List of Current Affairs

Source – Supreme Court

Why in News?

Recently, the Supreme Court in the matter of M/S Mathosri Manikbai Kothari College of Visual Arts v. The Assistant Provident Fund Commissioner has resolved the legal position relating to the clubbing of different institutes for the purpose of coverage under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act).

What was the Background of M/S Mathosri Manikbai Kothari College of Visual Arts v. The Assistant Provident Fund Commissioner Case?

• The Ideal Fine Arts Society runs two institutions, namely, the Ideal Institute of Fine Arts and Mathosri Manikbai Kothari College of Visual Arts.
• Both the Institutions are being run in the same campus and the Ideal Institute employed 8 people, whereas the Arts College had 18 employees.
• Based on the report of the Enforcement Officer dated 1^st July 2003, it was reported that there being total 26 employees working in both the Institutes, which are managed by the same Society and within the same premises, the establishment would be covered under the provisions of the EPF Act w.e.f. 1st March 1988.
• An order was passed under Section 7-A of the EPF Act, assessing the amount of contributions to be made by the appellant under various schemes of the EPF Act.
• The aforesaid order was challenged by the appellant through statutory appeal before the Tribunal, which was later dismissed.
• Thereafter, the appellant filed a writ petition challenging the order passed by the Tribunal before the single judge bench of the High Court of Karnataka.
• The Single Judge bench of the HC upheld the order passed by the Tribunal and also upheld the application of EPF Act to the appellant’s institution.
• In writ appeal, the order of the learned Single Judge was upheld by the Division Bench of the High Court of Karnataka.
• Thereafter an appeal was filed before the SC which was later dismissed.

What were the Court’s Observations?

• The Bench of Justices Hima Kohli and Rajesh Bindal observed that, from a perusal of the material available on record and the settled position of law, it can be safely opined that there is financial integrity between the Society of the appellant as well as the Ideal Institute as substantial funds have been advanced to the Institutes by the Society. Further, both the Institutes are functioning from the same premises.
• The Bench concluded that the two institutions can be interconnected for the purpose of coverage.

What are the Legal Provisions Involved in it?

• About:
  • It is a social security legislation which is enacted for the betterment of the future of the workers on their retirement or for the dependents of the workers in case of their death.
  • This Act provides for the institution of provident funds, pension funds and deposit-linked insurance funds for employees in factories and other establishments.
• Applicability of the Act
  • Section 1(3)(a) of this Act states that this act is applicable to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more people are employed.
  • Section 1(3)(b) of this Act states that this act is applicable to any other establishment employing twenty or more persons or a class of such establishments which the Central Government may, by notification in the Official Gazette, specify on this behalf.
    • Provided that the Central Government may, after giving not less than two months’ notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification.
• Section 7-A of the EPF Act
  • Section 7-A deals with the determination of money due from employers. It states that-
    • (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order, —
    • (a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and
    • (b) determine the amount due from any employer under any provision of this Act, the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary.
    • (2) The officer conducting the inquiry under sub-section (1) shall, for the purposes of such inquiry, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the following matters, namely: —
    • (a) enforcing the attendance of any person or examining him on oath;
    • (b) requiring the discovery and production of documents;
    • (c) receiving evidence on affidavit;
    • (d) issuing commissions for the examination of witnesses; and any such inquiry shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).
    • (3) No order shall be made under sub-section (1), unless the employer concerned is given a reasonable opportunity to represent his case.
    • (3A) Where the employer, employee or any other person required to attend the inquiry under sub-section (1) fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employer, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record.
    • (4) Where an order under sub-section (1) is passed against an employer ex parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry.

Provided that no such order shall be set aside merely on the ground that there has been an irregularity in the service of the show cause notice if the officer is satisfied that the employer had notice of the date of hearing and had sufficient time to appear before the officer.

Explanation. —Where an appeal has been preferred under this Act against an order passed ex parte and such appeal has been disposed of otherwise than on the ground that the appellant has withdrawn the appeal, no application shall lie under this sub-section for setting aside the ex parte order.

• • • (5) No order passed under this section shall be set aside on any application under sub-section (4) unless notice thereof has been served to the opposite party.

What are the Major Case Laws in Relation to the Coverage of EPF Act?

• In the Associated Cement Co. v. Workmen (1960) case, the SC held that it is impossible to lay down any one test as absolute and invariable for all cases to determine the issue regarding the clubbing of two establishments for the purpose of coverage under the EPF Act.
• In Noor Niwas Nursery Public School v. Regional Provident Fund Commissioner and Ors. (2001) case, the SC held that no straight jacket formula or test can be laid down for the purpose of clubbing of the two establishments and coverage under the EPF Act.

Source: Allahabad High Court (Neutral Citation No. - 2023: AHC:198523)

Why in News?

The Allahabad High Court (HC) has emphasized that proceedings governed by the Negotiable Instruments Act, 1881 (NI Act) should be resolved promptly, avoiding unnecessary technical complications in the matter of Ram Dhari Pal v. State of UP and 2 Others.

What is the Background of Ram Dhari Pal v. State of UP and 2 Others Case?

• The present application has been filed to direct the Additional Civil Judge/Judicial Magistrate, Jaunpur, to conclude the trial of the complaint case under Section 138 of N.I. Act, District Jaunpur within the stipulated period.
  • The contention of the learned counsel for the applicant is that though this complaint under NI Act was filed in the year 2022, but the trial could not yet conclude it.
  • It was further submitted that as per Section 143(2) of the NI Act, the trial for the offence should be conducted on day-to-day basis and it is further provided under Section 143(3) that the trial should be concluded within six months from the date of filing of the complaint.
  • Reliance was placed upon the case Indian Bank Association and others v. Union of India and others (2014), in which the Supreme Court (SC) has issued direction for expeditious disposal of the cases under NI Act.

What were the Court’s Observations?

• The HC took note of the following guidelines passed by the SC in the case of In Re: Expeditious Trial of Cases under Section 138 NI Act (2021):
  • 1) The High Courts are requested to issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 of the Act from summary trial to summons trial.
  • 2) Inquiry shall be conducted on receipt of complaints under Section 138 of the Act to arrive at sufficient grounds to proceed against the accused, when such accused resides beyond the territorial jurisdiction of the court.
  • 3) For the conduct of inquiry under Section 202 of the Code, evidence of witnesses on behalf of the complainant shall be permitted to be taken on affidavit. In suitable cases, the Magistrate can restrict the inquiry to examination of documents without insisting for examination of witnesses.
  • 4) We recommend that suitable amendments be made to the Act for the provision of one trial against a person for multiple offences under Section 138 of the Act committed within a period of 12 months, notwithstanding the restriction in Section 219 of the Code.
  • 5) The High Courts are requested to issue practice directions to the Trial Courts to treat service of summons in one complaint under Section 138 forming part of a transaction, as deemed service in respect of all the complaints filed before the same court relating to dishonour of cheques issued as part of the said transaction.
  • 6) Judgments of this Court in Adalat Prasad and Subramanium Sethuraman have interpreted the law correctly and we reiterate that there is no inherent power of Trial Courts to review or recall the issue of summons. This does not affect the power of the Trial Court under Section 322 of the Code to revisit the order of issue of process in case it is brought to the court's notice that it lacks jurisdiction to try the complaint.
  • 7) Section 258 of the Code is not applicable to complaints under Section 138 of the Act and findings to the contrary in Meters and Instruments (supra) do not lay down correct law. To conclusively deal with this aspect, amendment to the Act empowering the Trial Courts to reconsider/recall summons in respect of complaints under Section 138 shall be considered by the Committee constituted by an order of this Court dated 10.03.2021.
  • 8) All other points, which have been raised by the Amici Curiae in their preliminary report and written submissions and not considered herein, shall be the subject matter of deliberation by the aforementioned Committee. Any other issue relating to expeditious disposal of complaints under Section 138 of the Act shall also be considered by the Committee.
• Taking note of the Supreme Court’s abovementioned directions the HC directed the Additional Civil Judge/Judicial Magistrate, Jaunpur to conclude the trial of the complaint case expeditiously preferably within six months in accordance with the statutory provision of Sections 143(2) and 143(3) of the NI Act.

What are the Legal Provisions Involved?

Negotiable Instruments Act, 1881 (NI Act)

• Section 138: Dishonour of cheque for insufficiency, etc., of funds in the account — Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—
  • (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
  • (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque, 5 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
  • (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
  • Explanation — For the purposes of this section, “debt of other liability” means a legally enforceable debt or other liability.

Section 143 - Power of Court to try cases summarily —

• (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 all offences under this Chapter shall be tried by a Judicial Magistrate of the first class or by a Metropolitan Magistrate and the provisions of sections 262 to 265 (both inclusive) of the said Code shall, as far as may be, apply to such trials: Provided that in the case of any conviction in a summary trial under this section, it shall be lawful for the Magistrate to pass a sentence of imprisonment for a term not exceeding one year and an amount of fine exceeding five thousand rupees:
• Provided further that when at the commencement of, or in the course of, a summary trial under this section, it appears to the Magistrate that the nature of the case is such that a sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Magistrate shall after hearing the parties, record an order to that effect and thereafter recall any witness who may have been examined and proceed to hear or rehear the case in the manner provided by the said Code.
• (2) The trial of a case under this section shall, so far as practicable, consistently with the interests of justice, be continued from day to day until its conclusion, unless the Court finds the adjournment of the trial beyond the following day to be necessary for reasons to be recorded in writing.
• (3) Every trial under this section shall be conducted as expeditiously as possible and an endeavour shall be made to conclude the trial within six months from the date of filing of the complaint.

Source: Gujarat High Court

Why in News?

The High Court of Gujarat in the matter of InstaKart Services v. Megastone Logiparks Pvt Ltd. has held that in the presence of a conflicting exclusive jurisdiction clause, the location of arbitration. is considered the venue rather than the seat arbitration.

• Arbitration proceedings involve the "seat" and the "venue." The venue refers to where in physical space an arbitration is held, while the seat concerns what jurisdiction's laws apply.

What is the Background of the InstaKart Services v. Megastone Logiparks Pvt Ltd. Case?

• The parties entered into a lease agreement; the agreement’s Clause No. 25 provided for resolution of dispute through arbitration.
• The parties subsequently established a Maintenance and Amenities (M&E) agreement concerning the premises intended for leasing as outlined in the lease agreement.
• The petitioner contended that clause 25(ii) of the Lease Agreement indicates that the parties had agreed that the arbitration proceedings will be conducted at Bangalore, Karnataka.
  • Upon placing reliance on Supreme Court (SC) verdicts BGS SGS Coma JV v. NPHC (2020), M/s. Devyani International Ltd v. Siddhivinayak Builders and Developers (2017) petitioner further contended:
    • The seat of the arbitration having been agreed, the jurisdiction to entertain the petition under Section 11 of the (Arbitration and Conciliation Act, 1996) Act, 1996 can only be with the Karnataka High Court.
• It was argued on behalf of the respondent that the lease deed was executed for leasing the premises located in Gujarat.
• The instant petition, seeks for appointment of arbitrator under Section 11(6) of the Act, 1996 on two issues:
  • With regard to the appointment of an Arbitrator on the dispute arising out of the Maintenance and Amenities Agreement.
  • With regard to the territorial jurisdiction of this Court (HC) to entertain the petition under Section 11 of the Act, 1996.

What were the Court’s Observations?

• The Court noted that both agreements were executed by the parties as part of a single transaction. It further noted that they share the same termination date, and the execution of the lease agreement hinges on the fulfillment of the M&E agreement.
  • The Court determined that when two agreements have the same termination date and their execution relies on one another, the arbitration clause in one agreement can be utilized for the other as well.
• It was further observed that Clause 25 of the lease agreement provides that the Courts at Ahmedabad shall have exclusive jurisdiction in all matters arising out of the agreement.
  • It was finally held that the declaration that Arbitration shall be conducted at Bangalore indicates merely the venue of arbitration and not the seat of the arbitration.

What is Arbitration?

• Arbitration is a method of resolving disputes outside of the traditional court system i.e., it is one of the methods of Alternate Dispute Resolution as per Alternative Dispute Resolution Mechanism:
  • Section 89 of the Civil Procedure Code also provides for settlement a Settlement of disputes outside the Court —
    • (1) Where it appears to the Court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for —
    • (a) arbitration;
    • (b) conciliation;
    • (c) judicial settlement including settlement through Lok Adalat; or
    • (d) mediation.
    • (2) Were a dispute has been referred—
    • (a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act.
• It involves the parties in a dispute agreeing to submit their case to one or more neutral third parties, known as arbitrators, rather than going to court.
• These arbitrators hear the arguments and take the evidence presented by both sides and then make a binding decision, often referred to as an arbitral award, to settle the dispute.

What are the Legal Provisions Involved?

• Arbitration and Conciliation Act, 1996
  • Section 11 (6): Appointment of arbitrators - Where, under an appointment procedure agreed upon by the parties —
  • (a) a party fails to act as required under that procedure; or
  • (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
  • (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure,
• a party may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.