Delhi High Court
Case BriefsHigh Courts


Delhi High Court: In a batch of petitions filed assailing proceedings initiated by the respondent- State under the Prohibition of Benami Property Transactions Act, 1988 for attachment and confiscation of properties which were admittedly acquired prior to the enforcement of the Benami Transactions (Prohibition) Amendment Act, 2016, Yashwant Varma, J., quashed all proceedings as in compliance with a judgment rendered by the Supreme Court in Union of India v. Ganpati Dealcom Pvt. Ltd., 2022 SCC OnLine SC 1064, wherein it was categorically held that concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25-10-2016 and thus, all such prosecutions or confiscation proceedings shall stand quashed.

The Supreme Court in Ganpati Dalcom (supra) dealt with the issue of retrospective application of the provisions by virtue of the introduction of Benami Transactions (Prohibition) Amendment Act, 2016. The Supreme Court ruled on the powers of attachment and confiscation in respect of properties acquired and in which interests stood, prior to the 2016 Amendment by stating that the stain of benami transactions is not restricted to the person who is entering into the aforesaid transaction, rather, it attaches itself to the property perpetually and extends itself to all proceeds arising from such a property, unless the defence of innocent ownership is established under Section 27(2) of the 2016 Act. When such a defect is being created not on the individual, but on the property itself, a retroactive law would characterize itself as punitive for condemning the proceeds of sale which may also involve legitimate means of addition of wealth.

Looked at from a different angle, continuation of only the civil provisions under Section 4 of 1988 Act, etc., would mean that the legislative intention was to ensure that the ostensible owner would continue to have full ownership over the property, without allowing the real owner to interfere with the rights of benamidar. If that is the case, then without effective any enforcement proceedings for a long span of time, the rights that have crystallized since 1988, would be in jeopardy. Such implied intrusion into the right to property cannot be permitted to operate retroactively, as that would be unduly harsh and arbitrary.

In light of the judgment on, the Court noted that it is evident that the impugned proceedings cannot be sustained. Thus, the Court quashed various summon notices issued to the petitioners in the present batch of petitions, along with show cause notices, provisional attachment order and all other impugned proceedings.

[Reliance Commodities v. ACIT, WP (C) No. 3139 of 2019 and Satyendar Jain v. UOI, WP (C) No. 5158 of 2017, decided on 10-10-2022]

Advocates who appeared in this case:

In WP (C) No. 3139 of 2019

Mr. Anirudh Bakhru, Mr. Ayush Puri, Mr. Tejaswini, Ms. Umang Tyagi, Mr. Prateek Kumar, Advocates, for the Petitioner;

Ms. Shiva Lakshmi, CGSC with Ms. Srishti Rawat, Ms. Ritwik Sneha, Advocates, for the R-2;

In W.P.(C) 5158/2017

Mr. Dayan Krisyhnan, Sr. Adv. With Mr. Vivek Jain, Mr. Vaibhav Yadav, Mr. Amit Anand and Ms. Devyani, Advocates, for the Petitioner;

Mr. Zoheb Hossain, Sr. Standing Counsel with Mr. Vipul Agarwal and Mr. Parth Semwal, Advocates for the Income Tax Department.

*Arunima Bose, Editorial Assistant has put this report together.

Case BriefsSupreme Court

Supreme Court: While upholding the Constitutional validity of the Payment of Gratuity (Amendment) Act, 2009, the Division Bench of Sanjiv Khanna* and Bela M. Trivedi, JJ., held that the Amendment seeks to bring equality and give fair treatment to the teachers. It can hardly be categorised as an arbitrary and high-handed exercise.

Noticeably, the aforesaid Amendment Act was introduced to extend the benefit of gratuity to the teachers by including them in the definition of “employee”, who were earlier deprived of it. The Court said,

“Private schools, when they claim a vested right arising from the reason of defect, should not succeed, for acceptance would be at the expense of teachers who were denied and deprived of the intended benefit.”

The common question before the Bench was regarding constitutional validity of the amendment to Section 2(e) and insertion of Section 13A to the Payment of Gratuity Act, 1972 (the Act), with retrospective effect from 03-04-1997 vide the Payment of Gratuity (Amendment) Act, 2009.

Government Notification No. S-42013/1/95-SS.(II)

The Act requires payment of gratuity to an employee after he has rendered continuous service for not less than 5 years, on his superannuation, retirement or resignation or on his death or disablement due to accident or disease. Noticeably, by the Notification No. S-42013/1/95-SS.(II) issued by the Ministry of Labour and Employment, Government of India on 03-04-1997, the provisions of the Act have been made applicable to the educational institutions with ten or more employees.

Decision in Ahmedabad Private Primary Teachers’ Association’s case, (2004) 1 SCC 755

Therefore, the private schools being educational institutions, in which ten or more persons are employed, became liable to pay gratuity to their employees as per the provisions of the Act. However, some private schools raised a dispute claiming that the teachers in educational institutions or schools are not “employee” as defined in Section 2(e) of the Act. The Supreme Court in Ahmedabad Private Primary Teachers’ Association v. Administrative Officer, (2004) 1 SCC 755, held that teachers who impart education to students are not “employee” under Section 2(e) of the Act as they do not perform any kind of skilled, unskilled, semi-skilled, manual, supervisory, managerial, administrative, technical or clerical work.

Thus, the teachers were denied the benefit of gratuity, but other employees of the private schools, were entitled to the benefit of gratuity.

Payment of Gratuity (Amendment) Act, 2009

Referring the judgment in Ahmedabad Private Primary Teachers’ Association (supra) in the object and reasons for Amendment, the Government introduced the Payment of Gratuity (Amendment) Act, 2009 to cover the definition of “employee” to all kinds of employees. The Amendment Act inserted a new Section 13A and also Clause (e) to Section 2 of the Act with retrospective effect from 03-04-1997 to confer, with retrospective effect, benefit of gratuity to the teachers who have rendered continuous service for not less than 5 years.

Analysis and Findings

Whether the government empowered overrule judicial decisions by introducing Statutory Amendments?

The petitioners contended that the legislation vide the Amendment Act 2009 overrules the judicial decision in Ahmedabad Private Primary Teachers’ Association (supra) and violates the doctrine of separation of powers. Rejecting the aforesaid argument, the Court observed that the legislation in question rather rectifies the infirmities and defects pointed out by the Court in the aforesaid decision, and the amended clause (e) to Section 2, defining the word “employee” and the newly inserted Section 13A with retrospective effect, effectuate and catalyse the object and purpose of the Notification No. S-42013/1/95-SS.(II).

The Court opined that though a court decision cannot be overruled by the legislature, the legislature can amend the language of the provision that was the subject matter of the court decision, and such an amendment does not overrule the court decision. The Court said,

“Overruling assumes a decision based on the same law. Where the law, as in the present case, has been amended, and the defects have been removed or cured, the law changes, and therefore, the earlier interpretation is no longer applicable and becomes irrelevant.”

Noting that the decision in Ahmedabad Private Primary Teachers’ Association (supra) even acknowledged and prompted the legislature to enact a legislation granting the benefit of gratuity to teachers, who had been excluded because of the legal flaw, the Court held that the amendment enforces and gives effect to what was intended by the notification, but could not be achieved on account of the technical and legal defect. The lacuna, a distortion in the language that had the unwitting effect of leaving out teachers, has been rectified so as to achieve the object and purpose behind the issuance of the notification, making the Act applicable to all educational institutions.

Whether the Amendment financially confiscatory?

The private educational institutions also assailed the Amendment on the ground that they would be liable to pay gratuity for a period of service prior to 03-04-1997, and, therefore, the amendments are unconscionable and tyrannous, equally fallacious and financially confiscatory.  The Court, calling the aforesaid argument fallacious, observed that the argument, predicated on past liability, deserved to be rejected as there are upper-cap limits on payment of gratuity; i.e., the payment towards gratuity cannot exceed the specified amount, even if the employee would be entitled to higher amount in view of the years of the service rendered to the employer.

Relying on T.M.A. Pai Foundation v. State of Karnataka, (2002) 8 SCC 481, some schools argued that charging of capitation fee or profiteering by educational institutions is impermissible and they do not have capacity and ability to pay gratuity to the teachers.

Finding the aforesaid argument unapt and parsimonious, the Court clarified the decision in T.M.A. Pai Foundation (supra) by holding that the judgment does not state that the teachers should not be paid gratuity; in fact, the judgment holds that the educational institutions are entitled to reasonable surplus to meet the cost of expansion and augmentation of the facilities and this does not amount to profiteering.

The Court noted that though it is possible that in some States there are fee fixation laws which will have to be complied with, but compliance with these laws does not mean that the teachers should be deprived and denied gratuity, which they were/are entitled to receive as other employees of an educational institution. The Court said that regulation of fee is to ensure that there is no commercialisation and profiteering, and the effect is not to prohibit a school from fixing and collecting ‘just and permissible school fee’. The Court added,

“We would not accept any attempt to circumscribe and limit the power vested with the sovereign legislature, thereby putting fetters when such fetters are not prescribed by the Constitution. When and which cases to exercise the power has to be left to the legislature.”

Applicability: Retrospective v. Retroactive

The Court, while holding that the Amendment retroactive, observed that the provisions of the Act, even post the retrospective amendments, will apply only to those teachers who were in service as on 03-04-1997, and at the time of termination have rendered service of not less than 5 years. The Court said that the period of 5 years may be partly before 03-04-1997, as the date on which the person was employed does not determine the applicability of the PAG Act.

However, the date of termination of service, should be post the enforcement date. The entire length of service, including the service period prior to 03-04-1997, is to be counted for the purpose of computing the entitlement condition of 5 years of service.

Whether the Amendment violative of Fundamental Rights?

The schools had claimed violation of Articles 14, 19(1)(g), 21 and 300-A of the Constitution. Holding that the Constitutional provisions are not violated, the Court said that to deny gratuity benefits to the teachers upon enforcement of the notification No. S-42013/1/95-SS.(II) was itself an anomaly which mandated correction.

The Court observed that the teachers were discriminated to be denied benefit of gratuity, a terminal benefit, which was payable to other employees of the private schools/educational institutions, including those engaged in administrative and managerial work. The amendment with retrospective effect remedies the injustice and discrimination suffered by the teachers on account of a legislative mistake.

Whether the Amendment violated other enactments?

The last contention raised by the private schools and writ petitioners was predicated on the enactment of the Repealing and Amending Act 2016, by virtue of which the Amendment Act 2009 was repealed. Once again, rejecting such contention, the Court opined that the argument overlooked Section 6A of the General Clauses Act, 1897 and Section 4 of the Repealing and Amendment Act, which states that the repeal shall not affect any of the enactment in which the repealed enactment has been applied, incorporated or referred to. It also states that the Repealing Act shall not affect the validity, invalidity, effect or consequences of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred etc.


In the light of aforesaid, the Court upheld the validity of the Amendment Act and directed that the private schools would make payment to the employees/teachers along with the interest in accordance with the provisions of the Act within a period of 6 weeks and in case of default, the employees/teachers may move the appropriate forum to enforce payment in accordance with the provisions of the Act.

Hence, the Court vacated the partial stay on the Amendment Act in the order dated 31-01-2020 passed in Saint Xaviers High School v. Jayashree Shamal Ghosh, (SLP (C) No. 2235 of 2020) or in any other case. The appeals and the petition were dismissed.

[Independent Schools’ Federation of India (Regd.) v. Union of India, 2022 SCC OnLine SC 1113, decided on 29-08-2022]

*Judgment by: Justice Sanjiv Khanna

Kamini Sharma, Editorial Assistant has put this report together

Case BriefsSupreme Court

Supreme Court: While adjudicating a case related to the Reliance Commercial Finance resolution, the 3-judges Bench comprising Dr. D Y Chandrachud*, Surya Kant, and A S Bopanna, JJ., was posed with a question as to whether the SEBI Standardisation of procedure Circular (13-10-2020) has retroactive application. The Court clarified,

“Many decisions of this Court define ‘retroactivity’ to mean laws that destroy or impair vested rights, in real terms, this is the definition of ‘retrospectivity’ or ‘true retroactivity’.”

On one hand, SEBI argued that the circular will have a retroactive application, on the other, Reliance Commercial Finance Ltd., argued that applying the circular on the instant case would make its application retrospective. The Court held that the SEBI Circular has retroactive application by relying on the following definitions:

In Principles of Statutory Interpretation by Justice G.P. Singh (14th Edn., 2016 at p. 583), it is stated that the rule against retrospective construction is not applicable to a statute merely because “a part of the requisites for its action is drawn from a time antecedent to its passing.” If that were not so, every statute will be presumed to apply only to persons born and things which come into existence after its operation and the rule may well result in virtual nullification of most of the statutes.

Significant Precedents

In Vineeta Sharma v. Rakesh Sharma, 2020 (9) SCC 1, the Court described the nature of prospective, retrospective, and retroactive laws as follows:

“The prospective statute operates from the date of its enactment conferring new rights. The retrospective statute operates backwards and takes away or impairs vested rights acquired under existing laws. A retroactive statute is the one that does not operate retrospectively. It operates in futuro. However, its operation is based upon the character or status that arose earlier. Characteristic or event which happened in the past or requisites which had been drawn from antecedent events.”

Noticing that the terms “retrospective” and “retroactive” are often used interchangeably, though their meanings are distinct, the Court referred to State Bank’s Staff Union (Madras Circle) v. Union of India, (2005) 7 SCC 584, where this difference was succinctly appreciated in the following words:

“’Retroactivity’ is used to cover at least two distinct concepts. The first, which may be called ‘true retroactivity’, consists in the application of a new rule of law to an act or transaction which was completed before the rule was promulgated. The second concept, which will be referred to as ‘quasi-retroactivity’, occurs when a new rule of law is applied to an act or transaction in the process of completion…the foundation of these concepts is the distinction between completed and pending transactions….” (T.C. Hartley, The Foundations of European Community Law 129 (1981)


The Court clarified that though many decisions of the Court define “retroactivity” to mean laws that destroy or impair vested rights, in real terms, this is the definition of “retrospectivity” or “true retroactivity”. “Quasi-retroactivity” or simply “retroactivity” on the other hand is a law that is applicable to an act or transaction that is still underway. Such an act or transaction has not been completed and is in the process of completion. Retroactive laws also apply where the status or character of a thing or situation arose prior to the passage of the law.

[SEBI v. Rajkumar Nagpal, 2022 SCC OnLine SC 1119, decided on 30-08-2022]

*Judgment by: Justice Dr. D Y Chandrachud


For SEBI: N Venkataraman, Senior Counsel & Additional Solicitor General

For RCFL: Darius Khambata, Senior Counsel

For Bank of Baroda: KV Viswanathan, Senior Counsel

For Authum Investment and Infrastructure Ltd.: Dhruv Mehta, Senior Counsel

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

Also Read

SC upholds applicability of SEBI Circular; but gives a green signal to Reliance Commercial Finance resolution to avoid “unscrambling of resolution process”

Delhi High Court
Case BriefsHigh Courts

Delhi High Court: A Division Bench of Satish Chandra Sharma, CJ and Subramonium Prasad, J. refused to transfer the civil suits pending before the Additional District Judge, Patiala House Courts, New Delhi, to the designated Commercial Court as the Commercial Courts (Amendment) Act, 2018 (‘Amending Act’) shall not apply retrospectively and thus, the advantage provided under Section 19 of the Amending Act cannot be taken, as dispute relates before to the date of commencement of the Act, i.e., 03-05-2018.

The instant transfer petition was filed seeking transfer of civil suits relating to a commercial dispute pending before Additional District Judge, Patiala House Courts, New Delhi to the designated Commercial Courts in wake of Section 15 Commercial Act, 2015 Act on the ground that the suits are commercial in nature and pertain to ‘commercial disputes’ as defined under the Commercial Act, 2015 Act.

The main point of contention by petitioner was that even though the Amending Act, 2018 was to apply to cases filed on or after the institution of Amending Act, 2018, the Saving Clause enumerated in Section 19 of the Amending Act, 2018 conveyed that the Amending Act would have a retrospective impact to the extent that pending cases of the lowered specified value could also be transferred to a Commercial Court.

The issue under consideration is whether the Commercial Courts (Amendment) Act, 2018 (‘the Amending Act’) would apply retrospectively to the instant petition or not?

The Commercial Courts, Commercial Division and Commercial Appellate Division Act, 2015 (‘2015 Act’), now known as Commercial Courts Act, 2015 as amended in 2018 was enacted by the Legislature under which all suits over a sum of Rs.1 Crore was to be transferred from Ordinary Courts to the designated Commercial Courts. The amendment was promulgated whereby territories in which the High Courts had ordinary Original civil jurisdiction, Commercial Courts were to be established at the level of the District Courts as well, and any appeal from these Commercial Courts at the District Level would lie before the Commercial Appellate Division of the High Court. Further, the Amending Act reduced the specified value to Rupees three lakhs and, therefore, widened the pecuniary jurisdiction exercised by such District Courts (Commercial).

It was brought to the attention of the Court that the administrative side of this Court vide order dated 04-02-2020 ruled that the Amending Act would be applicable to only those cases which were instituted on or after 03-05-2018 and accordingly vide order dated 25-03-2022 notice was issued to the High Court to produce the record so as to demonstrate the rationale of the said order.

Dr. Amit George, Standing Counsel for the Delhi High Court, substantiated that the Amending Act is not applicable retrospectively, on the following grounds:

  • The Amending Act categorically states that it shall apply only to cases relating to commercial disputes that have been filed on or after the date of its commencement, i.e. 03-05-2018.
  • The general rule of interpretation is that every statute is prospective in operation until and unless it has been made expressly retrospectively in application.
  • The Saving Clause provided in Section 19 of the Amending Act has to be read harmoniously with Section 15 of the 2015 Act, and that any other interpretation by the Court would frustrate the very object of the Amending Act and would reduce Section 19 to a nullity.

The Court noted that 188th Report of the Law Commission of India on “Proposals for Constitution of Hi-Tech Fast — Track Commercial Divisions in High Courts”, states that the purpose of instituting the Commercial Courts Act, 2015, was to expedite commercial cases of a high pecuniary value and to create confidence in the commercial circles nationally and globally.

Placing reliance on Monnet Ispat and Energy Limited v. Union of India, (2012) 11 SCC 1 The Supreme Court observed that the cardinal principle of construction is that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation.

The Court observed that it cannot be said that there is any lack of clarity or ambiguity in the phrasing of Section 19 of the Amending Act which categorically states that the provisions of the Amending Act will apply to cases relating to commercial disputes filed on or after the date of commencement of the Act, i.e., 03-05-2018.

Thus, the Court opined that considering it to be retrospective in effect will lead to administrative difficulties which is contrary to the intention of the Legislature and had it intended for the Amending Act to be retrospective in nature, there is nothing that could have prevented the Legislature from explicitly specifying the same. Additionally, the purpose of the Saving Clause is to preserve from destruction certain rights, remedies and privileges already existing. This Clause saves all the rights that were previously there; it does not create any new rights.

The Court thus held that the Petitioners cannot take advantage of the Saving Clause in the Amending Act as the Act shall not apply retrospectively and therefore, the Court refused to transfer the civil suits pending before the Additional District Judge, Patiala House Courts, New Delhi, to the designated Commercial Court.

[Satyanarayan Khandelwal v. Prem Arora, 2022 SCC OnLine Del 2142 decided on 18-07-2022]

Advocates who appeared in this case :

Mr. Praveen Suri and Ms. Komal Chhibber, Advocates, for the Petitioner;

Mr. Vipin Nandwani, Advocate for the Respondent 1 and 2 Dr. Amit George, Standing Counsel, Delhi High Court with Mr. Rishabh Dheer & Mr. Amol Acharya, Advocates, for the Respondent.

*Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of M.R. Shah and B.V. Nagarathna, JJ., stayed the impugned order of Bombay High Court wherein the High Court had quashed the assessment order under Income Tax Act, 1961 and had further cautioned that if such orders continued to be passed, the Court will be constrained to impose substantial costs on the concerned Assessing Officer to be recovered from his/her salary.

The petitioner had impugned the assessment order dated 08-06-2021 along with the demand notice issued under Section 156 for initiating penalty proceedings under Section 274 read with Section 270A of the Income Tax Act, 1961. According to the petitioner, the assessment order had been passed without following the principles of natural justice as his request for personal hearing had not been considered and most importantly the reply/objection filed in response to the show cause notice with the draft assessment order had not been considered.

Holding that the assessment order was issued without application of mind the Bombay High Court set aside the impugned order and also the consequential notices. The High Court observed that Sub Section 9 of Section 144B of the Act provides that any assessment made shall be non-est if such assessment is not made in accordance with the procedure laid down under this section. Therefore, the High Court held that the impugned order was non-est and directed the Assessing Officer to take steps in accordance with law.

Notably, the High Court had passed additional directions under para 9 of the order which reads as:

“Respondents are put to notice, and Mr. Sharma to circulate this order right from the Revenue Secretary to everybody in the Finance Ministry, that if such orders are continued to be passed, this Court will be constrained to impose substantial costs on the concerned Assessing Officer to be recovered from his/her salary and also direct the department to place such judicial orders in the career records of such Assessing Officer.”

Aggrieved by the aforementioned order of the High Court Union of India had approached the Supreme Court to assail the impugned High Court order contending that the High Court ought not to have entertained the Writ Petition and ought to have relegated the original writ petitioner to avail statutory remedy of appeal before the CIT(A).

It was further submitted that one of the grounds on which the High Court had set aside the assessment order was sub-section (9) of Section 144B of the Income Tax Act, 1961, irrespective of the fact that sub-section (9) of Section 144B of the Act had been deleted with effect from 01-04-2021 and the provision to declare the assessment as non est if such assessment is not made in accordance with the procedure laid down under Section 144B of the Act had been deleted. Hence, the assessment order should not have been interfere with by the High Court and the assessee, if aggrieved, should have required to prefer an Appeal before the CIT(A).

It was further submitted by the State that even the observations made by the High Court in para 9, were also not warranted in the facts and circumstances of the case, more particularly, when the entire procedure before assessment was followed and thereafter even the legislature also deleted the provision of sub-section (9) of Section 144B of the Act retrospectively with effect from 01-04-2021.

Considering the arguments of ASG, Mr. Balbir Singh, the Bench issued notice in the matter. Notably, the Bench had also ordered that the observations made by the High Court in para 9 of the impugned judgment and order be stayed.

[National Faceless Assessment Centre v. Mantra Industries Ltd., Special Leave to Appeal (C) No(s). 4906 of 2022, decided on 11-04-2022]

Appearance by:

For the Appellant: ASG Balbir Singh, AOR Raj Bahadur Yadav, Advocate Gargi Khanna, Advocate Praveena Gautam, Advocate Shyam Gopal and Advocate Chinmayee Chandra

Kamini Sharma, Editorial Assistant has put this report together 

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of Ajay Rastogi* and Abhay S. Oka, JJ., held that a modification changing tariff for inadvertent drawal from temporary supply rate to the regular supply rate cannot be considered to be a mere clarification and is rather a substantial alteration which cannot be made applicable retrospectively.

Factual Background

The instant appeal under Section 125 of the Electricity Act, 2003 had been preferred at the instance of the distribution company, Ajmer Vidyut Vitran Nigam Ltd, the appellant herein. An agreement for short term open access of distribution system and supply of regular and standby HT supply came to be executed between the appellant and Hindustan Zinc Ltd. (HZL) in terms of the provisions of the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2004 on 22-09-2006 and draft format of the open access agreement became effective from 01-05-2006.

Consequently, the Rajasthan Electricity Regulatory Commission in terms of open access regulations specified a standard format of agreement for short term open access for distribution system and for HT supply which was served on 03-01-2007. Notably, under clause 29(1)(f), the standard format of agreement was supplied by the Commission on 03-01-2007, which stated: “29(1)(f). Inadvertent drawal of electricity in excess of regular & standby supply as per sub clause (e) at temporary supply tariff.”

However, when it was forwarded to HZL for its signatures, the HZL noticed that Clause 29(1)(f) of the format was different from the standard agreement prescribed in the open access regulations. Consequently, the appellant sought certain clarification and accordingly, reference was made to the Commission for examination of changes in the standard agreement for HT supply and short term open access in distribution.

Issues Involved

After deliberation, by its order dated 15-09-2007, the Commission made substantial changes and altered Clauses 29(1)(e) and 29(1)(f) and 32(4) of the standard format agreement and observed that the inadvertent drawal will be billed at the same rate as regular supply irrespective of whether such inadvertent drawal was done during a period of outage of generating unit affecting open access supply or during the period of shortage of supply.

Noticeably, Clause 29(1)(f) earlier provided that all inadvertent supply would be charged as per temporary supply tariff but the Commission altered the position substantially and held that instead of the tariff for temporary supply, a tariff for regular supply will be payable for inadvertent drawal.

It was when the appellant raised the bills for period from June, 2006 to February, 2008 (for the anterior period), thereby applying the changes introduced by the Commission retrospectively, the aggrieved respondents had filed appeal before the Appellate Tribunal questioning the order of the Commission which later on reached before the Bench in the instant case.

Analysis and Findings

The question before the Bench was, whether the order dated 15-09-2007 of the Commission was a mere interpretation/clarification of standard format agreement or the order changes the position substantially the terms of the format having prospective effect for raising future bills?

The Bench noticed that it was not the case of the appellant that the conditions of open access agreement and particularly, Clauses 29(1)(e) and 29(1)(f) of the agreement were either in contradistinction or in contravention to the Regulations, 2004 and tariff to be charged for inadvertent drawal from temporary supply rate was equally permissible under the scheme of Regulations, 2004 and agreement was accordingly executed between the parties in compliance thereof.

Therefore, the Bench held that the substantial change/modification which had been given effect to by the Commission under its order dated 15-09-2007 under Clause 29(1)(f) effecting the tariff for inadvertent drawal from temporary supply rate to regular supply rate was indeed a substantial change in the condition of the agreement and prejudicial to the interest of the parties (respondents herein) and could not be read to apply retrospectively from the date of agreement executed between the parties. The Bench expressed,

“As we are dealing with the commercial agreement, if any modification, that too substantial is being permitted to be altered under the agreement executed between the parties at a later stage with retrospective effect even by the statutory authority in the garb of correction or mistake or any typographical error, if any, that may, if prejudicial to the interest of the parties inter se in law be neither permissible nor advisable to give effect anterior to the date of modification/altercation in terms and conditions of the agreement.”

Although, acknowledging the infeasibility of laying down a straight-jacket principle regarding what is clarification or what may tantamount to a substantial change or modification, the Bench while relying on the guiding principles from Section 152 of the Code of Civil Procedure, 1908 clarified,

“…where there is an unintentional omission or mistake or an arithmetic or typographical error while drafting the agreement that may have been permissible to give an effect at a later stage from its inception but, where there is a substantial amendment/alteration in the conditions of agreement, if taken place with its inception, may certainly cause prejudice to the rights of the parties inter se financially or otherwise.”

Taking note of the interim order dated 27-08-2010 whereby the Court had directed the appellant to refund the amount deposited by the respondents with interest, the Bench clarified that considering the long business relations of the parties, the money already deposited by the respondents be adjusted against the future bills to be raised by the appellant in the terms as agreeable to the parties.

[Ajmer Vidyut Vitran Nigam Ltd. v. Hindustan Zinc Ltd., 2022 SCC OnLine SC 208, decided on 17-02-2022]

*Judgment by: Justice Ajay Rastogi

Appearance by

For the Appellant: Advocate Ajay Choudhary

For the Respondent: Advocate Dheeraj Nair

Kamini Sharma, Editorial Assistant has put this report together 

Case BriefsHigh Courts

Karnataka High Court: Krishna S Dixit J. quashes the criminal proceedings as the SC-ST act is not retrospective in nature.

The petitioners filed instant petition under Section 482 of Cr.PC 1973 seeking quashment of criminal proceedings as the Court has referred the matter for investigation in exercise of power u/s 156 (3) of the Code.

The Court observed that the offences allegedly been committed years ago i.e., on 18-10-1975 and the complaint was filed with inordinate delay with no plausible explanation for the same and thus ordinarily, the stale claims would not be entertained;

The Court further observed that the alleged acts do not constitute an offence under the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989, which is prospective in operation, there being constitutional bar to the retrospectively enacted in Article 20(2); it has been a settled principle of criminal jurisprudence that when the act complained of is not an offence when committed; a free citizen cannot be brought to book merely because such act is criminalized in a subsequent legislation.

The Court thus held “In the above circumstances, this petition succeeds and as a consequence, the FIR No.46/2014 registered by respondent No.1-Police is also set at naught and the proceedings in PCR No.63/2013 are also set aside.”

[Dr Shantha Raj TR v. State, 2022 SCC OnLine Kar 204, decided on 23-02-2022]


For petitioners: Mr. Sathish K and Mr. M S Bhagwat

For respondents: Ms. Renukaradhya

Arunima Bose, Editorial Assistant has reported this brief.

Supreme Court

Supreme Court: The 5-judge bench of R.M. Lodha, CJ and J.S. Khehar, J. Chelameswar, Dr. A.K. Sikri and R.F. Nariman deciding the question of law as to whether the proviso appended to Section 113 of the Income Tax Act, 1961 which was inserted in that Section by the Finance Act, 2002 is to operate prospectively or is clarificatory and curative in nature and, therefore, has retrospective operation, overruled the decision of the division bench in Commissioner of Income Tax v. Suresh N. Gupta, (2008) 4 SCC 362 which treated the said proviso as clarificatory and gave it a retrospective effect.

Applying the principle of fairness to the rule of restrospectivity, the Court held that legislation’s which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. Considering the proviso to Section 113 of the IT Act which states that the tax chargeable under the said Section shall be increased by a surcharge, if any, levied by any Central Act and applicable in the assessment year relevant to the previous year in which the search is initiated under Section 132 or the requisition is made under Section 132-A of IT Act, the Court noticed that the said provision id not beneficial but rather onerous to the assessee, hence, it cannot be retrospective effect.

In the present case, which was represented by B.V. Balram Das and Bhargava V. Desai, a search and seizure operation under Section 132 of ITAct was conducted in the year 2001 and consequently, the assessee filed its return of income for the block period from 01.04.1989 to 10.02.2000. The said block assessment was completed in the year 2002 but later it was observed that surcharge had not been levied on the tax imposed upon the assessee, thereby, resulting into the above issue before the Court. CIT v. Vatika Township Pvt. Ltd., Civil Appeal No. 8750 of 2014, decided on 15.09.2014

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