SECTION 7 APPLICATION UNDER INSOLVENCY AND BANKRUPTCY CODE (IBC) GOVERNED BY ARTICLE. 137 OF LIMITATION ACT, SUPREME COURT.

Supreme Court has held that applications under Section 7 of Insolvency and Bankruptcy Code (IBC) are governed by Article 137 of the Limitation Act for computation of limitation period. The judgment was rendered by a Bench of Justices Rohinton Nariman, R. Subhash Reddy and Surya Kant. In the present case, the Respondent No. 2 was declared NPA on 21st July, 2011. At that point of time, the State Bank of India filed two OAs in the Debt Recovery Tribunal in 2012 in order to recover a total debt of 50 Crores of rupees. Meanwhile, by an assignment dated 28th March, 2014, the State Bank of India assigned the debt to Respondent No. 1. The DEbt Recovery Tribunal held that the OAs filed before it were not maintainable. 

Against the judgment, Special Civil Applications were filed before the Gujarat High Court which resulted in the High Court remanding the aforesaid matter. From this order, a Special Leave Petition was dismissed on 25th March, 2017. An independent proceeding was then begun by Respondent No. 1 on 03rd October, 2017 in the form of a Section 7 application filed under the Insolvency and Bankruptcy Code in order to recover the original debt together with interest which amounted to about Rs. 124 Crores. In the Form-I that has statutorily to be annexed to the Section 7 application in Column II which was the date on which default occurred, the date of the NPA, i.e., 21st July, 2011 was filled up. The NCLT applied Article 62 of the Limitation Act which provides for a Limitation period of 12 years with respect to suits to enforce payment of money secured by a mortgage or otherwise charged upon immovable property. The limitation period as per the said Article begins when the money sued for becomes due. 

Applying the said Article, the NCLT came to the conclusion that since the limitation period was 12 years from the date on which the money suit had become due, the claim was filed within limitation. It, therefore, admitted the Section 7 application. On appeal, the NCLAT held that the time of limitation would begin running for the purposes of limitation only on and from 01st December, 2016 which is the date on which the Insolvency and Bankruptcy Code was brought into force. Consequently, it dismissed the appeal leading to the current appeal in Supreme Court. 

Advocate Aditya Parolia, appearing on behalf of the appellant, argued that Article 137 of the Limitation Act being a residuary Article would apply to the facts of this case. Since the right to sue accrued only on and from 21st July, 2011, and three years having elapsed since then in 2014, the Section 7 application filed in 2017 was out of time, he urged. Senior Counsel Debal Banerjee, appearing on behalf of the respondents, countered this by stressing on para 7 of the judgment in BK Educational Services Private Limited v. Parag Gupta and Associates and reiterated the finding of the NCLT that it would be Article 62 of the Limitation Act that would be attracted to the facts of this case. He further argued that being a commercial Code, a commercial interpretation has to be given so as to make the Code workable. 

The Supreme Court held that Article 62 is out of the way on the ground that it would only apply to suits. The present case being "an application" which is filed under Section 7, would fall only within the residuary Article 137. The time, therefore, would begin to run on 21st July, 2011, as a result of which the application filed under Section 7 would clearly be time-barred, the Court ruled. Regarding the argument that a commercial interpretation must be given, the Court said that 

"it is not for us to interpret, commercially or otherwise, Articles of the Limitation Act when it is clear that a particular Article gets attracted. It is well settled that there is no equity about limitation". 

It, therefore, allowed the appeal and set aside the judgment of NCLT and NCLAT. 

-Challapalli Srinivas Chakravarthy, 25th September, 2019 (Wednesday)- 

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SUPREME COURT TO GET PERMANENT CONSTITUTION BENCH.

Highlights:

(1). For the first time in its nearly 70-year-long history, the Supreme Court is set to have a permanent five-judge Constitution Bench, to be available round the year to adjudicate complex constitutional questions and interpret laws. 

(2). With the setting up of a permanent five-judge Constitution Bench and five three-judge Benches, as many as 20 of the 34 Benches would be engaged in adjudicating constitutional questions and important matters.  

For the first time in its nearly 70-year-long history, the Supreme Court is set to realise the dream of Constitution-framers by creating a permanent five-judge Constitution Bench, to be available round the year to adjudicate complex constitutional questions and interpret laws. Starting with a strength of eight judges in 1950, including the Chief Justice of India, the judges' strength is now 34, with a recent amendment by Parliament after CJI Ranjan Gogoi wrote to Prime Minister Narendra Modi outlining the urgent need for an increase in SC judges' strength in proportion to the increase in litigation. This gave CJI Gogoi freedom to decide that from 01st October, 2019, the SC will have a permanent five-judge bench. As per earlier practice, a two-judge bench, if it found an important question of law in a case, referred the issue to a three-judge bench, which referred certain select important cases for adjudication by a Constitution bench. 

The CJI then used to weigh pendency of cases, engagement of judges in other important cases which were at a stage of being partly heard and then select five judges who could take up Constitution Bench matters without disturbing the rate of disposal. Over the last three decades, setting up five-judge benches has been a challenging task for successive CJIs, given the exponential increase in filing of cases, triggered by numerous SC decisions expanding the writ jurisdiction to create the instrument of PIL and widening th span of fundamental rights. 

The SC also has 164 matters referred by teo-judge benches to three-judge benches. CJI Gogoi has decided to set up five permanent three-judge benches to take up these long-pending 164 cases. Till now, only one or two three-judge benches functioned daily. But with routine workload assigned to these benches, it prevented them from devoting adequate time to hear detailed arguments in these cases. PILs raising important questions of law, scams and human rights violations have been consuming significant judicial time, making it difficult for successive CJIs to disengage judges from such issues and include them in Constitution benches, a process that would block five judges for a long period. In the US and certain other countries, all the judges of the Supreme Court sit together and decide those petitions which are certified by the full court to be of constitutional importance. Nearly 90% of the cases filed in the US SC are rejected at the threshold and never heard by the court. 

CJI Gogoi, as head of the collegium, would be credited for appointing a record 14 judges to the SC. During his tenure as CJI, the SC twice achieved its full strength - of 31 judges in May this year and again of 34 judges now. With four new judges scheduled to take oath on 23rd September, 2019 (Monday), th CJI worked out a scheme by which the SC would truly discharge its duties as a constitutional court with a permanent five-judge bench. There are 37 matters pending for adjudication by the Constitution bench. The Ayodhya issue had been gathering dust since 2010 and CJI Gogoi decided to take it up despite the option of keeping pending a case that is termed as most important in judicial and national history. 

Even during the day-to-day hearing of the Ayodhya issue, the CJI had to squeeze out an hour daily to ensure that chambers for the new judges got ready prior to them taking oath to ensure that a full-strength SC functioned smoothly. With the setting up of a permanent five-judge Constitution Bench and five three-judge benches, as many as 20 of the 34 benches would be engaged in adjudicating constitutional questions and important matters. The rest 14 judges would function as seven two-judge benches. With the SC deciding to amend its rules allowing the CJI to set up single-judge benches for dealing with anticipatory and bail petitions, as was the practice till the 1980s, there could be more than seven benches that could be formed by CJI Gogoi for expeditious reduction in pendency of cases which has risen to nearly 60,000 cases. 

[Courtesy: Based on an article written by Dhananjay Mahapatra, published in The Times of India dated 21st September, 2019].

--Challapalli Srinivas Chakravarthy, 21-09-2019 (Saturday)--

ACQUITTAL WON'T END EMPLOYER'S ACTION.

Stating that no public servant shall behave in a manner which is derogatory to the prestige of the government, the Telangana High Court upheld the decision of the police to take departmental disciplinary action against a police constable, even after he was acquitted of criminal charges by the Criminal Court. A division Bench of the High Court was dealing with a petition filed by the Commandant of the Special Armed Reserve Central Police Lines (SARCPL) seeking to set aside the order of the Administrative Tribunal, which had given relief to police constable M. Ramesh. The Court said that the acquittal of criminal charges on account of witnesses turning hostile cannot be a ground to interfere with the disciplinary action passed in departmental proceedings. Ramesh was suspended for his alleged involvement in a criminal case. Along with his nephew, he had allegedly intercepted the vehicle of one D. Dayanand and robbed Rs. 9,700/-, a gold ring and a cell phone in April 2010. Senior officials found gross misconduct with Ramesh falsely reporting sick on May 2010 to cover up his involvement in the crime and his arrest by the civil police. 

Initiating departmental disciplinary action, the officials imposed the penalty of reduction in the time scale of pay for two stages, for two years, with a cumulative effect on future increments and pension. A criminal court acquitted him as the complainant and witnesses turned hostile. With disciplinary proceedings still under implementation by the department, Ramesh approached the Administrative Tribunal to revoke these charges. He succeeded with the tribunal setting aside the proceedings issued by the department against him. Aggrieved by the tribunal order, the police approached the High Court. The Court said he did not get 'an honourable' acquittal and upheld the disciplinary proceedings against the constable.

[Courtesy: Deccan Chronicle dated 12th April, 2019 (Friday)].

-Challapalli Srinivas Chakravarthy, 12th April, 2019, Friday-

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SEX TO MARRY IS RAPE: SUPREME COURT.

In a significant verdict, the Supreme Court has held that a person having sex with a woman on the promise of marrying her will be of no consequence as it is obtained by fraud. Giving this ruling, a Bench of Justices L. Nagewara Rao and M.R. Shah said this kind of consent obtained by the accused cannot be said to be of any consent becuase she was under the misconception to marry her, therefore, she submitted to sexual intercourse with him. This kind of consent taken by the accused with clear intention not to fulfil the promise and persuading the girl to believe that he is going to marry her and obtained her consent for the sexual intercourse under total misconception cannot be treated as consent. 

Writing the judgment, Justice Shah said that such incidents are on the increase now-a-days and that these are offences against society. "Rape is the most morally and physically reprehensible crime in a society, an assault on the body, mind and privacy of the victim. As observed by this Court in a catena of decisions, while a murderer destroys the physical frame of the victim, a rapist degrades and defiles the soul of a helpless female", the Supreme Court observed. The Bench, slapping a seven-year imprisonment on the appellant doctor Anurag Soni, said rape reduces a woman to an animal as it shakes the very core of her life. "By no means can a rape victim be called an accomplice. Rape leaves a permanent scar on the life of the victim. Rape is a crime against the entire society and violates the human rights of the victim. Being the most hated crime, rape is tantamount to a serious blow to the supreme honour of a woman, and offends both her seteem and dignity", the Court said.

[Courtesy Deccan Chronicle dated 12th April, 2019 (Friday)].

-Challapalli Srinivas Chakravarthy, 12th April, 2019 (Friday)- 

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