Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In total 4 writ petitions were filed against Air India Ltd./AIL (‘respondent’) by the AIL employees (‘petitioners’), being employed from late 1980s and retired between 2016 and 2018 alleging stagnation in pay and non-promotion of the petitioners along with anomalies in the fixation of pay due to the implementation of the report of the Justice Dharmadhikari Committee, which was constituted by the UoI (through its Ministry of Civil Aviation) to harmonize the differential service conditions of AIL and Indian Airlines Ltd., which came to be merged, a Division Bench of Dipankar Datta CJ., and M S Karnik J., held that the writ petitions although maintainable on the dates they were instituted, have ceased to be maintainable by reason of privatization of AIL which takes it beyond the jurisdiction to issue a writ or order or direction to it.

The Court remarked that when the Air Corporations Act, 1953 was operative, Air India was a statutory body. Thereafter, with the repeal of the said Act by the Air Corporations (Transfer of Undertakings) Act, 1994, Air India ceased to exist but upon its incorporation, AIL became a wholly owned Government company and, thus, an ‘other authority’ within the meaning of Article 12. That position subsisted when these writ petitions were instituted and continued thereafter till privatization of AIL. There is, thus, no doubt that this Court was competent to receive the writ petitions when the same were presented but not maintainable at present.

The question for consideration was regarding maintainability of the writ petitions owing to the intervening event of privatization of AIL, the principal respondent, between institution of the writ petitions and its final hearing before the Court.

The Court noted that the change in the status of the ‘authority’ against whom the writ was initially claimed to play a significant role in determining the issue of maintainability.

In Beg Raj Singh v. State of UP, (2003) 1 SCC 726, the Court laid down in para 7 that

A petitioner, though entitled to relief in law, may yet be denied relief in equity because of subsequent or intervening events i.e., the events between the commencement of litigation and the date of decision. The relief to which the petitioner is held entitled may have been rendered redundant by lapse of time or may have been rendered incapable of being granted by change in law.

In Rajesh D. Darbar v. Narasingrao Krishnaji Kulkarni, (2003) 7 SCC 219, the Court laid down that the courts are entitled to mould, vary or reshape the relief to make it justly relevant in the updated circumstances, provided

(i) circumstances in which modified remedy is claimed are exceptional;

(ii) such modification, if the statute on which the legal question is based, inhibits by its scheme or otherwise, such change; and

(iii) the party claiming the relief must have the same right from which either the first or the modified remedy may flow. We do not see any reason to hold that conditions (ii) and (iii) are satisfied in view of the very scheme of a writ remedy.

The Court held that Article 226 would not arm the Courts to issue a writ to any authority or person not comprehended within its meaning and thus, they are precluded from issuing any writ to AIL in the changed circumstances.

[R S Madireddy v. Union of India, 2022 SCC OnLine Bom 2657, decided on 20-09-2022]


Advocates who appeared in this case:

Mr. Sanjay Singhvi, Senior Advocate a/w Ms. Rohini Thyagarajan, Pankaj Sutar and Ms. Shanvi Punamiya i/b. M/s. Jayakar and Partners, Advocates, for the Petitioners/applicants;

Mr. Dashrath A. Dube, Advocates, for the Union of India;

Mr. Darius Khambhata, Senior Advocate, Mr. Kevic Setalvad, Senior Advocate a/w Mr. Aditya Mehta, Sneha Prabhu, Mr. S.D. Shetty, Mr. Rakesh Singh, Mr. Ravi Kini, Shristi Shetty and Jehan Lalkaka i/by. M. V. Kini & Co., Advocates, for the respondent 3 and 4;

Mr. Muralidhar Khadilkar a/w. Mr. Aakash Joshi for proposed respondent 5 in IA(L)/25662/2022.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In a petition filed by the petitioner Uttamrao Rambhaji Shelke seeking quashing and setting aside of the impugned order dated 16-09-2021 passed by the Principal Secretary, Law and Judiciary Department, Mantralaya, Mumbai appointing the respondent 3 to 14 as Members of Managing Committee of Shree Sai Baba Sansthan Trust, Shirdi Taluka Rahata, District Ahmednagar, a Division Bench of R D Dhanuka and S G Mehare, JJ. held that the State Government has committed vast illegalities in appointing these trustees by disregarding the principles laid down by this Court in a series of judgments. It further stated that various resolutions passed by the State Government appointing the persons as trustees on the said Sansthan Trust are in violation of the principles laid down by this Court and in breach of the provisions of Shree Sai Baba Sansthan Trust (Shirdi) Act, 2004.

The Court remarked that “if the State Government would have appointed independent trustees and not the politicians who are having close connection with the ruling party, the said Sansthan Trust which is a public Trust and is a custodian of public money and properties would have saved huge amount of public money spent on unnecessary litigations.”

The Court noted that the record indicates the idol of Shri Sai Baba was set up at Shirdi in 1954 and a scheme was framed in 1984 by Bombay High Court. The State Government enacted Shree Sai Baba Sansthan Trust (Shirdi) Act, 2004. The Principal Secretary and Senior Legal Advisor to the Government appointed 16 members comprising of various professionals, various devotees of Shree Sai Baba and various other uncontroversial persons.

However, since last 3 terms, the State Government started appointing politicians to most of these posts without considering the scheme of the Trust and contrary to the provisions of the said Act which also formed the subject matter of the Public Interest Litigations.

The Court noted that none of these appointments were made in compliance with the directions issued and the principles laid down in various judgments which were supposed to be complied with.

The Court observed that the said Sansthan Trust is set up with the purpose of public cause having the properties worth crores of rupees owned by the said Trust. When power is vested with the authority, it must exercise the same for the public good and it is expected that the State Government to at least keep the God away while distributing public largesses. Thus, there is no propriety in appointing the persons as trustees, against whom criminal cases are pending in a non-transparent manner

The Court further noted that the appointment of the trustees to such public trust has to satisfy the test of public interest by keeping the purpose and intent of creating such trust under the said Act for the betterment of and in the interest of large members of public devotees of Shri Sai Baba and not the private interest of the ruling Government to accommodate their party workers or politicians. The entire purpose and intent of creating such trust by the State Government under the scheme sanctioned by the Court is thus ex-facie defeated for the political gains of the party in Power.

Thus, the Court quashed and set aside the impugned order dated 16-09-2021 passed by the Principal Secretary, Law and Judiciary Department, Mantralaya, Mumbai appointing the respondent 3 to 14 as Members of Managing Committee of Shree Sai Baba Sansthan Trust, Shirdi Taluka Rahata, District Ahmednagar.

The Court further directed State Government to constitute a new “the Shree Sai Baba Sansthan Management Committee” within a period of eight weeks in accordance with the provisions of section 5 of 2004 Act, and in line with the principles laid down by the Courts in the judgments and until the State Government such new Committee is constituted, the affairs of the “Shree Sai Baba Sansthan Trust, Shirdi” shall be supervised, monitored and looked after by a committee consisting of (A) The Principal District Judge, Ahmednagar, (B) The Collector, Ahmednagar (C) The Chief Executive Officer of Shree Sai Baba Sansthan Trust Shirdi, subject to no major financial decision to be taken without permission of the Court.

[Uttamrao Rambhaji Shelke v. State of Maharashtra, 2022 SCC OnLine Bom 2280, decided on 13-09-2022]


Advocates who appeared in this case :

Mr. R.S. Deshmukh, Senior Counsel i/by D.R. Deshmukh for the petitioner;

Mr. R.N. Dhorde, Special Counsel a/w Mr.D.R. Kale, Government Pleader for the respondent no.1;

Mr. A.S. Bajaj for respondent 3;

Mr. P.R. Katneshwarkar h/f Mr.S.N. Gaikwad for respondent 4;

Mr. N.L. Jadhav for respondent 5;

Mr. A.C. Darandale for respondent 6;

Mr. Mazhar A. Jahagirdar for respondent 8;

Mr. R.A. Tambe for respondent 9.


*Arunima Bose, Editorial Assistant has put this report together.

Appointments & TransfersNews

On 26-09-2022, the Supreme Court in the collegium meeting has recommended elevation of Mr Justice Dipankar Datta, Chief Justice of Bombay High Court as Judge of Supreme Court.

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In a petition filed by petitioner-wife praying for quashing and setting aside the impugned communication dated 18-03-2019 issued by Respondent 2-Regional Forest Officer by which the request for compensation was rejected and seeks further directions against the Respondents to pay compensation to the Petitioner as per Government Resolution dated 11-07-2018, on account of death of her husband due to attack by wild Boar, a Division Bench of G S Patel and Gauri Godse, JJ., directed the State to pay an amount of Rs 10 lakhs to the Petitioner as compensation, within a period of three months from today, as per Government Resolution dated 11-07-2018 along with 6 per cent interest from the expiry of three months from date of her application till the actual payment is made. The Court premised the compensation on failure of State machinery to provide the required protection to human life which is guaranteed by Article 21 of the Constitution of India.

The Petitioner is widow of Arun Arvind Redij who died in an accident that was caused due to an attack by a wild boar. The said accident was reported to the local police station at Ratnagiri, Gramin and FIR was registered. The spot panchanama records that a wild boar attacked and collided with the two-wheeler of the deceased, which resulted into an accident and caused the death. Spot panchanama was conducted on the very same day of the accident by the said police station.

Petitioner on 11th February 2019 made an application to Respondent no.2-Regional Forest Officer, Ratnagiri inter alia seeking compensation for the loss of life of her husband relying upon the Government Resolution dated 11th July 2018 which provides for grant of compensation in case of death of a person due to attack by a wild animal which was rejected by Respondent 2 stating that accident was not intimated to the nearest Forest Officer within 48 hours of the accident and panchanama was not conducted within three days in presence of the forest officer.

The Court noted that the panchanama records that accident was caused due to involvement of wild boar, hence, it was the duty of the said police station to inform the nearest forest office regarding the accident. It was further noted that the State Government has not produced on record copy of any Government Resolution or Order which mandates that such information is to be given within 48 hours. Thus, the Court did not find relevance on the grounds of rejection.

The Court opined that on perusal of records placed before Court, it is clear that the human life is lost in the attack by wild boar, thus the reasons given in the impugned communication are illegal and unjustified.

The Court remarked “it is a twin obligation of the State Government. The first is to protect wildlife (wild animals) and the second is to protect humans from any injuries caused by any wild animal. It is thus an obligation of the State Government to protect lives of the citizens guaranteed under Article 21 of the Constitution of India.” Thus, if any wild animal causes injury to any person, this in fact is a failure of the State Government to protect right to life guaranteed under Article 21 of the Constitution of India.

As per Government Order relied by the petitioner for seeking compensation, the State is under an obligation to protect the human life from wild animals, and even dehors the said GR it is the obligation of the State Government to pay reasonable compensation, as the State Government could not protect the right to life of the deceased guaranteed under Article 21.

Thus, the Court quashed the impugned communication/rejection order and directed compensation of Rs. 10 lakhs within a maximum of three months from the date of the order and Rs. 50,000 as the cost of litigation.

[Anuja Arun Redij v. State of Maharashtra, 2022 SCC OnLine Bom 2871, decided on 26-09-2022]


Advocates who appeared in this case :

For the petitioner Mr RS Apte, Senior Advocate, i/b Ketan A Dhavle;

For respondent- State Mr Milind More, Additional Government Pleader.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In a case filed by Lata (‘petitioner’) daughter of the deceased who committed suicide and left a suicide note which pointed towards the guilt of the petitioner and her mother for offence under Section 306 read with 34 of Penal Code, 1860 (‘IPC'), a Division Bench of Manish Pitale and G.A Sanap, JJ., quashed the FIR against the petitioner and her mother stating that there is no proximate link between the suicide note recording harassment allegedly at the behest of the petitioner and the extreme step taken by the deceased due to a time gap between the date on which the suicide letter was written and the date on which the suicide was committed.

The Court observed that in the present case, the petitioner, allegedly through her mother, was making demands towards shares in the agricultural land or monetary relief from the father, however, such repeated demands or alleged increase in the demands cannot lead to a finding that prima facie the demands were being made with the intention of driving the father to commit suicide.

The deceased had two wives and children from both the wives and the informant in the present case is the son-in-law of the deceased, who is married to the daughter of the deceased from his first wife. It was alleged that a suicide note was found which clearly demonstrated that no option was left for the deceased, but to take the extreme step, because of the aggressive behavior of the co-accused i.e., mother of the petitioner, due to instigation on the part of the petitioner.

Reliance was placed on Sanju v. State of M.P., (2002) 5 SCC 371, wherein it was found that the alleged abusive words were used by the accused against the deceased, two days prior to the date when the deceased was found hanging. In these circumstances, the Supreme Court found it fit to quash the criminal proceedings.

Further reliance was placed on M. Mohan v. State, (2011) 3 SCC 626, wherein the Supreme Court emphasized that there ought to be a proximate link between the incidents alleged against the accused and the suicide by the deceased. On the facts of the said case, it was found that when the alleged incidents had taken place about four days prior to the suicide committed by the deceased, no proximate link could be attributed.

In the case of Amalendu Pal v. State of West Bengal, (2010) 1 SCC 707, it was held that mere harassment without any positive action on the part of the accused proximate to the time of occurrence, which led to the suicide, would not amount to an offence under Section 306 of the IPC.

The Court remarked that the contents of the suicide note brought out the fact that Shobha (co-accused) at the behest of the petitioner was making monetary demands or asking for a share in agricultural land from the deceased. The demand in itself, at worst, may have been unreasonable or a demand which the father was unable to fulfill, but it would be stretching things a bit far to reach a finding that the accused as the daughter, through her mother intentionally acted in such a manner to drive the deceased to commit suicide.

The Court held that on a perusal of the suicide note shows that it was dated 09-09-2021, while the actual act of suicide was committed on 14-09-2021, thus, there is no proximate link between the suicide note recording harassment allegedly at the behest of the petitioner and the extreme step taken by the deceased on 14-09-2021.

[Lata v. State of Maharashtra, 2022 SCC OnLine Bom 2840, decided on 22-09-2022]


Advocates who appeared in this case :

Mr. A. M. Sudame, Advocate, for the Petitioner;

Mr. S. M. Ghodeswar, APP, for the Respondent No.1 State.


*Arunima Bose, Editorial Assistant has reported this brief.

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In a case filed by a wife (‘appellant') challenging the Family Court order that granted decree of divorce without giving her opportunity to adduce evidence and without deciding her interim application for maintenance, a Division Bench of A S Chandurkar and Urmila Joshi Phalke, JJ., remanded the matter back to the Family Court to decide the proceedings afresh by giving opportunity to both the sides (husband and wife) to adduce the evidence. The Court also issued directions to the Trial Court to decide the interim application preferred by the appellant for maintenance pendente lite in accordance with the provision of Hindu Marriage Act, 1955.

The appellant and defendant got married and some marital disputes arose, due to whichshe left the matrimonial home and did not return even after consistent requests made by the husband alleging cruelty. The appellant-wife then filed for maintenance under Section 125 of Criminal Procedure Code before Family Court, Nanded which was thereby allowed and maintenance at the rate of Rs.3,000/- was granted to the children however rejecting the claim by appellant-wife.

Thereafter, the husband filed for restitution of conjugal rights, but the appellant did not return and then he filed for decree of divorce in July 2018 on the grounds of cruelty and desertion. The appellant filed her written statement in January 2019 and filed an application under Section 24 for maintenance pendente lite on the same day. The Family Court without deciding the interim application decided the petition by granting the decree of divorce on the ground that that after sufficient opportunity appellant wife remained absent and, therefore, matter is proceeded and accordingly decided.

The Court noted that the roznama reflects that it is not only the appellant-wife who remained absent during the proceedings, but, on several occasions both the parties were absent and on some occasions even the respondent-husband remained absent. Though the appellant had filed an interim application for maintenance pendente lite, it was not decided and the main petition for divorce was decided without assigning any reason even without following the timeline that interim application is to be decided within 60 days.

The Court further noted that Section 24 of Hindu Marriage Act, 1955, is a benevolent provision enacted with the object to provide relief by way of maintenance and litigation expenses to the spouse. In the above circumstances, it is necessary to give proper opportunity to the appellant to defend the grounds of divorce by adducing the evidence.

The Court thus set aside the decree for divorce and remanded back to the Family Court, Akola to decide afresh by affording an opportunity to both the sides to lead evidence.

[Chanda Rathod v. Prakash Singh Rathod, 2022 SCC OnLine Bom 2760, decided on 19-09-2022]


Advocates who appeared in this case :

Ms. Shilpa Tapadia, Advocate, for the Appellant;

Shri Ravikumar Tiwari with Shri C.A. Joshi, Advocate, for the Respondent.


*Arunima Bose, Editorial Assistant has put this report together.

Case BriefsSupreme Court

Supreme Court: In a special leave petition against the impugned judgment passed by the Bombay High Court, whereby, the Court dismissed the writ petition filed by the petitioner to sought directions against Securities and Exchange Board of India (SEBI) to forthwith furnish the documents relied upon by them to issue Show Cause Notice to the petitioner, the division bench of Indira Banerjee* and A.S. Bopanna, JJ. has observed that there was no procedural irregularity, at least till the stage of notice fixing a date of hearing and the High Court rightly did not interfere with the proceedings at the stage of the Show Cause Notice, thus, there is no infirmity in the impugned judgment of the High Court of dismissing the writ petition.

In the present case, the Petitioner was an employee of Religare Finvest Limited (RFL), a subsidiary entity of Religare Enterprises Ltd. (REL); and the respondent appointed a Forensic Auditor to investigate the matter of REL and related entities for alleged violation of the provisions of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (the SEBI PFUTP Regulations). Thereafter, a show cause notice was issued to the petitioner by the respondent under section 15-HA of the SEBI Act and Rule 3 of the SEBI Adjudication Rules, 1995 pertaining to Sections 11(1), 11(4), 11-B(1) 11-B (1), 11-B(2), and 11(4A) of the Securities and Exchange Board of India Act, 1992 (the SEBI Act) and Section 12-A(1) and 12-A(2) of the Securities Contract (Regulation) Act, 1956 (SCR Act 1956) read with SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (SEBI Adjudication Rules 1995) and Securities Contract (Regulation) (Procedure for holding inquiry and imposing penalties) Rules, 2005 (SCR Penalties Rules 2005), as to why appropriate directions for imposing penalty, should not be passed against him. Further, the petitioner had sought directions against the respondent to immediately furnish the documents relied upon by the respondent to issue Show Cause Notice to the petitioner.

The Court noted that the allegation in the Show Cause Notice is that funds to the tune of Rs. 2315.66 crores were diverted from RFL through several layers of conduit entities for the ultimate benefit of promoters of REL and RFL. Further, some documents were supplied to the petitioner, however, certain documents were denied on the ground that those were confidential documents.

The Court took note of the ruling in Natwar Singh v. Director of Enforcement, (2010) 13 SCC 255, wherein the Court held that “the concept of fairness may require the adjudicating authority to furnish copies of those documents upon which reliance has been placed by him to issue show-cause notice, requiring the noticee to explain as to why an inquiry under Section 16 of the Act should not be initiated. Further, all such documents relied on by the authority are required to be furnished to the noticee enabling him to show a proper cause as to why an inquiry should not be held against him though the Rules do not provide for the same”.

The Court took note of the submission by the petitioner that the Adjudicating Authority has not followed the procedure, and instead, fixed the case for final hearing without forming an opinion, as required under Rule 4(3) of the SEBI Adjudication Rules 1995, by relying on the ruling in Shashank Vyankatesh Manohar v. Union of India, 2013 SCC OnLine Bom 987. Further, the Court relied on the decision in T. Takano v. SEBI, (2022) 8 SCC 162, wherein the Court held that “it would be fundamentally contrary to the principles of natural justice if the relevant material were not disclosed to the noticee”. Further, the Court in T. Takano (supra), approved and followed the law laid down in Natwar Singh v. Director of Enforcement, (2010) 13 SCC 255 and reiterated that the Adjudicating Authority had the duty to disclose the materials that had been relied upon during the stage of adjudication and the authority cannot exercise unfettered discretion to redact documents necessary for the noticee to defend his case.

The Court observed that at the stage of Rule 3, the Board appoints an adjudicating officer if it is of the opinion that there are grounds for adjudication under any of the provisions in Chapter VIA of the SEBI Act and the Board only decides whether adjudication proceedings should be initiated or not. Further, the formation of opinion is not a formal inquiry proceeding involving any person against whom inquiry is contemplated and his/her participation is not necessary, and the Board forms its opinion, based on whether there are prima facie materials or grounds for initiation of inquiry and the opinion of the Board under Section 3 has nothing to do with the outcome of the enquiry.

Moreover, after the Board forms its opinion to appoint the officer, comes the next stage, which is the stage under Rule 4 of an inquiry for adjudging under Sections 15A to 15J and 15HB, that whether any person has committed contraventions as specified in those sections. Then the inquiry commences with a Show Cause Notice calling upon the noticee to show cause why an inquiry should not be held against him. The Show Cause Notice must specify the nature of the offence alleged to have been committed and the penalty proposed, to enable the noticee to effectively reply to the show cause.

The Court observed that Section 4(3) makes it clear that, after considering the cause (if any), the Adjudicating Officer is of the opinion that an inquiry should be held, he shall issue a notice fixing a date for appearance of that person either personally or through his lawyer or other authorized representative. Further, the noticee is not required to be heard personally or through a lawyer before taking a decision to proceed with an inquiry in respect of the contraventions alleged in the Show Cause Notice. Moreover, the decision to proceed or not to proceed with the inquiry may be taken based on the reply of the noticee to the Show Cause Notice and once it is decided to proceed with the inquiry, an opportunity of personal hearing is mandatory in accordance with law and in compliance with the principles of natural justice.

The Court viewed that in this case, the Board believed there were grounds for adjudication and accordingly appointed an Adjudicating Officer, who issued the Show Cause Notice to the petitioner, to which he gave a preliminary reply and thereafter sought documents. After considering the reply, the officer believed an inquiry should be held and accordingly, a notice fixing a date for appearance was issued. Thus, there was no procedural irregularity, at least till the stage of notice fixing a date of hearing.

Further, the Court observed that it is well settled that the documents which are not relied upon by the authority need not be supplied as held in Natwar Singh (supra). Thus, it was further observed that the High Court rightly did not interfere with the proceedings at the stage of the Show Cause Notice. Further the petitioner has apparently been permitted to inspect the opinion formed under Rule 3 of the SEBI Adjudication Rules and there is apparently no rule which requires SEBI to furnish the opinion under Rule 3 to the noticee in its entirety. Moreover, the documents relied upon for formation of opinion under Rule 3, are not required to be disclosed to the noticee unless relied upon in the inquiry. Thus, the Court allowed the petitioner to approach the appropriate forum, if he is prejudiced by reason of any adverse order, based on any materials not supplied to him and permitted the respondent to hold the inquiry, without relying upon any documents, not supplied to the petitioner.

[Kavi Arora v. SEBI, 2022 SCC OnLine SC 1217, decided on 14.09.2022]

Judgment by: Justice Indira Banerjee*

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In a case filed by Swapnil Prakash Parab (‘petitioner’) challenging rejection to the representation made before Bhabha Atomic Research Centre/BARC (‘Respondent 2’) on the orders of the Supreme Court. The case relates to non-disclosure of pendency of criminal case in the candidate declaration form, a Division Bench of R N Laddha and S V Gangapurwala, JJ., upheld the rejection by respondent 2 in view of the sensitive nature of work conducted in BARC, a candidate interested in joining such a sensitive institution is expected to have a flawless character and integrity without blemishes. An individual with criminal antecedents will not fit in this category and hiding the same, questions his honesty and integrity that are the inherent requirements in public employment.

Counsel for petitioner submitted that the Petitioner had no intention to suppress any information from the Respondent authority and non-disclosure of pendency of criminal case was the bonafide mistake of the Petitioner. Mere involvement in some petty cases would not render a person unsuitable for the job and the Petitioner was acquitted by Judgment dated 8th June 2016.

Counsel for State submitted that it was not in dispute that on the date when the Petitioner filled the application form, a criminal case was pending against him. His later acquittal on its own would not be sufficient to wash away the suppression of material facts. Verifying character and antecedents is also part of the recruitment process.

In Rajasthan Rajya Vidyut Prasaran Nigam Limited v. Anil Kanwariya, (2021) 10 SCC 136, the Court observed that,

The question is not about whether an employee was involved in a dispute of trivial nature and whether he has been subsequently acquitted or not. The question is about the credibility and / or trustworthiness of such an employee who at the initial stage of the employment i.e., while submitting the declaration / verification and /or applying for a post made false declaration and / or not disclosing and / or suppressing material fact of having involved in a criminal case. If the correct facts had been disclosed, the employer might not have appointed him. Then the question is of TRUST.

The Court observed that by perusing the facts of the case and material present before the Court, it is clear that there is nothing on record even to suggest that the decision taken by the concerned Authority in rejecting the candidature of the Respondent was in any way actuated by malafides or suffered on any other count.

The Court however remarked regarding the criminal case pending against the candidate in the words: “The order records that there was a counter criminal case, and the parties had settled the disputes and requested to compound the offences. Both cases involve offences which were not compoundable. Therefore, the parties were asked to lead the evidence. The witness had turned hostile. The Petitioner was thereupon acquitted.

The Court further noted that BARC is the nation’s premier research center and is engaged in advanced research and development activities in nuclear science. He should be reliable and trustworthy. He was expected to state all the required information honestly as honesty and integrity are the inherent requirements in public employment.

The Court opined that the petitioner should have made a declaration and left it to the employer to determine the effect of the pendency of a criminal case on his upcoming job. His subsequent acquittal on its own would not be enough to erase the suppression of essential facts.

Thus, the Court held that looking at the sensitive nature of activities undertaken at Bhabha Atomic Research Centre, we cannot say that the employer’s decision to reject the Petitioner’s representation was unreasonable or arbitrary.

[Swapnil Prakash Parab v. State of Maharashtra, 2022 SCC OnLine Bom 2338, decided on 16-09-2022]


Advocates who appeared in this case:

Mr. Amit Dubey a/w Ashok M. Saraogi for the Petitioner;

Mr. M.A. Sayed, AGP for the State;

Mr. Neel G. Helekar a/w Mr. P.J. Khosla for Respondent 2.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In a case filed by Atomberg Technologies Private Limited (‘plaintiff’) seeking temporary injunction as Polycab India Limited (‘defendant’) has a blatantly infringed by creating replica and/or reproduction of the overall design, shape, configuration, get-up of the Plaintiff’s Atomberg Renesa Ceiling Fan, R I Chagla, J. granted injunction against defendants as there is prima facie infringement of the Plaintiff’s registered design and passing off is made out as well as the balance of convenience also lies in favour of the Plaintiff and unless the reliefs as prayed is not granted, the Plaintiff will suffer irreparable loss, harm and injury.

Plaintiff is engaged in the creation of the novel and original designs for its products which involve inter-alia making of product drawings based on which mould / tool drawings are made and finally the moulds / tools are built. One of the products manufactured and sold by the Plaintiff is a Ceiling Fan named “Atomberg Renesa Ceiling Fan” which has a unique, innovative, distinctive, original and novel design formerly known as “Atomberg Gorilla Renesa Ceiling Fan” having technically sound and efficient quality and features, but also comprises inter-alia of overall unique, novel and distinctive shape and configuration having attractive and aesthetic appeal which is pleasing to eye of the consumer/ customer.

According to the Plaintiff, in or about the last week of August 2022, the Plaintiff’s representative learnt about the Defendant’s is selling fan on Flipkart and Amazon among others under the name Polycab Wizzy / Polycab Wizzy BLDC 1200 MM having shape, configuration, design and aesthetic appeal that is identical with and/or a fraudulent imitation and/or obvious imitation of the shape, configuration, design of the Plaintiff’s Atomberg Renesa Ceiling Fan for which the Plaintiff has secured design registration.

Plaintiffs fan

Defendants fan

The Court noted that visually the rival goods are nearly identical and prima facie, it appears that the Defendant has blatantly copied, created a replica and/or reproduced the overall design, shape, configuration, get up of the Plaintiff’s Atomberg Renesa Ceiling Fan. The design of the impugned fan is nothing but an imitation of the Plaintiff’s registered design and the adoption and/or use thereof cannot be matter of coincidence and/or honesty.

It further noted that the members of the trade and public upon coming across the Defendant’s impugned fan are bound to be put in a state of wonderment and are likely to be confused and deceived into believing that the fans offered by the Defendant are those of the Plaintiff and are originating from the Plaintiff and are connected in the course of the trade with the Plaintiff.

The Court thus granted the prayer sought.

[Atomberg Technologies Private Limited v. Polycab India Limited, 2022 SCC OnLine Bom 2845, decided on 14-09-2022]


Advocates who appeared in this case :

Mr. Hiren Kamod a/w Mr. Vaibhav Keni, Ms. Neha Iyer, Mr. Rohan Lopes Mr. Anees Patel and Mr. Prem Khullar i/b Legasis Partners for the Plaintiff;

Mr. Vinod Bhagat a/w Ms. Prachi Shah, Ms. Fatema Kalolwala, Mr. Atif Sayyed and Mr. Karan Khiani i/by G.S. Hegde and V.A. Bhagat for the Defendant.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
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Bombay High Court: In a petition filed by two convicts (‘petitioners’) challenging an order dated 09-07-2021 passed by Home Department, Government of Maharashtra directing their release after completion of 24 years of imprisonment including remission, as there are two different categories of crimes based on which remission is granted and their case seems to fall in a category having lesser year of imprisonment than 24 years as granted vide the impugned order, a Division Bench of Revati Mohite Dere and Madhav J Jamdar, JJ. held that even if it is assumed that the petitioners’ case falls under both the categories namely category no. 4 (c) and category no. 4 (d) of Guidelines dated 15-03-2010 (‘2010 Guidelines’), then also, the more beneficial category i.e., category no. 4 (c) will apply to the Petitioners’ case.

The petitioner claimed that the incident in question has taken place on account of a rivalry between two trade unions namely Mumbai Labour Union and Bhartiya Kamgar Sena. The deceased was a member of the Mumbai Labour Union, whereas, both, the Petitioners belonged to the Bhartiya Kamgar Sena. Petitioners i.e., Uday Dhaku Sutar and Ranjay Laxman Sawant (Accused 1 and 3) alongwith Prakash Yeragi (Accused 2), thus, were convicted for the offences punishable under Section 302 read with 34 of Penal Code, 1860 and were sentenced to suffer rigorous imprisonment for life.

Counsel for petitioners submitted that category 4 (c) of Guidelines dated 15th March, 2010 applies to the present case, whereas, the contention of the State is that category 4 (d) of said 2010 Guidelines is applicable.

Category 4 (c) covers Murder resulting from trade union activities and business rivalry mentioning 22 years as the period of imprisonment to be undergone including remission subject to a minimum of 14 years of actual imprisonment including set off period whereas Category 4 (d) covers murder committed by more than 1 person and mentions 22 years as the said period.

The Court noted that in the present case, murder has been committed by three persons, however, Guideline no. 4 (c) specifically contemplates murder resulting from trade union activities and does not further prescribe that the same will apply only if a murder has been committed by one person. What is relevant is murder should have been committed as a result of trade union activities and therefore, whether murder has been committed by more than one person/group of persons is totally irrelevant.

Placing reliance on State of Haryana v. Jagdish, (2010) 4 SCC 216, wherein the Court observed that “In case a liberal policy prevails on the date of consideration of the case of a “lifer” for premature release, he should be given benefit thereof.”

The Court remarked that it has been held by Supreme Court that in case of convicts the policy which was prevalent when the conviction takes place will apply and if any other liberal policy prevails on the date of consideration of case for premature release, then such policy will apply. The said principle of giving benefit to the convict of beneficial policy certainly applies to the two different policies/guidelines but the same will also apply to the categories in the same policy/guidelines, if case falls under both the categories.

Thus, the Court held that the present case is squarely governed by Guideline no. 4 (c) of Guidelines 2010, as the murder took place as a result of trade union activities and thereby quashed the impugned order.

[Uday Dhaku Sutar v. The State of Maharashtra, 2022 SCC OnLine Bom 2839, decided on 08-09-2022]


Advocates who appeared in this case:

Mr. Rupesh Jaiswal, Advocate, for the Petitioner in both the Writ Petitions;

Mr. J. P. Yagnik, APP, Advocate, for the Respondent-State in Writ Petition No. 4544 of 2021;

Ms. M. H. Mhatre, APP, Advocate, for the Respondent-State in Writ Petition No. 4545 of 2021.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: In a commercial division summary suit instituted by Aziz Amir Ali (‘plaintiff’) who is former employee of a registered partnership firm (‘defendant 1’) which is engaged in the business of selling umbrellas for more than a century and has acquired goodwill in the market., for recovery of a sum of Rs. 1,20,00,000/- along with interest at the rate of 24% p.a. on the principal sum of Rs. 1 Crore, N.J. Jamdar, J. held the summary suit to be maintainable on confirmation of accounts through deposit receipt presented before Court.

The plaintiffs invested their lifetime savings with the defendants under the Collective Investment Scheme and invested a total sum of Rs. 1 Crore by cross payee cheques drawn in favor of defendant 1. In turn, the defendants issued credit notes and kept paying the money until January 2020 however stopped payment of interest from the month of February 2020. Thus, letters and legal notices were sent but to no response, present summary suit was filed.

Defendant 2 assailed the tenability of the suit under Order XXXVII Civil Procedure Code, contending that there is no contract between the plaintiffs and the defendants as alleged credit notes/deposit receipts do not constitute written contract.

The Court noted that the claim of the plaintiff is substantiated by the statements of bank accounts which evidence the transfer of amount to the account of defendant 1 through cheques. Particulars of the cheques are mentioned in the credit notes/deposit receipts, thus giving credence to the receipt of the amount of Rs. 1 Crore.

On the contention raised by the counsel for defendant that the transaction allegedly evidenced by credit notes does not partake the character of ‘deposit’, the Court placed reliance on Basant Lal Agarwal v. Lloyds Finance Ltd., 2003 SCC OnLine Bom 1129, to explain the distinction between ‘loan’ and ‘deposit’.

The Court observed that the credit note/receipt clearly acknowledges the receipt of the amount thereunder and the legal notices sent constitute a specific and unequivocal demand of the said amount.

On the thrust of the defense regarding absence of stipulation as to the ‘term of deposit’ implying no contract to repay the amount, the Court opined that the very acknowledgment of the receipt of the amount evidenced by the credit note/receipt gives rise to a contract to repay the said amount and the obligation becomes enforceable upon demand, e-ven in the absence of stipulation as to period of payment.

Placing reliance on Jyotsna K. Valia v. TS Parekh and Co., 2007 SCC OnLine Bom 413, wherein it was observed that a summary suit on the accounts duly confirmed by the defendants would be maintainable, thus, the Court did not accede to the challenge to the tenability of the suit on the ground that it is not based on a written contract.

The Court held that the defendants cannot be granted an unconditional leave to defend the suit when there is material to show that the receipt of the principal amount of Rs. 1 Crore is incontestable and borders on an admitted liability.

The Court directed defendants to repay a sum of Rs. 1 Crore within a period of six weeks from the date of this order, failing which the plaintiffs shall be entitled to apply for an ex-parte decree against the defendants after obtaining a non-deposit certificate from the Prothonotary and Senior Master of this Court.

[Aziz Amirali Ghesani v. Ibrabim Currim, 2022 SCC OnLine Bom 2300, decided on 14-09-2022]


Advocates who appeared in this case:

Mr. Rashmin Khandekar, a/w Ms. Karishni Khanna, i/b Amit Tungare, Ms. Jill Rodricks, Vinit Jain and Deep Dighe, Advocates, for the Plaintiffs;

Mr. Zain Mookhi, a/w Janhavi Doshi, i/b Maniar Srivastava Asso., Advocates, for the Defendant no. 2;

Mr. Jamshed Master, i/b Natasha Bhot, Advocates, for the Defendant no. 3;

Mr. Siddha Pamesha, a/w Declan Fernandes, i/b Purazar Fouzdar, Advocates, for the Defendant no. 4.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
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Bombay High Court: In an appeal filed by Commissioner of Customs (Import) (‘appellant’) challenging an order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (CESTAT), directing provisional release of the seized goods in the shape of iPhones in purported exercise of powers under Section 110-A of Customs Act, 1962, a Division Bench of Dhiraj Singh Thakur and Abhay Ahuja JJ. set aside the impugned order as Dinesh Bhabootmal Salecha (‘respondent’) seeking release of the seized goods, was found to be an ‘importer’ and not ‘owner’ of the goods. The clear mandate of Section 110-A Customs Act, 1962 states that goods could be permitted to be released only in favour of an owner and the respondent failed to establish his ownership over the seized goods during the proceedings.

Based upon an intelligence input, the consignment (under challenge) was supposed to contain Memory Module of 4GB, 8GB and 32GB D-RAM valuing Rs. 80 Lakhs approximately, but on inspection was found to contain 3800 iPhones valuing approximately Rs. 42 Crores. Since the goods were mis-declared, the goods were seized under Section 110-A of Customs Act.

An application under Section 110-A of Customs Act was filed which was rejected by the adjudicating authority due to lack of evidence regarding ownership by Salecha Electronics Inc/Dinesh Bhabootmal Salecha. Assailing this, an appeal was preferred before CESTAT which was thereby allowed. and provisional release of the goods were directed. The Tribunal held that even when an ‘owner’ had not been defined in the Customs Act yet, the term ‘owner’ was deployed in the definition of an ‘importer’ under Section 2(26) of Customs Act and by default, ownership could be claimed by an ‘importer’.

On the contention of the respondent that the authorities had considered the Respondent to be an owner because the show cause notice was issued to him in terms of Section 124 Customs Act, the Court noted that on a perusal of Section 124 Customs Act, it can be seen that issuance of a show cause notice in terms of Section 124 does not necessarily establish that the person in whose name it is issued, is necessarily the owner.

The Court further noted that on a careful reading of Section 110-A of Customs Act, it is abundantly clear that goods seized may be released to the owner. The said section does not include or envisage release of goods provisionally in favor of an ‘importer’ of goods much less does it envisage, a release in favor of ‘any person’, in addition to the ‘owner’ as mentioned in Section 124 of Customs Act, who has been served a notice under the said section.

The Court held that the Tribunal has committed an error in importing the definition of an ‘importer’ as defined under Section 2(26) of Customs Act and reading the same in Section 110-A of Customs Act.

[Commissioner of Customs (Import) v. Dinesh Bhabootmal Salecha, 2022 SCC OnLine Bom 1808, decided on 08-09-2022]


Advocates who appeared in this case :

Mr. Advait Sethna a/w Mr. Rangan Majumdar i/b Ms. Ruju Thakker, Advocates, for the Appellant;

Mr. Prakash Shah a/w Mr. Jas Sanghavi i/b PDS Legal, Advocates, for the Respondent.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: In a case filed by a father (‘petitioner’) seeking for setting aside the order passed by the Juvenile Justice Board (‘JJB’) directing for medical examination of the accused child which ascertained his age to be 21 years, a division bench of Revati Mohite Dere and Madhav J Jamdar JJ., set aside the impugned order as the age was ascertained flouting the provisions stated under Section 94 of Juvenile Justice (Care and Protection of Children) Act, 2015 (‘JJ Act’). The age of the boy was found to be of 16 years (on the date of incident) as per the Aadhar card produced before the police, which was maliciously hidden as the father refused to pay a bribe to the police official concerned.

The petitioner was taken into custody for the alleged offences punishable under Sections 302, 307, 397, 326, 143, 145, 147, 148, 149, 504, 506(II), 34 of Penal Code, 1860 r/w Sections 4 and 25 of the Arms Act, 1959 and Section 37(1)(A) r/w 135 of the Maharashtra Police Act, 1951.

Counsel for the petitioner submitted that respondent 3- Samadhan Wagh, a police official, malafidely did not produce the documents, before the Juvenile Justice Board and Metropolitan Magistrate. The same was handed over by the petitioner’s father to show that his son was a Juvenile at the relevant time to the police official but Rs. 50000 was demanged by Wagh which was he refused to pay .

It was further submitted that as per Section 94 of JJ Act, only in the absence of any document to show the juvenility of a person, that the age is to be determined by conducting an ossification test or any other latest medical age determination test conducted on the orders of the Committee or the Board. However, in the present case, the Juvenile Justice Board ordered for medical examination without any document verification, which was further upheld by Metropolitan Magistrate.

The Court noted that the documents relied upon, in particular, the Aadhar Card was prepared in 2011 and as such, the petitioner or his father could not have anticipated any impending case against the petitioner. The Juvenile Justice Board also should have sought documents from respondent 3 before resorting to clause (3) of Section 94 of the JJ Act.

The Court further noted that from the documents which are annexed to the petition, the date of birth of the petitioner appears to be 04-06-2005, which, prima-facie shows that at the relevant time, petitioner was a juvenile.

The Court thus sets aside the impugned orders dated 26-08-2021 and 8-11- 2021. finding non-compliance with the provisions of Section 94 of the Juvenile Justice (Care and Protection of Children) Act, 2015.

The Court further directed the investigation in the matter to be handed from respondent 3 to the senior inspector of police and placed relevant documents before JJB so that appropriate orders could be passed.

The Court also directed Superintendent, Thane Central Prison to shift the petitioner to the Child Observation Home, Dongri. The directions were given to Additional Commissioner of Police, North Region, Mumbai to conduct an inquiry with respect to the allegations made against respondent 3 which will be heard by ACP only.

[Vikas Ramji Yadav v. State of Maharashtra, 2022 SCC OnLine Bom 2299, decided on 07-09-2022]


Advocates who appeared in this case :

Mr. Vashishtha Arora i/b Mr. Vipul M. Yadav for the Petitioner

Ms. S. D. Shinde, A.P.P for the Respondent—State

Sr. P.I Mr. Jeevan Kharat, from Dindoshi Police Station was present

P.I Mr. Samadhan Wagh from Dindoshi Police Station was present


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: In a case filed by a student (‘petitioner’) seeking directions to State (‘respondent’) to conduct the Maharashtra Public Service Commission examination in English as well as Marathi language, a Division bench of S.V. Gangapurwala and R.N. Laddha, JJ. directed the respondents to ensure that the next examination to be held for Public Prosecutors must be conducted in English as well as Marathi language in line with the implementation of the policy of State Government of promoting the language of State i.e. Marathi .

Counsel for the petitioner submitted that the petitioner has studied only in Marathi language. The proceedings before the Courts of Judicial Magistrate First Class (‘JMFC’) and Civil Judge Junior Division (‘CJJD’) are normally conducted in Marathi language. Further, as Marathi language is a local language, it is incumbent upon the respondent 1 to conduct the examination in English as well as Marathi language. Even the question papers are to be in both Marathi and English language. The MPSC holds the exam for the selection of the JMFC and for the said exam also the question papers are in Marathi as well as English language.

Placing reliance on Prashant P. Giri v. State of Maharashtra, (2010) 5 Mah LJ 206, the Court noted that in this case, it was observed that at least from the next examination for selection of the subordinate Judicial Officers in the State of Maharashtra, the facility be made available for answering the question paper in Marathi language. Twelve years have passed by and it cannot be comprehended that even after 12 years, the Government is still searching for the examiners to assess the answer papers in Marathi language.

The Court remarked “the Government ought to have been serious in implementing the said judgments in its letter and spirit. The Government cannot say that for the examination of the JMFC facility can be provided for answering in Marathi language and for the examination of Public Prosecutor the same facility would not be provided.”

The Court opined that as the examinations now are scheduled on 11-09-2022 and there are about 7700 candidates, and no other candidate has raised objection for answering the question paper in Marathi language, thus the prayer cannot be granted for the present examination.

However, the Court held that the respondents shall ensure that the next examination to be held for Public Prosecutors shall be conducted in English as well as Marathi language.


[Pratap Prakash Jadhav v. State of Maharashtra, 2022 SCC OnLine Bom 2232, decided on 07-09-2022]


Advocates who appeared in this case :

Mr. Alankar Kirpekar a/w Sushmit Phatale, Mr. Nikhil Adkine, Dynaesh Patil and Mr. Aditya Raktade i/by Metanshu R. Purandare. Mrs. M.P. Thakur, AGP for the State.


*Arunima Bose, Editorial Assistant has put this report together.

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: While deliberating upon the instant writ petition seeking temporary, time-limited relief so that the Letter of Credit is not further acted upon until MSEDCL has been able to move the Central Electricity Regulatory Commission, the Division Bench of G.S. Patel and Gauri Godse, JJ., issued an ad interim order directing the respondents to not take any steps to invoke the Letter of Credit in furtherance of the letter dated 29-08-2022 issued by the CGPL (Coastal Gujarat Power Ltd.)

The dispute was regarding the Short-Term Open Access arrangement between the Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) and Coastal Gujarat Power Ltd. This is a Special Purpose Vehicle (SPV) established to implement and develop a 4000 M W ultra-mega project at Mundra, Kutch District, Gujarat. The Tata Power Company Ltd. (the 2nd respondent) is the holding company of CGPL.

It was stated by the petitioner’s counsels that there was a Letter of Credit for Rs 19.88 crores in favour of CGPL issued by MSEDCL. Due to the disputes between the parties, CGPL invoked the Letter of Credit on 29-08-2022. MSEDCL actually paid Rs 19.66 crores, though under protest to CGPL/Tata Power on 30-08- 2022, one day after CGPL invoked the Letter of Credit.

It was further stated by the petitioner that despite the afore-stated payment having admittedly and demonstrably being made, CGPL has not yet communicated to Canara Bank (which issued the Letter of Credit and also the 4th respondent) not to act further on the invocation.

Upon perusal of the afore-stated facts, the Court pointed out that as of now it is not concerned with the disputes regarding the price of the power supply that have arisen vis-a-vis the power purchase agreement between MSEDCL and CGPL. The Court, however, noted that there is undoubtedly a payment made by MSEDCL to CGPL, although under protest, and that there is sufficient prima facie case to issue an ad interim order until 07-09-2022.

The Court also directed that the concerned are to act on an authenticated copy of the order and the Canara Bank will not insist on a certified copy of this order.

[Maharashtra State Electricity Distribution Company Ltd. v. Coastal Gujarat Power Ltd., 2022 SCC OnLine Bom 2048, decided on 05-09-2022]


Advocates who appeared in this case :

Rafique Dada, Senior Advocate, with Deepa Chawan, Ravindra Chille & Rahul Sinha i/b DSK Legal, Advocates, for the Petitioner.


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: While deliberating upon the instant writ petitions for quashment of FIR registered in connection with the suicide of prominent tribal leader Mohanbhai Sanjibhai Delkar,(MP, Dadra and Nagar Haveli), the Division Bench of Prasanna B. Varale and Shrikant D. Kulkarni, JJ., exercised their powers under Section 482 of CrPC and quashed the FIR filed against Praful K. Patel (Administrator, Dadra and Nagar Haveli) and others by Mohan Delkar’s son Abhinav Delkar.

Background

Mohanbhai Sanjibhai Delkar (the deceased) was a prominent tribal leader and was representing Dadra and Nagar Haveli since 1989 as Member of Parliament. On 21-02-2021, Mohan Delkar along with driver Ashok Patel and private bodyguard Nandu Wankhede reached Mumbai for attending some Court matter. The deceased was staying at Sea Green South Hotel, Marine Drive. On 22-02-2021 the deceased committed suicide by hanging in his hotel room. The deceased’s son, Abhinav Delkar was intimated of the turn of events through driver Ashok Patel. A suicide note and minutes of Parliamentary Privilege Committee were recovered from the scene. Abhinav Delkar recorded his statement with the police and the same statement was treated as First Information Report.

In the FIR it was stated that the deceased was subjected to ill-treatment, harassment and defamation at the instance of certain persons. It was also stated that this ill-treatment and harassments were done under the orders of Praful Khoda Patel, Administrator, Dadra and Nagar Haveli. Since the deceased was unable to bear this harassment, he committed suicide. It was stated in the FIR that the petitioners by hatching a conspiracy created such an atmosphere of pressure and depression which led the deceased to end his life.

The FIR against 9 persons was registered for offences punishable under Sections 306 (Abetment to suicide), 506, 389, 120-B of Penal Code, 1860 read with relevant provisions of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989.

The FIR further stated that the deceased was representing Dadra and Nagar Haveli since 2019 as an independent Member of Parliament (MP) and he belonged to a scheduled tribe community (Dhodia Patel). It was further stated that the deceased was continuously taking steps for the development of the area and in the past 1 year he was under tremendous pressure as the administration of Dadra and Nagar Haveli was continuously harassing and ill-treating him. The motive behind this harassment and ill-treatment was to take control over the college being run by the deceased and to prevent him from contesting the next elections.

Contentions of the Petitioners

The counsel of each petitioner made detailed submissions before the Court, the crux of which was-

  • It was contended that taking the FIR as it stands would only reflect that deceased himself admitted that he was active in social and political life for a considerably long period; had faced many adversities, and, was bold enough to face these difficulties and proceed further in his active political career.
  • It was submitted the deceased only made assumption and presumption that officers in the administration were acting under the orders of the Administrator and that the private individuals were hand in glove with the Administrator and were acting vindictively against the deceased.
  • It was also contended that the copy of the suicide note was not made available to the Petitioners and it is only referred to in the FIR. Since this material itself is undisclosed and withheld, therefore the petitioners are left only to guess work.
  • It was submitted that as far as the incidents quoted in the FIR are concerned, there is no proximity of these incidents and the act of committing suicide by deceased. Mere assumption and presumption are not sufficient enough to attract the provisions of the IPC. The FIR is silent on the aspect of the enmity or grudge being carried by the petitioners against the deceased; general and baseless statement that the petitioners joined together and hatched conspiracy under the direction of the Administrator is wholly unsustainable.

Contentions of the Respondent

Meanwhile the respondents contended that-

  • Conspiracy was hatched under the directions of the Administrator and pursuant to the conspiracy the petitioners harassed the deceased. Submitting details about the various incidents as referred to in the FIR, the counsels stated that though they are different incidents, however, a common thread in all these incidents is that they lead to the humiliation and harassment of the deceased.
  • It was submitted that FIR is not an encyclopedia as such, the investigating agency, upon lodging of FIR conducts the investigation and further material is collected or unearthed in the investigation.
  • It was submitted that though commission of suicide is a final act, the process of abetment to suicide is a complex one. There are certain causes for commission of suicide and consideration of these causes can be set as dynamics of suicide. It was stated that broadly there are two reasons for commission of suicide i.e., internal or personal reason and secondly, external factors. The effect of these two factors depends upon the sensitivity of a person.
  • It was contended that the investigation is still in progress, therefore, this is not a fit case for exercising powers under Section 482, CrPC.

Findings

Upon perusal of the contents of the FIR and noting the contentions raised by all the petitioners, the Court was of the opinion that that there are considerable merits in the submissions raised by the counsels appearing for Petitioners.

The Court agreed with the petitioners that the deceased was active in social and political life for a long period and faced many difficulties in life boldly and the alleged incidents of ill-treatment stated in the FIR were mere impressions carried out by the deceased. The Court noted that the petitioners presented sufficient material to show that the deceased was never disrespected in any of the public functions and proper protocols were followed considering the deceased’s stature.

Concerning the powers of the Court under Section 482, CrPC, it was observed by the Bench that while exercising powers under Section 482, the Court is not expected to undertake the exercise of detailed scrutiny or assessment of the material collected in the investigation, and it is expected from the Court to go through the contents of the FIR and material along with it.

The Court also agreed with the petitioners that the contents of the FIR fall short in order to attract Section 120-B of IPC. In order to attract Section 120 (B), there must be positive material to show that the petitioners came together to hatch a conspiracy and effect was given to that conspiracy. In the present case, except bare words that the petitioners were acting under the directions of Administrator, there is not a single incident to show that these petitioners came together and acted under the dictates of the Administrator.

Concerning offences under the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989, the Court pointed out that the FIR also falls short in attracting the charges under the 1989 Act.

Regarding Section 306 of IPC, the Court noted that there must be material of a positive act, as a pre-requisite for satisfying the word ‘abetment’, the contents of FIR and reference made to incidents falls too short to show any positive act committed by the petitioners so as to satisfy the term ‘abetment’.

[Sharad Darade v. State of Maharashtra, WP No. 1806/2021, decided on 08-09-2022]


Appearances

For State: AS Pai, PP


*Sucheta Sarkar Editorial Assistant has prepared this brief

 

 

Bombay High Court
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Bombay High Court: In deciding the instant bail application filed by a juvenile applicant by invoking Section 12 of Juvenile Justice (Care and Protection of Children) Act, 2015, the Bench of Bharati Dangre, J., while invoking the principles of repatriation and restoration, granted bail to the applicant. It was observed that since the applicant had positively responded to the rehabilitative efforts during his stay in the Observation Home, he therefore deserves to be reunited and restored with his family and it would be in his best interest so that he can develop himself with full potential.

Facts of the Case: The applicant along with five adults, were arrested for gang-raping a 7-year-old girl and were charged under Sections 376-D, 376(1)(n), 354, 354-D, 114, 509, 506 of IPC and Sections 6, 8 and 12 of the Protection of Children from Sexual Offences Act (POCSO Act). Upon the applicant’s arrest, he was produced before the Juvenile Justice Board constituted under the Juvenile Justice Act, 2015 and was placed in the Observation Home.

The applicant filed two bail applications before the Juvenile Justice Board, but both the applications were rejected. The Board observed that the adult accused persons are the family members of the applicant, and if the applicant is released on bail, he may again come in contact with these people or other people of similar criminal tendencies. The Board held that the applicant’s safety can only be ensured if he is inside the Observation Home.

Contentions of the Applicant:

  • The counsels for the applicant contended that the juvenile applicant belongs to a lower- middle socio-economic background, with his father working as a watchman and his mother being a homemaker. It was also submitted that the applicant had passed his 10th Standard but could not further pursue his education due to financial issues and mother’s illness.

  • It was contended that the applicant’s involvement in the crime is doubtful as the prosecution hasn’t been able to establish the same.

  • The applicant’s side also presented his physical and psychological status report by the Child Guidance Clinic wherein the Probation Officer stated that the applicant is not a danger to the society and has shown good potential to excel, if right kind of opportunities, guidance, support and education are made available to him. It was stated in the report that the applicant has been deprived of his education during his long detention in the Observation Home and the same has caused disruption to his life.

  • The applicant also drew the attention of the Court towards the objectives of Juvenile Justice Act, 2015, which considers a child as distinct from an adult, who has to undergo through the normal procedure on being accused of an offence. It was submitted that the principle of repatriation and restoration which has been recognized as an essential principle by the legislature through the 2015 Act has been violated.

  • It was also submitted that the prolonged detention of the applicant is hampering his progress and also affecting his mental health as it has caused him undue anxiety and that his further stay in the Observation Home is against his interest.

Contentions of the Respondent:

  • Vehemently opposing the bail application, the respondents submitted that the offence that has been committed i.e., gang-rape of a 7-year-old, the crime is heinous in nature. Thus, the applicant does not deserve his release on bail.

  • It was further argued that if released on bail, the applicant would pose danger to the victim.

  • The respondents also pointed out that the Special Judge under the POCSO Act also rejected the application filed by the applicant under Section 439 of CrPC by recording that the accusations faced by the applicant are grave in nature and it is a case of gang rape- an aggravated sexual assault.

Observations and Decision: Perusing the facts and contentions presented, the Court made the following observations-

  • The Court observed that the Juvenile Justice Act, 2015 was enacted while noting that the justice system applicable for adults is not suitable to be applied to a child or a juvenile. Therefore, a new method was evolved to try juveniles, so as to protect their interest and also insulate them from being exposed to vagaries of police and the normal criminal system. The Court also took into account Articles 15, 39 (e) and (f), 45 and 47 of the Constitution and United Nations Convention on the Rights of Child and perused in detail the Juvenile Justice Act, 2015.

  • The Court noted that, “Section 12 (1) of the 2015 Act, makes a provision to the exclusion of anything contained in the CrPC or any other law for the time being in force and is a special provision for a child who is alleged to have committed a bailable or non-bailable offence”. The only embargo is in the proviso to Section 12 stating that where there are reasonable grounds for believing that the release is likely to bring that person into association with a known criminal or expose the said person to moral, physical and psychological danger or the person’s release would defeat the ends of justice. “In the scheme of enactment, it can be seen that Section 12 contains an imperative mandate to release a child on bail, when he is apprehended or detained in connection with an offence and it is a special provision, which stands to the exclusion of the CrPC”. It was pointed out by the Court that Juvenile Justice Act, 2015 is a special statute providing a special procedure to protect children in need and children in conflict with the law. Thus, it is important that while construing its provisions, the core objective of this legislation must not be forgotten.

  • The Court noted the Report presented by the Probation Officer vis-a-vis the applicant’s physical and psychological parameters and observed that the applicant does not fulfill the criteria stated in the embargo contained in Section 12. It was observed that the Report does not reflect him as a desperado or a person misfit in the society, and it recommends that if an opportunity is given to the applicant, he will be a better person.

    “The accusations faced by the applicant are undisputedly serious, but he must also derive the benefit of being a ‘child’, despite he is being tried as an adult and the benefit of Section 12 of the Juvenile Justice (Care and Protection of Children) Act, 2015 cannot be denied to him”.

  • Stating that the applicant’s education has suffered due to his detention and the same could not be allowed, the Court granted bail to the applicant.

[Sandeep Ayodhya Prasad Rajak v. State of Maharashtra, 2022 SCC OnLine Bom 1825, decided on 22-08-2022]


Advocates who appeared in this case :

Maharukh Adenwalla, Advocate, for the Applicant;

A.A.Takalkar, A.P.P., Advocate, for the State/Respondent;

Saveena Bedi, Advocate, for the Intervenor.


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: The issue before the Court in the instant matter was that between a secured creditor (defined in SARFAESI Act and Recovery of Debt and Bankruptcy Act), and the revenue departments of the Central/State Governments, who can legally claim priority for liquidation of their respective dues qua the borrower/dealer upon enforcement of the ‘security interest' and consequent sale of the ‘secured asset'. The 3 Judge Bench of Dipankar Datta, CJ., and M.S. Karnik and N.J. Jamadar, JJ., while deliberating upon the question went on to frame and answer seven substantial questions of law on the issue.

Background: Prior to 1993, for effecting recovery of debts, the lenders were required to institute suits regulated by the provisions of the CPC. However, the lengthy processes and other problems led to ‘retardation of economic growth'. It is at this point that the Parliament enacted the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which was instrumental in establishing the Debt Recovery Tribunals in various States for expeditious adjudication and recovery of debts due to the lenders and other connected matters.

In due course of time, even the creation of DRTs fell short of achieving the desired results and after many deliberations, the SARFAESI Act came into being, which aimed at evolving means for faster recovery of dues without judicial intervention. The afore-stated legislations were deliberated by the Supreme Court in Central Bank of India v. State of Kerala, (2009) 4 SCC 94, wherein it was held that these legislations do not create first charge in favour of banks, financial institutions and other secured creditors over the first charge created under State legislations because Parliament did not intend to give priority to the dues of private creditors over sovereign debt of the State.

Later in 2016, via an amendment, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was rechristened as Recovery of Debt and Bankruptcy Act and Section 31-B- ‘Priority to the Secured Creditors' was incorporated. Even SARFAESI underwent an amendment in 2016 and Chapter IV-A- ‘Registration by Secured Creditors and Other Creditors', was added. These amendments resulted in another slew of decisions by several High Courts wherein it was observed that the amendments have tilted the scales in favour of the secured creditors and being a pre-2016 Amendment decision, the Central Bank of India case is no longer relevant.

Given the broad questions of law involved in the issue, the Division Bench of this Court comprising of Dipankar Datta, CJ., and M.S. Karnik, J., referred the matter to a larger Bench for consideration, therefore leading to the present writ petition

Primary Contentions: The secured creditors submitted that the priority created by Section 31-B of RDDB Act is not restricted to enforcement under this Act itself as the provision recognizes priority in a general manner. It was further submitted that the SARFAESI Act also recognises priority. It was contended that in view of amendments brought in both the Central enactments, they are entitled to assert priority over claims of the State sales tax department under the Maharashtra Value Added Tax Act.

The creditors also submitted that there is no dispute that the Central Acts and the State legislations operate in different fields and there is no apparent repugnancy; on the contrary, the State legislations are clear to this extent that the same would yield to Central Acts creating first charge.

Per contra, the State Government and its departments argued that Section 26-E as inserted in the SARFAESI Act does not create first charge in favour of the secured creditors; it only provides priority of payment to secured creditors over other creditors. Placing their interpretation of the newly added provisions, the counsels contended that that ‘priority' as inserted by the 2016 Amendment Act shall not displace the ‘first charge' of the State wherever the respective enactments provide so. The secured creditors shall have ‘priority' over Government dues only in cases where dues arising out of an enactment did not provide for the ‘first charge'.

Seven Questions of Law framed by the Court

  1. Does a secured creditor have a prior right over the relevant department of the Government to appropriate the amount realized by the sale of a secured asset?

  2. Despite Section 26-E in the SARFAESI Act or Section 31-B of the RDDB Act being attracted in a given case, whether dues accruing to a department of the Government ought to be repaid first by reason of ‘first charge' created over any property by operation of law (viz. the legislation in force in Maharashtra) giving such dues precedence over the dues of a secured creditor?

  3. Are the provisions in the SARFAESI Act according ‘priority' in payment of dues to a secured creditor for enforcing its security interest, prospective in nature?

  4. Whether Section 31-B of the RDDB Act can be pressed into service for overcoming the disability that visits a secured creditor in enforcing its security interest under the SARFAESI Act, upon such creditor's failure to register the security interest in terms of the amendments introduced in the SARFAESI Act?

  5. Whether the priority of interest contemplated by section 26-E of SARFAESI Act could be claimed by a secured creditor without registration of the security interest with the Central Registry?

  6. When, (if at all) can it be said that the statutory first charge under the State legislations (MVAT Act, MGST Act) stands displaced having regard to introduction of Chapter IV-A in the SARFAESI Act from 24-01- 2020?

  7. Whether an auction purchaser of a secured asset would be liable to pay the dues of the department in order to obtain a clear and marketable title to the property having purchased the same on “as is where is and whatever there is basis”?

The Answers

Questions 1 and 2: The Court perused the newly added provisions in the SARFAESI Act via the 2016 Amendment and noted that the object that the Parliament had in mind while incorporating Chapter IV-A in the SARFAESI Act seems crystal clear. “The dominant theme of the additions in the statute were intended to emphasize upon the need to register transactions of securitisation, reconstruction and creation of security interest with the Central registry (CERSAI)”. It was observed that Parliament designed Chapter IV-A in such a manner so as to include provisions which on the one hand, would disable any secured creditor to exercise the right of enforcing security interest under Chapter III of the SARFAESI without the CERSAI registration, and on the other enable the secured creditor, if it has the CERSAI registration, to claim priority over all other debts and all revenues, taxes, etc., in the matter of payment of the debts due to it. The Parliament used the word ‘priority over all other dues' in the SARFAESI Act to obviate any confusion as to inter-se distribution of proceeds received from sale of properties of the borrower/dealer.

Bare perusal of the 2016 Amending Act would show that the dues of the Central/State Governments were in the specific contemplation of the Parliament while it amended the RDDB Act and the SARFAESI Act, both of which make specific reference to debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority and ordains that the dues of a secured creditor will have ‘priority', i.e., take precedence.

It was stated the SARFAESI and RDDB Act being Central legislations, will prevail over State legislations as per the principle enshrined in Art. 254 of the Constitution. “Subject to compliance of the terms of Chapter IV-A, Section 26-E of the SARFAESI Act would thus override any provision in the MGST Act and the BST Act in case of a conflict with the SARFAESI Act”.

We have no hesitation to hold that the dues of a secured creditor (subject of course to CERSAI registration) and subject to proceedings under the IBC, would rank superior to the dues of the relevant department of the State Government”.

Question 3: Answering the question in affirmative, the Court once delved into the intention of the Legislature into bringing the 2016 Amendments in SARFAESI Act and RDDB Act via its Statement of Objects and Reasons. It was observed that the amendment was proposed to bring about a substantive change in the law and these changes were introduced for the first time “to suit changing credit landscape and augment ease of doing business”, as appears from the Statement for the amendment. These substantial changes, remedial in nature, having been brought in force for the first time, amount to substantive law and cannot be given retrospective effect. It was further noted that express provision in Section 26-D regulating the exercise of power by secured creditors, by barring them to take recourse to Chapter III of the SARFAESI Act without the CERSAI registration, there could be little doubt as to the fact that Section 26-E of the SARFAESI Act would apply prospectively from the date it was brought into force, i.e., 24-01- 2020.

Question 4: Answering this question negative, the Court observed that a statute has to be construed after ascertaining the legislative intent and in the context and scheme of the enactment. It was further stated that the end result of the RDDB Act and the SARFAESI Act is recovery of money, however, the process of recovery under the RDDB Act is largely court driven; and the process of recovery under the SARFAESI Act is essentially without court intervention. The nature of the two proceedings is, therefore, completely different.

The non-obstante clause in Section 31-B of RDDB Act makes it inescapably clear that the provision cannot be pressed into service in all cases where a secured creditor seeks enforcement of a security interest by taking recourse to the SARFAESI Act. Meanwhile, Sections 26-D and 26-E of SARFAESI Act, when read together, provides a special manner in which a secured creditor may enforce its security interest in supersession of others, without the intervention of courts. Enforcement of security interest under the SARFAESI Act by any other method is (if not expressly) impliedly barred.

Thus, Section 31-B of RDDB Act cannot be invoked to undo the disability that is expressly imposed by Section 26-D of the SARFAESI Act, more so when both these provisions have been brought on the respective statute books by the same 2016 Amending Act (notwithstanding that the two sections were made operative on different dates).

“A secured creditor, finding that it is disabled from obtaining the benefit of ‘priority' in terms of Section 26-E of the SARFAESI Act for want of CERSAI registration, cannot fall back on Section 31-B of the RDDB Act to claim ‘priority'”

Question 5: It was noted that the drastic power made available to a secured creditor by provisions contained the SARFAESI Act to dispossess the borrower/guarantor from the secured asset without intervention of Courts (but necessarily upon compliance with the procedural safeguards laid down therefor) has seemingly been arrested to a limited extent by incorporation of Section 26-D by the 2016 Amending Act. “Section 26-D, which also opens with a non-obstante clause, prohibits a secured creditor from exercising the rights for enforcement of security interest conferred by Chapter III, unless the secured interest created in its favour by the borrower has been registered with the CERSAI”. Not only registration with the CERSAI has been made a mandatory pre-condition for invocation of the provisions contained in Chapter III of the SARFAESI Act, the provisions relating to debts that are due to any secured creditor is available to be invoked only after the registration of security interest.

“This leads to the irresistible and inevitable conclusion that unless the security interest is registered, neither can the borrower seek enforcement invoking the provisions of Chapter III of the SARFAESI Act nor does the question of priority in payment would arise without such registration”.

Question 6: The Court opined if there has been an attachment and a proclamation thereof has been made according to a law prior to 24-01-2020 or 01-09-2016, i.e., the dates on which Chapter IV-A of the SARFAESI Act and Section 31-B of the RDDB Act, respectively, were enforced, the department may claim that its dues be paid first notwithstanding the secured dues of the secured creditors. However, in the absence of an order of attachment being made public in a manner known to law, once Chapter IV-A of the SARFAESI Act or Section 31-B has been enforced; the dues of the secured creditor surely would have ‘priority'.

In other words, if the immovable property of the defaulter is shown to have been attached in accordance with any law being enforced prior to Chapter IV-A of the SARFAESI Act, or Section 31-B of the RDDB Act and such attachment is followed by a proclamation according to law, the ‘priority' accorded by Section 26E of SARFAESI and Section 31-B of RDDB Act would not get attracted.

Question 7: It was observed that, notwithstanding the duty of the authorized officer to indicate the encumbrances attached to the secured asset in the sale advertisement inviting bids; if any detail in regard to such encumbrances is not indicated but the sale is expressly made on “as is where is, whatever there is basis”, the transferee shall be duty bound to deposit money for discharge of the encumbrances provided. However, such liability may be overcome if he is in a position to disprove the claim of the department that he had no constructive notice of the charge.

[Jalgaon Janta Sahakari Bank Ltd. v. Joint Commissioner of Sales Tax, 2022 SCC OnLine Bom 1767, decided on 30-08-2022]


Advocates who appeared in this case :

Rajiv Narula a/w Mehek Choudhary i/b. Jhangiani Narula and Associates for the petitioners in WP/2935/2018.


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: While deciding the instant application for anticipatory bail wherein the Court deliberated on what constitutes ‘Ganja' as per the provisions of Narcotics and Psychotropic Substances Act, 1985; the Bench of Bharati Dangre, J., observed that upon reading of Section 2(iii)(b) of NDPS Act, Ganja is the flowering or fruiting tops of a cannabis plant; however, when there are no accompanying flowering or fruiting tops, then the seeds and leaves of a cannabis plant are to be excluded from the definition of Ganja.

Facts of the case: On 17-04-2021, the Narcotics Control Bureau (NCB) received intel regarding a possible availability of huge quantity of Ganja at the house premises of the applicant in the morning of 18-04-2021. It was alleged that the applicant was involved in selling Ganja from the said house in small packets to the customers, with the help of his two associates.

A team was formed, and a search was carried out into the suspected house premises. The search led to green leafy substances being found in 3 kattas. The leafy substance was purported to be ganja and was sent for testing in order to ascertain its identity. The analysis of the substance reported it to be “in the form of soft greenish heterogeneous mixture flowering and fruiting tops, bits of leaves, steam and stalk along with seeds of plant (…) the sample under reference answer positive test for Ganja (Marijuana)”.

Contentions: The counsel for the applicant submitted that the seized substance does not match the definition of Ganja as provided in the NDPS Act. It was argued that mere leaves and seeds, in absence of fruiting and flowering tops, would not bring the substance within the purview of the term Ganja.

Per contra, the respondents submitted that even though the Panchnama did not mention the details of the recovered substance, the tests conducted on the substance revealed it to be a contraband i.e., Ganja.

Observations and Decision: Perusing the facts of the case, contentions and the analysis report of the seized substance, the Bench observed that-

  • Whether a substance is ‘Ganja' or not, the same will have to be determined on the facts of each case. Perusing Section, the Court further observed that it is implied that if seeds and leaves of cannabis plant are accompanied by flowering tops or fruiting tops, then it would amount to Ganja. However, when the seeds and leaves are not accompanied by the tops, then it will not be considered as Ganja. It would have to be ascertained that whether the flowering or fruiting tops of the cannabis plant are accompanied by the seeds and leaves.

  • The Court also noted that the report of analysis of the substance refers to the sample which is a heterogeneous mixture of flowering and fruiting tops, bits of leaves, steam and stalk along with seeds of plant and that this entire mixture weighed 43 kgs. It was observed that there was a discrepancy between what was seized and what was analyzed, thus prima-facie satisfying the Court that there are reasonable grounds for believing that the applicant is not guilty of offence of dealing in commercial quantity of contraband.

  • The Court also observed that it is the duty of the NCB to be assured of what substance is seized and what is forwarded for analysis, as it cannot be left for the Trial Courts to do guess work on the nature of the substance. Furthermore, relying on the proposition laid down in Union of India v. Shiv Shanker Kesari, (2007) 7 SCC 798, regarding consideration of bail application with reference to Section 37 of the NDPS Act, the Court stated that it is necessary to look into the nature of accusations and evidence collected by the prosecution during the course of investigation; and circumstances peculiar to particular cases shall be determined in the backdrop of the fact whether suspicion of the prosecution about indictment of applicant is prima-facie correct.

  • With the above-mentioned observations, the Court allowed the application and bail was granted to the applicant with conditions attached.

[Kunal Dattu Kadu v. Union of India, 2022 SCC OnLine Bom 1770, decided on 29-08-2022]


Advocates who appeared in this case :

Mithilesh Mishra i/b Sadiya Khan, Advocate, for the Applicant;

Shreeram Shirsat a/w Amandeep Singh, Advocate, Sra for Respondent No.1;

S.V. Gavand, APP, Advocate, for the State.


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Case BriefsSupreme Court

Supreme Court: In the Reliance Commercial takeover dispute, the 3-judges Bench comprising Dr. D Y Chandrachud*, Surya Kant and A S Bopanna, JJ., gave a green signal to the voting process to implement the resolution plan. The Court, though upheld the applicability of SEBI circular, it opined that the different voting mechanism proposed under the SEBI Circular will further delay the resolution process and potentially disrupt the efforts undertaken by the stakeholders, including the retail debenture holders. The Court noted,  

“Such unscrambling of the resolution process will not only prove time-consuming, but may also adversely affect the agreed realized gains to the retail debenture holders, who have already consented to the negotiated settlement before the High Court.” 

Factual Matrix 

The instant case relates to takeover of Reliance Commercial Finance Ltd. (RCFL) by Authum Investment and Infrastructure Ltd.; where a dispute arose with regard to the applicability of two circulars issued by RBI and SEBI— Reserve Bank of India (Prudential Framework for the Resolution of Stressed Assets) Directions 2019 and SEBI Standardisation of procedure Circular (13-10-2020).   

RCFL had issued Non-Convertible Debentures to various persons and Vistra ITCL (India) Ltd. was the Debenture Trustee under three Debenture Trust Deeds. RCFL committed its first default under the Debenture Trust Deeds in March 2019. 

The dispute 

Seventeen debenture holders instituted a suit on the Original Side of the Bombay High Court for protection of their interests with respect to the amounts due to them by RCFL, alleging that certain funds available with the Bank of Baroda, were distributed amongst creditors without regard to their status as secured or unsecured creditors without their consent and that they had a first charge on the receivables of RCFL.  

The debenture holders further alleged that the RBI Circular permitted this illegal distribution of funds and hence they urged for setting aside of the RBI Circular as illegal and ultra vires. They also sought an injunction restraining RCFL, Bank of Baroda, and RBI from implementing the RBI Circular. 

Impugned Decision  

The Single Judge held that the SEBI Circular could not be permitted to operate retrospectively and did not govern the Debenture Trust Deeds.  However, opining that a mere reference to the SEBI Circular would not override the express terms of any of the Debenture Trust Deeds, the Single Judge allowed to proceed with the voting process for the takeover of RCFL according to Debenture Trust Deeds signed in compliance with the RBI circular. In appeal, the Division Bench affirmed the aforesaid order of the Single Judge. 

Issues  

Based on the submissions canvassed by the parties, the following issues arose for determination: 

  1. Whether the civil court had the jurisdiction to entertain the lis in this case; and 
  2. Whether the debenture holders and other parties in the present case were required to follow the procedure under the SEBI Circular. 

Issue 1: Jurisdiction  

On the first issue, the Court noted that Section 15Y of the SEBI Act imposes a bar on the civil court to entertain any suit in respect of any matter that an adjudicating officer appointed under the SEBI Act is empowered to determine; however, since the Adjudicating officer has no jurisdiction under the SEBI Act to grant the relief sought by the plaintiffs in the first instance, the bar in Section 15Y would not operate as against the suit in the instant case. 

Similarly, with regard to the bar under Section 430 of the Companies Act that no civil court shall have the jurisdiction to entertain any suit in respect of any matter which the National Company Law Tribunal or the National Company Law Appellate Tribunal is empowered to determine, the Court observed that since neither the NCLT nor the NCLAT has jurisdiction to adjudicate upon a challenge to the RBI Circular, the bar in Section 430 is not attracted in the case at hand. 

Therefore, the Court held that the Single Judge as well as the Division Bench of the Bombay High Court properly exercised jurisdiction over the subject matter of the suit. 

Issue 2: Applicability of the SEBI Circular  

The RBI Circular provided that certain lenders may opt for a resolution strategy available to them under the existing legal framework, including entering into a resolution plan or initiating legal proceedings for recovery or insolvency. If the lenders chose to implement a Resolution Plan, they were required to enter into an Inter-creditor Agreement (ICA). 

By issuing the SEBI Circular, SEBI subscribed to the overall framework of the RBI Circular and permitted debenture holders to participate in the process specified in the RBI Circular to enter into a Resolution Plan (RBI circular provides only lenders can participate). Under the RBI Circular, the Resolution Plan cannot come into existence without an ICA. The SEBI Circular does not disturb this position. Hence, both the RBI Circular and the SEBI Circular refer to one and the same ICA and Resolution Plan.  

Rejecting the RCFL’s argument that Clauses 22 and 23 of the Fifth Schedule to the Debenture Trust Deed(s) are not concerned with signing an ICA or with the subject matter of the SEBI Circular in general, the Court observed that RCFL’s suggestion that the ICA and the Resolution Plan are distinct and severable is an incorrect interpretation of the circulars in question. The ICA and the Resolution Plan are inextricably intertwined and the latter has its genesis in the former and flows from it. 

Hence, the Court held that any reference to an ICA in the SEBI Circular is also necessarily a reference to the Resolution Plan and vice versa. It is not open to debenture holders to participate in the implementation of the Resolution Plan without being involved in its genesis through the ICA. The Court remarked,  

“There is only one ―door, so to speak, through which debenture holders can gain entry into the Resolution Plan with the lenders and that is through the ICA. Therefore, while the SEBI Circular does not mandate the execution of an ICA as the only route to entering a compromise with the issuer company, it lays down a procedure in the event that debenture holders choose the route of implementing a Resolution Plan with the lenders. This procedure cannot be circumvented.” 

Upholding the applicability of the SEBI circular, the Court pointed out the following: 

  • The purpose of the SEBI Circular is multi-fold – not only does it protect the interests of debenture holders at large (Clause 7), but it also protects the interests of any dissenting debenture holders (Clause 6.6).  
  • In the absence of Clause 7, debenture trustees would likely be unable to exit the ICA or the Resolution Plan even if they were not ―in the interest of investors or if the Resolution Plan was not finalized within 180 days from the end of the review period.  
  • Significantly, the absence of Clause 6.6 could mean that dissenting debenture holders would be bound by decisions taken even by way of a simple majority.  
  • We agree that the language in Regulation 15(7) of the 1993 Regulations and the SEBI Circular is facilitative and not mandatory. This is in recognition of the fact that debenture holders may opt to exercise their rights through mechanisms other than the execution of a Resolution Plan.  
  • The language cannot be construed to be facilitative in the sense of providing debenture holders with the option of by-passing the modalities prescribed by the SEBI Circular while accepting a Resolution Plan. The ICA continues to be the foundation or mother document for the Resolution Plan. 

Retroactive Application of the SEBI Circular  

Though RCFL issued the debentures and defaulted on the payments to the debenture holders prior to the issuance of the SEBI Circular, the Court culled out the following points to uphold the retroactive applicability of the SEBI Circular: 

  • On 13-10-2020 (when the SEBI Circular came into force), a compromise or agreement on the restructuring of the debt owed by RCFL did not exist. The debenture holders were not vested with any rights with respect to the resolution of RCFL‘s debt.  
  • The existence of the debt and the subsequent default by RCFL was the status of events, which existed prior to 13 October 2020. Once it came into force, the SEBI Circular applied to the manner of resolution of debt, as specified therein. 
  • Even assuming that debenture holders were vested with the right to sanction a compromise or arrangement in terms of the special majority in Clause 23 to the Fifth Schedule of the Debenture Trust Deed, they were divested of such a right upon the issuance of the SEBI Circular.  
  • Clause 59 of the Debenture Trust Deed stipulates that any provision in the Debenture Trust Deed which is in conflict with the 1993 Regulations is null and void.  
  • A contractually vested right may be taken away by the operation of a statutory instrument. The SEBI Circular owes its existence to statutory powers conferred by special legislation.  

Can SEBI Circular Bind Dissenting Debenture Holders 

SEBI contended that the compromise arrived at in terms of the direction of the High Court will also bind all the other debenture holders, who were not a party to the original suit before the High Court which will prejudice the dissenting debenture holders as they have to settle for a lesser amount – 24.96% of the principal among with a further 5% of the principal outstanding.  

Agreeing with SEBI‘s submission that the compromise arrived at the Debenture Trust Deed level among the consenting debenture holders should not bind the dissenting debenture holders, the Court directed that the dissenting debenture holders should be provided an option to accept the terms of the Resolution Plan.  

Alternatively, the Court held that the dissenting debenture holders have a right to stand outside the proposed Resolution Plan framed under the lender‘s ICA and pursue other legal means to recover their entitled dues. Hence, the Court disapproved the High Court’s interpretation of SEBI circular.  

Findings and Conclusion  

Though the Court upheld the applicability of the SEBI circular, it refrained from applying the same due to following findings:  

  • Under the present scheme of the Resolution Plan, retail debenture holders having exposure of up to INR 10 lakhs would stand to realize 100% of their principal dues. The secured retail debenture holders having an exposure of more than INR 10 lakhs would realize 29.69%. 
  • In comparison, the secured ICA lenders would receive 24.96% of their principal amount, which is lower than the recovery made by the debenture holders. It is also important to highlight that none of the debenture holders have raised any grievance with regard to the proposed compromise.  
  • The different voting mechanism proposed under the SEBI Circular will further delay the resolution process and potentially disrupt the efforts undertaken by the stakeholders, including the retail debenture holders.  
  • Such unscrambling of the resolution process will not only prove time-consuming, but may also adversely affect the agreed realized gains to the retail debenture holders, who have already consented to the negotiated settlement before the High Court. 

The Court observed,  

“In such a situation, application of the SEBI Circular, though right in law, may lead to unjust outcomes for the retail debenture holders if this court were to reverse the entire course of action which has occurred in the present case.” 

Relying on State v. Kalyan Singh, (2017) 7 SCC 444, the Court opined that the jurisdiction under Article 142 can be used to relax the rigors of law depending upon the peculiar facts and circumstances. Hence, considering that the compromise presently arrived at, which is in the interests of all the parties, will be disturbed if a new process is directed to be commenced in accordance with the SEBI Circular at the present stage, the application of the SEBI Circular will lead to a scenario where a Resolution Plan validly agreed upon by the ICA lenders under the RBI Framework will have to be unscrambled.  

Hence, the Court extended the benefit under Article 142 to the retail debenture holders by allowing the Resolution Plan to pass muster. The appeal was partly allowed and the Authum was allowed to process the takeover of RCFL.  

[SEBI v. Rajkumar Nagpal, 2022 SCC OnLine SC 1119, decided on 30-08-2022] 


*Judgment by: Justice Dr. D Y Chandrachud 


Appearance:  

For SEBI: N Venkataraman, Senior Counsel & Additional Solicitor General  

For RCFL: Darius Khambata, Senior Counsel 

For Bank of Baroda: KV Viswanathan, Senior Counsel  

For Authum Investment and Infrastructure Ltd.: Dhruv Mehta, Senior Counsel 


*Kamini Sharma, Editorial Assistant has put this report together.