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CIRP Under Article 226
21-Oct-2024
Source: Supreme Court
Why in News?
Recently, the Supreme Court in the matter of CoC of KSK Mahanadi Power Company Ltd. v. Uttar Pradesh Power Corporation Ltd. and Ors. has held that the High Court of Telangana has breached the procedure laid down in the Bankruptcy laws and the Supreme Court disapproves the High Court’s decision of deferring the CIRP process.
What was the Background of the CoC of KSK Mahanadi Power Company Ltd. v. Uttar Pradesh Power Corporation Ltd. and Ors. Case?
- In this case, KSK Mahanadi Power Company Limited (petitioner), a public limited company engaged in electricity generation, is currently undergoing Corporate Insolvency Resolution Process (CIRP).
- Uttar Pradesh Power Corporation Limited (respondent) filed a petition under Article 226 of the Constitution in the High Court of Telangana.
- The petition sought consolidation of the CIRP of the petitioner company with two other companies
- The consolidation was requested to be carried out before the National Company Law Tribunal (NCLT), through the respective Resolution Professionals of the three companies.
- Previously, a Financial Creditor had filed an application before the NCLT seeking similar consolidation of CIRP for these Corporate Debtors.
- The NCLT rejected this application on 12th February 2021.
- The Financial Creditor then filed an appeal with the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT's rejection.
- During the pendency of this appeal, the Financial Creditor filed two more applications with the NCLT.
- The NCLT deferred the Resolution Process and stayed the CIRP proceedings, subject to the outcome of the appeal pending before the NCLAT.
- The High Court of Telangana refused to consolidate the CIRP of both the companies and deferred the CIRP proceedings of both the companies and
- The Committee of Creditors (CoC) of the petitioner company appealed to the Supreme Court, challenging an order passed by the Single Judge of the High Court of Telangana.
What were the Court’s Observations?
- The Supreme Court made the following observations:
- That the High Court had no justification to direct the deferment of the CIRP.
- The decision was made by the High Court while exercising its jurisdiction under Article 226 of the Constitution.
- The High Court had declined to grant the main relief sought in the petition, which was the consolidation of the CIRP of three corporate entities. Despite this, the High Court still proceeded to direct the deferment of the CIRP.
- The Supreme Court noted that the High Court's direction to defer the CIRP under Article 226 breaches the discipline of the law laid down in the Insolvency and Bankruptcy Code 2016 (IBC).
- The order passed by High Court was without issuing notice to the CoC or the other respondents, which was procedural irregularity.
- That by directing the deferment of the CIRP, the High Court had overstepped its jurisdictional boundaries under Article 226 of the Constitution.
- That once the High Court had declined to grant the main relief of consolidation, there was no reason to exercise its jurisdiction under Article 226 to defer the CIRP.
- The Supreme Court's analysis suggests that such interventions by the High Court could disrupt the structured process laid out in the IBC.
- The Supreme Court found that the High Court's decision to defer the CIRP was unwarranted, procedurally flawed, and inconsistent with the principles of the insolvency law framework.
How Did the High Court Applied Article 226 of the Constitution in the Present Case?
- Jurisdiction under Article 226:
- Article 226 of the Indian Constitution gives High Courts the power to issue writs, directions, or orders to any person or authority, including the government, to enforce fundamental rights or for any other purpose.
- Initial petition:
- The respondent company filed a petition under Article 226 in the High Court of Telangana, seeking consolidation of the CIRP of three companies.
- Denial of main relief:
- The High Court denied to grant the main relief sought in the petition, which was the consolidation of the CIRP.
- Alternative direction:
- Despite denying the main relief, the High Court used its power under Article 226 to issue a direction that wasn't directly requested.
- Deferment order:
- The High Court directed that the Resolution Process should be deferred until a new application could be filed with the NCLT and decided upon.
- Time limit imposed:
- The High Court also directed the NCLT to examine any such new application and pass appropriate orders within two weeks.
- Interim measure:
- This deferment was essentially an interim measure, imposed by the High Court using its powers under Article 226.
- The High Court used its broad powers under Article 226 to issue a direction that affected the ongoing CIRP.
What is CIRP?
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Civil Law
Scope of Interference Under Section 37 of Arbitration and Conciliation Act, 1996
21-Oct-2024
Source: Allahabad High Court
Why in News?
A bench of Justice Piyush Agarwal held that the order cannot be challenged unless the parties are able to show that the order is patently illegal or arbitrary.
- The Allahabad High Court held this in the case of Vivek Nayak (Died) And Another v. The Arbitrator / Collector And 3 Others.
What was the Background of Vivek Nayak (Died) And Another v. The Arbitrator / Collector And 3 Others Case?
- By a notification dated 10th June 2012 objections were invited for acquisition of land near Ghaziabad.
- Pursuant to this the Appellants filed objection, and an award was passed by the Special Land Acquisition Officer determining the compensation.
- Aggrieved by the said award an application was filed before the Arbitrator/Collector, Aligarh wherein six issues were framed.
- The Arbitrator modified the award passed by the competent authority by order dated 29th September 2013.
- Aggrieved by the above order the Appellants preferred Arbitration Case No. 80/2013 before the Additional District Judge, Aligarh which was dismissed by the judgment dated 15th January 2022.
- The Appellants in this case submitted that the competent authority did not consider the market value while determining the award according to Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
- Further, the Appellants submitted that they have been deprived of the legitimate claim of solatium and interest as per the judgment of the Apex Court in Union of India v. Tarsem Singh (2019).
What were the Court’s Observations?
- The Court held that the bare perusal of the record shows that the order was passed after due consideration and detailed reasons have been assigned for not granting compensation as per the commercial rate.
- The Court held that if two views are possible and the Tribunal has taken one view on the basis of that order cannot be challenged unless the parties are able to show that the order is patently illegal.
- The Court further held that the ground regarding payment of solatium and interest cannot be permissible as the said ground was taken only after the order of the Apex Court in the case of Union of India v. Tarsem Singh (2019).
- In other words the Court observed that the judgment in the case of Tarsem Singh came only after almost six years.
- Thus, the Court dismissed the appeals.
What is Appeal under Section 37 of Arbitration and Conciliation Act, 1996 (A & C Act)?
- Section 37 of A & C Act lays down Appealable orders.
- Section 37 (1) is a non-obstante clause which provides that the appeal shall lie from the following orders:
- Refusing to refer the parties to arbitration under Section 8
- Granting or refusing to grant any measure under Section 9
- Setting aside or refusing to set aside an arbitral award under Section 34
- Section 37 (2) provides that an appeal shall lie to a Court from an order of the arbitral tribunal in following cases:
- Accepting the plea referred to in Section 16 (2) or Section 16 (3)
- Granting or refusing to grant an interim measure under Section 17
- Section 37 (3) provides that:
- No Second Appeal shall lie from an order in appeal under this Section
- Nothing in this Section shall takeaway the right to appeal to Supreme Court.
What is the Relation between Section 34 and Section 37 of A & C Act?
- Section 34 of the A & C Act provides for application for setting aside the arbitral award.
- The Court has held that the scope of interference in an appeal under Section 37 of the Act is restricted and subject to the same grounds on which an award can be challenged under Section 34 of the Act.
- The powers under Section 37 of the Act are not beyond the scope of interference provided under Section 34 of the Act.
- In the case of MMTC Limited v. Vedanta Limited (2019) the Court held that the interference under Section 37 of the Act cannot be travel beyond the restrictions laid down in Section 34 of the Act.
- In case of an appeal under Section 37 the Court must be extremely cautious and slow to disturb such concurrent findings.
What are the Landmark Judgments on Scope of Interference under Section 37 of the A & C Act?
- Konkan Railway Corporation Limited v. Chenab Bridge Project Undertaking (2023)
- This was a judgment delivered by a three judge bench.
- The Court held that the scope of jurisdiction under Section 34 and Section 37 of the Act is not like a normal appellate jurisdiction and the Courts should not interfere with the arbitral award lightly in a casual and cavalier manner.
- The mere possibility of an alternate view on facts or interpretation of the contract does not entitle the Courts to reverse the findings of the arbitral tribunal.
- Punjab State Civil Supplies Corporation Ltd. & Another v. M/s Sanman Rice Mills & Others (2024)
- The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act.
- It must also be remembered that proceedings under Section 34 of the Act are summary in nature and are not like a full-fledged regular civil suit. Therefore, the scope of Section 37 of the Act is much more summary in nature and not like an ordinary civil appeal.
- The award as such cannot be touched unless it is contrary to the substantive provision of law; any provision of the Act or the terms of the agreement.
- The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal.
Family Law
Impact of Child Marriage
21-Oct-2024
Source: Supreme Court
Why in News?
The Supreme Court observed that the Prohibition of Child Marriage Act, 2006 requires a collective effort for effective implementation, prioritizing prevention over prosecution. A bench led by Chief Justice DY Chandrachud noted the tailoring strategies to address the main causes such as poverty and gender inequality.
- Guidelines were issued to various government ministries to ensure widespread awareness and compliance.
- The need for legal action, the Court warned against solely focusing on prosecutions, which are ineffective for driving social change.
What was the Background of Society for Enlightenment and Voluntary Action & Anr v. Union of India & Ors.?
- A petition was filed under Article 32 of the Constitution by an NGO called Society for Enlightenment and Voluntary Action.
- The issue has been debated in India for over one and a half centuries, referenced by Rukhmabai's letter to Times of India from 1885.
- The NGO has worked extensively against child marriage and raised concerns about the alarming rate of child marriages in India despite the existence of the Prohibition of Child Marriage Act, 2006 (PCMA).
- The petitioner stated the failure of authorities to prevent child marriages and sought:
- Stronger enforcement mechanisms
- Implementation of awareness programs
- Appointment of Child Marriage Prohibition Officers
- Comprehensive support systems for child brides (including education, healthcare, and compensation)
- Statistical context of the issue:
- According to the 2019-2021 National Family Health Survey-5:
- 23.3% of girls under 18 years are married
- 17.7% of boys under 21 years are married
- This shows a reduction from NFHS-4 (2015-2016) which reported:
- 26.8% of girls married under legal age
- 20.3% of boys married under legal age
- According to the 2019-2021 National Family Health Survey-5:
- Legal framework:
- Under PCMA, child marriage is defined as a marriage where either party is a child
- Girls below 18 and boys below 21 are considered children under the Act
- Child marriage is considered both a social evil and a criminal offense
- International context:
- India, along with 192 other nations, has committed to eliminating child, early, and forced marriages under the Sustainable Development Goals (Target 5.3)
- The UN Convention on the Rights of the Child considers child marriage a violation of human rights
- Root causes identified:
- Patriarchy
- Gender inequality
- Poverty
- Lack of education and employment
- Petitioner's Key Submissions:
- High rates of child marriages evidenced by adolescent pregnancies
- CMPOs often overburdened with multiple responsibilities
- Only Haryana and Sikkim reported exclusive CMPO appointments
- Discrepancy between NCRB data and State department information
- Low reporting and conviction rates in child marriage cases
- Union of India's Submissions:
- Persistence due to societal perceptions and economic pressures
- Implementation of programs like Beti Bachao Beti Padhao
- Identification of 70 high-risk districts across 13 states
- Operation of Mahila Shakti Kendra in 640 districts
- Various state-level measures for elimination of child marriages
- RTI Findings:
- Only 23 out of 36 States/UTs responded
- Only 14 provided substantive data
- Most responses indicated transfer to other departments
- Limited exclusive CMPO appointments
What were the Court’s Observations?
- The Supreme Court held that child marriages violate fundamental rights guaranteed under Article 21 of the Constitution, including rights to self-determination, choice, autonomy, sexuality, health, and education.
- The Court observed that child marriage deprives children of their agency, autonomy, and right to fully develop and enjoy their childhood, affecting both girls and boys adversely.
- The judgment noted that child marriage objectifies children, imposing mature burdens on individuals who are not physically or mentally prepared to comprehend the significance of marriage.
- The Court observed that child marriage infringes upon a woman's right to reproductive choice, bodily autonomy, and freedom to make intimate choices, effectively violating her rights under Article 21.
- The Supreme Court held that child marriage inflicts tangible and lifelong physical and mental injuries, thereby violating the right to health, which is vital to lead a dignified life.
- The Court emphasized that child marriage violates the fundamental right to education under Article 21-A, particularly for girls, as it often leads to the conclusion of their educational pursuits.
- The Supreme Court issued guidelines prioritizing prevention and protection over penalization, directing a collective effort from all stakeholders to address the root causes of child marriage through community-driven strategies.
Rukhmabai's Case (1884):
- Case Background:
- Marriage occurred in 1874 when Rukhmabai was 11 and Dadaji Bhikaji was 19
- Marriage was not immediately consummated due to stepfather's reformist views
- Rukhmabai pursued education during this period
- In 1884, Dadaji filed suit for restitution of conjugal rights
- Initial Court Decision (Justice Pinhey, Bombay High Court):
- Dismissed petition for restitution of conjugal rights
- Held that marriage contracted before age of discretion cannot be enforced
- Emphasized inability to compel cohabitation after 11 years without prior cohabitation
- Ruled against forcing a young woman to live with someone against her will
- Legal Arguments by Rukhmabai:
- Contested on grounds of social, economic, and personal incompatibility
- Argued lack of discretion at time of marriage
- Challenged validity of consent in child marriage
- Appeal Outcome (Division Bench, Bombay High Court):
- Overturned Justice Pinhey's judgment
- Ordered Rukhmabai to join husband within one month
- Prescribed six months' imprisonment as penalty for non-compliance
- Ruled incompatibility not a valid defense under Hindu law
- Final Resolution:
- Rukhmabai refused to comply with court order
- Matter settled through compromise
- Dadaji accepted Rs. 2000 as settlement
- Rukhmabai subsequently pursued medical education in UK
Phulmoni Dasi's Case (1889):
- Case Facts:
- Victim was 11 years and 3 months old
- Married to Hari Maiti, aged 35
- Died from hemorrhage due to marital rape
- Cause of death: rupture of vagina
- Legal Issues:
- Application of rape laws to marital relationship
- Age of consent in marriage
- Marital rape exception in law
- Court's Ruling:
- Held rape law inapplicable as victim was over 10 years and married
- Focused on victim's age and physical maturity rather than crime
- Defendant protected by marital rape exception
- Legislative Impact:
- Case catalyzed support for Malabari's campaign
- Led to Age of Consent Bill by Andrew Scoble
- Resulted in Age of Consent Act, 1891
- Raised age of consent from 10 to 12 years
- Established statutory rape provisions regardless of marital status for girls under 12.
What are the Guidelines Issued by Supreme Court ?
- Legal Enforcement:
- State Governments and UTs must appoint dedicated Child Marriage Prevention Officers (CMPOs) at the district level, with regular performance reviews and mandatory training.
- Collectors and Superintendents of Police are responsible for actively preventing child marriages in their districts and prosecuting facilitators.
- States shall consider integrating Special Juvenile Police Units (SJPU) into the child marriage prevention framework.
- A State Special Child Marriage Prohibition Unit shall be constituted, comprising CMPOs and social workers experienced in child rights.
- Judicial Measures:
- Magistrates are empowered to take suo moto action and issue preventive injunctions to halt child marriages.
- The feasibility of establishing special fast-track courts for child marriage cases shall be assessed.
- Strict disciplinary and legal action is mandated against public servants neglecting their duty in child marriage cases.
- Magistrates should focus on "auspicious days" known for mass weddings to prevent child marriages.
- Community Involvement:
- States and UTs must develop Annual Action Plans with Key Performance Indicators to prevent child marriages.
- A "Child Marriage Free Village" initiative should be launched, encouraging Panchayats and community leaders to actively prevent child marriages.
- Regular orientation programs and workshops shall be conducted to build capacity among all stakeholders.
- Community-centric approaches should be adopted to address local cultural and social contexts related to child marriage.
- Awareness Campaigns:
- CMPOs must conduct regular awareness campaigns in schools, religious institutions, and Panchayats.
- Comprehensive sexuality education must be integrated into school curricula, including information on child marriage prevention.
- Educational materials on child marriage prevention should be prominently displayed in schools and public institutions.
- Targeted community awareness campaigns, empowerment programs for girls, and helpline awareness initiatives must be implemented.
- Training/Capacity Building:
- Specialized training must be provided to community health workers, law enforcement officers, and judicial officers on child marriage prevention.
- Teachers and school administrators shall be trained to recognize signs of potential child marriages.
- Local leaders and community influencers must be empowered through training programs to challenge harmful social norms.
- Collaborations with NGOs should be established to train volunteers and staff on child marriage prevention.
What is the Major Legislation Addressing Child Marriage and Ensuring Rights?
- Universal Framework
- The UDHR (1948) established that marriage should be based on free and full consent, setting an early framework against forced marriages.
- The Supplementary Convention on Slavery (1956) mandated states to prescribe minimum ages for marriage and ensure consent can be freely expressed.
- The ICCPR established the right of men and women of marriageable age to marry and emphasized free and full consent of intending spouses.
- CEDAW (1979) explicitly invalidated child marriages and called for legislation establishing minimum marriage age and mandatory registration.
- The CRC (1989) defined a child as anyone below 18 years and required comprehensive protection from all forms of abuse and exploitation.
- Regional Framework
- The African Charter on Rights and Welfare of the Child (1990) mandates 18 as minimum marriage age and prohibits child marriage and betrothal.
- The European Convention on Human Rights protects the right to marry for those of marriageable age and prohibits inhuman/degrading treatment.
- The SAARC Convention (2002) recognizes child marriage as a rights violation and advocates for minimum age legislation and awareness.
- The European Court requires balancing protection of minors with recognition of marriages in cross-border cases involving refugees.
- South Asian countries show varying rates of child marriage (from 50% in Bangladesh to 2% in Maldives) despite shared regional frameworks.
- Rights-Based Framework
- Right to Free Choice and Autonomy:
- Marriage requires free and full consent of both parties
- Parties must have cognitive capacity to understand marriage responsibilities
- States cannot choose or arrange partners for individuals
- Personal autonomy includes right to define relationships and identity
- Right Against Gender-Based Violence:
- Child marriage is recognized as a form of sexual exploitation
- States must prevent and punish violence against women
- Cultural/religious traditions cannot justify violence against women
- Structural nature of violence against women is acknowledged
- Right to Education:
- States must ensure free and compulsory primary education
- Child brides are four times more likely to drop out of school
- Right to comprehensive sexuality education is protected
- Education should develop child's full potential
- Right to Development:
- Children have the right to develop personality, talents, and abilities
- Development encompasses physical, mental, moral, and social dimensions
- Education should prepare children for responsible life in free society
- States must protect eight specific dimensions of child development
- Right to Free Choice and Autonomy:
Prohibition of Child Marraige,2006
- About:
- The act prohibits the marriage of children, defined as females under the age of 18 and males under the age of 21.
- The law replaces the earlier ‘Child Marriage Restraint Act of 1929’ and seeks to prevent the exploitation of children, particularly young girls.
- Any marriage that involves a minor is voidable under the ‘Prohibition of Child Marriage Act’, and the parties involved in arranging or facilitating such a marriage can be punished with imprisonment and a fine.
- The law imposes a duty on district authorities to prevent child marriages and to take appropriate measures to ensure the protection and rehabilitation of children who are victims of child marriage.
- The law recognizes the harmful effects of child marriage on the health, education, and development of children, particularly girls.
- The act prohibits the marriage of children, defined as females under the age of 18 and males under the age of 21.
- Penalties Under Act
- Section 9 - Penalty for Adult Male Groom
- Applies to men above 18 marrying a minor girl
- Punishment: Rigorous imprisonment up to 2 years OR fine up to ₹1 lakh OR both
- Court has discretion to choose between imprisonment, fine, or both
- Does not apply to adult women marrying minor men (as per Hardev Singh v. Harpreet Kaur case)
- Section 10 - Penalty for Performing/Conducting Child Marriage
- Applies to anyone who performs, conducts, directs or abets child marriage
- Punishment: Rigorous imprisonment up to 2 years AND fine up to ₹1 lakh
- Both imprisonment and fine are mandatory
- Defense available: Reasonable belief that it was not a child marriage
- Section 11 - Penalty for Promoting/Permitting Child Marriage
- Applies to parents, guardians, or anyone in charge of the child
- Punishment: Rigorous imprisonment up to 2 years AND fine up to ₹1 lakh
- Both imprisonment and fine are mandatory
- Women are exempt from imprisonment
- Includes negligent failure to prevent child marriage
- Creates presumption of negligence against person in charge of child
- Section 12 - Void Marriages Declares marriage void ab initio in cases where:
- Child is taken/enticed from lawful guardian
- Child is compelled by force or deceit
- Child is sold for marriage
- Child is trafficked or used for immoral purposes after marriage
- Additional Important Features:
- All offenses are cognizable and non-bailable (Section 15)
- No mandatory minimum punishment is prescribed
- Courts have discretion in sentencing except in Sections 10 and 11
- Presumption of guilt applies in Section 11 cases unless proved otherwise
- Section 9 - Penalty for Adult Male Groom