Look-Out Circular Cannot Bar Bankrupt Guarantor's Travel For Official Duties: Karnataka High Court

The Karnataka High Court on 30 April held that a Look-Out Circular (LOC) cannot operate as an absolute bar on a bankrupt guarantor's overseas travel where such travel is required to discharge professional obligations, and that authorities must balance such restrictions against constitutional protections and employment needs. Justice Sachin Shankar Magadum passed the order while disposing of a writ petition filed by Aditya Arora challenging an LOC issued at the instance of Bank of Baroda. He...

Non-Borrower Tenants Need Not Make Pre-Deposit Before Filing Appeal Before DRAT: Karnataka High Court

The Karnataka High Court has held that a tenant or other non-borrower cannot be compelled to make a pre-deposit to maintain an appeal against a Debt Recovery Tribunal order under the SARFAESI Act. It held that the requirement applies only to borrowers. A Division Bench of Justice Suraj Govindaraj and Justice K Manmadha Rao said the statute draws a clear distinction between borrowers and non-borrowers in prescribing conditions for appeal. “Once the appellant is admittedly not a borrower within...

Karnataka High Court Dismisses State Commercial Appeal Over 444-Day Delay, Calls Explanation 'Misleading'

The Karnataka High Court on recently (April 28) refused to condone a 444-day delay by Karnataka Public Works Department authorities in filing a commercial appeal and dismissed the case. A Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Poonacha held that the explanation offered by the State authorities for the delay was “inaccurate and misleading.” “In view of the above, the averment that the notices had not been served on the appellants, is erroneous. Not only was the...

Karnataka HC Directs Takedown Of AI-Morphed Content Depicting Dharmasthala Dharmadhikari Veerendra Heggade, Family

The Karnataka High Court has directed the State of Karnataka and the Bengaluru CEN Police Station to take immediate steps to ensure removal of AI-generated, morphed, manipulated, and fabricated images and video content depicting Dr. D. Veerendra Heggade, the Dharmadhikari of Sri Kshetra Dharmasthala, and his family members. The content is to be removed from all social media platforms, URLs, and press and media platforms within one week from receipt of a copy of the order. Justice S.R. Krishna...

Karnataka HC Says It Cannot 'Micromanage' CIRP Against Gulam Mustafa Enterprises Before NCLT Bengaluru

The Karnataka High Court has recently observed that it cannot micromanage proceedings before the National Company Law Tribunal by directing it to hear a company's applications in a particular order while hearing a petition filed by real estate developer Gulam Mustafa Enterprises Pvt. Ltd. “At the outset, this Court is of the considered view that the relief sought by the petitioner, in substance, amounts to inviting this Court to micromanage the proceedings pending before the adjudicating...

ITC Claims Filed Before 30 November 2021 Cannot Be Rejected on Limitation Ground: Karnataka High Court

The Karnataka High Court has held that Input Tax Credit (ITC) claims rejected as time-barred under Section 16(4) of the Central Goods and Services Tax Act, 2017 must be reconsidered where GST returns for the relevant financial years were filed on or before 30 November 2021, in view of the retrospective insertion of Section 16(5) of the CGST Act. A Single Judge Bench of Justice S. Sunil Dutt Yadav allowed the writ petition filed by ABE Security Mechanics Private Limited, set aside the show cause...

Courts Hearing Challenges To NH Act Arbitral Awards Cannot Enhance Compensation: Karnataka High Court

The Karnataka High Court has reiterated that courts cannot enhance compensation by modifying arbitral awards in land acquisition disputes under the National Highways Act. Referring to the precedent set by apex court, the court held, "The question whether the court could modify the award was also considered by the Constitution Bench of the Supreme Court in a recent decision in Gayatri Balasamy v. ISG Novasoft Technologies Limited3 . The Supreme Court, by a majority held that the arbitral award...

Arbitral Award Cannot Be Set Aside In Entirety If Claims Are Separable: Karnataka High Court

The Karnataka High Court has held that an arbitral award comprising distinct and separable claims cannot be set aside in its entirety merely because one component is found invalid, as courts have the power to sever the invalid portion while sustaining the valid portion. A Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Poonacha allowed the appeal filed by Pinaka Infomatics Private Limited and modified the order of the Commercial Court, Bengaluru, which had set aside the arbitral...

Civil Courts Cannot Grant Injunctions Against SARFAESI Action: Karnataka High Court

The Karnataka High Court has set aside a Commercial Court order that had stopped lenders from taking action under the SARFAESI Act, holding that such directions cannot be issued by civil courts. Referring to Section 34 of the SARFAESI Act, which bars courts from granting injunctions in such matters, the Court said: “A plain reading of the said section indicates that it proscribes any Civil Court from issuing any injunction not only with respect to the action taken, but also to an action that...

Karnataka High Court Allows Alternate Security In Arbitral Award Execution Despite Finality Of Stay Condition

The Karnataka High Court has held in an arbitral award execution matter that courts can modify conditions imposed while granting a stay, even if such conditions have attained finality, to secure the ends of justice. Justice H. T. Narendra Prasad observed: “While the condition imposed earlier has attained finality, the same does not preclude this Court from moulding the relief in execution proceedings so as to secure the ends of justice, particularly when adequate alternative security is...

Karnataka High Court Dismisses AVTEC Appeal, Holds Unilateral Appointment Of Sole Arbitrator Invalid

The Karnataka High Court on 29 April dismissed an appeal filed by AVTEC Limited and upheld the Commercial Court's order setting aside an arbitral award. A Division Bench of Justices Anu Sivaraman and T.M. Nadaf held that parties cannot permit unilateral appointment of a sole arbitrator under the Arbitration and Conciliation Act, 1996, and also ruled that a party which participates in arbitration without objection cannot later dispute jurisdiction. It observed: “The appellant having...

Karnataka High Court Holds KPIDFE Act, Like MPID, Has Priority Over SARFAESI Claims

The Karnataka High Court has held that secured creditors cannot claim priority under the SARFAESI Act over properties attached under the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 (KPIDFE Act), and such attachment would prevail in determining the priority of claims. A coram of Justice Lalitha Kanneganti dismissed a writ petition filed by Canara Bank challenging the refusal of the Sub-Registrar to register a sale certificate issued in favour of an...