Case BriefsSupreme Court

Supreme Court: In the plea challenging the Andhra Pradesh High Court order dated 22.05.2020 which directed the complete seizure of the  LG Polymers Plant in Vishakhapatnam in the case relating to the hazardous gas leak which claimed 12 lives and affected hundreds of others on May 7, 2020, the 3-judge bench of UU Lalit, MM Shantanagoudar and Vineet Saran, JJ allowed 30 LG Polymers personnel to access to the plant round the clock to maintain adequate safety measures as an interim measure till the matter is considered by the High Court.

“we permit the petitioner to give a list of 30 personnel as discussed hereinabove. Upon such names being given to the District Collector, those persons shall be afforded access to the plant round the clock to maintain adequate safety measures.”

The said direction of the Court came after Senior Advocate Mukul Rihatgi submitted that a complete seizure or sealing of plant/ premises will have tremendous adverse consequences and impact.

“the temperature of the plant cannot be allowed to go beyond 25° C; and if by any chance because of lack of adequate attention or safety measures, if the temperature goes beyond 25° C situation can have some ill effects.”

Here’s what LG Polymers submitted before the Supreme Court:

  • atleast 28 technical personnel and two administrative officials/incharge must be given emergency access to the plant/premises at any given point of time so that adequate safety measures are undertaken round the clock.
  • at the intermediate stages of manufacture, the Polymers that the petitioner manufactures can have toxic effects and therefore adequate safety measures have to be undertaken every time.
  • the premises in question also house the administrative and Law Offices of the Company and in case the entirety of the premises are seized/sealed, the operation of the company will stand seriously prejudiced.
  • the products lying for clearance be allowed to be cleared so that there are no adverse financial effects on the Company.
  • the inspections to be carried pursuant to the directions issued by the High Court must be in the presence of officials of the Company so that adequate assistance as well as complete knowledge about the processes undertaken by the petitioner could also be highlighted sufficiently.

Finding force in the abovementioned submissions and considering the fact that the compliance report was directed to be filed by 26.5.2020 and the matters may be taken up on 27.5.2020 & 28.5.2020, the Court gave liberty to the petitioner to place all these issues and aspects for consideration by the High Court.

Passing interim order in the matter, the Court clarified,

“This ad interim direction will continue till the High Court considers the matter.”

[LG Polymers India Pvt. Ltd. v. State of Andhra Pradesh, SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 11636/2020, order dated 26.05.2020]

Also read:

Vizag Gas Leak Incident| A.P. HC | LG Polymers to be seized and passports of directors shall not be released without leave of Court

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Appellate Tribunal (SAT): A Two-Member Bench of Justice Tarun Agarwala (Presiding Officer) and Justice M.T. Joshi (Judicial Member) was hearing two appeals pertaining to the orders passed by Adjudicating Officer (AO) of Securities and Exchange Board of India (SEBI) imposing penalty over appellants.

The appeals were filed by Subrata Bhattacharya and Gurmeet Singh, Directors of Pearl Agrotech Corporation Limited which was involved in mobilizing funds from the General Public by sponsoring schemes. SEBI found out that the schemes by the company are the Collective Investment Scheme (CIS) and was in violation with Section 15-HA of SEBI Act, 1992. Therefore, SEBI directed the company to wind up the CIS and return the money to the investors. The AO imposed a penalty of Rs 7,269,49,70,295 to be paid by appellants which was later quashed by the present tribunal back in 2016. Later after hearing the appellants, the AO revised the penalty to Rs 24,23,16,56,765. The Appeal was filed against this order of the AO.

The Counsel for the appellants, Kunal Katariya, Pulkit Sharma assisted by Pranav Shah submitted that the show cause notice was quashed by Rajasthan High Court and it held that the scheme was not CIS. The orders of High Court even though were set aside by the Supreme Court no interim order was passed, so the directors have not collected money illegally. The Counsel further submitted that there was no proof that the appellants have made profits from the scheme and the scheme floated was a valid scheme that did not require registration. Therefore, the penalty was imposed without considering the relevant factors.

The Counsel for the respondent, Shyam Mehta and Shehaab Roshan submitted that the appellants have unlawfully drawn the fund causing loss to investors.

The Tribunal relied on Regulation 4(2)(t) of Prohibition of Fraudulent and Unfair Trade Practices and observed that the collection made by the appellants was illegal and the total amount of collection amounts to illegal profits made by the appellants and the company and the amount was raised under CIS as not registered from SEBI. Further, it was observed that the orders of AO are in consideration with the law by placing reliance on Section 15-HA of SEBI Act, 1992.

In the view of above, the Tribunal dismissed the appeals.[Subrata Bhattacharya v. SEBI, 2020 SCC OnLine SAT 5, decided on 14-01-2020] 

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Exchange Board of India (SEBI): Anant Barua, Whole Time Member, denied KSBL’s request to permit the continuation of Karvy Stock Broking Limited (KSBL) using the Power of Attorney (PoA) for the purpose of transfer of securities.

SEBI had passed an ad-interim order against the Power of Attorney. Following directions were issued by SEBI:

“(i) KSBL is prohibited from taking new clients in respect of its stockbroking activities;

(ii)  The Depositories i.e. NSDL and CDSL, in order to prevent further misuse of clients’ securities by KSBL, are hereby directed not to act upon any instructions given by KSBL in pursuance of power of attorney given to KSBL by its clients, with immediate effect;

(iii)  The Depositories shall monitor the movement of securities into and from the DP account of clients of KSBL as DP to ensure that clients’ operations are not affected;

(iv)The Depositories shall not allow the transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) with immediate effect. The transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) shall be permitted only to the respective beneficial owner who has paid in full against these securities, under supervision of NSE; and

(v) The Depositories and Stock Exchanges shall initiate appropriate disciplinary regulatory proceedings against the Noticee for misuse of clients’ funds and securities as per their respective bye-laws, rules and regulations;………….”

Letters were sent by KSBL to SEBI with respect to placing the request in order to permit the continuation of KSBL using the power of attorney (PoA) only for the limited purpose of the transfer of securities for settling the client’s pay-in obligations to the Stock Exchanges.

KSBL had filed an appeal before SAT, Mumbai and for the same SAT had passed the following order:

“…7. We accordingly dispose of this appeal at this stage with a direction to the WTM to consider the request of the appellant which has been made vide letters dated November 24, 25 and 26, 2019 and pass an appropriate order after giving an opportunity of hearing by December 02, 2019…..”

Analysis & Decision

SEBI on considering the facts and submissions stated that the interim order that was passed by SEBI was at the time when it was found that KSBL had misused the clients’ securities by misusing the PoA given to it by its clients.

Further, the Commission noted that the clients of stockbrokers are free to avail various modes for giving instructions to the brokers including through PoA.

“..As per the Business Rules of depositories, the mode of affecting transfer by book entry based on electronic instruction received from the client such as through Speed e facility eliminating the need to deliver the DIS in physical form. If any client seeks to give instruction in physical form, he may also do so by sending the DIS through fax to depository participant and the original DIS may be sent within three days of the fax. The client who seeks to send physical DIS, in addition to sending it by fax has the option to deliver the same at the offices of the broker of depository participant (DP)..”

Thus, the Commission noted that the enormity of the prima facie violations observed against the KSBL in the interim order, it would not be prudent to allow the use of PoA by KSBL given to it by its clients, as prayed by KSBL. The clients of KSBL who seek to sell securities through KSBL may do so by using electronic or physical DIS only. [Karvy Stock Broking Ltd., In Re, 2019 SCC OnLine SEBI 303, decided on 29-11-2019]

Case BriefsHigh Courts

Jharkhand High Court: Sujit Narayan Prasad, J. dismissed the writ petition filed under Article 227 of the Constitution of India.

This is a case of respondents/plaintiff where a petition was filed on 01-02-2018 about some particular documents which could not have been filed at the time of presenting the plaint. On further, cross-examination of the document’s relevancy was assessed and it led the plaintiffs to file the petition where they requested leave from the trial court for marking those documents.

The petitioners had objected to the filed the petition on the grounds that no reason was given as to what held the plaintiffs from protecting the said documents along with the complaint. Another point of contention was that the petition was filed under the provision of Section 5 of Limitation Act, 1963 instead of Order 7 Rule 14 (3) of The Code Of Civil Procedure, 1908. It was because the Trial Court had the power for granting such relief under the CPC. Hence, the petition should not have been allowed but as per Mr Rajeeva Sharma, the learned counsel for the petitioners, the trial court allowed the petition without considering the facts. As a result of this the present writ petition was filed.

Mr M. Jalisur, the learned counsel appearing for the respondent has referred to the provision of Order 7 Rule 14 (3) of the CPC in defence to order dated 06-03-2018. It was further submitted by the counsel that the writ petition has no merit on the ground that the trial court had granted liberty to cross-examine the witnesses produced by the plaintiff. The respondents had filed an interlocutory application for vacating the stay on the order granted by the court by issuing a notice to the respondent on 10-07-2018.

The High Court after considering all the legalities and referring to the provisions of Order 7 Rule 14 (3) of the CPC deemed it fit and fair that the power to grant relief, taking into consideration the relevancy of the documents.

In the following case, the petition has been filed by the plaintiff under Section 5 of Limitation Act rather than Order 7 Rule 14 (3) of the CPC. The court relied on the judgment rendered by the Supreme Court of India in P.K. Palanisamy v. N. Arumugham, (2009) 9 SCC 173 where it was held that mentioning of the wrong provision or not mentioning that provision will not make the order invalid, if the court and/or statutory authority have the requisite jurisdiction  therefore.

Another question taken into consideration is the question of prejudice. The court on the following question held that in terms of the provision of Order 7 Rule 14 (3) of the CPC give liberty of cross-examining the witnesses to the petitioner.

Thus, as per the Supervisory jurisdiction in Article 227 of the Constitution of India, the Court was not mistaken in warranting any interference by the court. Therefore, the writ petition failed and Interim Order dated 10-07-2018 was vacated. [Jay Shankar Yadav v. Bhola Yadav, 2019 SCC OnLine Jhar 1509, decided on 07-11-2019]

Case BriefsHigh Courts

Rajasthan High Court:  Ashok Kumar Gaur, J., allowed the application on the ground that so long the interim order was passed by the court the respondent can not absolve itself from the responsibility of payment of salary to the petitioner.

An application was made by the petitioner for seeking direction against the respondents to release monthly salary. 

Narendra Kumar Meena, counsel for the petitioner submitted that the court had passed an interim order and directed the respondent to allow the petitioner to continue on the post of Security Guard. The petitioner thus joined the service as per the court’s order and was working continuously till date. It was submitted that in spite of continuous working of the petitioner the salary was not being released by the respondents. Thus, the application. 

Sandeep Kalwaniya, counsel for the respondent submitted that the contract period of the petitioner had already been expired and thus the respondent was not responsible to make any payment to the petitioner. 

The court after the submission of the parties held that order was passed by the court giving direction to the petitioner to continue on the post of a security guard and thus the respondent was liable to pay the salary to the petitioner same as he was getting on the date of the termination of the service. The court further held that if the decision of the not engaging any security guard in the office was taken by the respondent the same should be apprised to this court by filing an affidavit. Thus the court allowed the application and directed to “make payment of the salary to the petitioner directly from the date of his joining till date and payment will also be made on month to month basis till the interim order continues”.[Ramavtar Bunkar v. State of Rajasthan,  2019 SCC OnLine Raj 822, decided on 09-05-2019]

Case BriefsHigh Courts

Kerala High Court: The Bench of  Shaji P. Chaly, J. hearing a civil writ petition pertaining to a no-confidence motion filed against President of a Gram Panchayat, held that a person accused of defection is entitled to act as a member of the Panchayat until the date of the order of the Commission declaring him as disqualified.

The present petition had been filed by President of the Edavilangu Grama Panchayat who was ousted from his office by carrying out a motion of no-confidence. Consequent to this alleged defection that had taken place in the Panchayat committee, two petitions had been filed by third-parties under Section 4 of the Kerala Local Authorities (Prohibition of Defection) Act, 1999. Petitioner was not a party in these two petitions. His grievance was that without considering the pending petitions, no-confidence motion had been proposed to be considered, i.e., he was sought to be automatically disqualified on the ground of defection.

Petitioner’s contention was that State Election Commission does not have the power to grant any interim order so as to prevent a party from participating in any proceeding under a no-confidence motion; and that he was entitled to act as a member of the Panchayat until the Election Commission’s order declaring him as disqualified.

The Court took note of the judgment in Nattakam Suresh v. Kerala State Election Commission, 2009 SCC OnLine Ker 3917 where it was opined that there is no automatic disqualification of a member on the ground of defection. The Election Commission is not empowered to pass any interim order interdicting the continuance of a member of a local authority and it must dispose of the petition pending before it declaring the alleged defector as disqualified.

In view of the above, the instant petition was allowed and Election Commission was directed to decide petitions pending before it at the earliest. [Aadarsh A.P. v. Block Development Officer, 2019 SCC OnLine Ker 101, Order dated 10-01-2019]

Case BriefsHigh Courts

Kerala High Court: A Division Bench comprising of P.R. Ramachandra Menon and N. Anil Kumar, JJ. dismissed a petition seeing mandamus for police assistance in relation to a disputed property holding that a writ court could interfere in matters involving civil rights.

Dispute between the parties centered on the ownership and possession of a property in absolute possession of the petitioner. Respondent’s  3 to 6 who resided on the eastern side of the said property, broke a portion of the compound wall and made an attempt to carve out a pathway into petitioner’s property. Hence, the petitioner approached the Munsiff’s Court and was granted a decree of prohibitory injunction which was consequently executed. Allegedly, the respondents attempted to trespass into petitioner’s property again by breaking the iron fence on boundary separating their properties. Thus, the present petition was filed seeking police aid to reconstruct the said iron fence so as to prevent respondents from trespassing into his property.

The Court relied on the judgment of Division Bench of this Court in Adhikarath Valappil Kunhumuhammed v. Korath Illath Valappil Mammi, 1999 SCC OnLine Ker 159 where it was held that when there is dispute between parties and only an interim ex-parte order passed is in force, then in such a situation a Court should not exercise its jurisdiction under Article 226 of the Constitution of India with a direction for police aid.

In view of the above, it was held that disputed questions of title and possession of property could not be the subject matter for determination by a writ court under Article 226 of the Constitution of India under the guise of police protection, to the petitioner, particularly, when such questions were pending consideration before a competent civil court. [Raman v. State of Kerala, 2018 SCC OnLine Ker 7432, decided on 03-12-2018]

Case BriefsHigh Courts

Allahabad High Court: This petition was filed before a Single Judge Bench of Ajit Kumar, J. where an interim order in favour of petitioner was passed.

Facts of the case were that petitioner had applied for the UP Teacher Eligibility Test, 2018 and had successfully registered online for the same.  But while paying the online fee due to server problem his fee was not accepted. Thereafter, the petitioner approached the respondent. Respondent could not help the petitioner as offline payment of fee facility was not available. Hence, this petition was filed.

Petitioner contended that similar question was raised in another case of Madhu v. State of U.P., Writ-A No. 23113 of 2018, where an interim order was passed. In the interim order passed petitioner was allowed to participate in the U.P. TET Examination 2018. Respondents admitted that the case was covered under the case referred by petitioner and the directions in respect of candidates were similarly placed.

High Court issued an interim mandamus to the respondent to allow petitioner to participate in UP Teacher Eligibility Examination with a condition that his result would not be declared and would be subject to the outcome of the petition. Therefore, this matter was listed for hearing on another date. [Rachana Mishra v. State of U.P.,2018 SCC OnLine All 2740, order dated 14-11-2018]

Hot Off The PressNews

Supreme Court: The Bench comprising of CJ Dipak Misra and AM Khanwilkar and Dr DY Chandrachud JJ., refused to stay the Delhi High Court’s order restoring the ban on publication and sale of a book based on Baba Ramdev’s life i.e. “Godman to Tycoon”.

Ramdev in his suit had alleged that the information in the book was false, tended to injure his reputation. He further stated that the book contained defamatory and false information.

Juggernaut is the publisher of the mentioned book and it reached the Supreme Court in order to lift the ban on sale and publication of the book imposed.

Therefore, the Supreme Court in its order refused to lift the ban and asked the Delhi High Court to decide the petition by the end of September. The Court concluded by stating that keeping in view the contentions advanced with regard to the freedom of speech and expression and the rights of an author in writing a book, we only intend to clarify that the said observations should not influence the adjudicatory process while dealing with the matter finally.[Juggernaut Books Pvt. Ltd. v. Swami Ramdev, Special Leave to Appeal (C) No. 19050-19053 of 2018, order dated 23-07-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Disposing of an interim application under Section 33 of the Competition Act, 2002 (‘the Act’) by the informant Indian National Shipowners’ Association (‘INSA’ or ‘Informant’) against Oil and Natural Gas Corporation Limited (‘ONGC’ or ‘Opposite Party’) the Commission reiterated the conditions that have to be satisfied before interim relief can be granted under this section. The main clause which was alleged to be one-sided and unfair in this case was Clause 14.2 of the Special Contract Conditions (hereinafter, referred to as ‘SCC’), giving unilateral right of termination without assigning any reason.

The Commission had, vide its order dated 12.06.2018 passed under Section 26(1) of the Act, held the Opposite Party to be prima facie dominant in the relevant market. The Commission was of the view that the stipulation of Clause 14.2 of the SCC was one-sided as it gives an unfettered right to a dominant party to use it in its favour without giving any reciprocal right to the other party and this was prima facie in contravention of the provisions of Section 4(2)(a)(i) of the Act. Further, the manner in which the termination notices were sent and then consequently withdrawn by the Opposite Party on receiving a reduced offer from the members of the Informant, indicated the imperious approach adopted by the Opposite Party. Accordingly, the Commission directed the DG to carry out a detailed investigation.

In this Application, Commission noted that the principles for deciding the interim relief application under Section 33 of the Act were laid down by the Supreme Court in CCI v. SAIL(2010) 10 SCC 744, wherein it was held that while recording a reasoned order under Section 33 of the Act, the Commission shall, inter alia, ensure fulfilment of the following conditions:

a) record its satisfaction (which has to be of much higher degree than formation of a prima facie view under Section 26(1) of the Act) in clear terms that an act in contravention of the stated provisions has been committed and continues to be committed or is about to be committed;

b) it is necessary to issue order of restraint; and

c) from the record before the Commission, there is every likelihood that the party to the lis would suffer irreparable and irretrievable damage, or there is definite apprehension that it would have adverse effect on competition in the market.

The Commission found that all these conditions were satisfied in this case. However, by extending the undertaking by ONGC to not to invoke Clause 14.2 of SCC till further order the Commission denied to grant the interim relief. [In re, Indian National Shipowners’ Association v. Oil and Natural Gas Corporation Limited, Case No. 01 of 2018 order dated 15.06.2018]

Case BriefsSupreme Court

Supreme Court: Passing interim order in the most talked about Aadhaar linkage matter, the 5-judge Constitution Bench of Dipak Misra, CJ and Dr. AK Sikri, AM Khanwilkar, Dr. DY Chandrachud and Ashok Bhushan, JJ accepted the Central Government’s submission of extending the deadline for linking Aadhaar with all the schemes and existing bank accounts to 31st March 2018.

Senior Advocate Shyam Divan, appearing for the petitioners, had brought before the Court’s notice that the interim order of the Constitution Bench dated 15.10.2015, wherein it was directed that

  • Aadhaar Cards could permissibly be utilized only for six schemes
  • the Union Government was directed to strictly follow the earlier orders of this Court commencing from 23 September 2013; and
  • the Aadhaar card scheme was to be purely voluntary and could not be made mandatory until the matter is finally decided by this Court.

He, hence, argued:

“since the interim order governs the field it was the obligation of the Union government to seek a variation of the interim directions after the enactment of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 before making it mandatory to uplink or provide details of the Unique Identification Number/Aadhaar card for all purposes.”

Attorney General KK Venugopal, on the other hand, submitted:

“the interim directions were issued in the absence of a legislative framework. After Parliament has enacted the Aadhaar Act, 2016, the interim orders would not pose any impediment to enforcing the provisions of the law, duly enacted. Moreover, the reasonableness of each notification would have to be justified by the department concerned.”

Regarding new bank accounts, Attorney General submitted that while the last date for completing the process of Aadhaar linking may be extended until 31 March 2018, persons desirous to open new accounts shall produce proof to the bank of an application having been submitted for obtaining an Aadhaar card together with the application number which shall be supplied to the account opening bank. The Court accepted the said submission.

Regarding Aadhaar based E-KYC for mobile phone subscribers, the Court extended the date for the completion of the E-KYC process in respect of mobile phone subscribers until 31 March 2018. The original deadline for the same was 6 February 2018.

The Bench also clarified that as far as the provisions of Section 139 AA of the Income Tax Act, 1961 are concerned, the matter stands governed by the judgment of this Court in Binoy Visman v. Union of India, 2017 SCC OnLine SC 647.

Stating that the order will continue to operate pending the disposal of the proceedings before the Constitution Bench, the Court listed the entire batch of Aadhaar petitions for final hearing on January 17, 2018. [Justice K S Puttaswamy v. Union of India, 2017 SCC OnLine SC 1462, order dated 15.12.2017]