0

Insolvency And Bankruptcy Code, 2016 Will Prevail Over Customs Act, 1962

Insolvency and Bankruptcy

Recently, the Supreme Court once again upheld the overriding effect of Insolvency and Bankruptcy Code, 2016 (“Code”) in the matter of Sundaresh Bhatt vs. Central Board of Indirect Taxes & Custom[Civil Appeal No. 7667 of 2021] and held that the provisions of the Code will prevail over the provisions of the Customs Act, 1962 (“Customs Act”).

The Liquidator of  ABG Shipyard Ltd. (“Corporate Debtor”), challenged the order of the NCLAT wherein inter alia it was held that the goods lying in the customs bonded warehouses are not the assets of Corporate Debtor as the Corporate Debtor failed to take positive steps to take control of its assets by failing to pay customs duties and for that reason, the Corporate Debtor is deemed to have relinquished its title to its goods by legal implication in terms of the Customs Act. Therefore, a separate proceeding by Customs Authorities of confiscation of goods in the name of the Corporate Debtor undergoing liquidation, was not bad in law.

The question that came for consideration before the Hon’ble Supreme Court was whether the provisions of the Code will prevail over the provisions of the Customs Act and whether the Customs Authority was entitled to confiscate the goods of the Corporate Debtor which is currently undergoing liquidation in terms of the Code?  

The Supreme Court held that goods belonged to the corporate debtor despite the fact that the Custom Duty was not paid and title to the goods did not pass on to the Customs Authority. The Custom Authority therefore could not have confiscated the goods, which were the assets of the Corporate Debtor, for the purposes of recovering customs duties. Further, on the imposition of moratorium, no proceedings could have been initiated/continued by the Customs Authority against the Corporate Debtor. After the initiation of CIRP and consequent imposition of the moratorium, IRP/Resolution Professional/Liquidator takes control of the assets belonging to the corporate debtor and in this case also he had the right to take control over the goods lying in the custom bonded warehouse. Therefore, the Customs Authority was only required to assess the custom duty payable and thereafter could have filed a claim with the Resolution Professional/Liquidator (as the case may be) with respect to outstanding custom duties. The judgment is in line with the very objective of the Code which is essentially to maximize the value of assets of the corporate debtor. The goods lying with the Custom Authorities were part of the transaction the Corporate Debtor entered into consequent to which the goods were received at Customs but could not be procured by Corporate Debtor on account of insolvency.

0

Is There A Civil or Criminal Liability of E-Market Portals like Flipkart and Amazon in Case of Persons Selling Unauthorized or Fake Products on such Portals

Information and Technology

At least once in our online shopping experience, we all have returned items for not receiving a genuine product. Question arises whether the genuineness of the product is guaranteed by the e-portals where such items are listed or displayed? Can a buyer hold Flipkart or Amazon liable for letting persons/entities sell fake product through their website? Or can a company/person who owns or is an exclusive authorized dealer/distributor of the product take a legal action against such E-portals on an unauthorized person selling the same product?

E-portals like Amazon and Flipkart have been held to be “intermediary” as defined under Section 2(1)(w) of the Information Technology Act, 2000 (“I.T. Act”) [Google India Private Limited v. Visaka Industries (2020) 4 SCC 162]. Intermediaries are the platforms which on behalf of another person receive, store or transmit that electronic records or provides any service with respect to that record. An intermediary includes “telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online auction sites, online-market places and cyber cafes.” As per section 79 of the I.T. Act, these portals, including social media giants like Twitter, have been given ‘safe harbour’ protection. This means an intermediary is not liable for any third party information, data, or communication link made available or hosted by him on the website/platform of the intermediary. In other words, there is no liability of the ‘intermediary’ provided the conditions as stated under section 79 has been fulfilled by the intermediary.

In a recent case before Delhi High Court, Ashish Girdhar, the Managing Director of a company named Sanash Impex Pvt. Ltd. reported a case to Economic Wing, Delhi when his company noticed that unauthorized persons were selling products by the name DC DERMACOL on Flipkart while the Czech company DC DERMACOL, which is an international brand, had only authorized his company, Sanash Impex Pvt. Ltd., and granted it absolute and exclusive right to sell DC DERMACOL cosmetic products in India, both online and off-line. His complaint was registered as a FIR against Flipkart at the Economic Offences Wing, New Delhi, under Section 63 of the Copyright Act, 1957 and Sections 103 and 104 of the Trade Marks Act, 1999. Against the said FIR, Flipkart filed a writ petition under Articles 226 and 227 of the Constitution of India r/w Section 482 of the Code of Criminal Procedure, 1973 against State of NCT and Ashish Girdhar, praying for quashing of complaint.

The central argument of the Petitioner/Flipkart was that it being an ‘intermediary’’ under the I.T. Act, was protected under Section 79 of the I.T. Act, which provides a ‘safe harbour’ to intermediaries from liabilities for posting of material by third parties on their platforms. It was contented that Flipkart has complied with the Information Technology (Intermediary Guidelines) Rules, 2011 (“I.T. Guidelines”) where an intermediary is only required to post a Policy indicating that certain kinds of material were impermissible to be posted on its platform. Flipkart stated that it had made the policy part of its user agreement. Amongst other cases, the Petitioner’s Counsel relied on Shreya Singhal v. Union of India 2015 (5) SCC 1 and averred that the liability to take down such alleged unauthorised sites would arise only when a court order was brought to the notice of the Petitioner, Flipkart. The Counsel of the Petitioner further challenged the locus of the Respondent to file a police complaint on the ground that since as per Section 19 of the Copyright Act it is only the owner of the copyright who can file a complaint regarding infringement of copyright and the Respondent, being merely the one who has been authorized to sell the products with no assignment of copyright, could not have gotten the FIR registered.  Therefore, the entire drill was stated to be a miscarriage of justice.

The Respondent, Ashish Girdhar, on the other hand contended that he had sent the information regarding the infringements to the Petitioner through 33 emails and had requested the Petitioner to take down total 10 such offending sites.  Flipkart removed four of them without any court order. As per the Respondent’s Counsel once the actual information was sent to the Petitioner, it was expected to take down the site selling the offending products. If it had removed four, it did not require court order to remove the other six. The argument was that as per section 79 requirement, the Petitioner had ‘actual knowledge’ and it failed to adhere to the requirement of ‘due diligence’ and hence cannot invoke the protection under section 79 of the IT Act.  The Counsel relied upon Rule 3 of the I.T. Guidelines according to which the intermediary shall not knowingly host or publish any information or shall not initiate the transmission, select the receiver of transmission, and select or modify the information contained in the transmission which infringes any patent, trademark, copyright or other proprietary rights. The proviso states that, when the intermediary subsequently gets the information of such infringement, the removal of access to any information, data or communication link by an intermediary after such information, data or communication link comes to the actual knowledge of a person authorised by the intermediary pursuant to any order or direction, it shall not amount to hosing, publishing, editing or storing of any information that infringes the IP rights.  The Rule also puts an obligation on the intermediary that upon obtaining knowledge by itself or been brought to actual knowledge by an affected person in writing or through email signed with electronic signature about any such information as mentioned in sub-rule (2) above, shall act within thirty six hours and where applicable, work with user or owner of such information to disable such information that is in contravention of sub-rule (2). Further the intermediary shall preserve such information and associated records for at least ninety days for investigation purposes. The Intermediary shall inform its users that in case of non-compliance with rules and regulations, user agreement and privacy policy for access or usage of intermediary computer resource, the Intermediary has the right to immediately terminate the access or usage lights of the users to the computer resource of Intermediary and remove non-compliant information. It was contented that by reading of section 79 of the IT Act, it can be inferred that the protection was available under Section 79(2) if the intermediary did certain acts while protection would be withdrawn under Section 79(3) if the intermediaries committed certain other acts.

The Court analysed the obligation of an intermediary under section 79 of the IT Act and observed that the obligation of the intermediary is to observe due diligence and follow the guidelines prescribed by the Central Government. The intermediary is also required to observe due diligence as per Rule 3 of the IT Guideline which states that intermediary shall publish the rules and regulations, privacy policy and user agreement for access or usage of the intermediary’s computer resource by any person. However, any violation of these guidelines do not attract any penalty. The Court then digged into the question as to whether the FIR could have been registered at all against the Petitioner for offences under the Copyright Act and the T.M. Act? The Court started its findings by stating that I.T. Act does not provide for infringement of trademark or copyright and therefore reference was made to respective legislations. Section 63 of the Copyright Act prescribes punishment for infringement of copyright and makes an abettor equally liable for the same. The Court, therefore, closely examined whether e-portals will come within the ambit of abettor under Copyright Act.  Similarly, section 103 and 104 of the TM Act prescribe penalties for any person who falsifies any trade mark or applies it to goods or sells goods or provides services to which false trade mark or false trade description is applied. The Court observed that by permitting unauthorized sale of the DC DERMACOL products, Petitioner may appear to have committed the alleged offence.

In order to examine the liability of the E-portal, the court appreciated the higher standards of proof required in case of fixing criminal liability as compared to cases involving civil liability. Whereas Court has to look into balance of probabilities in civil matters, it requires a proof of ‘beyond reasonable doubt’ in establishing criminal offence. The Court held that the platform has complied with the I.T. Guidelines by putting ‘use of the platform’ and ‘selling’ terms on their ‘Terms of Use’. On this premise, the court went on to reason that “when compliance with the “due diligence” requirement under Rule 3 of the I.T. Guidelines is evident, ex facie, the exclusion of liability under Section 79 of the I.T. Act would include exclusion from criminal prosecution”.

The Court, while addressing the contention of the Respondent on Petitioner having ‘actual knowledge’ of infringement of copyright and trade mark as communicated by the former via emails, stated that the issue regarding the claim to a trade mark or copyright  is a ‘stoutly contested affair’ even before the courts and therefore an intermediary cannot be expected to take down a site/product only on communication or complaint by person aggrieved and any action without a court order in this regard would be problematic and infact cause havoc beyond imagination. Therefore, while referring to the judgment in Shreya Singhal the Court held that “the obligation to take down the offending material/sites, etc., from their platform would arise only on service of a court order upon them.” The Court, however, went to add an obiter that even when there is disobedience of order it would not amount to a criminal offence and no FIR can be registered in this regard. The Court further underlined a fundamental lacuna in the FIR that it did not even have the name of single website allegedly selling the products which were either fake or unauthorized, leave alone there being any allegation against them. The complaint was confined to the e-portals. Therefore, the Court observed that “Without determining the rights of those other sites to sell the products, prima facie, the petitioner has not committed any offence, leave alone under the Copyright Act or the T.M. Act.” Since the case was not made out on the face of the FIR, the FIR was liable to be quashed. In this judgment, therefore, the Court has once again reaffirmed that an intermediary’s obligation to take down the offending material from their platform would arise only on receipt of court order. The Court has further reasoned that any such allegation of infringement of IP rights is acutely contested matter and hence only Courts can decide such dispute and this cannot be left within the domain of the e-portals for immediate decisions and action. Moreover, the safe harbor protection under Section 79 covers both civil and criminal liabilities of intermediaries.

0

Whether Section 69A of the Information and Technologies Act, 2002 gives power to the Central Government to issue orders for blocking of social media accounts?

CommonMan, Constitution of India, Information and Technology

Recently, yet another dispute stirred up between the social media giant Twitter and the Indian Government on account of the Ministry of Electronics and Information Technology (MEIT) issuing a series of blocking orders to the former in relation to multiple twitter accounts and tweets posted on the social media page. As a matter of fact, the micro blogging site has been facing the heat from the Ministry since February 2021 where it has been asked to block almost 1500 accounts and 175 tweets till date. The matter precipitated when the Government finally issued notice dated 27.07.2022 to Twitter warning against punitive measures in the event Twitter does not comply with the blocking orders. Challenging the orders and notice, Twitter, which is a Significant Social Media Intermediary (SSMI) the Information Technologies Act, 2002 (2002 Act), filed a petition before the Karnataka High Court seeking to upend 39 blocking orders issued by the MEIT in June this year under section 69A of the 2002 Act.

As per section 69A, the Central Government has power to direct any agency of the Government or intermediary to block the access by the public of any information generated, transmitted, received, stored or hosted in any computer resource in the interest of sovereignty and integrity of India, defence of India, security of the State, friendly relations with foreign States or public order or for preventing incitement to the commission of any cognizable offence relating to the said grounds. The Government while exercising the said power is required to record reasons in writing.

The essential argument of the Petitioner/Twitter before the Karnataka High Court is that the orders blocking contents are “procedurally and substantially deficient of the provision” and the ones blocking user accounts “demonstrate excessive use of powers and are disproportionate”. Further, the blocking orders fail to provide specifics and do not establish “proximate relationship to the grounds under Section 69A” – as to why the contents of tweets or accounts fall within the heads given under Section 69A of the 2002 Act and rather reiterate the grounds stated in the section. In other words the MEIT has not shown how content disrupts sovereignty and integrity of India, defence of India, security of the State, friendly relations with foreign States or public order, as contemplated under Section 69A of the 2002 Act.  Twitter has taken the Constitutional ground of violation of freedom of speech guaranteed to the users of the platform to voice their opinion. Twitter, before the Karnataka High Court, has further claimed that the ‘blocking orders’ are arbitrary and illegal for not being in consonance with the procedure set out in the Information Technology (Procedures and Safeguards for Blocking of Access to Information by Public) Rules, 2009 (2009 Rules) and for not being in line with the ‘least intrusive test’ as recognised by the Supreme Court in the case of Justice K.S. Puttaswamy (Retd.) and Another v. Union of India and Others [Writ Petition (Civil) No. 494 of 2012] (famously known as Adhaar case).

Twitter has also cited the affidavit filed by the MEIT in the matter of Sanjay R Hegde v. Ministry of Electronics and Information Technology and Anr [WP(C) 13275 of 2019] before the Delhi High Court. In this matter it was Twitter that had suspended Mr. Hedge’s twitter account. The issue raised in the writ petition against Twitter (averred to be doing a public function) is regarding permanent suspension of the twitter account of petitioner, Mr. Hedge, being contrary to the Twitter Rules and in violation of rights guaranteed under Article 19(1)(a) and (c) of the Constitution of India. Twitter Rules prohibit contents that exhibit –  a. Violence; b. Terrorism/violent extremism; c. Child sexual exploitation; d. Abuse/Harassment; e. Hateful Conduct; f. Suicide or self-harm; g. Sensitive media, including graphic violence and adult content; h. Illegal or certain regulated goods or services; i. Publication of another person’s private information; j. Publication of Non-consensual nudity; k. Platform manipulation and spam; l. Manipulating with election integrity; m. Impersonation; n. Infringement of Copyright and Trademark. As per the petitioner, Mr. Hedge, the re-post of a poem titled ‘Gorakh Pandey’s poem ‘Unko phaansi de do’ and use of picture of August Landmesser as the ‘header’/ ‘cover picture’ of his Twitter profile was not covered in any of the heads prohibited under Twitter Rules. The Writ Petition prayed for issuing appropriate writ to frame guidelines to ensure that online speech is not arbitrarily censored by social media websites and also for restoring the account.

Clearly, the issues involved in the two matters, presently pending before the high courts, are different. While the petition before the Delhi High Court questions the action of blocking by the social media platform – Twitter, the petition before the Karnataka High Court challenges the orders issued by the Government to Twitter directing it to block the accounts of the users.

Further, the issue before the Delhi High Court is whether Twitter is within its rights and authority to block the account of Mr. Hedge (which perhaps still remains blocked)? This would also necessarily require the finding on whether a writ is maintainable against a private entity like Twitter and whether it is performing a public function so as to be covered under the umbrella of Article 226 of the Constitution of India. The issues before Karnataka High Court, on the other hand, is whether the exercise of power of issuing successive blocking orders by the Government to Twitter under section 69A of the 2002 Act is ultra vires or in other words is excessive and arbitrary? Whether this is a violation of Article 14 and 19 of the Constitution of India?

The MIET has exercised its power under section 69A of the 2002 Act which not only gives an authority to exercise power of blocking but also lays down obligation on the Government to state the reasons to be recorded in writing while issuing the blocking to the intermediary. Further, when the Central Government has satisfied itself that the grounds provided under section 69A are met, it can by order direct the intermediary to block ‘any information generated, transmitted, received, stored or hosted in any computer resource’. It does not state that the power extends to blocking or ordering the blocking of the very social media account permanently or even temporarily, essentially taking away from the account user’s right of any future publication (which changes the nature of order to punitive from protective) and also curbs the right of a reader to have access to the previous and future tweets which were not objectionable under section 69A of the 2002 Act. The power given to the Central Government under section 69A(1) is further subject to section 69A(2) which states that the “procedure and safeguards subject to which such blocking for access by the public may be carried out, shall be such as may be prescribed”. The procedure and safeguards have been provided under Information Technology (Procedures and Safeguards for Blocking of Access to Information by Public) Rules, 2009. Therefore, there are two clear riders to the exercise of power under section 69A(1) of the 2002 Act. Firstly, to follow the procedure as given in the 2009 Rules and secondly, while issuing the order, to record reason for its satisfaction in writing. Since the exercise of power by the Government is subject to these conditions, any order issued without following the due process shall not only render it illegal but also ultra vires and in conflict with fundamental rights guaranteed under Part III of the Constitution of India. The analysis and finding of the same is primarily factual (other than to determine the essential nature of power and its objective given under section 69A) and the Court shall certainly go into the fact finding whether the riders were fulfilled by the Government. With regard to the argument regarding the constitutionality of blocking orders and the same being ‘disproportionate’, Twitter has apparently relied on the ‘least intrusive test’ and ‘proportionality standard of review’ or ‘proportionality test’. It is pertinent to make clear at this point that Twitter is not challenging the constitutionality of the provision under section 69A of 2002 Act. The law is settled and the provision has been upheld in the matter of Shreya Singhal v Union of India [Writ Petition (Criminal) No.167 of 2012 decided on 24th March 2015]. It remains to be seen whether the said tests can be applied in the case of exercise of power by a Government authority under a provision of law that has been held to be constitutional (this not being a case of challenge of the legislative provision itself).

0

Refusal of a Contractor to Continue to Execute the Work Unless the Reciprocal Promises are Performed by the Other Party, Cannot Be Termed As Abandonment of Contract

Contracts and Agreements

When the promisor or a promisee refuses to executed his part of the terms in a contract and the other party expressly or impliedly consents to such non-execution, the contract is said to be abandoned. In other words, the contract is said to have been abandoned if both the parties fail to perform or one party fails to perform and the other party does not object or dispute such non-performance or non-fulfillment of obligation within a reasonable time. If the other party objects or disputes such non-performance or non-fulfillment of obligation within a reasonable time, the act of the first party shall then be called breach of contract. ‘Abandonment of contract’ is not defined in the Indian Contract Act, 1872. It is different from breach of contract which has been defined under Section 73 of Indian Contract Act.

In a recent judgment delivered by the Hon’ble Supreme Court of India[1], the Court clarified what shall not be terms as abandonment of contract. The Court held that “It is fundamental to the Law of Contract that whenever a material alteration takes place in the terms of the original contract, on account of any act of omission or commission on the part of one of the parties to the contract, it is open to the other party not to perform the original contract [there is an express provision to this effect under section 67 of the Indian Contract Act, 1872]. Such non-performance will not amount to abandonment.”

As per the facts of the case, the Appellant, a registered contractor with the Government of Maharashtra, entered into a contract for work for Regional Rural Piped Water Supply Scheme to be implemented in certain villages. The Appellant was issued a work order but only to be deferred by the Respondents subsequently that too without conveying any reasons whatsoever. Finally when the Appellant was asked to commence the work, essential material for the execution of work (pipes of a particular diameter) were not made available and the Respondents conveyed their intention to alter the terms of the work order by substituting the original material with an alternative one (i.e. pipes of varied diameter). Therefore, the Appellant demanded modified rate accordingly.  The Respondents, thus, asked the Appellant to discontinue the work related to pipelines and directed to start work of different nature on other work sites. Additionally, although the Appellant executed a part of work, against which the invoices were raised, the Respondent failed to honour the same citing shortage of funds as an excuse.   Therefore, the Appellant did not proceed with the work and on Respondent issuing a threat to withdraw the work order and to levy a fine, the Appellant filed a suit for recovery for a sum that included value of the work done, release of the security deposit, compensation and damages. The Trial Court partially decreed the amount. Aggrieved by the said judgment, the Respondents filed a regular civil appeal before the High Court of Judicature at Bombay. The High Court allowed the appeal partially and reduced the decree amount. The Appellant, thus, approached the Supreme Court.

After examining different heads of claims made by the Appellant before the Trial Court, and the extent to which these heads of claims were allowed by the Trial Court, and the heads of claims allowed by the High Court in the impugned judgment, the Court observed that three heads of claims namely (i) the release of security deposit (ii) overheads for the period from January 1989 to 30.09.1990 and (iii) loss of profits, were disallowed by the High Court mainly because the Appellant had abandoned the work under the main contract per the High Court.

Therefore, the question for consideration before the Hon’ble Supreme Court was whether there was abandonment on the part of the Appellant.

After analyzing the sequence of event, the Court found that the Appellant was not guilty of anything including abandonment. The Court further observed that the Respondents never invoked the clause in the contract which enabled the latter to rescind the contract, forfeit the security deposit and entrust the work to another contractor at the risk and costs of the Appellant. The Respondents did not allege breach of contract on part of the Appellant at any point of time. They even omitted to take any recourse under section 75 of the Contract Act to seek compensation for the damage sustained through the nonfulfillment of the contract. Instead the Respondents attributed abandonment to the Appellant. The Court took note of Section 67 of the Indian Contract Act, 1872 which lays down that if any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal.  Thus the refusal of a contractor to continue to execute the work, unless the reciprocal promises are performed by the other party, cannot be termed as abandonment of contract. After the commencement of work there was a change in the diameter of the pipes supplied by the Respondents for carrying out the contract and the Respondents made request for the performance of additional work without finalization of the modified rates as requested by the Appellant on account of change in the diameter of the pipes. This was held to be a material alteration by the Court on part of the Respondents and when a material alteration takes place in the terms of the original contract, on account of any act of omission or commission on the part of one of the parties to the contract, it is open to the other party not to perform the original contract which shall not amount to abandonment. Further clarifying the concept of ‘abandonment of contract’, the Court explained that “… the abandonment is normally understood, in the context of a right and not in the context of a liability or obligation. Moreover, abandonment is normally understood, in the context of a right and not in the context of a liability or obligation. A party to a contract may abandon his rights under the contract leading to a plea of waiver by the other party, but there is no question of abandoning an obligation. In this case, the appellant refused to perform his obligations under the work order, for reasons stated by him. This refusal to perform the obligations, can perhaps be termed as breach of contract and not abandonment.” The Court therefore allowed the appeal and set aside the order of the High Court.

0

If a Statute Prescribes a Method or Modality for Exercise of Power, by Necessary Implication, the Other Methods of Performance are Not Acceptable: SC

Negotiable Instruments

It is well recognized principle of law that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed.[1] The Hon’ble Supreme Court has once again affirmed the same. The principle and the verdict of the Apex Court[2] can be understood better in the light of the fact of the matter.

In view of the failure of a person, accused of dishonor of cheque and being prosecuted under section 138 of the Negotiable Instruments Act, 1881 (“1881 Act“), to deposit 20% of the cheque amount as interim compensation in terms of Section 143(A) of the 1881 Act as per the orders passed by the Senior Civil Judge & JMFC, Nagamangala, the application preferred by the accused under Section 145(2) of the 1881 Act seeking permission to cross-examine the opposite party was found non-maintainable. The accused was not allowed to cross-examine the witness and was ultimately found guilty under section 138 of 1881 Act.

In subsequent appeals, the order of conviction and sentence passed by the Trial Court was confirmed with the remarks that accused did not comply with the order of this Court to deposit 20% of cheque amount, hence, it disclosed that the accused was reluctant in complying with the order of the Court and thus the Magistrate had rightly refused the prayer made by accused seeking permission to cross-examine P.W.1 and proceeded to pass impugned order. On the challenge, the Hon’ble High Court also dismissed the Criminal Revision Petition filed by the accused affirming the view taken by the courts below.

On appeal before the Hon’ble Supreme Court, the question for consideration was precisely whether it is within the competence of the court to deprive an accused of his right to cross-examine a witness if the accused has failed to deposit the interim compensation. In other words, whether the court/authority deviate from the method in which that power has to be exercised by the court as expressly laid down in the statute? The Court examined the provision under section 143(A) of the 1881 Act which confers power to direct interim compensation. As per sub-section (5) of section 143(A), the interim compensation payable under the section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973. Thus, the remedy for failure to pay interim compensation as directed by the Court and the method to realize the same is provided for in the statute.

In this background, the Court applied the law settled by the Privy Council in Nazir Ahmad vs. King Emperor [AIR 1936 Privy Council 253 (2)] and relied upon by the Supreme Court in its decision in State of Uttar Pradesh vs. Singhara Singh and others [AIR 1964 SC 358] that “where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden”. The law was reiterated in J.N. Ganatra vs. Morvi Municipality [(1996) 9 SCC 495] and Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala [(2002) 1 SCC 633] where it was held that “It is a normal rule of construction that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself.” While applying the law to the facts of the case, the Court held that Section 143(A) nowhere contemplates that an accused who had failed to deposit interim compensation could be imposed with any other consequence including foreclosing the right to cross-examine the witnesses examined on behalf of the complainant. As per law, the interim compensation can only be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973. Therefore, any exercise of power by the Courts otherwise, goes beyond the permissible exercise of power given under the section. The Court accordingly ruled that the order of the lower court suffered from an inherent infirmity and illegality and was liable to be set aside.

[1] Taylor v. Taylor [(1875) 1 Ch D 426

[2] Noor Mohammed v. Khurram Pasha [Criminal Appeal No. 2872 of 2022]

1 … 4 5 6 7 8 … 14

You cannot copy content of this page

Left Menu Icon

DISCLAIMER & CONFIRMATION

The Bar Council of India does not permit advertisement or solicitation by advocates in any form or manner.

By clicking “Proceed” button below and accessing this website (www.nautiliyaalegal.com), the user fully accepts that he/she is seeking information of his/her own accord and volition and that no form of solicitation has taken place by the firm or its members.

The information provided under this website is solely available at your request for information purposes only. It should not be interpreted as soliciting or advertisement. The firm is not liable for any consequence of any action taken by the user relying on material / information provided under this website. In cases where the user has any legal issues, he/she in all cases must seek independent legal advice.