28 April 2025 Legal Updates

  ECONOMIC OFFENCES STAND ON DIFFERENT FOOTING, HIGH COURTS SHOULD BE CAUTIOUS WHILE QUASHING SUCH FIRS AT EARLY STAGE: SUPREME COURT  

(a) Case Title:

• Dinesh Sharma v. Emgee Cables and Communication Ltd. & Anr.

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• April 23, 2025

(d) Bench:

• Justice Bela M. Trivedi and Justice Prasanna B. Varale

Background Facts:

The appellant (Dinesh Sharma) represented BLS Polymers Ltd., which supplied plastic compounds to Emgee Cables from 2012-2017. Between April 2017 and July 2018, goods worth ₹2.20 crores were supplied, but payment remained outstanding. When the appellant visited the respondent's office in April 2018, he found it closed and his calls went unanswered.

The appellant filed an FIR for cheating, criminal breach of trust, and criminal conspiracy. Separately, Dena Bank also filed an FIR against the respondent company for various fraudulent activities. The High Court quashed the appellant's FIR, reasoning that this was merely a civil dispute arising from business transactions.

Supreme Court's Analysis:

1. The Supreme Court held that the High Court erred in quashing the FIR at a nascent stage of investigation by:

• Overlooking evidence indicating criminal intent, such as the creation of shell companies
• Failing to appreciate that economic offenses have wider ramifications than ordinary disputes
• Passing a "vague and cryptic order" without thorough examination

2. The Court specifically noted that Respondent No. 3 had made misleading statements about his position as a technical director, which supported the need for a thorough investigation.

Final Ruling:

The Supreme Court allowed the appeal and set aside the High Court's order, directing that the trial court should proceed with the case according to law without being influenced by any prima facie observations made in this judgment.

  ARBITRAL AWARD FOR CLAIMS NOT INCLUDED IN IBC RESOLUTION PLAN CAN'T BE ENFORCED: SUPREME COURT  

(a) Case Title:

• Electrosteel Steel Limited (now M/s ESL Steel Limited) v. Ispat Carrier Private Limited

(b) Court:

• Supreme Court of India

(c) Bench:

• Justice Abhay S. Oka and Justice Ujjal Bhuyan

(d) Date of Decision:

• April 21, 2025

Facts

Ispat Carrier Private Limited (respondent) filed claims before the West Bengal Micro, Small and Medium Facilitation Council against Electrosteel Steel Limited (appellant) for outstanding dues of Rs. 1,59,09,214.00.

During the pendency of these claims, the financial creditors of the appellant initiated insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).

The National Company Law Tribunal (NCLT) imposed a moratorium, and the arbitration proceedings before the Facilitation Council were temporarily suspended.

A resolution plan submitted by Vedanta Limited was approved by the NCLT on April 17, 2018, which settled the claims of operational creditors at nil value.

After the moratorium was lifted, the Facilitation Council resumed arbitration proceedings and passed an award in favor of the respondent.

The appellant did not challenge this award under Section 34 of the Arbitration and Conciliation Act, 1996 but raised objections during the execution proceedings.

Legal Issues

• Whether objections to execution of an arbitral award can be raised under Section 47 of CPC without challenging the award under Section 34 of the Arbitration Act?
• Whether the Facilitation Council had jurisdiction to pass an arbitral award after the resolution plan was approved by the NCLT?
• Whether claims not included in a resolution plan stand extinguished after the plan is approved?

Findings and Judgment

1. On raising objections in execution proceedings:

• The Court held that objections to the execution of an award can be raised under Section 47 of CPC on grounds of jurisdictional infirmity or voidness, even if no petition has been filed under Section 34 of the Arbitration Act.

2. On the effect of resolution plan:

• The Court relied on established precedents (Ghanshyam Mishra & Sons v. Edelweiss Asset Reconstruction Co. Ltd. and Essar Steel India Ltd. v. Satish Kumar Gupta) to hold that once a resolution plan is approved by the NCLT under Section 31 of IBC, all claims not part of the resolution plan stand extinguished.

3. On Facilitation Council's jurisdiction:

• The Court held that upon approval of the resolution plan, the claim of the respondent stood extinguished, and therefore the Facilitation Council lacked jurisdiction to pass the award.

  [MACT] SALARY OF SON APPOINTED ON COMPASSIONATE GROUNDS CAN'T BE TAKEN AS SALARY OF DECEASED FOR DETERMINING COMPENSATION: ALLAHABAD HC  

(a) Case Title:

• Uttar Pradesh State Road Transport Corp. Faizabad vs. Smt. Meena Srivastava And Others; Smt. Meena Srivastava W/O Pradeep Kumar Srivastava And 2 Others vs. U.P. Rajya Sarak Parivahan Nigam & 2 Others

(b) Court:

• Allahabad High Court (Lucknow Bench)

(c) Date of Decision:

• April 9, 2025

(d) Bench:

• Hon'ble Justice Abdul Moin

Facts

The case involves a fatal accident that occurred on September 6, 2007, when Pradeep Kumar Srivastava, while alighting from a UPSRTC (Uttar Pradesh State Road Transport Corporation) bus at Sultanpur, got his leg stuck in the door. The bus driver allegedly started the bus without noticing this, dragging the deceased, causing severe injuries which resulted in his death. The deceased's wife (Smt. Meena Srivastava) and two sons filed a claim application seeking compensation.

The UPSRTC denied responsibility, arguing that:

1. The bus was not operating on the Sultanpur route but was assigned to the Faizabad-Allahabad route
2. No bus ticket was found on the deceased
3. The bus driver's testimony did not acknowledge the accident

Issues

• Whether the accident occurred due to the negligence of the UPSRTC bus driver
• The appropriate amount of compensation to be awarded to the claimants

Court's Analysis and Decision

The Court dismissed UPSRTC's appeal on the following grounds:

1. Regarding the bus route:

• Although UPSRTC produced a certificate showing the bus was assigned to the Faizabad-Allahabad route, the bus driver himself testified that on the day of the accident, the bus had returned through Sultanpur and was parked at the Sultanpur bus depot.

2. Regarding the absence of a bus ticket:

• The Court noted that this ground was never raised before the Tribunal or in the appeal grounds, making it too late to consider.

3. Regarding the driver's testimony:

The Court noted that while the driver didn't admit to the accident, a charge sheet had been filed against him. Citing Supreme Court judgments in Bimla Devi (2009) and Mangla Ram (2018), the Court emphasized that:

• Claimants need only establish their case on the "preponderance of probability" rather than "beyond reasonable doubt"
• Filing of a charge sheet against the driver prima facie points to negligent driving
• Documents like FIR, site map, and charge sheet, when considered holistically, can help draw inferences about the probability of the claimant's case

On Compensation

The Court allowed the claimants' appeal regarding the compensation amount:

• The Tribunal had disregarded the deceased's salary slip showing monthly income of Rs. 54,143/- as a Junior Engineer in U.P. Power Corporation, claiming it was not properly proven.
• Instead, the Tribunal had relied on the salary slip of the deceased's son (who received compassionate appointment) showing Rs. 20,000/- to determine the deceased's income.
• The Court found this approach legally unsustainable, noting that the salary of a young employee at the beginning of service cannot be compared to that of an officer nearing retirement.
• The Court remanded the case back to the Tribunal to reconsider the compensation within six months.

Final Judgment

The Court dismissed the UPSRTC's appeal challenging liability, while allowing the claimants' appeal for enhancement of compensation by remanding the matter back to the Tribunal for proper assessment based on the deceased's actual salary.

Legal Principles Established

• In motor accident claims, the standard of proof is "preponderance of probability" rather than "beyond reasonable doubt"
• Police documents like charge sheets have evidentiary value in establishing negligence
• Compensation must be based on proper evidence of the deceased's income, not arbitrary comparisons