PETITIONER MOVES DELHI HIGH COURT TO CURB SALE OF EXPIRED MEDICINES

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In a public interest litigation petition filed in the Delhi High Court with the cause title, Amit Sahni vs. Union of India through Ministry of Health and Family Welfare and Anr., questions and challenges the serious issue of unlawful reselling and reuse of drugs/medicines by erasing original manufacturing dates, expiry date, maximum retail price and other details and re-stamping the already expired medicines for the purpose of selling.

The Petition was heard on 16th November, 2018 before the Division Bench comprising of Chief Justice of the Delhi High Court Rajendra Menon and Justice V Kameswar Rao. The Bench issued a notice to Ministry of Health and Family Welfare and the Drug Controller General of India, under Central Drugs Standard Control Organization, against the above-mentioned Petition filed to restrain the sale and re-use of expired medicines.

The Petitioner in his Petition stated that, “Bengal police had busted a Drug Mafia with fake drugs worth Rupees Ten Crores and the accused involved in the case were reselling medicines by changing the expiration date. The accused used to purchase such medicines from the medical shop saying that they would be disposing the same in crap.”

The Petitioner also stated that, “as per Environment Protection Act (Biomedical Waste Management and Handling Rules) expired or discarded medicines are either to be sent back to the manufacturer or disposed of as per the prescribed rules.”

The Petitioner in this public interest litigation seeks to restrain the drug mafia that is selling expired medicines to unsuspecting patients. It further seeks to protect such patients from the side effects that expired medicines can cause.

The matter is relisted on 11th March 2019 when Delhi High Court will hear Ministry of Health and Family Welfare and the Drug Controller General of India and probably ask them to explain their future cause of action to restrain the drug mafia hitherto.

Taruna Verma

Senior Associate

DELHI SESSIONS COURT ORDERS FIRST CONVICTION IN 1984 ANTI-SIKH RIOTS CASE

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The Hon’ble Delhi Sessions Court, Patiala House has recently passed a judgment dated 14.11.2018 (Judgment) in State vs. Naresh and another thereby convicting two accused persons of injuring and killing people in the 1984 anti-Sikh riots in Mahipalpur, Delhi.

In 1984, a group of people had attacked, killed, injured and looted few people from the Sikh community in Mahipalpur (Riots). But owing to lack of sufficient evidence, the police had closed the case sometime in 1994.

Therefore, the Ministry of Home Affairs had set up a Special Investigation Team (SIT) in 2015 for investigating/reinvestigating the cases of 1984 Riots appropriately. In one such investigation, it has been established that an unlawful assembly of about 800- 1000 persons were involved in criminal conspiracy with one another and had committed the offences of rioting, dacoity, murder, grievous hurt, attempt to murder, mischief (by destroying shops), destruction of property at Mahipalpur, Delhi. The SIT is yet to investigate other cases of 1984 Riots.

The Delhi Sessions Court herein made the following observations in this Judgment:

The testimonies of witnesses about the ordeals and the incidents that happened during the Riots including the details about the slogans raised by the accused persons against the Sikh community, the arms and weapons carried by the accused, the manner in which they attacked the deceased persons, etc, have established that the common object of the unlawful assembly was to murder people from the Sikh community.

In order to implement their common object, the accused persons had manhandled the deceased persons and the witnesses, wrongfully restrained them, destroyed their house, looted their shops, attempted to murder the witnesses (who survived the injuries and testified against the accused) and killed others.

Therefore, the Delhi Sessions Court convicted the accused persons for committing offences of house breaking, hurt, assault, wrongful restraint, murder, voluntarily causing hurt with dangerous weapons or means, dacoity, etc. Reportedly, this is the first conviction among the reopened cases in the 1984 anti-Sikh Riots.

Reportedly, the Delhi Sessions Court is likely to provide the quantum of punishment for the accused persons on or around 22.11.2018.

 

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

ABANDONED NRI WIVES SEEK SUPREME COURT HELP

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A petition has been filed in the Supreme Court of India by wives of Non-Resident Indians (NRIs) highlighting the marriage frauds committed by NRI men living abroad.

Citing data of close to 50,000 cases PAN India, the petition, argued by Senior Advocate Colin Gonsalves, states the following issues that are prevalent in cases of NRI marriage fraud:

NRI marriage fraud cases are wrongfully registered under section 498A of the Indian Penal Code, 1860 as well as the Dowry Prohibition Act, 1980.

Requests for husband’s deportation also have been rejected by the foreign countries in many cases.

Many a times, the husband withdraws the visa sponsorship for spouse following the matrimonial discord.

In India, the National Commission for Women and State Women Commissions have no power to act against NRI men who defraud their wives or direct police to take action against such men.

There is inefficient process in issuing Look Out Circulars and Non-Bailable Warrants against NRI husbands.

The police are lax in following up the process in such cases.

There are procedural delays at the level of Union Ministry in processing requests for issuance of Look Out Circulars and serving Non-Bailable Warrants through Indian Missions at foreign nations.

Able assistance is not forthcoming from Indian Embassies abroad.

In many cases, whereabouts of husbands abroad remain unknown for years.

Though section 10(3)(h) of the Passports Act gives power to the Passport Authority to impound passport in case of any warrant or summons is pending against the passport-holder, the provision is rarely invoked against NRI husbands who abandon or harass their wives.

The Supreme Court issued notice to the Centre and hinted at policy formulation in view of the absence of procedures to be followed by police, immigration authorities and embassies throughout the world for providing speedy justice to wives abandoned by NRI husbands.

These guidelines are also sought to enable service of summons and warrant on NRI husbands electronically through email, whatsapp and the like. Since women have to suffer physically, mentally and financially too, the petitioners sought free legal aid to them and a scheme for financial support as women lose their jobs after marriage to NRI men based outside the country.

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

LEGAL NOTICE ISSUED TO AMITABH BACHCHAN FOR PAO BHAJI ADVERTISEMENT

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The popular Pao Bhaji advertisement starring Amitabh Bachchan and two junior artists has drawn flake from the Bar Council of Delhi for using lawyer’s attire in a television commercial. The Bar Council of Delhi has issued a legal notice on 31.10.2018 to Amitabh Bachchan and Everest Masala and also served the same on YouTube and Zee News where the advertisement has been seen.

The notice, issued by the Bar Council of Delhi chairman KC Mittal, to the actor stated, “You are informed that lawyer’s attire is prescribed exclusively for the court and the same is not permitted to be used for any advertisement, much less commercial advertisement.”
It further said, “This has undermined the dignity of the legal profession. You have failed to take due precaution before using the attire of lawyer for advertisement and are liable for legal action for telecasting the advertisement without any authority.”

 

The Bar Council of Delhi has asked the opposite parties to “immediately stop all such advertisement and also give an undertaking, to be furnished within 10 days, to the Bar Council of Delhi, Bar Council of India and other State Bar Councils that the lawyers’ attire shall not be used to any advertisement in future” and warns of action in case of any violation in the future.

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

SUPREME COURT RULES THAT THE INTEREST TO BE LEVIED ON COMPENSATION FROM THE DATE OF ACCIDENT, AND NOT FROM THE DATE OF THE ADJUDICATION OF THE AWARD

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The Supreme Court has held in the case of North East Karnataka Road Transport Corporation vs. Smt. Sujatha, that the interest on compensation amount is to be levied from the date of accident, and not from the date of the adjudication of the Award.

Brief facts of the case are that one Mallikarjuna, a driver with the State Road Transport Corporation (SRTC) for the State of Karnataka, died on duty due to heart attack 06.04.1999. His wife filed a claim petition before the Commissioner under the Workmen’s Compensation Act, 1923 (“the Act”). The Commissioner allowed the claim petition and awarded a sum of Rs.3,79,120 (said amount) as compensation to the wife of the deceased, Mallikarjuna. ­ Along with the Award, a direction was laid down by Commissioner that SRTC has to deposit the awarded sum within 45 days, and if SRTC failed to deposit the said amount within 45 days, then it would be liable to incur an interest of 12% per annum on the Awarded sum.

Thereafter, against the Award allowed by the Commissioner, the SRTC moved the High Court of Karnataka (“The High Court”) for an appeal and the same was dismissed. Consequently, the SRTC filed a Special Leave Petition (SLP) in the Supreme Court.

It was observed by the Supreme Court that, an appeal under Workmen’s Compensation Act, 1923 (the Act) to the High Court against the order of the Commissioner is not similar to a Regular First Appeal akin to the Code of Civil Procedure, 1908 which can be heard both on facts and law. The appellate jurisdiction of the High Court can only examine the question of law in the case.

Therefore, when an appeal is filed by the aggrieved party (the employer) in the High Court, according to Workmen’s Compensation Act, 1923, the aggrieved party (the employer) is under a legal obligation to deposit the entire awarded sum in order to file an appeal.

It is only when the employer deposits the entire awarded money along with the memo of appeal duly certified by the Commissioner, his appeal is regarded as being properly filed in conformity with the requirement of the Act.

Then such appeal is heard on the fact whether it involves any substantial question of law or not; and whether it needs examination by the High Court. Thereafterthe High Court would admit the appeal for final hearing on merit, else it would dismiss the case in liminiwith the reason that it does not involve any substantial questions of law.

The Supreme Court with reference to the case of PratapNarain Singh Deo vs. Srinivas Sabata, 1976 AIR 222, held that, “when the personal injury is caused to a workman through an accident in the course of employment, then the employer becomes liable to pay the compensation as soon as the injury is caused to him, and that is date of the accident, not the date of the adjudication of claim”.

The Apex Court also observed that, contrary principle was appointed by the court in the case of, National Insurance Company Ltd vs. Mubasir Ahmed, 2007 AIR SC 1208 and Oriental InsuranceCompany Ltd. vs. Mohmad Nasir &Anr., 2009 AIR SC 3717, wherein the court held that “the payment of compensation would fall only after commissioner’s order with reference to the date on which the claim application was made.”

 

This principle was overruled by the Apex Court having said that, “the principle adopted in above cases has not adopted the correct principles of law”. That is why, it will not be considered as the binding precedent”.

Therefore, Supreme Court ruled in the favour of the claimant to the extent that the awarded sum of money will carry 12% interest per annum from the date of the accident, regardless of the fact whether it has been challenged by the claimant or not.

 Thus, the Apex Court held that “even though the respondent did not challenge this direction by filing any appeal in the High Court nor challenged it by filing any appeal in this Court too, yet the question being a pure question of law, this Court with a view to do substantialjustice to the respondent consider it just and proper to modify the order of the Commissioner in respondent’s favour so as to make the same in conformity with the law laid down by this Court in the above referred two decisions”.

Satyam Singh Pal

Associate

The Indian Lawyer

INDIA’S IMPROVED EASE OF DOING BUSINESS WORLD RANKING 2019

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In the recent World Bank’s Ease of Doing Business Ranking 2019, India has achieved a remarkable overall ranking of 77th position out of 190 countries, thereby, successfully shooting up 23 places from its earlier 100th rank.

The Doing Business report exhaustively covers business regulations and reforms in various cities and regions within a country and provides an overall ranking to the countries based on certain parameters including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency.

India has been ranked in the following manner in each of the given parameters out of 190 countries:

Starting a business- 137th rank

a) India has made setting up of business easier and smoother by putting together multiple application forms in a common application form.

b) Further the registration process under Goods and Services Tax (GST) has been made faster.

c) Also, the city of Mumbai has abolished the practice of site inspections for registering companies under the laws governing shops and establishments.

Dealing with construction permits- 52nd rank

i) The process of obtaining a construction permit has been made faster and cheaper.

ii) Introduction of decennial liability and insurance on construction contractors and design professionals to penalize them for any latent defect or collapse of building that they have constructed or designed, as the case may be. This is to improve the building quality control.

The cities of Delhi and Mumbai have introduced such reforms.

Getting electricity- 24th rank

In Delhi, the time involved in getting electricity connection and the charges for low voltage connections has been reduced.

Registering property- 166th rank

Getting credit- 22nd rank

India has strengthened the insolvency law and provided security creditors priority over claims of other stakeholders during insolvency proceedings.

Protecting minority investors- 7th rank

Paying taxes- 121st rank

(i) With the introduction of GST, various indirect taxes have been subsumed under a uniform system of taxation in the country.

(ii) Further, the corporate tax rate and the employees’ provident funds scheme rate have been reduced.

Trading across borders- 80th rank

The time and cost involved in imports and exports has been substantially made faster and less costly with electronic sealing of containers, better port infrastructure and electronic submission of supporting documents with digital signatures.

Enforcing contracts- 163rd rank

Resolving insolvency- 108th rank

The business reforms and initiatives of the Indian Government in bringing ease of doing business in India have seen a drastic improvement.

Reportedly, Mr. Jim Yong Kim, the President of the World Bank has described the India’s jump in ease of doing business ranking as a historic and unprecedented achievement which has been attained as a result of the unwavering commitment and leadership of Shri Narendra Modi, the Prime Minister of India.

The further initiatives of Indian Government on making doing business in India easier are likely to improve India’s ranking in the World Bank’s Ease of Doing Business Ranking in the coming years.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

SUPREME COURT RULES THAT AWARD-DEBTOR CANNOT BE SUBJECT TO A PENAL RATE OF INTEREST

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The Supreme Court in Vedanta vs. Shenzen Shandong Nuclear Power Construction Co. Ltd, held that, “the rate of interest must be compensatory as it is a type of reparation conceded to the award holder; while on the other hand it must not be punitive, unconscionable or usurious in nature.”

Concurring the case, on May 2008, Vedanta Ltd. and the Shenzen Shandong Nuclear Power Construction Co. Ltd. (Chinese Corporation) went into Engineering Procurement and Construction Contracts (the EPC Contract) for development of a 210MW Co-Generation Power Plant. Each of the four contracts contained an Arbitration Clause.

As one of the parties was a foreign party, thus, the arbitration was deemed to be International Commercial Arbitration (ICA), having its seat in India and governed by Arbitration and Conciliation Act, 1996 (the Act).

The termination proviso in the Contract provided that, in case of termination, the Purchaser will compensate 105% of the expense brought about by the Supplier. The EPC contracts did not contain any clause or provision on instalment of Interest.

In International Contracts, there was no accord on rate of granting interest. Therefore, in the absence of an agreement between the parties on interest, the rate of interest granted would be administered by the Law of the Seat of Arbitration.

Therefore, according to Section 31(7)(a) of the Act which relates to the award of Interest for the preference and, pendente lite period, or, in other words, the agreement between the parties. The expression “unless otherwise agreed by the parties” is missing from this section. And, the statutory rate of Interest is 2% higher than the current rate of interest predominant on the date of the award.

Therefore, the Supreme Court observed that “The discretion of the arbitrator to award interest must be exercised reasonably. An arbitral tribunal while making an award for Interest must take into consideration a host of factors, such as: (i) the ‘loss of use’ of the principal sum; (ii) the types of sums to which the Interest must apply; (iii) the time period over which interest should be awarded; (iv) the internationally prevailing rates of interest; (v) whether simple or compound rate of interest is to be applied; (vi) whether the rate of interest awarded is commercially prudent from an economic standpoint; (vii) the rates of inflation, (viii) proportionality of the count awarded as Interest to the principal sums awarded. On the one hand, the rate of Interest must be compensatory as it is a form of reparation granted to the award holder; while on the other it must not be punitive, unconscionable or usurious in nature.”

Further, in this case, the Arbitral Tribunal adopted a dual rate of Interest in the Award. The Award relates to instalment of Interest @ 9% for 120 days post grant; if the sum granted isn’t paid inside 120 days, the rate of Interest is scaled up to 15% on the entire sum awarded.

The Supreme Court also observed that “The dual rate of interest awarded seems to be unjustified. The award of a much higher rate of interest after 120 days’ is arbitrary, since the Award-debtor is entitled to challenge the award within a maximum period of 120 days as provided by Section 34(3) of the said Act, 1996. If the Award Debtor is made liable to pay a higher rate of Interest after 120 days, it would foreclose or seriously affect his statutory right to challenge the Award by filing objections under Section 34 of the said Act. The imposition of a high rate of interest @ 15% post- 120 days is exorbitant, from an economic standpoint, and has no correlation with the prevailing contemporary international rates of interest. The Award Debtor cannot be subjected to a penal rate of interest, either during the period when he is entitled to exercise the statutory right to challenge the Award, before a Court of law, or later. Furthermore, the Arbitral Tribunal has not given any reason for imposing a 15% rate of Interest post 120 days.

The Chinese Corporation has, in fact been awarded 105% of the costs incurred under the EPC Contracts by the Arbitral Tribunal. The award of interest @ 9% on the Euro component of the Claim is unjustified and unwarranted.
Therefore, the Supreme Court said that, “The Award has conceded a uniform rate of 9% S.I. (Simple Interest) on both the INR and the EUR part. Be that as it may, when the parties don’t operate in a same currency, it is important to consider the intricacies caused by differential rates of interest. Rate of interest contrasts depending on the currency. It is vital for the Arbitral Tribunal to coordinate the choice of the currency along with the interest rates. A uniform rate of Interest for INR and EUR would thus not be supported. The rate of 9% Interest on the INR segment granted by the Arbitral Tribunal is undisputed. However, as for the EUR segment, the Award Debtor has liability to pay interest at the LIBOR rate (London Inter-Bank Offered Rate) + 3 rate points, prevailing on the date of the Award. Along these lines, there was modification by the Arbitral Court on the award dictated. The interest rate of 15% post 120 days allowed on the whole sum granted stands erased. A uniform rate of interest @ 9% will be relevant for the INR segment in total till the date of acknowledgment or realization”.

Satyam Singh Pal
Associate
The Indian Lawyer

SUPREME COURT PROHIBITION ON SALE OR REGISTRATION OF BS-IV – COMPLIANT VEHICLES IN INDIA

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The Supreme Court in a recent case of M.C. Mehta vs. Union of India and others 2018 has passed a judgment dated 24.10.2018 (Judgment) and held that no Bharat Stage IV (BS-IV) – compliant vehicles should be permitted to be sold in India after 31.03.2020 (Deadline).

The Judgment stated that all automobile manufacturers in India have to dispose of the vehicles which conform to BS-IV norms and have to adopt BS-VI norms, which provide improved and eco friendly technological changes, in manufacturing automobiles.

In this regard the automobile manufacturers had requested the Apex Court for extension of the Deadline as it may take longer period of time to sell the stocks of non- BS-VI compliant vehicles and to manufacture BS-VI compliant vehicles, as the BS-VI fuel would be available in India only with effect from 01.04.2020.

The Supreme Court made the following observations in the said Judgment:

According to the Report of the Parliamentary Standing Committee dated 07.08.2018, the problem of air and vehicular pollution has had a cascading effect on the health of people residing in various parts of the country including the National Capital Region (NCR) of Delhi.

Also, according to the World Health Organization (WHO), Indian cities of Gwalior, Allahabad, Raipur, Delhi, Ludhiana, Khanna, Varanasi and Patna are amongst the most polluted cities in the world.

Thus, there is an urgent need to ensure compliance of BS-VI norms with effect from 01.04.2020 by automobile manufacturers in India.

Further, the Union Government of India has spent approximately Rs. 30,000 Crores to make BS-VI fuel available in various parts of India. Moreover, BS-VI fuel has already been made available in the NCR of Delhi since 01.04.2018.

Thus, there is no need for extension of Deadline as there is availability of BS-VI fuel in India for manufacturing automobiles.

Moreover, manufacture of BS­VI compliant vehicles has already begun in India by a number of automobile companies including M/s. Hero MotoCorp, and is expected to be finished before the Deadline.

In view of the above, other automobile manufacturers can also put in efforts to comply with BS­VI norms before the Deadline.

Further, a number of automobile vehicle companies are today engaged in manufacturing hydrogen cell, fuel vehicles along with hybrid, electric and compressed natural gas vehicles, which are technologically far more advanced than BS­VI compliant vehicles.

So, there should not be any difficulty for other automobile manufacturers in adopting BS­VI norms in manufacturing automobiles before the Deadline.

Most importantly, every person has a right to a decent environment in India which has been held to be a fundamental right under Article 21 of the Constitution of India 1950 as amended thereof by the Supreme Court in Shantistar Builders v. Narayan Khimalal Totame 1990.

Therefore, in view of a larger public interest, i.e., the health of citizens of India, the Supreme Court herein has refused to give any extension of the Deadline to comply with BS­VI norms and prohibited companies from selling or registering BS-IV compliant vehicles after 01.04.2020.

By

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

SUPREME COURT REFUSES TO PUT BLANKET BAN ON USE OF FIRECRACKERS, DESPITE AIR POLLUTION REACHING UNIMAGINABLE LEVELS

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The Supreme Court Bench of Justices AK Sikri and Ashok Bhushan had reserved its order on 28th August, 2018 in a petition calling for countrywide ban on bursting fire-crackers, citing the ill effects on environment and public health. The activists had petitioned the Supreme Court for a complete ban on fireworks in light of rising air pollution levels in New Delhi, ahead of Diwali.

The Supreme Court in its order dated 23rd October, 2018 refused to impose a nationwide blanket ban on sale of firecrackers. The verdict came in response to a plea seeking a ban on manufacturing and sale of firecrackers across the country to curb air pollution.

For informational purposes, the Supreme Court had, on 9th October, 2017, temporarily banned the sale of firecrackers ahead of Diwali last year.In wake of the temporary ban, the traders sought permission to sell crackers for at least a day or two before Diwali last year. In their contention, firecrackers manufacturers had argued that the use of firecrackers should not be completely banned, rather their use should be strictly regulated.

The Court observed that Article 21 (right to life) of the Constitution applies to both segments of people (firecracker manufacturers and general public) and it needs to maintain a balance while considering a countrywide ban on firecrackers. The Court said that it is important to take into account all aspects, including the fundamental right of livelihood of firecracker manufacturers and the right to health of over 1.3 billion people of the country.

The Order dated 23rd October, 2018 of the Supreme Court thus does not permit a complete ban on the use of firecrackers, but imposes the following conditions and restrictions:

Online sale of firecrackers is banned. The e-commerce websites would be in contempt of court if they are found selling fire-crackers.

Sale of firecrackers will happen only through licensed vendors. And only those firecrackers that are within noise pollution limits set in July 2005 verdict, In Re: Noise Pollution v. Unknown, are allowed.

Only “low polluting” green crackers which are within permitted decibel limits and emission norms will be allowed. On 8th August 2018, the Court observed that a spike in PM 2.5 levels in the air is a severe problem as the particulate matter remains in people’s lungs, leading to serious health implications.

Ladisor chain-firecrackers, which are very noisy, are banned.

Timing restrictions on burning firecrackers have been imposed, allowing people to burn crackers only between 8pm and 10 pm on Diwali, while between 11:45 pm to 12:15 am on New Year and Christmas.

All states have been directed to explore feasibility of community cracker bursting during festivals.

SHO’s will be held liable if banned firecrackers are sold in their area.

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

SUPREME COURT HELD THAT A NON-BANKING OR NON-FINANCIAL COMPANY CANNOT SEEK RELIEF UNDER SARFAESI AND TRANSFER OF PROPERTY ACT

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The Supreme Court in a recent Judgement Suzuki Parasrampuria Suitings Pvt. Ltd. Vs. The Official Liquidator of Mahendra Petrochemicals Ltd. (In Liquidation) and Others decided on 08.10.2018 held that Suzuki Parasrampuria Suitings Pvt. Ltd. (hereinafter as the “said Company”) cannot file an application to seek any benefit under the SARFAESI Act, 2002 (“SARFAESI Act”) and Section 130 of the Transfer of Property Act, 1882, unless it is a bank or banking company or a financial institution or a securitisation company or reconstruction company. It further held that, the Company cannot take contradictory stands at its own convenience.

Here, the said Company was an assignee of debt by the Industrial Finance Corporation of India Ltd. (IFCI) for the outstanding of M/s. Mahendra Petrochemicals Ltd (MPL). A Company Petition was filed for winding up of M/s. MPL. The Company then was referred to rehabilitation to the Board for Industrial and Financial Reconstruction (BIFR). While this was pending, without informing the BIFR, an unregistered memorandum of understanding (MOU) was entered between M/s. MPL with M/s. Suzuki Parasrampuria Suitings Pvt. Ltd. to lease out the properties to the said Company for 20 years to repay its debts. The Company Court was unaware about this arrangement, until on 19.04.2010, when a winding up order was passed by the court.

The IFCI, Bank of Baroda and Punjab National Bank who were the secured creditors, filed an original application for recovery of debt against MPL before the Debt Recovery Tribunal under the SARFAESI Act. IFCI held first charge to M/s. MPL for outstanding of Rs.160 crores over the assets and the Bank of Baroda had second charge for Rs.4,68,00,000 approximately. On 28.07.2010 after the winding up Order, IFCI assigned its dues to the Company for a sum of Rs.85 Lakhs only and informed the official liquidator thereafter.

Thereafter Suzuki Parasrampuria Suitings Pvt. Ltd. filed, Company application for substitution of its name in the place of IFCI as secured creditor. The same was however rejected on the grounds that the Company was neither a bank or banking company or a financial institution or securitization company or reconstruction company and therefore could not be substituted in place of IFCI as a secured creditor for the purpose of the SARFAESI Act. In order to seek relief for substitution as a secured creditor under the SARFAESI Act, the Company Judge held that the Suzuki Parasrampuria Suitings Pvt. Ltd could not draw any benefit under Section 130 of the Transfer of Property Act,1882, which states that-

“Section 130, The Transfer of Property Act, 1882, –

Transfer of actionable claim. —

(1) The transfer of an actionable claim 1[whether with or without consideration] shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent, shall be complete and effectual upon the execution of such instruments, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not: Provided that every dealing with the debt or other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer.

(2) The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor’s consent to such suit or proceeding and without making him a party thereto.

(Exception) —Nothing in this section applies to the transfer of a marine or fire policy of insurance 3[or affects the provisions of section 38 of the Insurance Act, 1938. Illustrations

(i) A owes money to B, who transfers the debt to C. B then demands the debt from A, who, not having received notice of the transfer, as prescribed in section 131, pays B. The payment is valid, and C cannot sue A for the debt.

(ii) A effects a policy on his own life with an Insurance Company and assigns it to a Bank for securing the payment of an existing or future debt. If A dies, the Bank is entitled to receive the amount of the policy and to sue on it without the concurrence of A’s executor, subject to the proviso in sub-section (1) of section 130 and to provisions of section 132.”

On the other hand, the respondents contended that the Company cannot take different stands in order get benefit according to their convenience.

When the matter went up to the Supreme Court, the Apex Court held-

though the litigant can take different stands at different times but cannot take contradictory stands in the same case. A party cannot be permitted to approbate and reprobate on the same facts and take inconsistent shifting stands. The untenability of an inconsistent stand in the same case was considered in Amar Singh vs. Union of India, (2011) 7 SCC 69, observing as follows:

“This Court wants to make it clear that an action at law is not a game of chess. A litigant who comes to Court and invokes its writ jurisdiction must come with clean hands. He cannot prevaricate and take inconsistent positions.”

The same issue was adjudged in Joint Action Committee of Air Line Pilots’ Assn. of India vs. DG of Civil Aviation, (2011) 5 SCC 435, observing:

“The doctrine of election is based on the rule of estoppel-the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppels in pais (or equitable estoppel), which is a rule in equity….. Taking inconsistent pleas by a party makes its conduct far from satisfactory. Further, the parties should not blow hot and cold by taking inconsistent stands and prolong proceedings unnecessarily.”

Satyam Singh Pal

Associate