The Lawyer's Digest: Supreme Court Judgments passed in July 2021

The Lawyer's Digest is a collection of concise summaries of all the judgments passed by the Supreme Court of India over the course of a month.
The Lawyer's Digest: Supreme Court Judgments passed in July 2021
Supreme Court Lawyers Digest

The Lawyer's Digest is a collection of concise summaries of all the judgments passed by the Supreme Court of India over the course of a month.

Topics have been sub-divided into areas of law including arbitration, criminal law, consumer law, service and administrative law, etc. for ease of reading.

Here are the summaries of judgments passed in July 2021.

Arbitration

In The Project Director, National Highways Authority of India v. M. Hakeem & Anr., the question was as to whether the power of the Court under Section 34 of the Arbitration and Conciliation Act, 1996 to ‘set aside’ an award would include the power to modify such an award. The facts in the appeals before the Court concerned awards passed in relation to the National Highways Act, 1956. The Court held that Section 34 cannot be held to include within it a power to modify an award. However, given the fact that in several similar cases, the NHAI had allowed similarly situated persons to receive compensation at a much higher rate than awarded, the Court declined to exercise its jurisdiction under Article 136 in favour of the appellants, and therefore, dismissed the appeals. [Key Words: UNCITRAL Model Law on International Commercial Arbitration, 1985, power of court to modify, Article 142] [Coram: R.F. Nariman, J., B.R. Gavai, J.]

In PSA Sical Terminals Pvt. Ltd. v. The Board of Trustees of V.O. Chidambranar Port Trust Tuticorin & Ors., the challenge was to a judgment of the Division Bench allowing the appeal of the respondent under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, thus, setting aside the arbitral award. While reiterating that an illegality with regard to a mere erroneous application of law would not be a ground for interference, in the facts of the case, the Court held that the findings of the Tribunal were based on ‘no evidence’ and ‘ignorance of vital evidence’, the same would come in the realm of perversity as explained in paragraph 31 of Associate Builders v. DDA (2015) 3 SCC 49. It further upheld the setting aside of the award on the ground that a unilateral addition or alteration of a contract had been foisted upon an unwilling party, which amounted to breach of a fundamental principle of justice, and thus, shocked the conscience of the Court. [Key Words: patent illegality, scope of interference, UNIDROIT Principles of International Commercial Contracts, fundamental principle of justice, terms of the contract, ex debito justitiae] [Coram: R.F. Nariman, J., B.R. Gavai, J.]

Criminal Law

In Lakshman Singh v. State of Bihar (now Jharkhand) the Court dismissed appeals preferred against a judgment of the High Court of Jharkhand, by which the judgment and order of conviction and sentence passed by the trial Court convicting the appellants under Sections 323 and 147 of the Indian Penal Code (IPC) and sentencing them to undergo six months simple imprisonment was confirmed. The appellants were accused of interfering in the casting of votes by forcing the informant to stop issuing voter slips and to handover the voters list which he was possessing. On the informant's refusal, the accused persons allegedly started physically beating him, and firing at and injuring others who came to the informant’s rescue.

The Court rejected the appellants’ contention that the witnesses were not independent witnesses and were unreliable, that the trial court and High Court had erred in concluding that the appellants were part of the unlawful assembly, and that the individual roles of the appellants had not been ascertained. The Court relied upon its decision in Mahadev Sharma v. State of Bihar to hold that,

“... every member of the unlawful assembly is guilty of the offence of rioting even though he may not have himself used force or violence” and that “offence of rioting under Section 146 IPC is said to be committed when the unlawful assembly or any member thereof in prosecution of the common object of such assembly uses force or violence”.

The Court noted that:

(i) the independent witnesses had all identified the accused and, along with the other injured witnesses, had unequivocally supported the prosecution’s case;

(ii) the persons were all named in FIR;

(iii) that some of the accused had also sustained injuries and had been unable to explain the injuries. It was further observed that all the accused persons were the members of the unlawful assembly and the common intention was “to snatch the voters slips and to cast bogus voting.

The Court noted that in People’s Union for Civil Liberties v. Union of India, it was held that the freedom of voting is a part of the freedom of expression and that the secrecy of the casting vote is necessary for strengthening democracy. Accordingly, the Court upheld the appellants’ conviction and sentence of six months imprisonment and dismissed the appeals. [Key Words: rioting and causing hurt, interference with elections, testimony of injured witness][Coram: DY Chandrachud, J., MR Shah, J.]

In Indra Devi v. State Of Rajasthan & Anr. and connected criminal appeals, the Supreme Court dismissed the appeals preferred by the complainant and the State of Rajasthan, respectively, against the order of the High Court allowing the writ petition filed by respondent no. 2. The High Court had opined that sanction under Section 197 of the Code of Criminal Procedure (CrPC) was required before triggering any prosecution against the erring government official. The allegation against the respondent No. 2 was that he, in collusion with superior officers, tampered with and fabricated land records to the benefit of a purchaser of land, causing wrongful loss to the complainant.

The Court opined that the accused superior officers, who were alleged to have colluded with respondent no. 2, were both granted the benefit of Section 197, CrPC. It was held that the superior officers, who had processed, and had put their initials on the papers, have been “acting or purporting to act in the discharge of official duty” and that the yardstick to be followed is to form a prima facie view whether the act or omission for which the accused was charged had a reasonable connection with the discharge of his duties. As neither the State nor the complainant appealed against the protection granted under Section 197 of the CrPC with respect to the two other officers, the Court held that similar protection must be granted to respondent no. 2, and accordingly dismissed the appeals. [Key Words: prosecution of public servants, previous sanction of competent authority] [Coram: SK Kaul, J., Hemant Gupta, J.]

In Pruthiviraj Jayantibhai Vanol v. Dinesh Dayabhai Vala and Others, the Court noted that criminal jurisprudence in India recognized that eye sight capacity living in rural areas was better than “town folks” and further that the identification at night between known persons was certainly possible by voice, silhouette, shadow and gait. It was further held that ocular testimony was the best form of testimony. It was clarified that ocular testimony was to be disbelieved only in a case of “a gross contradiction between medical evidence and oral evidence” where the medical evidence made “the ocular testimony improbable” and ruled out “all possibility of ocular evidence being true”. [Key Words: identification in dark, contradiction between ocular testimony and medical testimony] [Coram: Navin Sinha J., R Subhash Reddy J.]

In Dharmesh @ Dharmendra @ Dhamo Jagdishbhai @ Jagabhai Bhagubhai Ratadia & Anr v. The State of Gujarat the Court held that the imposition of the condition of payment of compensation to the victims for the grant of bail to the accused was against the scheme of the CrPC. Section 357 lays down that the discretion of Court for payment of compensation can only be exercised after the conclusion of the trial, as without trial, there cannot be a sentence. Further, under Section 235, at the time of passing the sentence the judge must hear an accused and, accordingly, the sentence must precede grant of compensation.

The factors for grant of fine or compensation are the nature of the crime, the injury suffered, the justness of the claim, the capacity to pay and other relevant circumstances which would be considered after giving an opportunity to the person convicted to be heard. Conversely, while granting bail, even if charges are framed, a prima facie view is taken based on the principle of not unnecessarily keeping a person in custody. The monetary condition can be imposed for grant of bail, inter alia, in cases of offences against property, but that cannot be used as compensation to be deposited and disbursed as a condition of the person being enlarged on bail.

The Court granted the appellants parity with the bail conditions imposed on the other accused, and without the imposition of any payment as way of compensation. [Key Words: condition of payment of compensation for grant of bail, Sections 357, 235, 250 CrPC][Coram: SK Kaul, J., Hemant Gupta, J.]

In Kumer Singh v. State of Rajasthan and Anr, an appeal was filed against the order releasing the private respondents on bail under Section 439, CrPC for offences punishable under Sections 147, 148, 341, 323, 307, 427, 302 read with Section 149 of the IPC. Setting aside the order passed by the High Court, the Court held that except narrating the submissions made by the counsel of the parties, there was no independent application of mind by the High Court and no reasons whatsoever had been assigned by the High Court for releasing the accused on bail.

The High Court had not taken into consideration the facts of the case, the nature of allegations or gravity of offences and role of the accused. The Court held that the order passed by the High Court suffers from perversity and does not pass the test laid down by the Court on grant of bail, and thus, the accused were directed to surrender forthwith. [Key Words: Sections 147, 148, 341, 323, 307, 427, 302 read with Section 149 of the IPC, bail under Section 439 CrPC, no independent application of mind by High Court, cancellation of bail] [Coram: DY Chandrachud , J., MR Shah, J.]

In A P Mahesh Cooperative Urban Bank Shareholders Welfare Association v. Ramesh Kumar Bung And Ors. the challenge was to an order of the High Court of Telangana staying the arrest and further proceedings against the respondents arising out of an FIR filed under Sections 409, 420, 467, 468, 471 and 477A read with 120B of the IPC. The arguments made by the petitioner, inter alia, pertained to the power of the High Court to stay criminal proceedings when cognizable offences are prima facie made out. It was further argued that the decision was legally invalid as the High Court had held the pendency of civil writ petitions relating to voter fraud as having a bearing on the criminal complaints and held that some allegations pertained to disputes arbitrable under Section 84 of Multi State Cooperative Societies Act, 2002.

Dismissing the petition, the Court held that the High Court had given elaborate reasons as to how the allegations of bank fraud were developed during the proceedings concerning allegations of election fraud and thus the same was not against earlier precedents. It was further held that the High Court only took note of the civil proceedings to note the way the colour of the entire proceedings had changed from a civil dispute to a criminal one, with overlapping allegations and the reference to Section 84 of Multi State Cooperative Societies Act, 2002 was limited to allegations relating to the admission of members. [Key Words: Sections 409, 420, 467, 468, 471 and 477A read with 120B IPC, stay of criminal proceedings, cognizable offences, Section 84 of Multi State Cooperative Societies Act, 2002, election fraud, bearing of civil writ petitions on a criminal complaint] [Coram: Indira Banerjee, J., V. Ramasubramanian, J.]

In M/s Supreme Bhiwandi Wada Manor Infrastructure Pvt. Ltd. v. The State of Maharashtra & Anr., the Bench reiterated that Section 156, CrPC deals with the police’s powers to investigate cognizable cases. While passing an order under Section 156(3), the Magistrate merely issues a reminder or intimates the police to exercise its primary duty of investigation. This was in distinction to Section 202 which applied to cases where the Magistrate takes cognizance and chooses to enquire into the complaint either itself or through any other agency. The Bench also held that it had the powers to cancel bail granted under Section 438 if the same was granted on irrelevant factors. [Key Words: cognizance, investigation, anticipatory bail, examination of complainant, postponement of issue of process] [Coram: DY Chandrachud J., MR Shah J.]

In Rakesh and Another v. State of UP and another, the Supreme Court reiterated that the statement of a doctor/medical officer during cross examination could, at best, be termed as his/her opinion and the eye witness’ account would have greater value. It was further held that recovery of the weapon used in the commission of the offence was not a sine qua non for conviction. [Key Words: recovery of weapon, eye-witness, medical officer, doctor, murder, motive] [Coram: DY Chandrachud J., MR Shah J.]

In Somesh Chourasia v. State of MP & Anr, it was noted that the judgment concerned “the cancellation of bail on the ground of supervening events, such as the conduct of the accused during the period of bail, vitiating the continuance of bail”. While listing the circumstances in which the High Court could cancel bail granted under Section 439(2), CrPC, the Bench held that the same considerations governed cancellation of bail at the post-conviction stage under the second proviso to Section 389 (1) of the CrPC. Since the facts concerned the alleged harassment of the district court judge at the hands of the accused in connivance with some officials of the police, the Bench urged that the “colonial mindset” change for the better towards the trial court judiciary. [Key Words: suspension of sentence, cancellation of bail, threat to trial court judges] [Coram: DY Chandrachud J., Hrishikesh Roy J.]

Constitutional Law

In Madras Bar Association v. Union of India and Another, the Supreme Court, by a 2:1 majority, set aside provisions of Section 184 of the Finance Act 2017, as amended by the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance 2021 on account of it being contrary to the principles of separation of power and the independence of the judiciary.

The Bench held that though the legislature was well within its right to legislatively overrule judgments, in the present case, the legislature failed to exercise its power legally.

The majority struck down the first proviso to Section 184(1), second proviso read with third proviso to Section 184(1), Section 184(7), Section 184(11)(i) and Section 184(11)(ii). Justice Hemant Gupta dissented stating that the Court ought to defer to legislative wisdom to the limited extent of prescription of minimum age and with respect to conditions of service such as as payment of house rent allowance. [Key Words: R Gandhi, Madras Bar Association, Rojer Mathew, legislative overruling] [Coram: L Nageswara Rao J., Hemant Gupta J., S. Ravindra Bhat J.]

Also Read
Supreme Court sets aside provision of Tribunal Reforms Ordinance 2021 fixing tenure of members of tribunal at 4 years

In Ajit Mohan & Ors. v. Legislative Assembly National Capital Territory of Delhi & Ors., the Court was, inter alia, faced with the issue as to the privilege of the Legislative Assembly to summon a person who is not a part of the Executive, and whether the same breaches an individual’s right to privacy and free speech. The Court dismissed the Writ Petition and declined to quash the summons to the petitioner and Facebook. In this context, the Court found as follows:

i. There is no dispute about the right of the Assembly to proceed on grounds of breach of privilege per se.

ii. The power to compel attendance by initiating privilege proceedings is an essential power.

iii. Members and non-Members (like the petitioners) can equally be directed to appear before the Committee and depose on oath.

iv. In the facts of the case, the issue of privileges is premature. Having said that, the insertion of para 4(vii) of the Terms of Reference taken along with the press conference of the Chairman of the Committee could legitimately give rise to apprehensions in the mind of the petitioners on account of which a caveat has been made.

v. Canvassing a clash between privilege powers and certain fundamental rights is also pre-emptory in the present case.

vi. In any case, the larger issue of privileges vis-a-vis the right of free speech, silence, and privacy in the context of Part III is still pending in view of the reference to Larger Bench in N. Ravi v. Legislative Assembly (2005)1 SCC603

vii. The Assembly admittedly does not have any power to legislate on aspects of law and order and police in view of Entries 1 and 2 of List II in the Seventh Schedule being excluded. Further, regulation of intermediaries is also subject matter covered by the Information Technology Act.

viii. The Assembly does not only perform the function of legislating; there are many other aspects of governance which can form part of the essential functions of the Legislative Assembly and consequently the Committee.

ix. Para 4(vii) of the Terms of Reference does not survive for any opinion of the Committee. It will not be permissible for the Committee to encroach upon any aspects strictly within the domain of Entries 1 and 2 of List II of the Seventh Schedule. As such, any representative of the petitioners would have the right to not answer questions directly covered by these two fields.

[Key Words: Facebook, liability of intermediaries, summons, Delhi riots, privilege, legislative competence, fundamental rights, time and case management] [Coram: Sanjay Kishan Kaul, J., Dinesh Maheshwari, J., Hrishikesh Roy, J.]

In The State of Kerala v. K. Ajith & Ors., the primary issue pertained to the exercise of power by the Public Prosecutor under Section 321, CrPC to withdraw the prosecution, and the exercise of jurisdiction by the CJM. On the issue of Section 321, the Court summarized the principles as follows:

i. Section 321 entrusts the decision to withdraw from a prosecution to the public prosecutor but the consent of the court is required for such withdrawal;

ii. The public prosecutor may withdraw from a prosecution not merely on the ground of paucity of evidence but also to further the broad ends of public justice;

iii. The public prosecutor must formulate an independent opinion before seeking the consent of the court to withdraw from the prosecution;

iv. While the mere fact that the initiative has come from the government will not vitiate an application for withdrawal, the court must make an effort to elicit the reasons for withdrawal so as to ensure that the public prosecutor was satisfied that the withdrawal of the prosecution is necessary for good reasons;

v. In deciding whether to grant its consent to a withdrawal, the court exercises a judicial function but it has been described to be supervisory in nature.

vi. While determining whether the withdrawal of the prosecution subserves the administration of justice, the court would be justified in scrutinizing the nature and gravity of the offence and its impact upon public life especially where matters involving public funds and the discharge of a public trust are implicated;

vii. In a situation where both the trial judge and the revisional court have concurred in granting or refusing consent, the Supreme Court, while exercising its jurisdiction under Article 136 of the Constitution, would exercise caution before disturbing concurrent findings.

The Court also dealt with the issue of immunities and privileges of MLAs under Articles 105 and 194 of the Constitution. Placing reliance on a plethora of English judgments on the subject, the Court held that a person committing a criminal offence within the precincts of the House does not hold an absolute privilege. [Key Words: Withdrawal of prosecution, immunity, privileges of MLAs, Parliament, Public Prosecutor, Sanction of Speaker, acts of public destruction] [Coram: D.Y. Chandrachud, J., M.R. Shah, J.]

In Union of India v. Rajendra N Shah and Anr., the vires of the Constitution 97th Amendment Act, 2011 was challenged, which inter alia introduced Part IXB under the heading ‘The Cooperative Societies’.

The Court held that Part IXB, insofar as it applies to co-operative societies which operate within a State, would require ratification under both sub-clauses (b) and (c) of the proviso to Article 368(2). It was further held that the procedure laid down in Article 368(2), which required ratification of legislatures by one half of the States, was admittedly not followed in the present case. However, the alternative argument of the Attorney General, that even if Part IXB was held to be constitutionally infirm qua co-operative societies operating within a State, it would yet operate qua multi-State co-operative societies and in Union Territories, which are not States, was accepted, relying on the doctrine of severability. Ultimately, it was held that Part IXB is operative only insofar as it concerns multi-State co-operative societies, both within the various States and in the Union territories of India.

Though Justice KM Joseph was in agreement with the reasoning and conclusion in regard to the provisions relating to Articles in question being unconstitutional, he expressed his inability to concur with the view that the doctrine of severability will apply to sustain Article 243ZR and 243ZS to the multistate cooperative societies operating in the UTs, and that it would not apply to those confined to the UTs.

[Key Words: Cooperative Societies, challenge to a constitutional amendment, Article 368, Article 19, 43B, doctrine of severability, non-obstante clause, constituent power of the Parliament, Kihoto Hollohan] [Coram: R.F. Nariman, J., B.R. Gavai, J.]

Land Laws

In Ismailbhai I Kansara (D) v State of Gujarat, the Court held that where the appellant had filed a writ petition after an eviction notice was served upon him and he made reference to such notice in his petition and had appeared before the Collector pursuant to the notice, an argument that the eviction order was passed without notice was untenable. [Key Words: Section 19(2)(b) of the Displaced Person (Compensation and Rehabilitation) Act 1954, eviction, ][Coram: SK Kaul, J., Hemant Gupta, J.]

In Eastern Coalfields Limited v. Anadinath Banerjee (D) and Others allowed the appeals preferred against the judgment of a Division Bench of the High Court of Calcutta. The issue before the Court was whether the respondent was entitled to employment by the appellant in lieu of acquisition of land. In 1991, the appellant had acquired land from individuals and had entered into agreements with those from whom more than 2 acres of land was acquired. However, the respondent’s name was not included on the rehabilitation list which was prepared pursuant to such acquisition.

The Court opined that both the Single Judge as well as the Division Bench had erred in granting relief to the respondent on the basis of the certificate of the Land Acquisition Collector and the view of the Personnel Manager. The Court held that under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as well as other social welfare legislations such as the Employees’ Provident Fund Scheme, 1952 and the Payment of Gratuity Act, 1972 the principle under which a “family” were defined was that relatives who are not dependent on the claimant will constitute a separate family unit for the purposes of compensation and rehabilitation.

Accordingly, the Court held that the self-serving affidavits executed by the father, brother and nephews of the respondent could not be taken as the basis of determining whether the holding of the respondent was in excess of the threshold of two acres as such affidavits create no interest in the land particularly when the executors do not fall within the definition of “family”. The Court concluded that the High Court erred in directing the appellant to grant employment to the respondent, and accordingly allowed the appeals. [Key Words: right to fair compensation, definition of ‘family’, qualifying criteria][Coram: DY Chandrachud, J., MR Shah, J.]

Service and Administrative Law

In Delhi Subordinate Services Selection Board & Anr v. Seema Kapoor, the Bench reversed the judgment of the High Court on the ground that benefit of age relaxation was permissible for government servants and departmental candidates, and not the employees of autonomous bodies i.e. the South Delhi Municipal Corporation in the present case. [Key Words: departmental candidates] [Coram: Sanjay Kishan Kaul J., Hemant Gupta J.]

In Rashi Mani Mishra and Ors. v. State of U.P. and Ors., the question before the Court related to the determination of seniority of Assistant Engineers working in the Rural Engineering Department and the common question involved was to assess whether the services rendered as ad hoc prior to their regularisation shall be counted for the purpose of seniority etc. or the period only from the date of their regularisation was to be considered.

Referring to its decision in Narendra Kumar Tripathi (2015) 11 SCC 80, the Court held the same to be per incuriam and held that - on a fair reading of the Public Service Commission Rules, 1979 (“1979 Rules”), which were extended from time to time, the initial appointment orders in the year 1985 and the subsequent order of regularisation in the year 1989 of the ad hoc appointees, the relevant Uttar Pradesh Rural Engineering (Group ‘B’) Service Rules, 1993 and the U.P. Government Servants Seniority Rules, 1991 - the services rendered by the ad hoc appointees prior to their regularisation as per the 1979 Rules shall not be counted for the purpose of seniority, vis-à-vis the direct recruits who were appointed prior to 1989 and they are not entitled to seniority from the date of their initial appointment in the year 1985.

[Key Words: determination of seniority of Assistant Engineers, date of regularisation to be considered for determining seniority, ad hoc services to not be considered, Public Service Commission) Rules, 1979 , Uttar Pradesh Rural Engineering (Group ‘B’) Service Rules, 1993] [Coram: Dr. D.Y. Chandrachud , J., M.R Shah, J.]

In New Okhla Industrial Development Authority & Anr. v. B D Singhal & Ors. the Court allowed appeals and set aside the judgment of the Division Bench of the High Court by which the High Court had directed that retrospective effect be given to the Government Order enhancing the age of superannuation of its employees from fifty-eight to sixty years. The Court noted that the New Okhla Industrial Development Authority (NOIDA) was constituted under the provisions of the UP Industrial Area Development Act 1976, Section 19, which granted NOIDA the power to make regulations “with the prior approval” of the State Government. In 2002, NOIDA proposed to amend Regulation 25, to enhance the age of superannuation from fifty-eight to sixty years. The proposal was rejected by the State Government in 2009.

The rejection was challenged before the High Court, and by judgment dated January 17, 2012 the High Court specifically left it open to the State Government to consider whether to give effect to the increase in the age of retirement from the date on which NOIDA resolved to bear the financial burden or from such other date as the government may find expedient. Thereafter, NOIDA passed another resolution to recommend to the State government to increase the age of retirement for its employees from fifty-eight to sixty years “with immediate effect” in July 2012. The Government of Uttar Pradesh acceded to NOIDA’s proposal for enhancing the age of retirement to sixty years on September 30, 2012.

However, in the interregnum, a writ petition had been filed by the respondents challenging the 2009 order of the State government rejecting the original proposal for enhancement of the age of retirement, and other consequential reliefs, as the respondents were due to retire on August 31, 2012 on attaining the then prevailing age of superannuation. The petition before the High Court was amended to incorporate a relief seeking to quash paragraph 1(ii) of the order of the State government dated September 30, 2012. A Division Bench of the Allahabad High Court at Lucknow allowed the writ petition and directed that the increase in the age of superannuation to sixty years shall have retrospective effect from June 29, 2002, i.e. the date of NOIDA’s original proposal. The Supreme Court held that the Government Order was explicitly clear that the enhancement was to be made prospectively, and that the High Court had erred in deciding that the enhancement in the age of retirement was based on the original resolution of the Board of NOIDA issued in 2002.

The High Court further erred in holding that the increase in the age prospectively was arbitrary, the top Court held, observing that the respondent-employees had no vested right. The recommendation of NOIDA was not a promise which would give rise to any promissory estoppel or legitimate expectation in favour of the respondents, the Supreme Court said and accordingly allowed the appeal to set aside the High Court’s decision. [Key Words: enhancement of age of superannuation, retrospective applicability][Coram: DY Chandrachud, J., MR Shah, J.]

In The State of Uttar Pradesh & Ors v Dr Manoj Kumar Sharma, the Court held that where a government doctor was relieved from his job in 2003, and while ‘awaiting posting orders’, he started private practice and intentionally delayed the decision on his writ petition against the same for thirteen years, he could not seek relief and would not be entitled to back wages. [Key Words: payment of back wages, writ petition][Coram: SK Kaul, J., Hemant Gupta, J.]

In Tek Chand and others v Bhakra Beas Management Board (BBMS), the Court held that the regulations provide that appointment by promotion is to be made by selection based on seniority-cum-merit and no employee is entitled to appointment as a matter of right. However, under Regulation 4(5), if a fireman had acquired better proficiency on the job training by reason of an appreciation certificate, such certification should be annexed to his service record. [Key Words: Bhakra Beas Management Board Class – III and Class – IV Employees (Recruitment and Conditions of Service) Regulations 1994, feeder post Leading Fireman, Departmental Promotion Committee, meaning of ‘and’][Coram: Navin Sinha, J., R Subhash Reddy, J.]

In Punjab State Co-Operative Milk Producers Federation Ltd & Anr v Balbir Kumar Walia & Ors, the Court held that in respect of the Government, financial constraints are relevant when liberalized benefits were granted from a particular date and limiting it to employees in service on a certain date. The Court also held that the wisdom and advisability of economic policies of the Government are not amenable to judicial review unless it can be demonstrated that such policy is contrary to any statutory provision or the Constitution. [Key Words: Revision of pay, Pay Commission, Punjab State Co-Operative Milk Producers Federation Services (Common Cadre) Rules 1980, Section 9-A of the Industrial Disputes Act 1947, protests, Crown Aluminium Works v. Workmen] [Coram: SK Kaul, J. Hemant Gupta, J.]

In Vice Chancellor Anand Agriculture University v. Kanubhai Nanubhai Vaghela and Anr., it was held that its judgment in Gujarat Agricultural University vs. Rathod Labhu Bechar & Ors (2001) 3 SCC 574 would not stand denuded due to observations in Secretary, State of Karnataka and Ors. v. Umadevi and Ors (2006) 4 SCC 1 as the respondents before the Court were covered by the former precedent. [Key Words: regularisation of daily wagers] [Coram: L Nageswara Rao J., Aniruddha Bose J.]

Supreme Court Practice and Procedure

In Vedanta Ltd (formerly known as M/s Sesa Sterlite Ltd) v The Goa Foundation & Ors, the Court held that where no cogent grounds have been furnished for the delay of 20-26 months for filing an application seeking review of a Judgment, the review petitions were liable to be dismissed on the ground of limitation. The Court also ruled that no legitimate grounds for review of its judgment in Goa Foundation II were made out and dismissed the petition on merits as well. [Key Words: Goa Foundation v Sesa Sterlite Ltd][Coram: DY Chandrachud, J., MR Shah, J.]

Consumer Law

In M/s Laureate Buildwell Pvt. Ltd. v. Charanjeet Singh, the Court held that the judgments in Raje Ram (2008) 17 SCC 407 and Wing Commander Arifur Rehman 2020 SCC OnLine SC 667 were restricted to the facts of those cases in the context of the nature and extent of relief to which a subsequent purchaser would be entitled.

It was further held that it would not be correct to say that “a subsequent purchaser who steps into the shoes of an original allottee of a housing project in which the builder has not honoured its commitment to deliver the flat within a stipulated time, cannot expect any – even reasonable time, for the performance of the builder’s obligation”. [Key Words: privity of contract, insurer, subsequent buyer] [Coram: Uday Umesh Lalit J., Hemant Gupta J., S Ravindra Bhat J.]

Registration

In Ripudaman Singh v. Tikka Maheshwar Chand, the Supreme Court held that a compromise decree in respect of land, not subject matter of suit but part of a family settlement, was not required to compulsorily registered under Section 17(2)(vi) of the Registration Act 1908 as no right was being created in praesenti and a family settlement only declares rights already possessed by the parties. [Key Words: Order XXIII Rule 3 Code of Civil Procedure, Kale and Others v. Deputy Director of Consolidation and Others (1976) 3 SCC 119, family settlement, compromise decree] [Coram: SK Kaul J., Hemant Gupta J.]

Securities Market

In Franklin Templeton Trustee Services Private Limited and Another v. Amruta Garg and Others etc., the Bench interpreted the interplay of Regulations 39 to 42 of the SEBI (Mutual Funds) Regulations 1996 with Regulation 18(15)(c) of the said Regulations. Harmoniously interpreting the same, the Bench held that unitholders of a Scheme were akin to shareholders, and they could not be treated as creditors. Furthermore, the Bench held that the Regulations did not suffer from manifest arbitrariness.

[Key Words: “consent” as per Regulation 18(15)(c) of the Securities and Exchange Board of India (Mutual Funds) Regulations 1996, meaning of “consent” and “majority”, Shackleton on Law and Practice of Meetings, quorum, William Paul White’s History and Philosophy of the Quorum as a Device of Parliamentary Procedure, literal interpretation, propositional interpretation, legislative intention, purposive interpretation, redemption, pre-decisional hearing, creditors, shareholders, unitholders, “due and payable”, manifest arbitrariness] [Coram: S. Abdul Nazeer J., Sanjiv Khanna J.]

Insolvency

In M/s Orator Marketing Pvt. Ltd. v. M/s Samtex Desinz Pvt. Ltd., the Bench held that a person who gives a term loan to a Corporate person, free of interest, on account of its working capital requirements, is a financial creditor and is competent to initiate the corporate resolution process under Section 7 of the Insolvency and Bankruptcy Code 2016 inasmuch as Section 5(8) defined financial debt as “a debt with interest if any”. [Coram: Innoventive, Swiss Ribbons, interpretation of statutes, mischief rule, Pioneer Urban Land and Infrastructure Ltd., meaning of financial creditor, time value of money, financial debt, expansive interpretation, “means”, “includes”] [Coram: Indira Banerjee J., V. Ramasubramanian J.]

CPC

In KP Natarajan and Anr. v. Muthalammal and Ors, the challenge was to the order of the High Court which had set aside an ex parte decree on the ground that the same had been passed against a minor who had not been represented by a duly appointed guardian under the procedure laid down under Order XXXII Rule 3 of CPC. It was, inter alia, argued by the petitioner that the High Court should not have set aside the ex parte decree as the same arose out of a revision petition from an application filed under Section 5 of the Limitation Act 1963, for condoning the delay in filing a reply and the same was not a ground which was raised in their revision petition.

The Court upheld the order passed by the High Court and held that even though the High Court was only dealing with the revision petition arising out of an order dismissing a petition under Section 5, the same does not curtail the jurisdiction of the High Court to look into the records with particular reference to an important rule of procedure, and was thus justified in invoking its powers under Article 227 of the Constitution of India 1950. [Key Words: Order XXXII Rule 3 of the Code of Civil Procedure 1908, setting aside of ex parte decree, Revision petition, power of the High Court under Article 227 of Constitution of India 1950] [Coram: Indira Banerjee, J., V. Ramasubramanian, J.]

In Sayyed Ayaz Ali v. Prakash G Goyal and Ors., the challenge arose from the judgment of the High Court which allowed an Application under Order 7 Rule 11 (d) of the Code of Civil Procedure, 1908, but set aside the part of order of the Trial Court directing the appellant to amend the plaint and pay appropriate court fee. Upholding the order of the High Court, the Court, inter alia, stated that the Trial Judge, having allowed the application under Order 7 Rule 11 (d), was not justified in granting the appellant-plaintiff the liberty to amend the plaint by seeking appropriate reliefs and paying the court fee.

It was further held that since the order of the Trial Court rejecting the plaint is subject to a first appeal under Section 96 of the Code of Civil Procedure, the writ petition filed by the appellant before the High Court was liable to be rejected on this ground alone. [Key Words: allowing Application under Order 7 Rule 11 (d) of the Code of Civil Procedure 1908, first appeal under Section 96 of the Code of Civil Procedure 1908, Amendment to Plaint] [Coram: Dr. D.Y. Chandrachud, J., M.R Shah, J.]

In Atlanta Infrastructure Ltd. (Rechristened As Atlanta Ltd.) v. Delta Marine Company & Ors. the Supreme Court deprecated the manner in which a litigation concerning encashment of a bank guarantee had been pending for nearly 20 years. A suit had been filed for a decree of permanent injunction restraining the appellant from encashment of bank guarantee. On November 18, 2019, the appellate court passed an interim order restraining the release of payment of bank guarantee, which order was confirmed on November 19, 2020. On January 6, 2020, the Supreme Court passed an order directing disposal of the appeal within a period of three months from the next date i.e. January 24, 2020. Meanwhile, respondent no.1 moved an application under Order 41 Rule 27 of the CPC seeking admission of copy of a report of an expert under Section 45 of the Evidence Act.

The application was rejected by the ADJ. Respondent No.1 then filed an appeal against the said order of rejection in which notice was issued and further proceedings pending before ADJ were stayed. Upon the aforesaid facts being brought to the attention of the Supreme Court, and noticing the mockery being made out of the proceedings, a report was called. Thereafter, the High Court vacated the stay observing that the order of the Supreme Court dated Janaury 6, 2020 was not brought to the knowledge of the High Court. By the impugned judgment of the High Court, the order of the ADJ rejecting the application under application under Order 41 Rule 27 was set aside and the matter was remitted back to the ADJ to consider the application afresh at the time of hearing of the appeal. The Supreme Court held that the impugned order was unsustainable, as the reason for the respondent filing the application under Order 41 Rule 27 CPC was to show that a fraud played on the Court.

However, the Court held that, as a bank guarantee is an independent contact, there is limited scope for interference in case of encashment of bank guarantee, one such reason be egregious fraud. However, the respondent admitted that he was trying to show that the appellants had been acting fraudulently in a different matter and that it was simply an attempt to prolong the issue and prevent encashment of the bank guarantee. As such, the Court allowed the appeal set aside the impugned order, further dismissing the appeal filed by respondent No.1 before the High Court against the order of the first appellate court rejecting the application for production of additional documents. [Key Words: injunction on encashment of Bank Guarantee, Fraud on Court, delay in proceedings][Coram: Sanjay Kishan Kaul, J., Hemant Gupta, J.]

Education

In Dr. Rohit Kumar v. Secretary Office of Lt. Governor of Delhi & Ors. the Supreme Court exercised its powers under Article 142 of the Constitution to grant the petitioner the relief of being admitted to the Post Graduate medical course in the following academic year. The petitioner was working as a doctor in the service of the GNCTD. Upon completion of five years of service, the petitioner became eligible to avail study leave to pursue post graduate studies, in accordance with the MoH&FW OM dated November 2, 2021. In October 2020, the petitioner was granted permission to apply for and appear in INICET-2020, which he did.

The results were declared in November 2020 and the petitioner successfully cleared the examination and participated in counselling for admission to PGI, Chandigarh in December 2020. The official authorities, thereafter, issued the requisite NOC for the petitioner to pursue the PG course. However, meanwhile, a policy decision was taken in October 2020 not to grant any further study leave to the doctors working in the hospitals of the Government of NCT of Delhi in view of the COVID-19 pandemic, in light of which the petitioner’s application for study leave was rejected in January 2021. The petition before the Delhi High Court was rejected by a Single Judge and, thereafter, the appeal therefrom, by a Division Bench.

The Supreme Court considered the factual matrix, as well as several of its decisions, and held that

“... in rare and exceptional cases, a meritorious candidate, who has suffered injustice by reason of his/her inability to secure admission in a medical course, whether under-graduate or postgraduate, due to no fault of his/her own, who has taken recourse to law promptly, without delay, might be granted relief of being accommodated in the same post in the next session.

As there had been no lapse by the petitioner, who could not join the post graduate course, due to the denial of study leave by the Government pursuant to a legitimate policy decision and in response to the call of duty, the Court held that the petitioner could not be denied relief.

Since the unfilled seat was carried forward to the next session, and no prejudice would be caused, the Court directed the petitioner to be accommodated in the next academic session. [Key Words: PG Medical Admission, INICET 2020, Rejection of Study Leave, Article 142 of the Constitution, Public Policy, Balance and Equity][Coram: Indira Banerjee, J., V. Ramasubramanian, J.]

Miscellaneous

In Sachin Kashyap & Ors. v. Sushil Chandra Srivastava & Ors. and connected appeals, the Supreme Court quashed a particular direction given by the High Court in the impugned judgment whereby the High Court had prohibited permission being granted for DJs to play music. The writ petition filed before the High Court had prayed for removal of an LCD signage from an intersection in Prayagraj. The High Court, whilst considering the prayer had issued directions including the impugned direction prohibiting DJs. Before the Supreme Court, the appellants submitted that there were no pleadings in the writ petition regarding the noise generated by DJs nor was such prayer was made before the High Court.

It was further submitted that they have a right to play music in public places only after obtaining license from the District Authority under the relevant Noise Pollution (Regulation and Control) Rules, 2000 and that by imposing such restriction, their livelihood protected by Article 19(1) (g) of the Constitution of India was affected. The Supreme Court rejected the submission made by the respondents that the High Court had the power to expand the scope of relief granted under Article 226. The Supreme Court held that as there were neither pleadings nor any prayer with regard to the playing of music or DJs in public places and no such direction could have been given in a private litigation which was not in the nature of Public Interest Litigation. Before giving any such direction, the affected parties should have been impleaded, at least in a representative capacity, which was not done, it was noted.

The Court, accordingly, quashed the direction given by the High Court and held that the appellants or any other such persons may be permitted to play the music only in accordance with law and after obtaining the requisite license/permission from the concerned authorities. [Key Words: Relief granted beyond pleadings, parties before the Court, power to expand relief under Article 226 of the Constitution][Coram: Vineet Saran, J., Dinesh Maheshwari, J.]

In Union Of India v. Association Of Unified Telecom Service Providers Of India And Ors. the Court dismissed a series of Miscellaneous Applications that had been filed, whereby Telecom Service Providers sought a modification of paragraph 38 (i) of the judgment dated September 1, 2020 passed by the Supreme Court, and for clarification that the said judgment does not bar the Union of India from considering and rectifying the clerical/arithmetical errors in computation of AGR dues. The grievance of the applicants was that the judgment dated September 1, 2020 needs clarification as even calculation errors cannot be rectified by the Union of India in view of the said judgment.

An earlier order, passed on July 20, 2020, had made it clear that no dispute can be raised in respect of AGR dues that had been arrived at, on the basis of calculations made by the Union of India and the actual amounts payable by the TSPs had been mentioned in the said order. In paragraph 38 of the judgment dated September 1, 2020, the Court had reiterated that no telecom operator shall raise any dispute in respect of the demand raised by the Department of Telecommunications pertaining to AGR dues and it was also held that there cannot be any reassessment.

The Court held that though the instant applications appeared to be innocuous, “the end result of the relief sought by the Applicants in the guise of correction or rectification of the defects or arithmetical errors in calculation of AGR dues, would be recalculation which would amount to the AGR dues, as specified in the order of this Court dated 20.07.2020, being altered”.

The Court observed that dispute relating to AGR dues had remained pending for a very long period of time. The Court also noted that the Supreme Court had stipulated that the AGR dues payable by TSPs cannot be the subject matter of any future litigation, with the order dated July 20, 2020, which made it clear that there was no scope for any recalculation/re-computation of AGR dues. Having so held, the Supreme Court dismissed the applications. [Key Words: AGR Dues, Telecom Service Providers, Correction of calculation error, reassessment of AGR][Coram: L Nageswara Rao, J., S Abdul Nazeer, J., MR Shah, J.]

Contract Law

In South Eastern Coalfields Ltd. & Ors v. M/s. S. Kumar’s Associates AKM (JV), the Court dismissed the appeal preferred from the judgment of the Division Bench of the Chhattisgarh High Court, which had opined that there was no subsisting contract between the parties and, accordingly, the general terms of the contract were inapplicable. The appellant’s case was that the requirement to deposit performance security of 5% of annualized contract within 28 days and to sign the Integrity Pact before entering into the agreement was not a pre-condition to the execution of the agreement but a “condition subsequent”, and further by commencing the works, there was acceptance of the award of the work by the respondent.

The Court took note of its decisions in Jawahar Lal Burman v. Union of India in which it had opined that the contract was concluded upon its acceptance, which acceptance was held to be unconditional, and Dresser Rand S.A. v. Bindal Agro Chem Ltd. in which the Court recognized the well settled principles of law that a Letter of Intent merely indicates party’s intention to enter into a contract with the other party in future and is not intended to bind either party ultimately to enter into a contract, with the caveat that a letter of intent may be construed as a letter of acceptance if such intention is evident from its terms. After analysing the terms of the Notice Inviting Tender and the Letter of Intent, the Court concluded that mobilization at the work site by the respondent would not amount to a concluding the contract inter se the parties.

The requirement to furnishing of the Performance Security/Security Deposit within 28 days, and further to enter an “Integrity Pact” following notification of the award was clearly a pre-condition for conclusion of the contract the appellant was only entitled to forfeit the bid security amount and could not call upon the respondent to make the difference in payment for getting the works completed by a third party. Having so held, the appeals were dismissed. [Key Words: letter of intent whether binding, conditions precedent vis-à-vis conditions subsequent, Indian Contract Act 1872, unconditional acceptance, concluded contract] [Coram: SK Kaul, J., Hemant Gupta, J.]

Reservation

In Aruna v. The State of Maharashtra and Others, the Court delved into whether the District Caste Verification Committee had erred by declining to verify the caste certificate of the appellant under the proviso to Rule 14 of the Maharashtra Scheduled Castes, Scheduled Tribes, De­notified Tribes (Vimukta Jatis), Nomadic Tribes, Other Backward Classes and Special Category (Regulation of Issuance and Verification of) Caste Certificate Rules 2012 and whether the High Court had erred in declining to interfere with such order of the Committee, owing to which the appellant stood retrospectively disqualified to hold the post of President of the Municipal Council, Kundalwadi, under Section 9A of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act,1965.

The Court held that, despite the validity and genuineness of the appellant’s caste certificate being upheld by the appellate authority and the Committee, the Committee patently erred in declining to verify the certificate on a complete misconception of facts, and that the appellant’s caste certificate was issued under Rule 6(1)(a) by the competent authority of the State of Maharashtra and not by the competent authority at Hyderabad. Thus, the decision to not verify the same under the proviso to Rule 14 was unsustainable, the Court held.

However, in deciding how to shape the relief to be granted, the Court held that elected tenure of the appellant would come to an end in December, 2021 and as respondent no.4 had assumed the position of the President after the disqualification of the appellant, it was not a fit case where the appellant should be reinstated. The appeals were allowed to the extent that the High Court order was set aside as regarding the appellant’s caste status. [Key Words: Article 19(1)(a) of the Constitution, reasonable restrictions, change of name on certificate issued by CBSE, CBSE Examination Byelaws, Evidence, Public Documents][Coram: Navin Sinha, J., R Subhash Reddy, J.]

About the authors: Subhro Prokas Mukherjee, Tanveer Oberoi and Sahil Tagotra are advocates practicing in Delhi. Abhinav Hansaraman works with a law firm in Bombay. Rukmini works with a firm in Bombay.

The views expressed in this article are personal.

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