The fairly recent law relating to Insolvency i.e. the Insolvency and Bankruptcy Code, 2016 has been the talk of the legal community. The fact that the law has been new, the Adjudicating Authority i.e. National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), with their judgments are now on a path to set down precedents and elaborating on the application of the Insolvency Bankruptcy Code, 2016. The presiding judges are set on tackling the loop holes and on an endeavor to find the intention and meaning of the legislation and decode the intention of the legislators.

The NCLAT, New Delhi vide its order in Mr Ashish Garodia vs Impact Event Management and Anr  dated 08.02.2019 allowed the appeal preferred by Director and shareholder of M/s Garodia Automobiles Pvt. Ltd. (Corporate Debtor) against the order passed by NCLT, Kolkata Bench which admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 preferred by M/s Impact Event Management(Operational Creditor).

During the course of the Insolvency proceedings, it was submitted by the Counsel for the Appellant/Corporate Debtor that there was pre-existence of dispute between the parties, on which ground the application under Section 9 by the Operational Creditor was not maintainable. It was found by the Adjudicating Authority that the Operational Creditor had not disputed the submissions of the Corporate Debtor that the Operational Creditor has no dues from the Corporate Debtor, as the former failed to perform the promotional services.

The Hon’ble Court in agreement with the submissions of the Corporate Debtor regarding maintainability of the application held that same was not maintainable, due to pre-existence of a dispute.

The Hon’ble Court was informed that the parties have settled the matter, in relation to which, it was held that

“5. Further, before the constitution of the ‘Committee of Creditors’, the parties having settled the matter. It is a fit case to accept the settlement. For the reasons aforesaid, we set aside the order dated 14th January, 2019.”

In lieu of the above, the order appointing Interim Resolution Professional, declaring moratorium, publishing the advertisement in the newspaper calling for application and other orders were declared as illegal and the same were set aside.

The above judgment now gives a resort to the Corporate Debtor and Operational Creditor to arrive at a settlement, during such circumstances. It can also be beneficial for Corporate Debtor to initiate an out-of court settlement with the Creditors, before constitution of Committee of Creditors, instead of being declared an insolvent in entirety and release some burden on the Adjudicating Authorities.

Sanjana Bakshi

Senior Associate

The Indian Lawyer



The Government of India on 21.02.2019 amending the personal laws namely the Divorce Act, 1869, the Dissolution of Muslim Marriage Act, 1939, the Special Marriage Act, 1954, the Hindu Marriage Act, 1955, and the Hindu Adoptions and Maintenance Act, 1956 and declared that leprosy cannot be a ground for divorce.

Leprosy is a chronic, progressive bacterial infection which primarily affects the nerves of the extremities, the skin, the lining of the nose, and the upper respiratory tract and was contagious. “Leprosy patients were isolated and segregated from society as the leprosy was not curable and the society was hostile to the patients but with modern medicine having changed that, the attitude of the society towards them began to change. Presently, leprosy is completely curable and can be treated with multidrug therapy”.

The amendment came as a response to the constant endeavours of the Human Rights Commission who advocated that leprosy as a ground for divorce is a “discriminatory” provision and such an archaic law should be amended. National Human Rights Commission first put forth the suggestion in 2008 that these changes be made. Following this, in 2010, India signed the United Nations General Assembly’s Resolution titled ‘Elimination of discrimination against persons affected by leprosy and their family members.’ It sought to reduce stigma and discrimination faced by the victims of leprosy.

The Act is in consonance of judgment rendered by the Supreme Court in the case of Pankaj Sinhala v. Union of India & Ors 2014, issuing directions for treatment and rehabilitation of those affected by leprosy, while also ensuring that the discrimination against them and their family members is eliminated completely.

The Court ordered that the Central Government and the State Government must organize seminars at all levels where there is probability to hear the views and experience directly from the former patients and their families as well as doctors, social workers and non-government originations. The Apex Court further directed that neither the private nor the Government schools shall discriminate against children who suffer from leprosy. Leprosy should definitely not be a ground to deny free education.

This is definitely a positive step taken by the Government, which ends discrimination that is based on stigma and misunderstanding of leprosy. This step has been hailed as a positive effort to reduce discrimination surrounding leprosy and hence an end to archaic laws which are not in tone with the dynamic society.


Suchit Patel


The Indian Lawyer



Recently, the Union Home Minister Shri Rajnath Singh and the Minister for Women and Child Development, Smt. Maneka Gandhi jointly launched a PAN-India Emergency Number 112 as an initiative to strengthen women safety in India on 19.02.2019. The said Emergency Response Support System (ERSS) has so far been launched in 16 States/Union Territories including Andhra Pradesh, Uttarakhand, Punjab, Kerala, Madhya Pradesh, Rajasthan, Uttar Pradesh, Telangana, Tamil Nadu, Gujarat, Puducherry, Lakshadweep, Andaman, Dadra and Nagar Haveli, Daman and Diu, Jammu and Kashmir. ERSS is said to have been already successfully implemented in the States of Himachal Pradesh and Nagaland.

In order to make this initiative a success, the Union Minister has called for continued coordination among the organizations including Police, Judiciary, Civil Administration and various volunteers. He further stated that if the women safety issue is addressed in India, then women would be able to freely and equally contribute to the strengthening of the economy, politics and society of the country.

With the launch of ERSS, it is aimed to resolve the issue of the need to remember multiple emergency helpline numbers. Once the ERSS is implemented, people would either have to dial 112 or use the panic button on their phones or the 112 India Mobile Application to connect to police/fire/health and other helplines through an Emergency Response Centre in the State.

Further, the Government has announced approval of Rs. 78.76 crore for the Nirbhaya Fund to strengthen DNA analysis capacities in the State Forensic Science Laboratories at Chennai and Madurai (State of Tamil Nadu), Lucknow and Agra (State of Uttar Pradesh), Kolkata (State of West Bengal) and Mumbai(State of Maharashtra),which would enable speedy investigation of rape cases.

The Union Minister added that the aforesaid initiatives and the amendments made to the Criminal Law in 2018 to strengthen investigation and prosecution machinery in India, including the provision of two months’ time period for completion of investigation in relation to rape of a child/woman, as the case may be,the provision of death penalty as a punishment for rape/gang rape on woman under twelve years, etc,would provide a strong deterrence against the offence of rape and would also instill a sense of security amongst women.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer



The much welcomed ‘Notification’ by the Department of Promotion of Industry and Internal Trade (DPIIT) on 19th February 2019 aims to resuscitate the distressed startup- ecosystem. The Central Government by widening the definition of the start-ups, entitled to ‘angel tax’ exemption, provided a major relief to the several start-ups.

 ‘Angel Tax’ is the market term used for income tax charged under the head “income from other sources” as per Section 56(2)(viib)( herein after referred as “Provision”) of the Income Tax Act, 1961, introduced via Finance Act, 2012. The objective of introducing section 56(2)(viib) was to discourage the generation and use of unaccounted money done through subscription of shares of a closely held company, at a value which is higher than the Fair Market Value (FMV) of shares of such private company.

This led to a Conundrum where the funds received by start-ups for operation and expansion were regarded as “income” under law, thereby attracting tax liability. The voices of dissent regarding the above mention provision, primarily introduced to curb money-laundering, was depriving them of their hard-earned funds.

The said notification essentially addresses the grievance of the startup community associated with the angel tax.

The major takeaways from the said Notification are:

Any entity incorporated in India as private limited company, or partnership firm or limited liability partnership firm will be entitled to tax exemption for a period of ten years( increased from the earlier period of 7 Years) from the date of incorporation, if:

Its annual turnover in any of the financial years after incorporation does not exceed Rs. 100 crores.

The entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business mode with high scope of employment and wealth generation.

Extending a major relief to startups, the Government allowed a full angel tax concession on investments worth up to Rs 25 crore. Earlier, the concession could only be availed when the total investment (including the angel investment) did not exceed Rs 10 crore.

In order to avail tax exemption, eligible start-ups have to file a self-declaration with the Department for Promotion of Industry and Internal Trade. The DPIIT will pass on these to the tax department. Thereafter the recognized start-ups will get exemption from tax as per sub-clause (ii) of proviso to Section 56(viib).

Investments from non-residents, venture capital companies/funds and frequently traded listed companies with a net worth of Rs 100 crore or turnover of at least Rs 250 crores will be exempt from the Rs.25 crores limit.

Lastly, in order to be eligible for start-up registration, the entity should not have invested in the following assets :

building or land, other than that used by the start-up for its business, or for purposes of renting, or as stock-in-trade in the ordinary course of business.

loans or advances, other than loans or advances made by start-ups whose substantial business is lending of money.

shares and securities.

capital contribution made to other entities.

a motor vehicle, aircraft, yacht, or any other mode of transport, the actual cost of which exceed Rs.10 lakhs, except those held by the start-up as stock-in-trade as part of business for the purposes of plying, hiring, leasing etc.

jewellery, other than that held by the start-up as stock-in-trade in the course of its business.

The Government’s move to abolish angel tax for start-ups are likely to liberate angel investing and unleash the next wave of entrepreneurship in the country, helping India further strengthen its position as a leading startup nation. The new norms are expected to soothe sentiments of both the budding entrepreneurs and the investors in startup ecosystem.


Legal Associate

The Indian Lawyer



The Supreme Court of India in the case of Arun Kumar Manglik vs Chirayu Health and Medicare Private Ltd. & Anr., passed a judgement dated 09.01.2019 holding that the while treating a patient medical professionals should adopt a patient-centric approach. The Apex Court found the hospital negligent and granted compensation to the Appellant.

In the above case Late Mrs. Madhu Manglik upon showing the symptoms of dengue fever was admitted to Chirayu Health & Medicare Hospital (Respondent Hospital) at about 7 AM on 15.11.2009. The Patient was checked at intervals, given medicines, diagnosed and blood reports were also taken periodically. The patient while in the hospital had a second cardiac arrest at 08:00 PM and was declared dead by the Respondent hospital at 08:50 PM.

The Appellant field a medical negligence Complaint before the Medical Council of India (MCI). The Ethics Committee (EC) of the MCI on 20.02.2015 came to a conclusion that the treating doctors had administered the treatment to the patient in accordance with the established medical guidelines, however the treatment was not provided in a timely manner.

The Appellant filed a Complaint before the State Commission Disputes Redressal Commission (SCDRC) seeking a compensation of Rs. 48 Lakhs on the ground that his spouse suffered an untimely death due to the medical negligence of the treating doctors of the Respondent hospital. The SCDRC gave a judgement on 27.04.2015, that a case of medical negligence was established and directed the Respondents to pay a compensation of Rs. 6 lakhs with the interest at the rate of 9 per cent per annum to the Appellant. The National Commission Disputes Redressal Commission (NCDRC) reversed the findings and dismissed the Judgement of SCDRC.

The Supreme Court of India held that considering the cases of Bolam vs Friern Hospital Management Committee (1957) 1 WLR 582 and Jacob Mathew vs State of Punjab (2005) 6 SCC 1 held that a medical practitioner must take a reasonable degree of care, and such care must be in accordance with utmost responsibility and reasonability. Further the Apex Court held that the Respondent hospital treated the patient according to the standard medical guidelines but failed to provide timely treatment. Hence the Respondent failed to satisfy the standard of reasonable care as laid down in the Bolam Case.

The Apex Court setting aside the Judgement of NCDRC held the Respondent hospital liable to pay a compensation of Rs. 15 Lakhs. However the Court was of the view that the Director of the Respondent hospital is not personally liable as he was neither the treating doctor nor an advising doctor.

Suchit Patel


The Indian Lawyer




The Hon’ble Delhi High Court in CUSHMAN AND WAKEFIELD INDIA PRIVATE LIMITED vs. UNION OF INDIA, on 11th February, 2019, upheld that the Rule 3(2) of the Companies (Registered Valuers and Valuation) Rules, 2017  (herein after referred as “the Rules”) has been made to uphold professional integrity.

Rule 3(2) of the said Rules talks about the eligibility of the Registered Valuers, reads as follows:

“No partnership entity or company shall be eligible to be a Registered Valuer if

(a) it has been set up for objects other than for rendering professional or financial services, including valuation services and that in the case of a company, it is not a subsidiary, joint venture or associate of another company or body corporate…”

In the present case, the restriction demarcated under the Rules were challenged by Cushman and Wakefield India Pvt Ltd (hereinafter referred as “the Company”), on the ground of arbitrariness, unreasonableness, and violative of Article 19(1) (g) of The Constitution of India, 1949 i.e. Right to carry business, trade or profession. It was submitted that this was an unreasonable classification.

The Company contended they are not only discriminated against individuals and partnership entities but also such companies which are not subsidiaries, joint ventures or associates of other companies / body corporates.

However, the opposite counsel submitted that restricted entities under Rule 3(2) of the Rules, if allowed as Registered Valuer will not be able to operate with independence and thus credibility cannot be ensured.

This restriction will be beneficial for the Valuers, by aiding them to take individual assessment and thereby eliminating the conflict of interest.

On perusal of the averments by the parties the Hon’ble Delhi High Court held that “The objective and intention behind laying down the impugned Rule is clearly to introduce higher standards of professionalism in valuation industry, specifically in relation to valuations undertaken for the purpose of Companies Act and IBC, 2016. The impugned Rule obviates the possibility of conflict of interest on account of diverging interests of constituent / associate entities which resultantly shall undermine the very process of valuation, being one of the most essential elements of the proceedings before NCLT

Satyam Singh Pal


The Indian Lawyer



According to various newspaper reports, the Government of India has withdrawn the Most Favored Nation (MFN) status given to Pakistan on 15.02.2019, in response to the recent terrorist attack by Pakistan backed Jaish-e-Mohammed terrorists on Central Reserve Police Force (CRPF) Personnel of India in Pulwama District of Jammu and Kashmir dated 14.02.2019.

The MFN principle is an essential element of the multilateral trading system under the World Trade Organization (WTO), a global international organization dealing with trade rules between nations. The MFN principle provides that no member country can discriminate amongst its trading partners/member countries, or give a special treatment, provide beneficial and special privileges, lower tax rates, etc, or favour its domestic goods and services over foreign products.

As per the obligation under the WTO, India had conferred the MFN status to Pakistan in 2014 along with other South Asian Association for Regional Cooperation (SAARC) countries including Bangladesh, Maldives, Nepal, and Sri Lanka.

Owing to the recent atrocious Pulwama Terrorist Attack 2019, India has, reportedly, withdrawn the MFN status conferred to Pakistan, as a result of which, India can now levy higher taxes and duties on goods coming from Pakistan to India, as per trade experts.

The Prime Minister of India, Shri Narendra Modi has condemned the Pulwama Terrorists Attack and has stated that the perpetrators of the Pulwama Terrorist Attack and those aiding and abetting the same would be strictly punished.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer




The Supreme Court on 12-02-2019 in Kamal Shivaji Pokarnekar vs. State of Maharashtra held that criminal complaints cannot be quashed only on the ground that the allegations made in the complaint appear to be of civil nature.

In the present case, the complainant had accused the developers of forgery and preparing false documents on the basis of which a development agreement was formulated. It was alleged that the respondents were liable to be punished for offences under Sections 420, 465, 467, 468, and 471 read with Section 34 of the Indian Penal Code (IPC). The Magistrate sent the complaint for investigation under Section 156 (3) of the Code. Thereafter, the police submitted a report stating that the matter appeared to be of a civil nature. The Trial Court issued summons to the accused. Later, when the respondents filed for Revision of this order, the Hon’ble High Court quashed the order issuing summons and held that the dispute in present case appears to be civil in nature. The criminal proceedings, if initiated against the accused would be an abuse of the process of law.

The complainant, thus, approached the Supreme Court in appeal.

Allowing the appeal, the Supreme Court, categorically stated that the Magistrate at the stage of taking cognizance, is not required to look into the merits of the evidence advanced or examine whether the same would lead to a conviction or not. The only time a criminal proceeding can be quashed is if a complaint prima facie does not disclose any offence or is found to be “frivolous, vexatious, or oppressive”. If allegations made do not constitute an offence, only then the High Court has the power to quash the complaint.

Pre-trial procedure does not require a “meticulous analysis” of the case or evaluation of whether the complaint would lead to conviction or acquittal. The High Court would not be right to interfere if, on a reading of the complaint and statements made, ingredients of an offence are made out.

Further, the Court noted that the complaint in the present, prima facie disclosed offences that were alleged against the Respondents. The veracity of the allegations has to be decided only in Trial. At the initial stage of issuance of process, it is not open to the courts to stifle the proceedings by entering into the merits of the contentions made on behalf of the accused.

The Court further clarified that criminal complaints cannot be quashed merely on the ground that the allegations made in the complaint appear to be civil in nature.

If the ingredients of an offence alleged against the accused are prima facie made out in the complaint, the criminal proceeding shall not be interdicted.




The Indian Lawyer




The Union Cabinet of India chaired by Prime Minister Shri Narendra Modi has recently approved the abolition of institution of Income Tax Ombudsman and Indirect Tax Ombudsman in India.

In the year 2003, the Institution of Income-Tax Ombudsman was established to resolve complaints relating to public grievances against the Department of Income Tax and to facilitate the settlement of such complaints.

The complaints filed before the Income- Tax Ombudsman generally related to delay in refunds, delay in allotment of permanent account number, non-adherence to prescribed working hours by Income Tax officials, unjustified rude behaviour of Income Tax officials with assessees, etc.

The Income- Tax Ombudsman usually settled the complaints by agreement, through conciliation and mediation between the Department of Income Tax and the aggrieved parties, otherwise by passing an award directing the parties to perform in accordance with the award of the Ombudsman.

Whereas, the Institution of Indirect Tax Ombudsman was established to resolve complaints relating to public grievances against the Customs, Central Excise and Service Tax Department and to facilitate the settlement of such complaints.

The complaints filed before the Indirect Tax Ombudsman generally related to delay in refunds or rebate, delay in adjudication, delay in registration of tax payers, non-adherence to prescribed working hours by Customs, Central Excise and Service Tax officials, unjustified rude behaviour of Customs, Central Excise and Service Tax officials with assessees, etc.

The Indirect Tax Ombudsman usually settled the complaints by agreement, through conciliation and mediation between the Customs, Central Excise and Service Tax Department and the aggrieved parties, otherwise by passing an award directing the parties to perform in accordance with the award of the Ombudsman.

But it has been observed that with the increasing use of alternate dispute redressal mechanisms by aggrieved persons such as Centralized Public Grievance Redress and Monitoring System, Aaykar Seva Kendras etc, both the Income Tax Ombudsman and the Indirect Tax Ombudsman have not been able to prove to be more effective than the alternate grievance redressal institutions. Therefore, the Government of India has decided to abolish both Income Tax Ombudsman as well as Indirect Tax Ombudsman in India.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer



The High Court of Bombay Bench at Aurangabad in the case of Shaikh Basid vs The State of Maharashtra & Yasminabano passed a judgement dated 06.02.2019 and held that a wife who is uncomfortable residing with her in-laws can wilfully reside separately and demand for maintenance.

In the above case the Applicant-husband (husband) and Respondent-wife (wife) got married on 05.05.2002 at Aurangabad and started residing at the husband’s house with his family. Later the problems started to arise and the wife subsequently moved in with her parents leaving the husband’s house on 05.02.2004. The wife was not ready to reside with the husband in his house with his parent’s even after a lot of personal requests by him. She further stated that she has no problem with the husband.

The husband then filed the Petition for restitution of conjugal rights under section 9 of the Hindu Marriage Act, 1955 (the Act) as amended thereof. The wife pleaded for the maintenance under section 125 of Code of Criminal Procedure, 1973 (Cr Pc), as amended thereof. The Family Court of Aurangabad on 09.02.2005 dismissed the appeal of husband under section 9 of the Act and allowed the plea of the wife under section 125 of Cr Pc 1973 directing the husband to pay Rs. 700/- per month to the wife as maintenance. The husband further contested the same in the High court of Bombay bench at Aurangabad and also prayed to dismiss the maintenance granted by the Family Court Judge.

The Apex Court in the above matter held that, the wife has complete right and is just in leaving the house of the husband if she is uncomfortable for her to reside there, and further the Apex Court upheld the Judgement dated 09.02.2005 of the Family Court.

Suchit Patel


The Indian Laywer