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Legal
INSURANCE
Legal
INSURANCE
Legal
INSURANCE
Legal
INSURANCE
Legal
INSURANCE
Legal
BANKINGBANKINGBANKINGBANKINGBANKING COMPANYCOMPANYCOMPANY
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COMPANY
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COMPANY
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CONSUMER
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CONSUMER
and
CONSUMER
and
CONSUMER
#1
and
CONSUMER
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AssociatesSolic
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AssociatesSolicitors and
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Associatestors and
GENERAL
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2015
Associatestors and
GENERAL
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2015
Associatestors and Advocates
GENERAL
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2015
AssociatesAdvocates
GENERAL
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AssociatesAdvocates
GENERAL
Associates Advocates
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topical index
company
conduct of board meetings through video conferencing
compounding of offence
banking
sarfeisi act
loss of confidence in employee - termination of service
mortgage and usufructuary Mortgage
insurance
no licence
registration not renewed
delay in lodging claim
pendency of criminal case
general
builder entitled to forfeit the earnest money in default
auction purchaser – “ As is where is basis”
cheque bouncing
liability of Directors
at par cheque
INSURANCE BANKING COMPANY CONSUMER GENERAL
Subros
The PUNJAB AND HARYANA HIGH
COURT in the case of MUKESH
KHOSLA v. AMANDEEP KAUR has held
that where the licence is found to be fake,
the State is under obligation to file com-
plaint or register an FIR .The court has
further held that where during the proceed-
ings that the driver has more than one
licence, the Tribunal will take immediate
notice of the same and recommend to the
concerned police authorities to register FIR.
After appointment engaging of a driver, the
owner shall seek
information
be fake in MACT proceedings, even if the
driver is acquitted in the criminal trial under
Section 279, 304 IPC, the State is under
obligation to file complaint or register an
FIR, under appropriate Sections (Sections
420, 467, 468, 471 IPC, etc.), for prosecut-
ing such driver.
3. Where the driving licence of the driver is
found to be fake in the MACT proceedings,
the Tribunal is required to forward a copy
of the judgment to the police for initiating
criminal pro-
ceedings against
under the RTI
Act/or any
other provision
available imme-
diately regard-
ing the
genuineness of
the driving
Where the licence is found to be fake, the State
is under obligation to file complaint or register
an FIR. Where driver has more than one
licence, the Tribunal will take immediate
notice of the same and recommend to
concerned police authorities to register FIR.
the driver.
4. The particu-
lars of such a
driver would
be circulated to
the
registration
authorities as
far as possible
licence from the office of issuing authority
within thirty days from the date such ap-
pointment / engagement. Following direc-
tions issued.
Held, that following remedial measures to
overcome such situations are being sug-
gested:-
1. The Union of India should create a
mechanism where the licences issued
throughout the country shall be verifiable
by all the State authorities. This could be in
the form of a software which is accessible
by the State Authorities as well as the Cen-
tral Government.
2. In the cases, where the licence is found to
or a system (agency) should be created to
put the name of all such black-listed drivers.
5. Where it comes to the notice of the
Tribunal during the proceedings that the
driver has more than one licence, the Tribu-
nal will take immediate notice of the same
and recommend to the concerned police
authorities to register FIR under relevant
sections against such driver. In such a situa-
tion also, the name of such a driver should
be put in the software, as suggested above,
for verification.
6. After appointment/engaging of a driver,
the owner shall seek information under the
RTI Act/or any other provision available
INSURANCE
Subros
immediately regarding the genuineness of
the driving licence from the office of issuing
authority within thirty days from the date
such appointment/engagement.
7. In case, the employer is illiterate or does
not understand, read or write the language
used in the licence, such an employer shall
get the licence verified from the instructor
of an approved driving school wherever the
driver is shown to be resident of one State/
place and that address is mentioned in the
application for grant of Driving Licence or
through con-
cerned
Further held, that the question which arises
for determination is that whether the appel-
lant-owner had taken reasonable care to find
out as to whether the driving licence pro-
duced by the driver was a genuine one. In
order to discharge his onus, the appellant
produced the Manager of the appellant-
owner. He stated that he along with Mukesh
Khosla, the appellant/owner, had seen the
driving licence of Balwinder Singh, which
carried signatures and seal of the office of
District Transport Officer. Only thereafter,
they had engaged
Suvidha Cen-
tre. The Li-
censing Au-
thority of the
other State/
place, if feels
fit to issue
driving licence
However witness appears to have been deliberately introduced as a
witness and there is nothing on record to show that this witness
was in the employment of the appellant-owner at the relevant time
Appellant chose not to step into the witness box, thereby not only
giving up his own valuable right to contend that he verified the
authenticity of the DL of the offending driver but also deprived the
insurer of his right to cross-examine him - Recovery rights given.
Balwinder
Singh as
driver. How-
ever, the
Manager
appears to
have been
deliberately to such person who is domicile of another
State, it must record reasons to issue driv-
ing licence contrary to the spirit of act by
holding that such applicant falls under the
provisions of law to be issued Driving
Licence by that authority. This process for
verification of the Driving Licence of
driver can be further simplified if the sug-
gested software can have a public window/
interface, wherein, private citizens can log
into the software and by entering the details
of the driving licence, can get a printed
verification report regarding the authentic-
ity of the Driving licence.
INSURANCE
introduced as a witness and there is nothing
on record to show that this witness was in
the employment of the appellant-owner at
the relevant time. Thus, evidence brought
on record by the appellant is insufficient
and not credible to prove that he had ob-
served due care and caution before engag-
ing the driver. Thus, insurer has been rightly
awarded recovery rights against the insured.
Furthermore appellant, has chosen not to
step into the witness box, thereby giving up
his own valuable right to contend that he
verified the authenticity of the DL of the
offending driver but also deprived the
insurer of his right to cross-examine him.
Subros
CONDUCT OF
BOARD MEETINGS
VIDEO CONFERENCING
Sandeep Suri
Advocate, Partner Subros and Associates
COMPANY LAW
CONDUCT OF BOARD
MEETINGS THROUGH
VIDEO
CONFERENCING
The advent of technology
has been given its due
recognition under the
provisions of COMPA-
NIES ACT, 2013. SEC-
TION 173 subsection (1)
requires Every company
ing of the Board of Direc-
tors within thirty days of
the date of its incorpora-
tion and thereafter hold a
minimum number of four
meetings of its Board of
Directors every year in
such a manner that not
more than one hundred
and twenty days shall
intervene between two
consecutive meetings of
the Board. Though the
word meeting is not been
defined under the act in
the normal sense of the
word it normally refer to
conference of persons for
the same would be sugges-
tive of that the board of
directors of the company
would assemble at a place
for the specific purposes
of discussing the transac-
tion of business in respect
of the fears of the com-
pany parent, requiring
there physical presence
thereof. That clause (3) the
same would remove from
its ambit any chance meet-
ing or any other meeting
or assembly of the board
of directors of the com-
pany as the same is re-
quired to be called by
giving not less than 7 days
notice in writing (subject
to the proviso mentioned
therein). However subsec-
COMPANY
tion (2) of section 173
provides
173 (2) The participation of
directors in a meeting of the Board
may be either in person or through
video conferencing or other audio
visual means, as may be
prescribed, which are capable of
recording and recognising the
participation of the directors and
of recording and storing the
proceedings of such meetings
along with date and time:
Provided that the Central Gov-
ernment may, by notification,
specify such matters which shall
not be dealt with in a meeting
through video conferencing or
other audio visual means.
The same is required to be
read with particular refer-
ence to clause (c) and
clause (f) of sub rule (3) of
Rule 3, of the Companies
(Meetings of Board and its
Powers) Rules, 2014 ,
which provides that a
meeting of the directors of
the company may be
carried out in terms of
subsection (2) of section
173 through video
Subros
conferencing or other
audiovisual means, pro-
vided the compliance is
made by the director with
respect of the following
requirements:
173(3). Meetings of Board
through video conferencing or
other audio visual means.- A
company shall comply with the
following procedure, for conven-
ing and conducting the Board
meetings through video
conferencing or other audio visual
means.
(1) ......
(2) The Chairperson of the
meeting and the company secre-
tary, if any, shall take due and
(a) to safeguard the integrity of
the meeting by ensuring sufficient
security and identification proce-
dures;
(b) to ensure availability of
proper video conferencing or
other audio visual equipment or
facilities for providing transmis-
sion of the communications for
effective participation of the
directors and other authorised
participants at the Board meeting;
(c) to record proceedings and
prepare the minutes of the
meeting;
(d) to store for safekeeping and
marking the tape recording(s) or
other electronic recording mecha-
nism as part of the records of the
company at least before the time
of completion of audit of that
particular year.
(e) to ensure that no person other
than the concerned director are
attending or have access to the
proceedings of the meeting
through video conferencing mode
or other audio visual means; and
(f) ......
The notice of the meeting
shall be sent to all the
directors in accordance
with the provisions of sub-
section (3) of section 173
of the Act. The notice
required to provide for an
option being made avail-
able for the purposes of
carrying out the meeting
through video
conferencing mode or
other audiovisual means.
A director intending to
participate through video
conferencing or audio
visual means shall commu-
nicate his intention to the
Chairperson or the com-
pany secretary of the
company and shall give
prior intimation to that
effect sufficiently in ad-
vance. The term - Suffi-
COMPANY
ciently in Advance - has
not been defined anywhere
in the Act or the Rules and
hence is dependant on each
company.
Such option is required to
be exercised by the con-
cerned director at the
beginning of the calendar
year as has been provided
in clause (e) of rule 3
thereof (e ) The director,
who desire, to participate
may intimate his intention
of participation through
the electronic mode at the
beginning of the calendar
year and such declaration
shall be valid for one
calendar year. (f) In the
absence of any intimation
under clause (c), it shall be
assumed that the director
shall attend the meeting in
person. It is to be noted
that the reference is to
CALENDAR YEAR and
not to the FINANCIAL
YEAR. Procedure re-
quired to be followed:
That the procedure re-
quired to be followed
where assistance of
video conferencing or
other audio means has
been taken requires that a
roll call shall be taken by
the Chairperson and where
Subros
every director participat-
ing through video
conferencing or other
audio visual means shall
state, for the record, his
name, location from where
he is participating, confir-
mation that he has received
the agenda and all the
relevant material for the
meeting and that apart
from the concerned direc-
tor no one other is attend-
ing or having access to the
proceedings of the meet-
ing at the location from
which he is carrying out
the said meeting . That
subsequent to the roll call,
the Chairperson or the
Company Secretary shall
inform the Board about
the names of persons other
than the directors who are
present for the said meet-
ing at the request or with
the permission of the
Chairperson and confirm
that the required quorum
is complete. The statutory
registers which are re-
quired to be placed in the
Board meeting as per the
provisions of the Act shall
be placed at the scheduled
venue of the meeting and
where such registers are
required to be signed by
the directors, the same
shall be deemed to have
been signed by the direc-
tors participating through
electronic mode, if they
have given their consent to
this effect and it is so
recorded in the minutes of
the meeting. However, not
all matters have been
permitted to be conducted
in a meeting through video
conferencing or other
audio visual means. Spe-
cific matters relating to the
approval of the annual
financial statements, the
and Audit Committee
Meetings for consideration
of accounts; or approval
of the matter relating to
amalgamation, merger,
demerger, acquisition and
takeover can not be con-
ducted through video
conferencing. The same
cannot be considered as a
suo motu option available
to the company to carry
out at its discretion a
board meeting at its own
discretion unless and until
all the directors desire to
participate in the meeting
through videoconferencing
or audiovisual means.
----
COMPANY
The same
cannot be consid-
ered as a suo motu
option available to
the company to
carry out at its dis-
cretion a board
meeting at its own
discretion unless
and until all the
directors desire to
participate in the
meeting through
videoconferencing
or audiovisual
means.
Subros
SARFAESI
ACT, 2002
SUPREME COURT
Banking / Securitisation /
Sale / Private treaty
Securitization and Recon-
struction of Financial Assets
and Enforcement of Security
Interest Act, 2002 (54 of
2002) Section 13 - Sale -
There were no terms settled
in writing between the
parties that the sale can be
affected by Private treaty -
Borrowers were not even
called to the joint meeting
by the Bank - Therefore,
there was a clear violation of
the aforesaid Rules
rendering the sale illegal.
asset provides maximum
benefit to the borrower by
the sale of such asset. There-
fore, the secured creditors are
expected to take bonafide
measures to ensure that there
is maximum yield from such
secured assets for the bor-
rower. Sale is null and void
being in violation of the
provision of Section 13 of
the SARFAESI Act, 2002
and Rules 8 and 9 of the
Rules, 2002.
Security Interest (Enforce-
ment) Rules 2002, Rule 8(5),
8(6), 9(2)
Held, that it must be empha-
sized that generally proceed-
ings under the SARFAESI
Act, 2002 against the bor-
rowers are initiated only
when the borrower is in dire
straits - The provisions of
the SARFAESI Act, 2002
and the Rules, 2002 have
been enacted to ensure that
the secured asset is not sold
for a song. It is expected
that all the banks and
financial institutions which
resort to the extreme
measures under the
SARFAESI Act, 2002 for
sale of the secured assets to
ensure, that such sale of the
BANKING
SUPREME COURT OF
INDIA
J. RAJIV
SUBRAMANIYAN
Versus
M/S PANDIYAS
Reported as reported as
(2014-4)176 PLR 809 (SC)
SARFAESI
Subros
2014-4 PLR 201
PUNJAB AND HARYANA HIGH COURT
M/S IAA HOSPITAL PVT. LTD.
Versus
AUTHORIZED OFFICER, UCO BANK
(i) SARFAESI Act, 2002 Section 13(4)(a),
13(4)(b) - Notice issued is violative of the
mandatory provisions of the SARFAESI
Act as there has been no proper valuation
and the sale notice did not provide for the
minimum 30 days period and no proper
inventory has been prepared and the assets
have been sold and the property at
Jalandhar has also been sold without show-
ing when the possession was taken and for
what value - Consequently, the order -
Whereby a seal of approval had been
granted to the sale certificates issued in
favour of respondents No.2 to 4 are also
quashed - The said respondents-auction
purchasers shall surrender the possession of
the property to the authorized officer of the
bank within a period of two months from
today.
(ii) SARFAESI Act, 2002 Section 3(3-A) -
Notice - Petitioner objected to the notice -
Bank allowed to sell a particular property -
No action was thereafter taken to decide the
objections or reject the representations
whereas the bank had already
put the petitioners in the list of willful
defaulters on 13.06.2011 and thus, violated
the provisions of Section 13(3-A) of the
SARFAESI Act by not taking a call on the
objection.
(iii) SARFAESI Act, 2002 - Securitization
Rules, Rule 5 , 8(5) - Further the provisions
of Rule 5 pertaining to fixation of valuation
of movable and secured assets in consulta-
tion with the secured creditor for realization
of the dues of the secured creditor were
apparently missing in the present case -
Before effecting sale of the immovable
property, the authorized officer was to
obtain valuation of the property from an
approved valuer and in consultation with
the secured creditor, fix the reserve price of
the property and sell the whole or in part of
such immovable secured asset by any of the
following methods prescribed which in-
cluded inviting tenders from the public.
(iv) SARFAESI Act, 2002- Secured credi-
tor has been conferred right to enforce their
security interest without the intervention of
the Court or Tribunal cannot be blatantly
violated - Plea of alternative remedy is not
an absolute bar for this Court to entertain a
writ petition under Articles 226/227 of the
Constitution of India, more particularly
when there exists numerous violations of
the statutory provisions
SARFAESI ACT, 2002 (54 of 2002)
BANKING SARFAESI
Subros
NATIONAL CONSUMER DISPUTES
REDRESSAL COMMISSION NEW DELHI
Ishwar Singh V. ICICI Lombard
30th January, 2015
Insurance claim was repudiated as at time of
accident, the vehicle was being driven by a
person not holding an effective and valid
driving license and also the vehicle was
carrying passengers in excess of the sanc-
tioned seating capacity.
Forum Allowed claim 75% : Forums
conclusion that subject vehicle at the time
of accident was carrying 2 passengers in
addition to the driver in violation of the
rules which amounted to violation of terms
and conditions of the policy. Question of
validity of driving license not gone into.
Relying upon the case of Amalendu Sahoo V. Oriental Insurance Company allowed claim on non -standard basis (75%).
No appeal by Insurance Company: State
commission on appeal of Insured dis-
missed complaint: Complainant ap-
proached State Commission Haryana for
enhancement, which, however, taking note
that at the time of accident subject vehicle
was being driven by a driver not having a
valid driving license to drive a commercial
vehicle, set aside the order of the Forum
and dismissed the complaint.
Repudiaton letter: Validity of the driving
license was not given as a reason for
repudiating the claim in the repudiation
letter : Contended that State Commission
has committed a grave error in looking into
the validity of the DL when the validity of
the DL was not given as a reason for repu-
INSURANCE
diating the claim in the repudiation letter.
NCDRDC did not find merit in this con-
tention because repudiation letter by itself
is not a sine qua non of the dispute between
the parties and as plea was taken in the
written statement filed in response to the
complaint, in the written statement, the
State Commission was justified in looking
into the validity of the driving license and it
cannot be said to have been acted beyond
the scope of the pleadings.
State Commission has not exceeded its
jurisdiction in dismissing the complaint
though the opposite party had not filed
appeal and had accepted the order of the
District Forum: Relying on Order XLI
Rule 33 CPC, NC held that there is wide
power to the Appellate Court to do com-
plete justice between the parties. Provision
enables the appellate Court to pass such
order as ought to have been passed under
the circumstances notwithstanding that the
party in whose favour the order is sought to
be exercised has not filed any appeal. State
Commission having noticed that driver of
the subject vehicle was not holding valid
driving license came to the conclusion that
it is a case of violation of terms and condi-
tions of the insurance policy and dismissed
the complaint. The order is in consonance
with the powers of the Appellate Court ,
and cannot be faulted.
Repudiation - Ground not men-
tioned in the repudiation letter -
Can be taken in defense
CONSUMER
Subros
Temporary registration not renewed - Insurance company not liable
Motor Vehicles Act, 1988 (59 of 1988) Section 39, 43 - Damage to vehicle -Temporary
registration was granted in respect of the vehicle in question, which had expired on
11.1.2006 and the alleged accident took place on 2.2.2006 when the vehicle was without any
registration - Nothing has been brought on record by the appellant to show that before or
after 11.1.2006, when the period of temporary registration expired, the appellant, owner of
the vehicle either applied for permanent registration as contemplated under Section 39 of
the Act or made any application for extension of period as temporary registration on the
ground of some special reasons - Using a vehicle on the public road without any registration
is not only an offence punishable under Section 192 of the Motor Vehicles Act but also a
fundamental breach of the terms and conditions of policy contract - Consumer Protection
Act, 1986.
SUPREME COURT OF INDIA / NARINDER SINGH Versus NEW INDIA ASSURANCE COMPANY LTD. / Civil Appeal No.8463 of 2014 / reported as (2014-4)176 PLR 824 (SC)
Delay in lodging claim - Company Liable
Insurance -Delay in lodging claim Theft of car - Delay in lodging claim with Insurance
Company of 54 days - Instructions dated 20.09.2011, issued by Insurance Regulatory and
Development Authority to all the insurance companies - As per the said instructions, this
condition should not prevent the settlement of genuine claims particularly when there is
delay in giving intimation or in submission of documents due to unavoidable circum-
stances - The companies were advised that they must not repudiate such claims on the
ground of delay, especially when the police has been promptly informed in this regard.
reported as (2014-4)176 PLR 861 PUNJAB AND HARYANA
Pendency of Criminal Case is no ground to hold Negligence of Driver
Criminal case pending - Shall not tantamount to negligence Motor Vehicles Act, 1988 (59 of
1988) Section 166 - Negligence - Fact of facing trial as an accused in relation to the
accident in the criminal case, would not ipso facto establish any negligence on the part of
driver. reported as (2014-4)176 PLR 736 PUNJAB AND HARYANA
INSURANCE CONSUMER
Subros
7th January 2015
National Consumer Disputes Redressal Commission (NCDRC)
The Commisison has reiterated that a builder is entitled to forfeit the installments
amounts paid where the allottee defaults in making the payment of the remaining
instalments.
The Honble Commission was pleased to set aside the orders of the lower courts wherein
DLF Southern Towns Pvt. Ltd. was ordered to refund the earnest amount. Complain-
ant had applied for allotment of apartment in the project of DLF for Rs.40,00,000/-
and paid Rs.4,00,000/- towards first installment. Builder had promised to hand over
possession by the end of 2009, however the construction was delayed. The complainant
did not pay the subsequent installments even though DLF started construction, and
complainant expressed his willingness to remit the defaulted installments. However, DLF
demanded additional amount of Rs.1,70,000/-, and put the complainant to notice that
otherwise they will forfeit amount of first installment of Rs.4,00,000/-.
Complaint was filed seeking delivery of the flat after receiving balance amount or to
refund the deposited amount. Builder had submitted that it agreed to deliver posses-
sion of flat within 36 months, but complainant failed to return the signed agreement
and did not pay subsequent installments in spite of repeated demands. District forum
allowed complaint with refund. Appeal was also dismissed of the builder.
The National Commission observed that as complainant had failed to perform terms
and conditions of the agreement in spite of repeated reminders, DLF was well within
its rights to forfeit amount of earnest money. It was held that it becomes clear that as
complainant has not paid any subsequent installments and committed default in making
payments of installments and also committed default in returning back duly signed agree-
ment, OP (DLF) had every right to forfeit amount of earnest money deposited by com-
plainant and learned District forum committed error in allowing complaint and learned
State Commission further committed error in dismissing appeal.
(DLF Southern Towns (P) Ltd. v. Dipu C. Seminlal)
Builder entitled to forfeit the earnest money in default of payment of
instalments
CONSUMER BUILDER
Subros
SUPREME COURT OF INDIA
Banking
Loss of confidence in employee - Termination of service
Service law - Banking sector - Loss of confidence in employee - Termination of service
- When a court is considering whether punishment of - Termination from service -
imposed upon a bank employee is shockingly excessive or disproportionate to the gravity
of the proved misconduct, the loss of confidence in the employee will be an important
and relevant factor - When an unknown person comes to the bank and claims to be the
account-holder of a long inoperative account, and a bank employee, who does not know
such person, instructs his colleague to transfer the account from - dormant-to-opera-
tive- category (contrary to instructions regulating dormant accounts) without any kind
of verification, and accepts the money withdrawal form from such person, gets a token
and collects the amount on behalf of such person for the purpose of handing it over to
such person, he in effect enables such unknown person to withdraw the amount contrary
to the banking procedures; and ultimately, if it transpires that the person who claimed
to be account holder was an imposter, the bank can not be found fault with if it says
that it has lost confidence in the employee concerned - A Bank is justified in contending
that not only employees who are dishonest, but those who are guilty of gross negli-
gence, are not fit to continue in its service. State Bank Of Bikaner & Jaipur vs Nemi
Chand Nalwaya
SUPREME COURT OF INDIA
Mortgage and Usufructuary Mortgage - Definition
Contracting parties should be competent to contract - Minors contract void
Definition of simple mortgage and usufructuary mortgage, wherein simple mortgage
is defined as the mortgage where property is mortgaged without delivering possession
of the mortgaged property to the mortgagee whereas usufructuary mortgage is defined
as the mortgage where the mortgagor delivers possession or expressly or by
implication binds himself to deliver possession of the mortgaged property to the
mortgagee and further authorises him to retain such possession until payment of the
mortgage-money, and to receive the rents and profits accruing from the property or
any part of such rents and profits and to appropriate the same in lieu of interest, or
in payment of the mortgage money, or partly in lieu of interest or partly in payment of
the mortgage money. Mathai Mathai versus Joseph Mary @ Marrykkutty Joseph
BANKING
Subros
COMPOUNDING OF
OFFENCE
Section 162, 220(1),
309, 621A of the Com-
panies Act, 1956
Andhra High Court in
Union Of India v Tech
Mahindra Limited,
Mumbai, decided on
23 June, 2014
Proceedings were initi-
ated against M/s.
Satyam Computer
Services Limited which
was subsequently re-
named as Tech
Mahindra Limited, in
pursuance of the order
of merger dated 11-6-
2013 for violation of
provisions of Section
309 of the Companies
Act, 1956 i.e., failure
of respondent No.1-
company to obtain the
opinion of the Central
Government before
payment of
failure to electronically
upload the attachments
to the Profit and Loss
Account along with the
Directors Report before
the Registrar of Compa-
nies. The accused filed
Company Application
under Section 621A of
the Act for compound-
ing the two offences
before the Company
Law Board. By a com-
mon order, dated
16.12.2011, the Com-
pany Law Board de-
clined to permit the
applicants to com-
pound the offences.
Appeals, were filed and
the High court by a
detailed order passed
on 12.03.2012, re-
manded the cases to
the Company Law
Board for consideration
of the Applications
afresh in accordance
with law as company
was made a victim of
the fraud played by its
Directors and that
following the fraud of a
great magnitude in-
dulged in by the then
Chairman, Managing
Director and other
Directors of the Com-
pany, and that the
Company itself, even
before it was reconsti-
tuted after its taking
over, was not an ac-
cused in the criminal
cases involving the
fraud by its Directors .
After remand, the Com-
pany Law Board passed
a fresh order, allowing
the applications of the
Company and respt
No.2 compounding the
offences by levying the
compounding fees.
Serious Fraud Investi-
gation Office (SFIO)
preferred Company
remunera-
tion to one
of its Direc-
tors as also
for violation
of provi-
sions of
Section
220(1) read
with Section
162 of the
Act, i.e.,
Where a penal provision is made compoundable, ordinarily,
the accused have an option to seek compounding of the
offence rather than contesting the case and inviting a
Judgment on merits. Assuming that the court or the
authority conferred with the power of such composition has
discretion not to compound the offence, such discretion
cannot be exercised arbitrarily. Unless public interest
compels such authority not to accept the request for
composition of an offence, such a request cannot be refused.
COMPANY
Appeals
aggrieved
by the
order of
the Com-
pany Law
Board
com-
pounding
the of-
fences.
The court was
to hold
tion to hold that the
refusal to
the offences on behalf
of accused in both
these cases causes
grave and
prejudice to their
ests. On th
instead of
public interest, compo
sition of the
would serve
interest as the Com
pany,
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
n
deed is unable to ap
preciate
the
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with
to
ecution has bee
launched. Such con
duct
appellant would
encourage frivolous
vexatious litigation
discourage
The court was
to hold
tion to hold that the
refusal to
the offences on behalf
of accused in both
these cases causes
grave and
prejudice to their
ests. On th
instead of
public interest, compo
sition of the
would serve
interest as the Com
pany,
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
nal
deed is unable to ap
preciate
the
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with
to which
ecution has bee
launched. Such con
duct
appellant would
encourage frivolous
vexatious litigation
discourage
The court was
to hold
tion to hold that the
refusal to
the offences on behalf
of accused in both
these cases causes
grave and
prejudice to their
ests. On th
instead of
public interest, compo
sition of the
would serve
interest as the Com
pany,
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
prosecution
deed is unable to ap
preciate
appellant
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with
which
ecution has bee
launched. Such con
duct on
appellant would
encourage frivolous
vexatious litigation
discourage
The court was
to hold that
tion to hold that the
refusal to
the offences on behalf
of accused in both
these cases causes
grave and
prejudice to their
ests. On th
instead of
public interest, compo
sition of the
would serve
interest as the Com
after
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
prosecution
deed is unable to ap
preciate
appellant
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with
which
ecution has bee
launched. Such con
on
appellant would
encourage frivolous
vexatious litigation
discourage
The court was
that
tion to hold that the
refusal to
the offences on behalf
of accused in both
these cases causes
grave and
prejudice to their
ests. On th
instead of
public interest, compo
sition of the
would serve
interest as the Com
after
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
prosecution
deed is unable to ap
the
appellant
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with
which separate
ecution has bee
launched. Such con
the
appellant would
encourage frivolous
vexatious litigation
discourage
The court was
that
tion to hold that the
refusal to
the offences on behalf
of accused in both
these cases causes
grave and
prejudice to their
ests. On the contrary,
instead of
public interest, compo
sition of the
would serve
interest as the Com
after its
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
prosecution
deed is unable to ap
the
appellant
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with
separate
ecution has bee
launched. Such con
the
appellant would
encourage frivolous
vexatious litigation
discourage entrepre
The court was pleased
tion to hold that the
compound
the offences on behalf
of accused in both
these cases causes
immense
prejudice to their
e contrary,
affecting
public interest, compo
sition of the
would serve
interest as the Com
its
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
prosecution
deed is unable to ap
conduct
appellant herein
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with
separate
ecution has bee
launched. Such con
part
appellant would
encourage frivolous
vexatious litigation
entrepre
pleased
tion to hold that the
compound
the offences on behalf
of accused in both
these cases causes
immense
prejudice to their
e contrary,
affecting
public interest, compo
offences
interest as the Com
reconsti
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
prosecution
deed is unable to ap
conduct
herein
needlessly filing these
appeals knowing
that accused have no
complicity in the
leged commission
the scam with respect
separate
ecution has bee
launched. Such con
part
appellant would
encourage frivolous
vexatious litigation
entrepre
pleased
tion to hold that the
compound
the offences on behalf
of accused in both
these cases causes
immense
prejudice to their inter
e contrary,
affecting
public interest, compo
offences
public
interest as the Com
reconsti
tution would be en
couraged to function
with more zeal
efficiency by getting
of the needless crimi
deed is unable to ap
conduct
herein
needlessly filing these
appeals knowing well
that accused have no
complicity in the
leged commission
respect
separate pros
ecution has bee
launched. Such con
of
appellant would only
encourage frivolous
vexatious litigation
entrepre
pleased
tion to hold that the
compound
the offences on behalf
of accused in both
these cases causes
immense
inter
e contrary,
affecting
public interest, compo
offences
public
interest as the Com
reconsti
tution would be en
couraged to function
and
efficiency by getting rid
of the needless crimi
deed is unable to ap
conduct of
herein in
needlessly filing these
well
that accused have no
al
leged commission of
respect
pros
ecution has bee
launched. Such con
of the
only
encourage frivolous and
and
entrepre-
pleased
tion to hold that the
compound
the offences on behalf
of accused in both
these cases causes
immense
inter-
e contrary,
affecting
public interest, compo-
offences
public
interest as the Com-
reconsti-
tution would be en-
couraged to function
and
rid
of the needless crimi-
deed is unable to ap-
of
in
needlessly filing these
well
that accused have no
al-
of
respect
pros-
ecution has been
launched. Such con-
the
only
and
and
neurs with
approach to
the arduous task of
resuscitating the
credited
such as the co
The court while
with the same held
if accused are con
victed by the
tional
liable to be punished
with fine under Sec
tion
as prescribed therein
and no further.
C.C.No.40
the
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
do
able reason for the
appellant
request of accused
N
neurs with
approach to
the arduous task of
resuscitating the
credited
such as the co
The court while
with the same held
if accused are con
victed by the
tional
liable to be punished
with fine under Sec
tion
as prescribed therein
and no further.
C.C.No.40
the
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
do
able reason for the
appellant
request of accused
Nos.1
neurs with
approach to
the arduous task of
resuscitating the
credited
such as the co
The court while
with the same held
if accused are con
victed by the
tional
liable to be punished
with fine under Sec
tion 629
as prescribed therein
and no further.
C.C.No.40
the accused
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
not
able reason for the
appellant
request of accused
os.1
neurs with
approach to
the arduous task of
resuscitating the
credited
such as the co
The court while
with the same held
if accused are con
victed by the
tional Court,
liable to be punished
with fine under Sec
629
as prescribed therein
and no further.
C.C.No.40
accused
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
not find
able reason for the
appellant
request of accused
os.1 and
COMPANY
neurs with
approach to
the arduous task of
resuscitating the
credited
such as the co
The court while
with the same held
if accused are con
victed by the
Court,
liable to be punished
with fine under Sec
629-A
as prescribed therein
and no further.
C.C.No.40
accused
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
find
able reason for the
appellant
request of accused
and
COMPANY
neurs with
approach to
the arduous task of
resuscitating the
such as the co
The court while
with the same held
if accused are con
victed by the
Court,
liable to be punished
with fine under Sec
A
as prescribed therein
and no further.
C.C.No.400 of
accused
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
find any
able reason for the
to
request of accused
and 4 for
COMPANY
neurs with
approach to undertake
the arduous task of
resuscitating the
companies
such as the company
The court while
with the same held
if accused are con
victed by the jurisdic
Court, they
liable to be punished
with fine under Sec
of
as prescribed therein
and no further.
0 of
accused are
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
any
able reason for the
oppose
request of accused
for
COMPANY
positive
undertake
the arduous task of
resuscitating the
companies
mpany
The court while dealing
with the same held
if accused are con
jurisdic
they
liable to be punished
with fine under Sec
the
as prescribed therein
and no further.
2009,
are
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
any conceiv
able reason for the
oppose
request of accused
for compo
COMPANY
positive
undertake
the arduous task of
resuscitating the
companies
mpany
dealing
with the same held
even
if accused are con
jurisdic
they
liable to be punished
with fine under Sec
the
as prescribed therein
and no further. ....In
2009,
are liable
to be sentenced to pay
fine under Section
A of the Act, if
alleged offence
proved. This being
undisputed position, I
conceiv
able reason for the
oppose
request of accused
compo
COMPANY
positive
undertake
the arduous task of
dis
companies
mpany
dealing
that
even
if accused are con
jurisdic
are
liable to be punished
with fine under Sec
Act
as prescribed therein
....In
2009,
liable
to be sentenced to pay
629
A of the Act, if the
proved. This being the
undisputed position, I
conceiv
able reason for the
oppose the
request of accused
compo
positive
undertake
the arduous task of
dis-
companies
mpany in
dealing
that
even
if accused are con-
jurisdic-
are
liable to be punished
with fine under Sec-
Act
as prescribed therein
....In
liable
to be sentenced to pay
629-
the
is
the
undisputed position, I
conceiv-
able reason for the
the
request of accused
compo-
positive
undertake
the arduous task of
-
companies
in
dealing
liable
to be sentenced to pay
-
the
is
the
undisputed position, I
-
able reason for the
the
request of accused
sition of the
Where
sion is made
poundable,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
inviting a
on merits.
that the court or
authority
with the power of
such
discretion not to
pound the
such discretion
not be exercised
trarily. Unless
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
fused.
COMPOUND
OF
S. 162, 220(1), 309,
Companies Act,
sition of the
Where
sion is made
poundable,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
inviting a
on merits.
that the court or
authority
with the power of
such
discretion not to
pound the
such discretion
not be exercised
trarily. Unless
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
fused.
COMPOUND
OF
S. 162, 220(1), 309,
Companies Act,
sition of the
Where
sion is made
poundable,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
inviting a
on merits.
that the court or
authority
with the power of
such composition
discretion not to
pound the
such discretion
not be exercised
trarily. Unless
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
fused. .
COMPOUND
OFFENCE
S. 162, 220(1), 309,
Companies Act,
Subros
sition of the
Where a
sion is made
poundable,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
inviting a
on merits.
that the court or
authority
with the power of
composition
discretion not to
pound the
such discretion
not be exercised
trarily. Unless
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
.
COMPOUND
OFFENCE
S. 162, 220(1), 309,
Companies Act,
Subros
sition of the
a penal
sion is made
poundable,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
inviting a
on merits.
that the court or
authority
with the power of
composition
discretion not to
pound the
such discretion
not be exercised
trarily. Unless
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
COMPOUND
OFFENCE
S. 162, 220(1), 309,
Companies Act,
by Sandeep
Subros
sition of the
penal
sion is made
ordinarily,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
Judgment
on merits. Ass
that the court or
conferred
with the power of
composition
discretion not to
pound the
such discretion
not be exercised
trarily. Unless
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
COMPOUND
OFFENCE
S. 162, 220(1), 309,
Companies Act,
by Sandeep
Subros
offences.
penal
sion is made
ordinarily,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
Judgment
Ass
that the court or
conferred
with the power of
composition
discretion not to
offence,
such discretion
not be exercised
trarily. Unless
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
COMPOUND
OFFENCE
S. 162, 220(1), 309,
Companies Act,
by Sandeep
Advocate
Subros
offences.
provi
com
ordinarily,
the accused have
option to seek com
pounding of the
fence rather than
testing the case
Judgment
Assuming
that the court or
conferred
with the power of
composition
discretion not to com
offence,
such discretion
not be exercised arbi
public
interest compels
authority not to
cept the request
composition of
offence, such a
quest cannot be
COMPOUNDIN
OFFENCE
S. 162, 220(1), 309, 621A
1956
by Sandeep
Advocate
Subros
offences.
provi
com
ordinarily,
the accused have
option to seek com
pounding of the of
fence rather than con
and
Judgment
uming
that the court or the
conferred
with the power of
composition has
com
offence,
can
arbi
public
such
authority not to ac
cept the request for
offence, such a re
quest cannot be re
ING
OFFENCE
621A
1956
Suri,
Advocate
Subros
offences.
provi-
com-
ordinarily,
an
option to seek com-
of-
con-
and
Judgment
uming
the
conferred
with the power of
has
com-
offence,
can-
arbi-
public
such
ac-
for
an
re-
re-
G
621A
Suri,
Advocate
offences.
-
-
ordinarily,
an
-
-
-
and
Judgment
uming
the
conferred
with the power of
has
-
offence,
-
-
public
such
-
for
an
-
-
G
621A
Subros
Cheque Bouncing
Liability of Directors
Negotiable Instruments Act, 1881 (26 of 1881) Section 138, 141 - Com-
plaint against all Directors of a company - Who are not signatories in the
cheques - There could be a case where the High Court may feel that filing of
the complaint against all Directors is abuse of the process of court - The
High Court would be justified in such cases in quashing the complaint after
looking into the material furnished by the accused - At that stage there
cannot be a mini trial or a roving inquiry - The material on the face of it
must be convincing or uncontroverted or there must be some totally ac-
ceptable circumstances requiring no trial to establish the innocence of the
Directors -Conclusions.
SUPREME COURT OF
INDIA
GUNMALA SALES PRI-
VATE LTD VERSUS ANU
MEHTA
Held, that there could be a
case where the High Court
may feel that filing of the
complaint against all Direc-
tors is abuse of the process
of court. The High Court
would be justified in such
cases in quashing the com-
plaint after looking into the
material furnished by the
accused. At that stage there
cannot be a mini trial or a
roving inquiry. The material
on the face of it must be
convincing or uncontroverted
or there must be some totally
acceptable circumstances
requiring no trial to establish
the innocence of the Direc-
tor. We may summarize our
conclusions as follows: a)
Once in a complaint filed
under Section 138 read with
Section 141 of the NI Act
the basic averment is made
that the Director was in
charge of and responsible for
the conduct of the business
of the company at the rel-
evant time when the offence
was committed, the Magis-
trate can issue process
against such Director; b) If a
petition is filed under Section
482 of the Code for quashing
of such a complaint by the
Director, the High Court
may, in the facts of a particu-
lar case, on an overall reading
of the complaint, refuse to
quash the complaint because
the complaint contains the
basic averment which is
sufficient to make out a case
against the Director. c) In the
facts of a given case, on an
overall reading of the com-
plaint, the High Court may,
despite the presence of the
basic averment, quash the
complaint because of the
absence of more particulars
about role of the Director in
the complaint. It may do so
having come across some
unimpeachable, uncontro-
vertible evidence which is
COMPANY Cheque Bouncing
Subros
beyond suspicion or doubt or
totally acceptable circum-
stances which may clearly
indicate that the Director
could not have been con-
cerned with the issuance of
cheques and asking him to
stand the trial would be
abuse of the process of the
court. Despite the presence
of basic averment, it may
come to a conclusion that no
case is made out against the
Director. Take for instance a
case of a Director suffering
from a terminal illness who
was bedridden at the relevant
time or a Director who had
resigned long before issuance
of cheques. In such cases, if
the High Court is convinced
that prosecuting such a
Director is merely an arm-
twisting tactics, the High
Court may quash the pro-
ceedings. It bears repetition
to state that to establish such
case unimpeachable, uncon-
trovertible evidence which is
beyond suspicion or doubt or
some totally acceptable
circumstances will have to be
brought to the notice of the
High Court. Such cases may
be few and far between but
the possibility of such a case
being there cannot be ruled
out. In the absence of such
evidence or circumstances,
complaint cannot be
quashed; d) No restriction
can be placed on the High
482 of the Code. The High
Court always uses and must
use this power sparingly and
with great circumspection to
prevent inter alia the abuse
of the process of the Court.
There are no fixed formulae
to be followed by the High
Court in this regard and the
exercise of this power de-
pends upon the facts and
circumstances of each case.
The High Court at that stage
does not conduct a mini trial
or roving inquiry, but, noth-
ing prevents it from taking
unimpeachable evidence or
totally acceptable circum-
stances into account which
may lead it to conclude that
no trial is necessary qua a
particular Director.
reported as (2014-4)176 PLR
736
--------------
“As is
where is
basis”
PUNJAB AND HARYANA
HIGH COURT
ATUL MODI versus STATE
BANK OF INDIA
Auction purchaser – “ As is
where is basis” - Calling
upon the petitioner, an
auction purchaser, to pay all
statutory dues and any other
dues on the property, ex-
penses relating to stamp
duty, Registration Charges,
Conveyance, Lawyers fees
etc. as per the conditions of
the auction notice - Property
is being sold on “As is
where is basis” and “As is
what is basis” - There was
specific condition that all
statutory dues payable and
“other dues” will be paid by
the auction purchaser -
When condition in the
advertisement was specific
that all dues shall be payable
by the auction purchaser -
The duesof the HSIIDC have
“first charge” even in terms
of communication - Cannot
dispute the claim of
enhanced compensation.
(2015-1) PLR 584
COMPANY As is where is
Subros
NEGOTIABLE INSTRUMENTS ACT
The apex court in the case of Dashrath Rupsingh
Rathod v. State of Maharashtra & Anr. (2014) 9 SCC
129 = (2014-4)176 P.L.R. 77 (S.C.) had held on the
point of jurisdiction, qua cheque bouncing cases
under section 138, that only the court where the
account of the person issuing the cheque is situ-
ated shall have jurisdiction in the matter and had
ordered for the return of all complaints to be pre-
sented in the court of competent jurisdiction.
The present case arises out of AT PAR cheques
and the court has been pleased to order that the
complaint shall not be returned in the interim.
Matter referred to another 3 judge bench.
The Hon’ble Apex court in for Special Leave to Appeal (Crl.) No(s). 134-170/2015, arising
out of impugned final judgment and order dated 16/12/2014 passed by the Hon’ble High
Court of Delhi at New Delhi in 37 Crl. M.C. No. 4407/14, 4731/14, 4534/14 to 4568/14, in
case titled M/S GOYAL MG GASES PVT. LTD. v. IND SYNERGY LTD. in terms of its
order dated 13/01/2015 upon hearing the counsel the Court
“ In view of the judgment rendered in Dashrath Rupsingh Rathod vs. State of Maharashtra & Anr. (2014) 9 SCC 129 which is a decision by a Bench of three learned Judges, it appears, the same has not been brought to the notice of the Bench of an- other three learned Judges in Yogendra Pratap Singh vs. Savitri Pandey & Anr. (2014) 10 SCALE 723. We are, therefore, of the view that the matter should be heard by another Bench of three learned Judges. There shall be interim stay of the impugned order in Crl. M.C. No. 4407/14, 4731/14, 4534/14 to 4568/14. In the meantime, the petitioner may refile the complaint which the Magistrate will keep it on record, though may not proceed with the matter until further orders.”
Negotiable Instruments Act
Dashrath Rupsingh Rathod
Transfer stayed
Matter referred to another 3 judge bench
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