Case BriefsForeign Courts

Supreme Court of The United States: In a significant decision which can have major repercussions on a woman’s choice to abort in the United States, the full bench of SCOTUS, with a ratio of 5:4, declined to block the Texas law which imposes a near complete ban on abortions. The majority consisted of Amy Coney Barrett, Brett Kavanaugh, Samuel Alito, Neil Gorsuch and Clarence Thomas, JJ.

The Texas Law on Abortion: The instant matter revolved around Senate Bill-8[1] which went into effect on 01-09-2021

  • The legislation puts an embargo on the doctors from performing abortions if they can detect a fetal heartbeat, including the cardiac activity that normally occurs at roughly the sixth week of pregnancy[2].
  • The law excludes the patient from being sued.
  • One of the chief highlights of the legislation is that it delegates the responsibility of the enforcement of the prohibition to the private persons and allows them to bring lawsuits against anyone who provides or aids or abets an abortion – the clinics, doctors and even a cab driver taking a patient to the abortion clinic can become a defendant.
  • Anyone who brings a successful suit can collect atleast $10,000 from the person who is found to have infringed the law.

The Legal TrejectoryOn May 19th 2021, the Governor of Texas signed the law and it was immediately challenged in the court. After the District Court’s denial to the defendants’ motion of dismissal on Aug. 25, they went to the U.S. Court of Appeals for the 5th Circuit. The Court of Appeals granted the defendants’ request to put the district-court proceedings, on hold, and denied the challengers’ request to expedite the appeal, thereby setting the stage for the challengers to seek emergency relief in the Supreme Court.[3]

Contentions: The State of Texas argued that neither they nor their executive employees possess the authority to enforce the Texas law either directly or indirectly.  Furthermore, it is not clear whether, under existing precedent, this Court can issue an injunction against state judges asked to decide a lawsuit under Texas’s law

Per contra, the applicants stated that the Texan law infringes the constitutional right of a woman to obtain an abortion during the first stage of pregnancy and the delegated enforcement of the law on the private persons appears to be a safeguard to protect the State from responsibility for implementing and enforcing the regulatory regime.

Abortion Rights in the United StatesIn the landmark decision of this Court in Roe v. Wade, 1973 SCC OnLine US SC 20, it was held that a pregnant woman’s fundamental right to choose to have an abortion without excessive governmental restrictions, is part of her Right to Privacy and therefore protected by the US Constitution.

Decades later, the SCOTUS in Planned Parenthood of Southeastern Pennsylvania v. Casey, 1992 SCC OnLine US SC 102 upheld the former decision but placed the “undue burden standard” on the right.

 Observations: On behalf of the Majority, Justice Samuel Alito observed that an applicant must carry the burden of making a “strong showing” that it is likely to succeed on the merits, that it will be “irreparably injured absent a stay,” that the balance of the equities favors it, and that a stay is con­sistent with the public interest. He noted that the applicants in the instant matter have raised “complex and novel anteced­ent procedural questions”, but they have not carried the aforestated burden. Examining the argument presented by the State of Texas, the Majority refused to issue a stay order on the impugned law. Justice Alito however clarified that this order is not based on any conclusion about the constitutionality of Texas’ law.

Dissenting Opinions: Chief Justice John Roberts along with Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan filed their opinions.

Chief Justice Roberts, considering the contentions raised by the applicants and terming the Texas law to be “unusual, but unprecedented”, observed that he would grant preliminary relief to preserve the status quo before the law went into effect, so that the courts may consider whether a state can avoid responsibility for its laws in such a manner.

Justice Breyer observed that delegation as provided in the impugned law, threatens to invade a constitutional right, and the coming into effect of that delegation will still threaten imminent harm.

Justice Sotomayor noted that, “The Court’s order is stunning”. In a scathing dissent, she stated that the Majority have decided to “bury their heads in the sand” silently consented in a State’s enactment of a law that flouts nearly 50 years of federal precedents. “The Court’s failure to act rewards tactics designed to avoid judicial review and inflicts significant harm on the applicants and on women.”

Justice Kagan noted that the Court’s swift disposal of the matter “greenlights the operation of Texas’s patently unconstitutional law banning most abortions. The Court thus rewards Texas’s scheme to insulate its law from judicial review by deputizing private parties to carry out unconstitutional restrictions on the State’s behalf”.

[Whole Woman’s Health v. Austin Reeve Jackson, No. 21A24, decided on 01-09-2021]


Sucheta Sarkar, Editorial Assistant has reported this brief.

[1] Senate Bill 8

[2] SCOTUS Blog, Texas Abortion Ban

[3] Refer fn. 3

Op EdsOP. ED.

April 24, 2021, will be known for two benchmark events in the legal field. First is, India will be getting its 48th Chief Justice of India, in the form of Justice N.V. Ramana, who takes over reins of the highest court from outgoing Chief Justice S.A. Bobde. And the second is, on this day, 48 years ago, the largest Bench till date (13-Judge Bench) of the Supreme Court of India in Kesavananda Bharati v. State of Kerala,[1] had laid down the basic structure doctrine, whereafter, any amendment made to the Constitution can be struck down by the court on violation of basic structure of the Constitution of India.

“Basic structure is not a part of the fundamental rights nor indeed a provision of the Constitution. The theory of basic structure is woven out of the conspectus of the Constitution and the amending power is subjected to it because it is a constituent power.”[2]

The “basic features”, which were declared to be part of “basic structure”, inter alia, are— (1) Supremacy of the Constitution; (2) sovereignty; (3) republican and democratic form of Government;[3] (3) federalism;[4] (4) secularism;[5] (5) separation of powers;[6] (6) independence of judiciary;[7] and (7) judicial review,[8] etc. The above conspectus is an illustrative list, because “for determining whether a particular feature of the Constitution is part of the basic structure or not, it has to be examined in each individual case keeping in mind the scheme of the Constitution”. [9]

So, a Constitutional Amendment or any Act/Regulation which is inserted into the 9th Schedule of the Constitution[10] after 24-4-1973[11] can be impugned as violative of basic structure of the Constitution. Now, the question that emanates is, can an “ordinary legislation” be impugned as violative of basic structure of the Constitution? This article discusses that, with assistance of judicial dictums.

Ordinary legislation means an Act enacted by either Parliament or the State Legislatures on the matters respectively enumerated under 7th Schedule of the Constitution[12]. Our Constitution’s aim is clear in demarcating the functions of the institutions. As per Article 245(1)[13], Parliament or State Legislatures make the laws, whereas, as per Article 141[14], the Supreme Court declares the law to be either constitutional or unconstitutional.

For declaring an ordinary law as constitutional or unconstitutional, its constitutional validity is generally tested on two grounds,[15]— (1) Legislative competence; (2) violation of fundamental rights or any other constitutional provisions. The other grounds that were considered are— (3) law should not be prohibited by any particular provision of the Constitution,[16] (4) law should follow the procedure laid down in the Constitution;[17] and (5) vagueness in law.[18]

Before applying the above tests, the court starts with a presumption that a law is constitutionally valid.[19]

Coming to assessment of the application of basic structure doctrine to an ordinary legislation, in Kuldip Nayar v. Union of India,[20] Ashoka Kumar Thakur v. Union of India,[21] and Union of India v. Madras Bar Assn.,[22] it was categorically held that “only constitutional amendments can be subjected to the test of the basic features doctrine. Legislative measures are not subject to basic features or basic structure or basic framework”.[23]

Whereas, in Madras Bar Assn. v. Union of India,[24] and Supreme Court Advocates-on-Record Assn. v. Union of India,[25] it was held that “if a challenge is raised to an ordinary legislation based on one of the ‘basic features’ of the Constitution, it would be valid to do so”.[26]

The dictum that even an ordinary legislation can be assailed as violative of “basic structure” of the Constitution is untenable, because, firstly, a constitutional amendment, made by virtue of Article 368[27], is an “amending power”, whereas, ordinary law, made by virtue of Articles 245 to 248[28] on entries in the 7th Schedule, deals with a “legislative power”. Secondly, the “basic structure” theory was evolved in Kesavananda Bharati case,[29] because a frontal attack on a constitutional amendment cannot be made on ground of violation of Part III per se, as the expression “law” under Article 13(3)[30] does not covers a constitutional amendment. The point that the expression “law” under Article 13(3) does not covers amendments under Article 368 was held by 8 Judges (Ray, Jaganmohan Reddy, Palekar, Khanna, Mathew, Beg, Dwivedi, Chandrachud, JJ.) out of 13 Judges in the Kesavananda Bharati case[31] by overruling C. Golak Nath v. State of Punjab[32] on this aspect. Therefore, the Judges in Kesavananda Bharati case[33] weaved the fundamental rights into the basic structure doctrine so that rights of citizenry can be protected against the mighty State, whereas an ordinary legislation can be directly challenged as violative of Part III as it comes under the expression “law”, as defined under Article 13(3). Thirdly, in Indira Nehru Gandhi v. Raj Narain[34] (famously called as “Election case”), about which noted jurist H.M. Seervai in his magnum opus — Constitutional Law of India (4th edn. at para 30.19) — says that “no one can now write on the amending power, without taking into account the effect of Election case[35]”, 3 Judges (Ray, C.J., Mathew, Chandrachud, JJ.) out of 5 Judges gave a detailed reasoning on why basic structure test cannot be used as a yardstick to test ordinary legislation. Chief Justice A.N. Ray (as His Lordships was then) observed that “if the theory of basic structures or basic features will be applied to legislative measures it will denude Parliament and State Legislatures of the power of legislation and deprive them of laying down legislative policies. This will be encroachment on the separation of powers”.[36] Justice K.K. Mathew (as His Lordships was then) gave a more picturesque reasoning. His Lordships observed that “I do not think that an ordinary law can be declared invalid for the reason that it goes against the vague concepts of democracy, justice, political, economic and social, liberty of thought, belief and expression; or equality of status and opportunity, or some invisible radiation from them.”[37] Justice Y.V. Chandrachud (as His Lordships was then) reasoned out by observing that “certain constitutional amendment has to be passed by a special majority and certain such amendments have to be ratified by the legislatures of not less than one-half of the States as provided by Article 368(2). An ordinary legislation can be passed by a simple majority. The two powers, though species of the same genus, operate in different fields and are therefore subject to different limitations”.[38]

In view of the above, it is expected that future Benches of the Supreme Court will follow the law as laid down in Indira Nehru Gandhi v. Raj Narain[39] and eschew the observations made in Madras Bar Assn. v. Union of India,[40] and Supreme Court Advocates-on-Record Assn. v. Union of India,[41] as per incuriam, so that the basic structure doctrine, which was evolved thanks to the painstaking efforts of Nani A. Palkhivala, does not gets too much stretched that it loses its elasticness.


Law student, University College of Law, Osmania University, e-mail: akashbaglekar@gmail.com

[1] (1973) 4 SCC 225 

[2] Indira Nehru Gandhi v. Raj Narain, 1975 Supp SCC 1 at para 691

[3] State (NCT of Delhi) v. Union of India, (2018) 8 SCC 501

[4] S.R. Bommai v. Union of India, (1994) 3 SCC 1

[5] S.R. Bommai v. Union of India, (1994) 3 SCC 1

[6] State of W.B. v. Committee for Protection of Democratic Rights, (2010) 3 SCC 571

[7] Supreme Court Advocates-on-Record Assn. v. Union of India, (2016) 5 SCC 1

[8] L. Chandra Kumar v. Union of India, (1997) 3 SCC 261

[9] Ashoka Kumar Thakur v. Union of India, (2008) 6 SCC 1 at para 116

[10] <http://www.scconline.com/DocumentLink/BT8UF5QH>.

[11] I.R. Coelho v. State of T.N., (2007) 2 SCC 1

[12]  <http://www.scconline.com/DocumentLink/ijM48Wrl>.

[13] <http://www.scconline.com/DocumentLink/2He6YRj3>.

[14] <http://www.scconline.com/DocumentLink/42L90IU1>.

[15] State of A.P. v. McDowell & Co., (1996) 3 SCC 709 at para 43; Public Services Tribunal Bar Assn. v. State of U.P., (2003) 4 SCC 104 at para 26

[16] Chhotabhai Jethabhai Patel and Co. v. Union of India, AIR 1962 SC 1006: 1962 Supp (2) SCR 1  at para 33

[17] Kihoto Hollohan v. Zachillhu, 1992 Supp (2) SCC 651 

[18] Shreya Singhal v. Union of India, (2015) 5 SCC 1

[19] Charanjit Lal Chowdhuri v. Union of India, AIR 1951 SC 41: 1950 SCR 869 at para 10. See also Ram Krishna Dalmia v. S.R. Tendolkar, AIR 1958 SC 538: 1959 SCR 279 at para 11 and R.K. Garg v. Union of India, (1981) 4 SCC 675 at para 7

[20] (2006) 7 SCC 1

[21] (2008) 6 SCC 1

[22] (2010) 11 SCC 1

[23] Ibid. at para 99.

[24] (2014) 10 SCC 1. In this case of 5-Judge Bench, Justice J.S. Khehar, who authored the leading judgment, held this view (see at para 109), while Justice Rohinton F. Nariman did not express any opinion on this point.

[25] (2016) 5 SCC 1. It is to be noted that in this case of 5-Judge Bench, only Justice J.S. Khehar held this view (see at para 381), while Justice Madan B. Lokur disagreed with this view (see at para 857). And Justice Kurian Joseph and Justice J. Chelameswar did not express any opinion on this point.

[26] Ibid. at para 381.

[27] <http://www.scconline.com/DocumentLink/0oP2hcsE>.

[28] <http://www.scconline.com/DocumentLink/BQ00wa9M>.

[29] (1973) 4 SCC 225

[30] <http://www.scconline.com/DocumentLink/cXoE51V8>.

[31] (1973) 4 SCC 225

[32] (1967) 2 SCR 762

[33] (1973) 4 SCC 225

[34] 1975 Supp SCC 1

[35] 1975 Supp SCC 1

[36] Ibid. at para 136.

[37] Ibid. at para 346.

[38] Ibid. at para 692.

[39] 1975 Supp SCC 1 

[40] (2014) 10 SCC 1

[41] (2016) 5 SCC 1. Only observations of Justice J.S. Khehar.

Case BriefsHigh Courts

Karnataka High Court: P.S. Dinesh Kumar J dismissed the petition being devoid of merits.

The facts of the case are such that the petitioner, Devas Employees’ Mauritius Pvt. Ltd., a Company incorporated under the laws of Republic of Mauritius filed the instant  petition with prayers to declare Section 272(1)(e) of Companies Act, 2013 (‘the Act’ for short) as ultra vires Constitution of India; and to declare that the second proviso to Section 272(3) of the Act, must be read to be applicable to the petitions presented by persons falling under Section 272(1)(e) of the Act; and to issue a writ of certiorari quashing sanction order dated January 18, 2021 and consequently to quash all proceedings before NCLT.

Counsel for the petitioners Mr. Rajiv Nayyar and Mr. C.K. Nanda Kumar submitted that both Registrar of Companies and a ‘person authorized by the Central Government’ stand on the same footing. In the case of Registrar, before according sanction, Central Government is required to give an opportunity to the Company and the same is missing in the case of a ‘person authorized by Central Government.

Counsel for respondents Mr. Venkatraman, Mr. Saji P John, Mr. M.B Naragund and M.N. Kumar  that there is a classic distinction between the Registrar of Companies and a person authorized by the Central Government because Registrar is a regulator and stands on a different footing.

The Court observed that the Registrar falls in a different category as the powers and duties of the Registrar of Companies enumerated in Sections 77, 77(2), 78, 81, 83, 93, 137, 157, 206, 208, 209 and 248 of the Companies Act.

The Court relied on judgment K.B. Nagur v. UOI, (2012)4 SCC 483 wherein it was observed

“20. It is also a settled and deeply-rooted canon of constitutional jurisprudence, that in the process of constitutional adjudication, the courts ought not to pass decisions on questions of constitutionality unless such adjudication is unavoidable. In this sense, the courts have followed a policy of strict necessity in disposing of a constitutional issue. In dealing with the issues of constitutionality, the courts are slow to embark upon an unnecessary, wide or general enquiry and should confine their decision as far as may be reasonably practicable, within the narrow limits required on the facts of a case.”

The Court further relied on judgment Government of Andhra Pradesh v. P. Laxmi Devi, (2008) 4 SCC 720 wherein it was observed

“46. ………….. But before declaring the statute to be unconstitutional, the court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Rt. Rev. Msgr. Mark Netto v. State of Kerala [(1979) 1 SCC 23 : AIR 1979 SC 83] SCC para 6 : AIR para 6. Also, it is none of the concern of the court whether the legislation I its opinion is wise or unwise.”

The Court observed that It is settled that when a provision of law is challenged, Courts are required to exercise restraint and be cautious in striking down a provision. It was further observed that one of the most profound tenets of Constitutionalism is presumption of Constitutionality assigned to each legislation enacted. Indubitably, Parliament has competence.

The Court held “The sanction accorded by the Central Government does not meet petitioner with any Civil consequence. Devas has not challenged the sanction order. Petitioner has failed to demonstrate infringement of any rights enshrined in Part-III of Constitution of India.”

The Court also held “Registrar and ‘a person authorized by the Central Government’ fall into different categories, it does not warrant reading down Section 272(3) of the Companies Act.”

In view of the above, petition was dismissed.

[Devas Employees Mauritius Private Limited v. Union of India, Writ Petition No.6191 OF 2021, decided on 28-04-2021]


Arunima Bose, Editorial Assistant has put this report together 

Legislation UpdatesNotifications

Central Government, after consultation with the Reserve Bank, hereby makes the following Scheme further to amend the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970:

  • Nationalised Banks (Management and Miscellaneous Provisions) Amendment Scheme, 2021
  • In the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970, after paragraph 14, the following paragraph shall be inserted, namely:—

“14A. Special provision.—Where a nationalised bank is required by law to do any act or thing and in order to do so the recommendations or determination of, or resolution of grievances of security holders by, or in respect of any appointment, approval or review by any Committee of the Board of the bank is required, and if the Board is satisfied that quorum for meeting of such Committee cannot be met on account of either existence of any vacancy in such Committee or recusal by member thereof, the Board may do that act or thing.”


Ministry of Finance

Notification dt. 25-01-2021

Legislation UpdatesStatutes/Bills/Ordinances

Governor of Uttar Pradesh promulgates the Uttar Pradesh Regulation of Urban Premises Tenancy Ordinance, 2021

Purpose of the Ordinance: To establish Rent Authority and Rent Tribunals to regulate renting of premises and to protect the interests of landlords and tenants and to provide speedy adjudication mechanism for resolution of disputes and matter connected therewith or incidental thereto.

[Section 3] Ordinance not to apply to certain premises:

  • Premises owned by the Central or State Government or Union Territory Administration or a Government undertaking or Enterprises or Statutory Body or Cantonment Board.
  • Premises owned by a Company, University or Organisation given on rent to its employees as part of service contract
  • Premises owned by religious or charitable institution as may be specified, by State Government’s notification.
  • Premise owned by Auqaf registered under the Waqf Act, 1995 or by any public trust registered under applicable law.
  • Other building or category of buildings specifically exempted in public interest by notification by the State Government.

 [Section 4] Tenancy Agreement

 No person shall, after the commencement of this Ordinance, let or take on rent any premises except by an agreement in writing, which shall be informed to the Rent Authority by the landlord and tenant jointly.

In case the tenant and landlord fail to jointly inform the execution of the tenancy agreement, the both of them shall separately inform the execution of tenancy agreement to the Rent Authority within a period of 1 month from the date of expiry.

[Section 5] Period of Tenancy

 Every tenancy entered into after the commencement of this Ordinance shall be valid for a period as agreed upon between the landlord and the tenant.

Tenant may request the landlord for renewal or extension of the tenancy, within the period agreed to in tenancy agreement, and if agreeable to the landlord, may enter into a new tenancy agreement with the landlord or mutually agreed terms and conditions.

 If a tenancy for a fixed term ends and has not been renewed or the tenant fails to vacate the premises at the end of such tenancy, then such tenant shall be liable to pay an enhanced rent to the landlord.

[Section 6] Rights and Obligations of successor in case of death

 Terms of agreement shall be binding upon their successors in the event of the death of the landlord or tenant, the successor of the deceased landlord or tenant shall have the same rights and obligations as agreed to in the tenancy agreement for the remaining period of such tenancy.

In the event of the death of tenant, the right of tenancy shall devolve on his successors, namely:

Spouse, son or daughter or where there are both son and daughter, both of them; parents; daughter-in-law, being the widow of his pre-deceased son; widowed or divorced sister

[Section 7] Restriction on sub-letting

 No tenant shall, except by entering into a supplementary agreement to the existing tenancy agreement:

  • Sub-let whole or part of the premises held by him as a tenant
  • Transfer or assign his rights in the tenancy agreement or any part thereof

[Section 10] Rent Authority to determine the revised rent in case of dispute

 In determining the rent to be revised, the rent authority may be guided by the prevailing market rent in the surrounding areas let out on rent.

[Section 11] Security Deposit

 Security deposit to be paid by the tenant in advance shall be such as may be agreed upon between the landlord and the tenant in the tenancy agreement, which shall be:

  • Not exceed two months’ rent, in case of residential premises; and
  • Not exceed 6 months’ rent, in case of non-residential premises.

Security Deposit shall be refunded to the tenant on the date of taking over vacant possession of the premises from the tenant, after making due deduction of any liability of the tenant.

[Section 14] Deposit of rent with Rent Authority

 Where the landlord refuses to accept any rent and other charges payable or refuses to give a receipt, the rent and other charges shall be paid to the landlord by postal money order or any other method, in such manner as may be prescribed, consecutively for two months, and if the landlord refuses to accept the rent and other charges within such period, then the tenant may deposit the same with the Rent Authority.

In case the tenant is unable to decide as to whom the rent is payable during the period of tenancy agreement, the tenant may, in such case, deposit the rent with the rent authority.

[Section 15] Repair and Maintenance of Property

 In case tenant fails or refuses to carry out the repairs, the landlord may carry out the repairs and deduct the amount incurred for such repairs from the security deposit and the amount so deducted shall be paid by the tenant within a period of one month of the issue of notice by the landlord.


To read more, click on the link below: Tenancy Ordinance

Op EdsOP. ED.

The Benami Transactions (Prohibition) Act, 1988 (Original Act) was enacted in the year 1988 with the object of prohibiting benami transactions. A benami transaction in simple terms refers to a transaction where a person actually purchasing a property does not do so in his own name, and does so in the name of another person, who is merely a “name lender” or a “benamidar”. Such person who pays consideration is commonly referred to as the “beneficial owner”.

The Original Act contained a mere 9 sections, including the power of acquisition of such benami property by an appropriate authority and also powers to prosecute offenders. Although the Original Act empowered the Central Government to make rules under Section 8, no such rules were ever framed. Therefore, the Original Act was widely regarded as a “toothless” legislation, which though empowered the State to confiscate properties, was rarely used and most importantly, no procedure, rules or mechanism were prescribed to give effect to the provisions of the Original Act.

With the change of dispensation in Parliament, the then Finance Minister, Late Mr. Arun Jaitley, sought to “give teeth to” this “toothless” legislation by introducing the Benami Transactions (Prohibition) Amendment Act, 2016. The Amendment was passed into law and came into force on 1-11-2016. The amended legislation was rechristened as the Prohibition of Benami Property Transactions Act, 1988 (New Act) and sought to amend the Original Act by adding as many as 72 sections and proper Rules for the effective implementation of the New Act.

But why did the Government opt for amending the Original Act instead of enacting a fresh legislation? The reason is not far to see, and was explained by Late Mr. Jaitley in Parliament in answer to a question where he categorically stated that:

Anybody will know that a law can be made retrospective, but under Article 20 of the Constitution of India, penal laws cannot be made retrospective. The simple answer to the question why we did not bring a new law is that a new law would have meant giving immunity to everybody from the penal provisions during the period 1988 to 2016 and giving a 28-year immunity would not have been in larger public interest, particularly if large amounts of unaccounted black money have been used to transact those transactions.”

But the question which arises is whether such a course is legally permissible? Can the legislature do something indirectly which it could not have done directly? The answer in my view is that such a course could not have adopted, especially given the strict provisions of the New Act, which have the effect of not only depriving a person of his property but also of initiation of criminal prosecution against a person found guilty under the New Act.

The Supreme Court has repeatedly held that amendment to a statute can be implemented retrospectively, however, such retrospective amendment cannot defeat the substantive rights of a party. It is well recognised that generally amendments to procedural laws may be retrospective, but when substantive rights of parties are affected, can such laws be implemented retrospectively?

The New Act was notified vide Notification No. 98 of 2016 dated 25-10-2016, which appointed the 1st day of November, 2016 as the date on which the provisions shall come into force.

Section 1(3) Remains Untouched

Interestingly, the New Act keeps Section 1(3) of the Original Act untouched, which provided that:

(3) The provisions of Sections 3, 5 and 8 shall come into force at once, and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988.

The aforesaid date of 19-5-1988 relates to the coming into force of the Presidential Ordinance whereas the date of 5-9-1988 relates to the date when the Original Act was brought into force. It is for this reason that Section 1(3) reads that Sections 3, 5 and 8 shall come into force at once.

In the New Act, Section 1(3) has been retained in its original form even though there are substantial amendments to Sections 3, 5 and 8. The said provision creates an anomalous situation with the use of the words “shall come into force at once”. What date does this relate to is something that requires deep consideration particularly in view of the substantive amendments brought about to the aforesaid sections. A literal reading of the words “shall come into force at once” lends credence to the interpretation that the amendments to the said section shall be effective only post 1-11-2016, thus making the provision prospective in its operation.

Substantive Amendments in the New Act

Substantive changes have been made to various provisions of the Original Act, and there is no doubt that such amendments are not mere procedural amendments. In fact, substantive changes affecting the vital rights of persons have been made to the New Act, thus warranting a prospective operation. Some of these substantive changes are:

  • Section 2(9) of the New Act expands the definition of “benami transaction” and brings within its fold certain transactions, which were hitherto not considered benami. This certainly qualifies as a substantive change of the scope and operation of the New Act.
  • Section 3 of the New Act seeks to make a distinction between transactions entered into prior to the New Act, by providing for a lesser punishment under Section 3(2) for past acts and a higher punishment under Chapter VII of the New Act for acts done after 1-11-2016. Such cases are covered by Section 3(3) of the New Act. This also leads us to the inevitable conclusion that the applicability of the new regime and punishment thereunder is only prospective.
  • Section 5 read with Chapter IV of the New Act provide for attachment, adjudication and confiscation of the properties under the New Act. Under the Original Act, though the provision for confiscation was present, however, the same was to be undertaken in terms of the procedure and rules prescribed. It is an admitted position that no rules were ever framed or brought into force for the said purpose.
  • Thus, even though the substantive provision for confiscation was present under the Original Act, the absence of rules framed thereunder would certainly militate against the prescription of the detailed procedure now laid down (and rules framed) under the New Act. This, some may argue, is directly contrary to Article 20 of the Constitution of India as Section 5 (without rules) of the Original Act was the “law in force” for transactions prior to 1-11-2016.
  • Even Chapter IV of the New Act tends to disturb various vested rights of persons, as it gives the Initiating Officer under the New Act the power to provisionally attach properties even before adjudication proceedings.
  • Various levels of the adjudication have been introduced under the New Act, which never existed earlier. Though these changes may be termed as “procedural”, the fact remains that creating layers of appeals, which were non-existent earlier, certainly represents substantive amendment affecting vested rights of parties.
  • Chapter VII of the New Act prescribes penalties, which were non-existent under the Original Act. These penalties cannot by any stretch of imagination be applied retrospectively, and any such misadventure would fall foul of Article 20 of the Constitution of India, 1950.

Interpretation by the High Courts

The question of whether the amendments brought about in the form of the New Act are to be applied prospectively or retrospectively have vexed various High Courts throughout the country. So far there is unanimity of judicial opinion (barring one) that the provisions of the New Act are to be applied prospectively. In Joseph Isharat v. Rozy Nishikant Gaikwad 1 , the Bombay High Court held:

  1. 7. What is crucial here is, in the first place, whether the change effected by the legislature in the Benami Act is a matter of procedure or is it a matter of substantial rights between the parties. If it is merely a procedural law, then, of course, procedure applicable as on the date of hearing may be relevant. If, on the other hand, it is a matter of substantive rights, then prima facie it will only have a prospective application unless the amended law speaks in a language “which expressly or by clear intention, takes in even pending matters”. Short of such intendment, the law shall be applied prospectively and not retrospectively.
  2. As held by the Supreme Court in R. Rajagopal Reddy v. Padmini Chandrasekharan[2], Section 4 of the Benami Act, or for that matter, the Benami Act as a whole, creates substantive rights in favour of benamidars and destroys substantive rights of real owners who are parties to such transaction and for whom new liabilities are created.…These observations clearly hold the field even as regards the present amendment to the Benami Act. The amendments introduced by the legislature affect substantive rights of the parties and must be applied prospectively.

In Mangathai Ammal v. Rajeshwari[3]  Supreme Court observed as follows:

  1. 42. It is required to be noted that the benami transaction came to be amended in the year 2016. As per Section 3 of the Benami Transaction (Prohibition) Act, 1988, there was a presumption that the transaction made in the name of the wife and children is for their benefit. By Benami Amendment Act, 2016, Section 3(2) of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted. It is the case on behalf of the respondents that therefore in view of omission of Section 3(2) of the Benami Transaction Act, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present case. Aforesaid cannot be accepted. As held by this Court in Binapani Paul Pratima Ghosh[4] the Benami Transaction Act would not be applicable retrospectively.

In Niharika Jain v. Union of India[5], the Rajasthan High Court observed:

  1. 93. … this Court has no hesitation to hold that the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1-11-2016 i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect.
  2. 94. It is made clear that this Court has neither examined nor commented upon merits of the writ applications but has considered only the larger question of retrospective applicability of the Benami Amendment Act, 2016 amending the original Benami Act of 1988. Thus, the authority concerned would examine each case on its own merits keeping in view the fact that amended provisions introduced and the amendments enacted and made enforceable w.e.f. 1-11-2016; would be prospective and not retrospective.

The Calcutta High Court in Ganpati Delcom (P) Ltd. v. Union of India[6], held as under:

In Canbank Financial Services Ltd. v. Custodian[7], the Supreme Court specifically held in para 67 that the said Act of 1988 had not been made workable as no rules under Section 8 of the said Act for acquisition of benami property had been framed. These two cases were also cited by Mr Khaitan. Section 6(c) of the General Clauses Act, 1897 is most important. It lays down that repeal of an enactment, which necessarily includes an amendment, would not affect “any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed”, unless a different intention is expressed by the legislature. Without question, the omission on the part of the Government to frame rules under Section 8 of the 1988 Act rendered it a dead letter and wholly inoperative. Assuming that the appellant had entered into a benami transaction in 2011, no action could be taken by the Central Government, in the absence of enabling procedural rules. It is well within the right of the appellant to contend that the Central Government had waived its rights. It could also contend that no criminal action could be initiated on the ground of limitation. Now, these rights which had accrued to the appellant could not, in the absence of an express provision be extinguished by the amending Act of 2016. In other words, applying the definition of benami property and benami transaction the Central Government could not, on the basis of the 2016 Amendment allege contravention and start the prosecution in respect of a transaction in 2011.

However, taking a contrary view, the Chhattisgarh High Court in Tulsiram v. ACIT[8] , held as follows: 

  1. 20. … It can also not to be said that provisions of the Amended Act of 2016 could not have been made applicable in respect of properties, which were acquired prior to 1-11-2016. The whole Act of 1988 as it stands today inclusive of the amended provisions brought into force from 1-11-2016 onwards applies irrespective of the period of purchase of the alleged benami property. Amended Act of 2016 does not have an existence by itself. Without the provisions of the Act of 1988, the amended provisions of 2016 has no relevance and the amended provisions are only laying down the proceedings to be adopted in a proceeding drawn under the Act of 1988 and the penalties to be imposed in each of the cases taking into consideration the period of purchase of benami property.

Conclusion

The amendments made by way of the New Act, in my view, are clearly substantive and not procedural in nature, and hence cannot be applied retrospectively. The New Act expands the scope of the law, casts a negative burden/onus on a person to prove that a property is not “benami property”, creates disabilities such as immediate attachment and subsequent confiscation and most importantly attracts criminal action. All these aspects lead to the inescapable conclusion that the New Act cannot and should not be applied retrospectively.

The golden words of the Supreme Court in CIT v. Vatika Township (P) Ltd.[9]  that “The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of the day in force and not tomorrow’s backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset”, are clearly applicable to the present situation.

The views taken by the various High Courts as highlighted above correctly lay down this position of law, and now all eyes will be on the Supreme Court to take a final view on this issue – once and for all. Till then the confusion remains.


[†] Practising Advocate, Delhi High Court.

[1]  2017 SCC OnLine Bom 10006

[2] (1995) 2 SCC 630 .

[3] 2019 SCC OnLine SC 717

[4] (2007) 6 SCC 100.

[5] 2019 SCC OnLine Raj 1640 

[6] 2019 SCC OnLine Cal 8679 : (2020) 421 ITR 483 

[7] (2004) 8 SCC 355

[8]  2019 SCC OnLine Chh 140

[9] (2015) 1 SCC 1, 21, para 28 ,

Legislation UpdatesRules & Regulations

Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2021

2. In the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 (hereinafter referred to as the principal regulations), in regulation 5,—

(i) after sub-regulation (4), the following sub-regulation shall be inserted, namely:—

“(4A) A shareholder director shall be an individual, who satisfies the eligibility norms, including experience and qualification, as decided by the Governing Board.”;

(ii) in sub-regulation (6), for clause (b), the following clause shall be substituted, namely:—

“(b) who has expertise in the field of finance, law, economics, accountancy, valuation, management or insolvency;”;

(iii) after sub-regulation (13), the following sub-regulations shall be inserted, namely:—

“(14) A director shall disclose any order of any authority that affects his character or reputation, to the insolvency professional agency, within one week of issue of such order:

Provided that a copy of the order shall be placed forthwith on the website of the insolvency professional agency;

Provided further that such director shall forthwith cease to be a director of the insolvency professional agency where the order disqualifies him to be a director of a company.”.

3. In the principal regulations, after regulation 5B, the following regulations shall be inserted, namely:-

6. Self-evaluation.

(1) The Governing Board shall evaluate its performance in a financial year within three months of the closure of the year, in the manner decided by it.

(2) The insolvency professional agency shall publish a report on self-evaluation referred to in sub-regulation (1) on its website.

Compliance Officer.

(1) An insolvency professional agency shall designate or appoint a compliance officer who shall be responsible for ensuring compliance with the provisions of the Code and regulations, circulars, guidelines, and directions issued thereunder.

(2) The compliance officer shall, immediately and independently, report to the Board any non-compliance of the provisions referred to in sub-regulation (1).

(3) The compliance officer shall submit a compliance certificate to the Board annually, verifying that the insolvency professional agency has complied with the provisions referred to in sub-regulation (1):

Provided that the annual compliance certificate shall also be signed by the managing director of the insolvency professional agency.

The Governing Board shall appoint or remove the compliance officer only by means of a resolution passed in its meeting”


Insolvency and Bankruptcy Board of India

[Notification dt. 14-01-2021]

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Manmohan and Sanjeev Narula, JJ., upheld the validity of Sections 132 and 69 of the Central Goods and Services Tax Act, 2017, and refused any interim relief to the petitioner.

Petitioners submitted that Sections 69 and 132 of the Central Goods and Services Tax Act, 2017 are unconstitutional as being provisions of criminal nature, they could have been enacted under Article 246A of the Constitution of India, 1950.

Further, the petitioners emphasized that the power to arrest and prosecute are not ancillary and/or incidental to the power to levy and collect goods and services tax.

Adding to the above submissions, it was further stated that since the power to levy Goods and Services Tax is provided under Article 246A, power in relation thereto could not be traced to Article 246 or any of entries in 7th Schedule.

In the alternative, they submitted that Entry 93 of List 1 confers jurisdiction upon the Parliament to make criminal laws only with respect to matters in List I and CGST. Therefore, according to them, Sections 69 and 132 are beyond the legislative competence of the Parliament.

In the past, many cases occurred wherein an assessee had been arrested at the initial stage of the investigation but the department had subsequently failed to establish its case in adjudication proceedings and in the process, the assessee suffered an irreparable loss on account of the arrest.

In the present cases, no Show Cause Notice had been issued to the Petitioners either under Section 73 or Section 74 of the CGST Act by the Respondents for any unpaid tax, short paid tax, or erroneous refunds or where input tax credit had been wrongly availed or utilized.

Court’s Reasoning

  • There is always a presumption in favour of the constitutionality of an enactment or any part thereof and the burden to show that there has been a clear transgression of constitutional principles is upon the person who impugns such an enactment. Further, Laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power.

Bench while analyzing several aspects of the matter stated that whenever constitutionality of a provision is challenged on the ground that it infringes a fundamental right, the direct and inevitable effect/consequence of the legislation has to be taken into account.

Court referred to the decision of Supreme Court in Namit Sharma v. Union of India, (2013) 1 SCC 745.

In the decision of the Court in Maganlal Chhanganlal (P) Ltd. v. Municipal Corporation of Great Bombay, (1974) 2 SCC 402, it was held that :

“Administrative officers, no less than the courts, do not function in a vacuum. It would be extremely unreal to hold that an administrative officer would in taking proceedings for eviction of unauthorised occupants of Government property or Municipal property resort to the procedure prescribed by the two Acts in one case and to the ordinary civil court in the other. The provisions of these two Acts cannot be struck down on the fanciful theory that power would be exercised in such an unrealistic fashion. In considering whether the officers would be discriminating between one set of persons and another, one has got to take into account normal human behaviour and not behaviour which is abnormal. It is not every fancied possibility of discrimination but the real risk of discrimination that we must take into account. This is not one of those cases where discrimination is writ large on the face of the statute. Discrimination may be possible but is very improbable.”

  • Goods and Service Tax is a Unique Tax, inasmuch as the power as well as field of legislation are to be found in a Single Article, i.e. Article 246-A. Scope of Article 246-A is significantly wide as it grants the power to make all laws ‘with respect to’ Goods and Service Tax.

Unless the Constitution itself expressly prohibits legislation on the subject either absolutely or conditionally, the power of a Legislature to enact legislation within its legislative competence is plenary.

Further, Court added that there is also no conflict between the operation of Article 246A and Article 246 as a non-obstante clause has been added to Article 246A to clarify that both Parliament and the State Legislatures have simultaneous powers in relation to Goods and Services Tax.

  • This Court is of the Prima facie opinion that the ‘Pith and Substance’ of the CGST Act is on a topic, upon which the parliament has power to legislate as the power to arrest and prosecute are ancillary and/or incidental to the power to levy collect goods and service tax.

When a law is challenged on the ground of being ultra vires to the powers of the legislature, the true character of the legislation as a whole has to be ascertained.

Bench opined that when a law dealing with a subject in one list is also touching on a subject in another list, what has to be ascertained. If on examination of the statute, it is found that the legislation is in substance on a matter assigned to the legislature enacting that statute, then it must be held valid, in its entirety even though it may trench upon matters beyond its competence. Incidental encroachment is not prohibited.

In light of the discussion of the above point, Court prima facie opined that the pith and substance of the CGST Act is on a topic, upon which the Parliament has power to legislate as the power to arrest and prosecute are ancillary and/or incidental to the power to levy and collect GST. 

  • Even if it is assumed that power to make offence in relation to evasion of GST is not to be found under Article 246A, then the same can be traced to Entry I of List III. The term ‘Criminal Law’ used in the aforesaid entry is significantly wide and includes all criminal laws except the exclusions.

Supreme Court’s decision in Kartar Singh v. State of Punjab, (1994) 3 SCC 569, has emphasized that the language used in the aforesaid entry is couched in very wide terms and the scope of the term ‘criminal law’ has been enlarged to include any matter that could be criminal in nature.

In view of the above, High Court prima facie opined that even if Sections 69 and 132 of the Act could not have been enacted in pursuance to power under Article 246A, they could have been enacted under Entry 1 of List III, as laying down of a crime and providing for its punishment is ‘criminal law’.

  • This Court, at the interim stage, cannot ignore the view taken by the Gujarat High Court with regard to application of Chapter XII CrPC to the CGST Act.

In Gujarat High Court’s decision in Vimal Yashwantgiri Goswami v. State of Gujarat, R/Special Civil Application No. 13679 of 2019, it was held as under:

♦ When any person is arrested by the authorised officer, in exercise of his powers under Section 69 of the CGST Act, the authorised officer effecting the arrest is not obliged in law to comply with the provisions of Sections 154 to 157 of the Code of Criminal Procedure, 1973. The authorised officer, after arresting such person, has to inform that person of the grounds for such arrest, and the person arrested will have to be taken to a Magistrate without unnecessary delay, if the offences are cognizable and non-bailable.

However, the provisions of Sections 154 to 157 of the Code will have no application at that point of time. Otherwise, Section 69 (3) provides for granting bail as the provision does not confer upon the GST officers, the powers of the officer in charge of a police station in respect of the investigation and report. Instead of defining the power to grant bail in detail, saying as to what they should do or what they should not do, the short and expedient way of referring to the powers of another officer when placed in somewhat similar circumstances, has been adopted. By its language, the sub-section (3) does not equate the officers of the GST with an officer in charge of a police station, nor does it make him one by implication. It only, therefore, means that he has got the powers as defined in the Code of Criminal Procedure for the purpose of releasing such person on bail or otherwise. This does not necessarily mean that a person alleged to have committed a non-cognizable and bailable offence cannot be arrested without a warrant issued by the Magistrate.

♦ The authorised officer exercising power to arrest under section 69 of the CGST Act, is not a Police Officer and, therefore, is not obliged in law to register FIR against the person arrested in respect of an offence under Sections 132 of the CGST Act.

♦ An authorised Officer is a ‘proper officer’ for the purposes of the CGST Act. As the authorised Officers are not Police Officers, the statements made before them in the course of inquiry are not inadmissible under Section 25 of the Evidence Act.

♦ Power to arrest a person by an authorized officer is statutory in character and should not be interfered with Section 69 of the CGST Act does not contemplate any magisterial intervention.

  • In view of the Supreme Court Judgment in Directorate of Enforcement v. Deepak Mahajan and the aforesaid Gujarat High Court Judgment, the arguments that prejudice is caused to the petitioners as they are not able to avail protection under Article 20(3) of the Constitution and/or the provisions of CrPC do not apply even when CGST Act is silent, are untenable in law.

Judicial Scrutiny

 When any person is arrested under Section 132(5) of the CGST Act, the said person has to be informed of the grounds of arrest and must necessarily be produced before a Magistrate under Section 69 (2) within a period of 24 hours.

 The above-stated would ensure judicial scrutiny over the acts of executive and it cannot be termed as unreasonable and/or excessive.

 Adding to its analysis, the Court stated that just because the CGST Act provides for both adjudications of civil liability and criminal prosecution doesn’t mean that the said Act is unfair or unreasonable.

  • Court prima facie finds force in the submission of the ASG that the Central Tax Officers are empowered to conduct intelligence-based enforcement action against taxpayers assigned to State Tax Administration under Section 6 of the CGST Act.
  • What emerges at the prima facie stage is that it is the case of the respondents that a tax collection mechanism has been converted into a disbursement mechanism as if it were a subsidy scheme.

To conclude the Court held that what emerges at the prima facie stage is that it is the case of the respondents that a tax collection mechanism has been converted into a disbursement mechanism as if it were a subsidy scheme.

Hence, in view of the serious allegations, the Court expressed that it is not inclined to interfere with the investigation at the present stage and that too in writ proceedings. At the same time, innocent persons cannot be arrested or harassed. Consequently, the applications for interim protection are dismissed with liberty to the parties to avail the statutory remedies.

It is settled law that though the powers of constitutional courts are wide and discretionary, yet there exist certain fetters in the exercise of such powers.

 In the Supreme Court decision of Hema Mishra v. State of U.P., (2014) 4 SCC 453, it was held that despite the fact that provision regarding pre-arrest bail, had been specifically omitted in Uttar Pradesh, the power under writ jurisdiction is to be exercised extremely sparingly.

Court’s view in the instant case is that the allegation that a tax collection mechanism has been converted into a disbursement mechanism most certainly requires investigation.

Bench stated that it has no doubt that the trial court, while considering the bail or remand or cancellation of bail application, ‘will separate the wheat from the chaff’ and will ensure that no innocent person against whom baseless allegations have been made is remanded to police/judicial custody.

Hence, the observations made herein are prima facie and shall not prejudice either of the parties at the stage of final arguments of the present writ petitions or in the proceedings for interim protection. [Dhruv Krishan Maggu v. Union of India, 2021 SCC OnLine Del 241, decided on 08-01-2021]

Op EdsOP. ED.

Introduction

The Prevention of Money-Laundering Act, 2002[1] (PMLA) is a pro-active legislation keen on curbing money-laundering and bringing violators to justice. Such a legislation is definitely the need of the hour considering the number of scams this country has seen in its past and a strong law securing the 4 walls of justice for offenders is welcomed by the people at large. However, off-late, criminal law practitioners (defense lawyers) have found it challenging to deal with PMLA for the fact that the 4 ends securing the 4 walls of ‘presumed’ justice is far too airtight even for genuine non-offenders to escape its clutches, if caught by sheer happenstance. This article deals with one such scenario.

PMLA punishes an individual for the offence of money-laundering under Sections 3 and 4 which read as follows:

3. Offence of money-laundering.— Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. 

[Explanation. – For the removal of doubts, it is hereby clarified that,

(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely,

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

(f) claiming as untainted property, in any manner whatsoever;

 (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever].

  1. Punishment for money-laundering.— Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine:

Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words which may extend to seven years, the words which may extend to ten years had been substituted.

On a bare reading of these two provisions, any money that is construed to be ‘proceeds of crime’ is liable to be punished under PMLA. ‘Proceeds of crime’ is defined under Section 2(1)(u) as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence[2]. It is my contention that an offence under the PMLA cannot be a stand-alone offence, as an offence is required to be committed (under the Schedule) for the monies/properties to be deemed ‘proceeds of crime’. Without commission of a crime, there exists no proceeds from crime.

The Karnataka High Court in K. Sowbaghya v. Union of India[3] has observed that:

having regard to the meaning attributed to ‘proceeds of crime’ under PMLA, whereby crime contemplated is the alleged scheduled offence, the ‘proceeds of crime’ contemplated under Sections 3 and 4 are clearly and inextricably linked to the scheduled offence and it is not possible to envision an offence under PMLA as a stand-alone offence without the guilt of the offender in the scheduled offence being established.

Therefore, on a logical reasoning of the said proposition, only if an offence under the Schedule to PMLA is committed, then the question of proceeds of crime arises.

Coming to the thesis or central question for discussion in this article, there are various offences under various statutes that have been adduced as scheduled offences under the PMLA, and for the major part of the Schedule, I have no quarrel with the intention of the legislature. For example, an offence under Section 25 of the Arms Act (which is a scheduled offence under the PMLA) punishes the individual who possesses or sells unlicensed arms and ammunition. The PMLA, rightly so, punishes the individual for the proceeds he/she has made or property acquired through such possession or sale. Taking another example, certain offences under the Penal Code, 1860 such as Sections 364-A (kidnapping for ransom), 384 to 389 (extortion), 392 to 402 (robbery and dacoity) etc are also scheduled offences under the PMLA. Similar to the previous example, IPC punishes the accused for the offences of kidnapping, extortion or robbery/dacoity whereas the PMLA punishes the accused for the money made or property acquired from the commission of such crimes.

The problem arises when considering offences under the Prevention of Corruption Act, 1988[4] (the PC Act), particularly Section 13. Offences under Section 13 (criminal misconduct by a public servant), also a scheduled offence under PMLA, punishes a public servant for receiving illegal gratification by using his/her public office, misappropriating property or owning/possessing property worth beyond known sources of income or illicit enrichment of wealth (general overview). Contrary to the argument that the PC Act only punishes a person for being corrupt or misusing his public office and PMLA punishes the monies made or properties acquired from such misconduct, I argue that the PC Act collectively performs the functions of the PMLA as well.

The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from money-laundering. Therefore, the function of PMLA is to seize/confiscate the properties so enjoyed by individuals who have acquired such property by commission of one or more offences which can be acted upon under the Act, apart from punishment for holding such property. The PC Act on the other hand, not only punishes an individual for being corrupt and holding tainted property, it also takes away any property/money derived from such abuse of power/criminal misconduct for the same reason that such property was acquired through illegal means.

The Supreme Court while dealing with a case under the PC Act in Yogendra Kumar Jaiswal v. State of Bihar[5] held that:

If a person acquires property by means which are not legally approved, the State would be perfectly justified to deprive such person of the enjoyment of such ill-gotten wealth. There is a public interest in ensuring that persons who cannot establish that they have legitimate sources to acquire the assets held by them, do not enjoy such wealth.  Such a deprivation would certainly be consistent with the requirement of Articles 300-A and 14 of the Constitution which prevent the State from arbitrarily depriving a person of his property.

When the PC Act inclusively curbs and confiscates “proceeds of crime”, would prosecution for the same under PMLA not amount to double jeopardy?

Provisions of the PC Act examined

An analysis of Section 13 of the PC Act will shed further light on this theory. Section 13 reads as follows:

13. Criminal Misconduct by a Public Servant. [(1) A public servant is said to commit the offence of criminal misconduct,

(a) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or any property under his control as a public servant or allows any other person so to do; or

(b) if he intentionally enriches himself illicitly during the period of his office.

Explanation 1.- A person shall be presumed to have intentionally enriched himself illicitly if he or any person on his behalf, is in possession of or has, at any time during the period of his office, been in possession of pecuniary resources or property disproportionate to his known sources of income which the public servant cannot satisfactorily account for.

Explanation 2.- The expression known sources of income means income received from any lawful sources.]

(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than [four years] but which may extend to [ten years] and shall also be liable to fine.[6]

Most cases pending or newly charged are predominantly under the provisions prior to the 2018 amendment due to the check period and hence, emphasis will also be placed on Sections 13(1)(a) to (e), as they were, prior to the amendment. However, the following explanation would be squarely applicable to Section 13 as it is subsequent to the amendment also.

Provision

(Before Amendment)

Key Word/Phrase
13(1)(a) Gratification other than legal remuneration
13(1)(b) Valuable thing
13(1)(c) Misappropriates property entrusted to him or under his control
13(1)(d) Valuable thing or pecuniary advantage
13(1)(e) Pecuniary resources or property disproportionate to known sources of income
(After amendment) Key Word/Phrase
13(1)(a) Misappropriates property entrusted to him or under his control
13(1)(b) Intentionally enriches himself illicitly

All these provisions have a key word or a phrase within which the alleged actions have to fit into for them to be charged with one of the above offences (all of which are scheduled offences under PMLA). At this point, it is also pertinent to examine the definition of ‘property’ as under Section 2(1)(v) of PMLA:

(v) “property” means any property or asset of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;

Explanation.– For the removal of doubts, it is hereby clarified that the term “property” includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;”

A bare reading of this definition would show that all keywords/phrases for making one liable under Section 13 of the PC Act also (on interpretation) fall under the definition of Section 2(1)(v) of PMLA. Apart from jail time, the objective of Sections 3 and 4 of PMLA are to confiscate any property that is construed to be from proceeds of crime as the person holding the said property has not obtained and enjoyed them through legal means. This, in its very essence is what Section 13 is also trying to accomplish. The Oxford English Dictionary defines the word “pecuniary” as “of or in money”, thereby making construction of the term ‘pecuniary advantage’ to also fall under the definition of property under Section 2(1)(v) of PMLA. This comparison is only to show that cumulatively, Section 13 of the PC Act and Sections 3 and 4 of PMLA are trying to achieve the same goal and have the same objectives. Therefore, initiating action against an individual under both the provisions of law for the same offence or transaction, would amount to double jeopardy.

It is agreed as stated by the Andhra Pradesh High Court in B. Rama Raju v. Union of India[7] that punishment under Sections 3 and 4 of PMLA are distinct proceedings from Section 5 which is attachment of property and subsequent confiscation. However, in a PC Act case, the trial court (CBI Court in most jurisdictions) passes an order of attachment of tainted property or property under presumption that it is through illegal gratifications during the pendency of trial. This is where Section 5 of PMLA comes in conflict with the proceedings already pending before the trial court. Once the properties are already attached and since the PMLA also permits an order of attachment under Section 5, the Enforcement Directorate making an application to transfer all properties from CBI to ED is prima facie posing a direct threat to the investigation conducted by CBI.[8] Both the agencies are looking into the same properties for offences committed and further, only if an offence is established by CBI can it be treated as ‘proceeds of crime’ by ED.

The Supreme Court in Kanhaiyalal v. D.R. Banaji[9] had held that:

 “If a court has exercised its power to appoint a receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as judicially determined. If other courts or tribunals of coordinate or exclusive jurisdiction were to permit proceedings to go independently of the court which was placed the custody of the property in the hands of the receiver, there was a likelihood of confusion in the administration of justice and possible conflict of jurisdiction.

Even though the observations made therein were in a civil case, the same principles are to be applied to criminal cases also, as attachment of property in these matters are quasi civil in nature. If the Enforcement Directorate were to interfere with pending proceedings conducted by CBI, then there would arise a conflict of jurisdiction since both are on the basis of the same offence and properties possessed therein.

The most essential ingredient for an offence under Section 3 of PMLA is the existence of property that is deemed to be a proceed of crime and Section 13 of the PC Act, quintessentially performs the twin function by making the accused public servant liable for abusing his/her office, possessing such property as well as confiscating the said property since it is a proceed of a ‘crime’ committed by the public servant. To makes things more convincing, punishment under Section 13(2) of the PC Act is much more severe than Section 4 of PMLA, thereby justifying its twin purpose.

Double Jeopardy explained

The concept of double jeopardy has been known to mankind from time immemorial. Dating back to 355 BC in Athens, Greece, the law forbids the same man to be tried twice on the same issue. Double jeopardy or non bis in idem is a procedural defense that prevents a person from being tried again on the same or similar charges following a valid conviction or acquittal. The principle of double jeopardy in India existed prior to the drafting and enforcement of the Constitution. It was first enacted in Section 403(1) of the Criminal Procedure Code, 1898 which is now Section 300 of the amended Criminal Procedure Code, 1973. A partial protection against double jeopardy is a Fundamental Right guaranteed under Article 20 (2) of the Constitution of India, which states “No person shall be prosecuted and punished for the same offence more than once”.

In Thomas Dana v. State of Punjab[10], a Constitutional Bench of 5 Judges laid down 3 requirements for double jeopardy i.e. prosecution, punishment and same offence. If these 3 are complied with, then the protection under Article 20(2) is guaranteed.

Section 300 of the Code of Criminal Procedure also protects a person from being tried again where he/she has already been tried and acquitted/convicted for the same offence. Section 26 of the General Clauses Act states that:

 “Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence.

This is further enumerated by the Supreme Court in Manipur Administration v. Thokchom Bira Singh[11], that for Article 20(2) and Section 26 of the General Clauses Act to act as a bar for second prosecution and its consequential punishment thereunder, it must be for the same offence that is, an offence whose ingredients are the same. Applying the principles of Section 26 of the General Clauses Act, Article 20(2) and the above decision of the  Supreme Court to the present question at hand, it can be stated that since the offence for which PMLA is invoked is essentially the same offence as under the PC Act, the above provisions will get attracted. Therefore, ingredients, occurrences and circumstances are the same for an offence under Section 13 of the PC Act and Sections 3 and 4 of PMLA (including evidence, both oral and documentary) i.e. money/properties acquired through commission of an offence, it is to be concluded that prosecution under PMLA is a second trial for the same offence when the PC Act proceedings are pending or have attained finality.

Conclusions

I have, in this article, tried to give an outline that prima facie, Section 13 of the PC Act and Sections 3 and 4 of PMLA do not harmoniously gel with each other. On the one hand, only if the primary or scheduled crime is made out can a prosecution under PMLA be maintainable (there are certain lines of thought which state, offence under PMLA is stand-alone and is not dependent on any other offence being proved/committed) and on the other hand, even on the existence of an offence under Section 13 of PC Act, the PC Act is a self-sufficient Act which punishes the accused for both abusing the position of being a public servant, as well as having acquired or being in possession of illegal gratification or property that is either misappropriated or disproportionate to known sources of income. Hence, a subsequent action under  PMLA is nothing but a violation of the constitutionally protected fundamental right against double jeopardy. In concluding remarks, it would be pertinent to note that the Schedule to PMLA is to be revisited and pros and cons are to be considered by the Courts having jurisdiction as to whether the provisions of the PC Act (not restricted to Section 13) are to be considered scheduled offences under PMLA.


*Advocate, Madras High Court

[1] Prevention of Money Laundering Act, 2002

[2]Indian Bank v. Government of India, 2012 SCC Online Mad 2526  

[3] 2016 SCC Online Kar 282

[4] Prevention of Corruption Act, 1988

[5](2016) 3 SCC 183

[6]Prior to the 2018 amendment, Section 13(1) reads as follows;

  1. Criminal misconduct by a public servant.—(1) A public servant is said to commit the offence of criminal misconduct,—

(a) if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person any gratification other than legal remuneration as a motive or reward such as is mentioned in section 7; or

(b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a consideration which he knows to be inadequate from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned; or

(c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do; or

(d) if he,—

(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing

or pecuniary advantage; or

(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or

(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or

(e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.

Explanation.—For the purposes of this section, “known sources of income” means income received from any lawful source and such receipt has been intimated in accordance with the provisions of any law, rules or orders for the time being applicable to a public servant.

[7] 2011 SCC OnLine AP 152

[8] I take this stand being fully aware of the fact that Section 18-A of the PC Act, pursuant to the 2018 amendment, has paved way and given priority to provisions of PMLA (with respect to attachment) over the Criminal Law (Amendment) Ordinance, 1944 under provisions of which attachment and confiscation are usually made under the PC Act. This bereft of the fact that if attachment in PMLA takes precedence over the PC Act, then the whole idea of establishing proceeds of crime would become null as the procedure for trial are different under both Acts and trial under PMLA is much more accelerated due to its narrow scope for the offence of proceeds of crime.

[9] 1959 SCR 333

[10] 1959 Supp (1) SCR 274

[11] (1964) 7 SCR 123 

Legislation UpdatesStatutes/Bills/Ordinances

Jammu and Kashmir Reorganisation (Amendment) Ordinance, 2021

President promulgates Jammu and Kashmir Reorganisation (Amendment) Ordinance, 2021.

Amendment of Section 13

In Section 13 of the Jammu and Kashmir Reorganisation Act, 2019, after the words “in article 239A”, the words “or any other article containing reference to elected members of the Legislative Assembly of the State” shall be inserted.

Amendment of Section 88

Section 88 (2) to (6), the following sub-sections shall be substituted:

“(2) The members of the Indian Service, Indian Police Service and Indian Forest Service for the existing cadre of Jammu and Kashmir, shall be borne and become part of the Arunachal Pradesh, Goa, Mizoram and Union territories cadre, and all future allocations of All India Services Officers for the Union territory of Jammu and Kashmir and UT of Ladakh shall be made to Arunachal Pradesh, Goa, Mizoram and Union territories cadre for which necessary modifications may be made in corresponding cadre allocation rules by the Central Government.

(3) The officers so borne or allocated on Arunachal, Goa, Mizoram and Union territories cadre shall function in accordance with rules framed by the Central Government.


Ministry of Law and Justice

[Ordinance dt. 07-01-2020]

Op EdsOP. ED.

Background and Introduction

The Karnataka Government promulgated the Karnataka Land Reforms (Amendment) Ordinance, 2020 [hereinafter ‘the Ordinance’] in July 2020[1] whereby Sections 79-A, 79-B and 79-C of the Karnataka Land Reforms Act, 1961[2] were omitted thereby permitting non-agriculturists to purchase agricultural land without any limitations under law. Considering that agricultural land was significantly cheaper than land within a metropolitan city, purchasing land outside the city becomes more economically viable in comparison to purchasing property within the city. The lifting of these restrictions could result in a spurt of residential dwellings outside the city in the form of high-rise apartments, villas, etc., Bangalore is witness to a trend where people living in the city are choosing to relocate to the city’s outskirts and surrounding rural areas. This rapid counter-urbanisation is attributable to various factors such as high urban population density, overcrowding, rise in pollution and establishment of prominent schools outside the city. This article seeks to address a legal vacuum that exists regarding utilisation of agricultural land for the purposes of residence in the form of farm houses. However, construction of any sort on land that has been converted from an agricultural land use to non-agricultural land use is not within the ambit of this write-up.

Present Legal Position

Development of layouts, high-rises and other residential buildings is regulated by Local Planning Authorities constituted under the Karnataka Town and Country Planning Act, 1961[3]. The Local Planning Authorities promulgate various comprehensive development plans and regulations under the Act. The zoning regulations are fairly comprehensive in classification of land use, building regulations and other construction codes. Further, Section 76-M contains an overriding clause that is reproduced as under:

76-M. Effect of other Laws—(1) Save as provided in this Act, the provisions of this Act and the rules, regulations and bye-laws made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law.

(2) Notwithstanding anything contained in any such other law,-

 (a) when permission for development in respect of any land has been obtained under this Act, such development shall not be deemed to be unlawfully undertaken or carried out by reason only of the fact that permission, approval or sanction required under such other law for such development has not been obtained;

(b) when permission for such development has not been obtained under this Act, such development shall not be deemed to be lawfully undertaken or carried out by reason only of the fact that permission, approval or sanction required under such other law for such development has been obtained.

The effect of the above section was therefore that no other legislation could prevail over the provisions, rules, bye-laws and regulations formulated under the Karnataka Town and Country Planning Act, 1961. Therefore, the Comprehensive Development Plans promulgated by the Local Planning Authorities would prevail over any other enactments promulgated by the Legislature.

Additionally, the modalities and procedure regarding grant of sanctioned plans, building licence permits are also governed by the local municipal bodies under the Karnataka Municipal Corporations Act, 1977[4], the Karnataka Municipalities Act, 1964[5] in urban areas and the Karnataka Panchayat Raj Act, 1993[6] in areas falling under Gram Panchayats. These local bodies are free to promulgate their own bye-laws and rules regarding the procedure for grant of sanctioned plans/license permits. However, the local bodies cannot promulgate any rules or regulations that run afoul of the zoning regulations and comprehensive development plan issued by the Local Planning Authorities. This position was clarified by the Karnataka High Court in Yashodha Rao v. Bruhat Bangalore Mahanagara Palike[7] viz.

 “11. At the outset, to determine which of the Regulations is applicable it is to be noticed that the Bye-laws, 2003 relied on by the learned counsel for the petitioner would indicate that the same was framed on 24-4-2004, keeping in view the earlier Zoning Regulations which was published with the approval of the State Government on 5-1-1995 under the provisions of the KTCP Act. The said Bye-law came into force in supersession of the Bye-laws, 1983. These aspects would indicate that the Bye-law to be framed by the Mahanagara Palike is dependent on the Master Plan which would be prepared by the BDA which is the Planning Authority in the instant case. On approval of the Revised Master Plan, the Bye-laws would have to be framed in conformity with the Revised Master Plan. Presently, though the Revised Master Plan, 2015 and the Zoning Regulations, 2007 has come into force with the approval of the State Government on 25-6-2007, the Mahanagara Palike has not yet framed the Bye-laws in conformity with the same. Though that is the position, the Mahanagara Palike cannot continue to approve the construction plan under the Bye-laws, 2003 itself insofar as the specifications as it would be contrary to the Master Plan and Regulations prepared by the Planning Authority which has the jurisdiction to plan and specify regarding the development and constructions in the area. That has to be regulated and implemented by the Local Authority i.e. the BBMP in the instant case.”

The Karnataka High Court also upheld the supremacy of the Zoning Regulations under the Karnataka Town and Country Planning, 1961 against any other provisions in Dhammangi Developers Pvt. Ltd.  v.  Additional Director (Town Planning), Bruhat Bangalore Mahanagara Palike[8], the Court held as under:

 13. As rightly contended by the counsel for the petitioner, as per Section 76-M of the Karnataka Town and Country Planning Act, 1961, the provisions of the Act and the rules, regulations and bye-laws made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law. The Revised Master Plan, 2015, and the Zoning of Land use and Regulations are the result of the power exercised by the State Government under the provisions of the Karnataka Town and Country Planning Act, 1961. Therefore, Section 76-M gives precedence to these regulations. Even if there are other regulations framed by the State Government or even if there are building bye-laws of the BBMP defining high rise building as height of 15 m  and above requiring clearance of Director of Fire Services, without impinging on the rules and regulations framed in exercise of the powers conferred under the Karnataka Town and Country Planning Act, 1961, the same can be enforced. It is also necessary to notice here that as per Section 505 of the Karnataka Municipal Corporations Act, 1976, the Corporation or its authorities are precluded from doing anything against the provisions contained in the Karnataka Town and Country Planning Act, 1961, and the Regulations framed therein. In the light of the above, the inescapable conclusion is, that while the petitioner is required to abide by all the fire safety measures that can be incorporated in the building constructed by him and the portion to be constructed by seeking necessary permission by the BBMP, he cannot be asked to follow such measures which may render impossible any additional construction by the petitioner. This is because at the time he obtained permission, there was no such rigor and the permission was granted after following the rules and regulations applicable at that time.”

 As on the date of this article, many local authorities have not promulgated any bye-laws governing the grant of building licence and continue to utilise the provisions of the Zoning Regulations issued by the Local Planning Authorities. Although the zoning regulations are comprehensive regarding residential, industrial, commercial and public buildings, the regulations promulgated by the Local Planning Authorities do not adequately address constructions under the classification of ‘farm houses’.

In 2015, Local Planning Authorities in Karnataka promulgated similar zoning regulations for their respective zones. Most of these regulations only stipulate that a farm house shall be limited to 200 sq m  or 250 sq m in size depending on the total extent of land holding. The only other condition common to the zoning regulations is that the farm house shall be utilised by the farmer for his dwelling and shall not be utilised for any commercial purpose. It would be fair to assume that any person erecting a farm house would do so in a significantly large parcel of land and the stringent requirements governing buildings within city limits would be unnecessary and therefore, the zoning regulations are reasonably silent on additional rules regarding erection of farm houses.

Change in the legal position viz. legislative amendments

However, when the legal position stood as detailed above, the Karnataka Government promulgated the Karnataka Land Revenue (Amendment) Act, 2015[9] which amended Section 95-A of the Karnataka Land Revenue Act, 1961[10] which governed uses of agricultural land and inserted the following explanation;:

“… Provided that the farm building or farm house so erected shall not be more than ten percent of his holding subject to maximum of such extend of land as maybe prescribed.

Explanation. – For the purpose of this sub-section “Farm Buildings” or “farm house” means a house attached to a farm and constructed in a portion of an agricultural land, used for the residence of the agriculturist or used for the purpose of keeping agricultural equipments and tethering cattle. The house shall be used by farmer for his own use and it shall not be let out for commercial activities to any individual or agency.”

The above amendment came into effect from 13th August, 2015 and in essence superseded the limitations of 200/250 sq m that was stipulated in the Zoning Regulations. The amendment would indicate that an ‘agriculturist/farmer’ can erect a farm building or structure that can be up to ten per cent of the size of the land held by him. This could theoretically mean that a farmer who owns ten acres of land could erect a building that is 43,000 sq  ft  without falling foul of the zoning regulations.

Thereafter, the Urban Development Department of Karnataka Government also promulgated a draft ‘Common Zonal Regulations, 2017’ that sought to replace all other zoning regulations formulated by the Local Planning Authorities. The draft common zoning regulations reduced the permissible construction area of a farm house to 100/150 sq m.[11] However, the said draft regulations were stayed by an order of the Karnataka High Court and the matter is presently pending before the High Court of Karnataka.[12]

Analysis of judicial pronouncements vis-à-vis the change in law

The Karnataka High Court considered the effect of the 2015 amendment to the Karnataka Land Revenue Act, 1961 in G.S. Siddaraju v. State of Karnataka[13] and held as under:

“11. It is thus clear that an agriculturist can erect building in his agricultural land for its more convenient use or better cultivation, provided such farm building or farm house so erected is not more than 10% of his holding subject to maximum of such extent of land as may be prescribed. No rule prescribing any maximum extent of land on which such building can be erected is brought to the notice of the Court. Therefore, the proviso which says that the farm building or farm house so erected shall not be more than 10% of his holding has to be kept in mind while examining whether the house constructed is in the nature of a farm house or it loses its characteristic feature of a farm house. In other words, if the farmer has got 10 acres of land, he cannot be found fault with for putting up construction utilising a bigger area in his agricultural land, say up to 1 acre provided he uses such construction for his own residence for the purpose of agricultural operations, tethering of cattle or for storing agricultural implements or products including for residence of himself and his family members, his servants and dependents.

*                                          *                                             *

  1. Merely because the construction put up is a bigger one, it cannot be held that the construction loses the characteristic of a farm building unless it falls within the mischief of proviso to sub-section (1) of Section 95 of the Act which states that such farm building or farm house erected shall not be more than 10% of his holding or that it does not satisfy the explanation appended to sub-section (1) of Section 95 of the Act which states that farm building or a farm house means a house attached to a farm and construction made in a portion of agricultural land, used for the residence of the agriculturist or used for the purpose of keeping agricultural equipments and tethering cattle or that the house shall be used by farmer for his own use and shall not be let out for commercial activities to any individual or agency.”

An analysis of this judgment demonstrates that the Court has applied the provisions of the Karnataka Land Revenue Act, 1961 enabling construction of farm houses to the extent of ten per cent of the land holding, even though the said provisions were in conflict with the zoning regulations that limited the size of construction of farm houses to only 200/250 sq m. In G.S. Siddaraju[14], the Karnataka High Court did not dwell into a discussion or analysis of the overruling clause that can be found in Section 76-M of the Karnataka Town and Country Planning Act, 1961. These judicial pronouncements therefore lead to a question as to whether Section 76-M of the Karnataka Town and Country Planning Act, 1961 operated only till the time when such provision was inserted or whether the provision continues to accord superiority to any and all further enactments promulgated by the Legislature after the dated on which Section 76-M was inserted into the Karnataka Town and Country Planning Act, 1961. The scope of operation of Section 76-M was considered by the Karnataka High Court in 1976 in  H.G. Kulkarni v.  Assistant Commissioner, Belgaum[15] wherein the Court observed:

17. We now turn to the only remaining contention of the petitioner, which has been outlined earlier. This contention turns on the over-riding effect given to the provisions of the Mysore (now Karnataka) Town and Country Planning Act, 1961 by Section 76-M therein, the relevant portion whereof reads:

“Effect of other Laws—(1) Save as provided in this Act, the provisions of this Act and the rules, regulations and bye-laws made thereunder shall have effect notwithstanding anything inconsistent herewith contained in any other law.

(2) *                           *                               *”

                                                                                            (emphasis supplied)

A similar provision is also to be found in the Act with which we are here concerned. It is Section 47 which reads:

“Effect of provisions inconsistent with other laws.—The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law.”

                                                                                     (emphasis supplied)

  1. The question is which of the above two provisions should prevail. The relevant principle governing the effect to be given to two such conflicting provisions has been stated in Craics on Statute Law, Sixth Edn. at p. 349, thus:

“….And it appears to be a constitutional necessity as well as an established rule of construction that the last utterances of the legislature should prevail over earlier statutes inconsistent with it;….”

  1. Viewed in the light of the above principle, it would be clear that the provisions of Section 47 of the Act must be given overriding effect vis- à-vis the provisions of the Karnataka Town and Country Planning Act, as the former Act being of the year 1966, was later than the other Act which was of the year 1961. But it was faintly suggested that when the legislature enacted Section 76-M of the Town and Country Planning Act, it had intended that it should have effect over all future legislation also. This contention is without substance as a legislature cannot impose fetters on itself in regard to the exercise of its legislative power in future, and even if it does, it would not be binding on it. Hence all the contentions fail.”

Therefore, the law regarding interpretation of statutes is clear to the extent that the last iteration of the legislature should prevail over earlier statutes that are inconsistent with it.

However, this position and the judgment in H.G. Kulkarni[16] was not directly considered by the Karnataka High Court whilst pronouncing the judgment in Dhammangi Developers Pvt.  Ltd.[17] since no direct conflict with Section 76-M of the Karnataka Town and Country Planning Act emerged. In Dhammangi Developers[18], the Court observed that on the basis of the facts in that case, since the regulations under the Fire Force Act, 1964 were made applicable only after the sanctioned plan was granted to the petitioner, Section 76-M would prevail over any further regulation. It could therefore be construed that Section 76-M would prevail over any inconsistencies to the zoning regulations. However, principles of statutory interpretation indicate that a later enactment must take precedence over any previous enactments in the event of any direct conflict. It is therefore a logical conclusion that a farm house can be constructed without any regulations subject to the total area being within ten per cent of the total land holdings.

Conclusions and ground realities

The evolution of the law in this regard reveals an unresolved conflict between the provisions of the Town and Country Planning Act, 1961 and the Karnataka Land Revenue Act, 1961. The zoning regulations framed thereunder do not adequately regulate any constructions on farm lands. Since the limitation on non-agriculturists purchasing farmlands has been lifted through the Karnataka Land Reforms (Amendment) Ordinance, 2020, the instances of farm lands being utilised to erect large structures will increase, resulting in disproportionate growth outside the city. The legal vacuum thus created will also have a detrimental effect of fertile agricultural lands being utilised to erect large residential structures. The Gram Panchayats governing the rural areas on the outskirts of the city do not have any formal mechanism where a building permit is granted for construction of a farm house. The Gram Panchayats generally issue a NOC on the basis of a simple sketch provided for construction of farm house. History reveals that when land use is unregulated, the citizens seek to construct buildings on every inch of usable space without having any regard to the use of land, environmental factor and other ramifications of large constructions. The situation requires immediate legislative correction in the form of specific regulations to address constructions on unconverted agricultural land and any such regulation must endeavour the misuse of agricultural lands in a nation that is primarily agricultural.


*Advocate, GDroit, Advocates, Bangalore. Author can be reached at gautamaditya@gdroit.com

[1] The Karnataka Land Reforms (Amendment) Ordinance, 2020; (Karnataka Ordinance No. 13 of 2020)

[2] The Karnataka Land Reforms Act, 1961 (Karnataka Act No. 10 of 1962)

[3] The Karnataka Town and Country Planning Act, 1961 (Karnataka Act No. 11 of 1963)

[4] The Karnataka Municipal Corporations Act, 1977( Karnataka Act No. 14 of 1977)

[5] The Karnataka Municipalities Act, 1964 (Karnataka Act No. 22 of 1964)

[6] The Karnataka Panchayat Raj Act, 1993 (Karnataka Act No. 14 of 1993)

[7]Yashodha Rao v. Bruhat Bangalore Mahanagara Palike, 2012 SCC OnLine Kar 8891

[8]Dhammangi Developers Pvt. Ltd. v. Additional Director (Town Planning), Bruhat Bangalore Mahanagara Palike; 2012 SCC OnLine Kar 9081

[9] The Karnataka Land Revenue (Amendment Act), 2015( Karnataka Act No. 31 of 2015)

[10] The Karnataka Land Revenue Act, 1964 (Karnataka Act No. 12 of 1964)

[11] Regulation 3.1.8(a)(G) of the Common Zonal Regulations for all Local Planning Areas, 2017 available at http://www.dtcp.gov.in/sites/dtcp.gov.in/files/pdfs/czr_draft_gazettee_notification.pdf

[12] Citizens Action Forum v. The State of Karnataka, WP No. 38165 of 2017, order dated 7-9-2020

[13]G.S. Siddaraju v. State of Karnataka; 2016 SCC OnLine Kar 8430

[14]Ibid

[15]H.G. Kulkarni v.  Assistant Commissioner, Belgaum, 1976 SCC OnLine Kar 15

[16]Ibid

[17]Id. at Note 8

[18] Id.

Legislation UpdatesNotifications

Central Government hereby declares that whole of the State of Nagaland to be ‘disturbed area’ for a period of six months with effect from 30-12-2020 for the purpose of Armed Forces (Special Powers) Act, 1958.

Read the notification, here: NOTIFICATION.


Ministry of Home Affairs

[Notification dt. 30-12-2020]

Legislation UpdatesNotifications

S.O. 4638(E)— In exercise of the powers conferred by Section 10A of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies further period of three months from the 25-12-2020, for the purposes of the said section.


Ministry of Corporate Affairs

[Notification dt. 22-12-2020]

Legislation UpdatesNotifications

S.O. 4646(E).—In exercise of the powers conferred by Section 1 (2) of the Companies (Amendment) Act, 2020 (29 of 2020), the Central Government hereby appoints the 21-12-2020 as the date on which the following provisions of the said Act shall come into force, namely:-

S. No. Sections
1. Section 1;

 

2 Section 3;

 

3 Sections 6 to 10 (both inclusive);

 

4 Sections 12 to 17 (both inclusive);

 

5 Clauses (a) and (b) of section 18;

 

6 Sections 19 to 21 (both inclusive);

 

7 Clause (i) of section 22;

 

8 Section 24;

 

9 Section 26;

 

10 Sections 28 to 31 (both inclusive);

 

11 Sections 33 to 39 (both inclusive);

 

12 Sections 41 to 44 (both inclusive);

 

13 Sections 46 to 51 (both inclusive);

 

14 Section 54;

 

15 Section 57;

 

16 Section 61; and

 

17 Section 63.

 


Ministry of Corporate Affairs

[Notification dt. 21-12-2020]

Legislation UpdatesNotifications

Central Government exercising the powers conferred by sub-section (3) of Section 1 of the Code of Wages, 2019 read with Section 14 of the General Clauses Act, 1897 appoints the date of publication of this notification in the Official Gazette as the date on which the following provisions of the said Code shall come into force, namely:-

SI. No. Provisions of the Code
1. sub-sections (1), (2), (3), (10) and (11) of section 42 (to the extent they relate to the Central Advisory Board);
2. clauses (s) and (t) of sub-section (2) of section 67 (to the extent they relate to the Central Advisory Board);
3. Section 69 [to the extent it relates to Sections 7 and 9 (to the extent they relate to the Central Government) and section 8 of the Minimum Wages Act, 1948 (11 of 1948)].

Read the Gazette here:  223800


Ministry of Labour and Employment

[Notification dt. 18-12-2020]


Also Read:

Centre notifies draft Code on Wages (Central) Rules, 2020 and invites objection and suggestions

Code on Wages Bill, 2019 received President’s assent — The Code on Wages, 2019 to be enacted

Rajya Sabha Passes The Code on Wages Bill, 2019

Lok Sabha Passes the Code on Wages Bill, 2019

Cabinet approves Code on Wages Bill

Legislation UpdatesStatutes/Bills/Ordinances

Ministry of Ports, Shipping and Waterways has circulated a draft of Indian Ports Bill 2020 for public consultation which will repeal and replace the Indian Ports Act, 1908 (Act No. 15 of 1908)

The draft Indian Ports Bill, 2020, seeks to, inter alia, enable the structured growth and sustainable development of ports to attract investments in the Port sector for optimum utilisation of the Indian Coastline effective administration and management of ports. The proposed Bill will provide measures to facilitate conservation of ports, taking into account the prevalent situation with respect to the high number of non-operational ports. It shall further ensure greater investment in the Indian maritime and ports sector through the creation of improved, comprehensive regulatory frameworks for the creation of new ports and management of existing ports.

The Bill also seeks to, inter alia, create an enabling environment for the growth and sustained development of the ports sector in India through the following broad methods:

  1. Constitution of Maritime Port Regulatory Authority
  2. Formulation of the National Port policy and National Port plan in consultation with Coastal State Governments, State Maritime Boards and other stakeholders.
  3. Formulation of specialised Adjudicatory Tribunals namely Maritime Ports Tribunal and Maritime Ports Appellate Tribunal to curb any anti-competitive practises in the port sector and act as a speedy and affordable grievance redressal mechanism.

The up-to-date provisions of the proposed Bill would ensure safety, security, pollution control, performance standards and sustainability of Ports. The Bill ensures that all up-to-date conventions /protocols to which India is a party, are also suitably incorporated. This will promote marine safety and security in the true sense. The Bill will fill up the gaps for achieving scientific development of Ports and Port Network.

The Bill seeks to provide increased opportunities for public and private investments in the Indian maritime and ports sector by way of removing barriers to entry, simplifying processes and establishment of agencies and bodies to plan and enable the growth of the ports sector. Enhancing “Ease of Doing Business’, it will provide greater impetus to a self-reliant domestic investment climate in the maritime sector, towards Atamanirbhar Bharat initiatives of the Government.

Minister of State (I/C)Ministry of Ports, Shipping and Waterways, Shri Mansukh Mandaviya, said, “We are working on the creation of a National Port Grid. This Bill will be a game-changer in the Indian maritime sector especially for bringing more investments. the bill will bolster structured growth and sustained development of Ports and ensure achieving this objective on a fast track basis. Consequently, it will result in revolutionary maritime reforms transmuting the Indian maritime set-up entirely in the times to come.”

The draft of Indian Ports Bill 2020 is issued for public consultation for seeking the feedback and suggestions. This can be accessed on the link http://shipmin.gov.in/sites/default/files/IPAbill.pdf and suggestions can be sent to sagar.mala@nic.in by 24 December 2020.


Ministry of Ports, Shipping and Waterways

[Press Release dt. 11-12-2020]

[Source: PIB]

Legislation UpdatesRules & Regulations

Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2020

The Central Government makes the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2020, to amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.

In the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, in rule 6, in clause (a), after the third proviso, the following proviso shall be inserted, namely:-

Provided also that a Multilateral Bank or Fund, of which India is a member, shall not be treated as an entity of a particular country nor shall any country be treated as the beneficial owner of the investments of such Bank or Fund in India

In Schedule 1 of the rules,  for the Defence sector, Centre notifies that the Defence Industry subject to Industrial license under the Industries (Development and Regulation) Act, 1951 and Manufacturing of small arms and ammunition under the Arms Act, 1959, the Sectoral Cap will be 100% and Entry Route in case of Automatic up to 74% and Government route beyond 74% wherever it is likely to result in access to modern technology or for other reasons to be recorded.

Read the detailed notification, here: NOTIFICATION


Ministry of Finance

[Notification dt. 08-12-2020]

Legislation UpdatesNotifications

Ministry of Road Transport and Highways has invited suggestions and comments from the public and all stakeholders on the proposed amendment to the Central Motor Vehicles Rules, 1989 to facilitate the owner of the vehicle for nominating a person (Nominee in RC). The draft notification GSR 739 (E) dated 26th November 2020 has been published by the Ministry.

Nomination facility is proposed to be incorporated at the time of registration of the vehicles. This would help the motor vehicle to be registered/transferred in the name of the nominee, in case of the death of the owner of the vehicle. The process is otherwise cumbersome and non-uniform across the country.

The amendments proposed in the Central Motor Vehicles Rule, 1989 are as under:-

(a) Rule 47. Application for registration of motor vehicles:- An additional clause is proposed to be inserted wherein “proof of identity of nominee, if any” to enable the owner to nominate anyone to be the legal heir of the vehicle in case of death.

(b) Rule 55. Transfer of ownership:- In sub-rule (2), it has been proposed that an additional clause may be inserted wherein “proof of identity of nominee, if any” to enable the owner to nominate anyone to be the legal heir of the vehicle in case of death.

(c) Rule 56. Transfer of ownership in case of death:- (i) In sub-rule (2), which is regarding the process to transfer the vehicle to the legal heir in case there is no nominee has been specified by the registered owner, it is proposed that An additional clause may be inserted wherein “proof of identity of nominee, if any” to enable the owner to nominate a nominee.

(d) A new sub-rule for insertion wherein it has been proposed that in the case where the nominee is already specified, the vehicle will be transferred in the name of nominee and nominee will have to upload the death certificate on the portal to inform the registering authority and apply for a new certificate of registration in his name through the portal which will be faceless if Aadhaar authentication is chosen by the nominee. For Change in Nominee in Contingency, it is proposed the possibility of change in nominee in case of any contingency arising out of special circumstances viz., divorce, division of property, transfer of assets without sale may be arrived at with an agreed Standard Operating Procedure (SOP) for such nomination, which may be done by such owners.

(e) Rule 57. Transfer of ownership in case vehicle is purchased in public auction:- In sub-rule (1) which is regarding the application for registration of motor vehicles, An additional clause may be inserted wherein “proof of identity of the nominee, if any” to enable the owner to nominate anyone to be the legal heir of the vehicle in case of death.

(f)  Amendment of FORM 20, Form 23 A, 24, 30, 31 and 32 has also been proposed for amendment to include details of the nominee and the declaration from the registered owner for entering the details of the nominee.

Certificates/orders issued by SDM/DM/Tribunals/ Courts may also be used for facilitating this citizen-friendly service and such window would be made available in the proposed amendment.

Objections and suggestions to these draft rules, if any, may be sent to the Joint Secretary (MVL), email: director-morth@gov.in, Ministry of Road Transport and Highways, Transport Bhawan, Parliament Street, New Delhi-110 001 within 30 days of date of notification.


Ministry of Road Transport & Highways

[Press Release dt. 27-11-2020]

Hot Off The PressNews

Editors Guild of India urges Chief Minister of Kerala to withdraw disturbing amendment to Kerala Police Act 118 A immediately, which provides for up to three years of punishment for publication of material with an intention to intimidate, insult, or defame any person through social media.

Although Government has placed the amendment on hold until discussed by the state assembly and has given an assurance to Kerala High Court that the state police will no take any adverse actions, but the ordinance is still in force and has the potential for grave misuse and should be withdrawn forthwith.

The amendment to the Kerala Police Act would deeply hurt the cause of free speech and freedom of press as it gives unbridled powers to the police to target political opposition and the press in the name of monitoring content on social media.

Editor Guil reiterates immediate withdrawal of this section 118 A of the Police Act.


Editors Guild of India

[Press Release dt. 24-11-2020]

COVID 19Legislation UpdatesNotifications

Central Government directs that the National Institute of Biologicals, Noida shall along with existing functions perform the function of Central Drugs Laboratory as an additional facility in respect of COVID-19 vaccine and the functions of the Director in respect of COVID-19 vaccine shall be exercised by the Director of the said Institute.

What does the Notification states?

S.O. 4206(E)— Whereas, there has been an outbreak of COVID-19 pandemic in India and worldwide;

Whereas, the Central Government is satisfied that making available suitable COVID-19 vaccines is essential to meet the requirements of emergency arising due to the pandemic COVID-19 and, therefore, in public interest, it is necessary and expedient to regulate the testing of COVID-19 vaccine for prevention and management of COVID-19 infection;

Whereas, the Central Government, in consultation with the Drugs Controller (India), is of the considered view that the supply of COVID-19 vaccine must not get affected and the vaccine must remain available to the public;

Now, therefore, in the exercise of the powers conferred by sections 6 and 26B read with section 33P of the Drugs and Cosmetics Act, 1940 (23 of 1940) and rule 3 of the Drugs and Cosmetics Rules, 1945, the Central Government, hereby directs that the National Institute of Biologicals, Noida, in addition to its existing functions shall perform the function of Central Drugs Laboratory as an additional facility in respect of COVID-19 vaccine and the functions of the Director in respect of COVID-19 vaccine shall be exercised by the Director of the said Institute.

2. In case of any inconsistency between this notification and any rule made under the said Act, the provisions of this notification shall prevail over such rule in public interest so as to meet the requirements of emergency which have arisen due to COVID-19 pandemic.

3. This order shall come into force on the date of its publication in the Official Gazette.

4. The notification shall remain into force for a period upto 30th November, 2021.

NOTIFICATION


Ministry of Health and Family Welfare

[Notification dt. 24-11-2019]