Case BriefsHigh Courts

Delhi High Court: Amit Bansal, J., dismissed a petition challenging the order passed by the lower court whereby respondent’s application under Section 8 of Arbitration and Conciliation Act, 1996 was admitted.

Instant petition was filed impugning the decision of the lower court whereby the application filed on behalf of the respondent under Section 8 of the Arbitration and Conciliation Act was allowed.

Background

It was contended by the petitioner that the respondent had wrongly withheld an amount of Rs 12,24,181 which led to the filing of a recovery suit for an amount of Rs 17,26,000 before the Court of ADJ. In the said suit, an application under Section 8 of the Act was filed on behalf of the respondent seeking that the parties may be referred to arbitration in terms of the arbitration clause contained in the Letter of Intent.

Further, the application under Section 8 was allowed by the impugned order.

Analysis, Law and Decision

High Court while analyzing the matter, expressed that,

Unlike an order refusing an application under Section 8 of the Act for which statutory remedy of appeal has been provided under Section 37 of the Act, no remedy has been provided in respect of an application allowing a Section 8 application.

The intent of the Act is that existence and validity of the arbitration agreement can be raised by a party before the Arbitral Tribunal and therefore, finality has been given to the orders passed by the court allowing application under Section 8 of the Act.

In Deep Industries Ltd. v. ONGC (2020) 15 SCC 706, the Supreme Court observed that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Arbitration Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy so that interference is restricted to orders which are patently lacking in inherent jurisdiction. It was further observed that, if petitions under Articles 226 and 227 of the Constitution of India against orders passed in appeals under the Arbitration Act were entertained, the entire arbitral process would be derailed and would not come to fruition for many years.

The reasoning given by the Supreme Court in the above decision would be equally applicable in the context of orders passed by courts allowing the application under Section 8 of the Act.

Hence, the Court opined that all grounds in respect of the existence and validity of the arbitration clause can be raised by the petitioner before the Arbitral Tribunal.

Court noted that the entire case was based upon the admission made by the respondent in respect of its alleged liability towards the petitioner and nowhere did the petitioner dispute the existence of the arbitration clause.

As observed by the Supreme Court in Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums, (2003) 6 SCC 503, once there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of the said agreement.

No merit was found in the present petition as the petitioner had not denied the existence of the arbitration agreement. [Arun Srivastava v. Larsen & Toubro Ltd., 2021 SCC OnLine Del 4909, decided on 9-11-2021]


Advocates before the Court:

For the Petitioner:

Randhir Jain with Bhoop Singh, Advocates

For the Respondent:

Ankit Chaturvedi with Neeraj Sood, Advocates

Case BriefsHigh Courts

Sikkim High Court: Meenakshi Madan Rai, J., decided on a petition wherein the petitioner body established under the Sikkim Municipalities Act, 2007, claimed that the provisions of the Employees‟ Provident Funds and Miscellaneous Provisions Act,

1952, (“EPF & MP Act, 1952”) was not applicable in the State of Sikkim as it was not enforced in compliance to the provisions of Article 371F of the Constitution of India. The prayers were as follows:

(a) to hold that the provisions of the Central Act are not applicable to the Petitioner; and

(b) to hold that the provisions of the Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 is not applicable to the Petitioner Corporation; and

(c) to hold that the Petitioner is not the principal employer of the Municipal wards Association/Committee/Samaj which is a non-profit making NGO as decided by the Respondents; and

(d) to issue an appropriate writ in the nature of mandamus or any other writ, order or direction holding that the proceedings conducted by the Respondents is without jurisdiction, bad and illegal; and/or

(e) to issue an appropriate writ in the nature of mandamus or certiorari or any other writ, order or direction quashing the Order dated 05.07.2019 passed by the Respondent;

(f) and upon cause/s being shown and after hearing the parties be pleased to make the rule absolute and/or pass such other orders;

(g) to pass any other direction/s, relief/s, order/s that may be deemed fit and proper in the circumstances of this case;

(h) to allow the costs of the Writ Petition in favour of the Petitioner.

Counsel for the respondents challenged the maintainability of the Petition contended that where an alternative, efficacious remedy is available, the Writ Jurisdiction of this Court cannot be invoked and that it was a settled law that Petitions under Writ Jurisdiction are not to be entertained by the High Court when an efficacious, alternative remedy is available, this being a Rule of self-imposed limitation, although discretion lies with the Court to permit a Petition under Article 226 of the Constitution, despite existence of such a remedy.

The Court in the light of the specific provisions of law and the observations made in the ratiocinations referred to by the counsel of the respondent opined that before invoking the Writ Jurisdiction of this Court, the Petitioner was to necessarily exhaust the remedy available to it under the Statute.[Gangtok Municipal Corporation v. Union of India, 2021 SCC OnLine Sikk 161, decided on 22-10-2021]


Suchita Shukla, Editorial Assistant has reported this brief.


 

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Dinesh Singh (Presiding Member), expressed that whether, for a particular purpose, a company is a ‘consumer’, has principally to be determined by examining the facts and specificities of the case.

In the instant matter, the complainant had filed the complaint under Section 58(1) (a) read with Section 59 of the Consumer Protection Act, 2019.

11 units, comprising the entire Mezzanine Floor of Summit Business Bay Andheri, were purchased by the Complainant Co. from the Builder Co. for a total consideration of Rs 17,95,30,000.

Preliminary Issue:

Whether the Complainant Co. is a ‘consumer’ under the Act?

A Company is included in the definition of ‘person’ contained in Section 2(31)of the Consumer Protection Act, 2019, it is not per se precluded from being ‘consumer’, provided, if, for a particular purpose, it meets the requirements of ‘consumer’ as defined in Section 2(7) of the Act 2019.

Further, it was added that:

[a] ‘housing construction’ under the definition of ‘service’ in Section 2(42) cannot be construed  to include construction of a commercial complex for commercial activity; and

[b] commercial space in a commercial complex for an office of a company engaged in a business to generate profit is for ‘commercial purpose’.

Bench stated that a plain reading of Section (7)(ii) and Section 2(42) of the Act 2019 makes it clear that the Complainant Co., which has purchased commercial space for its office in a commercial complex, is not a ‘consumer’ under the Act 2019.

“…if, for a particular purpose, a company does not meet the ingredients of ‘consumer’ under the Act 2019, it will not be left remediless, it can avail of remedies available under other existing laws.”

Commission referred to the Supreme Court decision in Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, (2020) 2 SCC 265, wherein it was decided that If, for a particular purpose, a company wants to enter the consumer protection fora, whether or not it is a ‘consumer’ has to be (reasonably and logically) adjudged in the given facts and specificities of each case (“a straight-jacket formula cannot be adopted in every case”; “The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case”).

Further while addressing the question relating to the purchase of commercial space in a commercial complex, in its own name, as its, the company’s property, its immovable capital assets, Bench stated that:

“a company creating immovable capital assets in the form of lands and buildings, in its own name, for its office, is differently placed from a company buying a car, in its own name, ‘solely or principally’ for the personal use of its Directors or employees.”

While analysing, another significant aspect that was added by the Bench was that, a company purchasing commercial space for its office in a commercial complex, is materially different from a company indemnifying its raw materials, goods in process, finished goods, plant and machinery, lands and buildings, etc., by taking insurance. In such case, the purpose is indemnification against perils, nothing per se to do ‘closely and directly’ with its profit-generating activity, the ‘dominant purpose’ is not linked with its commercial activity, as such the company straightaway falls within the meaning of ‘consumer’ in accordance with Section 2(7), without necessitating a detailed exposition.

Hence, Complainant’s case that it is a ‘consumer’ failed on its facts and on the law. Commission also observed that allowing anyone into consumer protection for has adverse ramifications:

[a] evasion of court fee in civil courts; and

[b] eroding into the time and resources of consumer protection fora, which could otherwise be better devoted to the ordinary general consumers, who straightaway fall, ex facie, in the definition of ‘consumer’ (without having to write a treatise to enable their anyhow entry into the fora).

In light of the above discussion, it was found that the complaint was not maintainable before the Commission. [Freight System (India) (P) Ltd. v. Omkar Realtors and Developers (P) Ltd., 2021 SCC OnLine NCDRC 19, decided on 25-01-2021]


Advocates for the parties:

For the Complainant: Vivek Kohli, Senior Advocate with Bharti Chawla, Advocate.

Op EdsOP. ED.

This article deals with the remedies that are available to a  creditor Bank to enforce a contract of personal guarantee executed by a person guaranteeing dues of a  corporate debtor, both under the Insolvency and Bankruptcy Code, 2016 and the Code of Civil Procedure, 1908.

The notification of certain provisions under Chapter III of the Insolvency and Bankruptcy Code, has armed the creditor bank with speedier and effective remedies against guarantors of a  corporate debtor. By Notification dated 15th November, 2019 issued by the MCA, provisions relating to the Insolvency of Personal Guarantors of Corporate Debtors (“the Insolvency Rules”)[1] and the Bankruptcy of Personal Guarantors of Corporate Debtors (“the Bankruptcy Rules”)[2] were brought into effect from  1-12-2019.

Noticeably, the remedies available under the said provisions are in addition to and without prejudice to the rights of the creditor Bank under the relevant provisions of the said IBC against the corporate debtor.

A guarantor, who fails to discharge his obligation under the guarantee despite a demand for payment being made by a bank thereunder, will be treated as a “defaulting guarantor” and a debtor of creditor bank. Such a defaulting guarantor may also owe monies to several other creditors including foreign creditors.

Current scenario in recovery

India has been experiencing a problem of huge arrears of pending cases. The backlog of cases has resulted not only in the dilution of access to timely justice, but in cases of banks and financial institutions, it has led to stagnation in the recovery of legitimate dues. In India, due to crumbling infrastructure like lack of sufficient Judges, complex procedures, etc, courts and specialised tribunals established for banks and financial institutions have not been able to clear the logjam of cases which in turn has resulted in hampering the recovery process by banks and financial institutions.

In today’s legal scenario, a bank can initiate Insolvency Resolution Proceedings (IRP) against the corporate debtor (main borrower) and the said insolvency proceedings have to be completed within 180 days and may be extended to a maximum of 330 days subject to, of course, power of  NCLT/NCLAT to extend the time for IRP in appropriate cases. In this regard, useful reference can be made to the order and judgment of the Supreme Court in the matter of Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta[3]. However, in the case of defaulting guarantor of a corporate debtor, banks are posed with a challenge of selecting the right legal remedy as there are several choices and legal complications associated therewith. The choice of appropriate legal remedy would be crucial for the creditor bank to protect not only its legal rights but also recovery prospects.

Amongst other scenarios, there could be a situation wherein a foreign creditor of the corporate debtor would have already obtained a decree from a foreign court against the defaulting guarantor; which has been discussed below.

Foreign creditor armed with a foreign decree

By the time, an Indian creditor bank is able to get a decree against a defaulting guarantor in an Indian court or tribunal, a foreign creditor might be already armed with a foreign decree against such defaulting guarantor. Moreover, if such decree is passed by a court situated in any of the reciprocating countries covered by a treaty with India as contemplated under Section 44-A of the Code of Civil Procedure,1908, (as amended), such foreign creditor decree-holder would march ahead of the Indian creditor bank in the race for recovery from such defaulting guarantor. In such a scenario, the foreign creditor concerned would be entitled to proceed with the execution of the foreign decree and the Indian creditor bank, who might have initiated recovery steps by filing a suit against the defaulting guarantor, would be still awaiting a decree without which the creditor bank cannot initiate execution proceedings.

Under Section 73 of the Code of Civil Procedure, 1908 (as amended), in the matter of distribution of assets of a judgment debtor, barring secured creditors (who would enjoy priority in the matter of realisation of their securities amongst creditors), the judgment creditors would enjoy priority against non-decree holder creditors. In such a situation, any delay in obtaining a decree against the defaulting guarantor would subject the Indian creditor bank to a serious disadvantage as against the judgment creditors of reciprocating foreign countries covered by Section 44-A of the Code of Civil Procedure, 1908 (as amended).

Question before Indian Creditor Bank

The above circumstances would essentially compel an Indian creditor bank to take urgent immediate legal steps to protect its recovery prospects against the defaulting guarantor concerned. However, the question that would arise before such Indian  creditor bank is “What should be the appropriate remedy both in law as well as from the viewpoint of business strategy.”

The answer to the above question would vary with the circumstances faced by such an Indian creditor bank and there could be two scenarios.

Two Scenarios

  • 1st Scenario – Wherein the Indian creditor bank might have already initiated insolvency proceedings against the main borrower for whom the defaulting guarantor had extended a guarantee to the Indian creditor bank.
  • 2nd Scenario – Wherein the Indian creditor bank has not initiated Insolvency proceedings and the claim of Indian creditor bank is above Rs 20 lakhs.

1st Scenario

In the first scenario, the Indian creditor bank might have already initiated insolvency proceedings against the main borrower for whom the defaulting guarantor had extended guarantee to the Indian creditor bank. On account of the  Notification[4], it is now permissible for a creditor bank to initiate insolvency resolution process against the defaulting guarantor under Sections 60(1), (2) & (4)of the Insolvency and Bankruptcy Code, 2016 after issuing a 14-day prior notice to such defaulting guarantor. If such a step is taken by the creditor bank, in the opinion of the author, an interim moratorium would commence on the date of the application filed in relation to resolution of all debts of such defaulting guarantor and shall continue till the date of admission of such application.

During such an interim moratorium period, any legal action or proceedings pending in respect of any other debts including decretal debts owed by such defaulting guarantor shall be deemed to have been stayed and other creditors of such defaulting guarantor including foreign decree holding creditors would not be able to initiate any legal action or proceedings in respect of any debt owed by the said defaulting guarantor.

Subsequently, a fresh moratorium shall commence on admission of the application for IRP (Insolvency Resolution Process) by NCLT under Sections 60(1) & (4) and Section 100 read with Section 101 of the said IBC and shall cease to have effect at the end of 180 days beginning with the date of admission of the application or on the date of adjudicating authority passing an order of repayment plan under Section 114 of the Code whichever is earlier, subject to of course, power of NCLT and NCLAT to extend the time-limit in suitable cases. As per Section 60(2) of the Code, an application inter alia relating to the insolvency resolution process or liquidation or bankruptcy of the personal guarantor (defaulting guarantor) as the case may be, can be filed before NCLT. Therefore, by virtue of the aforesaid section, in the opinion of the author, NCLT would be able to pass necessary orders of interim moratorium as contemplated.

At this juncture, it must be made clear that the decision of the Central Government to suspend the provisions of Sections 7, 9 & 10 of the Code for a period of six months by incorporating Section 10-A to IBC and proposed to be extended up to 1 year, would in no manner affect the provisions of Section 60 of IBC which contains provisions in respect of the insolvency resolution process (IRP) of personal guarantors of corporate debtors (against whom insolvency resolution process has already been initiated) read with the provisions of Chapter III of IBC which would mutatis mutandis apply in respect of the insolvency resolution process of personal guarantors of a  corporate debtor.

In this regard, it may be clarified that as per Section 60(4) of the Code, NCLT shall have all the powers of the Debts Recovery Tribunal as contemplated under Part III of the Code for the purpose of sub-section (2) of Section 60 of the Code. Therefore, in the opinion of the author, inter alia by virtue of Sections 95 and 96 of the said Code, in relation to interim moratorium and moratorium as applicable under the said Part III of the Code (which deals with Insolvency Resolution and Bankruptcy for Individuals and Partnership Firm’s debt of debtors as contemplated under Part III of the said Code) would also be applicable mutatis mutandis to the debt of personal defaulting guarantor.

In the event of the creditor bank being required to file an application for bankruptcy of the said personal guarantor, as contemplated under Section 121 of the Code, an interim moratorium as contemplated under Section 124 of the Code shall operate from the date of making an application and shall cease to have effect on the date of the bankruptcy commencement. In the event of a bankruptcy order being passed under Section 126 of the Code, the estate of the bankrupt (including the defaulting guarantor) as contemplated under Section 128 of the Code shall vest in the bankruptcy trustee as provided under Section 154 of the said Code.

Subsequently, the said estate shall be divided amongst the creditors. Noticeably, in this situation, other creditors (save and except the secured creditors), including the foreign decree- holding creditors may not enjoy any special priority over the Indian creditor bank unlike in the case of execution proceedings before a civil court.

This, in the opinion of the author, would be definitely an advantageous situation for the Indian creditor bank. At this juncture, it must be stated that the remedies mentioned above under the aforementioned section of the said IBC available to Indian creditor bank are completely independent of and without prejudice to the rights of the creditor bank against the corporate debtor or any other resolution plan that may be approved by a Committee of Creditors including the creditor bank in respect of the debts of a  corporate debtor.

It also needs to be mentioned that any concession that may be given by the creditor including the creditor bank to the corporate debtor concerned, or in other words, any haircut that may be taken by the creditor including the creditor bank in respect of the debt of the corporate debtor concerned would in no manner affect the claim of the creditor including the creditor bank as against guarantor of such corporate debtor. This legal position has been made clear by the judgments of various courts including the  Supreme Court of India.

The law laid down by the  Supreme Court in Committee of Creditors of Essar Steel India Ltd . v. Satish Kumar Gupta [5] (supra), (whereby the earlier judgment of the Supreme Court in State Bank of India v. V. Ramakrishnan[6] was approved), it would be clear that in the absence of initiation of any insolvency resolution process/insolvency proceeding against the personal guarantor by the creditor bank concerned, the creditor bank would be entitled to enforce the personal guarantee against the said personal guarantor outside the insolvency resolution process of the corporate debtor. Further, as held by the Supreme Court in the aforementioned judgments and even in view of Section 31 of the Code, the personal guarantor is required to pay for debts due without any moratorium applying to save the personal guarantor.

2nd Scenario

In the second scenario, if the claim of Indian creditor bank is above Rs 20 lakhs, it would be open for it to file an Original Application before DRT (Debts Recovery Tribunal) constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.  However, if the claim of the Indian creditor bank is below Rs 20 lakhs, the only other option for recovery would be to file a summary suit before the civil court  concerned and to seek a speedy disposal thereof. During the pendency of such original application or civil suit as the case may be, for justifiable reasons, the Indian creditor bank may seek attachment before the judgment, of assets of such defaulting guarantor or deposit/providing of sufficient security by the said defaulting guarantor.

At the same time, it must be stated that in the event of some other creditor initiating any insolvency resolution process (IRP) against such defaulting guarantor, during the period of interim moratorium or moratorium as the case may be in such IRP, the original application or the summary suit, as the case may be, filed by the Indian creditor bank would remain stayed to the disadvantage of the Indian creditor bank.

CONCLUSION

The new “Insolvency Rules” and “the Bankruptcy Rules” that have been brought into force so far as personal guarantors to corporate debtors who have defaulted are concerned, are a welcome initiative of the legislature as its spirit is aimed at improving the efficiency of recovery and maximising realisation of debts by banks and financial institutions. To ensure the success and effectiveness of the new amendments, it will be the duty of the courts and tribunals to ensure that the banks and financial institutions are not once again caught in a litany of proceedings and that recovery is not only a dream but a reality which takes place. These Rules are like a light at the end of a dark tunnel for banks and financial institutions and has lit a ray of hope in the way of banks and financial institutions who are looking for actual and meaningful recoveries.                                           


Disclaimer: This article is for information purposes only. Nothing contained herein is or is intended as legal advice and readers should obtain legal advice before acting on any information or view expressed herein. The author makes no representation or warranty, express or implied, in any manner whatsoever in connection with the contents of this article.

*Advocate

[1] The Insolvency  and  Bankruptcy  (Application  to  Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019

[2] The Insolvency  and  Bankruptcy  (Application  to  Adjudicating Authority  for  Bankruptcy  Process  for  Personal  Guarantors  to Corporate Debtors) Rules, 2019

[3] 2019 SCC OnLine SC 1478

[4] Notification dated 15.9.2019 issued by Ministry of Corporate Affairs brought into effect on 1.12.2019

[5]  2019 SCC OnLine SC 1478

[6] (2018) 17 SCC 394

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Bench of Dr S.M. Kantikar (Presiding member) and Dinesh Singh (Member) dismissed the revision petition and asked the complainant to seek a remedy in a competent civil court as per the law.

In the present case, the dispute arose between O.P Thakur (Complainant) and Shimla Municipal Corporation (OP-1) and H.S. Kochar & MS Kochar, Landlords (OP-2). The dispute is in respect to “deficiency in service” as alleged by the complainant.

In the first instance after the filing the complaint, district forum held that, the present complaint cannot be decided summarily before the district forum.

Thereafter, State Commission remanded the complaint back to the district forum while directing that district forum will dispose of the complaint afresh. In adjudication afresh, the district forum reiterated its stand as was in the first instance and ordered the complaint to be returned for being presented before the competent civil court.

Again the State Commission vide its order directed that “complainant is relegated to civil court for adjudication of his dispute.”

Thus in view of the above, complainant filed the instant revision petition before the Commission under Section 21 (b) of the Consumer Protection Act, 1986 against the State Commission’s Order.

Contentions

Advocate, Sameer Thakur argued on behalf of the complainant revisionist and argued that the case is remanded to the district forum for adjudication on merit apropos deficiency in service against the municipal corporation alone.

Adding to his above argument, he stated that, the complaint is such as can be adjudicated on merit in summary proceedings in consumer protection fora established under the Act 1986. Further, he stated that, fundamental rights under Articles 14 and 19 (1) (g) of the Constitution of India are being violated by the municipal corporation’s deliberate/wilful negligence.

Corporation’s Negligence

The public drainage system above the complainant’s office premises has been neglected by the Corporation. The rainwater flow from Mall Road diverted and gets logged in front of the passage to complainant’s office premises and even enters inside the office room. Despite the odds, the complainant used to mitigate the loss/damage to his professional property to the maximum extent at his own expense.

The situation as stated above went unmanageable after the monsoons of 2011 and 2012. The complainant approached the Corporation Commissioner but was ignored and no action was taken for any of his complaints. Thereafter he filed an RTI application to seek appropriate redressal still no action was taken.

Complainant in the above situation had to exhaust his lifetime earning for the survival of his family.

Corporation’s deliberate /wilful negligence is violative of complainant’s fundamental rights under Articles 14 and 19 (1) (g) of the Constitution.

Analysis and Decision of the Commission

Commission while noting some observations stated that,

Consumer Protection fora do not enforce fundamental rights, they do not exercise jurisdiction of High Courts or Supreme Court under Articles 226 or 32.

The present complaint filed for ‘deficiency of service’ under the Act 1986 is not meant or intended to be in the nature of public interest litigation apropos a public authority.

Commission examined whether or not the specificities of the case are such as can be adjudicated on merit in summary proceedings in quasi judicial consumer protection fora established under the Act 1986.

Commission held that, the instant case can be aptly adjudicated on merit in summary proceedings by quasi judicial consumer protection fora established under Act 1986.

Further, it also stated that the revision petition is dismissed with liberty to the complainant to seek a remedy in a competent civil court as per law.  Nothing stops the complainant from seeking remedy under Article 226 or Article 32 in High Court or Supreme Court to enforce any of his fundamental rights including “Art 14 & 19(1)(g) of the Constitution” mentioned in his complaint.

In view of the above terms, the present revision petition stands dismissed. [O.P. Thakur v. Shimla Municipal Corpn., 2019 SCC OnLine NCDRC 326, decided on 15-10-2019]

Case BriefsHigh Courts

Uttaranchal High Court: Sudhanshu Dhulia, J., contemplated a petition presented before him by the petitioner who was a member of Waqf Board and was subsequently disqualified, aggrieved by which he filed the instant petition.

The petitioner was disqualified in terms of Section 20 read with Section 16 of the Waqf Act, 1995. Section 16 talked about disqualification for being appointed or for continuing as a member of the Board if certain conditions are not followed also Section 20 talked about “removal of chairperson and member” when a person was subjected to disqualification under Section 16.

The case of the petitioner was that on the earlier occasion when he was a member of the Waqf Board for the term of five years (i.e. 22-06-2010 to 22-06-2015), but he was removed in 2012. The petitioner challenged the order before the Waqf Tribunal where his petition was allowed and the order by which he was removed as a member of the Waqf Board was set aside by the Waqf Tribunal.

The reason cited by the respondent was that on a previous occasion he was removed from his office as a member or as a Mutawalli. However, the order by which the petitioner was earlier removed as a member of the Waqf Board was set aside by the judicial order, and therefore, that order does not survive. It was contended that the order passed by the respondents was unreasonable and the petitioner was not given an opportunity of being heard.

Learned State counsel D.S. Patni and M.S. Rawat argued that the petitioner had an equally efficacious remedy to file an appeal before the Tribunal under Section 83 of the Waqf Act, 1995.

High Court observed that though the petitioner had a remedy under sub-section (2) of Section 83 of the Waqf Act, 1995 however, in this particular case the existence of an alternative remedy before the Tribunal not operated as a bar inasmuch as the present order had been passed without affording opportunity of hearing to the petitioner.

It was held that, “This is for the reason that in case the law provides a remedy at two stages i.e. one before the concerned authority and later before the appellate authority, both opportunities have to be fair and must comply with the norms of natural justice and fair play. It does not mean that the authority can pass an order in violation of principle of natural justice and fair play and the same shall stand cured if the appellate authority gives an opportunity of hearing to the petitioner. At both the stages, the petitioner was required to be given an opportunity of hearing in terms of principle of natural justice and fair play, which has not been given in the present case.”

Hence, the petition was allowed.[Haji Rao Sharafat Ali v. State of Uttarakhand, 2019 SCC OnLine Utt 893, decided on 23-08-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Appellate Tribunal, Prevention of Money Laundering Act (New Delhi): A Coram of Manmohan Singh (Chairman), J. and G.C. Mishra (Member) allowed an appeal under Section 26 of the Prevention of Money Laundering Act, 2002 against an order passed by the Adjudicating Authority for attaching property.

In the instant case the CBI registered a criminal case under Section 120-B of Penal Code, 1860 read with Sections 7, 12, 13(2) and 13(1)(d) of Prevention of Corruption Act, 1988 against one Joint Director of Enforcement Directorate (ED) wherein it was alleged that he assisted the appellant (herein), indulging in corrupt practices in an investigation. It was also alleged that they had taken a huge amount of bribes as quid-pro-quo for acts of omission and commission during the said investigation. As a result, the appellant was arrested by CBI and a charge sheet was filed against him. On the basis of the registration of the case by CBI, a Prevention of Money Laundering Act, 2002 (PMLA) case was also recorded at New Delhi. The ED provisionally attached the immovable property of the appellant which was confirmed by the Adjudicating Authority.

The respondent’s counsel, Shilpi Satyapriya Satyam, contended that the aforesaid property was attached as a “value thereof” in accordance with provision made under Section 2(1)(u) read with Section 2(1)(v) of the PMLA. The counsel for the appellant, R.K. Handoo, drew the attention of the Tribunal to the provision in Section 8(3)(a) of PMLA, 2002 as amended by Act 13 of 2018 which reads as, “a) continue during [investigation for a period not exceeding ninety days or] the pendency of the proceedings relating to any [offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be. On the basis of this the counsel contended that the confirmation order of attachment passed by the Adjudicating Authority did not survive. Also, no prosecution complaint was filed against the appeal, and hence the appeal be allowed.

The Tribunal found, “It is strange to note here that an immovable property of a person has been made part of a prosecution complaint for confiscation without making that person as a party and affording that person an opportunity to defend his case.” It was further noted, “Section 8(3)(a) of PMLA has been amended by the Act 13 of 2018, wherein a limitation period has been provided for continuation of attachment or retention of property or record post confirmation of attachment/retention and it is the intention of the legislature not to allow the Investigating Authority to get the property attached or retained the record/documents/items indefinitely in the name of investigation.”

Thus, the appeal was allowed. The Tribunal directed the appellant to move to the concerned Special Court for an appropriate remedy, wherein the Prosecution Complaint was pending and his property was made part and parcel of that complaint.[Sanjay Kumar v. Deputy Director Directorate of Enforcement, New Delhi, 2019 SCC OnLine ATPMLA 9, decided on 12-04-2019]

Case BriefsHigh Courts

Madhya Pradesh High Court: G.S. Ahluwalia, J. dismissed a writ due to lack of merit, where the petitioner challenged the advertisement by which the applications had been invited from Private Operators for the operation of Lok Seva Kendra under State Agency for Public Service, Madhya Pradesh.

Learned counsel for the petitioner Chandresh Kumar Shrivastava, submitted that the petitioner was awarded a contract for operating Lok Seva Kendra for three years and it was renewed subsequently. Clause 11 of the Agreement provided for renewal of contract, according to which, if the operator is interested to continue his right to operate Lok Seva Kendra, then he had to make an application for extension of the contract for a further period of three years within six months in advance to the expiry of the contract. He contended that, he made an application for renewal of his contract, however, without deciding the application, the respondents had issued an advertisement and ignored the request of the petitioner.

The learned counsel for the State, F.A. Shah submitted that the petitioner had not filed the acknowledgment of the receipt of the said application. The counsel highlighted that in case, if there was any dispute, the petitioner had an efficacious and alternative remedy under the Agreement and the petitioner had approached this Court without availing Arbitration Clause, which should have been the first recourse.

The petitioner contended that since the dispute was not raised because of violation of any contractual obligation either by the respondents or by the petitioner, therefore, the Arbitration Clause would not apply. It was further submitted that the State Government had issued instructions on with regard to the renewal of the contract and in the letter by the State the period of the agreement was extended in view of the ongoing election process. However, the State directed by a subsequent letter that the building should be handed over to the successor. Accordingly, it is clear that the agreement, which was executed in favour of the petitioner, would be prematurely terminated.

The Court observed that, the petitioner had not filed any acknowledgment or receipt to prove that petitioner had exercised his right of renewal before the State. Further, it stated that the case of the petitioner is one which qualified for alternative Redressal Forum as the petitioner sought enforcement of Clause 11 of the Agreement thus, the petitioner claimed that Clause 11 of the Agreement had been violated by the respondents. The Court held that, the efficacious remedy for the petitioner is under Clause 15 i.e availability of Arbitration Clause. Hence, the case of the petitioner was dismissed accordingly.[Shivkant Shrivastava v. State of M.P., 2019 SCC OnLine MP 943, decided on 30-05-2019]

Case BriefsForeign Courts

High Court of South Africa, Eastern Cape Local Division: This application was filed before G.J. Gajjar, AJ., under Rule 28(4) of the Uniform Rules of Courts by which the applicant seeks to amend its particulars of claim pursuant to a notice of objection filed by the respondent.

Respondent had objected to the amendment in particulars on the ground that it was not possible to determine what work was undertaken to remedy the alleged defective work or what portion of invoices was reduced by a certain aggregate sum. The applicant and respondent had entered into an oral agreement under which respondent had provided a programmer who was not appropriate for managing the PLC program due to which applicant had to recheck and get it corrected by a third party and company E for necessary and related costs. Applicant in its proposed amended particulars of claim has attached seven invoices made out to company E. The amended particulars was thus reducing this amount by 50% as a discount by the third party. Thus, this reduced amount as an amendment to the particulars was criticized by respondents. Respondent submitted that the plaintiff, at the very least, is required to specifically stipulate what portion of the attached invoices was not for its account and that Rule 18(4) should be read conjunctively with the provisions of Rule 18(10) in regard to the particulars required when claiming damages.

High Court was of the view that proposed amended particulars of claim do not disable the defendant from assessing the quantum of the claim. Therefore, the objection made by the respondent was dismissed and the particulars of claim was amended. [Shones Automation (PTY) Ltd. v. Smokey Mountain Trading 444 (PTY) Ltd., Case No. 1554 of 2018, decided on 19-02-2019]

Case BriefsHigh Courts

Manipur High Court: The Bench of Ramalingam Sudhakar, J. dismissed a writ petition holding that proper remedy for the petitioners to seek intervention of either the competent court or competent authority of the Government.

Petitioner who claimed to be the Maharaja of Manipur pleaded that as per the “Manipur Merger Agreement” dated 21-9-1949 between the erstwhile Governor General of India and the Maharaja of Manipur, certain private properties were allocated to the Maharaja to be administered by him on his own terms. It was further pleaded that some people were trying to encroach upon his property.

P. Tomcha, Advocate for the petitioner prayed for the relief of issuing a writ of mandamus directing the respondents to stop their illegal possession of the subject Multipurpose Community Hall. The documents on the basis of which the petitioner claimed his rights were disputed by the respondents.

The High Court was of the view that the matter involved disputed question of facts and therefore it was not inclined to entertain the petition. It was stated that the petitioner could approach either competent civil court or competent authority of the Government for establishing his rights as claimed. Thus, the petitioner was dismissed with liberty to petitioner to work out on his remedy in accordance with law. [Leishemba Sanajaoba v. State of Manipur, 2018 SCC OnLine Mani 171, decided on 14-12-2018]