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M.P. Ramani v. State of Kerala and Another

Citation

REED 2022 SC 08009

Court

Supreme Court

Subject 

Cheque – Forged Signature – Bank Account No. standing in the name of the appellant had been fraudulently obtained by the respondent No.2 - on forging the appellant’s signature attempted to extract amount from her account - Appellant herein who was arrayed as Respondent No.2 in Crl.M.C. before the High Court of Kerala was in the Appeal assailing the order - Whereas the High Court allowed the petition filed by Respondent No.2 herein under Section 482 of Cr.P.C and quashed the final report submitted alleging commission of offence under Sections 420, 465, 468 and 472 IPC by respondent No.2 herein

Date

August 10, 2022

Bench

N.A.

Applicable Law

Sections 173, 482, Code of Criminal Procedure, 1973
Sections 420, 465, 468, 472, Indian Penal Code, 1860

Brief

The Appellant herein who was arrayed as Respondent No.2 in Crl.M.C. before the High Court of Kerala was in this appeal assailing the order. By the said order, the High Court allowed the petition filed by Respondent No.2 herein under Section 482 of Cr.P.C and quashed the final report submitted alleging commission of offence under Sections 420, 465, 468 and 472 IPC by respondent No.2 herein.
The brief facts leading to the case was that the appellant herein as de facto complainant filed a complaint dated before the Sub-Inspector, Payyannur Police Station alleging that the cheque bearing No.813/063676 of Canara Bank, Payyannur Branch relating to A/c No.13111/2019 standing in the name of the appellant had been fraudulently obtained by the respondent No.2 herein and on forging the appellant’s signature had attempted to extract amount from her account.
It was specifically alleged that the signature on the cheque was forged and the cheque was drawn for a sum of Rs.3,50,000/- and was presented through the Federal Bank, Payyannur Branch through the account maintained by respondent No.2. The complaint further alleged that the cheque was allotted to the appellant by the Canara Bank, 30 years back and was not in use for want of new MCRI number. Based on the said complaint, FIR No.66 dated 20.01.2014 came to be registered for offence under Sections 420, 465, 468 and 472 IPC. Pursuant thereto the investigation was conducted and the final report under Section 173 Cr.P.C. was filed before the Competent Court. The respondent No.2 herein was accordingly accused of having committed the crime alleged by the appellant.
The appellant, at that stage filed the petition under Section 482 before the High Court seeking that the final report be quashed. The appellant was arrayed as respondent No.2 to the said petition. The High Court by the impugned order dated 07.10.2020 allowed the petition and quashed the proceedings. The appellant, thus being aggrieved was before the Supreme Court assailing the said order.
Though detailed investigation was conducted and the final report was filed. The Supreme Court noted that the order of the High Court was not only brief, but cryptic, while exercising the power under Section 482 Cr.P.C. The High Court, neither adverted to the facts arising in the case in detail nor to the nature of the allegation which led to the investigation and the filing of the final report. The only observation which appeared to have influenced the decision of the High Court was that the cheque leaf belonged to the appellant and it contained her signature and there was no allegation of threat. On the other hand, the very case sought to be made out by the appellant was that the cheque belonging to the appellant had been wrongly possessed by respondent No.2 and the cheque had been presented for realization by forging her signature and an attempt was made to extract the money. The non-examination of the case was incorrect perspective, keeping in view the guideline laid down by the Supreme Court to be borne in mind while exercising the power under Section 482 of Cr.P.C., in various decisions, had led to an order which on the face of it was not sustainable.
Having noted that the High Court had quashed the final report without adverting to either the facts or law by a cryptic order, the Supreme Court set aside the order and restored the petition to the file to the High Court so as to enable the parties to put forth their contentions and allowed the High Court to comprehensively advert to the matter on facts and law.
The Appeal was allowed.

Bank of Baroda and Another v. Parasaadilal Tursiram Sheetgrah Privated Limited and Others

Citation

REED 2022 SC 08202

Court

Supreme Court

Subject 

SARFAESI Proceedings – Auction Purchaser - Sale Certificate issued - Appeal – Filed by the Bank - against an Interlocutory Order of stay passed by the High Court in pending disposal of a Writ Petition - Writ Petition was filed by the Respondent Company against the order in appeal by the DRAT - By this order the challenge laid to the Sale Certificate issued in favour of the Auction Purchaser u/s 17 of the SARFAESI Act, 2002 was dismissed on the ground of limitation

Date

August 10, 2022

Bench

N.A.

Applicable Law

Sections 13(2), 13(4), 17, 17(1), SARFAESI Act, 2002

Brief

present proceedings commenced with a challenge to the sale certificate in an application under Section 17 of the Act by the Respondent Company and the Directors. After hearing the Company, its Directors and the legal representatives of the deceased Director, the DRT dismissed the Section 17 application on the ground that it was filed beyond the statutory period of limitation of 45 days. According to Section 17(1), the period of 45 days is mandated to commence from the date on which a measure under Section 13(4) has been adopted, which in the facts of the present case was the date when the secured asset was sold in favour of Respondent No.7.
The above referred order was challenged in review. The DRT by its order dated 08.08.2016 allowed the review on the ground that Sri Rakesh Sharma had expired before the auction had taken place and that his legal representatives were not issued notice. It was rather strange that the DRT not only entertained the Review Petition, but has allowed the same on the aforesaid ground.
The order in review was challenged before the DRAT, which found no difficulty in allowing the appeal on the ground that there had never been an error apparent on the face of record for exercising the review jurisdiction. It was the order of DRAT that was challenged before the High Court in the Writ Petition filed by the Company, its directors and also the legal representatives of the deceased Director. This very same ground was raised, that one of the Directors had expired and that his legal representatives were not given notice before the secured asset was brought to sale.
On the above referred question, the High Court admitted the Writ Petition and proceeded to grant the interim order. The Supreme Court noted that there was only limited question concerned as to whether the High Court was justified in passing the interim order.
This was a case where the Company, with its own independent identity, was contesting the proceedings. It was apparent that the Directors were also contesting the matter by filing the Section 17 application. Even the legal representatives of one of the deceased Directors were party to the application under Section 17. Further, DRAT came to the conclusion that the original order passed by the DRT had been arrived at after a detailed consideration and that there was no justifiable ground for invoking the review jurisdiction. For granting or refusing to grant an interim order, the above referred facts were more than sufficient.
The reason for providing a time limit of 45 days for filing an application under Section 17 can easily be inferred from the purpose and object of the enactment. In Transcore v. Union of India and Another, 2007(1) Bank CLR 1 (SC), the Supreme Court held that the “SARFAESI Act is enacted for quick enforcement of the security”. It was unfortunate that proceedings where a property that has been brought to sale and third-party rights created under the provisions of the Act, had remained inconclusive even after a decade.
For the reasons stated above, the Supreme Court were of the opinion that the High Court was not justified in staying the operation of the order of the DRAT which came to the conclusion that there was no error apparent on the face of record for the DRT to invoke the review jurisdiction and recall its order dismissing the application under Section 17 of the Act.
The Appeal was allowed and the order of the High Court was set aside.

State Bank of India v. V.K. Bakshi

Citation

REED 2022 Del 08004

Court

High Court

Subject 

Bank Service – Removal from Service – Appeal - Question for consideration of in intra-court appeal - Whether the Labour Court could reduce the penalty from “removal from service” to “stoppage of three increments with cumulative effect” - in exercise of its discretionary jurisdiction under Section 11A of the Industrial Disputes Act, 1947?

Date

August 7, 2022

Bench

Delhi

Applicable Law

Sections 10, 11A, Industrial Disputes Act, 1947

Brief

The High Court perused the Award of the Labour Court in the light of the legal principles as enunciated and explained in the legal decisions. It has examined each charge against the respondent/workman and sifted through the evidence on record. It has been noted that the allegations against the respondent/workman essentially pertain to raising of loans without seeking prior approval of the competent authority, which fact was also candidly admitted by the respondent/workman in his reply to the charge sheet. The Labour Court also noted the justification given by the respondent/workman that the loans were raised by him on account of illness of his daughter, purchase of a house and establishment of business of his son. With regard to the allegation of respondent’s outstanding amount towards one M/s Evergreen Chit Fund Pvt. Ltd., the Award has concluded that the respondent had not borrowed any loan from the said company. In fact, the brother of the respondent took a loan for which the respondent stood as guarantor but due to the untimely death of the said brother, the borrowed amount could not be returned by the borrower. Nevertheless, in time-through installments the due amount stood paid by the respondent/workman. Having regard to the evidence on record, the Labour Court concluded that the respondent/ workman had not been found guilty of any charge involving moral turpitude and that the overdue loan amounts stood repaid. Premised on the above factors, it concluded that punishment of “removal from service” was very grave and severe in nature and was liable to be reduced to “Stoppage of three increments with cumulative effect”.
Evidently before altering the punishment, the Labour Court had recorded its satisfaction that the punishment imposed upon the workman was disproportionate to the degree of guilt or wrongdoing of the respondent/ workman. Such satisfaction was supported by reasons which were based upon the material on record. The Labour Court had not committed any error of law. It has exercised its discretion judicially within the parameters of law. Reduction in punishment as ordered by the Labour Court, therefore, needed no interference.
The Appeal was dismissed.

Sanjay Sarin v. The Authorised Officer, Canara Bank and Others

Citation

REED 2022 NCLAT Del 08201

Court

High Court

Subject 

Corporate Insolvency - Loan – Guarantor of loan - Petitioner, who stood as a guarantor to a loan facility, was aggrieved with the recovery action initiated by the bank - against the borrower and himself under the SARFAESI Act, 2002. According to him, once a resolution plan qua the borrower was approved under Section 31 of the IBC, 2016, the bank’s claims stood addressed - It could not have sought recovery for amounts over and above the amount approved by the NCLT, and was seeking a mandamus to that effect - was the petition maintainable for the above reliefs, was the short question before the High Court

Date

August 7, 2022

Bench

Delhi

Applicable Law

Article 226, Constitution of India
Sections 30(2), 30(4), 31, 31(1), 33(3), 238, Insolvency and Bankruptcy Code, 2016
Sections 13, 13(2), 13(4), 14, 17, SARFAESI Act, 2002

Brief

In the present case, the Petitioner approached the High Court aggrieved with: (i) Respondent No. 2’s failure in adhering to the timelines of payments under the resolution plan, since as on date, 15 out of 24 instalments payable to Respondent No. 1 were still pending; and (ii) proceedings initiated by Respondent No. 1 under Section 13(4) of the SARFAESI Act; (iii) the institution of proceedings against the Petitioner by Respondent No. 1 for taking possession of the dwelling unit of the Petitioner and for appointment of a receiver, under Sections 14 of the SARFAESI Act before the Chief Metropolitan Magistrate, Karkardooma District Court.
The law relating to maintainability of a writ petition in matters relating to SARFAESI Act is no longer res integra. The Supreme Court in Phoenix ARC Pvt. Ltd. v. Vishwa Bharti Vidya Mandir and Ors., REED 2022 SC 01201 has held that “where proceedings are initiated under the SARFAESI Act, and the borrower is aggrieved by any of the actions of the bank for which the borrower has remedy under the SARFAESI Act, no writ petition should be entertained”. Similar views have been expressed by the High Court in M/s Trinkeshwar Developers and Builders Pvt. Ltd. v. North Municipal Corporation & Ors., REED 2022 Del 02227, wherein it was held that “a petitioner cannot invoke the writ jurisdiction of the court under Article 226 of the Constitution of India to indirectly seek the relief which the petitioner has failed to obtain otherwise”. As noted above, the Petitioner’s challenge to the action of Respondent No. 1 was already the subject-matter of challenge before the DRT, which was pending adjudication, and therefore, the present writ cannot be entertained.
The Petitioner also raised a grievance regarding the proceedings being in derogation of the Approval Order of the NCLT, and implored for the High Court’s intervention on the ground that there was no other remedy available. This contention was founded on the plea that, with the approval of the resolution plan, the guarantors’ liabilities were also discharged. This contention had been categorically negated by the Supreme Court in Lalit Kumar Jain v. Union of India, REED 2021 SC 05510.
On a bare perusal of the judgment of Lalit Kumar Jain v. Union of India, REED 2021 SC 05510, it was clear that the Supreme Court had, in very clear terms, held that discharge of the corporate debtor from a debt owed by it to its creditors, by way of an involuntary process such as insolvency proceedings, did not absolve the guarantor of its liability since it arises out of an independent contract. Thus, the passing of a resolution plan does not ipso facto discharge the personal guarantor. The judgment of the Supreme Court in State Bank of India v. V. Ramakrishnan and Another, REED 2018 SC 08560 also puts forth the aforementioned principle, and is contrary to the proposition canvassed by the Petitioner. As regards the extent of liability of a personal guarantor is concerned, the same would have to be determined in light of the agreement between the borrower, i.e., the corporate debtor, and the personal guarantor, for which the appropriate forum would be the Debt Recovery Tribunal and not the High Court. Thus, if the Petitioner is not absolved of his liability, the proceedings initiated by the bank under the SARFAESI Act cannot be held to be unconstitutional or in derogation of the Approval Order of the NCLT.
In relation to the other grievance raised by Respondent No. 1 qua non-implementation of the resolution plan, it must be noted that the aggrieved party was actually Respondent No. 1, who had not been paid in terms of the resolution plan approved by NCLT.
The High Court also taken note of Section 33(3) of the IBC, which envisages a liquidation process in the event of contravention of a resolution plan. Under this provision, Respondent No. 1 certainly has the right to proceed against the collateral securities for recovery of its dues, which are independent of the resolution plan approved by the NCLT. If the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected, may make an application to the Adjudicating Authority for an order for liquidation. Where a resolution applicant succeeds as a corporate debtor, but fails to comply with its assurance in terms of the resolution plan, then subsequent step to be taken has been specified in Section 33(3) of the IBC. This is the scheme under the IBC, and if the Parliament, in its wisdom, has only provided the remedy of a liquidation process under Section 33(3) of IBC as a consequence of non-implementation of the resolution plan by the concerned corporate debtor, the High Court cannot create another remedy just because the afore-noted remedy is not sufficient or suitable for the Petitioner. Therefore, Petitioner’s grievance regarding non-implementation of the resolution plan, too, cannot be a ground for the High Court to entertain the instant petition.
The Appeal was dismissed.

Agarwal Veneers v. Fundtonic Service Private Limited

Citation

REED 2022 NCLAT Del 08540

Court

NCLAT

Subject 

Corporate Insolvency - Appeal – Filed by the Operational Creditor under section 9 – against the order of the Adjudicating authority – wherein the AA rejected the section 9 Application of the Appellant on the ground - not fulfilling of pre-requisite of demand notice under section 8 of the Insolvency and Bankruptcy Code, 2016

Date

August 4, 2022

Bench

New Delhi

Applicable Law

Sections 8, 8(1), 8(2), 8(2)(a)(ii), 8(4), 8(5), 9, 9(3)(c), 20, 65, Insolvency and Bankruptcy Code, 2016
Rule 8(1), Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016
Regulation 7, IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

Brief

The brief point for consideration which arose in this Appeal was whether the Adjudicating Authority was justified in rejecting the Section 9 Application preferred by the Appellant herein.
The Appellant/Operational Creditor strongly contested that the Adjudicating Authority has wrongly observed that the demand notice under Section 8 of the Code was issued by an advocate and was therefore not valid.
The Adjudicating Authority in para 9 of the impugned order has observed that the demand notice which is a prerequisite for filing of the Application under Section 9 is bad as no document was produced by the Applicant/Appellant showing that the advocate who has signed the Application is associated with the Company for a long period and can take such steps on behalf of the Company.
The Appellate Authority were of the considered view that as far as this issued was concerned, an advocate can, on behalf of the Company issue a demand notice under Section 8 and no such document is required to establish his ‘period of association’ with the said Company. At this juncture, reliance was placed on the observations of the Supreme Court in ‘Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd., REED 2017 SC 12675, where the Apex Court observed, “49. Since there is no clear disharmony between the two parliamentary statues in the present case which cannot be resolved by harmonious interpretation, it is clear that both statutes must be read together. Also, we must not forget that Section 30 of the Advocates Act deals with the fundamental right under Article 19(1) (g) of the Constitution to practice one’s profession. Therefore, a conjoint reading of Section 30 of the Advocates Act and Sections 8 and 9 of the Code together with the Adjudicating Authority Rules and Forms thereunder would yield the result that a notice sent on behalf of an operational creditor by a lawyer would be in order”.
Therefore, the Appellate Authority were of the earnest view that the observation by the Adjudicating Authority in para -9 be set aside.
However, the Application was not dismissed on this ground alone. A perusal of the impugned order shows that the Adjudicating Authority had dismissed the Application even on merits, the grounds being that the Corporate Debtor is an’ MSME’ and a ‘going concern’ and a ‘viable entity’.
It was also observed by the Adjudicating Authority that the Operational Creditor had filed the Petition as a tool of recovery and that the Code is not intended to be a substitute to a Recovery Forum. Further, the Adjudicating Authority had also noted that the Appellant/Applicant had not produced on record any bank statements to show that payments were received from the Corporate Debtor against the invoices based on which the claims have been raised.
It was relevant to mention here, that the relevant provisions of the Code along with the concerned Regulations which establish that the Application should be complete and only then the Adjudicating Authority may decide to admit the Application.
As per the Insolvency and Bankruptcy Code, 2016 and relevant Regulations therein, that unless the Operational Creditor along with its application furnishes a copy of the invoices, the bank statements and the financial accounts, the Adjudicating Authority is empowered to reject an incomplete Application.
The Appellate Authority noted the contention of the Counsel for the Appellant that merely because the Corporate Debtor was a going concern and an MSME, the Adjudicating Authority ought not to have rejected the Application on this ground. The Preamble of IBC is carefully worded to describe the spirit and objective of the Code to be ‘Reorganisation’ and ‘Insolvency Resolution’, specifically omitting the word ‘Recovery’. The Parliament has made a conscious effort to ensure that there is a significant difference between ‘Resolution’ and ‘Recovery’. The Hon’ble Supreme Court has time and again observed that the fundamental intent of IBC is ‘maximising the value of assets’ in the process of ‘Resolution’.
In Mobilox Innovations Private Limited v. Kirusa Software Private Limited, REED 2017 SC 09545, the Apex Court has examined in detail the United Nations Legislative Guide on Insolvency, in which the IBC finds its roots. Any Application to commence CIRP can be denied when the Creditor is using Insolvency as an inappropriate substitute for Debt Recovery Procedures, the Appellate Authority noted.
If IBC is purely used for the purpose of Debt Recovery, particularly when the amounts due are small, and the Company is a solvent entity and is a going concern, the question of ‘Reorganising’ or ‘Resolution of the Company’ does not arise. This Tribunal in Binani Industries Limited v. Bank of Baroda & Another, REED 2018 NCLAT Del 11524, has differentiated between ‘Recovery’ and ‘Resolution’ and has observed that IBC is not a Recovery Proceeding. ‘Recovery’ dispossesses the ‘Corporate Debtor’ of its assets while a Resolution is an effort to keep it afloat. Further, this Tribunal in Asset Advisory Services v. VSS Projects, REED 2021 NCLAT 09523, and also in Praveen Kumar Mundra v. CIL Securities Limited, REED 2019 NCLAT Del 05544, has noted that CIRP cannot be initiated with fraudulent intent ‘for any purpose other than the Resolution of Insolvency or Liquidation’ and therefore it is clearly covered under Section 65 of the Code.
The Hon’ble Supreme court in Vidarbha Industries Power Limited v. Axis Bank Limited., REED 2022 SC 07529, had observed that even if there is a ‘debt’ and ‘default’, the Adjudicating Authority should use its discretion in admitting/ rejecting an application. In the instant case, the Adjudicating Authority had rightly rejected the Application on this ground too.
For all the aforenoted reasons, the Appeal was failed on merits and was accordingly dismissed.

Vyomesh Shah v. Union of India and Others

Citation

REED 2022 SC 08531

Court

Supreme Court

Subject 

Corporate Insolvency – Question of validity of few sections of Insolvency and Bankruptcy Code, 2016

Date

August 4, 2022

Bench

N.A.

Applicable Law

Sections 95(1), 96(1), 97(5), 99(1), 99(2), 99(4), 99(5), 99(6), 100, Insolvency and Bankruptcy Code, 2016

Brief

It was submitted that the issues involved in these writ petitions were similar and akin to those involved in other petitions pending in this Court questioning the validity of Sections 95(1), 96(1), 97(5), 99(1), 99(2), 99(4), 99(5), 99(6) and 100 of the Insolvency and Bankruptcy Code, 2016, wherein notices have been issued with interim orders.
In the meanwhile, petitioner(s) shall not transfer, alienate, encumber or dispose of any of their assets or legal rights or beneficial interest therein; and the Resolution Professional shall not proceed with filling of the report. If the report has been filed, the same shall not be acted upon.

Kotak Mahindra Bank Limited v. Kew Precision Parts Private Limited and Others

Citation

REED 2022 SC 08532

Court

Supreme Court

Subject 

Corporate Insolvency – Limitation - Appeal - Filed by the Financial Creditor under Section 62 of the Insolvency and Bankruptcy Code, 2016 against the order passed by the NCLAT - allowing Company Appeal filed by the Respondent-Corporate Debtor, against an order dated 6th September, 2019 passed by the Adjudicating Authority - admitting the application filed by the Appellant-Financial Creditor under Section 7 of the IBC for initiation of the CIRP against the Corporator Debtor

Date

August 4, 2022

Bench

N.A.

Applicable Law

Sections 25, 25(3), Indian Contract Act, 1872
Sections 7, 7(1), 7(2), 7(3), 7(4), 7(5), 7(5)(a), 7(5)(b), 7(7), 8, 9, 10, 14, 62, 238, 238A, 239(1)(c), 239(1)(d), 239(1)(e), 239(1)(f), Insolvency and Bankruptcy Code, 2016
Rule 4(1), Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016
Sections 5, 18, Limitation Act, 1963
Articles 62, 137, Limitation Act, 1963
Section 13(2), SARFAESI Act, 2002

Brief

The Corporate Debtor defaulted in payment of Rs.24,55,00,000/- to the appellant Financial Creditor as agreed. In these circumstances, the appellant Financial Creditor filed an application being Company Petition No. (IB) 672/MD/2019 in the NCLT. The said application was admitted by an order dated 6th September 2019 of the Adjudicating Authority (NCLT). The Adjudicating Authority found that the account of the Corporate Debtor with the Appellant Financial Creditor had been declared NPA on 30th September 2015. The Appellant Financial Creditor was, however, relying on the proposal for a one-time settlement given by the Corporate Debtor on 12th December 2018 to contend that the existence of financial debt had been admitted by the Corporate Debtor. The Adjudicating Authority admitted the petition and imposed a moratorium in terms of Section 14 of the IBC and also confirmed the appointment of Mr. Ashwani Kumar Gupta, as the Interim Resolution Professional (IRP).
The suspended Directors of the Corporate Debtor filed the appeal being Company Appeal (AT) Insolvency No. 1349 of 2019 in the NCLAT contending that the petition filed by the Appellant Financial Creditor under Section 7 of the IBC was patently barred by limitation. The Appellate Tribunal admitted the Appeal of the Corporate Debtor and set aside the order of the NCLT on the ground of limitation.
The Financial Creditor filed the present Appeal. In this appeal, it was contended that cheques given by the Corporate Debtor to the Financial Creditor bounced up to February 2017. If, as contended by the Appellant Financial Creditor, any cheque had been issued in February 2017, the application of the Appellant Financial Creditor under Section 7 for initiation of CIRP filed on 2nd January 2019 would clearly be within limitation. However, there are no details of the payment disclosed by the Appellant Financial Creditor either in the proceedings before the NCLT or NCLAT or before this court. However, if no payment had been made, after the account of the Corporate Debtor had been declared NPA in September 2015, acknowledgement made on 12th December 2018 or later, after the expiry of over three years from the date on which the default occurred, would not save limitation.
It was the case of the Appellant Financial Creditor that on 12th December 2018 the Corporate Debtor made an offer of one-time settlement at Rs.15 Crores. This offer was not accepted. On 19th December 2018, the Corporate Debtor revised its offer to Rs.20 Crores for a one-time settlement. This offer was also not accepted. On 20th December 2018, the Corporate Debtor again revised its offer for a one-time settlement. This time the Corporate Debtor offered to settle the outstanding dues of the Financial Creditor upon payment of Rs. 24,55,00,000/- to be paid within 31st December 2018. This offer was accepted, and the terms of the settlement were signed.
In terms of such an agreement, any agreement to pay a time-barred debt would be enforceable in law, within three years from the due date of payment. It appears that Section 25(3) of the Indian Contract Act was not brought to the notice of the NCLAT. The NCLAT also did not consider the Section mentioned above.
This Appeal contended that the last offer of 20th December 2018 was followed by an agreement. Whether there was a such agreement or not would have to be considered by the Adjudicating Authority.
Under Section 25(3), a debtor can enter into an agreement in writing, to pay the whole or part of a debt, which the creditor might have enforced, but for the limitation of a suit in law. A written promise to pay the barred debt is a valid contract. Such a promise constitutes novation and can form the basis of a suit independent of the original debt, for it is well settled that the debt is not extinguished, the remedy gets barred by the passage of time.
Section 25(3) applies only where the debt is one which would be enforceable against the defendants, but for the law of limitation. Where a debt is not binding on the defendant for other reasons, and consequentially not enforceable against him, there is no question of applicability of Section 25(3).
There is a distinction between acknowledgement under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgement in writing, signed by a party or its agent authorised on that behalf, have the effect of creating a fresh starting of limitation. The difference is that an acknowledgement under Section 18 of the Limitation Act has to be made within the period of limitation and need not be accompanied by any promise to pay. If an acknowledgement shows the existence of a jural relationship, it may extend limitation even though there may be a denial to pay. On the other hand, Section 25(3) is only attracted when there is an express promise to pay a debt that is time-barred or any part thereof. A promise to pay can be inferred from scrutinising the document. Only the promise should be clear and unconditional.
The scheme of the Insolvency and Bankruptcy Code, 2016 (IBC) is to ensure that when a default takes place, in the sense that debt becomes due and is not paid, the Corporate Insolvency Resolution Process begins. Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate the Corporate Insolvency Resolution Process in respect of a such corporate debtor in the manner as provided in Chapter II of the IBC.
The IBC is not just another statute for the recovery of debts. Nor is it a statute which merely prescribes the modalities of liquidation of a corporate body, unable to pay its debts. It is essentially a statute which works towards the revival of a corporate body, unable to pay its debts, by appointment of a Resolution Professional.
IBC has an overriding effect over other laws. Section 238 of the IBC provides that the provisions of the IBC shall have an effect, notwithstanding anything inconsistent therewith contained in any other law, for the time being in force, or any other instrument, having effect by virtue of any such law.
Unlike coercive recovery litigation, the Corporate Insolvency Resolution Process under the IBC is not adversarial to the interests of the Corporate Debtor as observed by the Supreme Court in Swiss Ribbons Private Limited v. Union of India, REED 2019 SC 01504, the Bench observed.
When a question arises as to the meaning of a certain provision in a statute, the provision has to be read in its context. The statute has to be read as a whole. The previous state of the law, the general scope and ambit of the statute and the mischief that it was intended to remedy are relevant factors. In Dena Bank (now Bank of Baroda) v. C. Shivakumar Reddy and Another, REED 2021 SC 08512, the Supreme Court held, "On a careful reading of the provisions of the IBC and in particular, the provisions of Section 7(2) to (5) of the IBC read with the 2016 Adjudicating Authority Rules there is no bar to the filing of documents at any time until a final order either admitting or dismissing the application has been passed.”
It is well settled by a plethora of judgments of this Court as also different High Courts and, in particular, the judgment of this Court in B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, REED 2018 SC 10542. NCLT/NCLAT has the discretion to entertain an application/appeal after the prescribed period of limitation. The condition precedent for exercise of such discretion is the existence of sufficient cause for not preferring the appeal and/or the application within the period prescribed by limitation.
The condition precedent for condonation of the delay in filing an application or appeal is the existence of sufficient cause. Whether the explanation furnished for the delay would constitute “sufficient cause” or not would be dependent upon the facts of each case.
Section 5 of the Limitation Act, 1963 does not speak of any application. The section enables the court to admit an application or appeal if the applicant or the appellant, as the case may be, satisfies the court that he had sufficient cause for not making the application and/or preferring the appeal, within the time prescribed. A Court/Tribunal may exercise its discretion to condone the delay, even in the absence of a formal application.
The Supreme Court bench observed, that "there is no specific period of limitation prescribed in the Limitation Act, 1963, for an application under the IBC, before the Adjudicating Authority (NCLT). An application for which no period of limitation is provided anywhere else in the Schedule to the Limitation Act is governed by Article 137 of the Schedule to the said Act. Under Article 137 of the Schedule to the Limitation Act, the period of limitation prescribed for such an application is three years from the date of accrual of the right to apply."
It is the well-settled proposition of law, as laid down in the judgment of this Court in Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P) Limited, REED 2019 SC 02501, that limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension in enlargement of the period of limitation, the relevant facts are required to be pleaded and requisite evidence is required to be adduced.
As per Section 18 of the Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired.
It is well settled that even entries in books of accounts and/or balance sheets of a Corporate Debtor would amount to an acknowledgment under Section 18 of the Limitation Act. In this Case, the Appellant Financial Creditor has not relied on any books of accounts or Balance Sheets of the Corporate Debtor.
Section 18 of the Limitation Act speaks of an acknowledgement in writing of liability, signed by the party against whom such property or right is claimed. Even if the writing containing the acknowledgement is undated, evidence might be given of the time when it was signed. The explanation clarifies that an acknowledgement may be sufficient even though it is accompanied by a refusal to pay, deliver, perform or permit to enjoy or is coupled with claim to set off, or is addressed to a person other than a person entitled to the property or right. “Signed” is to be construed to mean signed personally or by an authorised agent.
An acknowledgement made in writing within the period of limitation extends the period of limitation. In this case, there was no acknowledgement of debt within three years from the period in which the account of the Corporate Debtor was declared NPA or within three years from the date on which the loan facilities were recalled.
The Adjudicating Authority proceeded on the basis that the offer of settlement made by the Corporate Debtor on 12th December 2018 and rejection thereof by the Appellate Authority showed the Corporate Debtor had conceded that there was a continuous cause of action. It is, however, the case of the Appellant Financial Creditor in this appeal that terms of the settlement were executed on 20th December 2018 whereby the Corporate Debtor agreed to repay the amount of Rs.24,55,00,000/- within 31st December 2018. The Adjudicating Authority, however, did not refer to any settlement. Nor did it address the question of whether any agreement for repayment of debt came into existence in December 2018 and, if so, whether the agreement would attract Section 25(3) of the Contract Act.
The Appellate Tribunal (NCLAT) found that there was no acknowledgement of debt within the period of limitation of three years. Holding the application of the Appellant Financial Creditor, under Section 7 of the IBC, to be barred by limitation, the Appellate Authority (NCLAT) allowed the appeal.
The Appellate Tribunal (NCLAT) also did not notice the terms of the settlement stated to have been executed on 20th December 2018, possibly because the attention of the NCLAT was not drawn to any terms of the settlement. The Appellate Tribunal (NCLAT) did not, therefore, have the occasion to consider whether Section 25(3) of the Contract Act would be attracted. The Appellate Tribunal (NCLAT), as observed above, proceeded on the basis that the CIRP proceedings were barred by limitation in the absence of any acknowledgement of debt within the period of limitation, and closed the CIRP proceedings in the NCLT, without considering the question of applicability of Section 5 of the Limitation Act for condonation of delay, to proceedings under Section 7 of the IBC.
The Supreme Court was of the view that the Appellate Tribunal (NCLAT) erred in closing the CIRP proceedings without giving the Appellant Financial Creditor the opportunity to explain if there was sufficient cause for the delay in approaching the NCLT. An appeal being the continuation of original proceedings, the provision of Section 7(5)(b) of the IBC, of notifying the Financial Creditor before rejection of a claim, would be attracted. If notified of the proposal to close the proceedings, the Appellant Financial Creditor might have got the opportunity to rectify the defects in its application under Section 7 by filing additional pleadings and/or documents.
The Bench concluded "the documents can be filed at any time until the application for CIRP is finally dismissed, as held in Dena Bank (now Bank of Baroda) v. C. Shivakumar Reddy and Another, REED 2021 SC 08512.
The appeal was, therefore, allowed. The impugned judgment and order of the NCLAT were set aside to the extent that the CIRP proceedings have been closed. The Adjudicating Authority shall consider the application for CIRP afresh, in accordance with the law, in the light of the observations made above, after giving the Appellant and the Respondent opportunity to file additional affidavits disclosing documents/additional affidavits in response.

Sudhir Kumar Goel and Another v. Shashi Oil and Fats Private Limited and Others

Citation

REED 2022 NCLAT Del 08515

Court

NCLAT

Subject 

Corporate Insolvency – Appeal – Filed by the Appellants against the order passed by the Adjudication Authority - Appellants in both the cases were ex-promoters and ex-members of the Respondent No. 1

Date

August 3, 2022

Bench

New Delhi

Applicable Law

Sections 230, 231, 232, Companies Act, 2013
Sections 7, 29A(c), 29A(h), 33(2), 52, 54, 54(2), 240A, Insolvency and Bankruptcy Code, 2016
Section 13(4), SARFAESI Act, 2002

Brief

Having gone through the impugned order and examined submissions made by the Counsels for the parties, particularly facts disclosed in the Memo of Appeal filed by the Appellants, it was noted by the Appellate authority that it was not in dispute & rather accepted by the Appellants in their own Memo of Appeal on account of adverse financial situation the company/corporate debtor defaulted in the payment of installments to Allahabad Bank due to which the account of the Company was declared NPA. It was also not in dispute that Allahabad Bank assigned all its title interest & benefits in respect of the debts of the Company to Respondent No.2 through a deed of assignment at a price of Rs. 5.75 Crore. CIRP proceedings against the Company was initiated on 20.03.2018. This was also not in dispute that on 17.12.2018, CoC rejected the Resolution Plan submitted by the Appellants. The Appellant submitted the revised proposal on 03.01.2020. Revised Proposal was approved & accepted by Financial Creditor but since March/April 2020 Country was put under lockdown by the Government and as also from 22.03.2020 due to global pandemic no application could be filed before NCLT for approval of the revised proposal duly accepted by the Financial Creditor. Liquidator was however informed. Thereafter the, liquidator proceeded with auction notice from 12.08.2020 & on 29.08.2020 and finally the property was sold to the successful bidder for Rs. 3.78 Crore.
Considering all these aspects CA No. 143 of 2021 seeking dissolution of the Company was filed by the liquidator of the Company/Respondent No.1 which was listed on 07.07.2021 which was not served on the Appellants and the Adjudicating Authority allowed the same IA and the Company was purportedly dissolved on 15.07.2021. Once the Company was dissolved under Section 54 of the Code, nothing remained.
In view of provisions contained in Section 54 of the IBC, once after the completion of liquidation an application is filed by the liquidator of a Corporate Debtor for its dissolution to the Adjudicating Authority, who had no option but to pass an order of dissolution. In the present case the Adjudicating Authority had simply complied with the provisions under Section 54(2) of the Code. It was very much clear that the Company was fully dissolved. This dissolution happened when the company was liquidated.
Before parting with order, it was apt to clarify that there was no need to go into the matter further as to when the Appellants submitted the OTS/ other proposals & the Financial Creditor/CoC had not accepted their proposals. The equity though not applicable under IBC, even remotely same cannot come into play at this juncture. The role of the Appellate Tribunal was also restricted within the four walls of the ‘Code’ & passing of order under Section 54 of the Code brings the Corporate Debtor to a closed chapter. Accordingly, the Appellate Authority did not find any merit in the appeals and both the Appeals were dismissed.

Oyster Steel and Iron Private Limited v. Laxmi Foils Private Limited

Citation

REED 2022 NCLAT Del 08521

Court

NCLAT

Subject 

Corporate Insolvency - Appeal - Filed by the Appellant-Operation Creditor under Section 61 of the Insolvency and Bankruptcy Code 2016 - against the order passed by the Adjudicating Authority – Wherein the AA rejected the section 9 Application on the ground of ‘existence of disputes’ between the parties

Date

August 3, 2022

Bench

New Delhi

Applicable Law

Sections 8, 9, 9(5)(d), 9(5)(2)(d), 61, Insolvency and Bankruptcy Code, 2016

Brief

It was very much clear that the parties were not in a harmonious relationship and rather the Appellant –Director had initiated multiple litigations which also involved, the some of the transactions captured in this case. The Debit Notes so sent by the CD/Respondent to the Appellant/OC were bearing an acknowledgement. The Appellate Tribunal was not in a position to examine whether it was forged or not forged. It can only be done by the Trial Court/ Civil Court.
It apparently looked astonishing how a firm will keep mum from 2016 to 2018 when such huge amounts were due from the CD and thereafter initiated the petition under the Code for expeditious release of payment under the fear of the Code where the management changes from the existing management of the CD to the Resolution Professional of the CD.
The claim of the Respondent was that the Appellant had never delivered the contracted quantity and they were supporting it by way of emails. What was not in dispute that the Operational Creditor/Appellant was supplied of raw material and the CD /Respondent was a manufacturer and supplier of qualitative range of aluminium Hot rolled plats etc.
It was also apparent while going through both the Appeal and the reply by the Respondent that the industry practice for adjustment of rates and quantity/quality adjustment in release of payments was generally done through Debits Notes or Discounts.
There was some dispute with respect to supply of Form-C. Even the Operational Creditor had claimed for not getting Form-C resulted into additional tax and penalty was not backed by challan.
It was also not in dispute that the Demand notice had been replied by CD through its counsel’s letter dated 30.11.2018 wherein multiple issues had been raised by the Respondent/CD where the CD/Respondent was not only disputing the dues even the issue of Form-C, the issue of business practice, the business relationship keeping silence for dues from 2016 onwards and issue on demand notice for chasing of payment which was not legally due and payable.
All these reflected that the parties were in multiple litigation and hence the Operational creditor in order to bring pressure on the CD has adopted the provisions of the Code to get disputed payment realized from the CD. The provisions of the Code cannot be used for chasing of payment and moreover where there was a business dispute. The Supreme Court had already settled the matter that the “provision of the Code is not intended to be a substitute to be a recovery forum, and also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Code cannot be used whenever there is existence of real dispute and also whenever the intention is to use the Code as a means for chasing of payment or building pressure for releasing the payments.”
The Supreme Court in Mobilox Innovations Pvt. Ltd v. Kirusa Software Pvt. Ltd., REED 2017 SC 09545, has held at para 40 that “It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the “existence” of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application.”
In view of the aforesaid facts and circumstances of the case and the law laid down on the subject, the Appellate Authority were constrained to uphold the view of the Adjudicating Authority. Accordingly, the Appeal was dismissed.

Sardar Paramjit Singh Girgla v. Punjab & Sind Bank

Citation

REED 2022 Del 08005

Court

High Court

Subject 

Bank Service - Voluntarily retiring the Petitioner from the services - Bipartite Settlement - Petition filed under Article 226 of the Constitution of India for setting aside the award passed by the Presiding Officer, Central Government Industrial Tribunal-cum-Labour Court- whereby the PO upheld the decision of the Respondent for not allowing the Petitioner to join his duties

Date

August 3, 2022

Bench

Delhi

Applicable Law

Articles 226, 311, Constitution of India

Brief

In the present case, the Petitioner was appointed as apprentice at Punjab & Sind Bank, Janak Puri Branch, New Delhi vide letter No. Staff CA/1917 dated 23.05.1978 issued by Manager Personnel, Punjab and Sind Bank Ltd. (Regd Office, Hall Bazar, Amritsar). Later, the Petitioner was transferred to Hemkunt Colony, New Delhi. In view of the Petitioner’s unauthorized absence from duty, a notice dated 06.07.1996 was issued to him by the Bank directing him to report on duty within 30 days of the receipt of the said notice or provide an explanation of his absence otherwise he will be deemed to have been voluntarily retired from the services of the Respondent Bank on the expiry of the period of the said notice. The said notice was issued to the Petitioner on 06.07.1996 but was posted on 09.07.1996. Therefore, it was apparent that the said notice would have been received by the Petitioner on or after 09.07.1996. On 07.08.1996, i.e. within the period of 30 days, the Petitioner approached the Respondent Bank with an application seeking to join back his duties but he was not permitted to do so.
Thereafter, the Petitioner, vide letter dated 09.08.1996, again sought permission to join his duties and submitted that he could not report on duty earlier due to viral fever and back pain and was under treatment till 05.08.1996. The Respondent Bank, vide letter dated 14.08.1996, replied to the Petitioner to submitted proof of his illness from 17.06.1994 to 05.08.1996 for considering his request for allowing him to join his duties. The Petitioner sent a legal notice dated 27.08.1996 for withdrawing the notice dated 06.07.1996 issued by the Respondent Bank and to reinstate the Petitioner back in service from the day of his termination with full-service benefits. On 12.09.1996, the Petitioner filed a Suit No.544/1996 before the Civil Court and the same was dismissed by trial court vide its judgment dated 28.01.1998 on the ground of not being maintainable and premature. Another notice was issued to the Petitioner by the Respondent Bank on 07.10.1996 directing him to explain his unauthorized absence within 30 days of receipt of the notice, otherwise, he will be deemed to have been voluntarily retired from the services of the Bank on the expiry of the period of the said notice. In the absence of any response from the Petitioner to the Notice dated 07.10.1996 issued by the Respondent Bank, the Petitioner stood voluntarily retired with effect from 26.11.1996. The Petitioner has raised an Industrial Dispute thereby challenging his voluntarily retirement order.
The Industrial Tribunal at the first instance passed an award dated 01.05.2008 observing that the action of the Respondent for not allowing Petitioner to join his duty when he reported on duty on 07.08.1996, treating him as voluntarily retired from the services w.e.f. 26.11.1996 under Clause 17 of the BPS and detaining his salary dues, was neither proper nor justified. The learned Industrial Tribunal had accordingly directed that the management should reinstate the Petitioner with continuity in service but without back wages within two months from the date of the publication of the said award.
Subsequently, the respondent management filed an application before the learned Tribunal for setting aside the award dated 01.05.2008 claiming that they have not been given an opportunity to adduce additional evidence. The Tribunal set aside the said original award dated 01.05.2008 and permitted the respondent management to adduce additional evidence.
Thereafter, additional evidence was adduced by the management and after conclusion of the trial, the Industrial Tribunal passed the impugned award dated 23.07.2008, which was under challenge by way of the present writ petition.
The main thrust of the impugned award passed by the Industrial Tribunal is Clause 17 of the BPS. In order to ascertain the fact whether the Petitioner has been absenting himself unauthorizedly, it was relevant to look through the evidence produced by the parties.
From the conjoint reading of the different testimonies, it can be deciphered that the first notice dated 06.07.1996 was dispatched and received on 09.07.1996 pursuant to which the Petitioner reported for duty on 07.08.1996 and submitted an application stating the reason for his absence, however, it was stated that he was not allowed to join his duties as the Petitioner reported for duties after expiry of stipulated period of 30 days. It has also emerged from the testimonies of abovementioned witnesses that since no medical proof was attached with the application dated 07.08.1996, he was once again called upon vide letter dated 14.08.1996 to give sufficient proof of him being under medical treatment. However, admittedly, the letter dated 14.08.1996 was never served on the Petitioner and was received back unclaimed.
The evidence further reflects that no attendance register was produced by the Management/ Respondent. The details showing the period of days attended by the Petitioner from 17.06.1994 to 26.11.1996 have been produced by the Respondent/ Management vide Ex-MW1/1. It was also an admitted position that no departmental enquiry was held against the Petitioner for his unauthorized absence from duty and the action of deemed voluntarily retirement w.e.f. 26.11.1996 has been taken strictly in accordance with Clause 17 of BPS.
The Respondent/ Management claimed before the Industrial Tribunal that the Petitioner has attended the office for only 56 days during the period from 17.06.1994 to 26.11.1996. However, on a plain reading of the attendance chart which is, Ex. MW1/1, it transpires that the days which were national/ public holiday(s) are also included in the attendance chart, creating doubt on the authenticity and veracity of the said exhibited document. Moreover, the Respondent/Management failed to produce the attendance register or the medical leave register before the Industrial Tribunal.
Admittedly, the first notice dated 06.07.1996 was dispatched on 09.07.1996 and the Petitioner reported for duty on 07.08.1996. As per the BPS, the Petitioner was bound to report for duty within 30 days of the receipt of the notice. As such the period of the first notice is deemed to be reckoned from the date of receipt i.e., 09.07.1996. Taking into account 09.07.1996 as the date of receipt of the first notice, 30 days period to report for duty would come to an end on 08.08.1996 i.e., one day after the Petitioner reported for duty i.e., on 07.08.1996. As such it can be safely inferred that the Petitioner, pursuant to the first notice dated 06.07.1996 which was dispatched and received on 09.07.1996, reported for duty on 07.08.1996, i.e., within the stipulated period of 30 days and has adhered to the condition of reporting for duty within the specified period.
Clause 17 of the BPS is a continuous action by the Management, having different stages, for taking an action against an employee for unauthorized absence. When an employee abstains from his work for a period of more than 90 days, first notice is to be issued to such employee with a direction to report for duty within 30 days of the receipt of the notice (Stage-I). Pursuant thereto if an employee does not join his duties within the stipulated period of time he shall be deemed to have voluntarily retired unless he reports on duty without prejudice to the right of the Management to take action against the said employee in terms of law or rules of service (Stage-II).
The action in terms of BPS automatically comes to an end, if the delinquent employee report for duty within the stipulated period of 30 days from the date of receipt the of first notice, which in the present case, commences from 09.07.1996 and comes to an end on 08.08.1996 and the Petitioner reported on duty on 07.08.1996 i.e., within the stipulated period of 30 days. The occasion to issue the second notice will arise only if an employee, after reporting for duty in response to the first notice, again absents himself within a period of 30 days without submitting any application, which is not the case in the present matter.
It has been clearly mentioned in the BPS that despite reporting for duty within the stipulated period provided in the first notice, the Management is well within its rights to take any action against the employee in accordance with law or rules of service, if the Management is not satisfied with the justification/ explanation rendered by the employee after reporting for duty. In the present case, the action of deemed voluntary retirement of the Petitioner has been taken by the Management/ Respondent in terms of BPS after issuance of the second notice. In my opinion, the stage of issuance of the second notice does not arise as the Petitioner has joined his duties within the time period of 30 days as stipulated under the first notice and action, if any, so warranted, could have been taken pursuant to the joining of the Petitioner w.e.f. 07.08.1996 in accordance with law or rules of service. The action of Respondent/Management in not allowing the Petitioner to join his duties despite reporting within the prescribed period of 30 days from the date of issuance of the first notice is per se illegal, arbitrary and against the principles of natural justice. The learned Trial Court erred in holding that the deemed voluntarily retirement of the Petitioner w.e.f. 26.11.1996 without considering the fact that the Petitioner joined his duties within the prescribed time stipulated in terms of the first notice and therefore, the second notice could not have been issued in continuation of the first notice in terms of Clause 17 of the BPS.
In view of the aforementioned discussion and settled position of law applied to the facts of the present case, the Award dated 23.07.2008 passed by the Industrial Tribunal and the deemed voluntary retirement of the petitioner was set aside. The Respondent/ Management was directed to reinstate the Petitioner forthwith without back wages. The Petitioner was deemed to be in continuous service on notional basis.
The Petition was Allowed.