2018 SCC Vol. 9 November 7, 2018 Part 3

Arbitration and Conciliation Act, 1996 — S. 34(5) and Ss. 34(6), 34(3) and 29-A: Requirement of issuance of prior notice to the other party and filing of an affidavit endorsing compliance with the said requirement under S. 34(5), is directory and not mandatory. Considerations of convenience and justice are uppermost, and if general inconvenience or injustice results, without promoting the real aim and object of the enactment, the provision must be declared to be directory. Subsection (5) is not a condition precedent, but a procedural provision which seeks to reduce the delay in deciding applications under S. 34. Further, to construe such a provision as being mandatory would defeat the advancement of justice as it would provide the consequence of dismissing an application filed without adhering to the requirements of S. 34(5), thereby scuttling the process of justice by burying the element of fairness. However, it shall be the endeavour of every court in which a S. 34 application is filed, to stick to the time-limit of one year from the date of service of notice to the opposite party by the applicant, or by the court, as the case may be. Further, in case the court issues notice after the period mentioned in S. 34(3) has elapsed, every court shall endeavour to dispose of the S. 34 application within a period of one year from the date of filing of the said application similar to what has been provided in S. 14 of Commercial Courts Act, 2015. Also, in cases covered by S. 10 r/w S. 14 of the Commercial Courts Act, 2015, the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within six months, as stipulated and appeals which are not so covered will also be disposed of as expeditiously as possible, preferably within one year from the date on which the appeal is filed. [State of Bihar v. Bihar Rajya Bhumi Vikas Bank Samiti, (2018) 9 SCC 472]

 Civil Procedure Code, 1908 — Or. 39 Rr. 1 & 2 — Interim stay — Grant or refusal: While passing an order on interim stay application, justifiable reason(s) to support grant or rejection of prayer as to stay must be stated in the order keeping in view the facts and law applicable to the controversy involved. [Birwati Chaudhary v. State of Haryana, (2018) 9 SCC 458]

Civil Procedure Code, 1908 — Or. 41 R. 27, Or. 41 R. 23-A & Or. 41 R. 25 and Ss. 96 & 100 — Procedure to be followed by appellate courts after receiving additional evidence: Once additional evidence is permitted at appellate stage, other side must be given opportunity to lead rebuttal evidence to counter additional evidence. Appellate courts have two options (i) to take recourse remanding entire matter under Or. 41 R. 23-A for retrial, or (ii) to make limited remand under Or. 41 R. 25 by retaining main appeal with itself so that parties can lead evidence on particular issues in light of additional evidence and then to decide main appeal on merits. [Corpn. of Madras v. M. Parthasarathy, (2018) 9 SCC 445]

Civil Procedure Code, 1908 — Ss. 96(3), 100, 114 & Or. 23 R. 3-A: Challenge to compromise decree is not permissible except on ground of fraud. Such challenge can be by way of fresh suit, or review petition. [Ved Pal v. Prem Devi, (2018) 9 SCC 496]

Constitution of India — Arts. 21, 25, 19 and 29 and Preamble — Cow vigilantism and incidents of lynching solely based on perception: There is necessity of strengthening police administration. Pluralism and tolerance is essential values constituting building blocks of free and democratic society. It is the duty of State to promote fraternity amongst all citizens so that dignity of every citizen is protected, nourished and promoted, and to prevent crime and untoward incidents. Lynching affront to rule of law and exalted values of Constitution itself while vigilantism for whatever purpose or borne out of whatever cause undermines legal institutions of State. Such extrajudicial attempts under guise of law required to be nipped in bud lest it leads to anarchy and lawlessness corroding nation. It is the primary responsibility of State to foster secular, pluralistic and multicultural social order so as to allow free play to ideas and beliefs and coexistence of mutually contradictory perspectives. Directions covering areas of preventive, remedial and punitive measures, issued. [Tehseen S. Poonawalla v. Union of India, (2018) 9 SCC 501]

Contempt of Court — Civil Contempt — Purging of contempt/Opportunity to comply: Once the order dt. 8-3-2001 passed by Single Judge directing appellant FCI to frame scheme or to find ways to absorb respondent workmen within one year had attained finality it was required to be complied with in pith and substance. [Food Corpn. of India v. W.B. FCI Workmen’s Union, (2018) 9 SCC 469]

Criminal Procedure Code, 1973 — S. 378(3) — Application for grant of leave to appeal under — Parameters which High Court should keep in mind while deciding — Principles reiterated: In this case Trial court acquitted respondent-accused of charge of offences punishable under Ss. 363, 366, 376 and 120-B IPC. Application was filed by State for leave to appeal against such acquittal before High Court and High Court rejected it without assigning any reasons. Such casual approach of High Court, disapproved by the Supreme Court and matter was remanded back to it for decision afresh on merits, keeping in view law laid down by Supreme Court in Sujay Mangesh Poyarekar, (2008) 9 SCC 475. [State of U.P. v. Anil Kumar, (2018) 9 SCC 492]

Criminal Procedure Code, 1973 — S. 482: Quashment of subsequent criminal proceedings based on new set of facts merely because earlier criminal proceedings related to present matter were quashed, not proper. [Om Prakash Singh v. State of Bihar, (2018) 9 SCC 440]

Criminal Trial — Practice and Procedure — Abatement — Abatement of appeal: As there was report by High Court along with copy of death certificate regarding death of sole respondent in appeal, appeal stood abated against deceased and was dismissed as having abated. [State of Karnataka v. Srinivasa, (2018) 9 SCC 463]

Environment Law — Vehicular Pollution: NGT passed an order of plying of only CNG buses/coaches and other vehicles at Delhi Airport. Due to incompatibility of other vehicles to CNG mode, direction issued by NGT restricted to only buses and coaches. [Narangs International Hotels (P) Ltd. v. Society for Protection of CHETNA, (2018) 9 SCC 499]

Income Tax Act, 1961 — S. 10(20) (as amended by the Finance Act, 2002) — Noida Authority: After omission of S. 10(20-A) the only provision under which a body or authority can claim exemption was S. 10(20) and further, local authority having been exhaustively defined in the Explanation to S. 10(20), an entity has to fall under S. 10(20) to claim exemption. Further, the Explanation now containing the exhaustive definition of local authority, the definition of local authority as contained in S. 3(31) of the General Clauses Act, 1897 no more applicable. Also, the Explanatory Note to Finance Act, 2002 clearly indicate that by the Finance Act, 2002 the exemption under S. 10(20) had been restricted to Panchayats and Municipalities as referred to in Arts. 243-P(d) and 243-P(e) of the Constitution, and further by deletion of clause (20-A), the income of the Housing Boards of the States and of Development Authorities became taxable. Noti. dt. 24-12-2001 was issued by the Governor in exercise of the power under the proviso to clause (1) of Art. 243-Q of the Constitution of India specifying the appellant Authority to be an “industrial township” with effect from the date of the notification in the Official Gazette. The proviso did not contemplate constitution of an industrial establishment as a Municipality, rather clarified that an exception where Municipality under clause (1) of Art. 243-Q may not be constituted in an urban area. Further, the object of issuance of notification was to relieve the mandatory requirement of constitution of a Municipality in a State in the circumstances as mentioned in the proviso but exemption from constituting Municipality does not lead to mean that the industrial establishment which is providing municipal services to an industrial township is same as Municipality as defined in Art. 243-P(e).  Thus, held, industrial township as specified under Noti. dt. 24-12-2001 was not akin to Municipality as contemplated under Art. 243-Q. Hence, held, appellant Authority is not covered by the definition of “local authority” as contained in the Explanation to S. 10(20). [NOIDA v. CIT, (2018) 9 SCC 351]

Income Tax Act, 1961 — S. 194-A(3)(iii)(f) — Benefit of exemption given under Noti. No. S.O. 3489 dt. 22-10-1970 — Tax deduction at source on payment of interest by bank to Noida Authority: There is a well-marked distinction between a body which is created by the statute, on the one hand, and a body which after having come into existence is governed in accordance with the provisions of the statute, on the other. For instance, a company incorporated under the Companies Act is not a statutory body because it is not created by the statute but it is a body created in accordance with the provisions of the statute. When the words “by and under an Act” are preceded by the words “established”, the reference is to a corporation established, that it is brought into existence, by an Act or under an Act i.e. the term refers to a statutory corporation as contrasted from a non-statutory corporation incorporated or registered under the Companies Act. The preamble of that Act reads “an Act to provide for the constitution of an Authority for the development of certain areas in the State into industrial and urban township and for matters connected therewith”. Thus, the Act itself provided for constitution of an authority. Further, “the Authority” had been constituted by a Noti. dt. 17-4-1976 issued under S. 3 of the 1976 Act. Further, following the ruling in Satish Prabhakar Padhye, (2010) 4 SCC 378, wherein the State Financial Corporation was stated to be a corporation established under a Central Act, held, the Authority was covered by the Noti. dt. 22-10-1970. [CIT v. Canara Bank, (2018) 9 SCC 322]

Income Tax Act, 1961 — S. 194-I r/w S. 10(20) (as amended by the Finance Act, 2002) — Circular dt. 30-1-1995 — Deduction of income tax at source on payment of lease rent to Noida/Greater Noida Authority: The definition of rent as contained in the Explanation to S. 194-I is a very wide definition and payment to be made as annual rent is rent within the meaning of S. 194-I. Further, Circular dt. 30-1-1995 granting exemption from deduction of income tax at source, was issued on the strength of Ss. 10(20-A) and 10(20) as it existed at the relevant time and the very basis of the circular has been knocked out by the amendments made by the Finance Act, 2002. Thus, the circular could not be relied on by Noida/Greater Noida Authorities to contend that there was no requirement of deduction of tax at source. Therefore, tax is required to be deducted at source on payment of lease rent to Greater Noida Authority, as per S. 194-I. [NOIDA v. CIT, (2018) 9 SCC 342]

Motor Vehicles Act, 1988 — Ss. 166 & 173 and Sch. II — Compensation: Award of lump sum compensation without following multiplier method is not permissible. Compensation has to be just compensation. Mode of award in cases of permanent disability has to be based on functional disability or actual loss of income/income-earning capacity. Due to changed scenario in view of cost of living and current rate of inflation, Second Schedule provided under Motor Vehicles Act became redundant. [Anant v. Pratap, (2018) 9 SCC 450]

Penal Code, 1860 — S. 302 — Accused allegedly strangulated his wife to death: A-1(respondent-accused) was allegedly having illicit relationship with A-2 (since dead) and on account of which, there was altercation between A-1 and his wife, and he allegedly strangulated her to death. However, conviction of A-1 under S. 302, was held to be rightly reversed by High Court. [State of Karnataka v. Srinivasa, (2018) 9 SCC 460]

Penal Code, 1860 — Ss. 302, 147 and 148 r/w S. 149 — Murder trial — Appeal against acquittal: Re-appreciation of evidence was done by High Court as Trial court did not properly appreciate evidence and approach of trial court was found perverse. Testimony of eyewitnesses was also found credible. FIR was lodged promptly. Evidence of eyewitnesses was corroborated by medical evidence. Prosecution case was further corroborated by recovery of weapons from accused. Bloodstains found on weapons recovered from accused, were of blood group of deceased, which was yet another piece of evidence corroborating evidence of eyewitnesses and strengthening prosecution case. Hence, reversal of acquittal by High Court, confirmed. [Motiram Padu Joshi v. State of Maharashtra, (2018) 9 SCC 429]

Public Accountability, Vigilance and Prevention of Corruption — Vigilance Authorities: Validity of appointments to post of Central Vigilance Commissioner (CVC) and Vigilance Commissioner (VC), affirmed. Ground of violation of principle of impeccable integrity and institutional integrity, rejected as aspersions were based on false, vague, non-specific, unsubstantiated and/or baseless allegations/representations/complaints. [Common Cause v. Union of India, (2018) 9 SCC 382]

Service Law — Regularisation — Entitlement to regularization: The issue raised in this case was whether the employees employed to carry out appellant FCI’s business operations at its branch offices are contractual employees or employees of appellant. Findings of Tribunal to effect that (i) Agreement with contract labourers for doing work had ended in 1991 and thereafter it was not renewed; (ii) All 955 workers were paid wages directly by appellant; (iii) Nature of work which these workers were doing was of perennial nature in the set-up of FCI; (iv) All 955 workmen were performing their duties as permanent workmen; and (v) No evidence was adduced by appellant to rebut claim of respondent Union; were affirmed by the Single Judge as well as Division Bench. The Supreme Court held that the findings of fact recorded against appellant by Tribunal were based on sufficient evidence. Besides, said findings being concurrent in nature were binding on Supreme Court while hearing appeals under Art. 136 of the Constitution. Furthermore, very fact that appellant FCI failed to adduce any evidence to prove their case, Tribunal was justified in drawing adverse inference against them. Respondent employees were entitled to regularisation in services of appellant FCI. [Food Corpn. of India v. Employees Union, (2018) 9 SCC 464]


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