Karvy Wealth faces challenge in Delhi High Court for fraudulent activities.

On 13th August, 2021 clients of Karvy Private Wealth, a wealth management company, filed a case against it under Section 7 of the Insolvency and Bankruptcy Code on the ground that the Company did not provide restitution to financial creditors in cases where the corporate debtor raised money through fraudulent schemes. The clients were promised assured returns and buyback schemes. The investment received from schemes had in turn been disbursed to builders in different parts of the country who defaulted in their payments.

The clients have filed a number of cases against Karvy in different forums including the Supreme Court, Delhi High Court, National Company Law Tribunal, Delhi and National Company Law Tribunal, Chandigarh. The cases have been filed not only against Karvy Private Wealth but also against the different builder companies which had taken the investments from Karvy and had defaulted on the payments to the clients. 

In the instant case, the petition has been filed against the resolution process of C and C Towers Pvt. Ltd. (Herein after “Company”), a builder developing a Bus Terminal in Mohali, Punjab. The builder had taken funds from the Karvy Private Wealth for completion of the project and had offered buyback schemes and promised assured returns. Karvy Realty Ltd, a part of the parent company Karvy Stock Broking, hid essential information from the clients while marketing the Company for investment. It hid the fact that the project was severely delayed and that accounts of the Company have been declared NPA.

The Company was unable to fulfil its promise and defaulted on its payment. Thereafter, the Company went into insolvency proceedings. The Resolution Plan accepted by the CoC proposed an 87% cut to the creditors. The retail investors categorically rejected the aforementioned resolution plan but since they were in a minority, Edelweiss Asset Reconstruction Company with 60% voting share was able to approve it to the detriment of the investors.

Apart from the specific instances of Karvy and its builder clients, the petitioners have also challenged various provisions of laws related to investor rights. The petitioners had first challenged the -minimum 10% requirement from a class of investors for initiating insolvency proceedings- which was introduced through an amendment in the IBC. The Supreme Court however ruled against them and upheld the amendment. 

The petition filed against Karvy also challenges provision of the Banning of Unregulated Deposit Schemes Act, 2020 for providing a savings clause in favour of IBC and SARFASI Act under Clause 12 of the impugned Act. The petition further prays for the Court to fill the lacuna in the IBC relating to the redress the grievances of individual retail investors who have been fraudulently lured into investing in Ponzi schemes by declaring it violative of Article 14 and 21 of the Constitution.

Rajasthan High Court upholds grant of maternity relied to woman who gave birth prior to joining of the service.

On 4th August, 2021, the High Court of Rajasthan passed judgement in State of Rajasthan v Neeraj, wherein a single judge’s decision of granting maternity leave to a woman who gave birth prior to joining the service was upheld.

The facts of the case are that the respondent-petitioner gave birth to a child almost a month prior to her receiving the appointment letter. Subsequently she applied for a maternity leave. The request for her maternity leave was decided after 2 years. After a case was brought before a single bench of the Rajasthan High Court, the Judge held the woman to be entitled to the maternity relied. The same was challenged before the Division Bench of the Rajasthan High Court. 

The Division Bench consisting of Hon’ble Chief Justice Indrajit Mahanty and Hon’ble Justice Vinit Kumar Mathur heard the matter. 

The Additional Advocate General argued that the benefits of maternity leave are not available to the respondent because the delivery happened before commission of the job. Under Rule 103 of the Rajasthan Service Rules, 1951 a female servant is entitled for maternity leave only if she is in service. In the present case she was not a part of the service on the date she delivered the baby.

The Counsel for the respondent submitted that it is a beneficial legislation and the fact that the respondent joined only 19 days after the delivery of the baby does not deny her the benefit of the maternity leave.

The Court agreed with the view of Kerala High Court in the case of Mini KT v Senior Divisional Manager, LIC wherein the single Judge discussed the importance of motherhood, role of mothers and their position in the Indian society. The case also stated that “If on any reason she could not attend her workplace due to her duties towards child (compelling circumstances), the employer has to protect her person-hood as ‘mother’

The Court rejected the reasoning of the Counsel for the petitioner on the ground that Rule 103 has a nexus with the object sought to be achieved by the legislature which is facilitating a woman to overcome the problems and issues at the time of the delivery. Therefore, if a woman delivers a child before joining the services but within the confinement period, she would be entitled to maternity relief.

Therefore the Court upheld the decision of the Single Judge and dismissed the appeal.

Supreme Court issues notice in a plea seeking grants from the PM Cares Fund for a medical treatment.

In a case filed before the Supreme Court of India, a wife sought relief from the Court to direct transfer of funds from PM Cares Fund and State CM’s Fund. The plea stated “Not providing necessary financial assistance to save life of the husband of Petitioner is violative of Article 14 and 21 of the Constitution of India and the same can be construed as inaction on the part of the State in providing adequate healthcare to the citizens, particularly during the prevailing Covid 19 situation.

The facts of the case are that Sheela Mehra sought financial assistance/grant from the PM Cares Fund and State CM Fund for a lung transplant for her husband after having exhausted her own savings on the Covid treatment of the husband. The husband was taken to AIIMS Bhopal but due to unavailability of ECMO machine, he was airlifted and then admitted to KIMS Hospital, Secundarabad, Telangana.

The petitioner stated that she personally visited the Prime Minister’s Office (PMO) with an application for grant for defraying medical expenses of her husband. But the same was rejected as she did not have a recommendation from the Member of Parliament (MoP) of her constituency. According to the staff at the PMO, a recommendation letter was mandatory for processing the document.

The matter was brought before a Division Bench of Justice LN Rao and Justice Aniruddha Bose. They orally remarked that although nothing could be done for the petitioner in the Court, they still issued a notice to see if something could be done from the Union’s end. The Court subsequently issued notice to KIMS Hospital.

The petitioner argued that she was entitled to the relief sought on the basis of equity, justice and good conscience. She had a legitimate expectation from the Government. In the case of Parmanand Katara v UOI, the Court held that it is the obligation of the State to preserve life. In Paschim Banga Khet Mazdoor Samity v State of WB, it was held had denial of medical treatment to patient in a government Hospital for non- availability of bed is violative of Article 21. In the present case ECMO machine was not available at AIIMS, Bhopal.

Reliance was also placed on Centre for Public Interest Litigation v UOI, wherein it was held that the primary objective of dealing with any kind of emergency or distress situation, like posed by the COVID-19 pandemic, and to provide relief to the affected.

The matter has been deferred to a further date.

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In this case a wife sought relief from the Court to direct transfer of funds from PM Cares Fund and State CM’s Fund. She sought financial assistance/grant from the PM Cares Fund and State CM Fund for a lung transplant for her husband after having exhausted her own savings on the Covid treatment of the husband. The Division Bench orally remarked that although nothing could be done for the petitioner in the Court, they still issued a notice to see if something could be done from the Union’s end subsequently issued notice to KIMS Hospital. The matter has been deferred to a further date.

The Delhi H.C held that there is no distinction between part-time and full-time employee under the Payment of Gratuity Act, 2009

The High Court of Delhi in a recent judgement adjudged that even part- time, ad- hoc employees are entitled to gratuity under the Payment of Gratuity (Amendment) Act, 2009. The Bench consisted of Justice V. Kamesvar Rao.

The petition was filed by Janardhan Sharma, a part-time vocational teacher employed by the GNCT of Delhi. He prayed for the implementation of the Payment of Gratuity (Amendment) Act, 2009 with retrospective effect to extend the benefit of the scheme to vocational employees.

The facts of the case were that the Government of Delhi had introduced vocational training for 12th standard students. The Government had framed Recruitment Rules for the posts of Post Graduate Teachers (Vocational) in various Vocational Courses. In the year 2009, the Parliament amended the definition of the word ‘employee’ as defined in Section 2(e) of the Payment of Gratuity Act, 1972 with retrospective effect, from April 03, 1997. Due to this, teachers became entitled to Gratuity from their employer w.e.f. April 3rd, 1997.

The Counsel for the petitioner argued that part-time teachers cannot be restricted from the benefit of the scheme. The Act does not does not create a distinction between full time employee or part time employee. The Counsel relied on the judgement in National Bal Bhawan v. Vandana wherein it was held that even part-time employees are eligible for gratuity under the Act.

The Counsel for the Respondent, on the other hand, argued that the petitioner’s appointment was temporary and that their service was liable to be terminated at any time. Moreover, their service was renewed every year for continuation of service and wages being paid from contingency fund. The payment was also decided on the basis of the actual periods taught.

The Court held that the ‘teacher’ is included in the definition of ‘employee’ under Section 2(e) of the Act. For this reason a ‘teacher’ is entitled to gratuity. The Supreme Court had dismissed an appeal filed by the Birla Institute of Technology, in favour of the teacher. It held that “…the teachers were held entitled to claim the amount of gratuity under the Payment of Gratuity Act from their employer with effect from 03.04.1997

The Court also took notice of the definition of ‘wages’ in Section 2(s) of the Act. In National Bal Bhawan case, it was also held that “An employee is an employee, whether on casual, ad-hoc or part time basis. The definition of employee in the Act, 1972 also does not speak of any specific categories of the employees for its applicability, be it, regular, adhoc, part time, casual etc.

The quantum of the gratuity to be paid was also decided upon by the Court in the abovementioned case as “The combined reading of sub-Section (e) and subSection (s) of Section 2 of the Act, 1972 leaves no doubt that the gratuity is payable to the employees defined under the subject Act and is to be assessed on the basis of the wages / emoluments, within the ceiling limit as provided there-under

The Court, relying on the abovementioned judgement, allowed the petition.

Kerala High Court held that enmity cannot be a ground to discard Witness’ evidence

The High Court of Kerala dismissed the appeal of a person convicted of murder, rejecting the arguments of the counsel that the witness cannot be relied upon since there is personal enmity between the accused and the witness and that makes the evidence unreliable.

The facts of the case were that the accused’s wife left him to live with another relative of hers. She was having a sexual relationship with the relative. The wife and the relative were sleeping on the roof of their house when the accused came to the roof and killed the deceased with a hammer. Afterwards he ran away. The mother of the deceased as well as other relatives were present inside the house and came out once they realized something was wrong.

The wife as well as the relatives became witness against the accused. The Sessions Court had found the accused guilty. Appeal was therefore filed before the Kerala High Court. The Counsel for the accused objected to the witnesses and evidence for multiple discrepancies. The Counsel stated that the statement of wife should not be relied on since she had enmity towards the accused. The statement of another witness changed after the initial submission. Moreover, they argued that the roof was slanted so nobody could sleep there and a newlywed couple would not sleep in the open on the roof.

The Court rejected the arguments of the Counsel since the slant of roof was only slight and arguments of privacy for a newlywed couple was subjective and could not be a valid argument. On the issue of change in the statement of a witness, the Court rejected the claim. Stating that “But the question that emerges is whether such exaggeration or embellishment (if it is treated so) makes the evidence of PW2 unreliable. In our view, merely because of the reason that there is some exaggeration or embellishment in the deposition of the witness, from that stated to the police, cannot be a reason to discard the entire evidence unless it is so contradictory as to disprove the material aspects spoken of by the witness.”

The Court relied on State of U.P v Anil Singh for this conclusion. On the issue of the wife not being a reliable witness the court relying on the judgment in Mohabbat and others v State of M.P and Anil Rai v State of Bihar held that “It is a well settled position of law that, merely because, the witness is a close relative to the victim, evidence of such witness cannot be discarded, treating it as an interested version.

The matter was thereby dismissed.

Suo Moto by the Supreme Court in the Covid Case

Monday, 31st May, 2021 the Supreme Court questioned the center regarding the dual pricing and procurement policies in the Covid Vaccine, the centers diversion from the National Immunisation Program and its mandate on of registrations on the COWIN app.

The three judge Bench consisted of Justices D. Y. Chandrachud, L. Nageswara Rao and Ravindra Bhat. Solicitor General, Tushar Mehta, advanced that there had been some developments regarding the vaccination front and in his affidavit, he would elaborate and mention the facts for the same.

Justices D. Y. Chandrachud mentioned that his concern was regarding the basis of the central governments plan where they have stated that people above the age of 45 would receive vaccinations free of charge whereas population below 45 the state will have their arrangements with the manufactures and the remaining 50% procurement would be done by private hospitals. The centre has all by itself derived at the conclusion that the population which has crossed the age of 45 has a higher mortality rate than the ones below 45 however they have not considered the fact that the second wave has affected the people below 45 equally. The judge’squestion was why had the centre not made proper arrangements for people below the age of 45 and relied upon the state for the same. He asked for a justification for the same. To this the SG expressed that since 1st May provisions for below 45 people are also being done by the centre. For the people ranging between 18-45 50% of the vaccination would be on pro rata basis where as the other half would be given to private sectors. He also added that the question of bargaining with the manufactures is also irradicated as the prices will be fixed by the central government.

Justice Roa in view of one theory stated that the central government should make policies in such a way that vulnerable sections, like people will illnesses of health conditions and also falling in the range of 18-45 years receive the vaccination first.  To this justice Chandrachud added that vaccination for this range given through private hospitals is received by urban areas and some small towns but the rural areas have been neglected.

There were questions raised by the judges regarding the pricing of the vaccines by stating that the centre and the state have to fix a price for the vaccine for all age groups and there can be no difference in the pricing for people above or below 45.  The judges stated that they cannot ask the government to change the policy all together but they insisted that the new policy should meet tests of reasonableness.

Public opinion on draft of LDAR and Animal Preservation Regulatio

Before the Kerala high court, a plea has been filed by the citizens regarding their concerns that they have not been given an equal opportunity and say in the draft LakshadweepDevelopment Authority Regulation, 2021 (LDAR) and the Draft Lakshadweep Animal Preservation Regulations, 2021 (LAPR). The draft was in controversy owing to the fact that it would affect the rights of the islanders to retain the properties which were owned by them if the property has been taken over by the administrative department for the purposes of development.  The Lakshadweep Animal Preservation Regulations had banned slaughtering of cow, bull, bullock even though major population of the island were meat eaters.

The petitioner had hence called for an extension of 30 days to the public to give their comments and opinion on Draft LDAR and APR.

Contentions made by the petitioners were:

1. There should be a pre-legislative consultation.

In the year 2014, the legislative department had formulated a policy for pre-legislative consultation which was also followed by the Union Territory of Lakshadweep with respect to the new regulations proposed by the President of India through the administrator. The petitioner mentioned that these guidelines state the publication of proposed law so that interested citizens may give they opinion on the same and it was not meant to be for name sake.

2. The petitioners along side this mentioned how the public were not given sufficient time to comment to the Drafts.3. The petitioners also mentioned that invitation of comments on LDAR, LAPR was done in a namesake manner for ulterior benefits thereby suppressing public notice which would in turn invite comments from them. They mentioned that it was important for them to have scrutiny in the pre-legislative phase itself.4. Along with these there was a concern raised that the controversial amendments had failed to include the history and culture of the Union Territory.

Karla granted Bail in oxygen concentrator black market case

On 16th May, 2021, Sunday, Navneet Karla, a businessman was arrested by the police. The Delhi police had filed a case under section Sec. 420,188,120B,34 of the Indian Penal Code and sec. 3 and 7 of the Essential Commodity Act 1955 accusing him of keeping over 500 oxygen concentrators in restaurants. This case had been transferred to the crime branch.

Trial court had refused to grant Karla interim protection from the arrest. The single judge bench of high court consisting of Justice Subramaniam Prasad after listening to the matter turned down Senior Advocate Abhishek Sanghvi’s request of anticipatory Bail and orally stated that he was convinced by the trial courts order that interim protection at this stage could not be granted.

The advocate representing the petitioner during the submissions mentioned that the quality of the product was not of high standards and hence it was a case of cheating as he induced people to purchase those concentrators and earned huge profits.

On 20th May 2021, he was sent to a 14- day judicial custody as he was accused in the case of black-marketing.

Navneet Karla on Friday then accused the Delhi police officers of distributing the oxygen Concentrators seized from him and also stating that they are low-quality products. The police refuted to the contentions made by the defence stating that the sell was done after the businessman sold it to them claiming it was a premium German made quality.

In the present matter there was another hearing regarding the plea made by Delhi Police for the custody of the businessman. The defence submitted that the police had no jurisdiction for conducting the arrest or investigating the matter as it is regarding Drugs and Cosmetics Act and hence pre-trial detention cannot be allowed. The plea was then dismissed and the Karla was granted bail. The court while granting bail stated that it would be granted if the accused furnished personal bond of two sureties each of Rs. 1 lakh. The court also added that the businessman could not contact the customers to whom he had sold the oxygen concentrators. He was ordered not to tamper with evidence or influence witness and along with this he was asked to join the investigation whenever required.

The Supreme Court Strikes down Maratha Quota

The Supreme Court of India set aside the Maharashtra State Reservation for Socially and Educationally Backward Classes (SEBC) Act of 2018 declaring it unconstitutional as it violated the principles of equality enshrined in the Constitution. The High Court had, in June 2019, reduced the quantum of reservation for Marathas from the 16% recommended by the Gaikwad Commission to 12% in education and 13% in employment. The SC Bench also struck down the Maratha job and education reservations however, PG Medical Admissions under Maratha quota made till 09.09.2020 still remain. 

The Maratha quota exceeded the 50% ceiling and for such extension, there must be some exceptional circumstances and reasons. The SC thus looked into finding if there exceptional circumstances to justify the quota increase above 50%.

This judgement was delivered after analysing the representation of Marathas. The SC was of the opinion that Marathas have adequate representation in government jobs and services. It was also noted that they are not educationally or socially backward classes and hence there are no exceptional circumstances to raise the bar of reservation above 50% which was set by the Indira Shawney Case. The Supreme Court concluded that even the reduced percentages of reservation granted by the High Court were ultra vires. 

The SC relied on the concept that in such cases of reservation, what should be looked up to is adequate representation and not proportional representation. It determined based on statistics that Marathas have adequate representation and hence, raising the bar of reservation is unconstitutional under Art.16 of the constitution. 

SC to determine the constitutional validity of Sec 124A of IPC

Two journalists, Kishorechandra Wangkhemcha from Manipur and Kanhaiya Lal Shukla from Chhattisgarh in the pleas to the Supreme Court challenged S.124A of Indian Penal Code, 1860 (IPC) which deals with Sedition to be violative of the fundamental right of speech and expression. Both journalists have been charged under S.124-A of IPC for comments and cartoons shared by them on the social networking website Facebook.

The Supreme Court has now agreed to examine and decide the validity of S.124A and a bench of Justices UU Lalit, Indira Banerjee and KM Joseph issued notice to the Central government for the same.

What is Section 124-A of IPC exactly?

This section criminalizes the acts of Sedition. Sedition essentially means trying to incite violence and discontent against the country or the government. However, S.124-A also clearly states in its explanations that this crime does not include the comments/writings based on expressing disapprobation of the meas­ures of the Government with a view to obtain their alteration by lawful means which does not incite hate or violence. 

On what basis is the constitutionality challenged?

According to the plea, S.124-A of IPC is said to be violating Article 19 of the constitution of India which guarantees the freedom of speech and expression to the people. However, in various cases previously, S.124-A of IPC has been held as an acceptable exception to Art.19 of the Constitution. In Kedra Nath, the Supreme Court had held that Section 124A is constitutional since it imposed a reasonable restriction on Article 19(1)(a), falling within the ambit of Article 19(2).

These pleas also state that during the origin of S.124-A of IPC, it was essential since the situations and circumstances demanded such a strong and difficult law. Howereve now, India is legally and politically stable and such a law is rendered unnecessary. The further proceedings and decisions on this are awaited by the public.

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