Judgments
Supreme Court
Electrosteel Castings Limited Vs. UV Asset Reconstruction Company Limited & Ors.
MANU/SC/1150/2021
26.11.2021
Commercial
Mere mentioning and using the word ‘fraud’/’fraudulent’ is not sufficient to satisfy the test of ‘fraud’
The original plaintiff has preferred the present appeal against the judgment passed by the High Court, by which the Division Bench of the High Court has dismissed the said appeal preferred by the original Plaintiff rejecting the plaint/suit filed by the Appellant herein – original Plaintiff on the ground that the suit is barred by Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002).
It is the case on behalf of the Plaintiff – Appellant herein that, the suit in which there are allegations of ‘fraud’ with respect to the assignment deed shall be maintainable and the bar under Section 34 of SARFAESI Act shall not be applicable.
As per the settled preposition of law, mere mentioning and using the word ‘fraud’/’fraudulent’ is not sufficient to satisfy the test of ‘fraud’. As per the settled preposition of law such a pleading/using the word ‘fraud’/ ‘fraudulent’ without any material particulars would not tantamount to pleading of ‘fraud’. The allegations of ‘fraud’ are made without any particulars and only with a view to get out of the bar under Section 34 of the SARFAESI Act and by such a clever drafting the Plaintiff intends to bring the suit maintainable despite the bar under Section 34 of the SARFAESI Act, which is not permissible and which cannot be approved.
In the present case, the assignee has already initiated the proceedings under Section 13 which can be challenged by the Plaintiff – appellant herein by way of application under Section 17 of the SARFAESI Act before the DRT on whatever the legally available defences which may be available to it. It will be open for the Appellant herein to initiate appropriate proceedings before the DRT under Section 17 of the SARFAESI Act against the initiation of the proceedings by the assignee – respondent No.1 herein under Section 13 of the SARFAESI Act. The suit filed by the plaintiff – Appellant herein was absolutely not maintainable in view of the bar contained under Section 34 of the SARFAESI Act. Therefore, the courts below have not committed any error in rejecting the plaint/dismissing the suit in view of the bar under Section 34 of the SARFAESI Act. Appeal dismissed.
Tags : Suit Provision Bar
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Supreme Court
Avneesh Chandan Gadgil and Ors. vs. Oriental Bank of Commerce and Ors.
MANU/SC/1132/2021
24.11.2021
Limitation
Section 5 of Limitation Act shall not be applicable to the appeal against the order of Recovery Officer
The original respondent has preferred the present appeal dissatisfied with the impugned judgment passed by the High Court by which the High Court has allowed the said appeal preferred by the Respondent No.1 herein - Bank and has quashed and set aside the order passed by the Debts Recovery Appellate Tribunal ( “DRAT”) by which the learned DRAT quashed and set aside the order passed by the Debts Recovery Tribunal condoning the delay in preferring the appeal under Section 30 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 ( “the Act, 1993”).
The short question, which is posed for consideration before this Court is whether Section 5 of the Limitation Act shall be applicable to the appeal against the order of Recovery Officer under Section 30 of the Act, 1993?
The issue involved in the present appeal is now not res integra in view of the direct decision of this Court in the case of International Asset Reconstruction Company of India Limited Vs. Official Liquidator of Aldrich Pharmaceuticals Limited and Ors. Dealing with the appeal under Section 30 of the Act, 1993 after 2000 amendment, it is held that Section 5 of the limitation Act is specifically excluded so far as appeal under Section 30 of the Act, 1993 is concerned.
Thus, as per the law laid down by this Court in the aforesaid case and even otherwise considering Section 30 of the Act, 1993, present Court is also of the view that, Section 5 of the Limitation Act shall not be applicable to the appeal against the order of Recovery Officer as provided under Section 30 of the Act, 1993. Therefore, the High Court has committed a grave error in quashing and setting aside the order passed by the DRAT and in restoring the order passed by the Debts Recovery Tribunal condoning the delay in preferring the appeal under Section 30 by applying Section 5 of the Limitation Act.
The impugned judgment and order passed by the High Court and the order passed by the Debts Recovery Tribunal condoning the delay in preferring the appeal under Section 30 of the Act, 1993, preferred against the order passed by the Recovery Officer are unsustainable and are accordingly quashed and set aside. The order passed by the DRAT setting aside the order passed by the Debts Recovery Tribunal is restored. Appeal is allowed accordingly.
Tags : Applicability Provision Delay Condonation
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Supreme Court
TATA Consultancy Services Limited vs. Vishal Ghisulal Jain
MANU/SC/1118/2021
23.11.2021
Insolvency
NCLT does not have any residuary jurisdiction to entertain contractual dispute
Present appeal arises from a judgment of the National Company Law Appellate Tribunal. The NCLAT upheld the interim order of the National Company Law Tribunal which stayed the termination by the Appellant of its Facilities Agreement dated 1st December, 2016 with SK Wheels Private Limited.
The Appellant and the Corporate Debtor entered into a Build Phase Agreement on 24th August, 2015 followed by a Facilities Agreement on 1 December 2016. The Facilities Agreement obligated the Corporate Debtor to provide premises with certain specifications and facilities to the appellant for conducting examinations for educational institutions.
It is evident that, the Appellant had time and again informed the Corporate Debtor that its services were deficient, and it was falling foul of its contractual obligations. There is nothing to indicate that, the termination of the Facilities Agreement was motivated by the insolvency of the Corporate Debtor. The trajectory of events makes it clear that, the alleged breaches noted in the termination notice dated 10 June 2019 were not a smokescreen to terminate the agreement because of the insolvency of the Corporate Debtor. Thus, the NCLT does not have any residuary jurisdiction to entertain the present contractual dispute which has arisen dehors the insolvency of the Corporate Debtor. In the absence of jurisdiction over the dispute, the NCLT could not have imposed an ad-interim stay on the termination notice. The NCLAT has incorrectly upheld the interim order of the NCLT.
Even if the contractual dispute arises in relation to the insolvency, a party can be restrained from terminating the contract only if it is central to the success of the CIRP. Crucially, the termination of the contract should result in the corporate death of the Corporate Debtor. In Gujarat Urja, this Court held that, the jurisdiction of NCLT under Section 60(5)(c) of IBC cannot be invoked in matters where a termination may take place on grounds unrelated to the insolvency of the corporate debtor. It cannot even be invoked in the event of a legitimate termination of a contract based on an ipso facto clause like Article 9.2.1(e) herein, if such termination will not have the effect of making certain the death of the corporate debtor.
The narrow exception crafted by this Court in Gujarat Urja must be borne in mind by the NCLT and NCLAT even while examining prayers for interim relief. The order of the NCLT dated 18 December 2019 does not indicate that the NCLT has applied its mind to the centrality of the Facilities Agreement to the success of the CIRP and Corporate Debtor’s survival as a going concern. The NCLT has merely relied upon the procedural infirmity on part of the Appellant in the issuance of the termination notice, i.e., it did not give thirty days’ notice period to the Corporate Debtor to cure the deficiency in service. The NCLAT, in its impugned judgment, has averred that the decision of the NCLT preserves the ‘going concern’ status of the Corporate Debtor but there is no factual analysis on how the termination of the Facilities Agreement would put the survival of the Corporate Debtor in jeopardy.
The judgment of the NCLAT is set aside. The proceedings initiated against the appellant shall stand dismissed for absence of jurisdiction. The appeal is disposed of.
Tags : Contractual dispute Proceedings Jurisdiction
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Supreme Court
State of M.P. vs. Ghisilal
MANU/SC/1107/2021
22.11.2021
Civil
Civil court cannot declare orders passed by the authorities under the ULC Act as illegal or non-est
In present matter, the trial Court by the judgment and decree decreed the suit on the ground that, possession has not been taken, before the Urban Land (Ceiling and Regulation) Repeal Act, 1999 (Repeal Act) (ULC Act) has come into force. Trial court also granted consequential relief restraining the Appellant herein from interfering with the possession of the Respondent. As against the judgment and decree passed by the trial Court, the matter was carried by way of first appeal, by the Appellant and the Appellate Court has dismissed the appeal by the judgment. As against the same, the Appellant has carried the matter by way of Second Appeal before the High Court. The Second Appeal is also dismissed by the impugned judgment.
The aforesaid impugned judgment is questioned in present appeal mainly on the ground that after necessary notifications were issued under Section 10 of the Urban Land (Ceiling and Regulation) Act, 1976 (ULC Act), Appellant has taken possession and utilised the subject land for construction of houses for the poor by spending huge amounts. It is the case of the appellant that, the Respondent has not questioned the orders passed by the competent authority declaring the land as surplus land, it is not open to seek declaration by the Respondent - Plaintiff as prayed for. A specific ground was raised in the grounds of appeal that after taking possession, land was recorded in the name of the Government and the surplus land was allotted to Bhopal Development Authority for the benefit of slum dwellers and the said Authority has already constructed 100 houses on the land by spending about Rs.1.50 Crores by the time the appeal was preferred to this Court. It is also the case of the Appellant that, relief as sought in the suit is a belated attempt, such suit is not maintainable in law.
The ULC Act is a self-contained Code. Various provisions of the Act make it clear that, if any orders are passed by the competent authority, there is provision for appeal, revision before the designated appellate and revisional authorities. In view of such remedies available for aggrieved parties, the jurisdiction of the civil Courts to try suit relating to land which is subject-matter of ceiling proceedings, stands excluded by implication. Civil court cannot declare, orders passed by the authorities under the ULC Act, as illegal or non est. More so, when such orders have become final, no declaration could have been granted by the civil Court.
In present case, it is clear from the orders passed by the competent authorities, that the original declarant was holding excess land to the extent of 16000.32 square meters. When the orders passed by the competent authority and consequential notifications issued under Section 10(1) and 10(3) of the ULC Act have become final, it was not open for the Respondent to file a suit seeking declaration, as prayed for. Jurisdiction of the civil Courts is barred by necessary implication, trial court fell in error in entertaining the suit, as filed by the Respondent and even the first appellate court and second appellate court have not considered the various grounds raised by the Appellant in proper perspective.
It is trite principle that, where the suit is filed with particular pleadings and reliefs, it is to be considered with reference to pleadings on record and the reliefs claimed in the suit only. The impugned judgment and decree is set aside. Appeal is allowed.
Tags : Possession Suit Jurisdiction
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Supreme Court
State of U.P. and Ors. vs. Vikash Kumar Singh and Ors.
MANU/SC/1114/2021
22.11.2021
Service
Writ of mandamus cannot be issued directing the competent authority to grant relaxation in qualifying service
Appellant impugned judgment passed by the Division Bench of the High Court by which the Division Bench of the High Court has dismissed the Special Appeal filed by the Appellants confirming the judgment passed by the learned Single Judge quashing and setting aside the eligibility lists dated 18th March, 2019 and 10th May, 2019 of the Superintending Engineers (Civil) for promotion to the post of Chief Engineer (Civil) Level-II from the department. Further, a writ of mandamus is issued, commanding the Appellants – competent authority to prepare the eligibility list of the Superintending Engineer (Civil) including the names of the respondents – original writ petitioners for promotion to the post of Chief Engineer (Civil) Level – II by granting them relaxation in minimum length of service in accordance with the U.P. Government Servants Relaxation in Qualifying Service for Promotion Rules, 2006.
At the outset, it is required to be noted that, the learned Single Judge issued the writ of mandamus commanding the competent authority to grant the relaxation as per Rule 4 of the Relaxation Rules, 2006 in qualifying service and consequently, has quashed and set aside the eligibility lists dated 18th March, 2019 and 10th May, 2019. As per Rule 5(iii) of the Uttar Pradesh Service of Engineers (Irrigation Department) (Group A) Service Rules, 1990, one of the conditions to be eligible is that the Superintending Engineer must have completed 25 years of service (including at-least three years’ service as Superintending Engineer).
It is an admitted position that, the original writ petitioners did not fulfill the eligibility criteria as they did not have the qualifying service of having completed 25 years of service. Thus, the eligibility lists were prepared by the department absolutely as per Rule 5(iii) and Rule 8(iii) of the Rules, 1990. The names of the original writ petitioners were excluded from the eligibility list of Superintending Engineer for promotion to the post of Chief Engineer on the ground that they did not fulfil the eligibility criteria as per Rule 5(iii) of the Rules, 1990. Therefore, the High Court ought not to have set aside the said eligibility lists, which were prepared absolutely in accordance with the Rules, 1990.
The learned Single Judge thereafter while quashing and setting aside the eligibility lists dated 18th March, 2019 and 10th May, 2019 has issued the writ of mandamus commanding or directing the competent authority to grant relaxation in qualifying service, which as such was permissible under Rule 4 of the Relaxation Rules, 2006. The word used in the Rule 4 of Uttar Pradesh Government Servant Relaxation in Qualifying Service for Promotion Rules, 2006 is “MAY”. Therefore, the relaxation may be at the discretion of the competent authority. The relaxation cannot be prayed as a matter of right. If a conscious decision is taken not to grant the relaxation, merely because Rule permits relaxation, no writ of mandamus can be issued directing the competent authority to grant relaxation in qualifying service.
Therefore, the High Court has committed a grave error in issuing the writ of mandamus commanding the competent authority to grant relaxation in the qualifying service. Consequently, the High Court has also erred in quashing and setting aside the eligibility lists which were prepared absolutely in consonance with the Rules, 1990 and Rules, 2006. The impugned judgment and order are set aside. Appeal allowed.
Tags : Eligibility lists Quashing Legality
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High Court of Delhi
GBK Project Pvt. Ltd.Vs. Union of India
MANU/DE/3145/2021
22.11.2021
Arbitration
Arbitrator either has to be appointed with the consensus of the parties or by present Court
By way of present petition, Petitioner is seeking appointment of an independent Arbitrator under the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 read with Section 151 CPC. Petitioner-company claims to be involved in the business of construction and Railway contracts, who vide acceptance letter dated 26th September, 2016 of Respondent was awarded work pertaining to "Balance work of quarters at Asoati Faridabad, construction of station building, power cabin, RRI and other station building, extension of platforms, retaining wall, development of circulating area, drainage arrangements in yards and other allied works at different location in between AST and Jn cabin TKD for Rs. 12,64,61,022.97. The work was to be completed within stipulated period of 15 months i.e. 25th December, 2017.
According to Petitioner, Petitioner had made all necessary arrangements, however, work could not be completed by the stipulated time i.e. 25th December, 2017 due to several failures on the part of the Respondent and so, the period for completion of work was last extended upto 1st December, 2019. However, during execution of the work, various claims, clarifications and disputes arose between the parties, which were brought to the notice of concerned department of respondent, but instead of finding out any solution and acting oblivious to the genuine difficulties faced by the Petitioner, Respondent issued several notices to the Petitioner with a view to escape/wriggle out from its contractual obligations and vide notice dated 23rd September, 2019 the respondent terminated the contract.
It is averred by the Petitioner that, Respondent was under the obligation to serve 48 hours notice upon the Petitioner before terminating the contract as mandated and so, Petitioner vide its letter dated 23rd July, 2021, invoked the arbitration clause as contained under clause 64 of the General Conditions of the Contract. The Petitioner has submitted that petitioner claims amount to Rs. 4,76,34,485 against the Respondent and therefore, the present petition be allowed.
Pertinently, invocation of arbitration vide letter dated 23rd July, 2021 by the Petitioner is not disputed. Though the present petition has been opposed by learned counsel for Respondent, however, it is not disputed that any dispute INTER SE parties has to be resolved through arbitration in terms as contained under clause 64 of the General Conditions of the Contract.
However, contention of learned counsel for Respondent that appointment of Arbitrator has to be made in terms of Clause-64(3) of the General Conditions of Contract, is rejected in view of Supreme Court's decision in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd. , wherein it has been categorically stated that, no single party can be permitted to unilaterally appoint the Arbitrator, as it would defeat the purpose of unbiased adjudication of dispute between the parties. The aforesaid decision in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd. has been followed by a Co-ordinate Bench of this Court in Proddatur Cable TV Digi Services Vs. Citi Cable Network Limited. Thus, the Arbitrator either has to be appointed with the consensus of the parties or by this Court. Petition allowed.
Tags : Arbitrator Appointment
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