Important Corporate Law Judgments APRIL 2024 Every Business Must Know
Table of Contents
Key Supreme Court, NCLT, NCLAT and High Court Corporate Law Rulings in april 2024
M/s. Siddharth Enterprises V. Shapoorji Pallonji and Company Pvt. Ltd.
Citation: M/s. Siddharth Enterprises V. Shapoorji Pallonji and Company Private Limited, 2021 SCC OnLine NCLT 38114, C.P. (IB)/3340(MB)2019, NCLT Mumbai, decided by Hon’ble Justice P.N. Deshmukh and Mr. Shyam Babu Gautam, dated 18.10.2021.
Siddharth Enterprises, the operational creditor, filed a petition to initiate insolvency proceedings against Shapoorji Pallonji, alleging unpaid operational debts related to contractual services provided. The petition claimed that the corporate debtor defaulted on payments despite several reminders and negotiations. Shapoorji Pallonji, however, contested the petition, arguing that there was a pre-existing dispute regarding the debt’s validity and the services rendered.
The National Company Law Tribunal (NCLT) Mumbai, presided over by Justices KR Saji Kumar and Sanjiv Dutt, ruled in favour of Shapoorji Pallonji, emphasizing that insolvency proceedings under Section 9 of the IBC cannot be initiated if there is a pre-existing genuine dispute regarding the debt. The ratio decidendi underscored that the IBC is intended for debt recovery only in cases where there is a clear, undisputed operational debt. The Tribunal highlighted that the existence of any substantial dispute about the debt disqualifies the operational creditor from initiating CIRP, as the IBC is not a forum for dispute resolution but rather a mechanism to address insolvency. This decision reinforced the need to prevent misuse of the insolvency process for resolving contractual disagreements.
N.C. Goel and Anr. V. Piyush Infrastructure India Pvt. Ltd.
Citation: N.C. Goel and Another. V. Piyush Infrastructure India Private Limited, CP (IB) No. 453/ALD/2019, NCLAT, New Delhi, decided by Hon’ble Justice Rajasekhar V.K. and Justice Virendra Kumar Gupta (technical), dated 13.06.2022
The petitioners, sought to initiate a Corporate Insolvency Resolution Process against Piyush Infrastructure India Private Limited, alleging that the company had defaulted on payments owed to them. The primary issue revolved around whether the petitioners qualified as operational creditors under the Insolvency and Bankruptcy Code 2016 and whether their claims met the necessary criteria for insolvency proceedings. Piyush Infrastructure contested the application, questioning the legitimacy and sufficiency of the debt claim.
The NCLAT upheld the NCLT’s dismissal of the Section 7 insolvency application, ruling that the appellants failed to establish a “financial debt” under Section 5(8) of the IBC. The tribunal noted insufficient documentation to prove the loans were disbursed for a specific business purpose, a key criterion for financial debt. While post-dated cheques were issued by the corporate debtor, they were deemed insufficient to prove an unqualified admission of liability, especially amid disputes over interest payments and partial repayments. The NCLAT also highlighted procedural lapses, including non-payment of court fees, rendering the application non-maintainable. The judgment reaffirmed that mere issuance of cheques or unsubstantiated claims cannot trigger insolvency proceedings under the IBC.The judgment reinforced that procedural requirements and evidence of default must be clear and convincing to initiate insolvency proceedings.
Arunkumar Jayantilal Muchhala Vs. Awaita Properties Pvt. Ltd. and Anr.
Citation: Arunkumar Jayantilal Muchhala V. Awaita Properties Private Limited and Another, 2024 SCC OnLine NCLAT 428, Company Appeal (AT) (Insolvency) No. 121 of 2023 & I.A. No. 4828 of 2023, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan and justice Barun Mitra, dated 02.04.2024.
The case revolved around a financial dispute; The appellant sought to initiate a Corporate Insolvency Resolution Process against Awaita Properties due to alleged defaults on financial obligations. The primary issue was whether the appellant’s claims constituted a valid financial debt under the Insolvency and Bankruptcy Code and whether there was sufficient evidence to justify initiating the insolvency proceedings.
The Tribunal emphasized that only legitimate financial creditors with verifiable claims could initiate insolvency proceedings. This decision reinforced the IBC’s intention to prevent misuse of insolvency processes by ensuring that only genuine financial claims are grounds for insolvency. The ruling highlighted the importance of proper documentation and substantiated evidence in initiating CIRP, aiming to protect corporate debtors from frivolous or unsupported claims.
Prem Raj V. Poonamma Menon & Anr.
Citation: Prem Raj V. Poonamma Menon & Another, (2024) 6 SCC 143, Criminal Appeal No. 1858 of 2024 (Arising out of Special Leave Petition (Crl.) No. 9778/2018), Hon’ble Supreme Court, decided by Hon’ble Justice Sanjay Karol and Hon’ble Justice Aravind Kumar, dated 02.04.2024.
The appellant borrowed Rs. 2,00,000 and issued a cheque for repayment, which was dishonored due to insufficient funds. A notice of demand was issued, and a criminal complaint under Section 138 of the Negotiable Instruments Act was filed, while a concurrent civil suit resulted in a decree treating the cheque as a security instrument. Despite the civil decree, the criminal proceedings continued, leading to his conviction and imposition of imprisonment and damages.
The Supreme Court held that the decisions of civil courts are binding on criminal courts. Since the civil decree had already settled the dispute by deeming the cheque as security, initiating separate criminal proceedings on the same transaction was unsustainable. Consequently, the criminal conviction and associated penalties were quashed, emphasizing that conflicting civil and criminal findings cannot be reconciled to justify continued criminal liability.
Invoice Discounters of Riva Perfumes Represented by Minion Ventures Pvt Ltd V. Riva Perfumes LLP
Citation: Invoice Discounters of Riva Perfumes Represented by Minion Ventures LLP V. Riva Perfumes LLP, 2024 SCC OnLine NCLAT 399, Company Appeal (AT) (Insolvency) No. 518 of 2024,  NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan and Arun Baroka, dated 27.03.2024.
https://ibclaw.in/invoice-discounters-of-riva-perfumes-llp-vs-riva-perfumes-llp-nclat-new-delhi/
The NCLAT dismissed the Section 7 insolvency application, ruling that claims arising from invoice discounting transactions via platforms like KredX qualify as operational debt, not financial debt under Section 5(8) of the IBC. The tribunal emphasized that invoice discounting involves purchasing receivables from suppliers (operational creditors) and does not entail a direct disbursal of funds to the corporate debtor against the “time value of money” – a key requirement for financial debt. By acquiring invoice rights, the discounter’s step into the shoes of the original operational creditors, making their claims ineligible under Section 7. The NCLAT upheld the NCLT’s dismissal
The decision emphasized that creditors in financial arrangements, like invoice discounting, should have legal recourse under IBC when corporate debtors fail to meet their financial obligations. This judgment clarified the standing of invoice discounters as operational creditors under the IBC, thereby expanding the scope of who may initiate insolvency proceedings.
Palaparty Abhishek Vs. Binjusaria Ispat Pvt. Ltd. and Anr.
Citation: Palaparty Abhishek V. Binjusaria Ispat Private Limited and Another, MANU/SCOR/39059/2022, Civil Appeal No(s). 2061 of 2022 Hon’ble Supreme Court, decided by Hon’ble Justice S Abdul Nazeer and Hon’ble Justice Vikram Nath, dated 28.03.2022.
Palaparty Abhishek filed an appeal concerning his shareholding rights in Binjusaria Ispat Private Limited. The appellant argued that his rights as a shareholder had been compromised by actions taken by the company, which allegedly went against corporate governance norms and his legitimate expectations as a shareholder. The appeal raised questions about the conduct of the company’s management and their adherence to corporate responsibilities, as well as the protection of minority shareholder rights.
The Court held that the principles of fairness and transparency are fundamental to corporate governance and must be upheld by all parties involved. It underscored the importance of safeguarding the interests of minority shareholders and ensuring that corporate actions do not unfairly prejudice individual shareholders. The ruling reaffirmed the judiciary’s role in intervening when corporate practices conflict with shareholder rights and corporate governance standards.
Rahul Darbari v. Arun Kumar Khobragade & Ors.
Citation: Rahul Darbari v. Arun Kumar Khobragade and Others, 2024 SCC OnLine Del 2523, CRL.M.C. 1171 of 2022 & CRL.M.A. 5067 of 2022 & CRL.M.C. 1172 of 2022 & CRL.M.A. 5069 of 2022, High Court of New Delhi, decided by Hon’ble Justice Navin Chawla, dated 08.04.2024.
The Delhi High Court dismissed the petitions challenging the Trial Court’s order which had refused to allow the petitioner/complainant to recall himself as a witness and place additional documents on record in a case under Section 138 of the Negotiable Instruments Act. The Court held that the application under Section 311 CrPC was filed at a belated stage, appeared to be an afterthought, and lacked any satisfactory explanation for the delay or for the withdrawal of an earlier similar application. The Court emphasized that proceedings under Section 138 NI Act are intended to be summary and expeditious, and allowing such applications would defeat this purpose by unnecessarily prolonging the trial. The High Court further held that while Section 311 CrPC gives wide powers to the court to summon or recall witnesses, this power must be exercised with caution, only for strong and valid reasons, and not to allow parties to fill gaps in their case or abuse the process of law.
The Court held that criminal law should not be used as a tool for settling personal scores or professional disputes unless there is substantial evidence of intent to harm the reputation or well-being of the complainant. The judgment reinforced the principle that the criminal justice system should not be weaponized in cases lacking clear intent and evidence, safeguarding individuals from unwarranted criminal proceedings in professional conflicts.
Retailers Association of India v. State of Karnataka & Ors.
Kannada Language Comprehensive Development (Amendment) Act, 2024
Citation: Retailers Association of India v. State of Karnataka & Ors., W.P. No. 10244 of 2024, Karnataka High Court, decided by Hon’ble Justice M. Nagaprasanna, dated 21.05.2024.
The Karnataka High Court issued an interim order staying the enforcement of provisions allowing the sealing of commercial establishments for non-compliance with the Act’s mandate requiring 60% of signboards to be in Kannada. The court observed that the state’s February 2024 circular, which threatened sealing for violations, was “prima facie untenable” and lacked clarity on implementation timelines and definitions. While acknowledging the state’s intent to promote Kannada, the bench emphasized procedural fairness, noting the amended Act had not been formally notified. The Retailers Association of India highlighted practical challenges, such as redesigning signage across thousands of outlets, and argued the rule exceeded the original 50% requirement under the 2022 law. The court directed the state to issue clarifications and refrain from coercive action until the Act’s effective date is confirmed. This interim relief balances linguistic preservation with business operational feasibility. It prevents abrupt closures of establishments, allowing time for compliance while ensuring the state addresses ambiguities in the law.
Fortuna Skill Management Pvt. Ltd V. M/S Jaina Marketing and Associates
Citation: Fortuna Skill Management Private Limited v. M/S Jaina Marketing and Associates, 2024 SCC OnLine Del 1972, O.M.P. (COMM) 511 of 2023, High Court of Delhi, decided by Hon’ble Justice Prateek Jalan, dated 20.03.2024.
https://www.linkedin.com/posts/gunjan-chhabra-2009b91b_arbitration-arbitrators-legalissues-activity-7183305135631032321-ncFs?utm_source=share&utm_medium=member_android
The dispute arose between Fortuna Skill Management Private Limited and M/S Jaina Marketing and Associates concerning a contractual agreement. After disagreements over the execution of the contract, Fortuna sought to initiate arbitration as per the arbitration clause contained within the contract. Following the arbitral proceedings, an award was passed in favour of Fortuna. However, Jaina Marketing challenged the enforcement of the arbitral award, citing procedural irregularities and claims that the arbitration agreement was invalid.
The Court ruled that unless compelling grounds exist under the Act to challenge an award, the enforcement of such awards should not be hindered. The judgment highlighted that parties must adhere to the agreed-upon arbitration process, and challenges to arbitral awards must be supported by substantial evidence of irregularities. This decision reinforced the autonomy of arbitration as a dispute resolution mechanism and affirmed the courts’ limited role in reviewing arbitral awards to maintain the integrity and efficiency of arbitration proceedings.
M/S Rajco Steel Enterprises V. Kavita Saraff & Anr.
Citation : M/S Rajco Steel Enterprises V. Kavita Saraff & Another, (2024) 9 SCC 390, Special Leave Petition (Criminal) No. 5583 of 2022, Hon’ble Supreme Court, decided by Hon’ble Justice Aniruddha Bose and Justice Sanjay Kumar, dated 09.04.2024.
https://www.verdictum.in/court-updates/supreme-court/ms-rajco-steel-enterprises-v-kavita-saraff-2024-insc-288-documentary-evidence-substantiating-enforceable-debt-cheque-dishonour-1529985
Rajco Steel Enterprises (the pétitionner) faced legal action initiated by Kavita Saraff due to a bounced cheque issued by the company. The petitioner argued that the cheque was not issued in discharge of a legally enforceable debt, claiming that it was given as a security and not intended for payment. The petitioner sought to challenge the lower court’s decision that had upheld the complaint against them.
The Court held that the intention behind issuing the cheque, and the context of its issuance are crucial in determining liability under Section 138 of the Negotiable Instruments Act. It clarified that mere assertions of the cheque being issued as security do not absolve the issuer from criminal liability if it is proved that there was a debt at the time of issuance. The judgment reinforced the principle that companies and their directors could be held accountable for issuing cheques that bounce, emphasizing the need for strict compliance with the provisions of the NI Act to maintain the integrity of financial transactions.
Smt. Najmunisha and Abdul Hamid Chandmiya alias Ladoo Bapu V. State of Gujarat, Narcotics Control Bureau
Citation: Smt. Najmunisha, Abdul Hamid Chandmiya alias Ladoo Bapu V. State of Gujarat, Narcotics Control Bureau, 2024 SCC OnLine SC 520, Criminal Appeal Nos. 2319-2320 of 2009, Hon’ble Supreme Court, decided by Hon’ble Justice Aniruddha Bose and Justice Augustine George Masih, dated 09.04.2024.
The Supreme Court acquitted the appellants, overturning their convictions under the Narcotic Drugs and Psychotropic Substances Act, 1985, due to procedural lapses and violations of constitutional safeguards. The Court held that the search of their residence violated Section 42 of the NDPS Act, as the initial secret information pertained only to contraband in an auto-rickshaw, not their home, and authorities failed to record or communicate this information to superiors as mandated. Critically, the Court ruled that statements extracted under Section 67 of the NDPS Act – which were the primary basis for conviction – were inadmissible, as they were coerced and violated Article 20(3) of the Constitution (protection against self-incrimination).
The judgment clarified that NDPS Act’s search-seizure provisions do not override constitutional rights, emphasizing that confessions to NDPS officers lack legal sanctity unless voluntary. The Court also noted inconsistencies in prosecution witnesses’ testimonies and documentation, further weakening the case.
Bharat Sanchar Nigam Ltd. V. Vihaan Networks Ltd.
Citation: Bharat Sanchar Nigam Limited V. Vihaan Networks Limited, O.M.P (Comm) 405/2023, I.A Nos. 19196/2023 & 19198/2023 High Court of Delhi, decided by Hon’ble Justice Sachin Datta, dated 03.10.2023.
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The Delhi High Court dismissed BSNL’s petition under Section 34 of the Arbitration and Conciliation Act, upholding an arbitral award in favour of Vihaan Networks Ltd. (VNL). The dispute arose when BSNL withdrew an Advance Purchase Order (APO) for a 2G network project in the northeast after VNL had already undertaken substantial pre-contractual work on BSNL’s instructions. The Court held that, although no enforceable contract was ultimately concluded, VNL was entitled to compensation under Section 70 of the Indian Contract Act, applying the doctrine of quantum meruit. The arbitral award, which was found to be based on sound reasoning and evidence, granted VNL ₹33.69 crores for salary reimbursement and ₹9.83 crores for equipment costs, with interest, recognizing that BSNL had benefited from VNL’s work and could not deny reimbursement merely due to the absence of a final contract.
This judgment is useful as it reinforces the principle that a party who benefits from another’s work or services-even without a concluded contract-must compensate for it under the doctrine of quantum meruit. It clarifies the scope of Section 70 of the Contract Act in public procurement and government contracts, ensuring fairness when pre-contractual work is performed on the instructions of a beneficiary. The decision also affirms the limited scope of judicial interference with arbitral awards, providing certainty and efficiency in commercial dispute resolution.
SP Velayutham & Anr. V. M/S Emaar MGF Land Ltd.
Citation: SP Velayutham & Another V. M/S Emaar MGF Land Limited, MANU/SCOR/30335/2024, Special Leave Petition (Civil) Diary Nos.2986/2024, Special Leave to Appeal C No. 5059/2024, Hon’ble Supreme Court, decided by Hon’ble Justice Hrishikesh Roy and Justice Prashant Kumar Mishra, dated 26.02.2024.
https://www.linkedin.com/posts/bharath-pandey-452412a8_supreme-court-activity-7184609002620661760-QOYZ?utm_source=share&utm_medium=member_desktop
The Supreme Court set aside the Madras High Court’s classification of a money recovery suit as a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, clarifying that mere claims involving immovable property do not automatically qualify as commercial disputes. The case arose from Emaar’s suit seeking repayment of advances paid to the appellants for procuring land intended for a commercial project. The Court emphasized that for a dispute to be “commercial,” the property must be “actually used” in trade or commerce, not merely proposed for future commercial use..Relying on Ambalal Sarabhai Enterprises v. K.S. Infraspace LLP (2020), the judgment held that the High Court erred in broadly interpreting “use” to include future intent, thereby misclassifying the suit. The matter was remanded to reassess whether the land was actively utilized in commerce when the dispute arose, underscoring that simple money recovery claims lack the requisite commercial character unless tied to ongoing trade activities.
The Court ruled that real estate developers must adhere to the terms of their agreements and that purchasers have the right to seek remedies when these obligations are not met. The judgment reinforced the principle that consumers are entitled to fair treatment and timely delivery of properties, ensuring that developers cannot unjustly delay or evade their contractual responsibilities. The ruling aimed to protect the rights of buyers in the real estate sector while encouraging accountability among developers.
Shri Rahul Gyanchandani & Ors. V. Parsvnath Landmark Developers Pvt. Ltd.
Citation: Shri Rahul Gyanchandani & Others V. Parsvnath Landmark Developers Private Limited Company Appeal (AT) (Insolvency) No. 309 of 2024 & I.A No. 905,1032 of 2024 NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan and Barun Mitra, dated 17.10.2023.
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The NCLAT overturned the NCLT’s dismissal of a Section 7 insolvency application, clarifying that homebuyers with RERA orders remain allottees under the IBC and must comply with the second proviso to Section 7(1), which mandates a minimum threshold of 100 or 10% of allottees (whichever is lower) to initiate proceedings. The tribunal rejected the Corporate Debtor’s argument that RERA decree-holders constitute a separate “decree holder” category, emphasizing that homebuyers-whether with or without RERA orders-fall under the same class of financial creditors and cannot bypass IBC’s procedural requirements. The judgment distinguished Vishal Chelani v. Debashis Nanda (2023), noting that the appellants’ RERA-directed refund claims did not alter their status as allottees, and the NCLT erred in dismissing their application solely due to numerical insufficiency (4 out of 488 allottees). The NCLAT directed the NCLT to reconsider the application, ensuring compliance with the threshold mandate.
This ruling harmonizes RERA and IBC frameworks, preventing homebuyers from leveraging RERA orders to evade IBC’s collective mechanism. By mandating uniform treatment for all allottees, it curbs forum shopping and ensures insolvency proceedings reflect broader creditor consensus. The decision reinforces the IBC’s primacy in resolving insolvency while safeguarding corporate debtors from fragmented claims, promoting procedural discipline and equitable resolution for stakeholders.
Rangaswamy V. Ravi Kumar
Citation: Rangaswamy V. Ravi Kumar 2024 Kar 175 Arising out of Criminal Revision Petition No. 841 of 2020, Hon’ble High Court of Karnataka, decided by Hon’ble Justice S Rachaiah, dated 22.04.2024
https://www.livelaw.in/high-court/karnataka-high-court/karnataka-high-court-weekly-digest-april-15-21-2021-255695
The case arose when Rangaswamy (the petitioner) challenged a decision from a lower court that had dismissed his complaint against Ravi Kumar (the respondent). The complaint involved allegations that Ravi Kumar had committed certain offenses, and Rangaswamy sought to have the lower court’s decision overturned. The Revision Petition was filed to contest the dismissal, arguing that the lower court had erred in its assessment of the evidence and the application of relevant legal principles.
The Court emphasized that the dismissal of a complaint must be based on a clear understanding of the facts and applicable law. It reiterated that courts have a duty to ensure that justice is served and that aggrieved parties are afforded the opportunity to present their cases fairly. The ruling highlighted the judicial obligation to maintain a balance between upholding the law and protecting individual rights, particularly in criminal matters.
Insolvency and Bankruptcy Board of India V. Satyanarayan Bankatlal Malu and Ors.
Citation: Insolvency and Bankruptcy Board of India V. Satyanarayan Bankatlal Malu and Others, (2024) 6 SCC 508, Criminal Appeal No. 3851 of 2023, Hon’ble High Court of Bombay, decided by Hon’ble Justice BR Gavai and Justice Sandeep Mehta, dated 19.04.2024.
https://www.supremecourtcases.com/insolvency-and-bankruptcy-board-of-india-v-satyanarayan-bankatlal-malu-and-others-_
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The Supreme Court ruled that the Special Court under Section 236(1) of the Insolvency and Bankruptcy Code, 2016, must follow the jurisdictional framework of Section 435 of the Companies Act, 2013, as it existed when the IBC was enacted (28 May 2016), and not subsequent amendments. The case arose from a challenge to the Bombay High Court’s order quashing proceedings initiated by the Insolvency and Bankruptcy Board of India (IBBI) against the respondents for offenses under Sections 73(a) and 235A of the IBC. The High Court had held that post-2018 amendments to Section 435 of the Companies Act (which shifted jurisdiction from Sessions Courts to Magistrates) applied to IBC cases. Rejecting this, the Supreme Court clarified that Section 236(1) of the IBC incorporates Section 435 by reference, freezing its meaning to the 2016 version. Consequently, offenses under the IBC must be tried by Sessions Judges or Additional Sessions Judges, not Magistrates, irrespective of later amendments.
Raj Reddy Kallem V. The State of Haryana and Anr.
Citation: Raj Reddy Kallem V. The State of Haryana and Another, (2024) 8 SCC 588, Criminal Appeal No. 2210 of 2024 (Arising out of SLP (CRL) No. 629 of 2023), Hon’ble Supreme Court, decided by Hon’ble Justice AS Bopanna and Justice Sudhanshu Dhulia, dated 08.04.2024
The Supreme Court quashed criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881, despite the complainant’s refusal to consent to compounding, invoking its extraordinary power under Article 142 of the Constitution. The appellant had repaid the entire debt of ₹1.55 crore plus ₹10 lakh as interest but failed to secure the complainant’s consent for compounding. The Court affirmed that compounding under Section 147 NI Act requires the complainant’s consent, and mere repayment does not absolve criminal liability. However, noting the appellant’s full repayment, prior imprisonment, and prolonged litigation, it held that continuing proceedings would serve no legitimate purpose, thereby exercising its constitutional authority to quash the case. The judgment distinguished quashing (a judicial act) from compounding (a consensual settlement), clarifies that courts cannot compel consent but may intervene to prevent injustice in exceptional cases.
M/S Sujal Pharma V. Karnataka State Medical Supplies Corp. Ltd.
Citation: M/S Sujal Pharma V. Karnataka State Medical Supplies Corporation Limited, W.P. No. 20520 of 2021, Hon’ble High Court of Karnataka, decided by Hon’ble Justice M Nagaprasanna, dated 18.04.2024
Sujal Pharma, a pharmaceutical company, filed a writ petition challenging the actions of the Karnataka State Medical Supplies Corporation Limited (KSMC) concerning a tender for supplying medical supplies. The petitioner contended that the procurement process was flawed and that their bid was unfairly rejected. They sought judicial intervention to quash the decision of KSMC and to ensure that their bid was considered in line with the tender requirements.
The Court ruled that government entities must adhere to the prescribed procedures and criteria when evaluating bids to ensure a level playing field for all participants. It reiterated that any decision taken in public procurement must be justifiable and based on clear and objective criteria. The judgment reinforced the obligation of public authorities to conduct procurement in a manner that promotes competition and fairness, protecting the rights of bidders.
Kedar Bhausaheb Malhari V. Axis Bank Ltd.
Citation: Kedar Bhausaheb Malhari V. Axis Bank Limited Transfer Petition(s)(Criminal) No(s). 33/2018 & IA No. 16665/2018, the Hon’ble Supreme Court, decided by Hon’ble Justice CT Ravikumar and Justice Aravind Kumar, dated 24.04.2024
The Supreme Court impleaded the Union of India (Ministry of Finance and Ministry of Law & Justice) to address whether its powers under Section 406 CrPC to transfer cheque dishonour cases override the territorial jurisdiction framework under Section 142A of the Negotiable Instruments Act, 1881, as amended in 2015. The amendment mandates that complaints under Section 138 (dishonored cheques) be filed only where the payee’s bank is situated. The petitioner sought transfer of proceedings to the jurisdiction of the drawer’s bank, arguing that the amendment causes undue hardship to accused persons by forcing them to defend cases in distant forums.
The Court acknowledged the need to reconcile its constitutional powers with the statutory bar under Section 142A, noting potential conflicts with Articles 14 (equality) and 21 (fair trial) if accused persons are denied equitable access to justice. Senior Advocate Siddharth Luthra, appointed as Amicus Curiae, contended that the amendment’s rigidity could enable forum shopping by complainants and undermine the accused’s right to a fair defense.
Telecommunication Consultants India Ltd. V. Shivaa Trading
Citation: Telecommunication Consultants India Ltd v. Shivaa Trading, 2024 SCC OnLine Del 2937, OMP (COMM) 311 of 2022, the Hon’ble High Court of Delhi, decided by Hon’ble Justice Anup Jairam Bhambani, dated 09.04.2024.
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The Delhi High Court set aside an arbitral award, ruling that an arbitrator unilaterally appointed by a party’s Managing Director under a contractual clause was de jure ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996, read with the Seventh Schedule. The court held that such an appointment rendered the arbitration proceedings void ab initio, as the arbitrator lacked inherent jurisdiction due to a conflict of interest arising from their unilateral appointment by one party.
Relying on Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019), the judgment emphasized that eligibility under Section 12(5) is non-derogable and cannot be waived through conduct or implied consent, requiring an express written agreement post-dispute to validate such appointments. The court rejected the petitioner’s argument that participating in proceedings without objection constituted waiver, stating statutory ineligibility nullifies jurisdiction irrespective of procedural participation.
TJSB Sahakari Bank Ltd. V. Ms. Jovita Reema Mathias and Ors.
Citation: TJSB Sahakari Bank Limited V. Ms. Jovita Reema Mathias and Others, MANU/NC/1877/2024, M.A. 2987 of 2019, NCLT Mumbai, decided by Hon’ble Justice VG Bisht and Prabhat Kumar, dated 18.04.2024.
TJSB Sahakari Bank Limited (the applicant) filed an application against Ms. Jovita Reema Mathias and others to recover outstanding dues owed by a corporate debtor. The bank contended that it had provided financial assistance to the debtor and that the outstanding amount remained unpaid. The matter raised questions regarding the validity of the bank’s claims, the debt’s enforceability, and the proceedings related to the Insolvency and Bankruptcy Code (IBC).
The Tribunal emphasized the necessity of adhering to the procedural requirements outlined in the IBC while considering claims made by creditors. It ruled that the bank’s claim was valid and that the proceedings for recovery should be allowed to progress under the provisions of the IBC. This decision reinforced the principles of creditor rights and the importance of ensuring that financial institutions can recover legitimate dues while following due process in insolvency matters.
Krishan Chand V. Mahindra and Mahindra Financial Services Ltd.
Citation: Krishan Chand V. Mahindra and Mahindra Financial Services Limited 2024 344 HC, the Hon’ble High Court of Himachal Pradesh, decided by Hon’ble Justice Virendar Singh, dated 30.04.2024.
The Himachal Pradesh High Court held that the “compounding fee” imposed for late compounding of offences under Section 147 of the Negotiable Instruments Act, 1881, does not fall within the definition of a “fine” and is not relevant to the adjudication of the controversy in such cases. The Court clarified that compounding is a matter of settlement between parties, and the compounding fee is an additional burden only when compounding is done at a later stage, serving as a deterrent for litigants to settle early. The judgment emphasized that the payment of the compounding fee is a form of atonement when parties compound offences before higher courts, as opposed to the trial court where no such fee is required. The Court further observed that the imposition and deposit of the compounding fee is intended to encourage early resolution and is not a mandatory part of the adjudicatory process itself.
NBCC (India) Ltd. V. Zillion Infraprojects Pvt. Ltd.
Citation: NBCC (India) Limited V. Zillion Infraprojects Private Limited, (2024) 7 SCC 174, Civil Appeal Nos. 4417-4418 of 2024 (Arising out of Special Leave Petition (Civil) Nos. 7573-7574 of 2021), the Hon’ble Supreme Court, decided by Hon’ble Justice BR Gavai and Justice Sandeep Mehta, dated 19.03.2024.
The case arose from disputes related to a contract between NBCC (India) Limited and Zillion Infraprojects Private Limited concerning infrastructure projects. Zillion Infraprojects claimed that NBCC had failed to fulfill its contractual obligations, leading to delays and financial losses. In response, NBCC contested these claims, arguing that Zillion had not adhered to certain contract terms, thereby justifying its actions. The disputes escalated, leading to litigation and the appeals being brought before the Supreme Court.
The Court ruled that the terms of the contract must be interpreted clearly, and each party’s obligations must be honored to ensure accountability. It held that claims of non-performance should be substantiated with evidence, and any delays or failures must be examined in the context of the contractual framework. The judgment reiterated the significance of adhering to contractual agreements in public projects, emphasizing that parties must engage in good faith and uphold their responsibilities. The Court aimed to reinforce the integrity of contractual relationships while ensuring that disputes are resolved fairly and equitably based on the contractual obligations.
Global Credit Capital Ltd. & Anr. V. Sach Marketing Pvt. Ltd. & Anr.
Citation: Global Credit Capital Limited & Another V. Sach Marketing Private Limited & Another, (2024) 9 SCC 482, Civil Appeal Nos. 1143 of 2022 and 6991-6994 of 2022, the Hon’ble Supreme Court, decided by Hon’ble Justice Abhay S Oka and Justice Pankaj Mithal, dated 25.04.2024.
Global Credit Capital Limited (the appellant) filed appeals against Sach Marketing Private Limited and others concerning disputes arising from financial agreements. The appellants contended that Sach Marketing had defaulted on its repayment obligations under the financial agreements executed between the parties. The disputes included questions regarding the interpretation of contract terms, the legitimacy of the claims made, and whether the agreements were enforceable in light of the defaults.
The Court ruled that financial institutions must ensure that contracts are drafted with precision and clarity to avoid ambiguities that can lead to disputes. The decision underscored that in cases of default, parties must adhere to the terms of the contract and that judicial intervention is warranted when clear contractual obligations are not met. This ruling reinforced the principle of contractual fidelity, emphasizing the importance of contractual terms in determining the rights and obligations of the parties involved.
