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

A summary of Judgments passed by the Supreme Court in March, 2021.
The Lawyer's Digest: Supreme Court Judgments passed in March 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 March 2021.

Arbitration

In Bharat Sanchar Nigam Ltd. & Anr. v. M/s Nortel Networks India Pvt. Ltd., it was held that the period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act 1996 would be governed by Article 137 of the First Schedule of the Limitation Act 1963 and that the period of limitation would begin to run from the date of failure to appoint an arbitrator. It was also observed that the Parliament may consider amending Section 11 of the 1996 Act to provide a period of limitation for filing an application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings. It was further held that in rare and exceptional cases, where the claims are ex facie time barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference. [Key Words: appointment of arbitrator][Coram: Indu Malhotra, J., Ajay Rastogi, J.]

In Secundarabad Cantonment Board vs M/s B. Ramachandraiah & Sons, the appellant was aggrieved by the order and judgement of the High Court appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act 1996 (“A&C Act”). In disputes arising out of construction contracts, the respondent having obtained final completion certificates on 26.03.2003. Thereafter, the respondent had issued various demands for escalation and finally issued a letter dated 07.11.2006 to the appellant requesting the appointment of an arbitrator. The respondent periodically wrote letters reiterating its claim and issued a legal notice dates 30.01.2010 stating that arbitration as under Section 21 of the A&C Act had commenced with the letter dated 07.11.2006. After further letters calling for the appointment of an arbitrator, the appellant rejected the request by letter dated 10.11.2010. After 3 more years on 06.11.2013, the respondent filed the application under Section 11. The High Court allowed the application noting that the prolonged silence on part of the appellant indicated a live dispute and the question of bar on limitation was left open to be considered by the arbitrator. The Court noted its recent judgment in Bharat Sanchar Nigam Ltd. delivered on 10.03.2021 where it reiterated that the period of limitation for an application starts running after the passing of 30 days after the request to appoint an arbitrator and it cannot be confused with the period of limitation applicable on the substantive claims. The Court also recalled its judgment in Vidya Drolia (2021) 2 SCC 1 where it noted that at the stage of Section 11, the restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably non-arbitrable. In the present case, the Court noted that at the very latest, the time for an application under Section 11 began to run after 30 days of the request to appoint an arbitrator. A rejection of the request by the appellant in 2010 would not give any fresh start to the limitation period. Thus, the Court held that the application under Section 11 was hopelessly time-barred and set aside the judgment of the High Court. [Key Words: Section 11 the Arbitration and Conciliation Act 1996, Limitation Act 1963, Request for appointment of arbitrator] [Coram: R. F. Nariman, J., B.R. Gavai, J.]

In Government of Maharashtra vs M/s Borse Brothers Engineers & Contractors Pvt. Ltd., the court was considering three appeals, of which two challenged the correctness of the decision in N.V. International (2020) 2 SCC 109, while the third stated that there was a conflict between the judgment in N.V. International and Consolidated Engg. (2008) 7 SCC 169 to hold that it was open for the High Court to condone delay under Section 5 of the Limitation Act 1963 (“Limitation Act”) in filing an appeal under Section 37 of the Arbitration and Conciliation Act 1996 (“Arbitration Act”). The Court referred to Consolidated Engg and stated that a conjoint reading of Section 37 and Section 43 of the Arbitration Act makes it clear that the provisions of Limitation Act apply to appeals filed under Section 37 and that the period of limitation will rest on Articles 116 or 117 of the Schedule to the Limitation Act depending on the whether the appeal is to a High Court or an intra-High Court appeal. The Court held that Section 5 of the Limitation Act is applicable both by virtue of Section 43 of the Arbitration Act and Section 29 (2) of the Limitation Act. The Court further noted that upon application of the Commercial Courts Act 2015 (“Commercial Courts Act”), those appeals under Section 37 of the Arbitration Act are governed by Articles 116 or 117 of the Schedule to the Limitation Act only when the specified value under the Commercial Courts Act is less than Rs. 3 Lakhs, while in other cases, Section 13 (1A) of the Commercial Courts Act lays down a limitation of 60 days for appeals under Section 37 of the Arbitration Act. Considering the applicability of Section 5 of the Limitation Act, the Court noted there is no specific bar on condonation of delay under Section 13 of the Commercial Courts Act as in the case of Section 16 of the same statute and therefore Section 5 of the Limitation Act would continue to apply. On the correctness of N.V. International, the Court noted that N.V. International does not notice Commercial Courts Act and is therefore per incuriam and that bodily lifting of the last part of Section 34 (3) into Section 37 of the Arbitration Act is unwarranted. Consequently, the Court overruled N.V.International. The Court went on to note that “sufficient cause” in Section 5 of the Limitation Act has to be understood in the context of the objective of both the Arbitration Act and the Commercial Courts Act to achieve a speedy resolution and that delay should be condoned as an exception and not a rule. The Court however observed that the High Court had erred in noting that there was a conflict between N.V. International and Consolidated Engg, since Consolidated Engg deals with Section 14 of the Limitation Act and not Section 5. [Key Words: Section 37 of the Arbitration and Conciliation Act 1996, Limitation, Articles 116 or 117 of the Schedule to the Limitation Act, the Commercial Courts Act 2015, Section 13 (1A) of the Commercial Courts Act, Condonation of Delay, Section 5 Limitation Act] [Coram: R.F. Nariman, J., B.R.Gavai, J., Hrishikesh Roy, J.]

In M P Power Trading Co. Ltd. & Anr. vs Narmada Equipments Pvt Ltd., the appellant was aggrieved by the order appointing an arbitrator passed by the High Court in the respondent’s application under Section 11 of the A&C Act. The appellant objected to the appointment on the grounds that under Section 86 (1) (f) of the Electricity Act 2003, the State Electricity Commission was vested with exclusive jurisdiction to adjudicate the disputes between licensees and power-generating companies. The Court referred to its decision in Gujarat Urja Vikas Nigam Limited (2008) 4 SCC 755 where it was held that Section 86 (1) (f) of the Electricity Act, 2003 being a special provision would override Section 11 of the A&C Act, which is further affirmed by the non-obstante provision in Section 174 of the Electricity Act, 2003. In Hindustan Zinc Limited, the Court had specifically stated that inherent lack of jurisdiction cannot be overcome even with the consent of parties. Thus, the fact that the appellant had agreed to the appointment of arbitrators in an earlier round of litigation does not preclude it from raising the plea of bar under Section 86 (1) (f) of the Electricity Act, 2003. The Court set aside the judgment of the High Court appointing arbitrators. [Key Words: Section 86 (1) (f) of the Electricity Act 2003, Section 11 the Arbitration and Conciliation Act 1996, special legislation, exclusive power to adjudicate] [Coram: D.Y. Chandrachud, J., M R Shah, J.]

In Amway India Enterprises Pvt. Ltd. v. Ravindranath Rao Sindhia and Anr., the appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 by the Delhi High Court, was challenged inter alia on the ground that the same related to an international commercial arbitration, which was covered under Section 2(1)(f)(i), since the respondents were habitually resident and nationals of the USA. It had been held by the High Court that since the central management and control of body of individuals was exercised only in India under Section 2(1)(f)(iii), the dispute was not an international commercial arbitration. The Supreme Court set aside the order of the High Court by stating that under Section 2 (1) (f), any transaction between the parties, at least one of whom is either a foreign national in, or habitually resident in, any country other than India, would categorize the arbitration as an international commercial arbitration, irrespective of whether such individual, body corporate carries on business in India through a business office set up in India. [Key Words: International commercial arbitration, appointment of arbitrator, jurisdiction of High Court, Section 2(1)(f) of Arbitration and Conciliation Act 1996] [Coram: R.F. Nariman, J., B.R Gavai J.]

In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd. arose out of a petition filed under Section 11(6) of the Arbitration and Conciliation Act 1996, for the appointment of a sole arbitrator. The appellant contended that the Consultancy Agreement, containing the alleged arbitration agreement, was a concocted agreement, and therefore, no arbitration clause was in existence. The Court examined the provisions of Sections 8 and 11 of the Act, and referred inter alia to Vidya Drolia (2021) 2 SCC 1, which read the ‘prima facie test’ into Section 11(6A) so as to bring the provisions of Sections 8(1) and 11(6) read with 11(6A) on par. On facts, the Court held, that it was unsafe to conclude one way or the other, that an arbitration agreement existed between the parties. Relying on Vidya Drolia, the Court held that a deeper examination of whether an arbitration agreement exists between the parties must be left to the arbitrator. Therefore, the Court upheld the order of the High Court appointing the Arbitrator, with a direction that the issue as to the existence of the arbitration agreement shall be decided by him as a preliminary issue. [Key Words: Section 11(6), Appointment of Sole Arbitrator, 2015 Amendment, existence of arbitration agreement, concluded contract, preliminary issue] [Coram: R.F. Nariman, J., B.R. Gavai, J., Hrishikesh Roy, J.]

In Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund (earlier known as Kotak India Venture Limited) & Ors., the Court relied upon Vidya Drolia to hold that a dispute would be non arbitrable when a proceeding is in rem and an IBC proceeding would be in rem only when the petition is admitted. The Bench “…clarified that in any proceeding which is pending before the Adjudicating Authority under Section 7 of IB Code, if such petition is admitted upon the Adjudicating Authority recording the satisfaction with regard to the default and the debt being due from the corporate debtor, any application under Section 8 of the Act, 1996 made thereafter will not be maintainable. In a situation where the petition under Section 7 of IB Code is yet to be admitted and, in such proceedings, if an application under Section 8 of the Act, 1996 is filed, the Adjudicating Authority is duty bound to first decide the application under Section 7 of the IB Code by recording a satisfaction with regard to there being default or not, even if the application under Section 8 of Act, 1996 is kept along for consideration. In such event, the natural consequence of the consideration made therein on Section 7 of IB Code application would befall on the application under Section 8 of the Act, 1996.” Further, in view that the nature of the issues involved being mainly with regard to the conversion of preference shares into equity shares and the formula to be worked thereunder, the Bench held that the consideration could be resolved by the Arbitral Tribunal consisting of same members but separately constituted in respect of each agreement. [Key Words: erga omnes effect, composite arbitration, insolvency, arbitration] [Coram: S.A. Bobde, CJI., A.S. Bopanna, J., V. Ramasubramanian, J.]

In Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/s Navigant Technologies Pvt. Ltd., the Bench held that the period of limitation for filing objections under Section 34 of the Arbitration and Conciliation Act 1996 would be calculated from the date on which the signed copy of the award was made available to the parties. The Bench held that a dissenting Award must be delivered on the same day as the majority award as the former cannot be made after the Tribunal becomes functus officio. [Key Words: minority award, dissenting award, meaning of arbitration award] [Coram: Indu Malhotra, J, Ajay Rastogi, J.]

Commercial Disputes

In Rapid MetroRail Gurgaon Limited Etc. v. Haryana Mass Rapid Transport Corporation Limited and Ors, the Bench held that though High Court should ordinarily not invoke their jurisdiction in disputes which are arbitrable, the High Court’s orders under Article 226 was justified in the present case as not staying the termination notices would leave commuters without the facility of metro rail in Gurugram - a public interest. The Bench further re-affirmed that a consent decree is the product of the fusion of contract as also the Court’s command. [Key Words: debt due, termination payment, Comptroller and Auditor General of India, public interest] [Coram: D.Y. Chandrachud, J., M.R. Shah, J., Sanjiv Khanna, J.]

In Tata Consultancy Services Limited v. Cyrus Investments Private Limited and Others, the Bench held that while the NCLT had dealt with every issue, the NCLAT did not deal with many of the issues and thus there was “no escape from the conclusion that NCLAT did not expressly overturn the findings of facts recorded by NCLT”. Thus, even though the Supreme Court was not permitted to interfere with a finding of fact in an appeal under Section 423 of the Companies Act 2013, it could do so if the NCLAT’s finding was wholly perverse. Deciding all question of law in favour of the Tatas, the Supreme Court, inter alia, held that:

i. The NCLAT’s was wrong in its view that the company’s affairs have been or are being conducted in a manner prejudicial and oppressive to some members and that the facts otherwise justify the winding up of the company on just and equitable ground. The Bench held that under a petition under Section 241 Companies Act 2013, the NCLAT could not ask whether the removal of a Director was legally valid and/or justified or not, but merely whether such removal amounted to conduct oppressive or prejudicial to some members. The Bench further held that there was never and there could never have been a relationship in the nature of a quasi partnership between the Tata Group and S.P. Group.

ii. The Bench held that the NCLAT could not have directed the reinstatement of Cyrus Mistry into the Board of Tata Sons and other Tata companies as the same was not in accordance with the pleadings, reliefs sought and the NCLAT’s powers under Section 242(2) of the Companies Act 2013. This was because Sections 241 and 242 did not permit the Tribunal to make an order for reinstatement which is barred by Section 14 of the Specific Relief Act 1963 and the Principle of Legality.

iii. Tata Sons (Private) Limited was a private company under Section 2(68) of the Companies Act 2013.

[Key Words: Cyrus Mistry, Docomo, Tata, ‘corporate majority’, ‘Corporate democracy’, ‘corporate governance’, Oppression, Mismanagement and Unfair Prejudice, Bubble Act, joint stock company, proportionate representation] [Coram: S.A. Bobde, CJI., A.S. Bopanna, J., V. Ramasubramanian, J.]

Criminal Law

In The State (GNCT of Delhi) Narcotics Control Bureau v. Lokesh Chadha, the Bench held that while suspending a sentence for a person convicted under the NDPS Act, the High Court would be obliged to record reasons under Section 389(1) CrPC which “must have a bearing on the public policy underlying the incorporation of Section 37 of the NDPS Act.” [Key Words: suspension of sentence] [Coram: DY Chandrachud, J., MR Shah, J.]

In K. Prakash & Anr. vs. The State of Karnataka, the appellants were aggrieved by the judgement and order of the High Court confirming their conviction and sentence under Section 344 (sentence one year) and Section 366 (sentence two years) read with Section 34 of the IPC. The Court issued notice on the limited aspect of sentencing. The Court noted that many factors which may not be relevant to determine the guilt must be seen with a human approach at the stage of sentencing. That the complaint itself stated that the main accused was in love with the victim. It is also the case of the appellants that PW1 is not a direct witness the alleged incident, additionally the appellants have already served a sentence of three months and paid the fines. The appellants have also pleaded that there is no one to take care of their minor son and old age parents. The Court partly allowed the appeal and modified the sentence to time already undergone. [Key Words: sentencing, factors in sentencing, Section 344 IPC, Section 366 IPC] [Coram: Ashok Bhushan, J., R. Subash Reddy, J.]

In Netaji Achyut Shinde (Patil) & Anr. vs State of Maharashtra, the appellants challenged the common judgement of the High Court convicting them of committing offences punishable under Section 302 read with Section 34 of the IPC. The trial court had acquitted appellant no.s1 and 3 while convicting only the appellant no. 2. The High Court vide the impugned judgement had reversed the acquittals while upholding appellant no.2’s conviction. After considering the entire evidence on record, the Court dismissed the appeals and confirmed the convictions. The Court said it is incorrect to suggest that the first information received by the police at 5.45 pm by phone should be treated as the FIR and that the police had improved upon the case in registering the FIR at 11.30 pm. The Court recalled its decision in TT Antony (2001) 6 SCC 181 that mere message without clearly specifying the details of the offence or with incomplete information cannot be treated as an FIR. The Court also rejected the trial court’s reasoning supported by the appellants that no injury on the deceased was attributable specifically to the accused. The Court relied on Ramaswami Ayaangar (1976) 3 SCC 779 to reiterate that to attract Section 34 of the IPC, it is not necessary that each accused must assault the victim but they must have shared a common intention with which they acted. The Court noted that the trial court had erred in ignoring the ocular testimony establishing the role of the appellants in the commission of the offence. The Court noted it’s judgment in Sawant Singh (1961) 3 SCR 129 regarding the powers of the appellate court where the trial court has recorded acquittal to note that the High Court has the power to review the evidence on which an order of acquittal is founded and stated that the High Court had correctly reversed the acquittal of the appellants. [Key Words: FIR when registered, incomplete message to Police not an FIR, Section 302 IPC, Section 34 IPC, common intent] [Coram: L. Nageshwara Rao, J., Hemant Gupta, J., S. Ravindra Bhat, J.]

In State of Kerala vs. Mahesh, the appellant State was aggrieved by the order of the High Court granting bail to the respondent-accused under Section 439, CrPC. The State submitted that the accused had killed a female doctor at her clinic by repeatedly stabbing her in the presence of her father and it could not be ruled out that the respondent could attempt to influence the prosecution witnesses who all live in the same district. The Court allowed the appeal, accepting the submissions of the State and also noting that the High Court had failed to apply its mind and had not provided cogent reasons for the order, while the Sessions Court had rejected the application for bail after recording detailed reasons. The Court relied on Prasanta Kumar Sarkar (2010) 14 SCC 496 wherein the Court has laid down the principles for examining the correctness of the orders granting bail. The Court also cited Mahipal v. Rajesh Kumar and Anr. (2020) 2 SCC 188 to state that the exercise of appellate jurisdiction to adjudicate the correctness of bail order are not restricted by the principles for cancellation of bail. The Court also noted that the High Court had misinterpreted its order in In Re: Contagion of Covid-19 virus in prisons. The Court clarified that it had directed the States to form High Powered Committees to consider the release of prisoners accused of minor offences on parole or interim bail for an appropriate period and did not direct indiscriminate release of persons accused of heinous crimes like the respondent. [Key Words: principles for examining the correctness of the orders granting bail, Bail, Section 302 IPC] [Coram: Indira Banerjee, J., Krishna Murari, J.]

In Archana Rana v. State of Uttar Pradesh, an appeal was filed seeking the quashing of chargesheet and proceedings under Sections 419, 420, 323, 504, and 506, IPC. The Court reiterated that for an offence under Section 420 to be constituted, the accused must have committed the offence of cheating under Section 415 and the person cheated must be dishonestly induced to deliver property or to make, alter, or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. The Court held that where the allegations were made against the appellant’s husband and not her, the proceedings ought to be quashed. [Key Words: Section 482 CrPC, quashing of proceedings, FIR, Prof RK Vijayasarathy v. Sudha Seetharam (2019) 16 SCC 739][Coram: DY Chandrachud, J., MR Shah, J.]

In Sonu @ Subhash Kumar v. State of Uttar Pradesh, proceedings were initiated under Section 376, IPC. The Court, relying on Pramod Suryabhan Pawar, the Court held that where the original promise to marry was not false at the inception, proceedings under Section 376, IPC were liable to be quashed. [Key Words: Section 482, 164 CrPC, Section 376 IPC, Discharge, application for bail, Pramod Suryabhan Pawar v. State of Maharashtra (2019) 9 SCC 608][Coram: DY Chandrachud, J., MR Shah, J.]

In Patricia Mukhim v. State of Meghalaya, the dispute pertained to a Facebook by a journalist about an assault on some youth. The Court held that the intention to cause disorder or incite people to violence is sine qua non of the offence under Section 153A, IPC. The Court also held that the prosecution had to prove the existence of mens rea in order to succeed. The Court clarified that strongly worded or isolated passages could not be used to prove a charge under Section 153A and that the whole piece must be looked at. Relying on Bilal Ahmed Kaloo and Ramesh v Union of India (1988) 1 SCC 668, the Court held that merely inciting feelings of one community or group without reference to another community would not attract Section 153A and that the alleged criminal speech should be judged from the standards of the reasonable, strong-minded, firm and courageous man. The Court relied on Pravasi Bhalai Sangathan v. Union of India (2014) 11 SCC 477 and held that the interpretation of the word ‘hatred’ must be to interpret the speech objectively and ask whether a reasonable person aware of the context would view the speech as exposing a protected group to hatred. The second test would be to restrict interpretation of the term to extreme manifestations of detestation and vilification. The third test would be to focus on the effect of the speech at issue. Based on these principles, the Court ruled that there was no intention on the part of the appellant to incite violence and thus the ingredients of Sections 153A and 505(1)(c) were not made out. [Key Words: Section 482 CrPC, quashing of FIR, Sections 153A, 500, 505(1)(c) IPC, Facebook post, Article 19(1)(a) of the Constitution, meticulous process of inferential reasoning, Bilal Ahmed Kaloo v. State of AP (1997) 7 SCC 431, the man on the top of a Clapham omnibus][Coram: L Nageswara Rao, J., S Ravindra Bhat, J.]

In Dhirendra Singh @ Pappu v. State of Jharkhand, the Court held that merely because the weapon used to commit the crime was not seized is not a ground to acquit the accused when his presence, active participation, and use of firearm by him were established and proved. [Key Words: Sections 302, 34, 307 IPC, Section 27 Arms Act][Coram: DY Chandrachud, J., MR Shah, J.]

In Rahul vs State of Haryana, the appellant challenged confirmation of his conviction under Section 302 read with Section, 34 IPC and under Section 25 (1B) (a) of the Arms Act, 1959. The Court confirmed the conviction and sentence noting that the prosecution had satisfied the tests laid down in Sanjay Thakran (2007) 3 SCC 755 to be applied in cases resting on circumstantial evidence. The Court reiterated the well-settled proposition as stated in its judgment in Hari Obula Reddy (1981) 3 SCC 675 to state that interested testimony can be considered provided that it is corroborated with other evidence on record. The Court was of the view that the prosecution had proven the guilt of the appellant beyond reasonable evidence by leading cogent evidence. [Key Words: Section 302 IPC, circumstantial evidence, interested testimony] [Coram: Ashok Bhusan, J., R. Subhash Reddy, J.]

In Naveen Singh vs the State of Uttar Pradesh & Anr., the appellant was aggrieved by the order of the High Court granting bail to the respondent no.2-accused. The accused was alleged to have tampered with records of the court resulting in his acquittal in a case where he was accused under Section 307, 504 and 506 of the IPC. The District Judge directed the record keeper to file a complaint against the accused, and an FIR under Section 420, 467, 468, 471, 120 of the IPC was registered against him. After investigation, the police also filed a chargesheet against the accused. Considering the bail application moved by the accused, the High Court noted that since the chargesheet had already been filed and the guilt of the accused was a matter of trial, and that since the accused had undergone imprisonment of 18 months and granted bail to the accused. Aggrieved, the original informant challenged the order granting bail, which was also supported by the State. The Court noted that the High Court erred in noting that the maximum punishment under 467 read with 471 of the IPC was imprisonment for life. The Court noted that even charges have been framed against the accused, thus a prima facie case was found against the accused. The Court noted that the High Court had not adverted to the seriousness of the offences alleged. The Court also noted that in such a case where tampering of court documents is alleged, the locus of the appellant is not important. The Court tallowed the appeal and set aside the order of the High Court granting bail and directed the accused to surrender forthwith. [Key words: forgery, tampering of court record, Section 420, 467, 468, 471, 120 of the IPC, bail, cancellation of bail, gravity of offence] [Coram: D.Y. Chandrachud, J., M. R. Shah, J.]

In Sartaj Singh vs the State of Haryana, the appellant was the original informant who alleged that he was attacked by a group of men including the private respondents in the matter. Based on his statement naming the accused, including the private respondents, an FIR for offences under Section 149, 341, 323, 324,307 and 506 of the IPC was filed. Thereafter, the chargesheet was filed against several accused but not the private respondents. During the course of the trial, after examination of the appellant as PW-1 and several other witnesses, the appellant filed an application under Section 319, CrPC for summoning of the private respondents. The trial court after examining the material on record, allowed the application and summoned the private witnesses. Aggrieved, the private respondents moved revision petitions against the order of the trial court before the High Court. The High Court by the impugned order set aside the order under Section 319, CrPC, which was challenged before the Supreme Court. The Court referred to its detailed judgment in Hardeep Singh (2014) 3 SCC 92 to reiterate that the Court can exercise the power under Section 319, CrPC on the basis of the statement made in examination in chief and need not wait till such statement is cross-examined, provided that on the basis of the material before the Court. including the statement made in examination in chief, it appears that such person can be tried along with the accused facing trial. The Court noted that the High Court had erred in appreciating the deposition of the eyewitness at this stage as what is required to be considered was whether there was a prima facie case and not whether on the basis of the material the proposed accused is likely to be convicted. The Court allowed the petition and set aside the judgment and order of the High Court. [Key Words: Section 319 CrPC, power and ambit of, meaning of evidence under Section 319 CrPC] [Coram: D.Y. Chandrachud, J., M.R. Shah, J.]

In The State represented by the Deputy Superintendent of Police v. Tr N Seenivasagan, the Court held that if it appeared to the Court that the evidence of a person who is sought to be recalled is essential to the just decision of a case, the Court could do so under Section 311, CrPC. Relying on Manju Devi v. State of Rajasthan (2019) 6 SCC 203, the Court reiterated that an application under Section 311, CrPC could not be rejected solely on the ground that the case had been pending for an inordinate amount of time and allowed the application of the prosecution seeking recall of two witnesses. [Key Words: Sections 7, 12, 13(2), 13(1)(d) Prevention of Corruption Act 1988, Section 173(2), 311 CrPC, ][Coram: DY Chandrachud, J., MR Shah, J.]

In Kapil Agarwal and others v. Sanjay Sharma and others, the Court held that in a complaint case, merely because on the same facts and allegations a complaint has been filed, there is no bar on lodging an FIR with the police station. However, if it is found that the subsequent FIR is an abuse of the process of law or has been lodged to harass the accused, it can be quashed in exercise of powers under Article 226 of the Constitution or in the exercise of powers under Section 482, CrPC. The Court held that on facts, the impugned FIR was an abuse of process of law and was filed with a view to harass the appellants, and thus allowed the appeal and quashed the FIR. [Key Words: Article 226 Constitution of India, Sections 420, 406 IPC, Section 156(3), 210 CrPC, ][Coram: MR Shah, J., DY Chandrachud, J.]

In Krishna Lal Chawla and Ors. v. State of UP and Anr., the question, inter alia, before the Court was to consider the validity of a private complaint filed after an earlier information was also filed as NCR No. 158/2012 by the same party, against the same accused, in relation to the same incident. This was done after a chargesheet had already been filed after taking due permission of the Magistrate. The Court held that the Trial Judge has a duty under the Constitution and the CrPC, to identify and dispose of frivolous litigation at an early stage by exercising, substantially and to the fullest extent, the powers conferred on him, and should not have issued process against the appellants on the basis of such a private complaint. The Court used its powers under Article 142 to quash all the litigations between the parties arising out of the incident. [Key Words: private complaint, issue of process, curbing frivolous litigation, non-cognizable offence] [Coram: Mohan M. Shantanagoudar, J., R. Subhash Reddy J.]

In Union of India v. Prateek Shukla, the appeal arose from a judgment of a Single Judge granting bail to the respondent, who was alleged to be involved in the commission of offences punishable under 8, 9A, 25A, 23 and 29 of the Narcotic Drugs and Psychotropic Substances Act. 1985 (“NDPS”). The High Court had not commented on the merits of the matter and had only granted bail considering the clean past of the Respondent and by stating that given the respondent’s level of education, he might not commit any offence in the future as well. The Court allowed the Appeal by stating that the High Court has misapplied the law to the facts in arriving at a decision for the grant of bail to the Respondent as it had not considered the legal norms to be considered under Section 37 of the NDPS Act. The Court further stated that there was no application of mind by the High Court as the assumption that an educated person “may not commit any offence” is an extraneous circumstance which ought not to have weighed with the High Court in the grant of bail for an offence under the NDPS Act. [Key Words: Section 8, 9A, 25A, 23 and 29 NDPS Act, bail, cancellation of bail, legal norms under Section 37 NDPS Act, clean antecedents, level of education] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

In V.N. Patil v. K. Niranjan Kumar and Ors., the daughter of the appellant had died an unnatural death while residing with the Respondents who were facing trial under Sections 498A, 304B, 302 read with Section 34, IPC and under Sections 4 and 6 of the Dowry Prohibition Act, 1961. The trial itself was at the end of its closure when an application was filed by the Public Prosecutor under Section 173(5) read with Section 311 of CrPC for summoning the witnesses along with the concerned documents to adduce their evidence in connection with the second post-mortem conducted on the body of the deceased. The order allowing the application by the Trial Court was set aside by the High Court. The Supreme Court set aside the order of the High Court by stating that High Court had not adverted to the factual matrix noticed by the Trial Judge and set aside the same, summarily, without assigning any reasons, which could not facilitate the Court to understand the reason behind such reversal. [Key Words: Sections 498A, 304B, 302 read with Section 34 IPC, Sections 4 and 6 of the Dowry Prohibition Act, 196, Section 173(5) read with Section 311 of Code of Criminal Procedure, 1973, second post- mortem] [Coram: Indu Malhotra, J., Ajay Rastogi J.]

In Shivaji Chintappa Patil v. State of Maharashtra, the Bench held that in view of the facts that there were no marks on the body suggesting violence o struggle, the medical expert ruling out possibility of suicidal death, the post-mortem report stating the cause of death as ‘asphyxia due to hanging’, the Trial Court as well as the High Court erred in holding that the death was homicidal. The Bench reiterated some important laws:

i. On the interplay of the “last seen theory” and Section 106 of the Indian Evidence Act, the Bench held that it was settled that Section 106 did not “absolve the prosecution of discharging its primary burden of proving the prosecution case beyond reasonable doubt” and it was only when the “prosecution has led evidence which, if believed, will sustain a conviction, or which makes out a prima facie case, that the question arises of considering facts of which the burden of proof would lie upon the accused.

ii. Under Section 313, CrPC, “false explanation or non-explanation can only be used as an additional circumstance, when the prosecution has proved the chain of circumstances leading to no other conclusion than the guilt of the accused” and the same “…cannot be used as a link to complete the chain.”

iii. Though in a case of direct evidence, the motive would not be relevant, in a case of circumstantial evidence, motive plays an important link to complete the chain of circumstances.

[Key Words: circumstantial evidence] [Coram: RF Nariman, J., B.R. Gavai, J.]

In Priti Saraf and Anr. v. State of NCT of Delhi & Anr., the Bench reversed the decision of the High Court where the latter had exercised its powers under Section 482, CrPC. The Bench held that even though the facts narrated in the complaint/FIR/charge-sheet revealed a commercial transaction, but that was no reason for holding that the offence of cheating was not made out especially when “many a times, offence of cheating is committed in the course of commercial transactions”. [Key Words: Bhajan Lal case, civil case] [Coram: Indu Malhotra, J., Ajay Rastogi, J.]

In Girraj v. Kiranpal and Anr. Etc., a batch of five petitions were filed challenging the granting of bail to 5 Respondent- Accused by the Allahabad High Court in relation to offences under Sections 147, 148, 149, 307, 323, 326, 341 and 506 of the Indian Penal Code 1860. One co-accused, Narendra, who was not a party in the present case was granted bail by the High Court in Criminal Miscellaneous Bail Application No. 14060 of 2020 by an order dated August 5, 2020. All the respondents accused had relied on the same and were granted bail. However, vide order dated 11.12.2020, the order granting bail to Narendra was set aside by the Supreme Court. The Court held that since the only basis for claiming bail in the present batch of cases was by placing reliance on the order granting bail to the co-accused Narendra, the same had to be cancelled. However, in order to ensure fairness, the Court allowed them an opportunity to apply for bail before the High Court, after surrendering. [Key Words: bail, Sections 147, 148, 149, 307, 323, 326, 341 and 506 IPC, cancellation, surrender] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

In State of Rajasthan v. Love Kush Meena, the question before the Court was whether an acquittal based on the benefit of doubt given to the Respondent charged under Sections 302, 323, 341 read with Section 34 of the Indian Penal Code [IPC] is a bar for the respondent to join as a constable in the Rajasthan Police service. The Court allowed the appeal by holding that the mere fact of an acquittal would not suffice, and it would depend on whether it is a clean acquittal based on total absence of evidence or only on the basis of a benefit of doubt. The Court relied on its judgment in Avtar Singh (2016) 8 SCC 471 to state that where in respect of a heinous or serious nature of crime the acquittal is based purely on the basis of benefit of reasonable doubt, the same would not make the Respondent eligible for appointment. [Key Words: acquittal based on benefit of reasonable doubt, Sections 302,323,341/34 IPC, Rajasthan Police service] [Coram: SK Kaul, J., R. Subhash Reddy J.]

In Nagabhushan v. State of Karnataka, the challenge was to the order of conviction passed by the High Court of Karnataka, reversing the order of acquittal passed by the Trial Court. The Appellant was charged under Section 498A and Section 302 read with Section 34 of the IPC. The Appellant argued inter alia that there were material contradictions in the two dying declarations made by the deceased and the second one should not have been relied upon by the High Court. Dismissing the appeal, the Court held that the High Court had given cogent reasons for relying on the second dying declaration in light of the medical evidence and injuries sustained by the deceased, as evident from the post-mortem report. The Court further held that after pouring kerosene on the deceased and thereafter setting her ablaze, merely because the Accused might have tried to extinguish the fire will not take the case out of the clutches of clause fourthly of Section 300 of the IPC. [Key Words: multiple dying declarations, contradiction, Section 498A, 302 read with Section 34 IPC, medical evidence, corroboration of post-mortem report] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

In Rajendra @ Rajappa & Ors. v. State of Karnataka, the Bench held that:

1. The Supreme Court has circumscribed the scope of appeal under Section 378, CrPC where appeal is preferred against acquittal recorded by trial courts, and that unless the view taken by the trial court was not a possible view, normally the High Court should not interfere with the acquittal recorded by the trial court. Thus, there could not be any “straightjacket formula to apply readily for the cases in appeals arising out of acquittal recorded by the trial court”.

2. Only material contradictions could be a ground to discredit witnesses.

3. In the case before it, the intestine of the deceased was full of faecal matter, proving that death must have occurred between 3 to 12 hours prior to the postmortem examination- supporting the case of the prosecution. Thus, reliance on ocular testimony stating that there was undigested food in the stomach could be disregarded.

[Key Words: family members, close relatives, rustic, murder] [Coram: Sanjay Kishan Kaul, J., R. Subhash Reddy, J.]

In State of Uttar Pradesh v. Jail Superintendent (Ropar) & Ors., the Bench held as follows:

i. The petition before it under Article 32 of the Constitution was maintainable under Section 406, CrPC as the Uttar Pradesh State Government was certainly a “party interested” as per Section 406, CrPC.

ii. The relief sought in the accompanying petition could not be granted under Section 406, CrPC as the case was at the stage of investigation in Punjab.

iii. The Bench was invoking its powers under Article 142 to direct the Punjab Authorities to transfer the accused/Respondent No. 3 (Mukhtar Ansari) to Uttar Pradesh.

iv. The concerned Jail Superintendent of Uttar Pradesh was instructed to extend all medical facilities to the accused as per the Jail Manual.

Though not ruling on the contention by the Petitioner that the accused Mukhtar Ansari had deliberately conspired to have a FIR lodged through his proxies in order to attract Punjab’s jurisdiction, the Bench found it suspicious that the accused had not applied for default bail. It noted that there was 10 cases pending against the accused in Uttar Pradesh and the UP courts had already issued production warrants on 26 occasions, all of which were rejected by Punjab on “trivial” medical grounds. [Key Words: Section 267, 269 CrPC, Special Court for MPs/MLAs, The Transfer of Prisoners Act 1950] [Coram: Ashok Bhushan, J., R. Subhash Reddy, J.]

In Bhima Razu Prasad v. State, rep. by Deputy Superintendent of Police, CBI, the primary question was whether Section 195(1)(b)(i), CrPC bars lodging of case by the investigating agency under Section 193, IPC in respect of offence of giving false evidence which is committed at the stage of the investigation, prior to production of such evidence before the Trial Court. The Court relied, inter alia, upon Sachida Nand Singh (1998) 2 SCC 493, as affirmed by the Constitution Bench in Iqbal Singh Marwah (2005) 4 SCC 370, which held that Section 195(1)(b)(ii) read with Section 340(1), CrPC will only apply in respect of offences which are committed during the time when the document concerned was custodia legis or in the custody of the court. Holding that the provision in Section 195(1)(b)(i) was analogous to Section 195(1)(b)(ii), the Court held that Section 195(1)(b)(i) will not bar prosecution by the investigating agency for the offence punishable under Section 193 IPC which is committed during the stage of investigation. [Key Words: custodia legis, false evidence, perjury, offences against the administration of justice, reasonably close nexus] [Coram: MM Shantanagoudar, J., Vineet Saran, J.]

In Satpal vs. State of Haryana, the Court dismissed the appellant’s appeal against the judgement and order of the High Court confirming the appellant’s conviction under Section 302 of the IPC and sentence of rigorous imprisonment for life and a fine of Rs. 10,000/-. The Court held that the trial court and the High Court had rightly appreciated the evidence on record, including the dying declaration of the victim before a Judicial Magistrate, that the appellant had poured kerosene over her and set her on fire. The Court stated that merely because the deceased’s relatives were present at the Hospital at the time of recording of the dying declaration, it could not be inferred that such a declaration was tutored. The Court also took into consideration that although the appellant stated in his statement under 313, CrPC that several people from the village came to house at the time of the incident, no such person was examined in support of the defense. [Key Words: Dying Declaration, admissibility, Sectio 302 IPC] [Coram: Ashok Bhusan, J., R. Subash Reddy, J.]

In Ramesh Alias Dapinder Singh v. State of Himachal Pradesh, the appellant was acquitted by the Bench under Section 302, IPC as the overt acts were attributed to the principal accused and not the appellant i.e. the person accompanying the principal accused. [Key Words: vicarious criminal liability, Section 34 IPC, common intention, “in furtherance”] [Coram: UU Lalit, J., KM Joseph, J.]

In Swaati Nirkhi & Ors. V. State (NCT of Delhi) & Ors., the Court held that as most of the prosecution witnesses were situated in Delhi, the petition seeking transfer to Allahabad could not be allowed. [Key Words: Transfer Petition, Section 406 CRPC, Sections 34, 389 IPC][Coram: Ashok Bhushan, J., Indu Malhotra, J.]

In Naresh Kumar v. Kalawati, an appeal had been filed challenging the acquittal of the respondents in charges under Sections 498A and 302 read with Section 34, IPC. The Court reiterated that though its discretionary jurisdiction under Article 136 of the Constitution was vide, it would not interfere with concurrent findings of facts arrived at by two courts, unless there was a complete misappreciation of evidence, gross perversity in arriving at the findings, causing serious miscarriage of justice. The Court held that while a dying declaration can form the basis of conviction if made voluntarily and inspires confidence, in this case, the deceased’s dying declaration had no reference to either the respondent or dowry demand, was not signed by anyone, the doctor to whom the statement was made was not examined, as the witness who recorded the declaration did not state that the deceased was in a fit state of mind. Therefore, the Court held that the veracity and truthfulness of the dying declaration remained suspect and the probable defence could not be rejected. [Key Words: appeal challenging acquittal, dowry death, evidence, dying declaration][Coram: Navin Sinha, J., Krishna Murari, J.]

In Sumeti Vij v. M/s Paramount Tech Fab Industries, the Court ruled that the standard of proof for rebutting the presumption under Section 139 of the Negotiable Instruments Act was ‘preponderance of probabilities’ as was held in Rangappa v. Sri Mohan (2010) 11 SCC 441, that proceedings under Section 138 NI Act are quasi criminal in nature. In this case, as the complainant was able to prove that the appellant had ordered goods and that such goods were delivered and that the cheque was issued in lieu of this transaction, and that the appellant failed to record evidence to rebut the presumption under Section 139. Therefore, the Court did not interfere with the High Court’s finding that the appellant was guilty under Section 138 NI Act. [Key Words: Section 138 Negotiable Instruments Act 1881, Section 313 CrPC, ][Coram: Indu Malhotra, J., Rastogi, J.]

In Aparna Bhat & Ors. v. State of Madhya Pradesh & Anr., the Bench criticised the Madhya Pradesh High Court’s Single Judge for granting bail to a man accused of sexual assault in lieu of accepting a rakhi from the survivor. The Bench held that “…using rakhi tying as a condition for bail, transforms a molester into a brother, by a judicial mandate” which was “wholly unacceptable”. The Bench passed a slew of directions for all courts in the country which are as follows:

a) Bail conditions should not mandate, require, or permit contact between the accused and the victim. Such conditions should seek to protect the complainant from any further harassment by the accused;

b) Where circumstances exist for the court to believe that there might be a potential threat of harassment of the victim, or upon apprehension expressed, after calling for reports from the police, the nature of protection shall be separately considered and appropriate order made, in addition to a direction to the accused not to make any contact with the victim;

c) In all cases where bail is granted, the complainant should immediately be informed that the accused has been granted bail and copy of the bail order made over to him/her within two days;

d) Bail conditions and orders should avoid reflecting stereotypical or patriarchal notions about women and their place in society, and must strictly be in accordance with the requirements of the Cr. PC. In other words, discussion about the dress, behaviour, or past “conduct” or “morals” of the prosecutrix, should not enter the verdict granting bail;

e) The courts while adjudicating cases involving gender related crimes, should not suggest or entertain any notions (or encourage any steps) towards compromises between the prosecutrix and the accused to get married, suggest or mandate mediation between the accused and the survivor, or any form of compromise as it is beyond their powers and jurisdiction;

f) Sensitivity should be displayed at all times by judges, who should ensure that there is no traumatization of the prosecutrix, during the proceedings, or anything said during the arguments, and

g) Judges especially should not use any words, spoken or written, that would undermine or shake the confidence of the survivor in the fairness or impartiality of the court.

The Bench cautioned judges from following certain stereotypes about women when passing orders. [Key Words: Canadian Commentaries on Judicial Conduct, Henrik Ibsen, “irrelevant, freaky or illegal bail conditions”, “such other conditions court considers necessary” and “as it may think fit”, compromise between the survivor and accused, gender equality and gender sensitization, Bangkok General Guidance for Judges on Applying a Gender Perspective in South East Asia, sexual violence, CEDAW, DEVAW, judicial stereotyping] [Coram: A.M. Khanwilkar, J., S. Ravindra Bhat, J.]

Family Law

In Aman Lohia v. Kiran Lohia, the Court held that an application filed by the respondent under Section 151, CPC could not be regarded as a substantive petition required to be filed under Section 25 of the Guardians and Wards Act 1890. The Court held that the Family Court does not have plenary powers to waive mandatory procedural requirements and that the nature of inquiry before the Family Court is adjudicatory. The Court held that the Family Court was required to inform the appellant about making alternative arrangements where his counsel was discharged. Where there was no mention about the service of various orders, the Court held that there could be no legal presumption that the appellant had abandoned proceedings. [Key Words: guardianship and custody of minor child, CPC, Section 7(g) of the Family Courts Act 1984 ][Coram: AM Khanwilkar, J., BR Gavai. J., Krishna Murari, J.]

Land Acquisition

In Punalur Paper Mills Ltd. v. West Bengal Mineral Development and Trading Corporation Ltd., the Court affirmed the judgment of the Division Bench of the High Court and held that from the date of insertion of Section 10B in the West Bengal Premises Requisition and Control (Temporary Provisions) Act 1947, the State was on notice that the premises would have to be released before 15.08.1998 and that the state had 11.5 years to act and acquire the premises. Therefore, the State issuing a notification under Section 4 of the Land Acquisition Act without invoking the urgency provision and after the expiry of the requisition period would not wash away the lethargy of the State in initiating acquisition proceedings. The Court also held that the compensation for illegal occupation of premises cannot be assessed by the District Judge under Section 11(1)(b) of the West Bengal Act as the section refers to compensation during the period of requisition and not after the property continues to remain with the State without any authority of law after the expiry of the requisition period. [Key Words: West Bengal Premises Requisition and Control (Temporary Provisions) Act 1947, Land Acquisition Act 1894][Coram: RF Nariman, J., BR Gavai, J.]

In UP Awas Evam Vikash Parishad vs Asha Ram (D) The LRs & Ors., the Court considered 51 appeals in all wherein the High Court by the impugned judgment had determined the compensation of Rs. 297 per sq. yard to be paid to the respondents. The proceedings arose out of land acquired by the petitioner vide a notification dated 26.06.1982 under Section 28 of the U.P Awas Evam Vikas Parishad Adhiniyam 1965 (the “Act”) and subsequently under Section 32 of the Act. In 1989, the Special Land Acquisition Officer determined the compensation of Rs. 50 per sq. yard and Rs. 35 per sq. yard for parcels larger than 8 acres. Aggrieved the respondents sought a Reference for determination of the market value. The Additional District Judge awarded a compensation of Rs.120/- per sq. yard. Dissatisfied with the compensation the respondents appealed before the High Court. The High Court confirmed the compensation. In the SLP against the judgment of the High Court, the Court remitted the matters back to the High Court with a direction to consider additional documents filed by the respondents. The High Court reconsidered the matters and awarded a sum of Rs. 297/- per sq. yard. Hearing the appeals against the common judgment, the Court referred to its judgments including, Smt. Tribeni Devi & Ors. (1972) 1 SCC 480 to list the methods of valuation to be adopted to ascertain the market value of land, including opinion of experts and price paid by bonafide purchasers of lands adjacent to lands acquired at a time reasonably close to the notification of acquisition. The Court noted that the respondents had failed to adduce the additional documents before the High Court and moreover, some of sale instances referred to were much later in time and could not be considered. The Court also noted that there was nothing on record to show the potentiality of the lands acquired or that there was industrial development in the area. The Court observed that the Reference Court had determined the compensation after taking relevant factors into consideration including the size of the lands being acquired. The Court allowed the appeals and restored the compensation awarded by the Reference Court at Rs. 120 per sq. yard. [Key Words: U.P Awas Evam Vikas Parishad Adhiniyam 1965, Land acquisition, determination of market value, compensation,] [Coram: U.U. Lalit, J., Hemant Gupta, J., S. Ravindra Bhat, J.]

Service Law

In Jagmohan Singh Dhillon Etc. Etc. v. Satwant Singh & Ors., the Bench upheld the Division Bench’s judgment and disagreed with the Single Judge as the appellant was found to be not entitled to claim the benefit of military service for the purpose of seniority for appointment to the Punjab Civil Service (Executive Branch) since the benefit of Rule 4(1) of 1972 Rules was not continued in 1982 Rules, and that the appellant’s seniority was to be governed by the statutory rules applicable after the enforcement of the 1982 Rules. This was so because seniority and appointment were completely different concepts. [Key Words: Article 309 of the Constitution, seniority] [Coram: Ashok Bhushan, J., S. Abdul Nazeer, J., Hemant Gupta, J.]

In Sachin Kumar & Ors.vs Delhi Subordinate Service Selection Board (DSSSB) & Ors., a batch of 12 appeals arose from the judgment and order of the High Court upholding the judgment and order of the Central Administrative Tribunal, (“Tribunal”) by which the Tribunal had set aside the order DSSSB and the Government of the National Capital Territory of Delhi (“GNCTD”) cancelling the recruitment process conducted for the post of Head Clerk but limited the benefit of the judgment only to the 6 applicants who had approached the Tribunal (while requiring them to retake the tier II exam). Against the judgment of the High Court, DSSSB and the GNCTD filed appeal seeking to uphold their order, whereas other appellants included other candidates who were otherwise successful but were excluded for not having approached the Tribunal and the 6 applicants who were aggrieved by the requirement to sit for the tier II exam. The issue arose out the recruitment conducted by DSSSB for the post of Head Clerk, for which it had issued advertisement in 2009 attracting over 60 thousand applicants, but conducted the tier I examination only in 2014, for which about 8214 people appeared, of which 2415 candidates wrote the tier II examination. During this time, considering complaints of irregularity in the conduct of the exam, GNCTD constituted a committee, which pointed out several issues in the process including delay in conduct of the exam, issuing admit cards only through online mode when that was not specified in the advertisement, lack of randomization in seating arrangement leading to close relatives being seated in the same rooms, that over 50% of those appearing in the tier the court exam were from only 22 pin codes out of 609 pin codes from which applications were sent. Thereafter, GNCTD further directed DSSSB to verify the credentials of the candidates within the zone of consideration. Upon verification, irregularity was discovered with respect to 9 candidates out 290, including possibility of impersonation. Considering the circumstances, GNCTD recommended the cancellation of the selection process after providing suitable age relaxation to eligible candidates in the fresh exams, leading the DSSSB to cancel the selection process. The Court referred to several judgments including Chairman, Railway Recruitment Board (2010) 6 SCC 614 and Kalamani 2019 SCC Online 1002 to emphasize that a recruiting authority is entitled to take a bona fide view based on the material before it that the entire process stands vitiated necessitating a fresh selection process and such a considered decision should not be lightly interfered in exercise of powers of judicial review unless such a decision fails tests of reasonableness or proportionality. The Court considering the reports of the committees pointing to various lacunae in the conduct of the selection process, held that DSSSB and GNCTD were entitled to cancel the selection process. The Court thus allowed DSSSB’ and GNCTD’s appeal setting aside the judgments of the High Court and the Tribunal. The Court dismissed the appeals of the candidates. [Key Words: Recruitment Process, Article 14, Article 16, Sanctity of recruitment process, irregularity, corrupt practices, Cancellation of entire process when permissible] [Coram: D.Y. Chandrachud, J., M.R. Shah, J.]

In Chairman Administrative Committee UP Milk Union & Dairy Federation Centralized Services v. Jagpal Singh, the issue related to an order where the respondent was ordered to be reverted to the minimum pay scale and the period of suspension was to be considered as a period spent by the employee in service. The respondent employee was penalized for having a hidden chamber of milk In the tanker which caused financial losses to the Federation. The Court ruled that Section 122 of the Act and Rule 389-A of the Rules empower the State to constitute an authority for recruitment, training and disciplinary control of the employees of Co-Operative Societies. Under Rule 15 of the Dairy Service Rules, the Chairman of the Administrative Committee was the Appointing and Disciplinary Authority. The Court held that Rule 15 does not contemplate the Chairman to have prior concurrence of any authority. [Key Words: Uttar Pradesh Co-Operative Societies Act 1965, Uttar Pradesh Co-Operative Societies Rules 1968, Uttar Pradesh Co-operative Dairy Federation and Milk Union Centralised Service Rules 1984, Chandra Pal Singh v. State of UP Writ-A 45263 of 2011, ][Coram: UU Lalit, J., Hemant Gupta, J., S Ravindra Bhat, J.]

In University of Delhi v. Delhi University Contract Employees Union, where contract employees sought regularization in terms of paragraph 53 of the Supreme Court’s decision in Umadevi (2006) 4 SCC 1, the Court ruled that the High Court’s decision to reject was correct as the judgment in Umadevi applied to employees who had put in more than 10 years of service while the employees in this case had only put in 3-4 years of service. However, the Court ruled that while they could not avail the benefit of regularization, they must be given a window of opportunity to compete with available taken through public advertisement and agreed with the modality proposed by the University. [Key Words: UGC ban on filling up of non-teaching posts, Recruitment Rules (Non-Teaching Employees) 2008][Coram: UU Lalit, J., KM Joseph, J.]

In Suresh Kumar v. State of Haryana & Ors., the Bench adopted the purposive rule of interpretation in holding that as per the Punjab Police Rules, 1934, the State could promote sub-inspectors to inspectors if the former had eight years’ approved service to their credit, atleast 5 years being as sub-inspectors. This was because “…for promotion to Sub-Inspector to selection grade eight years’ approved service was contemplated which was with intent that sufficient experience is gained by Police personnel to be considered for promotion to Inspector who is to man a Police Station and has to discharge other important functions.” [Key Words: direct appointment, selection grades, promotional scale, Rules 14.13, 13.14 and 13.15 of Punjab Police Rules 1934 [Coram: Ashok Bhushan, J., R. Subhash Reddy, J.]

In Union of India v. P. Balasubrahmanayam, the respondent had been issued a charge memo by the Disciplinary Authority, Department of Posts under Rule 14 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965 which related to both procedural lapses in discharge of his duties as well as alleged illegal gratification by way of bribes. An adverse report was issued against the Respondent on culmination of the departmental proceedings where no charges of bribery were made out against the respondent but all charges relating to procedural lapses were held to have been proved. The Central Administrative Tribunal, Hyderabad(“CAT”) held the conclusion to be just and proper, but reduced the penalty imposed on the respondent. The High Court set aside the order of the CAT and directed the reinstatement of the respondent by holding that since the charges had a vigilance angle, the same could not been issued without prior approval of the Chief Vigilance Officer as mandated by a circular dated 18.01.2005 of the Department of Posts, Ministry of Communication and I.T. The Supreme Court set aside the order passed by the High Court by stating that since negligence of the respondent in performing his duties had been proved, it was not appropriate for the High Court to give the respondent a clean chit as a consequence of the Circular not being followed, as the same would not have been done if the charges had only been pertaining to procedural lapses and not bribery. [Key Words: Rule 14 of the Central Civil Services (Classification, Control and Appeal) Rules 1965, Central Vigilance Officer, disciplinary authority, illegal gratification, procedural lapses] [Coram: SK Kaul, J., Hrishikesh Roy J.]

In The State of Tamil Nadu v. K Shobana, the Court held that the word ‘first’ in Section 27(F) of the TN Government Servants (Conditions of Service) Act did not pertain to the general candidates’ list/ vacancies and that Section 27 would apply only when the reservation principle began, after filing up the seats on merit. The Court held that in the given facts, first the merit list was to be filled in, then the backlog vacancies of the particular reserved category to be thereafter filled in ‘first’, and then the remaining reserved vacancies for the current year to be filled thereafter. [Key Words: direct recruitment to the post of Post Graduate Assistants and Physical Education Directors, Grade – I, reservation for Most Backward Class (MBC) and Denotified Community (DNC) candidates, Section 27(f) of Tamil Nadu Government Servants (Conditions of Service) Act 2016][Coram: SK Kaul, J., Dinesh Maheshwari, J., Hrishikesh Roy, J.]

Constitutional Law

In Lt Col Nitisha v. Union of India, the Court held that the process of evaluating WSSCOs for the grant of PC was by a belated application of general policy which did not redress the harms of gendered discrimination that the Court had identified in Babita Puniya (2020) 7 SCC 469 and such a belated and formal application caused indirect discrimination. The Court also held that the benchmarking criterion of comparing female candidates with the last male counterparts from the corresponding batch was required only when the number of eligible female officers exceeded the cap of 250 officers who would be granted PC annually. Importantly, the Court held that it has to look at the effect of the concerned criteria, not at the intent underlying its adoption. Since such a pattern of evaluation would exclude from the grant of PC on grounds beyond their control, it was indirectly discriminatory against WSSCOs. The Court ruled that all women officers who have fulfilled the cut-off grade of 60 per cent in the Special No 5 Selection Board in September 2020 shall be entitled to the grant of PC, subject to their meeting the medical criteria. For the purpose of determining medical criteria, it shall be at the time of 5th year of service or at 10th year of service as the case may be. [Key Words: systemic discrimination, substantive equality, indirect discrimination, competitive merit][Coram: DY Chandrachud, J., MR Shah, J.]

In Charansingh v. State of Maharashtra, the challenge arose from the order passed by the High Court which had dismissed a writ petition challenging a notice issued by the Police Inspector calling for the personal presence of the appellant before the investigating officer of the Anti Corruption Bureau, Nagpur to give his statement in an open enquiry in respect of the property owned by him. It was argued by the appellant that such notice had no statutory force and was also hit by Article 20 (3) and 21 of the Constitution of India. The question before the court was to assess whether such an enquiry at the pre-FIR stage would be legal and permissible. The Court relied on Lalita Kumari (2014) 2 SCC 1 and P Sirajuddin (1970) 1 SCC 595 to hold that an enquiry at pre-FIR stage was permissible and even desirable, particularly in cases where the allegations are of misconduct of corrupt practice in acquiring the assets/properties. The Court further held that such a preliminary enquiry would be permissible only to ascertain the disclosure of cognizable offences, cannot be a fishing or roving enquiry, cannot be treated as a confessional statement but only as an opportunity to the appellant to clarify the allegations made against him. [Key Words: pre-FIR enquiry, preliminary enquiry, open enquiry, scope and extent, personal presence, corrupt practice] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

In Union Public Service Commission v. Bibhu Prasad Sarangi, the Supreme Court criticized the High Court of Orissa for cutting, copying, and pasting from the judgment of the Central Administrative Tribunal instead of employing substantive reasoning. As the High Court did not reason, as it was required to do so under Article 226 of the Constitution, the Supreme Court set aside the impugned judgment and restored the matter to the High Court. [Key Words: Central Administrative Tribunal, UPSC, Article 226 of the Constitution, promotion to IAS, DOPT Guidelines, Departmental Promotion Committees][Coram: DY Chandrachud, J., MR Shah, J.]

IBC

In A Navinchandra Steels Private Limited v. SREI Equipment Finance Limited, the Court held that in a conflict, the provisions of the IBC would prevail over the Companies Act. Further, the Court held that once a winding up petition was admitted, it should trump any subsequent attempt at revival of the company through petitions under Sections 7 or 9 IBC and that a petition under Section 7 IBC was an independent proceeding which must be tried on its own merits. [Key Words: winding up petition, NCLT, NCLAT, IBC, Sections 13(2), 13(4) of the SARFAESI Act][Coram: RF Nariman, J., BR Gavai, J.]

In Arun Kumar Jagtramka vs Jindal Steel and Power Ltd and Anr. the Court was considering two appeals and a petition under Article 32 of the Constitution of India wherein the appellants were aggrieved by the judgments of the National Companies Appellate Tribunal (“NCLAT”) holding that promoters who are ineligible to propose a resolution plan under Section 29A of the Insolvency and Bankruptcy Code 2016 (“IBC”) were also not eligible to file an application for compromise and arrangement under Section 230 to 232 of the Companies Act 2013, where the liquidation has been initiated under the IBC. The Petitioner under Article 32 of the Constitution challenged the constitutional validity of the Regulation 2B of the the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 (“Liquidation Regulations”), which after the amendment in 2020 states that a person ineligible to submit a resolution plan cannot be a party to a compromise or arrangement. The Court referred to its decisions in Chitra Sharma (2018) 18 SCC 575, ArcelorMittal (2019) 2 SCC 1 to state that Section 29A of the IBC has to be interpreted purposively to exclude persons whose misconduct has contributed to the defaults on part of the debtor from participating in the resolution process. The Court also referred to Swiss Ribbons (2019) 4 SCC 17 where the Court had held that the norm underlying Section 29A of the IBC would permeate Section 35 (1) (f) as well, i.e. to liquidation as well. The Court went on to state that liquidation under Chapter III of the IBC and subsequent revival of the debtor under Section 230 of the Companies Act forms a statutory continuum. Whereas Section 230 of the Companies Act has wider ambit, it has to be read harmoniously with the IBC when it is invoked in the statutory scheme under the IBC. In such context, the ineligibilities attaching under Section 35 (1) (f) read with 29A of IBC would apply. The Court also clearly distinguished withdrawal simplicitor under Section 12A of the IBC from the approval of resolution plan under Section 31 of the IBC or Scheme of compromise sanctioned under Section 230 of Companies Act both in terms of statutory context and consequences. The Court also upheld the validity of the Regulation 2B of the Liquidation Regulations, as being only clarificatory in nature and satisfying the requirements under Section 240 (1) of the IBC, i.e., of being consistent with the IBC and being made to carry out the provisions of the IBC. Consequently, the Court dismissed the appeals and the petition under Article 32. [Key Words: Section 29A of the Insolvency and Bankruptcy Code 2016, Section 230 to 232 of the Companies Act 2013, Regulation 2B of the the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, promoters’ eligibility to participate in compromise and arrangement] [ Coram: D.Y Chandrachud, J., M. R. Shah, J.]

In Alok Kaushik vs Mrs. Bhuvaneshwari Ramanathan and others, the appellant was the registered valuer appointed by the Interim Resolution Professional-respondent no. 1 for conducting valuation of the plant and machinery of the Corporate Debtor. The COC approved the fees payable to the appellant as Rs. 7.5 lakhs plus expense. The appellant was in the process of the conducting such valuations, when the NCLAT set-aside the initiation of the Insolvency Resolution Process against the Corporate Debtor and remitted the matter to NCLT for determination of costs of CIRP. The IRP-respondent no. 1 informed the appellant that the fees paid could not be paid and paid only Rs.50,000. The appellant being aggrieved, filed an application before the NCLT under Section 60 (5) of the IBC challenging the non-payment of fees. The NCLT declined to entertain the application stating that it had been rendered functus officio. NCLAT dismissed the appeal, resulting in the present appeal under Section 62 of the IBC. The Court relied on its recent decision in Gujarat Urja Vikas Nigam Limited 2021 SCC OnLine SC 194 where it has clarified that the jurisdiction of NCLT under Section 60 (5)(c) of the IBC has the jurisdiction to adjudicate disputes which arise solely from or relate to the insolvency of the Corporate Debtor. The Court noted that the present case would fall within such jurisdiction and the NCLT had erred in stating that it had become functus offico. The Court also noted that the availability of a grievance redressal mechanism before the IBBI under Section 217 of the IBC does not divest the NCLT of jurisdiction under Section 60 (5) (c) of the IBC. The Court set aside the impugned the judgement and remitted the matter to NCLT for determination of costs payable to the appellant. [Key Words: Costs of Interim Resolution Professional, Fees payable to registered valuer, Section 60 (5)(c) of the IBC, disputes relating to insolvency] [Coram: D.Y. Chandrachud, J., M R Shah, J.]

In N. Subramanian vs. M/s Aruna Hotels & Anr., the appellant being a retired employee of the Respondent, had moved an application under Section 9 of the Insolvency and Bankruptcy Code 2016 (“IBC”) before the National Company Law Tribunal(“NCLT”), on account of salary due to him amounting to Rs. 1.87 Crores from the year 1998 till his retirement in 2013. The NCLT admitted the appellant’s application on account of Rs. 1.06 Crores being admitted as being due vide a letter of acknowledgement and initiated moratorium under Section 14 of the IBC. Considering the Respondent’s appeal, the National Company Law Appellate Tribunal set aside the order of NCLT stating that the appellant’s application was time barred since he failed to explain the delay in making a claim for arrears since 1998 and that the Respondent had raised a dispute of such liability. The Court allowed the appeal and restored the order of the NCLT after noticing that the Respondent Company had in fact issued a letter acknowledging the dues on 30.09.2014, which was in any case within 3 years of the date of the application and that NCLAT had erred in its conclusion that there was a pending dispute when there was a clear acknowledgement of the dues. [Key Words: Section 9 IBC, Acknowledgement, Limitation] [Coram: R. F. Nariman, J., B.R. Gavai, J., Hrishikesh Roy, J.]

In P Mohanraj & Ors. V. M/s Shah Brothers Ispat Pvt Ltd., the question before the Court was whether proceedings under the Negotiable Instruments Act were hit by Section 14 IBC. The Court held that the exception in Section 14(3) to moratorium included transactions evidencing a debt or a liability, as was clear from the language of Sections 96(3), 101(3), and 14(3)(a)/(b) IBC. The Court also held that the word ‘or’ in Section 14(1)(a) in “the institution of suits or continuation of pending suits” must be read conjunctively. The Court also held that since the word proceedings is widened by the phrasing of “any judgment, decree or order” and “any court of law, tribunal…” and thus criminal proceedings under the CrPC would also be prohibited. When asked to use the noscitur a sociis rule of interpretation, the Court ruled that where a residuary phrase is used as a catch-all expression to take within its scope what may reasonably be comprehended by a provision, noscitur a sociis could not be used to colour an otherwise wide expression. The Court also reiterated that the purpose of the moratorium would be chipped away if quasi criminal proceedings which would deplete the assets of the corporate debtor were permitted. The Court ruled that a quasi-criminal proceeding under Chapter XVII of the NI Act would be a proceeding under Section 14(1)(a) and the moratorium would attach to such proceeding. Further, the Court ruled that such moratorium would only prohibit proceedings against the corporate debtor and proceedings under Section 141 NI Act could be continued against persons, such as the Director of the corporate debtor. [Key Words: Sections 138, 141 of the Negotiable Instruments Act 1881, Section 8 IBC, interpretation of statutes, nature of proceedings under the NI Act 1881][Coram: RF Nariman, J., Navin Sinha, J., KM Sinha, J.]

In Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors., the issue related to the resolution plan in the corporate insolvency resolution process under the IBC concerning the corporate debtor, Jaypee Infratech Limited. In summary, the Court held as follows:

i. The Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is circumscribed by Sections 30(2) and 31 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the Committee of Creditors (CoC). In case of any legitimate shortcoming, it could only send the resolution plan back to the CoC, for re-submission.

ii. The approval of the resolution plan of NBCC is not vitiated because of simultaneous consideration and voting over two resolution plans by the CoC.

iii. Re. the stipulations in the resolution plan which had not been approved, the only correct course for the Adjudicating Authority was to send the plan back to the CoC for reconsideration.

iv. The Adjudicating Authority has not erred in disapproving the proposed treatment of dissenting financial creditor like ICICI Bank in the resolution plan; but has erred in modifying the related terms of the resolution plan itself;

v. The homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person; when the resolution plan comprehensively deals with all the assets and liabilities of the corporate debtor, no housing project of the corporate debtor could be segregated merely for the reason that same has been completed or is nearing completion.

vi. Clause 23 of Schedule 3 of the resolution plan, providing for extinguishment of security interest of the lenders could not have been approved by the Adjudicating Authority, particularly in relation to the security interest that has not been discharged.

vii. As regards possession/control over the project sites/lands, it was left open for the resolution applicant to take recourse to the appropriate proceedings in accordance with law, whenever occasion so arose.

viii. The Appellate Authority was not justified in providing for an Interim Monitoring Committee for implementation of the resolution plan in question during the pendency of appeals. The impugned order dated 22.04.2020 passed by NCLAT is set aside.

Exercising its power under Article 142, in order to do complete justice between the parties, the Court extended the time period by 45 days from the date of the judgment for submission of the modified / fresh resolution plans by the resolution applicants, for their consideration by CoC and for submission of report by IRP to Adjudicating Authority.

[Key Words: Jaypee Infratech Limited, CIRP, resolution plan, resolution applicants, extension of time, Article 142, complete justice between the parties, Committee of Creditors, NBCC India, Sections 30, 31, 60(5) IBC, RERA, homebuyers] [Coram: A.M. Khanwilkar, J., Dinesh Maheshwari, J., Sanjiv Khanna, J.]

In Kridhan Infrastructure Pvt Ltd (now known as Krish Steel and Trading Pvt Ltd) v. Venkatesan Sankaranarayan & Ors, an appeal had been filed against an order of the NCLAT. In this dispute, the appellant had failed to implement its resolution plan for over eight months . The Court held that as the appellant had not complied with orders and had been granted sufficient opportunities to raise its concerns, and held that the forfeiture of rupees 20 crores as ordered was valid. [Key Words: NCLAT, National Company Law Appellate Tribunal, Rule 11 of the NCLAT Rules 2016, ][Coram: DY Chandrachud, J., MR Shah, J.]

In Sesh Nath Singh and Anr. v. Baidyabati Sheoraphuli Co-operative Bank Ltd and Anr., the Bench held Section 5 of the Limitation Act 1963 does not make it mandatory to file an application in writing before relief can be granted. Advocating for a purposive interpretation of Section 14 of the Limitation 1963 instead of a narrow and pedantic one, the Bench held that the provisions of the Limitation Act would apply mutatis mutandis to proceedings under the IBC in the NCLT/NCLAT. It further noted that in view of the ambit of the proceedings under the IBC before NCLT/NCLAT, the expression “court” in Section 14(2) would be deemed to be any forum for a civil proceeding including any Tribunal or any forum under the SARFAESI Act. It was further noted that Section 5 and 14 of the Limitation Act were not mutually exclusive and even in cases where Section 14 did not strictly apply, the principles of Section 14 could be invoked to grant relief to an applicant under Section 5 of the Limitation Act by purposively construing ‘sufficient cause’ as it was settled that omission to refer to the correct section of a statute does not vitiate an order. [Key Words: “sufficient cause”, incorporation, reference, “as far as may be”] [Coram: Indira Banerjee, J., Hemant Gupta, J.]

In Gujarat Urja Vikas Nigam Ltd. v. Mr. Amit Gupta & Ors., the challenge was to the judgment by the NCLAT under Section 61 of the IBC, upholding the NCLT’s stay on the termination by the Appellant of its Power Purchase Agreement (PPA) with one Astonfield Solar (Gujarat) Pvt. Ltd. Two issues arose. The first was, whether the NCLT/NCLAT could exercise jurisdiction under the IBC over disputes arising from a PPA, and the second was whether the appellant’s right to terminate the PPA under the Agreement was regulated by the IBC. The Court held that the NCLT/NCLAT could have exercised jurisdiction under section 60(5)(c) of the IBC to stay the termination of the PPA by the appellant, since the appellant sought to terminate the PPA under Article 9.2.1(e) only on account of the CIRP being initiated against the Corporate Debtor. The Court further held that the NCLT/NCLAT correctly stayed the termination of the PPA by the appellant, since allowing it to terminate the PPA would certainly result in the corporate death of the Corporate Debtor due to the PPA being its sole contract. The Court left the broader question of the validity/invalidity of ipso facto clauses in contracts open for legislative intervention [Key Words: Power Purchase Agreement, termination, arising out of, in relation to, ipso facto clauses, CIRP, IBC, corporate death] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

In Laxmi Pat Surana v. Union Bank of India and Anr., the Bench held that in accordance with the provisions of the IBC and Section 128 of the Indian Contract Act 1872, the status of the guarantor, who is a corporate person, “metamorphoses” into the corporate debtor, the moment the principal borrower (regardless of not being a corporate person) commits default in payment of debt which had become “due and payable”. The Bench rejected the Appellant’s argument that “since the loan was offered to a proprietary firm (not a corporate person), action under Section 7 of the Code cannot be initiated against the corporate person even though it had offered guarantee in respect of that transaction”. Secondly, the Bench held that acknowledgment of the liability by the principal borrower within the limitation period, does not absolve the guarantor of its liability even if the latter had not acknowledged. The Bench found the liability within the period of limitation as per Section 238A of the IBC, Section 18 read with Article 137 of the Limitation Act 1963. [Editor Note: Paragraphs 35, 36 and 37 of Laxi Pat Surana were relied upon by the Supreme Court in its judgment dated 15 April 2021 in Asset Reconstruction Company v. Bishal Jaiswal Civil Appeal No. 323 of 2021] [Key Words: Section 3 of the Limitation Act 1963, complete code, debt, corporate debtor, corporate person, guarantor and guarantee, financial debt] [Coram: A.M. Khanwilkar, J., B.R. Gavai, J., Krishna Murari, J.]

In Kalpraj Dharamshi & Anr. v. Kotak Investment Advisors Ltd. & Anr., the Bench held as follows:

i. The respondent’s appeals before NCLAT were not time barred and Section 14 of the Limitation Act 1963 saved the appeals because in the facts before the Bench, the Respondent filed its writ before the Bombay High Court immediately after NCLT pronounced its judgment and before the certified copy could be made available on the “principal ground, that the procedure followed by NCLT was in breach of principles of natural justice” and that “such a ground could be legitimately pursued before a writ court”. Hence, it was not a proceeding before the wrong court at all. Moreover, the High Court had dismissed the writ on the basis on of alternate and equally efficacious remedy.

ii. The Bench held that there was no waiver and acquiescence by the Respondent stopping it from challenging the Appellant’s participation. This was not a pure commercial contract and it would be wrong to suggest that the Resolution Professional and Application had equal bargaining power.

iii. The NCLAT was incorrect in law in interfering with the business decision of the Committee of Creditors. This was because Section 31 of the IBC mandated that its role be confined to verifying whether the Resolution Plan provided:

a) provided for the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor,

b) provided for the repayment of the debts of operational creditors in prescribed manner,

c) provided for the management of the affairs of the corporate debtor,

d) provided for the implementation and supervision of the resolution plan,

e) does not contravene any of the provisions of the law for the time being in force,

f) conformed to such other requirements as may be specified by the Board.

[Key Words: waiver, estoppel, acquiescence, limitation, commercial wisdom, bargaining power, dotted line, consent, meaningful choice] [Coram: A.M. Khanwilkar, J., B.R. Gavai, J., Krishna Murari, J.]

Election

In Vikas Kishanrao Gawali v. State of Maharashtra & Ors., the challenge, inter alia, was to Section 12(2)(c) of the Maharashtra Zilla Parishads and Panchayat Samits Act, 1961, as ultra vires the provisions of Articles 243-D and 243-T, as also Articles 14 and 16 of the Constitution of India. The validity of two Notifications issued by the State Election Commission providing for reservation exceeding 50 per cent qua Zilla Parishads and Panchayat Samitis was also questioned. The petitioners sought to rely upon the Constitution Bench judgment in K. Krishna Murthy (2010) 7 SCC 202, to argue that it was no longer open to the respondents to reserve more than 50 per cent (aggregate) seats in the concerned local bodies by providing reservation for SC/ST/OBCs. After a detailed analysis of the judgment of the Constitution Bench, though the Court negatived the challenge to the validity of Section 12(2)(c), it read down the provision to mean that reservation in favour of OBCs in the concerned local bodies can be notified to the extent that it does not exceed aggregate 50 per cent of the total seats reserved in favour of SC/ST/OCBs taken together. [Key Words: State Election Commission, constitutional challenge, reservation exceeding 50%, equality clause, ultra vires, local self-government, SC/ST/OBCs, reading down, ‘shall be’ and ‘may be’] [Coram: A.M. Khanwilkar, J., Indu Malhotra, J., Ajay Rastogi, J.]

In Association for Democratic Reforms & Anr. v. Union of India & Ors., the Supreme Court refused to stay the issuance of electoral bonds by way of an interim measure. The reason was that the Bench was not convinced that the Electoral Bond Scheme 2018 enabled “…complete anonymity in the financing of political parties by corporate houses, both in India and abroad…” as “…the purchase of the bonds as well as their encashment could happen only through banking channels and if purchase of bonds are allowed only to customers who fulfill KYC norms, the information about the purchaser will certainly be available with the SBI which alone is authorised to issue and encash the bonds as per the Scheme”. The Bench further noted that “… any expenditure incurred by anyone in purchasing the bonds through banking channels, will have to be accounted as an expenditure in his books of accounts” and such “…trial balance, cash flow statement, profit and loss account and balance sheet of companies which purchase Electoral Bonds will have to necessarily reflect the amount spent by way of expenditure in the purchase of Electoral Bonds” as per provisions of the Companies Act 2013. [Key Words: Electoral Bond Scheme 2018, Sections 128, 129, 133, 137 of the Companies Act 2013] [Coram: S.A. Bobde, CJI., A.S. Bopanna, J., V. Ramasubramanian, J.]

In State of Goa v. Fouziya Imtiaz Shaikh and Anr., the issue related to the bar to interference by courts in electoral matters relating to delimitation of constituencies and allotment of seats to such constituencies, specifically in the context of municipal elections. The Supreme Court laid down the following principles of law:

i. Under Article 243ZG(b), no election to any municipality can be called in question except by an election petition presented to a Tribunal. This would mean that from the date of notification of the election till the date of the declaration of result a judicial hands-off is mandated by the non-obstante clause contained in Article 243ZG debarring the writ court under Articles 226 and 227 from interfering once the election process has begun until it is over. The constitutional bar operates only during this period.

ii. If, however, the assistance of a writ court is required in subserving the progress of the election and facilitating its completion, the writ court may issue orders provided that the election process, once begun, cannot be postponed or protracted in any manner.

iii. The non-obstante clause contained in Article 243ZG does not operate as a bar after the election tribunal decides an election dispute before it.

iv. Under Article 243ZA(1), the SEC is in overall charge of the superintendence, direction and control of the preparation of electoral rolls, and the conduct of all municipal elections. In extraordinary cases, the SEC may conduct elections after such term is over, only for good reason.

v. Judicial review of a State Election Commission’s order is available on grounds of review of administrative orders. Here again, the writ court must adopt a hands-off policy while the election process is on and interfere either before the process commences or after such process is completed unless interfering with such order subserves and facilitates the progress of the election.

vi. Article 243ZA(2) makes it clear that the law made by the legislature of a State relating to or in connection with elections to municipalities, is subject to the provisions of the Constitution, and in particular Article 243T, which deals with reservation of seats.

vii. The bar contained in Article 243ZG(a) mandates that there be a judicial hands-off of the writ court or any court in questioning the validity of any law relating to delimitation of constituency or allotment of seats to such constituency made or purporting to be made under Article 243ZA.

viii. Any challenge to orders relating to delimitation or allotment of seats including preparation of electoral rolls, not being part of the election process, can also be challenged under the statutory provisions dealing with delimitation of constituencies and allotment of seats to such constituencies.

ix. The Constitutional bar of Article 243ZG(a) applies only to courts and not the State Election Commission, which is to supervise, direct and control preparation of electoral rolls and conduct elections to municipalities.

x. It is the duty of the SEC to countermand illegal orders made by any authority including the State Government which delimit constituencies or allot seats to such constituencies.

Further, on facts, it was held that the Law Secretary of the State could not be said to be an independent State Election Commissioner.

[Key Words: State Election Commission, delimitation of constituencies, election tribunal, municipal elections, concession by counsel, constitutional bar, Goa Municipalities Act, judicial hands-off approach] [Coram: R.F. Nariman, J., B.R. Gavai, J., Hrishikesh Roy, J.]

Tax

In Engineering Analysis Centre of Excellence Private Limited v. The Commissioner of Income Tax & Anr., the Bench held that though the transaction was the software “’licensed’ by the foreign, non-resident supplier to the distributor and resold to the resident end-user, or directly supplied to the resident end-user”, the “real nature of transaction” was the “sale of the sale of a physical object which contains an embedded computer programme, and is therefore, a sale of goods”. In an elaborate 226-page judgment, on the facts, the Bench held as follows:,

i. In light of the definition of “royalties” contained in Article 12 of India-Singapore DTAA, it was clear that there was no obligation on the persons mentioned in Section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases did not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (Section 9(1)(vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the assessees, would have no application in the facts of these cases.

ii. The amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, was not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in Section 195 of the Income Tax Act were not liable to deduct any TDS under Section 195 of the Income Tax Act.

On an analysis of various judgments, the Bench clarified the law relating to copyright at paragraph 117, which is reproduced as below:

i. Copyright is an exclusive right, which is negative in nature, being a right to restrict others from doing certain acts.

ii. Copyright is an intangible, incorporeal right, in the nature of a privilege, which is quite independent of any material substance. Ownership of copyright in a work is different from the ownership of the physical material in which the copyrighted work may happen to be embodied. An obvious example is the purchaser of a book or a CD/DVD, who becomes the owner of the physical article, but does not become the owner of the copyright inherent in the work, such copyright remaining exclusively with the owner.

iii. Parting with copyright entails parting with the right to do any of the acts mentioned in section 14 of the Copyright Act. The transfer of the material substance does not, of itself, serve to transfer the copyright therein. The transfer of the ownership of the physical substance, in which copyright subsists, gives the purchaser the right to do with it whatever he pleases, except the right to reproduce the same and issue it to the public, unless such copies are already in circulation, and the other acts mentioned in section 14 of the Copyright Act.

iv. A licence from a copyright owner, conferring no proprietary interest on the licensee, does not entail parting with any copyright, and is different from a licence issued under section 30 of the Copyright Act, which is a licence which grants the licensee an interest in the rights mentioned in section 14(a) and 14(b) of the Copyright Act. Where the core of a transaction is to authorize the end-user to have access to and make use of the “licensed” computer software product over which the licensee has no exclusive rights, no copyright is parted with and consequently, no infringement takes place, as is recognized by section 52(1)(aa) of the Copyright Act. It makes no difference whether the end-user is enabled to use computer software that is customised to its specifications or otherwise.

v. A non-exclusive, non-transferable licence, merely enabling the use of a copyrighted product, is in the nature of restrictive conditions which are ancillary to such use, and cannot be construed as a licence to enjoy all or any of the enumerated rights mentioned in section 14 of the Copyright Act, or create any interest in any such rights so as to attract section 30 of the Copyright Act.

vi. The right to reproduce and the right to use computer software are distinct and separate rights, as has been recognized in SBI v. Collector of Customs, 2000 (1) SCC 727 (see paragraph 21), the former amounting to parting with copyright and the latter, in the context of non-exclusive EULAs, not being so.

[Key Words: royalty, sale of copyrighted material, sale of copyright, principle of first sale, Copyright Act, DTAA, double taxation, “in respect of”, impotentia excusat legem, lex non cogit ad impossibilia, doctrine of first sale/principle of exhaustion, OECD Commentary] [Coram: RF Nariman, J., Hemant Gupta, J., B.R. Gavai, J.]

In M/s Canon India Private Limited v. Commissioner of Customs, the issue before the Court was whether after clearance of cameras on the basis that they were exempt from levy of basic Customs duty, proceedings initiated by the Directorate of Revenue Intelligence for recovery of duty under Section 28(4) Customs Act, 1962 were valid in law. The Court held that the use of the article ‘the’ in Section 28(4) of the Act was with the intention to designate the proper officer who had assessed the goods at the time of the clearance, and that the proper officer need not be the same officer who cleared the goods but could be an officer authorized to exercise the powers within the same office. Since the re-assessment and recovery was to be done by the same authority, therefore, the Additional Director General of DRI was not the proper officer to initiate recovery proceedings. The Court also held that under Section 6 of the Customs Act, the officers of the DRI were not customs officers and thus the notice issued by them was invalid. [Key Words: Sections 2(2)(c), 130E Customs Act 1962, Central Excise and Service Tax Appellate Tribunal, CESTAT, Notification 25/2005, Consolidated Coffee Ltd. v. Coffee Board (1980) 3 SCC 358][Coram: SA Bobde, CJI, J., AS Bopanna, J., V Ramasubramanian, J.]

In The Commissioner, Commercial Tax, Appellant U.P., Lucknow v. S/s Rujhan Studio, the Bench held that under the AP VAT Act 2008, the commodity, being an “embroidered ladies suit” which is unstitched, would fall under residuary entry under Schedule V. The Bench criticised the High Court and Tribunal’s findings as being contrary to plain meaning of the UP VAT Act 2008. [Key Words: textiles, manufacturing] [Coram: DY Chandrachud, J., MR Shah, J.]

In Westinghouse Saxby Farmer Ltd v. Commr. of Central Excise Calcutta, an appeal was filed under Section 35L(b) of the Central Excise Act 1944, against the dismissal of the appeal by the Customs Excise and Service Tax Appellate Tribunal (“CESTAT”). The appellant company was engaged in the manufacturing of ‘Relays’ which could be classified as electrical equipment and signalling equipment, falling under Tariff Item No. 8536.90 and Item no. 8608 respectively. The question before the Court was to ascertain the correct tariff classification of ‘Relays’ and also to determine whether the show cause demand notices issued by the Department from time to time were barred under Section 11 A of the Central Excise Act 1944. Allowing the appeal, it was noted by the Court that since the competent authority had already approved the classification of Relays under Item No. 8608, it was not proper for the authorities to now invoke Note 2 (f) of Section XVII of the Chapter laying down tariff rates. The Court further held that the attempt to undo the effect of the approval of the classification done on 27.08.1993, was time barred, even if some of the individual statutory notices, were issued within the period of limitation as the invocation of Section 11 A itself was time barred. [Key Words: Section 35 L (b), 11A Central Excise Act 1944, classification of items, Note 2 (f) of Section XVII, general rules of interpretation, barred by limitation] [Coram: S.A. Bobde, CJI., A.S Bopanna, J., V. Ramasubramaniam J.]

Consumer Law

In Narbada Devi & Ors. v. H.P. State Forest Corporation, the Bench declined to interfere with the impugned order. It stated that death resulting from “asphyxiation caused by alcohol consumption and regurgitation of food into larynx” did not amount to an accident under the Janta Personal Accident Insurance Scheme. [Key Words: death, alcohol, insurance, natural death, accidental death] [Coram: Mohan M. Shantagoudar, J., Vineet Saran, J.]

In Neena Aneja & Anr. V. Jai Prakash Associates Ltd., the consumer case was instituted on 18.06.2020 under the provisions of the Consumer Protection Act, 1986. Meanwhile, the material provisions of the Consumer Protection Act, 2019 were notified to come into force on 20.7.2020 and 24.07.2020. The NCDRC dismissed the consumer case on the ground that after the enforcement of the 2019 Act, its pecuniary jurisdiction has been enhanced from rupees one crore to ten crores. The Court, after a detailed consideration of the law on change of forum, set aside the NCDRC order, and held that all the proceedings instituted before 20.07.2020 under the 1986 Act shall continue to be heard by the fora corresponding to those designated under the 1986 Act, and not be transferred in terms of the new pecuniary limits established under the 2019 Act. In arriving at the aforesaid conclusion, the Court also took note of the financial hardship to the consumer and the delay that may accrue on account of transfer of pending cases to the lower fora. [Key Words: Consumer Protection Act, 2019, NCDRC, pecuniary jurisdiction, change of forum, statement of objects and reasons] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

In NBCC (India) Ltd. v. Shri Ram Trivedi, one of the terms of allotment of the flat envisaged that the appellant would ‘endeavour to’ hand over the possession within two and a half years from the date of allotment letter. In January 2017, the respondent instituted a consumer complaint in NCDRC since possession had not been handed over since four and a half years. The Court held that even though the expression ‘endeavour to’ does not mean an absolute commitment to hand over possession on or before a specified date, it could not be construed as leaving the date for handing over possession indefinite and at the absolute discretion of the developer. The burden would lie on the developer to explain the steps taken to comply with the contractual stipulation. However, the Supreme Court set aside the grant of compensation of Rs. 2,00,000/- by the NCDRC towards loss of rent, on the ground that once interest had been awarded, there would be no justification to award an additional amount of Rs. 2,00,000/-. [Key Words: NCDRC, delay in possession, compensation, interest, burden of proof, force majeure, loss of rent] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

CPC

In Mallanaguoda and Ors. v. Ninganagouda and Ors., the dispute arose from the allotment of 8 acres, 13 guntas of land in Block No.5 in a suit for partition and separate possession, to the Respondent by the High Court. In doing so, the High Court had set aside the judgment of the Trial Court as well as final decree proceedings and remanded the matter back to the Trial Court to reconsider allotment of shares to each one of the parties in Block No.5, on the basis of the same having non-agricultural potentiality, without substantiating the same. It was argued by the appellants that the High Court had exceeded its jurisdiction under Section 100, CPC in setting aside the judgment of the First Appellate Court when the First Appellate Court had specifically held that the convenience of the parties to cultivate the land is of prime importance which would be inconvenienced if Block No.5 was partitioned equally between the parties. Setting aside the judgment passed by the High Court, the Court held that the First Appellate Court is the final court on facts whose judgment should not be interfered with unless there is a substantial question of law, which was not present in this case. [Key Words: suit for partition, separate possession, non-agricultural potentiality of land, Section 100 CPC, substantial question of law, final court on facts] [Coram: L. Nageswara Rao, J., S. Ravindra Bhat, J.]

In Subodh Kumar vs Shamim Ahmed, the appellant-landlord had filed a suit for possession, rent and mesne profit against the respondent-tenet in 1994. The trial court after affording several opportunities to the tenant to file a written statement, decreed the suit ex-parte in favour of the landlord. The tenant’s application under Order 9 Rule 13 of the CPC for setting aside the ex-parte decree was dismissed and as also the application seeking the review of such rejection. The tenant respondent then approached the High Court under its writ jurisdiction against both these orders. The High Court allowed the tenant’s Write Petition, setting aside the rejection of the application under Order 9 Rule 13 and remanded the application to be considered afresh. The landlord’s application seeking review of the High Court’s judgment was also rejected, leading to the present petition before the Supreme Court. The Court allowed the appeal and set aside the judgment of the High Court noting that the trial court had rightly rejected the application under Order 9 Rule 13 since the application had failed to meet the requirement set out in proviso to Section 17 of the Provincial Small Cause Courts Act 1887, requiring an applicant seeking setting aside of an ex-parte order to deposit the complete decretal amount along with such an application. The Court relied on Kedarnath (2002) 2 SCC 16 to state that the compliance of the proviso under Section 17 to be mandatory in nature. The Court further held that even on merits, the trial court was correct to reject the application noting that the tenant had been given several opportunities to file a written statement. The Court also noted that the tenant’s submission regarding deposit of the rent under Section 30 (2) of the U.P. Urban Buildings (Regulations of Letting, Rent and Eviction) Act 1972 during the pendency of the suit was also liable to be rejected since the U.P Urban Buildings (Regulations of Letting, Rent and Eviction) Act 1972 was not applicable on the subject-property and additionally, the rents deposited still fell short of the decretal amount to be deposited. [Key Words: Tenancy, Order 9, Rule 13 CPC, ex-parte decree, Section 17 of the Provincial Small Cause Courts Act 1887] [ Coram: Ashok Bhushan, J., R. Subash Reddy, J.]

Miscellaneous

In Alka Khandu Avhad v. Amar Syamprasad Mishra and Anr., the challenge was to the decision of the High Court which had refused to quash the complaint filed against the appellant for offences punishable under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (‘NI Act’). The Court allowed the appeal and set aside the judgment passed by the High Court of Bombay, by holding that since the appellant was not a signatory to the dishonoured cheque and neither was the same drawn from a joint account, there cannot be any joint liability of the Appellant under Section 138 or 141 of the NI Act, even if there is a joint liability to pay. [Key Words: Section 138, 148, Negotiable Instruments Act 1881, signatory, joint liability, joint account] [Coram: D.Y. Chandrachud, J., M.R. Shah J.]

In Small Scale Industrial Manufactures Association (Regd.) vs Union of India & Ors. a wide range of petitioners approached the Court under Article 32 claiming reliefs which are broadly as follows:

I. a complete waiver of interest or interest on interest during the moratorium period;

II. there shall be sector­wise relief packages to be offered by the Union of India and/or the RBI and/or the Lenders;

III. moratorium to be permitted for all accounts instead of being at the discretion of the Lenders;

IV. extension of moratorium beyond 31.08.2020;

V. whatever the relief packages are offered by the Central Government and/or the RBI and/or the Lenders are not sufficient looking to the impact due to Covid­19 Pandemic and during the lockdown period due to Covid­19 Pandemic;

VI. the last date for invocation of the resolution mechanism, namely, 31.12.2020 provided under the 6.8.2020 circular should be extended.

The Court relied on a catena of judgments including Peerless General Finance (1992) 2 SCC 343, Nandlal Jaiswal (1986) 4 SCC 566, and Arun Kumar Agrawal (2013) 7 SCC 1 to state that the Courts should be circumspect in impugning on matters of economic policy under its powers of judicial review. The Court dismissed most of the petitions stating that the reliefs prayed for were matters of policy to be decided by the Government and expert bodies such as the Reserve Bank of India.

The Court rejected the submission that the Union of India had failed to formulate a National Plan under Section 11 of the Disaster Management Act 2005 stating that the National Disaster Management Authority (“NDMA”) had constituted empowered groups and considering the nature of the COVID-19 pandemic, various ministries were participating in the relief measures. The Court also considered Section 13 of the Disaster Management Act 2005 to state that the use of the word “may” in the provision denotes that the NDMA may recommend such measures as relaxation in repayment of loans only when it is satisfied that by the reliefs already announced. Additionally. The NDMA sent its views and recommendations to RBI by its O.M. dated 28.08.2020. Therefore, it could not be said that the NDMC had not performed its duty under Section 13 of the Disaster Management Act 2005.

In regard to the charging of interest on interest for the period of moratorium and the eligibility criteria set by the Central Government (loans upto Rs. 2 Crores for notified categories), the Court held that the cap of loans upto Rs 2 Crores was arbitrary and discriminatory. The Court also stated that interest on interest was payable by wilful defaulters during the moratorium period and as such default during the moratorium period could not be said to willful and charging of interest on interest as penal interest is unjustified. Therefore, the Court directed that there shall by no interest on interest for the period of moratorium. [Key Words: Covid-19 Pandemic, relief measures, waiver of interest, moratorium on repayment of loans, economic policy, National Plan under Section 11 of the Disaster Management Act 2005, interest on interest] [Coram: Ashok Bhushan, J., R. Subahs Reddy, J., M.R. Shah, J.]

In Madan Mohan Singh v. Ved Prakash Arya, the matter pertained to an order of eviction under the Public Premises Act. The Court relied on CM Beena and held that the conduct of parties before and after the creation of a relationship was relevant for finding out the intention of parties. The Court held that where there is no evidence for taking premises on rent and the defendant had admitted that he had not maintained any record of accounts of payment of rent, there was no basis to held that there was relationship of landlord and tenant. The Court also held that where the allotment letter prohibits the hirer from subletting the premises or any part thereof, the decision of the Chief Administrator shall be binding on the parties. [Key Words: Public Premises (Eviction of Unauthorised Occupants) Act, CM Beena v. PN Ramachandra Rao, 2004 (3) SCC 595, ][Coram: Ashok Bhushan, J., R Subhash Reddy, J.]

In Suman Devi & Ors. v. State of Uttarakhand and Ors., the Court held that if Section 87 of the UP Reorganisation Act, 2000 only obliged the State and Courts to enforce existing laws to the extent they were modified within two years of commencement of the Act, it would have had a disastrous effect of creating a vacuum in regard to laws not specifically mentioned. The Court also held that the omission to mention relevant qualifications in the advertisement did not relieve the State from its obligation to follow existing rules. [Key Words: Indian Nursing Council Act 1947, Uttar Pradesh Department of Medical Health and Family Welfare Health Worker and Health Supervisor (Male and Female) Service Rules 1997][Coram: L Nageswara Rao, J. S Ravindra Bhat, J.]

Reservation

In Pramod Kumar Singh and Ors. v. State of UP and Ors., a petition was filed seeking, inter alia, a direction to the respondents to consider the petitioners for appointment to the post of Constable PAC and Fireman seats meant for General Category Male Candidates in PAC and Fireman Posts which remained unfilled till date. It was alleged that certain candidates coming from ‘Reserved Categories’, who were initially selected against Reserved Categories’ seats, were now shown against the ‘open category' in the list published on 11.11.2019 which prejudiced the chances of ‘open category’ candidates. Dismissing the Petition, the Court held that the selection in respect of the posts were in accordance with the directions issued by the Court and if the candidates who were already selected against reserved posts were entitled to be considered against open category posts, that exercise cannot be termed as illegal or invalid on any count. [Key Words: reserved category, open category, shifting of candidates, PAC & Fireman Posts] [Coram: U.U Lalit, J., S. Ravindra Bhat, J., Hrishikesh Roy J.]

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