In 2024, the legal landscape witnessed several landmark decisions that reshaped corporate, constitutional, and competition laws. From this impactful year, we have carefully curated this document, focusing on judgments that left a lasting impression on legal jurisprudence. This compilation highlights transformative rulings across diverse areas such as constitutional validity, corporate governance, competition law, and regulatory compliance.
Association for Democratic Reforms v. D.K. Gandhi PS National Institute of Communicable Diseases [2024] 159 taxmann.com 383 (SC), [15-02-2024]
In the present case, the petitioners challenged the constitutional validity of the Electronic Bond Scheme, which introduced anonymous financial contributions to political parties.
The petitioners argued that the anonymity associated with electronic bonds undermines transparency in political funding and encroaches upon voters’ right to information. They further contended that the scheme facilitates contributions through shell companies, raising concerns about accountability and integrity in electoral finance.
In defence of the scheme, the Union of India had asserted its role in promoting the use of legitimate funds in political financing, ensuring transactions occur through regulated banking channels. They cited the need for donor anonymity to shield contributors from potential retribution by political entities.
The Supreme Court observed that the infringement of the right to information does not satisfy the proportionality standard concerning the purpose of curbing black money. Even if the argument that the Electoral Bond Scheme fulfils the purpose is accepted, nondisclosure of information on political funding is not the least restrictive means to achieve this purpose.
Further, the Supreme Court observed that the infringement of the right to information does not satisfy the proportionality standard concerning the purpose of guaranteeing informational privacy, as protecting donor privacy is not a legitimate purpose. Even if donor privacy is necessary, on balance, the public interest in free and fair elections trumps the private interest in confidentiality.
The right to information on political funding, traceable to Article 19(1)(a), can only be restricted on the grounds stipulated in Article 19(2). The purpose of curbing black money and recognising donor privacy is not traceable to the grounds in Article 19(2). Even if the purposes are traceable to Article 19(2), the Scheme is unreasonable and disproportionate to the purpose of increasing political funding through banking channels and reducing political funding through non-banking channels.
The Supreme Court also observed that the amendment to section 182 of the Companies Act 2013 must be read along with other provisions on financial contributions to political parties under the RPA and the IT Act. Neither the RPA nor the IT Act places a cap on the contributions that can be made by an individual. The amendment to section 182 is manifestly arbitrary for (a) treating political contributions by companies and individuals alike, (b) permitting the unregulated influence of companies in the governance and political process, violating the principle of free and fair elections, and (c) treating contributions made by profit-making and loss-making companies to political parties alike.
The Supreme Court held that the Electoral Bond Scheme, the proviso to Section 29C(1) of the Representation of the People Act 1951 (as amended by Section 137 of the Finance Act, 2017), Section 182(3) of the Companies Act (as amended by Section 154 of the Finance Act, 2017), and Section 13A(b) (as amended by Section 11 of the Finance Act, 2017) are violative of Article 19(1)(a) and unconstitutional.
The deletion of the proviso to Section 182(1) of the Companies Act, 2013, permitting unlimited corporate contributions to political parties, is arbitrary and violative of Article 14. Further, SBI must stop the issuance of Electoral Bonds. SBI must submit details of the Electoral Bonds purchased since the interim order of this Court dated April 12 2019 till date to the ECI. The details shall include the date of purchase of each Electoral Bond, the name of the purchaser of the bond and the denomination of the Electoral Bond purchased;
SBI must submit the details of political parties that have received contributions through electoral bonds since the interim order of this court, dated April 12, 2019, to the ECI. SBI must disclose details of each Electoral Bond encashed by political parties, which shall include the date of encashment and the denomination of the Electoral Bond;
Also, the SBI must submit the information to the ECI within 3 weeks from the date of this judgment, i.e. by March 6, 2024. The ECI must publish the information shared by the SBI on its official website within 1 week of the receipt of the information, i.e. by March 13, 2024.
Electoral bonds that are within the validity period of 15 days but have not been encashed by the political party yet must be returned by the political party or the purchaser, depending on who is in possession of the bond to the issuing bank. The issuing bank, upon their turn of the valid bond, must refund the amount to the purchaser’s account.
Kalvakuntla Kavitha v. Directorate of Enforcement [2024] 165 taxmann.com 794 (SC), [27-08-2024]
The Supreme Court set aside the order passed by the Single Judge of the Delhi High Court, whereby the Single Judge had refused to grant bail to K Kavitha (the appellant) under the first proviso to Section 45(1) of the PMLA, 2002, citing that the appellant could not be equated to a ‘vulnerable woman’ as she was a highly qualified and accomplished person.
In the instant case, the appellant filed an appeal before the Supreme Court challenging the order passed by the learned Single Judge of the High Court of Delhi. The Single Judge of the High Court dismissed her bail plea under the first proviso to Section 45(1) of PMLA, 2002.
The appellant was arrested in a money laundering case. She filed an application seeking bail on the ground that she was a woman and, therefore, entitled to special treatment under the first proviso to Section 45(1) of the PMLA, 2002. However, the Single Judge vide. the impugned order refused to grant bail to the appellant.
While denying the benefit of proviso to Section 45(1) of PMLA, the Single Judge came to the ‘heartening conclusion’ that it was bound to keep in mind the observation of the Supreme Court in Saumya Chaurasia v. Directorate of Enforcement [2023] 157 taxmann.com 326/182 SCL 139wherein it was held that the proviso to Section 45(1) of PMLA applied only to a ‘vulnerable woman’ and since the appellant was a well-educated and accomplished woman, who had remained a Member of Parliament, Member of Legislative Council, etc., she could not be equated to a ‘vulnerable woman’.
The proviso, which confers discretion on the Court to grant bail where the appellant is a woman or belongs to any of the other categories mentioned, states that -
“Provided that a person, who is under the age of sixteen years, or is a woman or is sick or infirm, or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees, may be released on bail, if the Special Court so directs:”
It was noted that the Supreme Court, in the case of Saumya Chaurasia [2023] 157 taxmann. com 326/182 SCL 139, had observed that Courts need to be more sensitive and sympathetic towards the category of persons included in the first proviso to Section 45(1) of PMLA as persons of tender age and women who were likely to be more vulnerable might sometimes be misused by unscrupulous elements and made scapegoats for committing such crime. This was vastly different from saying that the proviso to Section 45(1) of the PMLA applies only to ‘vulnerable women’.
The Supreme Court noted that the Single Judge of the Delhi High Court had ‘totally misapplied’ the ratio laid down in the Saumya Chaurasia case.
Further, it was observed that nowadays, educated and well-placed women in society engage themselves in commercial ventures and enterprises and advertently or inadvertently engage themselves in illegal activities. The Court, therefore, cautions that Courts, while deciding such matters, should exercise discretion judiciously and use their prudence.
Moreover, the Supreme Court in the said case did not say that merely because a woman was highly educated or a Member of Parliament or the Legislative Assembly, she was not entitled to the benefits of the proviso to Section 45(1) of the PMLA.
The Supreme Court held that the Single Judge had totally misdirected herself while denying the benefit of proviso to section 45(1) of PMLA. Therefore, the impugned order of the Single Judge was to be quashed, and the appellant was to be released immediately on bail upon furnishing bail bonds in the sum of Rs.10 lakhs.
Further, the Supreme Court directed the appellant to deposit her passport and not to make any attempt to tamper with evidence or influence the witnesses.
Bar of Indian Lawyers v. D.K. Gandhi PS National Institute of Communicable Diseases [2024] 162 taxmann.com 461 (SC), [14-05-2024]
In a significant ruling, the Supreme Court clarified that lawyers’ services are not covered under the Consumer Protection Act. This decision revisits a 2007 ruling by the National Consumer Disputes Redressal Commission (NCDRC), which had previously held that legal services fell under the Consumer Protection Act (CP Act).
The Respondent/client hired the services of the appellant/Advocate for filing a Complaint in the Court; however, the appellant failed to pay the full amount of compensation to the respondent.
The Respondent filed a complaint before the District Consumer Disputes Redressal Forum (DCDRF), and the appellant raised an objection that DCDRF had no jurisdiction to adjudicate the dispute raised in the complaint as Advocates were not covered under the provisions contained in the Consumer Protection Act. However, the DCDRF rejected the said objection.
Thereafter, the appellant filed an appeal against the said order, and the State Commission negated the holding of DCDRF. The Respondent preferred a revision application against the order of the State Commission, and the NCDRC passed the impugned order affirming the order of DCDRF. The appellant then filed an instant appeal challenging the impugned order before the Supreme Court.
It was noted that the very purpose and object of the CP Act is to protect consumers from unfair trade/business practices, and the Legislature never intended to include Professions or services rendered by Professionals like Advocates, Doctors, etc., within the purview of the CP Act.
The Supreme Court observed that the legal profession is different from other professions as what Advocates do affects not only an individual but the entire administration of justice, which is the foundation of a civilised society. Therefore, with regard to the role, status, and duties of Advocates as professionals, the legal profession is sui generis, i.e., unique in nature, and cannot be compared with any other profession.
The Supreme Court held that a service hired or availed of an Advocate is a service under “a contract of personal service” and would stand excluded from the definition of ‘service’ contained in section 2(42) of the CP Act. Therefore, a complaint alleging “deficiency in service” against advocates practising the legal profession would not be maintainable under the CP Act. Accordingly, the impugned judgment passed by the NCDRC was to be set aside.
Info Edge (India) Ltd. v. Google India (P.) Ltd. [2024] 158 taxmann.com 580 (HC), [19-01-2024]
In the instant case, the High Court ruled that an app developer cannot file a civil suit against Google for abuse of dominance and payment terms violating the Payment and Settlement System Act, 2007, as the CCI and RBI can deal with these issues.
The appellants were application developers. They instituted the plaint seeking a declaration that Google Payments Terms of Service-Seller (IN), posted on 2-6-2022, along with Payment Policies, Policies relating to Service Fees, Terms and Conditions, posted by Google on its websites/portals/web pages on various dates, including Blog-post-dated 175-2023, were illegal and unenforceable. These terms were related to the implementation of the Google Play Billing System (GPBS)/User Choice Billing (UCB)/Consumption-Based Model vis-a-vis Mobile application owned and operated by appellants in the Google Play Store in India.
A further declaration was sought to declare that any charges levied by Google under the Google Play Billing System and/or Alternate Billing System/User Choice Billing System are illegal, void and unenforceable vis-a-vis mobile applications owned and operated by appellants in the Google Play Store.
The Single Judge rejected the plaint purportedly on the ground that the plaint was barred by section 61 of the Competition Act, 2002 and the Payment and Settlement Systems (PSS) Act, 2007. Thereafter, an appeal was made before the High Court.
It was noted that the grievance of appellants that Google violated the PSS Act, 2007 could be redressed by the expert regulator, viz., the RBI, pursuant to the power and jurisdiction bestowed under the PSS Act, 2007.
The High Court observed that some of the appellants had approached the CCI on a similar premise, claiming that Google was exercising its dominant position and its payment/ billing terms were unconscionable. In this regard, the CCI had passed exhaustive orders. Similar averments were made in that plaint also.
The High Court held that considering the nature of the reliefs claimed and the earlier order of CCI, it was appropriate that the dispute between parties was dealt with by the authorities constituted under the Competition Act, more particularly when they had already approached the said authority.
In view of that, the High Court further held that if further terms were executed, the same ought to be tested by the CCI and not by other fora. Consequently, the appeal against the order of the Single Judge was to be dismissed.
Fertilizer Corporation of India Ltd. v. Coromandal Sacks (P.) Ltd. [2024] 162 taxmann.com 20 (SC), [26-04-2024]
In the instant case, the appellant company placed certain orders with the respondent company for the supply of high-density polyethylene (HDPE) bags, which were manufactured by the respondent as per the specifications and duly supplied periodically.
The purchase orders were amended from time to time to account for the increase in number of bags, which were required by the appellant.
It was a case of the respondent that in pursuance of communications exchanged with the appellant, it supplied 42,000 bags over and above the quantity mentioned in purchase orders to meet the urgent requirements of the appellant, on the understanding that a subsequent purchase order would be issued to account for extra supply.
However, when the appellant subsequently issued a formal purchase order to account for extra bags supplied, the price per bag mentioned in the order fell short of the price agreed upon between the parties.
To recover the amount due, the respondent instituted a Civil Suit. The Trial Court decided the suit in favour of the respondent and allowed interest at the rate of 12% on the amount due. The High Court, however, was of the view that the respondent, a small-scale industrial undertaking, was entitled to claim interest at the rate of 24% from the appellant.
It was a case of the appellant that they had been declared to be a sick company and, thus, if a suit was brought against a sick company during the pendency of proceedings before BIFR or AAIFR, then such a suit would be hit by Section 22(1) which puts an embargo on initiation or continuation of proceedings for execution or distress without permission of BIFR or the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).
It was noted that adjudication and determination of a contested liability under a contract is undoubtedly the domain of a Civil Court or an Arbitral Tribunal and not that of BIFR or AAIFR. Further, it was noted that the suit for recovery was not of a nature that could have proved to be a threat to the properties of the appellant-sick company or would have adversely impacted the scheme of revival.
The Supreme Court observed that the instant suit was a simple suit for recovery of money towards dues arising under alleged illegal deductions under contract. This could not be said to be a proceeding in the nature of execution, distress or like. Thus, the suit was not hit by section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
The Supreme Court held that the High Court committed no error in awarding 24% interest to the respondent as per the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. However, the period during which
the appellant was a sick company should be excluded for the purposes of calculation of interest.
Thus, the impugned order of the High Court was to be upheld subject to modification of the period for which interest would be granted.
State of Maharashtra v. National Organic Chemical Industries Ltd. [2024] 161 taxmann.com 324 (SC), [05-04-2024]
In the instant case, an appeal was filed challenging the order of the Bombay High Court, whereby the High Court allowed the writ petition of the respondent company.
The Respondent Company was incorporated with an initial share capital of Rs. 36 crores.
In the year 1992, the respondent company increased its share capital to Rs 600 crores and accordingly paid a stamp duty of Rs. 1.12 crores as per Article 10 of Schedule I of the Bombay Stamp Act, 1958.
Thereafter, the appellant - State of Maharashtra, amended Article 10 of the Bombay Stamp Act, 1958 and introduced a maximum cap of Rs. 25 lakhs on stamp duty, which would be payable by a company. Subsequently, the respondent passed a resolution for a further increase in its share capital to Rs. 1200 crores and paid Rs. 25 lakh as stamp duty.
However, according to the respondent company, this was done inadvertently as it was soon realised that the stamp duty was not liable to be paid by them since the maximum stamp duty, which was of Rs. 25 lakhs, had already been paid by them in the year 1992.
Consequently, the respondent wrote a letter to the appellant seeking a refund of the payment of stamp duty of Rs. 25 lakhs. However, this request was turned down by the appellant on the ground that whenever the authorised share capital of a company was increased, stamp duty was payable on each such occasion, and it was not a one-time measure. However, the Writ Court directed the appellant to refund stamp duty.
Aggrieved by the order of the Writ Court, the respondent company filed a writ petition before the Bombay High Court challenging the aforesaid order and seeking a refund of stamp duty of Rs 25 lakhs along with an interest.
The High Court allowed the writ petition and directed the appellants to refund the stamp duty of Rs 25 lakhs along with an interest @ 6% p.a. to the respondent company. Thereafter, an appeal was made to the Supreme Court.
The Supreme Court observed that the maximum cap of Rs. 25 lakhs would be applicable as a one-time measure and not on each subsequent increase in the share capital of the company was fortified directly by the Maharashtra Stamp (Amendment) Act, 2015, which amended the charging section for Article of Association, i.e., Article 10 of the Stamp Act.
Further, it is true that the amendment does not have a retrospective effect. However, since the instrument, i.e., ‘Articles of Association’ remained the same and an increase was initiated by the respondent after the cap was introduced, duty already paid on the same instrument would have to be considered.
The Supreme Court held that it was not a fresh instrument that had been brought to be stamped but only the increase in share capital in the original document, which had been specifically made chargeable by the Legislation.
Therefore, the order of the High Court was to be upheld. Accordingly, the appellant was directed to refund Rs 25 lakhs paid by the respondent along with an interest.
Directorate of Enforcement v. Bibhu Prasad Acharya [2024] 168 taxmann.com 155 (SC), [06-11-2024]
In the instant case, the appellant – Enforcement Directorate filed complaints against the respondents and others under section 44(1)(b) of the Prevention of Money Laundering Act, 2002. The complaint was for an offence under section 3 of the PMLA, which is punishable under section 4. Both private respondents were accused in the complaints. They were B i.e .respondent No.1 and A i.e .respondent No.2.
The Special Court took cognisance of the complaints and issued summons to the respondents and other accused persons. Both of them filed writ petitions before the High Court challenging the cognisance taken by the Trial Court and inter alia prayed for quashing the complaints on the ground that both of them were public servants and, therefore, it was necessary to obtain prior sanction under sub-section (1) of section 197 of the Code of Criminal Procedure, 1973.
The High Court, by the impugned judgement, upheld the respondents’ contentions and quashed the orders of taking cognisance passed by the Special Court on the complaints only as against the said respondents. Thereafter, an appeal was made before the Supreme Court.
The Supreme Court observed that the object of Section 197(1) of CrPC, which corresponds to Section 218 of Bhartiya Nagrik Suraksha Sanhita, 2023, must be considered here. The object is to protect public servants from prosecution. It ensures that public servants are not prosecuted for anything they do in the discharge of their duties. This provision is for the protection of honest and sincere officers. However, the protection is not unqualified. They can be prosecuted with a previous sanction from the appropriate government.
There are two conditions for applicability of section 197(1). The first condition is that the accused must be a public servant removable from his office by or with the Government’s sanction. The second condition is that the offence alleged to have been committed by the public servant while acting or purporting to act in the discharge of his duty.
The Supreme Court held that Section 65 is a prior section that specifically makes provisions of the CrPC applicable to PMLA, subject to the condition that only those provisions of the CrPC will apply that are not inconsistent with those of PMLA. Therefore, when a particular provision of the CrPC applies to proceedings under PMLA by virtue of section 65 of PMLA, section 71(1) cannot override the provisions of the CrPC that apply to PMLA.
Further, the Supreme Court held that in view of section 65 of PMLA, the provisions of section 197(1) of CrPC apply to a complaint under section 44(1)(b) of PMLA. Therefore, prior sanction under section 197(1) of the CrPC was required for taking cognisance of an offence under PMLA against accused public servants.
Jaiprakash Industries Ltd. v. Delhi Development Authority [2024] 161 taxmann. com 720 (SC), [05-04-2024]
In the instant case, the Respondent-Authority executed perpetual lease deeds in favour of company ‘JAPL’ in respect of the subject plots. Later on, the High Court sanctioned a scheme of amalgamation of JAPL with Jaypee Rewa.
The said plots were included in the schedule of properties to the scheme of amalgamation and, therefore, there was the transfer of leasehold properties. After amalgamation, the name of Jaypee Rewa was changed to Jaiprakash Industries and subsequently to Jaiprakash Associates, which was the appellant in the instant case.
Thereafter, the appellant made an application to the respondent for a grant of permission to mortgage said plots in favour of the bank. The Respondent demanded an unearned increase value of Rs.2.13 crore.
Being aggrieved by the said demand, representations were made by the appellant, which were not favourably considered by the respondent. Therefore, the appellant filed a writ petition before the Single Judge of the High Court.
However, the Single Judge dismissed the said petition relying upon the decision of the High Court in the case of Indian Shaving Products Ltd vs Delhi Development Authority [2022] 40 SCL 447 (Delhi). The Division Bench, by the impugned order, dismissed the appeal against the order of the Single Judge.
The Supreme Court held that there was nothing illegal about the impugned judgment, and accordingly, an instant appeal against the order of the High Court was to be dismissed.
Dhanraj Aswani
v. Amar S. Mulchandani [2024] 167 taxmann.com 564 (SC), [0909-2024]
In the instant case, the Respondent was arrested in connection with the ECIR. While in custody, he apprehended arrest in connection with the criminal case under sections 420, 406, 409, 465, 467, 468, 471 and 34 of the Indian Penal Code registered against him at the instance of the appellant.
In such circumstances, he prayed for anticipatory bail before the High Court. The appellant intervened in the proceedings of the said anticipatory bail application and raised an objection that as the respondent was already in custody in connection with ECIR, he could not pray for anticipatory bail in another complaint.
The High Court overruled the objection raised by the appellant. It was noted that under section 438 of the CrPC, the pre-condition for a person to apply for pre-arrest bail is a ‘reason to believe that he may be arrested on an accusation of having committed a nonbailable offence’.
It was noted that custody in one case does not affect the apprehension of arrest in a different case. Further, while a person already in custody in connection with a particular offence apprehends arrest in a different offence, then a subsequent offence is a separate offence for all practical purposes.
This would necessarily imply that all rights conferred by the statute on the accused, as well as the investigating agency in relation to subsequent offences, are independently protected. The Investigating agency, if it deems it necessary for the purpose of interrogation/ investigation in an offence, can seek remand of the accused whilst he is in custody in connection with a previous offence so long as no order granting anticipatory bail has been passed in relation to the subsequent offence.
The Supreme Court observed that if an order granting anticipatory bail in relation to a subsequent offence is obtained by the accused, it shall no longer be open to the investigating agency to seek remand of the accused in relation to the subsequent offence.
Similarly, if an order of police remand is passed before the accused is able to obtain anticipatory bail, it would thereafter not be open to the accused to seek anticipatory bail, and the only option available to him would be to seek regular bail.
The Supreme Court held that an anticipatory bail application filed at the instance of an accused who is already in judicial custody for a different offence would be maintainable under the scheme of CrPC. However, the competent courts will decide each such application on its own merits.
Arvind Kejriwal v. Directorate of Enforcement [2024] 164 taxmann.com 318 (SC), [12-07-2024]
In the instant case, the CBI registered an FIR alleging that top leaders of the political party ‘AAP’ hatched a conspiracy to introduce a new excise policy for 2021-22 to benefit liquor manufacturers who had given advance kickbacks to ‘AAP’.
The allegation against the appellant, Arvind Kejriwal, was that he, being the Chief Minister of the State of Delhi, was not only the brain behind ‘AAP’ but also involved in drafting the 2021-22 Excise policy. Thereafter, summons were issued, and the appellant was arrested for an offence under section 3 of the PMLA and consequently remanded to judicial custody by the Special Judge.
The appellant claimed that his arrest was in violation of section 19 of the Act and, thus, was illegal, which made an order of remand to the custody of the respondent also illegal. According to the appellant, ‘reasons to believe’ did not mention and evaluate ‘all’ or ‘entire’ material but selectively referred to implicating material and ignored exculpatory material.
It was also contended that statements relied upon by the Directorate of Enforcement (DoE) had been extracted under coercion. It was noted that arrest is based on the opinion of such an officer, whose opinion is open to judicial review but does not merit review in terms of well-settled principles of law.
Further, arguments raised by the appellant, which tended to dent material relied upon by the DoE in ‘reasons to believe’, though worthy of consideration, were in nature of propositions or deductions. They were a matter of discussion as they intended to support or establish a point of view based on inferences drawn from the material.
The Supreme Court observed that given the limited power of judicial review, ‘reasons to believe’ could not be set aside as accepting the appellant’s argument would be equivalent to undertaking a merits review. Thus, the question regarding the legality of the appellant’s arrest was referred to a Larger Bench.
The Supreme Court, further observed that the right to life and liberty is sacrosanct, and the appellant had suffered incarceration for over 90 days. As the larger bench would take time to decide the issue, the appellant was to be released on interim bail on furnishing a personal bond with a surety in the sum of Rs. 50,000 to the satisfaction of the Jail Superintendent.
The Supreme Court held that arrests under section 19 of PMLA cannot be made arbitrarily and on the whims and fancies of authorities. They must be made based on valid ‘reasons to believe’, meeting parameters prescribed by the law.
Further, the Supreme Court held that the production of ‘reasons to believe’ before the Special Court/Magistrate cannot be construed and is not the same as furnishing or providing ‘reasons to believe’ to an arrestee who has a right to challenge his arrest in violation of section 19(1) of PMLA.
Amar Sadhuram Mulchandani v. Directorate of Enforcement [2024] 167 taxmann.com 565 (HC), [09-08-2024]
In the instant case, the applicant was accused of an offence punishable under section 4 of the PMLA. He preferred a bail application on medical grounds. It was noted that the applicant required assistance for his daily activities. However, it was also noted that he had been provided treatment as an indoor patient for almost four months, and his health condition had improved.
The High Court observed that the prayer for bail on the count that the applicant required assistance for his daily routine activities could not be considered. Further, in light of the applicant’s health condition on other parameters, namely cardiac, nephrology, and ophthalmology, the applicant seemed to be relatively stable, and what he now required was diabetes management and physiotherapy.
The High Court held that the requirement of assistance, either in the form of physical aids like a wheelchair or walker or human support, cannot be construed to be such infirmity as to warrant release on bail by invoking the proviso to section 45(1) of the PMLA.
Therefore, an appropriate direction to the Superintendent of Central Prison, Mumbai, to provide requisite assistance, whenever necessary, would meet the exigency of the situation. Thus, the applicant was to be re-lodged in Central Prison, Mumbai.
Ansal Crown Heights Flat Buyers Association (Regd.) v. Ansal Crown Infrabuild (P.) Ltd. [2024] 158 taxmann.com 592 (SC), [17-01-2024]
In the instant case, the CIRP was initiated against the corporate debtor. Thereafter, the homebuyers filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC) against the corporate debtor and against the individual directors seeking a refund of the amount paid towards the purchase of apartments along with interest.
The NCDRC, by the order, directed the developer to complete the project in all respects and hand over possession of the allotted flats/apartments to the members of the Association of Homebuyers within the time specified.
The NCDRC, further held that the decree could not be executed against the corporate debtor due to the operation of moratorium under section 14 and in view of the same, it would not be appropriate to proceed in the same execution against respondents, i.e. directors/officers of the corporate debtor.
The appellants, decree-holder, filed an instant appeal before the Supreme Court seeking to execute the said directions of the National Commission not only against the respondent but also against several individuals on the ground that there was no prohibition on proceeding against the directors/officers of the corporate debtor, which was the subjectmatter of moratorium under section 14.
The Supreme Court held that only because there was a moratorium under section 14 against corporate debtor, it could not be said that no proceedings could be initiated against directors/officers of corporate debtor for execution.
The Supreme Court further held that the protection of moratorium would not be available to directors/officers of the corporate debtor. Therefore, the impugned orders passed by the NCDRC were to be set aside, and execution would continue against the directors/ officers of the corporate debtor.
In the instant case, respondent No. 2 – the operational creditor, filed a petition under section 9 against the corporate debtor. The NCLT admitted the application and initiated the CIRP against the corporate debtor.
Meanwhile, the NCLT’s order was challenged by the suspended director of the corporate debtor on the ground that he had transferred a sum of Rs 50 crores to the account of respondent no. 2 through RTGS as part of the settlement and respondent no. 2 accepted the statement to be correct.
In the exercise of its powers under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, the NCLAT approved a settlement in relation to the dues payable to respondent no. 2 by the corporate debtor and set aside the order of the NCLT.
The appellant, who claimed to be a financial creditor, filed an instant appeal contending that NCLAT should not have exercised its discretionary power under Rule 11 of the NCLAT Rules because there was a prescribed procedure for withdrawal and settlement under section 12A and Regulation 30A.
It was noted that an application for withdrawal had to be moved through IRP before the NCLT for approval, however, none of these requirements had been made.
Further, it was noted that since no formal application was instituted to seek withdrawal of CIRP, the request to approve settlement had been moved before the NCLAT during appellate proceedings instead of being placed before the NCLT.
The Supreme Court observed that the NCLAT had not provided any reasons for deviating from this procedure or urgency in approving the settlement without following the procedure. Further, Regulation 30A of the CIRP Regulations, 2016, provides a detailed procedure to deal with withdrawal or settlement at both stages post admission before and after the CoC is constituted.
Therefore, the requirement to invoke discretionary power such as Rule 11 of the NCLT Rules, Rule 11 of the NCLAT Rules or even the power of the Supreme Court under Article 142 no longer arises.
The Supreme Court held that the use of the phrase “any person aggrieved” in section 62 indicates that there is no rigid locus requirement to institute an appeal challenging an order of the NCLT before the NCLAT or an order of the NCLAT or before this Court. Thus, any person aggrieved by the order may institute an appeal, and nothing in the provision restricts the phrase to only the applicant creditor and the corporate debtor.
Further, the Supreme Court held that once the CIRP is initiated, the proceedings are no longer restricted to the individual applicant creditor and the corporate debtor but rather become collective proceedings, where all creditors are necessary stakeholders.
Vasan Healthcare (P.) Ltd. v. India Infoline Finance Ltd. [2024] 165 taxmann. com 237 (HC - Madras)[24-07-2024]
In the instant case, the petitioner company borrowed a loan from the respondent finance company, IIFL, to purchase medical equipment. To discharge the liability, the Managing Director/Authorised Signatory of the petitioner company issued cheques.
The cheques, on the presentation for collection, returned stating the reason’ funds insufficient’. Therefore, a complaint under section 138 of the Negotiable Instruments Act, 1881 was filed against the accused company and its directors.
The petitioner, vide the instant petition under section 482 of the Cr.PC, sought to quash the complaint under section 138 of the Act.
According to the petitioner, as per the resolution plan approved by the NCLT vide order dated 3-2-2023, the successful resolution applicant had taken over the company. Further, the creditors’ claims were settled under the approved resolution plan on the condition that all civil and criminal litigations, investigations, claims, disputes, and regulatory proceedings against the corporate debtor pending, present, or future would stand extinguished.
It was noted that after the insertion of section 32A of IBC by way of amendment with effect from 28-12-2019, the liability of the corporate debtor for prior offences is restricted. As per the law laid in Ajay Kumar Radheshyam Goenka v. Tourism Finance Corporation of India Ltd., [2023] 148 taxmann.com 280/178 SCL 401, it was clear that the corporate debtor cannot be prosecuted for the prior liability after the approval of the resolution plan.
However, protection under section 32A is restricted only to the corporate debtor and not its directors who were in charge of the company’s affairs when the offence was committed or signatory of the cheque.
The High Court held that since only the corporate debtor sought to quash the criminal complaint, an instant petition under section 482 of Cr. PC was to be allowed.
Madhaviben Jitendrabhai Rupareliya v. State of Gujarat [2024] 159 taxmann. com 642 (Gujarat), [04-01-2024]
In this significant ruling, the High Court held that banks that are secured creditors and have charge over the subject property would have priority over unsecured creditors, i.e., the Sales Tax Department (referred to as Crown’s debt). Thus, the claim of a secured creditor would prevail over a claim of an unsecured creditor.
The company ‘Helios’ availed various financial facilities from respondent No. 4 - bank (R4) by mortgaging the subject property, and a charge was created in favour of R4, and the same was recorded in the revenue record.
Upon Helios having defaulted on repayment of the loan and being declared an NPA, the bank initiated proceedings under the SARFAESI Act before the Debt Recovery Tribunal (DRT).
As Helios also did not make any payment towards the liability of the ‘Sales Tax Department’ (i.e. Respondent no 3 department (R3), a charge over the subject land was registered. According to the petitioner, the charge was registered by the Sales Tax department after a period of 6 years and 6 months after the charge of respondent No. 4 bank was registered as back as in the year 2000.
Pursuant to a public auction conducted by the bank in respect of the subject land, the petitioner participated in the bidding and as she was the highest bidder, the bank issued a certificate of sale in her favour in respect of movable and immovable property lying inside the property.
Subsequently, the bank executed a registered sale deed in favour of the petitioner. The petitioner applied before Mamlatdar to mutate her name in the revenue record. However, the Mamlatdar rejected the said application on the two grounds that the seller’s name did not tally and that over the land in question, there was already a charge registered in favour of Respondent No. 3 department.
The High Court observed that when the property was purchased pursuant to an auction carried out by the order passed by DRT, the auction was held to recover dues of the secured creditor, i.e., the bank, under an order passed by DRT in relevant proceedings before the DRT. Therefore, being a secured creditor, the bank enjoyed priority under section 26E of the SARFAESI Act.
The High Court ruled that the charge of the secured creditor would precede the charge of an unsecured creditor (crown debt). This decision allows the instant petition to direct the respondent authorities to mutate the petitioner’s name in revenue records by quashing and setting aside any charge over property in question by the State or its authorities as there was a first charge of the respondent bank.
Arif Azim Co. Ltd. v. Aptech Ltd. [2024] 167 taxmann.com 250 (SC), [01-03-2024]
In the instant case, the petitioner, a company based in Afghanistan, was engaged in the business of providing training in computer education, information technology, English language. The Respondent Company based in India entered into franchise agreements with the petitioner/franchisee.
As per the terms of the said agreements, the petitioner, as a franchisee, was granted a non-exclusive license to execute a short-term English training course for students from its centre in Kabul.
Thereafter, disputes arose between the parties regarding the renewal and payment of royalties, and the respondent issued a recovery notice. Pursuant to the said notice, the petitioner raised the issue of non-payment for the course conducted by the petitioner. After several rounds of failed communications and mediation, the petitioner issued a notice for the invocation of arbitration to the respondent on 24-11-2022.
The Respondent denied all claims raised by the petitioner in the said notice. The petitioner, thus, filed a petition under section 11(6) of the Arbitration and Conciliation Act, 1996, to appoint an arbitrator. The Respondent submitted that the said petition by the petitioner was barred by limitation.
It was noted from a perusal of communication that the petitioner’s right crystallised only on 28-3-2018 when the respondent clearly showed unwillingness to continue the discussion on payment related to the course.
The Supreme Court observed that the mere failure to pay may not give rise to a cause of action; however, once the applicant had asserted its claim and the respondent had either denied such claim or failed to reply to it, a cause of action will arise after such denial or failure.
In the instant case, the limitation period would have come to an end after the expiry of three years, i.e. 27-3-2021; however, the period from 15-3-2020 to 28-2-2022 was to be excluded due to Covid for the purpose of computation of limitation, and thus, the limitation period would come to an end on 13-3-2023.
The Supreme Court, further observed that for making an application under section 11(6) of the Act, the right to apply accrues only after a valid notice invoking arbitration has been issued by one party to the other party and there has been either a failure or refusal on the part of the other party to make an appointment as per appointment procedure agreed upon between the parties.
The Supreme Court held that since notice for invocation of arbitration was received by the respondent on 29-11-2022, which was within a three-year period from the date on which
the cause of action for the claim had arisen, claims could not be said to be ex-facie dead or time-barred on the date of commencement of arbitration proceedings.
Thus, an instant petition filed by the petitioner on 19-4-2023 was well within the limitation period as provided by Article 137 of the Limitation Act, 1963.
Rajeev Kumar v. State NCT of Delhi [2024] 166 taxmann.com 700 (HC), [11-092024]
In the instant case, the father of the complainant advanced a loan of Rs. 3.50 lakh to the accused, and in the discharge of his liability, the accused issued a cheque for the same amount in the name of the complainant’s father.
However, the complainant’s father passed away before presenting a cheque for encashment, after which the accused issued a new cheque of the same amount in the name of the complainant for repayment of the loan amount.
The Cheque in question, on presentation, was dishonoured with the remark’ funds insufficient’. Thereafter, a complaint was lodged under section 138 of the Negotiable Instruments Act, 1881. The Trial Court dismissed the complaint vide the impugned order and acquitted the accused of an offence by holding that the debt was not legally recoverable due to limitation.
According to the Trial Court, the date of the loan was 30-04-2012, and the cheque in question was issued on 31-12-2015, i.e. after three years of period limitation.
The High Court noted that the presentation of the cheque to the complainant’s father was 5-6 months before the death of his father, i.e. in the months of January/February 2014.
On that basis, even though the loan was allegedly taken in the year 2012 as per the finding of the Trial Court, an earlier cheque presented in 2014 would amount to an acknowledgement in writing of liability and, therefore, a fresh period of limitation would commence as per section 18 of the Limitation Act, 1963.
The High Court held that furnishing of the cheque in question on 31-12-2015 would still be for a legally enforceable debt or liability. Therefore, the impugned order acquitting the accused was to be set aside.
Manish Sisodia v. Directorate of Enforcement [2024] 165 taxmann.com 323 (SC), [09-08-2024]
In the instant case, the appellant’ Manish Sisodia’ was arrested for an offence under PMLA. On the ground of delay in trial, the appellant approached the Supreme Court for a grant of bail.
However, in view of the assurance given at the bar by the Solicitor General appearing for the Directorate of Enforcement (ED) that the trial would be concluded within the next ‘6-8 months’, the Supreme Court rejected the appellant’s bail application.
The appellant was free to move a fresh application for bail in case of a change in circumstances or in case the trial was protracted and proceeded at a snail’s pace in the next three months.
It was aforesaid observations that had triggered or prompted the appellant to approach the Supreme Court for a grant of bail. ED opposed the instant appeal on the ground that the investigation would be concluded, and the final complaint/charge sheet would be filed expeditiously, and at any rate on or before 03.07.2024, and immediately thereafter, the Trial Court would be free to proceed with the trial.
Further, if the appellant was released on bail, there was every possibility of him influencing witnesses or tampering with evidence. It was noted that the trial had not even yet commenced. Further, the case involved thousands of pages of documents and over a lakh pages of digitised documents.
Also, there was not even the remotest possibility of a trial being concluded in the near future, and keeping the appellant behind bars for an unlimited period of time in the hope of speedy completion of the trial would deprive his fundamental right to liberty under Article 21 of the Constitution.
The Supreme Court held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial.
Insofar as the possibility of tampering with evidence was concerned, it was to be noted that the case largely depended on documentary evidence that had already been seized by the prosecution; thus, there was no possibility of tampering with evidence.
The concern about influencing witnesses could be addressed by imposing stringent conditions upon the appellant. Thus, the instant appeal was to be allowed, and the appellant was directed to be released on bail.
Mangalore Refinery & Petrochemicals Ltd. v. Micro & Small Enterprises Facilitation Council [2024] 165 taxmann.com 809 (HC), [05-07-2024]
In the instant case, the appellant, i.e. Mangalore Refinery and Petrochemicals Ltd. invited tenders for a comprehensive DM water and CPU plant package for its refinery project. The Respondent no.2-claimant was awarded a contract through a Letter of Acceptance (LOA), with a completion deadline of March 31, 2011.
The project was completed by 11-3-2013, and a completion certificate was issued. Thereafter, disputes arose over payments, and the claimant filed a claim before respondent no.1Micro and Small Enterprises Facilitation Council, leading the Council to refer the matter to arbitration.
Aggrieved by the said order, the appellant filed an appeal before the High Court on the ground that the Council lacked jurisdiction as the respondent was not a small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006. The High Court upheld the Council’s referral to arbitration, dismissing the appellant’s petition challenging the order. Thereafter, the appellant filed an instant appeal.
It was noted that the appellant and claimant entered into an agreement on 01.12.2009 but the claimant submitted a memorandum to register itself as a small enterprise on 09.12.2011, concededly, the claimant completed its work and obtained a certificate from the appellant after registration under Section 8 i.e., only on 11.03.2013.
The Court held that since the claimant had been awarded a turnkey contract, work would have continued even after it filed a memorandum. Further, monies/amounts claimed by the Claimant became due only after registration, i.e., in 2016, and, therefore, the council had jurisdiction to entertain claims.
Updated Terms of Service and Privacy Policy for WhatsApp Users, in re [2024] 168 taxmann.com 482 (CCI), [18-11-2024]
The CCI held that WhatsApp’s updated privacy policy, which mandated the sharing of data of its users for purposes other than providing WhatsApp services, without offering any choice to its users to opt-out from same, disregarded legitimate expectations of users to decide as to how their data would be collected and used.
This conduct was deemed prima facie violative of Section 4 of the Competition Act. Consequently, WhatsApp was directed to cease and desist from such practices, as they were found to contravene the provisions of the Act.
In the instant case, WhatsApp had updated its privacy policy and terms of service for WhatsApp users. It was inter alia reported that the new policy made it mandatory for users to accept terms and conditions in order to retain their WhatsApp account information and provided as to how it would share personalised user information with Facebook (later renamed as Meta) and its subsidiaries. Consequently, the commission, decided to take suo-motu cognisance of the matter.
The CCI observed that WhatsApp was dominant in the relevant market for Over the Top (OTT) messaging apps through smartphones in India. Later, users were made to accept the 2021 update, which mandated sharing of data for purposes other than providing the WhatsApp services, without offering any choice to opt out from same, this imposition disregards legitimate expectation of users to decide as to how their data would be collected and used.
The CCI noted that by compelling all users to accept data-sharing conditions, WhatsApp reduces the level of privacy (an important non-price parameter of competition in digital markets) that users expect, thus diminishing consumer welfare. Additionally, this would result in increasing entry barriers for rivals and, thus, potentially leading to their exclusion from the market.
The CCI held that the impugned conduct of data-sharing by WhatsApp with Facebook apparently amounted to the degradation of non-price parameters of competition, ultimately constituting an abuse of market power.
The CCI, further held that WhatsApp had prima facie contravened the provisions of section 4 through its exploitative and exclusionary conduct in the garb of the policy update. Accordingly, in terms of Section 27(a) of the Act, WhatsApp was directed to cease and desist from indulging in such practices, which had been found to violate the provisions of the Act.
Yogesh Pratap Singh v. PVR Ltd. [2024] 158 taxmann.com 138 (CCI), [03-01-2024]
In the instant case, the Informant filed present information u/s 19(1)(a) of the Competition Act, 2002, alleging contravention of the provisions of sections 3 and 4 of the Act by PVR Ltd. (“OP”).
The Informant was a novelist, script-writer, lyricist and filmmaker. OP was engaged in the business of the exhibition of films in India through multiplexes and was also engaged in the production, promotion and release of films. The Informant, being a filmmaker, alleged discriminatory treatment by OP in the allocation of screens for the exhibition of movies.
The informant had alleged that OP allocated almost all of its screens to films produced by large production houses, which left no place for films produced by independent filmmakers, including the informant.
It was noted that allocation of screens was being done following criteria such as revenuegenerating potential of the movie, excitement/buzz around the film, marketing, advertising and promotions done, historical data (admission/box office revenue) of films of similar genres, previous review of filmmaker, selection team’s estimate of box office collection, language of film and cast and crew etc.
Further, OP had submitted evidence of exhibiting the informant’s film titled ‘Kya Yahi Soch Hai’ alongside the blockbuster commercial movie ‘Don 2’. The Informant’s film earned a collection of merely Rs. 3 lakh in 90 allocated shows across 11 different locations.
The CCI observed that the commercial wisdom of exhibitors is largely governed by consumer demand, and unless harm to competition is apparent, any intervention will only lead to undesirable consequences by taking away the autonomy of such undertaking and substituting the decision of such entity by the decision of the regulator.
The CCI held that in view of the foregoing, prima facie, there appeared to be no discernible competition concern in the market, and, thus, it would not be appropriate to delve into allegations of abuse of dominant position, which required delineation of the relevant market.
Thus, no case of contravention of provisions of the Act was made out against OP, and the matter was ordered to be closed immediately under section 26(2) of the Act.
CA Sam Varghese v. National Financial Reporting Authority [2024] 161 taxmann. com 246 (SC), [22-03-2024]
In the instant case, DHFL, a housing finance company (listed on both NSE and BSE), operated through a network of branches and was involved in the fraud of Rs. 31,000 crores.
The Respondent-NFRA suo motu initiated an audit quality review to probe into the role of Statutory Auditors for the financial year 2017-18, on suspected frauds by the promoters and directors of DHFL and alleged that the appointment of ‘H’ on branch auditor was done without following due procedures as prescribed in Companies Act, 2013 as well as violation of certain SAs and therefore the appellant was charged with professional misconduct.
The NFRA applied the principle of proportionality and imposed a minimal permissible penalty, i.e., a monetary fine of Rs. 1 lakh and barred auditors from practicing for a period of one year, which was 10% of the maximum penalty permissible.
Thereafter, ‘H’, one of the engagement partners of the DHFL, challenged the NFRA’s order before NCLAT on the ground that he had already deposited 10% of the penalty and the appeals had been made well in time.
The NCLAT vide the impugned order held that the penalty imposed by the NFRA could not be considered excessive and the mere filing of the appeal with a 10% deposit of penalty did not affect the order on debarment. Aggrieved by the NCLAT’s order, ‘H’ filed an instant appeal before the Supreme Court.
The Supreme Court held that there was no error in the impugned order passed by the NCLAT and, thus, the instant appeal was to be dismissed.
Securities and Exchange Board of India v. Alps Motor Finance Ltd. [2024] 159 taxmann.com 422 (SC), [05-02-2024]
In the instant case, the Respondent Company made six preferential allotments and made necessary disclosure on the stock exchange platform. Subsequently, an investigation was made and the stock exchange submitted a report indicating the possibility of misutilization of proceeds.
Based on this report, SEBI carried out further investigation and issued a show cause notice (SCN) alleging that the respondent company had deviated from the object of the issue and had not utilised proceeds from the preferential issue as per objects and, thus, violated clause 43 of the Listing Agreement/Regulation 32 of LODR Regulations and regulations 3 and 5 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
Thereafter, SEBI issued a show cause notice and imposed penalties. The SAT, by the impugned order quashed the order passed by the SEBI on the ground that there was an inordinate delay in the issuance of the adjudication proceedings.
Even otherwise, prior to the issuance of show cause notice, alleged deviation by the company was ratified pursuant to a special resolution passed by the shareholders of the company. Then, an appeal was made before the Supreme Court.
The Supreme Court held that there was no good ground and reasons to interfere with the impugned judgment. Hence, the appeal against the same was to be dismissed.
Vishal Tiwari v. Union of India [2024] 158 taxmann.com 85 (SC), [03-01-2024]
In the instant case, an activist short seller, ‘H’, published a report about the financial transactions of the ‘A’ group of companies, alleging that ‘A’ manipulated its share prices and failed to disclose transactions with related parties and other relevant information in violation of the regulations framed by the SEBI and provisions of the securities legislation. The SEBI was directed to investigate the said allegations. An expert committee was constituted, and both the SEBI and the said committee submitted a status report.
The petitioners/investors of ‘A’ filed an instant writ petition under Article 32 of the Constitution of India, raising concerns over the precipitate decline in investor wealth and volatility in the share market due to a fall in the share prices of ‘A’, seeking a direction to transfer the SEBI investigation to Special Investigation Team (SIT).
Further, the petitioners submitted that based on the report of ‘H’, the FPIs investing in stocks of ‘A’ in the stock market were the shell companies outside India owned by the brother of the chairperson of ‘A’, which would boost the value of ‘A’ stocks in the market and expose the market and investors to huge losses.
The petitioners contended that SEBI had received a letter alerting them about possible stock market manipulation being committed by ‘A’ by the overvaluation of the import of equipment. However, the SEBI did not take adequate action based on this letter.
Accordingly, the petitioners prayed that the SEBI be directed to revoke the amendments to the SEBI (Foreign Portfolio Investments) Regulations, 2014 (FPI) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), which had altered the definition of ‘related party’ and removed the mandatory requirement of disclosing ownership of the FPIs or make suitable changes.
It was noted that the power to transfer an investigation from an authorised agency i.e. SEBI to CBI or SIT, is exercised when the competent authority portrays a glaring, wilful and deliberate inaction in carrying out an investigation, and since, in the instant case, SEBI’s status report and details of investigations did not indicate deliberate inaction or inadequacy in an investigation by SEBI, the threshold for transfer of investigation was not demonstrated to exist. Thus, such a transfer was not warranted.
The Supreme Court held that there was no valid ground raised to interfere by directing the SEBI to revoke its amendments to Regulations, which were made in the exercise of its legislative powers. Further, a Regulation may be subject to judicial review if it is ultra vires the parent legislation or the Constitution. However, none of these grounds were pressed in the instant case. Therefore, the prayer seeking directions to the SEBI to revoke its amendments to the FPI and LODR Regulations was rejected.
Further, the Supreme Court directed the SEBI and investigative agencies of the Union Government to investigate whether the investors suffered a loss and consider the recommendations of an expert committee regarding creating an appropriate legal framework to implement the recommendations.
United States of America v. Google LLC [2024] 165 taxmann.com 394 (USDC) [05-08-2024]
In the instant case, the U.S. Department of Justice, supported by 11 states (Plaintiffs) filed lawsuits against Google in October 2020, accusing the company of violating Section 2 of the Sherman Act. The case focused on allegations that Google unlawfully maintained its monopoly in three product markets viz. general search services, search advertising and search text advertising.
After a trial that lasted over nine weeks, the Court found that Google held a dominant position in these markets, supported by significant barriers to entry and had engaged in anticompetitive practices via exclusive agreements.
It was noted that Section 2 of the Sherman Act makes it unlawful for a firm to ‘monopolise’.
Further, the parties agreed that the US is the relevant geographical market. The Court observed that Google held a substantial market share in the ‘general search services’ market, with a dominance of 89.2%, increasing to 94.9% share on mobile devices.
The Court identified significant barriers to entry, individually and collectively, that protect Google’s market dominance in general search. These include high capital costs, control over key distribution channels, substantial brand recognition, and Google’s scale. Therefore, it was concluded that Google monopolised the ‘general search services’ market.
The Court acknowledged that Google and its advertisers recognise search text advertising as a distinct product sub-market. The Court also took note of the plaintiff’s submission, stating that Google has maintained a large and durable market share in this market, further safeguarded by significant entry barriers.
Further, the Court highlighted that the exclusive agreements Google secured for default distribution on nearly all desktop and mobile devices effectively slow the competition. Due to the lack of viable competitors, these agreements solidified Google’s monopolistic hold on the ‘general search services’ market.
Google’s monopoly in general search has shown remarkable durability over time. The company’s market share, nearly 80% in 2009, grew to approximately 90% by 2020. This historical consistency in market dominance supports the conclusion that Google’s competitive practices have effectively hindered other players from gaining a significant market presence. The Court held that Google had violated Section 2 of the Sherman Act by unlawfully maintaining its monopoly in general search services and general search text ads by entering into exclusive agreements to secure default distribution on nearly all desktop and mobile devices in the United States.
Further, the Court also found that Google had exercised its monopoly power by charging competitive prices for general search text ads, which has allowed Google to earn monopoly profits.
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Naveen Wadhwa
Research and Advisory [Corporate and Personal Tax]
Chartered Accountant (All India 24th Rank)
14+ years of experience in Income tax and International Tax
Expertise across real estate, technology, publication, education, hospitality, and manufacturing sectors
Contributor to renowned media outlets on tax issues
Vinod K. Singhania Expert on Panel | Research and Advisory (Direct Tax)
Over 35 years of experience in tax laws
PhD in Corporate Economics and Legislation
Author and resource person in 800+ seminars
V.S. Datey Expert on Panel | Research and Advisory [Indirect Tax]
Holds 30+ years of experience
Engaged in consulting and training professionals on Indirect Taxation
A regular speaker at various industry forums, associations and industry workshops
Author of various books on Indirect Taxation used by professionals and Department officials
Manoj Fogla Expert on Panel | Research and Advisory [Charitable Trusts and NGOs]
Over three decades of practising experience on tax, legal and regulatory aspects of NPOs and Charitable Institutions
Law practitioner, a fellow member of the Institute of Chartered Accountants of India and also holds a Master's degree in Philosophy
PhD from Utkal University, Doctoral Research on Social Accountability Standards for NPOs
Author of several best-selling books for professionals, including the recent one titled 'Trust and NGO's Ready Reckoner' by Taxmann
Drafted publications for The Institute of Chartered Accountants of India, New Delhi, such as FAQs on GST for NPOs & FAQs on FCRA for NPOs.
Has been a faculty and resource person at various national and international forums
the UAE
Chartered Accountant (All India 36th Rank)
Has previously worked with the KPMG
S.S. Gupta Expert on Panel | Research and Advisory [Indirect Tax]
Chartered Accountant and Cost & Works Accountant
34+ Years of Experience in Indirect Taxation
Bestowed with numerous prestigious scholarships and prizes
Author of the book GST – How to Meet Your Obligations', which is widely referred to by Trade and Industry
Sudha G. Bhushan Expert on Panel | Research and Advisory [FEMA]
20+ Years of experience
Advisor to many Banks and MNCs
Experience in FDI and FEMA Advisory
Authored more than seven best-selling books
Provides training on FEMA to professionals
Experience in many sectors, including banking, fertilisers, and chemical
Has previously worked with Deloitte
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