Case BriefsSupreme Court

Supreme Court: Explaining the scope of Section 92 Proviso (6) of the Evidence Act, 1872, the 3-judge bench of NV Ramana, CJ* and Surya Kant and Aniruddha Bose, JJ has held that the said proviso can be resorted to only in cases where the terms of the document leave the question in doubt.

“But when a document is a straightforward one and presents no difficulty in construing it, the proviso does not apply. In this regard, we may state that Section 95 only builds on the proviso 6 of Section 92.”

The Court was of the opinion that if the contrary view is adopted as correct it would render Section 92 of the Evidence Act, otiose and also enlarge the ambit of proviso 6 beyond the main Section itself.

Background

Initially Appellant’s husband was running a business of stationary in the name of “Karandikar Brothers” before his untimely demise in the year 1962. After his demise, she continued the business for some time but later decided to let the Respondent run the same for some time.

The terms of the agreement were:

“The stationary shop by name “Karandikar Brothers” belonging to you of the stationary materials which is situated in the premises described in Para 1 (a) above and in which the furniture etc. as described in Para l(b) above belonging to you is existing is being taken by me for conducting by an agreement for a period of two  years beginning from 1st February 1963 to 31st January 1965.

The rent of the shop described in Para 1 (a) above is to be given by you only to the owner and I am not responsible therefor. I am to pay a royalty amount of Rs. 90 /-(Rupees Ninety only) for taking the said shop for conducting, for every month which is to be paid before the 5th day of every month.”

Time after time, the contract was duly extended. In 1980s, desiring to start her husband’s business again, appellant herein issued a notice requesting the Respondent to vacate the suit premises, However, the Respondent replied to the notice claiming that the sale of business was incidental rather the contract was a rent agreement stricto sensu.

The Trial Court while negating the contention of the Respondent, that the shop premises was given to him on license basis.

The Bombay High Court, however, held that:

“Thus, considering the entirety of the case, in my view, both   the   Courts   below   have   incorrectly   interpreted   the document and the surrounding circumstances which, in my view, indicate that the parties had in fact agreed that the premises were transferred to the appellant on a leave and license basis.”

Analysis

Section 95. Evidence as to document unmeaning in reference to existing facts.—

When language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense.  Illustration A sells to B, by deed, “my house in Calcutta”. A had no house in Calcutta, but it appears that he had a house at Howrah, of which B had been in possession since the execution of the deed. These facts may be proved to show that the deed related to the house of Howrah.

Section 92. Exclusion of evidence of oral agreement.—

When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms:…

Proviso (6).—Any fact may be proved which shows in what manner the language of a document is related to existing facts.

The Court explained that Section 92 specifically prohibits evidence of any oral agreement or statement which would contradict, vary, add to or subtract from its terms. If oral evidence could be received to show that the terms of the document were really different from those expressed therein, it would amount to according permission to give evidence to contradict or vary those terms and as such it comes within the inhibitions of Section 92. It could not be postulated that the legislature intended to nullify the object of Section 92 by enacting exceptions to that section.

Considering the facts and materials placed before it, the Court was of the opinion that the contract mandated continuation of the business in the name of ‘Karandikar Brothers’ by paying royalties of Rs. 90 per month.

“Once the parties have accepted the recitals and the contract, the respondent could not have adduced contrary extrinsic parole evidence, unless he portrayed ambiguity in the language. It may not be out of context to note that the extension of the contract was on same conditions.”

The Court, hence, held that the High Court erred in appreciating the ambit of Section 95, which led to consideration of evidence which only indicates breach rather than ambiguity in the language of contract. The evidence also points that the license was created for continuation of existing   business, rather than license/lease of shop premises.

The Court was, hence, of the opinion that if the meaning provided by the High Court is accepted, then it would amount to Courts substituting the bargain by the parties.

“Such interpretation, provided by the High Court violates basic tenants of legal interpretation.”

[Mangala Waman Karandikar v. Prakash Damodar Ranade, 2021 SCC OnLine SC 371 , decided on 07.05.2021]


*Judgment by: CJI NV Ramana

Know Thy Judge| Justice N.V. Ramana

Case BriefsSupreme Court

Supreme Court: In a case relating to dowry death, the bench of NV Ramana*, CJ and Aniruddha Bose, J has said that judges need to be extra careful while conducting criminal trials relating to Section 304-B, IPC. The Court went on to summarise the law under Section 304­B, IPC read with Section 113­B, Evidence Act and the guidelines to be followed by the Courts while conducting trials in such cases.

The Court noticed that, often, Trial Courts record the statement of an accused under Section 313, CrPC in a very casual and cursory manner, without specifically questioning the accused as to his defense.

“It ought to be noted that the examination of an accused under Section 313, CrPC cannot be treated as a mere procedural formality, as it is based on the fundamental principle of fairness.”

Hence, the Court must put incriminating circumstances before the accused and seek his response. A duty is also cast on the counsel of the accused to prepare his defense, since the inception of the trial, with due caution, keeping in consideration the peculiarities of Section 304¬B, IPC read with Section 113-B, Evidence Act.

Dowry deaths – Facts and Figures

A study titled “Global study on Homicide: Gender-related killing of women and girls”, published by the United Nations Office on Drugs and Crime, highlighted that in 2018 female dowry deaths account for 40 to 50 percent of all female homicides recorded annually in India. The dismal truth is that from the period 1999 to 2016, these figures have remained constant.

The latest data furnished by the National Crime Records Bureau indicates that in 2019 itself, 7115 cases were registered under Section 304-B, IPC alone.

Law on dowry death – The trajectory

Section 304¬B, IPC is one among many legislative initiatives undertaken by Parliament to remedy a long-standing social evil of dowry death. The pestiferous nature of dowry harassment, wherein married women   are   being   subjected   to   cruelty   because   of   covetous demands by husband and his relatives has not gone unnoticed. The Parliament enacted the Dowry Prohibition Act, 1961 as a first step to eradicate this social evil. Further, as the measures were   found   to   be   insufficient,   the   Criminal   Law   (Second Amendment) Act, 1983 (Act 46 of 1983) was passed wherein Chapter XX-A was introduced in the IPC, containing Section 498¬A.

The need for a stringent law to curb dowry deaths was suo motu taken up by the Law Commission in its 91st Law Commission Report. The Law Commission recognized that the IPC, as it existed at that relevant time, was insufficient to tackle the issue of dowry deaths due to the nature and modus of the crime.

The Parliament, then, introduced amendments to the Dowry Prohibition Act, as well as the IPC by enacting Dowry Prohibition (Amendment) Act, 1986 (Act 43 of 1986). By way of this amendment, Section 304-B, IPC was specifically introduced in the IPC, as a stringent provision to curb the menace of dowry death in India.

Margaret Alva, who presented the Amendment Bill before Rajya Sabha observed:

“You have never really heard of a girl being burnt while cooking in her mother’s  house or her husband’s  house. It is always in the mother-in-law’s house that she catches fire and is burnt in the kitchen. Therefore, getting evidence immediately becomes a great bit problem. Therefore, we have brought in a couple of amendments which give certain presumptions where the burden of proof shifts to the husband and to his people to show that it was not a dowry death or that it was not deliberately done.”

Dowry Death and Criminal Trial – Law Summarised

  1. Section 304¬B, IPC must be interpreted keeping in mind the legislative intent to curb the social evil of bride burning and dowry demand.
  2. The prosecution must at first establish the existence of the necessary ingredients for constituting an offence under Section 304-B, IPC. Once these ingredients are satisfied, the rebuttable presumption of causality, provided under Section 113¬B, Evidence Act operates against the accused.
  3. The phrase “soon before” as appearing in Section 304¬B, IPC cannot be construed to mean ‘immediately before’. The prosecution must establish existence of “proximate and live link” between the dowry death and cruelty or harassment for dowry demand by the husband or his relatives.
  4. Section 304-B, IPC does not take a pigeonhole approach in categorizing death as homicidal or suicidal or accidental. The reason for such non categorization is due to the fact that death occurring “otherwise than under normal circumstances” can, in cases, be homicidal or suicidal or accidental.
  5. Due to the precarious nature of Section 304-B, IPC read with 113¬B, Evidence Act, Judges, prosecution and defence should be careful during conduction of trial.
  6. It is a matter of grave concern that, often, Trial Courts record the statement under Section 313, CrPC in a very casual and cursory manner, without specifically questioning the accused as to his defense. It ought to be noted that the examination of an accused under Section 313, CrPC cannot be treated as a mere procedural formality, as it based on the fundamental principle of fairness. This aforesaid provision incorporates the valuable principle of natural justice “audi alteram partem” as it enables the accused to offer an explanation for the incriminatory material appearing against him. Therefore, it imposes an obligation on the court to question the accused fairly, with care and caution.
  7. The Court must put incriminating circumstances before the accused and seek his response. A duty is also cast on the counsel of the accused to prepare his defense since the inception of the Trial with due caution, keeping   in consideration the peculiarities of Section 304-B, IPC read with Section 113¬B, Evidence Act.
  8. Section 232, CrPC provides that, “If, after taking the evidence for the prosecution, examining   the accused and hearing the prosecution and the defence on the point, the Judge considers that there is no evidence that the accused committed the offence, the Judge shall record an order of acquittal”. Such discretion must be utilized by the Trial Courts as an obligation of best efforts.
  9. Once the Trial Court decides that the accused is not eligible to be acquitted as per the provisions of Section 232, CrPC, it must move on and fix hearings specifically for ‘defence evidence’, calling upon the accused to present his defense as per the procedure provided under Section 233, CrPC, which is also an invaluable right provided to the accused.
  10. In the same breath, Trial Courts need to balance other important considerations such as the right to a speedy trial.
  11. The presiding Judge should follow the guidelines laid down by the Supreme Court while sentencing and imposing appropriate punishment.
  12. Undoubtedly, the menace of dowry death is increasing day by day, however, sometimes family members of the husband are roped in, even though they have no active role in commission of the offence and are residing at distant places. In these cases, the Court need to be cautious in its approach.

[Satbir Singh v. State of Haryana, 2021 SCC OnLine SC 404, decided on 28.05.2021]


Judgment by: Chief Justice of India NV Ramana 

Know Thy Judge| Justice N.V. Ramana

Case BriefsSupreme Court

Supreme Court: In a case where a woman died of burn injuries one year into her marriage, the bench of NV Ramana*, CJ and Aniruddha Bose, J has held that Courts should use their discretion to determine if the period between the cruelty or harassment and the death of the victim   would come within the term “soon before” as the factum of cruelty or harassment differs from case to case.

“When the legislature used the words, “soon before” they did not mean “immediately before”. Rather, they left its determination in the hands of the courts.”

Background

A woman got married to a man in July, 1994. As fate would have it, she died exactly after year after receiving burn injuries, allegedly after she set herself ablaze due to being subjected to cruelty and dowry demand at the hands of her husband and in-laws. The appellants were convicted by the Trial Court in December, 1997 for the offences under Sections 304¬B and 306, IPC and were sentenced to undergo rigorous imprisonment for seven years for the offence punishable under Section 304-B, IPC and to undergo rigorous imprisonment for five years for the offence punishable under Section 306, IPC.

In November, 2008, the Punjab and Haryana High Court also  upheld the order of the Trial Court and dismissed the appeal filed by the appellants.

Analysis

Was the offence under Section 304-B IPC made out?

“Soon before” – Interpretation

When the legislature used the words, “soon before” they did not mean “immediately before”. Rather, they left its determination in the hands of the courts. The factum of cruelty or harassment differs from case to case. Even the spectrum of cruelty is quite varied, as it can range from physical, verbal or even emotional. This list is certainly not exhaustive. Therefore, Courts should use their discretion to determine if the period between the cruelty or harassment and the death of the victim   would come within the term “soon before”.

“What is pivotal to the above determination, is the establishment of a “proximate and live link” between the cruelty and the consequential death of the victim.”

When the prosecution shows that ‘soon before her death such woman has been subjected by such person to cruelty or harassment for, or in connection with, any demand for dowry’, a presumption of causation arises against the accused under Section 113-B of the Evidence Act. Thereafter, the accused has to rebut this statutory presumption.

Further, Section 304-B, IPC does not take a pigeonhole approach in categorizing death as homicidal   or suicidal or accidental, as was done earlier. The reason for such non categorization is due to the fact that death occurring “otherwise than under normal circumstances” can, in cases, be homicidal or suicidal or accidental. However, the Section 304-B, IPC endeavors to also address those situations wherein murders or suicide are masqueraded as accidents.

“Therefore, if all the other ingredients of Section 304¬B IPC are fulfilled, any death whether caused by burns or by bodily injury or occurring otherwise than under normal circumstances shall, as per the legislative mandate, be called a “dowry death” and the woman’s husband or his relative “shall be deemed to have caused her death” unless proved otherwise.”

Chain of circumstances  – Where did it lead?

  • The deceased and accused were married on 01.07.1994, and the death of the lady occurred on 31.07.1995.
  • According to the evidence of the doctor, the entire body of the deceased was doused with kerosene oil. Therefore, the possibility of an accident was ruled out.
  • The Deceased had disclosed to her brother, within a month after her marriage that the accused, husband and mother-in-law, used to physically harass her on the account of bringing insufficient dowry. Furthermore, the accused persons had made a specific demand of a scooter. Pursuant to this disclosure, she was brought back to her paternal house.
  • Only a month prior to her death, the deceased had returned to her matrimonial house. However, the accused still used to harass the deceased for dowry. The aforesaid fact was revealed by the deceased to her father, when she had come to visit him.
  • Just a week before the death, on the occasion of Teej festival, another brother of the deceased had visited her while she was in her matrimonial home. The deceased had reiterated her plight to her
  • On 31.07.1995, the father of the deceased was informed by some villagers that his daughter has been admitted in the hospital. Upon reaching, the father discovered that the deceased succumbed to burn injuries.

“The aforesaid chain of circumstances proves that there existed a live and proximate link between the instances of demand of dowry and the death of the deceased.”

The court noticed that since the ingredients of Section 304¬B, IPC stoodsatisfied, the presumption under 113¬B, Evidence Act operated against the appellants, who are deemed to have caused the offence specified under Section 304-B of IPC. The burden therefore shifted on the accused to rebut the aforesaid presumption, who in turn, failed to make out a case for acquittal.

Was the offence under Section 306 IPC made out?

A bare reading of the provision indicates that for the offence under Section 306, IPC the prosecution needs to first establish that a suicide has been committed. Secondly, the prosecution must also prove that the person who is said to have abetted the commission of suicide, has played an active role in the same.

With respect to this latter requirement, Section 113¬A, Evidence Act creates a presumption against the husband and/or his relative with respect to the abetment of suicide of a married woman, under certain conditions. Not going into the other conditions, a perusal of the provision indicates that such presumption shall be attracted only if the factum of suicide has been established by the prosecution first.

However, in the present case, the conclusion reached by the Courts below was based on assumptions, as there is no evidence on record to support the same.

The reasoning of the Trial Court in this regard was:

“Further, there is no direct evidence having been adduced by the prosecution the (sic) any of the accused caused death by sprinkling kerosene on the body of the deceased, the only possibility is that Meena Kumari put an end to her life by sprinkling kerosene on her body.”

Hence, since there was insufficient evidence to prove the factum of suicide beyond reasonable doubt, the presumption under Section 113-A, Evidence Act, is not of much help for the prosecution. The essential ingredient of deceased committing suicide has not been proved by the prosecution by adducing sufficient evidence.

“In the present case, the prosecution has failed to establish that the death occurred due to suicide. Therefore, we are of the opinion that the finding of the Courts below convicting the appellants under Section 306, IPC merits interference by this Court.”

Conclusion

Conviction under Section 304-B IPC was upheld and conviction and sentence under Section 306, IPC was set aside.

[Satbir Singh v. State of Haryana, 2021 SCC OnLine SC 404, decided on 28.05.2021]


Judgment by: Chief Justice of India NV Ramana

Know Thy Judge| Justice N.V. Ramana

Case BriefsSupreme Court

Supreme Court: The bench of L. Nageswara Rao* and Vineet Saran, JJ has shed light on how Courts should proceed while interpreting contracts.

Referring to various authorities, here is what the Court concluded:

  • The duty of the Court is not to delve deep into the intricacies of human mind to explore the undisclosed intention, but only to take the meaning of words used i.e. to say expressed intentions.[1]
  • In seeking to construe a clause in a Contract, there is no scope for adopting either a liberal or a narrow approach, whatever that may mean. The exercise which has to be undertaken is to determine what the words used mean. It can happen that in doing so one is driven to the conclusion that clause is ambiguous, and that it has two possible meanings. In those circumstances, the Court has to prefer one above the other in accordance with the settled principles. If one meaning is more in accord with what the Court considers to the underlined purpose and intent of the contract, or part of it, than the other, then the court will choose former or rather than the later[2].
  • The intention of the parties must be understood from the language they have used, considered in the light of the surrounding circumstances and object of the contract.[3]
  • Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavoring to collect the intention of the parties, even though the immediate object of inquiry is the meaning of an isolated clause[4].

[Bangalore Electricity Supply Company Limited (BESCOM) v. E.S. Solar Power Pvt. Ltd, 2021 SCC OnLine SC 358, decided on 03.05.2021]


Judgment by: Justice L. Nageswara Rao

[1] Kamala Devi v. Seth Takhatmal, 1964 (2) SCR 152

[2] Ashville Investment v. Elmer Contractors, 1988 (2) All ER 577

[3] Bank of India and Anr. v. K. MohanDas, (2009) 5 SCC 313

[4] Bihar State Electricity Board v. Green Rubber Industries, (1990) 1 SCC 731

Case BriefsHigh Courts

Uttaranchal High Court: Ravindra Maithani, J., allowed a writ petition which was filed by the petitioner who was aggrieved by the advertisement dated 29-12-2018 published by respondent 4 for filling up one post of Assistant Clerk in the Intermediate College. He sought that the advertisement be quashed and respondents be directed to consider the petitioner for promotion to the post.

Petitioner was appointed as Class IV employee in the School on 02-08-1997 when it was a high school. It was upgraded to intermediate and various posts were accordingly sanctioned. It was the case of the petitioner that after promotion of the first Assistant Clerk as Head Clerk, the post of Assistant Clerk fell vacant, which was not filled up on time.

Counsel for the petitioner, Mr Ashish Joshi contended that one Bhupal Singh Gusai had filed Writ Petition (s/s) No.253 of 2012 (“the first petition”) claiming the post of Assistant Clerk, but the department did not consider his case. It was decided on 08-02-2013 and at that time Bhupal Singh Gusai was recommended by respondent 4 for promotion to the post of Assistant Clerk, subsequently, he was promoted as Assistant Clerk. The counsel contended that instead of promoting the petitioner the respondent no.4 initiated the process to fill up the post by way of direct recruitment, which was against Regulation 39(2)(2) of the Chapter three of the Regulations (“the Regulations”) framed under Section 24 of the Uttarakhand School Education Act, 2006 (“the Act”).

Mrs Indu Sharma, Brief Holder for the State/respondent 1 to 3 submitted that there was no provision regarding filling up of single post by way of promotion from amongst the Class IV employees; there were no instructions from the Government to fill up a single post by promotion.

Mr Pankaj Chaturvedi, counsel on behalf of the Committee of Management, in their counter affidavit had stated that by resolution dated 12-09-2018, it was resolved that the post shall be filled up by way of direct recruitment and accordingly recommendation was made to the respondent 3, who had approved it.

The Court observed that the issue revolved around the interpretation of the Regulations, which provided for promotion to the post of Assistant Clerk. The Court explained that, Sub-Regulation (2) of Regulation 2 of the Chapter three, inter alia, provides that 50% of the total sanctioned posts in the clerical cadre shall be filled up by way of promotion of working Group IV employees, who are eligible and who had worked continuously for five years on a substantial post and whose service record is good. It also provides that the promotion shall be on the basis of merit subject to rejection of unfit. The comment appended to Sub-Regulation (2) of Regulation 2 of Chapter three provides that, “while computing 50% posts, less than half shall not be considered and half or more than half shall be considered as one.”

The question before the Court was that since last time the post was filled up by way of promotion, this time the respondent 4 resolved to fill up the post by way of direct recruitment and it was accordingly approved by respondent 3 but, can it be done? The Court answered in negative explaining that, Regulations do not provide that in case of single post, if once the post had been filled up by way of promotion, on the second time it may be filled up by way of direct recruitment and so on. Regulation 2 of Chapter three of the Regulations is clear on this point. It provides that 50% of the sanctioned posts of the clerical cadre shall be filled up by way of promotion from amongst eligible Group IV employees. It does not stop here. The comment appended to Sub-Regulation (2) of Regulation 2 makes it further clear that while computing 50%, less than half shall be ignored, but half or more than half shall be counted as one.

The Court while allowing the petition decided that the advertisement needed to be quashed as the respondents did not construe the regulations properly as in the instant case there was only one post. The Court while answering the second question as to whether the petitioner could be promoted to the post of Assistant Clerk the Court held that as there were other employees senior to the petitioner in the cadre, from which the post of Assistant Clerk was to be filled up by way of promotion, so the Court directed the respondents to undertake the process to fill up the post of Assistant Clerk in the school by way of promotion from the eligible Group IV employees.

[Asha Ram Ghansela v. State of Uttarakhand, 2021 SCC OnLine Utt 452, decided on 10-05-2021]


Suchita Shukla, Editorial Assistant has put this report together 

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of R. F. Nariman* and B.R. Gavai, JJ., addressed the instant case regarding statutory interpretation.  The issue before the Bench was whether a residential accommodation for nuns and hostel for students would fall under “religious or educational purposes” for the purpose of tax exemption. The Bench expressed,

“We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted.”

Findings of the High Court

Under Section 3(1)(b) of Kerala Building Tax Act, 1975 buildings that are used principally for religious, charitable or educational purposes or as factories or workshops are exempted from building tax.

The State had claimed that no exemption should be granted as residential accommodation for nuns and hostels for students would be for residential as apart from religious or educational purposes and would not therefore be covered by the exemption contained in Section 3(1)(b) of the Act. The Division Bench of Kerala High Court had held that the buildings used for the residence of the nuns in a convent, was principally used for religious purposes and therefore, should also qualify for exemption. However, on the question of hotel accommodations for students the Bench had expressed a contrary view and held that the same would not qualify as being principally used for education purpose and would not be entitled for exemption.

However, the full Bench of Kerala High Court had reversed the findings of Division Bench regarding hostel accommodation. The full Bench opined that the Division Bench while deciding the matter did not consider the educational Regulations of the Medical Council of India and Nursing Council of India, which made it mandatory that in order to get approval, hospital for patients and hostel facilities for students are mandatory. Thus, the full Bench held that, “

“Wherever hostel is compulsory for approval of a course study or an educational institution by the regulatory body as in the case of medical and nursing colleges, hostel building is an integral part of the educational institution, and so much so, accommodation to students provided in the hostel building is for educational purpose and therefore the hostel building qualifies for exemption from building tax.”

However, letting out of buildings by private agencies was held to be a commercial activity whether tenants were students or not.

Observation and Conclusion

Section 3(1)(b) of Kerala Building Tax Act, 1975 read as:

    1. Exemptions(1) Nothing in this Act shall apply to-

(b) Buildings used principally for religious, charitable or educational purposes or as factories or workshops.

Explanation- for the purposes of this sub-section, “charitable purpose” includes relief of the poor and free medical relief.

Noticing that even factories or workshops which produce goods and provide services were also exempted, despite profit motive, the Bench opined that the object for exempting buildings which were used principally for religious, charitable or educational purposes would be for core religious, charitable or educational activity as well as purposes directly connected with religious activity.

In Commr. of Customs (Preventive) v. M. Ambalal & Co., (2011) 2 SCC 74, the  Supreme Court made a clear distinction between exemptions which were to be strictly interpreted as opposed to beneficial exemptions and held that,

“The general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances.”

The Bench cited an example, stating that take a case where nuns were residing in a building next to a convent so that they may walk over to the convent for religious instruction. Take a case where the neighbouring building to the convent was let out on rent to any member of the public, and the rent was then utilised only for core religious activity. Letting out a building for a commercial purpose would lose any rational connection with religious activity. The indirect connection with religious activity being the profits which were ploughed back into religious activity would obviously not suffice to exempt such a building. But it was obvious that the purpose of residence of nuns was not to earn profit but residence that was integrally connected with religious or educational activity.

Lastly, while differentiating with the judgment in Union of India v. Wood Papers Ltd., (1990) 4 SCC 256, the Bench held that,

“An exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive for promoting economic growth or otherwise has some beneficial reason behind it.”

Thus, the Court refused to countenance the plea made by the State that buildings which were used for purposes integrally connected with religious or educational activity were outside the scope of the exemption contained in Section 3(1)(b) of the Act.

“We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted.”

In the light of above, the Bench opined that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to and a literal formalistic interpretation of the statute at hand was to be eschewed.

[State of Kerala v. Mother Superior Adoration Convent, 2021 SCC OnLine SC 151, decided on 01-03-2021]


Kamini Sharma, Editorial Assistant has put this report together 

*Judgment by: Justice R. F. Nariman

Know Thy Judge| Justice Rohinton F. Nariman

Appearance before the Court by:

For the Appellants: Sr. Adv. Venkatraman and Sr. Adv. Jaideep Gupta

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud* and MR Shah. JJ has held that the proceedings instituted before the commencement of the Consumer Protection Act 2019 on 20 July 2020 would continue before the fora corresponding to those under the Consumer Protection Act 1986 (the National Commission, State Commissions and District Commissions) and not be transferred in terms of the pecuniary jurisdiction set for the fora established under the Act of 2019.

Background

The material provisions of the Consumer Protection Act 2019 came into force on 20 July 2020. The appellants instituted a consumer case against real estate developers before the National Consumer Disputes Redressal Commission on 18 June 2020 under the Consumer Protection Act 1986 . The NCDRC by its order dated 30 July 2020 dismissed the consumer case on the ground that after the enforcement of the Act of 2019, its pecuniary jurisdiction has been enhanced from rupees one crore to rupees ten crores. The appellants’ review petition was also dismissed by the NCDRC on 5 October 2020. In the present case, the claim of Rs. 2.19 crores is below the enhanced pecuniary jurisdiction of the NCDRC.

This gave rise to the issue as to whether a complaint which was filed and registered under the Act of 1986, before the new Act of 2019 came into force, has to be entertained under the provisions of the erstwhile legislation. In anticipation of the enforcement of the Act of 2019, an administrative notice was issued by the NCDRC on 17 July 2020 to allow the functioning of its registry for fresh filings on 18 July 2020, since the new law was to come into force on 20 July 2020.

Analysis

Impact of a change in forum on pending proceedings and retrospectivity

After considering a number of precedents that have interpreted the impact of a change in forum on pending proceedings and retrospectivity, the following position of law emerged:

“a change in forum lies in the realm of procedure. Accordingly, in compliance with the tenets of statutory interpretation applicable to procedural law, amendments on matters of procedure are retrospective, unless a contrary intention emerges from the statute.”

Section 107 of the Act of 2019

  • Section 107(1) of the Act of 2019 repeals the Act of 1986.
  • Section 107 (2) has saved “the previous operation” of any repealed enactment or “anything duly done or suffered thereunder to the extent that it is not inconsistent with the provisions of the new legislation”.
  • Section 107(3) indicates that the mention of particular matters in sub-Section (2) will not prejudice or affect the general application of Section 6 of the General Clauses Act.

Section 6 of the General Clauses Act

Section 6 of the General Clauses Act provides governing principles with regard to the impact of the repeal of a central statute or regulation. These governing principles are to apply, “unless a different intention appears”. Clause (c) of Section 6 inter alia stipulates that a repeal would not affect “any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed”. The right to pursue a validly instituted consumer complaint under the Act of 1986 is a right which has accrued under the law which was repealed.

Clause (c) of Section 6 has the effect of preserving the right which has accrued. Clause (e) ensures that a legal proceeding which has been initiated to protect or enforce “such right” will not be affected and that it can be continued as if the repealing legislation has not been enacted. The expression “such a right” in clause (e) evidently means the right which has been adverted to in clause (c).

“The plain consequence of clause (c) and clause (e), when read together is twofold: first, the right which has accrued on the date of the institution of the consumer complaint under the Act of 1986 (the repealing law) is preserved; and second, the enforcement of the right through the instrument of a legal proceeding or remedy will not be affected by the repeal.”

However, considering that right to a forum is not an accrued right, the question whether the pending legal proceedings are required to be transferred to the newly created forum by virtue of the repeal would still persist.

While Section 6(e) of the General Clauses Act protects the pending legal proceedings for the enforcement of an accrued right from the effect of a repeal, this does not mean that the legal proceedings at a particular forum are saved from the effects from the repeal.

Object of the Act of 2019

There is no express language indicating that all pending cases would stand transferred to the fora created by the Act of 2019 by applying its newly prescribed pecuniary limits.

The Act of 2019 is enacted to provide “for protection of the interests of consumers” and has taken note of the evolution of consumer markets by the proliferation of products and services in light of global supply chains, ecommerce and international trade.

“New markets have provided a wider range of access to consumers. But at the same time, consumers are vulnerable to exploitation through unfair and unethical business practices. The Act has sought to address “the myriad and constantly emerging vulnerabilities of the consumers. The recurring theme in the new legislation is the protection of consumers which is sought to be strengthened by procedural interventions such as strengthening class actions and introducing mediation as an alternate forum of dispute resolution.”

In this backdrop, something specific in terms of statutory language – either express words or words indicative of a necessary intendment would have been required for mandating the transfer of pending cases.

“One can imagine the serious hardship that would be caused to the consumers, if cases which have been already instituted before the NCDRC were required to be transferred to the SCDRCs as a result of the alteration of pecuniary limits by the Act of 2019. A consumer who has engaged legal counsel at the headquarters of the NCDRC would have to undertake a fresh round of legal representation before the SCDRC incurring expense and engendering uncertainty in obtaining access to justice. Likewise, where complaints have been instituted before the SCDRC, a transfer of proceedings would require consumers to obtain legal representation before the District Commission if cases were to be transferred. Such a course of action would have a detrimental impact on the rights of consumers. Many consumers may not have the wherewithal or the resources to undertake a fresh burden of finding legal counsel to represent them in the new forum to which their cases would stand transferred.”

Hence, it would be difficult to attribute to Parliament, whose purpose in enacting the Act of 2019 was to protect and support consumers with an intent that would lead to financial hardship, uncertainty and expense in the conduct of consumer litigation.

Data on pendency of cases

Data drawn from annual reports of the Union Ministry of Consumer Affairs indicates pendency from financial year 2015-16 to financial year 2019-20 indicates that as on 31 October 2019, 21,216 cases were pending before the NCDRC and 1,25,156 cases were pending before the SCDRC. Many of these cases would have to be transferred if the view which the developer propounds is upheld.

“This will seriously dislocate the interests of consumers in a manner which defeats the object of the legislation, which is to protect and promote their welfare. Clear words indicative of either an express intent or an intent by necessary implication would be necessary to achieve this result. The Act of 2019 contains no such indication.”

Hence, the legislature cannot be attributed to be remiss in not explicitly providing for transfer of pending cases according to the new pecuniary limits set up for the fora established by the new law, were that to be its intention.

Conclusion

All proceedings instituted before 20 July 2020 under the Act of 1986 shall continue to be heard by the fora corresponding to those designated under the Act of 1986 and not be transferred in terms of the new pecuniary limits established under the Act of 2019.

[Neena Aneja v. Jai Prakash Associates Ltd., 2021 SCC OnLine SC 225, decided on 16.03.2021]


*Judgment by: Justice Dr. DY Chandrachud

Know Thy Judge| Justice Dr. DY Chandrachud

Appearances before the Court by:

For appellants: Advocate P Vinay Kumar

For respondent: Senior Advocate Krishnan Venugopal

Case BriefsSupreme Court

Supreme Court: Posed with the issue of Interpreting Section 60(5) of the Insolvency and Bankruptcy Code, 2016 in order to understand the scope of the jurisdiction of NCLT in dealing with the corporate disputes arising out of insolvency, the bench of Dr. DY Chandrachud* and MR Shah, JJ had the occasion to visit the principle to be kept in mind while interpreting ‘similar words’ in ‘distinct settings’.

Stating that in such cases it is necessary to bear in mind the context in which the phrases have been used, the Court took note of a commentary by Justice G.P. Singh wherein it was stated that,

“When the question arises as to the meaning of a certain provision in a statute, it is not only legitimate but proper to read that provision in its context. The context here means, the statute as a whole, the previous state of the law, other statutes in pari materia, the general scope of the statute and the mischief that it was intended to remedy.”

The Court, hence, said that textually similar language in different enactments has to be construed in the context and scheme of the statue in which the words appear.

“The meaning and content attributed to statutory language in one enactment cannot in all circumstances be transplanted into a distinct, if not, alien soil. For, it is trite law that the words of a statute have to be construed in a manner which would give them a sensible meaning which accords with the overall scheme of the statute, the context in which the words are used and the purpose of the underlying provision.”

[Gujarat Urja Vikas Nigam Limited v. Amit Gupta,  2021 SCC OnLine SC 194, decided on 08.03.2021]


*Judgment by: Justice Dr. DY Chandrachud

Know Thy Judge| Justice Dr. DY Chandrachud

Appearances before the Court by”

For appellant: Senior Advocate Shyam Diwan and Advocate Ranjitha Ramachandran

For Respondent: Senior Advocate C U Singh and Nakul Dewan

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of RF Nariman*, Navin Sinha and KM Joseph, JJ has, analysing various provisions under the Negotiable Instruments Act, the Court concluded that the proceedings under Section 138 are “quasi-criminal” in nature.

The Court held that

“a Section 138/141 proceeding against a corporate debtor is covered by Section 14(1)(a) of the IBC.”

In a 120-pages long verdict, the Supreme Court tackled the following issues to reach at the aforementioned conclusion:

OBJECT AND INTERPRETATION OF SECTION 14 OF THE IBC

The expression “institution of suits or continuation of pending suits” is to be read as one category, and the disjunctive “or” before the word “proceedings” would make it clear that proceedings against the corporate debtor would be a separate category.

“What throws light on the width of the expression “proceedings” is the expression “any judgment, decree or order” and “any court of law, tribunal, arbitration panel or other authority”. Since criminal proceedings under the Code of Criminal Procedure, 1973 are conducted before the courts mentioned in Section 6, CrPC, it is clear that a Section 138 proceeding being conducted before a Magistrate would certainly be a proceeding in a court of law in respect of a transaction which relates to a debt owed by the corporate debtor.”

A quasi-criminal proceeding which would result in the assets of the corporate debtor being depleted as a result of having to pay compensation which can amount to twice the amount of the cheque that has bounced would directly impact the corporate insolvency resolution process in the same manner as the institution, continuation, or execution of a decree in such suit in a civil court for the amount of debt or other liability.

“Judged from the point of view of this objective, it is impossible to discern any difference between the impact of a suit and a Section 138 proceeding, insofar as the corporate debtor is concerned, on its getting the necessary breathing space to get back on its feet during the corporate insolvency resolution process.”

Hence, the width of the expression “proceedings” cannot be cut down so as to make such proceedings analogous to civil suits.

THE INTERPLAY BETWEEN SECTION 14 AND SECTION 32A OF THE IBC

“A section which has been introduced by an amendment into an Act with its focus on cesser of liability for offences committed by the corporate debtor prior to the commencement of the corporate insolvency resolution process cannot be so construed so as to limit, by a sidewind as it were, the moratorium provision contained in Section 14, with which it is not at all concerned.”

If the expression “prosecution” in the first proviso of Section 32A(1) refers to criminal proceedings properly so-called either through the medium of a First Information Report or complaint filed by an investigating authority or complaint and not to quasi-criminal proceedings that are instituted under Sections 138/141 of the Negotiable Instruments Act against the corporate debtor, the object of Section 14(1) of the IBC gets subserved, as does the object of Section 32A, which does away with criminal prosecutions in all cases against the corporate debtor, thus absolving the corporate debtor from the same after a new management comes in.

NATURE OF PROCEEDINGS UNDER CHAPTER XVII OF THE NEGOTIABLE INSTRUMENTS ACT

“Section 138 contains within it the ingredients of the offence made out. The deeming provision is important in that the legislature is cognizant of the fact that what is otherwise a civil liability is now also deemed to be an offence, since this liability is made punishable by law.”

It is important to note that the transaction spoken of is a commercial transaction between two parties which involves payment of money for a debt or liability. The explanation to Section 138 makes it clear that such debt or other liability means a legally enforceable debt or other liability. Thus, a debt or other liability barred by the law of limitation would be outside the scope of Section 138. This, coupled with fine that may extend to twice the amount of the cheque that is payable as compensation to the aggrieved party to cover both the amount of the cheque and the interest and costs thereupon, would show that it is really a hybrid provision to enforce payment under a bounced cheque if it is otherwise enforceable in civil law.

Further, as the proviso gives an opportunity to the drawer of the cheque, stating that the drawer must fail to make payment of the amount within 15 days of the receipt of a notice, it becomes clear that the real object of the provision is not to penalise the wrongdoer for an offence that is already made out, but to compensate the victim.

Under Section 139, a presumption is raised that the holder of a cheque received the cheque for the discharge, in whole or in part, of any debt or other liability. To rebut this presumption, facts must be adduced which, on a preponderance of probability (not beyond reasonable doubt as in the case of criminal offences), must then be proved.

Section 140 states that it shall not be a defence in a prosecution for an offence under Section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that Section, thus making it clear that strict liability will attach, mens rea being no ingredient of the offence.

Section 141 makes Directors and other persons statutorily liable, provided the ingredients of the section are met. Interestingly, for the purposes of this Section, explanation (a) defines “company” as meaning any body corporate and includes a firm or other association of individuals.

A cursory reading of Section 142 makes clear that the procedure under the CrPC has been departed from. First and foremost, no court is to take cognizance of an offence punishable under Section 138 except on a complaint made in writing by the payee or the holder in due course of the cheque – the victim. Further, the language of Section 142(1) (b) would again show the hybrid nature of these provisions inasmuch as a complaint must be made within one month of the date on which the “cause of action” under clause (c) of the proviso to Section 138 arises.

“The expression “cause of action” is a foreigner to criminal jurisprudence, and would apply only in civil cases to recover money. Chapter XIII of the CrPC, consisting of Sections 177 to 189, is a chapter dealing with the jurisdiction of the criminal courts in inquiries and trials. When the jurisdiction of a criminal court is spoken of by these Sections, the expression “cause of action” is conspicuous by its absence.”

Under Section 143, it is lawful for a Magistrate to pass a sentence of imprisonment for a term not exceeding one year and a fine exceeding INR 5,000/- summarily. Hence,

“… the payment of compensation is at the heart of the provision in that a fine exceeding INR 5000/-, the sky being the limit, can be imposed by way of a summary trial which, after application of Section 357 of the CrPC, results in compensating the victim up to twice the amount of the bounced cheque.”

Under Section 144, the mode of service of summons is done as in civil cases, eschewing the mode contained in Sections 62 to 64 of the CrPC. Likewise, under Section 145, evidence is to be given by the complainant on affidavit, as it is given in civil proceedings, notwithstanding anything contained in the CrPC. Most importantly, by Section 147, offences under this Act are compoundable without any intervention of the court, as is required by Section 320(2) of the CrPC.

CONCLUSION

“The gravamen of a proceeding under Section 138, though couched in language making the act complained of an offence, is really in order to get back through a summary proceeding, the amount contained in the dishonoured cheque together with interest and costs, expeditiously and cheaply.”

The Court, hence, concluded that a quasi-criminal proceeding that is contained in Chapter XVII of the Negotiable Instruments Act would, given the object and context of Section 14 of the IBC, amount to a “proceeding” within the meaning of Section 14(1)(a), the moratorium therefore attaching to such proceeding.

[P. Mohanraj v. Shah Brother Ispat Pvt. Ltd., 2021 SCC OnLine SC 152, decided on 01.03.2021]


*Judgment by: Justice RF Nariman

Know Thy Judge| Justice Rohinton F. Nariman

Appearances before the Court by:

For Appellants: Senior Advocate Jayanth Muth Raj

For Respondent: Advocate Jayant Mehta

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of RF Nariman*, Navin Sinha and KM Joseph, JJ has held that an appeal under section 37(1)(c) of the Arbitration and Conciliation Act, 1996 would be maintainable against an order refusing to condone delay in filing an application under section 34 of the Arbitration Act, 1996 to set aside an award.

The Court was hearing an appeal arising out of a certificate issued under Article 133 read with Article 134A of the Constitution of India by the High Court of Delhi thereby giving rise to the question as to whether a learned single Judge’s order refusing to condone the Appellant’s delay in filing an application under section 34 of the Arbitration Act, 1996 is an appealable order under section 37(1)(c) of the said Act.

Interpreting Section 37(1)(c), the Court took note of the fact that the expression “setting aside or refusing to set aside an arbitral award” has to be read with the expression that follows – “under section 34”. Section 34 is not limited to grounds being made out under section 34(2).

As per section 34(1), an application made to set aside an award has to be in accordance with both sub-sections (2) and (3). Such application would not only have to be within the limitation period prescribed by sub-section (3), but would then have to set out grounds under sub-sections (2) and/or (2A) for setting aside such award. What follows from this is that the application itself must be within time, and if not within a period of three months, must be accompanied with an application for condonation of delay, provided it is within a further period of 30 days, this Court having made it clear that section 5 of the Limitation Act, 1963 does not apply and that any delay beyond 120 days cannot be condoned.

“Obviously, therefore, a literal reading of the provision would show that a refusal to set aside an arbitral award as delay has not been condoned under sub-section (3) of section 34 would certainly fall within section 37(1)(c). The aforesaid reasoning is strengthened by the fact that under section 37(2)(a), an appeal lies when a plea referred to in sub-section (2) or (3) of section 16 is accepted.”

The Court, hence, highlighted that the Legislature, when it wished to refer to part of a section, as opposed to the entire section, did so.

“Contrasted with the language of section 37(1)(c), where the expression “under section 34” refers to the entire section and not to section 34(2) only, the fact that an arbitral award can be refused to be set aside for refusal to condone delay under section 34(3) gets further strengthened.”

Further, so far as section 37(1)(a) is concerned, where a party is referred to arbitration under section 8, no appeal lies. This is for the reason that the effect of such order is that the parties must go to arbitration, it being left to the learned Arbitrator to decide preliminary points under section 16 of the Act, which then become the subject matter of appeal under section 37(2)(a) or the subject matter of grounds to set aside under section 34 an arbitral award ultimately made, depending upon whether the preliminary points are accepted or rejected by the arbitrator.

It is also important to note that an order refusing to refer parties to arbitration under section 8 may be made on a prima facie finding that no valid arbitration agreement exists, or on the ground that the original arbitration agreement, or a duly certified copy thereof is not annexed to the application under section 8.

“In either case, i.e. whether the preliminary ground for moving the court under section 8 is not made out either by not annexing the original arbitration agreement, or a duly certified copy, or on merits – the court finding that prima facie no valid agreement exists – an appeal lies under section 37(1)(a).”

Likewise, under section 37(2)(a), where a preliminary ground of the arbitrator not having the jurisdiction to continue with the proceedings is made out, an appeal lies under the said provision, as such determination is final in nature as it brings the arbitral proceedings to an end. However, if the converse is held by the learned arbitrator, then as the proceedings before the arbitrator are then to carry on, and the aforesaid decision on the preliminary ground is amenable to challenge under section 34 after the award is made, no appeal is provided.

The Court, hence, concluded,

“Undoubtedly, a limited right of appeal is given under section 37 of the Arbitration Act, 1996. But it is not the province or duty of this Court to further limit such right by excluding appeals which are in fact provided for, given the language of the provision as interpreted by us hereinabove.”

[Chintels India Ltd. v. Bhayana Builders Pvt. Ltd.,  2021 SCC OnLine SC 80, decided on 11.02.2021]


*Judgment by: Justice RF Nariman

Know Thy Judge| Justice Rohinton F. Nariman

Appearances before the Court by:

For Appellant: Advocate Rajshekhar Rao

For Respondent: Senior Advocate Mukul Rohatgi

Case BriefsForeign Courts

Federal Court of Australia: While deciding the instant appeal dealing with interpretational technicalities associated with international arbitration, the Court clarified the principles and distinctions between recognition and enforcement of arbitral awards vis-à-vis the ICSID Convention. The Court also clarified the legal position over the question that whether the ICSID Convention excludes any claim for foreign state immunity in proceedings for the recognition and enforcement of an award.

Facts: The dispute between the parties is related to the investment by the Respondents of EUR139,500,000 into solar power generation projects within the territory of Spain. The respondents were encouraged to do so by a subsidy program put in place by Spain, which was subsequently withdrawn. The Respondents alleged that the withdrawal of the subsidy program was a contravention of the Energy Charter Treaty (ECT). Pursuant to Article 26(3)(a) of the ECT, Spain agreed that it gave its unconditional consent to the submission of the dispute to international arbitration and, by the virtue of Article 26(4)(a) it agreed to an international arbitration under the auspices of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). The arbitrators eventually awarded the Respondents EUR101,000,000 with interest. The respondents applied to the Federal Court at first instance for an order that Spain pay it that amount with interest. Spain filed a notice contesting the jurisdiction of the Federal Court of Australia on the basis that it was immune from suit as a foreign state under S. 9 of the Foreign States Immunities Act 1985.

Issues: The following key issues were involved in the dispute-

  • Whether the ICSID Convention excludes any claim for foreign state immunity in proceedings for the recognition and enforcement of an award.
  • Meaning of recognition and enforcement in Art 54 and execution in Art 55 of ICSID Convention.
  • Whether Spain’s accession to the ICSID Convention constitutes submission to the jurisdiction of the Federal Court.

Contentions: Spain put forth the following arguments-

  • The word ‘execution’ in Article 55 must be understood as including a proceeding to ‘enforce’ an award (the reasons for this are, to an extent, complex and discussion of this issue may be postponed for now).
  • Even if ‘execution’ in Articles 54(3) and  55 does not mean ‘enforcement’, nevertheless, the question of the proper construction of Art 55 can only be definitively resolved by the International Court of Justice. Until then it is arguable Spain’s accession to Articles 54 and 55 cannot represent its clear agreement to submit to jurisdiction of Federal Court.

Relevant statutes: The case revolves around the interpretation of Articles 54 and 55 of the ICSID Convention. Article 54 deals with the recognition and enforcement of the pecuniary obligations imposed by the award. Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought. Article 55 states that –“Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution”.

The other statutory provisions that were highlighted in the case were Sections 3, 9 and 10 of the Foreign States Immunity Act, 1985. The provisions respectively deal with interpretation of an agreement (including international treaties and agreement); immunity of a foreign state from the jurisdiction of the courts of Australia; and, instances wherein a foreign state has to submit to the jurisdiction of the Australian law and courts.

Observations: The Court noted that, “The principal difficulty at the centre of the debate is linguistic or semantic” – (Allsop, CJ.,). With the parties to the dispute seeking lucidity on the aforementioned provisions, the Court examined them and made the following observations, with Perram, J., elucidating the key aspects of the provisions in question-

Regarding Articles 54 and 55

  • It was noted that ‘recognition’, ‘enforcement’ and ‘execution’ are concepts predating and existing outside of the ICSID Convention. Broadly “recognition refers to the formal confirmation by a municipal court that an arbitral award is authentic and has legal consequences under municipal law. Enforcement refers to the process by which a successful party seeks the municipal court’s assistance in ensuring compliance with the award (as recognised) and obtaining the redress to which it is entitled. Execution refers to the formal process by which enforcement is carried out”.
  • Since the issue at hand orbits around ICSID provisions, therefore the concepts must be interpreted accordingly. Perram, J., noted that under Art. 54 the Contracting States are required to recognise an award. It also permits a party having the benefit of an award to apply to a competent court for its recognition. It also permits a party to apply for the enforcement of the award by application to a competent court. “As such the Article explicitly contemplates two distinct applications to the competent court (or other authority). If enforcement in Art 54(2) were synonymous with recognition this distinction would appear to be pointless. The Article therefore recognises the distinction between the two applications and requires applications for both to be made to the ‘competent court’”.
  • The Judge further pointed out that Article 54(1) imposes two obligations on a Contracting State, first, recognition of the award as binding; and, secondly, (implicitly in relation to an award which has been recognised), enforcement of the pecuniary obligations imposed by the award ‘as if’ it were a final judgment of a domestic court. Article 54 does not contemplate the enforcement of awards which have not been recognised.
  •  “Article 55 does not refer to recognition and there can be no warrant for reading it as if it did”. Interpreting the Article along with the preceding provision (Article 54), the Court stated that the combined effect of Article 54 is that a Contracting State is required to recognise an award when a certified copy of the award is furnished to the competent court (or other authority).
  • If ‘execution’ were construed to include ‘recognition’ in Article 55 there could be no circumstance in which the recognition application expressly contemplated by Art 54(2) could ever be made against a Contracting State. This would render the recognition procedure in Art 54(2) perpetually unavailable against a Contracting State and would have the consequence that the obligation to recognise an award in Art 54(1) as binding could never be engaged. “It may be noted that the fact that recognition is wholly distinct from enforcement (including, if necessary, execution) is also reflected in the heading to Section 6: ‘Recognition and Enforcement of the Award’ where Art 54 and Art 55 are contained. For those reasons, Art 55 does not apply to recognition proceedings and is unavailable to modify the meaning of Art 54(1) and (2) in relation to such proceedings”.

Regarding Spain’s submission to Federal Court’s Jurisdiction: Deliberating upon the question that whether Article 54(1) and (2) constitute Spain’s agreement to submit to the jurisdiction of the Federal Court in a recognition proceeding, the Court answered in affirmative. Article 54(2) is in terms Spain’s agreement with Australia that the Respondents may apply to a competent court for recognition and the Federal Court has been designated as a competent court for the purposes of Article 54. Spain has therefore agreed to submit to the jurisdiction of this Court in relation to a recognition proceeding. Article 55 can have no impact on that conclusion because it has no application to recognition proceedings.

Making an interesting observation, the Court pointed out that the ICSID Convention had been done in English, Spanish and French. Article 33 of the Vienna Convention provides that where ‘a treaty has been authenticated in two or more languages, the text is equally authoritative in each language’; where a difference in meaning emerges which cannot otherwise be resolved by ordinary principles of interpretation ‘the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted.’ Allsop, C.J., noted that the relationship between recognition and enforcement can be seen by the wording of the ICSID Convention itself. “Whether the French and Spanish languages have a penumbra or range of meaning in the words exécution and ejecutar to encompass a non-execution procedure of enforcement would be a matter of evidence. I am unconvinced that the question of resolution of the meaning of the English, French and Spanish texts can be done in ignorance of the content by way of evidence of two of the three languages”.[Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. [2021] FCAFC 3, decided on 01-02-2021]


Sucheta Sarkar, Editorial Assistant has put this story together.

Case BriefsSupreme Court

Supreme Court: Dealing with the question whether the Parliament was competent to enact the National Highways Act, 1956 and the National Highway Authority of India Act, 1988 for construction of new roads traversing through the open green-fields, the 3-judge bench of AM Khanwilkar*, BR Gavai and Krishna Murari, JJ has held that

“… there is nothing in the Constitution which constricts the power of the Parliament to make a law for declaring any stretch/section within the State not being a road or an existing highway, to be a national highway. Whereas, the provisions in the Constitution unambiguously indicate that the legislative as well as executive power regarding all matters concerning and connected with a highway to be designated as a national highway, vests in the Parliament and the laws to be made by it in that regard.”

The 1956 Act and the 1988 Act were made in reference to Entry 23 of List I of the Seventh Schedule.  The Court noticed that the fact that Entry 13 of List II bestows exclusive power upon the legislature of any State concerning subject “roads”, cannot be the basis to give restricted meaning to Entry 23 in List I, dealing with all matters concerning “national highways”.

“It is well-established position that if the law made by the Parliament is in respect of subject falling under Union List, then the incidental encroachment by the law under the State list, per se, would not render it invalid.  The doctrine of pith and substance is well-established in India. The doctrine is invoked upon ascertaining the true character of the legislation.”

Adverting to Article 248 of the Constitution that bestows legislative powers on the Parliament to make a law with respect to any matter not enumerated in the Concurrent List or the State List, the Court noticed that the expression “highways” as such, is not mentioned either in the State List or the Concurrent list. While making law on the subject falling under the Union List in terms of Entry 97 thereof, it is open to the Parliament to make law on any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists.

It was further stated that the entries in the legislative lists are not sources of legislative powers, but are merely topics or fields in respect of which concerned legislative body is free to make a law. The entries must receive a liberal and expansive construction, reckoning the wide spirit thereof and not in a narrow pedantic sense.

“Entry 23 in List I refers generally to “highways” declared or to be declared by the Parliament as national highways and all matters connected therewith.  This empowers the Parliament to declare any stretch/section across any State as a highway for being designated as a national highway.  There is no indication in the Constitution to limit the exercise of that power of the Parliament only in respect of an existing “highway”.”

The Court further enunciated that whenever and wherever the question of legislative competence is raised, the test is whether the law enacted, examined as a whole, is substantially with respect to the particular topic of legislation falling under the concerned list.

“If the law made by the Parliament or the legislature of any State has a substantial and not merely a remote connection with the Entry under which it is made, there is nothing to preclude the concerned legislature to make law on all matters concerning the topic covered under the Union List or the State List, as the case may be.”

The Court also highlighted Central Government’s obligations under Part IV of the Constitution for securing a social order and promotion of welfare of the people in the concerned region, to provide them adequate means of livelihood, distribute material resources as best to subserve the common good, create new opportunities, so as to empower the people of that area including provisioning new economic opportunities in the area through which the national highway would pass and the country’s economy as a whole.

“The availability of a highway in any part of the State paves way for sustainable development and for overall enhancement of human well-being including to facilitate the habitants thereat to enjoy a decent quality of life, creation of assets (due to natural increase in market value of their properties) and to fulfil their aspirations of good life by provisioning access to newer and present-day opportunities.”

Hence, having said that the Parliament has exclusive legislative competence to make a law in respect of national highways and all matters connected therewith, which includes declaring any stretch/section within the State (not being existing roads/highways) as a national highway, it must follow that the Central Government alone has the executive powers to construct/build a new national highway in any State and to issue directions to the Government of any State for carrying out the purposes of the 1956 Act.

[Project Director, Project Implementation Unit v. P.V. Krishnamoorthy,  2020 SCC OnLine SC 1005, decided on 08.12.2020]


Justice AM Khanwilkar has penned this judgment. Read more about him here.

Counsels heard: Solicitor General of India Tushra Mehta, Senior Counsels S. Nagamuthu, Sanjay Parikh, Nikhil Nayyar, Anita Shenoy, Counsels Kabilan Manoharan advocate, P. Soma Sundaram, T.V.S. Raghavendra Sreyas and  S. Thananjayan

Also read: Prior environmental clearance required before commencement of actual construction of a National Highway, not at the planning stage: SC

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of AM Khanwilkar*, BR Gavai and Krishna Murari, JJ has held that it is not necessary for the Central Government or NHAI to apply for prior environmental/forest clearances or permissions before issuing notification under Section 2(2) declaring the stretch/section to be a national highway or Section 3A of the National Highways Act, 1956 to express intention to acquire land for the purpose of building, maintenance, management or operation of a national highway, as the case may be.

“Environmental/forest clearance is always site specific and, therefore, until the site is identified for construction of national highways manifested vide Section 3A notification, the question of making any application for permission under the environmental/forest laws would not arise.”

Scope of Central Government’s power under Section 2(2) of the National Highways Act, 1956

Explaining the scope of Section 2(2) of the National Highways Act, 1956, the Court said that the power bestowed upon the Central Government under Section 2(2) of the 1956 Act is not constricted or circumscribed by any other inhibition, such as to declare only an existing road or highway within the State as a national highway.  The requirement of a national highway within the country as a whole and State-wise, in particular, is to alleviate evolving socio-economic dynamics, for which such a wide power has been bestowed upon the Central Government. The Central Government is obliged to do so to facilitate it to discharge its obligations under Part IV of the Constitution.

“There is nothing in the Constitution of India or for that matter, the 1956 Act to limit that power of the Central Government only in respect of existing roads/highways within the State. To say so would be counter¬productive and would entail in a piquant situation that the Central   Government cannot effectively discharge its obligations under Part IV of the Constitution unto the remote inaccessible parts of the country until the concerned State Government constructs a road/highway within the State. (…) By its very nomenclature, a national highway is to link the entire country and provide  access to all in every remote corner of the country for interaction and to promote commerce and trade, employment and education including health related services.”

Hence, the Central Government is fully competent to notify “any land” (not necessarily an existing road/highway) for acquisition, to construct a highway to be a national highway.

Prior permission before issuing notification under Section 3A of the 1956 Act

The Court noticed that neither the 1956 Act, the Rules framed thereunder nor the National Highway Authority of India Act, 1988 and the Rules made thereunder specify any express condition requiring Central Government to obtain prior environmental/forest clearance before issuing notification under Section 2(2) declaring the stretch/section to be a national highway or Section 3A of the 1956 Act to express intention to acquire land for the purpose of building, maintenance, management or operation of a national highway, as the case may be.

“It is not necessary for the Central Government or for that matter, NHAI, to apply for prior environmental/forest clearances or permissions, as the case may be, at the stage of planning or taking an in­principle decision to formalize the Project of constructing a new national highway manifested in notification under Section 2(2), including until the stage of issuing notification under Section 3A of the 1956 Act.”

Even the notification issued by the MoEF dated 14.9.2006, does not constrict the power of Central Government to issue notification under Section 2(2) or Section 3A of the 1956 Act.

The prior environmental clearance in terms of 2006 notification issued under Section 3 of the Environment (Protection) Act, 1986 Act read with Rule 5 of the Environment (Protection) Rules, 1986, is required to be taken before commencement of the “actual construction or building work” of the national highway by the executing agency (NHAI). That will happen only after the acquisition proceedings are taken to its logical end until the land finally vests in the NHAI or is entrusted to it by the Central Government for building/management of the national highway. The land would vest in the Central Government under the 1956 Act only after publication of declaration of acquisition under Section 3D. Until then, the question of Central Government vesting it in favour of NHAI under Section 11 of the 1988 Act would not arise. However, until the vesting of the land, the Central Government and its authorised officer can undertake surveys of the notified lands by entering upon it in terms of Section 3B of the Act.

“Pertinently, the activities predicated in Section 3B are of exploration for verifying the feasibility and viability of land for construction of a national highway. These are one-time activities and not in the nature of exploitation of the land for continuous commercial/industrial activities as such. There is remote possibility of irretrievable wide-spread environmental impact due to carrying out activities referred to in Section 3B for assessing the worthiness of the land for using it as a national highway. Thus, the question of applying notification of 2006 at this stage does not arise, much less obligate the Central Government to follow directives thereunder.”

Deemed lapsing

The Court noticed that it is essential to issue a declaration under Section 3D of the 1956 Act within a period of one year from the date of publication of the notification under Section 3A in respect of the notified land, failing which notification under Section 3A ceases to have any effect.  However, time spent for obtaining environmental clearance or permission under the forest laws has not been explicitly excluded from the period of one year to be reckoned under Section 3D(3) of the Act. The extension of time or so to say suspension of time is only in respect of period during which the action of the proceedings to be taken in pursuance of notification under Section 3A(1) is stayed by an order of Court.

Noticing that there is no express provision in the 1956 Act, which excludes the time spent by the Central Government or the executing agency in obtaining prior environmental clearance or permission under forest laws, as the case may be, the Court directed that the dictum in Karnataka Industrial Areas Development Board vs. C. Kenchappa, (2006) 6 SCC 371, shall operate as a stay by an order of the Court for the purposes of Section 3D(3) in respect of all projects under the 1956 Act, in particular for excluding the time spent after issue of Section 3A notification, in obtaining the environmental clearance as well as for permissions under the forest laws.

“Thus, the acquisition process set in motion upon issue of Section 3A notification can go on in parallel until the stage of publication of notification under Section 3D, which can be issued after grant of clearances/permissions by the competent authority under the environment/forest laws and attaining finality thereof.”

[Project Director, Project Implementation Unit v. P.V. Krishnamoorthy, 2020 SCC OnLine SC 1005, decided on 08.12.2020]


*Justice AM Khanwilkar has penned this judgment. Read more about him here.

Counsels heard: Solicitor General of India Tushra Mehta, Senior Counsels S. Nagamuthu, Sanjay Parikh, Nikhil Nayyar, Anita Shenoy, Counsels Kabilan Manoharan advocate, P. Soma Sundaram, T.V.S. Raghavendra Sreyas and  S. Thananjayan

Also read: Centre versus State| Who has the power to make law declaring any land within a State as a national highway? Supreme Court answers

Case BriefsSupreme Court

Supreme Court: On the question as to whether the right of pre-emption can be enforced for an indefinite number of transactions or it is exercisable only the first time, the 3-judge bench of SK Kaul, Aniruddha Bose and Krishna Murari, JJ has held that

“… it is only exercisable for the first time when the cause of such a right arises, in a situation where the plaintiff-pre-emptor chooses to waive such right after the 1966 Act becoming operational. Section 9 of the said Act operates as a bar on his exercising such right on a subsequent transaction relating to the same immovable property.”

Origin and history of right of pre-emption

The historical perspective of the right of pre-emption shows that it owes its origination to the advent of the Mohammedan rule, based on customs, which came to be accepted in various courts largely located in the north of India. The pre-emptor has two rights. The inherent or primary right, which is the right to the offer of a thing about to be sold and the secondary or remedial right to follow the thing sold. It is a secondary right, which is simply a right of substitution in place of the original vendee. The pre-emptor is bound to show that he not only has a right as good as that of the vendee, but it is superior to that of the vendee; and that too at the time when the pre-emptor exercises his right.

“… the right is a “very weak right” and is, thus, capable of being defeated by all legitimate methods including the claim of superior or equal right.”

Recurring right or a one-time right

  • Section 21 of the Rajasthan Pre-Emption Act, 1966 stipulates that the right of pre-emption has to be exercised, in case of a sale, within one year from the date of sale and if the sale is not by a registered deed, on the purchaser taking the physical possession of any part of the property sold.
  • This period has to be as per Article 97 of the Limitation Act which states that it is one year from the date when the sale is registered.
  • The loss of right of pre-emption on transfer has been defined under Section 9 of the said Act which provides that the loss is only occasioned, when, within two months from the date of service of the notice, the price is not tendered. However, that is the loss of the right, vis-à-vis the transaction in question.

On the question whether such a right of pre-emption is a recurring right, i.e. every time the property is sold, the right would rearise, in a case the pre-empting plaintiff himself has chosen not to exercise such right over the subject immovable property when sold to another purchaser earlier, the Court held,

“… it would not be appropriate or permissible to adopt legal reasoning making such a weak right, some kind of a right in perpetuity arising to a plaintiff every time there is a subsequent transaction or sale once the plaintiff has waived his right or pre-emption over the subject immovable property.”

Holding that the loss of right mandated under Section 9 of the Act is absolute, the Court further stated that the plain reading of the said provision does not reveal that such right can re-arise to the person who waives his right of pre-emption in an earlier transaction. To do so would mean that a person, whether not having the means or for any other reason, does not exercise the right of pre-emption and yet he, even after decades, can exercise such a right.

“This would create some sort of a cloud on a title and uncertainty as a subsequent purchaser would not know, when he wants to sell the property, whether he can complete the transaction or not or whether a cosharer will jump into the scene. This is not contemplated in the 1966 Act. This is bound to have an effect on the price offered by a purchaser at that time because he would have an impression of uncertainty about the proposed transaction.”

The Court, hence, held that such a right is available once – whether to take it or leave it to a person having a right of pre-emption. If such person finds it is not worth once, it is not an open right available for all times to come to that person.

[Raghunath v. Radha Mohan,  2020 SCC OnLine SC 828, decided on 13.10.2020]

Case BriefsSupreme Court

Supreme Court: The bench of UU Lait and Indira Banerjee, JJ has explained that Section 12 of the Specific Relief Act, 1963 has to be construed in a liberal, purposive manner that is fair and promotes justice.

“A contractee who frustrates a contract deliberately by his own wrongful acts cannot be permitted to escape scot free.”

While hearing a case relating to sale of land in the year 1984, the Court held that Section 12 of the Specific Relief Act is to be construed and interpreted in a purposive and meaningful manner to empower the Court to direct specific performance by the defaulting party, of so much of the contract, as can be performed, in a case like this.

“To hold otherwise would permit a party to a contract for sale of land, to deliberately frustrate the entire contract by transferring a part of the suit property and creating third party interests over the same.”

The Court explained that the relief of specific performance of an agreement, was at all material times, equitable, discretionary relief, governed by the provisions of the Specific Relief Act 1963. Even though the power of the Court to direct specific performance of an agreement may have been discretionary, such power could not be arbitrary. The discretion had necessarily to be exercised in accordance with sound and reasonable judicial principles.

After the amendment of Section 10 of the Specific Relief Act, the words “specific performance of any contract may, in the discretion of the Court, be enforced” have been substituted with the words “specific performance of a contract shall be enforced subject to …”. Hence,

“the Court is, now obliged to enforce the specific performance of a contract, subject to the provisions of sub-section (2) of Section 11, Section 14 and Section 16 of the S.R.A. Relief of specific performance of a contract is no longer discretionary, after the amendment.”

Referring to suits relating to sale of land, the Court explained that

“an agreement to sell immovable property, generally creates a right in personam in favour of the Vendee. The Vendee acquires a legitimate right to enforce specific performance of the agreement.”

The Court ordinarily enforces a contract in its entirety by passing a decree for its specific performance. However, Section 12 of the Specific Relief Act carves out exceptions, where the Court might direct specific performance of a contract in part.

Further, where a party to the contract is unable to perform the whole of his part of the contract, the Court may, in the circumstances mentioned in Section 12 of the Specific Relief Act, direct the specific performance of so much of the contract, as can be performed, particularly where the value of the part of the contract left unperformed would be small in proportion to the total value of the contract and admits of compensation.

The Court may, under Section 12 of the Specific Relief Act direct the party in default to perform specifically, so much of his part of the contract, as he can perform, provided the other party pays or has paid the consideration for the whole of the contract, reduced by the consideration for the part which must be left unperformed.

[B. Santoshamma v. D. Sarala, CIVIL APPEAL NO.3574 OF 2009, decided on 18.09.2020]

Case BriefsSupreme Court

Supreme Court: Asking Telecom Operators to make the payment of 10% of the total AGR dues as by 31.3.2021, the 3-judge bench of Arun Mishra, SA Nazeer and MR Shah, JJ gave 10 years to the Telecom Service Providers (TSPs) to complete the payment of their AGR dues.

“The TSPs make payment in yearly instalments commencing from 1.4.2021 up to 31.3.2031 payable by 31st March of every succeeding financial year.”

The Union of India on the representation made by the telecom service providers and Indian Banks’ Association, had decided to provide the facility of making payment in instalments within 20 years. The Court, however, said that the period of 20 years fixed for payment is excessive.

“… it is a revenue sharing regime, and it is grant of sovereign right to the TSPs. under the Telecom Policy. We feel that some reasonable time is to be granted, considering the financial stress and the banking sector’s involvement. We deem it appropriate to grant facility of time to make payment of dues in equal yearly instalments.”

The Court, however, clarified that at the same time, it is to be ensured that the dues are paid in toto.

“The concession is granted only on the condition that the dues shall be paid punctually within the time stipulated by this Court. Even a single default will attract the dues along with interest, penalty and interest on penalty at the rate specified in the agreement.”

The Court noticed that the decision of the Cabinet is based on the various factors, and in the interest of the economy and the consumers. The decision is taken after extensive deliberations and consultations, and till the date of judgment, the dues have been worked out as per the decision rendered by this Court. Only for the subsequent period, some relaxation has been given as to the rate of interest, penalty, and interest on penalty, which is permissible.

“The arrears have accumulated for the last 20 years. It is also to be noted that some of the companies are under insolvency proceedings, validity of which is to be examined, and they were having huge arrears of AGR dues against them.  For protecting the telecom sector, a decision has been taken on various considerations mentioned above, which cannot be objected to.”

Last year, in Union of India v. Association of Unified Telecom Service Providers of India, 2019 SCC OnLine SC 1393the bench of Arun Mishra, SA Nazeer and MR Shah, JJ had refused to change the definition of gross revenue as defined in clause 19.1 of the licence agreement granted by the Government of India to the Telecom Service Providers. It had held,

“The definition in agreement is unambiguous, clear, and beyond the pale of doubt, and there is no confusion in the definition of gross revenue, which is the basis for realisation of the licence fee. Licensees have made a futile attempt to wriggle out of the definition in an indirect method, which was rejected directly in the decision of 2011 between the parties and it was held that these very heads form part of gross revenue.”

The Court, hence, noticed that is clear that in the case, which was decided by this Court relating to AGR dues, respondents were the parties, and they were litigating with respect to the definition of AGR in the second round of appeal filed before this Court.  Each of them was aware that the dispute as to the definition of AGR was pending in this Court. Thus, it is apparent that it was known to the parties that AGR dues to be finalised as per the decision of this Court in a pending matter, and lis was pending for the last 20 years.

“The liability cannot be escaped as specified in the Trading Guidelines to the extent that the seller or buyer is liable. They have to pay the AGR as per the judgment rendered by this Court. The purchasers who are not seller or buyer, shall have to pay the dues to the extent they are liable under the Guidelines, as discussed above.”

On the submission that they have paid dues as per the self-assessment or, in some cases, demands have not been raised, the Court directed DoT to complete the assessment in such cases of trade and raise demand if it has not been raised and to examine the correctness of self-assessment and raise demand, if necessary, after due verification.

“In  case demand notice has not been issued, let DoT raise the demand within six weeks from today.”

The Court, hence, issued the following directions:

  • That for the demand raised by the Department of Telecom in respect of the AGR dues based on the judgment of this Court, there shall not be any dispute raised by any of the Telecom Operators and that there shall not be any re-assessment.
  • That, at the first instance, the respective Telecom Operators shall make the payment of 10% of the total dues as demanded by DoT by 31.3.2021.
  • TSPs have to make payment in yearly instalments commencing from 1.4.2021 up to 31.3.2031 payable by 31st March of every succeeding financial year.
  • Various companies through Managing Director/Chairman or other authorised officer, to furnish an undertaking within four weeks, to make payment of arrears as per the order.
  • The existing bank guarantees that have been submitted regarding the spectrum shall be kept alive by TSPs. until the payment is made.
  • In the event of any default in making payment of annual instalments, interest would become payable as per the agreement along with penalty and interest on penalty automatically without reference to Court. Besides, it would be punishable for contempt of Court.
  • Compliance of order to be reported by all TSPs and DoT every year by 7th April of each succeeding year.

[Union of India v. Association of Unified Telecom Service Providers India, 2020 SCC OnLine SC 703, decided on 01.09.2020]

Case BriefsSupreme Court

Supreme Court: The bench of Indira Banjerjee and Indu Malhotra, JJ that the Courts are duty bound to issue a writ of Mandamus for enforcement of a public duty.

“The High Courts exercising their jurisdiction under Article 226 of the Constitution of India, not only have the power to issue a Writ of Mandamus or in the nature of Mandamus, but are duty bound to exercise such power, where the Government or a public authority has failed to exercise or has wrongly exercised discretion conferred upon it by a Statute, or a rule, or a policy decision of the Government or has exercised such discretion malafide, or on irrelevant consideration.”

The Court was hearing the case pertaining to a private road in Pune being declared as being owned by Pune Municipal Corporation whilst in the property records, there was no private road.  In 1970, by an order of the Pune Municipal Corporation, a Plot was divided into 4 plots and a private road admeasuring 414.14 square meters. Read more

“There is no whisper as to how the road came to be shown as in possession of Pune Municipal Commissioner nor of the procedure adopted for effecting changes, if any, in the property records.”

Considering the issue at hand, the Court noticed in case of dispossession except under the authority of law, the owner might obtain restoration of possession by a proceeding for Mandamus against the Government. It said that in all such cases, the High Court must issue a Writ of Mandamus and give directions to compel performance in an appropriate and lawful manner of the discretion conferred upon the Government or a public authority.”

“In appropriate cases, in order to prevent injustice to the parties, the Court may itself pass an order or give directions which the government or the public authorities should have passed, had it properly and lawfully exercised its discretion.”

Stating that the Court is duty bound to issue a writ of Mandamus for enforcement of a public duty, the bench said that there can be no doubt that an important requisite for issue of Mandamus is that Mandamus lies to enforce a legal duty. This duty must be shown to exist towards the applicant.

“A statutory duty must exist before it can be enforced through Mandamus. Unless a statutory duty or right can be read in the provision, Mandamus cannot be issued to enforce the same.”

It further said that High Court is not deprived of its jurisdiction to entertain a petition under Article 226 merely because in considering the petitioner’s right to relief questions of fact may fall to be determined. In a petition under Article 226 the High Court has jurisdiction to try issues both of fact and law. Exercise of the jurisdiction is, it is true, discretionary, but the discretion must be exercised on sound judicial principles.

[Hari Krishna Mandir Trust v. State of Maharashtra,  2020 SCC OnLine SC 631, decided on 07.08.2020]


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Case BriefsSupreme Court

Supreme court: The 2-judge bench of Indira Banerjee and Indu Malhotra, JJ has held that Section 88 of Maharashtra Regional and Town Planning Act, 1966 cannot be read in isolation from the other provisions of the Act, particularly Sections 65, 66, 125 and 126 thereof. It further, said,

“however laudable be the purpose, the Executive cannot deprive a person of his property without specific legal authority, which can be established in a court of law.”

On whether Section 88 of Maharashtra Regional and Town Planning Act, 1966 can be read in isolation

Section 125 read with Section 126 enables the state/Planning authority to acquire land. Section 65 read with Section 66, on the other hand, protect the interests of the owners. Considering all the relevant provisions, the Court held that on a proper construction of Section 88, when land is acquired for the purposes of a Development Scheme, the same vests in the State free from encumbrances. No third party can claim any right of easement to the land, or claim any right as an occupier, licensee, tenant, lessee, mortgagee or under any sale agreement. However,

“Section 88 of the Regional and Town Planning Act cannot be read in isolation. It has to be read with Section 125 to 129 relating to compulsory acquisition as also Section 59, 69 and 65.”

On Right to property vis-à-vis Doctrine of Eminent Domain

Article 300A of the Constitution of India embodies the doctrine of eminent domain which comprises two parts,

  • possession of property in the public interest; and
  • payment of reasonable compensation.

Noticing that the right to property may not be a fundamental right any longer, but it is still a constitutional right under Article 300A and a human right, the Court said that the right to property includes any proprietary interest hereditary interest in the right of management of a religion endowment, as well as anything acquired by inheritance. However laudable be the purpose, the Executive cannot deprive a person of his property without specific legal authority, which can be established in a court of law.

“In case of dispossession except under the authority of law, the owner might obtain restoration of possession by a proceeding for Mandamus against the Government.”

Factual background and Ruling

The Court was hearing the case pertaining to a private road in Pune being declared as being owned by Pune Municipal Corporation whilst in the property records, there was no private road.  In 1970, by an order of the Pune Municipal Corporation, a Plot was divided into 4 plots and a private road admeasuring 414.14 square meters.

On perusal of the documents, the Court noticed that there can be no doubt at all that the road in question measuring 444.14 sqm. never belonged to the Pune Municipal Corporation. In the property records, there was no private road. The Municipal Corporation was never shown as owner of the vacant plot or of any private road. Even assuming that there was any policy decision to have an approach road to every plot, it was incumbent upon the authorities concerned to acquire the land.

“There is no whisper as to how the road came to be shown as in possession of Pune Municipal Commissioner nor of the procedure adopted for effecting changes, if any, in the property records.”

The Court, hence, held that the Pune Municipal Corporation had a public duty under Section 91 to appropriately modify the scheme and to show the private road as property of its legitimate owners, as per the property records in existence, and or in the award of the Arbitrator.

It, hence, directed the Municipal Corporation to

“delete the name of the Pune Municipal Corporation as owner of the private road in the records pertaining to the Scheme and carry out such other consequential alterations as may be necessary under Section 91 of the Maharashtra Regional and Town Planning Act, 1966.”

[Hari Krishna Mandir Trust v. State of Maharashtra,  2020 SCC OnLine SC 631, decided on 07.08.2020]


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Case BriefsSupreme Court

Supreme Court: In a major turnaround in the AGR case, with respect to Public Sector Undertakings, the Department of Telecommunication has decided to withdraw the demands which constitute 96% of the of the ?4 lakh crore demand. However, with respect to 4% other Public Sector Undertakings, Solicitor General Tushar Mehta told the bench of Arun Mishra, SA Nazeer and MR Shah, JJ that “the final decision shall be taken before the next date of hearing and placed on record.

The decision came after the Court pulled up the Government for misusing it’s 2019 verdict and had said that the said verdict only applied to AGR dues owed by the telecom companies and not to PSUs.

In today’s order, the Court directed the telecom operators to file audited Balance Sheets, for the last 10 years including for the Calendar year ending 31.3.2020 as well as the Income Tax Returns and the particulars of AGR deposited during the last 10 years. It also requested to make payments of reasonable amount also to show their bonafides, before the next date of hearing.

The matter is scheduled to be taken up in the 3rd week of July.

Last year, in Union of India v. Association of Unified Telecom Service Providers of India, 2019 SCC OnLine SC 1393, where it had  refused  to change the definition of gross revenue as defined in clause 19.1 of the licence agreement granted by the Government of India to the Telecom Service Providers and had said,

“The definition of revenue has been taken in a broad, comprehensive, and inclusive manner to pose fewer problems of interpretation, and exclusion of certain items was avoided.”

[In re Mandar Deshpande, 2020 SCC OnLine SC 518 , order dated 18.06.2020]


Also read:

In a big blow to the Telecom Sector, SC refuses to change AGR definition

 

 

Case BriefsSupreme Court

Supreme Court: Dealing with the questions relating to interpretation of Section 47-A of the Indian Stamp Act, 1899 and the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 as amended from time to time, the bench of UU Lait and Indu Malhotra, JJ has held,

“There is nothing in the scheme of the Act which purports to restrict the exercise of suo motu power under Section 47-A, and confines it to cases where knowledge of any illegality or infirmity in the proceedings undertaken by the subordinate officers must be gathered from sources other than through a pending appeal.”

Under sub-section (1) of Section 47-A of the Act, if there is reason to believe that the market value has not been truly set forth in the Instrument tendered for registration, a reference can be made to the Collector, who (i) after giving the parties reasonable opportunity of being heard; and (ii) after holding an enquiry in such manner as may be prescribed by Rules, has to determine the correct value of the concerned property.

As per Rule 7 of the Rules, after considering the representations in writing and those urged at the time of hearing as well as all the relevant factors and evidence, the Collector must pass an order determining the market value of the concerned property and assess the element of duty payable on the instrument of transfer. Such order is required to be passed “within three months from the date of first notice”.

Here are the issues decided by the Court:

Whether Rule 7 of the Rules prescribing 3 months’ time for the Collector to pass an order determining the market value of the properties and duty payable on the instrument from the first notice, is directory or mandatory?

Explaining why requirement of the passing of order within 3 months from the date of first notice cannot be mandatory, the Court said,

“Form I notice itself must give twenty-one days to the concerned persons to respond. Depending upon their response, their statements would be recorded and/or certain information may be required to be called for, whereafter the Order in Form II is to be issued provisionally determining the market value. The concerned persons are entitled to raise objections in writing and must be afforded hearing. After fulfilling these requirements, the order in terms of Rule 7 can be passed. All these stages may not be completed in three months.”

The Court further explained that Section 47-A by itself does not prescribe any timeline. If the stipulation or fixation of period of three months from the first notice in terms of Rule 6 or from notice in Form II is taken to be mandatory it would lead to a situation of incongruity. The fact that Form II notice had been issued, would mean that on a prima facie view of the record and material, the value stated in the instrument was not the correct value; which in turn would mean that prima facie the Government Coffers were being denied the rightful dues.

“If for any reason the proceedings are not completed within three months and, therefore, must be held to be vitiated, the public interest would suffer, and the persons who were prime facie responsible for suppressing the real value, would stand to gain.”

The Court, hence, held that the amendment of Rule 7 incorporating the period of three months was essentially to guide the public officials to complete the process as early as possible but was not intended to create a right in favour of those who had prime facie conducted themselves prejudicing public interest.

Whether the appellate authority has power under Section 47A of the Act to enhance the market value of the property while deciding the appeal filed by the registrants?

Explaining the scope of appellate authority’s power under Section 47-A, the Court held that while entertaining an appeal, if an obvious illegality is noticed by the revisional authority, it can certainly exercise suo motu power to undo the mistake, or rectify an error committed by the subordinate officer authority, subject to such restrictions as are imposed on the exercise of the power by the statute.

Stating that nothing in the scheme of the Act purports to restrict the exercise of suo motu power under Section 47-A, and confines it to cases where knowledge of any illegality or infirmity in the proceedings undertaken by the subordinate officers must be gathered from sources other than through a pending appeal, the Court said,

“Unless the statute expressly or even by necessary implication restricts the exercise of power, there would be no occasion to read into the power, any other limitations.”

The Court, further, said that it makes no difference as to what was the source of the information or knowledge, so long as the power is exercised within the confines of the limitations or restrictions imposed by the statute, and is in accordance with law. Apart from the restrictions imposed by the statute, none can be read into the exercise of power on the ground as to the nature or source of information.

[Inspector General of Registration, Tamil Nadu v. K. Baskaran, 2020 SCC OnLine SC 509 , decided on 15.06.2020]