i. RBI circular asking banks to initiate insolvency proceedings against defaulting companies struck down – The Supreme Court struck down the circular issued by the Reserve Bank of India directing banks to initiate insolvency proceedings against companies having bad debts of Rs 2000 Cr or above, if the same were not resolved in 180 days. Other mechanisms like JLFs, CDRs, etc were also abolished by the RBI through this notification. The default was not to be tolerated even for one day. The Court struck down the notification explaining that a broad notification directing banks to simply resort to the IBC was beyond the powers of the RBI – the banks would take that decision on a case to case basis. [Dharani Sugars and Chemicals v Union of India, Transferred Case (Civil) No.66 of 2018 In Transfer Petition (Civil) No.1399 of 2018, date of order:02.04.2019]

ii. Employee is not entitled to full back wages on acquittal – The appellant in the case working at a mailing service. His employer lodged a complaint alleging that he had forged high value money orders of which he was found guilty in 1997. The High Court acquitted him and held that he was entitled to seniority and increments from the time of his dismissal to his reinstatement and back wages from the time he was acquitted to his reinstatement but not during the period of the trial. The fact that his back wages were limited only from acquittal to reinstatement was challenged by the appellant. The Supreme Court explained that unless and until the case filed by the employer was found to malicious and frivolous, the later cannot be said to be liable for back wages. It would not be any different from a case filed by somebody else against the accused. [Raj Narain v Union of India, CIVIL APPEAL No. 3339 of 2019, date of judgment: 01.04.2019]

iii. One sided clauses in builder agreements held unfair – The Supreme Court held that clauses favouring the builder incorporated into builder buyer agreements constitute an unfair practice and violated Section 2(r) of the Consumer Protection Act. The section defines any unfair practice as any unfair or unreasonable measure adopted by a seller to promote his sales. The flat buyer was not bound by such terms. In the facts of the case, the buyer had to pay 18% interest p.a. in the case of delay in payment of the money, whereas the buyer had to only pay 9% interest if there was any delay in the delivery of the flats. [Pioneer Urban Land & Infrastructure Ltd. v Govindan Raghavan, Civil Appeal No. 12238 of 2018, date of judgment: 02.04.2019]

iv. IBC, SARFESI do not override PMLA – The Delhi High Court held that the Insolvency and Bankruptcy Code, the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002(SARFESI) and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDBI) do not override the Prevention of Money Laundering Act. The judgment was given in an appeal from a decision of a tribunal that had held the opposite. The Court explained that the attachment of properties under the PMLA is a civil sanction that follows the criminal action that is initiated under the Act. The ‘tainted property’ (property that has been acquired as a result of criminal activity) or property deemed tainted – which was used in order to acquire other property through criminal activities – can be attached by the officer empowered under the PMLA. To get the property released, the accused has to show that the property was not involved in the alleged illegal activities. If a third party has claim under the RDBA or SARFESI, it is not rendered void because of such attachment unless the charge was created specifically to protect the property from the provisions of the PMLA. [The Deputy Director Directorate of Enforcement, Delhi v Axis Bank, Criminal Appeal 143/2018 & Criminal Miscellaneous Application 2262/2018, date of judgment: 02.04.2019]

v. Karnataka Government directed to issue instructions for revised certificates for transgender persons – The Karnataka Government issued a direction to the Principal Secretary of the Education Department to provide for rules to allow changing the details on certificates issued to transgender persons. The petitioner was facing hassles in changing their name and gender on their educational certificates to align them with their gender identity in accordance with the decision in NALSA which recognised a person’s right to choose their gender identity. The authority was asking for a court order to change the name and gender on the certificate. The government had argued that the authorities were asking for such orders because of lack of relevant guidelines. The State has thus been asked to issue proper guidelines so that persons do not have to come to court each time for a change. [Jeeva v State of Karnataka, Writ Petition No.12113/2019 (EDN – RES), date of order: 26.03.2019]

vi. Establishment of CBI under question – The Calcutta High Court will be looking into the validity of the Delhi Special Police Establishment Act, 1946 – the Act that established the present day Central Bureau of Investigation. Given the nature of the matter, the order has also asked the Chief Justice of the Calcutta High Court to look into whether it should be heard by two or more judges. The petition not only questions the validity of the Act on the grounds of the competence of the centre to create a police force with a nationwide jurisdiction even though states have exclusive jurisdiction on the same but also whether the CBI can be said to a part of the DSPE itself. In 2013, the Guwahati HC had struck down the DPSE Act but the judgment was stayed by the Supreme Court. [In Re: Chandan BiswasCriminal Appeal No. 314 of 2018, date of order: 29.03.2019]

vii. Provision of UP compassionate appointment rules redefined – The Uttarakhand High Court held that Compassionate Appointment Rules cannot disregard the claim of a married daughter to apply for the job of the deceased government servant because of the sheer fact of her marriage, if the daughter was dependant on the employee at the time of his death. The rules allow a married dependent son to apply for the job, however. The bench criticised the definition of ‘family’ adopted by the Uttar Pradesh Recruitment of Dependants of Government Servants Dying in Harness Rules, 1974, which only included sons and unmarried daughters. The definition, the judgment said, ignored present day realised where many women may depend on their father even after their marriage because their husbands left them or they are undergoing divorce proceedings. The son remains a part of the family even after his marriage and so does the daughter. Sons or daughters with independent means of livelihood would be ineligible for the jobs under the Rules and so would be a married daughter who is not dependant on the father. [Udham Singh Nagar District Cooperative Bank Ltd v Anjula Singh, Special Appeal No. 187 of 2017, date of judgment: 27.03.2019]
(IPA Service)