Delhi High Court
Case BriefsHigh Courts

Delhi High Court: In a PIL filed by Pankaj Kumar, a young advocate of 29 years of age, enrolled with Delhi Bar Council is seeking issuance of writ of mandamus to consider the financial difficulties faced by young lawyers and provide them with financial assistance of Rs.5000 during initial year of practice; a Division Bench of Satish Chandra Sharma and Subramonium Prasad, JJ., refused to entertain the instant Public Interest Litigation.

The Court, however, noted that unfortunately, young professionals in all fields, be it from Medicine, Chartered Accountancy, Architecture and Engineering etc., face problems that are similar to the ones being faced by young advocates.

The Court further noted that it is well settled that a writ can lie only for the enforcement of the right established by law and Article 21 cannot be stretched to encompass in itself a right of an Advocate to claim a monthly stipend from Bar Associations and it is for the Bar Councils to make provisions to provide some kind of financial assistance so that the young advocates, who are the future of this noble profession, are able to sustain themselves.

The Court requested Bar Council of Delhi and the Bar Council of India to make provisions for providing stipends to the young advocates, who have recently enrolled themselves in the profession, so that they can overcome the financial stress in the initial years of practice.

The Court further made an appeal to the senior lawyers to ensure that the stipend that is paid to their juniors is enough for their juniors to evade the financial stress that accompanies this profession, allows them to lead a more dignified life and be more mindful of the financial background of their juniors and employ a more empathetic approach towards the same, considering the virtuosity of this profession.

On a further direction sought by the petitioner regarding making rules for chamber/coworking space allotment by creating equal opportunity to the newly enrolled advocates, the Court observed that in view of the fact that there are rules for allotment of chambers, the plea of the Petitioner to provide for specific chambers only for junior advocates cannot be entertained.

The Court also appealed to the Bar Councils/ Associations to be more sensitive to the difficulties of the younger members of the Bar and to consider providing some specified space which can be utilized by the young advocates to further not only their career but also the future of this profession.

[Pankaj Kumar v. Bar Council of Delhi, 2022 SCC OnLine Del 3071, decided on 23-09-2022]


Advocates who appeared in this case :

For petitioner: Mr. Srikant Prasad and Mr. Dewashish Viswakarma, Advocates.

For respondent: Mr. Anurag Ahluwalia, CGSC with Mr. Danish Faraz Khan, Advocate for R-3. Mr. Anuj Aggarwal, ASC for GNCTD with Ms. Ayushi Bansal and Mr. Sanyam Suri, Advocates for R-4.


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

Customs, Excise and Services Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): While dealing with an issue relating to payment of 6% on empty packaging drums of cenvatable input considering the same as non-excisable goods, Ramesh Nair (Judicial Member) held that the empty packaging material of cenvatable input is not liable for payment.CA appearing on behalf of the appellant submitted that the adjudicating authority and Commissioner (Appeals) confirmed the demand considering the drum as non excisable goods. He further submitted that the empty drums are not generated during the process of manufacture it is cleared after emptying the inputs therefore, the drums are cleared as such and the same is not liable for payment under Rule 6(3).

The Tribunal considered the submission made by both sides, perused the records and found that the lower authorities have confirmed the demand only on the ground that empty drums of cenvatable input is a non excisable goods and therefore, the clearance there of will attract 6% reversal in terms of rule 6(3) of Cenvat Credit Rules, 2004. The Tribunal further considered and reiterated the judgment of the Tribunal in Banco Gasket (INDIA) Ltd. v. CCE & ST, (2021) 8 TMI 77 which was also dealing with an identical issue. The Tribunal relied on the above judgment stating that the very identical issue has been considered and categorically held that empty packaging material of cenvatable input is not liable for payment either as excise duty or as Cenvat credit under Rule 6(3) of Cenvat Credit Rules, 2004.

The Tribunal allowed the appeal, setting aside the impugned order holding that the appellant is not liable to make any payment on clearance on empty drums.

[Cadila Healthcare Ltd. v. C.C.E & ST, Excise Appeal No. 10100 of 2020, decided on 24-06-2022]


Advocates who appeared in this case :

Shri Mitesh Jain, Advocate, for the Appellant;

Shri Vinod Lukose, Superintendent (AR), for the Respondent.


*Suchita Shukla, Editorial Assistant has reported this brief.

SEBI
Legislation UpdatesNotifications

On June 21, 2022, SEBI has modified operational guidelines for Foreign Portfolio Investors and Designated depository participants and Eligible Foreign Investors to which the payment is to be done electronically. This shall come into force on June 24, 2022. which specifies Bank account details for remittance of various payment of various SEBI fees in US $.

The ‘Operational Guidelines for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors’, inter-alia, specifies Bank account details for remittance of various payment of various SEBI fees in US $.  In order to facilitate faster confirmation of remittances by the intermediaries, necessary arrangement has been made for foreign inward remittances in the following bank namely:

Name of the Bank Account Securities and Exchange Board of India

Name of Bank, Branch ICICI Bank Ltd. Bandra Kurla Complex, Bandra (East) Mumbai 400051

Bank Account No. 055501001994

IFSC Code ICIC0000555

MICR Code No. 400229029

Swift Code No. ICICINBBNRI

 

 

Case BriefsHigh Courts

Madhya Pradesh High Court: Sushrut Arvind Dharmadhikari, J. allowed a writ petition which was filed assailing the legality, validity and propriety of the order dated 1-8-2018 whereby the excess amount of Rs.81,239/- has been sought to be recovered from the gratuity payable to him.

Petitioner was aggrieved by the order of recovery after retirement, his grievance was that neither he was afforded any opportunity of hearing nor he was given any show cause notice before deducting the amount from the retiral dues i.e. gratuity of the petitioner. The petitioner was neither found guilty of any misconduct nor held guilty of any offence in the criminal proceedings. The inaction on the part of the respondents was in flagrant violation of principles of natural justice.

Counsel for the petitioner contended that the recovery cannot be made from the retiral dues of the petitioner because there was no misrepresentation or fault on the part of the petitioner. The said recovery had been done without prior approval of the Governor, which was in violation of Rule 9 of the Pension Rules, 1976.

The Court on the perusal of record noticed that it is not the case of the respondents that any undertaking was given by the petitioner for refund of the amount, if any excess payment is made. The Court relied on State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334 wherein the Supreme Court had laid down the following few situations wherein recoveries by the employee would be impermissible in law:

(i) Recovery from employees belonging to Class III and Class IV service (or Group C and Group D service).

(ii) Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.

(iii) Recovery from the employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.

(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.

(v) In any other case, where the Court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer’™s right to recover.

The Court held that the case falls under category 3 as the respondents 4 had wrongly issued the impugned order directing recovery of the amount of Rs.81,239/- and thus allowed the petition directing to refund the aforesaid amount, if already recovered, to the petitioner within a period of 3 months.[Rammani Patel v. State of Madhya Pradesh, 2022 SCC OnLine MP 879, decided on 22-04-2022]


For the petitioner: Mr C.L.Patel

For the respondents: Mr Dhiraj Tiwari


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Orissa High Court: R K Pattnaik, J. dismissed the petition and held that the ground on which the petition is raised is misconceived and therefore, cannot be sustained.

The facts of the case are such that the  petitioner is an accused in a complaint case filed by OP 1 pending before the court below for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 ( ‘the NI Act’) alleging therein that the former had taken a hand loan of Rs.40,000/- to meet his personal needs and when it could be paid back, some henchmen of OP 1 forcibly entered inside his residence and managed to obtain a cheque for an amount of Rs.40,000/- drawn in the UCO Bank, Khurda Branch, Khurda and thereafter, presented it before the bank for encashment but it could not be honored for insufficient funds in the account and again after five months, it was again submitted and yet dishonored with a similar endorsement dated 18th October, 2010. The cognizance was taken and now it is raised for dispute that court below could not have taken cognizance of the offence under Section 138 of the N.I. Act after it was presented for encashment once again after about five months which is not permitted under law. Hence the petitioner assailed the legality and judicial propriety of order of cognizance and invoked jurisdiction under Section 482 Cr.P.C on the grounds inter alia that it is not sustainable in law and therefore, liable to be quashed.

The issue that came for consideration is that the question is, whether on the basis of a statutory notice issued by OP 1 subsequent to dishonor of cheque about five months before, the learned court below could have entertained the complaint and taken cognizance of offence under Section 138 of the N.I. Act as against the petitioner?

The Court relied on Sadanandan Bhadran v. Madhavan Sunil Kumar, (1998) 6 SCC 514 and observed that to the extent that second and successive presentation of a cheque is legally permissible as long as it is within six months or validity of the cheque, whichever is earlier.

The Court reiterated that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by statutory notice and a failure to pay had not been launched. Hence no real or qualitative difference exists between a case where default is committed and prosecution immediately launched and another, where the prosecution is deferred till the cheque presented again gets dishonored for the second or successive time.

With regard to the purport of NI Act the Court observed that if the entire purpose underlined Section 138 of the N.I. Act is to compel the drawers to honor their commitments made in course of business or other transactions, there is no reason why a person who has issued a cheque which is dishonored and who failed to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque had not rushed to the court with a complaint based on such default or for the reason that the drawer has made the holder defer prosecution promising to make arrangements for funds or on account of any other similar situation.

The Court concluded after perusing various judgments on the similar point of law that such a criminal action on a subsequent statutory notice or a notice sent for the first time after dishonor of cheque previously for which prosecution was not launched on the promise of the accused to make arrangement for funds, a complaint cannot be held as not maintainable.

The Court thus observed that in the present case OP 1 did not send any statutory notice after the cheque was dishonored in the month of May, 2010 but once again presented it within the validity period of the cheque and thereafter, issued the statutory notice as required under law and under such circumstances, it cannot be said that the complaint is invalid.

The Court thus held “the contention of the petitioner vis-à-vis maintainability of the complaint on the ground raised is misconceived and therefore, cannot be sustained.”

[Gadadhar Barik v. Pradeep Kumar Jena, 2022 SCC OnLine Ori 1052, decided on 07-04-2022]


Appearances

For Petitioner- Mr. A. Pattanaik

For Opposite Parties- Mr. D.R. Parida


Arunima Bose, Editorial Assistant has reported this brief.

Experts CornerKhaitan & Co

Introduction

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) is an act “to regulate securitisation and reconstruction of financial assets and enforcement of security interest and to provide for a central database of security interests created on property rights, and for matters connected herewith or incidental thereto”. As per Section 13(2) of the SARFAESI Act, where any borrower, who is under a liability to a secured creditor makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as a non-performing asset, then the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within 60 (sixty) days from the date of the notice, failing which, the secured creditor shall be entitled to exercise all or any of the rights to take possession of the secured assets under Section 13(4) of the SARFAESI Act and sell the same without the intervention of the court.

 

With that background, we aim to analyse whether the auction-purchasers can purchase the secured asset from the secured creditors under SARFAESI Act and the Security Interest (Enforcement) Rules, 2002 (SARFAESI Rules) (collectively “SARFAESI”) free from encumbrance including those arising out of pending statutory dues.

 

Priority of dues: An analysis

 

With the introduction of the SARFAESI Act, several banks contended that given the non obstante clause in Section 35, the banks being the secured creditors will have priority over the State’s first charge. However, the Supreme Court in Central Bank of India v. State of Kerala[1] clarified that SARFAESI Act does not provide for first charge to the secured debts due to banks and State sales tax law which are creating first charge in favour of the State shall prevail. Further, the Supreme Court in Dena Bank v. Bhikhabhai Prabhudas Parekh & Co.[2] has held that the crown debts have priority over secured debts only if a statute gives such priority to its dues. Above stated, we understand that the position of law was that if State law provides for priority to statutory dues that shall prevail over secured debts of the banks.

 

However, with the insertion of Section 26-E via the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (amending Act), the above discussed position underwent a change and now any security created and recorded with the Central Registry3 is accorded statutory priority in accordance with Section 26-E of the SARFAESI Act. The text of Section 26-E of the SARFAESI Act (Section 26-E) reads as under:

 

26-E. Priority to secured creditors.— Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority.

Explanation.— For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.[3]

Various litigations came before different courts on the interpretation of Section 26-E and brought forth certain pressing common questions. To understand the current position, we shall be discussing certain important judgments below and presenting our analysis:

(i) If a State tax act also has a non -obstante clause, will Section 26-E prevail over it?

a) The Gujarat High Court in Kalupur Commercial Cooperative Bank Ltd State of Gujarat[4] (Kalupur) has dealt with the non obstante clause in detail while analysing whether Section 26-E which is a part of the central legislation would prevail over Section 48 of the Gujarat Value Added Tax Act, 2003 (GVAT), a State Act. It referred to the decisions of the Supreme Court in Kumaon Motor Owners’ Union Ltd v. State of U.P.[5] (Kumaon Motor) and Solidaire India Ltd. v. Fairgrowth Financial Services Ltd.[6] (Solidare).

 

The Supreme Court in Kumaon Motor[7] had discerned three principles in case of conflict between the provisions of two statutes viz:

  • If there is a conflict between the provisions of two statutes and nothing is repugnant, the provisions in the later statute would prevail;.
  • While resolving such conflict, the court must look into the object behind the two statutes. In other words, what is to be looked at is what necessitated the legislature to enact a particular provision later in point in time, which may be in conflict with the provisions of earlier statute.
  • The court must look into the language of the provisions. If the language of a particular provision is found to be more emphatic, the same would be indicative of the intention of the legislature that the same shall prevail over other statutes.

 

The Supreme Court in Solidare[8] stated that the principles of law discernible are that, if there is a conflict between two special legislations, the later must prevail. The simple reasoning is that at the time of enactment of the later statute, the legislature could be said to be aware of the earlier legislation and its non obstante clause. If the legislature still confers the later enactment with a non obstante clause, it means that the legislature wanted that enactment to prevail.

 

Having discussed the above, the Gujarat High Court, in Kalupur[9], noted that Section 48 of GVAT “would come into play only when the liability is finally assessed and the amount becomes due and payable”. Basis the above, it came to the conclusion that priority shall be that of the bank under Section 26-E and not of the State.

(b) The Nagpur Bench of the Bombay High Court in Union Bank of India v. State of Maharashtra[10] analysed the language of Section 37(1) of the Maharashtra Value Added Tax Act, 2002 (reproduced below) and ruled that though it begins with a non obstante clause, it is made subject to any provisions of the central legislation dealing with the issue in question. Hence, Section 26-E shall prevail.

    1. Notwithstanding anything contained in any contract to the contrary, but subject to any provision regarding creation of first charge in any Central Act for the time being in force, any amount of tax, penalty, interest, sum forfeited, fine or any other sum payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer or, as the case may be, person.

 

Similar view was also recently taken by the Division Bench of the Bombay High Court in SBI v. State of Maharashtra[11] (SBI judgment).

 

We further note that recently in Punjab National Bank v. Union of India[12], Supreme Court while dealing with the issue of whether the dues of the Excise Department would have priority over the dues of the secured creditors under Section 11-E to the Central Excise Act (which provides for first charge on the property of the defaulter for recovery), held that since Section 35 of the SARFAESI Act gives it an overriding effect on all other laws, the property shall be subject to the SARFAESI Act. Thus, the right of a secured creditor cannot be hampered and the State’s right to recover debts would prevail over other creditors only in cases where such creditors are unsecured.

 

(ii) Is the auction-purchaser liable to pay off the statutory dues?

(a) The Andhra Pradesh High Court in SBI v. CTO[13] (CTO case) held that the debts advanced by banks/financial institutions have precedence over the statutory dues of the government authorities. Accordingly, any secured asset sold by such bank or financial institution to any purchaser cannot be denied registration due to pending statutory dues and the banks are not entitled to withhold the sale certificate pursuant to the auction held. Further, it was clarified that if any balance of sale consideration amount is available post satisfaction of dues towards the banks, it shall be adjusted towards the dues, if any, of the department concerned.

(b) Similarly, the Gujarat High Court in Kalupur[14] set aside the attachment orders passed under the Section 48 of GVAT and held that as per Section 26-E, the bank/financial institutions had first charge over the mortgaged property. It is pertinent to note that despite the existence of the attachment orders, the Gujarat High Court validated sale of the mortgaged properties conducted by the bank and categorically stated that:

 

  1. 78. It is further clarified that the excess, if any, shall be adjusted towards the dues of the State under the Value Added Tax, 2005 Act. It is further declared that the respondents cannot proceed against the purchasers of the properties sold under the SARFAESI Act.

 

Further, in CTO case[15], as discussed above, the Andhra Pradesh High Court has held that the secured asset sold to any purchaser cannot be denied registration due to pending statutory dues and the banks are not entitled to withhold the sale certificate pursuant to the auction held. In SBI v. State of A.P.[16] and Pridhvi Asset Reconstruction and Securitisation Co. Ltd. v. State of A.P.[17], orders similar to the CTO case[18] were passed.

 

In SBI v. State of Maharashtra[19], the Bombay High Court have taken a similar view with regard to the registration of the sale certificate as upheld in the CTO case[20] i.e. the registration of sale certificate cannot be denied on account of pending statutory dues. This case has also highlighted that a Registrar does not have a quasi-judicial power and is only expected to ensure that the documents to be registered is accompanied by supporting documents.

 

However, having discussed the above position, it is pertinent to look at the judgment recently passed by the Supreme Court of India in Kotak Mahindra Bank Ltd. v. District Industries Centre[21] (Kotak case), disposing of the special leave petition that arose out of the order passed by the Bombay High Court in Medineutrina (P) Ltd. v. District Industries Centre[22] (Medineutrina case). The position taken by the Supreme Court in this case goes contrary to what has been established till now and hence needs a detailed mention.

 

In Medineutrina case[23], the petitioner was the auction-purchaser of the immovable property which was attached and auctioned by Punjab National Bank (PNB), under the SARFAESI Act. However, as certain statutory dues were due to the Sales Tax Department, PNB was not transferring the property in favour of the petitioner until such payment.  The petitioner thus came before the Bombay High Court challenging such non-transfer and additionally, relief was claimed against PNB to issue a no-objection certificate and to issue a fresh sale certificate, free from all encumbrances in favour of the petitioner. The petitioner also contended that there was the absence of notice, and it had no prior knowledge of such an encumbrance.

 

The Bombay High Court on the above set of facts dismissed the reliefs claimed by the petitioner and held that the petitioner was liable to pay the pending sale tax dues on the secured asset even if there was absence of any notice or prior knowledge of such encumbrance. It further ruled contrary to the principle established by the Supreme Court in the case of Ahmedabad Municipal Corpn. of the City of Ahmedabad v. Haji Abdulgafur Haji Hussenbhai[24] that a charge may not be enforced against a transferee if it had no notice of the same unless the requirement of such notice has been waived by law. This was held by following the reasoning that the above position would hold only when a charge is created under Section 100 of the Transfer of Property Act, 1882 in terms of which charge is not on the property. It further referred to AI Champdany Industries Ltd. v. Official Liquidator[25], wherein the Supreme Court had differentiated between an encumbrance as understood in the general parlance and an encumbrance which is a charge on the property and runs with the property.

 

In this regard, Bombay High Court observed that[26]:

  1. 34. … It goes without saying that when a statutory charge is created on the property, the same would go with the property and would follow the property, in whosoever’s hands the property goes.
  1. Thus the notice of such a statutory charge on the property, is always presumed in law, to one and all and none can claim ignorance of the same.
  1. As Section 37(1) of the Maharashtra Value Added Tax Act, 2002, creates a charge on the property, a successful auction-purchaser, thus would hold the property, upon which a statutory charge has been created, subject to such charge and the property would thus continue to be liable for any statutory charges created upon it, even in the hands of such auction-purchaser, though for non-disclosure of such charge by the secured creditor, the auction-purchaser may sue the secured creditor and have such redress, as may be permissible in law. This is more so for the reason that the priority given in Section 26-E of the SARFAESI Act, to the banks, which is a secured creditor, would only mean that it is first in que for recovery of its debts by sale of the property, which is a security interest, the other creditors being relegated to second place and so on, in the order of their preference as per law and contract, if any, as the case may be. Thus the dues under Section 37(1) of the MVAT Act, 2002, being a statutory charge on the property, would also be recoverable by sale of the property, and that puts a liability upon the auction-purchaser, who, in case he wants an encumbrance free title, will have to clear such dues.

 

Aggrieved by the same, the above decision in the Medineutrina case[27] was challenged before the Supreme Court of India.

 

The Supreme Court vide its order[28] dated 18-11-2021, disposed of the special leave petition, and upheld the decision of the Bombay High Court by noting that the agreement pursuant to which the auction-purchaser purchased the immovable property specifically stated that the auction-purchaser shall bear all statutory dues inter alia other dues and having agreed to these stipulations, auction-purchaser cannot shy away from the obligation. The specific portion of the agreement is reproduced below:

“It is not necessary for us to examine the other aspects dealt with by the High Court in the impugned judgment. For, the agreement executed by the petitioner pursuant to which the auction was concluded in favour of the petitioner reads thus:

  1. All statutory dues/attendant charges/other dues, including registration charges, stamp duty, taxes, any other known, unknown liability, expenses, property tax, any other dues of the Government or anybody in respect of properties/assets sold, shall have to be borne by the purchaser…. ”

 

Further, the fact that the State has the first charge on the property concerning statutory dues, the auction-purchaser cannot resile from the liability to discharge the same. Additionally, the Supreme Court acceded to the request that once such statutory dues have been paid, a fresh sale certificate shall be issued which shall note that the immovable property has been transferred free from all known encumbrances.

 

Conundrum around enforcement of Section 26-E

 

We further deem it necessary to discuss the conundrum around the enforcement of Section 26-E. We note that the amending Act did not come into force all at once but in parts. While certain sections including Section 31-B, Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) (Section 31-B) came into force on 1-9-2016; Section 26-E was brought into force much later, from 24-1-2020 vide Notification No. 4133 dated 26-12-2019. However, we observe that various judgments viz, Union Bank of India v. State of Maharashtra[29] and Medineutrina case[30] have been ruled on the premise that Section 26-E came into force on 1-9-2016.

 

However, the Gujarat High Court in Kalupur[31] which was decided on 23-9-2019, took into consideration the fact that Section 26-E was not yet enforced and had observed the below:

  1. While it is true that the bank has taken over the possession of the assets of the defaulter under the SARFAESI Act and not under the RDB Act, Section 31-B of the RDB Act, being a substantive provision giving priority to the “secured creditors”, the same will be applicable irrespective of the procedure through which the recovery is sought to be made. This is particularly because Section 2(l-a) of the RDB Act defines the phrase “secured creditors” to have the same meaning as assigned to it under the SARFAESI Act. Moreover, Section 37 of the SARFAESI Act clearly provides that the provisions of the SARFAESI Act shall be in addition to and not in derogation of inter alia the RDB Act. As such, the SARFAESI Act was enacted only with the intention of allowing faster recovery of debts to the secured credits without intervention of the court. This is apparent from the Statement of Objects and Reasons of the SARFAESI Act. Thus, an interpretation that, while the secured creditors will have priority in case they proceed under the RDB Act they will not have such priority if they proceed under the SARFAESI Act, will lead to an absurd situation and, in fact, would frustrate the object of the SARFAESI Act which is to enable fast recovery to the secured creditors.

 

58 . The insertion of Section 31-B of the RDB Act will give priority to the secured creditors even over the subsisting charges under other laws on the date of the implementation of the new provision i.e. 1-9-2016. The Supreme Court, in State of M.P. v. State Bank of Indore[32], has held that a provision creating first charge over the property would operate over all charges that may be in force.

 

The text of Section 31-B is reproduced below for ease of reference:

31-B. Priority to secured creditors.— Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority.

 

Following this reasoning given in Kalupur[33], Bombay High Court in SBI judgment[34] has recently ordered that even if Section 26-E was effective only prospectively from 24-1-2020 and thus not applicable to the facts at hand as they were prior in time, that would not make any difference; as Section 31-B itself would be sufficient to give priority to a secured creditor over the statutory dues.

 

Similarly, the Division Bench of the Bombay High Court in Axis Bank Ltd. v. State of Maharashtra[35] quashed and set aside the impugned notices issued by the Assistant Commissioner of Sales Tax after taking into consideration Section 529-A of the Companies Act, 1956 while also noting the statutory recognition of priority claim of the secured creditor in view of the amendment brought into effect by virtue of introduction of Section 26-E providing for priority to secured creditor over all other debts and all taxes, cess and other rates payable to Central Government or the State Government or the local authority while stating that the applicability of provisions of Section 31-B is pari materia to Section 26-E.

A similar view has been upheld by various High Courts in ASREC (India) Ltd. v. State of Maharashtra[36], GMG Engineers & Contractor (P) Ltd. v. State of Rajasthan[37], Bank of Baroda v. CST[38], and Commr. v. Indian Overseas Bank[39].

 

Analysis and conclusion

We understand from the above discussion that there is plethora of judgments that have dealt with subject-matter regarding priority of claims of secured creditor over the statutory dues. Post introduction of Section 26-E, it is now a settled position that the dues of the secured creditor will stand in priority.

 

We however note that, in terms of liability to pay statutory dues, the decision of the Supreme Court in the Kotak case[40] has caused ripples to an otherwise settled position that the statutory dues are to be paid from the excess of auction amount and that the sale certificate cannot be withheld on such statutory dues being pending. The Supreme Court in Kotak case[41] held that the auction-purchaser cannot resile from the liability to pay statutory dues and a sale certificate free from all encumbrances can be issued only once such dues have been cleared.

 

We, however, would like to point to the fact that the above decision seems to be very case specific as the auction-purchaser had specifically agreed to such payment liability under the auction agreement and cannot be seen as laying down the law that an auction-purchaser is liable to pay statutory dues in the absence of a contractual arrangement specifically stating so.

 

Further, we note that many judgments have been passed considering that Section 26-E came into force on 1-9-2016, which as discussed above is not the correct factual position. However, certain courts have rightly acknowledged the correct position and have reasoned priority of secured creditors in line with Kalupur[42] judgment, that is:

  • Section 31-B came into force on 1-9-2016;
  • Section 37 of the SARFAESI Act clearly provides that the provisions of the SARFAESI Act shall be in addition to, and not in derogation of inter alia the RDB Act and as such the SARFAESI Act was enacted only with the intention of allowing faster recovery of debts to secured creditors without the intervention of the court;
  • The definition of secured creditors is the same in both RDB Act and SARFAESI Act; and
  • An interpretation that, while the secured creditors will have priority in case they proceed under the RDB Act and that they will not have such priority if they proceed under the SARFAESI Act, will lead to an absurd situation and, in fact, would frustrate the object of the SARFAESI Act which is to enable fast recovery to the secured creditors.

 

Taking into consideration the above and ruling of Supreme Court in State of M.P. v. State Bank of Indore[43], we understand that the priority of secured creditors can be said to have been established from coming into force of Section 31-B.


† Partner, Khaitan & Co.

††  Associate, Khaitan & Co.

††† Associate, Khaitan & Co.

[1] (2009) 4 SCC 94.

[2] (2000) 5 SCC 694.

[3] Central Registry means the registry set up or cause to be set up under S. 20(1) of the SARFAESI Act.

[4] 2019 SCC OnLine Guj 1892

[5] AIR 1966 SC 785.

[6] (2001) 3 SCC 71.

[7] AIR 1966 SC 785.

[8] (2001) 3 SCC 71.

[9] 2019 SCC OnLine Guj 1892

[10] 2021 SCC OnLine Bom 6070.

[11] 2020 SCC OnLine Bom 4190.

[12] 2022 SCC OnLine SC 227.

[13] 2021 SCC OnLine AP 343 : AIR 2021 AP 87.

[14] 2019 SCC OnLine Guj 1892

[15] 2022 SCC OnLine SC 227.

[16] 2021 SCC OnLine AP 168 : AIR 2021 AP 108.

[17] 2020 SCC OnLine AP 1936 : (2021) 3 ALT 104.

[18] 2022 SCC OnLine SC 227.

[19] 2021 SCC OnLine Bom 2568.

[20] 2022 SCC OnLine SC 227.

[21] SLP (C) Diary No. 8269 of 2021, order dated 18-11-2021 (SC).

[22] 2021 SCC OnLine Bom 222 : (2021) 5 Mah LJ 402.

[23] 2021 SCC OnLine Bom 222 : (2021) 5 Mah LJ 402.

[24] (1971) 1 SCC 757.

[25] (2009) 4 SCC 486.

[26] 2021 SCC OnLine Bom 222 : (2021) 5 Mah LJ 402.)

[27] 2021 SCC OnLine Bom 222 : (2021) 5 Mah LJ 402.

[28] SLP (C) Diary No. 8269 of 2021, order dated 18-11-2021 (SC).

[29] 2021 SCC OnLine Bom 6070.

[30] 2021 SCC OnLine Bom 222 : (2021) 5 Mah LJ 402.

[31] 2019 SCC OnLine Guj 1892 : (2019) 156 SCL 668.

[32] (2002) 10 SCC 441

[33] 2019 SCC OnLine Guj 1892 : (2019) 156 SCL 668.

[34] 2020 SCC OnLine Bom 4190.

[35] 2017 SCC OnLine Bom 274 : (2017) 3 AIR Bom R 305.

[36] 2019 SCC OnLine Bom 5480 : (2020) 6 AIR Bom R 561.

[37] S.B. Civil Writ Petition No. 6872 of 2017, decided on 5-7-2017.

[38] 2018 SCC OnLine MP 1667 : (2018) 55 GSTR 210.

[39] 2016 SCC OnLine Mad 10030 : (2017) 1 Mad LJ 769.

[40] SLP (C) Diary No. 8269 of 2021, order dated 18-11-2021.

[41] SLP (C) Diary No. 8269 of 2021, order dated 18-11-2021.

[42] 2019 SCC OnLine Guj 1892 : (2019) 156 SCL 668 .

[43] (2002) 10 SCC 441.

Case BriefsSupreme Court

Supreme Court: The Division Bench of Dr Dhananjaya Y Chandrachud and M. R. Shah*, JJ., held that equation of posts and salary is a complex matter which should be left to the expert body and undertakings. Opining that granting of pay parity by the Court may result in a cascading effect having adverse consequences on employer, the Bench reminded,

 “There are limitations or qualifications to the applicability of the doctrine of ‘equal pay for equal work’.”

The instant appeal was filed against the order of Gujarat High Court in Letters Patent Appeal by which the High Court had quashed and set aside the judgment and order passed by the Single Judge whereby the Single Judge had held that the appellants were entitled to the pay scale of Rs.950-1500 with all consequential benefits upon completion of 10 years of service and revised pay scale as per 5th, 6th and 7th Pay Commission scales.

Background

With a view to resolve the issue relating to service condition of daily wagers engaged in maintenance and repairing work a committee called ‘Shri Daulatbhai Parmar Committee’ was constituted under the Chairmanship of the then Minister of Roads and Building Department–Shri Daulatbhai Parmar. On the recommendation of Parmar Committee, the Government of Gujarat passed a Resolution dated 17-10-1988 to give certain benefits to the skilled daily wager workmen depending upon the period of services undergone, i.e. less than 5, 5 or more or 10 years.

That the Respondent–Gujarat Water Supply and Sewerage Board adopted the said Government Resolution by way of communication dated 08-06-1989 and accordingly, all the daily rated employees working with the Board including the original petitioners were granted the benefit of the pay scales of Rs.750 and other benefits upon their completion of 5 years services.

The Bone of Contention

Noticeably, the Government issued subsequent Resolutions dated 01-05-1991 and 15-02-1992 by which certain modifications were carried out in the parent Resolution dated 17-10-1988 and it was provided that such daily wagers who were SSC passed and had completed 7 years, the Department would assign administrative work of clerical cadre Class III and they should be paid pay scale of Rs.950-1500 from the date of assignment of duty.

The appellants–daily rated employees were claiming the benefit flowing from the aforesaid subsequent Government Resolutions mainly on the ground that other similar daily rated employees had been granted the benefit and therefore not extending such benefits to other daily rated employees was discriminatory and violative of Article 14 of the Constitution.

Factual Analysis

Evidently, the Board never adopted the subsequent Resolutions while the parent Resolution was specifically approved by the Board vides communication dated 08-06-1989. On the contrary the administrative instructions vide communication dated 29-08-1991 were issued to all the Chief Engineers of zonal offices that benefits pursuant to Government Resolution of 1991 were not to be granted to the daily rated employees of the Board.

Therefore, the Bench was of the view that as such the Board which is an autonomous and statutory body created under the Gujarat Water Supply and Sewerage Board Act, 1978 never adopted the subsequent Government Resolutions and unless the said Resolutions were adopted by the Board, the daily rated employees working with the Board shall not be entitled to the benefits flowing from the subsequent resolutions.

Upholding the decision of the Division Bench, the Court held that daily rated employees of the Board cannot claim the benefits from the Resolutions of 1991 and 1992 as a matter of right as they do have any right to get the benefits flowing from the aforesaid Resolutions till specifically adopted by the Board like adoption of the parent Resolution dated. The Bench stated,

“There shall not be automatic adoption and/or applicability of the subsequent resolutions.”

The Bench added, the Board is an independent entity and it might have its own financial capacity and therefore its employees cannot claim parity with the employees of the State Government. The State Government and the autonomous Board/bodies cannot be put at par as the Board has to depend upon their own financial resources and it is ultimately for the Board to take a conscious decision which can be termed as a policy decision on the pay scales to be adopted and/or certain benefits which would have financial implications. Everything depends upon its economic viability or the financial capacity, otherwise the unit itself may not be able to function and may have to close down inevitably and have disastrous consequences for the employers themselves.

Conclusion

In the above backdrop, the Bench opined that the daily rated employees of the Board cannot invoke Article 14 of the Constitution to claim benefit on the ground of parity if they otherwise are not entitled to such benefit as Article 14 cannot be invoked to perpetuate illegality and irregularity. Accordingly, it was held that the Single Judge erred in directing the Board to grant the benefits flowing from the subsequent Government Resolutions which was rightly set aside by the Division Bench of the High Court.

[Rajesh Pravinchandra Rajyaguru v. Gujarat Water Supply & Sewerage Board, CIVIL APPEAL NO. 7578 OF 2021, decided on 17-12-2021]


Kamini Sharma, Editorial Assistant has pit this report together


Appearance by:

For the Original Petitioners: Sanjay Parikh, Senior Counsel

For the Board: Aastha Mehta, Advocate


*Judgment by: Justice M.R. Shah

Legislation UpdatesRules & Regulations

The Board of Deposit Insurance and Credit Guarantee Corporation, with the previous approval of the Reserve Bank of India notified Deposit Insurance and Credit Guarantee Corporation General (Amendment) Regulations, 2021 to modify  Deposit Insurance and Credit  Guarantee Corporation General Regulations, 1961.

 

  • Inserted New Regulation 21A in Principal Regulations relating to submitting a form furnishing the list and certification by the insured bank:


21A. (1) The insured bank, while furnishing the list and the certification under subsection (2) of section 18A, shall submit in such form as specified by the Corporation, the name and account details of depositors who have affirmed their willingness to receive the insured amount in respect of their deposit in the insured bank, and that form shall also contain a declaration signed by the chief executive officer/the person in charge as to the correctness of the contents thereof along with a confirmation as to availability of the declarations signed and submitted by the depositors, and an undertaking to preserve and submit the said declarations to the Corporation, within such time and in such manner as specified by the Corporation.


(2) The insured bank shall obtain willingness of the depositors in such form as may be specified by
the Corporation, which shall necessarily include an express declaration of willingness signed by the depositor to receive the insured amount along with a certification by the chief executive officer/the person in charge as to the correctness of the contents thereof, and the forms so obtained shall be submitted to the Corporation within such time and in such manner specified by the Corporation. (3) Where the insured bank receives willingness of a depositor after submission of the Form under subregulation (1) but within the period specified in the first proviso to subsection (4) of section 18A, it shall submit the details thereof in the same format specified under subregulation (1) within such time and in such manner specified by the Corporation in the same format specified under subregulation (1). (4) The claim settlement procedure adopted by the Corporation with the approval of the Board, for verifying the genuineness and authenticity of the claim made by the liquidator under section 17 and the transferee/insured bank under section 18 shall mutatis mutandis be applied for verification of the genuineness and authenticity of the

(a) claim made in the list furnished by the insured bank under subsection (2) of section 18A; and

(b) the forms and declarations referred to in subregulations (1), (2) and (3), for ascertaining the willingness of the depositor.

 

  • Inserted New Regulation 22A in the principal Regulations relating to deferring or varying the time limit for receipt of repayments under certain circumstances:

22A. (1) Notwithstanding anything contained in Regulation 22, where the Corporation is satisfied about the financial position of the insured bank or the transferee bank, as the case may be, and keeping in view the expected time period that would be sufficient to generate cash flows, capital infusion, liquidity, business profits, sale of assets, restructuring of the insured bank, to pay the stakeholders including uninsured depositors and other creditors, makes an assessment that the bank is not capable of making repayment to the Corporation, then it may defer or vary the time limit for receipt of repayments due to it for such period and upon such terms as the Board may specifically decide. (2) The decision of the Board referred in subregulation (1) shall be binding on the bank and till such time as repayment is made to the Corporation, the insured bank or the transferee bank, as the case may be, shall be prohibited from discharging the classes of liabilities, other than those specified in terms of the decision of the Board. (3) The Corporation may, for the purpose of assessment of the financial position and the capability of the bank to make repayment, call upon the bank, from time to time or periodically, to submit such records or statements and furnish such information as the Corporation considers it necessary and expedient and the bank shall comply with the same.

CBDT
Legislation UpdatesNotifications

On September 17, 2021, the Central Board of Direct Taxes (CBDT)  has issued a notification  that no deduction of tax shall be made on the following payment under section 194A of the Income-tax Act, 1961, which specifies, Interest other than “interest on securities”, made by a scheduled bank located in a specified area, to a member of Scheduled Tribe residing in any specified area, as referred to in clause (26) of section 10 of the Income-tax Act, 1961 subject to the following conditions:

 

  • The payer satisfies itself that the receiver is a member of Scheduled Tribe residing in any specified area, and the payment as referred above is accruing or arising to the receiver as referred to in clause (26) of section 10 of the said Act, during the previous year relevant for the assessment year in which the payment is made, by obtaining necessary documentary evidences in support of the same;
  • The payer reports the above payment in the statements of deduction of tax as referred to in sub- section (3) of section 200 of the said Act;
  • The payment made or aggregate of payments made during the previous year does not exceed twenty lakh rupees.
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.

Case BriefsHigh Courts

Meghalaya High Court: A Single judge bench comprising of Mohammad Yaqoob Mir, CJ. while dealing with a civil writ petition filed by a retired employee ruled that delay in release of retrial benefits cannot be justified on grounds on a financial crunch.

Brief background of the matter was that the petitioner worked as a driver in the respondent corporation. Though he had retired from service on 31-12-2017, his retrial benefits had not been released to him. Aggrieved by inaction on the part of respondent, he filed the instant writ petition. The respondent corporation pleaded that the retrial benefits had not been released since it was facing acute financial crisis and thus its resources were not enough to meet the petitioner’s demand.

The court dismissed the contention forwarded on behalf of the respondent holding that an employee has a vested right of getting retrial benefits on retirement and the release of such benefit cannot be linked with the financial health of the employer. It is for the employer to mobilize his resources to ensure that the retired employee gets his retrial benefits.

In the present case, the respondent – corporation could not be permitted to delay the benefits due to petitioner and thereby subject him to misery, mental agony and financial hardship. It was further stated that it is not only the petitioner but his entire family who were suffering in such a situation. As such, a guaranteed right to retrial benefits could not be delayed pleading financial crunch of the employer. On the aforesaid holding, the court High Court directed the respondent to ensure that all retrial benefits that the petitioner was entitled to, be sanctioned and released in his favour within two months. [Phlester Swer v. Meghalaya Transport Corporation,2018 SCC OnLine Megh 180, decided on 01-10-2018]

Case BriefsHigh Courts

Himachal Pradesh High Court: A Single Judge Bench comprising of Vivek Singh Thakur, J., decided a revision petition wherein the order of conviction passed against the petitioner by the trial court was reversed.

The petitioner was convicted and sentenced under in a criminal case arising under Section 138 of Negotiable Instruments Act. The petitioner, in the instant petition, submitted that he has entered into a compromise with the respondent and the matter has been amicably settled between the parties. Hence, he prayed for the quashing of the said order of conviction and sentence and also for compounding of the said offence.

The High Court perused the evidence available on record to satisfy itself that the matter was in fact amicably settled between the parties by entering into a compromise. Thus, the High Court was of the view that the order of conviction and sentence under Section 138 passed against the petitioner need to be quashed. Also, on further request of the petitioner, he was partly exempted from paying the compounding fee in consideration of the fact that the petitioner was a poor person, he was in jail, and he had no resources available to pay the required 15% of the suit amount. Hence, the petition was allowed. [Keshav Ram v. Padam Singh Thakur, 2018 SCC OnLine HP 150, dated 20.2.2018]

Case BriefsHigh Courts

Bombay High Court: The Court, consisting of V.M. Kanade and M.S. Sonak, JJ stayed the retrospective applicability of the Payment of Bonus (Amendment) Act, 2015, as provided by Section 1 sub-clause (2)  of the said Central Act, bearing in mind similar stays operative by the judgments of the Karnataka High Court (see post here), the Allahabad High Court (see post here) and Kerala High Court (see post here).  The Court decreed that no coercive steps would be taken to recover amounts due prior to 31st March 2016 from Petitioners Tech Mahindra, who were represented by Darius Khambatta, under instructions from Khaitan and Co. It must be noted that these amounts became formally due after change in Section 12 (calculation of  bonus with regard to certain employees), whereupon if salary or wage of employee exceeded Rs. 7000/- or the minimum wage for the scheduled employment, as fixed by the appropriate Government, the calculation is to be made as percentage of Rs. 7000/- or such minimum wage, whichever is higher.. The earlier threshold was set to Rs. 3500/-. [Tech Mahindra v. Union of India, 2016 SCC OnLine Bom 4380, order dated 13-06-2015]