Case BriefsSupreme Court

Supreme Court: The bench of Dr DY Chandrachud and Aniruddha Bose, JJ has held that the words “by another year” in Rule 105(1) of Delhi School Education Rules 1973 stipulate that the maximum period of probation permissible is two years.

Amending History of Rule 105 of the Delhi School Education Rules, 1973

Rule 105 of the 1973 Rules, as originally enacted, stipulated that an employee shall be appointed on initial probation for a period of one year which may be extended by the appointing authority “by another year”. No separate provision was stipulated for minority institutions. Two amendments were subsequently incorporated to the 1973 Rules. On 30 January 1985, the Delhi School Education (Amendment) Rules 1984 were notified. 12 By this amendment, Rule 110 of the 1973 Rules was substituted. The Court noticed that the amending history of the 1973 Rules shows that the words “by another year” appearing in the principal part of Rule 105 has not been omitted.

“By another year” – Meaning

The consistent meaning imparted to the word “another” is a single addition or one more. The ordinary and literal construction of the words “another” read with the words “for a period of one year” in Rule 105(1) implies that the appointing authority may extend the period of probation by one additional year.

“The contention that the words “by another year” imply that the appointing authority can extend the period of probation by one year at a time without any limit cannot be accepted as this would amount to rewriting the provision by substituting the words “by another year” with the words “by one year at a time”, which is impermissible in law.”

Hence, the Court said that had the delegate of the legislature intended that there is no limit on the permissible probationary period, the words “by another year” would have been omitted.

The limit placed on the permissible extension of the probationary period draws a balance between the opportunity that must be afforded to a probationer to modify and improve the quality of service and a mandate that the appointing authority of an educational institute hires qualified teachers. To impart a meaning to the words “by another year” that the appointing authority may extend the probationary period one year at a time without a limit will allow an appointing authority to extend the probationary period, with the prior approval of the Director, of a probationer ad nauseum.

Prior approval of Director

The prior approval of the Director, save and except for minority institutions, is mandatory and must be complied with as a condition precedent for the valid exercise of the power to extend the period of probation. The Director is required to assess the determination of the appointment authority and based on that assessment, to decide whether to approve an extension of the probationary period. The provision which mandates that the prior approval of the Director shall be sought before extending the period of probation ensures that the appointing authority may not extend the probationary period without legitimate reason.

Conclusion

  • The words “by another year” in Rule 105(1) of the 1973 Rules stipulate that the maximum period of probation permissible is two years. The limit equally applies to minority institutions covered by the first proviso to Rule 105; and
  • Rule 105(2) stipulates a condition precedent to the issuance of an order of confirmation. The continuation of the services of a probationer beyond the period of probation does not amount to a deemed confirmation of service. It is only upon the issuance of an order of confirmation by the appointing authority that a probationer is confirmed in service

[Durgabhai Deshmukh Memorial Sr. Sec. School v. JAJ Vasu Sena, 2019 SCC OnLine SC 1075, decided on 21.08.2019]

Legislation UpdatesNotifications

Several queries have been received in the Ministry with respect to interpretation of the provision of Section 232(6) of the Companies Act, 2013.

Clarification has been sought on whether it is mandatory to indicate a specific calendar date as ‘appointed date’ in the schemes referred to in the section. Further, requests have also been received to confirm whether the acquisition date’ for the purpose of Ind-AS 103 (Business combinations) would be the ‘appointed date’ referred to in Section 232(6).

The matter has been examined in detail in the Ministry in the light of the provisions of the Act, applicable rules, prevalent practices and orders passed by Courts/NCLT. It is noted that companies have been filing schemes under sections 230-232 of the Act indicating ‘appointed date’ either as a specific calendar date or an event-based date, as may have been mutually agreed upon by the parties to the scheme. Section 232(5) also requires that every company in relation to which the order is made shall file a certified copy of the order with the Registrar of Companies for registration within 30 days of the receipt of a certified copy of the order’.

In Marshall Sons & Co. India Ltd. v. ITO [1223 ITR 8091], it was held by the Hon’ble Supreme Court that every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place, and that such date may precede the date of sanctioning of the scheme by the Court, the date of filing of certified copies of the orders of the Court before the Registrar of Companies, and the date of allotment of shares, etc. It was observed therein that, the scheme, however, would be given effect from the transfer date (appointed date) itself.

In another case, in the matter of amalgamation of Equitas Housing Finance Limited and Equitas Micro Finance Limited with Equitas Finance Limited in C.P. Nos. 119 to 121 of 2016, the Hon’ble Madras High Court held that the provisions of Section 394 (1) of the Companies Act, 1956 (corresponding to Section 232 of the Companies Act, 2013) provided enough leeway to a company to delay the date on which the scheme of amalgamation shall take effect and tie the same to the occurrence of an event. Thus, the Court rejected the argument that the ‘appointed date’ in the scheme should necessarily be a specific calendar date.

Section 232(6) of the Act states that the scheme shall be deemed to be effective from the ‘appointed date’ and not a date subsequent to the ‘appointed date’. This is an enabling provision to allow the companies to decide and agree upon an ‘appointed date’ from which the scheme shall come into force.

In view of the above, it is hereby clarified that:

a) The provision of Section 232(6) of the Act enables the companies in question to choose and state in the scheme an ‘appointed date’. This date may be a specific calendar date or may be tied to the occurrence of an event such as the grant of license by a competent authority or fulfillment of any preconditions agreed upon by the parties, or meeting any other requirement as agreed upon between the parties, etc., which are relevant to the scheme.

b) The ‘appointed date’ identified under the scheme shall also be deemed to be the ‘acquisition date’ and date of transfer of control for the purpose of conforming to accounting standards (including Ind-AS 103 Business Combinations).

c) Where the ‘appointed date’ is chosen as a specific calendar date, it may precede the date of filing of the application for a scheme of merger/amalgamation in NCLT. However, if the ‘appointed date’ is significantly ante-dated beyond a year from
the date of filing, the justification for the same would have to be specifically brought out in the scheme and it should not be against the public interest.

d) The scheme may identify the ‘appointed date’ based on the occurrence of a trigger event which is key to the proposed scheme and agreed upon by the parties to the scheme. This event would have to be indicated in the scheme itself upon
occurrence of which the scheme would become effective. However, in case of such event-based date being a date subsequent to the date of filing the order with the Registrar under Section 232(5), the company shall file an intimation of the same with the Registrar within 30 days of such scheme coming into force.


Ministry of Corporate Affairs

[General Circular No. 04/2019]

[Circular dt. 21-08-2019]

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of RF Nariman, Sanjiv Khanna and Surya Kant, JJ has held the Amendment Act to Insolvency and Bankruptcy Code, 2016 made pursuant to a report prepared by the Insolvency Law Committee dated 26th March, 2018 does not infringe Articles 14, 19(1)(g) read with Article 19(6), or 300-A of the Constitution of India.

The amendments so made deem allottees of real estate projects to be “financial creditors” so that they may trigger the Code, under Section 7 thereof, against the real estate developer. In addition, being financial creditors, they are entitled to be represented in the Committee of Creditors by authorised representatives.

HOMEBUYERS AS FINANCIAL CREDITORS

The Amendment was challenged on ground that the treatment of allottees as financial creditors violates two facets of Article 14. One, that the amendment is discriminatory inasmuch as it treats unequals equally, and equals unequally, having no intelligible differentia; and two, that there is no nexus with the objects sought to be achieved by the Code.

On this the Court said that like other financial creditors, be they banks and financial institutions, or other individuals, all persons who have advanced monies to the corporate debtor should have the right to be on the Committee of Creditors.

“True, allottees are unsecured creditors, but they have a vital interest in amounts that are advanced for completion of the project, maybe to the extent of 100% of the project being funded by them alone.”

The Court further said that given the fact that allottees may not be a homogenous group, yet there are only two ways in which they can vote on the Committee of Creditors – either to approve or to disapprove of a proposed resolution plan.

“Sub-section (3A) goes a long way to ironing out any creases that may have been felt in the working of Section 25A in that the authorised representative now casts his vote on behalf of all financial creditors that he represents. If a decision taken by a vote of more than 50% of the voting share of the financial creditors that he represents is that a particular plan be either 145 accepted or rejected, it is clear that the minority of those who vote, and all others, will now be bound by this decision.”

DEEMING PROVISION

The Court noticed that although a deeming provision is to deem what is not there in reality, thereby requiring the subject matter to be treated as if it were real, yet several authorities and judgments show that a deeming fiction can also be used to put beyond doubt a particular construction that might otherwise be uncertain. It held,

“the deeming fiction that is used by the explanation is to put beyond doubt the fact that allottees are to be regarded as financial creditors within the enacting part contained in Section 5(8)(f) of the Code.”

EXPLANATION ADDED TO SECTION 5(8)(f)

The Court further noticed that an explanation does not ordinarily enlarge the scope of the original Section. But if it does, effect must be given to the legislative intent notwithstanding the fact that the legislature has named a provision as an explanation. It, hence, held,

“the explanation was added by the Amendment Act only to clarify doubts that had arisen as to whether home buyers/allottees were subsumed within Section 5(8)(f). The explanation added to Section 5(8)(f) of the Code by the Amendment Act does not in fact enlarge the scope of the original Section as home buyers/allottees would be subsumed within Section 5(8)(f) as it originally stood.”

RULING

  • The Amendment Act to Insolvency and Bankruptcy Code, 2016 made pursuant to a report prepared by the Insolvency Law Committee dated 26th March, 2018 does not infringe Articles 14, 19(1)(g) read with Article 19(6), or 300-A of the Constitution of India.
  • The RERA is to be read harmoniously with the Code, as amended by the Amendment Act. It is only in the event of conflict that the Code will prevail over the RERA. Remedies that are given to allottees of flats/apartments are therefore concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the Code.
  • Section 5(8)(f) as it originally appeared in the Code being a residuary provision, always subsumed within it allottees of flats/apartments. The explanation together with the deeming fiction added by the Amendment Act is only clarificatory of this position in law.

[Pioneer Urban Land and Infrastructure Ltd. v. Union of India, 2019 SCC OnLine SC 1005, decided on 09.08.2019]

Case BriefsSupreme Court

Supreme Court: When the bench of AM Khanwilkar and Ajay Rastogi, JJ was called upon to decide whether the condition of ‘use in the same form in which such goods are purchased’ under Rule 6(4)(m)(i) of the KST Rules expands the scope of charging section i.e. Section 5B under KST Act, 1957, it held,

“there is no variance between Rules 6(4)(m)(i) read with Explanation III and Section 5B of the KST Act, 1957.”

The Court said,

“We are clear, in our view, that Section 5B of the KST Act and Rule 6(4)(m)(i) of the KST Rules operate in different spheres. Section 5B is a charging provision for levy of sales tax whereas Rule 6(4)(m)(i) is a provision for deduction from tax. Under Section 5B, tax can be levied on transfer of property in the goods whether as goods or in some other form whereas Rule 6(4)(m)(i) provides for  a deduction in respect of the goods which have already suffered tax and which are used in the same form.”

It was explained that Section 5B of the KST Act is a charging provision which empowers the State to levy tax on the transfer of property in goods involved in works contract. At the same time Rule 6(4)(m)(i) read with Explanation III to Rule 6(4) of the KST Rules clarifies that the same goods can be taxed only once and cannot be made subject matter of multiple incidence of tax and the goods which have suffered   taxation undergoes transformation into a different commodity altogether and is then used in the execution of a works contract, the same being a different commercial commodity is liable to be taxed.

The Court explained that Rule 6(4)(m)(i) purports to grant benefit to the assessee by allowing deductions for the value of goods which have already suffered taxation and which goods substantially retain their original identity while being used in the execution of a works contract.  Explanation III to Rule 6(4) clarifies it further by categorically providing that in case the goods are transformed into a different commodity which then is used in the execution of works contract, then the benefit of deduction cannot be availed.

The Court also referred to a recent verdict in Achal Industries v. State of Karnataka, 2019 SCC OnLine SC 428 and said that it is trite law that tax provisions granting exemptions/concessions are required to be strictly construed.

[Craft Interiors v. Joint Commissioner of Commercial Taxes (Intelligence), 2019 SCC OnLine SC 815, decided on 02.07.2019]


Also read:

SC explains meaning of “total turnover” under the Karnataka Sales Tax Act

Case BriefsHigh Courts

Delhi High Court: Dealing with the scope and ambit of the Seeds Act, 1966, Vibhu Bakhru, J held that the Seeds Act is not concerned with where and how the seeds are used. He said,

“Once a person dealing with notified variety of seeds conforms to the requirement of Section 7 of the Seeds Act, there is no restriction as to where and how the crop is to be grown. The Seeds Act is limited to ensuring that the seeds available to farmers conform to the minimum limits of germination and purity and the marks or label affixed thereon correctly indicate so.”

The Court was hearing the petition filed by State of Madhya Pradesh challenging 2 Office Memorandums (OMs)

  • By OM-I, Ministry has set forth the standards of the “Basmati” variety of rice. Apart from setting forth the characteristics of Basmati Rice, OM-I also expressly provides that it would be necessary to ensure the linkage between the variety and the Geographical Indication and only Basmati varieties with prescribed characteristic grown in Indo-Gangetic region would qualify for such description.
  • By OM-II, Ministry had issued a direction to ensure that the registration of Basmati varieties for certified and foundation seeds is not undertaken outside geographical area detailed under the Geographical Indication (GI)for Basmati rice.
  • By the impugned letter, Ministry has withdrawn the allocation of seeds for Basmati allotted during the Kharif-2016, pursuant to the decision that production of Basmati variety seeds would not be taken outside the GI defined areas (areas included in the State of Punjab, Haryana, Himachal Pradesh, Delhi, Uttarakhand, Western Uttar Pradesh, Jammu and Kathua District of Jammu and Kashmir).

State had challenged the OMs on the grounds that:

  • it is outside the scope of the Seeds Act
  • the OMs encroach upon State’s power to pass laws in relation to agriculture, which is a state subject;
  • it ventures into the statutory field of the Geographical Indications of Goods (Registration and Protection) Act, 1999.

Noticing that the Ministry has sought to ascribe the advice or recommendations made by the Central Seeds Committee to Rule 3(c) of the Seeds Rules, the Court said that this is, obviously, without merit as Rule 3(c) only pertains to sending recommendations concerning records to the Central Government.

“the Central Seed Committee is a Committee constituted under the Seeds Act, and the provisions of the Seeds Act and the Rules made therein circumscribe its role and functions. Clearly, the Central Seeds Committee cannot exercise any other function. Its role to act in an advisory capacity to the Central Government and the State Governments is also limited only to the matters arising out of the administration of the Seeds Act and/or other functions that are specified under the Seeds Act. Any advice or recommendation made by the Central Seeds Committee outside the scope of its functions, and role as specified under the Seeds Act and the Rules made thereunder, would be wholly without jurisdiction and the authority of law.”

Restricting Basmati production to only regions in the Indo-Gangetic plain was also outside the scope of the Seeds Act, the Court said,

“The import of the OMs is not to ensure that the quality of seeds produced is maintained, but to restrict the area where the seeds could be used for production of crops. The effect of the impugned notifications is that breeder seeds would not be available for production outside the specified areas. The clear object is to ensure that the crop of Basmati rice is only grown in specified areas. This would not only be outside the scope of the Seeds Act but ? …  ? relates to the field of agriculture, which is a state subject.”

The Court said that the legislative competence for enacting the Seeds Act is traceable to Entry 33 of List III of the Seventh Schedule to the Constitution of India. It is, perhaps, for this reason that the Seeds Act also incorporates due participation by the State Government.

The Court, hence, set aside the impugned OM-I and OM-II (the Office Memorandum dated 29.05.2008 and Office Memorandum No.3- 35/2014-SD-IV dated 07.02.2014) along with the impugned Notification.

[State Govt. of Madhya Pradesh v. Union of India, 2019 SCC OnLine Del 8259, decided on 25.04.2019]

Case BriefsSupreme Court

Supreme Court: When the bench of Dr. DY Chandrachud and Hemant Gupta, JJ was tasked with determining whether a death due to malaria occasioned by a mosquito bite in Mozambique, constituted a death due to accident, it held that the illness of encephalitis malaria through a mosquito bite cannot be considered as an accident.

When can insurance be claimed:

As the law of insurance has developed, there has been a nuanced understanding of the distinction between an accident and a disease which is contracted in the natural course of human events in determining whether a policy of accident insurance would cover a disease. In a policy of insurance which covers death due to accident, the peril insured against is an accident: an untoward happening or occurrence which is unforeseen and unexpected in the normal course of human events. This understanding of what is an accident indicates that something which arises in the natural course of things is not an accident. This is the basis for holding that a disease may not fall for classification as an accident, when it is caused by a bodily infirmity or a condition.

“To be bitten by a mosquito and be imbued with a malarial parasite does involve an element of chance. But the disease which is caused as a result of the insect bite in the natural course of events cannot be regarded as an accident. Particularly, when the disease is caused in an area which is malaria prone.”

Ruling:

It was argued that there is an element of uncertainty about whether or when a person would be the victim of a mosquito bite which is a carrier of a vectorborne disease. The submission is that being bitten by a mosquito is an unforeseen eventuality and should be regarded as an accident. The Court, however, did not agree with the said submission as the insured was based in Mozambique. According to the World Health Organization’s World Malaria Report 2018, Mozambique, with a population of 29.6 million people, accounts for 5% of cases of malaria globally.

Noticing that it is on record that one out of three people in Mozambique is afflicted with malaria, the Court said that since the death of the insured in the present case was caused by encephalitis malaria,

“It was neither unexpected nor unforeseen. It was not a peril insured against in the policy of accident insurance.”

[National Insurance Co. v. Mousumi Bhattacharjee, 2019 SCC OnLine SC 419, decided on 26.03.2019]

Case BriefsSupreme Court

Supreme Court: The Bench of Abhay Manohar Sapre and Indu Malhotra, JJ has held that pendency of any writ petition by itself does not affect the constitutionality of a Statute. It said:

“It is only when the Court declares a Statute as being ultra vires the provisions of the Constitution then the question may arise to consider its effect on the rights of the parties and that would always depend upon the declaration rendered by the Court and the directions given in that case.”

Background of the case:

“Keeping in view the amendment made in the definition of Section 2(e), which as stated above was not brought to the notice of the Bench, this issue was not considered though had relevance for   deciding the question involved in the appeal. It is for this reason, we prima facie find error in the judgment and, therefore, are inclined to stay the operation of our judgment.”

What Court said in Ahmadabad Pvt. Primary Teachers Association verdict:

“The legislature was alive to various kinds of definitions of the word “employee” contained in various previous labour enactments when the Act was passed in 1972. If it intended to cover in the definition of “employee” all kinds of employees, it could have as well used such wide language as is contained in Section 2(f) of the Employees’ Provident Funds Act, 1952 which defines “employee” to mean “any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment …”. Non-use of such wide language in the definition of “employee” in Section 2(e) of the Act of 1972 reinforces our conclusion that teachers are clearly not covered in the definition.”

Ruling:

Hence, after noticing that though the definition was amended in 2009 by Act No.47 of 2009, yet the same was given retrospective effect from 03.04.1997 so as to bring the amended definition on Statute Book, from 03.04.1997, the Court held that the effect of the amendment made in the Payment of Gratuity Act vide Amending Act No. 47 of 2009 on 31.12.2009 was two­fold.

  • the law laid down by this Court in the case of Ahmadabad Pvt. Primary Teachers Association was no longer applicable against the teachers, as if not rendered, and
  • the teachers were held entitled to claim the amount of gratuity under the Payment of Gratuity Act from their employer with effect from 03.04.1997.

When the counsel for the Institution argued that the constitutional validity of Amending Act No. 47 of 2009 was under challenge in this Court in a writ petition, which is pending, the Court rejected the argument and said that pendency of any writ petition by itself does not affect the constitutionality of a Statute.

[Birla Institute of Technology v. State of Jharkhand, 2019 SCC OnLine SC 340, decided on 07.03..2019]

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Dr. AK Sikri, Ashok Bhushan and SA Nazeer, JJ decided the important question on the meaning, interpretation and applicability of Section 6 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (PP Act),

“Section 6 of the PP Act applies, inter alia, to the persons who keep their goods in the public premises whether they are tenants/licensees, sub­tenants or any other parties. The Estate Officer, under Section 6 of the PP Act, is entitled to sell the goods even of a stranger, found in/on the premises under unauthorized occupation.”

The Court was hearing the appeal against the judgment of Calcutta High Court, wherein it was held that Sections 59 and 61 of the Major Port Trusts Act, 1963 (MPT Act) vis­a­vis Sections 5 and 6 of the PP Act make it clear that if any goods are found to be lying on the land of the Port Trust, and for such land any rent is due or payable, the Port Trust has not only the lien over the goods, but also the right to sell those goods so as to appropriate the sale proceedings towards the rental dues.

The Court, however, agreed with the submission of the Port Trust that even if the goods belonging to the third parties are found lying on the premises after an order of eviction passed under Section 5, it was entitled to sell the goods and deduct from the sale proceeds any amount due to the Port Trust on account of arrears of rent or damages, etc and that the balance of the sale proceeds shall be paid to such person or persons, as may appear to the Estate Officer, to be entitled for the same.

Sections 5 and 6 of the PP Act explained:

The expression ‘spread on any public premises’, contained in sub­section (1)(b) of Section 5A in the context also means ‘lying on any premises’. Sub­section (3) of Section 5A authorizes the Estate Officer to remove any goods lying on any public premises after an order of eviction has been made under Section 5 of the Act. It is immaterial whether the said goods belong to the erstwhile tenant/licensee or to any other party. Sub­section (1A) of Section 6 authorises the Estate Officer to dispose of such goods/materials, etc. after giving fourteen days’ notice to the persons owning such   goods and other procedure prescribed therein. It is not necessary that the persons owning the goods lying on the premises should be erstwhile tenants/licensees. It is also not necessary that there should be a privity of contract between the Port Trust and the third party to whom such goods and materials belong for disposing of the property by the Estate Officer under Section 6.

The Court, hence, said:

“Section 6 of the PP Act has been enacted with obvious purpose of enabling statutory authorities to take all consequential steps after receiving possession of public premises and for recovery of dues, etc. Hence, the said provision ought not to be interpreted in a way which defeats the very purpose of its enactment. Section 6 of the PP Act must be read independent of, and not dependant on, Sections 59 and 61 of the MPT Act.”

[Board of Trustees for the Port of Kolkata v. APL (India) Pvt. Ltd., 2019 SCC OnLine SC 249, decided on 21.02.2019]

Case BriefsSupreme Court

Supreme Court: In the case where the Bench of RF Nariman and Navin Sinha, JJ was deciding the question as to the nature of the Arbitration and Conciliation (Amendment) Act, 2015, it was held:

“the Amendment Act is prospective in nature and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the Arbitration and Conciliation Act, 1996, on or after the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force.”

Regarding the question as to whether Section 36 of the Arbitration and Conciliation Act, 1996, which was substituted by the Amendment Act, would apply in its amended form or in its original form to the appeals in question, the Court said that

“in all cases where the Section 34 petition is filed after the commencement of the Amendment Act, and an application for stay having been made under Section 36 therein, will be governed by Section 34 as amended and Section 36 as substituted.”

On the question relating to Section 34 petitions that have been filed before the commencement of the Amendment Act, which were governed by Section 36 of the old Act, the Court said:

“execution of a decree pertains to the realm of procedure, and that there is no substantive vested right in a judgment debtor to resist execution, Section 36, as substituted, would apply even to pending Section 34 applications on the date of commencement of the Amendment Act.”

The Court also directed that a copy of this judgment be given to the Ministry of Law and Justice:

“The Government will be well-advised in keeping the aforesaid Statement of Objects and Reasons in the forefront, if it proposes to enact Section 87 on the lines indicated in the Government’s press release dated 7th March, 2018. The immediate effect of the proposed Section 87 would be to put all the important amendments made by the Amendment Act on a back-burner, such as the important amendments made to Sections 28 and 34 in particular, which, as has been stated by the Statement of Objects and Reasons.”

The Court said that it is this basic scheme which is adhered to by Section 26 of the Amendment Act, which ought not to be displaced as the very object of the enactment of the Amendment Act would otherwise be defeated. [Board of Cricket Control of India v. Kochi Cricket Pvt. Ltd., 2018 SCC OnLine SC 232, decided on 16.03.2018]

Case BriefsSupreme Court

Supreme Court: In the case where the Court was deciding the issue relating to interpretation of section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and section 31 of the Land Acquisition Act, 1894, the 3-judge bench of Arun Mishra, AK Goel and MM Shantanagoudar, JJ decided the following questions:

  1. What is the meaning of the expression ‘paid’/ ‘tender’ in Section 24 of the Act of 2013 and section 31 of the Act of 1894?
    The word ‘paid’ in section 24 of the Act of 2013 has the same meaning as ‘tender of payment’ in section 31(1) of the Act of 1894. They carry the same meaning and the expression ‘deposited’ in section 31(2) is not included in the expressions ‘paid’ in section 24 of the Act of 2013 or in ‘tender of payment’ used in section 31(1) of the Act of 1894. The words ‘paid’/tender’ and ‘deposited’ are different expressions and carry different meanings within their fold.
  2. Whether non-deposit of compensation in court under section 31(2) of the Act of 1894 results into a lapse of acquisition under section 24(2) of the Act of 2013? In section 24(2) of the Act of 2013 in the expression ‘paid,’ it is not necessary that the amount should be deposited in court as provided in section 31(2) of the Act of 1894. Non-deposit of compensation in court under section 31(2) of the Act of 1894 does not result in a lapse of acquisition under section 24(2) of the Act of 2013.
  3. What are the consequences of non-deposit in Court especially when compensation has been tendered and refused under section 31(1) of the Act of 1894 and section 24(2) of the Act of 2013? Due to the failure of deposit in court, the only consequence at the most in appropriate cases may be of a higher rate of interest on compensation as envisaged under section 34 of the Act of 1894 and not lapse of acquisition.
  4. Whether such persons after refusal can take advantage of their wrong/conduct?
    Once the amount of compensation has been unconditionally tendered and it is refused, that would amount to payment and the obligation under section 31(1) stands discharged and that amounts to discharge of obligation of payment under section 24(2) of the Act of 2013 also and it is not open to the person who has refused to accept compensation, to urge that since it has not been deposited in court, acquisition has lapsed. Claimants/landowners after refusal, cannot take advantage of their own wrong and seek protection under the provisions of section 24(2) of 2013 Act.
  5. Mode of taking physical possession as contemplated under section 24(2) of the Act of 1894.
    The normal mode of taking physical possession under the land acquisition cases is drawing of Panchnama.
  6. Whether section 24 of Act of 2013 revives barred and stale claims?
    The provisions of section 24 of the Act of 2013, do not revive barred or stale claims such claims cannot be entertained.
  7. Whether the conscious omission referred to in paragraph 11 of the judgment in Shree Balaji Nagar Residential Association v. State of Tamil Nadu [(2015) 3 SCC 353] makes any substantial difference to the legal position with regard to the exclusion or inclusion of the period covered by an interim order of the Court for the purpose of determination of the applicability of Section 24(2) of the 2013 Act?
    Provisions of section 24(2) do not intend to cover the period spent during litigation and when the authorities have been disabled to act under section 24(2) due to the final or interim order of a court or otherwise, such period has to be excluded from the period of five years as provided in section 24(2) of the Act of 2013. There is no conscious omission in section 24(2) for the exclusion of a period of the interim order. There was no necessity to insert such a provision. The omission does not make any substantial difference as to legal position.
  8. Whether the principle of “actus curiae neminem gravabit”, namely act of the Court should not prejudice any parties would be applicable in the present case to exclude the period covered by an interim order for the purpose of determining the question with regard to taking of possession as contemplated in Section 24(2) of the 2013 Act?
    The principle of “actus curiae neminem gravabit” is applicable including the other common law principles for determining the questions under section 24 of the Act of 2013. The period covered by the final/ interim order by which the authorities have been deprived of taking possession has to be excluded. Section 24(2) has no application where Court has quashed acquisition.

[Indore Development Authority v. Shailendra,  2018 SCC OnLine SC 100, decided on 08.02.2018]

Case BriefsSupreme Court

Supreme Court: The bench of SA Bobde and L Nageswara Rao, JJ defined the scope of the words ‘competent Court’ in Section 2(d) of Maharashtra Control of Organised Crime Act, 1999 (MCOCA) and held that the meaning of the term is not restricted to Courts in Delhi and charge sheets filed in Courts in other States can be taken into account for the purpose of constituting continuing unlawful activity. It was also held that there cannot be a prosecution under MCOCA without an organised crime being committed within Delhi.

The Court was hearing the issue relating to conviction of the respondent who was involved in in committing unlawful activities along with other members of a crime syndicate since 1985 in an organized manner, apart from being involved in 20 cases of attempt to murder, murder, extortion, rioting, cheating, forgery and for offences under the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986. The competent criminal Courts in and outside Delhi had taken cognizance of 8 crimes. Considering the nature of the crimes committed by the respondent, it was deemed proper to invoke MCOCA.

Senior Advocate Siddharth Luthra, appearing for the State of Delhi submitted before the Court that:

“organized crime is a serious threat to the society and that statement of objects and reasons have to be taken into account for interpretation of the provisions of the Act.”

He said that criminal cases in which cognizance was taken by Courts outside Delhi are relevant for the purpose of proceeding against the respondents under MCOCA. He added that organized crime is not restricted to territory within a State and a restrictive reading of the word ‘Competent Court’ would defeat the purpose for which the statute was enacted.

Respondent’s counsel, Senior Advocate UU Lalit, on the other hand, argued that MCOCA operates only within the territorial limits of National Capital Territory of Delhi and said:

“MCOCA is a special legislation which deals with organized crime and unless the essential ingredients of the offences under Sections 3 and 4 are made out, a case under the said statute cannot be registered.”

He further supported his argument by the fact that 6 out of 8 charge sheets filed against the respondents were filed in the State of Uttar Pradesh and had no nexus with the charge sheets filed in Delhi.

Agreeing with the arguments of the State, the Court said:

“Organised crime is not an activity restricted to a particular State which is apparent from a perusal of the Statement of Objects and Reasons. A restrictive reading of the words “competent Court” appearing in Section 2 (1)(d) of MCOCA will stultify the object of the Act.”

The Court further said that if members of an organised crime syndicate indulge in continuing unlawful activity across the country, it cannot by any stretch of imagination said, that there is no nexus between the charge sheets filed in Courts in States other than Delhi and the offence under MCOCA registered in Delhi.

The Court, however, agreed with the respondents on the argument that an activity of organized crime in Delhi is a sine qua non for registration of a crime under MCOCA. In the absence of an organized crime being committed in Delhi, the accused cannot be prosecuted on the basis of charge sheets filed outside Delhi. Noticing that there was no organised crime committed by the Respondents within the territory of Delhi, the Court held that there was no cause of action for initiation of proceedings under MCOCA in the present case and that the case should be heard by the competent court that has the territorial jurisdiction. [State of NCT of Delhi v. Brijesh Singh,  2017 SCC OnLine SC 1206, decided on 09.10.2017]

Case BriefsSupreme Court

Supreme Court: Explaining the scope of the expression “the public servant or his administrative superior” under Section 195(1) (a)(i) CrPC, the bench of A.K. Goel and U.U. Lalit, JJ held that the expression cannot exclude High Courts.

Interpreting Section 195(1) (a)(i) CrPC which says that cognizance in respect of offence under sections 172 to 188 IPC cannot be taken except “on the complaint in writing of the public servant concerned or of some other public servant to whom he is administratively subordinate”, the Court said that that while the bar against cognizance of a specified offence is mandatory, the same has to be understood in the context of the purpose for which such a bar is created. The bar is not intended to take away remedy against a crime but only to protect an innocent person against false or frivolous proceedings by a private person.

It was further held that direction of the High Court is at par with the direction of an administrative superior public servant to file a complaint in writing in terms of the statutory requirement. The protection intended by the Section against a private person filing a frivolous complaint is taken care of when the High Court finds that the matter was required to be gone into in public interest. Such direction cannot be rendered futile by invoking Section 195 to such a situation. Once the High Court directs investigation into a specified offence mentioned in Section 195, bar under Section 195(1)(a) cannot be pressed into service. [CBI v. M. Sivamani, 2017 SCC OnLine SC 845, decided on 01.08.2017]

Case BriefsSupreme Court

Supreme Court: Refusing to expand the scope of the word ‘child’ under Section 2(d) of the Protection of Children from Sexual Offences Act, 2012 (POCSO Act) to include  the   “mental   age”   of   a   person   or   the   age determined   by   the   prevalent   science   pertaining   to psychiatry   so   that   a   mentally   retarded   person   or   an extremely intellectually  challenged person who even has crossed the biological age of 18 years can be included within the holistic conception of the term “child”, the bench of Dipak Misra and R.F. Nariman, JJ held that the Parliament has felt it appropriate that the definition of the term “age” by chronological   age   or   biological   age   to   be   the   safest yardstick   than   referring   to   a   person   having   mental retardation.

In the case where both the judges wrote their separate but concurring opinion, it was said that the POCSO Act has identified minors and protected them by prescribing the statutory age which has nexus with the legal eligibility to give consent. It may be due to the fact that the standards of mental retardation are different and they require to be determined   by   an   expert   body.   The   degree   is   also different.  If a victim is mentally retarded, definitely the court trying the case shall take into consideration whether   there   is   a   consent   or   not.   In   certain circumstances, it would depend upon the degree of retardation or degree of understanding. It should never be put in a straight jacket formula.

Explaining the scope of the power of the Court to interpret the word “child” to give it a broader meaning, it was noticed that the legislature despite having the intent in its Statement of Objects   and   Reasons   and   the   long   Preamble   to   the POCSO Act, had defined the term “age” which does not only mention a child  but adds the words “below the age of 18 years”. The Court said that had the word “child” alone been mentioned in the Act, the scope of interpretation by the Courts could have been in a different realm and the Court might have deliberated on a larger canvass.

The Court was hearing the appeal of a sexual assault victim suffering from Cerebral Palsy due to which though being a 38-year-old, her mental age is no more than 6-8 years. [Eera v. State, 2017 SCC OnLine SC 787, decided on 21.07.2017]

Case BriefsHigh Courts

Kerala High Court: In a petition filed to quash the ongoing prosecution against the petitioner under the Juvenile Justice (Care and Protection of Children) Act, 2015 against the petitioner, the Bench of B. Sudheendra Kumar, J., while observing that the prosecution failed to prove that the minor girl working in the petitioner’s house was under bondage or was doing forced labour, also dealt with the issue of employment of children in households and of exploitation of child employees with special emphasis on the interpretation of Sections 79, 75, 76 and 78 of the 2015 Act. It was held by the Court that, employment of a child in households is permissible to the extent that the child is not kept in bondage.

The petitioner had been accused under Sections 75 and 79 of the Juvenile Justice Act, 2015 which deal with Punishment for Cruelty to Child and Exploitation of a Child Employee, respectively for allegedly engaging a minor girl as domestic help in his house. It was argued by the counsel of petitioner that there was no allegation that the minor victim girl was employed by the petitioner in bondage; therefore Section 79 of the 2015 Act is not attracted

It was observed by the Bench that in order to constitute an offence under Section 79, it must be looked whether the victim girl was employed by the petitioner in bondage. Since the term ‘bondage’ has not been defined in the Act, the Court had to rely on meanings provided for the term in various dictionaries. Also relying on other Central legislations and several International Conventions, the Court came to the conclusion that “engaging a child for the purpose of employment as such is not prohibited under Section 79 of the Act, if the engaging of the child for the employment is not by keeping the child in bondage.” It was further observed that the fundamental difference between ‘employment in bondage’ and ‘employment without any bondage’ is that a labourer does not have the liberty to leave the employment without the permission of the employer in the former; whereas, a labourer has the liberty to leave the employment without the permission of the employer in the latter. Though the victim had been employed as a house maid with the petitioner, it was established that she had not been kept in bondage; the petitioner had not withheld the earnings of the child or had used them for his purpose; and she had also not been physically or mentally harassed by anyone in the house. Therefore, further proceedings against the petitioner were quashed. [A. Nizamudhin v. Station House Officer, 2017 SCC OnLine Ker 7324, decided on 30.05.2017]

 

Case BriefsSupreme Court

Supreme Court: The Bench comprising of A.K Sikri and Abhay Manohar Sapre, JJ., said that where economic interest competes with the rights of other persons, need is to strike a balance between the two competing interests and have a balanced approach. The Bench was hearing the dispute as existence of 2 sugarcane factories within the radius of 15 km, thereby, violating Clause 6A of the Sugarcane (Control) Amendment Order, 2006.

Appellant stated that at the time of setting up of factory he received all the required permissions and his IEM also stood acknowledged, respondent also granted the no objection certificate to the new setup of the factory, even the Survey of India and Director of Sugar stated that, no similar factory lies within its radius of 15 km. The Appellant argued that at the time of establishment of the factory no “existing” sugar factory was there as per the definition given in clause 6A stating that an existing sugar factory is a factory which is in “operation” and respondent’s factory was not carrying out its crushing operations for last five sugar seasons therefore was not an existing factory and large amount of sugarcane was wasted amounting to huge losses to sugarcane farmers and appellant further prayed that a huge amount of investment has already been made by him therefore this economic factor should also be considered.

Accepting the argument, the Court held that at the time of establishment of the sugar factory by the appellant, he had bona fide intention and followed the requirements under clause 6A of Sugarcane (Control) Amendment Order 2006, the Court said that the requirement of distance mentioned in the Amendment Order was inserted keeping in mind the benefit of the existing sugar factories. In a situation like this, when such a factory itself gave no objection certificate, thereby waived the requirement, the bona fides of the appellant cannot be doubted.

The Court also considered the economic factors such as the expenditure of approximately Rs.300 crores by the appellant in establishing the factory; loans raised to the tune of Rs. 237 crores; operational cost of Rs. 150 crores; generation of employment of 377 persons on regular basis and indirect employment of more than 7000 persons; and setting up of co-generation plant for production of electricity which is giving supply of 37 MW of electricity. The Court, hence, held that these factors, particularly, bank loans, employment, generation and production at the factory serve useful public purpose and such economic considerations cannot be overlooked, in the context where there is hardly any statutory violation. [Shivashakti Sugars Ltd. v Renuka Sugar Ltd., 2017 SCC OnLine SC 6024, decided on 9-5- 2017]

Case BriefsSupreme Court

Supreme Court: Explaining the scope of the power of the State of Tamil Nadu to attach the immovable property of Financial Establishments under Section 3 of the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act, 1997, the Court said that the Act was enacted in order to curb the malady of financial swindlers and to protect the interest of innocent investors. Therefore, as per the procedure envisaged under Section 3 and 4 of the Act unequivocally the power to set the process into motion vests with the State Government by passing an ad-interim attachment order and thereafter act mandates appointment of competent authority under Sub-section (1) of Section 4 of the Act, to take further recourse as per the procedures laid down under Section 4 of the Act.

The Court was hearing the appeal against the order of Madras High Court setting aside the ad-interim order attaching the immovable properties of the partners of Financial Establishment, Global Capital Trading Services. Rejecting the contention of the Financial Establishment that before passing an order under section 3 of the act government has to take steps under section 4 of the act by identifying the properties, the bench of N.V. Ramana and P.C. Pant, JJ said that the High Court erred in accepting the said contention as the language employed under section 3 and 4 of the act is plain, unambiguous and it does not call for any interpretation as sort to be placed the respondents.

It was explained that while enacting the provisions the legislature has consciously given the discretion for passing an ad-interim order. it is evident from the language used in the section by inserting “Government may”. In the case on hand even before the other provisions are complied with the High Court erroneously interfered with the ad-interim order which defeats the very purpose of the provision which is incorporated to safeguard the interest of the investors. Hence, the order passed by the State Government under Section 3 of the Act attaching the immovable properties standing in the name of respondents, basing on the complaint of investors and directing the competent authority to take recourse as per the procedures contemplated under Sub-section (3) and (4) of Section 4 of the Act is valid and is very much in consonance with the provisions of the Act. [State v. K.S. Palanichamy, 2017 SCC OnLine SC 586, decided on 09.05.2017]

Case BriefsSupreme Court

Supreme Court: Dealing with the Section 97 of the Kerala Police Act, 2011 which mandates that the State Government shall ensure a minimum tenure of two years for the State Police Chief and that he could be transferred out before completion of the tenure if the State Government is prima facie satisfied that it is necessary to do so, on certain grounds specified in sub-section (2) of Section 97 of the Act, the Court said that the removal or displacement of any senior level officer from a tenure appointment must be for compelling reasons and must be justified by the concerned authority, if called upon to do so, on material that can be objectively tested. The bench said that this is what the rule of law expects and this is what Section 97 of the Act expects – the law must be faithfully implemented in a purposive manner.

The appellant in the present case was transferred before the competition of his tenure as an outcome of the aftermath of the Puttingal Temple Tragedy in which 100 persons were killed and around 400 were injured after the unauthorised fireworks by the temple authorities resulted in the stock of fireworks catching a spark and another case of brutal murder of a young Dalit girl Jisha within the jurisdiction of the Kuruppumpady police station, in the year 2016. State Government had submitted that it was prima facie satisfied that the conduct of the appellant post the two incidents did not inspire any confidence in his leadership and that translated into serious public dissatisfaction on the efficiency and the role of the police.

Noticing the fact that the Additional Chief Secretary recommended action against three specific police officers and placed the file before the Chief Minister and that the appellant has been accused of failure to take action against these errant police officers and unjustifiably apportioning a part of the blame on the district administration, the Court held that if the appellant failed to take any action against the errant police officers, the entire official machinery starting from the Chief Minister down to the Chief Secretary and the Additional Chief Secretary are equally to blame. The Court said that while it is true that a major part of the blame must rest on the police force at the ground level, the district administration perhaps cannot be completely absolved of its responsibility in the enormous tragedy that took place,

The Bench of Madan B. Lokur and Deepak Gupta, JJ, hence held that Section 97(2)(e) of the Act must be read and understood in the context of the other clauses of that Section which relate to verifiable facts and events. Clause (e) is not a blanket clause that permits the State Government to take any decision on the basis of what it believes to be public dissatisfaction. Otherwise, the State Government can misuse it and justify an adverse action on the ground of prima facie satisfaction outside the ambit of judicial review. [Dr. T.P. Senkumar IPS v. Union of India, 2017 SCC OnLine SC 463, decided on 24.04.2017]

Case BriefsSupreme Court

Supreme Court: Quashing the complaint filed against Mahendra Singh Dhoni for allegedly hurting the religious sentiments of people when an image of him being portrayed as Lord Vishnu was published in a magazine with a caption “God of Big Deals”, the Court said that Section 295A IPC does not stipulate everything to be penalised and any and every act would tantamount to insult or attempt to insult the religion or the religious beliefs of class of citizens. It penalise only those acts of insults to or those varieties of attempts to insult the religion or religious belief of a class of citizens which are perpetrated with the deliberate and malicious intention of outraging the religious feelings of that class of citizens.

Explaining further, the 3-judge bench of Dipak Misra, A.M.Khanwilkar and M.M. Shantanagouda, JJ said that insults to religion offered unwittingly or carelessly or without any deliberate or malicious intention to outrage the religious feelings of that class do not come within the Section. Emphasis has been laid on the calculated tendency of the said aggravated form of insult and also to disrupt the public order to invite the penalty.

The Court also cautioned the Magistrates who have been conferred with the power of taking cognizance and issuing summons and said that they are required to carefully scrutinize whether the allegations made in the complaint proceeding meet the basic ingredients of the offence; whether the concept of territorial jurisdiction is satisfied; and further whether the accused is really required to be summoned. [Mahendra Singh Dhoni v. Yerraguntla Shyamsundar, 2017 SCC OnLine SC 450, decided on 20.04.2017]

Case BriefsSupreme Court

Supreme Court: Dealing with the question as to the time limit for the validity of the Provisional certificate of Registry for a ship/vessel under the Merchant Shipping Act, 1958, the Court said that as per Section 40 the said Act, the ship has to be completely built and ready for sea-going and if it cannot comply with Section 40 within six months, that is, arriving at the port where there is a registrar, the validity of PCOR shall cease to exist. The Court clarified that the words “shall cease to have effect” under Section 40 of the Act mean that it will have no validity in the eyes of law and, in fact, the document would be absolutely null and void. The Provisional certificate of registry cannot be renewed nor its validity can be extended beyond six months.

The Bench of Dipak Misra and R. Banumathi, JJ said that for grant of PCOR to a ship becoming Indian ship abroad, the below mentioned requisite conditions for obtaining final registration must be satisfied:

(i) satisfaction of ownership of ship in terms of Section 21 of the Act;

(ii) the ship must be fully built and sea-going so that it can reach the Indian port for obtaining certificate of final registry and

(iii) satisfaction of other requirements contained in Sections 23 to 32 of the Act.

Taking note of the fact that Section 40 was drafted when India had not grown in the shipping arena and, therefore, at that juncture, ships were booked in a different stage, the Court said that Section 40 has to be read with the preceding provisions contained in Section 34 onwards till Section 41. The said Chapter is a complete Code. The schematic effect is that precautions have to be taken. Though surveyors have been chosen, they have to be extremely careful to see that the ship is completely built and thereafter being satisfied with regard to tonnage and other aspects, give the requisite certificate to make it sea-going. The Court said that these are the conditions precedent to get a provisional certificate. [Halliburton Offshore Services INC v. Principal Officer of Mercantile Marine Department, 2017 SCC OnLine SC 445, decided on 20.04.2017]

Case BriefsSupreme Court

Supreme Court: The Bench of J. Chelameswar and Abhay Manohar Sapre, JJ said that no right or liability can be created by a repealing enactment, which is inconsistent with the rights and obligations conferred under the repealed Act unless the repealing enactment makes an express declaration to that effect or adopts some other technique known to law to achieve that purpose. Giving retrospective effect to the repealing enactment is one of the techniques by which the legislature seeks to achieve that purpose.

The Court was hearing the matter relating to removal of the chairman of the Mehsana District Co-operative Milk Producers Union Ltd under Section 76-B of the Gujarat Co-operative Societies Act, 1961 for the period of 6 years.  Originally the Section provided for disqualification only for four years. But the “four years” period was substituted by “six years” period by the Gujarat Co-operative Societies (Amendment) Act, 2015. Hence, the question before the Court was whether the period of disqualification of six years is consistent with law.

The Court noticed that Section 7 of the Gujarat General Clauses Act, 1904 provides that where an enactment is repealed by a subsequent enactment, the repeal does not normally affect any investigation or legal proceedings in respect of any right, privilege, obligations, liability, penalty, forfeiture or punishment and any legal proceeding initiated during the currency of the repealed enactment could be continued as if the repealing Act has not been passed. It was further explained that repeal could be either of the entire enactment or a part of it. Substitution of parts of an enactment is nothing but pro tanto to repeal those parts.

It was held that normally when an enactment is repealed, any action initiated under that enactment dealing its currency should lapse because the authority of law for action initiated under an enactment ceases to exist on its repeal rendering the continuation of action without authority of law. However, Section 7 of the General Clauses Act seeks to preserve various rights and obligations acquired or incurred under repealed enactments. [Vipulbhai Mansingbhai Chaudhary v. State of Gujarata, 2017 SCC OnLine SC 410, decided on 17.04.2017]