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Supreme Court Monthly Digest: July 2020

Akshita Saxena
7 Sep 2020 5:20 AM GMT
Supreme Court Monthly Digest: July 2020
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1. Dispute As To Inheritance Of Shares Cannot Be Decided In Proceedings U/s 241/242 Of Companies Act, 2013: SC

Order dated July 6, 2020

The Supreme Court observed that a dispute as to inheritance of shares cannot be decided in proceedings under section 241/242 of the Companies Act, 2013. The bench comprising Justices Arun Mishra & S. Abdul Nazeer noted that, in Sangramsinh P. Gaekwad and Ors. v. Shantadevi P. Gaekwad (Dead) through LRs. and Ors., (2005) 11 SCC 314, it was held that the dispute as to inheritance of shares is eminently a civil dispute and cannot be said to be a dispute as regards oppression and/or mismanagement so as to attract Company Court's jurisdiction under sections 397 and 398 of Companies Act, 1956.

[Case: Aruna Oswal v. Pankaj Oswal]

2. SC Nullifies Post-March 31 Sale Of BS-IV Vehicles ; Bars Registration Of Such Vehicles

Order dated July 8, 2020

The Supreme Court recalled its March 27 order which allowed sale of 10% of unsold BS-IV vehicles for ten days after the lockdown, in areas except Delhi-NCR, after noting that the automobile dealers sold such vehicles during the lockdown in violation of the order.

Following the recall of the order, a bench comprising Justices Arun Mishra, S. Abdul Nazeer & Indira Banerjee held that such vehicles sold during lockdown should not be treated as sold, and that the consideration received should be refunded to the purchasers. The Court also ordered that no such vehicle, sold after March 31, should be registered.

[Case: MC Mehta v. Union of India]

3. Criminal Appeal Against Order Of Conviction Cannot Be Dismissed For Default: Reiterates SC

Order dated July 8, 2020

The Supreme Court set aside a Madras High Court order that had dismissed a Criminal Appeal against an order of conviction for default. The bench comprising Justices RF Nariman, Navin Sinha & BR Gavai agreed with the contention put forth by the counsel, relying on the decision of the Supreme Court in KS Panduranga v. State of Karnataka (2013) 3 SCC 721, that an appeal against an order of conviction cannot be dismissed in default but must be taken up and decided on merits even if the appellant in-person or the counsel representing him, is not present.

[Case: Sakunthala v. State]

4. Disabled Entitled To The Same Benefits As Given To SC-ST Candidates: SC

Order dated July 8, 2020

The Supreme Court observed that people suffering from disabilities are also socially backward and are thus entitled to the same benefits as given to the Scheduled Castes/ Scheduled Tribes candidates. It held that the provision giving only 5% concession in marks to PWD candidates as opposed to 10% relaxation provided to SC/ST candidates is discriminatory and PWD candidates are also entitled to same treatment.

While considering an appeal against a Punjab and Haryana High Court order, the bench headed by Justice RF Nariman said that it is 'following' the principle laid down in the Delhi High Court's judgment in Anamol Bhandari (Minor) through his father/Natural Guardian v. Delhi Technological University 2012 (131) DRJ 583.

[Case: Aryan Raj v. Chandigarh Administration]

5. [Order VII Rule 11 CPC] If Plaint Does Not Disclose Cause Of Action Or Suit Is Barred By Any Law, The Court Has No Option But To Reject The Plaint: SC

Order dated July 9, 2020

The Supreme Court observed that the provision of Order VII Rule 11 Code of Civil Procedure regarding 'Rejection of Plaint' is mandatory in nature. A bench comprising Justices L. Nageswara Rao & Indu Malhotra said: "It states that the plaint "shall" be rejected if any of the grounds specified in clause (a) to (e) are made out. If the Court finds that the plaintiff does not disclose a cause of action, or that the suit is barred by any law, the Court has no option, but to reject the plaintiff."

The Court observed, inter alia:

  • The power conferred on the court to terminate a civil action is, however, a drastic one, and the conditions enumerated in Order VII Rule 11 are required to be strictly adhered to.
  • Under Order VII Rule 11, a duty is cast on the Court to determine whether the plaint discloses a cause of action by scrutinizing the averments in the plaint, read in conjunction with the documents relied upon, or whether the suit is barred by any law.
  • The documents filed alongwith the plaint, are required to be taken into consideration for deciding the application under Order VII Rule 11 (a). When a document referred to in the plaint, forms the basis of the plaint, it should be treated as a part of the plaint.
  • The test for exercising the power under Order VII Rule 11 is that if the averments made in the plaint are taken in entirety, in conjunction with the documents relied upon, would the same result in a decree being passed.
  • If on a meaningful reading of the plaint, it is found that the suit is manifestly vexatious and without any merit, and does not disclose a right to sue, the court would be justified in exercising the power under Order VII Rule 11 CPC.

[Case: Dahiben v. Arvindbhai Kalyanji Bhansuli (Gajra)(D) Thr LRs]

6. Non Payment Of Part Of Sale Consideration Is Not A Ground For Cancellation Of Registered Sale Deed: SC

Order dated July 9, 2020

The Supreme Court has observed that non-payment of a part of sale consideration is not a ground for cancellation of a registered Sale Deed. Referring to the judgment in Vidyadhar v. Manikrao (1999) 3 SCC 573 and Section 54 of the Transfer of Property Act, 1882, the court said that the words "price paid or promised or part paid and part promised" indicates that actual payment of the whole of the price at the time of the execution of the Sale Deed is not a sine qua non for completion of the sale.

[Case: Dahiben v. Arvindbhai Kalyanji Bhansuli (Gajra)(D) Thr LRs]

7. [Suo Motu Limitation] SC Allows Service Through Instant Tele-Messenger Services Like Whatsapp, Email & Fax

Order dated July 10, 2020

In a major development in terms of modes of service, a bench of Chief Justice SA Bobde, AS Bopanna & Subhash Reddy allowed service of summons & notices through instant tele-messenger services like Whatsapp as well as via email & fax. The order was passed after Court noticed the difficulty in visiting post offices amid the pandemic. The Court clarified that all methods are to be employed to prove a valid service on a party.

[Read Report Here]

8. Sree Padmanabha Swamy Temple Case: SC Upholds 'Shebait' Rights Of Erstwhile Royal Family Of Travancore

Order dated July 13, 2020

The Supreme Court upheld the rights of erstwhile royal family of Travancore in the administration of Sree Padmanabha Swamy temple at Thiruvananthapuram. Allowing the appeal filed by members of the Travancore family, a bench of Justices UU Lalit & Indu Malhotra reversed the finding of the High Court of Kerala that the rights of family ceased to exist with the death of the last ruler of the Travancore in 1991. The death of the last ruler will not result in escheat of the rights in favour of the government, the Court held.

[Case: Sri Marthanda Varma & Anr. v. State Of Kerala & Ors.]

9. When A Person Refuses To Issue Certificate Under Section 65B(4) Of Evidence Act, Court Must Order Its Production: SC

Order dated July 14, 2020

The Supreme Court observed that an application can be made to the trial court to direct a person to produce the certificate under Section 65B(4) of Evidence Act on the refusal of such person to produce the same otherwise. The bench comprising of Justices RF Nariman, S. Ravindra Bhat & V. Ramasubramaniam observed that a Court may in appropriate cases allow the prosecution to produce such certificate at a later point in time.

The court observed that the certificate required under Section 65B(4) is a condition precedent to the admissibility of evidence by way of electronic record.

[Case: Arjun P. Khotkar v. Kailash K. Gorantyal & Ors.]

10. How To Prove Execution Of Will When Both Attesting Witnesses Are Dead ? SC Explains

Order dated July 17, 2020

The Supreme Court held that in a situation where both the attesting witnesses to a will are dead, it is sufficient to prove that the attestation of at least one attesting witness is in his handwriting. The issue in the appeal before the Apex court bench comprising of Justices Sanjay Kishan Kaul & KM Joseph was whether is it still the requirement of law when both the attesting witnesses are dead that: under Section 69 of the Evidence Act, the attestation as required under Section 63 of the Indian Succession Act, viz., attestation by the two witnesses has to be proved? or Is it sufficient to prove that the attestation of at least one attesting witness is in his handwriting, which is the literal command of Section 69 of the Evidence Act apart from proving the latter limb?

Answering this issue, the court noted that Section 69 of the Evidence Act manifests a departure from the requirement embodied in Section 68 of the Evidence Act.

[Case: V. Kalyanaswamy (D) By LR's. v. L. Bakthavatsalam (D) By LR's]

11. HC Cannot Allow Second Appeal Without Formulating Substantial Question Of Law, Reiterates SC

Order dated July 17, 2020

The Supreme Court reiterated that a High Court cannot allow Second Appeal without having formulated a substantial question of law. n this regard, the court referred to its earlier judgment in Bokka Subba Rao v. Kukkala Balakrishna (2008) 3 SCC 99.

"A mere mention about the question having been formulated in the memorandum of appeal is not enough", said the bench comprising Justices AM Khanwilkar, Dinesh Maheshwari & Sanjiv Khanna while setting aside a Kerala High Court judgment.

However, in a judgment delivered last year [Illoth Valappil Ambunhi (D) v. Kunhambu Karanavan], the Court observed that mere error in framing a question of law would not render a judgment in Second Appeal liable to be set aside, if it is found that a substantial question of law existed and such question has in fact been answered by the High Court.

[Case: Kunjunmuhammed v. Mariyumma]

12. MBA Degree Not Equivalent To PG Degree/Diploma In Human Resource Management Or Industrial Relations & Labour Legislation: SC

Order dated July 21, 2020

The Supreme Court has observed that Master of Business Administration (MBA) degree is not equivalent to a post graduate degree or diploma in Social Work, Labour Welfare, Industrial Relations or Personnel Management. The Apex Court bench comprising Justices DY Chandrachud, Indu Malhotra & KM Joseph observed that the Tribunal was manifestly in error in holding that the candidate was qualified merely because he studied two subjects as a part of his MBA degree programme, namely, Human Resource Management and Industrial Relations and Labour Legislation.

[Case: North Delhi Municipal Corporation v. Kavinder & Ors.]

13. [Double Tax Avoidance Treaty] Mumbai Project Office Of Samsung Heavy Industries Not A 'Permanent Establishment': SC

Order dated July 22, 2020

In a major relief for Samsung Heavy Industries Co. Ltd., the Supreme Court held that its Project Office in Mumbai cannot be termed as a "permanent establishment"(PE) for the purpose of taxation under Double Tax Avoidance Treaty. The bench comprising Justices RF Nariman, Navin Sinha and BR Gavai, while holding thus, observed that the burden of proving the fact that a foreign assessee has a "permanent establishment" in India is initially on the Revenue and not on the Assessee.

[Case: Director of Income Tax-II v. M/S Samsung Heavy Industries]

14. Hospitals Which Provide Free Services To Some Patients But Charge A Bulk Of Others Fall Under Consumer Protection Act: SC

Order dated July 23, 2020

The Supreme Court observed that it is only where a hospital provides medical services free of charge across the board to all patients that it would stand outside the purview of the Consumer Protection Act.

A hospital which renders free services to a certain category of patients, while providing services which are charged to the bulk of others would not lie outside the purview of the jurisdiction of the consumer fora, the bench comprising of Justices DY Chandrachud, Indu Malhotra and KM Joseph said.

[Case: Union of India v. NK Srivastava]

15. [Section 68 FERA] Liability For Offence Depends On Role One Plays In Company Affairs And Not On Mere Designation Or Status: SC

Order dated July 27, 2020

The Supreme Court held that for proceeding against a Director of a company for contravention of provisions of Foreign Exchange Regulation Act, 1973, the necessary ingredient for proceeding shall be that at the time offence was committed, the Director was in charge of and was responsible to the company for the conduct of the business of the company.

The liability to be proceeded with for offence under Section 68 of FERA, 1973 depends on the role one plays in the affairs of the company and not on mere designation or status, the bench comprising Justices Ashok Bhushan & R. Subhash Reddy observed.

[Case: Shailendra Swarup v. Deputy Director, ED]

16. [Motor Accident Compensation] Future Prospects On Advancement In Life And Career Also To Be Considered In Multiplier Method: SC

Order dated July 27, 2020

The Supreme Court observed that while applying the multiplier method in computing Motor Accident Compensation, future prospects on advancement in life and career are also to be taken into consideration. While allowing the appeal, the court agreed with the contention of Appellant that, in the age group of 15- 25 years, the multiplier has to be '18' along with factoring in the extent of disability.

Referring to an earlier ruling in National Insurance Co. Ltd. v. Pranay Sethi and Ors., (2017) 16 SCC 680, the bench comprising Justices Sanjay Kishan Kaul, Ajay Rastogi and Aniruddha Bose said: "In the age group of 15- 25 years, the multiplier has to be '18' along with factoring in the extent of disability. The aforesaid position is not really disputed by learned counsel for the respondent State Corporation and, thus, we come to the conclusion that the multiplier to be applied in the case of the appellant has to be '18' and not '17'."

[Case: Erudhaya Priya v. State Express Transport Corporation Ltd.]

17. Once Accused Makes A Plausible Defence In His 313 CrPC Statement, Burden Is On The Prosecution To Negate It: SC

Order dated July 28, 2020

The Supreme Court held that once a plausible version has been put forth by the defence at the examination stage of Section 313 of the CRPC, then it is for the prosecution to negate such a defense plea. A bench of Justices NV Ramana, Surya Kant & Krishna Murari further reiterated that failure of the trial court to fairly trial apply its mind and consider the defence could endanger the conviction itself.

[Case: Parminder Kaur @ Soni v. State of Punjabi]

18. Charge Under IPC Can Continue Even If Sanction In Respect Of Offence Under Prevention Of Corruption Act Is Not Forthcoming: SC

Order dated July 29, 2020

The Supreme Court observed that the charge against an accused for offence punishable under the Indian Penal Code can continue irrespective of the fact that sanction in respect of offence punishable under Prevention of Corruption Act, is not forthcoming.

The bench comprising of Justice AM Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna agreed with the view taken by Jharkhand High Court while dismissing a petition filed by an employee of BPCL (Bharat Petroleum Corporation Ltd.).

[Case: Satyabrat Gupta v. The State of Jharkhand]

19. [Motor Accident Compensation] For Age Group 15-25, Multiplier To Be Applied Is '18', Reiterates SC

Order dated July 29, 2020

The Supreme Court reiterated that while computing Motor Accident Compensation, for the age group of 15-25 years, the multiplier has to be '18'. Two recent judgments of the Supreme court had modified the award of MACT Tribunals on this ground. The MACT determined the total compensation as Rs.25,48,050/- but on account of contributory negligence to the extent of 50%, it directed the insurer, to pay only half of the said amount to the claimant. The High Court upheld the MACT order.

Though the Apex Court bench of Justices Sanjay Kishan Kaul, Ajay Rastogi and Aniruddha Bose upheld the contributory negligence finding, it observed: "We have examined the impugned judgment and all other perspective also and do not find any infirmity except two aspects: (a) the multiplier applied was 13 while as per the judgment in Sarla Verma & Ors. v. Delhi Transport Corporation & Anr.- (2009) 6 SCC 121, it should have been 18.(b) The interest granted is of 6% which generally the interest being granted is of 9%".

[Case: Ved Prakash Goel & Anr. v. SD Singh & Anr.]

20. In Income-Tax Matters, The Law To Be Applied Is The Law In Force In The Assessment Year Unless Otherwise Stated Or Implied: SC

Order dated July 29, 2020

In income-tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied, the Supreme Court reiterated.

In this regard, the Court referred to old judgments in Commissioner of Income-Tax, West Bengal v. Isthmian Steamship Lines: (1951) 20 ITR 572, Karimtharuvi Tea Estate Ltd. v. State of Kerala: (1966) 60 ITR 262. In the latter judgment, which is a constitutional bench one, it was observed thus:

"it is well-settled that the Income-tax Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force."

[Case: Shree Chaudhary Transport Company v. Income Tax Officer]

21. 2018 Karnataka Law Granting Reservation In Promotion For SC-ST Govt. Employees Constitutionally Valid: SC Dismisses Review Petitions

Order dated July 30, 2020

The Supreme Court dismissed Review Petitions filed against its judgment (BK Pavitra v. Union of India) that upheld the Constitutional validity of the Karnataka Extension of Consequential Seniority to Government Servants Promoted on the Basis of Reservation (to the Posts in the Civil Services of the State) Act 2018.

Dismissing the review petitions, the bench comprising Justices UU Lalit and DY Chandrachud observed: "We have gone through the contents of the Review Petitions. Every ground urged in the review petitions has been addressed on merits in the judgment under review."

[Case: BK Pavitra & Ors. v. Union of India & Ors.]

22. State Can Revoke 'Essentiality Certificate' Granted To Medical College On The Ground Of 'Gross Deficiencies': SC

Order dated July 31, 2020

The Supreme Court held that State Government has power to revoke the 'Essentiality Certificate' once granted for opening of a new medical college on the ground of 'gross deficiency'.

It would not be in public interest nor appropriate for the State Government to remain a mute spectator and not move into action when the college miserably fails to translate the spirit behind the Essentiality Certificate within a reasonable time, the bench comprising of Justices AM Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna said.

[Case: Sukh Sagar Medical College & Hospital v. State of Madhya Pradesh]

23. Memorandum Of Family Settlement Binding On Parties; Does Not Require Registration: SC

Order dated July 31, 2020

The Supreme Court observed that a 'memorandum of family settlement' is not required to be registered and is binding on the parties. A bench of Justices AM Khanwilkar & Dinesh Maheshwari in this regard referred to Kale & Ors. v. Deputy Director of Consolidation & Ors (1976) 3 SCC 119 and said:

"When by virtue of a family settlement or arrangement, members of a family descending from a common ancestor or a near relation seek to sink their differences and disputes, settle and resolve their conflicting claims or disputed titles once and for all in order to buy peace of mind and bring about complete harmony and goodwill in the family, such arrangement ought to be governed by a special equity peculiar to them and would be enforced if honestly made. The object of such arrangement is to protect the family from long drawn litigation or perpetual strives which mar the unity and solidarity of the family and create hatred and bad blood between the various members of the family."

[Case: Ravinder Kaur Grewal v. Manjit Kaur]

Other Developments

A. Validity Of Remission Policy Allowing Premature Release Of Life Convicts Aged Above 75: SC Refers Matter To Constitution Bench

A three judge bench headed by Justice UU Lalit has referred to a larger bench an important legal issue about the validity of Haryana Government's policy allowing premature release of life convicts aged above 75 which overrides Section 433A of Code of Criminal Procedure. The court was considering a case of a murder convict (sentenced to life imprisonment) who was released after completing 8 years of actual sentence invoking a remission policy framed by the State.

[Case: Pyare Lal v. State of Haryana]

B. SC Grants 6 Months Extension To Complete Probe In Hyderabad Encounter

The Supreme Court allowed an application filed by the Inquiry Commission, in the plea seeking investigation into the alleged encounter of four accused persons on 6th December, 2019 in Hyderabad, praying for an extension of 6 months for submission of final report. A bench comprising Chief Justice SA Bobde AS Bopanna & V. Ramasubramaniun granted an extension of 6 months.

[Case: GS Mani v. Union of India]

C. SC Sets Up Commission Headed By Ex-SC Judge Justice B S Chauhan To Probe Vikas Dubey Encounter

A bench of Chief Justice SA Bobde, AS Bopanna & V. Ramasubramaniun approved the constitution of an inquiry commission headed by Justice B S Chauhan, former Supreme Court judge, to probe into the genuineness of the encounter killing of UP gangster Vikas Dubey.

Significantly, a plea was filed before the SC alleging that Justice Chauhan has close connections of the judge with the ruling BJP Government. The same came to be dismissed on August 19 as unsubstantiated and devoid of merits.

[Case: Ghanshyam Upadhyay v. State of Uttar Pradesh]

D. [Central Vista Project] SC Allows Filing Of Writ Petition Against Environmental Clearance Granted To New Parliament Building; Expands Scope Of Hearing

The Supreme Court allowed the filing of a writ petition under Article 32 of the Constitution challenging the Environmental Clearance granted on June 17 for the construction of a new Parliament building as part of Union Government's ambitious Central Vista Project.

A bench headed by Justice A M Khanwilkar told Senior Advocate Shyam Divan that his clients will be given a week's time to file the writ petition, thereby expanding the scope of the hearing to include the issue of Environmental Clearances granted on June 17. This will be in addition to the issue surrounding the legality of the change in land use which is already under the consideration of the top court through two petitions pending before it.

On August 20, the SC decided to first take up the issue of "land use" and remarked that the issue of Environmental Clearances will be relevant only if the issue of land use is not allowed.

On August 29, the SC disposed off the petitions challenging change in land use of plot number 1 of the Central Vista Project, adding that it will be taken up at a later stage as the decision on its usage had not yet been taken by the Government. Further, it directed the Central Government to reply on challenge of the change in land usage for plots 2 to 8.

[Case: Rajeev Suri v. Union of India]

E. [IBC] Does Principal Borrower Has To Be Corporate Entity In Order To Maintain Insolvency Proceedings? SC To Examine

Does the principal borrower has to be corporate entity, in order to maintain the proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC)?, the Supreme Court would examine this question that has arisen in an appeal against a judgment of National Company Law Appellate Tribunal (NCLAT). While issuing notice on the above said question, the Supreme Court bench comprising of Justices Arun Mishra, BR Gavai and Krishna Murari stayed the operation of NCLAT judgment till the next date of hearing.

[Case: Laxmi Par Surana v. Union Bank of India & Anr.]

Supreme Court Monthly Digest: June 2020

Supreme Court Monthly Digest: May 2020

Supreme Court Monthly Digest : April 2020

Supreme Court Monthly Digest : March 2020

Supreme Court Monthly Digest : February 2020

Supreme Court Monthly Digest : January 2020

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