Tag Archives: fraud

Negotiable Instruments Act, Section 139 – Rebuttable Presumption

Once the execution of cheque is admitted Section 139 of the Negotiable Instruments Act mandates a presumption that the cheque was for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable preumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

        To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

        It is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a pervasive burden.

        It is not necessary for the accused to come in the witness box to support his defence.  Basalingappa v. Mudibasappa, (2019) 5 SCC 418.

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Appointment of Arbitrator – No Claim Certificate Obtained by Fraud, Coercion, Duress or Undue Influence

In Union of India v. Master Construction Company, (2011) 12 SCC 349, it was held as under:

            “In our opinion, there is no rule of the absolute kind. In a case where the claimant contends that a discharge voucher or no claim certificate has been obtained by fraud, coercion, duress or undue influence and the other side contests the correctness thereof, the Chief Justice/his designate must look into this aspect to find out at least, prima facie, whether or not the dispute is bona fide and genuine. Where the dispute raised by the claimant with regard to validity of the discharge voucher or no – claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not be a necessity to refer the dispute for arbitration at all.”

            From the proposition which has been laid down by the Hon’ble Apex Court, what reveals is that a mere plea of fraud, coercion or undue influence in itself is not enough and the party who alleged is under obligation to prima facie establish the same by placing satisfactory material on record before the Chief Justice or his Designate to exercise power under Section 11(6) of the Arbitration and Conciliation Act, 1996 which has been considered by the Hon’ble Supre Court in New India Assurance Co. Ltd. v. Genus Power Infrastructure Ltd., (2015) 2 SCC 424 as below:

            “It is therefore clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prima facie establish the same by placing material before the Chief Justice/ his Designate.”

            It is true that there cannot be a rule of its kind that mere allegation of discharge voucher or no claim certificate being obtained by fraud/coercion/undue influence practiced by other party in itself is sufficient for appointment of the arbitrator unless the claimant who alleges that execution of the discharge agreement or no claim certificate was obtained on account of fraud/coercion/undue influence practiced by the other party is able to substantiate the same, the correctness thereof may be open for the Chief Justice/his Designate to look into this aspect to find out at least prima facie whether the dispute is bona fide and genuine in taking a decision to invoke Section 11(6) of the Arbitration and Conciliation Act, 1996. United India Assurance Co. Ltd. v. Antique Art Exports Pvt. Ltd., (2019) 5 SCC 362.

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Recovery from Widow of Deceased Employee

In Kerala State Road Transport Corporation v. Varghese, (2003) 12 SCC 293, observing that recovery after retirement amounts to cut from retiral dues and causes irreparable loss and injury to a retired employee, as retirement dues are the only source of livelihood. Apex Court in the case of Ram Dayal Rai v. Jharkhand State Electricity Board, (2005) 3 SCC 501, held that even 5% cut out from the total amount of pension payable to the appellant was an irreparable loss and injury. Court in this case while dealing with a recovery due to overstay in official accommodation, had held:

“If the petitioner’s benefit is cut at 5% out of the total amount of pension payable to the appellant, the appellant will suffer an irreparable loss and injury since, after retirement, the pensionary benefit is the only amount available to eke out a livelihood for the retired employees of the Government.”

Similarly, recovery of an amount from the dues of deceased employee to which his widow is entitled, on the ground that he was paid an excess amount due to wrong fixation of pay cannot be justified after his death. Moreover, in the absence of any finding forthcoming that deceased employee was wrongly benefited for his representation and fraud, no such amount already paid is liable to be recovered. Savitri Pathak v. State of U.P., 2018 (2) AWC 3056.

 

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Appointment Obtained – Fraudulently

Fraudulently obtained order of appointment or approval can be recalled by the authority concerned. In such cases, merely because the employee continued in service for a number of years, on the basis of fraudulently obtained order, cannot get any equity in his favour or any estoppels against the employer/authority. When appointment or approval has been obtained by a person on the basis of forged documents, it would amount to misrepresentation and fraud on the employer. It would create no equity in his favour or any estoppel against the employer to cancel such appointment or approval since “Fraud and justice never dwell together.” Committee of Management v. State of U.P., (2018) 1 UPLBEC 610.

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Order of Appointment – Obtained Fraudulently

Fraudulently obtained order of appointment or approval can be recalled by the authority concerned. In such cases merely because the employee continued in service for a number of years, on the basis of fraudulently obtained order, cannot get any equity in his favour or any estoppels against the employer/authority. When appointment or approval has been obtained by a person on the basis of forged documents, it would amount to misrepresentation and fraud on the employer. It would create no equity in his favour or any estoppels against the employer to cancel such appointment or approval since “Fraud and justice never dwell together”. Committee of Management v. State of U.P., (2018) 1 UPLBEC 610.

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Corruption – Meaning of

Corruption is antithesis of good governance and democratic politics. It is said, that when corruption is pervasive, it permeates every aspect of people’s lives. It can affect the air they breathe, the water they drink and the food they eat. Going further, some more terminology can also be given to different shades of corruption like, financial corruption, cultural corruption, moral corruption, idealogical corruption etc. The fact remains that from whatever angle it is looked into, the ultimate result borne out is that, and the real impact of corruption is, the poor suffers most, the poverty grows darker, and rich become more richer.
In Secretary, Jaipur Development Authority v. Daulat Mal Jain, (1997) 1 SCC 34 it was held as under:
“When satisfaction sought in the performance of duties is for mutual personal gain, the misuse is usually termed as ‘corruption’”.
In High Court of Judicature at Bombay v. Shirishkumar Rangrao Patil, (1997) 6 SCC 339, the court held:
“Corruption, appears to have spread everywhere. No facet of public function has been left unaffected by the putrefied stink of ‘corruption’. ‘Corruption’ thy name is depraved and degraded conduct…..In the widest connotation, ‘corruption’ includes improper or selfish exercise of power and influence attached to a public office.”
In B.R. Kapur v. State of T.N., (2001) 7 SCC 231, it was held:
“scope of ‘corruption’ in the governing structure has heightened opportunism and unscrupulousness among political parties, causing them to marry and divorce one another at will, seek opportunistic alliances and coalitions often without the popular mandate.”
In State of A.P. v. V. Vasudeva Rao, (2004) 9 SCC 319, the Hon’ble Court stated as under:
“The word ‘corruption’ has wide connotation and embraces almost all the spheres of our day-to-day life the world over. In a limited sense, it connotes allowing decisions and actions of a person to be influenced not by rights or wrongs of a cause, but by the prospects of monetary gains or other selfish considerations.” In the Matter of I.F.C.A.I. v. D.K. Agrawal F.C.A., 2017 (123) ALR 374.

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Fraud – Arbitrability of

“Fraud” is a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his detriment. Fraud can be of different forms and hues. Its ingredients are an intention to deceive, use of unfair means, deliberated concealment of material facts, or abuse of position of confidence. The Black’s Law Dictionary defines “fraud” as a concealment or false representation through a statement or conduct that injures another who relies on it.

The issue of arbitrability of fraud has arisen on numerous occasions and there exist conflicting decisions of the Apex Court on this issue. While it has been held in Bharat Rasiklal Ashra v. Gautam Rasiklal Ashra, (2012) 2 SCC 144 that when fraud is of such a nature that it vitiates the arbitration agreement, it is for the court to decide on the validity of the arbitration agreement by determining the issue of fraud, there exists two parallel lines of judgments on the issue of whether an issue of fraud is arbitrable. In this context, a two Judge Bench of the Supreme Court while adjudicating on an application under section 8 of the Arbitration and Conciliation Act, 1996 in N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72, held that an issue of fraud is not arbitrable. The decision was ostensibly based on the decision of the three Judge Bench of the Supreme Court in Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962 SC 406. However, the said three Judge Bench decision (which was based on the finding in Russel v. Russel, (1880) LR 14 Ch D 471) is only an authority for the proposition that a party against whom an allegation of fraud is made in a public forum, has a right to defend himself in that public forum.

A distinction has also been made by certain High Courts between a serious issue of fraud and a mere allegation of fraud and the former has been held to be not arbitrable. The Supreme Court in Meguin GmbH v. Nandan Petrochem Ltd., (2016) 10 SCC 422 in the context of an application filed under Section 11 has gone ahead and appointed an arbitrator even though issues of fraud were involved. A. Ayyasamy v. A. Parmasivam, (2016) 10 SCC 386.

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