TaxTMI 
TaxTMI 
2019 (12) TMI 5
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....ky Anand, ASG Mr. Sumit Teterwal, Adv. Ms. Saudamini Sharma, Adv. Ms. Snidha Mehra, Adv. Mr. Hemant Arya, Adv. Ms. Kirti Dua, Adv. Tanisha Samanta, Adv. Mr. Chakitan V.S. Papta, Adv. Mrs. Anil Katiyar, AOR Mr. Arvind Kumar Sharma, AOR Ms. Astha Tyagi, AOR Ms. Madhusweta, Adv. Ms. Kanika Tandon, Adv. Ms. Subhashree Mohapatra, Adv. Mr. Piyush Sharma, AOR Mr. Gauhar Mirza, Adv. Mr. Nishant Dushi, Adv. Mr. S. S. Shroff, AOR Mr. Shailesh Madiyal, AOR Mr. Shail Kumar Dwivedi, AOR Mr. C.A. Sundaram, Sr. Adv. Mr. Ashish Bhan, Adv. Mr. Mohit Rohatgi, Adv. Mr. Ketan Gaur, Adv. Mr. Ayush Mitruka, Adv. Mr. Rajendra Dangwal, Adv. Mr. Syed Jafar Alam, AOR Mr. Abhishek Gupta, Adv. Mr. Zafar Inayat, Adv. Ms. Rohini Musa, Adv. Mr. Ashwani Kumar, AOR Ms. Peeha Verma, Adv. Mr. Ravinder Nain, Adv. Mr. Ravindra Lokhande, Adv. Mr. Abhishek Atrey, AOR JUDGMENT R. F. Nariman, J. 1. This set of Writ Petitions seek to challenge the constitutional validity of Section 87 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act, 1996") as inserted by Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019 (hereinafter referred to as the "2019 Amendmen....
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....nal debtors - which is not the case - the moment a challenge is filed to an award under Section 34 and/or Section 37 of the Arbitration Act, 1996, such debt becomes a 'disputed debt' under the judgments of this Court, and proceedings initiated under the Insolvency Code at the behest of the Petitioner company, not being maintainable in any case, would be dismissed at the threshold. Huge sums of money are therefore due from all these companies/government/government bodies to the Petitioners. 5. On the other hand, in order that the Petitioner company continue to operate, the Petitioner owes large sums to operational creditors for supplying men, machinery and material for the projects. It is stated in the Writ Petition No.1074 of 2019 that Demand Notices have been issued to the Petitioner by a large number of operational creditors for sums amounting to over a hundred crores. 6. Dr. Abhishek Manu Singhvi, learned Senior Advocate appearing on behalf of the Petitioner No.1 in Writ Petition No.1074 of 2019, has argued that the Arbitration Act, 1996 is based upon the UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on Internationa....
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.... specifically sent to the Ministry of Law and Justice and to the learned Attorney General for India, Section 87 was enacted, reference being made only to the Srikrishna Committee Report, without even a mention of the aforesaid judgment of this Court in BCCI (supra). Consequently, the learned Senior Advocate argued that since the basis of a judgment of the Supreme Court can only be removed if there is a pointed reference to the said judgment, obviously the judgment of this Court has been sought to be directly overturned without removing its basis. Further, Section 87 flies in the face of not only the object of the Arbitration Act, 1996 as a whole and the objects for enacting the 2015 Amendment Act, but is also contrary to Section 35 of the Arbitration Act, 1996. He has stated that it is amazing that in a Civil Court where a full-blooded appeal is filed, Order XLI Rule 5 of the Code of Civil Procedure, 1908 (hereinafter referred to as the "CPC") is to apply, there being no automatic-stay of a money decree; whereas in a summary proceeding under Section 34 of the Arbitration Act, 1996, where the court does not sit in appeal over the award - and if the view of the arbitrator is a possib....
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..... 8. So far as the challenge to the Insolvency Code is concerned, Dr. Singhvi exhorted us to read 'corporate person', as defined by Section 3(7) of the Insolvency Code, to include Government Bodies other than Government Companies (which are already included). This was based on the argument that qua the object sought to be achieved by the Insolvency Code, it makes no difference as to whether the person sued as a corporate person is a government company or a body corporate set up under a statute. He exhorted us to either delete the words 'limited liability' contained in Section 3(7) of the Code, or read Section 3(23)(g) of the Code into Section 3(7), and relied upon judgments which stressed the 'positive' aspect of Article 14 of the Constitution of India, which permit such interpretation. He then pointed out that whereas 'financial position' (as defined under Section 5(9) of the Insolvency Code) mandates taking into consideration the financial information and balance sheets, such financial position is irrelevant at the stage of triggering the Insolvency Code, and only becomes relevant at the stage of declaring such position to prospective resolution applicants, which itself makes ....
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....nt amount, asking for anything over and above this would amount to an arbitrary exercise of power, which is liable to be struck down. Dr. Singhvi contended that this extra amount of 10% per annum, being severable, can be struck down without otherwise impacting the NITI Aayog Scheme. 10. Shri Neeraj Kishan Kaul, also appearing for Hindustan Construction Company, reiterated some of the submissions of Dr. Singhvi and argued, based on a reading of Section 87 as introduced by the 2019 Amendment Act and Section 26 of the 2015 Amendment Act, that Section 87 is nothing but a re-hash of Section 26 and this being so, is therefore a direct attack on the judgment of this Court in BCCI (supra), without removing its basis. He also added that since there is no set-off mechanism provided by the Insolvency Code, the provisions of the Insolvency Code will have to be held to be manifestly arbitrary so far as his client is concerned, to this extent. 11. Shri C.A. Sundaram, learned Senior Advocate appearing for M/s Patel Engineering Ltd. in I.A. No. 157742 of 2019 in W.P (C) No. 1074 of 2019, reiterated the submissions that Section 87, being directly contrary to this Court's judgment in BCCI (sup....
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....cement of arbitral awards, by re- imposing an arbitrary cut-off date qua application of the amended Section 36. He then argued that even though Section 15 of the 2019 Amendment Act has deleted Section 26 of the 2015 Amendment Act, this has not changed the basis on which the judgment in BCCI (supra) was delivered, as there is no vested right to resist the enforcement of an arbitral award, and that arbitration proceedings and court proceedings are distinct sets of proceedings as recognized by Section 87 itself. Further, classification of parties on the basis of this cut-off date has no rational nexus to the object sought to be achieved by the Arbitration Act, 1996. Finally, he urged that the Counter-Affidavit filed by the Union of India, after referring to this Court's judgment, then mouthed the same reasons for introducing Section 87 as were in the Srikrishna Committee Report, which was prior to, and could not have taken into account, this Court's judgment in BCCI (supra). Therefore, to state that even after this Court settled the law in BCCI (supra) there would still be 'uncertainty' would itself show that the provision contained in Section 87 would be manifestly arbitrary. He then....
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.... Petition ought to be dismissed at the threshold itself. First and foremost, it was contended that the petitioner has mislead this Court by stating that a sum of INR 6070 crores is liable to be paid by the Government entities mentioned therein, as such sums amount to awards that have not been stayed by any Court. He referred to and relied upon a chart appended to the Counter-Affidavit of the Union of India dated 21.10.2019, in which he was at pains to point out that in each of the awards in favour of the Petitioner No.1 in Writ Petition No.1074 of 2019, the contract value was much less than the actual amount paid on completion of work, in addition to which, deposit orders have been passed by courts in all these cases, which have not been appealed against. He further argued that there was a gross suppression of facts and figures by Petitioner No.1, as a result of which the Writ Petition ought to be dismissed at the threshold. He contended that what was deliberately hidden by the Petitioner No.1 was the fact that the Respondent Public Sector Undertakings (hereinafter referred to as "PSUs") have deposited/paid substantial amounts that are due against them under arbitral awards, amount....
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....and independent of each other, Section 3(7) lifting only two out of seven entities mentioned in Section 3(23). Thus, being mutually exclusive, nothing from Section 3(23) which defines 'person' can possibly be imported into Section 3(7) which defines 'corporate person'. He further argued that this Court's judgment in K. Kishan v. Vijay Nirman Company Pvt. Ltd. (2018) 17 SCC 662 made it clear that arbitral awards that are pending adjudication under Section 34 would show that a pre- existing dispute exists in such cases, and therefore would in any case be outside the strong arm of the law contained in the Insolvency Code. 17. Ms. Pinky Anand, learned Additional Solicitor General, supported the submissions of both the learned Attorney General and the Solicitor General. She further argued, based on a copious reading of the Counter-Affidavit filed on behalf of the Union of India, that no inroads have been made into the objects sought to be achieved by the 2015 Amendment Act by merely following a particular cut-off date. In any case, the fixing of such cut-off date, being the sole prerogative of the Parliament, cannot be interfered with by the courts as this pertains to policy matters.....
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....ernational commercial arbitration in consonance with the UNCITRAL Model Rules, the New York Convention and the Geneva Convention. The New York Convention was physically before the legislature and available for its consideration when it enacted the 1996 Act. Article II of the Convention provides that each contracting State shall recognise an agreement and submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not concerning a subject-matter capable of settlement by arbitration. Once the agreement is there and the court is seized of an action in relation to such subject-matter, then on the request of one of the parties, it would refer the parties to arbitration unless the agreement is null and void, inoperative or incapable of performance." 21. What is important so far as the UNCITRAL Model Law is concerned is Article 36(2) thereof, which states as follows: "Article 36. Grounds for refusing recognition or enforcement- xxx xxx xxx (2) If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a....
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....ept to adjudicate on the correctness of the claim made by the applicant therein. Therefore, that being the legislative intent, any direction from us contrary to that, also becomes impermissible. On facts of this case, there being no exceptional situation which would compel us to ignore such statutory provision, and to use our jurisdiction under Article 142, we restrain ourselves from passing any such order, as prayed for by the applicant. 11. However, we do notice that this automatic suspension of the execution of the award, the moment an application challenging the said award is filed under Section 34 of the Act leaving no discretion in the court to put the parties on terms, in our opinion, defeats the very objective of the alternate dispute resolution system to which arbitration belongs. We do find that there is a recommendation made by the Ministry concerned to Parliament to amend Section 34 with a proposal to empower the civil court to pass suitable interim orders in such cases. In view of the urgency of such amendment, we sincerely hope that necessary steps would be taken by the authorities concerned at the earliest to bring about the required change in law." 24. W....
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....n omits to consider the rest of Section 36, which deals with applications under Section 34 that have been dismissed, which leads to an award being final and binding (when read with Section 35 of the Arbitration Act, 1996) which then becomes enforceable under the CPC, the award being treated as a decree for this purpose. 27. This also finds support from the language of Section 9 of the Arbitration Act, 1996, which specifically enables a party to apply to a Court for reliefs "...after the making of the arbitration award but before it is enforced in accordance with Section 36." The decisions in NALCO (supra) and Fiza Developers and Intra-trade Pvt. Ltd. (supra) overlook this statutory position. These words in Section 9 have not undergone any change by reason of the 2015 or 2019 Amendment Acts. 28. Interpreting Section 9 of the Arbitration Act, 1996, a Division Bench of the Bombay High Court in Dirk India Pvt. Ltd. v. Maharashtra State Power Generation Company Ltd. 2013 SCC Online Bom 481 held that: "13....The second facet of Section 9 is the proximate nexus between the orders that are sought and the arbitral proceedings. When an interim measure of protection is sought b....
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....ction Corporation Ltd. (supra) in following NALCO (supra), a per incuriam judgement, also does not state the law correctly. Thus, it is clear that the automatic-stay of an award, as laid down by these decisions, is incorrect. The resultant position is that Section 36 - even as originally enacted - is not meant to do away with Article 36(2) of the UNCITRAL Model Law, but is really meant to do away with the two bites at the cherry doctrine in the context of awards made in India, and the fact that enforcement of a final award, when read with Section 35, is to be under the CPC, treating the award as if it were a decree of the court. 31. In any event, on this aspect of the case, the BCCI judgment (supra) referred, in paragraph 25 thereof, to the 246th Law Commission Report on Section 36 as follows: "25. At this point, it is instructive to refer to the 246th Law Commission Report which led to the Amendment Act. This Report, which was handed over to the Government in August 2014, had this to state on why it was proposing to replace Section 36 of the 1996 Act: "AUTOMATIC STAY OF ENFORCEMENT OF THE AWARD UPON ADMISSION OF CHALLENGE "43. Section 36 of the ....
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....to the realm of procedure, and that there is no substantive vested right in a judgment-debtor to resist execution, Section 36, as substituted, would apply even to pending Section 34 applications on the date of commencement of the Amendment Act." The Court then commented on this Court's judgment in NALCO (supra) as follows: "67. In 2004, this Court's judgment in National Aluminium Co. [National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd., (2004) 1 SCC 540] had recommended that Section 36 be substituted, as it defeats the very objective of the alternative dispute resolution system, and that the section should be amended at the earliest to bring about the required change in law. It would be clear that looking at the practical aspect and the nature of rights presently involved, and the sheer unfairness of the unamended provision, which granted an automatic stay to execution of an award before the enforcement process of Section 34 was over (and which stay could last for a number of years) without having to look at the facts of each case, it is clear that Section 36 as amended should apply to Section 34 applications filed before the commencement of the Amendme....
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.... (a) not apply to- (i) arbitral proceedings commenced before the commencement of the Arbitration and Conciliation (Amendment) Act, 2015; (ii) court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015; (b) apply only to arbitral proceedings commenced on or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015 and to court proceedings arising out of or in relation to such arbitral proceedings." By Section 15 of the same Amendment Act, Section 26 of the 2015 Amendment Act was omitted as follows: "15. Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 shall be omitted and shall be deemed to have been omitted with effect from the 23rd October, 2015." Section 26 of the 2015 Amendment Act reads as follows: "26. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties ot....
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....proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act, and to court proceedings which have commenced on or after the Amendment Act came into force." (emphasis supplied) 37. The Court was alive to the Srikrishna Committee Report's recommendation of a proposed Section 87, as is clear from footnote 23 appended to paragraph 44 of the judgment. The Court then made a reference to the Statement of Objects and Reasons for the 2015 Amendment Act and stated as follows: "77. However, it is important to remember that the Amendment Act was enacted for the following reasons, as the Statement of Objects and Reasons for the Amendment Act states: "2. The Act was enacted to provide for speedy disposal of cases relating to arbitration with least court intervention. With the passage of time, some difficulties in the applicability of the Act have been noticed. Interpretation of the provisions of the Act by courts in some cases have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of the Act. With a view to overcome....
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....the definition of "Court" to provide that in the case of international commercial arbitrations, the Court should be the High Court; (ii) to ensure that an Indian court can exercise jurisdiction to grant interim measures, etc., even where the seat of the arbitration is outside India; (iii) an application for appointment of an arbitrator shall be disposed of by the High Court or Supreme Court, as the case may be, as expeditiously as possible and an endeavour should be made to dispose of the matter within a period of sixty days; (iv) to provide that while considering any application for appointment of arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues; (v) to provide that the Arbitral Tribunal shall make its award within a period of twelve months from the date it enters upon the reference and that the parties may, however, extend such period up to six months, beyond which period any extension can only be granted by the Court, on sufficient cause; (vi) to provide for a model fee schedule on the basis of which High Courts may frame rules for the purpose of de....
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.... (2003) 5 SCC 705 has been expressly done away with. So has the judgment in ONGC Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263. Both Sections 34 and 48 have been brought back to the position of law contained in Renusagar Power Plant Co. Ltd. v. General Electric Company, 1994 Supp (1) SCC 644, where "public policy" will now include only two of the three things set out therein viz. "fundamental policy of Indian law" and "justice or morality". The ground relating to "the interest of India" no longer obtains. "Fundamental policy of Indian law" is now to be understood as laid down in Renusagar, 1994 Supp (1) SCC 644. "Justice or morality" has been tightened and is now to be understood as meaning only basic notions of justice and morality i.e. such notions as would shock the conscience of the Court as understood in Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204. Section 28(3) has also been amended to bring it in line with the judgment of this Court in Associate Builders, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204, making it clear that the construction of the terms of the contract is primarily for the arbitrator to decide unless it is found that such a const....
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.... to such court proceedings which emanate from such arbitral proceedings." 40. Interestingly, no such clarification was made by the 2019 Amendment Act. Instead, Section 26 was omitted with effect from 23.10.2015 and Section 87 introduced. 41. Dr. Singhvi has argued, based on a number of judgments of this Court, that the question of removing the basis of a judgment cannot arise unless and until the judgment is present to the mind of the legislature. He stated that in all the major cases in which a judgment of a court is nullified by removing its basis, the judgment in question has been expressly referred to in the concerned Statement of Objects and Reasons. We are afraid that we cannot agree with this line of argument. What is important is to see whether, in substance, the basis of a particular judgment is in fact removed, whether or not that judgment is referred to in the Statement of Objects and Reasons of the amending act which seeks to remove its basis. 42. In Shri Prithvi Cotton Mills Ltd. and Anr. v. Broad Borough Municipality and Ors. (1969) 2 SCC 283, this Court held: "4....Granted legislative competence, it is not sufficient to declare merely that the decis....
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.... the basis of the decision of the Court. Even in such a situation the courts may not approve a retrospective deprivation of accrued rights arising from a judgment by means of a subsequent legislation (Madan Mohan Pathak v. Union of India [Madan Mohan Pathak v. Union of India, (1978) 2 SCC 50 : 1978 SCC (L&S) 103] ). However, where the Court's judgment is purely declaratory, the courts will lean in support of the legislative power to remove the basis of a court judgment even retrospectively, paving the way for a restoration of the status quo ante. Though the consequence may appear to be an exercise to overcome the judicial pronouncement it is so only at first blush; a closer scrutiny would confer legitimacy on such an exercise as the same is a normal adjunct of the legislative power. The whole exercise is one of viewing the different spheres of jurisdiction exercised by the two bodies i.e. the judiciary and the legislature. The balancing act, delicate as it is, to the constitutional scheme is guided by the well-defined values which have found succinct manifestation in the views of this Court in Bakhtawar Trust [Bakhtawar Trust v. M.D. Narayan, (2003) 5 SCC 298]." 45. Given th....
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....y of the 2015 amendment Act to court proceedings, both pending and newly initiated in case of arbitrations commenced prior to 23 October 2015. Different High Courts in India have taken divergent views on the applicability of the 2015 Amendment Act to such court proceedings. Broadly, there are three sets of views as summarised below: (a) The 2015 Amendment Act is not applicable to court proceedings (fresh and pending) where the arbitral proceedings to which they relate commenced before 23 October 2015. (b) The first part of section 26 is narrower than the second and only excludes arbitral proceedings commenced prior to 23 October 2015 from the application of the 2015 Amendment Act. The 2015 Amendment Act would, however, apply to fresh or pending court proceedings in relation to arbitral proceedings commenced prior to 23 October 2015. (c) The wording "arbitral proceedings" in section 26 cannot be construed to include related court proceedings. Accordingly, the 2015 Amendment Act applied to all arbitrations commenced on or after 23 October 2015. As far as court proceedings are concerned, the 2015 Amendment Act would apply to all court proceedings from 23Octo....
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....nifestly arbitrary, having been enacted unreasonably, without adequate determining principle, and contrary to the public interest sought to be subserved by the Arbitration Act, 1996 and the 2015 Amendment Act. This is for the reason that a key finding of the BCCI judgment (supra) is that the introduction of Section 87 would result in a delay of disposal of arbitration proceedings, and an increase in the interference of courts in arbitration matters, which defeats the very object of the Arbitration Act, 1996, which was strengthened by the 2015 Amendment Act. 49. Further, this Court has repeatedly held that an application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit - see Canara Nidhi Ltd. v. M. Shashikala 2019 SCC Online SC 1244 at paragraph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interference is called for - see Associated Construction v. Pawanhans Helicopters Ltd. (2008) 16 SCC 128 at paragraph 17. 50. Also, as has been held in the recent decision Ssangyong Engineering & Construction Co. Ltd.....
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....itigating - as a result of the automatic-stay, whereas it would be faced with immediate payment to its operational creditors, which payments may not be forthcoming due to monies not being released on account of automatic-stays of arbitral awards, exposing such award-holders to the rigors of the Insolvency Code. For all these reasons, the deletion of Section 26 of the 2015 Amendment Act, together with the insertion of Section 87 into the Arbitration Act, 1996 by the 2019 Amendment Act, is struck down as being manifestly arbitrary under Article 14 of the Constitution of India. 52. However, the learned Attorney General cited a number of judgments which state that the court should not ordinarily interfere with the fixation of cut-off dates, unless such fixation appears to be arbitrary or discriminatory (see for e.g., UOI v. Parameswaran Match Works (1975) 1 SCC 305 at paragraph 10 ^("10....The choice of a date as a basis for classification cannot be always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the circumstances. Where it is seen that a line or point there must be, and there is no mathemat....
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....lative of Articles 14 and 19(1)(g) of the Constitution of India. As a result, he has suggested that in order for his client, in turn, to recover monies from Government Companies and NHAI, the definition of 'corporate person' contained in Section 3(7) of the Insolvency Code should either be read without the words "with limited liability" contained in the third part of the definition, or have Section 3(23)(g) of the Insolvency Code, which is the definition of 'person', read into the aforesaid provision. In order to appreciate this contention it is necessary to set out these definitions: "Definitions 3. In this Code, unless the context otherwise requires,- xxx xxx xxx (7) "corporate person" means a company as defined in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013), a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider; (8) "corporate debtor" means a corporate person who owes a d....
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....y system". Though the system worked through the State Public Works Departments for a period of 40 years, as difficulties were experienced, the Centre itself decided to take over development and maintenance of the national highways system through the creation of a national highways authority. 60. The following provisions of the NHAI Act are relevant and are set out hereinbelow: "3. Constitution of the Authority.- (1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf, there shall be constituted for the purposes of this Act an Authority to be called the National Highways Authority of India. (2) The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall by the said name sue and be sued. [(3) The Authority shall consist of- (a) a Chairman; (b) not more than six full-time members; and (c) not more than six part-time members, to be appointed by the Central Gov....
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....s under this Act. 15. Mode of executing contracts on behalf of the Authority.- (1) Every contract shall, on behalf of the Authority, be made by the Chairman or such other member or such officer of the Authority as may be generally or specially empowered in this behalf by the Authority and such contracts or classes of contracts as may be specified in the regulations shall be sealed with the common seal of the Authority: Provided that no contract exceeding such value or amount as the Central Government may prescribe in this behalf shall be made unless it has been previously approved by that Government: Provided further that no contract for the acquisition or sale of immovable property or for the lease of any such property for a term exceeding thirty years and no other contract exceeding such value or amount as the Central Government may prescribe in this behalf shall be made unless it has been previously approved by that Government. (2) Subject to the provisions of sub-section (1), the form and manner in which any contract shall be made under this Act shall be such as may be provided by regulations. (3) No contract which is not in....
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....se of any power or the discharge of any function conferred or imposed on it by this Act. (3) Nothing contained in this section shall be construed as- (a) authorising the disregard by the Authority of any law for the time being in force; or (b) authorising any person to institute any proceeding in respect of a duty or liability to which the Authority or its officers or other employees would not otherwise be subject under this Act. 17. Additional capital and grants to the Authority by the Central Government.-- The Central Government may, after due appropriation made by Parliament, by law in this behalf,-- (a) provide any capital that may be required by the Authority for the discharge of its functions under this Act or for any purpose connected therewith on such terms and conditions as that Government may determine; (b) pay to the Authority, on such terms and conditions as the Central Government may determine, by way of loans or grants such sums of money as that Government may consider necessary for the efficient discharge by the Authority of its functions under this Act. 18. Funds of the Authority.-- (1) There sh....
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.... Government. 23. Accounts and audit.---The accounts of the Authority shall be maintained and audited in such manner as may, in consultation with the Comptroller and Auditor-General of India, be prescribed and the Authority shall furnish, to the Central Government before such date as may be prescribed, its audited copy of accounts together with the auditors report thereon. 24. Annual report and auditor's report to be laid before Parliament.--- The Central Government shall cause the annual report and auditor's report to be laid, as soon as may be after they are received, before each House of Parliament. xxx xxx xxx 33. Power of the Central Government to issue directions.- (1) Without prejudice to the other provisions of this Act, the Authority shall, in the discharge of its functions and duties under this Act, be bound by such directions on questions of policy as the Central Government may give in writing from time to time. (2) The decision of the Central Government whether a question is one of policy or not shall be final." 61. Under Section 3 of the aforementioned Act, the Authority shall be a body corporate which shall consi....
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....rupees, cannot possibly jeopardise an otherwise solvent company worth several crores of rupees. Such a company would be well within its rights to state that it is challenging the arbitral award passed against it, and the mere factum of challenge would be sufficient to state that it disputes the award. Such a case would clearly come within para 38 of Mobilox Innovations [Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353 : (2018) 1 SCC (Civ) 311] , being a case of a pre-existing ongoing dispute between the parties. The Code cannot be used in terrorem to extract this sum of money of rupees two lakhs even though it may not be finally payable as adjudication proceedings in respect thereto are still pending. We repeat that the object of the Code, at least insofar as operational creditors are concerned, is to put the insolvency process against a corporate debtor only in clear cases where a real dispute between the parties as to the debt owed does not exist. xxx xxx xxx 27. We repeat with emphasis that under our Code, insofar as an operational debt is concerned, all that has to be seen is whether the said debt can be said to be disputed, and we ha....
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....rs invoke the Insolvency Code against persons like the Petitioner - is again an argument which is answered by stating that the Insolvency Code is not meant to be a debt recovery legislation. 68. The argument of Shri Rai that the definition of 'dispute' under Section 5(6) of the Insolvency Code does not speak of the 'parties' to a dispute, and can therefore be interpreted to include a dispute between a sub-contractor and the principal employer with whom the sub-contractor may have no privity of contract, also does not commend itself to us. The definition of 'dispute' in Section 5(6) of the Insolvency Code deals with a suit or arbitration proceedings relating to one of three things - (a) the existence of the amount of debt; (b) the quality of goods or service; or (c) the breach of a representation or warranty. 69. Insofar as (a) is concerned, the definition of the word 'debt' contained in Section 3(11) of the Insolvency Code, refers to a liability or obligation in respect of a claim which is due from any person. This necessarily postulates the existence of a contractual or other relationship, which gives rise to a liability or obligation between parties in law. The same goes fo....
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....his Court recorded as much in its order dated 13.09.2019 in Writ Petition No.1074 of 2019 as follows: "The two interlocutory applications are filed for two reliefs. One is to stay further proceedings before the National Company Law Tribunal, and the second is to direct respondent nos.5-8 - Union of India, National Highways Authority of India, NHPC Ltd., IRCON International Ltd. and NTPC Limited to pay off amounts due under the Awards of Arbitrators which have not been stayed by any Court, amounting to a sum of Rs. 6,070 crores. Dr. Singhvi, learned Senior Counsel, states that his client will pay the Operational Creditors in these two interlocutory applications, amounts of Rs. 8.81 crores and 26.21 crores within a period of 12 weeks from today. We record the aforesaid statement. We also issue notice to the Respondents in the two interlocutory applications. Dasti service, in addition, is permitted. List the matter on 04th October, 2019. Dr. Singhvi further states that this order which is passed by us at 11:45am today, will be communicated orally to the NCLT which, apparently, is taking up these matters today. (emphasis supplied) ....
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.... strongly denied the Petitioner company's contention that it was in financial distress due to the non- payment of contractual dues owed to it by the Respondent PSUs, which allegedly left it susceptible to being proceeded against under the Code by its various creditors. The Union of India alleged that the Petitioner has been paid the amount of the contract, even with escalation, in almost all cases. In fact, it was contended in the Counter Affidavit that the Petitioner company had been paid more than the initial contract value by the Respondent PSUs (approximately 117%). The Union of India further contended that most of the claims raised by the Petitioner company against the Respondent PSUs are outside the scope of the basic contract value - such as 'loss of profit' etc. - which would in any event not have any impact on the financial health of the company. This, the Union of India alleged, demonstrated that it was 'absolutely false' that the Petitioner company had been relegated to insolvency due to the non-payment of dues by the Respondent PSUs. 77. The Petitioner company then filed an Additional Affidavit dated 04.11.2019 before this Court, wherein it admitted that, as on 31.08....
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....e 32 of the Constitution, embark on such an investigation." (emphasis supplied) 80. To similar effect is the decision in Surendra Prasad Khugsal v. Chairman, MMTC. 1994 Supp. (1) SCC 87, where this Court held: "6. We have heard both the parties in all the petitions at some length. The petitioners in all the petitions place their reliance on the decision in the M.M.R. Khan case [1990 Supp SCC 191 : 1990 SCC (L&S) 632 : (1991) 16 ATC 541] . However, we find that the said case which admittedly concerned the canteen workers both in the statutory canteens and recognised non-statutory canteens was decided on the facts in those cases including the provisions of the Railway Manual, the notifications and circulars issued by the Railway Board from time to time and other documents which pertained to the workers employed in the said canteens. None of the material which was taken into consideration there has relevance to the workers concerned in the present canteens. On the other hand, there are disputed facts in the present case which cannot be resolved in a writ petition under Article 32. We, therefore, find that this Court is not the proper forum to decide the present di....