Top 20 Judgements of the Year 2020 under Corporate Laws
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- Last Updated on 25 July, 2021
Compiled by Taxmann’s Editorial Team
The year 2020 has been nothing less than topsy-turvey and challenging with a deadly covid-19 virus pandemic followed by complete lockdowns, closures, isolation. Most of us worked from our homes with a faith that it will be all over soon. During pandemic, our Courts/Tribunals continued to deliver crucial judgments through electronic medium. The year passed in turmoil and we stepped into 2021 with hope. In the year 2020, we have reported 4,361 judgments on various laws including Income-tax, Indirect Taxes, and Corporate laws, etc. In Corporate Law alone we have reported 1,300+ cases. Out of these cases, we have identified the top 20 rulings that may be relevant for future references and to decipher some aspects under Corporate Law. The summary of these 20 cases is covered in this document.
Supreme Court lifts Prohibition on crypto-currencies
Internet and Mobile Association of India v. Reserve Bank of India  115 taxmann.com 53 (SC)
In an unprecedented decision, the three-judge bench of the Supreme Court removed the restrictions on dealing in cryptocurrencies by quashing the Reserve Bank of India’s circular dated April 6, 2018.
The Reserve Bank in a circular on April 6, 2018, had directed all regulated entities to neither deal in virtual currencies nor provide services for facilitating any person or entity in dealing with or settling virtual currencies and also to exit the relationship with such persons or entities if they were already providing such services to them.
This circular was challenged in the Supreme Court. The petitioner, in this case, was the Internet and Mobile Association of India (IMAI), a specialized industry body representing the interest of the online and digital services industry. It argued that the Reserve Bank had banned dealing in cryptocurrencies on “moral grounds” without any proper study.
Supreme Court’s ruling
The three-judge bench of the Supreme Court allowed the petition on the ground of ‘proportionality’. The court in a ruling which will have far-reaching implication said that “when the consistent stand of RBI is that they have not banned virtual currencies and when the government of India is unable to take a call despite several committees coming up with several proposals, including two draft bills, both of which advocated exactly opposite positions, it is not possible for us to hold that the impugned measure is proportionate.”
Daughter has an equal right as son as coparcener of a HUF under Hindu Succession Act: SC
Vineeta Sharma v. Rakesh Sharma  118 taxmann.com 322 (SC)In an important and significant judgment having social implications, the Supreme Court held that a daughter enjoys the same rights as a son as a coparcener in the joint Hindu family property irrespective of whether the father coparcener was alive on September 9, 2005, or not.The main issue, in this case, was the reconciliation of the conflicting views held by the two separate benches of the Supreme Court about the applicability of the amendments to the Hindu Succession Act carried out in 2005. A Division Bench of the Supreme Court in the Prakash v. Phulavati  65 taxmann.com 331 (SC) held that Section 6 is not retrospective in operation, and it applies when both, the coparcener and his daughter, were alive on September 9, 2005, the date of commencement of Amendment Act, 2005.Another Division Bench of the Apex Court held that the amended provisions of Section 6 confer full rights upon the daughter coparcener. Any coparcener, including a daughter, can claim a partition in the coparcenary property.SC Court’s rulingThe Three-judge Bench of the Supreme Court overruled the judgment in the Prakash v. Phulavati case and gave rights to daughters as a coparcener in the family property with retrospective effect. The Apex Court held that the provisions contained in substituted Section 6 of the Hindu Succession Act, 1956 confer the status of coparcener on the daughter born before or after amendment in the same manner as a son with the same rights and liabilities.”Since the right in coparcenary is by birth, it is not necessary that father coparcener should be living as on September 9, 2005,” the judgment said.
Meanwhile, the Apex Court also asked High Courts and the subordinate courts to decide the pending suits and appeals of similar nature in the light of the Supreme Court judgment within six months.
“We understand that on this question, suits/appeals are pending before different High Courts and subordinate courts. The matters have already been delayed due to a legal imbroglio caused by conflicting decisions. The daughters cannot be deprived of their right of equality conferred upon them by Section 6. Hence, we request that the pending matters be decided, as far as possible, within six months,” said the Apex Court judgment.
Apex Court dismisses plea to transfer fund from PM CARES to NDRF to fight COVID-19
Centre For Public Interest Litigation v. Union of India  118 taxmann.com 360 (SC)
Setting at rest the political controversy over PM CARES Fund, the Supreme Court rejected the plea of the Centre for Public Interest Litigation (CPIL) for transfer of PM CARES funds to the National Disaster Response Fund (NDRF).
A Public Interest Litigation (PIL) was filed by petitioners in the wake of the COVID-19 pandemic, seeking directions for evolving a new National Plan under section 11 to deal with the current pandemic (COVID-19) and to lay down minimum standards of relief under section 12 to be provided to persons affected with COVID-19.
It further sought directions to utilize National Disaster Response Fund (NDRF) for purposes of providing assistance in the fight against COVID-19 and all contributions/grants from individuals/institutions be credited in NDRF and not to PM CARES Fund and all funds collected in PM CARES Fund be transferred to NDRF
The main issues which the Apex Court sought to decide were as follows:
(a) Whether all the contributions/grants from individuals and institutions should be credited to the NDRF in terms of Section 46(1) (b) of the Act rather than PM CARES Fund? (b) Whether all the funds collected in the PM CARES Fund till date be directed to be transferred to the NDRF?
Apex Court’s ruling
The Supreme Court held that any contribution, grant of any individual or institution is not prohibited to be credited into the NDRF and it is still open for any person or institution to contribute to the NDRF in terms of Section 46(1)(b) of the Act, 2005.
The contribution by any person or by any institution in PM CARES Fund is voluntary and it is open for any person or institution to contribute to the PM CARES Fund, it added. The Apex Court further held that the funds collected in the PM CARES Fund were funds of public charitable trust and there is no occasion for issuing any direction to transfer them to the NDRF. “The prayer of the petitioner to direct all the funds collected in the PM CARES Fund till date to be transferred to the NDRF is refused,” said the Apex Court judgment.
Cooperative banks fall under purview of SARFAESI Act, Rules Supreme Court.
Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud Sahakari Bank Limited  116 taxmann.com 414 (SC)
In the instant ruling, a five-judge bench of the Supreme Court held that cooperative banks, as well as multi-state cooperative banks, are covered by the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or SARFAESI Act. There were conflicting High Court judgments regarding the applicability of the SARFAESI Act to the cooperative banks and multi-state cooperative banks. The litigants even questioned the competence of Parliament in terms of Entries in the Seventh Schedule of the Constitution to legislate on cooperative banks which were set up under the laws passed by the states.
The Supreme Court bench deliberated on the various issues in the case and settled the dispute once for all by ruling that the provisions of the SARFAESI Act would apply to the cooperative banks as well as multi-state cooperative banks.
Supreme Court’s observations
The Apex Court held that the cooperative banks and multi-state cooperative banks are ‘banks’ under section 2(1)(c) of the SARFAESI Act.
As loan recovery is an essential part of banking, the court said, the procedure prescribed under section 13 of the SARFAESI Act, legislation relatable to Entry 45 List-I of Seventh Schedule to Constitution of India, is applicable.
At the same time, the court held that aspects like ‘incorporation, regulation and winding up’ of cooperative banks run by cooperative societies registered under the state legislation would continue to be governed by legislations relatable to Entry 32 of List-II of the Seventh Schedule of the Constitution.
SC stays IBC ( Amendment ) Ordinance
In a relief to the troubled home buyers seeking legal solutions, the Supreme Court stayed the operation of the IBC (Amendment) Ordinance, 2019 which had restricted their rights to initiate insolvency proceedings against defaulting builder/developer.
The Ordinance promulgated by the President on December 28, 2019, imposed restrictions on homebuyers for initiating insolvency proceedings against defaulting builder/developer. The Government had introduced the IBC (Second Amendment) Bill, 2019 in the Lok Sabha during the Winter Session of Parliament last year but the bill could not be approved due to paucity of time. Hence, the President promulgated an Ordinance giving effect to the provisions of the amendment bill.
As per the Ordinance, at least 100 home buyers or buyers holding 10 percent of total available units of the same class, whichever is lower, were required to file a joint petition for initiating insolvency proceedings against the developer company in the National Company Law Tribunal (NCLT).
The stay granted by the Supreme Court against the operation of the Ordinance, many believe, is in tandem with the spirit of the IBC. The Apex Court’s stay order has restored the right of a home buyer to initiate corporate insolvency resolution proceedings against the developer/builder before the NCLT. The stay order will provide relief to homebuyers, especially those who have paid the money or are paying the money without any hope of getting possession of their dream house.
SC Upholds govt’s trade restrictions on import of pulses
Union of India v. Agricas LLP  118 taxmann.com 531 (SC)
In an important ruling, the Supreme Court upheld various restrictions imposed by the Government through notifications and trade notices on import and disposal of pulses including moong, urad, toor and gram.
In the instant case, various importers had challenged the restrictions imposed by the government on the trade of pulses under the Foreign Trade (Development and Regulation) Act, 1992 citing a host of reasons including commercial hardship and international obligations.
Since the cases were filed by traders in different High Courts, the Supreme Court ordered the bunching of petitions so that a final view could be taken on the issues raised by the traders.
Supreme Court’s ruling
The Supreme Court upheld the notifications and the trade notices issued by the Government and rejected the challenge made by the importers.
The Apex Court further said that imports made relying on interim orders would be held to be contrary to the notifications and the trade notices issued under the FTDR Act, and would be so dealt with under the provisions of the Customs Act, 1962.
“Writ Petitions filed by the intervenors before the respective High Courts shall stand dismissed in terms of this decision. Pending application(s), if any, also stand disposed of …,” said the Supreme Court order while dismissing the petition.
Banks are legally obliged to hand over title deeds to successful bidder of an auction sale: SC
Tripower Enterprises (P.) Ltd. v. State Bank of India  116 taxmann.com 377 (SC)
In this important ruling, the Supreme Court held that the bank is legally obliged to hand over title deeds or original documents to the successful bidder of an auction sale. The bank gave financial credit to the borrower after a guarantor offered his movable property by way of a mortgage. The borrower defaulted on repayment commitments following which the bank declared the loan as Non-Performing Asset (NPA). Thereafter, the bank took possession of the secured assets of the guarantor.
The guarantor filed a petition before the Debt Recovery Tribunal (DRT), challenging possession notice issued by the bank under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petition was rejected by the DRT. The guarantor then filed an appeal against this decision, which too was dismissed on the ground of non-payment of the pre-deposit amount.
Meanwhile, the secured assets were put up for public auction by the bank for recovery of outstanding dues. The appellant, which turned out to be the highest bidder in the auction, was issued a sale certificate by the bank. In the meantime, the bank moved an application before DRT for the return of original documents deposited with DRT, as the bank was obliged to hand over the same to the auction purchaser.
The bank’s application, however, was rejected by DRT, essentially on the ground that the issue raised by the guarantor that there was no valid mortgage in respect of secured assets and the equitable mortgage was created by incompetent persons, was yet to be examined by the Tribunal.
The Debt Recovery Appellate Tribunal (DRAT), however, reversed the decision of the DRT and directed that the original documents be handed over to the bank.
Later, on a writ petition filed by the guarantor, the High Court restored the order passed by DRT, rejecting the application of the bank. The aggrieved auction purchaser moved the Supreme Court for relief.
Supreme Court’s ruling
The Apex court ruled that as the appellant (auction purchaser) has been issued a sale certificate, the appellant is entitled to receive the title documents in respect of the properties referred to in the sale certificate. The mere fact that the bank did not challenge the impugned decision of the High Court, cannot undermine the direct interest of the appellant in getting the relief which was earlier claimed by the bank to fulfill its obligation of handing over the original documents to the auction purchaser, the Apex Court observed.
Power of Arbitral Tribunal and CCI are not overlapping rules, Bombay Hight Court.
Nuziveedu Seeds Limited v. (India) Private Limited  118 taxmann.com 247 (Bombay)
In the instant case, The Bombay High Court held that the jurisdiction of the Competition Commission of India (CCI) under the Competition Act and the jurisdiction of the Arbitral Tribunal under an agreement are altogether different and distinct, and do not overlap.
It further ruled that the issues of contractual relief are within the domain of Arbitral Tribunal and issues of violation of provisions of Competition Act are within the exclusive domain of CCI, and during the pendency of proceeding before CCI, a payment dispute is arbitrable.
Mahyco Monsanto Biotech and several other companies including the petitioner were locked in a commercial dispute regarding payment of fees. The matter went to the arbitration tribunal which gave the award in favour of the respondent company.
In the meanwhile, the Government of India filed a reference before the CCI seeking investigation and action against the respondent and its group companies for allegedly contravening the provisions of the Competition Act. Later, the petitioner and its two subsidiary companies filed information before the CCI against the respondent and its group companies complaining about several anti-competitive clauses and abusive conduct of the respondent including charging of high trait value over the State Government Price Control Notifications.
High Court’s ruling
The key issue that came up for consideration before the Bombay High Court was the possible overlap of the jurisdiction of the Competition Act and the Arbitral Tribunal.
It was contended by the petitioner that the Arbitral Tribunal ought to have awaited the decision of the CCI regarding the validity of the sub-license agreement before announcing its award.
The High Court, however, agreed with the contention of the respondent that the monetary claims made by the respondent do not fall within the jurisdiction of the CCI under Section 61 of the Competition Act.
“The learned arbitrator has rightly exercised its jurisdiction to entertain the monetary claims made by the respondent and has not exceeded his jurisdiction. The learned arbitrator has only directed the petitioner to pay the contractual dues of the respondent arising out of the sale of seeds,” the Bombay High Court said while dismissing a bunch of petitions on the same issue.
Limitation period for initiation of CRIP is 3 years from date of default even if a default took place prior to enactment IBC: SC
Bajulal Vardharji Gurjar v. Veer Gurjar Aluminum Industries (P) Limited  118 taxmann.com 323 (SC)
In this landmark ruling, the Supreme Court held that the limitation period of three years will apply even in those cases where the default in repayment of loan took place before enactment of the Insolvency and Bankruptcy Code (IBC), 2016.
As the corporate debtor had defaulted in payment of loans, its account with Corporation Bank was classified as Non-Performing Asset (NPA) on July 8, 2011, and that with Indian Overseas Bank on August 5, 2011. The proceedings were initiated against the corporate debtor in the Debt Recovery Tribunal. In the meanwhile, the JM Financial Assets Reconstruction Company (P.) Limited, which is Respondent No. 2, initiated a corporate insolvency resolution process against the corporate debtor under the IBC. The adjudicating authority or National Company Law Tribunal (NCLT) admitted the application and appointed an interim resolution professional.
Aggrieved by the decision, the appellant preferred an appeal before the National Company Law Appellate Tribunal (NCLAT). The NCLAT upheld the order of the NCLT and thus the appellant moved the Supreme Court.
The main contention, in this case, was with regard to the period of limitation. It was argued by the appellant that the application, which was filed after three years of the date of default, was barred by limitation under Section 137 of the Limitation Act.
While refuting the submissions, the Respondent argued that the application under Section 7 of the Code was not barred by limitation only because the initial date of default mentioned therein was August 8, 2011.
Supreme Court’s ruling:
The limitation period for application under section 7 is three years as provided by article 137 of Limitation Act, which commences from the date of default and is extendable only by the application of section 5 of Limitation Act if any case for condonation of delay is made out.
The Court ruled that the question of limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension or enlargement of a period of limitation, relevant facts are required to be pleaded and requisite evidence is required to be adduced.
“There is nothing in Code to indicate that period of limitation for purpose of an application under section 7 is to commence from the date of commencement of Code itself, similarly, nothing provided in Limitation Act could be taken as a basis to support the proposition,” said Apex Court.
The Supreme Court held that the Appellate Tribunal had been in error in applying the period of limitation provided for mortgage liability for purpose of limitation applicable to the application in question thus, an application made by financial creditor under section 7 in the month of March 2018, seeking initiation of CIRP in respect of corporate debtor with a specific assertion of date of default as 8-7-2011, having been filed much later than a period of three years from the date of default as stated in the application was to be rejected as being barred by limitation.
‘Collective Investment Scheme’ floated by a private trust is illegal: Supreme court
Osians Connoisseurs of Art (P) Limited v. Securities and Exchange Board of India (SEBI)  117 taxmann.com 393 (SC)
In an important ruling, the Supreme Court held that a collective investment scheme (CIS) operated by a private trust is not legal. The Apex Court made it clear that under the SEBI (Collective Investment Scheme) Regulations, 1999, a collective investment scheme can only be floated by a collective investment management company and in no other form.
The issue, in this case, relates to two trusts – Yatra Art Fund Trust-I and Yatra Art Trust Fund-II – which were set up under the Indian Trusts Act, 1882 to collect funds from investors for investment in works of arts. The market regulator SEBI raised objections to the fund-raising activities of the Trusts saying that they fall within the purview of the Collective Investment Scheme and hence should be registered as CIS under the relevant regulations.
The vexed dispute could not be resolved to the satisfaction of the litigants either by the SEBI or the Securities Appellate Tribunal and ultimately reached the Supreme Court.
Supreme Court’s Judgment
The Apex Court tried to deal with the issue in the light of the provisions of the SEBI (CIS) Regulations, 1999. As per Regulation 2(h), ‘Collective Investment Management Company means a company incorporated under the Companies Act, 1956 and registered with the Board under these regulations, whose object is to organize, operate and manage a collective investment scheme.’
Regulation 3 states that ‘No person other than a Collective Investment Management Company which has obtained a certificate under these regulations shall carry on or sponsor or launch a collective investment scheme.’
The Supreme Court ruled that under the statutory scheme of things, a collective investment scheme can only be floated by a collective investment management company and in no other form.
“Once the statutory scheme becomes clear, it is clear that the collective investment scheme that was being carried on by the appellants in the form of a private trust would be in the teeth of the Statute read with the CIS Regulations and would thus be illegal,” the Apex Court said.
Tata Sons v. Cyrus Mistry: Supreme Court stays NCLAT’s order that reinstated Cyrus Mistry as executive chairman of the Tata Sons
Tata Sons (P.) Ltd. v. Cyrus Investments (P.) Ltd.  113 taxmann.com 296 (SC)
In this important ruling, the Supreme Court stayed the order of the National Company Law Appellate Tribunal (NCLAT) that reinstated Cyrus Mistry as executive chairman of the Tata Sons. As widely anticipated, the stay was granted by the Apex Court on January 10, 2020, in the high-profiled Tata Sons (P.) Limited v. Cyrus Investments (P.) Limited case.
The battle began with a boardroom coup in 2016 during which Mistry was ousted from the post of Executive Chairman of Tata Sons and directorship of other Tata companies. Aggrieved by the developments, the Shapporji Pallonji Group, holding 18 percent share capital in the Tata Group, moved an application under sections 241-242 of Companies Act, 2013 alleging prejudicial and oppressional acts of majority shareholders (Tata Group). NCLT dismissed the application.
On an appeal, the NCLAT declared the resolution passed by the Board of Directors of Tata Sons removing Mistry as the Executive Chairman of the Company on October 24, 2016, as illegal
The NCLAT restored Mistry to his original position as Executive Chairman of Tata Sons and consequently director of the Tata companies for the rest of the tenure.
As a sequel to that, the appointment of the person as ‘Executive Chairman’ replacing Mistry was declared illegal.
While the NCLAT was pronouncing the judgment, Abhishek Manu Singhvi, Senior Counsel appearing on behalf of the Tata Sons, prayed for the suspension of the part of the judgment relating to reinstatement of Mistry as Executive Chairman and Director of Tata Sons.
The NCLAT agreed to suspend its order of reinstating Mistry as executive chairman of Tata Sons for four weeks, thus giving time to the company to go in for appeal at the higher forum.
Supreme Court Ruling
The litigants moved the Supreme Court which stayed the order of the NCLAT. As of now, the status quo will continue till the Apex court decides the dispute. The fierce legal battle is likely to continue for some more time before the Supreme Court takes a final view on the issue.
Karnataka Film Chamber of Commerce can’t prevent CCI from doing its duty; High Court dismisses writ petition.
Karnataka Film Chamber of Commerce v. Union of India  113 taxmann.com 372 (Karnataka)
In a significant ruling, the Karnataka High Court very categorically and unambiguously stated that a writ of prohibition could not be issued against a Statutory Commission for doing its assigned job.
The Karnataka High Court gave the ruling in a case wherein the petitioners sought a writ of prohibition against the Competition Commission of India from exercising its jurisdiction under the Competition Act, 2002. After hearing arguments of both sides, the High Court dismissed the petition as ‘misconceived.’
“Undisputed fact is, the Act is in force as on date. Hence, no writ of prohibition can be issued against the Statutory Commission from exercising its jurisdiction. Hence, a petition is misconceived and it is accordingly dismissed,” said the High Court judgment.
The judgment is significant as it would have a bearing on other statutory commissions. It would imply that no writ of prohibition can be issued against a statutory commission for exercising its duty. Although the judgment of the Karnataka High Court will not be binding on other High Courts, it would influence the course of arguments whenever matters of similar nature are taken up for adjudication.
The liquidation value of access can be higher than the bid under the corporate insolvency resolution process, rules Supreme Court.
Maharasthra Seamless Ltd. v. Padmanabhan Venkatesh  113 taxmann.com 421
The Supreme Court in a significant judgment concerning provisions of the Insolvency and Bankruptcy Code (IBC), 2016 made it clear that it is not necessary that bid of any resolution applicant has to be matched with the liquidation value of the assets. The liquidation value of assets can be higher than the bid under the corporate insolvency resolution process under the IBC.
In this case, Indian Bank initiated a corporate insolvency resolution process against the United Seamless Tubulaar Private Limited. At the end of the process, Maharashtra Seamless Limited (MSL) was declared a successful resolution applicant.
The Adjudicating Authority, the National Company Law Tribunal, Hyderabad Bench (NCLT), on January 21, 2019 approved MSL’s resolution plan, which among other things involved an upfront payment of Rs 477 crores. While approving the resolution plan, the NCLT said that it met all the requirements of Section 30(2) of the Code which primarily deals with payment to creditors.
Not satisfied with the order, corporate debtor Padmanabhan Venkatesh and Indian Bank moved the National Company Law Appellate Tribunal (NCLAT). The appellants wanted the MSL to increase the upfront payment to creditors to Rs 597.4 crore, which was the liquidation value. The NCLAT upheld the appeal and asked the MSL to deposit an additional sum failing, which the resolution plan would be set aside.
The MSL moved the Supreme Court against the order of the NCLAT.
The Supreme Court’s ruling
The main issue before the Supreme Court was whether the bid amount under the resolution plan should necessarily match the liquidation value.
“No provision in the Code or Regulations has been brought to our notice under which requires the bid of any Resolution Applicant to match with liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016,” the Supreme Court said.
The object behind prescribing such a valuation process, the apex court added, was to assist the Committee of Creditors (CoC) to decide on a resolution plan properly.
“Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the Code is to ascertain that a resolution plan meets the requirement of sub-section (2) and (4) of Section 30 thereof. We, per se, do not find any breach of the said provisions in the order of the Adjudicating Authority in approving the resolution plan,” the Supreme Court observed while allowing the appeal.
RTI Act to cover entities substantially financed by Govt. bodies, rules Gujarat Hight Court.
GVFL Limited v. Anubhav Singh  116 taxmann.com 743 (Gujarat)In a significant ruling, the Gujarat High Court held that the Right to Information Act, 2005 will apply to body owned, controlled, or substantially financed, directly or indirectly by funds provided by the appropriate Government. The significance of the High Court judgment in the case is that even those companies or entities which are indirectly funded by the Government will be treated as a “public authority” under Section 2(h)(d)(i) of the RTI Act.In the instant case, the respondent sought certain information from the Gujarat Venture Finance Limited (GVFL Limited) under the RTI Act. The company (petitioner) refused to provide the information saying that it was not a Government Company within the provisions of the Companies Act, 1956.The aggrieved respondent approached the Gujarat State Information Commission. The Commission held that the petitioner company was a public authority within the meaning of the 2(h) of the RTI Act. The company filed a writ petition in the Gujarat High Court challenging the order of the Gujarat State Information Commission.The Advocate on behalf of the petitioner argued that the GVFL cannot be considered as a public authority under the RTI Act as it was not owned, controlled, or substantially financed by the State Government.The advocate for the respondent said that GVFL was a venture of the State Government and was substantially financed from the funds of the state government. It was pointed out that the state-owned company GIIC Limited has 39.05 percent shares in the GVFL. Therefore, the petitioner company can be said to be substantially financed from the funds provided by the Government, it was argued.High Court’s ruling
Applying the ratio of various relevant judgments of the Supreme Court, the Gujarat High Court concluded that “it is not possible to hold that the petitioners (GVFL Limited and GVFL Trustee Company Private Limited) who are substantially financed by the companies owned by the State Government cannot be said to be ‘public authority’ and as such, the petitioners would be covered by the definition of ‘public authority’ under section 2(h)(d)(i) of the Act, 2005.”
NCLAT Can’t sit in appeal on commercial wisdom of CoC: Supreme Court.
Vishal Vijay Kalantri v. DBM Geotechnics & Constructions (P.) Ltd.  118 taxmann.com 230 (SC)
The Supreme Court refused to interfere in an Insolvency and Bankruptcy Code (IBC) proceedings in the instant case wherein the Committee of Creditors (CoC) had rejected a settlement proposal by as large as 99.68 percent vote. The Apex Court observed that the NCLT and NCLAT cannot sit in an appeal on commercial wisdom of the Committee of Creditors.
In this particular case, the Resolution Professional came up with a resolution plan for APSEZ under the provisions of the IBC. The CoC subsequently approved the resolution plan by 99.68 percent votes. Meanwhile, the Appellant came up with a settlement proposal which was also considered by the CoC but rejected by 99.68 percent votes. The Appellant approached the NCLAT but failed to obtain any relief. Thereafter, the appeal moved to the Supreme Court.
Supreme Court’s ruling
The Apex Court in a terse judgment upheld the order of the NCLAT saying, “in the circumstances, we see no reason to interfere in the matter. The appeal is, accordingly dismissed.”
Dispute as to the inheritance of shares is essentially a civil dispute: SC
Aruna Oswal v. Pankaj Oswal  117 taxmann.com 563 (SC)
In an important ruling, the Supreme Court held that the dispute relating to inheritance was eminently a civil dispute and cannot be decided in proceedings under Section 241/242 of the Companies Act, 2013. Moreover, the Apex Court pointed out that as the respondent himself chose to avail the remedy under the civil suit, filing of an application under Sections 241 and 242 of the Companies Act “was nothing but an afterthought and could not be permitted to continue.”
Industrialist Abhey Kumar Oswal, before his death, transferred the shares held by him in the Oswal Agro Mills Limited to his wife Aruna Oswal. Meanwhile, Abhey Oswal’s son Pankaj Oswal filed a partition suit claiming one-fourth of the shareholding held by his late father in the company. However, before the civil suit could be decided, Pankaj Oswal filed a company petition against Oswal Agro Mills and others alleging oppression and mismanagement in the Chandigarh bench of the National Company Law Tribunal (NCLT).
NCLT held that Pankaj Oswal, as legal heir, was entitled to one-fourth share of the property/shares. Aggrieved thereby, three appeals were filed before National Company Law Appellate Tribunal (NCLAT). However, all of them were dismissed vide judgment and order dated November 14, 2019.
The appellant thereafter moved the Supreme Court for relief.
Supreme Court’s ruling
The Apex Court held that the proceedings before the NCLT filed under Sections 241 and 242 of the Companies Act should not have been entertained because of the pending civil dispute and considering the respondent’s minuscule holding of 0.03 percent in the company. In view of the facts and circumstances of the instant case, the Apex Court said, the respondent should have waited for the decision of the right, title and interest, in the civil suit concerning his shares in question.
“Impugned orders passed by the NCLT as well as NCLAT are set aside, and the appeals are allowed to the aforesaid extent. We request that the civil suit be decided as expeditiously as possible, subject to cooperation by respondent No. 1 (Pankaj Oswal),” said the Supreme Court judgment.
No relief for Chandra Kochhar from Bombay High Court
Chanda Deepak Kochharv. ICICI Bank Ltd.  115 taxmann.com 80 (Bombay)
In a high-profile case, the Bombay High Court refused to give any relief to Chanda Kochhar, former managing director and CEO of the ICICI Bank, who is currently facing a host of allegations concerning nepotism and breach of faith. Chanda Kochhar was working as managing director of the ICICI Bank. Pending inquiry by a retired judge against her conduct, Kochhar resigned from the bank. However, her severance from the bank was treated as a termination by the ICICI Bank board and consequently, all her retirement benefits were revoked. Kochhar filed a writ petition challenging her termination order and also the Reserve Bank’s communication to the bank in that regard.
The question that arose, in this case, was whether the Section 35B(1)(b) of the Banking Regulation Act can be said to govern the service conditions of the petitioner so as to impose a statutory duty on the ICICI Bank and whether the petitioner can challenge it under writ jurisdiction.
It may be mentioned that when employed in a private entity is regulated by contracts, the courts do not exercise the writ jurisdiction. Courts exercise writ jurisdiction when a public law element is involved and the services are governed by a statute. For that purpose the nature of the concerned enactment and its purpose and scope has to be ascertained, the Bombay High Court said.
High Court’s judgment
Observing that the ICICI was a private body and not an instrumentality of the state, the Court said that the service conditions of the petitioner are not governed by any statute. “The dispute raised in this Petition arises from a contract of personal service. The termination of the Petitioner is in the realm of a contractual relationship. Since Section 35B(1)(b) does not regulate service conditions, approval for termination under it does not adjudicate the rights of the Petitioner as an employee,” it said.
The Court further pointed out that though Section 35B(1)(b) postulates that the termination would not come into effect if there is no prior approval of the Reserve Bank, the cause of action for the Petitioner is the termination by ICICI Bank.
“For the Petitioner, the legal implications of the grant of approval, non-grant of approval or post-facto approval, as the case may be, would be grounds and arguments in the contractual dispute. Thus, merely because the approval under section 35B(1)(b) is questioned, that cannot infuse a public law element in this dispute, which remains a contractual dispute.
No Waiver from pre-deposit while filing an appeal at DRAT: Supreme Court.
Union Bank of India v. Rajat Infrastructure (P.) Ltd.  115 taxmann.com 58 (SC)
The Supreme Court in this case made it clear that the petitioner cannot get a waiver from pre-deposit while filing an appeal in the Debt Recovery Appellate Tribunal (DRAT). In its judgment, the Apex Court turned down the ruling of the High Court.
This case relates to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. The parties objected to the sale of the property on the ground that the amount was low and there was collusion between the officers of the bank and the auction purchaser and filed a petition in the High Court.
The High Court held that the petitioner had an efficacious alternate remedy of appeal before the DRAT where no pre-deposit was required.
The successful bidders filed a review petition before the High Court praying that the High Court could not have issued directions that no pre-deposit was required. The High Court dismissed the review petition.
Supreme Court’s ruling
An appeal was filed in the Supreme Court against the order of the High Court.
The Apex Court deliberated on the issue of whether the High Court was right in holding that no pre-deposit was required under Section 18 of the SARFAESI Act.
“A guarantor or a mortgagor, who has mortgaged its property to secure the repayment of the loan, stands on the same footing as a borrower and if he wants to file an appeal, he must comply with the terms of Section 18 of the SARFAESI Act,” the Apex Court said declaring the order of the High Court as not sustainable.
Competition Commission of India rules that there is no abuse of dominance by “Whatsapp” on pre-installation of the payment app.
Harshita Chawla v. WhatsApp Inc  118 taxmann.com 421 (CCI)
In the given case, the Informant alleged that Facebook-backed WhatsApp, by using its dominance in the internet-based instant messaging App, is bundling its messaging App with the payment option (WhatsApp Pay) to penetrate the UPI enabled Digital Payments App Market.
It was further observed that by enabling automatic installation of WhatsApp Payments App in the WhatsApp Messaging App, WhatsApp thereby using such dominance to penetrate UPI enabled Digital Payments App Market.
Based on such allegations, the Informant prayed for an investigation against WhatsApp under the Act and directions to the Opposite Parties (Ops) to immediately cease and desist their anti-competitive operations.
After going through the submissions of WhatsApp and Facebook, and its analysis, the CCI dismissed the contention of the Informant lawyer and stated that the number of users being served under the beta version is limited to less than 1 percent of its users in India, the CCI said, “to that extent, the Commission tends to agree with WhatsApp that this allegation (of abuse of dominance) is premature.”
The Commission also observed that at present, the UPI digital payments market consists of various established players e.g. Google Pay, Paytm, Phone Pe, Amazon Pay, etc. which are backed by big companies/investors. Therefore, alleged contravention of provisions of section 4 against OPs not being made out, information filed was directed to be closed under section 26(2) of the Act.
Apex Court has issued SCN to Telcom Cos. over non-payment of dues linked to adjusted gross revenue ( AGR)
Union of India v. Association of Unified Telecom Service Providers of India Etc.  119 taxmann.com 26 (SC)
The Supreme Court has expressed anguish over delay in implementation of its order with regard to payment of dues linked to Adjusted Gross Revenue (AGR) by the telecom majors like Vodafone, Idea, and Bharti Airtel.
The main issue is the payment of statutory dues by the telecom companies to the government, which has been estimated at a humongous Rs 1.47 lakh crore.
The contention between the Government and telecom companies was the definition of the AGR. This is significant as under the new telecom policy, licensees are required to share a percentage of their AGR with the Government as an annual license fee. It actually meant that the higher the AGR, the greater would be the revenue for the Government.
The Supreme Court while deciding the dispute over the method of computing AGR in October 2019, gave its judgment in favor of the government and asked the telecom companies to pay statutory dues by January 23, 2020.
As the amount was huge, the telecom companies filed a review petition in the Supreme Court. The Apex court later dismissed the review petition saying it was devoid of any “justifiable reason”.
Supreme Court’s ruling
The Apex Court stated that the companies have violated the order passed by this Court in pith and substance. In spite of the dismissal of the review application, they have not deposited any amount so far.
The Apex court also took strong exception to an order passed by a ‘desk officer’ of the Department of Telecom asking the Accountant General not to insist on any payment pursuant to the order passed by the Supreme Court and also not to take any coercive steps till further orders.
In addition to the above, the Apex court asked the concerned persons to be personally present in the court on the next date of hearing on March 17, 2020, in case they fail to comply with its order.
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