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Thursday, March 4, 2021

reservation of seats for the Scheduled Castes and the Scheduled Tribes has to be seat wise and not Ward wise. Reservation of 50% is the object of empowering the women. Increase of seats for reserved category is a step towards empowering the SC/ST and these provisions cannot be read, in any manner, to hamper the empowerment of women, SC/ST. By the amendments made in 2015 in each Ward two seats are to be reserved for women which is with the intent and purpose of empowerment of women and increasing women representation in a Municipality.

reservation of seats for the Scheduled Castes and the Scheduled Tribes has to be seat wise and not Ward wise. Reservation of 50% is the object of empowering the women. Increase of seats for reserved category is a step towards empowering the SC/ST and these provisions cannot be read, in any manner, to hamper the empowerment of women, SC/ST. By the amendments made in 2015 in each Ward two seats are to be reserved for women which is with the intent and purpose of empowerment of women and increasing women representation in a Municipality.

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 706 OF 2021

(ARISING OUT OF SLP(C)NO.24950 OF 2015)

PARMAR SAMANTSINH UMEDSINH … APPELLANT

VS.

STATE OF GUJARAT & ORS. … RESPONDENTS

WITH

CIVIL APPEAL NO. 707 OF 2021

(ARISING OUT OF SLP(C)NO.30635 OF 2015)

STATE ELECTION COMMISSION … APPELLANT

VS.

VIRENDRASINH MAFAJI VAGHELA & ORS. … RESPONDENTS

WITH

WRIT PETITION (C)NO.786 OF 2020

NARENDRA KUMAR AMBALAL RAVAT … APPELLANT

VS.

STATE OF GUJARAT & ORS. … RESPONDENTS

J U D G M E N T

ASHOK BHUSHAN, J.

Leave granted.

2. The civil appeals and writ petition, being tagged,

all three matters have been heard together.

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3. We need to notice the facts and pleadings in the

first matter, i.e., Civil Appeal (arising out of

SLP(C)No.24950 of 2015-Parmar Samantsinh Umedsinh vs.

State of Gujarat & Ors.). The abovesaid appeal has been

filed against the judgment of Gujarat High Court dated

29.07.2015 in Special Civil Application No.12084 of 2015

dismissing the writ petition following an earlier

Division Bench judgment dated 13.08.2010 in Pankajsinh

Waghela v. State Election Commission through Election

Commissioner & others. The writ petition was filed by the

appellant herein challenging the vires of Section 5(3)

(iii)(a) and Section 29A of the Gujarat Provincial

Municipal Corporation Act, 1949 (hereinafter referred to

as “Act, 1949”) and other statutory provisions including

Rules framed thereunder and the notifications. In the

writ petition following reliefs were claimed:

“(A) Issue a writ of declaration, declaring

that:

a) Section 5(3)(iii)(a) and 29A of the

Gujarat Provincial Municipal Corporation Act,

1949 and

b) Sections 2 and 3 of the Gujarat Local

Authorities Laws (Amendment) Act, 2009 as

being ultra vires the Constitution of India

as it violates one member one ward mandate.

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(B) Issue a writ of declaration, declaring

that Rule 4 and Rule 5 of the Bombay

Provincial Municipal Corporation

(Delimittaion of Wards in the City and

Allocations of Reserved Seats) Rules, 1994

(including amendment of 2015) as being ultra

vires the Constitution of India.

(C) Issue a writ of declaration, declaring

Notification No.KV-194 of 2014-ELE-102014-

17010P dated 04.12.2014 as well as other

Notification dated 15.01.2015 issued by State

of Gujarat as ultra vires the Constitution of

India and/or Gujarat Local Authorities Laws

(Amendment)Act, 2009 and/or Gujarat

Provincial Municipal Corporation Act, 1949.

(D) Quash and set aside the order dated

11.12.2014 passed by the State Election

Commission under Section 5(3)(iii)(b) of the

Gujarat Provincial Municipal Corporation Act,

1949.

(E) Pending admission, hearing and final

hearing, be pleased to stay Notification

No.KV-194 of 2014-ELE-102014-1701-P dated

04.12.2014 issued by the State of Gujarat as

well as order dated 11.12.2014 passed by the

State Election Commission under Section 5(3)

(iii)(b) of the Gujarat Provincial Municipal

Corporation Act, 1949.

(F) Pending admission, hearing and final

hearing, be pleased to stay the election

process for the election due in October 2015

for Municipality in the State of Gujarat.

(G) Costs.

(H) Such other and further relief or

relieves as may be deem fit, just and proper,

in the facts and circumstances of the case.”

4. The Division Bench of the High Court dismissed the

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writ petition noticing that earlier the vires of Section

5(3)(iii)(a) and Sections 29A(2)(a) and 29A(3)(a) of the

Act, 1949 as well as Rule 4 of the Bombay Provincial

Municipal Corporations (the Delimitation of Wards in the

City and Allocation of Reserved Seats) Rules, 1994 were

challenged and were upheld and the issues in the writ

petition being covered by the earlier Division Bench

judgment of the High Court in the case of Pankajsinh

Waghela v. State Election Commission and others, the writ

petition is to be dismissed.

5. Aggrieved against the judgment of the Division Bench

dated 29.07.2015 Civil Appeal (arising out of

SLP(C)No.24950 of 2015) has been filed.

6. The Civil Appeal (arising out of SLP(C)No.30635 of

2015) has been filed against the Division Bench judgment

of the High Court dated 21.10.2015 by which judgment

Special Civil Application No.16313 of 2015 filed by the

respondents has been allowed. In the writ petition

Clauses (3), (4) and (5) of Ordinance No.3 of 2015

promulgated by the Governor of Gujarat were under

challenge. A mandamus was also sought seeking a direction

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to the State Election Commission to declare the dates of

holding Elections of Panchayats in the State of Gujarat

forthwith. On 03.10.2015 on the same date when Ordinance

No.3 of 2015 was issued by which Section 7A of the

Gujarat Provincial Municipal Corporations Act, 1949,

Section 8A of Gujarat Municipalities Act, 1963 and

Section 257 of the Gujarat Panchayats Act, 1993 have been

substituted an order was issued by the State Election

Commission that the Elections of 6 Municipal

Corporations, 53 Municipalities, 3 newly constituted

Munipalities, 23 Taluka Panchayats and 31 District

Panchayats which were to be held in October/November,

2015 were decided not to be held at present. The Division

Bench had disposed of the writ petition by recording its

conclusion in paragraph 72 which was to the following

effect:

“72.In view of the above observations and

discussions, the following conclusions:-

(a) Section 15(1) of the Gujarat Panchayats

Act inserted by Ordinance No.2 of 2015 is

read down in a manner that the Election

Commissioner must initiate the process of

election at least 45 days prior to the expiry

of the term of the respective Panchayats so

as to enable the newly elected body to hold

the first meeting and assume the power by

replacing the outgoing elected body. If

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Section 15(1) is not interpreted and read

accordingly, Section 15(1) would

unconstitutional and void.

If there is failure on the part of the State

Election Commission to initiate the process

for elections 45 days in advance, any citizen

affected thereby would be at liberty to

approach this Court under Article 226 of the

Constitution for seeking appropriate

direction against the State Election

Commission.

(b) Section 7A of the GPMC Act, Section 8A of

Page 86 of 89 Downloaded on : Sat Feb 20

15:44:28 IST 2021 C/SCA/16313/2015 CAV

JUDGMENT Municipalities Act and Section 257

of the Act brought about by Ordinance No.3

of 2015 are held to be unconstitutional and

void.

(c) The action of the State Election

Commission for postponement of the election

of all local bodies in the State is held to

be illegal and is set aside. Respondent No.2

Election Commission is directed to initiate

process of holding the election of the local

bodies forthwith.

Respondent No.1 State Government is directed

to render all cooperation and assistance,

including providing necessary police force

and reserved force or any other force as may

be requisitioned by the Election Commission

for ensuring the election at the earliest in

a free and fair atmosphere.”

7. The State Election Commission aggrieved by the

judgment of the High Court has come up in this appeal.

8. Writ Petition(C)No.786 of 2020 has been filed

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challenging the notifications dated 08.07.2020 issued by

the Governor of Gujarat in exercise of power under

Section 5(3)(iii)(a) of the Act, 1949 determining the

number of Wards, seats including the seats reserved for

Scheduled Castes, Scheduled Tribes, Backward Classes and

women of Vadodara Provincial Corporation, Ahmedabad

Provincial Corporation, Bhavnagar Provincial

Corporation, Ghandhinagar Provincial Corporation,

Jamnagar Provincial Corporation, Rajkot Provincial

Corporation and Surat Provincial Corporation. Writ order

or declaration declaring Section 5(3)(iii)(a) and 29A of

Act, 1949 as unconstitutional was also prayed for.

Section 5(3)(iii)(a) and 29A, Rule 4 and Rule 5 of Rules,

1994 as amended in 2015 has also been challenged.

Notification dated 04.12.2015 as well as 15.01.2015 was

also sought to be challenged including challenge to

Sections 2 and 3 of the Gujarat Local Authorities Laws

(Amendment) Act, 2009. By order of this Court dated

25.08.2020 the writ petition has been tagged with Civil

Appeal arising out of SLP(C) No.24950/2015.

9. We have heard Shri Kapil Sibal, learned senior

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counsel and Shri Harin P. Raval, learned senior counsel

appearing in the first appeal and writ petition for the

appellants and petitioner.

10. We have heard Shri Maninder Singh, learned senior

counsel appearing for the appellant in the appeal filed

by the State Election Commission. Shri Tushar Mehta,

learned Solicitor General and Ms. Manisha Lavkumar,

learned senior counsel have been heard for the State of

Gujarat.

11. Shri Kapil Sibal has led the arguments on behalf of

the appellants in the first matter. Referring to

provisions of Article 243R and 243S of the Constitution

of India, Shri Sibal submits that the constitutional

scheme does not permit multi member representation from a

Ward in the Municipal Corporation/Municipality. Shri

Sibal submits that Article 243S sub-clause (3) and subclause (4) uses expression “a member and the member”,

which indicates that from one Ward there can only be one

member in the Municipality. Similarly, Section 29A subclause 2 of the Act, 1949 is inconsistent with Article

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243S of the Constitution. He submits that Article 243R

does not contemplate/mandate a multi member Ward.

12. Shri Sibal submits that in the case of Lok Sabha it

is rule of election of one Member of Parliament is to be

from one unit of representation from one constituency.

Similarly, is the case of Vidhan Sabha only one member is

to be elected from one constituency. It is submitted that

Article 243S of the Constitution mandates that only one

member be elected from one Ward and it does not allow for

more than one member to be elected from the same Ward and

the impugned provisions and notifications are in

contravention of this cardinal constitutional principle

enshrined in Article 243S of the Constitution. It is

submitted that the election to a Municipal Corporation

ought to be conducted in the same manner as State

Legislative Assembly, wherein different constituencies

are represented by one member and no more. Further,

Article 243R cannot be interpreted to give wide, unguided

and uncontrolled powers to the State Legislature ignoring

other Constitutional provisions enshrined in the

Constitution of India. The State Legislature is empowered

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to make laws with regard to representation in a

Municipality and also composition and territorial area of

Wards Committees and the manner in which the seats are to

be filled. However, in its exercise of legislative

powers, the State Legislature cannot make laws violative

of the Constitutional principles and mandate.

13. Shri Sibal submits that there has to be thematic

consistency while interpreting the provisions of Part IXA

of the Constitution. The thematic flow of the

Constitution is of election of only one member from one

Ward constituency/unit of representation. Multi member

representation from a Ward is against the principle of

empowerment of down-trodden and woman. One member Ward

enables exclusive representation of the women/other

backward classes/Scheduled Castes/Scheduled Tribes

resulting therein empowerment which cannot be achieved by

a multi member Ward. Shri Sibal further submits that a

holistic schematic interpretation of the Constitution has

to be advanced. Shri Sibal submits that words occurring

in the Constitution should be read in their ordinary,

natural and grammatical meaning. Wordings of Article

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243S(4) would mean adding words to the plain language and

intent to Article 243S(4) of the Constitution of India.

14. It is submitted that singular cannot be read plural

in Article 243S. Applicability of the General Clauses Act

is restricted to the interpretation of the Constitution

of India by Article 367 itself. One of the submissions of

Shri Sibal is that Draft Rules for Amendment of

Delimitation Rules, 1994 were issued on 27.11.2014

inviting objections within 30 days of the publication of

Draft Rules, 1994. However, before expiry of 30 days

notification was issued on 04.12.2014 which is not in

accordance with law.

15. Shri Sibal submits that the Municipal Laws which are

prevalent in 28 States provide for one representation

from one Ward whereas Municipal Laws in Gujarat provide

for multi member Ward. It is submitted that in the

Municipal Laws of Bombay which provide for multi member

Ward now in 2019 it has reverted back to one member

representation.

16. Shri Harin P. Raval adopting the arguments of Shri

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Kapil Sibal submits that if the words are clear Rule of

literal interpretation shall apply. He submits that

Section 29A of Act, 1949 is inconsistent with Article

243S of the Constitution. Shri Raval further submits that

without reference to notification dated 27.11.2014, the

notification dated 04.12.2014 was published which is a

colourable exercise of power.

17. Shri Tushar Mehta, learned Solicitor General submits

that in Gujarat there were always multi member Wards.

Shri Mehta submits that an Act can be challenged on the

grounds of (1) substantive ultra vires, i.e, competence;

(2) procedural ultra vires; (3) ultra vires and

arbitrariness and (4) runs contrary to the constitutional

provisions. He submits that under Entry 5 List II of

Seventh Schedule of the Constitution, “the State

Legislature is competent to legislate local on

Governments. Shri Tushar Mehta submits that the

expression “the member” used in sub-clause (4) of Article

243S is used in reference to the Chairperson. Article

243S does not contain any provision that there shall be

only one member for one Ward. He submits that Article

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243S deals with constitution and composition of Wards

Committees and the provisions therein have to be confined

to constitution and composition of Wards Committees and

cannot be read in reference to constitution and

composition of a Municipality. He submits that the

constitutional provision of Article 243T contemplates

reservation of seats for the Scheduled Castes and the

Scheduled Tribes has to be seat wise and not Ward wise.

Reservation of 50% is the object of empowering the women.

Increase of seats for reserved category is a step towards

empowering the SC/ST and these provisions cannot be read,

in any manner, to hamper the empowerment of women, SC/ST.

By the amendments made in 2015 in each Ward two seats are

to be reserved for women which is with the intent and

purpose of empowerment of women and increasing women

representation in a Municipality.

18. Elaborating on Article 243R, Shri Mehta submits that

it is Article 243R which provides for composition of

Municipalities and there is no prohibition in the

constitutional provision in providing representation of

more than one member from one Ward. In interpretation of

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provision of the Constitution by virtue of Article 357 of

the Constitution a singular can also be read as plural.

He submits that Constitution does not provide for any

thematic mode and manner, the election to Lok Sabha and

Rajya Sabha is entirely different. In Lok Sabha members

are elected by direct Election whereas in Rajya Sabha

members are elected by indirect Election. There is

complete different mode of election of President of

India. Even in Parliament there is no thematic schematic.

19. The power of competent Legislature, i.e., State

Legislature in the light of enabling provisions provided

in the Constitution with regard to framing of laws

concerning Legislature cannot be whittled down by way of

restrictive interpretation as contended by the

appellants. The State Legislature in federal set up

specially in the matter of local Government are to enable

enough seats to adopt the reservation based on local

body.

20. The overarching scheme of Article 243D and 243T is to

ensure the fair representation of social diversity in the

composition of elected local bodies so as to contribute

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to the empowerment of the traditional weaker sections in

Society. The preferred means for pursuing this policy is

the reservation of seats and Chairperson positions in

favour of SC/ST, women and Backward Class candidates.

21. Learned counsel for the parties have also placed

reliance on various judgments of this Court which shall

be referred while considering the submission in detail.

22. From the submissions of the learned counsel for the

parties following questions arise for consideration:

(1) Whether Article 243R and Article 243S of the Constitution of India contains any limitation to the effect that there shall be only one member from one

Ward?

(2) Whether the provisions of Sections 5(3)(iii)(a), 29A

of the Gujarat Provincial Municipal Corporations

Act, 1949 and Rules 4 and 5 of Bombay Provincial Municipal Corporations (the delimitation of wards and

allocation of reserved seats) Rules, 1994 and Rule

2(b) of Gujarat Municipal Corporation’s Ward Committees Functions, Duties, Territorial Areas and Procedure for Transaction of Business Rules, 2007 are ul-

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tra virus to the provisions of Articles 243R and

243S of the Constitution?

(3) Whether having more than one representative from a

Ward negates the empowerment of weaker sections,

i.e., women, Scheduled Castes and Scheduled Tribes?

(4) Whether when the draft rules for amendment of Bombay

Provincial Municipal Corporations (the delimitation

of wards and allocation of reserved seats) Rules,

1994 were issued on 27.11.2014 which were to be published after noting of objections on or expiry of

thirty days, the State Government could have issued

notification dated 04.12.2014 before expiry of

thirty days?

Question Nos. 1 and 2

23. Both these questions being interrelated are being

taken together. We need to first notice the relevant

constitutional as well as statutory provisions which are

up for consideration before us. The provisions of the

Gujarat Provincial Municipal Corporations Act, 1949 and

the rules framed thereunder are under challenge. The

Legislation under challenge is referable to Entry 5 of

List II, i.e., State List under Seventh Schedule of the

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Constitution. Entry 5 is as follows:-

“5. Local government, that is to say, the

constitution and powers of municipal

corporations, improvement trusts, districts

boards, mining settlement authorities and

other local authorities for the purpose of

local self-government or village

administration.”

24. By Constitution (Seventy-fourth Amendment) Act, 1992,

Part IXA “The Municipalities” have been inserted in the

Constitution of India. Bill No.159 of 1991 was

introduced in the Lok Sabha for inserting new Part IXA.

The Bill, which was published in the gazette on

16.09.1991, contains the Statement of Objects and Reasons

for insertion of Part IXA in the Constitution. Paragraph

3(b) of the Statement of Objects and Reasons provides as

follows:-

“3. XXXXXXXXXXXXX

b) composition of Municipalities, which will

be decided by the Legislature of a State,

having the following features:

(i) persons to be chosen by direct election;

(ii) representation of Chairpersons of Committees, if any, at ward or other levels in

the Municipalities;

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(iii) representation of persons having special knowledge or experience of Municipal Administration in Municipalities (without voting rights);

XXXXXXXXXXXXXXXX”

25. The provisions of Part IXA of the Constitution, which

are relevant for the present case are Articles 243P,

243R, 243S, 243ZA and 243ZG, which shall be noticed

hereinafter. The appellant has also laid challenge to

Section 5(3)(iii) sub-clause(a) of the Act, 1949, which

is to the following effect:-

“5. XXXXXXXXXXXXXXXXXXXX

(3) Where general election is to be held

immediately after,—

XXXXXXXXXXXXXXXXXXXX

(iii) the limits of a City are altered,—

(a) the State Government shall, by

notification in the Official gazette,

determine the number of wards into which the

City shall be divided, the number of

councillors to be elected to the Corporation

and the number of seats to be reserved in

favour of the Scheduled Castes, the Scheduled

Tribes, the Backward Classes and Women as

provided in this section, and

XXXXXXXXXXXXXXXXXXXX”

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26. Section 29A of the Act, 1949, which is also under

challenge, is to the following effect:-

“29A. Composition of Wards Committee.-

(1) Where the population of the City is three

lakhs or more, there shall be constituted by

the Municipal Corporation, Subject to the

rules made by the State Government Wards

Committee or Committees consisting of one or

more wards within the territorial area of a

Corporation.

(2) Each Wards Committee shall consist

of –

(a) Councillors of the

Corporation representing a ward

within the territorial area of the

Ward Committee;

[ * * * * * * * * *]:

Provided that a person shall be

disqualified for being appointed, and for

being a member of the Wards Committee, if

under the provisions of this Act or any other

law for the time being in force, he would be

disqualified for being elected as, and for

being, a councillor.

(3) The Wards Committee shall at its

first meeting after its constitution under

subsection (1) and at its first meeting in

the same month in each succeeding year shall

elect,-

where the Wards Committee consists of-

(a) one ward, the Councillor

representing that ward in the

Corporation; or

(b) two or more wards, one of

the Councillors representing such

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wards in the Corporation elected by

the members of the Wards Committee,

to be the Chairperson of that

Committee.

XXXXXXXXXXXXXXXX”

27. Rules 4 and 5 of Bombay Provincial Municipal

Corporations (the Delimitation of wards in the city and

allocation of Reserved Seats) Rules, 1994, as it existed

prior to 2015 amendment are as follows:-

“4. All wards shall be multi-member

wards with three councilors to be elected

from each ward.

5. In each and every ward one seat

shall be reserved for women (including seats

to be reserved for women belonging to

Scheduled Castes, Scheduled Tribes and

Backward Classes) and one seat shall remain

unreserved. The remaining third seat may be

reserved, depending upon the requirement of

reservation as notified by the State

Government under Section 5 of the said Act.”

28. Another rule challenged before us is the Gujarat

Municipal Wards Committees Functions, Duties, Territorial

Areas and Procedure for Transaction of Business Rules,

2007. Rule 2(b) provides:-

“2(b) “Chairperson” means the persons

elected by the members of the Wards Committee

as the Chairperson of that Committee;”

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29. The notifications issued in exercise of powers under

Section 5(3) as well as the Rules, 1994 have also been

challenged. The ambit and scope of legislative power of

the State being under consideration, we need to first

notice the rules of interpretation of a legislative

entry.

30. It is well settled that legislative entries as

contained in Lists under Seventh Schedule of the

Constitution have not to be read in a narrow or

restricted manner and each general word occurring in the

entries should be held to extend to all ancillary or

subsidiary matters, which can fairly and reasonably be

said to be comprehended in it. In construing an entry

in a List conferring legislative power, the widest

possible construction according to their ordinary meaning

must be put upon the words used therein.

31. We may refer to the Constitution Bench judgment of

this Court in Ch. Tika Ramji and Others, etc. Vs. The

State of Uttar Pradesh and Others, AIR 1956 SC 676where

the principles for interpretation of a legislative entry

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has been enumerated in following words:-

“Each entry in the Lists which is a

category or head of the subject-matter of

legislation must be construed not in a narrow

or restricted sense but as widely as possible

so as to extend to all ancillary or

subsidiary matters which can fairly and

reasonably be said to be comprehended in

it………………”

32. Article 245, which deals with distribution of

legislative powers, begins with the words “subject to the

provisions of this Constitution”. Thus, laws made by the

Parliament and by the Legislature of the State, have to

be subject to the provisions of the Constitution.

Article 245(1) is as follows:-

“245. Extent of laws made by Parliament and

by the Legislatures of States.-(1) Subject to

the provisions of this Constitution,

Parliament may make laws for the whole or any

part of the territory of India, and the

Legislature of a State may make laws for the

whole or any part of the State.”

33. Article 246 deals with subject-matter of the laws

made by the Parliament and by the Legislature of the

State. Reading Articles 245 and 246 together, it is

abundantly clear that the legislative power to be

exercised by the Parliament and the State Legislatures as

enumerated in List I, List II and List III of Seventh

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Schedule are subject to the provisions of the

Constitution. Thus, when the Constitution expressly or

impliedly contains a limitation in exercise of

legislative power, the legislative power is subject to

such Constitution limitations. For example, Article

13(2) contains a limitation that State shall not make any

law which takes away or abridges the rights conferred by

Part III and any law made in contravention of this clause

shall, to the extent of the contravention, be void. A

Constitution Bench of this Court in Maharaj Umeg Singh

and Ors. Vs. State of Bombay and Ors., AIR 1955 SC 540

had categorically laid down that the legislative

competence of the State Legislature can only be

circumscribed by express prohibition contained in the

Constitution itself. In paragraphs 12 and 13 following

was laid down:-

“12. …………………..The legislative competence

of the State Legislature can only be circumscribed by express prohibition contained in

the Constitution itself and unless and until

there is any provision in the Constitution

expressly prohibiting legislation on the subject either absolutely or conditionally,

there is no fetter or limitation on the plenary powers which the State Legislature enjoys to legislate on the topics enumerated in

the Lists 2 and 3 of the Seventh Schedule to

the Constitution.

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13. The fetter or limitation upon the legislative power of the State Legislature which

had plenary powers of legislation within the

ambit of the legislative heads specified in

the Lists 2 and 3 of the Seventh Schedule to

the Constitution could only be imposed by the

Constitution itself and not by any obligation

which had been undertaken by either the Dominion Government or the Province of Bombay

or even the State of Bombay. Under Article

246 the State Legislature was invested with

the power to legislate on the topics enumerated in Lists 2 and 3 of the Seventh Schedule

to the Constitution and this power was by

virtue of Article 245(1) subject to the provisions of the Constitution.

The Constitution itself laid down the fetters or limitations on this power e.g. in Article 303 or Article 286(2). But unless and

until the court came to the conclusion that

the Constitution itself had expressly prohibited legislation on the subject either absolutely or conditionally the power of the

State Legislature to enact legislation within

its legislative competence was plenary. Once

the topic of legislation was comprised within

any of the entries in the Lists 2 and 3 of

the Seventh Schedule to the Constitution the

fetter or limitation on such legislative

power had to be found within the Constitution

itself and if there was no such fetter or

limitation to be found there the State Legislature had full competence to enact the impugned Act no matter whether such enactment

was contrary to the guarantee given, or the

obligation undertaken by the Dominion Government or the Province of Bombay or even the

State of Bombay.

XXXXXXXXXXXXXXXX”

34. Justice R. Banumathi in her separate opinion in a

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Constitution Bench in Jindal Stainless Limited and Anr.

Vs. State of Haryana and Ors., (2017) 12 SCC 1 laid down

following in paragraph 316:-

“316. In Umeg Singh v. State of

Bombay [AIR 1955 SC 540], this Court held

that since the power of the State to

legislate within its legislative competence

is plenary and the same cannot be curtailed

in the absence of an express limitation

placed on such power in the Constitution

itself, there is no express prohibition on

the legislative powers of the State to levy

taxes on the goods entering into a local area

for consumption, use or sale therein. Taxes

being the lifeblood of the State, they cannot

be decimated by implication.”

35. The ratio which can be culled out from the above

judgment is that power of the State to legislate within

its legislative competence is plenary and the same cannot

be curtailed in the absence of an express limitation

placed on such power in the Constitution itself.

36. Article 243ZF provides that any law relating to

municipalities in force in a State immediately before the

commencement of the Constitution (Seventy-fourth

Amendment) Act, 1992, which is inconsistent with the

provisions of Part IXA, shall not continue beyond

expiration of one year from commencement of the

26

constitutional amendment. Thus, Part IXA of the

Constitution categorically contemplated that any law made

by State Legislature, which is inconsistent with the

provisions of Part IXA shall cease to operate on the

expiration of one year or till amended or repealed by a

competent Legislature, whichever is earlier. The

Constitution provisions, thus, mandates that any law of

the State, which is inconsistent, cannot continue. Thus,

this limitation shall also govern any law made after

enforcement of Constitution (Seventy-fourth Amendment)

Act. Thus, a law, which is inconsistent with Part IXA

cannot be framed by the State Legislature.

37. Explaining the expression “inconsistent”, this Court

in Basti Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh

and Anr., (1979) 2 SCC 88where following was laid down in

paragraph 23:-

“23. …………………………………….“Inconsistent”, according

to Black's Legal Dictionary, means “mutually

repugnant or contradictory; contrary, the one

to the other so that both cannot stand, but

the acceptance or establishment of the one

implies the abrogation or abandonment of the

other”………………………”

38. One of the meanings of expression “inconsistent” as

approved by this Court is mutually repugnant or

27

contradictory. Article 254 of the Constitution contains

a heading “inconsistency between laws made by the

Parliament and the laws made by the Legislature of the

State” whereas under Article 254(1) and Article 254(2)

the words used are repugnant. The Constitution itself,

thus, has used the words inconsistency and repugnancy

interchangeably. To find out as to whether a law made by

State Legislature is inconsistent with provisions of Part

IXA of the Constitution, the principles which have been

laid down by this Court to determine the repugnancy

between the law made by the Legislature of a State and

law made by Parliament can be profitably relied on. We,

thus, need to notice the principles on which the

repugnancy of law made by State and law made by the

Parliament is found out.

39. The Constitution of India is a paramount law to which

all other laws are subject. One of the important tests

to find out as to whether or not there is repugnancy is

to ascertain the intention of the Legislature regarding

the fact that the dominant Legislature allowed the

subordinate Legislature to operate in the same field

28

paripasu the State Act and there will be no inconsistency

when the State Act and Central Act are supplemental to

each other. Things are inconsistent when they cannot

stand together at the same time and one law is

inconsistent with another law, when the command or power

or provision in the law conflicts directly with the

command or power or provision in the other law. While

legislating on a particular subject matter, the paramount

Legislature may evince the intention to cover only

certain specific matters leaving it to the State

Legislature to deal with the rest. One more preposition

need to be noticed is that there is always a presumption

that Legislature does not exceed its jurisdiction and

Court should make every attempt to reconcile the

provisions of apparently conflicting enactment. This

Court in Ch. Tika Ramji and Others, Etc. Vs. The State of

Uttar Pradesh and Others, AIR 1956 SC 676 had occasion to

consider the repugnancy between a State legislation, U.P.

Sugarcane (Regulation of Supply and Purchase) Act, 1953

and the Central Legislation namely the Industries

(Development and Regulation) Act, 1951 as well as the

Essential Commodities Act, 1955. It was held by this

29

Court that repugnancy falls to be considered when the law

made by the Parliament and the law made by the State

Legislature occupies the same field. This Court quoted

with approval three tests as referred by Nicholas in his

Australian Constitution and one test referred by Isaacs,

J. in paragraphs 27 and 28 of the judgment, which are to

the following effect:-

“27. Nicholas in his Australian Constitution, 2nd Ed., p. 303, refers to three

tests of inconsistency or repugnancy:—

(1) There may be inconsistency in the

actual terms of the competing statutes

(R. v. Brisbane Licensing Court, [1920] 28

CLR 23).

(2) Though there may be no direct conflict, a State law may be inoperative because

the Commonwealth law, or the award of the

Commonwealth Court, is intended to be a complete exhaustive code (Clyde Engineering Co.

Ltd. v. Cowburn, [1926] 37 CLR 466).

(3) Even in the absence of intention, a

conflict may arise when both State and Commonwealth seek to exercise their powers over

the same subject-matter (Victoria v. Commonwealth, [1937] 58 CLR 618; Wenn v. AttorneyGeneral (Vict.), [1948] 77 CLR 84)

28. Isaacs, J. in Clyde Engineering Company, Limited v. Cowburn [(1926) 37 CLR 466,

489] laid down one test of inconsistency as

conclusive: “If, however, a competent legislature expressly or implicitly evinces its

intention to cover the whole field, that is a

conclusive test of inconsistency where an-

30

other Legislature assumes to enter to any extent upon the same field”.”

40. This Court after referring to the provisions of State

Legislation as well as Central Legislation held that none

of these provisions do overlap, the Centre being silent

with regard to some of the provisions, which have been

enacted by the State, hence no repugnancy was found.

Following was laid down in paragraph 36:-

”(36). XXXXXXXXXXXXXXXX

Suffice it to say that none of these

provisions do overlap, the Centre being

silent with regard to some of the provisions

which have been enacted by the State and the

State being silent with regard to some of the

provisions which have been enacted by the

Centre. There is no repugnancy whatever

between these provisions and the impugned Act

and the Rules framed thereunder as also the

U.P. Sugarcane Regulation of Supply and

Purchase Order, 1954 do not trench upon the

field covered by Act 10 of 1955.”

41. Another Constitution Bench in Deep Chand and Ors. Vs.

The State of Uttar Pradesh and Ors., AIR 1959 SC 648

speaking through K. Subba Rao, J. after referring to the

earlier judgments of this Court and other precedents laid

down following three principles for ascertaining the

repugnancy between two statutes:-

31

“(29). XXXXXXXXXXXX

Repugnancy between two statutes may thus

be ascertained on the basis of the following

three principles:

(1) Whether there is direct conflict between the two provisions;

(2) Whether Parliament intended

to lay down an exhaustive code in

respect of the subject-matter replacing the Act of the State Legislature and

(3) Whether the law made by Parliament and the law made by the

State Legislature occupy the same

field.”

42. Again a Constitution Bench of this Court in

M.Karunanidhi Vs.Union of India and Anr., (1979) 3 SCC

431 reiterated the principles to determine the

inconsistency between two Statutes. In paragraph 35,

following prepositions were laid down:-

“35. On a careful consideration, therefore, of the authorities referred to above,

the following propositions emerge:

1. That in order to decide the

question of repugnancy it must be

shown that the two enactments contain inconsistent and irreconcilable provisions, so that they cannot stand together or operate in

the same field.

32

2. That there can be no repeal by

implication unless the inconsistency appears on the face of the

two statutes.

3. That where the two statutes

occupy a particular field, but

there is room or possibility of

both the statutes operating in the

same field without coming into collision with each other, no repugnancy results.

4. That where there is no inconsistency but a statute occupying

the same field seeks to create distinct and separate offences, no

question of repugnancy arises and

both the statutes continue to operate in the same field.”

43. Thakkar, J. speaking for himself and Fazal Ali, J.

in M/s. Ram Chandra Mawa Lal, Varanasi and Ors. Vs. State

of Uttar Pradesh and Ors., 1984 (Supp.) SCC 28 had

occasion to elaborately consider the principles to

determine inconsistency between two Statutes. The

principles were stated in following words in paragraph

47:-

47. ……………………………..The principle may be

stated thus. The Centre and the State both

cannot speak on the same channel and create

disharmony. If both speak, the voice of the

Centre will drown the voice of the State.

The State has to remain “silent” or it will

be “silenced”. But the State has the right

33

to “speak” and can “speak” (with

unquestionable authority) where the Centre

is “silent, without introducing

disharmony……………………………..”

44. The last judgment which needs to be noticed is

another Constitution Bench judgment in K.T. Plantation

Private Limited and Anr. Vs. State of Karanataka, (2011)

9 SCC 1 where on repugnancy, following was laid down in

paragraph 108:-

“108. The question of repugnancy under

Article 254 of the Constitution arises when

the provisions of both laws are fully

inconsistent or are absolutely irreconcilable

and it is impossible without disturbing the

other, or conflicting results are produced,

when both the statutes covering the same

field are applied to a given set of facts.

Repugnancy between the two statutes would

arise if there is a direct conflict between

the two provisions and the law made by

Parliament and the law made by the State

Legislature occupy the same field. Reference

may be made to the decisions of this Court

in Deep Chand v. State of U.P. [AIR 1959 SC

648], Prem Nath Kaul v. State of J&K [AIR

1959 SC 749], UkhaKolhe v. State of

Maharashtra [AIR 1963 SC 1531], Bar Council

of U.P. v. State of U.P. [(1973) 1 SCC

261] , T. Barai v. Henry Ah Hoe [(1983) 1 SCC

177], Hoechst Pharmaceuticals Ltd. v. State

of Bihar [(1983) 4 SCC

45], LingappaPochannaAppelwar v. State of

Maharashtra [(1985) 1 SCC 479] and Vijay

Kumar Sharma v. State of Karnataka [(1990) 2

SCC 562].”

34

45. After noticing the principles laid down by this Court

in above noted cases to find out repugnancy between law

made by State Legislature and that of Parliament, we need

to apply the above prepositions to find out as to whether

the provisions of Act, 1949 and the Rules framed

thereunder are inconsistent with constitutional

provisions as contained in Part IXA of the Constitution

of India.

46. We, now, proceed to notice the relevant

constitutional provisions contained in Part IXA. Article

243P is a definition clause. Article 243P(a) defines the

“Committee” in following words:-

“(a)"Committee" means a Committee constituted

under Article 243S;

47. Article 243(e) defines “Municipality” in following

words:-

“(e) "Municipality" means an institution of

self-government constituted under

Article 243Q;”

48. Article 243Q provides for constitution of

35

Municipalities. Article 243R deals with composition of

Municipalities, which is as follows:-

“243R. Composition of Municipalities—(1)

Save as provided in Clause (2), all the seats

in a Municipality shall be filled by persons

chosen by direct election from the

territorial constituencies in the Municipal

area and for this purpose each Municipal area

shall be divided into territorial

constituencies to be known as wards.

(2) The Legislature of a State may, by

law, provide –

(a) for the representation in a

Municipality of –

i. persons having special

knowledge or experience in Municipal administration;

ii. the members of the House of

the People and the members of the

Legislative Assembly of the State

representing constituencies which

comprise wholly or partly the Municipal area;

iii. the members of the Council

of States and the members of the

Legislative Council of the State

registered as electors within the

Municipal area;

iv. the Chairpersons of the Committees constituted under Clause

(5) of Article 243S:

Provided that the persons referred to in

paragraph (i) shall not have the right to

vote in the meeting of the Municipality;

36

b. the manner of election of the Chairperson of a Municipality.”

49. Sub-article(1) of Article 243R contains two

constitutional requirements:- (i) all the seats in a

Municipality shall be filled by persons chosen by direct

election and (ii) from the territorial constituencies in

the Municipal area and for this purpose each Municipal

area shall be divided into territorial constituencies to

be known as wards. Sub-article (2) of Article 243R

provided for the representation in a municipality of four

categories of persons which is a constitutional

requirement required to be adopted by State Legislature.

It may be noted that sub-article(2) of Article 243R does

not deal with seats in the Municipalities, which shall be

filed up by persons chosen by direct election. Article

243ZA deals with elections to the Municipalities, thus,

direct election, as contemplated under Article 243R has

to be as per Article 243ZA. 243ZA(2) provides as

follows:-

“243ZA Elections to the Municipalities—

XXXXXXXXXXXXXX

37

(2) Subject to the provisions of the Constitution, the Legislature of a State may,

by law, make provision with respect to

all matters relating to, or in connection with, elections to the Municipalities.”

50. Thus, the Legislature of a State may by lay has to

provide all matters relating to or in connection with

election to the Municipalities, which includes filling of

the seats in the Municipality by person chosen by direct

election. Articles 243R and 243ZA does not give any

indication as to whether from territorial constituency,

i.e., the Wards, whether only one member has to be

elected in the Municipality or it can be multiple member

constituency. The constitutional provisions of Article

243R, which provides for composition of Municipalities

and that of Article 243ZA does not give any indication to

the above. The provisions of Article 243ZG, which deals

with bar to interference by courts in electoral matters

throws some light. Article 243ZG is as follows:-

“243ZG Bar to interference by Courts in

electoral matters-Notwithstanding anything in

this Constitution,-

a. the validity of any law relating to

the delimitation of constituencies

38

or the allotment of seats to such

constituencies made or purporting to

be made under Article 243ZA shall

not be called in question in any

Court;

b. ………”

51. Article 243ZG(a) used two expressions: “any law

relating to the delimitation of constituencies or the

allotment of seats to such constituencies” may be read as

allotment of more than one seat to one constituency but

it can be said that the above provision also do not

provide that in one constituency, there may be more than

one seats.

52. Now, we turn to Article 243S, which is sheet anchor

of the argument of Shri Kapil Sibal, learned senior

counsel. Article 243S deals with Constitution and

Composition of Wards Committees. Article 243S is as

follows:-

“243S Constitution and composition of Wards

Committees, etc.—(1) There shall be

constituted Wards Committees, consisting of

one or more Wards, within the territorial

area of a Municipality having a population of

three lakhs or more.

(2) The Legislature of a State may, by law,

39

make provision with respect to –

a. the composition and the territorial area of a Wards Committee;

b. the manner in which the seats

in a Wards Committee shall be

filled.

(3) A member of a Municipality representing a

ward within the territorial area of the Wards

Committee shall be a member of that

Committee.

(4) Where a Wards Committee consists of -

a. one ward, the member representing that ward in the Municipality; or

b. two or more wards, one of the

members representing such

wards in the Municipality

elected by the members of the

Wards Committee,

shall be the Chairperson of

that Committee.

(5) Nothing in this article shall be deemed

to prevent the Legislature of a State from

making any provision for the Constitution of

Committees in addition to the Wards

Committees.”

53. On sub-article(3) and sub-article (4) of Article 243S

great emphasis has been laid down. It is submitted by

Shri Sibal that sub-article (3) uses the expression “a

40

member of a Municipality representing a ward”. It is

submitted that the expression “a member” clearly means

that only one member shall represent a ward. He further

submits that sub-article (4) sub-clause(a) uses the

expression “the member representing that ward” which

again reinforces that one ward shall be represented by

only one member. On a first blush, the argument appears

to be attractive but when we carefully analysed the

extent and purpose of Article 243S, we do not find any

such limitation in provision of Article 243S, which

limits the State Legislature for requiring multi-member

seats in a Ward. Reverting to sub-article (3) of Article

243S, the requirement is that a member of the

Municipality representing a Ward shall be a member of the

Ward Committee. Thus, constitutional requirement or

limitation engrafted in sub-article(3) is that a member

of the Municipality representing a Ward shall be a member

of the Ward Committee. The provision of Article 243S(3)

is not a provision regarding composition of Municipality

rather the provision is for constitution and composition

of Wards Committee. In Wards Committee, a member

representing a Ward in Municipality has to be the member

41

sub-article(3) of Article 243S cannot be read to mean

that it mandates that from one Ward more than one members

cannot be made representatives. In cases, where there

are more than one member from one Ward all will become

the member of the Committee. When all the members of the

Municipality representing a Ward are members of the

Committee, there is no breach of Article 243S(3).

54. Now, we come to sub-article (4) of Article 243S.

Article 243S(4) is a provision indicating as to who shall

be the Chairperson of Wards Committee. Sub-article(4)

says that where Wards committee consists of one ward, the

when it consists of two or more wards, one of the members

representing such wards in the Municipality elected by

the members of the Wards Committee. Shri Sibal submits

that sub-article(4) of Article 243S uses the expression

“the member” which means that with regard to one Ward

only one member has to represent in the Municipality and

in case of multi-member Ward, no election is contemplated

to elect Chairperson with regard to one Ward and election

is contemplated to elect one person only when there are

two or more Wards. It is true that under sub-article (4)

42

(a), in case of one Ward member representing that Ward

shall be the Chairperson.

55. We may now examine, if there are multi-members in one

ward, whether Constitutional provisions of Article

243S(4) are breached when Chairperson is to be elected.

The requirement is that member representing the Ward

shall be the Chairperson of the Committee and if there

are more than one members and one member out of multimember Ward is elected as Chairperson, the provision of

Article 243S(4) shall be applied. When the

constitutional provisions under Article 243S(4)(a) does

not provide for election for electing Chairperson in case

of a multi-member Ward, the same is supplemented by the

State legislation. In the present case, we have noticed

that Rule 2(b) of Rules, 2007, which provides that

Chairperson of a Ward Committee is the person elected by

the members of the Wards Committee. The Rule, thus,

contemplate an election of Chairperson amongst the

members of the Wards Committee, which shall also be

applicable in a case where there are more than one

members from one Ward. When out of multiple members in a

43

Ward, one member is elected as Chairperson, the mandate

of Article 243S(4)(a) is complied with. The requirement

is that member representing the ward in the Municipality

shall be the Chairperson. The above provision cannot be

read in providing any prohibition or limitation that in

one Ward, there cannot be more than one member. The

composition of Municipality has been dealt separately by

Article 243R and for composition of Municipality, the

provisions of Article 243S cannot be said to be

applicable or intended to provide any limitation or

prohibition with regard to composition of the

Municipalities. The Rule 2(b) of Rules, 2007 which

provides for election of Chairperson, by following which

rule, in case of multi-member Ward, Chairperson can be

elected, which may apply both to Article 243S(4) as well

as Rule 2(b) of the Rules, 2007. Thus, Rules 4 and 5 of

Rules, 1994 as well as Rule 2(b) of Rules, 2007 does in

no manner disobey the mandate of Article 243S(4), both

can be complied with without any conflict between the two

different provisions. We, thus, come to the conclusion

that provisions of Section 5(3)(iii)(a) as well as Rules

4 and 5 of Rules, 1994 and Rule 2(b) of Rules, 2007 are

44

not inconsistent with provisions of Article 243S.

56. Now, we come to the cases, which have been relied by

Shri Kapil Sibal in support of his submissions. Shri

Sibal has placed reliance on judgment of this Court in

Manoj Narula Vs. Union of India, (2014) 9 SCC 1 for the

preposition that doctrine of implication has to be

applied to explain the constitutional concepts. He has

referred to paragraph 17 of the judgment, which is to the

following effect:-

“17. Recently, in Subramanian

Swamy v. CBI [(2014) 8 SCC 682], the Constitution Bench, speaking through R.M. Lodha,

C.J., while declaring Section 6-A of the

Delhi Special Police Establishment Act, 1946,

which was inserted by Act 45 of 2003, as unconstitutional, has opined that: (SCC pp.

725-26, para 59)

“59. It seems to us that classification which is made in Section

6-A on the basis of status in the

government service is not permissible under Article 14 as it defeats

the purpose of finding prima facie

truth into the allegations of

graft, which amount to an offence

under the PC Act, 1988. Can there

be sound differentiation between

corrupt public servants based on

their status? Surely not, because

irrespective of their status or position, corrupt public servants are

45

corrupters of public power. The

corrupt public servants, whether

high or low, are birds of the same

feather and must be confronted with

the process of investigation and

inquiry equally. Based on the position or status in service, no distinction can be made between public

servants against whom there are allegations amounting to an offence

under the PC Act, 1988.”

And thereafter, the larger Bench further

said: (SCC p. 726, para 60)

“60. Corruption is an enemy of

the nation and tracking down corrupt public servants and punishing

such persons is a necessary mandate

of the PC Act, 1988. It is difficult to justify the classification

which has been made in Section 6-A

because the goal of law in the PC

Act, 1988 is to meet corruption

cases with a very strong hand and

all public servants are warned

through such a legislative measure

that corrupt public servants have

to face very serious consequences.”

And again: (SCC pp. 730-31, paras 71-72)

“71. Office of public power

cannot be the workshop of personal

gain. The probity in public life is

of great importance. How can two

public servants against whom there

are allegations of corruption of

graft or bribe-taking or criminal

misconduct under the PC Act, 1988

can be made to be treated differently because one happens to be a

junior officer and the other, a senior decision maker.

46

72. Corruption is an enemy of

nation and tracking down corrupt

public servant, howsoever high he

may be, and punishing such person

is a necessary mandate under the PC

Act, 1988. The status or position

of public servant does not qualify

such public servant from exemption

from equal treatment. The decisionmaking power does not segregate

corrupt officers into two classes

as they are common crimedoers and

have to be tracked down by the same

process of inquiry and investigation.”

57. No exception can be taken to the preposition laid

down by this Court as above. But this Court in

subsequent paragraph 71 while explaining the doctrine of

implication has held that this doctrine has its own

limitations. Interpretation has to have a base in the

Constitution. The relevant observations made in

Paragraph 71 are as follows:-

“71. …………………….Thus, the said principle

can be taken aid of for the purpose of interpreting constitutional provision in an expansive manner. But, it has its own limitations.

The interpretation has to have a base in the

Constitution. The Court cannot rewrite a constitutional provision. In this context, we

may fruitfully refer to Kuldip Nayar

case [Kuldip Nayar v. Union of India, (2006)

7 SCC 1] wherein the Court repelled the contention that a right to vote invariably carries an implied term i.e. the right to vote

in secrecy. The Court observed that where the

47

Constitution thought it fit to do so, it has

itself provided for elections by secret ballot e.g. in the case of election of the President of India and the Vice-President of India. ……………………………………….”

58. In paragraph 72, the Court rejected the submission of

petitioner that while interpreting the words “advise of

the Prime Minister” a prohibition to think of a person as

a Minister, if charges have been framed against him

cannot be inferred. In paragraph 72, following has been

laid down:-

“72. Thus analysed, it is not possible

to accept the submission of Mr Dwivedi that

while interpreting the words “advice of the

Prime Minister” it can legitimately be

inferred that there is a prohibition to think

of a person as a Minister if charges have

been framed against him in respect of heinous

and serious offences including corruption

cases under the criminal law.

59. We have analysed the provisions of Article 243R, 243S

and have come to the definite conclusion that no

limitation in Article 243S can be found of which contains

any prohibition of having more than one member for a

Ward.

60. Next judgment relied by Shri Kapil Sibal is Chief

Justice of Andhra Pradesh and Others Vs. L.V.A. Dixitulu

48

and Ors., (1979) 2 SCC 34. In the above case, this Court

has reiterated the principles of interpretation of a

constitutional provision. In paragraphs 66 and 67

following has been laid down:-

“66. The primary principle of

interpretation is that a Constitutional or

statutory provision should be construed

“according to the intent of they that made

it” (Coke). Normally, such intent is gathered

from the language of the provision. If the

language or the phraseology employed by the

legislation is precise and plain and thus by

itself proclaims the legislative intent in

unequivocal terms, the same must be given

effect to, regardless of the consequences

that may follow. But if the words used in the

provision are imprecise, protean or evocative

or can reasonably bear meanings more than

one, the Rule of strict grammatical

construction ceases to be a sure guide to

reach at the real legislative intent. In such

a case, in order to ascertain the true

meaning of the terms and phrases employed, it

is legitimate for the Court to go beyond the

and literal confines of the provision and to

call in aid other well recognised rules of

construction, such as its

legislative/history, the basic scheme and

framework of the statute as a whole, each

portion throwing light on the rest, the

purpose of the legislation, the object sought

to be achieved, and the consequences that may

flow from the adoption of one in preference

to the other possible interpretation.

67. Where two alternative constructions

are possible, the court must choose the one

which will be in accord with the other parts

of the statute and ensure its smooth,

49

harmonious working, and eschew the other

which leads to absurdity, confusion, or

friction, contradiction and conflict between

its various provisions, or undermines, or

tends to defeat or destroy the basic scheme

and purpose of the enactment. These canons of

construction apply to the interpretation of

our Constitution with greater force, because

the Constitution is a living, integrated

organism having a soul and consciousness of

its own……………………………………”

61. There can be no dispute to the above preposition

which has been laid down for interpretation of a

constitutional provision. Applying the above principle

of interpretation on the Constitution, we may notice that

when the State Legislature has been given preliminary

power of legislation with regard to composition of the

Municipalities, there has to be express or implied

limitation, which may prohibit the State Legislature to

make a law providing for multi-member Ward.

62. Another judgment relied by Shri Sibal is M.T. Khan

and Ors. Vs. Govt. of A.P. and Ors., (2004) 2 SCC 267.

This Court in the above case had occasion to consider

Articles 165 and 367 of the Constitution. Article 367

provides that the General Clauses Act could be applied in

dealing with interpretation unless the context otherwise

50

requires. This Court held that the Advocate General

referred to in Article 165 cannot be read in plural

sense. The Advocate General discharges the

constitutional functions and if more than one person is

appointed to discharge the constitutional functions,

different Advocate Generals may act differently,

resulting in a chaos. The office of Advocate General is

a public office, hence, Additional Advocate General

appointed by the State cannot be said to have been

appointed under Article 165 but that appointment has to

be traced to the source of the State’s power under

Article 162 of the Constitution of India. No exception

can be taken to the preposition as laid down by this

Court in the above judgment. Similarly, in Karnataka

Bank Ltd. Vs. State of Andhra Pradesh and Ors., (2008) 2

SCC 254. This Court held that the definition of person

under Section 3(42) of the General Clauses Act is not

applicable automatically to interpret the provision of

the Constitution unless the context so requires and makes

the definition applicable. Again, there can be no

dispute to the preposition as laid down in the above

case. 

51

63. We, in the present case, after analysing the relevant

provisions of Part IXA of the Constitution has come to

the conclusion that there is no prohibition or limitation

in Part IXA of the Constitution prohibiting the State

Legislature from making a law providing for election of

more than one member from one territorial constituency,

i.e., Ward.

64. We, thus, answer Question Nos.1 and 2 in following

manner:-

(1) Article 243R and 243S of the Constitution of India does not contain any limitation to the effect that there shall be only one member from

one Ward.

(2) Provisions of Section 5(3)(iii)(a) and Section

29A of the Act, 1949 and Rules 4 and 5 of the

Rules, 1994 and Rule 2(b) of Rules, 2007 are not

ultra vires to the provisions of Articles 243R

and 243S of the Constitution.

Question No.3

52

65. The submission of Shri Sibal is that having more than

one representative from a Ward negates the very concept

of empowerment of weaker sections, i.e., women, Scheduled

Castes and Scheduled Tribes. He submits that when there

is only one member from a Ward and if the Ward is

reserved for women, Scheduled Castes and Scheduled

Tribes, it is empowerment of women, Scheduled Caste and

Scheduled Tribes and if there are 4 members in a Ward,

women, Scheduled Castes and Scheduled Tribes shall not be

able to effectively espouse the cause of weaker sections.

The Statement of Objects and Reasons of the Bill No.159

of 1991 which was introduced in the Lok Sabha for

inserting Part IX in the Constitution, in paragraph 2

stated:

“2. Having regard to these inadequacies,

it is considered necessary that provisions

relating to Urban Local Bodies are

incorporated in the Constitution particularly

for-

(i) putting on a former footing

the relationship between the State

Government and the Urban Local Bodies

with respect to-

(a) the functions and

taxation powers; and

(b) arrangements for revenue

53

sharing;

(ii) ensuring regular conduct of

elections;

(iii) ensuring timely elections in

the case of supersession; and

(iv) providing adequate

representations for the weaker

sections like Scheduled Castes,

Scheduled Tribes and women.”

66. Article 243T of the Constitution of India included in

Part IXA, provides for reservation of seats. The

provision in the Constitution for providing reservation

of seats is a provision for empowering the women,

Scheduled Castes and Scheduled Tribes. The Gujarat

Delimitation of Wards and Allocation of Reserved Seats in

Municipal Borough Rules, 1994 has been amended by

Amendment Rules, 2015. Clauses 2 and 3 of which provide

as follows:

“2. In the Delimitation of Wards and allocation of Reserved Seats in Municipal Borough Rules, 1994 (hereinafter referred

to the "the said rules"), in rule 4, for

the word "three", the word "four" shall

be substituted.

3. In the said rules, for rule 5, the following rule shall be substituted,

namely:-

54

"5. (1) In each Ward two seats

shall be reserved for women (including seats to be reserved for women

belonging to the Scheduled Castes,

Scheduled Tribes and Backward

Classes) and the remaining seats

shall be allocated taking into consideration the requirement of reservation as provided under Section 6

of the said Act.

(2) While determining the number of

seats to be reserved for the different reserved categories as provided

in sub-rule (1);-

(a) if it is not feasible

to exactly divide the number

of seats evenly, then, after

such division the remaining

one seat, or

(b) if in case only one

seat is required to be reserved for any of the reserved

categories, then, such seat,

Shall first be allocated to a male

candidate and then a women by rotation in the general elections to be

held after coming into force of the

Delimitation of Wards and Allocation

of Reserved Seats in Municipal Borough (Amendment) Rules, 2015".”

67. As per above provision now it is 4 member Ward, 2

seats are to be reserved for women including seats

reserved for women belonging to Scheduled Castes,

Scheduled Tribes and Back Ward Classes. 

55

68. This Court in Kasambhai F. Ghanchi vs. Chandubhai D.

Rajput and others, (1998) 1 SCC 285, had held that the

idea of providing reservation for the benefit of weaker

sections of the society is not only to ensure their

participation but it is an effort to improve their lot.

Following observations were made in paragraph 13:

“13. The idea of providing reservation for

the benefit of weaker sections of the society

is not only to ensure their participation in

the conduct of the affairs of the

municipality but it is an effort to improve

their lot. The reservation ensures that the

specified minimum number of persons belonging

to that category become members of the

municipality. If because of their popularity

a larger number of Scheduled Castes,

Scheduled Tribes, Backward Classes or women

get elected to the municipality than the

number of reserved seats that would be

welcome. ……………”

69. The entire purpose and object of reserving seats for

weaker sections is to empower the weaker sections, i.e.,

women, Scheduled Castes and Scheduled Tribes, when there

are more numbers are reserved for weaker sections their

participation in municipality is bound to increase giving

strength to their voice and effective participation which

is nothing but empowerment of weaker sections. We are not

able to subscribe to the submission of Shri Sibal that

56

when there are only one representation from one Ward only

then empowerment of weaker sections can be made. By the

Rules, 1994 as amended in 2015 now the voice of weaker

sections can be felt from every Ward which clearly

enhances of presence and participation of weaker sections

and does not, in any manner, negate the empowerment of

weaker sections. We, thus, do not find any substance in

the above submission of Shri Sibal.

70. We answer Question No.3 in the following manner:

Having more than one representation from a

Ward in no manner negates the empowerment of

weaker sections rather it increases the

empowerment of weaker sections.

Question No.4

71. The submission of Shri Sibal is that before expiry of

30 days from the date of publication of notification

dated 27.11.2014, the notification has been issued on

04.12.2014 itself which is illegal. He submits that

notification dated 04.12.2014 has been issued without

57

considering the objection which was contemplated to be

filed within 30 days. The notification dated 27.11.2014

as well as notification dated 04.12.2014 has been brought

on record as Annexure P-1 and Annexure P-2 to the paper

book. It is useful to notice the notification dated

27.11.2014 along with draft notification which is to the

following effect:

"NOTIFICATION

Urban Development and Urban Housing

Department,

Sachivalaya, Gandhinagar

Dated: 27.11.2014

No.KV/184 of 2014/MISC/102014/5640/P:- The

following draft of rules which is proposed to

be issued under sub-section (1) of section

456, read with section 5 of the Gujarat

Provincial Municipal Corporations Act, 1949

(Born.LIX of 1949) is hereby published as

required by subsection (2) of the said

section 456 of the said Act, for

informatioria all persons likely to be

affected thereby and notice is hereby given

that the said draft rules will be taken into

consideration by the Government of Gujarat on

or after the expiry of thirty days from the

date of publication of this notification in

the Official Gazette.

2 Any objection or suggestion which may be

received by the Additional Chief Secretary to

the Government of Gujarat, Urban Development

and Urban Housing Department, Sachivalaya,

Gandhinagar, from any person with respect to

the said draft notification before the expiry

of the aforesaid period will be considered by

58

the Government.

DRAFT NOTIFICATION

No. KV/184 of 2014/MISC/102014/5640/P:- In

exercise of the powers conferred by subsection (1) of section 456 read with section

5 of the Gujarat Provincial Municipal

Corporations Act, 1949 (Born. LIX of 1949),

the Government of Gujarat hereby makes the

following rules further to amend the

Delimitation of Wards and Allocation of

Reserved Seats Rules, 1994, namely:-

1. These rules may be called the

Delimitation of Wards and Allocation of

Reserved Seats (Amendment) Rules, 2014.

2. In the Delimitation of Wards and

Allocation of Reserved Seats Rules, 1994

(hereinafter referred to as “the said

rules”), in rule 4, for the word “three”,

the word “four” shall be substituted.

3. In the said rules, for rule 5, the

following rule shall be substituted,

namely:-

"5.(1) In each ward two

seats shall be reserved for

women (including seats to be

reserved for women belonging

to the Scheduled Castes,

Scheduled Tribes and

Backward Classes) and the

remaining seats shall be

allocated taking into

consideration the

requirement of reservation

as provided under section 5

of the said Act.

(2) While determining the

59

number of seats to be

reserved for the different

reserved categories as

provided in sub-rule (1),-

(a)if it is not

feasible to exactly

divide the number of

seats evenly then after

such division the

remaining one seat, or

(b)if in case only one

seat is required to be

reserved for any of the

reserved categories,

then, such seatshall first be allocated to a male

candidate and then a woman by rotation in

the general elections to be held after

coming into force of the Delimitation of

Wards and Allocation of Reserved Seats

(Amendment) Rules, 2014.”

4. In the said rules, in rule 8, for the

words, brackets and figures “recognized

for the purposes of Representation of

Peoples Act, 1951 (43 of 1951)”, the

words “registered with the State Election

Commission” shall be substituted.

By order and in the name of the Governor

of Gujarat,

(Ashoksinh Parmar)

Deputy Secretary to Government.”

72. A perusal of the above notification indicates that

60

the said notification was a draft notification to amend

the Delimitation of Wards and Allocation of Reserved

Seats (Amendment) Rules, 2014 wherein Rule 4, for the

word “three”, the word “four” was sought to be

substituted.

73. The notification dated 04.12.2014 has been issued in

exercise of powers conferred by sub-clause (a) of clause

(iii) of sub-section (3) of Section 5 of Act, 1949. The

notification dated 04.12.2014 reads:

“NOTIFICATION

Urban Development and Urban Housing

Department Sachivalaya.

Gandhinagar.

Dated the 4th December, 2014

No.KV-194 of 2014 -ELE – 102014 – 1701 – P:

WHEREAS the Government of Gujarat in

exercise of powers conferred by sub-clause

(a) of clause (iii) of sub-section (3) of

section 5 read with sub-sections (4), (5),

(6) and (7) of the said section 5 of the

Gujarat Provincial Municipal Corporations

Act, 1949(Born. LIX of 1949) (hereinafter

referred to as “the said Act”) under the

Government Notification, Urban Development

and Urban Housing Department No.KV-47 of

2010-ELE102009-526-P, dated the 23rd March,

2010 has determined the numbers of Wards and

Councillors, numbers of Seats reserved for

Scheduled Tribes, Backward Classes and Women

for the Ahmedabad Municipal Corporation.

61

AND WHEREAS, the number of Wards and

Councillors, number of seats to be reserved

for Scheduled Castes, Scheduled Tribes,

Backward Classes and Women is required to be

ascertained in accordance with the figures of

the population as declared on the basis of

Census-2011 as also in view of the provisions

of section 5 of the said Act;

AND WHEREAS, the General Election of the

Municipal Corporation of the City of the

Ahmedabad is to be held;

NOW, THEREFORE, in exercise of the powers

conferred by sub-clause (a) of clause (iii)

of sub-section (3) of section 5 read with

sub-sectoins (4), (5), (6) and of the said

section 5 of the said Act, so far as the City

of Ahmedabad is concerned, the Government of

Gujarat hereby determines the numbers of

Wards and Seats as follows:-

1. The areas of the City of

Ahmedabad shall be divided into

Forty-eight (48) Wards and the

Municipal Corporation of the City

of Ahmedabad shall consist of

One Hundred and Ninety – two

(192) Councillors;

2. Out of One Hundred and Ninety-two

(192) Seats-

(i) Twenty (20) Seats shall

be reserved for

persons belonging to the

Scheduled Castes out

of which Ten(10) Seats

shall be reserved for

women belonging to

the Scheduled Castes;

(ii) Two(2) Seats shall be

62

reserved for the

persons belonging to

the Scheduled Tribes out

of which One(1) seat

shall be reserved for

women belonging to the

Scheduled Tribes;

(iii)Nineteen (19) Seats

shall be reserved for

the persons belonging to

the Backward Classes

out of which Nine(9)

Seats shall be reserved

for women belonging to

Backward Classes;

(iv) Ninety-six (96) Seats

shall be reserved for

the women (including the

number of seats

reserved for the women

belonging to Scheduled

Castes, Scheduled

Tribes and the Backward

Classes referred to as

above).

By order and in name of the Governor of Gujarat.

(Ashoksinh Parmar)

Deputy Secretary to Government.”

74. A bare perusal of the notification dated 04.12.2014

indicates that the said notification is not in reference

to the notification dated 27.11.2014 rather the said

notification was issued regarding determination of number

of Wards and Councillors' seats reserved for Scheduled

63

Castes and Scheduled Tribes and women. Thus, the argument

that notification dated 04.12.2014 issued before expiry

of 30 days is wholly misconceived. The appellants

themselves have brought on record a notification dated

15.01.2015 as Annexure P-9 to the paper book which is the

notification issued in reference to the notification

dated 27.11.2014. Notification dated 15.01.2015 reads:

"NOTIFICATION

Government of Gujarat

Urban Development and Urban Housing

Department

Sachivalaya, Gandhinagar

Dated 15th January, 2015

NO.KV-38 of 2015 – MISC – 102014 – 564- - P:

WHEREAS, the certain draft rules were

published as required by sub-section (2) of

section 456 of the Gujarat Provincial

Municipal Corporations Act, 1949 (Bom. LIX of

1949), at pages 76-1 and 76-2, Part I-A, in

the Central Section of the Gujarat Government

Gazette, Extra Ordinary, dated the 27th

November, 2014 under the Government

Notification, Urban Development and Urban

Housing Department No.KV/184 of 2014,

inviting objections or suggestions from all

persons likely to be affected thereby, within

a period of thirty days from the date of

publication of the said notification in the

Official Gazette.

Xxx xxx xxx xxxx”

75. Thus, in reference to notification dated 27.11.2014,

the notification was issued on 15.01.2015,Rules, namely,

64

Bombay Provincial Municipal Corporation (Delimitation of

Wards in the City and Allocation of Reserved Seats)

(Amendment) Rules, 2015 were issued which specifically

mentioned that objections and suggestions in pursuance of

draft have been considered by the Government. We, thus,

do not find any infirmity in the above notification.

76. In view of the above discussion, we answer Question

No.3 in the following manner:

Notification dated 04.12.0214 being not in

reference to notification dated 27.11.2014

which notification was on entirely different

subject, there is no illegality in issuing

notification dated 04.12.2014.

77. We having found that the provisions of Section 5(3)

(iii)(a) and Section 29A of Act, 1949 and Rule 4 and 5 of

Rules, 1994 and Rule 2(b) of Rules, 2007 are not ultra

vires to Part IXA of the Constitution, the Division Bench

of the High Court did not commit any error in dismissing

the writ petition filed by the appellants. We, thus, do

not find any merit in the Civil Appeal arising out of

SLP(C)No.24950 of 2015 and the Writ Petition (C)No.786 of

2020. Hence, the civil appeal and writ petition are

65

dismissed.

Civil Appeal (arising out of SLP(C)No.30635 of 2015-State

Election Commission vs. Virendrasinh Mafaji Vaghela &

Ors.)

78. The appeal has been filed against the Division Bench

judgment of the Gujarat High Court dated 21.10.2015 by

which writ petition filed by the respondents was allowed.

The High Court in paragraph 72 has issued directions

which we have noted above. The High Court found the

Ordinance No.3 of 2015 as unconstitutional and void. The

action of the State Election Commission for postponement

of the election of all local bodies in the State was held

to be illegal and set aside. The State Election

Commission was directed to initiate process of holding

the election of the local bodies forthwith. In pursuance

of the Division Bench judgment of the High Court dated

21.10.2015 Elections for the local bodies were held in

November/December, 2015. The direction of the Division

Bench dated 21.10.2015 having been carried out nothing

remains to be decided in this appeal. The tenure of the

Local Body constituted in pursuance of the impugned

direction of the High Court dated 21.10.2015 having come

to end, we see no necessity to enter into issue raised in

66

this appeal. Thus, the appeal is dismissed as having

become infructuous.

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

 (Ashok Bhushan)


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

 (R.Subhash Reddy)

New Delhi, ....................J.

February 24, 2021. (M.R. Shah) 

the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”) =The High Court took the view that since there is no provision for raising counter-claims under the MSMED Act, and the parties had in the Development Agreement dated 10.02.2014 agreed to refer all their disputes under the 1996 Act, it was a fit case for appointment of the arbitrator. The arbitration agreement provided for a three-member tribunal. The Applicant (Respondent herein) had already nominated its arbitrator, the Contractor was directed to appoint an arbitrator. On such nomination, the two arbitrators would appoint the presiding arbitrator. 8. The Appellant-Contractor challenged the aforesaid Order dated 16.09.2020 before this Court vide Special Leave Petition (C) No. 16027 of 2020. During the course of the proceedings, the parties have agreed to have their disputes adjudicated under the Arbitration & Conciliation Act, 1996 by a Court-appointed Sole Arbitrator. In view of the statement made by the Counsel for both parties on instructions, Clause 20 of the Development Agreement dated 10.02.2014 stands superseded to the extent that the arbitration will be conducted by a three-member tribunal. We appoint Justice K. Kannan, former Judge of the Madras High Court, as the Sole Arbitrator to adjudicate on all the claims and counter claims made by the parties arising out of the Development Agreement dated 10.02.2014. The arbitration will be conducted in accordance with the Arbitration and Conciliation Act, 1996. The arbitral proceedings shall be conducted by the Madras High Court Arbitration Centre in accordance with its Rules. The appointment of the Sole Arbitrator is subject to the Declarations to be made under Section 12 of the Arbitration and Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration. The Sole Arbitrator will be paid fees as per the Schedule of the Madras High Court Arbitration Centre (Administrative Cost and Arbitrators’ Fees) Rules, 2017.

the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”) =The High Court took the view that since there is no provision for raising counter-claims under the MSMED Act, and the parties had in the Development Agreement dated 10.02.2014 agreed to refer all their disputes under the 1996 Act, it was a fit case for appointment of the arbitrator. The arbitration agreement provided for a three-member tribunal. The Applicant (Respondent herein) had already nominated its arbitrator, the Contractor was directed to appoint an arbitrator. On such nomination, the two arbitrators would appoint the presiding arbitrator. 8. The Appellant-Contractor challenged the aforesaid Order dated 16.09.2020 before this Court vide Special Leave Petition (C) No. 16027 of 2020. During the course of the proceedings, the parties have agreed to have their disputes adjudicated under the Arbitration & Conciliation Act, 1996 by a Court-appointed Sole Arbitrator. In view of the statement made by the Counsel for both parties on instructions, Clause 20 of the Development Agreement dated 10.02.2014 stands superseded to the extent that the arbitration will be conducted by a three-member tribunal. We appoint Justice K. Kannan, former Judge of the Madras High Court, as the Sole Arbitrator to adjudicate on all the claims and counter claims made by the parties arising out of the Development Agreement dated 10.02.2014. The arbitration will be conducted in accordance with the Arbitration and Conciliation Act, 1996. The arbitral proceedings shall be conducted by the Madras High Court Arbitration Centre in accordance with its Rules. The appointment of the Sole Arbitrator is subject to the Declarations to be made under Section 12 of the Arbitration and Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration. The Sole Arbitrator will be paid fees as per the Schedule of the Madras High Court Arbitration Centre (Administrative Cost and Arbitrators’ Fees) Rules, 2017.


REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.692 OF 2021

(ARISING OUT OF SLP (C) NO. 16027 OF 2020)

GR GREEN LIFE ENERGY PVT. LTD. … APPELLANT

 VERSUS

LEITWIND SHRIRAM MANUFACTURING PVT. LTD. … RESPONDENT

O R D E R

Leave granted.

1. The present Civil Appeal has been filed by the Appellant-Contractor to

challenge the Order dated 16.09.2020 passed on an Application filed under

Section 11 of the Arbitration and Conciliation Act, 1996 by the Madras High

Court in Original Petition No. 300 of 2019.

2. The Appellant and the Respondent had entered into a Development

Agreement dated 10.02.2014 to set up a Wind Farm Project in Sangli District

in Maharashtra, which contained an arbitration clause.

Clause 20 of the Agreement reads as :

“20. Governing Law and Jurisdiction and Service of Process

….

c) All disputes, differences and claims or any non-payment concerning the

project work hereby created and / or touching this presents, arising out of or in

relation to anything contained herein shall be referred to arbitration to be held

at Chennai, under the provisions of Arbitration and Conciliation Act, 1996

(inforce from time to time). The arbitration panel shall consist of three

arbitrators, one arbitrator shall be appointed by each party and the arbitrators

so appointed shall appoint the presiding arbitrator. The parties here to shall

duly observe any interim award/s or direction/s of the arbitration tribunal and

the award in pursuance to arbitration shall be final and binding on the parties

hereto. The arbitration proceedings shall be in English language.”

1

3. Disputes arose between the parties with respect to claims raised by the

Appellant-Contractor, which led to issuance of a legal notice dated

21.04.2018 seeking payment of outstanding dues of Rs. 3,26,08,545/-.

4. The Respondent vide letter dated 21.01.2019 rejected the allegations in

the notice, and contended that the Contractor had failed to provide services

as agreed under the Development Agreement. It was further contended that

the Appellant-Contractor was liable to refund an amount of

Rs.10,26,00,000/- with Interest @ 15% p.a., and pay liquidated damages of

Rs. 1,54,00,000/- to the Respondent-Company.

The Respondent invoked arbitration under Clause 20 of the Agreement,

and nominated its arbitrator, with a request to the Appellant herein to make

nomination of its arbitrator.

5. On 18.03.2019, the Respondent herein filed a Petition under Section

11(6) of the 1996 Act before the High Court of Madras, wherein it was

prayed that the Court may appoint an arbitrator on behalf of the Appellant in

terms of Clause 20 of the Development Agreement, since the Contractor had

failed to do so.

6. Subsequently, the Appellant-Contractor, registered itself under the Micro,

Small and Medium Enterprises Development Act, 2006 (“MSMED Act”), and

filed an application for resolution of disputes before the Facilitation Council,

Pune established under the MSMED Act.

7. In the meanwhile, the Petition under Section 11 was taken up for hearing

before the High Court, wherein it was observed that there is no provision

under the MSMED Act for reference of counter-claims to the Facilitation

Council, and adjudication thereof. Sections 15 to 18 of the MSMED Act

provide for reference of disputes with respect to claims made by a supplier /

contractor registered under the MSMED Act. Even though Section 24 of the

MSMED Act gives overriding effect to the MSMED Act, it would not be

applicable in this case, since there is no provision under this Act to deal with

counter-claims filed against the supplier-contractor.

2

The High Court took the view that since there is no provision for raising

counter-claims under the MSMED Act, and the parties had in the

Development Agreement dated 10.02.2014 agreed to refer all their disputes

under the 1996 Act, it was a fit case for appointment of the arbitrator. The

arbitration agreement provided for a three-member tribunal. The Applicant

(Respondent herein) had already nominated its arbitrator, the Contractor

was directed to appoint an arbitrator. On such nomination, the two arbitrators

would appoint the presiding arbitrator.

8. The Appellant-Contractor challenged the aforesaid Order dated

16.09.2020 before this Court vide Special Leave Petition (C) No. 16027 of

2020.

During the course of the proceedings, the parties have agreed to have

their disputes adjudicated under the Arbitration & Conciliation Act, 1996 by a

Court-appointed Sole Arbitrator.

In view of the statement made by the Counsel for both parties on

instructions, Clause 20 of the Development Agreement dated 10.02.2014

stands superseded to the extent that the arbitration will be conducted by a

three-member tribunal.

We appoint Justice K. Kannan, former Judge of the Madras High Court,

as the Sole Arbitrator to adjudicate on all the claims and counter claims

made by the parties arising out of the Development Agreement dated

10.02.2014. The arbitration will be conducted in accordance with the

Arbitration and Conciliation Act, 1996. The arbitral proceedings shall be

conducted by the Madras High Court Arbitration Centre in accordance with

its Rules.

The appointment of the Sole Arbitrator is subject to the Declarations to

be made under Section 12 of the Arbitration and Conciliation Act, 1996 with

respect to independence and impartiality, and the ability to devote sufficient

time to complete the arbitration. The Sole Arbitrator will be paid fees as per

the Schedule of the Madras High Court Arbitration Centre (Administrative

Cost and Arbitrators’ Fees) Rules, 2017.

3

A copy of this Order be despatched to the Madras High Court Arbitration

Centre, and Justice K. Kannan (Retd.) at the following address :

“Justice K. Kannan

3/11, Lakshmi Colony,

North Crescent, T. Nagar

Chennai - 600017

Mob: +91-9780008145”

9. In view of the aforesaid directions, the Application filed by the AppellantContractor under the MSMED Act, registered as MSFEC Case No.

MH/26/M/PNE/02000 on 22.10.2020, will stand closed by the Facilitation

Council, Pune.

10. The Appeal is disposed of in the aforesaid terms. Pending applications, if

any, stand disposed.

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

 (INDU MALHOTRA)

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

 (AJAY RASTOGI)

New Delhi;

February 22, 2021.

4

circumstantial evidence = where the death has been caused by homicidal violence and the appellant who had himself taken the deceased to the hospital and made a false statement to the Doctor that she had suffered a cardiac arrest which was found to be false after the postmortem report was received and the nature of injuries which were attributed on the body of the deceased of which a reference has been made clearly establish that it is the case where none other than the accused appellant has committed a commission of crime with intention to commit the murder of his own wife who was at the advanced stage of pregnancy.

 circumstantial evidence = where the death has been caused by homicidal violence and the appellant who had himself taken the deceased to the hospital and made a false statement to the Doctor that she had suffered a cardiac arrest which was found to be false after the postmortem report was received and the nature of injuries which were attributed on the body of the deceased of which a reference has been made clearly establish that it is the case where none other than the accused appellant has committed a commission of crime with intention to commit the murder of his own wife who was at the advanced stage of pregnancy.

1

 NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1008 OF 2010

R. DAMODARAN ...APPELLANT(S)

 VERSUS

THE STATE REPRESENTED BY THE

INSPECTOR OF POLICE ...RESPONDENT(S)

J U D G M E N T

Rastogi, J.

1. The accused appellant was charged for offence under

Section 302 IPC for the murder of his own wife Nirmala Mary while

she was at the advanced stage of her pregnancy. After facing trial,

he was held guilty of charge of murder of his wife under Section 302

IPC and was awarded life imprisonment by the learned trial Judge

by judgment dated 3rd September, 2007 and confirmed by the High

Court by judgment impugned dated 10th July, 2009.

2

2. The case of the prosecution is that marriage of deceased

Nirmala Mary and accused appellant was solemnised on

17th February, 1997. The appellant used to frequently change his

rented accommodation and whenever he changed the rented

accommodation, he used to quarrel with the deceased and send her

to her father to fetch money. Her father extended monetary help to

the extent it was possible.

3. Since the date they shifted to Walles Garden area, the

accused appellant used to come home after consuming liquor and

invariably had a quarrel with the deceased and beat her. Deceased

lodged complaint at the Police Station many a times in this regard

and in continuation of the occurrence on the fateful night of 28th

October, 2005, while he was quarrelling with deceased Nirmala

Mary, he picked up a log from the house and beaten deceased

Nirmala Mary and caused internal injury in her stomach and

murdered her.

4. On the date of the incident, that is 29th October, 2005,

Mrs. Glory(PW 2-aunt of the deceased) found her standing in the

street. When she called the deceased (Nirmala Mary) and asked her 

3

what had happened, she replied that her husband had beaten her

up with a wooden log. Since there was a regular quarrel taking

place between husband and wife, Mrs. Glory(PW 2) told the

deceased that after she come back, she would take the deceased to

the hospital for treatment. After returning from work at home, she

was informed that the deceased had been taken to the hospital in a

serious condition. At about 4.30 p.m. on the same date, i.e. 29th

October, 2005, the accused appellant brought his wife to the

Kilpauk Medical College and Hospital, Chennai and complained

that she had got cardiac arrest. The Doctor medically examined

and found her dead. On receipt of the death intimation, PW 8, the

Sub Inspector of Police, attached to the Police Station proceeded to

the hospital and prepared the inquest report and FIR, in the first

instance, was registered under Section 174 Cr.PC for suspicious

death.

5. After the autopsy on the dead body was conducted by PW 7,

the Professor of Forensic Medicine, Senior Civil Surgeon,

Government Kilpauk Medical College, Chennai, it was opined that

the deceased died of shock and haemorrhage due to thoracic 

4

injuries and on the opinion expressed in the post-mortem report,

the case under Section 302 IPC was registered.

6. Pending investigation, the appellant was arrested. In

order to substantiate the charge, the prosecution marched 11

witnesses and also relied on 17 exhibits and 4 material objects. On

completion of the evidence on the side of the prosecution, the

accused was questioned under Section 313 CrPC to the

incriminating circumstances found in the evidence of the

prosecution witnesses, which he flatly denied as false and no

defence witness was examined.

7. It is not in controversy that the incident took place on

29th October, 2005 during day hours and the dead body of the

deceased was taken by the accused appellant to the hospital where

she was declared dead by the Doctor (PW 6). The case of the

prosecution was that the appellant attacked with a wooden log and

caused her death because of homicidal violence. The defence plea

was that it was a cardiac arrest. Even from the evidence of the

Doctor PW 6, it would be clear that when the accused appellant

brought the deceased to the hospital, she was dead but still 

5

informed the Doctor that she had a cardiac arrest. In the medical

opinion canvassed through PW 7 Doctor, it was opined that she

died out of shock and haemorrhage due to thoracic injuries because

of homicidal violence.

8. It is true that the prosecution had no direct evidence to

offer. It rested its case upon circumstances which would indicate

that in the past, he was ill-treating her and there were complaints

given to the police, and they were enquired by PWs 9 and 10, the

police officials, attached to Thousand Light Police Station. On the

fateful day, the accused appellant alone was present with his family

and they living together.

9. House of Mrs. Glory, the aunt of the deceased is situated

just opposite to their house and she had recorded her evidence as

PW 2 that on 29th October, 2005, when she was about to start for

work in the morning hours, she found the deceased standing in the

street and when she called her, the deceased informed that her

husband had beaten her. It is further corroborated from the postmortem report of the deceased who was at the advanced stage of

pregnancy at that time. 

6

10. It was the appellant himself who took her to the hospital

and made a false statement that she suffered a cardiac arrest but

after the autopsy was conducted on the body of the deceased, it was

opined that she died out of shock and haemorrhage due to thoracic

injuries. In addition to other circumstances, the prosecution was

able to establish that it was none other than the appellant who had

committed the crime and he wanted to show his innocence by

taking the deceased to the hospital and made a false statement that

she suffered a cardiac arrest which on receipt of the post-mortem

certificate, was found to be false where it was established that the

death was caused by homicidal violence.

11. The following injuries were found on the body of the

deceased:-

“(1)Bluish contusion seen over left mid-axillary line from 3-7

ribs level.

(2)Thick layer of reddish contusion seen in the sub cutanious

and inter costal region in the left mid-axillary line from 3-10

ribs.

(3)Fracture of 5-6 ribs from mid-axillary line on left side.

(4)Left thoracic cavity contains 1100 gms of clotted blood.

(5)Laceration of left lower iobe of lung(outer border) 3 X 2 X 2

cms

(6)Reddish left temporal contusion in the sub scalp region.

7

All the above injuries are antemortem in nature.”

12. The statement of PW 7 Doctor and the medical evidence

brought on record establish that the injury nos. 1 to 6 were caused

with blunt weapon which resulted into death of the deceased.

Thus, the ocular evidence of Mrs. Glory(PW 2 - aunt of the

deceased) is corroborated with the medical evidence of Doctor(PW

7).

13. In a case based on circumstantial evidence, the settled

principles of law are that the circumstances from which the

conclusion of guilt is to be drawn should be fully proved and such

circumstances should be conclusive in nature and moreover the

circumstances should be complete and there should be no gap left

in the chain of events. However, the circumstances must be

consistent only with the hypothesis of the guilt of the accused and

inconsistent with the innocence. The principle which has to be kept

in mind in a case of circumstantial evidence has been laid down by

a three Judge Bench of this Court in the judgment reported in

Sharad Birdhichand Sarda Vs. State of Maharashtra (1984) 4

SCC 116 which reads as under:-

8

“153. A close analysis of this decision would show that the following

conditions must be fulfilled before a case against an accused can be

said to be fully established:

(1) the circumstances from which the conclusion of guilt is to

be drawn should be fully established.

It may be noted here that this Court indicated that the

circumstances concerned “must or should” and not “may be”

established. There is not only a grammatical but a legal

distinction between “may be proved” and “must be or should be

proved” as was held by this Court in Shivaji Sahabrao

Bobade v. State of Maharashtra [(1973) 2 SCC 793 where the

observations were made:

“Certainly, it is a primary principle that the

accused must be and not merely may be guilty before a

court can convict and the mental distance between ‘may

be’ and ‘must be’ is long and divides vague conjectures

from sure conclusions.”

(2) the facts so established should be consistent only with the

hypothesis of the guilt of the accused, that is to say, they

should not be explainable on any other hypothesis except that

the accused is guilty,

(3) the circumstances should be of a conclusive nature and

tendency,

(4) they should exclude every possible hypothesis except the

one to be proved, and

(5) there must be a chain of evidence so complete as not to

leave any reasonable ground for the conclusion consistent with

the innocence of the accused and must show that in all human

probability the act must have been done by the accused.”

14. It was further followed by a three Judge Bench in Padala

Veera Reddy Vs. State of Andhra Pradesh and Ors. 1989 Supp

(2) SCC 706 wherein this Court held as under:-

9

“10. Before adverting to the arguments advanced by the learned

Counsel, we shall at the threshold point out that in the present case

there is no direct evidence to connect the accused with the offence in

question and the prosecution rests its case solely on circumstantial

evidence. This Court in a series of decisions has consistently held

that when a case rests upon circumstantial evidence such evidence

must satisfy the following tests:

“(1) the circumstances from which an inference of guilt is sought

to be drawn, must be cogently and firmly established;

(2) those circumstances should be of a definite tendency

unerringly pointing towards guilt of the accused;

(3) the circumstances, taken cumulatively, should form a chain

so complete that there is no escape from the conclusion that

within all human probability the crime was committed by the

accused and none else; and

(4) the circumstantial evidence in order to sustain conviction

must be complete and incapable of explanation of any other

hypothesis than that of the guilt of the accused and such

evidence should not only be consistent with the guilt of the

accused but should be inconsistent with his innocence.

(See Gambhir v. State of Maharashtra [(1982) 2 SCC 351]”

15. Taking note of the principles which has been laid down

by this Court and the circumstances which the prosecution has

established in a chain of events leave no matter of doubt that it is

none other than the appellant who had committed the crime of

murdering his own wife who was at the advanced stage of

pregnancy, and taken the dead body to the hospital and made a

false statement that she had got a cardiac arrest. Initially, the FIR

was registered on suspicion but after the autopsy on the body of the 

10

deceased was conducted, taking note of the post-mortem report, a

case under Section 302 IPC was registered. Such incriminating

links of facts could, if at all, have been explained by the appellant

and nobody else, they being personally and exclusively within his

knowledge. Of late, Courts have, from the falsity of the defence plea

and false answers given to Court, when questioned, found the

missing links to be supplied by such answers for completing the

chain of incriminating circumstances necessary to connect the

person concerned with the crime committed.

16. After we have gone through the record and findings

recorded by the learned trial Court and after being revisited by the

High Court under the impugned judgment which we have also

taken away for our satisfaction, the incriminating circumstances

pointed out, in our view, are sufficient with reasonable certainty on

the established facts, which connect the accused with the

commission of crime of committing the murder of his own wife

(Nirmala Mary).

17. Learned counsel for the appellant, in the first instance,

tried to persuade this Court that there are missing links in the 

11

circumstantial evidence on the basis of which the charge for offence

under Section 302 IPC has been established against him but when

this Court was not inclined to interfere with the finding and the

guilt which was recorded by the learned trial Court and affirmed by

the High Court under the impugned judgment, learned counsel for

the appellant submitted that the offence of the nature which has

been committed as alleged if is taken at the face value may not fall

under Section 302 IPC but may fall under Section 304 Part II IPC.

18. The present case squarely rests on circumstantial

evidence where the death has been caused by homicidal violence

and the appellant who had himself taken the deceased to the

hospital and made a false statement to the Doctor that she had

suffered a cardiac arrest which was found to be false after the postmortem report was received and the nature of injuries which were

attributed on the body of the deceased of which a reference has

been made clearly establish that it is the case where none other

than the accused appellant has committed a commission of crime

with intention to commit the murder of his own wife who was at the

advanced stage of pregnancy.

12

19. We find no substance in the appeal and is accordingly

dismissed.

20. The appellant was released on bail by this Court by Order

dated 6th April, 2018, the bail bonds stand cancelled. The appellant

is directed to surrender within four weeks from today and undergo

the remaining part of sentence. If he fails to surrender, action may

be taken in accordance with law.

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

……………..…………………………J.

(ASHOK BHUSHAN)

……………………………………….J.

(AJAY RASTOGI)

NEW DELHI

FEBRUARY 23, 2021

whether this conduct in raising the untenable plea and in failing to adhere to its obligations under the resolution plan can per se be regarded as a contempt of the order of this Court dated 18 June 2020. D

whether this conduct in raising the untenable plea and in failing to adhere to its obligations under the resolution plan can per se be regarded as a contempt of the order of this Court dated 18 June 2020. 

1

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE/INHERENT JURISDICTION

I.A. No. 58156 of 2020

In

Civil Appeal No. 6707 of 2019

Committee of Creditors of AMTEK Auto Limited

Through Corporation Bank …Applicant

Versus

Dinkar T Venkatasubramanian & Ors. …Respondents

And with

Contempt Petition (C) No. 524 of 2020

In

Civil Appeal No. 6707 of 2019

Committee of Creditors of AMTEK Auto Limited

Through Corporation Bank …Appellant

Versus

Vinit Bodas, Authorised Signatory,

Deccan Value Investor LP …Alleged Contemnor 

2

J U D G M E N T

Dr Dhananjaya Y Chandrachud, J

1 This judgment will govern two proceedings:

(i) A Contempt Petition1 instituted by the Committee of Creditors of AMTEK Auto

Limited (“corporate debtor”) inter alia against Deccan Value Investors LP

(“DVI”), the third Respondent in the Civil Appeal2 for violation of an order passed

by this Court on 18 June 20203

.

(ii) An application for rectification4 of the order of this Court dated 18 June 2020

instituted by DVI.

Both the proceedings are inter-related. Both have been heard together.

2 On 24 July 2017, an application under Section 7 of the Insolvency and

Bankruptcy Code 2016 (“IBC”) was admitted by the National Company Law Tribunal

(“NCLT”). Mr Dinkar T Venkatsubramanian was appointed as Interim Resolution

Professional. He was later confirmed as the Resolution Professional (“RP”).

3 On 31 August 2017, the RP published an advertisement inviting resolution plans

from prospective resolution applicants. Resolution plans were submitted by Liberty

House Group and DVI.

 1 Contempt Petition (C) No.542 of 2020

2 Civil Appeal No. 6707 of 2019 3 Order dated 18 June 2020 passed in I.A. No. 54321 of 2020 in Civil Appeal No. 6707 of 2019 4 I.A. No.58156 of 2020

3

4 On 6 March 2018, a revised plan submitted by Liberty House Group emerged as

the highest evaluated plan, while DVI withdrew its plan.

5 The Committee of Creditors (“CoC”) by a majority of 94.20 per cent approved

the final revised plan of Liberty House Group on 2 April 2018. On 25 July 2018, the

NCLT approved the resolution plan of Liberty House Group.

6 On 4 December 2018, the CoC filed an application seeking a declaration that

Liberty House Group had willfully contravened the terms of the resolution plan as

approved by the NCLT and for the RP to attempt a fresh process of resolution. NCLT by

an order dated 13 February 2019 held that Liberty House Group had failed to fulfill its

obligations under the approved resolution plan and directed the reconstitution of the

CoC for consideration of the resolution plan submitted by DVI. NCLT did not accede to

the request for carrying out a fresh process by inviting the plans again.

7 As a result the CoC filed an appeal5 before the National Company Law Appellate

Tribunal (“NCLAT”). The appeal was limited to the extent of challenging the rejection of

the prayer for inviting fresh applications from prospective applicants for submitting

resolution plans. On 15 April 2019, DVI filed an interlocutory application seeking

impleadment before the NCLAT, which was allowed by an order dated 22 April 2019. In

the course of the proceedings before the NCLAT, DVI supported the plea of the CoC for

restarting the process of inviting fresh applications for resolution plans. By its order

dated 16 August 2019, NCLAT came to the conclusion that since more than 270 days

had elapsed, an order of liquidation of the corporate debtor would have to ensue and

 5 Company Appeal No. 219 of 2019

4

accordingly directed the NCLT to pass appropriate orders of liquidation. The Civil

Appeal before this Court arose out of the order of the NCLAT directing liquidation of the

corporate debtor and was instituted on 26 August 2019 by the CoC.

8 This Court issued notice in the Civil Appeal on 6 September 2019 and stayed the

liquidation of the corporate debtor. The second proviso to Section 12(3) of the IBC was

amended with effect from 16 August 2019 by the Amending Act 26 of 2019 so as to

stipulate a time limit of 330 days for the completion of the corporate insolvency

resolution process from the insolvency commencement date. On 24 September 2019,

this Court accordingly directed the RP to invite fresh offers within a period of 21 days,

following which the CoC was directed to take a “final call in the matter” within two

weeks. The decision was to be placed before this Court on 5 November 2019. The RP

made a public announcement for inviting fresh resolution plans on 26 September 2019,

and the last date for submission of resolution plans was 22 October 2019. The CoC on

23 October 2019 concluded that only one resolution plan was received within the

stipulated timeline. DVI submitted a financial proposal on 4 November 2019. In the

meantime on 6 November 2019, the CoC moved an IA6 before this Court seeking an

extension of four weeks to consider three resolution offers received by the RP, including

that of DVI. On 13 November 2019 when the I.A. came up before this Court, an order

was passed that:

“The consideration to be confined to five offers received

within the time specified in the advertisement inviting offers.

Two offers received thereafter not to be considered.”

 6 I.A. No.168814 of 2019 

5

9 On 21 November 2019, the CoC again moved an IA7 for modification of the order

dated 13 November 2019 on the ground that while five resolution applicants had

responded to the fresh invitation of offers, only one had submitted the resolution plan

before the last date specified in the advertisement.

10 On 2 December 2019, the IA seeking modification of the earlier order was partly

allowed by this Court by directing that fresh offers be invited within 30 days after due

advertisement. The CoC was directed to evaluate the offers within three weeks

thereafter and to submit its evaluation before this Court. On 3 December 2019, the RP

made a public announcement for inviting fresh resolution plans. Fresh resolution plans

were submitted by four applicants, including DVI and LHG, and eventually on 6 January

2020, DVI was declared the highest evaluated resolution applicant. On 17 January

2020, DVI submitted its resolution plan together with a performance bank guarantee of

INR 150 crores (representing the first tranche). On 18 January 2020, DVI submitted a

revised resolution plan. The revised proposal of DVI was discussed in the 29th meeting

of the CoC, following which certain revisions were sought from DVI.

11 On 20 January 2020, when the proceedings came up before this Court, an

extension of two weeks was granted for finalizing the resolution plan. On 7 February

2020, DVI submitted an addendum along with its resolution plan dated 17 January

2020. On 10 February 2020, this Court was apprised of the fact that a resolution plan

was being voted upon by the members of the CoC in view of which an extension of one

week was granted to finalise the resolution plan. On 11 February 2020, the resolution

plan of DVI was approved by 70.07 per cent of the voting share of the CoC. On 19

 7 I.A. No.177847 of 2019

6

February 2020, the RP filed an affidavit before this Court intimating it about the

outcome of the voting. On 13 May 2020, the CoC filed an IA8 seeking approval of the

resolution plan of DVI. On 8 June 2020, this Court passed an order relegating the

matter to the NCLT to decide upon the approval application within a fortnight. The time

spent before the NCLT and this Court was directed to be excluded for calculating the

long stop date. An email was addressed to DVI on the same day by the RP to submit a

performance bank guarantee for the balance of INR 150 crores by 15 June 2020. DVI

filed an application9 before this Court on 12 June 2020 seeking a modification of the

order of 8 June 2020 for grant of a period of two months to it to examine and

understand the impact of the onset of COVID-19 and to re-evaluate the resolution plan.

Simultaneously, the RP filed an application10 before the NCLT on the same day seeking

approval of the resolution plan submitted by DVI. While seeking a extension of time of

two months before this Court, DVI in its IA inter alia stated that:

“4. The Approval Application by the Appellant seeking

approval of DVI’s Resolution Plan, was listed for hearing on

08.06.2020, when the Applicant submitted that due to Covid19 pandemic DVI’s Resolution Plan (as submitted and

approved by the CoC) was unviable and not feasible in the

present circumstances and the Respondent No. 3/Applicant

required sometime to assess the impact of the Covid-19

pandemic on the Indian economy as well as the Auto Industry

(including but not limited to the impact on the overall business

and financial health of the Corporate Debtor). It was therefore

requested that this Hon’ble Court may be pleased to relegate

the issue of the approval of a resolution plan to the

Adjudicating Authority, so as to enable the parties to renegotiate the terms of the Resolution Plan and to hear all the

stakeholders before approving a resolution plan.

[…]

 8 I.A. No. 48906 of 2020 9 I.A. No.54321 of 2020 10 IA No.225 of 2020 in CP (IB) No.42/CHD/HRY/2017

7

7. […]

Based on a prima facie analysis of the said information

provided by the RP and subject to a detailed examination and

verification, the Applicant, at the present stage, understands

that the significance of the information is substantial.

The information provided strongly indicates an adverse

impact which is likely to be over INR 700 crores.

[…]

9. However, COVID-19 pandemic has materially and

adversely impacted commercial assumptions underlying

the business plan and financial proposal for revival of the

Corporate Debtor and the feasibility and viability of the

Resolution Plan.

10. That faced with the limited time granted under the Order,

the RP has been insisting on the Respondent No. 3/ Applicant

that it executes the letter of intent and submit its additional

bank guarantee pursuant to the resolution plan which had

been approved, and which is now to be filed before the NCLT.

11. That the Respondent No. 3/ Applicant also suffers from

the threat of invocation of its existing bank guarantee of INR

150 crores that it had submitted in support of the DVI

Resolution Plan, if it does not execute the letter of intent and

submit the additional bank guarantee.”

(emphasis supplied)

12 On 18 June 2020, the IA filed by DVI was listed before this Court when the

following order was passed:

“The application made by the applicant for withdrawal of the

offer is hereby rejected and in case he indulges in such

kind of practice, it will be treated as contempt of this

Court in view of the various orders passed by this Court at

his instance. The application is accordingly dismissed.”

(emphasis supplied)

Following the order of this Court, the RP called upon DVI to submit a performance bank

guarantee for a balance of INR 150 crores which was reiterated on 6 July 2020 setting

an outer limit of 10 July 2020. In the meantime, on 30 June 2020 DVI moved its 

8

rectification application11 before this Court on the ground that:

(i) No application had ever been filed by DVI seeking withdrawal of the order;

and

(ii) DVI had never approached this Court earlier for any relief including

seeking an extension of time.

13 NCLT passed an order on 9 July 2020 approving the resolution plan submitted by

DVI. Following this, on 10 July 2020, an email was addressed to DVI by the erstwhile

RP to provide its nominations to the Implementation and Monitoring Committee (“IMC”).

By this email, DVI was also requested to attend the first meeting of the IMC scheduled

on 14 July 2020. On 14 July 2020, DVI by its email stated that formation of the IMC and

the convening of meetings was premature and recorded its intent to institute an appeal

against the order of the NCLT dated 9 July 2020 approving the resolution plan. On 21

July 2020, the RP addressed a communication to DVI to implement the resolution plan

and submit a performance bank guarantee for the balance INR 150 crores. This was

reiterated in a communication dated 23 July 2020 of the CoC to DVI. DVI by its letter

dated 25 July 2020 reiterated its intent to lodge an appeal against the order of NCLAT

and eventually filed its appeal12 before the NCLAT challenging the order of the NCLT

dated 9 July 2020. The said appeal is pending adjudication before the NCLAT. On 3

September 2020, DVI addressed an email invoking clause 8.7 of the resolution plan to

seek its termination forthwith. The email recorded that:

“6. Our client states that in view of outbreak of the COVID19 pandemic since March 2020 and continuing till date,

the business/assets/revenues of the Corporate Debtor

have been adversely and materially affected beyond INR

 11 IA No.58156 of 2020 12 Company Appeal (AT) (Insolvency) No. 654 of 2020

9

300 crores triggering clause 8.7 (iii) of the Resolution

Plan. This constitutes a ‘Force Majeure Event’ (as defined in

the Amtek Resolution Plan) which is a self operating clause

providing for the forthwith termination of the Resolution Plan.

The extent of the aforesaid adverse and material impact on

the business/assets/revenues of the Corporate Debtor have

remained uncontroverted by you in proceedings before the

NCLT Chandigarh. In any event, withholding of the

information sought vide the email dated 13 July 2020

only reinforces the fact that the event of Force Majeure

has occurred resulting in the forthwith termination of the

Amtek Resolution Plan.”

(emphasis supplied)

14 On 26 August 2020, the CoC filed a Contempt Petition13 before this Court on the

ground that DVI was in breach of the order of this Court dated 18 June 2020 by seeking

to withdraw the resolution plan. On 10 September 2020, DVI filed an IA14 in the pending

appeal before the NCLAT seeking cancellation and return of the performance bank

guarantee.

15 Notice was issued by this Court in the contempt petition instituted by the CoC on

25 September 2020.

16 On 14 December 2020, notice was issued by this Court on the rectification

application filed by DVI.

17 The learned Senior Counsel who have principally urged submissions on behalf of

the contesting parties are:

(i) Mr Mukul Rohatgi for DVI in support of the rectification application;

(ii) Mr Tushar Mehta, Solicitor General of India in support of the Contempt Petition

filed by the CoC;

 13 Contempt Petition No.524 of 2020 14 IA No.21814 of 2020

10

(iii) Mr Niraj Kishan Kaul, learned Senior Counsel for the RP; and

(iv) Dr Abhishek Manu Singhvi, learned Senior Counsel on behalf of the contemnor.

18 Mr Mukul Rohatgi, learned Senior Counsel appearing on behalf of DVI submitted

that the order of this Court dated 18 June 2020 needs to be rectified or clarified on the

ground that it proceeds on two factual misconceptions. The factual errors are stated to

be that:

(i) The IA that was moved by DVI was for withdrawal of the offer (resolution plan);

and

(ii) Various orders have been passed by this Court at the instance of DVI.

19 The submission is that the observation of the Court that “in case he [DVI]

indulges in such kind of practice, it will be treated as contempt of this Court” is premised

on a factual misconception. Addressing the Court on the first of the above premises, Mr

Rohatgi submitted that the reliefs which were sought in the application that was filed by

DVI on 12 June 2020 were in the following terms:

 “

(a) Pass an order modifying the Order dated 08.06.2020 to

grant a period of 2 (two) months from the date of the Order

to the Respondent No. 3/ Applicant to examine and

understand the impact of the Covid-19 pandemic and the

lock down to discuss the terms of the Resolution Plan with

the Committee of Creditors and thereafter direct the NCLT

to consider the matter of I.A. No. 48906 of 2020 and pass

appropriate orders;

(b) Pass an order directing the Committee of Creditors and the

resolution professional not to act upon the existing

resolution plan until conclusion of the above process,

subject to the Applicant/ Respondent No. 3 extending the

term of the existing bank guarantee for a corresponding

period;”

11

20 It was urged that there was no attempt on the part of DVI to withdraw from the

resolution plan. On the contrary, what the IA postulated was that a period of 15 days

which was fixed, commencing from 8 June 2020, for the NCLT to pass orders on the

approval application had resulted in practical difficulties for parties to enter into a

meaningful discussion and negotiation. DVI, according to the submission, stressed that

the period which was reserved for the NCLT to decide the approval application, which

was to expire on 23 June 2020, was inadequate and there was a threat on the

invocation of the performance bank guarantee. It was in this context that DVI

highlighted the serious financial impact of COVID-19 on the business of the corporate

debtor in the context of which it sought time to assess the impact of the pandemic on

the business and financial health of the corporate debtor. On the second of the factual

premises set out in the order of this Court, DVI has stressed that it had never moved

any application before this Court earlier for seeking an extension of time and hence the

basis of the order of this Court is factually incorrect.

The submission which has been urged on behalf of DVI has been opposed by Mr

Tushar Mehta, learned Solicitor General and by Mr Niraj Kishan Kaul, learned Senior

Counsel, appearing respectively for the CoC and the RP. The Solicitor General

submitted that:

(i) a detailed process was undertaken following the order of this Court dated 24

September 2019 to ensure that resolution plans could be invited so as to obviate

an order of liquidation of the corporate debtor. DVI was in the fray even before

the proceedings had reached this Court and even after the order of 24

September 2019, it had indicated its intent to enter the fray. From 4 November

2019 when DVI submitted its financial proposal, extensions of time were granted 

12

by this Court on 13 November 2019, 2 December 2019, 20 January 2020 and 10

February 2020. Though the extensions were sought by the CoC, there can be no

manner of doubt that this was to facilitate the finalization and approval of a

resolution plan and DVI was among the resolution applicants. After the CoC

approved DVI’s resolution plan on 11 February 2020, an IA was filed by the CoC

on 13 May 2020. This Court by an order dated 8 June 2020 relegated the

proceedings to the NCLT for considering the approval application. Laying stress

on the IA filed by DVI on 12 June 2020, it was urged that an attempt was made

by DVI to wriggle-out of its commitments under the resolution plan which has

been approved by the CoC on 11 February 2020 by highlighting the impact of

COVID-19 on the financial health of the corporate debtor.

(ii) Despite this Court having rejected the IA on 18 June 2020 :

(a) DVI failed to take steps in pursuance of the resolution plan which is

approved by the NCLT on 9 July 2020 by

(i) failing to submit the second tranche of the performance bank

guarantee of INR 150 crores;

(ii) failing to provide its nomination to the IMC;

(iii) refusing to attend the meetings of the IMC;

(iv) setting up through its advocates the plea that a force majeure

event had occurred resulting in termination of the resolution plan.

(b) This conduct, it has been submitted, is contumacious in that despite being

placed on notice by the order of this Court dated 18 June 2020 that:

(i) DVI’s IA stood dismissed; and

(ii) Any attempt to resile from the resolution plan would result in the 

13

invocation of the contempt jurisdiction, DVI effectively thwarted

the implementation of the resolution plan.

The Solicitor General has thus opposed the application for rectification and supported

the contempt petition on the above submissions.

21 Adopting a similar line of submissions, Mr Niraj Kishan Kaul, learned Senior

Counsel urged that:

(i) A plea of force majeure on account of COVID-19 was specifically raised in the

application filed by DVI before this Court on 12 June 2020;

(ii) By a letter dated 3 September 2020 addressed by the advocates of DVI, a plea

of force majeure was set up even after the order of this Court dated 18 June

2020 rejecting the IA; and

(iii) Even before the NCLAT, DVI filed an additional affidavit on 12 September 2020

for pleading a case of force majeure based on the COVID-19 pandemic.

On these grounds, it was submitted that DVI has made an intentional and willful attempt

to evade compliance of its obligation under the approved resolution plan though its IA

was specifically rejected on 18 June 2020 by this Court.

22 Dr Abhishek Manu Singhvi, learned Senior Counsel appearing on behalf of

the contemnor submitted that:

(i) In order to invoke the contempt jurisdiction, a disobedience has to be willful and

not by implication;

(ii) The exercise of legal rights by a party to a proceeding cannot constitute

contempt;

14

(iii) DVI was within its legitimate rights in challenging the order of the NCLT;

(iv) The view which may be taken on the merits of the submissions which have been

addressed by DVI on whether the conditions precedent to the implementation of

the resolution plan have been fulfilled cannot be basis for invoking the contempt

jurisdiction. An adjudicatory forum may take a decision, one way or the other on

the merits of DVI’s submissions, but a plea of contempt cannot be founded on

the acceptance or rejection of the plea of DVI that the conditions precedent to the

implementation of the resolution plan have not been fulfilled.

(v) In this context, the reply filed by the contemnor to the contempt petition

specifically sets out the case of DVI that the condition precedents to the

implementation of the resolution plan have not been fulfilled. The following

paragraphs of the reply have been emphasized:

“5. It is submitted that Resolution Plan dated 17.01.2020 (r/w

the addendum dated 07.02.2020) as submitted by DVI and

approved by the COC contains several obligations/conditions

precedents for its effective implementation and to ensure the

going concern status of the Corporate Debtor. It is an

admitted position that the Resolution Professional / COC inter

alia failed to ensure compliance of certain conditions

precedents under the Resolution Plan including failure of

obtaining the prior written consent of the mortgage of the Ace

Complex Land whilst executing a long term lease deed on

behalf of the Corporate Debtor. By an email dated

29.01.2020, such default was brought to the due notice of the

Resolution Professional by the representative of DVI. The

aforesaid requirement of obtaining the prior written consent

was further reiterated by DVI in the addendum dated

07.02.2020. A copy of the email dated 29.01.2020 is attached

as Annexure R-1. (Pages 37-40)

6. It is a matter of record that the aforesaid issues were

brought before the National Company Law Tribunal,

Chandigarh (“NCLT”) at the time of hearing of the IA filed by

the Resolution Professional for the approval of the Resolution

Plan. However, the NCLT proceeded to approve the

Resolution Plan on 09.07.2020 by inter alia unilaterally

modifying the provisions of the Resolution Plan to the

detriment of DVI. Respectfully, it is submitted that in the 

15

absence of fulfilment of the aforementioned provisions of the

Resolution Plan (amongst others), the very

implementation/feasibility/ viability of the Resolution Plan and

revival of the Corporate Debtor fails into jeopardy. DVI has

accordingly exercised its rights as available under lay by filing

its appeal before the National Company Law Appellate

Tribunal (“NCLAT”). Without prejudice to the aforesaid and

as elaborated hereunder, the Resolution Professional was

also intimated of the termination of the Resolution Plan on

03.09.2020 pursuant to the self-operative termination clause

of the Resolution Plan as approved by the CoC.

9. DVI’s Resolution Plan dated 17.01.2020 (read with its

addendum dated 07.02.2020) inter alia contains contingent

conditions in the form of clause 2.5.2, which is set out as

under:

“Unless waived (where permissible under Applicable Law) by

the Resolution Applicants, Acquisition of the Corporate

Debtor by the Resolution Applicants in terms of sub-section

5.1 (Acquisition as a Going Concern) of this Resolution Plan

and any other action set out in sub-sections 5.1 and 5.2

(Acquisition as a Going Concern), of the Resolution Plan are

contingent on the following conditions having been fulfilled in

a form and manner satisfactory to the Resolution Applicants

(“Effective Date Conditions Precedents”)

(a) Occurrence of NCLT Approved Date;

(b) Receipt of a copy of the order of the NCLT approving this

Resolution Plan; and

(c) term lease (subsisting for 20 years or more) for the ACE

Complex Land with Acceptable Terms.”

“Acceptable Terms” has been defined in the Resolution Plan

as under:

“Shall mean terms relating to the lease of ACE

Complex Land and shall be suitable protective terms

acceptable to the Resolution Applicants including (i)

confirmation of the validity and subsistence of the lease

arrangement by way of prior written consent of Vistra ITCL

Limited acting as the security trustee on behalf of KKR India

Financial Services Limited and L&T Finance Limited in a form

and substance acceptable to the Resolution Applicants; (ii) no

right of termination according to the lessor as long as lease

rentals are paid; and (iii) right of first refusal occurring to the

Resolution Applicants, in case of sale of ACE Complex Land.”

10. It is thus seen that it is one of the essential

requirements of the Resolution Plan for the Corporate Debtor

to execute a long-term lease (for 20 years or more) in respect

of the Ace Complex Land with “Acceptable Terms” i.e. with

the prior written consent of Vistra ITCL (India) Limited

(“Vistra”) viz; the mortgagee of the Ace Complex Land.

16

11. Significantly, the aforesaid requirement of the

“Execution of a long term lease (subsisting for 20 years or

more) for the ACE Complex Land with Acceptable Terms”

was reiterated in the addendum to the Resolution Plan dated

07.02.2020.”

23 During the course of the hearing, Dr Singhvi made the following oral statement

namely that “the application filed by DVI before the Supreme Court was to consider

finding solutions for the delay occasioned by COVID-19. Neither was force majeure

pleaded nor has it been pleaded now and only an extension of time has been sought on

the ground of Covid-19”. In other words, the submission of Dr Singhvi is that

(i) DVI has not set up a plea of force majeure as a basis for withdrawing from the

resolution plan; and

(ii) Whether the conditions precedent under the resolution plan have been fulfilled is

a matter which is sought to be urged in the appeal before the NCLAT.

The application for rectification

24 The application for rectification is premised on the assertion that there are two

factual misconceptions contained in the order of this Court dated 18 June 2020. Firstly,

the order proceeds on the basis that DVI in its IA of 12 June 2020 intended to withdraw

from the resolution plan, which was not the case; and secondly, the order indicates that

extensions of time for the submission of resolution plans were obtained on behalf of

DVI, which is contrary to the record. The submission, in other words, is that DVI did not

intend to resile from the resolution plan and only sought to highlight the financial impact

of the COVID-19 pandemic on the economy, the auto industry and the viability of the

corporate debtor. This submission has been reiterated by Dr Abhishek Manu Singhvi, 

17

learned Senior Counsel when he urged that the application moved before this Court on

12 June 2020:

(i) was to consider finding solutions for the delay due to COVID-19;

(ii) force majeure was not pleaded; and

(iii) the only plea was for the extension of time.

25 The record before this Court would however belie the critique of the order dated

18 June 2020 and of the submissions made by learned Senior Counsel. The IA filed by

DVI was styled as “an application for rectification”, as its title indicates, but paragraph 1

states that it is “an application for clarification / modification of the order dated 8 June

2020”. On 8 June 2020, this Court had relegated the matter of approval of the resolution

plan to the NCLT with a timeline of 15 days. In the IA filed by DVI purportedly for

‘clarification and modification’, it was submitted that “due to Covid-19 pandemic DVI’s

resolution plan (as submitted and approved by the CoC) was unviable and not feasible

in the present circumstances”. DVI submitted that when the proceedings came up on 8

June 2020 it had urged that its resolution plan was required to be relegated to the

adjudicating authority to assess the impact of the pandemic on the economy, the auto

industry and the financial health of the corporate debtor and to enable the parties to

renegotiate the terms of the resolution plan. In other words, DVI sought to submit that

the purpose of relegating the issue of approval of the resolution plan was to enable a

re-negotiation to take place before the resolution plans which have been approved by

the CoC could be the subject matter of an approval of the adjudicating authority. Now,

this submission of DVI cannot be accepted for two reasons: firstly, it is a settled

principle of law that the record of the Court speaks for itself and the terms of a judicial

order reflect what has been decided. The order of this Court dated 8 June 2020 

18

indicates that since the fresh resolution plan had been passed by the CoC with the

majority of 70 per cent, “the matter of IA” namely, IA 48906 of 2020 filed by the CoC

was being relegated to the NCLT for passing “appropriate orders”. There is absolutely

no indication in the order of the Court dated 8 June 2020 that the purpose of relegating

the IA to the NCLT was to facilitate a fresh evaluation being made by DVI in regard to

the impact of the pandemic on the economy, the auto industry and the health of the

corporate debtor. DVI, in other words, has attempted to read into the order dated 8

June 2020 a basis which does not find expression in the terms of the order. Such an

exercise is plainly impermissible. Secondly, Section 31 of the IBC provides the

requirements to be observed, before the adjudicating authority approves the resolution

plan. Sub-Sections (1) and (2) of Section 31 are in the following terms:

“(1) If the Adjudicating Authority is satisfied that the resolution

plan as approved by the committee of creditors under subsection (4) of section 30 meets the requirements as referred

to in sub-section (2) of section 30, it shall by order approve

the resolution plan which shall be binding on the corporate

debtor and its employees, members, creditors, [including the

Central Government, any State Government or any local

authority to whom a debt in respect of the payment of dues

arising under any law for the time being in force, such as

authorities to whom statutory dues are owed,] guarantors and

other stakeholders involved in the resolution plan:

[Provided that the Adjudicating Authority shall, before passing

an order for approval of resolution plan under this subsection, satisfy that the resolution plan has provisions for its

effective implementation.]

(2) Where the Adjudicating Authority is satisfied that the

resolution plan does not confirm to the requirements referred

to in sub-section (1), it may, by an order reject the resolution

plan.”

26 The role of the adjudicating authority under sub-section (1) of Section 31 comes

into being upon the approval of the resolution plan by the CoC under sub-section (4) of

Section 30. The function which is assigned by the statute to the adjudicating authority is 

19

to determine whether the resolution plan which has been approved by the CoC meets

the requirements of sub-section (2) of Section 30. Upon being satisfied that the

resolution plan meets those requirements, the adjudicating authority “shall by order

approve the resolution plan”. Before passing an order of approval the adjudicating

authority has to satisfy itself that the resolution plan has provisions for its effective

implementation. In the backdrop of the above provisions, the order of this Court dated 8

June 2020 required the adjudicating authority to perform the functions which are

entrusted to it under Section 31 of the IBC. To suggest that the purpose of the order

dated 8 June 2020 was to enable DVI to re-negotiate the resolution plan after assessing

the impact of the pandemic is thus fundamentally flawed. It is flawed because this

assertion is contrary to the plain terms of the record. It is flawed also because the

submission is contrary to the nature of the function which is expected to be exercised

by the adjudicating authority by the plain terms engrafted into the provisions of Section

31. When DVI moved its application on 12 June 2020, it asserted that the timeline of 15

days has “resulted in practical difficulties for parties to enter into any meaningful

discussions and negotiations”. To assert that there was any scope for negotiations and

discussions after the approval of the resolution plan by the CoC would be plainly

contrary to the terms of the IBC. DVI, in paragraph 7 of its application stated that it was

seeking a clarification/modification for, inter alia, the following reasons:

(i) Its management team was based out of the US and found it difficult to travel to

India during the course of the pandemic;

(ii) The pandemic had had a drastic impact on the business, revenue, assets and

financial and operational health of the corporate debtor;

(iii) The meeting of the CoC dated 4 May 2020 recorded the performance updates of 

20

the corporate debtors bearing on its financial health;

(iv) The RP had on 3 June 2020 shared additional information with DVI, which was

substantial in its significance;

(v) DVI’s resolution plan was based on the financials of the corporate debtor prior to

the COVID-19 pandemic;

(vi) The pandemic had materially and adversely impacted commercial assumptions

underlying the business plan and financial proposal for revival of the corporate

debtor;

(vii) The RP was requiring DVI to submit an additional bank guarantee pursuant to

the resolution plan failing which DVI faced the threat of the invocation of the

performance bank guarantee of INR 150 crores which it had submitted;

(viii) DVI even pleaded “special equities”. The reference to special equities contains a

distinct flavor of a ground being set up to injunct the invocation of the

performance bank guarantee. DVI sought a period of two months to (i) assess

the impact of the pandemic on the business and financial health of the corporate

debtor; (ii) the consequential impact of these circumstances on the feasibility and

viability of the resolution plan; and (iii) to allow parties to negotiate the terms of

the resolution plan. It was in this backdrop, that the reliefs which were sought in

the IA were to permit DVI a period of two months “to examine and understand the

impact of Covid-19 pandemic and the lockdown to discuss the terms of the

resolution plan with the CoC”; and

(ix) DVI in its IA also sought a restraining order against the CoC and the RP from

acting upon the existing resolution plan until the conclusion of the above process

subject to it extending the existing bank guarantee. 

21

27 The order of this Court dated 18 June 2020 must be understood in the context of

the IA which was moved by DVI. When the three judge Bench in its order dated 18 June

2020 observed that the “application made by the applicant for withdrawal of the offer is

hereby rejected” it must be understood in the context of the plea which was setup by

DVI. There can be no mistaking the fact that DVI, despite having submitted a resolution

plan which had undergone discussion and revision before the CoC before being

approved in the meeting of the CoC of 11 February 2020, was seeking to renege its

applications to fulfill the resolution plan. The plea for being allowed to re-examine the

impact of the pandemic and to re-negotiate the terms of the resolution plan makes it

abundantly clear that DVI was not willing to fulfill the terms of the obligations which it

had agreed. This is evident from the fact also that though DVI was obliged to furnish the

second tranche of its performance bank guarantee of INR 150 crores, it was not ready

to do so. On the contrary, apprehending a threat of the invocation of the first tranche of

the bank guarantee of INR 150 crores, DVI pleaded special equities and sought a

direction allowing it to keep the bank guarantee alive until the process of re-negotiation

was completed in two months. This again was to overcome the consequence of the

invocation of the bank guarantee arising from DVI’s default. The prayer seeking a

direction to allow DVI to extend the bank guarantee was artfully worded since the effect

would be to restrain the invocation of the bank guarantee. One of us (Justice MR Shah)

was a member of the Bench which declined to grant relief on the IA filed by DVI on 12

June 2020. But, for the purpose of the present application, this judgment is based on

the record as it stands, which leaves no manner of doubt that DVI was seeking to

renege on its commitments. When the order of this Court dated 18 June 2020 alludes to

“the application made by the applicant for withdrawal of the offer”, the reference is 

22

clearly to the substantive content of the IA which indicates that DVI was not ready to

abide by the commitments made by it in the resolution plan. The latter part of the order

dated 18 June 2020, placed DVI on notice that if it indulged in such kind of practices in

the future, it was “to be treated as contempt of this Court in view of the various orders

passed by this Court at his instance”. DVI submits that the orders of this Court were not

passed at its instance since applications for the extension of time had earlier been

granted on the request by the CoC. The list of dates filed by DVI indicate that DVI filed

its Vakalatnama in the appeal on 5 June 2020 a point which was stressed by Mr Mukul

Rohatgi, learned Senior Counsel. However, there can be no manner of doubt that the

extensions of time granted by this Court were to enable a due consideration of the

proposals of resolution applicants of which DVI undoubtedly was an applicant. This is

evident from the manner in which the proceedings unfolded. On 24 September 2019,

this Court directed the RP to invite fresh offers within a period of 21 days. As a result of

offers being received after the deadline under the invitation which was issued pursuant

to the above directions, an IA was moved on 6 November 2019 seeking an extension of

four weeks. On 13 November 2019, this Court directed that the consideration would be

confined to five offers “received within the time specified in the advertisement”. On 21

November 2019, the CoC sought a modification of the order of 13 November 2019 to

correctly record that while five resolution applicants had responded to the fresh

invitation by the RP only one resolution plan had been submitted before the last date of

submission. The CoC sought liberty to consider the additional three resolution offers,

one of which was the offer by DVI. It was in this context that on 2 December 2019, this

Court partly allowed the application for modification by directing that fresh offers to be

invited within thirty days. It was in pursuance of the order of this Court dated 2 

23

December 2019 that a public announcement was made by the RP on 3 December

2019. DVI submitted undertakings under Section 29A of the IBC and other documents

on 6 December 2019. Fresh resolution plans were submitted by four entities including

DVI on 31 December 2019.

28 On 6 January 2020, the CoC declared DVI as the highest evaluated resolution

applicant. DVI submitted a revised resolution plan dated 17 January 2020, following

which the voting which was scheduled by the CoC on that day was cancelled. The

revised proposal of the DVI was discussed in the 29th meeting of the CoC. On the same

day – 20 January 2020 –when the proceedings were listed before this Court it took note

of the fact that the CoC was in the process of approving a resolution plan following

which an extension of two weeks was granted. DVI submitted an addendum to the

resolution plan on 7 February 2020.

29 On 10 February 2020, the CoC sought an extension of a week for the resolution

plan to be voted upon by the members of the CoC. On 11 February 2020, the resolution

plan of DVI was approved and an affidavit was filed by the RP before this Court on 19

February 2020 reporting the approval of DVI’s resolution plan by the CoC. Appropriate

directions were sought. This sequence of events leaves no manner of doubt that the

extensions which were granted were to facilitate the process initially of inviting

resolution applicants to submit their plans and later for the evaluation of the plans which

had been submitted. After DVI was found to be the highest evaluated resolution

applicant, extensions were sought and granted for the resolution plan to be finalized

and voted upon by the CoC. Who sought an extension of time is really beside the point

and is of subsidiary importance. Formally it may be true that the extensions were 

24

applied for by the CoC, with the RP having apprised this Court also of the approval

granted to DVI’s resolution plan. However, DVI was the beneficiary of the extensions

which were granted by this Court. The extensions granted from time to time facilitated

the consideration of the resolution plan submitted by DVI. DVI cannot be heard to

contend that the order of this Court dated 8 June 2020 suffers from an error when the

process of seeking extensions before this Court ultimately led up to the approval of its

resolution plan. DVI’s application for rectification, in other words, is an attempt to

renege from the resolution plan which it submitted and to resile from its obligations. This

is a devious attempt which must be disallowed. The rectification application must

accordingly be dismissed.

Contempt Petition No. 542 of 2020

30 The premise of the contempt proceedings which has been initiated by the CoC is

that despite the order of this Court dated 18 June 2020, DVI has by its conduct

(i) Obstructed the implementation of the resolution plan; and

(ii) Set up a plea in the teeth of the rejection of its IA by this Court on 18 June 2020.

31 Dr Abhishek Manu Singhvi, learned Senior Counsel is correct in the

formulation of legal principle but it is in the application of those principles where the

fine-print of this case lies. There can be no manner of doubt that

(i) the contempt jurisdiction is to be exercised with circumspection;

(ii) the acceptance or rejection of a plea on merits is distinct from whether a party is

in breach of the order of court;

(iii) the disobedience of an order must be willful before it constitutes contempt;

25

(iv) a willful breach must appear clear by the conduct of a party not by implication;

and

(v) the exercise of legal rights and remedies would not constitute contempt.

32 We must at the outset note that on 8 June 2020, this Court relegated the matter

to the NCLT to decide upon the approval application within a fortnight. NCLT passed an

order approving the resolution plan submitted by DVI on 9 July 2020. DVI having taken

recourse to its appellate remedy before the NCLAT under the provisions of Section 61

of the IBC does not constitute contempt. The plea of contempt however proceeds on

the conduct of DVI. Bearing on this issue, the following circumstances have to be noted:

(i) the pleas which were set up by DVI in paragraphs 9,12,13,15 and 17 of its IA

filed on 12 June 2020, clearly sought to setup a foundation for force majeure. In

paragraph 9, DVI pleaded that “Covid-19 pandemic has materially and adversely

impacted commercial assumptions underlying the business plan and financial

proposal for revival of the corporate debtor and the feasibility and viability of the

resolution plan”. In paragraph 12, DVI urged that the execution of a letter of intent

and submission of an additional bank guarantee “would mean that the approved

resolution plan is being implemented without taking into consideration the

changed circumstances, and would be directly in conflict with the intent of

discussing the plan after understanding the impact of the changed financial

position of the Company and the market as a whole”;

(ii) Para 13 of the IA stated that DVI “has been placed in an impossible situation

where, on one hand the impact of the changed circumstances needs to be taken

into consideration for examining the impact of the same on the resolution plan…”;

26

(iii) In para 15, DVI submitted that it was “imperative that the CoC and the resolution

professional do not move forward without first giving it [DVI] the opportunity to

examine the impact of the changed circumstances on the plan and its feasibility

and to thereupon discuss the same with the CoC”; and

(iv) Finally, in para 17, DVI pleaded that it “may be allowed to assess the impact of

the COVID-19 pandemic on the overall business and financial health of the

Corporate Debtor, and the consequential impact of these circumstances on

feasibility and viability of DVI’s resolution plan and a period of 2 (two) months […]

may be granted to the parties to negotiate the terms of DVI’s resolution plan […]”.

These averments clearly indicate a foundation for the defence of force majeure.

33 On 3 September 2020, after the order of this Court dated 18 June 2020 rejecting

the above IA, an email was addressed on behalf of the DVI by Mr Dinesh Pednekar, of

Economic Laws Practice (“ELP”), the advocates representing DVI to the RP. The email

inter alia stated that:

“6.Our client states that in view of outbreak of the Covid-19

pandemic since March 2020 and continuing till date, the

business/assets/revenues of the Corporate Debtor have been

adversely and materially affected beyond INR 300 crores

triggering clause 8.7(iii) of the Resolution Plan. This

constitutes a ‘Force Majeure Event’ (as defined in the Amtek

Resolution Plan) which is a self-operating clause providing for

the forthwith termination business/assets/ revenues of the

Corporate Debtor have remained uncontroverted by you in

proceedings before the NCLT Chandigarh. In any event,

withholding of the information sought vide the email dated 13

July 2020 only reinforces the fact that the event of Force

Majeure has occurred resulting in the forthwith termination of

the Amtek Resolution Plan.”

27

On 12 September 2020, in an additional affidavit filed before the NCLAT, DVI again

sought to plead the COVID-19 pandemic as a reason for allowing it to re-negotiate the

resolution plan. The above circumstances leave no manner of doubt that despite the

rejection of its IA by this Court on 18 June 2020, DVI continued to persist in raising the

same grounds as a justification to be relieved of the obligations imposed on it by the

terms of its resolution plan.

34 Dr Abhishek Manu Singhvi, learned Senior Counsel had, in the course of his

submissions which have been recorded earlier, submitted that neither was force

majeure pleaded then (in the IA filed before this Court) nor thereafter.

35 Faced with the communication dated 3 September 2020 of ELP made on behalf

of DVI, Dr Abhishek Singhvi submitted that the submission was not before the NCLAT.

However, even this is factually incorrect.

36 Mr Niraj Kishan Kaul, learned Senior Counsel has drawn the attention of the

Court to the fact that on 12 September 2020, additional affidavit was filed before the

NCLAT where the plea of force majeure was raised by DVI. Besides this, DVI has,

despite the approval of the resolution plan, failed to

(i) submit a performance bank guarantee for the balance of INR 150 crores;

(ii) make a nomination to the IMC; and

(iii) failed to attend the meetings of the IMC.

37 The provisions of the IBC are premised on a time bound process for the

resolution of corporate insolvencies. Effectively, the conduct of DVI after the CoC

approved the resolution plan on 11 February 2020 has thwarted the entire process, 

28

thus, bringing things to a stand-still. Alive to the realities of the situation, Dr Abhishek

Manu Singhvi, learned Senior Counsel has stated before the Court that in the

proceedings which are pending before the NCLAT, DVI shall not plead force majeure

based on the outbreak of the Covid-19 pandemic.

38 The issue which needs to be addressed is whether recourse to the contempt

jurisdiction is valid and whether it should be exercised in the facts of this case.

Undoubtedly, as we have noted earlier, the conduct of DVI has not been bona fide. The

extension of time in the course of the judicial process before this Court enures to the

benefit of DVI as a resolution applicant whose proposal was considered under the

auspices of the directions of the Court. DVI attempted to resile from its obligations and

a reading of its application which led to the passing of the order of this Court dated 18

June 2020 will leave no doubt about the fact that DVI was not just seeking an extension

of time but a re-negotiation of its resolution plan after its approval by the CoC. Then

again, despite the order of this Court dated 18 June 2020 rejecting the attempt of DVI, it

continued to persist in raising the same pleas within and outside the proceedings before

the NCLAT. The conduct of DVI is lacking in bona fides. The issue however is whether

this conduct in raising the untenable plea and in failing to adhere to its obligations under

the resolution plan can per se be regarded as a contempt of the order of this Court

dated 18 June 2020. DVI was undoubtedly placed on notice of the order that should it

proceed in such terms, it would invite the invocation of the contempt jurisdiction. Having

said that, it is evident that the order of this Court dated 18 June 2020 rejected the IA

moved by DVI and as a necessary consequence, the basis on which the reliefs in the IA

were sought. Therefore correctly, it has been now stated on behalf of the DVI that it will

not set-up a plea of force majeure in view of the dismissal of its IA on 18 June 2020. 

29

However lacking in bona fides the conduct of DVI was, we must be circumspect about

invoking the contempt jurisdiction as setting up an untenable plea should not in and by

itself invite the penal consequences which emanate from the exercise of the contempt

jurisdiction. Likewise, the default of DVI in fulfilling the terms of the resolution plan may

invite consequences as envisaged in law. On the balance, we are of the considered

view that it would not be appropriate to exercise the contempt jurisdiction of this Court.

During the course of the hearing, Dr Abhishek Manu Singhvi, learned Senior Counsel

has relied on the affidavit filed in response to the contempt petition while seeking to

urge that DVI will be within in its rights to urge whether the conditions precedent to the

enforcement of the resolution plan have been fulfilled. Since DVI is in appeal before the

NCLAT, we express no opinion on the merits of the submission. The NCLAT will take a

view on the tenability and merits of the submission of DVI that the conditions precedent

under the resolution plan have not been fulfilled after hearing the parties. This is not an

issue which arises before the Court in the present proceedings either upon the

application for rectification moved by DVI or the contempt petition moved by the CoC.

39 For the above reasons, our conclusions and directions are that :

(i) There is no merit in the application for rectification moved by DVI. IA No. 58156

of 2020 in Civil Appeal No 6707 of 2020 shall stand dismissed;

(ii) It is not expedient in the interest of justice to pursue the contempt proceedings.

The Contempt Petition (C) No. 524 of 2020 in Civil Appeal No. 6707 of 2019 shall

accordingly stand dismissed, subject to (iii) below;

(iii) In terms of the submission which has been made by DVI before this Court and

even otherwise, as a consequence of the dismissal of its IA on 18 June 2020, it 

30

shall not set-up a plea for force majeure in the proceedings which are pending

before the NCLAT in appeal against the order of the NCLT approving the

resolution plan; and

(iv) The appeal filed by DVI against the approval of the resolution plan by the NCLT

shall peremptorily be heard and disposed of by the NCLAT not later than within a

period of one month from the date of the present judgment.

40 There shall be an order in the above terms.

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

[Dr Dhananjaya Y Chandrachud]

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

 [M R Shah]

New Delhi;

February 23, 2021