10 Important Judgments of March & April, 2021

1. Mankastu Impex Private Limited vs. Airvisual Limited, 2020 (3) SCC 399

A. Arbitration and Conciliation Act, 1996 Sections 11(6) and 20 International Commercial Arbitration – Seat of arbitration – Seat of arbitration is vital aspect of any arbitration proceedings – Significance of seat of arbitration is that it determines applicable law when deciding arbitration proceedings and arbitration procedure as well as judicial review over arbitration award.

B. Arbitration and Conciliation Act, 1996 Section 2(f) International Commercial Arbitration – To be ICA, three factors ought to be fulfilled – (i) arbitration; (ii) considered as commercial under laws in force in India; and (iii) at least one of parties is national or habitual resident in any country other than India – Since respondent is company incorporated under laws of Hong Kong, matter concerned is ICA.

C. Arbitration and Conciliation Act, 1996 Sections 11(6) and 20 International Commercial Arbitration – Seat of arbitration – Arbitration agreement entered into between parties provides Hong Kong as place of arbitration – Agreement between parties that dispute shall be referred to and finally resolved by arbitration administered in Hong Kong clearly suggests that parties have agreed that arbitration be seated at Hong Kong and that laws of Hong Kong shall govern arbitration proceedings as well as have power of judicial review over arbitration award – Once parties chosen “Hong Kong” as place of arbitration to be administered in Hong Kong, laws of Hong Kong would govern arbitration – Indian courts have no jurisdiction for appointment of arbitrator – Petition seeking appointment of arbitrator dismissed.

2.M/s Daya Technologies Pvt. Ltd. vs. M/s Crampton Greaves Ltd., 2020 (1) RCR (Civil) 803

A. Arbitration and Conciliation Act, 1996 Section 34 Arbitral award – Interference – Arbitral awards should not be interfered with in casual and cavalier manner unless perversity of award goes to root of matter without there being possibility of alternative interpretation which may sustain arbitral award – Mandate under Section 34 is to respect finality of arbitral award and party autonomy to get their dispute adjudicated by alternative forum – If Courts were to interfere with arbitral award in usual course on factual aspects, then commercial wisdom behind opting for alternate dispute resolution would stand frustrated.

B. Arbitration and Conciliation Act, 1996 Sections 31 and 34 Arbitral award – Necessity for providing reason – Mandate under Section 31(3) of Act is to have reasoning which is intelligible and adequate and which can in appropriate cases be even implied by Courts from
fair reading of award and documents referred to thereunder – Said provision does not require elaborate judgment to be passed by arbitrators having regards to speedy resolution of dispute.

C. Arbitration and Conciliation Act, 1996 Section 31 Arbitral award – Characteristics – Reasoned award has three characteristics i.e. proper, intelligible and adequate – If reasoning are improper, they reveal flaw in decision-making process – If challenge to award is based on ground that same is unintelligible, same would be equivalent of providing no reasons at all – Ordinarily unintelligible awards are to be set aside, subject to party autonomy to do away with reasoned award – Court need to have regard to documents submitted by parties and contentions raised before Tribunal so that awards with inadequate reasons are not set aside in casual manner – Courts required to be careful while distinguishing between inadequacy of reasons in award and unintelligible awards.

3.Kumar Saurabh vs. State of Haryana, 2021 (1) SCT 687

Constitution of India, 1950 Articles 12 and 226 Petition against outsourcing agency – Maintainability – Petitioners recruited by outsourcing agency and posted with Co-operative Bank Ltd – Appointment orders issued to petitioners by said outsourcing agency only and no appointment orders appointing them in respondent-Bank were issued in their favour by respondent-Bank – Once, terms of agreement between outsourcing agency and respondent-Bank came to end, simultaneously period of contractual appointment of employees, with respondent-Bank, also came to end – No master-servant relationship between respondent-Bank and petitioners – Petitioners praying for direction to their employer i.e outsourcing agency which is not instrumentality of State – Writ petition not maintainable – Petitioners cannot claim themselves to be employees of respondent-Bank so as to claim benefit of continuity in service.

 4.Jyoti vs. State of Haryana, 2021 (1) SCT, 588 ( P&H)

A. Contractual employment – Retrenchment – Whether Order Passed By Single Judge Relegating Them To Alternative Remedy Under Industrial Dispute Act, 1947 Correct? – Held, appellants are working as Data Entry Operators under Haryana Shehari Vikas Pradhiaran which is not ‘Housing apartment’, but statutory authority constituted by State Legislature – Prima facie, appellants covered under definition of “workmen”.

B. Constitution of India, 1950 Articles 14 and 16 Right Of Contractual Employees to seek Continuation of Services – Held,

(i) Principle of ‘last come first go’ applicable to case of retrenchment but not in case where initial appointment of employee is against public policy or employer finds work and conduct of employee to be not satisfactory;

(ii) In case work and conduct of employee not found to be satisfactory, then services of such employee, although being a senior, pales into insignificance and services of such employee can be terminated in accordance with terms and conditions of such employee;

(iii) Contractual/temporary employee cannot claim any protection against termination so long as action taken by authority not shown to be vitiated by infirmities viz. illegality, perversity, unreasonableness, unfairness or irrationality and so long as the action is not demonstrably defiant of logic;

(iv) Renewal of contract cannot be sought by temporary/contractual employee as matter of right as its renewal of employment depends upon perception of management as to usefulness of employee and need for incumbent in position held by such employee.

Thus, since initial appointment of appellants was against public policy, therefore, services rightly terminated by employer – Therefore, futile exercise to relegate appellants to remedy under Industrial Disputes Act, 1947 when it is apparent that their appointments are illegal, being directly in conflict with public policy.

5. Phoenix Arc Pvt. Ltd. vs. Ketulbhai Ramubhai Patel, 2021 (1) RCR (Civil) 874

Insolvency and Bankruptcy Code, 2016 Sections 5(7) and 60(5)(c) Financial creditor – Person having only security interest over assets of corporate debtor, even if falling within description of secured creditor by virtue of collateral security extended by corporate
debtor – Would not be covered by financial creditors – Financial creditor Company advanced financial facility to Corporate debtor Company – Facility Agreement was executed – Board of Directors of Corporate debtor passed Resolution to give Non-Disposal Undertaking in favour of Financial creditor Company whereby Board was authorised to provide undertaking to effect that 100% of their shareholding in GEL not to be disposed of so long as any amounts were due and payable and outstanding – Pledge Agreement was executed by which 40,160 shares of GEL were pledged as security – Corporate debtor has only extended security by pledging 40,160 shares of GEL – Corporate debtor has not entered into contract to perform promise, or discharge liability of borrower in case of his default – Appellant at best would be secured debtor qua said security but not be financial creditor – Decision of NCLAT is correct – Appeal dismissed.

6. Serious Fraud Investigation Office vs. Nittin Johari, 2021 (2) RCR (Criminal) 53

A. Companies Act, 2013 Sections 212(6) and 447 Fraud in relation to affairs of company – Limitation for grant of bail – Limitation under Section 212(6) Companies Act with respect to grant of bail – Is in addition to those already in Cr.P.C.

B. Companies Act, 2013 Sections 212(6) and 447 Criminal Procedure Code, 1973, Section 439 – Fraud in relation to affairs of company – Challenge to grant of bail – Economic offences constitute class apart and need to be visited with different approach – Said factor must be taken into consideration while determining whether bail should be granted in cases involving grave economic offences – Special Court, while considering bail applications filed by respondent both prior and subsequent to filing of Investigation report and complaint, has attempted to account not only for conditions laid down in Section 212(6) of Companies Act, but also of general principles governing grant of bail – High Court in impugned order has failed to apply general principles – Order granting bail set aside – Matter remanded for reconsideration in light of governing principles.

7. N. Subramanian vs. M/s Aruna Hotels Ltd., 2021 (2) RCR (Civil) 310

Insolvency and Bankruptcy Code, 2016 Section 9 Corporate Insolvency Resolution Process – Initiation by employee – Operational creditor worked as Public Relations Manager before he retired from services of corporate debtor – Operational creditor claimed sum Rs. 1.87 Crore owed to him being arrears of salary from year 1998 till 2013 – NCLT in its judgment held amount of Rs. 1.06 Crore payable being admitted by corporate debtor – In appeal NCLAT dismissed claim of operational creditor as not maintainable due to delay of 18 years – Held, From date of last acknowledgement i.e. 30.09.2014 till date on which petition before NCLT was filed i.e. 27.07.2017, three years have not elapsed – Therefore, at least to extent of acknowledgement made by Corporate Debtor, arrears of salary due for period of at least 3 years prior to 30.09.2014 would certainly be within limitation, and therefore payable to Operational creditor – NCLT judgment is correct in admitting application by Operational creditor – Order of NCLAT set aside.

8. Kotak Mahindra Bank Pvt. Limited vs. Ambuj A. Kasliwal, 2021 AIR (SC) 1041

 Recovery of Debts and Bankruptcy Act, 1993 Section 21 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Section 18 Appeal before Debts Recovery Appellate Tribunal without pre-deposit of portion of debt due – Held, in all cases fifty per cent of decretal amount i.e. debt due is to be deposited before DRAT as a mandatory requirement, but in appropriate cases for reasons to be recorded deposit of at least twenty-five per cent of debt due would be permissible, but not entire waiver – Therefore, any waiver of pre-deposit to entire extent would be against statutory provisions and not sustainable in law.

9. Lotus Realtech Pvt. Ltd. vs. State of Haryana, 2021 (2) RCR (Civil) 55

A. Constitution of India, 1950 Article 14 Real Estate (Regulation and Development) Act, 2016, Section 43(5) – Appeal by promoter – Pre-deposit – Provision mandate deposit of 30% of penalty amount for filing appeal by promoter before appellate authority against order of adjudicating officer – Validity of pre-deposit already upheld by Supreme Court – Right of appeal is creature of statute and therefore, is and can be made conditional upon fulfilling certain conditions by statute itself – Any requirement of fulfillment of condition imposed by statute itself before person can avail remedy of appeal is valid piece of legislation – Challenge to impugned provision rejected.

A. Constitution of India, 1950 Article 14 Real Estate (Regulation and Development) Act, 2016, Section 43(5) – Appeal by promoter – Pre-deposit – Provision mandate deposit of 30% of penalty amount for filing appeal by promoter before appellate authority against order of adjudicating officer – Validity of pre-deposit already upheld by Supreme Court – Right of appeal is creature of statute and therefore, is and can be made conditional upon fulfilling certain conditions by statute itself – Any requirement of fulfillment of condition imposed by statute itself before person can avail remedy of appeal is valid piece of legislation – Challenge to impugned provision rejected.

 10. Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal & Anr., CA No. 323 of 2021

Entries in Balance Sheets can amount to acknowledgment of debt for the purpose of extending limitation under Section 18 of the Limitation Act.