Roles of directors must be specified if allegations are made holding them liable for the conduct of the company: High Court of Telangana

The Hon’ble Justice B. Vijaysen Reddy judged a case dealing with section 138 of the Negotiable Instruments Act, where he held that “Mere assurance of payment or selection of jewelry cannot be the basis to rope in the petitioners. It is vaguely stated in the complaint that the petitioners are directors and responsible for the day-to-day affairs of the A1 company. But in the given facts and circumstances of the case and particularly the uncontroverted claim of the petitioners that they are household ladies, this Court is of the opinion that vague and omnibus against the petitioners/directors as being responsible for the day-to-day affairs of A1 company is not sufficient. Mere verbatim reproduction of the words contained in Section 141 of the Negotiable Instruments Act without any specific role attributed to each of the petitioners in the A1 company, cannot be the basis to prosecute the petitioners, as the same would unjust and result in abuse of process of law”. This case was Smt. Akkinapalli Sujatha & others Vs. The State of Telangana [CRIMINAL PETITION No.8231 of 2011]


Brief facts of the case are, the complainant is a wholesale dealer in gold. A1 is the jewelry shop. A2 is the Managing director of A1. A3 to A9 are the directors of the company. A2 to A9 visited the complainants shop to do business transactions. They shopped for Rs. 25,49,121. They paid through 2 cheques; one worth Rs. 4,75,000/- and the other Rs.20,74,121/-. Both these cheques were dishonoured. The complainant sent a statutory notice to A1 to A9 which was returned with an endorsement ‘not claimed’. He then filed a case before the Hon’ble High Court.

The counsel for the petitioners contends that A3-A9 have resigned from A1 company. Furthermore, since A2 has signed on these cheques, he must be held liable for such a dishonour. After hearing both the counsels, the High court observed that occupation in the cause title of the petition of the petitioners No. 5,7,8 and 9 was ‘house wife’. The learned judge was of the opinion that “though allegations are made against all the petitioners that they have selected the jewelry and assured payment to complainant, such facts are not relevant to prosecute them for the offence under Section138 read with Section 141 of the Negotiable Instruments Act. The petitioners are neither signatory of the cheques nor in any way responsible for issuance of the subject cheques. Accused No.2 is said to be the Managing Director, who signed the cheques.”  

The court placed heavy reliance on National Small Industries Corporation v. Harmeet Singh Panital [(2010) 3 SCC 330] wherein the supreme court held that, “It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.”

The court allowed the criminal petition and quashed the proceedings in CC.No.1011 of 2010 on the file of the II Additional Chief Metropolitan Magistrate, Hyderabad, against the petitioners/accused Nos.5, 7, 8 and 9.

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Constitution confers an equal right upon all the qualified individuals to seek employment to public offices through Articles 14, 16 and 309: The High Court of Delhi

Adherence to the rule of equality in public employment is a basic feature of our Constitution and since the rule of law is the core of our Constitution, a court would certainly be disabled from passing an order upholding a violation of Article 14 or in ordering the overlooking of the need to comply with the requirements of Article 14 read with Article 16 of the Constitution. Therefore is necessary to hold that unless the appointment is in terms of the relevant rules and after a proper competition among qualified persons, the same would not confer any right on the appointee. The aforementioned has been laid down by the Apex Court in the case of Secretary, State of Karnataka & Ors. v. Uma Devi & Ors.; (2006) 4 SCC 1 has laid the premise by the Delhi High Court to be followed in the case of Saroj Kumar Nayak & Ors v. Tribal Cooperative Marketing Development Federation on India Limited [W.P.(C) 5453/2020, CM Nos. 19659/2020 & 340/2021] which was decided by a single judge bench comprising Justice V. Kameswarrao on 21st June 2021.

The facts of the case are as follows. The petitioners were appointed as senior assistants and junior assistants. Though, the appointments were with the nomenclature “on contract basis” but for all purposes it was a regular appointment except the fact that the remuneration that is being paid, is not that of a regular appointee. In 2019, the respondent gave an advertisement to fill up various posts on direct recruitment basis. It is their case that as they are eligible and have been performing their duties sincerely / diligently hence are entitled to be regularized on the posts on which they are working. It was also stated that an advertisement had been issued on November 15, 2019 against which petitioner Nos.1, 4, 5, 6 and 7 had applied for the posts of Deputy Manager, Senior Accountant and Sales Executive. Consequent upon completion of all the procedure, the final result of the direct recruitment process and Computer Based Tests (‘CBT’ for short) were announced on March 23, 2021, wherein it was found except Deepak Kumar who has been shortlisted in the waiting list category for the post of Sales Executive, none of the other petitioners are successful in the selection process. The counsels from both the sides relied on several judgments to prove their side of the contention.

The court conducted an in depth perusal of the facts and arguments presented in the case. The court relied on the judgment passed in the case of Secretary, State of Karnataka & Ors. v. Uma Devi & Ors.; (2006) 4 SCC 1 which upheld that public appointment has to be in terms of the constitutional scheme, on regular basis and also following the recruitment rules.it laid emphasis to the rule of equality while addressing such issues of public employment. It outrightly declared the judgments relied upon by the petitioners as being redundant in the instant case. It declared that there exists no merit in the instant case and stated that “I am afraid that such a submission cannot be accepted in view of my discussion above based on the judgment of the Supreme Court in Secretary, State of Karnataka & Ors. (supra) and also the fact that the petitioners 1, 4, 5, 6 and 7 having applied for appointment to various posts pursuant to a notification of 2019 and being unsuccessful (except one petitioner who is in waiting list), the reliefs as prayed cannot be granted. Suffice to state, the Judgments relied upon are distinguishable on facts. 35. In view of my discussion above, I find the contesting petitioners are not entitled to any relief. There is no merit in the petition, the same is dismissed.”

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Section 12 of Employee’s Compensation Act imposes the liability of payment of compensation on the principal: The High Court of Delhi

If a person suffers an accident during the course of his employment while undertaking an activity concerned with the same, the employer of the aggrieved person is liable to compensate his employee after taking into consideration several factors including the age, the minimum wages and the disability certificate issued by a competent authority. The aforementioned has been upheld by the Delhi High court in the case of M/S Anshul Traders v. The Commissioner, Labour Welfare Centre and Anr. [FAO 193/2019 & CM APPLs.17224/2019, 43531/2019, 26992/2020 & 30265/2020] which was decided by the single judge bench comprising Justice J.R. Midha on 18th June 2021.

The facts of the case are as follows. Ram Krishan, a labourer, aged 22, employed under Anshul Traders and was posted on a truck. In 2016, when he was driving the vehicle, the upper portion of the goods loaded on the vehicle came in contact with transmission line of the electricity department due to which he was electrocuted and he suffered injuries on the right leg and his right shoulder and his right leg was amputated; he was employed on the vehicle and the accident arose out of and during the course of his employment; he suffered 100% disability and claimed compensation for permanent disablement along with interest @12% per annum from the date of accident till realization and penalty to the extent of 50%.  Ram Kishan filed an application dated 29th January, 2018 under Order I Rule 10 read with Order VI Rule 17 of Code of Civil Procedure to implead the registered owner of the vehicle, namely Gagan and United India Insurance Company Ltd. as respondents No.2 and 3. However, this petition was dismissed and he was awarded a compensation of Rs. 7,11,614/- The Commissioner, Employee’s Compensation further awarded penalty on Anshul Traders to pay an amount equal to 10% of the principal amount of compensation, i.e. Rs.71,161/-. This order was challenged by the appellant in the instant appeal.

Learned counsel for Anshul Traders urged at the time of the hearing that the offending vehicle bearing No. HR-55-F-6511 was validly insured with United India Insurance Company Ltd. and therefore, the liability to pay the compensation is of United India Insurance Company Ltd. under the policy. Ram Kishan has also challenged the order dated 12th October, 2018 on various grounds inter-alia that the Commissioner, Employee’s Compensation took the permanent disability as 70% whereas it should have been taken as 100% and the penalty of 10% be enhanced to 50%.

After a perusal of the facts and arguments the court was of the opinion that “Ram Kishan has been rightly compensation as Anshul himself admitted the accident and employment of Ram Kishan In that view of the matter, this Court upholds the impugned order dated 12th October, 2018 insofar as the Commissioner, Employee’s Compensation has awarded the compensation of Rs.7,11,614/- along with simple interest @ 12% per annum from 23rd June, 2016 and penalty of 10%.” It also remanded the case back to the Commissioner to adjudicate upon the matter of the validity of the insurance claim and penalty being 50%.

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Neither Merchant nor Trader as words has been defined in the act, thus their ordinary meaning in commercial world should be referred. : Calcutta High Court

Neither the word ‘merchant’ nor the word ‘trader’ has been defined in the Act of 2015. The ordinary meaning of such words as understood in the commercial world have to be applied more so since the provisions of the Act of 2015 deals with the commercial dispute said Justice Debangsu Basak of the Calcutta High Court in the matter South City Projects (Kolkata) Ltd vs Ideal Real Estates Pvt. Ltd [ CS 255 of 2019]

This order was given for the facts where the plaintiff has filed this action against the defendant in order to recover money lent and advanced. On May 30, 2017, the plaintiff lent and advanced Rs. 5 crores to the defendant. The defendant agreed to pay interest at the rate of 15% per year. As of March 31, 2018, the defendant issued a balance confirmation acknowledging the principal amount lent and advanced as well as the interest payable thereon. The defendant’s balance confirmation established the principal amount that the plaintiff had lent and advanced to the defendant, as well as the agreed rate of interest, which was 15% per annum. For the transaction, the defendant issued a tax deducted at the source certificate. According to the plaintiff, because the defendant was unable to repay the amount advanced despite repeated demands from the plaintiff, the parties agreed that the defendant would pay interest at a rate of 15% per annum with quarterly rests beginning October 1, 2018. According to the plaintiff, it raised and submitted invoices to the defendant for the interest component at the agreed-upon rate of 15% per annum, with quarterly rest with the defendant.

The defendant has denied that it agreed to pay interest at a rate of 15% per year with quarterly rests beginning October 1, 2018. The defendant acknowledged receipt of the sum of Rs. 5 crores as financial accommodation on the agreement and understanding that the plaintiff would be entitled to interest at the rate of 15% per annum on such loan in the affidavit filed by the defendant affirmed on December 15, 2020. The defendant has also claimed that such interest violated the provisions of the Bengal Money Lenders Act of 1940.

The defendant’s balance confirmation, dated March 31, 2018, acknowledged a sum of Rs. 5,62,87,671 to be due and payable by the defendant to the plaintiff. Such balance confirmation includes an interest component at a rate of 15% per year. According to the balance confirmation signed by the defendant, the defendant agreed to pay interest at the rate of 15% per year. The defendant had paid a total of Rs. 3 crores from April 1, 2018, until the filing of the suit, as well as Rs. 30 lakhs after the filing of the suit. As a result, after deducting Rs. 3.3 crores from the total amount of Rs. 5,62,87,671, the defendant owes the plaintiff Rs. 2,32,87,671. The defendant’s most recent payment was made on January 10, 2019. On the merits, the defendant has not revealed any defence to the claim for Rs. 2,32,87,671 plus interest at the rate of 15% per annum. As a result, it would be appropriate to enter a decree in favour of the plaintiff for Rs. 2,32,87,671 plus interest at the rate of 15% per annum from January 11, 2019, until realisation. “The plaintiff’s balance claim for interest and principal is left open to be decided at the trial of the suit.

As the compared  wording in the Insolvency and Bankruptcy Code, 2016, and the Act of 2015.” In this regard, he cited 2019 volume 4 Supreme Court Cases 17 (Swiss Ribbons Private Limited v. Union of India). 

Referring to 1977 volume 2 Supreme Court cases 424 Mannalal Khetan & Ors. v. Kedar Nath Khetan & Ors. learned senior advocate has also “submitted that the loan transaction is beyond the plaintiff’s Memorandum of Association and thus ultra vires the plaintiff’s objects clause.”

The disputes in the present case can be held to fall within Section 2(1)(c)(i) of the Act of 2015. As stock in trade, a real estate developer will have developed flats. While such a developer sells the flats in its inventory, it is a trader or merchant of such flats. In the ordinary course of business, one real estate developer lent and advanced money to another real estate developer. Both are free of any legal impediments that would prevent them from entering into the transaction. The facts and circumstances of each case determine whether the dispute involved in the suit is a “commercial dispute” within the meaning of the Act of 2015. In Swadha Builders Private Limited (supra), the Court transferred the suit to the Commercial Division under Section 15 of the Act of 2015. Following Ambalal Sarabhai’s (supra) decision of giving a restrictive interpretation to the words used in Section 2 (1)(c)(i) of the Act of 2015, it cannot be said that the suit does not involve a commercial dispute and is disposed of accordingly.

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Writ petition is not the appropriate remedy when it needs evidence and trial/enquiry: High Court of Jammu and Kashmir at Jammu

The Hon’ble judge, Mr. Justice Sanjeev Kumar decreed, “It is trite that where complicated disputed questions of fact are involved, the determination whereof requires evidence to be led before the prescribed Statutory Authority, it is not prudent to exercise extraordinary jurisdiction. The allegations of misrepresentation and fraud are, admittedly, subtle questions of fact, the determination whereof needs evidence of impeccable character. The determination of such facts and disputes can be better done by the authority concerned” in Dr. Suresh Sharma V. Union Territory of J&K & Ors. [WP(C) No.1100/2021 CM No.4498/2021].

The brief facts of the case are, respondent 3 and 4 are medical officers at the ISM department since 2001 and 2000 respectively. Respondent 3 applied for the RBA category certificate in 2006 and was duly issued to him. Without surrendering such a certificate, the respondent 3 got issued a fresh RBA category certificate in 2008. The same was for respondent 4. The petitioner assailed the validity and sustainability of these RBA certificates through this writ petition filed before the High Court since he feels that that respondent No.3 and 4 have, by concealment of material facts and by playing fraud have obtained category certificates and on the basis thereof have succeeded in getting accelerated promotion.

After listening to the contentions of both the counsels, the learned judge opined that the allegations made by both the parties involve adjudication of complicated disputed facts and to determine the falsity, evidence is required. The onus to prove the falsity and fraud/misrepresentation of the respondents lies with the petitioner. The judge relied on the case Punjab National Bank and others v. Atmanand Singh and others (arising out of SLP(C) No.11603/20217 decided on 6th of May, 2020), where it was held that “ We restate the above position that when the petition raises questions of fact of complex nature, such as in the present case, which may for their determination require oral and documentary evidence to be produced and proved by the concerned party and also because the relief sought is merely for ordering a refund of money, the High Court should be loath in entertaining such writ petition and instead must relegate the parties to remedy of a civil suit. Had it been a case where material facts referred to in the writ petition are admitted facts or indisputable facts, the High Court may be justified in examining the claim of the writ petitioner on its own merits in accordance with law”.  The judge dismissed the petition and allowed the petitioner to find a remedy before the competent forum to judge such a case.

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