Important Legal Updates March 2024 in India
Table of Contents
Important Legal Updates March 2024: Key Judgments, Amendments & Regulatory Changes
Venkataraman Krishnamurthy and Anr V. Lodha Crown Buildmart Pvt Ltd
Citation: Venkataraman Krishnamurthy and Anr V. Lodha Crown Buildmart Pvt Ltd, (2024) 4 SCC 230, Civil Appeal No. 971 of 2023, Hon’ble Supreme Court, decided by Hon’ble Justice Aniruddha Bose and Hon’ble Justice Sanjay Kumar, dated 22.02.2024.
Facts: In this case, the National Consumer Dispute Redressal Commission (NCDRC) made a new interpretation of the contract entered by the buyer and seller of the apartment. The contract specifically stated that the buyer has an option of election to end the contract and claim back the refund of consideration paid, in the event that the seller is not able to provide an ‘occupation certificate’ before the expiry of the term specified. Despite the seller’s failure to grant an ‘occupation certificate’ within the grace period, the NCDRC rejected the buyer’s right to terminate the contract and to get the refund of the consideration amount already paid to the seller for the purchase of the apartment.
Ratio: The Apex Court held that the Court’s cannot rewrite or make a new contract, and it is incumbent upon the courts to abide by the terms and conditions laid down in the contract which is binding on the parties to the contract. Further, it endorsed its earlier decision, in interpreting documents relating to a contract of insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties because it is not for the Court to make a new contract, however reasonable, if the parties have not made it themselves. Further reiterated that a contract, being a creature of an agreement between two or more parties, is to be interpreted giving the actual meaning to the words contained in the contract and it is not permissible for the Court to make a new contract.
Afortune Trading Research Lab LLP V. Additional Commissioner (Appeals I), Chennai and Anr.
Citation: Afortune Trading Research Lab LLP V. Additional Commissioner (Appeals I), Chennai and Anr., 2024 SCC OnLine Mad 2124, W.P. No. 2849 of 2021, Hon’ble High Court of judicature at Madras, decided by Hon’ble Mr. Justice C. Saravanan, dated 16.02.2024.
Facts: The Petitioner is into the business of providing opinions on equity and futures market, trading stocks and etc. Accordingly, the Petitioner has remitted GST for the services rendered to its clients, who are predominantly from US or neighboring countries, and has treated the services as export of service within the meaning of Section 2(6) of Integrated Goods and Service Tax of 2017 (IGST). The payments were received by the Petitioner in accordance with the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016. The Petitioner filed its documents for claiming tax refund and the same was dismissed stating that the Petitioner has not produced export invoices and have violated Section 2(6) of IGST Act. The said order is challenged herein.
Ratio: The Court held that the routing of the payment by the intermediary viz., PayPal from its account in CITI Bank to the Petitioner’s own account with HDFC Bank in Indian Rupees is in accordance with the provisions of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 as notified by Notification No.: FEMA 14(R)/2016-RB dated 02.05.2016. There is no dispute with respect to the services provided by the petitioner to its foreign clients. The Petitioner has provided the export services within the meaning of Section 2(b) of the IGST Act, 2017. PayPal merely acts as an intermediary who receives the remittances in freely convertible foreign exchange and in as much required to comply with the requirements of the foreign exchange and held that receipt of payment through PayPal recognised as valid form of receipt of export proceeds.
Vijay Saini and Ors. V. Devender Singh and Ors.
Citation: Vijay Saini and Ors. vs. Devender Singh and Ors., MANU/NL/0107/2024, Comp. App. (AT) (Ins.) No. 1194 of 2023, I.A. No. 4200 of 2023, Comp. App. (AT) (Ins.) No. 791 of 2023, Comp. App. (AT) (Ins.) No. 982 of 2023 and I.A. No. 3346 of 2023, National Company Law Appellant Tribunal, Principal Bench at New Delhi, Hon’ble Justice Ashok Bhushan and Mr. Barun Mitra, dated 16.02.2024.
Facts: The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, and the Appellant was appointed as the Resolution Professional. The Appellant released Form G, after which two Resolution Plans were received. Among these, the proposal submitted by the director of the Corporate Debtor to withdraw the CIRP was supported by 52.57% of Homebuyers of Sidhartha Buildhome Pvt. Ltd. (Financial Creditors). The Appellant rejected the Section 12A proposal after noting that only 52.57% of financial creditors had voted in favour of the proposal, falling short of the required 90% threshold under Section 12A of the Insolvency and Bankruptcy Code (IBC). An Interlocutory Application challenging the same was filed before the National Company Law Tribunal (NCLT) and the same was allowed. Aggrieved by the same, the present Appeal is filed.
Ratio: The National Company Law Appellant Tribunal (NCLAT) allowed the Appeal and held that since the decision of the NCLT directly overturns the decision of the Resolution Professional, the Resolution Professional is an aggrieved party and the Appeal filed by the Resolution Professional is maintainable. Further, it was observed that the present case requires the Resolution Professional to conduct the proceedings of the Committee of Creditors according to the IBC and decide on the result of voting. Hence, it cannot be said that Resolution Professional is taking any side in the present case.
Shiv Charan & Ors. V. Adjudicating Authority & Another.
Citation: Shiv Charan & Others V. Adjudicating Authority under the Prevention of Money Laundering Act, 2002, Department of Revenue and Another, 2024 SCC OnLine Bom 701, Writ Petition (L) No. 9943 of 2023, Hon’ble High Court of Judicature at Bombay, decided by Hon’ble Justice B. P. Colabawalla & Hon’ble Justice Somasekhar Sundaresan, dated 01.03.2024.
Facts: A Corporate Insolvency Resolution Process was initiated by a financial creditor against the corporate debtor under Insolvency and Bankruptcy Code (IBC). During this CIRP, the resolution plan proposed was approved by the National Company Law Tribunal (NCLT) on 17th February 2023. Prior to CIRP, allegations of cheating and breach of trust had led to First Information Reports (FIRs) against the corporate debtor, prompting the Enforcement Directorate (ED) to file an Enforcement Case Information Report (ECIR) under the Prevention of Money Laundering Act (PMLA) of 2002. Subsequently, ED attached various assets of the corporate debtor. Despite NCLT’s approval of the resolution plan, which directed the release of the attached properties under Section 32A of IBC, ED continued its attachment, leading to two writ petitions. One was filed by the resolution applicants seeking the release of the attached assets, and the other by the ED challenging the NCLT’s jurisdiction to invoke Section 32A.
Ratio: The Bombay High Court held that Section 32A of the IBC, a non-obstante provision, grants immunity to corporate debtors and their assets once a resolution plan is approved under Section 31, provided it results in a change of control. The Tribunal clarified that Section 32A prevails over other laws, including the PMLA, making attachments of the corporate debtor’s assets untenable post-approval. It emphasized that NCLT has jurisdiction under Section 60(5) of the IBC to direct the release of attached properties to facilitate the corporate debtor’s revival. Hence, the ED must release attachments once Section 32A is invoked, as continued attachment contradicts the IBC’s objectives and legislative mandate.
THANGAM AND ANOTHER V. NAVAMANI AMMAL
Citation: Thangam And Another V. Navamani Ammal, (2024) 4 SCC 247, Civil Appeal No. 8935 of 2011, Hon’ble Supreme Court of India, decide by Hon’ble Justice C.T. Ravikumar and Hon’ble Justice Rajesh Bindal, dated 04.03.2024.
Facts of the Case: The dispute centers on the validity of a registered will executed on 9th October 1984 by Palaniandi Udyar, who bequeathed approximately 3.5 acres of land to Navamani Amma, describing her as a daughter figure. The will excluded the testator’s widow and minor daughter, Thangam and Laila (Appellants), prompting them to challenge its validity, alleging suspicious circumstances, particularly the omission of the widow and daughter. The Defendant had no specific replies to the paras of the plaint but made their own submissions. The Trial Court upheld the will, but this decision was reversed by the First Appellate Court, which found it suspicious. On a second appeal, the High Court restored the Trial Court’s judgment, declaring the will valid. Aggrieved, the present Appeal is filed.
Ratio: The Supreme Court upheld the High Court’s judgment, affirming that the will was genuine and not surrounded by suspicious circumstances. The Court held that the Written Statement must have para wise reply to Plaint. All allegations are deemed to be admitted unless it is specifically denied by the Defendants in a suit. Further, it was concluded that the testator was of sound mind, fully aware of the welfare of his widow and minor daughter and had made provisions for them through other properties. The non-mention of the widow and daughter in the will did not render it invalid, as the testator explicitly chose to bequeath part of his property to the respondent, considering her as a daughter figure and the said pleadings in the Plaint was not denied by the Defendants in its Written Statement.
Jay Shri & Anr. V. State of Rajasthan
Citation: Jay Shri & Anr. V. State of Rajasthan (2024 INSC 48), 2024 SCC OnLine SC 54, Criminal Appeal No. of 2024 Arising out of SLP (Crl.) No. 14423 of 2023, Hon’ble Supreme Court of India, decided by Hon’ble Justice Sanjiv Kanna and Hon’ble Justice Dipankar Datta, dated 19.01.2024.
https://www.deccanherald.com/india/no-criminal-offence-in-mere-breach-of-contract-sc-2857722
Facts: The appellants, Jay Shri and Hitesh Kela, were seeking anticipatory bail after being charged under Sections 420 and 120B of the Indian Penal Code (IPC) for cheating and criminal conspiracy respectively. The charges stemmed from an FIR registered on August 26, 2022, in Osiyan, Jodhpur, Rajasthan.
Ratio: The Apex Court held that a mere breach of contract does not amount to an offence under Section 420 and 406 of the IPC unless a fraudulent or dishonest intention is shown from the beginning of the transaction. Further, it was held that any effort to settle civil disputes and claims which do not involve any criminal offence by applying pressure through criminal prosecution should be deprecated and discouraged.
Arif Azim Company Limited V. Aptech Limited.
Citation: M/s Arif Azim Co. Ltd. V. M/s Aptech Ltd, (2024) 5 SCC 313, Arbitration Petition No. 29 of 2023, Hon’ble Supreme Court of India, decide by Hon’ble CJI D. Y. Chandrachud, Hon’ble Justice J. B. Pardiwala and Hon’ble Justice Manoj Misra, dated 01.03.2024.
Facts: The case involves a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act), filed by Arif Azim Co. Ltd., an Afghanistan-based company, against Aptech Ltd., an Indian company. The dispute emerged from three franchise agreements signed on 21 March 2013, allowing the petitioner to operate education centers under Aptech’s brand in Afghanistan. The disagreement pertains specifically to the Aptech English Language Academy (AELA) agreement, concerning withheld payments related to training services provided under an Indian Council for Cultural Relations (ICCR) project for Afghan students. Arbitration was invoked by the petitioner after failed conciliation efforts and pre-institution mediation under the Commercial Courts Act, 2015. The petitioner claimed the outstanding sum along with interest, alleging that the respondent failed to release the due payment from ICCR. The arbitration petition was contested by the respondent on grounds of time-barred claims and incorrect invocation procedures.
Ratio: The Supreme Court held that the Limitation Act, 1963, applies to arbitration proceedings, including applications under Section 11(6) of the Act, as clarified by Section 43 of the Act. It reiterated that the limitation period for seeking the appointment of an arbitrator under Section 11(6) is three years from the date when the right to apply accrues, which generally begins upon the failure or refusal of the opposing party to appoint an arbitrator following a valid notice. The Court distinguished between the limitation for filing an arbitration petition and the limitation for the underlying substantive claims, concluding that the petition was timely since it was filed within three years from the failure to comply with the notice for invoking arbitration. Additionally, the Court clarified that while courts must screen ex-facie time-barred claims at the pre-referral stage, genuine disputes should generally be referred to arbitration.
Safiya Bano alias Shakira and Others v. The State of U.P. and Others
Citation: Safiya Bano alias Shakira and Others v. The State of U.P. and Others, 2024 SCC OnLine SC 222, Criminal Appeal No. of 2024, Arising out of SLP (Crl.) No. 8373 of 2019, Hon’ble Supreme Court of India, decided by Hon’ble Justice B. R. Gavai and Hon’ble Justice Sanjay Karol, dated 30.01.2024.
Facts: An Appeal was filed challenging the order of the High Court that dismissed a petition under Section 482 of the Code of Criminal Procedure, 1973 (CrPC), seeking to quash a First Information Report (FIR) against the appellants under Sections 498-A, 323, 504, 494, and 377 of the Indian Penal Code, 1860 (IPC). The FIR was lodged by the wife of the main accused, with allegations of harassment and dowry demands by her husband’s relatives. The appellants argued that the allegations were general and lacked specific details of ill-treatment. Despite an attempt at settlement between the wife and her husband, the proceedings against the appellants continued, with no concrete evidence of wrongdoing presented against them.
Ratio: The Supreme Court held that in cases of general allegations without specific evidence against relatives of the husband, the proceedings under Section 498-A of the IPC can be quashed to prevent misuse of law and harassment. The Court emphasized that bald and vague accusations, without clear indications of the appellants’ involvement in the alleged offenses, do not fulfil the requirements to constitute an offense under Section 498-A. The Court allowed the appeal, quashing the FIR against the appellants while permitting the proceedings to continue against the husband.
Vinayak Purshottam Dube V. Jayashree Padamkar Bhat and Ors.
Citation: Vinayak Purshottam Dube (Deceased) through Legal Representatives V. Jayashree Padamkar Bhat and Ors., (2024) 9 SCC 398, Civil Appeals Nos. 7768-7769 of 2023, Hon’ble Supreme Court of India, decided by Hon’ble B.V. Nagarathna and Hon’ble Justice Ujjal Bhuyan, dated 01.03.2024.
Facts: The appellants, legal heirs of Vinayak Purushottam Dube, appealed a consumer dispute involving a development agreement where the original opposite party (Dube) was alleged to have failed in fulfilling contractual obligations related to construction and payment under the agreement. The complainants pursued relief through various consumer forums, including the District Forum, State Commission, and National Consumer Disputes Redressal Commission (NCDRC). Upon Dube’s death, his legal representatives were substituted as parties. The NCDRC held that the legal representatives were bound to comply with the obligations of the deceased, both monetary and specific performance requirements. This ruling was contested, with the appellants arguing that personal obligations of the deceased developer could not be enforced against his heirs, especially obligations requiring the deceased’s specific skills.
Ratio: The Supreme Court held that legal heirs are liable only to the extent of the deceased’s estate but are not bound to perform personal contractual obligations that depend on the deceased’s individual skills or expertise. Personal obligations do not transfer upon death unless expressly stipulated. Therefore, while the heirs are responsible for monetary liabilities from the estate, they are not required to fulfil non-monetary obligations that necessitate the personal performance of the deceased.
Palaparty Abhishek V. Binjusaria Ispat Pvt. Ltd and Ors.
Citation: Palaparty Abhishek, Suspended Director of Abhirama Steels Ltd. Vs. Binjusaria Ispat Pvt. Ltd. and Ors., MANU/NL/0432/2022, Company Appeal (AT) (CH) (Ins) No. 19 of 2022, Hon’ble National Company Law Tribunal, Chennai, decided by Hon’ble Justice Venugopal M and Mr. Kanthi Narahari, dated 08.07.2022.
https://ibclaw.in/palaparty-abhishek-vs-binjusaria-ispat-pvt-ltd-and-anr-supreme-court
Facts: This appeal contests the National Company Law Tribunal’s (NCLT) order admitting a petition from the first Respondent and imposing a moratorium on the Corporate Debtor. The Appellant argued that the debt is time-barred and disputed the claim, citing inferior quality goods and coercion in signing the Memorandum of Understanding (MoU). The Respondent maintains that the debt arose from the MoU, which the Corporate Debtor failed to honour, and filed an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) within the limitation period.
Ratio: The NCLT ruled that the Corporate Debtor’s allegations of coercion in obtaining the MoU and cheques, as well as the return of the cheques with the “payment stopped” endorsement, cannot be dismissed solely because a case under the Negotiable Instruments Act is pending. The initiation of proceedings under Section 9 of the IBC was therefore upheld, and the NCLT’s decision to admit the application was deemed correct.
High Court Bar Association, Allahabad v. State of Uttar Pradesh & Ors.
Citation: High Court Bar Association, Allahabad v. State of Uttar Pradesh & Ors., MANU/SC/0149/2024, Criminal Appeal No. 3589 of 2023 and Special Leave Petition (Crl.) Nos. 13284-13289 of 2023 and Criminal Appeal Diary No. 49052 of 2023, Hon’ble Supreme Court of India decided by Hon’ble Justice CJI D.Y. Chandrachud, Hon’ble Justice Abhay Oka, Hon’ble Justice J.B. Pardiwala, Hon’ble Justice Manoj Misra, and Hon’ble Justice Pankaj Mithal, dated 29.02.2024.
Facts: The case involves the issue of automatic vacation of stay orders in civil and criminal cases as per directions issued in the case of Asian Resurfacing of Road Agency Private Limited and Anr. v. Central Bureau of Investigation. Under Article 142, the Supreme Court had previously ordered that interim stay orders granted by High Courts should automatically lapse after six months unless extended by a specific speaking order. This provision was challenged, arguing that such automatic vacation of stay without a hearing was akin to judicial legislation, disregarding procedural fairness. The High Court Bar Association of Allahabad contended that this direction limited the High Courts’ constitutional authority under Article 226, which is a part of the Constitution’s basic structure and not subordinate to Supreme Court directives.
Ratio: The Supreme Court held that automatic vacation of stay orders solely due to time lapse is unjust and contrary to principles of natural justice. It ruled that the exercise of powers under Article 142 should not encroach upon substantive rights or the High Courts’ constitutional jurisdiction. The Court further held that the High Courts while passing ex-parte ad interim relief must be granted for a limited duration. An ad interim order passed after hearing the contesting parties cannot be vacated by the High Court without giving sufficient opportunity of being heard and at the same time the application for vacating stay cannot be kept pending for a long time.
Shariff Constructions v. Bruhath Bangalore Mahanagar Palike and Ors.
Citation: Shariff Constructions v. Bruhath Bangalore Mahanagar Palike and Ors., MANU/KA/0853/2024, Writ Petition No. 1867 of 2024 (LB-TAX), Hon’ble High Court of Karnataka, decided by Hon’ble Justice S Sunil Dutt Yadav, dated 22.02.2024.
Facts: The petitioner challenged a Bruhath Bangalore Mahanagar Palike (BBMP) demand notice requiring payment of property tax, cesses, penalties, and other dues for the year 2019-2020. The petitioner contended that BBMP failed to follow the required procedures under Section 144 of the Bruhat Bengaluru Mahanagara Palike Act, 2020 (the Act) before issuing the notice, specifically pointing out that no prior inspection was conducted in the petitioner’s presence. The petitioner sought de-sealing of the premises and refund of excess taxes paid, arguing that reassessment should occur only after a proper inspection and due process as mandated by the Act.
Ratio: The Karnataka High Court ruled that BBMP must follow a structured procedure under Section 144 of the Act for property tax reassessment, including conducting inspections in the presence of the property owner and allowing the owner to provide necessary documentation and information. The Court outlined the steps required for inspection, reassessment, and issuing notices, stressing the importance of procedural compliance and adherence to principles of natural justice. The Court set aside the impugned demand notice, allowing BBMP to initiate fresh proceedings following the mandated inspection and reassessment process, thus reinforcing the need for transparency and procedural fairness in property tax matters under the Act.
Basavaraj v. Indira and Others
Citation: Basavaraj v. Indira and Others, (2024) 3 SCC 705, Civil Appeal No. 2886 of 2012, Hon’ble Supreme Court of India, decided by Hon’ble Justice C.T. Ravikumar and Hon’ble Justice Rajesh Bindal, dated 29.02.2024.
Facts: The Respondents filed a suit in 2005 seeking partition of ancestral property, contending that no actual division had occurred. The suit mentioned an earlier compromise decree from 2004 but did not challenge it. During the trial, which had reached the final argument stage, Respondents No. 1 and 2 filed an application to amend the plaint to declare the compromise decree null and void, citing oversight for not including this relief earlier. The Trial Court denied the amendment, but the High Court later allowed it, subject to costs, prompting the Appellant to appeal to the Supreme Court.
Ratio: The Supreme Court held that allowing the amendment at this stage would unfairly prejudice the Appellant and fundamentally alter the nature of the suit, which initially only sought partition. Under the proviso to Order VI Rule 17 of the Code of Civil Procedure, amendments after the trial’s commencement are barred unless due diligence is proven, which was not established in this case. The Court noted that the proposed amendment aimed at challenging the compromise decree was also time-barred, as it was filed over five years after the decree’s issuance, exceeding the three-year limitation for such claims. Further, it was held that amendment of the Plaint should not be allowed if it alters the nature of the Suit.
Rajnish Gupta & Anr V. Mukesh Garg
Citation: Rajnish Gupta V. Mukesh Garg, 2022 SCC OnLine Del 603, CS(OS) 332/2021, Hon’ble High Court of Delhi, decide by, Hon’ble Justice Amit Bansal, dated 23.02.2022.
Facts: The plaintiffs filed a suit for the recovery of Rs. 4,00,00,000 along with interest, contending that the defendant had received this sum as a loan but failed to repay it. The defendant admitted receiving the amount but claimed it was for an ancestral jewellery transaction. Based on these assertions, the Court framed issues, most of which placed the burden of proof on the defendant. Subsequently, the defendant filed an application under Order XVIII Rule 1 of the Civil Procedure Code (CPC), arguing that the plaintiffs should begin by leading evidence.
Ratio: The Court held that under Order XVIII Rule 1 of the CPC, while plaintiffs generally lead evidence first, exceptions arise if the defendant admits the plaintiff’s claims but introduces additional facts that form the basis of the dispute. Here, the defendant acknowledged receipt of funds but added a different basis for the transaction. Thus, the Court ruled that the defendant must lead evidence first, as the resolution of these issues was contingent on the facts introduced by the defendant. The Court clarified that Order XVIII Rule 1 allows flexibility for the Court to direct the sequence of evidence to ensure fair trial proceedings.
Srinivas Raghavendrarao Desai (Dead) By Lrs. V. Kumar Vamanrao @ Alok and Ors.
Citation: Srinivas Raghavendrarao Desai (Dead) By Lrs. V. Kumar Vamanrao @ Alok and Ors., 2024 SCC OnLine SC 226, Civil Appeal No(s), 7293-7294 of 2010, Hon’ble Supreme Court of India, decided by Hon’ble Justice C.T. Ravikumar and Hon’ble Justice Rajesh Bindal, dated 04.03.2024.
https://scourtapp.nic.in/supremecourt/2009/14969/14969_2009_13_1503_51045_Judgement_04-Mar-2024.pdf
Facts: The plaintiffs, family members of Defendant No. 1, filed a suit seeking partition and mesne profits for certain family properties. The Trial Court granted each plaintiff and defendants one-sixth share in a few suit schedule properties, while dismissing claims on a few others. Dissatisfied, the plaintiffs filed an appeal. The High Court ruled that Schedule-A properties were exclusively allotted to Defendant No. 1 in an alleged 1965 oral partition, thus granting each plaintiff a one-fourth share in these properties. It also voided the sale of one of the Schedule-A properties by Defendant No. 7 to Defendant No. 9. Defendant No. 7 appealed this at the Supreme Court, challenging the High Court’s reliance on the 1965 oral partition, which had not been part of the original pleadings.
Ratio: The Supreme Court held that the High Court erred by relying on the alleged 1965 oral partition, as it was neither included in the initial pleadings nor established by evidence permissible under procedural law. Since the Trial Court had already dismissed a request to amend the pleadings to include this partition, the plaintiffs could not rely on it. The Supreme Court emphasized that evidence beyond pleadings cannot be considered, especially when an amendment has been denied. Therefore, the High Court’s reliance on the 1965 oral partition was set aside, upholding the 1984 partition, which had allocated the disputed properties to Defendant No. 7. The sale to Defendant No. 9 by Defendant No. 7 was deemed valid.
Chanderpati V. M/S. Soni Realtors Pvt Ltd.
Citation: Chanderpati V. Soni Realtors Pvt Ltd., 2024 SCC OnLine NCLAT 321, Company Appeal (AT) (Insolvency) No. 691 of 2023, Hon’ble NCLAT, New Delhi, decided by Hon’ble Justice Rakesh Kumar Jain and Mr. Naresh Salecha, dated 01.03.2024.
https://ibclaw.in/chanderpati-vs-soni-realtors-pvt-ltd-nclat-new-delhi/
Facts: The Corporate Debtor filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) with the National Company Law Tribunal (NCLT) for financial recovery. The NCLT approved a resolution plan for Soni Realtors, submitted by Srijan Infra LLP, on 10 June 2022. Subsequently, several appeals were filed against this order, but without certified copies of the impugned order, as they were obtained after the 30-day appeal window had closed. The appellants argued for an exemption from the certified copy requirement, claiming procedural hurdles prevented compliance within the stipulated timeframe. The respondents, however, contested the appeals’ maintainability, citing delays and procedural non-compliance.
Ratio: The National Company Law Appellate Tribunal (NCLAT) held that while timely filing with certified copies is mandatory for appeal maintainability, procedural rules under Rule 14 of the NCLAT Rules allow discretionary exemption for substantial justice if a sufficient cause is shown. The Tribunal emphasized that appeals filed within the prescribed 30 days, or the additional 15-day extension were maintainable even without certified copies, provided applications for exemption were filed. In cases without such exemption applications, appeals were deemed non-maintainable. The NCLAT held that the period of limitation is to be reckoned from the date of pronouncement of the order in the cases covered by IBC. There is no automatic exemption where the litigants make no efforts to pursue a timely resolution of their grievance. It is not open to the person aggrieved under the Code to await the receipt of free certified copy under Section 420(3) of the Companies Act r/w Rule 50 of NCLT Rules and prevent limitation from running. The Appeal was thus dismissed as barred by limitation.
Rahul Darbari V. Arun Kumar Khobragade & Ors.
Citation: Rahul Darbari V. Arun Kumar Khobragade & Ors., 2024 SCC OnLine Del 2523, CRL.M.C. 1171/2022, CRL.M.A. 5067/2022, CRL.M.C. 1172/2022 and CRL.M.A. 5069/2022, Hon’ble High Court of Delhi, decided by Hon’ble Justice Navin Chawla, 08.04. 2024.
Facts: The dispute arose under Section 138 of the Negotiable Instruments Act (NI Act), where the petitioner, Rahul Darbari, filed complaints against the respondents for cheque dishonour. During the trial, the petitioner filed an application under Section 311 of the Code of Criminal Procedure (CrPC) to recall himself as a witness and introduce additional documents, including pleadings from a prior case filed by the respondents under Section 482 of the CrPC. This application had previously been withdrawn but was re-filed after the evidence was closed and the case was set for final arguments. The Trial Court dismissed the application, and the petitioner challenged this dismissal under Section 482 of the CrPC.
Ratio Decidendi: The Delhi High Court held that Section 311 of CrPC which allows for the recall of witnesses, is discretionary and should be exercised judiciously to ensure fair justice without undue delay. The Court emphasized that, in cases under Section 138 of the NI Act, which aim for expedited resolution, re-opening a trial at a late stage without just cause could unjustly prolong proceedings. The Court found that the petitioner’s delayed application lacked sufficient reason, highlighting that rights of the accused to a swift resolution must be balanced with the complainant’s ability to present evidence. The petition was thus dismissed, affirming the Trial Court’s decision.
Retailers Association of India & Others V. State of Karnataka & Others.
Citation: Retailers Association of India & Others V. State of Karnataka & Other, WP 7525/2024, Hon’ble High court of Karnataka, decided by Hon’ble Justice M. Nagaprasanna, decided by 18.03.2024.
Facts: The Retailers Association of India challenged Karnataka’s directive requiring businesses to display 60% of their signboard names in Kannada, issued under the Kannada Language Comprehensive Development Act, 2022. The High Court initially halted the implementation in March 2024, deeming the sealing of businesses for non-compliance “untenable.” The Association questioned the constitutionality of certain sections of the amended Act, arguing it violated fundamental rights and the Trademarks Act, referencing a similar case struck down by the Court in 2009. The hearing was adjourned for two weeks, with the interim order extended.
Ratio: The Hon’ble High Court while deciding the issue considered the object of the Act is to ensure the extensive use and propagation of Kannada Language and to co-ordinate the activities relating to the implementation of Kannada as Official Language new law is essential.
The difference between the unamended Section 17(6) of the amended Act is, the unamended provision mandated 50% of the Boards in all commercial establishments and business undertakings to be in Kannada language, which is increased to 60% by the amended Act, the tenability or otherwise of the legislation requires to be considered. The Court also considered that the intention of the State is not to seal down any business undertakings and to enforce 60% of the Boards to be in Kannada. The matter would require consideration and for the purpose of consideration would require the statement of objections by the State, as the Act is called in question. As such the Court held that no precipitative action can be taken against the Petitioners, till the clarification is issued.
Fortuna Skill Management Pvt. Ltd. V. Jaina Marketing and Associates
Citation: Fortuna Skill Management Pvt. Ltd. V. Jaina Marketing and Associates, 2024 SCC OnLine Del 1972, O.M.P. (COMM) 511/2023, Hon’ble High Court of Delhi, decided by Hon’ble Justice Prateek Jalan, dated 20.03.2024.
Facts: This is a dispute between Fortuna Skill Management Pvt. Ltd. (petitioner) and Jaina Marketing and Associates (respondent), stemming from a service agreement for after-sales mobile repair services. Under the agreement, the petitioner would provide service centers and repair both in-warranty and out-of-warranty phones, using spare parts from the respondent. The respondent claimed unpaid dues from the petitioner for spare parts supplied, asserting an outstanding balance based on signed “declaration letters” indicating liabilities. When attempts to reconcile accounts failed, arbitration was initiated, and the Arbitration Tribunal awarded ₹3,36,01,783 with interest to the respondent. The petitioner challenged this award, claiming that crucial delivery challans supporting its defence were not allowed as evidence due to the Tribunal’s rejection of a late-stage application to submit them.
Ratio: The Delhi High Court upheld the Arbitral Tribunal’s decision, emphasizing the need for expediency and adherence to procedural timelines in arbitration. The Court found no fault in the Tribunal’s rejection of the petitioner’s belated application to introduce additional evidence, as it was filed at the argument stage without justification for delay. Further, it was held that although Section 151 read with Order 18 Rule 17 of the Civil Procedure Code empowers the Court to permit additional evidence to be led if it clarifies evidence on record, this power can be used only sparingly, i.e., in cases where evidence sought to be brought on record has come into existence later, or could not have been brought on record earlier, due to valid & sufficient reasons.
M/S Rajco Steel Enterprises V. Kavita Saraff & Anr.
Citation: Rajco Steel Enterprises V. Kavita Saraff & Another., (2024) 9 SCC 390, SLPs (Crl.) No. 5583 of 2022 with Nos. 5781 of 2022, 5996 of 2022 and 6046 of 2022, Hon’ble Supreme Court of India, decided by Hon’ble Justice Aniruddha Bose and Hon’ble Justice Sanjay Kumar, dated 09.04.2024.
Facts: The complainant claimed to have given financial assistance to the accused, who allegedly issued cheques to discharge the liability. The accused denied this, stating that the complainant used her account for stock market transactions and exchanged cheques to settle profits and losses. She asserted that the complainant possessed her signed blank cheques and misused them. The Central Bureau of Investigation looked into the matter.
Ratio: The Court held that for an offense under Section 138 of the Negotiable Instruments Act (NI Act) for dishonour of cheque to be made out, the essential ingredients such as issuance of cheque, dishonour, and non-payment must be clearly established. Further, the Court held that unless valid documentary evidence produced for substantiating any enforceable debt or liability, the Accused cannot be punished under Section 138. Once the presumption under Section 118 read with Section 139 of the NI Act is rebutted by the Accused, it is for the Complainant to prove his case, that the Cheques were issued towards the legally enforceable debt.
Smt. Najmunisha, Abdul Hamid Chandmiya alias Ladoo Bapu V. State of Gujarat, Narcotics Control Bureau
Citation: 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 of India, decided by Hon’ble Justice Aniruddha Bose and Hon’ble Justice Augustine George Masih, dated 09.04.2024.
Facts: In this case, multiple accused were charged under the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985, following a raid by law enforcement based on alleged information of drug trafficking. Accused No. 04, Najmunisha’s husband, was implicated for possession and sale of narcotics, with Najmunisha (Accused No. 01) accused of aiding his activities. The Trial Court convicted Accused No. 01 and her husband, basing the conviction largely on their statements under Section 67 of the NDPS Act, where both confessed involvement in the drug trade. The High Court upheld the convictions, citing voluntary and uncoerced statements. However, discrepancies emerged regarding the raid’s legality, particularly due to procedural lapses, leading to the Supreme Court appeal.
Ratio: The Supreme Court, upon reviewing the procedural lapses, held that the prosecution failed to prove the case beyond reasonable doubt, mainly due to non-compliance with statutory requirements under Sections 41 and 42 of the NDPS Act. The Court emphasized that statements recorded under Section 67 are inadmissible as confessional evidence, as per Tofan Singh v. State of Tamil Nadu, since they are not recorded in the manner required for valid confessions in a criminal trial. It was further held that an Officer must mandatorily record in writing the reasons for arresting the accused as mandated under Section 41(2) of the NDPS Act, violation of the same would give rise to strict actions against the Officers involved. Consequently, the convictions were overturned, granting the accused the benefit of doubt.
BSNL V. Vihaan Networks Limited
Citation : BSNL V. Vihaan Networks Limited, 2023 SCC OnLine Del 6274, O.M.P. (Comm.) 405 of 2023 and IA Nos. 19196 of 2023 (Stay) & 19198 of 2023, Hon’ble High Court of Delhi, decided by Hon’ble Justice Sachin Datta, dated 03.10.2023.
Facts: The petitioner issued a tender in 2016 for a 2G GSM BSS Network project in remote areas of Arunachal Pradesh and Assam. The respondent’s bid was accepted in 2017, and an Advance Purchase Order (APO) was issued in March 2018. The respondent began deployment, but the petitioner later withdrew the APO in February 2020 without issuing a Purchase Order. The respondent thus initiated Arbitration proceedings, claiming losses from the cancellation.
Ratio: The Court held that the arbitration clause within the contract between the parties was valid and binding, reinforcing that any disputes arising from the contract must be resolved through arbitration as per the agreement, if there is an Arbitration Agreement. The Court emphasized the primacy of arbitration in commercial contracts, limiting the scope for judicial intervention unless there is a violation of fundamental legal principles.
S.P. Velayutham & Anr. V. M/S Emaar MGF Land Limited
Citation: S. P. Velayutham & Another. V. Emaar MGF Land Limited, MANU/SCOR/30335/2024, SPL (Civil) Diary No(s). 2986/2024, Special Leave to Appeal C No. 5059/2024, Hon’ble Supreme Court of India, decided by Hon’ble Justice Hrishikesh Roy and Hon’ble Justice Prashant Kumar Mishra, dated 26.02.2024.
Facts: The respondent filed C.S. No. 169 of 2018, which the High Court classified as a commercial suit under Section 2(1)(c) of the Commercial Courts Act, 2015. The petitioners challenged this, arguing it was a simple money recovery suit. The respondent maintained it remained a commercial dispute.
Ratio: The Apex Court held that a mere money recovery cannot be brought under the Commercial Dispute unless the disputed property is actually used in trade and commerce. While holding the same, the Apex Court remitted back the matter to the High Court for reconsideration, to decide on whether the suit for recovery of money would fall within the category of cases covered under Section 2(1)(c)(vii) of the Commercial Courts Act.
Rahul Gyanchandani & Ors. V. Parsvnath Landmark Developers P. Ltd.
Citation: Rahul Gyanchandani & Others. V. Parsvnath Landmark Developers Private Limited, 2024 SCC OnLine NCLAT 469, Company Appeal (AT) (Insolvency) No. 309 of 2024 and I.A. Nos. 905 and 1032 of 2024, NCLAT, New Delhi, decided by Hon’ble Justice Ashok Bhushan, Hon’ble Justice Barun Mitra and Hon’ble Justice Arun Baroka, dated 09.04.2024.
Facts: The Appellants (homebuyers) booked apartments in a project of Parsvnath Landmark Developers Pvt. Ltd. (Corporate Debtor), which was delayed. They filed complaints with Real Estate Regulatory Authority (RERA), obtaining refund orders with interest and compensation. The corporate debtor went into insolvency, and the appellants filed claims as allottees under the Insolvency and Bankruptcy Code (IBC). The National Company Law Tribunal (NCLT) dismissed their claims, which was challenged before the National Company Law Appellate Tribunal (NCLAT).
Ratio: The NCLAT held that when the underlying claim of an aggrieved party specifically in the form of a court or decree that does not alter or disturb the status of the converted party. Further, it was held that the homebuyers whether they have an order or decree from the RERA or do not have any decree or order from RERA, they belong to the same category of allottees, and no distinction can be made. It was also held that the Appellants are allottees within the meaning of IBC and as a Financial Creditors, they are required to comply with Section 7(1) & (2) of the IBC. Non-compliance of these Sections had to be looked in seriously and as such the Appeal was dismissed.
Rangaswamy V. Ravi Kumar
Citation: Rangaswamy V. Ravi Kumar, Criminal Revision Petition No. 841 of 2020, Hon’ble High Court of Karnataka, decided by Hon’ble Justice S. Rachaiah, dated 28.03.2024.
Facts: The accused, Rangaswamy, borrowed Rs. 55,000 in September 2012 from the complainant, Ravi Kumar, and issued a cheque for repayment after six months. The cheque was dishonoured due to insufficient funds, and despite receiving a legal notice, the accused neither repaid nor responded. The Trial Court convicted him under Section 138 of the Negotiable Instruments Act, rejecting his defence that the cheque was misused by a third party.
Ratio: The Karnataka High Court held that in cheque dishonour cases under Section 138 of the Negotiable Instruments Act, if the accused’s defence is not credible, the court can infer that a transaction occurred, and the cheque was issued for that transaction. Mere denial of liability is insufficient to rebut the statutory presumption, and the accused must produce cogent evidence. Since the petitioner failed to do so, the conviction was upheld.
Ansal Crown Heights Flat Buyers Association (Regd.) V Ansal Crown Infrabuild P. Ltd. & Ors.
Citation: Ansal Crown Heights Flat Buyers Association (Regd.) V M/S. Ansal Crown Infrabuild Private Limited & Others., 2024 SCC OnLine SC 64, Civil Appeal Nos. 4480 and 4481 of 2023 with 4247 of 2023, Hon’ble Supreme Court of India, decided by Hon’ble Justice Abhay S Oka and Hon’ble Justice Ujjal Bhuyan, dated 17.01.2024.
Facts: Homebuyers filed a complaint with National Consumer Disputes Redressal Commission (NCDRC) over delayed possession of flats, leading to an order directing the developer to complete the project or refund payments. When the developer failed, execution of the NCDRC Order was sought against the company and its directors. However, NCDRC held that the order could not be executed due to moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC), and because the directors were not parties to the original complaint.
Ratio: The Hon’ble Supreme Court ruled that the IBC moratorium applies only to the company, not its directors/officers if they are independently liable. It remitted the case to NCDRC for fresh adjudication on whether the directors/officers could be held accountable for the company’s obligations.
Insolvency and Bankruptcy Board of India (IBBI) V. Satyanarayan Bankatlal Malu and Ors.
Citation: Insolvency and Bankruptcy Board of India (IBBI) V. Satyanarayan Bankatlal Malu and Others, Criminal Appeal No. 2851 of 2023, Hon’ble Supreme Court of India, decided by Hon’ble Justice B.R. Gavai and Hon’ble Justice Sandeep Mehta, dated 29.04.2024.
Facts: A complaint was filed by the Insolvency and Bankruptcy Board of India (IBBI) against the Respondent under Section 236 of the Code of Criminal Procedure (CrPC) for the offences punishable under Sections 73(a) & 235A of the Insolvency and Bankruptcy Code (IBC). The Sessions Judge directed issuance of process against Respondents. The said Order was challenged before the High Court and the same was allowed by holding that the Complaint was filed before the Special Court presided by a Sessions Judge. Being aggrieved, the present Appeal is filed.
Ratio: The Court held that IBBI has the authority to regulate the conduct of insolvency professionals and initiate disciplinary proceedings. Further, as mandated under the Code, only the Special Court will have jurisdiction to try the offences under the Code and not the Sessions Judge. The Court distinguished between the legislation by reference and legislation by incorporation. Even if Section 236(1) is considered to be legislation by reference, the offences punishable under the IBC having imprisonment of 2 years or more will have to be tried by the Special Court. As such, the High Court’s Order was quashed, and the matter was remanded back to the High Court to considering the Petition afresh on merits.
Raj Reddy Kallem V. State of Haryana & Anr.
Citation: Raj Reddy Kallem V. State of Haryana & Another, (2024) 8 SCC 588, Criminal Appeal No. 2210 of 2024, Hon’ble Supreme Court of India, decided by Hon’ble Justice A. S. Bopanna and Hon’ble Justice Sudhanshu Dhulia, dated 08.04.2024.
https://ibclaw.in/raj-reddy-kallem-vs-the-state-of-haryana-and-anr-supreme-court/
Facts: In 2012, the complainant paid ₹1.55 crore to M/s Farmax for a machine that was never supplied. The appellant issued cheques, some of which bounced, leading to offence under Section 138 the Negotiable Instruments Act (NI Act), and a First Information Report (FIR) was registered. Convicted in 2015, he was sentenced to two years of rigorous imprisonment. A Lok Adalat settlement failed due to delayed payment. After multiple extensions, the Supreme Court in 2023 ordered him to pay ₹20 lakh with ₹10 lakh interest, which he complied with. Despite full repayment, the complainant refused to settle.
Ratio: The Supreme Court held that offences under Section 138 of the NI Act are compoundable but require the complainant’s consent, which cannot be compelled by the Courts. Mere repayment does not absolve criminal liability, though compounding can be sought even after conviction. Considering the appellant had fully repaid the amount and spent time in jail, and to prioritize compensatory justice over punishment in case of dishonour of cheque, the Court exercised its powers under Article 142 and quashed the conviction.
M/S. Sujal Pharma V. Karnataka State Medical Supplies Corporation Limited
Citation: Sujal Pharma V. Karnataka State Medical Supplies Corporation Limited., MANU/KA/1318/2024, WP No. 20520 of 2021 (GM-RES), Hon’ble High Court of Karnataka, decided by Hon’ble Justice M. Nagaprasanna, dated 18.04.2024.
Facts: The petitioner, a pharmaceutical distributor, was awarded a contract by the Karnataka State Medical Supplies Corporation Limited during COVID-19 to supply hand sanitizers. After delivery, the Corporation later found the product to be substandard based on a Drugs Control Department report and issued replacement notices. Without prior notice or hearing, the Corporation blacklisted the petitioner’s firm on 29-10-2021, prompting the petitioner to challenge the order in the Karnataka High Court.
Ratio: The Hon’ble High Court of Karnataka held that blacklisting has serious economic and civil consequences and cannot be imposed without following the principles of natural justice, including issuing a prior show-cause notice and affording an opportunity to be heard. Since no such notice was given, the blacklisting order was deemed unsustainable and was quashed. However, the Court clarified that the Corporation could take appropriate action in accordance with the law if necessary.
Kedar Bhausaheb Malhari V. Axis Bank Limited
Citation: Kedar Bhausaheb Malhari V. Axis Bank Limited., MANU/SCOR/55796/2024, Transfer Petitions Crl Nos. 33/2018, Hon’ble Supreme Court of India, decided by Hon’ble Justice C.T. Ravikumar and Hon’ble Justice Aravind Kumar, dated 24.04.2024.
Facts: The case involved the interpretation and implications of the amendment to Section 142A of the Negotiable Instruments Act. The Supreme Court noted the significance of the issue and deemed it necessary to include the Union of India, represented by the Ministry of Finance and the Ministry of Law and Justice, as a party to the proceedings. The Court also requested the Attorney General of India to provide insights on the matter.
Ratio: The Supreme Court recognized that the amendment to Section 142A requires careful judicial consideration. To ensure a comprehensive legal analysis, it directed the inclusion of relevant government authorities and allowed all parties to file written submissions. The case was scheduled for further hearing on 23.07.2024.
Telecommunication Consultants India Ltd V. Shivaa Trading
Citation: Telecommunication Consultants India Ltd V. Shivaa Trading, 2024 SCC OnLine Del 2937, O.M.P. (COMM) 311/2022, Hon’ble High Court of Delhi, decided by Hon’ble Justice Anup Jairam Bhambhani, dated 09.04.2024.
https://www.linkedin.com/feed/update/urn:li:activity:7188125124011659264/
Facts: The petitioner challenged an arbitral award under Section 34 of the Arbitration & Conciliation Act, 1996 (the Act), arising from a dispute over a contract for road construction. The petitioner had appointed the sole arbitrator per the contract’s arbitration clause but later argued that the appointment was void under Section 12(5) the Act, which prohibits arbitrators with certain relationships from being appointed unless expressly waived in writing after the dispute arose. The respondent opposed the challenge, arguing that the petitioner had themselves appointed the arbitrator and participated in the proceedings without objection.
Ratio: The Hon’ble Court, relying on Bharat Broadband Network Ltd. v. United Telecoms Ltd., held that an arbitrator appointed in violation of Section 12(5) is de jure ineligible, rendering the arbitration proceedings and award void ab initio. It emphasized that waiver under Section 12(5) must be express, in writing, and made after the dispute arose, which was absent in this case. Accordingly, the Court set aside the arbitral award, allowing the parties to pursue further legal remedies.
TJSB Sahakari Bank Limited and Ors. V. Ms. Jovita Reema Mathias and Ors.
Citation: TJSB Sahakari Bank Limited and Ors. V. Jovita Reema Mathias and Ors., MANU/NC/1877/2024, M.A. 2987 of 2019 and C.P. (IB) No. 1669/MB/2018, Hon’ble National Company Law Tribunal, Mumbai, decided by Hon’ble Justice V.G. Bisht and Sri. Prabhat Kumar, dated 18.04.2024.
https://ibclaw.in/tjsb-sahakari-bank-ltd-vs-ms-jovita-reema-mathias-and-ors-nclt-mumbai-bench/
Facts: The applicant, TJSB Sahakari Bank, alleged that the Corporate Debtor and its directors engaged in fraudulent activities, including falsification of books and misrepresentation to creditors, to manipulate the Corporate Insolvency Resolution Process (CIRP). The applicant claimed that the resolution professional acted in collusion with the Corporate Debtor’s ex-director and failed to follow due process, leading to wrongful constitution of the Committee of Creditors (CoC) and admission of questionable claims. The applicant sought penalties against the respondents under Sections 65, 71, 72, and 73 of the Insolvency and Bankruptcy Code (IBC), 2016.
Ratio: The National Company Law Tribunal (NCLT), Mumbai, held that there was no wrongdoing by the resolution professional warranting an inquiry by the Insolvency and Bankruptcy Board of India (IBBI). It found that the resolution professional acted within the scope of the IBC and that the CoC was formed based on verified financial records. Since the CIRP had already ended without resolution, followed by liquidation, the Tribunal dismissed the application as infructuous.
Ramesh Shah In consortium with Masitia Capital Services Pvt. Ltd. V. Central Bank of India and Ors.
Citation: Ramesh Shah In consortium with Masitia Capital Services Pvt. Ltd. V. Central Bank of India and Others., I.A. 317/2022, Hon’ble National Company Law Tribunal, Mumbai, decided by Hon’ble Ms. Lakshmi Gurung, Member (Judicial) Hon’ble Sh. Charanjeet Singh Gulati (Technical), dated 08.12.2023.
Facts: The ex-promoter of ETCO Denim Pvt. Ltd. submitted a resolution plan after obtaining Micro, Small and Medium Enterprises (MSME) registration post initiation of Corporate Insolvency Resolution Process (CIRP). The plan was approved by the Committee of Creditors (CoC) with 77.56% votes but challenged by the Central Bank of India, arguing the promoter’s ineligibility under Sections 29A and 240A of the Insolvency and Bankruptcy Code (IBC). The National Company Law Tribunal (NCLT) upheld the challenge and rejected the plan.
Ratio: The National Company Law Appellate Tribunal (NCLAT) ruled that MSME registration obtained before resolution plan submission does not disqualify the promoter. It held that NCLT cannot reassess MSME registration and reaffirmed the CoC’s commercial wisdom. The case was remanded for a fresh order within three months.
