Delhi High Court
Case BriefsHigh Courts

   

Delhi High Court: In a writ petition filed by an Additional District Judge for reimbursement of his treatment charges during Covid-19, the Single Judge Bench of Rekha Palli, J. directed the Government of NCT of Delhi to reimburse the remaining amount of Rs. 16,93,880 towards the cost of Covid-19 treatment incurred by an Additional District Judge during the pandemic.

Petitioner was posted as the Additional District Judge and had approached this Court, as respondents had refused to reimburse in full the expenses incurred by him for his medical treatment while he was admitted in the hospital (Respondent 5) on account of Covid-19.

Submissions on behalf of the Petitioner

Counsel for the petitioner states that the respondents do not dispute the fact that the petitioner was undergoing treatment for Covid-19 at the hospital and since there were no beds available in an empanelled hospital in the NCT of Delhi, the petitioner, due to his dropping levels of oxygen, had to be rushed to the nearest hospital (Respondent 5). Being in a helpless stage, the petitioner had no other option but to pay the entire amount of Rs. 24,02,380 to the hospital against the appropriate receipts.

Based on recommendations made by the Technical Standing Committee constituted by respondents, the hospital reimbursed only Rs. 7,08,500 and refused to pay the balance amount of Rs. 16,93,880 on the ground that this amount was charged by the hospital by ignoring the rates prescribed under the circular issued by the Government of NCT of Delhi, fixing the charges leviable for treatment of patients suffering from Covid-19.

Further, it was submitted that the petitioner cannot be penalized for the hospital charging amounts higher than what was prescribed by the Government of NCT of Delhi (Respondent 1) and if in case, the hospital had acted in violation of the circular, then it is for the Government of NCT of Delhi to act against the hospital and make recoveries, if any.

Submissions on behalf of the Respondent

Counsel for the respondent submitted that the hospital should be directed to explain as to why it had not abided by the circular and should further, be directed to refund the excessive amounts charged from the petitioner which were way above the rates prescribed in the circular.

Analysis, Law, and Decision

The Court opined that the petitioner, who had spent his hard-earned savings, while undergoing treatment to save his life, cannot be told that, since the hospital had failed to abide by the circular issued by the Government of NCT of Delhi, he should seek refund from the said hospital which saved his life. The Court did not find it necessary to delve into the circular’s validity as in the present case, the petitioner was seeking reimbursement of the amount for the bona fide expenses incurred by him for his treatment at the hospital.

The Court relied on Sqn. Commander Randeep Kumar Rana v. Union of India, 2004 SCC OnLine Del 333, wherein the Division Bench while dealing with a case, where the hospital had charged over and above package rates, held that the employer was under an obligation to pay to the government employee, and could make appropriate recoveries in accordance with law, from the hospital which had overcharged him.

The Court held that the Government of NCT of Delhi had to reimburse the petitioner by paying him the differential amount of Rs. 16,93,880 and since this Court had bot expressed any opinion on the validity of the circular, therefore, it would be open for Government of NCT of Delhi to pursue its remedy as per law, against the hospital, including taking penal action, and recovery of any amount which it perceives had been charged in excess. Thus, the Court directed the Government to pay within four weeks the balance amount of Rs. 16,93,880 to the petitioner.

[Dinesh Kumar v. Govt (NCT of Delhi), 2022 SCC OnLine Del 3937, decided on 22-11-2022]


Advocates who appeared in this case:

For the Petitioner(s): Senior Advocate J.P. Sengh;

Advocate Ashim Shridhar;

Advocate Manhisha Mehta;

Advocate Niyati;

For the Respondent(s): Senior Counsel Avnish Ahlawat;

Advocate Laavanya Kaushik;

Advocate N.K. Singh;

Advocate Aliza Alam.

SEBI
Legislation UpdatesNotifications

   

On 10-11-2022, the Securities and Exchange Board of India (‘SEBI’) has issued circular revising the Chapter XX of Operational Circular for issue and listing of Non-Convertible Securities (‘NCS’), Securitized Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper -Applicability of GST on fees remitted to SEBI. The provisions of this circular will come into force with immediate effect.

Key Points:

  1. Chapter XX was inserted in the operational circular through SEBI circular dated 13-04-2022, which provides the procedure for payment of fees under the heading ‘Bank account details for payment of fees’.

  2. SEBI vide circular dated 18-07-2022, notified that the following will be subject to GST at the rate of 18% (w.e.f. 18-07-2022):

    • Market Infrastructure Institutions;

    • Intermediaries registered with SEBI;

    • Companies which have listed/ are intending to list their securities on the Stock Exchange;

    • Persons who are dealing in the securities market.

  3. Accordingly, the following amendments are made in the format in paragraph (b) of Chapter XX (Bank account details for payment of fees):

    • Heading ‘Amount Remitted’ now specifies the break- up of fee and GST.

    • New headings introduced:

      i) Remitter’s account number

      ii) Remitter IFSC code

      iii) Payment product code (NEFT, RTGS, etc.)

      iv) Registered name of remitter

      v) Registered office address of remitter including State/UT

      vi) Email address

      vii) Complete address from where the money is being remitted including State/UT

      viii) GST Registration Number of the Remitter


*Kriti Kumar, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

   

On 31-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on review of provisions pertaining to specifications related to International Securities Identification Number (‘ISIN’) for debt securities issued on private placement basis to reduce fragmentation in the primary market and enhance liquidity in the secondary market. The provisions of this circular will be applicable from 1-04-2023.

Key Points:

  1. Newly capped limits are not applicable on ISINs utilized for issuance of debt securities upto 31-03-2023 and maturing in later years.

  2. Chapter VIII of the Operational Circular dated 10-08-2021 deals with specifications related to ISIN for debt securities.

  3. Earlier, the maximum number of ISINs maturing in any financial year allowed for an issuer of debt security was 17 which has been reduced to 14.

  4. For issuance of the capital gains tax debt securities under 54-EC of the Income Tax Act, 1961, the number has been reduced from 12 to 6.

  5. 14 ISINs are bifurcated:

    • For plain vanilla debt securities- maximum 9 ISINs maturing is allowed (secured and unsecured debts securities). If the outstanding amount reaches Rs. 15,000 crores, then another 3 can be permitted to mature in the same year.

    • For structured debt securities and market linked debt securities- maximum 5 ISINs maturing will be allowed.

  6. In case of only structured/ market linked debt securities, a maximum of 5 ISINs are allowed to mature.


*Kriti Kumar, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

   

On 28-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on reduction in denomination for debt securities and non- convertible redeemable preference shares to protect the interest of investors in securities and to promote the development of, and to regulate the securities market. The provisions of this circular are applicable on all issues on or after 1-01-2023.

Key Points:

  1. In an Operational Circular dated 10-08-2021, SEBI mandated that the face value of such shares issued on a placement basis should be Rs. 10 Lakh and the trading lot should be equal to the face value.

  2. After receiving representations regarding reduction of the face value and trading lot so that more investors can participate which will enhance the liquidity in the corporate bond market, SEBI made amendments to Chapter V of the Operational Circular.

  3. Face value of each is reduced to Rs 1 Lakh for both:

    1. debt security or non-convertible redeemable preference share issued on private placement,

    2. listed debt security and non-convertible redeemable preference share issued on private placement basis traded on a stock exchange or OTC basis.


*Kriti Kumar, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

   

On 19-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on Request for Quote (‘RFQ’) platform for trade execution and settlement of trades in listed Non-convertible Securities, Securitized Debt Instruments, Municipal Debt Securities and Commercial Paper to bring in transparency in “Over the Counter” deals which are negotiated bilaterally and to facilitate wider market participation in the corporate bond market. The provisions of this circular will come into effect from 1-01-2023.

Key Points:

  1. Earlier, stockbrokers were only allowed to place bids in a proprietary capacity. Now, SEBI has allowed such stockbrokers to place bids on this platform on behalf of clients also.

  2. RFQ is an electronic platform to enable sophisticated, multi-lateral negotiations to take place on a centralized online trading platform with straight-through-processing of clearing and settlement to complete a trade.

  3. Basic features of RFQ platform:

    • System for inviting/ giving quotes electronically.

    • Participant may request other participants for a quote of eligible security.

    • The quote can be placed to an identified counterparty through:

      i) One To One (‘OTO’) mode

      ii) One To Many (‘OTM’) mode

    • An audit trail of all interactions, I.e., quoted yield, mutually agreed price, deal terms etc., are maintained.

    • Negotiation is bilateral in nature.

    • Securities eligible:

      i) Non-convertible securities

      ii) Securitized Debt Instruments

      iii) Municipal Debt Securities

      iv) Commercial Paper

      v) Certificate of Deposit

      vi) Government Securities

      vii) State development Loans

      viii) Treasury Bills


*Kriti Kumar, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

On 13-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on Suspension, Cancellation or Surrender of Certificate of Registration of a Credit Rating Agency (‘CRA’) to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

Key Points:

  1. To surrender certificate of registration:
    • Within 15 days of the Order or request, CRA needs to disclose it on its website and communicate to its client.
    • Should not take any new clients.
    • Without any extra costs, clients should be allowed to withdraw assignments.
    • Migration to other CRAs having certificate of registration should be facilitated.
    • Comply with CRA Regulations and circulars.
    • Should share information and pay fees to SEBI, when required, and co-operate.

  2. When winding up:
    • Return cancelled registration certificate to SEBI.
    • Do not fraudulently represent himself as the holder of certificate.
    • Suspend the tasks for which the certificate was granted.
    • Should co-operate with SEBI until the wound-up process is complete.

  3. Suspension of certificate:
    • Suspend activities for which the certificate was granted.
    • Co-operate with SEBI

  4. The Credit Ratings of the client will be valid until the client withdraws and/ or migrates the assignment in case of cancellation or surrender of Registration.
  5. In case of Suspension of certificate of registration, the credit ratings will not be valid during the period of suspension.
  6. The CRA, the registration of which is cancelled, surrendered or suspended, it’s services cannot be used by listed entities.
  7. In case of Issuers Not Cooperating, for 6 months from the date of downgrade to non-investment grade, no CRA will assign any new ratings to such issuer until it resumes cooperation or rating is withdrawn.

  8. *Kriti Kumar, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

   

On 29-09-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on participation of SEBI registered Foreign Portfolio Investors (‘FPI’s) in Exchange Traded Commodity Derivatives in India to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. The Circular comes into effect with immediate effect.

Due to the non-participation of Eligible Foreign Entities (‘EFE’) in Exchange Traded Commodity Derivatives (‘ETCD’s) which enabled them to have actual exposure to Indian commodity markets, to participate in the commodity derivative segment of recognized stock exchanges, SEBI repealed the Circular dated 09-10-2018 whereby EFEs were also permitted to participate.

Key Points:

  1. SEBI decided to allow foreign investors to participate in Indian ETCDs through FPIs route.

  2. FPIs can participate in cash settled non-agricultural commodity derivative contracts and indices.

  3. Family offices and corporates can participate as ‘Clients’ and will be allowed position limit of 20 per cent.


*Kriti Kumar, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

   

On 3-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on extension of timeline for entering the details of the existing outstanding non- convertible securities in the ‘Security and Covenant Monitoring’ system hosted by Depositories to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

The issuers have to ensure that they enter the details into the Distributed Ledger Technology system on or before 31-10-2022. The Debenture Trustees will then have to verify the same by 31-12-2022.


*Kriti Kumar, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

   

On 28-09-2022, the Securities and Exchange Board of India (‘SEBI’) has issued circulars modifying the guidelines for preferential issue and institutional placement of units by listed InvITs/ REITs which were issued vide Circular dated 27-11-2019.

Key Points:

  1. Bar for minimum listing period of 12 months required in case of issuance of units through “institutional placement” is removed.

  2. The unsubscribed portion of the units can be allotted to the sponsors fulfilling the following conditions:

    • 90% of the issue size has been subscribed;

    • The issue should be made for acquisition of assets from that sponsor;

    • Units allotted should be locked in for a period of 3 years from the date of trading approval granted for the units. (As per Clause 3 Annexure I of Circulars dated 27-11-2019);

    • Approval of unitholders has been taken before allotting the un-subscribed portion of the unit.

Violation
Op EdsOP. ED.

   

Introduction

Narcotic drugs and psychotropic substances are commonly used for an ample number of medical and scientific uses (even in that case one has to obtain the required permit or authorisation) however they cannot be used or are abused and trafficked since they could be harmful to any society. India after the enactment of the Narcotic Drugs and Psychotropic Substances Act, 19851 (NDPS Act) has taken a strict approach through the statutory control over narcotic drugs which has also been envisaged under Article 47 of the Indian Constitution.2 It mandates that the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. It is a special Act, and it has been enacted with a view to making stringent provisions for the control and regulation of operations relating to narcotic drugs and psychotropic substances.ces.

The same principle of preventing the use of drugs except for medicinal use was also adopted in the three drug-related international conventions, namely, the Single Convention on Narcotic Drugs, 1961, the Convention on Psychotropic Substances, 1971 and the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988. India has signed and ratified the abovementioned conventions.

Look out circular (LOC) is issued to make sure that an individual (accused) who is absconding or wanted by law enforcement agencies is restricted to leave the country. It is mainly used at immigration checkpoints at international airports and seaports by the immigration branch. The look out circular is issued under Section 103 of the Passports Act, 1967 by the Ministry of Home Affairs (MHA) after considering the report provided by the Narcotics Control Bureau in the cases of NDPS.

Since the NDPS Act is a special Act passed by the legislature that has laid down its own procedure and implementation in terms of search and seizure and investigation. However, in cases of NDPS where a crime has a jail term of fewer than 7 years then investigating authorities could serve notice to the accused under Section 41(a) of the Criminal Procedure Code (CrPC)4 under the head “When police may arrest without warrant”. Bail provision and admissibility of the confession made by the accused under Sections 375 and 676 of the NDPS Act respectively have different applicability in comparison to the procedure laid down in CrPC.

Does an issuance of Look Out Circular violate Articles 19 and 21

The objective behind the NDPS Act is simply to consolidate and amend laws relating to narcotic drugs which aim to prohibit the consumption, trafficking, and cultivation of drugs; including manufacturing, distribution, sale, and purchase. Issuance of LOC in the NDPS Act is similar to that of other cases involving preventing an individual from absconding from the jurisdiction. The look out circular is different from an arrest since LOC does not necessarily lead to arrest. LOCs can be of different types. They can seek to merely restrict a person against whom it has been issued with an objective to inform the investigation agencies concerned. The performa of the LOC also contains a request to detain the individual at the local police/investigation agency, which generally leads to arrest.

It is an established law that Articles 197 and 218 are an integral part of the right to free movement but questioning the violation needs to answer whether there was a violation of the due procedure established by law. For instance, if the investigation agency has failed to establish any evidence against the accused therefore the procedure laid down by the law of the country includes providing the right to be heard and every other procedural law then it would defeat the purpose of Articles 19 and 21 and could violate the right to free movement.

The right to travel abroad has been held to be a fundamental right protected under Article 21 of the Constitution of India. The Supreme Court in Satwant Singh Sawhney v. D. Ramarathnam9, after analysing various English judgments as well as judgments passed by the various High Courts in India concluded that under Article 21 of the Constitution of India, no person can be deprived of his right to travel except according to procedure established by law.

The Supreme Court in Maneka Gandhi v. Union of India10 held that the right to travel abroad as a fundamental right guaranteed under Article 21 of the Constitution of India, vide para 35 of the said case the Supreme Court held as follows:

35. … the point of the matter is that though the right to go abroad is not a fundamental right, the denial of the right to go abroad may, in truth and in effect, restrict freedom of speech and expression or freedom to carry on a profession so as to contravene Article 19(1)(a) or Article 19(1)(g). In such a case, refusal or impounding of passport would be invalid unless it is justified under Article 19(2) or Article 19(6), as the case may be. Now, passport can be impounded under Section 10(3)(c) if the Passport Authority deems it necessary so to do in the interests of the sovereignty and integrity of India, the security of India, friendly relations of India with any foreign country or in the interests of the general public. The first three categories are the same as those in Article 19(2) and each of them, though separately mentioned, is a species within the broad genus of “interests of the general public”.

Further, in Priya Parameswaran Pillai v. Union of India11 the Delhi High Court held that the extent of abuse of the process was evident. The petitioner, an environmental activist, was termed an “exceptional case” as defined under the OM for indulging in “anti-national activities”. Accordingly, Ms Pillai was not informed about the LOC. The Delhi High Court held that the actions of the respondents were in violation of Ms Pillai's fundamental rights under Articles 21, 19(1)(a) and 19(1)(g) of the Constitution, and called for the withdrawal of such a LOC.

Further, in the judgment of Karti P. Chidambaram v. Bureau of Immigration12, the Madras High Court held that it is quite clear, that it can no longer be argued that the right to travel abroad is not a fundamental right. It is, as a matter of fact, a second generation right which flows from the right to life and personal liberty conferred on the citizens, under Article 21, which can be taken away only by procedure, as established in law. While it may be true that the right to go abroad does not include the right to freedom of speech and expression; in some cases, the curtailment of the right to travel abroad could impact a citizen’s right of free speech and expression.

Also, in the judgment of Satwant Singh Sawhney v. D. Ramarathnam13, the Supreme Court held that the right to travel abroad was a part of personal liberty under Article 21 of the Constitution; in which Court relied on CBI v. Asif Khader14, it was submitted that there are prescribed guidelines for issuance of LOC and the respondent's case does not come under any of the requirements of the guidelines and therefore, there is no justification on the part of the petitioner in issuing a LOC which has the effect of restricting the movement of the respondent and thereby violating the right guaranteed to the respondent under Article 21 of the Constitution.

On the other side trail of judgments that favour the issuance of LOC, the Supreme Court while upholding the Madhya Pradesh Police Regulations in Gobind v. State of M.P.15 had struck a note of caution and vide para 28, observed as follows:

28. The right to privacy, in any event, will necessarily have to go through a process of case-by-case development. Therefore, even assuming that the right to personal liberty, the right to move freely throughout the territory of India and the freedom of speech create an independent right of privacy as an emanation from them which one can characterise as a fundamental right, we do not think that the right is absolute.

Further, in Nikesh Tarachand Shah16 the Supreme Court while considering the question of fundamental rights pertaining to life and personal liberty, held that fundamental rights, particularly Article 21 of the Constitution, were nothing less than sacrosanct and that constitutional courts would come to the aid of a person who is able to demonstrate the violation of such sacrosanct rights.

Therefore, it can be said that after all, it all depends on judicial pronouncement since considering the factual scenario on case-to-case basis, a judicial mind should be applied to whether the procedure established by law has been followed or not and if not then it could well be said that it violates Article 19 read with Article 21 of the Indian Constitution.

What circumstances urge the issuance of LOC

The Allahabad High Court in G.S.C. Rao v. State of U.P.17 has held that such LOCs cannot be issued as a matter of course, but only when reasons exist where the accused deliberately evades arrest or does not appear in the trial court. In these circumstances, it was held in G.S.C. Rao case18 that condition precedent for issuance of the LOC was absent and the same was held liable to be set aside.

Further in the judgment of Sumer Singh Salkan v. Director19, where the Delhi High Court held that the respondent could not have issued a look out circular in the absence of any material fact and evidence with the respondent to conclude that the petitioner is deliberately evading arrest/trial. In Sumer Salkan case20, the following questions arose for consideration:

A. What are the categories of cases in which the investigating agency can seek recourse of look out circular and under what circumstances?

B. What is the remedy available to the person against whom such look out circular has been opened? What is the role of the court concerned when such a case is brought before it and under what circumstances, the subordinate courts can intervene?

Those questions were answered as follows:

A. Recourse to LOC can be taken by investigating agency in cognizable offences under the Penal Code or other penal laws, where the accused was deliberately evading arrest or not appearing in the trial court despite non-bailable warrants (NBWs) and other coercive measures and there was a likelihood of the accused leaving the country to evade trial/arrest.

B. The person against whom LOC is issued must join the investigation by appearing before IO or should surrender before the court concerned or should satisfy the court that LOC was wrongly issued against him. He may also approach the officer who ordered the issuance of LOC and explain that LOC was wrongly issued against him. LOC can be withdrawn by the authority that issued and can also be rescinded by the trial court where the case is pending or has jurisdiction over the police station concerned on an application by the person concerned.

The Delhi High Court21 held that “Recourse to an LOC can be taken by (an) investigating agency in cognizable offences under (the) Penal Code (IPC) or other penal laws, where the accused was deliberately evading arrest or (was) not appearing in the trial court despite non-bailable warrants and other coercive measures, and there was likelihood of the accused leaving the country to evade trial or arrest,” and thus directed the Ministry of Home Affairs to formulate guidelines for the same since it is strict in nature and misusing such stringent laws can be proved to be draconian law.

Therefore, as per the existing MHA guidelines and court directions from time to time, a look out circular can be issued in respect of a person who,

(a) is accused of a cognizable offence and is evading arrest; or

(b)is accused of a cognizable offence and is not appearing in a court for trial; or

(c)is accused of a cognizable offence and is likely to abscond or leave the country to avoid his arrest; or

(d)is an anti-national.

Conclusion

The aim and objective of the NDPS Act is to strictly prohibit the consumption, possession and trafficking of illicit drugs and psychotropic substances and commission of crime in this act would be treated severely. Thus, the investigation officer as well enjoys greater power in the sense of investigation including search and seizure and arrest. However, arrest issued under CrPC is distinctive in nature and its implementation that from look out circular since it does not restrict your movement per se but only restrict one to evade the arrest or fleeing away from jurisdiction.

It is well-settled law that Article 19 read with Article 21 is an integral part of the right to free movement but questioning the violation needs to answer whether there was a violation of the due procedure established by law. Thus, issuing a look out circular explicitly does not violate Article 19 read with Article 21 of the Indian Constitution but only if it is in violation or breach of any procedure laid down by the law. Specifically, in the case of the NDPS Act the investigation officer vests with enormous power with respect to search and seizure and submitting reports relying on which a LOC is issued thus several procedures have been laid down along with circumstances in which LOC can be issued clarified by Delhi High Court judgment and MHA guidelines. Thus, if the procedure has been followed the issuance of LOC does not violate any right since rights also come with reasonable restrictions. For example, bail provision and admissibility of the confession made by the accused under Sections 37 and 67 of the NDPS Act respectively have different applicability in comparison to the procedure laid down in CrPC. Thus, procedure laid in CrPC and the NDPS Act (special Act) is distinctive in nature and thus followed differently.


† Fifth year law student, BA LLB (Hons.), NALSAR University of Law, Hyderabad. Author can be reached at <yashvardhan.garu@nalsar.ac.in>/<yashvardhangaru1@gmail.com>.

†† Third year law student, BA LLB (Hons.), B.R. Ambedkar National Law University, Sonepat.

1. Narcotic Drugs and Psychotropic Substances Act, 1985.

2. Constitution of India, Art. 47, Directive Principal of State Policy contains provisions for public health, standard of living and prohibition of intoxicating drinks and drugs.

3. Passports Act, 1967, S. 10.

4. Criminal Procedure Code, 1973, S. 41(a), under head “When police may arrest without warrant”.

5. Narcotic Drugs and Psychotropic Substances Act, 1985, S. 37, under head “Offences to be cognizable and non-bailable”.

6. Narcotic Drugs and Psychotropic Substances Act, 1985, S. 67, under head “Power to call for information, etc.”

7. Constitution of India, Art. 19, Right to freedom of speech and expression.

8. Constitution of India, Art. 21, Right to protection of life and personal liberty.

9. AIR 1967 SC 1836.

10. (1978) 1 SCC 248.

11. 2015 SCC OnLine Del 7987.

12. 2018 SCC OnLine Mad 2229.

13. AIR 1967 SC 1836.

14. 2021 SCC OnLine Kar 15228.

15. (1975) 2 SCC 148.

16. Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1.

17. 2018 SCC OnLine All 5991.

18. 2018 SCC OnLine All 5991.

19. 2010 SCC OnLine Del 2699.

20. 2010 SCC OnLine Del 2699.

21. Sumer Singh Salkan v. Director, 2010 SCC OnLine Del 2699.

Delhi High Court
Case BriefsHigh Courts

Delhi High Court: In a case where a student (‘Petitioner’) was unable to take admission in BITS Pilani due to less percentage than the one required to meet eligibility for admission. This was due to CBSE (‘Respondent 1′) modifying the weightage formula without formal announcement aggrieving the petitioner and many other students. Chandra Dhari Singh, J. expressed his disappointment towards the glaring lapses and lackadaisical approach adopted by the CBSE. It further directed CBSE to compute the result of the petitioner again and calculate his marks as per the original declaration of giving equal weightage to Term 1 and Term 2 Exams, however clarified that the petition was partly allowed in view of the peculiar facts and circumstances of the case and shall not operate as a precedent.

CBSE issued “Special Scheme of Assessment for Board Examination Classes X and XII for the Session 2021-22” under which it decided to conduct the 2022 Board examinations in two Terms i.e., Term-I & Term-II and if COVID situation improved, it will conduct the exams in offline mode. The assessment will be done by giving equal weightage to both term exams i.e., 50-50. In October, 2021 as circulated, offline exams were conducted however the assessment was done giving 30% weightage to 1st term exams and 70% to 2nd term exams. The petitioner qualified the BITSAT 2022 entrance exam but, due to the changed weightage formula for calculation of XII Board marks, failed to meet the criteria of minimum 75% marks in XII results in the three subjects, namely – Physics, Chemistry and Mathematics. Therefore, the petitioner is unable to secure admission to BITS, Pilani.

Thus, an instant petition was filed challenging the circular as the petitioner is aggrieved by the modification of earlier announced 50%-50% weightage formula to 30%-70% weightage assigned to theory marks scored in Term-I and Term-II for preparation of Result of the 12th CBSE Board Examinations.

Whether a legitimate expectation has arisen due to the circulars issued by the CBSE and if so, what remedy can be granted to the petitioner for breach of such expectation by the CBSE?

Doctrine of Legitimate Expectation

Placing reliance on Council of Civil Service Unions v. Minister for the Civil Service (1985) A.C. 374, the Court noted that the doctrine of legitimate expectations is founded on the principle of fairness in government dealings. It comes into play if a public body leads an individual to believe that they will be a recipient of a substantive benefit.

Placing further reliance on the State of Bihar v. Shyama Nandan Mishra, 2022 SCC OnLine SC 554, the Court noted that the substantive legitimate expectation is not ultra vires the power of the authority, the State cannot be allowed to change course and belie the legitimate expectation. Regularity, Predictability, Certainty and Fairness are necessary concomitants of Government’s action and a failure to keep these commitments would permit the State’s action to be interdicted.

Thus, the Court observed that since the circulars were issued by Respondent 1 CBSE, as an autonomous organization under the Ministry of Education, in discharge of its public function, the doctrine of legitimate expectation can be attracted against it.

The Court concluded that there was nothing on record to suggest that any such order was passed by the Chairperson/Competent Authority accepting, enforcing and notifying the recommendation regarding the new weightage formula. Accordingly, merely on the basis of the recommendation of the Committee, the Competent Authority decided to prepare the final result for Class XII and Class X by giving the weightage to Term-I at 30% (for Theory Papers) and to Term-II at 70% (for Theory Papers).

The Court remarked that in a matter of hours, the result of lakhs of students was prepared and published the very next day, that is on 22-07-2022.

Thus, the Court directed CBSE to calculate and declare the result of the petitioner as per the formula declared in the Original Scheme dated 05-07-2021. The Court further decided not to interfere with the Revised Scheme of Weightage of Term-I and Term-II exams dated 23-07-2022 in the greater interest of the students at large and to ensure that justice does not in itself become an agent of chaos, as well as in light of the fact that the petitioner did not pray for setting aside the impugned circular of revised weightage formula.

[Devasri Bali v. Central Board Secondary Education, 2022 SCC OnLine Del 2602, decided on 26-08-2022]


Advocates who appeared in this case :

Ms. Anusuya Salwan, Mr. Bankim Garg, Mr. Shakaib Khan, Mr. Rachit Wadhwa and Ms, Advocates, for the Petitioner;

Mr. Chetan Sharma, ASG with Mr. Rupesh Kumar, Ms. Pankhuri Shrivastava, Mr. Amit Gupta, Mr. Saurabh Tripathi, Mr. Rishav Dubey, Mr. Sahaj Garg and Ms. Neelam Sharma, Advocates, for the CBSE;

Mr. Rajesh Gogna, CGSC with Mr. Devvrat Yadav G.P., Mr. Vidit Jain, Mr. Digvijay and Ms. Priya Singh, Advocates, for the UOI.


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

OP. ED.Practical Lawyer Archives

The approval of Board of Directors and modes of obtaining such approval is one of the most critical aspects of corporate compliance management. The Companies Act, 2013 (“the Act”) provides for certain decisions to be taken by the Board of Directors in its meeting. The Act also provides for passing of resolution by circulation by the Board of Directors of the company.

According to Section 179 of the Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. However, in exercising such power or doing such act or thing, the Board of Directors shall be subject to the provisions contained in that behalf in the Act, or in the memorandum of association or articles of association, including regulations made by the company in general meeting. Sub-section (3) of Section 179 of the Act provides for certain transactions or resolutions, wherein the Board of Directors of a company shall exercise by means of resolutions passed at Board meetings.

Section 175 of the Act relates to “passing of resolution by circulation”. This article analyses the provisions of Section 175 of the Act and provides for compliance checklist for passing of resolution by circulation. Necessary references are made to the secretarial standards issued by the Institute of Company Secretaries of India (ICSI).

  1. Meaning of “Circular Resolution”.—It is an alternative method of obtaining the approval of the Board of Directors. Section 175 of the Act creates an exception to the general rule that the Board of Directors of the company shall exercise their powers collectively by means of resolution passed at its meeting.
  2. Certain Resolutions that Cannot be Passed by Circulation.—Sub-section (3) of Section 179 of the Act and Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 provides for certain transactions or resolutions, wherein the Board of Directors shall exercise by means of resolutions passed in its meetings. Such transactions/resolutions are: (a) to make calls on shareholders in respect of money unpaid on their shares; (b) to authorise buy-back of securities; (c) to issue securities, including debentures, whether in or outside India; (d) to borrow monies; (e) to invest the funds of the company; (f) to grant loans or give guarantee or provide security in respect of loans; (g) to approve financial statement and the Board’s report; (h) to diversify the business of the company; (i) to approve amalgamation, merger or reconstruction; (j) to take over a company or acquire a controlling or substantial stake in another company; (k) to make political contributions; (l) to appoint or remove key managerial personnel; and (m) to appoint internal auditors and secretarial auditor. For companies incorporated under Section 8 of the Act, the board of directors may decide the following matters by circular resolution (instead of meeting): (a) to borrow monies; (b) to invest the funds of the company; (c) to grant loans or give guarantee or provide security in respect of loans. [MCA Notiifcation No. GSR 466 (E)] dated June 5, 2015].
  3. Resolutions that can be Passed by Circulation.—Any resolution other than the abovementioned resolutions can be passed by circulation by Board of Directors. The Act has not prescribed for list of transactions that can be approved by passing a circular resolution. However, the Company Secretary or Chairman of the company shall ensure the nature of resolution before proposing before the Board of Directors or Committee.
  4. Applicability.—The Board of Directors or any committee (e.g. Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, etc.) can pass a resolution by circulation.
  5. Decision to Pass a Resolution by Circular or Not.—According to the Secretarial Standard 1, the Chairman of the Board or in his absence, Managing Director or in their absence, any director other than an interested director, shall decide whether the approval of the Board for a particular business shall be obtained by means of a resolution by circulation.
  6. Explanation of Business by Note.—According to the Secretarial Standard 1, each business proposed to be passed by way of resolution by circulation shall be explained by a note setting out the details of the proposal, relevant material facts that enable the directors to understand the meaning, scope and implications of the proposal, nature of concern or interest, if any, of any director in the proposal, which the director had earlier disclosed and the draft of the resolution proposed. The note shall also indicate how a director shall signify assent or dissent to the resolution proposed and the date by which the director shall respond.
  7. Serial Numbering of Circular Resolution.—Secretarial Standard 1 mandates serial numbering of every circular resolution.
  8. Modes of Sending Necessary Documents.—The draft resolution together with necessary papers, if any, to all the directors, or members of the committee, as the case may be, shall be sent at their addresses registered with the company. The said documents can be sent by hand delivery or by post or by courier, or through such electronic means as may be prescribed [Section 175(1) of the Act]. A resolution in draft form may be circulated to the directors together with the necessary papers for seeking their approval, by electronic means which may include e-mail or fax [Rule 5 of the Companies (Meetings of Board and its Powers) Rules, 2014].
  9. Time-Limit for Approval.—The Act has not prescribed the time-limit for providing the approval of directors or committee members. However, according to the secretarial standards, not more than 7 days from the date of circulation of the draft of the resolution shall be given to the directors to respond. Additional 2 days may be provided, where the resolution and documents have been sent by the company by speed post or by registered post or by courier. However, in certain cases, the articles of association of the company may provide for such time-limits.
  10. Approval.—The?circular resolution shall be approved by a majority of the directors or committee members, who are entitled to vote on the resolution. After the time-limit is over, it is desirable that the outcome of resolution is communicated to the directors (i.e. whether the resolution is passed or not).
  11. Voting by Interested Director.— Section 175 of the Act does not provide for any reference to a situation wherein a director is interested in a circular resolution. However, according to the Secretarial Standard 1, an interested director shall not be entitled to vote on such resolutions.
  12. Recording the Resolution in Minutes of Meeting.—Where a resolution is passed by circulation, the same shall be noted in the minutes of the subsequent meeting of the Board of Directors. As a good corporate secretarial practice, it is desirable that following points are included in the minutes of the meeting: (i) date of circulation of draft resolution and papers; (ii) cut-off date for receiving the decision of directors; (iii) names of directors giving assent/dissent or abstain from voting; (iv) names of directors, if interested in the resolution; and (v) decision –whether the resolution is passed or not.
  13. Validity of Resolution by Circulation.—According to the secretarial standards, the passing of resolution by circulation shall be considered valid as if it had been passed at duly convened meeting of the Board of Directors. However, the said compliance shall not dispense with the requirement for the Board to meet at the specified frequency as prescribed under Section 173 of the Act.
  14. Discussion at Meeting, in Exceptional Cases.—In certain cases, where not less than one-third of the total number of directors of the company for the time-being require that any resolution under circulation must be decided at a meeting, the Chairperson shall put the resolution to be decided at a meeting of the Board. As a good corporate secretarial practice, such decision taken by the directors is noted in the minutes of the subsequent board meeting.
  15. Maintenance of Certain Documents.—The Company Secretary or the Chairman may maintain records of communication received from directors of company (i.e. with respect to assent/dissent or abstain from voting).

Generally, important matters are discussed at the meetings of Board of Directors and accordingly resolutions are passed. A resolution by circulation is passed when such approval is urgent in nature and cannot be kept on hold for passing such resolution in the ensuing Board meeting. Sometimes such matters are discussed in the earlier Board meetings but a resolution to that effect is not passed. Such decisions may include extension of lease agreement, opening bank account, changing signatories of the bank account, appointing consultants, etc. The passing of circular resolution and maintenance of corporate secretarial documents in relation to the resolution is important from the perspective of secretarial audit process, statutory audit process, internal audit process and issuance of certificate by practising Company Secretary under Section 92(2) of the Act.


*Gaurav N Pingle, Practising Company Secretary, Pune. He can be reached at gp@csgauravpingle.com.