NCDRC
Case BriefsTribunals/Commissions/Regulatory Bodies

   

National Consumer Disputes Redressal Commission (NCDRC): The Bench of S.M. Kanitkar (Presiding Member) and Binoy Kumar (Member) while deliberating upon the instant complaints seeking refund of amount paid against the total consideration of the flat booked along with interest; observed and held that Mahindra Homes and Ireo Pvt. Ltd., have committed deficiency in service vis-a-vis providing the complainants their apartment along with the amenities promised, and since the builder had deducted 10% of total sale consideration, hence the amount of earnest money deducted was not correct, especially when the complainants were not at fault.

Relevant Facts of the Case: The complainants booked an apartment (hereinafter unit) under the “Project Luminare” initiated by the opposite parties (Mahindra Homes and Ireo Pvt. Ltd.) on 10-10-2014. The basic sale price was Rs. 3 crore 52 lakhs and 23 thousand and the complainant paid a booking amount of 15 Lakhs. Thereafter, via provisional allotment letter dated 26-11-2014, the opposite parties allotted the unit to the complainants.

As per the complainants, the opposite parties executed an Apartment Buyer’s Agreement with them on 04-05-2015. Prior to execution of this Agreement, the complainants paid an amount of Rs. 86,70,436 towards consideration of the unit. The complainants stated that all in all, they paid Rs. 1,30, 05,655 against the total consideration. The complainants further stated that the Agreement had several one-sided, arbitrary clauses and they were unbale to negotiate those with the opposite parties. On 28-03-2019, the complainants received the offer of possession and to execute the conveyance deed within 60 days, making the final payment of Rs. 3,41,17,818.

The complainants then visited the site only to discover that the opposite parties had failed to provide the promised amenities such as- a state of the art clubhouse with banquet halls and basketball courts, golf course, kids’ playing area, gym etc.

Contentions: The complainants alleged mischievous concealment of the actual carpet area and super are by the opposite parties in order to overcharge the complainants.

It was also submitted that the opposite parties did not present their plans to the Haryana Real Estate Regulatory Authority. The complainants also submitted that despite them raising these concerns before the opposite parties, no action was taken to cure the defects. They also complained of harassment by the opposite parties.

The main grievance raised by the complainant was that the opposite parties had arbitrarily deducted the earnest money and had not completed the project as per the Agreement.

Per contra, the opposite parties argued that they had made their offer of possession within the time period stipulated in clause 4.3 of the Apartment Buyer’s Agreement. It was also argued that nowhere the opposite party had promised any sort of amenities. They also denied any concealment vis-a-vis the actual carpet area.

The opposite parties also submitted that carpet area details were given to the HRERA authorities in 2017, whereas their agreement with the complainants was finalized before RERA came into effect in 2016; which is why carpet area details were not found in HRERA records.

Observations and Decision:

  • The Commission noted that the opposite parties had defined “apartment” in their Agreement to mean only the unit allotted to the complainants and not amenities. The Commission rejected the contention of the opposite parties that Schedule VII of the Agreement enshrining the amenities was not mentioned anywhere in the Agreement, it pointed out that clause 3.2 of the Agreement clearly mentions Schedule VII. The Commission also pointed out that the amenities are mentioned in the brochure as well, therefore it was prudent that they should be completed along with the completion of the apartment.

  • The Commission noted that the allotment letter was issued in 2014; the Agreement came into existence in 2015. It was observed that as per the Agreement the project was scheduled to be completed within 5 years and 3 months from the date of excavation (15-01-2015). Technically the possession should have been offered on 15-04-2020, but the opposite parties offered the possession on 28-03-2019.

  • The Commission pointed out that the offer of possession was made on 28-03-2019, and the opposite parties had submitted that the facilities stated in Schedule VII are in Phase II of the Complex and would be provided along with Phase II. The Bench also noted the opposite parties’ submission that they had obtained occupancy certificate for Phase II on 06-09-2021, which means that was an unexplained delay of 2 years, including delay in executing the Agreement.

  • The Commission thus decided that clauses 4.3 must be read in consonance with clause 3.2 and since the opposite parties have obtained the occupancy certificate for Phase II, and an unexplained delay on their part means that the opposite parties have committed deficiency in service.

  • The Commission partly allowed the complaints and directed Mahindra and Ireo to forfeit only the booking amount and refund the balance to the complainants within 6 weeks of this order.

[Hemant Narang v. Mahindra Homes Pvt. Ltd., Consumer Complaint No. 384, decided on 26-08-2022]


Advocates who appeared in this case :

Complainants: Kapil Madan, Advocate

Opposite Parties: Shweta Bharti, Sukriti R. Kapoor, Eshita Bhasin, Aviral Tripathi, Advocates


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Customs, Excise and Services Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Division Coram of Sulekha Beevi C.S. (Judicial Member) and P. Anjani Kumar (Technical Member) allowed two appeals (with same issue involved) which were filed aggrieved by the order of original authority. The Tribunal answered that ocean freight charges are not subject to levy of Service Tax under Business Support Services or Business Auxiliary Services.

The appellant is a freight forwarder and is engaged in freight forwarding of import and export shipments. They also collect ocean freight charges from their customers and pay the same to shipping lines/ shipping companies. The appellant did not discharge any service tax on the ocean freight charges. The Department was of the view that the appellant is liable to pay service tax on the ocean freight charges collected by them as these falls under Business Support Services, the second appeal alleged that the appellant, which is a SEZ unit, is not eligible for refund/credit in respect of the input services because the services are not physically consumed within the SEZ unit. Consequently, show cause notices were issued to the appellant, proposing to demand service tax on these two issues. Original authority had confirmed the demand along with interest and imposed penalty. Thus, the instant appeal was filed.

Counsel on behalf of the appellant argued that the demand has been confirmed on ocean freight charges collected by the appellant alleging that the appellant has provided Business Support Services for the period from May 2006 to March 2009. Further, demand of Service Tax of Rs.53,93,244/- has been confirmed alleging that the appellant has wrongly availed the benefit for the period from April 2006 to March 2009. He further submitted that the issue as to whether ocean freight charges collected are subject to levy of Service Tax is no longer res integra.

The Tribunal agreed that the first issue that as to whether the charges collected by the appellant from its customers in the nature of ocean freight are subject to levy of Service Tax under Business Support Services has been considered in various decisions of the Tribunal wherein the Tribunal has held that ocean freight charges are not subject to levy of Service Tax under Business Support Services or Business Auxiliary Services reproducing the case of Greenwich Meridian Logistics India Pvt. Ltd. v. CST, 2016 (43) S.T.R. 215 (Tri.-Mumbai). The Tribunal further followed the decisions relied upon by the counsel of the appellant to hold that the demand of Service Tax on ocean freight charges cannot sustain and requires to be set aside.

Dealing with second issue of demand of Service Tax alleging that the benefit of exemption is not eligible as the input services / approved services have not been consumed within the SEZ unit itself the Tribunal relied on the case of Vision Pro Event Management v. Commr. of C.E. & S.T., 2019 (365) E.L.T. 555 (Tri.—Chennai) and other cases relied on by the counsel for the appellant and concluded that the demand of Service Tax alleging that the appellant has wrongly availed the benefit cannot sustain and requires to be set aside. The appeals were thereby allowed.

[Geodis Overseas (P) Ltd. v. Commr. of ST, 2022 SCC OnLine CESTAT 430, decided on 24-06-2022]


Advocates who appeared in this case :

Shri Raghavan Ramabadran, Advocate, for the Appellant;

Smt K. Komathi, Authorized Representative, Advocate, for the Respondent.


*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

   

Bengaluru Rural and Urban 1st Additional District Consumer Disputes Redressal Forum: While deciding the instant complaint raising the issue of deficient service provided by the BYJU's learning app, the coram comprising of H.R. Srinivas (President), Y.S. Thammanna and Sharavathi S.M (Members), upon perusal of the facts revealing such deficiency in rendering service and the consequent mental agony and harassment to the complainants; directed Think and Learn Pvt. Ltd. (provider of BYJU's learning app) to refund the amount spent to purchase the app (Rs 99,000) along with interest at 12% per annum from the date of receipt of the amount. The opposite party was also directed to pay a sum of Rs.25,000 as damages, and Rs 5,000 towards litigation expenses.

Facts of the case: The complainants had purchased a BYJU's learning package for Rs 99,000 from its representatives. During payment via credit card, the opposite party (hereinafter OP) had informed that payment will be converted into EMI. The complainants received a payment link from the OP and paid Rs 99,000 on 25-07-2021. However, after the payment, the amount was not converted into EMI. Additionally, the OP had assured that they will provide two Samsung tabs worth Rs.25,000 each for the course but instead, they provided Lenovo M8 and M10 tabs, worth Rs.10,000 each.

The complainants were also dissatisfied with the quality of learning provided by the app and tried to cancel the subscription by sending an email. The OP responded that their issue would be resolved within 24 hours. However, even after several months, the issue remained unresolved, thus, the complainant filed a complaint under Section 35 of the Consumer Protection Act, 2019 for deficiency of service and sought refund along with compensation for the same.

Issues: Whether the complainants have proved deficiency in service on the part of the opposite party and whether there is any entitlement to the relief prayed for in the complaint?

Analysis and Decision:

Upon analysing the facts and evidence, the Court observed that the representatives of OP had ensured the complainants that in case the student is not fully satisfied with the working of the learning app or in the event of an issue, the entire amount will be returned without any deduction, but despite multiple requests, the OP had failed to cancel the subscription and refund. Additionally, the OP had provided different tabs than what they had assured to provide. Thus, the above-stated acts amount to deficiency on part of the OP in rendering service to the complainants.

The Court also observed that despite service of notice, the OP neither appeared before the commission nor filed any reply, so, the claims made by the complainant have gone un-rebutted and un-challenged. Given the absence of legal representation from the opposite party, the Commission passed the instant Order ex-parte.

[Madhusudhana B v. Think and Learn Pvt Ltd., Complaint Case No. CC/423/2021, decided on 10-05-2022]


Advocates who appeared in this case :

Complainants-In-person

Opposite party- Ex-parte

Kerala High Court
Case BriefsHigh Courts

Kerala High Court: N. Nagaresh, J., decided whether medical service would fall within the ambit of Section 2(42) of the Consumer Protection Act, 2019 unless of course the service is free of charge or is under a contract of personal service.

Background

Doctors practising Modern Medicine in Kannur filed the present petition seeking to quash the orders of District and State Consumer Disputes Redressal Commissions, as sans jurisdiction and hence illegal.

They sought to declare that the Consumer Fora under the Consumer Protection Act, 2019 does not have jurisdiction to take cognizance of complaints in respect of medical negligence and deficiency in medical service as a medical profession and practice and practice does not come within the purview of term ‘service’ defined under Section 2(42) of the Consumer Protection Act, 2019.

Contention

Senior Counsel assisted by the counsel for the petitioners argued that the medical service/practice is not included in the illustrations in the inclusive definition of the term ‘service’ under Section 2(42) of the Consumer Protection Act, 2019 and hence the intention of the Parliament is clear that the Parliament did not want to include medical services/profession within the purview of the term ‘service’. The learned Senior Counsel pointed out that the Draft Bill of the new Consumer Protection Act, 2019 had included health sector among the illustrations of facilities that are treated as ‘service’ in Section 2(42) of the new Act. However, the health sector was removed from among the illustrations under Section 2(42). The obvious reason is that the lawmakers intended to exclude medical service/profession from the purview of the new Act.

Analysis

High Court noted the argument of the petitioners that a complaint in respect of medical negligence or deficiency in medical service was not maintainable before the District or State Consumer Disputes Redressal Commission for the reason that Section 2(42) of the Consumer Protection Act, 2019 does not take within its ambit the medical profession/medical services.

Supreme Court’s decision in Indian Medical Association v. V.P. Shantha, (1995) 6 SCC 651, considered the question whether medical negligence/deficiency in the medical services would fall within the ambit of ‘service’ and it was held that the services rendered to a patient by a medical practitioner by way of consultation, diagnosis and treatment, both medical and surgical would fall within the ambit of ‘service’ as defined under Section 2(1)(o) of the Act, 1986.

The Act, 1986 was substituted by the Consumer Protection Act, 2019, wherein the term ‘service’ is defined under Section 2(42).

Further, it was added that both Sections 2(42) of the Act, 2019 and Section 2(1)(o) of the Act, 1986 more or less have the same meaning and implications. The only difference is that Section 2)42) of the Act, 2019 is more descriptive and takes specifically in the banking, financing, insurance, transport, processing supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information.

High Court opined that Section 2(42) of the Act would show that the Parliament intended to specifically underline that, certain services like Banking, Financing, Insurance, transport, etc., which are in the nature of public utility services, would come within the purview of services.

The said definition is inclusive and not exhaustive. Therefore, all services which are made available to potential users would fall under Section 2(42), except those services rendered free of charge or under a contract of personal service. The words “but not limited to” appearing in Section 2(42) clarifies the intention of the Parliament.

Hence,

Medical services therefore would indeed fall within the ambit of Section 2(42), unless of course the service is free of charge or is under a contract of personal service.

Bench added that, the District Commission considered the issue of maintainability of the complaint and noted that there was no difference to the meaning of ‘service’ in the old Act and the new Act. Therefore, District Commission rejected the objections as to the maintainability of the complaint.

Even the State Commission held that since no conscious change in the definition of “service” was made in the new Act, the petitioner’s contention that Health Sector had been deliberately excluded by the Parliament while enacting the new law, could not be accepted.

High Court dismissed the petition in view of the above. [Dr Vijil v. Ambujakshi T.P., 2022 SCC OnLine Ker 863, decided on 10-2-2022]


Advocates before the Court:

For the Petitioners:

By Advocates:

GOPAKUMARAN NAIR (SR.)

SOORAJ T.ELENJICKAL

RENOY VINCENT

ARUN ROY

HELEN P.A.

SHAHIR SHOWKATH ALI

For the Respondents:

By Advocates:

SRI.MANU S, ASGI

SRI.V.GIREESH KUMAR, CGC

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission, New Delhi (NCDRC): The Coram of R.K. Agrawal (President) and Dr S.M. Kantikar (Member) addressed a matter wherein the builder took money from the purchaser for the formation of a co-operative housing society but failed to do so and when asked for the refund, he did not return the money as well.

An agreement was entered between the complainant and the OP to construct Bungalow and as per that, the complainant had paid Rs 10,00,000 as consideration. The said agreement was not notarized, after handing over the possession and Occupancy Certificate, OP had to form a Co-operative Society, for which an amount was collected from the complainant, which was Rs 75,000, but OP failed to do so and also did not enroll the complainant as a member or executed independent Deed of Sale.

Later it came to the complainant’s knowledge that the OP had executed a few individual sale deeds in respect of some purchasers but not for the complainant. The complainant got drafted a sale deed, but the OP demanded a further amount even after agreeing initially that he would execute the same.

The complainant even obtained a NOC under FEMA. Yet the sale deed was not executed by the builder.

Hence, on being aggrieved with the above circumstances, the party reached the consumer forum for a refund of Rs 10,00,000 along with interest @18% p.a.; compensation of Rs 5,00,000 and Rs 50,580 towards travel expenses due to postponement of Air Ticket to USA.

Analysis, Law and Decision

Coram noted that the appellant builder executed individual Sale Deeds in respect of some purchasers.

Commission found that the Complainant had agreed to join Co-operative Housing Society, but the appellant did not form any and also did not refund the money paid by the complainant as ‘advance towards the maintenance and formation of the Co-operative Housing Society”.

Based on the above discussion, the OP was liable for deficiency in service. [Dilip Sagun Naik v. Dr Maliyil Cheriyan Mathai, 2022 SCC OnLine NCDRC 30, decided on 17-2-2022]


Advocates before the Commission:

For the Appellant: Mr. Dileep Poolakkot, Advocate

For the Respondent: Mr. S.N. Joshi, Advocate

Case BriefsSupreme Court

Supreme Court: While adjudicating the dispute with regard to jurisdiction of CCI to inquire into allegations of bid rigging, collusive bidding, and cartelisation in the tender process for appointment of selling agents and distributors for lotteries organised in the State of Mizoram the Division Bench of Sanjay Kishan Kaul* and M.M. Sundresh, JJ., concluded that,

Lotteries may be a regulated commodity and may even be res extra commercium; that would not take away the aspect of something which is anti-competition in the context of the business related to lotteries.”

Factual Backdrop

A complaint was made by the respondent 4-complainant under Sections 3 & 4 read with Section 19(1)(a) of the Competition Act, 2002 with regard to invitation of expression of interest (EOI) issued by State of Mizoram through respondent 2, the Director, Institutional Finance and State Lottery inviting bids for the appointment of lottery distributors and selling agents for state lotteries.

The complainant contended before the Competition Commission of India (CCI) that there was bid rigging and a collusive bidding process which violated Section 3(1) read with Section 3(3) of the Competition Act, and also caused grave financial loss to the State of Mizoram. The allegation was also made against the State that it had abused its dominant position as administrator of State lotteries, by requiring distributors to furnish exorbitant sums of money towards security, advance payment, and prize pool even before the lotteries were held which was in contravention to Section 4 of the Competition Act.

Action Taken by the CCI

The CCI found that prima facie, there were evidence of cartelisation and bid rigging in contravention of Section 3(1) read with Section 3(3) of the Competition Act. However, the CCI opined that no case was made out against respondent the State as it could not be considered as an ‘enterprise’ or a ‘group’ under the Competition Act. The CCI opined that the State’s role was to regulate and monitor the business of lotteries in the State of Mizoram in exercise of its powers and functions under the Mizoram Lotteries (Regulation) Rules, 2011 framed under the Lotteries (Regulation) Act, 1998. The CCI, thus, rejected the complaint under Section 4 of the Competition Act.

However, with regard to private respondents, CCI required the Director General (DG) to conduct an investigation into the matter. Pursuant to which the DG report revealed that the respondent 5 and 6 along with M/s. Teesta Distributors and M/s. E-Cool Gaming Solutions (P) Ltd. had colluded, formed a cartel, and indulged in bid rigging in violation of Sections 3(1) and 3(3) of the Competition Act. Consequently, the CCI by its order dated 12-02-2013 send copies of the DG report to the parties seeking objections/replies thereto.

Intervention by the High Court

The Bench observed that surprisingly the State had approached the Gauhati High Court challenging both the report of the DG and the CCI’s order for making adverse observations despite the fact that the complainant had failed to establish a prima facie case under Section 4 of the Competition Act. The Bench remarked,

“We say ‘surprisingly’, because if at all, the grievance could have been of respondent 2 qua the observations made, but could not have been of State… In fact, Section 4 proceedings against respondent 1 were already closed.”

The High Court, however, chose to pass an interim order to stay further proceedings before the CCI. Subsequently, by the impugned order the High Court relied on Union of India v. Martin Lotter Agencies Ltd., (2009) 12 SCC 209,  to hold that lotteries, being akin to gambling activities, came under the purview of the doctrine of res extra commercium. The High Court opined that since the Competition Act was applicable to legitimate trade and goods, and was promulgated to ensure competition in markets that are res commercium, the CCI did not have jurisdiction to entertain the complaint of respondent  4.

Whether distribution of lotteries amounts to “Service”?

With regard to the respondents’ claim that they were merely a distributor which did not provide any services to any potential user of lottery and such distribution did not constitute a service under Section 2(u) of the Competition Act, the Bench held that the expansive definition of ‘Service’ under Section 2(u) of the Competition Act means “service of any description”, which is to be made available to potential users. Holding that the purchaser of a lottery ticket is a potential user and a service is being made available by the selling agents in the context of the Competition Act, the Bench concluded that the inclusive mentioning does not inhibit the larger expansive definition.

CCI’s Jurisdiction to entertain issues relating to lotteries

On the contention that Section 3(1) of the Competition Act would have no application as there was no “goods” or “provisions of services” which could give rise to the CCI’s jurisdiction, specifically because lottery tickets were not goods and there was no provision of any services, the Bench observed that lotteries may be a regulated commodity and may even be res extra commercium; that would not take away the aspect of something which is anti-competition in the context of the business related to lotteries. Hence, the Bench concluded,

The lottery business can continue to be regulated by the Lotteries (Regulation) Act, however, if in the tendering process there is an element of anti-competition which would require investigation by the CCI, that cannot be prevented under the pretext of the lottery business being res extra commercium, more so when the State Government decides to deal in lotteries.

Findings and Conclusion

Finding the conduct of the State “very non-appreciable” and intervention by the High Court “extremely premature”, the Bench stated that the State ought to have cooperated with the CCI and the High Court ought to have waited for the CCI to come to a conclusion but on the other hand what had happened was that the CCI proceedings had been brought to a standstill while the High Court opined on the basis of some aspects which may or may not arise. The Bench remarked,

“A simple aspect of anti-competitive practices and cartelisation had got dragged on for almost ten years in what appears to be a mis-application by the High Court of the interplay of the two Acts, i.e., the Competition Act and the Regulation Act.”

Hence, holding that the proceedings before the CCI ought to have been permitted to conclude with the right available to the affected parties to avail of the appellate remedy under Section 53B of the Competition Act, the Bench set aside the impugned judgment and directed to close the proceedings in the case filed by the State while the proceedings against the other parties were directed to continue.

[CCI v. State of Mizoram, 2022 SCC OnLine SC 63, decided on 19-01-2022]


*Judgment by: Justice Sanjay Kishan Kaul


Appearance by:

For the CCI: Rajshekhar Rao, Senior Advocate


Kamini Sharma, Editorial Assistant has put this report together

Case BriefsHigh Courts

Orissa High Court: A Division Bench of B P Routray and S. Muralidhar JJ. dismissed the petition being devoid of merits.

The instant petition was filed by the Petitioner, a Judicial Officer, challenging the order of compulsory retirement dated 23-08-2012 on attaining the age of 50 years in terms of Rule 44 of the OSJS and OJS Rules, 2007. He was an Officer in the cadre of Civil Judge and last worked as JMFC, Motu

Counsel for petitioners Mr. Manoj Kumar Mohanty submitted that absence of any adverse remark in the confidential report of the Petitioner touching on his integrity or about his inability to achieve the prescribed yardstick, the recommendation of the Full Court for his compulsory retirement is arbitrary

Counsel for respondents Mr. P K Muduli submitted that an overall assessment was made of the performance of the Petitioner during his entire service period and he was found unsuitable for being continued as such. It is also submitted that the scope of judicial review in matters of compulsory retirement is limited.

“Rule 44 of the OSJS and OJS Rules 2007 (hereinafter referred to as ‘2007 Rules’) authorizes the High Court to retire in public interest any member of the service who has attended the age of 50 years. Such consideration for all the Officers in service shall be made at least three times i.e., when he is about to attend the age of 50, 55 & 58 years.”

 The Court observed that the object of compulsory retirement is to weed out the dishonest, the corrupt and the deadwood. It is true that if an honest Judicial Officer is compulsorily retired it might lower the morale of his colleagues and other members in the service.

The Court observed that on a careful perusal of the record, it is seen that the Petitioner does not possess the standard efficiency required to discharge the duty of the post held by him. As per the notification of the State Government it is prescribed that it will not be in public interest to retain an employee in service, if he lacks in the standard of efficiency required to discharge the duties of the post he presently holds.

The Court further observed that on an overall assessment of the personal record of the Petitioner, the emerging picture is not favourable to him. During his service career spanning fourteen years and eight months, he was not able to get a ‘good’ grading for at least three consecutive years. He was earlier also let off with a warning to be careful in future. He was not found suitable either for promotion to the higher post or for getting higher pay in ACPII scale. His performance was often rated ‘average’. There have been allegations of his passing indiscriminate orders in particular cases or failing to maintain uniformity or consistency in passing judicial orders. Charges on the above score were framed against him in the departmental proceedings. The overall assessment of the Petitioner’s entire service carrier is that his performance failed to meet the expected standards of competency.

The Court held An overall consideration of all those factors, tested on the touchstone of the standard of efficiency of the Petitioner as a Judicial Officer reveals that the decision of authority cannot be said to be as mala fide or arbitrary or based on no evidence.”[Ashok Kumar Agarwala v. Registrar General of Orissa, 2022 SCC OnLine Ori 406, decided on 19-01-2022]


Arunima Bose, Editorial Assistant has reported this brief.

Case Briefs

Maharashtra Authority for Advance Ruling: The Bench of Rajiv Magoo, Additional Commissioner of Central Tax (Member) and T.R. Ramnani, Joint Commissioner of State Tax, decided whether GST will be payable on services provided by Club to its Members against monthly contribution?

Instant application was filed by the applicant seeking an advance ruling in respect of the following questions:

  1. Whether the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is ‘business’ as envisaged under Section 2(17) of the CGST Act, 2017?
  2. Whether contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, within the meaning of supply?

Factual Background

Applicant arranges meetings for its members and in order to defray its expenditure for such meetings, communications and administration, fees are collected from members. No facilities/benefits are provided such as recreation, etc. by the applicant. The applicant also sends fees to International Institution at USA for service activities and international administration.

Applicant further sends fees to its District Clubs.

It was stated that a separate administration account is maintained by the club, wherein sum recovered from all members for using the same for meetings and other petty administrative expenses and also include expenses for location and light refreshments.

The admin account is managed as if it is purely an agent of the members and no actual service if extended to the members.

Applicant maintains two separate bank accounts, one for administrative expenses and other for donations/charity. The receipts in donations/charity account are used exclusively for the purpose of donation/charity and no amount is utilized for administration purposes.

Advance ruling is sought about taxability or otherwise under the Act, of contributions received from the members in the Administration Account for expending the same for the weekly and other meetings and other petty administrative expenses.

Observations and Findings

Bench stated that in view of Section 7 of the CGST Act, 2017, the applicant society and its members were distinct persons and the fees received by the applicant, from its members was nothing but consideration received for supply of goods/services as a separate entity. Therefore, the applicant has to pay GST on the said amounts received from its members.

Contributions from the members, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply.

Authority expressed that the impugned activities performed by the applicant for the welfare activities of its members which includes meetings with food and refreshments, etc. is a service rendered by the applicant to its members as per the definition of term ‘services under Section 2(102) of the CGST Act.

Clause (e) of Section 2(17) of the CGST makes it clear that the activity of providing facilities or benefits by an association to its members for a subscription is a business under GST Act. Hence the transactions between the association and its members is a service.

“Member and Club are two distinct persons and hence, any activities and transactions between them will be supply between separate/distinct persons.”

 In view of the above discussion, it was held that the amount collected as membership subscription and admission fees from members is liable to GST as supply of services.[Rotary Club of Bombay Queen City, In Re., GST-ARA-19/2020-21/B-96, decided on 22-11-2021]

Advance RulingsCase Briefs

Maharashtra Authority for Advance Ruling (MahaGST): The Bench of Rajiv Magoo Joint Commissioner of Central Tax and T.R. Ramnani, Joint Commissioner of State Tax, decided whether reimbursement by Industry Partner to Third Party aggregator of stipend paid to students would attract GST or not.

Applicant filed the instant application seeking an advance ruling in respect of the following questions:

  1. Whether the reimbursement by Industry Partner to YAS of the stipend paid to students attracts GST?
  2. Whether the reimbursement by Industry Partner to YAS of the insurance premium attracts GST?
  3. Whether the reimbursement by Industry Partner to YAS of the expenses for uniform and safety shoes attracts GST?

Applicant was stated to be registered as a ‘not for profit Company’ under Section 25 of the Companies Act, 1956. The activities of applicant were charitable and hold registration under Section 12 AA of the Income Tax Act, 1961.

Since applicant is a Third Party Aggregator providing support for mobilizing the trainees under the National Apprenticeship promotion Scheme for providing them on-the-job training in industries, it enters into agreements with industry partner who impart actual practical training to the students.

Analysis, Law and Decision 

Firstly, the AAR stated that the two questions for consideration were withdrawn by the applicant, hence the discussions in the present matter will only pertain to: Whether the reimbursement by Industry Partner to the applicant, of the stipend paid to students, attracts GST?

Bench in view of the said issue stated that the industry partner that provides training to the trainees is required to pay stipend to the trainees. The said stipend is not directly paid to the trainees by the companies, rather the same are routed through the applicant. Adding to this, it was stated that the entire amounts received as stipend from the companies are paid to the trainees without any amount being retained. Hence, applicant acts only as the intermediary.

Therefore, AAR held that the applicant is only a conduit for the payment of stipend and the actual service is supplied by the trainees to the trainer companies against which stipend is payable.

Lastly, it was held that the amount of stipend received by the applicant from the industry partners and paid in full to the trainees is not taxable at the hands of the applicant. [Yashaswi Academy for Skills, In Re., GST-ARA-83/2019-20/B-47, decided on 20-08-2021]

Case BriefsDistrict CourtTribunals/Commissions/Regulatory Bodies

State Consumer Disputes Redressal Commission, U.T. Chandigarh: The Coram of Justice Raj Shekhar Attri (President) and Padma Pandey, Rajesh K. Arya (Members) observed that a service provider cannot state that it was not obliged to provide any record/bills to the consumer, since a person who is spending hefty amount to receive the services has the right to know where, how and in what manner the money was spent.

Complainant had paid an amount of Rs 27 lakhs to the OPs for the construction of a residential house.

Regarding the completion of work, the complainant asked the OPs to provide the details of the bill, but to no avail and as a result, the complainant hired a professional to assess the work done.

After the assessment, it was found that the value of completion of work done by the OPs came to be Rs 16,77,629 whereas they received an amount of Rs 27 lakhs. Due to which the complainant stopped the work.

OPs extracted Rs 10,22, 371 extra from the complainant causing him financial loss and also failed to complete the construction work as per the agreement and demanded more amount.

In view of the above background, the Complainant sought directions to OPs to refund the excess amount.

OP’s Pleading

Opposite Parties pleaded that as per the agreement, the complainant was liable to pay an amount of Rs 62,84,800, Since 60% of the work was completed, the complainant was supposed to pay an amount of Rs 37,73, 880, out of which only Rs 27 lakhs were paid. OPs also submitted that the person who did the assessment was not an expert. Also, the complainant befooled the OP that his loan was going to get sanctioned and hence the OPs should continue the construction work, even in the absence of payment of remaining amount.

OPs also submitted that they were not obliged to provide the detail of bills for the said construction work.

Analysis, Law and Decision

Moot Question: Whether the OPs had received an excess amount from the complainant towards partial construction work of house done on his plot or not?

Bench opined that to come to any definite conclusion, an independent person qualified in the said field was required to be appointed to give his report resultantly, a Local Commissioner was appointed.

Unfair Trade Practice

Commission noted from the report of the Local Commissioner that through the material in the building and structure raised was as per the required specifications, yet the value of work which has been done at the site came to be Rs 15,04,630 only, whereas, on the other hand, the opposite parties have already received an amount of Rs 27 lacs from the complainant, which act clearly amounts to adoption of unfair trade practice.

Deficiency in Service

Adding to its analysis, Bench also stated that the complainant was right in seeking bills from the OPs. In fact, by not providing the bill, OPs were deficient in providing service.

OPs cannot wriggle out of the situation by stating that they were not obliged to provide any record/bills to the complainant, as the same was not agreed to between the parties, because every person who is shredding hefty amount from his pocket towards the services being provided to him, has the right to know as to how, where and in what manner, the same has been utilized.

Conclusion

Commission directed OPs to refund the amount of Rs 11, 95, 370 received in excess along with 12% interest within a period of 30 days.

To pay compensation for causing mental agony and harassment and also cost of litigation, in lumpsum, to the tune of Rs 50,000/-, to the complainant, within a period of 30 days

If the complainant had availed housing loan from any bank/financial institution for making payment towards price of plot in question, it shall have the first charge on the amount payable, to the extent, the same was due to be paid by the complainant. [Mubarak Masih v. Gautam Construction Company, Complaint Case No. 57 of 2019, decided on 27-05-2021]


Advocates before the Commission:

Abhishek Bhateja, Advocate for the complainant.

N.K. Nagar, Advocate for the opposite parties.

Jammu and Kashmir and Ladakh High Court
Case BriefsHigh Courts

Jammu and Kashmir High Court: The Division Bench of Tashi Rabstan and Ali Mohammad Magrey, JJ., addressed the instant petition seeking for issuance of directions to the government for providing promotion opportunities to the persons working as restorers in the High Court. The Bench remarked,

“It is settled position of law that right of consideration for promotion to the next higher post is a fundamental right of an employee. Opportunity of advancement in service career by promotion is considered to be a normal incidence of service.”Ser

The grievance of the petitioners was that they were working as Restorers in the High Court of Jammu and Kashmir and that they had remained stagnated on the said posts as there were no promotional avenues available for them in terms of the rules governing the field. It was stated that the grade attached to the said posts of Restorers was Rs.2610-3450 (pre-revised) which was neither commensurate to the duties being performed by the petitioners nor at par with their counterparts working in the other High Courts of the country. The petitioners had filed a representation before the Registrar General of the High Court for seeking redressal of their grievances. The registrar, in return, had requested the government to accord approval for upgradation of pay scale of Restorers working in the High Court from 2610-3450 (pre-revised) to 3050-4910 (pre-revised).

However, despite there being recommendations for upgradation of pay scale the Government did not consider the case. The issue was threadbare discussed and examined by the High-Level Committee constituted for this purpose which was headed by Financial Commissioner, Finance Department. The Committee finally recommended that pay scale attached to the post held by all the employees working in the High Court could not be upgraded as it would lead to similar claims from similarly placed employees of the State Government and it may also result in pay anomalies.

Ultimately, keeping in view the demands of the employees, and also the direction passed by this  Court in Joginder Singh v State, the government decided that special pay equivalent to the 10% of the basic pay may be allowed to the employees.  The said benefit of the “Special Pay” had already been accepted by the employees and the Restorers had also been allowed the same benefit. The government contended that the case of the Restorers could not be examined in isolation from other employees of the High Court. Since, all the employees working in the High Court were governed by the same rules, same yardstick had to be adopted/ followed for each of such category of employees while considering their case of upgradation of pay scale.

The petitioners contended that the course of action adopted by the Government in intermingling the issue of upgradation of the grade attached to the posts of Restorers, with the grant of ‘Special Pay’ could not be countenanced at all.

The ‘Special Pay’ in favour of the employees working in the High Court was granted by the Government in recognition to the special duties being performed by such employees and same was a distinct element which, in no circumstance could be merged with the basic pay.

The Bench, after perusing the recruitment rules/ orders governing the service conditions of the petitioner-Restorers observed that the standing mode for filling up the available vacancies of Restorers in the High Court was 100% by direct recruitment, but, at the same time these Restorers had not been made the feeding cadre for any higher post, meaning thereby that there were no avenues for their promotion to the next higher post at all. The Bench expressed,

“Availability of reasonable promotional opportunities in service generates efficiency and fosters the appropriate attitude to grow for achieving excellence in service.”

The Supreme Court, in Council of Scientific and Industrial Research v. K.G.S. Bhatt, (1989) 4 SCC 635, in order to emphasize the importance of promotional avenues to obviate stagnation in service had held as follows:

“…an organization, public or private, does not ‘hire a hand’ but engages or employees a whole man. The person is recruited by an organization not just for a job, but for a whole career. One must, therefore, be given an opportunity to advance…Every management must provide realistic opportunities for promising employees to move upward.”

It had been repeated and reiterated in a catena of judicial dictums that absence of appropriate promotional prospects in service is bound to degenerate the employees. Stagnation in service on the same post for quite a long period of time and lack of any promotional avenues kills the desire to serve properly. The Bench observed,

“The petitioners have been discharging their duties on the posts of Restorers in the High Court since a long period of time with the legitimate expectation that in due recognition of such services being rendered by them, they will be provided appropriate promotional avenues as is the procedure prevalent with regard to the rest of the posts borne on the establishment of the High Court.”

The factum of stagnation in service qua the petitioners was clearly evident even to a naked eye as, in their entire length of service, not even a single promotional avenue was available to the petitioners. In view of the foregoing analysis, the Bench disposed of the instant petition by directing the Government to consider the recommendations of the High Court for upgradation of the grade attached to the posts of Restorers notwithstanding the grant of ‘Special Pay’ and pass appropriate orders thereon. Further, in view of the stagnation in service being faced by the petitioners, the Bench directed the Registrar of the High Court,to consider the case of the petitioners for exploring the possibility of creating suitable promotional avenues in favour of the petitioners by making appropriate amendment in the rules governing the field commensurate to the present status/ qualification of the petitioners. [Latif Hussain Khan v. State of JK, WP(C) No.1410/2019, decided on 26-02-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Appearance before the Court by:

For the Petitioner: Sr. Adv. Rohit Kapoor and Adv. Ankit

For the Respondents: Sr. AAG B. A. Dar and Adv. Masooda Jan

Punjab and Haryana High Court
Case BriefsHigh Courts

Punjab and Haryana High Court:The Division Bench of Ravi Shanker Jha, CJ. and Arun Palli, J., upheld the impugned order of Single Judge whereby, the Single Judge had held that the appellant is not entitled to pensionary benefits as he has resigned from service.

The petitioner joined the services of Punjab National Bank in the year 1963 and due to personal reasons, after rendering 25 years of service; he submitted his resignation on 05-01-1988, which was accepted belatedly by the bank on 14-10-1991 with effect from 05-02-1988. Petitioner requested the Bank to release his retiral benefits including gratuity, provident fund, leave encashment, sick leave salary and arrears of increments. The claim of the petitioner had been resisted by the Bank in view of Regulation 22(1) of the Punjab National Bank(Employees’)Pension Regulations, 1995, Which is extracted herein below:-

22. Forfeiture of service(1) Resignation or dismissal or removal or termination of an employee from service of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits.”

The Single Judge while considering the issue of pension relied on the judgment of Supreme Court rendered in Senior Divisional Manager, Life Insurance Corporation of India v.. Shree Lal Meena, (2019) 4 SCC 479, and Uco Bank v. Sanwar Mal, 2004(4) SCC 412, wherein, the Court had held that, In a self financing scheme, a separate fund is earmarked as the Scheme is not based on budgetary support but on adequate contributions from the members of the fund. Retirement is allowed only on completion of qualifying service which is not there in the case of resignation. When such a retiree opts for self financing Pension Scheme, he brings in accumulated contribution earned by him after completing qualifying number of years of service under the Provident Fund Rules whereas a person who resigns may not have adequate credit balance to his provident fund account. Similarly, the pension payable to the beneficiaries under the Scheme would depend on income accruing on investments and unless there is adequate corpus, the Scheme may not be workable and, therefore, Regulation 22 prescribes a disqualification to dismissed employees and employees who have resigned.

 On the basis of above-mentioned precedent, the Single Judge had held that there was no doubt that the petitioner had invited the forfeiture of pension by his own conduct and, therefore, no interference was called for by the Court to that extent. However, regarding the other claims, the Court observed that the same had been withheld by the Bank without any plausible explanation.  Therefore, the Court had directed the Bank to make requisite calculations and give benefits of all the retiral benefits except pension, to the petitioner by reckoning his date of resignation as 14-10-1991. The petitioner was also granted interest at 8% per annum on the amount, which was found due and payable to him.

In the light of above, the Bench dismissed the appeal holding that it did not find any reason to interfere with the order passed by the Single Judge, as the Single Judge had already granted adequate relief to the appellant. [Kanwar Kesri Singh v. Punjab National Bank, 2020 SCC OnLine P&H 2359, decided on 19-02-2020]

Case BriefsSupreme Court

Supreme Court: In a case relating to Prevention of Corruption Act, the 3-judge bench of Ashok Bhushan, R. Subhash Reddy and M.R. Shah*, JJ has partly allowed the appeal regarding quantum of sentence, while concurrent order of conviction by the Courts below was confirmed.

The appellant was convicted for offences under Sections 7, 13(2) read with 13(1) (d) of the Prevention of Corruption Act, 1988 whereby the Special Judge had sentenced him to undergo rigorous imprisonment for a period of two years with fine of Rs 5,000; which was confirmed by the High Court of judicature at Madras.

Aggrieved and dissatisfied, the appellant contended that he was a senior citizen aged about 69/70 years and had been already dismissed from service on being convicted for the offences under the Prevention of Corruption Act. Therefore, it was prayed to reduce the sentence imposed to the sentence already undergone.

Considering the fact that, out of two years sentence imposed by the Special Court, confirmed by the High Court, the appellant had already undergone approximately one year and one month and that the appellant was a senior citizen aged about 70 years who had been already dismissed from service, the Court stated,

“The ends of justice would be met if the sentence of two years rigorous imprisonment as imposed by the learned Special Court, confirmed by the High Court, is reduced to that of one year and one month rigorous imprisonment.”[S. Sundara Kumar v. State, 2021 SCC OnLine SC 21, decided on 13-01-2021]


*Justice M.R. Shah has penned this judgment

Jammu and Kashmir and Ladakh High Court
Case BriefsHigh Courts

Jammu and Kashmir High Court: Sanjay Dhar, J., while allowing the present petition, clarified that a person who has been declared missing for more than ten years, cannot be said to have ‘deserted’ his service responsibilities.

 Background

Petitioner has filed the instant petition seeking declaration that her husband namely Asha Ram, be declared as dead in terms of Section 108 of India Evidence Act, 1872. A Writ of Certiorari to quash the order of respondents whereby the missing husband of the petitioner has been declared as ‘deserter’ by the respondent authority has also been sought.

 Issue

Whether the respondents could have, on the basis of an enquiry, declared the petitioner’s husband as ‘deserter’ in the circumstances of the present case?

 Observation

Court reproduced Section 108 of the Indian Evidence Act, 1872;

Burden of proving that person is alive who has not been heard of for seven years –  Provided that when the question is whether a man is alive or dead, and it is proved that he has not been heard of for seven years by those who would naturally have heard of him if he had been alive, the burden of proving that he is alive is shifted to the person who affirms it.

Further, Court referred to the definition of the word ‘desert’ as defined in Oxford English Dictionary to mean: (i) callous or treacherously abandon (ii) leave (a place), causing it to appear empty and (iii) illegally run away from the military service and connecting it with the facts of the present case, observed, “A person, whose whereabouts are unknown and who has not been heard of for the last more than 10 years, cannot be stated to have illegally run away from his service … the petitioner’s husband is presumed to be dead because his whereabouts have remained unknown for more than seven years, as such, and by no stretch of imagination, he can be held guilty of having deserted the service of CRPF… The action of the respondents in declaring the petitioner’s husband as ‘deserter’ and thereafter handing down the punishment of dismissal to him, is unsustainable in law.”

 Decision

While allowing the present petition, Court quashed the orders of the respondent authority whereby the petitioner’s husband was declared ‘deserter’ and was dismissed from his service. Further, directions were issued to release all the service/pensionary benefits of the petitioner’s husband in favour of the rightful claimants.[Madhu Devi v. Union of India, 2020 SCC OnLine J&K 723, decided on 24-12-2020]


Sakshi Shukla, Editorial Assistant has put this story together

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) allowed an appeal which involved the admissibility of Cenvat credit by the appellants Bhoruka Aluminium Limited (BAL) Bhoruka Extrusions Private Limited (BEPL).

The counsel for the appellant,  Gaurav Shah submitted that BAL wanted to sell the Aluminium extrusion business since they were not able to run the same effectively and availed the services of Singhi Advisors for identifying a buyer for the specific business division, undertaking adequate negotiations and following due diligence; From the invoice and the agreement it is very clear that Singhi Advisors was appointed by BAL to find a suitable buyer for the companies Aluminium extrusion business; Singhi were also fully responsible for providing required documents. He further submitted that on the completion of the service and based on the service provider‟s advice, the Aluminium extrusion business of BAL was sold to BEPL (Fully owned by YKK Holdings, Japan) on a slump sale/going concern basis; the sale was that of the unit and not that of the shares of the company which was contrary to the findings of the Adjudicating Authority; as the appellants availed a service which was in the nature of legal and financial services and was availed in relation to the running the factory and manufacturing of the final excisable product, though indirectly, they availed credit.

The Tribunal after perusing the records found that it would be beneficial to look at the statutory provisions defining the input service under Rule 2(l) of Cenvat Credit Rules, 2004 from which it can be found that one was the substantive part and the other was the inclusive part. The Tribunal further explained that the nomenclature and the classification of services was secondary and just because the appellants could not classify the service availed under a particular head, it does not take away the substantial right of the appellants to avail the credit if it is otherwise permissible under the rules.

The Tribunal while allowing the appeal found that the intent of the appellant as seen from the correspondence available on record was not to wind up the company. The intent was very clear to sell or transfer the business, obviously the manufacturing activity, to any person or company who would manage the manufacturing activity i.e., to produce and sell the goods. Therefore, from a wider perspective, the efforts of the appellants were in the direction of continuation of the manufacture of final products and their removal from the factory. The Tribunal held that appellants had submitted that the said credit was not allowed to be transferred to the new unit in terms of Rule 10 of CCR 2004; they had not utilised the credit and even then, the department had issued a demand notice for payment back of credit which was not legally sustainable.[Bhoruka Extrusions (P) Ltd. v. C.C., C.E. & S.T.,  2021 SCC OnLine CESTAT 1, decided on 04-01-2021]


Suchita Shukla, Editorial Assistant has put this story together

Case BriefsHigh Courts

Himachal Pradesh High Court: Vivek Thakur J., while allowing the present petition, made an elaborated discussion over conditions for granting benefit of service and regularization, in the light of Gauri Dutt v. State of Himachal Pradesh, HLJ 2008 (HP) 366.

Background

The petitioner in the instant case was appointed as daily waged surveyor on 1-11-1983 and in the same year, he served at the said position for 61 days. He continued to work as a daily waged Surveyor till 30-06-1987 and with effect from 01-07-1987 to 28-02-1988, he was engaged as daily waged beldar. Thereafter, from 01-03-1988 to 31-10-1989, he was engaged as daily waged Fitter, a Class-III post equivalent to the post of Surveyor. Since 01-11-1989 till his regularization, he was engaged as daily waged Surveyor continuously. Since 1984 till his regularization vide order dated 17-12-2002, with effect from 31-03-2000, he served for 240 days each in every calendar year as a daily waged employee, though in a different capacity, that is, Surveyor, Beldar and Fitter, as mentioned above.

It is also undisputed that pursuant to the decision of Government dated 28-02-2008, taken after passing of judgment by the present High Court in Gauri Dutt v. State of Himachal Pradesh, HLJ 2008 (HP) 366, petitioner was regularized, immediately on completion of 10 years as Surveyor with 240 days each in every calendar year, vide order dated 18-03-2008 from retrospective date with effect from 01-01-2000. Thereafter petitioner had represented to the respondent authority to take into consideration his service with effect from 1984 onwards as he had completed 240 days in each calendar year continuously after 01-01-1984 till his regularization. Feeling aggrieved by omission on the part of respondents authority to take any decision, he had approached this High Court by filing CWP No. 8325 of 2011, which was disposed of vide order dated 11-10-2011 with direction to the respondents-authority to take appropriate action in representation made by petitioner, which was pending consideration before the authority. In pursuance to the order passed by the present High Court, representation of the petitioner was considered by Engineer-in-Chief and was decided vide order dated 28-11-2011, whereby it was concluded by the authority that from 01-03-1988 to 31-10-1989, petitioner was engaged as daily waged fitter and thereafter he continued as daily waged surveyor till his regularization and as post of fitter was equivalent to the post of surveyor, service of the petitioner as fitter with effect from 01-03-1988 to 31-10-1989 was also taken into consideration for counting requisite years for his regularization as surveyor and as such work-charge status was conferred upon the petitioner with effect from 01-01-1998, instead of 01-01-2000.

By way of present petition, petitioner has assailed order dated 28-11-2011, claiming that his entire service with effect from 01-01-1984, since when he has been working as daily waged Surveyor, Beldar and Fitter, with 240 days in each calendar year, is required to be taken into consideration for the purpose of conferring work-charge status upon him and/or regularization of his service.

Observation

The Court referred to the case of  Gauri Dutt, where the essential question was precisely relevant for consideration in the instant case, that is,

Where if an employee has rendered service on daily waged basis on 2 separate posts in lower and higher scales, can the employee be given benefit of the service rendered by him in the lower scale and be regularized in the higher scale by combining the two services after 10 years?

The Division Bench in the aforementioned case held, “when an employee completes 10 years of continuous service combined in two scales, an option should be given to the employee to either accept work charge status in the lower scale or he may continue to work on daily rated basis in the higher scale and claim work charge status in the higher scale of completion of 10 years of continuous service in the said scale…However, if the employee on being given a chance to exercise his option does not convey his opinion within 30 days, he shall be granted work charge status in the lower scale by combining the service rendered in both the scales.” In essence the Bench observed that,

An employee, for regularization against higher scale, cannot have benefit of his service against lower scale for the purpose of counting 10 years service, however, for regularization against lower scale an employee can have benefit of his service against post of higher scale for counting 10 years.

The Court further admitted the fact that the facts of the present case are not exactly similar to the facts of the Gauri Dutt and in the same light observed, “… a case, like present one, wherein the employee initially and finally has been appointed to a post of higher scale and in between to a post of lower scale, has not been discussed and considered therein. However, the essence of the judgment is very clear that for regularization to the post of higher scale, services of employee against the post of higher scale are only to be taken into consideration, but not the services rendered against post having lower scale. Petitioner herein, has continuously served for 240 days in each calendar year w.e.f. 01-01-1984, though against different posts having different scales.”

Decision

While allowing the present petition the Court said, “Considering the entire facts and circumstances and also ratio laid down in Gauri Dutt’s case, I am of the considered opinion that services of petitioner with effect from 01-01-1984 to 30-06-1987 when he has served against the post of Surveyor, is required to be taken into consideration for counting his requisite years of service for the purpose of conferring work-charge status/regularization, because there is no break in his daily wage service since 01-01-1984 as though he was engaged against posts having different scales, but his services were never discontinued till his regularization and he had completed 240 days in every calendar year during this period. His services as daily waged Beldar with effect from, 01-07-1987 to 28-02-1988 are not to be taken into consideration for calculating the requisite years, rather has to be excluded for the purpose of calculation of requisite years. But at the same time this period is not to be considered as a period when petitioner has not served at all for the purpose of continuance of service and completion of 240 days in each calendar year. Though, this period is to be taken into consideration for purpose of continuation, but is not to be added to the period of service as Surveyor.”[Ashok Kumar v. State of Himachal Pradesh, CWPOA No. 842 of 2019, decided on 27-11-2020]


Sakshi Shukla, Editorial Assistant has put this story together.

Punjab and Haryana High Court
Case BriefsHigh Courts

Punjab and Haryana High Court: While adjudicating a petition for quashing of a transfer order, Jaishree Thakur, J., dismissed the same being devoid of any merit.

The instant petition of certiorari has been filed under Article 226 of the Constitution of India whereby the petitioner has pleaded for quashing of the transfer order dated 14 08-2020 vide which the petitioner has been transferred from Government Senior Secondary School, Model Town Karnal to Government Senior Secondary School, Teekri.

The factual background is such that the petitioner is a clerk at Government High School Model Town Karnal, whereas his wife teaches at Government Primary School. He has a daughter who happens to be mentally challenged resulting in occasional fits of violence. She needs attention and assistance at all times. The petitioner is getting his daughter treated at a hospital in Karnal and hence, the transfer will only make his situation worse as his family would give to go through a lot of hardships. As per government policy under which, the case of the employees who have children suffering from medical ailments/permanent disability has to be considered, he has filed several option sot be transferred to a nearer place but to no avail.

Counsel for the petitioner, Parminder Singh submits that the petitioner should be posted within the town of Karnal on sympathetic grounds given that he has a mentally challenged daughter to take care of.

It is submitted by S.S. Pannu, respondent’s counsel that the case of the petitioner has been considered on sympathetic grounds while transferring him to Teekri. The place where the petitioner has been posted is hardly 7-8 kms from where he was posted earlier. It is also stated that the petitioner has worked at the same place for 6 years.

Upon careful perusal of the facts, circumstances and arguments the Court found no ground for interference in this instant petition and observed that,

“It is well settled that transfer is an incidence of service and would be open to interference by the court only if the petitioner could establish that the transfer order is mala fide in nature.”

The Court also remarked that an employee does not develop a vested right to continue on a particular post as per his/her choice. At best an employee can ask for consideration regarding his posting in order to mitigate the hardship he might have to face on account of his/her transfer. In the present case, the petitioner’s request has been duly considered on sympathetic grounds and the place of posting is at a distance of only 7 to 8 kms from where the petitioner was posted. The petitioner has not alleged any mala fides against ay senior official of the respondent department or against the transferring authority.

In view of the above, the petition has been dismissed being devoid of any merit.[Mukesh Kumar v. State of Haryana, 2020 SCC OnLine P&H 1837, decided on 05-10-2020]


Yashvardhan Shrivastav, Editorial Assistant has put this story together

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud and Ajay Rastogi, JJ has held that a construction worker who is registered under the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 19961 and is a beneficiary of the Scheme made under the Rules framed pursuant to the enactment, is a ‘consumer’ within the meaning of Section 2(d) of the Consumer Protection Act 1986.

The Court explained that the workers who are registered under the provisions of the Act of 1996 are beneficiaries of the schemes made by the Board. Upon registration, every worker is required to make a contribution to the fund at such rate per month as may be prescribed by the State government. It said that as per the statutory scheme, the services which are rendered by the Board to the beneficiaries are not services which are provided free of charge so as to constitute an exclusion from the statutory definition contained in Section 2(1)(o) and Section 2(d)(ii) of the Consumer Protection Act 1986.

“The true test is not whether the amount which has been contributed by the beneficiary is adequate to defray the entire cost of the expenditure envisaged under the scheme. So long as the service which has been rendered is not rendered free of charge, any deficiency of service is amenable to the fora for redressal constituted under the Consumer Protection Act 1986.”

Noticing that as per the definition contained in Section 2(1)(d), a ‘consumer’ includes not only a person who has hired or availed of service but even a beneficiary of a service, the Court held that the registered workers are clearly beneficiaries of the service provided by the Board in a statutory capacity.

The Court concluded by saying that public accountability is a significant consideration which underlies the provisions of the Consumer Protection Act 1986.

“The evolution of jurisprudence in relation to the enactment reflects the need to ensure a sense of public accountability by allowing consumers a redressal in the context of the discharge of non-sovereign functions which are not rendered free of charge.”

[Joint Labour Commissioner and Registering Officer v. Kesar Lal, 2020 SCC OnLine SC 327, decided on 17.03.2020]

Hot Off The PressNews

Supreme Court: CJI Ranjan Gogoi has said that the Court will look into the plea of the Government of NCT of Delhi has sought constitution of a larger bench to expeditiously decide the issue of who controls the services in Delhi.

The bench of Dr. AK Sikri and Ashok Bhushan, JJ had, on February 14, put an end to ‘almost’ all the issues related to the powers exercisable by and functions of the elected Government of National Capital Territory of Delhi (GNCTD) vis-a-vis the Central Government. However, the judges differed on the question relating to ‘Service matters’.

While both the judges agreed that Entry 41 of List II of the Seventh Schedule of the Constitution is not available to the Delhi Legislative Assembly as Entry 41 of List II deals with ‘State Public Services’ and ‘State Public Service Commission’ and that State Public Service Commission does not exist in NCTD, they differed on the issue of power to transfer and appoint certain officers.

Justice Sikri Justice Bhushan
The transfers and postings of Secretaries, HODs and other officers in the scale of Joint Secretary to the Government of India and above can be done by the Lieutenant Governor and the file submitted to him directly. For other levels, including DANICS officers, the files can be routed through the Chief Minister to Lieutenant Governor. In case of difference of opinion between the Lieutenant Governor and the Chief Minister, the view of the Lieutenant Governor should prevail and the Ministry of Home Affairs can issue a suitable notification in this regard. I having held that Entry 41 of List II of the Seventh Schedule of the Constitution is not available to the Legislative Assembly of GNCTD, there is no occasion to exercise any Executive power with regard to “Services” by the GNCTD, since the Executive power of the GNCTD as per Article 239AA(4) extend in relation to matters with respect to which Legislative Assembly has power to make laws. With regard to “Services” GNCTD can exercise only those Executive powers, which can be exercised by it under any law framed by the Parliament or it may exercise those Executive powers, which have been delegated to it.

To read the full report report on February 14 verdict, click here.

Case BriefsSupreme Court

Supreme Court: The bench of Dr. AK Sikri and Ashok Bhushan, JJ has put an end to ‘almost’ all the issues related to the powers exercisable by and functions of the elected Government of National Capital Territory of Delhi (GNCTD) vis-a-vis the Central Government.

Difference on opinion on issue relating to ‘service’ matters:

While both the judges agreed that Entry 41 of List II of the Seventh Schedule of the Constitution is not available to the Delhi Legislative Assembly as Entry 41 of List II deals with ‘State Public Services’ and ‘State Public Service Commission’ and that State Public Service Commission does not exist in NCTD, they differed on the issue of power to transfer and appoint certain officers.

 

 

Justice Sikri

 

Justice Bhushan

The transfers and postings of Secretaries, HODs and other officers in the scale of Joint Secretary to the Government of India and above can be done by the Lieutenant Governor and the file submitted to him directly. For other levels, including DANICS officers, the files can be routed through the Chief Minister to Lieutenant Governor. In case of difference of opinion between the Lieutenant Governor and the Chief Minister, the view of the Lieutenant Governor should prevail and the Ministry of Home Affairs can issue a suitable notification in this regard.

I having held that Entry 41 of List II of the Seventh Schedule of the Constitution is not available to the Legislative Assembly of GNCTD, there is no occasion to exercise any Executive power with regard to “Services” by the GNCTD, since the Executive power of the GNCTD as per Article 239AA(4) extend in relation to matters with respect to which Legislative Assembly has power to make laws. With regard to “Services” GNCTD can exercise only those Executive powers, which can be exercised by it under any law framed by the Parliament or it may exercise those Executive powers, which have been delegated to it.

 

In the light of the aforementioned difference of opinion, a larger bench will be deciding the issue.

Concurrent opinions of the judges on other issues at a glance:

Setting up of Anti-Corruption Bureau Police Station

Centre

Setting up of Commission of Inquiry

Centre

Power to pass orders under Delhi Electricity Reforms Act, 2011 and Delhi Electricity Reforms (Transfer Schemes) Rules, 2001 appointing the nominee Directors on the Board of Electricity Distribution Companies

GNCTD

Power to revise the minimum rates of Agricultural Land (Circle Rates) under the provisions of Indian Stamp Act, 1899

GNCTD

However, the LG is also empowered to form its opinion ‘on any matter’ which may be different from the decision taken by his Ministers. In such circumstances, LG is supposed to refer the matter to the President for decision and act according to the decision given thereon by the President.

Appointment of Public Prosecutors under Section 24 of the Code of Criminal Procedure

GNCTD

 

Also read the related 5-judge Constitution Bench judgement that held that NCT of Delhi is not a State and Lt. Governor of Delhi is not an administrator.

[Govt. of NCT of Delhi v. Union of India, 2019 SCC OnLine SC 193, decided on 14.02.2019]