Supreme Court Weekly Round-Up : July 17-23, 2023

IBC Overrides Electricity Act; Dues To Secured Creditors At Higher Footing Than Electricity Dues: Supreme CourtCase details: Paschimanchal Vidyut Vitran Nigam Ltd vs Raman Ispat Private LimitedCitation: 2023 LiveLaw (SC) 534The Supreme Court observed that Section 238 of the Insolvency and Bankruptcy Code overrides the provisions of the Electricity Act, 2003.The provisions of the IBC treat the dues payable to secured creditors are at a higher footing than dues payable to Central or State Government, the bench of Justices S. Ravindra Bhat and Dipankar Datta saidThe judgment analyzes the scheme of IBC, especially the 'waterfall mechanism' under the Section 53 IBC and noted that the government debts have lower priority that the debts owed to unsecured financial creditors."The priority of claims, indicated in the hierarchy of preferences, under the waterfall mechanism is therefore: Firstly, insolvency resolution process costs and the liquidation costs;Secondly, workmen’s dues for the period of 24 months preceding the liquidation commencement date and debts owed to a secured creditor in the event such secured creditor has relinquished security; Thirdly, wages and any unpaid dues owed to employees other than workmen for the period of 12 months preceding the liquidation commencement date; Fourthly, financial debts owed to unsecured creditors; Fifthly, any amount due to the central government and the state government and debts owed to a secured creditor for any amount unpaid following the enforcement of security interest; Sixthly, any remaining debts and dues; Seventhly, preference shareholders; and Eighthly equity shareholders or partners.This hierarchy or order of priority thus accords government debts [clause (e)] and operational debts [clause (f)] lower priority than dues owed to unsecured financial creditors"Prohibition Of Cow Slaughter To Be Decided By Legislature, Court Can't Compel Law Making : Supreme CourtCase title: Mathala Chandrapati Rao v Union of IndiaCitation:2023 LiveLaw (SC) 535The Supreme Court held that the decision regarding the prohibition of cow slaughter is for the legislature to take. The court cannot force the legislature to come out with a specific law even in its writ jurisdiction. The court also took note of the steps taken by the state governments for the protection of cows.The Supreme Court bench headed by Justices Abhay S. Oka and Sanjay Karol was hearing an appeal against NGT’s decision which declined a plea seeking a specific direction for the prohibition of cow slaughter. Agreeing with the NGT's view, the Court observed, “We may observe that this is something which is for the competent legislature to decide. Even in writ jurisdiction, this Court cannot compel the legislature to come out with particular legislation. Ultimately, it is for the appellant to persuade the legislature. “Fill Vacancies In Central Govt Industrial Tribunals By August 31 : Supreme Court To UnionCase Title: Labour Law Association v. Union Of India | W.P.(C) No. 562/2023 PIL-WCitation: 2023 LiveLaw (SC) 536The Supreme Court directed the Union Government to complete the process of appointing judicial officers to the vacant seats of the Central Government Industrial Tribunals before August 31, 2023. The direction was passed by a bench comprising CJI DY Chandrachud, Justice PS Narasimha, and Justice Manoj Misra.The petitioner in the matter, Labour Law Association had submitted that as many as nine out of twenty-two benches of the Central Government Industrial Tribunals were vacant and three more were to soon fall vacant in 2023. Upon this submission, the Apex Court had earlier directed for a Search-cum-Selection Committee (SCSC) to be formed. Accordingly, an SCSC, chaired by a Judge of the Supreme Court nominated by the Chief Justice of India was constituted by the Ministry of Labour and Employment on March 6, 2023.NI Act | In Cheque Dishonour Case, Interim Compensation Can Be Ordered To Be Paid Only After Accused Pleads Not Guilty: Supreme CourtCase title: Pawan Bhasin v State of UPCitation: 2023 LiveLaw (SC) 537The Supreme Court held that where a cheque is dishonoured, the interim compensation can be directed to be paid only after the accused has pleaded not guilty as per section 143A(1) of the Negotiable Instruments Act, 1881. In the present case, the court noted that the magistrate had directed to pay 10% of the cheque amount before the plea of accused was entered. The court held that such orders being passed before the plea was taken into account is unsustainable in law.Therefore the court observed that “ In the present case, the Magistrate did not issue the order after the plea of the accused was entered, but before that i.e. after he answered the summons. The party's counsels were present at an intermediate stage of proceedings, but before the plea of “not guilty” was entered. In these circumstances, clearly, there is an infraction of Section 143A (1).”School Transfer Certificate Cannot Be Relied Upon To...

Supreme Court Weekly Round-Up : July 17-23, 2023

Suraj Kumar

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