Case BriefsSupreme Court

Supreme Court: Dealing with the issue of limitation in cases under the Insolvency and Bankruptcy Code, 2016 (IBC), the bench of Indira Banerjee* and JK Maheshwari, JJ has held that the pendency of the proceedings in a parallel forum is not sufficient cause for the delay in filing an application under Section 9 of the IBC if by the time the application was filed, the claim had become barred by limitation.

Background

On or about 22.12.2015, the Respondent filed a Winding Up petition dated 04.07.2015 in the Madras High Court.

On 05.01.2016, the High Court returned the Winding Up petition to the Respondent for curing of defects. The Winding Up petition was represented on 03.02.2016, but again returned on 24.05.2016 with an endorsement to comply with the defects as intimated earlier.

The IBC came into force on 01.12.2016. Thereafter the Respondent issued a demand notice on 14.11.2017 under Section 8(1) calling upon the Appellant to repay its dues.

On 30.03.2018, the Respondent filed petition under Section 9 of the IBC for initiation of the Corporate Insolvency Resolution Process (CIRP) in the NCLT. By an order dated 02.01.2019, the Adjudicating Authority (NCLT) rejected the application as barred by limitation.

The Respondent appealed to the NCLAT under Section 61 of the IBC. By the impugned judgment and order, the NCLAT set aside the order dated 02.01.2019 passed by the Adjudicating Authority (NCLT) rejecting the application of the Respondent under Section 9 of the IBC and remitted the case to the Adjudicating Authority for admission after notice to the parties. The NCLAT held :-

“8. In the present case, it is not in dispute that right to apply under Section 9 accrued to the Appellant on 1st December, 2016, when ‘I&B Code’ came into force. Therefore, we find that the application under Section 9 filed by the Appellant is within the period of three years from the date of right to apply accrued.”

Analysis

The provisions of the Limitation Act are applicable to proceedings under the IBC as far as may be. Section 14(2) of the Limitation Act which provides for exclusion of time in computing the period of limitation in certain circumstances, provides as follows:

“14. Exclusion of time of proceeding bona fide in court without jurisdiction.— (1) … (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.”

Similarly, under Section 18 of the Limitation Act, an acknowledgment of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing of a fresh period of limitation, from the date on which the acknowledgment is signed. However, the acknowledgment must be made before the period of limitation expires.

Proceedings in good faith in a forum which lacks jurisdiction or is unable to entertain for like nature may save limitation. Similarly, acknowledgment of liability may have the effect of commencing a fresh period of limitation.

The Supreme Court observed that for the purpose of limitation, the relevant date is the date on which the right to sue accrues which is the date when a default occurs.

The condition precedent for condonation of the delay in filing an application or appeal, is the existence of sufficient cause. Whether the explanation furnished for the delay would constitute “sufficient cause” or not would be dependent upon facts of each case. However, there cannot be any straitjacket formula for accepting or rejecting the explanation furnished by the Appellant/applicant for the delay in taking steps.

When an appeal is filed against an order rejecting an application on the ground of limitation, the onus is on the Appellant to make out sufficient cause for the delay in filing the application. The date of enforcement of the IBC and/or the date on which an application could have first been filed under the IBC are not relevant in computation of limitation.

“It would be absurd to hold that the CIRP could be initiated by filing an application under Section 7 or Section 9 of the IBC, within three years from the date on which an application under those provisions of the IBC could have first been made before the NCLT even though the right to sue may have accrued decades ago.”

Further, the fact that an application for initiation of CIRP, may have been filed within three years from the date of enforcement of the relevant provisions of the IBC is inconsequential. What is material is the date on which the right to sue accrues, and whether the cause of action continuous.

In the case at hand, the last acknowledgment was in 2013 and the Madras High Court neither suffered from any defect of jurisdiction to entertain the winding up application nor was unable to entertain the winding up application for any other cause of a like nature.

As the limitation for initiation of winding up proceedings in the Madras High Court stopped running on the date on which the Winding Up petition was filed, the initiation of proceedings in Madras High Court would not save limitation for initiation of proceedings for initiation of CIRP in the NCLT under Section 7 of the IBC.

[Tech Sharp Engineers Pvt Ltd v. Sanghvi Movers ltd, 2022 SCC OnLine SC 1249, decided on 19.09.2022]


*Judgment by: Justice Indira Banerjee

Case BriefsSupreme Court

   

Supreme Court: In a suit for specific performance the Division Bench of Indira Banerjee* and Hrishikesh Roy, JJ., explained the terms willingness and readiness to pay. Reversing the concurrent orders of the Courts below, the Court held that the Respondent Plaintiff may have been willing to perform his part of the contract, it however appears that he was not ready with funds and was possibly trying to buy time to discharge his part of the contract. The Court noted,

“Making a subsequent deposit of balance consideration after lapse of seven years would not establish the Respondent Plaintiff's readiness to discharge his part of the contract.”

Background

The Respondent Plaintiff alleged that there was an agreement between him and the appellant to sell the disputed property for a consideration of Rs.15,10,000 out of which he had paid a sum of Rs.10,001 in advance. It was further agreed between the parties, that the Respondent Plaintiff would get the sale deed registered on or before 15-03-2003 upon payment of the full sale consideration.

The genesis of the case was that though the Respondent Plaintiff had approached the appellant with the balance consideration several times and requested to execute the sale deed in his favour, the appellant kept postponing the execution of the sale deed on one pretext or the other. On the contrary, the appellant contended that the Respondent Plaintiff was never ready or willing to perform his part of the contract.

Impugned Decision

The Trial Court found that the Respondent Plaintiff was ready and willing to perform his part of the contract, and thus entitled to the relief of specific performance. Therefore, the Trial Court decreed the suit and directed the appellant to receive the balance sale consideration of Rs.15 lakhs and execute the sale deed in favour of the Respondent Plaintiff. The Trial Court's decision was affirmed by the Madras High Court in appeal.

Willingness and Readiness to Pay

Section 16 (c) of the Specific Relief Act, 1963 (prior to amendment w.e.f. 01-10-2018) bars the relief of specific performance of a contract in favour of a person, who fails to aver and prove his readiness and willingness to perform his part of the contract.

The Court noted that to aver and prove readiness and willingness to perform an obligation to pay money, in terms of a contract, the plaintiff would have to make specific statements in the plaint and adduce evidence to show availability of funds to make payment in terms of the contract in time. In other words, the plaintiff would have to plead that he has sufficient funds or is in a position to raise funds in time to discharge his obligation under the contract.

Relying on Acharya Swami Ganesh Dassji v. Sita Ram Thapar, (1996) 4 SCC 526, the Court opined that there is a distinction between readiness and willingness to perform the contract and both ingredients are necessary for the relief of Specific Performance. While readiness means the capacity of the Plaintiff to perform the contract which would include his financial position, willingness relates to the conduct of the Plaintiff.

Considering that no evidence was adduced on behalf of the Respondent Plaintiff as to how he was in a position to pay or make arrangements for payment of the balance sale consideration within time; as his balance sheet dated 31-03-2003 revealed that he did not have sufficient funds to discharge his part of the contract, the Court held that the Courts below have erred in not adjudicating upon this vital issue except to make a sweeping observation that, given that the Respondent Plaintiff was a businessman he had sources to arrange the balance funds.

Limitation Period

Following the findings in Saradamani Kandappan v. S. Rajalakshmi, (2011) 12 SCC 18, the Court opined that while exercising discretion in suits for Specific Performance, the Courts should bear in mind that when the parties prescribed a time for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored. Similarly, every suit for Specific Performance need not be decreed merely because it is filed within the period of limitation, by ignoring time limits stipulated in the agreement.

Hence, the Court opined that the fact that the limitation is three years does not mean that a purchaser can wait for one or two years to file a suit and obtain Specific Performance. The Court observed that the three-year period is intended to assist the purchaser in special cases, i.e., where the major part of the consideration has been paid and possession has been delivered in part performance, where equity shifts in favour of the purchaser.

“The courts will also frown upon suits which are not filed immediately after the breach/refusal.”

Accordingly, the Court held that the fact that the suit had been filed after three years, just before expiry of the period of limitation, was also a ground to decline the Respondent Plaintiff the equitable relief of Specific Performance for purchase of the immovable property.

Additionally, the Court noted that the Court could not overlook the fact that the suit property is located in the industrial town of Hosur located about 30/40 kms. from Bengaluru and there is a phenomenal rise in the price of real estate in Hosur.

Conclusion

In view of the foregoing, the Court held that the Respondent Plaintiff was not entitled to the relief of specific performance. The appeal was allowed and the impugned judgment of the High Court, as well as the judgment and decree of the Trial Court, were set aside.

The appellant was directed to return the earnest money to the Respondent Plaintiff, within 4 weeks with interest at the rate of 7% per annum from the date of deposit of the same, till the date of refund.

[U.N. Krishnamurthy v. A.M. Krishnamurthy, 2022 SCC OnLine SC 840, decided on 12-07-2022]

*Judgment by: Justice Indira Banerjee


Advocates who appeared in this case :

Senior Advocate Krishnan Venugopal with AOR Mahesh Thakur, Advocates, for the Appellants;

N.D.B Raju with AOR M.A. Chinnasamy, Advocates, for the Respondent.


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

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): While deciding the instant revision petition under Section 21(b) of Consumer Protection Act, 1986, the Bench of Dinesh Singh (Presiding Member) and Karuna Nand Bajpayee, J., (Member) observed that points of law regarding “limitation” and “consumer” have to be applied on the facts of the case, and the facts can only be determined by leading evidence before the forum of first instance (in rare cases by filing additional evidence before the forum of appellate jurisdiction) and should not be raised in revision just for the sake of prolonging the lis.

Facts and Legal Trajectory of the Case: The complainant (respondent in the instant petition) insured his truck with the insurance company for an assured sum of Rs 9,60,000 for the period from 04-10-2006 to 03-10-2007. During the subsistence of the policy, the truck met with an accident on 19-10-2006. The complainant claimed loss of Rs 6,25,020. The surveyor appointed by the insurance company assessed the loss at Rs 2,30,000 which was intimated to the complainant via a letter dated 28-04-2010. The letter stated that the insurance company will settle the claim at Rs 1,04,316 and sent therewith pre-receipted vouchers for discharge in full. Aggrieved with the quantum of the settlement, the complainant filed a complaint before the District Commission on 08-06-2010.

Upon perusal, the District Commission assessed the loss at Rs. 5,27,770 and ordered the insurance company to pay the said sum to the complainant along with compensation of Rs. 20,000. The insurance company appealed to the State Commission which made its own independent appraisal of the case and assessed the loss at Rs. 4,50,000. It ordered the insurance company to pay the said sum to the complainant along with compensation of Rs. 20,000/- as ordered by the District Commission within two months of receipt of its Order, failing which it would carry interest at the rate of 15% per annum till payment.

Aggrieved with the decision, the insurance company then approached the NCDRC.

Contentions: Counsels for the insurance company argued that the surveyor’s report should not have been overruled by the State Commission. They also contended that the case was barred by limitation since the accident occurred on 19-10-2006 and the complaint was filed on 08-06-2010 which was beyond the two-year period stipulated under the Consumer Protection Act, 1986.

The counsel further contended that the vehicle was purchased under a hire-purchase agreement which shows that the same was being used for commercial activities and therefore the complainant was not a ‘consumer‘ under Section 2(1)(d) of the 1986 Act.

Per contra, the counsels for the complainant argued that the question of limitation was not raised by the insurance company either at the forum of original jurisdiction (District Commission) or at the forum of appellate jurisdiction (State Commission).

Observations: Perusing the trajectory of the dispute, the Bench made the following observations-

  • The District Commission had cogent reasons to overrule the surveyor’s report. The Bench noted that the District Commission made its appraisal after examining the entire evidence which also included the vouchers relating to the repairs undertaken on the accident-hit vehicle. The State Commission then took due note of the surveyor’s report as well as of the District Commission’s appraisal and after considering the entire evidence made its own assessments.

  • The Bench pointed out that the counsels of the insurance company could not explain the reasons that when the surveyor had assessed the loss at Rs. 2,30,000 what caused the insurance company to settle the claim at only Rs. 1,04,316. The counsels also could not explain the reasons that when the accident occurred in 2006, what caused the inordinate delay of sending intimation of settlement in 2010 i.e., after over 3.5 years; and whether the delay was on the part of the insurance company or on the part of the complainant or both.

  • Vis-a-vis the contention regarding limitation, the Bench upon examining the material placed before itself, observed that the insurance company intimated the settlement of claim via letter dated 28-04-2010. The complainant filed his complaint on 08.06.2010 which was well within the limitation period of two years provided under Section 24-A (1) of Consumer Protection Act, 1986. “The argument of the counsel that the limitation should be counted from the date of the accident is patently irrational, there is a distinct distinction between the date on which the accident occurred and the date on which the cause of action arose”.

  • Regarding the contention that the complainant is not a consumer as per the concerned provisions of the 1986 Act, the Bench pointed out that Section 2(1)(d) precludes a person who hires or avails of any service for any “commercial purpose” but the explanation thereto makes it clear that “commercial purpose” does not include services availed exclusively for the purposes of earning livelihood by means of self-employment. The Bench also noted that this objection was neither raised before the District Commission nor in appeal before the State Commission. “In other words, it is patently clear that the opportunity to rebut the same was not duly provided to the complainant before the District Commission or even before the State Commission”.

  • It was further observed that in matters where it is necessarily to be seen whether the activity undertaken was for commercial purpose or whether it was exclusively for the purpose of earning a livelihood through self-employment; much depends upon the facts. Thus, adequate opportunity to both sides must be made available so that they may furnish out the relevant facts and evidence.In such cases if the plea is not raised at the appropriate stage when it ought to have been raised and where the opportunity to furnish an adequate rebuttal in that regard could have been availed by the other side, it becomes highly doubtful whether such a plea seeking ouster of the jurisdiction may be raised at a belated stage”.

Conclusion and Decision: With the afore-stated observations, the Bench concluded that there was no misappropriation of evidence on the part of the State Commission requiring a de novo re-appreciation in revision. Given the facts of the instant case, the award appears to be just and equitable. There is no jurisdictional error or legal principle ignored or erroneously ruled or miscarriage of justice in the impugned Order of the State Commission.

The Commission also termed the instant revision petition to be frivolous one, filed simply to prolong the case.

The Commission also directed that the amount (if any) deposited by the insurance company with the District Commission, along with interest (if any) accrued, shall be released by the District Commission to the complainant by way of ‘payee’s account only’ demand draft as per the procedure. The balance awarded amount shall be made good by the insurance company, failing which the District Commission shall undertake execution, for ‘enforcement’ and for ‘penalty’ as per the law.

[National Insurance Co. Ltd. v. Prabodh Kumar Swain, 2022 SCC OnLine NCDRC 364, decided on 14-07-2022]


Advocates who appeared in this case :

S. K. Ray, Advocate with Nikita Chaturvedi, Advocates, for the Petitioner;

Subesh Kumar Sahu, proxy counsel for Sanjib Kumar Mohanty, Advocates, for the Respondent;

None, for the Respondent No.2.


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Madras High Court
Case BriefsHigh Courts

Madras High Court: In a case where show cause notices were sent by Assistant Commissioner of Customs (Respondent 4) for short collection of duty due to non-levy of anti-dumping duty in terms of Section 28(1) of Customs Act, 1962, a Division Bench of R. Mahadevan and J. Sathya Narayana Prasad, JJ. placed reliance on the doctrine of ‘substantial compliance’ to hold that the notices are not barred by limitation.

The petitioner firm imported three consignments of Ascorbic Acid for manufacture of medicines and paid the customs duty, following which the goods were released. But subsequently, Respondent 4 issued notices under section 28(1) of Customs Act, 1962 (‘the Act’). While the CESTAT dismissed the two appeals out of three filed by the petitioner. Aggrieved by the final order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 11-10-2004, the petitioner has appealed for quashing the same.

Counsel for appellant submitted that as per the provisions of Section 28 of the Act, a show cause notice has to be served within the statutory time limit of six months, from the date of payment of the customs duty. Whereas, in the present matter, the fourth respondent did not comply with these provisions. Hence, the notices served after the expiry of the limitation period were barred as such. He also contended that the 2nd and 3rd Bills of Entry were not duly served according to the said procedure in the Act. Further referring to Sections 28(1) and (3) of the Act, the terms ‘relevant date’ and ‘serve’ were interpreted to show that there was no actual delivery of the impugned documents to the recipient.

Counsel for respondents submitted that with regards to the provisions of Section 28 and Section 153 of the Act, Respondent 4 delivered the notices within the limitation period, according to the statutory procedure.

The Court identified that the primary issue at hand was whether the show cause notices in the respect of the two bills of entry, issued by the Respondent 4 were barred by limitation as per Section 28(1) of the Act. And thus, the Court noted that the notices were duly served with adherence to the impugned statute and that the CESTAT had issued correct orders. Reliance was placed on the case of Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, (2011) 1 SCC 236, to elucidate the doctrine of ‘substantial compliance’ that formed an integral part of the decision of this Court.

It was held as follows:

Doctrine of Substantial Compliance

The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted on some minor or in consequent aspects which cannot be described as the “essence” or the “substance” of the requirements.

Substantial compliance means “actual compliance in respect to the substance essential to every reasonable object of the statute” and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed.

The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted.

34. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the “substance” or “essence” of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempt at compliance may not be sufficient, but actual compliance with those factors which are considered as essential.”

The Court thus held that the demand notices issued by the fourth respondent were not barred by limitation and thus, the order of the CESTAT was upheld. Finally, it dismissed the appeal for writ petitions and closed the related miscellaneous petitions as well.

[Lalchand Bhimraj v. CESTAT, 2022 SCC OnLine Mad 3930, decided on 30-06-2022]


Advocates who appeared in this case :

J. Sivanandaraaj, Advocate, for the Appellant;

T. Pramod Kumar Chopda, Senior Standing Counsel, Advocate, for the Respondent.


*Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The bench of MR Shah* and BV Nagarathna, JJ has rejected the view taken by the Karnataka High Court and ITAT, Bangalore that the requirement of furnishing a declaration under Section 10B (8) of the Income Tax Act, 1961 (IT Act) is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The Court held that the assessee shall not be entitled to the benefit under Section 10B (8) of the IT Act on noncompliance of the twin conditions as provided under Section 10B (8) of the IT Act.

In the case at hand, when the assessee submitted its original return of income under Section 139(1) of the IT Act on the due date i.e. 31.10.2001, it specifically stated that it is a company and is a 100% export-oriented unit, entitled to claim exemption under Section 10B of the IT Act and therefore no loss is being carried forward. However, thereafter the assessee filed the revised return of income under Section 139(5) of the IT Act on 23.12.2002 and filed a declaration under Section 10B (8) which admittedly was after the due date of filing of the original return under Section 139(1), i.e., 31.10.2001.

The ITAT as well as the High Court held that for claiming the so-called exemption relief under Section 10B (8) of the IT Act, furnishing the declaration to the assessing officer is mandatory but furnishing the same before the due date of filing the original return of income is directory. Aggrieved by the decision, the Revenue approached the Supreme Court.

The Supreme Court observed that the High Court and ITAT is erroneous and contrary to the unambiguous language contained in Section 10B (8) of the IT Act which provides that  “where the assessee, before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of Section 10B may not be made applicable to him, the provisions of Section 10B shall not apply to him for any of the relevant assessment years”.

Hence, for claiming the benefit under Section 10B (8), the twin conditions of furnishing the declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section (1) of Section 139 of the IT Act are required to be fulfilled and/or satisfied. Both the conditions to be satisfied are mandatory.

It cannot be said that one of the conditions would be mandatory and the other would be directory, where the words used for furnishing the declaration to the assessing officer and to be furnished before the due date of filing the original return of income under subsection (1) of section 139 are same/similar.”

The Court also considered the facts that in the case at hand the assessee filed its original return under Section 139(1) and not under Section 139(3). The revenue submitted that the revised return filed by the assessee under Section 139(5) can only substitute its original return under Section 139(1) and cannot transform it into a return under Section 139(3), in order to avail the benefit of carrying forward or set-off of any loss under Section 80 of the IT Act.

Agreeing with the Revenue’s submission, the Court explained,

“The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under Section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or setoff of any loss. Filing a revised return under Section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed under Section 139(1) of the IT Act.”

Therefore, it was held that claiming benefit under Section 10B (8) and furnishing the declaration as required under Section 10B (8) in the revised return of income which was much after the due date of filing the original return of income under Section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under Section 139(1) of the Act.

Ruling in favour of the Revenue, the Court held that for claiming the benefit under Section 10B (8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under Section 139(1) are to be satisfied and both are mandatorily to be complied with.

Setting aside the judgment of High Court and ITAT, the Court held that the assessee shall not be entitled to the benefit under Section 10B (8) of the IT Act on noncompliance of the twin conditions as provided under Section 10B (8) of the IT Act.

[CIT v. Wipro Ltd., 2022 SCC OnLine SC 831, decided on 11.07.2022]


*Judgment by: Justice MR Shah


Counsels

For Revenue: ASG Balbir Singh

For Assessee: Senior Advocate S. Ganesh

Case BriefsSupreme Court

Supreme Court: In a case where the bench of S. Ravindra Bhat* and PS Narsimha, JJ was posed with the question as to whether the State can, merely on the ground of delay and laches, evade its legal responsibility towards those from whom private property has been expropriated, answering in negative, the bench held that the State cannot shield itself behind the ground of delay and laches as there cannot be a ‘limitation’ to doing justice.

Factual Background

The State of Himachal Pradesh utilised the subject land and adjoining lands for the construction of the ‘Narag Fagla Road’ in 1972-73, but allegedly no land acquisition proceedings were initiated, nor compensation given to the appellants or owners of the adjoining land.

Pursuant to a judgment by the Himachal Pradesh High Court directing the State to initiate land acquisition proceedings, a notification under Section 4 of the Land Acquisition Act, 1894 (hereafter ‘Act’) was issued on 16.10.2001 (published on 30.10.2001) and the award was passed on 20.12.2001 fixing compensation at ₹30,000 per bigha.

After a writ petition by similarly situated land owners was allowed by the High Court with the direction to acquire lands of the writ petitioners under the Act, with consequential benefits, the appellants approached the High Court in 2011, seeking compensation for the subject land or initiation of acquisition proceedings under the Act.

Relying on a Full bench decision of the High Court, it was held by the High Court in the impugned judgment that the matter involved disputed questions of law and fact for determination on the starting point of limitation, which could not be adjudicated in writ proceedings. The writ petition was disposed of, with liberty to file a civil suit in accordance with law.

Analysis

Right to property – Importance

While the right to property is no longer a fundamental right, it is pertinent to note that at the time of dispossession of the subject land, this right was still included in Part III of the Constitution. The right against deprivation of property unless in accordance with procedure established by law, continues to be a constitutional right under Article 300-A.

When it comes to the subject of private property, this court has upheld the high threshold of legality that must be met, to dispossess an individual of their property, and even more so when done by the State.

Can the State, merely on the ground of delay and laches, evade its legal responsibility towards those from whom private property has been expropriated?

The Court considered the facts of the present case that revealed that the State has, in a clandestine and arbitrary manner, actively tried to limit disbursal of compensation as required by law, only to those for which it was specifically prodded by the courts, rather than to all those who are entitled. This arbitrary action, which is also violative of the appellants’ prevailing Article 31 right (at the time of cause of action), undoubtedly warranted consideration, and intervention by the High Court, under its Article 226 jurisdiction.

Noticing that at every stage, the State sought to shirk its responsibility of acquiring land required for public use in the manner prescribed by law, the Court observed that,

“When seen holistically, it is apparent that the State’s actions, or lack thereof, have in fact compounded the injustice meted out to the appellants and compelled them to approach this court, albeit belatedly. The initiation of acquisition proceedings initially in the 1990s occurred only at the behest of the High Court. Even after such judicial intervention, the State continued to only extend the benefit of the court’s directions to those who specifically approached the courts. The State’s lackadaisical conduct is discernible from this action of initiating acquisition proceedings selectively, only in respect to the lands of those writ petitioners who had approached the court in earlier proceedings, and not other land owners.”

The Court also noticed that the State had merely averred to the appellants’ alleged verbal consent or the lack of objection, but had not placed any material on record to substantiate this plea. It was also unable to produce any evidence indicating that the land of the appellants had been taken over or acquired in the manner known to law, or that they had ever paid any compensation.

Further, despite the property not being adjoining, the subject land was acquired for the same reason – construction of the Narag Fagla Road, in 1972-73, and much like the claimants before the reference court, these appellants too were illegally dispossessed without following due process of law, thus resulting in violation of Article 31 and warranting the High Court’s intervention under Article 226 jurisdiction. Hence, in the absence of written consent to voluntarily give up their land, the appellants were entitled to compensation in terms of law.

Ruling

The State was, hence, directed to treat the subject lands as a deemed acquisition and appropriately disburse compensation to the appellants in the same terms as the order of the reference court dated 04.10.2005 and to consequently to ensure that the appropriate Land Acquisition Collector computes the compensation, and disburses it to the appellants, within four months from today. The appellants would also be entitled to consequential benefits of solatium, and interest on all sums payable under law w.e.f 16.10.2001 (i.e. date of issuance of notification under Section 4 of the Act), till the date of the impugned judgment, i.e. 12.09.2013.

Given the disregard for the appellants’ fundamental rights for decades after the act of dispossession, the Court also directed the State to pay legal costs and expenses of ₹ 50,000 to the appellants.

[Sukh Dutt Ratra v. State of Himachal Pradesh, 2022 SCC OnLine SC 410, decided on 06.04.2022]


*Judgment by: Justice S. Ravindra Bhat


Counsels

For appellants: Advocate Mahesh Thakur

For State: Advocate Abhinav Mukerji

Case BriefsSupreme Court

Supreme Court: In a case where the Development Plan was finalized in the year 2002, but the same was never implemented nor any action was taken for acquisition of the land under the Land Acquisition Act, 1894, the bench of Hemant Gupta* and V Ramasubramanian, JJ has held that the Bombay High Court’s direction to acquire land within a period of one year is in contravention of the time line fixed under the Maharashtra Regional and Town Planning Act, 1966.

In the present case, in 2016 i.e. after the expiry of the ten years’ time line, the appellants issued notice under Section 127 of the Act so as to purchase the reserved land within one year of the date of the notice. The Bombay High Court held that the reservation of land in the Development Plan stands lapsed as no declaration under Section 126 of the Maharashtra Regional and Town Planning Act, 1966 was published. However, the Planning Authority was given one year time to acquire the land once reserved.

The Supreme Court, however, disagreed with the High Court’s view and held that once the Act does not contemplate any further period for acquisition, the Court cannot grant additional period for acquisition of land. The land was reserved for a public purpose way back in 2002. By such reservation, the land owner could not use the land for any other purpose for ten years. After the expiry of ten years, the land owner had served a notice calling upon the respondents to acquire the land but still the land was not acquired.

“The land owner cannot be deprived of the use of the land for years together. Once an embargo has been put on a land owner not to use the land in a particular manner, the said restriction cannot be kept open-ended for indefinite period.”

The Court observed that the Statute has provided a period of ten years to acquire the land under Section 126 of the Act. Additional one year is granted to the land owner to serve a notice for acquisition prior to the amendment by Maharashtra in 2015. Such time line is sacrosanct and has to be adhered to by the State or by the Authorities under the State. Hence,

“The State or its functionaries cannot be directed to acquire the land as the acquisition is on its satisfaction that the land is required for a public purpose. If the State was inactive for long number of years, the Courts would not issue direction for acquisition of land, which is exercise of power of the State to invoke its rights of eminent domain.”

Consequently, the direction to acquire the land within one year was set aside by the Court.

[Laxmikant v. State of Maharashtra, 2022 SCC OnLine SC 349, decided on 23.03.2022]


*Judgment by: Justice Hemant Gupta

Case BriefsHigh Courts

It is the oft-repeated and a salutary principle of law that fraud and justice never dwell together (fraus et jus nunquam cohabitant)

Orissa High Court: Sashikant Mishra J. allowed the interim application (I.A.) and granted the relief sought and thereby cancelled the bail bonds executed erroneously.

The criminal petition i.e. CRLMC was filed by the petitioners under Section 482 Criminal Procedure Code i.e. Cr.P.C. to challenge the orders dated 06-09-2020/08-09-2020, 02-03-2021 and 03-05-2021 passed by the  Sessions Judge-cum-Special Judge, Malkangiri. The present application was filed by the State seeking recall of order dated 18-11-2021 passed in the above CRLMC mainly on the ground that such order was obtained by the accused petitioners by misleading the Court.

Counsel for petitioners submitted that the petition (I.A.) is not maintainable in law for the reason that as per Section 362 of Cr.P.C., the Court has no power to recall its own order after the same has been pronounced as it would amount to sitting in appeal over its own order.

Coounsel for respondents submitted that the averments contained in the CRLMC petition are product of misrepresentation of facts, inasmuch as, it is stated that the accused persons were arrested on 06-09-2020 but were produced on 08-09-2020 and accordingly, 180 days period was due to expire on 03-03-2021. Mr. Mishra further submitted that the petition for extension of time was filed and allowed before expiry of the 180 day period and charge sheet was also submitted before expiry of the extended period and therefore, no indefeasible right whatsoever accrued in favour of the petitioners for being released on default bail. But by completely misrepresenting such facts they have obtained the order, which is nothing but a fraud played on the Court and therefore, the order should be recalled.

Section 362 of Cr.P.C., which reads as under:

“362. Court not to alter judgement. Save as otherwise provided by this Code or by any other law for the time being in force, no Court, when it has signed its judgment or final order disposing of a case, shall alter or review the same except to correct a clerical or arithmetical error.”

 

The Court relied on judgment R. Rajeshwari v. H.N. Jagdish, (2008) 4 SCC 82 wherein it was held that although a specific bar has been created in regard to exercise of the jurisdiction of the High Court to review its own order and ordinarily, exercise of jurisdiction under Section 482 of the Code of Criminal Procedure would be unwarranted but in some rare cases, the High Court may do so where a judgment has been obtained from it by practicing fraud on it.

The Court observed that even otherwise Section 362 of the Code places a bar on the Court to ‘alter’ or ‘review’ its order or judgment. Once the judgment is pronounced and signed the Court becomes functus officio and therefore, no further alteration or review of the same is permissible save and except to correct clerical or arithmetical errors.

The Court stated that the bar under Section 362 of Cr.P.C. is not absolute and in any case, does not apply in case of recall of the order. There is no dispute that the inherent power of the High Court under Section 482 to give effect to any order under the Code, to prevent abuse of the process of Court or to secure the ends of justice. In case any of the three conditions exist, the High Court would be justified in exercising its jurisdiction.

The Court further observed that the impugned order was passed on erroneous premises as charge sheet was submitted two days after expiry of the extended period and since, the accused persons had not been produced nor their right to be released on default bail informed to them, the CRLMC was allowed by holding that they were entitled to be released on bail.

The court after perusing facts, calculating dates, analysing case laws observed that Court is unable to persuade itself to believe that it was a bonafide error on the part of the accused persons to miscalculate the date, rather, having regard to all the facts and circumstances noted hereinabove, it becomes more than evident that they had done so deliberately in order to obtain a favourable order. This is nothing but playing fraud on the Court. It goes without saying that but for such deliberate mis-presentation this Court would not have passed the order in question.

The Court stated that an order obtained by fraud cannot be allowed to subsist as it would amount to perpetrating a gross illegality. Even otherwise, the High Court, as a Court of record, has inherent power to correct the record. It, as a Court of record, has a duty to keep its records correctly and in accordance with law. In case any apparent error is noticed by the High Court or brought to its notice in respect of any orders passed by it, the High Court has not only the power but a duty to correct it. This is a plenary power of the High Court being a superior Court and a Court of record.

The Court made it amply clear that in the instant case, the order in question was passed exercising power under Section 482 of the Code which is indisputably, a plenary power. Therefore, once it comes to light that the party concerned was not entitled to the order passed in its favor, which is nothing but an abuse of the process of Court, it would be perfectly legal as also justified in invoking the very same power under Section 482 of the Code so as to prevent such abuse and to secure the ends of justice. True, such power has to be exercised sparingly but if the circumstances so warrant, the Court is expected to rise to the occasion to set right the wrong.

The Court thus held “it becomes evident that the accused petitioners were not entitled to default bail but had obtained such order by deliberately misrepresenting facts before this Court. As such, the order in question cannot be allowed to subsist and deserves to be set aside.”

Concluding Remark:

 IO being a responsible police officer in charge of investigating an offence as heinous as one under the NDPS Act carrying stringent punishment, is not expected to show such irresponsible conduct in calculating the time-period for completion of investigation while making prayer for extension of such time. There is no gainsaying about the ill-effect of such callousness and irresponsible conduct. The case at hand is a case in point. This Court therefore hopes and trusts that the higher police authorities shall take note of this lapse and issue necessary instructions to be followed by the IOs, particularly in NDPS cases [Saba Bisoi v. State of Odisha, 2022 SCC OnLine Ori 948, decided on 15-03-2022]

Appearances

For Petitioners : M/s. Jugal Kishore Panda, S.S. Dash, B. Karna & A.P. Dash

For Opp. Parties : Mr. S.K. Mishra


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: In a case where the bench of Ajay Rastogi and Abhay S. Oka, JJ was deciding an issue relating to Bihar Public Works Contracts Disputes, the bench has held that if any of the provisions of the Bihar Public Works Contracts Disputes Arbitration Tribunal Act, 2008 are in conflict with the Arbitration and Conciliation Act, 1996, the 2008 Act shall prevail to the extent of the conflict.

Relevant Provisions under the 2008 Act

Under Section 9 (1) of the 2008 Act, when any dispute arises between the parties to the contract, irrespective of the fact whether such contract does or does not contain an arbitration clause, either party can refer the dispute in writing in the prescribed form to the Arbitration Tribunal. The dispute can be referred within one year from the date on which the dispute has arisen.

Section 22 of the 2008 Act starts with a non-obstante clause which provides that notwithstanding anything contained in any other law, rule, order, scheme, or contract, any dispute as defined under section (e) of Section 2 shall be regulated by the provisions of the 2008 Act in the absence of an arbitration clause in the agreement.

In view of Section 8 of the 2008 Act, if any of the provisions of the 2008 Act are in conflict with the 1996 Act, the latter shall prevail to the extent of the conflict.

Analysis

In the case at hand, there was no arbitration clause in the agreement between the parties. The respondent, in the present case it was argued, did not refer the dispute to the Arbitration Tribunal within one year from the date on which the dispute had arisen as provided under Section 9(1) of the 2008 Act. The Arbitration Tribunal had condoned the delay.

Considering the provisions of both the Acts and also the facts of the case at hand, the Court observed that as there is no arbitration clause in the agreement between the parties, the provisions of the 1996 Act will have no application and the reference to the Arbitration Tribunal will be governed by the 2008 Act.

As the 2008 Act provides for a specific period of limitation, Article 137 of the schedule in the 1963 Act will not apply.

Further, under Section 18 of the 2008 Act, the Arbitration Tribunal has the power to condone the delay. Therefore, under Article 136 of the Constitution of India, the Court refused to interfere with the award on the ground that the reference was barred by limitation.

[Bihar Industrial Area Development Authority v. Rama Kant Singh, 2022 SCC OnLine SC 320, decided on 15.03.2022]


*Judgment by: Justice Abhay S. Oka


Counsels

For appellants: Senior Advocate Rajiv Dutta

Case BriefsHigh Courts

Rajasthan High Court: A Division Bench of Akil Kureshi CJ and Sudesh Bansal J ranted interim relief and stayed the provisional attachment order.

 

The facts of the case is such that the petitioner’s bank account was placed under provisional attachment by an order dated 03-12-2020 in exercise of powers under Section 83 of the Central Goods and Services Tax Act (for short ‘CGST Act’) by the respondents. Hence petition was filed seeking interim relief of stay of such order.

Counsel for petitioner submitted that in terms of sub-section (2) of Section 83 of CGST Act such provisional attachment cannot survive beyond a period of one year.

The Court observed that Section 83 of the CGST Act pertains to provisional attachment to protect the revenue in certain cases. In sub-section (1) of Section 83 the commissioner is empowered to order provisional attachment of the property of the assessee including bank account where proceedings under Chapters XII, XIV and XV are pending and the commissioner is of the opinion that for the purpose of protecting the interest of government revenue it is necessary so to do. Sub-section (2) of Section 83 provides that every such provisional attachment shall cease to have effect after expiry of period of one year from the date of order made under sub-section (1).

The Court further observed that CBIC’s circular dated 23-02-2021 has also clarified that every provisional attachment shall cease to have effect after expiry of period of one year from the date of attachment order.

The Court observed and held the “order of attachment was passed more than a year back and would therefore be ceased to be effective upon completion of period of one year. By way of interim relief therefore it is provided that the provisional attachment order stands stayed.”

[BR Construction Company v. Additional Director, D.B. Civil Writ Petition No. 2086/2021, decided on 22-02-2022]


Appearances

For Petitioner(s): Mr. Jatin Harjai and Mr Mohit Kumar Soni

For Respondent(s): Ms. Mahi Yadav


* Arunima Bose, Editorial Assistant has reported this brief. 

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Disputes Redressal Commission (NCDRC): The Coram of Justice R.K. Agrawal (President) and Dr S.M. Kantikar (Member) expressed that, when a Statute provides for a particular period of limitation, it has to be scrupulously applied, as an unlimited limitation leads to a sense of uncertainty.

Instant revision petition had been filed by the complainant under Section 19 read with Section 21(a)(ii) of the Consumer Protection Act, 1986 against the order passed by the West Bengal State Consumer Disputes Redressal Commission at Kolkata.

State commission had rejected the application seeking condonation of delay of 120 days in filing the Revision Petition and consequently summarily dismissed the Revision Petition.

Issue

Whether the State Commission was justified in declining to condone the delay of 120 days in filing the Revision Petition before it or not?

Analysis and Decision

Commission expressed that it is trite law that the expression ‘sufficient cause’ cannot be construed liberally if negligence, inaction or lack of bonafides are attributable to the party, praying for exercise of such discretion in its favour.

In the present matter, petitioner failed to make out any cause, much less a ‘sufficient cause’ for condonation of delay of 120 days in filing the Revision Petition before the State Commission and the State Commission for the reasons recorded in the Impugned Order was justified in declining to condone the delay.

Hence, the present revision petition was dismissed.[Pallab Mohan Chakraborti v. Debayan Ganguly, Revision Petition No. 2447 of 2018, decided on 22-2-2022]


Advocates before the Commission:

Petitioner in Person

For the respondent: Ms. Pooja Shukla, Advocate

Mr. Surojit Gangopadhyay, Advocate Ms. Chitralekha Das, Advocate

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud* and AS Bopanna, JJ has held that failure on the part of the builder to provide occupancy certificate is a continuing breach under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 and amounts to a continuing wrong.

Factual Background

The appellant is a co-operative housing society. The respondent constructed Wings ‘A’ and ‘B’ and entered into agreements to sell flats with individual purchasers in accordance with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA). The members of the appellant booked the flats in 1993 and were granted possession in 1997. According to the appellant, the respondent failed to take steps to obtain the occupation certificate from the municipal authorities.

There was an obligation on the respondent to provide the occupancy certificate and pay for the relevant charges till the certificate has been provided, however, the respondent time and again failed to provide the occupancy certificate to the appellant society. For this reason, a complaint was instituted in 1998 by the appellant against the respondent. The NCDRC on 20 August 2014 directed the respondent to obtain the certificate within a period of four months. Further, the NCDRC also imposed a penalty for any the delay in obtaining the occupancy certificate beyond these 4 months. Since 2014 till date, the respondent failed to provide the occupancy certificate.

In the absence of the occupation certificate, individual flat owners were not eligible for electricity and water connections. Due to the efforts of the appellant, temporary water and electricity connections were granted by the authorities. However, the members of the appellant had to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge.

Analysis

Obligations of Promoter under MOFA

Section 3 of the MOFA imposes certain general obligations on a promoter. These obligations inter alia include making disclosures on the nature of title to the land, encumbrances on the land, fixtures, fittings and amenities to be provided, and to not grant possession of a flat until a completion certificate is given by the local authority. The responsibility to obtain the occupancy certificate from the local authority has also been imposed under the agreement to sell between the members of the appellant and the respondent on the latter.

Sections 3 and 6 of the MOFA indicate that the promoter has an obligation to provide the occupancy certificate to the flat owners. Apart from this, the promoter must make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat-owners. Where the promoter fails to pay such charges, the promoter is liable even after the transfer of property.

Limitation

In the instant case, the appellant submitted that since the cause of action is founded on a continuing wrong, the complaint is within limitation.

Section 24A of the Consumer Protection Act 1986 provides for the period of limitation period for lodging a complaint. A complaint to a consumer forum has to be filed within two years of the date on which the cause of action has arisen.

Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues

A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. The continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong.

The appellants, therefore, were entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.

“Rejecting the complaint as being barred by limitation, when the demand for higher taxes is made repeatedly due to the lack of an occupancy certificate, is a narrow view which is not consonance with the welfare objective of the Consumer Protection Act 1986.”

Consumer

Section 2(1)(d) of the Consumer Protection Act defines a ‘consumer’ as a person that avails of any service for a consideration. A ‘deficiency’ is defined under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service that is required to be maintained by law.

In the present case, the NCDRC had held that the appellant is not a ‘consumer’ under the provisions of the Consumer Protection Act as they have claimed the recovery of higher charges paid to the municipal authorities from the respondent. Extending this further, the NCDRC observed that the respondent is not the service provider for water or electricity and thus, the complaint is not maintainable.

The respondent was responsible for transferring the title to the flats to the society along with the occupancy certificate. The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable. Thus, the members of the appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate.

[Samruddhi Co-operative Housing Society Ltd v. Mumbai Mahalaxmi Construction Pvt. Ltd, 2022 SCC OnLine SC 35, decided on 11.01.2022]


*Judgment by: Justice Dr. DY Chandrachud

Case BriefsSupreme Court

Supreme Court: In a case relating to Corporate Insolvency, the Division Bench comprising of Indira Banerjee* and J.K. Maheshwari, JJ., quashed the order of NCLAT rejecting the application under S. 60(5) of IBC. The Bench held that the NCLAT and NCLT had failed to consider the law laid down by the Court with regard to extension of limitation period due to Covid-19 pandemic.

The appeal was filed under Section 62 of the Insolvency and Bankruptcy Code 2016 (IBC) against a judgment and order of NCLAT, whereby it had dismissed the application assailing order of NCLT under Section 61 of the IBC, mainly on the ground that the Resolution Process had already been approved by the Committee of Creditors.

The Appellant, an entity indulged in business of Supply and Erection of Piping Systems had entered into a contract with the Rohit Ferro Tech Ltd.-Corporate Debtor, who contacted the Appellant and placed a Purchase Order for design, supply, erection and testing of LP piping system and the commissioning of an LDO (Light Diesel Oil) storage handling system for its IX 67.5 MW Power Plant (Unit-II) for a consideration of Rs.5,37,75,761 excluding taxes and duties. Subsequently, the Corporate Debtor amended the said purchase order to include additional work of the value of Rs.88,64,239 excluding taxes and duties.

Arbitral Award

Some dispute arose between the parties due to failure and negligence of the Corporate Debtor to pay a sum of Rs.76,85,472 in connection with the said purchase order, pursuant to which the appellant invoked the Arbitration Clause and an Arbitrator was appointed by the High Court of Calcutta. The Arbitrator decided the case in favour of the appellant declaring that the claimant-appellant shall be awarded a sum of Rs.55,01,661 along with interest at the rate of two percent higher than the current rate of interest prevalent on the date of the award on and from 08-08-2014 till the date of payment. Further, the costs at Rs. 5,00,000 was also awarded to the claimant-appellant.

Initiation of CIRP

However, the said award was challenged before the Trial Court by the appellant under Section 34 of the Act, 1996. Meanwhile, the respondent 2, namely State Bank of India being a Financial Creditor of the Corporate Debtor, filed an application before the NCLT under Section 7 of the IBC, for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, and one Supriyo Chaudhuri was appointed as Resolution Professional.

Covid-19 and Countrywide Lockdown

The grievance of the appellant was that due to the COVID-19 pandemic and subsequent imposition of countrywide lockdown, it was not aware of the initiation of CIRP against the Corporate Debtor till 27-11-2020 whereafter it came to know the Corporate Debtor had not been taking steps in the Arbitration Proceedings in view of Insolvency process initiated against it.

IBC and Period of Limitation

The appellant’s claim of Rs.1,13,38,651, filed under Regulation 7 of the Insolvency and Bankruptcy Board of India (Insolvency Process for Corporate Persons) Regulations 2016 against the Corporate Debtor was rejected by the Resolution Professional on the ground that it had been filed beyond time. It was this order of the Resolution Professional which was being assailed before NCLT and NCLAT and which was being impugned in the instant appeal.

The Bench observed that the NCLT had failed to consider the order of the Supreme Court in Cognizance For Extension of Limitation: In Re, (2021) 5 SCC 452, wherein, taking cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country the Supreme Court had ordered that for the purpose of counting period of limitation in all proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not the period from 15-03-2020 till 14-03-2021 shall stand excluded. The Court had further declared that in cases where the limitation would have expired during the period between 15-03-2020 till 14-03-2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15-03-2021.

Therefore, noticing that the NCLAT had also failed to consider the order of the Court extending period of limitation, the Bench held that since the appellant was required to file its claim within 3 months from 11-02-2020, and the appellant actually filed claim well before 14-01-2021, the claim ought not to have been rejected in the light of the above mentioned order.

Conclusion

In the backdrop of above, the Bench held that the NCLAT erred in dismissing the appeal without even considering the effect and impact of the orders of the Court in Cognizance For Extension of Limitation: In Re. Accordingly, the appeal was allowed and the impugned judgment and orders of NCLAT and NCLT were set aside. The application of the appellant under Section 60(5) of the IBC was allowed.

[GPR Power Solutions (P) Ltd. v. Supriyo Chaudhuri, 2021 SCC OnLine SC 1328, decided on 29-11-2021]


*Judgment by: Justice Indira Banerjee


Appearance by:

For Appellant(s): Sumit Kumar, AOR, Rajesh Pathak, Kumari Supriya, Abhishek Chakraborty, Hemant Kumar and Harshita Sinha, Advocates

For Respondent(s): Indranil Ghosh, Orijit Chatterjee, Swati Dalmial, Palzer Moktan, Ojasa Arya,  Akash Yadav, Advocates

Satya Mitra, AOR, Swarnendu Chatterjee, AOR and Naman Kamdar, Advocate


Report by: Kamini Sharma, Editorial Assistant


 

Case BriefsCOVID 19Supreme Court

Supreme Court: After the Supreme Court Advocates-on-Record Association approached the Court in light of the spread of Omicron, the new variant of the COVID-19 and the drastic surge in the number of COVID cases across the country, the 3-judge bench of NV Ramana, CJ and L. Nageswara Rao and Surya Kant, JJ restored the order dated 23.03.2020 and directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings.

 

The Court made clear that,

  • The balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.
  • In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022.
  • In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.
  • The period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.

 

When the COVID-19 pandemic first hot the World, on 23.03.2020, the Court had directed extension of the period of limitation in all proceedings before Courts/Tribunals including this Court w.e.f. 15.03.2020 till further orders. Read here

On 08.03.2021, the order dated 23.03.2020 was brought to an end, permitting the relaxation of period of limitation between 15.03.2020 and 14.03.2021. While doing so, it was made clear that the period of limitation would start from 15.03.2021. Read here

[IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION, 2022 SCC OnLine SC 27, order dated 10.01.2022]


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 ‘Country is returning to normalcy; Courts/Tribunals are functioning’; Supreme Court ends extension of limitation period for filing petitions/applications/suits/appeals, etc.

 

Case BriefsHigh Courts

Madhya Pradesh High Court: Vishal Dhagat, J. allowed an arbitration appeal against an impugned order passed by the First ADJ of Balaghat (MP).

The facts of the case were that the Court held that limitation for filing application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act, 1996”) shall be counted from date of passing of award dated 22-06-2017. Application filed for modification of award under Section 33 of Act of 1996 will not have any bearing as said application was filed on merits of award and not on grounds under Section 33(1) (a) (b).

In the present matter the counsel for appellant contended that they should have been given the benefit of Section 33 of the Arbitration and Conciliation Act 1996. Running of limitation should have been considered from the date of the rejection of the application instead of the date of passing of the order. On the other hand the respondent’s counsel contended that the application was dismissed and the award given therein was not modified hence the dismissal stands justified.

The Court was of the view that Dismissal of application under Section 34 of Act of 1996 on ground of limitation will come within the purview of refusing to set aside an arbitration award, therefore, appeal under Section 37 will be maintainable if application under Section 34 is dismissed on ground of limitation. The court eventually ‘set aside’ the impugned order which dismissed the application of the appellant filled under section 34 of the Arbitration and Conciliation Act, 1996.[Sar Parivahan v. Hindustan Copper Ltd., 2021 SCC OnLine MP 2477, decided on 04-12-2021]


Suchita Shukla, Editorial Assistant has reported this brief.


Advocate for petitioner

Adv. C. Veda Rao

Advocate for Respondent

Shri R.K Sanghi

Case BriefsSupreme Court

Supreme Court: In a case where the Andhra Pradesh High Court had condoned a delay of 1011 days even though no sufficient cause was shown explaining the delay, the bench of MR Shah* and BV Nagarathna, JJ has held that the High Court has not exercised the discretion judiciously.

Factual Background

  • The appellant herein – original plaintiff filed a civil suit for permanent injunction against the respondents herein – original defendants.
  • Trial Court dismissed the said suit by judgment and decree dated 23.04.2016.
  • First Appellate Court allowed the suit by quashing and setting aside the judgment and decree passed by the Trial Court, by judgment and decree dated 01.02.2017.
  • Original defendants – respondents herein applied for the certified copy of the judgment and order on 04.02.2017. The same was ready for delivery on 10.03.2017.
  • After a period of approximately 1011 days, the respondents herein – original defendants preferred the Second Appeal before the High Court. Application to condone the delay was also filed .
  • By the impugned order, the High Court has condoned the delay of 1011 days in preferring the Second Appeal, which is the subject matter of appeal before this Court.
  • While condoning the delay, the High Court has observed as under:

“… when there are certain questions, which require a debate in the second appeal, it is not necessary that this matter be rejected at this stage, without inviting a decision on merits. lf the delay is condoned though enormous, what happens at best is to give an opportunity to the parties to canvass their respective case. Since this question being of procedure, the attempt of the court should be to encourage a healthy discussion on merits than rejecting at threshold. Viewed from such perspective, accepting the reasons assigned by the petitioner, the delay in presenting this second appeal should be condoned.”

Analysis

Holding that the High Court has committed a grave error in condoning huge delay of 1011 days in preferring the appeal, the Cout noticed that as such no sufficient cause was shown by the respondents herein ¬ appellants before the High Court, explaining the huge delay of 1011 days in preferring the Second Appeal. Further, the High Court has also not observed that sufficient cause has been shown explaining the delay of 1011 days in preferring the Second Appeal.

Further, in the application seeking condonation of delay it was stated that she is aged 45 years and was looking after the entire litigation and that she was suffering from health issues and she had fallen sick from 01.01.2017 to 15.03.2017 and she was advised to take bed rest for the said period. However, there is no explanation for the period after 15.03.2017. Thus, the period of delay from 15.03.2017 till the Second Appeal was filed in the year 2021 has not at all been explained. Therefore, it was held that the High Court has not exercised the discretion judiciously.

On the reasoning given by the High Court, the Court noticed that the High Court has observed that if the delay is condoned no prejudice will be caused to the appellant as the appeal would be heard on merits and that there is no wilful negligence on the part of the respondents herein nor it suffers from want of due diligence. However, from the averments in the application for condonation of delay, the Court held that it was a case of a gross negligence and/or want of due diligence on the part of the respondents herein – appellants before the High Court in filing such a belated appeal.

It was, hence, held that,

“The High Court is not at all justified in exercising its discretion to condone such a huge delay. The High   Court has not exercised the discretion judiciously. The reasoning given by the High Court while condoning huge delay of 1011 days is not germane.”

[Majji Sannemma v. Reddy Sridevi, 2021 SCC OnLine SC 1260, decided on 16.12.2021]


Counsel: Advocate Siddhartha Srivastava for respondents


*Judgment by: Justice MR Shah

Case BriefsHigh Courts

Delhi High Court: Asha Menon, J., held that,

“Mere fact that the boundary walls had been built by the defendants cannot be termed as a hostile act against the true owner as the walls had been constructed to define the properties of the defendants after the family partition took place.”

The plaintiffs had filed the suit seeking recovery of possession, mesne profits, the permanent and mandatory injunction against the defendants, their agents, servants or any other person claiming through them in respect of property situated in the revenue estate. The property was bounded by 20 feet high brick walls on all sides.

It was stated to have built up portion comprising of two halls, three rooms, two separate bathrooms, two separate kitchens, a temple and a garden and a covered parking space (suit property).

The defendants were the relatives of the plaintiffs. It was claimed that the suit property had come into the share of Sudhir Kumar Tyagi on the basis of a partition which took place vide a decree passed by the Revenue Assistant in a suit being preferred under Section 55 of the Delhi Land Reforms Act, 1954.

Plaintiffs had asked the defendants to vacate the suit property, but the defendants refused to vacate the same. Further, the plaintiff claimed that despite the occupation of the suit property by defendants, Sudhir Kumar Tyagi had retained in his possession an office latrine, kitchen and a storage room near the northern side of the suit property towards the MCD Primary School which he used for his personal purposes, and which was placed under his lock and key and contained his old business records.

The covered parking area was also being used by the plaintiffs and their visitors. However, by the end of 2017, the relationship again deteriorated. Thereafter, Sudhir Kumar Tyagi expired on 24-05-2018.

It was averred that the plaintiffs taking hold of the situation, in 2019 made a joint request to the defendants to vacate the suit property but they requested for more time as their own residence was under renovation. A promise was made by the defendants that they would vacate the suit property by February or March, 2020 but till date they had failed to do so taking advantage of the Covid-19 pandemic situation.

In view of the above circumstances, the present matter approached the Court.

Analysis, Law and Decision

Identity of Property

The High Court noted that there does not appear to be any doubt as to the identity of the property in respect of which the plaintiffs have claimed possession from the defendants and in respect of which the defendants have asserted title by adverse possession.

Court stated that in view of the circumstances of the present case, raising of a doubt on the number of the suit property was insufficient to deny consideration of the application under Order XII Rule 6 CPC.

There was another aspect that needs to be noted before proceeding further and that is with regard to the admission that the electricity and water meters still stand in the name of the predecessor-in-interest of the plaintiffs. The Bench expressed that the defendants had not been able to file on record any electricity bill that was raised in their names at the suit property for running their Sports Complex.

Law | Order XII Rule 6 CPC

While considering an application under Order XII Rule 6 CPC, the law is that the powers are discretionary and further, that for the Court to exercise its powers under the said provisions, admissions should be clear, unambiguous and unequivocal.

In the decision of this Court in Rajeev Tandon v. Rashmi Tandon, 2019 SCC OnLine Del 7336, Court had considered the pleas of the defendant raised in that case to find out whether it disclosed any meaningful defence or not. The absence of material particulars in the pleadings and presence of unsubstantiated pleas and vague averments were found sufficient to hold that there are admissions in the pleadings to pass a decree under Order XII Rule 6.

While disposing of an application under Order XII Rule 6 CPC, the Court was fully justified in considering the averments in the written statement to see whether essential facts had been pleaded or whether defence was a complete moonshine, requiring the Court to not send the case for trial.

In the present matter, the defendants had accepted the fact that this suit property had fallen in the share of late Sudhir Kumar Tyagi, the plaintiffs’ predecessor-in-interest, on the partition of the suit property and he had been its owner since then.

In view of the fact that the parties were on good terms, as per the averments in the written statement, late Sudhir Kumar Tyagi had permitted the defendant 1 to use the plot. Thus, the possession had not been a result of wrongful dispossession of the rightful owner, when the defendant 1 came into the premises.

“…long possession will not affect the title of the true owner. Nor would the lack of use of the property by the owner, for a long time, affect his title.”

Bench added that it was only when the defendants start asserting hostile title that the clock will start ticking. Strangely, in the entire written statement, the defendants did not state any definitiveness as to dates since when they had started asserting their hostile title.

Adding to the above, High Court stated that defendant 1 did not assert independent and hostile title to late Sudhir Kumar Tyagi.

Further, defendants had to specifically plead with sufficient clarity when the possession became adverse and the exact date when adverse possession commenced and whether this fact was let known to the real owner.

“…a fundamental plea to submit the claim of adverse possession is missing and the burden on the defendants has not been discharged.”

Thus, it was the defendant who had to plead and only when pleadings exist could he prove the three classic requirements of “nec vi, nec clam, nec precario”. The non-disclosure of the starting point of limitation against the plaintiffs being not pleaded clearly, the defence of adverse possession is “total moonshine”.

The application under Order XII Rule 6 CPC was allowed. [Monika Tyagi v. Subhash Tyagi, 2021 SCC OnLine Del 5400, decided on 17-12-2021]


Advocates before the Court:

Mr Ravi Gupta, Senior Advocate with Mr Vidit Gupta, Mr Sachin Jain and Mr Himansh Yadav Advocates

Mr Rajat Aneja and Ms Rajula, Advocates

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise & Service Tax Appellate Tribunal (CESTAT): Sulekha Beevi C.S., J. (Judicial Member) allowed an appeal wherein the refund was rejected on the ground of limitation.

In this pertinent matter, the appellant filed the request for cancellation / surrender of Centralized Service Tax Registration in Tirupur Range as they have shifted their business activities to Ahmedabad and had already obtained Centralized Registration Certificate in Ahmedabad. A reply was issued to the appellant by e-mail wherein it was informed to the appellant that their request for surrender has been approved by the department. Thereafter, the appellant discharged the service tax liability and filed ST-3 returns under the new registration number under the jurisdiction of Ahmedabad Service Tax Commissionerate. But, while paying service tax for the period October to December 2014, they mentioned the registration number pertaining to Tirupur Commissionerate in their challan for payment of service tax of Rs.3,07,838/-. After scrutiny, the error was observed  in mentioning the registration number in the challan and requested that payment has to be made in regard to registration number of Ahmedabad Commissionerate. However, the department denied to accept their request and directed to make payment of service tax along with applicable interest and penalty again and furnish the proof of payment to the Ahmedabad Commissionerate.

Resultantly, it was held that though the department agreed that the earlier payment made by challan on the service tax registration number of the Tirupur Commissionerate was incorrect, they had neither adjusted the amount nor refunded the amount. Instead, the appellant had been directed to make the payment once again. Hence, it was clear that the department had collected service tax twice from the appellant, which not permissible under law.[Suraj Forwarders & Shipping Agencies v. Principal Commissioner of GST & CE, 2021 SCC OnLine CESTAT 2668, dated 10-12-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: In a case where the NCDRC had condoned a delay for a period beyond the prescribed statutory outer limit just before the decision of the Constitution Bench on 4 March 2020 wherein it was held that the consumer fora has no power and/or jurisdiction to accept the written statement beyond the statutory period prescribed under the Act, i.e., 45 days in all, the 3-judge bench of Dr. DY Chandrachud*, Surya Kant and Vikram Nath, JJ has held that the Constitution Bench judgment would not affect applications that were pending or decided before 4 March 2020.

The Court made clear that such applications for condonation would be entitled to the benefit of the position in Reliance General Insurance Co. Ltd. v.  Mampee Timbers & Hardwares Pvt. Ltd.,  (2021) 3 SCC 673, which directed consumer fora to render a decision on merits.

Factual Background

While entertaining a Consumer Complaint, the NCDRC has condoned the delay of 100 days in filing a written statement. The order of the NCDRC was a few days before the judgment of a Constitution Bench dated 4 March 2020, in New India Assurance company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2020) 5 SCC 757 which held that the limitation period under Section 13(2)3 of the Consumer Protection Act 1986 could not be extended beyond the statutorily prescribed period of forty-five days.

The appellants filed a consumer complaint before the NCDRC on 3 December 2018 based on two insurance policies on the ground of an alleged fire that took place at the factory of the appellant. The respondent received the summons on 20 May 2019 together with the order of the NCDRC and a complete set of papers consisting of the consumer complaint and documents. The respondent filed its written statement on 23 September 2019 together with IA No 15390 of 2019 for condonation of a delay of 100 days. The NCDRC, by its order dated 25 February 2020, condoned the delay subject to the respondent paying costs of Rs 50,000.

What led to the confusion?

A series of judgments, before and after the Constitution Bench verdict, gave contradictory views with respect to discretion of NCDRC to condone the delay beyond 45 days. Here’s how the various Supreme Court verdicts created uncertainty:

Reference to the Constitution Bench

The decision in J.J. Merchant v. Shrinath Chaturvedi, (2002) 6 SCC 635, which was a three Judge Bench decision, consumer fora has no power to extend the time for filing a reply/written statement beyond the period prescribed under the Act. However, thereafter, despite the above three Judge Bench decision, a contrary view was taken by a two Judge Bench and therefore the matter was referred to the five Judge Bench.

During the pendency of the matter before the Constitution Bench

Bhasin Infotech and Infrastructure Private Limited v. Grand Venezia Buyers Association, (2018) 17 SCC 255

Parties were permitted to file written statements beyond the prescribed limitation period, subject to payment of appropriate costs.

Reliance General Insurance Co. Ltd. v.  Mampee Timbers & Hardwares Pvt. Ltd.,  (2021) 3 SCC 673

The consumer fora may accept the written statement beyond the stipulated time of 45 days in an appropriate case, on suitable terms, including the payment of costs and to proceed with the matter.

Constitution Bench Verdict

New India Assurance company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2020) 5 SCC 757 [Constitution Bench]

The Constitution Bench reiterated the view taken in the case of J.J.Merchant and held that the consumer fora has no power and/or jurisdiction to accept the written statement beyond the statutory period prescribed under the Act, i.e., 45 days in all.

“28. It is true that “justice hurried is justice buried”. But in the same breath it is also said that “justice delayed is justice denied”. The legislature has chosen the latter, and for a good reason. It goes with the objective sought to be achieved by the Consumer Protection Act, which is to provide speedy justice to the consumer. It is not that sufficient time to file a response to the complaint has been denied to the opposite party. It is just that discretion of extension of time beyond 15 days (after the 30 days’ period) has been curtailed and consequences for the same have been provided under Section 13(2)(b)(ii) of the Consumer Protection Act. It may be that in some cases the opposite party could face hardship because of such provision, yet for achieving the object of the Act, which is speedy and simple redressal of consumer disputes, hardship which may be caused to a party has to be ignored.”

Read more: District Forum can’t extend limitation period of 45 days for filing response under Section 13 of Consumer Protection Act

Matter decided right after the Constitution Bench verdict

Daddy’s Builders Private Limited v. Manisha Bhargava, (2021) 3 SCC 669

The decision was rendered on 11 February 2021 after the judgment of the Constitution Bench in New India Assurance Company Limited (supra). That was a case where the NCDRC in a judgment dated 4 September 2020, had confirmed the order of the Karnataka State Consumer Disputes Redressal Commission dated 26 September 2018 rejecting an application seeking condonation of delay in filing the written statement. Ultimately it was left to the concerned fora to accept written statements beyond the stipulated period of 45 days in an appropriate case. [Read more]

Conclusion

Having regard to the prospective effect of the judgment of the Constitution Bench in New India Assurance Company Limited and the orders in Reliance General Insurance Company Limited and Bhasin Infotech, which had recognized an element of discretion pending the reference, the Court held that no case for interference is made in the order of the NCDRC allowing the application for condonation of delay on merits.

[Diamond Exports v. United India Insurance Company Limited, 2021 SCC OnLine SC 1241, decided on 14.12.2021]


Counsel

For appellant: Advocate Salil Paul


*Judgment by: Justice Dr. DY Chandrachud

Case BriefsSupreme Court

Supreme Court: Explaining the difference between acquiescence and delay and laches, the bench of L. Nageswara Rao and Sanjiv Khanna*, JJ has held that both limitation and laches destroy the remedy but not the right. Acquiescence, on the other hand, virtually destroys the right of the person.

The Court explained that the doctrine of acquiescence is an equitable doctrine which applies when a party having a right stands by and sees another dealing in a manner inconsistent with that right, while the act is in progress and after violation is completed, which conduct reflects his assent or accord. He cannot afterwards complain. In literal sense, the term acquiescence means silent assent, tacit consent, concurrence, or acceptance, which denotes conduct that is evidence of an intention of a party to abandon an equitable right and also to denote conduct from which another party will be justified in inferring such an intention.  Acquiescence can be either direct with full knowledge and express approbation, or indirect where a person having the right to set aside the action stands by and sees another dealing in a manner inconsistent with that right and inspite of the infringement takes no action mirroring acceptance. However, acquiescence will not apply if lapse of time is of no importance or consequence.

“Inactive acquiescence on the part of the respondent can be inferred till the filing of the appeal, and not for the period post filing of the appeal. Nevertheless, this acquiescence being in the nature of estoppel bars the respondent from claiming violation of the right of fair representation.”

Laches unlike limitation is flexible. However, both limitation and laches destroy the remedy but not the right. Laches like acquiescence is based upon equitable considerations, but laches unlike acquiescence imports even simple passivity. On the other hand, acquiescence implies active assent and is based upon the rule of estoppel in pais. As a form of estoppel, it bars a party afterwards from complaining of the violation of the right. Even indirect acquiescence implies almost active consent, which is not to be inferred by mere silence or inaction which is involved in laches. Acquiescence in this manner is quite distinct from delay.

[Chairman, State Bank of India v. MJ James, 2021 SCC OnLine SC 1061, decided on 16.11.2021]


*Judgment by: Justice Sanjiv Khanna