2018 SCC Vol. 6 July 14, 2018 Part 1

Constitution of India — Art. 14 — Invidious discrimination: Entitlement of former CMs of State of U.P. for allotment of government accommodation for their lifetime in terms of S. 4(3) of U.P. Ministers (Salaries, Allowances and Miscellaneous Provisions) Act, 1981 (as amended by U.P. Act 22 of 2016), violates doctrine of equality and is ultra vires the Constitution. Natural resources, public lands and public goods like government bungalows/official residence are public property and “Doctrine of Equality” which emerges from concepts of justice, fairness must guide State in distribution/allocation of same. Chief Minister, once he demits office is on a par with common citizen, though by virtue of office held, he/she may be entitled to security and other protocols. S. 4(3) of 1981 Act which creates a separate class of citizens for conferment of benefit by way of distribution of public property on basis of previous public office held by them, fails test of reasonable classification violating Art. 14 and is ultra vires the Constitution. Furthremore, U.P. Ex-Chief Ministers Residence Allotment Rules, 1997 were struck down by Supreme Court in Lok Prahari, (2016) 8 SCC 389 on ground that provision for accommodation for ex-CMs as made in the Rules was in direct conflict with S. 4 of 1981 Act. Insertion of S. 4(3), as substantive provision in statute, which sought to bring in same effect as 1997 Rules without curing defect as pointed out, is an invalid attempt to overreach judgment in Lok Prahari case. [Lok Prahari v. State of U.P., (2018) 6 SCC 1]

Constitution of India — Art. 226 — Maintainability of writ petition: In this case, second writ petition was filed after disposal of earlier one as withdrawn. Earlier petition was withdrawn only on account of pendency of appeal. Second writ petition challenging subsequent order passed in appeal, hence held, was maintainable. [Vinod v. District Selection Committee, (2018) 6 SCC 68]

Constitution of India — Art. 32 — Misuse of PIL — Casting aspersions on District Judiciary, High Court Judges, misrepresentation of facts, baseless allegations: In a case death of Special Judge conducting alleged Fake Encounter Death case (Sohrabuddin case), there was non-registration of FIR as inquest report and other materials indicated natural death. Discreet inquiry conducted by Commissioner, State Intelligence Department (SID) also concluding similarly. No complaint was lodged by any relative of said Special Judge in local police station about any suspicion regarding cause of death. Prayer for registration of FIR and court monitored investigation rejected. [Tehseen Poonawalla v. Union of India, (2018) 6 SCC 72]

Constitution of India — Arts. 226 and 32 — Scope of issuance of writ of quo warranto — Principles reiterated: As long as caste and income certificate is valid and in force, a writ of quo warranto cannot be issued on basis of assumptions, inferences and suspicions regarding fact of fulfilment of eligibility criteria. [Bharati Reddy v. State of Karnataka, (2018) 6 SCC 162]

Contract and Specific Relief — Performance of Contract — Time of Performance — Time of the Essence — Termination/Discharge/Compensation/Penalty for delayed performance: Government entered into power purchase agreement (PPA) with respondent contractor (successful bidder). Respondent got a term loan of Rs 267.37 crores and spent huge amounts to purchase 253 acres of land. Respondent completed project after a delay of only 16 days (claimed by respondent) disputed by appellant authorities. As per appellants 16 days’ delay was beyond extra time of 9 months permissible under PPA. Delay was due to resistance faced by project team like physical attacks at allotted site during land procurement. Said circumstance of delay though not force majeure, are unavoidable circumstances. In case of delay, Arts. 2.5 and 2.6 of agreement provide for penalty. By interim order, High Court direction for encashment of bank guarantee had been stayed subject to condition of restitution depending on outcome of case. Penalty of stated amount directed to be paid. Termination of contract, not proper. [M.P. Power Management Co. Ltd. v. Renew Clean Energy (P) Ltd., (2018) 6 SCC 157]

Criminal Procedure Code, 1973 — Ss. 340 and 195(1)(b)(i) — Perjury: As case of deliberate falsehood, not made out, initiation of prosecution for perjury in such case, not justified. Proceedings initiated under S. 340 CrPC r/w S. 195(1)(b)(i) CrPC, closed. [Chintamani Malviya v. High Court of M.P., (2018) 6 SCC 151]

Electricity Act, 2003 — Ss. 84(1) & (2) and Ss. 77, 85(2), (3), (5) & (6), 86(1)(f), 86, 112 and 113 and Statement of Objects and Reasons — State Electricity Commission: It is not mandatory that Chairman of State Commission should be a Judge but it is mandatory that there should be at least one person of law as a Member of the Commission, which requires a person, who is, or has been holding a judicial office or is a person possessing professional qualifications with substantial experience in the practice of law, who has the requisite qualifications to have been appointed as a Judge of the High Court or a District Judge. Consequential directions issued, but to apply prospectively. [State of Gujarat v. Utility Users’ Welfare Assn., (2018) 6 SCC 21]

Income Tax — Income: Amount received by assessee acting as a broker of Bank in trust, to be paid to certain parties on behalf of Bank, not income in the hands of assessee and not taxable. [CIT v. T. Jayachandran, (2018) 6 SCC 189]

Income Tax — Non-Residents/Offshore transactions — Permanent establishment (PE) in India — Relevance of — Arm’s length pricing i.e. where a non-resident compensates a Permanent Establishment (PE) at arm’s length price — Effect of: In this case, following the ruling in E-Funds IT Solution Inc., (2018) 13 SCC 294, held, once arm’s length price procedure has been followed, notice for the reassessment based only on the allegation that the appellant(s) has permanent establishment in India, cannot be sustained. [Honda Motor Co. Ltd. v. CIT, (2018) 6 SCC 70]

Industrial Disputes Act, 1947 — S. 9-A r/w Sch. IV Cl. 8 — Notice of change in any material terms of service to employee — Principles of Natural Justice — Compliance: Temporary decision to enhance age of superannuation of all Central Public Sector employees from 58 yrs to 60 yrs vide order dt. 19-11-1998 with a view to cut down losses, revoked vide order dt. 17-7-2002 and age of superannuation at 58 yrs restored without granting opportunity of hearing to employees, said order dt. 17-7-2002 was not sustainable. [Paradeep Phosphates Ltd. v. State Of Orissa, (2018) 6 SCC 195]

Labour Law — Workman: Employees working in canteen managed by a another party/contractor, providing canteen services to employees of establishment concerned, are entitled to be treated as employees of appellant with all attendant and monetary benefits on a par with regular employees. [Chennai Port Trust v. Industrial Employees Canteen Workers Welfare Assn., (2018) 6 SCC 202]

Transfer of Property Act, 1882 — Ss. 54, 7 and 8 — Sale of remaindermen’s interest during lifetime of holders of life estate: On partition between two brothers, certain properties including property in question coming to share of one I. On subsequent partition executed insofar as branch of I was concerned, the properties were equally divided among four sons of I. Having given ¼th share to each son, right of enjoyment of properties was retained by I and his wife M till their lifetime. In 1975, two sons of I i.e. K and S transferred their undivided share in property in question by executing registered sale deeds in favour of appellant herein. I and M died in 1975 and 1984 respectively. On basis of above sale deeds executed by K and S, appellant (in 1985) filed a civil suit seeking declaration that he was entitled to undivided half-share in property in question. Though K did not have any son, S had four sons, who were not made parties to above suit. Appellant later filed another suit seeking injunction against defendants named therein. In that suit, the four sons of S were added as parties. Trial court decreed former suit holding appellant to be entitled to one half-share in suit property and accordingly passed a preliminary decree in that behalf. However, it declining to grant any relief of permanent injunction against defendants, but, first appellate court held that since the four sons of S were not parties to suit for declaration and partition, insofar as branch of S was concerned, sale deed in favour of appellant would be valid only in respect of share of S. Thus, first appellate court held that appellant would be entitled to share of S in his branch (i.e. 1/4 × 1/6 = 1/24) and share of K. Resultantly, share of appellant was computed as 5/24. View taken by first appellate court was confirmed by High Court in second appeals. After going through the entirety of matter and relevant record, the Supreme Court held that assessment made by first appellate court and High Court, insofar as merits of matter was concerned, was proper and hence, no interference was called for. [A. Dharmalingam v. V. Lalithambal, (2018) 6 SCC 65]

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