COMMUNIQUE NOVEMBER, 2021

COURTS THIS MONTH 

• Supreme Court in the case of Life Insurance Corporation of India vs. Sunita (SLP(C) (13868 of 2019)) held that non-payment of insurance premium on the due date can lead to rejection of insurance claim. The Bench comprising of Justice Sanjiv Khanna and Justice Bela M. Trivedi said that the terms of insurance policy have to be strictly construed. The Court further observed that in a contract of insurance there is a requirement of Uberrima fides i.e. good faith on the part of the assured. In this case, the claimants had failed to pay premium on one of the due dates before the date of the accident. Relying on the case of Vikram Greentech (I) Ltd. vs. New India Assurance Co. Ltd. ((2009) 5 SCC 599) the Court decided that the terms of an insurance agreement must be interpreted strictly, and that once the premium was not paid the policy would stop being in force and any accidents that happen subsequently, before the renewal of the policy, will not be covered under the said policy.
   
• The Supreme Court in the case of Ratnam Sudesh Iyer vs. Jackie Kakubhai Shroff (Civil Appeal No. 6112 of 2021) held that the 2015 amendment to Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) will apply to all appeals made subsequent to the date of the amendment, i.e. 23.10.2015. The Supreme Court here was dealing with the question of application of 2015 Amendment to Section 34 of Arbitration Act, in a domestic award arising from an international commercial arbitration. The Supreme Court observed that the 2015 Amendment carved a distinction between a purely domestic award and a domestic award arising from international commercial arbitration, and that “a plea of patent illegality is not available for an award which arises from international commercial arbitration post the amendment”. Further the Supreme Court relied on the decision of Ssangyong Engineering and Construction Company Ltd. vs. National Highways Authority of India (2019 SCC On Line SC 677) to observe that amendment to Section 34 would apply to the appeals filed under the said section on or after 23.10.2015, even if the arbitration proceedings had commenced prior to that.
   
• The Supreme Court’s Bench comprising of Justice Uday Umesh Lalit, Justice Ajay Rastogi and Justice Aniruddha Bose in the case of New tech Promoters And Developers Pvt. Ltd. vs. State of UP (CA 6745 – 6749 of 2021) held that under Section 40(1) of the Real Estate (Regulation and Development) Act,2016 (“RERA”) the amount invested by the allottees along with the interest thereon, is recoverable as arrears of land revenue from the builders. Section 40 of RERA relates to the recovery of interest or penalty or compensation and enforcement of order, etc. The Supreme Court here was dealing with a batch of appeals against order of dismissal of writ petitions by the Allahabad High Court. Interpreting the scope of Section 40, the Supreme Court observed that a narrow reading of the provision would mean only penalty and interest on the principal amount are recoverable as arrears of land revenue, however such a conclusion would be contrary to the intention of the legislature. The Bench further observed that “taking into consideration the scheme of the Act what is to be returned to the allottee is his own life savings with interest on computed/quantified by the authority becomes recoverable and such arrear becomes enforceable in law.” The Supreme Court also clarified that the condition of pre-deposit for filing appeal under section 43(5) RERA is not discriminatory against the promoters.
   
• The Supreme Court in the case of Welspun Specialty Solutions Limited vs. Oil and Natural Gas Corporation Ltd.(CA 2826-2827 of 2016) held that merely stating in the contract that time is of essence, is not sufficient to make time the essence of the contract. The Bench comprising CJI NV Ramana and Justice Surya Kant were dealing with a challenge to an arbitral award, and in holding that time was not of essence, the Bench observed that the question whether time is of essence depends on the contract as whole and the surrounding circumstances. It was clarified that merely having a clause stating time is of essence is not enough, and the intention for the same has to be culled out from the contract. The Court further elaborated that generally under construction contracts time is not of essence and further contractual terms providing for extension procedure and imposition of liquidated damages, are indicators that time was not the essence of the contract.
   
• The Bench of the Supreme Court comprising of Justice Uday Umesh Lalit, Justice S Ravindra Bhat and Justice Bela M Trivedi, in the case of Attorney General for India vs. Satish and Anr.(Criminal Appeal No. 1410 of 2021), held that ‘skin-to-skin’ touch is not necessary for the offence of sexual assault under Protection of Children from Sexual Offences (“POCSO”) Act, 2012. The Supreme Court overturned the decision of the Bombay High Court (Nagpur Bench) in the case of Satish vs. State of Maharashtra (Criminal Appeal No 161 of 2020). Overturning the decision of the High Court, the Supreme Court noted that “the most important ingredient for constituting the offence of sexual assault under Section 7 of the Act is the “sexual intent” and not the “skin to skin” contact with the child”. The Bench further observed that “restricting the interpretation of the words “touch” or “physical contact” to “skin to skin contact” would not only be a narrow and pedantic interpretation of the provision Contained in Section 7 of the POCSO Act, but it would lead to an absurd interpretation of the said provision.
   
• The Apex Court in the case of The Chairman, State Bank of India and Anr vs. MJ James (Civil Appeal No. 8223 of 2009), held that there is no absolute right to be represented by a counsel of choice in cases of departmental enquiry. The Supreme Court observed that the representation depends on the rules governing the representation, however, in case of serious charges the right should be considered. The Supreme Court further observed that “…if the rules are silent, the party has no absolute right to be legally represented. However, the entitlement of a fair hearing is not to be dispensed with. What fairness requires would depend upon the nature of the investigation and the consequences it may have on the persons affected by it.”
   
• The Apex Court’s Bench comprising of Justice MR Shah and Justice Sanjiv Khanna, in the case of Meena Pawaia vs. Ashraf Ali (Civil Appeal No 6724 of 2021) reiterated that in cases of motor vehicle compensation, where the deceased has no income at the time of the accident-causing death, the Claimants also have the right to future prospects by adding future rise in income. In light of the same, the Court observed that it is not expected that the deceased who was not an earning individual, his income is likely to remain static. The Supreme Court relying on the case of National Insurance Company Limited vs. Pranay Sethi and Others ((2017) 16 SCC 680) observed that “the determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Motor Vehicles Act.” Allowing the appeal, the Supreme Court decided “..that even in case of a deceased who was not serving at the time of death and had no income at the time of death, their legal heirs shall also be entitled to future prospects by adding future rise in income as held by this court in the case of Pranay Sethi, i.e. addition of 40% of the income determined on guesswork considering the educational qualification, family background etc., where the deceased was below the age of 40 years.”
   
• The Supreme Court in the case of Assa Singh (D) By LRs vs. Shanti Parshad (D) By LRs. & Others (Civil Appeal No.6915 of 2021) held that the bar under Section 25 of Punjab Security of Land Tenures Act, 1953 will not apply in cases where the landlord-tenant relationship itself is disputed. Section 25 of the said Act bars jurisdiction of civil courts and gives exclusive jurisdiction to revenue courts to examine orders of lower authority relating to eviction of tenant. Deciding that the civil court will not be barred by Section 25 when there is a dispute as to the tenant-landlord relationship, the Supreme Court observed that “..the expression “validity of the decision or the Order” in Section 25 of the Act, would not include a case where, despite a dispute projected, that there was no landlord-tenant relationship, the Authority decides the said issue in the course of the Order of Eviction, under Section 14A, after brushing aside the tenant’s objection relating to his position, viz., that he is not a tenant. In such a situation, the validity is tied-up with the fundamental aspect of absence of power of the Authority to decide on the question of landlord-tenant relationship. We must clarify, therefore, that the validity of the orders under Section 14A is open to scrutiny in a Civil Court, in a situation, when the tenant denies and disputes the case of the landlord that there is a landlord-tenant relationship.”
   
• A Division Bench of the Delhi High Court comprising of Justice Vipin Sanghi and Justice Jasmeet Singh in the case of Neelam vs. Jai Singh (CM No.39488 of 2021) observed that unsubstantiated allegation of criminal conduct by wife against husband amounts to cruelty. The High Court was dealing with an appeal against a divorce decree granted by the Family Court, and upholding the order of the Family Court the High Court observed that after making serious unsubstantiated allegations against the husband and his family members the faith and trust between the husband and the wife stands completely demolished and the mere fact that she made serious allegations of criminal conduct against the respondent and his parents was sufficient to constitute acts of cruelty in a marital relationship.
   
• The Delhi High Court in the case of CBI vs. M/s INX Media Pvt Ltd. & Ors (CRL MC 1338 of 2021) held that an accused can bring to the notice of the Court an unrelied document that was recovered during the course of investigation but not produced by investigating agency. The High Court was dealing with an appeal against order of the special court directing CBI to file all the documents collected by it during investigation and provide a copy of the same to the accused persons, irrespective of the fact that whether they are being relied upon by the CBI or not. The High Court observed that whilst passing an order for inspection of unrelated document, the court has to maintain balance between the rights of the accused and maintaining sanctity of further investigations. The High Court upheld the order of the special court and stated that the apprehension of CBI that inspection by accused would hinder further investigation was unwarranted.
   
• A single judge Bench comprising of Justice Krishna S Dixit of the Karnataka High Court, in the case of Alekhya Ponnekanti vs. Union of India (W.P.No.11504/2021) upheld the validity of Central Government notification barring any Overseas Citizenship of India (“OCI”) cardholders to be eligible for admission in professional courses against any seat reserved exclusively for Indian citizens.
   
• The Court observed that the notification survived the reasonable classification and intelligible differentia test under Article 14 of the Constitution. The Court further observed that the notification sought to protect the interest of natives as it would be difficult for them to compete with NRIs and OCIs as these two classes have greater exposure to the outer world. Upholding the notification, the Karnataka High Court observed that “Article 14 of our Constitution sanctions ‘protective discrimination’; it hardly needs to be stated that the foreigners and the native citizens apparently belong to two different classes and therefore, treating them alike would fall foul of the principle of equality.”.
   
• A single judge Bench of Justice V.G Arun of the Kerala High Court, in the case of Raveendran vs. Lalitha & Ors. (OP(C) NO. 963 OF 2021) held that Order XLI Rule 5 of the Code of Civil Procedure, 1908 does not empower the appellate court to stay the operation of a judgment. Whilst dealing with the petition, the High Court held that “stay of operation of the judgment is not the same as staying the operation of the proceedings under a decree or staying the execution of a decree. An order staying the operation of the judgment will amount to staying the findings in the judgment, which cannot be done at the stage of admission.” Clarifying further, the Court observed that “even on being convinced of the reasons for granting stay, the appellate court could have stayed only the proceedings under the decree or execution of the decree and not, the operation of the judgment.
   
• A Division Bench of the Madras High Court comprising of Justice Sanjib Banerjee and Justice P.D Audikesavalu in the case of R. Muthukrishnan vs. Chennai Metro Rail Limited (W.P. No 17234 of 2021 (PIL)) held that the Chennai Metro Rail Limited does not have the statutory authority to levy fines on passengers not wearing face masks. The PIL was filed against a press release by the Metro Authorities informing about levy of penalties in case of individuals found not wearing masks in the metro. Therefore, in light of the aforesaid, the High Court observed that nothing in Section 5 and Section 6 of the Metro Rail (Operation and Maintenance) Act, 2002 confers power on the Metro Authorities to resort to confiscatory acts by levying penalties on the general public. The High Court also held that even with introduction of new offences in Section 76 of Tamil Nadu Public Health Act, 1939, the Metro Authorities could not impose fines for not wearing masks unless an amendment is made to the Metro Rail (Operation and Maintenance) Act, 2002, to that effect.
   
• A Division Bench of the Kerala High Court comprising of Justice A.K. Jayasankaran Nambiar and Justice Gopinath in the case of People for Animals vs. State of Kerala & Ors.W.P(C).NO.13603 of 2021) held that clause prohibiting a person from keeping a pet in their residential premises is void and unenforceable in law. The High Court relying on on a leading Supreme Court judgment held that prohibiting residents unconditionally from keeping pets touches upon their rights under Article 21 of the Constitution. Allowing the writ petition the High Court made observations that “..that clauses in any bye-law or agreement that have the effect of absolutely prohibiting a person from keeping a pet of his/her choice in a residential unit occupied by that person, should be treated as void and unenforceable in law. The Court further ordered that “the State and its institutions of governance must take appropriate measures to inculcate a spirit of accommodation towards animals amongst our people, preferably by introducing animal awareness programmes at the school level in the State.”
   
• The Karnataka High Court in the case of Lokanath vs. State Of Karnataka (Criminal Petition No.80 of 2021) has reiterated that provisions of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (“SC/ST Act”) cannot be invoked if there was no intention to oppress, insult, humiliate, subjugate or ridicule a member of the scheduled caste or scheduled tribe. In this case, a person had made an application before the High Court to quash the FIR registered against him under Sections 172, 173 of IPC and section 3(1)(f), 3(1)(g) of SC/ST Act. Quashing the FIR, the High Court observed that none of the ingredients under section 3(1)(f) and 3(1)(g) of SC/ST Act were made out and the dispute was entirely a civil dispute without any element of criminal intent. The Court held that “since the charge sheet materials do not disclose the offence under Section 3(1)(f) and 3(1)(g) of the SC/ST Act, prosecuting the petitioner for two IPC offences amounts to abuse of process of court.”
   
• The Bombay High Court in the case of Ganpat Dharma Mengal & others. vs. Tehsildar Office, Murbad and Ors. (W.P. No. 7174 of 2021) has ordered that mere non-linking of AADHAAR Card cannot be a reason to deny distribution of food grains under National Food Security Act, 2013 (“NFSA”). The Court also held that technicalities cannot be the reason to deny people the benefit of the schemes and that “..there is another document on which the beneficiary can rely upon to receive the benefits of the scheme, and that is “ration card” issued by the State of Union Territory Administration, Food Department.” The High Court also elaborated that as per the NFSA, even if one member of the family has the AADHAAR linked, the entire family will be entitled to for food grains rightfully entitled to them, and it is the obligation of the State to ensure that the beneficiary classes receive the benefit. the obligation of the State to ensure that the beneficiary classes receive the benefit. The Bombay High Court in the case of Zee Entertainment Enterprises Ltd. vs. Invesco Developing Markets Fund & Ors. (IA (L) No. 22525 of 2021)held that for the Board of Directors to requisition EGM under Section 100 of Companies Act, 2013, the shareholder resolution requisition must be legally valid. The High Court held that “If the resolution proposed to be passed at the requisitioned meeting were wholly illegal, then the board of directors would be under no obligation to call a meeting requisitioned for the purpose of passing such an illegal resolution.” The High Court further also observed that “a perfectly legal resolution, if carried, may well result in the diminution of the company’s profits or business. That is not a court’s concern. But the resolution must be legal. The interpretative question is therefore not over the word ‘valid’ at all but about the matters proposed to be considered at a requisitioned EGM. And the Court is never foreclosed from considering this.”
   
• The Allahabad High Court in the case of Smt. Khushboo Shukla vs. District Magistrate, Lucknow & Ors. (Misc Single No. 16212 of 2021) held that a summary proceeding under the Senior Citizens Act, 2007 cannot be used to oust the wife from her matrimonial home. In this case the order of eviction was passed by Sub-Divisional Magistrate, when a complaint by the said wife under Protection of Women from Domestic Violence Act, 2005 (“PWDV Act”) was pending. This order was challenged and the High Court, relying on the Supreme Court case of S Vanitha vs. Deputy Commissioner, Bengaluru Urban District; (Civil Appeal No. 3822 of 2020), observed that Senior Citizens, Act, 2007 and PWDV Act, 2005 are to be read simultaneously. The High Court also held that the woman was not in any manner interfering or damaging the house. Providing protection to the woman, the High Court observed that summary eviction under the said Act cannot defeat right of residence of woman in a shared household

 
NOTIFICATIONS/AMENDMENTS INSIGHTS 

• The Central Board of Indirect Taxes and Customs (“CBIC”) vide a Circular no. 166/22/2021-GST dated 17.11.2021 has provided clarification on issues related to refund. The clarifications provide that time period specified for filing refund is not applicable in case of refund claims that are of excess balance in electronic cash ledger. Further it is clarified that refund of tax can be claimed on amount deducted TDS and TCS, where such amount remains unutilized therein.
   
• Vide a circular no. SEBI / HO / CFD / DIL2 / CIR / P / 2021 / 0000000657 dated 16.11.2021, Securities Exchange Board of India (“SEBI”) has amended provisions for schemes of arrangement by Listed Entities. The Circular subsequently amends the Circular dated 22.12.2020 bearing No. SEBI / HO / CFD / DIL1 / CIR / P / 2020 / 249. It provides for clarifications on the processing of draft schemes filed with the stock exchanges, and make certain amendments to framework for Schemes of Arrangement by listed entities.
   
• Vide a circular no. SEBI / HO / MIRSD / MIRSD_IT / P / CIR / 2021 /0000000658 dated 16.11.2021, SEBI has provided the updated guidelines pertaining to the functioning of the Regulatory Sandbox. The Circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. The Circular provides that the application form for being part of the Regulatory Sandbox must be signed by the Chief Executive Officer (“CEO”) of the applicant or officer duly authorized by the CEO or compliance officer and also provides address for submission of aforesaid application forms.
   
• The CBIC vide a Circular no. CBEC-20 / 16 / 05 / 2021-GST / 1552 dated 2.11.2021 has issued guidelines for disallowing input tax credit (“ITC”) under Rule 86A of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”). The guidelines provide that the officer disallowing the ITC, must have reasons to believe that ITC available in electronic credit ledger is either ineligible or has been fraudulently availed by registered person before disallowing debit of amount in electronic credit ledger of taxpayer under Rule 86A of the CGST Rules, and that such reasons are to be recorded in writing. The guidelines further provide clarity on the powers of the officer in charge and their conduct whilst rejecting ITC under Rule 86A of CGST Rules.
   
• Vide a notification no. Ref. CEPD. PRD. No.S873 / 13.01.001 / 2021-22 dated 12.11.2021, the Reserve Bank of India (“RBI”) has issued notification regarding Integrated Ombudsman Scheme, 2021. Through this notification, RBI has integrated the three Ombudsman schemes – (i) the Banking Ombudsman Scheme, 2006, as amended up to 01.07.2017; (ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018; and (iii) the Ombudsman Scheme for Digital Transactions, 2019 into the Reserve Bank – Integrated Ombudsman Scheme, 2021 (“Scheme”)

 
DEALS THIS MONTH 

• India’s largest payment platform and the most valuable payments brand, Paytm became a public entity with its IPO this month. Paytm is a subsidiary of One 97 Communications Ltd., which is India’s leading digital ecosystem for consumers as well as merchants. The IP commenced on 8.11.2021 and concluded on 10.11.2021. The Paytm IPO was subscribed 1.89 times by the general public. Public issue was subscribed 1.66 in the retail category, 2.79 in the QIB category, and 0.24 in the NII category. This was India’s largest IPO, raising INR 18,300 crores.
   
• Leading Indian online marketplace for cosmetics and wellness products, Nykaa entered the Indian Stock Markets with the IPO of its parent “FSN ECommerce Ventures Ltd.”. The IPO opened for subscription on 28.10.2021 and concluded on 1.11.2021. The IPO comprised of equity shares aggregating up to INR 630 crores and an offer for sale of up to 41,972,660 equity shares by promoters or existing shareholders. Nykaa was founded in 2012 by former investment banker Falguni Nayar. Nykaa’s INR 5,350 crores IPO was subscribed 82 times.
   
• Unacademy acquired the online tuition platform Swiflearn. Swiflearn provides live face-to-face online tuitions for grade 1 to 10 students who are affiliated to the Central Board of Secondary Education and the Indian School Certificate Examinations. This acquisition is in line with Unacademy’s aim to strengthen its hold in kindergarten to grade 12 category education platforms for students all across the country.
   
• Easy Trip Planners Ltd. has recently acquired Spree Hospitality. Easy Trip Planners Ltd. operates travel platform namely EaseMyTrip and the acquisition will add a new revenue stream for the company. The company said that customers using EaseMyTrip will get exclusive offers from Spree Hospitality and the partnership will provide Spree with further expansion opportunities.
   
• UpGrad is set to merge three of its subsidiaries, upGrad Campus (formerly Impartus), upGrad Jeet (formerly The GATE Academy), and upGrad KnowledgeHut (formerly KnowledgeHut), into one single parent unit that will be called upGrad Education Pvt. Ltd. The amalgamation is said to offer an entire gamut of higher learning offerings catering to college learners and would provide support to college learners with undergrad degrees in study abroad programs, government test preparation courses etc.