[Breaking] Tribunals: Supreme Court refers passage of Finance Act as Money Bill to larger bench, strikes down Rules framed under Section 184
The Supreme Court today struck down the Rules framed under Section 184 of the Finance Act, 2017 by which the Centre sought to control the terms of services of members of Tribunals and Appellate Tribunals.
In a significant direction, the Court also referred the challenge to the passage of the Finance Act, 2017 as a Money Bill to a larger Bench.
While the Constitution Bench upheld the validity of Section 184, it has struck down the Rules framed thereunder. It has directed the Centre to reframe the Rules in consonance with the Supreme Court's judgment in R Gandhi v. Union of India.
The judgment was delivered by a Bench of Chief Justice of India Ranjan Gogoi and Justices NV Ramana, DY Chandrachud, Deepak Gupta and Sanjiv Khanna.
The judgment was rendered in a batch of petitions challenging the Constitutional validity of Finance Act, 2017 and the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 (Rules).
The petitioners had challenged the Finance Act, 2017 particularly Part XIV on various grounds.
Part XIV of the Finance Act repealed substantive provisions relating to the administration of 26 Tribunals established and codified under 26 diverse Central Laws. As a substitute, by virtue of Section 184, the Central Government was given the powers to frame rules in this regard.
One of the major grounds of challenge to the Finance Act was on the ground that the same was passed as a Money Bill.
Money Bills are those Bills which exclusively contain provisions for imposition of taxes and appropriation of moneys out of the Consolidated Fund. They can only be introduced in the Lok Sabha. The Rajya Sabha can only suggest amendments to money bills.
In the present case, all suggestions made by the Rajya Sabha regarding the Bill passed in the Lok Sabha were junked, and the Act came into force on April 1, 2017.
It was the petitioners’ case that the passage of the Finance Act in the form of a Money Bil’ was entirely inappropriate and amounted to a fraud on the Constitution.
Mere incidental burden on the Consolidated Fund is insufficient to qualify proposed legislation as a Money Bill, it had been contended. In the instant case, the provisions affecting administration of tribunals can hardly qualify as a purely fiscal measure, or enacted purely on financial considerations, the petitioner argued.
Further, the petitioner had contended that Section 184 delegated the powers to prescribe service conditions (such eligibility, tenure, appointment process etc.,) to the Central Government and the same was an affront to judicial independence.
Regarding the Rules relating to appointment, service conditions and removal of the members of various tribunals, the petitioner had submitted that the same were in violation of the guidelines of laid down by the Supreme Court in R Gandhi v. Union of India.
Interestingly, the Court also heard the following issues which had been framed in the lead case – Rojer Mathew v. South Indian Bank Limited:
- Creation of a regular cadres laying down eligibility for recruitment for Tribunals;
- Setting up of an autonomous oversight body for recruitment and overseeing the performance and discipline of the members so recruited and other issues relating thereto;
- Amending the scheme of direct appeals to this Court so that the orders of Tribunals are subject to jurisdiction of the High Courts;
- Making Benches of Tribunals accessible to common man at convenient locations instead of having only one location at Delhi or elsewhere. In the alternative, conferring jurisdiction on existing courts as special Courts or Tribunals.
The Central government has been directed by the Supreme Court to review technology from Japan with a view to tackling the issue of air pollution in India.
A Bench of Chief Justice of India Ranjan Gogoi and Justice SA Bobde recorded the submissions of Solicitor General Tushar Mehta that the Central government is exploring various technology, including hydrogen-based technology adopted by Japan, to tackle the issue.
The Court, therefore, directed the Centre to review the technology and submit a report about its outcome on December 3.
The Court was hearing a suo motu case registered by Supreme Court after air quality level in Delhi and surrounding States plummetted.
Last week, the Bench of Justices Arun Mishra and Deepak Gupta pulled up the Centre and the Delhi government for their inaction on the air pollution choking the national capital.
The air quality index in Delhi and other parts of Northern India has crossed hazardous and toxic levels, the Court had noted. It further observed that "no room in Delhi is safe". Despite installing air purifiers, the PM 2.5 levels were at 500 and 600, indicating a grim situation, the Bench said.
"The right to life is the most important. We can't live like this, cannot survive in this atmosphere. We are losing precious years of our life."
The Bench went on to pass a number of directions to tackle the issue of stubble burning, the major cause of the air pollution plaguing Delhi NCR and other regions in North India.
Among these was a direction to the governments of Punjab, Haryana, Uttar Pradesh, and Delhi to process the stubble and bear the costs of the same.
The Court will take up this matter for hearing next on November 15. The states were given a time of seven days to comply with the directions regarding hiring of machinery for stubble processing.
The Supreme Court will pronounce its judgment tomorrow in the Rafale Review petitions.
The judgment will be delivered tomorrow by a Bench of Chief Justice of India Ranjan Gogoi and Justices Sanjay Kishan Kaul and KM Joseph.
The review petitions were filed against the Court's December 2018 judgment, by which the Supreme Court had dismissed petitions calling for an investigation into the Rafale deal.
However, immediately after the judgment was pronounced, an error had come to light in the judgment. The judgment had placed on reliance on Central government’s submissions to state that details of pricing in the controversial Rafale deal were shared with the CAG and the CAG report was placed before Parliament and the Public Accounts Committee.
But the CAG report had neither been placed before the PAC nor the Parliament at the time when the case was being heard.
When the error came to light, the Central government filed a correction application seeking a correction in the judgment of the Supreme Court.
The correction application clarified that the note handed over in a sealed cover to the Supreme Court by the Union of India was misinterpreted by the Supreme Court resulting in the error by the Court.
The Centre stated that the while the pricing details were shared with the CAG, the report of the same has not yet been placed before the PAC. The application highlighted that the note in the sealed cover conveyed the normal course of procedure which would take place.
While requesting the Supreme Court to make corrections in the judgment to that effect, the Centre had stressed on the fact that the PAC will examine the CAG report, as is the procedure, after the CAG report has been prepared and submitted.
The correction application stated that the words and phrases used in the sealed cover note “has been” and “is” vis-à-vis the sharing of pricing details and submission of CAG report respectively, were misinterpreted by the Court to mean that the said processes have been completed.
The petitioners were quick to notice the mistake and filed Review petitions. The review petitions preferred by Yashwant Sinha, Arun Shourie, Prashant Bhushan and Sanjay Singh claimed that the judgment is based on “errors apparent on the face of the record” and ought to be recalled.
The Supreme Court had then proceeded to hear the review petitions in open court before reserving its verdict on May 10.
[Read the Notification]
The Supreme Court will pronounce its judgment tomorrow in the review petitions challenging the Sabarimala judgment of September 28, 2018 relating to entry of women into Sabarimala Temple in Kerala.
The judgment will be pronounced by a Bench of Chief Justice of India Ranjan Gogoi and Justices Rohinton Nariman, AM Khanwilkar, DY Chandrachud and Indu Malhotra.
On September 28, 2018, a Constitution Bench of then Chief Justice Dipak Misra and Justices Rohinton Nariman, AM Khanwilkar, DY Chandrachud, and Indu Malhotra had, by a 4:1 majority, struck down Rule 3(b) of the Kerala Hindu Places of Public Worship (Authorisation of Entry) Rules, 1965 which was the basis for barring entry of women between the ages of 10 and 50 years into the temple.
The Court had ruled that Rule 3(b) of 1965 Rules violated the right of Hindu women to practice religion under Article 25. Further, it was held that the bar on entry of women between the age of 10 and 50 years was not an essential part of the religion.
While four judges had struck down the Rule, Justice Indu Malhotra had penned a dissenting judgment holding that religious practices cannot be solely tested on the basis of Article 14 of the Constitution.
She had stated that notions of rationality cannot be brought into religion and that a balance needs to be struck between religious beliefs on one hand, and the cherished principles of non-discrimination and equality laid down by Constitution on the other.
The judgment of Supreme Court had significant ramifications in the State of Kerala, with the BJP, right wing organisations, as well as the Congress Party opposing the verdict. Attempts to prevent women from entering the shrine had led to violence in and around the temple.
Subsequently, 56 review petitions and some fresh writ petitions were filed challenging the verdict. The Court had heard the review petitions and writ petitions in open court before reserving its verdict on February 6 this year.
[Read the Notification]
Should Government process Collegium recommendations within a particular time frame? SC keeps question open
Should there be a time frame within which the Central government should decide on Collegium recommendations?
The Supreme Court today kept this question open while disposing of the petition relating to the appointment of Justice Akil Kureshi as High Court Chief Justice.
A Bench of Chief Justice of India Ranjan Gogoi and Justice SA Bobde noted today that the Central government has notified the appointment of Justice Akil Kureshi as Chief Justice of Tripura High Court.
Senior Advocate Harin Raval appearing for Gujarat High Court Advocates Association (GHCAA) handed over a written note on laying down a timeframe within which the Central government should decide the recommendations made by Collegium.
The Court kept that issue open and disposed of the petition.
The Central Government's notification of Justice Kureshi's elevation as High Court Chief Justice came through last week, over two months after he was recommended for elevation as Chief Justice of the Tripura High Court and almost six months after he had initially been recommended for elevation as Chief Justice of the Madhya Pradesh High Court.
In May this year, the Supreme Court Collegium had recommended that Justice Kureshi be appointed as Chief Justice of the Madhya Pradesh High Court. Various other recommendations made by the Collegium, barring the one related to Justice Kureshi, were approved by the Centre later on.
The delay in approving Justice Kureshi's appointment prompted the GHCAA to file a petition in the Supreme Court taking objection to the Central government’s apparent reluctance to appoint Justice Akil Kureshi as Chief Justice of the Madhya Pradesh High Court.
When that petition was heard on September 16 by a Bench of Chief Justice of India Ranjan Gogoi and Justices SA Bobde and S Abdul Nazeer, the Supreme Court had stated that a decision had been taken and would soon be published on the Supreme Court website.
On September 20, it was revealed that the Supreme Court Collegium had modified its recommendation to appoint Justice Akil Kureshi as Chief Justice of Madhya Pradesh High Court. It had, instead, resolved to appoint Justice Kureshi as Chief Justice of the Tripura High Court. On November 8, the Central Government finally notified its concurrence with the proposal to elevate Justice Kureshi as a High Court Chief Justice.
In a significant judgment, the Supreme Court today upheld the disqualification of 17 Karnataka MLAs who had resigned earlier this year.
However, the part of the order passed by the Speaker of the Karnataka Assembly barring the former Congress and JD(S) MLAs from contesting elections for the duration of the Assembly, has been set aside.
The Court observed that the Speaker does not have the power to indicate the duration for which a member may not contest elections after being disqualified or after resigning.
The judgment was rendered today by a three-judge Bench of Justices NV Ramana, Sanjiv Khanna, and Krishna Murari after the Court reserved orders in the case on October 25.
At the outset, the Bench noted that post the Kihoto Hollohan judgment, the Speaker, while exercising the power to disqualify, is a Tribunal and the validity of the orders are amenable to judicial review.
The Bench frowned upon the fact that the petitioners had approached the Supreme Court directly.
"Despite the fact that this Court has sufficient jurisdiction to deal with disqualification cases under the writ jurisdiction, a party challenging a disqualification order is required to first approach the High Court as it would be appropriate, effective and expeditious remedy to deal with such issues. This Court would have the benefit of a considered judicial verdict from the High Court. If the parties are still aggrieved, then they may approach this Court."
On the question of acceptance of resignation by the Speaker, it was held,
"Once it is demonstrated that a member is willing to resign out of his free will, the Speaker has no option but to accept the resignation. It is constitutionally impermissible for the Speaker to take into account any other extraneous factors while considering the resignation."
On the interplay between disqualification, resignation, and defection, the Court held,
"...there is no doubt that the disqualification relates to the date when such act of defectiontakes place. The tendering of resignation does not have a bearing on the jurisdiction of the Speaker in this regard.... the taint of disqualification does not vaporise, on resignation, provided the defection has happened prior to the date of resignation."
"We do not agree with the submission of the Petitioners that the disqualification proceedings cannot be continued if the resignations are tendered. Even if the resignation is tendered, the act resulting in disqualification arising prior to the resignation does not come to an end. The pending or impending disqualification action in the present case would not have been impacted by the submission of the resignation letter, considering the fact that the act of disqualification in this case have arisen prior to the members resigning from the Assembly."
While upholding the validity of the disqualification of the 17 Karnataka MLAs, the Court held,
"Our findings on allegations of not granting specific time in all the above cases are based on the unique facts and circumstances of each case. It should not be understood to mean that the Speaker could cut short the hearing period. The Speaker should give sufficient opportunity to a member before deciding a disqualification proceeding and ordinarily follow the time limit prescribed in the Rules of the Legislature."
On the powers of the Speaker to indicate how long an MLA would stand disqualified, the Court held,
"…it is clear that the Speaker, in exercise of his powers under the Tenth Schedule, does not have the power to either indicate the period for which a person is disqualified, nor to bar someone from contesting elections. We must be careful to remember that the desirability of a particular rule or law, should not in any event be confused with the question of existence of the same, and constitutional morality should never be replaced by political morality, in deciding what the Constitution mandates."
As a parting shot, the Court observed that there is a growing trend of the Speaker acting against the Constitutional mandate, which leads to citizenry being denied stable governments. The Bench goes on to express its regret at the manner by which constitutional functionaries have acted in the present case.
"...(The) regret this bench has, is with respect to the conduct and the manner in which allthe constitutional functionaries have acted in the current scenario. Being a constitutional functionary, the Constitution requires them and their actions to uphold constitutionalism and constitutional morality. In this regard, a functionary is expected to not be vacillated by the prevailing political morality and pressures. In order to uphold the Constitution, we need to have men and women who will make a good Constitution such as ours, better."
The resignation of 17 MLAs from the Congress and JD(S) parties eventually brought down the coalition government in Karnataka. The MLAs were thereafter disqualified on grounds of defection by former Speaker, KR Ramesh.
In July, petitions were filed by the 17 ex-MLAs of Karnataka, who challenged their disqualification by the Speaker of the Assembly. The Supreme Court issued notice in the petitions in September this year.
The disqualified MLAs had initially prayed before the Court that they be allowed to contest in the bypolls held for 15 Assembly seats in Karnataka. Appearing on behalf of the MLAs, Senior Advocate Mukul Rohatgi argued that the disqualification smacked of mala fides and arbitrariness. Senior Advocates Aryama Sundaram, AK Ganguli, KV Viswanathan, Sajan Poovayya and V Giri also appeared for the MLAs.
Appearing for the respondents, Senior Advocate Kapil Sibal had initially argued that the matter be heard by a Constitution Bench. It was also contended that the petitioners have no right to approach the Supreme Court in the matter. Further, since the MLAs had defected from the party, their disqualification was warranted. Senior Advocate Rajeev Dhavan also made arguments for the respondent side.
Solicitor General Tushar Mehta appeared for the present Speaker, VH Kageri. Arguing on the larger question of defection, he said that the MLAs had the right to resign and that the same would not warrant disqualification. The MLAs, in such a case, would have the right to face the electorate again and cannot be barred from contesting elections for the entire life of the Assembly. He suggested that the matter be sent to the Speaker's office for reconsideration.
On November 7, the Congress party through Sibal had sought to place on record the transcript of a speech delivered by present Karnataka Chief Minister BS Yeddyurappa. In this speech, Yeddyurappa allegedly says that the defection of the MLAs was orchestrated at the behest of present Union Home Minister Amit Shah. While the Court did not admit the audio clip or transcript as evidence, Sibal was told that the Bench had taken note of the point he was making.
[Read the judgment]Karnataka MLAs judgment
Supreme Court to deliver two important judgments tomorrow: Restructuring of Tribunals and whether CJI comes under RTI Act
A Constitution Bench of the Supreme Court headed by Chief Justice of India Ranjan Gogoi will deliver two crucial judgments on Wednesday, November 13. These judgments come in cases pertaining to reorganisation of Tribunals and bringing the office of the Chief Justice of India under the Right to Information Act (RTI Act).
The cases were heard by the Constitution Bench headed by CJI Gogoi and comprising Justices NV Ramana, DY Chandrachud, Deepak Gupta, and Sanjiv Khanna.
The judgment in the Roger Mathew case pertains to a challenge to Sections 156 to 189 of the Finance Act, 2017, which amend provisions relating to structuring and reorganisation of tribunals. Various issues were heard in this case, including those pertaining to bringing all tribunals under the Ministry of Law and Justice, uniformity of tribunals, the passage of Finance Act as a Money Bill etc.
The difference between a Finance Bill and a Money Bill was argued at length by Senior Counsel Arvind Datar. This aspect was refuted by Attorney General for India KK Venugopal, who had argued that the decision of the Speaker to table a bill as a money bill cannot be subject to judicial review. Proceedings in Parliament when the House is in session cannot be challenged before a court of law, Venugopal had submitted.
The second case raises the question of whether the office of the Chief Justice of India comes under the purview of RTI. This is an appeal filed by the Supreme Court against an order of the Central Information Commission which had held that the information relating to the appointment of Supreme Court judges should be furnished under the RTI Act.
The decision in the case will have huge ramifications as regards transparency in the Indian Judiciary. The absence of transparency has been particularly highlighted by the way the Collegium resolutions and decisions are arrived at.
The judgment is scheduled to be pronounced at 2PM on Wednesday, November 13.
[Read Notice]Judgment pronouncement notice for Nov 13
Lithius Energy Pvt. Ltd, which operates last-mile ride-sharing service Loca Rides, has raised funding from Fosun Group affiliate Fosun RZ Capital and Stellaris Venture Partners, among others, according to the company.
Other investors that participated in the round include TaxiForSure co-founder Aprameya Radhakrishna, Vokal co-founder Mayank Bidawatka and Cloud Nine co-founder Rohit M A.
Anoma Legal acted for Lithius Energy Pvt. Ltd.
Rajaram Legal advised Stellaris Venture Partners India, led by partner Prasad Subramanyan, Senior Associate Nikita Rajwade, and Associate Mahima Pradeep.
Tulip Diagnostics (P) Limited has acquired Biosense Technologies Private Limited for an undisclosed amount.
J. Sagar Associates acted for Tulip Diagnostics and the team was led by Partner Prakriti Jaiswal along with Senior Associate Shweta Gupta and Associate Aman Bhatia.
S&R Associates acted as legal counsel to Biosense Technologies and the team was led by Partner Sudip Mahapatra and Associate Soumalya Saha.
AK & Partners acted as legal counsel to a significant shareholder, Aman Midha, and the team was led by Partner Kritika Krishnamurthy along with Associate Srishti Dembla.
The Advocates Association, Bengaluru (AAB) today held a welcome ceremony for the five newly appointed Additional Judges of the Karnataka High Court.
Justices Neranahalli Srinivasan Sanjay Gowda, Jyoti Mulimani, Nataraj Rangaswamy, Hemant Chandangoudar and Pradeep Singh Yerur were recently elevated to the Bench.
The chief guests for the event were Chief Justice of the Karnataka High Court Abhay Shreeniwas Oka and AAB President AP Ranganatha.
Addressing the newly appointed judges on their new responsibilities, Chief Justice Oka said,
"It is true that your freedom will be curtailed to a great extent when you become a judge but the satisfaction that you get as a judge is unparalleled. You will not get the same satisfaction when you are a lawyer. The satisfaction of helping the common man to attain justice is beyond compare."
He also observed,
"Even if people criticize you, if you do well as per the oath that you have taken, then the ones who criticized you will compliment you later."
Speaking about the Karnataka Bar, Justice Oka said,
"The Karnataka Bar is very co-operative. In fact this tradition where your own colleagues and seniors felicitate you after you have been elevated to a judge is wonderful."
The Chief Justice also pointed out that if things go according to plan, at the end of five months, the Karnataka High Court will have 45 judges in total.
While addressing the crowd, the only woman judge from among the new appointees, Justice Jyoti Mulimani, said,
"Teamwork between the judges and the lawyers is required to build the legal system."
Justice Rangaswamy stated that though being in the position of a judge is a "tough task", he would do his best to render justice to everyone.
The event concluded with a vote of thanks by AAB Treasurer Shivamurthy. Various judges, senior counsels and members of the legal fraternity attended the event.
With the appointment of the five judges, the Karnataka High Court will have a working strength of 39 judges (19 permanent and 20 additional judges), as against a sanctioned strength of 62 judges.
The Delhi High Court has held that there could be no uniformity in the rates charged by private hospitals and nursing homes from the patients falling under general category.
Stating that all private hospitals and nursing homes cannot be equated with respect to the charges required to be paid by the patients, the Court has observed,
"It depends upon the nature of disease/diagnosis of the patients and the type of treatment given by the private homes/hospitals. Even otherwise, the charges to be paid by the patients as levied by the private nursing homes and hospitals depend upon the facilities available with them."
The judgment was passed a Division Bench of Chief Justice DN Patel and C Hari Shankar in a petition by NGO Legal Forum for Women Empowerment seeking to impose a cap upon the charges being charged by the private nursing homes and hospitals.
After hearing the counsel for both the sides and looking into the facts and circumstances of the case, the Court opined that charges levied by private nursing homes and hospitals depended upon a variety of factors.
"It appears that the charges of the private nursing homes and hospitals depend upon the variety of factors like,
(a) number of facilities being provided by the private nursing homes and hospitals,
(b) the promptness in providing of services by the private nursing homes and hospitals,
(c) the efficiency of the staff engaged by the private nursing homes/and hospitals
(d) number and quality of services provided by the private nursing homes and hospitals etc."
The Court, therefore, concluded that since the charges to be paid by a patient would depend upon the nature of the disease, diagnosis and other facilities, there could be no uniformity of charges levied by private nursing homes and hospitals.
In view of the above, the Court ordered,
"..we see no reason to entertain this writ petition... With these observations, this writ petition is hereby dismissed."
The petitioner was represented by Advocates Payal Bahl and Athar Alam.
The Respondent, NCT of Delhi, was represented by Additional Standing Counsel Sanjoy Ghose with Advocate Urvi Mohan.
Read the Order:
Bhima Koregaon: "Custodial interrogation of Gautam Navlakha is necessary" Pune Court refuses anticipatory bail
The Sessions Court in Pune today refused to grant anticipatory bail to activist Gautam Navlakha, accused in Bhima Koregaon case. The Court has also rejected Navlakha's application seeking a three-day extension from arrest.
Rejecting the anticipatory bail, the Court said that there is prima facie enough material to show Navlakha is not only a member of a banned organization (Communist Party of India- Maoist) but 'an active leader' as well.
The Court observed,
"It is clear that there is prima facie sufficient material to show that the applicant is not only a member of a banned organization but an active leader. Prima facie it can be noted that the organisation of Elgar Parishad at Pune was part of a larger conspiracy of the banned organization and Bhima Koregaon episode is one of the instances of execution of the said conspiracy. Therefore, the question of jurisdiction either of Pune Police or of this Court cannot be said to have merits, at least at this stage."
The Additional Sessions Judge at Pune, SR Navandar on November 7 had reserved its order in the plea for pre-arrest bail filed by activist Gautam Navlakha after hearing the arguments advanced by both Navlakha and the Pune Police.
The Court in its order noted that Pune Police, an investigating agency is making efforts to arrest the applicant for custodial interrogation since August 2018. However, the applicant Navlakha was getting protection from higher courts and therefore investigating machinery could not interrogate him effectively till this day
The order states,
“From the above facts, what is transpired is that unless the applicant is taken in custody and interrogated thoroughly, it is not possible to go to the root of the case and to trace out the different links which have been traced in the letter communication of the members of the banned organisation.”
Navlakha had moved the Pune Court on November 5, one day after the Bombay High Court directed him to approach the Special Court for this relief. Earlier, in a plea filed by Navlakha seeking quashing of the FIR against him in the case, the Supreme Court had granted him liberty to approach the appropriate forum seeking pre-arrest bail while refusing to decline the plea for quashing. That order of the Supreme court ultimately led to the filing of this application.
In seeking pre-arrest bail, Navlakha had contended that in over a year, the Pune Police has not brought forth any connection between him and the incident or any plan for disruption as alleged by the Police. There is merely an allegation of a suspicion that Navlakha is acquainted with certain alleged members of the banned organization, the CPI (Maoist), Navlakha claimed.
Navlakha had also contested the claims made by the Pune Police as regards the recovery of certain documents and letters allegedly recovered from his computer.
In this regard, the Court referred to several documents produced by Pune Police, including a report prepared on Navlakha, which was allegedly found in the laptop of co-accused Rona Wilson.
In light of the said report, the Court noted,
“This report gives an idea as to how the applicant is involved in the activities of the banned organization and as to how he co-ordinates with different terrorist groups and organizations. There is a specific reference of his contacts with the separatist leaders of Kashmir and office-bearers of Hijbul Mujahiddin."
The Court went on to note that letters found with co-accused show that applicant Navlakha had attended meetings of frontal organisations and he was involved in the recruitment process. For that purpose, he was in contact with the separatists from Jammu and Kashmir, the Court said.
“If his activities are taken into account in the light of the document ‘strategy and tactics’ what can be prima facie conceived is that he is an urban Maoist, who is in furtherance of the objectives of the banned organization discharging his responsibilities.”
After perusing material on record, the Court refused to grant Navlakha anticipatory bail and also rejected his application seeking 3-day extension from arrest.
Parting with the plea, Additional Sessions Judge S R Navandar ruled,
"In view of the above observations, I found that custodial interrogation of the applicant is necessary and hence no anticipatory bail can be granted at this stage."
Navlakha is likely to approach Bombay High Court tomorrow in appeal against Sessions Court order.
Gautam Navlakha and four other activists were implicated after an Elgar Parishad meeting held on December 31, 2017, allegedly provoked violence at the Koregaon-Bhima village in Pune the next day.
Navlakha was booked under provisions of the Unlawful Activities (Prevention) Act (UAPA) and Sections 121, 121 (a), and 124 of Indian Penal Code (IPC), amounting to waging a war against the State, conspiring to commit certain offences against the State, and sedition.
[Read Order here]
Surbhi Lal, Avantik Tamta win the Prathiba M Singh Scholarship for pursuing LLM at University of Cambridge
In an event held at Cambridge last month, Surbhi Lal from NLU Delhi and Avantik Tamta of NUJS, West Bengal were awarded the Prathiba M Singh Cambridge scholarship to pursue LLM at the University of Cambridge UK for the academic year 2019-2020.
The scholarships are awarded by the Sardar Manmohan Singh Charitable Trust which is set up by the family of Maninder Singh and Justice Prathiba M Singh.
Surbhi Lal had stood third in her batch at NLU Delhi (2016) winning several gold medals. She had secured admission for LL.M. at various Universities including Cambridge, Harvard, and Oxford. She was practising at a leading law firm in Delhi and was also conducting short courses for undergraduate students at NLU Delhi.
Avantik Tamta graduated from NUJS (2017) with a gold medal in IP law and Environmental law. His aspiration is to see India as an innovator paradise while providing an improved standard of living for the people.
The Scholarship event, usually held in Delhi, was, for the first time since its inception in 2014-15, organized at the Law Faculty of the University of Cambridge. It was presided over by Prof. Stephen J Toope, Vice-Chancellor, University of Cambridge, Justice Prathiba M Singh and Professor Ellis Ferran, Pro-Vice-Chancellor of Institutional and International Relations.
Speaking on how the Scholarship came to be, Justice Singh stated that she and her husband, Maninder Singh (Senior Advocate & Former Additional Solicitor General of India) wanted to do something different, they wanted to give back. The idea to give back in the form of scholarships germinated on the 50th birthday of Maninder Singh.
A trust was, therefore, set up in 2013, to provide scholarships to meritorious students to pursue a higher legal education at the University of Cambridge. The Trust, named after Senior Advocate Singh's father, Sardar Manmohan Singh - a migrant civil contractor who was known for his benevolent and helping nature - is family run. In the last 6 years (2014-15) since the institution of the scholarship, they have enabled 11 scholars to pursue the LLM program at the University of Cambridge, and continue to do so through their family trust.
In line with the objective of the trust, most of the scholars have, after completion of their respective courses, returned to India and are contributing to the growth of the Indian Legal System.
Having studied on a Cambridge Trust scholarship herself, Justice Singh while speaking at the event said,
“I am happy to share that in the last 5 years the scholars have returned to India, and have imbibed the purpose of the scholarship – which is to bring back their learning to the country.”
Lauding the benefaction of the Trust, Vice-Chancellor Prof. Toope, stated that her scholars have “enriched intellectual life at the University of Cambridge”.
Pro-Vice-Chancellor, Prof. Ferran spoke about the need for quality and equality in the higher judiciary. She highlighted the launch of the Cambridge Women in Law Initiative on September 27, 2019, to mark the centenary celebration of the Sex Disqualification (Removal) Act, 1919, when women were finally allowed to practice law. The event was held in the Faculty of Law at Cambridge and was attended by Lady Brenda Hale who had spoken on the occasion.
Prof. Ferran stated that the lead guest (Justice Singh) “embodies all the qualities we seek to champion at Cambridge Women and Law Initiative”.
Joanna Miles, Director of the LLM Program commented,
“As the director with the overall responsibility for admissions I do seek to ensure that we maintain a good diversity internationally. It brings, of course, people of different puristic traditions and backgrounds and its that intellectual richness that we get from that international cohort thats so important."
Among the notable attendees were Hellan Pennant, Director of the Cambridge Trust, Prof Lionel Bently, Professor of IP law, Ms. Clare Gordon, of the Faculty of Law.
Speaking at the event, one of the scholarship recipients, Surbhi Lal observed,
“This scholarship is not just about financial support. It is larger than that. It is about an amazing experience, it is about growth. It is about a commitment to oneself. And above all it is about being associated with a mentor like Justice Singh.”
The other recipient, Avantik Tamta echoed the sentiment in his address, remarking,
"I sense it as a responsibility upon my shoulders, a duty to imbibe the virtue of generosity and also learn to give back to people in whatever little way I can of the knowledge gained and the skills learnt."
After hearing the speeches from the scholars, Prof Toope remarked that he is not surprised at the excellent words spoken by the scholars as Indians are the best advocates he has come across.
To watch the scholarship event, click here.
With inputs from Advocate Ansh Singh Luthra
Maharashtra Government Formation: "Governor should not act as mouth piece of Central Government", Shiv Sena moves Supreme Court
The uncertainty surrounding the formation of the government in Maharashtra has reached the Supreme Court. The Shiv Sena has filed a petition challenging the decision of Governor Bhagat Singh Koshyari rejecting the claim of the party to form the government in the State.
In its petition, the Sena has assailed the decision of the Governor, who had rejected its request for three additional days to garner letters of support from the NCP and the Congress parties.
The petition has been filed through advocate Sunil Fernandes and settled by Senior Advocate Devadatt Kamat. It has been drawn by advocates Nizam Pasha, Rajesh Inamdar, Javedur Rahman, Aditya Bhat, and Ashwin G Raj. Senior Advocate Kapil Sibal will appear for the Shiv Sena.
The petition states that the Shiv Sena had been associated with the BJP in Maharashtra for the last 30 years, but owing to certain fundamental political differences that evolved during the last few weeks, that association has come to a staggering end.
It goes on to state that the Shiv Sena has been in advanced talks for government formation with the NCP and the Indian National Congress. It is for evolving a common minimum programme that three days' time was sought from the Governor, who disallowed the request.
The Shiv Sena has contended that the Governor is duty-bound to allow reasonable time to political parties to conclude their negotiations on government formation and that he should not act as a mouthpiece of the Central government.
The action of denying time to Shiv Sena is ex-facie arbitrary and contrary to Article 14, the Sena has contended.
The petition goes on to state that the action of the Governor in rejecting three days' time to the party is part of the "well-concerted plan of the BJP to invoke Article 356".
Any imposition of President's rule would result in horse-trading by BJP and allow them to "somehow cobble up majority by using unconstitutional means."
The Sena has therefore sought quashing of the Governor's decision rejecting its claim to form the government. It has also sought a direction to be issued to the Governor to grant the petitioner reasonable time to demonstrate that it has requisite support to form the government in Maharashtra.
It is understood that the petitioner is trying to get the case listed for hearing today itself, though the Court is shut for Guru Purab. The Supreme Court Registry is yet to respond to this request.
The National Company Law Tribunal, Bench V, New Delhi has initiated corporate insolvency resolution process against Aviva Life Insurance Co India Ltd under the Insolvency and Bankruptcy Code, 2016 (IBC).
Apart from imposing a moratorium in terms of Section 14 of the IBC, the NCLT has appointed Jatin Madan as the Interim Resolution Professional of Aviva Life Insurance.
The order was passed by a two-member Bench of Member (Judicial) Justice (Retd.) Rajesh Dayal Khare and Member (Technical) Sumita Purkayastha in a Section 9 IBC plea preferred by Apeejay Trust.
The Corporate Debtor, Aviva Life Insurance and the Operational Creditor, Apeejay Trust had entered into an agreement of Leave and License in June 2008 for office premises and other services for the former. However, in spite of several requests, the Corporate Debtor defaulted in making payments towards service tax and license fee to the tune of Rs 27,67,203.
The last payment in this regard was made in October 2017. Subsequently, the Operational Creditor issued a demand notice under Section 8 IBC in April 2019.
In response to the notice, the Corporate Debtor denied any liability and stated that no dues are payable.
The operational Creditor thus moved the NCLT under Section 9 IBC.
The Corporate Debtor argued that the Section 9 petition was not maintainable as it was an insurance company that was a ‘Financial Service Provider’ and was thus not covered under the ambit of IBC.
The Operational Creditor argued that there was no bar on the initiation of insolvency proceedings against the Corporate Debtor. It was submitted that a bar was only operative for institutions mentioned under ‘financial services’ as defined under Section 3(16) IBC.
It was further submitted that in the present case, the Corporate Debtor had not provided any insurance cover or financial assistance of any kind and the defaulted dues were with respect to lease and rentals.
After hearing the parties, the NCLT observed that under Section 3(16) IBC, financial service included transactions affecting a contract of insurance. However, in the present case, the claim was in respect of the outstanding license fees and service tax amounts, it added.
The NCLT thus concluded,
“Hence, the Corporate Debtor cannot use the provisions of Section 3 of the Insolvency and Bankruptcy Code, 2016 as a blanket cover to claim an exclusion from IBC proceedings on the ground that it is a financial service provider.”
In view of the above, the NCLT admitted the section 9 petition and initiated a corporate insolvency resolution process against the Corporate Debtor, Aviva Life Insurance.
The Operational Creditor was represented by Advocates Krishnedu Datta, Pervinder, Deepak Agarwal and Rahul.
The Corporate Debtor was represented by Advocate Gurmeet Bindra.
Read the Order:
Between the Council of Architecture (CoA) and the All India Council for Technical Education (AICTE), the mandate of the CoA would prevail when it comes to the grant of approvals and recognition of Architecture course degrees are concerned, the Supreme Court has held.
The judgment rendered by a three-Judge Bench headed by Chief Justice of India Ranjan Gogoi and comprising Justices Deepak Gupta and Aniruddha Bose ruled that the AICTE cannot impose any regulatory measured in relation to Architecture subject in case of a conflict between CoA and AICTE.
The Court was hearing appeals filed against the Bombay High Court Judgment which had quashed the order of the AICTE that had fixed a reduced intake number of students to an Architecture institute. The CoA and the AICTE had, after a joint assessment of the institute reduced the student intake number from 40 to 30.
After two years, the institute filed certain compliance reports which led to CoA restoring the intake number back to 40. However, the AICTE passed an order thereafter, once again bringing the intake number down to 30. This was challenged by the institute before the Bombay High Court.
The High Court quashed the order of the AICTE leading to the current appeal in Supreme Court. The Supreme Court also heard six other appeals raising the identical issue.
In dealing with the question of which body's mandate would prevail in case of conflict, the Supreme Court examined the object and purpose of the Statutes under which both these bodies were formed. The CoA was formed under the Architects Act, 1972 while the AICTE came into existence under the provisions of the AICTE Act, 1987.
The Court also pointed out that the 1972 Act deals with the registration of Architects and related issues which involved educational courses whereas the 1987 Act encompasses the overall development of technical education which includes Architecture. This is a point which was also highlighted by the High Court which had further said that the Architects Act of 1972 was not impliedly repealed by the enactment of the AICTE Act.
In this regard, the Supreme Court said that the 1972 Act cannot be said to be repealed merely because the term "technical education" under the AICTE Act also includes Architecture. The Court said,
"The principle of implied repeal cannot apply so far as the provisions relating to architecture education is concerned, on the basis of the 1987 Act having become operational. One of the dominant purposes of the 1972 Act is recognition of qualifications on architecture. The registration of an architect is dependent upon acquisition of such recognised qualification. The said Act cannot be held to have been repealed by implication for the sole reason of inclusion of the word “architecture” in the definition of technical education."
The Court thus said that the definition of "technical education" under Section 2(g) of the AICTE Act, 1987 would have to be given an interpretation that excludes architecture and makes it inapplicable to cases where the AICTE exercises its power to regulate framework for technical education institutes. Thus, the Court held that the AICTE would not have any power to impose regulatory measures and the mandate of the CoA would prevail for recognition of qualifications of Architecture.
"so far as recognition of degrees and diplomas of architecture education is concerned, the 1972 Act shall prevail. AICTE will not be entitled to impose any regulatory measure in connection with the degrees and diplomas in the subject of architecture. Norms and Regulations set by CoA and other specified authorities under the 1972 Act would have to be followed by an institution imparting education for degrees and diplomas in architecture."
The proposal to appoint Justice Sangita Dhingra Sehgal, Judge of the Delhi High Court, as a Judicial Member in the Competition Commission of India has been approved by the Appointments Committee of the Cabinet, Government of India.
As per a Central Government Infomation Note dated November 11, Justice Sangita Dhingra Sehgal would serve as a member in the Competition Commission for five years or until she attains the age of 65 years or until further orders.
Communication in this regard has now been sent to the Ministry of Corporate Affairs.
Justice Dhingra is set to retire as the Judge of the High Court in June next year.
Justice Sehgal obtained her LL.B degree from Delhi University in 1981 and completed her LL.M in 1983. She subsequently did her Ph.D. from Amity University, Noida in 2012. Justice Sehgal was the topper of her batch of 1984 in Delhi Judicial Services and joined the services in July 1985.
Justice Sehgal served as the Registrar General, High Court of Delhi from April 2013 to December 2014 and also worked as Registrar (Vigilance). She was elevated as an Additional Judge of the High Court on December 15, 2014, and became a Permanent Judge on June 2, 2016.
The post of a Judicial Member in the Competition Commission has been vacant for a considerable period of time. The issue was recently discussed by the High Court when it held that that non-appointment of a Judicial Member does not stop the Competition Commission of India (CCI) from carrying out its adjudicatory functions.
Read the Information Note:Justice Sangita Shingra Sehgal appointment as CCI member
The Court of Additional Chief Metropolitan Magistrate Jitendra Singh has asked the Delhi Police to file the status report on the investigation in the FIRs registered after the Tis Hazari incident.
The FIRs ie. FIR No. 268, 270 and 272 of 2019 essentially pertain to complaints by the injured advocates against the Delhi Police personnel.
The Court has also directed the Delhi Police to preserve all the relevant CCTV footage in and around the Tis Harazi incident.
".. in the interest of justice and to avoid a miscarriage of justice and further in the totality of circumstances, the worthy DCP concerned is expected to file the status report qua the investigation in the above-mentioned FIR on or before the NDOH.
As far as the application for preservation of the CCTV footage is concerned, the Investigating Agency is required to preserve all the relevant CCTV footages available in and around the place of incident, as, undoubtedly they are a crucial piece of evidence which can id in verifying the allegations and counter-allegations of advocates and police. ,"
The order was passed by the Court in a plea by the legal Committee of the Delhi Bar Association seeking a status report in the FIRs and issuance of directions for the arrest of the accused persons. The Committee had also sought the preservation of CCTV footage of the relevant time and place.
The Committee contended that proper and fair investigation in the case was not taking place as the Delhi Police had not even recorded the statement of witnesses/advocates who were present at the time of the incident. It was also alleged that the Agency had also failed to seize the weapon of offence or sought the custodial investigation of the accused persons.
The Delhi Police, on the other hand, submitted that fair investigation was underway and no stone was being left unturned to complete it expeditiously.
Observing that it was the duty of the Magistrate to ensure fair and impartial investigation, the Court directed the Delhi Police to file its status report in the case and preserve the CCTV footage.
It nonetheless added that the Court had no power direct the arrest of the accused persons and the same was the prerogative of the Police.
A scuffle had broken out between lawyers and police personnel at Delhi's Tis Hazari Court Complex on November 2 after an argument between a lawyer and the police over parking. The altercation soon escalated and resulted in serious violence in the Court Complex which included a lawyer getting shot.
The Delhi High Court Court soon took suo-moto cognizance of the matter and ordered a judicial inquiry headed by Justice (retd.) SP Garg into the Tis Hazari violence. While doing so, it also granted protection from coercive action against the lawyers in connection with the cross-FIRs registered against them by Delhi Police.
Following the incident, lawyers across the district courts in the city have been abstaining from work since November 4.
The matter would be heard next on November 20.
Read the Order:
The Government of India has told the Supreme Court that the wisdom of the decision to abrogate Article 370 of the Constitution of India cannot be subject to judicial review. The stance has been taken by the Central government in the counter affidavit filed in batch of cases challenging the revocation of the Special Status from the State of Jammu & Kashmir bifurcation of the State into two Union Territories.
A Constitution Bench of the Supreme Court headed by Justice NV Ramana along with Justices Sanjay Kishan Kaul, R Subhash Reddy, BR Gavai, and Surya Kant is scheduled to begin hearing the challenge on November 14.
In its response, the Centre has justified the move citing national security and integrity. It has also submitted that the full integration of the State of Jammu and Kashmir would lead to people of the region enjoying full protection and benefits of the Constitution of India.
The Centre also states that the decision is in favour of the people of the region and would act as a catalyst to their development and for peace in the region. The affidavit states,
"This would also act as a catalyst for enabling the State to achieve its development potential to the fullest, and to provide to its people the best possible standard of living in an atmosphere of peace, amity and tranquility"
The Centre, while rationalizing the Presidential Order of August 5 and the subsequent Reorganization Act, has also made a strong submission stating that "the wisdom of such decisions" is not amenable to judicial review. Seeking rejection of pleadings challenging these executive and legislative decisions, the Centre has submitted,
"It is submitted that while judicial review is part of the Constitutional power of this Hon’ble Court, it is submitted that the justification, efficacy, desirability and the wisdom of such decisions of the Hon’ble President as well as the Parliament is not amenable to judicial review.
It is submitted that the sphere of constitutional challenge is to be limited to Part III of the Constitution and the pleadings of the Petitioners with regard to the rationality or the wisdom of impugned decision/legislative measures, are to be rejected by this Hon’ble Court. "
The Centre has taken this opportunity to explain the nitty-gritty and the fine print of the Presidential Order of August 5 to point out that this executive order enabled for the phrase "Constituent Assembly" to be interpreted as "Legislative Assembly". Further, since the State was under the President's rule when the decision was taken, the Parliament was empowered to exercise the powers otherwise vested in the State Legislature.
The temporary nature of the Article has also been invoked by the Centre to prove its case. Further, the affidavit has also cited examples of other special and temporary Articles right from Article 371A to 371J. However, despite the existence of these special Articles in relation to certain States, the Constitution of India is applicable to these States in entirety. But the same was not the case when it came to Jammu and Kashmir, the reply enunciates.
In favour of removal of Article 370, the Centre has added that this Article enabled provisions to be made which gave special rights to permanent residents and imposes restrictions against others. Article 35A has been referred to as an obstacle in socio-economic development in this affidavit. It is added,
"It is submitted that the following deprivations of the residents of the erstwhile State of Jammu and Kashmir acted as a deterrent against complete integration of the erstwhile State. Chapter III of the Constitution of India, i.e. the fundamental rights, guaranteed to all citizens of India, were not made applicable to the people of Jammu and Kashmir in entirety."
The Centre has thus submitted that all due process of law and Constitutional provisions were upheld in the passing of the Presidential Orders of August 5 and 6 which revoked the Special Status of Jammu and Kashmir and abrogated Article 370.
"It is incorrect and misconceived to suggest that any of the applicable Rules of the Rajya Sabha and the Lok Sabha were violated in the course of the passage of the aforementioned resolutions on 05.08.2019 and 06.08.2019. It is submitted that each resolution was taken up and passed by the respective House of Parliament strictly in accordance with all applicable Rules."
The Government has notified new rules to regulate the procedure for appearing party-in-person before the Madras High Court. Named the High Court of Madras (Conduct of Proceedings by Party–in-Person) Rules, 2019 (2019 Rules), these rules will govern litigants who wish to plead, appear and argue his or her own case before the High Court and not through an Advocate.
The 2019 Rules require such litigants to personally approach the filing counter of the High Court. In this regard, Rule 4 states,
"The presentation of any matter or proceedings by the person not represented by an Advocate shall be made by such person personally in filing counter of the High Court."
This rule also requires the party-in-person to submit at least one identity proof with full address and photo, along with the applicant's mobile number and e-mail ID. As per Rule 7, the papers presented by the party-in-person in the filing counter as per stipulated office timings shall be scrutinized by the concerned Scrutiny Branches within one week.
Rule 5 makes it mandatory to file the application for appearing party-in-person after having it duly attested by an Oath Commissioner or Notary, along with the proceedings seeking permission to appear in-person. The rule also prescribes the following with respect to the application form.
- The application should indicate reasons why the litigant cannot or does not want to engage an Advocate and wants to appear and argue in-person.
- It should be accompanied by an undertaking that if Court appoints an Amicus Curiae or an advocate from the panel of the High Court's Legal Services Committee (for better assistance of the Court and for proper adjudication of the case), the party will accept such an appointment unconditionally
The Rules also envisions a party-in-person committee, to oversee the processing of applications and to guide litigants in appearing party-in-person. The committee is to be constituted by the High Court's Chief Justice and has been given the following powers
- Scrutiny of filings: All applications to appear party-in-person have to be verified by the committee. As per Rule 8, all filings by the applicants are to be scrutinised by the Committee to ensure that the party-in-person has complied with the requirements of the Madras High Court Appellate Side Rules, 1965 and Madras High Court Original Side Rules, 1956 and other applicable Rules/procedure. The committee is also to ensure that the party-in- person "has not made any objectionable averments/allegations and has not used and undertaken not to use or speak an unparliamentary language in the proceedings and the matter of like nature, in the Court or Office."
- Guidance of litigants: After the litigant's papers are scrutinised by a scrutiny branch, the same is presented (the petitioners/applications or objections) to the committee. The litigant seeking to appear party-in-persons is required to appear before the committee at a specified date and time. As per rule 7, the party-in-person committee inter alia shall guide him/her about the mannerisms and the language to be used in the Court and the decorum of the Court to be maintained. This procedure is applicable to any interlocutory applications filed by party-in-person subsequent to the filing of main proceedings viz. Petition, Appeal, Revision Petition etc.
- Issuance of Certificate to appear party-in-person: Following interaction with the litigant, the committee is to give opinion by way of office report on whether the litigant would be able to sufficiently assist the court while appearing party-in-person, or whether it is required that the Court appoint an Amicus Curiae or other advocates from the legal services panel. If the litigant is found not competent, the committee may refer the party-in-person to the High Court Legal Services Committee for offering legal services (if the party is entitled to legal aid). A litigant would only be allowed to appear party-in-person after the Court allows it based on the litigant's application and the certificate obtained from the committee. However, the permission is subject to further orders that the Court may pass (Rule 8 (g)).
The High Court is ultimately vested with the discretionary power to determine whether a party would be allowed to appear in person. In this regard, Rule 10 contains a non-obstante provision, which states,
"Notwithstanding anything contained in these Rules, the concerned Court before which the matter lies, may, in its discretion, permit a litigant/s to appear in-person and conduct proceedings in Court."
Rule 9 clarifies that these rules are not applicable in matters concerning bail, temporary/transit bail, parole, furlough and habeas corpus petitions.
Rule 11 provides that the 2019 Rules would be applicable to pending and future matters before the High Court.
[Read the Rules]
The Insolvency and Bankruptcy Board of India has released the report of the working group on group insolvency, proposing reforms in the legal framework to address insolvency and bankruptcy of companies that belong to the same group.
Rationale for the framework of group insolvency in India
Presently, the Insolvency and Bankruptcy Code, 2016 (IBC) does not provide for a consolidated mechanism to (procedurally or substantively) synchronise insolvency proceedings of corporate debtors within the same group. In spite of this, adjudicating authorities under the IBC (the “AAs”) have passed orders taking into consideration corporate debtors and their interconnections with other group companies such as in cases of Sachet Infrastructure, Videocon, Amtek Auto, Jaypee etc.
By way of the background of a few of such instances, in SBI v. Videocon, the AA held that the assets and liabilities of 13 Videocon companies shall be substantively consolidated for the purpose of their corporate insolvency resolution process (“CIRP”). The AA based its decision on factors such as common control, common directors, common assets, interloping of debts, common financial creditors, etc. In the matter of Edelweiss ARC v. Sachet Infrastructure, the AA directed procedural consolidation of insolvency proceedings against 5 companies working as a consortium to develop a residential plotted colony. The court even mandated a single resolution professional to guide the simultaneous CIRPs and complete it in one go with a consolidated resolution plan(s) for total development.
The rationale behind adopting a Framework is multi-fold:
- Companies belonging to the same group are linked either operationally in terms of dependence for the supply of raw material, or financially, in terms of inter-corporate deposits or guarantees. Recognizing these internal linkages is time-consuming and expensive when the insolvency of each group company is dealt with in isolation. Further, the value of assets realized can be maximised if the inter-linked companies are offered for bidding/resolution together.
- There can be a reduction in the asymmetry of information between the different creditors and the promoters. Moreover, the nature of transactions between different groups may have relevance to the insolvency proceeding.
As observed by the working group, codifying a Framework can have advantages such as reduced cost of proceedings, exchange of information, more certainty for stakeholders and maximisation of value.
Scope of the Framework
The Framework proposed by the working group to deal with the insolvency of companies or corporate groups is as follows:
- Applicability: The working group has recommended that the definitions of holding, subsidiary and associate companies in the Companies Act, 2013 take into account both vertical and horizontal integrations between group companies. Given this, a ‘corporate group’, to which the Framework will be applicable, should be defined to include holding, subsidiary, and associate companies. Further, an application may be made to the AA to include other companies if they are so intrinsically linked so as to form part of a ‘group’ in commercial understanding.
- Mechanisms: The issues arising in insolvency of group companies can be tackled by two mechanisms, broadly: (a) the procedural coordination mechanisms (“PCMs”) which are targeted at coordinating procedures of insolvency; and (b) substantive consolidation mechanisms which are targeted at consolidating the assets and liabilities of different group companies so that they are treated as part of a single insolvency estate for the purpose of reorganisation or distribution in liquidation.
- Implementation: The working group has recommended that the Framework should be introduced in a phased manner. Given this, the working group has recommended that, in its first phase, the Framework may cover only domestic entities and the Framework may not include substantive consolidation.
- PCMs: The working group has noted that the key feature of PCMs is that they are aimed at coordinating the administration and conduct of insolvency proceedings, and do not alter the rights and liabilities of the parties. Companies that have not committed default or companies that are not covered under the IBC will not be included under PCMs. Further, the WG has recommended that PCMs (other than co-operation, communication and information sharing) should in-principle be enabled by law, however, flexibility should be granted not to opt for these mechanisms if they do not help maximise the value of assets or lower the costs of proceedings.
- Elements of PCMs: PCMs may involve any or a combination of the following elements:
- co-operation, communication, and information sharing between insolvency professionals (“IPs”), creditors and AAs;
- designation of AAs or single insolvency representative, the formation of a group creditors’ committee and a joint application process; and
- group coordination proceedings.
Working group recommendations
The working group has recommended amending the IBC, the corresponding rules and regulations and other relevant laws to enable its recommendations for the Framework. The key working group recommendations are set out below:
- Co-operation, communication and Information sharing: The IPs, each committee of creditors(“CoC”) and AAs will have to cooperate, communicate and share information with each other, in case of insolvency of group companies.
- Joint application process: A single application to commence CIRP for multiple group companies that have committed defaults can be made. Such a joint application process should be in addition to the mechanism to initiate the CIRP against each group company separately.
- Designation of a single AA: A single AA is required to administer the insolvency proceedings of different companies in a group. This will be the AA that first admits an application to commence the CIRP for any company in the group. However, the CoCs of different companies may, by the required majority, choose the AA as per their convenience. If any CoC opts out of the group insolvency process, the AAs must share information, cooperate and communicate with each other.
- Designation of a single IP: The AA will have to appoint a single IP in the insolvency proceedings of all companies in the corporate group. Multiple IPs can be appointed if a single IP has potential conflicts of interest or insufficient resources to carry out his duties. The different IPs will have to communicate, cooperate and share information with each other.
- Formation of a group creditors’ committee and signing a framework agreement: The group creditors’ committee will be formed at the discretion of the CoCs of each group company. The composition, constitution, and cost of the group creditors’ committee can be decided by an agreement between the CoCs or by a framework agreement.
- Group coordination proceedings: Such coordination proceedings should be enabled by a vote of the majority of each CoC, and governed by the framework agreement. The parties to the framework agreement can appoint an IP as a group coordinator. The group coordinator will be required to propose the actions to be taken by the group. Each CoC can opt-out of the group coordination proceedings if it does not approve of the strategy of the group coordinator. When group coordination proceedings are opened, all AAs should be intimated of the same and all cases should be transferred to a single AA chosen under the framework agreement.
- Extension of CIRP timeframe: The timeframe for proceedings of any company that has opened group co-ordination proceedings may be extended to 420 days (including time taken in litigation) on an application to the AA. (The timeframe presently available for a company to complete CIRP under IBC is 330 days.)
- Rules against perverse behaviour of group companies: While the WG pondered over-rules against perverse behaviour from various jurisdictions which could be incorporated in the Framework, the only amendment that the WG has finally recommended is to allow subordination of intra-group debt in exceptional circumstances of fraud, etc. No other rules against perverse behaviour have been recommended on account of provisions regarding preferential and fraudulent transactions already being covered in the present IBC. Further, the subordination of intragroup claims may be allowed in respect of all group companies, regardless of their solvency.
Each company is a legal person having its own distinct identity and presently, the processes set out in the IBC apply only in respect of the company against whom an application for insolvency resolution has been filed and admitted. While the provisions of the present IBC and the emerging jurisprudence are aimed at revival of every company in distress and maximization of its value, there have been several instances where recovery has been limited or has failed on account of the corporate debtor’s insolvency resolution being dealt with in isolation, to the exclusion of the other entities in the group which form part of intrinsically linked operations or supply chains.
While weighing the recommendations of the working group, utmost consideration should be given to ensure that the Framework is not a subject of abuse, where stakeholders invoke the Framework with the sole intent of extending the CIRP by an additional period of 90 days. To this extent, AAs will have to exercise cautious discretion. The need for this process check can be seen as hugely pertinent in view of the recent instances where the IBC has failed to meet its primary objective of time-bound stress resolution and prevention of asset value erosion.
Nonetheless, the recommendations of the working group, if implemented with caution, will be a definite step towards taking the insolvency reforms forward. The working group report will serve as a guiding principle for the proposed phased implementation of the group insolvency regime for effectively tackling the substantiated issues which have arisen in cases of group insolvency.
Dhwani Shah is currently working as a senior associate at Talwar Thakore & Associates, Mumbai.
The Bombay High Court recently directed the Maharashtra Government to conduct compulsory awareness and training sessions for its officials on the legal rights of differently-abled persons, in line with the Rights of Persons with Disabilities Act, 2016.
In this regard, the Court also asked the State to take the assistance of the Maharashtra Legal Services Authority and lawyers involved in PILs filed on the issue, including Senior Counsel Gayatri Singh.
A Division Bench of Justices SC Dharmadhikari and RI Chagla was hearing PILs filed by the All India Handicapped Development Foundation raising concerns over funds allocated and utilised for the benefit of the differently-abled persons since 2001. The plea also sought directions to the government to release data on how many posts in different departments were reserved for divyang persons (differently-abled persons) and how many of them have been filled.
The High Court observed,
“We see a general lack of sensitivity much less duty towards the disabled. This comes because there is no awareness of the fact that persons with disabilities have rights. These rights cannot be frustrated and defeated by a lacklustre attitude and refusal to implement the law, enacted by Parliament, in right earnest.”
The Bench took critical note that this was despite the fact the passage of twelve years since India signed the United Nations Convention on the rights of persons with disabilities, and three years since India introduced the 2016 Act. The Court went on to remark,
“That Law has to be implemented sincerely and all efforts will have to be made for the effective implementation and enforcement thereof. That is possible only when officials of the State and that in-charge of municipal governance and civic affairs are enlightened enough and for that, the State would have to conduct and carry out training and awareness programmes.”
Appearing for the State, Advocate GW Mattos submitted that the Government is aware of the situation at the ground level and that it would do everything possible to fulfil the mandate of the Rights of Persons with Disabilities Act, 2016. The 2016 Act is successor legislation to The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. Nevertheless, the Bench noted,
“We may have as many compliance affidavits as the Government or the Department concerned wish to file and place on record but we would, firstly, expect the Head of the State, particularly the highest executive functionary, namely, the Chief Secretary to ensure that there are training programmes and workshops organised throughout the State to make officials of the State aware of The Rights of Persons with Disabilities Act, 2016.”
In this backdrop, the Court directed that the State ensure that awareness and training programmes are organised by all major departments, coordinated by the Department of Social Justice. The awareness programmes have been directed to be organised throughout the State on a non-working day. Experts in the field, including legal professionals, ought to be invited to address government officers, the Bench further said.
Concluding the hearing, the Court said,
“The expectancy is that, tomorrow's Heads of Departments are made aware of this Legislation and particularly about the rights of persons with disabilities. It is possible that a disabled or differently-abled person may not be aware of his/her rights but he/she should not be deprived of the necessary assistance and support because of lack of sensitivity of his/her colleagues and the public at large. We feel that holding of programmes for the awareness of the officers of the State should be made compulsory.”
The Court has posted the matter for further hearing on December 10.
[Read Order dated November 4, 2019]
Better if justice is delivered from the heart: Chief Justice AP Sahi on his first day as Madras High Court Chief Justice
On his first day as Chief Justice of the Madras High Court, Justice AP Sahi emphasised on the importance of delivering justice from the heart. Chief Justice Sahi was speaking at the welcome ceremony conducted yesterday at the High Court, following his formal oath-taking ceremony at Raj Bhavan.
"There is no doubt that the Bar is the mother of the Bench. But how do you cultivate yourself? It is your outstanding professional conduct and your efficiency and your delivery and the Bar that improves upon the judgment. But how to educate yourself?", Chief Justice AP Sahi remarked. He went on to say,
"I will only share with you that it is not only the education of the mind, but what is more important is the education of the heart. And it is here, the role of the Bench steps in. It would be better if justice is delivered from the heart, reason being that law is good - whatever is legal is no doubt just - but justice is better."
The aspect of social justice featured prominently in Chief Justice Sahi's address. While welcoming the judge, Advocate General Vijay Narayan had made note that the judgments passed by Justice Sahi during his time on the Bench reflect a strong sense of social justice and deep constitutional values on a wide variety of topics. He added,
"Given your Lordship’s long tenure and vast experience, I can say with utmost confidence, that your lordship would make a significant contribution to the administration of justice while maintaining the great traditions of this hallowed institution."
During his speech, Chief Justice AP Sahi expressed that he felt like a part of the family at the Madras High Court.
"I was wondering as to whether I will be so welcomed here or not. But I find - people say two is company, three is a crowd - 15,000 is a family. I believe I am in my family."
Chief Justice Sahi expressed his admiration for the State of Tamil Nadu, observing that
"I have come to a land, a province, that is not only rich in culture and civilisation - not only in the profession of law - but you just imagine the expanse that your soil has contributed to the canvas of civilisation…. And the canvas spreads, if I may say so, from divinity - Thiruvallavur - to infinity, Ramanujan. The profession of law is just one part of it."
He went on to laud the contributions of the Madras High Court to the field of law, stating that its contribution is unparalleled in the history of this country. Chief Justice Sahi was particularly appreciative of the contributions of Advocate Alladi Krishnaswamy Iyer, given his role in drafting the Indian Constitution. He noted,
"It cannot be described in words (referring to Krishnaswamy Iyer's contributions). It has laid down ... the basic structure. It is something different that the Supreme Court codified it after half a century. But the foundations had been laid long before.
After all, what does a common man aspire for? The common man does not know the rigmaroles or the semantics or the jugglery or even the gymnastic catapults that go on in courts. He only wants - what is known as the highest sense that one aspires for - and that is justice. I think the common man needs it more today than he needed it before."
He went on to say,
"I am only reminded of a great personality of your Bar...Mr Krishnaswamy Iyer KT. I was unknowingly blessed by his work (on the) professional art of advocacy.. The book was given to me by none else than by Justice JS Varma, former late Chief Justice of India, whom I had the occasion to meet. And I paid my tributes to that great man by getting it published - 500 copies - and distributing it to the lawyers in Patna High Court..."
Chief Justice Sahi's transfer from the Patna High Court to Madras was notified by the government last month.
Born in January 1959, Justice Sahi obtained his law degree in 1985. He enrolled as an advocate the same year, following which he practiced in the Allahabad High Court, primarily on the cvil and constitutional side. He was elevated as an additional judge of the Allahabad His Court in September 2004, following which he was made a permanent judge in August 2005. In November 2018, he was appointed as Chief Justice of the Patna High Court.
High Court parking and other woes brought to the new Chief Justice's notice
While welcoming Chief Justice AP Sahi to the High Court, Madras High Court Advocates' Association (MHAA) Vice President Sudha highlighted certain issues requiring prioritised redressal.
Apart from reiterating a consistent request for enabling the representation of more women on the High Court Bench, the Chief Justice was also urged to redress issues of parking at the High Court. In this regard, Sudha pointed out that lawyers are often constrained to leave their vehicles outside the High Court and by the main road. To address the issue, she suggested that the new Chief Justice consider taking steps to introduce automated, multilevel parking at the High Court.
She also requested that the Chief Justice look into issues of inadequate chambers space for lawyers, financial assistance for a fully digitalised library, and the construction of a new arch at the Aavin gate, which is the biggest entry point for litigants.
She added that she hoped to see that these issues are addressed during Chief Justice Sahi's tenure and that "another wish list" may be presented later, given the immense growth of the Madras Bar.
The Chief Justice acknowledged these demands during his speech, while also remarking in lighter vein,
"Coming to your 'wish list' - somebody asked a lawyer, please ask for three wishes that would be granted. He (lawyer) said, I should have success in life. Alright granted - what is your second wish? He (lawyer) said, I should be comfortable enough and earn a lot of money. Alright granted, but what is your third wish? He (lawyer) said, I should be granted the liberty to ask for more wishes."
Other speakers at the event included Chairman of the Bar Council of Tamil Nadu and Puducherry PS Amalraj; Madras Bar Association President ARL Sundaresan; President of the Women Lawyers' Association Louisal Ramesh and Law Association President L Chenkuttuvan.
Former Chief Justice of the Jammu and Kashmir High Court, Justice Paul Vasanthakumar, Allahabad High Court judge, Justice Abdul Moin, Co-Chairman of the Bar Council of India S Prabhakaran, and various law officers of the state also attended the event.
AgustaWestland: Christian Michel alleges interference by CBI, ED during Consular Access; Court seeks report from Tihar Jail authorities
Alleged middleman in the AgustaWestland deal, Christian Michel has filed an application before the CBI Court alleging interference by CBI and Enforcement Directorate (ED) officials during Consular access when British High Commission officials went to meet Michel in Tihar jail.
A Special CBI Court today sought a report from Tihar Jail authorities in connection with the same. Michel is represented by Advocates Aljo K Joseph, Sriram Parakkat and Vishnu Shankar.
As alleged in an application moved before the CBI Court presided over by Judge Arvind Kumar, the CBI and ED Officials had visited him at the same time as the visit of British consular who was due to meet him.
It is further alleged that during the consular visit, ED and CBI officials "tried to interfere with the entire process and they checked all the articles which were carried by the Consular and tried to talk to Christian Michel James.."
Emphasizing on the Vienna Convention on Consular Relations 1963, Michel has submitted that once consular access is approved, the consular officer must be free to communicate with nationals of the sending State and have access to them and vice versa.
However, the consular visit was allowed to Michel after 4-5 requests and the same is in violation of the Convention. Moreover, it was interrupted by CBI and ED officials, it has been alleged.
It was further submitted that when in judicial custody, it is the prerogative of the Court to permit an investigating agency to visit an accused for any reason in Jail.
Since no permission to visit Michel was sought in the present case, it is argued that the ED and CBI officials visiting him in Jail was illegal.
Michel has also cited the example of Kulbhushan Jadhav's case when India had approached the International Court of Justice against denial of consular access by Pakistan, an act which was held by the ICJ to be violative of Article 36 of Vienna convention.
Michel has thus sought an inquiry into the incident.
Christian Michel is accused of having entered into as many as twelve contracts with AgustaWestland to legitimize the illicit commission/kickbacks amounting to 42.27 Euro million received on the procurement of VVIP helicopters by the Government of India.
After being extradited to India from Dubai, Michel was produced before the CBI Court on December 5 and sent to CBI custody. On December 22, he was sent to seven days’ ED custody by the CBI Court.
Christian Michel was finally sent to judicial custody on January 5 and remained in Tihar Jail ever since.
Michel's bail plea is currently pending with the Delhi High Court.
The matter would be heard next on November 18.
The Central Government has notified the appointment of Subhasis Talapatra, Judge of the Tripura High Court as the Acting Chief Justice of the same court today.
Justice Talapatra will take charge as the Acting Chief Justice of the Tripura High Court from the date on which Justice Sanjay Karol relinquishes charge of the office of Chief Justice. Justice Karol was recently transferred to the Patna High Court.
Justice Talapatra had earlier served as the Acting Chief Justice of Tripura High Court once before, for a 12 day period last year, following the elevation of Chief Justice Ajay Rastogi to the Supreme Court.
Justice Talapatra did his graduation in Arts and Law from University of Calcutta. He enrolled with the Bar Council of Assam, Nagaland, Meghalaya, Manipur, Tripura, Mizoram and Arunachal Pradesh on September 12, 1990. He mainly practised at Agartala Bench of Gauhati High Court and appeared in Constitutional, civil and criminal matters. He was designated as a Senior Advocate on December 21, 2004.
Justice Talapatra was sworn in as an Additional Judge of Gauhati High Court on November 15, 2011. He was made a Permanent Judge of the High Court in September 2013.
[Read the notification here]
Scaling down of marks by DU due to inclusion of Multimedia and Web Technology in best-four subjects violates Article 14, Delhi HC
The Delhi High Court has held that the scaling down of marks by 2.5% by Delhi University because of the mere inclusion of Multimedia and Web Technology as one of the best-four subjects of a candidate was in violation of Article 14 of the Constitution of India.
The judgment was passed by a Single Judge Bench of Justice Rajiv Shakdher in a petition preferred by one Sanchi Dilavari (petitioner).
The petitioner sat for the grade-XII examination conducted by the Central Board of Secondary Education (CBSE) in May 2019. The subjects chosen by the petitioner were in line with Circular No. 26 dated October 23, 2003, issued by the CBSE and were as follows:
(i) English Core (ii) Economics (iii) Business Studies (iv) Accountancy (v) Multimedia and Web Technology (vi) Mathematics (vii) Work Experience (viii) Physical and Health Education and (ix) General Studies.
In June 2019, the petitioner made an online application for gaining admission the BA Honours (Business Economics) programme at Delhi University. She had secured 92% in the grade-XII examination based on the marks obtained in the best-four subjects i.e. English, Business Studies, Economics, and Multimedia and Web Technology.
It was the petitioner's grievance that she was unable to get admission in a college of her choice as her marks were scaled down by 2.5% on account of Multimedia and Web Technology being included in her best-four subjects.
Due to this, the petitioner was left with no option but to take admission for evening classes at Shyam Lal College at Delhi University.
Being aggrieved, the petitioner approached the High Court. As an interim measure, the petitioner was granted provisional admission in the morning session at Satyawai College against a seat vacant in the EWS category.
The petitioner argued that the scaling down of marks by 2.5% was unsustainable in law and contrary to the provisions of the 2003 circular issued by the CBSE. The circular had granted equal weightage to all three courses related to computers i.e. Computer Science, Informatics Practices, and Multimedia and Web Technology.
Delhi University argued that although there was no provision for scaling down of marks in the information bulletin for the academic session 2019-2020, the same was done on account of directions contained in a judgment passed by a Division Bench of the Court in Charanpal Singh Bagri v. University of Delhi.
It was argued that as per this judgment, Delhi University had to grant admissions in the academic session 2019-2020 based on the eligibility criteria provided for admissions to the undergraduate courses in the academic session 2018-2019.
Delhi University further contended that the issue of scaling down of marks was also raised in Muskan Aggarwal vs. University of Delhi, but no relief was granted.
Lastly, it was submitted that since the seat available in the Satyawati College was a seat that fell in the EWS category, the petitioner who belonged to the General category could not be granted admission as a regular student against the said seat.
After hearing the parties and perusing the two judgments, the Court opined that neither of the judgments dealt with the issue which arose for consideration in the instant writ petition.
"The broad principle which has been formulated in the Division Bench judgement was that change in the eligibility criteria for admission of students to colleges cannot be done midstream. Therefore, if this principle is applied, it would only help the cause of the petitioner."
The Court noted that in the instant case, what was material was that the petitioner had chosen the subjects that she wished to pursue in grade-XI and grade-XII in 2016-17 after she passed her grade-X exam. The same was made in accordance with the representation made by the CBSE in its circular that all computer subjects had equal weightage.
More specifically, it was suggested that irrespective of which of the three courses related to computer a student chooses, it would be at par with other subjects such as Physics, Chemistry, Maths, Accountancy, Geography, etc. for all other purposes.
Therefore, a mid-stream change could not have been brought about by the University without consulting the CBSE, the Court held.
It further added that Delhi University's argument that scaling down was done in compliance of the information bulletin issued for the academic session 2018-19 could not sustained, as the petitioner could not have altered her choices of subjects after she had indicated her options in 2016-17.
The Court also rejected the argument that the seat provisionally offered to petitioner was an EWS seat and thus could not be granted to a candidate from the general category.
"Ordinarily, the reserved seat should go to a candidate who falls in such a category. If, however, no candidate is available in the reserved category, the seat ought not to be wasted only because the person seeking admission belongs to the General category."
The Court thus concluded,
"...I am persuaded to hold that the denial of admission to the petitioner by scaling down her marks by 2.5% because she included Multimedia and Web technology as one of the subjects in the best-four subjects chosen by her was not fair and, in that sense, violative of Article 14; which is the unspoken gravamen of the petitioner’s case.
The fact that Multimedia and Web Technology has been singled out for scaling down of marks whereas no such provision is made qua other computer subjects (i.e. Computer Science and Informatics Practices) makes the unfairness even more egregious."
In view of the above, the Court allowed the petition and granted regular admission to the petitioner for the morning classes at Satyawati College
The petitioner was represented by Advocate Rajeshwari H.
Delhi University was represented by Advocates Mohinder JS Rupal and Kousik Ghosh.
CBSE was represented by Advocates Amit Bansal and Seema Dolo.
Read the Judgment:
The Supreme Court has held that a financial creditor can be offered Minimum Liquidation Value under a resolution plan in cases where the corporate insolvency resolution process has begun well before the amendment to Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which came into existence on October 5, 2018.
The Judgment was passed by a Division Bench of Justices Arun Mishra and S Ravindra Bhat in an appeal against an order passed by the National Company Law Appellate Tribunal (NCLAT).
Corporate Insolvency Resolution Process was initiated against the corporate debtor, M/s. Rave Scans Private Limited, under Section 10 of IBC in January 2017.
The appellant, Ravi Jain was the resolution applicant of the corporate debtor whose liquidation value was ascertained at Rs 36 crores. Against this liquidation amount of Rs 36 crore, the appellant offered Rs. 54 crores to revive the Corporate Debtor in terms of the resolution plan.
A resolution plan by the appellant was subsequently submitted to the adjudicating authority, i.e., the Principal Bench of the NCLT and approved.
One of the Financial creditors, Hero Fincorp Ltd., challenged the approval before the NCLAT on the ground that the plan was discriminatory. Hero Fincorp, who had dissented with the resolution plan, alleged that the secured financial creditors were provided with a higher percentage of their claim amounts i.e. with 45% of their admitted claims while it had been allowed a lesser percentage of its admitted claim i.e. 32.34%.
The remarks column in the resolution plan showed that the amount offered to Hero Fincorp was based on Minimum Liquidation Value under the unamended Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
The NCLAT set aside the NCLT order and directed the resolution applicant to increase the liquidation value of the offer to Hero.
Assailing the NCLT order which was passed on October 17, 2018, the NCLAT held that the NCLT failed to notice that a resolution plan which discriminated against a dissenting financial creditor could not be approved in terms of the amended Regulation 38.
The NCLAT observed that under Section 30(2)(b) (ii), such differential treatment must only be made in such a manner as may be specified by the Insolvency Board, which shall not be less than the amount to be paid to these creditors in accordance with Section 53(1) in the event of liquidation of the corporate debtor.
NCLAT also observed that the appellant had noticed that Regulation 38 was amended on October 5, 2018, however, neither was it brought to the notice of the NCLT when the matter was taken up for approval nor was the resolution plan amended accordingly.
In light of this, the NCLAT held that the resolution plan was discriminatory and violative of Section 30(2)(e) IBC and directed that the successful resolution applicant to remove the discrimination by providing similar treatment to the appellant.
After hearing the counsel appearing for the appellant, corporate debtor, and Hero Fincorp, the Supreme Court noticed that while Hero Fincorp was provided with 32.34% of its admitted claim as it had dissented with the plan, Tata Capital Financial Services Ltd. was provided with 75.63% of its admitted claim and other financial creditors such as Indian Overseas Bank, Bank of Baroda and Punjab National Bank were provided with 45% of their admitted claims.
It further noted that the resolution plan was approved and, except the objections of the dissenting creditor i.e Hero Fincorp, had even attained finality.
Given the fact that the resolution process began well before the amended regulation came into force i.e. January 2017 and the resolution plan was prepared and approved before the amended Regulation 38 which came into existence on October 5, 2018, the Court opined that the NCLAT order requiring the appellant to update its resolution plan was not justified.
"Given that the resolution process began well before the amended regulation came into force (in fact, January, 2017) and the resolution plan was prepared and approved before that event, the wide observations of the NCLAT, requiring the appellant to match the payout (offered to other financial creditors) to Hero, was not justified."
The Court, therefore, ordered,
“Having regard to these factors and circumstances, it is held that the NCLAT’s order and directions were not justified. They are hereby set aside; the order of the NCLT is hereby restored.”
Read the Oder:
India Justice Report 2019: Only 15 million out of 1 billion eligible Indians provided legal aid services in last 14 years
The India Justice Report 2019 measures the capacity of four aspects of the justice system - the police, the prison system, the judiciary and legal aid - in each state, against its own declared benchmarks.
The report contains various important observations with respect to legal aid in terms of the functioning of district legal services authorities, paralegal volunteers in the system, diversity in the legal aid space, workload, budget, and infrastructure, amongst others.
The report observes that since 1995, only 15 million people have benefited from legal aid services in a country where over 80% per cent of 1.25 billion people are actually eligible for legal aid.
For the purpose of the study, legal aid services are not only restricted to representation in court cases, but also include spreading legal literacy, facilitating actualization of the entitlements of people under welfare laws and schemes, and the provision of advice and counselling.
It is also observed that lawyers are not trained well enough to provide satisfactory solutions to the people. It also states that resources such as finance and human resources are not optimally or effectively utilized. In this regard, the report states,
"The lack of optimal financial management and well trained human resources, poor training of legal aid lawyers on their duties and responsibilities, inadequate performance monitoring and absence of mechanisms to gauge customer satisfaction hamper the functioning of LSIs to a great extent. A bigger concern has been ensuring the quality of services provided which is directly linked to the training, documenting, reporting and monitoring of legal aid providers. Monitoring and mentoring committees either don’t exist and if they do, their functioning is sub-par."
The prime observations made by the report with reference to the current legal aid system in India include the following:
Uneven organizational practices
As of 2018, there were 664 district legal services authorities (DLSAs) and 2,254 sub-divisional/taluka legal services committees established across districts. However, states such as Tripura, West Bengal, Telangana, Chhattisgarh, Gujarat and Uttar Pradesh are yet to establish DLSAs in all their judicial districts.
It is also pertinent to note that with respect to full term secretaries, against 664 DLSAs, the number of sanctioned posts of full-time secretaries to DLSAs stood at 603, with a clear deficit of 61. The number of full-time secretaries actually in place was 525—a deficit of 139 to the number of DLSAs.
Another observation made in the study was that smaller jurisdictions such as Arunachal Pradesh and Mizoram are yet to implement full-term secretaries, which plainly showcases organizational and structural disparities as far as DLSAs are concerned.
Another issue is the uneven distribution of paralegals. The report mentions that paralegals are an important link between legal services institutions (LSIs) and the community. However,
"To be effective they need to be trained, monitored and fairly compensated for their services."
The report also states that as per 2019 data, there were 63,759 panel lawyers and 69,290 paralegal volunteers (PLVs) working with LSIs across the country.
“Para-legal volunteers (PLVs) serve as the bridge between people and the legal aid system. 22 of 36 states and Union Territories average less than 10 PLVs per lakh population.”
Not enough women representatives
The study highlights the importance of gender diversity to reach out to more people. In this regard it states,
"The presence of a large number of women panel lawyers and PLVs is essential for reaching out to a constituency that is often under-served and faces socio-cultural barriers when they try to come forward for legal assistance."
On comparing the gender breakdown of panel lawyers, the report states the following,
“Amongst panel lawyers, the gender breakdown is much less encouraging, only 18 per cent of them being women. Amongst the eighteen large and mid-sized states, Kerala ranks highest (40 per cent) followed by Karnataka (30 per cent) and Maharashtra at (27 per cent). Rajasthan, Odisha, and Uttar Pradesh all have less than 10 per cent. Amongst the seven small states Meghalaya ranks the highest (54 per cent) and Arunachal Pradesh lowest at (15 per cent.)”
Budget utilization problematic
Funds for LSIs are sourced through both the National Legal Services Authority (NALSA) and state budgets. However, the report pertinently observed that according to the data collected in 2017–2018, many states had absolutely little to no fund allocation for LSIs. In this regard, the report reads,
“In 2017–2018, six states and UTs including Jharkhand and Assam had no funds allocated from the state, whereas Nagaland, Arunachal Pradesh, Manipur, Tripura saw less than 20 per cent being provided by the state governments.”
On a positive note, Uttar Pradesh and Andhra Pradesh saw more than 80 per cent of their funds coming from the state governments.
Another important aspect is the utilization of funds. The report observed that in the same year, only five states actually managed to utilize more than 90 per cent of NALSA allocated funds, with Rajasthan (98 per cent) and Chhattisgarh (97 per cent), topping the list. On the other hand, UTs such as Daman and Diu, and Dadra and Nagar Haveli spent the least, i.e. a mere 4 per cent of the funds allocated, followed closely by Lakshadweep (7 per cent).
The report also points out that only 16 states and Union Territories had spent over 50% of their total legal aid budget.
Lok Adalats - Sharing the workload of courts
On the topic of effectiveness of Lok Adalats, the study reveals,
"In 2017–2018, countrywide Lok Adalats disposed 7.85 million cases. Of these, 5.92 million cases were disposed by National Lok Adalats (conducted by NALSA), 2.82 million of which (or, 48 per cent) were in the pre-litigation stage. Another 1.93 million cases were disposed by Lok Adalats held by SLSAs,of which 0.98 million (or, 51 per cent) were in the pre-litigation stage."
Among the 18 large and mid-sized states, the highest number of cases disposed at the pre-litigation stage was in West Bengal.
The chart below presents a graphic picture of how the different categories of states have performed during the period of 2017 - 2018
As depicted above, only the state of West Bengal witnessed praiseworthy results as compared to the other states in the effective disposal of cases by utilizing methods of alternate dispute resolution. 93.8% of the pre-litigation cases that were taken up were disposed of and 2.8% were not disposed of. The states of Mizoram and Sikkim also bore improving results in this aspect amongst the small states.
Infrastructure, a limited area
Infrastructure is a fundamental pre-requisite in the fulfilment of effective legal aid services, the report notes. The NALSA (Legal Services Clinics) Regulations, 2011 requires legal aid clinics be established in areas where people face ‘geographical, social and other barriers’.
Statistics in the report point out that a total of 14,161 clinics existed across around 597,000 villages. As of 2017, on average, one legal services clinic serves 42 villages. There are only eleven states and UTs where a legal service clinic covers, on average, less than 10 villages. One state (Arunachal Pradesh) and three UTs (Delhi, Lakshadweep and Andaman and Nicobar Islands) don’t have a single legal service clinic.
Furthermore, various regulations mandate the setting up of legal services clinics in jails subject to financial availability, the study reveals. On this topic, the report observed,
“Amongst the large states, Gujarat has the most jail legal services clinics—48 clinics in 27 jails: Punjab has 32 clinics in 26 jails; Chhattisgarh has 34 in 30 prisons. Kerala, Maharashtra and Uttar Pradesh have less than half the number of clinics required. Jharkhand, Odisha, Tamil Nadu and West Bengal do much better with clinics nearly matching the number of jails."
The study further states that the coverage of clinics to villages is quite poor making it unable to provide easily accessible legal assistance to every deserving person.
The report also highlights the importance of awareness of the law.
"The use of the legal aid machinery to spread legal awareness about the Constitution, rights and legal relationships between individual and the State, and individuals inter se is particularly desirable and valuable."
The chapter on Legal Aid concludes,
"Improved monitoring of quality legal assistance, evaluations of the needs of individuals and local communities, and their satisfaction with the services provided, would go a long way in realizing the true potential of the huge complex of legal services offered."
[Read the report]India Justice Report 2019
NPAC's Arbitration Review:A convenient argument of forum non conveniens rejected by Delhi HC, Parties referred to arbitration instead!
Mohammad Kamran and Alipak Banerjee
Continuing the trend of arbitration-friendly rulings, the Delhi High Court, recently in Jes & Ben Groupo Pvt Ltd & Ors v. Hell Energy Magyarorzag Kft (Hell Energy Hungary Ltd) & Anr referred the parties to arbitration before the Hungarian Chamber of Commerce, Budapest and dismissed the civil suit filed to wriggle out of the arbitration.
The Plaintiff No 1 and Defendant No 1 entered into an Exclusive Distribution Agreement (Distribution Agreement), granting exclusive distribution rights to Plaintiff No 1 in respect of the product Hell Energy (an Energy Drink). Due to failure to fulfill 75% of the annual order volume, Defendant No 1 terminated the Distribution Agreement. Aggrieved by the termination, the Plaintiffs filed a civil suit for injunction, cancellation, declaration, reconciliation/ rendition of accounts and damages. Relying on the arbitration clause in the Distribution Agreement, the Defendants filed an application under Section 45 of the Arbitration and Conciliation Act, 1996 (Act) objecting to the maintainability of the suit and sought a referral to arbitration. Section 45 of the Act confers powers on a judicial authority to refer parties to arbitration unless the agreement is found to be null and void, inoperative, or incapable of being performed.
Decision of the Delhi High Court:
The Delhi High Court ruled that: (a) the scope of power under Section 45 of the Act requires the Court to take a prima facie view of the matter on the basis of material and evidence produced by the parties on record. (b) forum non conveniens cannot make a subject matter non-arbitrable or incapable of being performed; (c) when both parties have the expertise and the contract is a commercial transaction, the plea of unequal bargaining power cannot be raised to avoid arbitration; (d) the parties cannot be allowed to wriggle out of an arbitration by cleverly drafting the plaint and impleading non-signatories to the arbitration agreement in the civil suit; (e) the allegations on malpractices and predatory practices are questions of disputed facts and within the scope of adjudication by the Arbitral Tribunal, and do not prima facie render the arbitration agreement null and void; (f) although allegations of fraud and malpractice was contended to confer jurisdiction on the civil court, and wriggle out of arbitration, but a review of the plaint does not disclose any allegations of fraud, much less serious fraud; (g) where the parties have expressly entered into an agreement referring any dispute to arbitration, the same cannot be held to be contrary to public policy.
This appears to be a well-reasoned ruling by the Delhi High Court. Some of the important aspects of the ruling have been discussed below:
Scope of enquiry under Section 45 of the Act:
The Delhi High Court relied on the decision of the Supreme Court in Shin-Etsu Chemical Co. Ltd v. Aksh Optifibre Ltd and Anr (2005) 7 SCC 234, where it was held that at the pre-reference stage, the court should draw a prima facie finding as to the validity of the arbitration agreement and refer the parties to arbitration. The Delhi High Court also referred to the ruling of the Supreme Court in Sasan Power Ltd v. North American Coal Corpn (India) (P) Ltd. (2016) 10 SCC 813, where it was observed that the scope of enquiry under Section 45 is only confined to whether the arbitration agreement is void, inoperative or incapable of being performed, but not the legality and validity of the substantive contract. Relying on the above decisions, the Delhi High Court upheld the arbitration clause in the Distribution Agreement and directed the parties to arbitration.
Forum Non Conveniens cannot bar arbitration:
The Delhi High Court relied on the decision of the Supreme Court in Harmony Innovations Shipping Ltd v. Gupta Coal Indian Ltd and Ors, AIR 2015 SC 1504 and negated the objection of the Plaintiff. Indeed, forum non conveniens such as financial prejudice or geographical location cannot be contended to come out of a contractually agreed mechanism of dispute resolution. In fact, the Supreme Court in Modi Entertainment Network & Anr vs W.S.G.Cricket Pte. Ltd, while ruling on the jurisdiction of the court, had opined that a party to the contract containing jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approaches the court of choice in which exclusive or non- exclusive jurisdiction is created, the proceedings in that court cannot per se be treated as vexatious or oppressive nor can the court be said to be forum non-conveniens.
Impleading Non-Signatories to the arbitration:
Although the Delhi High Court held that the non-signatories impleaded in the civil suit are not necessary parties, as the dispute related to the termination of the Distribution Agreement, the law on impleadment of non-signatories to the arbitration is well settled. It is not enough for a party to implead non-signatories and wriggle out of an arbitration. The Supreme Court in Chloro Control has held that the legal bases to bind alter ego to an arbitration agreement are implied consent, third party beneficiary, guarantors, assignment or another transfer mechanism of control rights, apparent authority, piercing of the corporate veil, agent principle relationship etc. Subsequently, in Cherian Properties Limited v. Kasturi and Sons Limited and Ors, the Supreme Court has held that the effort should be to find the true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intent to bind someone which is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory. Similar findings have been arrived at by the Supreme Court in Purple Medical Solutions Private Limited v. MIV Therapeutics Inc and Anr and Delhi High Court in GMR Energy Limited v. Doosan Power Systems India Private Limited & Ors as well.
Mohammad Kamran, Senior Member, International Dispute Resolution and Investigations Practice, Nishith Desai Associates
Alipak Banerjee, Leader, International Dispute Resolution and Investigations Practice, Nishith Desai Associates
- Crafted by Pixelmattic