ZENITH DRUGS & ALLIED AGENCIES PVT. LTD. REPRESENTED BY ITS MANAGING DIRECTOR, SHRI UDAY KRISHNA PAUL V. M/S. NICHOLAS PIRAMAL INDIA LTD.

SC-Setting aside the Guwahati HC order,the Hon’ble SC held that the parties can be referred to arbitration in an application filed under Sec.8 of the Arbitration and Conciliation Act only if the subject matter of the action before the judicial authority relates to dispute which is the subject of the arbitration agreement. Since the respondent has raised the plea that the compromise decree is vitiated by fraud, the merits of such a plea could be decided only by the Civil Court and the parties cannot be referred to arbitration. Hon'ble Justices  R. Banumathi and A.S. Bopanna [30-07-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/zenith-drugs-and-allied-agencies-pvt-ltd-represented-by-its-managing-director,-shri-uday-krishna-paul-vs-ms-nicholas-piramal-india-ltd

Mauji Ram V. State of Uttar Pradesh & Anr.

SC-The appeal against the Allahabad HC order has been allowed with the observation that the HC committed jurisdictional error in passing the impugned order because while passing it the HC did not assign any reason as to on what grounds, even though of a prima facie nature, it considered just and proper to grant bail to the respondents. It must appear from a perusal of the order that the Court has applied its mind to the relevant facts in the light of the material filed by the prosecution at the time of consideration of bail application.-Hon'ble Justices Abhay Manohar Sapre and Indu Malhotra[29-07-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/mauji-ram-vs-state-of-uttar-pradesh-and-anr

STATE BANK OF INDIA & ORS. V. ATINDRA NATH BHATTACHARYYA & ANR.

SC-The opportunity of hearing granted to the respondent, which was the subject matter of appeal, has been set aside and the appeal has been allowed with the observation that once the respondent has failed to avail of opportunity of hearing granted, the Bank cannot be directed to give another opportunity for the sake of justice. The respondent avoided availing the said opportunity when offered. Once opportunity has been granted to the respondent, he is not entitled to another on the ground of compassion. The delaying tactics cannot be rewarded in such a manner.-Hon'ble Justices L. Nageswara Rao and Hemant Gupta [25-07-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/state-bank-of-india-and-ors-vs-atindra-nath-bhattacharyya-and-anr

BRAHMANI RIVER PELLETS LIMITED V. KAMACHI INDUSTRIES LIMITED

While setting aside the Madras HC order,the Hon’ble SC observed that when the parties have agreed to have the “venue” of arbitration at Bhubaneswar, the Madras HC erred in assuming the jurisdiction under Sec.11(6) of the Arbitration and Conciliation Act, 1996.Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts.Non-use of words like “exclusive jurisdiction”, “only”, “exclusive”, “alone” is not decisive and does not make any material difference.- Hon'ble Justices  R.Banumathi and A.S.Bopanna [25-07-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/brahmani-river-pellets-limited-vs-kamachi-industries-limited

Sri A.M.C.S. Swamy, ADE/DPE/Hyd (Central) V. Mehdi Agah Karbalai & Anr.

SC-Setting aside the Hyderabad HC order, the Hon’ble SC observed that when there is express provision in the Special Act empowering the Special Court to take cognizance of an offence without the accused being committed, it cannot be said that taking cognizance of offence by Special Court is in violation of Sec. 193 of the CrPC,1973. The Govt. had already issued notification notifying the 1st Additional District Judge’s Court as a Special Court and under Sec. 151 of the Electricity Act, 2003, the Special Court is empowered to take cognizance without there being an order of committal as contemplated under Sec. 193 of the CrPC.-Hon'ble Justices R. Banumathi and R. Subhash Reddy [23-07-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/sri-amcs-swamy,-adedpehyd-(central)-vs-mehdi-agah-karbalai-and-anr

Vinod Bhaiyalal Jain & Ors. V. Wadhwani Parmeshwari Cold Storage Pvt. Ltd.Through its Director & Anr.

SC-The Hon’ble SC observed that the award passed by the Arbitrator was not sustainable and the learned District Judge was justified in entertaining the petition under Sec. 34 of the Arbitration and Conciliation Act, 1996 to set aside the award. There was a reasonable basis for the appellants to make a claim that the Arbitrator would not be fair to them even if not biased and propriety demanded that the Arbitrator should have recused in the present facts; but failed to do so.-Hon'ble Justices R. Banumathi and A.S.Bopanna [24-07-2019]
Read the full judgment with iDRAF (Issue,Decision,Reasoning,Arguments,Facts)-https://www.legitquest.com/vinod-bhaiyalal-jain-and-ors-vs-wadhwani-parmeshwari-cold-storage-pvt-ltdthrough-its-director-and-anr

Section 138 NI Act: Delay In Filing The Complaint Can Be Condoned If Sufficient Cause Is Shown In The Complaint [Read Judgment]

Section 138 NI Act: Delay In Filing The Complaint Can Be Condoned If Sufficient Cause Is Shown In The Complaint [Read Judgment]: The Supreme Court has observed that cognizance of a complaint filed under Section 138 of the Negotiable Instrument Act can be taken by the court even after the prescribed period, if the...

GST Evaders Can Be Arrested: SC Upholds Telangana HC Judgment

Supreme Court has dismissed a plea challenging Telangana High Court judgment that held that a person can be arrested by the competent authority in cases of Goods and Service Tax (GST) evasion. 

The vacation bench of Chief Justice of India Ranjan Gogoi and Justice Aniruddha Bose, dismissing the Special Leave Petition, said that it is not inclined to interfere. 

The Division bench of the Telangana High Court, in April, comprising of V. Ramasubramanian and Justice P. Keshava Rao had dismissed a batch of writ petitions seeking protection from arrest for alleged tax evasion. The challenge was against the summons issued by Superintendent (Anti-Evasion) of the Hyderabad GST Commissionerate under the Central Goods and Services Tax Act, 2017. The bench observed that sub Section (1) of Section 69 of the Act empowers the Commissioner to order the arrest of a person, when such a person is believed to have committed a cognizable and non bailable offence. 

It had said: "If reasons to believe are recorded in the files, we do not think it is necessary to record those reasons in the authorization for arrest under Section 69(1) of the CGST Act. Since Section 69(1) of the CGST Act, 2017 specifically uses the words “reasons to believe”, in contrast to the words “reasons to be recorded” appearing in Section 41A(3) of Cr.P.C., we think that it is enough if the reasons are found in the file, though not disclosed in the order authorizing the arrest." 

The state had submitted before the High Court that the petitioners before it were allegedly involved in incorporating several partnership firms and had claimed input tax credit on the basis of certain invoices, without there being any actual physical receipt of goods. It had alleged that the fraudulent input tax credit claimed by them was to the tune of Rs 224.05 crore. 

The High court had also rejected the contention that here cannot be an arrest even before adjudication or assessment. 

It had said: "To say that a prosecution can be launched only after the completion of the assessment, goes contrary to Section 132 of the CGST Act, 2017. The list of offences included in sub Section (1) of Section 132 of CGST Act, 2017 have no co relation to assessment. Issue of invoices or bills without supply of goods and the availing of ITC by using such invoices or bills, are made offences under clauses (b) and (c) of sub Section (1) of Section 132 of the CGST Act. The prosecutions for these offences do not depend upon the completion of assessment." 

The bench also did not favour the argument raised by the petitioners that since all the offences under the Act are compoundable under sub Section (1) of Section 138 of the CGST Act, 2017, subject to the restrictions contained in the proviso thereto and that therefore, there is no necessity to arrest a person for the alleged commission of an offence which is compoundable. The court also had observed that the furthering of enquiry/ investigation is not the only object of arrest.

https://www.livelaw.in/top-stories/gst-evaders-can-be-arrested-14530

Whether Section 143-A Of The Negotiable Instruments Act, 1881 Has Retrospective Application Or Not ?

Preface: 

The party who commits default in payment can be sued by a payee in the civil court by filing suit for recovery of money. However, the special provision of Section 138 under the Negotiable Instruments Act, 1881 (hereinafter referred to as the NIA) was inserted with effect from 01.04.1989 vide the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988. The object of the NIA is to enhance the acceptability of the cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts.

That by virtue of the Amendment Act No. 20 of 2018 in the NIA, the legislature introduced Section 143-A and Section 148providing for "Power to direct interim compensation" and "Power of Appellate Court to order payment pending appeal against conviction" respectively.

Key Aspects- Section 143-A of the NIA:

i.                 Section 143-A of the NIA deals with order of payment of interim compensation; the upper limit is maximum 20% of the cheque amount.

ii.                The order as regards payment of interim compensation is made directly in favour of the complainant.

iii.               If the order of payment is made, the accused is to pay interim compensation within a period of 60 days from the date of the order and for special reason, further 30 days can be given, hence, within a total of 90 days from the date of the order.

iv.               Stage at which application under Section 143-A of the NIA can be filed: (a) In summary trials or summons case, where the accused pleads not guilty to the accusation made in the complaint, and, (b)In any other case,upon framing of charge.

v.                Sub-section (3) of Section 143-A of the NIA states that the interim compensation shall be paid within 60 days from the date of the order passed under Sub-section (1) of Section 143-A of the NIA. However, Sub-section (1) of Section 143-A of the NIA states that the court may order the drawer to pay interim compensation. So, it leaves discretion with the trial court to pass such order of interim compensation and if such interim compensation is directed to be paid, then the ceiling limit under Sub-section (2) of Section 143-A of the NIA is 20% of the cheque amount.

vi.               Sub-section (4) of Section 143-A of the NIA states about recovery of money with interest from the complainant in case of acquittal of the accused within a period of 60 days or maximum 90 days from the date of order of acquittal of the accused.

vii.             Sub-section (5) of Section 143-A of the NIA states that interim compensation payable by the accused can be recovered by the complainant as if it were a fine under Section 421 of the Criminal Procedure Code, 1973.

Key Aspects- Section 148 of the NIA:

i.                 Section 148 of the NIA states that in an appeal by the drawer/accused against conviction under Section 138 of the NIA, the Appellate Court may order the appellant/drawer to deposit such sum which shall be a minimum of 20% of the fine or compensation awarded by the trial court.

ii.                 The Appellate Court may direct the release of the amount which is deposited by the appellant/drawerin the Appellate Court to the complainant/respondent, at any time during the pendency of the appeal.

iii.               If the order of payment is made, the appellant/drawer is to deposit such sum (minimum of 20% of the fine or compensation awarded by the trial court) within a period of 60 days from the date of the order and for special reason, further 30 days can be given, hence, within 90 days from the date of the order.

iv.               The order directing the deposit of money in the Appellate Court can be passed at any time during the pendency of the appeal.

v.                As per the proviso to Section 148 of the NIA, if the appellant/drawer is acquitted, the Appellate Court shall direct the complainant/respondent to repay to the appellant/drawer the amount so released, with interest (at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year) within 60 days from the date of the order, or within such further period not exceeding 30 days as may be directed by the Appellate Court on sufficient cause being shown by the complainant/respondent.

Comparing Section 143-A and Section 148 of the NIA:

In the matter of: Ajay Vinodchandra Shah V/s State of Maharashtra, Criminal Writ Petition No. 258 of 2019, High Court of Bombay, Date of Decision: 14.03.2019, Coram: MridulaBhatkar, J., in Para 13 and Para 14 it was held as follows:

"13. On comparison of the language used in sections 143A and 148, one finds a difference. U/s 143A, the accused is yet to face a trial. Under sub-section (2) thereof, the interim compensation under sub-section (1) shall not exceed twenty percent of the amount of cheque. However, under section 148, it is stated that the Court may order the appellant to deposit such sum which shall be a minimum of twenty percent of the fine. These clauses in these two sections reflect the intention of the Legislature that a person at the stage of trial is always considered innocent till he is found guilty and, therefore, the ceiling of 20% compensation is mentioned. However, in the appeal, when the first Court holds the accused guilty and thus, once he is convicted, then, the appellate Court is given the power to pass order directing the accused to deposit the amount which shall be a minimum of 20% of the fine or compensation awarded by the trial Court. It is further stated in section 148 that the amount payable under this sub-section (sic) shall be in addition to any interim compensation paid by the appellant under section 143A. 14. The Legislature has also taken care of the accused if at all he is not held guilty and acquitted either at the trial or in the appeal. The sub-section (4) of section 143A and the proviso to section 148 state about the repayment of the amount by the complainant to the accused. In the event of acquittal, the said amount also to be paid within 60 days from the date of the order…"

Section 143-A of the NIA operates retrospectively?

In the matter of: Punjab Tin Supply Co. V/s Central Government, (1984) 1 SCC 206, it was observed that, all laws which affect substantive rights generally operate prospectively and there is a presumption against their retrospectivity if they affect vested rights and obligations unless the legislative intent is clear and compulsive; such retrospective effect may be given where there are express words giving retrospective effect or where the language used necessarily implies that such retrospective operation is intended. Hence, the question whether a statutory provision has retrospective effect or not depends primarily on the language in which it is couched. If the language is clear and unambiguous, effect will have to be given to the provision in question in accordance with its tenor; however, if the language is not clear then the court has to decide whether in the light of the surrounding circumstances retrospective effect should be given to the statutory provision or not.

According to Section 5 of the General Clauses Act, 1897, any Act of Parliament comes into operation on the day on which it receives the assent of the President. Unless it is expressed to become operational on any other date and unless a contrary intention is expressed, the Act of Parliament comes into effect qua all cases on the day of its commencement.

View Taken by the Hon'ble High Court of Bombay: In the matter of Ajay Vinodchandra Shah (Supra), the Hon'ble High Court of Bombay observed that (Para 12 of the report):

"… It is incorrect to accept that it is to be made not (sic)applicable to the cases which are filed only after 01.09.2018 and not applicable to the cases pending earlier in the trial as well as appellate Court. Huge number of cases under section 138 of the Act are pending in the Courts. In these cases, if the plea is recorded or charge is not framed, then the trial Court can invoke its powers under Section 143-A after 1.9.2018 and can impose interim compensation which shall not exceed 20% of the amount of cheque. Same is the case in appeals. If the appeals are pending, the Court can pass interim orders under section 148…"

Thus, according to the view taken by the Hon'ble High Court of Bombay, Section 143-A and Section 148 of the NIA do not operate prospectively.

View Taken by the Hon'ble High Court of Punjab & Haryana:

In the matter of: Ginni Garments & Anr V/s Sethi Garments, CRR No. 9872-2018 (O&M), High Court of Punjab & Haryana, Date of Decision: 04.04.2019, Coram: Rajbir Sehrawat, J., it was held that:

i.                 Whether Section 143-A and Section 148 of the NIA have prospective or retrospective operation depends upon the determination whether these provisions are substantive in nature or are merely procedural. If these provisions are substantive in nature then these provisions cannot be applied retrospectively to the pending cases, however, if these provisions are procedural in nature then they have to be applied to all the cases, including the ones pending before the court on the date, the amendment was enforced.

ii.                A bare perusal of Section 143-A of the NIA shows that Section 143-A of the NIA has given power to the trial court to order the drawer of the cheque to pay interim compensation (maximum of 20% of the cheque amount) to the complainant, where the accused has not pleaded guilty of the accusation made against him. Moreover, as per Section 143-A of the NIA if interim compensation is not paid within 60 days (or maximum of 90 days) from the order of the court granting interim compensation, then the interim compensation can be recovered by the complainant from the drawer/accused under Section 421 of the Criminal Procedure Code, 1973, as if it were a 'fine' imposed upon the drawer/accused.Section 143-A of the NIA casts a substantive obligation upon the drawer/accused.

iii.               Section 143-A of the NIA is not a procedural provision as it intends to create a 'stand-alone liability' for the drawer/accused towards the complainant which has to be discharged by the drawer/accused when the matter is still pending for adjudication before the trial court.

iv.               Although the provision of Section 143-A of the NIA cannot be applied to the pending trials, however, the situation regarding Section 148 of the NIA is drastically different. Section 148 of the NIA does not, in any way, affects the substantive right of the accused, to defend himself or to prosecute his appeal. Section 148 of the NIA categorically provides that in case the appellant/drawer is acquitted by the Appellate Court, then, the amount awarded by the Appellate Court as interim compensation shall be returned to him, by the complainant along with interest.

v.                 When the case reaches before the Appellate Court, the appellant/drawer has already acquired a status of 'convict', who has already been found guilty of his conduct and sentenced by the trial court. In case the trial court imposes a fine then making the appellant/drawer pay that amount does not affect his substantive right, rather it is a matter of procedure only. Moreover, in case the trial court imposes a fine, which can be up to twice the amount of the cheque and which can be treated as compensation to be paid to the complainant, in that situation, liability of the appellant/drawer has already been determined by the trial court and the liability to pay the amount to the complainant already exists at the time when the appellant/drawer comes before the Appellate Court.

vi.               Section 148 of the NIA is to govern all the appeals pending on the date on which it was enforced and/or appeals filed thereafter.

View Taken by the Hon'ble High Court of Allahabad:

In the matter of: Vivek Kumar Negi V/s State of U.P. &Anr., Application under Section 482 of the Cr.P.C. No. 11055 of 2019, High Court of Allahabad, Date of Decision: 11.04.2019, Coram: Arvind Kumar Mishra, J., the question that came for adjudication before the Hon'ble Court was this:

"… whether the amendment brought and incorporated under Section 143 (A) (1) of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act') is applicable retrospectively nor (sic) not?"

Answering the question framed above, the Hon'ble Court observed as follows:

"… In so far as amendment is concerned, the amendment is of procedural nature and not of substantive nature. Moreover, in matters of applicability of the amendment [under Section 143 (A)] proceedings launched in the matters pending prior to the incorporation of the amendment there is no express bar in the Act. It being so, the amendment will be applicable even to the proceeding pending prior to the date of incorporation of the amendment as Section 143 (A) in the matters involving provisions of the Negotiable Instruments Act, 1881…"

Thus, according to the view taken by the Hon'ble High Court of Allahabad, Section 143-A of the NIA is to operate retrospectively.

View Taken by the Hon'ble High Court of Karnataka:

In the matter of: Sri V. Narasimha Murthy V/s Sri Santhosh,

 I.A. No. 3 of 2018 in Criminal Revision Petition No. 425 of 2018, High Court of Karnataka, Date of Decision: 18.02.2019,

Coram: B.A. Patil, J.,

it was held that:

i.                 According to Section 148 of the NIA, the Appellate Court may order the accused to deposit a minimum of 20% of the fine amount or the compensation awarded by the trial court and if the said amount is deposited within 60 days from the date of such order, the Appellate Court may direct the release of the amount so deposited by the accused in favour of the complainant during the pendency of the appeal. The proviso to Section 148 of the NIA states that while releasing the amount so deposited, the complainant has to be directed to repay the said amount in the event of acquittal of the accused with interest at bank rate which was prevailing during the said period.

ii.                It is a cardinal principle of construction that every statute is prima facie prospective in nature, unless it is expressly or by necessary implication made to have retrospective operation.

iii.               Section 148 of the NIA has been enacted to protect the interest of the complainant and to provide relief to the complainant. Further, Section 148 of the NIA has been enacted to discourage filing of frivolous appeals. Thus, Section 148 of the NIA has to be given wider interpretation and not a restricted/pedantic interpretation.

iv.               Section 148 of the NIA has to be given retrospective effect.Section 148 of the NIA is to govern all the appeals pending on the date on which it was enforced and/or appeals filed thereafter.

Afternote:

In the matter of: G.J. Raja V/s Tejraj Surana,

Petition for Special Leave to Appeal (Crl.) No. 3342/2019, the Hon'ble Supreme Court of India, formulated the following question of law for adjudication:

"… whether Section 143-A introduced by the Amendment Act No. 20 of 2018 in the Negotiable Instruments Act, 1881 has retrospective application or not?"

The aforenoted matter is still pending adjudication before the Hon'ble Supreme Court of India with the next date of hearing being: 01.07.2019.

Source: https://www.livelaw.in/columns/whether-section-143-a-in-the-negotiable-instruments-act-14507

Bar Council of Delhi directs Deloitte, EY, KPMG and PwC not to offer legal services

In a double-whammy of sorts for the Big Four audit-cum-consultancy firms – Deloitte, EY, KPMG and PwC – the Bar Council of Delhi on Friday directed the four firms to refrain from providing legal services to clients till further notice.

The move comes after a complaint was filed by the Society of Indian Law Firms (SILF), representing around 100 Indian law firms. SILF said in its complaint that the Big Four were actually accounting firms, but are engaged in "doing law practice". SILF had filed a similar complaint to the Bar Council in 2015 alleging that the Big Four were resorting to "unauthorised practice of law" in violation of the Advocates Act.

The Bar Council order asked the four firms to provide a list of advocates on their rolls. The order copy said that while Deloitte and KPMG had filed their response to the complaint, PwC and EY had asked for more time to submit their response. The Council has deferred the matter for further hearing to July 12. It has asked the four firms to refrain from the practice until further orders.

The development comes at a time when the Big Four firms are under the scanner for audit-related practices. The recent meltdown at ILFS group has put the spotlight on statutory auditors.

Many in the chartered accountant fraternity were of the view that there were grey areas over jurisdiction of non-litigation related legal services. In their earlier response in 2015, one of the Big Four firms had said that they were not "engaged in the practice of law". A source in one of the Big Four firms reiterated the same stand that they do not represent any legal firm. "We do not practice in any area that only advocates are supposed to practice," he added.

There has been growing angst in the legal fraternity that multinational audit-cum-consultancy firms have over the years hired lawyers in large numbers to offer legal advice to clients. “It is a turf battle between lawyers and chartered accountants,” noted a senior advocate and chartered accountant. There are many lawyers – registered with the Bar Council – who offer tax advice to clients.

Meanwhile, the Institute of Chartered Accountants refused to get drawn into this fight and did not offer any official comment to Bar Council’s order.



Source: https://www.business-standard.com/article/companies/bar-council-of-delhi-directs-big-four-not-to-offer-legal-services-119050301212_1.htm