Company Law – Misfeasance proceedings under Section 542 of Companies Act – Non-executive nominee directors’ application for deletion at threshold rejected – Interim freezing orders vacated – Matter to proceed to trial [Paras 29–41].

Company Law – Fraudulent Conduct – Section 542 of Companies Act, 1956 – Interim Relief Partially Granted – Non-executive nominee directors Srinivasan and Sreenivasulu sought to strike out their names from misfeasance proceedings, alleging lack of specific pleadings and no evidence of fraudulent participation – Held: Though pleadings lack specificity, presence in board meetings and fiduciary obligations as directors justify trial – Relief under Order VII Rule 11 CPC and Order I Rule 10 CPC declined [Paras 29–32, 38–39].

Nominee Directors – Fiduciary Liability – Directors Cannot Evade Corporate Responsibility – Court held that nominee directors, though non-executive, fall within ambit of persons "knowingly party" under Section 542 and cannot escape scrutiny solely on designation – Absence of express allegations insufficient for rejection at threshold [Paras 20–24, 36–38].

Pleadings in Fraud Cases – Order VI Rule 4 CPC – Liberal Approach for Official Liquidator Permitted – Court acknowledged limitations on Official Liquidator's access to internal records and granted permission to file additional affidavit with specific allegations before trial – Leave granted to applicants to reapply for deletion if no evidence is brought during trial [Paras 30–31, 39].

Interim Orders – Freezing of Assets – Interim Orders Vacated – Considering hardship to applicants and lack of prima facie evidence, the Court vacated prior ex parte orders freezing their bank/demat accounts and restraining them from dealing with movable/immovable assets – Balance of convenience not in favour of continuation [Para 40].

Final Decision – Applications Partly Allowed – Interim freezing orders vacated – Misfeasance proceedings to continue – Official Liquidator permitted to amend pleadings with specific charges; applicants allowed to reapply for deletion after evidence stage [Para 41].

Motor Accident Claim – Proof of Income – Summoning Income Tax Records – Petitioners (legal heirs of deceased) sought summoning of Clerk of Income Tax Department and employer’s salary records to prove deceased’s income – Tribunal rejected application – Held: Petitioners failed to produce even basic bank account statement of deceased – Claimed salary paid partly in cash but could not specify how much or when – Income tax documents of the firm alone cannot prove payment to a specific employee without direct correlation – Summary nature of MACT proceedings limits scope of wide-ranging fishing inquiries – No illegality in Tribunal’s refusal [Paras 5–7]

Civil Procedure – Relevancy of Evidence – Court's Discretion in Summoning Witnesses – Held: Mere existence of firm’s audit or tax records showing overall salary disbursement insufficient to prove individual’s income – Petitioners failed to establish how proposed evidence is material for adjudication – Dismissal of summoning application justified – No perversity or irregularity in impugned order [Paras 6–8]

Constitution of India – Article 227 – Supervisory Jurisdiction – Held: High Court will not interfere with interlocutory orders of subordinate courts or tribunals unless there is manifest perversity or jurisdictional error – Tribunal rightly exercised discretion based on lack of foundational material – Revision petition dismissed [Paras 3, 8]

Decision: Civil Revision Petition dismissed – No material irregularity in rejection of summoning request – No ground to interfere under Article 227

Motor Accident – Determination of Income – Presumptive Basis – Admissibility – Deceased was owner of loader vehicle and paying monthly EMI of ₹18,250 – Tribunal presumed additional earnings of ₹7,000/month to support his family of five dependents – Held: Tribunal justified in estimating income at ₹25,250/month in absence of documentary proof – Supported by SC ruling in Gurpreet Kaur v. United India Insurance Co. Ltd., 2022 SCC OnLine SC 1778 – No interference warranted [Paras 2, 4, 6–8]

Motor Accident – Future Prospects – Age-based Calculation – Tribunal awarded 40% future prospects though deceased was aged 36 – Under Rule 220-A of the U.P. Motor Vehicle Rules, claimants were entitled to 50% – Held: Award of 40% is conservative; no scope for reduction – Appeal against adequacy of compensation not sustainable [Paras 3, 9–10]

Compensation – No Deduction Warranted – Tribunal’s Approach Reasonable – Appellant-insurer raised ground that compensation was excessive due to presumed income – Held: Income based on proven expenditure (EMI) and family responsibilities is a valid basis – Future prospects correctly applied – No illegality in award [Paras 4–10]

Decision: Appeal dismissed at admission stage – Tribunal’s award of ₹48,56,250/- with 7.5% interest affirmed – Statutory deposit to be remitted to Tribunal forthwith.

Transfer of Criminal Case – Allegation of Bias – Application for transfer based on dissatisfaction with trial court’s order rejecting recall of witness under Section 311 CrPC – Allegation of unjustified and discriminatory conduct – Held: Mere dissatisfaction with judicial order cannot be grounds for transfer – Apprehension of bias must be reasonable, not imaginary or presumed – Transfer denied [Paras 2-4, 23-24]

Judicial Orders – Not a Valid Basis for Transfer – Judicial orders passed by competent courts after hearing parties cannot be construed as indicators of bias – Transfer sought merely because court rejected application under Section 311 CrPC – Court reiterated that such orders form part of judicial process and cannot justify apprehension of injustice [Paras 3, 6]

Reasonable Apprehension – Meaning and Threshold – Reiterated legal position that for a case to be transferred, party must demonstrate reasonable and substantiated apprehension that justice will not be done – Mere suspicion or dissatisfaction insufficient – Reference to Gurcharan Das Chadha v. State of Rajasthan (1966) 2 SCR 686 [Paras 6, 10, 16, 22]

Protection of Judges – Courts Warn Against Forum Shopping – Strong judicial warning against attempts to malign presiding officers or seek ‘forum shopping’ – Cited precedents including Ajay Kumar Pandey (1998) 7 SCC 248 and R.K. Anand (2009) 8 SCC 106 – Held: No civilised system of justice permits forum shopping or judicial intimidation [Paras 8, 11-13, 19, 22]

Judicial Discipline – Expression of Opinion During Hearing – Judges not expected to be sphinx-like – Mere expression of views during proceedings not to be misconstrued as bias – Allegations must be substantiated by material facts – Court cautioned against frivolous and vexatious transfer pleas [Paras 7, 17, 21]

Exceptional Relief – Transfer to be Granted Sparingly – Court emphasized transfer is not to be granted routinely – Must be exercised cautiously and in rare cases where justice may be jeopardized – Cited multiple Apex Court decisions including Amarinder Singh v. Parkash Singh Badal and Afzal Ali Sha v. State of West Bengal [Paras 15, 16, 22]

Decision: Transfer application rejected – No case made out for reasonable apprehension of bias – Judicial order under challenge not a valid basis for transfer – No costs imposed.

Criminal Law – Quashing - Bank Loan Fraud – Diversion of Loan Funds – Further Investigation – Accused company (HCCPL) and its directors alleged to have diverted Rs.15 crore project loan from erstwhile SBT (now SBI) by selling mortgaged properties without bank's consent – CBI initially excluded bank officials from prosecution citing lack of mens rea – Special Judge rejected CBI’s request to drop PC Act charges and directed further investigation – Held: Special Judge rightly found material suggesting complicity or willful neglect on part of bank officials – Further investigation justified [Paras 4–6, 13, 15]

Criminal Procedure – Role of Public Servants – CBI’s report described conduct of bank officials as negligent but lacking dishonest intention – However, Special Judge found unexplained silence and procedural violations by officials in allowing the borrower to operate outside mandated norms like escrow account requirement – Held: Dereliction of duty without criminal intent insufficient basis to shield officials from further scrutiny – Deeper inquiry mandated [Paras 12–14, 17]

Corporate Loan Disbursement – Escrow Account – Lax Monitoring – Loan extended to HCCPL without opening escrow account – Flats sold without bank consent and sale proceeds routed through third-party banks – CBI failed to investigate critical lapses – Trial court rightly observed that institutional failures merited reinvestigation – Escrow account norms were industry standard and failure to enforce indicated serious oversight [Para 16]

Maintainability – Accused Lacking Locus to Challenge Investigation Against Co-accused – Petition filed by Managing Director of HCCPL (A1) to quash order for further investigation against bank officials – Court held that A1 had no standing to contest reliefs denied to others – Filing of petition seen as attempt to shield co-accused – Revealed apparent collusion between borrower and bank staff – Petition not maintainable [Paras 23–24]

Decision:

Petition dismissed – Special Court’s direction for further investigation upheld – Interim stay vacated – CBI directed to complete further investigation and submit report within two months [Para 25]

Family Law – Partition Suit – Legal Heirship Disputed – Respondent-plaintiff claimed share in ancestral property as son of Godari Beeraiah through second wife Banamma – Trial court decreed the suit based on declarations and oral evidence – Appellate court found no conclusive proof of legal marriage between Beeraiah and Banamma – Plaintiff failed to produce birth certificate, school records or examine his mother who was alive – Held: Plaintiff failed to establish status as legal heir – Trial court’s decree set aside [Paras 7, 19–31]

Evidence Act – Section 50 and 60 – Relationship by Conduct – Court reiterated that opinion expressed by conduct must be proved by direct evidence under Section 60 – Conduct must relate to person having special means of knowledge – Held: Mere declarations or documents based on self-declaration (Exs.A7–A17) do not constitute conclusive proof – Referred Dolgobinda Paricha v. Nimai Charan Misra [AIR 1959 SC 914] [Paras 15, 26]

Limitation – Partition Suit Barred – Plaintiff filed suit 13 years after death of alleged father without reasonable explanation for delay – No prior assertion of rights or legal notice issued – Held: Suit barred by limitation and indicates lack of bona fides [Paras 3.1, 30]

Documentary Evidence – Public Documents and Presumptions – Certified copies of voter lists, gas records, and employment documents (Exs.A7–A17) relied on by plaintiff were based on self-declared data – Held: Not sufficient to displace legal burden to prove relationship – Absence of school records, birth certificate, and pedigree registers noted – [Paras 16, 26]

Decision: Appeal allowed – Trial court decree set aside – Respondent-plaintiff’s suit for partition dismissed – No costs – Interim orders vacated – Miscellaneous applications closed [Paras 31–32]

Tax Law – Repossessed Vehicles – VAT Liability – NBFC classified as dealer – Sale of hypothecated vehicles by NBFC without borrower’s consent held taxable – High Court relied on Division Bench ruling in Cholamandalam Investment – Held: NBFCs executing repossession and sale of vehicles for debt recovery fall within definition of ‘dealer’ under Section 2(15) – Classification not dependent on ownership or express agency – Such sales are compulsory and not voluntary or on behalf of owner [Paras 2, 22-33, 43]

Definition of Dealer – Scope under Section 2(15) and Explanation III – Exhaustive coverage – Includes any person disposing of goods, even without ownership – Distinction between contractual and statutory sale irrelevant – Explanation III includes sale of unclaimed goods – Thus, NBFC selling repossessed assets also covered [Paras 24-26, 35-36]

Nature of Contract – Borrower Consent Not Required – Clauses in loan agreement empowered NBFC to sell hypothecated asset without borrower’s participation or accountability – Borrower cannot dispute sale value – Held: Rights exercised under contract indicate sale is independent, not agency-based – NBFC liable as dealer [Paras 27, 33, 42]

Business Assets – Sale of Used Machinery and Furniture – Taxability under TNVAT – Sale of fixed assets like air conditioners, furniture, machinery used for business purposes held taxable – Such disposals fall within definition of ‘sale’ and attract VAT [Paras 1, 4, 43]

Binding Precedent – Identical Issues Covered by Cholamandalam Investment – Court declined to re-open settled issues – Held: Previous ruling upholding VAT liability on NBFCs’ sale of hypothecated goods fully applicable – Dismissal of petition warranted [Paras 2-3, 30-33]

Decision: Petition dismissed – Tribunal’s order upheld – All substantial questions of law answered against the assessee – No costs awarded.

Criminal Law – Corporal Punishment by Teacher – Quashing of Proceedings – No Mens Rea – Bona Fide Act to Enforce Discipline – Proceedings Quashed – Accused, a school teacher, allegedly caned students involved in a fight in the classroom – Victim, a minor, stated that teacher beat only those involved, and only on their legs – No medical treatment taken – Delay of four days in reporting incident – No injuries found – Held: Teacher acted in bona fide exercise of disciplinary authority, no intent to cause harm – Acts fall within protective scope of Sections 88 and 89 IPC – Prosecution under Section 324 IPC and Section 75 JJ Act not maintainable [Paras 2, 5, 6, 7, 8, 9, 10].

Juvenile Justice Act – Section 75 – Application to Teachers – Intent and Severity Key – No Unlawful Conduct When Discipline Enforced Reasonably – Teacher’s action lacked cruelty or excessive force – Courts held implied authority exists where parents entrust child to teacher – Bona fide disciplinary action not covered under Section 75 JJ Act in absence of intent to harm or evidence of injury [Paras 7, 8].

Delay in Filing Complaint – No Justification Provided – Prosecution Viewed with Suspicion – Incident occurred on 16.09.2019 – Complaint lodged only on 20.09.2019 without explanation – No medical evidence – Delay reinforces defence version and supports quashing [Para 10].

Judicial Precedents – Corporal Punishment by Teachers – Qualified Protection Recognised – Relied on K.A. Abdul Vahid v. State of Kerala, 2005 (2) KLT 72; Rajan @ Raju v. Sub Inspector of Police, 2019 (1) KLT 119; and Jomi v. State of Kerala, 2024 (2) KLD 230 – Held: Disciplinary action taken without malice or disproportionate force is not criminal [Paras 5–7].

Decision: Criminal Miscellaneous Case allowed – Proceedings in S.C. No. 577 of 2023 before the Additional Sessions Judge-I (Special Court), Palakkad, arising from Crime No. 585/2019 of Vadakkancherry Police Station, quashed – Teacher held to have acted within lawful disciplinary authority [Final Para].

SC/ST Act – Anticipatory Bail – Bar Under Section 18 – Prima Facie Case – Appellant sought pre-arrest bail in FIR alleging public insult of complainant belonging to Scheduled Caste by using caste-based slurs – Held: Prima facie, allegations attract Section 3(1)(r) of SC/ST Act – Abuse was specific, caste-based, and made in public view while complainant was discharging official duties as Panchayat Member – Bar under Section 18 applicable – Anticipatory bail rightly denied [Paras 2, 7–9]

Criminal Procedure – Maintainability of Anticipatory Bail Under SC/ST Act – Legal Position Summarised – Court reiterates principles from Subhash Kashinath Mahajan and Prathvi Raj Chauhan – Anticipatory bail is maintainable under SC/ST Act only where complaint is prima facie false, malafide or no offence is made out – In present case, FIR discloses specific allegations supported by witnesses – Hence, no case for anticipatory bail [Paras 6–8]

Caste-based Abuse – Public Insult – Specific Utterances and Context – Alleged remarks (“Kutti-chudi-dhedni”) were caste-centric and publicly made, attracting ingredients of Section 3(1)(r) – Dispute regarding garbage dumping site is defence argument, not relevant at anticipatory bail stage – Role of appellant, nature of allegations and societal impact considered – Appeal dismissed [Paras 2, 7–9]

Decision: Appeal dismissed – Anticipatory bail denied – Prima facie offence under Section 3(1)(r) of SC/ST Act made out – Bar under Section 18 attracted – Pending applications also disposed