Case BriefsHigh Courts

Chhattisgarh High Court: Rajendra Singh Samant, J., dismissed the petition being devoid of merits.

The facts of the case are such that the applicant was charge-sheeted for trial in offence under Sections 13(1)(e) read with 13(2) of Prevention of Corruption Act which was challenged before this Court and was disposed off vide directions to receive the passbooks of the bank accounts, which were under seizure nut will not be able to operate the bank accounts, as there is no specific direction of the Special Court for operation of the accounts. The instant Criminal Revision was filed challenging the legality, propriety and correctness of this order by Special Judge (Prevention of Corruption Act), Raipur, by dismissing the prayer of the applicant to defreeze the bank account, which has been seized by the respondent.

Counsel for the petitioners Mr Kishore Bhaduri and Sunny Agrawal submitted that the prohibitory order of the respondent regarding operation of the bank account is uncalled for in the present situation, hence, it is prayed that the revision petition may be allowed and the impugned order may be set aside and relief be granted to the applicant.

Counsel for the respondent Mr Adil Minhaj submitted that the amount in the bank accounts can be regarded as property under seizure has been acquired unlawfully, cannot be allowed to be disbursed or disposed when the charge sheet has been filed and the prosecution has not come to an end.

The Court relied on judgment State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685 wherein it was held as under

“Then again the time consumed by the Courts in concluding the trials is another factor which should be borne in mind in  interpreting the provisions of Section 102 of the Criminal Procedure Code and the underlying object engrafted therein, inasmuch as if there can be no order of seizure of the bank account of the accused then the entire money deposited in a bank which is ultimately held in the trial to be the outcome of the illegal gratification, could be withdrawn by the accused and the Courts would be powerless to get the said money which has any direct link with the commission of the offence committed by the accused as a public officer. We are, therefore, persuaded to take the view that the bank account of the accused or any of his relation is `property’ within the meaning of Section 102 of the Criminal Procedure Code and a police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence for which the police officer is investigating into.”

The Court observed that the money in the bank account may be regarded as a property and the seizure of such property on suspicion that it is connected with commission of offence held as property within the meaning of Section 102 of Criminal Procedure Code i.e. Cr.PC and the police officer also has power to prohibit the operation of such account, if such assets have linkages with the commission of offence.

The Court thus held that there is a clear conclusion of the Investigation Agency against the applicant that he has amassed wealth, acquired assets, which are disproportionate to his income “…and the prosecution against the applicant is under contemplation by the respondent side, therefore, no order can be passed to defreeze the bank accounts, which have been seized from this applicant.”

In view of the above, the instant petition was dismissed and disposed off.[Ramesh Kumar Sharma v. State of Chhattisgarh, 2021 SCC OnLine Chh 902, decided on 12-04-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Bombay High Court: R.D. Dhanuka, J., held that relinquishment of properties held by the legal heirs of a person whose properties were self-acquired properties would enure only for those persons in whose favour such deed of relinquishment was executed.

The First Appeal was filed under Section 96 of the Code of Civil Procedure, 1908.

Respondents (original plaintiffs) case was that the suit properties were the self-acquired properties of Late Shripad Pandit who was the grandfather of the respondents. The said properties were purchased in the name of Late Smt. Usha was the wife of Shripad Pandit and the grandmother of the respondents.

Appellants (original defendants) are the uncles of the respondents (original plaintiffs). Father of the respondents expired and after his death, the mother of the respondents who were defendant 4 got re-married.

Respondents stated that the deceased Usha Pandit and Shripad Pandit had four sons and four daughters. After their demise, each son and daughter had 1/8th share therein. Sisters of appellant1 to 3 relinquished their undivided share in the suit property by a registered release deed and thus had no right, title and interest of any nature in the suit property.

Trial Judge declared that the appellants and respondents 1 to 3 were having 1/4th share each in units/apartments reserved for their joint family. It was further held that respondents 1 to 3 (original plaintiffs) are entitled for partition, separate possession of their 1/4th share in the suit property. Court restrained the appellants permanently from creating third party interest to the extent of 1/4th share of respondents 1 to 3 in the suit property and directed that partition of 1/4th share of respondents 1 to 3 effected by appointing Court Commissioner and separate possession of their share be given to them.

In view of being affected with the trial court judgment, appellants filed the present appeal.

Analysis and Decision

A perusal of the judgment and decree passed by the Trial Court indicates that the trial Court though had rendered a finding that the suit properties were inherited by the parties had rendered perverse finding that the suit properties were co-parcenary properties and release deed executed by the sisters of the appellants were for the benefit of all the members of the family and not only the appellants.

Trial Judge strongly placed reliance on the judgment of the Andhra Pradesh High Court in the case of M. Krishna Rao v. M. L. Narasikha Rao, 2003 SCC OnLine AP 526 & L. Sundaram and Ravichandran v. Lakshmanana (died)2003 (1) Mh. LJ. 195, held that relinquishment of the right and interest by the daughters of Shri Shripad Pandit and Usha was in favour of the entire family and not in favour of the appellants only.

Co-Parcenary & Not Self Acquired | Erroneous

Trial Judge erroneously proceeded on the premise that the Deed of Release by four daughters of Shripad Pandit in favour of the appellants were co-parcenary properties and not his self-acquired properties.

Bench relied on the decision of the Supreme Court in Kishore Tulshiram Mantrim v. Dilip Jank Mantri,  Second Appeal No. 374 of 2018 decided on 14-8-2018 and opined that the suit properties were self-acquired properties of the deceased Shripad Pandit, all the legal heirs of the said deceased were entitled to equal share including the four daughters of the said deceased who were sisters of the appellants. The daughters of the said deceased thus were free to relinquish their undivided share in the suit property in favour of the other legal heirs of the said deceased exclusively.

Relinquishment of properties inherited by the legal heirs of the person whose properties were self-acquired properties would not enure for the benefit of all the legal heirs of the said deceased but would enure only for those persons in whose favour such deed of relinquishment/release was executed.

 In the present matter, Trial Judge erroneously applied the principles applicable to the relinquishment of undivided share by a coparcener in favour of another coparcener to the properties inherited by the legal heirs of a deceased whose properties were self-acquired.

A perusal of the release deed which was produced on record in evidence executed by the four daughters of the said deceased i.e. Pushpalata, Bharti, Hemlata and Varsha clearly show that they had released all their undivided share right, title and interest in the suit property in favour of the appellant exclusively. Hence respondents 1 to 3 would be entitled to only 1/8th share in the suit property and not 1/4th share. [Shashikant Shripad Pandit v. Kaustubh Subhash Pandit, 2020 SCC OnLine Bom 309, decided on 25-02-2020]


Advocates before the Court:

Girish R. Agrawal for the appellants.

Jaydeep Deo for the respondents 1 to 3

Case BriefsHigh Courts

Madras High Court: N. Anand Venkatesh, J., while addressing a matter expressed that:

“…a transaction hit by lis pendens would not result in the same being rendered void or illegal or of no effect. It will only be subject to the result of the litigation and the purchaser would be bound by the same.”

The instant case was with regard to the property originally belonging to a partnership firm which was subsequently dissolved and the same was said to have been vested on the de facto complainant by virtue of decree. Thereafter the building in the property was demolished to put up new construction and a joint venture agreement was also entered into with a developer.

But since the agreement did not go through the property continued to be vacant.

Prosecution’s case was that the petitioner’s vendor had trespassed into the property and had created documents and managed to obtain a patta.

Petitioner knew about the dispute between the parties and the pending criminal case against the vendor, yet they entered into the sale agreements and agreed to purchase properties including the property belonging to respondent 2. Ultimately, a registered sale Deed was executed in favour of the petitioners by undervaluing the property, after which the petitioners started taking steps to take possession of the property and on coming to know of the same, respondent 2 gave a complaint on the basis of which an FIR was registered against the vendor and petitioners.

Analysis and Decision

Bench noted that the petitioners came into the scene in 2016 when they entered into a sale agreement with the vendor Mr Iqbal. On agreeing to purchase certain items of properties which also included the subject property for a total sale consideration of Rs 4 crores.

Further, it was seen that out of the total sale consideration of Rs 4 crores, more than ninety percent of the sale consideration has been paid by way of RTGS transfer from the bank account maintained by the Petitioners. Thereafter, the patta has also been transferred in favour of the Petitioners. That apart, there was also a name transfer by the Corporation in the property tax records from the name of Mr Iqbal to the names of the Petitioners, respectively.

FIR was registered for the offences of making a false document and cheating. Without undertaking the exercise of a mini investigation, it had to be seen whether the offence was made out against the petitioners or not?

Dispute was with regard to the right and title over the subject property between respondent 2 and the vendor of the petitioners.

Vendor of the petitioners was positively claiming a right and title over the subject property and he believed that he was the owner of the property.

Further, it was observed that at the time when the sale deed was executed, in favour of the

Petitioners, and at the time when the parties entered into an agreement of sale, the suit filed by the 2nd Respondent had been dismissed for default, hence no compelling material was available that could have prevented the petitioners from purchasing the subject property.

Property was free from any encumbrance after it was purchased by Mr Iqbal in the year 2010.

It is now a well-settled position of law that even when a document is executed by a person claiming a property which is not his, that does not by itself satisfy the requirements of a false document as defined under Section 464 IPC. If it does not satisfy the requirements of Section 464 IPC, there is no forgery and if there is no forgery, automatically neither Section 467 nor Section 471 IPC will be attracted. 

For the above position of law, Supreme Court referred to the decision in Mohd. Ibrahim v. State of Bihar, (2009) 8 SCC 751, Sheila Sebastian v. R. Jawaharaj, 2018 (3) MLJ (Crl) 39.

Even in the extreme case of branding the Petitioners as speculative buyers of the subject property, knowing fully well about the dispute in title over the subject property, that by itself does not amount to an offence of cheating, forgery and making of false document.

Allegations made by respondent 2 did not make out any offence against the petitioners and the continuation of investigation against the petitioners would be an abuse of process of law, which requires interference of the Court.

Hence in view of the above discussion, present petition was allowed.[Dr Subba Somu v. Inspector of Police, 2021 SCC OnLine Mad 877, decided on 01-03-2021]


Advocates who appeared before the Court:

For Petitioners: Mr ARL. Sundaresan, Senior Counsel and Mr R. Umasuthan

For 1st Respondent: Mr A. Natarajan, State Public Prosecutor for R1

Asstd: by Mr M/Mohamed Riyaz Additional Public Prosecutor

Mr G. Mohanakrishnan Mr S. Janarthanan for R 2

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of AM Khanwilkar*, Indi Malhotra and Ajay Rastogi has held that the condition predicated in Section 31 of the Foreign Exchange Regulation Act, 1973 of obtaining “previous” general or special permission of the RBI for transfer or disposal of immovable property situated in India by sale or mortgage by a person, who is not a citizen of India, is mandatory.

“Until such permission is accorded, in law, the transfer cannot be given effect to; and for contravening with that requirement, the concerned person may be visited with penalty under Section 50 and other consequences provided for in the 1973 Act.”

The important question to be decided before the Court was whether transaction specified in Section 31 of the 1973 Act entered into in contravention of that provision is void or is only voidable and it can be voided at whose instance.

Object of the Statute

1973 Act was brought into force to consolidate and amend the law relating to certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import and export of currency, for the conservation of the foreign exchange resources of the country and the proper utilisation thereof in the interests of the economic development of the country.

Object of Section 31

While introducing the Bill in the Lok Sabha and explaining the object of Section 31 of the 1973 Act,  Mr. Y.B. Chavan, the then Minister of Finance stated:

“As a matter of general policy it has been felt that we should not allow foreign investment in  landed property/buildings constructed by foreigners and foreign controlled companies as such investments offer scope for considerable amount of capital liability by way of capital repatriation. While we may still require foreign investments in certain sophisticated branches of industry, there is no reason why we should allow foreigners and foreign companies to enter real estate business.”

The object of Section 31 of the 1973 Act was thus to minimise the drainage of foreign exchange by way of repatriation of income from immovable property and sale proceeds in case of 16 disposal of property by a person, who is not a citizen of India.  Section 31, hence, puts restriction on acquisition, holding and disposal of immovable property in India by foreigners – non citizens.

Absence of explicit mention of failure to seek previous permission

It is true that the consequences of failure to seek such previous permission has not been explicitly specified in the same provision or elsewhere in the Act, but then the purport of Section 31 must be understood in the context of intent with which it has been enacted, the general policy not to allow foreign investment in landed property/buildings constructed by foreigners or to allow them to enter into real estate business to eschew capital repatriation, including the purport of other provisions of the Act, such as Sections 47, 50 and 63.

Section 47

Sub-Section (1) clearly envisages that no person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of the 1973 Act or of any rule, direction or order made thereunder.  What is significant to notice is that sub¬Section (2) declares that the agreement shall not be invalid if it provides that thing shall not be done without the permission of the Central Government or the RBI.  That would be the implied requirement of the agreement in terms of this provision.

In other words, though ostensibly the agreement would be a conditional one made subject to permission of the Central Government or the RBI, as the case may be and if such term is not expressly mentioned in the agreement, it shall be an implied term of every contract governed by the law — of obtaining permission of the Central Government or the RBI before doing the thing provided for in the agreement.

In that sense, such a term partakes the colour of a statutory contract. Notably, Section 47 of the 1973 Act applies to all the contracts or agreements covered under the 1973 Act, which require previous permission of the RBI.

Section 50

Section 50 reinforces the position that transfer of land situated in India by a person, who is not a citizen of India, would visit with penalty. Indeed, inserting such a provision does not mean that the 1973 Act is a penal statute, but is to provide for penal consequence for contravention of provisions, such as Section 31 of the 1973 Act.

Section 63

Section 63 of the 1973 Act empowers the court trying a contravention under Section 56 which includes one under Section 51 of the 1973 Act, to confiscate the currency, security or any other money or property in respect of which the contravention has taken place. The expression “property” in Section 63, takes within its sweep immovable property referred to in Section 31 of the 1973 Act.

Effect of reading Section 31 with Sections 47, 50 and 63 

“The requirement specified in Section 31 is mandatory and, therefore, contract or agreement including the gift pertaining to transfer of immovable property of a foreign national without previous general or special permission of the RBI, would be unenforceable in law.”

From the analysis of Section 31 of the 1973 Act and upon conjoint reading with Sections 47, 50 and 63 of the same Act, we must hold that the requirement of taking “previous” permission of the RBI   before executing the sale deed or gift deed is the quintessence; and failure to do so must render the transfer unenforceable in law.

“The dispensation under Section 31 mandates “previous” or “prior” permission of the RBI before the transfer takes effect.  For, the RBI is competent to refuse to grant permission in a given case. The sale or gift could be given effect and taken forward only after such permission is accorded by the RBI. There is no possibility of ex post facto permission being granted by the RBI under Section 31 of the 1973 Act.”

Before grant of such permission, if the sale deed or gift deed is challenged by a person affected by the same directly or indirectly and the court declares it to be invalid, despite the document being registered, no clear title would pass on to the recipient or beneficiary under such deed. The clear title would pass on and the deed can be given effect to only if permission is accorded by the RBI under Section 31 of the 1973 Act to such transaction.

“Merely because no provision in the Act makes the transaction void or says that no title in the property passes to the purchaser in case there is contravention of the provisions of Section 31, will be of no avail. That does not validate the transfer referred to in Section 31, which is not backed by “previous” permission of the RBI.”

In light of the general policy that foreigners should not be permitted/allowed to deal with real estate in India; the peremptory condition of seeking previous permission of the RBI before engaging in transactions specified in Section 31 of the 1973 Act and the consequences of penalty in case of contravention, the transfer of immovable property situated in India by a person, who is not a citizen of India, without previous permission of the RBI must be regarded as unenforceable and by implication a prohibited act. That can be avoided by the RBI and also by anyone who is affected directly or indirectly by such a transaction. There is no reason to deny remedy to a person, who is directly or indirectly affected by such a transaction.  He can set up challenge thereto by direct action or even by way of collateral or indirect challenge.

“In other words, until permission is accorded by the RBI, it would not be a lawful contract or agreement within the meaning of Section 10 read with Section 23 of the Contract Act. For, it remains a forbidden transaction unless permission is obtained from the RBI. The fact that the transaction can be taken forward after grant of permission by the RBI does not make the transaction any less forbidden at the time it is entered into. It would nevertheless be a case of transaction opposed to public policy and, thus, unlawful.”

[Asha John Divianathan v. Vikram Malhotra, 2021 SCC OnLine SC 147, decided on 26.02.2021]


*Judgment by: Justice AM Khanwilkar

Know Thy Judge| Justice AM Khanwilkar

Appearances before the Court by:

For appellant: Advocate Navkesh Batra

For respondent: Senior Advocate C.A. Sundram

Case BriefsHigh Courts

Madhya Pradesh High Court: Rohit Arya, J., dismissed a revision petition which was filed after the dismissal of Petitioner’s application under Order 7 Rule 11 CPC.

The respondent/wife and three children were plaintiffs in the suit seeking relief that they were entitled to half share of the property managed by petitioner. Suit had been filed on the premise that marriage was solemnized between them 17 years ago, they were blessed with three children. Since October 2019 petitioner had ousted plaintiffs from the home and prior to that, he used to come home in a drunken state and picking up fights with his wife and also used to physically assault her. To add pain to the injury, he had also kept a lady with him by the name Pushpa and was living like husband and wife, gradually he started creating the third party right in the existing properties managed by him.

In the aforesaid backdrop of factual matrix, wife and children (now respondents) had filed the suit alleging mishandling of the property and alienation thereof to their prejudice with the assertion that they were entitled for their share in the property. The petitioner had in turn filed an application under Order 7 Rule 11 CPC styling himself to be the exclusive owner of the properties allegedly self-acquired by him.

The Trial Court had rejected the application under Order 7 Rule 11 CPC opining that only plaint averments were to be seen for deciding such an application, it further had held that the claim of share in the properties or right of succession were not pure questions of law instead they were mixed question of law and fact. Unless parties lead evidence in support of their pleadings, said questions could not be answered.

This Court while dismissing the revision held that the trial Court had applied correct principles of law while rejecting the application under Order 7 Rule 11 CPC and there was no illegality or jurisdictional error warranting interference under Section 115 of CPC.[Rajesh Vishwakarma v. Sapna Vishwakarma, 2021 SCC OnLine MP 388, decided on 19-02-2021]


Suchita Shukla, Editorial Assistant has put this story together

Case BriefsHigh Courts

Madhya Pradesh High Court: G.S. Ahluwalia, J., disposed of a writ petition setting aside the orders passed by the Board of Revenue and Additional Commissioner in relation to a matter of Will.

The petition contained that the husband of the petitioner had one-half share in the agricultural land bearing survey nos.1031 area 0.81 hectare, 1033 area 0.15 hectare, 1040 area 0.72 hectare, 1084 area 0.76 hectare total area 2.44 hectare situated in a village. The husband of the petitioner had died issue-less on 17-5-2006 due to illness. The respondents had then filed an application for mutation of their names on the basis of a “Will” purportedly executed by the deceased. The petitioner submitted her objection and claimed that she is the sole legal heir of deceased, being his legally wedded wife. After which the Tehsildar had rejected the application filed by the respondents, being aggrieved an appeal was filed before the Court of SDO which was again rejected. Finally respondent made n appeal before the Additional Commissioner which was allowed after relying upon the so called “Will” executed by deceased and the names of the respondents were directed to be mutated in the revenue records, aggrieved by which the petitioners had preferred an appeal before the Additional Commissioner which was dismissed. Thus, the instant appeal was filed.

The Court relied on the decision given in Ranjit v. Nandita Singh, MP No.2692 of 2020 which talked about the Conferral of Status of Courts on Board and Revenue Officers where it was clearly held that the revenue authorities have no jurisdiction to decide the correctness and genuineness of a “Will” and if the propounder of the “Will” wants to take advantage of the “Will”, then he had to get his title declared from the Civil Court of competent jurisdiction.

The Court while setting aside the orders passed by the Board of Revenue and Additional Commissioner directed that the revenue authorities restore the names of the petitioner in the revenue records.[Ramkali v. Banmali, 2021 SCC OnLine MP 359, decided on 17-02-2021]


Suchita Shukla, Editorial Assistant has put this story together.

Case BriefsForeign Courts

Supreme Court of the United States: Roberts, CJ., while addressing a matter with regard to artworks obtained by Nazis from Jewish art dealers with the usage of coercion, held that:

The phrase “rights in property taken in violation of international law,” as used in the Foreign Sovereign Immunities Act expropriation exception, refers to violations of the international law of expropriation and thereby incorporates the domestic takings rule.

The Foreign Sovereign Immunities Act provides that foreign nations are presumptively immune from the jurisdiction of United States Courts. One of the exceptions under the statute is:

a sovereign does not enjoy immunity in any case “in which rights in property taken in violation of international law are in issue.”

 The question to be considered in view of the above exception is: Whether a country’s alleged taking of property from its own nationals falls in the above exception?

 Factual Matrix

Present matter is in with regard to the dozen medieval relics and devotional objects known as the Welfnschatz. The pieces date back to the early days of the Holy Roman Empire and occupy a unique position in German History and culture.

The collection was assembled within Germany’s Brunswick Cathedral over the course of several centuries, before being moved to a Hanoverian chapel in 1671 and later to Switzerland for safekeeping in the wake of World War I.

During the waning years of the Weimar Republic, a consortium of three art firms owned by Jewish residents of Frankfurt purchased the Welfenschatz from the Duke of Brunswick. By 1931, the consortium had sold about half of the collection’s pieces to museums and individuals in Europe and the United States, including many to the Cleveland Museum of Art, where they reside today.

After ascending to power, Hermann Goering—Adolf Hitler’s deputy and the Prime Minister of Prussia—became interested in the remainder of the Welfenschatz.

Reasons for the Complaint filed and what does it allege?

It has been alleged in the complaint that Hermann Goering employed a combination of political prosecution and physical threats to coerce the consortium into selling the remaining pieces to Prussia in 1935 for approximately one-third of their value.

What happened to the consortium members and how are the respondents related to them?

Two of the consortium members fled the country following the sale, and the third died in Germany shortly thereafter.

Respondents are two United States citizens and a citizen of the United Kingdom who traces their lineages back to the three members of the consortium.

The United States took possession of the Welfenschatz in the course of the occupation of Nazi Germany at the end of the war, eventually turning the collection over to the Federal Republic of Germany.

For nearly 60 years, the treasure has been maintained by Stiftung Preussischer Kulturbesitz (SPK)—the Prussian Cultural Heritage Foundation—and it is now displayed at a museum in Berlin. SPK is an instrumentality of the Federal Republic.

SPK conducted an investigation on heirs approaching them claiming that the sale of the Welfenschatz to Prussian Government was unlawful. In the investigation, it was determined that the transaction occurred at a fair market price without coercion.

German Advisory Commission

Parties agreed to submit the claim to the German Advisory Commission for Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property.

Commission concluded after reviewing the witnesses and hearing from expert witnesses the sale had occurred at a fair price without duress.

Federal District Court in Washington, D.C.

Germany argued that it was immune from suit because the heirs’ claims did not fall within the FSIA’s exception to immunity for “property taken in violation of international law.”

Panel while agreeing with the heirs that the exception for property taken in violation of international law was satisfied because “genocide perpetrated by a state even against its own nationals is a violation of international law.”

Whether the sale of the consortium’s property was an act of genocide, because the expropriation exception is best read as referencing the international law of expropriation rather than of human rights. 

Bench recognized that ‘United States law governs domestically but does not rule the world.’ Kiobel v. Royal Dutch Petroleum Co., 569 U. S. 108, 115 (2013).

As a Nation, we would be surprised—and might even initiate reciprocal action—if a court in Germany adjudicated claims by Americans that they were entitled to hundreds of millions of dollars because of human rights violations committed by the United States Government years ago. There is no reason to anticipate that Germany’s reaction would be any different were American courts to exercise the jurisdiction claimed in this case.

Court found that none of the arguments submitted by the heirs could overcome the text, context and history of the expropriation exception.

Heirs could not show that the FSIA allows them to bring their claims against Germany.

Further, while concluding its decision, Supreme Court expressed as follows:

We hold that the phrase “rights in property taken in violation of international law,” as used in the FSIA’s expropriation exception, refers to violations of the international law of expropriation and thereby incorporates the domestic takings rule.

While vacating the decision of the  Court of Appeals for the D.C. Circuit, Bench remanded the case for further proceedings.[Federal Republic of Germany v. Philipp,  2021 SCC OnLine US SC 1, decided on 03-02-2021]

Case BriefsHigh Courts

Calcutta High Court: Sabyasachi Bhattacharya, J., reiterated the decision of Supreme Court in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542, regarding whether NCLT and Resolution Professional have jurisdiction to take control and custody of any asset except as subject to the determination of ownership by a court or authority.

“…the power of the resolution professional to take control of any asset, itself, is subject to the determination of ownership by a court or authority.”

Factual Matrix

Kolkata Municipal Corporation filed the present petition challenging an order passed by the National Company Law Tribunal (NCLT) acting as Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 for handing over physical possession of the office premises.

KMC, in exercise of its authority under Sections 217-220 of the Kolkata Municipal Corporation Act, 1980, had distrained the said property in the recovery of municipal tax dues from an assessee.

Debt of the assessee came within the purview of a Corporate Insolvency Resolution Process (CIRP), thus prompting respondent 4, the Resolution Professional, representing the owner of the asset, to approach the NCLT for handing over of such physical possession of the property-in-question from the KMC.

In view of the above, the instant petition was filed.

Questions that arise in the instant matter are:

  • Whether the writ jurisdiction of this court under Article 226 of the Constitution of India can be invoked in the matter, despite the availability of an alternative remedy;
  • Whether the property-in-question, having been seized by the KMC in recovery of its statutory claims against the debtor, can be the subject matter of a Corporate Resolution Process under the Insolvency and Bankruptcy Code, 2016.

While considering the first question, Bench referred to the decision of Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542, wherein it was held that, in so far as the question of exercise of the power conferred by Article 226, despite the distinction between lack of jurisdiction and the wrongful exercise of the available jurisdiction, should certainly be taken into account by High Courts, when Article 226 is sought to be invoked by passing a statutory alternative remedy provided by a special statute.

Petitioners urged that the NCLT and the Resolution Professional have no jurisdiction to take control and custody of any asset except as subject to the determination of ownership by a court or authority. KMC exercised its powers under Sections 217 to 220 of the 1980 Act to distraint the asset of the debtor and to attach the property, to be followed by sale in future, but the said exercise of power was argued to be beyond the purview of IBC. Resolution Professional and the NCLT acted de hors their statutory powers in seeking to take control and custody of the asset.

Hence, the challenge in the present petition was on the ground of absence of jurisdiction and not ‘wrongful exercise of the available jurisdiction’, thus bringing it within the fold of Article 226 of the Constitution. Therefore, petition is maintainable.

“…although a wrongful exercise of available jurisdiction would not be sufficient to invoke the High Court’s jurisdiction under Article 226 of the Constitution, the ground of absence of jurisdiction could trigger such invocation.”

Considering the second questions posed above, Bench stated that it would be particularly apt to consider the tests laid down by the Supreme Court in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542.

In the above-referred decision, while discussing Section 60(5)(c) of IBC, Supreme Court held, “…a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase “arising out of or in relation to the insolvency resolution”.

Further, the Court, while moving ahead in the analysis of the matter and reaching a conclusion expressed that there cannot be any doubt about the proposition that the contours of the powers conferred on the Adjudicating Authority, being the NCLT, under Section 60 of the IBC, are defined by the duties of the interim resolution professional under Section 18.

What is to be seen to examine the charter of the interim resolution professional is whether the assets, of which control and custody is sought to be taken by the professional, are sub judice before a court or authority for the purpose of “determination of ownership” thereof.

In the instant matter, petitioner proceeded with acquiring the possession of the property-in-question and putting up the same for attachment under its powers as flowing from Sections 217-220 of the 1980 Act.

The above-said provision envisages a situation where an amount of tax, for which a bill has been presented under Section 216 of the Act, is not paid within 30 days from the presentation thereof.

In view of the event, Municipal Commissioner may cause a demand notice to be served on the person for such liability and on the non-payment of such tax, petitioner shall under Section 219 of the 1980 Act issue a distress warrant, for distraint of the property. Further in the process, person charged with the execution of the warrant in the presence of two witnesses, makes an inventory of the property which he seizes under such warrant. Thereafter, steps are taken for disposal of such property, including attachment and sale.

KMC followed the above-laid procedure and took possession of the disputed property for non-payment of tax. Hence, there was no scope of any ‘determination’ of ownership of the property by the KMC. Thus, in view of the Supreme Court decision in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542  a finalised claim would come within the purview of “operational debt” under Section 5(21) of the IBC. Hence, the Resolution Professional has jurisdiction to take custody and control of the same.

Parameters of powers of the NCLT, as an Adjudicating Authority under Section 60 of the IBC, is defined and circumscribed by the scope of Section 18(f)(vi) of the IBC. Such exercise of power would fall within the ambit of the expression “arising out of or in relation to the insolvency resolution”, as envisaged in Section 60(5)(c) of the IBC.

Crown Debts

Referring to the decision of Supreme Court in Commr. of Income-tax v. Monnet Ispat Energy Ltd., [Special Leave to Appeal (C) No (S) 6438 of 2018], wherein it was held that income tax dues, being in the nature of crown debts do not take precedence even over secured creditors, Bench stated that the said proposition holds true in the present matter as well.

Hence, KMC’s claim being in the nature of crown debts, cannot gain precedence over other secured creditors, as contemplated in the IBC.

Therefore, in view of the Supreme Court decision in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542 Finalised claim of the KMC can very well be the subject-matter of a Corporate Resolution Process under the IBC.

Accordingly, the Court decided the above two questions in affirmative.[Kolkata Municipal Corpn. v. Union of India, 2021 SCC OnLine Cal 145, decided on 29-01-2021]


Advocates who appeared:

For Petitioners:

Ashok Kumar Banerjee, Sr. Adv.,

Rajdip Roy,
Anindya Sundar Chatterjee,
Goutam Dinda

For Respondent 3:

Jishnu Chowdhury,

Dilwar Khan,
Sondwip Sutradhar

For Respondent 4:

Rishav Banerjee,

Pronoy Agarwal,

Ankita Baid

Case BriefsHigh Courts

Delhi High Court: Mukta Gupta, J., quashed an FIR on noticing that the matter was being dragged only with the purpose of harassing one of the parties by the other.

In the instant petition, directions to respondent 2 were sought with regard to abiding the settlement terms arrived between the parties before the Delhi High Court Mediation and Conciliation Centre for quashing of FIR under Sections 406/420/467/468/471/506/120-B of Penal Code, 1860.

What were the allegations in the above-stated FIR?

FIR lodged by respondent 2 contained allegations that complainant’s father was the owner of a property and had given the said property on license basis to his real brother (R.N. Chopra) in light of his brother’s financial condition not being good.

Complainant’s father passed away in 2001 and later in 2010, the complainant came to India and requested the petitioners to vacate the property. But the petitioners refused to do the same. Further in the FIR, it was alleged that with the intention to cheat, the petitioners executed a sale deed in 2005, which was executed by the petitioner 2, as attorney of late R.N. Chopra in favour of respondent. However, the father of the complainant passed away on 29-07-2001, the said GPA was invalid.

Since respondent 2 was not coming forward and claimed further money on the ground that he had to undergo visits to India, for settling the matter, the parties were referred to mediation and on 28-09-2017, a settlement agreement was entered into between Satish Kumar Chopra and Ashok Kumar Sehgal, as first-party and Anil Chopra, as second party.

Respondent 2 did not deny the settlement and repeatedly did not appear before the Court. Every time his grievance has been that he requires to be paid more money as he had to spend money on the travel for the settlement.

Bench stated that since the matter has already been settled and respondent 2 has just been dragging his feet only to delay the quashing and to harass the petitioners, therefore, Court quashed the FIR in view of the settlement deed arrived at between the parties before the Delhi High Court Mediation and Conciliation Centre.

In view of the above discussion, the petition was disposed of. [Satish Kumari Chopra v. State, 2021 SCC OnLine Del 203, decided on 22-01-2021]


Advocates for the parties:

Petitioners: Gaganmeet Singh Sachdeva and H.S. Sachdeva, Advocates

Respondent: Rahul Mehra, Standing Counsel (Crl.) with Chaitanya Gosain, Advocate for State.

Rajeev K. Agarwal, Advocate for R-2.

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Anup Thakur (Presiding Member), held that a person who purchases a fully constructed real estate property (a Villa in the present case) with eyes wide open, cannot subsequently claim what all was offered in the original brochure.

Gist of the Case

In the instant matter, appellants case was that the complainant was an individual who had bought and moved into his villa in April, 2013 with his eyes wide open, under a specific agreement.

In light of the above, complainants could not file and maintain a consumer complaint qua the common items/concerns of all the other residents of the project.

Senior Counsel for the Appellants raised the following issues:

(i) Whether after having taken possession of the Villa, it was permissible to raise grievances regarding defects, given that the complainants had purchased an already constructed villa and had thus done so with their eyes wide open;

(ii) Whether the complainant, being one individual occupying one villa from out of 97 villas and 47 apartments in a housing complex could seek reliefs affecting all other residents, through an individual consumer complaint;

(iii) a sub-issue was whether the State Commission could have granted both reliefs which were, in fact, sought as an alternative to each other.

Analysis and Decision

Bench stated that complainant’s grievance qua the clubhouse as being only for the exclusive use of the residents of the villa, to the exclusive of all others, cannot stand. As per the agreement referred above, the complainant was provided with the facility of a clubhouse and he had paid a fee for it, in a similar manner, others including the apartment owners had also paid a fee for the use of the clubhouse.

Therefore, the Commission was unable to understand regarding how the complainant, in his individual capacity was claiming exclusiveness of the clubhouse only for the residents of the villa.

With regarding making demands by referring to the brochure, Commission answered the complainant that as far as the complainant was concerned, he visited the site, the villa, liked what he saw, signed an agreement, and was given possession of that, within a few months. The complainant clearly did all this with his eyes wide open. It was therefore not for him to now refer to what all had been promised in the brochure(s) and start making demands based on that.

Bench on perusal of the record opined that the instant appeal against the impugned order of the State Commission deserved consideration and could be partly allowed.

State Commission’s Order

Firstly the OP was directed to pay a consolidated amount of Rs 2 Lakh as compensation for the defects and deficiencies in the construction. The said order was evidence-based and for the said reason it is to be upheld.

Bench in view of the above considered it just that the amount of Rs 2 lakh be paid with simple interest of 6% per annum.

Bench however did not agree with the rest of the State Commission’s Order viz.

  • restraining OP from extending the clubhouse facilities to others,
  • directing the OPs to construct 6’ feet high boundary wall on the fourth remaining side of the campus
  • directing the OPs to construct 30’ X 40’ CC road at the entrance and in the entire campus.

Commission expressed that there was nothing in the complaint petition to show that there was even a claim that all other villa residents were of the same view. Indeed, if this had been the case, the complainant would have then filed a joint complaint or have come through the Association of villa owners.

Bench appreciated that the complainants had signed the agreement, after applying their mind to the aspects of community living in a villa in a project which had 96 other villas and that they were not the original allottees; rather, they came in January 2013, saw the villa, were satisfied with what they saw and were told, and then, with eyes wide open, signed the agreement.

The agreement in itself clearly spelt out that it would alone henceforth govern the relationship between the complainant and the OP.

Clause 4 of the agreement made the above aspect abundantly clear:

“4. The purchaser has applied for allotment of Villa No. 17 in the above said scheme “Manglam’s Arpan” and the seller has agreed to allot to the purchaser Villa/Shop in the said Scheme on the following terms & conditions. All other agreements and/or arrangements or letters, assurances written, oral or implied hereto, sales brochures, newspapers advertisements, etc. before made and which are in any way contradictory to or inconsistent with this agreement shall have no effect. The sellers hereby agrees to sell Purchaser hereby agrees to purchase on terms &conditions mentioned in this Agreement.”

Bench concluded that the complainants in light of the agreement could not have laid any claim to what was promised in the brochure. Along with this, the Commission added that the complainant could not have certainly claimed anything of behalf of themselves as well as on behalf of other residents and that too since December 2012, when they were nowhere in the picture.

A narrative which goes beyond what falls in the domain of the individual complainant can still have relevance but confined strictly to what directly affects the complainant, not beyond that.

The commission while partly allowing the appeal, laid down the following directions:

(i) order of the State Commission in para 19 (a), directing the OPs to pay to the complainants a consolidated amount of Rs 2 lakh as compensation for defects and deficiencies in construction, is upheld;

(ii) This amount of Rs.2 lakh shall carry interest @ 6% p.a. from the date of the impugned order of the State Commission, till the date of actual payment;

(iii) Rest of the order of the State Commission relating to common facilities and costs is set aside.

[Manglam Build-Developers Ltd. v. Aviral Mathur, 2021 SCC OnLine NCDRC 15, decided on 12-01-2021]


Advocates who represented the parties:

For the Appellant: Sukumar Pattjoshi, Sr. Adv. with Sunil Mund, Advocate

For the Respondent: Debesh Panda, Advocate with Naman Maheshwari, Advocate

Op EdsOP. ED.

            On 11-8-2020, the Supreme Court of India passed a landmark judgment in Vineeta Sharma v. Rakesh Sharma[1], stating that the Hindu Succession (Amendment) Act, 2005[2] will have a retrospective effect. The 2005 Amendment amended Section 6 of the Act in order to align with the constitutional belief of gender equality. Under the amendment, the daughter of the coparcener shall by birth become a coparcener in her own right in the same manner as the son. Vineeta Sharma case[3] settled the matter in the question – whether the 2005 Amendment had deemed the daughter to have the same right as of a son in the coparcenary property irrespective of the father being alive before the Amendment.

            The judgment was decided by a three-Judge Bench comprising of Arun Mishra, M. R. Shah and S. Abdul Nazeer, JJ. and was authored by Arun Mishra, J. It stated that as the right of being a coparcener is by birth for a son and so is it for a daughter post the 2005 Amendment, and even if the father was not alive on 9-9-2005, it does not obstruct a daughter’s right from claiming her share in the coparcenary property. This judgment resulted in overruling the Supreme Court’s earlier judgments in Prakash v. Phulavati[4] and Mangammal v. T.B. Raju[5] which had held otherwise. Hereby, Vineeta Sharma[6] judgment re-affirmed equality in the treatment of sons and daughters by the law for the purposes of succession.

            One of the reasons listed by the Supreme Court in the recent judgment to put the daughter at par with the son is that coparcenary rights are formed since birth and “it is not necessary to form a coparcenary or to become a coparcener that a predecessor coparcener should be alive.[7] The Supreme Court held that notional partition, the proviso to Section 6 of the 2005 Amendment Act[8] mentions, is merely a fiction of partition that is created in order to ascertain the share of the surviving Class I female heirs[9] or male relatives of the female heirs of the deceased coparcener. However, the purpose behind the statutory fiction is “not to bring about the real partition”.[10]

            The concept of notional partition is created to give effect to the Explanation to Section 6 of the Hindu Succession (Amendment) Act, 2005[11]. It is a legally formed fiction where partition is assumed to happen between the deceased and his coparceners, immediately before the death of the deceased. Notional partition can be interpreted in the following two ways: (1) narrow interpretation; and (2) broad interpretation.

            In the narrow interpretation, notional partition is a partial partition. According to the unamended Section 6, intestate succession happened by notional partition only if any member from Class I heirs mentioned in the Schedule, was alive at the time of the death of the deceased. This indicates that the property divided is like a legal fiction created only to determine the share of the deceased. Whereas the other remaining part of the property continues to be a coparcenary property until an actual partition is effected. In this way, the coparceners have fluctuating undivided joint interest in the coparcenary property. Therefore, the narrow concept of notional partition does not result in the disruption of the joint Hindu Undivided Family. Accordingly, female members who inherit in joint family property under unamended Section 6 (wife, mother and grandmother), will be entitled only to the share which is notionally devolved upon her as per Explanation 1 to Section 6[12] if the actual partition does not take place.

            On the other hand, the broader interpretation of notional partition assumes that the actual partition has occurred immediately before the death of the deceased. This interpretation is followed by the Supreme Court in Gurupad Khandappa v. Hirabai Khandappa Magdum[13]. In Uttam v. Saubhag Singh[14], which was decided post 2005 Amendment, the Supreme Court placed reliance on Khandappa case.[15] Going by this interpretation, the fictional assumption should be brought to a logical end. It should be treated and accepted as a concrete reality. Once the fictional assumption is made, it is not irrevocable as the “… assumption having been made once for the purpose of ascertaining the share of the deceased in the coparcenary property, one cannot go back on that assumption and ascertain the share of the heirs without reference to it.”[16]

            As a result of following the broader interpretation of notional partition, the joint Hindu Undivided Family no longer exists, by converting the coparcenary property into separate property of the deceased’s heirs. Accordingly, female members who inherit in joint female property under amended Section 6 will be entitled to both the interest which she has inherited and the share which is notionally devolved upon her as per Explanation 1 to Section 6.[17] However, it must be noted that broader interpretation of the fiction can be used only to ascertain the shares of the deceased and cannot be carried beyond that to say that the female heirs cease to be members of the joint family.[18] Therefore, broader interpretation of the concept of notional partition is used to enlarge the scope of the shares which women are entitled to so as to be in tandem with the Statement of Objects and Reasons of the said 2005 Amendment Act.

            In Vineeta Sharma[19], the Court relied on the narrow interpretation of notional partition by holding that “The entire partition of the coparcenary is not provided by deemed fiction; otherwise, coparcenary could not have continued which is by birth, and the death of one coparcener would have brought an end to it.”[20] This results in keeping the spirit of joint Hindu family intact.[21] This rationale is given to justify that coparcenary rights are available since birth and hence, daughters will get share in the coparcenary property irrespective of the father being alive or not.

            However, due to this reasoning, the female member (who cannot ask for partition since they are not coparceners) who inherits the joint family property will have to bear the brunt if she dies before any actual partition is initiated by the coparceners. This is because, while they will be entitled to the share devolved upon notionally as per amended Section 6, they will not receive any right in the joint family property. If the Supreme Court would have followed the broad interpretation instead, it could have yielded a similar result of vesting the daughter with the same right as of the son in the coparcenary property irrespective of father being alive. Moreover, it would have granted the daughter-in-law her share of the property without her having to depend on any coparcener to demand for an actual partition in future.

            The Supreme Court in Vineeta Sharma[22] judgment traces its way back to the past by following narrow interpretation and ensures that the joint Hindu Undivided Family stays intact.  Whereas, the 174th Report of the Law Commission of India[23] and the Consultation Paper on Reform of Family Law, 2018[24] both recommended the abolition of coparcenary and to put an end to the joint Hindu family system. The abolition of coparcenary is the only plausible solution to rectify the inherent biases of the Hindu Succession (Amendment) Act, 2005.

            While the decision in Vineeta Sharma[25] is a progressive step forward, however, it raises a lot of issues which are yet to be addressed. The judgment quoted that “Once a daughter, always a daughter … son is a son till he is married.”[26] Many have celebrated this statement, yet it has deep hues of romantic paternalism behind it. By stating so, the Court implied that a daughter can never form her own coparcenary as she will always need to hide behind the shadow of her father, grandfather, brother, husband, or son. This has led to an anomalous situation as sons can start their own coparcenary once they get married and have children.

            To say the least, the judgment does not just raise one issue, it raises a couple of them.  The issues related to gender inequality still persists. By pushing a narrative shrouded in romantic paternalism, the Court has failed to see that the married women are now double beneficiaries of these laws (same women inherit from the lineage as well as from her marriage). While at the same time it has turned a blind eye towards the men who only inherit property because of a single lineage. This further re-enforces the patriarchal structure of the society in which men are also victims at certain times.

            While this judgment surely is a welcoming step, however, it opens floodgates of various questions which are yet to be answered. It will be interesting to know how things unfold with respect to ascertaining the shares of dependent women under the abovementioned circumstances. Moreover, it pushes to shift the discourse regarding gender equality and traditional laws, as the country waits holding its breath anticipating what is to come.


* Third-year law students, Jindal Global Law School, Sonipat.

[1] Vineeta Sharma v. Rakesh Sharma, (2020) 9 SCC 1

[2] Hindu Succession (Amendment) Act, 2005

[3] Supra Note 1.

[4] (2016) 2 SCC 36

[5] (2018) 15 SCC 662

[6] Supra Note 1.

[7] Supra Note 1 at p. 73, para 75.

[8]Read as “Provided that nothing contained in this sub-section shall affect or invalidate any disposition or alienation including any partition or testamentary disposition of property which had taken place before  20th day of December, 2004.”

[9] The list is mentioned in the Schedule to the Act of 1956.

[10] Supra Note 1 at p. 101, para 101.

[11]Read as “Explanation.—For the purposes of this sub-section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.”

[12] Ibid.

[13] (1978) 3 SCC 383

[14] (2016) 4 SCC 68

[15] Supra Note 13.

[16] Supra Note 13, para 13.

[17] Supra Note 11 .

[18]State of Maharashtra v.  Narayan Rao, (1985) 2 SCC 321,  para 9

[19] Supra Note 1.

[20]Ibid, at p. 101, para 101.

[21]As coparcenary rights are not derived from any person or event apart from being birth of the coparcener, it satisfies the concept of unobstructed heritage explained by Mulla, cited by the Supreme Court. Therefore, there is no need to take support of the narrow interpretation in order to justify the equal treatment of son and daughter. By following narrow interpretation, the Court wants to keep the concept of Hindu tradition of social togetherness unimpaired. The ulterior motive is to serve the people who are dependent on earning family members and give tax benefits incurring through it.

[22] Supra note 1.

[23] Law Commission Report, Property Rights of Women: Proposed Reforms under the Hindu Law, (Report No. 174, 2000) p. 26, para 5.7.

[24] Law Commission of India, Consultation Paper on Reform of Family Law (2018) p. 126, para 5.12.

[25] Supra Note 1.

[26] Supra Note 1,  p. 56, para 50.

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 ,

Case BriefsHigh Courts

Jharkhand High Court: Rajesh Shankar, J., quashing the impugned letter, held, “The respondent 5 being an administrative/revenue Officer is supposed to know the basic law and he can not be permitted to act without jurisdiction so as to infringe the right to property of the petitioners in an arbitrary fashion.”

Background

The factual background of the case as stated in the writ petition is that the petitioners purchased the said land by virtue of three separate sale deeds and they came in peaceful possession of their respective land. Thereafter, they decided to construct a residential apartment over the same, however, some miscreants started threatening and making demand of ransom from them. Two individuals filed a petition under Section 144 Code of Criminal Procedure, 1973, before the Sub Divisional Officer, Sadar Ranchi, which was registered as Case No. M-2073 of 2019, and, thereafter, the petitioners were restrained by the respondents 5 and 6 from initiating construction work. Ultimately, the Sub-Divisional Officer, Sadar, Ranchi dismissed the aforesaid case vide order dated 22-01-2020. The petitioners then filed a representation dated 31-05-2020 requesting the respondent 6 to maintain law and order situation as the petitioners were apprehending interference of local goons once the construction work was started. However, when the petitioners started construction work in the month of May, 2020, the husband of the petitioner 2 was attacked and threatened by local goons and an amount of 10 lac was demanded as ransom from him which was duly reported to the police, resultantly an FIR was registered. The respondent 5 vide letter no.37/(ii) dated 08-06-2020 directed the respondent no.6 to take steps for stopping the construction work taking place over the said land, as Original Suit No.18 of 2020 was pending in the court of Civil Judge Senior Division-I, Ranchi. The said letter was subsequently handed over to the petitioners by the respondent no.6. Thereafter, the respondent no.6 issued notice dated 09-06-2020 to the petitioners, directing them to stop construction work over the said land till the disposal of the aforesaid suit in the light of the direction issued by the respondent 5 vide letter no.37/(ii) dated 08-06-2020. The present petition is moved to question the authority of the said notices and further for setting aside the same.

Contentions

Counsel for the petitioner, Amritansh Vats, referred to a catena of judgments by the Supreme Court, to emphasize that Right to Property is a Constitutional Right under Article 300-A of the Constitution and the Respondent authority does not possess any power or jurisdiction to arbitrarily restrain the petitioners from enjoying such right. Reliance was placed on;

  • Hari Krishna Mandir Trust v. State of Maharashtra, 2020 SCC OnLine SC 631, In this case, the Supreme Court held that the right to property may not be a fundamental right any longer but it is still a constitutional right under Article 300-A as well as a human right and no person can be deprived of his property save by the authority of law. The High Courts exercising their jurisdiction under Article 226 of the Constitution of India, not only have the power to issue a Writ of Mandamus or in nature thereof, but are duty-bound to exercise such power where the government or public authority has failed to exercise or has wrongly exercised discretion conferred upon it by a Statute, or a rule, or a policy decision of the government or has exercised such discretion with malafide, or on irrelevant consideration.
  • M.C. Mehta v. Union of India, 2020 SCC OnLine SC 648, With respect to the enforceability of Article 300-A, the Court observed, “The law in this behalf is explicit. Right of a person to construct residential houses in the residential area is a valuable right. The said right can only be regulated in terms of a regulatory statute but unless there exists a clear provision the same cannot be taken away.”
  • State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77, In the present case, the Court categorically held, “In absence of any substantive provision contained in a parliamentary or legislative enactment, a person cannot be refrained from dealing with his property in any manner he likes. Such statutory interdict would be opposed to one’s right to property as envisaged under Article 300-A of the Constitution.”
  • State of U.P. v. Manohar, (2005) 2 SCC 126, Supreme Court remarked, in the words,
    “Para 7. Ours is a constitutional democracy and the rights available to the citizens are declared by the Constitution. Although Article 19(1)(f) was deleted by the Forty-fourth Amendment to the Constitution, Article 300-A has been placed in the Constitution, which reads as follows:
    300-A. Persons not to be deprived of property save by authority of law.—No person shall be deprived of his property save by authority of law.
    Para 8. This is a case where we find utter lack of legal authority for deprivation of the respondent’s property by the appellants who are State authorities. In our view, this case was an eminently fit one for exercising the writ jurisdiction of the High Court under Article 226 of the Constitution. In our view, the High Court was somewhat liberal in not imposing exemplary costs on the appellants. We would have perhaps followed suit, but for the intransigence displayed before us.”
  • Delhi Airtech Services v. State of U.P., (2011) 9 SCC 354, A synonymity was drawn between the word ‘law’ as used under Article 21 and under Article 300-A by the Supreme Court, stating, “ Para 83. The expression law which figures both in Article 21 and Article 300-A must be given the same meaning. In both cases, the law would mean a validly enacted law. In order to be valid law it must be just, fair and reasonable having regard to the requirement of Articles 14 and 21 as explained in Maneka Gandhi, (1978) 1 SCC 248. This is especially so, as “law” in both the Articles 21 and 300-A is meant to prevent deprivation of rights. Insofar as Article 21 is concerned, it is a fundamental right whereas in Article 300-A it is a constitutional right which has been given a status of a basic human right.”

Observation

With respect to the alleged arbitrary exercise of power by the Administrative/Revenue Officer “If a suit is filed in any civil court, it is the court concerned which may grant an injunction on an application of the aggrieved person, if it is established that there exists a prima facie case, balance of convenience lies in his favour and if such order is not passed, he would suffer irreparable loss and injury. It is a settled law that mere filing of a suit does not entitle the plaintiff to presume an order of status quo unless the court by a specific order grants the same having taken into consideration the facts, applicable law and judicial pronouncement. The Circle officer has no power or jurisdiction to grant status quo on the mere filing of a civil suit. The respondent 5 being an administrative/revenue Officer is supposed to know the basic law and he can not be permitted to act without jurisdiction so as to infringe the right to property of the petitioners in an arbitrary fashion.”

Decision

Allowing the present petition, the Court quashed the impugned letter no. 37(ii) dated 08-06-2020 issued by the Circle Officer, as well as the letter dated 09-06-2020 issued by the Police Inspector cum officer in charge of the Kanke Police Station, Ranchi.[Sandip Khanna v. State of Jharkhand, 2020 SCC OnLine Jhar 1020, decided on 14-12-2020]


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Case BriefsHigh Courts

Chattisgarh High Court: Sanjay K Agrawal J., dismissed the second appeal being devoid of merits.

The facts of the case are such that the plaintiff’s father, Kanhaiya Kori (Defendant 2) purchased the suit property including suit land along with the kutcha house by registered sale deed from one Rajim Bai and he remained in possession and the said kutcha house was constructed by him. Kanhaiya Kori sold the suit property in favour of Madanlal Bharadwaj (Defendant 1) by sale deed dated 21-1-2003. Thereafter, the plaintiff sought decree for declaration of title and permanent injunction stating inter alia that though his father i.e defendant 2 has purchased the suit land in his own name, but sale consideration was paid by him and hence his father had no right and title to alienate the suit property. The trial Court decreed the suit granting decree for declaration of title and permanent injunction in favour of the plaintiff which was reversed by the first appellate Court on appeal being preferred by defendant 1 leading to filing of instant second appeal.

Counsel for the appellants submitted that by the alleged transfer, no title has been transferred in favour of defendant 1, as the plaintiff remained in possession of the suit land and transfer of suit land, which is abadi land, without delivery of possession along with superstructure, no title has been passed and as such, decree passed in favour of the plaintiff would not have been set aside by the first appellate Court.

Counsel for the respondents supported the impugned judgment and decree of the first appellate court.

The case at hand falls under Section 54 of Transfer of Property Act, 1882 which states as under:

“54. “Sale” defined.—‘‘Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.

Sale how made.—Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.

Contract for sale.—A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties.

It does not, of itself, create any interest in or charge on such property.”

 The Court thus relied on judgment G. Hampamma v. Kartigi Sajjivalada Kalingappa, 1989 SCC OnLine Kar 135 and observed that It is the case of the plaintiff that possession has not been transferred to defendant 1, therefore, sale is not complete without delivery of possession. Non-delivery of possession does not affect the conveyance of title. What is transferred for consideration is the right of ownership. Right to possession is incidental to right of ownership. One who is a owner can bring an action for recovery of possession. Once the right, title and interest are sold, on payment of sale consideration the person in possession, is either a permissive holder like tenant or a person holding adversely to the interest of true owner. In either event person in possession has no title. Since delivery of physical possession is not an essential ingredient of sale, that circumstance by itself can have no relevance to decide the intention. When title is transferred and the person who has purchased the property has title over the suit property, merely because he has not been given possession, non-delivery of possession could not affect the title of the person who has purchased the property.

The Court thus held that in the present case, by registered sale deed the original defendant 2 has purchased the property and the valid title has been transferred in his favour. Even the plaintiff has not questioned the title of defendant 1 either by seeking a declaration that sale made by defendant 2 as owner in favour of defendant 1 is invalid or void otherwise. Hence, in regard to the observations made above, the first appellate Court is absolutely justified in holding that defendant 1 is the titleholder of the suit land and the plaintiff has no right, title and interest over the suit property and rightly reversed the judgment and decree of the Trial Court.

In view of the above, appeal was dismissed.[Ram Avtar Kori v. Madanlal Bhardwaj, 2020 SCC OnLine Chh 1182, decided on 14-12-2020]


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Case BriefsHigh Courts

Kerala High Court: A.M. Badar J., allowing the present petition, quashes the attachment made by the State authorities to recover tax dues.

Background

Counsel appearing for the petitioner argued that for repayment of loan availed by its borrower, the property comprised in Mannanchery village was mortgaged by the borrower. As the loan account became irregular, by following due process of law, it was declared as Non-Performing Asset and demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’) came to be issued on 02-07-2015. Standing Counsel further submitted that as the borrower failed to settle the loan amount by repayment, physical possession of the mortgaged property was taken by the petitioner bank on 30-11-2019. It is to be further noted that, on 22-02-2019, the respondents had attached the said property alleging to have the ‘First Charge’ over the secured assets for recovery of sales tax dues. This act of the State, as per the Standing Counsel, is grossly illegal, arbitrary and misconstrued. Prayer sought by the petitioner, therefore, seeks to quash the aforementioned attachment made by the respondent authorities and further set aside the related communication letters.

Decision

Allowing the present petition, the Court relied on Travancore Devaswom Board v. Local Fund Audit, 2020 (3) KLT 296 and State Bank of India v. State of Kerala, 2019 (4) KLT 521, both of which, make it clear that, Section 26E of the SARFAESI Act and Section 31B of the RDB Act create a ‘First Charge’ by way of a priority to the Banks/Financial Institutions to recover and satisfy their debts, notwithstanding any statutory ‘First Charge’ in favour of the Revenue.

[Bank of Baroda v. State of Kerala, 2020 SCC OnLine Ker 7152, decided on 15-12-2020]


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Case BriefsHigh Courts

Allahabad High Court: Ram Krishna Gautam, J., held that as per Section 482 Criminal Procedure Code, 1973, while exercising the inherent jurisdiction, High Court cannot make any comment on the factual matrix as the same remains under the trial court’s domain.

The instant application was filed under Section 482 Criminal Procedure Code, 1973 against the State of U.P. and Wsima Begum for quashing the charge sheet as well as the criminal case under Sections 420, 467 and 468 of Penal Code, 1860.

Applicants Counsel, Nazrul Islam Jafri, S.A. Ansari mentioned that allegations made against the applicant made out a case of civil liability as the applicant was alleged to have gotten her name mutated after the death of her husband under Section 34 of Land Revenue Act.

Applicant was married to Sagar Ali under Muslim Rites and customs and was blessed by one female child.

Applicant was subjected to cruelty with regard to dowry hence a criminal case was filed against her husband and in-laws.

Unfortunately, the husband of the applicant and his mother were murdered by unknown assailants. Due to the enmity and litigation, Parvej lodged a criminal case against the applicant and her family members on the basis of frivolous allegations under Section 147, 148, 149, 302, 307, 115 and 120-B of IPC read with Section 7 of Criminal Law Amendment Act.

Applicant, after the death of Sagar Ali, filed an application for getting her name along with her minor daughter’s name mutated at the place of Sagar Ali over his agricultural property.

In light of the above-stated, the application was allowed and the names were mutated in the revenue records.

Further, it has been stated that OP-2 claiming to be the second wife of Sagar Ali moved an application before the Court of Nayab Tehsildar challenging the above mutation order on the ground that she was the legally wedded wife of Sagar Ali. Hence the present applicant was fully aware of those facts even then, she got her name mutated with the wrong contention.

Tehsildar on hearing both sides, in 2014 had set aside the mutation order.

Analysis 

Civil Suits regarding agricultural land of Sagar Ali and his mother Ikhlasi Begum, with regard to disputed “will”, said to be executed by Sagar Ali, is pending before the competent Civil Court.

Ummeda Begum claimed herself to be successor along with her daughter Zoya for the property of late Sagar Ali and late Ikhlasi Begum. She claimed herself to be the only successor wit no other inheritor.

Court noted that in many other previous litigations it was fully in the knowledge of Ummeda Fatima that Sagar Ali was married to Wasima Begum, who was blessed with one female child. Even after knowing this fact mutation application was moved with an incorrect affidavit and incorrect application of documents.

U.P. Revenue Code Section 114 (c) provides that “A person who commits the murder of a [Bhumidhar, asami or government lessee], or abates the commission of such murder, shall be disqualified from inheriting the interest of the deceased in any holding.”

The prima facie case was disclosed for cognizable offence and it was not a ground for quashing of the FIR.

Offence of moving application, with false and fictitious contention, claiming herself to be sole survivor along with her minor daughter over the property of late Sagar Ali and his mother Ikhlasi Begum, and thereafter, fabricating oral and documentary evidence for it and getting name mutated, knowing the legal situation of debarring of inheritance and conviction in that criminal case of murder, prima facie, makes out offences for which charge-sheet was filed.

Section 482 CrPC, provides that nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.

In the decision of the Supreme Court in Hamida v. Rashid, (2008) 1 SCC 474, Supreme Court propounded that “Ends of justice would be better served if valuable time of the Court is spent in hearing those appeals rather than entertaining petitions under Section 482 at an interlocutory stage which after filed with some oblique motive in order to circumvent the prescribed procedure, or to delay the trial which enable to win over the witness or may disinterested in giving evidence, ultimately resulting in miscarriage of Justice.”

Abuse of Process of Court

In the Supreme Court decision of Dhanlakshmi v. R. Prasan Kumar, 1990 Supp SCC 686, it was propounded that “To prevent abuse of the process of the Court, High Court in exercise of its inherent powers under section 482 could quash the proceedings but there would be justification for interference only when the complaint did not disclose any offence or was frivolous vexatious or oppressive.”

Hence in view of the above, the exercise of inherent jurisdiction under Section 482 CrPC is within the limits, propounded as above. Therefore, this Court will not make any comment on the factual matrix because the same remains within the domain of the trial court.

Prayer for quashing the impugned order as well as the proceeding of the aforesaid complaint case was refused.[Ummeda Fatima v. State of U.P., 2020 SCC OnLine All 1358, decided on 19-11-2020]

Case BriefsHigh Courts

Kerala High Court: A Full Bench of A.M. Shaffique, Sunil Thomas and Gopinath, JJ., held that there is no limitation period for wife/divorced wife to claim her property entrusted to husband/in-laws given in the form of dowry or otherwise.

Questions involved was:

Whether trust created by a wife entrusting her property to her husband gets extinguished after the dissolution of marriage and whether she can initiate proceedings invoking Section 10 of the Limitation Act, 1963 without any limitation of time?

For the above-stated question, reference was made to the decision of Bindu K.P. v. Surendran C.K., [2018 (2) KHC 1] wherein it was held that claim of the wife or ex-wife for a dowry is not barred by any length of time.

Counsel for the appellant Sri S.K. Balachandran placed the following decision before the Court:

    • Swapna v. Thankavelu, 1990 SCC OnLine Ker 168: – In the above case, a Single Judge of this Court held that when valuable articles are entrusted by the wife to the husband for safe custody, the husband remains in the position as a trustee who is bound to account to the wife all her properties at any time when she demands. The aforesaid judgment was delivered following the Supreme Court judgment in Pratibha Rani v. Surajkumar, (1985) 2 SCC 370. It was further held that if the husband is a trustee, the wife is entitled to follow the property in the possession of the trustee, and Section 10 of the Limitation Act would apply.
  • Chacko v. Annamma, (1985) 2 SCC 370: – In this case, the Division Bench of this Court approved Swapna’s case stated above. In the above case, on a detailed analysis of the relevant provisions including Section 10 of the Limitation Act and the provisions of the Trusts Act, overruling an earlier judgment in Annamma v. Thressiamma, 1971 SCC OnLine Ker 86, it was held that there is a creation of trust in respect of stridhanam property and therefore Section 10 applies.
  • In Bhatacharjee v. Sarathi Choudhury, 1993 SCC OnLine Ker 13, while considering the impact of Section 12 of the Protection of Women from Domestic Violence Act, 2005, the Supreme Court held that as long as the status of the aggrieved person remains, and the stridhanam remains in the custody of the husband, the wife can put forth a claim under Section 12 of the Act.

Question involved in the above reference was the following:

When there is a change in circumstances between the spouses, especially when there is a dissolution of marriage and substantial time had elapsed, whether the trust created between them would be extinguished?

Section 10 of the Limitation Act states as follows:

“10. Suits against trustees and their representatives- Notwithstanding anything contained in the foregoing provisions of this Act, no suit against a person in whom property has become vested in trust for any specific purpose, or against his legal representatives or assigns (not being assigns for valuable consideration), for the purpose of following in his or their hands such property, or the proceeds thereof, or for an account of such property or proceeds, shall be barred by any length of time.

Explanation.-For the purposes of this section any property comprised in a Hindu, Muslim or Buddhist religious or charitable endowment shall be deemed to be property vested in trust for a specific purpose and the manager of the property shall be deemed to be the trustee thereof.”

In view of the decisions referred above, it is settled that,

when the wife entrusts with the husband any property belonging to her, a trust is created and the husband is bound to return the same to his wife. If the same is not returned, the wife has a right to demand the same by filing a suit or as in the present case, file an application before the Family Court or take other necessary steps under the relevant statutes in force.

When Section 10 of the Limitation Act indicates that there is no limitation for initiating any such action, in the absence of any other statute providing for a limitation, the trustee cannot take a contention that he shall not return the trust property on account of any period of limitation. The question posed is, when the relationship between the parties gets deranged and results in divorce, whether the trust gets extinguished and the divorced wife would be entitled to invoke Section 10 of the Limitation Act and file a suit at her will and pleasure at any point in time. In such an event, the questions to be considered are (i) whether a trust had been created at any point of time, (ii) if a trust has been created and the husband remains in the position of a trustee, whether it gets extinguished on the dissolution of marriage or under any other circumstances.

Under Section 77 of the Indian Trusts Act, 1882, a trust gets extinguished only under certain circumstances. Section 77 reads as under:

“77. Trust how extinguished.— A trust is extinguished—
(a) when its purpose is completely fulfilled; or
(b) when its purpose becomes unlawful; or
(c) when the fulfilment of its purpose becomes impossible by the destruction of the trust-property or otherwise; or
(d) when the trust, being revocable, is expressly revoked.”

Hence, unless any of the above-stated eventualities as mentioned take place, which is a question of fact to be decided on a case to case basis and once a trust is created, it continues to operate, even though marriage is dissolved. However, in an instance where there is an agreement between the parties settling the obligations arising from the trust, it gets fulfilled in terms of Section 77(a).

As per the Dowry Prohibition Act, 1961, when a statutory trust is created in respect of dowry, the principle aforestated shall apply.

Further, the Court added that, in the case of ornaments which are given in the form of dowry, definitely, a statutory trust is created. Even otherwise, if the ornaments owned by the wife do not form part of the dowry and if there is an entrustment of gold ornaments by the wife to the husband or his parents, a trust gets created, in which event, the trustee or trustees, as the case may be, are liable to return the same and there is no limitation for claiming the same by the wife/divorced wife.

In light of the above, the Court agreed with the law laid down in Chacko v. Annamma, (1993) 1 KLT 675 and upheld the view expressed in Bindu K.P. v. Surendran C.K., [2018 (2) KHC 1]. [Sheela K.K. v. N.G. Suresh, 2020 SCC OnLine Ker 4240, decided on 24-09-2020]

Case BriefsHigh Courts

Madras High Court: R. Subramanian, J., dismissed the second appeal filed in regard to suit for partition and granting possession of share to a daughter as coparcener on finding no substantial question of law.

In the instant second appeal, plaintiffs are aggrieved by the dismissal of their suit for partition and separate possession of their 1/3rd share.

What did the plaintiffs contend?

Plaintiffs stated that the suit properties belonged to Rasappa Gounder who died in the year 1980 leaving behind one son and two daughters. One of the daughters is the wife of the first plaintiff and mother of the second plaintiff, died on 20-04-1987.

Plaintiffs claimed that as the daughter she would become a coparcener upon enactment of Hindu Succession (Amendment Act 39 of 2005) Act, the plaintiff’s would seek a 1/3rd share in the estate of Rasappa Gounder.

Defendants Contention

Defendants contended that the predecessor in interest viz., Rasappa Gounder died in the year 1980 and after his death, there was an arrangement under which the daughters and the second defendant Subbayal relinquished their share in Rasappa Gounder’s estate upon receipt of Rs 25,000.

It was also stated that defendant 1 was in possession of the property as an absolute owner and sold a portion of the properties to the knowledge of Poornam, plaintiffs and second defendant.

Therefore, it was contended that the plaintiffs were effectively ousted from the enjoyment of the property by the first defendant.

Second defendant supported the above contentions and stated that she and her sister had received a sum of Rs 25,000 in full quit of their share and have no claim over the properties of the deceased.

Trial Court

Trial Court had held that since Rasappa Gounder died in 1981, the succession having opened on the death of Rasappa Gounder, Poornam would not become a coparcener.

Vineeta Sharma v. Rakesh Sharma, (2020) SCC Online 641

Change in law brought by the above-cited decision of the Supreme Court would not have helped the plaintiff, since the daughter herself had died in 1987 even prior to the enactment of the Hindu Succession (Amendment Act 39 of 2005) Act.

Hence, the claim that the daughter becomes a coparcener was rejected by the trial court.

In view of the above, a second appeal was filed.

Counsel A. Thiyagarajan appeared for the appellants.

Decision

Bench stated that if the claim of the plaintiffs was to be restricted to Section 8 of the Hindu Succession Act, then the devolution of the estate happened on the death of Rasappa Gounder in the year 1981. The instant suit has been filed 30 years thereafter in the year 2011.

Hence the Court stated that it is a stale claim which is sought to be resurrected for some other reason.

Therefore, Court found no substantial question of law and dismissed the second appeal. [C.P. Subramaniam v. Deivasigamami,  2020 SCC OnLine Mad 5206, decided on 16-10-2020]

Case BriefsHigh Courts

Delhi High Court: A Division Bench of Rajiv Sahai Endlaw and Asha Menon, JJ., dismissed an application filed under Section 151 CPC expressing surprise that advocates moved the application seeking the legal opinion of the Court.

The present application was filed invoking Section 151 of the Code of Civil Procedure, 1908 by the appellant, respondents 3 and 5 seeking clarification on the following:

“Whether the share in the property received by a son on the partition of a HUF is “HUF” or “individual” in his hands?”

Bench stated that “neither Section 151 CPC nor any other provision of law vests in this Court, acting as the Company Appeal Court, advisory jurisdiction.”

Court was surprised to note that the advocates are moving applications seeking the legal opinion of the Court. The application is thoroughly misconceived.

Dismissing the matter, Court added that,

“one of us (Justice Rajiv Sahai Endlaw) will be demitting office on 13th August, 2021 and the advocates are at liberty to approach him for advice at that time, by deferring the execution of the sale deed till then!”

Advocate Lalit Gupta stated that he did not even sign the application and his name has just been added without consulting him. [Balraj Kishan Gupta v. Panna Lal Giridhar Lal (P) Ltd., 2020 SCC OnLine Del 1265, decided on 18-09-2020]