Tag: #recentjudgement

​​​​​​​-​Report by Shivansh Pratap Singh

In the case of MR. JAY SURYAKANT KAKADE Vs MRS. ANUNAYA JAY KAKADE  dated 02.Feb.2022 a husband has filed an application for transfer of proceedings from the magistrate to the family court but the wife argues her right to appeal will be infringed.

Facts of the case:

The Applicant (Husband) seeks to transfer the proceedings filed by the wife under the Protection of Women under the Domestic Violence act,2005 before the Judicial Magistrate to the family court where he has filed a divorce petition.

Applicant’s Contention:

As the primary evidence in both cases remains the same there is the risk of conflicting judgements by two different judges. Further, the efficiency of cross-examination would be reduced and the judicial time of different courts will be wasted.

Respondent’s Contention:

Respondent disputed the applicant’s contention about conflicting judgements and the efficiency of cross-examination as misplaced. Domestic Violence Act aims to provide speedy remedy to women and such transfer will take away that right and also would be a serious infringement upon her right to appeal.

Judgement:

Amit Borkar opined that it is consistent with the court’s previous decisions to transfer the proceedings under Domestic Violence Act to the family court as the application filed under the Magistrate can be effectively tried under the family court. Further, the transfer is “Necessary” to avoid conflicting judgements. Whereas when it comes to the right to appeal, no such right is being infringed upon as the right being referred to here is just the right of revision. Further, the claim for speedy right of justice can be negated by the inversion test as not being the orbiter dicta or binding precedent.

KeyTakeaway from the judgement:

While delivering the judgement Amit Borkar sir referred to the ‘inversion test’ by Eugene Wambaugh to counter two points of the respondent, inversion test is a test to identify the ratio decidendi or obiter dicta of a judgement by treating a point to be absent and checking if the outcome/result varies. If it does vary then it’s the ratio decidendi or orbiter dicta but not if the resulting doesn’t vary. Further Orbiter Dicta is that part of the judgement that has to be treated as a binding precedent. 

READ FULL JUDGEMENT: MCA/500/2022

–Report by Sanya Luthra

The case Sandesh Mayekar vs Union of India and Ors deals with the petitioner demanding a fair election procedure for a member of the Dental Council of India in the state of Maharashtra and therefore suggesting the process for the elections and how it should be free of all biases and should take place fairly and everyone have an equal chance of being a member.

FACTS:

A writ petition was filed by the petitioner challenging the electoral process of the member of the Dental Council of India as the maintenance of the register for the election was done by the Indian Dental Association whose president was also a member of the Dental Council of India which might have resulted in the business and not a fair decision would have been taken, as the party involved must have been partial towards their organization and as the next elections are on the board, so hoping for reform a writ petition has been filed.

PETITIONER’S CONTENTIONS:

He submits that there should be two stages of preparation for an electoral list, in stage one the date should be fixed for preparing the preliminary electoral list and then he says that there should be at least thirty days for the public to raise objections to the preliminary electoral list and then he also suggested to publish both the preliminary and the final list in both English and local newspaper which has a wide circulation in the state of Maharashtra, he also suggests that the final list should be published on the official website of Maharashtra State Dental Council.

DEFENDANT’S CONTENTIONS:

Defendant has presented no contentions and has positively taken everything.

JUDGMENT:

The court was of opinion that the petitioner is correct in suggesting a two-stage preparation of the electoral list and then publishing it in both the newspapers and also on the official website of Maharashtra State Dental Council as it will ensure a fair electoral process and will not result in any personal biasedness. The court also clarifies that the new electoral process decision is prospective and has no relation with prior elections result.

READ FULL JUDGEMENT: https://bit.ly/3XkMLe9

CITATION: 2023/DHC/000799

–Report by Umang Kanwat

Issues only arise when one party affirms and the other party disputes a crucial truth or legal premise. The legal or factual assertions are considered material propositions. Such essential claims must be made by the plaintiff to establish his legal standing. Similarly, the defendant must allege to support his defence. A distinct issue won’t arise unless each relevant statement is supported by the plaintiff and refuted by the defendant.

The Court may revise already-framed questions, frame new issues, recast matters as may be necessary to resolve a dispute before it, or strike out concerns that have been improperly brought or formed, according to Order XIV Rule 5 of the CPC. As a result, the Court has the power to alter or eliminate the concerns as necessary.

The case of PRIME TIME INDIA Vs. SOMNATH VIJ revolves around Order XIV Rule 5 of the CPC, wherein the court tries to evaluate if the contentions on which the applicant argues are satisfactory or not. The word “issue” has not been defined in the CPC, however, Order XIV Rule 1 of the CPC indicates that “issues arise when a material proposition of fact or law is affirmed by one party and denied by the other”.

Facts: 

The applicant in the present case filed an application requesting the Honourable Supreme Court of India to remove certain legal issues framed by the defendants in the case considering them to be baseless and motionless under Order XIV Rule 5 of CPC. The application is based on a previous case over a disputed property where the present applicant was the defendant and the case ended with a settlement between the parties.

Applicant’s Contentions:

The applicant has filled out this application regarding striking off certain issues that were framed in the case over a property dispute. According to the applicant they agreed on the settlement and hence these issues in the aforementioned suit consequently sabotaged the interest of the applicant. Based on the joint application filed dismissing the objections to the settlement terms, this was done with malice aforethought. 

Defendant’s Contentions:

The defendant argued that the applicant filed the case even though it is unauthorized to do so. The defendants acknowledged that their culpability for the applicant’s claim had been reduced, and they would not object if the settlement included a decision granting the applicant’s request for specific performance. The present application under Order XIV Rule 5 read with Section 151 CPC was not submitted with a board resolution and was not embossed with the company’s seal; as a result, it is subject to being rejected simply on this basis. The applicant also violated the court’s order by adding construction to the disputed property and so the defendant has a right to take legal action against the applicant. 

The court made no mistake in the framing of the issues the issues were framed by the applicant who was previously the defendant’s pleadings.

JUDGEMENT:

The application was rejected because it had no merit. 

This was because the court believed that the legal concerns or issues raised by the Defendants’ arguments, which were requested to be deleted through the present application, were relevant for the adjudication of the current lawsuit.

Furthermore, an issue is a topic of contention between the parties in a civil lawsuit. Additionally, when parties differ on “material propositions” of truth or law, a problem arises. An issue that can limit the scope of disagreement may be presented to identify the genuine dispute and resolve it. In this instance, it was clear that the Court’s prior bench had given proper consideration to all pertinent arguments, including the compromise decree while framing the problems.

READ FULL JUDGEMENT: https://bit.ly/3RuuHNb

-Report by Sanya Luthra

The case Pawan Arora vs State (Govt. of NCT of Delhi) deals with the petitioner being liable for keeping the substances for which he didn’t possess a suitable license which was considered unlawful and because of this the petitioner has been in custody since 4th August 2020 and Trial Court has also rejected the bail application and observed that the firm did not possess a such license which authorised them to sell those substances.

FACTS:

As a result of some secret information, a raid was conducted in the Jhuggis of Kamla Nehru Camp Kirti Nagar, New Delhi by the Narcotic Cell and because of that raid on the night of 17th and 18th June 2020 when the raid was conducted a huge amount of the consignment of psychotropic substance Tramadol, Nitrazepam based tablets and Codeine based syrups were recovered from the godown situated there. When police inquired about the same then Shravan Kumar (who was there at the time of the raid) revealed that the medicines of the godown belonged to the petitioner and his manager Chander Shekhar. With this an FIR was lodged regarding the same and Shravan Kumar was arrested at that time, later on, it was revealed that the petitioner and his manager had the office of the same substance, later on, the petitioner and his manager were also arrested, further, it was held that the license to sell and possess medicines was of Chander Shekhar. So now it is up to Delhi High Court to check the liability of the three people involved and also to grant bail or not.

PETITIONER’S CONTENTIONS:

It was put forward by the petitioner that the authenticity of the secret information is doubtful and the petitioner also argued that the license to sell the following substance was there with the petitioner so he was lawful in selling those and it was also stated that these substances do not fall within Schedule I of the NDPS Act hence compliance to Chapter VII A of the NDPS Rules 1985 is not required. Instead, they fall under Schedule H-1 of the Drugs and Cosmetics Act. Schedule H-1 has been issued under Rules 65 and 97 of the Drugs and Cosmetics Rules, 1945 and the said substances which have been recovered and have been attributed to the petitioner, fall under Sr.No.20 (Codeine), No.36 (Nitrazepam) and No.45 (Tramadol), so they were emphasizing that they possess a lawful license for everything and can’t be said to conduct unlawful activities.

RESPONDENT’S CONTENTIONS:

The learned counsel from the state argued that the FSL report which has arrived also proves that the substances they were carrying include substances which they were not supposed to be sold or possessed by anyone, that’s why they were having the unlawful substances and should be punished for the same, also the license which they were having was not eligible to possess such substances.

JUDGMENT:

The Delhi High Court held that at this stage when a trial has to be conducted and will take much time and 37 witnesses have to be examined and prima facie it does seem violation of license rules and not of illegal stocking and sale of substances, without a license, so the petitioner can be released on regular bail and therefore he is released on regular bail with the sum amount of 1,00,000 as bond and two sureties with certain conditions which are that he will not leave the country, will provide his all mobile numbers, permanent address, join the investigation and will appear before the court when called.

READ FULL JUDGEMENT: https://bit.ly/3DHbrX1

CITATION: 2023/DHC/000688

–Report by Sneha Sakshi

In the case of MAHARASHTRA STATE FINANCIAL CORPORATION EX-EMPLOYEES ASSOCIATION & ORS.
VERSUS STATE OF MAHARASHTRA & ORS., the appellants had brought a discrimination claim against the Maharashtra government’s Industry, Energy and Labour Department’s decision dated 29.03.2010 in that procedure.

FACTS:

The workers of the Maharashtra State Financial Corporation who retired or passed away between January 1, 2006, and March 29, 2010, were not granted the benefit of the pay scale change that the Fifth Pay Commission had recommended. The modification, however, became effective on January 1, 2006.

The determination of the implementation date for the Fifth Pay Commission’s recommendations as they relate to the respondent corporation is at issue in this case. That formulating a policy on fixation of pay for the wages of its employees, the scope of its revision, as well as the date of its execution, are undeniably matters of exclusive executive decision-making power. Special leave to appeal granted.

The appeal was finally heard with the parties’ knowledgeable counsel’s permission. A ruling by the Bombay High Court is being contested by the appellant organisation.

CONTENTIONS OF APPELLANT:

➢ The expert counsel for the appellants, Mr Jay Salva, asserted that, notwithstanding the fact that the most recent pay modification had been in effect for its employees from 1986 to 1989, MSFC believed it had gone into effect on January 1, 1999. While the previous version was being authorised, five more revisions were due.
➢ The board of directors decided to follow the pay commission’s recommendations starting in January 1996 without giving those modifications any thought.
➢ Only the 115 current employees who were working at the time that the benefits were passed on were subject to the enhanced salary, depriving the 900 previous employees of comparative advantages.
➢ All people who were employed received temporary reliefs beginning in September 1993, including those who ultimately lost out on the pay revision owing to retirement.
➢ Mr Salva contended that the MSFC owed no more than 32 crores to all former workers, including those who had retired, asked for VRS, or had passed away. He said the GR failed to recover the money paid for interim relief and ad hoc amounts paid to current employees between September 1993 and July 2001.

CONTENTIONS OF RESPONDENT:

➢ The employee in question was not subject to any scheme and chose to leave the company of his or her own volition. However, the Corporation had less obligation to pay salary dues.
➢ The defence attorney for MSFC contended that the state government shouldn’t intervene because of the contested judgement.
➢ It was contended that MSFC is an independent company and is exempt from Maharashtra Government regulations.
➢ Expert counsel emphasised that by paying the benefits on the terms proposed by the appellants, the Corporation was suffering losses.
➢ These characteristics made these workers eligible for benefits above and beyond what they would have gotten if they had remained in their jobs.
➢ Before issuing such a ruling, the Court, according to Mr Patil, must consider the financial impact on the employer.

JUDGMENT:

On January 1, 1996, the State Government adopted and put into practice the Fifth Pay Commission’s recommendations. Without choosing whether to impose those scales for its employees, the MSFC forwarded the idea to the State Government (as required by S. 39 of the State Financial Corporations Act). During this period, all present employees received a little reprieve in the form of wage revision.

The Fifth Pay Commission’s recommendations for pay modification were put into action by MSFC on March 29, 2010. The State of Maharashtra letter dated 29.03.2010 served as the basis for the decision to apply the wage revision to the workers who were already working there and to minimise the arrears that would be due as of the first of January 2006 in the future.

By Office Order dated 09.04.2010, the MSFC decided to implement the decision of the Government of Maharashtra and grant the benefits of the Fifth Pay Commission to employees of the Corporation who were on its rolls on that date.

The highest court in India has ruled that voluntarily leaving one’s job before finishing it is still eligible for rewards. The employer cannot discriminate against or split a homogeneous class of workers using a fake cut-off date, the court said.

It was held that VRS employees cannot claim parity with others who retired upon achieving the age of superannuation. Those who died during that period shall be entitled to arrears based on pay revision, accepted by the Corporation. The Corporation was directed to pay interest @ 8% p.a. on these arrears from 01.04.2010 till the end of this judgment.

LINK TO FULL JUDGEMENT: https://bit.ly/3Rw1Qbk

-Report by Shweta Sabuji

In the recent case of K.T.V. OIL MILLS PRIVATE LIMITED VERSUS THE SECRETARY TO GOVERNMENT, UNION OF INDIA & ORS., an appeal filed in opposition to the judgment and decree rendered on the file of the Commercial Division of this Honourable High Court on July 3, 2018, by the learned Single Judge in A.No.1253 of 2018 in C.S.No.706 of 2017.

FACTS:

The appellant was established in 2008 as a company under the Companies Act of 1956. The purpose of forming this Company was to take over K.T.V. Oil Mills’ operations. The late Shri. K. T. Varadaraj Chetty launched an oil trading company in Kotwal Market in 1971. Under the name and style “K.T.V Oil Mills,” the company operated from 1999 to 2008 as a partnership firm. The partnership firm was then changed into a private limited company in 2008 under the name “K.T.V. Health Food Private Limited,” and they applied to the Trademark Registry for the registration of the trademark “ROOBINI,” claiming usage as of June 1, 1995.

On December 30, 2007, K.T.V. Oil Mills and the appellant engaged in an assignment deed, and as a result, the trademark “ROOBINI” was transferred. The K.T.V. Oil Mills partners all acquired shares in the appellant-Company. The assignment deed was completed in favor of the appellant by the partners of K.T.V. Oil Mills because they chose to operate the company under the appellant’s Company name. As a result, the appellant learned that the respondent was using the contested trademark “ROOBEN” in 2017, which is a slavish replica of the appellant’s trademark “ROOBINI” regarding a similar product.

PLAINTIFF’S CONTENTIONS:

The plaintiff responded to the request for the plaint to be rejected by filing a counter, claiming that the plaintiff’s predecessor, K.T.V. Oil Mills, conducted business from 1995 to 2007 under the name and style of “ROOBINI,” and that all necessary applications for the trademark’s registration were also made. Ultimately, the trademark “ROOBINI” was registered on 22.01.1999 under registration number 837894, claiming use from 01.06.1995. Totake its business to the next level, K.T.V. Oil Mills, a partnership firm, became a private limited company. As a result, the Partners of K.T.V. Oil Mills assigned their ownership of the entire business as well as the trademark “ROOBINI” to the appellant-Company, which then became known as “K.T.V. Health Food Private Limited.”

On December 30, 2007, an assignment deed was made. After that, the appellant filed the proper paperwork to transfer the trademark “ROOBINI” that the Partnership Firm had previously assigned to the appellant in favor of the plaintiff. As a result, the Trademark Registry registered the same on January 25, 2018. Due to the assignment deed executed on December 30, 2007, only theappellant/plaintiff is currently the owner of the trademark “ROOBINI” at the time the lawsuit was filed.

Additionally, the appellant submitted the required paperwork in 2015 to modify the registration in the appellant Company’s name. As a result, the plaintiff is the “ROOBINI” trademark’s owner. Since the plaintiff has been conducting business through its branch office on Chennai’s Thambu Chetty Street, which is squarely within this Court’s jurisdiction, the matter was brought before this Hon’ble Court.

JUDGEMENT:

Following a hearing with both parties, the learned Single Judge granted the request to dismiss the complaint, concluding that the telephone bills by themselves were insufficient to establish that the appellant was operating at the branch office, which is located at Thambu Chetty Street in Chennai. Furthermore, the appellant/plaintiff was not the owner of the trademark “Roobini” when it was registered. Even if it is assumed without admission that the assignment deed was executed in the plaintiff’s favor and that the trademark “Roobini” was registered in the plaintiff’s name as a result of the said assignment deed, the plaintiff is not entitled to any rights in the trademark “ROOBINI” based on the assignment deed.

The plaintiff is also not permitted to file the current lawsuit in this court without having their principal place of business within its jurisdiction, even though they maintain a branch office at Thambu Chetty Street in Chennai, which they claim is within that court’s jurisdiction because those provisions, as well as Sections 134(2) of the Trademarks Act and Section 62(2) of the Copy Act, define “carrying on business” respectively.

The plaint is therefore susceptible to being dismissed as long as neither the defendant nor the plaintiff’s primary place of business is engaged in business within the jurisdiction of this Court. As a result, the plaint was dismissed by the contested order. The appellant has chosen the current Original Side Appeal because he is unhappy with the aforementioned order.

READ FULL JUDGEMENT: https://bit.ly/3I1cbcl

-Report by Shreya Gupta

In the case of UNIVERSITY OF DELHI Vs. M/S KALRA ELECTRICALS, the two parties Delhi University and M/S Kalra Electricals were the former was the petitioner and the latter was the respondent. The dispute between the parties arose from a work contract and the dispute was referred to the arbitration for settlement where the arbitrator ordered the petitioner to pay rupees 20 lakhs for other 44 contracts which were not referred to it.

FACTS:

The case was filed under section 34 of the Arbitration and Conciliation act, of 1966. The dispute arose from the work contract dated 09.06.2005. There was no dispute regarding the other 44 contracts between the parties. The dispute was regarding the sum of Rs. 92,101.25. It was referred to arbitration in view of clause 25.

PETITIONER’S CONTENTIONS:

The petitioner’s advocate contends whether the arbitral tribunal can provide relief for the case that has not been referred to it. She contends that the awarded sum was time-barred. She further states about section 34 of the Arbitration and Conciliation Act, 1966 which states that “the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside”. She contended that the relief provided under the other 44 contacts to the respondent was not disputed and the respondent would have filed a claim under it if that was the case.

The court has separated the subject work contract from all other contracts and therefore it was beyond the arbitral tribunal’s jurisdiction. She further in support stated some of the previous cases- Ssangyong Engineering and Construction Company Limited vs. National Highways Authority of India (NHAI), MSK Projects India (JV) Limited vs. the State of Rajasthan and Another, State of Goa vs. Praveen Enterprises, Alupro Building Systems Pvt Ltd vs. Ozone Overseas Pvt Ltd, Indus Biotech Private Limited vs. Kotak India Venture (Offshore) Fund (Earlier Known as Kotak India Venture Limited) and Others5 and DLF Home Developers Limited vs. Rajapura Homes Private Limited and Another.

RESPONDENT’S CONTENTION:

The respondent’s advocate stated that the arbitrator was well within his jurisdiction because the case arose regarding the other 44 contracts from the subject contract and that the petitioner paid for it maliciously. He stated that the assistant engineer gave the letter to the arbitrator to give orders for the other 44 contracts as well.

JUDGEMENT:

The court stated that the payment of Rs. 93,033 is not due and is in order and so DU should deduct any amount in payment to KE. The court ordered DU to make the pending payments of 20lakh at 9% per annum interest to KE from the date of raising the bill to the date of actual payment. The court stated that the award of Rs. 20 lakhs regarding the other 44 contracts were out of the arbitral jurisdiction and is set aside. The court further stated that the arbitrator fell foul of Section 34 (2) (a) (ⅳ) which is impermissible in law as it caused patent illegality. The order of arbitration was set aside from the other contracts and was followed for the subject contract. The court stated in its order “I find that since there is no fraud committed by KE and since the contracts are not inter-related it was wrong and illegal on part of DU to withhold the amount of Rs 20 Lakh in 44 contracts for settling an amount of Rs.92,033/- or Rs. 93,688/-or even both related to just one or two contracts”.

–Report by Prapti Prajeeta

In this case of IFB AGRO INDUSTRIES LIMITED vs SICGIL INDIA LIMITED, the court determined the forum appropriate for adjudication and determination of violations of SAST and SEBI Regulations. In this case, the contention that under Section 59 the National Company Law Tribunal exercises a parallel jurisdiction with the Securities and Exchange Board of India for addressing violations of the Regulations framed under the SEBI Act was rejected.

In this very case, an appeal was filed against the National Company Law Appellate Tribunal for a judgment passed. 

FACTS:-

The Appellant is a company listed and engaged in manufacturing and selling rectified spirits, etc. And respondent No. 1 is a too-listed company engaged in producing the same type of products. Other respondents are the managing director, his wife and some close relatives of the respondents. 

In August 2003, one respondent came up with a proposal for a business between the Appellant and Respondent No. 1. The Appellant rejected the proposal. After this rejection, the Respondents started acquiring shares of the Appellant from the open market to eliminate competition and strengthen its dominant position in the relevant market. 

As of 2004, the Respondents held under 5% of the Appellant’s total paid-up share capital. At the same time, Respondent No. 1 acquired 600 equity shares of the Appellant, and as a result, the respondents aggregate shareholding crossed the paid-up share capital of the Appellant in total by 5%, it triggered the SEBI (SAST) Regulation 7(1)9

Four months later, Respondent No. 1 acquired additional shares of the Appellant; as a result, the total paid-up share capital of the Appellant exceede5% by shareholding. This triggered the SEBI (PIT) Regulations, and Respondent No. 1 failed to disclose within the prescribed time. 

After this, the Appellant filed a petition before the Company Law Board under the 1956 Act for its register rectification by deleting the name of the Respondents as the owner of shares over and above the 5% threshold. 

Upon receiving notice of the petition above, but then Respondent No. 1 sold a few shares of the Appellant and then brought down to 4.91%its shareholding. But the Appellant claims that Respondent No. 1 never reduced its shareholding. Then SEBI was also informed that the individual shareholding of Respondent No. 1 stands below 5%. And as a result, SEBI has not taken any regulatory action.

But then the matter stood transferred to the Tribunal. The tribunal held that it violated the SEBI (PIT) Regulations. Further, the Tribunal also held that there had been SEBI (SAST) Regulations violation as the Respondents did not disclose in the proper format. However, the Tribunal held that the CLB and SEBI exercised powers fall in different and distinct jurisdictional fields. The tribunal thus allowed the company petition.

The Respondents then went to Appellate Tribunal in an appeal where it allowed the appeal and set aside the order of the Tribunal. Being aggrieved by it the plaintiff brought this appeal.

APPELLANT’S CONTENTIONS:-

the Appellant contended that no time intimation was prescribed in format and given by the Respondents when SEBI (SAST) Regulations got triggered; Respondent Nos. 1 – 6 were “connected persons” and were “acting in concert.” He then emphasized that the Respondents had previously admitted to the non-disclosure. Thus the Appellant has the right under Section 111A of the Act to approach the tribunal for rectification of the register. 

DEFENDANT’S CONTENTIONS:-

The Respondents contended that filing a petition under Section 111A is an abuse of process. No violation under the SEBI (SAST) Regulations has occurred as the Respondents did give timely intimation in the prescribed format. The SEBI (PIT) Regulations do not apply to the other Respondent as shareholding never crossed 5% in individual limit. And under section 111A (3), the Tribunal doesn’t have any power to annul the transfer or to direct the buy-back of the shares.

JUDGMENT:-

The court held that the SEBI (SAST) regulation is a comprehensive scheme, the complained transaction should suffer regulator scrutiny and only the regulator has to determine the provisions of the SEBI Act and the Regulations.

Further, the court held that the Appellant is not justified to invoke the CLB jurisdiction under Section 111A for violation of SEBI regulations. And the Tribunal was wrong in allowing and entertaining the company petition filed under Section 111A of the 1956 Act. However, the tribunal did exceed its jurisdiction, so the Appellate Tribunal’s decision in setting aside the judgment was correct. The court then dismissed the appeal with no order as to costs.

–Report by Nawvi Kamalnathan

The petition was filed under Article 136 of the Indian Constitution in the name of M/S Indian Medicines Pharmaceuticals Corporation Ltd Versus Kerala Ayurvedic Co-Operative Society Ltd. & Ors. to be heard before Judges on the matter concerning tenders as the preferable method to procure contracts with the state over other discretionary and arbitrary methods which tend to be violative of Fundamental rights guaranteed under the constitution of India.

FACTS:

The first respondent herein this case is Kerela Ayurvedic Co-operative Society Limited, which is a licensed Ayurvedic and Unani drugs Manufacturer, filed this suit to contest the judgment passed by the High court of Lucknow Bench, Allahabad judicature in favour of the Indian Medicines Pharmaceutical Corporation Limited (IMPCL) and the state.

In the year of 2014, the GOI launched NAM to promote the department of AYUSH, Ministry of Health, and Family Welfare to procure a cost-effective medical system and services. In the Operation Guidelines of the same, it is provided that 75% of the admissible assistance shall be aided by the Central Government and 25% of that remaining shall be taken care of by the respective states. The UP-stateAYUSH society initiates its purchases from a single vendor IMPCL, and the purchase order is given to them without any tendering process just based on nomination.

In a petition filed by the first respondent against the appellant, they sought a decree to procure Ayurvedic Medicines under the AYUSH program through tenders. The High court held the method of procuring medicines is illegal. Therefore, the appellant was directed to invite tenders for competitive rates thus initiating the supply of quality drugs.

PLAINTIFF’S CONTENTIONS:

Mr. Naresh Kaushik, the learned counsel appearing on behalf of the Appellants contested that IMPCL has been in the picture to cater to the needs of the Central Government to procure quality medical drugs, and thereby, the GOI holds around 98.11% of its shares. One of the prime reasons to supply drugs at an affordable price is the unique organizational setup and the prices of the drugs are vetted by the union Ministry of Finance.

IMPCL has a drug testing laboratory that is certified since it’s a government manufacturing company. Also, the Ministry of AYUSH has at various times recommended the purchase of medicines from IMPCL. Paragraph 4(vi)(b) mentions the phrase ‘at least’ that can be inferred to provide a minimum benchmark for procurement and not the upper limit.

It was further contended that the procurement of medicines may be made through tenders in cases where the property is planning to dispose of and in this case, there is no reason.IMPCL is not a private entity, so, there is no scope for monopoly, when the sale is not initiated in the open market.

DEFENDANT’S CONTENTIONS:

Whereas on the other hand, Mr. Kaleeswaram Raj, the counsel appearing on behalf of the respondents contended that Para 4(vi) provides only the establishment to procure medicines and does not address the question of whom and how. The mention of the phrase ‘or’ in para 4(vi) can be inferred to indicate that all are equally eligible to supply medicines.

UP State cannot arbitrarily fix one particular party to be eligible to procure medicines and all the entities mentioned in the para shall be recognized on an equal footing. Thus, initiating purchases in a fair process that shall enable all entities for an equal opportunity to secure orders.

There is no warrant for procurement of medicines to be obtained only from IMPCL and the prices shall be vetted by the Department of Expenditure, Ministry of Finance but it does not have the power to determine the prices of Ayurvedic medicines. So, the National Pharmaceutical Pricing Authority should be the authority for determining the prices of medicines.

JUDGEMENT:

The court observed from the precedents that the state while entering a contract shall not stand on the same foot as a private person, thus, it can’t act arbitrarily while dealing with the public be it in matters of jobs or contracts. It is also essential that the state and all its instrumentalities have to conform to COI to guarantee Fundamental Rights to its citizen.

In answering the question of whether the tender is a constitutional requirement the court has pointed out certainly more than once in many of its cases that Government contracts must be initiated transparently. The first cum first service policy is arbitrarily alienating resources and this is not a preferred method of allocation.

The court considered that tender allows negotiation with a private enterprise. The reason for the public auction being reasonable is that it allows a transparent process for the public and the procurement of any goods can be made at their best quality and price. The deviation of tender should not violate Article 14 and must be fair and reasonable.

The intervention application filed in the court has the scope only to interpret para 4(vi)(b) of the Operational Guidelines and the court finds that there were no records to show that other manufacturing entities of drug suppliers cannot supply better drugs. Therefore, the appeal stands disposed of.

–Report by Nawvi Kamalnathan

In the case of The Chief Engineer, Water Resources Department and Others (hereinafter referred to as appellants) Versus Rattan India Power Limited through its Director and Others (hereinafter referred to as respondents) the important issue of, the party signing the contract is entitled to the amount of consideration or not was dealt with by the Supreme Court.

FACTS

The respondent has entered into a contract with the appellant to Pay the sum of Rs.1,00,000/- for irrigation restoration charges reserved for irrigation purposes. The same consideration was agreed to be paid on the date of signing the contract. A writ petition filed before the High Court of Bombay directed the respondent to pay Rs 50,000/- per hectare by reducing the irrigation restoration charges affecting the total liability reduction.

The appellant sought an appeal as per the Irrigation Department of the State of Maharashtra. As per the circular, no water shall be utilized for other purposes unless an agreement is entered into by the concerned government and the industry. Water usage for industrial purposes is seen as a loss of water rather than being directed to agricultural purposes.

APPELLANT’S CONTENTIONS

The substance of the argument made by the learned counsel appearing on behalf of the appellant was that the contract is sacrosanct in nature. The impugned order entered by the respondent and the appellant for accepting the irrigation restoration charges shall not be entitled to be challenged.

DEFENDANT’S CONTENTIONS

On the other hand, the counsel appearing on behalf of the respondent contended that the rate prevailing in the in-principle approval granted by the high-powered committee is directly linked to the approval or sanction was applicable and the appellant could have levied the charges.

The government circular shall apply prospectively and not to ongoing contracts. If the circular is given a retrospective effect, it would certainly undermine it.

JUDGEMENT

The respondent is not justified in levying the charges when he agreed to pay the same while entering into a contract he issued an undertaking to pay the specific sum within the specific time period. The agreement and undertaking shall be stopping the respondent from challenging the irrigation restoration charges.

The rights and liabilities of the parties are standing crystallized from the date when entered into the contract. The in-principle approval granted in favour has been cancelled as they failed to execute an agreement with the appellant. Also, the central government undertaking was given an exemption as the power produced from it shall be used for public benefit. In comparison to all other parties, the respondent has been drawing high amounts of water, especially from an area scarce of water resources.

However, the records before the court state only two instalments being paid by the respondents, and therefore, the court directed the respondents to pay the balance amount with interest from the date of instalment fell from the date of the impugned order.

In conclusion, the Hon’ble Supreme Court of India allows the Civil Appeal arising from the special leave petition and sets aside the impugned judgment passed by the High Court of Bombay, and directs the parties to bear their own costs.