Monthly Archives: February 2020

Term “Taking Cognizance” – Meaning of

The term “taking cognizance” actually means ‘become aware of’ , but in reference to a Court or a Judge, it means ‘to take notice of judicially’. The term has no mystic significance in criminal law. In practice ‘taking cognizance’ means taking notice of an offence for limitation of proceedings under Section 190 CrPC.

            “cognizance’ refers to the point when the Court first takes judicial notice of an offence by not only applying its mind to the contents of the complaint/police report, but also proceeding further as provided further in Chapter XIV of CrPC.

            Taking cognizance include either taking steps to see whether there is basis for initiating a judicial proceeding or initiating a judicial proceeding against an offender by the Magistrate. Smt. Dhanrawati Devi v. State of U.P., 2020 (1) ACC 529.

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Doctrine of the Public Trust

The basic principle of the “Doctrine of the Public Trust” is that the public has a right to expect certain lands and natural areas to retain their natural characteristic is finding its way into the law of the land. The doctrine of the public trust has its origin from the ancient Roman Empire. It was founded on the ideas that certain common properties such as rivers, seashore, forests and the air were held by Government in Trusteeship for the free and unimpeded use of the general public. The recent attention paid to the environment by the higher judiciary in the country bears a very close conceptual relationship to this legal doctrine. The Roman Law provides that the natural resources were either owned by no one (res nullious) or by everyone in common (res communious). The said Roman Law has also been adopted by the English Common Law where the sovereign has power to own the natural resources. But it does not have power to grant these properties to private owners if the effect was to interfere with the public interest. Support India Welfare Scoiety v. State of U.P., (2020) 1 UPLBEC 126.

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Financial Debt – Under Insolvency & Bankruptcy Code

Thus, in order to be a “debt”, there ought to be  a liability or obligation in respect of a “claim” which is due from any person. “Claim” then means either a right to payment or a right to payment arising out of breach of contract, and this claim can be made whether or not such right to payment is reduced to judgment. Then comes “default”, which in turn refers to non-payment of debt when whole or any part of the debt has become due and payable and is not paid by the corporate debtor.

            What is clear, therefore, is that a debt is a liability or obligation in respect of a right to payment, even if it arises out of breach of contract, which is due from any person, notwithstanding that there is no adjudication of the said breach, followed by a judgment or decree or order. The expression “payment” is again an expression which is elastic enough to include “recompense”, and includes repayment.

            The definition of “financial debt” in Section 5(8) then goes on to state that a “debt” must be disbursed against the consideration for time value of money. “Disbursement” is defined in Black’s Law Dictionary (10th Edition) to mean:

  1. The act of paying out money, commonly from a fund or in settlement of a debt or account payable. 2. The money so paid; an amount of money given for a particular purpose.

In short, the “disbursal” must be money and must be against consideration for the “time value of money”, meaning thereby, the fact that such money is now no longer with the lender, but is with the borrower, who then utilizes the money. In the Dictionary of Banking Terms (2nd Edition) by Thomas P. Fitch, “time value for money” is defined thus:

            “present value” today’s value of a payment or a stream of payment amount due and payable at some specified future date, discounted by a compound interest rate of discount rate. Also called the time value of money. Today’s value of a stream of cash flows is worth less than the sum of the cash flows to be received or saved over time. Present value accounting is widely used in discounted cash flow analysis.”

            As per the precise language of Section 5(8)(f) of the Insolvency and Bankruptcy Code, which appears to be a residuary provision, whereas it is “catch all” in nature. This is clear from the words “any amount” and “any other transaction” which means that amounts that are “raised” under “transactions” not covered by any of the other clauses, would amount to a financial debt if they had the commercial effect of a borrowing.

            The expression “any other transaction” would include an arrangement in writing for the transfer of funds to the corporate debtor. Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416.

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Family Settlement – Should Be Enforced

Hon’ble Supreme Court in the case of Kale v. DDC, 1976 RD 355 (SC), has observed that family settlements or arrangements are governed by a special equity and should be enforced if they are honestly made. It has further been observed that ordinarily the courts would lean in favour of family arrangements and technical or trivial grounds are to be overlooked and further that Rule of estoppel is to be pressed into service to prevent unsettling of a settled dispute. The said observations have been made by the Hon’ble Supreme Court by recognizing the virtue of family settlement amongst members of a family descending from a common ancestor as such members by entering into family settlement make an attempt to bury their differences and resolve the conflicts or claims or disputes in titles once for all in order to buy peace of mind and to bring harmony and goodwill in the family. In Bhagwan Krishan Gupta (2) v. Prabha Gupta, 2009 (107) RD 66, wherein it has been held that when there is a family settlement, evidently, technicalities in the matter of construction should not be insisted upon. Ram Asrey v. DDC, 2020 (146) RD 32.

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