SUPREME COURT

• COMPANY

Securities and Exchange Board of India v. Ajay Agarwal (Decided on 25.02.2010) MANU/SC/0137/2010

Company -Alleged misstatement of facts in prospectus of company and misguiding investors - Restraint order from assessing securities market - Power of SEBI to issue directions - Section 11B of the Securities and Exchange Board of India Act, 1992 - SEBI restrained respondent-Director of Company from assessing securities market on prima facie case that facts were misstated in the prospectus of the company during public issue of shares and therefore, investors were misguided - Appellate Board ruled in favour of respondent on ground that provision of Section 11B cannot be invoked in respect of the alleged misconduct which took place at a point of time when Section 11B was not on the statute book - Whether Section 11B of the Securities and Exchange Board of India Act, 1992 could be invoked by the Chairman of the in conjunction with Sections 4(3) and 11 for restraining the respondent-Joint Managing Director of the Company from associating with any corporate body in accessing the securities market and prohibiting him from buying, selling or dealing in securities.

Held, the impugned Order was passed by the Board in exercise of its power under Section 4(3) read with Section 11 and Section 11B of the said Act and as per Section 11 of the said Act the Board has the power of restraining a person from accessing the securities market or prohibiting any person associated with securities market to buy, sell or deal in securities. Such power is given to the Board under Section 11(4)(b) of the said Act. Therefore, restrain order passed on the respondent strictly speaking was not under Section 11B of the said Act. However, the provisions of Section 11(4)(B) of the said Act also came by way of amendment in 2002. It should, however, be noted that by the time the Board passed the order on 31st March 2004 all the amendments were on the statute. Therefore, the question here is not of retrospective operation of the amendments. Even if the amendments to the said Act are allowed to operate prospectively by the time the order was passed by the Board, it was empowered by the aforesaid amendments to do so. Therefore, without giving any retrospective operation to those provisions, the impugned order can be passed by the Board in as much as the amendments in questions empowered the Board to pass such an order when it passed the order. So, the question that survives is whether the Board could pass the order in respect of allegations which surfaced prior to the coming into effect of those amendments in 1995 and 2002.

• LIMITATION

Oriental Aroma Chemical Industries Ltd. v. Gujarat Industrial Development Corporation and Anr. (Decided on 26.02.2010) MANU/SC/0141/2010

Limitation - Application for condonation of delay - Delay condoned outside limitation period - Discretion and Power of Court - Order 41 Rule 3A of the Code of Civil Procedure read with Section 5 of the Limitation Act - Whether the Division Bench of Gujarat High Court was justified in condoning more than four years' delay in filing of appeal by the respondents against judgment and decree dated 30.10.2004 passed by the Trial Court?

Held, the law of limitation prescribes a period within which legal remedy can be availed for redress of the legal injury. At the same time, the courts are bestowed with the power to condone the delay, if sufficient cause is shown for not availing the remedy within the stipulated time. The expression "sufficient cause" employed in Section 5 of the Indian Limitation Act, 1963 and similar other statutes is elastic enough to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice. Although, no hard and fast rule can be laid down in dealing with the applications for condonation of delay, this Court has justifiably advocated adoption of a liberal approach in condoning the delay of short duration and a stricter approach where the delay is inordinate

In the instant case, reading of the impugned order makes it clear that the High Court did make a bald reference to the application for condonation of delay filed by the respondents but allowed the same without adverting to the averments contained therein and the reply filed on behalf of the appellant. Therefore, the High Court committed grave error by condoning more than four years' delay in filing of appeal ignoring the judicially accepted parameters for exercise of discretion under Section 5 of the Limitation Act.

• SERVICE

Maharashtra University of Health Sciences and Ors. v. Satchikitsa Prasarak Mandal and Ors. (Decided on 25.02.2010) MANU/SC/0136/2010

Service - Complaint of sexual harassment against approved teachers of Appellant college by non approved teachers - Directions issued by Respondent University freezing appointment of impugned approved teachers on recommendations of Grievance Committee -High Court quashing direction of University - Jurisdiction of Grievance Committee of University - Principle of esjudem generis - Section 2(35) read with Section 53 of Maharashtra University of Health Sciences Act, 1998

Held, on a combined reading of Section 2(35) with Section 53 of the said Act, this Court is of the opinion that in respect of unapproved teachers also Grievance Committee has the jurisdiction to entertain complaint and undertake the statutory exercise conferred on it under Section 53 of the said Act. The definition of teachers under Section 2(35) is wide enough to include even unapproved teacher. The definition of teacher under Section 2(35) cannot be read on the basis of ejusdem generis nor can the definition be confined to only approved teachers. If that is done, then a substantial part of the definition under Section 2(35) would become redundant. That is against the very essence of the doctrine of ejusdem generis. The purpose of this doctrine is to reconcile any incompatibility between specific and general words so that all words in a Statute can be given effect and no word becomes superfluous. It is also one of the cardinal canons of construction that no Statute can be interpreted in such a way as to render a part of it otiose. It is, therefore, clear where there is a different legislative intent, as in this case, the principle of ejusdem generis cannot be applied to make a part of the definition completely redundant. By giving such a narrow and truncated interpretation of `teachers' under Section 2(35), High court has not only ignored a part of Section 2(35) but it has also unfortunately given an interpretation which is incompatible with the avowed purpose of Section 53 of the Act.

• COMMERCIAL

Hindustan Petroleum Corpn. Ltd. and Ors. v. Super Highway Services and Anr. (Decided on 19.02.2010) MANU/SC/0129/2010

Commercial - Termination of dealership agreement - Validity thereof - Opportunity of hearing and sufficient notice as to proceedings not given - Whether the dealership of the Respondent No. 1 had been validly terminated in accordance with Clause 58 of the Dealership Agreement executed between the parties on 30th August, 2003.

Held, the cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreement, the concerned authority has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. The non-service of notice to the aggrieved person before termination of his dealership agreement also offends the well- established principle that no person should be condemned unheard. It was the duty of the petitioner to ensure that the Respondent No. 1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement.

Admittedly the dealership agreement was terminated on the ground that the product supplied by the petitioner corporation was contaminated by the respondent. Such contamination was sought to be proved by testing. The Guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be made an empty formality. Notice should be served on the dealer sufficiently early so as to give him adequate time and opportunity to arrange for his presence during the test and there should be admissible evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer. In the present case, there is no admissible evidence to prove service of notice on the respondent or refusal of notice by the respondent. Thus, the termination of the dealership agreement of the respondent was arbitrary, illegal and in violation of the principles of natural justice.

HIGH COURTS

• CONSTITUTION

UTTARANCHAL HIGH COURT 

Rajeev Gupta v. Union of India (UOI) and Ors. (Decided on 10.02.2010) MANU/UC/0012/2010

Constitution - Writ of Quo-Warranto seeking removal of elected representative from public office - Scope thereof - Representation of the People Act, 1951 - Whether a writ petition seeking to assail election of elected person and his removal from public office is competent

Held, for assailing an appointment made to a public office, writ in the nature of quo warranto would lie only if the appointment to such office had been made in violation of the prescribed statutory conditions. A writ petition to assail the election of a person is not competent. The only remedy available to an individual who wishes to unseat an elected representative holding the office of a Member of Parliament is through an election petition under the provisions of Representation of the People Act, 1951.

• CIVIL

PUNJAB HIGH COURT

Bikkar Singh and Ors. v. Jalaur Singh and Ors (Decided on 16.02.2010) MANU/PH/0049/2010

Civil - Second appeal - Non compliance with statutory requirements - No substantial question of law incorporated in grounds of appeal -Jurisdiction of Court to formulate substantial question of law in memo of appeal - Whether non-compliance with any procedural requirement relating to a pleading, memorandum of appeal or application or petition for relief entails automatic dismissal - Order 41 Rule 2 CPC, Section 100 and Section 151 of CPC

Held, non-compliance with any procedural requirement relating to a pleading, memorandum of appeal or application or petition for relief should not entail automatic dismissal or rejection, unless the relevant statute or rule so mandates. Procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use (Ratio in Uday Shankar Triyar v. Ram Kalewar Prasad Singh and Anr). Jurisdiction of this Court to permit the appellants to formulate substantial questions of law in the memo of appeal is not taken away, it can be exercised when facts and circumstances of that case permits, however, that latitude cannot be given in each and every case.

• LABOUR AND INDUSTRIAL

CALCUTTA HIGH COURT

Food Corporation of India v. Central Government Industrial Tribunal and Ors (Decided on 25.02.2009) MANU/WB/0336/2009

Labour and Industrial - Regularization of casual workers in service - Award by Tribunal - Challenge thereto vide writ petition - Industrial Disputes Act, 1947 and Article 226 of Constitution of India - Whether writ is maintainable particularly the writ of certiorari under Article 226 of the Constitution of India to quash the direction passed in the award by the learned Tribunal directing to regularize by way of absorption of the casual appointees in permanent post under principle of "error of law" and "jurisdictional contour."

Held, no regularization even in respect of a workman under Industrial Dispute Act is permissible unless the contingencies of the law is satisfied, namely, appointment following the rule, appointment in a post and appointment for a long continuous period. If the regularization is done on breach of those settled legal position, surely it is coming within the ambit of error in law. Judicial review in writ jurisdiction under Article 226 relating to challenge of any award passed by Industrial Tribunal, accordingly, is contoured and limited only on the issue of jurisdictional ground and also on the ground of error of law. In the instant case, from the decision under challenge in the writ application passed by the learned Tribunal below, it appears that the Tribunal did not answer by any findings as to why workmen were legally entitled to be absorbed permanently on considering the settled legal position of law that absorption and/or regularization are not the mode of permanent appointment. Even the reasoning as advanced, namely, "unfair labour practice", it also does not support the decision to regularize in absence of any statutory provision for regularization of service of the workmen under the four corners of the Industrial Dispute Act, 1947. Therefore, writ is maintainable.

• DIRECT TAXATION

BOMBAY HIGH COURT

Suresh Anandraj Jain, Sau Ujwala Paraschand Jain and Tatiya Credit Corporation v. Union of India (UOI) through B.T. Pali (Decided on 11.02.2010) MANU/MH/0100/2010

Direct Taxation - Offence by Companies - Willful attempt to evade tax - Concealment of taxable income - Section 276C and Section 278B of Income Tax Act - Trial Court issued process against Applicant-accused on a complaint by Respondents that Applicant-accused, partners of impugned firm, concealed taxable income and made bogus claim of remission/rebate - Hence, present application - Whether Applicants can be punished for offence by firm?

Held, the company being a juristic person cannot be prosecuted for the offence for which custodial sentence is the mandatory punishment. But when custodial sentence and fine are the prescribed mode of punishment, the court can impose the sentence of fine on a company which is found guilty as the sentence of imprisonment is impossible to be carried out. It is an acceptable legal maxim that law does not compel a man to do that which cannot possibly be performed. In the present case, whether the Applicants can be punished Under Section 276C for the offence committed Under Section 278B by the firm or not can be considered after trial and after giving opportunity to both the sides to lead the evidence. Applications dismissed.

• CRIMINAL

BOMBAY HIGH COURT

Mohammad Murtuza Mohammad Yusuf Vs.Gulam Nabi Abdul Rehman and State of Maharashtra through Police (Decided on 15.02.2010) MANU/MH/0102/2010

Criminal - Offence of dishonour of cheque - Statutory presumptions available to Complainant - Rebuttal thereof by Accused - Section 138 and Section 139 of Negotiable Instruments Act, 1881 - Appellant-Complainant challenged order of Trial Court acquitting Respondent-Accused for offence of dishonour of cheque - Hence, present appeal - Whether order of Trial Court acquitting Respondent-Accused is valid?

Held, in special prosecutions based upon dishonoured cheque, offence punishable under Section 138 of the Negotiable Instruments Act, the Complainant is aided by the statutory presumptions. The statutory presumptions arising are required to be rebutted by the Accused by adducing satisfactory evidence which is to be tested on preponderance of probabilities. Bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the Accused to seek dismissal of the Complaint. Something which is probable has to be brought on record for getting the burden of proof shifted back to the Complainant. In the present case, presumptions statutorily available to the Complainant were not rebutted by the Accused by adducing satisfactory evidence to the contrary. Therefore, acquittal order appears unreasonable, contrary to the record in the facts and circumstances of the case. Respondent/Accused guilty of offence punishable under Section 138 of the Negotiable Instruments Act.

• INTELLECTUAL PROPERTY RIGHTS

DELHI HIGH COURT

Mount Everest Mineral Water Ltd. v. Bisleri International Pvt. Ltd. and Ors. (Decided on 22.02.2010) MANU/DE/0410/2010

Intellectual Property Rights - Trademarks - Application for rectification of registration of trademark - Appearance of Registrar in legal proceedings - Content of deposition or statement made by Registrar or his duly authorised subordinate - Scope thereof - Section 98 of Trademarks Act, 1999.

Held, the appearance or statement as the case may be could be for the purposes of explaining matters with particular reference to the case in which the application for rectification is filed or it could be about the general practice followed by the Trade Marks Registry. Where his opinion on the general practice of the Trade Marks Registry is sought, he is expected to depose on such practice de hors the lis between the parties. The Registrar while appearing in proceedings under Section 98 TM Act 1999 will remain neutral and objective. In the instant case, the contents of the statement made by the Senior Examiner indicate that it was not confined to the record of the case or to the general practice of the Trade Marks Registry in like cases. It went far beyond. Therefore, statement dated 9th September 2008 of the Senior Examiner is directed to be taken off the records of the three rectification applications. Writ petition is accordingly allowed.