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Indian Laws - Case Laws
Showing 21 to 40 of 26744 Records
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2024 (11) TMI 706
Seeking quashing and setting aside of the Look Out Circular (LOC) - petitioner has not been arraigned as an accused by the SEBI - HELD THAT:- The petitioner is the son of an accused Late Sudhir Moravekar. It is not in dispute, that the E.O.W has registered an FIR as against the petitioner's father and others (not the petitioner) and that after investigation, E.O.W has filed charge-sheet in the said case, as against the petitioner’s father and other accused on 30th October 2021. Admittedly, the petitioner has not been arraigned as an accused in the said case registered by the E.O.W. It also appears that the SEBI has filed several prosecution complaints in the matter of Pancard Clubs Limited in 2019. Admittedly, the petitioner has not been arraigned as an accused by SEBI in any of the said complaints - It is not in dispute that the petitioner has abided by the terms and conditions stipulated in the said orders. It appears that the petitioner has businesses overseas, as a result of which, he is required to regularly travel overseas. It also appears that the petitioner is involved in business of short-term rental service apartments in Thailand and Dubai, requiring him to travel often. It also appears that the petitioner’s mother, a senior citizen, his wife and one school going child are dependent on him and that he is a resident of Mumbai and as such has roots in the society. It is also not in dispute that the SFIO has filed a prosecution complaint in February 2024 and till date, the trial Court has not taken cognizance of the said complaint.
In order to assail the fear of the learned counsel for the respondent No.1, that the petitioner would not be available, when the Court takes cognizance of the prosecution case, we directed the learned counsel for the petitioner to file an affidavit of the petitioner undertaking to co-operate with the trial Court. Accordingly, learned counsel for the petitioner has tendered an affidavit of the petitioner dated 12th July 2024. The said affidavit is taken on record and marked 'X' for identification. In the said affidavit, the petitioner has undertaken to remain present as and when summoned by the learned Special Court or the offices of the respondent Agency and has voluntarily ensured full compliance with the respondent Agency i.e. SFIO. Thus, the petitioner has undertaken to abide by the undertaking given by him in the affidavit i.e. to remain present before the trial Court, as and when summoned and even before the respondent Agency i.e. SFIO - The petitioner has roots in the society and has also tendered an undertaking as stated aforesaid. In this light of the matter, the apprehension of the respondent No.1-SFIO, does not appear to be valid and bonafide.
The impugned LOC issued as against the petitioner, at the behest of the respondent No.1-SFIO, is quashed and set aside - The petitioner to abide by his undertaking given to this Court dated 12th July 2024 - Petition allowed.
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2024 (11) TMI 705
Challenge to Lookout Circular issued against the Petitioner by the Bureau of Immigration at the request of the State Bank of India - Fundamental Right to travel abroad under Article 21 of the Constitution of India - parties have arrived at a One Time Settlement and the proposal has been accepted by the lead member of consortium, i.e., the State Bank of India - HELD THAT:- Clause L of the Office Memorandum of 2021 states that in exceptional cases, an LOC can be issued at the instance of the Bank if the authorities are of the view that letting the person to depart from the country will be detrimental to the economic interests of India.
The Courts have also laid down the scope of the term 'detrimental to the economic interest of India' used in Office Memorandum bearing No.25016/10/2017-Imm (Pt.) dated 22.02.2021, which is the last of the guidelines issued by the Ministry of Home Affairs for issuance of Lookout Circulars, which cannot be resorted in every case of Bank default and the citizen's right to travel abroad, which is a Fundamental Right guaranteed under Article 21 of the Constitution of India, cannot be taken away and persons cannot be deprived of their liberty and right to travel abroad only because of their inability to repay the amounts due to Banks.
It is well settled that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offence under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine - It is well settled that mere inability to pay money without there being a criminal case cannot be a reason to take away the Fundamental Right guaranteed under Article 21 of the Constitution of India. Right to travel abroad has been held to be a Fundamental Right under Article 21 of the Constitution of India which cannot be taken away in an arbitrary and illegal manner.
The issuance of lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts.
In view of the fact that an amicable settlement has been arrived at and the Petitioner has already deposited a sum of Rs. 113.50 crore with the State Bank of India, which is the lead member of the consortium, and in view of the fact that there is no criminal case pending against the Petitioner, this Court is of the opinion that the Lookout Circular issued against the Petitioner which has the effect of taking away the Fundamental Right guaranteed under Article 21 of the Constitution of India cannot be permitted to sustain and the same is hereby quashed.
Petition allowed.
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2024 (11) TMI 605
Dishonour of Cheque - legally enforceable debt or not - principal defence taken by the petitioner in his statement under Section 313 of the CrPC, and his examination in chief, was that he did not know the respondent and had no transactions with him - HELD THAT:- Since the present revision petition has been filed under Section 397 of the CrPC, challenging the concurrent findings of both lower courts, this Court’s role is limited to assessing the correctness, legality, and propriety of the impugned order.
It is trite law that this Court is required to exercise restraint and should not interfere with the findings in the impugned orders or reappreciate evidence merely because another view is possible unless the impugned orders are wholly unreasonable or untenable in law.
In the present case, the petitioner has sought to prove his case by controverting that the cheques in question were not issued in discharge of any legally enforceable debt. It has been contented that the subject cheques were in fact advanced to one Vinod Tiwari as blank signed security cheques since the petitioner had taken a loan for a sum of Rs. 1,00,000/- from Vinod Tiwari. It has further been contended that the petitioner did not know the respondent, and the respondent had misused the subject cheques. It is the petitioner’s case that no liability was owed towards the respondent.
On a perusal of the impugned order, it is seen that the petitioner had merely stated that he had not taken any loan from the respondent, and that the cheques were given as security to Vinod Kumar. Petitioner not only failed to lead any evidence to substantiate his claims but he also did not cross-examine the respondent to raise a probable defence. The petitioner did not adduce any material to suggest that there was no loan transaction between the petitioner and the respondent, or even summon any person to show that the loan existed between the petitioner and one Vinod Tiwari. Merely reiterating the contentions, and making bald assertions do not suffice to dislodge the presumptions raised against the petitioner.
In the instant case, upon a consideration of the totality of circumstances, it is evident that the petitioner had failed to rebut the presumptions raised against him under Sections 118 and 139 of the NI Act.
This Court finds no infirmity in the impugned order, and the same does not merit any interference - petition dismissed.
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2024 (11) TMI 604
Dishonour of Cheque - role of the petitioner (director of the accused company) in the transaction made - resignation from the accused company prior to the cheque dishonour - vicarious liability - Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- In accordance with Section 141 of the NI Act, in instances where the principal offender under Section 138 of the NI Act is a company, every person who at such time when the cheque was dishonoured, and no subsequent payment was made, was in charge of the business of the company, and was responsible for the conduct of business, is deemed to be guilty of the offence under Section 138 of the NI Act.
It is trite law that a person cannot be arrayed as an accused person merely due to association with the accused company in capacity of a Director. In SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [2005 (9) TMI 304 - SUPREME COURT], the Hon’ble Apex Court analysed Section 141 of the NI Act and observed 'Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a Director or manager or secretary was enough to cast criminal liability, the section would have said so. Instead of “every person” the section would have said ‘every Director, manager or secretary in a company is liable’…, etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action.'
It must be borne in mind that Section 141 of the NI Act is a penal provision that aims to create vicarious liability on the accused. For this reason, the provisions ought to be strictly construed. In the case of NATIONAL SMALL INDUSTRIES CORPN. LTD. VERSUS HARMEET SINGH PAINTAL [2010 (2) TMI 590 - SUPREME COURT], the Hon’ble Apex Court had emphasised the necessity to detail the role of the director accused on account of the penal nature of Section 141 of the NI Act and held 'Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.'
From a perusal of the record, it is apparent that during each series of omission necessary to constitute an offence under Section 138 read with Section 141 of the NI Act, the petitioner had ceased to be a director of M/s Fresco Foods Pvt. Ltd. It is evident that at the date of issuance of the cheque on 26.09.2016, the date of the dishonour of the subject cheque on 04.10.2016 or at the date of the demand notice on 28.10.2016, the petitioner was not in charge of and responsible for the conduct of the accused company. Merely stating that the cheque was handed over way back in the year 2009 or that the petitioner signed as a witness to the agreement dated 12.03.2009 is not sufficient to attract liability when the petitioner was not a director of the accused company at any of the relevant stages necessary for the commission of the offence under Section 138 read with Section 141 of the NI Act.
The proceedings emanating from Complaint Case for the offence under Section 138 read with Section 141 of the NI Act qua the petitioner is quashed - petition allowed.
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2024 (11) TMI 603
Dishonour of Cheque - rebuttal of presumption available to the complainant under Section 139 of the Negotiable Instruments Act - HELD THAT:- On careful scrutiny of the material on record in this regard, it clearly shows that P.W.3 is the official of the MCDCC bank. In his oral evidence, it has clearly admitted that accused has got two accounts in his bank. One in the individual capacity and another account in the name of Bhagiratha Fishermen Association. He also specifically stated that accused used to operate both the accounts by himself.
Why accused has chosen to sign in two different languages is also a question that needs to be explained by the accused under what circumstances, he signed the cheque in question in a particular language is also to be explained by the accused. Absolutely, there is no explanation forthcoming from the accused in this regard - This Court, that too, in the revisional jurisdiction, cannot revisit into the factual aspects of the matter unless there is a patent factual defect in the case of the complainant or if there is a improper exercise of jurisdiction.
This Court is of the considered opinion that the order of conviction passed by both the Courts is based on sound reasons and requires no interference in this revision petition - it is noticed that while imposing sentence, without assigning any special reasons, learned Trial Magistrate has imposed Rs.1,32,250/- as the fine amount as against cheque amount of Rs.75,000/-. Out of the which, sum of Rs.1,22,250/- was ordered to be paid as compensation to the complainant and balance sum of Rs.10,000/- towards the defraying expenses of the State. Since lis is privy to the parties and no State machinery is involved, awarding sum of Rs.10,000/- towards defraying expenses of the State needs interference by this Court. So also taking note of the fact that no special reasons are forthcoming, ordering sum of Rs.1,10,000/- as the compensation to the complainant as against cheque amount of Rs.75,000/- by reducing fine amount of Rs.1,10,000/- from Rs.1,32,250/- would meet the ends of justice.
Revision petition is allowed in part.
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2024 (11) TMI 602
Construction of buildings for a proposed medical college located in Kanyakumari, Tamil Nadu - cause of action - Jurisdiction of High Court - forum shopping - Direction to the Respondents to refrain from granting any permission, recognition or approval to the proposed nursing college to be established by St. Alphonsa Trust on the Subject Properties - cancellation/revocation of any permission, recognition or approval already granted to the said proposed nursing college - conducting an independent inquiry into the circumstances surrounding the grant of Essentiality Certificate dated 14.06.2024 to St. Alphonsa Trust - taking any action on the Essentiality Certificate - HELD THAT:- Both the petitioner and the respondent Trust are situated in Tamil Nadu, and the properties in question are also located there. The cause of action, including the petitioner’s claims for unpaid amounts and subsequent arbitration proceedings, arise out of events which took place in Tamil Nadu. Further, the orders relating to the property in dispute, including the attachment order and the arbitral award, have all been passed by the District Court in Nagercoil and the Madras High Court. The petitioner has previously approached these Courts for relief, and the orders passed by them directly pertain to the property in question and the execution of the arbitral award. Thus, there is no justification for invoking the jurisdiction of this High Court when the Courts in Tamil Nadu have already been seized of the matter and have issued relevant orders.
A Coordinate Bench of this Court in the case of Chinteshwar Steel Pvt. Ltd. v. Union of India [2013 (11) TMI 1800 - DELHI HIGH COURT], has held that in case of pan India Tribunals, or Tribunals/statutory authorities having jurisdiction over several States, the situs of the Tribunal would not necessarily be the marker for identifying the jurisdictional High Court.
This Court is of the considered opinion that the ground on which the petitioner is seeking directions against the respondents, including Tamil Nadu Medical Council and Tamil Nadu Nurses and Midwives Council, to restrain them from granting any permission to St. Alphonsa Trust (situated in Tamil Nadu) to start nursing and medical college on the properties situated at Kanyakumari, Tamil Nadu, is the pendency of civil disputes in the courts of Tamil Nadu between the petitioner and the Trust. The petitioner previously has already invoked the jurisdiction of High Court of Madras for seeking similar reliefs - the petitioner herein has engaged in forum shopping by seeking to invoke the jurisdiction of this Court after having withdrawn petitions from the appropriate forum in Tamil Nadu. Such conduct, where the petitioner attempts to choose a forum favorable to them after having already approached the appropriate forum, cannot be condoned.
The present petitions along with pending application stand dismissed solely on the ground of territorial jurisdiction, alongwith a total cost of Rs. 50,000/- (Rs. 25,000/- in each petition), to be deposited with Delhi High Court Staff Welfare Fund within two weeks.
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2024 (11) TMI 601
Maintainability of complaint - respondent had obtained Occupation/Completion Certificate for the project much before the RERA came into force - Jurisdiction of the Real Estate Regulatory Authority (RERA) concerning projects completed before its enactment - forum shopping/hunting - HELD THAT:- The learned Authority as also the learned Tribunal have dismissed the appellant’s complaint and appeal by holding that once the project stood completed in the year 2007, the Authority under the RERA would have no jurisdiction to entertain any complaint qua such a project. The learned Tribunal also found that the appellant had vigorously pursued his initial complaint before the District Forum and it is only at the stage when his appeal before the State Commission was pending adjudication that he chose to withdraw. This, according to the learned Tribunal amounted to forum hunting.
Further the learned Tribunal observed that it was an admitted position that the project had been completed in the year 2006 with the Completion Certificate by the DDA being issued on 08.03.2007, i.e., much prior to the RERA 2016 coming into force. In the light of this admitted position, the learned Tribunal was correct in holding that the RERA cannot be applied to projects, which stood completed before the enactment thereof. If complaints pertaining to projects, which were completed before the RERA was enacted were to be entertained, the same would amount to giving retrospective effect to the RERA, which the Legislature never intended.
The complaint of the appellant was per se not maintainable under the RERA as the project of the respondent had been completed with the Completion Certificate having been issued by DDA on 08.03.2007 i.e., much prior to RERA coming into force.
There are no such provision in the RERA, which grants liberty to a person, who had been pursuing any remedy under the Consumer Protection Act to file a complaint under RERA in respect of a project, which stood completed before the Act came into force.
The Real Estate Regulatory Authority, the adjudicatory officer / authority and the learned Tribunal have rightly rejected / dismissed the complaint of the appellant on the ground of lack of jurisdiction as the RERA itself was not applicable to the project, which not only was completed but also had received the Completion Certificate much before the enactment of the RERA - Appeal dismissed.
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2024 (11) TMI 542
Independence and impartiality of arbitral tribunals under the Arbitration and Conciliation Act 1996 - interplay between party autonomy and independence and impartiality of the arbitral tribunal - unilateral appointment of sole arbitrator, or curation of a panel of arbitrators and mandate that the other party select their arbitrator from the panel - principle of equal treatment of parties applies at the stage of the appointment of arbitrators or not - appointment process in a public-private contract which allows a government entity to unilaterally appoint a sole arbitrator or majority of the arbitrators of the arbitral tribunal is violative of Article 14 of the Constitution.
As per Dr. Dhananjaya Y Chandrachud, CJI and Pamidighantam Sri Narasimha:-
HELD THAT:- Following was held:
a. The principle of equal treatment of parties applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators;
b. The Arbitration Act does not prohibit PSUs from empanelling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs;
c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators;
d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators. The process of appointing arbitrators in CORE [2019 (12) TMI 841 - SUPREME COURT] is unequal and prejudiced in favour of the Railways;
e. Unilateral appointment clauses in public-private contracts are violative of Article 14 of the Constitution;
f. The principle of express waiver contained under the proviso to Section 12(5) also applies to situations where the parties seek to waive the allegation of bias against an arbitrator appointed unilaterally by one of the parties. After the disputes have arisen, the parties can determine whether there is a necessity to waive the nemo judex rule; and
g. The law laid down in the present reference will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction applies to three-member tribunals.
As per Hrishikesh Roy, J.
HELD THAT:- The following are the conclusions :-
a) Section 18 applies to all stages of arbitration including the stage of appointment of an arbitrator. The Arbitration Act does not provide for any special treatment to the government irrespective of whether the arbitration is by or against the government.
b) Unilateral appointment of Arbitrators is permissible as per the legislative scheme of the Arbitration Act. There is a distinction between ‘ineligibility’ and ‘unilateral’ appointment of arbitrators. As long as an arbitrator nominated by a party is eligible under the Seventh Schedule of the Act, the appointment (unilateral or otherwise), should be permissible. It is only in cases of a complete lack of consensus that the court should exercise its power under Section 11(6) of the Arbitration Act to appoint an independent and impartial arbitrator as per Section 11(8) read with Section 12 and 18 of the Arbitration Act. At the appointment stage, the scope of judicial intervention is otherwise extremely narrow.
c) The independence and impartiality of the arbitrator must be examined within the statutory framework of the Arbitration Act, particularly Section 18 read with 12(5). Public Law constitutional principles should not be imported to arbitration proceedings particularly at the threshold stage of Section 11.
As per Pamidighantam Sri Narasimha:
Following are summarised:
I. Dispute resolution through arbitration encompasses two independent yet interdependent principles: contractual freedom as party autonomy and statutory obligation as duty to constitute an independent arbitral tribunal.
II. Party autonomy in making of an arbitration agreement is an essential feature of arbitration. It commences with choosing the members of the arbitral tribunal, extends to the procedure that would apply for its conduct, and concludes with the method by which an award could be challenged before a court. It is thus a brooding and guiding spirit of arbitration. Party autonomy is sufficiently incorporated in the Arbitration Act, along with a restraint on judicial intervention.
III. The moment parties choose arbitration over ordinary civil proceedings for dispute resolution, their duty to establish an independent and impartial tribunal arises. The substitution of arbitration in place of civil courts as an exception under Section 28 of the Contract Act is only for a forum and not for contracting out of the most essential feature of a dispute resolution, i.e., independence and impartiality must exist in every forum. This essential feature is the inviolable public policy consideration under Section 23 of the Contract Act from which the parties cannot opt out. Arbitration agreements which are not compliant of this public policy consideration are void under Section 23 of the Contract Act. Thus, there is a statutory incorporation of duties of the parties to the arbitration agreement.
IV. If an arbitration agreement is considered by the court as not enabling constitution of an independent and impartial tribunal, any submission that the said agreement is a binding contract, or it is in exercise of party autonomy is not tenable as such an agreement will be against public policy and as such not an enforceable contract.
V. In view of the statutory incorporation of these duties, it is not necessary to apply public law principles evolved in constitutional and administrative laws. Sourcing these duty obligations from Contract Act and Arbitration Act is important to maintain the integrity of the party autonomy and restraint of judicial institutions.
VI. The power to ensure that the arbitration agreement is compliant of the public policy requirement of establishing an independent and impartial tribunal is always of the Court. This principle is recognised and statutorily incorporated in the Contract Act and the Arbitration Act. It is the duty of the court to ensure that the arbitration agreement inspires confidence and it will enable establishment of an independent and impartial arbitral tribunal.
VII. Neither public policy considerations under the Contract Act or the Arbitration Act restrain the parties to the arbitration from maintaining a panel of arbitrators in any manner. However, arbitration agreements enabling one of the parties to unilaterally constitute arbitral tribunal do not inspire confidence of independence and may violate the public policy requirement of constituting an independent and impartial tribunal. The court will, therefore, scrutinise the agreement and hold them to be invalid if it considers it appropriate.
VIII. The occasion for the court to examine the constitution of the independent and impartial tribunal under the arbitration clause will arise when one of the parties makes an application under Sections 11, 14 or 34. It is not permissible for the court to give an advance declaration that all such agreements which enable one of the parties to unilaterally constitute the arbitral tribunal would be void per se. No two agreements are the same and it is necessary for the court to examine the text and context of the agreement.
IX. All applications pending before the courts challenging the unilateral appointment clauses will be disposed of applying the test as to whether such a clause enables establishment of an independent and impartial tribunal.
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2024 (11) TMI 540
Dishonour of Cheque - seeking expeditious disposal of cases under the Negotiable Instrument Act, 1881 - HELD THAT:- From perusal of record, it appears that the proceeding under the Act, 1881 is pending since 2021. However, as per Section 143(2) of Act, 1881 the trial for the offence under the Act, 1881 should be conducted on day to day basis and it is further provided u/s 143(3) of the Act, 1881 that the trial should be concluded within six months from the date of filing of the complaint.
The Apex Court in the case of INDIAN BANK ASSOCIATION AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2014 (5) TMI 750 - SUPREME COURT], has issued direction for expeditious disposal of the cases under the Act, 1881.
From the above mentioned judgement of Apex Court, it is clear that the Apex Court for expeditious disposal of cases under the Act, 1881 has issued several directions which the concerned court/Magistrate has to follow while deciding the cases under the Act, 1881. From the observations of the Apex Court as well as analysis of Sections 138 & 143 of the Act, 1881, it is expedient that all the proceedings under the Act, 1881 should be concluded expeditiously without going into unnecessary technicality.
This Court directs the Additional Chief Judicial Magistrate, Court No.8, Prayagraj, to decide the Complaint Case No.468 of 2019 (Chandrama Prasad Singh Vs. Vijendra Pratap Singh), under section 138 of Negotiable Instrument Act, 1881, Police Station-Khiri, District-Prayagraj, keeping in mind the direction of the Apex Court in above mentioned cases, expeditiously preferably within a period of six months from the date of receipt of certified copy of this order, strictly in accordance with statutory provision of Sections 143(2) and 143(3) of the Act, 1881, if there is no legal impediment.
The application is disposed of.
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2024 (11) TMI 539
Exemption Scheme (Policy) to be applied with retrospective or prospective effect - Seeking direction to the respondents to refund the amount to the petitioner realized under the head of 'Tax' in respect of his Hybrid Vehicle - HELD THAT:- Admittedly, the vehicle in question has been purchased by the petitioner prior to the date of Policy, 2022, i.e. 13.10.2022 and tax itself has been paid as applicable on the said date and, therefore, it cannot be said that under the said Policy/Notification, the petitioner was entitled to the exemption as provided. Only on account of the fact that the vehicle was registered on 18.10.2022, i.e. after the date as indicated in the amendment, i.e. 14.10.2022, the petitioner cannot seek the refund from the respondents as the tax was paid prior to the date of the said Policy.
It has been laid down by Hon’ble Supreme Court in M/S. STAR INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) , RAIGAD [2015 (10) TMI 1288 - SUPREME COURT] that the eligibility criteria laid down for exemption notification is required to be construed strictly.
In that view of the matter, no case for issuing direction for refund, as prayed for, is made out - Petition dismissed.
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2024 (11) TMI 538
Seeking constitution of an Arbitral Tribunal to adjudicate the disputes between the parties - cause of action - constitution of an Arbitral Tribunal to adjudicate the disputes between the parties - Section 11 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The understanding of the learned counsel for the respondent that the limitation period for invocation of the arbitration would begin from the date of execution of the MoU dated 14.06.2019 is ex-facie incorrect. It is only after the disputes arose between the parties that the occasion arose for the petitioner to take recourse to arbitration.
In the facts of the present case, it cannot be said that the claims sought to be raised by the petitioner are ex-facie barred by the limitation so as to preclude any reference to arbitration. In any event, as held in SBI General Insurance Co. Ltd. v. Krish Spinning [2024 (9) TMI 606 - SUPREME COURT], at the reference stage, all that is required to be examined is whether there exists an arbitration agreement. All other aspects touching upon the merits or maintainability of the claim/s are required to be dealt with by a duly constituted Arbitral Tribunal.
Likewise, the fact that there are proceedings pending under Section 138 of the NI Act as also the fact that the petitioner, in the first instance, sought to seek resolution of the matter through pre-litigation mediation under the CC Act, would not preclude the petitioner from taking recourse to arbitration and seek adjudication of the disputes on merit - there is no impediment to constitution of an Arbitral Tribunal to adjudicate the disputes between the parties.
A perusal of the arbitration agreement shows that it contemplates a three-member Arbitral Tribunal. At this stage, learned counsel for the respondent submits that a Sole Arbitrator be appointed by this Court. The same request is also made by the learned counsel for the petitioner.
The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties requisite disclosure as required under Section 12 of the A&C Act - It is agreed between the parties that the arbitration shall take place under the aegis of and under the rules of Delhi International Arbitration Centre (DIAC).
The present petition stands disposed off.
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2024 (11) TMI 465
Appointment of a sole arbitrator in terms of arbitration clause stipulated in the agreements to adjudicate upon the disputes between the petitioner and the respondents - sub-sections (6) and (12) of Section 11 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- In Khardah Company Ltd. v. Raymon & Co (India) Pvt. Ltd., [1962 (5) TMI 32 - SUPREME COURT] it was held that an assignment of a contract might result by transfer either of the rights or of the obligations thereunder. But there is a well-recognized distinction between these two classes of assignments. As a rule, obligations under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is really a novation resulting in substitution of liabilities. On the other hand, the rights under a contract are assignable unless the contract is personal in its nature, or the rights are incapable of assignment either under the law or under an agreement between the parties.
Since at the stage of consideration of a prayer under Section 11(6) of the 1996 Act the Court has to confine itself to the examination of the existence of an arbitration agreement (vide sub-section (6-A) of Section 11), it would not be appropriate to delve deep into the issue as it could well be considered by the arbitrator on the basis of evidence led by the parties. More so, when existence of arbitration agreement in the license agreement and share subscription agreement is not in dispute.
It is deemed appropriate to refer the matter to the Delhi International Arbitration Centre for appointment of a sole arbitrator to adjudicate upon the dispute between the parties.
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2024 (11) TMI 464
Rent or occupation charges and CAM charges - HELD THAT:- The learned court below be suitably approached by the parties so that hearing of both the suits are expedited.
Although the respondent shall make payment of occupation and other charges at the above rate in modification of the impugned judgement and order, it is absolutely clear that the said order would not stand in the way of the appellant prosecuting their suit for eviction of the respondent and moving the court for any interim order in aid of it.
Appeal disposed off.
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2024 (11) TMI 394
Dissolution, settlement of accounts and distribution of shares of a partnership firm, namely, Crystal Transport Service - appointment of receiver to take charge of the management and assets of the firm till it is wound up - restraining the defendants from recovering, receiving or disposing of the property and effects of the firm - HELD THAT:- In the instant case, the finding, which appears on the record, is to the effect that the fourth defendant (appellant company) had taken over the assets of the firm. Therefore, in light of the provisions of Section 37 of the 1932 Act, if the fourth defendant is carrying on business with the assets of the firm, till a final settlement is made, the plaintiff, who would fall in the category of an outgoing partner, would have the right to seek for accounts and a share in the profits which might be derived from his share in the assets of the firm.
As to what extent the business of the appellant company is derived from the assets of the firm is a matter of evidence which parties may have to adduce in the course of the proceedings relating to the preparation of the final decree pursuant to the order of remand.
Considering that by the impugned order the matter has been remanded to the trial court, there are no good reason to interfere with the order impugned - appeal disposed off.
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2024 (11) TMI 393
Doctrine of Forum Non Conveniens - Maintainability of the petition under Section 11 of the Arbitration and Conciliation Act, 1996 - Applicability of Part I of the Act, 1996 to the arbitration clause contained in the Distributorship Agreement - seat of the arbitration in terms of the Distributorship Agreement - Seeking a referral of the disputes that have arisen between the parties to arbitration and consequent appointment of an arbitrator by this Court in terms of clauses 26 and 27 of the Consumer Distributorship Agreement respectively dated 09.11.2010 - Section 11 sub-section (6)(a) read with Section 11 sub-section (12)(a) of the Arbitration and Conciliation Act, 1996.
HELD THAT:- The following position of law emerges:-
(i) Part I of the Act, 1996 and the provisions thereunder only applies where the arbitration takes place in India i.e., where either (I) the seat of arbitration is in India OR (II) the law governing the arbitration agreement are the laws of India.
(ii) Arbitration agreements executed after 06.09.2012 where the seat of arbitration is outside India, Part I of the Act, 1996 and the provisions thereunder will not be applicable and would fall beyond the jurisdiction of Indian courts.
(iii) Even those arbitration agreements that have been executed prior to 06.09.2012 Part I of the Act, 1996 will not be applicable, if its application has been excluded by the parties in the arbitration agreement either explicitly by designating the seat of arbitration outside India or implicitly by choosing the law governing the agreement to be any other law other than Indian law.
(iv) The moment ‘seat’ is determined, it would be akin to an exclusive jurisdiction clause whereby only the jurisdictional courts of that seat alone will have the jurisdiction to regulate the arbitral proceedings. The notional doctrine of concurrent jurisdiction has been expressly rejected and overruled by this Court in its subsequent decisions.
(v) The ‘Closest Connection Test’ for determining the seat of arbitration by identifying the law with which the agreement to arbitrate has its closest and most real connection is no longer a viable criterion for determination of the seat or situs of arbitration in view of the Shashoua Principle. The seat of arbitration cannot be determined by formulaic and unpredictable application of choice of law rules based on abstract connecting factors to the underlying contract. Even if the law governing the contract has been expressly stipulated, it does not mean that the law governing the arbitration agreement and by extension the seat of arbitration will be the same as the lex contractus.
(vi) The more appropriate criterion for determining the seat of arbitration in view of the subsequent decisions of this Court is that where in an arbitration agreement there is an express designation of a place of arbitration anchoring the arbitral proceedings to such place, and there being no other significant contrary indicia to show otherwise, such place would be the ‘seat’ of arbitration even if it is designated in the nomenclature of ‘venue’ in the arbitration agreement.
(vii) Where the curial law of a particular place or supranational body of rules has been stipulated in an arbitration agreement or clause, such stipulation is a positive indicium that the place so designated is actually the ‘seat’, as more often than not the law governing the arbitration agreement and by extension the seat of the arbitration tends to coincide with the curial law.
(viii) Merely because the parties have stipulated a venue without any express choice of a seat, the courts cannot sideline the specific choices made by the parties in the arbitration agreement by imputing these stipulations as inadvertence at the behest of the parties as regards the seat of arbitration. Deference has to be shown to each and every choice and stipulations made by the parties, afterall the courts are only a conduit or means to arbitration, and the sum and substance of the arbitration is derived from the choices of the parties and their intentions contained in the arbitration agreement. It is the duty of the court to give weight and due consideration to each choice made by the parties and to construe the arbitration agreement in a manner that aligns the most with such stipulations and intentions.
(ix) We do not for a moment say that, the Closest Connection Test has no application whatsoever, where there is no express or implied designation of a place of arbitration in the agreement either in the form of ‘venue’ or ‘curial law’, there the closest connection test may be more suitable for determining the seat of arbitration.
(x) Where two or more possible places that have been designated in the arbitration agreement either expressly or impliedly, equally appear to be the seat of arbitration, then in such cases the conflict may be resolved through recourse to the Doctrine of Forum Non Conveniens, and the seat be then determined based on which one of the possible places may be the most appropriate forum keeping in mind the nature of the agreement, the dispute at hand, the parties themselves and their intentions. The place most suited for the interests of all the parties and the ends of justice may be determined as the ‘seat’ of arbitration.
The present petition under Section 11 of the Act, 1996 is not maintainable as neither the seat of arbitration is India nor is the arbitration agreement governed by laws of India.
The present petition filed by the petitioner fails and is hereby dismissed.
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2024 (11) TMI 392
Seeking appointment of an arbitrator to adjudicate disputes and claims in terms of Clause 18.12 of the Master Services Agreement - whether the High Court committed any error in dismissing the appellant’s application under Section 11 of the Act, 1996? - HELD THAT:- In a recent pronouncement, relying on the Constitution Bench judgment of this Court in In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899, [2023 (12) TMI 897 - SUPREME COURT (LB)] this Court in SBI General Insurance Co. Ltd. vs. Krish Spinning [2024 (9) TMI 606 - SUPREME COURT], summarised the law on the scope and standard of judicial scrutiny that an application under Section 11(6) of the Act, 1996 can be subjected to - it was held that 'ex-facie frivolity and dishonesty in litigation is an aspect which the arbitral tribunal is equally, if not more, capable to decide upon the appreciation of the evidence adduced by the parties. We say so because the arbitral tribunal has the benefit of going through all the relevant evidence and pleadings in much more detail than the referral court. If the referral court is able to see the frivolity in the litigation on the basis of bare minimum pleadings, then it would be incorrect to doubt that the arbitral tribunal would not be able to arrive at the same inference, most likely in the first few hearings itself, with the benefit of extensive pleadings and evidentiary material.'
The scope of inquiry under Section 11 of the Act, 1996 is limited to ascertaining the prima facie existence of an arbitration agreement. In the present case, the High Court exceeded this limited scope by undertaking a detailed examination of the factual matrix. The High Court erroneously proceeded to assess the auditor’s report in detail and dismissed the arbitration application. In our view, such an approach does not give effect to the legislative intent behind the 2015 amendment to the Act, 1996 which limited the judicial scrutiny at the stage of Section 11 solely to the prima facie determination of the existence of an arbitration agreement.
It is clarified that the limited jurisdiction of the referral Courts under Section 11 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time-consuming and costly arbitration process - it is clarified that the aforesaid is not to be construed as a determination of the merits of the matter, which the Arbitral Tribunal will rightfully be equipped to determine.
The appeal filed by the appellant is allowed and the impugned order passed by the High Court of Bombay is hereby set aside.
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2024 (11) TMI 340
Validity of the Explanation to Rule 38 of the Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 - Explanation to Rule 45(8)(a) of the Mineral Conservation and Development Rules, 2017 - computation of royalty to be levied for the extraction or consumption of mined ores - Whether, the Explanation(s) appended to Rule 38 of the MCR, 2016 and Rule 45 of the MCDR, 2017 respectively are unreasonable and manifestly arbitrary and in consequence of violation of Article 14 of the Constitution?
HELD THAT:- In M.P. OIL EXTRACTION VERSUS STATE OF M.P. [1997 (7) TMI 660 - SUPREME COURT], this Court held that policy decisions are the domain of the executive authority of the State and that the courts should not embark on the unchartered ocean of public policy and should not question the efficacy or otherwise of such policy so long the same does not offend any provision of the stature or the Constitution of India. It further observed that unless the policy framed is absolutely capricious or not informed by reasons, the court cannot and should not outstep its limit and tinker with the policy decision of the executive functionary of the State.
In PREMIUM GRANITES VERSUS. STATE OF T.N. [1994 (2) TMI 302 - SUPREME COURT], this Court observed that it is not the domain of the courts to consider as to whether a particular policy is wise or that a better public policy can be evolved, and that such matters must be left to the discretion of the executive and legislature.
In BALCO EMPLOYEES UNION (REGD.) VERSUS UNION OF INDIA [2001 (12) TMI 808 - SUPREME COURT] this Court held that it is not for the courts to consider the relative merits of different economic policies and consider whether a better policy may be evolved. It further held that when it comes to policy decisions on economic matters, the courts ought to be very circumspect in disturbing such conclusions unless there is an illegality in the decision itself.
While courts have the power of judicial review to ensure that executive actions and legislative enactments comply with the Constitution, this power is not absolute. Judicial review is meant to act as a safeguard against actions that overstep legal boundaries or infringe on fundamental rights, but it does not entail a comprehensive re-evaluation of the policy’s wisdom. The judicial review of policy decisions is limited to assessing the legality of the decision- making process rather than the substantive merits of the policy itself.
In the present case, there is no doubt that the mechanism for computation of royalty in terms of Rule 38 of the MCR, 2016 and Rule 45 of the MCDR, 2017 devised by the respondents might have onerous implications in monetary terms on the mining leaseholders inasmuch as there is a compounding effect on the rate of royalty for every subsequent month. However, this Court in the absence of anything to show that such policy is in excess of the powers or domain of the respondents herein or in breach of any statutory provision, cannot strike down the same.
Merely because the Explanation(s) to Rule 38 of the MCR, 2016 and Rule 45 of the MCDR, 2017 provides that there shall be no deduction of royalty, payments to the District Mineral Foundation and payments to the National Mineral Exploration Trust from the gross amount for the purpose of computing sale value does not in any manner makes the aforesaid Explanation in derogation of the main provision. The aforesaid Explanation(s) are merely clarificatory in nature inasmuch as it explains the ambiguities in the main provisions of Rule 38 of the MCR, 2016 and Rule 45 of the MCDR, 2017, and thus, they cannot be said to exceed the ambit of the main provisions or in contravention of the statutory scheme.
Whether the exclusion of royalty, and contributions towards DMF and NMET paid previously for coal but not for other minerals is unreasonable and manifestly arbitrary? - HELD THAT:- In RK. GARG VERSUS UNION OF INDIA AND OTHERS [1981 (11) TMI 57 - SUPREME COURT], this Court observed that laws relating to economic activities should be viewed with greater latitude and the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula.
The respondents a period of 2-months from the date of pronouncement of this judgment to conclude the public consultation process undertaken for amending the MMDR Act initiated pursuant to the Notice dated 25.05.2022 and take a final decisive call in regard to the cascading impact of royalty on royalty in the calculation of the ‘average sale price’ by virtue of the Explanation(s) to Rule 38 of the MCR, 2016 and Rule 45 of the MCDR, 2017.
The challenge to the validity of Explanation(s) appended to Rule 38 of the MCR, 2016 and Rule 45 of the MCDR, 2017 is answered accordingly.
The Registry shall notify this matter before an appropriate Bench after a period of two months from the date of pronouncement of this judgment to report compliance of the directions.
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2024 (11) TMI 339
Seeking appointment of an arbitrator for the adjudication of disputes and claims in terms of Clause 13.10 of the Shareholders Agreement dated 25.07.2011 entered into between the petitioner and the respondents - Section 11(6) read with Section 11(12)(a) of the Arbitration & Conciliation Act, 1996 - whether a reference under Section 11(6) of the Act, 1996 to be declined by examining whether the substantive claims of the petitioner are ex facie and hopelessly time barred?
HELD THAT:- A three-judge bench of this Court in Vidya Drolia & Ors v. Durga Trading Corporation [2020 (12) TMI 1227 - SUPREME COURT] while dealing with the scope of powers of the referral court under Sections 8 and 11 respectively, endorsed the prima facie test and opined that Courts at the referral stage can interfere only in rare cases where it is manifest that the claims are ex facie time-barred and dead, or there is no subsisting dispute. Such a restricted and limited review was considered necessary to check and protect parties from being forced to arbitrate when the matter is demonstrably “non-arbitrable” and to cut off the deadwood.
In Bharat Sanchar Nigam Limited and Another v. Nortel Networks India Private Limited [2021 (3) TMI 447 - SUPREME COURT], the notice invoking arbitration was issued 5 ½ years after the cause of action arose, i.e., rejection of the claims of Nortel by BSNL and the claim was therefore held to be ex facie time-barred. This Court clarified that the period of limitation for filing a petition seeking appointment of an arbitrator(s) cannot be confused or conflated with the period of limitation applicable to substantive claims made in the underlying commercial contract.
The substantive claims of the petitioner are ex-facie time barred and therefore, incapable of being referred to arbitration. The respondents contend that, with respect to the issue relating to the 2,00,010 equity shares, the petitioner has sought enforcement of the letter dated 22.09.2011 but has however, served a notice invoking arbitration 6 years later on 23.01.2017. Further, with respect to the 4,00,000 equity shares, it was contended that the claim can only arise upon the date of resignation i.e., 18.07.2013 and the claim would, therefore, again be time-barred.
It is now well settled law that, at the stage of Section 11 application, the referral Courts need only to examine whether the arbitration agreement exists – nothing more, nothing less. This approach upholds the intention of the parties, at the time of entering into the agreement, to refer all disputes arising between themselves to arbitration. However, some parties might take undue advantage of such a limited scope of judicial interference of the referral courts and force other parties to the agreement into participating in a time- consuming and costly arbitration process.
The existence of the arbitration agreement as contained in Clause 13.10 of the Shareholders Agreement is not disputed by either of the parties. The submissions as regard the claim of the petitioner being ex-facie time barred may be adjudicated upon by the arbitral tribunal as a preliminary issue - Petition allowed.
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2024 (11) TMI 281
Scope of the power of the State Legislatures under Entry 8 and the meaning of the phrase “intoxicating liquor” - Doctrine of Occupied Field - whether “intoxicating liquor” in Entry 8 only includes potable alcohol, such as alcoholic beverages or also includes alcohol which is used in the production of other products? - Entry 52 of List I of the Seventh Schedule to the Constitution overrides Entry 8 of List II or not - expression ‘intoxicating liquors’ in Entry 8 of List II of the Seventh Schedule to the Constitution includes alcohol other than potable alcohol or not - notified order under Section 18G of the IDRA is necessary for Parliament to occupy the field under Entry 33 of List III of the Seventh Schedule to the Constitution or not.
As held by the Judges, CJI [Dr Dhananjaya Y Chandrachud], J [Hrishikesh Roy], J [Abhay S Oka], J [J B Pardiwala], J [Manoj Misra], J [Ujjal Bhuyan] and J [Satish Chandra Sharma]:-
a. Entry 8 of List II of the Seventh Schedule to the Constitution is both an industry-based entry and a product-based entry. The words that follow the expression “that is to say” in the Entry are not exhaustive of its contents. It includes the regulation of everything from the raw materials to the consumption of ‘intoxicating liquor’;
b. Parliament cannot occupy the field of the entire industry merely by issuing a declaration under Entry 52 of List I. The State Legislature’s competence under Entry 24 of List II is denuded only to the extent of the field covered by the law of Parliament under Entry 52 of List I;
c. Parliament does not have the legislative competence to enact a law taking control of the industry of intoxicating liquor covered by Entry 8 of List II in exercise of the power under Article 246 read with Entry 52 of List I;
d. This Court in THE STATE OF BOMBAY AND ANOTHER VERSUS FN. BALSARA [1951 (5) TMI 3 - SUPREME COURT] and SOUTHERN PHARMACEUTICALS & CHEMICALS TRICHUR & ORS. VERSUS STATE OF KERALA [1981 (9) TMI 275 - SUPREME COURT] did not limit the meaning of the expression ‘intoxicating liquor’ to its popular meaning, that is, alcoholic beverages that produce intoxication. All the three judgments interpreted the expression to cover alcohol that could be noxiously used to the detriment of health;
e. The expression ‘intoxicating liquor’ in Entry 8 has not acquired a legislative meaning on an application of the test laid down in THE STATE OF MADRAS VERSUS GANNON DUNKERLEY & CO. (MADRAS) LTD. [1958 (4) TMI 42 - SUPREME COURT];
f. The study of the evolution of the legislative entries on alcohol indicates that the use of the expressions “intoxicating liquor” and “alcoholic liquor for human consumption” in the Seventh Schedule to the Constitution was a matter well-thought of. It also indicates that the members of the Constituent Assembly were aware of use of the variants of alcohol as a raw material in the production of multiple products;
g. Entry 8 of List II is based on public interest. It seeks to enhance the scope of the entry beyond potable alcohol. This is inferable from the use of the phrase ‘intoxicating’ and other accompanying words in the Entry. Alcohol is inherently a noxious substance that is prone to misuse affecting public health at large. Entry 8 covers alcohol that could be used noxiously to the detriment of public health. This includes alcohol such as rectified spirit, ENA and denatured spirit which are used as raw materials in the production of potable alcohol and other products. However, it does not include the final product (such as a hand sanitiser) that contains alcohol since such an interpretation will substantially diminish the scope of other legislative entries;
h. The judgment in SYNTHETICS & CHEMICALS LTD., ETC. VERSUS STATE OF UP. [1989 (10) TMI 214 - SUPREME COURT] is overruled in terms of this judgment;
i. Item 26 of the First Schedule to the IDRA must be read as excluding the industry of “intoxicating liquor”, as interpreted in this judgment;
j. The correctness of the judgment in CH. TIKA RAMJI & OTHERS, ETC. VERSUS THE STATE OF UTTAR PRADESH & OTHERS [1956 (4) TMI 55 - SUPREME COURT] on the interpretation of word ‘industry’ as it occurs in the legislative entries does not fall for determination in this reference; and
k. The issue of whether Section 18G of the IDRA covers the field under Entry 33 of List III does not arise for adjudication in view of the finding that denatured alcohol is covered by Entry 8 of List II.
The reference is answered in the above terms.
The Registry is directed to obtain administrative instructions from the Chief Justice for placing the matters before an appropriate Bench.
The order of above judges have been differed in few points by NAGARATHNA, J. - The decision as given by him are as follows:-
a. Entry 8 – List II deals with “intoxicating liquors”. The misuse, diversion or abuse of “industrial alcohol” as “intoxicating liquors” can also be controlled and prevented under Entry 8 – List II by the State Legislatures having regard to Article 47 of the Constitution. It is also made clear that the IDRA which has been enacted by the Parliament by virtue of Entry 52 – List I has taken control of “Fermentation Industries” as a scheduled industry. Such “Fermentation Industries” would exclude “intoxicating liquors”.
b. Parliament can occupy the field of the entire industry by merely issuing a declaration under Entry 52 – List I and the State Legislature’s competence under Entry 24 – List II is denuded to the field of the entire industry and specifically to the extent of the field covered by the law of Parliament under Entry 52 – List I.
c. The decision as given by above judges agreed.
d. The context of the controversy must be borne in mind in the said cases. The aforesaid decisions in substance limited the meaning of the expression “intoxicating liquors” to its popular meaning i.e. “alcoholic beverages” that produce intoxication. Therefore, in the context of prohibition of “intoxicating liquor” as a beverage, there could not have been prohibition of production of alcohol used for medicinal and toilet preparation as well as “industrial alcohol” or non-potable alcohol.
e. The expression “intoxicating liquor” in Entry 8 has acquired a legislative and judicial meaning over the decades.
f. The members of the Constituent Assembly were clear in what they envisaged within the scope and ambit of the expression “intoxicating liquors” in Entry 8 – List II. This is also evident from Item 26 of the First Schedule of the IDRA. “Intoxicating liquors” is only a segment of the “Fermentation Industries”, namely, potable alcohol. There was no intention on the part of the members of the Constituent Assembly to read within the expression “intoxicating liquors” non-potable or “industrial alcohol”. Further, in order to have a consistency between what was envisaged under Entry 84 – List I and Entry 51 – List II in the context of alcoholic liquors for human consumption, the taxing Entry in List II which is within the legislative competence of the States follows the regulatory Entry in Entry 8 – List II. Therefore, the use of the expression “industrial alcohol” or non-potable alcohol in Synthetics and Chemicals (7J) was only to crystallise all variants of alcohol which were non-potable and to distinguish the same from potable alcohol meant only for human consumption as a beverage.
g. The entire controversy cannot be viewed from the point of view of alcohol being used as a raw material and final product such as hand sanitizer containing alcohol. The potential misuse of alcohol cannot be the basis for interpreting an Entry such as Entry 8 – List II. Ultimately, the “Fermentation Industries” have to be borne in mind which takes within its canvas only non-potable /“industrial alcohol”. The aspect of public health having a corelation to Entry 8 – List II dealing with “intoxicating liquor” and the misuse of alcohol cannot be a guide while interpreting the content of the said Entry and therefore, its scope and ambit being amplified beyond what it really envisages as a field of legislation for the States to legislate upon.
h. The judgment in SYNTHETICS & CHEMICALS LTD. need not be overruled in relation to Section 18G of the IDRA and it continues to be good law in the context of what is comprised in the expression “industrial alcohol” and “intoxicating liquors” except what has been clarified above in Entry 8 – List II.
i. Item 26 of the First Schedule of the IDRA must be read excluding only what is contained in the expression “intoxicating liquors” as interpreted above in Entry 8 – List II.
j. Tika Ramji is held to be not good law insofar as the requirement of issuance of a notified order as a condition precedent for the field to be occupied, has been mandated therein.
k. Denatured alcohol belongs to the family of “industrial alcohol” and therefore, Section 18G of the IDRA has a bearing on the said product. Section 18G occupies the field under Entry 33(a) – List III and, thereby, only Parliament is competent to legislate on all articles or class of articles related to a scheduled industry i.e. “Fermentation Industries”.
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2024 (11) TMI 280
Dishonour of Cheque - Liability of a non-executive Director - vicarious liability - Section 138 read with Sections 141/142 of the Negotiable Instruments Act, 1881 - HELD THAT:- The law as regards the liability of a Director for an offence under Section 138 NI Act committed by a company is no longer res integra.
In SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [2005 (9) TMI 304 - SUPREME COURT], the Supreme Court while dealing with the aforesaid, discussed in detail the role of a Director in a company as well as their liability.
It is a well-settled principle in law that if any Director seeks quashing of a complaint under Section 138 NI Act or any process issued therein, then one must show that the complaint is bereft of the appropriate pleadings/averments which would bring him into the fold of the rigours of Section 141 NI Act and in this regard, one must bring on record, certain sterling and incontrovertible evidence showing that the accused is not concerned with issuance of the said cheques, which can only be seen by the High Court exercising powers under Section 482 Cr.P.C.
In the present case, as discernible from the complaint, there is a dearth of any specific averments and only a general mention of accused Nos. 3-8 as the Directors of accused company and being in charge and responsible for the conduct, affairs, and business of the company, is alleged. The petitioner is not even a signatory to the subject cheques. It is in fact the Managing Director i.e., accused No. 2, who is deemed in-charge of the day to day affairs of the company and is actively involved and responsible for the affairs of the company, who has also signed the subject cheques. Indisputably, the other accused persons, who were also Directors of the company, have been dropped from the list of accused. Additionally, the petitioner, being designated as Chairman as per the 27th Annual Report, cannot be deemed to be in-charge of the day to day as per the principles established in the judgment of YASHOVARDHAN BIRLA VERSUS CECIL WEBBER ENGINEERING LTD. & ORS. [2023 (4) TMI 706 - DELHI HIGH COURT], in absence of any additional material on record.
In view of the uncontroverted fact that the subject complaints lack the necessary averments to endorse as to what was the active role of the petitioner and as to how the petitioner was guilty or responsible for the offence, this Court is of the opinion that continuance of the present proceedings qua the petitioner would amount to abuse of the process of the Court.
Petition allowed.
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