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A substantial question of law arises when it has a material bearing on the rights of the parties involved and is not covered by specific provisions of law or settled legal principles: Supreme Court

The Judgment analyzed in this blog revolves around the interpretation of the Commissioner’s order and its implications on the ownership of the disputed land. The dispute primarily concerns the land comprised in Sy. No. 3, where the plaintiff asserts their title based on the grant of occupancy rights to their predecessor-in-interest, while the defendant claims ownership through a separate transaction and subsequent grant of occupancy rights. The central question is whether the Commissioner’s order, as interpreted by the lower courts, conclusively establishes the plaintiff’s better title to the land.

The case, P. Kishore Kumar versus Vittal K Patkar [CIVIL APPEAL NO. 7210 OF 2011 ]originated in the Trial Court where the plaintiff filed a suit seeking a declaration of title and permanent injunction against the defendant regarding the disputed land. The Trial Court, after examining revenue records and the Commissioner’s order, ruled in favor of the plaintiff, decreeing them as the absolute owner of the disputed property. However, the defendant, aggrieved by the Trial Court’s decree, appealed to the District Court under Section 96 of the CPC.

The first appellate court overturned the Trial Court’s decision, emphasizing the absence of an Inam grant in favor of the plaintiff’s vendor and dismissing the reliance solely on revenue records. The court noted the absence of the order dated March 24, 1959, referred to by the plaintiff. Dissatisfied with this decision, the plaintiff then pursued a second appeal before the Karnataka High Court.

The High Court, in its judgment, framed a substantial question of law regarding the lower appellate court’s failure to consider certain evidences and admissions made by the defendant. It interpreted the Commissioner’s order in favor of the plaintiff’s vendor, relying on the exhibited revenue records. Despite acknowledging discrepancies with the Act, the High Court upheld the Trial Court’s decree, affirming the plaintiff’s better title.

The present petition before the Supreme Court is an appeal against the High Court’s judgment and decree. The appellants challenge the High Court’s interpretation of the Commissioner’s order, arguing that it erroneously favored the plaintiff’s title despite inconsistencies with the provisions of the Act. They contend that the lower courts erred in relying solely on revenue records and failing to adequately consider all relevant evidence and legal provisions. The appellants seek a reversal of the High Court’s decision and a declaration of their ownership rights over the disputed land.

Firstly, the court emphasized the importance of distinguishing between a mere question of law and a substantial question of law in the context of entertaining a second appeal under section 100 of the CPC (Code of Civil Procedure). It highlighted that a substantial question of law arises when it has a material bearing on the rights of the parties involved and is not covered by specific provisions of law or settled legal principles. Additionally, it arises when the lower court decision violates settled legal principles (Section 100, CPC).

Secondly, the court delved into the interpretation of sections 9 and 9A of the Act, which pertained to the rights of Inamdars and tenants in respect to the vesting of land. It emphasized that only tenants or Inamdars could make an application for occupancy rights under these sections. The court examined the Commissioner’s order, which denied occupancy rights to the plaintiff’s vendor, indicating that the plaintiff’s claim lacked merit under section 9A of the Act.

Thirdly, the court addressed the evidentiary value of revenue records in determining title. It cited precedents to establish that revenue records, including mutation entries, do not confer or extinguish title and cannot be relied upon as conclusive evidence of ownership (Sawarni vs. Inder Kaur, Balwant Singh & Ors vs. Daulat Singh, Jitendra Singh vs. State of Madhya Pradesh and others).

Fourthly, the court scrutinized the sale deeds presented by both parties. It found that the defendant’s sale deed, supported by the Commissioner’s order granting occupancy rights, carried more weight than the plaintiff’s sale deed, which lacked such support.

Fifthly, the court discussed the principle of caveat emptor, highlighting the buyer’s duty to diligently investigate the title of the property being purchased. It noted the plaintiff’s failure to fulfill this duty by not examining the Commissioner’s order.

Finally, based on the analysis of these issues and provisions of law, the court held that the Trial Court erred in decreeing the suit in favor of the plaintiff. The first appellate court’s decision to dismiss the suit was upheld as it correctly interpreted the Commissioner’s order and considered the evidence presented. The High Court’s decision to reverse the first appellate court’s findings was deemed erroneous, and the plaintiff’s suit was consequently dismissed. The court clarified that its decision did not prejudice the plaintiff’s right to pursue any claim concerning another schedule property in the future.

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Worker’s prolonged absence from duty without permission, suggests they have no intention to return to their bank job, thus constituting Voluntary Retirement. : Supreme Court

This judgment revolves around the legality of the workman’s deemed voluntary retirement from service and the subsequent reinstatement order. The central question is whether the disciplinary actions taken against the workman by the Bank were justified and whether his subsequent deemed retirement was valid.

The case, UP Singh versus Punjab National Bank [CIVIL APPEAL NO.5494 OF 2013 ] originated in the trial court, where the workman, employed as a Clerk cum-Cashier with the Punjab National Bank, was suspended on disciplinary grounds in 1982. Following an inquiry, he was found guilty and penalized with a stoppage of increments. However, he was also directed to report to a different branch for duty. The workman failed to comply with this order, leading to his deemed voluntary retirement in 1984 under Clause XVI of the Fourth Bipartite Agreement.

Subsequently, the workman raised a dispute regarding his retirement, which was referred to the Central Government Industrial Tribunal-cum-Labour court in 1991. The Tribunal ruled in favor of the workman, ordering his reinstatement with full back wages and benefits. However, this decision was challenged by the Bank in the High Court of Delhi.

The High Court, upon review, upheld the Bank’s position, setting aside the Tribunal’s award. This decision was then appealed by the workman through an intra-court appeal to the Division Bench of the High Court, which affirmed the Single Judge’s ruling.

Now before the Supreme Court, the workman is impugning the Division Bench’s order, challenging the validity of his deemed retirement and seeking reinstatement with full back wages and benefits. He argues that the disciplinary actions taken against him were unjustified, particularly the order of transfer issued simultaneously with the punishment order, which he claims was beyond the authority of the Disciplinary Authority. Additionally, he contends that his representations and grievances were not adequately addressed by the Bank, leading to his deemed retirement.

Conversely, the Bank argues that the workman’s past conduct, including misbehavior and non-compliance with orders, warranted disciplinary action. They assert that the imposed punishment was lenient considering the circumstances, and the subsequent direction for transfer was justified to maintain discipline within the institution.

The Supreme Court’s decision will thus hinge on a careful examination of the disciplinary proceedings, the validity of the deemed retirement, and the adequacy of the Bank’s actions in addressing the workman’s grievances, while also considering relevant provisions of employment agreements and labor laws.

Firstly, the court acknowledges the undisputed fact that the workman, who had been punished with a transfer and stoppage of increments in 1983, did not challenge the order of punishment or transfer, which consequently became final. The court emphasizes that the workman’s failure to challenge the order signifies his acceptance and duty-bound obligation to comply.

The court highlights Clause XVI of the Bipartite Agreement, which stipulates the conditions under which an employee can be deemed to have voluntarily retired. It underscores that the workman’s continuous absence from duty without proper leave or intention to join work, as well as his pursuit of a legal career, indicate his lack of intent to return to his bank employment.

Moreover, the court scrutinizes the workman’s conduct, citing instances where he deliberately avoided providing his address and attempted to manipulate the situation to his advantage by claiming mental torture and hunger strikes. The court views these actions as indicative of the workman’s attempt to avoid compliance with the bank’s directives while seeking financial benefits.

Despite the bank’s leniency in issuing multiple notices and granting extensions, the workman persistently failed to report for duty, leading the bank to ultimately treat him as having voluntarily retired. The court finds no error in the bank’s actions and upholds the order passed by the High Court, ultimately dismissing the appeal.

In summary, the court’s analysis revolves around the workman’s conduct, the provisions of the Bipartite Agreement regarding voluntary cessation of employment, and the bank’s adherence to due process in addressing the workman’s non-compliance. The court concludes that the bank’s decision to treat the workman as having voluntarily retired is justified based on his actions and upheld the order accordingly.

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Order II Rule 2 of the C.P.C. does not bar a subsequent suit for mesne profits if those accrued profits had not been included in an earlier suit for possession.: Supreme Court

Issue addressed in this judgment revolves around the maintainability of a subsequent suit filed by the respondent-plaintiff for claiming damages for use and occupation of a property, despite not claiming such damages in an earlier suit seeking possession of the same property.

The case, Bharat Petroleum Corporation vs ATM Constructions [S.L.P. (C) NO. 8292 OF 2021] originated in the Trial Court, where the respondent-plaintiff filed a suit in January 2006 seeking possession of a property from the appellants-defendants, whose lease had expired in 1997. Despite the expiration of the lease, the appellants failed to vacate the premises. The first suit primarily sought possession of the property, overlooking the claim for damages for use and occupation.

During the pendency of the first suit, the respondent-plaintiff filed another suit in January 2020, seeking liquidated damages for the period from 1998 until 2019, along with future damages from 2020 until the date of handing over vacant possession of the property. The appellants challenged this subsequent suit by filing an application under Order VII Rule 11(d) of the Civil Procedure Code (C.P.C.) in the High Court, seeking rejection of the plaint.

The High Court dismissed the application, prompting the appellants to appeal to the Supreme Court. The appellants contested the maintainability of the subsequent suit, arguing that the relief for damages for use and occupation, which was available but not claimed in the first suit, should be deemed to be omitted. They contended that filing a fresh suit for the same relief was not permissible under law.

Conversely, the respondent-plaintiff argued that there was no bar in filing a separate suit for claiming damages for use and occupation, especially when the earlier suit primarily sought possession of the property. They cited settled legal principles and precedents to support their position that a subsequent suit with a distinct cause of action is maintainable, even if damages were not claimed in the first suit.

The Supreme Court was tasked with adjudicating on the maintainability of the subsequent suit filed by the respondent-plaintiff, considering the interplay of Order II Rule 2 and other relevant provisions of the C.P.C. The central question revolved around whether the subsequent suit was barred under law due to the omission of claiming damages in the earlier suit and whether the principles of res judicata applied in this context.

The respondent-plaintiff claimed absolute ownership of the property, which was originally owned by T. Padmanabhan, T. Sethuraman, and T. Gopinath. The property had been leased to M/s Burma Shell Oil Storage and Distribution Company of India Ltd. until 1997, after which the lease expired. The respondent-plaintiff acquired the property from Mrs. S. Bharwani, who had purchased it at an auction. The appellants-defendants, the successors of the lessee company, were in possession of the property after the lease expired.

In the first suit, filed by the respondent-plaintiff, the claim was for possession of the property only. However, in a subsequent suit filed in 2010, the respondent sought damages for the use and occupation of the property from 1998 onwards, after the lease had expired. The appellants filed an application under Order VII Rule 11(d) of the Civil Procedure Code (C.P.C.) to reject the plaint, arguing that the subsequent suit for damages was not maintainable as it involved a different cause of action from the first suit for possession.

The court upon determining whether the subsequent suit for damages was maintainable considering the difference in cause of action from the first suit for possession examined Order II Rule 2 of the C.P.C., which deals with the joinder of causes of action, and analyzed previous case law on similar matters.

The court referenced the judgment in Ram Karan Singh v. Nakchhad Ahir, where it was held that the cause of action for recovery of possession is not necessarily identical to the cause of action for recovery of mesne profits, and that a claim for mesne profits accrues from day to day. The court also considered the judgment in Sadhu Singh’s case, which ruled that Order II Rule 2 of the C.P.C. does not bar a subsequent suit for mesne profits if those accrued profits had not been included in an earlier suit for possession.

Applying these principles to the present case, the court held that the subsequent suit for damages for use and occupation of the property was maintainable. It reasoned that possession and damages for use and occupation are two different causes of action, and since the claims involve different considerations for adjudication, the second suit was permissible. The court dismissed the appeal, affirming the lower court’s decision to reject the application to reject the plaint.

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Supreme Court Verdict: Upholding Equity in Selection of Female Officers for Promotion in Indian Army

The current case before the Supreme Court of India concerns the promotion of female officers in the Indian Army to the rank of Colonel by selection.

The dispute concerns the promotion of women officers in the Indian Army to the rank of Colonel by selection. Following a prior court decision in the case of Nitisha vs. Union of India, these women officers were granted Permanent Commissions (PC).
However, their non-promotion by the Special No. 3 Selection Board (SB) became a point of contention. The core of the issue is that the women officers’ recent Confidential Reports (CRs) were not properly examined throughout the promotion process.
The female officers claimed that they were unjustly compared to their male counterparts from previous batches. They claimed that the Army authorities had breached both the policy framework and the spirit of the Nitisha ruling.

The Hon’ble Bench of Justice Dr Dhananjaya Y Chandrachud, Justice J B Pardiwala and Justice Manoj Misra stated that We are conscious of the fact that the judgment in Nitisha deals with the grant of PC, whereas in the present case the Court is concerned with the empanelment of officers who are granted PC for promotion as Colonels by selection. In that regard, the policy framework which has been set out by the letter dated 7 October 2002 which has been set out in the earlier part of this judgment makes it abundantly clear that CRs after nine years’ reckonable service was required to be taken into consideration. Subsequently, after the Quantitative Assessment System came into existence, it was clarified by the policy circular dated 17 March 2011 that the consideration of CRs for various SBs will be as per the policy in vogue at the time of consideration. The policy circular dated 23 December 2017 indicates the primacy which is attributed to CRs, which carry 89 out of a total of 100 marks. This indicates the importance of a correct evaluation and reckoning of the CRs since it forms the basis of promotion which is being considered by Special No 3 SB. The policy document of 31 October 2013 stipulates that the cut off CRs in respect of officers of batch will be promulgated by the MS Branch before the conduct of the Selection Board. In the counter affidavit which has been filed by the Army authorities, it has been specified that for the purpose of the work of Special No 3 SB, an officer is granted three looks, namely, the first look, the first review and the second review. Consequently, it has been stated that if all the CRs up to date were to be considered in the first look itself, the purpose of having a second look and a final review would be rendered otiose. We are in agreement with this logic. However, this would have perhaps justified the authorities to exclude the last CR which could have been considered at the final look and the CR prior to that, which could be considered at the stage of the first review. However, as the chart which we have annexed earlier indicates, a cut off was applied arbitrarily in the present case ostensibly to equate the women officers with their male counterparts. The arbitrariness of the cutoff is evident from the fact that the CRs for several years were kept out of reckoning altogether. A stray sentence in the judgment of this Court in Nitisha cannot be torn out of context. We are constrained to observe that the attitude has been to find some way to defeat the just entitlement of the women officers. Such an approach does disservice to the need to provide justice to the women officers who have fought a long and hard battle before this Court to receive their just entitlement under the law. Even after the judgment in Nitisha, the women officers have been compelled to move this Court repeatedly for the realization of their rights. An alternate ground has been sought to be raised on behalf of the Army authorities to the effect that adequate vacancies were not available for accommodating the officers. In this regard, it is common ground that in an earlier order dated 21 November 2022, the Court recorded the statement of the Army authorities that as many as 150 vacancies were to be made available pursuant to the judgment of this Court in Nitisha. Admittedly, as the counter indicates 108 vacancies have been filled up. The ground of the unavailability of vacancies would therefore not be available at this stage. We are, therefore, clearly of the view that the manner in which the applicants have been denied empanelment for the post of Colonel on a selection basis is arbitrary. Besides being violative of the fundamental principles of fairness embodied in Article 14 of the Constitution, the whole approach has been contrary to both the judgment of this Court in Nitisha as well as the applicable policy framework laid down by the Army authorities.  We accordingly order and direct that: (i) A fresh exercise of reconvening Special No 3 SB shall be conducted no later than within a fortnight from the date of this order for all the women officers who were considered by the earlier Special No 3 SB (except for those officers who have already been empanelled); (ii) In the course of Special No 3 SB to be convened in pursuance of the above direction, the Attorney General states that a common cut off of June 2021 shall be taken into reckoning in order to obviate any controversy; (iii) Since during the pendency of these proceedings, one of the officers, Colonel (Time Scale) Asha Kale has retired, her case shall also be considered on a similar footing; and Those officers who have already been empanelled or promoted as Colonels, shall not be disturbed or affected in any manner nor will their seniority be affected by the implementation of these directions. The Miscellaneous Applications are accordingly disposed of.  Pending applications, if any, stand disposed of.

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Supreme Court Decision: Clarifying Adjudicating Authority Limits and Upholding Commercial Rationality in Insolvency Proceedings

ACIL, a manufacturer of precision engineering and vehicle components such as crankshafts and connecting rods, went through a Corporate Insolvency Resolution Process (CIRP) launched by IDBI Bank Limited. Mr. Ravindra Loonkar was appointed Interim Resolution Professional and then confirmed as Resolution Professional (RP) by the NCLT. Despite a total claim of about Rs. 1,830 crores, the accepted claim in the CIRP was Rs. 1,782 crores. The RP launched many rounds of Expressions of Interest, with the appellant-Resolution Applicant submitting multiple Resolution Plans, which culminated in a final proposal on August 5, 2019. This final plan, agreed by the Committee of Creditors (CoC) with an 88.56% majority vote, requested a financial payout of Rupees 129.5 crores, with an upfront payment of Rupees 80.44 crores to Financial. Creditors (FCs), and procedures for carrying forward losses under the Income Tax Act. However, on September 1, 2021, the adoption of the Resolution Plan was placed on hold for clarification on asset valuation. The appellant appealed this decision to the NCLAT, which upheld the NCLT’s decision, resulting in case before Supreme Court 

The Hon’ble bench of Justice Vikram Nath and Justice Ahsanuddin Amanullah  at Supreme Court delivered the verdict stating that In the case at hand, we find that there was no occasion before the Adjudicating Authority NCLT to be swayed only on the per se ground that the hair-cut would be about 94.25% and that it 35 was not convinced that the fair value of the assets has been projected in proper manner as the bid of the appellant was very close to the fair value of the assets of ACIL. Ordering revaluation of the assets, by the OL, Ministry of Corporate Affairs, Government of India, in-charge of the particular area, cannot be justified. As explained in Innovative Industries Ltd. v ICICI Bank, (2018) 1 SCC 407 and Swiss Ribbons Private Limited v Union of India, (2019) 4 SCC 17, the Code was specifically introduced by Parliament for ensuring quick and time-bound resolution of insolvency of corporate entities in financial trouble, by first attempting to revive the Corporate Debtor, failure whereof would entail liquidation of the Corporate Debtor’s assets, and no unnecessary impediment should be created to delay or derail the CIRP. In the present case, both the NCLT and NCLAT erred to fully recognise that under the Resolution Plan, the Corporate 36 Debtor was set to be revived and not liquidated. Thus, the minimum mandatory component in the Resolution Plan was only a reflection of the actual money, including upfront payment, which would go towards the FC(s). As discussed previously, the final Resolution Plan provided for the monetization proceeds of the land as also the avoidance amounts to go to the FC(s) of the Corporate Debtor.  At this juncture, it also cannot be lost sight of that it is for the FC(s) who constitute the CoC to take a call, one way or the other. Stricto sensu, it is now well-settled that it is well within the CoC’s domain as to how to deal with the entire debt of the Corporate Debtor. In this background, if after repeated negotiations, a Resolution Plan is submitted, as was done by the appellant (Resolution Applicant), including the financial component which includes the actual and minimum upfront payments, and has been 37 approved by the CoC with a majority vote of 88.56%, such commercial wisdom was not required to be called into question or casually interfered with. Surprisingly, the discussion in both orders is wanting, except for the difference in the figure of the total outstanding dues and the amount of money which the appellant was to put up initially for taking over the Corporate Debtor, for this Court to understand as to what other reasons, grounded in the Code’s provisions, compelled the Adjudicating Authority-NCLT to embark upon the novel path of ordering revaluation by the OL. At the cost of repetition, nobody had moved before the NCLT or raised any objection challenging the Resolution Plan pending approval. Even the NCLAT has only indicated that when “figures of crores” are emerging stage-wise, “then there is no harm to look at the Expert opinion”, which the Adjudicating Authority-NCLT in this case has asked for.  It is worthwhile to note that the Adjudicating Authority has jurisdiction only under Section 31(2) of the Code, which gives power not to approve only when the Resolution Plan does not meet the requirement laid down under Section 31(1) of the Code, for which a reasoned order is required to be passed. We may state that the NCLT’s jurisdiction and powers as the Adjudicating Authority under the Code, flow only from the Code and the Regulations thereunder. It has been held in Jaypee Kensington Boulevard Apartments Welfare Association v NBCC (India) Limited, (2022) 1 SCC 401: ‘273.1. The adjudicating authority has limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by Sections 30(2) and 31 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the Committee of Creditors. If, within its 39 limited jurisdiction, the adjudicating authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Code and exposited by this Court.’ (emphasis supplied) 32. From the assistance rendered and the judicial precedents brought to notice, it is clear that the order dated 01.09.2021 by the NCLT cannot withstand judicial scrutiny, either on facts or in law. There may have been a situation where due to glaring facts, an order of the nature impugned herein could be left untouched and this Court would have refrained from interference, but only if detailed reasoning, disclosing the facts for being persuaded to embark on such path, were discernible in the order dated 01.09.2021, which unfortunately is cryptic and bereft of detail. Recording of reasons, and not just 40 reasons but cogent reasons, for orders is a duty on Courts and Tribunals. In the recent past, from Kranti Associates Private Limited v Masood Ahmed Khan, (2010) 9 SCC 496 to Manoj Kumar Khokhar v State of Rajasthan, (2022) 3 SCC 501, the clear position in law is that a Court or even a quasi-judicial authority has a duty to record reasons for its decision. Needless to add, ‘Reason is the heartbeat of every conclusion. Without the same, it becomes lifeless.’ 15 That apart, the order of the NCLT dated 01.09.2021 suffers from a jurisdictional error, as in the facts that prevailed, it was not entitled to pass the direction that it did. 33. Under the circumstances, while this Court could have adopted the course of remanding the matter back to the NCLT for fresh/de novo consideration, but being conscious of the fact that such course would impede quick resolution 15 Raj Kishore Jha v State of Bihar, (2003) 11 SCC 519. 41 as the CIRP is in a stalemate right from 01.09.2021 and after having applied our minds to the factual aspects also, we do not find that remand for consideration afresh, now, would serve the purpose of justice or aid the objects of the Code. Accordingly, and for all the reasons afore[1]stated, this appeal stands allowed. The order dated 01.09.2021 of the NCLT and the Impugned Judgment dated 19.01.2022 of the NCLAT are set aside. The NCLT will pass appropriate orders in terms of this judgment, on the Approval Application, being I.A. No.1636 of 2019 in CP(IB) No.170(PB)/2018, within three weeks from the date of production of a copy of this judgment. Pending avoidance application(s) on the file of the NCLT in connection herewith shall proceed on their own merits, but with expedition. No order as to costs. Insofar as the pending Interlocutory Applications herein are concerned, they are dealt with below: a. I.A. No.25463/2022: Does not survive in view of the decision in the appeal; disposed of. b. I.A. No.25464/2022: Does not survive in view of the decision in the appeal; disposed of. c. I.A. No.185233/2022: Wrongly shown as pending in the order sheet; already disposed of vide order dated 17.04.2023. 36. Insofar as Mr. Singh’s submissions that this Court may not exclude from the NCLT’s ambit any power to direct re-valuation, we have given our anxious thought to the same. Our view is that while certainty in law and legal principles is the obvious aim, the law is to be applied in the context of the facts. If a matter where the facts are stark comes to light, the same would have to necessarily be dealt with by the NCLT within the four corners 43 of the Code itself, having due regard to the extant circumstances. It is for the NCLT to exercise power strictly within the domain permitted by the Code. In this behalf, one may peruse the decisions in Embassy Property Developments Private Limited v State of Karnataka, (2020) 13 SCC 308 and Gujarat Urja Vikas Nigam Limited v Amit Gupta, (2021) 7 SCC 209.

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