A three Judge Bench of the Supreme Court, in CIVIL APPEAL NOS.4310-4311 OF 2010
[Arising out of SLP (C) Nos.13571-72 of 2008] Union of India V. Ramesh Ram & Ors. etc. had referred to the Constitution Bench an important legal question as to whether candidates belonging to reserved category, who get recommended against general/unreserved vacancies on account of their merit (without the benefit of any relaxation/concession), can opt for a higher choice of service earmarked for Reserved Category and thereby migrate to reservation category?
The Constitution Bench on 07/05/2010setting aside the decision of Madras High Court held that: "With regard to the specific characteristics of the UPSC examinations we hold that Reserved Category candidates (belonging to OBC, SC or ST categories among others) who are selected on merit and placed in the list of general/ unreserved Category candidates can choose to migrate to the respective reserved categories at the time of allocation of services. Such migration is enabled by Rule 16 (2) of the Civil Services Examination Rules, which is not inconsistent with Rule 16 (1) of the same or even the content of Articles 14, 16 (4) and 335 of the Constitution of India.
The Constitution Bench summarized it’s answer as under:
i) MRC candidates who avail the benefit of Rule 16 (2) and adjusted in the reserved category should be counted as part of the reserved pool for the purpose of computing the aggregate reservation quotas. The seats vacated by MRC candidates in the General Pool will be offered to General category candidates.
ii) By operation of Rule 16 (2), the reserved status of an MRC candidate is protected so that his/ her better performance does not deny him of the chance to be allotted to a more preferred service.
iii) The amended Rule 16 (2) only seeks to recognize the inter se merit between two classes of candidates i.e. a) meritorious reserved category candidates b) relatively lower ranked reserved category candidates, for the purpose of allocation to the various Civil Services with due regard for th preferences indicated by them.
iv) The reserved category candidates "belonging to OBC, SC/ ST categories" who are selected on merit and placed in the list of General/Unreserved category candidates can choose to migrate to the respective reserved category at the time of allocation of services. Such migration as envisaged by Rule 16 (2) is not inconsistent with Rule 16 (1) or Articles 14, 16 (4) and 335 of the Constitution.
A Constitution Bench of The Supreme Court in Writ Petition No 21 of 1999, Bhim Singh v. Union of India, decided on 06/05/2010, has held that the MPLAD Scheme is valid and intra vires of the Constitution . The court said that:
1) Owing to the quasi-federal nature of the Constitution and the specific wording of Article 282, both the Union and the State have the power to make grants for a purpose irrespective of whether the subject matter of the purpose falls in the Seventh Schedule provided that the purpose is "public purpose" within the meaning of the Constitution.
2) The Scheme falls within the meaning of "public purpose" aiming for the fulfillment of the development and welfare of the State as reflected in the Directive Principles of State Policy.
3) Both Articles 275 and 282 are sources of spending funds/monies under the Constitution. Article 282 is normally meant for special, temporary or ad hoc schemes. However, the matter of expenditure for a "public purpose", is subject to fulfillment of the constitutional requirements. The power under Article 282 to sanction grant is not restricted.
4) "Laws" mentioned in Article 282 would also include Appropriation Acts. A specific or special law need not be enacted by the Parliament to resort to the provision. Thus, the MPLAD Scheme is valid as Appropriation Acts have been duly passed year after year.
5) Indian Constitution does not recognize strict separation of powers. The constitutional principle of separation of powers will only be violated if an essential function of one branch is taken over by another branch, leading to a removal of checks and balances.
6) Even though MPs have been given a seemingly executive function, their role is limited to `recommending' works and actual implementation is done by the local authorities. There is no removal of checks and balances since these are duly provided and have to be strictly adhered to by the guidelines of the Scheme and the Parliament. Therefore, the Scheme does not violate separation of powers.
7) Panchayat Raj Institutions, Municipal as well as local bodies have also not been denuded of their role or jurisdiction by the Scheme as due place has been accorded to them by the guidelines, in the implementation of the Scheme.
8) The court can strike down a law or scheme only on the basis of its vires or unconstitutionality but not on the basis of its viability. When a regime of accountability is available within the Scheme, it is not proper for the Court to strike it down, unless it violates any constitutional principle.
9) In the present Scheme, an accountability regime has been provided. Efforts must be made to make the regime more robust, but in its current form, cannot be struck down as unconstitutional.
10) The Scheme does not result in an unfair advantage to the sitting Members of Parliament and does not amount to a corrupt practice.
In CRIMINAL APPEAL NO. 963 OF 2010, Damodar S. Prabhu v. Sayed Babalal H., decided on 03/05/2010 , the Supreme Court observedthat the interests of justice would indeed be better served if parties resorted to compounding as a method to resolve their disputes at an early stage instead of engaging in protracted litigation before several forums, thereby causing undue delay, expenditure and strain on part of the judicial system. This is clearly a situation that is causing some concern, since Section 147 of the Act does not prescribe as to what stage is appropriate for compounding the offence and whether the same can be done at the instance of the complainant or with the leave of the court.
With regard to the progression of litigation in cheque bouncing cases, the Attorney General requested to the Supreme Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, the Supreme Court directed the following guidelines to be followed:-
THE GUIDELINES
(a) That directions can be given that the Writ of Summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on theaccused.
(b) If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be required to pay10% of the cheque amount to be deposited as a conditionfor compounding with the Legal Services Authority, orsuch authority as the Court deems fit.
(c) Similarly, if the application for compounding is madebefore the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on thecondition that the accused pays 15% of the chequeamount by way of costs.
(d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to20% of the cheque amount.
The supreme Court further directed that :
(e) any costs imposed in accordance with these guidelines should be deposited with the Legal Services Authority operating at the level of the Court before which compounding takes place. For instance, in case of compounding during the pendency of proceedings beforeMagistrate's Court or a Court of Sessions, such costs should be deposited with the District Legal Services Authority. Likewise, costs imposed in connection with composition before the High Court should be deposited with the State Legal Services Authority and those imposed in connection with composition before the Supreme Court should be deposited with the National Legal Services Authority.
The Supreme Court agreed with the Attorney General's suggestions for controlling the filing of multiple complaints that are relatable to the same transaction. It was submitted that complaints are being increasingly filed in multiple jurisdictions in a vexatious manner which causes tremendous harassment and prejudice to the drawers of the cheque. For instance, in the same transaction pertaining to a loan taken on an installment basis to be repaid in equate monthly installments, several cheques are taken which are dated for each monthly installment and upon the dishonor of each of such cheques, different complaints are being filed in different courts which may also have jurisdiction in relation to the complaint. In light of this submission, we direct that it should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction. Such a disclosure should be made on a sworn affidavit which should accompany the complaint file under Section 200 of the CrPC. If it is found that suchmultiple complaints have been filed, orders for transfer of the complaint to the first court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice. These directions should be given effect prospectively.
The court said that, “We are also conscious of the view that the judicial endorsement of the above quoted guidelines could be seen as an act of judicial law-making and therefore an intrusion into the legislative domain. It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under Section 320 of the CrPC cannot be followed in the strict sense. In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act. The graded scheme for imposing costs is a means to encourage compounding at an early stage of litigation. In the status quo,valuable time of the Court is spent on the trial of these cases and the parties are not liable to pay any Court fee since the proceedings are governed by the Code of Criminal Procedure, even though the impact of the offence is largely confined to the private parties. Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent Court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end. Even in the past, this Court has used its power to do complete justice under Article 142 of the Constitution to frame guidelines in relation to subject-matter where there was a legislative vacuum.”
Unlike s. 151 0f C.P.C., the lower courts have no inherent power to pass an order in a situation for which there is no specific provision under Cr.P.C. More over, unlike restoration of a civil suit under order 9 of C.P.C., there is no provision under Cr.P.C. for restoration of a complaint when a criminal complaint is dismissed for default . In this regard The Law Commission of India has recommended for giving powers to the lower criminal courts on the line of powers of civil courts. Recommendation of the Law Commission of India is as under:
I. INTRODUCTION
1.1 It is a well settled law that a criminal court has no power like the one which a civil court possesses under Order IX of the Code of Civil Procedure1908 (CPC) to restore a complaint dismissed in default, as the accused stands discharged or acquitted depending on the case being a warrant-case or a summons-case. In order to get the complaint restored, a complainant, poor or rich, has to knock the door of the High Court under section 482 of the Code of Criminal Procedure 1973 (CrPC). If a Magistrate has the power to entertain a complaint and decide it on merits after summoning the accused, he should also have power to restore it on good or sufficient cause being shown and re-summon the accused to face the trial on merits.
1.2 The relevant provisions of the CrPC are:
(i) Section 249 relating to warrant-cases -
“Absence of complainant.- When the proceedings have been instituted upon complaint, and on any day fixed for the hearing of the case, the complainant is absent and the offence may be lawfully compounded or is not a cognizable offence, the Magistrate may, in his discretion, notwithstanding anything hereinbefore contained, at any time before the charge has been framed, discharge the accused.”
(ii) Section 256 relating to summons-cases -
“Non-appearance or death of complainant.- (1) If the summons has been issued on complaint, and on the day appointed for the appearance of the accused, or any day subsequent thereto, to which the hearing may be adjourned, the complainant does not appear, the Magistrate shall, notwithstanding anything hereinbefore contained, acquit the accused, unless for some reason he thinks it proper to adjourn the hearing of the case to some other day:
Provided that where the complainant is represented by a pleader or by the officer conducting the prosecution or where the Magistrate is of opinion that the personal attendance of the complainant is not necessary, the Magistrate may dispense with his attendance and proceed with the case.
(2) The provisions of sub-section (1) shall, so far as may be, apply also to cases where non-appearance of the complainant is due to his death.”
1.3 Section 249 will not apply to a case in which the Magistrate tries an accused for offences that are non-compoundable and cognizable. This section applies only to offences that may be lawfully compounded or are non-cognizable. Therefore, the Magistrate has no discretion to discharge an accused when the offences are of serious nature. Chapter XIX of the CrPC containing the procedure for trial of warrant-cases by Magistrates prescribes two procedures, one for trial of cases instituted on police reports and the other for trial of cases instituted on private complaints. The law-makers have excluded non-compoundable and cognizable offences from the purview of section 249 because for more serious offences, the police, generally, file charge-sheets.
1.4 With regard to offences that are compoundable and non-cognizable where discretion is given to the Magistrate to discharge the accused for the absence of complainant, the Magistrate may be vested with the power to restore the complaint on file if sufficient cause is shown by the complainant for his absence on the date of hearing.
1.5 There may be several reasons for the absence of complainant on the date of hearing. One most important cause may be total bandh call given by the political parties or hartal where transport is suspended completely, both public and private. This is a genuine cause for absence of complainant from appearing before court. Complainant on his way to court may suffer severe setback necessitating hospitalization. He may suffer (a) heartache, (b) high BP, (c) low sugar leading to coma or (d) vertigo, etc. Death of a close relation may be another sufficient cause.
1.6 So in each case if the complainant shows sufficient cause for his absence, the Magistrate may restore his complaint on file. The period may be 15 days or 30 days from the date of discharge of the accused for moving the application.
1.7 With regard to trial of summons-cases, under section 256, the Magistrate shall acquit the accused if the complainant does not appear on the date of hearing. The proviso to section 256 says that where the complainant is represented by a pleader or by the officer conducting the prosecution or where the Magistrate is of the opinion that the personal attendance of the complainant is not necessary, the Magistrate may dispense with his attendance and proceed with the case. Here also there may be sufficient reasons for the absence of complainant, examples of which have been given in the earlier paragraphs. Under section 256, a sub-section may be added to the effect that if the complainant shows sufficient cause for his absence on the date of hearing, the Magistrate may restore the complaint on file provided the application is filed within 15 days or 30 days from the date of acquittal of the accused.
1.8 In the CPC Order IX, Rules 4, 8 and 9 read as under:
(i) Rule 4 -
“Plaintiff may bring fresh suit or Court may restore suit to file.-
Where a suit is dismissed under rule 2 or rule 3, the plaintiff may (subject to the law of limitation) bring a fresh suit; or he may apply for an order to set the dismissal aside, and if he satisfies the Court that there was sufficient cause for such failure as is referred to in rule 2, or for his non-appearance, as the case may be, the Court shall make an order setting aside the dismissal and shall appoint a day for proceeding with the suit.”
(ii) Rule 8 -
“Procedure where defendant only appears.- Where the defendant
appears and the plaintiff does not appear when the suit is called on for hearing, the Court shall make an order that the suit be dismissed,
unless the defendant admits the claim, or part thereof, in which case the Court shall pass a decree against the defendant upon such admission, and, where part only of the claim has been admitted, shall dismiss the suit so far as it relates to the remainder.”
(iii) Rule 9 -
“Decree against plaintiff by default bars fresh suit.- (1) Where a suit is wholly or partly dismissed under rule 8, the plaintiff shall be precluded from bringing a fresh suit in respect of the same cause of action. But he may apply for an order to set the dismissal aside, and if he satisfies the Court that there was sufficient cause for his nonappearance when the suit was called on for hearing, the Court shall make an order setting aside the dismissal upon such terms as to costs or otherwise as it thinks fit and shall appoint a day for proceeding with the suit. … .”
1.9 When provisions have been provided to restore a suit which has been dismissed on the ground of absence of plaintiff, similar provisions need be provided under the CrPC also.
1.10 In the absence of such provisions under sections 249 and 256, the complainants have to move the High Court under criminal revision where the accused has been discharged or in appeal against acquittal where the accused has been acquitted. By adding provisions for restoration of complaints, the burden on the High Courts will be lessened.
Inherent power of subordinate courts
1.11 The subordinate criminal courts have no inherent powers.1 The formula “interest of justice” is not available to the subordinate criminal judiciary beyond the frontiers of the statutory provisions and does not enable entry into the corridor of investigation.2 However, courts exist for dispensation of justice and not for its denial for technical reasons when law and justice otherwise demand. Even though inherent power saved under section 482, CrPC is only in favour of High Courts, the subordinate criminal courts are also not powerless to do what is absolutely necessary for dispensation of justice in the absence of a specific enabling provision provided there is no prohibition and no illegality or miscarriage of justice is involved. All the criminal courts are having such an auxiliary power subject to restriction which justice, equity, good conscience and legal provisions demand provided it will not unnecessarily prejudice somebody else.3 A Division Bench of the Kerala High Court has in In the matter of StateProsecutor4 held that the subordinate courts have the inherent power to act ex debito justitiae (in accordance with the requirement of justice) to do the
real and substantial justice for which alone they exist. The absence of any reference to any other criminal court in the said provision does not necessarily imply that such courts can in no circumstances exercise inherent power. Courts may act on the principle that every procedure should be understood as permissible till it is shown to be prohibited by law.
1.12 Section 482 of the CrPC closely resembles Section 151 of the CPC. In order to seek interference under the said section three conditions should be fulfilled: (1) the injustice which comes to light should be of a grave character and not of a trivial character; (2) it should be clear and palpable and not doubtful; and (3) there exists no other provision of law by which the party aggrieved could have sought relief.5
1.13 In Raj Narain v. State6 and In re, Biyamma7, it was held that a High Court can revoke, review, recall or alter its own earlier decision in a criminal revision and rehear the same by virtue of its inherent power reserved under the said section.
1.14 The word ‘process’ is a general word meaning in effect anything done by the court. It includes criminal proceedings in a subordinate court.
Therefore, power should be vested in the subordinate criminal courts to restore the complaint which was dismissed by default with a view to secure justice. Whenever the Magistrate is satisfied that it is necessary in order to secure the ends of justice, he should be able to interfere with his earlier order. The court which has the power to entertain a case and order notice and decide the case on merits should also have the power to correct an obvious error.
1.15 If a court finds that it delivered a judgment without hearing the party who was entitled to be heard himself or through his counsel which was necessary in the interest of justice, the court should be empowered to set aside the judgement and grant rehearing of the matter. It is true that there is no provision in the CrPC to the said effect. Nevertheless, in the interest of justice and the independence of the Judiciary, judges and magistrates should be at full liberty to discuss the conduct of persons before them either as parties or as witnesses. While exercising this power, courts should bear in mind that no person should be condemned without being heard.
1.16 However, the Supreme Court in A. S. Gauraya v. S. N. Thakur8
specifically ruled that the CrPC does not contain any provision enabling a Magistrate to exercise inherent power to restore a complaint by revoking his earlier order dismissing it for the non-appearance of the complainant.
II. LAW COMMISSION’S 141st REPORT
2.1 The 12th Law Commission of India in its 141st Report titled “Need for Amending the Law as regards Power of Courts to Restore Criminal Revisional Applications and Criminal Cases Dismissed for Default in Appearance” [1991] recommended, inter alia, amendment of section 256 ofthe CrPC enabling restoration of a criminal case wherein the accused hasbeen acquitted for non-appearance of the complainant where there wassufficient cause for the non-appearance. A meritorious complaint cannot beallowed to be thwarted only on the ground that the complainant was unable to remain present, even though there existed good and sufficient cause for such absence.
2.2 The Law Commission in its aforesaid Report further recommended amendment of section 482 of the CrPC for conferment of inherent powers also on all subordinate criminal courts other than the High Court.
III. RECOMMENDATION
3. In the light of above, the Law Commission has recommended appropriate amendments in sections 249 and 256 of the Code of Criminal Procedure 1973 inserting provisions on the lines of Order IX of the CPC, enabling restoration of complaints.
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1 Tulsamma v. Jagannath, 2004 Cri. L. J. 4272
2 State of Kerala v. Vijayan, 1985(1) CRIMES 261
3 Madhavi v. Thupran, 1987 (1) KLT 488
4 1973 Cri. L. J. 1288
5 Ram Narain v. Mool Chand, AIR 1960 All. 296; Janata Dal v. H. S. Chowdhary, AIR 1993 SC 892
InSunderbhaiAmbalalDesai(2002) 10 SCC 283,theSupreme Court whilequotingtheprovisions Sections 451 and 457oftheCr.PC,observed in para 7 as under:-
"7.In our view, the powers under Section 451 Cr PC should be exercised
expeditiously and judiciously. It would serve various purposes, namely:
1.ownerofthe article would not suffer because of its
remainingunusedorbyits misappropriation;
2. court orthe police would not be required to keep the
article in safe custody;
3.iftheproper panchnama before handing over possession of the article is prepared, that can be used in evidence instead of its productionbefore the court during the trial. Ifnecessary, evidence could also be recorded describing the nature of the property in detail; and
4.this jurisdictionof the court to record evidence should beexercised promptly so that there may notbe further chance of tampering with thearticles."
To safeguard theinterestsof the prosecution, it was directed that following measures should be adopted giving instances contained in para 12 reproduced hereinbelow:
"12For this purpose, if material on record indicates that sucharticlesbelong to the complainant at whose house theft, robberyordacoityhastaken
place,thenseizedarticlesbe handed over to the complainant after:
(1)preparingdetailedproper panchnama of sucharticles;
(2)takingphotographsofsuch articles and a bond thatsuch articles would be produced if required atthetime of trial; and
(3)after taking proper security."
While dealing with the seized vehicles from time to time by the police either in commission of various offences or abandoned vehicles or vehicles which are recovered during investigation of complaint of thefts,the court observed as
under:-
"17.In our view, whatever be the situation, it is of no use to keep such seized vehicles at the police stations for a long period. It is for the Magistrate to pass appropriate orders immediately by taking appropriate bond and guarantee aswell as security for return of the said vehicles, if required at any point of time. This can be done pending hearing ofapplications for return of such vehicles.
18.In case where the vehicle is not claimed by the accused, owner, or theinsurance company or by a third person, then such vehicle may be ordered to be auctioned by the court. If the said vehicle is insured with the insurance company then the insurance company be informed by the court to take possession of the vehicle which is not claimed by the owner or a third person. If the insurancecompany fails to take possession, the vehicles may be sold as per the direction of the court. The court would pass such order within a period of six months from the date of production of the said vehiclebefore the court. In any case, beforehanding over possession of such vehicles, appropriatephotographsofthesaid vehicle should be taken and detailed panchnama should be prepared."
In General Insurance Council & Ors.V.State of Andhra Pradesh & orsdecided on 19/04/2010,ConsideringthemandateofSection451readwith Section 457 of the Code, the Supreme Courtinadditiontoaforesaiddirections,gave followingfurther directions with regard to seized vehicles are required to be given.
"(A)Insurer may be permitted to move a separate application for release of the recovered vehicle as soon as it is informed of such recovery before the Jurisdictional Court. Ordinarily, release shall be made within a period of 30 days from the date of the application. The necessary photographs may be taken duly authenticatedandcertified,anda detailed panchnama may be prepared before such release.
(B)The photographs so taken may be used as secondary evidence during trial.Hence, physical production of the vehicle may be dispensed with.
(C)Insurerwouldsubmitan undertaking/guaranteetoremitthe proceeds from the sale/auction of the vehicle conducted by the Insurance Company in the event that the Magistrate finally adjudicates that the rightful ownership of the vehicle does not vest with the insurer. The undertaking/guarantee wouldbe furnished at the time of release of the vehicle, pursuant to the application releaseoftherecoveredvehicle. Insistenceonpersonalbondsmaybe
dispensed with looking to the corporatestructure of the insurer."
Sick Industrial Companies (Special provisions) Act, 1984 (SICA) has overriding effect when there arises a question of jurisdiction of BFIR under SICA vis a vis the High Court under s 391 of companies Act. In Tata Motors Ltd v. Pharmaceutical Products of India Ltd. & Anr 2008 AIR 2805, 2008(9 )SCR267 , 2008(7 )SCC619 , 2008(9 )SCALE262 , 2008(9 )JT227, the respondent being unable to pay the dues made a reference in terms of Section 15 of SICA before the Board for Industrial and Financial Reconstruction (BIFR). The BIFR passed an order recommending winding up of the respondent. An appeal was preferred there against before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).
Respondent, however, filed an application before the High Court of Judicature at Bombay purported to be in terms of Section 391 of the 1956 Act during the pendency of the said appeal. Scheme proposed by the respondent was approved by the single judge as well as in intra court appeal .
The Supreme Court held that:
‘SICA furthermore was enacted to secure the principles specified in Article 39 of the Constitution of India. It seeks to give effect to the larger public interest. It should be given primacy because of its higher public purpose. Section 26 of SICA bars the jurisdiction of the Civil Courts.
What scheme should be prepared by the operating agency for revival and rehabilitation of the sick industrial company is within the domain of BIFR. Section 26 not only covers orders passed under SICA but also any matter which BIFR is empowered to determine. The jurisdiction of civil court is, thus, barred in respect of any matter for which the appellate authority or the Board is empowered. The High Court may not be a civil court but its jurisdiction in a case of this nature is limited. Section 15 of SICA provides for making reference by the Board of Directors of the Company on becoming an industrial company, a sick industrial company, to the Board for determination of the measures to be adopted with respect to the company. Section 16 provides for making inquiry into the working of sick industrial company by the Board after receiving reference.
Section 17 of SICA provides for powers of Board to make suitable order on the completion of inquiry. Section 18 thereof provides for preparation and sanction of Scheme. Section 19 provides for rehabilitation by giving financial assistance. According to sub section (1), Where the scheme relates to preventive, ameliorative, remedial and other measures with respect to any sick industrial company, the scheme may provide for financial assistance by way of loans, advances or guarantees or reliefs or concessions or sacrifices from the Central Government, a State Government, any scheduled bank or other bank, a public financia institution or State level institution or any institution or other authority (any Government, bank, institution or other authority required by a scheme to provide for such financial assistance being hereafter in this section referred to as the person required by the scheme to provide financial assistance) to the sick industrial company.
The supreme court held that : “The provisions of a special Act will override the provisions of a general Act. A later of it will override an earlier Act. 1956 Act is a general Act. It consolidates and restates the law relating to companies and certain other associations. It is prior in point of time to SICA. ……… Wherever any inconstancy is seen in the provisions of the two Acts, SICA would prevail. SICA furthermore is a complete code. It contains a non-obstante clause in Section 32. ……..SICA is a special statute. It is a self contained Code. The jurisdiction of the Company Judge in a case where reference had been made to BIFR would be subject to the provisions of SICA.”
In NGEF Ltd. vs. Chandra Developers (P) Ltd. : (2005) 8 SCC 219 (see also, Morgan Securities and Credit Pvt. Ltd. v. Modi Rubber Ltd. [AIR 2007 SC 683), in regard to the jurisdiction of the Company Court it was held :- "39. The provisions of SICA contain non obstante clauses. It is a special statute. It is a complete code in itself. The jurisdiction of the Company Court in such matters would arise only when BIFR or AAAIFR, as the case may be, has exercised its jurisdiction under Section 20 of SICA recommending winding up of the Company upon arriving at a finding that there does not exist any chance of revival of the Company."
It was further held: The satisfaction arrived at by BIFR that the Company is not likely to become viable in future and it is just and equitable that the Company should be wound up must be based on objective criteria. The High Court indisputably on receipt of such recommendation of BIFR would initiate a proceeding for winding up in terms of Section 433 of the Companies Act. Sub-section (2) of Section 536 ipso facto does not confer any jurisdiction upon the Company Court to direct sale of the assets of the sick company. It has to exercise its power thereunder subject to the provisions of the special statute governing the field. Despite the fact that the procedures laid down under the Companies Act would be applicable therefore but they must be read with sub-section (4) of Section 20 of SICA which contains a non obstante clause and in terms thereof, BIFR is authorised to sell the assets of the sick industrial company in such a manner as it may dee fit. By reason of the said provision, BIFR is also empowered to forward the sale proceeds to the High Court for orders for distribution in accordance with Section 529-A and other provisions of the Companies Act which in no uncertain terms would mean that the distribution of the sale proceeds would be for the purpose of meeting the claims of the creditors in the manner laid down therein. The intention of Parliament in enacting the said provision becomes clear as in terms of Section 22-A of SICA, BIFR is empowered to issue any direction in the interest of the sick industrial company or its creditors or shareholders and direct the sick industrial company not to dispose of its assets except with its assent. Section 32, contains a non obstante clause. The scheme suggests that BIFR retains control over the assets of the Company and in terms of the aforementioned provisions may either sick industrial company. Such a power in BIFR remains till a winding-up order is passed by the High Court and a stage arrives for the High Court for issuing orders for distribution of the sale proceeds. ………SICA was furthermore enacted subsequent to the provisions of the Companies Act. It is not, thus, possible to accept the submission that the High Court exercises a concurrent jurisdiction."
It was ruled that the Company Court and the BIFR do not exercise concurrent jurisdiction. It was held that: It may be true that the High Court's jurisdiction is that of the Appellate Authority but keeping in view the terminology contained in sub- section (4) of Section 20 read with Section 32 of the Act, it leaves no manner of doubt that the provisions of SICA shall prevail over the provisions of the Companies Act. For the aforementioned purpose, it was not necessary for Parliament to mention specifically the provisions of sub-section (4) of Section 20 that the same shall prevail over Section 536 of the Companies Act…..”
“BIFR admittedly had the power to sell the assets of the Company but the High Court until a winding-up order is issued does not have the same.”
In Bombay Dyeing & Manufacturing Co. Ltd. vs. Bombay Environmental Action Group : (2006) 3 SCC 434 It was held that: “13. The 1993 Act was enacted to provide for and regulate the payment of interest on delayed payments to small-scale and ancillary industrial undertakings and for matters connected therewith. 14. The provisions of the 1993 Act, therefore, do not envisage a situation where an industrial company becomes sick and requires framing of a scheme for its revival. 15. It is no doubt true that an award in relation to a claim of a small-scale industry if made by the Council would be governed by the provisions of the Arbitration and Conciliation Act, 1996 .”
In Damji Valli Shah v. Life Insurance Corporation of India, [(1965) 2 SCR 665 ], the question which arose for consideration was as to whether a similar provision made in the Life Insurance Corporation Act, 1956 shall bar the jurisdiction of the Company Court in terms of Section 446 (1) of the Companies Act. Referring to Section 41 of the Life Insurance Corporation Act, 1956 it was stated that the Tribunal constituted under the LIC Act will have exclusive jurisdiction.
Case - M/s Hindustan Petroleum Corpn. Ltd. & Ors v. M/s Super Highway Services & Anr. decided on 19/02/2010
An inspection of petrol pump was made and dealership was cancelled on the ground that high speed diesel was found contaminated. The High allowed the writ petition of the on the ground that notice of the Laboratory Test to be conducted at the Barauni Terminal had not been served upon thepetitioner, which has caused severe prejudice to him since its dealership agreement was terminated on the basis of the findings of such Test. Admittedly the dealership agreement was terminated on the ground that the product supplied by the petitioner corporation was contaminated by the respondent. Such contamination was sought to be proved by testing the T.T. retention sample in the laboratory at Barauni Terminal.
Dismissing the SLP of the Corporation the Supreme Court held that : “The Guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be made an empty formality. Notice should be served on the dealer sufficiently early so as to give him adequate time and opportunity to arrange for his presence during the test and there should be admissible evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer. In the present case, there is no admissible evidence to prove service of notice on the respondent or refusal of notice by the respondent. Further, the notice dated 28.05.2008 which was allegedly refused by respondent, did not give him adequate time to arrange for the presence of himself or his representative during the test to be conducted at 3.00 PM on 29.05.2008. It is also to be noted that the endorsement regarding the alleged refusal is dated 29.05.2008 itself. Thus, the termination of the dealership agreement of the respondent was arbitrary, illegal and in violation of the principles of natural justice.”
A Division Bench of the Allahabad High Court in Shripal Vaish v. U.P. Power Corpn. Ltd. (2009) 4 UPLBEC 3267 held that if a person is not entitled to payment in view of a particular provision, he can not claim parity that under similar circumstances payment is being made to others. The court relied on decision of the apex court in State of Bihar v Kameshwar Prasad Singh AIR 2000 SC 2306 . In Kameshwar Prasad’s case it was held that:
“ The concept of equality as envisaged under Article 14 of the Constitution is a positive conceptwhich cannot be enforced in a negative manner.When any authority is shown to have committed any illegality or irregularity in favourofany individual or groupofindividualsother cannotclaim the same illegality or irregularity onground ofdenial thereof to them.Similarly wrong judgment passed in favour of one individual does not entitle others to claim similar benefits.”
In this regard the Supreme Court inGursharan Singh& Ors.v.NDMC & Ors.[1996 (2) SCC 459] held that citizenshave assumed wrong notions regarding the scopeof Article 14of the Constitution whichguaranteesequality beforelawto all citizens. Benefitsextendedtosome persons in an irregular or illegal manner cannot be claimed by a citizen on the plea of equality as enshrined in Article 14of the Constitution by way of writ petition filed in the High Court.The Court observed:
"Neither Article 14 of the Constitution conceives within theequalityclause this concept nor Article 226empowers the High Court to enforce such claim of equality before law. If such claims are enforced, it shall amount to directing to continueand perpetuate an illegal procedure or anillegal orderforextending similar benefits to others.Beforea claimbasedonequalityclause isupheld, itmustbe establishedby the petitioner that his claim being just and legal, has been denied to him, while it has been extended to others and in this process there has been a discrimination."
Again in Secretary, Jaipur Development Authority, Jaipur v.DaulatMal Jain & Ors.[1997 (1) SCC 35] thisCourt consideredthe scope of Article 14 of the Constitution and reiteratedits earlier position regarding the conceptof equality holding:
"Sufficeit to hold that the illegal allotmentfounded uponultravires and illegal policy of allotmentmadeto someother persons wrongly, would not form a legalpremise toensureit to the respondent or to repeat orperpetuate suchillegalorder, nor could it be legalised.Inother words,judicial process cannot be abused to perpetuate the illegalities.Thus considered, we hold that the High Court wasclearlyin error in directing the appellants toallot
the land to the respondents."
In Stateof Haryana & Ors v.Ram Kumar Mann[1997 (3) SCC 321] this Court observed:
"Thedoctrineof discriminationisfoundedupon existence of an enforceable right.He was discriminated and deniedequality as some similarly situated persons had been giventhesame relief.Article 14 would applyonly when invidiousdiscriminationismetedoutto equals and similarlycircumstancedwithoutany rationalbasisor relationshipin that behalf.The respondent has noright, whatsoeverand cannot be given the relief wrongly givento them,i.e., benefit of withdrawal of resignation.The High Court was wholly wrong in reaching the conclusion that there was invidious discrimination.If we cannot allow a wrong to perpetrate,an employee, after committing mis-appropriation ofmoney,is dismissed from service and subsequently that orderiswithdrawn and he is reinstated into theservice. Canasimilarly circumstanced person claim equalityunder Section 14 for reinstatement?The answer is obviously "No". Ina converse case, in the first instance, one may be wrong butthewrong order cannot be the foundation forclaiming equalityforenforcementof the same order. Asstated earlier, his right must be founded upon enforceable right to entitle himtotheequality treatmentfor enforcement thereof.A wrong decision by the Government does not give a righttoenforcethe wrong orderandclaimparityor equality.Two wrongs can never make a right."
Whether after the notice issued under clause (b) of Section 138 of the Negotiable Instruments Act,1881 is received by the drawer of the cheque, the payee or holder of the cheque, who does not take any action on the basis of such notice within the period prescribed under Section 138 of the Act, is entitled to send a fresh notice in respect of the same cheque and, thereafter, proceed to file a complaint under Section 138 of the Act?
Above question has been answered in negative by the Supreme Court in CRIMINAL APPEAL NO.46 OF 2010 (@ SPECIAL LEAVE PETITION (CRL) NO.6676 OF 2008), Tameeshwar Vaishnav Vs. Ramvishal Gupta (Decided on 8/1/10) wherein relying on two earlier decisions it has been held that under s 138 , NI Act, the cause of action arises only once. In this case first notice was issued on 22th march 2006 but complaint was not filed within 30 days and subsequently the cheque was again presented and dishonored and fresh notice was issued on 14th June 2006 and on that basis a complint was filed on 10th July 2006. The Supreme Court accepted the argument that when the complainant did not take any action on the basis of the first notice a second notice in regard to the self-same cheque was barred under the proviso to Section 138 of the Act. In Sadanandan Bhadran vs. Madhavan Sunil Kumar [(1998) 6 SCC 514], it was held that the cause of action to file complaint on non-payment despite issue of notice, arises but once. Another cause of action would not arise on repeated dishonour on re-presentation. It was also held that while the payee was free to present the cheque repeatedly within its validity period, once notice had been issued and payments not received within 15 days of the receipt of the notice, the payee has to avail the very cause of action arising thereupon and file the complaint. Dishonour of the cheque on each re-presentation does not give rise to a fresh cause of action. This view was reiterated in Prem Chand Vijay Kumar vs. Yashpal Singh & Anr. [(2005) 4 SCC 417].
Following above decisions in Tameeshwar case (supra) the Supreme Court held that:
“The provisions of Section 138 and clauses (a), (b) and (c) to the proviso thereof indicate that a cheque has to be presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. Clause (b) indicates that the payee or the holder in due course of the cheque, has to make demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and clause (c) provides that if the drawer of the cheque fails to make the payment of the said amount of money to the payee or to the holder in due course of the cheque within 15 days of receipt of the said notice, the payee or the holder of the cheque may file a complaint under Section 142 of the Act in the manner prescribed.”
The Supreme Court hald that : “In the instant case, it is clear that the fresh (sic) notices were received by the Appellant on 14th June, 2006, whereas the complaints were filed on 10th July, 2006. It must, therefore, be held that the complaints were filed beyond the period of limitation and the learned Magistrate erred in taking cognizance on the complaints filed on the basis of the second notices issued on 7th June, 2006. Similarly, the High Court was also wrong in affirming the order of the learned Magistrate.”
