Litigation Arbitration

Two of the Petitioners namely, Agij Promotion of Nineteen Media Pvt. Ltd and Nikhil Wagle approached Bombay High Court challenging the constitutional validity of the 2021 Rules more specifically Rule 9, Rule 14 and Rule 16.

Under Rule 9 publishers of news and current affairs content and publishers of online curated content, are under a mandatory obligation to observe and adhere to the Code of Ethics laid down in the Appendix annexed to the impugned Rules. “Non-observance of Rules” which ordains that where an intermediary fails to observe these rules, the provisions of sub- section (1) of section 79 of the Act shall not be applicable to such intermediary and the intermediary shall be liable for punishment under any law for the time being in force including the provisions of the Act and the Indian Penal Code. The Court observed that it suffers illegalities in the fact that it obligates publishers and online curators to observe a Code of Ethics completely alien to the IT Act. The Court further held that Section 87 does not confer any power on the Central Government to frame rules contemplating such provisions.  The Court held that democracy is vital and it is the checks and balances that makes democracy work. It noted that with the 2021 Rules, one would have to think twice before criticising any personality even if they have good reason to do so out of the risk of being punished/sanctioned. The Court observed that the Rules are manifestly unreasonable and go beyond the scope of the IT Act, its aims and provisions. The Court held that the provisions would deprive people of exercising their right to freedom of speech and runs contrary to Constitutional principles. The Court held that Rule 9 is ultra vires to the IT Act and contrary to Article 19(1)(a) of the Constitution of India..

The Court held in terms of Rule 14 that since the interdepartmental committee contemplated under the Section is yet to be constituted, there is no immediate urgency and that the petitioners may urge for relief on the issue when the committee is actually constituted. Rule 16 is pari materia to Rule 9 of the 2009 Rules which is still in operation and further noted that Rule 16 is traceable in Section 69A of the IT Act which falls within the restrictions imposed by Article 19(2) of the Constitution of India and since the petitioners are not aggrieved by the rule, the Court found that no case is made out and rejected the prayer.

The Court dismissed the Petition holding that all the issues involved in the Petition are disputed question of facts and not amenable to the adjudication under Article 226 of the Constitution of India. The Court observed that it is not open to the Court to approach the matter solely from the point of view of the importers or exporters, unmindful of the difficulties which were faced by the ICDs and CFSs during the lockdown, and the constraints under which they operated.

In 2011, the Appellant Bank had sanctioned Term Loan in favour of M/s. Kavveri Telecom Infrastructure Limited (Corporate Debtor). The Corporate Debtor defaulted in repayment of its dues to the Appellant Bank. The Loan Account of the Corporate was therefore declared Non-Performing Asset (NPA) in December 2013. The Bank subsequently issued a legal notice to the Corporate Debtor for payment of its outstanding dues.

Later in 2015, the Appellant Bank filed an application before the Debt Recovery Tribunal, Bangalore (DRT) for the recovery of the said dues. In 2017, the Corporate Debtor gave a proposal for one time settlement of the Term Loan Account, upon payment of Rs.5.50 crores. Also in March 2017, the DRT passed a final judgement against the Corporate Debtor (DRT Judgement) and subsequently issued a Recovery Certificate dated 25 May 2017 (Recovery Certificate) for INR 52.12 Crores.

Since no payment was advanced for more than a year, the Bank approached the National Company Law Tribunal (NCLT) in 2018 by way of a petition under Section 7 of the IBC (the Petition). Subsequently, two applications were filed by the Bank in 2019 to bring on record additional documents.  Opposing the same¸ the Corporate Debtor filed its preliminary objection, contending that the petition was barred by limitation. The objection of the Corporate Debtor was considered and rejected by the NCLT. Thereafter, in the Promoter’s appeal from the NCLT judgment, the NCLAT set aside the NCLT decision in 2019. NCLAT’s decision, in turn, was challenged before the Supreme Court by the Bank.

While allowing the appeal, the Court highlighted that a decree for money in favour of the Financial Creditor, passed by the DRT, in favour of the Financial Creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings u/s 7 of the IBC for initiation of Corporate Insolvency Resolution Process (CIRP), within three years from the date of the judgment, if the dues of the Corporate Debtor to the Financial Debtor remained unpaid.

The Competition Commission of India, as per proviso Section 26(1) of the Act, clubbed all the cases, opining a case of the contravention of the provisions of Section 4 of the Act. Furthermore, the Commission directed the Director General (DG) to conduct an investigation into the matter and submit a report, which would be the basis for further deliberation.

Primarily, the allegation involved that OP unjustifiably failed to pass on the assured benefits in a fair, transparent manner to the Informant. Further, it has abuses its dominance by refusing to supply VSF to a spinning company and has harassed the company by delaying discounts owing to its monopoly in the market.

Basis the investigation, the Competition watchdog found that the OP has abused its dominant position in the market for the supply of VSF to spinners in India by charging discriminatory prices to its customers, denying market access and imposing supplementary obligations upon its customers in violation of the relevant law. Grasim has been directed to cease and desist from indulging in such practices. Though, it did not levy any fresh fine as it has already imposed a ₹302 crore penalty last March in a similar case.