List of Current Affairs

Source: Supreme Court 

Why in News? 

A bench of Justice Abhay S. Oka and Justice Augustine George Masih held that while deciding the writ of habeas corpus in relation to the custody of the child the principle of welfare of child should be considered.         

• The Supreme Court held this in the case of Somprabha Rana v. The State of Madhya Pradesh. 

What is the Background of Somprabha Rana v. The State of Madhya Pradesh Case?

• The mother of the child in this case died an unnatural death by hanging on 27th December 2022. 
• Respondent no. 2,3 (maternal grandparents of the child) and 4 (father of the child) invoked the jurisdiction of the Madhya Pradesh High Court under Article 226 of the Constitution of India, 1950 (COI).  
• It was the case of the respondents that when the 4^th respondent (father of the child) was busy in completing the formalities of the postmortem of his wife, Appellant no. 2 and 3 (real sisters of deceased mother), took away the minor child (age of the child was 11 months on the date of the death of the mother). 
• It is to be noted that the 4^th Respondent was arrested for offences under Section 498A and Section 304B of Indian Penal Code, 1860 (IPC) and was granted bail on 19^th April 2023. 
• The writ of Habeas Corpus was allowed by the Division Bench of High Court and the Court directed the Appellants to hand over the custody to the Respondents. 
• The Supreme Court granted the stay of operation of the above judgment on 7^th July 2023. 
• On 5^th December 2023 the Supreme Court granted leave and continued the stay but the Court observed that it would be open for the husband to apply for the custody before the appropriate Court.  
• The Husband till date did not make any application for custody of the child. An application for custody was made by the Appellants but the same was withdrawn later.   
• The question before the Court now is: 
  • Whether the High Court was justified in disturbing the custody of the child whose age was one year and 5 months at the time of passing of the judgment?

What were the Court’s Observations? 

• The High Court disturbed the child's custody only because the respondent was the child's real father. 
• The High Court did not deal with the issue of welfare of the child. 
• The Supreme Court most importantly held that: 
  • When the Court deals with the issue of Habeas Corpus regarding a minor, the Court cannot treat the child as movable property and transfer custody without even considering the impact of the disturbance of the custody on the child. Such issues cannot be decided mechanically. 
• The doctrine of parens patriae should not be ignored by the Courts. 
• Given the tender years of the child and the fact that the child has not met the parents and grandparents for a considerably long time, the Court refused to transfer the custody immediately to the father and the grandparents. 
• The Court also held that the Regular Civil/Family Courts dealing with child custody matters are in an advantageous position.  
• However, the Court held that even if the custody of the child should not be granted to the father, he should be granted the right to have access to meet the child.

What is the Law on Custody of Child vis-a-vis Exercise of Jurisdiction under Article 226 of the COI? 

• The Court laid down the following principles to be followed in such cases: 
  • Writ of Habeas Corpus is a prerogative writ. It is an extraordinary remedy and is a discretionary remedy. 
  • It is at the discretion of the High Court to exercise or not exercise the powers in such cases. It all depends on the facts of individual cases. 
  • Even if in a particular case the High Court finds that the custody of the child is illegal it can decline to exercise the jurisdiction under Article 226 if the High Court is of the view that it will not be in the welfare /interests of the minor to disturb his/her custody. 
  • While deciding the question regarding the custody of the child, welfare of the minor should be of paramount consideration. 
  • The above principle also applies to a petition seeking Habeas Corpus concerning a minor.

What is the Principle of Best Interest of Child to be Considered in Cases of Custody of Child? 

• Section 17 of The Guardians and Wards Act, 1890 
  • Section 17 (1) provides that in appointing or declaring the guardian of a minor, the Court shall, subject to the provisions of this section, be guided by what, consistently with the law to which the minor is subject, appears in the circumstances to be for the welfare of the minor. 
  • Section 17 (2) provides that In considering what will be for the welfare of the minor, the Court shall have regard to the age, sex and religion of the minor, the character and capacity of the proposed guardian and his nearness of kin to the minor, the wishes, if any, of a deceased parent, and any existing or previous relations of the proposed guardian with the minor or his property. 
  • Section 17 (3) provides that if the minor is old enough to form an intelligent preference, the Court may consider that preference. 
• Section 13 of Hindu Minorities and Guardianship Act, 1956 
  • This Section provides that the in the appointment or declaration of any person as guardian of a Hindu minor by a court, the welfare of the minor shall be the paramount consideration. 
• Ashish Ranjan v. Anupam Tandon (2010) 
  • While considering the welfare of the child, the "moral and ethical welfare of the child must also weigh with the court as well as his physical well- being" 
  • The child cannot be treated as a property or a commodity and, therefore, such issues have to be handled by the court with care and caution with love, affection and sentiments applying human touch to the problem.   
• Col. Ramneesh Pal Singh v. Sugandhi Aggarwal (2024) 
  • The Court held that the matter of custody should be decided by taking into consideration the following factors:  
    • The socioeconomic and educational opportunities which may be made available to the Minor Children;  
    • Healthcare and overall well being of the children  
    • The ability to provide physical surroundings conducive to growing adolescents but also take into consideration the preference of the Minor Children. 

Why are Family Courts in a more Advantageous Position to Decide Child Custody?

• The Family Court can frequently interact with the child. 
• Practically, all Family Courts have a child centre/play area. 
• A child can be brought to the play centre, where the judicial officer can interact with the child. Access can be given to the parties to meet the child at the same place. 
• The Court can appoint experts to make the psychological assessment of the child. 
• If an access is required to be given to one of the parties to meet the child, the Civil Court or Family Court is in a better position to monitor the same. 

Source: Supreme Court 

Why in News? 

Recently, the Supreme Court in the matter of V.S. Palanivel v. P. Sriram CS Liquidator etc  has held the Rule 12 under Schedule 1 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (IBBIR) is mandatory in nature and the liquidator cannot extent the time limit mentioned under the Rule under his discretion. 

What was the Background of the V.S. Palanivel v. P. Sriram CS Liquidator etc  Case? 

• In the present case, a company named Sri Lakshmi Hotels Private Limited (corporate Debtor (CD), herein after to be referred as company was held by the four members (Shareholders: Appellate, his wife, his and his daughter in law). 
• The company took a loan from the financial creditor in the year 2006. 
• A dispute arose between the two against which the financial creditor (FC) invoked the arbitration clause between the parties. 
• The Arbitrator passed an award in Favour of the FC and when appealed by the company before Madras High Court which got dismissed by the High Court. 
• The nonpayment of the awarded amount by the company to the FC resulted in filing of application by the FC before the Adjudicating Authority (AA) for initiating corporate insolvency resolution process (CIRP) against the company. 
• Respondent No.2 (Interim Resolution Professional [IRP], Resolution Professional [RP] and Liquidator) was appointed but no resolution plan was recommended by him for the revival of the company. 
• The Committee of creditors recommended the resolution plan for the liquidation of the company. 
• The valuation report was submitted, and the date of auction was fixed with a reserved price 
• It was alleged that the Liquidator requested the appellant to nominate a person in the Stakeholders Committee, which the appellant failed to do. 
• No bid was received in the first auction due to which the reserved price was reduced by 25% of the original reserved price. 
• M/s KMC Speciality Hospitals (India) Limited (Purchaser) emerged as a successful bidder by depositing the earnest amount. 
• The appellant argued that the balance amount to be paid within 90 days as per Rule 12 of Schedule-I under Regulation 33 of the IBBIR. 
• The letter demanding the balance amount was dispatched on 24th  December 2019 and received by the purchaser on 26th  December 2019. 
• It was argued that the day to be reckoned for counting 90 days is from 25th December. 
• While the purchaser argued that the date on which the letter came into its knowledge to be considered for reckoning 90 days limit i.e. 26th December 2019. 
• The appellant filed the application before AA for setting aside the auction proceedings which was dismissed. 
• While the purchaser filed an application before AA for extension of time for making payment of the balance sale consideration  
  • due to Covid-19 pandemic and 
  • Due to the order passed by the Income Tax Authority for attaching the auctioned property 
• The application by purchaser was accepted by the AA and the time granted for depositing the balance sale consideration was deferred till the lockdown was lifted by the Central Government/State Government, respectively. 
• However, the purchaser paid the balance amount on 24th August 2020 and the sale deed was executed on 28th August 2020. 
• After one month of the sale deed the appellant challenged the order of the AA for extension of time and challenged the execution of sale deed. 
• The AA dismissed the application of the appellant for setting aside the execution sale deed. 
• Aggrieved by the decision of the AA the company filed Company Appeal which got rejected by the tribunal. 
• The appellant then filed the present appeal before the Supreme Court on the following grounds: 
  • For recalling the order passed by the AA in regards to the setting aside the auction proceeding. 
  • for extension of time to deposit the balance sale consideration after the Central/State lockdown was lifted. 

What were the Court’s Observations? 

• The Supreme Court observed that Regulation 47A of the IBBIR was inserted for computation of the timeline for completing any task in connection with a liquidation process that could not be completed on account of declaration of the lockdown. 
  • Therefore, the Supreme Court dismissed the contention of the appellate that the AA not to have accepted that Covid-19 lockdown was a valid reason for extension of time to deposit the balance sale consideration. 
• The Supreme Court observed that: 
  • The first proviso to Rule 12 of IBBIR stipulates that if the payment is made after 30 days, then the successful bidder would have to pay interest on the amount payable at the rate of 12 per cent.  
  • The second proviso to Rule 12 of IBBIR stipulates the outer limit for payment and states that if the payment is not received within 90 days, then the sale shall stand cancelled. 
  • The Supreme Court stressed on the use of word ‘may’ and ‘shall’, the court pointed out the intention of the statute that to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator. 
  • The Supreme Court further added that the AA exercised statutory powers under Section 35 of the Indian Bankruptcy Code, 2016(IBC) read with its inherent powers under Rule 11 of the National Company Law Tribunal Rules, 2016  for extending the time to deposit the balance sale consideration on sufficient cause being shown, i.e., in view of the countrywide lockdown due to the Covid19 pandemic. 
• The Supreme Court further stated that there was a default on the part of the Auction Purchaser in making deposit of the balance sale consideration even after permission was granted by the AA to lift the attachment order by the Income Tax. 
  • The court further stated that considering the developments of hospital on the land by the purchaser it would be too harsh to set aside the sale deed as the appellate also failed to file the application in a reasonable time (he file the application after 19 months of execution of sale deed) 
  • Therefore, the Supreme Court ordered the purchaser to pay an additional amount to the appellate. 

What is Rule 12 of IBBIR? 

• It is given under Schedule 1 of the IBBIR which states the rules regarding Mode of Sale. 
• Regulation 33 of IBBIR states the process of Mode of Sale. 
• Rule 12 to be read with regulation 33 of IBBIR under which: 
  • Clause (1) states that the liquidator shall ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I. 
  • Clause (2) states that the liquidator may sell the assets of the corporate debtor by means of private sale only after prior consultation with the consultation committee under regulation 31A, in the manner specified in Schedule I when 
    • the asset is perishable; 
    • the asset is likely to deteriorate in value significantly if not sold immediately 
    • the prior permission of the Adjudicating Authority has been obtained for such sale: 
  • Provided that the liquidator shall not sell the assets, without prior permission of the Adjudicating Authority, by way of private sale to- 
    • a related party of the corporate debtor; 
    • his related party; or 
    • any professional appointed by him. 
  • Clause (3) states that the liquidator shall not proceed with the sale of an asset if he has reason to believe that there is any collusion between the buyers, or the corporate debtor’s related parties and buyers, or the creditors and the buyer, and shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties. 
•  Rule 12 of the IBBIR reads as follows: 
  • Clause (1) states that on the close of the auction, the highest bidder shall be invited to provide balance sale consideration within ninety days or such period as mentioned in the auction notice under clause 3, of the date of such demand 
  • It is provided that payments made after thirty days shall attract interest at the rate of twelve per cent. 
  • It is provided further that the sale shall be cancelled if the payment is not received within the period provided under this clause. 
• Prior to the amendment of 2024 clause (1) of this rule used to read as “On the close of the auction, the highest bidder shall be invited to provide balance sale consideration within ninety days of the date of such demand”.