ALLIED LAWS

14. Covid-19 – Lockdown – Banks cannot classify firms as NPAs – RBI guidelines

Anant Raj Ltd. vs. Yes Bank Ltd.; W.P.(C) Urgent 5/2020; Date of order: 6^th April, 2020 (Delhi)(HC)(UR)

The petitioner had approached the Court seeking a direction against Yes Bank from taking coercive / adverse steps against it, including but not limited to declaring its account as a Non-Performing Asset (NPA). The petitioner contended that it failed to pay the instalment which fell due on 1^st January, 2020 (the subject matter of the present petition) because of adverse economic conditions brought about by the effects of the Covid-19 pandemic.

The High Court held that classification of the account of the petitioner as an NPA cannot be done in view of the RBI Circular related to moratorium of loan repayments. It held that a prima facie reading of the Statement on Development and Regulatory Policies issued by the RBI on 27^th March, 2020 along with the Regulatory Package indicates the intention of RBI to maintain the status quo as on 1^st March, 2020 for all accounts. The Court further observed that before classification as NPA, an account has to be classified as SMA-2 and any account which is classified as SMA-2 on 1^st March, 2020 cannot be further downgraded to an NPA after the issuance of the Notification. The status has to be maintained as it was on 1^st March, 2020.

Thus, the Court granted interim protection from the account being declared as an NPA. However, it was clarified that the stipulated interest and penal charges shall continue to accrue on the outstanding payment even during the moratorium period.

15. Covid-19 – Lockdown – Period of the moratorium – Will not include period of lockdown

Transcon Skycity Pvt. Ltd. and Ors. vs. ICICI & Ors.; W.P. LD VC No. 28 of 2020; Date of order: 11^th April, 2020 (SC)(UR)

A petition was filed before the Supreme Court as to whether the moratorium period is excluded in the computation of the 90-day period for determining NPA for amounts that fell due prior to 1^st March, 2020 and which remain unpaid or in default. The Court at the outset observed that its scope for adjudication, at that particular juncture, was restricted only to the aspect of urgent ad interim relief and issues like maintainability were kept open for adjudication at an appropriate time.

The Hon’ble Court held that the period during which there is a lockdown will not be reckoned by ICICI Bank for the purposes of computation of the 90-day NPA declaration period. If the lockdown is lifted at an earlier date than 31^st May, 2020, then this protection will cease on the date of lifting of the lockdown and the computing and reckoning of the remainder of the 90-day period will start from that earlier lifting of the lockdown-ending date. The moratorium period of 1^st March, 2020 to 31^st May, 2020 under the RBI Covid-19 regulatory package does not per se give the petitioners any additional benefits in regard to the prior defaults, i.e. those that occurred before 1^st March, 2020. Thus, the relief to the petitioners is co-terminus with the lockdown period.

The Court also opined that this order will not serve as a precedent for any other case in regard to any other borrower who is in default or any other bank. Each of these cases will have to be assessed on its own merits. The question as to whether the petitioners are entitled to the benefit of the entire moratorium period in respect of the prior defaults of January and February, 2020 was left open.

16. Employment – Ministry of Home Affairs Order – Payment of wages during lockdown – Negotiable [Disaster Management Act, 2005, S.10; Constitution of India, 1949, Art. 14, Art. 19, Art. 300A]

Ficus Pax Pvt. Ltd. vs. UOI; W.P.(C) Diary No. 10983 of 2020; Date of order: 12^th June, 2020 (SC)(UR)

A petition was filed by an association of employers and a private limited company challenging the validity of the Order of the Ministry of Home Affairs dated 29^th March, 2020 stating that all the employers, be they in the industry or in the shops and commercial establishments, shall make payment of wages of their workers at their work places on the due date, without any deduction for the period their establishments are under closure during the lockdown.

The Hon’ble Supreme Court held that no industry can survive without the workers. Thus, employers and employees need to negotiate and settle among themselves. If they are not able to do so, they need to approach the labour authorities concerned to sort out the issues.

17. Family Law – Maintenance on divorce – Wife entitled to maintenance – Even if she runs a business and earns income [Hindu Marriage Act, 1955, S.12, S.13; Code of Criminal Procedure, 1973, S.125]

Sanjay Damodar Kale vs. Kalyani Sanjay Kale (Ms); RA No. 164 of 2019; Date of order: 26^th May, 2020 (Bom)(HC)(UR)

The couple got married on 12^th November, 1997 in accordance with Hindu religious rites and ceremonies. According to the applicant, the wife, since the inception of marital life the respondent husband treated her with extreme cruelty. She was dropped at her parental home at Satara in the month of January, 1999 by her husband. Despite repeated assurances, the respondent did not come to fetch her back to her marital home. In April, 2007 the respondent expressed his desire to obtain divorce from the applicant. Although the applicant claimed to have resisted in the beginning, she signed the documents for a divorce petition by mutual consent as the respondent assured the applicant that he would continue to maintain the marital relationship with her despite a paper decree of divorce.

Despite the decree of dissolution of marriage, the respondent continued to visit the applicant at her apartment and had marital relations as well. But from September, 2012 the respondent-husband stopped visiting the applicant’s house. The applicant-wife claimed the respondent made no provision for her maintenance and livelihood as she had no source of income. Hence, the applicant filed an application u/s 125 of the Criminal Procedure Code for award of maintenance at the rate of Rs. 50,000 per month. The Family Court allowed the application holding that the respondent has refused or neglected to maintain the applicant who is unable to maintain herself, despite the respondent having sufficient means to maintain her.

The Bombay High Court held that the claim of the applicant that she had no source of income ought to have been accepted by the learned Judge, Family Court with a pinch of salt. The tenor of the evidence and the material on the record suggests that the applicant was carrying on the business of Kalyani Beauty Parlour and Training Institute to sustain her livelihood. Further, in this inflationary economy, where the prices of commodities and services are increasing day by day, the income from the business of beauty parlour, which has an element of seasonality, may not be sufficient to support the livelihood of the applicant and afford her to maintain the same standard of living to which she was accustomed before the decree of divorce. Thus, the Court concluded that Rs. 12,000 per month would be a reasonable amount to support the applicant wife instead of Rs. 15,000 awarded by the Family Court (against the original claim / prayer for Rs. 50,000)  as the applicant’s source of income was not adequately considered by the Family Court Judge.

18. Interpretation of terms and conditions of document(s) – Constitutes substantial question of law – High Court required to exercise power – Matter remanded to the High Court [Code of Civil Procedure, 1908, S.100]

Rajendra Lalit Kumar Agrawal vs. Ratna Ashok Muranjan; (2019) 3 Supreme Court Cases 378

The appellant is the plaintiff whereas the respondents are the defendants. The appellant filed a civil suit against the respondents for specific performance of the contract in relation to the suit property. The suit was based on an agreement dated 8^th August, 1984. The trial Court passed an order dated 5^th July, 2004 favouring the appellant and passed a decree for specific performance of the contract against the respondents. On appeal by the respondents, the District Court vide order dated 10^th November, 2016 allowed the prayer of the respondents, thereby dismissing the suit. The appellant filed a second appeal before the High Court. The High Court dismissed the second appeal, too, holding that it did not involve any substantial question of law as is required to be made out u/s 100 of the Code of Civil Procedure, 1908 (Code).

On an appeal before the Supreme Court, it was held that interpretation of terms and conditions of document(s) constitutes a substantial question of law within the meaning of section 100 of the Code, especially when both parties admit to the document. The Apex Court also held the High Court could have framed questions on the issues, which were material for grant or refusal of specific performance keeping in view the requirements of section 16 of the Specific Relief Act. Therefore, the order of the High Court was set aside and the matter was remanded back to the High Court.

19. Will – Mutual Will – Effect from – Death of either testator – The beneficiaries do not have to wait till the death of both the executants to enforce their rights [Hindu Succession Act, 1956]

Vickram Bahl & Anr. vs. Siddhartha Bahl; CS(OS) 78/2016 & IAs Nos. 2362/2016, 12095/2016, 15767/2018 and 15768/2018; Date of order: 25^th April, 2020 (Delhi)(HC)

Late Wing Commander N.N. Bahl and his wife Mrs. Sundri Bahl executed a Joint Will dated 31^st March, 2006. As per the Will, after the demise of one spouse the entire property will ‘rest’ in the other spouse and no one else shall have any right or interest until the demise of both the testators. Further, as per the Will after the demise of both the testators their eldest son, grand-daughter (daughter of the eldest son) and younger son will have ownership rights as per their respective shares. The eldest son along with his daughter filed a suit seeking permanent injunction against his mother and brother from dispossessing them from their respective share of the property under the Will.

The Court held that Mrs. Sundri N. Bahl having accepted the said Will, is bound by it. Since the rights in favour of the ultimate beneficiary under the mutual Will are crystallised on the demise of either of the executants and during the lifetime of the executant of the Will, i.e. Mrs. Sundri Bahl, the beneficiaries do not have to wait till the death of both the executants to enforce their rights.