Legal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

18 Reports to Read


Competition Commission of India (CCI)


Star India providing bouquet of channels at lesser prices resulting significant loss in consumer base of Asianet Digital Network: Star India abusing dominance of its position? 

The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) noted allegations against Star India for providing a bouquet of channels at lesser prices resulting in denying of market access and also amounting to unfair pricing.

Read full report here…

7 entities indulged in anti-competitive agreement for supply of signages for branches/offices/ATMs of SBI: E-mails exchanged between parties formed basis for manipulation of bidding process

Noting that in respect of cases concerning cartels that are hidden or secret, there is little or no documentary evidence and may be quite fragmentary, Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members)  imposed penalties on 7 entities and signages for bid-rigging activities and cartelization with respect to the supply of signage for branches, offices and ATMs of State Bank of India.

Read full report here…

Forcing buyers to purchase insurance policies?  Even if dealers offer to sell insurance policies to customers, customers may yet have option to buy such policies from alternative channels

The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) addressed a matter wherein it was alleged that certain Car Companies were abusing their dominant position and denying the cashless claim to consumers if the insurance policy had not been obtained through them, their dealers or their insurance broking companies.

Read full report here…


Customs, Excise and Service Tax Appellate Tribunal (CESTAT)


Amount deposited during the investigation, ipso facto, becomes pre-deposit when the assessee carries the dispute before the Appellate Forum

Anil Choudhary (Judicial Member) dismissed applications filed by the Revenue pertaining to rectification of mistakes.

Read full report here…


Income Tax Appellate Tribunal (ITAT)


Notice issued against a dead person is null and void and all consequent proceedings/orders being equally tainted are liable to be set aside

The Coram of Amit Shukla (Judicial Member) and Pradip Kumar Kedia (Accountant Member) allowed an appeal against a revisional order passed under Section 263 of the Income Tax Act, 1961.

Read full report here…

Does Income Tax Act prohibit HRA Exemption On Rent Paid To Wife?

An appeal was filed by the assessee against the order of CIT(A)-21, New Delhi dated 21-01-2019 before the bench comprising of Sh. A. D. Jain (Vice-President) and Dr. B. R. R. Kumar (Accountant Member).

Read full report here…


National Consumer Disputes Redressal Commission (NCDRC)


When a Statute provides for a particular period of limitation, it has to be scrupulously applied, as an unlimited limitation leads to a sense of uncertainty

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

Read full report here…

Will Tax deducted at source be attracted on compensation awarded under Consumer Protection Act “in the form of simple interest”?

The Coram of Dinesh Singh (Presiding Member) and Justice Karuna Nand Bajpayee (Member) expressed that in the ‘service’ of ‘housing construction’, if, in a particular case, “compensation” is computed “by way of interest” on the deposited amount it shall not be differently treated than the other cases in which the term “interest” may not at all be used in computing the compensation.

Read full report here…

If a person conceals facts about pre-existing fatal disease at the time of taking insurance, would it be a breach of insurance contract?

The Coram of Dinesh Singh (Presiding Member) and Karuna Nand Bajpayee (Member) upheld the decision of the District Commission with respect to concealment of pre-existing fatal diseases at the time of taking insurance.

Read full report here…

Consensus between dentists and patients essential to standardize treatment plans and methods: No X-ray conducted prior to performing root canal treatment: Read how NCDRC found dentist negligent

Expressing that, the consensus between the dentists and patients is essential to standardize treatment plans and methods, Coram of Justice R.K. Agrawal (President) and Dr S.M. Kantikar (Member) addressed a case of dental negligence and remarked that,

“The teeth are only part of the face and it cannot be simply concluded that the whole face will become more beautiful once the teeth become neat.”

Read full report here…


National Company Law Tribunal (NCLT)


Whether Shareholders have the right to remove Directors of a company? NCLT explains in light of Companies Act, 2013

Expressing that the management of business affairs in a company is not a sole duty of a Director, the results of a company’s performance is a team of work of Board of Directors, the Coram of Ashok Kumar Borah, Judicial Member and Shyam Babu Gautam, Technical Member, held that, Companies Act gives shareholders the right to remove the Directors of the company.

Read full report here…

National Company Law Tribunal orders insolvency proceedings against Supertech: Indebted and defaulted repayment of loan

The Coram of P.N. Prasad, Judicial Member and Rahul Bhatnagar, Technical Member, declared insolvency proceedings against the builder Supertech Limited.

Read full report here…

Logix Insolvent? NCLT initiates insolvency proceedings against Logix City Developers

The Coram of Bachu Venkat Balaram Das (Judicial Member) and Narender Kumar Bhola (Technical Member) initiates insolvency proceedings against Logix City Developers due to default in payment.

Read full report here…


National Company Law Appellate Tribunal (NCLAT)


Reduction of Capital’ is a ‘Domestic Affair’ of a particular company in which, ordinary, a Tribunal will not interfere because of the reason that it is a ‘majority decision’ which prevails

“A ‘special resolution’ is required to determine those matters for which the Act requires a ‘special resolution’ and except these matters in all other situations an ‘Ordinary Resolution’ is to be passed.”

Read full report here…


National Green Tribunal (NGT)


Unregulated tourism activities resulting in damage to environment in eco-sensitive Himalayan States of India: NGT takes suo motu cognizance

The Coram of Justice Adarsh Kumar Goel (Chairperson) and Justice Sudhir Agarwal (Judicial Member), Prof. A. Senthil Vel (Expert Member) and Dr Vijay Kulkarni (Expert Member) took suo moto cognizance based on media report highlighting the damage to the environment in eco-sensitive Himalayan States of India due to unregulated tourism.

Read full report here…


Securities Exchange Board of India (SEBI)


Can SEBI proceed against a Chartered Accountant for lack of due diligence? SAT analyses

The Coram of Justice Tarun Agarwala (Presiding Officer) and Justice M.T. Joshi (Judicial Member) while addressing a matter whether a Chartered Accountant could be held guilty by SEBI for lack of due diligence, held that,

Lack of due diligence can only lead to professional negligence which would amount to a misconduct which could be taken up only by ICAI.


Uttar Pradesh Real Estate Appellate Tribunal


Developer issued two allotment letters, increasing cost of a unit in second by correcting taxes, lease rent and advance maintenance charges: Read whether UPRERA finds it to be illegal

The Division Bench of Justice Dr D.K. Arora (Chairman) and Rajiv Misra (Administrative Member) set aside the decision of the Regulatory Authority and held that the developer did not conceal the details of the project including the status of the same.

Read full report here…


West Bengal Taxation Tribunal


Can States levy ‘Entry Tax’?

The Coram of Justice Malay Marut Banerjee (Chairman) and Suranjan Kundu (Judicial Member) and Chanchalmal Bachhawat (Technical Member), expressed that, Article 304(a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation.

Read full report here…

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Appellate Tribunal for Electricity (APTEL)


State commission disallows benefit of increase in the tariff based on the change in law provision; Tribunal directs reconsideration

A Coram of R.K. Gauba (Officiating Chairperson) and Sandesh Kumar Sharma (Technical Member) decided on an appeal which was filed by Solar Power Project Developer (“SPD”) assailing order passed by respondent Bihar Electricity Regulatory Commission (“the State Commission”) disallowing the benefit of increase in the tariff based on the change in law provision with respect to increased Operation and Maintenance (O&M) costs of its 10MW solar power generating system.

Read full report, here…


 Customs, Excise and Service Tax Appellate Tribunal (CESTAT)


Whether Membership Subscription Charges, which is an essential service for business promotion, will be eligible for CENVAT Credit? CESTAT explains

While taking into consideration various of kinds of charges and whether they would qualify to be eligible for CENVAT Credit, P. Dinesha (Judicial Member) held that Membership Subscription charges are essential for business promotion and hence eligible for refund claim.

Read full report, here…

Unless 7.5% of the penalty is deposited when the penalty is in dispute, the appeal cannot be entertained by the Tribunal

The Coram of Sulekha Beevi, C.S. (Judicial Member) and P. Anjani Kumar (Technical Member) decided on an appeal which was filed in the matter of non-compliance with the pre-deposit.

Read full report, here…

Whether the services provided by CRS companies to the appellant can be subjected to levy of service tax under the OIDAR services? CESTAT addresses

The Coram of Dilip Gupta (President) and P.V. Subba Rao (Technical Member) took up an appeal which was filed by Air India to assail that part of the order by which the demand of service tax of Rs. 37,58,23,581/- has been confirmed against the total amount of service tax that was proposed in the show cause notice. It was for the reason that there was no liability pay service tax prior to 18-04-2006. The Commissioner had also ordered for recovery of interest under section 75 of the Finance Act, 1994 and penalty under Sections 76, 77 and 78 of the Finance Act.

Read full report, here…


National Consumer Disputes Redressal Commission (NCDRC)


 Can flat owners be prevented from use of certain open spaces and facilities by builders? NCDRC answers

While noting whether the flat owners can be prevented from the use of certain common spaces, the Coram of Justice R.K. Agarwal (President) held that under the provisions of the Maharashtra Apartment Ownership Act 1970 and even Maharashtra Ownership Flats (Regulation of the promotion of construction, sale management and transfer) Act, 1963, a Society had to be formed by the builder and the entire building premises including the open space in question was to be transferred to the Society or a legal body for its maintenance and further, as per Section 6 of the MAOA 1970, each flat owner is entitled to an undivided interest in the common areas and the facilities.

Read full report, here…

Can doctors alleged of medical negligence be exempted from legal proceedings as they are busy and conscious about their duties towards patients? NCDRC answers in a transfer application

The Coram of Dr S.M. Kantikar (Presiding Member) and Binoy Kumar (Member) while allowing an application for transfer expressed that,

“…it is true that the doctors are busy and conscious about their duties towards the patient, but they are not exempted from the legal proceedings and duty bound to attend the court proceedings (physical or virtual mode) either through their Counsel or on their own.”

Read full report, here…

Patient developed serious complications after being operated which were promptly treated by doctors, yet she died. Would this amount to ‘medical negligence’? NCDRC analyses

The Coram of Justice R.K. Agarwal (President) and Dr S.M. Kantikar (Member) analyses a matter wherein a patient developed serious issues after being operated, which led to her death, hence the doctors/hospital were alleged for medical negligence.

Read full report, here…

Homebuyer invests his hard-earned money to get legal possession of flat, yet gets subjected to a 6-year delay: Read how NCDRC provided relief to consumer

While addressing a case wherein there was a delay of 6 years in handing over the possession to the buyer, the Coram of Dr S.M. Kantikar (Presiding Member) and Binoy Kumar, Member, held that in view of catena of Supreme Court decisions on the said issue, the buyer was entitled to get legal possession along with compensation.

Read full report, here…

Builder took money from homebuyer for formation of Co-operative Housing Society, but never formed so: Read why the homebuyer approached Commission

The Coram of R.K. Agrawal (President) and Dr S.M. Kantikar (Member) addressed a matter wherein the builder took money from the purchaser for the formation of a co-operative housing society but failed to do so and when asked for the refund, he did not return the money as well.

Read full report, here…


National Company Law Tribunal (NCLT)


Operational Creditor is under obligation to recover money from its client and not agent: NCLT decides while dismissing a petition filed under S. 9 IBC

The Coram of H.V. Subba Rao (Judicial Member) and Chandra Bhan Singh (Technical Member) dismissed a petition filed under Section 9 of the IBC while noting that no operational debt existed under Section 5(8) and expressed that,

Operational Creditor being the Principal was always under obligation to recover the money from the client and not from his agent unless the agent failed to perform his duties.

Read full report, here…

In case of an application being filed under S.7 of IBC, will insufficiency of stamp duty be looked into? NCLT decides

The Coram of H.V. Subba Rao, Judicial Member addressed the relevancy of insufficiency of stamp duty under Section 7 proceedings of Insolvency and Bankruptcy Code, 2016

“…a Section 7 application under the IBC can be filed in a simple form prescribed in the Code even without any pleadings.”

Read full report, here…

Mumbai International Airport Limited temporarily restrained from removing Jet Airways assets from its premises including MIAL’s hangar: Airline’s representatives, workmen, etc. allowed access for maintenance of assets

The Coram of Kapal Kumar Vohra, Technical Member and Justice P.N. Deshmukh, Judicial Member, while addressing a matter wherein Jet Airways requested Mumbai Airport not remove its assets from its premises, expressed that,

“…it is to be noted that one of the principal objectives of the Code is to provide for revival of the CD and every attempt ought to be made to revive the CD and Liquidation being the last resort.”

Read full report, here…


National Company Law Appellate Tribunal (NCLAT)


 If a case was filed under IBC, can penalty be imposed under Companies Act? NCLAT addresses

The Coram of Justice Ashok Bhushan (Chairperson) and Dr Alok Srivastava (Technical Member) held that if the Intervention Application was filed under the IBC, then, any penalty to be imposed should have been under the provisions of IBC and not the Companies Act.

Read full report, here…

If granting exclusion of time would help Corporate Debtor from liquidation, should NCLAT allow such exclusion? Here’s what NCLAT says 

The Coram of Justice M. Venugopal (Judicial Member) and Dr Ashok Kumar Mishra (Technical Member) held that if granting exclusion of time helps the Corporate Debtor to revive, the basic objective of Insolvency and Bankruptcy Code will eb achieved.

Read full report, here…

Can application filed under S. 95(1) read with S. 60(1) IBC be rejected on ground that no Corporate Insolvency Resolution Process was pending against Corporate Debtor? NCLAT addresses

If CIRP or Liquidation Proceeding of a Corporate Debtor is pending before an NCLT, application relating to Insolvency Process of Corporate or Personal Guarantor should be filed before same NCLT.

Read full report, here…

EPC Construction Resolution: NCLAT allows distribution of Rs 223 crores from available cash balance among creditors and lenders

The Bench of Justice Ashok Bhushan (Chairperson) and Dr. Alok Srivastava (Technical Member) allowed the distribution of INR 223 crore from the cash balance available with EPC Construction among its creditors and lenders.

Read full report, here…


Securities Exchange Board of India (SEBI)


 Zee Insider Trading Case | In absence of direct evidence, matters of insider trading are to be tested on what grounds? SEBI lifts restrictions on 10 entities

The Coram of Santosh Kumar Mohanty (Whole Time Member) lifted restrictions imposed on 10 Entities who were alleged in insider trading, though the Tribunal added that the said relaxation was being granted subject to the outcome of appeal proceedings filed by SEBI against SAT Order before Supreme Court.

Read full report, here…

Legal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

Appellate Tribunal for Electricity (APTEL)


State commission disallows benefit of increase in the tariff based on the change in law provision; Tribunal directs reconsideration

A Coram of R.K. Gauba (Officiating Chairperson) and Sandesh Kumar Sharma (Technical Member) decided on an appeal which was filed by Solar Power Project Developer (“SPD”) assailing order passed by respondent Bihar Electricity Regulatory Commission (“the State Commission”) disallowing the benefit of increase in the tariff based on the change in law provision with respect to increased Operation and Maintenance (O&M) costs of its 10MW solar power generating system.

Read full report here…


Armed Forces Tribunal (AFT)


AFT grants war injury pension to soldier who sustained injuries resulting in disability during Operation Hifazat

The Bench of Justice Dharam Chand Chaudhary (Member J) and Vice Admiral HCS Bisht (Member A), granted war injury pension to the ex-serviceman who had sustained injuries resulting in disability during Operation Hifazat.

Read full report here…


Arbitral Tribunal, New Delhi


Arbitral Tribunal finds SJDA at fault; directs to refund bid amount of Rs 84.24 crores to the claimant in New Township Project

“No permission for conversion of land was obtained and, therefore, even if all other conditions were fulfilled, the Claimant-Developer could not have commenced construction activities on the agricultural lands without obtaining conversion of land use.”

Read full report here…


 Competition Commission of India (CCI)


Apple charging a commission of up to 30% on all payments made through its in-app purchase system, is a violation of its dominant position? CCI orders investigation 

“Some consumers may have preference for closed ecosystem like Apple and others may have a preference for open ecosystems like that of Google.” 

Read full report here… 

Why did CCI suspend the Amazon-Future deal? Detailed analysis of CCI order imposing Rs 202 crores penalty on Amazon

“Amazon had misled the Commission to believe, through false statements and material omissions, that the Combination and its purpose were the interest of Amazon in the business of FCPL.”

Read full report here…

Is Google abusing dominant position in news aggregation? CCI gives prima facie findings; discusses Snippets, Mirror Image Websites, Paywall Options, etc.

“Google appears to operate as a gateway between various news publishers on the one hand and news readers on the other. Another alternative for the news publisher is to forgo the traffic generated by Google for them, which would be unfavourable to their revenue generation.”

Read full report here…


 Customs Excise & Service Tax Appellate Tribunal (CESTAT)


“Obiter dictum” not legally binding as precedent; jurisdictional commissioner cautioned for filing frivolous applications

Suvendu Kumar Pati (Judicial Member) dismissed an appeal which was filed in response to the order passed by this Tribunal for rectification of mistake on the ground that the order to the extent of availment of service of outdoor catering was not proper.

Read full report here…

Jurisdiction for claim of refund filed/initiated to be dealt under the provision Central Excise law and not by the provision of CGST law

Ashok Jindal (Judicial Member) dismissed the application filed by the Revenue (CCE & ST, Panchkula) for ratification of mistake in a final order by the Tribunal which was noticed by the Applicant. The Tribunal dealt with two issues (a) whether to ratify previous order & (b) to deal with the jurisdiction

Read full report here…

Is there any provision under Cenvat Credit Rules, 2004 or Finance Act, 1994 for reversal of CENVAT credit for services provided for which no consideration is received by an assessee? CESTAT analyses

“CENVAT Credit Rules or Finance Act there was no provision for reversal of CENVAT credit for the services provided for which no consideration for service provided was received by an assessee.”

Read full report here…


District Consumer Disputes Redressal Commission, Kolkata


Consumer cannot be forced to pay “service charge” in a restaurant: Consumer Forum finds conduct of restaurant contrary to principles of Consumer Protection Act

“The OPs must have been aware of the guidelines of Fair Trade Practice related to changing of service charge from the consumers by hotels/restaurant issued by Department of Consumer Affairs, Government of India, inter alia, stipulating that service charge on hotel and restaurant bill is “totally voluntarily” and not mandatory.”

Read full report here…


Income Tax Appellate Tribunal (ITAT)


If lessee is not actual owner of property, can actual rental expenses be claimed on return of income? ITAT decides

“The assessee-company has merely taken the assets on lease from the owner, and it is accordingly eligible to claim actual rental expenses in the return of income.”

Read full report here… 

Can merely disowning bank accounts exempt assessee from paying tax? Read why ITAT approved addition of Rs 12.81 Crores under S.68 of Income Tax Act

“Merely disowning the bank accounts by the assessee does not lead to the conclusion that the accounts are not maintained by him when there is a direct evidence contrary to the contention of the assessee.”

Read full report here…


 National Consumer Disputes Redressal Commission (NCDRC)


Homebuyers cannot be expected to wait indefinitely for taking possession: NCDRC allows consumer complaint against Builder, directs refund, imposes costs

Commission dealt with a complaint filed under Section 21 read with Section 2(c) of the Consumer Protection Act, 1986 by the complainant in respect of a plot allotted to him promoted by the OP, claiming deficiency of service due to delay in handing over possession of the plot allotted and claiming refund of amount deposited with compensation.

Read full report here… 

Insurer refuses to issue insurance policy as Risk Confirmation letter obtained on concealment of material fact by Insurance Broker: Policy will be vitiated? NCDRC answers

“Section 19 of Contract Act, 1872, provides that when the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the party whose consent is so caused.”

Read full report here…

Plastic pieces found in slices of bread, but compensation denied to consumer. Read why NCDRC set aside State Commission’s order of compensation

Ram Surat Maurya (Presiding Member) addressed a matter wherein Britannia was alleged to have pieces of plastic in its bread, but the complainant failed to prove that the bread was manufactured by the said company.

Read full report here…

Minor treated for “Measles” instead of “Stevens-Johnson Syndrome” due to wrong diagnosis and leading to medical negligence: Read detailed report on NCDRC’s decision

“The patient at her young age of 12 years suffered very serious and potentially fatal SJ syndrome. It was the patient’s sheer good luck that she survived in spite of such grossly inappropriate/inadequate treatment at every stage.”

Read full report here…


National Company Law Appellate Tribunal (NCLAT) 


Is it proper for NCLT to record finding regarding default when RP is yet to consider it and submit report? NCLAT discusses Ss. 95, 97, 99 IBC

“…there cannot be any dispute with the statutory scheme as contained in Section 97 that when application is filed by the Resolution Professional under Section 95, the Adjudicating Authority shall direct the Board within seven days of the date of the application to confirm that disciplinary proceedings pending against the Resolution Professional or not and the Board was required within seven days to communicate in writing either confirming the appointment of the Resolution Professional or rejecting the appointment of the Resolution Professional and nominating another Resolution Professional.” 

Read full report here…

Aggrieved with the categorisation as ‘unsecured creditor’, Tribunal secures ‘secured creditor’, having relinquished the security interest

The Coram of Ashok Bhushan J, (Chairperson), and Dr Alok Srivastava (Technical Member) while accepting the appeal and rejecting the claim of the respondent, the Tribunal was of the opinion that the Adjudicating Authority committed an error in rejecting the claim of the appellant to be ‘secured creditor’.

Read full report here…

Is approval with 90% vote of CoC required before allowing withdrawal of CIRP application even where CoC was not yet constituted? NCLAT clarifies law on S. 12-A IBC 

“…when the application is filed prior to the constitution of Committee of Creditors, the requirement of ninety percent vote of Committee of Creditors is not applicable and the Adjudicating Authority has to consider the Application without requiring approval by ninety percent vote of the Committee of Creditors.”

Read full report here…

Dominant position and Predatory Pricing or Win-Win for riders and drivers? NCLAT upholds CCI’s decision

“We do not think that Ola could operate independently of other competitors in the relevant market, and hence it did not enjoy a dominant position in the market.”

Read full report here…

Once Adjudicating Authority approves Resolution Plan, does it still remains a confidential document? Read what NCLAT says

“The category of creditors including the Members of the suspended Board of Directors or the partners of the corporate persons, who are entitled to participate in the meeting of the Committee of Creditors are entitled to receive copies of all documents.”

Read full report here…


 National Green Tribunal (NGT)


Rampant noise pollution, incessant use of horns; a Deplorable state of affairs! NGT finds Rajasthan in contempt of Supreme Court’s order 

While addressing the issue of pressure/air horns and motor vehicles being driven with intolerable sound in Rajasthan, the Bench comprising of Justice Sheo Kumar Singh (Judicial Member) and Dr. Arun Kumar Verma (Expert Member) found the State of Rajasthan in contempt of the Supreme Court’s order and issued notice to the state government to reply within three weeks.

Read full report here…


Securities Exchange Board of India (SEBI)


Twitter, Telegram and the tattered chances-Illicit act of swindlers recommending stock tips on social media; Tribunal acts immediately

“The tips circulated through the Channel create an inducing impact which are then followed by the subscribers and ironically, such stock tips may also prove to be true, if large number of recipients of such tips believe it and collectively act on it. Slowly and gradually, after seeing the price of the said thinly traded scrip actually rising, more and more subscribers start believing in the tips and start acting on it, which further strengthens the belief of such tips being genuine, as large number of individuals end up acting on such tips and by their collective buying actions, convert the deceitful, specious and baseless tips to realty”

Read full report here…

‘Billionaire’ dream turns into dread-Unauthorsied investment advisory amounted to fraud & misrepresentation

S.K. Mohanty, Whole Time Member while affirming an ex-parte interim order of SEBI, was of the view that the activities of the Noticees, Billionaire Solutions Pvt. Ltd. (Sole proprietor Akash Jaiswal) was covered within the definition of “fraud” defined under regulation 2(1)(c) of the PFUTP Regulations, 2003. And therefore was held liable for the violation of provisions of Section 12A (a), (b), (c) of the SEBI Act, 1992, Regulations 3 (b), (c) & (d), 4(1), 4(2)(k) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations, 2003).

Read full report here…

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Here are some of the interesting Legal Stories from the Last Week of January 2022


Can a girl be treated as property and given in donation? Bom HC addresses in light of “Daanpatra” executed by father of a daughter

“When the girl as per her own statement is minor, then why the father who is in all respect guardian of the girl should give the girl as Daan? A girl is not a property which can be given in donation.”

Read Full Report, here…


Whether denial of conjugal rights to a prisoner amounts to violation of Art. 21 of the Constitution of India?  Madras HC answers in light of “extraordinary circumstances”

Expressing that, a convict cannot enjoy all the liberties as are available to a common person, otherwise there would no difference between a law-abiding citizen and a law-violating prisoner, the Division Bench of Munishwar Nath Bhandari, ACJ and Pushpa Sathyanarayana and P.D. Audikesavalu, JJ., held that,

The leave for a specific purpose which may be for undergoing infertility treatment, as such, may not be considered for having conjugal relationship in common parlance, but for extraordinary reason, thus we (High Court) can safely hold that the 1982 Rules itself protect the rights of the prisoner guaranteed under Article 21 of the Constitution of India to the extent it is required.

Read Full Report, here…


Can a Kazi adjudicate disputes like a Court and pass an order like a decree? MP HC answers

If a Kazi entertains a dispute and acts as a mediator to settle the dispute between the members of the community that would be permissible, but he cannot adjudicate the dispute like a court and pass an order like a decree.

Read Full Report, here…


Minor treated for “Measles” instead of “Stevens-Johnson Syndrome” due to wrong diagnosis and leading to medical negligence: Read detailed report on NCDRC’s decision

The patient at her young age of 12 years suffered very serious and potentially fatal SJ syndrome. It was the patient’s sheer good luck that she survived in spite of such grossly inappropriate/inadequate treatment at every stage.

Read Full Report, here…


Is there any provision under Cenvat Credit Rules, 2004 or Finance Act, 1994 for reversal of CENVAT credit for services provided for which no consideration is received by an assessee? CESTAT analyses

CENVAT Credit Rules or Finance Act there was no provision for reversal of CENVAT credit for the services provided for which no consideration for service provided was received by an assessee.

Read Full Report, here…


Once Adjudicating Authority approves Resolution Plan, does it still remains a confidential document? Read what NCLAT says

Justice Ashok Bhushan (Chairperson) and Dr Ashok Kumar Mishra (Technical Member) expressed that, once Resolution Plain is approved by the Adjudicating Authority, it no longer remains a confidential document, so as to preclude Regulator and other persons from accessing the said document.

Read Full Report, here…

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 Some of the interesting legal stories from Week 2 of January 2022


Competition Commission of India (CCI)

1. Is Google abusing dominant position in news aggregation? CCI gives prima facie findings; discusses Snippets, Mirror Image Websites, Paywall Options, etc.

Google appears to operate as a gateway between various news publishers on the one hand and newsreaders on the other. Another alternative for the news publisher is to forgo the traffic generated by Google for them, which would be unfavourable to their revenue generation.

Read full report, here:https://bit.ly/33BQTQy


Delhi High Court

2. ‘Unmarried daughter, even if earning, can’t be assumed to have sufficient resources to meet matrimonial expenses’: Del HC orders father to pay marriage expenses of daughters

Kanya Daan is a solemn and pious obligation of a Hindu Father, from which he cannot renege.

An unmarried daughter, even if employed and earning, cannot be assumed to have sufficient resources to meet her matrimonial expenses. 

Read full report, here: https://bit.ly/3KbeNTL

3. Why is ‘Rooh Afza’ seeking injunction against ‘Dil Afza’? Here’s how Del HC stressed upon ‘deep emotion’ while deciding

Buying a bottle of sharbat may involve emotions, but not deep to the extent hoped for by the learned counsel for the plaintiffs. In any case, those who appreciate this deep emotion would be the first to be able to distinguish between ‘Rooh’ and ‘Dil’.

Read full report, here: https://bit.ly/33DKtQN


Securities Exchange Board of India (SEBI)

4. Twitter, Telegram and the tattered chances-Illicit act of swindlers recommending stock tips on social media; Tribunal acts immediately

“…The alleged scheme of enticing and inducing others to deal in certain securities thereby creating adverse and artificial impact on the price and volume of those scrips, has been ingenuously crafted and implemented in a manner that it was an impossible task for the common investors to identify any dubious hidden intent behind such messages and tips that were being circulated amongst them through the Telegram Channel”.

Read full report, here: https://bit.ly/34T02VD


Kerala High Court

5. Right to maintenance of child born out of inter-faith marriage: Is father under obligation to maintain his children even when there’s no statutory stipulation? HC answers

“There is no substantive law mandating a father of a child born out of an inter–religion marriage to maintain it. The Special Marriage Act, 1984 is silent on this.”

Read full report, here: https://bit.ly/3Fthmgj


 Dwarka Court, New Delhi

6. Dishonour of Cheque occurring when parties entered in an illegal and void agreement: Can Court still take cognizance in S. 138 NI Act complaint? Dwarka Court decides

Court on noting the fact that the sole purpose of the agreement was to obtain a tender in favour of the complainant, not on the basis of its intrinsic merit, but on the basis of “good links” of the accused with the NTPC higher authorities. Such agreements are expressly rendered void and of no legal consequence by virtue of Section 23 of the Indian Contract Act.

Read full report, here: https://bit.ly/3tuDmoI


Proceedings underway:

  • Marital Rape proceedings in Delhi High Court.
High Court Round UpLegal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

Some of the most interesting legal stories from Week 1 of January, 2022


‘Auspicious Time’ not there, Wife refuses to return to matrimonial home | Chhattisgarh High Court

“… despite efforts taken by the husband to restore the matrimonial home, the wife did not cooperate and under the guise of auspicious time to return, she continued at her maternal home.”

Read full report here…

“Overseas Wife”, Husband visited wife for few days on yearly visits | Delhi High Court

“…every marriage, where the couple stays apart from each other for work or other obligations consensually, is a broken one.”

Read full report here…

Right to Relax in danger?

Madras High Court expresses that, Suspicion that immoral activities are taking place in massage centres cannot be reason enough to intrude into an individual’s right to relax for it intrinsically is part and parcel of his fundamental right to privacy.

Read full report here…

Does Workmen’s Compensation Act, 1923 prohibits payment of compensation to a minor?

Bombay High Court decides whether the Insurance Company can be absolved of its liability to pay compensation under the Employees Compensation Act, 1923, if the employee who has succumbed to an accident which took place during the course of employment, is a minor?

Read full report here…

Future Retail seeking to terminate arbitration proceedings with Amazon: Read what Del HC decided

An adjournment at the last minute cannot be sought in respect of international commercial arbitration of this magnitude, involving arbitrators, counsels and experts from different jurisdictions.

Read full report here…

Foetus with severe cardiac anomaly, but pregnancy beyond 24 weeks: Can termination of pregnancy be permitted?

While explaining whether a pregnant woman can seek termination of pregnancy beyond 24 weeks, Delhi high Court found the mental health of the petitioner to be an essential factor for allowing termination of pregnancy.

Read full report here…

Dr Subramanian Swamy’s plea that Air India’s Disinvestment is arbitrary, illegal, corrupt: 5-pointer report of Delhi HC decision

Delhi High Court dismissed Dr Subramanian Swamy’s plea stating that any delay in the process of disinvestment of Air India would cause loss to public exchequer, besides creating uncertainty amongst the existing employees.

Read full report here…

Can a wife be forced to cohabit and establish conjugal rights? Gujarat High Court

A marriage between Mohammedans is a civil contract and a suit for restitution of conjugal rights is nothing more than an enforcement of the right to consortium under this contract.

Read full report here…

Apple charging a commission of up to 30% on all payments made through its in-app purchase system, is a violation of its dominant position? Read what the Competition Commission of India states

Some consumers may have a preference for a closed ecosystem like Apple and others may have a preference for open ecosystems like that of Google.

Read full report here…

Legal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

Armed Forces Tribunal (AFT) 

AFT denies grant of any relief to the person invalidated from service due to Alcohol Dependence Syndrome

“All efforts are made by military doctors and the organization to help a soldier who has become a victim of ‘Alcohol Dependence Syndrome’ and only when all efforts fail the soldier is invalided out on ground of ‘Alcohol Dependence Syndrome”.

Read more…

Is hypertension a disability attributable to or aggravated by Military Service? Will Invalidation make one entitled to disability pension? Tribunal decides

The Division Bench of Justice Umesh Chandra Srivastava and Vice Admiral Abhay Raghunath Karve, Member (A) granted disability pension to the person invalidated from service due to Hypertension.

Read more…

Where lesser age is recorded in school certificate than the actual age; correct date of birth will be the one recorded by the parents in service records

 Resolving a date of birth related controversy, the Division Bench of Justice Umesh Chandra Srivastava and Vice Admiral Abhay Raghunath Karve, Member (A) stated,

“If we take date of birth recorded in educational certificate of the applicant as correct i.e. 05-07-1992 and date of birth in respect of his younger brother being 20-02-1992 as per service records, one can imagine as to how it could be possible that an elder brother comes to this world later than his younger brother.”

Read more…


Central Administrative Tribunal (CAT)

 When subjective satisfaction of dispensing with the inquiry is not supported by any independent material, dispensing with holding the inquiry would be illegal

 “If a preliminary inquiry could be conducted, there may not be any reason as to why formal departmental inquiry could not have been initiated against the delinquent.”

Read more…


Competition Commission of India (CCI)

Competition Watchdog | Know why CCI imposed penalties on beer companies: Nation-wide Cartel? Read Full Report

 “No distinction in the Act, for the purposes of assessment of anti-competitive conduct, is made between the end-consumers, and intermediaries falling in the supply chain.” 

Read more…


Central Bureau of Investigation (CBI)

CBI | Does not find any fault in the coda but questions the agenda | Accepts CBI’s closure report but questions the investigation

Shivank Singh, Special Judicial Magistrate (CBI), while accepting the closure report questioned the delayed investigation by the premier investigation agency of the country. While accepting closure report, the Court stated,

“It may be noted that the collective and cogent evidence/ material gathered by CBI is enough to settle the fact that the allegations of complainant against her father and 26 other accused could not be substantiated”.

Read more…

Cremation of rights could not burn Justice on pyre | Lambasted UP Police for ‘shoddy investigation’, orders for further investigation

 “…it may be noted that there are many lapses on the part of UP Police which has hauled this case with open ends. This court is in deep pain to note that due to such lapses, the parents and family of the deceased did not even get a chance to see the dead body of the deceased or to perform the last rites of their late son”.

Read more…


Customs, Excise and Services Tax Appellate Tribunal (CESTAT)

When road construction is exempt; is every activity exempt relating to the road construction including consulting engineer services? Tribunal answers 

This Tribunal has held in other disputed cases that even the barricade provided on the side of highway, maintaining greenery on the side or middle of highway, construction of any facility, refreshment centre for road users, is also part of the road construction and such activity is also exempt. Even the administrative building constructed by the concessionaire, for construction of the road or highway for administration and collection of toll etc. is part of road.

Read more…

Recourse to revocation should be taken in extreme circumstances only and not in respect of violations for which there are other provisions to deal with them; Tribunal partly allows appeal

The Division Coram of Sulekha Beevi C.S. (Judicial Member) and P. Anjani Kumar (Technical Member) partly allowed an appeal which was filed assailing an impugned order by which the appellant customs broker’s licence was revoked on the grounds of contravention of Regulations 10(b), 10(d) and (10)(n) of the Customs Brokers Licensing Regulations, 2018; security deposit was forfeited and penalty was also imposed. 

Read more…

Amount claimed as refund already debited in Returns, whether there would be entitlement for refund under Rule 5 of CCR, 2004? Tribunal answers

P Dinesha (Judicial Member) allowed an appeal in which the Tribunal had to decide whether the appellant was entitled to refund under Rule 5 of CENVAT Credit Rules, 2004 (CCR).

Read more…

Whether the services provided by subsidiary company to its parent company in a foreign country could be treated as export of services? Tribunal answers

 Anil Choudhary (Judicial Member) allowed the appeals which were filed against the common Order-in-Appeal which dealt with the issue as to whether the services provided by the appellant to its parent company in Hong Kong, could be treated as export of services, and if the answer was in affirmative, whether the refund of amount paid under mistake of law by treating such export of services, as taxable service, could be denied by the revenue.

Read more…

Whether refund claim under R. 5 of CCR can be rejected on the ground that appellant did not debit amount of refund claimed at the time of filing refund claim, but have debited such amount subsequent to the filing of refund claim but before adjudication?

Anil Choudhary (Judicial Member) allowed an appeal which was filed bearing the issue as to whether the refund claim under Rule 5 of Cenvat Credit Rules read with Notification No.27/2012-CE (NT) can be rejected on the ground that the appellant did not debit the amount of refund claimed at the time of fling the refund claim, but have debited such amount subsequent to the filing of the refund claim but before adjudication.

Read more…

If two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted; Appeal allowed

When there is a reasonable interpretation of a legal and factual situation, which is favourable to the assessee, such an interpretation is to be adopted.

Read more…


National Company Law Tribunal (NCLT)

Deducing from the acts and the tactics of the corporate debtor failing the test of legality, initiates CIRP

The Coram of Ashok Kumar Borah, Judicial Member, and Shyam Babu Gautam, Technical Member while allowing the company petition, ordered for initiation of Corporate Insolvency Resolution Process (CIRP). The Bench stated that,

“The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices”.

Read more…

Debit acknowledged in emails, CIRP initiated resultantly-Appoints IRPM and declares moratorium

The Coram of P.S.N Prasad, Judicial Member and Narender Kumar Bhola,  Technical Member were inclined to allow the process of CIRP, considering the debt acknowledged by the corporate debtor.

Read more…


National Company Law and Appellate Tribunal (NCLAT)

NCLAT| Finds raising a late ‘pre-existing dispute’, spurious and to avoid action under IBC| Denies to stay CIRP 

The Coram of Justice Jarat Kumar Jain and Alok Srivastava, Technical Member while deciding an appeal denied to put a stay on the CIRP proceedings. The Tribunal was of the opinion that the alleged ‘pre-existing-dispute’ was raised at such a late stage even though it was a spurious dispute, only with an intention to avoid action under IBC. The Tribunal further made it clear that the order will not have any effect on the final outcome.

Read more…


Securities Exchange Board of India (SEBI)

SEBI | Monotonous modus operandi, modulated endgame |Issue of GDR, artificial arrangement, supported by the subscribing Company itself-Restrained and to disgorge

“It appears that the whole series of GDR issues by several listed companies in India was an act orchestrated by Arun Panchariya to reap benefits by sitting on the other side of the issuance and subscribing to the GDRs through an arrangement with Vintage. The respective Indian companies have also apparently participated in such schemes. Accordingly, as brought in the foregoing paragraphs, in view of the repetitive nature of such acts along with the gravity of the offences that have been perpetrated by Arun Panchariya, I am of the considered opinion that stern measures need to be taken against him and his connected entities”. 

Read more …

“Pandya ka Sauda” turns out to be the “Aakhri Sauda” for anchor and 5 other entities for the fraudulent trade activity-Ex parte interim order

 The balance of convenience is to impose suitable directions against the aforesaid entities so as to maintain a level playing field in the market for the general investors. If an ex-parte order is passed, what is at stake is right of the current entities herein vis-a-vis multitude of investors in the market. It may be noted that one of the underlying differences between the ex-parte orders in the case of private suits and ex-parte public enforcement actions, is the identification of the injured party. In private damage suits, the injured individual, as “whole”, is identifiable whereas ex-parte public enforcement actions, seek to protect the floating multitude of investing public by preventing, continuous and imminent violations of the securities laws.

Read more…

GDR| Catches the principal architect in activation & orchestration of the fraudulent scheme –Leaves one being ‘under liquidation’, rest restrained from accessing the market

G Mahalingam, Whole Time Member, restricted the entities from the securities market, involved in the fraudulent issuance of GDRs without appropriate disclosures.

Read more…

Calibrated efforts cancelling out the chance of coincidence of matching trades in illiquid scrip does not go scot free-Restricted from the market for manipulation

 Madhabi Puri Buch, Whole Time Member, while exercising powers under Section 19 read with Sections 11(1), 11(4) and 11B (1) and 11B(2) of the Securities and Exchange Board of India Act, 1992 restricted the Noticees involved in manipulation of the scrip.

Read more…

Tribunals/Regulatory Bodies/Commissions Monthly Roundup

Here’s a run-through of all the significant decisions covered in the month of July, 2021 under the Section of Tribunals/Commission/Regulatory Bodies.


Appellate Tribunal for Electricity

 

Solar Project

Whether there was bona fide delay in commissioning the solar power project?

“…allowed an appeal which was filed against the Order of Karnataka Electricity Regulatory Commission (Commission) whereby, the Commission has held that the Applicant/Appellant was not entitled to extension of time for commissioning of solar power project in terms of the Power Purchase Agreement and Supplementary power Purchase Agreement.”

Read more: https://bit.ly/3jbKtvP


Armed Forces Tribunal

War Injury Pension

Tribunal grants war injury pension to WW-2 soldier who suffered splinter wound injury in Italy

“…war injury pension to World War-2 veteran who suffered splinter wound injury in his right leg”

Read more: https://bit.ly/37cxXXi


Customs Excise & Service Tax Appellate Tribunal

Input Services

Whether distribution of credits on input services attributable to final product on a pro-rata basis proportionate to turnover of each unit between manufacturing plants? Tribunal answers

“…issue involved was that the appeals was whether Parle Biscuits was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle Biscuits and its contract manufacturing units, including Krishna Foods, under Rule 7(d) of the CENVAT Rules.”

Read more: https://bit.ly/2V5CYhG

Convenience Fee

“Convenience fee” charged by PVR for online booking of movie tickets under OIDAR category under S. 65(105) (zh) of Finance Act taxable or not? Tribunal explains

“Issue involved was related to to taxability of “convenience fee” charged by PVR Limited on its customers for online booking of movie tickets under the category of “online information and database access retrieval system” defined under section 65 (75) of the Finance Act and taxable under section 65 (105)(zh) of the Finance Act.” 

Read more: https://bit.ly/3rKRvvg

Principles of Natural Justice

Revenue has miserably failed to discharge its onus; Tribunal finds impugned order opposed to principles of natural justice

https://bit.ly/37a5uB8

CENVAT Credit

Admissibility of the Cenvat Credit in respect of outward GTA; Tribunal allows appeal

https://bit.ly/3xcJKzf


Central Information Commission

Right to Information Act

Can S. 8(1)(d), RTI Act be invoked to deny copy of thesis in view of commercial viability and to protect interests of scholar and his guide?

“…thesis publication of the research scholars cannot be reasonably even brought under any of the suo motu components of disclosure envisaged under Section 4 of the RTI Act, thereby reinforcing the proposition that the protection of Section 8 and 9 exemptions is very much available to the CPIO in the instant case.”

Read more: https://bit.ly/3fbpI23


Delhi State Consumer Disputes Redressal Commission

 

Deficiency of Service

Will Camera Manufacturer — Nikon be liable for deficiency of service caused to a consumer who lost all his photographs due to memory card getting corrupted?

“…Nikon was neither the manufacturer, dealer, importer, wholesaler of the Memory Card which got corrupted leading to the loss of the photos.”

Read more: https://bit.ly/3fbqg87

Builder-Buyer Dispute

Builder handing over possession of plot with incomplete development beyond agreed time. Is buyer entitled to refund of deposit with interest? Commission decides

“Possession of the plot land booked by the complainant was not handed over within the time agreed to despite the complainant has made the payment to the extent sought from time to time.”

Read more: https://bit.ly/2WJUV6d


National Consumer Disputes Redressal Commission

Medical Negligence

  • Can Wheelchair injuries be covered under the ambit of medical negligence?

“Wheelchairs are usually thought of a medical device that is meant to help those who are injured or have physical challenges; they can also be a source of injury when not properly used. Most wheelchair injuries that happen in a medical setting due to the negligence of medical staff and such could be easily prevented by a hospital or nursing home.”

Read more: https://bit.ly/3fimrOy

  • In case a medical practitioner chooses to follow one procedure instead of another, which turned out to be a failure, Can the said act be negligent?

“…The medical professional is often called upon to adopt a procedure that involves a higher element of risk, but which he honestly believes as providing greater chances of success for the patient rather than a procedure involving lesser risk but higher chances of failure.”

Read more: https://bit.ly/3idk4hG


National Company Law Appellate Tribunal

 

Insolvency Proceedings

An Arroyo for OYO | While allowing it to work independently, closed insolvency proceedings; Disallowed external parties to impinge

“We are of the considered view that before Constitution of Committee of Creditors (CoC) mere filing of a ‘Claim’ does not constitute a default per se. It is only on the basis of the ‘Claims’ that the CoC is constituted. In a catena of Judgments, the Supreme Court has reiterated that the prime objective of the Court is not recovery, but revival”.

Read more: https://bit.ly/3rO12BU


National Company Law Tribunal

Personal Guarantor

Personal Guarantor not liable to be prosecuted under S. 95 IBC where corporate debtor concerned is not under corporate insolvency resolution process

https://bit.ly/2Vmxnn0


National Green Tribunal

No Odour control system required to prevent odour from Sewage Treatment Plant. Why? NGT imposes costs on Delhi Jal Board: Why DJB is shirking its responsibility?

Mere spraying of chemical solution and other superficial steps is not effective in installing an effective odour control unit.”

Read more: https://bit.ly/3rMxOTD


National Human Rights Commission

Fr. Stan Swamy | Medical Treatment

  • Ensure every possible medical treatment to imprisoned FR. Stan Swamy as part of life saving measure and protection of his basic human rights: NHRC

https://bit.ly/3yk7ov5

Manual Scavenging

  • Manual scavenging and hazardous cleaning still remain a stinking truth of our nation: NHRC

https://bit.ly/3yi3seb

Post-Poll Violence in West Bengal

  • NHRC refutes allegations in a section of media regarding leakage of report relating to post poll violence in West Bengal

https://bit.ly/3BZMT9h


Securities Exchange Board of India

Fraudulent Scheme

 Manipulation in prices, fraudulent scheme results in debarment-Global Infratech, Directors and 12 other entities ousted from the market

https://www.scconline.com/blog/post/2021/07/23/manipulation-in-prices/

Insider Trading

Financial Racket: Kundra, Shetty into murky waters again | Imposes fine for insider trading on Viaan Industries

https://bit.ly/2V0zFZq


 Securities Appellate Tribunal

 

Collective Investment Scheme

Unregistered Collective Investment Scheme violative of S. 12(1)(b) of SEBI Act and Regulations, order to pay 10% p.a. interest on refundable amount not vitiated

https://bit.ly/3j728EJ


Tribunals/Regulatory Bodies/Commissions Monthly Roundup | June 2021

Case BriefsSupreme Court

Supreme Court: A 3-Judge Bench of the Supreme Court, by a majority of 2:1, has declared that certain portions of Section 184 of the Finance Act, 2017 as amended by the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 are unconstitutional and inoperative. Section 184 consists of provisions relating to the qualifications, appointment, etc., of Chairperson and Members of tribunals. The majority was formed by L. Nageswara Rao, J. who delivered the leading opinion, and S. Ravindra Bhat, J. penning a separate concurring opinion. Whereas, Hemant Gupta, J. wrote a substantially dissenting opinion.

The Challenge

The Madras Bar Association filed the instant writ petition seeking a declaration that Section 12 of the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 (“Ordinance”) and Section 184 of the Finance Act, 2017 as amended by the Ordinance are ultra vires Articles 14, 21 and 50 of the Constitution of India inasmuch as these are violative of the principles of separation of powers and independence of judiciary, apart from being contrary to the principles laid down by several earlier judgments[1] of the Supreme Court.

The dispute raised in the writ petition relates to:

(i) First proviso to Section 184(1) according to which a person below the age of 50 years shall not be eligible for appointment as Chairperson or Member; and also the second proviso, read with the third proviso, which stipulates that the allowances and benefits payable to Chairpersons and Members shall be the same as a Central Government officer holding a post carrying the same pay as that of the Chairpersons and Members.

(ii) Section 184(7) which stipulates that the Selection Committee shall recommend a panel of two names for appointment to the post of Chairperson or Member and the Central Government shall take a decision preferably within three months from the date of the recommendation of the Committee, notwithstanding any judgment, order or decree of any Court.

(iii) Section 184(11) which shall be deemed to have been inserted with effect from 26-5-2017, provides that the term of office of the Chairperson and Member of a tribunal shall be four years. The age of retirement of the Chairperson and Members is specified as 70 years and 67 years, respectively. As per the proviso, if the term of office or the age of retirement specified in the order of appointment issued by the Central Government for those who have been appointed between 26-5-2017 and 4-4-2021 is greater than that specified in Section 184(11), the term of office or the age of retirement shall be as set out in the order of appointment, subject to a maximum term of office of five years.

The Finance Act and the Ordinance

The Finance Act, 2017 was brought into force from 31-3-2017 to give effect to the financial proposals for the financial year 2017-18. Sections 183 to 189 thereof dealt with conditions of service of Chairperson and Members of Tribunals, Appellate Tribunals and other authorities.

The Tribunal Reforms (Rationalisation and Conditions of Service) Bill, 2021 was introduced in the Lok Sabha on 13-2-2021 but could not be taken up for consideration. According to the Statement of Objects and Reasons, the said Bill was proposed with a view to streamline tribunals and sought to abolish certain tribunals and other authorities, which “only add to another additional layer of litigation” and were not “beneficial for the public at large”. Thereafter, the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 was promulgated on 4-4-2021. Chapter XI thereof makes amendments to the Finance Act, 2017.

Discussion and Observations

  1. Separation of Power

Discussing this indispensable concept, the Court said that the doctrine of separation of powers, though not expressly engrafted in the Constitution, its sweep, operation and visibility are apparent from the scheme of the Indian Constitution. It forms part of basic structure of the Constitution. The Constitution has made demarcation, without drawing formal lines between the three organs ─ legislature, executive and judiciary, which is nothing but a consequence of principles of equality enshrined in Article 14 of the Constitution. Accordingly, breach of separation of judicial power may amount to negation of equality under Article 14. Stating thus, the Court reaffirmed:

Violation of separation of powers would result in infringement of Article 14 of the Constitution. A legislation can be declared as unconstitutional if it is in violation of the principle of separation of powers.

  1. Independence of Judiciary

On this point, the Court recorded that independence of judiciary is a fighting faith of our Constitution. It is cardinal principle of the Constitution that an independent judiciary is the most essential characteristic of a free society like ours and the judiciary which is to act as a bastion of the rights and freedom of people is given certain constitutional guarantees to safeguard independence of judiciary. An independent and efficient judicial system has been recognised as a part of basic structure of our Constitution.

After discussing Article 50 (which provides that the State shall take steps to separate the judiciary from the executive in the public services of the State) and Article 37 (which declares that the principles laid down in Part IV of the Constitution are fundamental in the governance of the country and it should be the duty of the State to apply the principles in making laws), the Court observed:

[Independence] is the lifeblood of the judiciary. … It is the freedom from interference and pressures which provides the judicial atmosphere where [a Judge] can work with absolute commitment to the cause of justice and constitutional values. It is also the discipline in life, habits and outlook that enables a Judge to be impartial. Its existence depends however not only on philosophical, ethical or moral aspects but also upon several mundane things ─ security in tenure, freedom from ordinary monetary worries, freedom from influences and pressures within (from others in the judiciary) and without (from the executive).

  1. Judicial Decisions and Legislative Overruling

The controversy that arose for consideration of the Court in the instant writ petition relates to the legislative response to the judgment of the Court in Madras Bar Assn. v. Union of India, 2020 SCC OnLine SC 962 (“Madras Bar Assn. case“). In that case, the validity of the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020 (“2020 Rules”) was challenged by the Madras Bar Association. The relevant portions of the decision in Madras Bar Assn. case along with the affect of the Ordinance are discussed below at relevant place.

(A) Judicial Review

Appreciating the scope of judicial review of ordinances, the Court noted that it is the same as that of a legislative act. Article 123 of the Constitution empowers the President to promulgate an ordinance during recess of the Parliament, which shall have the same force and effect as an act of the Parliament. The validity of an ordinance can be challenged on grounds available for judicial review of a legislative act.

The power to strike down primary legislation enacted by the Union of India or the State legislatures is on limited grounds. Where there is challenge to the constitutional validity of a law enacted by the legislature, the Court must keep in view that there is always a presumption of constitutionality of an enactment and a clear transgression of constitutional principles must be shown. The Court reiterated that:

[S]ans flagrant violation of the constitutional provisions, the law made by Parliament or a State legislature is not declared bad and legislative enactment can be struck down only on two grounds: (i) that the appropriate legislature does not have the competence to make the law, and (ii) that it takes away or abridges any of the fundamental rights enumerated in Part III of the Constitution or any other constitutional provisions. [‘Manifest arbitrariness’ is also recognised] as a ground under Article 14 on the basis of which a legislative enactment can be judicially reviewed.

(B) Permissible Legislative Overruling

The Court culled out the principles in accordance with which legislative overruling could be permissible:

(i) The effect of the judgments of the Court can be nullified by a legislative act removing the basis of the judgment. Such law can be retrospective. Retrospective amendment should be reasonable and not arbitrary and must not be violative of the fundamental rights guaranteed under the Constitution.

(ii) The test for determining the validity of validating legislation is that the judgment pointing out the defect would not have been passed, if the altered position as sought to be brought in by the validating statute existed before the Court at the time of rendering its judgment. In other words, the defect pointed out should have been cured such that the basis of the judgment pointing out the defect is removed.

(iii) Nullification of mandamus by an enactment would be an impermissible legislative exercise. Even interim directions cannot be reversed by a legislative veto.

(iv) Transgression of constitutional limitations and intrusion into the judicial power by the legislature is violative of the principle of separation of powers, the rule of law and of Article 14 of the Constitution of India.

Validity of the Ordinance and Amended Provisions

The grievance of the petitioners was mainly related to the violation of the first proviso and the second proviso, read with the third proviso, to Section 184(1), Sections 184(7) and 184(11) of the Finance Act, 2017 as amended by the Ordinance.

  1. Section 184(1)

(A) The first proviso of Section 184(1) provides minimum age for appointment as Chairperson or Member of a tribunal as 50 years.

One of the issues considered in Madras Bar Assn. case was the correctness of the conditions imposed in the 2020 Rules that an advocate is eligible for appointment as a Member only if he has 25 years of experience. It is relevant to state that advocates were ineligible for most of the tribunals. In Madras Bar Assn. case, the Court found the exclusion of advocates from being appointed as Members to be contrary to earlier judgments of the Court. In such view of the matter, a direction was given to amend the 2020 Rules to make advocates with at least 10 years of experience at the bar eligible for appointment as Members in tribunals.

Discussing that the direction given in the nature of mandamus in Madras Bar Assn. case is to the effect that advocates are eligible for appointment as Members, provided they have experience of 10 years, the Court in the instant petition observed:

The first proviso to Section 184 which prescribes a minimum age of 50 years is an attempt to circumvent the direction issued in Madras Bar Assn. case striking down the experience requirement of 25 years at the bar for advocates to be eligible. Introduction of the first proviso to Section 184(1) is a direct affront to the judgment of this Court in Madras Bar Assn. case.”

Underlining the importance of recruitment of Members from the bar at a young age to ensure a longer tenure, the Court was of the view that fixing a minimum age for recruitment of Members as 50 years would act as a deterrent for competent advocates to seek appointment. Practically, it would be difficult for an advocate appointed after attaining the age of 50 years to resume legal practice after completion of one term, in case he is not reappointed. Security of tenure and conditions of service are recognised as core components of independence of the judiciary. Independence of the judiciary can be sustained only when the incumbents are assured of fair and reasonable conditions of service, which include adequate remuneration and security of tenure.

The Court found that first proviso to Section 184(1) is in violation of the doctrine of separation of powers as the judgment Madras Bar Assn. case has been frustrated by an impermissible legislative override.

Resultantly, the first proviso to Section 184(1) was declared unconstitutional as it is violative of Article 14 of the Constitution.

It was directed that the selections conducted for appointment of Members, ITAT pursuant to the advertisement issued in 2018 should be finalised and appointments made by considering the candidates between 35 to 50 years as also eligible.

Ravindra Bhat, J., in his separate concurring opinion said that:

Prescribing 50 years as a minimum age limit for consideration of advocates has the devastating effect of entirely excluding successful young advocates, especially those who might be trained and competent in the particular subject (such as Indirect Taxation, Anti-Dumping, Income-Tax, International Taxation and Telecom Regulation). The exclusion of such eligible candidates in preference to those who are more than 50 years of age is inexplicable and therefore entirely arbitrary.

(B) The second proviso to Section 184(1) deals with the allowances and benefits payable to the Members which are to be the same as are admissible to a Central Government officer holding a post carrying the same pay.

In Madras Bar Assn. case, the Court considered Rule 15 of the 2020 Rules according to which, Chairpersons and Members of tribunals were entitled to House Rent Allowance at the same rate as admissible to officers with the Government of India holding Group ‘A’ post carrying the same pay. In that case, it was noted that an amount of Rs 75,000 per month which was paid as HRA was not sufficient to get a decent accommodation in Delhi for Chairpersons and Members of tribunals. Taking note of the serious problem of housing and the inadequate amount that was being paid as HRA to the Members, the Court in that case directed enhancement of HRA to Rs 1,25,000 per month to the Members and Rs 1,50,000 per month to Chairperson or Vice-Chairperson or President of tribunals. This direction was made effective from 1-1-2021.

Noting the submission of the Amicus Curiae that result of the instant amendment made by the Ordinance is that the Members of tribunals working in Delhi will get Rs 60,000 as HRA, the Court was of the view that the second proviso to Section 184(1), read with the third proviso, is an affront to the judgment in Madras Bar Assn. case. The direction issued in Madras Bar Assn. case for payment of HRA was to ensure that decent accommodation is provided to tribunal Members. Such direction was issued to uphold independence of the judiciary and it cannot be subject matter of legislative response. The Court held that a mandamus issued by the Supreme Court cannot be reversed by the legislature as it would amount to impermissible legislative override.

Therefore, the second proviso, read with the third proviso, to Section 184(1) was declared as unconstitutional.

The Court noted that after the judgment in the instant writ petition was reserved on 3-6-2021, the Ministry of Finance amended the 2020 Rules whereby the earlier Rule 15 was substituted[2]. The Explanatory Memorandum at the end of the notification states that the amendment to Rule 15 of the 2020 Rules on HRA, shall be given retrospective operation with effect from 1-1-2021, in order to give effect to the judgment in Madras Bar Assn. case. The Court was of the opinion that this amendment to Rule 15 is in conformity with the directions on the subject of HRA in Madras Bar Assn. case. In view thereof, no further direction is required to be given with respect to HRA.

  1. Section 184(7)

(A) Section 184(7) stipulates that a Search-cum-Selection Committee shall recommend a panel of two names for appointment to the post of Chairperson or Member and the Central Government shall take a decision preferably within three months from the date of the recommendation of the Committee, notwithstanding any judgment, order or decree of any Court.

Rule 4(2) of the 2020 Rules pertains to the procedure to be followed by the Selection Committee. According to the said Rule, the Selection Committee should recommend two or three names for appointment to each post. A direction was given in Madras Bar Assn. case to amend Rule 4(2) of the 2020 Rules to provide that the Selection Committee shall recommend one person for appointment in each post in place of a panel of two or three persons for appointment to each post.

The Court recorded that sufficient reasons were given in Madras Bar Assn. case to hold that executive influence should be avoided in matters of appointments to tribunals ─ therefore, the direction that only one person shall be recommended to each post. The decision of the Court in that regard is law laid down under Article 141 of the Constitution. The only way the legislature could nullify the said decision was by curing the defect in Rule 4(2). There is no such attempt made except to repeat the provision of Rule 4(2) of the 2020 Rules in the Ordinance amending the Finance Act, 2017.

Ergo, Section 184(7) was declared to be unsustainable in law as it is an attempt to override the law laid down by the Supreme Court.

(B) The second part of Section 184(7) provides that the Government shall take a decision regarding the recommendations made by the Selection Committee preferably within a period of three months. This was in response to the direction in Madras Bar Assn. case that the Government shall make appointments to tribunals within three months from the completion of the selection and recommendation by the Selection Committee.

Such direction, the Court noted, was necessitated in view of the lethargy shown by the Union of India in making appointments and filling up the posts of Chairpersons and Members of tribunals which have been long vacant. The direction given in Madras Bar Assn. case for expediting the process of appointment was in the larger interest of administration of justice and to uphold the rule of law.

The Court held, Section 184(7) as amended by the Ordinance permitting the Government to take a decision preferably within three months from the date of recommendation of the Selection Committee is invalid and unconstitutional, as this amended provision simply seeks to negate the directions of the Supreme Court.

  1. Section 184(11)

(A) The tenure of the Chairperson and Member of a tribunal is fixed at four years by Section 184(11), notwithstanding anything contained in any judgment, order or decree of any court. Sub-section (11) of Section 184 has been given retrospective effect from 26-5-2017.

Rule 9 of 2020 Rules had specified the term of appointment of the Chairperson or Member of the Tribunal as four years.  After perusing the law laid down by earlier judgments that a short stint is anti-merit, the Court in the Madras Bar Assn. case directed the modification of tenure in Rules 9(1) and 9(2) as five years in respect of Chairpersons and Members of tribunals.

The Court, in the instant petition, held that insertion of Section 184(11) prescribing a term of four years for the Chairpersons and Members of tribunals by giving retrospective effect to the provision from 26-5-2017 is clearly an attempt to override the declaration of law by the Supreme Court under Article 141 in the Madras Bar Assn. case.

Therefore, clauses (i) and (ii) of Section 184(11) were declared as void and unconstitutional.

(B) The proviso to Section 184(11) refers to appointments that were made to the posts of Chairperson or Members between 26-5-2017 and the notified date, i.e., 4-4-2021. The proviso lays down that the term of office of Chairperson and Members of tribunals who were appointed between 26-5-2017 and 4-4-2021 shall be five years even though the order of appointment issued by the Government had a higher term of office or age of retirement.

On this point, the Court referred to the interim directions given by the Supreme Court on 9-2-2018 in Kudrat Sandhu v. Union of India, 2018 SCC OnLine SC 2898 wherein it was held that all selections to the post of Chairperson/ Chairman, Judicial/ Administrative Members shall be for a period as provided in the Act and the Rules in respect of all tribunals. Reference was also made to certain subsequent orders passed in the same case of Kudrat Sandhu.

Coming back to the instant petition, the Court was of the opinion that though, there is nothing wrong with the proviso to Section 184(11) being given retrospective effect, the appointments made pursuant to the interim directions passed by the Supreme Court cannot be interfered with. The Court pointed out that even the interim orders passed by the Supreme Court cannot be overruled by a legislative act.

While making it clear that the appointments that are made to the CESTAT on the basis of interim orders passed by the Supreme Court shall be governed by the relevant statute and the rules framed thereunder, as they existed prior to the Finance Act, 2017, the Court upheld the retrospectivity given to the proviso to Section 184(11). Clarifying further, the Court stated that appointments after 4-4-2021 shall be governed by the Ordinance, as modified by the directions in the instant judgment.

Consequently, Section 12 of the Ordinance making amendments in the earlier Section 184 of the Finance Act, 2017, also stands invalidated.

The Dissent

Lastly, it may also be mentioned that the upshot of the dissenting opinion written by Hemant Gupta, J. (as summarised by S. Ravindra Bhat, J. in his opinion) was that as regards prescription of minimum age or with respect to conditions of service such as payment of house rent allowance, the Court ought to respect legislative wisdom; and that the directions issued in past judgments cannot bind Parliament, as they fell outside the judicial sphere.

The writ petition stood disposed of in terms of the majority judgment. [Madras Bar Assn. v. Union of India, 2021 SCC OnLine SC 463, decided on 14-7-2021]


[1] Union of India v. Madras Bar Assn., (2010) 11 SCC 1; Madras Bar Assn. v. Union of India, (2014) 10 SCC 1; Rojer Mathew v. South Indian Bank Ltd., (2020) 6 SCC 1; and Madras Bar Assn. v. Union of India, 2020 SCC OnLine SC 962

[2] Vide Rule 6, the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) (Amendment) Rules, 2021


Tejaswi Pandit, Senior Editorial Assistant has reported this brief.

Tribunals/Regulatory Bodies/Commissions Monthly Roundup

Here’s a run-through of all the significant decisions covered in the month of June, 2021 under the Section of Tribunals/Commission/Regulatory Bodies.


Armed Forces Tribunal

♦ AFT | Pension cannot be denied for disability being less than 20% where the disability is assessed at 15-19%“

The assessment of disability to the tune of 15-19% itself is a doubtful assessment and cannot be final for the simple reason that there is no barometer which can assess the disability percentage to the extent of 1% and therefore, the percentage of disability which has been assessed as 15-19% may be 20% also and there may be variation of at least two percent plus also. In case of doubt as the benefit should always be given to the applicant.”

https://wp.me/scenps-pension


Competition Commission of India

♦ CCI examines if airlines were involved in cartelization resulting in anti-competitive practice during Jat Agitation in 2016 || Synoptic view of Judgment

“…with the use of algorithms, there exists a high possibility of collusion with or without the need of human intervention or coordination between competitors.”

https://wp.me/pcenps-130u

♦ ABFI prohibits State Baseball Associations from joining unrecognised leagues, threatens disciplinary action | CCI to examine such conduct in light of provisions of Competition Act

“ABFI isued communication to its affiliated State Baseball Association requested them no to entertain unrecognized bodies and further by requesting them not to allow their respective State players to participate in any of the tournaments organized by such unrecognized bodies, has violated the provisions of Section 4(2)(c) of the Act as it resulted in denial of market access to other federations.”

https://wp.me/pcenps-130J

♦ CCI | Did Google leverage dominance in Play Store? Director-General to conduct investigation in complaint by smart phone/smart TV users

“..by making pre-installation of Google’s proprietary apps conditional upon signing of ACC for all android devices manufactured/distributed/marketed by device manufacturers, Google has reduced the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android and thereby limited technical or scientific development relating to goods or services to the prejudice of consumers in contravention of Section 4(2)(b) of the Act.”

https://wp.me/scenps-google

♦ Are Tourist Taxi Unions in State of Goa preventing entry of App-based Taxi Aggregator Companies in Goa? Read a detailed account of CCI’s decision

“..despite the opposition of taxi unions, the State of Goa does not appear to have acceded to or conceded to the demands of the OPs and the policy allowing entry of app based taxi aggregators was eventually notified.”

https://wp.me/pcenps-13au

♦ CCI | Co-location facility of National Stock Exchange is anti-competitive? Is the service an autocratic move against traders? Comprehensive Report

A robust exchange acts as a backbone of the financial system and the provision of co-location facility by exchanges help increase volumes of trades manifold and provides liquidity to investors. This augurs well for the market, the companies and the economy.

https://wp.me/pcenps-13aA


Customs, Excise and Services Tax Appellate Tribunal

♦ CESTAT | Assessable Value to include Advertising and Marketing Costs, if relatable to Imported Goods; Tribunal provides relief to Volvo Auto India

https://wp.me/pcenps-1312


Income Tax Appellate Tribunal

♦ ITAT | Whether DTAA protection in respect of taxation of dividend in source jurisdiction, can be extended to ‘dividend distribution tax’ under S. 115-O, Income Tax Act, in the hands of a domestic company? Matter referred to larger Bench

“Whether the protection granted by the tax treaties, under Section 90 of the Income Tax Act, 1961, in respect of taxation of dividend in the source jurisdiction, can be extended, even in the absence of a specific treaty provision to that effect, to the dividend distribution tax under Section 115-O in the hands of a domestic company?”

https://wp.me/scenps-taxation


National Consumer Disputes Redressal Commission

♦ NCDRC | In a case of death insurance claim, can police investigation be replaced by private agency investigation engaged by insurance company? Commission spells out

Inquest is conducted as mandated under the Cr.P.C., Post Mortem is conducted by the concerned government Medical Officer, Investigation is conducted by the Police (a private agency engaged by the Insurance Co. does not substitute for the Police).

https://wp.me/pcenps-12Zd

♦ NCDRC | Builder unilaterally, high-handedly cancels sale agreement on not handing over timely possession: Commission decides builder-buyer dispute, levies interest to be paid by builder

“According to Section 8 of the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, if the builder is not able to hand over the possession over the building/flat within the time specified in the agreement then the builder is liable to pay interest to the purchaser of the flat for the period for which the possession has not been handed over.”

https://wp.me/pcenps-139u


National Company Law Appellate Tribunal

NCLAT | Can Banks debit amounts from Corporate Debtor Company after Moratorium Order? Is there an obligation of releasing ‘title deeds’ under Resolution Process? Read on

Banks cannot freeze accounts, nor can they prohibit the ‘Corporate Debtor’ from withdrawing the amount as available on the date of the moratorium for its day-to-day functioning.

https://wp.me/pcenps-12UG


Real Estate Regulatory Authorities

Rajasthan Real Estate Regulatory Authority, Jaipur

♦ Is S. 13 of RERA Act a mandatory requirement? Can promoter demand cost of plot more than 10% before registering sale agreement? | Raj RERA decides

https://wp.me/scenps-rera

Maharashtra Real Estate Regulatory Authority, Mumbai

♦ Can promoter/builder sell covered car parking by charging certain amount? Whether open parking has to be handed to society or can be sold in open market? MahaRERA decides

https://wp.me/pcenps-133Q


State Consumer Forums

State Consumer Disputes Redressal Commission, U.T. Chandigarh

♦ Consumer spending hefty amount has right to ask for record of expenditure. Can service provider evade liability? Read on

…every person who is shredding hefty amount from his pocket towards the services being provided to him, has the right to know as to how, where and in what manner, the same has been utilized.”

https://wp.me/pcenps-12OG

Consumer Disputes Redressal Commission Gujarat State, Ahmedabad

♦ Consumer Forum | Can complainant raise consumer dispute where excess electricity duty is charged? Is he overriding statutory remedy if he already approached the Collector? Read on

“Section 3 of Consumer Proetction Act cannot be said to be inconsistent with Rule 12 of the Electricity Duty Rules.”

https://wp.me/pcenps-12Ns

State Consumer Disputes Redressal Commission, Telangana

♦ Can insurance company repudiate claim if insured suppresses fact of suffering from ailment while taking policy? Telangana State Consumer Forum answers

“If the insurer can show that prior to the date of declaration of being healthy, the insured was suffering with ailment which was within her knowledge but was suppressed, then the insurance company is well within its right to repudiate the claim on the ground of suppression veri.”

https://wp.me/pcenps-134C


Securities Appellate Tribunal

♦ Oscillating Independent Director; SAT to determine independency of Pradip K. Khaitan, independent director of Dhunseri Ventures Ltd.

https://wp.me/pcenps-12PM

♦ SAT | SEBI exonerated preferential allottees, exit providers and LTP contributors from manipulation | SAT terms it ‘cryptic’

https://wp.me/pcenps-135j

♦ SAT | Franklin Templeton gets interim relief | Gives due consideration to the 2 decades’ reputation

https://wp.me/pcenps-138Y


Securities Exchange Board of India

♦ Infosys insider trading | While in possession of Unpublished Price Sensitive Information, 2 employees of Infosys & 6 other entities violated Insider Trading Regulations on Infosys Stock [Detailed Report]

“The liability of acting partners and non-acting partners (collectively known as firm) for the injury to the third party is an outcome of joint and several liability of such partners under IPA, irrespective of whether that the conduct (act of omission or commission of the firm) which gave rise to the loss/injury to the third party is also in violation of any provision under securities law.”

https://wp.me/scenps-infosys

♦ Decoded | SEBI bars Director of Franklin Templeton AMC,  wife from accessing securities markets for 1 yr: Can redemption of units by Director of a mutual fund AMC be titled as fair conduct?

Laws dealing with information asymmetries (PIT Regulations and PFUTP Regulations) essentially seek to address the issues arising out of disparities in access to material information, that is otherwise not legally available to general investors, and to prevent those persons having access to such superior information from exploiting the informational advantage, in order to protect the integrity of the market and maintain investor confidence.

https://wp.me/pcenps-12Vh

♦ SEBI | Not so “independent” Independent director and a concocted scheme with affinity and consanguinity |SEBI takes on each violation with mordant remarks

“…remuneration and qualification are two crucial criterions to evaluate and adjudge the significance of a position held by a person in an organisation and his importance and status in participating in the management of a company.”

https://wp.me/pcenps-133k

♦ SEBI | Kingfisher’s chopped wings and shrinked wingspan | United Breweries Acquisition | Heineken exempted from the obligation under Takeover Regulations with exceptions

https://wp.me/pcenps-135X

Case BriefsSupreme Court

Supreme Court: Taking note of the depleting strength of the members of the NCLT and NCLAT, the 3-judge bench of L. Nageswara Rao, Hemant Gupta and S. Ravindra Bhat, JJ has issued certain directions and has asked the Government to complete the reappointment process “at the earliest and not later than two months”.

The direction came in the petition filed by the National Company Law Tribunal and Appellate Tribunal Bar Association seeking direction to the Central Government

  • to fill up the vacancies of Chairman, NCLAT and President of NCLT without any further delay.
  • to issue letters of appointment to the candidates pursuant to the Selection procedure initiated in 2019 and to fill up the remaining vacancies of Members of NCLT and NCLAT.
  • to extend the term of six Members of the NCLT and NCLAT for a further period of five years as they are completing the tenure by June, 2021.

The Additional Solicitor General Balbir Singh had told the Court that the process for appointment of candidates who have been selected pursuant to the procedure which was initiated in 2019 shall be expedited and orders of appointment shall be issued soon. In respect of the process to be initiated for filling up the existing vacancies, a search cum Selection Committee has to be constituted. The Court, hence, directed that the Selection Process shall be initiated at the earliest.

On the issue of extension of the term of the Members of the NCLT and NCLAT who are completing their tenure in June, 2021 is concerned, Attorney General KK Venugopal submitted that the government has initiated the process for reappointment by requesting the Chief Justice of India to constitute a committee for the purposes of the reappointment of members to the NCLT and NCLAT.

As per Section 413 of the Company’s Act 2013, the President or other members of the Tribunal shall hold office for a period of 5 years and shall be entitled for reappointment for another term of 5 years.

The petitioner, however, requested that the members who are completing their tenure should be permitted to continue till the process of reappointment is completed.

“… there are 39 members at present for a sanctioned strength of 63 and the depletion of the strength of the members will adversely affect the smooth functioning of the Tribunals.”

The Court, hence, directed the Government to complete the process within two months and said,

“As the Government has already initiated the process of reappointment by writing to the Hon’ble Chief Justice, we trust and hope that the reappointment process should be completed expeditiously, as there is no necessity of issuance of any advertisement for participation of other eligible candidates. Reappointment of members can be considered separately without waiting for the process of fresh appointments to commence.”

[National Company Law Tribunal and Appellate Tribunal Bar Association v. Ministry of Corporate Affairs, 2021 SCC OnLine SC 406, order dated 31.05.2021]


For Petitioner(s) Mr. A.S. Chandhiok, Sr. Adv. Mr. Virender Ganda, Sr. Adv. Mr. Ajay Kumar Jain, Adv Mr. Rakesh Kumar, Adv Mr. Vipul Ganda, Adv Mr. Vishal Ganda, Adv Mr. Satyajit A. Desai, Adv. Mrs. Anagha S Desai, AOR Ms. Aastha Trivedi, Adv Ms. Guresha Bhamra, Adv Mr. Tejasvi Chaudhry, Adv Mr. Satya Kam Sharma, Adv.

For Respondent(s) Mr. KK Venugopal, Ld. AG Mr. Balbir Singh, Ld. ASG Mr. R. Balasubramanium, Sr. Adv. Mr. Zoheb Hossain, Adv Ms. Shradha Deshmukh, Adv. Ms. Chinmayee Chandra, Adv. Mr. Shyam Gopal, Adv. Mr. Ankur Talwar, Adv. Ms. Suhasini Sen, Adv. Mr. Gurmeet Singh Makker, AOR

NewsWeekly Rewind

We are back with the 5th Episode of SCC Online Weekly Rewind featuring Devika Sharma, Senior Editorial Assistant bringing you the most important and interesting stories from the field of law. Go check out the link below!


  

Supreme Court 

♦ President appoints Justice NV Ramana as the next Chief Justice of India  

After the final stamp of approval from the President, Justice Ramana is set to take oath as the 48th Chief Justice of India on April 24, 2021. Justice Ramana who is due to retire on August 26, 2022, will serve as the CJI for 16 months.   

https://www.scconline.com/blog/post/2021/04/06/president-appoints-justice-nv-ramana-as-the-next-chief-justice-of-india/   

 Rohingya Refugees not to be deported without following prescribed procedure  

 In a significant ruling relating to the rights of the Rohingya Refugees, the Supreme Court has directed that no refugee will be deported unless the procedure prescribed for such deportation is followed.   

The order came in the interim application filed in the Rohingya matter seeking  

(a) the release of the detained Rohingya refugees; and  

(b) a direction to the Union of India not to deport the Rohingya refugees who have been detained in the sub¬jail in Jammu.  

The Court, however, refused to grant the interim relief and said that,    

“Right not to be deported, is ancillary or concomitant to the right to reside or settle in any part of the territory of India.”  

https://www.scconline.com/blog/post/2021/04/08/rohingya-refugees-not-to-be-deported-unless-the-procedure-prescribed-for-such-deportation-is-followed-supreme-court/   

 No automatic vacation of stay under Section 254(2A) Proviso 3 of the Income Tax Act, 1961 if the assessee is not responsible for the delay  

 Dealing with an important question as to the constitutional validity of the third proviso to Section 254(2A) of the Income Tax Act, 1961, the Supreme Court has held that any order of stay shall stand vacated after the expiry of the period or periods mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee 

Upholding the 2015 Delhi High Court verdict, the Court said,    

Unequals have been treated equally so far as assessees who are responsible for delaying appellate proceedings and those who are not so responsible, resulting in a violation of Article 14 of the Constitution of India.”  

https://www.scconline.com/blog/post/2021/04/09/cant-treat-unequals-equally-no-automatic-vacation-of-stay-under-section-2542a-proviso-3-of-the-income-tax-act-1961-if-the-assessee-is-not-responsible-for-the-delay-supreme-court/   


High Courts 

Delhi High Court

♦ Vehicle even if occupied by only one person would constitute a ‘public place’ and wearing of mask therein would be compulsory 

Did you know that wearing face masks even while travelling alone in your car is compulsory? Well, Delhi High Court in a recent decision held that a vehicle even if occupied by only one person would constitute a ‘public place’ and wearing of a mask therein, would be compulsory. The decision came when petitioners challenged imposition of fine for non-wearing of masks while travelling alone in a private car. 

https://www.scconline.com/blog/post/2021/04/08/covid-19/ 

Madras High Court

♦ Political parties should restrain from making serious allegations or criticism against constitutional functionaries 

Madras High Court while addressing a criminal petition held that “Political parties should restrain from making serious allegations against constitutional functionaries. 

https://www.scconline.com/blog/post/2021/04/05/defamation-3/ 

  

♦ PCOS v. Impotency? Divorce on ground of no cohabitation. Is it a legitimate expectation of husband? HC explains while discussing concept of marriage and S. 12(1)(a), HMA 

While addressing a significant issue with respect to divorce being sought on ground of PCOS in wife, Madras High Court observed that PCOS cannot be termed as impotency and further remarked that  concept of marriage in the present generation has been taken very lightly and even for trivial issues, divorce is filed, and marriage is broken. https://www.scconline.com/blog/post/2021/04/05/divorce-3/ 

Bombay High Court

♦ Anil Deshmukh ‘prima facie’ committed cognizable offence, but No immediate FIR by CBI. Credibility of State machinery at stake: HC directs CBI to conclude preliminary investigation preferably within 15 days 

 In a significant development, Bombay High Court directed CBI to conduct a preliminary enquiry into the complaints against the Home Minister of the State of Maharashtra, Anil Deshmukh. The said order came after Former Commissioner of Mumbai Police Param Bir Singh moved the High Court seeking investigation into the allegation of illegal money collection ordered by the Home Minister. 

https://www.scconline.com/blog/post/2021/04/06/anil-deshmukh/ 


Tribunals 

Reliance ménage in trouble; Irregular shareholding, default in trading regulations 

SEBI imposed penalty of Rs 25 cores on Mukesh Ambani, Anil Ambani, Nita Ambani and Tina Ambani along with others for violation of the provisions of Regulation 11(1) of Takeover Regulations due to some irregularities. 

https://www.scconline.com/blog/post/2021/04/08/reliance/ 

  


Foreign Courts 

  SCOTUS decides in favour of Google in a copyright dispute between Google and Oracle. 

In a major decision in the copyright space, in a dispute between Google and Oracle; the Supreme Court of the United States, held that Google’s copying of Oracle’s Java SE API code, which included only those lines of code that were needed to allow programmers to put their accrued talents to work in a new and transformative program, was a fair use of that material as a matter of law. 

 https://bit.ly/3wKNOb1


Legislation Updates  

♦ Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021: https://bit.ly/3wKnH3P  and Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021: https://bit.ly/3uHfDiM

On April 04, 2021, the President promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 and Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021.  

♦ Central Motor Vehicles (Sixth Amendment) Rules, 2021 

Ministry of Road Transport and Highways has notified Central Motor Vehicles (Sixth Amendment) Rules, 2021, effective from April 1, 2021. The Rules amend the Central Motor Vehicles Rules, 1989:https://bit.ly/3dVfFMT

Key changes by the amendment  

  1. Minimum training required for driving E-rickshaw or E-cart  
  2. Conditions to be satisfied for learner’s license  
  3. Form of learner‘s licence  
  4. Permanently surrendering a class or classes of vehicles from the driving licence  
  5. Issuance of duplicate driving licence  

 ♦ Gujarat Assembly Passes Freedom of Religion Amendment Bill, 2021 

The Freedom of Religion Amendment Bill, 2021 has been passed by Gujarat Assembly which will modify Gujarat Freedom of Religion Act, 2003. The Bill provides that:  

Any marriage which is done for the purpose of unlawful conversion by the person of one religion with the person of another religion, either by converting himself/herself before or after marriage shall be declared void by the Family Court or where the Family Court is not established by the Court having jurisdiction to try such cases.   https://bit.ly/39WwVQX


 Fact Check 

Does Section 354D say that you can go to jail for staring at a woman for 14 seconds? 

Recently an instagram reel went viral which stated that a person could go to jail for staring at a woman for 14 seconds. The reel gave section 354D of the Indian Penal Code, 1860 as the source of this information. Our fact-check team found out that this is not true. Section 354D defines stalking but does not mention any 14 seconds anywhere in the definition. The origin of the ‘14 seconds rule’ can be traced back to Kerala Excise Officer Rishi Raj Singh’s statement in an event in Kochi back in 2016. If a woman feels that she is being harassed she can file a complaint with the police, however, there is no criteria of ‘staring for 14 seconds’ mentioned anywhere in the law books.  


SCC Online Weekly Rewind  

NewsWeekly Rewind

The 4th Episode of our SCC OnLine Weekly Rewind was released on 4-04-2021. If you haven’t yet checked out the latest updates of that week, featuring Bhumika Indulia, Associate Editor, just click on the link below.

Supreme Court

♦ Mukhtar Ansari’s custody transferred to Uttar Pradesh: https://bit.ly/2PnnbIv

♦ Supreme Court refused to interfere with the scheme of sale of electoral bonds by the Political Parties which was challenged on the ground that it allows the donors of political parties to maintain anonymity which is not healthy for a democracy: https://bit.ly/3mhJQ4S

♦ Rapid Rail Case: HSVP to deposit 80% of debt due in Escrow Account: https://bit.ly/3wIparl


High Courts

♦ Madras HC | Quality of education being compromised in course of more law colleges being born in guise of creating opportunities : https://bit.ly/3sRahAI

♦ Madras HC | “Trying to develop the case brick by brick and construct something purposeful”: HC while arranging counselling for same-sex couple and parents: https://bit.ly/31Wpwgd

♦ Ker HC | ‘Ensure ‘no double voting by any voter’; HC directs Election Commission of India to be on war footing to ensure fair and democratic election: https://bit.ly/3rOcH1E

Tribunal

♦ CCI | No ‘opt-out’ option for WhatsApp users in the 2021 Update. Why? Data Sharing with Facebook, Unilateral terms and more. Read CCI’s take on WhatsApp’s conduct in the garb of the policy update: https://bit.ly/39DeG2N


Legislation Updates

♦ Extension of Last Date for Linking Aadhaar number with PAN from March 31, 2021 to June 30, 2021 : https://bit.ly/31GsfKf

♦ Finance Act, 2021 : https://bit.ly/3sSjcC4

Copyright (Amendment) Rules, 2021: https://bit.ly/2Px5oOP

♦ Insurance (Amendment) Act, 2021: https://bit.ly/2R4tiSo


Did you check out the 3rd Episode yet? If not, here’s the link:

SCC Online Weekly Rewind Volume 1 Episode 3

 

Case BriefsHigh Courts

Delhi High Court: Prathiba M. Singh, J., addressed a concern wherein it was stated that the NCLAT and NCLT ought to have an open link where parties who are interested can join the proceedings.

The instant petition was filed to seek the provision of open or virtual links for attending hearings in the National Company Law Tribunal and National Company Law Appellate Tribunal.

High Court’s opinion on perusal of the affidavits filed on behalf of the NCLT and NCLAT was that the forums like NCLT and NCLAT, which have a high quantum of work, ought to be permitted to regulate their own procedure so long as the same is not arbitrary.

In virtual hearings, there is a possibility of enormous disturbance if there is no regulated entry.

NCLAT and NCLT submitted that whenever links are required, there are separate ‘active’ and ‘viewing’ links shared with the parties. They also added their concern that lawyers mention matters which may not have been listed on the particular date causing enormous disruption in the hearings if open links would be provided.

Hence in view of the facts and circumstances, Bench directed NCLT and NCLAT to regulate their own procedure for virtual hearing platforms so long as it is ensured that if any particular party requests for a link, the same would be considered in a fair, transparent and non-arbitrary manner.

To the extent possible, parties would be permitted to view the proceedings.

 While concluding, High Court held that since virtual hearings are a measure adopted to ensure that Tribunals and Courts are functioning during the COVID-19 pandemic, the Petitioner, if he wishes to join any particular hearing, may write an e-mail at least 24 hours in advance to the Deputy Registrar of the NCLT and NCLAT. The same shall be considered in accordance with the NCLT and NCLAT’s own procedure, in a fair, transparent and non-arbitrary manner. [Deepak Khosla v. NCLAT, 2021 SCC OnLine Del 1214, decided on 08-03-2021]


Advocates who appeared before the Court:

For the Petitioner: Deepak Khosla, Advocate

For the Respondents: Chetan Sharma, ASG with Dev P. Bhardwaj, CGSC, Amit Gupta, Vinay Yadav, Sahaj Garg, Akshay Gadeock &  R.V. Prabhat, Advocates for UOI.

Case BriefsSupreme Court

Supreme Court: In a petition filed for seeking directions that till a new chairperson of the Intellectual Property Appellate Board (“IPAB”), is appointed, the incumbent should continue to function as Chairperson, the 3-Judge Bench of L. Nageswara Rao, Hemant Gupta and S. Ravindra Bhat*, JJ opined that,

“The amendments brought about through S. 184 of the Finance Act, 2017, in terms of the maximum age up to which any Member or Chairperson can hold office in a Tribunal could not apply in the case of the Board because the Rules of 2017 had fixed the tenure limits of chairpersons and members of tribunals, including that of the chairperson of the board.”

Factual Matrix

In the instant case, the applicant had sought extension of the term of the incumbent Chairperson of IPAB stating that S. 184 of the Finance Act, 2017, had prescribed the term of office and the conditions of service of Chairperson and members of various tribunals including that of the Board. S. 161 of the Finance Act inserted Section 89A to the Trade Mark Act which stipulated that the term of office of appointments to the board after the date of commencement of the Finance Act would be governed by the provisions of the Section 184 of the said Finance Act. The outer age limit of the chairperson of the board was 70 years, in terms of S. 184.

The applicant contended that though Section 86 of Trade Mark Act had prescribed the outer age limit as 65 years, that was over borne by the provisions of section 89A of the Act, which had stated that the terms and conditions hitherto applicable would no longer be so and that in matters of conditions of service and tenure of appointment, the provisions of section 184 of the Finance Act would apply.

It was argued by the applicant that taking into consideration the workload of the board, it was absolutely essential that it was headed by a properly qualified chairperson. The applicant particularly relied on Section 84(2) of the Trade Mark Act and urged that there could be no bench without a judicial member.

Analysis and Decision

Reliance was placed on Rojer Mathew v. South Indian Bank Ltd., (2020) 6 SCC 1 , by the Court wherein after pronouncing that the 2017 Rules were unsustainable, and quashing them, with a direction to the Central Government to frame new Rules, the Constitution Bench  also directed as follows:

Interim relief

  1. As the Tribunal, Appellate Tribunal and Other Authorities (Qualification, Experience and Other Conditions of Service of Members) Rules, 2017 have been struck down and several directions have been issued vide the majority judgment for framing of fresh set of rules, we, as an interim order, direct that appointments to the Tribunal/Appellate Tribunal and the terms and conditions of appointment shall be in terms of the respective statutes before the enactment of the Finance Bill, 2017.”

The Bench further noticed that on 20-03-018 the Supreme Court had clarified a previous order dated 09-02-2018 in Kudrat Sandhu v. Union of India 2021 SCC OnLine SC 89 as follows:

“(iii) The tenure of the Chairperson and the Judicial/Administrative/Expert/Technical Members of all the Tribunals shall be for a period of five years or the maximum age that was fixed/determined under the old Acts and Rules;”

Another contention raised by the applicant was that no member can function as a Chairperson, as none of the existing members were judicial members, but were technical members. The Bench observed, S. 84 (2) of the Trade Mark Act no doubt had stated that a bench of the board should consist of a judicial and a technical member. However, it was “subject to other provisions” of the Trade Mark Act.

Section 87 enables a vice-chairperson, or as the case may be the senior-most member of the board to act as chairperson in the event of a vacancy to that position, significantly, Section 85 inter alia stipulates the qualifications for the post of chairperson or vice-chairperson.”

The relevant provisions of S. 85 of Trade Mark Act revealed that there was no bar for a technical member to be appointed as a regular chairperson, provided she or he had for “at least two years, held the office of a Vice-Chairperson”. In fact, the incumbent five technical members all hold legal qualifications (three of them holding masters in law, including one who had post-doctoral qualification). Four of these incumbent members were practising advocates in specialized fields of intellectual property (trademarks, and copyright) and one technical member (patents) had experience in the Patent Office.

“These members had practical legal experience of ten to fifteen years. The fact that they were appointed as technical members cannot obfuscate the fact that they are legally trained and qualified.”

Therefore, the contention that the technical members, in their position at the board as of now, could not function without a chairperson, was held unsustainable. Also the argument that the incumbent chairperson continued to remain in office in view of the declaration of law by Rojer Mathew was declared insubstantial and uncountenanced.

[The International Association for Protection of Intellectual Property v. Union of India, 2021 SCC OnLine SC 89, decided on 12-02-2021]


Kamini Sharma, Editorial Assistant has put this report together 

*Judgment by: Justice S. Ravindra Bhat

Know Thy Judge| Justice S. Ravindra Bhat

Case BriefsSupreme Court

[Note: This report is a detailed analysis of Supreme Court’s judgment in Madras Bar Association v. Union of India[1]. To read the guidelines and directions issued by the Court, click here.]

Supreme Court: The 3-judge bench of L. Nageswara Rao*, Hemant Gupta and S. Ravindra Bhat has issued extensive directions in relating to selection, appointment, tenure, conditions of service, etc. relating to various tribunals, 19 in number, thereby calling for certain modifications to the Tribunal, Appellate Tribunal and other Authorities [Qualification, Experience and Other Conditions of Service of Members] Rules, 2020

The Supreme Court was once again, within the span of a year, called upon to decide the issue at hand. Last year, the Constitution Bench in Rojer Mathew v. South Indian Bank Ltd., (2020) 6 SCC 1 had held that the Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017, as a whole was ultra vires.

“That the judicial system and this Court in particular has to live these déjà vu moments, time and again (exemplified by no less than four constitution bench judgments) in the last 8 years, speaks profound volumes about the constancy of other branches of governance, in their insistence regarding these issues.”

Here is the explainer on the directions issued by the Court:

NATIONAL TRIBUNALS COMMISSION

“We have noticed a disturbing trend of the Government not implementing the directions issued by this Court. To ensure that the Tribunals should not function as another department under the control of the executive, repeated directions have been issued which have gone unheeded forcing the Petitioner to approach this Court time and again. It is high time that we put an end to this practice.”

Noticing that the Tribunals are not free from the Executive control and that they are not perceived to be independent judicial bodies, the Court said that there was an imperative need to ensure that the Tribunals discharge the judicial functions without any interference of the Executive whether directly or indirectly.

Hence,

“An independent body headed by a retired Judge of the Supreme Court supervising the appointments and the functioning of the Tribunals apart from being in control of any disciplinary proceedings against the Members would not only improve the functioning of the Tribunals but would also be in accordance with the principles of judicial independence.”

To stop the dependence of the Tribunals on their parent Departments for routing their requirements and to ensure speedy administrative decision making, as an interregnum measure, it was hence directed that there should be a separate “tribunals wing” established in the Ministry of Finance, Government of India to take up, deal with and finalize requirements of all the Tribunals till the National Tribunals Commission is established.

Read the directions here

SEARCH-CUM-SELECTION COMMITTEE

After it was brought to Court’s notice that the constitution of the Search-cum-Selection Committees as per 2020 Rules does not ensure judicial dominance, the Court made the following directions:

  • a casting vote will be given to the Chief Justice of India or his nominee as the Chairperson of the Search-cum-Selection Committee.
  • normally the Chairperson of the Tribunal would be a retired Judge of the Supreme Court or the Chief Justice of a High Court. However, there are certain Tribunals in which the Chairperson may not be a judicial member. In such Tribunals, the Search-cum-Selection Committee should have a retired Judge of the Supreme Court or a retired Chief Justice of a High Court nominated by the Chief Justice of India in place of the Chairperson of the Tribunal.
  • the 2020 Rules would be amended to reflect that whenever the re-appointment of the Chairman or Chairperson or President of a Tribunal is considered by the Search-cum-Selection Committee, the Chairman or Chairperson or President of the Tribunal shall be replaced by a retired Judge of the Supreme Court or a retired Chief Justice of a High Court nominated by the Chief Justice of India.
  • Secretary to the sponsoring or parent Department shall serve as the Member-Secretary/Convener to the Search-cum-Selection Committee and shall function in the Search-cum-Selection Committee without a vote.
  • Rule 4 (2) of the Rules that postulates that a panel of two or three persons shall be recommended by the Search-cum-Selection Committee from which the appointments to the posts of Chairperson or members of the Tribunal shall be made by the Central Government, shall be amended and till so amended, that it be read as empowering the Search-cum-Selection Committee to recommend the name of only one person for each post. Taking note of the requirement of the reports of the selected candidates from the Intelligence Bureau, another suitable person can be selected by the Search-cum-Selection Committee and placed in the waiting list.

Read the directions here

TERM OF OFFICE

At present Rule 9(1) permits a Chairman, Chairperson or President of the Tribunal to continue till 70 years which is in conformity with Parliamentary mandate in Section 184 of the Finance Act. However, Rule 9(2) provides that Vice Chairman and other members shall hold office till they attain 65 years.

Accepting Amicus Curiae’s submission that under the 2020 Rules, the Vice Chairman, Vice-Chairperson or Vice-President or members in almost all the Tribunals will have only a short tenure of less than three years if the maximum age is 65 years, the Court directed the Government to amend Rule 9 (1) of the 2020 Rules by making the term of Chairman, Chairperson or President as five years or till they attain 70 years, whichever is earlier and other members dealt with in Rule 9(2) as five years or till they attain 67 years, whichever is earlier.

Section 184 of the Finance Act, 2017 provides for reappointment of Chairpersons, Vice-Chairpersons and members of the Tribunals on completion of their tenure. There is no mention of reappointment in the 2020 Rules. Hence, Reappointment for at least one term shall be provided to the persons who are appointed to the Tribunals at a young age by giving preference to the service rendered by them.

Read the directions here

HOUSE RENT ALLOWANCE

Noticing that lack of housing in Delhi has been one of the reasons for retired Judges of the High Courts and the Supreme Court to not accept appointments to Tribunals, the Court directed the Government of India to make serious efforts to provide suitable housing to the Chairperson and the members of the Tribunals and in case providing housing is not possible, to enhance the house rent allowance to Rs.1,25,000/- for members of Tribunals and Rs.1,50,000/- for the Chairman or Chairperson or President and Vice Chairman or Vice Chairperson or Vice President of Tribunals.

“… an option should be given to the Chairperson and the members of the Tribunals to either apply for housing accommodation to be provided by the Government of India as per the existing rules or to accept the enhanced house rent allowance. This direction shall be effective from 01.01.2021.”

Read the directions here

ADVOCATES AS JUDICIAL MEMBERS

While the Attorney General suggested that an advocate who has 25 years of experience should be considered for appointment as a Judicial member, the Amicus Curiae suggested that it should be 15 years.

Considering both the suggestions, the Court said,

“As the qualification for an advocate of a High Court for appointment as a Judge of a High Court is only 10 years, we are of the opinion that the experience at the bar should be on the same lines for being considered for appointment as a judicial member of a Tribunal.”

However, it is left open to the Search-cum-Selection Committee to take into account in the experience of the Advocates at the bar and the specialization of the Advocates in the relevant branch of law while considering them for appointment as judicial members.

Read the directions here

ELIGIBILITY OF MEMBERS OF INDIAN LEGAL SERVICE

The Court directed that the members of Indian Legal Service shall be entitled to be considered for appointment as a judicial member subject to their fulfilling the other criteria which advocates are subjected to. In addition, the nature of work done by the members of the Indian Legal Service and their specialization in the relevant branches of law shall be considered by the Search-cum-Selection Committee while evaluating their candidature.

Read the directions here

IMPORTANCE OF APPOINTMENT OF COMPETENT AND YOUNG LAWYERS AND TECHNICAL MEMBERS

Tribunals discharge a judicial role, and with respect to matters entrusted to them, the jurisdiction of civil courts is usually barred. Therefore, wherever legal expertise in the particular domain is implicated, it would be natural that advocates with experience in the same, or ancillary field would provide the “catchment” for consideration for membership. This is also the case with selection of technical members, who would have expertise in the scientific or technical, or wherever required, policy background.

Younger advocates who are around 45 years old bring in fresh perspectives. Many states induct lawyers just after 7 years of practice directly as District Judges.

“If the justice delivery system by tribunals is to be independent and vibrant, absorbing technological changes and rapid advances, it is essential that those practitioners with a certain vitality, energy and enthusiasm are inducted.”

25 years of practice even with a five-year degree holder, would mean that the minimum age of induction would be 48 years: it may be more, given the time taken to process recommendations. Therefore, a tenure without assured re-engagements would not be feasible. A younger lawyer, who may not be suitable to continue after one tenure (or is reluctant to continue), can still return, to the bar, than an older one, who may not be able to piece her life together again.

Read the directions here

REMOVAL OF MEMBERS

Rule 8 of the 2020 Rules provides the procedure for inquiry of misbehavior or incapacity of a member. According to the said Rule, the preliminary scrutiny of the complaint is done by the Central Government. If the Central Government finds that there are reasonable grounds for conducting an inquiry into the allegations made against a member in the complaint, it shall make a reference to the Search-cum-Selection Committee which shall conduct an inquiry and submit the report to the Central Government.

However, Amicus Curiae argued that there is no clarity in the Rules as to whether the reports submitted by the Search-cum-Selection Committee are binding on the Central Government. The Attorney General submitted that the preliminary scrutiny done by the Central Government, according to Rule 8 (1) is only for the purpose of weeding out frivolous complaints and that the recommendations made by the Search-cum-Selection Committee shall be implemented by the Central Government. The Court accepted the submissions of the learned Attorney General.

Read the directions here

TIME LIMIT FOR APPOINTMENT

“The very reason for constituting Tribunals is to supplement the functions of the High Courts and the other Courts and to ensure that the consumer of justice gets speedy redressal to his grievances. This would be defeated if the Tribunals do not function effectively.”

It was brought to Court’s notice that there are a large number of unfilled vacancies hampering the progress of the functioning of the Tribunals. The pendency of cases in the Tribunals is increasing mainly due to the lack of personnel in the Tribunals which is due to the delay in filling up the vacancies as and when they arise due to the retirement of the members.

The Court, hence, directed that the Government of India shall make the appointments to the Tribunals within three months after the Search-cum-Selection Committee completes the selection and makes its recommendations.

Read the directions here

RETROSPECTIVITY OF THE 2020 RULES

The Court rejected the submission of learned Attorney General that the 2020 Rules which replaced the Tribunal, Appellate Tribunal and other Authorities (Qualification, Experience and Other Conditions of Service of Members) Rules, 2017 shall come into force with effect from 26.05.2017 which was the appointed day in accordance with the 2017 Rules and said,

“It is true that the 2017 Rules were brought into force from 26.05.2017 and Section 183 of the Finance Act provides for any appointment made after the appointed day shall be in accordance with the Rules made under Section 184 of the Finance Act, 2017. 2017 Rules which have come into force with effect from 26.05.2017 in accordance with Section 183 have been struck down by this Court. The 2020 Rules which came into force from the date of their publication in the Official Gazette, i.e. 12.02.2020, cannot be given retrospective effect.”

Further, the intention of Government of India to make the 2020 Rules prospective is very clear from the notification dated 12.02.2020. In any event, subordinate legislation cannot be given retrospective effect unless the parent statute specifically provides for the same.

The Court, however, clarified that all appointments made prior to the 2020 Rules which came into force on 12.02.2020 shall be governed by the parent Acts and Rules. Any appointment made after the 2020 Rules have come into force shall be in accordance with the 2020 Rules subject to the modifications directed in this judgment.

Read the directions here

In the petition that was filed by Madras Bar Association, the Court directed the Government to strictly adhere to the directions and not force the Petitioner-Madras Bar Association, which has been relentless in its efforts to ensure judicial independence of the Tribunals, to knock the doors of this Court again.

[Madras Bar Association v. Union of India, 2020 SCC OnLine SC 962, decided on 27.11.2020]


*Justice L. Nageswara Rao has penned this judgment.

[1] Writ Petition (C) No.804 of 2020, decided on 27.11.2020

Counsels heard:

Senior Advocate Arvind Datar, amicus curiae

Attorney General for India K.K. Venugopal,

Additional Solicitor General Balbir Singh and S.V. Raju,

Senior Advocates Mukul Rohtagi, C.A. Sundaram, Vikas Singh,. Anitha Shenoy, R. Balasubramanium, A.S. Chandhiok, Virender Ganda, M.S. Ganesh, Sidharth Luthra, C.S. Vaidyanathan, Guru Krishnakumar, Rakesh Kumar Khanna, Gautam Misra, P.S. Narasimha.

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Case BriefsSupreme Court

Supreme Court: The 3-judge bench of L. Nageswara Rao*, Hemant Gupta and S. Ravindra Bhat has issued extensive directions in relating to selection, appointment, tenure, conditions of service, etc. relating to various tribunals, 19 in number, thereby calling for certain modifications to the Tribunal, Appellate Tribunal and other Authorities [Qualification, Experience and Other Conditions of Service of Members] Rules, 2020.

While the bench has upheld the validity of Tribunal Rules, 2020, here are the modifications and directions issued by the Court:

(i) The Union of India shall constitute a National Tribunals Commission which shall act as an independent body to supervise the appointments and functioning of Tribunals, as well as to conduct disciplinary proceedings against members of Tribunals and to take care of administrative and infrastructural needs of the Tribunals, in an appropriate manner.

Till the National Tribunals Commission is constituted, a separate wing in the Ministry of Finance, Government of India shall be established to cater to the requirements of the Tribunals.

(ii) Instead of the four-member Search-cum-Selection Committees comprising of the Chief Justice of India or his nominee, outgoing or sitting Chairman or Chairperson or President of the Tribunal and two Secretaries to the Government of India, the Search-cum-Selection Committees should comprise of the following members:

(a) The Chief Justice of India or his nominee—Chairperson (with a casting vote).

(b) The outgoing Chairman or Chairperson or President of the Tribunal in case of appointment of the Chairman or Chairperson or President of the Tribunal (or) the sitting Chairman or Chairperson or President of the Tribunal in case of appointment of other members of the Tribunal (or) a retired Judge of the Supreme Court of India or a retired Chief Justice of a High Court in case the Chairman or Chairperson or President of the Tribunal is not a Judicial member or if the Chairman or Chairperson or President of the Tribunal is seeking re-appointment—member;

(c) Secretary to the Ministry of Law and Justice, Government of India—member;

(d) Secretary to the Government of India from a department other than the parent or sponsoring department, nominated by the Cabinet Secretary—member;

(e) Secretary to the sponsoring or parent Ministry or Department—Member Secretary/Convener (without a vote).

Till amendments are carried out, the 2020 Rules shall be read in the manner indicated.

(iii) Rule 4(2) of the 2020 Rules shall be amended to provide that the Search-cum-Selection Committee shall recommend the name of one person for appointment to each post instead of a panel of two or three persons for appointment to each post. Another name may be recommended to be included in the waiting list.

(iv) The Chairpersons, Vice-Chairpersons and the members of the Tribunal shall hold office for a term of five years and shall be eligible for reappointment. Rule 9(2) of the 2020 Rules shall be amended to provide that the Vice-Chairman, Vice-Chairperson and Vice President and other members shall hold office till they attain the age of sixty-seven years.

(v) The Union of India shall make serious efforts to provide suitable housing to the Chairman or Chairperson or President and other members of the Tribunals. If providing housing is not possible, the Chairman or Chairperson or President and Vice-Chairman, Vice-Chairperson, Vice President of the Tribunals shall be paid Rs. 1,50,000/- per month as house rent allowance and Rs. 1,25,000/- per month for other members of the Tribunals from 01.01.2021.

(vi) Advocates with an experience of at least 10 years should be eligible for appointment as judicial members in the Tribunals. The experience of the Advocate at the bar and their specialization in the relevant branches of law is to be considered. They shall be entitled for reappointment for at least one term by giving preference to the service rendered by them for the Tribunals.

(vii) The members of the Indian Legal Service shall be eligible for appointment as judicial members in the Tribunals, provided that they fulfil the criteria applicable to advocates subject to suitability to be assessed by the Search-cum-Selection Committee on the basis of their experience and knowledge in the specialized branch of law.

(viii) Rule 8 of the 2020 Rules shall be amended to reflect that the recommendations of the Search-cum-Selection Committee in matters of disciplinary actions shall be final and shall be implemented by the Central Government.

(ix) The Union of India shall make appointments to Tribunals within three months from the date on which the Search-cum-Selection Committee completes the selection process and makes its recommendations.

(x) The 2020 Rules shall have prospective effect and will be applicable from 12.02.2020, as per Rule 1(2) of the 2020 Rules.

(xi) Appointments made prior to the 2017 Rules are governed by the parent Acts and Rules which established the concerned Tribunals. Any appointments that were made after the 2020 Rules came into force i.e. on or after 12.02.2020 shall be governed by the 2020 Rules subject to the modifications as directed in this judgment.

(xii) Appointments made under the 2020 Rules till the date of this judgment, shall not be considered invalid, insofar as they conformed to the recommendations of the Search-cum-Selection Committees in terms of the 2020 Rules, as they stood before the modifications directed in this judgment. They are, in other words, saved and shall not be questioned.

(xiii) In case the Search-cum-Selection Committees have made recommendations after conducting selections in accordance with the 2020 Rules, appointments shall be made within three months from today and shall not be subject matter of challenge on the ground that they are not in accord with this judgment.

(xiv) The terms and conditions relating to salary, benefits, allowances, house rent allowance etc. shall be in accordance with the terms indicated in and directed by this judgment.

(xv) The Chairpersons, Vice Chairpersons and members of the Tribunals appointed prior to 12.02.2020 shall be governed by the parent statutes and Rules as per which they were appointed. The 2020 Rules shall be applicable with the modifications as directed to those who were appointed after 12.02.2020.

The Court has clarified that all appointments made prior to the 2020 Rules which came into force on 12.02.2020 shall be governed by the parent Acts and Rules. Any appointment made after the 2020 Rules have come into force shall be in accordance with the 2020 Rules subject to the modifications as directed.

In the petition that was filed by Madras Bar Association, the Court directed the Government to strictly adhere to the directions given above and not force the Petitioner-Madras Bar Association, which has been relentless in its efforts to ensure judicial independence of the Tribunals, to knock the doors of this Court again.

[Madras Bar Association v. Union of India, 2020 SCC OnLine SC 962, decided on 27.11.2020]


*Justice L. Nageswara Rao has penned this judgment 

Case BriefsSupreme Court

Supreme Court: In the case where the National Green Tribunal directed the State of Madhya Pradesh to ensure that no dealer and/or outlet and/or petrol pump should supply fuel to vehicles without Pollution Under Control (PUC) Certificate, the bench of Arun Mishra and Indira Banerjee, JJ has held that NGT had no power to pass such direction as the stoppage of supply of fuel to vehicles not complying with the requirement to have and/or display a valid PUC Certificate is not contemplated either in the Central Motor Vehicles Rules, 1989 or in the National Green Tribunal Act, 2010.

“Motor Vehicles not complying with the requirement of possessing and/or displaying a valid PUC Certificate cannot be debarred from being supplied fuel.”

The Court said that when a Statute or a Statutory Rules prescribed a penalty for any act or omission, no other penalty not contemplated in the Statute or a Statutory Rules can be imposed. When a Statute requires a thing to be done in a particular manner, it is to be done only in that manner.

After going through the relevant provisions, the Court summarized that driving a vehicle without a pollution PUC certificate entails:

  • suspension of registration certificate;
  • imprisonment which may extend to three months;
  • fine which may extend to Rs.10,000/- or both
  • disqualification for holding licence for a period of three months
  • imprisonment for a term which may extend to six months or with fine which may extend to Rs.10,000/- or with fine.

It further noticed that as per Rule 116(8) and (9), the suspension of the certificate of registration is temporary. The suspension is until such time as a certificate is produced before the Registering Authority certifying that the vehicle complies with sub Rules (2) and (7) of the Rule 115 of the Central rules. A Certificate of Registration is also to be deemed to have been suspended, until a fresh Pollution Under Control certificate is obtained.

“There can be no doubt that strong measures must be taken to protect the environment and improve the air quality whenever there is contravention of statutory rules causing environmental pollution. Stringent action has to be taken, but in accordance with law.”

The Court, hence, noticed that in passing blanket direction, directing the appellant State Government to ensure that no dealer and/or outlet and/or petrol pump should supply fuel to vehicles without PUC Certificate, de hors the Central Motor Vehicles Rules, NGT overlooked the fact that no vehicle can either be repaired to comply with pollution norms, nor tested for compliance with the political norms upon repair, without fuel.

Hence, the NGT had no power and/or authority and/or jurisdiction to pass orders directing the Appellant State Government to issue orders, instructions or directions on dealers, outlets and petrol pumps not to supply fuel to vehicles without PUC Certificate.

The Court, however, directed that the State shall strictly implement compliance of Rules 115 and 116 and penalize all those who contravene the said Rules in accordance with the provisions of the 1989 Rules.

“The Registration Certificate of vehicles which do not possess a valid PUC Certificate shall be forthwith suspended and/or cancelled, and penal measures initiated against the owner and/or the person(s) in possession and/or control of the offending vehicle, in accordance with law.”

[State of Madhya Pradesh v. Centre for Environment Protection Research and Development, 2020 SCC OnLine SC 687, decided on 28.08.2020]

Case BriefsSupreme Court (Constitution Benches)

Supreme Court: On September 26, 2019, the 5-judge bench of former CJ Dipak Misra and A.K. Sikri, A.M. Khanwilkar, Dr D.Y. Chandrachud and Ashok Bhushan, JJ, ‘finally’ put an end to the Aadhaar dilemma in a 4:1 verdict and declared that the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 was valid and not violative of the fundamental right to privacy. The Court also held that Section 7 was the core provision of the Aadhaar Act and since it satisfied the condition of Article 110 of the Constitution, the Aadhaar Act was validly passed as Money Bill.

Just over a year later, when another 5-judge bench sat to decide the validity of Finance Act, 2017 as a Money Bill, it realised that the Aadhaar issue might not just be over yet.

The 5-judge Constitution Bench of Ranjan Goigoi, CJ and NV Ramana, Dr. DY Chandrachud, Deepak Gupta and Sanjiv Khanna, JJ went through the the judgment in K.S. Puttaswamy v. Union of India (Aadhaar-5 Judge), (2019) 1 SCC 1 when both parties in the Finance Act validity case relied upon it.

After “extensively examining” the issue, the Bench noticed that the majority in K.S. Puttaswamy (Aadhaar-5) pronounced the nature of the Aadhaar Act, 2016 without first delineating the scope of Article 110(1) and principles for interpretation or the repercussions of such process. It, hence, said,

“It is clear to us that the majority dictum in K.S. Puttaswamy (Aadhaar-5) did not substantially discuss the effect of the word ‘only’ in Article 110(1) and offers little guidance on the repercussions of a finding when some of the provisions of an enactment passed as a “Money Bill” do not conform to Article 110(1)(a) to (g).”

In the Aadhaar-5 Verdict, referring to the definition of “Money Bill” and the meaning and purpose of the word ‘only’ used in Article 110(1) of the Constitution, Ashok Bhushan, J. had observed that legislative intent was that the main and substantive provision of an enactment should only be any or all of the sub-clauses from (a) to (f). In the event the main or substantive provisions of the Act are not covered by sub-clauses (a) to (f), the bill cannot be said to be a “Money Bill”. It was further observed that the use of the word ‘only’ in Article 110(1) has its purpose, which is clear restriction for a bill to be certified as a “Money Bill”. It was, hence, observed that the Aadhaar Act veers around the government’s constitutional obligation to provide for subsidies, benefits and services to individuals and other provisions are only incidental provisions to the main provision. Therefore, the Aadhaar Bill was rightly certified by the Speaker as a “Money Bill.

It is pertinent to note that Chandrachud, J was the lone dissenting judge in the 4:1 Aadhaar-5 verdict and he was also the part of the 5-judge bench that referred the issue of validity of Finance Act being passed as Money Bill to a 7-judge bench. In his minority opinion in the Aadhaar-5 verdict, Chandrachud, J had, referring to the word ‘only’ in Article 110(1) of the Constitution, observed that the pith and substance doctrine which is applicable to legislative entries would not apply when deciding the question whether or not a particular bill is a “Money Bill”. He had held,

“the Money Bill must deal with the declaration of any expenditure to be charged on the Consolidated Fund of India (or increasing the amount of expenditure) and, therefore, Section 7 of the Aadhaar Act did not have the effect of making the bill a Money Bill as it did not declare the expenditure incurred on services, benefits or subsidies to be a charge on the Consolidated Fund of India.”

Noticing that the majority judgment in K.S. Puttaswamy (Aadhaar-5) did not elucidate and explain the scope and ambit of sub-clauses (a) to (f) to clause (1) of Article 110 of the Constitution, a legal position and facet which arises for consideration in the present case and assumes considerable importance, the Court, held

“Given the various challenges made to the scope of judicial review and interpretative principles (or lack thereof) as adumbrated by the majority in K.S. Puttaswamy (Aadhaar-5) and the substantial precedential impact of its analysis of the Aadhaar Act, 2016, it becomes essential to determine its correctness. Being a Bench of equal strength as that in K.S. Puttaswamy (Aadhaar-5), we accordingly direct that this batch of matters be placed before Hon’ble the Chief Justice of India, on the administrative side, for consideration by a larger Bench.”

[Roger Mathew v. South India Bank Ltd.,  2019 SCC OnLine SC 1456, decided on 13.11.2019]


Read the full report on 2018 Aadhaar Judgment here.

Read the full report on the Finance Act judgment here