Tele-Law service is being made free of cost for citizens from this year (Press release 16 July 2022)

Tele-Law service is being made free of cost for citizens from this year- Shri Kiren Rijiju

MoU exchanged between Department of Justice and NALSA on Integrated Delivery of Legal Services

Under the provision of the MoU, NALSA to provide services of 700 lawyers, in each district exclusively for Tele-Law program

“From this year, Tele-Law service is being made free of cost for citizens in the country,” announced Shri Kiren Rijiju, Minister of Law and Justice at the 18th All India Legal Services Meet at Jaipur today. Tele–Law mainstreams legal aid to the marginalized seeking legal help by connecting them with the Panel Lawyers through the tele/video-conferencing infrastructure available at Common Service Centers (CSCs) across 1 lakh Gram Panchayats. For easy and direct access Tele- Law Mobile Application (both Android and IoS) has also been launched in 2021 and it is presently available in 22 scheduled languages. Benefitting from this digital revolution, Tele-Law has widened the outreach of legal services to 20 Lakh + beneficiaries in just five years.

During the event, Department of Justice, Ministry of Law & Justice and National Legal Services Authority (NALSA) exchanged Memorandum of Understanding (MoU) on Integrated Delivery of Legal Services. The Union Minister said that the MoU is symbolic of our joint commitment to advance the cause of Justice for All and establish the Rule of Law as the greatest unifying factor among the citizens. Under the provision of the MoU, NALSA would provide the services of 700 lawyers, in each district exclusively for the Tele-Law program. These empanelled lawyers would now also act as referral lawyers and also assist in strengthening the mechanism for dispute avoidance and dispute resolution at the pre-litigation stage. Shri Kiren Rijiju expressed his confidence that the association will help in reaching out to 1 crore beneficiaries in no time.

Addressing the event, Shri Kiren Rijiju, underscored the need of decongestion of jails through release of undertrials. NALSA through its SLSAs and DLSAs is already working in this regard through Under Trial Review Committee (UTRCs) by making available free legal aid/legal counsel to the undertrials. During last year a total of 21,148 meetings of UTRCs were held resulting in release of 31,605 undertrial inmates.

The Minister appealed the State Legal Services Authorities to further intensify their efforts to provide legal counsel/aid to the under-trial prisoners so that in co-ordination with the Under Trial review Committee maximum number of undertrial prisoners are released. He further appealed the High Courts to ensure during this period regular meetings of UTRC headed by the concerned District Judge so that maximum number of undertrial prisoners languishing in our jails are recommended for release before 15th August 2022. He said that the release of undertrial prisoners may be seen in the context that as part of the celebration of “Azadi ka Amrit Mahotsav” Government of India has already decided to grant Special Remission to prisoners for which the guidelines have already been issued by Ministry of Home affairs.

In his concluding remarks, Shri Kiren Rijiju said that access to justice has been recognized as an integral part of our legal framework prescribed under the Constitution of India. And to achieve, realize this vision and build on the work accomplished so far, there needs to be greater collaboration between legal services authorities and various departments and agencies of the government.

SC : Adjudicating authority (NCLT) or the appellate authority (NCLAT) cannot sit in appeal on commercial wisdom of Committee of Creditors

Case Reference: Vallal Rck Vs Siva Industries And Holdings Limited And Others (Supreme Court) dated 03/06/2022

SC held that when 90% or more of the creditors decide that it will be in the interest of all the stake-holders to permit Settlement Plan filed by promoter of the Corporate Debtor and withdraw Corporate Insolvency Resolution Process as per Section 12A of the IBC, 2016, the adjudicating authority (NCLT) or the appellate authority (NCLAT) cannot sit in appeal over such commercial wisdom of Committee of Creditors.

INCOME TAX : Rajasthan High Court grants refund of recovered tax in excess of 20% against disputed demand

Case reference:

Ram Gopal Sharma Vs ITO (Rajasthan High Court) dated 23/05/2022

1. Learned counsel for the petitioner has submitted that the petitioner is a senior citizen and has been filing regular income tax return. In the instant case, return of income tax was filed on 23.07.2017 for the assessment year 2017-18. The same came in scrutiny and high pitched additions were made vide assessment order dated 28.11.2019. It is submitted that income assessed by Assessing Officer was Rs. 24,04,440/-, which is more than two times the returned income, and a demand of Rs. 12,62,649/- was created. Against the said order, appeal before the Commissioner Of Income Tax (Appeal-1) was preferred on 18.12.2019, within a period of 30 days. After filing appeal, the petitioner suo moto deposited a sum of Rs. 2,52,530/- on 18.12.2019, which was equivalent to 20% of demand created, in terms of Office Memorandum dated 29.02.2016 and 31.07.2017, issued by respondent No. 2. As a matter of precaution, stay application dated 26.12.2019 was also filed by the petitioner, requesting for keeping the demand in abeyance till the disposal of the appeal. 

2. It is further submitted that the Assessing Officer i.e. respondent No. 1, against all canons of law, without disposing the stay application filed by the petitioner, without considering the fact that the petitioner has himself deposited Rs. 2,52,530/- and bypassing the Office Memorandum dated 29.02.2016 and 31.07.2017, initiated coercive recovery on 28.01.2020 and recovered entire amount of Rs. 12,62,650/- from the bank account of the petitioner in a exparte manner. 

3. In this background, present writ petition was filed against the adversarial and illegal approach of the respondents contrary to their own circulars and provisions of law and against orders passed by Hon’ble Supreme Court and Hon’ble Jurisdictional High Court and other Hon’ble High Court’s. 

4. Per contra, learned Standing Counsel, Mr. Anuroop Singhi, submitted that the amount of Rs 2,52,530, equivalent to 20% of additional demand, which was deposited by the petitioner on 18.12.2019 was already refunded to him vide rectification order (u/s 154 r.w.s 144 of the I.T. Act, 1961) dated 01.06.2020, after the recovery of entire amount of Rs. 12,62,650 from the petitioner, which was done on 28.01.2020. On the date of hearing, however, learned counsel for the respondent fairly conceded that recovery of over 20% of demand, before disposal of appeal is not appropriate. He was further unable to refute the narration and positions submitted by counsel for the petitioner. He fairly conceded that petitioner is entitled to refund of amount in excess of 20% of the total demand which was recovered from him. 

5. In this background, relying upon the Office Memorandum dated 29.02.2016 & 31.07.2017, considering Section 220(6) of theT. Act, 1961, considering the fair admission on part of Standing Counsel, and considering the fact that the amount of Rs 2,52,531, equivalent to 20% of the demand, was already refunded by department on 01.06.2020, this court deems it appropriate to direct the respondent to refund the excess amount of Rs 10,10,119, being 80% of the demand that is already recovered from the petitioner. The respondents are entitled to keep 20% of the demand, i.e. Rs 2,52,530 in terms of Office Memorandum dated 29.02.2016 and 31.07.2017, until the appeal of petitioner pending before Commissioner Of Income Tax (Appeal-1) is decided. The refund of Rs. 10,10,119 be made to the petitioner within a period of 30 days from the pronouncement of this judgment, failing which respondent will be liable to pay interest as applicable. Upon delay of the payment, interest as applicable will be recovered from the erring officer/respondent. 

6. In light of the above, the writ petition is disposed off. 

All pending applications also stand disposed off.

International Taxation : No TDS deductible on business profit of non-resident in absence of Permanent Establishment in India

Case Reference :

Apurva Goswami Vs DDIT (International Taxation) (ITAT Delhi) dated 24/05/2022

Facts in brief :

From 15CA/CB certificates filed by the assessee, the Ld. AO noted that the assessee has remitted amounts to various parties outside India without deducting tax at source. It was pointed out that the Global Business Affiliates (GBA), as per the terms and conditions of the agreement were entitled to fixed compensation and further additional commission on orders procured for the assessee. It was further stated that the nature of services as rendered by non resident agent who is carrying out business activities in other contracting state falls squarely within the scope of Article 7 of DTAA. As per Article 7 the profits of an enterprise of other State would be taxable in India if there was a PE of such enterprise in India. The explanation of the assessee was not acceptable to the ld. AO. According to him the impugned payments were made to the consultant which are covered under section 9(1)(vii) and not to the agent as claimed. The assesee was liable to deduct tax at source from fee paid for consultancy services.

Conclusion of the case :

Held that the payments made to the GBAs/ BDAs are not FTS but business profits not taxable in the hands of GBAs/BDAs in India in the absence of PE by virtue of the Article 7 of the DTAA, no tax is required to be deducted at source on such payments. In the case of GE India Technology Centre Pvt. Ltd. vs. CIT (2010-TMI-77380-SC) the Hon’ble Supreme Court held that obligation under section 195(1) to withhold tax arrives only if the payment is chargeable to tax in the hands of non-resident recipient. Therefore, merely because a person has not deducted tax at source from a remittance abroad, it cannot be inferred that the person making a remittance has committed a failure in discharging his tax withholding obligations because such obligations come into existence only when recipient has a tax liability in India. Thus, the payments made to the GBAs/ BDAs are not subject to any withholding tax, such payments being not chargeable to tax in India.

Company Law : Order passed by Adjudicating Authority without application of resolution professional’s for initiation of proceedings u/s 43 of IBC is unsustainable

Order passed by Adjudicating Authority without application of resolution professional’s for initiation of proceedings u/s 43 of IBC is unsustainable

Case Reference :

Sahara India Vs Nandkishor Vishnupant Despande (Delhi- NCLAT) dated 09 May 2022

Conclusion of the case:

When a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out…”

It reflects that the Resolution Professional, a statutory functionary, has not filed an application for initiation of proceedings under Section 43 of the Code in respect of preferential transactions and the Adjudicating Authority has passed the order, then it is supplementing it by fresh reason in through affidavit or otherwise. This is also not acceptable in the case of the Code.

Facts in brief:

The Appellant has remitted the principal amount of Rs. 39,95,00,000/- in various tranches commencing from April, 2018 to February, 2019 in accordance with the ‘Memorandum of Understanding’ (MOU) dated 07th March, 2017 with the Corporate Debtor (CD)/Respondent (in CIRP) for supply of future goods in the form of gold coins/Gold ornaments. The golds were supposed to be supplied by the CD any time after January, 2019. As per MoU vide para 1 reflects clearly that all such advance payments will not attract any interest. It is also stated at para 3 of the MOU that both the parties have agreed to fix the price of Gold coin/Gold ornaments at the prevailing market rate of the day when Gold coin/Gold Ornaments demanded is physically delivered to the Buyer as per the location(s) specified by the Buyer. The Seller also agrees to give 2% discount on the prevailing market price of Gold and will not charge making charges and delivery charges on the future demand by the Buyer (after January, 2019) and at the time of delivery of quantity. The Buyer has a right to assign its obligations and rights as per this MOU to its nominee(s) without taking prior consent of the Seller and the Seller shall not cause any hindrance are raise any objection in the same. The Seller gives at least 30 days’ notice showing its unwillingness to continue the understanding as reached between the parties and the buyer is ready to give a mutually agreed compensation as well as refund the excess amount, if any. The Ld. Counsel for the Appellant has submitted that they have informed the CD vide its letter dated 04th February, 2019 to supply of 10 kg Gold coins (100 points of 100 gram each) as obligation in accordance with the MOU. Even after long wait CD didn’t supplied, accordingly, the Appellant vide its letter dated 05th March, 2019 asked the CD to refund the amount as there is too much delay. The CD informed the Appellant vide its letter dated 11th March, 2019 to convert the advance amount of the Appellant into unsecured loan with 10% p.a. rate of interest on outstanding amount till full and final payment of the same are made to them. However, the Appellant accepted the offer after communicating the notice of default to the CD in between there are other correspondence also. ‘Corporate Insolvency Resolution Process’ was initiated against CD on 13th November 2019. Accordingly, the appellant submitted its claim in Form C. Resolution Professional considered the claims of the appellant, not in the category of ‘Financial Debt’ and as a result the appellant challenged the decision.

Company Law: SC explains applicability of Duomatic Principle in Company Law In India

Case Reference

Mahima Datla Vs Dr. Renuka Datla (Supreme Court of India) dated 06/04/2022

The *Duomatic Principle* can be briefly stated as ‘anything the members of a company can do by formal resolution in a general meeting, they can also do informally, if all of them assent to it.’

It is noted that application of Duomatic Principle is only applicable in those cases wherein bona fide transactions are involved. Fraud is a clear exception to application of these principles, be it Duomatic Principle or Doctrine of Indoor Management.

CCI : Mere common business linkages between bidders not sufficient to prove bid rigging

Case Reference:

Virendra Kumar Singh Vs Nandal Finance & Leasing Private Limited (Competition Commission of India) dated 18/05/2022

_It may not be entirely uncommon, where a common Promoter/Director acts as a link between two entities, to facilitate anti-competitive behaviour. However, there is no presumption that it has to be that way at all times; instead it will depend upon the attendant factual matrix. Thus, the Commission is of the view that merely having common business linkages between the bidders as projected by the Informant, in itself, cannot be the sole basis to suggest meeting of minds or assentio mentium between the bidders in the bidding process.”_

Bar of voting as per Section 188 of the Companies Act, 2013 on related parties operated only at the time of entering into a contract or arrangement  (SEBI Vs R.T. Agro Private Limited (Supreme Court) dated 25 April 2022)



Legal provisions:
188. Related party transactions   (1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to— (a) sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; ——————————————————— [Provided that no contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a Special resolution ( Resolution substituted by Companies (Amendment) Act, 2015 and is effective from 29th May, 2015.):   [Provided further that no member of the company shall vote on such [resolution], to approve any contract or arrangement which may be entered into by the company, if such member is a related party:]]

Having heard learned counsel for the appellant-Securities and Exchange Board of India (‘SEBI’) and having perused the material placed on record, we find absolutely no reason to entertain this appeal.

The company R. T. Exports Limited proposed to enter into a transaction with one Neelkanth Realtors Private Limited for purchase of 40,000 sq. ft. of residential space. This proposal was treated as a related party transaction and was required to be approved by the shareholders of the Company. Accordingly, a special resolution was approved by R. T. Exports Limited on 15.07.2014. In terms of Section 188 of the Companies Act, 2013, the related parties abstained from voting on this special resolution. Thereafter, an Extra-Ordinary General Meeting was convened on 16.12.2016 for rescinding the resolution dated 15.07.2014 in which, the related parties also voted.

However, the appellant-SEBI took up the matter on a complaint and issued notice alleging violation of Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Adjudicating Officer, ultimately, proceeded to penalise the present respondents 1 with a cumulative sum of Rs. 35 lakhs for the alleged violation of the said Regulation 23.

The Securities Appellate Tribunal has not approved this order passed by the Adjudicating Officer and has allowed the appeal filed by the present respondents while, inter alia, holding that the bar of voting as per Section 188 of the Companies Act, 2013 on related parties operated only at the time of entering into a contract or arrangement, i.e., when the resolution dated 15.07.2014 was passed; and therein the said related parties indeed abstained from voting. The Appellate Tribunal found no fault in the said parties voting in the recalling/rescinding of the said resolution.

The view, as taken by the Appellate Tribunal, in the given set of facts and circumstances of the present case, appears to be a plausible view of the matter. In fact, nothing of ill-intent on the part of the respondents has been established in the present case. The hyper-technical stance of the appellant could have only been, and has rightly been, disapproved on the given set of facts and circumstances.

The appeal fails and is, therefore, dismissed.

All pending applications stand disposed of.

Corruption In Judiciary

Accountability in higher judiciary is maintained through “in-house mechanism”. The Supreme Court of India, in its full Court meeting on 7thMay, 1997, adopted two Resolutions namely (i) ‘The Restatement of Values of Judicial Life” which lays down certain judicial standards and principles to be observed and followed by the Judges of the Supreme Court and High Courts (ii) “in-house procedure’ for taking suitable remedial action against judges who do not follow universally accepted values of Judicial life including those included in the Restatement of Values of Judicial life.

As per the established “In-house procedure’ for the Higher Judiciary, the Chief Justice of India is competent to receive complaints against the conduct of Judges of the Supreme Court and the Chief Justices of the High Courts. Similarly, the Chief Justices of the High Courts are competent to receive complaints against the conduct of High Court Judges. The complaints/representations received are forwarded to the Chief Justice of India or to the Chief Justice of the concerned High Court, as the case may be, for appropriate action.

During last 05 years (from 01.01.2017 to 31.12.2021), 1631 complaintswere received in the Centralised Public Grievance Redress and Monitoring System (CPGRAMS) on the functioning of the judiciary including judicial corruption and forwarded to the CJI/Chief Justice of High Courts, respectively, as per the procedure established under “in-house mechanism”.

This information was given by the Union Minister of Law and Justice, Shri Kiren Rijiju in a written reply in Lok Sabha today.

Ministry of Law and Justice Press release April 1, 2022