LatestLaws.com's Monthly Digest (May 2023)
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- ADMINISTRATIVE LAW
- Kerala High Court rules: State Disability Commissioner cannot make adjudication on service matter and direct appointment of a person to Civil Services
Recently, the Kerala High Court ruled that the State Commissioner for Persons with Disabilities lacks the authority to decide on service matters or to direct the appointment of an individual to civil services of the Central or State Government.
The Court further noted that following the enactment of the Administrative Tribunals Act, 1985, all service matters relating to appointments in Central and State Government services must be decided by the Administrative Tribunals established under the Act.
The division judge bench of Justice Abhay S Oka and Justice Rajesh Bindal of the Apex Court in the case of Calcutta State Transport Corporation & Ors. Vs Ashit Chakraborty & Ors. held that merely because there were some wrong deductions from his salary, the employee can’t be denied pension on this ground.
The Division Bench of the Delhi High Court in the case of Kavita vs Delhi High Court & Anr. consisting of Justices Manmohan and Saurabh Banerjee held that compassionate appointment is an exception to the rule that appointment should be made only based on merit.
The Supreme Court Bench, consisting of Hon'ble Mr. Justice Rajesh Bindal and Hon'ble Mr. Justice Abhay S. Oka emphasised that the Corporation cannot deny employees their rightful pension entitlement on the grounds of technical objections or the Corporation's own faults. The Apex Court upheld the High Court's assessment that the Corporation was at fault for not implementing the Calcutta State Transport Corporation Employees’ Service (Death cum Retirement Benefits) Regulations, 1990 (hereinafter referred to as “Regulations, 1990”). Consequently, the Bench ordered the Corporation to refund the excess provident fund contributions and gratuity, along with interest.
- ARBITRATION
- SC Expounds: No Arbitration possible when Dispute Arises from a Non-Arbitrable Agreement
The Supreme Court declared that arbitration proceedings were not feasible if no arbitration clause was present in agreements other than the principal agreement. The Court upheld that the primary agreement and the other agreements had no conjunction; therefore, the arbitration clause could not apply to the other agreements.
Recently, the Supreme Court in a bench comprising Hon’ble Mr. Justice M.R. Shah and Hon’ble Mr. Justice C.T. Ravikumar upheld the judgment of the Telangana High Court stating that in situations where the notice seeking arbitration was served prior to the promulgation of the Amendment Act, 2015, and the plea for the appointment of an arbitrator was filed after it had come into effect, the legal system prevailing before the amendment shall be in force. Hence, the Arbitration & Conciliation Act, 1996 shall govern the matter.
The Supreme Court ruled that the High Court had violated the law by interfering with the arbitration award under Section 37 of the Arbitration and Conciliation Act, 1996. The District Court deemed this award acceptable under Section 34 of the same Act. Additionally, the High Court had made a mistake in ordering the restoration of the dealership to the first respondent.
The Supreme Court emphasized the significance of displaying restraint when scrutinizing the validity of arbitral awards to avoid interference with the decision-making process. The Apex Court stressed that such awards possess a distinct status and are not considered regular adjudicatory orders. Hence, they should not be interfered with by the Courts.
However, the court also observed that the High Court had exceeded its jurisdiction by examining the evidence presented before the Arbitral Tribunal and overturning the award in a manner that went beyond the scope of the Arbitration and Conciliation Act, 1996.
Recently, the Bombay High Court held that the appointment procedure's illegality does not make the entire arbitration agreement invalid.
A single-judge bench of this Court, comprising Justice Avinash G. Gharote, held that even if the procedure for appointing the arbitrator under the arbitration agreement is deemed invalid due to the inclusion of Section 12(5) and the Supreme Court's decision in Perkins Eastman, this does not make the entire arbitration agreement unenforceable.
The Supreme Court acknowledged the distinctive characteristics of statutory arbitrations and implications under the Limitation Act, 1963. The Court specifically stated that the cause of arbitration begins when one party serves notice to the other, requesting the appointment of an arbitrator. This clarification was essential in addressing situations where the cause of arbitration is delayed due to a prolonged absence or omission of notice issuance after the contract's execution.
The Delhi High Court has affirmed the validity of settlement awards under the New York Convention and their recognition under the Arbitration and Conciliation Act, 1996. The High Court concluded that there is unanimous acceptance across jurisdictions that awards based on settlements between parties are enforceable.
The Supreme Court in a group of Writ Petitions upheld the Constitutional validity of Sections 326 and 327 of the Companies Act, 2013 (hereinafter referred to as the “Companies Act”). The Apex Court clarified that Section 326 and 327 are not applicable in liquidation proceedings under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”). Additionally, the court has ruled that the distribution of assets during liquidation under IBC must adhere to Section 53 subject to Section 36(4) of the IBC.
The Indian Supreme Court upheld the constitutional validity of Section 140(5) of the Companies Act, 2013, stating that it was not biased or unreasonable. During its verdict, the Court specified that Section 140(5) did not breach Articles 14 and 19(1)(g) of the Indian Constitution.
The Supreme Court quashed the High Court's decision and held that the investigation against the appellant company was unnecessary. The Court determined that the company had no connection to the alleged offender, so the freeze and bank guarantee orders were unfounded.
Recently the High Court of Bombay ruled that a defect in the board resolution authorizing a person to initiate arbitration is curable and only a procedural irregularity.
Therefore, such a defect cannot result in the rejection of claims or termination of arbitral proceedings, according to the court. Justices K.R. Shriram and Rajesh S. Patil held that the requirement of a board resolution authorizing a person to take legal action on behalf of a company is procedural and defects in it cannot defeat the substantive rights of a party.
The Supreme Court expounded that the Legislature made a conscious decision to exclude the sums such as provident fund, pension fund and gratuity fund out of workmen dues and to put workmen dues for 24 months preceding the liquidation date at an equal pedestal with the dues owed to the secured creditor. This decision cannot be claimed to be unconstitutional.
It was categorically held that workman and secured creditor can be kept at an equal footing only when secured creditor has relinquished its security and the same it the part of the sage of the liquidation pool.
The broader goal of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) is to explore whether the Corporate Debtor can be revived or not and if nor then economic assets have to be maximized and hence, the waterfall mechanism should be seen in light of this. Conflicting interest have to be balanced when economics are involved.
Lastly, the Bench highlighted the difference between the waterfall mechanism given in the Companies Act, 2013 and the IBC stating that waterfall mechanism is based on structured mathematical formula and therefore, the hierarchy is created in terms of payment of debts. Striking off any one thing would disbalance the entire structure and disrupt the working as interest of all the stakeholders would get affected. Further, the waterfall mechanism as envisaged under the IBC is way more beneficial than the one in Companies Act, 2013.
The Supreme Court confirmed that the ineligibility of a resolution applicant under Section 164(2)(b) of the Companies Act, 2013 cannot be presumed unless the competent authority declares the disqualification. The Court held that such an interpretation is necessary to ensure that the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”), is not misused by promoters or directors of companies who may be disqualified under the Companies Act but seek to participate in the insolvency resolution process.
- CONSTITUTIONAL LAW
The Supreme Court of India has affirmed the unique status of the National Capital Territory of Delhi under Article 239AA of the Indian Constitution. The Court recognized that this provision establishes a constitutionally mandated legislature and Council of Ministers for the NCT of Delhi, distinguishing it from other Union Territories.
The Court also affirmed that the NCT of Delhi has legislative and executive power over Entry 41 of List II of the Seventh Schedule, which pertains to ‘Services’.
According to a recent ruling by the Bombay High Court, a maritime claim made by a ship agent seeking indemnity from the shipowner for unpaid port dues can be entertained by the High Court under Section 4 of the Admiralty Act, 2017.
The division bench, comprising Justice KR Shriram and Justice Rajesh Patil, held that the phrase "arising out of" in Section 4(1), which pertains to the High Court's jurisdiction over maritime claims, has a broad meaning that encompasses an agent's indemnity claim against the vessel for unpaid port dues.
The Single Bench of the Delhi High Court in the case of Smt. Kartari Devi vs Sh. Vinod Kumar & Ors. consisting of Justice Tushar Rao Gedela held that Sub-Section 6 of Section 16 of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 places an obligation upon the Appellate Tribunal to pronounce its order in writing within one month of the receipt of the appeal.
The Supreme Court reiterated the legislative intent regarding the interpretation of Section 3(1)(x) of the SC/ST Act. The Apex Court clarified that the intent of the legislature is clear in distinguishing between general insults or intimidation and those specifically aimed at individuals due to their caste or tribal identity.
The Supreme Court examined the implications of the Prevention of Cruelty to Animals (Tamil Nadu Amendment) Act, 2017 and concluded that it did not contradict Articles 51-A, 14, and 21 of the Constitution of India. The Court thoroughly evaluated the provisions of the Act and analyzed its compatibility with the constitutional framework.
The Supreme Court emphasized that the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act, 2002”) offered an alternative legal recourse through an appeal under Section 17. This provision allowed individuals to approach the Debt Recovery Tribunal to challenge the actions taken by the Bank under Section 13(4) of the Act. Consequently, the High Court erred in entertaining the writ petition that contested the e-auction notice under Article 226 of the Indian Constitution. The Supreme Court deemed this decision as a significant mistake on the part of the High Court.
The Division Bench of the Delhi High Court in the case of Vodafone Mobile Services Ltd. & Anr vs Telecom Regulatory Authority of India consisting of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad, while upholding the penalty on Vodafone, held that when there is a specialised Tribunal, the Telecom Disputes Settlement and Appellate Tribunal, constituted to deal with the disputes under the TRAI Act, then Courts must be slow to interfere under Article 226 of the Constitution of India.
- SC rules: Doctrine of Legitimate Expectation is substantive and enforceable in the public law domain
The 2-judge bench of the Supreme Court, comprising of Hon’ble Mr. Justice M.R Shah and Hon’ble Mr. Justice Krishna Murari, embarked upon a comprehensive review of the scope and intricate nature of the Doctrine of Legitimate Expectations.
It was expounded that the doctrine of legitimate expectation complements the rule of law by ensuring that public authorities make fair and consistent decisions. When a public authority creates an expectation in individuals or groups, failure to consider these expectations may lead to legal challenges. The Courts have protected legitimate expectations in the past, contributing to transparency, accountability, and trust in the legal system. The doctrine of legitimate expectation was established within Article 14 of the Constitution of India. The doctrine of legitimate expectation is a substantive and enforceable right in the sphere of public law with limitations.
- CRIMINAL LAW
The division judge bench of Justice M.R. Shah and Justice J.B. Pardiwala of the Apex Court in the case of Omprakash Sahni Vs Jai Shankar Chaudhary & Ors held that if the accused person subsequently looks to be entitled to an acquittal by this Court, he should not be put behind bars for an extended period of time until the appeal's conclusion—which often takes a very long time to decide and dispose of. But in order for the Court to come to a prima facie conclusion that the conviction may not be valid, it is necessary to look into something that is very apparent or gross from the record when determining whether the convict has a fair chance of being acquitted.
The Apex Court emphasized that the right to default bail under Section 167 (2) of the Criminal Procedure Code (hereinafter referred to as “CrPC”) was a conditional right that only arose during the pendency of the investigation and not after the completion of the investigation. The Court made it clear that once the investigation was complete, the question of default bail did not arise. The Court reiterated that the right to default bail was valuable but conditional.
The Supreme Court observed that the Inspector of Police had carried out a further investigation under Section 173(8) of the Criminal Procedure Code based on the authorization given by a police officer rather than a judicial officer.
The Court restated that the judicial officer had the authority to grant authorization for further investigation, not the police officers.
Additionally, the Court mentioned that the legal obligation to obtain permission for further investigation or submit a supplementary report was not fulfilled, making the investigation report legally invalid.
The Kerala High Court recently held that formal membership in a political party is not a prerequisite for applying the provisions for disqualifying one for voluntarily giving up membership of his party. It further stated that if a member contests an election with the support of a political party, he/she will be regarded as a member of that party.
The division judge bench of Justice Krishna Murari and Justice Ahsanuddin Amanullah of the Apex Court in the case of Sanjay Dubey Vs The State of Madhya Pradesh and Another held that the powers under Articles 226 and 227 of the Constitution are meant for taking care of situations where the High Court feels that some direction(s)/order(s) are required in the interest of justice.
The Supreme Court bench comprising Justice V. Ramasubramanian and Justice Krishna Murari granted permission for a de novo investigation. The Court's decision entailed allowing a fresh investigation to be conducted from the beginning, essentially nullifying the previous investigation.
The Delhi High Court elucidated that Investigating Officers were obligated to comply with the procedural instructions outlined in the Narcotic Drugs and Psychotropic Substances Act, 1985. Hon’ble Mr. Justice Amit Sharma underscored that any non-compliance with the procedural instructions could have serious implications for the prosecution's case.
The Delhi High Court expounded that certain special enactments, including the Officials Secrets Act, 1923, mandated specific procedure for initiating legal proceedings. These enactments stipulated that complaints must be filed by a designated or appropriate authority and necessitated a prior police investigation. Only after fulfilling these prerequisites could the court take cognizance of the complaint.
- Insolvency and Bankruptcy Code
Recently, the National Company Law Appellant Tribunal while dealing with a challenged decision of NCLT held that the payment of electricity bills and the company’s valuable assets is a clear indication that the company is still carrying out its business operation and the Registrar of Companies cannot remove its name from the Registrar of Companies.
The Supreme Court made a significant observation regarding the responsibility of an auction purchaser towards the property purchased. The Court pointed out that an Official Liquidator could not guarantee or warrant the condition of the sold property. Therefore, it was the purchaser's responsibility to conduct a thorough investigation of the title and encumbrances of the property.
The NCLAT (National Company Law Appellate Tribunal), consisting of Justice Rakesh Kumar as the Judicial Member and Dr. Alok Srivastava as the Technical Member, based in New Delhi, heard the appeals filed by the respective Appellants against the Respondent. The NCLAT determined that the preferential transactions in question could not be considered as part of the regular business operations. The Appellate Bench identified these two transactions as preferential transactions and directed the Appellants to refund the respective amounts to the corporate debtor.
The Supreme Court elucidated that once the National Company Law Tribunal was satisfied with the occurrence of a default, it was devoid of any discretion to refuse admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 hereinafter referred to as “IBC”).
The Apex Court noted that even the non-payment of a fraction of the debt that had matured and necessitated settlement would unequivocally amount to default on the part of the corporate debtor.
- Intellectual Property Rights
The Bombay High Court allowed an application asserting copyright in a web series titled “Scam 1992: The Harshad Mehta Story”, which is said to be a cinematic adaptation and dramatization of the book titled “The Scam”.
The court observed that unless interim injunction reliefs are granted urgently in favor of the plaintiff, the plaintiff is likely to suffer grave and irreparable loss, thereby indicating that the balance of convenience also lies in favor of the plaintiff.
The Single Bench of the Delhi High Court in the case of Microsoft Technology Licensing, LLC vs The Assistant Controller of Patents and Designs consisting of Justice Sanjeev Narula held that just because an invention involves computer programs and algorithms, it shouldn't automatically be considered a computer program. Instead, it should be evaluated based on its technical advancements and practical usefulness in solving real-world problems.
- FAMILY LAW
Apex Court's Constitution Bench concluded that Supreme Court had the authority to dissolve a marriage by mutual consent without requiring a second motion. However, the Court stressed the importance of exercising this power with caution.
Supreme Court of India examined the extent of its authority to dissolve marriages based on an irretrievable breakdown under Article 142 of the Indian Constitution.
The Court held that the power to achieve complete justice under Article 142 is not restricted by the fault and blame doctrine that applies to divorce petitions under Section 13(1)(i-a) of the Hindu Marriage Act.
Issuing a slew of guidelines to be followed by the Mediators while drafting settlement agreements in matrimonial disputes, the Delhi High Court has asked to publish such agreements in Hindi as well, in addition to English.
The single-judge bench of Justice Swarana Kanta Sharma observed that a common understanding of the parties on essential conditions for the enforceability of an agreement is crucial in a mediated settlement agreement and expressing intentions and commitments to the agreement through clear and concise language is critical for its effective enforcement.
The Court, therefore, directed that the concerned In-charge of Mediation Centres will ensure that the mediated settlement agreements are prepared in the Hindi language also, in addition to the English language, as far as possible. It is being directed since in the majority of cases, the parties do not comprehend English, and their spoken language and mother tongue is Hindi. However, in cases the parties are well-versed in the English language and want the agreement to be in the English language only, there will be no such insistence or requirement.
The Single Bench of the Delhi High Court in the case of Smt. Chetna Rathee vs Sh. Chahit Kundu consisting of Justice Rekha Palli held that in matters when the Court is dealing with petitions pertaining to Family Law, where the parties are already at loggerheads with each other, even though the matters are required to be decided expeditiously, the Court is expected to not adopt such a hyper-technical approach and close the right of the parties to cross-examine in such a hurried manner.
The Single Bench of the Delhi High Court in the case of Ritu Chernalia vs Amar Chernalia & Ors. consisting of Justice Prathiba M. Singh held that the right of the daughter-in-law in a shared household is not an indefeasible right and cannot be to the exclusion of the in-laws.
- LAWS FOR WELFARE OF CHILDREN
The Delhi High Court expounded that the Protection of Children from Sexual Offences Act, 2012, which strives to stop sexual crimes against children, did not discriminate based on the victim's marital status. This implies that whether the victim was married or not, they were equally eligible for protection and legal justice under the law.
In an Appeal under section 11 of the Guardians and Wards Act, 1890 the High Court of Orissa was of the opinion that keeping the impugned property idle with the appellant without any income from it, would be beneficial for none, hence it was directed to be utilized in a manner for the welfare of the minors and permission was given under section 11.
Justice Anuja Prabhudessai of the Bombay High Court ruled that a person's lack of wisdom teeth is not enough evidence to establish that they are a minor. The ruling came in the context of a case under the Protection of Children from Sexual Offences Act, 2012 (POCSO Act) in which a man had been convicted. The judge found that the prosecution had failed to establish beyond a reasonable doubt that the complainant was a child when the incident occurred.
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