Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): The Coram comprising of Justice S.J. Mukhopadhaya, Chairperson and Alok Srivastava, Member (Technical), while deciding an appeal filed against Bank of India, stated that,

“Bank of India once accepted amount is expected to reach settlement, failing which the question, whether application under Section 7 was filed under malicious intent for recovery and not for resolution will be considered.”

Bank of India (Financial Creditor) had moved an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 that had been admitted by impugned order passed by National Company Law Tribunal.

Further it is to be noted that, in the meantime, appellant (Corporate Debtor) tried to reach settlement with Bank of India who had already received a sum of Rs 80,00,000, but was not reaching any settlement.

Adding to the above, it was submitted that the money  was accepted by Bank of India during the ‘Corporate Insolvency Resolution Process’, which is otherwise not permissible, on ground that it wants settlement and then refusing to settle.

It was also stated that the application under Section 7 was filed by Bank of India with malicious intent and not for resolution or liquidation and calls for penal action under Section 65 of IBC.

Appellate Tribunal while posting the case for orders on 12-03-2020, gave direction that in the meantime, Interim Resolution Professional will not constitute the ‘Committee of Creditors’, if not yet constituted, to enable the parties to reach settlement. Further, the Interim Resolution Professional will also ensure that company remains a going concern and will take assistance of the (suspended) Board of Directors and the officers/Directors/employees.

Further, adding to the above, Appellate Tribunal also stated that the bank account of the ‘Corporate Debtor’ be allowed to be operated for day-to-day functioning of the company. [Akshay Arun Shetty v. Bank of India, Company Appeal (AT) (Insolvency) No. 277 of 2020, decided on 14-02-2020]

Case BriefsHigh Courts

Kerala High Court: A Bench comprising of K. Abraham Mathew, J. allowed further investigation to the petitioner as the prior investigation was not sufficient.

The accused was charged for offences under Sections 406 and 420 IPC. It was stated that he was entrusted with the responsibility for the manufacture of ornaments for which gold was given to him which allegedly was misappropriated by him. The petitioner through his counsels N.M. Madhu, P.P. Harris and C.S. Rajani claimed that he was not satisfied with the investigation and wanted a further investigation into the matter. He has also brought to the Court’s notice that as per the statements of the witnesses on record, the accused sold them gold ornaments for which even attempts were not made by the investigating officer as to their recovery.

The Court agreed with the petitioner, allowed the writ petition and granted further investigation in the case. [Biju v. State of Kerala, 2018 SCC OnLine Ker 7430, decided on 05-07-2018]

Case BriefsHigh Courts

Meghalaya High Court: A Division Bench comprising of Mohammad Yaqoob Mir, CJ and S.R. Sen, J. dismissed a petition on being infructuous.

The Advocate General A. Kumar has submitted that the Meghalaya Clinker Cess Act, 2015 has been repealed by the Meghalaya Goods and Services Tax Act, 2017; consequently, there was no recovery and no question of refund. He contended that the petition cannot hold shall be dismissed as infructuous. The counsel for the petitioner, A. Saraf has prayed for declaring the Meghalaya Clinker Cess Act, 2015 to be ultra vires and further levy of cess on the manufactured clinker produced in the State shall be beyond the legislative competence of the respondent who shall then be restrained from realizing cess on the manufactured clinker under the above said Act.

The Court considering the status of the Act dismissed the petition on being infructuous. [Star Cement Meghalaya Ltd. v. State of Meghalaya, 2018 SCC OnLine Megh 268, decided on 07-12-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Pratibha M. Singh, J. dismissed a criminal appeal while upholding the conviction and sentence of the appellant (accused) inter alia for the offence punishable under Section 397 IPC.

The appellant was accused of robbery by the use of a deadly weapon- a knife. It was alleged that the appellant along with other co-accused entered the house of the victims, threatened them with a knife and robbed their house. On victim’s information, FIR was registered, the appellant was apprehended, arrested, charged, tried, convicted and sentenced by the trial court inter alia under Section 397 IPC. The appellant approached the High Court challenging the decision of the trial court contending that since the deadly weapon (a knife in this case) was not recovered, the appellant could not have been convicted under the section.

The High Court referred to a long catena of decisions to reach a conclusion that recovery of the weapon was not essential to convict the appellant under Section 397. The Court relied on Ashfaq v. State (NCT of Delhi), (2004) 3 SCC 116 wherein the Supreme Court referred to Phool Kumar v. State (UT of Delhi), (1975) 1 SCC 797 wherein it was held, “… what is essential to satisfy the word ‘use’ for the purpose of Section 397 is the robbery being committed by an offender who was armed with deadly weapon which was within the vision of the victim so as to be capable of creating a terror in the mind of the victim… knife is equally a deadly weapon, for purposes of Section 397”. The High Court referring to its earlier decisions held, the fact that the knife was not recovered would not matter as long as eye-witnesses to the crime are able to convincingly and consistently recount the fact that they were threatened by the sight of the accused wielding the knife while parting with their belongings. Placing reliance on the precedents and discussions held therein, the Court held, recovery of the weapon is not essential for conviction for an offence under Section 397 IPC. The Court, while holding that ingredients required for conviction under Section 397 were satisfied by the testimonies of prosecution witnesses, upheld the conviction and sentence awarded by the trial court and dismissed the appeal. [Murlidhar v.  State,2018 SCC OnLine Del 9401, dated 01-06-2018]

Case BriefsHigh Courts

Calcutta High Court: The writ petition was preferred by a primary school teacher, aggrieved that an amount of Rs. 68, 556 was deducted from the pension payment order by the authorities, due to alleged over-drawl.

Learned counsel on behalf of the petitioner, by relying on the Supreme Court’s decision of Shyam Babu Verma v. Union of India, (1994) 2 SCC 521 contends that the excess amount can’t be recovered from the retiral benefit of an employee unless it is due to some fraud or misrepresentation. In the case of Syed Abdul Qadir v. State of Bihar, (2009) 3 SCC 475 the Supreme Court observed that “the relief against recovery is granted by courts not because of any right in the employees, but in equity, exercising judicial discretion to relieve the employees from the hardship that will be caused if recovery is ordered.”

Therefore,  Arijit Banerjee, J. quoted the observation of another learned Judge, “the choice is like choosing between the devil and deep sea” and ordered that, by considering the decisions of the Hon’ble Division Bench in the cases of Shyam Babu Verma, Syed Abdul Qadir, Chandi Prasad Uniyal v. State of Uttarakhand, (2012) 8 SCC 417 and State of Punjab v. Rafiq Masih, (2014) 8 SCC 883 held that no recovery can be made from a retired employee who is due to retire within one year from the order of recovery. Further, no recovery could be made in the present case from the retrial benefits of the petitioner even after a delay of 15 years by considering the decision of the case of Union of India v. Tarsem Singh, (2008) 3 SCC 648, as it did not affect the third party rights. [Jaynal Alam v. State of West Bengal, 2017 SCC OnLine Cal 10406, decided on 12.07.2017]


High Courts

Himachal Pradesh High Court: In an interesting case where petitioner has filed a writ petition seeking quashing of order for recovery of vacation salary granted to the petitioner by the respondents, the division bench of Mansoor Ahmad Mir, C.J and Tarlok Singh Chauhan, J accordingly quashed the said order and directed the respondents not to effect the recovery of the said amount from the petitioner and if the recovery is already made, must be refunded to the petitioner. In the instant case the petitioner has not played any role, played fraud or misrepresentation in release of the vacation salary.

The Court while deciding the petition extensively relied on the judgment of the Supreme Court in State of Punjab v. Rafiq Masih (2015) 4 SCC 334, wherein the Court laid down the parameters of fact situations such that employees, who are beneficiaries of wrongful monetary gains at the hands of the employer, may not be compelled to refund the same. The Court further observed in the abovestated case that an action of the State, ordering a recovery from an employee would be fair, so long as it is not rendered iniquitous to the extent, that the action of recovery would be more wrongful, improper and more unwarranted, than the corresponding right of the employer, to recover the amount. The Court also noted that the recovery would be permissible till such time as it would not have a harsh and arbitrary effect on the employee.

Court also delved into explaining the doctrine of equality found in Articles 14 to 18 of the Constitution and stated that such an action would breach the obligations of the State, to citizens of this country, and renders the action arbitrary, and therefore, violative of the mandate contained in Article 14 of the Constitution of India. Seema Sharma v. State of Himachal Pradesh, 2015 SCC OnLine HP 918, decided on 20.04.2015


Tribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): “It is the choice of the bank to recover the money either from the guarantor or the borrower.  It is abhorrent from the principles of law to say that the Bank must first of all recover the money from the borrower and thereafter it can proceed against the guarantor,” held NCDRC while allowing a petition filed by Canara Bank challenging the order of Kerala State Consumer Disputes Redressal Commission which decided against the recovery made by the bank from the complainant against the dues payable by a person who was introduced by the complainant. The dispute arose when after the demise of borrower; his dues were adjusted against the term deposit of the complainant. The complainant denied the intention to be a guarantor or a surety for the borrower and alleged that he was made to sign on some blank papers. He also contended that the bank should have first approached the family of the borrower who had died. The District Forum as well as the State Commission both decided in favor of the petitioner. After perusing the records, NCDRC set aside the orders of District Forum and State Commission and held that bank is entitled to choose between the guarantor and the borrower for recovery of dues. NCDRC also upheld the recovery made by the bank on the ground that “the complainant signed the blank papers, if any, with his open eyes and on his own volition. Even if he has signed the blank papers, he did it at his own peril.”(Canara Bank v. R.S.Vasan, Revision Petition No. 914 of 2014, decided on September 3, 2014)

To read the full judgment, refer SCCOnLine