Legal Remedies for Corona affected

Dr. Kislay Panday, Solicitor, Supreme Court of India

The lawyers across the continents in the past few months have been hit with a slew of #coronavirus related legal matters. This is not surprising given the scale and magnitude of the #diseases which is indeed spreading like wildfire.

In India especially the last four weeks have been rather disturbing as the cases as well as the deaths are mounting. Some people affected by the disease are directly impacted while many others have had to face many situations for no fault of theirs.

These situations were often created by their employers, landlords, neighborhoods, even #hospitals, and law enforcers. Many people in the last few months have lost their #jobs or lay off or had a #salary cut despite a government directive to the contrary. There have been cases where landlords threw out the stuff of #medicalpersonnel fighting corona on the pretext that they can bring in corona!

This is the most unfortunate situation as when we need to be united against the virus we are busy using it to further our own petty ends. The coronavirus does not #discriminate, but people do.  The coronavirus has and will continue to impacts all societies and economies.

The biggest legal issue that has come to our notice is #employment-related. In the wake of a shrinking economy and rampant loss of customers, the companies after companies are laying off their workforce, often illegally on the pretext that they have no funds to sustain them.

This is a rather bizarre situation as no one can take such an effect as this goes grossly against the labor laws and established employer-employee relations. At best they can cut perks (that too if permitted in the contract if any).

Having said that, given our system of jurisprudence anybody is free to seek #legalremedies and so the #court cases are inevitable. To the employees serving in various companies, I have good news, if you are fired by your boss on the pretext of the corona pandemic he is on the wrong side of the law.

The reason is simple, unlike in the west where ‘force majeure’ is categorically mentioned, it is most likely to be absent in Indian #contracts. Interestingly enough even if it is there it has no legal value.  The expression ‘#forcemajeure’ or an #actofGod does not exist in the Indian statutes. 

The Indian Contract Act which provides the framework of any contract is silent on the term `force majeure’.  The court rulings have been rather varied, from case to case, depending on other facts brought to its notice.

In the absence of the ‘force majeure’ clause, Sec 56 of the Contract Act becomes relevant which is about `frustration of contract’ implying that the contract has become impossible or unlawful. This then opens a new legal tussle which can rage for years as it becomes courts prerogative to interpret the law in the matter brought before it.

Besides, even if the term ‘force majeure’ is mentioned in a contract it does not imply `#pandemics’ per se, as it typically covers catastrophes like war.  This is indeed good news for the employee who has been wrongly terminated or whose salary has been drastically slashed by the company in order to safeguard its own interests and pass on the burden of Corona pandemic on the hapless employees.

However, it is not that simple as if anyone who has ever fought a case in court knows the time and energy it takes to get justice.  We are doing all we can to help people in this time of crisis. Our team is dealing with such cases and using knowledge and experience to determine the best we can do to provide succor to these people.

 We have started this service ‘#probono’ and is open for anyone wronged by his employer or anyone on the pretext of coronavirus.  We have also started a helpline for corona patients who can dial-in for any legal advice absolutely free of cost 24X7 The Pandemic we are facing is unprecedented and we need not forget that it should be an opportunity to help others rather than profit from it at the expense of others.

Article By:  Dr. Kislay Panday, Solicitor, Supreme Court of India

PIL FILED IN SUPREME COURT IN THE TAMIL NADU-CUSTODIAL DEATH CASE

Recently, a Public Interest Litigation (#PIL) has been filed in the Supreme Court on or around 03-07-2020 seeking a direction that the #TamilNadu #ChiefMinister does not hold the portfolio of #HomeMinistry till the completion of the investigation and trial in the alleged father-son #custodialdeath in Tamil Nadu.

In the said matter, the Madurai Bench of the Madras High Court had passed an Order dated 24-06-2020 by taking #suomotocognizance in the matter of The Registrar (Judicial), Madurai Bench of the Madras High Court vs The State of Tamil Nadu and 5 others W.P. (MD) No.7042 of 2020, pertaining to the alleged custodial death of Late Tr. #Bennicks and Late Tr. #Jeyaraj in #Sathankulam, Tamil Nadu.

A suo moto cognizance is generally exercised by a high court under Article 226 of the Constitution of India 1950. In a number of other instances, the courts have evoked their judicial conscience based on newspaper and media reports and have taken suo moto cognizance of cases, to ensure speedy justice and preservation of human rights.

In this case, Late Tr. Bennicks and Late Tr. Jeyaraj were arrested by Sathankulam Police Station Officers on 19-06-2020, based on a complaint which stated that the Deceased Prisoners had refused to shut their mobile shop after the permitted time and further, threatened, abused and prevented the police officers from discharging their official duties during the Covid-19 period. Thereafter, they were shifted to Sub-Jail on 20-06-2020. But on 22-06-2020, both the #RemandPrisoners were admitted to Government Hospital, Kovilpatti, where they passed away.

Based on the complaint of Jail Superintendent, two #FIRs were registered in Kovilpatti Police Station on 23-06-2020 with regard to the death of the Deceased Prisoners. Further, the family members of the Deceased Prisoners also filed a Petition in the Madras High Court on 23-06-2020, against the alleged #policebrutality of Sathankulam Police Officers, which led to the death of the Deceased Prisoners.

The Madras High Court in the suo moto case passed an Order dated 26-06-2020 and directed the Judicial Magistrate, Kovilpatti to visit Sathankulam to conduct inquiry and local investigation, as the family members of the Deceased Prisoners were not in a mental and physical condition to travel to Kovilpatti, which is 100 kms away from Sathankulam.

It has been further noted in the Order dated 29-06-2020, that the State Government of Tamil Nadu had planned to transfer the case to Central Bureau of Investigation (CBI). Further, as the Sathankulam police officials were not cooperating with the inquiry of the Judicial Magistrate, the Madras High Court directed the District Collector to depute Revenue Officers in Sathankulam, to assist the Magistrate in his inquiry.

Thereafter, the report of the Magistrate was filed in the Madras High Court, which stated that a few police officers at Sathankulam Police Station had tried to cause disappearance of the evidence in this case, which is based on the statement of Ms. Revathy, Head Constable, Sathankulam Police Station. Thus, the Madras High Court appointed a CB-CID Officer to investigate this case, until the case is handed over to CBI, vide Order dated 30-06-2020. This would ensure that no evidence is tampered until the investigation is complete.  

Meanwhile, the Chief Minister of Tamil Nadu, Shri. Edappadi K Palaniswamy, reportedly issued a public statement on 24-06-2020, stating that the Deceased Prisoners had succumbed to certain illness and not due to police atrocities. As a consequence, the PIL was filed in the Apex Court praying that the Tamil Nadu Chief Minister is retrained from holding the portfolio of Home Ministry till the completion of the investigation and trial. This is to ensure a free and fair probe and trial in this case.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

IMPLEMENTATION OF AMENDMENTS IN INDIAN STAMP ACT, 1899 AND RULES MADE THEREUNDER

The Central Government had amended the Indian Stamp Act, 1899 (‘the Act’) on 01.04.2019. The implementation of the amended provisions of the #IndianStampAct, 1899 brought through #Finance Act, 2019 and Rules made thereunder has come into force on 01.07.2020.

Accordingly, the Central Government has notified implementation of the amendments in the Act, and in Indian Stamp (Collection of stamp duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019 [(‘Stamp Rules’) or (‘Amendments’)] which will facilitate ease of doing business. This will also bring uniformity and affordability of the stamp duty on securities across States and thereby build a PAN India securities market.

The Amendments have been carried out with respect to securities market transactions. This provides the manner in which #stampduty shall be levied and collected by such agencies and then transferred to the concerned state governments.

The basic framework which is being created by the Central Government through the Amendments is creation of the legal and institutional mechanism to enable States to collect stamp duty at one place by one agency. The collection of Stamp Duty shall be carried out through the Stock Exchanges or Clearing Corporations authorised by the Stock Exchange or by the Depositories, when any security is being sold, transferred or issued through these platforms.

The Central Government has also notified the Clearing Corporation of India Limited (CCIL) and the Registrars to Issue and Share Transfer Agents to act as collecting agents. The collecting agent may deduct 0.2 per cent of the stamp-duty collected on behalf of the State Government towards facilitation charges before transferring the same to such State Government.

The collecting agents have to transfer collected stamp duty to the State Government within three weeks of the end of each month. Any collecting agent who fails to collect the stamp duty or fails to transfer stamp duty to the State Government within fifteen days of the expiry of the time specified, shall be punishable with fine which shall not be less than one lakh rupees, but which may extend up to one per cent of the collection or transfer so defaulted.

The stamp duty rates being implemented through the Amended Indian Stamp Act with effect from 01.07.2020 are:

Stamp Duty Rates

InstrumentRate
Issue of Debenture0.005%
Transfer and Re-issue of debenture0.0001%.
Issue of security other than debenture0.005%
Transfer of security other than debenture on delivery basis;0.015%
Transfer of security other than debenture on non-delivery basis0.003%
Derivatives–– 
(i) Futures (Equity and Commodity)0.002%
(ii) Options (Equity and Commodity)0.003%
(iii) Currency and Interest Rate Derivatives0.0001%
(iv) Other Derivatives0.002%
Government Securities0%
Repo on Corporate Bonds0.00001%

The benefit of such Amendments is that cost of collection would be minimised while revenue productivity is enhanced. Further, this system will help develop equity markets and equity culture.

Some Key Highlights of Stamp Rules Amendments:

The amendments inter-alia provide for the following structural reforms—

  1. “States cannot collect stamp duty on any secondary record of transaction associated with a transaction on which the depository/stock exchange has been authorised to collect the stamp duty. This is to avoid multiple incidences of taxation.
  2. The collecting agents shall within three weeks of the end of each month and in accordance with the Rules made in this behalf by the Central Government, transfer the stamp-duty collected to the State Government. The concern State Government will be where the residence of the buyer is located and in case the buyer is located outside India, to the State Government having the registered office of the trading member or broker of such buyer and in case where there is no such trading member of the buyer, to the State Government having the registered office of the participant. The collecting agent shall transfer the collected stamp-duty in the account of concerned State Government with the Reserve Bank of India or any scheduled commercial bank, as informed to the collecting agent by the Reserve Bank of India or the concerned State Government.
  3. In the extant scenario, stamp duty was payable by both seller and buyer whereas in the new system it is levied only on one side (payable either by the buyer or by the seller but not by both, except in case of certain instrument of exchange where the stamp duty shall be borne by both parties in equal proportion).
  4. The collecting agents shall be the Stock Exchanges or authorized Clearing Corporations and the Depositories.
  5. For all exchange based secondary market transactions in securities, Stock Exchanges shall collect the stamp duty; and for off-market transactions (which are made for a consideration as disclosed by trading parties) and initial issue of securities happening in demat form, Depositories shall collect the stamp duty.
  6. The Central Government has also notified the Clearing Corporation of India Limited (CCIL) under the jurisdiction of RBI and the Registrars to an Issue and/or Share Transfer Agents (RTI/STAs) to act as a collecting agent. The objective is to bring OTC derivative transactions reported to CCIL and physical space (non-demat) transactions in mutual funds handled through RTI/STAs under the ambit of stamp duty regime so as to avoid any tax arbitrage.
  7. The collecting agents shall within three weeks of the end of each month transfer the stamp-duty collected to the State Government where the residence of the buyer is located and in case the buyer is located outside India, to the State Government having the registered office of the trading member or broker of such buyer and in case where there is no such trading member of the buyer, to the State Government having the registered office of the participant.
  8. The collecting agent shall transfer the collected stamp-duty in the account of concerned State Government with the Reserve Bank of India or any scheduled commercial bank, as informed to the collecting agent by the Reserve Bank of India or the concerned State Government.
  9. The collecting agent may deduct 0.2 per cent of the stamp-duty collected on behalf of the State Government towards facilitation charges before transferring the same to such State Government.
  10. For many segments, there is reduction in duty. For example, the rate prescribed is lower for issue of equity/debentures and for transfer of debentures (including re-issue) to aid capital formation and to promote corporate bond market.
  11. For equity cash segment trading (both delivery and non-delivery-based transactions) and options, since rates are to be charged only on one side in line with the new scheme, it can be stated that there is an overall reduction in tax burden.
  12. Secondary market transfer of instruments which are traded with differences in a few basis points, like interest rate / currency derivatives or corporate bonds are being charged at a very lower rate from the existing rates. For the newly introduced ‘repo on corporate bonds’, a far lower rate is specified, since similarly positioned repo on Government Securities is not subject to duty.
  13. No stamp duty shall be chargeable in respect of the Instruments of transaction in stock exchanges and depositories established in any International Financial Services Centre set up under section 18 of the Special Economic Zones Act, 2005.
  14. Tax arbitrage is avoided by providing the same rate of stamp duty for issue or re-issue or sale or transfer of securities happening outside stock exchanges and depositories.
  15. Mutual funds, being delivery-based transactions in securities, were supposed to have been paying the duty as per various State Acts. All mutual fund transactions are thus liable for stamp duty and the new system has only standardized the charges across states and the manner of collection of stamp duty.”

[Source: PIB Release ID: 1635399]

Lakshmi Vishwakarma

Associate

The Indian Lawyer

NEW CLASSIFICATION AND REGISTRATION PROCESS FOR MSME NOTIFIED

The Union Ministry of Micro, Small and Medium Enterprises (‘MSME’), vide Notification No. S.O. 2119(E) dated 26.06.2020, declared the new process of classification and registration of enterprises as #MSME. This Notification comes into effect from 01.07.2020. The Notification deals with the manner of calculation of investment in plant and machinery. It deals with turnover classification for MSME and updation of information and transition period for the classification.

It also emphasizes registration of all existing and new MSME in the Udayam registration portal. For this purpose an enterprise will be known as Udyam and its registration process will be known as ‘Udyam Registration’.

The Government has already issued a Notification number S.O.1702 (E), dated 01.06.2020,  to make the change in the MSME definition in accordance with #Aatmanirbhar Bharat Package on 13.05.2020.This was also made effective from 01.07.2020.

The Notification dated 26.06.2020 states that Udyam Registration can be filed online based on self-declaration with no requirement to upload documents, papers, certificates or proof. It also clarified that this is possible because the Udyam Registration process has been fully integrated with the Systems of Income Tax and Goods and Services Tax and the details filled can be verified on the basis of Permanent Account Number (PAN) or Goods and Services Tax Identification Number (GSTIN) details.

As per the revised definition, vide Notification dated 01.06.2020, an enterprise shall be classified as a MSME on the basis of the following criteria, namely:–

EnterprisesInvestment and TurnoverLimit
MICROInvestment in plant and machinery or equipments;  Does not exceed Rupees 1 Crores    
Turnover  Does not exceed Rupees 5 Crores
SMALLInvestment in plant and machinery or equipments;  Does not exceed Rupees 10 Crores  
Turnover  Does not exceed Rupees 50 Crores  
MEDIUMInvestment in plant and machinery or equipments;  Does not exceed Rupees 50 Crores
TurnoverDoes not exceed Rupees 250 Crores

Earlier, MSMEs were classified in two categories, such as manufacturing and service enterprises. Now this has been removed and both will be the same. Moreover, if any enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, then it will cease to exist in its current category. And it will be placed in the next higher category. However no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.  

All units shall be collectively treated as one enterprise if they are listed with the same Goods and Services Tax Identification Number (GSTIN) and Permanent Account Number (PAN). Further, for all of such entities, the turnover and investment figures shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprises.

Other Highlights of Notification dated 26.07.2020

  1. An enterprise can be registered just on the basis of Aadhaar number.
  2. Investment in ‘Plant and Machinery or Equipment’ and ‘Turnover’ are the basic criteria for classification of MSMEs now;
  3. Exports of goods or services or both shall be excluded while calculating the turnover of any enterprise whether Micro, Small or Medium;
  4. The Ministry of MSME has established a strong facilitation mechanism for the MSMEs. This process is in the form of ‘Single Window Systems’ at the district level and regional level. This will be helpful for those entrepreneurs who are unable to file the Udyam Registration.

Now, the Facilitation of MSMEs will be a simple and yet fast-track. It is a revolutionary step towards Ease of Doing Business.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

Call for Papers | National Law School of India Review

National Law School of India Review is inviting contributions for its forthcoming Volume 33, Issue 1.

About

NLSIR is the flagship law journal of the National Law School of India University, Bangalore. In its 33rd year now, the NLSIR is a bi-annual, student-edited, peer-reviewed law journal, which holds the distinction of being the first Indian student-run law journal to be cited by the Supreme Court of India, in its decision in Action Committee, Unaided Private Schools v. Director of Education. Notably, we have also been cited recently in the Supreme Court’s landmark judgment, Justice K.S. Puttaswamy v. Union of India, which established the Fundamental Right to Privacy in India. NLSIR has also been recently cited in Justice R. S. Bachawat’s Law of Arbitration and Conciliation, a leading treatise on arbitration law in India.

To further our aim to encourage legal writing, provide inclusive legal scholarship, and contribute to issues at the forefront of contemporary legal discourse, the Board of Editors is inviting submissions for its forthcoming Volume 33, Issue 1. 

Submission Guidelines

1.    All contributions submitted to the NLSIR should be original, and should not have any plagiarized content.

2.    By submitting contributions to NLSIR, the author(s) confirms that the manuscript is not being simultaneously considered for publication elsewhere (online or print). 

3.    Pieces with relevance to India or Indian law are particularly welcome. This, however, is not a prerequisite.

4.    Submissions are accepted for the following categories:

§  Long Articles: Between 5,000 and 10,000 words. Papers in this category are expected to engage with the theme and literature comprehensively, and offer an innovative reassessment of the current understanding of that theme. It is advisable, though not necessary, to choose a theme that is of contemporary importance. Purely theoretical pieces are also welcome.

§  Essays: Between 3,000 and 5,000 words. Essays are more concise in scope. These papers usually deal with a very specific issue and argue that the issue must be conceptualized differently. They are expected to make an easily identifiable and concrete argument.

§  Case Notes and Legislative Comments: Between 1,500 and 2,500 words. Case Notes are expected to analyse any contemporary judicial pronouncement, or a new piece of legislation, whether in India or elsewhere. The Note must identify and examine the line of cases in which the decision in question came about, and comment on implications for the evolution of that branch of law. In case of Legislative Comment, the Note must analyse the objective of the legislation, and the expected legal impact.

§  Book Reviews: Between 2,000 to 3,000 words.

5.    The journal is flexible regarding the word count depending on the quality of the submission. All word limits are exclusive of footnotes

Formatting Guidelines 

1.    The body of the manuscript should be in Times New Roman, font size 12 with 1.5 line spacing. The footnotes should be in Times New Roman, font size 10 with single line spacing.

2.    The manuscript should contain only footnotes (and not endnotes) as a method of citation. Citations must conform to OSCOLA (Oxford University Standard for the Citation of Legal Authorities) (4th edn.) style of citation.

3.    Authors are required to adhere to the NLSIR Style Guide which can be found here.

Submission Procedure

Submissions may be emailed to mail.nlsir@gmail.com under the subject “33(1) NLSIR – Submission”. All submissions must contain the following:

1.    The manuscript in a .doc or .docx format. The manuscript should not contain the name of the author, their institutional affiliations, or any other identification markers. The title of the manuscript should indicate the sub-theme that the author(s) have chosen.

2.    A separate cover letter in a .doc or .docx format, containing the Name of the author, Professional Information, Title of the manuscript, and Contact information.

3.    An abstract of not more than 150 words.

General Information

1.    The deadline for submissions is October 30, 11.59 PM.

2.    Co-authoring of papers among individuals of the same or different institutions is permissible, for a maximum of three authors

3.    Upon submission, every manuscript will undergo two internal reviews by the Board of Editors. If approved in both the rounds, it is subject to a double-blind peer review process. 

4.  We hope to update authors on the submission within 4 weeks of their submission.

Contact

For more information, please visit www.nlsir.com. For queries, write to us at mail.nlsir@gmail.com. You can subscribe to NLSIR here.

SUPREME COURT REITERATES THAT RIGHT TO SECRECY OF VOTING INCLUDES CHOICE OF DISCLOSURE

The Supreme Court has in a recent case of Laxmi Singh and others Vs Rekha Singh and others passed a Judgment dated 19-06-2020 and reiterated that a voter cannot be compelled to disclose information about whom he/she has voted in an election by way of secret ballot under the Representation of the People Act, 1951 (the Act). Furthermore, a voter cannot be prevented from voluntarily waiving such right to secrecy and choosing to reveal his/her ballot information to third parties.

In the present case, a no-confidence motion was passed against the Respondent-Panchayat Adhyaksha in the Zila Panchayat, Prayagraj, Uttar Pradesh by a majority vote. Aggrieved, the Respondent filed a case in the District Court on the ground that few Members had not followed the secret ballot procedure properly. But the District Court allowed the no-confidence motion. Thereafter, the Respondent filed an appeal before the High Court at Allahabad, which set aside the minutes of the Panchayat Meeting on the ground that few Panchayat Members had violated the rule of secrecy of ballot, as they had disclosed their ballot papers. Therefore, the Appellants had filed an appeal in the Supreme Court against the Allahabad High Court Order.

The Apex Court made the following observations in this case:

1- The Supreme Court noted that as per the Uttar Pradesh (Zila Panchayats) (Voting on Motions of Non-Confidence) Rules 1966, the panchayat members are required to put a specified mark on the ballot paper to express their choice without disclosing their names and details, and then, fold the said ballot paper, so that the secrecy of the ballot is not infringed. This was to ensure fair and free elections and to protect the interests of the voters.

2- Further, Section 94 of the Act provides that a voter cannot be compelled to disclose information about whom he/she has voted in a secret ballot. This concept of privilege of non-disclosure was formulated under the Act to ensure transparency and fairness in elections and to enable voters to cast their votes freely.

3- But the Apex Court held that the said concept of privilege inheres a right to waive it. Thus, the privilege of non-disclosure may end, if the voter decides to voluntarily reveal information about whom he/she had voted. In such case, the Supreme Court held that the waiver of secrecy by individual voters cannot be held to have contravened Section 94 of the Representation of the People Act, 1951.

But in this case, as both the Parties had agreed to conduct a fresh no-confidence motion against the Respondent by way of secret ballot, the Apex Court directed the Parties to conduct a fresh meeting, where the District Judge, Allahabad or Additional District Judge, Allahabad, would act as the Presiding Officer to ensure fair and free elections.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

DIRECTORS CAN BE PROSECUTED UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT ACT IF THE COMPANY IS NAMED

The High Court of Madhya Pradesh has pronounced vide its Order dated 09.06.2020 in the case of Bhupendra Suryawanshi v. Sai Traders[M. Cr. C No. 735 of 2020] that a representative of a company cannot be prosecuted under Section 138 of Negotiable Instrument Act, 1881 (‘the N.I. Act’) unless the company is impleaded as a party.

The said provision aims to prohibit dishonesty on the part of the drawer of cheque. Currently dishonour of cheque is a criminal offence and punishable with imprisonment up to one year or fine which is double the amount of dishonored cheque or both.

Brief Facts of the Case

Sai Traders (‘Respondent’) is a trade firm had filed a Complaint through its proprietor against Mr Bhupendra Suryawanshi(‘Petitioner’) who is the chairman of a company namely ‘Well Built Industry India Ltd., Kalyan Pura, Ashta, District-Sehore’ (‘the Company’). The Complaint states that the Petitioner borrowed Rs. 2,00,000/- from the Respondent on 14.08.2016 for business purposes. He assured the Respondent that he would return the same within a period of four months. But, after expiry of the stipulated period, the Respondent demanded his money and the Petitioner gave him cheque dated 25.11.2017 amounting to Rs. 2,00,000/-.

On 18.01.2018, when cheque was deposited in the bank, the same was dishonoured due to “stop payment” instructions by the Petitioner. Thereafter, the Respondent sent a Demand Notice and filed a Complaint before the Judicial Magistrate First Class (‘JMFC’). The JMFC framed the charges against the Petitioner, vide Order dated 20.05.2019. Being aggrieved by the said Order, the Petitioner approached the High Court for quashing the Complaint.

Petitioner’s Contention

The Petitioner stated that the Complaint was not maintainable against him as a Chairman of the Company as the Respondent had not made the Company a party to case. Hence, in view of the provision of Section 141 N.I. Act, which speaks about the offences by Companies, the proceedings under Section 138 N.I. Act are bad in law.

Section 141 of N.I. Act deals with the offences committed by companies. The said Section states that if an offence is committed by a company under Section 138 of the N.I. Act, every person, who was in-charge and responsible to the company in the conduct of the business of the company, is liable along with the company to be proceeded against and punished accordingly. Further, it provides that no person shall be liable to be punished if he proves that an offence was not committed under his knowledge or he has exercised all reasonable care to prevent the offence.

High Court Decision and Observations

The High Court relied on a landmark Judgment passed by the Hon’ble Apex Court in the case of National Small Industries Corpn. Ltd. Vs Harmeed Singh Paintal  [(2010) 3 SCC 330], which settled the principle of vicarious liability of the Director/Managing Director/Joint Director of company as well as principle regarding necessity of specific averment in the complaint.

In light of the aforesaid Judgment, this Court ordered that “the person (Director/Managing Director/Joint Director/other officers and employees) of Company cannot be prosecuted under Section 138 of N.I. Act unless the Company is impleaded as an accused”. The Court further relied on the following Judgments of the Apex Court in the cases of S.M.S. Pharmaceuticals Lts. Vs. Neeta Bhalla and Another, [(2005) 8 SCC 89], K.K. Ahuja Vs. V.K.Vora [2009 (10) SCC 48], and National Small Industries Corpn. Ltd (Supra).

The Court also observed that a demand notice was served only on the Petitioner/Accused, there was no demand notice against Company, and therefore, without arraying the company as an accused in the Complaint, the Petitioner cannot be prosecuted for the offence under Section 138 N.I. Act.

Hence, the Petition was allowed and the Complaint was quashed. Consequently, the Order dated 20.05.2019 passed by learned JMFC was set aside.

Lakshmi Vishwakarma

Associate

The Indian Lawyer & Allied Services

SUPREME COURT VALIDATES GOVERNMENT SANCTION A MUST FOR LEGAL ACTION AGAINST PUBLIC SERVANTS

The #SupremeCourt has in a recent case of D. Devaraja vs Owais Sabeer Hussain passed a #Judgment dated 18-06-2020, where the Court held that when any person files a #complaint against a #publicservant, say, a #judge or #policeofficer, etc, accusing him of any #offence committed during the discharge of his #officialduties, the courts shall take #cognizance of such offence, only if there is a prior #sanction of the #Government.

In this case, the Appellant-Police Officer at Karnataka had detained the Respondent for conducting investigation of multiple pending criminal cases lodged against him. Thereafter, when the case was transferred to the Central Crime Branch and the Respondent was released, he filed a private complaint before the Magistrate alleging ill-treatment and police excesses by the Appellant and other police officers when he was in police custody. The Magistrate took cognizance against the Appellant in the said complaint case. Being aggrieved, the Appellant filed a Petition under Section 482 of the Code of Criminal Procedure 1973 (CrPC) in the Karnataka High Court to quash the order passed by the Magistrate. But the High Court redirected the case for proper hearing to the Trial Court. Being aggrieved, the Appellant filed an appeal before the Supreme Court.

The Apex Court made the following observations in this case:

1- That Section 197 (1) of CrPC requires a court to take cognizance of an offence alleged to have been committed by a public servant during the discharge of his official duties, only if there is a prior sanction of the Central Government or State Government, as the case may be.

2- Further, Section 170 (1) of the Karnataka Police Act, 1963 as amended in 2013 (the Act) also requires a court to take cognizance of an offence alleged to have been committed by a commissioner, magistrate, police officer, etc during his official duty, only if there is a prior sanction of the Government.

3- The object of the aforesaid provisions of CrPC and the Act is to protect a public servant or a police officer discharging official duties from facing frivolous, revengeful and vexatious criminal proceedings that may be possibly filed against them.

4- But the said protection is a limited one as it is available only when the alleged act done by the public servant is reasonably connected with the discharge of duties in his official capacity, and not in his private capacity.

5- That it is the duty of the trial court to determine whether prior sanction of the Government has been obtained or not in a complaint case. Failing which, such a complaint has to be rejected.

6- Once a sanction is granted in a particular case, the Government would have the complete control of the prosecution.

But in the present case, as there was no Government sanction issued, the Supreme Court held that the Magistrate erred in taking cognizance against the Appellant in the said complaint case, and quashed the complaint filed against the Appellant.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

‘OWNER’ IN CASE OF ACCIDENT IS A PERSON WHOSE NAME IS REGISTERED

The #SupremeCourt of India recently clarified vide #Judgment dated 18.06.2020 in the case of Surendra Kumar Bhilawe V. The New India Assurance Company Limited [Civil Appeal No. 2632 of 2020] that ‘#owner’ means the person in whose name the motor vehicle stands registered under the #MotorVehiclesAct, 1988.

The facts pertaining to the case involves Mr. Surendra Kumar Bhilawe (the Appellant), who was the owner of a Truck, which was covered by a Policy of Insurance issued by the New India Assurance Company Limited (the Insurer) effective for the period from 02.06.2011 to 01.06.2012. The said Truck, which was loaded with Ammonia Nitrate at Raipur, started its journey driven by one Mr. Rajendra Singh.

While on the journey the said Truck met with an accident on road. It was stated that the accident occurred in the driver’s efforts to save a cow, which had come on its way and he lost his control on the vehicle. This caused the vehicle to fall into a river by the side of the road and the Truck was extensively damaged. The Ammonia Nitrate, carried in the Truck was also washed away.

Proceedings:

The Appellant lodged the claim with the Insurer. However, the Insurer repudiated the said claim on the ground that the Appellant had sold the said Truck to one Mr. Mohammad Iliyas Ansari (the Transferee) on 11.4.2008 for a consideration of Rs.1,40,000/- and also on the ground of delay in filing a police complaint and in lodging the claim for reimbursement of losses.

Being aggrieved by the action of the Insurer, the Appellant filed Complaint before the District Consumer Disputes Redressal Forum, which vide Judgment dated 09.01.2014 allowed the Complaint and directed the Insurer to pay Rs 4, 93,500/- along with interest. It also granted relief in terms of compensation to the tune of Rs 7000/- for mental agony and cost of litigation. The said relief was granted on the ground that the ownership of the said Truck never stood transferred to the Transferee. The said Judgment of the District Forum was appealed before the State Consumer Disputes Redressal Commission, which was dismissed vide an Order dated 22.07.2014, on the same ground.

The Insurer filed Revision Petition before the National Consumer Disputes Redressal Commission challenging the Order of the State Commission. The National Commission allowed the said Revision Petition, and set aside the Orders of the District Forum and the State Commission respectively, and dismissed the Complaint of the Appellant. It was dismissed on the ground that the Appellant had sold his vehicle to the Transferee and ownership in the vehicle passes to the purchaser thereby the Insurer is not liable to pay for losses.

The Appellant appealed before the Supreme Court and contented that even though he had entered into a Sale Agreement with the Transferee, he had not actually transferred ownership of the vehicle to him. Even after the Sale Agreement, the Appellant had himself been paying instalments, to Bank, towards repayment of the loan obtained by him for purchase of the said Truck.

Legal Issue

Could ownership of the said Truck be transferred without transfer of registration in the name of the Transferee, in view of the Motor Vehicle Act, 1988 and the Rules framed thereunder?

Judgment

The Court allowed the Appeal. While dealing with the aforesaid issue the Court firstly, looked into the definition of ‘owner’ under the old Act, of 1939, and observed that the term ‘owner’ meant the person in possession of a motor vehicle. It said that legislature has consciously changed the definition of ‘owner’ to mean the person in whose name the motor vehicle stands under the Motor Vehicles Act, 1988. This definition of ‘owner’ has been overlooked and ignored by the National Commission.

Thereafter, the Court referred to its earlier Judgments passed in Naveen Kumar v. Vijay Kumar and Others [(2018) 3 SCC 1] and Pushpa Leela & Ors. v. Shakuntala [(2011) 2 SCC 240], which were rendered in the context of liability to satisfy third party claims. However, the dictum of this Court was that the registered owner continues to remain owner and when the vehicle is Insured in the name of the registered owner, the Insurer would remain liable notwithstanding any transfer, would apply equally in the case of claims made by the insured himself in case of an accident.

It was held that the ownership of the Truck stands in the name of the Appellant on the day accident occurred. It noted that in Certificate of Registration of the Vehicle in question, the name of the Appellant is recorded as registered owner. And he was the one who was paying the instalments to the Bank and not the Transferee, in whose name Sale Agreement was executed.

It further referred to various provisions of the Motor Vehicle Act, 1988 and judicial precedent to finally decide that “In view of the definition of ‘owner’ in Section 2(30) of the Motor Vehicles Act, the Appellant remained the owner of the said truck on the date of the accident and the Insurer could not have avoided its liability for the losses suffered by the owner on the ground of transfer of ownership to Mohammad Iliyas Ansari.”

Thus, the Court set aside the impugned Order of the National Commission under Appeal and upheld the Order of the District Forum as the correct interpretation of the Law.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

THE LAW IN SUICIDE CASES

In recent times, discussions on #suicide have occupied the attention of the #media, social and print, TV and internet in a big way. The recent suicide of actor, #SushantSinghRajput (#Actor), on 14-06-2020 is a case that has been highlighted aggressively by press and media possibly because of the lack of #news items due to the #Pandemic. It seems that the world is now fed up of reading news and updates on Coronavirus and any other news, even if tragic, is a welcome break from the Corona crisis. However, this aggressive reporting on suicide has in its wake seen the commission of suicide by few people across the country. So, the over-zealousness of the press also has its minus points. But it is unlikely that such suicides will restrain reporting of this news item.

Police investigations on the suicide of Sushant Singh Rajput is underway for a number of days and there are people in the suspect list, some of who are famous #Bollywood personalities. Though most of these #FIRs will be unfounded, however, the ground reality is the law on suicides in India makes abetment of suicide also an offence punishable under the #law.

The law states at Section 306 of the Indian Penal Code 1860 (#IPC) that #abetment of suicide is an offence punishable under the law. As per the law, a person is guilty of abetment of a thing in three circumstances, firstly, if a person instigates any person to do that thing, secondly, engages with one or more persons in any conspiracy for the doing of that thing, and thirdly, intentionally aids by illegal act or omission, the doing of that thing is deemed to have abetted the crime.

Hence, if any person, in the named persons, in the Sushant Singh Rajput’s case are deemed to fall within the definition of abetment of his suicide, such persons will be punished with imprisonment of a term which may extend to 10 years and also be liable to fine.

Though suicide is generally the outcome of #depression or manic disorder, however, there are instances when the depression can be due to the acts and omissions of third parties who have instigated the suicidal person to act in a manner that he feels compelled to take his own life.

While criminal law assumes innocence until proven guilty and that too beyond reasonable doubt, all persons who have been named to have abetted the Actor’s suicide, will have to go through the rigors of investigation, if a complaint or a FIR has been lodged against them. Only time will tell whether the Actor’s suicide was the outcome of depression or due to the instigation of some third party.

Sushila Ram Varma

Chief Consultant

The Indian Lawyer