Akaant MittalExperts Corner

Recapitulation

The present column post will conclude the 3-part series on the law of limitation and its interplay with the Insolvency and Bankruptcy Code, 2016 (IB Code).

 

In the first part of the column, we had discussed the initial issues in the interplay of IB Code with the law on limitation and how they were resolved by the insertion of Section 238-A to the IB Code and the Supreme Court rulings in B.K. Educational Services[1] and Vashdeo R. Bhojwani v. Abhyudaya Cooperative Bank Ltd.[2] We also discussed the recent ruling of the Supreme Court in Sesh Nath Singh v. Baidyabati Sheoraphuli Cooperative Bank Ltd.[3] which provided some respite as far as Section 14 of the Limitation Act is concerned and how a creditor can use that provision to seek extension of limitation period.

 

In the second part of the column, we discussed the applicability of Section 18 of the Limitation Act to the applications seeking initiation of resolution process under the IB Code. The missed opportunities of Babulal Vardharji[4] now stand settled conclusively by the rulings in Laxmi Pat[5]. Similarly, the limitation issues concerning the acknowledgment of debt for the purposes of Section 18 of the Limitation Act by virtue of entries in balance sheets of a company was settled by the Supreme Court in Asset Reconstruction Co.[6] ruling.

 

In this third part, we will discuss the issue of the effect of Section 19 of the Limitation Act, 1963 which stipulates the “effect of payment on account of debt or of interest on legacy” on an application seeking initiation of resolution process under the IB Code.

 

Brief on Section 19 of the Limitation Act, 1963

 

  1. Effect of payment on account of debt or of interest on legacy.—Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:

Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.

 

To attract the application of Section 19, two conditions are essential (i) the payment must be made within the prescribed period of limitation; and (ii) it must be acknowledged by some form of writing, either in the handwriting of the payee himself or signed by him.

 

Applicability of Section 19 of the Limitation Act, 1963 to IB Code

The National Company Law Appellate Tribunal (NCLAT) has been confronted on several occasions where partial payment of the debt or payment of interest has been made by the debtor on account of the debt.

 

For instance in Neha Himatsingka v. Himatsingka Resorts (P) Ltd.[7] the argument that the debt in question was time barred was rejected. The NCLAT noted that as per the record the corporate debtor had paid interest even after the year 2016-2017 and also issued cheques in the year 2018; therefore, the argument that the claim is time barred was rejected.

 

Similarly in T. Johnson[8], the creditor relied upon (1) the revival letter dated 20-2-2016; (2) balance confirmation letter dated 22-2-2016 by the corporate debtor; and (3) the factum of last payment having been made on 14-11-2017 to establish that its claim is not time barred.

 

The NCLAT noting that apart from the above, there is an admission on the part of the corporate debtor on the basis of the written submissions of the appellant before the National Company Law Tribunal (NCLT) and the fact that the appellant debtor is merely disputing the correctness of the quantum of balance claimed by the financial creditor rejected the argument that the claim is time barred.[9]

 

As we have seen in the previous columns, in the rulings of Laxmi Pat[10], Sesh Nath[11] and Asset Reconstruction Co.[12] the Supreme Court has settled that the phrase “the provisions of Limitation Act have been made applicable to the proceedings under the Code, as far as may be applicable” in Section 238-A of the IB Code means that all the relevant provisions of the Limitation Act can be invoked while filing an application under the IB Code. The same in those cases meant that Sections 5, 14 and 18 of the Limitation Act were invoked to extend limitation period.

 

Now the recent ruling of the NCLAT ruling in Rajendra Narottamdas Sheth v. Chandra Prakash Jain,[13] provides us with a more useful reference point to understand the interplay between Section 19 of the Limitation Act, 1963 with the IB Code.

 

In Rajendra Narottamdas[14], the account of the debtor was declared as a non-performing asset (NPA) on 30-9-2014 and the financial creditor filed an application seeking initiation of corporate insolvency resolution process (CIRP) against the debtor on 25-4-2019.[15] The debtor claimed that the application is time barred as it was beyond the three-year limitation period that commenced on the date of the NPA.[16] The financial creditor argued that the limitation period got extended on account of Section 18 of the Limitation Act by relying on the documents showing acknowledgments of debt by the corporate debtor in writing. The creditor also placed reliance on the statements of accounts showing various instalments paid on account of debt and interest, even after the declaration of NPA to invoke the application of Section 19 of the Limitation Act.[17]

 

The NCLAT referred to the following undisputed facts where: (a) the corporate debtor had issued balance confirmation letter dated 7-4-2016 and acknowledged the debt; (b) the account statements showed regular credit entries after 7-4-2016 till May 2018; and (c) the corporate debtor issued a letter dated 17-11-2018 giving details of amounts repaid till 30-9-2018 and acknowledging amount outstanding in respective accounts as on that date.

 

On the basis of these facts, the NCLAT held that the benefit of Sections 18 and 19 were attracted and the application by the creditor was not time barred.[18]

 

Conclusion

 

If the reasoning in Sesh Nath[19], Laxmi Pat[20] and Asset Reconstruction Co.[21] is to be accepted that the “provisions of Limitation Act have been made applicable to the proceedings under the Code, as far as may be applicable”[22], then clearly Section 19 of the Limitation Act can be used to extend limitation period. To that effect, the ruling of the NCLAT in Rajendra Narottamdas[23] shows the way ahead for the application of Section 19 of the Limitation Act to the IB Code.


± Akaant Kumar Mittal is an advocate at the Constitutional Courts, and National Company Law Tribunal, Delhi and Chandigarh. He is also a visiting lecturer at the NUJS, Kolkata and the author of the commentary Insolvency and Bankruptcy Code – Law and Practice.

The author gratefully acknowledges the research and assistance of Sh. Abhishek Jain, 3rd Year, B.A.LLB. (Hons.), Student at National University of Juridical Sciences, Kolkata, in writing this article.

 

[1] B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633 : (2018) 5 SCC (Civ) 528.

[2] (2019) 9 SCC 158 : (2019) 4 SCC (Civ) 308.

[3] 2021 SCC OnLine SC 244.

[4]Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P) Ltd., (2020) 15 SCC 1 : 2020 SCC OnLine SC 647.

[5] Laxmi Pat Surana v. Union Bank of India, 2021 SCC OnLine SC 267.

[6] Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal, 2021 SCC OnLine SC 321.

[7] 2018 SCC OnLine NCLAT 784.

[8] T. Johnson v. Phoenix ARC (P) Ltd., 2019 SCC OnLine NCLAT 244.

[9] Id., para 6.

[10] 2021 SCC OnLine SC 267.

[11] 2021 SCC OnLine SC 244.

[12] 2021 SCC OnLine SC 321.

[13] 2020 SCC OnLine NCLAT 827.

[14] Id.

[15] Id, para 3.

[16] Id, para 4.

[17] Id, para 8.

[18] Id, paras 24-27.

[19] 2021 SCC OnLine SC 244.

[20] 2021 SCC OnLine SC 267.

[21] 2021 SCC OnLine SC 321.

[22] Laxmi Pat Surana, 2021 SCC OnLine SC 267, para 41.

[23] 2020 SCC OnLine NCLAT 827.

Akaant MittalExperts Corner

Recapitulation

In the previous column, we discussed the initial issues in the interplay of Insolvency and Bankruptcy Code, 2016 (IB Code) with the law on limitation and how they were resolved by the insertion of Section 238-A to the IB Code and the Supreme Court rulings in B.K. Educational Services[1] and Vashdeo R.  Bhojwani v. Abhyudaya Cooperative Bank Ltd.[2]

 

We then discussed that currently there are three major issues that require a modicum of certainty, namely, whether the creditors can use the following provisions of the Limitation Act to extend/renew the period of limitation while seeking initiation of resolution process against a corporate debtor:

 

(i) Section 14 of the Limitation Act, 1963, which states “exclusion of time of proceeding bona fide in court without jurisdiction” is applicable.

(ii) Section 18 of the Limitation Act, 1963 which provides for the “effect of acknowledgment in writing”.

(iii) Section 19 of the Limitation Act, 1963 which stipulates the “effect of payment on account of debt or of interest on legacy”.

 

In the previous column, we had discussed that the recent ruling of the Supreme Court in Sesh Nath Singh v. Baidyabati Sheoraphuli Cooperative Bank Ltd.[3] does provide some respite as far as Section 14 of the Limitation Act is concerned and a creditor can use that provision to seek extension of limitation period. But there were still some lingering doubts on whether Section 14 could still come to the rescue of the creditors even when rightly pursuing remedy in another court or tribunal before coming to the National Company Law Tribunal (NCLT) in an application under Section 7 or Section 9 or Section10 of the IB Code.

 

Brief on Section 18 of the Limitation Act, 1963

Coming to issue (ii), Section 18 of the Limitation Act, 1963 provides:

 

  1. Effect of acknowledgment in writing.—(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

 

Section 18 of the Limitation Act requires acknowledgment of liability to be made before the expiration of the prescribed period and to be in the form of, or in writing signed by the party against whom such right is claimed, in order to be effective to extend limitation.[4]

 

The fact that a debtor has acknowledged that there is debt is sufficient to restart the period of limitation.[5] It is however essential that a person either making acknowledgment of liability or a person making the payment must make acknowledgment or payment by his own writing signed by him or in writing at least signed by him and such acknowledgment must be before the expiration of the existing period of limitation[6]. In other words, there must be a written acknowledgment containing an admission of a subsisting liability, and a mere admission of past liability is not sufficient to constitute such an “acknowledgment”.[7]

 

Judicial Discourse on the Applicability of Section 18

The issue of Section 18 was explicitly a matter of issue in Babulal Vardharji. In Babulal Vardharji[8], the appellant before the National Company Law Appellate Tribunal (NCLAT) argued that the default took place in July 2011 and the application under Section 7 being filed in March 2018 was barred by limitation. The respondent, in turn, contended that there is a continuous cause of action. The NCLAT noted the proceedings undertaken by the respondent creditor before the Debts Recovery Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) and the same were pending. The financial creditor also brought on record a letter dated 31-7-2018 issued by the appellant seeking a one-time settlement (OTS) with the creditor bank. Based on a culmination of these factors, the NCLAT found that the claim is not time barred as well.

 

However, when the matter in Babulal Vardharji went into appeal before the Supreme Court[9] the Supreme Court set aside the order of the NCLAT. The Supreme Court held that since the date of default is 8-7-2011, therefore, on account of the Limitation Act, the application under Section 7 is time barred. The Court also specifically discussed the reliance made by the NCLAT on the pendency of the application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the fact that corporate debtor had made a prayer for OTS in July 2018. The Supreme Court on these grounds stated that “noticeably, though the Appellate Tribunal has referred to [these factors] … [but the NCLAT] has not recorded any specific finding about the effect of these factors.”[10]

 

While the Court sought to answer if Section 18 of the Limitation Act is applicable, in the end, it seems to have confined its findings only to the facts of the case. It stated:

 

  1. even if it be assumed that the principles relating to acknowledgment as per Section 18 of the Limitation Act are applicable for extension of time for the purpose of the application under Section 7 of the Code, in our view, neither the said provision and principles come in operation in the present case nor do they enure to the benefit of Respondent 2 for the fundamental reason that in the application made before NCLT, Respondent. 2 specifically stated the date of default as “8-7-2011 being the date of NPA” .

35.1. … [i]n other words, even if Section 18 of the Limitation Act and principles thereof were applicable, the same would not apply to the application under consideration in the present case, looking to the very averment regarding default therein and for want of any other averment in regard to acknowledgment.[11]

 

Therefore, it is submitted that the ruling in Babulal Vardharji[12] still left the issue of applicability of Section 18 of the Limitation Act unaddressed. The Supreme Court has overlooked (a) the acknowledgment of debt on account of the OTS offer; (b) the pending litigation before Debts Recovery Tribunal; and (c) the differentiation that NCLAT made between the limitation in filing the application vis-à-vis the time barred of the debt amount. The NCLAT applied Article 137 to the filing of an application under the IB Code to only hold that the application itself is not barred on account of the law of limitation. Regarding the bar on the debt amount itself, the NCLAT analysed that all the due attempts are being made to recover the debt amount before the appropriate forum (before the IB Code came to be enacted).

 

The Court had the opportune occasion to categorically put to rest any debate on the applicability of Section 18 of the Limitation Act to extend limitation for an application under Section 7 or Section 9 under the IB Code. However, the same was a missed opportunity.

 

The ruling in Babulal Vardharji[13] formed the basis of the NCLT ruling in Lampex Electronics Ltd. v. AMI Tech (India) (P) Ltd.[14] and a Calcutta High Court ruling in Gouri Shankar Chatterjee v. SBI[15] where relying on Babulal Vardharji[16], the courts held that Section 18 is inapplicable.

 

However, in a decision dated 26-3-2021, the Supreme Court in Laxmi Pat Surana v. Union Bank of India[17] seems to have put to rest this issue with respect to Section 18.

 

The corporate debtor – guarantor in this case argued that the date of default was in the year 2010 when the account of the principal borrower was declared non-performing asset. The respondent creditor – bank, in turn, submitted that on account of the time-to-time acknowledgments of debt given by the principal borrower and even the guarantor – corporate debtor, the last of which was given on 8-12-2018 means that the debt is not time barred.

 

The Court, firstly, addressed the purport of Babulal Vardharji[18] with respect to the issue of whether Section 18 of the Limitation Act applies to an application under the IB Code. It put to rest that in that ruling the Supreme Court had not ruled out the application of Section 18 of the Limitation Act to the proceedings under the IB Code, if the fact situation of the case so warrants.

 

Subsequently taking note of the provision of Section 238-A of the IB Code, the Court opined that once the provisions of Limitation Act have been made applicable to the proceedings under the IB Code, as far as such provisions may be applicable, there remains no reason to exclude the effect of Section 18 of the Limitation Act to the proceedings initiated under the IB Code.

 

Therefore, it was directed that a fresh period of limitation be computed from the date of acknowledgment of a debt by the principal borrower and/or the corporate guarantor, including in particular the last communication dated 8-12-2018. Resultantly, the application of the financial creditor under Section 7 of the IB Code was found to be within the limitation by granting the benefit of exclusion of time period under Section 18 of the Limitation Act.

 

The same also formed the basis for the Supreme Court ruling in Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal,[19] where the Court set aside the 5- Judge ruling of the NCLAT in V. Padmakumar,[20] which had held that entries in balance sheets would not amount to an acknowledgment of debt for the purpose of extending limitation under Section 18 of the Limitation Act.

 

The Court relied on the observations in Sesh Nath Singh[21] and the categorical position laid down in Laxmi Pat[22] to firstly conclude that Section 18 of the Limitation Act applies to the proceedings under the IB Code. The Court also set aside the ruling of the Calcutta High Court in Gouri Shankar Chatterjee.[23]

 

Then, the Court went on to discuss that how entries in a balance sheet may amount to an acknowledgment for the purposes of Section 18 of the Limitation Act.

 

The implication of this decision may be a matter of discussion since accounting rules, if conservative, may require recognition of claims even if the corporate debtor is contesting the same. Therefore, even when a dispute is under contest for a period of over 3 years, still the balance sheet of the company may show under the head of contingent liability of the notes in the balance sheet. Just to prevent any misinterpretation, the Court was cognizant of the same and even noted this circumstance and discussed as to when an entry in a balance sheet may not necessarily mean an acknowledgment of liability. The Court stated:

 

  1. 19. … this judgment holds that though the filing of a balance sheet is by compulsion of law, the acknowledgment of a debt is not necessarily so. In fact, it is not uncommon to have an entry in a balance sheet with notes annexed to or forming part of such balance sheet, or in the auditor’s report, which must be read along with the balance sheet, indicating that such entry would not amount to an acknowledgment of debt for reasons given in the said note.

                                               ***

  1. 32. … the statement of law contained in Bengal Silk Mills[24], that there is a compulsion in law to prepare a balance sheet but no compulsion to make any particular admission, is correct in law as it would depend on the facts of each case as to whether an entry made in a balance sheet qua any particular creditor is unequivocal or has been entered into with caveats, which then has to be examined on a case-by-case basis to establish whether an acknowledgment of liability has, in fact, been made, thereby extending limitation under Section 18 of the Limitation Act.[25]

 

With the rulings in Laxmi Pat[26] and Asset Reconstruction Co.[27], it is submitted that the issue of the application of Section 18 of the Limitation Act to the applications seeking initiation of resolution process under the IB Code is settled unequivocally and put to a categorical end.

 

Conclusion

The Supreme Court while reiterating the applicability of Section 18 of the Limitation Act to the applications seeking initiation of resolution process under the IB Code has set out the interpretative standards for future references. The missed opportunities of Babulal Vardharji[28] which was subsequently followed by the tribunals, and the High Courts now stand settled conclusively by the ruling in Laxmi Pat[29]. Similarly the erroneous determination by the NCLAT in V. Padmakumar[30] of the limitation issues concerning the acknowledgment of debt under Section 18 by virtue of entries in balance sheets of a company was equally enigmatic. While correcting this error, the Supreme Court reiterated the position settled in Laxmi Pat[31], putting a conclusive end to the issue of the application of Section 18 of the Limitation Act to the applications seeking initiation of resolution process under the IB Code.

 

† Akaant Kumar Mittal is an advocate at the Constitutional Courts, and National Company Law Tribunal, Delhi and Chandigarh. He is also a visiting lecturer at the NUJS, Kolkata and the author of the commentary Insolvency and Bankruptcy Code – Law and Practice.

The author gratefully acknowledges the research and assistance of Sh. Yash Borana, 4th Year, B.A.LLB. (Hons.), Student at National Law University, Nagpur, in writing this article.

 

[1] B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633 : (2018) 5 SCC (Civ) 528.

[2] (2019) 9 SCC 158 : (2019) 4 SCC (Civ) 308.

[3] 2021 SCC OnLine SC 244.

[4] Lakshmirattan Cotton Mills Co. Ltd. v. Aluminium Corpn. of India, (1971) 1 SCC 67 : AIR 1971 SC 1482; Laxmi Pat Surana v. Union Bank of India, 2021 SCC OnLine SC 267.

[5] See also Shalini Publicity Creative (P) Ltd. v. Dena Bank, 2019 SCC OnLine NCLAT 91, para 7.

[6] Laxmi Pat Surana v. Union Bank of India, 2021 SCC OnLine SC 267, para 37.

[7] Valliamma Champaka Pillai v. Sivathanu Pillai, (1979) 4 SCC 429.

[8] Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P) Ltd., 2019 SCC OnLine NCLAT 295.

[9] Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P) Ltd., (2020) 15 SCC 1 : 2020 SCC OnLine SC 647.

[10] Ibid, para 12 (additions made]).

[11] Ibid, paras 35 and 35.1 (emphasis added).

[12] Ibid.

[13] Ibid.

[14] C.P. No. 1810/IBC/MB/2018.

[15] C.O. 1257 of 2020.

[16] (2020) 15 SCC 1 : 2020 SCC OnLine SC 647

[17]  2021 SCC OnLine SC 267.

[18]  (2020) 15 SCC 1 : 2020 SCC OnLine SC 647.

[19] 2021 SCC OnLine SC 321.

[20] V. Padmakumar v. Stressed Assets Stabilisation Fund, 2020 SCC OnLine NCLAT 417.

[21] Sesh Nath Singh  v. Baidyabati Sheoraphuli Cooperative Bank Ltd., 2021 SCC OnLine SC 244.

[22] 2021 SCC OnLine SC 267.

[23] Civil appeal arising out of SLP (Civil) No. 1168 of 2021 in Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal, 2021 SCC OnLine SC 321.

[24] Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, 1961 SCC OnLine Cal 128.

[25] 2021 SCC OnLine SC 321, paras 19 and 32 (emphasis added).

[26] 2021 SCC OnLine SC 267.

[27] 2021 SCC OnLine SC 321.

[28] (2020) 15 SCC 1 : 2020 SCC OnLine SC 647

[29] 2021 SCC OnLine SC 267.

[30] 2020 SCC OnLine NCLAT 417.

[31] 2021 SCC OnLine SC 267.

Case BriefsHigh Courts

Chhattisgarh High Court: Rajendra Chandra Singh Samant, J., allowed the petition and set aside the impugned order.

The facts of the case are such that the respondents were Malgujars of Malkharauda Jagirdari, who were holders of the land in question and the petitioners are the persons in possession of the land in question on the ground of grant or purchase or by sikhmi rights or by a registered sale deed. Proceeding was drawn against the respondents under the M.P. Ceiling of Agriculture Holdings Act, 1960 (i.e. “Act, 1960”). The petitioners filed their objections which came to be dismissed by the Sub-Divisional Officer (Revenue) vesting the disputed land with the State Government. Subsequent to that the petitioners and the various villagers made representation before the Sub-Divisional Officer, Sakti, for allotment of land from the government. The applications of some of the villagers were entertained and lease was granted in favour of some of the villagers, but the case of the petitioners was not considered. The petitioners then preferred an appeal before the Board of Revenue and Additional Tahsildar, Malkharauda submitted report making recommendations in favour of the petitioners for grant of government land on lease. The Board of Revenue has dismissed the appeal only on the ground of limitation. Being aggrieved by the said order instant petition was filed.

Counsel for the petitioners Mr Rajeev Shrivastava submitted that the order passed by the Board of Revenue is cryptic order, by taking technical approach, without considering that the petitioners have been prosecuted their claim since the very beginning by raising their objections. Hence, the order passed is erroneous without any justification.

Counsel for the respondents Mr Adil Minhaj submitted that the appeal was clearly delayed by two years, before it was filed in the Board of Revenue, regarding which, day to day explanation was required and there had been no such explanation given by the petitioners’ side. Hence, the impugned order has been correctly passed, which needs no interference.

The Court relied on Oriental Aroma Chemical Industries Ltd. v. Gujrat Industrial Development Corpn., (2010) 5 SCC 459 wherein it was held “law of limitation is founded on public policy. The legislature does not prescribe limitation with the object of destroying the rights of the parties, but to ensure that they do not resort to dilatory tactics and seek remedy without delay, therefore, the expression sufficient cause must receive a liberal construction so as to advance substantial justice.”

The Court further relied on State of Karnataka v. Y. Moideen Kunhi (dead) by LRS., (2009) 13 SCC 192 wherein it was held that “the Court must not be pedantic in deciding delay condonation petition, which should not be dismissed on mere ground of longer delay, if the, explanation offered is bonafide.”

The Court observed that Section 44 of the Act, 1960 provides for limitation of 60 days from the order against which appeal or revision is to be preferred. It is further provided that the provisions of Section 4, 5, 12 and 14 of the Indian Limitation Act shall also apply to the filing of such appeal or application for revision. It was further observed that Section 5 of the Indian Limitation Act provides for extension of prescribed period, in certain cases, where in, the applicant satisfies the Court that he had sufficient cause for not preferring the appeal within the prescribed period.

It was further observed that that the petitioners have a claim for allotment of surplus land vested with the State in ceiling proceeding, in their favour on the basis of their entitlement and that despite there being recommendation in their favour, the same was not considered by the Sub-Divisional Officer and also the reasons for delay mentioned in their memo of appeal and application for condonation of delay, which appears to be bonafide.

The Court thus held that “learned Board of Revenue has failed to exercise the jurisdiction and dismissed the application for condonation of delay of the petitioners in mechanical and arbitrary manner.” 

In view of the above, petition was allowed.[Rajendra Kumar v. State of Chhattisgarh, 2021 SCC OnLine Chh 445, decided on 03-03-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of RF Nariman, BR Gavai and Hrishikesh Roy, JJ has held that given the object of speedy disposal sought to be achieved both under the Arbitration and Conciliation Act, 1996 and Commercial Courts Act, 2015, for appeals filed under section 37 of the Arbitration Act that are governed by Articles 116 and 117 of the Limitation Act or section 13(1A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule.

However,

“in a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the court, be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party’s inaction, negligence or laches.”

Resultantly, the Court has overruled last year’s judgment in N.V. International v. State of Assam, (2020) 2 SCC 109 , wherein it was held that any delay beyond 120 days in the filing of an appeal under Section  37 from an application being either dismissed or allowed under Section 34 cannot be allowed. It was further, clarified that the said period of 120 days, comprises of a grace period of 30 days under Section 5 of the Limitation Act added to the prescribed period of 90 days.

The Court said that merely because sufficient cause has been made out in the facts of a given case, there is no right in the appellant to have delay condoned.

“Given the object sought to be achieved under both the Arbitration Act and the Commercial Courts Act, that is, the speedy resolution of disputes, the expression “sufficient cause” is not elastic enough to cover long delays beyond the period provided by the appeal provision itself. Besides, the expression “sufficient cause” is not itself a loose panacea for the ill of pressing negligent and stale claims.”

Section 37 of the Arbitration Act, when read with section 43 thereof, makes it clear that the provisions of the Limitation Act will apply to appeals that are filed under section 37. Articles 116 and 117 of the Limitation Act provide for a limitation period of 90 days and 30 days, depending upon whether the appeal is from any other court to a High Court or an intra-High Court appeal. Further, when the Commercial Courts Act is applied to the aforesaid appeals, given the definition of “specified value” and the provisions contained in sections 10 and 13 thereof, it is clear that it is only when the specified value is for a sum less than three lakh rupees that the appellate provision contained in section 37 of the Arbitration Act will be governed, for the purposes of limitation, by Articles 116 and 117 of the Limitation Act.

On this, the Court explained that,

“… the main object of the Arbitration Act requiring speedy resolution of disputes would be the most important principle to be applied when applications under section 5 of the Limitation Act are filed to condone delay beyond 90 days and/or 30 days depending upon whether Article 116(a) or 116(b) or 117 applies. As a matter of fact, given the timelines contained in sections 8, 9(2), 11(4), 11(13), 13(2)-(5), 29A, 29B, 33(3)-(5) and 34(3) of the Arbitration Act, and the observations made in some of this Court’s judgments, the object of speedy resolution of disputes would govern appeals covered by Articles 116 and 117 of the Limitation Act.”

Hence, from the scheme of the Arbitration Act, condonation of delay under section 5 of the Limitation Act has to be seen in the context of the object of speedy resolution of disputes.

Why was NV International overruled?

Firstly, N.V. International does not notice the provisions of the Commercial Courts Act at all and can be said to be per incuriam on this count.

Secondly, the period of 90 days plus 30 days and not thereafter mentioned in section 34(3) of the Arbitration Act cannot now apply, the limitation period for filing of appeals under the Commercial Courts Act being 60 days and not 90 days.

Thirdly, the argument that absent a provision curtailing the condonation of delay beyond the period provided in section 13 of the Commercial Courts Act would also make it clear that any such bodily lifting of the last part of section 34(3) into section 37 of the Arbitration Act would also be unwarranted.

Stating that the difference between interpretation and legislation is sometimes a fine one, as it has repeatedly been held that judges do not merely interpret the law but also create law, the Court referred to the judgment in Eera v. State (NCT of Delhi), (2017) 15 SCC 133, wherein it was held,

“The golden rule in determining whether the judiciary has crossed the Lakshman Rekha in the guise of interpreting a statute is really whether a Judge has only ironed out the creases that he found in a statute in the light of its object, or whether he has altered the material of which the Act is woven. In short, the difference is the well-known philosophical difference between “is” and “ought”. Does the Judge put himself in the place of the legislator and ask himself whether the legislator intended a certain result, or does he state that this must have been the intent of the legislator and infuse what he thinks should have been done had he been the legislator. If the latter, it is clear that the Judge then would add something more than what there is in the statute by way of a supposed intention of the legislator and would go beyond creative interpretation of legislation to legislating itself. It is at this point that the Judge crosses the Lakshman Rekha and becomes a legislator, stating what the law ought to be instead of what the law is.”

Hence, given the ‘lakshman rekha’ laid down in the aforementioned judgment, the Court found it little difficult to appreciate how a cap can be judicially engrafted onto a statutory provision which then bars condonation of delay by even one day beyond the cap so engrafted.

[Government of Maharashtra v. Borse Brothers Engineers and Contractors Pvt. Ltd., 2021 SCC OnLine SC 233, decided on 19.03.2021]


*Judgment by: Justice RF Nariman

Know Thy Judge| Justice Rohinton F. Nariman

Case BriefsSupreme Court

Supreme Court: In an important ruling, the bench of Indu Malhotra* and Ajay Rastogi, JJ has held that the period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963. Hence, the period of limitation will begin to run from the date when there is failure to appoint the arbitrator. Further,iIn rare and exceptional cases, where the claims are ex facie timebarred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference.

The Court also suggested that,

“It would be necessary for Parliament to effect an amendment to Section 11, prescribing a specific period of limitation within which a party may move the court for making an application for appointment of the arbitration under Section 11 of the 1996 Act.”

This would be in consonance with the object of expeditious disposal of arbitration proceedings.

What would be the period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996?

Section 11 does not prescribe any time period for filing an application under sub-section (6) for appointment of an arbitrator. Since there is no provision in the 1996 Act specifying the period of limitation for filing an application under Section 11, one would have to take recourse to the Limitation Act, 1963, as per Section 43 of the Arbitration Act, which provides that the Limitation Act shall apply to arbitrations, as it applies to proceedings in Court.

It is a settled law that the limitation for filing an application under Section 11 would arise upon the failure to make the appointment of the arbitrator within a period of 30 days’ from issuance of the notice invoking arbitration.

“… an application under Section 11 can be filed only after a notice of arbitration in respect of the particular claim(s) / dispute(s) to be referred to arbitration [as contemplated by Section 21 of the Act] is made, and there is failure to make the appointment.”

However,  the period of limitation for filing a petition seeking appointment of an arbitrator/s cannot be confused or conflated with the period of limitation applicable to the substantive claims made in the underlying commercial contract. The period of limitation for such claims is prescribed under various Articles of the Limitation Act, 1963.

“The limitation for deciding the underlying substantive disputes is necessarily distinct from that of filing an application for appointment of an arbitrator. This position was recognized even under Section 20 of the Arbitration Act 1940.”

Given the vacuum in the law to provide a period of limitation under Section 11 of the Arbitration and Conciliation 1996, the Courts have taken recourse to the position that since none of the Articles in the Schedule to the Limitation Act, 1963 provide a time period for filing an application for appointment of an arbitrator under Section 11, it would be covered by the residual provision Article 137 of the Limitation Act, 1963 which provides a period of 3 years from the date when the right to apply accrues.

However, this is an unduly long period for filing an application u/S. 11, since it would defeat the very object of the Act, which provides for expeditious resolution of commercial disputes within a time bound period.

“The 1996 Act has been amended twice over in 2015 and 2019, to provide for further time limits to ensure that the arbitration proceedings are conducted and concluded expeditiously. Section 29A mandates that the arbitral tribunal will conclude the proceedings within a period of 18 months. In view of the legislative intent, the period of 3 years for filing an application under Section 11 would run contrary to the scheme of the Act.”

Hence, the period of limitation for filing an application under Section 11 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963. The period of limitation will begin to run from the date when there is failure to appoint the arbitrator. This position will hold field till the Legislature comes up with an amendment to Section 11 of the 1996 Act to provide a period of limitation for filing an application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings.

Whether the Court while exercising jurisdiction under Section 11 is obligated to appoint an arbitrator even in a case where the claims are ex facie time-barred?

In view of the legislative mandate contained in the amended Section 11(6A), the Court is now required only to examine the existence of the arbitration agreement. All other preliminary or threshold issues are left to be decided by the arbitrator under Section 16, which enshrines the kompetenz-komptenz principle.

“The doctrine of kompetenz-komptenz implies that the arbitral tribunal is empowered and has the competence to rule on its own jurisdiction, including determination of all jurisdictional issues. This was intended to minimise judicial intervention at the pre-reference stage, so that the arbitral process is not thwarted at the threshold when a preliminary objection is raised by the parties.”

In a recent judgment delivered by a three-judge bench in Vidya Drolia v. Durga Trading Corporation(2021) 2 SCC 1, on the scope of power under Sections 8 and 11, it has been held that the Court must undertake a primary first review to weed out “manifestly ex facie non-existent and invalid arbitration agreements, or non-arbitrable disputes.”

“The prima facie review at the reference stage is to cut the deadwood, where dismissal is bare faced and pellucid, and when on the facts and law, the litigation must stop at the first stage. Only when the Court is certain that no valid arbitration agreement exists, or that the subject matter is not arbitrable, that reference may be refused.”

While exercising jurisdiction under Section 11 as the judicial forum, the court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the Courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere “only” when it is “manifest” that the claims are ex facie time barred and dead, or there is no subsisting dispute.

“It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time-barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. However, if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal.”

[BSNL v. Nortel Network India Pvt. Ltd., 2021 SCC OnLine SC 207, decided on 10.03.2021]


*Judgment by: Justice Indu Malhotra 

Appearances before the Court by:

For appellants: Senior Advocate R.D. Agrawala

For respondent: Senior AdvocateNeeraj Kumar Jain, Senior Advocate

Amicus Curiae: Senior Advocate Arvind Datar

Case BriefsSupreme Court

Supreme Court: As the country heads towards returning to normalcy, the 3-judge bench of SA Bobde, CJ and L. Nageswara Rao and S. Ravindra Bhat, JJ jas issued fresh guidelines in relation to the period of limitation for filing petitions/applications/suits/appeals/all other proceedings.

“Though, we have not seen the end of the pandemic, there is considerable improvement. The lockdown has been lifted and the country is returning to normalcy. Almost all the Courts and Tribunals are functioning either physically or by virtual mode.”

Due to the onset of COVID-19 pandemic, by an order dated 27.03.2020*, the Supreme Court had extended the period of limitation prescribed under the general law or special laws whether compoundable or not with effect from 15.03.2020 till further orders. The order dated 15.03.2020* was extended from time to time. The said decision was taken after taking note of the difficulties that might be faced by the litigants across the country in filing petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under any special laws (both Central or State).

Here are the fresh directions:

  1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.
  2. 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. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply.
  3. The period from 15.03.2020 till 14.03.2021 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.
  4. The Government of India shall amend the guidelines for containment zones, to state. “Regulated movement will be allowed for medical emergencies, provision of essential goods and services, and other necessary functions, such as, time bound applications, including for legal purposes, and educational and job-related requirements.”

[IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION, 2021 SCC OnLine SC 193, order dated 08.03.2021]


*Ed. Note: The order erroneously mentions the order dated 23.03.2020 as the order dated 27.03.2020 and the order dated 15.03.2020. Read the following report on the order dated 23.03.2020 extending the limitation period for filing petitions/applications/suits/appeals/etc. 

Coronavirus (COVID-19)| SC extends limitation period for filing petitions/applications/suits/appeals, etc.

Case BriefsSupreme Court

Supreme Court: The bench of Indu Malhotra* and Ajay Rastogi, JJ was posed with the question as to whether the period of limitation for filing the Petition under Section 34 of the Arbitration and Conciliation Act, 1996 would commence from the date on which the draft award is circulated to the parties, or the date on which the signed copy of the award is provided. Going with the latter, the Court held that the period of limitation for filing objections would have to be reckoned from the date on which the signed copy of the award was made available to the parties.

“There is only one date recognised by law i.e. the date on which a signed copy of the final award is received by the parties, from which the period of limitation for filing objections would start ticking. There can be no finality in the award, except after it is signed, because signing of the award gives legal effect and finality to the award.”

Below are the key points highlighted by the Court:

  • Section 31 (1) is couched in mandatory terms, and provides that an arbitral award shall be made in writing and signed by all the members of the arbitral tribunal.

“If the arbitral tribunal comprises of more than one arbitrator, the award is made when the arbitrators acting together finally express their decision in writing, and is authenticated by their signatures.”

  • An award takes legal effect only after it is signed by the arbitrators, which gives it authentication. There can be no finality of the award, except after it is signed, since signing of the award gives legal effect and validity to it.
  • The making and delivery of the award are different stages of an arbitration proceeding. An award is made when it is authenticated by the person who makes it. The statute makes it obligatory for each of the members of the tribunal to sign the award, to make it a valid award. The usage of the term “shall” makes it a mandatory requirement. It is not merely a ministerial act, or an empty formality which can be dispensed with.
  • The legal requirement under sub-section (5) of Section 31 is the delivery of a copy of the award signed by the members of the arbitral tribunal / arbitrator, and not any copy of the award. On a harmonious construction of Section 31(5) read with Section 34(3), the period of limitation prescribed for filing objections would commence only from the date when the signed copy of the award is delivered to the party making the application for setting aside the award.

“If the law prescribes that a copy of the award is to be communicated, delivered, dispatched, forwarded, rendered, or sent to the parties concerned in a particular way, and since the law sets a period of limitation for challenging the award in question by the aggrieved party, then the period of limitation can only commence from the date on which the award was received by the concerned party in the manner prescribed by law.”

  • In an arbitral tribunal comprising of a panel of three members, if one of the members gives a dissenting opinion, it must be delivered contemporaneously on the same date as the final award, and not on a subsequent date, as the tribunal becomes functus officio upon the passing of the final award. The period for rendering the award and dissenting opinion must be within the period prescribed by Section 29A of the Act.
    • The dissenting opinion of a minority arbitrator can be relied upon by the party seeking to set aside the award to buttress its submissions in the proceedings under Section 34.
    • At the stage of judicial scrutiny by the Court under Section 34, the Court is not precluded from considering the findings and conclusions of the dissenting opinion of the minority member of the tribunal
  • The date on which the signed award is provided to the parties is a crucial date in arbitration proceedings under the Arbitration and Conciliation Act, 1996. It is from this date that:

(a) the period of 30 days’ for filing an application under Section 33 for correction and interpretation of the award, or additional award may be filed;

(b) the arbitral proceedings would terminate as provided by Section 32(1) of the Act;

(c) the period of limitation for filing objections to the award under Section 34 commences.

  • Section 34(3) provides a specific time limit of three months from the date of “receipt” of the award, and a further period of thirty days, if the Court is satisfied that the party was prevented by sufficient cause from making the application within the said period, but not thereafter

“If the objections are not filed within the period prescribed by Section 34, the award holder is entitled to move for enforcement of the arbitral award as a deemed decree of the Court u/S. 36 of the Act.”

[DAKSHIN HARYANA BIJLI VITRAN NIGAM LTD. v. NAVIGANT TECHNOLOGIES PVT. LTD., 2021 SCC OnLine SC 157 , decided on 02.03.2021]


*Judgment by: Justice Indu Malhotra

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud and MR Shah, JJ has held that consumer fora has no jurisdiction and/or power to accept the written statement beyond the period of 45 days.

The Court was hearing the case where the National Consumer Disputes Redressal Commission had confirmed the order passed by the Karnataka State Consumer Disputes Redressal Commission rejecting the application seeking condonation of delay in filing the written statement to the consumer complaint. The written version/written statement was filed beyond the prescribed period of limitation provided under the Consumer Protection Act, 1986, i.e., beyond the period of 45 days.

As per the Consumer Protection Act, 1986, the written version/written statement is required to be filed within 30 days and the same can be extended by a further period of 15 days.

As per the decision of the Constitution Bench in New India Assurance company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2020) 5 SCC 757,

“the District Forum has no power to extend the time to file the response to the complaint beyond the period of 15 days in addition to 30 days as is envisaged under Section 13 of the Act.”

It was, however, submitted by the petitioner that as observed in paragraph 63, the said judgment shall be applicable prospectively only. Therefore, the aforesaid decision shall not be applicable retrospectively to the complaints filed before the said decision.

Refusing the accept the contention, the Court said that as per 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 and the Constitution Bench has reiterated the view taken in the case of J.J.Merchant and has again reiterated 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 petitioner had then relied on Reliance General Insurance Co. Ltd. v.  Mampee Timbers & Hardwares Pvt. Ltd., 2017 SCC OnLine SC 2027, wherein it was directed that 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, keeping in view the fact that the judgment of this Court in the case of New India Assurance Company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2015) 16 SCC 20 has been referred to a larger Bench.

The Court rejected this contention too on the ground that the Court had, in Reliance General Insurance Co. Ltd, specifically mentioned that

“it will be open to the concerned fora to accept the written statement filed beyond the stipulated period of 45 days in an appropriate case, on suitable terms, including the payment of costs and to proceed with the matter.”

Therefore, ultimately, it was left to the concerned fora to accept the written statement beyond the stipulated period of 45 days in an appropriate case.

In the present case, despite sufficient time granted the written statement was not filed within the prescribed period of limitation. Therefore, the Court observed that the National Commission had considered the aspect of condonation of delay on merits also.

[Daddy’s Builders Pvt. Ltd. v. Manisha Bhargava, 2021 SCC OnLine SC 82, decided on 11.02.2021]


*Judgment by: Justice MR Shah

Petitioner’s Counsel: Advocate Ashish Choudhary

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

Case BriefsHigh Courts

Himachal Pradesh High Court: Jyotsna Rewal Dua J., dismissed the petition being non-maintainable.

The petitioner by way of this instant petition has challenged the election of Respondent 5 as Member, Block Development Committee, Misserwala, District Sirmour in the elections to Panchayati Raj Institutions of the State concluded in January 2021. The writ petition has been filed seeking that the respondent election commission may be directed to start the fresh election and declare the election under challenge as null and void.

The issue before the High Court is the maintainability of writ petitions under Article 226 of the Constitution of India vis-à-vis Article 243-O of the Constitution of India in respect of limitation in exercise of judicial review by the Court in election matters.

Section 162 of the H.P. Panchayati Raj Act provides that no election under the Act shall be called in question except by an election petition presented in accordance with the provisions of the chapter and Section 175 of the Act enumerates the grounds for declaring election to be void.

The Court stated

 “We are also conscious of the limitations set forth on such exercise of judicial review in view of bar of jurisdiction imposed by Article 243-O of the Constitution of India, which is quoted hereinbelow:-

“243-O. Bar to interference by Courts in electoral matters- Notwithstanding anything in this Constitution-

(a) the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies made or purporting to be made under article 243K, shall not be called in question in any court;

(b) no election to any Panchayat shall be called in question except by an election petition presented to such authority and in such manner as is provided for by or under any Law made by the Legislature of a State.”

 The Court further relied on judgment Laxmibai v. Collector, Nanded, (2020) 12 SCC 186 wherein it was observed the maintainability of writ petitions under Article 226 of the Constitution of India vis-a-vis Article 243-O of the Constitution of India in respect of limitation in exercise of judicial review by the Court in election matters, it was held that all election disputes must be determined only by way of an election petition. This by itself may not per-se bar judicial review, which is the basic structure of the Constitution but ordinarily, such jurisdiction would not be exercised. The relevant paragraphs of the judgment are extracted hereinafter:

 “15. It is true that the High Court exercises a plenary jurisdiction under Article 226 of the Constitution of India. Such jurisdiction being discretionary in nature may not be exercised inter alia keeping in view of the fact that an efficacious alternative remedy is available therefor. (See Mrs.

  1. Article 243-O of the Constitution of India mandates that all election disputes must be determined only by way of an election petition. This by itself may not per se bar judicial review which is the basic structure of the Constitution, but ordinarily such jurisdiction would not be exercised. There may be some cases where a writ petition would be entertained but in this case we are not concerned with the said question.
  2. ….a writ petition should not be entertained when the main question which fell for decision before the High Court was non-compliance of the provisions of the Act which was one of the grounds for an election petition in terms Rule 12 framed under the Act.”
  3. Section 10A of the 1959 Act and Section 9A of the 1961 Act read with Articles 243-K and 243-O, are pari material with Article 324 of the Constitution of India. In view of the judgments referred, we find that the remedy of an aggrieved person accepting or rejecting nomination of a candidate is by way of an election petition in view of the bar created under Section 15A of the 1959 Act. The said Act is a complete code providing machinery for redressal to the grievances pertaining to election as contained in Section 15 of the 1959 Act. The High Court though exercises extraordinary jurisdiction under Article 226 of the Constitution of India but such jurisdiction is discretionary in nature and may not be exercised in view of the fact that an efficacious alternative remedy is available and more so exercise restraint in terms of Article 243-O of the Constitution of India. Once alternate machinery is provided by the statute, the recourse to writ jurisdiction is not an appropriate remedy. It is a prudent discretion to be exercised by the High Court not to interfere in the election matters, especially after declaration of the results of the elections but relegate the parties to the remedy contemplated by the statute. In view of the above, the writ petition should not have been entertained by the High Court. However, the order of the High Court that the appellant has not furnished the election expenses incurred on the date of election does not warrant any interference.”

 The Court thus held that “the instant writ petition is not maintainable at all and the same is accordingly dismissed with liberty reserved to the petitioner to avail appropriate alternate remedy in accordance with law.” [Kauser v. State Election Commission,  2021 SCC OnLine HP 227, decided on 08-02-2021]


Arunima Bose, Editorial Assistant has put this story together

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the impugned order wherein credit had been denied on the premise as per Notification No.02/14-CE (N.T.) dt. 20-01-2014, the appellant was not entitled to credit prior to the Notification No.01/10-CE dt. 6-02-2010.

The appellant was located in the State of Jammu & Kashmir and was availing the benefit of exemption Notification No.01/10-CE dt.6-02-2010. The appellant procured certain inputs and availed credit of duty paid on these inputs. The Revenue stated that an assessee is not entitled to avail credit against the inputs issued by the units, who were availing exemption under Notification No.01/10-CE dt. 6-02-2010 and after the introduction of Notification No.02/14-CE (N.T.) dt. 20-01-2014, the notification No.01/10-CE dt. 6-02-2010 was amended thereafter the credit was available to the assessee. After adjudication, the credit availed by the appellant was denied. Counsel for the appellant also submitted that the period involved in this case was 01-08-2012 to 19-01-2014 whereas the show cause notice had been issued on 31-08-2017 by invoking the extended period of limitation.

The Tribunal observed that similarly placed assessee was allowed the credit although against those orders, the appeals had been filed by the Revenue before the Commissioner (Appeals), in that circumstance, when the Revenue was having divergent views on the issue, the extended period of limitation was not applicable.

The Tribunal allowed the appeal stating that the denial of credit was barred by limitation as the show cause notice was issued by invoking the extended period of limitation.[Pioneer Pesticides (P) Ltd. v. Commr. of CGST, 2021 SCC OnLine CESTAT 8, decided on 12-01-2021]


Suchita Shukla, Editorial Assistant has put this story together

Case BriefsSupreme Court Roundups

Did you know? In the year 2020,

    • All the Constitution bench verdicts were unanimous with no dissenting opinion.
    • 9 out of 11 Constitution bench judgments were delivered by benches consisting of Justices Arun Mishra, Indira Banerjee, Vineet Saran and M.R. Shah, followed by Justices Aniruddha Bose and S. Ravindra Bhat who were part of Constitution benches in 5 and 4 cases, respectively.

As we look forward to the new year of 2021, here is a quick recap of the Constitution bench verdicts delivered by the Supreme Court of India in 2020.

1. Questions of law can be referred to larger bench while hearing a review petition

9-judge bench: SA Bobde, CJ and R Banumathi, Ashok Bhushan, L Nageswara Rao, M M Shantanagoudar, S A Nazeer, R Subhash Reddy, B R Gavai and Surya Kant, JJ

After renowned jurist and senior advocate Fali Nariman objected to the manner in which the Supreme Court turned a review of the Sabarimala case into an opportunity to set up a nine-judge Bench and examine whether certain essential religious practices of various faiths, including Islam and Zoroastrianism, should be constitutionally protected, the 9-judge bench held that the Supreme Court can refer questions of law to a larger bench while exercising its review jurisdiction.

The Court had in November last year, suggested that the Sabarimala issue along with other related issues, be heard by a larger bench of at least 7-judges. [Read: Sabarimala Review Petitions Not Referred To A Larger Bench, But Kept Pending. Here’s What Supreme Court Has Actually Held]

Read more…

[Kantaru Rajeevaru v. Indian Young Lawyers Assn, (2020) 3 SCC 52]


2. Pleas challenging the abrogation of Article 370 not referred to a larger bench

5-judge bench: NV Ramana, SK Kaul, R. Subhash Reddy, BR Gavai and Surya Kant, JJ

The bench refused to refer the petitions challenging the constitutional validity of the Centre’s move to abrogate Article 370 to a larger bench. Holding that there is no conflict between the judgments in the Prem Nath Kaul case and the Sampat Prakash casethe bench said that judgments cannot be interpreted in a vacuum, separate from their facts and context. Observations made in a judgment cannot be selectively picked in order to give them a particular meaning. It noted,

the Constitution Bench in the Prem Nath Kaul case did not discuss the continuation or cessation of the operation of Article 370 of the Constitution after the dissolution of the Constituent Assembly of the State. This was not an issue in question before the Court, unlike in the Sampat Prakash case where the contention was specifically made before, and refuted by, the Court. This Court sees no reason to read into the Prem Nath Kaul case an interpretation which results in it being in conflict with the subsequent judgments of this Court, particularly when an ordinary reading of the judgment does not result in such an interpretation.”

Read more…

[Dr. Shah Faesal v. Union of India, (2020) 4 SCC 1]


3. No time limit could be fixed while granting anticipatory bail

5-judge bench: Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah, and S. Ravindra Bhat, JJ

The bench unanimously ruled that the protection granted to a person under Section 438 Cr.PC should not invariably be limited to a fixed period; it should inure in favour of the accused without any restriction on time.

Read more…

[Sushila Aggarwal v. State of NCT of Delhi,  (2020) 5 SCC 1]


4. No lapse of acquisition proceedings if government has ‘paid’ compensation

5-judge bench: Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah, and S. Ravindra Bhat, JJ

The bench unanimously held that the land owners who had refused to accept compensation or who sought reference for higher compensation, cannot claim that the acquisition proceedings had lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013

Last year, Justice Arun Mishra, heading the Bench, had refused to recuse himself from hearing the case and had said,

“I would be committing a grave blunder by recusal in the circumstances, on the grounds prayed for, and posterity will not forgive me down the line for setting a bad precedent. It is only for the interest of the judiciary (which is supreme) and the system (which is nulli secundus) that has compelled me not to recuse.”

Justice Mishra’s recusal was sought on the ground that he was heading a Bench meant to re-examine a judgment that he had himself given in 2018 in in Indore Development Authority v. Shailendra, (2018) 3 SCC 412. 

Read more…

[Indore Development Authority v. Manohar Lal Sharma, (2020) 8 SCC 129]


5. States, and not MCI, have power to make reservation for in-service candidates in Post Graduate Medical Course 

5-judge bench: Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah and Aniruddha Bose, JJ

The bench unanimously held that States have the legislative competence and/or authority to provide for a separate source of entry for in-service candidates seeking admission to postgraduate degree/diploma courses, in exercise of powers under Entry 25, List III.

“…policy must provide that subsequent to obtaining the postgraduate degree by the concerned in-service doctors obtaining entry  in degree courses through such separate channel serve the State in the rural, tribal and hilly areas at least for five years after obtaining the degree/diploma and for that they will execute bonds for  such  sum the   respective  States  may   consider   fit  and  proper”

 The Court, however, specifically observed and clarified that the present decision shall operate prospectively, and any admissions given earlier taking a contrary view shall not be affected by this judgment.

Read more…

[TN Medical Officers Association v. Union of India, 2020 SCC OnLine SC 699]


6. Sub-classification of Scheduled Castes| E.V. Chinnaiah decision to be revisited; Matter referred to larger bench

5-judge bench: Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah and Aniruddha Bose, JJ

After noticing that a 5-Judge Bench in E.V. Chinnaiah v. State of A.P., (2005) 1 SCC 394, is required to be revisited, the bench referred the matter to a larger bench and said,

“Reservation was not contemplated for all the time by the framers of the Constitution.  On the one hand, there is no exclusion of those who have come up, on the other hand, if sub¬classification is denied, it would defeat right to equality by treating unequal as equal.”

Read more…

[State of Punjab v. Davinder Singh, (2020) 8 SCC 1]


7. SARFAESI Act applicable to Co­operative Banks

5-judge bench of Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah and Aniruddha Bose, JJ

The bench unanimously held that banking’ relating to co­operatives can be included within the purview of Entry 45 of List I, and it cannot be said to be over inclusion to cover provisions of recovery by co­operative banks in the SARFAESI Act.

Holding that Co­operative bank’s entire operation and activity of banking are governed by a law enacted under Entry 45 of List I, i.e., the BR Act, 1949, and the RBI Act under Entry 38 of List I, the bench said,

“recovery of dues would be an essential function of any banking institution and the Parliament can enact a law under Entry 45 of List I as the activity of banking done by co­operative banks is within the purview of Entry 45 of List I. Obviously, it is open to the Parliament to provide the remedy for recovery under Section 13 of the SARFAESI Act.”

Read more…  

[Pandurang Ganpati Chaugale v. Vishwasrao Patil Murgud Sahakari Bank Ltd,  (2020) 9 SCC 215]


8. Andhra Pradesh’s 100% reservation for Scheduled Tribe candidates for the post of teachers without rhyme or reason

5-judge bench: Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah and Aniruddha Bose, JJ 

Holding the Government Office Ms. No.3 dated 10.1.2000 issued by the erstwhile State of Andhra Pradesh providing 100% reservation to the Scheduled Tribe candidates out of whom 33.1/3% shall be women for the post of teachers in the schools in the scheduled areas in the State of Andhra Pradesh, unconstitutional, the bench said that there was no rhyme or reason with the State Government to resort to 100% reservation.

“It was least expected from the functionary like Government to act in aforesaid manner as they were bound by the dictum laid down by this Court in Indra Sawhney and other decisions holding that the limit of reservation not to exceed 50%.”

Read more…

[Chebrolu Leela Prasad Rao v. State of Andhra Pradesh, 2020 SCC OnLine SC 383]


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

5-judge bench: Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah and S. Ravindra Bhat, JJ

The bench unanimously held that the District Forum has no power to extend the time for filing the response to the complaint beyond the period of 15 days in addition to 30 days as is envisaged under Section 13 of the Consumer Protection Act, 1986.

The bench was answering the reference relating to the grant of time for filing response to a complaint under the provisions of the Consumer Protection Act, 1986 wherein the answers to the following questions were sought:

  • whether Section 13(2) (a) of the Consumer Protection Act, which provides for the respondent/opposite party filing its response to the complaint within 30 days or such extended period, not exceeding 15 days, should be read as mandatory or directory; i.e., whether the District Forum has power to extend the time for filing the response beyond the period of 15 days, in addition to 30 days.
  • what would be the commencing point of limitation of 30 days stipulated under the aforesaid Section.

Read more…

[New India Assurance v. Hilli Multipurpose Cold Storage Pvt. Ltd., (2020) 5 SCC 757]


10. Accused under NDPS Act not entitled to acquittal as a blanket rule merely because the complainant is the investigating officer

5-judge bench: Arun Mishra, Indira Banerjee, Vineet Saran, MR Shah and S. Ravindra Bhat, JJ

The bench unanimously held that the accused under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) is not entitled to an acquittal as a blanket rule merely because the complainant is the investigating officer.

“… merely because the informant is the investigator, by that itself the investigation would not suffer the vice of unfairness or bias and therefore on the sole ground that informant is the investigator, the accused is not entitled to acquittal. The matter has to be decided on a case to case basis.”

Read more…

[Mukesh v. State (Narcotic Branch of Delhi), (2020) 10 SCC 120]


11. State Government cannot fix the “minimum price” of sugarcane once Centre has already fixed it

5-judge bench: Arun Mishra, Indira Banerjee and Vineet Saran, M.R. Shah and Aniruddha Bose, JJ,

The bench unanimously held that once the Central Government having exercised the power under Entries 33 and 34 List III of seventh Schedule and fixed the “minimum price”, the State Government cannot fix the “minimum price” of sugarcane.

By virtue of Entries 33 and 34 List III of seventh Schedule, both the Central Government as well as the State Government have the power to fix the price of sugarcane. The Court, however, clarified that

“it is always open for the State Government to fix the “advised price” which is always higher than the “minimum price”, in view of the relevant provisions of the Sugarcane (Control) Order, 1966, which has been issued in exercise of powers under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953.”

Read more…

[West UP Sugar Mills Association v. State of Uttar Pradesh, (2020) 9 SCC 548]


Also read:

Supreme Court year-end roundup| From important judgments to unmissable facts and stories, here’s a comprehensive roundup of all that happened in 2020

Case BriefsSupreme Court

Supreme Court: The bench of AM Khanwilkar* and Dinesh Maheshwari, JJ has held that for invoking Section 17 of the Limitation Act, 1963, two ingredients i.e. existence of a fraud and discovery of such fraud, have to be pleaded and duly proved and that in case of failure to establish the existence of fraud, there is no occasion for its discovery.


Background of the case


The dispute dating back to 1990 pertains to a General Power of Attorney (GPA) purported to have been executed by the plaintiff in favour of defendant No. 1 and consequently sale deeds executed by defendant No. 1 as an attorney of the plaintiff. However, according to the plaintiff, reposing complete trust in her step brothers to step-brothers, she had signed on blank papers under the guise of preparation and processing of documents for the purpose of getting the estate left behind by their father mutated in their names.

After analysing the evidence on record, the trial Court dismissed the suit filed by the plaintiff and this order was upheld by the appellate Court. The High Court, however, reversed the concurrent opinions of two Courts and held that the trial Court as well as the first appellate Court committed manifest error and misapplied the settled legal position.

Challenging the High Court’s decision before the Supreme Court, the defendants argued that interference by the High Court was unwarranted as the same did not involve any substantial question of law. On merits, the aforesaid defendants contended that the evidence of the plaintiff was self­-contradictory, as she first claimed that her signatures were taken on blank papers and then denied her signatures occurring on the 1990 GPA. The plea that the signatures were taken on blank papers was not substantiated as the 1990 GPA was executed on stamp papers.


Analysis


The Court held that the diverse grounds urged by the plaintiff in disputing the 1990 GPA and the sale deeds were unsubstantiated and untenable. Here are the key factors taken into consideration by the Court:

  • As the record revealed that the disputed documents were registered, the Court, guided by the settled legal principle that a document is presumed to be genuine if the same is registered, was of the opinion that the initial onus was on the plaintiff, who had challenged the stated registered document.
  • As the execution of the 1990 GPA and the sale deeds in the present cases was denied by the plaintiff, it became necessary for the plaintiff to examine the attesting witnesses of the disputed documents to establish her allegation about its non-execution. However, both the attesting witnesses were not examined.

“The trial Court had justly placed the initial burden of proof upon the plaintiff as it was her case that the subject documents were forged or product of fraud and moreso because the documents bore her signature. The first appellate Court did not elaborate on that aspect. Even assuming that the burden had shifted upon the defendants, the witness identifying signatures of the dead attesting witness was examined by the defendants. Therefore, the documents stood proved and the burden was duly discharged by the defendants.”

  • The evidence of plaintiff’s deed writer (PW4) unveiled that the stated documents were prepared on the basis of instructions of the plaintiff and had been duly executed by her in the presence of the attesting witnesses.

“… the trial Court and the first appellate Court had relied upon the evidence of PW4. The High Court, however, proceeded on surmises and conjectures and took a view which is perverse and tenuous.   In that, the ground on which the High Court rejected the evidence of PW4 is that he was known to the defendant No. 4 since his school days. We do not find it to be a correct approach to disregard  the credible testimony of the witness examined by the plaintiff herself (without declaring him as a hostile witness) and especially when it had come on record that the said scribe is a regular deed writer at  the  Tehsil  complex,  Dasuya.  Notably, PW4 had not been declared hostile at the instance of the plaintiff and as such, this part of his testimony would be staring at the plaintiff.”

  • Since the attesting witness had proved the execution of the sale deeds, the primary onus upon the plaintiff had not shifted unto the defendants. Further, the plaintiff was obliged to rebut the positive evidence produced by the defendants regarding payment of consideration amount to the plaintiff; but also ought to have independently proved her case of non-receipt of the consideration amount.

Ruling


Concluding that the plaintiff failed to prove that her signatures on the subject documents are forged, the Court reiterated that the standard of proof required in a civil dispute is preponderance of probabilities and not beyond reasonable doubt.

“In the present cases, though the discrepancies in the 1990 GPA are bound to create some doubt, however, in absence of any tangible evidence produced by the plaintiff to support the plea of fraud, it does not take the matter further. Rather, in this case the testimony of the attesting witness, scribe and other independent witnesses plainly support the case of the defendants. That evidence dispels the doubt if any; and tilt the balance in favour of the defendants.”

[Rattan Singh v. Nirmal Gill, 2020 SCC OnLine SC 936, decided on 16.11.2020]


*Justice AM Khanwilkar has penned this judgment 

Case BriefsSupreme Court

Supreme Court: On the question as to whether the right of pre-emption can be enforced for an indefinite number of transactions or it is exercisable only the first time, the 3-judge bench of SK Kaul, Aniruddha Bose and Krishna Murari, JJ has held that

“… it is only exercisable for the first time when the cause of such a right arises, in a situation where the plaintiff-pre-emptor chooses to waive such right after the 1966 Act becoming operational. Section 9 of the said Act operates as a bar on his exercising such right on a subsequent transaction relating to the same immovable property.”

Origin and history of right of pre-emption

The historical perspective of the right of pre-emption shows that it owes its origination to the advent of the Mohammedan rule, based on customs, which came to be accepted in various courts largely located in the north of India. The pre-emptor has two rights. The inherent or primary right, which is the right to the offer of a thing about to be sold and the secondary or remedial right to follow the thing sold. It is a secondary right, which is simply a right of substitution in place of the original vendee. The pre-emptor is bound to show that he not only has a right as good as that of the vendee, but it is superior to that of the vendee; and that too at the time when the pre-emptor exercises his right.

“… the right is a “very weak right” and is, thus, capable of being defeated by all legitimate methods including the claim of superior or equal right.”

Recurring right or a one-time right

  • Section 21 of the Rajasthan Pre-Emption Act, 1966 stipulates that the right of pre-emption has to be exercised, in case of a sale, within one year from the date of sale and if the sale is not by a registered deed, on the purchaser taking the physical possession of any part of the property sold.
  • This period has to be as per Article 97 of the Limitation Act which states that it is one year from the date when the sale is registered.
  • The loss of right of pre-emption on transfer has been defined under Section 9 of the said Act which provides that the loss is only occasioned, when, within two months from the date of service of the notice, the price is not tendered. However, that is the loss of the right, vis-à-vis the transaction in question.

On the question whether such a right of pre-emption is a recurring right, i.e. every time the property is sold, the right would rearise, in a case the pre-empting plaintiff himself has chosen not to exercise such right over the subject immovable property when sold to another purchaser earlier, the Court held,

“… it would not be appropriate or permissible to adopt legal reasoning making such a weak right, some kind of a right in perpetuity arising to a plaintiff every time there is a subsequent transaction or sale once the plaintiff has waived his right or pre-emption over the subject immovable property.”

Holding that the loss of right mandated under Section 9 of the Act is absolute, the Court further stated that the plain reading of the said provision does not reveal that such right can re-arise to the person who waives his right of pre-emption in an earlier transaction. To do so would mean that a person, whether not having the means or for any other reason, does not exercise the right of pre-emption and yet he, even after decades, can exercise such a right.

“This would create some sort of a cloud on a title and uncertainty as a subsequent purchaser would not know, when he wants to sell the property, whether he can complete the transaction or not or whether a cosharer will jump into the scene. This is not contemplated in the 1966 Act. This is bound to have an effect on the price offered by a purchaser at that time because he would have an impression of uncertainty about the proposed transaction.”

The Court, hence, held that such a right is available once – whether to take it or leave it to a person having a right of pre-emption. If such person finds it is not worth once, it is not an open right available for all times to come to that person.

[Raghunath v. Radha Mohan,  2020 SCC OnLine SC 828, decided on 13.10.2020]

Case BriefsHigh Courts

Patna High Court: In a petition alleging Section 234E of the Income Tax Act, 1961 to be unconstitutional, ultra vires and in contravention of the Constitution of India, Division Bench of Sanjay Karol, CJ., and S. Kumar, J., disposed of the petition refuting all the said allegations and upholding Section 234E as constitutionally valid.

Two fold submissions have been made by the petitioner in the present petition which are (1) constitutional validity of Section 234E of the Income Tax Act, 1961 is challenged; (2) Initiation of proceedings under Section 200A of the Income Tax Act, 1961 is bad in law.

The factual matrix in the present matter is such that a fee for default in furnishing statement under heading Levy of fee in certain cases in chapter XVII-Collection and Recovery-Interest Chargeable has been levied on the petitioner and the same has been challenged.

While dealing with the first issue whereby the constitutional validity of Section 234E of the Income Tax Act, 1961 has been challenged, the Court found no substance in the said contention raised by the petitioner. It is held that under no circumstances can it be implied that the aforementioned statute has was passed by an incompetent legislature or that it has infringed the rights guaranteed under Part III of the Constitution of India. Section 234E is reproduced below for reference-

“234E. Fee for default in furnishing statements.

—(1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section

(3) of section 200 or the proviso to sub-section (3) of section 206C.

(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of Section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.”

Further, relying on the position adopted by other Indian Courts of law while settling a similar issue in a string of case laws, the Court dismissed this contention raised by the petitioner basis the judgments delivered in the cases of Rashmikant Kundailia v. Union of India, (2015) 373 ITR 0268 (Bom), Dr Amrit Lal Mangal v. Union of India, (2015) 235 Taxman 0410 (P &H) and Biswajit Das v. Union of India, (2019) 413 ITR 0092 (Delhi).

Now with respect to the second contention of the petitioner that the proceedings under Section 200A of the Income Tax Act, 1961 is bad in law, the counsel for the petitioner, D.V. Pathy has submitted that the petitioner will be taking recourse under the statutory remedy that is available to him. He pleads for the issue of limitation to be relaxed.

Counsel of the respondents, Archana Sinha has submitted that the issue of limitation shall not be raised during the proceedings given that the petitioner takes recourse under the statute within a period of thirty days from the date of passing of this order.

In view of the facts, circumstances, authorities cited and the arguments advances, the Court disposed of the petition with the direction that the subject of limitation shall not come into the picture if statutory proceedings are initiated within a period of thirty days from the date of this order.[L.N. Sales Pvt. Ltd. v. Union of India, 2020 SCC OnLine Pat 1232, decided on 20-08-2020]

Case BriefsSupreme Court

Supreme Court:  The 3-judge bench of SA Nazeer, Indu Malhotra and Aniruddha Bose, JJ has dismissed Central Government’s plea against enforcement of a 2011 foreign award passed in favour of Vedanta Limited in a dispute arising out of a contract for exploring and developing the petroleum resources in the Ravva Gas and Oil Fields. The Court held,

“the enforcement of the foreign award does not contravene the public policy of India, or that it is contrary to the basic notions of justice.”

On 19 February 2020 the Delhi High Court had directed the enforcement of the foreign award by the Vedanta Limited.

On applicability of amended Section 48 of the Arbitration & Conciliation Act, 1996

In Renusagar Power Co. v General Electric Co., 1994 Supp (1) SCC 644, this Court held that “public policy” comprised of (1) the fundamental policy of Indian law; (2) interests of India; and (3) justice or morality.

Section 48 of the Arbitration and Conciliation Act, 1996 was amended by Act 3 of 2016. By this amendment, the public policy ground was given a narrow and specific construction by statute, by the insertion of two Explanations. The 2016 Amendment has dropped the clause “interests of India,” which was expounded by the Renusagar judgment

“The two Explanations in Section 48 begin with the words “For the avoidance of any doubt.” It cannot, however, be presumed to be clarificatory and retrospective, since the substituted Explanation 1 has introduced new sub-clauses, which have brought about a material and substantive change in the section. A new Explanation 2 has been inserted which states that the test as to whether there is a contravention with the fundamental policy of Indian law, shall not entail a review on the merits of the dispute.”

The Court, hence, held that since the amendments have introduced specific criteria for the first time, it must be considered to be prospective, irrespective of the usage of the phrase “for the removal of doubts.”

It was, hence, held that the amended Section 48 would not be applicable to the present case, since the court proceedings for enforcement were filed by the Respondents-Claimants on 14.10.2014 i.e. prior to the 2016 Amendment having come into force on 23.10.2015.

Whether the Malaysian Courts were justified in applying the Malaysian law of public policy while deciding the challenge to the foreign award?

The Court held that the Malaysian Courts being the seat courts were justified in applying the Malaysian Act to the public policy challenge raised by the Government of India. The enforcement court would, however, examine the challenge to the award in accordance with the grounds available under Section 48 of the Act, without being constrained by the findings of the Malaysian Courts.

“Merely because the Malaysian Courts have upheld the award, it would not be an impediment for the Indian courts to examine whether the award was opposed to the public policy of India under Section 48 of the Indian Arbitration Act, 1996.”

If the award is found to be violative of the public policy of India, it would not be enforced by the Indian courts. The enforcement court would however not second-guess or review the correctness of the judgment of the Seat Courts, while deciding the challenge to the award.

Whether the foreign award is in conflict with the Public Policy of India?

Rejecting the contention that the award may not be enforced, since it is contrary to the basic notions of justice, the Court noticed that the Government has neither been able to prove that the violation of procedural due process in the conduct of the arbitral proceedings nor have they been able to prove that the award is in conflict with the basic notions of justice, or in violation of the substantive public policy of India.

The Court noticed that the  enforcement may be refused only if it violates the enforcement State’s most basic notions of morality and justice, which has been  interpreted to mean that there should be great hesitation in refusing enforcement, unless it is obtained through “corruption or fraud, or undue means.”

On limitation for filing an enforcement/execution petition of a foreign award under Section 47 of the 1996 Act

The Court held that the period of limitation for filing a petition for enforcement of a foreign award under Sections 47 and 49, would be governed by Article 137 of the Limitation Act, 1963 which prescribes a period of three years from when the right to apply accrues.

The Court noticed:

  • The limitation period for filing the enforcement / execution petition for enforcement of a foreign award in India, would be governed by Indian law. The Indian Arbitration Act, 1996 does not specify any period of limitation for filing an application for enforcement/execution of a foreign award. Section 43 however provides that the Limitation Act, 1963 shall apply to arbitrations, as it applies to proceedings in court.
  • The Limitation Act, 1963 does not contain any specific provision for enforcement of a foreign award. Articles 136 and 137 fall in the Third Division of the Schedule to the Limitation Act. Article 136 provides that the period of limitation for the execution of any decree or order of a “civil court” is twelve years from the date when the decree or order becomes enforceable.
  • Article 137 is the residuary provision in the Limitation Act which provides that the period of limitation for any application where no period of limitation is provided in the Act, would be three years from “when the right to apply accrues”.
  • The legislature has omitted reference to “foreign decrees” under Article 136 of the Limitation Act. The intention of the legislature was to confine Article 136 to the decrees of a civil court in India. The application for execution of a foreign decree would be an application not covered under any other Article of the Limitation Act, and would be covered by Article 137 of the Limitation Act.
  • Foreign awards are not decrees of an Indian civil court. By a legal fiction, Section 49 provides that a foreign award, after it is granted recognition and enforcement under Section 48, would be deemed to be a decree of “that Court” for the limited purpose of enforcement. The phrase “that Court” refers to the Court which has adjudicated upon the petition filed under Sections 47 and 49 for enforcement of the foreign award. Hence,

“Article 136 of the Limitation Act would not be applicable for the enforcement/execution of a foreign award, since it is not a decree of a civil court in India.”

  • The enforcement of a foreign award as a deemed decree of the concerned High Court [as per the amended Explanation to Section 47 by Act 3 of 2016 confers exclusive jurisdiction on the High Court for execution of foreign awards] would be covered by the residuary provision i.e. Article 137 of the Limitation Act.

On the Scheme of the 1996 Act for enforcement of New York Convention awards

The enforcement Court cannot set aside a foreign award, even if the conditions under Section 48 are made out. The power to set aside a foreign award vests only with the court at the seat of arbitration, since the supervisory or primary jurisdiction is exercised by the curial courts at the seat of arbitration.

“The enforcement court may “refuse” enforcement of a foreign award, if the conditions contained in Section 48 are made out. This would be evident from the language of the Section itself, which provides that enforcement of a foreign award may be “refused” only if the applicant furnishes proof of any of the conditions contained in Section 48 of the Act.”

Further, the enforcement court is not to correct the errors in the award under Section 48, or undertake a review on the merits of the award, but is conferred with the limited power to “refuse” enforcement, if the grounds are made out.

If the Court is satisfied that the application under Section 48 is without merit, and the foreign award is found to be enforceable, then under Section 49, the award shall be deemed to be a decree of “that Court”.

“The limited purpose of the legal fiction is for the purpose of the enforcement of the foreign award. The concerned High Court would then enforce the award by taking recourse to the provisions of Order XXI of the CPC.”

[Government of India v. Vedanta Limited, 2020 SCC OnLine SC 749, decided on 16.09.2020]

Case BriefsHigh Courts

Madras High Court:  G.K. Ilanthiraiyan, J., quashed the proceedings filed under the Domestic Violence Act in light of being barred by limitation.

The instant petition was filed to quash the Domestic Violence proceedings under the Domestic Violence Act.

Petitioner and respondent are husband and wife, due to some misunderstanding between the two, the respondent left the matrimonial home and went to her parents home.

Thereafter, petitioner filed a petition for dissolution of marriage, whereas the respondent on the other hand also filed a petition for restitution of conjugal rights.

Petitioner’s Counsel contended that the Domestic Violence proceedings were filed only to harass the petitioner and escape from the legal proceedings.

Domestic Violence complaint was filed after the lapse of 1 year 10 months, therefore barred by limitation, and Magistrate ought not to have been taken cognizance under the DV Act.

In view of the above, the DV proceedings need to be quashed.

Bench relied on the decision in Inderjit Singh Grewal v. State of Punjab, (2011) 12 SCC 588 wherein it was held that, under Sections 28 and 32 of the DV Act, 2005 read with Rule 15(6)of the Protection of Women from Domestic Violence Rules, 2006 which make the provisions of the Code of Criminal Procedure applicable.

“…the issue of limitation, in view of the provisions of Section 468 Code of Criminal Procedure, that the complaint could be filed only within a period of one year from the date of the incident seem to be preponderous in view of the provisions of Sections 28 and 32 of the Act 2005 read with Rule 15(6) of The Protection of Women from Domestic Violence Rules, 2006 which make the provisions of Code of Criminal Procedure applicable and stand fortified.”

Therefore, the respondent ought to have lodged the complaint within a period of 1 year from the date of the incident.

Hence, the complaint lodged against the petitioner under the DV Act cannot be sustained. [N. Prasad v. Harithalakshmi, 2020 SCC OnLine Mad 1767, decided on 20-07-2020]

Case BriefsCOVID 19Supreme Court

Supreme Court: The 3-judge bench of Ashok Bhushan, SK Kaul and MR Shah, JJ has held that it’s order dated 23.03.2020, wherein the Court had extended limitation period of appeals from high courts or tribunals on account of COVID-19 pandemic, cannot be read to mean that it ever intended to extend the period of filing charge sheet by police as contemplated under Section 167(2) of the Code of Criminal Procedure.

Setting aside the Madras High Court judgment, where it was had held that the Supreme Court order dated 23.03.2020 eclipsed all provisions prescribing period of limitation until further orders, including the time prescribed under Section 167(2) of the code of Criminal Procedure, the bench said,

“neither this Court in its order dated 23.03.2020 can be held to have eclipsed the time under Section 167(2) CrPC nor the restrictions which have been imposed during the lockdown announced by the Government shall operate as any restriction on the rights of an accused as protected by Section 167(2) regarding his indefeasible right to get a default bail on non-submission of charge sheet within the time prescribed.”

On 23.03.2020, the Court had extended the limitation for filing petitions/ applications/ suits/ appeals/all other proceedings to obviate lawyers/litigants to come physically to file such proceedings in respective Courts/Tribunals. The Court, in the present order explained that the said order was passed to protect the litigants/lawyers whose petitions/ applications/ suits/ appeals/all other proceedings would become time barred they being not able to physically come to file such proceedings. The order was for the benefit of the litigants who have to take remedy in law as per the applicable statute for a right.

“When this Court passed the above order for extending the limitation for filing petitions/ applications/ suits/ appeals/all other proceedings, the order was for the benefit of those who have to take remedy, whose remedy may be barred by time because they were unable to come physically to file such proceedings.”

Stating that the scheme of Code of Criminal Procedure clearly delineates that provisions of Section 167 of Code of Criminal Procedure gives due regard to the personal liberty of a person, the Court explained that without submission of charge sheet within 60 days or 90 days as may be applicable, an accused cannot be detained by the Police. The provision gives due recognition to the personal liberty.

Noticing that the law of limitation bars the remedy but not the right, the Court said that the Investigating Officer in the present case could have submitted/filed the charge sheet before the (Incharge) Magistrate. Therefore, even during the lockdown and as has been done in so many cases the charge-sheet could have been filed/submitted before the Magistrate (Incharge) and the Investigating Officer was not precluded from filing/submitting the charge-sheet even within the stipulated period before the Magistrate (Incharge).

On High Court’s opinion that the lockdown announced by the Government is akin to proclamation of Emergency, the Court said,

“The view of the learned Single Judge that the restrictions, which have been imposed during period of lockdown by the Government of India should not give right to an accused to pray for grant of default bail even though charge sheet has not been filed within the time prescribed under Section 167(2) of the Code of Criminal Procedure, is clearly erroneous and not in accordance with law.”

It is pertinent to note that another bench of Madras High Court had, in Settu v. State, Crl.OP(MD)No. 5291 of 2020, already considered the judgment of this Court dated 23.03.2020 and noticing that personal liberty is too precious a fundamental right, it had held,

“The noble object of the Hon’ble Supreme Court’s direction is to ensure that no litigant is deprived of his valuable rights. But, if I accept the plea of the respondent police, the direction of the Hon’ble Supreme Court which is intended to save and preserve rights would result in taking away the valuable right that had accrued to the accused herein.”

The single judge in the impugned judgment before the Court had called the above mentioned Madras High Court order uncharitable. On this the Court said that the impugned judgment is not only erroneous but also sends wrong signals to the State and the prosecution emboldening them to act in breach of liberty of a person. It, further, said that all Courts including the High Courts and the Supreme Court have to follow a principle of Comity of Courts. A Bench whether coordinate or Larger, has to refrain from making any uncharitable observation on a decision even though delivered by a Bench of a lesser coram.

“A Bench sitting in a Larger coram may be right in overturning a judgment on a question of law, which jurisdiction a Judge sitting in a coordinate Bench does not have. In any case, a Judge sitting in a coordinate Bench or a Larger Bench has no business to make any adverse comment or uncharitable remark on any other judgment.”

[S. Kasi v. State, 2020 SCC OnLine SC 529 , decided on 19.06.2020]


Also read:

COVID-19| SC extends limitation period for filing petitions/applications/suits/appeals, etc.

COVID 19Hot Off The PressNews

The Supreme Court Registry has notified the list of 1239 matters that are likely to be heard by the Supreme Court through Video Conferencing from June 1, 2020.

Earlier, the Registry had notified the new schedule for summer vacations of the Court. The Notice read:

“the period from 18th May, 2020 to 19th June, 2020 (both inclusive) shall be declared as period functioning for the Supreme Court of India.”

The Court was originally supposed to remain closed from May 18, 2020 to July 5, 2020 but the same was changed due to the ongoing Coronavirus Pandemic.  The Court had, on March 23, 2020, opted to hold video-conference to hear urgent matters in an unprecedented move

Click here to access the list of matter.


Also read: 

COVID-19| No in-person hearings in SC till further notice; Extremely urgent matters to be heard via video conference

COVID-19| Here’s the list of directions issued by CJI Bobde in the light of Coronavirus lockdown

COVID-19| SC extends limitation period for filing petitions/applications/suits/appeals, etc

COVID-19| SC extends limitation prescribed under the A&C, 1996 and the NI Act,1881

Case BriefsCOVID 19Supreme Court

Supreme Court: The 3-judge bench of SA Bobde, Deepak Gupta and Hrishikesh Roy, JJ has directed extended the limitation prescribed under the Arbitration and Conciliation Act, 1996 and under section 138 of the Negotiable Instruments Act 1881. The Court directed that the limitation period under the said Acts,

“shall be extended with effect from 15.03.2020 till further orders to be passed by this Court in the present proceedings.”

The said order of the Court came in furtherance of the order passed on March 23, 2020 in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION, 2020 SCC OnLine SC 343, wherein the 3-judge bench of SA Bobde, CJ and L. Nageswara Rao and Surya Kant, JJhad  invoked its power under Article 142 read with Article 141 of the Constitution of India and extended limitation period of appeals from high courts or tribunals on account of coronavirus (COVID-19) pandemic.

The Court took into consideration the effect of the Corona Virus (COVID 19) and resultant difficulties being faced by the lawyers and litigants and passed the present order with a view to obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunal across the country including this Court.

The Court further said,

“In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown.”

[IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION,  2020 SCC OnLine SC 434 , order dated 06.05.2020]

COVID 19Hot Off The PressNews

1. With regard to Limitation, it is clear that the order dated 23.3.2020 passed by Hon’ble Supreme Court in suo motu WP-03/2020 is binding on everyone in India, for further clarification, it is hereby clarified that the litigant public with regard to the matters falling within jurisdiction of NCLT shall abide by the aforesaid orders of Hon’ble Supreme Court of India.

2. This issues with approval of Hon’ble Acting President, NCLT.


National Company Law Tribunal 

[Notice dt. 24-03-2020]