Weekly Overview| Supreme Court Judgments: Jan 2 – Jan 6, 2022
|1) Demonetization satisfies test of proportionality, is not flawed in law: SC upholds validity by 4:1 majority
A Constitution Bench of the Court upheld the validity of demonetization. It was a 4:1 majority while Justice BV Nagarathna wrote a dissenting judgment.
The Court held that power available to the Central Government under Section 26 of the RBI Act cannot be restricted to mean that it can be exercised only for ‘one’ or ‘some’ series of banknotes and not for ‘all’ series of bank notes. The Court also observed that the period provided for exchange of notes cannot be said to unreasonable.
Cause Title- Vivek Narayan Sharma v. Union of India
Date of Judgment- January 2, 2023
Coram- Justice S Abdul Nazeer, Justice BR Gavai, Justice AS Bopanna, Justice V Ramasubramanian, and Justice BV Nagarathna
2) Burden to prove mental incapacity is on defence- SC upholds conviction of man for murder of his children
The Court upheld the conviction of a man for the murder of his minor children. The allegation against the Appellant was that he strangulated and killed his two minor sons and threw the dead bodies into a canal.
Rejecting the Appellant's plea of mental incapacity, the Court specified that "the burden to prove that as a result of unsoundness of mind, the accused was incapable of knowing the consequences of his acts is on the defence, as duly exemplified by illustration (a) to the said Section 105 of the Evidence Act."
Cause Title- Prem Singh v. State of NCT of Delhi
Date of Judgment- January 2, 2023
Coram- Justice Dinesh Maheshwari and Justice Sudhanshu Dhulia
3) NBFCs not liable to pay interest tax on interest component paid under hire-purchase agreement
The Court confirmed that Non-Banking Finance Companies are not liable to pay interest tax on the interest component included in the hire-purchase installments paid under the hire-purchase agreement.
The Court observed that a hire-purchase agreement has two elements – an element of bailment and an element of sale. The element of sale fructifies when the option to purchase is exercised by the intending purchaser after fulfilling the terms of the agreement. Till then, the goods are given on hire. The Court held that what is payable is the hire amount and not interest per see.
Cause Title- M/s. Muthoot Leasing and Finance Limited & another v. Commissioner of Income Tax
Date of Judgment- January 3, 2023
Coram- Justice Sanjiv Khanna and Justice MM Sundresh
4) Govt contracts should be awarded through tenders, contracts can be awarded through other methods if non-arbitrary
The Court observed that government contracts should be awarded by a transparent process like inviting tenders. The Court further added that in situations that warrant a departure from the precept of inviting tenders or conducting public auctions, the departure must not be unreasonable or discriminatory.
The Court noted that Inviting tenders and conducting public auctions are considered to be preferred methods of allocation for two reasons: firstly procurement can be made at the best price; and secondly, allocation is through a transparent process. However, if the purpose of allocation by the State is not revenue maximization, the State could award contracts through other methods, provided it is non-arbitrary.
Cause Title- M/S Indian Medicines Pharmaceuticals Corporation Ltd v. Kerala Ayurvedic Co-Operative Society Ltd. & Ors.
Date of Judgment- January 3, 2023
Coram- Chief Justice DY Chandrachud and Justice Hima Kohli
5) PM or CM doesn’t have disciplinary control over members of council of ministers
The Constitution Bench noted that the Prime Minister or the Chief Minister does not have disciplinary control over the members of the Council of Ministers. It added that in a country like ours where there is a multiparty system, it is not possible at all times for a Prime Minister/Chief Minister to take the whip, whenever a statement is made by someone in the Council of Ministers.
The majority opinion has been rendered by Justice V Ramasubramanian being concurred by three other judges while an alternative opinion, dissenting on a few points has been authored by Justice BV Nagarathna.
Cause Title- Kaushal Kishor v. State of Uttar Pradesh & Ors
Date of Judgment- January 3, 2023
Coram- Justice S A Nazeer, Justice AS Bopanna, Justice BR Gavai, Justice V Ramasubramanian, and Justice BV Nagarathna
6) Section 5 Limitation Act- ‘Sufficient Cause’ is the cause for which party could not be blamed
The Court while dismissing an appeal filed by Sabarmati Gas Limited observed that ‘sufficient cause’ is the cause for which a party could not be blamed as per Section 5 of the Limitation Act, 1963.
In this case, the appellant filed an application under Section 9 of the Insolvency and Bankruptcy Code before NCLT seeking initiation of a Corporate Insolvency Resolution Process (CIRP) in its capacity as Operational Creditor of the respondent but the same got dismissed on the grounds of being barred by limitation and thereafter, the NCLAT also dismissed the appeal.
Cause Title- Sabarmati Gas Limited v. Shah Alloys Limited
Date of Judgment- January 4, 2023
Coram- Justice Ajay Rastogi and Justice C.T. Ravikumar
7) NCLT under Sec 59 of Companies Act can’t exercise parallel jurisdiction with SEBI for addressing SEBI regulations violations
The Court has held that the National Company Law Tribunal (NCLT) under Section 59 of the Companies Act, 2013 cannot exercise a parallel jurisdiction with the Securities and Exchange Board of India (SEBI) for addressing the violations of the Regulations framed under the SEBI Act.
The main question for consideration before the Apex Court in this appeal was related to the scope of the rectificatory jurisdiction of the NCLT under Section 59 of the Companies Act.
In this case, the Bench observed that it is only for the regulator to determine a violation of the provisions of the SEBI Act and the Regulations and that the appellant was not justified in invoking jurisdiction for the violation of SEBI regulations.
Cause Title- IFB Agro Industries Limited v. SICGIL India Limited and Others
Date of Judgment- January 4, 2023
Coram- Justice A.S. Bopanna and Justice Pamidighantam Sri Narasimha
8) Person in possession of land in assumed character as owner has a legal right against entire world except rightful owner
The Court held that a person in possession of the land in the assumed character as the owner, and exercising peaceably the ordinary rights of ownership, has a legal right against the entire world except for the rightful owner.
In this case, the Court said that a decree of possession cannot be passed in favour of the plaintiff on the ground that the defendants were not able to fully establish their right, title, and interest in the property.
Cause Title- Smriti Debbarma (Dead) Through Legal Representative v. Prabha Ranjan Debbarma & Ors.
Date of Judgment- January 4, 2023
Coram- Justice Sanjiv Khanna and Justice J.K. Maheshwari
9) Specific Performance- No adverse inference can be drawn for not producing accounts, unless buyer was specifically asked to do so
The Court reiterated that unless the buyer was specifically called upon to produce passbook, accounts etc. either by the defendant or, the Court orders him to do so, no adverse inference can be drawn.
The Court relied upon its Judgment in Indira Kaur & Ors. v. Sheo Lal Kapoor wherein the Court had set aside the findings whereby an adverse inference had been drawn against the plaintiff therein for not producing the passbook.
The Court made this observation while restoring the judgment and decree passed by the Trial Court while allowing the appeal and directed the respondent to execute the sale deed in favour of the appellant.
Cause Title- Basavaraj v. Padmavathi & Anr.
Date of Judgment- January 5, 2023
Coram- Justice M.R. Shah and Justice B.V. Nagarathna
10) IBC- SC directs already deposited amount of Company to be appropriated towards settlement dues under sabka vishwas scheme
The Court while deciding an appeal relating to the Insolvency and Bankruptcy Code Moratorium directed that the payment of Rs. 1,24,28,500/- already deposited by the appellant company be appropriated towards the settlement dues under ‘Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019’.
The Court noted that it is a case where the appellant was unable to make the payment due to the legal impediment and the bar during the period of moratorium.
Cause Title- M/s. Shekhar Resorts Limited (Unit Hotel Orient Taj) v. Union of India & Ors.
Date of Judgment- January 5, 2023
Coram- Justice M.R. Shah and Justice B.V. Nagarathna
11) Borrower has to pre-deposit 50% of amount as debt due in appeal before DRAT u/s. 18 of SARFAESI Act
The Court explained 50% of which amount the borrower was required to deposit as pre-deposit under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act').
The Court held that the borrower has to deposit 50% of the amount of “debt due” as claimed by the bank/financial institution/assignee along with interest as claimed in the notice under Section 13(2) of the SARFAESI Act and the borrower is not entitled to claim adjustment/appropriation of the amount realised by selling the secured properties and deposited by the auction purchaser when the auction sale is also under challenge.
Cause Title- M/s Sidha Neelkanth Paper Industries Private Limited & Another v. Prudent ARC Limited & Others
Date of Judgment- January 5, 2023
Coram- Justice M.R. Shah and Justice B.V. Nagarathna
12) Burden of proof is on borrower to prove particular property is agricultural land under SARFAESI Act
The Court held that in the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act') burden was upon the borrowers to prove that the secured properties were agricultural lands and were actually being used as agricultural lands and were thus, exempted under Section 31(i) of SARFAESI Act.
In this case, the Court noted that the High Court had erred in entertaining the writ petition under Article 226/227 challenging the judgment and order of the DRT as an alternative statutory remedy was available by way of appeal before the DRAT.
Cause Title- K. Sreedhar v M/s Raus Constructions Pvt. Ltd. & Ors.
Date of Judgment- January 5, 2023
Coram- Justice MR Shah and Justice MM Sundresh
13) Recoveries with respect to secured creditor under SARFAESI Act would prevail over recoveries under MSMED Act
The Court observed that the recoveries with respect to secured creditors under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act') would prevail over the recoveries under the Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’).
The Apex Court considering the relevant provisions of the MSMED Act and the SARFAESI Act observed that under provisions of the MSMED Act, more particularly Sections 15 to 23, no 'priority' was provided with respect to the dues under the MSMED Act, like Section 26E of the SARFAESI Act.
Cause Title- Kotak Mahindra Bank Limited v. Girnar Corrugators Pvt. Ltd. & Ors.
Date of Judgment- January 5, 2023
Coram- Justice M.R. Shah and Justice Krishna Murari
14) Period of parole to be excluded from period of sentence while considering premature release
The Court upheld the decision of the Bombay High Court holding that the period of parole granted to a prisoner, had to be excluded from the period of sentence while considering the premature release of the prisoner.
The Court held that if the period of parole was included in the sentence, then influential persons would get the parole number of times, defeating the object of imprisonment and therefore, the period should be excluded.
In this case, the Special Leave Petition was preferred against the dismissal of writ petitions by the High Court wherein the writ petitions were filed challenging the State’s decision of not considering the case of petitioners for premature release.
Cause Title- Rohan Dhungat Etc. v. State of Goa & Ors Etc.
Date of Judgment- January 5, 2023
Coram- Justice MR Shah and Justice CT Ravikumar