Supreme Court & High Courts
Director Not Party To Company's Articles of Association Cannot Invoke Arbitration Under the Articles: Delhi HC
The Delhi High Court has held that a director who has neither signed nor is a party to a company's Articles of Association cannot invoke an arbitration clause contained in those articles. A single judge bench of Justice Purushaindra Kumar Kaurav said that arbitration requires clear and demonstrable consent. The court observed that "Thus, the mere existence of a document, despite it containing an arbitration clause, and persons, even if they are party to it, would not qualify as an...
Court Can Extend Arbitrator's Mandate Even After Its Expiry: Calcutta High Court
The Calcutta High Court has reiterated that an arbitrator's authority does not end automatically on expiry of the time limit prescribed under the Arbitration and Conciliation Act, 1996. The court said that it retains the power to extend an arbitrator's mandate even after expiry of the time fixed and that in this case the parties had consented by their conduct. Applying this settled position, the court extended the mandate of the arbitrator in the case before it and refused to terminate the...
Directors Not Criminally Liable For Company's Contractual Breach Without Proof Of Fraud: Delhi High Court
The Delhi High Court has said that a company's inability to pay its dues because of financial distress is a civil issue, not a criminal offense. A director cannot be prosecuted for cheating unless there is clear proof of personal fraud or personal gain. Justice Neena Bansal Krishna quashed cheating charges against a former managing director of Creative Wares Limited, a manufacturing company that later ran into financial trouble and was declared a sick industrial company by the BIFR. The court...
Arbitrator Appointment Challenges Must Be Raised Before Tribunal, Not In Interim Appeals: Kerala High Court
The Kerala High Court has held that its role is limited when hearing an appeal against an interim order passed under the Arbitration and Conciliation Act. At this stage, the court cannot examine whether the arbitrator was properly appointed or has the authority to act. A Single Judge Bench of Justice S Manu said such objections must be raised before the arbitral tribunal itself. “Competency of the Arbitral Tribunal is a matter to be raised before the Tribunal by the party having a...
Realty Company's Sale of Long-Held Freehold Land Is Capital Gains Not Business Income: Madras Court
The Madras High Court has held that profits earned from the sale of decades-old freehold land must be taxed as capital gains and not as business income, rejecting the income tax department's attempt to treat the transaction as part of a real estate business. A division bench of Justices Anita Sumanth and Mummineni Sudheer Kumar said the record clearly showed that the land was held as a long-term asset and was sold without any development or trading activity. "The accounts reveal that the...
Karnataka High Court Refuses Daughter's Plea For Parents' Interim Bail In GST Evasion Case
The Karnataka High Court has declined to grant interim bail to a husband and wife arrested in a GST enforcement action, holding that the case did not present circumstances warranting the court's intervention at the writ stage. A Single Judge Bench of Justice M Nagaprasanna, in an order pronounced on January 12, noted that the court did not find any illegality in the manner of arrest and that statutory remedies for seeking bail were already available under criminal law. “Therefore, the facts in...
Only Final SFIO Report, Not Interim Report, Can Trigger Prosecution Under Companies Act: Calcutta High Court
The Calcutta High Court has clarified that the central government cannot initiate prosecution under the Companies Act on the basis of an interim report submitted by the Serious Fraud Investigation Office and must wait for the final investigation report after completion of the probe. Justice Krishna Rao made the observation while allowing a writ petition filed by Sunil Kumar Agarwal and quashing a Look Out Circular issued against him during the pendency of an SFIO investigation, noting that...
Limitation Plea Can Be Raised At Any Stage As Long As Facts Are On Record: Madras High Court
In a recent ruling, the Madras High Court held that a belated plea of limitation cannot be entertained where the factual foundation necessary to examine such a plea is absent on record. The ruling came from a bench of Justice Dr. Anita Sumanth and Justice P Dhanabal while dismissing an appeal filed by Modern Engineering & Plastics Pvt. Ltd. The court noted that "Normally, limitation, if it were to be a pure question of law may be raised at any stage of the proceeding, and it would not...