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Decoding Sec 87 of Arbitration and Conciliation Act, 1996

The moment a challenge to any arbitral award is filed under Section 34 or Section 37 of the Arbitration and Conciliation Act, 1996, that would be parsed into a disputed debt under the Insolvency and Bankruptcy Code, 2016 which would eventually result to be held as non-maintainable.

MUNEEB RASHID MALIK

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DELHI HIGH COURT APPOINTS FIVE RETIRED JUDICIAL OFFICERS AS PRESIDING OFFICERS OF SPECIAL COURTS

The Hon’ble Supreme in the judgment pronounced in the case of BCCI v. Kochi Cricket (P) Ltd., had caught sight of the fact that the Government was propounding to insert Section 87 in the Arbitration and Conciliation Act, 1996.

The press release, dated 7-3-2018, stated that the Union Cabinet under the chairmanship of the Hon’ble Prime Minister, has approved the Arbitration and Conciliation (Amendment) Bill, 2018 in which a new Section 87 is proposed to be inserted as follows: “A new Section 87 is proposed to be inserted to clarify that unless parties agree otherwise the Amendment Act, 2015 shall not apply to (a) arbitral proceedings which have commenced before the commencement of the Amendment Act of 2015, (b) court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Amendment Act of 2015 and shall apply only to arbitral proceedings commenced on or after the commencement of the Amendment Act of 2015 and to court proceedings arising out of or in relation to such arbitral proceedings.”

The press release was in harmony with the report of the High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India headed by Retd. Justice B.N. Srikrishna. A bench of Justices Rohinton Fali Nariman and Navin Sinha, in BCCI (supra), held that the Arbitration and Conciliation (Amendment) Act, 2015, will apply to those proceedings of arbitration and court proceedings related to arbitration which began on or after 23rd October, 2015, that meant that the 2015 Amendment Act applied prospectively to the Principal Act of 1996. However, an exception was carved out and it was held that Section 36 would apply even to pending applications (filed before 23rd October, 2015) under Section 34 of the Act which meant that the 2015 Amendment Act applied retrospectively to Section 36 which will be able to do away with the automatic stay regime against enforcement of an award.

Also, In BCCI (supra), the Bench cautioned and advised the Government to take into consideration the Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, before enacting Section 87 in the Arbitration and Conciliation Act, 1996, as the propounding of Section 87 would postpone the consideration of the 2015 Amendment Act and the incongruities in the Principal Act would be brought back into existence. A copy of the BCCI (supra) judgment was sent to the Ministry of Law and Justice and the learned Attorney General for India for their perusal and necessary measures.

The BCCI (supra) judgment sent to the Ministry of Law and Justice and the learned Attorney General for India was not taken into consideration by them and Section 87 of the Arbitration and Conciliation Act, 1996, was inserted by Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019 and brought into force with effect from 30.08.2019.

 The facts of the case titled, Hindustan Construction Company Limited v. Union of India in which Section 87 was struck down, are discussed briefly. Hindustan Construction Company Limited is an infrastructure company which is involved in the business of infrastructure projects on a large scale. It undertakes projects as a contractor for government bodies and government companies such as the NHAI, NHPC, NTPC, IRCON, etc. As humongous cost overruns are involved in such projects and also due to the complexion of the projects, Hindustan Construction Company Limited wrangled with the government companies and bodies. The arbitral awards were pronounced in favour of Hindustan Construction Company Limited. The awards, so pronounced, were challenged under Section 34 of the Arbitration and Conciliation Act, 1996. The Respondents challenged the arbitral awards and succeeded in getting an automatic stay on the execution of the arbitral awards due to the newly inserted Section 87 of the Arbitration and Conciliation Act, 1996, as inserted by Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019 and brought into force with effect from 30.08.2019.

Hindustan Construction Company Limited argued that Section 87 is an impediment for the enforcement of any arbitral award. The moment a challenge to any arbitral award is filed under Section 34 or Section 37 of the Arbitration and Conciliation Act, 1996, that would be parsed into a disputed debt under the Insolvency and Bankruptcy Code, 2016 which would eventually result to be held as nonmaintainable. Demand notices were also issued to the Petitioner who owed hefty sums of money to the operational creditors responsible for supplying men, machinery and material for the projects undertaken.

In Hindustan Construction Company case (supra), three issues were challenged before the Hon’ble Supreme Court, which were: –

The constitutional validity of Section 87 of the Arbitration and Conciliation Act, 1996;

 Repealing of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 by Section 15 of the 2019 Amendment Act;

Some provisions of the Insolvency and Bankruptcy Code, 2016.

In Hindustan Construction Company case (supra), a bench of Justices R.F. Nariman, Surya Kant and V. Ramasubramanian pronounced the judgment with Justice R.F. Nariman authoring it. It was enunciated that in the case of BCCI (supra), the Hon’ble Supreme Court had already cautioned the Government that Section 87, if enacted, would be in conflict with the Statements of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, still the Arbitration and Conciliation (Amendment) Act, 2019 was brought into force. As Section 87 was enacted in accordance with the report of High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India headed by Retd. Justice B.N. Srikrishna, the Committee failed to take into consideration that the it took 19 years for the Parliament to remove the mischief of Section 36 by bringing into force the Arbitration and Conciliation (Amendment) Act, 2015, and by enacting Section 87, the 2015 amendment is reversed, which leads to manifest arbitrariness.

The bench observed that the Hon’ble Supreme Court’s judgments in the cases of National Aluminum Company Ltd. (NALCO) v. Pressteel & Fabrications (P) Ltd. and Fiza Developers and Inter-trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. were per incuriam and incorrect as both the judgments held that that the moment an arbitral award is challenged, an automatic stay on the award comes into picture and the award becomes impossible to be enforced. The judgments failed to interpret Sections 9, 35, and 36 of the Arbitration and Conciliation Act, 1996, correctly. Also, automatic stay by way of Section 36 is not there in the Section at all and this interpretation fails to consider the second part of Section 36 dealing with the enforcement of an award (final and binding) as a decree of a court under the Code of Civil Procedure.

Coming to the issue of the repealing of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 by Section 15 of the 2019 Amendment Act, the Bench laid emphasis on the BCCI judgment (supra) in which the scheme of Section 26 was made clear. The judgment in BCCI (supra) made it pretty lucid with regard to the scheme of Section 26 that the 2015 Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced, by way of Section 21 of the principal Act, on or after the Amendment Act, and to court proceedings which have commenced on or after the Amendment Act came into force. After interpreting Section 26 of the Arbitration and Conciliation Act, 1996, very lucidly, Section 87 was still enacted which defeats the primary goals and objectives of the Arbitration and Conciliation Act, 1996.

 The bench while rejecting the petitioners’ argument to either read in or read down, the definition of corporate person in Section 3(7) of the Insolvency and Bankruptcy Code, 2016, observed that the NHAI is a statutory body which performs significant governmental functions as an extended limb of the Central Government, and bodies such as the NHAI are ungovernable by certain provisions of the Insolvency and Bankruptcy Code, 2016. The Bench, while discussing the case of Swiss Ribbons (P) Ltd. v. UOI, noticed that the Insolvency and Bankruptcy Code, 2016, is an economic legislation which usually raises a bigger threshold of challenge and leaves the Parliament of India a free play in the joints.

 The bench, after discussing various aspects of the Arbitration and Conciliation (Amendment) Act, 2015, the Arbitration and Conciliation (Amendment) Act, 2019, and a catena of judgments, in detail, held as follows: –

The introduction of Section 87 in the Arbitration and Conciliation Act, 1996, by way of Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019, is manifestly arbitrary under Article 14 of the Constitution of India. An arbitral award-holder will always be dispossessed of the productivity of the award if the grant of automatic-stays, the moment an application under Section 34 is filed, become the norm, defeating the very purpose of the Arbitration and Conciliation Act, 1996 and exposing the awardholders to the adversities of the Insolvency and Bankruptcy Code, 2016. Section 9 of the Principal Act also supports the fact that there is no concept of automatic stay as the said Section assists the parties to apply for interim reliefs before the enforcement of an award and 2015 Amendment Act clarified the misconception of automatic stays.

The repealing of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 by Section 15 of the 2019 Amendment Act is also manifestly arbitrary under Article 14 of the Constitution of India. The judgment in BCCI (supra) will continue to be incorporated in every sense so that 2015 Amendment Act can apply to all court proceedings which commenced after 23.10.2015.

The challenge to some of the provisions of Insolvency and Bankruptcy Code, 2016, has no merit at all and therefore, the challenge is rejected. As discussed, the NHAI is a statutory body which performs significant governmental functions as an extended limb of the Central Government, and bodies such as the NHAI are ungovernable by certain provisions of the Insolvency and Bankruptcy Code, 2016. The Insolvency and Bankruptcy Code, 2016, is an economic legislation which usually raises a bigger threshold of challenge and leaves the Parliament of India a free play in the joints.

The judgment in the case of Hindustan Construction Company Limited v. Union of India has finally settled the position regarding the applicability of the Arbitration and Conciliation (Amendment) Act, 2015, as pronounced by the Hon’ble Supreme Court in the case of BCCI (supra) and reiterated in this judgment. The concept of automatic stays has been put to rest with the judgment elucidating that the Arbitration and Conciliation Act, 1996, has nothing in it with regard to automatic stays, if the interpretation of Section 36 is considered as a whole. The moment an application is filed under Section 34, automatic stay is granted on the award which is against the basic foundation and object of the Arbitration and Conciliation Act,1996, so, the judgment in hand has removed such oddity. This judgment will prove to be a boon in strengthening the Indian Arbitration Regime and make our country a robust hub of arbitration. The Hon’ble Supreme Court has provided a significant breathing space to the award holders by holding in the judgment in hand that the arbitral awards are challenged under Sections 34 and 37 of the Arbitration Act, 1996 and more than 6 years are spent in defending these challenges, therefore, the major problem was that the moment a challenge is made under Section 34, there is an automatic-stay of such awards under the Arbitration and Conciliation Act, 1996. The judgment has now done away with this glaring problem.

This judgment also clears the air with regard to the true applicability of Section 26 of the Principal Act by holding that the 2015 Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced, by way of Section 21 of the principal Act, on or after the Amendment Act, and to court proceedings which have commenced on or after the Amendment Act came into force. The Supreme Court has risen to the occasion by holding that the Insolvency and Bankruptcy Code, 2016, is an economic legislation which usually raises a bigger threshold of challenge and leaves the Parliament of India a free play in the joints. The judgment will surely play a vital role in strengthening the alternate dispute resolution mechanism in our country and in promoting the concept of less interference of courts in arbitral awards and proceedings.

Justice R.F. Nariman before pronouncing the judgment in hand, had already said that the 2019 Arbitration Amendment Act has several glaring loopholes while delivering a keynote address at the 3rd ICC India Arbitration Day event organized by Indian Chamber of Commerce at Delhi on 14th September 2019 (Saturday). Justice Nariman said, “The insertion of Section 87 in the Act was a retrograde move, as it nullified the effect of 2018 judgment of the SC which clarified the position on retrospective application of automatic stay provision. The Supreme Court in BCCI v. Kochi Cricket Private Limited, had said that the 2015 amendment to Section 36 will apply only to: (a) arbitral proceedings commenced on or after October 23, 2015; and (b) arbitration-related court proceedings filed on or after October 23, 2015, even where the arbitral proceedings had been commenced before the amendments came into force. Section 87 has unsettled this provision, leading to confusion. Another judicial pronouncement in future will be needed to clear this confusion.”

 The important impact of this judgment is the positive approach of the Judiciary towards strengthening the Arbitration Regime in India. Our country will surely become a robust hub of arbitration provided all stakeholders rise to the occasion by taking concerted steps for the unfolding of arbitration jurisprudence in India. With the pronouncing of judgments like the one in hand, the future of arbitration in our country is well shielded. The arbitration jurisprudence will surely make headway in the coming years as parties have now started to settle their disputes by means of arbitration in a great way. This is one of the consequences of the increased globalisation of world trade and investment. Therefore, our country is also putting its best foot forward by bringing our Principal Arbitration Act in line with the arbitration legislations followed by other countries, to become a sturdy hub of arbitration in the world.

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Allahabad High Court Quashes POSCO Case: If Husband/Accused Is Convicted Then Victim/Wife’s Future Would Be Ruined

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Allahabad High Court Quashes POSCO Case: If Husband/Accused Is Convicted Then Victim/Wife’s Future Would Be Ruined

The Allahabad High Court recently in the case Rajiv Kumar v. State of U.P. And 2 Others observed and has recently quashed an FIR and criminal proceedings in a POCSO case registered against a man as it noted that the accused man and victim-wife (who was a minor at the time of the incident) married the accused/ applicant out of her own sweet will and is living a happy married life with him.
The bench comprising of Justice Manju Rani Chauhan observed that to punish punish the offenders for a crime, involved in the present case, is in the interest of society, but, at the same time, the husband is taking care of his wife and in case, the husband is sentenced and convicted for societal interest, then, the wife will be in great trouble and it would ruin their future. Thus, it is also in the interest of society to settle and resettle the family for their welfare, the bench quashed the rape-POCSO case against the accused.

Facts of the Case:
The Maternal Uncle of the Victim lodged an FIR against the accused under Sections 363, 366, and Section 376 of the Indian Penal Code, 1860and Section 3/4 of the POCSO Act, alleging that the accused had raped the victim (then a 17-year-old minor).
Further, the accused moved the instant Section 482 CrPC petition seeking to quash the instant FIR. Also, the victim appeared before the Court and had submitted that her maternal uncle had lodged the FIR in an attempt to ruin her married life.
It was further stated by her that she has entered into a compromise with the accused and has married him out of her free will, and consent, and without any external pressure, coercion, or threat of any kind. Before the court, it was also submitted that that out of their wedlock, they are blessed with a male child, who is presently four and half years old and as per her date of birth and at the time of marriage she was nearly 17 and half years old.
It was submitted by the Applicant-Accused that on account of the compromise entered into between the parties concerned, all disputes between them have come to an end, and therefore, further proceedings are liable to be quashed in the present case.

Observations Made By Court:
In the present case, the court noted that though the offence under the relevant sections 363, 366 and 376 of IPC and Sections 3/4 of POCSO Act are not compoundable under Section 320 Cr.P.C, however, adding to it, the court stated that the power of the High Court under Section 482 Cr.P.C is not inhibited by the provisions of Section 320 Cr.P.C and the criminal proceedings as well as the FIR can be quashed by exercising inherent powers under provision of Section 482 Cr.P.C, if warranted in given facts and circumstances of the case for ends of justice or to prevent abuse of the process of any Court, even including the cases which are not compoundable where parties have settled the matter between themselves.
The court while considering the facts and circumstances of the case, and also the submissions made by the counsel for the parties, the court came to the considered opinion that the victim herself, has stated before this Court that out of her own sweet will, she has married the applicant and is living a happy married life and out of their wedlock, the couple are blessed with a male child. However, no useful purpose shall be served by prolonging the proceedings of the criminal case as the parties have already settled their disputes.
Accordingly, the court quashed the charge sheet and the cognizance order as well as the entire proceedings of the Criminal Case were hereby quashed. Thus, the application was allowed.

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SC likely to hear next month pleas related to Article 370

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SC to hear Manoj Tiwari’s plea on firecracker

A Supreme Court constitution bench is expected to hear a slew of petitions related to Article 370 of the Constitution, which granted Jammu and Kashmir (J&K) semi-autonomous status before it was repealed in August 2019. Chief Justice of India (CJI) Uday Umesh Lalit said on Friday that the petitions will be heard after the Dussehra holiday.

When senior advocate Prashanth Sen asked the CJI to list the matter, Justice Lalit responded, “We will certainly list that…it will be listed after Dussehra break.” From October 3 to 10, the court will be closed for Dussehra.

The petitions were last heard in March 2020, when a five-judge panel declined to refer the case to a larger panel. The reference was requested because previous court decisions on the subject were in conflict with one another. This contention was rejected by the bench.

At the time, the bench was aware of an older batch of petitions pending in the Supreme Court challenging the constitutionality of Articles 370 and 35A, which granted J&K special status. It was stated that all issues concerning Article 370 should preferably be heard together.

National Conference legislators, former bureaucrats, and some organisations are among those who have objected to the repeal of Article 370. Some petitioners cited the Supreme Court’s 2018 decision, which stated that Article 370 had gained permanent status.

Many petitions have also been filed against the Jammu and Kashmir State Reorganization Act, which calls for the division of J&K into two Union Territories.

Despite opposition from the central government, which argued that Article 370 had international and cross-border implications, the Supreme Court issued notices on the petitions on August 28, 2019. The Centre also claimed that it is a highly sensitive issue, and that whatever happens in the country will be brought up at the United Nations. While issuing notices in 2019, the court referred the case to the five-judge constitution bench.

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Supreme Court: Fixed Term Sentences Exceeding 14 Years Can Be Alternative To Death Sentence In Certain Cases

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death penalty

The Supreme Court in the case State of Haryana vs Anand Kindoo observed and stated that fixed term sentences exceeding 14 years can be awared in appropriate cases to strike a delicate balance between the victims’ petition for justice and rehabilitative justice for the convicts.
The bench comprising of Justice Sanjay Kishan Kaul, Justice Abhay S. Oka and the Justice Vikram Nath observed that this fixed term sentence can only be by the High Court or this Court and not by the trial Court.
In the present case, the trial court awarded death sentence to the accused who were ‘trusted employees’ of the deceased. However, Major General Kailash Chand Dhingra (K.C. Dhingra) and his wife Smt. Sangeeta Dhingra, who were an aged couple and were killed by the accused while they were sleeping. It was refused by the High Court to confirm the death sentence and imposed life sentence on them.
In an appeal before the Apex Court, the complainant and the state contended that given the brutality of the crime, the court should impose a fixed term sentence before which the convicts are not liable to be considered for granting of remission. Thus, it was submitted that there should be at least a fixed term sentence.
The court observed that it was a pre-planned murder for gain and greed by somebody who was in a position of trust with the family.
The bench observed that at an advanced stage in such health respect, there is always an element of trust and faith in the person by a person who employs them as well as the family members. However, the work takes other family members elsewhere and with the joint family system having broken down, the role of such trusted help becomes even more significant. Also, it is the significance of the society where a wrong signal goes if a trusted person breaches that trust to kill the person who had employed them in such a gruesome manner. It has been stated by the trial Court, the society itself demands justice, apart from an utter element on deterrence which is in any aspect of conviction. Further, the approach cannot be the vindictive but lack of appropriate sentence leaves the cry of justice of the society un-addressed apart from the fact that other persons who may have the propensity to carry out the crime feel that they will get away with the lighter sentence, if in case they are caught. While, battering two sleeping people beyond recognition who imposed trust in their employee certainly calls for something more than merely a life sentence under Section 302, IPC, even if death sentence is not to be imposed.
Therefore, the court imposed a fixed term sentence of 30 years.
The bench while allowing the appeal observed in the case Shankar Kishanrao khade vs. State of Mahrashtra (2013) 5 SCC 546, wherein it was held that if there is any circumstance favouring the accused such as lack of intention to commit the crime, young age of the accused, possibility of reformation etc., accused not being a menance to the society, no previous criminal record etc., the accused may avoid capital punishment. It was opined by the court that the crime is important but so is the criminal and hence the Supreme Court in recent past has substituted death penalty with fixed term sentences exceeding 14 years. It stated that imposing a fixed term sentence creates a possibility for the convict to re-integrate into society after serving his/her sentence. A delicate balance is strike the balance between victims’ plea for justice.

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NCLAT Upholds Dismissal Of Section 7 Petition, Corporate Debtor Willing To Pay Full Amount, Opposed By Financial Creditor

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NCLAT Upholds Dismissal Of Section 7 Petition, Corporate Debtor Willing To Pay Full Amount, Opposed By Financial Creditor

The National Company Law Appellate Tribunal (“NCLAT”) in the case Reliance Commercial Finance Limited v Darode Jog Builder Private Limited, the Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Judicial Member, Justice M. Satyanarayana Murthy and the Technical Member, Mr. Barun Mitra observed while adjudicating an appeal filed in Reliance Commercial Finance Limited v Darode Jog Builder Pvt. Ltd., has upheld the Adjudicating Authority’s decision to not admit a petition under Section 7 of IBC, despite there being a default and a debt. It was recorded by the bench the Corporate Debtor an opportunity to pay/settle the full amount of default despite the Financial Creditor’s unwillingness to enter settlement.

Background Facts of the Case:
The Appellant/ Financial Creditor, Reliance Commercial Finance Limited had sanctioned Term-Loans of Rs. 19.5 Crores to the Corporate Debtor i.e., Darode Jog Builder Pvt. Ltd. on 29.07.2013. In 2017, the Loan Accounts were declared as the Non-Performing Assets. On 04.11.2019, a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC”) was filled by Financial Creditor, wherein seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) over a default of Rs. 15,79,41,658/- against the Corporate Debtor.
It was observed that in an hearing held on 06.07.2022, the Corporate Debtor acknowledged its liability to pay and made an offer of Rs. 12.75 Crores, which is to be paid within 45 days. Thus, the Adjudicating Authority directed the Counsel for the Financial Creditor to obtain appropriate instructions. Thus, the court observed that if the Settlement did not take place, the Petition would automatically be admitted on the next date of hearing.
The court on the next date of hearing i.e. 11.07.2022, it was submitted by the Corporate Debtor that it is willing to deposit the entire amount of Rs. 15,79,41,658/- within 45 days. However, the Financial Creditor expressed its unwillingness for settling the matter. The Bank account details of the Financial Creditor were obtained by the Adjudicating Authority and alongside granted liberty to the latter to file for restoration of petition in case said amount is not deposited within 45 days. The court disposed of the appeal.
The Financial Creditor filed an appeal before the NCLAT, aggrieved by the order dated 11.07.2022.

Contentions Made By Appellant:
It was submitted by the Financial Creditor that the Adjudicating Authority committed error in disposing of the Petition, as it was not willing to settle the matter. However, the Adjudicating Authority could not have permitted the Corporate Debtor to deposit amount in Financial Creditor’s account.

Contentions Made By Respondent:
It was argued by the Corporate Debtor that Financial Creditor was unwilling to settle as earlier entire amount was not offered and settlement had not taken place despite several adjournments. Further, it was submitted that the Corporate Debtor has financial capacity to deposit the entire amount.

NCLAT Decision:
The Bench placed reliance on the Supreme Court judgment in the case Vidarbha Industries Power Limited Vs. Axis Bank Limited, Civil Appeal No. 4633 of 2021.
It was observed by the bench that as per the judgment, even after debt and default is there, Adjudicating Authority has to apply its mind to assess the feasibility of initiating CIRP.
It stated that when the Corporate Debtor has complied to deposit the entire defaulted amount of the Financial Creditor as permitted by the Adjudicating Authority and no purpose and occasion shall survive to still proceed with the Corporate Debtor Insolvency Resolution.
Accordingly, the bench observed that the proceedings under Section 7 are for resolution of insolvency. Adjudicating Authority had not erred in ascertaining whether the Corporate Debtor can comply to deposit the entire defaulted amount in bank account of Financial Creditor’s. Further, the court observed that the Financial Creditor’s interest was fully protected, since liberty was already given to revive the petition in case full amount was not received within 45 days.

The bench dismissed the appeal.

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IBBI Amends Liquidation Process Regulations: COC To Function As Stakeholder’s Consultation Committee For First 60 Days

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IBBI Amends Liquidation Process Regulations: COC To Function As Stakeholder’s Consultation Committee For First 60 Days

On 16.09.2022, the Insolvency and Bankruptcy Board of India (“IBBI”) has notified amendments for a second time to the IBBI (Voluntary Liquidation Process) Regulations, 2016 (“Voluntary Liquidation Regulations”) and IBBI (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”).
Detailed Overview Of the Amendments:
the IBBI has introduced the following amendments to the Voluntary Liquidation Regulations and Liquidation Process regulations, in exercise of the powers conferred by Section 196(1)(t) read with Section 240 of the Insolvency and Bankruptcy Code, 2016.
For enabling better participation of stakeholders and streamline the liquidation process to reduce delays and realize better value, the following major modifications are made for the amendment in Liquidation Regulation.
The Committee of Creditors (CoC) constituted during Corporate Insolvency Resolution Process (CIRP) shall function as Stakeholders Consultation Committee (SCC) in the first 60 days and after the adjudication of claims and within 60 days of initiation of process, the SCC shall be reconstituted with respect to the admitted claims.
It has been mandated to the liquidator to conduct the meetings of SCC in a structured and time bound manner with better participation of stakeholders.
It has been enlarged the scope of mandatory consultation by liquidator with SCC and now SCC may even propose replacement of liquidator to the Adjudicating Authority (AA) and fix the fees of liquidator, if the same during CIRP is not fixed by the CoC.
The amount of claim collated during CIRP shall be verified by the liquidator, if any claim is not fixed during the liquidation process.
Whenever it is decided by the CoC that the process of compromise or arrangement may be explored during liquidation process, an application shall be filled by the liquidator only in such cases before Adjudicating Authority for considering the proposal of arrangement or compromise, if any, within thirty days of the order of liquidation.
For Auction process, specific event-based timelines have been stipulated.
SCC b Before filing of an application for dissolution or closure of the process shall advice the liquidator, the manner in which proceedings in respect of avoidance transactions or fraudulent or wrongful trading and shall be pursued after closure of liquidation proceedings.
Further, the Amendment Liquidation Regulations and Amendment Voluntary Liquidation Regulations lays down the manner and period of retention of records relating to liquidation and voluntary liquidation of a corporate debtor or corporate person, respectively.

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Supreme Court: Setting Aside NCDRC Order Awarding Compensation To Women Who Gave Birth Despite Undergoing Tubectomy Surgery

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Supreme Court: Setting Aside NCDRC Order Awarding Compensation To Women Who Gave Birth Despite Undergoing Tubectomy Surgery

The Supreme Court in the case Civil Hospital vs Manjit Singh observed and has set aside an NCDRC order that directed a hospital to pay compensation to a woman who delivered a child despite undergoing tubectomy procedure.
In the present case, a woman underwent tubectomy procedure twice, though both the procedures remained unsuccessful. In the year 2003, she gave birth to a male child. A complaint was filled by her before the District Consumer Disputes Redressal Forum alleging medical negligence on account of failed tubectomy surgery. Thus, the court dismissed the same on the ground that the hospital is not a consumer. The order was affirmed by the State Consumer Commission (SCDRC). Later, the revision petition was allowed by the National Consumer Commission and has directed to pay compensation as per the guidelines and the policy of the State.
Before the Apex Court, two contentions were raised by the hospital (1) that hospitals and Doctors who render service without any charge to every person availing of the service would not fall within the ambit of ‘service’ under Section 2(1)(o) of the Act relying on the case Indian Medical Association Vs. V.P. Shantha And Ors., (1995) 6 SCC 651 that the failed tubectomy surgery is not a case of medical negligence as the sterilized woman can become pregnant due to natural causes. [relying on the case State of Punjab Vs. Shiv Ram and Ors., 2005, 7 SCC 1].
The bench while taking notice of the law laid down in the decisions relied on by the appellants, allowed the appeal by setting aside the NCDRC order. However, if the respondent has been paid any amount in terms of the Order of the NCDRC, the same shall not be recovered by the State, the bench said.
It was observed in In V.P. Shantha that the Hospitals and Doctors who render service without any charge whatsoever to every person availing of the service would not fall within the ambit of ‘service’ under Section 2(1)(o) of the Act. Thus, the payment of a token amount for registration purposes only would not alter the position in respect of such doctors and hospitals.
The Apex Court regarding failed tubectomy surgery in Shiv Ram (supra), had observed that the cause of action in claiming compensation in cases of failed sterilization operation arises on account of negligence of the surgeon and not on the account of child birth. Further, the failure due to natural causes would not provide any ground for claim and it is the women who has conceived the child to go or not to go for medical termination of pregnancy. Thus, having gathered the knowledge of conception in spite of having undergone sterilization operation, if the couple opts for bearing the child, it ceases to be an unwanted child and the compensation for maintenance and upbringing of such a child cannot be claimed.

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