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How are air crash victims and kins compensated?

This article categorically answers the questions and provides an overview of the international treaties applicable in the event of an international air accident and the necessary compensation.



“We are strangely biased, as individuals and media institutions, to focus on big sudden changes, whether good or bad – amazing breakthroughs, such as a new gadget that gets released, or catastrophic failures, like a plane crash”. -Steven Johnson

 The horrifying incident of the Kozhikode Air India Express crash on 7th August 2020 shook the nation and the already financially struggling aviation industry. In light of the injured victims, the casualties and the suspicions of the airport authorities being naive of violation notices sent to them. The question turns on who is liable? Who should pay and what should be the compensation?

 Although Air India Express has promised an interim compensation1 of Rs.10 lakh to the next of kin of the deceased passengers who were 12 years and above and Rs.5 lakh to passengers below 12 years of age Rs.2,00,000 to critically injured as immediate relief, is this adequate compensation? Can the victims claim more compensation?

This article categorically answers the questions and provides an overview of the International Treaties applicable in the event of an International Air accident and the necessary compensation that can be provided to the air crash victims under different circumstances along with relevant supporting precedents.

  1. Preliminary terms

It will be relevant to see the legal terms behind the unfortunate incident of an airplane crash means under prevailing laws of India. The Aircraft (Investigation of Accidents and Incidents) Rules, 2017 defines –

“accident” as means an occurrence associated with the operation of an aircraft which,– “

  1. in the case of a manned aircraft ,takes place between the time any person boards the aircraft with the intention of flight until such time as all such persons have disembarked; or
  2. in the case of an unmanned aircraft, takes place between the time the aircraft is ready to move with the purpose of flight until such time as it comes to rest at the end of the flight and the primary propulsion system is shut down, in which:” either a person is fatally or seriously injured or affected due to aircraft damage or structural failure or missing aircraft. The definition can be considered to be inclusive of technicalities and encompasses a large number of contingencies.

 • “aircraft” means any machine that can derive support in the atmosphere from the reactions of the air other than the reactions of the air against the surface of the earth;

 (iv) “serious injury” means an injury which is sustained by a person in an accident and which

  1. requires hospitalization for more than forty-eight hours, commencing within seven days from the date the injury was received; or (ii) results in a fracture of any bone (except simple fractures of fingers, toes or nose); or
  2. involves lacerations which cause severe hemorrhage, nerve, muscle or tendon damage; or
  3. involves injury to any internal organ; or
  4. involves second or third degree burns, or any burns affecting more than five per cent; or
  5. involves verified exposure to infectious substances or injurious radiation;

 ii. Applicable International Conventions

 In the year 1929, the Warsaw convention was signed for the unification of certain rules for international carriage by air. This convention is applicable to all international carriage of persons, baggage or cargo performed by aircraft for reward. Later came to be known as the The Montreal Convention 1999 (MC99) (“the convention”) aims to establish passenger rights in case of death or injury to passengers, damages, delays or lost luggage.

As per the convention the term ‘International carriage’ means:

“any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two States Parties, or within the territory of a single State Party if there is an agreed stopping place within the territory of another State, even if that State is not a State Party. Carriage between two points within the territory of a single State Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention.”

 India became a signatory to this convention in June 2009. The application of this convention in India is contained in the Carriage by Air Act, 1972 (“the Act”), third schedule relating to the rights and liabilities of carriers, passengers, consignors, consignees and other persons, shall, subject to the provisions of this Act, have the force of law in India in relation to any carriage by air to which those rules apply, irrespective of the nationality of the aircraft performing the carriage.

Convention on International Civil Aviation (Chicago Convention)

 The Chicago convention is a landmark agreement which establishes the core principles to promote “cooperation and “create and preserve friendship and understanding among the nations and peoples of the world” in order to permit International Air Transport. This convention also establishes the specialized agency – International Civil Aviation Organization (ICAO) to oversee the principles of this Convention. India became a member to this convention on 1 March 1947. These broad principles set out in the convention are reflected in Indian Aviation statues and the rules.

India is also a member of several other International conventions on aviation such as: The Rome Convention, 1952, The Guadalajara Convention, 1961, The Hague Convention 1970, The Montreal Convention, 1971, The Cape Town Convention, 2001.

iii. Air crash Investigation

The Aircraft Accident Investigation Bureau (AIB) and Directorate General of Civil Aviation (DG) are required to be notified about the accident within 24 hours of the accident or incident and also give information to the District Magistrate and the Officer-in-charge of the nearest Police Station of the accident. Under such circumstances the DG and AIB are under an obligation to conduct the investigation in accordance with the rules and the Aircraft Accident Investigation Bureau acts as the accident Investigating Authority.

The unfortunate incident of an air crash is heavily investigated by the air crash investigators, private companies, personnel appointed by the airline, etc. All the necessary data is collected to determine the reason for a plane crash. This data is usually obtained by studying the parts of aircraft and recovering information from the Black box and the in flight recorded located in the cockpit and the tail respectively.

This information collected is used to determine if the pilot, airplane or the airplane parts manufacturer or others are at fault.

 iv. Compensation

 • Liability of a carrier:

When it comes to international flights, an international air carrier convention was put in place in 1999 to address what would happen after aircraft accidents. This happened at the Montreal Convention and was adopted by a United Nations agency known as the Civil Aviation Organization (CAO). The treaty stipulates that the “the carrier is liable for damage sustained in case of death or bodily injury of a passenger upon condition only that the accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking.”

• Liability of other stakeholders in the aviation industry

 The manufacturing defaults like in the case of Boeing 737 max9 were fatal on more than two occasions and all planes had to be grounded. In many cases, liability can be assigned on a percentage basis. It’s possible for an airline to be 30 percent at fault for an accident if it’s determined their safety inspections of the plane were improper, or a faulty part was not replaced. Similarly if the airport authority ignored any violations then they too become liable.

For eg: manufacturers can be found to be 70 percent at fault if they made the faulty part and did not realize it could cause a plane crash. The settlements plane crash victims receive will be based on the percentage of determined liability.

Compensation and liability is thus calculated percentage-wise on a pro rata basis. Action for Damages

 In case of a liability an action for damages can be brought at the option of plaintiff, in the territory of one of the States Parties, either before the court of the domicile of the carrier or of its principal place of business, or where it has a place of business through which the contract has been made or before the court at the place of destination.

Under tort law compensatory, incidental, consequential, nominal, liquidated, and (sometimes) punitive damages can be claimed.

Extent of Compensation

And when an airline is found at fault for an accident, each affected passenger is to get a minimum value equal to $ 113,100 special drawing rights (“SDRs”). It is to be noted that usually there are caps to the amounts fixed by the governments and thus the payout might be substantially lower.

Such plane crash compensation currently equals to approximately $170,000 per passenger. “During the past several decades, there have been limitations placed on victims for what they can recover from an airline under the international treaties and laws. If it can be proven that an airline did not take all required precautions for a flight; there will be no limit to what a victim can recover.”

The air crash investigation reports become a crucial piece of evidence in determining the liability and which stakeholder has to pay its share of compensation and to what percentage. Compensation in case of delay

Article 19 of the Convention says if any damage per say is caused to passengers due to delay of the flight, then airlines are bound to pay 4,694 SDRs for each passenger. This works out to $7,221. In case of destruction or damage to baggage, the airlines are liable to pay 1,131 SDRs, which works out to approximately $1,740. Again, these amounts are capped and the payout would be lower in most cases.

v. Calculation

The value of the SDRs is calculated as defined by the International Monetary Fund (IMF). The prescribed limits are revised every five years. This revision is based on the weighted average of the annual rates of increase or decrease in the consumer price indices of the various countries. For example, if there are passengers of different nationalities in an air crash, the compensation amounts might vary among the passengers. The convention also prescribes a certain limit for countries which are not a part of the IMF.

These amounts seem substantial prima facie but these limits are capped, which means passengers get less than the prescribed amounts.

Usually, the Insurance company of the Airline company takes care of this compensation as well.

The final amount depends on the Property and Casualty Cover the particular airline has, says an insurance company official. “It will depend on who is the insurer and reinsurer of the airline. These depend on the personal treaty between the insurance companies and these treaties are customised.”

 It is not unheard of the airline companies getting into litigation disputes with the insurance company and/or with passengers, delaying the entire process of payouts altogether.

There were reports that in the Ukraine crash, the airline might refuse to pay some part of the insurance on the ground that it was an act of war. However, the insurance company official says that is not the case. “When the aircraft (Malaysia Airlines Flight 17) flew over the zone, it was a safe zone. Only later was it declared a danger zone. It is possible this case might go into arbitration.

Usually, airlines from the track record have been efficient to facilitate a smooth transfer of preliminary compensation funds but not at the right amount.

 vi. Insurance Coverage and Damages

 Every airline company that operates around the world must have a certain level of mandatory insurance coverage for all flights. These insurance companies will be paying the compensation to victims in the case of an airplane accident and will be determined by property and casualty coverage and for international flights by abovementioned treaties.

 The victim of an accident involving an airplane is entitled to two different types of compensation damages. The first type is pecuniary damages and second being non-pecuniary damages. Facts and the subject matter are variables in every case. This will involve compensation for their medical treatments, loss of income, benefits to the survivors of a deceased kin, dependents and more.

The other type is known as non-pecuniary and this is where the largest amounts of compensation are paid. It involves payment for pain and suffering. There are some places that will permit compensation for pain and suffering experienced prior to impact (air crash investigation reports are analysed), as well as for what a person experiences during a crash.

vii. Should compensation to the kin of air crash victims vary from person to person?

 The unfortunate incidents of airplane crashes are catastrophic and substantially impair the lives of the passengers kin in many ways. In cases where the fuselage of the airplane is missing for years, the unknown of the whereabouts is also much daunting. In cases of extreme crashes where the fuselage debris is too damaged, it may take the air crash investigation authorities years to decode what went wrong during the flight.

 The passengers in an aircraft might host several nationalities, regions or any demographics with respect to caste, creed, sex, and so on.

The compensation which is paid by the Airline Company as such should not be discriminatory in any form whatsoever considering a given situation. The nationality or sex or age or income or the potential future income of the now-deceased passenger should not be the protocol basis for compensation to the next of the kin. This very salutary principle of non-discrimination is embodied in Article 1 of the Convention.

Compensation should be a derivative of the human aspect combined with monetary compensation. Airlines should take it upon themselves to help the kinof the diseased passenger as substantial trauma or the unknown of whereabouts of the diseased could impair their lives permanently. In case the passenger survives, it wouldn’t be without substantial post-traumatic stress disorders amongst physical injuries and the same should be taken into account.

As per the revision of compensation about done in 2009, compensation of Special Drawing Rights (SDR) – an IMF notional currency that is derived on the very basis of the prevailing value of some hard currencies of the world (subjective of the region) — 113,100 is payable to the next of kin in case of death in air travel. Compensation for physical injury and loss of or damage to baggage is also laid down in the convention.

There are several judgments to that effect where the Supreme Court order of May 19, 2020, in Triveni Kodkany vs Air India Ltd17 and others, granting the largest ever compensation in an individual case of Rs.7.64 crore needs to be understood and examined. It also held that gross income should be the basic factor to determine compensation and not salary. In addition to it, 6% simple interest for the delay was also awarded. The victim was a passenger in the ill-fated flight from Dubai that overshot the runway in Mangaluru and fell down the cliff in 2010. He was an expatriate working in a company in UAE.

The Supreme Court has upheld the compensation ordered by the National Consumer Disputes Redressal Commission set up under the Consumer Protection Act while acceding to the prayer of the family to consider the cost to the company (CTC) without nitpicking about various allowances.

 Human life is invaluable, in such cases people travelling for leisure or work get affected unknowingly. Which is perhaps why in India under the Motor Vehicles Act, 1988 as interpreted by the Supreme Court in National Insurance Company Ltd vs Pranav Sethi19 in 2017, the income of the victim at the time of the fatal accident is the clincher — greater the income greater the compensation a basic structure of the payout.

For the sake of placing a spectrum, an unemployed youth might at best get compensation if at all based on his future potential although the apex court conception of adding 30 per cent on this count to the existing income of people dying in their prime simply cannot be implemented when one was unemployed.

The state governments/ central governments also announce one time compensation to victims on a humanitarian basis.

 viii. What can you claim?

The kins and the victims of passengers involved in the aircraft or in an aircraft accident, they can indeed claim compensation. Depending on the injuries, they can claim for immediate or future pain, suffering, lost income, other financial losses (including superannuation), medical expenses and impairment benefits calculated as per Property and Casualty Cover.

They may be able to claim dependency damages if someone in their family has died in an aircraft accident.

Depending on the case and circumstances after the air crash investigation, the organization liable for the damages could be the aircraft operator, the airport corporation or other airport site operator; manufacturer or maintenance engineer; or another agency, such as the Civil Aviation Safety Authority.

The preliminary compensation declared by the party at gross default in case of an airplane crash, are usually nominal. Further claims should be made on pecuniary and non-pecuniary grounds. The courts have taken a bright view in favour of victims protection and adequate compensation in light of the international conventions and compensation rules in India with broad interpretation. It’s wisely said that a human life cannot be priced, but the kins of the diseased or the injured themselves need to bear the trauma of a crash lifelong.

ix. Conclusion

Compensation is not only beneficial to the victims but helps to keep the reputation of the airline company and all the stakeholders involved. The airline industry is marketed as the safest, fastest and convenient. In order to uphold this same reputation and to expand the already struggling airline industry, such unfortunate incidents of airplane crashes should be looked at broadly by all the stakeholders in the aviation industry. Paying the right amount of compensation and avoiding getting into petty litigation disputes should be the moral principle to make the aviation industry upload its reputation. Adequate, appropriate and unconditional compensation gives the injured and the kins the strength to continue their livelihood and make flying a better experience for everyone.

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Legally Speaking

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



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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Legally Speaking

SC likely to hear next month pleas related to Article 370



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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Legally Speaking

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



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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Legally Speaking

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



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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Legally Speaking

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



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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Legally Speaking

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



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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