Important Judgments – 2021

February 10, 2022by Chitwandeep Kaur0
Author – Chitwandeep Kaur

JANUARY

Rajeev Suri Vs. Delhi Development Authority, 2021

Rajeev Suri vs. Delhi Development Authority and Ors. (2021), also known as the Central Vista case, conducted a comprehensive judicial assessment of the legality of the Central Vista Project of the Government of India. The judgment was pronounced by a bench constituting Justices A.M. Khanwilkar, Sanjiv Khanna, and Dinesh Maheshwari on 5 January 2021. The Supreme Court ruled that the Central Vista Committee’s (CVC) decision of “no protest” and “endorsement” by the Delhi Urban Art Commission (DUAC) and “earlier endorsement” by the Heritage Conservation Committee (HCC) of the Central Vista Project, for which Prime Minister Narendra Modi laid the foundation stone on December 10, is without flaw.

FEBRUARY

UNITECH Limited vs. Telangana State Industrial Infrastructure Corporation (TSIIC)

“The presence of an arbitration clause within a contract between a state instrumentality and a private party does not act as an absolute bar to availing remedies under Article 226.” 

In the case where it was argued that a remedy for the recovery of moneys arising out a contractual matter cannot be availed of under Article 226 of the Constitution.

The Hon’ble Supreme Court clarified that the recourse to the jurisdiction under Article 226 of the Constitution is not excluded altogether in a contractual matter. A public law remedy is available for enforcing legal rights subject to well-settled parameters.

The Hon’ble Court, however, made clear that though the presence of an arbitration clause does not oust the jurisdiction under Article 226 in all cases, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked.

Naresh Dayal vs. Delhi Gymkhana Club Ltd

“NCLT has no jurisdiction to decide cause of action over which it has no power under Companies Act.” The case dealt with the allotting of a certain “green card holder” to the members of the Delhi Gymkhana Club, wherein permanent members of the club were allotted this card.

As per the AOA of the Company, there was no provision for the allocation of such cards, and therefore, the party approached the Court. The respondents claimed that it was up to the NCLT to decide upon this matter, for it is bestowed with this jurisdiction as per §242 of the Companies Act.

The court held that since the present matter does not pertain to any aspect as provided under §242, i.e., any action of oppression or mismanagement, any prejudicial interests or a petition for winding up therefore, it was held that the NCLT does not have jurisdiction to decide over matter for which it does not have jurisdiction under Companies Act.

MARCH

Gujarat Urja Vikas Nigam Limited vs. Mr Amit Gupta & Ors

“NCLT Has Jurisdiction To Adjudicate Contractual Disputes Which Arise Solely From Or Which Relate To Corporate Debtor’s Insolvency.”

The Supreme Court observed that the National Company Law Tribunal has jurisdiction to adjudicate contractual disputes, which arise solely from or which relate to the insolvency of the Corporate Debtor. However, for adjudication of disputes that arise dehors  the insolvency of the Corporate Debtor, the RP must approach the relevant competent authority, the bench comprising Justices DY Chandrachud and Justice MR Shah observed while upholding the order of the National Company Law Tribunal which stayed the termination by the Gujarat Urja Vikas Nigam Limited of its Power Purchase Agreement with Astonfield Solar (Gujarat) Private Limited.

Kalpraj Dharamshi & Anr vs. Kotak Investment Advisors Ltd & Anr.

“NCLT/NCLAT Can’t Interfere With Commercial Wisdom Of CoC Except Within Limited Scope Under Sections 30 & 31 IBC.”

The Supreme Court has reiterated that the National Company Law Tribunal (NCLT) or the National Company Law Appellate Tribunal (NCLAT) cannot interfere with the ‘commercial wisdom’ of the Committee of Creditors (CoC), except within the limited scope under Sections 30 and 31 of the IBC. Based on this well-settled principle, a 3-judge bench comprising Justices AM Khanwilkar, BR Gavai and Krishna Murari set aside an order of the NCLAT which had annulled the decision of CoC to accept a resolution plan.

“It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the IBC”, the Supreme Court observed referring to precedents such as Committee of Creditors of Essar Steel India Ltd vs. Satish Kumar Gupta and Ors., Maharashtra Seamless Ltd vs. Padmanabhan Venkatesh and Ors., K. Sashidhar vs. Indian Overseas Bank etc.

The Court stated that “it will therefore be clear, that this Court, in unequivocal terms, held, that the appeal is a creature of statute and that the statute has not invested jurisdiction and authority either with NCLT or NCLAT, to review the commercial decision exercised by CoC of approving the resolution plan or rejecting the same”, the judgment authored by Justice BR Gavai stated.

“We are of the considered view, that in view of the paramount importance given to the decision of CoC, which is to be taken on the basis of ‘commercial wisdom’, NCLAT was not correct in law in interfering with the commercial decision taken by CoC by a thumping majority of 84.36%”, the Court observed.

APRIL

Sanjiv Prakash vs. Seema Kukreja and Ors.

The Court observed that the ‘question of novation of contract containing an arbitration clause cannot be considered by the Court in a petition filed under Section 11 of the Arbitration and Conciliation Act.’

The court said that a Section 11 court would refer the matter when contentions relating to non-arbitrability are plainly arguable, or when facts are contested. The court cannot at a preliminary stage, enter into a mini trial or elaborate review of the facts and law which would usurp the jurisdiction of the arbitral tribunal.

M/S Utkal Suppliers v. Maa Kanak Durga Enterprises

A Court cannot second-guess an Authority’s interpretation of its own tender unless it is arbitrary, perverse or mala fide.

The Court noted that the authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If the two interpretations of tender are possible then the interpretation of the author must prevail over the other.

Existence of an arbitration clause does not debar the court from entertaining a writ petition.’

The Supreme Court has stated that the existence of an arbitration clause does not debar the court from entertaining a writ petition in a contractual matter.

The Hon’ble Court has held that the availability of an alternative remedy does not prohibit the Court from entertaining a writ petition in an appropriate case. The High Court may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly (1) where the writ petition seeks enforcement of a fundamental right; (ii) where there is failure of principles of natural justice or (iii) where the impugned orders or proceedings are wholly without jurisdiction or (iv) the vires of an Act is under challenge.

MAY

Lalit Kumar Jain vs. Insolvency and Bankruptcy Board Of India

The Court upheld the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) concerning the liability of the personal guarantors to the corporate debtors. It also held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. The release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process, i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract.

The Ministry of Corporate Affairs through the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 extended application of IBC process to the personal guarantors. Various personal guarantors were proceeded against under the new laws. These personal guarantors approached the Supreme Court to challenge the rules and application of IBC to personal guarantors.

The Chief Election Commissioner of India v. MR Vijayabhaskar 

Freedom of press relating to Court proceedings

The Court held that freedom of speech and expression also extends to reporting the proceedings that happen in courts including oral observations made by judges.

“Article 19(1)(a) covers freedom of press. Freedom of speech and expression covers freedom to cover court proceedings too…Now people are more digital oriented and hence look to internet for information. hence it would do no good to prevent a new medium to report proceedings. constitutional bodies will do better than complain about this,”  the Court said

Rahul Sharma v. National Insurance Company Ltd .

If deceased was self-employed and below the age of 40 years, 40% addition would be made to their income as future prospects.

This judgement reiterated the ratio of the Supreme Court in National Insurance Co. Ltd. v. Pranay Sethi.

JUNE

Matrix Global Pvt. Ltd. v. Ministry of Education, Federal Democratic Republic of Ethiopia

“Prior consent of central government is not required to enforce an arbitral award against a foreign state.”

The petitioner filed an application for enforcement of the arbitral award against a foreign state. The court framed two issues: Firstly, whether it is necessary to obtain the permission of central government u/s 86 of the CPC before the enforcement of the arbitral award against a Foreign State? Secondly, whether a foreign state is entitled to claim sovereign immunity against the enforcement of the arbitral award in cases arising out of the commercial transaction?

The court ruled that the Central Government’s consent was not required for the enforcement of an arbitral judgment against a foreign state under Section 86(3) of the Code. A Foreign State could not claim Sovereign Immunity against the enforcement of an arbitral judgment arising out of a commercial transaction. A commercial contract’s arbitration clause is an implied waiver by the foreign state, preventing it from blocking enforcement action based on the principle of sovereign immunity. The foreign state could not claim that its approval must be obtained repeatedly because the award is the result of arbitration, which the foreign state had agreed to.

M/s IMZ Corporate Pvt. Ltd. v. MSD Telematics Pvt. Ltd.

“Non-payment of stamp duty on a commercial contract does not invalidate an arbitration agreement.”

The petitioner filed a petition under Section 11 of the A&C Act, 1996 for the appointment of a sole arbitrator. The issue before the court was that whether the non-payment of stamp duty on a commercial agreement would invalidate the arbitration agreement or not?

The court held that while deciding on the Section 11 petition, the court only needs to look into the existence of an arbitration agreement. Further, the court observed that mere allegations of fraud will not validate the document and the court will enquire only in cases where the document appears to be fabricated.

JULY

Dena Bank vs. C. Shivakumar Reddy; CA 1650 OF 2020, LL 2021 SC 349

The Supreme court observed that a fresh cause of action can be initiated under section 7 of IBC, if due of corporate debtor to financial debtor remain unpaid.

“Judgment and/or decree for money in favour of the Financial Creditor, passed by the DRT, or any other Tribunal or Court, or the issuance of a Certificate of Recovery in favour of the Financial Creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, within three years from the date of the judgment and/or decree or within three years from the date of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Debtor, under the judgment and/or decree and/or in terms of the Certificate of Recovery, or any part thereof remained unpaid.”

Orator Marketing Pvt. Ltd. vs. Samtex Desinz Pvt. Ltd., LL 2021 SC 333

The Supreme Court observed that a financier who gave interest free loans to finance the commercial operations of a corporate body is a Financial Creditor and capable to start the Corporate Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016.

“There is no discernible s no discernible reason, why a term loan to meet the financial requirements of a Corporate Debtor for its operation, which obviously has the commercial effect of borrowing, should be excluded from the purview of a financial debt”

AUGUST

Pratap Technocrats (P) Ltd. v. Monitoring Committee of Reliance Infratel Ltd

“Jurisdiction of the Adjudicating Authority and the Appellate Authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom.”

“Under the Indian Insolvency regime, it appears that a conscious choice has been made by the legislature to not confer any independent equity-based jurisdiction on the Adjudicating Authority other than the statutory requirements laid down under Section 30 (2) of the IBC.”

Dena Bank v. C. Shivakumar Reddy

There is no bar in law to amendment of pleadings in an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 or to filing of additional documents apart from those initially filed, at any time until a final order either admitting or dismissing the application has been passed”.

The Court also held that an application under Section 7 for imitation of corporate insolvency resolution process against a corporate debtor is not be barred by limitation if there is an acknowledgement of the debt by the corporate debtor before expiry of the limitation period. Such acknowledgment can be by way of statement of accounts, balance sheets, financial statements and offer of one time settlement.

Moreover, a final judgment and/or decree of any court or tribunal or any arbitral award for payment of money, if not satisfied, would fall within the ambit of a financial debt, enabling the creditor to initiate proceedings under Section 7.

SEPTEMBER

Ebix Singapore (P) Ltd. v. Educomp Solutions Ltd. (Committee of Creditors)

Under Insolvency and Bankruptcy Code, 2016, a Resolution Applicant is not entitled to withdraw or modify its Resolution Plan, once it has been submitted to the National Company Law Tribunal (Adjudicating Authority). The Supreme Court held:

“The existing insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC-approved Resolution Plans, at the behest of the successful Resolution Applicant, once the plan has been submitted to the Adjudicating Authority.”

The Supreme Court urged NCLT and NCLAT to be sensitive to the effect of such delays on the insolvency resolution process and be cognizant that adjournments hamper the efficacy of the judicial process. The Court said:

“The NCLT and the NCLAT should endeavor, on a best effort basis, to strictly adhere to the timelines stipulated under the IBC and clear pending resolution plans forthwith. Judicial delay was one of the major reasons for the failure of the insolvency regime that was in effect prior to the IBC. We cannot let the present insolvency regime meet the same fate.”

Union of India v. VKC Footsteps

The division bench of Dr. DY Chandrachud and MR Shah, JJ has upheld the validity of Section 54(3) of the Central Goods and Services Tax Act, 2017 (CGST Act) which provides for refund of unutilised input tax credit (ITC) in certain cases.

Section 54of the CGST Act provides for a refund of tax. Under sub-Section (1) of Section 54, a person claiming a refund of “tax and interest, if any, paid on such tax or any other amount paid” has to make an application within two years of the relevant date.

Upholding the constitutional validity of Section 54(3), the Court held that

“A claim to refund is governed by statute. There is no constitutional entitlement to seek a refund.”

The Court also found it impossible to accept the premise that the guiding principles which impart a measure of flexibility to the legislature in designing appropriate classifications for the purpose of a fiscal regime should be confined only to the revenue harvesting measures of a statute.

OCTOBER

Manohar Lal Sharma v. Union of India

“In matters pertaining to national security, the scope of judicial review is limited. However, this does not mean that the State gets a free pass every time the spectre of “national security” is raised. National security cannot be the bugbear that the judiciary shies away from, by virtue of its mere mentioning. Although this Court should be circumspect in encroaching upon the domain of national security, no omnibus prohibition can be called for against judicial review.”

The 3-judge bench of NV Ramana, CJ and Surya Kant and Hima Kohli, JJ has appointed an Expert Committee to look into the truth or falsity of the allegations in the Pegasus Spyware case, “taking into account the public importance and the alleged scope and nature of the large-scale violation of the fundamental rights of the citizens of the country.”

Geo Varghese v. State of Rajasthan

In a case where a 14-year-old had committed suicide after his PTI Teacher had allegedly “harassed and insulted him in the presence of everyone”, the bench of SA Nazeer and Krishna Murari*, JJ has held that the suicide note suggested that it was a rhetoric document, penned down by an immature mind and that it was the hypersensitive temperament of the deceased which led him to take such an extraordinary step. The Court said that the action of the teacher, otherwise would not ordinarily induce a similarly circumstanced student to commit suicide.

The Court explained that,

“A simple act of reprimand of a student for his behaviour or indiscipline by a teacher, who is under moral obligations to inculcate the good qualities of a human being in a student would definitely not amount to instigation or intentionally aid to the commission of a suicide by a student.”

NOVEMBER

Narinder Singh v. Union of India

Idioms carping ‘delay’ and ‘hurry’ in adjudication highlight the importance of both speedy disposal and reasonable opportunity, as both are essential for an even-handed and correct decision. Neither should be sacrificed nor inflated, as to prolong or trample a just and fair adjudication. A pragmatic and common-sense approach would invariably check any discord between the desire for expeditious disposal and adequacy of opportunity to establish one’s case.

Section 19 of the Act states that while the arbitral tribunal is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872, in the absence of any agreement between the parties as to the procedure to be followed, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate. Section 18 mandates that both parties shall be treated with equality and each party shall be given a full opportunity to present his case. Reference can also be made to Sections 24 and 25 and newly enacted Section 29A of the Act, which though not applicable to this case, emphasise on quick and prompt adjudications.

Veena Pandey v. Union of India

Pension as is well known, is the deferred portion of the compensation1 for rendering long years of service. It is a hard-earned benefit accruing to an employee in the nature of property.

While considering the appellant’s case, the High Court did not however consider her entitlement on merit, but had dismissed both the Writ Petition and the LPA, citing want of territorial jurisdiction. The employment of the appellant’s husband with the respondent employer is however not in dispute. Nevertheless, for over a decade, the widow of the employee is forced to litigate to secure the pension benefits.

DECEMBER

Ravinder Kumar Dhariwal & Anr. Vs. Union of India & Ors.

The Supreme Court observed that the initiation of disciplinary proceedings against persons with mental disabilities is a facet of indirect discrimination. The Court has ruled that person with a disability is entitled to protection under the Rights of Persons with Disabilities Act 2016 (RPwD Act) as long as the disability was one of the factors for the discriminatory act.

Justice Dr. D. Y. Chandrachud, Justice Surya Kant and Justice Vikram Nath held the appellant to be entitled to the protection of Section 20(4) of the RPwD Act in the event he is found unsuitable for his current employment duty.

The appellant has been undergoing treatment for mental health disorders for a long time, since 2009. He has been diagnosed with 40 to 70 percent of permanent disability by a government hospital. While all CRPF personnel may be subject to disciplinary proceedings on charges of misconduct, the appellant is more vulnerable to engage in behavior that can be classified as misconduct because of his mental disability. He is at a disproportionate disadvantage of being subjected to such proceedings in comparison to his able-bodied counterparts”, observed the Court.

The Larger Bench pointed out that in the present case, the appellant is only required to prove that disability was one of the factors that led to the institution of disciplinary proceedings against him on the charge of misconduct.

The Apex Court therefore concluded that the duty of providing reasonable accommodation to persons with disabilities is sacrosanct, and all possible alternatives must be considered before ordering dismissal from service.

State Of UP v. Aishwarya Pandey

The Supreme Court has affirmed that there cannot be two different pay-scales for the employee appointed on compassionate ground and the employee appointed on regular basis, and that the moment a person is appointed on a particular post, that person is entitled to the pay-scale of the very post, even if the appointment is on compassionate ground. At this stage, it is required to be noted that even in the case of similarly situated employees, the similar benefit was granted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chitwandeep Kaur

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