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JSA successfully advised and represented Jayant Agro Organics Limited and Jayant Finvest Limited before the NCLT, Mumbai in a matter pertaining to scheme of merger by absorption

JSA successfully advised and represented Jayant Agro-Organics Limited (“Jayant Agro”) and Jayant Finvest Limited (“Jayant Finvest”) in a scheme of merger by absorption wherein the holding company – Jayant Finvest was merged into its subsidiary – Jayant Agro, which is listed on the BSE and NSE. The petition for sanction of the scheme was heavily contested by the Income Tax Authority (“ITA”) on the grounds that the scheme falls under the Impermissible Avoidance Agreement (IAA) under Section 96 of the Income Tax Act, 1961. After considering the objections of ITA and our submissions, the NCLT sanctioned the scheme of merger.

The ITA had objected to the sanction of the scheme on the grounds that the scheme was nothing but a mechanism to avoid tax. This was defended on the basis that once the Scheme is found to be not violative of any law and not contrary to public policy, the NCLT will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who have given their approval.

On this basis, the NCLT whilst sanctioning the scheme held that the Scheme is permissible under Section 230 of the Companies Act and squarely falls under the provisions of Section 2(1)B of the Income Tax Act which may result in exemption of income tax in the hands of Jayant Finvest, Jayant Agro and their respective shareholders.

Our Transaction Team Comprised Lead Partner – Varghese Thomas and Vikram Raghani, Of Counsel – Saeeda Bandukwala, Senior Associate – Ahsan Allana.

Tags BSE, Companies Act, JSA, Leading Law Firm, Leading Lawyers, NCLT, NSE

JSA Brief | August 2024

This edition of the JSA Brief showcases JSA authored articles, updates & newsletters and achievements such as deals and events in all practice area over the preceding month (August 2024).

To read further details, click here or refer to the below document.

For more details, please contact [email protected]

*In case the document is not visible on the device you are using, please click the link above.

Tags Articles, Deal Making, Events, JSA, JSA Prism, Legal Updates, Newsletters, Publications, Recognitions

JSA Prism | Dispute Resolution | September 2024

Please click here to download the Prism as a PDF.

Bombay High Court affirms the applicability of Section 5 of the Limitation Act, 1963 vis-à-vis the Maharashtra Stamp Act, 1958 to condone delay in stamp duty refund applications

A 2 (two) judge bench of the Hon’ble Bombay High Court (“Bombay HC”) in Nanji Dana Patel vs. State of Maharashtra, Through Government Pleader and Others[1] has upheld the applicability of section 5[2] of the Limitation Act, 1963 (“Limitation Act”) to the Maharashtra Stamp Act, 1958 (“Stamp Act”) for the purpose of condoning delay in filing of refund application. The Bombay HC noted that there is nothing in the Stamp Act that excludes the applicability of the Limitation Act. Accordingly, the delay in filing the application for a refund was condoned, and the matter was remanded to the Inspector General of Registrar and Controller of Stamps (“Controller”) to be considered de novo on merits, with a specific deadline of October 31, 2024.

Brief facts

Nanji Patel, the Petitioner had entered into a development agreement dated March 3, 2014, with a counter-party, and a stamp duty of INR 78,65,000 (Indian Rupees seventy-eight lakh sixty-five thousand) was paid under the provisions of the Stamp Act.

Subsequently, in 2015, the parties decided to cancel the development agreement and convey the property to the Petitioner for valuable consideration. A cancellation deed and a conveyance deed both dated June 24, 2015, were executed, and an additional stamp duty of INR 1,00,00,000 (Indian Rupees one crore) was paid on the conveyance deed.

On February 15, 2018, the Petitioner filed an application for refund of INR 78,65,000 (Indian Rupees seventy-eight lakh sixty-five thousand) stamp duty paid on the now-cancelled development agreement. However, the Controller rejected the refund application on the grounds that it was filed beyond the 6 (six) month period mandated under Section 48(1) of the Stamp Act.

Aggrieved by the above rejection, the Petitioner filed a writ petition before the Bombay HC.

Issues

Whether Section 5 of the Limitation Act is applicable to the Stamp Act?
If ‘sufficient cause’ exists, can delay in filing a refund application be condoned?

Analysis and Findings

The Bombay HC, upon consideration of the submissions adduced by the parties and the relevant provisions of the Limitation Act and the Stamp Act, opined that –

while Section 48 of the Stamp Act provides for a 6 (six) month limitation for filing refund applications, there is no specific exclusion of the Limitation Act, especially Section 5 of the Limitation Act. This allows for the condonation of delay in filing such applications when ‘sufficient cause’ is demonstrated;
in the present case, the Bombay HC accepted the Petitioner’s argument that the delay was caused by being ‘ill-advised’, which constitutes ‘sufficient cause’ under Section 5 of the Limitation Act;
to support its decision, reliance was placed on the judgement of Abaad Ali vs. Directorate of Revenue Prosecution Intelligence[3], which held that, unless a statute (general or special) expressly excludes the applicability of the Limitation Act, Section 5 can be invoked to condone delays;
furthermore, the Bombay HC also extensively relied on the principles laid down in Bano Saiyed vs. Chief Controlling Revenue Authority and Inspector General of Registration and Controller of Stamps[4], which directs the State to not ordinarily rely on technicalities when dealing with a citizen. It was the Bombay HC’s view that if the State is satisfied that the case of a citizen is a just one, even though the legal defences may be open to it, it must act as an honest person;
moreover, the Bombay HC highlighted that a fiscal lis is not an adversarial proceeding, and the State must act as an honest party, especially where excess payments have been made. In this case, the retention of INR 78,65,000 (Indian Rupees seventy-eight lakh sixty-five thousand) by the State was deemed contrary to Articles 265 and 300A of the Constitution of India (“Constitution”), which prohibit the retention of taxes without legal authority; and
accordingly, applying the above-stated principles to the present matter, the Bombay HC treated the writ petition as an application under Section 5 of the Limitation Act and permitted condonation of delay in filing the refund application.

The Bombay HC quashed the order of the Controller rejecting the refund application and remanded the matter for de novo consideration on merits, after condoning the delay. The Controller was directed to pass a reasoned order on or before October 31, 2024, and provide the Petitioner with notice for a personal hearing at least 5 (five) working days in advance.

Conclusion

This judgment establishes a significant precedent for allowing delayed applications for stamp duty refunds under the Maharashtra Stamp Act by invoking Section 5 of the Limitation Act. The Bombay HC reaffirmed that, unless expressly excluded, Section 5 can be applied to condone delays, provided ‘sufficient cause’ is demonstrated.

However, a gap remains regarding which authority has the power to condone such delays under the Stamp Act, as the Stamp Act itself does not provide for this. As a result, individuals seeking refunds may still need to approach the High Court under Article 226 of the Constitution for delay condonation, placing an undue burden on both citizens and the judiciary. Legislative reform may be required to address this procedural gap.

Despite this, the judgment delivers much-needed clarity and relief, reiterating that citizens should not be penalized for procedural delays when seeking refunds for excess payments. It also reinforces the State’s obligation to avoid unjust enrichment by retaining excess payments, as such retention would violate Articles 265 and 300A of the Constitution.

This Prism is prepared by:

Varghese Thomas
Partner

Ahsan Allana
Senior Associate

Kabir Saund
Associate

For more details, please contact [email protected]

[1] 2024 SCC OnLine Bom 2817

[2] Section 5 of the Limitation Act, 1963 permits the condonation of delay in preferring an appeal or making an application in certain cases where the court is satisfied that the delay was due to ‘sufficient cause’.

[3] (2024) 7 SCC 91

[4] 2024 SCC OnLine SC 979

Tags Bombay High Court, JSA, JSA Prism, Leading Lawyers, Legal Updates, Limitation Act, Maharashtra Stamp Act, Stamp Act

JSA successfully represented State Bank of India in admitting Mr. Shantanu Jagdish Prasad (Promoter/Personal Guarantor of EduComp) into personal insolvency resolution proceedings

The National Company Law Tribunal, New Delhi Bench admitted State Bank of India’s application under Section 95 of the Code against Mr. Shantanu Jagdish Prakash (Personal Guarantor / Promoter of EduComp).

By the said Judgement, the NCLT decided the following key legal issues – (i) Whether the date of default can be beyond the date of NPA declaration; (ii) Whether SBI can maintain a company petition when the Deed of (Personal) Guarantee was executed in favor of SBICAP Trustee and whether the clause in Deed of Guarantee granting joint and several rights to SBICAP Trustee and SBI was violative of Section 28 of the Indian Contract Act? (iii) whether a Company Petition can be admitted against the Personal Guarantor pending the re-evaluation of the shares held by the Corporate Debtor?

Re: Date of Default

The NCLT held that the Company Petition is deemed to be within limitation since the limitation period started on 23.08.2018. This was based on the issuance of the revival letter by the Corporate Guarantor on 30.11.2016, acknowledging the debt for the purpose of Section 18 of the Limitation Act, and the subsequent loan recall notice issued by SBI on 22.06.2018, under Section 13(2) of the SARFAESI Act, demanding the payment to be made within 60 days.

Re: The Deed of Guarantee in favour of SBICAP Trustee

the NCLT held SBI had the locus standi to file the Company Petition since it is seen from Section 95(1) of Code, that the creditor may apply either himself or jointly with other creditor or through RP to this Adjudicating Authority for initiating an Insolvency Resolution Process under chapter III. Merely because the SBICAP Trustee acted on behalf of SBI, it cannot be held that the beneficiary/creditor cannot enforce the Personal Guarantee. As per the Master Reconstruction Agreement, SBICAP was appointed as Security Trustee to hold security interests for the benefit of the CDR lenders and non-CDR lenders. Therefore, SBI had the right to initiate insolvency proceedings.

Further, the NCLT held that the Personal Guarantee was valid. It observed that while Section 28 of the Indian Contract Act prohibits certain types of agreements that restrict a party’s rights, the Personal Guarantor’s plea would also primarily result in the recovery of the debt from the Security Trustee.

Re: Admission of company petition against personal guarantee pending re-evaluation of the shares held by the Corporate Debtor

The NCLT held that the Personal Guarantor is responsible for preparing the repayment plan under Section 105 of the Code. Therefore, the Personal Guarantor can include details about the value of securities and the amount of debt repaid by the Principal Borrower or other guarantors during the implementation of the repayment plan. It was further held that the guarantor cannot be absolved of liability based on beliefs about the Corporate Debtor’s ability to repay or the possibility of a credit facility extension. Lastly, it was held that if the revaluation of securities results in an increase in value, the guarantor may benefit under Section 141 of the Indian Contract Act.

Deal value: INR 323 Crores

Our Disputes Team Comprised Partners – Dheeraj Nair and Manish Jha, Principal Associate – Vishrutyi Sahni and Associate – Muskaan Gupta.

Tags JSA, Leading Law Firm, Leading Lawyers, NCLT

JSA successfully replaced the suspended RP appointed by the NCLT in the personal insolvency of Shantanu Jagdish Prasad (Educomp) based on an interpretation of Section 98 of the Code and the IBBI suspension order

In an unique challenge, JSA has successfully obtained orders from the NCLT, Delhi and NCLAT, New Delhi to replace a Resolution Professional in the personal insolvency of Shantanu Jagdish Prasad (Educomp) in an application under Section 98 of the Code. The NCLT, Delhi and NCLAT finally interpreted the standard language of the IBBI suspension order which gives liberty that the “respective CoC/SCC, as the case may be, will decide about continuation of existing assignment of Mr. Sandeep Bhatt” to hold that this liberty does not disentitle an independent financial creditor from filing for replacement of a suspended RP under Section 98 of the Code. The NCLT, Delhi also clarified that the appointment of the replaced RP the entire proceedings under Section 95 would not need to be undertaken all over again, particularly when the RP was not suspended while submitting its report under Section 99 of the Code.

The Tribunal also clarified that a suspended IP is left with no authority to discharge function in the capacity and that the suspension will relegate back to the date on which the Registration was granted. The Tribunal reaffirmed that as soon as an order of suspension is passed, the RP will lack any authority to function as an IRP in pending proceedings or any proceeding carried on henceforth as he is ineligible to function as such and his incapacity, would be his incapacity right from the date he was registered-by IBBI.

As a background, the NCLT, Delhi admitted Shantanu Jagdish Prasad (Educomp) into personal insolvency resolution process on an application under Section 95 of the Code filed by State Bank of India and appointed Mr. Sandeep Kumar Bhatt as the Resolution Professional. However, the IBBI passed an order (prior to the admission order) suspending the Resolution Professional for a period of 2 years. The State Bank of India filed an application under Section 98(1) of the Code for replacement of the RP arguing, inter alia, that the RP has no authority to discharge its functions. The RP contested his replacement relying on the language of IBBI suspension order which stated that the “respective CoC/SCC, as the case may be, will decide about continuation of existing assignment of Mr. Sandeep Bhatt” and therefore, State Bank of India by itself did not have any authority to file for the replacement of RP under Section 98 of the Code. He further argued that the current RP is representing many other Creditors despite being under suspension and no one has sought his replacement till date. Even the personal guarantor argued that if the current RP is replaced and new RP is appointed, all the steps taken by the current RP would turn otiose and redundant and the new RP has to take the steps afresh from the initial stage as his appointment is in terms of the provisions of Section 97 of the Code.

The NCLT, Delhi and NCLAT finally interpreted the standard language of the IBBI suspension order which gives liberty that the “respective CoC/SCC, as the case may be, will decide about continuation of existing assignment of Mr. Sandeep Bhatt” to hold that this liberty does not disentitle an independent financial creditor from filing for replacement of a suspended RP under Section 98 of the Code. The NCLT, Delhi also clarified that the appointment of the replaced RP will Section 95 would not need to be undertaken all over again, particularly when the RP was not suspended while submitting its report under Section 99 of the Code.

The Tribunal also clarified that a suspended IP is left with no authority to discharge function and that the suspension will relegate back to the date on which the Registration was granted. The Tribunal reaffirmed that as soon as an order of suspension is passed, the RP will lack any authority to function as an IRP in pending proceedings or any proceeding carried on henceforth as he is ineligible to function as such and his incapacity, would be his incapacity right from the date he was registered-by IBBI.

Our Disputes Team Comprised Partners – Dheeraj Nair and Manish Jha, Principal Associate – Vishrutyi Sahni and Associate – Muskaan Gupta.

JSA successfully represented Indiabulls Housing Finance Limited in admitting Mrs. Ritu Chhabria (Personal Guarantor of Raghuleela Infraventures Private Limited) into personal insolvency resolution process

The National Company Law Tribunal, Mumbai has admitted Mrs. Ritu Chhabria (Personal Guarantor of Raghuleela Infraventures Private Limited) into personal insolvency resolution process in a company petition filed by Indiabulls Housing Finance Limited.

By its judgment, the National Company Law Tribunal, Mumbai settled that the default on the part of the Guarantor arises only when demand notice is issued as contemplated in the Deed of Guarantee and such default is valid ground to initiate personal insolvency resolution process against a personal guarantor. The Tribunal also reiterated that (i) sufficient security of the principal amount under the loan agreement is no ground to wriggle out of personal insolvency in terms of the surety’s co-extensive liability under Section 128 of the Contract Act, 1872 and (ii) the insolvency proceedings initiated against a personal guarantor remain unaffected by the debt recovery actions initiated by the Petitioner by way of arbitration proceedings or otherwise.

The Personal Guarantor contested the petition on the grounds that – (i) Orders of injunction are operating against the principal borrower in the arbitration proceedings pending in Delhi High Court and the Bombay High Court, thus, no useful purpose would be served by initiating insolvency proceedings against the Personal Guarantor and that once the Financial Creditor has availed its remedy under arbitration, it cannot double dip by initiating insolvency for the same cause of action; and (ii) the loan facilities availed by the principal borrower are adequately secured and safeguarded by the assets, which are five times more in value than the principal outstanding loan amount.

By its judgment, the National Company Law Tribunal, Mumbai settled that the default on the part of the Guarantor arises only when demand notice is issued as contemplated in the Deed of Guarantee and such default is valid grounds to initiate personal insolvency resolution process against a personal guarantor. The Tribunal also reiterated that (i) sufficient security of the principal amount under the loan agreement is no ground to wriggle out of personal insolvency in terms of the surety’s co-extensive liability under Section 128 of the Contract Act, 1872 and (ii) the insolvency proceedings initiated against a personal guarantor remain unaffected by the debt recovery actions initiated by the Petitioner by way of arbitration proceedings or otherwise.

Deal value: INR 30.29 Crores

Our Disputes Team Comprised Partners – Dheeraj Nair and Varghese Thomas, Principal Associate – Vishrutyi Sahni and Senior Associate – Ahsan Allana.

Tags Indiabulls Housing Finance Limited, JSA, Leading Law Firm, Leading Lawyers

JSA successfully represents Indiabulls Housing Finance Limited in admitting Mr. Mohit Singh (Personal Guarantor) of the Shipra Group of Companies into Personal Insolvency Resolution Process

The National Company Law Tribunal, New Delhi recently admitted Mr. Mohit Singh (Personal Guarantor of Shipra Leasing Private Limited) into insolvency in a highly contested company petition filed by Indiabulls Housing Finance Limited amidst a long-standing dispute between the parties.

This judgement decided 4 key legal objections raised by the personal guarantor – (i) whether the date of default can change from the Demand Notice under Section 8 to the application under Section 9; (ii) no proof of delivery of demand notice under Rule 7(1) of the Personal Guarantor Rules; (iii) applicability of Section 10A in petitions under Section 95 of the Code; and (iv) whether a company petition under Section 95 is maintainable when there are pending disputes between the parties regarding the “debt”. The Tribunal also decided whether factors like other pending litigations between the parties, and the stay of admission of CIRP against the Corporate Debtor would be relevant factors.

Re: Change of Date of Default from Section 8 Demand Notice to Section 9 Application

Based on our submissions, the Tribunal decided that the difference in the dates of default has no bearing on the maintainability of the company petition under Section 95 of the Code as opposed to what it may have to an Application under Section 7, or Section 9 of the Code. Article 137 of the Limitation Act, 1963, read with Section 238-A of the Code, mandates a three-year limitation period for filing Section 95 petitions, calculated from the date of default specified in the petition. In the present case, since the present Company Petition was filed under Section 95 of the Code on January 5, 2021, both the dates identified as the dates of default fall well within the three-year limitation period. Hence, either/both “dates of default” will not render the present petition non-maintainable.

Re: No proof of delivery of demand notice under Rule 7(1) of the Personal Guarantor Rules

We argued that Section 27 of the General Clauses Act, 1897 gives rise to a presumption that when a notice is sent to the correct address by registered post, the service of notice has been affected. The Tribunal agreed with this submission and held that since the Demand Notice was sent to the correct address of the Personal Guarantor, there is a presumption that service of notice has been affected when it is sent to the correct address by registered post. Hence, this objection is devoid of merit and is an afterthought in an attempt to avoid liability since the Personal Guarantor has neither pleaded this objection it its reply to the RP’s report filed in the present proceedings before this Hon’ble Tribunal.

Re: Date of Default falling during the period of Section 10A of the Code

Based on the clear and unambiguous language of Section 10A, read with the position clarified by the Hon’ble NCLAT in the case of Amit Jain v Siemens Financial Services Pvt. Ltd., 2022 SCC OnLine NCLAT 347, it is settled position that Section 10-A of the Code is not applicable to proceedings against the personal guarantors under Section 95 of the Code.

Re: Pending disputes regarding the “debt” between the parties

We argued that when the Adjudicating Authority admitted the company petition against the Corporate Debtor, it had already admitted the Corporate Debtor into CIRP in respect of the same “Debt”. This serves as a judicial imprimatur on the validity of the “debt” and precludes the Respondent from relitigating the issue in this present proceeding. Accordingly, the Adjudicating Authority rejected this objection.

Based on the above, the Tribunal declared that the present petition meets the requisite ingredients for admission of an Application under Section 95 of the Code.

Deal value: INR 14 Crores

Our Disputes Team Comprised Lead Partners – Dheeraj Nair and Manish Jha, and Principal Associate – Vishrutyi Sahni.

Tags Indiabulls Housing Finance Limited, JSA, Leading Law Firm, Leading Lawyers

JSA advises Actis in securing CCI’s unconditional approval for General Atlantic’s acquisition of Actis

JSA advised Actis Holdings S.à r.l. (Actis) on the Indian competition law aspects of General Atlantic’s acquisition of Actis.

Kirkland and Ellis were international counsel for Actis.

The transaction will create a diversified, global investment platform with approximately USD 96 billion in combined assets under management. Actis will become the sustainable infrastructure arm within General Atlantic’s global investment platform.

Our Transaction Team Comprised Lead Partner – Nisha Kaur Uberoi, Partner – Harshita Parmar, Principal Associate – Rahat Dhawan, Senior Associate – Kamal Sharma, Associate – Pramothesh Mukherjee.

Tags Acquisition, CCI, JSA, Leading Law Firm, Leading Lawyers

JSA Prism | Dispute Resolution | August 2024

Please click here to download the Prism as a PDF.

Hon’ble Supreme Court of India holds that judicial role encompasses the duty to direct the Executive branch to review the working of the statutes and audit the statutory impact

The Hon’ble Supreme Court of India (“Supreme Court”), in a recent judgment dated July 30,2024[1] in Yash Developers vs. Harihar Krupa Co-operative Housing Society Limited[2], while examining the provisions of Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (“Maharashtra Slum Areas Act”) vis-à-vis scope of judicial review against an order passed by the Apex Grievance Redressal Committee (“AGRC”) under Section 13 of the Maharashtra Slum Areas Act, inter alia held that:

assessment of the working of the statute to realise if its purpose and objective is achieved or not is the implied duty of the Executive branch;
judicial role encompasses the duty to direct the Executive branch to review the working of the statutes and audit the statutory impact; and
judicial review is ineffective until and unless duty is identified with accountability.

Brief Facts

In 2003, Yash Developers (“Appellant”) was appointed as a developer by Harihar Krupa Co-Operative Housing Society Limited (“Respondent No. 1”) to develop a slum rehabilitation building (“Project”) under the Development Agreement dated August 20, 2003 (“Development Agreement”). However, owing to the inordinate delay of more than 16 (sixteen) years (i.e., from 2003 to 2019) in commencing the construction of the Project, the Development Agreement in favour of the Appellant was terminated by the order dated August 4, 2021 passed by AGRC (“Order”).
Aggrieved by AGRC’s Order, the Appellant challenged the said Order in Writ Petition (L) No. 18022 of 2021 filed before the Ld. Bombay High Court (“Bombay HC”). On October 14, 2022, Bombay HC dismissed the Appellant’s writ petition on facts as well as on law, while observing the limited scope of judicial review under Article 226 of the Constitution of India against the decision of the statutory authority such as AGRC.
Thereafter, the Appellant challenged the judgment of Bombay HC before the Supreme Court in the present civil appeal.

Issues

The following issues fell for consideration before the Supreme Court:
- the scope of judicial review against an order under Section 13 of the Maharashtra Slum Areas Act; and
- Accountability of officers exercising power coupled with duty under Section 13 of the Maharashtra Slum Areas Act.
Apart from the aforesaid issues, the Supreme Court also dealt with:
- the submissions of the parties on the facts of the case since Appellant had argued the case only on the facts; and
- issue of performance audit of statute.

Analysis and observations of Supreme Court

While upholding the decision of AGRC and the Bombay HC, the Supreme Court dismissed the Appellant’s civil appeal inter alia observed and held as under:

the submissions of Appellant regarding 16 (sixteen) years delay in the project, the Supreme Court opined that:
- delay from 2003 to 2011, delay of 8 (eight) years in resolving disputes with a competing builder cannot be a justification under any circumstance;
- delay from 2011 to 2014, it was for Appellant as a developer to make all the necessary arrangements for environmental clearances while other sanctions and permissions are pending;
- delay from 2014 to 2019, non-cooperation of some of the members cannot be a ground for delaying the project; and
- delay from 2015 to 2017, findings of the AGRC and Bombay HC are very clear wherein it was correctly held that the delay caused due to the sanction of the draft development plan for the construction of the road cannot be a justification for delaying the project;
case after case, the Bombay HC has been ruling that, in respect of the Maharashtra Slum Areas Act, (a) the developer is duty-bound to complete the project within the stipulated time; and (b) the Slum Rehabilitation Authority has not merely the power but a broader duty to ensure that the developer completes the project within time. However, the said rulings have not had the desired impact, much less compliance. The reason is that, neither the developer nor the authority is asked to face the consequences of their derelictions. Until and unless the duty is identified with accountability, judicial review is ineffective.
The Maharashtra Slum Areas Act came into being in 1971 with the intend to materialize the constitutional assurance of dignity of the individual by providing basic housing, so integral to human life. However, for over 5 (five) decades, the Bombay HC has been exercising judicial review jurisdiction, disposing of writ petitions raising claims or challenges to the exercise of powers or dereliction of duties by authorities under the Maharashtra Slum Areas Act. Such propensity and the proclivity of the statute to generate litigation are worrisome. There seems to be a problem with the statutory framework.
While reviewing and assessing the implementation of a statute, is an integral part of Rule of Law, assessment of the working of the statute to realise if its purpose and objective is achieved or not is the implied duty of the executive government. The purpose of such review by courts is to ensure that a law is working out in practice as it was intended. If not, to understand the reason and address it quickly. It is in this perspective and in recognition of this obligation of the executive government that the constitutional courts have directed governments to carry performance/ assessment audit of statutes or has suggested amendments to the provisions of a particular enactment so as to remove perceived infirmities in its working.
One of the functions of the judiciary is to facilitate access to justice and ensure the effective functioning of constitutional bodies. In this role, the judiciary does not review executive and legislative actions, but only nudges and provides impetus to systemic reforms. The facilitative role is not just inspired from the institutional role that the judiciary perceives for itself but is also a directive of many of the fundamental rights in Part III of the Constitution and the cherished preambular vision of justice-social, economic and political.

Conclusion

In respect of the duty of judiciary and Executive branch in respect of working of the statute, Supreme Court held as under:
- assessment of the working of the statute to realise if its purpose and objective is achieved or not is the implied duty of the Executive branch;
- judicial role encompasses the duty to direct the Executive branch to review the working of the statutes and audit the statutory impact; and
- judicial review is ineffective until and unless duty is identified with accountability.
The judgment of the Supreme Court underscores the constitutional court’s duty that while exercising judicial review, the court’s ought to:
- strike a delicate balance, by ensuring that justice is accessible and that the Executive branch remains accountable for the effective implementation of laws. This will ensure that executive actions are in accordance with the law of the land and the legislative intent.
- intervene when necessary and to direct the executive to reassess and review the working of the statutes and audit the statutory impact, and act as a facilitator of ‘access to justice’, one of the roles of the judiciary, especially the constitutional courts.

This Prism is prepared by:

Anupam Varma
Partner

Rahul Kinra
Partner

Girdhar Gopal Khattar
Associate

For more details, please contact [email protected]

[1] P.S. Narasimha and Aravind Kumar, JJ.

[2] 2024 SCC OnLine SC 1840. Civil Appeal No. 8127 of 2024 and connected matter

Tags Dispute Resolution, JSA, JSA Prism, Leading Law Firm, Leading Lawyers, Legal Updates, Supreme Court

JSA successfully advised and represented Tata Communications Limited in defending an award in its favour before the High Court of Delhi

The Delhi High Court, in a decisive and swift ruling, dismissed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, filed by the Union of India, at the very first hearing. The High Court emphatically remarked that the Union of India should never have approached the court with such a meritless challenge. The High Court also directed that the judgment be placed before the Secretary, Ministry of Woman and Child Development, and the Secretary, Department of Legal Affairs, Government of India, for necessary administrative directions.

The High Court, while dismissing the petition, held that there was no absurdity and arbitrariness in the conclusions arrived at by the Ld. Sole Arbitrator, which are sine quo non for interference under Section 34 of the Act.

Our Disputes Team Comprised Partner – Padmaja Kaul, Principal Associate – Yugank Goel and Associate – Vansh Bhutani.