ALLIED LAWS

20. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, sections 2(c) and 5(c), Banking Regulation Act, 1949, sections 5(b) and 6(1) – Co-operative banks – Definition of ‘banks’ – SARFAESI Act – Power of the Central Government to legislate

Pandurang Ganpati Chaugule vs. Vishwasrao Patil Murgud Sahakari Bank Limited; Civil Appeal No. 5674 of 2009 (SC); Date of order: 5^th May, 2020

Bench: Arun Mishra J., Indira Banerjee J., Vineet Saran J., M.R. Shah J., Aniruddha Bose J.

FACTS

A question arose with respect to the legislative field covered by Entry 45 of List I, viz. ‘Banking’ and Entry 32 of List II of the Seventh Schedule of the Constitution of India, consequentially the power of the Parliament to legislate and the applicability of the SARFAESI Act to co-operative banks.

HELD

The Supreme Court held that the co­-operative banks under the State legislation and multi­-state co-­operative banks are ‘banks’ u/s 2(1)(c) of the SARFAESI Act and while state laws might regulate co-operative societies regarding their incorporation, regulation and winding up, the Parliament was competent to enact laws to regulate their banking function.

Further, recovery is an essential part of banking; as such, the recovery procedure prescribed u/s 13 of the SARFAESI Act, a legislation relatable to Entry 45 List I of the Seventh Schedule to the Constitution of India, is applicable. Parliament has legislative competence under Entry 45 of List I of the Seventh Schedule of the Constitution of India to provide additional procedures for recovery u/s 13 of the SARFAESI Act with respect to co-operative banks.

21. Covid-19 – Period of limitation – Applicable to Arbitration & Conciliation Act, 1996, and Negotiable Instruments Act, 1881

Suo Motu Writ Petition by the Hon’ble Supreme Court; Suo Motu Writ Petition No. 3 of 2020 (SC); Date of order: 6^th May, 2020

Bench: Chief Justice S.A. Bobde, Deepak Gupta J., Hrishikesh Roy J.

Counsel: K.K. Venugopal, Tushar Mehta

FACTS

The Hon’ble Supreme Court had in the same petition vide order dated 23^rd March, 2020 held that to ease the difficulties faced by the litigants and their lawyers across the country in filing their petitions / applications / suits / appeals, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not, shall stand extended w.e.f. 15^th March, 2020 till further order/s to be passed by the Court in the present proceedings. A clarification was sought with respect to the applicability of the order to the Arbitration and Conciliation Act, 1996 and the Negotiable Instruments Act, 1881.

HELD

The Supreme Court has clarified that all periods of limitation prescribed under the Arbitration and Conciliation Act, 1996 and u/s 138 of the Negotiable Instruments Act, 1881 shall be extended with effect from 15^th March, 2020 till further orders.

It further held that in case the limitation has expired after 15^th March, 2020, then the period from 15^th March, 2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises, shall be extended for a period of 15 days after the lifting of the lockdown.

22. Partnership Act, 1932, sections 37 and 42 – Partnership firm – Only two partners – Retirement of one partner – Dissolution – Accounts to be settled accordingly

Guru Nanak Industries vs. Amar Singh (deceased) through LR

Civil Appeal No. 6659-6660 of 2010 (SC); Date of order: 26^th May, 2020

Bench: Sanjiv Khanna J., N.V. Ramana J., Krishna Murari J.

FACTS

The firm had two partners and one of them agreed to retire. The dispute arose as to whether the same amounted to ‘dissolution of a partnership firm’ or ‘retirement of a partner’ as the same would have a direct bearing on the accounting treatment for settling of the accounts.

HELD

The Supreme Court held that there is a clear distinction between ‘retirement of a partner’ and ‘dissolution of a partnership firm’. On retirement of the partner, the reconstituted firm continues and the retiring partner is to be paid his dues in terms of section 37 of the Partnership Act. In case of dissolution, the accounts have to be settled and distributed as per the mode prescribed in section 48 of the Partnership Act. In the present case, there being only two partners, the partnership firm could not have continued to carry on business as a firm. A partnership firm must have at least two partners. When there are only two partners and one has agreed to retire, the retirement amounts to dissolution of the firm.

23. Indian Evidence Act 1872, sections 65 and 66 – Wills – Existence of a Will – Secondary evidence to establish its existence

 Jagmail Singh vs. Karamjit Singh; Civil Appeal No. 1889 of 2020 (SC); Date of order: 13^th May, 2020 Bench: Navin Sinha J., Krishna Murari J.

FACTS

During the pendency of a land dispute, an application under sections 65 and 66 of the Evidence Act was moved by the appellants seeking permission to prove a copy of a Will dated 24^th January, 1989 by way of secondary evidence. The application was made on the ground that the said original Will was handed over by the appellants to revenue officials for sanctioning the mutation in their favour. The revenue officials were issued notice for production of the original Will dated 24^th January, 1989 but they failed to produce the said Will. The application was then dismissed.

HELD

The Supreme Court held that a perusal of section 65 makes it clear that secondary evidence may be given with regard to the existence, condition or the contents of a document when the original is shown or appears to be in possession or power against whom the document is sought to be produced, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after notice mentioned in section 66 such person does not produce it. It is a settled position of law that for secondary evidence to be admitted foundational evidence has to be given being the reasons as to why the original evidence has not been furnished.

Further, during cross-examination the (revenue) officials did not unequivocally deny the existence of the Will and the scribe of the Will and another witness had admitted the existence of such a Will. Therefore, the appellants would be entitled to lead secondary evidence in respect of the Will in question. However, such admission of secondary evidence does not automatically attest to its authenticity, truthfulness or genuineness which will have to be established during the course of the trial in accordance with law.

24. Covid-19 – General law – Service of notices, summons and exchange of pleadings / documents

Suo Motu Writ Petition by the Hon’ble Supreme Court; Suo Motu Writ Petition No. 3 of 2020 (SC); Date of order: 10^th July, 2020

Bench: Chief Justice S.A. Bobde, R. Subhash Reddy J., A.S. Bopanna J.

Counsel: K. K. Venugopal, Tushar Mehta

FACTS

Service of notices, summons and exchange of pleadings / documents is a requirement of virtually every legal proceeding. Services of notices, summons and pleadings etc. have not been possible during the period of lockdown because this involves visits to post offices, courier companies or physical delivery of notices, summons and pleadings. The Supreme Court took cognisance of this fact.

HELD

The Hon’ble Supreme Court held that such services may be effected by e-mail, FAX, commonly used instant messaging services, such as WhatsApp, Telegram, Signal, etc. However, if a party intends to effect service by means of said instant messaging services, the party must also effect service of the same document / documents by e-mail simultaneously on the same date.