ADDITIONAL DISTRICT JUDGE HAS JURISDICTION TO ENTERTAIN A PETITION FILED UNDER SECTION 34 OF ARBITRATION AND CONCILIATION ACT: KERALA HC - The Daily Guardian
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ADDITIONAL DISTRICT JUDGE HAS JURISDICTION TO ENTERTAIN A PETITION FILED UNDER SECTION 34 OF ARBITRATION AND CONCILIATION ACT: KERALA HC

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While setting all the speculation to rest on whether an Additional District Judge has jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 or not, the Kerala High Court has just recently on 9 April 2021 in a latest, learned, laudable and landmark judgment titled Kasim VK vs M Ashraf in Arb.A.No. 37 of 2020 held in no uncertain terms that an Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Arbitration and Conciliation Act. The two Judge Bench of the Kerala High Court comprising of Justice CT Ravikumar and Justice K Haripal observed that, “Principal District Judge can only be considered first among equals and the Additional District Judge is in no way considered to be inferior to the Principal District Judge.” The Kerala High Court observed thus while dismissing an Arbitration Appeal.

To start with, Justice K Haripal who has authored this judgment for himself and Justice CT Ravikumar sets the ball rolling by first and foremost pointing out in para 1 that, “Whether an Additional District Court has jurisdiction to entertain a petition touching the matters falling under the Arbitration and Conciliation Act; Can a party to an arbitration dispute challenge the jurisdiction of the Arbitrator for the first time before the court in a petition filed under Section 34 of the Act, are the two questions posed for consideration in this appeal.”

As we see, the Bench then puts forth in para 2 that, “This is an appeal preferred under Section 37 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as the Act, challenging the correctness of the order of the III Additional District Judge, Kozhikode in OP(Arbitration) No.270/2018. That was a petition filed by the appellant before the District Court, under Section 34 of the Act seeking to set aside the award of the Arbitrator, dated 29.09.2018.”

While elaborating on the facts of the case, the Bench then envisages in para 3 that, “It is the common case that the appellant and the respondent were partners in M/s.Shalimar Jewellery, a partnership concern dealing in the sale of gold. The partnership agreement was executed on 28.10.2013. Before the execution of that agreement, there were three partners in the firm, the appellant, the respondent and one V.K. Moidu. When Moidu chose to move out, the agreement dated 28.10.2013 was brought in existence. During the course of business the appellant and the respondent could not move on and thus, by a lawyer notice, the respondent notified the appellant his intention to dissolve the partnership. Thus he informed that the partnership stood dissolved with effect from 01.05.2015. In the matter of settlement of accounts the partners could not reach a consensus and that led to the appointment of two Arbitrators at the instance of the parties. The appellant nominated Sri. K. Aravindakshan as Arbitrator who dismissed the claim of the respondent. On the other hand, one Sri. Abdulla Manapurath was nominated by the respondent as Arbitrator who found that, at the time of dissolution of the partnership, 6481.580 grams of gold was the stockin-trade, the value of which was estimated to be Rs.1,91,85,476.80/- and thus the respondent was found entitled half of the said amount, i.e. Rs.95,92,738.40/-. In the light of divergent finding of the respective Arbitrators, both the Arbitrators jointly nominated Adv. Sri. A.K. Rajeev as the third Arbitrator, who, after taking evidence, passed an award to the effect that the respondent is entitled to claim Rs.1,13,77,405/- with interest at the rate of 11% on Rs.87,03,427/-. Aggrieved by the said award of the third umpire, the appellant moved the District Court with the above stated Original Petition under Section 34 of the Act. By the impugned order, on 02.03.2020, the learned III Additional District Judge dismissed the petition. Aggrieved by the same, the appellant has moved this Court under Section 37 of the Act.”

Needless to say, the Bench then states in para 4 that, “We heard Adv. Sri. B. Krishnan for the appellant and Adv. Sri. Mohammed Nias for the respondent. The records leading to the award and the order passed by the learned Additional District Judge were also summoned and perused.”

To say the least, the Bench then notes in para 5 that, “The point arising for consideration is whether the appellant could make out valid reasons for interference under Section 37 of the Act.”

Be it noted, the Bench then observes in para 6 that, “As mentioned earlier, it is the common case that both the appellant and the respondent were partners of a partnership firm by name M/s.Shalimar Jewellery doing business in gold at Nadapuram in Kozhikode district. The partnership agreement was executed on 28.10.2013 in continuation of the earlier business run by the parties themselves along with one V.K. Moidu. Clause 17 of the partnership agreement reads thus:-

“17. Any dispute or difference of opinion that may arise between the partners or their heirs or their legal representatives with regard to this partnership agreement or any other matter relating to this firm shall be mutually discussed and settled. If not settled, the dispute shall be referred to two arbitrators by common agreement of the partners. Where these arbitrators are themselves divided in opinion, the matters may further be referred to an umpire chosen by the said arbitrators.”

It is on the strength of the above clause in the agreement that the appellant and the respondent had nominated their respective Arbitrators. But divergent awards were passed by the Arbitrators, which necessitated the appointment of a third umpire and that was how the impugned award had come into existence.”

Furthermore, the Bench then envisages in para 7 that, “The impugned order indicates that even though the appellant had challenged the award with numerous contentions, at the time of argument he confined to one ground only namely, that the dispute is not capable of settlement by arbitration. The learned Additional District Judge considered this aspect and basing on the decision of the Hon’ble Supreme Court in M/s. V.H. Patel & Company and others v. Hirubhai Himabhai Patel and others [(2000) 4 SCC 368] and also A. Ayyasami v. Parasasivam and others [(2016) 10 SCC 386] ruled against the appellant and held that a dispute on the dissolution of a partnership is capable of being adjudicated by the Arbitrator and ultimately the petition was dismissed.”

It is worthwhile to mention that para 12 then stipulates that, “The preamble of the Act makes it amply clear that the Parliament enacted the statute almost on the same lines as the Model Law which was drafted by United Nations Commission on International Trade Law, UNCITRAL. Under the 1940 Act, an Arbitrator had no power to decide on his own jurisdiction. But Section 16 of the Act of 1996 is a recognition of the doctrine of competence-competence meaning that the Arbitral Tribunal can rule on its own jurisdiction. The crux of the arbitration process is the autonomy of the disputing parties with minimum judicial intervention. Once the Arbitral Tribunal, after hearing parties, gives a decision that the arbitration agreement exists between the parties, then by virtue of sub-section (5) of Section 16, the tribunal is bound to proceed with the arbitration matter and make the award and the validity of the order can be assailed by the aggrieved party only by filing objections against the award under Section 34.”

To put things in perspective, the Bench then envisages in para 13 that, “It is the requirement of the law that respondent must state his objections with regard to the jurisdiction of the Arbitrator before filing the statement of defence. However, the respondent may be allowed to raise objection to the jurisdiction of the Arbitrator even subsequent to the filing of the defence statement provided he can show good reasons to the Arbitrator for raising such an objection at a belated stage. In this connection, it is apposite to extract the following paragraphs from the decision reported in Gas Authority of India Limited and another v. Keti Constructions (I) Ltd. and others [(2007) 5 SCC 38]:-

“24. The whole object and scheme of the Act is to secure an expeditious resolution of disputes. Therefore, where a party raises a plea that the Arbitral Tribunal has not been properly constituted or has no jurisdiction, it must do so at the threshold before the Arbitral Tribunal so that remedial measures may be immediately taken and time and expense involved in hearing of the matter before the Arbitral Tribunal which may ultimately be found to be either not properly constituted or lacking in jurisdiction, in proceedings for setting aside the award, may be avoided. The commentary on Model Law clearly illustrates the aforesaid legal position.

25. Where a party has received notice and he does not raise a plea of lack of jurisdiction before the Arbitral Tribunal, he must make out a strong case why he did not do so if he chooses to move a petition for setting aside the award under Section 34(2)(a)(v) of the Act on the ground that the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties. If plea of jurisdiction is not taken before the Arbitrator as provided in Section 16 of the Act, such a plea cannot be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award, unless good reasons are shown.”

The above dictum is a complete answer to the argument raised by the appellant touching want of jurisdiction of the Arbitrator. At the risk of repetition, we may point out that the appellant has no dispute regarding the validity of the agreement, nor he had raised such a contention before the two Arbitrators chosen by the parties and also before the third umpire. In the circumstances, he is estopped from raising such a belated plea in a petition filed under Section 34 of the Act.”

While citing yet another relevant case law, the Bench then observes in para 14 that, “We have also come across the decision of a learned Single Judge of the Bombay High Court, reported in Yogendra N. Thakkar v. Vinay Balse and another [2018 KHC 5034], where the learned Judge has ruled, basing on the decision of the Hon’ble Apex Court in V.H. Patel & Company, quoted supra, that the power of dissolution of the partnership firm under Section 44(g) of the Indian Partnership Act on just and equitable grounds also is an action in personam and not in rem. We concur with the above view expressed by the learned Single Judge of the Bombay High Court.”

Of course, the Bench then hastens to add in para 15 that, “We have already referred to clause 17 of the agreement executed between the parties. It is quite patent that the said clause is very wide and the intention of the parties is to settle the dispute through arbitration, in the event it could be settled through mediation. Section 44 of the Partnership Act also does not impose any taboo or cause any restriction which prevents dissolution of partnership through arbitration. In other words, there is no inherent lack of jurisdiction in the matter of considering the question of dissolving the partnership through arbitration.”

To be sure, the Bench then points out in para 16 that, “During the course of argument, the learned counsel for the appellant also disputed the jurisdiction of the Additional District Judge in entertaining a petition under Section 34 of the Act. Referring to Section 2(e) of the Act, he said that ‘court’ means only principal civil court of original jurisdiction in a district and, therefore, the Additional District Judge has no jurisdiction to entertain the petition. In this connection, he placed strong reliance on Sree Gurudeva Charitable and Educational Trust, quoted supra. But we have no doubt in our mind that such an argument cannot be accepted in right earnest. Firstly, the decision in Sree Gurudeva Charitable and Educational Trust, was rendered in the context of Section 92 of the Civil Procedure Code and has turned up on its own facts. We are not called upon to make any opinion on the correctness of the said decision. Secondly, Section 2(1) (e) of the Act reads thus:

“2. Definitions.- (1) In this Part, unless the context otherwise requires,-

(e) “Court” means—(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;

(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court.”

Most remarkably, the Bench then also points out in para 17 that, “A close reading of this provision will not impel us to adopt the argument raised by the learned counsel. The said provision enables the principal civil court of original jurisdiction in a district as the court having jurisdiction to decide the question forming the subject matter of arbitration; such a court does not include any civil court of a grade inferior to such a court or any Court of Small Causes. The latter limb of Section 2(1)(e) of the Act makes it abundantly clear that the definition of the ‘court’ does not include ‘any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes’. To put it in other words, legislature has not thought of excluding courts exercising identical or co-equal powers from the definition. In no stretch of imagination an Additional District Judge can be inferior to such principal civil court. A court is inferior to another court, when an appeal lies from the former to the latter. An inferior court must be construed to mean judicially inferior and has appellate jurisdiction. A court is an inferior court for the purpose of the prohibition in the provision whenever its jurisdiction is limited. The Additional District Judge enjoys an equal, concurrent jurisdiction with the District Judge. His powers are identical and co-equal with the Principal District Judge. Both are manned by officers in the category of District Judge. The Principal District Judge cannot revise an order passed by any Additional District Judge. District Court is the ‘court’ for the purposes of execution of the award and considering the matters under the Arbitration Act, it is important to note that the Principal District Judge has no appellate jurisdiction or revisional jurisdiction over the Additional District Judge. For all practical purposes, if there are more than one district court in a district, the Principal District Judge can only be considered first among equals and the Additional District Judge is in no way considered to be inferior to the Principal District Judge.”

Quite pertinently, the Bench then states in para 18 that, “When a similar contention, that an Additional District Judge has no jurisdiction to entertain an application under Section 9 of the Act, was raised, in Globsyn Technologies Ltd. v. Eskaaycee Infosys [2004 (2) ALT 174 : MANU/AP/0970/2003] the High Court of Andhra Pradesh ruled thus:-

“12. The short question that falls for consideration is as to whether the Court of the learned VI-Additional District Judge is a Civil Court of a grade inferior to the Principal Civil Court. The Court of the Principal District Judge and the Court of VI Additional District Judge are of equal grade. The Court of the learned VI-Additional District Judge is not a court of a grade inferior to the Court of the Principal District Judge. The expression “Court of a grade inferior” is required to be understood in its proper context.

13. The dictionary meaning of inferior is “lower in any respect, subordinate, a person who is lower in rank or station”. According to Black’s Law Dictionary, inferior means “one who, in relation to another, has less power and is below him; one who is bound to obey another. The term may denote any Court subordinate to the chief appellate Tribunal in the particular judicial system [eg. Trial Court]; but it is also commonly used as the designation of a Court special, limited or statutory jurisdiction”.

14. I find it difficult to accept the submission of the learned Additional Advocate General that the Court of the learned VI Additional District Judge at Visakhapatnam is a Court of a grade inferior to the Principal District Judge’s Court. ……..””

While continuing in a similar vein, the Bench then also states in para 19 that, “A Division Bench of the Madhya Pradesh High Court also considered the same question pointedly in Madhya Pradesh State Electricity Board and another v. ANSALDO Energia, S.P.A. and another [AIR 2008 M.P. 328]. After making an elaborate survey of authorities taken by various High Courts on the point, approving the dictum in Globsyn, mentioned supra, it was held that, the Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Act. We are in respectful agreement with the above finding.”

Most significantly, the Bench then quite rightly points out in para 20 that, “In the context of the Kerala Civil Courts Act also such an argument of the learned counsel cannot hold good. Section 2 of the Civil Courts Act provides three category of positions namely, the court of a District Judge, the court of a Subordinate Judge and the court of a Munsiff. Section 3 provides for establishment of district court. Going by sub-section (2) of Section 3 of the Civil Courts Act, the Government shall establish a district court for each district and a Judge shall be appointed to such court. Section 4 provides for appointment of Additional District Judges. Under sub-section (1) of Section 4 when the state of business pending before a district court so requires, one or more Additional District Judges may be appointed to that court for such period as it deemed necessary. Sub-section (2) of Section 4 says that an Additional District Judge shall discharge all or any of the functions of the District Judge under this Act in respect of all matters which the District Judge may assign to him, or which under the provision of Section 7 may be instituted before him and in the discharge of those functions he shall exercise the same powers as the District Judge. When such additional district courts are established and Additional District Judges are appointed, sub-section (2) of Section 4 of the Civil Courts Act empowers the Additional District Judges so appointed with powers to discharge all the functions of the District Judges. It is very specific when it is provided that the Additional District Judge shall exercise the same powers as the District Judge. That is why it is stated that Principal District Judge is only first among equals among the District Judges in a district. In the circumstance, there is no jurisdictional error in Additional District Judges hearing petitions filed under the Act.”

Adding more to it, the Bench then states in para 21 that, “Arguments were also addressed stating that the award was given in total disregard of the time frame provided under Section 29-A of the Act. According to the learned counsel, the award is hit by subclause (4) of Section 29A of the Act. We are unable to subscribe this argument also. It is evident from the paper book produced by the learned counsel and also the records that, when two Arbitrators appointed by the parties had given divergent views, appointment of a third umpire became necessary. Accordingly, both the Arbitrators together, by letter dated 15.05.2017, nominated Sri.A.K. Rajeev, Advocate, Vadakara as the third umpire. The proceeding paper indicates that he had taken up the matter on 19.05.2017 and the impugned award was passed on 29.09.2018. No doubt such an award was not passed within a period of twelve months as provided under Section 29-A(1) of the Act. All the same, sub-clause (3) of Section 29-A provides that the parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months. Referring to paragraph 8 of the impugned award, the learned counsel for the respondent submitted that the third umpire proceeded with the matter, as consented by the parties, under sub-section (3) of Section 29-A. Relevant portion of the award indicates that, ‘there was some delay in proceeding with the matter partly attributable to his personal inconvenience and also due to the delay and laches on the part of the parties in submitting their statements and documents before him’.

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The claimant filed his statement along with the documents only on 02.04.2018 whereas the respondent filed his statement on 09.05.2018. It is further stated that on 09.05.2018, that is before the expiry of twelve months starting from 15.05.2017, both the parties were requested by him to extend their cooperation to complete the proceedings and make the award as early as possible and at any rate on or before 15.10.2018. According to him, they accepted and agreed for the same and cooperated with him for completing the arbitration proceedings. In other words, taking the date of commencement of the proceedings as 15.05.2017, before the expiry of twelve months both the parties consented to extend the period specified in sub-section (1) of Section 29-A for making the award and the award was passed on 29.09.2018 within a further period of six months from the date of giving the consent. Sitting in this jurisdiction, we do not find any reason to disbelieve the version of the Arbitrator and to strike off the proceedings under sub-section (4) of Section 29-A of the Act.”

For the sake of clarity, the Bench then states in para 22 that, “This is not a regular appeal as provided under Order XLI CPC or Section 5 of the High Court Act, but an appeal under Section 37 of the Act. While considering an application under Section 34 of the Act, the District Court has only supervisory jurisdiction. The jurisdiction of this Court under Section 37, at the tapering end of the proceedings, is still narrow and thin.”

Quite aptly, the Bench then observes in para 23 that, “It is the settled proposition of law that an Arbitrator is a Judge chosen by the parties and his decision is final. The court is not expected to appraise evidence as done by a regular court of appeal. In a case where the award contains reasons, interference would not be available within the jurisdiction of the court unless reasons are totally perverse or the award is based on wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and materials on record. Once it is found that the view of the Arbitrator is a plausible one, the court will refrain from interfering in the matter.”

It cannot be glossed over that the Bench then states in para 24 that, “In the decision reported in P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. (2012 (1) SCC 594 the Apex Court held that a court under Section 34(2) of the Act does not sit in appeal over the award of an Arbitral Tribunal by re-assessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. In the absence of any ground under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether any different decision can be arrived at. Similarly, in Sutlej Construction Ltd. v. Union Territory of Chandigarh [(2018) 1 SCC 718], while commenting against an order passed under Section 34 of the Act, the Hon’ble Supreme Court held that the Judge ought to have restrained himself from getting into the meanderings of evidence appreciation and acting like a second appellate court.”

No doubt, the Bench then seeks to point out in para 25 that, “Coming down to the jurisdiction under Section 37, it is clear that the court cannot travel beyond the restrictions laid down under Section 34 of the Act. The Hon’ble Supreme Court has held that the Court cannot undertake an independent assessment of the merits of the award and must only ascertain that the exercise of power under Section 34 has not exceeded the scope of the provisions; in case an arbitral award has been confirmed by the court under Section 34, in an appeal under Section 37 the appellate court must be extremely cautious and slow in disturbing such concurrent findings.”

Finally, the Bench then holds in para 26 that, “We have considered the contentions of the parties bearing in mind the restrictions imposed by the statute and also the caution sounded by the Apex Court. On an overall consideration of the entire circumstances, we are sure that the learned Additional District Judge has considered the award in proper perspective and reached a correct conclusion. We are of the definite view that overwhelming reasons are not made out warranting interference in appeal. Point is answered accordingly and the appeal is dismissed. No costs. Before parting with, we once again record our deep appreciation for the erudite and enlightening arguments raised before this Court by the learned counsel for the appellant as also the learned counsel for the respondent.”

In essence, the two Judge Bench of the Kerala High Court comprising of Justice K Haripal and Justice CT Ravikumar in their 26-page painstaking brilliant, brief and balanced judgment make the picture pretty clear on whether Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Arbitration and Conciliation Act. The Additional District Judge has jurisdiction to entertain a petition filed under Section 34 of the Arbitration and Conciliation Act and there is nothing wrong in doing so as this is permitted in law. Para 17 and para 20 explains this quite elaborately, explicitly, eloquently and elegantly and form the real backbone of this judgment which is par excellence.

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DISPOSE OF EXECUTION PROCEEDINGS WITHIN SIX MONTHS FROM THE DATE OF FILING: SC ISSUES DIRECTIONS TO REDUCE DELAY

In a suit for payment of money, before settlement of issues, the defendant may be required to disclose his assets on oath, to the extent that he is being made liable in a suit. The court may further, at any stage, in appropriate cases during the pendency of suit, using powers under Section 151 CPC, demand security to ensure satisfaction of any decree.

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While taking the right stand, the Supreme Court just recently on April 22, 2021 in a latest, landmark, laudable and learned judgment titled Rahul S Shah vs Jinendra Kumar Gandhi in Civil Appeal Nos. 1659-1660 of 2021 (@ Special Leave To Appeal Nos. 7965-7966/2020) and 2 Other Civil Appeals while issuing directions to reduce delays in the execution proceedings observed that an Executing Court must dispose of the Execution Proceedings within six months from the date of filing which may be extended only by recording reasons in writing for such delay. It must be mentioned here that the Bench of Apex Court headed by former CJI SA Bobde asked the High Courts to reconsider and update all the Rules relating to Execution of Decrees made under exercise of its powers under Article 227 of the Constitution of India and Section 122 of CPC, within one year of this order. The Bench also comprising of Justices L Nageswara Rao and S Ravindra Bhat observed that, “These directions are in exercise of our jurisdiction under Article 142 read with Article 141 and Article 144 of the Constitution of India in larger public interest sub-serve the process of justice so as to bring to an end the unnecessary ordeal of litigation faced by parties awaiting fruits of decree and in larger perspective affecting the faith of the litigants in the process of law.”

To start with, the ball is set rolling in para 2 wherein it is put forth that, “The present appeals arise out of the common judgment and order dated 16th January, 2020 of the Karnataka High Court which dismissed several Writ Petitions. The course of the litigation highlights the malaise of constant abuse of procedural provisions which defeats justice, i.e. frivolous attempts by unsuccessful litigants to putting up spurious objections and setting up third parties, to object, delay and obstruct the execution of a decree.”

While elaborating in detail, the Bench then observes in para 3 that, “The third respondent (hereafter referred to as ‘Narayanamma’) had purchased a property measuring 1 Acre (Survey No. 15/2) of Deevatige Ramanahalli, Mysore Road, Bengaluru (hereafter referred to as ‘suit property’) under the sale deed dated 17.03.1960. The suit land was converted and got merged in the municipal limits of Bengaluru and was assigned with Municipal Corporation No. 327 and 328, Mysore Road, Bengaluru. Narayanamma sold 1908 square yard of the suit property in Municipal Corporation (Survey No. 327) to 2nd and 3rd respondents (hereafter referred to ‘Jitendra’ and `Urmila’) under a sale deed dated 13.05.1986. This was demarcated with the sketch annexed to the sale deed. The adjacent portion of property, Survey No. 327 was sold to Shri Moolendra Kumar Gandhi and Smt. Baby Gandhi by another sale deed dated 13.05.1986. This property was also demarcated in the sketch and clearly shows its dimensions and boundaries annexed to the sale deed. Therefore, the first two respondents, Shri Moolendra Kumar Gandhi and Smt. Baby Gandhi became absolute owners of the suit property with the totally admeasuring of 3871 square yards. Thus, Narayanamma had sold about 34,839 square feet of the property out of 1 Acre land (43,860 square feet) owned by her. Subsequently, after the sale of the major portion of the said property to the first two respondents and their brother, Narayanamma who is the mother of A. Ramachandra Reddy the fourth respondent (hereafter called “the vendors”) filed a suit1 for declaration that the two sale deeds in favour of the first two respondents (also called “purchasers” or “decree-holders”) as well as against Shri Moolendra Kumar Gandhi etc. were void. The vendors and Shri Anjan Reddy (deceased respondent no. 8) on 25.03.1991 executed a registered partition deed. This document did not advert to the sale deed executed in favour of the purchasers and Shri Moolendar Kumar Gandhi and Smt. Baby Kumari Gandhi. The purchasers were restrained by an injunction from entering the property which Narayanamma claimed was hers.”

To put things in perspective, the Bench then points out in para 4 that, “During the pendency of the suit for declaration, the first purchasers filed two suits (O.S. Nos. 9077/ 1996 and 9078/1996) against the vendors for possession. During the pendency of these suits on 11.02.2000 by two separate sale deeds Shri Dhanji Bhai Patel and Shri Govind Dhanji Patel purchased 7489 square feet and 7650 square feet respectively, out of the residue of the property owned by Narayanamma. While so, during the pendency of the suits instituted by the purchasers, the vendors again sold the suit property i.e. the land to the present appellant (Rahul Shah) and three others (Respondents no. 5-7) by four separate sale deeds. (Dated 09.11.2001, 12.12.2001, 05.12.2002 and 20.10.2004) In the possession suits the vendors filed counter claims (dated 18.04.1998). During the pendency of proceedings the purchasers sought for transfer and mutation of property in their names which were declined by the Municipal Corporation; this led to their approaching the High Court in Writ Petition No. 19205/1992 which was disposed of with a direction (Dated 05.11.1998) that after adjudication of the injunction suit (filed by the vendors) the khata be transferred.”

Furthermore, the Bench then states in para 5 that, “The proceedings in the injunction suit filed by the vendors and the other two suits filed by the purchasers were clubbed together. The City Civil Judge, Bangalore by a common judgment dated 21.12.2006 allowed and decreed the suits for possession preferred by the purchasers and dismissed the vendor’s suit for injunction. The decree holders preferred execution proceedings. (Execution Case Nos. 458-459/2007). They filed applications under Order XXI Rule 97 of the Code of Civil Procedure (CPC) since the judgment debtors/vendors had sold the property to the appellant and respondents no. 4 to 7. The appellant i.e. a subsequent purchaser filed objections.”

As it turned out, the Bench then enunciates in para 6 that, “During the pendency of the proceedings the front portion of the suit property bearing Municipal Corporation No. 327, Mysore road, Bangalore became the subject matter of the acquisition for the Bangalore Metro Project. The decree holders (the first two respondents) preferred objections to the proposed acquisition and further claimed the possession. In the meanwhile, aggrieved by the dismissal of the suit and decreeing the suit for possession, Narayanamma filed first appeals in the High Court (R.F.A. No. 661-663/ 2007). In these proceedings it was brought to the notice of the High Court that the suit properties had been sold to the appellant and respondents no. 4 to 7. By an order dated 10.04.2008, the High Court directed the vendors to furnish particulars with respect to the sale, names of the purchaser and area sold etc. By common judgment dated 22.10.2009 the High Court dismissed all the appeals pending before it. The Special Leave Petition preferred by the vendors (S.L.P. (C) Nos. 16349-13651/2010) was also dismissed by this Court on 23.07.2010.”

To be sure, the Bench then points out in para 12 that, “All these orders led to initiation of five writ petitions on behalf of the appellant, and the vendors etc. Three First appeals (R.F.A. Nos. 441, 468 and 469/2017) were preferred by obstructers challenging the decision of the Executing Court dated 15.02.2017. By impugned common order all these Writ Petitions and appeals were dismissed.”

Quite remarkably, the Bench then stipulates in para 41 that, “Having regard to the above background, wherein there is urgent need to reduce delays in the execution proceedings we deem it appropriate to issue few directions to do complete justice. These directions are in exercise of our jurisdiction under Article 142 read with Article 141 and Article 144 of the Constitution of India in larger public interest to sub-serve the process of justice so as to bring to an end the unnecessary ordeal of litigation faced by parties awaiting fruits of decree and in larger perspective affecting the faith of the litigants in the process of law.”

Most remarkably, the Bench then in para 42 which forms the cornerstone of this commendable judgment very rightly holds that, “All Courts dealing with suits and execution proceedings shall mandatorily follow the below-mentioned directions:

1. In suits relating to delivery of possession, the court must examine the parties to the suit under Order X in relation to third party interest and further exercise the power under Order XI Rule 14 asking parties to disclose and produce documents, upon oath, which are in possession of the parties including declaration pertaining to third party interest in such properties.

2. In appropriate cases, where the possession is not in dispute and not a question of fact for adjudication before the Court, the Court may appoint Commissioner to assess the accurate description and status of the property.

3. After examination of parties under Order X or production of documents under Order XI or receipt of commission report, the Court must add all necessary or proper parties to the suit, so as to avoid multiplicity of proceedings and also make such joinder of cause of action in the same suit.

4. Under Order XL Rule 1 of CPC, a Court Receiver can be appointed to monitor the status of the property in question as custodia legis for proper adjudication of the matter.

5. The Court must, before passing the decree, pertaining to delivery of possession of a property ensure that the decree is unambiguous so as to not only contain clear description of the property but also having regard to the status of the property.

6. In a money suit, the Court must invariably resort to Order XXI Rule 11, ensuring immediate execution of decree for payment of money on oral application.

7. In a suit for payment of money, before settlement of issues, the defendant may be required to disclose his assets on oath, to the extent that he is being made liable in a suit. The Court may further, at any stage, in appropriate cases during the pendency of suit, using powers under Section 151 CPC, demand security to ensure satisfaction of any decree.

8. The Court exercising jurisdiction under Section 47 or under Order XXI of CPC, must not issue notice on an application of third-party claiming rights in a mechanical manner. Further, the Court should refrain from entertaining any such application(s) that has already been considered by the Court while adjudicating the suit or which raises any such issue which otherwise could have been raised and determined during adjudication of suit if due diligence was exercised by the applicant.

9. The Court should allow taking of evidence during the execution proceedings only in exceptional and rare cases where the question of fact could not be decided by resorting to any other expeditious method like appointment of Commissioner or calling for electronic materials including photographs or video with affidavits.

10. The Court must in appropriate cases where it finds the objection or resistance or claim to be frivolous or mala fide, resort to Sub-rule (2) of Rule 98 of Order XXI as well as grant compensatory costs in accordance with Section 35A.

11. Under section 60 of CPC the term “…in name of the judgment- debtor or by another person in trust for him or on his behalf” should be read liberally to incorporate any other person from whom he may have the ability to derive share, profit or property.

12. The Executing Court must dispose of the Execution Proceedings within six months from the date of filing, which may be extended only by recording reasons in writing for such delay.

13. The Executing Court may on satisfaction of the fact that it is not possible to execute the decree without police assistance, direct the concerned Police Station to provide police assistance to such officials who are working towards execution of the decree. Further, in case an offence against the public servant while discharging his duties is brought to the knowledge of the Court, the same must be dealt stringently in accordance with law.

14. The Judicial Academies must prepare manuals and ensure continuous training through appropriate mediums to the Court personnel/staff executing the warrants, carrying out attachment and sale and any other official duties for executing orders issued by the Executing Courts.”

Going forward, the Bench then observes in para 43 that, “We further direct all the High Courts to reconsider and update all the Rules relating to Execution of Decrees, made under exercise of its powers under Article 227 of the Constitution of India and Section 122 of CPC, within one year of the date of this Order. The High Courts must ensure that the Rules are in consonance with CPC and the above directions, with an endeavour to expedite the process of execution with the use of Information Technology tools. Until such time these Rules are brought into existence, the above directions shall remain enforceable.”

Finally, the Bench then holds in para 44 that, “The appeals stand dismissed.”

In sum, these above mentioned directions laid down by the three Judge Bench of Apex Court headed by former CJI Sharad Arvind Bobde and also comprising of Justice L Nageswara Rao and Justice S Ravindra Bhat must be followed by all courts dealing with suits and execution proceedings. Until the rules are made these directions shall remain enforceable as has been very rightly laid down also. All courts must comply with it accordingly! No denying it!

The writer is an Advocate.

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NABFID ACT, 2021: ANALYSING THE CHALLENGES AHEAD

Sine qua non, the banks and other financial institutions must comply with statutory norms and requirements framed by the supervisory authorities. It is imperative to hire external auditors to scrutinise the working of the institution and book members if they indulge in financial malpractices or breach regulatory and statutory code of conduct.

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Infrastructure development of any nation plays crucial role in attracting foreign investments and boosts the economic development of the country. Improvement in Infrastructure financing facilitates rapid economic growth. Prime Minister Narendra Modi in his 2019 Independence Day speech laid the foundation of National Infrastructure Pipeline (NIP) for financial year 2019 to financial year 2025 with the purpose of injecting almost Rs100 lakh crore into the social and economic infrastructure projects of the country such as roads, rail, ports, energy, housing, water etc.Presently, around 7,400 projects have been included so far under NIP within more than 30 sub-sectors out of which over 1800 projects have already been sanctioned and are now under the developmental phase.

Infrastructure projects involve high capital investments, high risks and long gestation periods. Owing to large capital investments in these projects, the major focus of lenders is on revenue generation. Before financing such projects the lenders analyse the potential of such projects considering commercial, environmental, regulatory, engineering and financial aspects that would govern the implementation of such projects. With the aim of providing the facility of Infrastructure Financing, the government of India has established a new Development Financial Institution which will go by the name of The National Bank for Financing Infrastructure and Development (hereinafter referred to as NaBFID).

INCEPTION OF DFI

The inception of Development Financial Institution (DFI) can be traced back to the time of India’s independence. In the year 1948, India’s first DFI, Industrial Finance Corporation of India (ICFI) was set up. Industrial Credit and Investment Corporation of India Limited (ICICI) — nation’s first DFI in the private sector, was established in 1955. An initiative of the World Bank, ICICI Bank Limited was initially established prior to ICFI in 1944 and it was only in 2000; that both ICICI Limited and ICICI Bank Limited agglutinated into the first Universal bank of India. Industrial Development Bank of India (IDBI) was set up in 1964 under RBI and converted to a universal bank in 2003. All these primary financial institutions were responsible for assisting long-term financing in the industrial sector of the economy of the country.

Some sector- specific Development Banks such as EXIM Bank, National Housing Bank and Housing and Urban Development Corporations followed by State- specific DFIs came up in the 70s and 80s with the objective of providing concessional lending to small and medium enterprises. Yet, in early 1990, the financial reforms drastically compressed and condensed the role of DFIs in financing the industrial sector by drawing out concessional funding through Long Term Operation (LTO) funds from RBI thereby making it impractical and non- sustainable. As a result, ICICI and IDBI were transmuted into Commercial banks and IIBI was shut down.

The idea of DFI was again resuscitated in 2017 by RBI in an attempt to cater long-term financing needs of the economy. Finance Minister Nirmala Sithraman while presenting the Union Budget 2021-22 stated that, India’s Infrastructure needs long term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Therefore, India will set up a new DFI called the National Bank for Financing Infrastructure and Development.

STATUS QUO

The National Bank for Financing Infrastructure and Development (hereinafter referred to as NaBFID) bill was introduced in Lok Sabha on 22nd March, 2021 and was passed on 23rd March, 2021. The bill was subsequently passed in Rajya Sabha on 25th March, 2021. This bill states that the institution established by it will be the principal DFI for infrastructure financing. The institution is set up as a corporate body with authorised share capital of one lakh crore rupees. Its shares will be held by:

1. Central Government

2. Multilateral Institutions

3. Insurers

4. Sovereign Wealth Fun

5. Pension Funds

6. Financial Institutions

7. Banks

8. Any other institution as the central government prescribes.

The central government will own 100% shares initially but they can in the future be reduced to at least 26%. The Bill establishes NBFID as a company with share capital amounting to one lakh crore rupees. NBFID has been set up with the primary motive of lending, investing or to attract investments for infrastructure projects located wholly or partially in India. This institution will also facilitate the market for bonds and derivatives for development financing.

The Institution will discharge two types of functions: (i) Financial Objective, (ii) Developmental Objective. Financial Objectives include directly or indirectly lending, investing or attracting investments for projects entirely or partly within Indian territory whereas developmental objective facilitates the development of market for bonds, loans and derivatives for infrastructure financing.

Board of Directors will form the governing body of NBFID and the Chairperson will be appointed by the central government in consultation with the Reserve Bank of India. Central Government will constitute a body that will recommend candidates suitable for the post of Managing Directors and Deputy Managing Directors. Independent Directors will be appointed based on the recommendations of the internal committee.

CRITICAL ISSUES

The weakening of growth impulses and subdued credit off-take are playing out, with sporadic credit default events and incidents of frauds exacerbating the reluctance to lend which is starkly evident in the slowdown of flow of resources, both from banks and non-banks to the commercial sector in the first half of 2019-20. Frauds can occur on account of overlooking regulatory guidelines and/ or on lapses in internal risk governance, compliance, and audit functions. In particular, lack of prudent internal control mechanisms and surveillance systems is limiting their ability to prevent frauds. The increased Incidents of forgery and fraud not only result in financial loss to the institutions but additionally disturb the fiduciary relationship which exists between the customer and the institution.

Considering the business shambles like IL&FS, RBI has come up with stringent set of rules for the auditors of financial institutions and banks respectively. As per the reports, the primary function of fraud management, monitoring and investigation must be assigned to the Audit Committee of the Board. Thus, it is clearly evident that auditing process should be free from the other pillar of the government namely the legislature yet under their perusal. The bone of contention of lack of parliamentary oversight of a DFI was raised by members of Parliament while debating on the National Bank for Financing Infrastructure and Development (NaBFID) Bill, 2021.

While referring to Section 26 of the bill, it was contended that DFI would remain outside the purview of Comptroller and Auditor General (CAG), Central Vigilance Commission (CVC) and Central Bureau of Investigation (CBI). Since these development institutions will be expending huge amount of government funds, the inspection by these 3Cs becomes imperative. Opposing these contentions, Finance Minister Nirmala Sitharaman said, “Every year audited accounts (of this bank) will come to each House of Parliament….so Parliament oversight (of the institution) is in-built in the bill.” Section 26 of the Act provides, “The Institution shall furnish to the Central Government and the Reserve Bank within four months from the date on which its accounts are closed and balanced, a copy of its balance-sheet and accounts together with a copy of the auditor’s report and a report of the working of the Institution during the relevant year, and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament.”

Section 6 of the Act states the procedure for appointment of board of directors. According to the section, the members of the board will be appointed by the Central Government which means there are chances of political biasness for infrastructure financing. The political party in power may then appoint its own people to the board and may then favour its own people by financing their projects thereby making it politically biased.

Secondly, Section 35 states that before initiating any investigation against the employees of the institution prior sanction of the Central Government is necessary. Prior sanction is mandatory for Courts as well before taking cognizance of the offences under any law against the employees of NBFID. Now, this provision makes the employees of the institution immune from legal proceedings and as has been mentioned under section 6, the government will appoint these employees and prior sanction from the government will lead to defiance of the principles of accountability as then they will not be answerable for their actions. This Section will help such employees evade their responsibilities and consequently there will be no transparency thereby going against public welfare.

CONCLUDING REMARKS

Sine qua non, the banks and other financial institutions must comply with statutory norms and requirements framed by the supervisory authorities. It is imperative to hire external auditors to scrutinize the working of the institution and book members if they indulge in financial malpractices or breach regulatory and statutory code of conduct. Thus, there is a need for an independent and efficacious audit system to ensure sound health of these institutions as per the recommendations of the Expert Committee set up by the Reserve Bank (Chairman: Shri Y H Malegam).

India is striving towards becoming a major economic power and in that direction government is taking every possible step to strengthen up the economy. By establishing this DFI the government is trying to improve the infrastructure of the country as any country’s infrastructure development is a litmus test of knowing whether the country is financially sound or not. But the government should also have considered that by only establishing the new institution this objective cannot be achieved as what’s more important is the implementation and the mechanism of the new institution and therefore, on reading of section 6 and section 35 of the Act we can see that there will arise issues on the governance of the institution. The governance of DFIs matters a lot since these are public financial institutions dealing with public money. Therefore, it is of utmost importance that these DFIs should be transparent in their operations and accountable to the public.

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DRUG ABUSE IN INDIA: POLICY REFINEMENT FOR EFFICIENT CONTROL

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“Drug abuse is a social evil. It destroys vitals not only of the society but also adversely affects the economic growth of the country…..” Y K Sabarwal, Former Chief Justice of India (2006)

It is no secret that despite being illegal, marijuana, also known as cannabis, can be availed very easily. As per the Indian law, the consumption or possession of marijuana is a criminal act and those found guilty can face a jail term up to 10 years or a fine of Rs. 1 lakh or both. When the Britishers arrived in India, they found the widespread trade of cannabis and its massive consumption as a source of revenue. Accordingly, they had levied a tax on it and were the first one to pass a law in connection with the usage of marijuana in 1838, 1871, and further in 1877.

The vogue of substance abuse in young generation has assumed alarming dimensions in India. Changing cultural values, increasing economic stress and dwindling supportive bonds are leading to initiation of substance abuse. According to the World Health Organization (WHO) substance abuse is persistent or sporadic drug use inconsistent with or unrelated to acceptable medical practice. Drug addiction causes immense human distress and the illegal production and distribution of drugs have spawned crime and violence worldwide. Today, there is no part of the world that is untouched from the curse of drug trafficking and drug addiction. Millions of drug addicts, all over the world, are leading miserable lives, between life and death. India too is caught in this vicious cycle of drug abuse, and the number of drug addicts is gradually increasing. Cannabis, heroin, and Indian-produced pharmaceutical drugs are the most frequently abused drugs in India. Cannabis products, often called charas, bhang, or ganja, are massively abused throughout the country

From traditional plant-based drugs such as cannabis, cocaine and heroin to synthetic drugs such as tramadol, consumption of narcotic substances in India has increased manifold over years, pushed through a strong network of drug cartels. In terms of users, India’s illicit drug markets are mostly dominated by cannabis and opioids.

According to a 2019 study, National Survey on Extent and Pattern of Substance Abuse in India, by the Ministry of Social Justice and Empowerment, there are nearly three crore cannabis users in India.

THE CONSTITUTIONAL APPROACH AND DRUG POLICY

India’s approach towards Narcotic Drugs and Psychotropic Substances is enshrined in Article 47 of the Constitution of India which mandates that the ‘State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health’. Article 47, which is based on Gandhian principle, provides social security and justice to the citizens by enumerating duties of the state which are important for achieving the goal of a better society, and it includes better conditions of living, access to healthy and nutritious food and public health and hygiene. As intoxicating drinks and drugs are injurious to health and therefore it has been expressly provided by article 47 that state should take steps to reduce or stop the consumption of such injurious drinks or drugs. The same principle of preventing use of drugs except for medicinal use was also adopted in the three international conventions on drug related matters, viz., Single Convention on Narcotic Drugs, 1961, Convention on Psychotropic Substances, 1971 and the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988. India has signed and ratified these three conventions. India’s commitment to prevention of drug abuse and trafficking predates the coming into force of the three conventions.

THE NARCOTIC DRUGS AND PSYCHOTROPIC SUBSTANCES ACT, 1985: A CRITICAL ANALYSIS

The NDPS Act prohibits cultivation, production, possession, sale, purchase, trade, import, export, use and consumption of narcotic drugs and psychotropic substances except for medical and scientific purposes in accordance with the law. Preparation to commit certain offences is punishable as is attempt. Accessory crimes of aiding and abetting and criminal conspiracy attract the same punishment as the principal offence.

The NDPS Act lays down the procedure for search, seizure and arrest of persons in public and private places. Safeguards such as prior recording of information, notifying a superior, limiting powers of arrest to designated officers, informing the person being searched of her/his rights have been scrupulously enforced by the courts, in light of the stringent punishments prescribed under the Act. At the same time, norms for investigation and evidence are permissive and have been interpreted in a manner that prejudices the accused. In 1988, the NDPS Act was supplemented by the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act to provide for preventive detention of people suspected or accused of involvement in drug trafficking

Adolescents are adventurous, self confident and often do new things to show that they can. By and large, this is the age at which most addicts get initiated into drugs. Section 32B of the NDPS Act lists ‘the fact that the offence is committed in an educational institution or social service facility or in the immediate vicinity of such institution or facility or in other place to which school children and students resort for educational, sports and social activities’ as one of the aggravating factors which may be considered by the Court for imposing higher than the minimum penalty prescribed for the offence.

THE JUDICIAL RESPONSE

The Indian judiciary is considered as one of the most proactive adjudicatory wings when it comes to judicial review of the Indian legislations and policies. In 2008, a division bench of the Supreme Court of India in the case of ‘E Michael Raj v Intelligence Bureau, Narcotics Control Bureau had ruled that punishment under the NDPS Act will depend on the quantity of offending drug present in a consignment seized by the police. Five grams of heroin would classify as a small quantity while 250 grams of the same contraband would be considered a commercial quantity attracting a punishment of up to 20 years of imprisonment. Drug peddlers would sell heroin mixed with caffeine, chalk powder, zinc oxide, to get around the law and escape with minor sentences. Reversing the 2008 decision of E Michael Raj, a three-judge bench of Justices Arun Mishra, Indira Banerjee and MR Shah in the case of Hira Singh And Another v. Union Of India And Another held that, “The problem of drug addicts is international and the drug mafia are working throughout the world. It is a crime against society and it has to be dealt with an iron hand. The use of drugs by young people in India has increased. The drugs are being used for weakening the nation.” Therefore, if it is accepted that it is only the actual content by weight of offending drug which is relevant for the purpose of determining whether it is a small quantity or commercial quantity, in that case, the object and purpose of enactment of NDPS Act would be frustrated,” the court said.

The evil of drug abuse not only creates shackles on the very idea of a better life but it also acts as an impediment to the growth of the country. The legal framework which is present to counter the abuse of drugs is based on a solid foundation. As far as the drug law enforcement is concerned, the Narcotics Control Bureau (NCB) has been compiling statistics on seizures, etc. from various State and Central law enforcement agencies and has been compiling the National Drug Enforcement Statistics (NDES) every month. These statistics represent the drug law enforcement as well as the comparative performance of various agencies and the compilation need to be done within the appropriate time so as to comply with the provisions of the Narcotic Drugs and Psychotropic Substances Act (NDPS), 1985.

THE AMELIORATIVE APPROACH FOR EFFICIENCY

In 1988, the Prevention of Illicit Traffic in NDPS (PITNDPS) Act was enacted to provide for detention in certain cases for the purpose of preventing illicit traffic in narcotic drugs and psychotropic substances and for matters connected therewith. The act may be used to secure preventive detention of the major drug traffickers. As the drug traffickers deal in large volumes, and earn substantially through trafficking, every effort should be made by the concerned organization to identify, seize and freeze their properties and follow up the case vigorously till the properties are forfeited. Moreover, the need of the hour is to improve the quality of estimates and statistical reports on narcotic drugs and ensure that these reports are submitted in a timely manner, including the reports on consumption of narcotic drugs, in conformity with the definition of “consumption” in the Single Convention on Narcotic Drugs, 1961, as amended by the 1972 Protocol.

Efforts have to be made to keep up and further strengthen the mechanism for collection of statistics on drug law enforcement by the NCB. The mechanism of collection of statistics on legitimate manufacture, trade, use, consumption and stocks of narcotic drugs, psychotropic substances and precursors should be strengthened and streamlined so as to ensure strict compliance of the Narcotic Drugs and Psychotropic Substances Act, 1985.

Apart from this, the authorities must strive for the development of a mechanism to regularly collect statistics on drug and substance abuse in the country and to use such statistics as a yardstick to measure the effect of various interventions.

Efforts have to be made to keep up and further strengthen the mechanism for collection of statistics on drug law enforcement by the NCB. The mechanism of collection of statistics on legitimate manufacture, trade, use, consumption and stocks of narcotic drugs, psychotropic substances and precursors should be strengthened and streamlined so as to ensure strict compliance of the Narcotic Drugs and Psychotropic Substances Act, 1985.

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RIP VAN WINKLES HAVE A PLACE IN LITERATURE, NOT IN LAW, SAYS ALLAHABAD HIGH COURT

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In a latest, laudable, landmark and learned judgment titled Ganga Sahay & Ors. v. Deputy Director of Consolidation & 14 Ors. in Writ- B No.- 302 of 2021 delivered recently on March 18, 2021, the Allahabad High Court has most rightly, remarkably and rationally observed that the rule of delay and laches as a policy of litigative repose, creates certainty in legal relations and curtails fruitless litigation thereby ensuring that the administration of justice is not clogged by pointless litigation. The observation came from a Single Judge Bench of Allahabad High Court comprising of Justice Ajay Bhanot while dismissing a writ petition filed after a delay of more than 4 years, by observing it to be barred by the rule of delay and laches without there being any satisfactory explanation as to the delay. Justice Ajay Bhanot has done certainly the right thing and has thus once again only reiterated what is well known that a party who does not care in filing the petition in time and wakes up after a long period of time without any reasonable cause is bound to be held barred to file petition after the lapse of a certain period of time as we see in this notable case also!

Needless to say, as goes the well known legal maxim also which is titled “Vigilantibus Non Dormientibus Jura Subveniunt” which means that, “The law assists only those who are vigilant, and not those who sleep over their rights.” There can be no denying it! It must also be mentioned here that this famous legal maxim makes it amply clear that it is the obligation of individuals to not only be aware of their rights under the law, but also to be vigilant while exercising or using the same. If they are not vigilant then they are bound to pay a heavy price for it as we see in this case also where the petitioner’s claim is rejected for not filing the petition well within time! We even see in the Limitation Act of 1963 that if the suffered/aggrieved party does not file a suit for relief within the stipulated period, for the breach of his rights, then it cannot be claimed at a later stage.

To start with, the ball is set rolling in para 1 of this notable judgment wherein it is observed that, “Petitioners have assailed the order dated 09.09.2016. The petitioners were not parties in the proceedings before the courts below. The petitioners claim inheritance from one Ram Avtar (since deceased) who had allegedly executed a Will deed in favour of the petitioners. The authenticity of the Will deed and rights of petitioners as successors have first to be approved by the competent court before the petitioners can maintain any petition on behalf of the deceased Ram Avtar. It could not be pointed out what heritable rights of the petitioners devolving from Ram Avtar (since deceased) are being canvassed before this Court.”

As we see, it is then pointed out in para 2 that, “Learned Standing Counsel raises a preliminary objection to the maintainability of the writ petition. He submits that the writ petition is barred by delay and laches and the petitioner has approached this Court after a delay of more than four years.”

To put things in perspective, the Bench then very rightly maintains in para 3 that, “Clearly, the writ petition is barred by delay and laches. The petitioner has approached this Court after more than four years. There is no satisfactory explanation for laches and the delay in filing the writ petition on the part of the petitioner. Further third party rights have been entrenched. The law has long set its face against indolent litigants who approach this Court after a long delay.”

Needless to state, it is then underscored in para 4 that, “The courts have consistently observed that delay and laches on part of the litigant will disentitle him to any relief. In this regard the Hon’ble Supreme Court has settled the law with clarity and observed it with consistency.”

Furthermore, it is then enunciated in para 5 that, “The line of authorities on this point are consistent and long. The discussion will benefit from the authorities in point.”

While citing the relevant case law, the Bench then seeks to substantiate its reasonable stand by pointing out in para 6 that, “The Hon’ble Supreme Court in R & M Trust Vs. Koramangala Residents Vigilance Group and others reported at 2005 (3) SCC 91 held thus:-

“There is no doubt that delay is a very important factor while exercising extraordinary jurisdiction under Article 226 of the Constitution. We cannot disturb the third party interest created on account of delay. Even otherwise also why Court should come to rescue of person who is not vigilant of his rights.””

While citing yet another relevant case law, it is then pointed out in para 7 that, “The Hon’ble Supreme Court in Maharashtra State Road Transport Corporation Vs. Balwant Regular Motor Service reported at AIR 1969 SC 329 held thus:-

“Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”

While continuing in a similar vein, the Bench then makes it a point to mention in para 8 that, “A similar sentiment was echoed by the Hon’ble Supreme Court in Shiv Dass Vs. Union of India reported at 2007 (9) SCC 274, the Hon’ble Supreme Court opined as under:-

“The High Court does not ordinarily permit a belated resort to the extraordinary remedy because it is likely to cause confusion and public inconvenience and bring in its train new injustices, and if writ jurisdiction is exercised after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on third parties. It was pointed out that when writ jurisdiction is invoked, unexplained delay coupled with the creation of third party rights in the meantime is an important factor which also weighs with the High Court in deciding whether or not to exercise such jurisdiction.”

For esteemed readers exclusive benefit, it must be mentioned here that it is then pointed out in para 9 that, “When the issue of delay and laches came up before the Hon’ble Supreme Court in Shankara Co-op. Housing Society Ltd. Vs. M. Prabhakar and ors. reported at 2011 (5) SCC 607, Hon’ble Supreme Court reiterated settled position of law and confirmed the well established criteria which has to be considered before exercise of discretion under Article 226 of the Constitution of India. The relevant portion is extracted herein below:-

“53. The relevant considerations, in determining whether delay or laches should be put against a person who approaches the writ court under Article 226 of the Constitution is now well settled. They are: (1) there is no inviolable rule of law that whenever there is a delay, the court must necessarily refuse to entertain the petition; it is a rule of practice based on sound and proper exercise of discretion, and each case must be dealt with on its own facts. (2) The principle on which the court refuses relief on the ground of laches or delay is that the rights accrued to others by the delay in filing the petition should not be disturbed, unless there is a reasonable explanation for the delay, because court should not harm innocent parties if their rights had emerged by the delay on the part of the Petitioners. (3) The satisfactory way of explaining delay in making an application under Article 226 is for the Petitioner to show that he had been seeking relief elsewhere in a manner provided by law. If he runs after a remedy not provided in the Statute or the statutory rules, it is not desirable for the High Court to condone the delay. It is immaterial what the Petitioner chooses to believe in regard to the remedy. (4) No hard and fast rule, can be laid down in this regard. Every case shall have to be decided on its own facts. (5) That representations would not be adequate explanation to take care of the delay.”

While continuing further, the Bench then also points out in para 10 that, “The Hon’ble Supreme Court also noticed the ingenuous devices adopted by unscrupulous litigants to tide over the delay and laches on part of such litigants. One such commonly used device is by filing a representation to the authorities after a long delay. Such litigants then approach the Court with an innocuous prayer to decide the representation. Once such representation is decided in compliance of orders of the court, it is claimed that a fresh cause of action has arisen. Stale wine does not become fresh in a new bottle. The Hon’ble Supreme Court saw through the designs of such litigants and foiled their intent in no uncertain terms.”

Be it noted, it is then very aptly pointed out in para 11 that, “The Hon’ble Supreme Court considered this issue in C. Jacob Vs. Director of Geology & Min. Indus. Est. and another reported at 2008 (10) SCC 115. The law laid down by the Hon’ble Supreme Court would guide the fate of the case. The relevant extract of the judgment is reproduced hereunder for ease of reference :-

“6. Let us take the hypothetical case of an employee who is terminated from service in 1980. He does not challenge the termination. But nearly two decades later, say in the year 2000, he decides to challenge the termination. He is aware that any such challenge would be rejected at the threshold on the ground of delay (if the application is made before Tribunal) or on the ground of delay and laches (if a writ petition is filed before a High Court). Therefore, instead of challenging the termination, he gives a representation requesting that he may be taken back to service. Normally, there will be considerable delay in replying such representations relating to old matters. Taking advantage of this position, the ex-employee files an application/writ petition before the Tribunal/High Court seeking a direction to the employer to consider and dispose of his representation. The Tribunals/High Courts routinely allow or dispose of such applications/petitions (many a time even without notice to the other side), without examining the matter on merits, with a direction to consider and dispose of the representation. The courts/tribunals proceed on the assumption, that every citizen deserves a reply to his representation. Secondly they assume that a mere direction to consider and dispose of the representation does not involve any ‘decision’ on rights and obligations of parties. Little do they realize the consequences of such a direction to ‘consider’. If the representation is considered and accepted, the ex-employee gets a relief, which he would not have got on account of the long delay, all by reason of the direction to ‘consider’. If the representation is considered and rejected, the ex-employee files an application/writ petition, not with reference to the original cause of action of 1982, but by treating the rejection of the representation given in 2000, as the cause of action. A prayer is made for quashing the rejection of representation and for grant of the relief claimed in the representation. The Tribunals/High Courts routinely entertain such applications/petitions ignoring the huge delay preceding the representation, and proceed to examine the claim on merits and grant relief. In this manner, the bar of limitation or the laches gets obliterated or ignored.””

It is also worth noting that no differently, it is then also stated in para 12 that, “A similar view was taken by the Hon’ble Supreme Court in S.S. Rathore Vs. State of Madhya Pradesh reported at 1989 (4) SCC 582. The relevant extract of the judgment is reproduced hereunder for ease of reference :-

“It is proper that the position in such cases should be uniform. Therefore, in every such case only when the appeal or representation provided by law is disposed of, cause of action shall first accrue and where such order is not made, on the expiry of six months from the date when the appeal was filed or representation was made, the right to sue shall first accrue. Submission of just a memorial or representation to the Head of the establishment shall not be taken into consideration in the matter of fixing limitation.””

Most significantly, what forms the cornerstone of this worth emulating judgment is then stated quite elegantly, effectively and eloquently in para 13 that, “Law has long set its face against delay in approaching the court. The courts have consistently declined to condone the delay and denied relief to litigants who are guilty of laches. Litigants who are in long slumber and not vigilant about their rights are discouraged by the courts. Belated claims are rejected at the threshold. Rip Van Winkles have a place in literature, but not in law.”

No less significant is what is then stated in para 14 that, “All this is done on the foot of the rule of delay and laches. Statutes of limitation are ordained by the legislature, rule of laches was evolved by the courts. Sources of the law differ but the purpose is congruent. Statutes of limitation and the law of delay and laches are rules of repose.”

To be sure, it is then also postulated in para 15 that, “The rule of laches and delay is founded on sound policy and is supported by good authority. The rule of laches and delay is employed by the courts as a tool for efficient administration of justice and a bulwark against abuse of process of courts.”

Going ahead, it is then stated in para 16 that, “Some elements of public policy and realities of administration of justice may now be considered.”

While explaining why the rule of laches and delay is strictly adhered to by courts, the Bench then minces no words to hold in para 17 that, “While indolent litigants revel in inactivity, the cycle of life moves on. New realities come into existence. Oblivious to the claims of the litigants, parties order their lives and institutions their affairs to the new realities. In case claims filed after inordinate delay are entertained by courts, lives and affairs of such individuals and institutions would be in a disarray for no fault of theirs. Their lives and affairs would be clouded with uncertainty and they would face prospects of long and fruitless litigation.”

Truth be told, it is then further expounded in para 18 that, “The delay would entrench independent third party rights, which cannot be dislodged. The deposit of subsequent events obscures the original claim and alters the cause itself. The refusal to permit agitation of stale claims is based on the principle of acquiescence. In certain situations, the party by its failure to raise the claim in time waives its right to assert it after long delay.”

Not stopping here, it is then also put forth in para 19 that, “The rule of delay and laches by preventing the assertion of belated claims puts to final rest long dormant claims. This policy of litigative repose, creates certainty in legal relations and curtails fruitless litigation. It ensures that the administration of justice is not clogged by pointless litigation.”

What’s more, it is then most aptly stated in para 20 that, “The above stated position of law on the question of delay and laches on part of the petitioners, controls the facts of the case. There is no satisfactory explanation of the delay in the writ petition. The explanation for laches is self serving and lacks credibility is accordingly rejected. The writ petition is barred by delay and laches and is not liable to be entertained.”

Finally, it is then held in the last para 21 that, “The writ petition is dismissed.”

To conclude, Justice Ajay Bhanot of Allahabad High Court has done certainly the right thing giving the right reasons for holding so and has thus once again only reiterated what is well known that a party who does not care in filing the petition in time and wakes up after a long period of time without any reasonable cause is bound to be held barred to file petition after the lapse of a certain period of time as we see in this notable case also! All the parties must always be cautious of it and adhere to the time limit without fail. It is in their own best interest to do so because if they err then their petition is bound to be rejected as we see so ostensibly in this case also!

Sanjeev Sirohi, Advocate

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Legally Speaking

TAKING THE FREEDOM OF SOCIAL MEDIA SERIOUSLY

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Last week, a three-judge bench of the Supreme Court of India comprising Justices Dr. D. Y. Chandrachud, L. Nageswar Rao, and S. Ravindra Bhat issued a strong warning to the Central and State Governments not to curtail the freedom of speech and expression of people who are seeking help on social media platforms to get oxygen, essential medicines, and other things during the covid pandemic.“The Central Government and State Governments shall notify all Chief Secretaries/Directors General of Police/Commissioners of Police that any clampdown on information on social media or harassment caused to individuals seeking/delivering help on any platform will attract a coercive exercise of jurisdiction by this Court. The Registrar (Judicial) is also directed to place a copy of this order before all District Magistrates in the country”, observed the Court for protecting the social media users from harassment by the police and other administrative agencies of the centre and the states. This is a much-needed and timely intervention by the Apex Court that is likely to facilitate the smooth communication of information on the internet during this difficult time when social solidarity needs to be promoted in our society.

The directions given by the Apex Court will certainly protect people from harassment and torture by the police and other government agencies in some states that have shown less tolerance to digest their criticism on social media platforms during this pandemic. Unfortunately, some governments have wrongly interpreted the criticism as an attempt to disrepute them and they also warned the people to face the charges under draconian laws such as the National Security Act. This is nothing but rubbing salt on people’s wounds. Admittedly, social media has been very useful and effective in addressing the grievances of thousands of people who were unable to get any kind of help from the government during this covid crisis. Not only this, but social media has also unearthed the various omissions and commissions of the centre and the states who have failed the people utterly during this covid pandemic. It seems the governments want to clamp down on the use of social media to avoid their responsibility. This is not the way to deal with the people. At this time, the governments should come forward to address the public health issue and take people’s cooperation in fighting against the invisible coronavirus.

Sadly, in some states like U.P., the administration has filed criminal cases against the citizens who were seeking help on social media platforms like Facebook and Twitter. In Amethi, the police registered an FIR against a man who was asking people to send him an oxygen cylinder for his family member who was suffering from covid. Ironically, no government wants to accept the truth. Recently, a Division Bench of the Allahabad High Court had strongly criticized the functioning of the U. P. government during the corona crisis while hearing a PIL. “The ghost of corona is marching on the roads and streets of the major cities of the state…those who are resourceful will survive and the rest as histories of past pandemics tell us, may die for want of proper health care”, the Court had said about the corona infection in the State of Uttar Pradesh. Not only this, but the High Court had also asked the State Government to discard its “my way or no way” attitude. This is the time when the government should listen to the High Court’s suggestion and improve the health infrastructure in the state.

It is a matter of fact that governments have ignored the public health issue in our country. It has never been a big issue for debate and discussion in the elections. The people have also failed to raise this issue on social platforms that build a strong public opinion. Indian politics is badly plagued with caste, community, and religious issues. The time has come when people should make it an election agenda given the poor health infrastructure in the country. Today, thousands of people are dying because of the shortage of oxygen, beds, and essential drugs. People are getting their covid test reports after five-six days. They are badly fed up with the governments and their agencies. Where should they go to seek help if the state does not respond to their calls? This is a matter of national shame. During this time, some public-spirited citizens have come forward to help people on social media platforms. It is indeed an admirable effort that should be carried forward to protect people’s lives and livelihoods at this extremely difficult time. Not only common people, but some honest administrative and police officers have also taken serious note of such calls and sent the required help to the needy people. This is why even the Apex Court appositely admired this gesture in these words: “In these trying times, those desperately seeking help for their loved ones on these platforms should not have their misery compounded through the actions of the State and its instrumentalities. Further, there are two more crucial reasons why such a clampdown on information sharing must be absolutely stopped immediately”.

Given the above discussion, it is submitted that all governments should welcome constructive criticism at this time. They should not discourage people from getting help on social media platforms. In a difficult time like this, people’s complaints, criticism, anguish, and anger provide valuable feedback to the policy-makers that must be used in urgently plugging the holes in the public health system, fixing accountability of negligent medical officers, and making self-introspection to learn from the mistakes and prepare for the future in a better manner. No popularly elected government can avoid criticism in a democracy. When people will die, they will cry and the government is duty-bound to protect people’s lives.

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DEALING WITH BIOMEDICAL WASTE: A TOUGH GRIND AFTER THE PANDEMIC

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Biomedical waste is composed of animal and human waste, treatment equipment, for instance, syringes, needles, and the other different kinds of amenities in the process of research and treatment (Bio-Medical Waste Management Rules, 2016). Adequate biomedical waste management concerning the proper rules and regulations were consistently overlooked for years, specifically in a developing country like India.

India, the second most populated country worldwide after China and the world’s second worst-hit country by COVID-19 officially, and unofficially it is undoubtedly the worst affected. India now has 20.7 million confirmed cases of the deadly Covid-19 virus. However, the recovery rate among Indian population is also very remarkably high. The administration has also taken rigorous steps to tackle Covid-19, but this has resulted in piles of Bio-medical waste. According to Central Pollution Control Board (CPCB) data, approximately 4527 tons of bio-medical waste was generated in December 2020. This has unduly pressurised the waste management system of country. Lack of resources has further added to this problem of waste management. India faced severe consequences during the second wave of COVID-19 and responding to which the medical system is also overburdened. These critical conditions have also posed a challenge in the administration to manage the bio-medical waste generated in treating the patients found positive with Covid-19. The country has a total of 238,170 healthcare facilities, out of which 87,267 are bedded while the remaining 151,208 are non-bedded healthcare facilities (HCFs) generating BMW. According to a study, improper management and disposal of bio-medical waste could expose freely roaming animals and humans with diseases like Covid-19. Thus, it becomes imperative to think for effective management strategies and spare some resources to manage bio-medical waste.

Untreated and improperly managed BMW is a potential source of infection. Millions of contaminated personal protection equipment (PPE) (e.g., facemasks and gloves) would end up as wastes, which, if improperly managed, can pose environmental and health threats. In a recent study (Kampf et al., 2020) finds that the coronavirus can survive on material surfaces (e.g., metals, glass, and plastics) for up to 9 days. Such threats may be ameliorated in developed countries where green and sustainable waste management strategies, capable of containing such viruses, are practiced. However, the threats would be much higher in developing countries that have poor waste management strategies. In many developing countries, solid wastes are dumped in the open and in poorly managed landfills where waste pickers without wearing proper PPE would scavenge for recyclable materials (World Bank, 2019).

Thus, it is the right time to call upon the policymakers to ponder this problem, which could become an uphill climb later if not given due attention.

IMMEDIATE ACTION AND FUTURE POLICY RECOMMENDATIONS:

The lockdown had led to enhancement in the origination of the food and packaging waste from the domestic households, which should be disseminated as per the current waste accumulation rules. The occurrence of the collection of biodegradable waste could be modified according to the locality. However, the recyclable waste could be reduced according to the accessibility of the people as well as the trucks. As they should be helped to accumulate them in the sealed bags for a longer tenure. There would be more generation of infectious waste and toxic waste if more heed is given to sanitary products and other health care products. So, it is very much necessary that it should be accumulated in double lined sealed bags with a particular symbol. The food packaging and the other waste should be handled with possible care and caution as it should be carried in a double layered compostable bag.

There would be less charge on the management of the hazardous waste as more waste from the households is being compensated by the smaller number of wastes from the restaurants, eateries and the other complexes. It is necessary to be conscious for the exposure of the waste as long as it exposes the pathogen to spread. The people living at their home required to be more prudent as there is a need of dissemination of the waste. The propagation of the same should be done through advertisements, newspapers or other source of media.

Few Policy recommendations deliberately made for the policymakers which might assist a system to tackle the pandemic:

a) Identification of the key role: This is the prime duty of the government to recognize the part which has to be played by sanitation workers. For instance, UK government has specifically given key worker status to their workers as the government would be fulfilling all the requirements of their family during the COVID crises so they could continue their services.

b) Formulation of the Global Common Platform of Knowledge: It is very much necessary to formulate a platform as well as foundation of knowledge so that the people should gain the know how of handling the waste as they could curb themselves in need of the hour.

c) Pervasive standardization of the coding: The universal standards for the color coding are very much significant for disseminating the bio medical waste. As it would provide assistance to the identification of the type and the characteristic of the waste. Proper training to the workers in the regard would also be very much helpful.

d) Technology Based Solutions: To deliver the high quality by products, it is very much necessary to emphasize the gasification, hydrothermal, and carbonization kind of techniques. Additionally, there should be investment of research into it.

e) Implementations of the principals from circular economy: To reduce the amount food wasted, re-utilization of the food waste and nutrient recycling are the major fundamentals of the circular economy in the food system and should be executed both at producer as well as consumer level. Furthermore, the circular-based models’ execution would assist in deviation of the accumulated waste from the disposal sites to the recyclable plants; however, it would also help in declining the generation of the waste in the initial place.

f) Propagation Regarding Circular economy: People are not knowing about the methodology behind the circular economy so it is the dire need to aware people regarding the concept of circular economy. The fabrication of the recyclable products would, for instance, bioplastic and biodegradable products should be highly promoted as well rewarded.

g) Moving from awareness to Action: Just by propagating the general public regrading the same would not help rather they should be highly motivated to implement all the schemes practically. Media campaigning would really assist in effecting the people’s behavior and would also assist in the transformation of their musings to converting the economy into a greener one.

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