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The High Court should not entertain a petition under Article 226 of the Constitution particularly when an alternative statutory remedy is available : SC

Case title: PHR Invent Educational Society v. UCO Bank and Ors

Case no.: Civil Appeal No. ….. of 2024 (Arising out of SLP(C) No. 8867 of 2022)

Order on: 10th April 2024

Quorum: Justice B.R. Gavai, Justice Rajesh Bindal and Justice Sandeep Mehta

FACTS OF THE CASE

The case revolves around a loan availed by the borrower (Dr. M.V. Ramana Rao) from UCO Bank, for which four properties were mortgaged as collateral security. Due to default in repayment, the bank initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

The Bank issued an Auction Sale Notice for the scheduled properties. The borrower challenged this through a securitization application before the Debts Recovery Tribunal (DRT).

Meanwhile, the auction was conducted, and the appellant emerged as the highest bidder. Despite interim orders from the DRT, the borrower failed to comply with payment obligations. Eventually, the sale was confirmed in favor of the appellant.

CONTENTIONS OF THE APPELLANT

The appellant argued against the High Court entertaining the borrower’s writ petition, citing settled law on alternative remedies under the SARFAESI Act. They emphasized the borrower’s conduct, including non-compliance with payment obligations and the finality of the sale in favor of the appellant.

Shri Basant, learned Senior Counsel appearing for the appellant-auction purchaser relied on the judgments of this Court in the cases of,

United Bank of India v. Satyawati Tondon and Other:

The High Court overlooked the settled law that it will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions.

The Court further held that though the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, still it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution.

CONTENTIONS OF THE RESPONDENTS

UCO Bank and others argued for the dismissal of the borrower’s writ petition, emphasizing the availability of statutory remedies under the DRT Act and SARFAESI Act. They highlighted the borrower’s failure to comply with payment obligations and the finality of the confirmed sale.

ISSUE

  • Whether the High Court erred in entertaining the borrower’s writ petition despite the availability of alternative remedies under the SARFAESI Act.
  • Whether the borrower’s conduct disentitles them to equitable relief.

COURT’S ANALYSIS AND JUDGEMENT

The court reiterated settled law that the High Court should not entertain petitions under Article 226 of the Constitution when effective alternative remedies are available. It emphasized the finality of the confirmed sale and the extinguishment of the borrower’s right of redemption. The court found no exceptional circumstances warranting the High Court’s interference. It held that the High Court erred in entertaining and allowing the borrower’s petition and dismissed the same.

The court, while recognizing the High Court’s wide powers under Article 226, stressed the importance of exhausting alternative remedies, especially in matters involving recovery of dues. The judgment upheld the finality of the confirmed sale and the borrower’s failure to avail statutory remedies, ultimately dismissing the borrower’s writ petition.

This case underscores the significance of adhering to statutory procedures and exhausting alternative remedies before seeking recourse through writ jurisdiction, particularly in matters concerning financial obligations and recovery actions.

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Judgement Reviewed by – Chiraag K A

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Police complaint not a prerequisite for providing medical care at Hospitals to a Pregnant minor : Bombay HC

Case title: XYZ v. State of Maharashtra & Ors.

Case no.: Writ Petition (L.) No. 12243 Of 2024

Order on: 10th April 2024

Coram: Justice G. S. Kulkarni & Justice Firdosh P. Pooniwalla

FACTS OF THE CASE

The petitioner, filed a writ petition under Article 226 of the Constitution to safeguard the legal rights and health interests of her 17-year-old daughter, who was approximately seven months pregnant. The daughter, along with her partner (also a minor), asserted that their relationship was consensual and declined to disclose further details.

The petitioner encountered obstacles when attempting to secure medical treatment for her daughter, as healthcare facilities demanded a police complaint, which neither the petitioner nor her daughter intended to file.

CONTENTIONS OF THE PETITIONER

Petitioner’s Counsel advocated for medical treatment without the need for a police complaint. Proposed treatment at Sir J.J. Group of Hospitals and admission to St. Catherine’s Home for the daughter.

CONTENTIONS OF THE RESPONDENTS

State’s Counsel acknowledged the availability of medical treatment at Sir J.J. Group of Hospitals but required an Emergency Police Report (EPR) from the petitioner as a formality.

LEGAL PROVISIONS

Article 21 of the Constitution guarantees a fundamental right to the petitioner’s daughter, to be provided medical treatment, which in no case can be denied to her.

ISSUE

  • Whether medical treatment can be provided without insistence on a police complaint?
  • Is the petitioner’s daughter entitled to medical aid under Article 21 of the Constitution?

COURT’S ANALYSIS AND JUDGEMENT

The court found merit in the petitioner’s argument that denial of medical treatment due to the absence of a police complaint violated the daughter’s fundamental right under Article 21. Despite consensual relations, medical aid cannot be withheld. The court emphasized that medical aid is intrinsic to the right to life and must be accessible to all, irrespective of legal proceedings. Consequently, the court directed:

  • Submission of an EPR by the petitioner for record purposes.
  • Provision of medical treatment at Sir J.J. Group of Hospitals under anonymity.
  • Admission of the daughter to St. Catherine’s Home with confidentiality.
  • Open consideration of adoption for the child.

In conclusion, the court’s judgment prioritized the daughter’s health and well-being while respecting her autonomy and confidentiality.

This case sets a significant precedent reaffirming the fundamental right to medical treatment under Article 21, even in sensitive circumstances.

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Judgement Reviewed by – Chiraag K A

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Delhi High Court Orders Reinstatement of JNU PhD Scholar amidst disciplinary dispute.

Case title: Ankita Singh v. Vice Chancellor of Jawaharlal Nehru University and Ors.

Case No.: W.P.(C) 2805/2024

Decided on: 01.04.2024

Quorum: Hon’ble Justice C Hari Shankar.

FACTS OF THE CASE:

The case involves a petitioner named Ankita Singh, who is a Ph.D. scholar at the Centre for the Study of Social Systems, School of Social Sciences, Jawaharlal Nehru University (JNU). The case revolves around the petitioner’s expulsion from JNU without allegedly following the principles of natural justice or the Statutes governing the procedure. The petitioner has approached the court seeking relief under Article 226 of the Constitution of India.

LEGAL PROVISIONS:

Article 226, The petitioner has sought relief under Article 226, which grants the High Courts the power to issue writs for the enforcement of fundamental rights and for any other purpose.

Principles of Natural Justice, the petitioner claims that her expulsion from JNU violated the principles of natural justice. These principles include the right to be heard, the right to a fair and unbiased decision-maker, and the right to a fair opportunity to present one’s case.

The petitioner alleges that the expulsion was carried out without complying with the Statutes governing the procedure for such actions.

APPELLANTS CONTENTION:

Petitioner contends that her expulsion from JNU was carried out without complying with the principles of natural justice or the Statutes governing the procedure for such actions. She claims that she was not given a fair opportunity to present her case or defend herself against the allegations.

Petitioner argues that the principles of natural justice, which include the right to be heard and the right to a fair and unbiased decision-maker, were not followed during the expulsion process. She asserts that the decision to expel her was made without proper consideration of her side of the story.

Petitioner asserts that despite the availability of alternate forms of redress, such as an appeal under the Statutes governing JNU, the remedy under Article 226 of the Constitution of India should not be foreclosed. She argues that the availability of an alternate remedy should not act as a bar to the exercise of jurisdiction under Article 226.

RESPONDENTS CONTENTION:

The respondents, represented by Ms. Monika Arora, Ld. CGSC, and Adv Mr. Kautilya Birat for UOI, along with Mr. Subhrodeep Saha, Adv. For JNU, raised a preliminary objection to the maintainability of the writ petition. They argued that the petitioner had an alternate remedy of appeal under the Statutes governing JNU.

COURT ANALYSIS AND JUDGMENT:

The Court noted the absence of a counter affidavit from JNU and presumed the assertions in the petition to be correct and untraversed. The Court addressed a preliminary objection raised by JNU’s counsel regarding the maintainability of the writ petition, stating that the petitioner had been granted liberty by the Supreme Court to approach the jurisdictional High Court. Therefore, the Court rejected the objection and allowed the writ petition to proceed under Article 226 of the Constitution of India.

In its judgment, the Court expressed deep concern over the expulsion of Ankita Singh from JNU without apparent compliance with the principles of natural justice or the Statutes governing the procedure for such actions. The Court found the facts of the case to be deeply disturbing and stayed the operation of the impugned office order dated 8 May 2023. As a result, Ankita Singh was ordered to be readmitted to JNU in the same capacity as before, allowing her to continue her course of study pending the outcome of the writ petition. The Court granted JNU four weeks to file a counter affidavit and provided an additional four weeks for the petitioner to file a rejoinder. The case was scheduled to be renotified on 9 July 2024.

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Judgement reviewed by – Ayush Shrivastava

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Calcutta High Court rules to enforce arbitration clause, emphasizing it’s significance and procedures laid in the Arbitration and Conciliation Act.

Case title: M/S Fullerton India Credit Company Limited vs. Manju Khati

Case No.: C.O. No. 3689 of 2015

Decided on: 02.04.2024

Quorum: Hon’ble Justice Prasenjit Biswas

FACTS OF THE CASE:

The case involves a dispute between M/S Fullerton India Credit Company Limited and Ms. Manju Khati. Ms. Khati filed a suit against Fullerton India Credit Company Limited seeking declaration, injunction, and consequential relief. Fullerton India Credit Company Limited, the defendant, filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, along with Section 5 of the Act, requesting to refer the matter to arbitration due to an arbitration clause in their agreement. The Trial Court rejected Fullerton India Credit Company Limited’s application, leading to a revisional application being filed challenging the Trial Court’s decision.

LEGAL PROVISIONS:

The legal provisions involved in the case were Section 8 and Section 5 of the Arbitration and Conciliation Act, 1996. Section 8 of the Act deals with the power to refer parties to arbitration when there is an arbitration agreement. It mandates that a judicial authority, upon application by a party, must refer the parties to arbitration if there is an arbitration agreement. Section 5 of the Act pertains to the extent of judicial intervention in matters governed by the Act, stating that judicial authorities should not intervene unless provided for in the Act.

APPELLANTS CONTENTION:

The appellant, Fullerton India Credit Company Limited, contended that the Trial Court had erred in not referring the matter to arbitration as per the arbitration clause in their agreement. They argued that the Trial Court misinterpreted Section 8(1) and (2) of the Arbitration and Conciliation Act, 1996, and failed to appreciate that the Trial Court lacked jurisdiction to try the suit. The appellant emphasized that the Trial Court should have considered the arbitration agreement and referred the dispute to arbitration for proper adjudication.

RESPONDENTS CONTENTION:

The respondent, Ms. Manju Khati, argued against the appellant’s application under Section 8 of the Arbitration and Conciliation Act, 1996. They contended prmarily that the arbitration clause in the agreement only applied to disputes connected with the agreement itself, not to the broader issues raised in the suit. The respondent disagreed with the appellant’s assertion that the civil court lacked jurisdiction, stating that the Arbitral Tribunal should only decide on the terms and conditions of the agreement, not the entire dispute.

COURT ANALYSIS AND JUDGMENT:

In the case of M/S Fullerton India Credit Company Limited versus Ms. Manju Khati, the High Court analyzed the application of Section 8 of the Arbitration and Conciliation Act, 1996. The Court considered the presence of an arbitration agreement between the parties and the jurisdiction of the civil court in referring disputes to arbitration. It emphasized the importance of complying with the procedures outlined in the Act and the need to respect arbitration clauses in agreements.

The Court found that the Trial Court had erred in not referring the parties to arbitration despite the existence of a valid arbitration clause. It highlighted that the Trial Court’s decision was contrary to the provisions of Section 8 of the Act, which mandate referral to arbitration when an arbitration agreement exists. The  High Court set aside the Trial Court’s order and directed the matter to be referred to arbitration within a specified timeframe, emphasizing the significance of upholding arbitration agreements and following the procedures outlined in the Act for dispute resolution.

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Judgement reviewed by – Ayush Shrivastava

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Maximum Stamp Duty of Rs. 25 lakhs is applicable only as a one-time measure and not on each subsequent increase in the share capital of a company: Supreme Court

Case title: State of Maharashtra & Anr. Vs National Organic Chemical Industries Ltd.

Case no.: Civil Appeal No. 8821 of 2011

Decision on: April 5th, 2024

Quoram: Justice Sudhanshu Dhulia and Justice Prasanna B. Varale

Facts of the case

The respondent company was incorporated with an initial share capital of Rs. 36 crores and in 1992, it increased its share capital to Rs. 600 crores and accordingly paid a stamp duty of Rs.1,12,80,000/- as per Article 10 of Schedule-I of the Bombay Stamp Act, 1958. The State/appellant amended Article 10 and introduced a maximum cap of Rs. 25 lakhs on stamp duty which would be payable by a company. Subsequently, the respondent passed a resolution for a further increase in its share capital to Rs. 1,200 crores and paid Rs. 25 lakhs as stamp duty. However, according to the respondent, this was done inadvertently as it was soon realized that stamp duty was not liable to be paid by them since the maximum stamp duty which was of Rs. 25 lakhs payable on Articles of Association (AOA) as per the provisions of the Stamp Act, had already been paid by them in 1992.

Consequently, the respondent wrote a letter seeking a refund of the payment of Stamp Duty of Rs. 25 lakhs but this request was turned down stating that whenever the authorized share capital of a company is increased, the stamp duty is payable on each such occasion at the time of filing of Form No. 5 and it is not a one-time measure. Aggrieved by the same, the respondent filed a writ petition before the High Court seeking a refund of Stamp Duty of Rs. 25 lakhs with interest, paid by them inadvertently. The High Court ruled in favor of the respondent and held that Form No.5 is not an instrument as defined by Section 2 of the Stamp Act and that stamp duty can only be charged on AOA, where the maximum duty (Rs.25 Lakhs), payable as per the amendment has already been paid. An appeal contesting the same was preferred before the Apex Court.

Submissions on behalf of the Appellants/State

The Counsel submitted that every time a company increases its share capital, it is a separate taxing event and stamp duty is liable to be paid irrespective of whether the maximum amount payable under the section has previously been paid. Further, he relied on Section 14 A of the Stamp Act and contended that any material or substantial alteration in the character of an instrument requires a fresh stamp duty according to its altered character. Hence, the maximum cap of Rs. 25 lakhs which was introduced after the payment of Stamp Duty of Rs.1,12,80,000/- cannot be taken into consideration in any case.

Submissions on behalf of the Respondents

The Counsel submits that it is only the Articles of Association of a company which are chargeable to Stamp Duty under Article 10. The Form No.5 which is being contended by the appellants to be a separate instrument is completely alien to the Stamp Act as it serves a very limited purpose of giving notice to the Registrar that a company has increased its share capital beyond the authorised share capital. She further submitted that increase in the share capital of a company does not materially or substantially alter the character of the Articles of Association so as to fall within Section 14A of the Stamp Act. Thus, the counsel through a catena of judgement contended that the fiscal statutes have to be construed strictly

Court’s Analysis and Judgement

The Court examined the relevant provisions of Stamp Duty Act and quoted the definition of instrument. The first question before the Court was whether the notice sent to the Registrar in Form No.5 is an “instrument” as defined under Section 2(l). On perusal of the provisions of Companies Act noted that it is the Registrar who is the custodian of the articles of a company and not the company. Thus, when a company has to alter the same or modify its share capital as recorded therein, it has to pass a resolution and file its Form No. 5. It relied on the decision of Allahabad High Court in New Egerton Woollen Milthels, In re, where the Court answered the above question in negative. The Court noted that filing of Form No. 5 is only a method prescribed, whereby “notice” of increase in share capital has to be sent to the Registrar, within 30 days of passing of such resolution. It further emphasized that it is only the articles which are an instrument within the meaning of Section 2(l) of the Stamp Act and not the Form No. 5.

Further, the Court addressed the question on whether the increase in share capital of the respondent would mandate the payment of Stamp Duty on the materially alters the character of the instrument, i.e., Articles of Association or whether the same could be considered as a part of and valid according to Section 31(2) of the Companies Act. The Court asserted that it is a settled position of law that in case of conflict between two laws, the general law must give way to the special law. A conjoined reading of the Stamp Act and the Companies Act would show that while the former governs the payment of stamp duty for all manner of instruments, the latter deals with all aspects relating to companies and other similar associations. Hence, stated that the Companies Act which is the special law overrides the General Law (Stamp Act) and thereby, any increase in the share capital of the company also shall be valid as if it were originally there when the Articles of Association were first stamped.

Secondly, on the question of whether the maximum cap on stamp duty is applicable every time there is an increase in the share capital or it is a one-time measure. The Court ruled that the Maharashtra Stamp (Amendment) Act, 2015 which amended the charging section for Articles of Association i.e., Article 10 of the Stamp Act fortifies on the fact that the maximum cap of Rs. 25 lakhs would be applicable as a one-time measure and not on each subsequent increase in the share capital of a company.

The Court rejected the contention of appellant that the stamp duty paid before the amendment cannot be taken into account and held that it is true that the amendment does not have retrospective effect, however since the instrument ‘Articles of Association’ remains the same and the increase was initiated by the respondent after the cap was introduced, the duty already paid on the same very instrument will have to be considered and that it is not a fresh instrument which has been brought to be stamped, but only the increase in share capital in the original document, which has been specifically made chargeable by the Legislation.

The Apex Court therefore, dismissed the appeal and upheld the order of the Bombay High Court. Accordingly, it directed the appellants to refund Rs. 25 lakhs paid by the respondent.

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Judgement Reviewed by – Keerthi K

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