MANISH KUMAR v. UNION OF INDIA AND ANOTHER

[K. M. JOSEPH, J.]

52. In Dattatraya Govind Mahajan v. State of Maharashtra [(1977) 2 SCR 790 : (1977) 2 SCC 548 : AIR 1977 SC 915] Bhagwati, J. observed thus: (SCC p. 563, para 9) “It is true that the orthodox function of an Explanation is to explain the meaning and effect of the main provision to which it is an Explanation and to clear up any doubt or ambiguity in it.... Therefore, even though the provision in question has been called an Explanation, we must construe it according to its plain language and not on any a priori considerations.” F

53. Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is— “(a) to explain the meaning and intendment of the Act itself, G (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, H

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A (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and B (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same.”

233Copy pinpoint233. It is important to actually understand the scope of an Explanation. We have already noticed the summary of the conclusions of this Court in S. Sundaram Pillai (supra) at paragraph-53. It may give the impression that an Explanation, in those circumstances, does not widen the boundaries of the main provision to which it is an Explanation. However, it is apposite that we hearken back to what this Court said on D an earlier occasion. In a judgment rendered by four learned Judges in Hiralal Rattanlal and Ors. v. State of U.P. and another70 this Court had, while considering the scope of an Explanation in a Taxing Statute, viz., the United Provinces Sales Tax Act, 1948, had this to say: “22. It was next urged that on a true construction of E Explanation II to Section 3-D, no charge can be said to have been created on the purchases of split or processed pulses. It was firstly contended that an Explanation cannot extend the scope of the main section, it can only explain that section. In construing a statutory provision, the first and the foremost rule of construction F is the literary construction. All that we have to see at the very outset is what does that provision say? If the provision is unambiguous and if from that provision, the legislative intent is clear, we need not call into aid the other rules of construction of statutes. The other rules of construction of statutes are called into aid only when the legislative intention is not clear. Ordinarily a G proviso to a section is intended to take out a part of the main section for special treatment. It is not expected to enlarge the scope of the main section. But cases have arisen in which this Court has held that despite the fact that a provision is called proviso, it is really a separate provision and the so-called proviso has 70 H (1973) 1 SCC 216

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25. On the basis of the language of the Explanation this Court held that it did not widen the scope of clause (c). But from what has been said in the case, it is clear that if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect be given to legislative intent notwithstanding the fact that the Legislature named that provision as an Explanation. In all these matters the courts have to find out the true intention of the Legislature.” (Emphasis supplied) D

234Copy pinpoint234. Even though, in a later decision in S. Sundaram Pillai (supra), this Court had adverted to this Judgment when it came to culling out the propositions, the aspect about an Explanation, widening the scope of a provision, has not been expressly spelt out. It must be remembered that the Legislature speaks through the medium of the words it uses. The nomenclature, it gives to the device, cannot control the express language, which it employs. If, in effect, in a particular case, an Explanation does widen the terms of the main provision, it would become the duty of the Court to give effect to the will of the Legislature.

235Copy pinpoint235. In fact, with respect to the decision in S. Sundaram Pillai (supra), it may be necessary to dissect the provisions which fell for consideration. The Court, in the said case, was dealing with the law relating to restrictions on eviction of the tenant prevailing in Tamil Nadu. The substantive provision conferred a right on the landlord to evict a tenant, should he wilfully fail to pay the rent. There was a proviso, however, which empowered the Court to grant time to the tenant subject to the limit of 30 days, should it be found that the non-payment of the rent was not wilful. It was to this proviso that an Explanation was added. The Explanation, in turn, provided that if the landlord gave a notice to the tenant to pay the rent and rent remained unpaid for a period of two months, it would be construed as a case of wilful default. The arguments, H

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A which were addressed before this Court, included the contention that even if a notice was given within the meaning of the Explanation, it would not control the duty of the Court to find out whether there was wilful default. It was, while the Court dealt with these arguments, inter alia, that the Court proceeded to lay down two propositions. Firstly, in a case where no notice was given by the landlord, within the meaning of the Explanation, it was for the Court to find out, on the facts and circumstances, as to whether there was wilful default. The second proposition, which was laid down was, even if a notice was given under the Explanation and there was default in payment, it would be treated as a case of wilful default unless the tenant was able to establish that he was prevented from making payment on account of circumstances which prevented him from doing so. We may also notice a still later judgment of this Court in Sonia Bhatia (supra). In the said case, the question fell for consideration under the law relating to land reforms. Sub-Section (6) of Section 5 of the U.P. Imposition of Ceiling on Land Holdings Act, 1960 provided that the transfer made by a person, after a certain date, was to be ignored. There was a proviso, which, however, excepted certain transfers. One of the conditions to be met before a case could fall within the proviso was that the transfer must have been made for valuable consideration. To the said proviso, there was again an Explanation I followed by Explanation II. It reads as follows: E “Explanation I.—For the purposes of this sub-section, the expression “transfer of land made after the twenty-fourth day of January, 1971”, includes— (a) a declaration of a person as a co-tenure-holder made after the twenty-fourth day of January, 1971 in a suit or proceeding F irrespective of whether such suit or proceeding was pending on or was instituted after the twenty-fourth day of January, 1971; (b) any admission, acknowledgement, relinquishment or declaration in favour of a person to the like effect, made in any other deed or instrument or in any other manner. G Explanation II: The burden of proving that a case falls within clause (b) of the proviso shall rest with the party claiming its benefits.”

236Copy pinpoint236. The transfer in the said case was a gift which attracted the wrath of the main provision which meant that the transfer had to be ignored, and the land, which was the subject matter of the gift, had to be H

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237Copy pinpoint237. We have made a brief survey of some of the case law by way of expounding the true province of an Explanation.

238Copy pinpoint238. Coming to the facts of the instant case, it is necessary to analyse the limbs of Section 11. Sections 7, 9 and 10, read with Section D 5, provide for the procedure to be adopted by the Adjudicating Authority in dealing with applications for initiating CIRP by the financial creditor, operational creditor and corporate debtor. It is after that Section 11 makes its appearance in the Code. It purports to declare that an application for initiating CIRP cannot be made by categories expressly detailed in Section E

11. Section 11(a) vetoes an application by a corporate debtor, which is itself undergoing a CIRP. An argument sought to be addressed by the petitioner is that the purport of the said provision is that it prohibits not only a corporate debtor, which is undergoing a CIRP, from initiating a CIRP against itself, which, but for the fact, it is undergoing a CIRP, would be maintainable under Section 10 of the Code, but it also proscribes an application by a corporate debtor for initiating a CIRP against another corporate debtor. It appears to be clear to us, and this will be corroborated by the further provisions as well, that the real intention of the Legislature was that the prohibition was only against the corporate debtor, which is already faced with the CIRP filed by either a financial creditor or operational creditor, jumping into the fray with an application under Section

10. This appears to be clear from the reports which have been placed before us.

239Copy pinpoint239. Coming to Section 11(b), it again disables a corporate debtor which has completed CIRP twelve months preceding the date of the H

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A making of the application from invoking the Code. It may be demystified as follows: On the strength of the application made under Sections 7, 9 or 10, CIRP is initiated and it is completed at a certain point of time. This Section is aimed at preventing a further application not eternally but for B a period of twelve months after the expiry of the insolvency resolution process. Quite apart from the fact that even the petitioners do not lay store by Section 11(b) and their case is premised on Section 11(a) and 11(d), the importance of Section 11(b) is that it sheds light regarding the intention of the Legislature to be that the corporate debtor cannot initiate CIRP against itself under any of the limbs of Section 11, in the C circumstances detailed therein. Section 11(c) again disentitles corporate debtor, apart from a financial creditor who has violated any terms of a resolution plan, which was approved twelve months before the making of the application. In other words, after the Adjudicating Authority approves a resolution plan under Section 31 of the Code, should a D corporate debtor, inter alia, transgress upon any of the terms of the resolution plan and it still ventures to again approach the Adjudicating Authority with an application under Section 10 and attempt to restart the process all over again within a period of twelve months from the date of approval, this is declared impermissible under Section 11(c).

240Copy pinpoint240. Finally, coming to Section 11(d), it disentitles the making of an application to initiate CIRP by a corporate debtor in respect of whom a liquidation order has been made. We have already noticed the scheme of the Code. The Legislature intends to have a two-stages approach to the problem of insolvency as regards the corporate debtor. On the basis of an application by the eligible person, a CIRP is initiated. If it is admitted, F a Committee of Creditors is constituted before the curtains are wrung down on the insolvency resolution process by the inexorable passage of time, which is fixed under Section 12. If a resolution plan finds approval at the hands of the Committee of Creditors and also the Adjudicating Authority, liquidation is staved off. Should there be no resolution plan G within the time limit or the resolution plan is not approved, the curtains rise for the process of liquidation process to be played out in terms of the Code. The first act of the drama consists of the order of liquidation to be passed under Section 33 of the Code. It is this order which is referred to in Section 11(d). There is also an order of liquidation permissible earlier, under Section 33(4). No doubt after the introduction of the explanation H

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[K. M. JOSEPH, J.]

to Section 33(2), an order of liquidation may be passed in terms thereof. A Once, this order is passed, the Legislature intended that a corporate debtor, in regard to whom the CIRP was initiated and which has culminated in the order of liquidation being passed after no resolution of the insolvency took place, cannot again initiate a fresh CIRP, putting under the carpet, as it were, a whole process in the recent past. In fact, B to use the words “recent past” may not be correct for unlike Section 11(b) and 11(c), in a case, where there is an order for liquidation under Section 33, then, an application under Section 10, would not be maintainable. The person disentitled under Section 11(d) would be the corporate debtor and the disentitlement is qua itself.

241Copy pinpoint241. Now, let us turn to the first Explanation. The Explanation C declares that for the purpose of Section 11, a corporate debtor includes a corporate applicant in respect of such corporate debtor. There is an argument raised on behalf of the petitioners which surrounds the word “included”. The contention appears to be that before the insertion of Explanation II, which is challenged before us, under Section 11, not only was an application for initiating CIRP by a corporate debtor against itself prohibited in the circumstances referred to in Section 11 but it also contemplated that the CIRP could not be filed by the corporate debtor in circumstances covered by Section 11 against another corporate debtor. Otherwise, there was no meaning in using the word “includes”. In order to appreciate this argument, it is necessary to set out the definition of the word “corporate applicant” in the Code. “6(5) “corporate applicant” means— (a) corporate debtor; or (b) a member or partner of the corporate debtor who is authorised to make an application for the corporate insolvency resolution process under the constitutional document of the corporate debtor; or (c) an individual who is in charge of managing the operations and resources of the corporate debtor; or G (d) a person who has the control and supervision over the financial affairs of the corporate debtor;”

242Copy pinpoint242. It is to be noticed that under Section 10 of the Code, a corporate debtor can file an application for CIRP, when there is a default H

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A by itself. The persons, who can make application under section 10, are those who are alluded to as in the definition of the word “corporate applicant”. In other words, an application by the corporate debtor for initiating a CIRP, when there is a default by the corporate debtor, can be made not only by the corporate debtor but also any of the other three categories falling in clauses (b), (c) and (d) of the provision which defines the word “corporate applicant”. It is to ensure that there was clarity regarding the question as to whether, while in Section 11, there is a prohibition against the corporate debtor in various circumstances and it is disabled from moving an application under Section 10 against itself, there is no reference to the other persons who are covered by the definition of the word “corporate applicant”. It is hence that Explanation I was inserted. In other words, it was to ensure that in the circumstances contemplated in Section 11, an application under Section 10 could not be made by any of the categories of persons mentioned in the definition of the word “corporate applicant”.

243Copy pinpoint243. Now, let us consider finally the impugned Explanation. The impugned Explanation came to be inserted by the impugned amendment. Apparently, interpreting Section 11, there appears to have been some cleavage of opinion. This is apparent from the case set up on behalf of the petitioners and the case set up on behalf of the Union of India. The intention of the Legislature was always to target the corporate debtor only insofar as it purported to prohibit application by the corporate debtor against itself, to prevent abuse of the provisions of the Code. It could never had been the intention of the Legislature to create an obstacle in the path of the corporate debtor, in any of the circumstances contained in Section 11, from maximizing its assets by trying to recover the liabilities due to it from others. Not only does it go against the basic common sense view but it would frustrate the very object of the Code, if a corporate debtor is prevented from invoking the provisions of the Code either by itself or through his resolution professional, who at later stage, may, don the mantle of its liquidator. The provisions of the impugned Explanation, thus, clearly amount to a clarificatory amendment. A G clarificatory amendment, it is not even in dispute, is retrospective in nature. The Explanation merely makes the intention of the Legislature clear beyond the pale of doubt. The argument of the petitioners that the amendment came into force only on 28.12.2019 and, therefore, in respect to applications filed under Sections 7, 9 or 10, it will not have any bearing, H cannot be accepted. The Explanation, in the facts of these cases, is

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clearly clarificatory in nature and it will certainly apply to all pending applications also.

244Copy pinpoint244. We may notice that these are petitions filed under Article 32 of the Constitution of India, essentially, complaining of violation of Fundamental Right under Article 14 of the Constitution insofar as the challenge to the Explanation is concerned, a strained effort is made to describe this amendment as manifestly arbitrary. To build up this argument, an attempt is made to contend that an Explanation cannot widen the provisions or whittle down its scope. We are afraid, that this venture of attempting to persuade us to hold that an Explanation would be trespassing the limits of its province, should it widen the scope of the main provisions, itself has no legs to stand on, as explained earlier. We are unable to understand how it could be described as being arbitrary for the Legislature to clarify its intention through the device of an Explanation. The further attempt to persuade us to overturn the provision on the score that the Explanation attempts to achieve the result of a repeal of Sections 11(a) and 11(d), is totally meritless. We are clear in our mind that on a proper understanding of Sections 11(a) and 11(d), it does nothing of the kind. Sections 11(a) and 11(d) remain intact in the manner we have propounded.

245Copy pinpoint245. We must record our understanding of the efforts of the petitioner in the light of the application which is pending and the appeal also which is preferred by the petitioner in NCLAT. We are really concerned and can be called upon only to pronounce on the vires of the Statute on the score that it is unconstitutional on any ground known to law. The only ground which is urged before us is the violation of Article

14. This ground does not merit acceptance. The challenge is repelled. IS SECTION 32A UNCONSTITUTIONAL? F

246Copy pinpoint246. Section 32A is challenged by allottees in Writ Petition No.75 of 2020. The petitioners in Writ Petition No.27 of 2020 and Writ Petition No. 579 of 2020, who are creditors (money lenders) also challenge Section 32A.

247Copy pinpoint247. The petitioners contend that immunity granted to the corporate G debtors and its assets acquired from the proceeds of crimes and any criminal liability arising from the offences of the erstwhile management for the offences committed prior to initiation of CIRP and approval of the resolution plan by the adjudicating authority further jeopardizes the interest of the allottees/creditors. It will cause huge losses which is sought H

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A to be prevented under the provisions of the Prevention of Money Laundering Act, 2002.

248Copy pinpoint248. Section 32A is arbitrary, ultra vires and violative of Article 300A and Articles 14, 19 and 21.

249Copy pinpoint249. The stand of the Union, on the other hand, is as follows: B Section 32A provides immunity to the corporate debtor and its property when there is approval of the resolution plan resulting in the change of management of control of corporate debtor. This is subject to the successful resolution applicant being not involved in the commission of the offence. Statutory basis has now given under Section 32A to the law laid down by this Court in the decision of Committee of Creditors of Essar Steel(supra). This Court took the view therein that successful resolution applicant cannot be faced with undecided claim after its resolution plan has been accepted. The object is to ensure that a successful resolution applicant starts of on a fresh slate. The relevant extracts of the Statement of Objects and Reasons relied upon by the Union of India are as follows: “STATEMENT OF OBJECTS AND REASONS xxx E

2. A need was felt to give the highest priority in repayment to last mile funding to corporate debtors to prevent insolvency, in case the company goes into corporate insolvency resolution process or liquidation, to prevent potential abuse of the Code by certain classes of financial creditors, to provide immunity against prosecution of F the corporate debtor and action against the property of the corporate debtor and the successful resolution applicant subject to fulfilment of certain conditions, and in order to fill the critical gaps in the corporate insolvency 69 framework, it has become necessary to amend certain provisions of the Insolvency and Bankruptcy Code, 2016. G 3.The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019, inter alia, provides for the following, namely:— xxx

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(vii) to insert a new section 32A so as to provide that the liability A of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease under certain circumstances.”

250Copy pinpoint250. Reliance is also placed on the report of the Insolvency Law Committee. Relevant extracts which have been relied on are as follows: B “PREFACE v. Liability of corporate debtor for offences committed prior to initiation of CIRP- in order to address the issue of liability that fall upon the resolution applicant for offences committed prior to commencement of CIRP, it has been recommended that a new section should be inserted which provides that when the corporate debtor is successfully resolved, it should not be held liable for any offence committed prior to the commencement of the CIRP, unless the successful resolution applicant was also involved in the commission of the offence, or was a related party, promoter or other person in management and control of the corporate debtor at the time of or any time following the commission of the offence. Notwithstanding this, those persons who were responsible to the corporate debtor for the conduct of its business at the time of the commission of such offence, should continue to be liable for such an offence, vicariously or 70 otherwise. The newly inserted section as mentioned above shall also include protection of property from enforcement action when taken by successful resolution applicant. Also, it was recommended that cooperation and assistance to authorities investigating the offences committed prior to commencement of CIRP shall be continued by any person who is required to provide such assistance under the applicable law. xxx Chapter 1: Recommendations regarding the Corporate Insolvency Resolution Process G xxx

17. LIABILITY OF CORPORATE DEBTOR FOR OFFENCES COMMITTED PRIOR TO INITIATION OF CIRP* H

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A 17.1. Section 17 of the Code provides that on commencement of the CIRP, the powers of management of the corporate debtor vest with the interim resolution professional. Further, the powers of the Board of Directors or partners of the corporate debtor stand suspended, and are to be exercised by the interim resolution professional. Thereafter, Section 29A, read with Section 35(1)(f), B places restrictions on related parties of the corporate debtor from proposing a resolution plan and purchasing the property of the corporate debtor in the CIRP and liquidation process, respectively. Thus, in most cases, the provisions of the Code effectuate a change in control of the corporate debtor that results in a clean break of the corporate debtor from its erstwhile management. However, the legal form of the corporate debtor continues in the CIRP, and may be preserved in the resolution plan. Additionally, while the property of the corporate debtor may also change hands upon resolution or liquidation, such property also continues to exist, either as property of the corporate debtor, or in the hands of the purchaser. 17.2. However, even after commencement of CIRP or after its successful resolution or liquidation, the corporate debtor, along with its property, would be susceptible to investigations or proceedings related to criminal offences committed by it prior to the commencement of a CIRP, leading to the imposition of certain liabilities and restrictions on the corporate debtor and its 71 properties even after they were lawfully acquired by a resolution applicant or a successful bidder, respectively. Liability where a Resolution Plan has been Approved F 17.3. It was brought to the Committee that this had created apprehension amongst potential resolution applicants, who did not want to take on the liability for any offences committed prior to commencement of CIRP. In one case, JSW Steel had specifically sought certain reliefs and concessions, within an annexure to the resolution plan it had submitted for approval of the Adjudicating Authority. Without relief from imposition of the such liability, the Committee noted that in the long run, potential resolution applicants could be disincentivised from proposing a resolution plan. The Committee was also concerned that resolution plans could be priced lower on an average, even where the corporate debtor did not

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commit any offence and was not subject to investigation, due to adverse selection by resolution applicants who might be apprehensive that they might be held liable for offences that they have not been able to detect due to information asymmetry. Thus, the threat of liability falling on bona fide persons who acquire the legal entity, could substantially lower the chances of its successful takeover by potential resolution applicants. 17.4. This could have substantially hampered the Code’s goal of value maximisation, and lowered recoveries to creditors, including financial institutions who take recourse to the Code for resolution of the NPAs on their balance sheet. At the same time, the Committee was also conscious that authorities are duty bound to penalize the commission of any offence, especially in cases involving substantial public interest. Thus, two competing concerns need to be balanced. 17.5. The Committee noted that the proceedings under the Code, which are designed to ensure maximization of value, generally require transfer of the corporate debtor to bona fide persons. In fact, Section 29A casts a wide net that disallows any undesirable person, related party or defaulting entity from acquiring a corporate debtor. Further, the Code provides for an open process, in which transfers either require approval of the Adjudicating Authority, or can be challenged before it. Thus, the CIRP typically culminates in a change of control to 72 resolution applicants who are unrelated to the old management of the corporate debtor and step in to resolve the insolvency of the corporate debtor following the approval of a resolution plan by the Adjudicating Authority. F 17.6. Given this, the Committee felt that a distinction must be drawn between the corporate debtor which may have committed offences under the control of its previous management, prior to the CIRP, and the corporate debtor that is resolved, and taken over by an unconnected resolution applicant. While the corporate debtor’s actions prior to the commencement of the CIRP must be G investigated and penalised, the liability must be affixed only upon those who were responsible for the corporate debtor’s actions in this period. However, the new management of the corporate debtor, which has nothing to do with such past offences, should not be penalised for the actions of the erstwhile management of H

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A the corporate debtor, unless they themselves were involved in the commission of the offence, or were related parties, promoters or other persons in management and control of the corporate debtor at the time of or any time following the commission of the offence, and could acquire the corporate debtor, notwithstanding the prohibition under Section 29A. B 17.7. Thus, the Committee agreed that a new Section should be inserted to provide that where the corporate debtor is successfully resolved, it should not be held liable for any offence committed prior to the commencement of the CIRP, unless the successful resolution applicant was also involved in the commission of the offence, or was a related party, promoter or other person in management and control of the corporate debtor at the time of or any time following the commission of the offence. 17.8. Notwithstanding this, those persons who were responsible to the corporate debtor for the conduct of its business at the time of the commission of such offence, should continue to be liable for such an offence, vicariously or otherwise, regardless of the fact that the corporate debtor’s liability has ceased. Actions against the Property of the Corporate Debtor 17.9. The Committee also noted that in furtherance of a criminal investigation and prosecution, the property of a company, which continues to exist after the resolution or liquidation of a corporate debtor, may have been liable to be attached, seized or confiscated. For instance, the property of a corporate debtor may have been at risk of attachment, seizure or confiscation where there was any suspicion that such property was derived out of proceeds of crime in an offence of money laundering. It was felt that taking actions against such property, after it is acquired by a resolution applicant, or a bidder in liquidation, could be contrary to the interest of value maximisation of the corporate debtor’s assets, by substantially reducing the chances of finding a willing resolution applicant or bidder in liquidation, or lowering the price of bids, as discussed above. 17.10. Thus, the Committee agreed that the property of a corporate debtor, when taken over by a successful resolution applicant, or when sold to a bona fide bidder in liquidation under the Code, H should be protected from such enforcement action, and the new

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Section discussed in paragraph 17.7 should provide for the same. A Here too, the Committee agreed that the protection given to the corporate debtor’s assets should in no way prevent the relevant investigating authorities from taking action against the property of persons in the erstwhile management of the corporate debtor, that may have been involved in the commission of such criminal offence. B 17.11. By way of abundant caution, the Committee also recognised and agreed that in all such cases where the resolution plan is approved, or where the assets of the corporate debtor are sold under liquidation, such approved resolution plan or liquidation sale of the assets of the corporate debtor’s assets would have to result in a change in control of the corporate debtor to a person who C was not a related party of the corporate debtor at the time of commission of the offence, and was not involved in the commission of such criminal offence along with the corporate debtor. Cooperation in Investigation D 17.12. While the Committee felt that the corporate debtor and bona fide purchasers of the corporate debtor or its property should not be held liable for offences committed prior to the commencement of insolvency, the Committee agreed that the corporate debtor and any person who may be required to provide assistance under the applicable law should continue to provide E assistance and cooperation to the authorities investigating an offence committed prior to the commencement of the CIRP. Consequently, the Committee recommended the new Section should provide for such continued cooperation and assistance.” The Additional Solicitor General also places reliance on the Sixth F Report of the Standing Committee of Lok Sabha made in March, 2020. The relevant portion according to the learned ASG are as follows: “ 3.8 “The stakeholders on the above clause furnished the G following suggestion:- “Though the Bill gives immunity to the corporate debtor (company as a legal entity) from prior offences, the individuals responsible for committing such offences on behalf of the debtor will still be held liable. The question is H

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A whether the debtor should be absolved of all kinds of prior offences with such a blanket immunity.” 3.9 The Secretary, Ministry of Corporate Affairs during the sitting held on 15th January, 2020 remarked:- “If the bidder, who is coming and participating under the B court supervised competitive process, does not get security and is not indemnified, there may be a problem.” 3.10 Further, the Ministry furnished the following comment on the above suggestion:

C “…this provision would only apply where the CIRP culminates in a change in control to a 75 completely unconnected resolution applicant. As such, a resolution applicant has nothing to do with the commission of any pre- CIRP offence whatsoever, and the corporate debtor is now fundamentally not the same entity as the one that committed the crime.” 3.11 The Committee are in agreement with the intent of this amendment to safeguard the position of the Resolution Applicant(s) by ring-fencing them from prosecution and liabilities under offences committed by erstwhile promoters etc. The Committee understand the need for treating the company or the Corporate Debtor as a cleansed entity for cases which result in change in the management or control of the corporate debtor to a person who was not a promotor or in the management control of the corporate debtor or related party of such person, or to a person against whom there are material evidence and pending complaint or report by the investigating authority filed in relation to the criminal offence. The Committee agree that this provision is essential to provide the Resolution Applicant(s) a fair chance to revive the unit which otherwise would directly go into liquidation, which may not be as beneficial to the economy. The Committee believe that this ring-fencing is essential to achieve revival or resolution without imposing additional liabilities on the Resolution Applicant, arising from malafide acts of the previous promoter or management.” H

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251Copy pinpoint251. Apart from the fact that it is intended to give a clean break to the successful resolution applicant, it is pointed out that it is hedged in with ample safeguards to avoid any exploitation. The same are as follows: “106. Section 32A was inserted to give a clean break to successful resolution applicants from the erstwhile management by shielding them and immunizing them from prosecution and liabilities for offences that may have been committed prior to the commencement of the CIRP. Further, ample safeguards have been incorporated in the said provision to prevent any exploitation, namely: i. The immunity is attracted only when a resolution plan is approved by the Adjudicating Authority under section 31 and the resolution plan results in the change in management or control of the corporate debtor. ii. The immunity is granted only to the corporate debtor and its property, where such property is covered under the resolution plan approved by the Adjudicating Authority under section 31, D from any liability or prosecution with regard to offences committed prior to the commencement of the corporate insolvency resolution process. iii. Any person who was a promoter or in the management or control of the corporate debtor or a related party or was in any E manner incharge of, or responsible to the corporate debtor for the conduct of its business and who was directly or indirectly involved in the commission of such offence shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor’s liability has ceased. F iv. Section 32A does not bar an action against the property of any person other than the corporate debtor against whom such an action may be taken under such law as may be applicable. v. Notwithstanding the immunity given under Section 32A, the G corporate debtor and any person, who may be required to provide assistance under such law as may be applicable to such corporate debtor or person, shall extend all assistance and co-operation to any authority investigating an offence committed prior to the commencement of the corporate insolvency resolution process.” H

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252Copy pinpoint252. Section 32A has been divided into three parts consisting of sub-Sections (1) to (3). Under sub-Section (1), notwithstanding anything contained, either in the Code or in any other law, liability of a corporate debtor, for an offence committed prior to the commencement of the CIRP, shall cease. Further, the corporate debtor shall not be liable to be prosecuted for such an offence. Both, these immunities are subject to B the following conditions: i. A Resolution Plan, in regard to the corporate debtor, must be approved by the Adjudicating Authority under Section 31 of the Code; C ii. The Resolution Plan, so approved, must result in the change in the management or control of the corporate debtor; iii. The change in the management or control, under the approved Resolution Plan, must not be in favour of a person, who was a promoter, or in the management and control of the corporate debtor, or in favour of a related party of the corporate debtor; iv. The change in the management or control of the corporate debtor must not be in favour of a person, with regard to whom the relevant Investigating Authority has material which leads it to entertain the reason to believe that he had abetted or conspired for the commission of the offence and has submitted or filed a Report before the relevant Authority or the Court. This last limb may require a little more demystification. The person, who comes to acquire the management and control of the corporate person, must not be a person who has abetted or conspired for the commission of the offence committed by the corporate debtor prior to the commencement of the CIRP. Therefore, abetting or conspiracy by the person, who acquires management and control of the corporate debtor, under a Resolution Plan, which is approved under Section 31 of the Code and the filing of the report, would remove the protective umbrella or immunity erected by Section 32A in regard to an offence committed by the corporate debtor before the commencement of the CIRP. To make it even more clear, if either of the conditions, namely abetting or conspiring followed by the report, which have been mentioned as aforesaid, are present, then, the liability of the corporate debtor, for an offence H

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committed prior to the commencement of the CIRP, will remain unaffected.;

253Copy pinpoint253. The first proviso in sub-Section (1) declares that if there is approval of a Resolution Plan under Section 31 and a prosecution has been instituted during the CIRP against the corporate debtor, the corporate debtor will stand discharged. This is, however, subject to the condition that the requirements in sub-Section (1), which have been elaborated by us, have been fulfilled. In other words, if under the approved Resolution plan, there is a change in the management and control of the corporate debtor, to a person, who is not a promoter, or in the management and control of the corporate debtor, or a related party of the corporate debtor, or the person who acquires control or management of the corporate debtor, has neither abetted nor conspired in the commission of the offence, then, the prosecution, if it is instituted after the commencement of the CIRP and during its pendency, will stand discharged against the corporate debtor. Under the second proviso to sub-Section (1), however, the designated partner in respect of the liability partnership or the Officer in default, as defined under Section 2(60) of the Companies Act, 2013, or every person, who was, in any manner, in-charge or responsible to the corporate debtor for the conduct of its business, will continue to be liable to be prosecuted and punished for the offence committed by the corporate debtor. This is despite the extinguishment of the criminal liability of the corporate debtor under sub-Section (1). Still further, every person, who was associated with the corporate debtor in any manner, and, who was directly or indirectly involved in the commission of such offence, in terms of the Report submitted and Report filed by the Investigating Authority, will continue to be liable to be prosecuted and punished for the offence committed by the corporate debtor. Thus, the combined reading of the various limbs of sub-Section (1) would show that while, on the one hand, the corporate debtor is freed from the liability for any offence committed before the commencement of the CIRP, the statutory immunity from the consequences of the commission of the offence by the corporate debtor is not available and the criminal liability will continue to haunt the persons, who were in in-charge of the assets of the corporate debtor, or who were responsible for the conduct of its business or those who were associated with the corporate debtor in any manner, and who were directly or indirectly involved in the commission of the offence, and they will continue to be liable. H

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254Copy pinpoint254. Coming to sub-Section (2) of Section 32A, it declares a bar against taking any action against property of the corporate debtor. This bar also contemplates the connection between the offence committed by the corporate debtor before the commencement of the CIRP and the property of the corporate debtor. This bar is conditional to the property being covered under the Resolution Plan. The further requirement is that a Resolution Plan must be approved by the Adjudicating Authority and, finally, the approved plan, must result in a change in control of the corporate debtor not to a person, who is already identified and described in sub-Section (1). In other words, the requirements for invoking the bar against proceeding against the property of the corporate debtor in relation to an offence committed before the commencement of the CIRP, are as follows: (i) There must be Resolution Plan, which is approved by the Adjudication Authority under Section 31 of the Code; (ii) The approved Resolution Plan must result in the change in control of the corporate debtor to a person, who was not – (a) a promoter; (b) in the management or control of the corporate debtor or (c) a related party of the corporate debtor; (d) a person with regard to whom the investigating authority, had, on the basis of the material, reason to believe that he has abetted or conspired for the commission of the offence and has submitted a Report or a complaint. If all these aforesaid conditions are fulfilled then the Law Giver has provided that no action can be taken against the property of the corporate debtor in connection with the offence;

F The Explanation to sub-Section (2) has clarified that the words “an action against the property of the corporate debtor in relation to an offence”, would include the attachment, seizure, retention or confiscation of such property under the law applicable to the corporate debtor. Since the word “include” is used under sub-clause (i) of the Explanation, the word “action” G against the property of the corporate debtor is intended to have the widest possible amplitude. There is a clear nexus with the object of the Code. The other part of the clarification, under the Explanation, is found in the second sub-clause of the Explanation (ii). Under the second limb of the Explanation, the H Law Giver has clearly articulated the point that as far as the

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property of any person, other than the corporate debtor or any person who had acquired the property of the corporate debtor through the CIRP or liquidation process under the Code and who otherwise fulfil the requirement under Section 32A, action can be taken against the property of such other person. Thus, reading sub-Section (1) and sub-Section(2) together, two results emerge – (i) subject to the requirements embedded in sub- Section (1), the liability of the corporate, debtor for the offence committed under the CIRP, will cease; (ii) The property of the corporate debtor is protected from any legal action again subject to the safeguards, which we have indicated. The bar against action against the property, is available, not only to the corporate debtor but also to any person who acquires property of the corporate debtor under the CIRP or the liquidation process. The bar against action against the property of the corporate debtor is also available in the case of a person subject to the same limitation as prescribed in sub-Section (1) and also in sub-Section (2), if he has purchased the property of the corporate debtor in the proceedings for the liquidation of the corporate debtor.

255Copy pinpoint255. The last segment of Section 32A makes it obligatory on the part of the corporate debtor or any person, to whom immunity is provided under Section 32A, to provide all assistance to the Investigating Officer E qua any offence committed prior to the commencement of the CIRP.

256Copy pinpoint256. The contentions of the petitioners appear to be that this provision is constitutionally anathema as it confers an undeserved immunity for the property which would be acquired with the proceeds of a crime. The provisions of the Prevention of Money-Laundering Act, F 2002 (for short, the PMLA) are pressed before us. It is contended that the prohibition against proceeding against the property, affects the interest of stakeholders like the petitioners who may be allottees or other creditors. In short, it appears to be their contention that the provisions cannot stand the scrutiny of the Court when tested on the anvil of Article G 14 of the Constitution of India. The provision is projected as being manifestly arbitrary. To screen valuable properties from being proceeded against, result in the gravest prejudice to the home buyers and other creditors. The stand of the Union of India is clear. The provision is born out of experience. The Code was enacted in the year 2016. In the course H

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A of its working, the experience it has produced, is that, resolution applicants are reticent in putting up a Resolution Plan, and even if it is forthcoming, it is not fair to the interest of the corporate debtor and the other stake holders.

257Copy pinpoint257. We are of the clear view that no case whatsoever is made out to seek invalidation of Section 32A. The boundaries of this Court’s jurisdiction are clear. The wisdom of the legislation is not open to judicial review. Having regard to the object of the Code, the experience of the working of the code, the interests of all stakeholders including most importantly the imperative need to attract resolution applicants who would not shy away from offering reasonable and fair value as part of the resolution plan if the legislature thought that immunity be granted to the corporate debtor as also its property, it hardly furnishes a ground for this this Court to interfere. The provision is carefully thought out. It is not as if the wrongdoers are allowed to get away. They remain liable. The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate. We must also not overlook the principle that the impugned provision is part of an economic measure. The reverence courts justifiably hold such laws in cannot but be applicable in the instant case as well. The provision deals with reference to offences committed prior to the commencement of the CIRP. With the admission of the application the management of the corporate debtor passes into the hands of the Interim Resolution Professional and thereafter into the hands of the Resolution Professional subject undoubtedly to the control by the Committee of Creditors. As far as protection afforded to the property is concerned there is clearly a rationale behind it. Having regard to the object of the statute we hardly see any manifest arbitrariness in the provision.

258Copy pinpoint258. It must be remembered that the immunity is premised on various conditions being fulfilled. There must be a resolution plan. It must be approved. There must be a change in the control of the corporate debtor. The new management cannot be the disguised avatar of the old management. It cannot even be the related party of the corporate debtor. The new management cannot be the subject matter of an investigation which has resulted in material showing abetment or conspiracy for the commission of the offence and the report or complaint filed thereto. These ingredients are also insisted upon for claiming exemption of the H

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bar from actions against the property. Significantly every person who A was associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of the offence in terms of the report submitted continues to be liable to be prosecuted and punished for the offence committed by the corporate debtor. The corporate debtor and its property in the context of the scheme of the code constitute a B distinct subject matter justifying the special treatment accorded to them. Creation of a criminal offence as also abolishing criminal liability must ordinarily be left to the judgement of the legislature. Erecting a bar against action against the property of the corporate debtor when viewed in the larger context of the objectives sought to be achieved at the forefront of which is maximisation of the value of the assets which again is to be achieved at the earliest point of time cannot become the subject of judicial veto on the ground of violation of Article 14. We would be remiss if we did not remind ourselves that attaining public welfare very often needs delicate balancing of conflicting interests. As to what priority must be accorded to which interest must remain a legislative value judgement and if seemingly the legislature in its pursuit of the greater good appears to jettison the interests of some it cannot unless it strikingly ill squares with some constitutional mandate suffer invalidation.

259Copy pinpoint259. There is no basis at all to impugn the Section on the ground that it violates Articles 19, 21 or 300A. E VESTED RIGHT; RETROSPECTIVITY; THE 3 rd PROVISO IN SECTION 7

260Copy pinpoint260. We will recapitulate the third proviso, at this juncture. “7(1) xxx xxx xxx F Explanation xxx xxx xxx xxx xxx xxx Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first and G second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first or second proviso within thirty days of the commencement of the said Act, H

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A failing which the application shall be deemed to be withdrawn before its admission.”

261Copy pinpoint261. A perusal of the same, makes it clear that the third proviso is a one-time affair. It is intended only to deal with those applications, under Section 7, which were filed prior to 28.12.2019, when, by way of the impugned Ordinance, initially, the threshold requirements came to be introduced by the first and the second impugned provisos. In other words, the legislative intention was to ensure that no application under Section 7 could be filed after 28.12.2019, except upon complying with the requirements in the first and second provisos. The Legislature did not stop there. It has clearly intended that the threshold requirement it imposed, will apply to all those applications, which were filed, prior to 28.12.2019 as well, subject to the exception that the applications, so filed, had not been admitted, under Section 7(5). In other words, the Legislature intended that in every application, filed under Section 7, by the creditors covered by the first proviso and by the allottees governed by the second proviso, should also be embraced by the newly imposed threshold requirement for which, it was intended, should be complied within 30 days from the date of the Ordinance. However, this restriction was not to apply to those applications which stood admitted as on the date of the Ordinance. It is also clear that the consequence of failure to comply with the threshold requirement, in regard to applications, which have been filed earlier, was that they would stand withdrawn.

262Copy pinpoint262. In this regard, several contentions are raised. It is pointed out by the learned Counsel for the petitioners, apart from the plea of discrimination, which is alleged against the first and second provisos, that the third proviso, makes a clear incursion into a vested right. The F impugned third proviso is afflicted with the vice of manifest arbitrariness. It is contended that the petitioners, who had moved an application under the erstwhile regime, were legally entitled to make such an application, whether it is by a single allottee or jointly. This was a substantive right. Availing such substantive right, under a Statute, when the application G stood instituted, they had the right to continue with the proceeding unimpaired and unhindered by the new threshold requirement, which cannot be made applicable in their cases. It is contended that when there is a repeal of a Statute, the existing rights are saved. In this case, there was an existing right with the petitioners to institute the application under Section 7 and, therefore, this right cannot be imperilled by enacting H

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the amendment. It is pointed out that the statutory time limit to decide an application, was fourteen days. This Court, in Pioneer (supra), also stressed the importance of disposing matters, within the period, even though, it may have laid down that the period is not inflexibly mandatory and that it is directory. In the case of the petitioners, the applications were pending for more than a year. Classifying the applications under the same head, is arbitrary and irrational. The petitioners have spent substantial sums towards court fee, legal and other expenses, in addition to considerable time. There is no provision to ameliorate their losses. Withdrawals and fresh filing would derail the insolvency process. Our attention is draw to the judgment of this Court in Hitendra Vishnu Thakur and others v. State of Maharashtra and others71, wherein this Court laid down that Statute, which affects substantive right, is presumed to be prospective, unless made retrospective expressly or by necessary intendment. Every litigant has a vested right in substantive matters but no such right exists in procedural law. The law relating to right of action and right of appeal, even though remedial, is substantive in nature. A D procedural Statute should not, generally speaking, be applied retrospectively, where the result would be to create new disabilities or obligations or to impose new duties in respect of accomplished transactions. Reliance is placed similarly on the judgment of this Court in Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal & Co. and another72. The period of 30 days is far too short and that too, under an amendment, E which is itself impossible to comply with. In this regard, also judgment of this Court in B.K. Educational Services Private Ltd. v. Parag Gupta and Associates 73 , is referred to. The proviso cannot be applied retrospectively. The proviso is penal, arbitrary, unjust and unfair. Reliance is placed on In Re: Pulborough Parish School Board Election, Bourke v. F Nutt74.

263Copy pinpoint263. Per contra, the stand of the respondents in this regard, is as follows: The third proviso does not affect any rights of the creditors in question. By merely filing an application under Section 7, no absolute G right is created. In this regard, reliance is placed on judgments of this Court in (2004) 1 SCC 663, (2019) 2 SCC 1, (2019) 4 SCC 17, (2015) 3 71 (1994) 4 SCC 602 72 (2001) 8 SCC 397 73 (2019) 11 SCC 633/ 2018 1 IBJ (JP) 649 SC 74 (1894) 1 QB 725 H

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A SCC 206, (2019) SCCONLINE SC 1478. It is further contended that the mere right to take advantage of a statue is not a vested right. And in this regard out attention is drawn to following Judgments – (1961) Vol. 2 All Eng. 721, (1980) 1 SCC 149; Lalji Raja and Sons (supra), (1985) 1 SCC 436. The impugned third proviso is intended to protect the collective interest of others in a class of creditors. Before admission of an application, there is no vested right. Therefore, it does not have retrospective application, in a manner that impairs vested right. This requirement would ensure that there is no needless multiplicity and no single allottee would be able to achieve admission and its consequences without having a certain minimum number of compatriots on board. Even vested right can be taken away by the Legislature [(1957 SCR 488].

264Copy pinpoint264. The first question, which we would have to answer, is whether the right under the unamended Section 7 was a vested right of the financial creditors or allottees covered by the provisos 1 and 2, respectively. This brings us squarely to the question as to what constitutes a vested right. D Learned ASG contends that there is no vested right till the application is admitted. It is also contended that the right was only one to take advantage of a Statute. In Salmond on Jurisprudence, the following characteristics have been found indispensable to constitute a right: “41. The characteristics of a legal right E Every legal right has the five following characteristics: - (1) It is vested in a person who may be distinguished as the owner of the right, the subject of it, the person entitled, or the person of inherence.

F (2) It avails against a person, upon whom lies the correlative duty. He may be distinguished as the person bound, or as the subject of the duty, or as the person of incidence. (3) It obliges the person bound to an act or omission in favour of the person entitled. This may be termed the content of the right. G (4) The act or omission relates to some thing (in the widest sense of that word), which may be termed the object or subject-matter of the right. (5) Every legal right has a title, that is to say, certain facts or event by reason of which the right has become vested in its owner.” H

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265Copy pinpoint265. Legal rights are, in a wider sense, of four distinct kinds. A They are rights, liberties, powers and immunities. Duty is the correlative of a right, while, no rights correspond to liberties. Liabilities have a nexus with the power exercised by another person, with regard to whom, the liability exists in another party. When somebody has an immunity against another, it disables the latter, and thus, it constitutes a disability for him. B Salmond notes further that the term right is often used in the wide sense to include liberty by which it is meant to have one left free to do as he pleases.

266Copy pinpoint266. We may notice the following discussion relating to powers and liabilities: C “2. Powers and liabilities. Yet another class of legal rights consists of those which are termed powers. Examples of such are the following: the right to make a will, or to alienate property; the power of sale vested in a mortgagee; a landlord’s right of re- entry; the right to marry one’s deceased wife’s sister; the power to sue and to prosecute; the right to rescind a contract for fraud; D a power of appointment; a power of appointment; the right of issuing execution on a judgment; the various powers vested in judges and other officials for the due fulfilment of their functions. All these are legal rights-they are legally recognized interests- they are advantages conferred by the law-but they are rights of a E different species from the two classes which we have already considered. …… My right to make a will corresponds to no duty in any one else. A mortgagee’s power of sale is not the correlative of any duty imposed upon the mortgagor; xxx xxx xxx xxx F A power may be defined as ability conferred upon a person by law to alter, by his own will directed to that end, the rights, duties, liabilities or other legal relations, either of himself or of other persons. …” (Emphasis supplied) G

267Copy pinpoint267. It may be asked whether a right of action is a right or a power. Is there a duty with anyone in the case of a right to an action? We need not probe this further as a power is also a right in the wider sense. The right to sue and right to appeal has been so recognized as we will notice. H

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268Copy pinpoint268. As far as the distinct kind of legal rights are concerned, in the classification made by Salmond75 which counts nine distinct legal classifications of legal rights, we notice the following discussion of classification between vested and contingent rights. To quote: “Vested and contingent rights. A right vests when all the B facts have occurred which must by law occur in order for the person in question to have the right. A right is contingent when some but not all of the vestive facts, as they are termed, have occurred. A grant of land to A in fee simple will give A a vested right of ownership. A grant to for life and then to in fee simple if he survives A, gives B a contingent right. It is contingent because some of the vestive facts have not yet taken place, and indeed may neve do so: B may not survive A. if he does, his formerly contingent right now becomes vested. A contingent right then is a right that is incomplete. A contingent right is different, however from a mere hope D of spes. If A leaves B a legacy in his will, B has no right to this during A’s lifetime. He has no more than a hope that he will obtain a legacy; he certainly does not have an incomplete right, since it is open to A at any time to alter his will.”

269Copy pinpoint269. In Garikapati Veeraya (supra), the suit was filed on E 22.04.1949. The High Court decreed the suit in an appeal by the plaintiff on 04.03.1955. The petitioner before this Court contended that since the valuation of the suit was more than Rs. 10,000, in terms of the clause 39 of the Letters Patent, 1865, an appeal was maintainable before the Supreme Court. No doubt this involved the argument that the appeal in F fact lay to the Federal Court as all appeals would lie to the Federal Court in view of the abolition of the Privy Council in 1949. Since, the Federal Court was replaced by Supreme Court, the appeal lay before this Court.

270Copy pinpoint270. After consideration of the case law we notice the following principles which have been laid down by this Court. G “23(i) That the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. (ii) The right of appeal is not a mere matter of procedure but is a substantive right. H 75 See “Salmond on Jurisprudence, 12 th Edition, P J Fitzgerald”

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(iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit. (iv) The right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse judgment is pronounced such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal. (v) This vested right of appeal can be taken away only by a C subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise. (Emphasis supplied)

271Copy pinpoint271. It is clear that the institution of a suit leads to the inference that the right of appeal is preserved. There is a vested right of appeal. D The vested right of appeal accrues to the litigant and exists from the day of the institution of the lis (suit). Therefore, while the remedy of an appeal may be provided under the statute that right becomes a vested right only from the point of time that the suit is filed either by the appellant or the opposite party. All of this undoubtedly is subject to a subsequent enactment not interfering with the right of an appeal.

272Copy pinpoint272. In Lalji Raja and Sons v. Hansraj Nathuram76, this court inter alia held as follows: “16. That a provision to preserve the right accrued under a repealed Act “was not intended to preserve the abstract rights conferred by the repealed Act.... It only applies to specific rights given to an individual upon happening of one or the other of the events specified in statute see” — Lord Atkin’s observations in Hamilton Cell v. White. [(1922) 2 KB 422] The mere right, existing at the date of spealing statute, to take advantage of provisions of the statute repealed is not a “right accrued” within the meaning of the usual saving clause — see Abbot v. Minister for Lands [(1895) AC 425] and G. Ogden Industries Pvt. Ltd. v. Lucas. [(1969) 1 All ER 121]”

276 (1971) 1 SCC 721 H

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273Copy pinpoint273. It is apposite to notice the context in which the said observations were made. There was an ex parte decree passed by a Court in West-Bengal in 1949. It was transferred to a Court (Morena) in Old Madhya Bharat State. The Execution Petition was dismissed on the ground that it was an ex parte Decree by a foreign court. This Court noted that Sections 38 and 39 of the Code of Civil Procedure did not B apply on the day in question, and therefore, the transfer orders was without jurisdiction. On 1st April, 1951 the CPC was extended to former state of Madhya Bharat. The decree holders sought a fresh transfer of the decree to the very same court as earlier namely Morena which had become part of State of Madhya Pradesh to which CPC applied. The C High Court upheld the contention of the judgment debtor that the decree could not be executed as being of the foreign court. This Court reversed the High Court judgment. The argument which was raised, was based on Section 20 of the Code of Civil Procedure (Amendment) Act, 1951, by which the Code was extended to Madhya Bharat. There was a repeal of the law that prevailed in the State when the amendment to the CPC in D 1951 was made applicable. There was, however, also a proviso which saved rights privileges, obligations and liabilities acquired, accrued or incurred. The contention therefore of the judgment debtor was that the judgment debtor’s right to resist was preserved under the saving clause. It was found by this Court that the provisions of CPC enforced in Madhya E Bharat did not confer the right claimed by the judgment debtor. All that happened as a result of the extension of the Code to the whole of India in 1951, was that the decrees which could have been executed in the British India could now be executed in the whole of India. It is, therefore, in the context of a repeal and as to whether right to take advantage of the repealed law constituted a right accrued under the usual saving clause F that the observations made in paragraph 16 are to be understood.

274Copy pinpoint274. This Court made reference to a few decisions (paragraph- 16) including Abbott and Minister of Lands77. We think, it is appropriate that we advert to the issues which were involved in the said cases.

275Copy pinpoint275. In Abbott (supra), the Privy Council had to deal with the following factual matrix, in short: The appellant effected a conditional purchase under Section 22 of the Crown Lands Alienation Act, 1861, adjoining the land which he had acquired in fee simple. He made certain applications, seeking to 77 H (1895) AC 425

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make further additional conditional purchases of certain adjoining lands A as also seeking a lease. The questions which arose for the opinion of the court were three in number. Firstly, the question arose whether the conditional purchase which the appellant had made, constituted him the holder of an original conditional purchase, under Section 42 of the Act of

1884. Still further, the question fell for decision as to whether Section 22 B of the Crown Lands Act of 1884 reserved the right for the appellant the right to purchase additional conditional purchases of adjoining crown lands, which were allowed to the full area of 648 acres allowed by the repealed Act. Thirdly, the question arose, as to whether supposing him to be entitled to the additional conditional purchase, was he entitled to the conditional lease which he had applied for? Section 22 of the 1861 C Act was repealed and in the later Act, there was no corresponding provision to Section 22 but there was a saving proviso which enabled the appellant, according to him, to make an additional conditional purchase, as if Section 22 remained in force. The saving clause saved all the accrued rights and liabilities. Noticing the change in the condition of residence, D which had been earlier imposed, being done away with, the Court went on to hold as follows: “It has been very common in the case of repealing statues to save all rights accrued. If it were held that the effect of this was to leave it open to any one who could have taken advantage of them, the result would be very far-reaching. E It may be, as Windeyer J. observes, that the power to take advantage of an enactment may without impropriety be termed a “right”. But the question is whether it is a “right accrued” within the meaning of the enactment which has to be construed. F Their Lordships think not, and they are confirmed in this opinion by the fact that the words relied on are found in conjunction with the words “obligations incurred or imposed”. They think that the mere right (assuming it to be properly so called existing in the members of the community or any class of them to take advantage of an enactment, without any act done by an individual towards G availing himself of that right, cannot properly be deemed a “right accrued” within the meaning of the enactment.”

276Copy pinpoint276. In Hamilton Gell v. White78, upon a quit notice given by the landlord, the tenant sought to avail the benefit of Section 11 of the 78 (1922) 2 K.B. 422 H

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A Agricultural Holdings Act, 1914 by successfully complying with one out of the two conditions for seeking the compensation. Before the tenant could comply with the further condition, which was that he should move the action within two months, after quitting the holding, Section 11 was repealed. He subsequently made his claim within three months, as limited by the repealed Section. The matter went to an Arbitrator. The Arbitrator B stated a special case. He raised two questions. Firstly, whether the tenant was entitled to claim compensation under the repealing Act of 1920 and, secondly, whether he could claim under the repealed Act notwithstanding the repeal. The first question was answered against the tenant, with which, the Court of Appeal agreed. As regards the second question, the C Court was of the view that the tenant was entitled to succeed. The following is the reasoning, in short: “SCRUTTON L.J. … But it is not suggested by the appellant that his right to compensation was acquired by his giving notice of intention to claim it, what gave him the right was the fact of the landlord having given a notice to quit in view of a sale. The conditions imposed by s. 11 were conditions, not of the acquisition of the right, but of its enforcement. Sect. 38 says that repeal of an Act shall not (c) “affect any right …. acquired …. under any enactment so repealed,” or (e) “affect any investigation, legal proceeding, or remedy in respect of any such right.” As soon as the tenant had given notice of his intention to claim compensation under s. 11 he was entitled to have that claim investigated by an arbitrator. In the course of that arbitration he would no doubt have to prove that that right in fact existed, that is to say that the notice to quit was given in view of a sale, and he would also have to prove the measure of his loss. But he was entitled to have that investigation, which had been begun, continue, for s. 38 expressly provides that the investigation shall not be affected by the repeal. I should like to add that the arbitrator would be well advised to make his award complete. If he had continued his investigation and said: If it is found that the tenant had a right I assess the compensation at so much under the Act of 1908 and so much under the Act of 1920 we should have been able to give our final judgment.” (Emphasis supplied)

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[K. M. JOSEPH, J.]

277Copy pinpoint277. The decision thus turned on the point of time at which the A right arose.

278Copy pinpoint278. Atkin LJ., as he then was, agreed that the Appeal should be allowed and went on to hold as follows: “ATKIN L.J. …. It is obvious that that provision was not intended to preserve the abstract rights conferred by the repealed B Act, such for instance as the right of compensation for disturbance conferred upon tenants generally under the Act of 1908, for if it were the repealing Act would be altogether inoperative. It only applies to the specific rights given to an individual upon the happening of one or other of the events specified in the statute. C Here the necessary event has happened, because the landlord has, in view of a sale of the property, given the tenant notice to quit. Under those circumstances the tenant has “acquired a right,” which would “accrue” when he has quitted his holding, to receive compensation. …” D

279Copy pinpoint279. In Odgen Industries Pty. Ltd. v. Haider Doreen 79 Lucas ,the following facts in a case which originated in Australia may be noticed. An employee of the appellant died on 7th July, 1965. His death was materially contributed by injuries, which, in turn, arose out of and in the course of his employment with the appellants. The employee was hospitalized in March, 1965 for treatment and he again came to be hospitalized in 19th June, 1965 and, thereafter, he died on 07.07.1965. He left behind him the respondent, his widow and two children under the age of 16, who were wholly dependent on the employee’s earnings. The amount of compensation for the dependents would have been calculated under the Workers Compensation Act, 1958. The Act, however, was amended by the Workers Compensation (Amendment) Act, 1965. The Amendment Act, came into force for 01.07.1965. The Amendment Act increased the benefits payable to the dependents. The High Court of Australia dismissed the appeal of the employer and affirmed the award of the Workman’s compensation board paying the increased compensation under the Amending Act. The Privy Council was called upon to decide two questions. Firstly, the question was whether, as the Amendment Act came into operation after the original injury to the employee, his dependents were entitled to the increased rates prescribed by the amending Act. Secondly, did the deceased, after the 30.06.1965, 79 3 WLR 75 / (1969) (1) All England Reports 121 H

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A suffer a further injury or aggravation, which gave him new title for the purpose of the Amendment Act. The Court, went on to hold as inter-alia follows: “Under the Act of 1958 the widow did not have to prove that she was in fact dependent upon the earnings of her husband though under the Amendment Act she has to do so. Nevertheless, it is quite clear as a matter of law that no single person can say under either Act the moment before the death “I shall be a dependant at the death if I so long live.” First, it must be established that the death was caused or contributed to by the accident, secondly that the widow will be the deceased’s widow at the date of death and not dead or married to some other man, and the children must show that they are under sixteen. None of these things can be ascertained (let alone proved) until after the moment of death of the worker. In their Lordships’ opinion in section 7 (2)(c) the rights, privileges and obligations acquired or accrued on the one side and the liabilities incurred on the other side referred to in that paragraph are mutual and correlative. … The object and intent of the Interpretation Act is to preserve rights and privileges acquired or accrued on the one side and the corresponding obligation or liability incurred by the person bound to observe or perform those rights or privileges on the other side; so that when a subsequent Act repeals or amends those rights, privileges and liabilities for the future that would not affect the pre-existing mutual rights and liabilities of the parties. …. But in the view that their Lordships take there is for the purposes of the Interpretation Act no right in the dependants and no correlative liability upon the worker’s employers until the moment of death. Therefore apart altogether from authority their Lordships are of opinion that the Acts Interpretation Act has no application and the rights of the dependants and the corresponding liability of the employer must be tested and ascertained at the date of the death; at that time there was an obligation upon the employer under and by virtue of the Act of 1958 as amended by the Amendment Act to compensate the dependants in accordance with its provisions. That was the ground of decision of the majority of the High Court

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[K. M. JOSEPH, J.]

in their very careful judgments with which their Lordships agree. A …” (Emphasis supplied)

280Copy pinpoint280. It will be, at once, noticed that the saving clause in the repealing Act, was not the basis for the judgment rendered in favour of the employee. The compensation was ordered based on the law prevalent at the time of death.

281Copy pinpoint281. Now, it is necessary to refer to the judgment of this Court in Isha Valimohamed v. Haji Gulam Mohamad & Haji Dada Trust80. The facts in the said case are to be noticed in some detail for it may have bearing on the questions to be answered by us. The Respondent landlord purported to terminate the tenancy in relation to a building by a notice dated 12.02.1964 on the ground inter alia of subletting. It must be noticed that at the time the subletting took place the building was covered by Saurashtra Rent Control Act, 1951. The said Act provided that the landlord shall be entitled to recover possession in the case of subletting by the tenant. It is while this Act was in force that the tenant sublet the premises. However, the Saurashtra Act came to be repealed by the Bombay Rents, Hotels and Lodging Houses Rates Control Act, 1947 on 31.12.1963. Section 51 of the Bombay Act, inter alia, contained the saving clause that the repeal would not affect any right, privilege, obligation, liability accrued or incurred under any law so repealed. The notice, terminating tenancy was issued on 12.02.1964 after the repeal of the ‘Saurashtra Act’. The High court took the view that the landlord had an accrued right under saving clause of the Bombay Act. The suit was brought after the repeal.

282Copy pinpoint282. This Court adopted the following reasoning: F If the notice under the Transfer of Property was necessary to determine the tenancy on the ground of subletting, then the High Court would not be correct that the respondent landlord had an accrued right before issue of notice. Thereafter, the Court went on to consider ‘Hamilton’ (supra) and ‘Abbott’ (supra) inter G alia. Thereafter, the Court went on to consider the argument as to whether the landlord had a privilege under the saving clause.

80 (1974) 2 SCC 484 H

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A Thereafter, what is relevant is that this Court went on to find that the High Court was not right in proceeding on the basis of that notice was necessary under Transfer of Property Act to terminate on the ground that the appellant had sublet the premises.

283Copy pinpoint283. It is apposite to notice the reasoning in paragraph-16: B “16. Under the Transfer of Property Act, mere sub-letting, by a tenant, unless the contract of tenancy so provides, is no ground for terminating the tenancy. Under that Act a landlord cannot terminate a tenancy on the ground that the tenant had sub-let the premises unless the contract of tenancy prohibits him from doing so. The respondent-landlord therefore could not have issued a notice under any of the provisions of the Transfer of Property Act to determine the tenancy, as the contract of tenancy did not prohibit sub-letting by the tenant. To put it, differently, under the Transfer of Property Act, it is only if the contract of tenancy prohibits sub- letting by tenant that a landlord can forfeit the tenancy on the ground that the tenant has sub-let the premises and recover possession of the same after issuing a notice. Section 111 of the Transfer of Property Act provides that a lease may be determined by forfeiture if the tenant commits breach of any of the conditions of the contract of tenancy which entails a forfeiture of the tenancy. E If sub-letting is not prohibited under the contract of tenancy, sub- letting would not be a breach of any condition in the contract of tenancy which would enable the landlord to forfeit the tenancy on that score by issuing a notice. If that be so, there was no question of the respondent landlord terminating the tenancy under the Transfer of Property Act on the ground that the tenant had sub- F let the premises. It is only under Section 13(1)(e) of the Saurashtra Act that a landlord was entitled to recover possession of the property on the basis that the tenant had sub-let the premises; and, that is because, Section 15 of that Act unconditionally prohibited a tenant from sub-letting. The Saurashtra Act nowhere G insists that the landlord should issue a notice and terminate the tenancy before instituting a suit for recovery of possession under Section 13(1)(e) on the ground that the tenant had sub-let the premises. The position, therefore, was that the landlord was entitled to recover possession of the premises under Section 13(1) of the Saurashtra Act on the ground that the tenant sublet the premises. H

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[K. M. JOSEPH, J.]

It would follow that a right accrued to the landlord to recover A possession under Section 13(1) of the Saurashtra Act when the tenant sub-let the premises during the currency of that Act and the right survived the repeal of that Act under proviso (2) to Section 51 of the Bombay Act and, therefore, the suit for recovery of possession of the premises under Section 13(1) read with clause B (e) of the Saurashtra Act after the repeal of that Act on the basis of the sub-letting during the currency of the Saurashtra Act was maintainable. In this view, we think that the judgment of the High Court must be upheld and we do so.”

284Copy pinpoint284. Thus, what is relevant, this Court went on to find under the Saurashtra Act, there was no requirement of any notice to terminate the C tenancy. It was found that the landlord was entitled to recover the possession under the said Act, if there was subletting. In other words, the Court went on to hold that a right accrued to the landlord under the Saurashtra Act upon the appellant subletting the premises. It was during the pendency of the Saurashtra Act. This right survived the repeal of the D Saurashtra Act and thus the suit under the Saurashtra Act was maintainable.

285Copy pinpoint285. Apparently, the Court drew support from the principle in Hamilton (supra). We have already noticed the facts of Hamilton (supra). The question in short would appear to be as to when the right comes into existence? If, the right comes into existence then the remedy can be pursued by the party entitled.

286Copy pinpoint286. This again would necessarily depend upon the terms of the repealing enactments as also the terms of the saving clause. In the absence of a saving clause, no doubt a party can also fall back on the Section 6 of the General Clauses Act, 1897. This is again subject to what is held about the scope of a saving clause in (1989) 2 SCC 557 as will be noticed later on.

287Copy pinpoint287. What is further significant to be noticed is that the decision involved a case where, though styled as a suit, the proceeding under the Saurashtra Act was a proceeding under a Statute and the right was one created by the statute and what gave the right to the landlord was an act of subletting. The said right was what was not wiped out by the repeal. As already noticed the suit itself was filed after the repeal. The discussion on the distinction between a privilege and an accrued right in the said

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A decision has been relied upon recently in a judgement by one of us (Justice R.F. Nariman) in Bombay Stock Exchange v. V.S. Kandalgaonkar81.

288Copy pinpoint288. In New India Assurance Co. Ltd. v. Shanti Misra82, the husband of the first respondent died as a result of a motor accident. The suit could be brought under Article 82 of the Limitation Act 1963 within B two years of the accident. On 18.03.1867, the Government of Uttar Pradesh constituted the claim Tribunal under Section 110 of the Motor Vehicle Act. The application of the respondents before the Tribunal was objected to by the appellant insurer. While deciding in favour of the respondents and holding that the application was maintainable before the Tribunal, this court, inter-alia, held as follows: C “… If action, before Civil Court was alive where no suit had been filed “In such cases the vested right of action was not meant to be extinguished. The remedy of either application under Section 110A or a civil suit must be available; surely not both.”

289Copy pinpoint289. Thereafter, it was held, inter-alia, as follows: D “5. On the plain language of Sections 110-A and 110-F there should be no difficulty in taking the view that the change in law was merely a change of forum i.e. a change of adjectival or procedural law and not of substantive law. It is a well-established proposition that such a change of law operates retrospectively and the person has to go to the new forum even if his cause of action or right of action accrued prior to the change of forum. He will have a vested right of action but not a vested right of forum. If by express words the new forum is made available only to causes of action arising after the creation of the forum, then the retrospective operation of the law is taken away. Otherwise the general rule is to make it retrospective. The expressions “arising out of an accident” occurring in sub-section (1) and “over the area in which the accident occurred”, mentioned in sub-section (2) clearly show that the change of forum was meant to be operative retrospectively irrespective of the fact as to when the accident occurred. To that extent there was no difficulty in giving the answer in a simple way.” (Emphasis supplied) 81 (2015) 2 SCC 1 82 H (1975) 2 SCC 840

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[K. M. JOSEPH, J.]

290Copy pinpoint290. We may also notice that in regard to the question as to whether A a new law of Limitation could extinguish vested right of action, it was held, inter-alia, as follows: “7. (2) Even though by and large the law of limitation has been held to be a procedural law, there are exceptions to this principle. Generally the law of limitation which is in vogue on the date of the B commencement of the action governs it. But there are certain exceptions to this principle. The new law of limitation providing a longer period cannot revive a dead remedy. Nor can it suddenly extinguish a vested right of action by providing for a shorter period of limitation.” C It is important to notice paragraph-9: “9. In Gopeshwar Pal v. Jiban Chandra Chandra [ILR 51 Cal 1125] Jenkins, C.J. delivering the judgment on behalf of the majority of the Full Bench said at p. 1141: “Here the plaintiff at the time when the amending Act was passed D had a vested right of suit, and we see nothing in the Act as amended that demands the construction that the plaintiff was thereby deprived of a right of suit vested in him at the date of the passing of the amending Act. It is not (in our opinion) even a fair reading of Section 184 and the third Schedule of the Bengal Tenancy Act, E as amended, to hold that it was intended to impose an impossible condition under pain of the forfeiture of a vested right, and we can only construe the amendment as not applying to cases where its provisions cannot be obeyed.” The majority of the Full Bench of the Madras High Court in Rajah F Sahib Meharban-i-Doston Sri Raja Row V.K.M. Surya Row Bahadur, Sirdar, Rajahmundry Sircar and Rajah of Pittapur v. G. Venkata Subba Row [ILR 34 Mad 645] has taken the same view following the Full Bench decision in Gopeshwar Pal case at p.

650. Amendment of the law of limitation could not destroy the plaintiff’s right of action which was in existence when the Act G came into force. We are conscious of the distinction which was sought to be made in the application of these principles. It was said that the right could not be destroyed but recourse to suit would be available under the old law of limitation. We, however, think that giving retrospective effect to the change of law in relation H

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A to the forum, in the context of the object of the change, is imperative. That being so the principles aforesaid for overcoming the bar of limitation will be applicable.”

291Copy pinpoint291. This judgment has been followed in Vinod Gurudas Raikar v. National Insurance Co. Ltd. & ors83 and also in Union of India v. B Harnam Singh84 and recently also by this Court in B.K. Educational Services (supra).

292Copy pinpoint292. In V. Dhanapal Chettiar v. Yesodai Ammal85, a Bench of seven learned Judges while taking the view that a notice to quit under section 106 of the TP Act 1882 was not necessary for an Eviction C Petition under any of the State Rent Acts observed in regard to Isha Valimohamed (supra) that the view taken in the said case that the landlord could not have issued notice to determine the tenancy on the ground of subletting under any of the provisions of Transfer of Property Act was not correct as a notice issued under Section 111 (h) does not require any ground to be made out for termination of the tenancy. It was further held that the view taken in Isha Valimohamed (supra), in this regard, would be taken only under Section 111 (g).

293Copy pinpoint293. In D. C. Bhatia v. Union of India86, the Delhi Rent Control Act came to be amended with effect from 01.12.1988, by which amendment, the Act was not to apply to any premises, the monthly rent of which exceeded Rs.3500/-. Dealing with the tenants’ contention that he had a vested right this Court took the view that if the tenant is sought to be evicted before the amendment, they could have taken advantage of the provisions of the Act to resist such eviction. But this was nothing more than the right to take advantage of the law and the tenant had statutory protection only as long as the law remains in force. We may only notice paragraph-53. It read as under: “53. The provisions of a repealed statute cannot be relied upon after it has been repealed. But, what has been acquired under the Repealed Act cannot be disturbed. But, if any new or further step is needed to be taken under the Act, that cannot be taken even after the Act is repealed.” (Emphasis supplied) 83 (1991) 4 SCC 333 84 (1993) 2 SCC 162 85 (1979) 4 SCC 214 H 86 (1995) 1 SCC 104

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[K. M. JOSEPH, J.]

294Copy pinpoint294. In Mst. Bibi Sayeeda & Ors. v. State of Bihar and Others87, A the Court was to dealing with the meaning of the word ‘Bazar’ in the Bihar Land Reforms Act, 1950 (Bihar Act 30 of 1950). In the course, of the said judgement the Court went on to hold that the right of the proprietor of a State to hold a ‘Mela’ on its own land is a right in the estate being appurtenant to the ownership of his land. In the context, of property rights undoubtedly the Court went on to make the following observations: “17. The word ‘vested’ is defined in Black’s Law Dictionary (6th Edn.) at p. 1563 as: “Vested; fixed; accrued; settled; absolute; complete. Having the character or given the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent.” Rights are ‘vested’ when right to enjoyment, present or prospective, has become property of some particular person or persons as present interest; mere expectancy of future benefits, or contingent interest in property founded on anticipated continuance of existing laws, does not constitute vested rights. In Webster’s Comprehensive Dictionary, (International Edn.) at p. 1397 ‘vested’ is defined as: “[L]aw held by a tenure subject to no contingency; complete; established by law as a permanent right; vested interests.”

295Copy pinpoint295. Though this is a case which dealt with vested right qua property there is indeed authority for the proposition that the concept of vested right is not confined to a property right. In this regard we may profitably refer to the special bench of judgement of High Court of F Calcutta reported in Gopeshur Pal v. Jiban Chandra Chandra and others88, referred to by this Court in AIR 1976 SC 237 (supra) when it was, inter alia, held: 3.‘‘On the contrary, the essential conditions of the two cases are so distinct that in our opinion it cannot be said that the earlier G decision is, in relation to the circumstances of this case, affected by the judgment of the Privy Council. It is an established axiom of construction that though procedure may be regulated by the Act 87 (1996) 9 SCC 516/AIR 1996 SC 1936 88 AIR 1914 Calcutta 806 H

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A for the time being in force, still, the intention to take away a vested right without compensation or any saving, is not to be imputed to the Legislature, unless it be expressed in unequivocal terms [cf. The Commissioner of Public Works v. Logan [L.R. 1903 A.C. 355.]]. That this view is not limited to those cases where rights of property in the limited sense are involved, is shown by the Colonial Sugar B Refining Co. v. Irving [L.R. 1905 A.C. 369.], where it was held that an Act ought not to be so construed as to deprive a suitor of an appeal in a pending action, which belonged to him as of right at the date of the passing of the Act. Equally is a right of suit a vested right, and in Jackson v. Woolley [8 Ell. and Bl. 784 (1859).], C the Court of Exchequer Chamber declined, in the absence of something putting the matter beyond doubt, to put on an Act a construction that would deprive any person of a right of action vested in him at the time of the passing of the Act.

4. William, J. said: “It would require words of no ordinary strength D in the statute to induce us to say that it takes away such a vested right.”

296Copy pinpoint296. In M.S. Shivananda v. Karnataka SRTC89, under an ordinance, employees of the erstwhile State Carriage Operators were to be absorbed by State Road Transport corporation subject to certain conditions. The E ratio was provided. The ordinance was replaced by an Act. The ratio, however, stood altered. This affected the chances of absorption of the workers. This led to writ petitions. The question which fell to be decided with reference to the effect of repeal and what constituted a right. The court held inter-alia as follows:

F “15. The distinction between what is, and what is not a right preserved by the provisions of Section 6 of the General clauses Act is often one of great fineness. What is unaffected by the repeal of a statute is a right acquired or accrued under it and not a mere “hope or expectation of”, or liberty to apply for, acquiring a right. In Director of Public Works v. Ho Po Sang [(1961) 2 All G ER 721, 731 (PC)] Lord Morris speaking for the Privy Council, observed: “It may be, therefore, that under some repealed enactment, a right has been given but that, in respect of it, some investigation or 89 H (1980) 1 SCC 149