Upholding the constitutional validity of the Andhra Pradesh Protection of Depositors of Financial Establishments Act 1999, the Supreme Court has dismissed the appeals moved by former directors of Vasavi Cooperative Urban Bank Ltd, who were accused of swindling the depositors. In this case, Soma Suresh Kumar versus Government of Andhra, large number of complaints were received from the depositors stating that the Board of The bankss directors had siphoned away money amounting to crores of rupees by creating fake documents. The charge sheet was filed against several persons, including the directors, who moved the apex court for quashing all proceedings passed by the competent authority and the Special Court constituted under the Act. They also wanted to restrain the authorities from arresting them or attaching their properties. However, both Andhra Pradesh and the Central government justified the action saying that while the accused had entered into a criminal conspiracy with the borrowers of the bank and created fake proprietary concerns, firms/companies and swindled away money of the depositors by accepting defective, forged title deeds and defaulted in paying the depositors dues.
The Union government stated that the provisions of the Andhra Act were not opposed to public policy nor unconstitutional nor did they violate the fundamental rights of the accused. Stating that similar laws were passed by Tamil Nadu, Maharashtra and Pondicherry to protect small depositors, the apex court rejected the objection of the accused that the AP does not have the competence to enact the 1999 law since the subject banking is covered under Entry 45 of List I of Seventh Schedule, hence, only the central government is entitled to enact the law relating to the subject of accepting of deposit from the public and repayment of the same on demand.
SC sets aside Calcutta HC order
Quashing the Calcutta High Court decision in a global tender dispute, the Supreme Court held that Rashmi Metaliks Ltds failure to submit its latest income tax return along with its bid was not sufficient to disqualify it. It directed the Kolkata Metropolitan Development Authority to proceed further in the matter on this predication as the disqualification of the company on the ground of it having failed to submit its latest Income Tax Return along with its bid is not sufficient reason for disregarding its offer/bid. Rashmi Metaliks failed to comply with one of the bid terms that the latest tax return should be filed along with the application. The HC concluded that the company had failed to comprehensively correspond to the essential terms of the tender and, therefore, the bidder was rightly disqualified.
SC found that the financial bid of the company was substantially lower than others. It scrutinised the companysIT returns filed during the course of hearing and found that for the 2011-12, the gross income of the company was more than R15.34 crore. Although the income tax for 2012-13 was nil, substantial tax had been deposited. It said: We think that the IT Return would have assumed the character of an essential term if one of the qualifications was either the gross income or the net income on which tax was attracted. In many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. This feature being absent, we think that the filing of the latest IT Return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the company and if even thereafter no rectification had been carried out, the position may have been appreciably different.
SC has set aside the Allahabad High Courts 2012 order that was in favour of Ishan Systems Ltd without hearing the creditor companies, Optiemus Infracom Ltd and Phoenix, in a debt recovery case. Ishan Systems, the owner of the auctioned property, had moved the debt recovery tribunal complaining of violation of the statutory rules regulating the auction of property. While the HC found no good ground to interfere with the appellate authoritys order, it, without hearing the creditor companies, restrained the auction purchaser from making any further transfer of the property or raise any construction.
This was challenged in the Supreme Court, which quashed the HC order saying : it needs to be indicated that the practice which was adopted by the Allahabad HC, is not only arbitrary, but also contrary to the concept of the principles of natural justice...