Supreme Court Clarifies Banking Operations in Hamdard Laboratories Dispute: Hammad Ahmed vs. Abdul Majeed (2019) INSC 657 (09 July 2019)

Introduction

Date of the Judgment: 09 July 2019
Citation: (2019) INSC 657
Judges: Uday Umesh Lalit, J., Hemant Gupta, J.

Can a court clarify its own order to correct an inadvertent error? The Supreme Court of India recently addressed this question in a dispute concerning the management of Hamdard Laboratories. The court clarified its previous order, specifying that the arrangement for joint management was only in respect of banking operations and not the overall management of the institution. This clarification was made in response to a miscellaneous application filed by one of the parties involved. The judgment was delivered by a two-judge bench comprising Justice Uday Umesh Lalit and Justice Hemant Gupta, with Justice Hemant Gupta authoring the order.

Case Background

The dispute revolves around the management of Hamdard Laboratories (India). The appellant, Hammad Ahmed, was appointed as Chief Mutawalli. However, the respondents, Abdul Majeed and others, continued to assert joint management rights, citing a previous Supreme Court order. This order, dated April 3, 2019, had stated that the parties would continue with the arrangements for management as per a resolution dated April 28, 2015. This resolution was initially about the operation of two bank accounts of Hamdard in the Corporation Bank. The appellant contended that the respondents were creating impediments in the working and management of Hamdard.

Timeline

Course of Proceedings

The appellant had filed an application before the Delhi High Court seeking the release of salaries and the ability to operate bank accounts as the sole signatory. The Delhi High Court’s Single Bench directed the respondents to hand over domain names and ERP passwords but did not grant the relief of operating bank accounts as a sole signatory. The Supreme Court, in its judgment dated April 3, 2019, set aside the Division Bench order and restored the Single Bench order. However, the Supreme Court also added that the parties would continue with the arrangements as per the resolution dated April 28, 2015. This led to the current miscellaneous application seeking clarification of the term “management” in the order.

Legal Framework

The core legal issue revolves around the interpretation of the Supreme Court’s order dated April 3, 2019, specifically paragraph 59, which stated:

“59. Thus, in view of above the appeals are allowed. The order passed by learned Division Bench on 27.11.2018 is set aside and that of the order of learned Single Bench on 25.10.2017 is restored. The parties will additionally continue with the arrangements arrived at in respect of the management of the Hamdard in terms of the resolution dated 28.04.2015.”

The resolution dated April 28, 2015, was passed to operate two bank accounts of Hamdard in the Corporation Bank. It allowed one member from each of the two groups to sign in combination for bank operations. The resolution also stated that it could be rescinded with a written notice to the bank by any trustee. The appellant argued that the resolution was revoked by an email dated December 12, 2018, and that as Chief Mutawalli, he has the right to operate the bank accounts as per the Wakf Deed of 1948, as amended in 1973.

Arguments

Appellant’s Arguments:

• The appellant argued that the resolution of April 28, 2015, regarding joint operation of bank accounts, was revoked by the email dated December 12, 2018.
• The appellant contended that as the Chief Mutawalli, he has the sole right to operate the bank accounts according to the Wakf Deed of 1948 as amended in 1973.
• The appellant sought to restrain the respondents from interfering in the working and management of Hamdard.
• The appellant argued that the respondents were creating impediments in the working and management of Hamdard.

Respondent’s Arguments:

• The respondents argued that the revocation of the resolution was specifically in the context of a payment of Rs. 40 crores made shortly after the Division Bench order of the High Court.
• The respondents contended that the appellant’s claim for exclusive rights to operate bank accounts was not granted by the Single Bench of the Delhi High Court, and that the Supreme Court restored this order.
• The respondents argued that the additional direction in paragraph 59 of the Supreme Court’s order was to protect the interests of both groups, ensuring no group was excluded from the affairs of Hamdard.
• The respondents submitted that the Supreme Court order was to safeguard the interest of both the groups so that one group is not excluded in the affairs of Hamdard.

The innovativeness of the argument by the appellant was in claiming that the revocation of the resolution of 2015 meant that he had the sole right to operate the bank accounts as the Chief Mutawalli. The respondents innovatively argued that the Supreme Court’s order was to ensure that the interest of both groups was protected and that the appellant’s claim for exclusive rights was not granted by the Delhi High Court.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was the interpretation of paragraph 59 of its judgment dated April 3, 2019, specifically regarding the term “management” and its relation to the resolution dated April 28, 2015. The court also had to consider whether the appellant had the sole right to operate bank accounts as Chief Mutawalli and whether the respondents were creating impediments in the working of Hamdard.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific cases or books in this order. The primary focus was on the interpretation of its own previous order and the resolution dated April 28, 2015. The court considered the following legal provisions:

• The Supreme Court order dated April 3, 2019, specifically paragraph 59.
• The resolution dated April 28, 2015, regarding the operation of bank accounts.
• The Wakf Deed of 1948 as amended by the 1973 Deed, as argued by the appellant.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to correct an inadvertent error in its previous order. The court emphasized that the resolution of April 28, 2015, was specifically about banking operations and not the overall management of Hamdard. The court also considered that the Delhi High Court’s Single Bench had not granted the appellant the sole right to operate bank accounts, and the Supreme Court had restored that order. The court hoped that both groups would cooperate to maintain the reputation of Hamdard.

Key Takeaways

• The Supreme Court clarified that its previous order regarding the management of Hamdard was specific to banking operations and not the overall management.
• The appellant’s claim for the sole right to operate bank accounts was not granted.
• The court emphasized the need for both groups to cooperate in the interest of Hamdard.
• The court has the power to correct its own inadvertent mistakes in its orders.

Directions

The Supreme Court did not give any specific directions other than substituting the word “management” with “banking operations” in paragraph 59 of its order dated April 3, 2019. The court expressed hope that both groups would cooperate in the interest of Hamdard.

Development of Law

The ratio decidendi of this case is that the Supreme Court has the power to correct its own inadvertent mistakes in its orders to ensure clarity and accuracy. The court clarified that the term “management” in its previous order was an inadvertent error and that the resolution dated April 28, 2015, was specific to banking operations and not the overall management of the institution. This clarification did not change any previous position of law but rather interpreted and corrected an earlier order.

Conclusion

The Supreme Court clarified its previous order regarding the management of Hamdard Laboratories, specifying that the arrangement for joint management was only in respect of banking operations and not the overall management of the institution. The court corrected an inadvertent mistake in its previous order and emphasized the need for both groups to cooperate in the interest of Hamdard. The appellant’s claim for the sole right to operate bank accounts was not granted.