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Indian Laws - Case Laws
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2025 (4) TMI 431
Application for appointment of a learned Arbitrator - Clause 16 of the agreement constituted a valid arbitration clause under the Arbitration and Conciliation Act, 1996 or not - The respondent No. 1 had approached the NCLT, Cuttack for initiation of insolvency proceedings against the petitioner, as the corporate debtor. The petitioner also participated in the said proceeding and after several months has invoked Clause 16, by treating the same to be an arbitration clause. In the reply filed to the notice issued under the IBC as also in the objection filed before the NCLT, the petitioner did not contend that the matter should be resolved by arbitration.
HELD THAT:- In the decision of Jagdish Chander [2007 (4) TMI 624 - SUPREME COURT], the Hon’ble Apex Court held that intention of the parties to enter into an arbitration agreement will have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicated an intention on the part of the parties to refer the dispute to a private tribunal for adjudication and a willingness to be bound by the decision of such tribunal on such disputes, it would constitute as an arbitration agreement. While there was no specific form of an agreement, the words used should disclose a determination and an obligation to refer to arbitration, but not merely a possibility of going for arbitration.
In the present case, the Managing Director of BAL, represented the company and signed the contract. The designated partner of the respondent No. 1 also represented the partnership firm and signed the contract. Thus, these two officials were representing the parties to the contract and were binding themselves to the terms and conditions of the contract. They were also bound to ensure that the parties to the contract performed their rights and liabilities there under.
By signing the contract, the Managing Director of BAL and the designated partner committed that the respective parties would be bound by the obligations and responsibilities outlined in the contract. Both parties have alleged breach. Thus, it would be absurd to hold that under such circumstances, the same persons could impartially settle the disputes - In the case in hand, compliance of Clause (4) is not ensured.
Conclusion - Clause 16 do not constitute a valid arbitration agreement under the Arbitration and Conciliation Act, 1996. The application for appointment of an arbitrator is dismissed, as the clause failed to meet the statutory requirements for an arbitration agreement.
Application dismissed.
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2025 (4) TMI 430
Dishonour of Cheque - challenge to issuance of the impugned notice - lack of prior examination of the complainant and witnesses on oath - non-application of mind - principles of natural justice - HELD THAT:- In light of the decision in A.C. Narayanan v. State of Maharashtra and Another [2013 (9) TMI 948 - SUPREME COURT], it becomes clear that in respect of complaints under Section 138 of the NI Act, once the complainant files an affidavit in support of the complaint, it is within the Magistrate’s discretion to decide whether to examine the complainant or witnesses on oath. The Magistrate is not bound to do so and may rely solely on the complaint, supporting documents, and the affidavit to decide whether to issue process.
Section 145 of the NI Act expressly permits the complainant to tender evidence by way of affidavit and enables the Court to proceed on such material unless a request is made for summoning the witness for cross-examination. Thus, the NI Act carves out a procedural departure from the general requirement under Section 200 CrPC (and now Section 223 BNSS), recognising the affidavit as a valid substitute for oral examination at the pre-cognizance stage.
While Section 223 of the BNSS broadly retains the procedural framework of Section 200 of the CrPC with respect to the examination of the complainant and witnesses, it introduces a significant departure through the insertion of a proviso mandating that the proposed accused be afforded an opportunity of hearing before cognizance is taken. This proviso marks a substantive procedural safeguard that did not exist under the earlier regime. However, with regard to offences under Section 138 of the NI Act, the Supreme Court in A.C. Narayanan v. State of Maharashtra has categorically held that the Magistrate may, in his discretion, proceed on the basis of the complaint, supporting documents, and an affidavit of the complainant, without necessarily examining the complainant or witnesses on oath prior to issuing process. Accordingly, in the Court’s view, the procedure for such cases has not undergone any material change with the enactment of Section 223 of the BNSS. The requirement of examining the complainant and the witnesses upon oath, at the pre-cognizance stage remains directory and not mandatory in complaints under Section 138 of the NI Act.
Conclusion - The Petitioner’s contention, that the Magistrate erred in issuing notice under Section 223 without first examining the complainant and witnesses on oath, does not merit acceptance. The challenge to the Impugned notice is, therefore, misconceived and without legal basis.
The Court finds no merit in the present petition - Petition dismissed.
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2025 (4) TMI 429
Dishonour of Cheque - insufficient funds - petitioner submitted that the petitioner has been convicted in a mechanical manner without due application of mind - violation of principles of natural justice - HELD THAT:- 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 - It is also well settled that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque received the cheque in discharge of a legally enforceable debt or liability are raised against the accused.
Coming to the facts of the present case, a bare perusal of Ex. CW-1 shows that when the complainant withdrew the first complaint, being, CC 2152/1/08, in terms of the compromise between the parties, he had received the subject cheque as part of the settlement. The cheque details were duly noted in the said order and the statements of the petitioner as well as the respondent was also recorded. The petitioner had assured that the subject cheque shall be encashed and she would abide by the terms of the compromise deed between the parties. The petitioner had affirmed her signature on the compromise deed as well.
It is also relevant to note that the compromise deed records the admission of the petitioner to the liability in complaint case bearing no. 2152/1/08. Undue emphasis cannot be laid solely on the factor of adjudication of liability, because even though the same is a factor, the absence of such adjudication does not relegate the complainant to establishing its case afresh, especially when the unchallenged compromise deed records admission on part of the accused.
In the present case, after reaping the benefits of the complainant withdrawing the first complaint, the petitioner initially denied the factum of any settlement or compromise - The learned trial Court has rightly noted that the compromise deed has all the essentials of a contract wherein once the respondent withdrew the original complaint, the petitioner could not be allowed to escape her liability under the same.
Considering the mitigating circumstances brought forth by the petitioner as well as the quantum of fine imposed, in the opinion of this Court, interests of justice would be met if the sentence imposed on the petitioner is modified to the extent of only payment of the fine amount of Rs. 30,00,000/- with no substantive sentence of imprisonment. In default of payment of fine, the petitioner shall undergo simple imprisonment for a period of six months. Let the fine amount be released to the respondent as compensation. This Court is not interfering in the fine amount considering the nature of the offence as well as the conduct of the petitioner to blatantly deny having entered into any settlement at the first instance.
Conclusion - The conviction under Section 138 of the NI Act upheld, but the sentence is modified to exclude imprisonment, focusing on the fine, given the petitioner's circumstances.
Petition disposed off.
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2025 (4) TMI 428
Demand for enhanced stamp duty by the Sub-Registrar on the sale certificate - wilful undervaluation of the property under Section 47-A of the Indian Stamp Act - Property was sold by the Official Liquidator in a public auction (E-Auction) - HELD THAT:- The issue relating to payment of stamp duty on sale certificate is no longer res-integra. In Bell Tower Enterprises LLP, Rep. by its Managing Partner Vs. State of Tamil Nadu, Rep. by its Secretary to Government, [2022 (9) TMI 1504 - MADRAS HIGH COURT], after referring all the precedents on the issue of stamping of sale certificate had held that the stamp duty payable on the sale certificate is only 5% and the registration charges payable is 1% and had observed that 'conveyance would apply to a Sale Certificate also. Under Article 23 of the Stamp Act, the Stamp Duty payable on a sale is 5% as per G.O.Ms.No.46, CT and All Department dated 27.03.2012.'
The said judgment was also followed by another learned Single Judge of this Court in N.C. Suresh Kumar and another Vs. Inspector General of Registration [2023 (8) TMI 1632 - MADRAS HIGH COURT]. Therefore, the demand made by the Sub-Registrar that the petitioner must pay enhanced stamp duty is not justified.
As regards the reference made under Section 47-A of the Stamp Act we are constrained to hold that such a reference is not authorized by Section 47-A. The Hon'ble Supreme Court in Registrar of Assurances and another Vs. ASL VYAPAR Private Ltd. & another [2022 (11) TMI 1385 - SUPREME COURT] after referring to the earlier judgment in V.N. Devadass Vs. Chief Revenue Control Office -cum-Inspector and others [2009 (5) TMI 967 - SUPREME COURT] held that a reference under Section 47-A cannot be resorted, where a sale is by public auction by the officers appointed by the Court.
Conclusion - The demand for enhanced stamp duty is unlawful, the reference under Section 47-A is unauthorized, and the petitioner is entitled to a refund of the excess duty paid with interest.
The order of the learned Single Judge dismissing the writ petition is set aside. The demand made by the sub-Registrar is also set aside. The 47-A proceedings are quashed - Appeal allowed.
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2025 (4) TMI 358
Liability of appellant, United India Insurance Co. Ltd., to compensate the respondent, M/s. Park Leather Industries Ltd., under the insurance policy for the damage and loss suffered due to the collapse of the factory shed - correct determination of quantum of compensation payable to the respondent - HELD THAT:- Having noted that the surveyor appointed by the appellant had assessed the damage at a much lesser figure, i.e., ₹8,89,176/-, the NCDRC could not have assumed that the appellant had mutely accepted the enhanced estimation of ₹46,97,085/-, as per the unilateral assessment made by the surveyor appointed by the respondent. It is not in dispute that this assessment was undertaken by the respondent’s surveyor without putting the appellant on notice and without its participation.
In any event, it is patently clear that the NCDRC did not independently apply its mind to the quantification of the claim and blindly acted upon the alleged failure of the appellant to deny the assessment in the surveyor’s report produced by the respondent. This impression, was unfounded and erroneous. It would, therefore, be just and proper that the NCDRC undertakes that exercise now, by allowing the parties to adduce evidence in that regard, and then decide the amount that would be payable to the respondent under the insurance policy.
Conclusion - The determination of liability under the insurance policy upheld, but the issue of quantum of compensation remitted to the NCDRC for fresh assessment.
Appeal allowed by way of remand.
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2025 (4) TMI 357
Dishonour of Cheque - legally enforceable debt or not - vicarious liability of designated partner of the LLP u/s 138/141 of the Negotiable Instruments Act, 1881 - HELD THAT:- It cannot be said that mere mentioning in the complaint that the petitioner is the key person responsible for the management of the accused no.1 and thereby is jointly and severally liable for the offence under section 138/141 of the N.I. Act in the complaint, is sufficient compliance of section 141 of N.I Act.
When clause 41C and 73 of the LLP agreement stipulates that a partner of the LLP agreement can borrow a loan in the name of the LLP only upon written consent of the LLP/other partners, it was required to be averred as to whether the consent of the petitioner herein was taken or not in the context of his specific denial in the reply. Clause 41(g)(k) of the agreement specially mandates that the entire loan borrowed in the name of LLP must be approved by Mr. Kakrania and Mr. Baid, then how the petitioner can be fastened with the allegations levelled in the complaint - Section 41(c) and 73 makes it clear that partner will not be responsible for wrongful act and in reply to demand notice, it has been specially stated that the alleged act is the wrongful act of accused no. 2, then why the present petitioner has been made responsible in the complaint, specially when it has been specifically alleged in the reply that accused no. 2 was made accused of financial irregularities, which culminated several criminal proceedings and said accused no.2 is solely responsible for taking all fiscal and financial decisions of the LLP and that accused no.2 had misutilized his positon and entered into financial transaction for his personal gain and enrichment and not for the benefit of the firm and that such transaction was beyond the knowledge of the other partners.
From the facts and circumstances of the case it is clear that the reply was given by the petitioner herein through Email on 10th June, 2021 and from the order sheet it is clear that complaint was lodged much thereafter on 1st July 2021. From the complaint in question, it is found that except a bald statement that the petitioner and other accused persons are the key persons and petitioner along with other accused persons are jointly and severally liable for the offences under section 138/141 of N.I Act, no attempt has been made in the complaint to indicate even prima facie that petitioner is vicariously liable to the alleged transaction, discarding the reply as underlined above.
The statutory requirement contained in section 141 of N.I Act had not been complied with in respect of present petitioner, specially in the context of reply given by the petitioner herein denying his liability. It may be true that it is not necessary for the complaint to specifically reproduce the wordings of the section but what is required is a clear statement of fact in the context of petitioner’s denial of his liability, so as to enable the court to arrive at a prima facie opinion that the petitioner/accused no.3 is vicariously liable.
Conclusion - The averment in the complaint filed by the opposite party herein are not sufficient to satisfy the mandatory requirements under section 141 of N.I Act. Since the averments in the complaint are not sufficient to attract the rigour of section 141 to create vicarious liability upon the petitioner herein, he is entitled to succeed in this Application. The petitioner has therefore made out a case for quashing the criminal complaint in relation to him in exercise of the jurisdiction under section 482 of the Cr.P.C.
Revision allowed.
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2025 (4) TMI 356
Dishonour of Cheque - vicarious liability of Independent Director u/s 141 of the Negotiable Instruments Act, 1881 - main ground on which quashing of the summoning Order and further proceedings emanating therefrom in relation to the Petitioner is sought, is that he was an Independent Director and had no role in the day to day affairs of the Company - HELD THAT:- It is a penal provision creating vicarious liability which must be strictly construed. Mere 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, is not sufficient. The Complaint should spell out as to how and in what manner Respondent was in charge of or was responsible to the accused Company for the conduct of its business.
Apex Court explained in the case of N.K. Wahi v. Shekhar Singh, [2007 (3) TMI 671 - SUPREME COURT] that to launch a prosecution against the alleged Directors, there must be a specific allegation in the Complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are in-charge and responsible for the conduct of the business of the Company. While the exact words of the Section may not be reproduced, but the role of the Director must be discernible from the averments made in the Complaint. In the absence of any averment or specific evidence, the Complaint would not be entertain-able.
In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another, [2005 (9) TMI 304 - SUPREME COURT], the Apex Court held that mere designation as a Director is not sufficient; specific role and responsibility must be established in the Complaint.
It is well established that in order to fasten the vicarious liability in terms of Section 141, the role of the Directors concerned should be specifically described in clear and unambiguous as to how the Directors concerned were alleged to be in charge and responsible for the conduct and affairs of the Company - the averments made against the Petitioner in the Complaint may be considered. It is evident that the Appellant was neither a signatory to the dishonoured cheques nor was he actively involved in the financial decision-making of the Company. Moreover, he resigned from the post of independent Non-Executive Director on 03.05.2017, duly notified through Form DIR-11 and DIR-12 to the Registrar of Companies.
A contention is raised that the DIR Form 12, did not reflect the name of the Petitioner as an Independent Director, but as explained, DIR form merely gives the names of Directors and does not specify if they are independent Directors, which is generally reflected in Memorandum/ Articles of Association.
Conclusion - The Petitioner could not be held vicariously liable under Section 141 of the NI Act due to the lack of specific averments and evidence of his involvement in the alleged offence.
Petition allowed.
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2025 (4) TMI 355
Dishonour of Cheque - vicarious liability of former director, u/s 141 of the Negotiable Instruments Act, 1881, for cheques issued by the company after her resignation - HELD THAT:- The Revisional Court has examined this issue threadbare and applied the correct test for vicarious liability under Section 141 of the NI Act. The Revisional Court, relying on the Supreme Court’s judgment in S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan [2022 (9) TMI 846 - SUPREME COURT], rightly observed that where there exists unimpeachable material, such as a duly recorded resignation and absence of any role in the cheque issuance, the complaint against such a person cannot be sustained. Mere prior association with the company or the fact that she is related to other co-accused cannot, by themselves, form the basis for continuing criminal proceedings under Sections 138 read with 141 of the NI Act.
It is a settled position in criminal jurisprudence that vicarious liability, where one person is held liable for the acts of another, is not ordinarily recognised unless explicitly provided for by statute. Section 141 of the NI Act carves out a statutory exception to this general rule. It incorporates a deeming fiction, enabling the prosecution of not only the company that issued the dishonoured cheque but also those individuals who, at the material time, were in charge of and responsible for its business - However, in order to attract Section 141 (1), it must be shown that the person, at the time the offence was committed, was in charge of and responsible to the company for the conduct of the business of the company. The Supreme Court has repeatedly emphasised that this deeming provision must be applied with precision.
There is no material on record to suggest that the Respondent exercised control over the affairs of the company at the relevant time, particularly after her resignation as director. The mere fact that her email address continued to reflect on the website of the RoC Ministry of Corporate Affairs does not, by itself, establish that she retained any decision-making authority or functional role within the company. In the absence of a formal designation or specific averments demonstrating her responsibility in the conduct of the company’s business on the date the offence is alleged to have been committed, the deeming fiction under Section 141 (1) of the NI Act cannot be invoked against her.
In the present case, a careful perusal of the complaints reveals that the allegations against the Respondent are vague, generalised and bereft of any particulars that would indicate her role in the commission of the alleged offence. There is no material to suggest how, and in what manner, she consented to or connived in the issuance of the dishonoured cheques or that her neglect was the proximate cause of the same. In the absence of such foundational pleadings, the threshold for invoking vicarious liability under Section 141 (2) is also not met.
Conclusion - The Revisional Court has correctly appreciated the factual matrix and applied the settled legal principles to conclude that the summoning orders against the Respondent could not be sustained. This Court finds no cogent reason to interfere with the impugned order in exercise of its revisional jurisdiction under Section 528 of the BNSS.
Petition dismissed.
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2025 (4) TMI 354
Dishonour of cheque - Funds Insufficient - legally enforceable debt or liability at the time of presentation of cheque or not - HELD THAT:- The facts that emerge on record is that the loan was taken on 15.10.1998, as per the document produced at exhibit 15 and an amount of 70,426/- was repaid by ₹ 2,18,200/- dated 08.05.2001 from his account with the accused. There is no evidence on record as to whether any interest had to be taken on the amount, and if any interest had to be taken at what rate it had to be taken. The amount of ₹ 2,18,200/- dated 08.05.2001 from his account with2,18,200/- which is the amount of cheque is not reflected in the statement produced at exhibit 24 and if the amount that is repaid is considered an amount of ₹ 2,18,200/- dated 08.05.2001 from his account with1,04,574/- is outstanding. The accused has stepped into the witness box and it is the defence of the accused that the entire amount has been repaid within a period of two years, but no evidence has come on record that the amount of cheque of ₹ 2,18,200/- dated 08.05.2001 from his account with 2,18,200/- was the legally enforceable due from the accused.
As per the observations of the Apex Court in the case of Rangappa [2010 (5) TMI 391 - SUPREME COURT] and Basalingappa [2019 (4) TMI 660 - SUPREME COURT] in the cross-examination of the complainant the presumption has been rebutted and the accused has raised a probable defence and from the documents by produced by the complainant there is no evidence that the amount of cheque was the legally enforceable due.
The learned Trial Court has appreciated all the evidence produced by both the parties and has concluded that the complainant has not proved the legally enforceable debt as the amount mentioned in the cheque in question. The learned Trial Court has concluded that from evidence on record the complainant has failed to prove his case and the amount mentioned in the cheque is more than the loan amount and the accused has successfully rebutted the presumption under Section 139 of the NI Act. The accused had created a reasonable doubt and the complainant has failed to produce reliable and cogent evidence on record about the legally recoverable debt from the accused and has not proved his case beyond reasonable doubt.
Conclusion - No interference is warranted as the complainant failed to establish the accused's guilt beyond a reasonable doubt.
Appeal dismissed.
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2025 (4) TMI 310
Decree of suit for specific performance of an Agreement to Sell, if the buyer had accepted the refund of majority of the earnest money deposit/advance consideration, during the pendency of the civil suit - HELD THAT:- After examination of the pleadings and evidence in the present suit as well as the conduct of the Respondent No.1-buyer, this Court is unable to agree with Respondent No.1-buyer that she was willing to perform the Agreement to Sell dated 25th January, 2008 and go ahead with the purchase of the property. This Court says so because admittedly, as noted above, the five demand drafts dated 7th February 2008 for Rs. 2,11,000/- were encashed by the Respondent No.1-buyer in July, 2008. The conduct of the Respondent No.1-buyer in encashing the demand drafts establishes beyond doubt that the Respondent No.1-buyer was not willing to perform her part of the Agreement to Sell and proceed with execution of the sale deed; for the Respondent No.1-buyer would not have encashed the demand drafts if she was indeed willing to perform the contract and have a sale deed executed. Consequently, once it is established that the Respondent No. 1-buyer is not willing to perform the contract, the fact that the entire advance consideration/earnest money had not been returned to Respondent No.1-buyer is irrelevant and immaterial.
Since in the present case, the seller had issued a letter dated 07th February, 2008 cancelling the agreement to sell prior to the institution of the suit, the same constitutes a jurisdictional fact as till the said cancellation is set aside, the respondent is not entitled to the relief of specific performance - Consequently, this Court is of the opinion that absent a prayer for declaratory relief that termination/cancellation of the agreement is bad in law, a suit for specific performance is not maintainable.
Locus standi to file appeal - HELD THAT:- The appellant was impleaded as defendant no. 3 in the subject suit as she is a beneficiary under the Will dated 23rd September 2002 executed by the original owner/seller, whereby the subject property has been bequeathed in her favour. Consequently, the appellant, being a necessary and interested party to the lis, has the locus to file the present appeal. Further, the onus to establish readiness and willingness is on the Respondent No.1-buyer and the failure to establish the same disentitles the Respondent No.1-buyer from the equitable and discretionary relief of specific performance.
Conclusion - The buyer's encashment of the refund constituted acceptance of the agreement's cancellation. The Agreement to Sell cannot be specifically enforced.
Appeal allowed.
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2025 (4) TMI 240
Entitlement to pensionary benefits under the applicable legal framework, to respondent, who was removed from service for misconduct - applicability and interpretation of the Bipartite Settlement and the UCO Bank (Employees') Pension Regulations, 1995 - HELD THAT:- In the instant case, the initial penalty imposed on the respondent by the appellant was dismissal from service with immediate effect after having been found guilty of gross misconduct as per Clause 19.5(c) of the Bipartite Settlement. Appellate authority vide the order dated 16.02.2000 modified the penalty order dated 14.12.1999 passed by the disciplinary authority by substituting the penalty of dismissal from service by removal from service with terminal benefits. The substituted penalty in terms of the appellate order dated 16.02.2000 reads as under: Shri V.K. Handa (PFM No. 22488) is hereby removed from the bank’s service with immediate effect. However, he will be entitled to receive the terminal benefits for the period of service he has rendered. Removal from service will not be a disqualification for his future employment.
The respondent had raised an industrial dispute which culminated in an award dated 13.02.2004. As per this award, Labour Court had invoked the provisions of Section 11A of the Industrial Disputes Act and substituted the penalty of removal from service with terminal benefits by the penalty of stoppage of four increments for one year with further direction for reinstatement in service with 75 percent back wages. This award of the Labour Court failed to stand judicial scrutiny as learned Single Judge of the High Court set aside the same which decision was affirmed by the Division Bench in letters patent appeal. This sequence of events demonstrates that the modified penalty as imposed by the appellate authority attained finality as this appellate order was not questioned by the appellant.
Learned Single Judge also held that objection of the appellant to the claim of pension by the respondent was without any basis in as much as the appellate authority had specifically held that respondent would be entitled to receive terminal benefits for the period of service he had rendered. This order of the appellate authority has attained finality. Therefore, it was held that respondent was entitled to receive pension in view of the order passed by the appellate authority.
Conclusion - There are no doubt that such of the employees who are otherwise eligible for superannuation benefit are removed from service in terms of Clause 6(b) of the Bipartite Settlement shall be entitled to superannuation benefits.
The civil appeal is dismissed.
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2025 (4) TMI 239
Time limitation for initiating proceedings for recovery of arrears of license fees initiated by the New Mangalore Port Trust (NMPT) - Common argument raised on behalf of both sides is to the effect that objections had not been taken at the right time and at the initial stage - HELD THAT:- Both sides agree that the Limitation Act will apply to the proceedings under the PP Act. The respondents cannot argue that only section 3 of the Limitation Act along with the limitation provided under Article 52 of the Schedule of the Limitation Act will apply and not section 18 of the same Act. Once the Limitation Act applies, all its provisions will be applicable to the proceedings under the PP Act. It is true that the plea of benefit of section 18 of the Limitation Act was not raised before the High Court and therefore not considered but nevertheless, as the objection of the respondents that the arguments relating to the benefits of section 18 of Limitation Act may not be considered by this Court is already rejected, the same is dealt and it is analyzed as to whether the benefit could or could not be extended to the appellant as claimed.
Section 18 of the Limitation Act is very clear that where liability is acknowledged in respect of any property or right, a fresh limitation may be computed from the time when the acknowledgment was so signed. Clause (a) of the explanation to Section 18 declares that an acknowledgment would be sufficient for various reasons to be stated therein, which includes the time for payment has not yet come as one of the reasons. In the present case this reason squarely applies. The respondents were throughout alleging that the time had not been come as the appeals were pending before the Division Bench. This acknowledgement was given in response to the demand by the lessor (appellant) made well within the limitation of 3 years. The lessor as such would be entitled to the benefit of extension of limitation taking benefit of Section 18 of the Limitation Act.
Once the issue relating to retrospective applicability of revised tariff has been upheld by the learned Single Judge and the writ petitions filed by the respondents were dismissed, against which intra-court appeals at the instance of the respondents were pending, the High Court ought not to have proceeded with the hearing of the writ petition - The respondents were well aware that they had lost from the Single Judge as their petitions had been dismissed but still, they had been resisting the demand only on the basis of the pendency of the appeals before the Division Bench. This objection was taken only to delay the payment of the dues of the revised tariff. The respondents therefore ought not to have benefitted out of the technical objection raised by them regarding the limitations when they were themselves bound by the decision of the learned Single Judge and had no other objection or denial to the demand except that of the pending appeals before the Division Bench.
Conclusion - The limitation period for recovery proceedings extended due to the acknowledgment of liability by the respondents, allowing the proceedings to continue.
The impugned order of the High Court set aside - the writ petitions restored before the High Court to be heard after disposal of the pending intra-court appeals filed by the respondents.
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2025 (4) TMI 173
Whether the contractual clause that bars the appellant/contractor from claiming any interest on any payment, arrears or balance due to it amounts to an express bar on the arbitrator’s power to grant pendente lite interest as per the law under the Arbitration Act, 1940? - HELD THAT:- Under the 1940 Act, a stricter approach is followed that requires a clear and express clause against the payment of interest in case of difference, dispute, or misunderstanding, in case of delay of payment, or any other case whatsoever, to constitute a bar on the arbitrator from granting interest. A clause that only provides that interest shall not be granted on amounts payable under the contract would not be sufficient. On the other hand, under the 1996 Act wherein Section 31(7)(a) sanctifies party autonomy, interest is not payable the moment the contract provides otherwise.
Clause 22 prohibits the appellant (contractor) from claiming interest on any payment, arrears or balance, which may be found due to him at any time. Applying the above-stated law, we find that this clause does not expressly bar the award of pendente lite interest in the event of disputes, differences, or misunderstandings between the parties, or on delayed payment, or in any other respect whatsoever. Under the 1940 Act, this Court has not readily inferred a bar on the arbitrator from clauses that merely bar the contractor from claiming interest, and the same will apply to this case as well.
Considering that the arbitrator entered reference in 1991 and the award was made in 1995, along with the passage of time in litigation as well as the amounts already paid by the respondent including post-award interest @ 9%, it is deemed appropriate to grant 9% pendente lite interest, instead of 15% as granted by the arbitral tribunal, from 18.12.1991 till 07.03.1995 (date of the arbitral award) within a period of 60 days.
Application disposed off.
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2025 (4) TMI 172
Dishonour of Cheque - discharge of a legally enforceable debt - rebuttal of presumption under Sections 118 and 139 of the Negotiable Instruments Act - burden of proof on the accused to rebut the presumption - HELD THAT:- The High Court while allowing the criminal revision has primarily proceeded on the presumption that it was obligatory on the part of the complainant to establish his case on the basis of evidence by giving the details of the bank account as well as the date and time of the withdrawal of the said amount which was given to the accused and also the date and time of the payment made to the accused, including the date and time of receiving of the cheque, which has not been done in the present case. Pausing here, such presumption on the complainant, by the High Court, appears to be erroneous. The onus is not on the complainant at the threshold to prove his capacity/financial wherewithal to make the payment in discharge of which the cheque is alleged to have been issued in his favour.
In the present case, on an overall circumspection of the entire facts and circumstances of the case, it is found that the appellant succeeded in establishing his case and the Orders passed by the Trial Court and the Appellate Court did not warrant any interference. The High Court erred in overturning the concurrent findings of guilt and consequential conviction by the Trial Court and the Appellate Court.
Conclusion - The complainant had successfully established the case under Section 138 of the Act, and the High Court erred in overturning the concurrent findings of the lower courts.
The Impugned Order is set aside - appeal allowed.
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2025 (4) TMI 171
Time Limitation for filing application under Section 34 of the Arbitration and Conciliation Act, 1996 (ACA) - HELD THAT:- The respondent’s application under Section 34, which was filed on 11.07.2022, i.e., the next working day of the court, must be considered as being filed within the limitation period. Consequently, there was no delay in filing the application and sufficient cause need not be shown for condonation of delay. The High Court therefore rightly allowed the Section 37 appeal and held that the respondent’s Section 34 application was filed within the limitation period.
It is not required to interfere with the High Court’s direction to stay the execution of pending recovery till the matter is adjudicated on merits, since the same is interim in nature and the appellant has already withdrawn 50% of the arbitral sum that was deposited by the respondent.
In this view of the matter, the present appeal is dismissed.
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2025 (4) TMI 170
Seeking leave to appeal - Acquittal of accused - Dishonour of Cheque - legally enforceable debt or not - failure to properly apply the statutory presumptions under Sections 118 (a) and 139 of NI Act - HELD THAT:- In proceedings under Section 138 of the NI Act, the law creates a presumption in favour of the holder of the cheque that it was issued in discharge of a legally enforceable debt or liability. Section 118 (a) of the Act presumes that the cheque was made or drawn for consideration, while Section 139 mandates that the Court shall presume that the cheque was issued for the discharge of such liability. Once execution of the cheque is admitted or established, these statutory presumptions operate automatically in favour of the complainant. However, it is equally well-settled that these presumptions are rebuttable. The accused is entitled to demonstrate, by cogent material or circumstances, that the debt or liability did not exist at the time of issuance of the cheque. The presumption does not render the complainant’s case infallible, it only shifts the initial burden, which can be discharged by the accused on a balance of probabilities.
The Supreme Court, in Rajesh Jain v. Ajay Singh [2023 (10) TMI 418 - SUPREME COURT] held that the phrase “unless the contrary is proved” in Section 139 does not imply that the accused must necessarily prove the negative, i.e., that the instrument was not issued in discharge of any debt or liability. Instead, it suffices if the accused can demonstrate that the existence of such liability is improbable, so as to persuade a prudent person, under the given circumstances, that no such debt existed.
In the present case, the issuance of the cheque and the signature thereon are admitted by the Respondent. However, a closer examination of the record shows that the Trial Court rightly found the statutory presumptions under Sections 118 and 139 to have been rebutted on a preponderance of probabilities. The Respondent, in his statement under Section 313 CrPC, clearly stated that the cheque was given only as security in respect of a smaller sum of Rs. 1,65,000/-, and not towards any legally enforceable liability equivalent to the cheque amount - The Respondent acknowledged his liability to the extent of Rs. 1,65,000/- and expressed his willingness to repay the same, however, he denied any liability for the amount mentioned in the cheque. Though he did not lead any defence evidence, his admissions and explanations were relevant for assessing whether the statutory presumption stood rebutted.
Whether the defence so raised by the Respondent was sufficient to rebut the presumptions under Sections 118 and 139 of the NI Act on the touchstone of preponderance of probabilities? - HELD THAT:- This Court finds no infirmity in the Trial Court’s conclusion that the Petitioner failed to establish his financial capacity to have advanced the alleged loan of Rs. 10 lakhs to the Respondent. This finding stands well-supported by the inconsistencies in the Petitioner’s own evidence, the absence of corroborative documentation, and the failure to produce income tax returns reflecting the alleged loan transaction - it would be profitable to take note of the recent judgment of the Supreme Court in Sri Dattatraya v. Sharanappa [2024 (8) TMI 468 - SUPREME COURT], where the Court upheld the acquittal of an accused in a cheque dishonour case, inter alia, on the ground that the complainant had failed to substantiate the loan transaction either through documentary evidence or by reflecting the same in his income tax returns. The Court further noted that contradictions in the complainant’s deposition undermined the credibility of his claim and that, despite the presumption under Section 139 of the NI Act, the accused had succeeded in rebutting the same on a preponderance of probabilities.
Conclusion - The Trial Court rightly concluded that the Petitioner’s failure to substantiate the source of the alleged loan, his inability to produce any supporting documentation such as bank records or income tax returns, and the inconsistencies in his testimony rendered his claim inherently improbable. The Respondent, through his cross-examination and the surrounding circumstances, successfully rebutted the statutory presumption under Section 139 of the NI Act. This Court finds no perversity or legal infirmity in the Trial Court’s reasoning. The impugned judgment, therefore, calls for no interference.
Petition dismissed.
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2025 (4) TMI 103
Appropriate rate of interest to be applied to the enhanced valuation of shares sold by the appellants to the State of Rajasthan - delay in remittance of the fair value of the shares to the appellants - HELD THAT:- Here, it cannot be disputed that there has been a transaction of trade, viz. sale and purchase of goods, which clearly implies a commercial transaction between the parties. The term “Public Interest” denotes a wider concept with its genus rooted to the welfare of the public at large, with different species attributable to individual and specific impact, depending upon the concept and the subject under consideration. It deals with the impact of a policy decision on the society. Generally, public interest is anathema to commercial transactions. However, by exception, when the terms are oppressive or one-sided, they are to be termed as unconscionable, arbitrary and by application of externalities, public interest will have to lean towards the individual who has been wronged, as such contracts are deemed to take away the fairness, affecting the free consent required to culminate into a valid contract. The constitutional courts, under such circumstances will be armed with Article 14 to strike down such contracts or to pass appropriate decrees or orders.
In the present case, the transaction, though commercial, is not between two businessmen or entities; the State and its instrumentality are parties to the contract with better bargaining or imposing authority; and from the records, we find that there was no public interest in offering a lesser sum. Further, with the price fixed found to be unconscionable, this Court affirmed the enhanced price fixed by the High Court.
Pertinently, it is to be pointed out at this juncture that there was no agreement between the parties relating to grant of interest for the delayed payment. Even the exchange of communications between the parties remains silent on this aspect. In the absence of any agreement or contract, the provisions of Section 34 of the Code of Civil Procedure dealing with ‘interest’ would come into play.
Section 34 of the Code of Civil Procedure empowers the court to grant interest at three different stages of a money decree viz., (i) the court may award interest on the principal sum claimed at a rate it deems reasonable, for the period before the suit was filed. Such interest is generally governed by agreements between the parties; (ii) The court may award interest on the principal amount from the date of filing the suit until the date of the decree, at a reasonable rate. Here, the court has full discretion to determine the interest rate based on fairness, commercial usage and equity; and (iii)the court may grant interest on the total decretal amount (principal + interest before decree) from the date of the decree until payment, at a rate not exceeding 6% per annum unless otherwise specified in contractual agreements or statutory provisions. However, if the claim arises from a commercial transaction, courts may allow interest at a higher rate based on agreements between the parties.
Thus, it is abundantly clear that the Courts have the authority to determine the appropriate interest rate, considering the totality of the facts and circumstances in accordance with law. That apart, the Courts have the discretion to decide whether the interest is payable from the date of institution of the suit, a period prior to that, or from the date of the decree, depending on the specific facts of each case.
Considering the prolonged pendency of the dispute regarding the valuation of shares, which has only been determined recently, and the substantial share amount involved, and also keeping in mind that this is a commercial transaction, and the entire burden of interest along with principal value falls upon the Government, it is necessary in the present case to award reasonable interest, in order to strike a balance between the parties. Thus, in these peculiar facts and circumstances, it is deemed fit, just and appropriate to award simple interest at the rate of 6% per annum from 8th July 1975, on the enhanced valuation of shares till the date of decree and interest at the rate of 9% per annum from the date of decree till the date of realisation. The interest shall be paid along with the amount due towards the enhanced value of the shares, after adjusting the amount already paid, to the appellants, within a period of two months from today.
Conclusion - The High Court's judgment modified, awarding simple interest at 6% per annum from 8th July 1975 until the date of decree and 9% per annum from the date of decree until realization.
The impugned judgments and orders passed by the High Court are modified - appeal disposed off.
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2025 (4) TMI 102
Quashing of criminal proceedings for possessing assets disproportionate to known sources of income - use of inherent powers under Section 482 of the Cr.P.C. - Validity of the sanction granted to prosecute the respondent.
Use of inherent powers under Section 482 of the Cr.P.C. - HELD THAT:- In the present case, the inherent power under Section 482 Cr.P.C. for quashing the criminal proceedings was invoked after the dismissal of the discharge application and the consequent revision petition. In State by Karnataka Lokayukta, Police Station, Bengaluru v. M.R. Hiremath, [2019 (5) TMI 1986 - SUPREME COURT] this Court examined a similar situation where the High Court entertained a petition under Section 482 Cr.P.C. filed against the dismissal of a discharge petition. Setting aside the judgement of the High Court, this Court held 'The High Court has erred in coming to the conclusion that in the absence of a certificate Under Section 65B when the charge sheet was submitted, the prosecution was liable to fail and that the proceeding was required to be quashed at that stage. The High Court has evidently lost sight of the other material on which the prosecution sought to place reliance.'
It is not disputed that in the instant case, the Special Court, as well as the High Court, while dismissing the petition for discharge, examined the allegations and arrived at clear findings that there was a prima facie case against the respondent. The impugned order revisits the earlier decisions without any statable change in the facts and circumstances of the case, traverses to the extreme end of the spectrum, and concludes that: i) the wife of the accused purchased the properties in the name of the daughter having power of attorney; ii) that there was no satisfactory evidence of Benami; iii) even if allowed to prosecute, the chances of conviction were bleak; or iv) the probability of conviction is low; and v) the statements of witnesses do not warrant prosecution.
Validity of the sanction granted to prosecute the respondent - HELD THAT:- There is no doubt that the High Court committed an error in quashing the prosecution on the ground that the sanction to prosecute is illegal and invalid. In conclusion, it is found that the objections raised in the revision petition against the Special Court’s order dismissing the discharge application were identical to the grounds raised in the petition under Section 482 Cr.P.C., from which the present appeal arises. Second, apart from being congruent and overlapping, the respondent could not demonstrate any material change in facts and circumstances between the dismissal of the revision petition by the High Court and the filing of the quashing petition under Section 482 Cr.P.C. Third, the validity of the sanction can always be examined during the course of the trial and the problems due to the typographical error as alleged by the State could have been explained by producing the file at the time of trial. Fourth, it is settled that a mere delay in the grant of sanction for prosecuting a public authority is not a ground to quash a criminal case.
The reasoning adopted by the High Court for interdicting the criminal proceedings is contrary to the well-established principles laid down by this Court.
Conclusion - i) The High Court erred in quashing the proceedings, as it did not adhere to the principles governing the exercise of inherent powers under Section 482. ii) The validity of the sanction should be assessed in the trial court, during the trial, not in pre-trial proceedings.
The case restored to Trial Court - Appeal allowed.
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2025 (4) TMI 65
Levy of service charges - Whether the collection of mandatory Service Charge by restaurants and other establishments is permissible under the Consumer Protection Act, 2019?
HELD THAT:- One of the most important features of the CPA, 2019 is the establishment of the CCPA, which is a regulator for protection and enforcement of the rights of consumers. The CCPA is established under Section 10 of the CPA, 2019 as a regulator to regulate matters relating to violation of the rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interest of the public and consumers. The CCPA is also established to promote, protect and enforce the rights of consumers as a class.
The CCPA consists of a Chief Commissioner who manages the body along with other Commissioners. It consists of an investigation wing as provided under Section 15 of the CPA, 2019. The purpose of the investigation wing is, inter alia, to conduct an inquiry and investigation as may be directed by the CCPA. The CCPA under Section 16 of the CPA, 2019 can also make a complaint or refer a matter to the District Collector for enquiry or investigation regarding violation of rights of consumers as also into unfair trade practices, misleading advertisements, etc. The District Collector under Section 16 of the CPA, 2019 is to then submit a report to the CCPA in respect of the said complaint or reference.
In Poonam Verma v. Delhi Development Authority [2007 (12) TMI 551 - SUPREME COURT] it was held that guidelines which do not have statutory backing, remain advisory. However, in the present case the guidelines do have proper statutory backing. The CCPA, established under Section 10 of the CPA, 2019 has the mandate of law to pass the impugned guidelines in the interest of consumers as a class.
It is trite law that a regulation issued under a statute is valid law. The Supreme Court in the judgment Sukhdev Singh and Others v. Bhagatram Sardar Singh Raghuvanshi and Another [1975 (2) TMI 111 - SUPREME COURT] while deciding on the validity of regulations framed under the Oil and Natural Gas Commission Act, 1959, the Life Insurance Corporation Act, 1956 and the Industrial Finance Corporation Act, 1948 held that the same have force of law. The Supreme Court while holding this, inter alia observed that the powers of statutory bodies are derived, controlled and restricted by the statutes which create them. Further, the vires of law is capable of being challenged if the issuing authority lacks statutory backing. However, if the same derives authority from a statute or regulation, it is valid.
The Supreme Court in Karnataka Live Band Restaurants Association v. State of Karnataka and Others [2018 (1) TMI 1521 - SUPREME COURT] upheld the constitutionality of ‘The Licensing and Controlling of Places of Public Entertainment (Bangalore City) Order 2005’ issued under the Karnataka Police Act, which meant to regulate and license, places of public entertainment like live band restaurants, discotheques, cabarets halls, etc. This was done while dismissing the appeal made by Karnataka Live Band Restaurants Association wherein it was inter alia held that the Court while deciding such cases, has to do the same on the touchstone of, whether the restrictions imposed are reasonable in the interest of general public or not.
Applying the doctrine of proportionality to the present case, it is found that the limitation on rights of the restaurant establishments is constitutional as the same is proportional to the purpose sought to be achieved i.e., the larger consumer interest. The impugned guidelines are a just means to achieve the said purpose and hence, cannot be held to be unconstitutional.
Can restaurant establishments levy and collect service charge mandatorily, by simply displaying the same on its menu card? Would this amount to unfair trade practice and would this be violative of rights of consumers? - HELD THAT:- The customers who visit such establishments could be simply walk-in customers or even customers who make a conscious choice to visit an establishment. In either case, once the customer enters the establishment, it is unlikely that any customer would go away merely upon seeing the menu card. Once the customer has been handed the menu card, the focus is on ordering of the food. Most customers opt for the food joints of their choice based upon the approximate cost that they may incur, depending on the occasion – whether a celebration of a special occasion, a relaxing meal with friends or family, a formal meal with professional associates or colleagues etc., This assessment is based on the price printed on the menu card for the food. However, what invariably happens in most establishments is that after the food is charged, service charge of 10% - 12% is added by default and taxes are charged over and above the said amount.
In the present case, even if an implied contract is deemed to exist between the consumer and the restaurant establishment, upon the consumer placing an order after being informed about the service charge, it would be rendered void. This is because consumers, at this scale, have little bargaining power against restaurant establishments as a class. The Court is of the opinion that the said class requires to be protected with the intent to secure social and economic justice. Such a view is also in consonance with Article 14 of the Constitution of India. Thus, an implied contract on the basis of so-called information cannot constitute a validly enforceable contract as the same would be an unfair contract as per the Act itself.
The CCPA while issuing the impugned guidelines has performed its functions within the four corners of the CPA, 2019 and not outside the same. The said guidelines though termed as guidelines are not optional guidelines but are mandatory guidelines which have to be followed. These guidelines emanate from the overarching authority vested in the CCPA, which is established under the CPA, 2019 for taking appropriate steps to defend rights of consumers and thus, it cannot be argued that the same are merely executive instructions which are not binding on establishments.
The guidelines framed by the CCPA are thus valid and are in the interest of the consumers and the same are upheld.
Conclusion - i) The CCPA is fully empowered to issue guidelines under the CPA, 2019, and these guidelines are enforceable as they have statutory backing. ii) The mandatory collection of service charges by restaurants is an unfair trade practice and constitutes an unfair contract under the CPA, 2019. iii) Service charges cannot be made compulsory, and consumers must have the discretion to decide whether to pay them. iv) The guidelines issued by the CCPA are valid and in the interest of consumers, and all restaurant establishments must adhere to them.
Petition dismissed.
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2025 (4) TMI 64
Maintainability of Respondent/Bank's application under Section 14 of the SARFAESI Act - symbolic possession of the Respondent/Bank - compliance with the mandatory requirements under Section 13(2) of the SARFAESI Act before proceeding under Section 14 - HELD THAT:- In the case of R. D. Jain and Company [2022 (7) TMI 1237 - SUPREME COURT], the Hon’ble Supreme Court held that the powers initiated by the DM/CMM under Section 14 of the SARFAESI Act is of ministerial nature and while disposing of application under Section 14, no element of quasi-judicial function or adjudication is attracted, however, the DM/CMM has to adjudicate and decide correctness of information given in application and nothing more.
In the case in hand, the Petitioners have not denied about service of notice dated 14.09.2022 issued by the Respondent/Bank under Section 13(2) of the SARFAESI Act. No doubt, as per the Provisions of Section 14, the details of the transaction and secured assets are required to be submitted on affidavit. On perusal of the record, it appears that Mr. Anilkumar Shrivastava, the Authorized Officer of the Respondent/Bank submitted all transactions history between the Petitioners and the Respondent/Bank on verification which is based on the documentary evidence. The Respondent/Bank has also given detailed description of secured assets. The Petitioners have not disputed about description of secured assets. Therefore, merely solemn affirmation/affidavit is not furnished with the application under Section 14 of the SARFAESI Act, it may be called as a procedural defect, which can be cured by filing additional affidavit.
Since, the Respondent/Bank complied with the provisions of Section 14 of the SARFAESI Act as per view taken by the Hon’ble Apex Court as well as by this Court, the notice is not required to be given to the borrower or the third party. Nonetheless, the Petitioners are already served notice dated 14.09.2022 issued by the Respondent/Bank under Section 13(2) of the SARFAESI Act but neither the Petitioners replied the same nor they challenged the said notice before the competent authority. Further, the Petitioners have concealed the fact of service notice on 15.09.2022. Therefore, filing an application below Exh.21 is itself killing the time.
There are no substance to disturb the findings of the learned Trial Court, hence, the Writ Petition is dismissed.
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