Legislation UpdatesRules & Regulations

   

The Central Board of Direct Taxes has notified Income-tax (26th Amendment) Rules, 2022 to amend Income-tax Rules, 1962.

The amendment inserts a new  Rule 40G in the Income-tax Rules, 1962, relating to Refund Claim under Section 239-A has been inserted. It provides that a claim for refund under section 239-A shall be made in Form No. 29D and must be accompanied by a copy of an agreement or other arrangement referred to in section 239-A. The claim may be presented by the claimant himself or through a duly authorised agent.

In the principal rules, Form No. 29D relating to Application by a person under section 239-A of the Income-tax Act, 1961 for refund of tax deducted has been inserted.

Case BriefsSupreme Court

Supreme Court: The Division Bench of M.R. Shah* and Sanjiv Khanna, JJ., reversed concurrent findings of the Arbitral Tribunal and the Delhi High Court rejecting the National Highway Authority of India’s (NHAI) application to file a counter-claim in a commercial dispute. The Court held, 

“When there is a provision for filing the counter-claim – set off, which is expressly inserted in Section 23 of the Arbitration Act, 1996, there is no reason for curtailing the right of the appellant for making the counter-claim or set off. If we do not allow the counter-claim made by the NHAI in the proceedings arising out of the claims made by the Contractor, it may lead to parallel proceedings before various fora.” 

Continuous Breach of Contract and Its Subsequent Termination  

NHAI and the respondent-contractor entered into an Engineering Procurement and Construction (EPC) Agreement (hereinafter “the Contract”) in respect of the improvement/augmentation of two laning with paved shoulders of National Highway 210 under National Highways Development Project (NHDP) PHASE-III.  

According to NHAI, the Contractor was in continuous breach of specific obligations under the Contract for which a cure period notice was issued calling upon the Contractor to cure the defaults within 60 days. When the Contractor failed to cure the defects pointed, a notice of intention to terminate the Contract was issued. Having found the Contractor’s reply totally unsatisfactory, the NHAI issued a termination notice under Clause 23.1.2 of the Contract.  

Commencement of Arbitration 

Aggrieved by the untimely termination of the contract, the Contractor invoked the arbitration clause. NHAI joined the arbitration and after two days of filing the Statement of Defence, it sent a letter to the Arbitral Tribunal seeking extension of time for filing the counter-claim which was rejected by the Tribunal, essentially on the ground that the procedure under Clauses 26.1 and 26.2 of the contract had not been followed by the NHAI and therefore, the counter-claim was beyond the scope of the arbitration agreement and adjudication of the said dispute was beyond the jurisdiction of the Tribunal.  

Particularly, the Tribunal held that the counter-claim was a dispute which needed to be first amicably settled by way of conciliation as mandated by Clause 26 and, only then it could be taken to arbitration.  

To challenge the aforementioned order, NHAI preferred the appeal under Section 34 of the Arbitration Act, 1996 before the Delhi High Court. The High Court dismissed the appeal and confirmed the order passed by the Arbitral Tribunal. 

Contentions of the Parties 

NHAI submitted that both in the termination notice as well as in the Statement of Defence, it had reserved its right to claim damages and stated that it would file its counter-claim separately. Hence, it could not be said that claim was raised by surprise or by way of counterblast. Further, the counter-claim was not a separate ‘dispute’ but rather a ‘claim’ and Clause 26 does not contemplate repeated invocation of the same procedure when there is an overlapping cause of action. 

Contesting the stand taken by NHAI, the contractor contended that mere reservation of rights would not entitle either party to bypass the contractually agreed mechanism under Clause 26. Since the EPC Contract does not contemplate parties raising claims by directly resorting to arbitration without going through the steps set out in Clause 26; i.e., Step 1: Notification of Disputes and Step 2: Resolution by amicable settlement.  

Factual Analysis  

Whether Counter Claim was a separate dispute?  

Under the contract, both the parties are given the opportunity to resolve the dispute amicably through conciliation, and thereafter the “Dispute”, which is not resolved shall have to be finally settled by arbitration. Noting that the cause of dispute was the termination of the contract by the NHAI, the Court stated,  

It may be true that in a given case, the “Dispute” may include the claims and/or counter-claims, but, at the same time, the main dispute can be said to be termination of the contract, which as observed hereinabove was required to be resolved through conciliation after following the procedure as above.”  

Hence, opining that NHAI’s request to file counter-claim was a “claim” and not a “dispute”, the Court held that both the Arbitral Tribunal as well as the High Court had failed to appreciate the difference between the expressions “claim”, which may be made by one side and “Dispute”, which by its definition has two sides.  

Whether NHAI bypassed the agreed procedure?  

The Court noted that from the very beginning, the NHAI reserved its right to claim damages, and even in the Statement of Defence, it claimed such a set off of Rs.1.23 crores and also specifically stated it reserved its right to file the counter-claim. Further, there was no delay at all on the part of the NHAI initially praying for an extension of time to file the counter-claim and/or thereafter to file the application under Section 23(2A) permitting it to place on record the counter-claim.  

The Court ruled that once it was established that the counter-claim was a “claim” and not a “dispute” there was no requirement to follow the procedure mentioned under Clause 26, much less a question to bypass the procedure. The Court said,  

“Once any dispute, difference or controversy is notified under Clause 26.1, the entire subject matter including counter-claim/set off would form subject matter of arbitration as ‘any dispute which is not resolved in Clauses 26.1 and 26.2’.” 

Therefore, the Court opined that not permitting the NHAI to file the counter-claim would defeat the object and purpose of permitting to file the counter-claim/set off as provided under Section 28 23(2A) of the Arbitration Act, 1996. 

Findings and Conclusion 

In the light of the above, the Court held that by such a narrow interpretation, the Arbitral Tribunal had taken away the valuable right of the NHAI to submit counter-claim; thereby negotiating the statutory and contractual rights of the NHAI and paving way for a piecemeal and inchoate adjudication. Similarly, the High Court had seriously erred by making a narrow interpretation of Clause 26 while confirming the order passed by the Arbitral Tribunal. 

Consequently, the Arbitral Tribunal order and the impugned judgment of the High Court were quashed and set aside. NHAI’s application to file the counter-claim was allowed. Additionally, the Court directed the time spent in litigation (the period between 18-07-2017 till 11-07-2022) be excluded from computing the period of the passing of the award under Section 29A of the Arbitration Act, 1996.  

[National Highway Authority of India v. Transstroy (India) Ltd., 2022 SCC OnLine SC 832, decided on 11-07-2022]  


*Judgment by: Justice M. R. Shah  

Appearance by:  

For NHAI: ASG Madhavi Diwan 

For the Contractor: Senior Advocate Nakul Dewan 


Kamini Sharma, Editorial Assistant has put this report together 

NCLAT
Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Appellate Tribunal, Mumbai: The Bench of Ashok Bhushan, J., Chairperson, M. Satyanarayana Murthy, Judicial Member, and Naresh Salecha, Technical member has dismissed a company appeal and has held that interest on delayed payment is also a form of debt and therefore, would form a part of the operational debt under Insolvency and Bankruptcy Code, 2016.

Background of the case

Operational Creditor supplies different types of yarns and has supplied goods to Bombay Rayons Fashions Ltd., Corporate Debtor. The Operational Creditor raised invoices between March, 2017 and January 2020, wherein, Operational Creditor supplied goods for Rs. 2,02,26,017/- under nine invoices. The Corporate Debtor paid three invoices with substantial delay; for one invoice part payment made and remaining five invoices, Corporate Debtor failed to make any payment.

Operational Creditor filed an application under Section 9 seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor. The Adjudicating Authority admitted the application and approved initiation of CIRP along with appointment of Insolvency Resolution Professional. The company appeal was filed against the order passed by the Adjudicating Authority dated 07-06-2022.

Analysis and decision

First, the Bench referred to the definition of debt, as per Section 3(11) of the IBC, “a debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt.” Therefore, the Bench observed that the definition of debt includes ‘claim’ which is being defined under Section 3(6) of the IBC. As per the provision of IBC a claim means-

“(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;

(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured.”

Further, the Bench observed that vide the Notification No S.O. 1205 (E) dated 24.03.2020, issued by the Ministry of Corporate Affairs, the threshold Limit to initiate a CIRP has increased from Rupees 1 Lakh to Rupees 1 Crore.

Therefore, in the light of the above analysis, the Bench held that the total amount for maintainability of claim will include both principal debt amount as well as interest on delayed payment which was clearly stipulated in the invoice. Thus, in light of this the outstanding debt amounts to Rs. 1,60,87,838/- (principal debt amount of Rs. 97,87,220/- plus interest @18% p.a.).

Hence, as the total debt outstanding was above Rs. 1 crore as per requirement of Section 4 IBC read with notification No. S.O 1205 (E), the present Application was maintainable.

[Prashat Agarwal v. Vikash Parasrampuria, Company Appeal (AT) (Ins) No. 690 of 2022, decided on- 15-07-2022]


Advocates who appeared in this case :

Abhijeet Sinha, Sunil Vyas, Nausher Kohli, Palzer Moktan, Dipti Das, Deep Morabia, and Aditya Shukla, Advocates, for the Appellant;

Saurabh Pandya, Viraj Parikh, Mahur Mahajan, Advocates, for R-1;

Rubina Khan & Rohit Gupta, Advocates, for R-2.

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT), New Delhi: The Coram of Pradip Kumar Kedia (Accountant Member) and Narender Kumar Choudhry (Judicial Member) allowed an appeal which was filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals) -XXXVI, New Delhi passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 concerning AY 2013-14. The instant appeal challenged the disallowance of Rs 45,60,061 on account of delayed payment of employee’s contribution towards EPF and ESIC.

The Tribunal on perusal of records observed that the Assessing Officer has made the impugned addition on the ground that the assessee has deposited employee’s contribution towards Provident Fund and ESI amounting to Rs 45,60,061/ – after due date as prescribed under the relevant Act/ Rules in breach of Explanation 5 to Section 43B of the Act. The Assessing Officer accordingly resorted to the additions under Section 36(1)(va) read with Section 2(24) (x) of the Act. Case of the assessee before lower authorities was that it had deposited the employee’s contribution in EPF and ESIC before the due date of filing of return of income stipulated under Section 139(1) of the Act.

The Tribunal found that a similar issue was decided in favour of the assessee by the Delhi High Court in the case of Pr.CIT v. Pro Interactive Service (India) (P) Ltd., ITA No.983 of 2018 order dated 10-09-2018 extract of which is as under:

“In view of the judgment of the Division Bench of Delhi High Court in Commissioner of Income-Tax versus Aimil Limited, (2010) 321 ITR 508 (Del ) the issue is covered against the Revenue and, therefore, no substantial quest ion of law arises for consideration in this appeal . The legislative intent was / is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPF) and Employee’s State Insurance Scheme (ESI ) as deemed income of the employer under Sect ion 2(24) (x) of the Act .”

Following the above binding precedents the Tribunal directed the Assessing Officer to allow the claim of the assessee and delete the addition. The Tribunal allowed the appeal of the assessee finding that the delayed payment of employee’s contribution to EPF/ESIC is not disallowable as the amendments to Section 36(1) (va) and Section 43B effected by Finance Act, 2021 were applicable prospectively in relation to Assessment Year 2021-22 and subsequent years. Therefore, the claim of deduction of contribution to Employee’s State Insurance Scheme (ESI) and Provident Fund u/s.36(1) (va) could not be denied to the assessee in Assessment Year 2014-15 in question on the basis of amendments made by Finance Act , 2021 finding support from the decision of the Co-ordinate Bench of Tribunal in the case of The Continental Restaurant and Café Company v. ITO, (2021) 91 ITR (Trib. )(S.N. ) 60 (Bang. ) and Adyar Ananda Bhavan Sweets India P. Ltd. vs. ACIT, ITA No.402 and 403/Chny/2021 order dated 08-12-2021.[Kiwi Enterprises (P) Ltd. v. ACIT, 2022 SCC OnLine ITAT 148, decided on 21-04-2022]


Appellant by: None

Respondent by: Shri Parikshit Singh, Sr.D.R.


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: While deciding an almost three decade long commercial dispute relating to Arakonam Naval Air Station, the 3-Judge Bench comprising of N. V. Ramana, CJ, and A. S. Bopanna and Hima Kohli*, JJ., set aside the impugned judgment passed by the Division Bench of Madras High Court. The Bench remarked,

“By going into the minute details of the evidence led before the learned Sole Arbitrator with a magnifying glass and the findings returned thereon, the Appellate Court has clearly transgressed the limitations placed on it.”

The appellant claimant, a construction company had entered into a contract with the respondent-Union of India for construction of a runway and allied works at the Naval Air Station, Arakonam for a total contract price of ₹19,58,94,190 on 16-11-1988. The case of the appellant was that the respondent had arbitrarily rejected its request for extension of time and without any warning had terminated the contract on 02-04-1992 with immediate which was otherwise to expire on 31-03-1992.

Arbitration Award

On 24-06-1999 the sole arbitrator pronounced a detailed Award wherein a sum of Rs.25,96,87,442.89p was awarded in favour of the appellant-claimant, inclusive of interest up to 31-05-1999. Further, future interest was directed to be paid by the respondent-Union of India from 01-06-1999 at the rate of 18% per annum on the principal amount of Rs. 14,12,50,907.55p till realization. As regards the counter-claim of the respondent, the Sole Arbitrator awarded a sum of Rs.1,42,255 in its favour along with future interest.

Accepting as many as twenty reasons cited by the counsel for the appellant-claimant that had caused a delay in completing the work that necessitated extension of time, ranging from water logged conditions at the site due to which, the work could not commence till 31-12-1988, increase in the quantity of the work required to be executed, orders issued by the respondent for procuring and deploying of sophisticated machinery and equipment that were not originally contemplated, non-availability of petroleum products due to the Gulf crisis, stoppage of work for inauguration of the runway, non-issue of entry passes to labourers and removal of operators and staff of the operators, etc., the arbitrator  held that the appellant-claimant could not be blamed for non-completion of the work within the stipulated time, including the extended time and that the respondent ought to have extended the date of completion of the contract up to 31-05-1993 and that the extension of time granted by the respondent up to 31-03-1992, was inadequate and not commensurate with the delays caused for the factors referred to hereinabove.

Findings of the High Court

The Division Bench of the High Court had, however, set aside the amount awarded by the Sole Arbitrator in favour of the appellant towards idle hire charges and value of the tools and machineries. Similarly, the findings returned in the Award relating to extension of time and illegal termination of the contract by the respondent were also set aside.

Observations and Analysis

Though the appellant-claimant had sought compensation under several heads, the Sole Arbitrator granted it an amount of ₹15,35,40,785 towards idle hire charges and for the value of the machinery, inclusive of interest upto 31st May, 1999 for arriving at that figure, reliance was placed by the arbitrator on the report of an Engineer appointed by the Division Bench of the High Court of Madras in a separate proceeding filed by the appellant-claimant to ascertain the availability of the different items and machineries and their value.

The Appellate Court had set aside the aforesaid claim by taking a view that the Sole Arbitrator had misconducted himself by observing that the claimant “may be correct” in not taking the machineries without an inventory when they were available at the site in spite of the High Court order granting permission to the appellant-claimant to remove the equipment and machineries from the site. The High Court held that the Sole Arbitrator had interpreted the clauses of the contract by taking a particular view and had gone to great length to analyse several reasons offered by the appellant-claimant to justify its plea that it was entitled for extension of time to execute the contract.

Disapproving the view taken by the High Court, the Bench stated that the Division Bench ought not to have sat over the said decision as an Appellate Court and seek to substitute its view for that of the Arbitrator.  Resultantly, accepting the findings returned by the Sole Arbitrator endorsed by the Single Judge, the Bench held that there was sufficient justification for the appellant-claimant to have sought extension of time for completing the work and that the decision of the respondent-Union of India to terminate the contract was not for legitimate reasons.

Verdict

In the backdrop of above, the Bench concluded that the conclusion drawn by the Appellate Court was manifestly erroneous and in the face of the settled legal position that the Arbitrator is the final arbiter of the disputes between the parties and it is not open to a party to challenge the Award on the ground that he has drawn his own conclusions or has failed to appreciate certain facts. The impugned judgment was set aside, while the judgment of the Single Judge and decree granted in favour of the appellant-claimant in terms of the Award along with interest was upheld and restored.

[Atlanta Ltd. v. Union of India, 2022 SCC OnLine SC 49, decided on 18-01-2022]


*Judgment by: Justice Hima Kohli


Appearance by:

For the Appellant/Claimant: Meenakshi Arora, Senior Advocate

For the Union of India: Sanjay Jain, Additional Solicitor General


Kamini Sharma, Editorial Assistant has put this report together

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: Expressing that, Negligence does not always mean absolute carelessness, but want of such a degree of care as required in particular circumstances, Vinay Joshi, J., held that no absolute standard can be fixed as to what constitutes negligence differs from case to case.

High Court stated that,

When a person suffers injury without any negligence on his part, but result of combined effect of negligence of two other persons, it is not case of “contributory” but it is a case of “composite negligence”.

Background

Appellant’s case was that the appellant injured (applicant) was proceeding as a pillion rider along with his brother on motorcycle. The motorcycle was hit by an offending truck which came in high speed and gave dash from behind. Due to the said incident, both the applicant and his brother sustained severe bodily injuries.

An FIR was registered under Sections 279, 337 and 338 of the Penal Code, 1860 against the driver of the offending truck. Due to the accidental injuries, the applicant lost his job as well as his earning capacity, hence he approached the Tribunal for grant of compensation in terms of Section 166 of the Motor Vehicles Act.

What was Tribunal’s decision?

Tribunal quantified compensation of Rs 8,84,520, however, recorded the finding that the accident occurred due to sole negligence of the motorcycle rider, i.e. applicant’s brother. Since there was no negligence on the part of the truck driver, the claim petition was dismissed.

Negligence

It was not in dispute that the appellant was pillion rider and therefore it was a case of composite negligence, in view of that even if there was slightest negligence on the part of truck driver, then the injured can recover compensation from the owner and insurer of the truck. Hence, it was necessary to dwell upon the question of negligence.

“… claim petition is not an adversarial adjudication between litigating parties but a statutory determination of compensation, after due enquiry, in accordance with the statute.” 

Tribunal’s conclusion was drawn solely on the ground that at the time of dash motorcycle was on the wrong side of the road i.e. to its right side.

Analysis and Discussion

In Court’s opinion, the Tribunals discarded spot panchanama which disclosed that the accident took place to the eastern side. Thus, it gave a complete different picture and location of the place of occurrence. The reason for discarding the same was that the rider could not have shown the place since he was admitted to the hospital.

Further, it was stated that there may have been the possibility of Vinod showing the place since there were no documents of him being an indoor patient. Besides that, the panchnama had a reference that there were bloodstains and the existence of the same supported the location of the occurrence.

High Court added that it was not clear as to in which direction the motorcycle was heading, hence the tribunal erred in solely relying said admission by overlooking spot panchanama.

Bench cited the Supreme Court decision in Bimla Devi v. Himachal Road Trans. Corpn., 2009 ACJ 1725 (SC), wherein it was ruled that the strict proof of an accident caused by a particular vehicle in a particular manner was not possible to be done by the claimants. They were merely to establish their case on the touchstone of preponderance of probabilities. The standard of proof beyond reasonable doubt cannot be invoked in claim petitions.

Further, the Court remarked that,

“Negligence is omission of duty caused either by an omission to do something which a reasonable man guided upon those considerations which ordinarily by reason of conduct of human affairs would do or obliged to do.” 

Significantly, the Court added that, even if it was assumed that the motorcycle was to the wrong side of the road, still dash was given from behind which clearly demonstrated that the truck driver was very much negligent.

The present matter was a case of composite negligence. The negligence of truck driver may be to any extent, but it would certainly attract liability.

Bench further added that, since the dash was from behind, the doctrine of Res ipsa loquitur would apply against the truck driver.

Merely on stray admission applicant’s entire case dehors to police papers cannot be jettisoned.

The driver and owner have appeared and contested the claim but driver did not step into witness box, which is sufficient to draw adverse inference against them.

Hence, it was quite clear that the truck driver had also contributed in negligence and therefore the finding recorded by the Tribunal on the point of negligence was totally erroneous.

Composite Negligence

“…the accident was result of negligence on the part of both i.e. motorcycle rider and truck driver. Meaning thereby a case of composite negligence.”

In the case of composite negligence, the claimant has no choice to seek compensation from either of the wrongdoer.

Elaborating further, the Bench stated that, since the truck driver contributed in negligence i.e. he was also wrong doer, the applicant can very well claim entire compensation from the driver, owner and insurer of the offending truck.

The compensation assessed by the Tribunal was just and proper. Besides that claimant was entitled to interest @7% per annum, which would be in the tune of the prevailing rate of interest in the banking sector.

Therefore, the appeal was allowed. [Satling Gangadhar Bagal v. Abarao Dnyanoba Sanap, 2022 SCC OnLine Bom 426, decided on 24-2-2022]


Advocates before the Court:

Mr S.S. Dargad, Advocate for the appellant.

Mr A.V. Thombre h/f. Mr S.S. Thombre, Advocate for respondents 1 & 2.

Mr S.V. Kulkarni, Advocate for respondent 3.

Experts CornerTarun Jain (Tax Practitioner)

A technical yet interesting controversy has arisen in the context of indirect tax laws, particularly customs laws. The issue relates to availability of refund despite failure to challenge assessment proceedings. This issue has witnessed multiple rounds of litigation in the context of customs law and is an interesting one.

 


Background: Understanding the Assessment Scheme


It is expedient to examine the scheme of the assessment in order to appreciate the issue in greater detail. Most of the indirect tax laws were earlier based on the “assessment” regime where a tax officer would pass an order of assessment determining the rights and liabilities of the taxpayers concerned. Subsequently this assessment scheme was replaced by “self-assessment” scheme. Under this scheme, the obligation to comply with the law concerned rests upon the taxpayers who must ensure compliance with the provisions tax law, including filing of tax return along with the attendant consequences. This scheme where the taxpayer is obliged to assess and determine the correct tax liability is commonly understood as the self-assessment scheme. In such scenario the role of the tax officer is limited to verifying the self-assessment of the taxpayer and initiate recovery proceeding, if required, in order to recovery short paid tax, besides ensuring that the other provisions of the tax law are complied with by the taxpayer.

 


The First Round of Litigation in Customs Law


The question as to the manner in which a taxpayer could apply for refund arose for the first time in the context of the assessment regime under the customs law. The Supreme Court in CCE v. Flock (India) (P) Ltd.[1] opined that it is obligatory on the part of the taxpayers to challenge the assessment orders, without which a refund is not maintainable. In this decision it was observed that “there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing his order”.

Subsequent, in Priya Blue Industries Ltd. v. Commr. of Customs[2] the Supreme Court refused to change its opinion and reiterated that the assessment order being in appealable order and refund being a consequence of the assessment, in the absence of a challenge to an assessment order a refund claim could not be entertained much less considered on merits. Thus the issue rested conclusively in the context of the assessment regime under the customs law.

 


Change to Self-Assessment Scheme under Customs Law


In 2011 the Customs Act, 1962 was substantially amended. One of the major changes was the switchover from the assessment scheme to the self-assessment mechanism. Given that the self-assessment regime implied absence of an order of assessment, a view emerged that the earlier decisions of the Supreme Court were not applicable in the case of self-assessment as in such cases the assessment having been made by the taxpayer himself, it was not possible for the taxpayer to challenge the assessment order. Inter alia (a) on such legal interpretation; (b) grounds of practical exigencies; and (c) citing lack of a provision providing for appeal by the taxpayer against his own self-assessment, it was being contended on such account that there was no requirement to challenge the assessment order in order to claim refund. This view came to be rejected by the tax officers who refused to grant refund citing the self-assessment order but the view came to be vindicated by the Delhi High Court. In its decision in Micromax Informatics Ltd. v. Union of India[3], the Delhi High Court examined the new provisions of the customs law and the self-assessment scheme therein to opine that the process of self-assessment there was “no assessment order as such passed by the customs authorities” and thus there was no necessity to file an appeal any appeal in order to claim refund. This decision of the Delhi High Court was agreed by the Calcutta High Court[4] and Madras High Court[5] amongst others.

 

The issue subsequently thereafter came up for consideration of the Supreme Court. Unable to subscribe to the High Court reasoning, the Supreme Court in ITC case[6] reversed this view to the detriment of the taxpayers. In the opinion of the Supreme Court, notwithstanding the change in the customs law framework, there was no change in the legal position emerging from its earlier decisions. The Supreme Court explained that self-assessment also resulted in an “order” under the customs law which could not be wished away and its effect could be invalidated only by way of appropriate proceedings under the customs law. In conclusion, the Supreme Court noted the following:

 

  1. 47. When we consider the overall effect of the provisions prior to amendment and post amendment under the Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act.

 

A critical observation of the Supreme Court in ITC case[7] was in relation to the refund proceedings. It inter alia observed that refund “is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise”.


The Third Round: Amendment/Rectification as an Alternative to Appeal


One would have assumed that with the decision in ITC case[8] the issue would no longer have been res integra and the controversy would have subsided. However, that the ingenuity of the lawyers knows no bounds is best reflected in the scenario that followed. Faced with the law emanating from the ITC case[9], an innovative approach was adopted in subsequent matters where the taxpayer had claimed refund without challenging the self-assessment order.

 

It began to be canvassed that the Supreme Court in ITC case[10] itself had opened the door for another remedy to the taxpayer when it observed that the refund provision “cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made”. Stressing upon this observation, the taxpayer contended that a refund proceeding could be supplemented with a request for amendment, which once allowed would imply that the self-assessment order did not stand in the way of claim refund. This assertion came to be accepted by the Bombay High Court in Dimension Data India (P) Ltd. v. Commr. of Customs.[11]

 

In this decision, the Bombay High Court concluded that it was obligatory upon the tax officers to address a formal request for amendment of documents when accompanied by a refund claim, in view of the power of amendment (Section 149) and the power of rectification (Section 154) being statutorily vested on the tax officers. Declaring the legal position, the High Court inter alia observed as under:

 

“… in the judgment itself Supreme Court has clarified that in case any person is aggrieved by an order which would include an order of self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Customs Act before he makes a claim for refund. This is because as long as the order is not modified the order remains on record holding the field and on that basis no refund can be claimed but the moot point is Supreme Court has not confined modification of the order through the mechanism of Section 128 only. Supreme Court has clarified that such modification can be done under other relevant provisions of the Customs Act also which would include Sections 149 and 154 of the Customs Act.

*                                              *                                              *

In the instant case, petitioner has not sought for any refund on the basis of the self-assessment. It has sought reassessment upon amendment of the Bills of Entry by correcting the customs tariff head of the goods which would then facilitate the petitioner to seek a claim for refund. This distinction though subtle is crucial to distinguish the case of the petitioner from the one which was adjudicated by the Supreme Court and by this Court.”

 

Thereafter the Telangana High Court followed suit, albeit independently, to opine in Sony India (P) Ltd. v. Union of India[12] to opine that it was obligatory on the part of the tax officer to ensure that the documents were amended so as to being conformity with law and also that refund was made the taxpayer wherever due. In this case the High Court inter alia observed as under:

  1. 48. Further, it is the duty and responsibility of the Assessing Officer/Assistant Commissioner to correctly determine the duty leviable in accordance with law before clearing the goods for home consumption. The assessing officer instead, having failed in correctly determining the duty payable, has caused serious prejudice to the importer/petitioner at the first instance. Thereafter, in refusing to amend the Bill of Entry under Section 149 of the Act, to enable the importer/petitioner to claim refund of the excess duty paid, the assessing authority/Assistant Commissioner caused further great injustice to petitioner.

 

These decisions of the Bombay and Telangana High Court has thereafter been followed to various ends. For illustration, in Kirloskar Ferrous Industries Ltd. v. Commr. of Customs,[13] the Customs Tribunal directed the tax officers to treat the taxpayer’s request for reassessment as a request for amendment of the documents and thereafter process the refund claim. Thereafter, as another illustration, the Customs Tribunal in Commr. of Customs v. Vivo Mobile India (P) Ltd.[14] agreed with the contention of the taxpayer to the effect “that even if the refund applications that were filed cannot be entertained, then too it is open to the respondent to invoke the provisions of Section 149 or Section 154 of the Customs Act for either seeking amendment in the bill of entries or seeking correction in the bills of entry and then refund applications can be filed”. In this case the Customs Tribunal disposed the appeal permitting the taxpayer to file an application for amendment even at the second appellate stage with a direction to the tax officer to consider such application.


Conclusion


The aforesaid discussion reveals that two rounds of litigation and decisions of the Supreme Court have failed to course correct the taxpayers into initiating the appropriate proceedings and approaching the correct forum for seeking refund in customs matters. The courts, nonetheless, have been benevolent to the cause of the taxpayers and have sustained claims to creative options albeit within the statutory framework. As the law stands today, to the benefit of the taxpayer, the absence of a formal challenge to self-assessment under customs by way of an appeal is not fatal to the refund claim. In such instances, the taxpayer who may choose to supplement the refund claim with request for amendment/rectification, even belatedly, in order to get the refund claim addressed on merits.


† Tarun Jain, Advocate, Supreme Court of India; LLM (Taxation), London School of Economics.

[1] (2000) 6 SCC 650 : (2000) 120 ELT 285.

[2] (2005) 10 SCC 433 : (2004) 172 ELT 145.

[3] 2016 SCC OnLine Del 1238 : (2016) 335 ELT 446.

[4] SGS Marketing v. Union of India, 2016 SCC OnLine Cal 4915 :  (2016) 341 ELT 47.

[5] Micromax Informatics Ltd. v. Commr. of Customs, 2017 SCC OnLine Mad 22043

[6] ITC Ltd. v. CCE, (2019) 17 SCC 46, 69.

[7] (2019) 17 SCC 46.

[8] (2019) 17 SCC 46.

[9] (2019) 17 SCC 46.

[10] (2019) 17 SCC 46.

[11] (2021) 376 ELT 192.

[12] 2021 SCC Online TS 982.

[13] 2021 SCC OnLine CESTAT 225.

[14] 2021 SCC Online CESTAT 2578.

Jharkhand High Court
Case BriefsHigh Courts

Jharkhand High Court: S.N.Pathak, J., held that the employees of Telco Recreation Club cannot claim parity in pay and other benefits at par with the regular employees of Telco Ltd. The Bench held that,

“When the initial appointment letter of the workmen has not been issued by the petitioner-Management, the question of parity in pay etc. with the employees of the petitioner-Management does not arise.”

Factual Matrix of the Case

The petitioner Company-Telco Ltd., was a leading manufacturer and seller of automobiles in the Country. In 1958, the company had started a separate department under the name and style of “Telco Recreation Club” for carrying activities of welfare and recreation of its employees. The said Telco Recreation Club was a Society registered under Societies Act having a separate legal entity of its own with its own source of income, its own constitution and bye-laws and had no direct connection with the petitioner-company and the petitioner company, under its corporate responsibility, provide financial assistance to several Societies in the area including the said Club.

The case of the petitioner-company was that it had no control over TELCO Recreation Club, which was run and managed by a Managing Committee elected/ selected by its members, yet one Indra Deo Prasad on behalf of 21 persons employed in Telco Recreation Club made a claim of parity in pay and other benefits at par with the regular employees of Telco Ltd. It was also the stand of the company that the government of Bihar had found Telco Recreation Club to be an independent establishment and had made a reference being Ref. Case No. 06 of 1991 to Industrial Tribunal, Ranchi, which was never challenged or objected by the employees of the said Club and therefore, the petitioner-company could not be treated to be the employer of the workmen of Telco Recreation Club.

Decision by the Labour Court

 The Labour Court held that there existed a relationship of employer and employees between the parties, and Telco Recreation Club was a department/wing of the company, and that petitioner-company provided all facilities to said Club and had direct control over the Managing Committee of the said Club as the General Manager of Telco Ltd. was the President of the Club; the reference was maintainable. The Labour Court had further held that the concerned workmen were also permanent employees of  Teclo Ltd., and hence, they were entitled to get pay and other benefits at par with the employees of Telco Ltd. Accordingly, the issue was decided in favour of the workmen.

Findings of the Court

Considering the rival submission of the parties and on perusal of Judgments brought on record, the Bench reached the conclusion that the impugned Award suffered from patent illegalities and was based upon errors of law. Admittedly, there was no relationship of employer-employee between the petitioner-Management and the concerned workman. The Bench clarified,

“Neither in the appointment of workmen nor in the process of their engagement, the petitioner-Management has played any role, therefore, the industrial disputes against the petitioner-Management is wholly illegal and uncalled for.”

The concerned workmen were being governed by the rules, regulations and bye-laws of the Club and not the petitioner-Management. Even the disciplinary control was of the Club and not of the Management. Hence, the findings of the Tribunal were totally perverse and error of law. Finding force in the arguments of the petitioner-company that the Club was incorporated as a separate body and concerned workmen were admittedly appointed by the Club and not by the petitioner-Management, the Bench opined that the claim of the concerned workmen was not sustainable.

Reliance was placed by the Court upon the decision of Supreme Court in Bengal Nagpur Cotton Mills v. Bharat Lal, (2011) 1 SCC 635,  wherein it had held that two of the well-recognized tests to find out whether the contract labourers are the direct employees of the principal employer are-

  • Whether the principal employer pays salary instead of the contractor?
  • Whether the principal employer control and supervises the work of the employees?

Accordingly, the Bench held that in the instant case on both these counts, the workmen had failed to establish their case as they could not establish that they were working directly under control and supervision of the management, hence, the question of the employer-employee relationship did not arise at all.

Placing reliance on Bhuwanesh Kumar Dwivedi v. Hindalco Industries, (2014) 11 SCC 85,wherein, the Supreme Court had held that, “where Labour Court commits patent mistake in law in arriving at a conclusion contrary to law, the same can be corrected by the High Court. In the instant case, the Tribunal has committed a patent error of law to hold that the employer-employee relationship exists between the petitioner-Management and the concerned workman”; the Bench opined that

“In the instant case, the concerned workmen have sought for parity in pay and other benefits at par with the regular employees of TELCO Ltd. whereas the fact is that the petitioner-Management has never issued appointment letters to them rather these workmen were appointed by the Club, which is a separate entity.  When the initial appointment letter of the workmen has not been issued by the petitioner-Management, the question of parity in pay etc. with the employees of the petitioner-Management does not arise and as such the impugned Award suffers from patent illegalities and is fit to be interfered.”

In the backdrop of above, the impugned Award was quashed.  [Management of Motors Ltd. v. State of Jharkhand, 2021 SCC OnLine Jhar 413, decided on 18-06-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Appearance before the Court by:

For the Petitioner: Sr. Adv. Kamal Nayan Choubey, Sr.Adv. V.P. Singh, Adv.  Amit Kumar Das, Adv. Rashmi Kumar and Adv. Arun Kumar Singh

For the Respondents:     Sr. Adv. Ajit Kumar and Adv. Kumari Sugandha

For the State: GP-III O.P. Tiwari

Case BriefsTribunals/Commissions/Regulatory Bodies

State Consumer Disputes Redressal Commission, Telangana: Justice MSK Jaiswal (President) and Meena Ramanathan (Member) upheld the District Commission’s Order observing the consequence of suppressing the material fact while taking an insurance policy.

If the insurer can show that prior to the date of declaration of being healthy, the insured was suffering with ailment which was within her knowledge but was suppressed, then the insurance company is well within its right to repudiate the claim on the ground of suppression veri.

Complainant had submitted that his wife has obtained new money back policy from the OPs with a duration of 20 years for an assured sum of Rs 10,00,000. At the time of accepting the policy, the OPs carried out mandatory medical tests on the proponent and issued the policy in question.

While the policy was in force, the holder died due to cardiorespiratory arrest.

Being the nominee, complainant made the claim with the OPs and to the utter shock and surprise, the OPs repudiated the claim on the ground that the deceased life assured was suffering from lung cancer and took treatment prior to obtaining the policy, hence the claim was repudiated.

Complainant prayed to direct the OPs to pay the amount.

It was stated that OPs investigated the matter, and it was revealed that the deceased life assured suppressed the material fact relating to her health condition giving incorrect answers in the proposal form.

Analysis, Law and Decision

Bench noted that OPs submission was that the insured was suffering from serious ailment viz., lung cancer and suppressed the said fact.

Commission reiterated the legal position that if the insured is found to have suppressed the information which was material for the insurer to decide about the issuance of the policy is made out, the insurance company cannot be made liable to indemnify the insured on the ground that contractual obligations between insured and insurer are based purely on good faith and if insured has knowingly failed to reveal the information which was within her exclusive knowledge, the insurer could not be said to be liable to indemnify the insured.

In the present case, the insurance company contended that even before taking the policy, the insured was suffering from a serious ailment and was undergoing treatment and evidence was placed on record with regard to the said contention.

Coram held that perusal of the crucial documents on record leaves no room for doubt that the insured was aware that she was suffering from a serious ailment for more than 6 months prior to taking the insurance policy and suppressing all those facts, she took the policy.

Therefore, District Commission’s Order holding that complainant was not entitled to any relief was upheld and the complaint was dismissed.[K.N. Vidyakarji v. Life Insurance Corporation of India, FA No. 402 of 2020, decided on 15-06-2021]


Advocates before the Commission:

Counsel for the Appellant: Karakot Nagekar Sai Kumar

Counsel for the Respondents: KRL Sarma

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Dinesh Singh (Presiding Member) while addressing the instant first appeal upheld the State Commission’s Order in regard to a claim filed by the insured with the insurance company.

The instant appeal was filed under Section 19 of the Consumer Protection Act, 1986 challenging the Order passed by the State Consumer Disputes Redressal Commission, Maharashtra.

Complainant Firm took an insurance policy to cover its plant and machinery, electrical installations and stock-in-trade. The premium was paid for the valid policy. In 2005, an incident of fire took place and the insurance company was intimated after which survey was conducted.

The complainant had claimed an amount of Rs 17,00,000 but the surveyor assessed the loss at Rs 1,54,500. Since the Complainant Firm failed to submit the relevant record for verification, as mentioned in the Surveyor’s Report. Hence, Insurance Company filed the claim as ‘no claim’.

State Commission vide its impugned Order dated 22-09-2015 allowed the Complaint at the loss assessed by the Insurance Co.’s Surveyor i.e. at Rs 1,54,500 and awarded the said amount with interest at the rate of 9% per annum.

Complainant Firm appealed before this Commission for enhancement in compensation, specifically for accepting its claimed loss of Rs 17,00,000.

Analysis and Decision

Investigation and Survey by an insurance company are fundamental in determining the amount payable to the insured.

Bench observed that an insurance company is duty-bound to appoint its surveyor in accordance with the provisions of the Insurance Act, 1938 (Section 64 UM Surveyors or loss assessors specifically refers). A Survey cannot be disregarded or dismissed without cogent reasons.

Further, the Commission also observed that the onus,

[a] of showing that the Report of the Surveyor appointed by the Insurance Co. was flawed and

[b] of showing that actually, in fact, the loss was Rs 17,00,000, was on the Complainant Firm, which onus it failed to discharge.

Hence, in view of the above discussion, the Commission held that the State Commission had passed a reasoned order.

State Commission’s impugned order was upheld and confirmed.[Wilson Home Appliances v. New India Assurance Co. Ltd., 2020 SCC OnLine NCDRC 493, decided on 10-12-2020]


Advocates who appeared for the matter:

For the Appellant:  Ms Manisha T. Karia, Advocate

For Respondent 1: Mr S. M. Tripathi, Advocate

For the Respondent 2: Ex parte

Case BriefsHigh Courts

Bombay High Court: R.I. Chagla, J., while addressing a matter held that,

“Cause of action in rem does not merge with the Order / Judgment in personam given in respect of a cause of action in personam arising out of the same facts.”

Senior Advocate, Prashant Pratap stated that there is no Caveat against the arrest of the defendant-Vessel. Varsha Gawande, Court Associate upon checking the caveat against arrest Register stated that there is noCaveat against the arrest of Defendant Vessel.

Background

Claim in the Suit is for a Decree against the Defendant Vessel and for the arrest, sequestration, condemnation and sale of the Defendant Vessel, for securing and / or satisfying the Plaintiff’s claim of the principal amount of USD 1,120,914 and USD 25,000 for cost of litigation in India aggregating USD 1,145,914 plus poundage with interest at the rate of 2% per month from the date of the Suit till payment and / or realization as per the Particulars of Claim.

Plaintiff has not been paid in respect of equipment supplied and services rendered, which were necessary for the operation of the Defendant Vessel.

Thus, to recover the above-stated unpaid amounts, present suit was filed and Judge’s Order had been taken out for arrest of Defendant Vessel.

Urgent relief which had been sought is for the arrest of the Defendant Vessel as there was an apprehension as stated in the Plaint that if the Defendant vessel was permitted to sail, Plaintiff would have no legal recourse whatsoever to recover the amounts due to it and eventually these proceedings will be rendered infructuous.

In Court’s opinion, case for arrest of defendant-vessel was made out.  Dues of the Plaintiff for providing equipment and services to the Defendant vessel is evidenced from the Letter of Award read with Sub Contract and invoices annexed.

Thus, Claim would fall within the meaning of a maritime claim under Section 4(1)(I) of the Admiralty (Jurisdiction of Settlement of Maritime Claims) Act, 2017.

Plaintiff fled the present suit seeking attachment of the Defendant vessel, which is currently within jurisdiction of this Court.

Further it was submitted that the proceedings before the Courts in Abu Dhabi are in personam and the present Suit is in rem against the Defendant Vessel.

Hence for the above, Bench stated that,

“proceedings before the Courts in Abu Dhabi are in personam and cannot come in the way of the present Suit, which is an action in rem and that the Plaintiff is entitled to commence an action in rem, whilst the action in personam is still pending and has not proceeded to a final Judgment.”

Balance of convenience lies with plaintiff to whom, almost irreversible prejudice would be caused if reliefs were to be denied.

Therefore, Court directed the Sheriff of Mumbai to effect the arrest/seizure or detention of defendant vessel along with her hull, engines, gears, tackles, bunkers, machinery, apparel, plant, furniture, fixtures, appurtenances and paraphernalia, plant and machinery at present at anchorage at the Port of Mumbai or wherever she has within the territorial waters of India until the satisfaction of the Plaintiff’s claim.

Further the Bench stated that,

after service of this Order of Arrest, if the arrested Vessel is not released by the furnishing security or bail amount within 6 weeks of service, or an application for vacating the order of arrest is not fled, or the vessel is found abandoned by the person-in-charge of the Vessel or owner, or is found unmanned, then, in such an event, on an application being made by the Plaintiff, the office of the Sheriff of Mumbai shall present a Sheriff’s report for auctioning the Vessel within a period of fourteen days from the date of receiving communication from the Plaintiff’s Advocate or from the date of knowledge of abandonment of Vessel.

[Fugro Survey (Middle East) Ltd. v. DLB 1600 (IMO No. 9681651), DHOC NO. LD-VC-53-2020, decided on 02-05-2020]

Jharkhand High Court
Case BriefsHigh Courts

Jharkhand High Court: A Division Bench of Aparesh Kumar Singh and Kailash Prasad Deo, JJ. dismissed the writ petition being devoid of merits.

Brief facts of the case are that the father of the applicant died on 24.08.2009. After which his mother filed an application dated 13.04.2010 for grant of compassionate appointment in his favour as the deceased employee died leaving behind a widow, two sons and one married daughter. The name of the applicant was at serial number 30 out of 73 persons and 19 out of 59 candidates in 2012 and 2013 respectively. 

Now by the impugned order dated 21.05.2015, the cases of applicants got rejected because they have been considered five and they could not find place in the list of deserving candidates, either in view of non-availability of vacancies or more deserving persons listed above. The Tribunal rejected the arguments of the applicants and held the applicant has received due consideration along with others and no case of discrimination holds ground. 

The applicant being aggrieved by an order passed by Central Administrative Tribunal, seeking quashing of the order of rejection of compassionate appointment dated 21.05.2015 has preferred this writ petition.

The counsel for the petitioner, Ajay Kumar Pathak, submitted that the claim of compassionate appointment has been rejected on arbitrary grounds. Proper evaluation of the claim as per the defined yardstick has not been made. Learned Tribunal should have accorded sympathetic consideration since the father of the applicant had died on 24.08.2009 in harness.

The counsel for the respondent, Laxman Kumar, has opposed the prayer. He submitted that applicant’s claim was considered as per the uniform defined criteria on five occasions, one after the other on applications made for reconsideration. The previous orders of rejection were not challenged.

The Court observed that in the matter of compassionate appointment, vacancies are limited for a particular year out of the total post in the cadre i.e., 5%. Applicant’s claim was considered four times earlier and each time he did not find place amongst the candidates falling within the vacancies for that year against the quota of compassionate appointment. Applicant has not been able to show that he had a better claim then the other candidates above in the list. Moreover, the earlier orders of rejection were also not challenged and had become stale.

In view of the above, the Court decided not to interfere in the impugned order passed by the learned CAT and dismissed the writ petition. [Mukesh Kumar Das v. Union of India, 2020 SCC OnLine Jhar 231, decided on 02-03-2020 ]

Case BriefsForeign Courts

Supreme Court of the Democratic Socialist Republic of Sri Lanka: Full Bench of Buwaneka Aluwihare, Vijith K. Malalgoda, and S. Thurairaja, JJ. allowed the appeal by setting aside the order of the Learned High Court Judge and directed the District Court to proceed to conclude the case.

In the present case, the appellant filed the case against the judgment of the High Court of the Western Province holden in Gampaha (also referred to as the ‘High Court’) in a Testamentary Case. The concerned parties had raised their objections on the Letter of Administration at the Testamentary Case which the 12th Respondent-Respondent-Appellant had obtained from the District Court of Negombo. The District Court had ordered to dispose of this matter on written Submissions of 06-10-1998. Since the original petitioner had died, his son was substituted in the above mentioned testamentary. The substituted petitioner had raised an objection with regard to the inventory and thus, made an application to re-inquire the matter orally. Later, the 12th Respondent- Respondent-Appellant objected and by order dated 01-03-2013 District Judge decided not to allow the fresh submissions.

Further, the Substituted Petitioner-Petitioner- Respondent appealed to the Provincial High Court of Gampaha. The appeal was allowed by the Civil Appellate Court. The question of law, is whether a substituted party in any action can deny the acceptance of the original party, also whether the substituted party can be estopped from taking a contrary position to the party. As per, Section 395 of the Civil Procedure Code Act, if the sole plaintiff has died the legal representative may be substituted by the court if the right to sue is still there. The pleas available to a Legal Representative was observed in an Indian Order, Gurdial Singh v. Gurdev Singh, 1991 SCC OnLine P&H 579. In the following case, it was held that in case of any dispute the legal representative has the right to continue the suit but he cannot claim anything which was not mentioned by the original plaintiff.

Thus, in the present case, it was held that the District Court’s order passed on 01-03-2013 is correct. Lastly, the Court ordered the Judge of the District Court to conclude this long-running case and the parties are directed to co-operate with the District Judge. [Kandiahpillai Shanmuganathan v. Kandiahpillai Vythilingam, 2019 SCC OnLine SL SC 13, decided on 11-09-2019]

Case BriefsHigh Courts

Bombay High Court: M.G. Giratkar, J. dismissed a second appeal filed against the judgments of the lower courts wherein the partition suit brought by the appellant was dismissed.

One Maghadeo, ho was the biological father of the appellant, had given the appellant in adoption to his real brother Fakira, who was childless. The appellant had now brought a partition suit, claiming his share in the property of Mahadeo. The Civil Judge dismissed the appellant’s suit holding that he was not entitled to claim partition in the property of his real father. The appeal filed before the District Judge was also dismissed. Hence, the appellant filed the instant second appeal.

R.L. Khapre, Advocate for the appellant, contended that the appellant had never been given in the adoption and, therefore, he had a right in the property left by his real father. Mahadeo, Per contra, S.R. Deshpande, Advocate representing the respondent, opposed the instant appeal.

On perusal of the record, the High Court found that the factum of the appellant having been given in adoption by Mahadeo to Fakira had been duly proved by the documents as well as his own admissions. Also, the testimony of the priest in whose presence the process of adoption was completed, was also found reliable and creditworthy. It was held: “The admission of the plaintiff in his cross-examination shows that his father Mahadeo died in 1963. Since then, till filing of the suit in the year 2001, he did not claim any partition from the defendants. The silence for a long time on the part of the plaintiff partition from the defendants. The silence for a long time on the part of the plaintiff itself shows that he was given in adoption to Fakira. His conduct shows that he is adoptive son of Fakira. His admissions and documents clearly show that he has inherited the property left by his adoptive father Fakira. Therefore, he cannot claim any partition in the property of his real father Mahadeo.”

Incidentally, it was submitted on behalf of the appellant that the issue in respect of adoption was not framed by the trial court. Therefore, there was no opportunity for the plaintiff to adduce proper evidence.

On this aspect, the Court relied on Satyadhyantirtha Swami v. Raghunath Daji Patil, 1925 SCC OnLine Bom 107, wherein it was held: “If there is no issue framed on a question but the parties have adduced evidence and discussed it before the Court, and the Court decides it as if there was an issue about it, the decree need not be set aside in appeal on the ground merely that no such issue was framed.” In the instant case, it was held that Issue 1 framed by the trial court included the issue of adoption and it could not be said that the appellant had no opportunity to adduce evidence on the said issue.

In such view of the matter, the appeal was held to be without merits and was, thus, dismissed. [Pandhari v. Vithoba, 2019 SCC OnLine Bom 3006, decided on 17-10-2019]

Jharkhand High Court
Case BriefsHigh Courts

Jharkhand High Court: A Division Bench of H.C. Mishra and Deepak Roshan, JJ., set aside the impugned orders and directed the Assessing Authority to re-examine the claim of the petitioner in view of original tax invoices.

The facts of the case were that the petitioner has claimed Input Tax Credit (ITC) to the tune of Rs 5,34,22,304.71. The assessing officer had allowed ITC only to the tune of Rs 3,40,37,182.46 and denied the balance ITC claim on the ground that for this amount, JVAT 404 form was not submitted by the petitioner.

The counsel for the petitioner submitted that as per provision of Section 18(6) of the JVAT Act, 2005, claim of ITC of the petitioner was required to be considered by the assessing officer on the strength of tax invoices in originally produced by the petitioner showing payment of tax. However, the said claim of the petitioner was denied by the Assessing Officer by relying upon Rule-35(2) of the JVAT Rules, 2006 which apart from prescribing the condition of original tax invoices also lays down additional condition of producing a declaration in Form JVAT 404. The contention of the petitioner is that Rule 35(2) of the JVAT Rules, 2006 provides for furnishing declaration Forms JVAT 404 for availing benefit of ITC to the extent that it cannot be treated to be mandatory in nature but as directory in nature, especially in view of fact that Section 18(6) of the JVAT Act, 2005 does not provide for furnishing of JVAT 404 forms for the purpose of claiming benefit of ITC and it only contemplates production of tax invoices in original.

In view of the above, the court held that the instant matter is squarely covered by the judgment of Brahmaputra Metallics Ltd. v. State of Jharkhand, 2019 SCC OnLine Jhar 816 allowed by this Court vide order dated 09-07-2019 and directed the respondent to re-examine the claim of the petitioner towards its claim of ITC in respect of which the petitioner has not submitted JVAT-404 Forms, by verifying the said claim from tax invoices in original containing particulars of sale evidencing the amount of input tax paid and if satisfied, extend the benefit of ITC to the petitioner.[Simplex Infrastructures Ltd., Ranchi v. State of Jharkhand, 2019 SCC OnLine Jhar 1059, decided on 20-08-2019]

Patna High Court
Case BriefsHigh Courts

Patna High Court: Rajendra Kumar Mishra, J. disposed of the writ petition saying that the final decision regarding the petitioner’s claim rested with the respondent authorities.

A special leave application was filed on behalf of the appellant under Section 378(4) of the Code of Criminal Procedure, seeking leave to file an appeal against the judgment passed by the Additional Chief Judicial Magistrate wherein he had acquitted the respondent from the charges under Sections 323 and 420 of the Penal Code, 1860.

The mother of the appellant had filed a complaint case in the Court of SDJM., Sheohar at Sitamarhi. The mother of the appellant, aged about 85 years used to live with her son Daya Shankar Mishra (Appellant) and her other son, Ashutosh Mishra (Respondent) used to live separately. In absence of Daya Shankar Mishra, the respondent took her to Sheohar for treatment on 25-01-2008 and 28-01-2008, but in the garb of such treatment, he managed to take her thumb impression and signature on papers saying that her thumb impression and signature were required for her treatment. The respondent got the property transferred to his name by way of the thumb impression and signatures that he had obtained, and when he was questioned by the appellant he threatened her in return.

The learned ACJM, Sheohar at Sitamarhi acquitted the respondent on the grounds that the prosecution failed to prove the charges under Sections 323 and 420 of the Penal Code.

The Panchnama clearly indicated that the said plot of land was transferred in the name of the respondent and the trial Court committed an error in not considering the evidence.

The Court held that the Trial Court concluded that neither the complainant had filed any suit for cancellation of the sale deed nor any competent jurisdiction has declared the sale deed null and void and that the complainant had not denied giving the thumb impression and signature on the sale deed, rather, her claim was that her thumb impression and signature obtained on papers were converted into a sale deed. The Court instead failed to make an attempt to compare the thumb impression and signature of the sale deed with the signature and thumb impression of the register maintained in the office of Sub-Registrar. The Court found no reason to allow this Special Leave to Appeal.

In view of the above-noted facts, the instant application was dismissed accordingly.[Daya Shankar Mishra v. State of Bihar, 2019 SCC OnLine Pat 1429, decided on 08-08-2019]

Jharkhand High Court
Case BriefsHigh Courts

Jharkhand High Court: Sanjay Kumar Dwivedi, J. contemplated the mercy petition filed by a petitioner who sought re-employment in a Coal Company.

Counsel for the petitioner Ranjan Kumar Singh, submitted that petitioner was dismissed from services on the ground of absent for 58 days and that after dismissal, the petitioner, who is an illiterate person, approached the authorities for re-employment in terms of the scheme but his representation was not considered in the true spirit of the Scheme.

On the contrary, the counsel for the respondent Company submitted that the petitioner had filed the representation after nine years of his dismissal, thus, the writ was liable to be quashed due to delay.

The Court observed that the petitioner was an illiterate person, as it was evident from the representation he had filed with the respondents-authorities on which he gave his thumb impression, and he wasn’t able to understand the legal impediment of approaching at a belated stage. Hence, his claim was not denied solely on the ground of delay and needs consideration.[Dulal Bouri v. BCCL, 2019 SCC OnLine Jhar 804, decided on 08-07-2019]

Armed Forces Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Armed Forces Tribunal: A Coram of Justice SVS Rathore (Judicial Member) and Air Marshal BBP Sinha (Administrative Member) allowed an ex-hawaldar’s application for disability pension holding that stress and strain of military service can also happen in peace areas.

Applicant herein was enrolled in the Indian Army in 1971 and after serving the Army for 22 years, he was discharged from service in 1973. Thereafter, the applicant was inducted in the Defence Security Corps (DSC) as Sepoy in medically fit condition and after serving for 15 years in the DSC, he was discharged therefrom in 2010. Before applicant’s discharge, the Release Medical Board (RMB) considered his disability as ‘primary hypertension’ and opined the disease as “neither attributable nor aggravated” (NANA) by military service and assessed it as 30% for life. The Medical Board further assessed the disability qualifying for a disability pension as NIL for life. Aggrieved with non-payment of disability pension, the applicant preferred representation which was rejected by the appropriate authority. Hence, the present petition.

The Tribunal noted that the only reason given by the RMB for declaring the disease as NANA was that it had not started in peace area and not in a field, high altitude area or counter-insurgency operation area. This reason was outrightly dismissed by the Tribunal opining that it amounted to saying that there is no stress and strain of military service in peace areas. Therefore, in terms of the judgment of Dharamvir Singh v. Union of India, (2013) 7 SCC 316 it was held that the applicant’s disability of ‘primary hypertension’ be considered as aggravated by military service.

The impugned order was set aside and the applicant was held to be entitled to benefit of rounding-off of disability pension. Relying on Shiv Dass v. Union of India, (2007) 9 SCC 274 he was directed to be granted disability pension at 30 percent for life which would be rounded off to 50 percent from three years prior to the filing of this application.[Ex Havildar Anand Singh v. Union of India, 2019 SCC OnLine AFT 1408, decided on 26-03-2019]

Case BriefsHigh Courts

Bombay High Court: M.S. Sonak, J. while disposing of a petition filed by eatery owners whose licences have been cancelled, directed the Municipal Corporation of Greater Mumbai to accept petitioners’ application for renewal of license and thereafter dispose of such application on its own merits and in accordance with law as expeditiously as possible.

The challenge in the present petition was to the order dated 20-4-2019 by which the Additional Chief Judge (Appeal Court) had dismissed petitioners’ application seeking interim relief pending disposal of the Municipal Appeal in which the petitioners have challenged certain orders cancelling the license to operate the eating places. 

The High Court was of the view that no case for interference was established. The grant of an interim injunction would virtually amount to allowing the appeal filed by the petitioners. It is pertinent to note that the petitioners had prayed for an interim mandatory injunction to direct the Municipal Corporation of Greater Mumbai to renew their license which has already expired. Such orders, according to the Court, cannot normally be made at the interim stage and that too in the absence of a very strong prima facie case. It was held by the Court: “Since the license has already expired, there is no question of the petitioners claiming for any interim relief and on the basis of same continuing or commencing the business from the suit premises”.

Jamshed Master, Advocate for the petitioners submitted, however, that the Municipal Corporation was not even accepting petitioner’s application for renewal of license, much less considering them in accordance with the law. The High Court held the Municipal Corporation of Greater Mumbai cannot simply refuse to accept the application and thereby avoid making a decision as to whether the petitioners were entitled to renewal or not. 

Accordingly, without disturbing the impugned order, the Court directed the Municipal Corporation of Greater Mumbai to accept petitioners’ application for renewal of license and thereafter dispose of such application on its own merits and in accordance with law as expeditiously as possible and in any case within a period of two months from the date of such application. [Vijay D. Shetty v. Municipal Corpn. of Greater Mumbai, WP (ST) No. 13549 of 2019, dated 03-05-2019]

 

Case BriefsForeign Courts

High Court of South Africa, Eastern Cape Local Division: This application was filed before G.J. Gajjar, AJ., under Rule 28(4) of the Uniform Rules of Courts by which the applicant seeks to amend its particulars of claim pursuant to a notice of objection filed by the respondent.

Respondent had objected to the amendment in particulars on the ground that it was not possible to determine what work was undertaken to remedy the alleged defective work or what portion of invoices was reduced by a certain aggregate sum. The applicant and respondent had entered into an oral agreement under which respondent had provided a programmer who was not appropriate for managing the PLC program due to which applicant had to recheck and get it corrected by a third party and company E for necessary and related costs. Applicant in its proposed amended particulars of claim has attached seven invoices made out to company E. The amended particulars was thus reducing this amount by 50% as a discount by the third party. Thus, this reduced amount as an amendment to the particulars was criticized by respondents. Respondent submitted that the plaintiff, at the very least, is required to specifically stipulate what portion of the attached invoices was not for its account and that Rule 18(4) should be read conjunctively with the provisions of Rule 18(10) in regard to the particulars required when claiming damages.

High Court was of the view that proposed amended particulars of claim do not disable the defendant from assessing the quantum of the claim. Therefore, the objection made by the respondent was dismissed and the particulars of claim was amended. [Shones Automation (PTY) Ltd. v. Smokey Mountain Trading 444 (PTY) Ltd., Case No. 1554 of 2018, decided on 19-02-2019]