Case BriefsHigh Courts

Delhi High Court: Rajnish Bhatnagar, J. granted bail to a young mother of two minor children, who was booked in connection with the murder of her tutor with whom she had an illicit relationship.

Facts

On 10-3-2020, police received information that one RK had been admitted to LBS Hospital. By the time police reached the hospital, RK had died during treatment. As per the prosecution, the deceased was a home tutor engaged by the petitioner for teaching her as she was preparing for Central Teachers Eligibility Test. During this period, the petitioner and the deceased developed physical intimacy. This fact came to the knowledge of petitioner’s husband, who tried to persuade the deceased to call off the relationship but the deceased was adamant to continue relationship with the petitioner. The deceased even threatened the petitioner that he had their video captured, and asked her to continue their relationship otherwise he will make the video public.

As per the prosecution, on 9-3-2020, the petitioner made a phone call to the deceased and asked him to come to a flat in a certain apartment building which belonged to one of the co-accused. On reaching the said flat, three co-accused persons gave beating to the deceased. Later, the deceased succumbed to injuries in the hospital.

Contentions          

The petitioner filed the instant petition for bail under Section 439 CrPC submitting that she was a young lady aged 32 years and mother of two minor children. She merely made a phone call to the deceased and after dropping him near the apartment building, she went away to her husband’s chemist shop. She only dropped the deceased near the apartment building as her husband wanted to talk to the deceased and take back the video so that she may not be maligned in the society. The petitioner claimed that she was unaware of what transpired in the flat, and she had no involvement in murder of the deceased.

Per contra, the prosecution vehemently opposed the bail petition alleging that the petitioner was a part of the conspiracy.

Decision

Looking firstly at antecedents of the petitioner, the High Court found that as per the status report, she had no previous involvement.

The Court noted the fact that the petitioner was a young mother of two minor children. She was involved in illicit relationship with her tutor. She wanted back the video recordings made by the deceased so as to save her image in the society and for that purpose she narrated entire facts to her husband. On day of the incident, the petitioner dropped the deceased near the apartment building from where he went to the flat where the crime occurred. In Court’s opinion, nothing appeared on record to show that the petitioner at any point of time had any knowledge about what would be done with the deceased by other co-accused. The only role assigned to the petitioner was that she dropped the deceased near the apartment building. Even otherwise, there was no communication between the petitioner and other co-accused from the time she dropped the deceased near the apartment till the time her husband came back to the chemist shop.

Looking into entire facts and circumstances of the case, and the role attributed to the petitioner, and also that she is a young mother of two minor children, her husband already being in judicial custody, the Court allowed the petition and admitted the petitioner to bail on furnishing a personal bond in the sum of Rs 50,000 with one surety in the like amount to the satisfaction the trial court. [Jyoti v. State (NCT of Delhi), 2021 SCC OnLine Del 3902, decided on 4-8-2021]


Advocates before the Court:

For the Petitioner: Mr Jitender Sethi, Advocate with Mr Hemant Gulati, Advocate.

For the Respondent: Ms Rajni Gupta, APP for the State SI

Subhash Kumar, PS Ghazipur.

Case BriefsHigh Courts

Delhi High Court: Suresh Kumar Kait, J., reiterated that no party could be permitted to unilaterally appoint an Arbitrator, as the same would defeat the purpose of unbiased adjudication of the dispute between the parties.

Crux of the petitions is to seek the appointment of Arbitrators for adjudication of disputes between the parties.

According to the petitioner firm, a license agreement along with a supplementary agreement was entered between the petitioner and respondent of shops in question, which was renewable every five years at the option of the petitioner.

Petitioner submitted that after the change of name of petitioner/firm from M/S Virender Kumar & Co. to M/S Sital Dass Sons, an additional space adjacent to shop in the same shopping arcade was granted by the respondent to M/S Sital Dass Sons vide supplementary agreement and the terms of the original license agreement were to be read with the other agreement. M/S Sital Dass Sons through its partners informed the respondent that they shall be operating under two different names.

According to the petitioners in the petitions, on the ground that the internal fittings of shopping arcade were nearly 40 years old and were in urgent need of repair and it was no longer financially profitable to continue with shopping arcade, respondent vide a notice revoked the license in respect of the shops.

Petitioners contended that they were in exclusive possession of shops in question and the said notice did not mention any violation of the terms and conditions of the license/lease agreement by petitioners. Further submitted that petitioners had the right to carry on business at the hours suited to them and the license/lease could not have been terminated at the will of respondent.

It had been also brought to the notice of this Court that against illegal eviction of petitioners, they had preferred a civil suit CS(Comm)) 237/2020 before this Court for declaration and permanent injunction against the respondents, which was disposed of vide order dated 21.07.2020 as not maintainable in view of Arbitration clause between the parties.

Bench stated that the arbitration agreement between the parties and invocation of arbitration was not disputed by the respondents. Hence the said petitions deserved to be allowed.

However, contention of petitioners to appoint Arbitrator of their choice was rejected, as no party could be permitted to unilaterally appoint an Arbitrator, as the same would defeat the purpose of unbiased adjudication of dispute between the parties.

Court relied on the decision of the Supreme Court in Perkins Eastman Architects DPS v. HSCC (India) Ltd., 2019 SCC OnLine SC 1517 wherein it had been categorically stated that “in cases where one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator.”

The above-stated decision was followed by the Coordinate Benches of this Court in Proddatur Cable Tv Digi Services v. Siti Cable Network Limited 2020 SCC OnLine Del 350 and VSK Technologies Private Ltd. v. Delhi Jal Board, 2021 SCC OnLine Del 3525 in unequivocal terms.

Concurring the above decisions, present petition was allowed.

Hence, the High Court appointed the sole arbitrator to adjudicate the dispute between the parties.

Adding to the above, Court stated that the fee of the arbitrator shall be governed by the fourth schedule of the Arbitration and Conciliation Act, 1996 and the Arbitrator shall ensure compliance with Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration. [Sital Dass Jewellers v. Asian Hotels (North) Ltd., 2021 SCC OnLine Del 3914, decided on 6-08-2021]


Advocates before the Court:

For the Petitioners: Mr P.K. Agrawal, Mr Rishabh Tomar & Ms Sukriti Sinha, Advocates

For the Respondent: Mr Sidhant Kumar & Ms Manyaa Chandok, Advocates

Case BriefsHigh Courts

Delhi High Court: Asha Menon, J., addressed a suit for trade mark infringement, wherein the Court additionally addressed the scope of Section 124 of Trade Marks Act.

Instant petition, petitioner was aggrieved that on account of the fact that his suit, which he had filed against the defendants for infringement of his proprietary trade mark “RACER” as also passing off their goods as that of the petitioner and other reliefs, was stayed by the trial court.

The stated order was challenged and was further disposed of by permitting the petitioner to withdraw that petition and granting liberty to approach the Tribunal (sic.) by review petition.

Counsel for the petitioner, S.K. Bansal relied upon the judgment of this Court in J. K. Oil Industries v. Adani Wilmar Ltd., 2018 SCC OnLine Del 9367 to submit that when a suit was filed for infringement of trade mark as also for passing off, the filing of a rectification petition before the Intellectual Property Rights Board would result in the stay of the suit as far as infringement of trade mark was concerned under Section 124 of the Trade Marks Act, 1999, but that suit with regard to passing off was to continue.

With regard to the prayer of the petitioner for continuing the suit for passing off, the counsel submitted that since an injunction was already in force against the respondents and the respondents were not using the trade mark “RACER”, no prejudice was being caused to the petitioner, if the suit waiting for the disposal of the rectification petition filed by the respondents before the IPRB. Thus, the counsel submitted that the present petition deserved to be dismissed.

Analysis, Law and Decision

Bench stated that it is settled law that Section 124 of the Trade Marks Act does not provide for stay of action against the passing off and was applicable only where a rectification application/cancellation has been sought against the registered trade mark that a plaintiff claims to be exclusively it’s own.

The above is intended to avoid conflicting decisions by the Civil Courts and the Tribunal.

There is no such occasion arising in a suit for passing off. It is only when clever drafting discloses the intent of the plaintiff to get over the statutory bar, being aware of the rectification proceedings commenced against the trade mark that it claims is exclusively it’s own.

Hence, Court held that the trial court had misread the judgments of this Court in Micolube India Ltd. v. Maggon Auto Centre,    2010 SCC OnLine Del 138, and an error apparent on the face of the impugned order. Trial Court ought not to have directed that the entire suit be stayed, though, this Court including J.K. Oil Industries v. Adani Wilmar Ltd., 2018 SCC OnLine Del 9367, has consistently held that while the suit for infringement of trade mark has to be stayed under Section 124 of the Trade Marks Act, when a rectification petition is filed before the IPRB, an action for passing off could continue.

In view of the above petition was allowed. The order passed by the trial court was modified to read that Civil Suit No.577/2016 [New No.10725/2016] shall remain stayed under Section 124 of the Trade Marks Act qua the action for infringement of trade mark, but shall continue qua the relief sought against passing off and connected reliefs. [Parveen Kumar Gupta v. Ravi Chadha, 2021 SCC OnLine Del 3916, decided on 6-08-2021]


Advocates before the Court:

For the Petitioner: S.K. Bansal and Ajay Amitabh Suman, Advocates

For the Respondents: Ashish Deep Verma, Kamya Ritu Verma, Vijay Singh and Bharti Sharma, Advocates

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Manmohan and Navin Chawla, JJ., noted the mandatory condition provided under Section 144B (7) of Income Tax Act, 1961.

Present petition challenged the Assessment order, notice of demand and notice of penalty passed under Section 143(3) read with Section 144B, Section 156 and Section 274 read with Section 271AAC(1) of the Income Tax Act, 1961 pertaining to the Assessment Year 2018-19.

Petitioner’s counsel submitted that there had been a breach of principles of natural justice, inasmuch as the respondent/revenue had failed to issue the mandatory Show Cause Notice-cum-draft assessment order to the petitioner/assessee, prior to the passing of the impugned assessment order.

Counsel for the Respondent-Revenue submitted that the final Assessment order had been passed without the issuance of a formal Show Cause Notice due to program and systematic glitches and he pointed out that the petitioner had been given ample opportunities and time for furnishing the requisite details and making submissions and hence there was no violation of principles of natural justice.

Analysis, Law and Decision

High Court opined that Section 144B (7) of the Income Tax Act, 1961 mandatorily provides for issuance of a prior show cause notice and draft assessment order before issuing the final assessment order.

Since in the present matter no prior Show Cause Notice, as well as assessment order, had been issued before passing the impugned assessment order, there was a blatant violation of principles of natural justice as well as the mandatory procedure prescribed in “Faceless Assessment Scheme” and as stipulated in Section 144 B of the Act.

Therefore, in the aforesaid facts, impugned assessment order, notice of demand and notice of penalty were set aside and the matter was remanded back to the Assessing Officer, who shall issue a draft assessment order and thereafter pass a reasoned order.

In view of the above, petition was disposed of. [Akashganga Infraventures India Ltd. v. National Faceless Assessment Centre, Delhi; WP (C) 5413 of 2021, decided on 4-08-2021]


Advocates before the Court: 

For the Petitioner: Mr Prakash Kumar, Advocate & Ms Rashmi Singh, Advocates

For the Respondent: Mr Zoheb Hossain, Sr. Standing Counsel for the Department

Case BriefsHigh Courts

Delhi High Court: Asha Menon, J., decided a matter concerning dishonour of cheque.

Petitioner had filed a suit for recovery of Rs 1,65, 75,000 under Order XXXVII of the Code of Civil Procedure, 1908.

Background

Managing Director and other Directors of the respondent/defendant persuaded the petitioner/plaintiff to give friendly loans at an interest @18% per annum. Petitioner and his wife gave Rs 18,00,000 from the bank account to Hari Om Anand as the Managing Director of the respondent/defendant.

At the request of Hari Om Anand, the petitioner/plaintiff also started looking after the legal consultation work of the respondent/defendant and the Managing Director and other Directors. Subsequently, the petitioner/plaintiff gave another friendly loan of Rs 3,20,00,000 from his bank account to Hari Om Anand and continued to take care of the legal work.

Further, Petitioner/Plaintiff submitted that 6 cheques were issued by Hari Om Anand. The said cheques were dishonoured on presentation due to insufficient funds. The petitioner/plaintiff filed a criminal case under Section 138 NI Act.

The above was preceded by a notice to which no reply was sent.

In an appearance respondent/defendant offered to furnish a corporate guarantee duly signed by the Managing Director and duly authorized by the Board Resolution relating to immovable properties, for securing the suit amount and the restrain order was filed.

Present petition was filed against two orders of the trial court.

Vide an Order dated 28-7-2020, this Court observed that the trial Court had erred in not securing the amount of Rs 1.5 crores as directed in the order dated 24-12-2019 and ought to have asked the respondent/defendant to submit documents of a property of which the title was clear or a bank certificate recording a no objection to the creation of a second charge on the property to the extent of Rs 1.5 crores ought to have been furnished.

Vide orders dated 4-12-2020, this Court had after noting the letter of the Punjab National Bank, Gymkhana Branch, Meerut, U.P. that a lien had been created in the sum of Rs 1.50 crores, directed that the said amount of Rs 1.50 crores be deposited in an interest-bearing fixed deposit. This FDR had since been deposited in the Registry of this Court as was noted in the orders of this Court dated 5-03-2021 and 8-03-2021

Further, the petitioner’s counsel submitted that trial court had wrongly granted leave to defend the respondent in a case where the respondent/defendant had raised no triable issues.

Adding to the above, it was stated that trial court had proceeded in a wrong direction as the loan transactions between the petitioner/plaintiff and the respondent/defendant were different transactions and had nothing to do with the payment of Rs.1.50 crores, which was towards the legal fees of the petitioner/plaintiff and for which the invoice had been raised.

There was no dispute in that the petitioner/plaintiff had acted as a legal advisor to the respondent/defendant.

There was no document to establish a lawyer-client relationship, no retainership agreement had been filed and therefore, the claim of the petitioner/plaintiff was suspicious that he was entitled to a sum of Rs 1.50 crores towards such legal assistance.

As regards the question whether leave to defend has been rightly granted to the respondent/defendant or not, the facts that prevailed upon before the learned Trial Court were that the petitioner/plaintiff himself has referred to loans having been given to the respondent/defendant by way of bank transfer.

When the respondent/defendant had challenged the claim of the petitioner/plaintiff that he had acted as legal advisor to them and, therefore, the invoice raised was for a fee, this fact too would have to be proved.

In application for leave to defend, the respondent/defendant it was averred that the petitioner/plaintiff had claimed to have been providing legal assistance to the respondent/defendant since the year 2000.

With respect to the submissions made by the counsel for the petitioner/plaintiff, on taking cognizance of an offence by the MM under Section 138 of the N.I. Act automatically a decree against the respondent/defendant should follow, cannot be accepted, as cognizance leads to trial and the accused can also get acquitted.

Secondly, on the one hand, the petitioner/plaintiff claims that the cheques were towards loans which were separate transactions and on the other hand, wants this Court to draw conclusions on that basis, that the signatures on the cheques were admitted and the MM had taken cognizance of the case to decree this suit.

Bench stated that in light of the above submissions, it is indeed a matter of trial as to what was the liability of the respondent/defendant towards the petitioner/plaintiff and towards what transaction or service rendered by the petitioner/plaintiff, that is, as a lender or as a legal advisor, would he be entitled to the suit amount.

High Court held that the Trial Court was right in observing that the defence taken was not moonshine and disclosed triable issues which required inquiry. Leave to defend had to be granted in the light of these varying stands taken by the petitioner/plaintiff in different proceedings.

in the light of the previous orders of this Court and the deposit of the FDR for a sum of Rs.1.5 crores with the Registry of this Court, the leave to defend granted to the respondent/defendant is not unconditional and does not work to the disadvantage of the petitioner/plaintiff.

In view of the above, petition was dismissed. [Sarvesh Bisaria v. Anand Nirog Dham Hospital (P) Ltd., 2021 SCC OnLine Del 3859, decided on 30-7-2021]


Advocates before the Court:

For the Petitioner; Vivek Kumar Tandon, Advocate

For the Respondent: Sanchit Garga, Advocate

Case BriefsHigh Courts

Delhi High Court: Sanjeev Narula, J., while addressing the present matter held that prima facie view on territorial jurisdiction has to be on the basis of averments made in the plaint, and the documents relied upon by the plaintiff and in case the same brings out the ingredients for establishing the jurisdiction of the court, that would be sufficient for the court to assume jurisdiction.

Instant suit was filed to seek a permanent injunction restraining infringement of trademark and passing off; infringement of copyright, trade dress, breach of confidentiality; misappropriation of trade secrets, etc.

Further, it was noted that defendant 1 was based in Ahmedabad, defendant 2 in Chandigarh and defendants 3 and 4 in Punjab, whereas the plaintiff was based in Chandigarh.

Defendant 1 sought the return of the plaint on the following grounds:

  • Defendant 1 has its registered office in Ahmedabad and has been operating its business from the said jurisdiction. The plaintiffs have also admitted that they have been operating in Ahmedabad and other cities of Gujarat.
  • Claims of the Plaintiffs regarding the alleged violation of the impugned rights as well as alleged confusion caused in the market relate to Ahmedabad and other cities of Gujarat and therefore if at all there was any cause of action in favour of the plaintiffs, the same would have accrued in Ahmedabad, Gujarat and certainly not in Delhi. Plaintiffs deliberately chose to file the present proceedings before the Court to cause hardship and inconvenience to defendant 1, even though proper jurisdiction to file the present suit would have been Ahmedabad, Gujarat.
  • Address reflected on the trademark applications/registrations on which the plaintiffs have based their claims and grounds are also of Chandigarh.
  • Further, it was stated that it is settled that jurisdiction can only be invoked on the basis of online presence if the allegedly infringing article can be purchased online within the said jurisdiction.

Plaintiff submitted that since the defendants have been contacting the parties at Delhi for establishing their franchisees, including plaintiffs’ Master Franchisee in Delhi for converting them to the Defendants Master Franchiseee. Therefore, the cause of action arose in Delhi. Further, he added that in case the defendants do not intend to expand their operation in Delhi, they should make a statement to that effect.

Analysis, Law and Decision

Bench held that the question of territorial jurisdiction in matters relating to infringement of trademarks is well-settled.

Stating that Section 134(2) of the Trade Marks Act, 1999 and also Section 62(2) of the Copyrights Act, 1957 are in addition to Section 20 of the CPC, Court opined that, the plaintiff was entitled to file the suit for infringement of trademark where the cause of action arose under Section 20(c) of CPC.

High Court found that the averments made in the plaint disclose a cause of action in Delhi.

Further, it was stated that the plaintiffs contended that the defendant were openly and publicly expressing their intention to expand all across the country and were entertaining franchisee queries within the territory of Delhi.

Bench found the contention of defendants that mere alleged apprehension in the pleadings, unsubstantiated by documentary evidence, can never be a basis to seek jurisdiction – incorrect.

Considering the nature of business, the prior relationship of the parties, and the business format of establishing franchisees, it cannot be assumed that the Plaintiffs’ allegations are mis-founded or could be construed as false, in absence of any documentary proof.

In view of the above, the occurrence of the cause of action, jurisdiction, which was the determinative factor under Section 20 of the CPC, clearly vests in this Court and defendant would have to prove their contentions during the trial.

Matter to be listed for arguments on remaining applications on 21-9-2021. [Copenhagen Hospitality and Retail v. A.R. Impex,    2021 SCC OnLine Del 3899, decided on 29-7-2021]


Advocates before the Court:

For the Plaintiffs:

Mr. Chander M. Lall, Senior Advocate with Mrs. Bindra Rana, Mr. Vikrant Rana, Mr. Priya Adlakha, Ms. Tanvi Bhatnagar, Ms. Rima Majumdar, Ms. Nancy Roy and Ms. Ananya Chug, Advocates.

For the Defendants:

Mr. Neeraj Grover, Advocate with, Mr. K.C. Patel, Mr. Naqeeb Nawab, Mr. Himanshu Deora, Mr. Shashwat Rakshit & Mr. Raghav Vig, Advocates for D-1.

Mr. Gautam Singh, Advocate for D-2.

Case BriefsHigh Courts

Delhi High Court: Yogesh Khanna, J., remarked that,

Once the Parliament steps in and cures the defect pointed out by a Constitutional Court, the defect appears to be cured and the presumption of constitutionality is to apply to such provision.

Instant petitions were for grant of bail to the applicants.

Factual Matrix

An enquiry under FEMA, 1999 was commenced on 1-07-2017 by the respondent at various places against Naresh Jain and others, it was alleged that the petitioners and others had appeared on numerous occasions before the Enforcement Directorate and the enquiry was conducted for 2 years under Section 47 of the FEMA.

Further, the ED registered FIR with EOW Cell for Scheduled Offences under the Prevention of the Money Laundering Act, 2002. Thereafter, the petitioners appeared before the ED on several occasions. Searches were conducted by the ED under PMLA at the residential premises of the petitioner Bimal Jain also.

Prosecution complaint was filed before the Special Judge, PMLA against eight accused persons, including the petitioners herein. Petitioner Bimal Kumar Jain also joined the investigation of FEMA as also PMLA on various occasions.

Senior Counsel for the petitioner submitted that:

a) while arresting Bimal Jain, the procedure under Section 19 PMLA was not followed.

b) the Enforcement Directorate cannot be the complainant and the Investigating Officer at the same time; and

c) effect of declaration of twin conditions under Section 45 of the PMLA have been declared unconstitutional and ultra vires in view of decision in Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1.

Analysis, Law and Decision

Non-Compliance under Section 19 of the PMLA

High Court stated that since the arrest of accused Bimal Jain was in execution of the NBWs therefore, the provision under Section 19 of the PMLA could not be adhered to.

Admittedly, Bimal Jain was arrested in execution of the NBW by the Special Judge, PMLA while taking cognizance of prosecution complaint filed by the Enforcement Directorate and thus there was no occasion to comply with the requirement of Section 19 of the PMLA.

Bench stated that, the very fact the complaint was filed by the Enforcement Directorate arraying petitioner Bimal Jain as accused 2, prima facie shows there were reasons to believe the person was guilty of offence punishable under PMLA as the complaint was filed only against a person who was presumed to be guilty.

The Complainant and the Investigating Agency cannot be the same

Court referred to the decision of Mukesh Singh v. State (NCT) of Delhi, (2020) 10 SCC 120.

Twin conditions of Section 45 of the PMLA

Supreme Court in Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1 declared Section 45 of the PMLA as it stood then, as unconstitutional and violative of Articles 14 and 21 of the Constitution of India, but the defects pointed out were cured by the legislature and an amendment to Section 45(1) was made vide Finance Act, 2018.

Supreme Court’s decision in P. Chidambaram v. E.D., (2019) 9 SCC 24 took judicial note of the above amendment.

High Court stated that the legislature has the power to cure the underlying defect pointed out by a Court, while striking down a provision of law and pass a suitable amendment. Bench referred to the decision of Supreme Court in State of Karnataka v. Karnataka Pawn Brokers Association, (2018) 6 SCC 363 it was held:-

“24. On analysis of the aforesaid judgments it can be said that the Legislature has the power to enact validating laws including the power to amend laws with retrospective effect. However, this can be done to remove causes of invalidity. When such a law is passed, the Legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultantly, it amends the law, by removing the mistakes committed in the earlier legislation, the effect of which is to remove the basis and foundation of the judgment. If this is done, the same does not amount to statutory overruling.”

Adding to the above analysis, Court remarked that merely because the entire section was not re-enacted would be of no consequence since the provision even after being declared unconstitutional, does not get repealed or wiped out from the statute book and it only becomes unenforceable.

Therefore, High Court held that there is a presumption in favour of constitutionality since the amended Section 45(1) of the PMLA has not been struck down, Court referred to the decision of the Supreme Court in Nagaland Senior Govt. Employees Welfare Assn. v. State of Nagaland, (2010) 7 SCC 643.

If Section 45(1) of the PMLA is ignored, whether the petitioners are entitled to bail per parameter of Section 439 CrPC?

The investigation by EG revealed that Naresh Jain and Bimal Jain along with other accomplices hatched a criminal conspiracy to cause loss to the exchequer and banks by indulging in illegal foreign exchange transaction on the basis of forged/fabricated documents.

Naresh Jain also facilitated parking of funds abroad by Indian nationals through his international Hawala transaction structure created in India and in various other jurisdictions. Naresh Jain conducted international Hawala operation and domestic operation of providing accommodation entries to co-conspirators.

Investigation so far, revealed that Naresh Jain incorporated and operated 450 Indian entities and 104 foreign entities. These entities were incorporated by using original identity proofs and documents of dummy shareholders and directors as well by fabricating identity proofs and documents of these shareholders and directors. Fabricated documents were used to open bank accounts as well.

Further, it was alleged that the petitioners were well connected in India and abroad and there was an apprehension that they will flee from the country to evade trial in case they were enlarged on bail. It was also alleged that Bimal Jain had evaded the summons issued by the department and had refused to join investigation.

ED alleged that the petitioners were involved in various criminal cases and even two Red Corner Notices were issued by Interpol against Naresh Kumar Jain.

Even the allegations were that the petitioners forged their medical certificates and Naresh Jain continues the criminal activities while in Jail and the investigation in the case is still going on and a large number of activities/fact accounts/witnesses /employees and beneficiaries are involved.

Adding to the above allegations, it was stated that if enlarged on bail there was every likelihood the petitioners may flee to Dubai or elsewhere to avoid the process of law and they were flight risks.

Hence, bail was not granted to the petitioners and the petitions were dismissed. [Bimal Kumar Jain and Naresh Jain v. Directorate of Enforcement, 2021 SCC OnLine Del 3847, decided on 30-07-2021]


Advocates before the Court:

For the Petitioner/s: Vikram Chaudhri, Sr. Advocate with Naveen Malhotra, and Harshit Sethi, Advocates.

For the Respondent: S.V.Raju, ASG, .Zoheb Hossain, Special Counsel, Amit Mahajan, CGSC, Aarushi Singh, Mallika Hiremath, Vivek Gurnani, and Agni Sen, Advocates

Case BriefsHigh Courts

Delhi High Court: Prathiba M. Singh, J., held that,

“…relegating parties to customary Courts when they themselves admit that they are following Hindu customs and traditions would be antithetical to the purpose behind enacting a statute like the HMA, 1955.”

Question for Consideration:

Applicability of the Hindu Marriage Act, 1955, in respect of the parties who belonged to the Meena community in view of the exclusion under Section 2(2) of the HMA,1955.

Petitioner and respondent sought divorce under Section 13-1(ia) of the HMA, 1955.

An FIR was lodged by the Respondent under The Protection of Women from Domestic Violence Act, 2005 as also an application seeking maintenance, under Section 125 of The Code of Criminal Procedure, 1973.

In the divorce petition, since the respondent did not appear, she proceeded ex-parte. However, after she was permitted to participate by the Supreme Court, she filed an application under Order VII Rule 10 and Order VII Rule11 of the Code of Civil Procedure, 1908 before the family court.

In the said application respondent sought for rejection of the divorce petition, on the ground that the provisions of the HMA, 1955 do not apply to the parties, on the ground that the provisions of the HMA do not apply to the parties concerned as they are members of a notified Scheduled Tribe in Rajasthan, and hence the HMA, 1955 would not be applicable to the case of the said parties in view of Section 2(2) of the HMA, 1955.

Family Court held that the provisions of the HMA, 1955 do not extend to the Meena community, which was a notified Scheduled Tribe. The said order was under challenge in the present petition.

Analysis, Law and Decision

Bench noted that the case of the wife was that the Meena community was covered by the exclusion under Section 2(2) of the HMA.

Divorce petition under Section 13-1(ia) of the HMA was dismissed by the trial court on the basis of the exclusion in Section 2(2) of the HMA, 1955. The trial court had not conducted the trial in the petition or considered the evidence in the matter, but summarily dismissed the petition simply on the ground that since the parties belong to the Meena Community, the provisions of the HMA, 1955 would not be applicable.

Court noted that the parties have since inception pleaded that they belong to the Meena community, however, their marriage was solemnized according to Hindu rites and ceremonies, and they follow Hindu customs.

Respondent-wife had admitted that:

(i) that the marriage was conducted as per the “Hindu Riti Riwaz”

(ii) that the marriage was effected by following the “Saptapadi”

(iii) that the marriage was conducted in front of `Agni’ – fire.

Whether in view of the above facts, parties ought to be governed by the provisions of the HMA or should they be relegated to procedures of the Meena tribe?

The word `Hindu’ is not defined in any of the statutes. It is in view of the fact that there is no definition of Hindu, that the Supreme Court has held in Labishwar Manjhi  v. Pran Manjhi, (2000) 8 SCC 587, that if members of Tribes are Hinduised, the provisions of the HMA, 1955 would be applicable.

Further, the High Court expressed that the manner in which the marriage had been conducted in the present matter and the customs being followed by the parties show that as in the case of Hindus, the marriage is conducted in front of the fire. The Hindu customary marriage involves the ceremony of Saptapadi which has also been performed in the present case. The various other ceremonies, as is clear from the marriage invitation are also as per Hindu customs.

Hence,

If members of a tribe voluntarily choose to follow Hindu customs, traditions and rites they cannot be kept out of the purview of the provisions of the HMA, 1955.

Adding to the above, High Court also stated that nothing was placed before the Court to show that the Meena community Tribe had a specialized Court with proper procedures to deal with the issues.

Therefore, if the Court has to choose between relegating parties to customary Courts which may or may not provide for proper procedures and safeguards as against codified statutes envisioning adequate safeguards and procedures, this Court is inclined to lean in favour of an interpretation in favour of the latter, especially in view of the binding precedent of the Supreme Court.

Divorce Proceedings

Court held that if proper tribal customs were not established or the following of Hindu customs or rites was admitted by the parties, there was no reason to hold that the provisions of the HMA, 1955 would not apply. 

The trial court erred in noting the admissions of Respondent-wife which led to the incorrect conclusion. 

Courts have been repeatedly confronted with the conflicts that arise in personal laws

Bench remarked that persons belonging to various communities, castes, and religions, who forge marital bonds, struggle with such conflicts. It is with the hope of bringing uniformity and to eliminate these struggles and conflicts, that the Supreme Court way back in 1985, in Mohd. Ahmed Khan v. Shah Bano Begum, (1985) 2 SCC 556 observed:

“…A common Civil Code will help the cause of national integration by removing disparate loyalties to laws which have conflicting ideologies. No community is likely to bell the cat by making gratuitous concessions on this issue. It is the State which is charged with the duty of securing a uniform civil code for the citizens of the country and, unquestionably, it has the legislative competence to do so.”

In Jordon Diengdeh v. S.S. Chopra, (1985) 3 SCC 62, the Supreme Court observed in the context of dissolution of marriage between a couple wherein the wife belong to the Naga Tribe and the husband was a Sikh by religion that Article 44 of the Constitution needs to be implemented in its letter and spirit.

Need for a Uniform Code has been again echoed by the Supreme Court in ABC v. State (NCT of Delhi), (2015) 10 SCC 1.

Lastly, the Court concluded stating that the need for a Uniform Civil Code as envisioned under Article 44, has been reiterated from time to time by the Supreme Court. Cases like the present one repeatedly highlight the need for such a Code – ‘common to all’, which would enable uniform principles being applied in respect of aspects such as marriage, divorce, succession etc., so that settled principles, safeguards and procedures can be laid down and citizens are not made to struggle due to the conflicts and contradictions in various personal laws.

The hope expressed in Article 44 of the Constitution that the State shall secure for its citizens Uniform Civil Code ought not to remain a mere hope.

The Supreme Court had, in 1985 directed that the judgment in Jordon Diengdeh v. S.S. Chopra, (1985) 3 SCC 62, to be placed before the Ministry of Law to take appropriate steps. However, more than three decades have passed since then and it is unclear as to what steps have been taken in this regard till date.

In view of the above discussion, the appeal was allowed.[Satprakash Meena v. Alka Meena, 2021 SCC OnLine Del 3645, decided on 7-07-2021]


Advocates before the Court:

For the Petitioner: F.K. Jha, Advocate

For the Respondent: Abhinav Gupta and Nitesh Ranjan, Advocates

Case BriefsHigh Courts

Delhi High Court: V. Kameswar Rao, J., had set aside the controversial order of the CCIM (Central Council of Indian Medicine), whereby, number of doctors teaching at various Ayurvedic colleges were handed de-certification for working outside their State of registration. The Bench stated,

“The petitioners being in dark as to for what reasons, the material relied upon by them has been discarded, the impugned orders need to be set aside.”

Background

The factual background common to all the petitions was that the CCIM had initially passed order dated 24-11-2020 whereby it withdrew the teacher’s code and debarred the teachers for a period of 10 years under Regulation 3(1)(f) of Regulations of 2016 which requires CCIM to certify that the teaching faculty present in a college is not working at any other place. Therefore, as per the said regulation it is the duty of the CCIM to check that a teaching faculty who has shown himself to be teaching at a particular college is not merely an ‘On Paper Teacher’.

However, on reconsideration, the said order was withdrawn with regard to all the teachers and fresh orders dated 14-01-2021 and 15-01-2021 had been passed whereby CCIM had decided not to certify the petitioners that they were not working elsewhere.

Arguments Advanced by the Petitioners

The petitioners submitted that imposition of punishment of ‘decertification as a teacher’ or ‘decertifying the Teacher Code’ has nowhere been provided as a punishment for being registered in another State or for violation of Regulation 26 by the CCIM. Additionally, the impugned decision was assailed by the petitioners on following grounds:

  1. The Regulation 3 of the Regulations of 2016 does not contemplate the consequence that the individual faculty members will be denied certification, rather it contemplates that the college will be denied permission if CCIM does not give certification in terms of 3(1)(f) of the Regulations of 2016.
  2. Regulation 26 of Regulations of 1982 does not empower CCIM to undertake the whole process of inquiry of alleged ‘On Paper Teachers’ rather it only mandates that every person registered as a practitioner shall intimate the concerned State Board or Council with respect to change in type of practice or change of address or succeeding to another practice. There was no reference to alleged non-compliance with Regulation 26 of Regulations of 1982 in the impugned orders.
  3. The only consequence for not notifying any change of address or practice to State Board or Council / Central Council was that the right to participate in the election of the members to the Central Council or a Board would be forfeited permanently or for such period as may be specified by an order of Central Government. (Ref: Section 31 of CCIM Act).
  4. The impugned orders of the CCIM were in violation of the principles of legitimate expectation and therefore arbitrary, excessively harsh and were liable to be quashed for violating Article 14 of the Constitution.

 Opinion and Findings of the Court

Regulation 3 of Regulations of 2016, shall have a twin effect, i.e., non-certification of the faculty / teacher and also the denial of permission to a particular college to function.”

Rejecting the submission of the petitoners that Regulations 3(1)(f) could not have been invoked as it contemplate that it was the college/institution which should be denied permission to run an Ayurvedic College and it did not authorise an action against the teachers, the Bench stated that Regulation 3 deals with the Requirements of Minimum Standards to grant permission and such a permission can be granted only if the College fulfils the requirement for the faculty(s) under the norms. But if the faculty/teacher is not in place, the same would result in CCIM denying the certification that the faculty/teacher is not working at any other place, 2016.

Whether Central Registration dispenses with the Requirement to obtain State Registration for the Teachers?

Regarding the stand that the petitioners were required to be registered in the State where he was teaching was contrary to the office letter dated 29-01-2021 which dispensed with the requirement of State registration for the teachers who had obtained central registration as per the CCIM Act, the Bench opined that it was true that the Regulation 26 of Regulations of 1982 provide the practitioner to inform the change in type of practice and address, but the fact that the impugned action was not an action under Regulation 26 but the CCIM had relied upon the information submitted by the teachers in the state register to, not to certify that he/ she was not working at any other place. Therefore, the Bench held that the registration in the Central register would not be of any help to the petitioners as it did not had any bearing/effect, the basis of the impugned orders was that the petitioners, though practicing at one place but were teaching at other distant places.

Whether the Order was Unjust on the Ground of Parity?

The plea of the petitioners, that the impugned orders were discriminatory as large number of identically situated Ayurvedic teachers had either been not touched or had been exonerated with identical facts and circumstances was rejected as unmerited as the petitioners had failed to state as to how those cases were identical. The Bench reiterated the Supreme Court’s opinion that, “even if some benefit has been given wrongly, it cannot be a reason to bestow the same benefit to the petitioners. There cannot be a negative equality.” State of Bihar v. Kameshwar Prasad Singh, (2000) 9 SCC 94)

Whether Past Certification by CCIM Creates an Embargo to reject Certification?

On the plea of the petitioners that the CCIM having certified the teachers in the previous inspection(s) and during these years the CCIM having not put forth the requirement of a registration in the State register of the respective State where the petitioners were teaching; the CCIM could not deny the certification concerned, the Bench expressed merely because in the past the CCIM had certified the teachers, that they were not working at any other place would not preclude CCIM on the basis of facts/evidence available to come to a conclusion that in fact a teacher is working/gainfully engaged at a different place, and thereby, not certify that the teacher is not working at any other place.

Further, the petitioners were required to follow the mandate of Regulation 26 and intimate the change of type of practice and address to the state board, to be in conformity with the address/place of the college where he/she is teaching. Not informing the same and teaching in a different state should surely suggest that he/she is practicing or working at a different place from the purported institution/college.

Whether CCIM went Outside its Jurisdiction while Denying Certification to the Teachers?

Rejecting the plea of the petitioners that CCIM did not have disciplinary powers to take action against the petitioners who were teachers governed by the CCIM Act, the Bench stated the impugned action was not a disciplinary action but a decision which emanated Regulation 3(1)(f) which the CCIM was empowered to take and which power had not been challenged by the petitioners.

Whether Separate Show-cause Notices were required for Notifying the Impugned Action?

Considering the fact that the CCIM/Ministry of Ayush was requesting the teachers and the colleges to desist from the practice of ‘On Paper Teachers’ ever since 2019, the Bench stated that when Regulation 26 mandates that change in type of practice or address shall be informed, it was required to be followed and for which no separate notice was required to be issued. Moreover, the impugned action was not for not following Regulation 26 but one emanating from Regulation 3(1)(f) of Regulations of 2016. The action being in accordance with Regulation 3(1)(f) of Regulations of 2016, it could not be said that the same violated Article 14 of the Constitution.

A related plea was that the principles of legitimate expectation clearly required that the CCIM ought to have given the petitioners a specific notice/intimation to shift their place of registration to the current state of employment. The Bench stated,

“It may be true that separate show-cause notices were not issued to the petitioners notifying the impugned action, but it cannot be said that no hearing was given to them. The hearing was given to them by the Grievance Redressal Committee wherein the petitioners have participated and relied upon, materials/documents in support of their stand that they were actually working in the college.”

Whether CCIM failed to consider the Materials Produced?

Noticeably, the petitioners were asked to furnish at least 7 out of 12 particulars sought for vide the said communication and that the said particulars were not considered by CCIM. Neither was it a case where the teachers having been found to be present on papers were physically absent. Accepting the plea of the petitioners that non-compliance of Regulation 26, could not disprove the physical presence of the teachers at the college, the Bench opined,

“The impugned orders passed do not reveal that the material produced by the petitioners has been considered. Even if considered, the material is not referred to.”

Relying on the decisions in Kothari Filaments v. Commr. of Customs, (2009) 2 SCC 192, and S.N. Mukherjee v. Union of India, (1990) 4 SCC 594, wherein it was held that “a person charged with misdeclaration is entitled to a proper hearing which would include documents on which reliance is placed”; the Bench held that the law in this regard is well settled that an authority discharging its functions under a statute/regulation must pass a reasoned order which would reveal the consideration of the relevant material in support of the said order.

Verdict

In the view of the above, the matters were remanded back to the CCIM with a direction that they should pass fresh order(s) by considering all the material available with them including the material submitted by the individual petitioner. Further, the Court ordered that the status quo as prevailing with regard to each of the petitioners shall continue.[Anil Kumar Singh Bhadoria v. Union Of India, 2021 SCC OnLine Del 3807, decided on 26-07-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Advocates before the Court:

Mr Sandeep Sethi and Mr A. Mariarputham, Sr. Advs. Mr Siddharth Gupta, Mr Avneesh Arputham, Mr Vikas Sethi, Mr Md. Zunaid Altamis, Mr Saurabh Dutta, Mr Animesh Kumar, Mr Nishant Kumar, Mr Ambuj Dixit, Ms Utkarsha Sharma, Ms.Shweta Singh, Mr Siddharth Sharma, Mr Amit Khemka, Mr Rishi Sehgal, Mr Midhun Aggarwal, Mr Jasbir Singh Malik, Mr Kanwar Udai Bhan Singh Sehrawat and Mr Akshay Bansal, Advs. for petitioners.

Ms Archana Pathak Dave, Mr Kumar Prashant, Ms Vanya Gupta and Mr Pramod Kumar Vishnoi, Mr Shashank Bajpai, Sr. Panel Counsel, Mrs Shakun Sudha Shukla, Ms Monika Arora, CGSC, Mr Shriram Tiwary, Ms Aakanksha Kaul, Mr Manek Singh, Mr. Manish Mohan, CGSC, Ms Manisha Saroha, Mr Avnish Singh, Ms Pushplata Singh, Ms Sumanlata Gautam, Mr Farman Ali, Mr Athar Raza Farooquei, Mr Vijay Joshi, Sr. Panel Counsel, Mr Neeraj, Mr Sahaj Garg, Mr Rudra Paliwal, Mr Vedansh Anand, Mr Sanjeev Sabharwal, Sr. Panel Counsel, Mr Jivesh Kumar Tiwari, Sr. Panel Counsel, Mr Santosh Kumar Pandey, Mr Harish Kumar Garg, Ms Payal Aggarwal, Mr Rajesh Kumar, Sr. Panel Counsel, Mr Satya Ranjan Swain, Central Govt. Sr. Panel Counsel, Mr Soumendu Mukherjee, G.P., Mr Kautilya Birat, Mr Akshay Amritanshu, Mr Vikrant N. Goyal, Mr Suraj Kumar, Mr Alok Singh, Sr. Panel Counsel, Mr Vijayender Kumar, Mr Dhruv Kapur, Mr Maharshi Kaler, Mr Tanveer Ahmed Ansari, Mr Naginder Benipal, Sr. Panel Counsel, Ms Rupali Kapoor, Govt. Pleader and Ms Harithi Kambiri, Advs. for respondents.

Case BriefsHigh Courts

Delhi High Court: Jayant Nath, J., held that,

Exception 3 to Section 28 of the Contract Act deals with curtailment of the period for the creditor to approach the court/tribunal to enforce his rights. It does not in any manner deal with the claim period within which the beneficiary is entitled to lodge his claim with the bank/guarantor.

In the present petition, the dispute centred around the interpretation of Section 28 of the Indian Contract Act, 1872.

Petitioner submitted that based on an erroneous interpretation of Section 28 of the Indian Contract Act, 1872 respondent bank forced a mandatory and unalterable claim period of a minimum of 12 months for the bank guarantee.

Further, it was stated that the claim period is a time period contractually agreed upon between the creditor and principal debtor, which provided a grace period beyond the validity period of the guarantee to make a demand on the bank for a default, which occurred during the validity period. Adding to the said, it was stated that the said claim period may or may not even exist in a bank guarantee.

As per respondent PNB, a claim period in a bank guarantee which was less than 12 months would render the claim period void and would effectively increase the claim period under the bank guarantee to 3 years under the Limitation Act, 1963.

Respondent 2 stated that it would be open for the banks to stipulate as a condition precedent that if the claim was not lodged before a stipulated time, the bank guarantee shall be revoked or terminated but the stipulated date cannot be less than one year in any event.

Petitioner 1’s case was that it had a number of contracts with Government Bodies and Public Sector Undertakings. Petitioner used to normally issue ‘Performance Bank Guarantee’ or ‘Advance Bank Guarantee’ in the course of performance of the contract.

It was pleaded that on a complete misinterpretation of Section 28 of the Contract Act, respondent 1 bank insisted that the claim period should be 12 months. Adverse fallout for the petitioner of such interpretation was that the petitioner was unnecessarily made liable to pay commission charges for such extended bank guarantee when as per the contract between the principal debtor and the creditor, the claim period would be much shorter.

The extended claim period affected the petitioners’ capability to do business by entering into new contracts and affected the fundamental rights of the petitioners under Article 19(1)(g) of the Constitution of India. 

Analysis, Law and Decision

Bench stated that under Article 226 (2) of the Constitution of India, order or writ can be issued by a High Court in relation to territories within which the cause of action wholly or in part arises.

Whether a high court has territorial jurisdiction to entertain a writ petition? 

Court stated that while entertaining a writ petition, the doctrine of forum convenience and nature of the cause of action are also required to be scrutinized by the High Court.

Since the part of the cause of action arose within the territory of this Court, it would have territorial jurisdiction to adjudicate the instant petition.

High Court held that limiting the time within which the rights are to be enforced is void provided the rights to be enforced under the Contract continue to exist even beyond the shorter agreed period for enforcing the rights.

Further, the Court added that, if beyond the shorter period agreed between the parties, the rights under the contract are not kept alive, no limiting of the time to enforce the rights under the contract arises and such an agreement putting a time limit to sue will not be hit by Section 28 of the Act.

Section 28 prior to the amendment

Bench noted that Section 28 of the Contract Act prior to the amendment provided that a clause limiting the time within which the rights are to be enforced, is void, if the right to be enforced under the Contract continued to exist even beyond the shorter period agreed for enforcing the rights.

If beyond the shorter period agreed between the parties for enforcing the rights, the rights under the contract are not kept alive, then such an agreement putting a time limit to sue was not hit by Section 28 of the Contract Act. 

Why was the newly added Section 28 of the Contract Act enacted?

The said was enacted to do away with the earlier distinction between remedy and rights i.e., a clause barring the remedy only was void but a clause extinguishing a right was valid.

Adding to the above, Bench stated that the said clause now provides that the beneficiary of the bank guarantee i.e. creditor would have time to approach the appropriate court for enforcement of his rights under the bank guarantee in terms of the provision of the Limitation Act i.e. 3 years for private parties and 30 years for government parties.

Later, the T.R. Andhyarujina Committee recommended that the said period be reduced to one year for enforcing the rights under the bank guarantee. Thereafter, Exception 3 to Section 28 of the Contract was added in 2013.

Hence,

Exception 3 to section 28 of the Contact Act deals with the rights of a creditor to enforce his rights under the bank guarantee after happening of a specified event. 

Respondent in its counter-affidavit admitted that, Exception 3 to section 28 of the Contract Act deals with a clause in a bank guarantee to the effect that in case no claim is filed before the court of law within a period which is not less than 12 months from the date of occurring or non- occurring of the specified event, the liability of the bank shall get extinguished. Such a term is not contrary to law.

While concluding the matter, the Court stated that respondent 1 erred in taking the view that they were in law mandated to stipulate a claim period of 12 months in the bank guarantee failing which the clause shall be void under Section 28 of the Contract Act.

Section 28 deals with right of the creditor to enforce his rights under the bank guarantee in case of refusal by the guarantor to pay before an appropriate court or tribunal.

Therefore, all the communications issued by respondent 1 reproduced erroneous interpretation of Exception 3 to Section 28 of the Contract Act and were clearly vitiated.

Issue of prescribing the bank charges and the period for retention of security

Court held that the above-stated issue were matters of contract and this Court cannot interfere in such contractual matters.

In view of the above discussion, petition was disposed of. [Larsen & Toubro Limited v. Punjab and National Bank, 2021 SCC OnLine Del 3827, decided on 28-07-2021]


Advocates before the Court:

For the Petitioners: Mr Neeraj Kishan Kaul, Sr. Adv. with Mr Rishi Agrawala, Mr Karan Luthra, Ms Megha Bengani, Mr Deepak Joshi and Mr Aakash Lamba, Advs.

For the Respondents: Mr Dhruv Mehta, Sr. Adv. with Mr Rajesh Gautam, Mr Anant Gautam and Mr Nipun Sharma, Advs. for R-1/PNB.

Dr Lalit Bhasin, Ms Nina Gupta, Ms Ananya Marwah, Ms Ruchika Joshi and Mr Ajay Pratap Singh, Advs. for R- 2/IBA.

Mr Ramesh Babu, Ms Nisha Sharma and Ms Tanya Chowdhary, Advocates for RBI/R-3

Case BriefsHigh Courts

Delhi High Court: Prathiba M. Singh, J., while quoting that ‘Promises are meant to be broken’ stated that the law has evolved the doctrines of legitimate expectation and promissory estoppel to ensure that promises made by the Government, its officials and other authorities are not broken and are, in fact, judicially enforceable, subject to certain conditions.

Promise by Chief Minister of Delhi

Petitioners filed the instant petition seeking enforcement of CM of Delhi’s promise.

Petitioners sought the recovery/payment/refund of the monthly rental amount, as per the promise made by the CM.

What was the promise?

CM, Delhi in a press conference on 29-3-2020, amidst the pandemic requested all the landlords to postpone the demand/collection of rent from those tenants who were poor and poverty-stricken.

CM, in the press conference, had made a clear promise that if any tenant is unable to pay the rent due to poverty, the Government would pay his/her rent on their behalf.

“…a solemn assurance was given that the Government would take care of the tenants.”

Analysis, Law and Decision

Bench on perusal of various decisions of the Courts laid down the salient principles of the doctrines of promissory estoppel and legitimate expectation:

Principles from decisions in India:

In India, the two doctrines of promissory estoppel and legitimate expectation have been moulded and expanded further, in order to suit the economic and social conditions prevalent in India. Some of the principles that emerge are:

i)  If a representation is made by the Government, the question is whether it should be allowed to go back on it and whether such an act of resiling from the said assurance would constitute legal fraud.

ii)  It is necessary to promote honesty and good faith in governance. Therefore, if a promise has been made, the Government has a duty to fulfil the same.

iii)  Executive necessity does not constitute an adequate reason to not give effect to a representation.

iv)  If the promise made is clear and unequivocal then the Court can enforce it.

v)  If the promise is acted upon by the promisee, the need to enforce the said promise becomes stronger. There need not be any detriment caused. Mere action on the promise is sufficient for cause of action to arise.

vi)  Under the traditional law of contracts, unless and until, the terms are agreed upon, there would be no contract. However, the doctrine of promissory estoppel is an exception, i.e., no contract is required to enforce a promise made by the Government, if the Government made the same consciously, with an intention for it to be acted upon by the citizen.

vii)  It is important to bridge the gap between law and morality and these two doctrines of promissory estoppel and legitimate expectation are judicial contributions in the said direction.

viii)  Relief based on legitimate expectation or promissory estoppel can be refused only if it is unequitable to hold the Government to its promise.

ix)  If public interest would be prejudiced by enforcing the said promise, only then, relief may be refused. The only exception is overriding public interest or when enforcement is unfair or contrary to public interest. However, the Government would have to disclose the facts that would exempt it from enforcing the said promise and a mere claim in respect of the same would not be sufficient to establish overriding public interest.

x)  A mere ipse dixit would not work, and the Government cannot presume a self-exemption. Only a Court can grant exemption from liability for not adhering to the assurance, provided the Government shows proper justification.

xi)  High ranking officials who may have made representations or given assurances or promises, can, due to the position they hold, bind the Government to their statements.

xii)  It is presumed that once a representation is made by a high- ranking official, the same is within the scope of its authority.

xiii)  If the representation or promise made or is prohibited by law then it cannot be enforced.

xiv)  The relief that may be given by the Court, in the case of an unconscionable departure from a promise is flexible, so as to remedy the injustice caused.

xv)  The mere non-issuance of a notification would not stand in the way of granting relief, if the facts justify the same, as the same would only be a ministerial act.

xvi)  Both these doctrines have to be expansively interpreted, as a recognition of the doctrine of fairness and non-arbitrariness.

xvii)  The legitimate expectation of a citizen ought to be considered and given due weight in decision making. It is a relevant factor for consideration in the decision-making process.

xviii)  Failure to adhere to a promise without adequate justification violates the trust between the Government and the citizen.

xix)  The broad exceptions to not grant relief on the basis of these principles would be – mistake, or if the same is unfair and contrary to public interest.

xx)  The doctrine of legitimate expectation is broader in its scope than the doctrine of promissory estoppel, and it may be based on past practice of the authorities. It need not involve a specific statement and is meant to ensure non-arbitrariness in State action.

xxi)  The doctrine of legitimate expectation and its enforcement is an integral part of non-arbitrariness and non-abuse of power as enshrined in Article 14 of the Constitution.

Now, moving on to analysing the facts, Bench noted that the address by the CM in the press conference has three dimensions:

  • The first dimension is an appeal to the landlords.
  • Second is a promise to landlords that it would pay on behalf of the tenants, if they are unable to due to lack of means and poverty, and
  • thirdly, it has a warning to landlords to not coerce the tenants.

Whether the said statements given by the CM were enforceable by applying either the doctrine of legitimate expectation or promissory estoppel?

Further, Bench stated that the promise made by the CM was under the premise that COVID-19 may be over within two-three months, as the words used were  आश्वासन (assurance or promise) and भुगतान (reimbursement) for the landlords, on behalf of the tenants.

High Court expressed that the principles governing the doctrines of legitimate expectation and promissory estoppel primarily recognize the role of the State of the Governmental authorities vis-à-vis the public.

Adding to the above, High Court stated that the said doctrines are a reflection of the legal recognition being accorded to the trust that citizens repose on promises/assurances/representations which are made by Constitutional functionaries and governmental authorities, especially in times of distress.

The raison d’être for granting recognition to such assurances/promises/representations, is that such functionaries and authorities, who are either elected to public positions or who hold positions of power, are answerable to the people, especially once they undertake or agree to do or not to do a particular thing.

Legal Enforceability

Bench expressed that the question as to whether a promise/assurance/representation results in a legally enforceable right and if so, what would be the relief that a Court can grant, depends upon the factual circumstances of each case and the context in which the said promises/assurance or representations have been made by the Governmental authorities.

Judicial Enforceability

The assurance given or the promise made in the present case was obviously with a view to stop or curb the migration of people from Delhi to the extent possible.

The actual effect of the promise or the assurance was beyond the scope of the present writ petition, inasmuch as there was no clarity as to whether the assurance resulted in tenants staying back.

However, this Court cannot be dismissive of the fact that the Petitioners, who are before the Court, claim to have acted on the promise or the assurance made by the CM. It would not be unreasonable to presume that some tenants and landlords may have altered their positions based upon the assurance given by the CM.

The salient facts and features of the present case were:

(1) Exceptional circumstances of the COVID-19 pandemic.

(2) Extreme distress being faced by migrant labourers and blue-collar workers and employees.

(3) A clear promise/assurance made by the CM.

(4) No positive policy to implement the said promise/assurance given by the GNCTD.

(5) No contrary policy implemented by the government, placed before the Court.

(6) No decision taken to not implement the said promise/assurance that was given by the CM.

(7) The exception of public interest having not been invoked for the non-implementation of the promise/assurance.

What should be the conduct of the Government, in the context when a senior functionary like the CM gives a promise/assurance to the public, which is categorical, unequivocal and unambiguous?

Court opined that such inaction would not be permissible when clearly the making of the promise/assurance by the CM was not in doubt, and was in fact admitted by the GNCTD.

Doctrines of Promissory Estoppel and Legitimate Expectation

The said doctrines are based on the axiom that the people trust the government.

In a democratic setup, persons who hold an elected office, and especially heads of government, heads of State and those holding responsible positions are expected to make responsible assurances/promises to their citizens, especially in times of crisis and distress. On behalf of the citizens, there would obviously be a reasonable expectation, that an assurance or a promise made by a senior Constitutional functionary, not less than the CM himself, would be give effect to.

If the GNCTD had actually come out with a policy either deciding to not implement the said promise or assurance on grounds which are legally sustainable, obviously the Courts cannot interfere. However, even applying the basic Wednesbury principles, the decision making, after the promise was made, ought not to be an arbitrary one.

 Bench held that in the backdrop of the commitment made, it is not the positive decision making which is arbitrary, but the lack of decision making or indecision, which this Court holds to be contrary to law.

Once the CM had made a solemn assurance, there was a duty cast on the GNCTD to take a stand as to whether to enforce the said promise or not, and if so on what grounds or on the basis of what reasons.

In the context of upholding Fundamental Rights, the principles of legitimate expectation have to be accorded a higher pedestal and the burden on the authority concerned not to honour the same, is even higher.

Conclusion

A statement given in a consciously held press conference, in the background of the lockdown announced due to the pandemic and the mass exodus of migrant labourers, cannot be simply overlooked. Proper governance requires the Government to take a decision on the assurance given by the CM, and inaction on the same cannot be the answer.

The expectation of the citizens could be that the Government would implement the promise, however, when this Court is examining this promise and the expectation that comes with it, the question is whether there is any reason as to why the Government did not even take a decision in this regard.

To that extent, insofar as the indecision is concerned, the GNCTD needed to answer the question, which it has failed to answer. 

Elaborating more, Court stated that the said promise was to act as a balm on the wounds of landlords and tenants, who were severely affected as a class of citizens in Delhi. However, the lack of any decision to implement, or a conscious reasoned decision not to implement, has resulted in non decisionem factionem in respect of the legitimate expectation of its citizens. The statements made by persons in power are trusted by the public who repose faith and believe in the same.

Thus, “puffing” which may be permissible in commercial advertising, ought not to be recognisable and permissible in governance.

Whether the statement made by the CM can be completely ignored and can be held to be not binding on the GNCTD?

In Court’s view, the promise/assurance/representation given by the CM clearly amounts to an enforceable promise, the implementation of which ought to be considered by the Government. Good governance requires that promises made to citizens, by those who govern, are not broken, without valid and justifiable reasons.

Lastly, the Court concluded by laying down the following directions:

  1. The GNCTD would, having regard to the statement made by the CM on 29th March, 2020, to landlords and tenants, take a decision as to the implementation of the same within a period of 6 weeks;
  2. The said decision would be taken, bearing in mind the larger interest of the persons to whom the benefits were intended to be extended in the said statement, as also any overriding public interest concerns.
  3. Upon the said decision being taken, the GNCTD would frame a clear policy in this regard.
  4. Upon the said decision being taken, if a Scheme or Policy is announced, the Petitioners’ case be considered under the said Scheme/Policy as per the procedure prescribed therein, if any.

Petition was disposed of in the above terms. [Najma v. GNCTD, 2021 SCC OnLine Del 3775, decided on 22-07-2021]


Advocates before the Court:

For the Petitioner: Gaurav Jain, Advocate

For the Respondent: Rahul Mehra, Sr. Advocate with Mr. Gautam Narayan, ASC, GNCTD and Mr. Adithya Nair, Advocate.

COVID 19Hot Off The PressNews

Delhi High Court

Vide the Public Notice dated 22-07-2021, Full Court observed that physical hearings in the Delhi High Court may be resumed in a restricted manner w.e.f 16-8-2021 on an experimental basis, subject to further orders based on evaluation of the situation of the pandemic in the NCT of Delhi.

Read the detailed Notice here: PUBLIC NOTICE


Delhi High Court

[Public Notice dt. 22-7-2021]

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Rajiv Sahai Endlaw and Asha Menon, JJ., held that the pawnor, merely by his act of delivering his own goods to a creditor in consideration of a credit facility granted to the debtor/borrower, by legal fiction becomes liable for the entire debt, would be detrimental to trade and commerce, with borrowings becoming difficult to obtain owing to persons not agreeing to make a pledge of their goods for credit to another, for the fear of becoming liable for more than the value of goods.

Legal Question for Consideration

Whether by virtue of Section 176 of the Indian Contract Act, 1872, the pawnor, even if different from borrower or the principal debtor, becomes liable for payment of the entire debt, even if has not furnished any guarantee for repayment of the entire debt i.e. over and above the value of the pawned goods?

Facts pertinent to the matter

Respondent 1 had filed the original application before the Debt Recovery Tribunal, Delhi under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 along with pendente lite and future interest, jointly and severally from respondent 2 and petitioner.

Aggrieved from the order of DRAT, of dismissal of his appeal, the petitioner filed the instant petition.

Analysis, Law, Decision

It was noted that the counsel for respondent 1 Bank had fairly admitted that there was no document whereunder the petitioner had undertaken liability as a borrower, in his personal capacity or as a guarantor for repayment of the dues of respondent 2 Company to the respondent 1 Bank.

Bench on an interpretation of Clause 2.1 of the Share Pledge Agreement was unable to agree with the contention of respondent 1 Bank that the petitioner became liable for the entire debt.

Further, it was stated that,

In the Share Pledge Agreement,

  • while the respondent 1 Bank is described as the Bank, the respondent 2 Company is described as the Borrower and the petitioner is described as the Pledgor; the same is indicative of the role of the petitioner in the agreement being confined to that of a pledgor/pawnor, as distinct from a borrower; had the intent been, of the petitioner along with the respondent 2 Company borrowing the monies and being liable for repayment thereof, the petitioner, besides as a pledgor, would also have been described as a borrower;
  • Clause 2.1 merely notes the agreement to be for the benefit of the respondent 1 Bank; merely by stating so, the petitioner did not and could not in law have become liable for more than that for which he expressly became liable under the Share Pledge Agreement; the pledge made by the petitioner under the agreement was also for the benefit of the respondent 1 Bank and thus merely from the statement that the agreement was for the benefit of the respondent 1 Bank, it does not follow that the benefit to the respondent 1 Bank flowing from the petitioner was more than that undertaken by the petitioner or provided in the agreement;
  • the petitioner pledged his shares as security for due discharge and repayment of Obligations under the Finance Documents; it is not the case that under the Finance Documents the petitioner is personally liable; and,
  • the parties expressly agreed that in the event of any default by the borrower, the respondent 1 Bank would be entitled to transfer or register in its name the pledged shares and to receive all amounts payable with respect thereto and to sell the same; there is no clause, that on any default or breach by the respondent 2 Company as borrower, the petitioner would become personally liable for the borrowings of respondent 2 Company.

Supreme Court, in State of Maharashtra v. M.N. Kaul, AIR 1967 SC 1634, while answering the question of whether the guarantee subject matter thereof was enforceable, held, “That depends upon the terms under which the guarantor bound himself. Under the law he cannot be made liable for more than he has undertaken”

In Central Bank of India v. Virudhunagar Steel Rolling Mills Ltd., (2015) 16 SCC 207, held that,

“…had the intent been to make the directors personally liable for the outstanding liabilities of the company also, it could have been so provided in the letter of guarantee and the directors were thus not personally liable for the dues of prior to the date they signed the letter of guarantee. It was further held that since the deed of guarantee was drafted by the bank, in case of doubt, had to be read against the bank.”

In the instant matter, High Court dismissed the contention of the respondent 1 Bank that the petitioner admitted his liability before the Recovery Officer.

Court stated that banks are also known to, besides the borrower, make others also on whose surety/guarantee the said credit facilities are extended to the borrower, sign a plethora of documents, again in their standard form. From the conduct of the respondent 1 Bank not making the petitioner sign any such documents, the only inference is that the petitioner was not intended to be liable for dues of respondent 2 Company save to the extent of the value of the shares pledged by the respondent 2 Company.

Moving, further, with the analysis, Bench elaborated that Section 172 provides bailment of goods as security for payment of a debt is called a “pledge” and the bailor is called the “pawnor” and the bailee, the “pawnee”.

In Court’s opinion, none of the provisions preceding or following Section 176 provide for the pawnor, by virtue of the pledge, even if not otherwise liable for the payment of debt, by a legal fiction becoming so liable for payment for debt, even beyond the value of the pawned goods.

“…we hesitate to, merely on the basis of Section 176 hold that a pawnee can recover from the pawnor anything beyond the value of the goods which the pawnor has pledged, unless the pawnor has separately from the pledge also made himself liable for the debt.”

Therefore, Bench decided that under Section 176 of the Contract Act, the pawnor, if not otherwise liable for the debt as a borrower or as a guarantor or otherwise, does not merely from the act of making a pledge, become liable to the creditor/pawnee, for anything more than the value of the goods pledged.

Hence, DRAT erred in holding the petitioner as a pawnor become liable for the entire debt for which pledge was made even without being a borrower and even in the absence of having promised so.

In view of the above discussion, a petition was disposed of. [Ajoy Khanderia v. Barclays Bank, 2021 SCC OnLine Del 3740, decided on 20-07-2021]


Advocates before the Court:

For the Petitioner:

Mr Rajeeve Mehra, Sr. Adv. with Mr Kanishk Ahuja and Ms Neha Bhatia, Advs

For the Respondent:

Mr R.P. Aggarwal and Ms Manisha Agrawal, Advs.


Additional Read:

Section 176 – Pawnee’s right where pawnor makes default. – If the pawnor makes default in payment of the debt, or performance, at the stipulated time of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale.

If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor.”

Case BriefsHigh Courts

Delhi High Court: Mukta Gupta, J., decides a matter revolving around the Will of a deceased person.

Factual Background

Instant suit was filed by two brothers’ owners of the suit property. The brothers mentioned were brothers of Late Shanti Swaroop Gupta.

Defendants submitted that the deceased left a Will in the name of his son-in-law who also passed away. In the said Will, properties of Late Shanti Swarup Gupta were bequeathed on his son-in-law who was the brother of defendants 1 to 3. The said defendants claimed ownership in the suit property to defendant 4 and conveyed it to defendant 5 and have further conveyed to the third parties.

Plaintiffs in the matter were 4 brothers of Late Shanti Swarup Gupta and claimed rights in the suit property by virtue of being Class-II legal heirs.

A probate petition was filed by the son-in-law of Late Shanti Swarup Gupta which was granted in his favour.

Present suit aimed to seek a declaration of the impugned registered Will is null and void, void-ab-initio and illegal, the decree of possession of the suit property, decree of permanent injunction against the defendants from creating any third party rights and direction to the office of Sub-Registrar not to register any sale till the disposal of the suit.

Analysis, Law and Decision

Section 263 of the Indian Succession Act reveals that the grant of probate or letter of administration or the revocation or annulment thereof for just cause can be ordered only by the probate Court. 

Court noted that the plaintiffs claimed that Anand Prakash Verma, son-in-law of Late Shanti Swarup Gupta, obtained the probate of the Will by playing fraud by not disclosing about other legal heirs of the deceased and hence the Will be declared null and void ab initio and illegal and of no effect.

Further, the plaintiffs applied for revocation of the probate granted and thus the relief as sought in prayer (a) of the present suit is not maintainable before this Court but before the probate Court under Section 263 of the Indian Successions Act.

In Court’s opinion, no ground was found to grant an interim injunction.

Hence, present suit was not maintainable. [Niranjan Swarup Gupta v. Bimla Devi, 2021 SCC OnLine Del 3690, decided on 14-07-2021]


Advocates before the Court:

For the Plaintiffs:

Mr. Piyush Singhal, Advocate for the plaintiffs with Mr. Ankur Gupta, A.R. of the plaintiffs in person.

For the Defendants:

Mr. Chandan Rai Chawla, Advocate for D1 to D3.

Mr. Kaadambari, Advocate with Ms. Priyanka, Advocate for D4 Mr. Samrat Nigam, Advocate with Mr. Sudarshan Ranjan, Mr. H. Bajaj, Advocates for D5 and D6.


Additional Reading:

Probate

1. Official proof of a will. [Whart.]. 2. Means the copy of a will certified under the seal of a Court of competent jurisdiction with a grant of administration of the estate of the testator, [Section 2(f), Succession Act, 1925 (India)].

[Source: SCC Online Webedition]

Case BriefsCOVID 19District Court

District Court: The Court of Devanshu Sajlan, MM, NI Act-05/(West)/Delhi, allowed a mutual application moved on behalf of the parties for the recording of evidence through video conferencing.

Noting the fact that the matter is a ‘5-year-old’ matter, both the counsels mutually submitted that they wish to proceed with the matter and conduct evidence through VC.

Trial Court stated that both the parties were mutually willing in recording the evidence through VC, hence mutual oral application moved on behalf of the parties was allowed and the matter was directed to be listed for the recording of evidence through VC in terms of the following directions:

(i) An audio-visual recording of the examination of the complainant shall be preserved. An encrypted master copy with hash value shall be retained as a part of the record.

(ii) The evidence shall be transcribed through the mode of ‘screen sharing option’ on Cisco Webex, so that both the parties and their counsels can follow/ read the transcription in real time.

(iii) Upon the conclusion of the transcription of the cross-examination of the complainant, the complainant shall be provided with a soft copy of the transcript (bearing the digital signature of the undersigned court) through the official email- id of the court, and the complainant shall be required to affix his signature on the transcript after taking a print-out of the same.

(iv) After affixing his signature on the printed copy of the transcript, the complainant shall be required to send a scanned copy of the same on the official email-id of the court. The signed transcript will form part of the record of the judicial proceedings.

(v) Due to the present situation of COVID-19 pandemic, both parties are in agreement that it is not advisable to depute a ‘coordinator’ at the place from where the complainant shall appear for the recording of his evidence.

(vi) However, in order to prevent unnecessary tutoring or prompting, learned counsel for the complainant has submitted that he shall ensure that the complainant appears for the recording of his evidence through VC from his home; and not from the office premises/ chamber of the learned counsel for the complainant.

(vii) The complainant shall not use mobile phone/ any communication device while his evidence is being recorded.

(viii) Further, the complainant shall ensure that he has a proper internet connection so that there are no disruptions while recording his evidence.

(ix) While all endeavours shall be made to record evidence through VC, the court is cognizant of the fact that internet connectivity issues can be taken as an excuse for not answering questions put by the learned counsel to the witness and to indulge in witness prompting. Accordingly, in a scenario where the VC is disrupted during the recording of evidence, recording of evidence through VC may be discontinued and the matter would be adjourned if it appears that the witness/ complainant is deliberately disconnecting his internet connection.

[Kanwal Nain Singh Mokha v. Rekha Khurana, CC No. 1924 of 2016, decided on 26-06-2021]


Read the Summary of Videoconferencing Rules notified on 1-06-2020 by the Delhi High Court

The Rules are divided into 5 Chapters with 2 Schedules.

First Chapter contains the definitions.

In Chapter 2, the General Principles have been laid down which are under the following heads mainly:

  • General Principles Governing Video Conferencing
  • Facilities recommended for Video Conferencing
  • Preparatory Arrangements

Chapter 3, consists of the Procedure for Video Conferencing, which is laid down under the following heads:

  • Application for Appearance, Evidence and Submission by Video Conferencing
  • Service of Summons
  • Examinations of Persons
  • Exhibiting or Showing Documents to witness or accused at a remote point.
  • Ensuring Seamless Video Conferencing
  • Judicial remand, the framing of charge, the examination of accused and Proceedings under Section 164 CrPC

Chapter 4 is all about the General Procedure for conducting Video Conferencing. Following heads cover the said procedure:

  • Costs of Video Conferencing
  • Conduct of Proceedings
  • Access to legal Aid Clinics/Camps/Lok Adalat’s/Jail Adalat’s
  • Allowing persons who are not parties to the case to view the proceedings

Chapter 5 is the Miscellaneous Chapter with the following heads:

  • Reference to Words and Expressions
  • Power to Relax
  • Residual Provisions

Schedule I has pointers regarding the attire of the Advocates, Police Officials, Presiding Judge, Judicial Officers and Court Staff; Protocol, Remote point, etc.

Schedule II is with respect to the “Request Form for Video Conferencing”.

Read the detailed Rules here: NotificationFile_ULDC4UVQWZ9

Case BriefsHigh Courts

Delhi High Court: Subramonium Prasad, J., granted an interim injunction in favour of Tata Sons (P) Ltd. in a case where the defendant has got a domain name registered which is identical to the website of their e-commerce arm.

Plaintiffs’ Counsel, Pravin Anand submitted that plaintiff 1, holding company of the TATA Group of Companies was the owner and registered proprietor of the trademark TATA as well as the device mark TATA. Plaintiff 2 was a part of the TATA Group and engaged in the business of e-commerce, dealing in various products through its e-commerce platform www.tatacliq.com.

It was submitted that the above domain name was registered by plaintiff 2 and defendant 1 was the owner of the domain name: www.tatacliqsmart.com which is identical with the plaintiff’s website.

Adding to the above submissions, it was stated that the defendant had added the word ‘smart’ in the domain name which was not permitted. Defendant was selling the products of plaintiff 1 company on its website, which amounted to infringement of the plaintiffs registered trademark and copyrights.

Another contention was that defendant 1 through its website www.tatacliqsmart.com was selling various TATA products at throw away prices and there was a likelihood that by using the word TATA the defendant would be selling the products which were not actual products of TATA but fake products.

Bench tried opening the website www.tatacliqsmart.com and found that the website could not be opened, however, the screenshots produced by the plaintiffs show that the website was being used for online sale of several products including products of plaintiff 1. Hence it was apparent that defendant 1 had shut down the website only because the present suit was filed.

Court opined that the plaintiffs made a case of grant of interim injunction.

Matter to be listed before the Roster Bench on 19-07-2021. [TATA Sons (P) Ltd. v. Electro International, 2021 SCC OnLine Del 3743, decide on 28-06-2021]


Advocates before the Court:

For the Plaintiffs: Mr Pravin Anand, Mr Achuthan Sreekumar and Mr Rohil Bansal, Advocates

For the Defendants: Mr Mrinal Ojha and Mr Debarshi Dutta, Advocates for Defendants Nos.2 and 3.


About Justice Subramonium Prasad:

Justice Subramonium Prasad graduated in B.Com. (Hons.) from Delhi University. He acquired his LLB degree from Campus Law Centre, Delhi University in the year 1990. Justice Prasad cleared the Advocate-On–Record exam in 1996 and started his independent practice. He became the Standing Counsel for the State of Tamil Nadu in the Supreme Court of India in 2003, a post he held till 2006. He was also the standing counsel for the custodian appointed under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, dealing with cases pertaining to the 1992 stock exchange scam. In October 2012, Justice Prasad was appointed as the Additional Advocate General for the State of Tamil Nadu in the Supreme Court of India. Justice Prasad was designated as a Senior Advocate by the Supreme Court of India in April 2015.

Over his career spanning 28 years, Justice Prasad has worked on several high profile matters, and has been involved in several reported judgements of the Supreme Court on various subjects like Constitutional Law, Tax, Corporate and Commercial Law, Criminal Law, Election Law, Service Law and Inter-State River Water Disputes.

Justice Prasad was appointed as an Additional Judge of the Madras High Court on 4.06.2018. He was transferred to Delhi High Court as an Additional Judge on 13.03.2020 and confirmed as a Permanent Judge of the Madras High Court on 17.03.2020.


Source: Delhi High Court Website

Case BriefsHigh Courts

Delhi High Court: Sanjeev Narula, J., refused to interfere in the interim arbitral award whereby the sole arbitrator had allowed certain claims of the respondent in arbitration proceedings against the appellant-IRCTC.

IRCTC sought the setting aside of the interim arbitral award, whereby Sole Arbitrator had allowed certain claims of the Respondent in arbitration proceedings.

Summary of Facts

Respondent, a private railway catering service provider empanelled with IRCTC and entitled to be considered for allotment of temporary licenses on category ‘A’ trains. on 07th September, 2016, IRCTC published a limited tender inviting bids from empanelled parties for providing on-board catering services in respect of Train No. 12951- 52/12953-54 (Rajdhani/August Kranti Express) for six months.

On being the highest bidder, respondent was awarded a temporary license.

What was the dispute?

Welcome drink served to the passengers was provided by IRCTC. Later, IRCTC decided that:

  • service provider to provide welcome drink to passengers at no extra-charge receivable by it, and if unwilling to do so, it could opt to exit the temporary license;
  • where service provider was providing meals to passengers on account of short supply by IRCTC, it would be reimbursed production charges @ Rs. 84/- (inclusive of taxes) per passenger for lunch/dinner for 2nd and 3rd A.C. passengers.
  • where additional meals were being served due to late running of train for more than 2 hours, service provider would be reimbursed @ Rs. 26.40 + service tax, per passenger.

For the above-stated policy decision, DC raised the following concerns:

  • DC reasoned that welcome drink was not included in the tender document;
  • expressed reservation with regard to reimbursement of charges on account of late running of trains for more than 2 hours.
  • emphasised that having made a substantial investment in setting up a base kitchen and infrastructure, it was unwilling to exit from the contract.

Later, on 13-2-2017, respondent intimated that it would provide the welcome drink in case the same would not be provided by IRCTC, but it would be charging for services as well as production charges for the same. In the event of train being late, charge of Rs 30 would be applied along with service tax for additional meal.

From 5-03-2017, the above-said service commenced. Further, in the month of April, IRCTC sought an unconditional acceptance of the policy decision from respondent and unless unconditional acceptance would be tendered, it would be presumed that respondent are not interested in extension of the license.

Further, it was added that, for a certain period when respondent did not provide the welcome drink and IRCTC had to provide the same, the charges in that respect would be adjusted against the bills raised by respondent.

Respondent raised an issue with regard to the above-stated, asserting that it was not liable for the charges. It further raised the issue of non-payment of service tax on service charge for food and drink for the period from 19th December 2016 to 04th March 2017, as well as other charges allegedly payable to it.

Respondent unconditionally accepted the policy decision and a 6-month extension of license was granted.

Respondent invoked arbitration with regard to deductions made on account of welcome drink as well as other issues. Hence, a petition was filed under Section 11 of the Arbitration and Conciliation Act.

What all were the claims?

  • Claim towards non-payment for a welcome drink: DC contended that the welcome drink did not form part of the tender document. It should not be liable to serve the same or reimburse the expenses incurred by IRCTC for serving the same from 19th December, 2016 to 04th March, 2017.
  • Reimbursement of GST on production charges/supply of meals with effect from 1st July 2017.
  • Claim towards wastage of food due to cancellation/non-turning- up of passengers.

Two claims of respondent were allowed: (i) payment with respect to welcome drink; and (ii) reimbursement of GST on production charges.

IRCTC filed an objection against the impugned award before District Judge at Patiala House Court Complex, Delhi, however, the claim calculated by IRCTC exceeded its pecuniary jurisdiction as per the provision of Section 12(2) of the Commercial Courts Acts, 2015.

Analysis, Law and Decision

Whether welcome drink formed a part of initial period of contract?

As per the tender document which refers to CC No. 32 of 14 states the Clause 2.1 requires the service provider to deliver free of cost catering to passengers.

Arbitrator meticulously examined the tender conditions, circulars issued by Railway Board, IRCTC’s policy, contractual provisions and testimonies of the witnesses and went on to answer the question in negative.

CC No. 32 of 14 dated 6-08-2014 laid down rates of composite contract for the service provider and noting the admitted position that catering services under the tender were invited through the mode of partial unbundling of services, the learned Arbitrator noted that respondent was required to provide quotations for the sector-wise services mentioned in Annexures, which had no direct or specific reference to the condition of providing a welcome drink. In the said circumstances, it was concluded that the bid was not invited for the service of provision of welcome drink, and thus no charge was quoted towards the same.

Arbitrator gave a finding that there was no contractual stipulation in the tender document that specifically put the obligation on respondent to provide welcome drink and the said finding was held to be sound, credible and comprehensive by the High Court.

 Binding Effect of Respondent’s ‘unconditional acceptance’

the policy decision dated 07-02-2017 became a part of the contract between the parties has rightly been disallowed by the learned Arbitrator, by holding the same to be a fresh policy decision brought in by IRCTC post entering into the licensing agreement with DC. IRCTC could not give any justification for bearing the burden for the initial period between 19-12-2016 to 4-03-2017, despite it’s alleged understanding to the contrary. Its continued supply of welcome drink without expressly affirming that the contractual obligation for the job lay on DC, reaffirms the uncertainty of contractual obligations.

On the basis of the conduct and the testimony of witnesses, the Arbitrator rightly held that the actions of IRCTC exhibit ambiguity about DC’s contractually stipulated obligations, which were then redressed by way of the ex post facto policy decision.

GST

The GST laws has replaced the erstwhile indirect taxation regime.

Respondent had explained that since the trains were moving through several states and each state had a different rate of tax under State VAT laws, it was not feasible to account for the same, therefore production charges were paid inclusive of taxes.

Besides, no Input Tax Credit was available to IRCTC for VAT.

However, the position underwent a change with the introduction of GST laws.

GST is available as Input Tax Credit for paying the outgoing tax liability. With restructuring of indirect tax system, railways introduced CC No. 44/17 which specifically provides for GST on catering services in the subject trains. The bifurcation of production charges was done under the afore-noted circular and it was advised that GST is to be reimbursed to the service provider on submission of proof of deposit.

the said circular specifies the revised catering apportionment charges for the trains in question where catering charges are built-in to the ticket fare. The table thereunder shows ‘catering charges disbursed to the service provider’ both with and without 18% GST in separate columns.

 Hence, IRCTC’s contention that claim of service tax on production charges was identical and since the same had been given up, the claim of GST would not survive.

Further, it was added that,

Applicability of service tax on production charges is a different plea intertwined with determination of factual position of whether there is an incidence of service in the activity of production or if the nature of service could be held as a composite supply.

GST is clearly attracted on supply of food. 

The claim of service tax over and above the amounts agreed to, was premised on a different footing and cannot be read at par with the claim of GST.

Arbitrator has given a finding that GST has been deposited by DC and proof thereof had been furnished to IRCTC. Court found no fault in interpretation of terms of contract.

Hence no ground for interference was made out. [Indian Railway Catering & Tourism Corporation Ltd. v. Deepak & Co., 2021 SCC OnLine Del 3609, decided on 5-07-2021]


Advocates before the Court:

For the Petitioner: Mr Nikhil Majithia and Mr Piyush Gautam, Advocates

For the Respondent: Mr Naresh Thanai and Ms Khushboo Singh, Advocates


About Justice Sanjeev Narula

Born on 24th August, 1970. Studied at St. Mary’s Presentation Convent School, Jammu. Graduated in B.Sc.(Computer Science) from Kirorimal College, University of Delhi. He acquired Degree in Law in 1994 from Law Faculty, University of Jammu and got enrolled with Bar Council of Delhi in 1995.

Practiced primarily before the Delhi High Court and also before the Supreme Court of India, District Courts of Delhi and various judicial forums in Delhi. Advised and represented clients in litigation relating to Civil, Commercial, Corporate, Criminal, Customs, Indirect taxes, Service, Banking & Finance, Land &Property, Arbitration, Indirect Taxes, GST, Intellectual Property, Constitutional, Cyber, E-Commerce, Consumer and Family Laws.

He was appointed as Central Government Standing Counsel; Senior Standing Counsel (Customs and Indirect Taxes) and Standing Counsel for Central Information Commission (CIC) for the Delhi High Court, positions he retained until he was appointed as a Judge.

Appointed as Permanent Judge of Delhi High Court on 22nd October 2018.


Source: Delhi High Court Website

Case BriefsHigh Courts

Delhi High Court: The Division Bench of C. Hari Shankar and Subramonium Prasad, JJ., while addressing the matter expressed that:

Within the confines of the law, compassion must inhere in the approach of every court which practices equity.

Petitioner who had joined BSF in 1997 was detected with HIV+ in 2007.

Petitioner’s submission was that he was placed in the Low Medical Category due to which he was not given any promotion and at present, he was posted at the Headquarters, New Delhi since 2017.

Voluntary Retirement due to Transfer Order

He was aggrieved with the order of transfer at Cachar, Assam located on the Indo-Bangladesh Border as travelling to the said destination and discharging duties would be severely deleterious to his health and could also imperil his life, hence he applied for voluntary retirement.

“…rules applicable to the BSF permit BSF personnel to apply for voluntary retirement on 90 days’ notice.”

Petitioner had sought the retirement with effect from 30-09-2021 and also addressed a separate representation on 16th June seeking suspension of the transfer order.

Petition states that till date no decision on has been made on either of the above stated. Instead on 22-06-2021, a movement order was issued, relieving the petitioner of his duties at Delhi and directing him to report at Cachar, Assam on or before 5-07-2021.

In view of the above facts, the petitioner moved this Court.

Analysis, Law and Decision

High Court had queried as to whether the place to which the petitioner was being transferred, conformed to criteria A and B governing the places to which P-3 category personnel would be posted i.e. at which humidity level is less than 75 % round the year and which has access to specialist services nearby.

To the above-stated queries, the only submission of Mr Tiwari was that there happens to be a government hospital within 10 kms of the place to which the petitioner was posted. As to whether the said government hospital has the ART facilities to treat HIV+ patients, Mr Tiwari had no instructions, except to state that it’s a medical college.

Later, however, Mr Tiwari, respondent’s counsel did submit that the Government hospital had the facility to treat the HIV+ Patients, though he was still unaware of whether the required Mega Highly Active Retroviral Therapy facilities are available there.

Court was hoping that a compassionate approach would be adopted by the respondent, nevertheless, the respondents chose to contest the petition.

Bench stated that the MHA guidelines dated 28-09-2017 clearly require that P-3 category BSF personnel be posted at a place that has a humidity level of less than 75 % round the year and has access to specialist services nearby. To merely state that there is a medical college that has ART facility (which, too, is merely a telephonic instruction received during the course of hearing) at a distance of 10 km, in a place such as Assam, can hardly reflect compliance with the mandate of the guidelines.

Justice, it is well settled, has to be tempered with mercy and compassion. Justice to which mercy is alien is no justice at all.

In view of the facts and circumstances, Bench remarked that the petitioner did not insist upon staying in Delhi and very fairly, at the cost of his career agreed to voluntarily retire, hence the insistence of respondent on joining the duty at Cachar, in petitioner’s medical condition cannot be appreciated.

Therefore, petitioner was entitled to a stay of operation of the impugned order transferring him to Cachar as well as the movement order relieving him till the next date of hearing.

High Court noted that the writ petition was not accompanied with an application for stay and the power of the Court to pass appropriate orders, to aid the final order which can be passed by it, stood settled by Supreme Court as far back as in I.T.O. v. Mohd Kunhi, AIR 1969 SC 430.

Matter to be re-notified on 6-09-2021. [Kavendra Singh Siddhu v. Union of India, 2021 SCC OnLine Del 3602, decided on 2-07-2021]


Advocates before the Court:

For the Petitioner: Mr Aditya Hooda, Advocate

For the Respondents: Mr Jivesh Kumar Tiwari, Senior Panel Counsel with Mr Shoumendu Mukherji, GP for Union of India.


About the Bench:

Justice C. Harishankar

He was born in New Delhi on 4th May 1968, Justice C. Hari Shankar completed his schooling from St. Columba’s School and, thereafter, acquired B. Sc. (Hons) in Chemistry from Kirori Mal College and LL.B. from the Campus Law Centre, Delhi University in 1993. He has appeared, as arguing/senior counsel, before several judicial fora, including, but not limited to, the Supreme Court of India, High Courts of Delhi, Calcutta, Gujarat, Bombay, Allahabad, Punjab & Haryana, Madhya Pradesh, Rajasthan, Uttaranchal, Andhra Pradesh, Madras and Himachal Pradesh, the Central Administrative Tribunal, the Customs, Excise and Service Tax Appellate Tribunal, the Appellate Tribunal for Foreign Exchange, the Company Law Board, the AAIFR, the NCDRC, and the National Green Tribunal. His core areas of specialization were indirect taxes, along with allied subjects such as foreign exchange and COFEPOSA, and service law. He was on the Panel of Special Counsel representing the Central Government in the Supreme Court of India, and was also empaneled Counsel for the Directorate General of Anti-Dumping. He was regularly appearing on behalf of the Central Council for Research in Unani Medicine before the CAT and before this Court. On 20th August 2014, he was designated Senior Advocate by the Delhi High Court.

Justice Hari Shankar was appointed permanent Judge of this Court on 15th May 2017.


Justice Subramonium Prasad

Justice Subramonium Prasad graduated in B.Com. (Hons.) from Delhi University. He acquired his LLB degree from Campus Law Centre, Delhi University in the year 1990. Justice Prasad cleared the Advocate-On–Record exam in 1996 and started his independent practice. He became the Standing Counsel for the State of Tamil Nadu in the Supreme Court of India in 2003, a post he held till 2006. He was also the standing counsel for the custodian appointed under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, dealing with cases pertaining to the 1992 stock exchange scam. In October 2012, Justice Prasad was appointed as the Additional Advocate General for the State of Tamil Nadu in the Supreme Court of India. Justice Prasad was designated as a Senior Advocate by the Supreme Court of India in April 2015.

Over his career spanning 28 years, Justice Prasad has worked on several high profile matters, and has been involved in several reported judgements of the Supreme Court on various subjects like Constitutional Law, Tax, Corporate and Commercial Law, Criminal Law, Election Law, Service Law and Inter State River Water Disputes.

Justice Prasad was appointed as an Additional Judge of the Madras High Court on 4.06.2018. He was transferred to Delhi High Court as an Additional Judge on 13.03.2020 and confirmed as a Permanent Judge of the Madras High Court on 17.03.2020.

[Source of information: Delhi High Court website]

Case BriefsHigh Courts

Delhi High Court: J.R. Midha, J., in a very significant ruling issued guidelines with regard to the feeding of stray dogs and directions for their welfare.

In the present matter, plaintiff approached the Court to restrain defendant 1 from feeding the stray dogs near the entrance/exit of the suit property.

The above dispute was amicably settled between the parties.

Pragyan Sharma, Amicus Curiae, Manisha T. Karia, Counsel for Animal Welfare Board of India, Nandita Rao, Additional Standing Counsel for GNCTD and Counsels for both the parties urged before this Court to lay down the guidelines with respect to feeding of stray dogs.

Guidelines with respect to feeding of stray dogs

  • Animals have a right under law to be treated with compassion, respect and dignity. Animals are sentient creatures with an intrinsic value. Therefore, protection of such beings is the moral responsibility of each and every citizen including the governmental and non-governmental organisations.
  • Animals may be mute but we as a society have to speak on their behalf. No pain or agony should be caused to the animals. Cruelty to animals causes psychological pain to them. Animals breathe like us and have emotions. The animals require food, water, shelter, normal behaviour, medical care, self-determination.
  • Community dogs (stray/street dogs) have the right to food and citizens have the right to feed community dogs but in exercising this right, care and caution should be taken to ensure that it does not impinge upon the rights of others or cause any harm, hinderance, harassment and nuisance to other individuals or members of the society.
  • Feeding of the community dogs have to be done at areas designated by the AWBI in consultation with Resident Welfare Associations or Municipal Corporation. It is the duty of the AWBI and the RWAs to ensure and keep in mind the fact that community dogs live in „packs‘ and care should be taken by the AWBI and RWAs to see that each „pack‟ ideally has different designated areas for feeding even if that means designating multiple areas in a locality.
  • All Law enforcement authorities shall ensure that no harassment or hindrance is caused to the person feeding street dog at the designated feeding spot and to properly implement the AWBI Revised Guidelines on Pet dogs and street dogs dated 26th February, 2015.
  • It shall be the duty and obligation of every Resident Welfare Associations or Municipal Corporation (in case RWA is not available) to ensure that every community dog in every area has access to food and water in the absence of caregivers or community dog feeders in the said area.
  • Street dogs have to be fed and tended to at places within their territory which are not frequented, or less frequented, and sparingly used by the general public and residents.
  • Any person having compassion for stray dogs can feed the dogs at their private entrance/porch/driveway of their house or any other place not shared with other residents.
  • No person can restrict the other from feeding of dogs, until and unless it is causing harm or harassment to that other person.
  • Residents and the members of the RWA as well as the dog feeders have to act in harmony with each other and not in a manner which shall lead to unpleasant circumstances in the colony.
  • AWBI shall ensure that every Resident Welfare Association or Municipal Corporation (in case RWA is not available), shall have an Animal Welfare Committee, which shall be responsible for ensuring compliance of the provisions of the PCA Act and ensure harmony and ease of communication between caregivers, feeders or animal lovers and other residents.
  • Municipal Corporations at the request of the RWA and/or local authority or persons volunteering to take such responsibility shall be responsible for having the stray dogs registered/vaccinated/sterilised.
  • Vaccinated and sterilized dogs cannot be removed by the Municipality.
  • It shall be the duty of the SHO concerned to ensure peace and harmony is maintained amongst the residents of the area.
  • If any of the street/community dogs is injured or unwell, it shall be the duty of the RWA to secure treatment for such dog by the vets made available by the Municipal Corporation and / or privately from the funds of the RWA.
  • Street dogs perform the role of community scavengers and also control rodent population in the area thus preventing spread of diseases like Leptospirosis.
  • Street dogs provide companionship to those residents who feed them an act as their stress relievers
  • It is the responsibility of the community residents to get their dogs vaccinated against rabies every year to prevent the spread of rabies.
  • Every RWA should form Guard and Dog partnerships and in consultation with the Delhi Police Dog Squad, the dogs can be trained to make them effective as guard dogs and yet friendly to those who live in the colony.
  • The importance of street dogs‟ in our community is of great significance. Being territorial animals, they live in certain areas and play the role of guards by protecting the community from the entry of outsiders or unknown people. If these are removed from a certain area, the new stray dogs will take their place
  • If any of the street/community dog is injured or unwell, it shall be the duty of the RWA to secure treatment for such dog by the vets made available by the Municipal Corporation and/or privately from the funds of the RWA.
  • In order to check the overpopulation of street dogs in the community, it is also the responsibility of community to get their street dog population sterilized through an NGO engaged in Dog sterilization programme.

Succinct Conclusion

Duty and Responsibility 

  • RWA or Municipal Corporation and all Government authorities including enforcement authorities to provide all assistance and ensure that no hindrance is caused to the caregivers or feeders of community dogs. Jurisdictional SHO to ensure that peace and harmony is maintained amongst the residents, care-givers and community dog feeders and there is no harassment to any care-giver or community dog feeder from feeding community dogs in the manner specified.
  • RWA to ensure that every community dog in every area has access to food and water in the absence of caregivers or community dog feeders.
  • AWBI shall ensure that every RWA or Municipal Corporation, shall have an Animal Welfare Committee, which shall be responsible for ensuring compliance of the provisions of the PCA Act and ensure harmony and ease of communication between caregivers, feeders or animal lovers and other residents.
  • In case, any resident(s) or the RWA has any grievance with regard to any act of caregivers and feeders, in relation to feeding of community dogs, the said resident(s), shall, at the first instance seek redressal of their grievance through a process of dialogue and discussion through the Animal Welfare Committee failing which the said issue may be brought to the notice of the AWBI through the RWA.
  • Government of India (Ministry of Personal, Public Grievances and Pensions, Department of Personal and Training) by Office Memorandum dated 26th May, 2006 had notified that the Government servant who indulges in act of cruelty to animals will be making himself liable for action under Prevention of Cruelty to Animals Act. Besides, punishment under the Act, he would also make himself liable for action under CCS(Conduct) Rules for conduct unbecoming of a Government servant. The said Office Memorandum also added that while residents and Associations are free to address institutional agencies for redressal of their grievances, no resident/association will interfere with the freedom of other residents in tending animals etc.
  • Despite the clear position of law prohibiting cruelty to the animal including stray dogs, there is increasing tendency of the citizens to defy the same. Many times, the Government employees take up a position in complete violation of well settled law which has been dealt with in the Office Memorandum dated 26th May, 2006. Such act of defiance be noted down in the ACR file of Government employee. If any such complaint is received by AWBI, the same be sent to the concerned office for being placed in the ACR file of the Government employee for necessary action as per CCS Rules.
  • Need to spread awareness that even animals have a right to live with respect and dignity.
  • It would be appropriate to constitute a Committee to implement these Guidelines. Committee shall comprise of the following:

(i)  The Director, Animal Husbandry Department or his nominee.

(ii)  One Senior Officer to be nominated by all the Municipal Corporations.

(iii)  One Senior Officer to be nominated by Delhi Cantonment Board.

(iv)  One Senior Officer to be nominated by Animal Welfare Board of India.

(v)  Ms. Nandita Rao, Additional Standing Counsel, Govt. of NCT of Delhi as Convenor.

(vi)  Ms. Manisha T. Karia, Advocate for Animal Welfare Board of India.

(vii)  Mr. Pragyan Sharma, Advocate

The committee shall hold its first meeting within 4 weeks.

High Court directed that the above decision be sent to Delhi Judicial Academy to sensitize the judges about the directions laid down by this Court.[Dr Maya D. Chablani v. Radha Mittal, 2021 SCC OnLine Del 3599, decided on 24-06-2021]


Advocates before the Court:

For the Plaintiff: Abhishek Gusain and Sam C. Mathew, Advocates

For the Defendants: D.K. Pandey and Deepak Kumar, Advocates for defendants 1 and 3

Pragyan Sharma, Advocate as Amicus Curiae

Nandita Rao, ASC for GNCTD

Manisha T. Karia, Sukhda Kalra, Adarsh Kumar and Nidhi Nagpal, Advocates for Animal Welfare Board of India

Case BriefsHigh Courts

Delhi High Court: Subramonium Prasad, J., addressed a matter with regard to offences under Section 138 of Negotiable Instruments Act, 1881.

Instant revision petition was filed against the decision passed by the Additional Sessions Judge dismissing the appeal filed by the petitioner and affirming the Judgment of Metropolitan Magistrate convicting petitioner for offences under Section 138 of Negotiable instruments Act.

Respondent 2 instituted a complaint against the petitioner for an offence punishable under Section 138 NI Act.

Petitioner submitted that he was to procure material for assembling the computers for supply to the complainant and the cheque was given as a security for the loan which was to be arranged by the complainant from other parties.

Analysis, Law and Decision

Bench noted that the acknowledged receipt stated that the petitioner had taken a loan of Rs 15,00,000 and in lieu of the loan he issued a cheque. The said receipt was signed by the petitioner.

Court for the above-stated decided that the fact that there was no witnesses and the fact that it does not state as to from whom the loan was being taken doesn’t persuade the Court to disbelieve the document.

The said cheque was returned with endorsement “Insufficient Funds”.

Receipt along with cheque made out a case under Section 138 NI Act. Presumption under Section 139 of the N.I. Act, therefore, arises in favour of the holder of the cheque i.e. the complainant and unless the contrary is proved, that the complainant has received the cheque for discharge, in whole or in part, of any debt or other liability.

Bench stated that the petitioner couldn’t rebut the presumption under Section 139 NI Act. He didn’t deny his signatures on the cheque and did not deny the fact that the receipt was given by him which acknowledged a sum of Rs 15,00,000 taken as a loan.

Further, it was also added that the mere ipse dixit of the petitioner and the statement in defence under Section 313 CrPC without any material does not rebut the presumption cast on the petitioner under Section 139 of the N.I. Act.

The fact that the loan was given in violation of Section 269 SS of IT Act does not mean that the Court cannot look into the documents at all.

Offence Section 269 SS IT Act at best makes an offence under Section 271 D of the IT Act but it does not mean that the loan of Rs.15,00,000/- has not been given by the complainant to the petitioner herein. 

High Court agreed with the Courts below that the initial burden cast against the petitioner had not been discharged.

In view of the above revision, the petition was dismissed. [Barun Kumar v. State of NCT of Delhi, 2021 SCC OnLine Del 3498, decided 25-06-2021]


Advocates before the Court:

For the Petitioner: Mr. Dheeraj Malhotra and Mr.Gaurav Gupta, Advocates

For the Respondents: Mr Hirein Sharma, APP for the State Mr. Shakeel Sarwar Wani and Mr. Himanshu Garg for respondents No.2 to 4