Delhi High Court
Case BriefsHigh Courts

   

Delhi High Court: In a case where revision petition was filed against the order passed by the Trial Court by which accused persons were discharged under Section 376 of Penal Code, 1860 (IPC), the Single Judge Bench of Swarana Kanta Sharma, J. held that an accused should not merely be discharged in a rape case because the victim had not stated about the same in her FIR, and hence, the Court set aside the Trial Court order to the extent of discharging the accused of rape.

Background

In 2016, the accused while he was getting some work done in the building near the house of the victim (complainant), made certain gestures towards the victim, to which she had objected. The accused along with his son and his friends went to quarrel with the victim but fled from the place when victim dialed the police control room. Three days later, the accused persons (respondents) unlawfully entered the victim’s house, who was five months pregnant, assaulted her with the intention to outrage her modesty.

On the next day of the incident, the complainant was taken to the hospital where she was medically examined due to stomach ache and bleeding from her genitals. During the investigation, the victim handed over a torn piece of kurta to the Investigating Officer (IO) and subsequently, her statement was recorded under Section 164 CrPC, wherein, the victim stated that one of the accused persons had inserted a finger inside her genitals. Thereafter, the charge sheet was filed under Sections 376, 323, 354, 354-B, 458, 509 and 34 of IPC and later, order on charge was passed by the Trial Court, by which the accused persons were discharged under Section 376 IPC.

Submissions of behalf of the Petitioner

Counsel for the petitioner submitted that the Trial Court, while passing the order, had exceeded its jurisdiction and had appreciated the evidence in detail at the stage of framing of charges. Further, it was stated that the complainant had revealed that she did not mention the occurrence of the incident earlier as she was afraid that her honour and dignity would be compromised. Counsel submitted that the Trial Court had ignored the settled law that even if two views were possible at the stage of framing of charge, the view in favour of the complainant should be accepted.

Submissions of behalf of the Respondent

Counsel for the respondent submitted that the medical examination of the victim revealed that there was an alleged history of physical assault by a neighbour, however, no history of any sexual assault, no complaint of pain in the abdomen/LPV/BPV and no fresh external injury on the body at the time of examination had been observed. Thus, the accusation of rape was a made-up story, hence, the petition should be dismissed.

Analysis, Law, and Decision

The Court relied on Asim Shariff v. National Investigation Agency, (2019) 7 SCC 148, wherein it was reiterated that the Trial Court was not supposed to divulge the evidence on the record to determine whether the accused would get acquitted or convicted if a particular charge was framed against an accused. The Court also relied on Vikram Johar v. State of Uttar Pradesh, 2019 SCC OnLine SC 609, wherein the Supreme Court had reiterated that during the stage of charge, the Court must not conduct a mini-trial and the decision should not be based on the prima facie appreciation of the materials placed on record.

The Court opined that the Trial Court at the stage of framing of charge, went on to marshal the evidence and found contradictions in the same. In relation to this, the Court relied on Hazrat Deen v. State of Uttar Pradesh, Special Leave to Appeal (Crl.) No(s). 9552 of 2021, wherein it was opined that “in her statement given by the prosecutrix under Section 164 CrPC after the prosecutrix attained majority, she categorically made statements which tantamount to offence under Section 376 IPC. Discrepancies between the FIR and any subsequent statement under Section 164 CrPC may be a defence. However, the discrepancies cannot be a ground for discharge without initiation of trial.”

The Court held that the Trial Court had committed an error in discharging the accused by giving undue weightage to the discrepancies in the statements of the complainant. Further, the Court stated that charge under Section 376 IPC could have been framed solely based on the statement made under Section 164 CrPC even if such an allegation was not made in the FIR or in statement under Section 161 CrPC. This was so because in offences like rape where only the victim was the witness in majority of the cases, the statement made by victim should be looked at from a considerate and liberal perspective at the time of framing charges. The Court also held that a statement made under Section 164 CrPC disclosing the offence of rape shall be sufficient to frame charges under Section 376 IPC and an accused should not merely be discharged under Section 376 IPC because the victim had not stated about the same in her FIR.

The Court held that the order passed by the Trial Court to the extent of discharging the respondents for an offence under Section 376 IPC was set aside and accordingly, charge under Section 376 IPC was framed against the respondents.

[State v. Mohd. Javed Nasir, 2022 SCC OnLine Del 3974, decided on 23-11-2022]


Advocates who appeared in this case :

For the Petitioner: Additional Public Prosecutor Manoj Pant;

For the Respondent(s): Advocate R.K. Singh;

Advocate Gagan Gupta.

Case BriefsSupreme Court

   

Supreme Court: In an appeal filed by the Food Corporation of India (‘FCI’) against the judgment of Tripura high Court wherein it held that demurrages cannot be recovered as a charge by the corporation, the division bench of Pamidighantam Sri Narasimha* and AS Bonappa JJ. after examining the contract, held that the parties did not intend to include liability on account of demurrages as part and parcel of the expression “charges” in the contract between them.

The issue is whether the demurrages imposed on the corporation by the Railways can be, in turn, recovered by the corporation from the contractors as “charges” recoverable under clause XII(a) of the contract between the parties?

The Court said that the scope of the expression “charges” must be understood as intended by the parties to the contract. Thus, the Court examined the expression “charges” in the context of its related words in the contract, which are costs, damages, registration fees, and expenses. These expressions indicate the different heads under which losses are recoverable from the contractors for acts of negligence, unworkmanlike performance of any service, breach of terms and failure to carry out the work in the context of the working of the contract. However, it said that these expressions are wide and do not aid in understanding the meaning of the expression “charges”, thus, the meaning must be understood in the larger context of the contract.

The Court said that the real question is whether the contractors had any obligation towards loading and unloading foodgrains from the railway wagons. After examining the contract, the Court said that there is no contractual provision requiring the contractors to undertake the task of loading and unloading foodgrains from the railway wagons.

Further, based on interpretation of the expression “charges” in the contractual context, it was opined that, it did not include liability on account of demurrages. Thus, the corporation cannot impose and collect demurrages from the contractors.

The Court while providing for intrinsic tools for interpreting a contract, said that interpretation of contracts concerns the correct intention of the parties to it and words and expressions used in the contract are principal tools to ascertain such intention. While interpreting the words, courts look at the expressions falling for interpretation in the context of other provisions of the contract and in the context of the contract as a whole. Further, courts do not resort to materials external to the contract for construing the intention of the parties, however, there are certain exceptions to this rule, for instance, in latent ambiguity, which cannot be resolved without reference to extrinsic evidence. Latent ambiguity exists when words in a contract appear to be free from ambiguity; however, when they are sought to be applied to a particular context or question, they are amenable to multiple outcomes.

The Court while comparing the present contracts with similar but not identical contracts entered by the corporation confirmed that the interpretation of the word “charges” in the contract is exclusive of liability for demurrages, as the present contract do not involve the task of loading and unloading foodgrains from the railway wagons as a part of the contractors’ responsibility. Thus, the liability of the contractors in the present contracts is clearly distinguishable from other contracts entered into by the FCI, having a different scope and objective, therefore the Court upheld the judgment of the High Court.

[Food Corpn. of India v. Abhijit Paul, 2022 SCC OnLine SC 1605, decided on 18-11-2022]

*Judgment by: Pamidighantam Sri Narasimha.


*Apoorva Goel, Editorial Assistant has reported this brief.

IBBI
Legislation UpdatesRules & Regulations

   

The Insolvency and Bankruptcy Board of India has notified Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2022 to futher amend the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

The amendment inserts a new clause 26A in the First Schedule in IBBI (Insolvency Professionals) Regulations, 2016 providing that an insolvency professional must not accept /share any fees or charges from any professional and/or support service provider who are appointed under the processes.

Case BriefsSupreme Court

Supreme Court: In a rape case that resulted in suicide by the victim, the Division Bench of D.Y. Chandrachud and J.B. Pardiwala*, JJ., reversed the M.P. High Court’s order discharging accused of all the charges on the ground that there was a delay in lodging the FIR and holding the entire case put up by the parents of the deceased was doubtful. The Court remarked,

“The facts of this litigation are quite heart-breaking and at the same time, more disturbing is the utterly incomprehensible impugned judgment of the High Court discharging the accused of the offence of rape essentially on the ground of delay in the registration of the FIR.”

Factual Matrix

The father of the deceased (the informant hereinafter) had assailed the impugned judgment and order of the M.P. High Court discharging the accused and setting aside the Special Court’s order framing charge against the accused for offences punishable under Section 376 of the Penal Code, 1860 and Sections 5 and 6 of the Protection of Children from Sexual Offences Act, 2012 (POCSO Act).

On 27-04-2020, the deceased complained of severe stomach ache. Suspecting a stomach tumor, the informant immediately rushed to the hospital with his daughter for medical treatment. The informant made the deceased sit on a bench outside the hospital and went to talk to the doctor. However, before the doctor could attend the deceased, she delivered a baby.

Later on, the deceased disclosed to the informant that she had conceived through one Amit Tiwari and would take a room on rent and start living life along with Amit and the newborn. On the same evening, the deceased committed suicide by hanging herself on the rod of the OT light affixed to the ceiling with a dupatta.

Evidence Adduced

The following evidence was adduced by the prosecution to prove the offences alleged:

  • The school record indicates that the deceased was born on 20-07-2001;
  • The mother of the deceased revealed that on 07-07-2019 the deceased revealed that she had missed her period (menstruation) for the past one and a half months and that she had conceived through Amit Tiwari (the accused);
  • (C) The deceased attained majority on 20-07-2019;

The Impugned Judgment

The Special Court framed charges against the accused under Section 376 of the Penal Code, 1860 and Sections 5 and 6 of the POCSO Act. The accused filed a revision application before the High Court contending that he was in a consensual relationship with the deceased and the deceased being major at the time of the incident could be said to be a consenting party. Hence, the Special court could not have proceeded to frame the charge of rape against him.

The High Court allowed the criminal revision application and discharged the accused of all the charges.

Analysis and Opinion

The Court opined that in a case praying for quashing of the charge, the principle to be adopted by the High Court should be that if the entire evidence produced by the prosecution is to be believed, would it constitute an offence or not? The truthfulness, sufficiency and acceptability of the material produced at the time of framing of a charge can be done only at the stage of trial. There must be reasons to hold that in the interest of justice and to avoid abuse of the process of the Court a charge framed against the accused needs to be quashed. occasions. The Court expressed,

“It is to be kept in mind that once the trial court has framed a charge against an accused the trial must proceed without unnecessary interference by a superior court and the entire evidence from the prosecution side should be placed on record.”

The Court reiterated that the focus of Courts need not be on the proof of the allegation rather it has to be on the material produced to form an opinion on whether there is a strong suspicion that the accused has committed an offence, which if put to trial, could prove his guilt. Opining that the framing of charge is not a stage, at which stage the final test of guilt is to be applied, the Court held that to hold that at the stage of framing the charge, the court should form an opinion that the accused is certainly guilty of committing an offence, is to hold something which is neither permissible nor is in consonance with the scheme of Criminal Procedure Code.

Unappeased by the manner in which the case has been dealt with, the Court remarked,

“One (another) disturbing feature of this litigation is that it is the unfortunate father of the deceased who had to come before this Court seeking justice. It was expected of the State to challenge the illegal order passed by the High Court.”

“Another disturbing feature is that the trial court thought fit not to frame charge against the accused for the alleged offence punishable under Section 306 of the IPC i.e., abetment to the commission of suicide. Unfortunately, no one has questioned that part of the order of the trial court declining to frame charge for the alleged offence of abetting the commission of suicide punishable under Section 306 of the IPC. In such circumstances, we do not say anything further in this regard.”

Referring to Thakur Ram v. State of Bihar, (1966) 2 SCR 740, the Court expressed that barring a few exceptions, in criminal matters the party who is treated as the aggrieved party is the State which is the custodian of the social interests of the community at large and so it is for the State to take all the steps necessary for bringing the person who has acted against the social interests of the community to book.

Conclusion

Lastly, the Court criticized the High Court for assuming it fit to discharge the accused of all the charges on the ground that there was delay in lodging the FIR and that the entire case put up by the parents of the deceased was doubtful. The Court noted,

“What is relevant to note is that although the High Court has devoted two full paragraphs for the purpose of recording the submissions as regards the age of the deceased, ultimately no specific finding has been recorded in that regard by the High Court.”

In the light of the above, the appeal was allowed and the impugned order was set aside. The Trial Court was directed to put the accused on trial.

[Manendra Prasad Tiwari v. Amit Kumar Tiwari, 2022 SCC OnLine SC 10572, decided on 12-08-2022]


*Judgment by: Justice J.B. Pardiwala


Appearance:

For Appellant: Mr. Siddharth Singh, AOR

For Respondent(s): Mr. Swarnendu Chatterjee, AOR, Mr. Pragaya Parijat Singh, Adv. Mr. Himanshu Naidwad, Adv. Mr. Ambuj Tiwari, Adv. Mr. Yashwardhan Singh, Adv. Ms. Deepadrshi Garg, Adv. Ms. Ankita Choudhary, DAG Ms. Himanshi Shakya, Adv. Mr. Sunny Choudhary, AOR and Mr. Upendra Mishra, Adv.

*Kamini Sharma, Editorial Assistant has put this report together.

Madras High Court
Case BriefsHigh Courts

   

Madras High Court: V Sivagnanam J. directed the State police to add the offences under Sections 417 and 420 Penal Code, 1860 (‘IPC') on allegations that the accused husband has deceived the complainant- ex-wife and made her to marry him, wrongfully displaying that he is competent to consummate marriage.

The petitioner is the complainant whose marriage took place with the first accused took and after the marriage, the complainant found that he is not interested with his wife in the marriage life due to his impotency. Thereafter, the complainant came to know that due to his impotency, he got divorced from his first wife. Pursuant to this, the accused husband left the home on 04-01-2022 and the petitioner made a complaint on 15-02-2022 that got registered on 18-05-2022.

A perusal of the complaint given by the complainant clearly states about the non-disclosure of the impotency of the husband at the time of marriage and he made the complainant to believe that he is a competent person to live ordinary life as husband and wife without disclosing his incapacity and thereby, the accused-husband deceived the complainant and made her to marry him, claiming that he is competent to consummate the marriage. After the alleged deceit came to light, the accused-husband granted divorce to the wife by saying ‘talaq' and went to United States of America.

The case was registered under Sections 498-A and 406 IPC without including Sections 420, 417 and 379 IPC even though the allegation disclosed the fact of cheating committed by the accused persons. Thus, the instant criminal original petition was filed to direct the respondent police to alter the FIR by including Sections 420, 417 and 379 Penal Code, 1860 therein.

Relevant provisions of Penal Code, 1860

Section 417 Punishment for cheating —Whoever cheats shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both.

Section 420 Cheating and dishonestly inducing delivery of property. —Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

Counsel for State submitted that the matter has been referred to the Social Welfare Department, Madurai, for the purpose of conducting a preliminary enquiry. After receiving the report from the Social Welfare Department, Madurai, they are ready to consider the alteration of F.I.R.

Thus, the Court directed the respondent Police to add the offences under Sections 417 and 420 IPC in the case and investigate and file the final report within four months, after receiving the report from the Social Welfare Department, Madurai.

[Irfana Nasreen v. The State, Crl. O P (MD) No. 11840 of 2020, decided on 20-07-2022]


Advocates who appeared in this case :

M. Radhakrishnan, Advocate, for the Petitioner;

R. Suresh Kumar, Government Advocate, for the Respondent.


*Arunima Bose, Editorial Assistant has reported this brief.

Madhya Pradesh High Court
Case BriefsHigh Courts

Madhya Pradesh High Court: Anand Pathak, J. dismissed an application for bail which was filed by the applicant, who had been arrested on 03-02-2022 for offence punishable under Sections 409, 420, 467, 468, 471, 201, 120-B of Penal Code, 1860 and Sections 7, 13(1) & 13(2) of Prevention of Corruption Act, 1988.

It was alleged that Chief Executive Officer of Janpad Panchayat, Sironj (‘Applicant’) misused his official position and embezzled an amount of Rs. 30,68,37,000/- (Rs. Thirty Crores Sixty Eight Lacs Thirty Seven Thousand) on pretext of 6021 marriages allegedly conducted by members of unorganized labour class under Vivah Sahayata Yojna (scheme promulgated by State Government) where every member of unorganized labour between age group of 18 to 60 if undergoes marriage then financial assistance to the tune of Rs. 51,000/- is given after due verification.

Counsel for the Applicant submitted that he was suffering confinement since 03-02-2022 and charge-sheet has already been filed, therefore, chance of tampering with evidence / witness was remote. It was further submitted that Applicant was facing false implication. It was submitted that only 18 families were pointed out to be beneficiaries and not a single penny had been transferred in the account of Applicant.

Counsel for the State on the other hand submitted that detailed charge-sheet indicated the role of Applicant; wherein, Applicant has given benefits of 18,52, 32,000/- during COVID period April, 2020 to May, 2021 and in total more than 6,000 beneficiaries alleged to have been benefited by the act of Applicant but on close scrutiny it was found that some people received the benefit; wherein, no children were eligible to be married. Some beneficiaries were not family of construction workers and in some of the cases, beneficiaries did not have any knowledge about the benefits given to them. Around 529 persons were those construction workers whose registrations were not made in Registration Portal and still got the benefit.

The Court observed that contents of FIR / narration in charge-sheet indicate that Applicant facilitated marriage of more than 6,000 persons in families of construction workers during the period April 2020 to May, 2021 but incidentally, said period was of lock-downs at major portion of time, therefore, occurrence of such large number of marriages in strict lockdown period itself creates doubt. It was further found that many beneficiaries were those who were not entitled for the same because of the fact that no member was going to be married during that period in their families nor many construction workers were registered at all at the portal and still got the benefits. Many more beneficiaries were those who never received the amount but on record they were paid the benefits of scheme to the tune of Rs. 51,000/- on each marriage.

It appears to be a big scam where crores of rupees were siphoned off on the pretext of giving benefit of विवाह सहायता योजना to poor construction workers. It is a white collar crime prima facie.

The Court held that it cannot be ruled out that some more members must be involved in commission of offence as names of two non-government employees who were working at the instance of Applicant have come up and there is a possibility that tampering of evidence/witness can take place. The application was dismissed.

[Shobit Tripathi v. State of Madhya Pradesh, 2022 SCC OnLine MP 1270, decided on 09-06-2022]


Advocates who appeared in this case :

Mr Manish Dutt Sharma with Mr Prashant Sharma, Advocates, for the Applicant;

Mr Naval Kishore Gupta, Advocate, for the Respondent.


*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Madhya Pradesh High Court: Atul Sreedharan, J. decided on a petition which was filed by the petitioner who was aggrieved by the departmental proceedings against him on the identical charges by the CBI in the criminal case.

The case is one where the petitioner was allegedly apprehended red-hand taking bribe for the clearance of bills of complainant M/s. Sandeep Kapoor Security Agency.

Counsel for the petitioner contended that illegal gratification demanded and received from Sandeep Kapoor was identical to that of article of Charge No.1. The second ground taken by him was that the departmental charge-sheet, which has been served upon him, had been prepared on the basis of a vigilance report whereby those who carried out the vigilance investigation were junior in rank to the petitioner which was impermissible.

Counsel for the respondent submitted that the witnesses and the charge in the CBI charge-sheet were not identical to that of Article 1 in the charge-sheet initiating departmental enquiry.

The Court referred to the judgment of the Supreme Court in Capt. M. Paul Anthony v. Bharat Gold Mines Ltd., (1999) 3 SCC 679 wherein it was held that departmental proceedings and proceedings in a criminal case can proceed simultaneously as there is no bar. It also held that if the departmental proceedings and the criminal case are based on identical and similar set of facts and the charge in criminal case against a delinquent employee is of a grave nature, which involves complicated questions of law and fact, it is desirable to stay the departmental proceedings till conclusion of the criminal case. It also held that the question whether the nature of the charge in a criminal case is grave involving complicated questions of fact and law, will depend upon the nature of the offence, the nature of the case against the employee, based upon evidence and material collected against him during investigation or as reflected in the charge-sheet.

The Court noted that in the instant case charge against the petitioner is under section 120-B read with section 7 of the Prevention of Corruption Act. The offence under section 7 is far more complexed in nature than the offences pointed out in the orders of the co-ordinate Benches, which refused to stay the proceedings of the departmental enquiry during the pendency of the criminal trial. The Court was of the view that under such circumstances law laid down in Capt. M. Paul Anthony will squarely apply in the facts and circumstances of this case and, therefore, the department was prohibited from proceedings against the petitioner as far as Article-1 of the departmental charge-sheet is concerned. The department, however, is at liberty to proceed with Article No.2 of the chargesheet which had no relevance, commonality or intended purpose to allegations in the charge sheet against the petitioner before the court trying the criminal case.[Harish Chandra Hinunia v. FCI, Writ Petition No. 453 of 2022, decided on 07-02-2022]


For the petitioner: Mr Sanjay Agrawal

For the respondent: Mr Mukesh Kumar Agrawal


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The Division Bench of R. Subhash Reddy* and Hrishikesh Roy, JJ., held that to determine State Monopoly for disallowance of certain fee, charge, etc. in the case of State Government Undertakings the aspect of ‘exclusivity’ has to be viewed from the nature of undertaking on which levy is imposed and not on the number of undertakings on which the levy is imposed. The Bench stated,

“If this aspect of exclusivity is viewed from the nature of undertaking, in this particular case, both KSBC and Kerala State Cooperatives Consumers’ Federation Ltd. are undertakings of the State of Kerala, therefore, levy is an exclusive levy on the State Government Undertakings.”

Background

The issue before the Bench was whether the appellant-Kerala State Beverages Manufacturing & Marketing Corporation Ltd., a company engaged in wholesale and retail trade of beverages exempted from levy of gallonage fees, licence fee and shop rental (kist) for FL9 licence and FL1 licence, surcharge on sales tax and turnover tax for the assessment years 2014-2015 and 2015-2016?

The case of the appellant was that the company did not fall within the purview of Section 40(a)(iib), while the case of the revenue was that all the aforesaid amounts were covered under Section 40(a)(iib) as such, such amounts were not deductible for the purpose of computation of income. Section 40 of the Income Tax Act, 1961 is the provision dealing with ‘amounts not deductible’. However, by the Finance Act, 2013 (Act 17 of 2013), Section 40 of the Act was amended by inserting Section 40(a)(iib).

Findings of the High Court

The question of law raised was answered by the High Court of Kerala partly in favour of assessee/appellant and partly in favour of the revenue in the following manner:

“We hold that the levy of Gallonage Fee, Licence Fee and Shop Rental (kist) with respect to the FL9 licences granted to the appellant will clearly fall within the purview of Section 40 (a) (iib) and the amount paid in this regard is liable to be disallowed. The amount of Gallonage Fee, Licence Fee, or Shop Rental (kist) paid with respect to FL1 licences granted in favour of the appellant, with respect to the retail business in foreign liquor, is not an exclusive levy on the appellant, which is a state government undertaking. Therefore the disallowance made with respect to those amounts cannot be sustained. The surcharge on sales tax and turnover tax is not a ‘fee or charge’ coming within the scope of Section 40 (a) (iib) and is not an amount which can be disallowed under the said provision. Therefore the disallowance made in this regard is liable to be set aside. In the result the assessment completed against the appellants with respect to the assessment years 20142015, 20152016 are hereby set aside.”

State Monopoly

During the assessment years 2014-2015 and 2015-2016 the appellant was holding FL9 and FL1 licences to deal in wholesale and retail of Indian Made Foreign Liquor (IMFL) and Foreign Made Foreign Liquor (FMFL) granted by the Excise Department Rules. The appellant was the only licence holder for the relevant years so far as licence to deal in wholesale, and so far as FL1 licences were concerned, it was also granted to one other State owned Undertaking, i.e., Kerala State Cooperatives Consumers’ Federation Ltd.

By interpreting the word ‘exclusively’ as worded in Section 40(a)(iib)(A) of the Act, High Court in the impugned order had held that the levy of gallonage fee, licence fee and shop rental (kist) with respect to FL9 licences granted to the appellant would clearly fall within the purview of Section 40(a)(iib) of the Act and the amounts paid in that regard was liable to be disallowed. At the same with respect to FL1 licences granted in favour of the appellant for retail business, it was held that it was not an exclusive levy; as such disallowance made with respect to the same could not be sustained.

Considering the relevant Memorandum to the Finance Act, 2013 and underlying object for amendment of Income Tax Act, 2013, the Bench opined that the amendment was made to plug the possible diversion or shifting of profits from these undertakings into State’s treasury. Hence, in view of Section 40(a)(iib) of the Act any amount which is  levied exclusively on the State owned undertaking cannot be claimed as a deduction in the books of State owned undertaking, thus same is liable to income tax.

Disagreeing with the view taken by the High Court, the Bench opined that if the amended provision is to be read in the manner interpreted by the High Court, it will literally defeat the very purpose and intention behind the amendment. The Bench stated,

“The aspect of exclusivity under Section 40(a)(iib) is not to be considered with a narrow interpretation, which will defeat the very intention of Legislature, only on the ground that there is yet another player, viz., Kerala State Cooperatives Consumers’ Federation Ltd. which is also granted licence under FL1.”

The Bench added, the aspect of ‘exclusivity’ under Section 40(a)(iib) had to be viewed from the nature of undertaking on which levy is imposed and not on the number of undertakings on which the levy is imposed. Since both the undertakings; i.e. KSBC and Kerala State Cooperatives Consumers’ Federation Ltd. were undertakings of the State, the Bench held that levy was an exclusive levy on the State Government Undertakings.

Fee vis-a-vis Tax

Observing that a clear distinction between ‘fee’ and ‘tax’ was carefully maintained throughout the scheme under Section 40(a) of the Act itself, as wherever the Parliament intended to cover the tax it specifically mentioned as a tax, the Bench stated that Section 40(a)(i) and 40(a)(ia) specifically relate to tax related items. Section 40(a)(ic) refers to a sum paid on account of fringe benefit tax. At the same time, Section 40(a)(iib) refers to royalty, licence fee, service fee, privilege fee or any other fee or charge. Hence,

“If these words are considered to include a tax or surcharge like sales tax, the distinction so carefully spelt out in Section 40 between a tax and a fee will be obliterated and rendered meaningless.”

Further, the Bench observed that gallonage fee, licence fee and shop rental (kist) were the levies under the Kerala Abkari Act on all the licence holders, as such it could not be said that same was an exclusive levy on the appellant/KSBC. Hence, the Bench expressed,

“Once the State Government Undertaking takes licence, the statutory levies referred above are on the Government undertaking because it is granted licences.”

Therefore, the Bench disagreed with the finding of the High Court holding that such finding was contrary to object and intention behind the legislation.

Findings and Conclusion

In the backdrop of above, the Bench concluded:

  1. Gallonage fee, licence fee and shop rental (kist) with respect to FL9 and FL1 licences granted to the appellant would squarely fall within the purview of Section 40(a)(iib).
  2. Surcharge on sales tax and turnover tax, is not a fee or charge coming within the scope of Section 40(a)(iib)(A) or 40(a)(iib)(B), as such same is not an amount which can be disallowed under the said provision and disallowance made in this regard was rightly set aside by the High Court.

Resultantly, assessments completed against the assessee for 2014-2015 and 2015-2016 were set aside and the Assessing Officer was directed to pass revised orders after computing the liability in accordance with the directions in this judgment.

[Kerala State Beverages Manufacturing & Marketing Corporation Ltd. v. CIT, 2022 SCC OnLine SC 3, decided on 03-01-2021]


*Judgment by: Justice R. Subhash Reddy


Appearance by:

For the Appellant: S. Ganesh, Senior Advocate

For the State: N. Venkataraman, Additional Solicitor General


Kamini Sharma, Editorial Assistant has put this report together 


 

Legislation UpdatesNotifications

Central Board of Direct taxes notifies a clarification that the imposition of a charge on the prescribed electronic modes under Section 269 SU of the Income Tax Act.

Based on Section 10 A of the Payment and Settlement Systems Act, 2000, any charge including the Merchant Discount Rate shall not be applicable on or after 01-01-2020 on payment made through prescribed electronic modes.

However, representations have been received that some banks are imposing and collecting charges on transactions carried out through UPI. A certain number of transactions are allowed free of charge beyond which every transaction bears a charge.

The above-stated act on part of banks is a breach of Section 10 A of the PSS Act as well as Section 269SU of the IT Act. Such breach attracts penal provisions under Section 271 DB of the IT Act as well as Section 26 of the PSS Act.

Therefore, bank are advised to immediately refund the charges collected, if any, on or after 1st January, 2020 on transactions carried out using the electronic modes prescribed under Section 269 SU of the IT Act and not to impose charges on any future transactions carried through the said prescribed modes.

Following were prescribed electronic modes under Section 269 SU of the Income Tax Act:

  • Debit Card powered by RuPay
  • Unified Payments interface (UPI)(BHIM-UPI)
  • Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

Reserve Bank of India
Legislation UpdatesNotifications

National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) systems – Waiver of charges

The Reserve Bank has since reviewed the various charges levied by it on the member banks for transactions processed in the RTGS and NEFT systems. In order to provide an impetus to digital funds movement, it has been decided that with effect from July 1, 2019, processing charges and time varying charges levied on banks by Reserve Bank of India (RBI) for outward transactions undertaken using the RTGS system, as also the processing charges levied by RBI for transactions processed in NEFT system will be waived by the Reserve Bank.

The banks are advised to pass on the benefits to their customers for undertaking transactions using the RTGS and NEFT systems with effect from July 1, 2019, i.e. today.

This directive is issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

Please note: Circular can be referred here — CIRCULAR


[Circular dt. 11-06-2019]

Reserve Bank of India

Jammu and Kashmir and Ladakh High Court
Case BriefsHigh Courts

Jammu & Kashmir High Court: A Single Judge Bench of Sanjay Kumar Gupta, J., dismissed a petition filed under Section 561-A of the Jammu & Kashmir Criminal Procedure Code, 1889 (CrPC), whereby the order of framing of charge passed by the Additional Sessions Judge, Jammu, was challenged.

The respondent/complainant was traveling in his car along with his family members when petitioners in their car and a bike started following the respondent’s car. The petitioners were sometimes coming in front of the respondent’s car and sometimes behind it. On enquiring about the actions of petitioners, the respondent and his wife were beaten by the petitioners with a baseball stick. The respondent cried for help and some passerby intervened and the petitioner fled away from the scene thereafter.

The main issue that arose before the Court was whether the order of the ASJ suffered from any sort of legal infirmities.

The Court observed that according to the reports of the doctor, the injuries received by petitioner and his wife were not grievous in nature, however, non-seriousness of injuries should not be a criterion for framing charges against the accused. Factors such as place of injury; the intentions of accused at the time of inflicting the injuries, weapon of offence with which injuries are caused and other circumstances of the case must be kept in mind while framing the charges. The Court observed that in the instant case, the petitioners dragged the respondents out of their car and started beating them, it was only after the respondent started making hue and cry, some pedestrians gathered and saved the respondent and his wife. Had some person not come on spot, respondent and his wife would have been killed by the accused persons.

The Court held that considering the totality of facts and circumstances of the case, the ASJ did not commit any error while framing charges against the accused under Sections 307, 504 and 506 of the Ranbir Penal Code. Resultantly, the petition was dismissed.[Babloo Kumar v. State of J&K,2018 SCC OnLine J&K 834, order dated 16-11-2018]

 

Hot Off The PressNews

Supreme Court: A 5-Judge Constitution Bench  comprising of CJ Dipak Misra and R.F. Nariman, A.M. Khanwilkar, Dr D.Y. Chandrachud and Indu Malhotra, JJ. is likely to pronounce judgment on the petition filed by Public Interest Foundation (a non-governmental organization) seeking disqualification of politicians, including Members of Parliament (MPs) and Members of legislative assemblies (MLAs) from contesting elections, once charges are framed against them.

The Court had earlier, on August 28, reserved the judgment in the matter. The Court had indicated that voters have a right to know the antecedents of candidates and the Election Commission could be asked to direct political parties to ensure that persons, facing criminal charges, do not contest on their tickets using their poll symbols.

The Court started hearing of the matter on August 9. The issues for consideration before the Court were:

  • Whether the court can lay down additional disqualifications beyond Article 102(e) and Section 8 of the Representation of the People Act, 1951?
  • Whether the disqualification should be triggered upon conviction as it exists presently or upon framing of charges by the court?
  • Whether filing of false affidavits under Section 125-A of the RP Act should be a ground of disqualification?

Attorney General K.K. Venugopal, appearing for the Centre, had stated that the Parliament has made a distinction between an accused and a convict and there has been a provision for disqualification in the RP Act upon conviction of a lawmaker. The Centre, deriving strength in its argument from the principle that every man is innocent until proven guilty, had also contended that such course would create a  pre-condition that would adversely affect the right of the candidates to participate in polls; the judiciary should not venture into this legislative arena.

Case BriefsHigh Courts

Bombay High Court: A Single Judge Bench comprising of K.R. Shriram, J. decided an admiralty suit wherein it was held that the claim of charges on the sale proceeds of MT Pratibha Bheema (marine vessel)  constituted maritime lien.

The said vessel was anchored outside Panaji Port, it had developed a technical snag; in view of the impending monsoon, the plaintiff State of Goa towed MT Pratibha Bheema to Mormugoa Port. While anchored at the port, the vessel was sold. Since, at the time of sale, the vessel was within the limits of area controlled by the plaintiff, it demanded various charges from the sale proceed. The question before the Court was whether plaintiff’s claim was secured by maritime lien on sale proceeds of MT Pratibha Bheema. According to the plaintiff, its claim was a maritime claim within the meaning of Article 1(l) of International Convention for the Unification of Certain Rules Relating to the Arrest of Sea going Ships, 1952 and Article 1(n) of International Convention on the Arrest of Ships, 1999.

At the outset, High Court noted that plaintiff produced all the documents to substantiate its claim; and in fact, the defendants conceded that heads of claim had been sufficiently proved. The Court referred to Article 4(1)(d) of International Convention on Maritime Liens and Mortgages, 1993 which reads, “claims for port, canal, and other waterway dues and pilotage dues”. It was noted that India is a signatory to the Convention. Following its earlier decision, the Court held that said Convention could be said to be part and parcel of Indian law or to have force of law in India. Moreover, Section 4(1)(n) of Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017, provides that dues in connection with any port, harbour, canal, dock or light tolls, other tolls, waterway or any similar kind chargeable under any law for the time being in force, will be a maritime claim. Also, Section 9 provides for inter se priority on maritime lien. The Court held that Section 4(1)(n) read with Section 9(1)(d) of Admiralty Act provides that plaintiff’s claim will be in the nature of maritime lien. Plaintiff’s claim was allowed with interest of 12% pa. The suit was disposed of accordingly. [State of Goa v. Sale Proceeds of the Vessel MT Pratibha Bheema,  2018 SCC OnLine Bom 1320, dated 07-06-2018]