The Lawyer's Digest: Supreme Court Judgments passed in May 2020

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

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

Here are the summaries of judgments passed in May 2020.

Arbitration

In South East Asia Marine Engineering and Constructions Ltd. v. Oil India Limited, an arbitral tribunal had decreed an award in favour of the appellants, holding that a government circular which caused an increase in the price of high speed diesel triggered the change in law clause under the contract. The District Court upheld the award in a challenge under Section 34 of the Arbitration Act 1996 and held that the award did not warrant judicial interference. The High Court, in an appeal under Section 37 of the Arbitration Act, while setting aside the award, held that said clause was akin to a force majeure clause. However, the Supreme Court while setting aside the award, held that the arbitral tribunal had not taken into account all clauses while interpreting the contract, and also held that the High Court’s holding that clause 23 was inserted in furtherance of the doctrine of frustration was incorrect. The Court also held that as under the contract, price was payable to the contractor for full and proper performance of its contractual obligations and as the contract stated that the rates, terms, and conditions were to be in force till the completion or abandonment of the last well being drilled, the contract was based on a fixed rate and therefore price fluctuations owing to the circular cannot be brought under the clause unless specific language pointed to such inclusion. [Keywords: change in law, force majeure] [Coram: N.V. Ramana, J., Mohan M. Shantanagoudar, J., Ajay Rastogi, J.]

In Patel Engineering Ltd. v. NEEPCO, the petition challenged an order of the High Court declining to review a judgment setting aside a domestic arbitral award. The Court, relying on Associated Builders (2015) 3 SCC 49 and Ssangyong Engineering (2019) 15 SCC 141 held that the ground of patent illegality is available under Section 34(2A) of the Arbitration Act 1996 for setting aside domestic awards made after 23.10.2015. The Court held that an award could be set aside if the decision of the arbitrator is perverse, or so irrational that no reasonable person would have arrived at the same, or the construction of the contract is such that no fair or reasonable person would take, or the view of the arbitrator is not even a possible view. In this case, the Court upheld the view of the High Court that no reasonable person could have arrived at the arbitrator’s conclusion. The Court noted that the judgment followed the test set out in Associated Builders and Ssangyong Engineering and could not be faulted. [Keywords: Patent Illegality, Section 34(2A) of the Arbitration Act 1996 Applicability of the Amendment Act 2015] [Coram: R. Banumathi, J., Indu Malhotra, J., Aniruddha Bose, J.]

Criminal Law

In State of Rajasthan v. Mehram & Others, the Court partly allowed the appeal on the grounds that the Accused No. 5 was deprived of the power of self-control by grave and sudden provocation due to repeated unauthorised entry by the complainant party into the accused’s field. The Court also noted that unexplained injuries on the accused persons does not necessarily lead to an acquittal. The nature of the injuries strongly suggested that the accused persons were the aggressors and not the complainant. The Court also held that the High Court erred in stating that there was a common object as the incident was a free-fight where the accused persons exceeded their right to self-defence. [Keywords: Sections 148, 302, 304 Part I of the IPC] [Coram: A.M.Khanwilkar, J., Dinesh Maheshwari, J.]

In Arnab Ranjan Goswami v. Union of India & Ors., the petitioner sought quashing of FIRs and complaints lodged against him in multiple jurisdictions under Art. 32 of the Constitution. The Court, relying on TT Antony (2001) 6 SCC 181 held that the FIRs lodged across various states pertained to the same cause of action and thus quashed all FIRs and complaints except one which came to be transferred to Mumbai, where the Petitioner also had lodged a complaint. The Court, relying on CPDR (2010) 3 SCC 571 held that the power to transfer an investigation must be used sparingly and that an accused person does not have a choice in regard to the mode or manner in which investigation may be carried out by an investigating agency. Further, mere allegations against the investigating agency do not constitute sufficient basis to transfer the investigation. The Court, relying on Romila Thapar (2018) 10 SCC 753 held that the accused does not have a say in the matter of appointment of the investigating agency. The Court refused to exercise jurisdiction under Art. 32 of the Constitution to quash the FIR before the NM Joshi Marg Police Station and directed the petitioner to avail remedies under the CrPC before the appropriate High Court. [Keywords: Transfer of Investigation to CBI, Freedom of Speech] [Coram: D.Y. Chandrachud, J., M.R. Shah, J.]

In Sonu v. State of Madhya Pradesh, The Court, relying on Sanwant Khan AIR 1956 SC 54 and Baiju AIR 1978 SC 522, laid down an eight-part test on when an accused person could be convicted for offences other than theft when the stolen article is recovered from the accused. While the tests include that both offences must be part of one transaction and must have been committed at the same time; the Court held that an inference that the person in possession is guilty of offences other than the theft may not be drawn. Further, the Court, relying on Hardev Singh AIR 1975 SC 179 held that the essence of Section 34 is that the common intention must be for the very offence which the accused is charged with. As the only evidence against the accused was the recovery of a mobile phone from him, the Court acquitted the accused. [Keywords: Section 114B Indian Evidence Act, Circumstantial evidence] [Coram: Sanjay Kishan Kaul, J., K.M. Joseph, J.]

In Ombir Singh v. State of Uttar Pradesh, the appellant challenged a judgment of the Allahabad High Court confirming his conviction under Section 302 read with Section 34 of the IPC and Section 27 of the Arms Act 1959. The Court, relying on Jafel Biswas (2019) 12 SCC 560 held that a mere delay in compliance of Section 157 of the CrPC is not sufficient ground to acquit the appellant, as the obligation of the IO is a public duty and does not affect the trial. [Keywords: Effect of non-compliance of Section 157 CrPC][Coram: N.V. Ramana, J., Mohan M. Shantanagoudar, J., Sanjiv Khanna, J.]

Service Law and Administrative Law

In Gopal Prasad v. Bihar School Examination Board & Others, the Court, was faced with a peculiar matter pertaining to Rule 73 of the Bihar Service Code. According to the same, an employee who has joined the service before the age of 18 would be deemed to have attained the age of 18 on the date of joining. The question before the Court was whether the age of retirement should be computed on the basis of the actual age of the person or on the basis of the age if the person were deemed to have attained the age of 18 on the date of joining. Banerjee, J., opined that the age of retirement and qualifying service for the purpose of retirement benefits are different and that qualifying service for retirement means the length of service for the purpose of computation of retiral benefits would commence from the attainment of the age of qualifying service of pension. To the contrary, Rastogi, J., opined that as a person may not enter into service prior to attaining majority, the maximum length of service under the rules is 42 years. Since there was disagreement between the Judges, the matter was directed to be placed before the Hon’ble CJI for reference to a larger bench. [Keywords: Age of Superannuation] [Coram: Indira Banerjee, J., Ajay Rastogi, J.]

In Chairman-cum-Managing Director, Mahanadi Coalfields Limited v. Sri Rabindranath Choubey, the issues were whether an employer could withhold payment of gratuity of an employee after superannuation due to pending disciplinary proceedings and whether the punishment of dismissal could be imposed in proceedings continuing after an employee has become superannuated if found guilty, under Rule 34.2 of the Conduct Discipline and Appeal Rules 1978. The majority, relying on Ram Lal Bhaskar (2011) 10 SCC 249 held that the employer has a right to withhold gratuity during the pendency of disciplinary proceedings and that the disciplinary authority has the power to impose the penalty of dismissal even after the employee attains the age of superannuation where the disciplinary proceedings were initiated while the employee was in service. The Court reasoned that as several service benefits depend upon the outcome of the inquiry, it would be against public policy to let an employee go scot-free after collecting service benefits to which he would not be entitled and the event of superannuation cannot rescue the employee or condone his guilt. The Court gave a purposive interpretation to Sections 4(1) and 4(6) of the Payment of Gratuity Act 1972 and held that the inquiry can be continued given the deeming fiction in the same manner as if the employee had continued in service and appropriate punishment can be imposed apart from the forfeiture of the gratuity including the recovery of pecuniary loss. Justice Rastogi in his separate opinion dissented on the second issue and opined that substantive penalties under Rule 27 including dismissal from service may not be inflicted upon an employee who had retired from service. [Keywords: Disciplinary proceedings after superannuation, withholding of gratuity pending disciplinary proceedings] [Coram: Arun Mishra, J., M.R. Shah, J., Ajay Rastogi, J.]

Constitutional Law

In Punjab National Bank & Others v. Atmanand Singh & Others, the Court reiterating when complex facts are to be determined and evidence to be adduced, the High Court should be ‘loath’ in entertaining such writs and ought to relegate the parties to a civil suit. While agreeing that the High Court may choose to cross examine the affiants in its writ jurisdiction, the same was subject to the High Court doing the same on sound judicial principles. In the present case, the High Court was found to adjudicate upon the writ without even deciding the disputed questions of fact. [Keywords: Article 226, alternative remedy] [Coram: A.M.Khanwilkar, J., Dinesh Maheshwari, J.]

In Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud Sahakari Bank Limited, the Court held that , co-operative banks and multi-state co-operative banks are banks under Section 2(1)(c) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (‘SARFESI Act’), and while state laws might regulate co-operative societies regarding their incorporation, regulation, and winding up, the union parliament was competent to enact laws to regulate their banking function. The Court also stated that the main activity of co-operative banks is banking, and that since recovery is an essential part of banking, the recovery procedure under Section 13 of the SARFAESI Act applies and is a legislation relatable to Entry 45 under List I of the Seventh Schedule to the Constitution of India. [Keywords: Entry 45 of List I (Banking), Entry 32 of List II of the Seventh Schedule of the Constitution of India] [Coram: Arun Mishra, J., Indira Banerjee, J., Vineet Saran, J., M.R. Shah, J., Anirddha Bose,J.]

In Assistant Commissioner (CT) LTU, Kakinada and Others v. M/s Glaxo Smith Kline Consumer Healthcare Limited, the Court referring to ONGC v. Gujarat Energy Transmission Company (2017) 5 SCC 42, noted that when it restricted itself from using its powers under Article 142 directly or use Article 142 to invoke Section 5 Limitation Act, the High Court could not have invoked Article 226 to condone the delay. The Court overruled various judgments of the High Courts including Panoli Intermediate AIR 2015 Guj 97, Phoenix Plasts Company 2013 (298) ELT 481 (Kar.), Electronics Corporation of India 2018 (361) ELT 22(A.P.) on the ground these were based on a ‘faulty’ premise that Article 226 could not be curtailed. The Court stated that High Courts retained their jurisdiction under Article 226 as the parties were still at liberty to approach them to complain of statutory authorities ‘overstepping or crossing the limits of jurisdiction including in flagrant disregard of law and rules of procedure or in violation of principles of natural justice, where no procedure is specified.’ [Keywords: Article 226, Section 31 of the Andhra Pradesh Value Added Tax 2005] [Coram: A.M. Khanwilkar, J., Dinesh Maheshwari, J.]

In Foundation for Media Professionals v. UT of Jammu and Kashmir, a writ petition was filed challenging the restriction of mobile internet speed to 2G and seeking 4G mobile internet. The petition claimed that in light of the existing Covid-19 situation and the national lockdown, such restrictions on the residents of the entire UT of J&K impacts their rights to health, education, business and freedom of speech and expression, that the same is a violation of the directions of the Supreme Court in Anuradha Bhasin (2020) SCC OnLine SC 25 and the Temporary Suspension of Telecom Services (Public Emergency or Public Safety) Rules, 2017, as no Review Committee had been constituted as required under the rules. The respondents contended that fundamental rights had to be balanced against the larger public interest of protecting the security of the State and on balance, the security of the nation should prevail against fundamental rights of the citizens and in prevailing circumstances of continuing insurgency and the spreading of fake news to incite violence, it would not be possible to provide full internet services to the region. Further, the respondents also argued that information regarding Covid-19 was available on websites which could be downloaded through 2G internet and on TV and that there were no restrictions over fixed line internet. The Court, while recognizing its observations in Anuradha Bhasin that the degree and scope of the restriction, temporally and territorially must stand in relation to what is actually necessary to combat an emergent situation, held that while one of the tests of proportionality of the orders is territorial extent of the restrictions, however, compelling circumstances of cross border terrorism cannot be ignored. Further, the Court also noted that the respondents had eased internet restrictions. However, the Court, in light of its orders in Anuradha Bhasin, instead of constituting a Review Committee, which provides for adequate procedural and substantive safeguards to ensure that the imposed restrictions are narrowly tailored, under Rule 2(2) of the Telecom Suspension Rules, constituted a special committee consisting of secretaries at the national and state level to determine the necessity of the continuation of restrictions in the UT of J&K. [Keywords: Fundamental Rights, Internet Restrictions in Jammu and Kashmir][Coram: N.V. Ramana, J., R. Subhash Reddy, J., B.R. Gavai, J.]

Education

In Bihar Staff Selection Commission and Others v. Arun Kumar and Others, the Court deprecated the High Court’s compounding of litigation under the narrow powers under Article 226 by directing re-evaluation of answer sheets in the absence of a provision allowing re-evaluation. The Court, relying upon Pranav Verma 2019 (17) SCALE 731, accepted the recommendations of its committee of experts. [Keywords: Article 226, Public Examination, Article 142, recruitment to public services] [Coram: Rohinton F Nariman, J., S Ravindra Bhat, J.]

In Alapati Jyotsna v. Union of India, a petition under Article 32 of the Constitution sought orders directing the respondents to conduct ‘single counselling’ for filling up seats in Post Graduate Medical Courses leading to Degrees and Diplomas and seats in Diplomate of National Board (DNB) Courses. The Court found that as the counselling and consequential process was at an advanced stage and if the petition was allowed, it would result in complete disturbance of the process of admission for the present year. The Court, while not passing any specific order, observed that it hoped that authorities would enable common counselling for DNB PG seats along with all Post Graduate seats leading to Degrees and Diplomas from the next academic year onwards. [Keywords: Single counselling for PG Medical courses leading to degrees and diplomas] [Coram: U.U. Lalit, J., Dinesh Maheshwari, J.]

Insurance Law

In Canara Bank v. M/s. Leatheroid Plastics Pvt. Ltd., the Court, on a reading of the contract, held that the duty to effect insurance over hypothecated assets was with the borrower and that the bank could not be held responsible if there was any loss or damage to the assets which were not adequately covered by insurance taken by the borrower. However, if the bank effected insurance, such insurance should cover the entire set of hypothecated assets against which credit facilities were extended. The Court interpreted the phrase “The bank is at liberty and is not bound to effect such insurance” to mean that such insurance should carry features which a borrower’s policy would cover and held that any loss arising out of the bank’s actions would amount to deficiency in service under the Consumer Protection Act 1986. [Keywords: Obligation to insure hypothecated assets] [Coram: U.U. Lalit, J., Aniruddha Bose, J.]

Specific Performance, Contract, CPC, Transfer of Property, and Partnership

In Triloki Nath Singh v. Anirudh Singh, the Court stated that the appellant being a non-party to the compromise decree could not avail a legal remedy to question the validity of the compromise decree passed by the High Court by way of a fresh civil suit as the bar contained on Order XXIII Rule 3A was applicable to both parties and non-parties alike. However, the Appellant’s rights were preserved only by the proviso Order XXIII Rule 3 so that the objections may be agitated where the Court when the compromise decree is sought to be effected. [Keywords: Compromise Decree, Section 34 of Specific Relief Act 1963, Order XXIII Rules 3 and 3A of CPC, Order XLIII Rule 1 (m) of CPC] [Coram: A.M. Khanwilkar, J., Ajay Rastogi, J.]

In Guru Nanak Industries v. Amar Singh (Dead) through LRs, the dispute related to the alleged resignation of a partner from a partnership firm and said partner demanding dissolution of the firm. The Court, relying on Pamuru Vishnu (2003) 3 SCC 445 held that when a firm has only two partners, and one of them agrees to retire, it amounts to dissolution of the firm, as a partnership firm must have at least two partners. Therefore, in this case, accounts would have to be settled as per Section 48 of the Partnership Act. [Keywords: Section 48 of the Partnership Act 1932] [Coram: N.V. Ramana, J., Sanjiv Khanna, J., Krishna Murari, J.]

Practice and Procedure

In Ratnagiri Nagar Parishad v. Gangaram Narayan Ambekar, the Court held that the civil courts could not have decided a suit wherein it was prayed that a mandatory injunction be granted against the construction of a solid waste and management project as the project was allegedly injurious to the health of the villages. The Court relied on Section 41(h) of the Specific Relief Act 1963, Section 29 of the 2010 Act as also paragraph 41 in Bhopal Gas Peedith Mahila Udyog Sangathan (2012) 8 SCC 326. Furthermore, applying Anuthala Sudhakar (2008) 4 SCC 594, Hargovind Jasraj and Another (2013) SCC 182. The Court stated as no declaration has been sought by the plaintiffs in the present case, the suit for simpliciter permanent injunction could not be proceeded further at all. This was so because ‘if the matter involves complicated question of fact and law relating to title, the Court will relegate the parties to the remedy of a comprehensive suit for declaration of title, instead of deciding the issue in a suit for mere injunction’. Relying on Kuldip Singh (2000) 4 SCC 50 and Section 41(f), it was held that no case for quia timet action was made out. [Keywords: Section 41(h) of the Specific Relief Act 1963, Section 29 of the National Green Tribunal Act 2010] [Coram: A.M. Khanwilkar, J., Dinesh Maheshwai, J.]

Taxation

In Commissioner of Central Excise, Delhi – III v. M/s. Uni Products India Ltd., In two appeals against the order of the CESTAT on the question of whether car matting should be classified as carpets and other textile floor coverings under Chapter 57 of the First Schedule to the Central Excise Tariff Act 1985 or under vehicles other than railway or tramway rolling-stock and parts and accessories thereof under Chapter 87, the Court held that once the subject goods come within the ambit of the sub-heading ‘Carpets and other textile floor coverings’, the sole reason that they are exclusively made for cars and not for homes does not mean that those goods can be transplanted to the residual entry of ‘other’ of chapter 87. [Keywords: Chapters 57 and 87 of the Central Excise Tariff Act 1985] [Coram: Deepak Gupta, J., Aniruddha Bose, J.]

Electricity

In CLP India Private Limited v. Gujarat Urja Vikas Nigam Limited & Another, a three-judge bench dismissed cross appeals filed by CLP India Private Limited (‘CLP’) and the Gujarat Urja Vikas Nigam. The Court, relying on India Thermal Power Limited (2000) 3 SCC 379, Binani Zinc (2009) 11 SCC 244, Tata Power Company 2019 (7) SCALE 297, held that parties could agree to appropriate terms for the generation and sale of electricity under Section 43A of the Electricity Act 2003 and that it is not necessary that the definition of naphtha-based unit required that naphtha constitute at least 50% of the fuel. However, the tariff must be in accordance with the provisions of Section 43A. The Court also held that mere correspondence and disagreements do not extend the period of limitation, the cause of action arose in May 1996, and that Article 18 of the Limitation Act was applicable. Further, as the agreement between the parties was that the interest on the sum of INR 53.90 crores was payable for the specified period 01.07.2003-31.12.2009, thus CLP’s argument that amounts were payable prior to 01.07.2003 was untenable as nothing prevented CLP from claiming the same during negotiations so as to have it incorporated as a term of the contract. [Keywords: Electricity Act 2003, CERC Tariff Regulations 2001 and CERC Tariff Regulations 2003, Article 18 of the Limitation Act 1963] [Coram: Arun Mishra, J., Vineet Saran, J., S. Ravindra Bhat, J.]

Labour Law

In The Workmen through the Convener FCI Labour Federation v. Ravuthar Dawood Naseem, a contempt petition was filed alleging non-compliance of an order instructing the respondent to regularize and departmentalise certain workers who had been working as daily rated or casual labour. The Court, relying on Ram Kishan (2014) 16 SCC 204, held that only when the disobedience of an order is willful, deliberate, and with full knowledge of the consequences would it constitute civil contempt. As the original order was silent about the system in which the workers had to be regularized and departmentalised, the Court declined to hold the FCI guilty of contempt, even though not all workers had been departmentalised in the Departmental Labour System. [Keywords: Industrial Disputes Act 1947] [Coram: A. M. Khanwilkar, J., Dinesh Maheshwari, J.]

Wills

In Jagmail Singh v. Karamjit Singh, the Court, while setting aside the order of a High Court refusing an application under Sections 65 and 66 of the Indian Evidence Act 1872 on the grounds that the pre-requisite condition of the existence of the will was not proved. The Court relied on Ashok Dulichand [1976] 1 SCR 246 and Rakesh Mohindra (2016) 16 SCC 483 noting that as the revenue officials against whom applications for production of the original will were made did not produce the will but did not unequivocally deny the existence of the will and the scribe of the will and another witness had admitted the existence of such a will, the appellants ought to be allowed to give secondary evidence, as the existence of the will had been established. [Keywords: Sections 65 and 66 of the Indian Evidence Act 1872] [Coram: Navin Sinha, J., Krishna Murari, J.]

In Kavita Kanwar v. Mrs. Pamela Mehta, the Court, relying on H. Venkatachala Iyengar AIR 1959 SC 443 and Shivakumar Civ. App. No. 6076 of 2009 decided on 24.04.2020, held that the probate proceedings are a matter of conscience of the Court irrespective of whether any plea in opposition is taken or not and that the propounder of a Will must satisfy the Court with the removal of all suspicious circumstances. Therefore, non-filing of written statement or objections by any party would not require the Court to grant probate. Further, the Court held that a will cannot be viewed with suspicion merely because the major beneficiary had played an active role in the execution of the well. The relevant consideration should be the cumulative effect of all facts and their impact on the free will of the testatrix according to the Court’s conscience. However, as the testatrix had used technical language which would not be used by a layperson and had merely copied text given to her, the Court did not infer that the testatrix had expressed her own free will in the will. As there were other suspicious circumstances surrounding the will, the Court affirmed the findings of the lower courts that it cannot be said that the testatrix executed and signed the document in question as her will. [Keywords: Sections 59, 61, and 63 of the Succession Act 1925] [Coram: A.M. Khanwilkar, J., Dinesh Maheshwari, J.]

Land Ceiling, Town Planning, Rent Control and Tenancy

In Bangalore Mysore Infrastructure Corridor Area Planning Authority & Anrv. Nandi Infrastructure Corridor Enterprise Limited & Ors., the Appellant Planning Authority challenged the order and Judgement of the High Court setting aside it's letter rejecting the Respondent Company's application for approvals to build Group Housing. The Court observed that the High Court erred in framing questions regarding the grounds set out in the letter of rejection without addressing the preliminary issues of whether the Respondent ought to have resorted to the dispute resolution mechanism set out in the Frame Work Agreement ('FWA'). The Court accepted the Appellant's submission that the FWA provided only for development of self-sustained townships and did not permit deviation by construction of standalone group housing outside the designated locations without prior permission from the State. The Court also held that unless any proposed deviation was approved by the State, application to the Planning Authority would be infirm and non-est in law. The Court also held that the High Court erred in issuing a writ of mandamus directing the Planning Authority to grant Commencement Certificate. [Keywords: Development of Infrastructure Corridor] [Coram: A. M. Khanwilkar, J., Dinesh Maheshwari, J.]