interim order

Experts CornerSiddharth R Gupta

It is the plain and unqualified obligation of every person against, or in respect of whom an order is made by a court of competent jurisdiction, to obey it unless and until that order is discharged.

Romer L.J.,

Hadkinson v. Hadkinson1

Disobedience of orders of a court strikes at the very root of the rule of law on which the judicial system rests. Judicial orders are bound to be obeyed at all costs. Howsoever grave the effect may be, is no answer for non-compliance of a judicial order. Judicial orders cannot be permitted to be circumvented.

J.S. Khehar, J.

Subrata Roy Sahara v. Union of India2

The present article delves into a subject of immense relevance for the judicial system of our country, with the ongoing debate on interpretation of interim orders regarding their extent, existence, and expiry after a particular passage of time. In other words, we would attempt to highlight how the question of duration and endurance of interim orders has been answered by the various courts, especially the constitutional courts of the country viz. (High Courts and the Supreme Court), when they were mentioned to be operative for a particular period/duration/time by the court passing the order granting interim relief.

As the analytical description would unfold, what will also be amusing to note is that the constitutional courts of the country have themselves left every corner of this issue ambiguous and ambivalent. It is highly desirable that the Supreme Court of India must step in and resolve the serious conundrum occasioned owing to mutually contradictory judicial verdicts of various High Courts. There is a sharp vertical cleavage of judicial opinion on the duration and expiry of interim orders, when they are passed for a fixed period/time.

The article shall be segregated into the following sub-topics:

1. Purpose and objective of an interim/interlocutory order by any court of law.

2. Classification of interim/interlocutory orders on the basis of their wordings.

3. Origins and applicability of the legal maxim – “actus curiae neminem gravabit”.

4. View of the Supreme Court of India.

5. Views of the High Courts favouring continuation of interim order in various contingencies.

6. Views of the High Courts against continuation of interim order, declaring their expiry date.

Discussions under topics A to D shall be undertaken in the current part of the article whilst discussions under topics E to G shall be dealt with in Part II of the article

Purpose and objective of an interim/interlocutory order by any court of law

The roots and origins of the concept of interim/interlocutory order in the Indian context can be traced to the provisions of Order 39 Rules 1 to 3 CPC, which are the repository of powers to grant interim relief and temporary injunctions.

Upon perusal of Order 39 Rule 1 CPC, it would indicate that wherein any suit, it is proved by affidavit or otherwise (i) that any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit, or wrongfully sold in execution of a decree; or (b) that the defendant threatens, or intends, to remove or dispose of the property with a view to defrauding the creditors; (c) that the defendant threatens to dispossess, the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute in the suit; the court may grant an order of temporary injunction to restrain such acts.

It has now been well settled that before a court grants a temporary injunction, it needs to be satisfied that a person seeking an injunction has a prima facie case in his favour and that the balance of convenience and possibility of irreparable injury being caused also lies in his favour.

The word “prima facie case” apparently indicates something which at the first impression makes out a triable case. The term “prima facie case” should not be confused with the term “prima facie title” which has to be established at the trial upon permitting the parties to lead evidence. Thus, it means a substantial question has been raised, which upon first sight needs to be investigated and decided on merits.

The word “balance of convenience” denotes that the court must be satisfied that the comparative mischief and hardship which is likely to be caused to the person seeking an injunction is more than the inconvenience likely to be caused to the other party by granting such injunction.

The word “irreparable injury” on the other hand guides the court to be satisfied that the refusal to grant the injunction would result in such injury which cannot be compensated in terms of costs or otherwise and the person seeking injunction needs to be protected from the consequences of apprehended injury.

The aforesaid three ingredients have been noticed by the House of Lords in the celebrated case of American Cyanamid Co. v. Ethicon Ltd.3 The principles regarding grant of injunction as laid down by the Lord Diplock in the Cyanamid case4 can be summarised as under:

(1) The plaintiff must first satisfy the court that there is a serious issue to decide and that if the defendants were not restrained and the plaintiff won the action, damages at common law would be inadequate compensation for the plaintiff’s loss.

(2) The court, once satisfied with these matters will then consider whether the balance of convenience lies in favour of granting an injunction or not, that is, whether justice would be best served by an order of injunction.

(3) The court does not and cannot judge the merits of the parties’ respective cases and that any decision of justice will be taken in a state of uncertainty about the parties’ rights.

The Supreme Court of India has also followed the same principle as followed by the English courts primarily the three considerations mentioned above. In Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd.,5 the Supreme Court of India referred to the Cyanamid case6. It also relied upon the Indian precedents and succinctly enumerated the broad parameters that should govern the judicial discretion in the passing of interim/interlocutory/temporary orders by Indian courts. Vide para 24, the Supreme Court Bench, comprising B.N. Kirpal and U.C. Banerjee, JJ., held thus:

24. We, however, think it fit to note hereinbelow certain specific considerations in the matter of grant of the interlocutory injunction, the basic being non-expression of opinion as to the merits of the matter by the court, since the issue of grant of injunction, usually, is at the earliest possible stage so far as the time-frame is concerned. The other considerations which ought to weigh with the court hearing the application or petition for the grant of injunctions are as below:

(i) Extent of damages being an adequate remedy.

(ii) Protect the plaintiff’s interest for violation of his rights though, however, having regard to the injury that may be suffered by the defendants by reason therefor.

(iii) The court while dealing with the matter ought not to ignore the factum of the strength of one party’s case is stronger than the other’s.

(iv) No fixed rules or notions ought to be had in the matter of grant of the injunction but on the facts and circumstances of each case — the relief being kept flexible.

(v) The issue is to be looked at from the point of view as to whether on the refusal of the injunction the plaintiff would suffer irreparable loss and injury keeping in view the strength of the parties’ case.

(vi) Balance of convenience or inconvenience ought to be considered as an important requirement even if there is a serious question or prima facie case in support of the grant.

(vii) Whether the grant or refusal of the injunction will adversely affect the interest of the general public which can or cannot be compensated otherwise.

The authorities and precedents on principles governing grant of interim relief are innumerable. However, the above ones have been referred to broadly explain the factors that should govern grant of interim relief by any judicial/quasi-judicial court or a tribunal.

Necessarily, therefore, the exercise of passing of any interim order granting any interim relief by necessary implication is an exercise to be undertaken by the courts with due application of mind, preferably through speaking order. The Supreme Court has been consistently holding that interim orders cannot be granted on mere asking or as a matter of force, but only on consideration governing them (as explained above). There has to be an active display of judicial conscience and mental thinking in the process of passing of interim order in favour of any party.

The present article delves into the moot question of whether the effect of an interim order granted to any party must dissipate on procedural grounds, when the time expires. Whether, despite all the diligent efforts of the parties, when the courts are not able to decide on the vacation or withdrawal of interim relief so granted to any party, should the party be denied the fruits of a judicially considered and well-deliberated interim order is the question to be answered.

Classification of interim/interlocutory orders on the basis of their wordings

Even though it may be a singular term  “interlocutory orders”, however the content of these orders may bear different colours. As stated earlier, the grant of interim relief to any party in any proceeding is dependent upon a host of factors. The courts may while granting interim relief, bracket it with certain conditions or riders. The tenure, extent and duration of the interim orders may be limited by the court whilst granting interim relief. Generally, the court restricts the extent and duration of the interim orders in the following words:

(i) “in the meanwhile … during the pendency of the matter”;

(ii) “till the next date of hearing of the matter”;

(iii) “till the next date of listing”;

(iv) “list on (date) … till then interim order (as specified) to operate”; and

(v) “parties are directed to maintain status quo (or any other similar interim order) till further orders of this Court”.

The interim orders of varied wordings may be passed by the court, but each of them has a separate import about its extent and duration. It is the dispute about the interpretation of these interim orders only that has been keeping jurists and Judges puzzled alike, with no definite answer. A one line interim order may at times cascade into another bigger litigation if the stakes on either side are volatile, for protection of which only the interim order of the court was passed.

Origins applicability of the legal maxim – “actus curiae neminem gravabit” for extension and restoration of interlocutory orders

The maxim is founded upon justice and good sense; and affords a safe and certain guide for the administration of the law. In virtue of it where a case stands over for argument from term to term on account of the multiplicity of business in the court, or for judgment from the intricacy of the question, the party ought not to be prejudiced by that delay, but should be allowed to enter up his judgment retrospectively to meet the justice of the case; and therefore, if  one party  to  an  action  dies  during  a  curia  advisari vult,  judgment may be entered “nunc pro tunc”, for the delay is the act of the court, and therefore neither party should suffer for it.

Cases do however, occur, in which injury is caused by the act of a legal tribunal, as by the laches or mistake of its officers; and where, notwithstanding the maxim as to actus curiae, the injured party is altogether without redress.

The maxim referred to above was relied on, referred and applied for by the courts at UK as far back in the beginning of 19th century in the judgment of Pulteney v. Warren7, wherein Lord Eldon in the context of above maxim, observed as under:

“If there be a principle, upon which courts of justice ought to act without scruple, it is this; to relieve parties against that injustice occasioned by its own acts or oversights at the instance of the party, against whom the relief is sought. That proposition is broadly laid down in some of the cases.”

This view was followed subsequently by the House of Lords in East India Co. v. John Campion8. In another case of Rodger v. Comptoir d’Escompte de Paris9, the principle enshrined above in the Latin maxim was reiterated again in following lines:

… One of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors and when the expression “the act of the court” is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case….

In addition to the above, first few judgments which affirmed and followed the doctrine of “actus curiae neminem gravabit” is Turner v. London and South-Western Railway Co.10 In this case, the plaintiff had died after the hearing, but before the court rendered its judgment. The court ordered that its judgment be entered “nunc pro tunc”, as of the day when the argument terminated, noting that this would not cause an injustice to the other party and that such a result was appropriate in a case in which the delay had resulted from an act of the court.

Thus in essence, the Latin maxim “actus curiae neminem gravabit”, means “an act of the court should prejudice no one”. At times, judicial proceedings or orders of the court may itself perpetuate injustice. The doctrine therefore allows courts to rectify and undo the wrongs committed to any party due to its own mistakes, shortcomings in judicial proceedings or judicial orders.

The Privy Council as far back as in Debi Bakhsh Singh v. Habib Shah11 pointed out that an abuse of the process of the court may be committed by the court or by a party. Where a court employs a procedure in doing something, which it never intended to do and there is an abuse of the process of the court, it can always be corrected. Lord Shaw spoke for the Bench thus:

“Quite apart from Section 151, any court might have rightly considered itself to possess an inherent power to rectify the mistake which had been inadvertently made.”

Further, in another matter of The Bolivar12, the Privy Council applying the doctrine further stated thus:

“Where substantial injustice would otherwise result, the court has, in Their Lordships’ opinion, an inherent power to set aside its own judgments of condemnation so as to let in bona fide claims by parties….”

In Jang Singh v. Brij Lal13, the Supreme Court of India in relation to the maxim “actus curiae neminem gravabit” observed as follows:

6. … There is no higher principle for the guidance of the court than the one that no act of courts should harm a litigant and it is the bounden duty of courts to see that if a person is harmed by a mistake of the court he should be restored to the position he would have occupied but for that mistake. This is aptly summed up in the maxim:

“actus curiae neminem gravabit”.

Courts have held in many judgments said that to own up any mistake when judicial satisfaction is reached, does not militate against its status or authority. Perhaps it would enhance both.

What would happen if the interim order applicable up to a particular date or any interim arrangement determined by the court does not get extended due to procedural impediments on the part of the court; or owing to omission on the part of its Registry. Whether an interlocutory order passed after due consideration of merits and application of judicial mind with due exercise of judicial conscience and discretion must disappear for the faults in the machineries working in the judicial system. Courts in India have applied the aforementioned doctrine of “actus curiae neminem gravabit” to restore the previously passed interlocutory orders that expired for no fault of the parties.

In Pradip Kumar Saha v. Rajesh Rajak14, the ADJ Court at Siliguri (W.B.) had passed an order whereby the prayer for extension of ad interim order of stay of the operation of the order was refused against which the matter travelled to the High Court. Previously, an ad interim order of injunction was passed on an application filed by the plaintiffs/opposite parties on 17-8-2015 restraining the defendant-petitioner from disturbing the peaceful possession of the plaintiff till 16-9-2015. This interim order was extended from time to time until the Order No. 16 passed in the said suit. But from Order No. 16 till Order No. 24 passed in the said suit, this order was not extended by the trial court. No order came to be passed for extension of interim order, when the matter travelled to the High Court on the question of existence and continuation of interim order when the parties had made diligent efforts. The High Court applying the doctrine of “actus curiae neminem gravabit”, held that act of the court should not cause any prejudice to the litigant and therefore continued the ad interim order granted earlier by the trial court till the final disposal of the pending applications for the extension of the interim relief. Vide para 1, the High Court applying the said doctrine observed thus:

1. … An ad interim order of injunction was passed on an application filed by the plaintiffs/opposite parties on 17-8-2015 restraining the defendant-petitioner from disturbing the peaceful possession of the plaintiff till 16-9-2015. It is not in dispute that such ad interim order of injunction was extended from time to time until the Order No. 16 passed in the said suit. There is no reflection after the said Order No. 16 till the Order No. 24 passed in the said suit that the said ex parte ad interim order of injunction was extended by the trial court. A serious dispute was raised before this Court over the filing of an application seeking extension of the said interim order on each date of listing. My attention is drawn to the orders recorded in the said suit wherefrom it appears that an application seeking extension of ad interim order was filed but there is no reflection that the court extended the said ad interim order of injunction. By an order dated 10-1-2018 the learned Judge in the trial court took up the matter and noticed that the ex parte ad interim order of injunction granted on 17-8-2015 has not been extended on and from 1-7-2016. The learned Judge was of the opinion that it was a mistake on the part of the court in not extending ad interim order of injunction and extended in the manner as if the said ad interim order of injunction was operative through out the proceeding. What can be seen from the tenet of the said order is that the learned Judge in the trial court was swayed by the fact that the act of the court should not cause any prejudice to the litigant. Such principle is well recognised and based on the legal maxim “actus curiae neminem gravabit”.

Vide para 5, the High Court held thus:

5. This Court, therefore, modifies the order dated 10-1-2018 in exercise of the power of superintendence to the extent that the ad interim order of injunction passed on 17-8-2015 is reimposed from the said date and to continue till the disposal of the injunction applications.

A somewhat similar situation arose before the Madras High Court in T. Gnanasambanthan v. Board of Governors15. In this case, the writ petition was filed challenging the order of discharge passed by the respondents. Through an interim order, the court stayed the operation of the impugned order of discharge. Against this order, a vacate stay petition was filed by the respondents which was not decided within 14 days from the date of filing. Consequently, the respondents issued an office order dated 30-10-2013 relieving the petitioner with effect from 30-10-2013 on the ground that the interim stay automatically got vacated due to Article 226(3) of the Constitution of India. The main issue was whether the stand taken by the respondents on the basis of Article 226(3) to the effect that the stay automatically got vacated is correct or not.

The court noted that due to fault on the part of its Registry and listing section, the application for vacation of interim order could not get listed. This was titled as “act of omission” on the part of the court, warranting invocation of “actus curiae neminem gravabit”. Holding that when the court or its executive machinery is at fault, then the parties should not suffer. Vide para 65, the Madras High Court held thus:

65. But unfortunately, none of the High Courts, whose decisions are relied upon by the respondents, has considered the question from the pedestal of the most fundamental principle of law, namely, that no one shall be prejudiced by an act of court (actus curiae neminem gravabit). An act can either be an act of omission or be an act of commission. The non-listing of an application for vacation of an interim order, if not due to the fault of any of the parties, but due to the fault of the Registry of the court, would fall under the category of “act of omission”. No law can be so absurd as to say that if the court is at fault, the parties shall suffer. I do not think that any case law is required to support the proposition that an act of court shall not prejudice a party.

Vide paras 74-75, the Madras High Court further held as follows:

74. … Take for instance a case, where an application for vacating the stay is taken up for hearing within two weeks of its presentation and the court reserves orders. If orders were not pronounced on or before the expiry of the 14th day from the date of filing of the vacate stay application, could it be said that the party, who obtained an interim stay, should still suffer, despite ensuring that the application is heard within two weeks. It is not within the control of any party to have his application or the opposite party’s application listed for hearing. Even if a party succeeds in getting the application listed within two weeks, it is not in his control to ensure that the application is heard before the expiry of two weeks. Even if a party succeeds in making the court hear the application for vacation of the interim order within two weeks, it is not in his control (especially these days) to ensure that it is disposed of within two weeks from the date of filing of the vacate stay application.

75. Therefore, an interpretation that would put a party, who is not at fault, to disastrous consequences, for the failure of an institution or for the happening of something that is beyond his control, is wholly unjustified. If a statutory provision imposes an obligation upon one party and makes the opposite party suffer for the consequences of non-fulfilment of the obligation cast therein, such a provision cannot be said to be mandatory. Unfortunately, none of the High Courts, whose decisions are relied upon by the respondents, has taken note of this basic difference between the person, on whom, an obligation is cast and the person, on whom, the consequences are made to fall under Article 226(3). Hence, with great respect, I am unable to agree with the views expressed by the other High Courts.

From the above judgments, it is clear that the doctrine of “actus curiae neminem gravabit”, can be rightly invoked to continue and restore interim orders that expired due to faults on the part of Registry or the executing machinery of the court. However, a neat and clear case has to be made out by the party pleading for applicability of the doctrine that it is entitled for restitution due to fault on the part of the court, meaning thereby that more often than not one can claim restitution if due diligence is proved on his part.

View of the Supreme Court of India on extent, expiry and duration of interim orders

Not many judgments are available of the Supreme Court on the issue of duration and existence of interlocutory orders. However, there are two judgments that have taken a strict view on their operability, while there are some others on the other end of the spectrum. The first one at hand is the judgment of Arjan Singh v. Punit Ahluwalia16. In this case, through the interim order dated 2-2-1996, Dr Bawa, one of the respondents, was restrained from transferring the property, which order was to remain in effect till 16-10-1996. An application for extension of the said interim order was filed on this date, but extension could not be granted since the Presiding Officer was on leave on 16-10-1996. Thereafter, the matter was transferred to another court and the interim order was neither extended nor vacated. Therefore, the main issue that arose was whether the order of injunction was operative, so as to attract the provisions of Order 39 Rule 2-A of the Code of Civil Procedure or invoking the inherent jurisdiction of the court under Section 151 thereof. The court held that if the order of injunction was operative up to a particular date, technically the order of injunction shall not remain operative thereafter. Thus, the owner of the land Dr Bawa and Defendant 2 Sanjeev Sharma could have entered into the compromise, to be treating the interim order to be not operative beyond the date it was so held to be. Vide paras 16-17, the Supreme Court held thus:

16. The learned trial Judge passed an interim order on 2-2-1996, which was periodically extended. Indisputably, by reason thereof, Dr Bawa was restrained from transferring the property. A similar order of injunction was passed in Sanjeev Sharma’s case which was made absolute on 28-5-1997. It is, however, again beyond any dispute that the said order of injunction continued from time to time. It was operative till 16-10-1996. It has been noticed by the learned trial Judge that an application for extension was filed. However, because the Presiding Officer was on leave on 16-10-1996 and later the matter was transferred to another court, the interim order was neither extended nor vacated.

17. Was the order of injunction operative so as to attract the provisions of Rule 2-A of Order 39 of the Code of Civil Procedure or invoking the inherent jurisdiction of the court under Section 151 thereof? The learned trial Judge opined that it was so because it was for the court to pass an appropriate order thereunder. The High Court, however, differed with the aforementioned finding of the learned trial Judge to hold that no order of injunction was operative. It, furthermore, held that any transaction carried out in violation of the order of the court is void; it would be a nullity. The decision of the High Court is based on the decisions of different High Courts including Pranakrushna v. Umakanta Panda17, Phani Bhusan Dey v. Sudhamoyee Roy18 and Harbalas v. State of Haryana19. We agree with the High Court on this issue. If the order of injunction was operative up to a particular date, technically the order of injunction shall not remain operative thereafter. The owner of the land Dr Bawa and Defendant 2 Sanjeev Sharma, thus, could have entered into the compromise. The effect thereof would be that the said deed of sale was not binding on the appellant. It would be hit by the doctrine of lis pendens, as adumbrated under Section 52 of the Transfer of Property Act. The said deed of sale would not come in the court’s way in passing a decree in favour of the appellant. Its validity or otherwise would not be necessary to be considered as the appellant is not bound thereby. Sanjeev Sharma and consequently Punit Ahluwalia would be deemed to be aware of the pendency of the suit. Even Section 19 of the Specific Relief Act will be attracted.

A similar issue arose thereafter in Ashok Kumar v. State of Haryana20. The appellant landowners acquired the said lands in 1993 and raised certain construction thereupon. A notification was issued on 20-12-1996 for acquisition of the said lands by the State of Haryana. A suit was filed by the landowners in the Court of the Civil Judge, Senior Division, Panipat, questioning the validity of the said notification. On an application for grant of injunction filed by the appellants, an order of interim injunction was passed on 30-8-1997. The said interim order was extended from time to time. The matter was placed on 28-7-1998 on the ground that the Presiding Officer was to remain on leave on 29-7-1998. The matter was adjourned to 9-9-1998. However, the order of injunction was not extended. After some adjournments, the suit was dismissed for default on 19-8-2000. The main issue was whether the order of an interim injunction granted by the learned Civil Judge, Senior Division, Panipat, was operative till 9-9-1998 or 19-8-2000. The Supreme Court held that the interim order having been extended till a particular date, the contention raised by the respondents herein that they were under a bona fide belief that the injunction order would continue till it was vacated cannot be accepted. It was stated  that although in the earlier order dated 30-8-1997, the term “in the meantime” was used, which was repeated in order dated 24-9-1997, but in the subsequent orders beginning from 29-11-1997, the expression used was “till then”. Vide paras 11-12, the Supreme Court held thus:

11. The short question which arises for consideration in this appeal is as to whether the order of ad interim injunction granted by the learned Civil Judge, Senior Division, Panipat, was operative till 9-9-1998 or 19-8-2000. We have noticed hereinbefore the nature of the orders passed by the learned Civil Judge. Although in its order dated 30-8-1997, the learned Civil Judge, used the term “in the meantime”, which was repeated in its order dated 24-9-1997, but in the subsequent orders beginning from 29-11-1997, the expression used was “till then”.

12. The term of the order of the learned Judge, in our opinion, does not leave any manner of doubt whatsoever that the interim order was only extended from time to time. The interim order having been extended till a particular date, the contention raised by the respondents herein that they were under a bona fide belief that the injunction order would continue till it was vacated cannot be accepted.

From the above exposition, it is clear that a lot depends on the exact language of the interim order passed by the court. If the interim order passed by the court is intended to have a limited effect for a definite time, then in such circumstances, it cannot be held to possess an operation beyond its reach by presumptions. If one follows the view taken by the Supreme Court, then there is no warrant for the proposition, that unless an order of stay passed once even for the limited period is vacated by an express order or otherwise; the same would continue to operate.

However, till date, the Supreme Court of India has not dealt with or adjudicated any case, where arguments have been taken on the applicability of doctrine of “actus curiae neminem gravabit”. Both the judgments of Arjan Singh21 and Ashok Kumar22 were decided essentially on the facts of the case, without delving into the larger issue of applicability of the above Latin maxim. The argument always remains open for an aggrieved party to persuade the Supreme Court to take another view.

With this, the Part I of this article gets concluded. In the sequel to this part, the discussion shall veer around the sharp cleavage of judicial opinion amongst various High Courts on the subject. This cleavage of judicial opinion shows far more serious questions than it answers, requiring intervention by the Supreme Court of India at the earliest to solve one of the complex judicial enigmas which our legal fraternity faces every day.

The remaining discourse on the subject shall continue in Part II of this article to follow after a short while.

† Siddharth R. Gupta is an Advocate practising at Madhya Pradesh High Court and Supreme Court of India.

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

1. (1952) 2 All ER 567 at para 288, p. 285.

2. (2014) 8 SCC 470 at para 185.2 : AIR 2014 SC 3241.

3. 1975 AC 396 : (1975) 2 WLR 316 : (1975) 1 All ER 504 : 1975 UKHL 1.

4. 1975 AC 396 : (1975) 2 WLR 316 : (1975) 1 All ER 504 : 1975 UKHL 1.

5. (1999) 7 SCC 1, 13, 14 : AIR 1999 SC 3105.

6. 1975 AC 396 : (1975) 2 WLR 316 : (1975) 1 All ER 504 : 1975 UKHL 1.

7. 6 Ves 73, 92 (1801) : (1801) 31 BR 944.

8. (1837) 11 Bli NS PC 158 : 6 ER 291 (1837).

9. [LR] 3 PC 465, 475 : 1871 UKPC 6.

10. [LR] 17 Eq 561.

11. 1913 SCC OnLine PC 15 : ILR (1913) 35 All 33.

12. 1916 SCC OnLine PC 30 : AIR 1916 PC 85.

13. AIR 1966 SC 1631 : (1964) 2 SCR 145.

14. 2018 SCC OnLine Cal 3056.

15. 2014 SCC OnLine Mad 235 : (2014) 3 Mad LJ 1.

16. (2008) 8 SCC 348, 355, 356 : AIR 2008 SC 2718.

17. 1988 SCC OnLine Ori 35 : AIR 1989 Ori 148.

18. 91 CWN 1078.

19. 1973 Punj LJ 84.

20. (2007) 3 SCC 470, 472, 473 : AIR 2007 SC 1411.

21. (2008) 8 SCC 348 : AIR 2008 SC 2718.

22. (2007) 3 SCC 470 : AIR 2007 SC 1411.

Case BriefsSupreme Court

Supreme Court: The bench of MR Shah* and BV Nagarathna, JJ has held that in a case where on the date of commencement of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, no award has been declared under Section 11 of the Act, 1894, due to the pendency of any proceedings and/or the interim stay granted by the Court, such landowners shall not be entitled to the compensation under Section 24(1) of the Act, 2013 and they shall be entitled to the compensation only under the Act, 1894.

It was argued before the Court that there is no express provision in Section 24, that excludes the period during which any interim order was operative, preventing the State from making an award. The Court, however, rejected the contention and held that preventing the State from taking the possession of acquired land or from giving effect to the award, in a particular case or cases, cannot result in the inclusion of such period or periods for the purpose of reckoning the period of five years.

It cannot be disputed that there shall be a very huge difference between the quantum of compensation payable under the Act, 1894 and the compensation payable under the Act, 2013. It cannot be said that there was any inaction on the part of the Authority in not declaring the award because of the interim order passed by the Court.

“Therefore, should the State and the Public Exchequer be made to suffer when there is no inaction on the part of the Authority in declaring the Award? The intention of the Parliament while enacting Section 24(1) of the Act, 2013 cannot be to give benefit to a litigant, who has obtained a stay order and because of that the award could not be declared and thereafter the litigant may be awarded the compensation as per Act, 2013. It may even result in discrimination between the landowners, whose lands have been acquired under the same notification.”

Stating that no party could take advantage of a litigation, the Court held that the principle of restitution is a statutory recognition of the rule of justice, equity and fair play. The court has inherent jurisdiction to order restitution so as to do complete justice. This is also on the principle that an unsuccessful litigant who had the benefit of an interim order in his favour cannot encash or take advantage of the same on the enforcement of the Act, 2013 by initially stalling the acquisition process and later seeking a higher compensation under the provisions of Act, 2013.

The Court, hence, observed that

“If at the instance of a landowner, who has challenged the acquisition, an interim order has been passed by a Court is successful then the proceeding of acquisition or the acquisition notification would be quashed. Then there would be no occasion to determine any compensation. But on the other hand, if a landowner, who has the benefit of an interim order in his favour whilst a challenge is made to the acquisition, is unsuccessful, he cannot then contend that he must be paid compensation under the provision of the Act, 2013 on its enforcement, whereas a landowner, who did not have the benefit of any interim order is paid compensation determined under the provisions of the Act, 1894, which is lesser than what would be computed under the Act, 2013.”

[Faizabad-Ayodhya Development Authority v. Dr. Rajesh Kumar Pandey, 2022 SCC OnLine SC 679, decided on 20.05.2022]

*Judgment by: Justice MR Shah

Case BriefsHigh Courts

Chhattisgarh High Court: Goutam Bhaduri, J., allowed the petition and directed the vehicle to be released on certain conditions. 

The brief facts of this case are that on receiving information, a vehicle was intercepted and from the vehicle illicit liquor to the extent of 34.54 bulk litres was seized. Thus, the case was registered under Section 34(2) of the Chhattisgarh Excise Act, and the liquor as also the vehicle were seized by the police allegedly for transporting illicit liquor, as such proceeding under Section 47-A(3) of the Act was drawn for confiscation of the vehicle. Further, the Collector, who is authorised under Section 47-A(3) started a confiscation proceeding for the vehicle. During such a confiscation proceeding, an application was filed by the petitioner who is the owner of the vehicle to release the vehicle and interim custody of the vehicle were sought for, which was dismissed. Therefore, the instant petition.

Counsel for the petitioner submitted that the confiscation proceeding though having been commenced does not put any bar to release the vehicles into interim custody. He further submitted that till the confiscation proceeding is concluded, the vehicle should have been handed over to the applicant. It is submitted that no necessary useful purpose would be served by keeping the vehicle in the custody except the loss caused to it.

The Court observed that the confiscation proceeding under the Act is governed by Section 47-A(3) of the Act and Section 47-A(2) of the Act regulates the power and procedure to be adopted for confiscation.

The Court further observed that perusal of Section 47-A(2) would show that power has been given to the District Magistrate (Collector) upon production of the article and on having satisfied that offence covered under clause (a) or clause (b) of sub-section (1) of Section 34 has been committed and if liquor is more than 5 bulk litres he may order for confiscation of articles, intoxicants, implements, utensils including the conveyance so seized. The Court records that during pendency of the proceeding he may pass an order of interim nature for custody, disposal etc. of the confiscated intoxicants, articles, implements, conveyance as may appear to be necessary in the facts of this case. Section 47-B of the Act provides for appeal against the order of confiscation. Therefore, it necessarily leads that order of confiscation can only be challenged when it reaches its finality and the statute do not give any space to challenge any other order except the final one. It is a settled proposition of jurisprudence that every wrong will have a remedy. So if the order is found to be wrong then certainly the High Court would have all the power to correct the same.

The Court relied on judgment Sunderbhai Ambalal Desai v. State of Gujarat, (2002) 10 SCC 283 and observed that no reasons have been assigned for rejection in the impugned order and only it is stated that since vehicle was found in transporting illicit liquor as such it is not feasible to hand over the vehicle to the petitioner. So for all practical purposes vehicle is lying at the disposal of authorities or at police station. Thus, if it is kept in the police station it must be occupying space or is prone to cause natural decay and may lose its road worthiness when kept in a stationary position.

The Court thus held “vehicle be released in favour of petitioner by way of interim measure, if the confiscation proceedings have not been concluded till date of production of this order”[Shyam Bihari Yadav v. State of Chhattisgarh, WPCR No. 372 of 2022, decided on 26-04-2022]

Appearances:

For Petitioner: Shri T.K. Jha

For Respondent/State: Shri Ajay Kubrani

Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The bench of Hemant Gupta and V. Ramasubramanian*, JJ has held that an ad hoc payment made to the workers pursuant to the interim orders passed by this Court in a previous round of litigation does not form part of “wages” within the meaning of the expression under Section 2(s) of the Payment of Gratuity Act, 1972, for the purpose of calculating gratuity.

Factual Background

The scales of pay of the employees of public sector undertakings were revised w.e.f. 01.01.1992.

When the benefit of such revision was not made available to the employees of Fertiliser Corporation of India Limited and Hindustan Fertiliser Corporation Limited, their employees moved writ petitions in various High Courts, in the year 1996.

The writ petitions pending on the file of various High Courts were transferred to the Supreme Court.

By an interim order dated 18.08.2000, the Supreme Court directed an ad hoc monthly payment of Rs.1500/¬, Rs.1000/-, Rs.750/¬ and Rs.500/¬, respectively to four different categories of employees, as an interim measure, subject to the final outcome of the writ petitions which stood transferred to this Court.

In the final order, the Supreme Court held that economic viability or the financial capacity of the employer is an important factor which cannot be ignored while fixing the wage structure and that the materials on record clearly revealed that both these companies were suffering heavy losses for several years. It also made it clear that what was paid was only ad hoc.

Once the curtain was finally drawn on their very employment, the Controlling Authority started passing orders in the applications filed by the employees individually, treating the ad hoc payment as part of the wages.

The Management of these companies moved an application before the Supreme Court for clarification/modification of the order. On 01.05.2008, the Supreme Court disposed of the interim application by just observing that when the final order is passed, the interim order automatically comes to an end.

Analysis

Section 2(s) of the Act defines wages, as follows:-

“wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.”

The Court explained that the definition of the expression is in 3 parts,

  • the first part indicating the meaning of the expression,
  • the second part indicating what is included therein and
  • the third part indicating what is not included therein.

In the first part of the definition, the emphasis is on what is earned by the employee “in accordance with the terms and conditions of employment”.

Hence, irrespective of whether what was earned has been paid or remained payable, the same is included in the definition, provided it is in accordance with the terms and conditions of his employment.

The Court also took note of the ruling in Straw Board Manufacturing Co. Ltd. v. Workmen, (1977) 2 SCC 329, wherein it was held that:

“We clarify that wages will mean and included basic wages and Dearness Allowance and nothing else”.

The Court also observed that it is a fundamental principle of law that a party who is in enjoyment of an interim order, is bound to lose the benefit of such interim order when the ultimate outcome of the case goes against him.

“Merely because of the fortuitous circumstance of the Voluntary Separation Scheme coming into effect before the transferred cases were finally dismissed by this Court by an order dated 25.04.2003, creating an illusion as though the last drawn pay included this  ad hoc  payment, it is not possible to go against the fundamental rule that the benefits of an interim order would automatically go when the party who secured it, failed in the final stage.”

Keeping in mind the above definition, if we go back to historical facts, it would be clear that the employees initiated the first round of litigation before various High Courts, for the grant of the benefit of revision of pay scales, way back in the year 1996, on the ground that the employees of other PSUs have been granted revision on par with the Government servants. It will thus be clear that what was claimed in the first round of litigation was not what was payable in accordance with the terms and conditions of employment. Therefore, this Court was clear in its interim order dated 18.08.2000 as to how 1the ad hoc payment ordered there under should be treated. Even in the final order, this Court made it clear that what was paid was only ad hoc.

The Court, hence, held that the ad hoc payment made pursuant to the interim orders will not form part of the wages. However, in view of the efflux of time and taking into account the fact that few employees are now no more, the Court directed the Management not to effect any recovery, if payment has already been made to any of the respondents or their families.

[Fertilizer Corporation of India Ltd. v. Rajesh Chandra Srivastava, 2022 SCC OnLine SC 417, decided on 07.04.2022]

*Judgment by: Justice V. Ramasubramanian

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: The Division Bench of Milind N. Jadhav and S.J. Kathawalla, JJ., refused to grant any ad-interim order in favour of ‘MEP’ Infrastructure Developers Ltd. (‘Petitioner’)  in view of the order dated 14-01-2022 passed by G.S. Patel, J. where the Court directed MEP Infrastructure to refrain from taking any action towards disposal of or creation of any third party rights in respect of its immovable properties in Maharashtra.

 

Facts:

SDMC being a statutory body is liable to collect toll taxes from vehicles entering into Delhi. It is one of the major sources of revenue for all the Municipal Corporations of Delhi. In order to collect such taxes SDMC had, by way of a tender process, awarded a contract to MEP Infrastructure Developers Ltd. at the highest bid of Rs. 1206 Crore per year for a period of five year.

MEP faltered in timely payment of the Rs. 1206 Crore divided on a weekly basis. After which SDMC started to recover the toll amounts from MEP.

The Commissioner of SDMC by exercising his powers under the DMC Act sought to recover toll tax by attachment of properties of MEP in Delhi and beyond.

In such exercise, SDMC successfully reached the doors of MEP in Maharashtra and obtained an order from Bombay High Court in October 2021, where the  Court had directed the local authorities to recover the monies against MEP as per the law. In such exercise, the local authorities of the respective district in Maharashtra have already attached a few properties of MEP.

However, to obstruct such exercise of recovery by SDMC through local functionaries, MEP filed another writ petition before Bombay High Court.

The Court by way of interim order dated February 14, 2022 directed MEP to refrain from taking any action towards disposal of or creation of any third party rights in respect of its immovable properties in Maharashtra. Further, High Court directed MEP to maintain balances in its Bank accounts as on date as a security towards the amounts due.

 

The review petition was filed seeking review of the Order dated 27-10-2021 (“Subject Order”) passed by this Court whereby this court had issued writ of mandamus against Respondent No. 2  to 5 herein to take action as per law and discharge their statutory duty.

 

Present Order:

The Court refused to grant ad interim relief to the MEP Infra for already being protected in view of the Order dated 14th January, 2022 passed by Justice G.S. Patel directing the parties to maintain status quo.

The matter is stood over to 04-03-2022.

[MEP Infrastructure Developers Ltd. v. South Delhi Municipal Corpn., Review Petition 9 of 2022, order dated 18-02-2022]

Mr Ravi Kadam, Senior Advocate with Mr Venkatesh Dhond, Senior Advocate a/w Mr Zal Andhyarujina, Senior Advocate a/w Mr Rashmin Khandekar, Ms Tanmayi Gadre, Mr Deepak Deshmukh, Ms Swati Singh and Mr Vivek Dwivedi by Naik & Naik for the Petitioner

Mr Sanjay Vashishtha a/w Ms Shreya Shrivastava and Ms Dishya Pandey for Respondent 1

Ms Neha Bhide, ‘B’ Panel Counsel for the State

*Suchita Shukla, Editorial Assistant has reported this brief.

Jammu and Kashmir and Ladakh High Court
Case BriefsHigh Courts

Jammu & Kashmir and Ladakh High Court: Sanjay Dhar, J., clarified the difference between Interim Award and Interim Order. The Bench stated,

“While passing an order under Section 17 (1)(ii)(e) of the Act of 1996, an arbitral Tribunal would be justified in considering the prima facie case, the balance of convenience and similar other factors at the time of passing such an order, while making an interim award under Section 31 (6) of the Act, the arbitral Tribunal has to be satisfied that there is an admission or acknowledgment of liability on the part of the party against which the award is proposed to be made.”

Background

The respondent-firm, being a supplier of defence equipments to the Indian Army and Para Military Forces, was given a contract for supply of 6250 pairs of Boot Anti Mine Infantry (hereinafter referred to as ‘BAMI’). As per clause Part IV i.e Special conditions of supply order of the Tender Agreement, the appellant had to make the payment to the respondent-firm instantly. It was alleged by the respondent-firm that no such payment had been made to it.

The respondent-firm claimed to have taken credit limit from the Axis Bank for the aforesaid supply and because of the delay in the payment, it had suffered a grave financial hardship and  was in urgent need of Rs.5,50,00,000/- against the outstanding payment of Rs.,16,80,00,000/- as interim relief so that the Bank would not declare it as NPA.

Allegations against the Respondent-firm

It was submitted by the government that delay in processing the bills had occurred due to non submission of correct documents by the respondent-firm. It was further submitted that certain complaints were received by the petitioner with regard to the shoes supplied by the respondent firm to the effect that several mine blast incidents had taken place, due to which the wearers of the shoes had lost limbs/suffered amputation. Accordingly, the petitioner had issued a defect report to the respondent-firm highlighting failure of the BAMI. Therefore, the government argued that any financial hardship suffered by the respondent-firm was due to its own misconduct as it had supplied substandard quality of BAMI which never met the General Staff Qualitative Requirements leading to amputations/loss of limbs in mine blast incidents and, therefore, the respondent-firm was not entitled to any interim relief.

Decision of the Arbitrator

Noticing that respondent-firm had supplied 6250 pairs of BAMI to the government and the BAMI successfully qualified the blast test and field trials of the Technical Evaluation done by the TEC constituted by the government and that the BAMI supplied by the respondent-firm were also inspected physically by the Inspection and Acceptance Board constituted by the petitioner, the Arbitrator had held that the respondent-firm was entitled to interim award amounting to Rs.5,50,00,000/- under the provisions of Section 31(6) of the Arbitration and Conciliation Act, 1996.

Observation and Analysis

Pursuing the impugned interim award, the Bench stated that though the Arbitrator had taken into consideration the factors, like prima facie case, the balance of convenience and irreparable loss, but the Tribunal had not given any finding as to whether there was any admission of claim on the part of the government. The Bench held that without there being a finding on this aspect of the matter, it was not open to the Arbitrator to pass an interim award in favour of the respondent-firm simply because it was reeling under the burden of loan and interest accruing thereon. Hence, the Bench held that the Arbitrator was not deciding an application under Section 17 (1)(ii)(e) of the Act, 1996, but it was deciding an application under section 31 (6) of the said Act and, it had landed itself into an error by applying the parameters necessary for passing an order under Section 17 (1)(ii)(e).

Interim Order vs Interim Award

Opining that an interim award cannot be equated to an interim order that can be passed by an arbitral Tribunal under Section 17 (1)(ii)(e) of the Act of 1996, the Bench stated,

“There is a clear distinction between the powers of an arbitral Tribunal to pass orders by way of an interim measures in terms of Section 17 (1)(ii)(e) of the Act of 1996 and an interim award in terms of Section 31 (6) of the said Act.”

While passing an order under Section 17 (1)(ii)(e) of the Act of 1996, an arbitral Tribunal would be justified in considering the prima facie case, the balance of convenience and similar other factors at the time of passing such an order, while making an interim award under Section 31 (6) of the Act, the arbitral Tribunal has to be satisfied that there is an admission or acknowledgment of liability on the part of the party against which the award is proposed to be made and such an admission should be clear, unambiguous and definite and should not require any evidence to prove at the stage of the trial.

Verdict

In the backdrop of above, it was held that the Arbitrator had, while passing the impugned interim award, committed a patent illegality appearing on the face of it and, thus, the same deserved to be quashed and set aside.

Accordingly, the impugned interim award passed by the Arbitrator was quashed and the application of respondent-firm for grant of interim award was remanded back to the Arbitrator with a direction to consider the same afresh on merits. [Union of India v. Gee Kay Engineering Industries, 2021 SCC OnLine J&K 678, decided on 16-09-2021]

Kamini Sharma, Editorial Assistant has reported this brief.

Appearance by:

For the Union of India: Vishal Sharma ASGI

For the Respondent-firm: M/S Guneet Choudhary & Ashwani Khajuria Advocates

Case BriefsHigh Courts

Delhi High Court: Jayant Nath, J., did a comprehensive analysis of the matter involving trademark infringement.

Legacy of Rajdhani

Plaintiff had originally conceived and adopted the trademark/label ‘Rajdhani’ for several products. Plaintiff company was formed in 1983 and carried forward the said business under the trademark/label’ Rajdhani’.

Trademarks/Labels are owned by the plaintiff company and ‘Rajdhani Flour Mills Limited’ as a sister concern of the plaintiff company vide an agreement.

Further, it was stated that the plaintiff and Rajdhani Flour Mills have co-existing rights in the trademark/labels in question.

It is stated that the plaintiff came into existence in 1983. Therefore, there is no question of the plaintiff using the composite trade mark ‘Rajdhani’ since 1966 as claimed.

Even if for some reason it was assumed that the plaintiff had been using the trademark since inception, the defendants have been continuously using the trademark ‘Rajdhani’ and its variants since 1965.

Analysis, Law and Decision

Whether plaintiff has any rights to the trade mark RAJDHANI keeping into account the alleged memorandum of family settlement?

It was claimed that the origin of the trade mark in question RAJDHANI was in 1966, present director of the plaintiff conceived and adopted the trade mark/label.

Prima facie, Court opined that the plea of defendants that pursuant to the family settlement, no rights flow to the plaintiff was without merits.

Adding to the above, Bench stated that the said settlement conferred rights on the trade mark RADHANI in favour of the plaintiff/ director of the plaintiff. The mark has also been registered in the name of the plaintiff. Admittedly, no steps have been taken by the plaintiff for registration of the assignment of the trade mark in favour of the plaintiff. However, it was not urged before the court that it was mandatory to register the assignment in favour of the plaintiff under the Trade Marks Act.

Merely because the defendant’s trademark is not registered would not entitle the plaintiff to any interim injunction. Supreme Court’s decision in Neon Laboratories Ltd v. Medical Technologies Ltd., (2016) 2 SCC 672 was relied upon.

From the above decision of the Supreme Court, what follows is that the ‘first in the market’ test has always enjoyed pre-eminence.

The rights of a prior user will normally override those of the subsequent user even though it had been accorded registration of its trademark.

Prima facie the reliance of the defendant on documents to show the date of user of the trademark was misplaced.

In the light of the documents on record, it is difficult to, at this stage, prima facie without leading further evidence to accept the plea of the defendant that it has been using the trademark ‘Rajdhani’ since 1965 as alleged.

Prima Facie the defendant had failed to show prior user of the trademark in question.

With regard to alleged delay in approaching the Court, Bench held that delay per se may not always be sufficient to disentitle the plaintiff to grant of an interim order.

Adding to the above, Court stated that prima facie in view of the registered Memorandum of Family Settlement dated 31-03-2009 filed by the plaintiff, the plaintiff traces its user of the trademark since 1966. The plaintiff had also placed on record invoices starting from the year 2006 pertaining to the said products with the trademark in question.

Hence, High Court held that prima facie, the plaintiff was the first in the market with the trademark ‘Rajdhani’ and was the registered owner of the said trademark.

The defendant was using the trademark ‘Rajdhani’ for allied and cognate goods which was identical as that of the trademark of the plaintiff and prima facie infringing the rights of the plaintiff.

Therefore, an interim injunction was passed in favour of the plaintiff against the defendants restraining defendants its directors, proprietors, etc. from using in any manner the trademark ‘Rajdhani’ or any other trademark which is deceptively similar to the trademark of the plaintiff.

In view of the above application was disposed of. [Victoria Foods (P) Ltd. v. Rajdhani Masala Co., 2021 SCC OnLine Del 4224, decided on 1-09-2021]

Advocates before the Court:

For the Plaintiff: Dayan Krishnan, Sr. Adv. with Rohit Gandhi, Manish Singhal, Adish Srivastava and Sukrit Seth, Advs.

For the Defendants: Kapil Sibal & Chander Lall, Sr. Advs. with Ankur Singhal, Mr.Sajad Sultan and Nancy Roy, Advs.

Case BriefsHigh Courts

Punjab and Haryana High Court: Arun Monga, J., had directed to maintain status quo and not to appoint anyone on the post of the petitioner who had been allegedly terminated due to his suspected participation in farmer’s protest in New Delhi.

The petitioner was appointed to the post of Senior Treatment Supervisor (STS) under National Rural Health Mission (NRHM) by Civil Surgeon-cum-Chairman, Executive Committee, District Health and Family Welfare, Mewat. The petitioner contended that he had been serving uninterruptedly since 2014.  In spite of that, merely on a vague allegation/suspicion of the petitioner having participated in the strike call given by farmers in Delhi on 05-02-2021, his services had been summarily terminated by the impugned order dated 25-02-2021 without holding any inquiry and giving any show-cause notice or opportunity of being hear in-person to the petitioner. To justify the delay in approaching the Court, the petitioner contended that due to current pandemic scenario, he was earlier unable to challenge the impugned termination order as the Courts were working under certain restrictions.

In the light of the above submissions, the Bench passed an interim order directing the State to keep the post of Senior Treatment Supervisor which was earlier manned by the petitioner vacant.[Rajuddin v. State of Haryana, CWP No. 10642 of 2021, decided on 28-06-2021]

Kamini Sharma, Editorial Assistant has reported this brief.

Appearance before the Court by:

For the Petitioner: Advocate Mohd. Arshad

For the State of Haryana: DAG, Saurabh Mohunta

Case BriefsHigh Courts

Karnataka High Court: P.S. Dinesh Kumar, J., rejects the petition seeking the writ of certiorari against the order of NCLT imposing heavy costs.

Facts

The petitioner company availed a loan from the Bank of Maharashtra towards its infrastructure development and various other works. Upon delay in payment of interest, the bank issued a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Sale notice and public notice were subsequently published. By an interim order passed by the present court, the Bank was allowed to proceed with the auction provided it shall not confirm the sale.

Subsequently, the respondent also moved to the NCLT under Section 7 of the Insolvency and the Bankruptcy Code, 2016 wherein the tribunal appointed an Insolvency Resolution Professional (IRP) to facilitate the process. Noticeably, while the case was before NCLT, the petitioner sought time for settling the issue and submitting its objections on several occasions through as many as thirteen adjournment orders.

Petitioner’s Contentions

It was submitted by the counsel for the petitioner, Vivek Holla, that despite sincere attempts, the interest amount could not be deposited either before the NCLT or the present Court. Further, no adequate opportunity of filing the counter was provided at the hearing before NCLT. Lastly, the tribunal was devoid of any jurisdiction upon the instant matter as on the date of application under Section 7, the debt was time-barred.

 Respondent’s Contentions

The counsel for the respondent, M. Jagadeesh submitted that the petition by an erstwhile Director of the Company is not maintainable and further the conduct of the petitioner also disentitles him from any other discretionary relief. The counsel relying on the case of Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, contended that once IRP is appointed, the erstwhile directors who are no longer in management cannot stand in appeal.

Court’s Observation

The Court rejected the present petition recognizing several reasons. Firstly, the petitioner company is represented by its erstwhile director, secondly, the petitioner company has willfully defaulted on several occasions, giving false assurances with regards to the settlement before the NCLT and thirdly, the impugned order is an appealable order. With respect to the court order and an undertaking, the court remarked, ‘An assurance is a promise and stands on a higher footing than an order passed by Tribunals or Courts because promises or undertakings are given voluntarily whereas orders are imposed by an authority.’ Further relying on the judgment of Prestige Lights Ltd. v. State Bank of India, (2007) 8 SCC 449, it was held that an order passed by a competent court, interim or final, has to be obeyed without reservation.[Alpine Wineries (P) Ltd. v. Pridhvi Asset Reconstruction Company, WP No. 1631 of 2020, decided on 04-09-2020]

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]

Jharkhand High Court
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]

Kerala High Court
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]

Kerala High Court
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]