LAW FOR ALL

Wednesday, February 10, 2021

Whether the invalidation of membership of appellants and the impleaded appellants1 (and two others), solely on the ground that the then Managing Committee on its way out and facing no confidence motion before the Special General Body Meeting2 demanded by the majority of existing members of the Society ought not to have hastened admission of new members, is just and proper and the appropriate direction necessary in that regard?

Whether the invalidation of membership of appellants and the impleaded appellants1 (and two others), solely on the ground that the then Managing Committee on its way out and facing no confidence motion before the Special General Body Meeting2 demanded by the majority of existing members of the Society ought not to have hastened admission of new members, is just and proper and the appropriate direction necessary in that regard?

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 412 OF 2021

(Arising out of S.L.P. (Civil) No. 8138 of 2020)

Swati Ulhas Kerkar and Ors. … Appellants

versus

Sanjay Walavalkar and Ors. …Respondents

J U D G M E N T

A. M. KHANWILKAR, J.

1. The central question in this appeal is: Whether the

invalidation of membership of appellants and the impleaded

appellants1

(and two others), solely on the ground that the then

Managing Committee on its way out and facing no confidence

motion before the Special General Body Meeting2

demanded by the

majority of existing members of the Society ought not to have

hastened admission of new members, is just and proper and the

appropriate direction necessary in that regard?

For short, “the appellants”

For short, “SGBM”

FACTUAL MATRIX

2. Briefly stated, Prabodhan Education Society3

is a registered

society under the Societies Registration Act, 18604

. The Society

consisted of 32 members – before induction of 22 persons

(including the appellants) as members on 17.09.2017 and their

subsequent removal in terms of the impugned decision.

3. The byelaws of the Society mandate that the elections to the

Karyakari Samiti (Managing Committee) be held every three years.

The elections to the Managing Committee were due in September

2013, however, there was a delay in conducting elections, which

ultimately came to be held on 05.10.2014. While the Managing

Committee elected in 2014 was at the helm of affairs of the

Society, it was served with a requisition dated 07.11.2016 signed

by 18 of the 32 existing members of the Society, to convene a

SGBM for removal of the Chairman, Secretary and Treasurer and

for conducting elections therefor. The removal of the Managing

Committee was sought on various grounds of abuse of power and

mismanagement, resulting in loss of confidence.

4. In furtherance of the said requisition, the Secretary vide

letter dated 22.11.2016, scheduled a SGBM on 07.12.2016.

3 For short, “the Society”.

4 For short, “the 1860 Act”.

However, upon objections raised by the members of the Managing

Committee to hold such SGBM, the said decision came to be

reviewed and the SGBM stood cancelled. That decision was

communicated to the members of the general body vide letter

dated 03.12.2016.

5. Aggrieved by the cancellation of the SGBM by the Managing

Committee, Sanjay Walavalkar (respondent No. 1 herein and one

other member of the Society) approached the High Court of

Bombay, Bench at Goa5

vide Writ Petition No. 1195 of 2016 for the

following reliefs:

“(a) This Honourable Court be pleased to issue a writ of

mandamus or a writ in the nature of mandamus or any

other appropriate writ, order or direction commanding

the Respondent No.4 to convene a Special General Body

Meeting to transact the agenda as requisitioned by the

18 requisitioning members vide their letter dated

07.11.2016 addressed to the Chairman/Secretary of the

said society and to hold the same under the supervision

and control of the Respondent Nos.2 and/or 3 as the

observers to oversee such meeting.

(b) This Honourable Court be pleased to issue a writ of

mandamus or a writ in the nature of mandamus or any

other appropriate writ, order or direction commanding

the Respondent Nos. 2 and/or Respondent No.3 to

direct the Respondent No.4 to convene a Special

General Body Meeting to transact the agenda as

requisitioned by the 18 requisitioning members vide

their letter dated 07.11.2016 addressed to the

Chairman/Secretary of the said society and to hold the

same under the supervision and control of the

Respondent Nos.2 and/or 3 as the observers to oversee

such meeting.”

5 For short, “the High Court”

6. Indisputably, 22 persons (including the appellants – vide

letters dated 12.09.2016, 19.09.2016, 22.09.2016, 18.10.2016,

12.12.2016 and 19.12.2016) had filed applications for being

enrolled as a member of the Society. The Secretary issued notice

dated 29.12.2016 proposing to convene a meeting of the Managing

Committee on 02.01.2017 to induct new members. The induction

was, however, deferred. The Secretary issued another notice on

16.09.2017 for convening a meeting of the Managing Committee

on 17.09.2017, to consider induction of new members. In that

meeting, the Managing Committee went on to induct the aforesaid

22 persons (including the appellants) as members, despite

objections raised by the Treasurer. In the same meeting, it was

decided to convene an Annual General Body Meeting6

08.10.2017 for conducting elections to constitute new Managing

Committee. The relevant portion of the minutes of meeting dated

17.09.2017 is as under:

“3. It was decided that the 34th General Body Meeting be

convened on Sunday, 8th October 2017 at 10:00 AM, in

the school premises. Notices be sent 15 days in

advance.

4. Following new 22 (Twenty two) members were

inducted today as members of Prabhodhan Education

Society (General Body). (Their applications were pending

since Sept/Oct 2016). It was done to complete the

pending work/task of the present committee before

expiry of the term.

6 For short, “AGM”

...

Shri Vithal G.P. Parrikar, the Treasurer, raised his

objection to induction of new members. He said he

would not mind their induction after General Body and

expressed fear that this act may invite contempt of

court.”

7. Respondent No. 1, aggrieved by the said development, sought

additional reliefs in the above writ petition as under:

“(a) This Hon'ble Court be pleased to declare that the

Notice dated 29/12/2016 addressed by the Secretary of

the Respondent No.4, thereby proposing to convene the

meeting of the Managing Committee interalia to induct

new members to the General Body of the Respondent

No.4 is illegal and bad in law and the same be quashed

and set aside.

(b) This Hon'ble Court be pleased to declare that the

holding of the Meetings of the Managing Committee of

the Prabodhan Education Society on 17/09/2017 and

18/09/2017 and the decisions taken thereat (including

in respect of induction of Respondent No.5 to 26) are

illegal and nonest and the same be quashed and set

aside and the Respondent No.5 to 26 be restrained from

acting as members of the Respondent No.4 for all

intents and purposes.

Managing Committee of the Respondent No.4 from

admitting or inducting any new members to the General

Body of the Respondent No.4, pending holding of the

Special General Body Meeting as requisitioned by 18

members of the Respondent No.4 vide their letter dated

07.11.2016.”

8. As the decision of the Managing Committee dated 17.09.2017

came to be assailed before the Court, the Managing Committee

deferred elections.

9. The High Court vide interim order dated 05.10.2017

permitted respondent No. 1, to bring on record the 22 newly

inducted members, as they were likely to be affected by the

outcome of the further reliefs claimed in the stated writ petition.

The relevant portion of the interim order is extracted hereunder:

“1. The matter is moved urgently at the instance of the

Petitioner. It could not be taken up yesterday.

2. Mr Kantak, learned Senior Advocate on behalf of the

4th Respondent, states, on instructions, that the

elections scheduled on 8th October 2017 will be

deferred till 5th November 2017.

3. However, it is pointed out that the term of the

current Managing Committee and its office bearers

ends by 7th October 2017. In view of the statement

made, the present Managing Committee will continue

as a pro tem or caretaker Managing Committee till the

next elections but will not take any major financial,

policy or other decisions until that time. It may attend

to routine management and administrative issues

alone.

4. List the Petition high on the supplementary board

on 31st October 2017.

5. In the meantime, leave to amend to join the newly

inducted members. Amendment to be carried out

without need of verification by 10th October 2017.

Notice to be issued to the newly added Respondents

returnable on 31st October 2017. An amendment is

also permitted to add an additional prayer. Liberty to

file an additional affidavit after the amendment is

carried out.”

10. The above writ petition was ultimately disposed of vide order

dated 08.11.2017, directing the Inspector General of

Societies/District Registrar7

to decide the dispute on its merits as

per law, in the following words:

“8. ..... Since the Petitioner has already approached the

Inspector General under Section 20(A) and the

Inspector General is considering the complaint and that

7 For short, “the Authority”

it is the grievance of the Petitioner that certain

developments have taken place pending the decision of

the complaint, even the subsequent grievance of the

Petitioner can be considered by the Inspector General

on its own merits. Since the Inspector General is an

authority under the Act, it will be appropriate that the

matter is first looked into by the Authority under the

Act, before this Court is called upon to decide the issue

of internal management of the society at first instance.

.....

10. Accordingly, we dispose of the Writ Petition by

directing Respondent No.3 i.e. the Inspector General,

before whom the complaint is made by the Petitioner is

pending, to consider the additional grievance made by

the Petitioner as well. The Inspector General will decide

the matter on its own merits as per law. All contentions

of all parties are kept open, including the one

mentioned above.

11. The adinterim order passed in this petition, in the

form of statement recorded will continue till disposal of

the complaint and two weeks thereafter.”

11. Pursuant to the aforesaid order, respondent No. 1 filed a

consolidated complaint dated 16.11.2017 before the Authority.

The Authority registered Case No. DRN/RDS/794/2017 wherein it

adjudged three original complaints dated 13.10.2016, 04.11.2016

and 05.12.2016 along with the consolidated complaint.

12. The Authority, after having heard the parties to the

complaint as well as the newly inducted 22 members, vide

judgment and order dated 09.03.2018, was pleased to issue

directions and also set aside the decision of the Managing

Committee dated 17.09.2017 giving membership to 22 persons

(including the appellants) on the ground that the same was illegal

and arbitrary. The operative order of the Authority is reproduced

hereunder:

“A) I hereby declare that the induction of Shri.

Gajanan Harishchandra Mandrekar, Shri Subhash

Vinayak Desai, Adv. Sau. Swati Ulhas Kerkar, Dr.

Sitaram V. Korgaonkar, Shri Pandharinath

Lakshman Mapari, Dr. Bhiva Ladu Malik, Shri

Milind Vaman Karkhanis, Shri Krishnaraj Narcinha

Sukerkar, Shri. Atmaram Vaman Gaonkar, Shri.

Pravin Punaji Neswankar, Shri. Sandeep V. Palni,

Shri. Kiran Ramchandra Naik, Shri. Datta

Purushottam Naik, Shri. Shashank Gokuldas

Kamat, Shri. Audhut Ramchandra Kamat, Sau.

Medha R. Prabhudessai, Shri. Devidas J. Saraf,

Shri. Abhai Bhamaikar, Shri. Ashish Sarvottam

Prabhudessai, Shri. Vivek P. Navare, Shri. Vasudev

Subrai Naik Khaunte and Dr. Kedareshwar P.S.

Narvekar, as members of the Prabodhan Education

Society, by virtue of the decision taken by the

majority members of the managing committee at

its meeting held on 17.09.2017, is illegal, arbitrary

and is hereby setaside;

B) I hereby declare that the decision of the majority

members of the managing committee of the Prabodhan

Education Society not to hold the SGM as

requisitioned by 18 members vide their letter dated

07.11.2016, is illegal, arbitrary, dehors the power of

the managing committee and malafide;

C) For the detailed stated in the foregoing part of

this Order, I hereby declare and hold the act of

managing committee as guilty of mismanagement of

affairs of the Prabodhan Education Society and breach

of their fiduciary obligations towards the general body

of the society;

D) I hereby direct the managing committee of the

Prabodhan Education Society and particularly its

Secretary Shri Velingkar to take step to convene an

Annual General Body Meeting of the Society, within a

period of 7 days from the date of receipt of this Order,

with due procedure laid there in under the Societies

Registration Act for the specific purpose of holding

elections to the various posts of the managing

committee of the Prabodhan Education Society for the

period 20182021;

E) with the view to ensure free, fair and impartial

conduct of elections, I hereby direct that the aforesaid

proposed AGM shall be held under the supervision,

direction and control of Shri Suraj Vernekar, Civil

RegistrarcumSub Registrar as the observer; and that

the agenda concerning elections of managing

committee members shall be transacted first, before

any other item/business is taken up for consideration;

F) I hereby direct the managing committee elected

after the forthcoming elections (subject to the approval

of the general body) may frame necessary rules

concerning regulation of its affairs. Considering the

situation in which the society is placed presently and

considering the fact that there are certain gaps in the

byelaws of the society concerning certain aspects, the

managing committee may consider formulating rules

on the following amongst other issues:

i. Rules giving further details on the manner in

which the managing committee shall act after receiving

requisitions by members directing it to convene a

SGM.

ii. Rules stipulating whether any other item (such

as induction of new members or change to the

constitution of the society etc. shall be permitted

during the pendency and consideration of a requisition

under Clause 3(V) of the Society byelaws;

iii. Rules whether there should be any cap/outer

limit on the maximum number of members that can be

inducted at any given point of time and further

whether such induction of new members can be done

on the eve elections (if not, up till what time can such

induction be done);

iv. Rules dealing with the manner and prescribing

further details as to how meetings of the managing

committee and the general body shall be held

(including prescribing notice period for meetings,

mode/manner of intimation etc.),

v. Rules dealing with procedural aspects of

conduction meetings and recording of minutes etc.”

(emphasis supplied)

13. Assailing the said judgment and order, the Society

represented through Secretary, Chairman and Secretary (in

individual capacity) filed Writ Petition No. 373 of 2018 before the

High Court, wherein, the stay granted in the previous proceedings

was extended until disposal of the writ petition by an interim order

dated 22.03.2018.

14. The High Court vide final judgment and order dated

28.05.2020, framed and adjudged five issues. The issues read as

under:

“1. Can a Society, on its own, maintain a writ petition

against an order passed by a statutory authority

concerning the resolutions its Governing Body or

Managing Committee passed?

2. Is the impugned order ultra vires of the Registrar? In

the alternative, has the Registrar got the power to rule

on the allegations of mismanagement by the Managing

Committee?

3. Has the Managing Committee committed an illegality

in not convening the Special General Body Meeting at

the request of 18 of 32 Society members?

4. In the absence of any provision in the bylaws or

under the act for bringing up a noconfidence motion or

to remove the office bearers, could the applicants have

insisted on having a Special General Body meeting for

discussing those issues?

5. Has the Managing Committee legitimately inducted

22 new members, especially, pending the writ petition

and on the eve of the elections?”

While addressing the fourth issue, the High Court placed reliance

on a decision of this Court in Vipulbhai M. Chaudhary v.

Gujarat Cooperative Milk Marketing Federation Limited &

Ors.8 and held that no confidence motion can be maintained even

in absence of provision therefor in the byelaws. The relevant

portion of the impugned judgment is reproduced below:

“71. Vipulbhai M. Chaudhary, I reckon, clinches the

issue. In any democratically constituted institution, the

office bearers continue to hold the office during the

pleasure of the members that have chosen those office

bearers. Sometimes the governing rules or regulations

of that institution are silent about how the governing

members must account for their misdeeds or

maladministration when their tenure is subsisting. But

it is no license for them to wreak havoc in the name of

administration and annihilate the institution. In other

words, it is institutionally inherent that the governing

members must administer the affairs of the institution

faithfully, honestly, and diligently; they should always

remain accountable to the members for their omissions

and commissions. In the same reckoning, the members'

right to unseat these governing members is equally

inherent in the scheme of the things, despite no express

provision to that effect, say, in the byelaws.

72. So we cannot hear the petitioners saying that they

were justified in not holding the SGBM. In this context,

we may reiterate what the Registrar has held: once the

majority members, especially in tune with the bylaws,

required the Managing Committee to hold a general

body meeting for whatever purpose, it is the Managing

Committee's bounden duty to abide by that demand. Let

us assume that the majority members wanted the

general body meeting to discuss frivolous or

unimportant issues; still it is not for the Managing

Committee to sit in judgement over the tenability of the

majority members' demand. Once meeting convened, it

is for the entire body of the membership to examine the

demands and decide on them. This observation, as

made by the Registrar, remains even more relevant

because, here, the allegations concerned the very

Managing Committee.

.....

8 (2015) 8 SCC 1

74. Nevertheless, for the reasons mentioned above, I

must confirm the findings of the Registrar that the

Managing Committee has acted with material

irregularity by refusing to abide by the majority

members' demand for an SGBM. Now, we will examine

the last issue, keeping in view our answer to this issue.”

With respect to the fifth issue, pertaining to the validity of

induction of the 22 new members, the High Court disagreed with

the findings of the Authority on material aspects. However, it held

that the same was bad being taken by the Managing Committee

pending no confidence requisition. The High Court adverted to the

dictum in Vipulbhai (supra) and observed thus:

“95. Then, what vitiates the Managing Committee’s

decision to induct new members?

96. We have already held that the Managing

Committee’s refusal to hold the SGBM even when

majority members demanded is an act of illegality. Now,

we should examine the induction of the new members

in the context of that refusal. On the converse, if there

was no demand for an SGBM by the majority and no

expression of noconfidence, then the governing body

may induct new members at any stage during its tenure

—the beginning, the middle, or the end of the tenure

making no difference.

97. Here, the majority members—18 out of 32—

demanded an SGBM; it was, among other things, to

express their no confidence against certain office

bearers, too. The case holding of Vipulbhai M.

Chaudhary dispels all doubts about whether the statute

or the byelaws should provide for unseating of an office

bearer. No need. It is a constitutionally conferred right.

98. Thus, inferentially, we may hold that once

majority members express no confidence on the

governing body or any office bearer and demand an

SGBM, until the governing body proves its majority,

it loses legitimacy to take policy decisions. And that

legitimacy includes induction of new members.

Otherwise, the moment a governing body, that is the

Managing Committee, faces a noconfidence motion, the

easy—and devious—way out for the governing body is

put the SGBM on hold, induct new members

indiscriminately, alter the membership equation, and

then hold the SGBM. It is abuse of power that upsets

the democratic design of any society and that

should be struck at.

99. So the inescapable conclusion is that the

Managing Committee inducting new members in the

face of no confidence and the impending SGBM is

illegal and arbitrary.”

(emphasis supplied)

Finally, the High Court concluded by holding thus:

“Under these circumstances, I refuse to interfere with

the impugned order, dated 9th March 2018, of the

District Registrar. As a result, I dismiss the writ

petition. No order on costs. Interim relief, if any, stands

vacated.”

15. In view of disposal of the Writ Petition No. 373 of 2018, the

Civil RegistrarcumSub Registrar of Societies, vide letter dated

01.06.2020, directed the Secretary to convene an AGM to conduct

elections for constituting a new Managing Committee by

04.06.2020 (within 7 days from the date of High Court’s order

dated 28.05.2020), failing which the Authority shall conduct such

elections forthwith.

16. In the meantime, aggrieved by the impugned decision of the

High Court, the Society, Chairman and Secretary approached this

Court vide SLP (Civil) No. 7352 of 2020 on 04.06.2020.

Simultaneously, the Chairman and Secretary also addressed letter

dated 04.06.2020 to the Authority, informing that the Managing

Committee held a meeting on 03.06.2020 wherein it had decided

to fix the AGM tentatively on 28.06.2020 for holding elections.

Further, it informed that final date of election would be fixed at a

later date, after withdrawal of Section 144 of Cr.P.C., 1973 which

was in force due to lockdown ordered on account of prevailing

pandemic situation (Covid19).

17. On the other hand, since the Managing Committee failed to

convene an AGM within 7 days, the Authority vide notice dated

09.06.2020 convened an AGM on 25.06.2020 for conducting

elections.

18. Be that as it may, the stated SLP filed by the Society was

listed before this Court on 15.06.2020, whence the same came to

be disposed of in the following terms:

“We decline to interfere in this Special Leave Petition at

the instance of the petitioners. The Special Leave

Petition is dismissed accordingly.

If the 22 person(s) who have been dismembered file

independent Special Leave Petition(s) to assail the

decision of the High Court at their instance, the

issue can be considered on its own merits.

Pending applications, if any, stand disposed of.”

(emphasis supplied)

19. Taking cue from the aforementioned observations made by

this Court, the appellants have approached this Court, by way of

this appeal, to impugn the order dated 28.05.2020 passed by the

High Court. With permission of this Court, 12 other persons (out

of the 22 dismembered persons) similarly placed as the original

appellants have been impleaded as appellants in this appeal.

20. During pendency of the present proceedings, in response to

the Authority’s notice dated 09.06.2020, the Secretary addressed

letter dated 22.06.2020, informing that as per the byelaws, 15

days’ notice is essential for convening an AGM and the same

cannot be convened within 7 days as directed by the Authority.

The said letter also informed that the direction vide order dated

09.03.2018 was only to start the process of elections and not to

conduct elections per se. Further, the Managing Committee had

convened a meeting on 20.06.2020 to fix the AGM on 12.07.2020

for conducting elections. On the same day, the Secretary had also

addressed a letter to the District Magistrate seeking permission to

conduct elections on 12.07.2020.

21. The appellants had addressed letters to the Authority on

24.06.2020 informing about the pendency of the present appeal

and requesting to defer the elections. Despite receiving this

intimation, the Authority proceeded to conduct the elections on

25.06.2020 and constituted the new Managing Committee. This

Court upon being appraised of the said development, vide order

dated 25.06.2020, clarified that any steps taken by the Authority

would be subject to the outcome of this proceedings. The order

reads thus:

“Permission to file Special Leave Petition is granted.

Heard learned counsel for the petitioner(s).

It has been brought to our notice that despite the

pendency of this Special Leave Petition and which fact

was brought to the notice of the Registrar, for reasons

best known to the Registrar, he hastened the election

process.

This factual position be placed on record by way of a

formal application, to be filed by the petitioner(s) and

for appropriate reliefs, as may be advised.

In addition, it will be open to the left over persons who

are similarly placed as the petitioner(s), to file a formal

application for impleading them as party to the

present proceedings.

Both these applications to be filed within one week

from today through email/online.

Issue notice to the respondents on this Special Leave

Petition and proposed applications, returnable within

four weeks.

Dasti, in addition, is permitted.

Any steps taken by the Registrar, including

elections allegedly conducted by him today, i.e.

25.06.2020 will be subject to the outcome of this

Special Leave Petition.”

(emphasis supplied)

22. Curiously, the District Magistrate, in response to the letter

dated 22.06.2020 of the Secretary, refused to grant permission to

conduct elections on 12.07.2020 in view of the restrictions

imposed under Section 144 of Cr.P.C. The same was intimated by

letter dated 10.07.2020.

23. Meanwhile, the newly elected Managing Committee

addressed letters dated 25.06.2020 and 11.07.2020 to the schools

run by the Society intimating about the change in management of

the Society as well as the schools.

24. We may now advert to the challenge before us in the present

appeal.

SUBMISSIONS

25. The thrust of the arguments of the appellants is that in terms

of clause 1(c) of the byelaws of the Society, a person automatically

gets inducted as member of the Society upon submitting

application in the prescribed form along with prescribed fees. As

such, the appellants were validly inducted as members of the

Society as they had duly submitted their applications in form

prescribed under the byelaws of the Society. Reliance was placed

upon the dictum of this Court in Zoroastrian Cooperative

Housing Society Ltd. & Anr. v. District Registrar, Cooperative

Societies (Urban) & Ors.9

to contend that the right to

(2005) 5 SCC 632

membership in any Society would have to be tested on the

touchstone of the byelaws and nothing else.

26. It was urged that in any case 5 out of the 22 persons had

submitted their applications for membership before the requisition

of no confidence had been moved. Whereas, rest of the persons

had filed their applications in December 2016. It was urged that

their applications for membership were eventually approved on

17.09.2017 after noting that each one of them was an eminent

and well acclaimed person in educational field. Moreover, the

Managing Committee had wide discretion to induct a member and

they did exercise that power bonafide whilst inducting the

appellants. Reliance was placed on the findings of the High Court

to contend that the decision taken by the Managing Committee (to

induct appellants) was during the subsistence of its tenure and

cannot be faulted with. It was also urged that the High Court had

noted that there was no illegality in admitting the members on the

eve of elections or at the end of the tenure of the Managing

Committee. Further, there was no finding by the Courts below

that the appellants did not fulfil the requirements under the byelaws.

27. It was submitted that reliance upon the decision of this

Court in Vipulbhai (supra) by the High Court was misplaced as

the said decision concerned a cooperative society, whereas the

Society in this case is registered under the 1860 Act. Further, it

was urged that the said decision was based on the 97th

Amendment to the Constitution of India10

, which had been struck

down by a Division Bench of Gujarat High Court in Rajendra N.

Shah v. Union of India & Anr.11. Reliance was then placed on

the dictum of this Court in Kusum Ingots & Alloys Ltd. v. Union

of India & Anr.12 to contend that though an appeal had been

preferred before this Court against the decision of Gujarat High

Court in Rajendra N. Shah (supra), the same is pending

adjudication (vide Civil Appeal Nos. 91089109 of 2014) and there

being no order suspending the operation of the said judgment, the

97th Amendment is not currently in existence. Therefore, the

decision in Vipulbhai (supra) was inapplicable. The appellants

also relied upon a decision of Delhi High Court in Mukund L.

Abhyankar v. Chief Executive Officer, National Federation of

10 For short, “the 97th Amendment”

11 2013 SCC OnLine Guj 2242

12 (2004) 6 SCC 254

Urban Coop. Bank and Credit Societies Ltd. & Ors.13 to urge

that the fundamental basis of the decision in Vipulbhai (supra)

stood fully eroded without the 97th Constitutional Amendment.

28. The appellants also submitted that the Authority hastened

the election despite being informed of the pendency of the present

appeal. This was done to defeat the rights of the appellants. It is

contended that mala fides of the authorities are manifest from the

fact that permission to conduct the election proposed by the

Managing Committee was refused by the District Magistrate in

view of the Covid19 protocol, while the election scheduled by the

Authority during the same time was conducted in breach of the

said protocols. Further, as on the date of elections, the electoral

college consisted of 52 members including 30 existing members

and the 22 dismembered persons. However, despite pendency of

the present appeal (wherein the rights of the 22 dismembered

persons are under consideration), the Authority conducted

elections with electoral of only 30 members. This was nothing

short of abuse of process of law.

29. Per contra, respondent no. 1 contended that the appellants

were aware of the proceedings before the Authority yet chose not

13 (2017) 241 DLT 358

to challenge its judgment and order. Hence, the appellants are

bound by the findings therein. Resultantly, it is not open to the

appellants to assail the order of the High Court. Further, with the

dismissal of SLP (preferred by the Society, Chairman and

Secretary), the order of the High Court stands confirmed and it

cannot be further challenged. In that, the finding that the

Managing Committee inducted 22 persons illegally and arbitrarily,

also had attained finality. Significantly, the appellants had no

right whatsoever, much less vested right on the date of election

and exconsequenti no locus to file the present appeal.

30. It was urged that the said 22 persons were intentionally

inducted by the then office bearers of the Society, so as to alter the

composition of the Society in their favour and to consolidate their

control over the Society. Further, it was submitted that the SLP

(filed by the Society, Chairman and Secretary) was dismissed on

15.06.2020 and on the same day, the appellants approached this

Court by filing fresh appeal through the same AdvocateonRecord,

which clearly shows collusion between them. Furthermore, the

controversy is about the validity of induction of the appellants and

not their removal. As such, the lis is interse between the

Managing Committee and members and the appellants being

outsiders had no causal connection with the Society whatsoever.

Even if the appellants had any vested right, that stood defeated by

the order of the Authority and of the High Court confirming the

same including this Court.

31. It was then contended that the High Court had rightly held

that in democratically constituted institutions, the office bearers

continue to hold office during the pleasure of the members and

they can be unseated despite any express provision in the byelaws. Reliance was placed upon a decision of this Court in T.

Varghese George v. Kora K. George & Ors.14 to urge that the

Managing Committee had no power to take any policy decision

once a no confidence motion is moved, as that would be against

their fiduciary duties towards the Society. It was submitted that

any decision taken after the no confidence motion is moved ought

to be tested on the touchstone of ‘legal malice’ or malice in fact,

whilst relying upon the decision of this Court in State of Punjab

& Anr. v. Gurdial Singh & Ors.15

32. It was also urged that the appellants cannot claim the

principle of open membership as envisaged in Section 22 of the

Goa Cooperative Societies Act, 2001, to apply to them. For, the

14 (2012) 1 SCC 369

15 (1980) 2 SCC 471

respondentSociety is not a cooperative society. At best, the

applications of the 22 members may be considered afresh.

33. The argument set forth by the Authority is that this appeal is

not maintainable as the impugned order dated 28.05.2020 has

attained finality upon dismissal of the SLP (Civil) No. 7352 of 2020

(filed by the Society, Chairman and Secretary). It is urged that

upon disposal of Writ Petition No. 373 of 2018 vide order dated

28.05.2020, the interim order therein stood vacated and the

elections were required to be conducted since there was no order

staying the elections. In fact, the High Court in its order had

observed that elections should be conducted expeditiously. It was

submitted that the Authority had to conduct elections due to

inaction of the Managing Committee in that regard. It was then

urged that the Authority conducted elections on 25.06.2020, that

too one month after the order dated 28.05.2020, by duly putting

the members on 15 days’ notice, which cannot be termed as acting

in undue haste. The learned Solicitor General, for the Authority

elaborated upon Vipulbhai (supra) to contend that the said

judgment had rightly dealt with the democratic principles, which

apply to cooperative societies and other societies alike. It was

submitted that the said judgment is binding and does not lose its

force as the democratic principles were in existence since a long

time and were merely given a constitutional frame by the 97th

Amendment. It was further submitted that in light of the said

decision, no confidence motion is maintainable even in absence of

express provision in that regard in the byelaws; and the silence in

the byelaws cannot be treated as a gap. Finally, it was urged that

in a democratically governed body, members can be inducted by

the Managing Committee only when it enjoys confidence of the

members. However, once the requisition of no confidence was

pending, the Managing Committee ought not to have inducted new

members into the Society and more so as many as 22 in number

which would inevitably change the constitution of the Society.

34. We have heard Mr. Huzefa Ahmadi, learned senior counsel

and Ms. Anshula Grover, learned counsel for appellants; Mr.

Tushar Mehta, learned Solicitor General, Mr. Arun R. Pedneker,

learned Standing Counsel for the State of Goa and Ms. Mukti

Chowdhary, learned counsel for the Authority; and Mr. Vinay

Navare, learned senior counsel and Mr. R.P. Gupta, learned

counsel for respondent No. 1.

CONSIDERATION

35. At the outset, be it noted that the scope of present appeal is

limited to the question of justness of induction of the appellants as

members of the Society by the then Managing Committee on its

way out and despite the pending requisition expressing no

confidence against it; including the correctness and sweep of the

order passed by the Registrar and as upheld by the High Court

vide impugned judgment, qua the appellants herein. No other

issue decided by the Registrar or the High Court need be

addressed in the present appeal at the instance of these

appellants.

36. The High Court, vide impugned judgment, went on to hold

against the Society due to the manner in which the requisition of

no confidence motion moved by the majority of the existing

members (18 out of 32) to convene SGBM came to be delayed and

frustrated by the stratagem adopted by the then Managing

Committee, who had allegedly indulged in mismanagement and

maladministration of the affairs of the Society. That action of the

then Managing Committee has been held to be illegal and bad in

law as it was bordering on colourable exercise of power. Having

said that, the High Court then dealt with the issue of justness of

induction of 22 new members (including appellants herein) by the

then Managing Committee vide decision dated 17.09.2017 and

declared the same as illegal being consequence of illegal action of

not convening the SGBM demanded by the majority of members of

the Society for removal of office bearers and instead hastening the

induction of new members. The finding of the High Court that the

decision of the then Managing Committee dated 17.09.2017

hastening the admission of 22 new members whilst no confidence

motion was pending, is illegal and bad in law has become final

with the dismissal of SLP filed by the Society vide order dated

15.06.2020.

37. Before we dwell upon the core issue involved in this appeal, it

is apposite to examine the preliminary objection raised by

respondent No. 1 regarding maintainability of the appeal at the

instance of these appellants. According to respondent No. 1, the

question whether the appellants have been legally and properly

admitted as members or not is a lis between the existing members

and the Managing Committee, to which the appellants herein are

strangers and have no locus in that regard. This argument, in our

opinion, is tenuous and cannot be sustained. For, the real

question posed at the instance of these appellants is whether they

had a right to be considered for being admitted as members of the

Society and further whether the order of the Registrar results in

dismembering them despite they being validly admitted as

members at the relevant point of time vide decision of the then

Managing Committee dated 17.09.2017. Indeed, it is open to the

existing members to object to any new person being admitted as

member of the Society by the outgoing Managing Committee and

that would be a lis between the existing members and the outgoing

Managing Committee. That, however, does not denude the

appellants of cause of action, who desired to be admitted as

members of the Society being eligible in all respects, to be

considered for such admission. Similarly, if a person has been

dismembered by the Society including on account of direction

issued by the competent authority, such a person will have

independent remedy to assail that decision. In either case,

therefore, being affected by such nonconsideration or by virtue of

dismembering, the aggrieved person would be competent to

pursue remedy before the concerned forum for redressal of his

grievance and for enforcement of his legal rights.

38. In the present case, the appellants were admitted by the then

Managing Committee to be members of the Society, but they have

been subsequently dismembered only because of the order passed

by the Registrar having become final. Further, they were made

party to the proceedings before the Registrar, who had set aside

the decisions of the then Managing Committee, dated 17.09.2017.

Thus understood, the objection regarding maintainability of

challenge to the decision of the Registrar and of the High Court by

such affected persons (appellants herein) cannot be countenanced.

39. It is then urged by respondent no.1 that these appellants had

not challenged the decision of the Registrar dated 09.03.2018

before the High Court and thus had acquiesced of the same.

Resultantly, they were not entitled to maintain this appeal. It is

true that the appellants did not file separate writ petition before

the High Court despite the unambiguous order passed by the

Registrar on 09.03.2018 directly affecting them in declaring the

decision of the then Managing Committee dated 17.09.2017 to

admit them as members of the Society, as illegal, arbitrary and to

set it aside on that count. However, undisputedly, that part of the

order of the Registrar was assailed by the Society before the High

Court by way of Writ Petition No. 373 of 2018. The reliefs claimed

in the stated writ petition by the Society were, to also espouse the

cause of the appellants herein. For, the appellants were admitted

by the then Managing Committee as members of the Society. They

came to be dismembered subsequently only because of the order

of the Registrar of setting aside the decision of the then Managing

Committee dated 17.09.2017 attaining finality. Indubitably, the

Society is competent to espouse the cause of its members and

more so to justify its actions in the form of decision of the then

Managing Committee in office. So understood, the appellants

herein cannot be faulted for having directly assailed the decision

of the High Court confirming the declaration and subject order of

the Registrar resulting in their being dismembered from the

membership of the Society. As a matter of fact, this Court while

dismissing SLP (Civil) No. 7352 of 2020 filed by the Society, vide

order dated 15.06.2020, had made it amply clear that if the 22

persons, who have been dismembered, were to file independent

special leave petition(s) questioning the correctness of the order of

the Registrar in setting aside the decision of the then Managing

Committee dated 17.09.2017 resulting in their being dismembered

from the Society and of the High Court confirming that part of the

Registrar’s order, that challenge could be considered on its own

merits. To put it differently, the limited issue involved in this

appeal is expressly kept open by this Court for being agitated by

the appellants. Indeed, this observation came to be made by this

Court whilst rejecting the challenge of the Society and the office

bearers of the then Managing Committee to the decision of the

Registrar and of the High Court vide impugned judgment.

Nevertheless, as aforesaid, the rejection of earlier special leave

petition filed by the Society and the office bearers of the then

Managing Committee will not come in the way of the appellants

herein to espouse their cause in their own rights.

40. Reverting to the merits of the issue involved in this appeal,

we must hasten to add that the appellants cannot be denuded of

their right to assail the order of the Registrar and of the High

Court denying them of their core right of being considered to be

admitted as member of the Society, being eligible in all respects.

They claim to possess the requisite qualification and had

expressed intention to abide by the byelaws of the Society. Their

right to be considered for being admitted as members of the

Society cannot be linked to the acts of commission and omission

of the office bearers of the then Managing Committee. Neither the

Registrar nor the High Court has dismembered the appellants on

the ground of being ineligible in any manner or because it has

been established that they were the henchmen of the office bearers

of the then Managing Committee. Notably, even the no confidence

motion does not mention that the then Managing Committee

wanted to intentionally change the constitution of the Society

(membership pattern) by admitting new members. In that sense,

until contrary is proved the appellants (and two others) must be

regarded as bonafide applicants. Only the decision of the then

Managing Committee dated 17.09.2017, stands vitiated for the

reason noted by the High Court. Admittedly, at least five

appellants had submitted their applications for being admitted as

members of the Society even before the no confidence motion was

moved on 07.11.2016. It is a different matter that upon

consideration of request for admitting as members of the Society,

the newly elected Managing Committee may accept or reject the

same on merits. Depending upon that outcome, the appellants

may even resort to further remedies permissible in law.

41. For elaborating this grievance of the appellants, we must

advert to the byelaws of the Society under which the appellants

had submitted application(s) for being admitted as member of the

respondentSociety. Byelaw 1(a) postulates that any person

irrespective of his race, caste, religion and sex, shall be entitled to

be considered for being admitted as member upon complying with

the conditions specified therein. The other relevant clause in the

byelaws is clause 1(c), which reads thus:

“1) MEMBERSHIP:

Samiti only on an application made in the

prescribed form and on payment of the

prescribed fees. Such application form shall be

considered only when it is proposed by a

member of the Karyakari Samiti. The Karyakari

Samiti is competent to reject any application

without assigning any reason therefor.”

42. For the present, it is not necessary for us to dwell upon the

wider question of whether the membership in the respondentSociety is one of open membership concept or otherwise. Suffice it

to note that 22 persons (including appellants herein) had applied

for being admitted as member of the respondentSociety between

12.09.2016 to 19.12.2016. Notably, 5 appellants (out of 22

persons) had already submitted their application until 18.10.2016

before the stated requisition was moved by 18 out 32 existing

members of the Society on 07.11.2016 expressing no confidence in

the then Managing Committee. Indisputably, requisition/notice of

no confidence makes no reference to the apprehension about any

attempt being made by the office bearers of the then Managing

Committee to change the constitution (membership pattern) of the

Society. The membership applications were placed for

consideration of the Managing Committee, in its meeting convened

on 02.01.2017 for that purpose but the decision was deferred.

43. Be it noted that as per clause 1(c) of the byelaws, it is the

prerogative of the Managing Committee to admit a person as

member of the Society or to reject his application without

assigning any reason therefor. The eligibility for being enrolled as

a member of the Society is spelt out in clause 1(a). The further

condition in clause 1(c) is of being proposed by the member of the

Managing Committee and submitting application in the prescribed

form and payment of prescribed fee.

44. The problem in the present case is the manner of

consideration of stated applications of appellants (and two others)

by the outgoing Managing Committee including by unjustly

protracting the requisition for convening SGBM demanded by

majority of existing members. For, upon receipt of such

requisition, it was the bounden duty of the Secretary of the

Society, in terms of clause 3(v), to immediately issue notice to

convene SGBM within 15 days from the date of receipt of

requisition and to issue 15 days’ notice to all the members

intimating about date of such meeting. The Secretary had issued

such notice on 22.11.2016 scheduling SGBM for 07.12.2016.

But, before the date of meeting, the Managing Committee deferred

the SGBM on some specious objection. That meeting was not

held. Instead, the then Managing Committee hastened to take a

decision about admitting 22 new members in its meeting held on

17.09.2017 by giving a short notice of only one day. This action

did not find favour with the Registrar for the reasons recorded in

his decision dated 09.03.2018 including for setting aside the

minutes of Managing Committee meeting dated 17.09.2017, some

of which commended to the High Court as is discerned from the

impugned judgment.

45. The High Court had adverted to each of the findings of the

Registrar regarding factual aspects. It is unnecessary to analyse

the same in the present appeal, considering the cause propounded

by the appellants. What is relevant is the view taken by the High

Court that the then Managing Committee was amiss in admitting

the 22 new members. The High Court agreed with the view of the

Registrar that only after the outgoing Managing Committee had

secured the trust vote and confidence of the majority of SGBM, it

could have proceeded to admit new members. For, with the issue

of no confidence requisition by the majority (18 out of 32), it had

lost legitimacy to take any policy decision regarding the

management and administration of the Society, which included

induction of new members. The High Court expounded about the

danger of resorting to such stratagem — as it was likely to upset

the constitution (membership pattern) of the Society and inevitably

strengthen the hands of the office bearers of the outgoing

Managing Committee and enable them to clung to the power,

despite being under a cloud due to expression of no confidence

against them by majority of members vide letter dated 07.11.2016.

46. The view so taken by the High Court in the impugned

judgment has been assailed by the appellants. According to them,

at least 5 appellants had submitted applications for being

inducted as member of the Society, much before the majority of

existing members (18 out of 32) had moved requisition on

07.11.2016. Even the remaining applicants (17 out of 22

including appellant herein) had submitted applications in

December 2016 itself, which were placed for consideration before

the then Managing Committee on 02.01.2017 and finally on

17.09.2017. Until that date, there was no restrictive order issued

by any Court or competent forum against the then Managing

Committee prohibiting it from admitting new members. Further,

no case has been made out that the appellants were ineligible to

become member of the Society or that they had not submitted the

prescribed form or failed to pay prescribed fees therefor.

Furthermore, there is no finding by the Registrar or in particular

by the High Court that the appellants were the henchmen of the

office bearers of the then Managing Committee. The Registrar as

well as the High Court have proceeded on the basis of surmise and

hypothesis that the appellants were being inducted as new

members to strengthen the hands of office bearers of the then

Managing Committee and to defuse the threat of removal from the

office due to the pending no confidence motion against them.

47. We find force in the argument of the appellants that for some

acts of commission or omission of the then Managing Committee,

the appellants who are otherwise eligible to be enrolled as

members of the Society in their own rights need not be denied of

the same. They have a right to be considered for being admitted

as members of the Society by the newly elected Managing

Committee.

48. Be that as it may, we now proceed to examine the argument

of the appellants that at least the case of 5 appellants, who had

applied for grant of membership before the majority of the existing

members had moved no confidence motion on 07.11.2016 be

treated differently. After cogitating over all facets, we are of the

considered opinion that it would be unwise to accede to this

submission. We say so because as noted earlier, at the instance of

these appellants it is not permissible to reopen the findings and

conclusion reached by the High Court, as regards illegality

committed by the then Managing Committee in deferring the

SGBM despite the mandate in that regard in terms of clause 3(v) of

the byelaws and instead hastening the process of admitting 22

new members thereby changing the constitution of the Society of

only 32 existing members. That finding and conclusion has

become final with the rejection of the SLP filed by the Society and

the office bearers of the then Managing Committee on 15.06.2020.

Resultantly, it must follow that the decision of the then Managing

Committee dated 17.09.2017 admitting 22 new members has been

rendered nonest. This logic uniformly applies to all the 22

persons enrolled as new members of the respondentSociety.

There is no legal basis to segregate the claim of 5 appellants on

the basis of date of (prior) applications. Indubitably, merely upon

making an application it does not follow that he/she would stand

admitted as a member of the Society. The applicant must fulfil

other eligibility and procedural conditions and eventually, the

Managing Committee must find the candidature fit and deserving

for being admitted as a member of the Society. In other words, the

decision of the then Managing Committee dated 17.09.2017, “as a

whole”, suffers from the vice of unseemly haste, and thus

colourable exercise of power and nonest in the eyes of law. It

cannot be viewed differently for 5 appellants just because of prior

date of application.

49. This is precisely the effect of the decision of the Registrar in

his operative order [paragraph (A)] as applicable to the appellants

and similarly placed two other persons, who are not before us.

The High Court has rightly upheld that conclusion of the Registrar

vide impugned judgment dismissing the writ petition of the

Society.

50. In our opinion, however, the Registrar as well as the High

Court, after so observing, ought to have clarified the position that

the parties (appellants and Society) are relegated to the situation

as it obtained prior to 17.09.2017. That would have been a just

and proper order. That means the applications filed by the

appellants and similarly placed two other persons between

September 2016 to December 2016, ought to be regarded as

pending for scrutiny and for being processed by the newly

constituted Managing Committee after conducting elections, which

were due since October 2016. To this limited extent, the

appellants ought to succeed in the present appeal. We say so

because the Registrar as well as the High Court has not given any

finding regarding ineligibility of the appellants to be member of the

Society. In any case, that would be a matter to be considered by

the newly constituted Managing Committee in the first instance,

on casetocase basis, on its own merits in accordance with law

uninfluenced by any observation made by the Registrar, the High

Court or for that matter in this judgment. If the decision is

adverse to any applicant, he would be free to pursue further

remedies as may be permissible in law.

51. To conclude, we uphold the view taken by the High Court

that the decision of the Managing Committee dated 17.09.2017

suffers from the vice of colourable exercise of power and thus,

illegal and bad in law. The same is nonest in the eyes of law.

However, the parties (appellants and Society) need to be relegated

to the stage before 17.09.2017, meaning thereby the applications

submitted by the appellants and two other similarly placed

persons for grant of membership, be regarded as pending and/or

deemed to be revived in terms of this judgment. Their applications

for grant of membership be considered by the newly constituted

Managing Committee on its own merits in accordance with law.

All contentions available to the parties in that regard are left open.

52. While parting and for the completion of record, we may

advert to the challenge of the appellants to the continuation of

election process and having been taken forward to constitute the

newly elected Managing Committee despite pendency of this

appeal. In light of our above analysis, this grievance cannot be

maintained at the instance of these appellants as the status of

these appellants is merely that of the applicants for grant of

membership. Until they are admitted as members of the Society,

they would have no right whatsoever to participate in the election

process culminated in June 2020.

53. Accordingly, this appeal partly succeeds to the extent of

clarifying/modifying the order passed by the Registrar (paragraph

(A) of his operative order) as affirmed by the High Court, to mean

that the applications made by the appellants and similarly placed

two other persons for grant of membership of the Society, are

deemed to be pending and/or revived and be considered by the

newly constituted Managing Committee on its own merits in

accordance with law, keeping in mind the observations made in

this judgment.

54. The appeal is disposed of in the above terms. Pending

applications, if any, also stand disposed of. No order as to costs.

..................................J.

(A.M. Khanwilkar)

...................................J.

(S. Ravindra Bhat)

New Delhi;

February 10, 2021.

suit for injunction - burden of prove- “15. It is trite law that, in a suit for declaration of title, the burden always lies on the Plaintiff to make out and establish a clear case for granting such a declaration and the weakness, if any, of the case set up by the Defendants would not be a ground to grant relief to the Plaintiff.”” There cannot be any dispute to the proposition laid down by this Court in the above cases. But coming to the facts in the present case the present suit giving rise to this appeal, was not a suit for declaration of title and possession rather the suit was filed for injunction. As noted above, the High Court has given cogent reasons for holding that the suit filed by the plaintiff for injunction was maintainable without entering into the title of the plaintiff in facts of the present case specially in view of the previous litigation which was initiated at the instance of defendant No.1 where he lost the suit for declaration and recovery of possession of the same property. The submission of learned counsel for the appellants that evidence filed by the defendant were not looked into is not correct. The trial court as well as the High Court has looked into not only the oral evidence but the exhibits which were filed on behalf of the defendant which is clear from the discussion made by the High Court in paragraphs 13 and 16. We do not find any error in the view of the High Court that it was not necessary to enter into the validity of Exhibits A-1 and A-2 and the suit for injunction filed by the plaintiff deserved to be decreed on the basis of admitted and established possession of the plaintiff. We, thus, do not find any error in the judgment of the High Court allowing the second appeal filed by the plaintiff by setting aside the judgment of the First Appellate Court and restoring that of trial court.

suit for injunction - burden of prove- “15. It is trite law that, in a suit

for declaration of title, the burden always lies on the Plaintiff to make out

and establish a clear case for granting such a declaration and the weakness, if

any, of the case set up by the Defendants would not be a ground to grant relief to

the Plaintiff.”” There cannot be any dispute to the proposition laid down by this Court in the above cases. But coming to the facts in the present case the present suit giving rise to this appeal, was not a suit for declaration of title and possession rather the suit was filed for injunction. As noted above, the High Court has given cogent reasons for holding that the

suit filed by the plaintiff for injunction was maintainable without entering into the title of the

plaintiff in facts of the present case specially in view of the previous litigation which was initiated

at the instance of defendant No.1 where he lost the suit for declaration and recovery of possession of

the same property. The submission of learned counsel for the appellants that evidence filed by the

defendant were not looked into is not correct. The trial court as well as the High Court has looked into

not only the oral evidence but the exhibits which were filed on behalf of the defendant which is clear

from the discussion made by the High Court in paragraphs 13 and 16.

We do not find any error in the view of the High Court that it was not necessary to enter into the

validity of Exhibits A-1 and A-2 and the suit for injunction filed by the plaintiff deserved to be

decreed on the basis of admitted and established possession of the plaintiff. We, thus, do not find

any error in the judgment of the High Court allowing the second appeal filed by the plaintiff by setting

aside the judgment of the First Appellate Court and restoring that of trial court.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.9472 of 2010

A.SUBRAMANIAN & ANR. ...APPELLANT(S)

VERSUS

R. PANNERSELVAM ...RESPONDENT(S)

J U D G M E N T

ASHOK BHUSHAN, J.

This appeal has been filed by the defendants in

the civil suit challenging the judgment dated

28.04.2009 of Madras High Court in Second Appeal

No.39 of 2009 by which judgment the High Court had

allowed the second appeal of the plaintiff setting

aside the judgment of the First Appellate Court dated

26.11.2008 in A.S. No.172 of 2005 and restoring the

judgment dated 06.02.2004 in O.S.No.188 of 2002 of

the trial court decreeing the suit.

2. Parties shall be referred to as referred in the

Original Suit. Brief facts of the case giving rise to

this appeal are:

The plaintiff, R. Pannerselvam, who is the

respondent in this appeal, filed O.S. No.188 of 2002

in the Court of District Munsif, Namakkal praying for

permanent injunction interdicting the defendants from

disturbing the peaceful possession and enjoyment of

the plaintiff over the suit property. The suit

property was measuring 1777-1/2 sq.ft. comprising in

Survey No.172/1 situated at Kalappanaickenpatti

Village. Plaintiff’s case in the suit was that suit

property originally belonged to one Dhasi Naidu son

of Thalama Naidu who went to Sri Lanka as a Farm

Labour and died at Sri Lanka. The son of Dhasi Naidu,

Krishnasamy Naidu came to India in 1981 and entrusted

the suit property and other properties to one Ghani

Sahib, who had been managing and enjoying the

properties.

3. The plaintiff claimed to have purchased the suit

property by registered deed on 16.07.2001 for a valid

consideration from the descendants of Dhasi Naidu.

The plaintiff’s further case was that the first

defendant was formerly military serviceman, and the

second defendant who was son-in-law of the first

defendant, working as constable in police department,

attempted to disturb the plaintiff’s peaceful

possession and enjoyment over the suit property.

Hence, the suit was filed. The documents filed along

with the plaint were power of attorney executed by

legal heirs of Dhasi Naidu dated 22.05.2001, sale

deed dated 16.07.2001 and sale deed dated 14.03.1946

in favour of Dhasi Naidu and house tax receipt dated

27.02.2001.

4. Defendant No.1 filed written statement refuting

the claim of the plaintiff; defendant admitted that

suit property belonged to Dhasi Naidu. The defendant

pleaded that registered sale deed dated 16.07.2001

itself is a fabricated and forged one. So called

legal heirs-descendants of Dhasi Naidu as alleged in

sale deed are fictious and are not true legal heirs

of the said Dhasi Naidu. The title of the suit

property is itself questionable, the plaintiff along

with Ghani Sahib has fabricated two special powers

and plaintiff under Order VII Rule 14 of C.P.C. with

the said documents had filed suit. The defendants in

the written statement had set up the claim that Dhasi

Naidu’s son Sanjeevi Naidu had entrusted the suit

property and other properties to one P. Rangaraju

Naidu by a registered power of attorney, who later

died, leaving behind his only legal heir Mrs. Arjuna

Devi, who died leaving behind her daughters, Nalanda,

Indira and Gunabarathi. Defendant No.1 on behalf of

her three daughters filed a suit against the Ghani

Sahib questioning his tenancy which suit was

dismissed and had been taken in appeal being

A.S.No.297 of 1994.

5. The plaintiff examined himself as PW.1. Defendant

examined DW.1 to DW.6. Plaintiff filed seven

exhibits. The trial court framed the following three

issues:

“a) Is the permanent injunction sought for by

the plaintiff in the suit is available to him?

b) Is the statement of the defendants that

the plaintiff is not the real owner of the suit

property correct?

c) What are the other reliefs available to the

plaintiff?

6. The trial court held that power of attorney dated

22.05.2001 was prepared at Sri Lanka and registered

at Namakkal Sub-Registrar’s office. The documents

filed on behalf of the plaintiff are Exhibits PW1 and

PW2. The trial court held that the plaintiff has

right over the property, the possession of plaintiff

was also found proved. The trial court decreed the

suit.

7. The defendants filed an appeal before the Sub

Court, Namakkal being A.S. No.172 of 2005. The First

Appellate Court entered into the validity of power of

attorney Exhibits PW1 and PW2 and observed that

Exhibit PW1 is in circumstances by suspicious

surrounding. The First Appellate Court, however, came

to a conclusion that power deed written abroad need

not be registered. The First Appellate Court,

further, came to the conclusion that execution and

authentication of power of attorney, Exhibit PW1

having not been proved, the sale deed Exhibit PW2 is

also adversely affected. Hence, plaintiff has failed

to establish his title over the suit property. The

First Appellate Court has, further, found that

defendant No.1 had instituted O.S.No.524 of 1987

which was for the same property in which defendant

No.1 had claimed declaration and possession of the

property for himself and her three daughters which

suit having been dismissed, the defendant has also

not been able to prove that suit property belonged to

the three daughters of defendant No.1 and possession

lies with them. The First Appellate Court allowed the

appeal and set aside the decree on the ground that

plaintiff had failed to prove his title. Aggrieved by

the judgment of the First Appellate Court the

plaintiff has filed the second appeal.

8. The High Court vide its judgment dated 28.04.2009

allowed the second appeal by deciding three

substantial questions of law affirming the decree of

trial court granting injunction in favour of the

plaintiff. The High Court found that defendant having

filed Original Suit No.524 of 1987 for declaration

and recovery of possession of the suit property which

was dismissed by the trial court against which A.S.

No.297 of 1994 having also been dismissed, the

finality was achieved to the previous proceedings

that defendant has neither title nor in possession of

the suit property and the possession of the plaintiff

having been admitted by the defendant, the suit of

the plaintiff deserved to be decreed. The High Court

was further of the view that the First Appellate

Court ought not to have entered into the validity of

the Exhibits A-1 and A-2. The High Court allowed the

appeal. Aggrieved against the judgment of the High

Court, the defendants have come up in this appeal.

9. Ms. K. Abhirame, learned counsel has appeared on

behalf of the appellants and Shri V. Prabhakar,

learned counsel has appeared for the respondent.

10. Learned counsel for the appellants submits that

the plaintiff having claimed right to the suit

property on the basis of sale deed dated 16.07.2001

which sale deed was not found to be valid having not

been executed by proper power of attorney by the

heirs of Dhasi Naidu, the suit of the plaintiff

deserved to be dismissed. It is submitted that the

plaintiff can succeed in the suit on the strength of

his own case and the plaintiff cannot take any

advantage of the weakness of the case of the

defendants. Even defendants failed to prove their

title and possession the suit of the plaintiff could

not have been decreed mere on the fact that the

defendants failed to prove their title and

possession.

11. Learned counsel for the appellants further

submitted that the documents filed by the defendants

were not considered by the trial court as well as by

the High Court. Learned counsel for the appellant has

placed reliance on the judgments of this Court in

Nagar Palika, Jind vs. Jagat Singh, Advocate, (1995)

3 SCC 426; Yamuna Nagar Improvement Trust vs.

Khariati Lal, (2005) 10 SCC 30 and Jagdish Prasad

Patel (dead) Through Legal Representatives and

another vs. Shivnath and others, (2019) 6 SCC 82.

12. Shri V. Prabhakar, learned counsel appearing for

the respondent refuting the submission of the counsel

for the appellants contends that plaintiff has

successfully proved his possession which was also

admitted by the defendant in his statement, the suit

for injunction was rightly decreed by the trial

court. It is submitted that in essence the plaintiff

has also successfully proved his titled by registered

sale deed. The property was purchased by a registered

sale deed on the basis of power of attorney executed

by legal heirs of Dhasi Naidu. The power of attorney

having been prepared at Sri Lanka and registered by

Sub-Registrar Namakkal, First Appellate Court

committed error in holding the power of attorney not

properly executed and authenticated. It is submitted

that the plaintiff having demolished the old

structure which is proved from the evidence on

record, the possession of the plaintiff could not be

denied by the defendant. The defendant having filed

suit for declaration as well as recovery of

possession of the suit property against Ghani Sahib,

the manager of the property which suit having been

dismissed there is no right in the defendant to

resist the suit of the plaintiff.

13. We have considered the submission of the learned

counsel for the parties and have perused the records.

14. The plaintiff in his plaint claimed title and

possession, and sought restraining the defendants

from disturbing plaintiff’s peaceful possession and

enjoyment over the suit property. In the suit

plaintiff has prayed for the following reliefs:

a)by means of permanent injunction interdicting

the defendants, and their man from disturbing

the peaceful possession and enjoyment of the

plaintiff over the suit property in any

manner;

b)by granting further other relief or reliefs

as the Hon’ble Court deems fit in the

circumstances of the case;

c)awarding the cost of the suit by the

defendants and thus render justice.”

15. The trial court found that the plaintiff has

proved his right over the property as well as

possession, he was entitled for decree of injunction.

All the three courts have referred to the earlier

suit being O.S.No.524 of 1987 filed by the defendants

which suit was dismissed by the trial court and

appeal against which being A.S. No.297 of 1994 was

also dismissed which judgments were brought before

the trial court by the plaintiff. The copy of the

judgment dated 23.11.1992 in O.S. No.524 of 1987 of

the trial court has been brought on record as

Annexure P5. The suit was filed by defendant No.1

along with his three minor daughters and he being

father, guardian and next friend of daughters, the

plaintiff of O.S. No.524 of 1987 claimed title over

the suit property through Shri P. Rangaraju Naidu.

Ghani Sahib who was manager, was impleaded as

defendant and suit was filed for declaration and

possession and permanent injunction. The defendant

contested the suit where defendant took the plea that

the property belonged to Dhasi Naidu whose son

Krishnasamy Naidu, who came to India and executed

power of attorney in favour of defendant for managing

the suit property since then the defendant was in

possession and user. The trial court held that the

plaintiff has failed to prove his title as well as

possession. The possession of defendant was admitted

by Subramanian who was the plaintiff in the said

suit. In paragraph 11 of the judgment following was

held by the trial court:

“11.....In this suit, it has been admitted by

the plaintiffs that the defendant is in

possession of the suit properties. Under the

circumstances since the plaintiffs have

admitted that the defendant is in possession of

the suit properties, it is held that even

though the defendant has not produced the power

of attorney executed by Krishnasamy in favour

of defendant, in the deposition DW1 has made a

claim that the defendant is the power of

Krishnasamy is an acceptable one. From the

deposition of DW2, it is held that Dasi Naidu

died leaving behind Sanjeevi Naidu, Nallu Naidu

and Krishnasamy Naidu as his legal heirs.....

It is also held that the defendant is in

possession and managing the suit property in

his capacity as the power agent of Krishnasamy

and defendant is not a tenant in the suit

property and accordingly issue number 2 and 5

are answered respectively. ....”

16. The suit for declaration and possession filed by

Subramanian was dismissed against which A.S. No.297

of 1994 was filed which was dismissed by the District

Court, Salem on 08.09.1995.

17. The High Court in its judgment has rightly

referred to the earlier litigation and held that in

view of the findings in the earlier suit filed by

Subramanian and his three daughters it is sufficient

to hold that defendants are not in possession of the

suit property. The High Court has also rightly

observed that plaintiff’s possession is based on the

admission of the defendant himself made in the suit.

In paragraph 24, the High Court has held:

“24.....The Plaintiff’s possession is based on

admissions made by the defendants themselves

and also the factum of the previous

proceedings, which D-1 initiated and met with

his waterloo.”

18. The submission which has been made by the counsel

for the appellants is that in the suit, plaintiff has

claimed his title and possession, the High Court

committed error in not entering into the question of

title of plaintiff and without determining the title

of the plaintiff the suit ought not to have been

decreed. Learned counsel for the appellants has

placed reliance on the judgment of this Court in

Nagar Palika, Jind vs. Jagat Singh, Advocate, (1995)

3 SCC 426. In the above case suit was filed by the

respondent for injunction which was resisted by

Municipal Committee on the ground that the respondent

was neither the owner of the land in question nor was

he in possession. The trial court dismissed the suit.

The First Appellate Court had decreed the suit and

second appeal was dismissed by the High Court. Nagar

Palika filed appeal before this Court. The argument

was raised before this court by Nagar Palika that the

Court of law proceeded on the assumption that the

acquisition of title through the sale deed which has

not been produced before the High Court was admitted

fact in the case and had never been questioned by the

Municipal Committee. This Court in paragraph 6

disapproving the judgment of the First Appellate

Court held following:

“6. The counsel appearing for the

respondent, could not explain as to how in face

of such clear denial of the title and

possession of the respondent by the Municipal

Committee in its written statement, the Court

of Appeal proceeded on the assumption that the

acquisition of the title through the sale deed,

which had not been produced before the Court,

was an admitted fact in the case and had never

been questioned by the Municipal Committee.

According to us, when the Court of Appeal

proceeded to consider the evidence relating to

the possession of the respondent after the

alleged date of purchase by him through the

sale deed in question, which was never produced

before the Court, the Court of Appeal committed

a grave error. It never applied its mind to the

main issue, in a suit based on title, whether

the respondent had proved his title to the suit

property. It cannot be disputed that onus to

prove his title to the property in question was

on the said respondent. It further appears,

that on behalf of the appellant, it was pointed

out before the Court of Appeal that the said

respondent was claiming the share of one of the

co-shares in the patti, but no co-sharer can

convey title to a specific part of joint

property. However omitted to consider the basic

issues in the case, the Court of Appeal

proceeded only to consider the revenue records

from the year 1974-75 like jamabandhi for the

year 1974-75 and Khasra Girdwari pertaining to

the year 1977-79.”

19. In the suit stand was taken by the respondent

that the suit be treated under Section 6 of the

Specific Relief Act, 1963. This Court repelled the

above submission. In paragraph 9, the plea of

respondent based on Section 6 was rejected by this

Court by making following observation:

“9. We fail to appreciate as to how the

principle of Section 6 of Specific Relief Act,

1963 can be applied in the facts and

circumstances of the present case. The

respondent, who was the plaintiff, never

alleged that he had been dispossessed by the

appellant-Municipal Committee. On the other

hand, he claimed to be the owner of the land in

question and asserted that he was in possession

over the same. He sought for permanent

injunction restraining the appellant from

interfering with his possession. Both the

parties led evidences in support of their

respective claims including on the question of

title.”

20. In the present case the possession of the

plaintiff was upheld by the High Court on two main

reasons. Firstly, the defendant of the suit,

Subramanian had earlier filed a suit for recovery of

possession and declaration for the same property

against Ghani Sahib who was manager of the property

which suit was dismissed and recovery of possession

having been rejected, defendant cannot even make a

plea to be in possession and secondly defendant in

his cross-examination himself admitted that the

plaintiff after purchase had demolished the

construction. The High Court in paragraph 13 of its

judgment has extracted the relevant excerpts from the

statement of DW1’s deposition during crossexamination. In paragraph 13 of the judgment after

quoting from deposition of DW1, the High Court held:

“13.....A bare perusal of those excerpts would

clearly display as to how DW1(D1) went to the

extent of half-Heartedly admitting partly the

reality) and denied the rest of the truth,

without having any responsibility to speak

truth. For the purpose of achieving success in

the litigative battle, by hook or crook, D-1

went to the extent of pleading before this

Court quite antithetical to the Judgments and

decrees in O.S.No.524 of 1987 and in A.s.

No.297 of 1994 (Exs.A-3, A-5, A-6 and A-7) that

the previous suit was not for recovery of

possession of the suit property. But, those

judgments and decrees would clearly indicate

that the earlier suit was filed by D-1 and his

three children for declaration and recovery of

possession of the entire property including the

suit property. In the said previous suit, the

first defendant and his legal heirs contended

that they derived title from their original

porosities Rangarajulu Naidu and obtained the

suit property under a power deed and they

failed in both the courts. As such, that is

much more than sufficient to hold that the

defendants are not in possession of the suitproperty herein.”

21. The High Court was also right in its view that it

is a common principle of law that even trespasser,

who is in established possession of the property

could obtain injunction. However, the matter would be

different, if the plaintiff himself elaborates in the

plaint about title dispute and fails to make a prayer

for declaration of title along with injunction

relief. The High Court has rightly observed that a

bare perusal of the plaint would demonstrate that the

plaintiff has not narrated anything about the title

dispute obviously because of the fact that in the

previous litigation, DW1 failed to obtain any relief.

The High court has rightly observed that the

principle that plaintiff cannot seek for a bare

permanent injunction without seeking a prayer for

declaration is not applicable to the facts of the

present case.

22. We may also refer to judgment of this Court in

Nair Service Society Ltd. vs. K.C. Alexander and

others, AIR 1968 SC 1165, where three-Judge Bench of

this Court presided by Hidayatullah, J. has

reiterated the principle that possession is good

against all but the true owner. The principle

enumerated in judgment of Judicial Committee in Parry

v. Clissold, (1907) AC 73, was noticed in paragraph

17 to the following effect:

“(17) In our judgment this involves an

incorrect approach to our problem. To express

our meaning we may begin by reading 1907 AC 73,

to discover if the principle that possession is

good against all but the true owner has in any

way been departed from. 1907 AC 73 reaffirmed

the principle by stating quite clearly:

“It cannot be disputed that a person in

possession of land in the assumed character of

owner and exercising peaceably the ordinary

rights of ownership has a perfectly good title

against all the world but the rightful owner.

And if the rightful owner does not come forward

and assert his title by the process of law

within the period prescribed by the provisions

of the statute of Limitation applicable to the

case, his right is for ever extinguished and

the possessory owner acquires an absolute

title.”

23. In paragraph 22 of the judgment, the Bench

approved the dictum in 1907 AC 73.

24. Learned counsel for the appellants has also

referred to judgment of this Court in Ajendra

Prasadji Narendra Prasadji Pandey vs. Swami K.

Narayandasji and others, (2005)10 SCC 11, in which

case this Court elaborated the cumulative factor for

granting a temporary injunction which case is clearly

distinguishable and has no application in the present

case. Next judgment relied by the learned counsel for

the appellant is in Jagdish Prasad Patel (dead)

through Legal Representatives and another vs.

Shivnath and others, (2019) 6 SCC 82. In the above

case in the suit for declaration of title and

possession this Court reiterated the principle that

suit for declaration of title and possession the

plaintiffs will succeed on the strength of their own

title irrespective of whether defendants proved their

case or not. In paragraph 44 and 45 following was

laid down:

“44. In the suit for declaration for title

and possession, the Plaintiffs-Respondents

could succeed only on the strength of their own

title and not on the weakness of the case of

the Defendants-Appellants. The burden is on the

Plaintiffs-Respondents to establish their title

to the suit properties to show that they are

entitled for a decree for declaration. The

Plaintiffs-Respondents have neither produced

the title document i.e. patta-lease which the

Plaintiffs-Respondents are relying upon nor

proved their right by adducing any other

evidence. As noted above, the revenue entries

relied on by them are also held to be not

genuine. In any event, revenue entries for few

Khataunis are not proof of title; but are mere

statements for revenue purpose. They cannot

confer any right or title on the party relying

on them for proving their title.

45. Observing that in a suit for

declaration of title, the PlaintiffsRespondents are to succeed only on the strength

of their own title irrespective of whether the

Defendants-Appellants have proved their case or

not, in Union of India v. Vasavi Coop. Housing

Society Limited, (2014) 2 SCC 269, it was held

as underSCC p.275, para 15)

“15. It is trite law that, in a suit

for declaration of title, the burden

always lies on the Plaintiff to make out

and establish a clear case for granting

such a declaration and the weakness, if

any, of the case set up by the Defendants

would not be a ground to grant relief to

the Plaintiff.””

25. There cannot be any dispute to the proposition

laid down by this Court in the above cases. But

coming to the facts in the present case the present

suit giving rise to this appeal, was not a suit for

declaration of title and possession rather the suit

was filed for injunction. As noted above, the High

Court has given cogent reasons for holding that the

suit filed by the plaintiff for injunction was

maintainable without entering into the title of the

plaintiff in facts of the present case specially in

view of the previous litigation which was initiated

at the instance of defendant No.1 where he lost the

suit for declaration and recovery of possession of

the same property. The submission of learned counsel

for the appellants that evidence filed by the

defendant were not looked into is not correct. The

trial court as well as the High Court has looked into

not only the oral evidence but the exhibits which

were filed on behalf of the defendant which is clear

from the discussion made by the High Court in

paragraphs 13 and 16.

26. We do not find any error in the view of the High

Court that it was not necessary to enter into the

validity of Exhibits A-1 and A-2 and the suit for

injunction filed by the plaintiff deserved to be

decreed on the basis of admitted and established

possession of the plaintiff. We, thus, do not find

any error in the judgment of the High Court allowing

the second appeal filed by the plaintiff by setting

aside the judgment of the First Appellate Court and

restoring that of trial court.

27. In the result, the appeal is dismissed.

......................J.

( ASHOK BHUSHAN )

......................J.

( R. SUBHASH REDDY )

......................J.

( M.R. SHAH )

New Delhi,

February 08, 2021.

A bank officer/employee deals with the public money. The nature of his work demands vigilance with the inbuilt requirement to act carefully. If an officer/employee of the bank is allowed to act beyond his authority, the discipline of the bank will disappear. When the procedural guidelines are issued for grant of loans, officers/employees are required to follow the same meticulously and any deviation will lead to erosion of public trust on the banks. If the manager of a bank indulges in such misconduct, which is evident from the charge memo dated 18.06.2004 and the findings of the enquiry officer, it indicates that such charges are grave and serious. Inspite of proved misconduct on such serious charges, disciplinary authority itself was liberal in imposing the punishment of compulsory retirement. In that view of the matter, it cannot be said that the punishment imposed in the disciplinary proceedings on the appellant, is disproportionate to the gravity of charges. As such, this submission of the learned counsel for the appellant also cannot be accepted.

C.A.No.4394 of 2010

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.4394 OF 2010

Boloram Bordoloi …..Appellant

Versus

Lakhimi Gaolia Bank & Ors. …..Respondents

J U D G M E N T

R. Subhash Reddy, J.

1. This civil appeal is filed by the appellant in Writ Appeal

No.361 of 2008 on the file of Gauhati High Court, aggrieved by

the order dated 03.04.2009. By the aforesaid order, the order

dated 08.06.2007 passed by the learned Single Judge in Writ

Petition No.219 of 2006 was confirmed. The learned Single

Judge, while confirming the order of compulsory retirement in

disciplinary proceedings initiated against the appellant, has held

that withholding of service benefits as well as pensionary dues to

C.A.No.4394 of 2010

the appellant is illegal and issued directions to pay the retiral

benefits.

2. The appellant was the Manager of the first respondentbank. On the basis of certain allegations levelled against him,

disciplinary proceedings were initiated and charge memo dated

18.06.2004 was issued. The substance of the charges is

extracted in the order passed by the learned Single Judge. In

view of the reply filed by him on 15.07.2004, denying the

charges, the respondentbank having not satisfied with the

explanation, has decided to order departmental enquiry against

the appellant. The Enquiry Officer, after completing the enquiry

by appreciating the oral and documentary evidence on record,

has held that all the charges, i.e. charge nos.1 to 5, framed

against the appellant were proved. In view of the findings

recorded by the Enquiry Officer, the respondentbank has

proposed to inflict the punishment of compulsory retirement on

the appellant. Based on the findings recorded in the

departmental enquiry, has passed order imposing the

punishment of “compulsory retirement” from service. The

C.A.No.4394 of 2010

appellant was unsuccessful before the departmental appellate

authority, i.e., Board of Directors of the Bank and the appellate

authority has dismissed his appeal confirming the order of the

disciplinary authority. Challenging the order of the disciplinary

authority imposing the punishment of compulsory retirement, as

confirmed by the appellate authority, the appellant approached

the High Court by filing Writ Petition (C) No.219 of 2006 before

the Gauhati High Court. The learned Single Judge vide detailed

judgment and order dated 08.06.2007 has not interfered with the

order of compulsory retirement but at the same time has found

that withholding of the service benefits including pensionary

dues was illegal and issued directions for payment of such

benefits to the appellant. As against the order of the learned

Single Judge, the appellant has preferred Writ Appeal No.361 of

2008. The Division Bench of the High Court, by the impugned

order, has dismissed the same by confirming the order of the

learned Single Judge.

C.A.No.4394 of 2010

3. We have heard Sri Parthiv Goswami, learned counsel for

the appellant and Sri Rajesh Kumar, learned counsel appearing

for the respondentbank.

4. Learned counsel for the appellant has mainly contended

that after completion of enquiry, even before furnishing a copy of

enquiry report, the disciplinary authority has issued show cause

notice dated 30.07.2005 vide Ref.

No.LBG/I&V/PP&PA/154/08/200506 by indicating proposed

punishment of compulsory retirement. It is submitted that such

conclusion arrived at by the disciplinary authority even before

the service of enquiry report, is illegal. To buttress his

submission, the learned counsel has placed reliance on judgment

of this Court in the case of Managing Director, ECIL,

Hyderabad & Ors. v. B. Karunakar & Ors. (1993) 4 SCC 727

and the judgment of this Court in the case of State Bank of

India & Ors. v. Mohammad Badruddin (2019) 16 SCC 69.

Further submission of the learned counsel was that the

disciplinary authority has not recorded any reasons in the order

dated 29.08.2005 while imposing the punishment of compulsory

C.A.No.4394 of 2010

retirement and similarly the appellate authority has dismissed

the appeal without recording reasons. Lastly, it is submitted by

learned counsel that the punishment imposed is disproportionate

to the gravity of charges, as such, prayed for setting aside the

impugned orders.

5. On the other hand, Sri Rajesh Kumar, learned counsel

appearing for the respondentbank, by taking us to the charges

framed against the appellant and the findings recorded by the

Enquiry Officer, has submitted that the charges framed against

the appellant are grave and serious and in view of the proved

misconduct of the appellant who was working as a Manager in

the bank, the order of compulsory retirement was passed by the

disciplinary authority. It is submitted that having regard to

charges framed against the appellant, punishment imposed

cannot be said to be disproportionate. Further it is submitted

that after enquiry is completed it is always open for the

disciplinary authority to indicate the punishment in the show

cause notice, by enclosing a copy of the Enquiry Report. It is

submitted that the respondents have followed procedure

C.A.No.4394 of 2010

contemplated under the Rules and the procedure adopted is in

conformity with the ratio laid down by this Court in the case of

Managing Director, ECIL, Hyderabad (supra). It is submitted

that having regard to facts of the case, the judgment in the case

of Mohammad Badruddin (supra) has no application to support

the case of the appellant.

6. Having heard the learned counsel for the parties, we have

perused the impugned order, the order of the learned Single

Judge and other material placed on record.

7. The appellant was working as a Manager of the

respondentbank. A perusal of the charges, which are held to be

proved by the Enquiry Officer, reveal that he has sanctioned and

disbursed loans without following the due procedure

contemplated under law and also there are allegations of

misappropriation, disbursing loans irregularly in some instances

to (a) units without any shop/business; (b) more than one loan to

members of same family etc. The Enquiry Officer, after

considering oral and documentary evidence on record, has held

that all the charges are proved. Based on the findings recorded

C.A.No.4394 of 2010

by Enquiry Officer, the disciplinary authority has tentatively

decided to impose punishment of compulsory retirement.

Disciplinary authority has issued show cause notice dated

30.07.2005 by enclosing a copy of the enquiry report. In

response to the show cause notice, the appellant has submitted

his comments vide letter dated 16.08.2005 indicating that due to

work pressure some operational lapses have occurred. Further

he has also pleaded that if the bank has sustained any loss due

to his fault, he is ready to bear such loss from his own source.

After filing the response to the show cause notice, order is passed

by disciplinary authority imposing punishment of compulsory

retirement. After Enquiry Officer records his findings, it is

always open for the disciplinary authority to arrive at tentative

conclusion of proposed punishment and it can indicate to the

delinquent employee by enclosing a copy of the enquiry report.

Though the learned counsel for the appellant has argued that

even before tentative conclusion is arrived at by the disciplinary

authority, the enquiry report has to be served upon him, but

there is no such proposition laid down in the judgment of this

C.A.No.4394 of 2010

Court in the case of Managing Director, ECIL, Hyderabad

(supra). In the aforesaid judgment of this Court it is held that

delinquent employee is entitled to a copy of the enquiry report of

the enquiry officer before the disciplinary authority takes a

decision on the question of guilt of the delinquent. Merely

because a show cause notice is issued by indicating the proposed

punishment it cannot be said that disciplinary authority has

taken a decision. A perusal of the show cause notice dated

30.07.2005 itself makes it clear that along with the show cause

notice itself enquiry report was also enclosed. As such, it cannot

be said that the procedure prescribed under the rules was not

followed by respondentbank. We are of the view that the

judgment of this Court in the case of Managing Director, ECIL,

Hyderabad (supra) is not helpful to the case of the appellant.

Further, it is well settled that if the disciplinary authority accepts

the findings recorded by the Enquiry Officer and passes an order,

no detailed reasons are required to be recorded in the order

imposing punishment. The punishment is imposed based on the

findings recorded in the enquiry report, as such, no further

C.A.No.4394 of 2010

elaborate reasons are required to be given by the disciplinary

authority. As the departmental appeal was considered by the

Board of Directors in the meeting held on 10.12.2005, the

Board’s decision is communicated vide order dated 21.12.2005 in

Ref. No.LGB/I&V/Appeal/31/02/200506. In that view of the

matter, we do not find any merit in the submission of the learned

counsel for the appellant that orders impugned are devoid of

reasons.

8. Even, the last submission of the learned counsel for the

appellant that the punishment imposed is disproportionate to the

gravity of charges, also cannot be accepted. The charges framed

against the appellant in the departmental enquiry are serious

and grave. If we look at the response, in his letter dated

16.08.2005, to the show cause notice issued by the disciplinary

authority, it is clear that he has virtually admitted the charges,

however, tried to explain that such lapses occurred due to work

pressure. Further he went to the extent of saying – he is ready to

bear the loss suffered by the bank on account of his lapses. The

manager of a bank plays a vital role in managing the affairs of

C.A.No.4394 of 2010

the bank. A bank officer/employee deals with the public money.

The nature of his work demands vigilance with the inbuilt

requirement to act carefully. If an officer/employee of the bank

is allowed to act beyond his authority, the discipline of the bank

will disappear. When the procedural guidelines are issued for

grant of loans, officers/employees are required to follow the same

meticulously and any deviation will lead to erosion of public trust

on the banks. If the manager of a bank indulges in such

misconduct, which is evident from the charge memo dated

18.06.2004 and the findings of the enquiry officer, it indicates

that such charges are grave and serious. Inspite of proved

misconduct on such serious charges, disciplinary authority itself

was liberal in imposing the punishment of compulsory

retirement. In that view of the matter, it cannot be said that the

punishment imposed in the disciplinary proceedings on the

appellant, is disproportionate to the gravity of charges. As such,

this submission of the learned counsel for the appellant also

cannot be accepted.

C.A.No.4394 of 2010

9. For the aforesaid reasons, this appeal is devoid of merit,

same is dismissed with no order as to costs.

……………………………J.

[Ashok Bhushan]

……………………………J.

[R. Subhash Reddy]

……………………………J.

[M.R. Shah]

New Delhi.

February 08, 2021

The bar created is retrospective as the cut-off date has been fixed as 25th March, 2020 while the newly inserted Section 10A introduced through the Ordinance has come into effect on 5th June, 2020. The object of the legislation has been to suspend operation of Sections 7, 9 & 10 in respect of defaults arising on or after 25th March, 2020 i.e. the date on which Nationwide lockdown was enforced disrupting normal business operations and impacting the economy globally. Indeed, the explanation removes the doubt 19 by clarifying that such bar shall not operate in respect of any default committed prior to 25th March, 2020.”

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No. 4050 of 2020

Ramesh Kymal .... Appellant

Versus

M/s Siemens Gamesa Renewable Power Pvt Ltd. .... Respondent

J U D G M E N T

Dr Dhananjaya Y Chandrachud, J

1 The appellate jurisdiction of this Court under Section 62 of the Insolvency and

Bankruptcy Code, 2016 (“IBC”) has been invoked to challenge the judgement and

order of the National Company Law Appellate Tribunal (“NCLAT” or “Appellate

Tribunal”) dated 19 October 2020. The NCLAT affirmed the decision of the National

Company Law Tribunal (“NCLT” or “Adjudication Authority”) dated 9 July 2020,

holding that in view of the provisions of Section 10A, which have been inserted by

Act 17 of 2020 (the “Amending Act”) with retrospective effect from 5 June 2020, the

application filed by the appellant as an operational creditor under Section 9 was not

maintainable.

2 Some of the salient facts set out in the appeal are being adverted to in order

to indicate the broad contours of the controversy. The issue involved raises a

question of law. Hence, while setting out the facts as set up in the appeal, we need

to clarify that the factual dispute has not arisen for adjudication.

3 The appellant claims that a sum of INR 104,11,76,479 is due and payable to

him pursuant to his resignation “from all capacities held by him in the respondent in

accordance with the various Employment Agreements/Incentive Agreements”

entered into by him with the respondent during his tenure as Chairman and

Managing Director. The appellant entered into an Employment Agreement with the

respondent on 16 July 2009. Another Employment Agreement was entered into on

16 December 2013, effective from 1 January 2014, which superseded the previous

agreement. The Employment Agreement dated 16 December 2013 was coupled

with an Incentive Agreement signed on the same date. The Incentive Agreement is

stated to have been amended and restated on 17 April 2015, along with a further

amendment through a Side Letter dated 20 April 2015. Further, the new

Employment Agreement was amended through a Letter Amendment No. 1 dated 17

April 2015.

4 On 21 January 2020, the appellant submitted his resignation to the

respondent and its parent entity, detailing the entitlements which he claimed under

the Employment and Incentive Agreements. On 28 January 2020, the respondent

acknowledged receipt of the letter of resignation and requested the appellant to

continue in employment beyond the 60 days’ notice period stipulated in the

Employment Agreement. According to the appellant, he agreed to continue to

provide his services to the respondent till 30 April 2020. There was an exchange of

communications between the parties and, according to the appellant, by an email

dated 27 March 2020, the respondent confirmed the payments which were due and

payable to him under the letter of resignation (except for point 12). The appellant is

stated to have addressed a final reminder by an email dated 27 April 2020, three

days prior to the extended notice period came to an end.

5 On 28 April 2020, a termination letter was addressed to the appellant. The

appellant issued a demand notice on 30 April 2020 in Form 3 of the IBC. The

demand notice specified that the date of default was 30 April 2020.

6 On 11 May 2020, the appellant filed an application1 under Section 9 of the

IBC on the ground that there was a default in the payment of his operational dues.

During the pendency of the application, an Ordinance2 was promulgated by the

President of India on 5 June 2020 by which Section 10A was inserted into the IBC.

Section 10A reads as follows:

“10A. Suspension of initiation of corporate insolvency

resolution process.— Notwithstanding anything contained in

sections 7,9 and 10, no application for initiation of corporate

insolvency resolution process of a corporate debtor shall be

filed, for any default arising on or after 25th March, 2020 for a

period of six months or such further period, not exceeding

one year from such date, as may be notified in this behalf:

Provided that no application shall ever be filed for initiation of

corporate insolvency resolution process of a corporate debtor

for the said default occurring during the said period.

Explanation – For the removal of doubts, it is hereby clarified

that the provisions of this section shall not apply to any

default committed under the said sections before 25th March,

2020.”

7 The respondent filed an application3 seeking the dismissal of the appellant’s

application on the basis of the newly inserted provisions of Section 10A. The NCLT

upheld the submission of the respondent, holding that a bar has been created by the

newly inserted provisions of Section 10A. This decision has been upheld in appeal

by the NCLAT.

1 IBA/215/2020 2 Ordinance 9 of 2020 (the “Ordinance”) 3 IA 395 of 2020

8 The issue which falls for determination in this appeal is whether the provisions

of Section 10A stand attracted to an application under Section 9 which was filed

before 5 June 2020 (the date on which the provision came into force) in respect of a

default which has occurred after 25 March 2020. Before proceeding to discuss the

rival submissions, it is necessary to preface the discussion with reference to three

significant dates which have a bearing on the present proceedings:

• 30 April 2020 – date of default as set up in Form 3;

• 11 May 2020 – date of institution of the application under Section 9; and

• 5 June 2020 – date on which Section 10A was inserted in the IBC.

9 The date of default is crystalized as 30 April 2020 in the demand notice

issued by the appellant in Form 3, which is prescribed under Rule 5 of the

Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The

statutory form provides for a disclosure of the particulars of the operational debt. The

disclosure which has been made by the appellant includes the amount claimed in

default and the date of default, as tabulated below:

2. AMOUNT CLAIMED TO BE IN

DEFAULT AND THE DATE ON

WHICH THE DEFAULT OCCURRED

[ATTACH THE WORKINGS FOR

COMPUTATION OF -*DEFAULT IN

TABULAR FORM]

INR 104,28, 76,479/- (Indian Rupees One Hundred

and Four Crores Twenty Eight Lakhs Seventy Six

Thousand Four Hundred and Seventy Nine only) as

on 30.04.2020 along with interest @ 18% (eighteen

percent) p.a. till the date of realisation of entire

payment.

10 Sub-Section (1) of Section 8 of IBC stipulates:

“8. Insolvency resolution by operational creditor.—(1) an

operational creditor may, on the occurrence of a default,

deliver a demand notice of the unpaid operational debt or a

copy of an invoice demanding payment of the amount

involved in the default to the corporate debtor in such form

and manner as may be prescribed.”

Under Section 9(1), the operational creditor may file an application before the

Adjudicating Authority for initiating the Corporate Insolvency Resolution Process

(“CIRP”), after the expiry of a period of ten days from the date of delivery of the

notice (or invoice demanding payment) under sub-Section (1) of Section 8, if the

operational creditor does not receive payment from the corporate debtor or a notice

of the dispute under sub-Section (2) of Section 8. The appellant having specified 30

April 2020 as the date of default, this appeal must proceed on that basis. It is

necessary to make this clear at the outset because an attempt has been made

during the course of the submissions by Mr Neeraj Kishan Kaul, learned Senior

Counsel appearing on behalf of the appellant, to submit that though the demand

notice mentions the date of default as 30 April 2020, the "actual first date of default"

was 21 January 2020 when the letter of resignation was tendered and that the

“second date of default' was 23 March 2020 when the sixty days’ notice period from

the letter of resignation submitted by the appellant concluded. This attempt to set

back the date of default to either 21 January 2020 or 23 March 2020 is plainly

untenable for the reason that it is contrary to the disclosure made by the appellant in

the demand notice which has been issued in pursuance of the provisions of Section

8(1) and Section 9 of the IBC. The demand notice triggers further actions which are

adopted towards the initiation of the insolvency resolution process. The question

which needs to be resolved is whether Section 10A would stand attracted to a

situation such as the present where the application under Section 9 was filed prior to

5 June 2020, when Section 10A was inserted, and in respect of a default which has

taken place after 25 March 2020.

11 Mr Neeraj Kishan Kaul submits that:

(i) Section 10A creates a bar to the 'filing of applications' under Sections 7, 9 and

10 in relation to defaults committed on or after 25 March 2020 for a period of

six months, which can be extended up to one year;

(ii) The Ordinance and the Act which replaced it do not provide for the

retrospective application of Section 10A either expressly or by necessary

implication to applications which had already been filed and were pending on

5 June 2020;

(iii) Section 10A prohibits the filing of a fresh application in relation to defaults

occurring on or after 25 March 2020, once Section 10A has been notified (i.e.,

after 5 June 2020);

(iv) Section 10A uses the expressions "shall be filed" and "shall ever filed" which

are indicative of the prospective nature of the statutory provision in its

application to proceedings which were initiated after 5 June 2020; and

(v) The IBC makes a clear distinction between the "initiation date" under Section

5(11) and the "insolvency commencement date" under Section 5(12).

12 On the above premises, it has been submitted that Section 10A will have no

application. Mr Kaul also urged that in each case it is necessary for the Court and

the tribunals to deduce as to whether the cause of financial distress is or is not

attributable to the Covid-19 pandemic. In the present case, it was asserted that the

onset of Covid-19, which was the reason for the insertion of Section 10A, has

nothing to do with the default of the respondent to pay the outstanding operational

debt of the appellant, which owes its existence even before the onset of the

pandemic. Hence, it has been submitted that the event of default (30 April 2020) in

the notice of demand cannot be read in isolation.

13 Opposing the above submissions, it has been urged by Mr Gopal Jain,

learned Senior Counsel on behalf of the respondent, that:

(i) The legislative intent in the insertion of Section 10A was to deal with an

extraordinary event, the outbreak of Covid-19 pandemic, which led to financial

distress faced by corporate entities;

(ii) Section 10A is prefaced with a non-obstante clause which overrides Sections

7, 9 and 10; and

(iii) Section 10A provides a cut-off date of 25 March 2020 and it is evident from

the substantive part of the provision, as well as from the proviso and the

explanation, that no application can be filed for the initiation of the CIRP for a

default occurring on and after 25 March 2020, for a period of six months or as

extended upon a notification.

14 The rival submissions can now be considered.

15 The financial distress caused by the outbreak of Covid-19 provides the

backdrop to the insertion of Section 10A. The underlying rationale for the insertion of

Section 10A has been explained in the recitals to the Ordinance, which are extracted

below:

"…

AND WHEREAS COVID-19 pandemic has impacted

business, financial markets and economy all over the world,

including India, and created uncertainty and stress for

business for reasons beyond their control;

AND WHEREAS a nationwide lockdown is in force

since 25th March, 2020 to combat the spread of COVID19 which has added to disruption of normal business

operations;

AND WHEREAS it is difficult to find adequate number of

resolution applicants to rescue the corporate person who

may default in discharge of their debt obligation;

AND WHEREAS it is considered expedient to suspend under

sections 7, 9 and I 0 of the Insolvency and Bankruptcy Code,

2016 to prevent corporate persons which are experiencing

distress on account of unprecedented situation. being

pushed into insolvency proceedings under the Court for some

time;

AND WHEREAS it is considered expedient to exclude the

defaults arising on account of unprecedented situation

for the purposes of insolvency proceeding under this Code;”

(emphasis supplied)

16 Section 10A is prefaced with a non-obstante provision which has the effect of

overriding Sections 7, 9 and 10. Section 10A provides that:

(i) no application for the initiation of the CIRP by a corporate debtor shall be

filed;

(ii) for any default arising on or after 25 March 2020; and

(iii) for a period of six months or such further period not exceeding one year from

such date as may be notified in this behalf.

The proviso to Section 10A stipulates that "no application shall ever be filed" for the

initiation of the CIRP of a corporate debtor "for the said default occurring during the

said period". The explanation which has been inserted for the removal of doubts

clarifies that Section 10A shall not apply to any default which has been committed

under Sections 7, 9 and 10 before 25 March 2020.

17 Section 10A makes a reference to the initiation of the CIRP. Clauses (11) and

(12) of Section 5 of the IBC define two distinct concepts, namely:

(i) the initiation date; and

(ii) the insolvency commencement date.

18 The “initiation date” is defined in Section 5(11) in the following terms:

"5(11) "initiation date" means the date on which a financial

creditor, corporate applicant or operational creditor, as the

case may be, makes an application to the Adjudicating

Authority for initiating corporate insolvency resolution

process;"

The expression "insolvency commencement date" is defined in Section 5(12) in the

following terms:

“5(12) "insolvency commencement date" means the date of

admission of an application for initiating corporate insolvency

resolution process by the Adjudicating Authority under

sections 7, 9 or section 10, as the case may be:”

19 Section 5(11) stipulates that the date on which a financial creditor, corporate

applicant or operational creditor makes an application to the adjudicating authority

for initiating the CIRP is the “initiation date”. Distinguished from this is the

“insolvency commencement date”, which is the date on which the application for

initiating the CIRP under Sections 7, 9 or 10, as the case may be, is admitted by the

Adjudicating Authority.

20 The substantive part of Section 10A adverts to an application for the initiation

of the CIRP. It stipulates that for any default arising on or after 25 March 2020, no

application for initiating the CIRP of a corporate debtor shall be filed for a period of

six months or such further period not exceeding one year "from such date" as may

be notified in this behalf. The expression "from such date” is evidently intended to

refer to 25 March 2020 so that for a period of six months (extendable to one year by

notification) no application for the initiation of the CIRP can be filed. The submission

of the appellant is that the expression "shall be filed" is indicative of a legislative

intent to make the provision prospective so as to apply only to those applications

which were filed after 5 June 2020 when the provision was inserted. Such a

construction cannot be accepted.

21 The date of 25 March 2020 has consciously been provided by the legislature

in the recitals to the Ordinance and Section 10A, since it coincides with the date on

which the national lockdown was declared in India due to the onset of the Covid-19

pandemic. In Sardar Inder Singh vs State of Rajasthan 4 , the Rajpramukh

promulgated the Rajasthan (Protection of Tenants) Ordinance (9 of 1949) on 21

June 1949 which, inter alia, provided for the reinstatement of tenants who had been

in occupation on 1 April 1948 but had been subsequently dispossessed. When it

was challenged before the Supreme Court, the Constitution bench, speaking

through Justice T L Venkatarama Ayyar, relied on the recital in its preamble5 while

interpreting its provisions. The Court held that:

4 1957 SCR 605 5 “Whereas with a view to putting a check on the growing tendency of landholders to eject or dispossess tenants from

their holdings, and in the wider national interest of increasing the production of foodgrains, it is expedient to make

provisions for the protection of tenants in Rajasthan from ejectment or dispossession from their holdings.”

“11. In the present case, the preamble to the Ordinance

clearly recites the state of facts which necessitated the

enactment of the law in question, and Section 3 fixed the

duration of the Act as two years, on an understanding of the

situation as it then existed. At the same time, it conferred a

power on the Rajpramukh to extend the life of the Ordinance

beyond that period, if the state of affairs then should require

it. When such extension is decided by the Rajpramukh and

notified, the law that will operate is the law which was enacted

by the legislative authority in respect of “place, person, laws,

powers”, and it is clearly conditional and not delegated

legislation as laid down in Queen v. Burah [(1877-8) 5 IA 178,

180, 194, 195] and must, in consequence, be held to be

valid…

…

(4) We shall next consider the contention that the provisions

of the Ordinance are repugnant to Article 14 of the

Constitution, and that it must therefore be held to have

become void. In the argument before us, the attack was

mainly directed against Sections 7(1) and 15 of the

Ordinance. The contention with reference to Section 7(1) is

that under that section landlords who had tenants on their

lands on April 1, 1948, were subjected to various restrictions

in the enjoyment of their rights as owners, while other

landlords were free from similar restrictions. There is no

substance in this contention. The preamble to the

Ordinance recites that there was a growing tendency on

the part of the landholders to eject tenants, and that it

was therefore expedient to enact a law for giving them

protection; and for granting relief to them, the Legislature

had necessarily to decide from what date the law should

be given operation, and it decided that it should be from

April 1, 1948. That is a matter exclusively for the

Legislature to determine, and the propriety of that

determination is not open to question in courts. We

should add that the petitioners sought to dispute the

correctness of the recitals in the preamble. This they clearly

cannot do. Vide the observations of Holmes, J. in Block v.

Hirsh [(1920) 65 LEd 865 : (1920) 256 US 135].

12. A more substantial contention is the one based on

Section 15, which authorises the Government to exempt any

person or class of persons from the operation of the Act. It is

argued that that section does not lay down the principles on

which exemption could be granted, and that the decision of

the matter is left to the unfettered and uncanalised discretion

of the Government, and is therefore repugnant to Article 14. It

is true that that section does not itself indicate the

grounds on which exemption could be granted, but the

preamble to the Ordinance sets out with sufficient

clearness the policy of the legislature; and as that governs

Section 15 of the Ordinance, the decision of the Government

thereunder cannot be said to be unguided…”

(emphasis supplied)

22 The language of the provision is not always decisive to arrive at a

determination whether the provision if applicable prospectively or retrospectively.

Justice G.P. Singh in his authoritative commentary on the interpretation of statutes,

Principles of Statutory Interpretation6

, has stated that:

“In deciding the question of applicability of a particular statute

to past events, the language used is no doubt the most

important factor to be taken into account; but it cannot be

stated as an inflexible rule that use of present tense or

present perfect tense is decisive of the matter that the

statute does not draw upon past events for its operation.

Thus, the words “a debtor commits an act of bankruptcy”

were held to apply to acts of bankruptcy committed before the

operation of the Act. The words “if a person has been

convicted” were construed to include anterior convictions. The

words “has made”, “has ceased”, “has failed” and “has

become”, may denote events happening before or after

coming into force of the statute and all that is necessary is

that the event must have taken place at the time when action

on that account is taken under the statute……And the word

“is” though normally referring to the present often has a future

meaning and may also have a past signification in the sense

of “has been. The real issue in each case is as to the

dominant intention of the Legislature to be gathered from

the language used, the object indicated, the nature of

rights affected, and the circumstances under which the

statute is passed.”

(emphasis supplied)

6. G.P. Singh, Principles of Statutory Interpretation (1st edn., Lexis Nexis 2015)

23 Adopting the construction which has been suggested by the appellant would

defeat the object and intent underlying the insertion of Section 10A. The onset of the

Covid-19 pandemic is a cataclysmic event which has serious repercussions on the

financial health of corporate enterprises. The Ordinance and the Amending Act

enacted by Parliament, adopt 25 March 2020 as the cut-off date. The proviso to

Section 10A stipulates that "no application shall ever be filed" for the initiation of the

CIRP "for the said default occurring during the said period”. The expression "shall

ever be filed" is a clear indicator that the intent of the legislature is to bar the

institution of any application for the commencement of the CIRP in respect of a

default which has occurred on or after 25 March 2020 for a period of six months,

extendable up to one year as notified. The explanation which has been introduced to

remove doubts places the matter beyond doubt by clarifying that the statutory

provision shall not apply to any default before 25 March 2020. The substantive part

of Section 10A is to be construed harmoniously with the first proviso and the

explanation. Reading the provisions together, it is evident that Parliament intended

to impose a bar on the filing of applications for the commencement of the CIRP in

respect of a corporate debtor for a default occurring on or after 25 March 2020; the

embargo remaining in force for a period of six months, extendable to one year.

Acceptance of the submission of the appellant would defeat the very purpose and

object underlying the insertion of Section 10A. For, it would leave a whole class of

corporate debtors where the default has occurred on or after 25 March 2020 outside

the pale of protection because the application was filed before 5 June 2020.

24 We have already clarified that the correct interpretation of Section 10A cannot

be merely based on the language of the provision; rather it must take into account

the object of the Ordinance and the extraordinary circumstances in which it was

promulgated. It must be noted, however, that the retrospective bar on the filing of

applications for the commencement of CIRP during the stipulated period does not

extinguish the debt owed by the corporate debtor or the right of creditors to recover

it.

25 Section 10A does not contain any requirement that the Adjudicating Authority

must launch into an enquiry into whether, and if so to what extent, the financial

health of the corporate debtor was affected by the onset of the Covid-19 pandemic.

Parliament has stepped in legislatively because of the widespread distress caused

by an unheralded public health crisis. It was cognizant of the fact that resolution

applicants may not come forth to take up the process of the resolution of

insolvencies (this as we have seen was referred to in the recitals to the Ordinance),

which would lead to instances of the corporate debtors going under liquidation and

no longer remaining a going concern. This would go against the very object of the

IBC, as has been noted by a two-Judge bench of this Court in its judgment in Swiss

Ribbons (P) Ltd. v. Union of India7

. Speaking through Justice Rohinton F Nariman,

the Court held as follows:

“27. As is discernible, the Preamble gives an insight into what

is sought to be achieved by the Code. The Code is first and

7 (2019) 4 SCC 17

foremost, a Code for reorganisation and insolvency resolution

of corporate debtors. Unless such reorganisation is effected

in a time-bound manner, the value of the assets of such

persons will deplete. Therefore, maximisation of value of the

assets of such persons so that they are efficiently run as

going concerns is another very important objective of the

Code. This, in turn, will promote entrepreneurship as the

persons in management of the corporate debtor are removed

and replaced by entrepreneurs. When, therefore, a resolution

plan takes off and the corporate debtor is brought back into

the economic mainstream, it is able to repay its debts, which,

in turn, enhances the viability of credit in the hands of banks

and financial institutions. Above all, ultimately, the interests of

all stakeholders are looked after as the corporate debtor itself

becomes a beneficiary of the resolution scheme—workers are

paid, the creditors in the long run will be repaid in full, and

shareholders/investors are able to maximise their investment.

Timely resolution of a corporate debtor who is in the red, by

an effective legal framework, would go a long way to support

the development of credit markets. Since more investment

can be made with funds that have come back into the

economy, business then eases up, which leads, overall, to

higher economic growth and development of the Indian

economy. What is interesting to note is that the Preamble

does not, in any manner, refer to liquidation, which is only

availed of as a last resort if there is either no resolution plan

or the resolution plans submitted are not up to the mark. Even

in liquidation, the liquidator can sell the business of the

corporate debtor as a going concern. (See ArcelorMittal

[ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2

SCC 1] at para 83, fn 3).”

Hence, the embargo contained in Section 10A must receive a purposive

construction which will advance the object which was sought to be achieved by

enacting the provision. We are therefore unable to accept the contention of the

appellant.

26 The date of the initiation of the CIRP is the date on which a financial creditor,

operational creditor or corporate applicant makes an application to the adjudicating

authority for initiating the process. On the other hand, the insolvency

commencement date is the date of the admission of the application. This distinction

is also evident from the provisions of sub-section (6) of Section 7, sub-section (6) of

Section 9 and sub-section (5) of Section 10. Section 7 deals with the initiation of the

CIRP by a financial creditor; Section 8 provides for the insolvency resolution by an

operational creditor; Section 9 provides for the application for initiation of the CIRP

by an operational creditor; and Section 10 provides for the initiation of the CIRP by a

corporate applicant. NCLAT has explained the difference between the initiation of

the CIRP and its commencement succinctly, when it observed:

“13. Reading the two definition clauses in juxtaposition, it

emerges that while the first viz. 'initiation date' is referable to

filing of application by the eligible applicant, the later viz.

'commencement date' refers to passing of order of admission

of application by the Adjudicating Authority. The 'initiation

date' ascribes a role to the eligible applicant whereas the

'commencement date rests upon exercise of power vested in

the Adjudicating Authority. Adopting this interpretation would

leave no scope for initiation of CIRP of a Corporate Debtor at

the instance of eligible applicant in respect of Default arising

on or after 25th March, 2020 as the provision engrafted in

Section 10A clearly bars filing of such application by the

eligible applicant for initiation of CIRP of Corporate Debtor in

respect of such default. The bar created is retrospective as

the cut-off date has been fixed as 25th March, 2020 while the

newly inserted Section 10A introduced through the Ordinance

has come into effect on 5th June, 2020. The object of the

legislation has been to suspend operation of Sections 7, 9 &

10 in respect of defaults arising on or after 25th March, 2020

i.e. the date on which Nationwide lockdown was enforced

disrupting normal business operations and impacting the

economy globally. Indeed, the explanation removes the doubt

by clarifying that such bar shall not operate in respect of any

default committed prior to 25th March, 2020.”

27 We are in agreement with the view which has been taken by the NCLAT for

the reasons which have been set out earlier in the course of this judgment. We

affirm the conclusion of the NCLAT. The appeal is accordingly dismissed. There

shall be no order as to costs.

28 Pending application(s), if any, stand disposed of.

…….………….…………………...........................J.

[Dr Dhananjaya Y Chandrachud]

…….…………………………...............................J.

[MR Shah]

New Delhi;

February 9, 2021.

Exception 4 of Section 300 IPC.=the offence was committed without premeditation in the sudden fight in the heat of passion and, thus, falls within Exception 4 of Section 300 IPC. The appellant and the deceased are members of the family and that the dispute occurred on the question of raising the wall. The appellant is alleged to have hit the deceased with the Shovel, a common agricultural tool, and later picked up a stone to hit the deceased. Such injuries were caused in the heat of passion as is likely to cause death. Therefore, it will be culpable homicide not amounting to murder falling within the first part of Section 304 IPC. Such an argument was raised before the High Court as well but the High Court did not agree with the argument raised. The accused is an agriculturist, and the Shovel is a part of an agricultural tool that is possessed by agriculturists. The accused was attributed with the first blow with the Shovel followed a hit by a stone on the head of the deceased which was picked up from the street. The accused and the deceased were from the same family. The cause of provocation was sudden, without premeditation. We find that, in the facts and circumstances of the case, it is a case falling under Exception 4 of Section 300 IPC. The injuries were inflicted without premeditation in a sudden fight in the heat of passion upon a sudden quarrel and without the offender having taken advantage or acted cruelly or unusually. In this view of the matter, we find that the appellant is liable to be convicted for an offence under Section 304 Part I.

Exception 4 of Section 300 IPC.=the offence was committed without premeditation in the sudden fight in the heat of passion and, thus, falls within Exception 4 of Section 300 IPC. The appellant and the deceased are members of the family and that the dispute occurred on the question of raising the wall. The appellant is alleged to have hit the deceased with the Shovel, a common agricultural tool, and later picked up a stone to hit the deceased. Such injuries were caused in the heat of passion as is likely to cause death. Therefore, it will be culpable homicide not amounting to murder falling within the first part of Section 304 IPC. Such an argument was raised before the High Court as well but the High Court did not agree with the argument raised. The accused is an agriculturist, and the Shovel is a part of an agricultural tool that is possessed by agriculturists. The accused was attributed with the first blow with the Shovel followed a hit by a stone on the head of the deceased which was picked up from the street. The accused and the deceased were from the same family. The cause of provocation was sudden, without premeditation. We find that, in the facts and circumstances of the case, it is a case falling under Exception 4 of Section 300 IPC. The injuries were inflicted without premeditation in a sudden fight in the heat of passion upon a sudden quarrel and without the offender having taken advantage or acted cruelly or unusually. In this view of the matter, we find that the appellant is liable to be convicted for an offence under Section 304 Part I.

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1730 OF 2015

PARDESHIRAM .....APPELLANT(S)

VERSUS

STATE OF M.P. (NOW CHHATTISGARH) .....RESPONDENT(S)

J U D G M E N T

HEMANT GUPTA, J.

1. The challenge in the present appeal is to an order passed by the

High Court of Chhattisgarh at Bilaspur on 4.8.2010 whereby an

appeal against the judgment of conviction and the order of

sentence dated 4.3.2003 was dismissed.

2. The appellant stands convicted for an offence under Section 302

of the Indian Penal Code, 18601

for causing the death of Kartik

Ram in an incident which occurred on 30.5.2002 at Village

Bhardao Para, PS Aurang, District Raipur, Chhattisgarh. The

1 For short, the ‘IPC’

deceased was the Uncle of the accused. The accused and the

deceased had a dispute on agricultural land before the incident.

The cause of the dispute was the raising of the wall which

infuriated the appellant on the refusal of the deceased to raise the

wall. An FIR was lodged based on the statement of Arjun (PW-1),

son of the deceased. As per the statement, on the date of the

incident, the deceased returned from his field after delivering

fertiliser on his Bullock Cart. The deceased was to take another

round to deliver fertiliser but in the meantime, the accused

quarrelled with the deceased on the issue of construction of the

wall. The dispute was pacified by Jagdish. However, after Jagdish

left, the accused climbed over the Bullock Cart of Kartik Ram and

assaulted him with a spade. The accused hit the deceased with a

stone on his head and as a result, the deceased died.

3. The prosecution examined Arjun (PW-1), son of the deceased,

Sukhbati Bai (PW-2), wife of the deceased, and Budhram (PW-3),

an acquaintance of the deceased. PW 3 turned hostile. The prosecution also examined Shankar Lal (PW-4), the nephew of the deceased and the accused. He also turned hostile. The postmortem

of the dead body was conducted by Dr G.P. Chandrakar (PW-5). Netan (PW-6) is the Investigating Officer.

4. Mr. Sanjay R. Hegde learned senior counsel for the appellant has

argued that the offence was committed without premeditation in

the sudden fight in the heat of passion and, thus, falls within Exception 4 of Section 300 IPC. The appellant and the deceased are

members of the family and that the dispute occurred on the question of raising the wall. The appellant is alleged to have hit the deceased with the Shovel, a common agricultural tool, and later

picked up a stone to hit the deceased. Such injuries were caused

in the heat of passion as is likely to cause death. Therefore, it will

be culpable homicide not amounting to murder falling within the

first part of Section 304 IPC. Such an argument was raised before

the High Court as well but the High Court did not agree with the

argument raised.

5. The accused is an agriculturist, and the Shovel is a part of an agricultural tool that is possessed by agriculturists. The accused was

attributed with the first blow with the Shovel followed a hit by a

stone on the head of the deceased which was picked up from the

street.

6. The accused and the deceased were from the same family. The

cause of provocation was sudden, without premeditation. We find

that, in the facts and circumstances of the case, it is a case falling

under Exception 4 of Section 300 IPC. The injuries were inflicted

without premeditation in a sudden fight in the heat of passion

upon a sudden quarrel and without the offender having taken advantage or acted cruelly or unusually. In this view of the matter,

we find that the appellant is liable to be convicted for an offence

under Section 304 Part I.

7. The appellant has served more than 18years of his jail sentence.

Therefore, keeping in view the period of custody undergone; the

relationship between the accused and the deceased and the background in which the injuries were caused, we are inclined to allow

this appeal partly. We thus convict the appellant for an offence under Section 304 Part I IPC and sentence him to the sentence already undergone. He is to be released forthwith, if not wanted in

any other case.

.............................................J.

(HEMANT GUPTA)

.............................................J.

(S. RAVINDRA BHAT)

NEW DELHI;

FEBRUARY 09, 2021.

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Wednesday, February 10, 2021