In a recent, remarkable and righteous decision titled Amar Nath Chaubey vs Union of India [SLP (CRL.) NO. 6951 of 2018] delivered just recently on December 14, 2020 has maintained that a closure report cannot be filed merely on the ground that the investigation was not possible as the informant had not supplied adequate materials to investigate. The three-judge Bench of Apex Court headed by RF Nariman and also comprising of Justice Navin Sinha and Justice Krishna Murari while setting aside closure reports against some accused in a murder case did not shy away from remarking that, “A fair investigation is a necessary concomitant of Articles 14 and 21 of the Constitution of India.” The Court observed that it is the statutory as well as constitutional duty of the police to investigate on receiving report of the commission of a cognizable offence.
To start with, the ball is set rolling in the opening para 1 of this notable judgment wherein it is observed that, “One Shri Ram Bihari Chaubey, the father of the petitioner, was shot dead at his residence in Village Shrikanthpur, Chaubepur, Varanasi in the State of Uttar Pradesh, on 04.12.2015 at around 7.15 AM. An F.I.R. No. 378/2015 under Sections 302, 147, 148 and 149, I.P.C. was registered the same day at Chobepur Police Station at 11.15 AM. Four unknown assailants were stated to have come on a motor cycle. Two of them entered the residence and shot the deceased, while the two others waited outside, after which they all escaped.”
To put things in perspective, the Bench then observed in para 2 that, “The petitioner, son of the deceased, approached the Allahabad High Court complaining of the lackadaisical manner in which the police was investigating because some powerful personalities were also involved. The investigating officers were also being changed with regularity seeking a mandamus for a proper inquiry into the murder of his father including by the C.B.I. The High Court called for a progress report and also required the Chief Secretary to file his affidavit in the matter. The petitioner is aggrieved by the impugned order of the High Court dated 17.05.2018 disposing the writ petition, accepting the contention of the police that the investigation would be concluded expeditiously and report will be submitted before the competent court within a period of eight weeks.”
Of course, the Bench then observes in para 3 that, “We have heard the learned counsel for the petitioner, for the State of Uttar Pradesh and for respondent no.5. On 29.06.2017 charge sheet was submitted against one Raju alias Nagender Singh son of late Ramji Singh, Ajay Singh and Shani Singh both sons of Narayan Singh, citing 21 witnesses. The charge sheet stated that the name of respondent no.5 had transpired during investigation as having conspired in the killing after which Section 120B I.P.C. was also added. The charge sheeted accused Raju alias Nagender Singh confessed that apart from the others named by him, respondent no. 5 in conspiracy had the murder planned and executed. The investigation was thus kept pending against Manish Singh, Dabloo Singh and respondent no.5. The police in the case diary noting dated 17.02.2017 recorded that on basis of confidential information from the police informer, that respondent no.5 had given a “supari” of Rs. Five lacs for murder of the deceased. Political rivalry existed between the deceased and respondent no.5 on account of assembly elections as also panchayat elections. It further contained noting that the real person behind the incident was respondent n. 5 based on very confidential information, having serious ramifications. The case diary noting dated 06.04.2017 records that the police party went to landmark tower to arrest Ajay Singh and Shani Singh. Respondent no.5 demanded the production of arrest warrant against the concerned persons and required the investigating officer to give in writing that the suspect was being taken for interrogation. Raju alias Nagender Singh after intensive interrogation disclosed that with co-accused Ajay Singh, he had gone to meet respondent no.5, disclosing the manner in which the murder was committed by him and his accomplices. The case diary noting dated 29.06.2017 records that investigation against Dabloo Singh and Manish Singh and respondent no.5 were in progress. Respondent no.5 vide Annexure P.5 letter no. 4/2017 wrote to the Principal Secretary that he was being falsely implicated and the matter be properly investigated, if required from the C.B.I.”
While further elaborating on the progress of the case, the Bench then elucidates in para 4 that, “The Sub-Inspector of Police submitted a progress report before the High Court on 11.10.2017 that the investigation up to that date revealed the involvement of Ajay Singh, Raju alias Nagender Singh, Shani Singh, Manish Singh, Dabloo Singh and respondent no.5 as a conspirator. Charge sheet had been submitted against Ajay Singh, Raju alias Nagender Singh and Shani Singh and investigation with regard to Dabloo Singh, Manish Singh and respondent no.5 is still pending. It further stated that raids were conducted for arresting others including respondent no.5. From the material collected during investigation it was apparent that the murder was committed due to political rivalry by hatching a conspiracy effectively with the help of respondent no.5 and that the police were trying to collect more credible materials. Another affidavit was filed on 16.05.2018 before the High Court, by one Shri Devender Chaubey, the In-charge Chief Secretary, disclosing that respondent no.5 had 24 criminal cases against him including under Section 302 IPC. In five cases final report had been filed in absence of credible evidence. In nine cases respondent no. 5 had been charge sheeted but was acquitted. Five criminal trials are still pending against respondent no.5. He had also been put behind bars under the provisions of National Security Act by order dated 11.11.1998. It concluded that the allegations against respondent no.5 were under investigation.”
To be sure, it is then revealed in para 5 that, “This Court issued notice in the present matter on 07.09.2018. On 20.01.2020, this Court directed the Director General of Police, U.P. to file an affidavit with regard to the status of the investigation vis-à-vis respondent no.5. An affidavit was filed by the D.G.P. on 22.02.2020 stating that there was no cogent evidence against respondent no.5 despite discreet efforts. Investigation of the case was therefore closed on 30.01.2019 and report submitted in the concerned court along with other police papers on 04.06.2019 with regard to accused Ajay Singh, Shani Singh, Raju alias Nagender Singh only and no further investigation was pending against any person. The trial court summoned the complainant for evidence on several dates, but the complainant had not appeared.”
Be it noted, the Bench then observes in para 6 that, “We have considered the matter. The F.I.R. was registered on 04.12.2015. Eight investigating officers have been changed. Respondent no.5 suo motu sought impleadment in the writ petition filed in the High Court. An investigation which had been kept pending since 04.12.2015 was promptly closed on 30.01.2019 after this Court had issued notice on 07.09.2018. The affidavit of the Director General of Police, U.P. not being satisfactory, on 26.10.2020 this Court required the respondents to file copy of the closure report stated to have been filed before the court concerned. The affidavit filed by the Circle Officer, Pindara, Varanasi dated 31.10.2020, pursuant to our order dated 26.10.2020 encloses the closure report dated 02.09.2018, the supervision note of the Superintendent of Police, Rural dated 17.12.2018 and the closure report dated 30.01.2019 submitted in court. We have gone through the same. It simply states that there was no concrete evidence of conspiracy against respondent no.5 and that the informant had not placed any materials before the police direct or indirect with regard to the conspiracy. As and when materials will be found against respondent no.5 in future, action would be taken as per law. No credible evidence was found against Manish Singh and Dabloo Singh.”
While slamming the police investigation and the closure report, the Bench then, more significantly, without mincing any words states upfront in para 7 that, “We are constrained to record that the investigation and the closure report are extremely casual and perfunctory in nature. The investigation and closure report do not contain any material with regard to the nature of investigation against the other accused including respondent no.5 for conspiracy to arrive at the conclusion for insufficiency of evidence against them. The closure report is based on the ipse dixit of the Investigating Officer. The supervision note of the Senior Superintendent of Police (Rural), in the circumstances leaves much to be desired. The investigation appears to be a sham, designed to conceal more than to investigate. The police has the primary duty to investigate on receiving report of the commission of a cognizable offence. This is a statutory duty under the Code of Criminal Procedure apart from being a constitutional obligation to ensure that peace is maintained in the society and the rule of law is upheld and applied. To say that further investigation was not possible as the informant had not supplied adequate materials to investigate, to our mind, is a preposterous statement, coming from the police.”
Most significantly, the Bench then minces no words to state squarely, simply and straightly in para 8 that, “The police has a statutory duty to investigate into any crime in accordance with law as provided in the Code of Criminal Procedure. Investigation is the exclusive privilege and prerogative of the police which cannot be interfered with. But if the police does not perform its statutory duty in accordance with law or is remiss in the performance of its duty, the court cannot abdicate its duties on the precocious plea that investigation is the exclusive prerogative of the police. Once the conscience of the court is satisfied, from the materials on record, that the police has not investigated properly or apparently is remiss in the investigation, the court has a bounden constitutional obligation to ensure that the investigation is conducted in accordance with law. If the court gives any directions for that purpose within the contours of the law, it cannot amount to interference with investigation. A fair investigation is, but a necessary concomitant of Articles 14 and 21 of the Constitution of India and this Court has the bounden obligation to ensure adherence by the police.”
Briefly stated, para 9 then while citing a recent relevant case law states that, “In Manohar Lal Sharma vs. Principal Secretary and ors., (2014) 2 SCC 532, this Court observed as follows:
“24. In the criminal justice system the investigation of an offence is the domain of the police. The power to investigate into the cognizable offences by the police officer is ordinarily not impinged by any fetters. However, such power has to be exercised consistent with the statutory provisions and for legitimate purpose. The courts ordinarily do not interfere in the matters of investigation by police, particularly, when the facts and circumstances do not indicate that the investigating officer is not functioning bona fide. In very exceptional cases, however, where the court finds that the police officer has exercised his investigatory powers in breach of the statutory provision putting the personal liberty and/or the property of the citizen in jeopardy by illegal and improper use of the power or there is abuse of the investigatory power and process by the police officer or the investigation by the police is found to be not bona fide or the investigation is tainted with animosity, the court may intervene to protect the personal and/or property rights of the citizens.
26. One of the responsibilities of the police is protection of life, liberty and property of citizens. The investigation of offences is one of the important duties the police has to perform. The aim of investigation is ultimately to search for truth and bring the offender to book.
xxx xxx xxx
39. … In the rare and compelling circumstances referred to above, the superior courts may monitor an investigation to ensure that the investigating agency conducts the investigation in a free, fair and time-bound manner without any external interference.””
It is worth paying attention here that para 10 then discloses that, “The trial is stated to have commenced against the charge sheeted accused, and the informant summoned to give evidence. In the facts of the case, we direct that further trial shall remain stayed. The closure reports dated 02.09.2018, 17.12.2018 culminating in the report dated 30.01.2019 are partly set aside insofar as the non-charge sheeted accused are concerned only. Those already charge sheeted, calls for no interference.”
Now it is time to deal with concluding paras. Para 11 states that, “We hereby appoint Shri Satyarth Anirudh Pankaj, I.P.S. as the senior officer, State of Uttar Pradesh to carry out further investigation in the matter through a team of competent officers to be selected by him of his own choice. The State shall ensure the availability of such officers. The investigation must be concluded within a period of two months from the date of receipt of a copy of this order, unless extension is required, and the final report be placed before this Court. The Director General of Police, Uttar Pradesh shall do the needful.” The last para 12 then stipulates that, “List immediately after two months for further orders.”
In a nutshell, this latest, landmark, learned and laudable judgment leaves no room for doubt that closure report cannot be filed merely because informant did not supply adequate materials to investigate. The police must always follows this useful directive whenever it is confronted with such situations in future! It will in doing so certainly benefit its ownself as also the investigation process which has to be taken always to its logical conclusion by ensuring that the guilty is not spared and the innocent is not convicted or harassed in any manner! This is exactly what the Supreme Court also desires so by this commendable judgment as is clearly manifested also in it! Very rightly so!
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Judicial reforms in India need to go beyond informal calls for inclusivity
On 7 June 2021, it was reported that the Chief Justice of India, in a virtually closed-door meeting with the Chief Justices of all the High Courts, emphasised that the High Court collegiums must recommend Dalit, tribal, OBC, minorities and women for elevation as judges so that the High Court would truly reflect the vast social diversity of the country.
This move is revolutionary because several adverse remarks had been made in the past regarding the demography of the higher judiciary but little had changed. Mr George F. Gadbois’ (a political scientist) in his book titled ‘Judges of the Supreme Court of India’, stated that 92.2% of the Supreme Court comprised male Brahmins and other forward castes based on empirical data between 1950-1989; fast forward to the present-day scenario, Supreme Court now has only 1 woman judge, 1 judge from the Dalit community and 3 judges from the Parsi, Christian and Muslim minority communities collectively. Further, the Ministry of Law & Justice’s 2020 report on ‘Judges of the High Courts’ stated that only 12% of the judges in the High Courts were women; and, Vidhi Centre for Legal Policy’s 2018 report stated that there were only 27.6% of women judges in the lower judiciary. In 2016, even the former director of the National Judicial Academy had remarked that “The typical Indian judge is Hindu, upper-class, upper-caste and male.”
For an institution which according to the aforesaid data has been a bastion of few select privileged classes of the society; the decision by the CJI to diversify the higher judiciary comes as a move that warrants acceptance with arms wide open. However, in spite of the substantive part of the inclusivity policy being in tune with the ethos of a representative democracy, the existing practises concerning the elevation of judges to the higher judiciary based on inclusivity grounds, does not facilitate its smooth and sociologically legitimate implementation.
A glimpse of the collegium resolution dated 08.05.2019
This was a time when there was no representation from the Scheduled Caste community in the Supreme Court for a decade. Thus, the Supreme Court Collegium elevated a judge belonging to the Scheduled Caste community from the Bombay High Court. While doing so the Collegium resolution stated that “His (the judge from the SC community’s) recommendation, in no way, is to be misconstrued to mean that three senior-most Judges from Bombay High Court (two of whom are serving as Chief Justices) are less suitable than him”. Now, there are several challenges attached to such ad-hoc elevations. Firstly, the aforesaid statement made by the Collegium makes it look like the only reason why none of the three other senior-most judges of the High Court were elevated is because they were at the right place at the wrong time; secondly, it still does not ensure that representation of judges with non-traditional background in the judiciary would continue in a sustained manner because after all, it took a decades’ time for the Collegium to realise the lack of representation of the SC community in the Supreme Court; and lastly, the lack of a well-defined policy for selection of the candidates belonging to the SC/ST/women/minority communities could exacerbate the allegations of nepotism and favouritism, a charge that the higher judiciary already has been saddled with time and again.
In light of the same, it is natural that the call for diversification by the CJI must be supplemented with procedural policies that both sustain as well as accelerate the prospect of constituting a diverse, democratic and representative judiciary.
JUDICIAL PERFORMANCE EVALUATION
Judicial Performance Evaluation Programmes conduct periodic assessment of the performances of the judges. It dates back to the year 1978 when the government of Alaska conducted the first judicial performance evaluation programme. However, over the years the judicial performance evaluation programmes have evolved across varied array of jurisdictions to meet their own unique needs; some are also meant for enhancing the accountability of the judges apart from determining the career paths of the judges. The 2017 Vidhi Centre for Legal Policy’s report stated that despite the differences among the practice of judicial performance evaluation; there are few commonalities that remain axiomatic across jurisdictions i.e., they are official state-run programmes, data and information on several parameters is collected from a wide audience through survey mechanisms, and the survey results and recommendations are widely circulated.
Further, the 2017 report after wide consultation with eminent jurists, judges, academicians and advocates recommended that India’s judicial performance evaluation programmes must be run by a statutory body or commission that would carry out the surveys annually to evaluate the performances of the judges for the elevation to the higher judiciary. The programme would be conducted in three phases – the first stage would entail the survey which would be filled by peers on the bench, court staff, eminent advocates to name a few; the second stage would carry out the collation of data, and the third and last stage would be the publication of the data in a public domain along with the recommendations made by the body/commission.
The induction of the judicial performance evaluation programmes is not only desirable but even the need of the hour because the aforementioned statistics evinced that the lower judiciary comparatively enjoyed a greater diversity of judges; it gives a fair, if not ideal, pool of candidates whose performances can be evaluated in order to be elevated to the higher judiciary. This would also prove to be a game-changer because not only would it provide for a rational and uniform basis for the elevation/non-elevation of a particular judge to the higher judiciary but also inhibits the scope for favouritism/nepotism, and its annual reports would ensure that the diversification policy is not compromised or ignored over time. Lastly, since the aim of such programmes is also to ensure that merit is rewarded, it would also cause only the meritorious candidates from non-traditional backgrounds to be elevated to the highest echelons of the judiciary; which is in tune with the vision of the drafters of the constitution who envisaged merit as the sole ground for appointment to the judiciary.
How Madras High Court judge broke his preconceived notions for LGBTQIA+ community
‘There are many branches on the tree of life. There is no one way to be, and there is room for everyone to be who they are.” ~ Justice A. Venkatesh
The Tale of two brave girls
This movement for change began when two girls named S. Sushma and U. Seema Agarval who were in a romantic relationship with each other faced harassment and mental pressure from their family due to their sexual orientation and therefore decided to run away from their respective homes and shift to Chennai.
S. Sushma had pursued a bachelor’s degree in Mathematics from Madurai and Seema was pursuing a bachelor’s degree in the Tamil language at that time. They both knew each other from the past two years and their friendship in the sue course of time blossomed into a unique, romantic relationship and both of them see each other as their partner for life time. When the parents of the couple received the knowledge of their relationship, they strongly opposed it and started pressuring them, and that’s when they decided to leave Madurai and shift to Chennai to start their new life.
The girls belong to the LGBTQIA+ community. The NGO’s and other members of the community supported the girls and arranged for accommodation for ensuring their protection. Meanwhile, their parents filed different missing FIR’s for each girl and the police began their search. The Petitioners in the apprehension of threat and danger to their life approached the Hon’ble Court of Madras to issue direction to the Police to protect them from any kind of threat and danger.
Justice Anand Venkatesh took note of the facts of the case and arranged for a meeting in the mediation centre for the couple and their parents, he also sat with the parents to understand their viewpoint on the notice of same-sex relationship.
Counselling session were arranged for the parents to understand the same-sex relationship in today’s world and also, to understand their daughter’s emotional state and feelings toward the relationship but nothing good came out of it. No change was recorded in the attitude and thinking of the parents.
For the very first time, the Indian Judiciary has given a helping hand to the LGBTQIA+ community not just by issuing the guildlines for their protection and safety, but also actively took part understand their feelings and emotions, and to break the pre-conceived notion which exists in our society concerning the LGBTQIA+ community.
How did the Judge overcome his Prejudice?
The Hon’ble Judge of the Madras High Court, Justice Anand Venkatesh passed an order while deciding on the Writ Petition no. 7284 of 2021, S. Sushama and another v Commissioner of Police and others, in favour of the Lesbian couple who were continuously subjected to harassment by the police officials after their respective parents filed a missing report against them.
The Judgment is itself is a step towards creating a safe environment for the LGBTQIA+ community in our Country, but it was not easy for him to break this pre-conceived notion about the Gay and Lesbian community which exists in our society.
Justice A. Venkatesh agreed that it was not easy for him to understand the mindset and the situation of the petitioners as he has never encountered anybody belonging to the LGBTQIA+ Community and therefore never had a chance to understand in depth about their emotions and mindset.
For better understanding and the analysis of the situation in hand Hon’ble Justice of the Madras High Court underwent psycho-educative session with various counsellors and professionals who deal with the LGBTQ+ community to understand their issues better.
In a report submitted by the clinical Phycologist Dr Vidya Dinkaran, she stated that the Hon’ble Judge participated in a session with her and broke his flawed notions about the LGBTQ+ community. The Hon’ble Judge after interacting with the Petitioners and the parents realised that “There has been a misconception that went to the cutting edge was how homosexuality is all the time saw distinctly with a sexual undertone (i.e.), a relationship restricted uniquely to sex.
The report stated that how Justice Venkatesh communicated on paying attention to the lesbian couple was the point at which he understood the imperfect notion about the community he had and how two ladies came to be viewed as a couple before the finish of that conversation for him. He came in with the consciousness of the bias he holds. This was developed by seeing how no two heterosexuals in a relationship will be judged promptly as being together just to participate in sex and it shouldn’t be different for any two individuals with different sexual Orientations.
After realising his bias toward this community, Justice Venkatesh interacted with different people belonging to the LGBTQ+ community to deepen his knowledge and understanding of the diversity amongst people of his own country. Also to gain insights on their living situations and the discrimination being faced by them in the society. Therefore, an interaction was scheduled with Dr Trinetra Haldar Gummaraju, MBBS Intern and an influencer from Kasturba Medical College and her mother Ms Haima Haldar. Dr Trinetra, a transwoman herself shared her journey and lived experiences with the judge and Dr L.Ramakrishnan, Vice President, SAATHII.
All these interactions finally broke all his notions about the LGBTQ+ Community and he started looking at them as a normal human being and in the judgement, he confessed that, Dr Vidya Dinakaran and Dr Trinetra and his Guru’s who helped him to break his pre-conceived notion and pulled him out of the darkness.
Justice Anand Venkatesh noticed that a cultural change is required in the approach towards LGBTQIA+ connections. The threats they face are because of the way that their relationship loath cultural authorization. He quoted in his Judgement, S. Sushama and another v Commissioner of Police and others that, 2021:-
“…the actual problem is not the fact that the law does not recognise a relationship but that the sanction that is accorded by the society is not available. It is only for this reason, I strongly feel that the change must take place at a societal level and when it is complemented by law there will be a remarkable change in the outlook of the society by recognising same-sex relationships”,
And therefore, in the light of the above-made observations this court feels that there should be stringent laws made by the Legislative Authorities for the LGBTQ+ community to protect them from the harassment, social and mental torture and from prohibiting any kind of activities to change their sexual orientation through means such as black magic or undergoing medical operations.
GUIDELINES ISSUED BY COURT FOR PROTECTION OF THE LGBTQIA+ COMMUNITY
The Hon’ble High Court of Madras issued notice to the Union and the Central Government to make laws that protect them and till the time, the laws do not come into force the following guidelines shall be followed to protect the LGBTQIA+ community who are living in the most vulnerable environment and there is no law for their safety and protection. The guidelines are as follows:
On receipt of a missing complaint of any adult who after the investigation is found to belong to the LGBTQ+ community, the Police officials, in that case, shall shut the complaint without any further actions and harassment to the persons.
The Ministry of Social Justice and Empowerment (MSJE), needs to enrol Non-Governmental Organizations (NGOs) which have the adequate ability and experience in dealing with the issues looked at by the LGBTQIA+ people group. The rundown of such NGOs alongside the location, contact subtleties, and administrations gave will be published on the official website which will be updated regularly.
Anyone belonging to the LGBTQIA+ community, who is facing harassment of any kind can approach the listed NGOs for the protection of their interests.
The Service provider NGOs shall maintain a record of the person in private who seeks help from them and share such data with the Ministry regularly to keep a check on the atrocities faced by them and take measure accordingly.
The offences faced by the person belonging to the LGBTQIA+ community shall be dealt with adequately with the help of the Counsellors and the State Legal Service Authority and in certain cases, law enforcement agencies shall also provide help.
With particularity of issue of convenience, reasonable changes are to be made in existing short stay homes, Anganwadi covers, and “Gramin greh” (a haven home for transsexual people, the motivation behind which is to give asylum to transsexual people, with fundamental conveniences like a safe house, food, clinical consideration and sporting offices. Plus, it will offer help for limit building/expertise improvement of people locally, which will empower them to lead an existence of nobility and regard) to oblige any and each individual from the LGBTQIA+ people group, who require covers or potentially homes. The MSJE will make sufficient infrastructural courses of action in such a manner, inside a time of 12 weeks from the date of receipt of a duplicate of this request.
Any such measures need to be taken for safeguarding the interest of the LGBTQIA+ community and help them to lead a normal life like any other person. The Central Government is also requested to frame such policies to protect the LGTQIA+ community from being harassed by their family members and society.
Awareness programmes to break the prejudices against the LGBTQIA+ community shall be carried out by the concerned department of the Union and State Ministries to spread awareness amongst the people.
LGBTQIA+ RIGHTS IN INDIA: CURRENT SCENARIO
The present scenario in India is that the Apex Court in their Judgement of Navtej Singh Johar v. Union of India (2018) SCC 1, decriminalised Homosexuality between the consenting adults. But there are no laws for the protection of the LQBTQIA+ community in India, they can get married but there are no laws for the legalisation of their marriage which deprives them of many rights which a heterosexual couple have like, buying life insurance for your partner and adopting children etc. Adoption by a single person belonging to the community is recognised but not by same-sex couples. Despite strong political movement in support of Pride Month and the guidelines still today the LGBTQIA+ community continue to suffer on daily basis.
The current situation is grim for lesbian, gay, sexually open, and transsexual youth in India. Many faces provocation and tormenting, and to stay away from embarrassment and savagery they regularly skip classes or exit school out and out.
In the past year’s Court decisions has laid down a better guideline for their safety and protection from harassment based on their sexual choices and sexual character, and the Indian government’s position on LGBT rights has developed impressively. Yet, substantially more is expected to ensure individuals based on sexual and sex character in India.
SC shocked as bail plea not listed for a year
While according due respect, prime importance and high priority to even the rights of the accused, the Supreme Court has as recently as on June 15, 2021 in a latest, learned, laudable and landmark judgement titled Chunni Lal Gaba vs Assistant Director, Directorate of Enforcement in Special Leave Petition (Criminal) Diary No. 11581/2021 (Arising out of impugned final judgement and order dated 29-04-2021 in CRMM No. 8112/2020 passed by the High Court of Punjab & Haryana at Chandigarh) (FOR ADMISSION and I.R. and IA No.66481/2021-EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT and IA No.66482/2021-EXEMPTION FROM FILING AFFIDAVIT and IA No.66476/2021-PERMISSION TO FILE SLP WITHOUT CERTIFIED/PLAIN COPY OF IMPUGNED ORDER) minced just no words to hold that non-listing of bail application impinges on liberty of accused. While expressing shock over a bail application filed before the Punjab and Haryana High Court not being listed for hearing for more than one year, the Supreme Court did not take time in observing that under the prevailing pandemic, at least half of the judges should sit on alternative days so that hearing is accorded to the person in distress. Very rightly so!
Without mincing any words, the top court while taking up the cudgels to protect the rights of he accused also and observed aptly that, “Non-listing of application for regular bail, irrespective of seriousness or lack thereof, of the offences attributed to the accused, impinges upon the liberty of the person in custody.” We all know how Mohammad Aamir Khan kept fighting for years and was wrongly kept in jail for 14 years before he was granted bail. Similarly we also saw how in another case an Army Officer named Lt Col Prasad Shrikant Purohit was kept in jail for more than 9 years even though the charge-sheet was not filed against him and he is still a serving Army Officer and this can only be labelled as worst “judicial murder and police murder”!
To put it mildly: Why was evidence not produced in court for nine years if there was any evidence? Under no circumstances can this be ever justified. Had it not been a legal super giant named Harish Salve who is the highest paid lawyer of India and who is also former Solicitor General of India who represented India even in the high profile Kulbhushan Jadhav case in ICJ against Pakistan perhaps Ly Col Purohit would have been rotting in jail even after 14 years just like Mohammad Aamir Khan for which the whole Indian Army must feel terribly ashamed that an honest and upright serving Army Officer was falsely implicated by Mumbai ATS and even former Defence Minister Manohar Parikar had conceded that wrong had been done with Col Purohit and asked Army to hand over documents and copies of court of inquiry to him so that he could come to know what all was there in it. Army must feel terribly ashamed over it that it did not hold the hand of an honest and upright officer like Lt Col Purohit and instead cooperated fully with Mumbai ATS which cannot be justified under any circumstances!
, coming back to the present case, it must be mentioned here that the vacation Bench of Justice Hemant Gupta and Justice V Ramasubramanian of the Apex Court was considering a Special Leave Petition (SLP) against an April order of the Punjab and Haryana High Court whereby the request for hearing of an application for bail under Section 439 of the CrPC pending since February 28, 2020 was declined. It must also be mentioned here that Justice Hemant Gupta who was earlier a Judge of the Punjab and Haryana High Court told the senior advocate who was arguing the case that, “I am aware of the situation of the Punjab and Haryana High Court.”
While elaborating on the facts of the present case, it must be stated here that the SLP petitioner, Chunni Lal Gaba is a former President of a Municipal Council in Punjab and is also an accused in a multi-crore synthetic drug racket. In addition to being charge-sheeted under the NDPS Act, the ED has charge-sheeted Gaba and nine members of his family associated with his 11 firms in connection with the infamous ‘Bhola drug case’ for the alleged violation of the Prevention of Money Laundering Act. Gaba was granted interim bail on March 28, 2020 which was further extended till June 20, 2020 and finally till July 3, 2020.
Furthermore, the ED had moved the High Court contending that the Department was not heard of granting interim bail at the initial stage and thereafter. It must also be noted that on July 2, 2020, the High Court directed the Trial Court to afford full opportunity to the Department to oppose the extension of interim bail, taking into consideration the gravity of the offence.
Truth be told, it may be recalled that the Punjab and Haryana High Court had said that, “We also make it clear that while hearing the matter, learned trial court shall take into consideration the clarificatory order dated 13.04.2020 passed by the Hon’ble Supreme Court as well as Section 45 of the Prevention of Money Laundering Act, 2002. We also make it clear that bail in cases involving heinous crimes like the offences under the Narcotics Drugs and Psychotropic Substances Act, 1985, the Protection of Children from Sexual Offences Act, 2012 and the Prevention of Money Laundering Act, 2002, may not be granted as a matter of right.” We saw subsequently how on July 4, 2020, the CBI court which is also a designated ED court had cancelled Gaba’s interim bail and sent him to judicial custody.
At the outset, the vacation Bench of Apex Court comprising of Justice Hemant Gupta and Justice V Ramasubramanian sets the ball rolling by observing in the introductory para that, “Permission to file SLP without certified/plain copy of impugned order granted.”
While laying the background and the purpose of the petition, the Bench then puts forth in the next para that, “The present special leave petition is directed against an order whereby the request for hearing of an application for bail under Section 439 of the Code of Criminal Procedure, 1973, pending since 28.02.2020, was declined.”
Most significantly, what forms the cornerstone of this extremely commendable judgment is then stated by observing that, “Normally, we do not interfere with an interim order passed by the High Court but we are constrained to pass the present order as we are shocked to see that the bail application under Section 439 CrPC is not being listed for hearing for more than one year. The accused has a right to hearing of his application for bail. In fact, the denial of hearing is an infringement of right and liberty assured to an accused.”
Adding more to it, the Bench then also sought to make it absolutely clear that, “Even during the pandemic, when all Courts are making attempts to hear and decide all matter, non-listing of such an application for bail defeats the administration of justice. Under the prevailing pandemic, at least half of the judges should sit on alternative days so that hearing is accorded to the person in distress. Non-listing of application for regular bail, irrespective of seriousness or lack thereof, of the offences attributed to the accused, impinges upon the liberty of the person in custody.”
While striking the right chord, the Bench then further adds in the next para that, “Therefore, we hope that the High Court will be able to take up the application for bail at an early date so that the right of the accused of hearing of application for bail is not taken away by not entertaining such application on the mentioning memo.”
In its concluding part, the Bench then finally observes that, “Let the Registrar General of the High Court bring this Order to the notice of the competent authority to take remedial steps at the earliest. The special leave petition stands disposed of accordingly. Pending applications stand disposed of.”
Before winding up, it has to be said in all fairness that this most commendable and noteworthy judgment which speaks out vociferously for the rights of the accused also and shows concern for their liberty too has to be applauded, emulated and implemented by all the courts, in all the states and in all the parts of the country without any exception whatsoever! To lock up a person in jail for years without giving him any opportunity to argue his/her case in court is the worst travesty of justice and is nothing but most horrible “judicial and police murder” for which both the judiciary and the police are culpable and cannot be exonerated under any circumstances! A law must be made in this effect that no person shall be kept in jail beyond few days without being produced before the court to face trial! This status quo of accused languishing in jail for years has to be wiped out and a new system where accused rights are taken care of also must be implemented now itself!
It goes without saying that if there is proof with the police, why it does not file chargesheet for nine years as we saw in Lt Col Shrikanth Purohit’s case and just keeps chanting “Swaha, Swaha, Swaha, Swaha” not for one year or two year or three years or five years or eight years but for full nine years and to rub to the wounds of the affected accused person, judiciary does virtually nothing but to inexplicably observe everything happening like a mute and most helpless spectator until some legal super giant like Harish Salve appears suddenly on the scene to speak up for the worst affected person for which judiciary has lots of explaining to do itself and it cannot be ever pardoned because judiciary has lots of power which it must exercise whenever and wherever it finds that the human rights of the accused person are being violated with impunity by the police in cahoots with an inactive judiciary failing which its own reputation will take the worst beating! It must be asked as to why in such cases should judiciary also not be held equally culpable just like police? All the courts, let me repeat, all the courts must always accord supreme importance to the personal liberty of the accused also because the accused also until proven guilty is innocent and has to be treated so!
Needless to say, the rampant misuse and abuse of draconian laws like UAPA, sedition, anti-dowry laws and several others has to be checked most strictly now itself as police too many times have been found to be on the extreme wrong side of law on grounds of extraneous considerations like money, personal enmity or political pressure and so on! We all know how recently three to four senior police officers were dismissed in Maharashtra for being on the wrong side of law!
Please read concluding on thedailyguardian.com
We also saw how senior IPS officers were making most serious corruption charges against top politicians and of demanding crores of rupees in extortion extorted from the people at large in Maharashtra and it is high time that police reforms too must be implemented and police freed from political control so that police can function independently without being adversely affected by politicians of any party no matter who it may be!
Last but not the least, no one is saying that stringent laws should be abolished but all that one is advocating is that an active judiciary must ensure that such stringent laws are not abused and promptly take action against the erring police or other men in uniform whenever they commit any such wrong which impinges on the personal liberty of the accused without any valid ground just like we see in this case which is why this most historic judgment even though is so short yet is being hailed all over most generously and which cannot be questioned also as there are valid reasons also for it! This can no longer be brushed aside now under carpet! It has to be addressed now itself and most effectively by holding police strictly accountable whenever they hold to ransom the personal liberty of the accused!
Insolvency and Bankruptcy Code: Walking at snail’s pace with various speed humps
While entering the fifth year of existence, before COVID-19 moratorium was imposed the Insolvency and Bankruptcy code was already walking at the snail pace with various speed humps but after the sudden blow of COVID-19 NCLT will be facing the bigger problem such as deluge of cases once the moratorium is lifted.
As IBC was brought into existence with aim “to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues ” but everything came to abrupt halt in the calendar year of 2020 .
Across the world, it has been observed that the corporate which was in the pink of financial conditions before the pandemic brought down the GDP reflecting sharp decline in the economy. Supply chains are still unstable, valuation of the stock decreased due to global fall and in total the valuation of business fell steeply.
Looking at such scenarios, through various viewpoints it was suggested that Insolvency and Bankruptcy Code (2016) also needs little bit of cushioning to keep up with the change.
Former RBI Governor, Mr. Raghuram Rajan quotes in one of his interviews that “ a key step India needs to take in the run of economic recovery is to clean up the financial sector of past stresses. He further says that NCLT should be working in overdrive to clear out previous cases and prepare for the deluge of new ones.”
Insolvency and Bankruptcy code being a new legislation has been facing the problem of winding up the case within stipulated time and lack of manpower in NCLT in comparison to the cases filed; with this storm of COVID-19 and reimposition of moratorium, the real challenge which India would be facing will be when there is lifting of suspension on filing of new cases under the Code and there will be deluge of cases pre and post COVID-19 on NCLT.
On January 5,2020 first NCLT President, former Chief Justice Shri M.M. Kumar retired and the IBC has been without a full-time president ever since. On December 9, the Supreme Court of India in an order stated that former Justice Shri BSV Prakash Kumar who was acting NCLT president since Justice Kumar retired would continue to function as an acting President until appointment of the regular one.
Justice Shri. S.J. Mukhopadhaya who was the first chairperson of the NCLAT also completed his tenure in March. Justice Shri B.L.Bhat took over as an acting chairperson of NCLAT. Justice Shri AIS Cheema, Member (Judicial) has been designated as the officiating chairperson of National Company Law Appellate Tribunal with effect from 18th April’21.
The problem with manpower had hardly been resolved when a blow of COVID-19 shutdown happened in March in order to prevent the spread also led to shutdown of NCLT and NCLAT which affected the newly evolving legislation. However, other courts of law across the country eventually opted for online hearing of cases to lessen the burden of cases post lockdown, insolvency courts couldn’t do much with the same.
According to the report from official data, ‘63% of the more than 21,000 cases pending with NCLT benches as of end-January are IBC cases.’ Keeping in mind that IBC is an evolving legislation and with very limited NCLT benches, there is an urgent need to allow a simplified form of depot restructuring through different methods and look for alternate resolution for dispute settlement mechanisms under IBC rather than overburdening NCLT binding them with time and less manpower.
Another problem faced by NCLT is its infrastructure, since the establishment of the Code it has surpassed the capacity of the existing infrastructure and has resulted in an obstruction of cases even at the early stage of admission. A total of around 19,844 cases were pending before NCLT as of July 31, 2020 including 12,438 cases under IBC. During the FY 2020, almost 480 cases were admitted by the tribunal every quarter, if this existing pace continues it may take around six years to complete the backlog cases shaking the basic motive behind establishment of IBC i.e., resolution process in time bound manner.
Admission of cases under tribunal has been one of the major concerns in the current insolvency proceedings. It takes more than 14 days as envisaged in the code for the acceptance of the case. The performance of the tribunal has also differed from bench to bench with regard to resolution in a time bound manner. Places like Delhi and Mumbai with highest number of insolvency cases NCLT usually take for resolution more than 475 days in comparison to the national average of 440 days resolution process. On the other hand, places like Bangalore and Kolkata have better average of 352 and 339 days respectively.
History has been a great teacher. Those who ignore its lesson are ill fated. In order to meet the challenges in the ecosystem any implementation or legislation enactment needs to constantly evolve. Insolvency and Bankruptcy code is an evolving legislation and it was already struggling with the growing demand of the code.
Senior Adv. Mr. Ramji Srinivasan who has represented in major cases including IL&FS says “ The decision of the government keeping in mind the COVID-19 situation and providing a holiday against the defaults post lockdown and raising the threshold of the defaults will not only have positive but also negative impact.”
He further says that such rising of threshold will reflect a positive impact and will support and shield such businesses who are finding themselves in liquidity crises. On the other side, the negative impact will be on smaller businesses that owe smaller amounts by bigger businesses and are going through the difficulty of recovery of the amount.”
Another Senior Advocate Mr. Abhinav Vashisht said “There could be a tremendous rush post lockdown and the tribunal has to follow the process of prioritising the urgent matters for hearing given their present strength.”
Mr. Vashisht further adds “It’s important to take up urgent cases by the tribunal and some could be taken up later but until and unless there is no increase in the number all over the place, it would be extremely difficult to fill up the gap of more than an year of the non-filling and keeping in mind the current pandemic situation it would lead to further insolvencies”
When the case of Jet Airways Private limited knocked the door NCLT, the tribunal faced the requirement of actual, clear and elaborative provision on cross border insolvency not just two sections (Sections 234 and 235) which gives not a very clear idea as to how to deal with cross border insolvency. It is vital for the country to introduce the concept of cross border insolvency regime in the legal framework
In order to reduce the deluge of cases NCLT requires new offices, before new cases it is important to wipe out the old one and prepare for an avalanche of new cases.
Restructuring the debts seems to be on top priority for many firms as access to finance moving forward is extremely important for few firms, there when the concept of cleaning up financial sector comes into picture keeping in mind that one can lend when that is required.
Another aspect which should be considered by IBC is if the basic motive behind establishment of the code is to provide time bond resolution, it would be difficult to achieve such motive if NCLT and NCLAT are the only bodies deluged with resolution cases. There can be ‘out of court’ settlement in the case of insolvency disputes , it was not only reduce the pressure over the tribunals but will also provide flexibility to creditors and companies as every time the default of the company doesn’t mark the death of the company,
As quoted by Former RBI Governor , Mr. Raghuram Rajan that when IBC has moved two steps forward and one step backward due to COVID-19 pandemic ,it is important to prepare for the next phase . It is important to revitalise our companies, and it is equally important to prepare a plan where companies not only come out from this and reopen and grow.”
The raging Covid-19 pandemic: Environmental justice
Unlike popular notions and misconceptions, the Indian courts braved unimaginable odds to deliver speedy environmental justice during the pandemic when the entire country was battered with different Covid-19 waves. India’s ecological security has been superb with new priorities in the post-pandemic world. It has been rightly postulated by a scholar, ‘What is the use of a house if you haven’t got a tolerable planet to put it on?’
The Prime Minister of India, in the 47th G7 summit held recently, clearly demarcated the national policy on climate change and gave the ‘One Earth, One Health’ mantra. The G7 summit is held annually among the group of seven wealthy nations that came together to discuss pressing climate issues; this year’s highlight being the ongoing battle with the global pandemic, while also deliberating on critical climate challenges. The UK, being the chair of the event, invited India too this time for G7 at Cornwall.
There is normally a growing criticism about India and China both not doing many international commitments and mandating carbon reductions. However, PM Modi clarified and assured the international community that India is doing a lot on carbon reductions, electric mobility, saving on electricity, promoting non-conventional energy sources on a very comprehensive level.
The reason is India has already created a move for carbon related technology and exemplary promotion of electric vehicles. India has marked ahead of other countries on the use of non-conventional energies. The country is making an ambitious push towards electric mobility to reduce smog. In March 2021, 25,640 electric vehicles were sold across the country, of which 90% were two and three-wheelers. The total 400,000 EVs registered in India in 2019 accounted for less than 0.2% of all vehicles. Committing to Net Zero India looks at emissions overall, allowing for the removal of any unavoidable emissions, such as those from aviation or manufacturing. Removing greenhouse gases could be via nature, as trees take carbon dioxide from the atmosphere, or through new technology or changing industrial processes.
While India was already crippling with many important environment issues, the COVID-19 pandemic came as a major jolt for the entire country. Where one could witness varied exotic species of animals on road in place of environment polluting vehicles, the courts judicial intervention did not cease to operate even during the harsh times of both waves of the COVID-19 pandemic of our nation.
Even though the COVID-19 pandemic shifted the focus from the environment to public health, the Indian judiciary has continued to play a significant role in addressing the environmental concerns that arose not only due to the pandemic but also the ones that have persisted since long and are somewhat man-made. The response of the PM in G7 was on behalf of a resilient resurgent India which has a renewed focus on its environmental and health commitments.
For example, it was evident that the Oxygen Bench of the Delhi High Court like many other High Courts of the country were persistent in administering with its judicial intervention catering emergency remedies for public health, the Supreme Court of India (“SC”) and even the Green Bench of the National Green Tribunal (“NGT”) were also steadfast in addressing the environmental concerns of the country at the same time.
It is imperative to analyse the steps taken by the judicial forums in the past year to understand the ways in which environmental concerns were addressed in the country and what lies ahead in preserving the essential elements of our ecological security.
Few examples of great judicial interventions in the past one year for the cause of environment:
For the purposes of protection of the Great Indian Bustard and the Lesser Florican which are both at the verge of extinction, a public interest writ bearing Writ Petition (Civil) No. 838 of 2019 in the case of M.K. Ranjitsinh v. UOI on 19.04.2021, the SC inter-alia stroke a balance between the protection of the endangered birds as well as the importance of efficient transmission of power. The Court had set up a committee to assess whether an underground powerline is feasible or not in difficult cases and further directed to install diverters pending consideration of the conversion of the overhead cables into underground powerlines in regions with an excess of these birds and to install underground power cables wherever feasible.
For the purposes of construction of a Road Over Bridge (ROB), it was contended by the Government of West Bengal that there was a need to cut down trees which were more than 150 years old. It was claimed that these are “historical trees” which have irreplaceable value, due to the reason of their non-transferability and that they cannot be transplanted elsewhere. The SC of India on 25.03.2021 took a stern view in the case of Association for Protection of Democratic Rights v. State of West Bengal in Special Leave Petition (Civil) No. 25047 of 2018; and inter-alia constituted a Committee of Experts in order to develop a set of scientific and policy guidelines that shall govern decision making with respect to cutting of trees for such developmental projects.
The Apex Court on 09.12.2020, in the case of Titty v. Range Forest Officer, (2021) 1 SCC 812 inter-alia clarified on the question as to when an offence of capture or possession of wildlife species under the Wildlife (Protection) Act, 1972, can be said to be made out. The Apex Court held that the capture or possession of species belonging to the same genus or otherwise related The issue pertaining to solid waste management on railway stations was highlighted in the case of Saloni Singh & Anr. v. Union of India & Ors., Original Application No. 141/2014; wherein the Principal Bench of NGT, also known as the ‘Green Bench’, on 18.08.2020 inter-alia looked into the matter of non-compliance with the Plastics Waste and Solid Waste Management Rules, as well as the prevention of effluent discharge, water management at railway stations, compartments, and tracks, and the elimination of encroachments that degrade the environment. It specifically instructed the CPCB to consider the process of implementing Railway Action Plans for all-important stations to species specified in the Schedules to the Wildlife Act is not sufficient to constitute an offence under the Wildlife Act. To constitute an offence under the Wildlife Act, it is necessary that the animal in possession or captivity must be the exact genus and species as specified in the Schedules to the Wildlife Act.
The issue pertaining to solid waste management on railway stations was highlighted in the case of Saloni Singh & Anr. v. Union of India & Ors., Original Application No. 141/2014; wherein the Principal Bench of NGT, also known as the ‘Green Bench’, on 18.08.2020 inter-alia looked into the matter of non-compliance with the Plastics Waste and Solid Waste Management Rules, as well as the prevention of effluent discharge, water management at railway stations, compartments, and tracks, and the elimination of encroachments that degrade the environment. It specifically instructed the CPCB to consider the process of implementing Railway Action Plans for all-important stations.
In the case of Shailesh Singh v. Hotel Holiday Regency, Moradabad & Ors., Original Application No. 176/ 2015; the NGT addressed the concern of illegal extraction and contamination of groundwater on 20.07.2020, especially, in regions designated by the Central Ground Water Authority (CGWA) as overexploited, critically exploited, or semi-critically exploited. The Tribunal formed an Expert Committee to look into the procedures that need to be taken to prevent groundwater depletion and to ensure that groundwater is not removed in an unauthorized and exploitative manner. The Tribunal ordered the Ministry of Jal Shakti and the State Government to ensure that the CGWA has the necessary manpower and is operating efficiently in order to ensure long-term groundwater management.
An environmental issue arising out of household use of RO released water was also brought to the fore in the case of Friends through its General Secretary v. Ministry of Water Resources, Original Application. No. 314/2015. The Tribunal aimed to place onus of being responsible on both the government and its citizens including the industrialists. The NGT on 13.07.2020 inter-alia addressed the issue of potable water conservation by preventing waste due to the improper usage of reverse osmosis by RO equipment. It directed the MoEFCC to produce an appropriate notification which must include a mechanism for raising public awareness about the negative effects of RO released water, as well as effective enforcement, such as requiring concerned local bodies to display water quality at regular intervals. ‘Extended Producer Responsibility’ was also imposed on manufacturers for the disposal of cartridges and membranes, requiring them to provide correct labelling on the purifier.
The NGT in the case of Rajiv Narayan & Anr. v. Union of India & Ors., Original Application no. 804/2017, on 01.07.2020 inter-alia dealt with the issue of Hazardous Waste Management. The Tribunal ordered various governmental and administrative bodies to follow the Expert Committees recommendations, which was established in one of its earlier rulings in the case. The Tribunal also directed to make sure that the hazardous waste inventory was updated and double- checked to ensure that it was accurate. In furtherance to this order, the Green Bench had passed a detailed order in the present case on 29.01.2021 by placing its reliance on the judgment passed by the SC in Research Foundation for Science Technology and Natural Resources Policy vs. Union of India (UOI) and Ors., (2005) 10 SCC 510, which inter-alia dealt with the same issue of the alarming situation created by generation and unscientific dumping of hazardous waste resulting in serious and irreversible damage to the environment and public health.
In Re: Scientific Disposal of Bio-Medical Waste arising out of COVID–19 treatment, the NGT on 23.04.2020 addressed the threat posed by COVID–19 waste disposal, and showed its concerns regarding the same for not being dealt with in a scientific manner. It directed the Chief Secretaries of States/ UTs, to monitor the treatment of COVID-19 waste by coordinating with multiple state departments. Further, a National Level Task Force was created, with representatives from multiple ministries, to ensure that the waste treatment is being done in accordance with the rules. The Tribunal had managed to keep a check on the functioning of every state and district level machinery even during the times of Covid.
It was emphatically emphasised by the SC in one its ruling that if the EC was to be ultimately refused, irreparable harm would have already been caused to the environment. Thus, the SC on 01.04.2020, in the case of Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors., 2020 (5) SCJ 531, upheld the principles of environmental protection and held that an ex post facto environmental clearance or EC is adversative to key doctrines of environmental law such as the ‘Precautionary Principle’ and ‘Sustainable Development’. Emphasising on the relevance of such doctrines, it was observed that the power given to the Government by Section 3(1) of the Environment Protection Act 1986 to undertake measures it deems necessary or expedient must necessarily be only “for the purpose of protecting and improving the quality of the environment and preventing, controlling and abating environmental pollution.” EC necessitates cautious application of the mind and a comprehensive study into the consequences to be suffered by the environment.
The SC made some positive measures in the case of M.C. Mehta (Stubble Burning & Air Quality) v. UOI, (2020) 7 SCC 530, concerning intense air pollution due to stubble burning in the Delhi-NCR region. The Court on 13.01.2020 noted that not being able to breathe good quality air is an affront to the right to life guaranteed by Article 21 of the Indian Constitution, 1950. It noted that the inadequacy of the state machinery to check air pollution, and inability to sufficiently lift garbage and waste has also majorly contributed to the pollution. It directed the Governments of NCT of Delhi-NCR, Haryana and UP to prepare a scheme to alleviate the need for stubble burning amongst small farmers, and if need be, to provide the necessary farming equipment to them free of cost or on a nominal rental basis. It also directed inter alia that smog towers and anti-smog guns be installed in the Delhi-NCR region and the same shall be updated by filing relevant status reports.
A noteworthy case titled “Sudhir Mishra vs. Ministry of Health and Family Welfare & Ors. in W.P. (C) 2115 of 2015” which has been filed by the Author, being an environmental activist and lawyer is being relentlessly litigated since 2015. During the peak of the first wave of the COVID-19 pandemic, the High Court of Delhi had taken cognizance on the same issue of stubble burning by farmers around Delhi-NCR region and had passed appropriate directions in the said case.
While the Oxygen Bench was busy in procuring oxygen for its citizens, the Green Bench was busy in saving the environment through which we get the oxygen. India is a country endowed with rich environmental diversity and ecological resources. Even at the international level, India has led the efforts to develop the framework of international environmental law since the earlier times. In various judgments over the course of the last year, India has upheld principles of sustainable development balanced with the needs of a developing country’s economy.
Unlike common notions and misconceptions of varied nature, the Indian courts braved unimaginable odds to deliver speedy environmental justice during the pandemic when the entire country was battered with different covid waves. India’s ecological security has been superb with new priorities in post pandemic world. Trees, water, and disposal of plastics is a major priority for the Modi government and with pain of pandemic’s second wave easing the environmental safeguards will be on top of our national agenda all over again. We can always take pride that as a nation our forest cover has increased many folds since Independence. We have saved our flora and fauna. Our tigers and elephants remain highly protected and the remaining challenges of river pollution, plastics, and increased plantation will be the remaining priorities. It has been rightly postulated by a scholar, “What is the use of a house if you haven’t got a tolerable planet to put it on?”
IBC and the development of credit market in India
Financial instruments are in-principle designed to mitigate the risks pertaining to repayment of debt. By mitigating such risks, the regime aims to furnish more assurance among the investors and expanding resources for the beneficiary of borrowers.
Economic development of a country is channelized by reforms brought in the legal and financial sector. Time and again deliberate reforms are brought in the country with an aim to bring higher economic growth in the country. Major factor contributing to the growth of India’s Index of Economic Freedom since 1990s is attributed to the supportive governmental policies and institution. These policy decisions range from lowering key policy rates, increasing, or decreasing the rate of interests on different types of loans and cash transfers and, various types of fiscal stimulus measures. Annual Financial Statement, 2021-22 considered persistent problems of the banking and financial sector. For instilling confidence in Corporate Bond Market in India and improve secondary market liquidity, an announcement was made regarding the creation of a permanent institutional framework to invest in investment-grade securities.
There is a strong causal relationship between the development of credit market and economic growth. An established credit market effectively relocates the resources aiming higher economic growth and fuels the growth of credit market. Time bound successful resolution of the stressed assets will reinstate the trust of investor, which is paramount in credit market. The present article seeks to discuss the nexus between IBC and development of Credit Market. The article will also draw a comparative analysis between the Pre-IBC and IBC Regime and how the latter has been better fostering the credit market in the Country.
Historically, the laws relating to corporate insolvency and creditor protection proved to be a significant obstacle to the growth of the credit markets in India. The Sick Industrial Companies (Special Provisions) Act, 1985 (‘SICA’), enacted to rescue sick companies, turned out to be inefficient due to delays and other systemic problems leading to its failure. Several committees appointed by the government critiqued and sought to introduce new legislation. The Bankruptcy Law Reform Committee, which issued its report in 2015, that resulted in a concrete change in the form of the Insolvency and Bankruptcy Code, 2016 (the ‘Code’).
The Code signifies a paradigm shift in Indian corporate insolvency law. It involves an approach where creditors lead a time-bound process that is intended to revive and rehabilitate companies and stands in stark contrast to the experience with SICA where most companies were wound up. By taking the process of corporate resolution out of the hands of the company’s board and management, the Code seeks to avoid problems of moral hazard. In terms of the institutional set up, the Code assigns the oversight responsibility to the NCLT (and the NCLAT).
IBC AND CREDIT MARKET
Credit Culture provides a unique blend that keeps the credit method united and forms the crucial foundation of Credit discipline. A county’s credit culture wields a strong influence on the bank’s lending and credit risk management system. Credit culture of a bank is defined by the policies set out by the bank which influences practices and management attitude of the bank. The impugned polices further categorically set out the lending environment and determines the lending behaviour of the bank. The ultimate goal of credit culture is to build a risk management system that in a way foster a good banking system and build right foundation for fostering the economy as well. Considering the complex and extensive banking regime, credit culture plays an indispensable role in the lending institution. IBC fosters an environment where credits can be generated from the domestic market and investments can be drawn from the international market.
Enactment of the Code aimed at enforcing discipline in the country’s credit culture. There is a well planted notion in the defaulter’s mind that in case there is a financial default, Corporate debtor will not be provided with an “automatic-rescue package”. There is a notion of security in the mind of creditors that in case of a default in payment, the dispute does not ends by dragging the debtors to court for the repayment of loan and get struck in the shackles of litigation with unimaginable set of issues. The Resolution proceedings in IBC were designed by bypassing the cumbersome, inefficient, subjective and debtor-friendly model. IBC has ushered a simple and creditor friendly model which has certainty and ensures value maximization of the assets for the benefit of stakeholders in Time bound manner. The present framework ensures that the lenders are paid on time, imbibing a credit culture in the mind of investors. This in turn is a contributing factor in the rise of India’s ranking in Ease of Doing Business Index from lowly 42 in 2014 to 63 in 2019. Thus, making India a favourable destination for Foreign Investment. IBC makes efforts to bring best out of a situation of a financial default with a creditor friendly approach.
INCLUSION OF PERSONAL GUARANTORS AND CORPORATE GUARANTORS
Jurisprudence of any legislation evolves over a period of time and IBC was no exception. Since the inception of the code, it has been exposed to prolific legislative and judicial reforms. The latest and perhaps the most significant development was driven by the Notification dated 15th November 2019, wherein the Central Government enacted part III of the Insolvency and Bankruptcy Code. Thus, bringing Personal Guarantors to Corporate Debtors, Insolvency and Bankruptcy proceedings of Individuals within the sweep of IBC. The notification explicitly mentions that the provisions of part-III of the Code have been enforced as far as they are applicable to the Guarantors. The validity of this notification was upheld by the apex court in the case of Lalit Kumar Jain v. Union of India.
Financial instruments are in-principle designed to mitigate the risks pertaining to repayment of debt. By mitigating such risks, the regime aims to furnish more assurance among the investors and expanding resources for the beneficiary of borrowers. The customary practices involved in such credit enhancement scheme is by providing sureties against the risk to qualifying borrowers. This not only schematize introduction of large-scale lending operations but also introduces new borrowers to the market. Further ensuring a steady flow of liquidity in the market.
As a pre-requisite for banks to provide loans it requires guarantees to be given by the Guarantors. Historically, India is the economy where a large part of Companies (listed/unlisted) are run by the Owners/Promoters. Generally, Banks ensure the guarantee of the Promoters to ensure their skin in the game. In absence of any efficacious forum to enforce personal guarantees which comes like a shadow with insolvency of the corporate debtor for which the guarantee has been given. It was a prolific step to enable rehabilitation and bankruptcy proceedings against personal guarantors. This will allow the creditors to run recovery proceedings against creditors and guarantors simultaneously before the same Adjudicating Authority of the NCLT having territorial jurisdiction.
IBC: SATISFACTORY EXIT ROUTE FOR BUSINESS
Any entity in the market requires freedom at three instances namely, a hassle-free entry, free competition ensuring a level playing field for all the players, and a smooth exit. Entities must have freedom to indulge in the business till they remain resourceful. On accounting several losses, they can vacate the field for newer and more efficient entities. Thus, ensuring the proper allocation and redirection of resources. For proper allocation of resources, it is crucial for a mechanism to exist wherein the defunct firms can leave the space and relocate the idle resources in orderly manner for newer players. At the same time, India being an Economy supporting Start-ups it brings a sense of security within the newly established entities that their withdrawal from the business will not leave them with tons of obligations taking a lifetime to repay. Such a mechanism is envisaged in the form of Insolvency and Bankruptcy Code, 2016. The pre-IBC regime neither had an efficient rescue mechanism nor a satisfactory exit route for business.
The present insolvency framework has experienced a move from a “Debtor-in-possession” model to “Creditor in Control” model. At the time of admission of insolvency petition, juncture at which the control and management of the defaulting company is transferred to the Committee of Creditors depicts the model of “Creditor in Control”.
Supreme Court in the case of Innovative Industries Ltd. v. ICICI Bank rejected a challenge to the insolvency proceedings mounted by the corporate debtor (Innovative Industries Ltd) and ruled in favour of the Financial Creditor (ICICI Bank), emphasizing the creditor friendly nature of the Code. By rejecting the time barred claim of the debtor, Court not only endorsed the creditor centric approach of the court, but also the time bound structure of the Code. The slant of the court ruling clearly demonstrates the need for a stringent corporate insolvency framework in India, which was answered by enactment of the Code.
The BLRC Report recognized that it is not a company’s ‘divine right’ to control the affairs of the firm. In case of any default in payment of debt, the control of the company must shift from the debtor to creditors. The erstwhile Code promoted a debtor-friendly regime, allowing defaulting debtors to secure a moratorium order and force write-downs on debt repayment. At the same time keeping the management of the defaulting company in the hands of the debtor, frustrating the efforts of the creditors including banks to realize their payment of dues by indulging in serial litigation.
Before the enactment of the Code, the non-adjudicatory forms of dispute resolution suffered high rates of failure. Which in turn resulted into continuing defaults committed by the borrowing entities. The management of the company continued to stay in the hands of the defaulting debtors which in turn became another reason for defaulters to continue to thwart the system. The Code was enacted focusing on finding a resolution and recognition of distressed financial assets which would otherwise face liquidation. This behavioural change has instilled a significantly increased sense of fiscal and credit discipline to better preserve economic value.
INCLUSION OF BANKS
IBC regime brings within its sweep not only guarantors and promoters but also keep a check on the Banks. It acts as an instrument which drives bank to refer specific cases of default against large borrowers for resolution.
With the legislation coming into force, an immediate step was taken by the government for the execution of the same. Subsequently, the Banking Regulation (Amendment) Ordinance, 2017 was promulgated, now passed by Parliament, which introduced new clauses into the Banking Regulation Act, 1949 permitting the RBI to initiate action requiring banks to launch proceedings to resolve bad assets with specifically identified clients. In an attempt to resolve the crisis due to the ballooning Non-Performing Assets of Indian Banks, the Reserve Bank of India directed the concerned banks to initiate insolvency proceedings against such NPAs under the Code. The 12 selected stressed companies constituting 25% of the total NPAs, effectively constituted the test cases for implementation of the Code.
Thereinafter, creditors and on several other occasions corporate debtors had initiated proceedings for the resolution of the corporate debts though the procedure envisaged under the Code. Unpaid loans are only the tip of the iceberg of an ailing banking sector which pose a risk to the nation’s economic growth. The Code was effectively considered a panacea for the NPA problem that had distressed India’s banking sector.
Statistically, the economic survey report, 2020-2021 has reiterated the same view. Data reported by Reserve Bank of India has indicated a hike of 45.4% in the recovery of percentage of claims for scheduled commercial banks through IBC for the financial year 2019-20. This recovery number is the highest as compared to recovery through any other means and under any other legislations. The report further mentions the amount recovered by the scheduled commercial banks in IBC regime was 1.73 Lakh Crore. The amount being more than all the amounts recovered by all the other possible alternative mechanism available for the year 2019-20.
It is noteworthy to mention that inclusion of the Non-Banking Finance Institution is credit positive for India’s banks that are NBFI’s largest lenders. Until the enforcement of the IBC Regime, the only resolution framework for NBFIs was through liquidation.
ADJUDICATION VERSUS RESOLUTION
Within the IBC Regime, both creditors and debtors are empowered to initiate insolvency proceedings. The characteristic attribute of IBC lies to confirm the commercial feasibility of insolvency resolution. The Code also demarcates the commercial aspect from the judicial aspect. In turn it narrows down the role of adjudicating authority to facilitate the process envisaged under the Code rather than adjudicating on merits of the resolution.
The significant changes brought by the Code in the equation of Creditors and Debtors has redefined the fashion in which the credit market functions. The fear of the slipping away of control and management of the firm from the existing promoters and Corporate Debtor to the Committee of Creditors acts as a deterrence in the minds of the corporate debtor. This inevitable consequence of an Insolvency proceedings acts as deterrence mechanism and refrain the firm from operating below the optimum level of efficiency. Additionally, in case of defaults, it encourages the corporate debtor(s) to settle the dispute expeditiously with the creditor at the earliest, preferably outside the court.
There has been catena of instances wherein the corporate debtors have resolved their dispute and repaid the debts immediately on the filing of the application before the concerned National Company Law Tribunal and sometimes even before the application is admitted for further proceedings.
Regarding the withdrawal of application, statistically since the inception of the Code 18,892 applications have been filed before the concerned NCLT. As many as 14,884 cases involving defaults of 5.15 lakh crore were withdrawn by September 2020 before these applications were admitted by the Adjudicating Authority and 897 processes were closed mid-way by December 2020. These statistics were reported by the Economic Survey Report, 2020-2021. It indicates that almost 83% of the cases of financial default by the Corporate Debtor are resolved even before the lis enters the very first stage of CIRP. This accounts for the behavioural shift among the defaulting parties. It is been four years since the inception of the Code, only 7% of the defaults have undergone the entire procedure envisaged under the Code resulting into Liquidation or Resolution.
In account of these statistics a likely option in future for resolving stressed assets is a pre-packaged insolvency resolution process. A proposal regarding the same is floated by the Ministry of Corporate Affairs for the public views. The proposed regime enables the stressed companies to enter into negotiation of restructuring plans with creditors prior to the formal institution of insolvency proceedings. ‘Pre-Packs’ are existing mechanism in U.S. and U.K. jurisdiction ad recently notified in India. Such negotiations result in completion of resolution process quickly and discreetly. Enforcement of a statutory pre-pack regime will go a long way in resolution of stressed assets of the creditors.
WATERFALL MECHANISM WITHIN THE CODE
The conundrum of distribution prescribed within the Code follows a waterfall mechanism which essentially delineates the order in which the liquidation proceeds will be distributed within the different categories of shareholders. As per the principles for effective insolvency and Creditor/Debtor regime by World Bank, Insolvency regime of a country must provide for an equitable treatment of similarly situated creditors.
In a pool of creditors, secured creditors are given the preference in resolving their dues. Secured Credit is an essential part of the credit system, it drives economy and encourage entrepreneurship. Preferring Secured Creditor’s right and their claims and taxation dues promotes secured lending. IBC regime protects the Secured Creditor’s right in liquidation by permitting it to enforce its security (Security against which the credit is extended) by staying out in the liquidation process. Vide section 52 of the Code, the Secured Creditor need not to give up its security to the liquidation estate and can reinforce the same on its own for the realization of its dues. For realization of the credit owed to the Secured Creditors, they have two options provided upon the commencement of the liquidation proceedings. Firstly, either to relinquish the security interest and receive their share after the sale of the assets. Secondly, to stay outside the liquidation proceedings, and to recover the due credit by the exercising the right owed to the Secured Creditor in section 52 of the Code.
Taking an insight in the credit industry, India’s insolvency regime continues to achieve and surpass its objectives, assist in strengthening India’s credit environment, and further entrepreneurship in the country.
The Pre-IBC regime discouraged the lenders from lending their assets due to the inefficient resolution system. The lenders were also unsure of their recovery of debt which in a way reduced finance availability. There was a need of legislation which stops the practice of not-paying back the loan and getting away without penalty.
In the case of Binani cement, the NCLAT observed “Resolution of stressed assets” to be the first and foremost objective of the Code. The second being the “Maximization of the value of the assets of the Corporate Debtor”. The third objective being “promoting entrepreneurship, availability of credit and balancing interests”. This order of objective is sacrosanct. The code was enacted to foster the credit regime of the country.
The factors such as, passing the management of the debtor company in the hands of the company has always fostered the credit culture in the country. The Economic Survey Report, 2020-2021 has reiterated these factors as indispensable for bringing confidence within the investors.
IBC envisages certain provisions which ensures protection of the creditors, but not at the cost of causing damage to the debtors. In addition to the creditor centric approach of the Code, it can also be seen to protect debtors against the wilful frivolous petition brought by the Creditors just for the sake of pushing the debtor company in insolvency proceedings. Suspension of IBC for the stipulated duration once in a century crisis is one such move. Additionally, in the light of recently promulgated IBC Amendment Ordinance which came in force on 28th December, 2019 a corporate insolvency resolution plan (CIRP) application can only be filed jointly by 100 allottees under the same real estate project or 10 per cent of the total number of allottees under the same real estate project, whichever is less. The said move was brought in to ensure that creditors or stakeholders who have inordinate leverage over the real estate companies by being at par with the financial Creditors do not abuse the IBC Provisions. The code seeks to strike a balance between the creditors and debtors to foster the credit market in the Country.
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