Read Order:  PRADEEP KUMAR v. STATE OF HARYANA

LE Correspondent

New Delhi, January 8, 2024: The Supreme Court has acquitted a murder convict as there was “a yawning gap” between the charge against the appellant and the evidence that the prosecution has adduced.

It was the case of the prosecution that while the Assistant Sub Inspector (PW-21) was with other police officials on duty, the complainant-Sunil Kumar Bhura (PW-20) met him and got his statement (EX.PY) recorded. The statement had said that he is a resident of Nehru Garden Colony, Kaithal and the deceased-Shamsher Singh is related to him, being son of his paternal aunt. The previous day, when PW-20 was in the office of the deceased along with one Balwant Singh (PW-18), the deceased received a few calls. After conversing on the mobile phone, the deceased informed them that he had to go to Gole Market and left on his motorcycle. The complainant and Balwant Singh also left the shop of the deceased. In the morning, the deceased’s wife informed PW-20 that the deceased had not returned the previous night. On receiving the said information, PW-20 and PW-18 reached the house of the deceased and thereafter went on a search for the deceased.

When PW-20 got the information that a dead body was found lying, he along with PW-18 and one Mr. Naresh (PW-13) reached the spot and saw that the deceased lying there, with his throat having knotted with some cloth, and the right eye being badly injured. They also noticed some injuries on the head of the deceased. The motorcycle of the deceased was parked by the side. While Naresh and PW-18 remained at the spot, PW-20 had come to inform the police about the incident and his statement was thus recorded and read over to him by the investigating officer (PW-21) with his endorsement. After the FIR was registered, PW-24 took over the investigation and recorded the statements of witnesses.

The sole appellant herein was tried along with another accused for the murder of one Samsher Singh and convicted under Section 302 read with Section 34 of the Indian Penal Code, 1860 for murder and sentenced to rigorous imprisonment for life by the Trial Court (The Additional Sessions Judge). In appeal, the High Court of Punjab & Haryana, by the impugned judgment, dismissed the appeal and confirmed the conviction and sentence. Thus, the appellant approached the Top Court.

The Division Bench, comprising of Justice B.R. Gavai and Justice Pamidighantam Sri Narasimha, rejected the evidence of PW-10, an Ex. Sarpanch of the village Geon, and also held that this witness was not trustworthy. The Bench also opined that the testimony of the chance witness was completely unreliable as there were too many coincidences in his version and his story was improbable in the context of the facts and circumstances of the case. The Bench also dismissed the version of another chance witness, PW-12, whose testimony was relied on by the prosecution to prove the last seen theory. These were the three witnesses whose versions were relied upon by the lower Courts.

Apart from the improbable and contradictory versions of the three witnesses, the appellants had brought to the Court’s notice that the weapons recovered by the IO and the ones seen by the witnesses were only sticks. However, the deceased had suffered an incise wound which according to the doctor, PW-14 who conducted the post-mortem, was caused by a sharp-edged weapon. The prosecution had not recovered any sharp-edged weapon and there was no mention about such weapon at all.

The FSL report stated that the blood on the sticks, blood-stained pants and the blood group of the deceased was the same. The Bench opined that the appellant’s counsel had rightly contended that this was not an indication of the guilt.

Admittedly, there were no eyewitnesses, and the entire case of the prosecution depended upon circumstantial evidence. Reference was made to Pritinder Singh v. State of Punjab, [LQ/SC/2023/733] and Sharad Birdhichand Sarda v. State of Maharashtra [LQ/SC/1984/171] wherein it has been held that circumstances should be of a conclusive nature and tendency. They should exclude every possible hypothesis except the one sought to be proved, and there must be a chain of evidence so complete so as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused and must show that in all human probability the act must have been done by the accused.

“There is a yawning gap between the charge against the Appellant and the evidence that the prosecution has adduced. The circumstances do not establish the guilt of the Appellant at all. While the principle applicable to circumstantial evidence requires that the facts must be consistent with the hypothesis of the guilt of the accused, in the present case the evidence adduced gives rise to doubts, improbabilities and inconsistencies”, the Bench held.

Thus, allowing the appeal, the Bench acquitted the Appellant of all charges.

Read Order: RELIANCE LIFE INSURANCE COMPANY LTD. & ANR v. JAYA WADHWANI & ANR

LE Correspondent

New Delhi, January 8, 2023: The Supreme Court has set aside the judgments of the District Consumer Disputes Redressal Forum, State Consumer Disputes Redressal Commission and National Commission whereby it was held that the date of issuance of the initial deposit receipt of premium was the date of commencement of the Policy.

The sole question, before the Division Bench of Justice Vikram Nath and Justice Rajesh Bindal, was as to what would be the date from which the policy becomes effective; whether it would be the date on which the policy is issued or the date of the commencement mentioned in the policy or it would be the date of the issuance of the deposit receipt or cover note.

The District Forum, State Commission and the National Commission had proceeded on the basis that the date of issuance of the initial deposit receipt of premium was the date of commencement of the Policy and had accordingly allowed the complaint filed by the respondent.

From the documents on record in the case of Usha Soni, the Bench found that that the first cheque was issued on 26.09.2012. The policy issuance and commencement date in the Policy is mentioned as 28.09.2012. Further, the next premium due was on 28.09.2013. Grace period was 30 days under Clause 1(iv) of the terms and conditions. Clause 5 mentioned that the policy would lapse and Clause 6 provided for reinstatement. However, since the renewal amount was not paid within the time allowed, the policy stood lapsed and subsequently, upon payment of the premium against the lapsed policy on 25.02.2014, the policy was reinstated from the said date. The life assured committed suicide on 03.06.2014, which was well within the period of 12 months.

After a perusal of the orders passed by the District Forum, the State Commission, and the National Commission, the Bench found that although clause 9 of the terms and conditions had been referred to but the aspect of reinstatement of a lapsed Policy had not been considered. They had wrongly taken the date of issue of policy only as the relevant date to count 12 months, i.e., from 28.09.2012.

“Once it is mentioned in the Policy that the 12 months period is to commence from the date of the issuance of the policy or the date of any reinstatement of the policy, the reinstatement aspect ought to have been considered. The date of reinstatement of the policy is clearly stated to be 25.02.2014 and that is also the date of commencement of policy, both the dates being the same. Thus, the date of incidence of suicide being 03.06.2014, it was well within 12 months”, the Bench held.

Coming to the case of Jaya Wadhwani, the proposal form was submitted on 14.07.2012 with respect to the cheque dated 13.07.2012 of the premium amount wherein also it was mentioned that the receipt was issued subject to the clearance of the cheque and further that the insurance protection shall only be provided effective from the date of acceptance of the risk, which happened on 16.07.2012, when the policy was issued and the date of commencement was notified to be the same date.

“14th July 2012, therefore, cannot be taken to be the date of issuance of policy. It is only the date of issue of receipt of the initial premium. The date of issue of policy being 16.07.2012 is actually the date from which the policy commences and becomes effective”, the Bench opined.

In the present case, period of 12 months from 16.07.2012 would complete on 15.07.2013. It would be the last day of 12 months as from the next day, i.e., 16.07.2013 the next month will start. Unfortunately, the incidence of suicide was on 15.07.2013, the last day of 12 months, the Top Court noticed.

The Bench said, “…the date of proposal cannot be treated to be the date of policy until and unless on the date of proposal, initial deposit as also the issuance of policy happens on the same date where, for example, the premium is paid in cash then, immediately, the policy could be issued. Merely, tendering a cheque may not be enough as till such time the cheque is encashed, the contract would not become effective. The drawer of the cheque may, at any time, after issuing, stop its payment or there may not be enough funds in the account of which the cheque is issued and there could be many other reasons for which the cheque could be returned without being encashed.”

The Bench also referred to Life Insurance Corporation of India and Another vs. Dharam Vir Anand [LQ/SC/1998/1016]  & Life Insurance Corpn. of India vs. Mani Ram [LQ/SC/2005/766] in order to reiterate that the date of issue of policy would be the relevant date even if there was backdating.

“In the present appeals, we do not find any such issue of back dating but the date of issuance of the policy would be the relevant date for all the purposes and not the date of proposal or the date of issuance of the receipt. In view of the above, the stand taken by the appellant is approved”, the Bench held while allowing the appeal.

Read Order: The State of Uttar Pradesh & Ors v. Association of Retired Supreme Court and High Court Judges at Allahabad & Ors

Tulip Kanth

New Delhi, January 8, 2023: While setting aside the Orders of the Allahabad High Court whereby criminal contempt proceedings were initiated against various officials of the Government of Uttar Pradesh, the Supreme Court has issued a Standard Operating Procedure on Personal Appearance of Government Officials in Court Proceedings.

The 3-Judge Bench of Chief Justice D.Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra said, “Constantly summoning officials of the government instead of relying on the law officers representing the government, runs contrary to the scheme envisaged by the Constitution.”

The Apex Court was considering the appeals which arose from two orders of the Division Bench of the High Court of Judicature at Allahabad dated April 4, 2023 and April 19, 2023 (Impugned Orders). The Impugned Orders had given rise to significant questions about the separation of powers, the exercise of criminal contempt jurisdiction, and the practice of frequently summoning government officials to court.

By its order dated April 4, 2023 (First Impugned Order), the High Court directed the Government of Uttar Pradesh to notify rules proposed by the Chief Justice of the High Court pertaining to Domestic Help to Former Chief Justices and Former Judges of the Allahabad High Court by the next date of hearing. The High Court further directed certain officials of the Government of Uttar Pradesh to be present before the court on the next date if the order was not complied with.

The State of Uttar Pradesh moved an application before the High Court to seek a recall of this Order highlighting legal obstacles in complying with the directions of the High Court. By its order dated April 19, 2023 (Second Impugned Order), the High Court held that the recall application was contemptuous and initiated criminal contempt proceedings against various officials of the Government of Uttar Pradesh. The officials present in the court, including the Secretary (Finance) and Special Secretary (Finance) were taken into custody and bailable warrants were issued against the Chief Secretary and the Additional Chief Secretary (Finance).

At the outset, referring to Article 229(2) of the Constitution which pertains only to the service conditions of officers and servants of the High Courts and does not include Judges of the High Court (both sitting and retired judges), the Bench held, “The Chief Justice does not have the power, under Article 229, to make rules pertaining to the post-retiral benefits payable to former Chief Justices and judges of the High Court. Therefore, the Rules proposed by the Chief Justice, in the present case, do not fall within the competence of the Chief Justice under Article 229. The reliance placed on the provision in the preamble to the Rules is misplaced.”

It was also observed that the High Court’s conduct on the judicial side in the Impugned Orders was also erroneous. “Therefore, the High Court acted beyond its jurisdiction under Article 226 by frequently summoning officers to expedite the consideration of the Rules and issuing directions to notify the Rules by a fixed date, under the threat of criminal contempt”, the Bench stated.

In the second Impugned Order, the High Court held that the actions of the officials of the Government of Uttar Pradesh constituted criminal contempt as there was no valid reason to not comply with the earlier Order.

According to the Bench, even if the High Court’s assessment was assumed to be correct, non-compliance with the First Impugned Order could at most, constitute civil contempt. The High Court failed to give any reasoning for how the purported non-compliance with the First Impugned Order was of the nature to meet the standard of criminal contempt. The High Court acted in haste by invoking criminal contempt against the officials of the Government of Uttar Pradesh and directing for them to be taken into custody.

“In our considered opinion, however, even the standard for civil contempt was not met in the facts of the present case”, it said while also noticing that the power of the High Courts to initiate contempt proceedings cannot be used to obstruct parties or their counsel from availing legal remedies.

In the present case, the State of Uttar Pradesh was availing its legitimate remedy of filing a recall application and the same was filed in a bona fide manner. Not only had the Finance Department raised its concerns regarding the competence of the Chief Justice before the High Court but its previous conduct, including file notings of the department and letters to the Central Government, indicated that this objection had been raised by them in the past. The legal position taken by the Government in the recall application was evidently based on their desire to avail their legal remedy and not to willfully disobey the First Impugned Order.

The Bench was of the view that the actions of the government of Uttar Pradesh did not constitute even civil contempt let alone criminal contempt. The circumstances most definitely did not warrant the High Court acting in haste, by directing that the officials present before the court be taken into custody. As per the Bench, the invocation of criminal contempt and taking the government officials into custody was not warranted.

The Top Court also highlighted the fact that the appearance of government officials before courts must not be reduced to a routine measure in cases where the government is a party and can only be resorted to in limited circumstances. The use of the power to summon the presence of government officials must not be used as a tool to pressurize the government, particularly, under the threat of contempt.

Thus, setting aside the impugned orders, the Bench framed the SOP on Personal Appearance of Government Officials in Court Proceedings. The same is set out below:

This Standard Operating Procedure is applicable to all court proceedings involving the government in cases before the Supreme Court, High Courts and all other courts acting under their respective appellate and/or original jurisdiction or proceedings related to contempt of court.

1. Personal presence pending adjudication of a dispute

1.1 Based on the nature of the evidence taken on record, proceedings may broadly be classified into three categories:

a. Evidence-based Adjudication: These proceedings involve evidence such as documents or oral statements. In these proceedings, a government official may be required to be physically present for testimony or to present relevant documents. Rules of procedure, such as the Code of Civil Procedure, 1908, or Criminal Procedure Code 1973, govern these proceedings.

b. Summary Proceedings: These proceedings, often called summary proceedings, rely on affidavits, documents, or reports. They are typically governed by the Rules of the Court set by the High Court and principles of Natural Justice.

c. Non-adversarial Proceedings: While hearing non- adversarial proceedings, the court may require the presence of government officials to understand a complex policy or technical matter that the law officers of the government may not be able to address.

1.2 Other than in cases falling under para 1.1(a) above, if the issues can be addressed through affidavits and other documents, physical presence may not be necessary and should not be directed as a routine measure.

1.3 The presence of a government official may be directed, inter alia, in cases where the court is prima facie satisfied that specific information is not being provided or is intentionally withheld, or if the correct position is being suppressed or misrepresented.

1.4 The court should not direct the presence of an official solely because the officials stance in the affidavit differs from the courts view. In such cases, if the matter can be resolved based on existing records, it should be decided on merits accordingly.

2. Procedure prior to directing personal presence

2.1 In exceptional cases wherein the in-person appearance of a government official is called for by the court, the court should allow as a first option, the officer to appear before it through video conferencing.

2.2 The Invitation Link for VC appearance and viewing, as the case may be, must be sent by the Registry of the court to the given mobile no(s)/e-mail id(s) by SMS/email/WhatsApp of the concerned official at least one day before the scheduled hearing

2.3 When the personal presence of an official is directed, reasons should be recorded as to why such presence is required.

2.4 Due notice for in-person appearance, giving sufficient time for such appearance, must be served in advance to the official. This would enable the official to come prepared and render due assistance to the court for proper adjudication of the matter for which they have been summoned.

3. Procedure during the personal presence of government officials: In instances where the court directs the personal presence of an official or a party, the following procedures are recommended:

3.1 Scheduled Time Slot: The court should, to the extent possible, designate a specific time slot for addressing matters where the personal presence of an official or a party is mandated.

3.2 The conduct of officials: Government officials participating in the proceedings need not stand throughout the hearing. Standing should be required only when the official is responding to or making statements in court.

3.3 During the course of proceedings, oral remarks with the potential to humiliate the official should be avoided.

3.4 The court must refrain from making comments on the physical appearance, educational background, or social standing of the official appearing before it.

3.5 Courts must cultivate an environment of respect and professionalism. Comments on the dress of the official appearing before the court should be avoided unless there is a violation of the specified dress code applicable to their office.

4. Time Period for compliance with judicial orders by the Government

4.1 Ensuring compliance with judicial orders involving intricate policy matters necessitates navigating various levels of decision- making by the Government. The court must consider these complexities before establishing specific timelines for compliance with its orders. The court should acknowledge and accommodate a reasonable timeframe, as per the specifics of the case.

4.2 If an order has already been passed, and the government seeks a revision of the specified timeframe, the court may entertain such requests and permit a revised, reasonable timeframe for the compliance of judicial orders, allowing for a hearing to consider modifications.

5. Personal presence for enforcement/contempt of court proceedings

5.1 The court should exercise caution and restraint when initiating contempt proceedings, ensuring a judicious and fair process.

5.2 Preliminary Determination of Contempt: In a proceeding instituted for contempt by wilful disobedience of its order, the court should ordinarily issue a notice to the alleged contemnor, seeking an explanation for their actions, instead of immediately directing personal presence.

5.3 Notice and Subsequent Actions: Following the issuance of the notice, the court should carefully consider the response from the alleged contemnor. Based on their response or absence thereof, it should decide on the appropriate course of action. Depending on the severity of the allegation, the court may direct the personal presence of the contemnor.

5.4 Procedure when personal presence is directed: In cases requiring the physical presence of a government official, it should provide advance notice for an in-person appearance, allowing ample time for preparation. However, the court should allow the officer as a first option, to appear before it through video conferencing.

5.5 Addressing Non-Compliance: The court should evaluate instances of non-compliance, taking into account procedural delays or technical reasons. If the original order lacks a specified compliance timeframe, it should consider granting an appropriate extension to facilitate compliance.

5.6 When the order specifies a compliance deadline and difficulties arise, the court should permit the contemnor to submit an application for an extension or stay before the issuing court or the relevant appellate/higher court.

Read Order: DARSHAN SINGH v. STATE OF PUNJAB

Tulip Kanth

New Delhi, January 5, 2024: The Supreme Court has set aside the judgment of conviction against a husband accused of murdering his wife after considering a strong hypothesis that the deceased had committed suicide. According to the Top Court, this fact was sufficient to create a doubt in favour of the accused.

The factual background of the case was that the deceased, Amrik Kaur was married to Darshan Singh, the appellant, some time in 1988. The marriage was arranged through Melo Kaur (PW-3), the cousin sister of the deceased. The prosecution alleged that their marital relationship was strained owing largely to the fact that Darshan Singh had developed an illicit partnership with Rani Kaur (A2).

Several relatives had prevailed on the appellant to put an end to his relationship with Rani Kaur, but to no avail. The illicit relationship between Darshan Singh and Rani Kaur was said to have lasted for at least three years before the fateful day. It was the case of the prosecution that on the intervening night of 18.05.1999 and 19.05.1999, Darshan Singh and Rani Kaur, with the motive of eliminating the deceased, administered poison and intentionally caused the death of Amrik Kaur.

On these allegations, Darshan Singh and Rani Kaur were prosecuted for charges under Section 302 r/w Section 34 IPC. The Trial Court convicted both the accused persons for the offence under Section 302 r/w Section 34 and sentenced them to undergo imprisonment for life.

The 3-Judge Bench of Justice B.R. Gavai, Justice Pamidighantam Sri Narasimha & Justice Aravind Kumar was considering an appeal by special leave arising out of a judgment by the High Court of Punjab & Haryana upholding the order of conviction and sentence, as against Darshan Singh (the appellant) and allowing the appeal of Rani Kaur (Accused No. 2), thereby acquitting her of all charges. The State of Punjab had not challenged the acquittal of Rani Kaur by filing any special leave petition.

Noting the fact that there was no eye-witness to the incident and the case of the prosecution was based on on circumstantial evidence, the Bench said, “the normal approach in a case based on circumstantial evidence is that the circumstances from which an inference of guilt is sought to be drawn must be cogently and firmly established; that those circumstances should be of a definite tendency unerringly pointing towards the guilt of the accused; that the circumstances taken cumulatively should form a chain so complete that there is no escape from the conclusion, that within all human probability, the crime was committed by the accused and they should be incapable of explanation on any hypothesis other than that of the guilt of the accused and inconsistent with his innocence.” Reference was made to Sharad Birdhichand Sarda v. State of Maharashtra [LQ/SC/1984/171].

In the present matter, the Trial Court found both the accused guilty but the High Court had confirmed the order of conviction only against the appellant and extended benefit of doubt to Rani Kaur. The appellant having failed to give a proper and believable explanation was, in fact, used as an additional link in the chain of circumstances.

In this case, the presence was sought to be proved by the prosecution on the basis of the testimony of PW-3, PW-4, PW-5 and the statements of the accused at the 313 stage. The Court opined that the presence of the appellant and Rani Kaur in the appellants house in the intervening night of 18.05.99 and 19.05.99, hadnot been firmly and cogently established. There were several omissions that have been brought out in the cross examination of PW-3 and PW-4, which seriously dented the credibility of their testimony.

“If the PWs had failed to mention in their statements u/s 161 CrPC about the involvement of an accused, their subsequent statement before court during trial regarding involvement of that particular accused cannot be relied upon. Prosecution cannot seek to prove a fact during trial through a witness which such witness had not stated to police during investigation. The evidence of that witness regarding the said improved fact is of no significance”, the Bench said.

Taking note of the fact that PW-3 claimed to be an illiterate witness, the Bench opined, “We are cognizant that the appreciation of evidence led by such a witness has to be treated differently from other kinds of witnesses. It cannot be subjected to a hyper-technical inquiry and much emphasis ought not to be given to imprecise details that may have been brought out in the evidence. This Court has held that the evidence of a rustic/illiterate witness must not be disregarded if there were to be certain minor contradictions or inconsistencies in the deposition.”Reference was made to State of U.P. Vs. Chhoteylal[LQ/SC/2011/95] ; Dimple Gupta (minor) Vs. Rajiv Gupta, [LQ/SC/2007/1296].However, the Bench held that the testimony of PW-3 suffered not merely from technical imperfections, there were glaring omissions and improvements that have been brought out in the cross-examination, which cannot be attributed to the illiteracy of the individual deposition.

The Bench also refused to rely solely on the testimony of the chance witness to prove that the appellant was escaping along with Rani Kaur after having murdered his wife.

The appellant had set up a defence that the deceased had committed suicide. This, according to the Bench, had raised a doubt as regards his defence that the deceased had committed suicide. According to the Bench, there appeared to be no dispute as to the fact that the death was caused by poisoning. The doctor’s testimony on the basis of the chemical examiner’s report that the cause of death was linked to aluminium phosphide poisoning remained unchallenged. In fact, in his 313 statement, even the appellant stated that the deceased consumed poison (aluminum phosphide) and committed suicide.

“The main principle to be satisfied in a case of conviction based on circumstantial evidence is that the proved circumstances must be complete and incapable of explanation of any other hypothesis than that of the guilt of the accused but should be inconsistent with his innocence- in other words, the circumstances should exclude every possible hypothesis except the one to be proved”, the Bench said.

In this case, the Bench held that it couldn’t be said that the proved circumstances, even if presence was proved, taken with other circumstances would lead to an unfailing conclusion that the appellant and Rani Kaur were guilty of murdering his wife. There was alive a strong hypothesis that the deceased had committed suicide, which explanation was led by the appellant in his statement under Section 313 CrPC, and it was sufficient to create a doubt in our minds.

“It is trite law that the statement recorded u/s. 313 CrPC cannot form the sole basis of conviction. Therefore, the presence of the appellant cannot be found solely based on his statement, notwithstanding the lack of independent evidence led by the prosecution”, the Bench further noted.It was also held that the State cannot on the one hand accept the verdict of the Court that the presence of Rani Kaur along with the appellant is doubtful and at the same time, maintain its case that the two of them were jointly present, committed the offence together and escaped together.

Referring to Bhimsingh Vs. State of Uttarakhand, the Bench reaffirmed that the  conviction is to be based on circumstantial evidence solely, then there should not be any snap in the chain of circumstances. If there is a snap in the chain, the accused is entitled to benefit of doubt. Therefore, allowing the appeal, the Bench set aside the findings of conviction.

Read Order: S.V. SAMUDRAM v. STATEOF KARNATAKA & ANR

Tulip Kanth

New Delhi, January 5, 2023 :In the absence of compliance with the well laid out parameters and contours of both Section 34 and Section 37 of the Arbitration & Conciliation Act, the Supreme Court has set aside a Karnataka High Court order while restoring the Arbitrator’s award.

Facts of the case suggested that the Claimant-Appellant, S.V. Samudram, a registered Class II Civil Engineering Contractor, had secured a contract from the Karnataka State Public Works Department to construct the office and residence of the Chief Conservator of Forests at Sirsi for an amount of Rs 14.86 lakh.The said contract was entered into between the parties on 29^th January, 1990 with the stipulation that the possession of the construction site would be handed over to the Claimant-Appellant on 8^th March, 1990 and the work allotted was to be completed on or before 6^th May 1992 i.e., 18 months from the date of the agreement excluding the monsoon season.

The work as allotted could not be completed by the Claimant-Appellant, for which, he held the authorities of the State responsible as they allegedly did not clear his bills, repeatedly at every stage and also due to delays caused by change of site and in delivery of material for such construction.For settlement and adjudication of disputes, the parties to the contract resorted to the arbitral mechanism and resultantly, in Arbitration Petition, Mr. S.K Angadi, Chief Engineer (Retd.) stood appointed as the Arbitrator.

The appellants approached the Top Court challenging a judgment of the High Court of Karnataka (Dharwad Bench) under Section 37(1) of the Arbitration and Conciliation Act, 1996.

The issue before the Division Bench of Justice Abhay S. Oka and Justice Sanjay Karol was whether the High Court was justified in confirming the order under Section 34 of the Arbitration & Conciliation Act, 1996 passed by the Senior Civil Judgewhereby the award passed by the Arbitrator was modified and the amount awarded was reduced.

The Bench noted that the position as to whether an arbitral award can be modified in the proceedings initiated under Sections 34/37 of the A&C Act is no longer res integra. Reference was made to National Highways Authority of India v. M. Hakeen and Another[LQ/SC/2021/2866] wherein it was categorically held that any court under Section 34 would have no jurisdiction to modify the arbitral award, which at best, given the same to be in conflict with the grounds specified under Section 34 would be wholly unsustainable in law. The Court observed that any attempt to modify an award under Section 34 would amount to crossing the Lakshman Rekha.

Furthermore, referring to Dyna Technologies Private Limited v. Crompton Greaves Limited [LQ/SC/2019/1917]; Konkan Railway Corpn. Ltd. v. Chenab Bridge Project [LQ/SC/2023/868];  Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited [LQ/SC/2021/3001] to reiterate certain principles such as award passed by a technical expert is not meant to be scrutinised in the same manner as is the one prepared by a legally trained mind. It was observed therein that if the view taken by the Arbitrator is a plausible view, no interference on the specified grounds is warranted.

The Bench took note of the fact that it was dealing with an award passed on 18^th February, 2003, prior to the amendment brought in Section 34 by virtue of the Arbitration and Conciliation (Amendment) Act, 2015. “…prior to the Amending Act, it was open for the Court to examine the award as to whether it was in conflict with, (a) public policy of India; (b) induced or affected by fraud; (c) corruption; and (d) any violation of the provisions of Section 75 and 81 of the A&C Act”, it said.

In the instant case, the only provision under which the award could have been assailed was for it to have been in conflict with the public policy of India. This concept, the Bench noted has been elaborately considered by this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India [LQ/SC/2019/858]; Associate Builders v. DDA [LQ/SC/2014/1247]. It had been observed in these cases that insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law.

The Bench was of the opinion that the view taken by the Arbitrator, in the present matter, was a plausible view and could not have been substituted for its own by the Court.The reasons assigned by the Court under Section 34 of the A &C Act, were totally extraneous to the controversy, to the lis between the parties and not borne out from the record.

It was also observed that in awarding an amount of 25% of the tender amount in favour of the Claimant-Appellant, the Court had ipso facto accepted that the Claimant-Appellant had not breached the terms of the contract. In fact, the Court appeared to have accepted the Claimant’s contention of delay in handing over the site drawings and supply of materials. The Court while noticing the change in the drawings, resorted to, a misadventure by observing that the changes in the drawings were only minor in the dimension of beam which as we find the Court have contradicted itself by recording the same to have been noticed as essential in the execution of the contract.

“The Court, in our considered view had no business to state that the Claimant is claiming the amount is from the pocket of the concerned engineer or his property”, the Bench said while further commenting, “For it is no business of the Court to consider the burden on the exchequer. All that is required by the Court is to see as to whether the contracting parties have agreed to bind themselves to the terms with the only supervisory jurisdiction of the Court to consider breach thereof, in the light of the grounds specified under Section 34.”

The Bench made it very clear that the court could have at best set aside the award and could not modify the same. It was observed that the question of idleness of the labour did not arise if there was another building to be constructed, and therefore, such claim cannot be paid. This, as per the Top Court, was a clear instance of the court supplanting its view in place of the Arbitrator, which is not a permissible exercise, and is completely de-hors to the jurisdiction under Section 34.
 

In the considered opinion of the Bench, the court while confirming the modification of the award committed the very same mistake which the Court under Section 34 of the A&C Act, made.

The Court under Section 37 had only three options of confirming the award of the Arbitrator; setting aside the award as modified under Section 34 and rejecting the application(s) under Section 34 and 37. Referring to J.G Engineers (P) Ltd. v. UOI [LQ/SC/2011/640]wherein it has been held that the award passed by the Arbitrator is patently illegal, unreasonable, contrary to public policy, the Bench opined that therewas no reason forthcoming as to how the holding of the Arbitrator flies in the face of public policy.

Thus, allowing the appeal, the Bench also awarded interest at the rate of 9 % p.a. from the date of award pendente lite and future, till date of payment.

Read Order: Public Interest Committee for Scheduling Specific Areas and Anr v. Union of India & Ors

LE Correspondent

New Delhi, January 5, 2023: While considering a plea seeking a direction for the grant of proportional representation for Scheduled Tribes in the House of the People as well as the Legislative Assemblies of West Bengal and Sikkim, the Supreme Court has observed that it is for the Union Government to take recourse to powers under the Delimitation Act, 2002 for the purpose of ensuring that the provisions of Articles 330 and 332 of the Constitution are duly implemented.

The petition, before the 3-Judge Bench of Chief Justice D.Y.Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra, sought a direction for upholding the constitutional rights of the Limboo-Tamang Scheduled Tribe to reservation of seats in the Sikkim Legislative Assembly and also directions to amend/strike down the Notification of the Delimitation Commission dated September 4, 2006 and the Delimitation of Parliamentary and Assembly Constituencies Order 2008 to the extent that they do not provide for reservations for members of the Limboo-Tamang Scheduled Tribe.

It additionally sought directions to the effect that Section 7(1A) of the Representation of People’s Act (RP Act) is ultra vires the Constitution for the same reason. The petitioner had put up a request to the Delimitation Commission as well as the Election Commission to effectuate the mandate of Article 332 of the Constitution, in respect of Limboo Tamang Scheduled Tribe, by undertaking necessary changes to the 2006 Notification and the 2008 Order.

It was the case of the petitioners that the 2006 Delimitation Notification was, to the extent that it did not accommodate the newly inducted Limboo Tamang Tribes, not corrected by the Election Commission, in the exercise of its powers under Section 11 of the Delimitation Act. Thus, according to the petitioners, the 2008 Order published by the Election Commission under the Representation of People Act 1950, which was a consolidation of the Orders issued by the Delimitation Commission, was defective to the extent that it did not account for the Amending Act of 2002.

It was submitted that there is a constitutional mandate and the entitlement of the Limboo and Tamang communities as Schedules Tribes which stems from the Amending Act of 2002, whereby they were designated as Scheduled Tribes. Accordingly, it is the plain duty of the Union Government and the Election Commission to act in pursuance of their statutory and constitutional powers. It was urged that to the extent that the 2006 Notification and the 2008 Order and Section 7(1A) of the RP Act do not account for the Limboo and Tamang Scheduled Tribes, they violate this mandate.

On the issue of whether Delimitation Commission can amend the 2006 Notification under the Delimitation Act, the Bench stated that in view of Article 329 of the Constitution, the Delimitation Notification of 2006 cannot be called into question. Any changes to the 2006 Notification, could only have been made in accordance with the Delimitation Act. The Act envisages changes/suggestions only until the publication of the final notification, consequent to which, the notification assumes the force of law in supersession of any other law for the time being in force. In view of Article 329, the Bench held that it was beyond the realm of judicial review.

The Bench made it clear that the Delimitation Act only provides for changes prior to the final notification. Once published, the Notification cannot be amended even by the Delimitation Commission under the 2002 Act.

Next, the Bench considered the issue of power of Election Commission to Amend the 2008 Order to incorporate those changes. It was observed that the Amending Act of 2002 which designates Limboo and Tamang Scheduled Tribes is enacted under Articles 341 (2) and 342 (2) of the Constitution. It does not relate to delimitation, but to designation of certain Castes and Tribes as Scheduled Castes and Tribes for the purpose of the Article 366 of the Constitution.

As per the Top Court, even if the discretion, as apparently vested in the Election Commission to act is taken to be coupled with a duty to act, the duty arises only when the conditions for its exercise are fulfilled. For the Election Commission to act, there must be an order that relates to delimitation and such an order must have been issued under Section 8-A of this Act or under a Central Act.

Considering that neither of these conditions is present as far as the Amending Act of 2002 is concerned, to warrant the exercise of power under Section 9(1)(aa) of the RP Act, the Bench said, “Thus, the RP Act does not envisage a duty vested in the Election Commission to amend the 2008 Order to include the 2002 Amending Act.”

The petitioners had sought for a mandamus against the Election Commission generally in accordance with Article 332 for the Sikkim State Legislative Assembly, on the strength of Section 9 of the RP Act and Section 11of the Delimitation Act.

Referring to clause (a) of sub-section (1) of Section 11of the Delimitation Act and Section 9 of the RP Act, the Bench opined that he invocation of this clause can take place only if one finds the non-inclusion of the Limboo Tamang Scheduled Tribes in the 2006 Notification and 2008 Order as an “error” arising out of an inadvertent slip or omission. However, the non-inclusion of these Scheduled Tribes in the two Orders is attributable to the fact that the Constitution itself mandates the delimitation exercise to be carried out in accordance with the figures of the 2001 census alone and that the subsequent changes to the ST Order have not been accordingly assimilated with the 2001 figures.

Consequently, the delimitation exercise undertaken in 2006 could not account for the Amending Act of 2002. The Bench opined that this was the specific issue that the Court addressed in Virendra Pratap and Another vs Union of India and Othersby stating that the Election Commission may obtain the relevant figures that were de hors the 2001 census.

Thus, the non-inclusion of the Limboo Tamang STs is not attributable to a mere error arising out of an inadvertent slip or omission- which are the only grounds under which the Orders can be altered by the Delimitation Commission or the Election Commission, the Top Court affirmed. “The entirety of the ambit of clause (a) is to allow the Election Commission to correct printing mistakes and inadvertent slips or omissions that result in error. This, evidently, would not extend to making substantial modifications in the delimitation which has been made by the Delimitation Commission in the exercise of its statutory power”, the Bench said.

The Bench opined that the Delimitation Act or the RP Act do not require consideration of subsequent changes to the composition of the Scheduled Castes or Scheduled Tribes Orders in determining the reserved seats for Scheduled Tribes.

“The Delimitation Act and the Representation of the People Act, as they exist presently, do not create such a legislative framework. Absent a statutory duty, this Court is unable to issue a writ of mandamus against the respondents”, the Bench held while further adding, “No mandamus can be issued to Parliament as a legislating body to enact a legislation or to legislate in a particular manner. These are matters which have to be factored in by Parliament, at its discretion. The judgment of the Constitution Bench in RC Poudyal clearly lays down the road map for the manner in which the Court must approach such a vexed issue.”

The Bench concluded the matter by observing that the delimitation of Parliamentary and Assembly Constituencies Order 2008 forms the basis of the First and Second Schedules to the RP Act. The Delimitation Commission completed its exercise almost fifteen years ago. The Additional Solicitor General submitted that nearly fifty-one communities were added after 2001 to the list of Scheduled Tribes until the last census took place in 2011.

“This is a matter which must engage the attention of the Union Government. The manner in which this exercise would have to be determined within the purview of the Delimitation Act 2002. But as we have already noted earlier, the exercise would require legislative amendments, particularly having regard to the provisions of the First and Second Schedules to the RP Act. Directing a legislative amendment is beyond the domain of judicial review”, the Bench noted.

Considering the fact that in regard to the State of West Bengal, it had been submitted, by the counsel appearing on behalf of the Election Commission that broadly an additional seat would have to be made available in the State of West Bengal for the Scheduled Tribes in order to accommodate the principle of proportional representation, the Bench stated, “The above submission makes it abundantly clear that it is for the Union Government to take recourse to the powers under the Delimitation Act 2002 for the purpose of ensuring that the provisions of Articles 330 and 332 are duly implemented. The Central Government should take a decision with all reasonable dispatch, in accordance with law.”

Read Order:  ABHISHEK SAXENA v. THE STATE OF UTTAR PRADESH & ANR

Tulip Kanth

New Delhi, January 5, 2024: The Supreme Court has observed that intentionally putting a person in fear of injury to himself or another and dishonestly inducing the person so put to deliver to any person any property or valuable security, are the two main ingredients to attract the offence under Section 384, IPC.

An FIR , in this case, was registered against the appellant, his parents and relatives alleging commission of offences under Sections 323, 363, 384, and 406 of the Indian Penal Code. Thereafter the accused, including the appellant, filed an application under Section 482 CrPC seeking quashment of the FIR and the consequently filed chargesheet and the summoning order. As per the impugned order, the High Court declined to exercise the power under Section 482 CrPC and consequently dismissed the petition qua the appellant.

The Division Bench of Justice C.T. Ravikumar & Justice Sanjay Kumar , at the outset, observed, “Having gone through the chargesheet, and the other material on record, we could not find necessary ingredients to attract the offences under Sections 323, 384 and 406 of the I.P.C. qua the appellant.”

It was noticed by the Bench that as far as the allegation of commission of offence under Section 323 was concerned, besides the bald statement ‘when I asked these people about my daughter, they beat up me’ no material whatsoever to support the allegation causation of hurt was available on record much less voluntary causation of hurt. About the demand of a sum of Rs 20 lakh from her father after about 15 days from 12.06.2016 from the house of second respondent’s father in Bareilly, the second respondent (the complainant) in her statement given to the Investigating Officer, submitted that she did not get registered an FIR or file any complaint in Bareilly.

The unrefuted position of facts revealed from the materials on record was that the appellant herein had already filed a petition for dissolution of his marriage with the second respondent-complainant and also an Application Sections 7, 10 and 17 of the Guardians & Wards Act, 1890 for declaring him as the guardian of the person of the minor daughter by name ‘Anwesha Saxena’, before the Family Court. FIR was registered against the appellant, his parents and relatives on 04.09.2016 on the complaint of the second respondent only on 04.09.2016.

It was noted that in this FIR, date of incident was shown as 12.06.2016 at 03.00 AM and date of information was shown as on 04.09.2016 at 09.30 AM and the delay in investigation is recorded as the delay in submitting information by the complainant i.e., the second respondent herein.

Noting that there was no material to show for allegation of hurt, the Bench said, “As the High Court did not endeavour to consider whether the chargesheet submitted showed prima facie case under Sections 323, 384 and 406, IPC for voluntarily causing hurt, for extortion and for criminal breach of trust, we think it inevitable to undertake such a consideration as in the facts and circumstances while called upon to exercise the power under Section 482, CrPC the High Court was legally bound to see if allegations/accusations constitute any offence or not.”

In the recorded statement of the second respondent-complainant or in the counter affidavit filed by the first respondent there was not even a whisper that after the incident she went to a doctor or underwent any kind of treatment. It was also seen that the FIR got registered only after the filing of petition by the appellant before the Family Court. Above all, the Bench stated that the basic ingredients to constitute an offence under Section 323, IPC was lacking in the chargesheet.

The Bench further clarified that following are the essential ingredients to constitute an offence under Section 406, IPC:

(i) Entrusting any person with property or with any dominion over property;

(ii) the person entrusted (a) dishonestly misappropriating or converting to his own use that property; or (b) dishonestly using or disposing of that property or willfully suffering any other person so to do in violation –

1. of any direction of law prescribing the mode in which such trust is to be discharge, or;
2. (ii) of any legal contract made touching the discharge of such trust.

In the absence of basic ingredient of entrustment of property and dishonest usage or disposal of any such property to satisfy the offence punishable under Section 406, IPC in the present case, the charge of commission of the offence thereunder also cannot be attracted.

Thus, the Bench opined that no useful purpose was likely to be served by allowing criminal prosecution against the appellant to continue based on the aforesaid chargesheet as ingredients of all the aforementioned offences were wanting in this case.

“We have no hesitation to hold that the High Court has clearly fallen in error in not invoking the powers under Section 482, CrPC to quash the proceedings qua the appellant”, the Bench held while allowing the appeal.

Read Order: BHARTI AIRTEL LIMITED AND ANOTHER v. VIJAYKUMAR V. IYER AND OTHERS

Tulip Kanth

New Delhi, January 5, 2023: While dismissing the appeals of Bharti Airtel challenging an order of the NCLAT, the Supreme Court has observed that unlike the provisions of the Companies Act, in the case of Corporate Insolvency Resolution Process, IBC does not give the indebted creditors the right to set-off against the corporate debtor.

The present appeals, before the Division Bench of Justice Sanjiv Khanna and Justice S.V.N Bhatti, raised an interesting question on the right to claim set-off in the Corporate Insolvency Resolution Process, when the Resolution Professional proceeds in terms of clause (a) Section 25(2) of the Insolvency and Bankruptcy Code, 2016 to take custody and control of all the assets of the corporate debtor.

The factual background of this case was such that in April 2016, Bharti Airtel Limited and Bharti Hexacom Limited (appellants or Airtel entities) entered into eight spectrum trading agreements with Aircel Limited and Dishnet Wireless Limited (Aircel entities) for purchase of the right to use the spectrum allocated to the latter in the 2300 MHz band. The DoT for grant of approval demanded bank guarantees from the Aircel entities. Challenging this direction, the Aircel entities approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

By the interim order TDSAT directed Aircel entities to submit the bank guarantees. As the Aircel entities did not have the means to procure and submit the bank guarantees for approximately Rs.453.73 crores, they approached the Airtel entities to submit bank guarantees on their behalf to the DoT.

The Airtel entities and Aircel entities entered into three Letters of Understanding whereby the Airtel entities agreed to furnish the bank guarantees to the DOT on behalf of the Aircel entities. The claims submitted by the Airtel entities were admitted by the Resolution Professional to the extent of Rs.112 crores. Claim on account of receivable of about Rs.5.85 crores owed by Aircel entities to Telenor India, which had been merged with Bharti Airtel Limited, was not accepted.

The Resolution Professional for Aircel Limited, Dishnet Wireless Limited and Aircel Cellular Limited, wrote to Bharti Airtel Limited, stating that they had suo moto adjusted an amount of Rs.112.87 crores from the amount of Rs.453.73 crores payable by Airtel entities to Aircel entities. Bharti Airtel Limited was asked to pay Rs.112.87 crores to Aircel entities, which were undergoing Corporate Insolvency Resolution Process, failing which the Resolution Professional would be obligated to take steps for recovery. The Airtel entities objected on several grounds, and also claimed set-off of the amount due to them by the Aircel entities from the amount payable by them to the Aircel entities. Their reply and claim for set- off was rejected by the Resolution Professional.

The Airtel entities thereupon approached the Adjudicating Authority which held that the Airtel entities had a right to set off Rs.112.87 crores from the payment, which was retained, and due and payable to Aircel entities. This order was challenged before the National Company Law Appellate Tribunal (NCLAT) and the Appellate Tribunal allowed the appeal.

The Airtel entities urged that Section 30 of the IBC seeks to ensure that the assets and liabilities of the corporate debtor, as recorded in the resolution plan, correspond to the liquidation estate of the corporate debtor in the event of liquidation. It was submitted that if the Resolution Professional proceeds in terms of Section 25 and secures the assets from the creditors, the creditors would not be entitled to claim set-off during the course of the Corporate Insolvency Resolution Process, which is earlier in the point of time.

At the outset, the Bench highlighted the fact that the expression mutual dealings is the condition to be satisfied for insolvency set-off under Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

It was further observed that the provisions of statutory set-off in terms of Order VIII Rule 6 of CPC or insolvency set-off as permitted by Regulation 29 of the Liquidation Regulations can’t be applied to the Corporate Insolvency Resolution Process.

“The aforesaid rule would be, however, subject to two exceptions or situations. The first, if at all it can be called an exception, is where a party is entitled to contractual set-off, on the date which is effective before or on the date the Corporate Insolvency Resolution Process is put into motion or commences… The second exception will be in the case of equitable set-off when the claim and counter claim in the form of set-off are linked and connected on account of one or more transactions that can be treated as one. The set-off should be genuine and clearly established on facts and in law, so as to make it inequitable and unfair that the debtor be asked to pay money, without adjustment sought that is fully justified and legal, the Top Court said.

The finding of the Bench that the IBC is a complete code relying upon the opening part of the enactment and Sections 238 and 243, nullified the argument raised by the appellant Airtel entities that they are entitled to statutory set-off or insolvency set-off, in the Corporate Insolvency Resolution Proceedings under Chapter II Part II of the IBC. Regulation 29 of the Liquidation Regulations does not apply to Part II of the IBC.

Referring to section 30 of the IBC, the Bench opined that the provision requires that the Resolution Professional shall examine each resolution plan received by him to confirm that each plan provides for payment of debts of the operational creditor in the manner as may be specified by the Board. The Board has not specified the manner in which payment of debts to the operational creditor shall be made. However, the stipulation that the payment of debts to the operational creditor shall not be less than the amount that the operational creditors are entitled to in terms of the order of priority in sub-section (1) to Section 53 of the IBC is mandatory.

The Bench made it clear that clause (ii) to sub- section (2)(b) of Section 30 does not support the plea of insolvency set-off. The section does not make Chapter III Part II, that is, Section 36(4)(e) or Regulation 29, applicable to the Corporate Insolvency Resolution Process under Chapter II Part II of the IBC. Secondly, clause (ii) to Section 30(2)(b) deals with the amounts to be paid to the creditors and not the amount payable by the creditors to the corporate debtor. Thirdly, clause (ii) to Section 30(2)(b) has appliance when the resolution plan is being considered for approval.

“Fourthly, and for the reasons elaborated earlier, and in view of the specific legislative mandate as incorporated and reflected in Chapter II Part II of the IBC, we should hold that the provisions of the IBC relating to Corporate Insolvency Resolution Process do not recognise the principle of insolvency set-off. We would not extend it by implication, when the legislature has not accepted applicability of mutual set-off at the initial stage, that is, the Corporate Insolvency Resolution Process stage”, the Bench held.

The Bench did not agree that insolvency set-off under the IBC is automatic and self-executing. It also did not find any provision in the IBC which states so. “In the context of the IBC, insolvency set-off is neither automatic, nor self-executing”, the Bench held while also rejecting the argument that insolvency set-off is automatic and self-executing.

On the aspect of mutual dealings and also equity, the Bench noted that adjustment of the inter-connect charges are under a separate and distinct agreement. The telephone service providers use facilities of each other as the caller or the receiver may be using a different service provider. Accordingly, adjustments of set-off are made on the basis of contractual set-off. These are also justified on the ground of equitable set-off. The set-off to this extent has been permitted and allowed by the Resolution Professional, the Bench added.

According to the Top Court, the transaction for purchase of the right to use the spectrum was an entirely different and unconnected transaction. The agreement to purchase the spectrum encountered obstacles because the DoT had required bank guarantees to be furnished. Accordingly, Airtel entities, on the request of Aircel entities had furnished bank guarantees on their behalf. The bank guarantees were returned and accordingly Airtel entities became liable to pay the balance amount in terms of the letters of understanding. The amounts had become payable post the commencement of the Corporate Insolvency Resolution Process, the Bench noted.

“For the same reason, we will also reject the argument that by not allowing set-off, new rights are being created and, therefore, Section 14 of the IBC will not be operative and applicable. Moratorium under Section 14 is to grant protection and prevent a scramble and dissipation of the assets of the corporate debtor. The contention that the amount to be set-off is not part of the corporate debtor’s assets in the present facts is misconceived and must be rejected”, the Bench held.

Thus, in light of the provisions of the IBC relating to the Corporate Insolvency Resolution Process, the Bench dismissed the appeals.

Read Order: PERUMAL RAJA @ PERUMAL v. STATE, REP. BY INSPECTOR OF POLICE

Tulip Kanth

New Delhi, January 5, 2023: The Supreme Court has upheld the conviction of a murder accused after noting that there had been recoveries of the motorcycle as well as other belongings of the deceased at the behest of the appellant. The presence of motive reinforced the conclusion reached by the Top Court.

The impugned judgment by the Madras High Court affirmed the conviction of the appellant – Perumal Raja @ Perumal for murder of Rajini @ Rajinikanth under Section 302 and Section 201 of the IPC.

The factual background of the case was such that on 20.04.2008, Rajaram, who was settled in France, returned to Puducherry as his son Rajini @ Rajinikanth, who was living in India, had gone missing. Rajaram had approached PS Odiansalai, Puducherry, and made an oral complaint stating that when he opened his house, he had found articles to be scattered all over the place. His motorcycle was missing. He requested the Police to make inquiries. Rajaram was murdered the next day. An FIR was registered under Sections 147, 148, 341 and 302 of the IPC read with Section 149 of the IPC.

Arumugam, father of Rajaram, had made a written complaint that his grandson Rajini @ Rajinikanth was missing. The complaint was registered for a ‘missing man’ and was taken up for investigation.  The appellant – Perumal Raja @ Perumal, son of Krishnamurthy (husband of the sister of Rajaram), was detained and taken into custody. According to the investigation, the motive for the crime was inter se family property disputes and the appellant – Perumal Raja @ Perumal’s desire to acquire and become owner of the house in question.

The Division Bench, comprising of Justice Sanjiv Khanna & Justice S.V. N Bhatti, took note of the fact that the prosecution’s case, in the absence of eye witnesses, is based upon circumstantial evidence.It was made clear by the Bench that Section 27 of the Evidence Act does not lay down the principle that discovery of a fact is to be equated to the object produced or found. The discovery of a fact includes the object found, the place from which it was produced and the knowledge of the accused as to its existence. To this extent, therefore, factum of discovery combines both the physical object as well as the mental consciousness of the informant accused in relation thereto.

“Section 27 of the Evidence Act is frequently used by the police, and the courts must be vigilant about its application to ensure credibility of evidence, as the provision is vulnerable to abuse. However, this does not mean that in every case invocation of Section 27 of the Evidence Act must be seen with suspicion and is to be discarded as perfunctory and unworthy of credence”, the Bench said.

In this case, the disclosure statement was made by the appellant – Perumal Raja @ Perumal when he was detained in another case, relating to the murder of Rajaram. He was subsequently arrested in this case which was registered at PS Odiansalai, Puducherry. The expression custody under Section 27 of the Evidence Act does not mean formal custody. It includes any kind of restriction, restraint or even surveillance by the police. Even if the accused was not formally arrested at the time of giving information, the accused ought to be deemed, for all practical purposes, in the custody of the police, the Bench opined.

Reference was made to a recent decision of the Top Court in Rajesh & Anr. v. State of Madhya Pradesh 2023 SCC OnLine SC 1202, which held that formal accusation and formal police custody are essential pre-requisites under Section 27 of the Evidence Act.

“Thus, in our considered view the correct interpretation would be that as soon as an accused or suspected person comes into the hands of a police officer, he is no longer at liberty and is under a check, and is, therefore, in custody within the meaning of Sections 25 to 27 of the Evidence Act. It is for this reason that the expression custody has been held, as earlier observed, to include surveillance, restriction or restraint by the police”, the Bench stated while further adding that Section 106 comes into play when the prosecution is able to establish the facts by way of circumstantial evidence.

In the present case, the homicidal death of Rajini @ Rajinikanth, the disclosure statement marked Exhibit P-37, and the consequent recovery had been proved beyond doubt and debate. The appellant – Perumal Raja @ Perumal in his statement under Section 313 of the Code of Criminal Procedure, 1973 plainly denied all accusations without furnishing any explanation regarding his knowledge of the places from which the dead body was recovered. In this circumstance, the failure of the appellant – Perumal Raja @ Perumal to present evidence on his behalf or to offer any cogent explanation regarding the recovery of the dead body by virtue of his special knowledge must lead to a reasonable adverse inference, by application of the principle under Section 106 of the Evidence Act, thus forming an additional link in the chain of circumstances. The additional link further affirms the conclusion of guilt as indicated by the prosecution evidence, the Bench held.

The Top Court noted that it was only consequent to the disclosure statement by the appellant – Perumal Raja @ Perumal, that the police came to know that Rajini @ Rajinikanth had been murdered and his body was first dumped in the sump tank and after some months, it was retrieved, cut into two parts, put in sack bags, and thrown in the river/canal. The police, accordingly, proceeded on the leads and recovered the parts of the dead body from the sump tank and sack bags from the river/canal.

It had been also established that Rajini @ Rajinikanth was murdered. In addition, there had been recoveries of the motorcycle and other belongings at the behest of the appellant – Perumal Raja @ Perumal. These facts, in the absence of any other material to doubt them, establish indubitable conclusion that the appellant – Perumal Raja @ Perumal was guilty of having committed murder of Rajini @ Rajinikanth. The presence of motive reinforced the above conclusion.

The Bench concluded the matter by clarifying that Section 27 of the Evidence Act could not have been applied to the other co-accused for the simple reason that the provision pertains to information that distinctly relates to the discovery of a fact that was previously unknown, as opposed to fact already disclosed or known. Once information is given by an accused, the same information cannot be used, even if voluntarily made by a co-accused who is in custody.

“Section 27 of the Evidence Act does apply to joint disclosures, but this is not one such. This was precisely the reason given by the trial court to acquit the co-accused. Even if Section 8 of the Evidence Act is to apply, it would not have been possible to convict the co-accused. The trial court rightly held other co-accused not guilty. For the same reason, acquittal of co-accused Chella @ Mukundhan, who was earlier absconding, is also of no avail”, the Bench said while dismissing the appeal.

Read Order:DBS BANK LIMITED SINGAPORE v. RUCHI SOYA INDUSTRIES LIMITED AND ANOTHER

Tulip Kanth

New Delhi, January 4, 2023:Taking a different view and ratio from India Resurgence ARC Private Limited v. Amit Metaliks Limited & Anotheron the interpretation of Section 30(2)(b)(ii) of the IBC, the Supreme Court has referred to a larger Benchthe issue of whether a dissenting financial creditor is entitled to minimum value of its security interest.

The Division Bench of Justice Sanjiv Khanna and Justice S.V.N. Bhatti was considering the issue whether Section 30(2)(b)(ii) of the Insolvency and Bankruptcy Code, 2016 as amended in 2019, entitles the dissenting financial creditor to be paid the minimum value of its security interest.

The facts of the case suggested that the Appellant - DBS Bank Limited Singapore had extended financial debt of around 50 million dollars to M/s. Ruchi Soya Industries Limited (Corporate Debtor).A Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor. The company petition seeking to initiate CIRP was admitted and a Resolution Professional was appointed.The appellant had submitted its claim, which was admitted by the RP at Rs. 242,96,00,000

On 20.03.2019, Patanjali Ayurvedic Limited submitted a resolution plan for Rs. 4134 crore against the aggregate claims of around Rs. 8398 crore representing approximately 49.22% of the total admitted claims of the financial creditors. The appellant informed the Committee of Creditors that the sole and exclusive nature of security held by the appellant by way of mortgage/hypothecation over immovable and fixed assets of the Corporate Debtor was of greater value compared to collaterals held by other creditors. The appellant requested the CoC to take into account the liquidation value of such security while considering the distribution of proceeds and to make such distribution in a fair and equitable manner.The resolution plan was approved by 96.95% of the CoC. The appellant had voted against the resolution plan, thereby becoming a dissenting financial creditor.

The resolution plan was filed for approval before the National Company Law Tribunal. Separately, the appellant challenged the distribution mechanism of the resolution plan proceeds by way of an application before the NCLT, Mumbai.The NCLT granted provisional/conditional approval to the resolution plan. By the same order, the NCLT dismissed the appellants application challenging the distribution mechanism of the resolution plan proceeds.The appellant challenged the dismissal of its application before the National Company Law Appellate Tribunal.

During pendency of the appeal, Section 6 of the Insolvency and Bankruptcy Code (Amendment) Act, 2019 was notified which amended Section 30(2)(b) of the Code. Amended Section 30(2)(b)(ii) of the Code provides that operational and dissenting financial creditors shall not be paid an amount lesser than the amount to be paid to creditors in the event of liquidation of the Corporate Debtor under Section 53(1) of the Code. Explanation 2 added thereby makes the amended Section 30(2)(b) applicable to pending proceedings. Section 30(4) was also amended to state the CoC shall take into account the order of priority amongst creditors as laid down in Section 53(1) of the Code.

At the 26th CoC meeting, the appellant requested the CoC to reconsider the distribution of the resolution proceeds in light of the amendments to the Code. The appellant had submitted that if the amendments were considered, it would be entitled to receive Rs. 217,86,00,000 which is the liquidation value of the security interest. The CoC, however, did not accept the prayer. The NCLT finally approved the resolution plan. The appellant challenged the final approval order by way of an appeal before the NCLAT. The first NCLAT appeal preferred by the appellant was still pending.

The two appeals preferred by the appellant against the orders/judgments of the NCLT but the same were dismissed. Hence, the appellant approached the Top Court.

At the outset, the Bench clarified that the Amendment Act was certainly applicable when the appeals were heard and decided by the NCLAT on 18.11.2019 and 09.12.2019, which was post the enforcement of the Amendment Act.Next, the Bench referred to Section 30(2)(b)(ii) which recognises that all financial creditors need not be similarly situated. Secured financial creditors may have distinct sets of securities.

Reference was made to Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta &Ors, Swiss Ribbons Private Limited and Another v. Union of India and Others and Vallal RCK v. Siva Industries and Holdings Limited and Others which have held that the commercial wisdom of the CoC must be respected.

“Therefore, the resolution plan accepted by the requisite creditors/members of the CoC upon voting, is enforceable and binding on all creditors. The CoC can decide the manner of distribution of resolution proceeds amongst creditors and others, but Section 30(2)(b) protects the dissenting financial creditor and operational creditors by ensuring that they are paid a minimum amount that is not lesser than their entitlement upon the liquidation of the corporate debtor”, the Bench stated.

However, the Bench observed that a dissenting financial creditor cannot take advantage of Section 30(2)(b)(ii). A secured creditor cannot claim preference over another secured creditor at the stage of distribution on the ground of a dissent or assent, otherwise the distribution would be arbitrary and discriminative. The purpose of the amendment was only to ensure that a dissenting financial creditor does not get anything less than the liquidation value, but not for getting the maximum of the secured assets.

“In our opinion, the provisions of Section 30(2)(b)(ii) by law provides assurance to the dissenting creditors that they will receive as money the amount they would have received in the liquidation proceedings. This rule also applies to the operational creditors. This ensures that dissenting creditors receive the payment of the value of their security interest”, the Bench further noted while adding that the dissenting financial creditor has to statutorily forgo and relinquish his security interest on the resolution plan being accepted, and his position is same and no different from that of a secured creditor who has voluntarily relinquished security and is to be paid under Section 53(1)(b)(ii) of the Code.

The Top Court’s reasoning found resonance in the reasoning given in Jaypee Kensington (supra), which states that for the purpose of discharge of obligation mentioned in the second part of Section 30(2)(b) of the Code, the dissenting financial creditors are to be paid an amount quantified in terms of the proceeds of assets receivable under Section 53 of the Code.What the dissenting financial creditor is entitled to is the payment, which should not be less than the amount/value of the security interest held by them. The security interest gets converted from the asset to the value of the asset, which is to be paid in the form of money, the Bench added.

The Bench opined that a dissenting financial creditor, therefore, cannot enforce the security interest. A dissenting financial creditor enforces the security interest, the resolution plan itself may fail and become unworkable. The dissenting financial creditor has to statutorily forgo and relinquish his security interest on the resolution plan being accepted, and his position is same and no different from that of a secured creditor who has voluntarily relinquished security and is to be paid under Section 53(1)(b)(ii) of the Code.

“The dissenting financial creditor cannot object to the resolution plan, but can object to the distribution of the proceeds under the resolution plan, when the proceeds are less than what the dissenting financial creditor would be entitled to in terms of Section 53(1) if the corporate debtor had gone into liquidation. This is the statutory option or choice given by law to the dissenting financial creditor. The option/choice should be respected”, the Bench said.

Furthermore, the Bench held that a secured creditor not satisfied with the proposed pay- out can vote against the resolution plan or the distribution of proceeds, in which case it is entitled to full liquidation value of the security payable in terms of Section 53(1) on liquidation of the corporate debtor. The conflict with sub-clause (ii) to clause (b) to sub-section (2) to Section 30 does not arise as it relates to the minimum payment which is to be made to an operational creditor or a dissenting financial creditor. A dissenting financial creditor does not vote in favour of the scheme. Operational creditors do not have the right to vote.

Thus, taking a different view and ratio from India Resurgence ARC Private Limited (Supra)on interpretation of Section 30(2)(b)(ii) of the IBC, the Bench held, “…we feel that it would be appropriate and proper if the question framed at the beginning of this judgment is referred to a larger Bench. The matter be, placed before the Hon’ble the Chief Justice for appropriate orders.”

Read Order: RAJENDHIRAN v. MUTHAIAMMAL @ MUTHAYEE & ORS

LE Correspondent

New Delhi, January 4, 2023: In a property dispute case, the Supreme Court has allowed an appeal challenging a Madras High Court judgment in light of the fact that the High Court ignored material evidence and recorded a perverse finding.

The Division Bench of Justice Vikram Nath and Justice Rajesh Bindal was considering an appeal whereby the defendants, assailed the correctness of the judgment of the Madras High Court allowing the Second Appeal filed by the plaintiff.

The facts of the case were that the respondent instituted a suit before the Munsiff Court claiming relief of declaration that the sale deed executed by the first defendant in favour of second defendant was null and void and to declare that suit property belonged to the plaintiffs and further for relief of an injunction against the defendants.

According to the plaint case, the property in question originally belonged to one Avinashi Gounder who had four sons namely, Arunachalam, Arumugam, Ramasamy and Palaniyappan. Plaintiff No.1 is the wife and plaintiff no.2 is the adopted son of Arunachalam. The first defendant is the daughter of Palaniyappan and the second defendant is the vendee of the suit property from defendant no.1.

According to the plaintiffs, the four brothers had entered into an oral partition and the suit property came to the share of Arunachalam. Subsequently Arunachalam, had executed a will whereby the suit property and other properties belonging to Arunachalam were bequeathed in favour of the plaintiffs. Upon the death of Arunachalam, the plaintiffs became the absolute owners of the property in suit.

Plaintiff no.2 and defendant no.2 were running a partnership business and the property in suit was offered as a security to the Karur Vysya Bank. As the loan amount could not be repaid, plaintiff no.2 cleared the outstanding loan. Further it was claimed that defendant no.2 clandestinely obtained the sale deed. It was the case of the plaintiff that the entire property which was allotted to Palaniyappan (father of defendant no.1) had been sold by defendant no.1 with specific boundaries to one Mathiyalagan. It was thus the claim of the plaintiffs that the defendants would not have any right over the properties of Avinashi Gounder and that the plaintiffs were cultivating the land in suit but as the defendant no.2 tried to trespass the suit property, the necessity for filing the suit arose.

The Trial Court dismissed the suit. The plaintiffs preferred an appeal but the same was dismissed the appeal. Specific findings were recorded that the oral partition had not been proved by the plaintiffs. The First Appellate Court also approved the finding regarding non-joinder of necessary parties. Aggrieved by the same, the plaintiffs preferred Second Appeal but the same was dismissed.

The Bench opined that the two sale deeds related to different properties and not to survey number in question. “Whether any partition with respect to the survey number in question had taken place or not, is not borne out from the record. The suit property was never recorded in the name of the plaintiffs or for that matter, husband of plaintiff no.1, at any time”, the Bench said.

The will which was the basis of the claim of the plaintiff, had not been found to be proved in accordance to law. The Trial Court and the First Appellate Court had dealt with the two sale deeds, and found that these were not sufficient to prove the oral partition or in any manner established the oral partition with respect to the survey number in question.

The Bench was of the view that although the plaintiffs set up a case that the land in suit was coming from Avinashi Gounder but on record, two pattas were filed which established that the survey number in question had been allotted in the name of plaintiff no.1 and eight others jointly with respect to which there was no partition. This fact had been admitted by the plaintiffs in their deposition.

Noting that all these aspects had been considered by the Trial Court and the First Appellate Court but the High Court failed to consider the oral as also the documentary evidence, the Bench observed that only on the basis of the two sale deeds and one mortgage deed, which related to different piece and parcels of land, the High Court recorded a perverse finding that oral partition had taken place. It also did not deal with the other findings recorded by the Courts below.

“In view of the above discussion and on the findings recorded above, the impugned judgment cannot be sustained as it not only does not conform to the scope of Section 100 of the Code of Civil Procedure, 1908 but also as it was perverse on appreciated evidence, and also ignoring material evidence”, the Bench held while allowing the appeal.