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SSrana Newsletter 2021 Issues 08

April 28, 2021

Loan Moratorium cannot be Extended Further- Supreme Court.

RBIExtraordinary times call for extraordinary measures. The coronavirus pandemic has altered the equilibrium and status quo of the Indian economy. To give stimulus to the economy, the Government of India and Reserve Bank of India (RBI) have taken slew of measures to combat the liquidity crisis.

BALANCE SHEET ENTRIES IS ACKNOWLEDGMENT OF DEBT UNDER LIMITATION ACT.

supremeLaw of Limitation prescribes the time limit for different types of suits for which an aggrieved person can approach the court for redressal. For Insolvency applications the limitation period is 3 years.

CHEQUE BOUNCE RELIEF TO FIRMS FACING INSOLVENCY PROCEEDINGS.

insolvencyThe question whether the institution or continuation of a proceeding under Section 138/141 of the Negotiable Instruments (NI) Act  can be said to be covered by the moratorium provision, namely, Section 14 of the Insolvency and Bankruptcy Code (IBC) has been a crucial issue in the legal domain.

DELHI HIGH COURT EXTENDS VALIDITY OF ALL INTERIM ORDERS.

vehicleTaking suo moto cognizance of the alarming rate in which Covid-19 cases have increased in India, the Full Bench of the Hon’ble Delhi High Court in Court on its own motion vs. State (Govt. of N.C.T. of Delhi)proceeded to extend the validity .

Medical Negligence India.

MedicalMedical profession is considered to be a noble profession however, it has been time and again placed under scrutiny and so have all persons working in this profession. Medical negligence is considered to be one of the most crucial concerns not just in our country but throughout the world.

STRIKING OF DEFENSE IN COMMERCIAL SUITS.

CaptureThe foremost objective upon receipt of summons of a suit for a Defendant(s), is to prepare a defense and represent oneself, whether it be an individual or company. Every party is statutorily bound to appear before the Court and present their case within stipulated time.

FSSAI- DIRECTIONS TO FACILITATE FOOD BUSINESS DURING COVID-19.

vehicleThe Food Safety and Standards Authority of India (FSSAI) has issued a press release on April 20, 2021, wherein they have issued directions for facilitating food businesses during the prevailing COVID-19 conditions.


Loan Moratorium cannot be Extended Further- Supreme Court.

RBI

By Nihit Nagpal and Anuj Jhawar

Extraordinary times call for extraordinary measures. The coronavirus pandemic has altered the equilibrium and status quo of the Indian economy. To give stimulus to the economy, the Government of India and Reserve Bank of India (RBI) have taken slew of measures to combat the liquidity crisis.  In this context, the RBI vide its circular dated March 27, 2020 had issued statement on Developmental and Regulatory Policies to mitigate the financial stress caused by COVID-19.[1]  The main highlight of the said circular was relief by banks and other financial institutions a moratorium of 3 months to the borrowers for loan installments falling due between March 1, 2020 and May 31, 2020. The announcement of Moratorium came as a sigh of relief for many borrowers as they were allowed a relaxation to defer the payment of EMI installments during the period as prescribed by RBI. The RBI thereafter extended the said period for another 3 months i.e. till August 31, 2020[2].

Moratorium and Relief Measures introduced by RBI amid COVID-19

While the moratorium prescribed by RBI was stipulated to expire on August 31, 2020, a batch of writ petitions were filed before the Hon’ble Supreme Court seeking extension of the moratorium period and waiver of accruing interest. The Apex Court while dealing with the said petitions, first granted an interim protection in the case of Gajendra Sharma v. Union of India & Anr  to the borrowers and directed that the loan accounts which have not been declared as NPA (Non- Performing Assets) till August 31, 2020 shall not be declared as NPA till further orders[3]. On March 23, 2020, the Supreme Court bench of Justices Ashok Bhushan, R Subhash Reddy and M R Shah in a Small Scale Industrial Manufacturers Association (Regd.) v. Union of India, declared that no compound interest, interest on interest or penal interest shall be charged on installments due during the loan moratorium period and any amount which has been accrued during the said period shall be refunded to the respective borrowers.

Background

The writ petition first came up for hearing on September 03, 2020 before the Hon’ble Supreme Court..  While, Solicitor General, Mr. Tushar Mehta represented the Government of India, on the other hand Mr. Harish Salve represented the Indian Bank Association.

The initial submissions made by the Solicitor General are as follows:.

  • He pointed out that the idea of moratorium was only to give relaxations to the borrowers to defer their EMIs thereby easing the financial burden caused by Covid-19 induced lockdown. There was no intention to grant a complete waiver of the interest loan amount.
  • It was also stated that the banks and financial institutions are the backbone of the country and waiver of interest during moratorium would be prejudicial to the interest of banks and would also give undue benefit to the willful defaulters.
  • It was also apprised that the government would be coming up with sector specific guidelines/plan soon which would contain appropriate reliefs for the borrowers.

On the other hand, Mr. Salve on behalf of Indian Bank Association made the following submissions before the Hon’ble Court:

  • He assured the Hon’ble Court that the loan accounts will not automatically be declared NPA from September 01, 2020 as once the moratorium is over then a default period of 90 days shall commence and the moratorium period is not included in the default period.
  • Further, he submitted that the Individual and industrial problems need to be addressed differently for providing a specified relief and the financial issues faced by bank should not be neglected.

With respect to the levying of compound interest (interest on interest), the Hon’ble Court had observed that RBI needs to clarify on this position as moratorium and penal interest cannot go together. Further, the bench also observed that the government has taken steps to mitigate the financial challenges of borrowers however, in such a situation more measures would be needed to alleviate the hardships faced by the borrowers. Further, the Hon’ble Court opined that the main grievance of the Petitioner was that they have not been given adequate relief under the National Disaster Management Authority (NDMA) and the disaster authority has not been active to provide adequate relief.

The Hon’ble Court resumed its hearing on September 10, 2020 to decide the issue of loan moratorium, interest waiver and other related issues. However, the hearing on the issue was further deferred by the Court till September 28, 2020., While the Hon’ble Court maintained the current status quo, it directed that the interim order passed vide order dated September 03, 2020 shall continue. The Solicitor General, Mr. Tushar Mehta on behalf of the Central Government and RBI had informed the Learned Bench that an expert committee had been constituted at the highest level which has been considering all issues that have arisen in this writ petition. In this regard, additional time was sought by the Central Government to file an affidavit for bringing on record the decision taken by them with the RBI. The Hon’ble Supreme Court had granted 2 weeks’ time to file appropriate affidavit replying to the issues which have arisen in the matter and had directed that all decisions taken by RBI, Government of India or Banks should be placed before its consideration.

During the course of hearing, several other issues like levying of interest, downgrading of borrowers credit rating were also raised before the Hon’ble Court.

Additional affidavits were filed on behalf of both the respondents, highlighting the Government of India, Ministry of Finance’s letter dated October 23, 2020 pertaining to COVID-19 relief titled as “Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (March 1, 2020 to August 31, 2020)”[4] inclusive of operational Guidelines and mechanism for such grant. Pursuant to the aforementioned letter, RBI issued a circular dated October 26, 2020[5] in favour of all the Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks), All Primary (Urban) Co-operative Banks/ State Cooperative Banks/ District Central Co-operative Banks, All India Financial Institutions and All Non-Banking Financial Companies (including Housing Finance Companies) to follow necessary sanctions as provided under the letter dated October 23, 2020.

Submissions were heard by the Hon’ble Court on November 19, 2020 in various tagged applications and writ petitions including W.P. (C) No. 825/ 2020, I.A No. 96215/ 2020. W.P 608/2020 and the Ld. Counsel for the parties were directed to submit their suggestions to the Ld. Solicitor General for the Government of India and the Ld. Counsel for the RBI.[6] In the course of the petitions, Ld. Counsel for the petitioner submitted that Central Government’s decision to waive off interest in eight categories of loans with a paid up amount up to 2 crores has “come as a great relief”.

The final judgment in Gajendra Sharma case was passed on November 27, 2020 by the three judge bench of the Hon’ble Supreme Court of India, headed by Justice Mr. Ashok Bhushan where it was held “The case of the present petitioner, who has taken housing loan is fully covered by the decisions of the Union of India as noted above, since the benefit has been extended to the housing loan upto Rs.2 Crores, i.e., in pursuance of the aforesaid decisions of the Government of India, the Ministry of Finance had issued order dated 23.10.2020”.  The present petition was thereby disposed off and the respondents were directed to take up all the necessary steps in accordance with circular of 23.10.2020.

Pursuant to the aforementioned judgment dated November 27, 2020[7], in a connected matter[8], the Hon’ble Supreme Court of India heard petitions pertaining to extension of loan moratorium period and waiver of accruing interest.  The Ld. Counsel for the petitioner urged that people are suffering financially every day and a cogent solution needs to be implemented by the RBI in this regard. Following this, the Reserve Bank of India (RBI) and Indian Banks Association (IBA) pleaded the Supreme Court not to pass any further orders on similar petitions until an empirical and comprehensive data is collected. After hearing arguments from both the parties, the three-bench judge of Hon’ble Supreme Court headed by Justice Mr. Ashok Bhushan reserved the verdict on December 17, 2020.

On March 25, 2020, the Supreme Court bench of Justices Ashok Bhushan, R. S. Reddy and M. R. Shah passed their judgment on the issue of extension of moratorium period and waiver of interest accrued therein. In the extensive 148-page judgment, the Court pointed that in case further extensions are granted beyond the six-month moratorium period as announced by RBI in the press conference dated May 22, 2020, the accumulated interest is likely to heap up to 6 lakh crores. Keeping in view the economic capacity of the nation, banks being the financial backbone shall not be able to take up additional economic loss arising out of deferred interest.

Vide the aforementioned judgement, the Apex Court emphasized that there is no justification whatsoever to restrain the relief of not charging interest on interest, with respect to loans amounting up to Rs 2 crores. It was further pointed out that financial hardships were faced by loan defaulters and the need to defer interest during moratorium period was a cogent one.

Furthermore, all petitions seeking the following reliefs were rejected by the Hon’ble bench[9]

  • Extension of loan moratorium period
  • Complete waiver of interest accrued during the moratorium period
  • Extension of period of resolution mechanism as provided under RBI circular dated 06.08.2020[10]
  • Sector-specific relief to be proposed by RBI
  • Additional reliefs to be proposed and implemented by the Central Government/ RBI over and above the existing relief packages.

While rejecting the above-mentioned petitions, the Hon’ble Court emphasized that numerous relief packages are proposed by Ministries and Central Government in view of the COVID-19 pandemic to the disaster affected borrowers. Some of the relief packages are as follows:

S.NO. PACKAGE AMOUNT OF RELIEF SECTORS
1. Garib Kalyan Package 2 lakh crores Power, Real Estate, MSMEs
2. Emergency Credit Line Guarantee Scheme 3 lakh crores Power, construction, real-estate, textiles, pharmaceuticals, logistics, cement, auto components and hotel, restaurants and tourism
3. Subordinate Debt with Partial Credit Guarantee 20, 000 crores MSMEs and hospitality sector
4. Fund of Funds for providing Growth Equity to MSMEs 50,000 crores MSMEs

Finally, the Court concluded that all the installments due between the declared moratorium periods as per circular dated 27.03.2020 cannot be termed as willful and deliberate. Any installments collected shall be refunded and adjusted / credited in the next installment due against the loan account. Thus, all the petitions and connected interlocutory applications were disposed off.

 

[1] https://rbidocs.rbi.org.in/rdocs/Notification/PDFs/NOTI186B27003E9DB3D4FB49BDDF955F4289D68.PDF

[2] https://rbidocs.rbi.org.in/rdocs/notification/PDFs/250ISS1B6B55D87E8D40FF97D3B93DF923F1A5.PDF

[3] https://main.sci.gov.in/supremecourt/2020/11127/11127_ _34_16_23763_Order_03-Sep-2020.pdf

[4] https://financialservices.gov.in/sites/default/files/Scheme%20Letter.pdf

[5] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11989&Mode=0

[6] https://main.sci.gov.in/supremecourt/2020/11127/11127_2020_36_42_24717_Order_19-Nov-2020.pdf

[7] https://main.sci.gov.in/supremecourt/2020/11162/11162_2020_37_40_25111_Order_17-Dec-2020.pdf

[8] Small Scale Industries Manufacturers Association (Regd.) v. Union of India & Ors [WrP. (C)  No. 476/2020

[9] https://main.sci.gov.in/supremecourt/2020/11162/11162_2020_35_1501_27212_Judgement_23-Mar-2021.pdf

[10] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11942&Mode=0

 


 


BALANCE SHEET ENTRIES IS ACKNOWLEDGMENT OF DEBT UNDER LIMITATION ACT.

supreme

By Lucy Rana and Nihit Nagpal

Law of Limitation prescribes the time limit for different types of suits for which an aggrieved person can approach the court for redressal. For Insolvency applications the limitation period is 3 years.

Section 18[1] of the Limitation Act provides that when before the expiration of the limitation period an acknowledgment of liability in respect of the property or right has been made by the party against whom such property or right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so made.

Recently in Asset Reconstruction Company India Limited v. Bishal Jaiswal][2] the Hon’ble Supreme Court examined an interesting question if the balance sheets can amount to acknowledgment of debt under Section 18 of the Limitation Act.

Background:

In 2009, Corporate Power Ltd. [“the corporate debtor”] to set up a thermal power project in Jharkhand, availed of loan from various lenders, including the State Bank of India [“SBI”] and later account of the corporate debtor was declared as a non-performing asset. Some of the original lenders of the corporate debtor assigned the debts owed to them by the corporate debtor to the Asset Reconstruction Company Limited [“A,”. The Appellant filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 [“IBC”] before the National Company Law Tribunal, Calcutta [“NCLT”] for a claiming default amount from the corporate debtor.

As the relevant form indicating the date of default did not indicate any such date the Appellant on by filing a supplementary affidavit before the NCLT, specifically mentioning the date of default and annexing copies of balance sheets of the corporate debtor, which, according to the Appellant, acknowledged periodically the debt that was due. Section 7 application was admitted by the NCLT, observing that the balance sheets of the corporate debtor, wherein it acknowledged its liability, were signed before the expiry of three years from the date of default, and entries in such balance sheets being acknowledgements of the debt due for the purposes of Section 18 of the Limitation Act, thus the Section 7 application is not barred by limitation.

In an appeal filed in the NCLAT, the corporate debtor relied upon the Full Bench judgment of the NCLAT in V. Padmakumar v. Stressed Assets Stabilization Fund in which a majority members held that entries in balance sheets would not amount to acknowledgement of debt for the purpose of extending limitation under Section 18 of the Limitation Act.

ISSUES:

The issue raised before the Supreme Court in appeal was whether an entry made in a balance sheet of a corporate debtor would amount to an a acknowledgement of liability under Section 18 of the Limitation Act and Can acknowledgment of balance sheet be taken for the purpose of extending limitation?

CONTENTIONS BY RESPONDENT:

Respondents argued that the balance sheets in the present case did not amount to acknowledgement of liability and auditor’s report should be read along with the balance sheets, would make it clear that there was no unequivocal acknowledgement of debt.

That there has never been a pleading before either the NCLT or the NCLAT that an acknowledgement of liability contained in any of the balance sheets extended the limitation to file an insolvency application. On merits, if the auditor’s report were to be seen, there was no acknowledgement of liability.

The court also noted the judgment of Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, that there is a compulsion in law to prepare a balance sheet but no compulsion to make any particular as admission, and and evidence needs to place on record to establish an acknowledgement of liability.

DECISION

  • After considering the arguments by both the counsels and judgments cited by the counsel of Appellant of the Supreme Court in Mahabir Cold Storage v. CIT, 1991 Supp (1) SCC 402; A.V. Murthy v. B.S. Nagabasavanna, (2002) 2 SCC 642; S. Natarajan vs. Sama Dharman,
    holding that the entries in the books of accounts would amount to an acknowledgement of the liability to within the meaning of Section 18 of the Limitation Act, 1963 and to extend the period of limitation for the discharge of the liability as debt.
  • This court answered the issues in favor of Appellant and indicated that an entry made in the books of accounts, including the balance sheet, can amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act.
  • The Judgment clarifies and proves highly beneficial for prospective creditors/applicants to prove their acknowledgment of debts through entries in balance sheets of the corporate debtor and extension of limitation.
  • Therefore, the balance sheets of the corporate debtor wherein the liability was acknowledged and were signed before the expiry of three years from the date of default can be taken on record to calculate the period imitation.

 

References:

  1. https://images.assettype.com/barandbench/2021-04/164ba1cb-2b2a-41b6-a1c5-b32da5169a32/Asset_Reconstruction_Company__India__Limited_v_Bishal_Jaiswal.pdf

-Pdf of the [Asset Reconstruction Company (India Limited v. Bishal Jaiswal]

  1. https://legislative.gov.in/sites/default/files/A1963-36.pdf – Pdf of Limitation Act, 1963

[1]Section 18 of the Limitation Act, 1963

Effect of acknowledgment in writing.—

(1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.—For the purposes of this section,—

(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right;

(b) the word “signed” means signed either personally or by an agent duly authorised in this behalf; and

(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.

[2] CIVIL APPEAL NO.323 OF 2021


 


CHEQUE BOUNCE RELIEF TO FIRMS FACING INSOLVENCY PROCEEDINGS.

insolvency

By Nihit Nagpal and Anuj Jhawar

The question whether the institution or continuation of a proceeding under Section 138/141 of the Negotiable Instruments (NI) Act  can be said to be covered by the moratorium provision, namely, Section 14 of the Insolvency and Bankruptcy Code (IBC) has been a crucial issue in the legal domain. Various High courts have had dissenting opinion in relation to this concerning matter. However the Apex court has now put an end to all doubts and confusions. While dealing with this issue the court observed that the declaration of moratorium covers criminal proceedings for dishonor of cheque against corporate debtor.

RELEVANT PROVISION

“Moratorium

(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:–

(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;”[1]

Thus, on the day insolvency proceedings are commenced, it is the duty of the Adjudicating Authority to pass orders declaring moratorium. The declaration of moratorium shall prohibit institution of any fresh suit or continuation of pending suit or proceedings against the corporate debtor. It shall even include the execution of any decree, order or judgement in any court of law.

SUPREME COURT’S ORDER

In P Mohanraj and others v M/s Shah Brothers Ispat Ltd[2]and related matters before the Supreme Court, the continuation of the criminal proceedings under Section 138 of NI Act during the pendency of liquidation proceedings under IBC was challenged.  The bench comprising of Justices RF Nariman, Navin Sinha and KM Joseph held that a proceeding under Section 138 and 141 of NI Act against the corporate debtor will be covered under Section 14(1)(a) of IBC. They clarified that this moratorium shall stand extended only to the corporate debtor. The benefit of moratorium did not stand extended on judicial proceedings in cheque bounce cases to directors or signatories of cheques of such firms, saying criminal cases would continue against “natural persons”.

The Apex Court, disagreeing with the views taken by various High Courts, observed that a proceeding under Section 138 NI Act was a ‘quasi criminal proceeding’. It was meant to enforce a civil remedy and therefore it would amount to a proceeding within the meaning of Section 14(1)(a) of IBC, attracting the moratorium.

It was observed that the ambit of Section 14 of IBC was very wide and it was clear that the expression “institution of suits or continuation of pending suits” was to be read as one category, and the disjunctive “or” before the word “proceedings” would make it clear that proceedings against the corporate debtor would be a separate category. “Since criminal proceedings under the Code of Criminal Procedure, 1973 (CrPC) are conducted before the courts mentioned in Section 6 of CrPC, it is clear that a Section 138 proceeding being conducted before a Magistrate would certainly be a proceeding in a court of law in respect of a transaction which relates to a debt owed by the corporate debtor”

In respect to the objective of the moratorium, the Court observed that the main intention of the policy makers was to form a scheme which shields the corporate debtor from pecuniary attacks. This was done to give them a breathing space so that they could continue to operate and rehabilitate itself. Allowing Section 138 matters would crack this shield and bound to have adverse consequences.

While examining the provisions of the NI Act, the bench observe that Section 138 is a hybrid provision to enforce payment under a bounce cheque. The main objective is not to penalize the wrongdoer for an offence but to compensate the victim. “It is clear that a Section 138 proceeding can be said to be a ‘civil sheep’ in a ‘criminal wolf’s’ clothing, as it is the interest of the victim that is sought to be protected, the larger interest of the State being subsumed in the victim alone moving a court in cheque bouncing cases, as has been seen by us in the analysis made … Chapter XVII of the Negotiable Instruments Act.”

CONCLUSION

Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act

[1] Section 14 of the Insolvency and Bankruptcy Code (IBC) 2016.

[2] LL 2021 SC 120

DELHI HIGH COURT EXTENDS VALIDITY OF ALL INTERIM ORDERS.

delhi

Taking suo moto cognizance of the alarming rate in which Covid-19 cases have increased in India, the Full Bench of the Hon’ble Delhi High Court in Court on its own motion vs. State (Govt. of N.C.T. of Delhi)[1] proceeded to extend the validity of all the interim orders that were either subsisting as on April 19, 2021 or had expired on April 19, 2021. This order of the Hon’ble Court includes all the cases that are pending adjudication before the Delhi High Court as well as all the courts subordinate to it.

This order comes shortly after the Delhi High Court’s Office Order No. 1/R/RG/DHC/2021 dated April 18, 2021, wherein it was announced that in view of the resurgence of Covid-19 cases, from April 19, 2021 all the benches of the court shall only take up extremely urgent matters that were filed in the year 2021, and all the other cases shall be adjourned en bloc i.e. all the same time.[2]

Extend Validity of all Interim Orders

On Monday i.e. April 19, 2021, the Government of NCT of Delhi had announced a State vide curfew effective from 10:00 P.M. on April 19 till April 26, 2021. This curfew order of the Government announced strong measures to be implemented for the purpose of controlling the spread of Covid.

In view of the curfew imposed as well as the extremely limited functioning of Courts, the advocates and the litigants would not be in a position to appear in their matters, including those where stay, bail or parole have been granted by the High Court, or the Courts Subordinate to it, on or before March 19, 2021. Due to this reason, interim orders functioning in favour of the parties would start expiring on and from April 19, 2021. We would like to mention here that it seems there is a typographical error in the Court’s order where it says “…on or before March 19, 2021” when in fact it should be April 19, 2021, which is the day from which the Office Order is effective.

Furthermore, relying upon a similar order passed by the High Court last year in Court on its own motion vs. State & Ors.- In re: Extension of Interim orders[3], the Full bench observed that the situation that has arisen presently, is similar to how it was last year, and therefore it requires a similar response.

Therefore, taking suo moto cognizance under Article 226 and 227 of the Constitution, the Hon’ble Court ordered that “in all pending matters, before this High Court and the Courts subordinate to it, wherein such interim orders issued were subsisting as on 19.04.2021 and expired or will expire thereafter, the same shall stand automatically extended till 16.07.2021 or until further orders, except where any orders to the contrary have been passed by the Hon’ble Supreme Court of India in any particular matter, during the intervening period.”

To a large extent it will provide relief to under-trial prisoners, who have been granted interim bail by the Hon’ble Court during the period mentioned in the Court’s order

It was also clarified that in case, the extension of interim orders causes any hardship of an extreme nature to a party to such proceeding, they would be at liberty to seek suitable relief.

The Writ Petition has now been listed on July 16, 2021, where in our opinion, the Court may consider either extending its orders further or ending the extension, contingent on how the Covid-19 situation will be like by then      

[1] W.P. (C) 4921/2021

[2] https://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/PublicNotice_Y7QRJF80S8P.PDF

[3] W.P. (C) No. 3037/2020

Related Posts

Delhi High Court extends interim orders till October 31

End of Extension of Limitation Period during COVID-19- Supreme Court

 


Medical Negligence India.

Medical

By Priya Adlakha and Nihit Nagpal

Medical profession is considered to be a noble profession however, it has been time and again placed under scrutiny and so have all persons working in this profession. Medical negligence is considered to be one of the most crucial concerns not just in our country but throughout the world. The primary reason is that numerous cases have been reported where an under qualified medical professional has been taken under inquiry for not taking reasonable care during the time of operation, diagnosis, etc.

What is medical negligence?

While considering the issue, the Hon’ble Supreme Court in Kusum Sharma & Ors. v. Batra Hospital & Medical Research Centre and Ors placed reference to the Halsbury’s Laws of England, 4th Edn., Vol. 26 pp. 17-18, wherein it was defined as “22. Negligence. – Duties owed to patient. A person who holds himself out as ready to give medical advice or treatment impliedly undertakes that he is possessed of skill and knowledge for the purpose. Such a person, whether he is a registered medical practitioner or not, who is consulted by a patient, owes him certain duties, namely, a duty of care in deciding whether to undertake the case; a duty of care in deciding what treatment to give; and a duty of care in his administration of that treatment. A breach of any of these duties will support an action for negligence by the patient.”[1]

Thus, there are 3 components of medical negligence:

  • Existence of legal duty
  • Breach of legal duty
  • Damage caused by such breach

There are various kinds of situations which amount to medical negligence by a medical professional such as incorrect diagnosis, deferred diagnosis, inaccurate surgery, long term negligent treatment, childbirth and labor malpractice, needless surgery and erroneous administration of anesthesia etc.

In Vinod Jain vs. Santokba Durlabhji Memorial Hospital and Ors. [2], the Hon’ble Supreme Court observed that the test for negligence shall be from the view point that a doctor who has been accredited with a special skill or competence but does not possess highest expert skill, it would in such case be sufficient that he exercises skill of an ordinary competent man under similar scenario. This is primarily done for greater good of the community at large, to prevent the doctors from thinking about their own safety instead of the safety of the patients.

What does not amount to medical negligence?

If a patient has suffered an injury the doctor might not be held liable for negligence. In case of error of judgement by the doctor, he shall not be charged against any such actions. Even doctors are humans and, hence are prone to make mistakes, and therefore, they shall be allowed some relief. Merely based on the fact that the decision of the doctor did not turn out to be favorable, he cannot be held against such error in judgement. The Courts have observed that merely because the doctor choose an different procedure/ treatment to cure the problem and it did not work as expected, will not make him liable. One must prove that there was breach of duty on his part. A doctor performing his duty with due care and caution could not be held liable for negligence.[3]  However, where error in judgement was due to a negligent act, it shall then be termed breach of duty and the doctor shall be held liable for his actions.

Duty of Care

The Hon’ble Supreme Court in Dr. Laxman Balkrishna Joshi Vs. Dr. Trimbak Bapu Godbole[4] had observed that every doctor must exercise reasonable “standard of care” that are set out in the profession. Any breach towards these duties shall hold him liable for medical negligence.

The National Consumer Disputes Redressal Commission in Chandigarh Clinical Laboratory vs Jagjeet Kaur upheld the findings of the District and State commission wherein the appellant was directed to pay the complainant a compensation of Rs.25,000 along with cost of Rs. 2,000. The appellant laboratory had issued the patient with wrong reports for which the Hon’ble Commission held that the appellant had “duty of care” to give accurate findings to the patient and failure of the appellant to take due care shall amount to medical negligence.[5]

When does the liability arise?

A medical professional or hospital shall be held liable for all actions against the patients where they have not taken proper standard of care and it has resulted in suffering on part of the patient. The burden of proof shall lie on the complainant to prove a case of negligence. They have to first establish that there was a duty of care on part of the accused and that, there was breach of such duty.

The State Consumer Disputes Redressal Commission of Jharkhand in Jagdish Prasad Singh v. Dr. A.K.Chatterjee directed the opposite party to pay a sum of Rs. 25,000 to the complainant as compensation for his mental agony and physical harassment and Rs. 5,000 as litigation cost. It was observed that the accused had failed to take due care to return the precise findings in the reports. Whether harm came to the patient or not would not be the criteria for case against negligence.

However, in some case the courts use the principle of “ipsa loquitur” which means things speak for itself.  In such a scenario, it is presumed that the medical professional has acted beneath the set standard of care causing negligence. Under this principle it is presumed that the injury could not have been caused from anything but the negligence on part of the medical professional. In practice, the use of this principle by the judge would mean that the negligence has already ensued. Here the burden shifts onto the doctor to prove the case otherwise. Few examples are leaving an object inside the patient’s body or operating the wrong patient.

Remedies- Medical Negligence

  1. Medical Council of India

An aggrieved party can file a complaint of negligence against a medical practitioner to the concerned State Medical Council as they have the power to take action against the concerned doctor by suspending or cancelling his registration. However, the Indian Medical Council Act, 1956 does not give them the power to compensate the aggrieved party.

The accused is required to file a complaint to the council precisely specifying all the facts and relevant details in the concerned matter. The council shall then allow the accused 30 days’ time to submit his reply. If the council is not satisfied with the reply then they shall call upon both the parties to present evidence in support of their claims.

  • Civil liability under Consumer Forum

An aggrieved person can approach the consumer courts to file a case against the accused person and the hospital. In Indian Medical Association vs. V.P. Santha[6] the Hon’ble Supreme Court observed that the medical practitioners are covered under the Consumer Protection Act, 1986 and the medical services rendered by them should be treated as services under section 2(1) (o) of the Consumer Protection Act, 1986. Similarly under the new Consumer Protection Act, 2019, the medical services shall fall under the ambit of services as mentioned in section 2(42) of the new Act. Any matter in medical negligence on the part of the service provider will be considered as deficiency under section 42(11) of the new Consumer Protection Act, 2019.

Any aggrieved person can claim damages for medical negligence against a doctor or a hospital. Section 69(1) of the Consumer Protection Act, 2019 lays down the time limit within which a complaint for medical negligence must be filed as 2 years from the date of injury.

  • Criminal liability

Under various provisions of Indian Penal Code, 1860 any person who acts negligently or rashly that results in threat to human life or personal safety or; results in death of a person then the person shall be punished with imprisonment and/or fine. However the court have observed that in a matter of negligence where a criminal case is being perused, the element of “mens rea” must be shown to exist. To check for criminal liability, it must be clearly shown that the accused did something or failed to do something which in the given circumstances no other medical professional in his ordinary senses and prudence would have done or failed to do.[7]

The aggrieved party will first file a complaint with the local police authority against the concerned person/persons. If no action is taken, the aggrieved party can file a criminal complaint under Criminal Procedure Code, 1973.

Conclusion

The patients while in pain approach the doctors for their treatment with a simple hope of speedy recovery. However, sometimes there are situations where the treatment do not go as planned, it may be because the result of natural course of life or due to the doctor’s fault. One thing which should be kept in mind is the fact that even they are humans and prone to making mistakes. However, any harm due to the negligent act on part of the doctor or medical staff shall attract liability. Any person aggrieved due to the medical negligence shall approach the abovementioned authorities/courts for compensation

[1](2010) 3 SCC 480

[2] AIR2019SC1143

[3] Achutrao Haribhau khodwa and Ors v. the State of Maharashtra: 1996 SCC (2) 634

[4] 1969 AIR 128

[5] IV (2007) CPJ 157 NC

[6] 1995 SCC (6) 651

[7] Malay Kumar Ganguly  vs. Sukumar Mukherjee and Ors: AIR2010SC1162

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STRIKING OF DEFENSE IN COMMERCIAL SUITS.

Capture

By Nihit Nagpal and Anuj Jhawar

The foremost objective upon receipt of summons of a suit for a Defendant(s), is to prepare a defense and represent oneself, whether it be an individual or company. Every party is statutorily bound to appear before the Court and present their case within stipulated time.

The present article deals with the amendments made by the Commercial Court Act, 2015 in the Code of Civil Procedure, 1908 and the effect on striking of defense in Commercial Suits.

The Code of Civil Procedure, 1908 stipulates time period for filing written statement in ordinary suits and The Commercial Courts Act, 2015 came into force on October 23, 2015 along with certain amendments to the Code of Civil Procedure, 1908 with regard to filling of written statement in any suit of a commercial dispute of a specified value, which are as follows:

Filing of Written Statement- Ordinary Suits v. Commercial Suits

ORDINARY SUITS COMMERCIAL SUITS
In the Order V Rule 1 Sub-rule (1) of the Code of Civil Procedure, 1908, the second proviso applicable to ordinary suits  states that when a defendant has failed to file his written statement within the stipulated period of 30 days, the Court shall give him extension to file his written statement by recording his reason for the delay in writing. However, such extension should not be later than 90 days from the date of service of summons. In the Order V Rule 1 Sub-rule (1) of the Code of Civil Procedure, 1908, the proviso applicable to commercial disputes of a specified value states that when a defendant has failed to file his written statement within the stipulated period of 30 days, the Court shall give him extension to file his written statement by recording his reason for the delay in writing and on payment of costs as the Court deems fit. However, such extension should not be more than 120 days from the date of service of summons and on expiry of 120 days, the defendant shall forfeit his right to file the written statement and the written statement should not be taken on record by the Court.
Similarly, in the Order VIII Rule 1 of the Code of Civil Procedure, 1908, the proviso applicable to ordinary suits states that when a defendant has failed to file his written statement within the stipulated period of 30 days, the Court shall give him extension to file his written statement by recording his reason for the delay in writing. However, such extension should not be later than 90 days from the date of service of summons. Similarly, in the Order VIII Rule 1 of the Code of Civil Procedure, 1908, a new proviso was substituted applicable to commercial disputes of a specified value stating that the defendant must file written statement of his defense within 30 days from the date of service of summons upon him. In event of failure to do so, the Court has the discretion to extend the time for filing of the Written Statement, by recording the reasons for the delay. However, such extension should not be more than 120 days from the date of service of summons and on expiry of 120 days, the defendant shall forfeit his right to file the written statement and the written statement should not be taken on record by the Court.
In the Order VIII Rule 10 of Code of Civil Procedure, 1908 applicable to ordinary suits states that on the failure of the defendant to file his written statement within the permitted time, the Court shall pronounce judgment against the defendant, or make such an order in relation to the suit as it thinks fit which shall be of the nature of a decree. The above was re-emphasized in the Order VIII Rule 10 of Code of Civil Procedure, 1908, applicable to commercial disputes of specified value stating that the Courts do not have the power to grant further extension beyond the statutory time provided under Order VIII Rule I of Code of Civil Procedure, 1908.

The Supreme Court of India in SCG Contracts India Pvt. Ltd. Vs. K.S. Chamankar Infrastructure Pvt. Ltd. and Ors.[1] has upheld the abovementioned provisions under Code of Civil Procedure, 1908 applicable to commercial dispute stating that, the abovementioned provisions would show that ordinarily a written statement is to be filed within a period of 30 days. However, a grace period of further 90 days is granted to the defendant which the Court employ by recording the reasons in writing and payment of costs as it deems fit. The Apex Court reiterated that Court has no further power to extend the time beyond period of 120 days. Further, on expiration of period of 120 days from the date of service of summons, the defendant shall forfeit his right to file the written statement and the Court shall not allow the written statement of the defendant to be taken on record.

CONCLUSION

In a Commercial Suit, where the defendant has failed to file his written statement within the period of 30 days from the date of service of summons, the Court has the discretion to allow further period to make such submissions which may not exceed 90 days. If the Defendant has failed to file his written statement beyond the stipulated period of 120 days from the date of service of summons, the Defendant shall forfeit the right to file his written statement and the Court shall not allow the written statement of the Defendant to be taken on record.

[1] AIR 2019 SC 2691

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FSSAI- DIRECTIONS TO FACILITATE FOOD BUSINESS DURING COVID-19.

coronavirus5

The Food Safety and Standards Authority of India (FSSAI) has issued a press release on April 20, 2021[1], wherein they have issued directions for facilitating food businesses during the prevailing COVID-19 conditions.

Directions for facilitating food businesses during the prevailing COVID-19 conditions

  • Import clearances of food items and testing services by FSSAI’s notified laboratories (including both public and private laboratories) will come under the category of Essential Services.
  • FSSAI has allowed the Food Business Operators (FBO), other than manufacturers, to temporarily operate their businesses on the basis of a valid receipt of FSSAI license/ registration application having 17- digit Application Reference Number (ARN) generated upon online application and fee payment on FoSCoS.
  • New businesses can also start operating once they successfully filed the complete application on FOSCOS. Please be advised that this is an interim relief measure, the licence/ registration will need to be secured before the expiry of the relaxation.
  • Manufacturers are allowed to increase/ enhance their capacity, on the basis of a valid receipt of FSSAI license/ registration application having 17- digit Application Reference Number (ARN) generated upon online application and fee payment on FoSCoS. This will enable immediate upscaling of production facilities without waiting for regulatory approvals.
  • No routine inspections are required to be done except in case of high risk food product viz. Milk and milk products, slaughter houses, meat and meat products etc. However, food safety authorities can conduct inspections in case of select cases on basis of risk profiling or in case of any food emergency/ incidents and complaints. Where feasible, inspections can be done by e-inspection.
  • The deadline for returns for 2020-21 has been extended till 30th, June 2021. All returns are required to be filed online on FOSCOS.
  • No penalty is payable for late filing of application for renewal of licenses.

[1]https://fssai.gov.in/upload/press_release/2021/04/607ef8c7c1b04Press_Release_Facilate_Food_Business_20_04_2021.pdf

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