List of Current Affairs

Source: Supreme Court

Why in News?

The bench of Chief Justice of India DY Chandrachud and Justice JB Pardiwala observed that the right of redemption is clearly restricted till the date of publication of the sale notice under the Section 13(8) of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI).

• The Supreme Court gave this observation in the matter of Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. And Ors.

Background

• The subject matter behind this appeal started when respondent borrowers borrowed 100 crore rupees from a bank.
• They used 65 crore rupees to pay off an existing Lease Rental Discounting Loan (LRD) and kept 35 crore rupees as a guarantee for simple mortgage by using a piece of land.
• But then, bank declared their loan account as Non-Performing Assest as the defaulted in the payment of loan.
• The bank asked them to pay 123.83 crore rupees, which includes the loan amount, interest, and other charges.
  • Since they could not pay, the bank decided to sell the land at an auction.
• After a few tries, the bank finally sold the land for 105 crore rupees, and the appellant bid the most and paid the total bid amount.
• While all of this was happening, the borrowers asked Debt Recovery Tribunal (DRT) for redemption of mortgage by paying 129 crore rupees.
• The borrowers prayed before the Telangana High Court to allow them the redemption of mortgage.
• Both the bank and the HC permitted the redemption subject to the payment of 129 crore rupees.
• However, the appellant, who won the land at the auction, aggrieved from the order of HC presented this appeal before the SC.

Court’s Observations

• The court held that “equity cannot supplant the law. Equity has to follow law, if the law is clear and unambiguous”.
• The SC further said that the High Court under Article 226 of the Constitution of India, 1950 could not have applied equitable considerations to overreach the outcome contemplated by the statutory auction process prescribed under the SARFAESI Act.
• The court also said that Section 13(8) under the SARFAESI Act is different from and overrides Section 60 of the Transfer of Property Act, 1882 which is general law related to the right to redeem.

Section 13 SARFAESI Act

• Purpose:
  • Section 13(8) of the SARFAESI Act empowers banks and financial institutions in India to take possession of a borrower's property, sell or lease it, and recover their dues in case of default.
  • Section 13(8) of the Act is often referred to as the "possession and sale" provision.
  • It outlines the procedure that lenders can follow to take possession of a secured asset and subsequently sell or lease it to recover their outstanding loans.
• Applicability:
  • Under Section 13 (8), if someone owes money to a secured creditor and they pay back the owed amount, along with any extra costs and fees, before the creditor announces they are going to sell the assets through public auction or through private treaties by way of lease, assignment or sale, then two things happen:
    • The creditor cannot sell or transfer the assets to someone else.
    • If the creditor had already started the process to sell or transfer the assets before the debt was paid off, they must stop and cannot continue with the sale or transfer.
  • However, once the process under Section 18 is over, the creditor cannot allow the redemption of that property.

Procedure under Section 13(8)

• Section 13(8) comes into play when a borrower defaults on their loan payments. It allows the lender to initiate the process of recovering the defaulted amount.
• Before taking any action under this section, the lender is required to issue a notice to the borrower.
  • This notice serves as a warning and provides the borrower with an opportunity to rectify the default within 60 days from the date of the notice.
• Under this period, the borrower can pay the defaulted amount and redeem his property.
• If the borrower fails to remedy the default within the stipulated 60-day period, the lender can proceed to take possession of the secured asset.
• Once possession is taken, the lender has the authority to sell or lease the asset to recover the outstanding amount.
  • The sale can be conducted through a public auction or a private treaty, depending on the circumstances and the terms of the loan agreement.
• If a borrower believes that the possession and sale of the asset were not conducted in compliance with the provisions of the Act, they can challenge the same in the DRT or a court of law.

Source: Supreme Court

Why in News?

A Division Bench of the Supreme Court (SC) reaffirmed the well-established legal principle of Res Judicata in the matter of Samir Kumar Majumder v. The Union of India.

Background

• The facts of the case arise from the backdrop that the appellant (Samir Kumar Majumder) was a schoolteacher at the Railway Higher Secondary School (School hereafter), Alipurduar Junction.
  • His initial appointment was made as a Substitute Teacher.
  • He contended that artificial breaks were created in his service by terminating him on the eve of the school vacations and thereafter reappointing him.
    • He was terminated twice on 09th June 1990 and 22nd September 1990 and re engaged on 24th July 1990 and 1st November 1990 respectively.
• Fearing further creation of artificial breaks, he filed an application before the Central Administrative Tribunal (CAT), Guwahati Bench and prayed for setting aside of the letters of termination and also prayed for regularization of service.
  • CAT, Guwahati passed an interim order after which he continued his services. The application of the appellant was finally dismissed on the ground:
    • The CAT, Guwahati relied upon the case of Smt. Jayasree Deb Roy (Dutta) v. The Union of India & Ors (1989).
    • The tribunal in the present matter stated that substitute teachers cannot claim regularization as a matter of right. CAT also held that selection by the Railway Recruitment Board (RRB) is essential for regular appointment.
• An appeal was made to SC in which it was held that “The appellants are entitled to absorption on a regular basis through the process of screening by the screening committee and they are not required to face selection by the RRB for the purpose of regular absorption.”
• The appellant underwent the screening process conducted by the Screening Committee and was subsequently appointed to the position of Primary Teacher at the School to fill an existing vacancy.
• Aggrieved by the same, appellant approached the CAT, Guwahati again on the ground that he should have been absorbed as Assistant Teacher since he worked as a substitute Assistant Teacher and taught Classes XI and XII.
• CAT dismissed the appellant’s application and the same was upheld by the High Court. Hence, the present case was filed in SC.

Court’s Observations

• The SC was of the view that the appellant’s claim for absorption as Assistant Teacher in the Higher Secondary Section was not tenable.
  • It was noted that the appellant was initially appointed as a substitute teacher with the salary scale of a primary teacher. During the initial round of proceedings, there was no assertion made that he had served as an Assistant Teacher in the School. The argument before the CAT was also for regularization of services only.
• The Court also tested appellant’s case from the lens of res judicata and held that the appellant's request for absorption as an assistant teacher in the Higher Secondary Section is evidently precluded by the doctrine of constructive res judicata.

Legal Provisions

Doctrine of Res Judicata and Constructive Res judicata

• Res Judicata – Res means ‘Thing’ and Judicata means ‘Already Decided’ so Res Judicata simply means ‘A thing which has been decided’.
• The principle is based upon maxims:
  • Interest Republicae Ut Sit Finis Litium - It is to the interest of the state that there should be a limit to litigation.
  • Nemo Debet Bis Vexari Pro Una Et Eadem Causa - No one shall be vexed twice for the same cause.
  • Res judicata pro veritate accipitur - A judicial decision must be accepted as correct.
• The Concept is enshrined under Section 11 of Code of Civil Procedure, 1908 (CPC) whereas the concept of Constructive Res Judicata is provided by Section 11 Explanation IV of CPC.
  • Section 11 - Res judicata - No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.
    • Explanation IV - Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.
  • A decree passed by a court without jurisdiction over the subject matter is not res judicata.
  • It is a mixed question of law and facts, and the bar does not only apply to the decision itself but also to the facts and circumstance involved in the case.
  • Constructive Res Judicata implies that the matter that might and ought to have been raised in a suit but has not been raised cannot be taken up in a subsequent suit fulfilling conditions prescribed under Section 11.

Case Laws

• Sulochana Amma v. Narayana Nair (1993): It was held by SC that Res Judicata applies not only to all judicial proceeding before the court but also to all Quasi-Judicial proceedings of tribunals.
• Sheodan Singh v. Daryao Kunwar (1996): It was held that for determining the question, which is the former suit, it is not the date of filing of suit that matters rather date of decision is to be considered.

Source: Allahabad High Court

Why in News?

The bench of Justices Saumitra Dayal Singh and Arun Kumar Singh Deshwal observed that an application for waiving off cooling period can be rejected for interest of the parties and justice and not in mechanical manner.

• The Allahabad High Court gave this observation in the matter of Amit Jaiswal v. Dr. Pankhuri Agarwal.

Background

• The husband and wife presented a joint application for divorce by mutual consent under Section 13B of the Hindu Marriage Act, 1955 (HMA) which was rejected by the family court.
• Hence the parties filed an application praying the court to waive off the cooling period of six months to file the second motion petition.
• However, the application for waiving off the cooling period was also rejected by the family court.
• Hence the parties preferred an appeal before the Allahabad HC.

Court’s Observations

• The court held that the learned family court has rejected the joint application made by the parties, in a mechanical manner.
  • No application of mind has been made to the facts pleaded by the parties.
• The court relied upon the observation given in Vijay Agarwal v. Smt. Suchita Bansal (2023) that the period mentioned in Section 13B (2) is not mandatory but directory.
  • It will be open to the court to exercise its discretion in the facts and circumstances of each case where there is no possibility of parties resuming cohabitation and there are chances of alternative rehabilitation.

Divorce with Mutual Consent

• Introduction:
  • Section 13B of HMA, deals exclusively with divorce by mutual consent.
  • This section was introduced as an amendment to the Act through Marriage Laws (Amendment) Act, 1976, recognizing that in certain situations, divorce could be a more humane and less acrimonious option.
• Conditions:
  • Under Sub-section 1 of Section 13B the couple must have lived separately for a continuous period of at least one year immediately preceding the presentation of the petition.
    • During this period, they should have remained apart, and there should be no cohabitation.
  • Both parties must agree to the divorce and file a joint petition before the appropriate court, expressing their mutual consent to dissolve the marriage.
    • This consent must be free and voluntary.
• Opportunity for Reassurance:
  • Before passing the decree of divorce for mutual consent the court attempts to conciliate or mediate the dispute between parties and provides a minimum cooling period of 6 months for reassurance of the party’s decision to take divorce.
• Passing of Decree:
  • If the petition is not withdrawn after all attempts by court and parties, the court shall pass a decree of divorce declaring the marriage to be dissolved with effect from the date of the decree.
  • However, the court will pass the decree upon its satisfaction after hearing the parties and after making such an inquiry as it thinks fit, that a marriage has been solemnized and that the averments in the petition are true.

Cooling Off Period

• The court imposes a six-month cooling off period from the date of filing the joint petition. During this time, the couple is encouraged to rethink their decision.
  • Sub-section 2 of Section 13B contains a period for a second motion which may not be before a minimum period of six months after the date of the presentation of the petition and not later than eighteen months.
• During this six-month period, the court often encourages or mandates counseling or mediation for the couple.
  • These sessions aim to help the spouses communicate, understand each other's concerns, and explore the possibility of resolving their differences.
• In certain exceptional cases, the court may consider waiving the cooling off period if it is convinced that the marriage has irretrievably broken down and there is no possibility of reconciliation.
• After the cooling-off period, the couple can file a second motion confirming their intention to proceed with the divorce.
  • If they still do not withdraw the joint petition for divorce, the court grants a decree of divorce, effectively ending the marriage.