312
[2010] 11 S.C.R. 311
PUNJAB NATIONAL BANK AND ORS.
v.
K.K. VERMA
(Civil Appeal No. 7416 of 2010)
SEPTEMBER 7, 2010
A
B
[R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]
Service Law – Departmental Inquiry – Punjab National
Bank Officers Employees (Discipline and Appeal)
Regulations, 1977 – Regulation 7(2) and 9 – Right of
employee to represent against the adverse findings in an
inquiry report – Nationalized bank – Employee allegedly
committed serious irregularities/lapses while discharging his
duties – Served with charge-sheet and consequently removed
from service – Held: Nationalized bank is an instrumentality
of the State, and is always expected to act in fairness and to
follow the principles of natural justice – The service
regulations in question contained the requirement to furnish
a copy of the inquiry report, and the order of the Disciplinary
Authority recording its disagreement therewith, to the
employee, prior to any decision on the penalty, in order to
secure to him an opportunity to make his submissions on the
adverse findings and to prove his innocence – By not giving
the inquiry report and the adverse order of the disciplinary
authority, the employee was denied the opportunity to
represent, before the finding of guilt was arrived at, and
thereby he was certainly prejudiced – Constitution of India,
1950 – Article 311(2) – Natural justice.
The respondent, a Manager in the appellant-bank,
allegedly committed serious irregularities / lapses while
discharging his duties. He was served with a chargesheet which contained in all four charges. Departmental
inquiry was held against the respondent in terms of the
311
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Punjab National Bank Officers Employees (Discipline and
Appeal) Regulations, 1977.
The Inquiry Officer submitted report stating that the
first three charges were established but not the fourth
one. The Disciplinary Authority accepted the finding of
B
the Inquiry Officer in respect of the first three charges but
reversed its finding as regards charge no.4 inasmuch as
it found the respondent guilty in regard to a part of that
charge as well; and consequently imposed the major
penalty of removal of the respondent from service.
C
The respondent challenged the order of his removal
from service by filing a writ petition. He contended that
he was not furnished with a copy of the inquiry report
before the issuance of the order of removal and thereby
D he was not afforded an appropriate opportunity to defend
himself resulting in denial of principles of natural justice
and causing him great prejudice. The writ petition was
allowed by the Single Judge of the High Court. The order
was upheld by the Division Bench of the High Court.
E
Aggrieved, the employer-bank filed the instant appeal
contending that it was not mandatory for it to furnish the
inquiry report since the same became necessary only
after the Supreme Court judgment in the case of Mohd.
Ramzan Khan* which judgment itself declared that the
F law declared therein was to be applied prospectively and
that the order of removal of the respondent was passed
prior to the said judgment.
Per contra, the respondent–employee contended that
G all that the judgment in Mohd. Ramzan’s case did was to
remove the doubts which arose due to the changes
brought into Article 311(2) of the Constitution by the 42nd
Constitutional amendment; and in any event Regulations
H
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA
313
7(2) and 9 the 1977 regulations made it obligatory for the
appellant to furnish a copy of the inquiry report to the
respondent.
314
A
Disposing of the appeal, the Court
HELD:1.1. The right to represent against the findings
in the inquiry report to prove one’s innocence is distinct
from the right to represent against the proposed penalty.
It is only the second right to represent against the
proposed penalty which is taken away by the 42nd
Constitutional Amendment. The right to represent against
the findings in the report is not disturbed in any way. In
fact, any denial thereof will make the final order
vulnerable. [Para 28] [334-B-E]
1.2. The right of an employee to represent against the
adverse findings in an inquiry report is referrable to
Article 311(2) of the Constitution of India. The import of
this provision was explained by a Constitution Bench**
of the Supreme Court which held that it included both the
opportunities to an employee, namely, to deny one’s guilt
and establish innocence, which he can, only if he is
informed about the charges and the imputations in
support, and secondly, an opportunity to make a
representation on the proposed punishment. The
Fifteenth Amendment to the Constitution w.e.f 6th
October, 1963 amended Article 311 (2), and further
clarified the position in this behalf. The import of this
change was explained by another Constitution Bench £
which in terms noted that it is well settled that the public
servant who is entitled to the protection of Article 311,
must get two opportunities to defend himself. First, to
defend the charge against him and prove his innocence,
which opportunity is to be given by giving him the report
against him, and then a second notice when the
government decides provisionally about the proposed
B
C
D
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A punishment, as to why the same should not be imposed.
The 42nd Amendment effected in 1976 once again
amended sub-article 311 (2). In Mohd. Ramzan Khan’s
case, this Court was concerned with the question as to
whether the 42nd Amendment brought about any change
B in the matter of supply of a copy of the report which is a
part of the first stage, and the effect of non-supply thereof
on the punishment proposed. It is only with a view not to
affect the inquiries which were conducted in the
meanwhile that the Court held that those inquiries will not
C be affected, and though it was only declaring the law, the
propositions laid down therein will apply prospectively.
This was basically to protect the actions which were taken
during the interregnum i.e after the 42nd Amendment
became effective until it was explained as above in this
judgment. [Paras 17, 18, 19, 20] [326-A-E; G-H; 327-A-F;
D
328-B-C]
*Union of India vs. Mohd. Ramzan Khan 1991 (1) SCC
588, Explained.
E
E
F
F
G
H
**Khem Chand v. Union of India AIR 1958 SC 300;
£ Union of India v. H.C. Goel AIR 1964 SC 364 and Union
of India & Anr. v. Tulsiram Patel 1985 (3) SCC 398, referred
to.
2.1. Regulation 7(2) of the Punjab National Bank
Officers Employees (Discipline and Appeal) Regulations,
1977 requires the Disciplinary Authority to record its
reasons for disagreement wherever it disagrees with the
findings of the inquiry officer while Regulation 9 provides
for communicating to the employee concerned, the orders
G passed under Regulation 7, apart from providing him with
a copy of the inquiry report. These regulations will have
to be read as laid down only with a view to provide an
opportunity to the employee to represent against the
findings to the extent they are adverse to him. Then only
H they will become meaningful. The service regulations of
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA
315
the appellant are concerning the discipline and conduct
in a nationalized bank which is an instrumentality of the
state. The instrumentalities of the state have always been
expected to act in fairness, and following the principles
of natural justice has always been considered as a
minimum expectation in that behalf. The above
regulations will, therefore, have to be read as containing
the requirement to furnish a copy of the inquiry report and
the order of the Disciplinary Authority recording its
disagreement therewith to the employee prior to any
decision on the penalty being arrived at. That will secure
to the delinquent employee an opportunity to make his
submissions on the adverse findings and to prove his
innocence. [Para 23] [330-C-F]
2.2. It is clear that where the service rules with regard
to the disciplinary proceedings themselves made it
obligatory to supply a copy of the report to the
employees, it would act as an exception. The direction
that the judgment in Mohd. Ramzan Khan will not apply
retrospectively, will not cover such service regulations
and the concerned employers will have to continue to
give a copy of the inquiry report to the delinquent
employees, as provided in their service regulations. [Para
26] [332-B-C]
2.3. In the instant case, it is clear that the appellants
had not followed their own Regulations which clearly
require the disciplinary authority to record the reasons
where it differed from the inquiry officer. The Regulations
also clearly lay down that a copy of the inquiry report and
the order of disagreement are to be provided to the
employee. In the present case, one is concerned with the
stage where the Disciplinary Authority differs with the
inquiry officer on his findings. This is prior to arriving at
the guilt of the employee. His right to receive the report
and defend at that stage before the guilt is established
316
A
B
C
D
E
F
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A is very much recognized. As seen from the order of
Disciplinary Authority, the appellant has considered it to
be a serious charge and, therefore, the respondent ought
to have been given the opportunity to challenge the
adverse finding of the Disciplinary Authority where it
B differed from the inquiry officer to establish his
innocence. By not giving the inquiry report and the
adverse order of the disciplinary authority, the
respondent was denied the opportunity to represent,
before the finding of guilt was arrived at, and thereby he
C was certainly prejudiced. [Paras 28, 29, 30] [333-B-E; 334D-E; G-H]
2.4. The service regulations are required to be
followed in letter as well as in spirit. There is no error on
the part of the High Court in interfering with the order of
D removal of the respondent from the service and in
directing the appellant to furnish the respondent a copy
of the inquiry report, and afford him opportunity of
hearing. The respondent is directed to be given a copy
of the report of the Inquiry Officer and the detailed order
E of the Disciplinary Authority differing therewith, basically
to afford him the opportunity to explain his position with
respect to the charges and prove his innocence. [Paras
31, 32] [335-A-E]
F
Union of India vs. Mohd. Ramzan Khan 1991 (1) SCC
588, held inapplicable.
Managing Director, ECIL, Hyderabad and Ors. v. B.
Karunakar and Ors. 1993 (4) SCC 727 and Punjab National
Bank v. Kunj Behari Misra 1998 (7) SCC 84, relied on.
G
G
H
State of Assam vs. Vimal Kumar Pandit AIR 1963 SC
1612; National Fertilizers Ltd. and Anr. v. P.K. Khanna AIR
2005 SC 3742 ; State of Maharashtra v. B.K. Takkamore &
Ors. AIR 1967 SC 1353; S.K. Singh v. Central Bank of India
H and Ors. 1996 (6) SCC 415 and Haryana Financial
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA
317
318
Corporation and Anr. v. Kailash Chandra Ahuja 2008 (9) SCC A
31, referred to.
A
Case Law Reference:
1991 (1) SCC 588
held inapplicable
Para 14
1993 (4) SCC 727
relied on
Para 15
AIR 1958 SC 300
referred to
Para 17
AIR 1964 SC 364
referred to
Para 18
1998 (7) SCC 84
relied on
Para 24
AIR 1963 SC 1612
referred to
Para 25
AIR 2005 SC 3742
referred to
Para 27
1985 (3) SCC 398
referred to
Para 28
AIR 1967 SC 1353
referred to
Para 29
1996 (6) SCC 415
referred to
Para 30
2008 (9) SCC 31
referred to
Para 30
B
B
C
C
D
D
E
E
SUPREME COURT REPORTS
[2010] 11 S.C.R.
2. This appeal by the appellant Bank seeks to challenge
the judgment and order dated 31.1.2008 rendered by Division
Bench of the Punjab and Haryana High Court dismissing LPA
No. 17 of 2008 filed by the appellant Bank with costs. The
impugned judgment was rendered in an appeal arising out of
the judgment dated 26.11.2007 by a Single Judge of that court
whereby the Learned Single Judge had allowed the Writ Petition
No. 2756 of 1986 filed by the respondent challenging his
removal from service by the order of the appellant dated
17.4.1985.
3. The two impugned judgments have interfered with the
order of removal on the ground of not furnishing the respondent
a copy of the inquiry report before issuing the order of
punishment and thereby not affording him an appropriate
opportunity to defend resulting into denial of principles of natural
justice causing him great prejudice. The appellant Bank has
raised the question in this appeal as to whether the respondent
was entitled either in law or as per the rules governing his
service conditions to a copy of the inquiry report before issuance
of the order of punishment.
4. Short facts leading to the appeal are as follows:
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7416 of 2010.
From the Judgment & Order dated 31.01.2008 of the High
Court of Punjab & Haryana at Chandigarh in LPA No. 17 of
F
2008.
F
The respondent was working as a Manager of appellant’s
branch at Jallianwalan Bagh, Amritsar. He was served with a
Charge Sheet dated 12.8.1983 which contained in all four
charges. They were principally as follows:
(1)
Dhruv Mehta, Yashraj Singh Deora, Sarv Mitter, R.K.
Gautam (for Mitter & Mitter Co.) for the Appellants.
Rohit Arya, Nitin Gaur, S.K. Sabharwal for the Respondent. G
G
The Judgment of the Court was delivered by
GOKHALE J. 1. Leave granted.
H
H
He connived with the borrowers and showed undue
favour to them by throwing bank’s norms to winds.
In that, amongst others particulars, it was alleged
that when he has on leave from 09.02.1982 to
17.02.1982, he visited the office to issue the bank
guarantee in the favour of Income Tax Officer,
Amritsar on behalf of M/s Des Raj Aggarwal & Co.
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA [H.L. GOKHALE, J.]
319
320
(2)
The second charge was that he submitted wrong
information to the authorities thereby concealed the
factual state of affairs of the branch from the
authorities.
A
(3)
The third charge was that he allowed unauthorized
facilities to various parties during the period of
credit squeeze for which his powers had been
withdrawn.
B
B
(4)
The fourth charge consisting of three parts reads as
C
follows:
C
A
(i) He misused his official position to secure undue benefit
for himself. He was given a personal allowance of Rs. 147/
- per month from 01.07.1979 at the time of fitment of the
salary under PNB Officer Employees (Service) D
Regulations, 1979, which was to be adjusted out of annual
grades increment @ 1/3rd of the increment of the year. He
did not allow the person concerned to make any
adjustment from the increments released in his favour.
D
E
E
(ii) He was sanctioned a refundable loan by the Trustees
of the Provident Fund against his Provident Fund in 1973.
He did not pay instalments. The balance as on 30.6.1981
was 5291/-.
[2010] 11 S.C.R.
during the discharge of duties. They would certainly not amount
to moral turpitude, requiring a departmental enquiry for a major
penalty.
6. A regular departmental inquiry was held thereafter into
those allegations in terms of the Punjab National Bank Officers
Employees (Discipline and Appeal) Regulations 1977, framed
under Section 19 of the Banking Companies (Acquisition and
Transfer of Undertaking Act) 1970. The inquiry officer submitted
his report dated 7.2.1985 returning a finding that the first three
charges were established but not the fourth one.
7. As can be seen from the earlier narration, Charge No.
4 was in three parts. The first part of this charge was that the
respondent used his official position to secure undue benefit
for himself. In that it is alleged that he was given a personal
allowance of Rs. 147/- from 01.07.1979 which was to be
adjusted out of annual grades increment at one-third of the
increment of the year. The respondent did not allow the person
concerned to make any adjustment from the increments
released in his favour. As far as this aspect is concerned the
inquiry officer held as follows:Non-adjustment of the personal allowance
(iii) The Regional Office, Amritsar sanctioned a consumer F
loan of Rs. 5000/- to Shri Verma for purchase of fridge.
He showed the purchase of the said item from M/s
Electronics Services Centre having cash credit limits with
the Branch without actually purchasing the fridge. The firm
M/s Electronics Service Centre is not dealing in G
refrigerators/fridges. The amount of fridge was paid cash
through a cash order at the counter.
5. The respondent denied these allegations. According to
him they were vague and general in nature. At the highest they
may be considered as procedural lapses/minor irregularities
SUPREME COURT REPORTS
H
F
G
H
Mr. Verma was given a personal allowance of Rs. 147/per month with effect from 01.07.1979 i.e. at the time of fitment
of salary under the PCT which was to be adjusted out of the
annual graded increment at the rate 1/3rd of the increment of
the year but did not adjust as per the above norms.
This fact cannot be proved as he can never give such
things in writing for not deducting 1/3rd of the graded increment.
He might have verbally asked the Establishment Clerk not to
adjust, but here it is doubtful and the benefit of this should go
to Mr. Verma.
The salary bill is sent every month for post audit to Regional
Manager Office and it should have been pointed out by the
PUNJAB NATIONAL BANK AND ORS. v. K.K. VERMA 321
[H.L. GOKHALE, J.]
Regional Officer of this lapse, whereas it was pointed out on
29.05.1981, followed by reminders of date 17.07.1981,
08.09.1981, and finally on 21.4.1982 exhibit page 32 which was
duly deposited by Verma in three instalments with the kind
permission of the R.M. Amritsar exhibit page 31.
322
A
A
B
8. The second part of this Charge No. 4 was that the
respondent was sanctioned a refundable loan from the
Provident Fund Department but he did not pay the instalments
and the balance as on 30.6.1983 was Rs. 6381/-. The inquiry
officer held that this charge was proved. (This is however a
situation of not refunding a small portion of the advance which C
could be adjusted later on).
B
9. The third part of charge No. 4 was that the respondent
had taken consumer loan of Rs. 5000/- for purchasing a
refrigerator. It was alleged that he had purchased the item from D
M/s Electronic Service Centre which was having cash credit
limits with the Bank. Infact he had not purchased the fridge and
that firm was not dealing with refrigerators at all. The inquiry
officer held that the respondent came from a well to do family
and was financially of good means. He is living in a bungalow E
owned by himself and it was difficult to believe that he was not
already having any refrigerator. He, therefore, held that no
refrigerator was purchased by him from that concern.
10. The disciplinary authority vide its order dated
30.3.1985 accepted the finding of the inquiry officer in respect F
of the first three charges but differed with its finding on charge
No. 4. He was of the view that the charges were serious and
therefore decided to impose the major penalty of removal of
respondent from service. In the said order, as regards Charge
G
No. 4 (i) the Disciplinary Authority observed as follows:“As regards the findings of Enquiry Officer with
regard to non-deduction and adjustment of 1/3rd of the
graded increment towards personal allowance, I do not
agree with him that there is nothing on record which could
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
show that Shri Verma had instructed the Establishment
Clerk not to adjust this part of increment towards personal
allowance. Shri Verma must have been signing salary bill
as a final signatory and if deductions were not adjusted
towards adjustment of personal allowance he could point
out to the office. It shows, he intentionally did not permit
this adjustment to get personal benefit.”
11. The impugned order of removal passed by the
disciplinary authority reads as follows:“Punjab National Bank
Zonal Office
Chandigarh.
C
Ref:ZO:DAC:
D
Dated 17.4.1985
Shri K.K. Verma,
215-Green Avanue,
Amritsar
Reg: Departmental Enquiry against you – chargesheet
Dated 12.8.83.
E
F
G
H
You were served with chargesheet dated 12.8.83 for
the serious irregularities/lapses committed by you while
working as manager, BO: Jallianwala Bagh, Amritsar. To
know the truth of imputations of lapses on your part,
enquiry proceedings were initiated against you in terms of
PNB Officer employees (D & A) Regulations, 1977
(Clause-6) and for this purpose Shri A.L. Pahwa, Manager,
BC:Akali Market, Amritsar, was appointed as Enquiry
Officer and Shri A.K. Aggarwal, Manager PF Deptt., HO,
New Delhi was appointed as Presenting Officer. The
Enquiry officer has since submitted his report alongwith
relevant records of the proceedings in the above matter. I
have carefully gone through the report alongwith the entire
record of the enquiry proceedings and agree with the
findings of the Enquiry Officer and hold you guilty of the
aforesaid serious irregularities/lapses.
PUNJAB NATIONAL BANK AND ORS. v. K.K. VERMA 323
[H.L. GOKHALE, J.]
Keeping in view the above, I decide to impose upon
you the major penalty of your removal from the service of
the Bank with immediate effect.
324
A
A
B
B
12. The respondent thereafter preferred a Departmental C
appeal and then a review petition, both of which came to be
rejected. Being aggrieved by that order, the respondent filed
the above referred Writ Petition to a Single Judge of the Punjab
and Haryana High Court who allowed that Writ Petition. The
learned Single Judge set aside the order of removal. He has D
further observed that it will be open to the competent authority
to decide the question of proposed punishment after following
principles of natural justice by furnishing the respondent a copy
of the enquiry report and affording him opportunity of hearing
in the context of proposed punishment. As stated above, the E
appeal filed by the appellants herein from that judgment also
came to be dismissed. Being aggrieved by both these
judgments, the appellant has filed the present appeal by special
leave. The main submission of the appellant has been that the
appellant was not required to give a copy of the inquiry report F
prior to the decision of the disciplinary authority, and the order
of removal could not be interfered on that ground.
C
A copy of the detailed orders passed by the undersigned
in regard to the above matter alongwith a copy of the
Enquiry report is enclosed herewith.
Sd/Disciplinary Authority
Deputy General Manager”
13. Now, what is material to note is, that the respondent
was not furnished with a copy of the inquiry report, and the
disciplinary authority straightforward passed the order of G
removal which has been quoted earlier. The report of the inquiry
officer and the detailed order of the Disciplinary Authority
became available to the respondent only alongwith the order
of removal, and he did not have any opportunity to make his
submissions on that report to defend the charges anytime prior H
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
to the punishment of removal being decided and imposed. It
was therefore, canvassed on behalf of the respondent before
the Learned Single Judge that the action of the appellant was
violative of principles of natural justice. He had not been
furnished with the copy of the report any time prior to his
removal and it was particularly necessary when the disciplinary
authority had ultimately differed with the finding on Charge No.
4 rendered by the inquiry officer which became known only after
the inquiry report and the detailed order of the Disciplinary
Authority was received alongwith the removal order. He would
have made submissions on his innocence and would have
pointed out to the disciplinary authority that even the first three
charges were not established. There is no dispute with respect
to the fact that the inquiry report was not furnished to the
respondent earlier. The Learned Single Judge had specifically
asked the appellant whether they had furnished a copy of the
inquiry report to the respondent and he recorded in this order
that they could not produce any material from the concerned
file to show that a copy of the report had been furnished to the
respondent. That apart, the Division Bench also held that the
order of removal was a mechanical order passed without going
into the findings referred in the report, (which were in favour of
the respondent at least on charge No. 4) and without explaining
as to why the disciplinary authority had differed from the inquiry
officer on Charge No. 4.
14. It was canvassed on behalf of the appellant that it was
not mandatory for them to furnish the inquiry report, which had
become necessary only after the judgment of the Apex Court
dated 20.11.1990 rendered in the case of Union of India vs.
Mohd. Ramzan Khan [1991 (1) SCC 588]. The judgment in
Mohd. Ramzan (supra) would not apply to the present case
since the order of removal in the present case was passed prior
to this judgment on 17.4.1985 and the judgment in Mohd.
Ramzan itself declared that the law declared therein was to be
applied as a prospective one. This plea was raised by the
appellant before the Division Bench but it was turned down
PUNJAB NATIONAL BANK AND ORS. v. K.K. VERMA 325
[H.L. GOKHALE, J.]
holding that the principles of natural justice were always there
to protect the right of hearing to be provided to the delinquent
official, before awarding him the punishment, and that the
judgment in Mohd. Ramzan Khan had only recognized this
position and made it mandatory.
15. The learned counsel for the appellant pressed into
service the following observations in para 33 of the Judgment
of the Constitution Bench in Managing Director, ECIL,
Hyderabad and Ors. versus B. Karunakar and Ors. reported
in 1993 (4) SCC 727.
“…….. It is for the first time in Mohd. Ramzan Khan
case that this court laid down the law. That decision made
the law laid down there prospective in operation i.e.
applicable to the orders of punishment passed after
November 20, 1990. The law laid down was not applicable
to the orders of punishment passed before that date
notwithstanding the fact that the proceedings arising out
of the same were pending in courts after that date. The
said proceedings had to be decided according to the law
prevalent prior to the said date which did not require the
authority to supply a copy of the enquiry officer’s report to
the employee. The only exception to this was where the
service rules with regard to the disciplinary proceedings
themselves made it obligatory to supply a copy of the
report to the employee.” (emphasis supplied)
16. The counsel for the respondent on the other hand
submitted that the right to receive the inquiry report and to make
submissions thereon to prove one’s innocence was always
available to the employees of Government and Public Bodies.
All that the judgment in Mohd. Ramzan Khan’s case did was
to remove the doubts which arose due to the changes brought
into Article 311(2) by the 42nd Constitutional amendments. The
judgment made the law declared prospective only to avoid the
difficulties that would arise in inquiries held prior thereto.
326
A
A
B
B
C
C
D
E
SUPREME COURT REPORTS
[2010] 11 S.C.R.
17. In this connection, it is to be noted that as far as the
right of an employee to represent against the adverse findings
in an inquiry report is concerned, the same is referrable to Article
311(2) of the Constitution of India. Article 311 (2) in the original
Constitution read as follows:“311. (2) No such person as aforesaid shall be
dismissed or removed or reduced in rank until he has been
given a reasonable opportunity of showing cause against
the action proposed to be taken in regard to him.”
The import of this provision was explained by a Constitution
Bench of this Court in Khem Chand v. Union of India [AIR 1958
SC 300]. It held that it included both the opportunities to an
employee, namely to deny one’s guilt and establish innocence,
which he can, only if he is informed about the charges and the
D imputations in support, and secondly an opportunity to make a
representation on the proposed punishment.
18. The Fifteenth Amendment to the Constitution w.e.f 6th
October, 1963 amended Article 311 (2), and further clarified the
E position in this behalf. The amended Article 311 (2) reads as
follows:“311. (2) No such person as aforesaid shall be
dismissed or removed or reduced in rank except after an
enquiry in which he has been informed of the charges
against him and given a reasonable opportunity of being
heard in respect of those charges and where it is proposed,
after such inquiry, to impose on him any such penalty, until
he has been given a reasonable opportunity of making
representation on the penalty proposed, but only on the
basis of the evidence adduced during such inquiry.”
F
F
G
G
H
The import of this change was explained by another
Constitution Bench in Union of India v. H.C. Goel [AIR 1964
SC 364] which in terms noted that it is well settled that the public
H servant who is entitled to the protection of Article 311, must get
PUNJAB NATIONAL BANK AND ORS. v. K.K. VERMA 327
[H.L. GOKHALE, J.]
two opportunities to defend himself. First, to defend the charge
against him and prove his innocence, which opportunity is to
be given by giving him the report against him, and then a
second notice when the government decides provisionally about
the proposed punishment, as to why the same should not be
imposed.
328
A
A
B
B
C
C
19. The 42nd Amendment effected in 1976 once again
amended sub-article 311 (2) as follows:“311. (2) No such person as aforesaid shall be
dismissed or removed or reduced in rank except after an
enquiry in which he has been informed of the charges
against him and given a reasonable opportunity of being
heard in respect of those charges.
Provided that where it is proposed, after such inquiry,
to impose upon him any such penalty, such penalty may
be imposed on the basis of the evidence adduced during
such inquiry and it shall not be necessary to give such
person any opportunity of making representation on the
penalty proposed:”
20. In Mohd. Ramzan Khan’s case (supra) the Court was
concerned with the question as to whether the 42nd Amendment
brought about any change in the matter of supply of a copy of
the report which is a part of the first stage, and the effect of nonsupply thereof on the punishment proposed. The Court
considered the various judgments on this aspect and held in
paragraph 18 of the judgment as follows:“We make it clear that wherever there has been an
Inquiry Officer and he has furnished a report to the
disciplinary authority at the conclusion of the inquiry holding
the delinquent guilty of all or any of the charges with
proposal for any particular punishment or not, the
delinquent is entitled to a copy of such report and will also
be entitled to make a representation against it, if he so
D
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
desires, and non-furnishing of the report would amount to
violation of rules of natural justice and make the final order
liable to challenge hereafter.” (emphasis supplied)
It is only with a view not to affect the inquiries which were
conducted in the meanwhile that the Court held that those
inquiries will not be affected, and though it was only declaring
the law, the propositions laid down therein will apply
prospectively. This was basically to protect the actions which
were taken during the interregnum i.e after the 42nd
Amendment became effective until it was explained as above
in this judgment.
21. Counsel for the appellant submitted that appellant’s
action was protected since the impugned order of removal was
passed during this interregnum. On the other hand, the counsel
for the respondent pointed out that though the observations in
Karunakar (extracted above) explained the prospective
application of the propositions in Mohd. Ramzan Khan, it also
made it clear that where the service rules themselves made it
obligatory, it was necessary to furnish a copy of the inquiry
report to the employee. In this connection, counsel for the
respondent pressed into service regulation 7 (2) and regulation
9 of the above referred service regulations under which the
inquiry was held. (Regulation 8 is about minor penalties with
which we are not concerned in this matter). These two
regulations read as follows:7. Action on the Inquiry Report:
(1)
G
G
H
H
The Disciplinary Authority, if it is not itself the Inquiry
Authority may, for reasons to be recorded by it in
writing, remit the case to the Inquiring Authority for
fresh or further inquiry and report and the Inquiring
Authority shall thereupon proceed to hold the further
inquiry according to the provisions of Regulation 6
as far as may be.
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA [H.L. GOKHALE, J.]
(2)
(3)
(4)
9.
329
330
A
A
B
If the Disciplinary Authority, having regard to its
findings on all or any of the articles of charge is of
the opinion that any of the penalties specified in the
regulation 4 should be imposed on the officer
employee it shall, notwithstanding anything C
contained in regulation 8, make an order imposing
such penalty.
B
The Disciplinary Authority shall, if it disagrees with
the findings of the Inquiring Authority on any article
of charge, record its reasons for such disagreement
and record its own findings on such charge, if the
evidence on record is sufficient for the purpose.
If the Disciplinary Authority, having regard to its
findings on all or any of the articles of charge, is of
the opinion that no penalty is called for, it may pass D
an order exonerating the officer employee
concerned.
C
D
Communication of orders
E
E
22. Regulation 7 thus, speaks of four kinds of orders to F
be passed by the Disciplinary Authority after receiving the
report of the inquiry. (1) Order once again remitting the case
to the inquiry officer, (2) Order recording disagreement with the
inquiry officer, (3) Order imposing a penalty and (4) an order
exonerating the employee. Regulation 7 (2) makes it clear that G
where the disciplinary authority disagrees with the findings of
the inquiry officer on any article of charge, it must record its
reasons for such disagreement. Regulation 9 provides that the
orders made by the disciplinary authority under article 7 have
to be communicated to the officer / employee concerned. He H
F
Orders made by the Disciplinary Authority under
Regulation 7 or Regulation 8 shall be communicated to the
officer employee concerned, who shall also be supplied
with a copy of the report of inquiry, if any.”
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[2010] 11 S.C.R.
is also to be supplied with a copy of the report of the inquiry, if
any. The counsel for the respondent submitted with much force
that both these regulations when read together provide that
when the disciplinary authority was differing with the inquiry
officer, the report of the inquiry officer must be furnished to the
employee before the decision on penalty was arrived at.
23. Regulation 7 (2) requires the Disciplinary Authority to
record its reasons for disagreement wherever it disagrees with
the findings of the inquiry officer. Regulation 9 provides for
communicating to the employee concerned, the orders passed
under Regulation 7, apart from providing him with a copy of the
inquiry report. These regulations will have to be read as laid
down only with a view to provide an opportunity to the employee
to represent against the findings to the extent they are adverse
to him. Then only they will become meaningful. The service
regulations of the appellant are concerning the discipline and
conduct in a nationalized bank which is an instrumentality of the
state. The instrumentalities of the state have always been
expected to act in fairness, and following the principles of
natural justice has always been considered as a minimum
expectation in that behalf. The above regulations will, therefore,
have to be read as containing the requirement to furnish a copy
of the inquiry report and the order of the Disciplinary Authority
recording its disagreement therewith to the employee prior to
any decision on the penalty being arrived at. That will secure
to the delinquent employee an opportunity to make his
submissions on the adverse findings and to prove his
innocence.
24. The interpretation of regulation 7 (2) of the appellant
bank is no longer res integra. In Punjab National Bank v. Kunj
Behari Misra [1998 (7) SCC 84] this very question came up
before this Court. Two Assistant Managers at the Lucknow
Branch of the appellant bank viz. Kunj Behari Misra and S.P.
Goel were charged for misconduct, when shortage of Rs. 1 lakh
was detected in the branch on 10.11.1981. The inquiry officer
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA [H.L. GOKHALE, J.]
331
held Mr. Misra guilty of only one out of the six charges viz. that
he had not signed the concerned register at the relevant time.
He exonerated Mr. Goel of all the charges. The disciplinary
authority reversed the findings of the inquiry officer and held that
the charges were proved. By his orders dated 12.12.83 and
15.12.83 he directed proportionate recovery of Rs. 1 lakh from
both the officers.
25. In that case also the appellant bank canvassed the
same submission viz. that since the inquiry was during the
period prior to the judgment in Mohd. Ramzan Khan (supra)
the appellant was not required to give the inquiry report or the
report of the disciplinary authority differing with the inquiry
officer. The very regulation 7 (2) came up for consideration. A
bench of three judges of this Court held that the requirement to
give these reports to the employee will have to be read into
regulation 7 (2). The Court referred to and relied upon an earlier
judgment of the constitution bench in State of Assam vs. Vimal
Kumar Pandit [AIR 1963 SC 1612] and para 26 of Karunakar
(supra) and specifically ruled in para 19 as follows:“19. The result of the aforesaid discussion would be
that the principles of natural justice have to be read into
Regulation 7(2). As a result thereof, whenever the
disciplinary authority disagrees with the enquiry authority
on any article of charge, then before it records its own
findings on such charge, it must record its tentative reasons
for such disagreement and give to the delinquent officer
an opportunity to represent before it records its findings.
The report of the enquiry officer containing its findings will
have to be conveyed and the delinquent officer will have
an opportunity to persuade the disciplinary authority to
accept the favourable conclusion of the enquiry officer. The
principles of natural justice, as we have already observed,
require the authority which has to take a final decision and
can impose a penalty, to give an opportunity to the officer
charged of misconduct to file a representation before the
disciplinary authority records its findings on the charges
332
A
B
C
D
A
framed against the officer.”
27. The counsel for the appellant relied upon the judgment
of this Court in National Fertilizers Ltd. and Anr. v. P.K.
Khanna [AIR 2005 SC 3742] where the disciplinary rules were
D pari-materia to the rules in the present case as can be seen
from para 10 of that judgment. Counsel relied on para 13 of
the judgment which reads as follows:-
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[2010] 11 S.C.R.
26. Apart from this, as seen from the legal position
enunciated in para 33 of Karunakar (supra), earlier extracted,
it is clear that where the service rules with regard to the
disciplinary proceedings themselves made it obligatory to
B
supply a copy of the report to the employees, it would act as
an exception. The direction that the judgment in Mohd. Ramzan
Khan will not apply retrospectively, will not cover such service
regulations and the concerned employers will have to continue
to give a copy of the inquiry report to the delinquent employees,
C
as provided in their service regulations.
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“As far as the second question is concerned, neither
the decision in Karunakar nor Rule 33 quoted earlier
postulate that the delinquent employee should be given an
opportunity to show cause after the finding of guilt as to
the quantum of the punishment. The Rules envisage the
passing of an order by the Disciplinary Authority not only
finding the delinquent guilty, but also imposing punishment
after the delinquent has been given a copy of the Enquiry
report and had an opportunity of challenging the same.”
(emphasis supplied)
This paragraph make it clear that there is no second
G opportunity available to the delinquent employee after the finding
of guilt on the quantum of punishment. At the same time, the
second sentence of this para clearly states that a copy of the
inquiry report is to be given to the delinquent employee prior
to the decision of the disciplinary authority for providing him with
H an opportunity to challenge the report. It is also material to note
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA [H.L. GOKHALE, J.]
333
from this judgment that since the employee had contended in
that case, that the Disciplinary Authority had not considered his
objections correctly, this Court directed the Appellate Authority
(and not the Disciplinary Authority) to reconsider the objections
of the respondent.
334
A
B
28. This being the position, in the instant case it is clear
that the appellant had not followed their own regulations which
clearly require the disciplinary authority to record the reasons
where it differed from the inquiry officer. The regulations also
clearly lay down that a copy of the inquiry report and the order
of disagreement are to be provided to the employee. In the C
present case, we are concerned with the stage where the
Disciplinary Authority differs with the inquiry officer on his
findings. This is prior to arriving at the guilt of the employee.
His right to receive the report and defend at that stage before
the guilt is established is very much recognized as seen above. D
Counsel for the appellant submitted that Constitution Bench has
held in Union of India & Anr. v. Tulsiram Patel [1985 (3) SCC
398] that after the 42nd Amendment, the employees are not
entitled in law to be heard in the matter of penalty. In Karunakar’s
case (supra), another Constitution Bench has referred to E
Tulsiram Patel in paragraph 4 and then explained the legal
position in this behalf in paragraph 7 as follows:“While the right to represent against the findings in
the report is part of the reasonable opportunity available F
during the first stage of the inquiry viz., before the
disciplinary authority takes into consideration the findings
in the report, the right to show cause against the penalty
proposed belongs to the second stage when the
disciplinary authority has considered the findings in the
G
report and has come to the conclusion with regard to the
guilt of the employee and proposes to award penalty on
the basis of its conclusions. The first right is the right to
prove innocence. The second right is to plead for either
no penalty or a lesser penalty although the conclusion
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[2010] 11 S.C.R.
regarding the guilt is accepted. It is the second right
exercisable at the second stage which was taken away by
the 42nd Amendment.”
Thus, the right to represent against the findings in the
inquiry report to prove one’s innocence is distinct from the right
to represent against the proposed penalty. It is only the second
right to represent against the proposed penalty which is taken
away by the 42nd Amendment. The right to represent against
the findings in the report is not disturbed in any way. In fact, any
denial thereof will make the final order vulnerable.
29. Counsel for the respondent relied upon the judgment
in State of Maharashtra v. B.K. Takkamore & Ors. [AIR 1967
SC 1353] to submit that if the impugned order can be sustained
excluding the disputed charge, this Court should not interfere.
In our view, it is not possible for us to pre-judge the issue in the
present case. As seen from the order of Disciplinary Authority
quoted above, the appellant has considered it to be a serious
charge and therefore the respondent ought to have been given
the opportunity to challenge the adverse finding of the
Disciplinary Authority where it differed from the inquiry officer
to establish his innocence.
30. It was then submitted that non supply of inquiry report
is inconsequential if the employee does not show as to how he
is prejudiced thereby. Karunakar (supra), S.K. Singh v. Central
Bank of India and Ors. [1996 (6) SCC 415] and Haryana
Financial Corporation and Anr. v. Kailash Chandra Ahuja
[2008 (9) SCC 31] were relied upon in support. There cannot
be any grievance with respect to the proposition. In the present
case however, we are concerned with a situation where the
finding of the inquiry officer on a charge has been reversed by
the Disciplinary Authority, which was not the case in any of the
three cases. Besides, by not giving the inquiry report and the
adverse order of the disciplinary authority, the respondent was
denied the opportunity to represent before the finding of guilt
was arrived at and thereby he was certainly prejudiced.
PUNJAB NATIONAL BANK AND ORS. v. K.K.
VERMA [H.L. GOKHALE, J.]
335
31. Thus, there is no error on the part of the learned Single A
Judge in interfering with the order of removal of the respondent
from the service. The Court was ultimately dealing with the
removal of an employee from his service which is a very serious
matter. The regulations are, therefore, required to be followed
in letter as well as in spirit. The Learned Single Judge was, B
therefore, right in directing the appellant to furnish the
respondent a copy of the inquiry report, and afford him
opportunity of hearing. The Learned Division Bench was equally
right in leaving the order of the Learned Single Judge
undisturbed. In our view, there is no reason to take a different C
view from the one taken by the learned judges of the High Court.
32. In the circumstances, though in principle, we uphold the
order of the learned Single Judge, we modify the same to a
limited extent by observing that the respondent is to be given
a copy of the report of the Inquiry Officer and the detailed order D
of the Disciplinary Authority differing therewith, basically to
afford him the opportunity to explain his position with respect
to the charges and prove his innocence. The Learned Single
Judge has directed that the competent authority will keep in
mind that the respondent is out of job since 1985 and in that E
context it should also consider the factor of the service put in
by him. We may also add that the competent authority may as
well consider that when the respondent was removed, his date
of retirement viz. 30.9.1987 was round the corner. We however,
make it clear that it is for the competent authority to consider F
these aspects, when he takes steps in accordance with the
impugned judgments which we confirm with the modification as
above.
33. The appeal is disposed of accordingly. The Interim
G
order stands vacated. There will no order as to costs.
B.B.B.
[2010] 11 S.C.R. 336
A
B
MAIN PAL
v.
STATE OF HARYANA
(Criminal Appeal No. 1696 of 2010 )
SEPTEMBER 07, 2010
[R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]
C
D
E
F
Penal Code, 1860 – ss.452 and 354 – Code of Criminal
Procedure, 1973 – ss. 211, 212, 215 and 464 – Accused
charged with having entered the house of PW1 and
assaulting her with intent to outrage her modesty – Evidence
however indicated that accused assaulted PW1’s daughterin-law to outrage her modesty – Whether accused could be
punished, for assaulting and outraging the modesty of PW1’s
daughter-in-law’, even though he was not charged with any
offence with reference to PW1’s daughter-in-law’, on the
ground that the error or omission in the charge did not
prejudice the accused or result in failure of justice – Held, No
– The accused could not be punished for committing an
offence against PW1’s daughter-in-law when he was charged
with having committed the offence against PW1 and the entire
defence of the accused was with reference to charge of having
committed offence against PW1 – New trial directed after
charging the accused with the offence of outraging the
modesty of PW1’s daughter-in-law.
Interpretation of Statutes – Illustrations under a provision
of a Statute – Held: They offer relevant and valuable
indications as to meaning and object of the provision and are
helpful in the working and application of the provision.
G
Appeal disposed of.
H
The appellant was charged with the offences of
trespassing into the house of PW1 and attempting to
outrage her modesty. The appellant pleaded not guilty to
the said charge and claimed trial. The Magistrate held the
336
MAIN PAL v. STATE OF HARYANA
337
appellant guilty of offences under Sections 452 and 354
IPC and sentenced him to rigorous imprisonment for six
months.
One of the contentions urged by the appellant before
the first appellate court and the High Court was that the
charge against him was that he attempted to outrage the
modesty of Prakashi Devi (PW-1) whereas the evidence
was to show that he attempted to outrage the modesty
of Sheela Devi, daughter-in-law of PW1. He contended
that as the charge levelled against him was not proved,
and as he was not required to defend himself against a
charge that he assaulted and outraged the modesty of
PW1’s daughter-in-law, he ought to have been acquitted.
This was negatived by the appellate court and the High
Court holding that an accused cannot take advantage of
a technical defect in framing the charge. It was held that
mentioning the name of PW1 instead of the name of her
daughter-in-law in the charge was an error that did not
prejudice the accused-appellant.
In the instant appeal the question for consideration
was: When the charge was that the accused assaulted
PW1 and outraged her modesty, but the evidence was
that he assaulted PW1’s daughter-in-law to outrage her
modesty, can the accused be punished, for assaulting
and outraging the modesty of PW1’s daughter-in-law’,
even though he was not charged with any offence with
reference to PW1’s daughter-in-law’, on the ground that
the error or omission in the charge did not prejudice the
accused or result in failure of justice.
Allowing the appeal, the Court
338
A
B
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A concentrated his cross-examination with reference to the
said charge and elicited answers showing that he did not
assault or outrage the modesty of PW1. The evidence of
PW-1 and PW-2 was that the appellant did not touch or
tease or abuse PW1. Their evidence was that he touched/
B caught the hand of PW1’s daughter-in-law and when she
raised an alarm, he ran away. When the charge was that
the accused attempted to commit trespass into the house
of PW1 with intent to outrage the modesty of PW1, the
conclusion of the appellate court and the High Court that
C there was no failure of justice if he is punished for the
offence of having assaulted PW1’s daughter-in-law and
outraging her modesty, is opposed to principles of fair
play and natural justice embodied in Sections 211, 212,
215 and 464 of the Code of Criminal Procedure, 1973.
[Para 11] [352-G-H; 353-A-D]
D
1.2. The principles relating to sections 212, 215 and
464, CrPC, which are relevant to this case, are as follows:
E
E
F
F
G
G
H
H
HELD:1.1. In the instant case, the charge was that the
appellant committed trespass into the house of PW1,
assaulted her and outraged her modesty. The accused
(i) The object of framing a charge is to enable an
accused to have a clear idea of what he is being tried
for and of the essential facts that he has to meet. The
charge must also contain the particulars of date, time,
place and person against whom the offence was
committed, as are reasonably sufficient to give the
accused notice of the matter with which he is
charged.
(ii) The accused is entitled to know with certainty and
accuracy, the exact nature of the charge against him,
and unless he has such knowledge, his defence will
be prejudiced. Where an accused is charged with
having committed offence against one person but on
the evidence led, he is convicted for committing
offence against another person, without a charge
being framed in respect of it, the accused will be
MAIN PAL v. STATE OF HARYANA
339
prejudiced, resulting in a failure of justice. But there
will be no prejudice or failure of justice where there
was an error in the charge and the accused was
aware of the error. Such knowledge can be inferred
from the defence, that is, if the defence of the
accused showed that he was defending himself
against the real and actual charge and not the
erroneous charge.
340
A
A
B
B
(iii) In judging a question of prejudice, as of guilt, the
courts must act with a broad vision and look to the
substance and not to the technicalities, and their C
main concern should be to see whether the accused
had a fair trial, whether he knew what he was being
tried for, whether the main facts sought to be
established against him were explained to him fairly
and clearly, and whether he was given a full and fair D
chance to defend himself. [Para 9] [351-C-H; 352-AB]
State of Himachal Pradesh v. Geeta Ram 2000 (7) SCC
452, distinguished.
Willie (William) Staney v. State of Madhya Pradesh AIR
1956 SC 116; Gurbachan Singh v. State of Punjab AIR 1957
SC 623; Shamnsaheb M. Multtani vs. State of Karnataka
2001 (2) SCC 577; State of West Bengal vs. Laisal Haque
AIR 1989 SC 129; State of A.P. vs. Thakkidiram Reddy 1998
(6) SCC 554; Dalbir Singh v. State of UP 2004 (5) SCC 334;
Dumpala Chandra Reddy vs. Nimakayala Bali Reddy 2008
(8) SCC 339 and Sanichar Sahni vs. State of Bihar 2009 (7)
SCC 198, relied on.
2.1. When the accused is charged with having
entered the house of PW1 and assaulted her with intent
to outrage her modesty and when the accused defended
himself in regard to the said charge and concentrated on
proving that the said charges were not true, he cannot
C
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E
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F
F
G
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H
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
be convicted for having assaulted and outraging the
modesty of someone else, namely PW1’s daughter-inlaw. The accused did not have any opportunity to meet
or defend himself against the charge that he assaulted
PW1’s daughter-in-law and outraged her modesty. Nor
did he proceed with his defence on the understanding
that he was being charged with having committed the
offence with reference to PW1’s daughter-in-law. One of
the fundamental principles of justice is that an accused
should know what is the charge against him so that he
can build his defence in regard to that charge. An
accused cannot be punished for committing an offence
against ‘Y’ when he is charged with having committed
the offence against ‘X’ and the entire defence of the
accused was with reference to charge of having
committed offence against ‘X’. [Para 11] [353-B-G]
2.2. The illustrations under a provision of a Statute
offer relevant and valuable indications as to meaning and
object of the provision and are helpful in the working and
application of the provision. Illustration (e) under section
215 of CrPC, as contrasted from illustration (d) under that
section, throws some light on this issue. Applying the
guidance offered by the said illustrations and the legal
principles evolved by this Court, the position will be as
follows : If PW1’s daughter-in-law alone had been
present at the house at the time of the incident and the
accused had assaulted and outraged the modesty of the
said PW1’s daughter-in-law, but in the charge the name
of the victim had been erroneously mentioned, say as
Sushila Devi or Prakashi Devi (though there was no
person by such name), and the inquiry exclusively
referred to the assault and outraging the modesty of
PW1’s daughter-in-law, the court could infer that the
accused was not misled and the error in the charge was
immaterial. On the other hand, if two persons were
present in the house at the time of the incident, namely,
MAIN PAL v. STATE OF HARYANA
341
PW1 and PW1’s daughter-in-law and the accused is
charged with trespassing into the house of PW1, and
assaulting and outraging the modesty of the said PW1,
and the witnesses refer only to the assault and outraging
the modesty of PW1’s daughter-in-law, the court will have
to infer that the accused was prejudiced, if the accused
had solely concentrated and focused his defence and
entire cross-examination to show that he did not commit
the offences against PW1. [Para 12] [353-G-H; 354-A-F-H;
355-A]
342
A
A
B
B
2.3. The court having charged the accused with the C
offence of having trespassed into the house of PW1 with
intent to assault her and having further charged him for
having assaulted her by outraging her modesty, convicts
him on the ground that though he did not assault or
outrage the modesty of PW1, he had outraged the D
modesty of PW1’s daughter-in-law, that would lead to
failure of justice. There was a material error in the charge
as it violated the requirement of sub-section (1) of section
212 of CrPC, that the charge shall contain particulars as
to the person against whom the offence was committed. E
There were two women present at the house at the time
of the alleged incident, namely, PW1 and her daughterin-law. In view of the specific charge, the accused
concentrated on showing that the charge was false. He
did not attempt to meet the case made out in the trial that F
the offence was against PW1’s daughter-in-law. The
accused was thus clearly misled by the error in the
charge which caused prejudice to the accused thereby
occasioning failure of justice. Therefore, there should be
a new trial after charging him with the offence of G
outraging the modesty of PW1’s daughter-in-law. [Para
13] [355-B-E]
3. The conviction of the accused-appellant is set
aside and the matter is remitted to the trial court with a
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
direction for a new trial after framing a charge by
substituting the words “her daughter-in-law Sheela Devi”
for the words “abovenamed Prakashi Devi”, in the
second part of the charge. [Para 14] [355-F-G]
Case Law Reference:
AIR 1956 SC 116
relied on
Para 8
AIR 1957 SC 623
relied on
Para 8
2001 (2) SCC 577
relied on
Para 8
AIR 1989 SC 129
relied on
Para 8
1998 (6) SCC 554
relied on
Para 8
2004 (5) SCC 334
relied on
Para 8
2008 (8) SCC 339
relied on
Para 8
2009 (7) SCC 198
relied on
Para 8
2000 (7) SCC 452
distinguished
Para 10
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 1696 of 2010.
From the Judgment & Order dated 16.3.2010 of the High
Court of Punjab & Haryana at Chandigarh in Criminal Revision
No. 441 of 2002.
Vikas Sharma, K.M. Gupta, Praveen Swarup for the
Appellant.
The Judgment of the Court was delivered by
G
R. V. RAVEENDRAN J. 1. Leave granted.
2. An FIR was registered on 23.3.1996 on the statement
of one Prakashi Devi. She stated that on the night of 22/
23.3.1996, while she and her daughter-in-law Sheela Devi were
H
MAIN PAL v. STATE OF HARYANA
[R.V. RAVEENDRAN, J.]
343
344
sleeping in her house, around 11.30 PM, the appellant jumped A
over the front wall of her house and broke the bulbs and ran
away; that at that time, no male member was present in the
house except the children; that around 00.30 AM the appellant
again came into her house and touched her daughter-in-law
Sheela Devi who woke up and raised an alarm; and that the B
appellant immediately ran away. The police investigated into
the said complaint and submitted a report under Section 173
of the Code of Criminal Procedure (for short ‘the Code’). On
that basis, the following charge was framed by the Judicial
Magistrate, First Class, Karnal, against the appellant –
C
“That on 23.3.1996, after having made preparation for
causing hurt or assault, you committed house trespass into
the house of Smt. Prakashi Devi, and thereby committed
an offence punishable under section 452 IPC within my
cognizance. Secondly on the same date, time and place, D
you assaulted and used criminal force against
abovenamed Prakashi Devi with intent to outrage her
modesty and thereby committed an offence punishable
under section 354 IPC and within my cognizance.
E
And I hereby direct that you be tried on the above said
charge by this court.”
A
B
C
D
E
(emphasis supplied)
When the said charged was read over and explained to the
appellant, he pleaded not guilty to the said charge and claimed
trial.
F
3. Prakashi Devi was examined as PW-1. She reiterated
what was recorded in the FIR, that the appellant came into the G
house around 11.30 PM and broke the bulbs, that he came
again around 00.30 AM and touched her daughter-in-law
(Sheela Devi) and when her daughter-in-law woke up and
raised an alarm, the appellant ran away. In her crossexamination, Prakashi Devi stated that she has five sons; that
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[2010] 11 S.C.R.
only her husband and one son named Mahavir were staying with
her; that the other four sons were married and were not staying
with her; that on that night, her husband was away in the fields
and her son Mahavir was also not present in the house.
However, when confronted with her statement recorded in the
FIR, she admitted having stated that when the appellant had
come first time at around 11.30 PM and broke the outside bulbs,
her son woke up and went out of the house. She also admitted
that the appellant did not touch her nor teased her nor abused
her. Her daughter-in-law Sheela Devi gave evidence as PW-2
and stated that she was married to one Jaibir who worked in
the military services; that at 11 to 11.30 PM the accused scaled
the door and broke the bulbs in the verandah of her house; that
when she identified the accused and raised an alarm the
accused ran away; that again he came around 00.30 AM by
scaling the door and caught her hand; and that when she raised
an alarm and when her mother-in-law woke up, he ran away. It
was elicited in her cross-examination that the accused did not
go towards her mother-in-law nor say anything to her motherin-law; that she used to come to the village where her in-laws
were residing, only when her husband came home; and that the
house of her father-in-law was surrounded by the houses of his
brothers and their sons. Both PW1 and PW2 stated that the
house of the accused was at a distance of 15-16 houses from
the house of Prakashi Devi; that the accused had never come
into their house earlier; that their family and the accused were
not on visiting terms with each other even during functions,
marriages or death, though they were on visiting terms with
others in the village. PW 2 also stated that she did not know
the particulars of the dispute between the accused and her inlaws. The investigating officer was examined as PW-3. The
accused examined a witness Ex-Sarpanch of the village as
DW-1 and he stated that there was a quarrel between the
accused and complainant’s son Surinder about a water course
and subsequently he came to know that the quarrel was
converted into a false case against the accused by registering
MAIN PAL v. STATE OF HARYANA
[R.V. RAVEENDRAN, J.]
345
a false allegation that the accused had outraged the modesty
of a woman.
4. The learned Magistrate by judgment dated 2.2.2001,
held the accused guilty of offences under sections 452 and 354
Cr.PC and sentenced him for rigorous imprisonment for six
months and a fine of Rs.1,000/- in default thereof simple
imprisonment for one month. The appeal filed by the accused
was dismissed by the Addl. Sessions Judge on 20.2.2002. The
criminal revision filed by the appellant was disposed of by the
High Court on 16.3.2010 upholding the conviction but reducing
the sentence from six to four months rigorous imprisonment.
That order is challenged by the accused.
5. One of the contentions urged by the accused before the
appellate court and High Court was that the charge against him
was that he attempted to outrage the modesty of Prakashi Devi
(PW-1) whereas the evidence was to show that he attempted
to outrage the modesty of her daughter-in-law Sheela Devi. He
contended that as the charge levelled against him was not
proved, and as he was not required to defend himself against
a charge that he assaulted and outraged the modesty of Sheela
Devi, he ought to have been acquitted. This was negatived by
the appellate court and High Court holding that an accused
cannot take advantage of a technical defect in framing the
charge. It was held that mentioning the name of Prakashi Devi
instead of the name of Sheela Devi in the charge was an error
that did not prejudice the accused.
6. The following question therefore arises for our
consideration: When the charge is that the accused assaulted
‘X’ and outraged her modesty, but the evidence is that he
assaulted ‘Y’ to outrage her modesty, can the accused be
punished, for having assaulting and outraging the modesty of
‘Y’, even though he was not charged with any offence with
reference to ‘Y’, on the ground that the error or omission in the
charge did not prejudice the accused or result in failure of
justice.
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[2010] 11 S.C.R.
A
A
B
B
C
C
D
D
E
E
F
F
G
G
H
8. In Willie (William) Slaney vs. State of Madhya Pradesh
[AIR 1956 SC 116] this court explained the concepts of
H “prejudice to the accused” and “failure of justice” thus:-
7. Section 211 of the Code relates to the contents of the
charge. It inter alia provides that every charge under the Code
shall state the offence with which the accused is charged.
Section 212 of the Code provides that the charge shall contain
the particulars as to the time and place of the alleged offence,
and the person (if any) against whom, or the thing (if any) in
respect of which, it was committed, as are reasonably sufficient
to give the accused notice of the matter with which he is
charged. Section 215 of the Code however clarifies that no
error in stating either the offence or the particulars required to
be stated in the charge, and no omission to state the offence
or those particulars, shall be regarded at any stage of the case
as material, unless the accused was in fact misled by such error
or omission, and it has occasioned a failure of justice. Section
464 of the Code relates to effect of omission to frame, or
absence of, or error in, charge. Sub-section (1) thereof provides
that no finding, sentence or order of a court of competent
jurisdiction shall be deemed invalid merely on the ground that
no charge was framed or on the ground of any error, omission
or irregularity in the charge including any misjoinder of charge,
unless, in the opinion of the court of appeal, confirmation or
revision, a failure of justice has in fact been occasioned
thereby. Sub-section (2) of sec. 464 provides that if the court
of appeal, confirmation or revision is of opinion that failure of
justice has in fact been occasioned, it may —
(a) in the case of an omission to frame a charge, order
that a charge be framed and that the trial be
recommended from the point immediately after the framing
of the charge;
(b) in case of an error, omission or irregularity in the
charge, direct a new trial to be had upon a charge framed
in whatever manner it thinks fit.
MAIN PAL v. STATE OF HARYANA
[R.V. RAVEENDRAN, J.]
347
348
“(6) Before we proceed to set out our answer and A
examine the provisions of the Code, we will pause to
observe that the Code is a code of procedure and, like all
procedural laws, is designed to further the ends of justice
and not to frustrate them by the introduction of endless
technicalities. The object of the Code is to ensure that an B
accused person gets a full and fair trial along certain wellestablished and well-understood lines that accord with our
notions of natural justice. If he does, if he is tried by a
competent court, if he is told and clearly understands the
nature of the offence for which he is being tried, if the case C
against him is fully and fairly explained to him and he is
afforded a full and fair opportunity of defending himself,
then, provided there is ‘substantial’ compliance with the
outward forms of the law, mere mistakes in procedure,
mere inconsequential errors and omissions in the trial are
D
regarded as venal by the Code and the trial is not vitiated
unless the accused can show substantial prejudice. That,
broadly speaking, is the basic principle on which the
Code is based.
A
E
E
(7) Now here, as in all procedural laws, certain things are
regarded as vital. Disregard of a provision of that nature
is fatal to the trial and at once invalidates the conviction.
Others are not vital and whatever the irregularity they can
be cured; and in that event the conviction must stand
unless the Court is satisfied that there was prejudice.
Some of these matters are dealt with by the Code and
wherever that is the case full effect must be given to its
provisions.”
F
This Court then examined the question as to when a procedure
G
adopted could be said to have worked actual injustice to the
accused and held :
“Except where there is something so vital as to cut at the
root of jurisdiction or so abhorrent to what one might term
natural justice, the matter resolves itself to a question of
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
prejudice. Some violations of the Code will be so obvious
that they will speak for themselves as, for example, a
refusal to give the accused a hearing, a refusal to allow
him to defend himself, a refusal to explain the nature of the
charge to him and so forth.
These go to the foundations of natural justice and would
be struck down as illegal forthwith. It hardly matters whether
this is because prejudice is then patent or because it is
so abhorrent to well-established notions of natural justice
that a trial of that kind is only a mockery of a trial and not
of the kind envisaged by the laws of our land because
either way they would be struck down at once.
Other violations will not be so obvious and it may be
possible to show that having regard to all that occurred no
prejudice was occasioned or that there was no reasonable
probability of prejudice. In still another class of case, the
matter may be so near the border line that very slight
evidence of a reasonable possibility of prejudice would
swing the balance in favour of the accused.
… The Code is emphatic that ‘whatever’ the irregularity it
is not to be regarded as fatal unless there is prejudice.”
“It is the substance that we must seek. Courts have to
administer justice and justice includes the punishment of
guilt just as much as the protection of innocence. Neither
can be done if the shadow is mistaken for the substance
and the goal is lost in a labyrinth of unsubstantial
technicalities. Broad vision is required, a nice balancing
of the rights of the State and the protection of society in
general against protection from harassment to the
individual and the risks of unjust conviction.
Every reasonable presumption must be made in favour of
an accused person; he must be given the benefit of every
reasonable doubt. The same broad principles of justice
MAIN PAL v. STATE OF HARYANA
[R.V. RAVEENDRAN, J.]
349
and fair play must be brought to bear when determining a
matter of prejudice as in adjudging guilt. But when all is
said and done what we are concerned to see is whether
the accused had a fair trial, whether he knew what he was
being tried for, whether the main facts sought to be
established against him were explained to him fairly and
clearly and whether he was given a full and fair chance to
defend himself.
350
A
A
B
B
If all these elements are there and no prejudice is shown
the conviction must stand whatever the irregularities
C
whether traceable to the charge or to a want of one.”
C
“In adjudging the question of prejudice the fact that the
absence of a charge, or a substantial mistake in it, is a
serious lacuna will naturally operate to the benefit of the
accused and if there is any reasonable and substantial D
doubt about whether he was, or was reasonably likely to
have been, misled in the circumstances of any particular
case, he is as much entitled to the benefit of it here as
elsewhere; but if, on a careful consideration of all the facts,
prejudice, or a reasonable and substantial likelihood of it, E
is not disclosed the conviction must stand; also it will
always be material to consider whether objection to the
nature of the charge, or a total want of one, was taken at
an early stage.…..But these are matters of fact which will
be special to each different case and no conclusion on F
these questions of fact in any one case can ever be
regarded as a precedent or a guide for a conclusion of
fact in another, because the facts can never be alike in any
two cases however alike they may seem. There is no such
thing as a judicial precedent on facts though counsel, and
G
even judges, are sometimes prone to argue and to act as
if there were.”
[2010] 11 S.C.R.
In Gurbachan Singh v. State of Punjab [AIR 1957 SC 623]
following Willie Slaney, this Court held:
“……in judging a question of prejudice, as of guilt, courts
must act with a broad vision and look to the substance and
not to technicalities, and their main concern should be to
see whether the accused had a fair trial, whether he knew
what he was being tried for, whether the main facts sought
to be established against him were explained to him fairly
and clearly and whether he was given a full and fair chance
to defend himself.”
In Shamnsaheb M. Multtani vs. State of Karnataka – 2001 (2)
SCC 577, this Court considered the meaning of the expression
“failure of justice” occurring in section 464 of Cr.PC. This Court
held thus :
D
E
F
G
(emphasis supplied)
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SUPREME COURT REPORTS
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“The crux of the matter is this : Would there be occasion
for a failure of justice by adopting such a course as to
convict an accused of the offence under section 304-B IPC
when all the ingredients necessary for the said offence
have come out in evidence, although he was not charged
with the said offence?
… a conviction would be valid even if there is any omission
or irregularity in the charge, provided it did not occasion a
failure of justice….The criminal court, particularly the
superior court should make a close examination to
ascertain whether there was really a failure of justice or
whether it is only a camouflage.
One of the cardinal principles of natural justice is that no
man should be condemned without being heard, (audi
alteram partem). But the law reports are replete with
instances of courts hesitating to approve the contention that
failure of justice had occasioned merely because a person
was not heard on a particular aspect. However, if the
aspect is of such a nature that non-explanation of it has
MAIN PAL v. STATE OF HARYANA
[R.V. RAVEENDRAN, J.]
351
contributed to penalizing an individual, the court should say
that since he was not given the opportunity to explain that
aspect there was failure of justice on account of noncompliance with the principle of natural justice.”
352
A
The above principles are reiterated in several decisions
B
of this Court, including State of West Bengal vs. Laisal Haque
- AIR 1989 SC 129, State of A.P. vs. Thakkidiram Reddy 1998 (6) SCC 554, Dalbir Singh v. State of UP [2004 (5) SCC
334], Dumpala Chandra Reddy vs. Nimakayala Bali Reddy
- 2008 (8) SCC 339 and Sanichar Sahni vs. State of Bihar C
2009 (7) SCC 198.
charge and not the erroneous charge.
B
(iii) In judging a question of prejudice, as of guilt, the courts
must act with a broad vision and look to the substance and
not to the technicalities, and their main concern should be
to see whether the accused had a fair trial, whether he
knew what he was being tried for, whether the main facts
sought to be established against him were explained to
him fairly and clearly, and whether he was given a full and
fair chance to defend himself.
C
D
D
E
E
(ii) The accused is entitled to know with certainty and
accuracy, the exact nature of the charge against him, and
unless he has such knowledge, his defence will be F
prejudiced. Where an accused is charged with having
committed offence against one person but on the evidence
led, he is convicted for committing offence against another
person, without a charge being framed in respect of it, the
accused will be prejudiced, resulting in a failure of justice. G
But there will be no prejudice or failure of justice where
there was an error in the charge and the accused was
aware of the error. Such knowledge can be inferred from
the defence, that is, if the defence of the accused showed
that he was defending himself against the real and actual H
[2010] 11 S.C.R.
A
9. The following principles relating to sections 212, 215
and 464 of the Code, relevant to this case, become evident
from the said enunciations:
(i) The object of framing a charge is to enable an accused
to have a clear idea of what he is being tried for and of
the essential facts that he has to meet. The charge must
also contain the particulars of date, time, place and person
against whom the offence was committed, as are
reasonably sufficient to give the accused notice of the
matter with which he is charged.
SUPREME COURT REPORTS
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10. The respondent relied upon the decision of this court
in State of Himachal Pradesh v. Geeta Ram [2000 (7) SCC
452]. In that case the respondent was chargesheeted for an
offence under section 376 IPC and section 3 of the Scheduled
Castes and Scheduled Tribes (Prevention of Atrocities) Act,
1989. The Magistrate committed the case to Sessions Court
which was specified as a special court under the Act. The
special court framed a charge only for an offence under section
376 IPC and after trial convicted the respondent under section
376 IPC and sentenced him to ten years imprisonment. The
High Court set aside the conviction on the technical ground that
the trial court had no jurisdiction as it was a special court
specified in under the SC & ST (Prevention of Atrocities) Act.
This Court reversed the decision of the High Court on the
ground that a special court under the Act being a sessions
court, it continued to have jurisdiction to try the case for the
offence under section 376 IPC. That matter was considered
under section 465 of the Code and not relevant on the facts of
this case.
11. As noticed above, in this case, the charge was that
appellant committed trespass into the house of Prakashi Devi
for assaulting Prakashi Devi, and assaulted the said Prakashi
Devi and outraged her modesty. The accused concentrated his
cross-examination with reference to the said charge and
elicited answers showing that he did not assault or outrage the
modesty of Prakashi Devi. He did not try to challenge the
MAIN PAL v. STATE OF HARYANA
[R.V. RAVEENDRAN, J.]
353
354
evidence let in to show that he had tried to outrage the modesty A
of Sheela Devi, as he was not charged with such an offence.
The evidence of PW-1 and PW-2 was that the appellant did
not touch or tease or abuse Prakashi Devi. Their evidence was
that he touched/caught the hand of Sheela Devi and when she
raised an alarm he ran away. When the charge was that the B
accused attempted to commit trespass into the house of
Prakashi Devi with intent to outrage the modesty of Prakashi
Devi, the conclusion of the appellate court and the High Court
that there was no failure of justice if he is punished for the
offence of having assaulted Sheela Devi and outraging her C
modesty, is opposed to principles of fair play and natural justice
embodied in sections 211, 212, 215 and 464 of the Code.
When the accused is charged with having entered the house
of Prakashi Devi and assaulted the said Prakashi Devi with
intent to outrage her modesty and when the accused defended
D
himself in regard to the said charge and concentrated on
proving that the said charges were not true, he cannot be
convicted for having assaulted and outraging the modesty of
someone else, namely Sheela Devi. The accused did not have
any opportunity to meet or defend himself against the charge
that he assaulted Sheela Devi and outraged her modesty. Nor E
did he proceed with his defence on the understanding that he
was being charged with having committed the offence with
reference to Sheela Devi. One of the fundamental principles of
justice is that an accused should know what is the charge
against him so that he can build his defence in regard to that F
charge. An accused cannot be punished for committing an
offence against ‘Y’ when he is charged with having committed
the offence against ‘X’ and the entire defence of the accused
was with reference to charge of having committed offence
G
against ‘X’.
12. The illustrations under a provision of a Statute offer
relevant and valuable indications as to meaning and object of
the provision and are helpful in the working and application of
the provision. Illustration (e) under section 215 of the Code, as
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
contrasted from illustration (d) under that section, throws some
light on this issue. The said illustrations are extracted below :
“(d) A is charged with the murder of Khoda Baksh on the
21st January, 1882. In fact, the murdered person’s name
was Haidar Baksh, and the date of the murder was the
20th January, 1882. A was never charged with any murder
but one, and had heard the inquiry before the Magistrate,
which referred exclusively to the case of Haidar Baksh. The
Court may infer from these facts that A was not misled,
and that the error in the charge was immaterial.
(e) A was charged with murdering Haidar Baksh on the
20th January, 1882, and Khoda Baksh (who tried to arrest
him for that murder) on the 21st January, 1882. When
charged for the murder of Haidar Baksh, he was tried for
the murder of Khoda Baksh. The witnesses present in his
defence were witnesses in the case of Haidar Baksh. The
Court may infer from this that A was misled, and that the
error was material.”
Applying the guidance offered by the said illustrations and the
legal principles evolved by this Court, the position will be as
follows : If Sheela Devi alone had been present at the house
at the time of the incident and the accused had assaulted and
outraged the modesty of the said Sheela Devi, but in the
charge the name of the victim had been erroneously mentioned,
say as Sushila Devi or Prakashi Devi (though there was no
person by such name), and the inquiry exclusively referred to
the assault and outraging the modesty of Sheela Devi, the court
could infer that the accused was not misled and the error in
the charge was immaterial. On the other hand, if two persons
were present in the house at the time of the incident namely
Prakashi Devi and Sheela Devi and the accused is charged
with trespassing into the house of Prakashi Devi, and assaulting
and outraging the modesty of the said Prakashi Devi, and the
witnesses refer only to the assault and outraging the modesty
of Sheela Devi, the court will have to infer that the accused was
MAIN PAL v. STATE OF HARYANA
[R.V. RAVEENDRAN, J.]
[2010] 11 S.C.R. 356
355
prejudiced, if the accused had solely concentrated and focused
his defence and entire cross-examination to show that he did
not commit the offences against Prakashi Devi.
A
13. The court having charged the accused with the offence
of having trespassed into the house of Prakashi Devi with intent
B
to assault her and having further charged him for having
assaulted the said Prakashi Devi by outraging her modesty,
convicts him on the ground that though he did not assault or
outrage the modesty of Prakashi Devi, he had outraged the
modesty of Sheela Devi, that would lead to failure of justice.
There was a material error in the charge as it violated the C
requirement of sub-section (1) of section 212 of the Code, that
the charge shall contain particulars as to the person against
whom the offence was committed. There were two women
present at the house at the time of the alleged incident, namely
Prakashi Devi and her daughter-in-law Sheela Devi. In view of D
the specific charge, the accused concentrated on showing that
the charge was false. He did not attempt to meet the case
made out in the trial that the offence was against Sheela Devi.
The accused was thus clearly misled by the error in the charge
which caused prejudiced to the accused thereby occasioning E
failure of justice. Therefore, we are of the view that there should
be a new trial after charging him with the offence of outraging
the modesty of Sheela Devi.
14. The appeal is therefore allowed, the conviction of the
accused is set aside and the matter is remitted to the trial court
with a direction for a new trial after framing a charge by
substituting the words “her daughter-in-law Sheela Devi” for the
words “abovenamed Prakashi Devi”, in the second part of the
charge.
B.B.B.
A
B
NAND KISHORE GUPTA & ORS.
v.
STATE OF U.P. & ORS.
(Civil Appeal No. 7468 of 2010)
SEPTEMBER 8, 2010
[V.S. SIRPURKAR AND CYRIAC JOSEPH, JJ.]
C
D
E
F
F
G
G
Appeal allowed.
H
Land Acquisition Act, 1894 – s. 4(1) r/w. ss. 17(1) and (4);
s. 6(1) r/w ss. 17(1) and (4); s. 5A and Parts II and VII –
Acquisition of land on urgent basis for a project of
development and construction of Expressway– Project granted
to a company – Validity of acquisition under Part II and
validity of invoking urgency provision dispensing with enquiry
u/s. 5A – Held: acquisition of the land under Part II was correct
as the same was for the public purpose and was not for a
private company – In the facts and circumstances of the case,
the acquisition cannot be said to be a colourable exercise of
power – The Government only used the company for
implementing its policy – Invocation of urgency provision u/
s. 17(1) and (4) and dispensing with enquiry u/s. 5A was also
necessary in view of the facts of the case – Constitutionalism
– Colourable exercise of power.
In the year 2001 Taj Expressway Industrial
Development Authority [which was later named as
Yamuna Expressway Industrial Development Authority
(YEIDA)] was constituted under the U.P. Industrial Area
Development Act, 1976, with intent to develop the eastern
side of the river Yamuna by construction of a 6 lane
Expressway joining Noida and Agra. Tenders were
issued inviting bids from interested parties desirous of
implementing the project. Respondent No.5-company
(the successful bidder) was given the project work.
Concession Agreement was executed between the
parties in 2003. The project was challenged before High
356
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 357
ORS.
358
Court in Public Interest Litigation. Commission of Enquiry
was also appointed by the State which submitted its
report. Ultimately, the PIL was dismissed by the High
Court.
A
A
Thereafter, the notification was issued by the State
Government u/s. 4(1) r/w. ss. 17 (1) and 17 (4) of the Land
Acquisition Act, 1894 for the purpose of the construction
of the interchange under the Yamuna Expressway Project
through Yamuna Expressway Industrial Development
Authority. Ultimately, the State issued notification u/s. 6(1)
r/w. ss. 17(1) and 17(4) of the Act. Writ petitions were filed
challenging the acquisition. The High Court dismissed the
writ petitions.
B
B
In the instant appeals, the following were the main
questions which arose for consideration:
1.
The acquisition could not be said to be for the
public purpose:
(a)
as the object of the acquisition was not
covered by the definition of ‘public purpose’ in
Section 3(f) of the Land Acquisition Act, 1894;
(b)
the acquisition must be considered to be
under Part VII of the Act and not under Part II,
since it virtually amounted to acquisition of
land for a private person i.e. respondent No.5;
(c)
(d)
as the compensation for the land acquisition
was coming wholly from respondent No. 5 and
not from the Government or from YEIDA, it was
not an acquisition for public purpose;
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the acquisition for the so-called interchange
was not at all necessary and it was actually a
colourable exercise of powers.
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2.
[2010] 11 S.C.R.
Sections 17(1) and 17(4) of the Land
Acquisition Act were not applicable and,
therefore, the Government could not have
dispensed with the enquiry u/s. 5A of the Act.
Dismissing the appeals, the Court
HELD: 1.1. The High Court was right in holding that
the acquisition was made for the public purpose. The
High Court has considered the question of public purpose
keeping in mind the correct principles of law. Therefore,
C it cannot be said that the acquisition was not for the
public purpose. [Para 37] [396-A-C]
1.2. The High Court rightly found that the acquisition
was not for the Company but was for the public purpose.
D The Expressway is a work of immense public importance.
The State gains advantages from the construction of an
Expressway and so does the general public. Creation of
a corridor for fast moving traffic resulting into curtailing
the traveling time, as also the transport of the goods,
would be some factors which speak in favour of the
E
Project being for the public purpose. The creation of the
five zones for industry, residence, amusement etc., would
be complimentary to the creation of the Expressway. The
creation of land parcels would give impetus to the
industrial development of the State creating more jobs
F and helping the economy and thereby helping the general
public. There can be no doubt that the implementation of
the Project would result in coming into existence of five
developed parcels/centers in the State for the use of the
citizens. There shall, thus, be the planned development
G of this otherwise industrially backward area. The creation
of these five parcels would certainly help the maximum
utilization of the Expressway and the existence of an
Expressway for the fast moving traffic would help the
industrial culture created in the five parcels. Thus, both
H
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 359
ORS.
will be complimentary to each other and can be viewed
as parts of an integral scheme. Therefore, it cannot be
said that it is not a public purpose. [Para 30] [386-C-H;
387-A-B]
1.3. It is also to be seen that this was not a case
where the exercise of power of eminent domain by the
State was for any of the purposes set down in Section
40 of the Act. Further, it is not as if the power of
acquisition was exercised by the State Government for
the work or Project of the Company. Lastly, it is not a case
where the power of exercise was exercised by the State
Government so that the acquired land was to belong or
vest permanently in the Company for its own purpose.
The lease was going to be for 90 years after which the
whole land was going to revert back to the State
Government, so also the whole land acquired and used
actually for the purpose of the highway would also go
back to the State after the period of 36 years, during
which the Company would have the right to levy and
collect the toll. It is not as if a public purpose is relevant
in Part VII, where under Section 39, the previous consent
of appropriate Government is required for execution of
an agreement between the Government and the
Company. Section 40 of the Act then puts a specific rider
that the State Government shall not give the consent
unless it is satisfied of any of the contingencies
described in sub-Sections (a), (aa) and (b) thereof. Thus,
even when the acquisition is meant for a Company, the
concept of public purpose has to be at the back of mind
of the acquiring body like Government. [Para 29] [383-H;
384-A-D; 385-B]
1.4. In the instant case, there is no question of any
agreement with the Company as the three eventualities
described u/s. 40 of the Act are not available for the
simple reason that the basic idea for the acquisition under
360
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Part VII of the Act is the total transfer of the ownership of
the acquiring land in favour of the Company. That is
obviously not present. There is no factual background for
holding that any agreement was contemplated in
between the State Government and the Company or for
B that matter, YEIDA and the Company, as envisaged in
Sections 39, 40 and 41 of the Act. There is absolutely no
evidence to suggest that this is an acquisition for the
Company, basically on account of the fact that the
acquired land is not to vest with the Company. This was
C clearly a Project conceived and justified by the State
Government, while the concessionaire was to be chosen
only to implement the Project. The Project was going to
be implemented on the basis of principles of BOT.
Therefore, after the operating period was over, the assets
D of the Project were to be transferred to the State
Government. There was going to be no vesting of land
as in case that if the acquisition was being effected under
Part VII of the Act. The High Court, has correctly come to
the conclusion that the acquisition was not meant only
E for the Company and on that count, it could not be said
that this is not for the public purpose. [Para 29] [385-BH]
1.5. It is not correct to say that the Company has paid
the compensation cost and, therefore, the acquisition is
F clearly covered under Part VII of the Act, and there may
be no public purpose if the acquisition is made for the
Company and it is the Company who has to shell out the
whole compensation. Even if it is accepted that all this
compensation is coming from the Company, it should be
G borne in mind that the Company gets no proprietary or
ownership rights over the Project assets. If it is presumed
that the compensation is coming from the Company, then
it will have to be held that the whole assets would go to
the Company. At least that is envisaged in Part VII of the
H Act. In the instant case, that is not the case. The assets
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 361
ORS.
are to revert back to the acquiring body or, as the case
may be, the Government. Even the lands which are utilized
for the construction of the Expressway are to go back to
the Government barely after 36 years i.e. after the
Company has utilized its rights to recover the toll on the
Expressway. Secondly, it must be borne in mind that the
Concession Agreement has been executed in February,
2003, whereas the acquisition process started
somewhere in the month of September, 2007. When the
Concession Agreement was executed, the cost factor was
not known. The acquiring body was only to make
available the land to the concessionaire to implement the
Project. The State Government was to earn Rs.100/- per
hectare for the total acquired land, which was about 25
million square meters over and above the compensation
to be decided. The mention of the compensation amount
in addition to the lease money of Rs.100/- per hectare
would clearly provide that the whole compensation was
not going to be paid by the Company alone. This is apart
from the fact that through this agreement, only the extent
of the compensation payable by the Company to YEIDA
was decided. However, once all the amounts went to the
coffers of YEIDA, it would lose its independent character
as a premium. When it goes into the coffers of YEIDA, it
is the YEIDA who would make the payments of the
estimated compensation and thereby it would be as if the
compensation is paid not by the Company, but by YEIDA.
[Para 31] [387-C-H; 388-A-F]
1.6. At the time when the Project conceived in 2001,
the present Company was not in existence. It came in
existence only later on. This is an admitted position also.
Therefore, it cannot be said that the whole Project was
envisaged keeping this Company in view. Besides, and
the fact that a full-fledged enquiry was got done by the
State by constituting a Commission of Enquiry also
cannot be ignored. The said Commission of Enquiry
362
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[2010] 11 S.C.R.
A
submitted its Report in October, 2006 and it was duly
accepted by both the Houses of the Legislature of the
State of Uttar Pradesh. Again, the aspects of the
transparency have been examined by the Division Bench
of the High Court in a P.I.L., which was dismissed by a
judgment,
which
remained
B well-considered
unchallenged. Nobody has so far argued that any
specific partial treatment was offered to the Company nor
has it been pointed out at any stage that there was
anything amiss with the tendering process or that the
C tender of contract to the Company was a foregone
conclusion. Therefore, it cannot be said that this
acquisition was a colourable exercise of power. There
was a full transparency in the whole process and the
whole process was checked, rechecked and rerechecked, leaving no scope to infer any bias in favour
D
of the Company. [Para 28] [382-G-H; 383-A-D]
E
State of Karnataka and Anr. vs. All India Manufacturers
Organizationand Ors. 2006 (4) SCC 683; Sooraram Pratap
Reddy and Ors. vs.District Collector, Ranga Reddy District
and Ors. etc. etc. 2008 (9) SCC 552; Pratibha Nema and Ors.
vs. State of M.P. and Ors. 2003 (10) SCC 626, relied on.
Smt. Somavanti and Ors. vs. The State of Punjab and
Ors. AIR 1963 SC 151, distinguished.
F
G
H
F
Naihati Municipality and Ors. vs. Chinmoyee Mukherjee
and Ors. 1996 (10) SCC 632; Dhampur Sugar (Kashipur) Ltd.
vs. State of Uttaranchal and Ors. 2007 (8) SCC 418; Babu
Barkya Thakur vs. State of Bombay AIR 1960 SC 1203;
Pandit Jhandu Lal vs. State of Punjab AIR 1961 SC 343;
G Devinder Singh and Ors. vs. State of Punjab and Ors. 2008(1)
SCC 728; Jage Ram and Ors. vs. State of Haryana and Ors.
1971 (1) SCC 671; Shyam Behari and
Ors.vs. State of
Madhya Pradesh and Ors. AIR 1965SC 427, referred to.
H
2.1. The challenge by the appellants on the ground
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 363
ORS.
that there was no urgency and, therefore, the enquiry u/
s. 5-A of the Act should not have been dispensed with,
cannot be accepted. The High Court has taken meticulous
care in examining as to whether there was material
before the State Government to dispense with the enquiry
u/s. 5A of the Act. In the instant Project, considering the
various reasons like enormousness of the Project,
likelihood of the encroachments, number of appellants
who would have required to be heard and the time taken
for that purpose, and the fact that the Project had lingered
already from 2001 till 2008, there was necessity to
dispense with the enquiry u/s. 5A of the Act. There is no
reason to take a different view than what is taken by the
High Court. [Paras 39 and 41] [401-F-H; 402-A-D; 403-C]
Tika Ram and Ors. etc. etc. vs. State of U.P. and Ors.
etc. etc 2009 (10) SCC 689, relied on.
Sheikhar Hotels Gulmohar Enclave and Anr. vs. State of
UttarPradesh and Ors. 2008 (14) SCC 716; First Land
Acquisition Collector and Ors. vs. Nirodhi Prakash Gangoli
and Anr. 2002 (4) SCC 160; State of Punjab and Anr. vs.
Gurdial Singh and Ors. 1980 (2) SCC 471; Om Prakash and
Anr. vs. State of U.P. and Ors. 1998 (6) SCC 1; Babu Ram
and Anr. vs. Sate of Haryana and Anr. 2009 (10) SCC 115;
Manju Lata Agrawal vs. State of U.P. and Ors. 2007(9) ADJ
447 (DB); Sudhir Chandra Agrawal vs. State of U.P. 2 0 0 8
(3) ADJ 289 (DB); Munshi Singh vs. State of U.P. 2009 (8)
ADJ 360 (DB); Essco Fabs Pvt. Ltd. and Anr. vs. State of
Haryana and Anr. etc. etc. 2009 (2) SCC 377; Mahender Pal
and Ors. vs. Stateof Haryana and Ors.2009 (14) SCC 281 –
referred to.
364
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C
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A 1,600 hectares. This is apart from the 25 million square
meters of land which was liable to be acquired for the
purposes of development of 5 land parcels. There was
interlinking between the acquisition of land for the
highway and the acquisition of land for establishing the
B 5 townships. However, this was not the only factor
considered by the State Government and even the High
Court has not held the same to be the only factor for
dispensing with the enquiry. [Para 40] [402-F-H; 403-A-B]
Om Prakash and Anr. vs. State of U.P. and Ors. 1998 (6)
C SCC 1, distinguished
Case Law Reference:
D
E
F
G
D
E
F
G
2.2. It is not correct to say that the encroachment
issue was not a relevant factor for dispensing with
enquiry u/s. 5A of the Act. In the instant case, the area to
be acquired for the Expressway alone was more than
H
H
2003 (10) SCC 626
Referred to.
Para 31
1996 (10) SCC 632
Referred to.
Para 31
2006 (4) SCC 683
Relied on.
Para 33
2008 (9) SCC 552
Relied on.
Para 34
2007 (8) SCC 418
Referred to.
Para 34
AIR 1960 SC 1203
Referred to.
Para 34
AIR 1961 SC 343
Referred to.
Para 35
AIR 1963 SC 151
Distinguished.
Para 37
2003 (10) SCC 626
Referred to.
Para 37
2008(1) SCC 728
Referred to.
Para 37
1971 (1) SCC 671
Referred to.
Para 37
AIR 1965SC 427
Referred to.
Para 37
2008 (14) SCC 716
Referred to.
Para 39
2002 (4) SCC 160
Referred to.
Para 39
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 365
ORS.
1980 (2) SCC 471
Referred to.
Para 39
1998 (6) SCC 1
Referred to.
Para 39
2009 (10) SCC 115
Referred to.
Para 39
2007(9) ADJ 447 (DB) Referred to.
Para 39
2008 (3) ADJ 289 (DB) Referred to.
Para 39
2009 (8) ADJ 360 (DB) Referred to.
Para 39
2009 (2) SCC 377
Referred to.
Para 39
2009 (14) SCC 281
Referred to.
Para 39
2009 (10) SCC 689
Relied on.
Para 39
1998 (6) SCC 1
Distinguished.
Para 40
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7468 of 2010.
From the Judgment & Order dated 30.11.2009 of the High
Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
31314 of 2009.
366
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A
B
B
C
C
D
D
E
E
F
F
G
G
H
H
WITH
C.A. Nos. 7469-7470 of 2010.
Ranjit Kumar, Ratnakar Dash, S.B. Upadhyay, Altaf
Ahmad, Anurag Sharma, Parshant Kumar, (for AP & J
Chambers, Meenakshi Arora, Poli Kataki, Mohit T.N. Singh,
S.K. Dwivedi, Rajeev K. Dubey, Kamlendra Mishra, Pawan
Upadhyay, Param mishra (for Sharmila Upadhyay), Ravindra
Kumar for the appearing parties.
The Judgment of the Court was delivered by
V.S. SIRPURKAR, J. 1. This judgment will govern Special
Leave Petition (Civil) Nos. 33194 of 2009, 33958 of 2009 and
35336 of 2009.
SUPREME COURT REPORTS
[2010] 11 S.C.R.
2. Leave granted in all the Special Leave Petitions.
3. In the first two Special Leave Petitions, judgment passed
by the High Court of Judicature at Allahabad dated 30.11.2009,
is in challenge while in the third Special Leave Petition,
judgment dated 5.10.2009 on the same subject is impugned.
By the impugned judgments, the Writ Petitions filed by the land
owners challenging the notification under Sections 4 and 6 of
the Land Acquisition Act, 1894 (hereinafter called ‘the Act’ for
short) relating to Yamuna Expressway Project, were dismissed
by the High Court. In the Writ Petitions, directions were sought,
firstly not to give effect to the notifications issued and further
not to dispossess the landholders/ petitioners after demolishing
their constructions on the lands which were proposed to be
acquired. All the challenges were repelled by the High Court.
The High Court, in the judgment dated 30.11.2009 passed in
Civil Misc. Writ Petition No.31314 of 2009 (Nand Kishore
Gupta & Ors. Vs. State of U.P. & Ors.), basically pointed out
that out of 12,282 land owners, 11,397 had already received
their compensation under the agreement and the challenge
related only to 21.03 hectares out of 1,604 hectares of land.
The High Court also took the view that the scales of justice must
tilt towards the right to development of the millions who will be
benefited from the road and the development of the area, as
against the human rights of 35 petitioners therein, whose main
complaint was that they were not heard before the declaration
under Section 6 of the Act. The High Court also declined to give
any direction to the State Government to consider to exempt
21.03 hectares of land relating to the 35 petitioners therein on
account of the fact that the construction of the road had to be
made in an alignment and that alignment could not be changed.
Identical view was taken in another Writ Petition filed by one
Balbir Singh. The High Court also expressed its concerns that
any direction to exempt the land covered by the construction
might seriously jeopardize the Project. The High Court also
reiterated that the acquisition of the land for interchange of the
road was the essential part of the Project, as also the
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 367
ORS. [V.S. SIRPURKAR, J.]
construction of bridges, culverts and interchanges, which were
essential for the fast moving six lane Expressway.
368
A
4. Before we approach the arguments, it would be
interesting to see some facts of this litigation.
5. A notification dated 20.2.2009 was issued by the
Government of Uttar Pradesh under Section 4(1) read with
Sections 17(1) and 17(4) of the Act. Thereunder, the lands
described in the schedules appended thereto in District Agra,
Pargana Etmadpur, Tehsil Etmadpur, Village Kuberpur were
covered for a public purpose, namely, the construction of the
interchange under the Yamuna Expressway Project in District
Agra through Yamuna Expressway Industrial Development
Authority (hereinafter called ‘YEIDA’ for short). In fact, in the year
2001 itself, the State Government had taken a decision for the
construction of Yamuna Expressway which sometimes earlier
was named as Taj Expressway, which was to proceed from
Greater Noida to Agra. This was to be done on Build, Operate
and Transfer (BOT) basis and the builder was to get the rights
to collect the tolls for a period of 36 years from the date of
commencement of commercial operations. On account of the
public outcry, the State Government appointed a Commission
of Enquiry under the Chairmanship of Mr. Justice Siddheshwar
Narain (Retd.). A Public Interest Litigation was also filed. The
Project was cleared in the enquiry and the Public Interest
Litigation also ended in favour of the Government of U.P. It is
on the backdrop of this that the State Government came up with
a notification dated 20.2.2009, i.e. only after its way was
cleared, which itself took about 8 years. This was the reason
given for making applicable the urgency clause under Sections
17(1) and 17(4) of the Act. Legal notices were served by those
who were affected, but ultimately the State came out with a
notification dated 15.6.2009 under Section 6(1) read with
Sections 17(1) and 17(4) of the Act. It is mainly the complaint
of the appellants that they had purchased the land long time
back and their names were duly mutated in the Revenue records
B
C
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E
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A and they had thereafter raised constructions over the land in
question, and in those constructions, they were running their
business like shops, cold-storage etc. The appellants also
complained that the area which was proposed to be cleared
for the interchange, if acquired, the appellants would suffer
B immensely. The appellants very seriously challenged the
application of urgency under Sections 17(1) and 17(4) of the
Act to these acquisitions, thereby depriving the appellants of
an opportunity to be heard under Section 5A of the Act. Even
before us, that is the main thrust of the arguments on behalf of
C the appellants.
6. The other major challenge opposing the acquisition
related to the concept of ‘public purpose’. It was tried to be
suggested that this was in fact an acquisition without any public
purpose for the Company-J.P. Infratech Ltd.-respondent No.5
D and would be covered under Part VII of the Act. In that, the
learned Counsel appearing on behalf of the appellants urged
that there could be no dispensation with enquiry under Section
5A of the Act. It was pointed out that the compensation was
payable by the private party under the scheme and, therefore
E also, this could not be viewed as a public purpose. It was also
suggested that this was virtually a perpetual lease in favour of
the Company and, therefore, the Company was getting deemed
proprietary rights.
7. In the two impugned judgments, the Allahabad High
Court has repelled all the challenges. In fact in the earlier round
of litigation that is in the Public Interest Litigation itself the
Division Bench of the Allahabad High Court repelled the
challenges to this Project which was then known as Taj
Expressway Project and the land acquisition made therefor.
F
F
G
G
H
8. Before we approach the questions argued, it will be
better to refer to the judgment of the Allahabad High Court in
the Public Interest Litigation, which, in itself, refers the enquiry
held by Mr. Justice Sidheshwar Narain (Retd.). In fact one of
H the prayers in the Public Interest Litigation was for production
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 369
ORS. [V.S. SIRPURKAR, J.]
370
of the Report dated 12.10.2006 of the Commission headed by A
Mr. Justice Narain. The other prayers were to initiate de novo
judicial enquiry by a sitting High Court Judge and further to issue
a Writ of Mandamus declaring the alleged Enquiry Report as
illegal, invalid and ineffective and not enforceable in the eyes
of law and lastly to pass any other Writ, order or direction. This B
Writ Petition was then amended and the Concession
Agreement dated 7.2.2003 entered between the Taj
Expressway Authority and the Jaiprakash Industries (hereinafter
called ‘the Company’ for short) also came to be challenged.
This Taj Expressway Authority was constituted under Section C
3 of the U.P. Industrial Area Development Act, 1996 which later
on was named as Yamuna Expressway Industrial Development
Authority (YEIDA). The petitioners prayed for a declaration that
this agreement was null and void.
A
9. Another prayer added by way of an amendment was for D
investigation by the special investigation team into the entire
deal of Taj Expressway Project. The High Court in its well
considered judgment, took note of the three challenges by the
petitioners to the said Commission of Enquiry Report. The said
E
challenges were:
D
(1)
that the award of contract to the Company was
activated by mala fides;
(2)
that the tender process itself was faulty; and
(3)
that the terms of contract were unconscionable and
against the public interest.
F
10. All the three challenges were refuted by the Division
Bench of the High Court by referring to the Report itself which G
was filed before it at the instance of the State Government. It
recorded a finding that there was no mala fide on the part of
anybody. The Commission had also come to the conclusion
that the Agreement with the Company was arrived at after
proper scrutiny on the part of the Government Officers and there
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
was no mala fide on the alleged connection of one Shri Anup
Mishra or his father with the Company. The Division Bench
affirmed this finding. The Division Bench also recorded a
finding that the petitioner therein was not able to place any other
material on record to show that the process itself was faulty or
that the terms of contract were unconscionable and against the
public interest. While considering the amendment made by the
petitioner to the Writ Petition by which fresh challenges were
thrown against the Agreement dated 7.2.2003, the Division
Bench came to the conclusion that there was no procedural
infirmity in the contract having been awarded to the Company.
The Division Bench then considered the other challenges
namely:
(1)
huge chunks of lands had been given to respondent
No.2 on lease for 90 years at a very nominal lease
rent.
(2)
Exemption of stamp duty has been given to
respondent No.2 causing loss of revenue to the
State exchequer.
11. The Division Bench in detail considered the nature of
lease and the nature of the transaction. For that it went on to
analyze the whole Project which had the three objectives,
namely:
(1)
provide a fast moving corridor to minimize travel
time
(2)
to connect the main township/ commercial centres
on the Eastern side of Yamuna
(3)
to relieve the National Highway No.2 which was
already congested and ran through the heart of
cities like Faridabad, Ballabhgarh and Palwal.”
12. The High Court then discussed the financial
ramifications resulting out of the Agreement and then after
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 371
ORS. [V.S. SIRPURKAR, J.]
referring various judgments of this Court, went on to decide the A
question whether before finalizing the contract in favour of
respondent No. 2 Company, the State Government or the Taj
Expressway Authority had undertaken the requisite research.
It went on to record a finding as found in the Commission of
Enquiry that the authorities had examined all the aspects of the B
matter before issuing the bid document inviting offers. It also
recorded that there was proper publication of the Notice Inviting
Tender (NIT) in various national Dailies and that 19 parties had
responded to the NITs. The High Court, therefore, recorded a
finding that there was nothing shady and the entire process was C
transparent. The High Court also registered a finding that it
could not be said that undue concessions were given to the
Company in view of the fact that all such concessions had
already been spelt out in the bid document. Thus, the High Court
approved of the findings reached in the Commission of Enquiry
D
by Mr. Justice Siddheshwar Narain (Retd.). Ultimately, the High
Court dismissed the Public Interest Litigation.
13. It is on this backdrop that number of Writ Petitions
came to be filed again giving rise to the two impugned
judgments.
A
B
D
E
E
F
F
(a)
as the object of this acquisition is not covered by
the definition of ‘public purpose’ in Section 3 (f) of
the Land Acquisition Act.
(b)
it cannot be said that this acquisition would come
under Part II of the Land Acquisition Act and in fact
it must be considered to be under Part VII of the
Act since it virtually amounts to acquisition of land
for J.P. Infratech-a company(respondent No.5).
G
G
H
H
[2010] 11 S.C.R.
(c)
the compensation for the land acquisition is coming
wholly from the Jaypee Industries and not from the
Government or from YEIDA and, therefore, it is not
an acquisition for public purpose.
(d)
the acquisition for so-called interchange is not at all
necessary and it is actually a colourable exercise
of powers.
2.
The application of Sections 17 (1) and 17 (4) of the
Land Acquisition Act was wholly unnecessary and,
therefore, illegal,
(a)
and, therefore, the Government could not have
dispensed with the enquiry under Section 5 A of the
Act.
C
Basically two questions emerge from the arguments made
at the Bar before us. They are:The acquisition itself cannot be said to be for the public
purpose:
SUPREME COURT REPORTS
372
14. Learned Counsel appearing on behalf of the appellants
argued in support of the above two main and the ancillary
questions.
15. As against this, learned Counsel appearing for the
State as also for the Company and YEIDA supported the
acquisition and contended that it was futile to oppose the
acquisition, particularly, when the acquisition was virtually
accepted by all except a few, inasmuch as the learned Counsel
contended that majority of the landlords have accepted the
compensation also and have not challenged the acquisition in
any manner. It is only a few extremely insignificant pockets
which are now caught in this litigation. The learned Counsel
have specifically averred that the whole process was extremely
transparent and that there was necessity of this land considering
the public purpose involved and that all care was taken to
safeguard the interests of the farmers and that the creation of
this Expressway and creation of five townships would
immensely help the general public residing on the Eastern Bank
of Yamuna particularly, and the residents of UP generally. It is
on these rival contentions that we have to proceed now.
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 373
ORS. [V.S. SIRPURKAR, J.]
16. Since the land acquisition exercise is for the Yamuna
Expressway Project, it would be worthwhile to see some factual
background thereof. U.P. Industrial Area Development Act,
1976 came into force on 1.4.1976. Section 3 thereof provides
for constituting an authority by a notification. The object of this
legislation is planned development of certain notified areas in
the State by building up integrated industrial townships. The
State Government is empowered thereunder to declare the
industrial development area and this Act empowers the
authority to acquire the land by direct purchase or through State
(under the provisions of the Land Acquisition Act, 1894). It also
requires preparing a Master Plan, to demarcate the sites into
industrial, commercial, institutional, residential and other land
use in accordance with the Master Plan. Under Section 7 of
the said Act, the authority is empowered to allot its properties,
by way of lease or otherwise, on such terms and conditions as
it may deem fit. An authority called Taj Expressway Industrial
Development Authority came to be constituted under this Act
by a Notification dated 24.4.2001. This Authority changed its
nomenclature and became Yamuna Expressway Industrial
Development Authority (‘YEIDA’ for short) vide Notification
dated 11.7.2008. This was with intent to develop the Eastern
Side of the river Yamuna by construction of a 6 lane
Expressway joining Noida to Agra and also for development
of five regions along the said Expressway into a planned
industrial development area for residential, industrial,
institutional or recreational purposes. The industrial
development area was also notified on 24.4.2001, which then
comprised of 8 villages. Later on, vide notification dated
22.8.2001, as many as 63 No. of villages including the village
of some of the appellants were also included. By further
notifications, some more villages were also notified as part of
industrial development area. The area was in 4 districts,
namely, Gautam Budh Nagar, Agra, Mathura and Aligarh.
17. After the constitution of the Authority (YEIDA), public
notices for global tenders were issued in 2001 inviting bids from
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A interested parties desirous of implementing the Project of the
said 6 lane Expressway and the building of the townships on
Build, Operate and Transfer model. This Project, however, did
not proceed, as there was no eligible bidder and ultimately, the
selection process was dropped. Subsequently, in November,
B 2002, fresh bids were invited on the same principles, but with
an option either to enter into a joint venture (JV) with the YEIDA
or to implement the said Project without any equity partition of
the said Authority. In the Bid Document, the necessity of the
major highway connecting New Delhi with Mathura and Agra
C was reiterated with the objectives (i) to provide a fast moving
corridor to minimize the travel time, (ii) to connect the main
townships/commercial centres on the Eastern Side of Yamuna,
and (iii) to relieve NH-2 which was already congested and ran
through the heart of cities like Faridabad, Ballabhgarh and
Palwal. It was informed to the interested parties that the
D
proposed Expressway was to be about 160 Kms. in length
shortening the distance between Noida and Agra with an
estimated cost of US $ 350 million. It was also informed that
the Expressway was to pass through virgin area along the river
Yamuna and that a band of 500 meters width of land at five or
E more locations, of which one location was to be in Noida or
Greater Noida area along the Expressway, would be offered
on acquisition cost along the corridor as an integral part of the
Project. It was further informed that in addition to the land for
Expressway, 25 million square meters land along the same
F would be given at acquisition cost for development of the same
for commercial, amusement, industrial, institutional and
residential purpose. Bids were invited from all the interested
parties having experience in the construction/development of
infrastructure Projects including real estate development and
G it was informed that the selected developer would be offered
25 millions square meters of land for development on
acquisition cost on lease for a period of 90 years. It was also
informed that the concession period would be for 7 years from
the date of signing of the Concession Agreement and all the
H assets related to the Expressway were to stand transferred on
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 375
ORS. [V.S. SIRPURKAR, J.]
the date of signing of the Concession Agreement in favour of
such a successful bidder. The Bid Document also provided that
the successful bidder would have the right to levy, collect and
retain toll from the public using the Expressway during the
concession period. Tender of Jaiprakash Industries Ltd. was
accepted and thus they became the successful bidder as they
had claimed the lowest concession period of 36 years.
18. The Concession Agreement dated 7.2.2003 also came
to be executed between the parties. However, before the work
could start, the whole Project got stuck up in the litigation, upon
which the Enquiry Commission was appointed by the State
Government under the Chairmanship of Mr. Justice
Siddheshwar Narain (Retd.). Before that, two Commissions of
sub enquiries were constituted. While the Report of the first
Commission was quashed by the Allahabad High Court, the
second Commission of Enquiry could not proceed at all, as the
Members had resigned. Ultimately, Mr. Justice Siddheshwar
Narain (Retd.) completed the enquiry and submitted his Report
in October, 2006. Thereafter, as has already been pointed out
earlier, a Public Interest Litigation came to be filed by way of a
Writ Petition before the Allahabad High Court, which was
dismissed by the Allahabad High Court. It was thereafter that
the process of land acquisition commenced in September,
2007. In the first phase, land for Expressway was acquired.
Subsequently, the acquisition process started for the land for
development. The first Writ Petition being Civil Misc. Writ
Petition No. 48978 of 2008 came to be filed by one Balbir
Singh, challenging the Notification dated 15.10.2007 issued
under Section 4 of the Act, as also the Notification dated
4.1.2008 issued under Section 6 of the Act. Status quo order
was passed on the said Writ Petition. On its heels, other Writ
Petitions were filed, the main Writ Petition being Civil Misc. Writ
Petition No. 31314 of 2009 filed by one Nand Kishore Gupta.
The status quo orders were passed even in that Writ Petition.
Ultimately, the Writ Petition of Balbir Singh was dismissed by
a judgment dated 5.10.2009 and that of others including Nand
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A Kishore’s came to be dismissed on 30.11.2009. It is on this
historical backdrop that we have now to consider the
correctness or otherwise of these two judgments, which pertain
to, more or the less, same subject, but with slight variation.
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19. The Writ Petition filed by Balbir Singh proceeded, inter
alia, on the grounds that acquisition was a colourable exercise
of power and was one which should have been accomplished
by complying with the provisions of Part VII of the Act as this
was an acquisition for company. By the judgment dated
5.10.2009, the High Court dismissed the Writ Petition holding
C that (a) the entire process of acquisition was in accordance
with the provisions of the Act and this was not a colourable
exercise of powers, (b) the land in instant case was indeed
acquired for public purpose, namely, construction of Yamuna
Expressway Project, (c) the land was not acquired for company
D and as such the procedure under Chapter VII was not
applicable.
It was also urged in that case that the entire cost of the
acquisition was to be borne by the Company and the Company
E had to pay the entire dues towards acquisition cost and,
therefore, there was no public purpose in this acquisition and
the so-called public purpose appearing in the Notification was
a camouflage. It was further urged that since even a part of
compensation was not coming from the Government out of the
F public revenue or some fund controlled by the local authority,
this acquisition was not for the public purpose. In Balbir Singh’s
case, all these objections were dismissed.
20. More or the less, same contentions with some
difference were raised in Nand Kishore’s case also, the
G judgment which also disposed of the Civil Misc. Writ Petition
No. 50474 of 2009 (Rajo Devi & Ors. Vs. State of U.P. & Ors.),
Civil Misc. Writ Petition No. 35090 of 2009 (J.S. Horticulture
Pvt. Ltd. Vs. State of U.P. & Ors.), Civil Misc. Writ Petition No.
51537 of 2009 (Bhupendra Singh & Ors. Vs. State of U.P. &
H Ors.), Civil Misc. Writ Petition No. 51543 of 2009 (Mukesh
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 377
ORS. [V.S. SIRPURKAR, J.]
Singh Vs. State of U.P. & Ors.), Civil Misc. Writ Petition No.
51546 of 2009 (Vijay Singh & Anr. Vs. State of U.P. & Ors.),
Civil Misc. Writ Petition No. 51551 of 2009 (Jagvir Singh &
Ors. Vs. State of U.P. & Ors.), Civil Misc. Writ Petition No.
60587 of 2009 (Kadival Infrastructure Pvt. Ltd. & Anr. Vs.
State of U.P. & Ors.) alongwith the main Writ Petition being
Civil Misc. Writ Petition No.31314 of 2009 (Nand Kishore
Gupta & Ors. Vs. State of U.P. & Ors.). The individual
grievances raised in all these Writ Petitions were dealt with and
the challenges were rejected. The two main points, as culled
out by us, were dealt with as in Balbir Singh’s case.
21. Insofar as the individual grievances are concerned, they
were mostly in the nature of plea regarding the constructions
having been there in this land required for interchange. For
example, in Nand Kishore Gupta’s case, it was claimed that
there was cold storage of the petitioner No. 1 therein and shops
in cold storage, a temple in plot No. 139, a weigh bridge
(Dharm Kanta) on plot No. 122 and some of the plots were
owned by Trishul Awas Sahkari Awas Samiti. It was stated in
Civil Misc. Writ Petition No. 50474 of 2009 (Rajo Devi & Ors.
Vs. State of U.P. & Ors.) that the petitioners had a house and
a boundary wall on some Khasras and some constructions on
the others. In Civil Misc. Writ Petition No. 35090 of 2009 (J.S.
Horticulture Pvt. Ltd. Vs. State of U.P. & Ors.), it was urged that
there was a 10’X11’ high boundary wall and constructed rooms
inside a ‘Goshala’ and 3 tube wells with several trees. In Civil
Misc. Writ Petition No. 51537 of 2009 (Bhupendra Singh & Ors.
Vs. State of U.P. & Ors.), it was urged that this was an
agricultural land and the petitioners therein depended on the
same for their livelihood. In still other Writ Petitions being Civil
Misc. Writ Petition No. 51543 of 2009 (Mukesh Singh Vs. State
of U.P. & Ors.), Civil Misc. Writ Petition No. 51546 of 2009
(Vijay Singh & Anr. Vs. State of U.P. & Ors.) and Civil Misc.
Writ Petition No. 51551 of 2009 (Jagvir Singh & Ors. Vs. State
of U.P. & Ors.), the same plea of cultivation was raised. In Civil
Misc. Writ Petition No. 60587 of 2009 (Kadival Infrastructure
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A Pvt. Ltd. & Anr. Vs. State of U.P. & Ors.), the petitioners
claimed that they had purchased 7 plots with the total area of
24060 sq. meters and they were plots for industrial purposes
and that the plot of Yashoda Devi was a fertile land.
22. The High Court has refuted all these contentions by
B giving good reasons. We will not go into these individual cases
once the High Court has decided not to entertain these plea
and, in our opinion, correctly. After all, this was an acquisition
for building up a highway and the abovementioned Writ
Petitions pertained to the land required for interchange. It is
C obvious that the alignment of the highway cannot be changed,
as its design has been prepared after consideration of so
many factors by the experts in building the road. Its direction
or alignment, therefore, cannot be changed, with the result, the
area which is required for interchange, also cannot be changed.
D This is a typical example of the individual having to sacrifice
his land for the public good. There can be no dispute that this
road would add to the betterment of the citizens of the East
Yamuna area in particular and Uttar Pradesh in general. This
is apart from the fact that the majority of the persons whose
E lands have been acquired, have either not objected to it or have
accepted the compensation without any demur. It will, therefore,
not be possible for us to go into these individual grievances,
which have been rightly rejected by the High Court. In fact, in
Balbir Singh’s case, it was pointed out that out of the 12,315
F affected farmers in 133 villages over the total area of 1,638
hectares of the Expressway, 11387 have already received
compensation and only 142 farmers have raised the issues.
The High Court has rightly held that the private interest is always
affected to some extent in such large schemes requiring the
G acquisition of land. The High Court has rightly held that a holistic
view had to be taken to look for an all round development
without forgetting about our heritage, culture and traditions. We
also, therefore, would not entertain the objections, feebly raised
before us, individually.
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NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 379
ORS. [V.S. SIRPURKAR, J.]
23. We have now to see as to whether the challenge posed
by the appellants herein about this acquisition not being for
public purpose is justified or not. Shri Ranjit Kumar, Shri Debol
Banerjee, learned Senior Counsel and Ms. Meenakshi Arora,
learned Counsel appearing on behalf of the appellants,
vehemently urged that this acquisition, in the first place, is
colourable exercise of power. All the learned Counsel urged that
the very nature the whole transaction showed was that the whole
acquisition was tailor made for the respondent Company. The
learned Counsel further urged that it was meant only for the
benefit of the Company, inasmuch as, though the acquisition
should have been made under the provisions of Part VII of the
Act, it was carried out in terms of the provisions of the Part II of
the Act, citing this to be an acquisition for public purpose.
According to the learned Counsel, there already existed a road
which was a functional road and Yamuna Expressway is only
an excuse to develop the feeder road to connect the five
proposed townships. The learned Counsel urged that the huge
land of 25 million square meters has virtually been handed over
to the respondent Company on a platter and, therefore, all this
exercise was clearly not for the public purpose. It was further
urged that the so-called Concession Agreement dated 7.2.2003
was one-sided, inasmuch as, even if it was terminated, the land
which was given to the Company for development, would have
remained unaffected. It was further urged that considering the
length of the lease period of 90 years, the land was virtually
given to the Company for ever, and it was nothing but
transferring the same in favour of the Company. It was then
pointed out that it was only the Expressway which would revert
back to the Government after 36 years, but not the land
measuring about 25 million square meters, which would be
wholly managed by the Company. In fact, the learned Counsel
argued that this cannot be said to be an integrated Project, as
the land for Expressway and the land for development have
been treated on an entirely different and unequal footing. It was
also pointed out that the present purpose was not a public
purpose as envisaged in Section 3(f) of the Act. The learned
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Counsel pointed out that from the Agreement itself, it is clear
that the entire cost of the acquisition is going to be borne by
the Company and, therefore, there can be no doubt that the
acquisition is for the Company and not for the public purpose.
The learned Counsel argued that merely because the Company
has paid the entire cost of acquisition alongwith Rs.100/- per
hectare per year by way of premium, it cannot be denied that
it is only the private respondent who is bearing the entire cost
of the acquisition and the State Government/YEIDA has not
contributed anything. Heavily relying on the decision in Pratibha
Nema & Ors. Vs. State of M.P. & Ors. [2003 (10) SCC 626],
the learned Counsel argued that this issue needs to be
addressed by this Court on the backdrop of this case.
24. As against this, the learned Counsel appearing on
behalf of the State, as also for the Company and YEIDA, pointed
out that this cannot be said to be a colourable exercise of power.
They also pointed out that there cannot be any dispute about
the utility of this Project and its benefits to the public. They
further pointed out that the whole process has been extremely
transparent. They also pointed out that this acquisition cannot,
under any circumstances, come within Part VII of the Act. The
learned Counsel further pointed out that the five developed
parcels of the land were going to revert to the acquiring body
after 90 years, and the period of 90 years cannot provide a
permanency to the whole transaction. The learned Counsel
urged that the State ultimately was going to receive a 6 lane
Expressway which was 160 Kilometers long alongwith five
developed parcels of land on the Eastern Side of Yamuna river.
The learned Counsel also pointed out that all this was going to
help the industrialization and the overall development of that
area in particular and the State in general, apart from the fact
that this highway would reduce the traffic congestion presently
felt on N.H.-2. The learned Counsel pointed out that it will also
release the congestion, as it exists in the cities and would help
smooth movement of people, goods and material.
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 381
ORS. [V.S. SIRPURKAR, J.]
25. The learned Counsel also urged that the creation of
five planned parcels of land under the Scheme would immensely
help the trading activities in the State and would be extremely
useful for the citizens. The learned Counsel further pointed out
that the land would be put to the industrial, commercial,
residential, amusement or institutional purposes which would
ultimately serve the public purpose. Lastly, on this question, the
learned Counsel urged that it was a misnomer to say that the
compensation was coming only from the private coffers of the
Company. The learned Counsel also referred to the nature of
the agreement i.e. the BOT contract. The contention raised was
that a BOT contract, by its nature cannot be equated to or with
an acquisition for a Company. According to the learned
Counsel, all that the Government was doing was merely
choosing a third party agency to implement the work of building,
designing, financing or running the Project, and that the
Government was utilizing the expertise and enterprise of a third
party.
26. Our attention was also invited to two decisions of this
Court concerning the BOT contracts and the allegations made
relating to them. The decisions were State of Karnataka & Anr.
Vs. All India Manufacturers Organization & Ors. [2006 (4)
SCC 683] and Sooraram Pratap Reddy & Ors. Vs. District
Collector, Ranga Reddy District & Ors. etc. etc. [2008 (9) SCC
552].
27. The first and foremost thing which we must keep in
mind while deciding these matters is that at least in the present
two matters (Balbir Singh’s case decided on 5.10.2009 and
Nand Kishore’s case decided on 30.11.2009), the subject
related only to the acquisition of few hectares of land as
compared to the acquisition of large chunk which has not been
challenged. Further, it is an admitted position that majority of
the acquisition proceedings are over. In Balbir Singh’s case
also, the persons who challenged the Project, were 9 in
number, owning about 7.09 hectares of land i.e. about 0.42%
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A of the total land. It has been strongly argued on behalf of the
State, the Company and YEIDA that the major activity of land
acquisition process is over. It has been noted in Balbir Singh’s
case that out of the 12,315 affected farmers in 133 villages over
the total area of 1,638 hectares of the Expressway, 11387 have
B already received compensation and only 142 farmers out of
such a large number of villages have raised the issues, leaving
139 farmers who had not taken the compensation. This is apart
from the fact that only 9 Writ Petitioners came in that Writ
Petition. The story in Nand Kishore’s Writ Petition which was
C disposed of by the High Court alongwith other Writ Petitions is
no different. The learned Counsel appearing on behalf of the
appellants could not deny the fact that the total number of
petitioners concerned in these acquisition proceedings, coming
up before the High Court, was extremely insignificant as
compared to those who had accepted the compensation. Of
D
course, that by itself may not be the only reason to hold against
the appellants (petitioners), however, that fact will have to be
kept in mind while deciding the issues which cover the whole
acquisition process, which acquisition is for the purpose of
development of 25 million square meters of land. The High
E Court has also noticed this aspect. We have mentioned this
aspect only with a limited objective of showing that the criticism
against the whole scheme which would invalidate the
acquisition would be difficult to be accepted, particularly in this
case, in view of the fact that majority of the land owners have
F parted with possession, taken the compensation and thus, the
whole scheme has progressed to a substantial level, wherefrom
it will be extremely difficult now to turn back to square one.
28. We must point out that at the time when the Project
conceived
in 2001, the present Company was not in existence.
G
It came in existence only later on. This is an admitted position
also. Therefore, it cannot be said that the whole Project was
envisaged keeping this Company in view. That would be the
first reason to reject the argument that the whole scheme was
H a result of colourable exercise of power. We also cannot ignore
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 383
ORS. [V.S. SIRPURKAR, J.]
the fact that a full-fledged enquiry was got done by the State
by constituting a Commission of Enquiry under the
Chairmanship of Mr. Justice Sidheshwar Narain. The said
Commission of Enquiry submitted its Report in October, 2006
and it was duly accepted by both the Houses of the Legislature
of the State of Uttar Pradesh. Again, we also cannot ignore
that the aspects of the transparency have been examined by
the Division Bench of the Allahabad High Court in a P.I.L., which
was dismissed by a well-considered judgment, which remained
unchallenged. We have already made reference to that
judgment. Nobody has so far argued that any specific partial
treatment was offered to the Company nor has it been pointed
out at any stage that there was anything amiss with the
tendering process or that the tender of contract to the Company
herein was a foregone conclusion. We, therefore, cannot
subscribe to the contention that this acquisition was a
colourable exercise of power. We must say that there was a
full transparency in the whole process and the whole process
was checked, rechecked and re-rechecked, leaving no scope
to infer any bias in favour of the Company.
29. It was pointed out that initially the award was preceded
by issuance of an advertisement in the leading newspapers
throughout the country. It was also pointed out that the offers
were invited on the basis of a global tender and as many as
19 parties entered the fray, and that it is only thereafter that
the present respondent Company was chosen for the award
of the tender. Again, the essential features of the transaction
appear to be that (i) Project was to be implemented on the
Build Operate and Transfer model, (ii) Project conceived of the
construction of the Expressway as well as development of land
parcels at five different locations and (iii) the land for
development was to be provided to the selected bidder on a
lease of 90 years upon payment of acquisition cost and
necessary lease rentals. There was, thus, a complete
transparency in the whole affair. It is also to be seen that this
was not a case where the exercise of power of eminent
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(aa) that such acquisition is needed for the construction
of some building or work for a Company which is
engaged or is taking steps for engaging itself in any
industry or work which is for a public purpose, or
H
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(b)
domain by the State was for any of the purposes set down in
Section 40 of the Act. Further, it is not as if the power of
acquisition was exercised by the State Government for the work
or Project of the Company. Lastly, it is not a case where the
power of exercise was exercised by the State Government so
that the acquired land was to belong or vest permanently in the
Company for its own purpose. It was pointed out that the lease
is going to be for 90 years after which the whole land is going
to revert back to the State Government, so also the whole land
acquired and used actually for the purpose of the highway
would also go back to the State after the period of 36 years,
during which the Company would have the right to levy and
collect the toll. It is not as if a public purpose is relevant in Part
VII, where under Section 39, the previous consent of
appropriate Government is required for execution of an
agreement between the Government and the Company.
Section 40 of the Act then puts a specific rider that the State
Government shall not give the consent unless it is satisfied of
any of the contingencies described in sub-Sections (a), (aa)
and (b) thereof, which are as under:40.
Previous enquiry:- (1) Such consent shall not be
given unless the appropriate Government be
satisfied, either on the report of the Collector under
Section 5A, Sub-section (2), or by an enquiry held
as hereinafter provided,-
(a)
that the purpose of the acquisition is to obtain land
for the erection of dwelling houses for workmen
employed by the Company or for the provision of
amenities directly connected therewith, or
that such acquisition is needed for the construction
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 385
ORS. [V.S. SIRPURKAR, J.]
of some work, and that such work is likely to prove
useful to the public.
This would suggest that even when the acquisition is meant
for the Company, the concept of public purpose has to be at
the back of mind of the acquiring body like Government. Here,
of course, there is no question of any agreement with the
Company as the three eventualities described under Section
40 of the Act are not available for the simple reason that the
basic idea for the acquisition under Part VII of the Act is the
total transfer of the ownership of the acquiring land in favour of
the Company. That is obviously not present here. We do not
see any factual background for holding that any agreement was
contemplated in between the State Government and the
Company or for that matter, YEIDA and the Company, as
envisaged in Sections 39, 40 and 41 of the Act. It was tried to
be canvassed before us that there would be a difference in
concepts of a public purpose and the work useful to the public.
We are not much impressed by this argument in view of the
fact that there is absolutely no evidence to suggest that this is
an acquisition for the Company, basically on account of the fact
that the acquired land is not to vest with the Company. This was
clearly a Project conceived and justified by the State
Government, while the concessionaire was to be chosen only
to implement the Project. The Project was going to be
implemented on the basis of principles of BOT. Therefore, after
the operating period is over, the assets of the Project were to
be transferred to the State Government. There was going to be
no vesting of land as in case that if the acquisition was being
effected under Part VII of the Act. We, therefore, do not accept
the argument that this was either a colourable exercise of power
or was meant for the Company. We are not impressed by the
argument that this was an acquisition for the Company. The
High Court, in Balbir Singh’s judgment, has correctly come to
the conclusion that this acquisition was not meant only for the
Company and on that count, it could not be said that this is not
for the public purpose. The learned Counsel, however,
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A vehemently argued that the whole compensation had come
from the Company and, therefore, this acquisition cannot be
said to be for a public purpose. We shall tackle this point a little
later. However, before we proceed to do that, we must express
on the utility of the Expressway, which was conceived, as also
B the development of five parcels of land.
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30. During the debate, our attention was invited to Section
3(f) of the Act, which contains a definition for ‘public purpose’.
It was pointed out that where the acquisition is for the Company,
it cannot amount to a public purpose. There can be no dispute
about this proposition that where the acquisition of land is for
the companies, it cannot amount to a public purpose. It was,
therefore, our endeavour to find out whether this land was for
the Company and we are quite satisfied with a finding recorded
by the High Court that this acquisition was not for the Company
but was for the public purpose. The Expressway is a work of
immense public importance. The State gains advantages from
the construction of an Expressway and so does the general
public. Creation of a corridor for fast moving traffic resulting into
curtailing the traveling time, as also the transport of the goods,
would be some factors which speak in favour of the Project
being for the public purpose. Much was stated about the 25
million square meters of land being acquired for the five parcels
of land. In fact, in our opinion, as has rightly been commented
upon by the High Court, the creation of the five zones for
industry, residence, amusement etc., would be complimentary
to the creation of the Expressway. It cannot be forgotten that
the creation of land parcels would give impetus to the industrial
development of the State creating more jobs and helping the
economy and thereby helping the general public. There can be
no doubt that the implementation of the Project would result in
coming into existence of five developed parcels/centers in the
State for the use of the citizens. There shall, thus, be the planned
development of this otherwise industrially backward area. The
creation of these five parcels will certainly help the maximum
utilization of the Expressway and the existence of an
[G.S. SINGHVI, J.]
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 387
ORS. [V.S. SIRPURKAR, J.]
Expressway for the fast moving traffic would help the industrial
culture created in the five parcels. Thus, both will be
complimentary to each other and can be viewed as parts of an
integral scheme. Therefore, it cannot be said that it is not a
public purpose.
31. We must, at this stage, take into account the argument
that the whole compensation is coming wholly from the
Company and not from the Government or from YEIDA. The
appellants invited our attention to Clause 4.1(d) of the
Concession Agreement. On that basis, it was argued that the
Company has paid the compensation cost and, therefore, the
acquisition is clearly covered under Part VII of the Act, and
there may be no public purpose if the acquisition is made for
the Company and it is the Company who has to shell out the
whole compensation. Now, this argument is clearly incorrect.
Even if we accept for the sake of argument that all this
compensation is coming from the Company, we must firstly
bear it in mind that the Company gets no proprietary or
ownership rights over the Project assets. Now, if it is presumed
that the compensation is coming from the Company, then it will
have to be held that the whole assets would go to the Company.
At least that is envisaged in Part VII of the Act. Here, that is
not the case. The assets are to revert back to the acquiring body
or, as the case may be, the Government. Even the lands which
are utilized for the construction of the Expressway are to go
back to the Government barely after 36 years i.e. after the
Company has utilized its rights to recover the toll on the
Expressway. Secondly, it must be borne in mind that the
Concession Agreement has been executed in February, 2003,
whereas the acquisition process started somewhere in the
month of September, 2007. When the Concession Agreement
was executed, the cost factor was not known. The acquiring
body was only to make available the land to the concessionaire
to implement the Project. There would be number of difficulties
arising, as for example, it would be clearly not contemplated
that the land would be made available without any value or that
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A there would no scheme for the State Government for recovering
the expenses that it would incur in obtaining the land. The
learned Counsel appearing for the State as also for the
Company and YEIDA argued that in order to overcome and iron
out such difficulties, the Agreement provides that the land would
B be leased on a premium equivalent to the acquisition cost. This
argument proceeds on the basis of Clause 4.3 C of the
Concession Agreement. It is to be noted then that the premium
of the land was not going to be just the acquisition cost, but
also the lease rent of Rs.100/- per hectare. Therefore, the State
C Government was to earn Rs.100/- per hectare for the total
acquired land, which was about 25 million square meters over
and above the compensation to be decided. The mention of
the compensation amount in addition to the lease money of
Rs.100/- per hectare would clearly provide that the whole
compensation was not going to be paid by the Company alone.
D
This is apart from the fact that through this agreement, only the
extent of the compensation payable by the Company to YEIDA
was decided. However, once all the amounts went to the coffers
of YEIDA, it would lose its independent character as a
premium. When it goes into the coffers of YEIDA, it is the YEIDA
E who would make the payments of the estimated compensation
and thereby it would be as if the compensation is paid not by
the Company, but by YEIDA. The respondents have relied on
the law laid down in Pratibha Nema’s Case [cited supra], more
particularly, paragraphs 24 and 25 therein. The respondents
F also argued relying upon the decision in Naihati Municipality
& Ors. Vs. Chinmoyee Mukherjee & Ors. [1996 (10) SCC
632]. The respondents argued that the law laid down in Pratibha
Nema’s Case (cited supra) emanates from the judgment in
Naihati Municipality & Ors. Vs. Chinmoyee Mukherjee & Ors.
G (cited supra).
32. Two judgments in State of Karnataka & Ors. Vs. All
India Manufacturers Organization & Ors. [cited supra] and
Sooraram Pratap Reddy & Ors. Vs. District Collector, Ranga
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Reddy District & Ors. etc. etc. (cited supra) were pressed in
service by the respondents.
33. The first judgment in State of Karnataka & Ors. Vs. All
India Manufacturers Organization & Ors. (cited supra) pertain
to Bangalore-Mysore Infrastructure Corridor Project). While
considering what the public purpose was, this Court in
paragraphs 76, 77, 78 and 79 took stock of the contention,
whereby it was suggested that land far away from the actual
alignment of the road and periphery had been acquired and,
therefore, even if the implementation of the highway Project was
assumed to be for the public purpose, the acquisition of the land
far away therefrom would not amount to a public purpose nor
would it be covered by the provisions of the Karnataka Industrial
Areas Development Act, 1966 (KIAD Act). In the present case
also, it was argued that the lands which are being acquired for
the interchange would not at all be necessary. Further, it was
argued that the five parcels of land which is being acquired for
the development of five industrial townships, could not be said
for the public purpose nor could it be said to be a part of the
present integrated scheme. This Court had refuted this
argument holding that even in case of Bangalore-Mysore
highway Project, the lands even little away from the main
alignment of the road, had to be a part of this Project and the
Project was an integrated infrastructure development Project
and not merely a highway Project. It was conceived originally
as the Bangalore-Mysore Infrastructure Corridor Project, which
conceived of the development of roads between Bangalore and
Mysore, for which there were several interchanges in and
around the periphery of the city of Bangalore, together with
numerous developmental infrastructure activities alongwith the
highway at several points. The situation is no different in the
present case. Therefore, the contention that this acquisition was
not for public purpose, is rejected.
34. In Sooraram Pratap Reddy & Ors. Vs. District
Collector, Ranga Reddy District & Ors. etc. etc. (cited supra),
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G
A same question cropped up which has been mentioned in
Paragraphs 9, 10 and 11 of the judgment suggesting that there
was no public purpose and in fact, it was an acquisition for a
private Company under Part VII of the Act and, therefore, the
power of eminent domain would have no application to such
B case. The contentions raised in that judgment in paragraphs
16, 17 and 18 are almost similar to the contentions raised
herein. The Court has extensively dealt with the question of
public purpose in paragraph 66 and has taken stock of
practically all the cases till paragraph 109 therein. It will not be
C necessary for us to repeat all the case law and the questions
raised and considered in these paragraphs, such as industrial
policy of the State, acquisition for Company etc. In fact, while
considering the contention regarding the industrial policy of the
State, the Court has taken into consideration the oft-quoted
case of Dhampur Sugar (Kashipur) Ltd. Vs. State of
D
Uttaranchal & Ors. [2007 (8) SCC 418], where this Court has
come to the conclusion that in the absence of illegality or
violation of law, a Court of law will not interfere in the policy
matters. Similar is the case here, where the development of the
industrial infrastructure along the Expressway for the overall
E betterment of the region and further for the industrialization of
the otherwise backward region of Uttar Pradesh, was
considered as a policy. In this judgment again, the Court has
extensively considered the question as to whether and under
what circumstances, the acquisition could be said to be the
F acquisition for the Company. In that, the Court has also
considered the decision in Babu Barkya Thakur Vs. State of
Bombay [AIR 1960 SC 1203]. The Court quoted the
observations in the aforementioned decision in Babu Barkya
Thakur Vs. State of Bombay (cited supra) to the following
G effect:-
H
“These requirements indicate that the acquisition for a
Company also is in substance for a public purpose
inasmuch as it cannot be seriously contended that
constructing dwelling houses, and providing amenities for
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the benefit of the workmen employed by it and construction
of some work of public utility do not serve a public
purpose.”
We have already considered this question that in the
present case, there is nothing to indicate that the acquisition
is for the Company i.e. for Jaiprakash Industries Ltd. It is only,
therefore, that we are at pains to point out that the Government
was only using the Company for implementing its policy.
35. In the aforementioned judgment of Sooraram Pratap
Reddy & Ors. Vs. District Collector, Ranga Reddy District &
Ors. etc. etc. (cited supra), Hon’ble Thakker, J. has also referred
to the decision in Pandit Jhandu Lal Vs. State of Punjab [AIR
1961 SC 343], where the acquisition was for construction of
houses by members of Thapar Industries Cooperative Housing
Society Ltd., Yamuna Nagar. The challenge was that there was
non-compliance of the provisions of Part VII of the Act, though
the acquisition was for the Company under Part VII of the Act.
The High Court, in that case, held that the acquisition was for
a public purpose and there was no need to comply with the
provisions of Part VII of the Act. In fact, practically all the
decisions on the subject of acquisition for the Company and
public purpose have been considered in this judgment of
Sooraram Pratap Reddy & Ors. Vs. District Collector, Ranga
Reddy District & Ors. etc. etc. (cited supra), which itself is a
locus classicus. Ultimately, this Court came to the conclusion
that the acquisition made by the State of Andhra Pradesh could
not be faulted, as it was in pursuance of policy decision for
development of the city of Hyderabad and in pursuance of that
policy, an integrated Project was taken up for development of
the city of Hyderabad into a business-cum-leisure tourism
infrastructure centre. The Court also came to the conclusion
that the Andhra Pradesh Infrastructure and Investment
Corporation (APIIC) in the reported decision was a nodal
agency like YEIDA in the present case which was to generate
the revenue and help the development of infrastructure for
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A industrialization of the area. The Court also recognized that
such instrumentality of State would have the power of eminent
domain. Like the present case, the Court held the Project to
be an integrated and indivisible Project. We have no doubt that
in the present case also, the Expressway as well as the five
B parcels which are to be developed are part of an integrated
and indivisible Project. In the reported judgment of Sooraram
Pratap Reddy & Ors. Vs. District Collector, Ranga Reddy
District & Ors. etc. etc. (cited supra), it has also been found
that the entire amount of the compensation was to be paid by
C the State agency APIIC, just like in the present case, where the
entire amount is to be paid by YEIDA, which agency is working
as a nodal agency for the execution of the Project. The Court
has also found that where the power of eminent domain is
exercised mala fide or for collateral purposes and de hors the
Act or in an irrational or unreasonable manner or when the
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purpose is ‘no public purpose’ and the fraud on statute is
apparent, a Writ Court can undoubtedly interfere. It has been
found very specifically here that the present matter is not
suffering from the above defects. In this judgment, the subject
of eminent domain has been discussed and considered with
E thoroughness and all the ramifications of the principle of
eminent domain have been discussed. We have already culled
out the principles emanating from this decision in the earlier
part of this judgment and even at the cost of repetition, we may
say that this judgment is practically, the law setter on the subject
F of eminent domain, as also on the other allied subjects of
acquisition. The judgment has also explained the concept of
‘public purpose’, which has been held to be wider than ‘public
necessity’. The judgment proceeds on a basis that merely
because the benefit goes to a particular section of the society,
G the acquisition does not cease to be for the public purpose. It
has been specifically held that where the State is satisfied
about the existence of a public purpose, the acquisition would
be governed by Part II of the Act, as has happened in the
present matter. The judgment in Sooraram Pratap Reddy &
H Ors. Vs. District Collector, Ranga Reddy District & Ors. etc.
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 393
ORS. [V.S. SIRPURKAR, J.]
etc. (cited supra) is an authoritative pronouncement on the
mode of payment, as also on the construction of Sections 40
and 41 of the Act. In fact, this judgment is a complete answer
to the argument of the appellants that this acquisition is not for
public purpose.
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36. The respondents then fall back upon the nature of the
transaction, saying that since the whole transaction is on the
BOT basis, the Government has merely chosen a third party
agency to implement the Project instead of taking up itself the
task of building, designing, financing or running the Project. It
C
was pointed out that in such contracts, the assets did not go to
the private enterprise which was chosen by the Government.
On the other hand, the assets revert to the Government and,
therefore, the BOT Project can never be akin to the acquisition
of land for a Company under Part VII of the Act, where the land
and the assets vest and belong to the Company. The D
respondents argued that when a BOT contract is tested in the
light of the provisions of Part VII of the Act, as also the Land
Acquisition (Companies) Rules, 1963, it would come out that
there has to be an agreement between the State and the
Company, which necessarily provides for the payment of cost E
of acquisition to the Government. It must entail the transfer of
such land to the Company. Similarly, under Rule 5 of the Rules
of 1963, the agreement must itself make provision that the land
will be utilized only for the purposes for which it was acquired
and if the Company commits breach of any condition of the F
agreement, the Government would be entitled to declare the
transfer of land to it to be null and void, so also if the Company
fails to utilize the entire land acquired, the unutilized portion
would revert to the Government. The respondents argued that
in a BOT contract, the land is only leased to a third party agency G
for the purposes of implementation of the Project. There is no
occasion for declaring the transfer of land to be null and void.
There would also be no occasion for reversion of the utilized
land of the State Government. The respondents, therefore,
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argued that a BOT contract can never be contemplated as
falling under Part VII of the Act.
37. Some other decisions which were pressed in service
by the appellants are Smt. Somavanti & Ors. Vs. The State of
Punjab & Ors. [AIR 1963 SC 151], more particularly, the
observations in paragraph 40 therein, where the Constitution
Bench of this Court observed that if the purpose of acquisition
is not related to a public purpose, then a question may well
arise whether in making the declaration there has been on the
part of the Government, a fraud on the power conferred on it
by the Act. We have already discussed the factual situation
here for pointing out that this acquisition was indeed for the
public purpose and cannot be held to be for respondent
Company. In that view, the criticism is not justified. The decision
in Pandit Jhandu Lal Vs. State of Punjab (cited supra) was
also referred to and, more particularly, the observations in
Paragraph 8 therein. There can be no dispute about the
principles laid down; however, as we have already pointed out,
this case has been thoroughly considered in Sooraram Pratap
Reddy & Ors. Vs. District Collector, Ranga Reddy District &
Ors. etc. etc. (cited supra). We have already returned a finding
that the compensation in this case does not come from the
respondent Company alone. We approve of the finding returned
by the High Court in that behalf. During the debate, the decision
in Devinder Singh & Ors. Vs. State of Punjab & Ors. [2008(1)
SCC 728] was also referred to. It was urged that there was a
conflict in this decision and the decision in Pratibha Nema’s
Case (cited supra). This was a case where the petitioners who
were the owner of the agricultural lands, had challenged the
acquisition of lands for M/s. International Tractors Ltd. It was
claimed that the land was being acquired for public purpose
i.e. setting up the Ganesha Project of M/s. International Tractors
Ltd. at various villages. The High Court had held that the land
acquisition was for public purpose. This Court explained the
public purpose as defined in Section 3(f) of the Act and noted
that the aforementioned Ganesha Project was not a Project of
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 395
ORS. [V.S. SIRPURKAR, J.]
the State, but the one undertaken by the Company M/s.
International Tractors Ltd. The Court then went on to consider
Sections 40 and 41 of the Act alongwith Rule 4 of the Land
Acquisition (Companies) Rules, 1963 and came to the
conclusion that the same could not be a public purpose as the
whole compensation was coming from the coffers of the
Company. In that view, the Court further came to the conclusion
that the State not having followed the provisions of Sections 40
and 41 of the Act, the whole process had suffered illegality. The
Court also considered the decision in Pratibha Nema’s Case
(cited supra) and distinguished the same by making a comment
to the following effect:“But we must hasten to add that the Bench did not have
any occasion to consider the question as to whether the
State is entitled to take recourse to the provisions of both
Part II and Part VII of the Act simultaneously.”
The Court, however, refused to go into the nicety of the
question and observed that in a case of acquisition for a public
Company, public purpose is not to be assumed and the point
of distinction between acquisition of lands under Part II and Part
VII of the Act would be the source of funds to cover the cost of
acquisition. The Court also considered the judgment of this
Court in Smt. Somavanti & Ors. Vs. The State of Punjab &
Ors. (cited supra), Jage Ram & Ors. Vs. State of Haryana &
Ors. [1971 (1) SCC 671] and Shyam Behari & Ors. Vs. State
of Madhya Pradesh & Ors. [AIR 1965 SC 427]. Ultimately, the
Court came to the conclusion that the necessary provisions not
having been found, the view of the High Court was not correct,
whereby it had upheld the land acquisition, holding it to be for
the public purpose. We have closely seen the judgment;
however, the factual situation in the judgment is quite different.
In our opinion, the judgment will not help the appellants to
contend that the present land acquisition is not for public
purpose. We also do not think that there is any serious conflict
between the decision in Pratibha Nema’s Case (cited supra)
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A and the decision in Devinder Singh & Ors. Vs. State of Punjab
& Ors. (cited supra), so as to require a reference to the larger
Bench. In our opinion, the decision in Pratibha Nema’s Case
(cited supra) applies to the fact situation in this case. Therefore,
considering the overall factual situation, we are of the opinion
B that the High Court was right in holding that the acquisition was
made for the public purpose. We find from the order of the High
Court that the High Court has considered the question of public
purpose keeping in mind the correct principles of law. We are,
therefore, of the opinion that the contention raised by the
C learned Counsel for the appellants that this acquisition was not
for the public purpose for various reasons which we have
discussed, is not correct.
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38. This takes us to the next point pertaining to the
application of Sections 17(1) and 17(4) of the Act. The learned
Counsel for the appellants have vociferously urged that there
was no necessity whatsoever to apply the urgency clause to
these acquisitions and further to avoid the enquiry under Section
5A of the Act. According to the learned Counsel, this
dispensation of Section 5A enquiry was not only unjust, but
added to the sufferings of the appellants who had lost their fertile
land. It was pointed out that this Project was slumbering since
2001 and it was in order to infuse fictitious urgency that a
reference to the Commonwealth Games was made. According
to the appellants, Right to be heard was akin to the
Fundamental Rights and its breach has rendered the whole
acquisition exercise illegal. Numbers of authorities were relied
upon by the appellants. The respondents, on the other hand,
argued that there was material available before the
Government justifying the invocation of the urgency clause. The
respondents argued that, in fact, the High Court has returned
the finding that there was material before the State Government
for dispensing with the enquiry under Section 5A of the Act and
that finding was based on the examination by the High Court
of the records of the State Government. It was pointed out that
going through the ordinary procedure for acquisition of land
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 397
ORS. [V.S. SIRPURKAR, J.]
would have taken years for disposal of the objections while land
was urgently required for public purpose, in this case, the
construction of interchange under the Yamuna Expressway
Project, which was absolutely essential for the purposes of
running the highway. It was also pointed out by the respondents
that because of the unnecessary litigation in the enquiries, the
Project was hopelessly delayed and the cost had gone up from
Rs.1,700 crores to whopping Rs.9,700 crores. It was also
further pointed out that any waste of time would have invited
the encroachments on the land, which would have added to the
further trouble. The enormousness of the Project which required
acquisition of 1,604 hectares of land involving 12,283 farmers,
would have taken years if the enquiry under Section 5A was
permitted and thereby, the cost would have still further soared
up. Numbers of authorities were relied upon by the parties.
39. Before considering the issue, we must take stock of
the finding returned by the High Court. In the judgment in Nand
Kishore Gupta & Ors. Vs. State of U.P. & Ors. (Civil Misc. Writ
Petition No.31314 of 2009), the High Court took stock of the
allegations regarding malafides and dispensing with the enquiry
under Section 5A of the Act by referring to Paragraph Nos. 20,
21, 28, 29, 30, 31 and 32 of the Reply filed on behalf of the
State Government through an affidavit of one Shri Vinod Kumar
Singh, ADM, Land Acquisition, Agra, wherein it was pointed
out that the Project was on the mammoth scale and there was
a great deal of possibility of encroachments if the Project was
allowed to linger. The High Court took note of the contention
that YEIDA deposited 70% of the estimated compensation on
29.5.2009 itself, since 10% of the estimated compensation
was already deposited by the acquiring body (YEIDA). The High
Court then referred to the various clauses of the Concession
Agreement like Clause Nos. 2.1, 2.2, 3.1, 3.2, 3.6 and 4.1 (a),
(b), (c) & (d) to know about the exact nature of the job which
was required to be done for building the Expressway. It was
after this that the High Court had recorded a finding that the
integrated Project was to cover a large area of land and the
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A requirement was of 25 million square meters of land to be
acquired. The High Court, therefore, noted the plea raised to
the effect that the State Government took correct decision to
invoke the urgency clause, as on an enquiry into disposal of
individual objections as contemplated under Section 5A of the
B Act, the Project itself would have lost all value and efficacy. The
High Court also noted the plea raised by YEIDA and the State
Government about the likelihood of encroachment. The High
Court then referred to the two decisions of this Court in
Sheikhar Hotels Gulmohar Enclave & Anr. Vs. State of Uttar
C Pradesh & Ors. [2008(14) SCC 716] and First Land
Acquisition Collector & Ors. Vs. Nirodhi Prakash Gangoli &
Anr. [2002 (4) SCC 160]. The High Court also referred to the
counter affidavit of one Shri V.C. Srivastava, Addl. General
Manager, Jaypee Infratech Ltd. (owned by Jaiprakash
Industries Ltd.). The High Court then took stock of the plea
D
raised on behalf of the respondents on the basis of more than
25 judgments of this Court. The High Court then referred to the
decision of this Court in State of Punjab & Anr. Vs. Gurdial
Singh & Ors. [1980 (2) SCC 471] and Om Prakash & Anr. Vs.
State of U.P. & Ors. [1998 (6) SCC 1], as also Babu Ram &
E Anr. Vs. State of Haryana & Anr. [2009 (10) SCC 115]. The
High Court also referred to the decision in Manju Lata Agrawal
Vs. State of U.P. & Ors. [2007(9) ADJ 447 (DB)], Sudhir
Chandra Agrawal Vs. State of U.P. [2008 (3) ADJ 289 (DB)]
and Munshi Singh Vs. State of U.P. [2009 (8) ADJ 360 (DB)],
F which all were the decisions of the Allahabad High Court itself.
The Court then referred to the delay on account of the litigations
from 2001 till 2008 and referred to the contention raised on
behalf of the appellants relying on the judgment in Essco Fabs
Pvt. Ltd. & Anr. Vs. State of Haryana & Anr. etc. etc. [2009
G (2) SCC 377], Mahender Pal & Ors. Vs. State of Haryana &
Ors. [2009 (14) SCC 281] and Babu Ram & Anr. Vs. State of
Haryana & Anr. (cited supra). It then recorded a finding in the
following words:H
“In order to verify whether there was any material with the
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 399
ORS. [V.S. SIRPURKAR, J.]
State Government to form an opinion and to exercise its
powers under Section 17(1) and Section 17(4) of the Act,
dispensing with enquiry under Section 5A of the Act, and
that the State Government had applied its mind on such
material, we summoned the records of the three concerned
notifications. Shri Satish Chaturvedi, Addl. Advocate
General assisted by Shri M.C. Tripathi, Addl. Chief
Standing Counsel has produced the records alongwith the
material collected by the Collectors/District Magistrate and
placed before the State Government for forming an opinion.
He has taken us through the various documents and forms
on which the Collectors have recommended on Forms X
alongwith justification of their recommendations as well as
its summary given in the office note placed before the State
Government. The three files produced before us relate to
village Kuberpur, district Agra, village Malupur Pargana
Atmadpur, district Agra and village Tappal district Aligarh
for construction of interchange.
The notification under Section 4(1)/17 of the Act for
proposing acquisition of land of village Kuberpur was
made on 20.2.2009 and was published in two newspapers
‘Amar Ujala’ and ‘Dainik Jagran’ on 27.7.2009. The
munadi was made on 7.3.2009. The notification under
Section 6(1)/17 was issued on 15.6.2009 and was
published in the two newspapers on 18.6.2009. The notice
under Section 9 was sent on 20.6.2009 and possession
was taken on 8.7.2009. In the recommendation sent by the
District Magistrate, considered by the State Government
on 11.2.2009 before publication of notification under
Section 4, the District Magistrate had after giving details
of land proposed to be acquired, had forwarded the FormX alongwith justification referred to in para 3 of the noting
of the State Government. The Collector, Agra
recommended that in order to acquire the land for
Y.E.I.D.A. established under the U.P. Industrial Area
Development Act, 1976 the preparation of plan,
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identification of land for units for industrial development,
infrastructural facilities, the lease or sale of the land, the
construction of building and for industrial units. Y.E.I.D.A.
has been given the regulating powers. The village Kuberpur
is in the notified area of Y.E.I.D.A. and which urgently
requires the proposed land for construction of interchange’
for Y.E.I.D.A. In case of any delay there is a strong
possibility of encroachment on the land, which will affect
the Project of Y.E.I.D.A. in public interest. In para 4 it was
stated that hearing of oral and written objections will take
several years causing indefinite delay in construction of
interchange. The proposal was forwarded with
recommendation signed by the Under Secretary, Industrial
Development, Government of U.P., Special Secretary,
Industrial Development ; Shri Arun Kumar Sinha,
Secretary, Rehabilitation and Industrial Development
Department; Government of U.P.; Shri V.N. Garg, Principal
Secretary, Rehabilitation and Development, Government
of U.P. on 12.2.2009 and by Shri Shailesh Krishna, the
Principal Secretary to Chief Minister on 18.2.2009.
As regard the acquisition of land for Y.E.I.D.A. for
interchange in village Malupur for construction of Yamuna
Expressway, Pargana Atmadpur, district Agra for
acquisition of 4.5322 hects. of land the proposal with
recommendation of District Magistrate, Agra on Form-X
and the justification similar to and in the same language
as in the case of village Kuberpur, district Agra was placed
before the State Government alongwith the notings. The
proposal bears recommendations and signature of Under
Secretary, Industrial Development Department,
Government of U.P. on 23.10.2008 ; Special Secretary,
Industrial Development, Government of U.P. on
24.10.2008; Principal Secretary, Industrial Development
and Commissioner on 30.11.2008 ; Special Secretary,
Industrial Development on 10.12.2008 and the Secretary
to Chief Minister on 15.12.2008.
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 401
ORS. [V.S. SIRPURKAR, J.]
For village Tappal in Tehsil Khair, district Aligarh proposal
for acquisition of 48.572 hect. of land for Y.E.I.D.A. for
construction of Yamuna Expressway with the
recommendation of the District Magistrate and justification
for invoking urgency clause was placed before the State
Government and was recommended and signed by the
Under Secretary and Special Secretary, Industrial
Development Department on 16.1.2009 ; Secretary,
Rehabilitation and Industrial Development, Department of
Government of U.P. on 16.1.2009 ; Principal Secretary,
Industrial Development on 16.1.2009 and by the Secretary
to the Chief Minister on the same day on 16.1.2009. The
proposals were accepted by the State Government for
acquisition and for invoking urgency clause for construction
of Yamuna Expressway by Y.E.I.D.A.”
Ultimately, the High Court wrote a finding in the following
words:“The record produced before us by the State Government
enclosing the material of invoking urgency clause and the
satisfaction of the State Government on the said material,
has satisfied us that the State Government had sufficient
material and had applied its mind to record its opinion that
there was urgency to acquire the land to dispense with the
enquiry under Section 5A of the Act.”
402
A
B
C
D
E
F
We have deliberately quoted the above part of the High
Court judgment only to show the meticulous care taken by the
High Court in examining as to whether there was material
before the State Government to dispense with the enquiry under
Section 5A of the Act. We are completely convinced that there
was necessity in this Project considering the various reasons
like enormousness of the Project, likelihood of the
encroachments, number of appellants who would have required
to be heard and the time taken for that purpose, and the fact
that the Project had lingered already from 2001 till 2008. We
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A do not see any reason why we should take a different view than
what is taken by the High Court. The law on this subject was
thoroughly discussed in Tika Ram & Ors. etc. etc. Vs. State of
U.P. & Ors. etc. etc. [2009 (10) SCC 689], to which one of us
(V.S. Sirpurkar) was a party. In that decision also, we had
B reiterated that the satisfaction required on the part of Executive
in dispensing with the enquiry under Section 5A is a matter
subject to satisfaction and can be assailed only on the ground
that there was no sufficient material to dispense with the enquiry
or that the order suffered from malice. It was also found on facts
C in Tika Ram & Ors. etc. etc. Vs. State of U.P. & Ors. etc. etc.
(cited supra) that there was no charge of malafide levelled
against the exercise of power and there was material available
in support of the satisfaction on the part of the Executive
justifying the invocation of the provisions of Section 17. The
position is no different in the present case. The High Court in
D
the present matter went a step ahead and examined the bulky
original record itself to find that there was full material available.
40. We are not impressed by the argument that the
encroachment issue was not a relevant factor. This argument
E was based on the reported decision in Om Prakash & Anr. Vs.
State of U.P. & Ors. (cited supra). It must be said that the actual
scenario in that case was different. In that case, the Court was
considering the acquisition of area of about 500 acres
comprising of 437 plots, whereas, in the present case, the area
F to be acquired for the Expressway alone was more than 1,600
hectares. This is apart from the 25 million square meters of land
which was liable to be acquired for the purposes of
development of 5 land parcels. There was interlinking between
the acquisition of land for the highway and the acquisition of
G land for establishing the 5 townships. In Om Prakash & Anr.
Vs. State of U.P. & Ors. (cited supra), there was unexplained
delay after issuance of Section 4 notification, which is not the
case here. Therefore, we do not think that what has been said
in Om Prakash & Anr. Vs. State of U.P. & Ors. (cited supra)
H would be apposite here. Every case has to be decided on its
NAND KISHORE GUPTA & ORS. v. STATE OF U.P. & 403
ORS. [V.S. SIRPURKAR, J.]
own facts. This is apart from the fact that it is not specifically
laid down in Om Prakash & Anr. Vs. State of U.P. & Ors.
(cited supra) that the encroachment was never a relevant factor
for dispensing with the enquiry under Section 5A. Again we
hasten to add that this was not the only factor considered by
the State Government and even the High Court has not held
the same to be the only factor for dispensing with the enquiry.
[2010] 11 S.C.R. 404
A
A
B
B
41. In view of the law laid down in the last judgment on this
issue i.e. Tika Ram & Ors. etc. etc. Vs. State of U.P. & Ors.
etc. etc. (cited supra), we are of the clear opinion that the
challenge by the appellants on the ground that there was no C
urgency and, therefore, the enquiry under Section 5-A of the Act
should not have been dispensed with, cannot be accepted. We
hold accordingly.
42. No other point was canvassed before us.
43. There is no merit in the appeals. They are dismissed.
The two impugned judgments of the High Court i.e. Civil Misc.
Writ Petition No. 48978 of 2008 (Balbir Singh & Anr. Vs. State
of U.P. & Ors.) decided on 5.10.2009 and Civil Misc. Writ
Petition No. 31314 of 2009 (Nand Kishore Gupta & Ors. Vs.
State of U.P. & Ors.) decided on 30.11.2009 are confirmed.
There shall be no costs.
K.K.T
D
E
AJANTA PHARMA LTD.
v.
COMMISSIONER OF INCOME TAX-9, MUMBAI
(Civil Appeal No. 7518 of 2010)
SEPTEMBER 9, 2010
[S.H. KAPADIA, CJI AND K.S. PANICKER
RADHAKRISHNAN, J.]
C
D
E
Appeals dismissed.
F
G
Income Tax Act, 1961 – ss. 115JB and 80HHC –
Assessment of Minimum Alternate Tax (MAT) Company u/s.
115-JB for assessment year 2001-2002 – Deduction in respect
of profits retained for export business – Computation of ‘book
profits’ u/s. 115-JB – Held: Reduction of 100% export profits,
as computed u/s. 80HHC(3), is eligible for reduction under
clause (iv) of Explanation to s. 115JB.
The appellant, a Minimum Alternate Tax (MAT)
Company, filed its return of income for the assessment year
2001-02. It claimed deduction under Section 80HHC of the
Income-Tax Act, 1961. While computing the ‘book profits’
under Section 115-JB of the Act, the assessee claimed
reduction of 100% export profits under clause (iv) of
Explanation to Section 115JB. The Assessing Authority
allowed reduction of only 80% of the export profits in
terms of Section 80HHC(1B). The Appellate Authority as
well as the tribunal allowed the claim of the assesee
holding that 100% export profits earned by the assessee
as computed under Section 80HHC(3) was eligible for
reduction under clause (iv) of Explanation to Section
115JB. Aggrieved, respondent-Department filed an appeal
and the High Court allowed the same. Therefore, the
appellant-assessee filed the instant appeal.
Allowing the appeal, the Court
H
HELD: 1.1 Section 115JB of the Income Tax Act, 1961
404
AJANTA PHARMA LTD. v. COMMISSIONER OF
INCOME TAX-9, MUMBAI
405
refers to levy of MAT on the deemed income. Sections A
80HHC and 115JB operate in different spheres. The two
essential conditions for invoking Section 80HHC(1) are
that assessee must be in the business of export and
secondly that sale proceeds of such exports should be
receivable in India in convertible foreign exchange. Hence, B
Section 80HHC(1) refers to ‘eligibility’ whereas Section
80HHC(3) refers to computation of tax incentive. Coming
to Section 80HHC(1B), it is clear that after Finance Act,
2000 w.e.f. assessment year 2001-02 exporters would not
get 100% deduction in respect of profits derived from C
exports but they would get deduction of 80% in the
assessment year 2001-02, 70% in the assessment year
2002-03 and so on. Thus, Section 80HHC(1B) deals not
with ‘eligibility’ but with the ‘extent of deduction’. [Para 9]
[411-F-H; 412-A-B]
D
1.2 Section 115JB is a self-contained Code. It taxes
deemed income. It begins with a non-obstante clause.
Section 115JB refers to computation of ‘book profits’
which have to be computed by making Upward and
Downward Adjustments. In the Downward Adjustment, E
vide clause (iv) it seeks to exclude ‘eligible’ profits derived
from exports. On the other hand, under Section 80HHC(1B)
it is the extent of deduction which matters. The word
‘thereof’ in each of the items under Section 80HHC(1B) is
important. Thus, if an assessee earns Rs. 100 crores then F
for the assessment year 2001-2002, the extent of deduction
is 80% thereof and so on, which means that the principle
of proportionality is brought in to scale down the tax
incentive in a phased manner. However, for the purposes
of computation of book profits which is different from G
normal computation under the 1961 Act/computation
under Chapter VIA, the Upward and Downward
Adjustments are to be kept in mind and, if so read, it
becomes clear that clause (iv) covers full export profits of
100% as ‘eligible profits’ and that the same cannot be
H
406
A
B
C
D
E
F
SUPREME COURT REPORTS
[2010] 11 S.C.R.
reduced to 80% by relying on Section 80HHC(1B). Thus,
for computing ‘book profits’ the Downward Adjustment
would be Rs. 100 crores and not Rs. 90 crores. The idea
being to exclude ‘export profits’ from computation of book
profits under Section 115JB which imposes MAT on
deemed income. The Memorandum of Explanation to the
Finance Bill, 2000 supports the said reasoning. [Para 9]
[412-B-G]
1.3 It cannot be said that the ‘eligibility’ as well as
‘deductibility’ of the profit have got to be considered
together for working out the deduction as mentioned in
clause (iv) of Explanation to Section 115JB. If the
dichotomy between ‘eligibility’ of profit and ‘deductibility’
of profit is not kept in mind then Section 115JB will cease
to be a self-contained code. In Section 115JB, as in
Section 115JA, it is clearly stated that the relief would be
computed under Section 80HHC(3)/(3A), subject to the
conditions under sub-clauses (4) and (4A) of that Section.
The conditions are only that the relief should be certified
by the Chartered Accountant. Such condition is not a
qualifying condition but it is a compliance condition.
Therefore, reliance cannot be placed on the last sentence
in clause (iv) of Explanation to Section 115JB (subject to
the conditions specified in sub-clauses (4) and (4A) of that
Section) to obliterate the difference between ‘eligibility’
and ‘deductibility’ of profits. Therefore, the impugned
judgment of the High Court is set aside and the judgment
of the tribunal is restored. [Para 10] [413-B-F]
CIVIL APPELLATE JURIDICTION : Civil Appeal No. 7518
of 2010.
G
From the Judgment & Order dated 07.05.2009 of the High
Court of Judicature at Bombay in Income Tax Appeal No. 1005
of 2008.
Bishwajit Bhattacharya, ASG, Mukul Gupta, Jehangir D.
H
AJANTA PHARMA LTD. v. COMMISSIONER OF
INCOME TAX-9, MUMBAI
407
Mistri, Rustom B. Hathikhanawala, Vikas Malhotra, Ajay Singh,
Judy James, B.V. Balaram Das for the apearing parties.
408
A
A
The Judgment of the Court was delivered by
S.H. KAPADIA, CJI. 1. Leave granted.
2. Assessee was a MAT company at the relevant time. On
30.10.2001, it filed its return of income for assessment year
2001-02. The said return was accompanied by statutory audit
report claiming deduction under Section 80HHC of the Incometax Act, 1961 (for short, “the 1961 Act”). While computing the
“book profits” under Section 115-JB of the 1961 Act, the
assessee claimed reduction, under clause (iv) of Explanation to
Section 115JB, of 100% export profits. Vide assessment order
dated 27.2.2004 the AO allowed only 80% of the export profits
in terms of Section 80HHC(1B), as being allowed for reduction
of “book profits” under clause (iv) of Explanation to Section
115JB of the 1961 Act. Being aggrieved by the assessment
order, assessee moved before the CIT(A). Vide order dated
30.7.2004, the CIT(A) held that 100% export profits earned by
the assessee as computed under Section 80HHC(3) was
eligible for reduction under clause (iv) of Explanation to Section
115JB. This order of CIT(A) was upheld by the Tribunal which
took the view that the amount of profit eligible for deduction would
not be governed by Section 80HHC(1B) since there is no
reference to the said sub-section in clause (iv) of the Explanation
to Section 115JB. Against the concurrent finding the Department
carried the matter in appeal to the Bombay High Court. By the
impugned decision dated 7.5.2009 the Department’s appeal
under Section 260A of the 1961 Act stood allowed. Hence this
civil appeal.
3. The question of law raised in this civil appeal is : whether
for determining the “book profits” in terms of Section 115JB, the
net profits as shown in the P&L Account have to be reduced by
the amount of profits eligible for deduction under Section 80HHC
or by the amount of deduction under Section 80HHC?
B
B
C
C
D
D
E
E
SUPREME COURT REPORTS
4. To answer the above question we need to quote
hereinbelow Section 115-JB as inserted by Finance Act, 2000,
w.e.f. 1.4.2001 which reads as follows:
“115-JB. (1) Notwithstanding anything contained in any
other provision of this Act, where in the case of an assessee,
being a company, the income-tax, payable on the total
income as computed under this Act in respect of any
previous year relevant to the assessment year commencing
on or after the 1st day of April, 2001, is less than seven and
one-half per cent of its book profit, such book profit shall be
deemed to be the total income of the assessee and the tax
payable by the assessee on such total income shall be the
amount of income-tax at the rate of seven and one-half per
cent.
(2) Every assessee being a company, shall, for the purposes
of this section, prepare its profit and loss account for the
relevant previous year in accordance with the provisions of
Parts II and III of Schedule VI to the Companies Act, 1956
(1 of 1956).
Provided
Provided further
F
F
G
H
…
…
If any amount referred to in clauses (a) to (f) is debited to
the profit and loss account, and as reduced by –
(i) to (iii)
H
…
Explanation : For the purposes of this section, “book profit”
means the net profit as shown in the profit and loss account
for the relevant previous year prepared under sub-section
(2), as increased by –
(a) to (f)
G
[2010] 11 S.C.R.
…
(iv) the amount of profits eligible for deduction under
Section 80HHC, computed under clause (a) or clause (b)
AJANTA PHARMA LTD. v. COMMISSIONER OF
INCOME TAX-9, MUMBAI [S.H. KAPADIA, CJI.]
409
410
A
A
5. We also quote hereinbelow Section 80HHC as inserted
by the Finance Act, 1983 w.e.f. 1.4.83. Sub-section (1B) thereof
was inserted by Finance Act, 2000, w.e.f. 1.4.2001, the relevant
portion of the said provisions reads as follows:
B
B
“80HHC. (1) Where an assessee, being an Indian company
or a person (other than a company) resident in India, is
engaged in the business of export out of India of any goods
or merchandise to which this section applies, there shall, in
accordance with and subject to the provisions of this section,
be allowed, in computing the total income of the assessee,
a deduction to the extent of profits, referred to in sub-section
(1B) derived by the assessee from the export of such goods
or merchandise:
C
or clause (c) of sub-section (3) or sub-section (3A), as the
case may be, of that section, and subject to the conditions
specified in that section.”
(emphasis supplied)
Provided
…
(1A)
…
(1B) For the purposes of sub-sections (1) and (1A), the
extent of deduction of the profits shall be an amount equal
to –
(i)
eighty per cent thereof for an assessment year
beginning on the 1st Day of April, 2001;
(ii)
seventy per cent thereof for an assessment
year beginning on the 1st day of April, 2002;
(iii)
fifty per cent thereof for an assessment year
beginning on the 1st day of April, 2003;
(iv)
thirty per cent thereof for an assessment year
beginning on the 1st day of April, 2004,
SUPREME COURT REPORTS
[2010] 11 S.C.R.
and no deduction shall be allowed in respect
of the assessment year beginning on the 1st
day of April, 2005 and any subsequent
assessment year.”
(emphasis supplied)
6. Sub-section (1B) was inserted by Finance Act, 2000
w.e.f. 1.4.2001 i.e., the same Act which inserted Section
115JA.
D
E
F
G
H
7. In recent times, the number of zero-tax companies and
companies paying marginal tax has grown, hence, vide the
Finance (No.2) Act, 1996, levy of minimum tax on companies
having “book profits” stood introduced. The scheme envisaged
payment of minimum tax by deeming 30% of the book profits
D computed under the Companies Act, as taxable income, in a
case where the total income as computed under the provisions
of the 1961 Act, is less than 30% of the book profit. The word
“book profit” has been defined in Section 115JA(2) read with the
Explanation thereto to mean the net profit as shown in the Profit
and Loss Account, as increased by the amount(s) mentioned in
E
clauses (a) to (f), and as reduced by amount(s) covered by
clauses (i) to (ix) of the Explanation. These may be called for the
sake of brevity as “Upward and Downward Adjustments”. From
the above it is clear that Section 115JA is a self-contained Code
and will apply notwithstanding any provisions in the 1961 Act. In
F this case, we are concerned with Downward Adjustment,
particularly clause (viii) which refers to the amount(s) of profits
eligible for deduction under Section 80HHC, computed under
Section 80HHC(3) but subject to conditions specified in
Sections 80HHC(4) and 80HHC(4A).
G
8. By the Finance Act, 2000, Section 115JB was inserted
w.e.f. 1.4.2001 providing for levy of MAT on certain companies.
Section 115JB, though structured differently, stood inserted to
provide for payment of advance tax by MAT companies. Section
H 115JB is the successor section to Section 115JA. In essence,
C
AJANTA PHARMA LTD. v. COMMISSIONER OF
INCOME TAX-9, MUMBAI [S.H. KAPADIA, CJI.]
411
412
it is the same except that Section 115JA provided for MAT on
companies, so far as it does not deem the book profit as total
income. Under Section 115JB, however, clause (viii) of Section
115JA is re-numbered as clause (iv). Section 115JB continues
to remain a self-contained Code.
A
9. On the other hand, Section 80HHC(1) inter alia states that
where an assessee, who is the Indian resident, is engaged in
the business of exports out of India of any goods earns
convertible foreign exchange then in computing the total income,
a deduction of the profits derived from such exports would be
admissible. Thus, Section 80HHC provides for tax incentives.
Section 80HHC(1) at one point of time laid down that an amount
equal to the amount of deduction claimed should be debited to
the P&L Account of the previous year in respect of which
deduction is to be allowed and credited to the reserve account
to be utilized for the business purpose. Section 80HHC(1)
concerns eligibility whereas Section 80HHC(3) concerns
computation of the quantum of deduction/tax relief. At one point
of time prior to the Finance Act, 2000, exporters were allowed
100% deduction in respect of profits derived from export of
goods. However, that has now been reduced in a phase-wise
manner under Section 80HHC(1B). It may be noted that all
assessable entities are not eligible for deduction under Section
80HHC. Similarly, only eligible goods are entitled to such special
deduction under Section 80HHC(1). A bare reading of Section
80AB shows that computation of deduction is geared to the
amount of income, but Section 80HHC(3), which refers to
quantification of deduction is geared to the exports turnover and
not to the income. On the other hand, Section 115JB refers to
levy of MAT on the deemed income. The above discussion is
only to show that Sections 80HHC and 115JB operate in
different spheres. Thus, two essential conditions for invoking
Section 80HHC(1) are that assessee must be in the business
of export and secondly that sale proceeds of such exports should
be receivable in India in convertible foreign exchange. Hence,
Section 80HHC(1) refers to “eligibility” whereas Section
80HHC(3) refers to computation of tax incentive. Coming to
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Section 80HHC(1B) it is clear that after Finance Act, 2000 w.e.f.
assessment year 2001-02 exporters would not get 100%
deduction in respect of profits derived from exports but that they
would get deduction of 80% in the assessment year 2001-02,
70% in the assessment year 2002-03 and so on. Thus, Section
B 80HHC(1B) deals not with “eligibility” but with the “extent of
deduction”. As earlier stated, Section 115JB is a self-contained
Code. It taxes deemed income. It begins with a non-obstante
clause. Section 115JB refers to computation of “book profits”
which have to be computed by making Upward and Downward
C Adjustments. In the Downward Adjustment, vide clause (iv) it
seeks to exclude “eligible” profits derived from exports. On the
other hand, under Section 80HHC(1B) it is the extent of
deduction which matters. The word “thereof” in each of the items
under Section 80HHC(1B) is important. Thus, if an assessee
earns Rs.100 crores then for the assessment year 2001-02, the
D
extent of deduction is 80% thereof and so on which means that
the principle of proportionality is brought in to scale down the tax
incentive in a phased manner. However, for the purposes of
computation of book profits which computation is different from
normal computation under the 1961 Act/computation under
E Chapter VIA. We need to keep in mind the Upward and
Downward Adjustments and if so read it becomes clear that
clause (iv) covers full export profits of 100% as “eligible profits”
and that the same cannot be reduced to 80% by relying on
Section 80HHC(1B). Thus, for computing “book profits” the
F Downward Adjustment, in the above example, would be Rs.100
crores and not Rs.90 crores. The idea being to exclude “export
profits” from computation of book profits under Section 115JB
which imposes MAT on deemed income. The above reasoning
also gets support from the Memorandum of Explanation to the
G Finance Bill, 2000.
H
10. One of the contentions raised on behalf of the
Department was that if clause (iv) of Explanation to Section
115JB is read in entirety including the last line thereof (which
reads as “subject to the conditions specified in that section”), it
AJANTA PHARMA LTD. v. COMMISSIONER OF
INCOME TAX-9, MUMBAI [S.H. KAPADIA, CJI.]
413
becomes clear that the amount of profits eligible for deduction
under Section 80HHC, computed under clause (a) or clause (b)
or clause (c) of sub-section (3) or sub-section (3A), as the case
may be, is subject to the conditions specified in that Section.
According to the Department, the assessee herein is trying to
read the various provisions of Section 80HHC in isolation
whereas as per clause (iv) of Explanation to Section 115JB, it
is clear that book profit shall be reduced by the amount of profits
eligible for deduction under Section 80HHC as computed under
clause(a) or clause(b) or clause(c) of sub-section (3) or subsection (3A), as the case may be, of that Section and subject to
the conditions specified in that Section, thereby meaning that the
deduction allowable would be only to the extent of deduction
computed in accordance with the provisions of Section 80HHC.
Thus, according to the Department, both “eligibility” as well as
“deductibility” of the profit have got to be considered together
for working out the deduction as mentioned in clause (iv) of
Explanation to Section 115JB. We find no merit in this argument.
If the dichotomy between “eligibility” of profit and “deductibility”
of profit is not kept in mind then Section 115JB will cease to be
a self-contained code. In Section 115JB, as in Section 115JA,
it has been clearly stated that the relief will be computed under
Section 80HHC(3)/(3A), subject to the conditions under subclauses (4) and (4A) of that Section. The conditions are only that
the relief should be certified by the Chartered Accountant. Such
condition is not a qualifying condition but it is a compliance
condition. Therefore, one cannot rely upon the last sentence in
clause (iv) of Explanation to Section 115JB (subject to the
conditions specified in sub-clauses (4) and (4A) of that Section)
to obliterate the difference between “eligibility” and “deductibility”
of profits as contended on behalf of the Department.
11. For the above reasons, we set aside the impugned
judgment of the High Court and restore the judgment of the
Tribunal. Accordingly, the civil appeal of the assessee is allowed
with no order as to costs.
N.J.
Appeal allowed.
[2010] 11 S.C.R. 414
A
A
B
B
NAGBHAI NAJBHAI KHACKAR
v.
STATE OF GUJARAT
(Civil Appeal No. 7519 of 2010)
SEPTEMBER 9, 2010
[S.H. KAPADIA, CJI, K.S. PANICKER
RADHAKRISHNAN AND SWATANTER KUMAR, JJ.]
C
D
E
F
Land Ceiling – Gujarat Agricultural Lands Ceiling Act,
C 1960 (as amended by Act 2 of 1974) – ss.2(1), 2(6), 2(17) and
5 – “Bid lands” held by the appellants claimed as uncultivable
waste lands – Whether such “bid lands” were required to be
taken into consideration for the purpose of land ceiling under
the Gujarat Agricultural Lands Ceiling Act, 1960, as amended
D by Act 2 of 1974 – Held: The definition of “land” under the
1960 Act was specifically amended by the Amendment Act
2 of 1974 to include “bid lands”, without limiting the same to
cultivable bid lands – This specific intention of the Legislature
must be given its full meaning – Moreover, the subject lands
E survived acquisition under the 1952 Act only because they
were "bid lands" which by definition under that Act were
treated as lands being used by the Girasdars for grazing cattle
– Under the Ceiling Act, s.2(1) defines the use of land for the
purpose of grazing cattle as an agricultural purpose – Thus,
F "bid lands" fall under s.2(1) of the Ceiling Act – Saurashtra
Estates Acquisition Act, 1952.
G
In the instant appeals, the question for consideration
before the Court was: whether the bid lands held by the
appellants were required to be taken into consideration
G for the purpose of land ceiling under the Gujarat
Agricultural Lands Ceiling Act, 1960, as amended by Act
2 of 1974, which came into force from 1.4.1976.
H
H
414
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT
415
Dismissing the appeals, the Court
HELD:1.1. The argument made by the appellants,
that the legislative intent behind enacting clause (e) of
Explanation I to Section 2(6) of the Gujarat Agricultural
Lands Ceiling Act, 1960 was to include only cultivable
lands in the definition of “dry crop lands” as the ultimate
object of the Gujarat Agricultural Lands Ceiling Act, 1960
is to fix a ceiling on lands held for agricultural purpose
and consequently “bid lands” which are uncultivable
waste lands cannot be included in Explanation I(e), has
no merit. The definition of “land” under the 1960 Act was
specifically amended by the Gujarat Agricultural Lands
Ceiling Amendment Act 2 of 1974 to include “bid lands”
of Girasdars or Barkhalidars in Section 2(17)(ii)(c) of the
1960 Act. The Statement of Objects and Reasons of the
Amending Act also makes it clear that there was a
specific legislative intent of including “bid lands” of
Girasdars or Barkhalidars within the definition of “land”.
This inclusion does not make any distinction between
cultivable and uncultivable bid lands. The insertion of bid
lands in Section 2(17) is without any such qualification.
Therefore, this specific intent of the Legislature must be
given its full meaning. [Para 9] [428-E-H; 429-A-B]
1.2. If the argument of the appellants is to be
accepted, it would defeat the very purpose of the 1960
Act because in that event a holder could hold lands to
an unlimited extent by including waste lands in droughtprone areas, hill areas and waste lands within their
holdings. Moreover, the subject lands survived
acquisition under the Saurashtra Estates Acquisition Act,
1952 only because they were “bid lands” which by
definition under those Acts were treated as lands being
used by the Girasdars for grazing cattle. Now, under the
present Ceiling Act, Section 2(1) defines the use of land
416
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A for the purpose of grazing cattle as an agricultural
purpose. Thus, “bid lands” fall under Section 2(1) of the
Ceiling Act. This is one more reason for coming to the
conclusion that the Ceiling Act as amended applies to
“bid lands”. Under Section 5(1) of the 1952 Act all lands
B saved from acquisition had to be “bid lands” which by
definition under Section 2(a) of the 1952 Act were the
lands being used by a Girasdar or a Barkhalidar for
grazing cattle or for cutting grass. If the lands in question
were put to any other use, they were liable to acquisition
C under Section 5(2). Because the subject lands were used
for grazing cattle, they got saved under the 1952 Act and,
therefore, it is now not open to the appellants to contend
that the subject lands are not capable of being used for
agricultural purpose. [Para 9] [429-B-G]
D
1.3. The definition of the words “dry crop land” in
Explanation I(e) has two parts, namely, (i) “land other than
the land specified in paragraphs (a) to (c)” and (ii) “grass
land”. Thus, the first part includes all lands other than
those specified in paragraphs (a) to (c). Therefore, once
E the subject land falls in the first part of definition of the
word “dry crop land” which land comes under Section
2(17) and which falls outside paragraphs (a) to (c) then
such lands would fall within the definition of the words
“dry crop land”. Further, there are two reasons why
F “grass land” stood separately defined in Explanation I(e).
Firstly, under the proviso to Section 5, which is also
inserted by the Amending Act, a distinction is made
between “grass lands” included within “dry crop land”
and “grass lands” falling in the desert or hill areas of
G drought-prone areas for fixing the ceiling of dry crop land
in those areas. Secondly, under clause (f) to Explanation
I, “grass land” and not all “dry crop land” is deemed to
be rice land in certain situations. The proviso to Section
5 itself makes it clear that by the Amending Act of 1974
H
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT
417
the Legislature was placing a ceiling even on desert and
hill areas. The proviso inter alia states that the ceiling limit
with reference to “dry crop land” shall be 12 ½ per cent
more than that specified in the Schedule which makes it
clear that the Legislature intended to include even desert
and hills in drought-prone areas within the definition of
“dry crop land”. Once such lands are used for grazing
of cattle, Section 2(1) of the Ceiling Act would kick in and
consequently the “bid lands” would stand covered by the
Ceiling Act. The definition of “dry crop land” under
Section 2(6) is relevant for the purpose of ascertaining
the extent of ceiling limit under Schedule I. The subject
lands got saved from acquisition under the 1952 Act only
because the appellants were the holders of “bid lands”
which were put to use for grazing of cattle or cutting of
grass. It is these very lands which are now sought to be
covered by the 1960 Act, as amended. [Para 10] [429-H;
430-A-G]
1.4. The argument of the appellants that the
Legislature unwittingly through over-sight left out the
word “includes” in the definition of “dry crop land” in
Explanation I(e) has no merit. Section 2(6) of the Pre-1974
Act which defined “class of land”, covered four items,
namely, perennially irrigated land, seasonally irrigated
land, dry crop land and rice land, whereas under the Post1974 Act, rice land has been deleted from the “class of
land”. Under the Pre-1974 Act, “dry crop land” was
defined by clause (e) of Explanation to mean “land other
than perennially or seasonally irrigated or dry crop land
or rice land” and it included “grass land”, whereas under
the Post-1974 Act, not only the word “includes” but even
the words “rice land” do not find place in the definition
of “dry crop land” in clause (e) of Explanation I. Clause
(d) and clause (e) of the Post-1974 Act are drastically
different from the structure of the said clauses in the Pre1974 Act. [Para 11] [431-A-C-H]
418
A
A
SUPREME COURT REPORTS
[2010] 11 S.C.R.
I.R. Coelho (Dead) by Lrs. v. State of Tamil Nadu 2007
(2) SCC 1 and Krishnadas Vithaldas Sanjanwala v. The State
of Gujarat and Ors. (1966) 7 GLR 244, referred to.
Case Law Reference:
B
B
2007 (2) SCC 1
referred to
Para 3
(1966) 7 GLR 244
referred to
Para 11
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7519 of 2010.
C
C
From the Judgment & Order dated 17.02.2004 of the
High Court of Gujarat at Ahmedabad in Special Civil
Application No. 1145 of 1991.
D
D
WITH
C.A. Nos. 7520, 7521, 7522, 7523, 7524, 7525, 7526,
7527, 7528, 7529, 7530, 7531, 7532, 7533, 7534, 7535,
7536, 7537, 7538, 7539, 7540 of 2010.
E
F
E
F
R.F. Nariman, J.R. Nanavati, P.V. Hathi, Anip Sachthey,
Huzefa Ahmadi, Mohit Paul, Shagun Matta, Sherin Daniel,
Pradhuman Govil, Avinash Thakkar for the Appellant.
Preetesh Kapur, Hemantika Wahi, Jesal, Renuka Sahu
for the Respondent.
The Judgment of the Court was delivered by
S. H. KAPADIA, CJI. 1. Leave granted.
G
H
2. A short question which arises for determination in this
G batch of cases is whether bid lands were required to be
taken into consideration for the purpose of land ceiling under
the Gujarat Agricultural Lands Ceiling Act, 1960, as amended
vide Act 2 of 1974, which came into force from 1.4.1976.
H
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT [S.H. KAPADIA, CJI.]
419
3. At the outset, we may state that writ petitions were
filed in the High Court inter alia challenging the provisions
of the Gujarat Agricultural Lands Ceiling Amendment Act 2
of 1974 as violative of Articles 14 and 19 of the Constitution.
We may state that Amending Act 2 of 1974 has been
included as Item No. 71 in the Ninth Schedule to the
Constitution of India by the Constitution Thirty-fourth
Amendment Act. That inclusion was challenged before the
Constitution Bench of this Court on the ground that Thirtyfourth Amendment to the Constitution violated the basic
structure of the Constitution which challenge has now been
given up in view of the judgment of this Court in the case
of I.R. Coelho (Dead) by Lrs. v. State of Tamil Nadu
reported in 2007 (2) SCC 1.
4. As regards the question of includability of the bid
lands in the lands ceiling is concerned, the case of the
appellant(s) before us was, that bid lands held by the
appellant(s) being uncultivable waste lands; being rocky and
stony were not included in the definition of “land” in the 1960
Act as originally enacted; that “bid lands” held by the
appellant(s) were sought to be included in the total holding
of the appellant(s) to determine the ceiling under the 1960
Act only by reason of Amendment Act 2 of 1974. At this
stage, it may be noted that the said Amendment Act 2 of
1974, which came into force from 1.4.1976, was challenged
only for the reason that under Section 5(1)(a) of Saurashtra
Estates Acquisition Act, 1952 (“1952 Act” for short) no bid
lands which were uncultivable waste vested in the State
Government, which bid lands are now sought to be covered
by 1960 Act on account of the impugned Amendment Act 2
of 1974. According to the appellant(s), once such “bid lands”
stood excluded from vesting under the 1952 Act, the same
could not be included for calculating the total holding to
determine the ceiling limit under the 1960 Act, as amended.
It was contended on behalf of the appellant(s) that bid lands
420
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A which were also uncultivable waste lands cannot be included
for computing the total holding under the 1960 Act, as
amended, as the object of the Ceiling Act was to impose
ceiling on lands held for cultivation or agricultural purposes.
It was further submitted on behalf of the appellant(s) that bid
B lands cannot fall within the definition of dry crop land in
clause (e) of Explanation I to Section 2(6) as only “grass
lands” which abound in grass grown naturally and which are
capable of being used for agricultural purposes could be
included in such definition of “dry crop” land and since the
C “bid lands” did not fall in any “class of land” under Section
2(6), such land could not be included for calculating the
ceiling limit under Section 6 of the 1960 Act, as amended.
In this connection, Shri R.F. Nariman, learned senior counsel
appearing on behalf of the appellant(s), submitted that the
Act of 1960 (Unamended) was a useful guide in interpreting
D
the definition of “dry crop land” under the Act. According to
the learned counsel, the simple meaning of the said definition
made it clear that “dry crop land” has been defined to include
“grass land”, that is to say, land which abounds in grass
grown naturally and which is capable of being used for
E agricultural purposes. According to the learned counsel,
unwittingly, the word “includes” occurring in the unamended
definition of ‘dry crop land’ was left out of the amended
definition. Such omission, according to the learned counsel,
can always be supplied by the Court. Since, the lands
F specified in paras (a) to (c), to wit, perennially irrigated land,
seasonally irrigated land and superior dry crop land are all
lands on which agricultural operations are capable of being
performed the expression “other than the land specified in
paras (a) to (c)” obviously refers to lands other than those
G stated in paras (a) to (c) but which are capable of being
used for agricultural purposes. According to the learned
counsel, the appellant(s) had specifically pleaded that their
lands were barren, rocky and uncultivable but the Authorities
proceeded on the basis that the said fact was irrelevant in
H
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT [S.H. KAPADIA, CJI.]
421
view of the definition of the word “land” under Section 2(17)
of the 1960 Act. According to the learned counsel, even as
per the revenue records, the subject lands have been
described as “Pot Kharaba” i.e. waste lands, barren lands
or uncultivable lands and, consequently, the same cannot fall
within the definition of dry crop land under Section 2(6)(iv).
According to the learned counsel, the said Act had to be
interpreted in the context of agricultural land ceiling and in
the context of the said 1960 Act being part of agrarian
reforms and unless lands were capable of being used for
agricultural purposes, the bid lands which were also
uncultivable waste lands cannot fall within the ambit of the
1960 Act. According to the learned counsel, the impugned
judgment of the High Court was erroneous as it has placed
interpretation on the proviso to Section 5(1) and so read the
High Court has held that even desert and hilly areas where
no cultivation is possible can be subjected to ceiling.
According to the learned counsel, Section 5 states that lands
in deserts or hilly areas must first be dry crop lands as
defined under Explanation I(e) after which such lands falling
in a desert or hill may be accorded a larger ceiling area by
the State Government. In any event, according to the learned
counsel, Section 5(1) proviso has no bearing on the definition
of dry crop land except to the extent that the dry crop land
may also fall in hilly or desert areas; example, hilly or desert
areas which abounds in grass and which are capable of
being used for agricultural purposes. Consequently, hilly or
desert areas which do not abound in grass or which are
incapable of being used for agricultural purposes are not
covered by the Ceiling Act, 1960. Thus, according to the
learned counsel, bid lands are excluded from the definition
of dry crop land and they do not fall within any of the
categories of classes of land under the Act and, therefore,
cannot be subjected to ceiling under the 1960 Act.
422
A
B
C
D
E
F
G
5. Shri Preetesh Kapur, learned counsel appearing on
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A behalf of the State of Gujarat, submitted that it has been the
admitted case of the appellant(s) all through the proceedings
that the lands in question were in fact bid lands; that, only
argument raised before the Tribunal as well as the High
Court, besides the constitutional challenge, was two-fold; (i)
B that the subject lands were not fit for “agriculture” and since
the 1960 Act is an agricultural ceiling Act, the subject lands
had to be excluded from the purview of the Act; (ii) that, the
definition of “dry crop land” did not specifically cover bid
lands and must be construed to cover only such bid lands
C as “abound in grass” and, therefore, the lands in question
stood outside the Ceiling Act. According to the learned
counsel, the definition of “land” stood specifically amended
by the Amendment Act (No. 2 of 1974) to include “bid lands”
of Girasdars and Barkhalidars in Section 2(17)(ii)(c).
According to the learned counsel, the Statement of Objects
D
and Reasons for enacting the Amending Act also made it
clear that the Amendment Act stood enacted for including the
bid lands of Girasdars and Barkhalidars within the definition
of “land”. Therefore, according to the learned counsel once
the definition of “land” stood specifically amended to include
E “bid lands”, without limiting the same to cultivable bid lands,
the specific intention of the Legislature must be given its full
meaning. By the said Amending Act No. 2 of 1974,
according to the learned counsel, a proviso was also
inserted after Section 5 which increased the ceiling limit in
F respect of “desert” and hilly areas by 12 ½ per cent which
indicates that even deserts and hilly areas have been sought
to be brought within the ambit of the Agricultural Ceiling Act.
Therefore, the said proviso negates the contentions of the
appellant(s) that only such bid lands which were “capable of
G agriculture” or which abound in grass alone were meant to
be covered under the Act. It was further submitted that the
lands in question are in fact “agricultural” lands. They survived
acquisition under the earlier three Acts only because they
were “bid lands” which by definition under those Acts were
H
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT [S.H. KAPADIA, CJI.]
423
lands “being used” by Girasdars/Barkhalidars for grazing
cattle. That, under the Ceiling Act, Section 2(1) defines the
use of land for the purposes of grazing cattle as agricultural
purpose and thus, according to the learned counsel, by their
very definition “bid lands” are capable of being used for
agricultural purpose, namely, grazing cattle. On the question
of classification of lands, learned counsel submitted that
Sections 4 and 5 of the 1960 Act expressly made two-fold
division by dividing the State into local areas as well as
classes of lands. For the ceiling area in Schedule I, the land
had to fall under one of the classes, namely, perennially
irrigated land, seasonally irrigated land, superior dry crop
land and dry crop land which have been defined in
Explanation I to Section 2(6) of the Act. Learned counsel
submitted that there is no merit in the argument of the
appellant(s) that “bid land” is not specified in the class of
lands under Section 2(6) and that even if bid lands were
included in “dry crop land” it must be only such bid lands
which “abound in grass” which would fall under the 1960 Act.
According to the learned counsel the argument of the
appellant(s) is fallacious as it overlooks the specific
legislative intent. In this connection, learned counsel
submitted that from a bare reading of the definition of “dry
crop lands” in Explanation I(e) it was clear that the said
definition stood in two parts, namely, (i) “land other than the
land specified in paragraphs (a) to (c) and” (ii) “grass land”.
Thus, according to the learned counsel, the first part of the
definition included all lands other than those specified in
paragraphs (a) to (c) provided they fall under the definition
of land under Section 2(17). According to the learned
counsel, the reason why “grass land” had to be separately
defined in clause (e) was because under the proviso to
Section 5 a further distinction was made between grass land
included within “dry crop land” and other barren/desert/
drought-prone areas which also fell within “dry crop land”.
Further, according to the learned counsel, under clause (f)
to the said Explanation under Section 2(6), “grass land” and
424
A
B
C
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A not all “dry crop lands” were deemed to be rice lands in
certain situations which also necessitated a separate
definition of grass lands. Finally, learned counsel submitted
that once bid lands fall within the ambit of the Agricultural
Ceiling Act by virtue of the specific inclusion of all bid lands
B in Section 2(17), the ambit of inclusion should not be read
down by reference to the classification under Section 2(6)
of the 1960 Act.
6. For deciding this matter, we quote hereinbelow
Section 2(6) of 1960 Act (unamended) in juxtaposition with
C the 1960 Act (as amended by the Amending Act 2 of 1974):
“Gujarat Agricultural Lands Ceiling Act, 1960
D
D
Unamended Act (Pre –
1974)
Amended Act (Post – 1974)
(Inserted by Guj. 2 of 1974)
2. Definitions- In this Act, 2. Definitions- In this Act,
unless the context requires unless the context requires
otherwiseotherwiseE
F
E
F
G
G
H
H
(6) “class of land” means (6)“class of land” means any
any of the following classes of the following classes of
land, that is to say:of land, that is to say :(i) perennially irrigated land; (i) perennially irrigated land;
(ii) seasonally irrigated land; (ii) seasonally irrigated land;
(iii) superior dry crop land;
(iii) dry crop land;
(iv) dry crop land;
(iv) rice land;
Explanation—For the
purpose of this Act-
Explanation I–For the purpose
of this Act –
(d) rice land means rice land
situated in a local area
where the average rainfall is
not less than 35 inches a
year, such average being
(d) “rice land” means land
which is situated in a local
area where the average
rainfall is not less than 89
centimeters a year such
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT [S.H. KAPADIA, CJI.]
calculated on the basis of
the rainfall in that area
during the five years
immediately preceding the
year 1959 but does not
include perennially or
seasonally irrigated land
used for the cultivation of
rice;
425
average being calculated on
the basis of rainfall in that area
during the five years
immediately preceding the
year 1959 and which is used
for the cultivation of rice or
which, in the opinion of the
State Government, is fit for
the cultivation of rice but
does not include perennial or
seasonally irrigated land used
for the cultivation of rice;
(e) “dry crop land” means
land other than perennially or
seasonally irrigated or rice
land and includes grass
land, that is to say, land
which abounds in grass
grown naturally and which is
capable of being used for
agricultural purposes;
(e) “dry crop land” means land
other than the land specified in
paragraphs (a) to (c) and
grass land, that is to say,
land which abounds in grass
grown naturally and which is
capable of being used for
agricultural purposes;
(f) grass land referred to in
paragraph
(e)
shall,
notwithstanding anything
contained in that paragraph,
be deemed to be rice land,
if, is it situated in a local
area referred to in clause (d)
and in the opinion of the
State Government it is fit for
the cultivation of rice.”
(f) “grass land” referred to in
paragraph
(e)
shall,
notwithstanding anything
contained in that paragraph,
be deemed to be rice land if
it is situated in a local area
referred to in paragraph (d)
and in the opinion of the State
Government it is fit for the
cultivation of rice;”
426
A
A
SUPREME COURT REPORTS
[2010] 11 S.C.R.
7. We also quote hereinbelow the relevant provisions of
Section 2(17) of the 1960 Act (Post-1974) which reads as
follows:
“2(17) “land” means-
B
B
C
C
(i) in relation to any period prior to the specified date,
land which is used or capable of being used for
agricultural purpose and includes the sites of farm
buildings appurtenant to such land;
(ii) in relation to any other period, land which is used
or capable of being used for agricultural purposes, and
includes –
(b) the lands on which grass grows naturally;
D
D
E
E
(c) the bid lands held by the Girasdars or Barkhalidars
under the Saurashtra Land Reforms Act, 1951 (Sau. Act
XXV of 1951), the Saurashtra Barkhali Abolition Act,
1951 (Sau. Act XXVI of 1951), or the Saurashtra
Estates Acquisition Act, 1952 (Sau. Act III of 1952), as
the case may be.”
8. We also quote hereinbelow Section 5 of the 1960 Act
(Post-1974) with the proviso which was not there prior to the
amendment:
F
G
H
F
G
H
“5. - Ceiling areas
(1) Subject to the provisions of sub-sections (2) and (3),
in relation to each class of local area as specified in
Schedule I, the ceiling area with reference to each class
of land shall be as specified in the said schedule
against the respective class of local area;
Provided that in areas which in the opinion of the
State Government are desert or hill areas of droughtprone areas and which are specified by the State
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT [S.H. KAPADIA, CJI.]
427
Government from time to time, by notification in the
Official Gazette, as such areas, the ceiling area with
reference to dry crop land shall be such area as is
twelve and a half percent more than the ceiling area as
specified with reference to dry crops land against the
class of local area in which the said areas fall, provided
however that such ceiling area shall in no case exceed
an area of 21.85 hectares (54 acres), and for the
purpose of determining whether any area is a desert or
hill area or a drought-prone area, regard shall be had
to the soil classification of the land, the climate and
rainfall of the area, the extent of irrigation facilities in the
area, the average yield of crop and the agricultural
resources of the area, the general economic conditions
prevalent therein and such other factors.
428
A
A
SUPREME COURT REPORTS
[2010] 11 S.C.R.
or, as the case may be, fraction of such ceiling area;
(ii) the multiple or fraction so expressed in the case of
each of the local areas shall be added together:
B
B
(iii) the person shall be deemed to hold land less than
equal to, or more than, the ceiling area according as the
sum total of the multiples and fractions under clause (ii)
is less than equal to, or more than one”
(emphasis supplied)
C
C
(2) Where a person holds land consisting of different
classes in the same class of local area, then for
determining the question whether the total land held by
him is less than, equal to, or more than, the ceiling area,
the acreage of each class of land held by such person
shall be converted into the acreage of dry crop land on
the basis of the proportion which the ceiling area for the
class of land to be so converted bears to the ceiling
area for dry crop land.
D
D
E
E
(3) Where a person holds, lands, whether consisting of
different classes of land or not, in different classes of
local areas, the question whether the total land held by
him is less than, equal to, or more than, the ceiling area,
shall be determined as follows, that is to say—
F
F
(i) the acreage of each class of land held by the person
in each class of local area shall be first converted into
the acreage of dry crop land in that local area in
accordance with sub-section (2) and the total acreage
so arrived at shall be expressed in terms of a multiple
G
G
H
H
9. The short question which is inborn in this batch of
cases concerns applicability of the Gujarat Agricultural Lands
Ceiling Amendment Act, 1972 which came into force w.e.f.
1.4.1976 to the “bid lands”. It is the case of the appellants
before us that the “bid lands” of the appellants do not fall
within the definition of “dry crop land” under Explanation I(e)
to Section 2(6) of the 1960 Act principally because the said
definition under the unamended Act included grass lands, that
is to say, lands which “abounds in grass grown naturally and
which is capable of being used for agricultural purposes”.
According to the appellants, in the amended Act, through
over-sight, the word “includes” in Explanation I(e), which
defines “dry crop land” stood omitted and, therefore, this
Court could always fill in the omission by reading the word
“includes” in the said clause. According to the appellants, the
legislative intent behind enacting clause (e) of Explanation I
was to include only cultivable lands in the definition of “dry
crop lands” as the ultimate object of the 1960 Act is to fix
a ceiling on lands held for agricultural purpose and
consequently “bid lands” which are uncultivable waste lands
cannot be included in Explanation I(e). We find no merit in
this argument. The definition of “land” is specifically amended
by the Amendment Act 2 of 1974 to include “bid lands” of
Girasdars or Barkhalidars in Section 2(17)(ii)(c). The
Statement of Objects and Reasons of the Amending Act
also makes it clear that there was a specific legislative intent
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT [S.H. KAPADIA, CJI.]
429
of including “bid lands” of Girasdars or Barkhalidars within
the definition of “land”. This inclusion does not make any
distinction between cultivable and uncultivable bid lands. The
insertion of bid lands in Section 2(17) is without any such
qualification. Therefore, this specific intent of the Legislature
must be given its full meaning. If the argument of the
appellants is to be accepted, it would defeat the very
purpose of the 1960 Act because in that event a holder
could hold lands to an unlimited extent by including waste
lands in drought-prone areas, hill areas and waste lands
within their holdings. There is one more reason for not
accepting the argument of the appellants. The subject lands
survived acquisition under the 1952 Act only because they
were “bid lands” which by definition under those Acts were
treated as lands being used by the Girasdars for grazing
cattle (see Section 2(a) of the 1952 Act). Now, under the
present Ceiling Act, Section 2(1) defines the use of land for
the purpose of grazing cattle as an agricultural purpose.
Thus, “bid lands” fall under Section 2(1) of the Ceiling Act.
This is one more reason for coming to the conclusion that
the Ceiling Act as amended applies to “bid lands”. It is also
important to note that under Section 5(1) of the 1952 Act all
lands saved from acquisition had to be “bid lands” which by
definition under Section 2(a) of the 1952 Act were the lands
being used by a Girasdar or a Barkhalidar for grazing cattle
or for cutting grass. If the lands in question were put to any
other use, they were liable to acquisition under Section 5(2).
Because the subject lands were used for grazing cattle, they
got saved under the 1952 Act and, therefore, it is now not
open to the appellants to contend that the subject lands are
not capable of being used for agricultural purpose.
430
A
B
C
D
E
F
G
10. Now, coming to the question of interpretation of the
definition of the words “dry crop land” in Explanation I(e), one
finds that the definition has two parts, namely, (i) “land other
than the land specified in paragraphs (a) to (c)” and (ii)
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A “grass land”. Thus, the first part includes all lands other than
those specified in paragraphs (a) to (c). Therefore, once the
subject land falls in the first part of definition of the word “dry
crop land” which land comes under Section 2(17) and which
falls outside paragraphs (a) to (c) then such lands would fall
B within the definition of the words “dry crop land”. Further,
there are two reasons why “grass land” stood separately
defined in Explanation I(e). Firstly, under the proviso to
Section 5, which is also inserted by the Amending Act, a
distinction is made between “grass lands” included within
C “dry crop land” and “grass lands” falling in the desert or hill
areas of drought-prone areas for fixing the ceiling of dry crop
land in those areas. Secondly, under clause (f) to Explanation
I, “grass land” and not all “dry crop land” is deemed to be
rice land in certain situations. The proviso to Section 5 itself
makes it clear that by the Amending Act of 1974 the
D
Legislature was placing a ceiling even on desert and hill
areas. The proviso inter alia states that the ceiling limit with
reference to “dry crop land” shall be 12 ½ per cent more
than that specified in the Schedule which makes it clear that
the Legislature intended to include even desert and hills in
E drought-prone areas within the definition of “dry crop land”.
Once such lands are used for grazing of cattle, Section 2(1)
of the Ceiling Act would kick in and consequently the “bid
lands” would stand covered by the Ceiling Act. The definition
of “dry crop land” under Section 2(6) is relevant for the
F purpose of ascertaining the extent of ceiling limit under
Schedule I. It is important to note that the subject lands got
saved from acquisition under the 1952 Act only because the
appellants were the holders of “bid lands” which were put to
use for grazing of cattle or cutting of grass. It is these very
G lands which are now sought to be covered by the 1960 Act,
as amended.
11. We also do not find any merit in the argument
advanced on behalf of the appellants that the Legislature
H
H
NAGBHAI NAJBHAI KHACKAR v. STATE OF
GUJARAT [S.H. KAPADIA, CJI.]
431
unwittingly through over-sight left out the word “includes” in
the definition of “dry crop land” in Explanation I(e). If one
looks at the Pre-1974 Act under Section 2(6) which defined
“class of land”, it covered four items, namely, perennially
irrigated land, seasonally irrigated land, dry crop land and
rice land, whereas under the Post-1974 Act, rice land has
been deleted from the “class of land”. Under the Pre-1974
Act, “dry crop land” was defined by clause (e) of Explanation
to mean “land other than perennially or seasonally irrigated
or dry crop land or rice land” and it included “grass land”,
whereas under Post-1974 Act, not only the word “includes”
but even the words “rice land” do not find place in the
definition of “dry crop land” in clause (e) of Explanation I. One
of the reasons for this structural change is indicated by the
judgment of the Gujarat High Court in the case of Krishnadas
Vithaldas Sanjanwala v. The State of Gujarat and Ors.
[(1966) 7 GLR 244] in which it has been laid down that
ordinarily “grass lands” would be “dry crop lands” within the
meaning of clause (e) of Explanation to Section 2(6) of Pre1974 Act as the definition of “dry crop land” included “grass
land”, however, in a given case the Tribunal could promote
the grass land by declaring it to be a rice land falling under
Section 2(6)(iv) (see Explanation I(f) to Section 2(6) of the
Pre-1974 Act). According to the said decision, which has
been consistently followed thereafter, “grass land” of the kind
mentioned in clause (e) could be promoted to the category
of rice land if the Tribunal found that such grass land was
situated in a local area referred to in clause (d) and if in the
opinion of the State Government such land was found fit for
cultivation of rice. Therefore, the promotion of the grass land
to the category of rice land, according to the said decision
of the High Court, was dependent upon an objective fact
which was justiciable and the determination of a subjective
fact by the State Government. Consequently, clause (d) and
clause (e) of the Post-1974 Act are drastically different from
the structure of the said clauses in the Pre-1974 Act. There
is no merit, therefore, in the contention advanced on behalf
432
A
B
D
E
F
G
H
[2010] 11 S.C.R.
A of the appellants that the Legislature had through over-sight
omitted the word “includes” from Explanation I(e).
B
12. For the afore-stated reasons, we find no merit in this
batch of cases. Accordingly, the same are dismissed with
no order as to costs.
B.B.B.
C
SUPREME COURT REPORTS
Appeal dismissed.
434
[2010] 11 S.C.R. 433
RAM NARESH
v.
STATE OF U.P.
(Criminal Appeal No. 231 of 2004)
SEPTEMBER 9, 2010
A
B
A
B
[HARJIT SINGH BEDI AND CHANDRAMAULI KR.
PRASAD, JJ.]
SUPREME COURT REPORTS
[2010] 11 S.C.R.
From the Judgment & Order dated 19.11.2002 of the High
Cour of Allahabad, Lucknow Bench Lucknow in Criminal
Appeal No. 529 of 1989.
Anurag Kishore, Somna Dhown and Vishwajit Singh for
the Appellant.
Sandeep Singh. G.V. Rao, Irshad Ahmad, Abhishek
Choudhury and Manoj Kumar Dwivedi for the Respondent.
The following Order of the Court was delivered
Penal Code, 1860:
C
s.307 – Attempt to murder – Accused shot at the victim
– Conviction and sentence of five years RI – Pleas of delay
in lodging the FIR and related witnesses – Rejected – HELD:
There is no substantial delay in lodging the FIR – Incident
happened late in the evening in a village about 9 km away
from the police station and it would have been difficult for the
complainant living in a backward area to rush to the police
station immediately – There is also no reason to disregard
the evidence of PWs – It must also be borne in mind that the
incident happened in the year 1978 and the evidence was
recorded in the year 1986 – Some discrepancies are,
therefore, bound to appear in the ocular evidence as memory
fades with the passage of time – Though the doctor has
deposed that from a look at the injury it could not be said with
certainty that it was a fire arm injury, in the light of ocular
evidence, however, the opinion of the doctor cannot stand in
the way of the prosecution – However, keeping in view the fact
that the incident had happened 32 years ago, the sentence
is reduced from five years to three years – Delay in lodging
FIR – Evidence – Variance in medical evidence and oral
testimony – Sentence/Sentencing.
D
ORDER
1. This appeal is directed against the judgment and order
of the High Court of Judicature at Allahabad whereby the
appellant stands convicted for an offence punishable under
D Section 307 of the Indian Penal Code and sentenced to
rigorous imprisonment for five years.
2. The facts of the case are as under:
E
F
G
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 231 of 2004.
433
C
H
2.1 On 11th August, 1978, as Ram Vilas PW 1, and his
E brother Shiv Vilas were returning home after visiting the temple
about half a kilometre away from the village, they were waylaid
by the appellant Ram Naresh and his father Jagannath (since
expired). Jagannath was carrying a country made revolver
whereas the appellant was armed with a single barrel shot gun.
F Jaganath exhorted the appellant that as Shiv Vilas was always
coming in their way he should be killed. The appellant
thereupon fired one shot at Ram Vilas which hit him on the
head. The firing also attracted P.Ws2 and 3 to the spot. The
next morning Ram Vilas along with the injured Shiv Vilas went
G to Police Station, Makhi and a First Information Report was
lodged for an offence punishale under Sections 307/34 IPC.
On the completion of the investigation the accused were
charged for the above offences. The trial court and the High
Court have relied on the evidence of Ram Vilas P.W. 1 and
H
RAM NARESH v. STATE OF U.P.
435
Lalu P.W. 3 as eye witnesses of the occurrence, Shiv Vilas, in
the meanwhile, having been murdered in some other incident.
3. Before the trial court as well the High Court, the primary
argument made on behalf of the accused was that there was
an inordinate and unexplained delay in the lodging of the FIR,
that the evidence of the eye witnesses who were closely related
to the injured was discrepant in material particulars, and that
the medical evidence did not support the ocular evidence.
These submissions have been rejected by both the courts
below. Before us, today, Mr. Anurag Kishore, the learned
counsel for the appellant has reiterated the same arguments.
We find from a reading of the evidence that there is no
substantial delay in the lodging of the FIR. The incident
happened in a village about 9 kms. away from the police station
late in the evening and it would have been difficult for the
complainant living in rustic and backward area to rush to the
police station immediately. We also find no reason to disregard
the evidence of Ram Vilas and Lalu, PWs. Admittedly, Ram
Vilas was a brother of Shiv Vilas, the injured and Lalu was a
close relative and also a party man. It must also be borne in
mind that the incident happened in the year 1978 and the
evidence was recorded in the year 1986. Some discrepancies
are therefore bound to appear in the ocular evidence as
memory fades with the passage of time.
4. We have also gone through the evidence of Dr. J.N.
Bajpai, P.W. 5. He deposed that from a look at the injury
caused to Shiv Vilas it could not be said with certainity that it
was a fire arm injury. In the light of the ocular evidence, however,
we find that the opinion of the doctor can in no way stand in
the way of the prosecution. Mr. Kishore has also attempted to
argue that as the shot had been fired at Shiv Vilas from a
distance of four feet the entry wound would have blackening and
charring thereon. It is true that had the shot gun been fired from
that distance, blackening and charring would have been visible
but the four steps (kadams) that have been referred to by Mr.
436
A
B
C
D
F
G
H
[2010] 11 S.C.R.
A Kishore is not four feet but about 20 feet as a kadam CRL.A.
No. 231 of 2004 5 REPORTABLE would be about four to five
feet. In this view of the matter, the fact that there was no
blackening or charring around the wound does not in any
manner help the defence.
B
5. It has been finally submitted by Mr. Kishore that as the
incident had happened in the year 1978 and as 32 years had
passed on some reduction in the sentence may be considered.
We find merit in this plea. We, accordingly, reduce the sentence
of the appellant from five to three years.
C
6. With this modification in the sentence, the appeal is
dismissed.
7. Appellant be taken into custody forthwith to serve out
the remaining period of his sentence.
R.P.
E
SUPREME COURT REPORTS
Appeal dismissed.
[2010] 11 S.C.R. 437
M/S. TECHNO SHARES & STOCKS LTD.
v.
THE COMMISSIONER OF INCOME TAX IV
(Civil Appeal Nos. 7780-7781 of 2010)
SEPTEMBER 9, 2010
438
A
B
[S.H. KAPADIA, CJI AND K.S. PANICKER
RADHAKRISHNAN, J.]
Income Tax Act,1961 – 32(1)(ii) – Depreciation under –
Whether permissible on the cost of a Stock Exchange
Membership Card – Held: As per Bombay Stock Exchange
Rules, membership right is a ‘Business or Commercial Right’
– Therefore, depreciation is allowable on the cost of a Stock
Exchange Membership Card – Bombay Stock Exchange
Rules – Rules 5 to 10 and 16 – Bombay stock exchange ByeLaws–Bye-law 400.
The question which arose for consideration in the
instant appeals was whether depreciation u/s. 32(1)(ii) of
Income Tax Act, 1961 is allowable on the cost of a Stock
Exchange Membership Card.
437
[2010] 11 S.C.R.
A defaulting member to the Exchange, Clearing House, etc.
It is this right of membership which allows the nondefaulting member to participate in the trading session
on the floor of the Exchange. Thus, the said membership
right is a “business or commercial right” conferred by the
B Rules of BSE on the non-defaulting continuing member.
[Paras 18 and 25] [458-C; 453-G-H; 454-A]
C
C
D
D
E
E
F
F
G
G
H
H
Allowing the appeals, the Court
HELD: 1.1 On the facts and circumstances of the
instant cases, the Tribunal was right in holding that
depreciation was allowable on the cost of the Stock
Exchange Membership Card u/s. 32(1)(ii) of the Income
Tax Act, 1961. On the analysis of the Rules of BSE, it is
clear that the right of membership (including right of
nomination) gets vested in the Exchange on the demise/
default committed by the member; that, on such forfeiture
and vesting in the Exchange, the same gets disposed of
by inviting offers and the consideration received thereof
is used to liquidate the dues owed by the former/
SUPREME COURT REPORTS
1.2 Rules 5 to 10 and 16 of BSE Rules and the Byelaw 400 of BSE indicate that the right of membership
(including the right of nomination) vests in the Exchange
only when a member commits default. Otherwise, he
continues to participate in the trading session on the
floor of the Exchange; that he continues to deal with
other members of the Exchange and even has the right
to nominate subject to compliance of the Rules. By virtue
of Explanation 3 to Section 32(1)(ii), the commercial or
business right which is similar to a “licence” or
“franchise” is declared to be an intangible asset.
Moreover, u/r. 5 membership is a personal permission
from the Exchange which is nothing but a “licence”
which enables the member to exercise rights and
privileges attached thereto. It is this licence which
enables the member to trade on the floor of the Exchange
and to participate in the trading session on the floor of
the Exchange. It is this licence which enables the member
to access the market. Therefore, the right of membership,
which includes right of nomination, is a “licence” or “akin
to a licence” which is one of the items which falls in
Section 32(1)(ii) of the 1961 Act. The right to participate
in the market has an economic and money value. It is an
expense incurred by the assessee which satisfies the test
of being a “licence” or “any other business or commercial
right of similar nature” in terms of Section 32(1)(ii). [Para
19] [453-C-G]
Vinay Bubna v. Stock Exchange, Mumbai (1999) 6 SCC
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 439
OF INCOME TAX IV
215; Stock Exchange, Ahmedabad v. Assistant
Commissioner of Income-Tax (2001) 248 ITR 209 – relied
on.
440
A
2. The instant judgment is strictly confined to the
right of membership conferred upon the member under B
the BSE membership card during the relevant
assessment years. The judgment should not be
understood to mean that every business or commercial
right would constitute a “licence” or a “franchise” in
terms of Section 32(1)(ii) of the 1961 Act. [Para 24] [457C
F-G; 458-A]
A
B
Relied on.
Para 20
(2001) 248 ITR 209
Relied on.
Para 20
D
C
D
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7780-7781 of 2010.
From the Judgment & Order dated 11.09.2009 of the
High Court of Judicature at Bombay in Income Tax Appeal No. E
1333 of 2009.
E
WITH
C.A. Nos. 7782, 7783-7785, 7786-7788, 7789, 7790- F
7791, 7792, 7793-7794, 7795-7798, 7799-7802, 7803-7804,
7805, 7806-7809, 7810-7812, 7813-7814, 7815-7816, 78177818, 7819-7822, 7823-7824, 7825-7827, 7828, 7829-7830,
7831, 7832, 7833-7835, 7836-7839, 7840-7842, 7843-7844,
7845, 7846, 7847-7848, 7849, 7850, 7851, 7852, 7853-7855,
G
7856-7858, 7859-7861, 7862-7864, 7865-7866, 7867-7870,
7871, 7872, 7873-7875, 7876-7878, 7879, 7880, 7881-7882.
7883-7884, 7885-7886, 7887-7889, 7890, 7891-7892 of 2010
& 35600 of 2009.
R.P.Bhatt, S. Ganesh, Jatin Zaveri, Vimal Chandra S.
H
[2010] 11 S.C.R.
Dave, F.V. Irani, Rustom B. Hathikhanawala, Pramod B.
Agarwala, Abhishek Baid, Praveena Gautam, Mukul Gupta,
Arijit Prasad, B.V. Balaram Das, U.A. Rana, Mrinal Majumdar,
Devina Sehgal (for Gagrat & Co.), Kunal Chatterjee, Partha Sil
for the appearing parties.
The Judgment of the Court was delivered by
S.H. KAPADIA, CJI 1. Leave granted.
Case Law Reference:
(1999) 6 SCC 215
SUPREME COURT REPORTS
F
G
H
2. In this batch of cases the question which arises for
determination is: whether BSE Membership Card can be
considered an intangible asset for the purpose of depreciation
under Section 32(1)(ii) of the Income Tax Act, 1961 (for short
“the 1961 Act”)?
Facts in M/s Techno Shares & Stocks Ltd. [Lead matter]
3. In this case, we are concerned with the Assessment
Years 1999-2000, 2000-2001, 2001-2002 and 2002-2003.
The assessee company filed its Return of income for the
Assessment Year 1999-2000 disclosing a loss of Rs.
10,77,276/-. The return was processed under Section 143(1)
on November 8, 2000. The case stood reopened under Section
147 and Notice u/s 148 stood issued to the assessee on
16.7.2002. The assessee filed its return of income under
protest. The assessee filed its return of income pursuant to the
Notice u/s 148 once again declaring loss of Rs. 10,77,276/-,
the same as was in the original return of income. The main
reason for reopening of assessment under Section 147 was
the claim of depreciation by the assessee on BSE membership
card amounting to Rs. 23,65,000/-. The claim of depreciation
of the assessee was based on Section 32(1)(ii) which stood
inserted by Finance (No. 2) Act, 1998 w.e.f. 1.4.1999. However,
the said Section deals with claim for depreciation of items
acquired on or after 1.4.1998. The assessee claimed before
the A.O. that the BSE membership card is a “licence” or
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 441
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
“business or commercial right of similar nature” u/s 32(1)(ii) and
is, therefore, an intangible asset eligible for depreciation u/s
32(1)(ii) which submission was not accepted by the A.O. It was
held that membership is only a personal permission which is
non-transferable and which does not devolve automatically on
legal heirs and, therefore, it is not a privately owned asset. That,
there is no ownership of an asset and that what ultimately can
be sold is only a Right to Nomination. Further, according to the
A.O., in the case of BSE membership, there is no
obsolescence, wear and tear or diminution in value by its use,
hence, the assessee was not entitled to claim depreciation u/
s 32(1)(ii). This decision of the A.O. stood affirmed by C.I.T.
(A) in the appeal filed by the assessee.
4. Aggrieved by the said decision of CIT (A), the assessee
carried the matter in appeal to the Tribunal which took the view
that since the assessee had acquired a right to trade on the
floor of BSE through the membership card, it was not entitled
to depreciation u/s 32(1)(ii) of the 1961 Act. That, the said Card
is a capital asset through which right to trade on the floor of
BSE is acquired and since it is intangible asset the said
assessee was entitled to depreciation u/s 32(1)(ii).
5. Against the said decision, the Department carried the
matter in appeal to the High Court which came to the conclusion,
following certain decisions of this Court, that the BSE
membership card is only a personal privilege granted to a
member to trade in shares on the floor of the Stock Exchange;
that, such a privilege cannot be equated with the expression
“licence” or “any other business or commercial rights of similar
nature” u/s 32(1)(ii); that, there is a difference between
acquiring a know-how, patent, copyright or trademark and
acquiring a licence to use such know-how, patent, copyright,
trademark or franchise; that the expression “business or
commercial rights of similar nature” in Section 32(1)(ii) of the
1961 Act would take its colour from the preceding words,
namely, know-how, patent, copyright, trademark and franchise
442
A
B
C
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A which belong to a class of intellectual property rights and
applying the rule of ejusdem generis, the High Court held that
the expression “licence” as well as the expression “business
and commercial rights of similar nature” in Section 32(1)(ii) of
the 1961 Act are referable to IPRs such as know-how, patent,
B copyright, trademark and franchise and since the BSE
membership card does not fall in any of the above categories,
the claim for depreciation was not admissible on the BSE
membership card acquired by the assessee u/s 32(1)(ii).
Consequently, the appeals filed by the Department stood
C allowed, hence, these civil appeals.
Importance of BSE:
D
E
F
G
6. BSE is recognized by the Government of India under
Securities Contracts (Regulation) Act, 1956. Approximately
D 70000 deals are executed on a daily basis. There are about
3500 companies which are listed on BSE. The market
capitalization of the BSE is Rs. 5 trillion. The main aim and
object of the BSE is to provide a market place for the purchase
and sale of securities. It aims to promote, develop and maintain
E a well regulated market for dealing in securities and to
safeguard the interests of the members and the investing public
having dealings in the Exchange. It helps industrial development
of the country through resources mobilization. It is set up to
establish and promote “just practices” in securities transactions.
F In November, 1996, the BSE constituted a Trade Guarantee
Scheme under which all trades carried out on online trading are
guaranteed by the clearing house of BSE. Similarly, a
depository has been set up as a joint venture between BSE
and Bank of India etc. BSE has introduced trading also in fixed
income securities to give impetus to trading in debentures and
G
corporate debt instruments to increase trading in Government
owned securities.
Question arising in the Present Matters:
H
H
7. Is depreciation allowable on the cost of a Stock
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 443
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
Exchange Membership Card under Section 32(1)(ii) of the
Income Tax Act, 1961, which was enacted and inserted by
Finance (No. 2) Act, 1998?
444
A
A
Answer to the above Question:
8. To answer the above question, we need to quote
hereinbelow certain relevant provisions of the 1961 Act:
B
B
(i)
(ii)
any stock-in-trade, consumable stores or raw
materials held for the purposes of his
business or profession ;
personal effects, that is to say, movable
property (including wearing apparel and
furniture, but excluding jewellery) held for
personal use by the assessee or any
member of his family dependent on him.
C
C
D
D
E
E
F
F
32. (1) In respect of depreciation of—
..
(ii) know-how, patents, copyrights, trade marks, licences,
franchises or any other business or commercial rights of
similar nature, being intangible assets acquired on or after
the 1st day of April, 1998, owned, wholly or partly, by the
assessee and used for the purposes of the business or
profession, the following deductions shall be allowed—
Explanation 3.- For the purposes of this sub-section, the
expressions “assets” and “block of assets” shall mean-
(a) tangible assets, being buildings, machinery, plant or
furniture;
(b) intangible assets, being know-how, patents, copyrights,
trademarks, licences, franchises or any other business or
commercial rights of similar nature.
“Membership a Personal Privilege
Depreciation.
(i)
[2010] 11 S.C.R.
9. We also quote hereinbelow relevant Rules of Bombay
Stock Exchange Limited as they stood at the relevant time:
2. In this Act, unless the context otherwise requires,—
(14) “capital asset” means property of any kind held by an
assessee, whether or not connected with his business or
profession, but does not include—
SUPREME COURT REPORTS
5. The membership shall constitute a personal permission
from the Exchange to exercise the rights and privileges
attached thereto subject to the Rules, Bye-laws and
Regulations of the Exchange.
Right of Membership Inalienable
6. A member shall not assign, mortgage, pledge,
hypothecate or charge his right of membership or any
rights or privileges attached thereto and no such attempted
assignment, mortgage, pledge, hypothecation or charge
shall be effective as against the Exchange for any purpose
nor shall any right or interest in any membership other than
the personal right or interest of the member therein be
recognized by the Exchange. The Governing Board shall
expel any member of the Exchange who acts or attempts
to act in violation of the provisions of this Rule.
Right of Nomination
G
7. Subject to the provisions of these Rules a member shall
have
the right of nomination which shall be personal and nonG
transferable.
Right of Nomination of Deceased or Defaulter
Member
H
H
9. On the death or default of a member his right of
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 445
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
nomination shall cease and vest in the Exchange.
446
A
A
B
B
C
C
SUPREME COURT REPORTS
member or his heirs or the persons
mentioned in Appendix C to these Rules may
with the sanction of the Governing Board
nominate any person eligible under these
Rules for admission to membership of the
Exchange as a candidate for admission in
the place of the deceased member. In
considering such nomination the Governing
Board shall be guided so far as practicable
by the instructions set out in Appendix C to
these Rules.
Forfeited or Lapsed Right of Membership
10. When a right of membership is forfeited to or vest in
the Exchange under any Rule, Bye-law or Regulation of the
Exchange for the time being in force it shall belong
absolutely to the Exchange free of all rights, claims or
interest of such member or any person claiming through
such member and the Governing Board shall be entitled
to deal with or dispose of such right of membership as it
may think fit.
Nomination in case of Defaulter
Nomination by Member
(c)
11(a) A member of not less than three years’ standing
who desires to resign may nominate a person eligible
under these Rules, for admission to membership of the
Exchange as a candidate for admission in his place:
D
D
Provided that a member of less than three years’ standing
who desires to resign may with the sanction of the
Governing Board nominate his own son eligible under
these Rules for admission to membership of the
Exchange as a candidate for admission in his place;
E
E
Provided further that the Governing Board may, at its
absolute discretion and in exceptional cases and for
cogent reasons to be recorded in writing, permit by a
special resolution, a member of less than three years’
standing, who desires to resign, to nominate a person as
a candidate for admission in his place, subject to such
terms and conditions as the Governing Board may in its
absolute discretion think fit to impose.
***
The forfeited right of membership of a
defaulter shall be restored to him if he be readmitted as a member within six months from
the date of default but if an application by a
defaulter for re-admission be rejected by the
Governing Board or if no such application be
made within six months of the declaration of
default the Governing Board may at any time
exercise the right of nomination in respect of
such membership.
Dues and Claims
F
F
G
G
15. The Governing Board shall not approve a nomination
unless the nominating member or in the case of a
deceased member his legal representatives or heirs or
the persons mentioned in Appendix C to these Rules or
any other person on his behalf shall have paid and satisfied
in full.
Dues of the Exchange
*** ***
(i)
Nomination in Case of Deceased Member
(b)
[2010] 11 S.C.R.
The legal representatives of a deceased
H
H
Such subscriptions, debts, fines, fees,
charges and other monies as shall have
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 447
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
been determined by the Governing Board to
be due to the Exchange or the Clearing
House by the nominating or deceased
member; and
Liabilities relating to Contracts
(ii)
(iii)
Such debts, liabilities, obligations and claims
arising out of any contracts made by such
member subject to the Rules, Bye-laws and
Regulations of the Exchange as shall have
been admitted by the Governing Board; and
448
A
B
A
B
16. (1) When as provided in these Rules the Governing
Board has exercised the right of nomination in respect
of a membership vesting in the Exchange the
consideration received therefor shall be applied to the
following purposes and in the following order of priority,
namely-
C
C
D
D
E
E
Dues of Exchange and Clearing House
(i) first - the payment of such subscriptions, debts, fines,
fees, charges and other monies as shall have been
determined by the Governing Board to be due to the
Exchange, to the Clearing House or to the Trade
Guarantee Fund by the former member whose right of
membership vests in the Exchange.
by such former member subject to the Rules, Bye-laws and
Regulations of the Exchange as shall have been admitted
by the Governing Board:
Provided that if the amount available be insufficient to pay
and satisfy all such debts, liabilities, obligations and claims
in full they shall be paid and satisfied pro rata, and
(iii) third - the payment of the surplus, if any, to the funds
of the Exchange: provided that the exchange in general
meeting may at its absolute discretion direct that such
surplus be disposed of or applied in such other manner
as it may deem fit.
(2) The provisions of clause (1) of this Rule shall not apply
in cases where the Governing Board has exercised the
right of nomination in respect of a membership which has
vested in the Exchange upon a member having been
declared a defaulter on or subsequent to such date as the
Governing Board may specify in this behalf.
Application of Consideration
16A When the Governing Board has exercised the right
of nomination in respect of a membership which
has vested in the Exchange upon a member
having been declared a defaulter on or subsequent
to the date to be specified by the Governing Board
as referred to in clause (2) of Rule 16, the
consideration received therefor shall be paid by the
Governing Board to the Defaulters’ Committee to
be applied for the purposes and in the order of
priority specified in the Bye-laws and the
Regulations of the Exchange.
F
F
G
G
H
10. We also quote hereinbelow Bye-law 400 of BSE,
H which reads as under:
Liabilities relating to Contracts
(ii) second-the payment of such debts, liabilities,
obligations and claims arising out of any contracts made
[2010] 11 S.C.R.
Surplus
all amounts due or payable by the nominating
or deceased member to the Trade
Guarantee Fund.
Allocation in Order of Priority
SUPREME COURT REPORTS
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 449
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
“Application of Defaulters’ Assets and Other
Amounts
400. Subject to the provisions of Bye-law 398, the
Defaulters’ Committee shall realise and apply all the
money, rights and assets of the defaulter which have
vested in or which have been received by the Defaulters’
Committee (other than the amount paid by the Governing
Board to the Defaulters’ Committee pursuant to Rule 16A
in respect of the consideration received by the Governing
Board for exercising the right of nomination in respect of
the defaulter’s erstwhile right of membership) and all other
assets and money of the defaulter in the Exchange or the
market including the money and securities receivable by
him from any other member, money and securities of the
defaulter lying with the Clearing House or the Exchange,
credit balances lying in the Clearing House, security
deposits, any bank guarantees furnished on behalf of the
defaulter, fixed deposit receipts discharged or assigned
to or in favour of the Exchange,
Base / Additional Capital deposited with the Exchange by
the defaulter, any security created or agreed to be created
by the defaulter or any other person in favour of the
Exchange or the Defaulters’ Committee for the obligations
of the defaulter to the following purposes and in the
following order of priority , viz.:-
450
A
A
B
B
C
C
D
D
E
E
F
F
G
G
(i) First - to make any payments required to be made under
Bye-law 391 and 394;
(ii) Second - the payment of such subscriptions, debts,
fines, fees, charges and other money as shall have been
determined by the Defaulters’ Committee to be due to the
Securities and Exchange Board of India, to the Exchange
or to the Clearing House by the defaulter;
(iii) Third - the rectification or replacement of or
SUPREME COURT REPORTS
[2010] 11 S.C.R.
compensation for any bad deliveries made by or on behalf
of the defaulter to any other member in the settlement in
which the defaulter has been declared a defaulter or in any
prior or subsequent settlement (unless the Governing
Board has otherwise determined in respect of such
settlement or settlements under Bye-law 394) provided the
conditions of Bye-law 153 and all other applicable Rules,
Bye-Laws and Regulations and instruc- tions of the
Governing Board are complied with;
(iv) Fourth - the balance, if any, shall be paid into the Fund
to the extent of the money paid out of the Fund (other than
payments made out of Members’ refundable contributions)
and not recovered by the Fund and the interest payable
by the defaulter to the Fund in respect thereof;
(v) Fifth - the balance, if any, shall be paid into the Fund to
the extent of the money paid out of the Fund out of the
refundable contributions of members (other than the
refundable contribution of the defaulter) and not recovered
by the Fund and the interest payable by the defaulter to
the Fund in respect thereof;
(vi) Sixth - subject to the Rules, Bye-Laws and Regulation
of the Exchange, including in particular Bye-Law 343, the
balance, if any, shall be applied by the Defaulters’
Committee for the payment of such unpaid outstandings,
debts, liabilities, obligations and claims to or of members
of the Exchange arising out of any contracts made by the
defaulter with such members subject to the Rules, Byelaws and Regulations of the Exchange as shall have been
admitted by the Defaulters’ Committee; provided that if the
amount available be insufficient to pay and satisfy all such
debts, liabilities, obligations and claims in full they shall be
paid and satisfied pro rata;
(vii) Seventh - subject to the Rules, Bye-Laws and
H
H
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 451
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
Regulation of the Exchange, including in particular ByeLaw 343, the balance, if any, shall be applied by the
Defaulters’ Committee for the payment of such unpaid
debts, liabilities, obligations and claims to or of the
defaulter’s constituents arising out of any contracts made
by such defaulter subject to the Rules, Bye-laws and
Regulations of the Exchange as shall have been admitted
by the Governing Board; provided that if the amount
available be insufficient to pay and satisfy all such debts,
liabilities, obligations and claims in full they shall be paid
and satisfied pro rata;
452
A
B
C
(viii) Eighth - the balance, if any, shall be paid into the
Exchange’s Customers’ Protection Fund to the extent of
any and all amounts paid out of the Customers’ Protection
Fund towards the obligations or liabilities of the defaulter
and interest thereon at the rate of 2.5% per month (or such
other rate as the Governing Board may specify) from the
date of payment out of the Customers’ Protection Fund to
the date of repayment to the Fund; and
D
(ix) Ninth - the surplus, if any, shall be paid to the defaulter.
E
Clarification: It is clarified that this Bye-law 400 does not
apply to the amount paid by the Governing Board to the
Defaulters’ Committee pursuant to Rule 16A in respect of
the consideration received by the Governing Board for
exercising the right of nomination in respect of the
defaulter’s erstwhile right of membership as the same does
not belong to the defaulter and the defaulter has no claim,
right, title or interest therein.”
11. At the outset we wish to clarify that our present
judgment is confined to the Rules and Bye-laws of BSE, as they
stood during the relevant assessment years.
12. Section 32 of the 1961 Act provides for a deduction
of allowance being made in respect of depreciation of building,
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A machinery, plant or furniture, being a tangible asset. Vide
Finance (No.2) Act, 1998, the Parliament thought it fit to extend
the benefit of depreciation also to intangible assets enumerated
in Section 32(1)(ii) in respect of know-how, patents, copyrights,
trade marks, licences, franchises or any other business or
B commercial rights of similar nature, being intangible assets
acquired on or after 1st April, 1998. In the lead matter, the
assessee bought the membership card of BSE for Rs. 95 lakhs.
In the case of M/s. HDFC Securities Ltd. v. The Commissioner
of Income Tax-4 (Civil Appeal arising out of SLP (C) Nos.
5656-5657 of 2010), the assessee bought the membership
C
card of BSE for Rs. 2.80 crores.
13. Appellant before us claims that the membership card
enables him to trade on the floor of BSE and, consequently, it
is a business or commercial right in the nature of a licence
D under Section 32(1)(ii). On the other hand, it is the case of the
Department that membership is a personal privilege; that it is
not an asset; that it is not owned by the assessee, therefore,
the claim of the assessee for depreciation was not admissible
under Section 32(1)(ii).
E
14. To decide the above controversy, we need to examine
the Rules of BSE.
15. Rule 5, quoted above, states that membership shall
constitute a personal permission from the Exchange to
F exercise the rights and privileges attached thereto. Rule 6 inter
alia states that membership shall not be alienable. Rule 7
confers right of nomination on the member of the Exchange.
However, that Rule clarifies that although a member has a right
of nomination, such right shall be personal and non-transferable.
G Rule 9 inter alia states that on the demise or default of a
member the said right of nomination shall cease and vest in
the Exchange. Rule 10 refers to forfeited or lapsed right of
membership. It inter alia states that when a right of membership
is forfeited to or when such right vests in the Exchange under
H any Rule or Bye-law, it shall belong absolutely to the Exchange
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 453
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
free of all rights, claims or interests of such member or any
person claiming through such member and the Governing Board
alone shall be entitled to deal with or dispose of such right of
membership as it may think fit. Rule 15 inter alia states that the
Governing Board shall not approve a nomination unless the
nominating member or in the case of a deceased member his
legal representatives satisfy in full all dues of the Exchange; all
liabilities relating to contracts and all amounts due and payable
to the Trade Guarantee Fund. Rule 16 deals with allocation in
the Order of Priority. It inter alia states that when the Board has
exercised the right of nomination in respect of a membership
vesting in the Exchange the consideration received thereof shall
be applied to the specified purposes.
16. On reading Rules 5 to 10 it becomes clear that the right
of nomination is conferred on the member of the Exchange; that,
the said right shall cease and vest in the Exchange when his
membership gets forfeited to the Exchange; that on such
forfeiture the right of membership gets vested in the Exchange
and on such vesting the Exchange has the right to deal with it
as it may think fit. That, on forfeiture even the right of nomination
vests in the Exchange. Thus, a non-defaulting continuing
member owns the right of nomination with respect to the
membership of the Exchange till his right of membership is
forfeited to the Exchange.
17. The question which we are required to examine is whether the right of nomination in the non-defaulting continuing
member comes within the expression “business or commercial
right of similar nature” in Section 32(1)(ii) of the 1961 Act?
18. On the analysis of the Rules of BSE, it is clear that the
right of membership (including right of nomination) gets vested
in the Exchange on the demise/ default committed by the
member; that, on such forfeiture and vesting in the Exchange
the same gets disposed of by inviting offers and the
consideration received thereof is used to liquidate the dues
owed by the former/ defaulting member to the Exchange,
454
A
B
[2010] 11 S.C.R.
A Clearing House, etc. [see Rule 16 and Bye-law 400]. It is this
right of membership which allows the non-defaulting member
to participate in the trading session on the floor of the
Exchange. Thus, the said membership right is a “business or
commercial right” conferred by the Rules of BSE on the nonB defaulting continuing member.
C
C
D
D
E
E
F
F
G
G
H
SUPREME COURT REPORTS
19. The next question is - whether the membership right
could be said to be owned by the assessee and used for the
business purpose in terms of Section 32(1)(ii). Our answer is
in the affirmative for the reason that the Rules and the Bye-laws
analysed hereinabove indicate that the right of membership
(including the right of nomination) vests in the Exchange only
when a member commits default. Otherwise, he continues to
participate in the trading session on the floor of the Exchange;
that he continues to deal with other members of the Exchange
and even has the right to nominate subject to compliance of
the Rules. Moreover, by virtue of Explanation 3 to Section
32(1)(ii) the commercial or business right which is similar to a
“licence” or “franchise” is declared to be an intangible asset.
Moreover, under Rule 5 membership is a personal permission
from the Exchange which is nothing but a “licence” which
enables the member to exercise rights and privileges attached
thereto. It is this licence which enables the member to trade on
the floor of the Exchange and to participate in the trading
session on the floor of the Exchange. It is this licence which
enables the member to access the market. Therefore, the right
of membership, which includes right of nomination, is a “licence”
or “akin to a licence” which is one of the items which falls in
Section 32(1)(ii) of the 1961 Act. The right to participate in the
market has an economic and money value. It is an expense
incurred by the assessee which satisfies the test of being a
“licence” or “any other business or commercial right of similar
nature” in terms of Section 32(1)(ii).
20. Since heavy reliance is placed by the Department on
the judgments of this Court in the following cases, we need to
H discuss those judgments and clarify the position in law:
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 455
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
(i)
Vinay Bubna v. Stock Exchange, Mumbai [(1999)
6 SCC 215]
(ii)
Stock Exchange, Ahmedabad v. Assistant
Commissioner of Income-Tax [(2001) 248 ITR
209]
21. In the case of Vinay Bubna (supra), one Yogesh Mehta
who was a member of BSE was declared a defaulter by the
Exchange. An amount of Rs. 21.81 crores was due and
payable by the defaulter to Vinay Bubna who had moved the
Bombay High Court by way of an arbitration petition against
Yogesh Mehta (defaulter). In the said proceedings, an
application was filed for appointing a court receiver. The High
Court did not grant to Vinay Bubna any relief in respect of the
membership card of the defaulter – member. In the said
proceedings, Rule 16 was challenged on the ground that
membership of BSE was an asset of the share-broker and on
its sale from the proceedings thereof payment should be made
to creditors like Vinay Bubna and proceeds should not be
allowed to be distributed by BSE in the manner indicated by
Rule 16. On behalf of the Stock Exchange, it was submitted that
after respondent No. 3, Yogesh Mehta stood declared to be a
defaulter he ceased to be the member of the Stock Exchange
whereupon his rights of membership vested in the Exchange
free of all rights, claims and interests and, therefore, the
Exchange was at liberty to invite applications from other
persons and to admit anyone who offers to pay the highest
amount. It was argued that the said proceeds so received did
not belong to the ex-member and the order of priority contained
in Rule 16 was just and fair and was not illegal, wrong or
arbitrary. The contention of the Stock Exchange was accepted
by this Court observing that when the defaulting member is
expelled from the Exchange no interest in his membership card
remains in himself and none can pass to his assignee. It was
held that once the membership ceases to be an asset of the
share-broker the question of Rule 16 being contrary to the
456
A
B
C
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A insolvency law does not arise. In our view, the judgment in
Vinay Bubna’s case supports our reasoning in this case. The
judgment in Vinay Bubna’s case clearly indicates that it was a
case dealing with the rights of a defaulting non-continuing
member. The judgment in Vinay Bubna’s case clearly indicates
B that membership card is an asset of a non-defaulting continuing
member. However, the membership card ceases to be an
asset only when the member commits a default in which event
the card vests in the Exchange free from all encumbrances and
once it so vests in the Exchange then the Exchange is free to
C allocate the consideration in the order of priority indicated by
Rule 16.
D
D
E
E
F
F
G
G
H
H
22. In the case of Stock Exchange, Ahmedabad (supra),
the question which arose for determination was whether after
the demise of a stock-broker could he be declared a defaulter
by the Exchange? In that case the facts were as follows.
Ahmedabad Stock Exchange (ASE) admitted Rajesh Shah as
its member on 19th February, 1988. He died on 7th February,
1994. On February 12, 1994, his legal representatives wrote
to the Stock Exchange that they were unable to meet the
liabilities of the deceased. Thereafter, the Governing Board of
ASE passed a resolution on 12th February, 1994 declaring
Rajesh Shah, the deceased member, as a “deemed defaulter”.
By the said resolution, the Board resolved that the membership
rights of the deceased member who was declared to be a
deemed defaulter should vest in the Stock Exchange and the
said membership rights be disposed of by inviting offers within
a minimum floor price of Rs. 25 lakhs. It is the said declaration
dated 12th February, 1994 by which Rajesh Shah was declared
to be a deemed defaulter came to be challenged. Another
interesting fact which needs to be mentioned was that on 15th
February, 1994 a provisional attachment order was passed
under Section 281B of the 1961 Act in respect of the
membership card in the name of Rajesh Shah. On 16th
February, 1994, the Stock Exchange issued advertisement
inviting claims from member creditors to lodge their claims
TECHNO SHARES & STOCKS LTD. v. COMMISSIONER 457
OF INCOME TAX IV [S.H. KAPADIA, CJI.]
within 30 days. They invited offers for purchase of membership
also within the minimum floor price of Rs. 25 lakhs. On 5th
December, 1994, ASE passed a resolution disposing of the
membership right of the deceased in favour of UTI Security Ltd.
for Rs. 27 lakhs. However, a garnishee notice was issued by
the Department under Section 226(3) of the 1961 Act in the
sum of Rs. 12.25 lakhs. That notice was addressed to the
Executive Director of the Stock Exchange by the Department.
Under the said circumstances, ASE filed a writ petition in the
High Court challenging the orders of provisional attachment as
well as the garnishee notice. The question for determination
which arose in the said judgment was as to the nature of the
rights of the deceased or his legal representatives in the
membership card. It was held by this Court, after examining the
Rules and the Bye-laws, that the right of nomination which earlier
vested in Rajesh Shah stood vested in the Exchange under the
Rules when he committed default. On default, that right vested
in the Stock Exchange absolutely and, therefore, the
consideration received by the Stock Exchange of Rs. 27 lakhs
from UTI Security Ltd. could not be attached by the Income Tax
Department because on vesting, such right of nomination
belonged to the Exchange absolutely.
458
[2010] 11 S.C.R.
A
A they stood at the relevant time. Our judgment should not be
understood to mean that every business or commercial right
would constitute a “licence” or a “franchise” in terms of Section
32(1)(ii) of the 1961 Act.
B
B
C
25. We answer the question at page 6 in the affirmative
by holding that on the facts and circumstances of these cases
the Tribunal was right in holding that depreciation was allowable
on the cost of the membership card under Section 32(1)(ii) of
C the 1961 Act. Accordingly, the impugned judgment(s) of the
Bombay High Court is set aside and the appeal(s) filed by the
nominated non-defaulting continuing member stands allowed
with no order as to costs.
D
E
23. For the afore-stated reasons, we are of the view that
both the afore-stated judgments support the reasoning given
by us hereinabove.
24. Before concluding, we wish to clarify that our present
judgment is strictly confined to the right of membership
conferred upon the member under the BSE membership card
during the relevant assessment years. We hold that the said
right of membership is a “business or commercial right” which
gives a non-defaulting continuing member a right to access the
Exchange and to participate therein and in that sense it is a
licence or akin to licence in terms of Section 32(1)(ii) of the
1961 Act. That, such a right vests in the Exchange only on
default/ demise in terms of the Rules and Bye-laws of BSE, as
SUPREME COURT REPORTS
F
G
H
Conclusion
K.K.T.
Appeals allowed.
[2010] 11 S.C.R. 459
SANGAPPA SANGANABASAPPA M. & ORS.
v.
STATE OF KARNATAKA & ORS.
(Criminal Appeal No. 436 of 2006)
SEPTEMBER 13, 2010
460
A
B
[B. SUDERSHAN REDDY AND SURINDER SINGH
NIJJAR, JJ.]
Penal Code, 1860:
C
s. 302/34 – Double murder – Seven persons prosecuted
for commission of offences punishable u/s 302/149 –
Acquittal by trial court – Conviction by High Court of 3 of the
accused u/s 302/34 – HELD: High Court is perfectly justified
in reversing the order of acquittal passed by trial court which
totally misread the evidence of eye-witnesses – Trial court
committed serious error in rejecting evidence of the eyewitnesses only on the basis that they were related to
deceased – High Court rightly held that their evidence, read
as a whole, ignoring minor contradictions and inconsistencies,
inspires confidence – Evidence – Testimony of related
witnesses.
The accused-appellants (A-1, A-2 and A-4) alongwith
four others were prosecuted for commission of offences
punishable u/ss. 148, 302 and 506(2) read with s.149 IPC.
The prosecution case was that on 29.5.1995, when PW
10, the daughter of PW 8, was returning home, A-1
attempted to outrage her modesty, but she was rescued
with the intervention of PWs 4 and 7. She complained of
the incident to her uncle (deceased ‘Ir’), who chastised
A-1. Upon this, A-1 assaulted ‘Ir’’s son (PW 15) on
2.6.1999. PW-15 reported the incident to ‘Ir’, the same day,
whereupon both ‘Ir’ and his brother ‘K’ (the other
deceased) went to A-1 in order to inquire about the
459
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A assault on PW 15. There all the accused armed with axes,
‘jambiya’ and stick, attacked ‘Ir’ and ‘K’. A-1 inflicted
‘jambiya’ injury on the abdomen of ‘Ir’, while A -2 inflicted
axe injury on his head. In the meantime, A-3, A-5 and A-6
were stated to have overpowered ‘K’ and A-1 inflicted
B ‘jambiya’ injury on his abdomen. A-4 also assaulted ‘Ir’
and shouted that he should be finished. Meanwhile, PW8
and PW 9, who followed ‘Ir’ and ‘K’ on coming to know
that they were going to A-1, reached the place of incident
and tried to intervene, but the accused threatened them
C with dire consequences. ‘Ir’ died at the spot and ‘K’ in the
hospital. All the accused were acquitted by the trial court.
However, the High Court convicted and sentenced A-1,
A-2 and A-4 u/s.302 with the aid of s.34 IPC. Aggrieved,
the three convicts filed the appeal.
D
Dismissing the appeal, the Court,
HELD: 1.1 The High Court is perfectly justified in
reversing the order of acquittal passed by the trial court
which totally misread the evidence of eye-witnesses and
E disbelieved them on fanciful grounds. The trial court was
carried away with the minor inconsistencies in the
evidence of prosecution witnesses for rejecting the
prosecution case. The trial court committed serious error
in rejecting the evidence of PW-8 and PW-9 only on the
F basis that they are related to the deceased. Their
relationship with the deceased per se would not be a
ground to reject their evidence. It is true the evidence of
interested witnesses has to be properly assessed and
carefully scrutinized which the High Court did in exercise
of its appellate jurisdiction. [Para 12-13] [472-C-E]
G
1.2 In order to ascertain as to who caused the death
of ‘Ir’ and ‘K’, the sequence of events as is evident from
the evidence of PW-8, PW-9, PW-10, PW-11 and PW-15
has to be properly evaluated. There is nothing unnatural
H that ‘Ir’ and his brother ‘K’ proceeded to the land of A-1
SANGAPPA SANGANABASAPPA M. v. STATE OF
KARNATAKA
461
to question him as to why PW-15 was assaulted by him.
There is enough material available on record to establish
that there was deep rooted enmity between the appellants
and the deceased. The origin of the whole sequence of
events is the incident of 29.5.1995 when PW-10, the
daughter of PW-8, was subjected to an attempt to outrage
her modesty by A-1. This incident is followed by the
incident of assault by A-1 on PW-15, the son of deceased
‘Ir’. The events took place in quick succession. There is
nothing on record to disbelieve the evidence of PW-15 as
regards the incident that had taken place on the fateful
day before noon which led to the assault on both the
deceased in the afternoon. [Para 11] [469-F; 469-H; 470A-B]
1.3 Since PWs 1 to 4 and 7 have been declared
hostile, the entire prosecution story rests upon the
evidence of PW-8 and PW-9 who fully supported the
prosecution version of the incident that took place on
2.6.1995. The High Court upon re-appreciation of the
evidence found that PW-8 and PW-9 consistently spoke
with regard to the incident that had taken place on
2.6.1995 resulting in the death of two victims and,
accordingly, believed and accepted their evidence in its
totality. The High Court came to the conclusion that their
evidence, if read as a whole, ignoring minor
contradictions and inconsistencies, if any, inspires
confidence. The High Court found fault with the trial court
for rejecting the evidence of PW-8 and PW-9 on the sole
ground that they are closely related to the deceased. [Para
8-9] [467-F; 468-C-E]
1.4 Mere fact that A-1 has been acquitted in the case
regarding the attempt to outrage the modesty of PW-10,
itself is of no consequence. The evidence of PW-10
receives a complete corroboration and support from the
evidence of PW-11. This evidence is to be read along with
462
A
B
[2010] 11 S.C.R.
A the evidence of PW-8, who is not only an eye-witness to
the occurrence but also the first informant and has lodged
the FIR. It is in the evidence of PW-8 that after PW-15
complained of assault on him by A-1, both ‘Ir’ and ‘K’
proceeded to the garden land of A-1 to question him
B about the incident of assault on PW-15. [Para 11] [471-CE]
C
C
D
D
E
E
F
F
G
G
H
SUPREME COURT REPORTS
H
1.5 There is nothing unnatural in PW-8 and PW-9
following ‘Ir’ and ‘K’ when they were proceeding to the
land of A-1. When both of them were at a distance of 10
marus, from the land of A-1, they witnessed the actual
incident of assault on ‘Ir’ and ‘K’. It is clearly and
categorically stated by PW-8 that A-1 attacked ‘K’ with
‘jambiya’ and as a result of which ‘K’ sustained injuries
on his abdomen and chest. It is also in the evidence of
PW-8 that A-4 was armed with an axe and so also A-2
while A-1 was armed with ‘jambiya’. The weapons were
identified by him in the court. It is specifically stated in
the course of his evidence that A-2 was holding an axe,
A-4 was holding another axe and A-1 was holding the
‘jambiya’ and all of them assaulted ‘Ir’ with axe, ‘jambiya’
and stick. The evidence of PW-9, who is brother of PW8, is more or less same as of the evidence of PW-8. It is
in his evidence that ‘Ir’ received head injury and died on
the spot. When ‘K’ went to the rescue of ‘Ir’, he too was
subjected to assault by the appellants. It is A-1 who had
assaulted ‘K’ with ‘jambiya’ and caused injury on his
abdomen. He vividly deposed as to which of the accused
was holding of what weapons which is in conformity with
what has been stated by PW-8. [Para 11] [470-E-H; 471B-D]
1.6 The evidence of Doctors (PW-5 and PW-12)
completely supports the ocular evidence. The evidence
of PWs- 5, 8, 9, 10, 11 and 12 has been meticulously
analysed by the High Court. On going through the said
SANGAPPA SANGANABASAPPA M. v. STATE OF
KARNATAKA
463
evidence this Court is in complete agreement with the
conclusions drawn by the High Court and the reasons
assigned by it to believe the evidence of the said
witnesses and, more particularly, the evidence of PW-8
and PW-9 who are the eye witnesses to the incident.
[Para 12] [471-E-F]
1.7 The High Court rightly concurred with the view
of the trial court in coming to the conclusion that it is not
a case which would attract the provisions of ss.148 and
149 IPC. On the other hand, the evidence available on
record suggests that it is only the appellants who
committed assault on ‘Ir’ and ‘K’ with ‘’jambiya’ and axes
and caused the fatal injuries to them. The participation of
other appellants along with A-1 and common intention
on their part is clearly evident from the evidence available
on record. The High Court rightly convicted the
appellants for the offence punishable u/s.302 with the aid
of s.34 IPC. [Para 12] [471-F-H; 472-A-B]
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 436 of 2006.
464
A
C
D
2. Against the said judgment of the High Court, the
appellants have preferred the present Criminal Appeal under
Section 379 of the Code of Criminal Procedure, 1973 read with
Section 2 of the Supreme Court (Enlargement of Criminal
D Appellate Jurisdiction) Act, 1970.
B
E
F
Sanjay R. Hegde, Ramesh Kr. Mishra, Krutin Joshi,
Abhisekh Malviya for the Respondents.
The Judgment of the Court was delivered by
B. SUDERSHAN REDDY, J. 1. The appellants –
Sangappa Sanganabasappa Murakachatti, Yamanappa
Rudrappa Murakachatti and Pundalik Sanganabasappa
Murakachatti (A-1, A-2 & A-4 respectively) along with four others
were tried in Sessions Case No. 169 of 1995 by the Principal
Sessions Judge, Bijapur for offences punishable under
[2010] 11 S.C.R.
A Sections 148, 302 and 506 (2) read with Section 149 of the
Indian Penal Code (for short IPC). The learned Principal
Sessions Judge, vide judgment dated 26th September, 1998
acquitted all the accused appellants of the aforesaid offences.
The State of Karnataka preferred appeal under Section 378
B (1) & (3) of the Code of Criminal Procedure against the order
of acquittal before the High Court at Bangalore. A Division
Bench of the High Court by the impugned judgment dated
1.4.2005, partly allowed the said appeal, setting aside the
acquittal of the appellants herein and affirmed the acquittal in
C so far as the rest of the accused are concerned.
From the Judgment & Order dated 01.04.2005 of the High
Court of Karnataka at Bangalore in Crl. A. No. 119 of 1999.
Ajay Kumar M., B. Subrahmanya Prasad, R.D. Upadhyay
for the Appellants.
SUPREME COURT REPORTS
G
H
3. In order to consider as to whether the impugned
judgment convicting the appellants herein for the offence
punishable under Section 302 read with Section 34 IPC suffers
from any infirmities requiring our interference, it may be just and
E
necessary to briefly notice the prosecution case.
F
4. We shall refer to only such of the relevant facts and
material evidence since the High Court has very meticulously
analysed the entire evidence available on record by reappreciating the same.
5. On 29.5.1995 at about 5.00 or 6.00 P.M, when
Ningamma (PW-10) who is none other than the daughter of
Basappa (PW-8) was returning home from the fields along with
her brother Sadashiva (PW-11), Sangappa (A-1) made an
G attempt to outrage her modesty, but she was, however, rescued
with the intervention of Chandrappa (PW-7) and Bheemappa
(PW-4). She went home and complained about the incident to
the deceased Irappa who chastised Sangappa. On 2.6.1995
at about 11.00 a.m. in the morning when Laxman (PW-15) was
H
SANGAPPA SANGANABASAPPA M. v. STATE OF
KARNATAKA [B. SUDERSHAN REDDY, J.]
465
in his fields looking after the sheep, Sangappa went there and
assaulted Laxman with a stick over the issue of being chastised
by his father – Irappa. Laxman on returning from the fields
informed about the incident to his father – Irappa. Both Irappa
and his brother Kenchappa (the other deceased) rushed to the
garden land of Sangappa in order to enquire as to what
transpired in the matter. That all the accused who were armed
with deadly weapons questioned the propriety on the part of
Irappa in coming to their place and making an inquiry about the
incident of assault on his son. In the process Sangappa who
was armed with jambiya inflicted injury on the abdomen of the
deceased - Irappa and Yamanappa (A-2) inflicted injury over
the head of the deceased with axe and in the meanwhile, the
other accused Sangana Basappa (A-3), Rudrappa (A-5) and
Smt. Bhagawwa (A-6) over powered the deceased Kenchappa and assaulted him and at that point of time,
Sangappa inflicted injury on the abdomen of deceased –
Kenchappa. In the same process Pundalik (A-4) committed
assault on Irappa and shouted that he should be finished. It is
the case of the prosecution that even Pundalik, who was armed
with axe, assaulted the deceased Irappa over his head.
Basappa (PW-8) along with Siddappa (PW-9) and others tried
to intervene in order to rescue the two deceased persons in
vain as they were threatened by the accused with dire
consequences. Basappa and Siddappa witnessed the incident
as they were following the two deceased having come to know
of the fact that the two deceased persons were proceeding to
the garden land of Sangappa to inquire about the incident of
assault on Laxman (PW-15). The incident in question had
occurred at about 2.00 p.m. afternoon on 2.6.1995 in the
garden land of Sangappa. It is at a distance of about 10 kms.
from the police station. That immediately after the incident the
first information had been lodged by Basappa (PW-8) with the
SHO, Nagappa (PW-14) at the Kolhar Police Station. FIR was
registered at about 3.30 p.m. Out of the two injured persons,
Irappa died on the spot while the injured Kenchappa succumbed
466
A
B
[2010] 11 S.C.R.
A to the injuries in the hospital. Ramappa (PW-13), sub-Inspector
of police took up the further investigation. Inquest proceedings
over the dead body of deceased – Irappa were held on
3.6.1995 and statements of PW-3, PW-4, PW-7, PW-9, PW10 and PW-11 were recorded. M.Os 1 to 4 were seized. In the
B meanwhile, Investigation Officer received the intimation from the
hospital about the death of injured Kenchappa and immediately
proceeded to the hospital and held inquest over the body of
the deceased – Kenchappa. The dead bodies of the two
deceased were subjected to the post-mortem examination.
C
C
D
D
E
SUPREME COURT REPORTS
6. Dr. Ramappa (PW-5) is the Medical Officer, who held
autopsy on the dead body of the deceased - Kenchappa and
issued the post-mortem report (Ex. P-9). The following injuries
on the dead body of Kenchappa were noticed:
1.
Sutured wound over upper abdomen 8” in
length on right side of umbilicus 1” below 1”
away from midline vertical direction
2.
Transverse sutured crocoid present on left
side on anterior abdominal wall just below
costal margin in the anterior axillary line.
E
He opined that death was due to shock and haemorrhage
as a result of the injury to vital organs and he was also of the
opinion that such injuries could be caused with the weapon like
jambiya.
F
F
G
Dr. Yalagurdacharya (PW-12), is the Medical Officer, who
conducted the post mortem examination on the dead body of
the deceased - Irappa and found the following external injuries
G on the dead body of Irappa:
H
H
1.
Lacerated wound 4.5 cms. X 1.5 cms., on the
scalp in the midline in the frontal area.
Margins irregular and contused.
2.
Lacerated wound on the left parietal area 2.5
SANGAPPA SANGANABASAPPA M. v. STATE OF
KARNATAKA [B. SUDERSHAN REDDY, J.]
467
cms. Long 1.5 cms., wide since surrounding
the wound is ecchymosed present swelling
of the surrounding tissues.
3.
Elliptical stab wound (penetrating) on the left
side of the chest, 7 cms, below left nipple 2.5
cms., long and 1.2 cms., wide at the
cetredepth of the wound 12 cms.
The post-mortem report in respect of deceased – Irappa is
exhibit P-12. The Doctor opined that the death was due to
perforating wound on the left side of the chest, causing
perforating of the heart leading to haemorrhage, cardiac failure
and death. He was of the opinion that the injury nos. 1 and 2
found on the dead body of Irappa could be caused by weapons
like axe and club and injury no. 3 could be caused by means
of a dagger. The report of the serologist (Ex. P-16) discloses
that blood stains found on jambiya since disintegrated, origin
could not be determined but the two axes were found to be
stained with human blood.
7. The prosecution, in order to establish its case, had
altogether examined 15 witnesses (PW-1 to PW-15) at the trial
and placed on record Exhibits P-1 to P-17 and M.Os 1 to 16.
8. Be it noted that PWs 1, 2, 3 and 4 did not support the
case of the prosecution and hence they were declared hostile.
Chandrappa (PW-7) had been examined to speak about the
incident which took place on 29.5.1995 and also to the
occurrence, which took place on 2.6.1995 but he did not
support the prosecution case and was declared hostile.
Basappa (PW-8) is the father of PW-10 and eye witness to the
incident which took place on 2.6.1995, wherein two deceased
Kenchappa and Irappa had been assaulted. He is also the first
informant and lodged FIR. Siddappa (PW-9) is the younger
brother of PW-8 as well as the two deceased persons
Kenchappa and Irappa. He is also an eye witness to the
occurrence, which took place on 2.6.1995. The entire
468
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A prosecution story rests upon the evidence of PW-8 and PW-9
who fully supported the prosecution version of the incident that
took place on 2.6.1995 with which we are concerned in the
present case. The sequence of events suggests that the origin
leading to the fatal attack on the two deceased is traceable to
B the incident that took place on 29.5.1995 when Sangappa (A1) had tried to outrage the modesty of PW-10. Sadashiva (PW11) who is none other than the son of PW-8 speaks about the
incident that took place on 29.5.1995 relating to the outrage of
the modesty of PW-10.
C
9. The High Court upon re-appreciation of the evidence
found that PW-8 and PW-9 have consistently spoken to with
regard to the incident that had taken place on 2.6.1995 resulting
in the death of Irappa and Kenchappa and accordingly
believed and accepted their evidence in its totality. The High
D Court came to the conclusion that if their evidence read as a
whole, ignoring minor contradictions and inconsistencies, if any,
inspires confidence. The High Court found fault with the trial
court for rejecting the evidence of PW-8 and PW-9 on the sole
ground that they are closely related to the deceased. The High
E Court took the view that the appellants herein are liable to be
convicted for the offence punishable under Section 302 with the
aid of Section 34 of IPC since they had inflicted the injuries with
the deadly weapons like axe and jambiya on vital parts of the
body of the two deceased persons which itself would show that
F all of them shared the intention to cause the death.
10. We have heard the learned counsel for the appellants
as well as the learned counsel for the State. The learned
counsel for the appellants strenuously contended that PW-8 and
PW-9 are highly interested witnesses being close relatives of
G
the deceased and it would be unsafe to convict the appellants
based on the evidence of such highly interested witnesses. This
aspect of the matter becomes relevant according to the learned
counsel for the appellants in view of the fact that other eye
witnesses did not support the case of the prosecution at all. The
H
SANGAPPA SANGANABASAPPA M. v. STATE OF
KARNATAKA [B. SUDERSHAN REDDY, J.]
469
learned counsel for the State supported the impugned judgment
and submitted that the evidence of two eye witnesses (PW-8
& PW-9) cannot be rejected on the simple ground of their
relationship with the deceased. It is quite natural that being the
kith and kin of the two deceased persons PW-8 and PW-9 have
followed the deceased when they came to know that the
deceased were proceeding to the land of Sangappa in order
to inquire about the incident of assault on PW-15. Now we shall
proceed to consider the submissions.
11. That the deceased Irappa and Kenchappa had died
homicidal death is beyond the pale of any doubt. The evidence
of two Medical Officers PW-5 and PW-12 and the contents of
the post-mortem reports have not been seriously challenged by
the defence. The deceased Irappa had died on the spot,
whereas Kenchappa had succumbed to the injuries while
undergoing treatment at the hospital on the next day of the
incident. The evidence of the Medical Officers in clear and
categorical terms establishes that both the deceased Irappa
and Kenchappa succumbed to the injuries that were found on
their bodies. Those injuries could have been caused with the
sharp weapons like axe and jambiya. The only question that
arises for our consideration is that is there any evidence
available on record as to who caused the death of Irappa and
Kenchappa? In this regard the sequence of events as is evident
from the evidence of Basappa (PW-8), Siddappa (PW-9),
Ningamma (PW-10), Sadashiva (PW-11) and Laxman (PW-15)
has to be properly evaluated. The incident of assault resulting
in the death of deceased Irappa and Kenchappa took place in
the garden land of Sangappa around 2.00 p.m. on 2.6.1996. It
is important to note this incident was preceded by an assault
on Laxman (PW-15) when he was in his fields. PW-15 who is
none other than the son of the deceased Irappa. There is
nothing unnatural that Irappa and his brother Kenchappa
proceeded to the land of Sangappa to question him as to why
PW-15 was assaulted by him. There is enough material
available on record to establish that there was deep rooted
470
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A enmity between the appellants and the deceased. The origin
of the whole sequence of events lies as to what transpired on
29.5.1995 when PW-10 who is none other than the daughter
of PW-8 was subjected to an attempt to outrage her modesty
by Sangappa. This incident is followed by the incident of
B assault on Laxman (PW-15) by Sangappa. The events took
place in quick succession. There is nothing on record to
disbelieve the evidence of PW-15 as regards the incident that
had taken place on the fateful day before noon which led to the
assault on both the deceased in the afternoon. Mere fact that
C Sangappa has been acquitted in the case regarding the
attempt to outrage the modesty of PW-10 itself is of no
consequence. The evidence of PW-10 receives a complete
corroboration and support from the evidence of PW-11. This
evidence is to be read along with the evidence of PW-8 who
is not only an eye witness to the occurrence but also the first
D
informant who lodged the FIR. It is in the evidence of PW-8 that
after PW-15 complained of assault on him by Sangappa, both
deceased persons Irappa and Kenchappa proceeded to the
garden land of Sangappa to question him about the incident
of assault on PW-15. There is nothing unnatural in PW-8
E following both the deceased when they were proceeding to the
land of Sangappa. PW-9 also accompanied PW-8. When both
of them were at a distance of 10 marus, from the land of
Sangappa, they witnessed the actual incident of assault on the
deceased. It is clearly and categorically stated by PW-8 that
F Sangappa attacked deceased Kenchappa with jambiya and as
a result of which Kenchappa had sustained injuries on his
abdomen and chest. It is also in the evidence of PW-8 that
Pundalik (A-4) was armed with axe and so also Yamanappa
(A-2) while Sangappa (A-1) was armed with jambiya. The
G weapons were identified by him in the court. It is specifically
stated in the course of his evidence that A-2 was holding axe,
A-4 was holding the other axe and A-1 was holding the jambiya
and all of them assaulted the deceased Irappa with axe, jambiya
and stick. That so far as the deceased Kenchappa is concerned
H it is stated by PW-8 that A-1 inflicted injury on the body of
SANGAPPA SANGANABASAPPA M. v. STATE OF
KARNATAKA [B. SUDERSHAN REDDY, J.]
471
Kenchappa with jambiya. It is true in cross-examination he
admitted that the land belonging to one Sangappa and
Ramagond is situated adjacent to the scene of incident and
whereas his land is at the distance of about 2 to 3 kilometers
from the scene of occurrence. It is also admitted by him that at
the time of incident, the wife of adjacent land owner Sangappa
was present in their land. It is true wife of Sangappa is not
examined but that itself is not so fatal based on which evidence
of PW-8 could be disbelieved. The evidence of Siddappa (PW9) who is none other than the brother of PW-8 is more or less
same as of the evidence of PW-8. It is in his evidence that
deceased Irappa received head injury and died on the spot.
When Kenchappa went to the rescue of Irappa, he too had
been subjected to assault by the appellants. It is Sangappa who
had assaulted Kenchappa with jambiya and caused injury on
the abdomen. He vividly deposed as to which of the accused
was holding of what weapons which is in conformity with what
has been stated by PW-8.
12. The evidence of Doctors (PW-5 and PW-12)
completely supports the ocular evidence. The evidence of PWs5, 8, 9, 10, 11 and 12 has been meticulously analysed by the
High Court as is clearly evident from the judgment. On going
through the said evidence we are in complete agreement with
the conclusions drawn by the High Court and the reasons
assigned by it to believe the evidence of the said witnesses
and more particularly the evidence of PW-8 and PW-9 who are
the eye witnesses to the incident. The High Court rightly
concurred with the view of the trial court in coming to the
conclusion that it is not a case which would attract the
provisions of Sections 148 and 149 of the IPC. On the other
hand, the evidence available on record suggests that it is only
the appellants who committed assault on Irrappa and
Kenchappa with jambiya and axes and caused the fatal injuries
to the two deceased persons Irappa and Kenchappa. The
participation of other appellants along with appellant no. 1 and
common intention on their part is clearly evident from the
472
A
B
C
D
E
F
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A evidence available on record. The High Court rightly convicted
the appellants for the offence punishable under Section 302 with
the aid of Section 34 IPC. The High Court is absolutely right in
coming to the conclusion that the appellants participated in the
assault on the two deceased persons and inflicted fatal injuries
B on the vital parts of the bodies of both the deceased. The
assault had been conjointly committed by all the appellants. The
sequence of events and total circumstances if taken together
into consideration it is clearly evident that the appellants shared
common intention to commit the offence for which they are liable
C to be convicted. The High Court did not commit any error in
convicting the appellants alone for the offence punishable under
Section 302 with the aid of Section 34 IPC. The High Court is
perfectly justified in reversing the order of acquittal passed by
the trial court which totally misread the evidence of eye
witnesses and disbelieved them on fanciful grounds. The trial
D
court was carried away with the minor inconsistencies in the
evidence of prosecution witnesses for rejecting the prosecution
case. The trial court committed serious error in rejecting the
evidence of PW-8 and PW-9 only on the basis that they are
related to the deceased. Their relationship with the deceased
E per se would not be a ground to reject their evidence. It is true
the evidence of interested witnesses has to be properly
assessed and carefully scrutinized which the High Court did in
exercise of its appellate jurisdiction.
F
13. For all the aforesaid reasons we uphold the conviction
as well as sentence for the offence punishable under Section
302 read with Section 34 IPC.
14. The appeal is, accordingly, dismissed.
G
H
R.P
Appeal dismissed.
[2010] 11 S.C.R. 473
SHYAMRAO MAROTI KORWATE
v.
DEEPAK KISANRAO TEKAM
(Civil Appeal No. 2817 of 2008)
SEPTEMBER 14, 2010
474
A
B
[P. SATHASIVAM AND DR. B. S. CHAUHAN, JJ.]
Guardians and Wards Act, 1890:
ss. 7 and 25 – Rival claims for custody of the minor son
by his maternal grand- father and father – HELD: The
provisions of the 1890 Act and the 1956 Act, make it clear
that in a matter of custody of a minor child, the paramount
consideration is the “welfare of the minor” and not the rights
of the parents or relatives under the statute which are in force
– Therefore, the District Judge has rightly given the custody
of the minor to his maternal grand-father – However, keeping
in view the age of the maternal grand-father and the fact that
after four years the child would attain the age of 12 and his
father is free to make fresh application, directions given
enlarging visitation rights of the father, in order to ascertain
whether the child would show inclination to join with his father
on his attaining the age of 12 – Hindu Minority and
Guardianship Act, 1956 – s.13.
C
Consequent upon the death of the wife of the
respondent, after giving birth to their son on 23.03.2003,
the child remained in the custody of his maternal grandfather, the appellant. On 7.8.2003, the appellant filed
before the Court of District Judge an application u/s. 7 of
the Guardians and Wards Act, 1890. The respondent
contested the application and also filed another
application u/s 25 of the 1890 Act for custody of his son.
Meanwhile, the respondent remarried and was blessed
with another son from his second wife. The District
473
F
D
E
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Judge, appointed the appellant as guardian of the child,
allowed his application and rejected that of the
respondent with liberty to file such an application after
the minor completed the age of 12. The respondent was
permitted to meet the minor once in a month. The appeal
B filed by the respondent was allowed by the High Court
and he was allowed to have custody of the child.
Aggrieved, the maternal grand-father of the minor filed the
appeal.
C
Partly allowing the appeal, the Court
HELD: 1.1 It is true that under the Guardians and
Wards Act, 1890, the father is the guardian of the minor
child until he is found unfit to be a guardian of the minor.
However, an analysis of the relevant provisions of
D the1890 Act and the Hindu Minority and Guardianship
Act, 1956 makes it clear that in a matter of custody of a
minor child, the paramount consideration is the “welfare
of the minor” and not the rights of the parents or relatives
under the statute which are in force. The word “welfare”
E used in s. 13 of the 1956 Act has to be construed literally
and must be taken in its widest sense. [Para 10 and 13]
[481-A; 482-A; 483-C-D]
F
Gaurav Nagpal vs. Sumedha Nagpal, 2008 (16)
SCR 396 = (2009) 1 SCC 42; Anjali Kapoor (Smt.) vs. Rajiv
Baijal, 2009 (6) SCR 560 = (2009) 7 SCC 322 – relied on.
1.2 On 23.03.2003, after giving birth to the child, the
mother died and the child was taken by the maternal
grand-father. Before the District Judge, it has been
G highlighted that after the death of his wife, the
respondent-husband has married another woman and
also has a son from his second marriage. It is also
highlighted by the appellant that the respondent is
working as an Operator in the Maharashtra State
H Electricity Board at a distance of 90 kms from his
SHYAMRAO MAROTI KORWATE v. DEEPAK
KISANRAO TEKAM
475
residence. It is further stated that the place where
respondent is residing is a rural village and lacks in better
educational facilities. It is the claim of the maternal grandfather that he is a pensioner getting sizeable income by
way of pension and other retiral benefits and also owns
agricultural properties. It is his further claim that he is
living with his wife, i.e. maternal grandmother of the child,
and other relatives such as sons and a daughter. It is also
his claim that he is residing in a Taluk Centre where good
educational facilities are available. In this view of the
matter, the District Judge is justified in appointing the
maternal grand-father as guardian of the minor till the age
of 12 years. It is true that the single Judge of the High
Court interacted with both the parties and the child
separately and noted that “the child could not be
unhappy, uncomfortable and unsafe in the custody of the
father”. However, there is no material to show that at any
point of time the respondent-father had attempted to meet
the child when he was in the custody of maternal grandfather. [Para 12, 14 and 15] [482-E-H; 483-F-H; 484-A-B]
1.3 However, it is relevant to note that the maternal
grand-father is aged about 63 years and if his sons are
married, undoubtedly the child cannot get the same love
and affection from him and his family. On attaining the age
of 12 years by the minor, the father is free to make a fresh
application and depending on the welfare and wish of the
child, further order has to be passed in the matter of
custody. As on date, the child is aged about 8 years and
it is the concern of the Court that after four years, i.e., after
attaining the age of 12 years whether the child would
show any inclination to join with his father. [para 15] [484A-C]
1.4 In the circumstances of the case, the order of the
High Court is modified and the appellant grand-father is
permitted to have the custody of the child till the age of
12 years as ordered by the District Judge. This
476
A
B
C
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A conclusion is based on welfare of the minor as provided
in s.13 of the 1956 Act. Since on completion of 12 years,
a fresh decision is to be taken about entrusting the
custody of the minor child, following directions about the
visitation rights of the father are issued:
B
(1) During long holidays/vacations covering more
than two weeks the child will be allowed to be in the
company of the father for a period of seven days.
C
D
D
E
E
F
F
(2) The period shall be fixed by the father after due
intimation to the material grand-father who shall
permit the child to go with the father for the aforesaid
period.
(3) Besides, twice in a month preferably on Saturday
or Sunday or a festival day, maternal grand-father
shall allow the child to visit the father from morning
to evening. Father shall take the child and leave him
back at the maternal grand-father’s place on such
days.
(4) The father is free to provide facilities such as
payment of school fees, books, dress materials,
eatables etc. during this period to develop a
conducive relationship with the child. [Para 16] [484E-H; 485-A-C]
Case Law Reference:
2008 (16) SCR 396
relied on
Para 10
2009 (6) SCR 560
relied on
Para 13
G
G
H
From the Judgment and order dated 17.10.2007 of the
High Court of Bombay Bench at Nagpur in First Appeal No. 501
H of 2007.
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2817 of 2008.
SHYAMRAO MAROTI KORWATE v. DEEPAK
KISANRAO TEKAM
477
Anantbhushan Kanade, Amit S. Pandit and R.P. Goyal for
the Appellant
478
A
Anagha S. Desai and Satyajit A. Desai for the
Respondent.
The Judgment of the Court was delivered by
P. SATHASIVAM, J. 1. This appeal, pertaining to the
custody of a minor child, is directed against the final judgment
and order dated 17.10.2007 passed by the High Court of
Judicature at Bombay, Nagpur Bench, Nagpur in First appeal
No. 501 of 2007 whereby the High Court reversed the judgment
and order dated 16.04.2007 passed by the District Judge,
Yavatmal, Maharashtra.
2. Brief facts:
(a) On 03.06.2002, the marriage of the respondent was
solemnized with Kaveri, the daughter of the appellant herein.
Out of the said wedlock, on 23.03.2003, a son, namely,
Vishwajeet @ Sangharsh was born. After giving birth to son,
on the same day, the respondent’s wife died due to excessive
bleeding. Vishwajeet is residing with the appellant–maternal
grandfather and his family since his birth. After the death of his
wife, the respondent contracted second marriage and also has
a son from the second marriage.
(b) On 07.08.2003, the appellant–maternal grandfather of
the minor filed an application in the Court of District Judge II,
Yavatmal, Maharashtra under Section 7 of the Guardians and
Wards Act, 1890 (hereinafter referred to as ‘Act 1890’) being
M.J.C. No. 10 of 2003 for appointing him as guardian of the
minor Vishwajeet. The said application was opposed by the
respondent and, on 15.10.2003, he also filed an application
under Section 25 of the Act 1890 being M.J.C. No. 12 of 2003
for the custody of his son. The District Judge by a common
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A judgment dated 16.04.2007 in both the proceedings, allowed
the application filed by the appellant herein and appointed him
as a Guardian of Vishwajeet till he attains the age of 12 years
and directed him to deposit the amounts inheritable by the
minor due to the demise of his mother, in any Nationalized Bank
B in Fixed deposit in the name of minor, which may be renewed
from time to time till he attains majority and also directed that
nobody can withdraw the principal or interest amount without
prior permission of the Court. The District Judge further directed
the newly appointed guardian to allow the respondent-father to
C meet the minor once in a month. The application filed by the
respondent was dismissed by the District Judge with the liberty
to file such application after completion of the age of 12 years
by the minor.
(c) Aggrieved by the said order, the respondent herein filed
D First Appeal No. 501 of 2007 in the High Court of Bombay,
Nagpur Bench, Nagpur. On 17.10.2007, the learned single
Judge of the High Court allowed the appeal filed by the
respondent herein and directed the appellant herein to hand
over the custody of the child to the respondent. Challenging the
E said order, the appellant has preferred this appeal by way of
special leave petition before this Court.
F
3. Heard Mr. Anantbhushan Kanade, learned senior
counsel for the appellant and Ms. Anagha S. Desai, learned
counsel for the respondent.
4. The appellant herein is the maternal grandfather of the
child and the respondent is the father of the child. Since we have
already narrated the events for filing the petition for custody/
guardian of the child, there is no need to traverse the same
G once again. Before considering the claim of both sides, it is
useful to refer the statutory provisions relevant for our purpose.
5. The Act 1890 consolidates and amends the law relating
to guardians and wards. Section 4 of the Act defines “minor”
H as “a person who has not attained the age of majority”.
SHYAMRAO MAROTI KORWATE v. DEEPAK
KISANRAO TEKAM [P. SATHASIVAM, J.]
479
“Guardian” means “a person having the care of the person of
a minor or of his property, or of both his person and property”.
“Ward” is defined as “a minor for whose person or property or
both there is a guardian”. Sections 5 to 19 of the Act relate to
appointment and declaration of guardians. Section 7 thereof
deals with “power of the Court to make order as to
guardianship” which reads as under:
“7. Power of the court to make order as to
guardianship.—(1) Where the court is satisfied that it is
for the welfare of a minor that an order should be made—
480
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
provisions of this section, be guided by what, consistently
with the law to which the minor is subject, appears in the
circumstances to be for the welfare of the minor.
(2) In considering what will be for the welfare of the minor,
the Court shall have regard to the age, sex and religion of
the minor, the character and capacity of the proposed
guardian and his nearness of kin to the minor, the wishes,
if any, of a deceased parent, and any existing or previous
relations of the proposed guardian with the minor or his
property.
(a) appointing a guardian of his person or property, or both,
or
(3) If the minor is old enough to form an intelligent
preference, the court may consider that preference.
(b) declaring a person to be such a guardian, the court may
make an order accordingly.
Xxx xxx xxx
D
(2) An order under this section shall imply the removal of
any guardian who has not been appointed by will or other
instrument or appointed or declared by the court.
(3) Where a guardian has been appointed by will or other
instrument or appointed or declared by the Court, an order
under this section appointing or declaring another person
to be guardian in his stead shall not be made until the
powers of the guardian appointed or declared as
aforesaid have ceased under the provisions of this Act.”
6. Section 8 of the Act 1890 enumerates persons entitled
to apply for an order as to guardianship. Section 9 empowers
the Court having jurisdiction to entertain application for
guardianship. Sections 10 to 16 deal with procedure and
powers of Court. Section 17 is another material provision and
may be reproduced hereunder:
“17. Matters to be considered by the court in
appointing guardian.—(1) In appointing or declaring the
guardian of a minor, the court shall, subject to the
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(5) The Court shall not appoint or declare any person to
be a guardian against his will.”
7. The Hindu Minority and Guardianship Act, 1956
(hereinafter referred to as ‘Act 1956’) is another important
E statute relating to minority and guardianship among the Hindus.
Section 4 defines “minor” as “a person who has not completed
the age of eighteen years”. “Guardian” means “a person having
the care of the person of a minor or of his property or of both
his person and property”, and includes a “Natural guardian”.
F “Natural guardian” means any of the guardians mentioned in
Section 6 of the Act 1956.
8. Section 6 enacts as to who can be said to be a “Natural
guardian”. It reads thus:
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“6. Natural guardians of a Hindu minor.—The natural
guardians of a Hindu minor, in respect of the minor’s
person as well as in respect of the minor’s property
(excluding his or her undivided interest in joint family
property), are—
SHYAMRAO MAROTI KORWATE v. DEEPAK
KISANRAO TEKAM [P. SATHASIVAM, J.]
481
482
(a) in the case of a boy or an unmarried girl — the
father, and after him, the mother: Provided that the
custody of a minor who has not completed the age
of five years shall ordinarily be with the mother;
A
(b) in the case of an illegitimate boy or an
illegitimate unmarried girl — the mother, and after
her, the father;
B
10. If we analyze the above provisions, one thing is clear
that in a matter of custody of a minor child, the paramount
consideration is the “welfare of the minor” and not rights of the
parents or relatives under a statute which are in force. The word
“welfare” used in Section 13 of the Act 1956 has to be
B construed literally and must be taken in its widest sense.
11. In Gaurav Nagpal vs. Sumedha Nagpal, (2009) 1
SCC 42, this Court held:
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(a) if he has ceased to be a Hindu, or
(b) if he has completely and finally renounced the
world by becoming a hermit (vanaprastha) or an
ascetic (yati or sanyasi).
Explanation.—In this section, the expressions ‘father’ and
‘mother’ do not include a stepfather and a stepmother.”
E
9. Section 8 thereof enumerates powers of natural
guardian and Section 13 deals with welfare of minor which
reads thus:
paramount
F
(1) In the appointment or declaration of any person as
guardian of a Hindu minor by a court, the welfare of the
minor shall be the paramount consideration.
G
(2) No person shall be entitled to the guardianship by virtue
of the provisions of this Act or of any law relating to
guardianship in marriage among Hindus, if the court is of
opinion that his or her guardianship will not be for the
welfare of the minor.”
H
“13. Welfare of
consideration.—
minor
to
be
[2010] 11 S.C.R.
A
(c) in the case of a married girl — the husband:
Provided that no person shall be entitled to act as
the natural guardian of a minor under the provisions
of this section—
SUPREME COURT REPORTS
“51. The word “welfare” used in Section 13 of the Act has
to be construed literally and must be taken in its widest
sense. The moral and ethical welfare of the child must also
weigh with the court as well as its physical well-being.
Though the provisions of the special statutes which govern
the rights of the parents or guardians may be taken into
consideration, there is nothing which can stand in the way
of the court exercising its parens patriae jurisdiction arising
in such cases.”
12. In the light of the above background, let us consider
whether the custody of the minor is to be entrusted with the
E
maternal grandfather as ordered by the District Court or with
the father as directed by the High Court. We have already
referred to the fact that on 23.03.2003, after giving birth to the
child, the mother died and the child was taken by the maternal
grandfather. The maternal grand-father filed a petition for
F custody on 07.08.2003 and father also made a similar petition
for custody on 15.10.2003. Before the District Judge, it was
highlighted that immediately after the death of his wife, the
respondent-husband married another woman and also has a
son from his second marriage. Though the exact date of
G marriage is not mentioned anywhere, the fact remains that
within a period of one year after the death of Kaveri, daughter
of the appellant herein, the respondent-husband married
another woman. It is also highlighted by the appellant that the
respondent is working as an Operator in the Maharashtra State
H Electricity Board at a distance of 90 kms from his residence. It
SHYAMRAO MAROTI KORWATE v. DEEPAK
KISANRAO TEKAM [P. SATHASIVAM, J.]
483
is further stated that the place where respondent is residing is
a rural village and there is lack of better educational facilities.
It is the claim of the maternal grandfather that he is a pensioner
getting sizeable income by way of pension and other retiral
benefits and also own agricultural properties. It is his further
claim that he is living with his wife i.e. maternal grandmother
of the child and other relatives such as sons and a daughter. It
is also his claim that he is residing in a Taluk Centre where
good educational facilities are available.
13. Though several allegations have been made by the
parties against each other, we feel that in the absence of any
specific finding by the Courts below on either of them, it is
unnecessary to refer to the same. It is true that under the Act
1890, the father is the guardian of the minor child until he is
found unfit to be a guardian of the minor. In deciding such
question, this Court consistently held that the welfare of the
minor child is the paramount consideration and such a question
cannot be decided merely on the basis of the rights of the
parties under the law. This principle is reiterated in Anjali
Kapoor (Smt.) vs. Rajiv Baijal, (2009) 7 SCC 322.
484
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14. Though father is the natural guardian in respect of a
minor child, taking note of the fact that welfare of the minor to
be of paramount consideration inasmuch as the respondentfather got married within a year after the death of his first wifeKaveri and also having a son through the second marriage,
residing in a rural village, working at a distance of 90 kms and
of the fact that the child was all along with the maternal grandfather and his family since birth, residing in a Taluka Centre
where the child is getting good education, we feel that the
District Judge was justified in appointing the appellant maternal
grandfather as guardian of the minor child till the age of 12
years.
15. The High Court reversed the said conclusion and
appointed father of the child as his guardian. It is true that the
learned single Judge interacted with both the parties and the
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A child separately and noted that “the child could not be unhappy,
uncomfortable and unsafe in the custody of the father”.
However, there is no material to show that at any point of time
the respondent-father had attempted to meet the child when he
was in the custody of maternal grandfather. No doubt, it is true
B that on attaining the age of 12 years by the minor, the father is
free to make a fresh application and depending on the welfare
and wish of the child, further order has to be passed in the
matter of custody. It is said that as on date, the child is aged
about 8 years. Our anxiety is that after four years, i.e., after
C attaining the age of 12 years whether the child would show any
inclination to join with his father. It is relevant to note that the
maternal grandfather is aged about 63 years and if his sons
are married, undoubtedly the child cannot get the same love
and affection from him and his family.
D
16. Inasmuch as the child has continuously been living with
the maternal grandfather and his family from the date of his birth
i.e. 23.03.2003 and getting good education at their hands,
taking note of the position of the father of the child who is
working 90 kms. away from his house in a rural village, we
E modify the order of the High Court and permit the appellant
grandfather to have the custody of the child Vishwajeet @
Sangharsh till the age of 12 years as ordered by the District
Judge. The above conclusion is based on welfare of the minor
as provided in Section 13 of the Act 1956. Since on completion
F of 12 years, a fresh decision is to be taken about entrusting
the custody of the minor child, while modifying the order of the
High Court as mentioned above, we issue the following
directions about the visitation rights of the father:
G
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(1) During long holidays/vacations covering more than two
weeks the child will be allowed to be in the company of
the father for a period of seven days.
(2) The period shall be fixed by the father after due
intimation to the maternal grandfather who shall permit the
child to go with the father for the aforesaid period.
SHYAMRAO MAROTI KORWATE v. DEEPAK
KISANRAO TEKAM [P. SATHASIVAM, J.]
485
(3) In addition to the same, twice in a month preferably on
Saturday or Sunday or a festival day, maternal grand-father
shall allow the child to visit the father from morning to
evening. Father shall take the child and leave him back at
the maternal grand-father’s place on such days.’
(4) The father is free to provide facilities such as payment
of school fees, books, dress materials, eatables etc. during
this period to develop a conducive relationship with the
child.
17. With the above direction, the impugned order of the
High Court is modified. The appellant-maternal grandfather is
permitted to continue the custody of the child till the age of 12
years as ordered by the District Judge. The decision regarding
investment in the name of minor child is also restored. To the
extent mentioned above, the appeal is allowed. No costs.
R.P
Appeal partly allowed.
[2010] 11 S.C.R. 486
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RAMA DEVI
v.
STATE OF BIHAR AND ORS.
(Criminal Appeal No. 1754 of 2010)
SEPTEMBER 14, 2010
[ALTAMAS KABIR AND A.K. PATNAIK, JJ.]
C
D
Code of Criminal Procedure, 1973: s.482– Quashing of
complaint – Allegation of cheating – Complaint alleging that
C huge area of land was sold by the brother of vendor to different
persons and accused having knowledge of previous sales
purchased the land and in order to cheat the complainant sold
the land to him – Magistrate took cognizance of offence –
Petition for quashing of complaint and proceedings,
D dismissed by High Court – On appeal, held: The materials
on record showed that a link was not established between the
vendor and the accused and in fact the accused herself felt
cheated in the hands of the vendor – Complaint and the
consequential proceedings quashed – Penal Code, 1860 –
E ss.406, 420 465, 468, 120-B.
A complaint was filed by respondent no.2 against the
appellant under Sections 406, 420 465, 468, 120-B, IPC.
The allegation in the complaint was that a huge area of
land was sold by ‘S’ to different persons at different points
F of time by different sale deeds. ‘P’, the brother of ‘S’ sold
a portion of the land to the appellant and the appellant
purchased the land inspite of having knowledge that
those lands had already been sold to others and, in order
to cheat the complainant, she executed the sale deed in
G his favour.
The magistrate took cognizance of the offences. The
appellant filed petition for quashing the proceedings
before the High Court, which was dismissed. The instant
486
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RAMA DEVI v. STATE OF BIHAR AND ORS.
487
appeal was filed challenging the order of the High Court.
488
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Allowing the appeal, the Court
HELD: No link had at all been established between
the sale deeds executed by ‘S’ in respect of mutated
property and the appellant which could have given rise
to suspicion, if any, of a conspiracy between herself and
her vendor and his brother ‘S’, with the intention of
cheating respondent no.2. If respondent no.2 was
prejudiced by the fact that the appellant had executed a
sale deed in his favour in respect of a plot of land which
had already been the subject matter of a previous transfer,
he could at best question such transfer and claim
damages in respect thereof from the vendor of the
appellant by way of appropriate damages, but an action
in the criminal court would not lie in the absence of any
intention to cheat and/or defraud respondent no.2. If at
all respondent no.2 had any grievance in respect of the
sale deed which was executed in his favour by the
appellant, it could be against ‘P’ and not the appellant.
The veracity of the appellant’s story that she was cheated
by her vendor ‘P’, may be gauged from the fact that after
having purchased the suit property from ‘P’ by a duly
registered deed of sale, she applied to the concerned
authority for mutation in her name and the property
continued to be mutated in her name till such time as she
transferred the same to respondent no.2. There was no
reason for the appellant to have obtained the sale deed
in her name from ‘P’ with the intention of cheating
respondent no.2. Therefore, the appellant cannot be
made responsible for the circumstances which followed
the sale effected by the appellant in favour of respondent
no.2 and the filing of such a criminal complaint was
nothing more than an attempt to pressurize the appellant
into making a settlement. The order passed by the High
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Court is set aside. Consequently, complaint and the
proceedings initiated on the basis thereof are also
quashed. [Paras 12, 13] [492-D-F]
B
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 1754 of 2010.
From the Judgment and Order dated 20.12.2006 of the
High Court of Patna in CRLM No. 19975/2006.
T. Mahipal for the Petitioner.
C
C
Gopal Singh, Chandan Kumar and Amit Pawan for the
Respondents.
The Judgment of the Court was delivered by
D
D
ALTAMAS KABIR, J. 1. Leave granted.
2. This appeal is directed against the judgment and order
dated 20th December, 2006, passed by the Patna High Court
in Crl. Misc. No.19975 of 2006 dismissing the same.
E
F
G
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E
3. The Respondent No.2, Birendra Kumar Sinha, filed a
Complaint Case No.3714C of 2005 against the Appellant
alleging that she had committed offences under Section 406,
420, 465, 468, 120-B of the Indian Penal Code (IPC) by
executing a Deed of Sale in his favour, on 12th February, 2005,
F in respect of a plot of land measuring 1 Katha 5 Dhurs,
pertaining to Survey No.235 in Khata No.3 of Mauza Dhelwan
under Phulwarisharif P.S., District Patna, Bihar. According to
the complainant, the boundary wall erected by him around the
said plot was demolished and on inquiry, he came to know that
G one Prabhu Singh, who had sold the land to the Appellant was
the full brother of one Sita Ram Singh, who had earlier sold the
entire area of Survey plot No.235 to different persons at
different points of time by different sale deeds. The complainant
alleged that Prabhu Singh, the Appellant's vendor and brother
H
RAMA DEVI v. STATE OF BIHAR AND ORS.
[ALTAMAS KABIR, J.]
489
of Sita Ram Singh, had acted as an attesting witness in the
said Sale Deeds executed by Sita Ram Singh, which indicated
that inspite of having knowledge that Sita Ram Singh had sold
the lands in question to others, Rama Devi purchased the said
lands and in order to cheat the complainant, executed the Sale
Deed in his favour on 12th February, 2005.
4. On 28th February, 2006, the Sub-Divisional Judicial
Magistrate, Patna, took cognizance of the alleged offences and
issued process only against the Appellant herein. Aggrieved
thereby, the Appellant filed Criminal Miscellaneous Petition
No.19975 of 2006 before the Patna High Court on 10th May,
2006, for quashing the cognizance taken as also the entire
proceedings in Complaint Case No.3714C of 2005 pending
before the said Sub-Divisional Judicial Magistrate, Patna. On
20th December, 2006, the Patna High Court dismissed the
Appellant's aforesaid petition under Section 482 Cr.P.C., which
is the subject matter of challenge in the present appeal.
5. On behalf of the Appellant it was pointed out by Mr.
Nagendra Rai, learned Senior Advocate, that the learned
Magistrate had taken cognizance of the offences complained
of on an erroneous appreciation of the material before him to
the effect that it was not disputed that the property in question
had earlier been sold by Sita Ram Singh, who was the brother
of the Appellant's vendor, and that the Appellant had attested
the said Sale Deed, which clearly indicated that the Appellant
had knowledge of the earlier sale and despite the same, had
not only executed the Sale Deed in favour of the complainant
but had also indicated that no other deed had been executed
in respect of the property which were free from all
encumbrances. Mr. Rai referred to the Sale Deeds which had
been referred to by the learned Magistrate, from which it would
be apparent that the Appellant was not an attesting witness to
any of the sale deeds. Mr. Rai also referred to the Sale Deed
executed by the Appellant in favour of the complainant to show
that Prabhu Singh was not an attesting witness in the said
490
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[2010] 11 S.C.R.
A document either and the witnesses were : (1) Kedar Prasad
Singh, (2) Nawal Kisahore and (3) Awadhesh Kumar.
6. Mr. Rai submitted that since the very basis for the
cognizance taken by the learned Magistrate was fallacious and
without any foundation, the High Court erred in dismissing the
B
Appellant's application under Section 482 Cr.P.C. and that the
cognizance taken by the learned Magistrate, as also the
proceedings relating to the Complaint Case No.3714C of
2005, were liable to be quashed.
C
7. Mr. Rai's submissions were strongly opposed on behalf
of the Respondent No.2, Birendra Kumar Sinha. It was
submitted that no case had been made out on behalf of the
Appellant for interference with the order of the High Court
impugned in this appeal. Mr. P.S. Mishra, learned Senior
D Advocate appearing for the Respondent No.2, reiterated the
submissions which were made before the High Court to the
effect that Prabhu Singh, the Appellant's vendor, and his brother
Sita Ram Singh had in conspiracy with each other sold away
the entire lands comprising Survey Plot No.235 and that the
E Appellant was also a party to such conspiracy. Mr. Mishra urged
that despite being part of the conspiracy, the Appellant got
Prabhu Singh to transfer the land in question to her and got her
name mutated in the concerned jamabandi, which would be
apparent from the inquiry report of the application for mutation
F of Case No.650/7 Year 2001-02 Hulka No.7 dated 5th March,
2002. From the said report, it would be crystal clear that the
names of both Sita Ram Singh and Rama Devi were shown in
the column for recording the name of the raiyat in respect of
the jamabandi. Mr. Mishra submitted that the same would
indicate a deep-rooted conspiracy hatched by the said Sita
G
Ram Singh and his brother Prabhu Singh and Rama Devi, to
defraud and cheat the Respondent No.2 by executing a sale
deed after obtaining the full consideration, despite having
knowledge that the land in question had already been
transferred earlier by Sita Ram Singh to another party.
H
RAMA DEVI v. STATE OF BIHAR AND ORS.
[ALTAMAS KABIR, J.]
491
8. In addition to the above, Mr. Mishra denied the
genuineness of the Deed of Sale executed by Rama Devi in
favour of the Respondent No.2 in view of the observations
made by the High Court in its impugned order indicating that
Prabhu Singh, the Appellant's vendor had attested the sale
deed despite having full knowledge of the earlier transactions
in respect of the lands in question.
9. Mr. Mishra submitted that the High Court had rightly held
that the question of genuineness of the documents and the
intention of the Appellant, Sita Ram Singh and Prabhu Singh
were required to be decided on evidence in the backdrop of
the conspiracy alleged by the Respondent No.2, which could
only be done by holding a full-fledged trial.
10. Having considered the submissions made on behalf
of the respective parties and having considered the documents
placed before us and also the Courts below, we do not find any
substance in Mr. Mishra's submissions on behalf of the
Respondent No.2. From the materials produced before us, no
link has been established between Prabhu Singh and the
appellant. If at all the Respondent No.2 has any grievance in
respect of the sale deed which had been executed in his favour
by the Appellant, it could be against Prabhu Singh and not the
Appellant. If we were to accept Mr. Mishra's submissions, then
it was the Appellant Rama Devi who had been cheated by her
vendor, Prabhu Singh, who had sold her the property in
question, although, the same is alleged to have been the
subject matter of an earlier sale effected by his brother, Sita
Ram Singh. The veracity of the Appellant's story may be gauged
from the fact that after having purchased the suit property from
Prabhu Singh by a duly registered deed of sale, she applied
to the concerned authority of Phulwarisharif Circle for mutation
of her name in respect of the jamabandi in which Survey Plot
No.235 had been included and the property continued to be
mutated in her name till such time as she transferred the same
to the Respondent No.2. There can be no reason, as suggested
SUPREME COURT REPORTS
492
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B
C
D
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A by Mr. Mishra, for the Appellant to have obtained the sale deed
in her name from Prabhu Singh with the intention of cheating
the Respondent No.2. In fact, no link had at all been established
between the sale deeds executed by Sita Ram Singh in
respect of mutated property and the Appellant which could have
B given rise to suspicion, if any, of a conspiracy between herself
and her vendor and his brother Sita Ram Singh, with the
intention of cheating the Respondent No.2.
11. If the Respondent No.2 has been prejudiced by the fact
that the Appellant had executed a saledeed in his favour in
C respect of a plot of land which had already been the subject
matter of a previous transfer, he can at best question such
transfer and claim damages in respect thereof from the vendor
of the Appellant by way of appropriate damages, but an action
in the Criminal Court would not lie in the absence of any
D intention to cheat and/or defraud the Respondent No.2.
12. We, therefore, have no doubt in our minds that the
Appellant, Rama Devi, cannot be made responsible for the
circumstances which followed the sale effected by the Appellant
E in favour of the Respondent No.2 and the filing of such a
criminal complaint was nothing more than an attempt to
pressurize the Appellant into making a settlement.
F
F
G
G
13. We, therefore, have no hesitation in setting aside the
order passed by the High Court on 20th December, 2006, in
Crl. Misc. No.19975 of 2006, which has been impugned in this
appeal. Consequently, Complaint Case No.3714C of 2005 and
the proceedings initiated on the basis thereof by the SubDivisional Judicial Magistrate, Patna, are also quashed.
14. The appeal, therefore, succeeds and is allowed.
D.G.
H
[2010] 11 S.C.R.
Appeal allowed.
494
[2010] 11 S.C.R. 493
SRI SAMBHU DAS @ BIJOY DAS & ANR.
v.
STATE OF ASSAM
(Criminal Appeal No. 342 of 2007)
SEPTEMBER 15, 2010
A
B
[DR. MUKUNDAKAM SHARMA AND H.L. DATTU, JJ.]
Penal Code, 1860: s.302/34 – Murder – Conviction
based on evidence of eye-witnesses – Concurrent findings of
courts below – Interference with – Held: No reason to upset
the concurrent findings of courts below – The evidence of eyewitness was corroborated by the investigating officer and the
post-mortem report and was found to be trustworthy and
reliable – Merely because some persons were not examined
would not corrode the vitality of the prosecution version,
particularly, when witnesses examined withstood the crossexamination and pointed to the accused persons as
perpetrators of the crime – Constitution of India, 1950 –
Art.136 – Evidence.
Constitution of India, 1950: Art.136 – Scope of – Held:
Art.136 only confers a discretionary power on the Supreme
Court to be exercised sparingly to interfere in suitable cases
where grave miscarriage of justice has resulted from illegality
or misapprehension or mistake in reading evidence or from
ignoring, excluding or illegally admitting material evidence –
When there are concurrent findings of facts and/or when there
is no question of law involved and the conclusion is not
perverse, the Supreme Court would not re-open the findings
of the High Court.
C
D
E
F
G
Code of Criminal Procedure, 1973:
[2010] 11 S.C.R.
A FIR loses its authenticity if it is lodged after the inquest report
is a general proposition and may not be true in all cases and
all circumstances – On facts, entry made in the general diary
on the basis of telephonic message/information and on
receipt of that information, the investigating officer went to the
B place of incident, drew up the inquest report, made seizure of
the material objects and recorded the statements of persons
present – Formal FIR lodged after few hours – Lodging of FIR
after recording the inquest report would not be fatal – FIR.
C
s.174 – Inquest report – Object of – Held: Is to ascertain
whether a person has died under unnatural circumstances or
died an unnatural death and, if so, what was the cause of
death.
FIR: When information regarding a cognizable offence is
D furnished to the police, that information is regarded as the FIR
and all enquiries held by the police, subsequent thereto would
be treated as investigation, even though the formal registration
of the FIR takes place only later.
The prosecution case was that on 7.6.1997, the
deceased was returning home on a rickshaw driven by
PW-2. On the way, the appellants and others assaulted
the deceased and thereafter forcibly took him to a house
where he was assaulted by all the accused persons. The
wife of the deceased was informed about the assault on
F her husband. She came to the place of occurrence and
saw the accused persons assaulting the deceased. The
police was informed by PW-8. The police came to the
place of occurrence and took the injured to the hospital
where he was declared dead. The appellants-accused
G and two others were convicted under Section 302/34 IPC.
The order of trial court was upheld by the High Court.
E
s.174 – Inquest report – FIR lodged after recording
inquest report – Authenticity of – Held: The proposition that
493
SUPREME COURT REPORTS
In the instant appeal, it was contended for the
appellants that the Supreme Court can take a different
H
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SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 495
OF ASSAM
view and also come to a different conclusion than the one
arrived at by the trial court and the High Court if it prima
facie comes to the conclusion that the findings of fact
reached by the trial court and confirmed by the High
Court suffer from any patent error of law or have resulted
in miscarriage of justice; that the FIR was lodged after the
inquest was held and, therefore, the FIR was not reliable;
and that the important witness was not examined by the
prosecution which was fatal to prosecution story.
Dismissing the appeal, the Court
HELD: 1. This Court, in exercise of its powers under
Article 136 of the Constitution will not re-open the
findings of the High Court when there are concurrent
findings of facts and when there is no question of law
involved and the conclusion is not perverse. Article 136
of the Constitution does not confer a right of appeal on
a party. It only confers a discretionary power on the
Supreme Court to be exercised sparingly to interfere in
suitable cases where grave miscarriage of justice has
resulted from illegality or misapprehension or mistake in
reading evidence or from ignoring, excluding or illegally
admitting material evidence. [Para 12] [506-E-G]
496
A
B
C
C
D
D
E
E
G
Balaka Singh & Ors. v. The State of Punjab 1975(4)
SCC 511; Ramesh Baburao Devaskar and Ors. v. State of
Maharashtra, 2007(13) SCC 501; Badri v. State of Rajasthan
1995 Supp. (3) SCC 521; Ishvarbhai Fuljibhai Patni v. State
H
F
[2010] 11 S.C.R.
A of Gujarat 1995 (1) SCC 178; Lal Singh v. State of Madhya
Pradesh 2003 (9) SCC 464; Hate Singh Bhagat Singh v.
State of Madhya Bharat AIR 1953 SC 468, referred to.
B
Dhananjay Shanker Shetty v. State of Maharashtra
(2002) 6 SCC 596; Ravinder Parkash & Anr. v. State of
Haryana (2002) 8 SCC 426; Bharat v. State of Madhya
Pradesh (2003) 3 SCC 106; Mousam Singha Roy & Ors. v.
State of West Bengal (2003) 12 SCC 377; Ganga Kumar
Srivastava v. State of Bihar (2005) 6 SCC 211; Basudev
Hazra v. Matiar Rahaman Mandal AIR 1971 SC 722, relied
on.
SUPREME COURT REPORTS
2.1. In the instant case, there was the documentary
evidence in the form of G.D. entry recorded by PW-8 in
the General Diary on 07.06.1997 at about 6.30 P.M. That
entry was made on the basis of the telephonic message/
information supplied by PW-3. It was on receipt of this
information that PW-8 went to the place of the incident,
drew up the inquest report, made seizure of the material
objects and recorded the statement of those present,
including PW-1. Admittedly, the inquest report was
prepared by PW-8 at 9.30 P.M. and the formal FIR was
lodged by PW-1 at 11.30 P.M. The proposition that the FIR
loses its authenticity if it is lodged after the inquest report
is a general proposition and may not be true in all cases
and all circumstances. This general proposition cannot
be universally applied, by holding that if the FIR is lodged
for whatever reason after recording the inquest report the
same would be fatal to all the proceedings arising out of
the Indian Penal Code. [Para 16] [508-B-F]
2.2. The Inquest Report is prepared under Section
174 Cr.P.C. The object of the inquest proceedings is to
ascertain whether a person has died under unnatural
F circumstances or died an unnatural death and, if so, what
was the cause of death. The question regarding the
details as to how the deceased was assaulted or who
assaulted him or under what circumstances he was
assaulted, is foreign to the ambit and scope of the
proceedings under Section 174 Cr.P.C. The names of the
G
assailants and the manner of assault are not required to
be mentioned in the inquest report. The purpose of
preparing the inquest report is for making a note in regard
to identification marks of the accused. Mention of the
H
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 497
OF ASSAM
name of the accused and eye-witness in the inquest
report is not necessary. Due to non-mentioning of the
name of the accused in the inquest report, it cannot be
inferred that the FIR was not in existence at the time of
inquest proceedings. Inquest report and post mortem
report cannot be termed to be substantive evidence and
any discrepancy occurring therein can neither be termed
to be fatal nor even a suspicious circumstance which
would warrant a benefit to the accused and the resultant
dismissal of the prosecution case. The contents of the
inquest report cannot be termed as evidence, but they
can be looked into to test the veracity of the witnesses.
[Para 17] [508-G-H; 509-A-D]
Podda Narayana v. State of Andhra Pradesh AIR 1975
SC 1252; George v. State of Kerala AIR 1998 SC 1376;
Suresh Rai v. State of Bihar AIR 2000 SC 2207, referred to.
2.3. The well settled principle is that when information
regarding a cognizable offence is furnished to the police,
that information is regarded as the FIR and all enquiries
held by the police, subsequent thereto would be treated
as investigation, even though the formal registration of
the FIR takes place only later. Assuming that some report
was made on telephone and that was the real FIR, that
by itself would not affect the appreciation of evidence
made by the Sessions Judge and the conclusions of fact
drawn by him. The FIR under Section 154 Cr. P.C. is not
a substantive piece of evidence. Its only use is to
contradict or corroborate the maker thereof. [Paras 23, 24]
[511-D-F]
Maha Singh v. State (Delhi Administration) (1976) SCC
644; State of U.P. v. Bhagwant Kishore AIR 1964 SC 221,
referred to.
3.1. The post-mortem was conducted by the doctorPW6. The post-mortem report of the deceased stated that
498
A
B
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F
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A injuries were found to be ante mortem in nature. In the
opinion of PW6, death was due to shock and hemorrhage
resulting from the injuries sustained which were caused
by blunt weapons. Unfortunately, the doctor did not state
in his report whether the injuries sustained by the
B deceased were of homicidal in nature. He further opined
that the injuries were fresh and caused by a blunt object.
PW-8 was the investigating officer. A little comparison of
the seized objects and the wounds found on the body
of the deceased lead to inference that the evidence of PWC 8 can be believed, since it corroborated with the opinion
of the doctor, PW-6. Therefore, it can be safely inferred
that the deceased died because of the injuries sustained
by the assault made by other persons and not by selfinflicted wounds. [Paras 25] [511-G-H; 512-A-E]
D
3.3. In the cross-examination of PW-1, nothing very
striking was elicited except minor contradiction, which
would not shake her credibility. In fact, she had stated
that immediately after the post-mortem of the dead body,
she lodged the FIR with the police and she further denied
E the suggestion that she did not tell the police that the
accused persons had assaulted her husband and killed
him while he was returning home on a Rickshaw.
Therefore, two important aspects emerged from her
evidence before the trial court. Firstly, she has seen that
F her husband was tied by means of a rope in a house and
secondly, the accused persons including the appellants
were assaulting her husband. The reasons for not
examining the person who had informed PW1 about the
incident were not explained by the prosecution.
G Therefore, that part of the evidence of PW1 has to be
eschewed since no effort was made by the prosecution
to explain the reason for non-examination of one of the
important persons. It is noticed by this Court time and
again that in a number of criminal cases, because of
H sloppy attitude shown by the prosecution, the real culprit
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 499
OF ASSAM
goes scot free. It is no doubt true that when statement of
PW1 was recorded under Section 161 Cr.P.C., she had
not implicated four other accused persons but certainly
implicated the appellants and two other accused persons.
Merely because she had made some improvement in the
FIR lodged by her, her testimony cannot be totally
discarded. [Para 27] [513-D-H; 514-A-E]
4. It is not necessary for the prosecution to examine
every other witness cited by them in the charge-sheet.
Mere non-examination of some persons does not corrode
the vitality of the prosecution version, particularly, the
witnesses examined have withstood the crossexamination and pointed to the accused persons as
perpetrators of the crime. The trial court and the High
Court came to the conclusion that the evidence of PW1
was trustworthy and reliable. The evidence of PW1 was
corroborated by PW-8 and the post-mortem report issued
by PW6. The trial court and the High Court were justified
in believing of PW-1. PW2 was declared hostile by the
prosecution. However, in his examination-in-chief, he
says that he was carrying the victim in his rickshaw and
he stopped the rickshaw on the request made by the
deceased and at that time, the victim had a quarrel with
some persons who then assaulted him with blunt
objects. In his cross-examination, he denied the
suggestions put to him with reference to his statement
made under Section 161 Cr. P.C. before the Investigating
Officer. PW3, PW4, PW5 were brought in by the
prosecution as eye-witnesses to the occurrence. But all
of them had turned hostile. Unfortunately, the trend in
this country appears to be, as the time passes, dead are
forgotten and the living with a criminal record are
worshipped and adored and no witness would like to
speak against them. The trial court and the High Court
did not give any credence to their evidence. The High
Court arrived at its findings after examination and
500
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A consideration of the main features of evidence. It was
only thereafter, the High Court affirmed the findings of the
trial court while convicting the accused persons. There
is no reason to upset the finding of the trial court and the
High Court. [Paras 28, 29, 30, 32 33] [515-E-H; 516-A-D;
B 517-A-B]
Case Law Reference:
C
D
E
F
G
H
C
D
E
F
G
1975(4) SCC 511
referred to
Paras 4,13,
2007(13) SCC 501
referred to
Paras 4, 13, 15
1995 Supp. (3) SCC 521 referred to
Para 4
1995 (1) SCC 178
referred to
Para 4
2003 (9) SCC 464
referred to
Para 4
AIR 1953 SC 468
referred to
Para 6
(2002) 6 SCC 596
relied on
Para 7
(2002) 8 SCC 426
relied on
Para 8
(2003) 3 SCC 106
relied on
Para 9
(2003) 12 SCC 377
relied on
Para 10
(2005) 6 SCC 211
relied on
Para 11
AIR 1971 SC 722
relied on
Para 12
AIR 1975 SC 1252
referred to
Para 17
AIR 1998 SC 1376
referred to
Para 17
AIR 2000 SC 2207
referred to
Para 17
(1976) SCC 644
referred to
Para 21
AIR 1964 SC 221
referred to
Para 22
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
H No. 342 of 2007.
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 501
OF ASSAM
From the Judgment & Order dated 26.4.2006 of the High
Court of Guwahati in CRLA No. 63 of 2005.
502
A
M.N. Rao, Azim H. Laskar, A. Ramesh and Abhijit
Sengupta for the Petitioners.
Avijit Roy and Navneet (for Corporate Law Group) for the
Respondent.
B
The Judgment of the Court was delivered by
H.L. DATTU, J.1. This appeal is directed against the
judgment and order passed by the Gauhati High Court in
Criminal Appeal No. 63 of 2005, dated 26.04.2006, whereby
and where under, the High Court has affirmed the order passed
by the Sessions Judge, Hailakandi, in Sessions Case No.2 of
2002. The appellants are convicted under Section 302/34 IPC
and sentenced to imprisonment for life and to pay a fine of Rs.
10,000/- each, and in default, to undergo further imprisonment
for six months each.
2. The case of the prosecution is that, on 07.06.1997 at
about 5.00 P.M. the deceased Fanilal Das was returning home
on a rickshaw driven by Manilal Das (PW2). The deceased
stopped the rickshaw near Shiva temple and after offering his
prayer, he came back to the rickshaw and at that point of time,
the appellants and others assaulted the deceased and,
thereafter, forcibly took him to the house of Kunja Mohan where
he was assaulted by all the accused persons. It is their further
case, that, one Upendra Das informed the wife of the deceased
about the assault on her husband by the appellants and on
hearing the same, she came to the place of occurrence and
saw the accused persons assaulting the deceased, and on
being informed by PW-3, police came to the place of incident
and took the injured to the hospital where he was declared
dead. After completing the investigation, the accused persons
were charge-sheeted. Initially, four accused persons were tried
by the Sessions Judge, Hailkandi for commission of the
C
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A offence under Section 302/34 IPC. During the trial, four other
persons were also arrayed as accused and tried along with the
appellants. All the accused persons pleaded not guilty. During
the course of the trial, the prosecution examined eight
witnesses. After completion of the trial, the appellants were
B examined under Section 313 Cr.P.C., wherein the appellants
completely denied their involvement in the alleged offence. The
learned trial Judge convicted the appellants and two others for
the offence under Section 302/34 IPC and sentenced as stated
earlier. This order of the Sessions Court is confirmed by the
C Gauhati High Court by rejecting the criminal appeals filed by
the accused persons.
3. This appeal is filed only by Sambhu Das @ Bijoy Das
(Accused No. 4) and Bibhu Das @ Sekhar Das (Accused No.
5).
D
4. While assailing the judgment and order of the High
Court, it is contended by Shri M.N. Rao, learned senior counsel,
that admittedly, the Inquest Report was recorded by the
Investigating Officer at 9.30 PM and the FIR was lodged by the
E wife of the deceased at 11.30 PM on 07.06.1997. Therefore,
it is contended that the First Information Report loses all
authenticity if written after Inquest Report. In aid of his
submission, reliance is placed on the observation made by this
court in the case of Balaka Singh & Ors. Vs. The State of
F Punjab, [1975(4) SCC 511] and Ramesh Baburao Devaskar
and Ors. Vs. State of Maharashtra, [2007(13) SCC 501]. It is
further contended that the High Court has failed to address
itself to certain crucial aspects of evidence and proceeded to
dispose of the appeal on general observations and more so,
in a very casual and cavalier manner which is impermissible
G
in law. Reliance is placed on the observation made by this court
in the case of Badri vs. State of Rajasthan, [1995 Supp. (3)
SCC 521], Ishvarbhai Fuljibhai Patni vs. State of Gujarat,
[1995 (1) SCC 178] and Lal Singh vs. State of Madhya
Pradesh, [2003 (9) SCC 464]. It is further contended that the
H
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 503
OF ASSAM [H.L. DATTU, J.]
High Court has erred in not appreciating the fact that the
accused has put forward a reasonable defence throughout the
trial and as well as in their statement recorded under Section
313 of Criminal Procedure Code. While elaborating this
contention, it is stated that prior to the occurrence, the
complainant’s husband and her husband’s younger brother
Chunnulal Das had got involved in the case regarding the
murder of their brother Arun Das and for that reason they have
been implicated in the present case out of that grudge. It is
further submitted that in the instant case, the High Court has
made departure from the rule, that when an accused person
puts forward a reasonable defence which is likely to be true and
in addition, when the same is supported by some prosecution
witnesses, the burden of proof on the other side becomes
onerous, because a reasonable and probable story likely to be
true when pitted against a weak and vacillating prosecution
case and by that reasonable doubt, the accused must get the
benefit. It is further submitted that this court, in the case of Hate
Singh Bhagat Singh vs. State of Madhya Bharat, [AIR 1953 SC
468] has held that when an accused person puts forward a
reasonable defence which is likely to be true and in addition is
supported by two prosecution witnesses, then the burden on
the other side becomes all the heavier because a reasonable
and probable story likely to be true when pitted against a weak
and vacillating case is bound to raise reasonable doubts of
which the accused must get the benefit. It is also contended
that one important material witness, namely, Upen Das, who
is said to have informed PW1 that the accused person killed
her husband has not been examined by the prosecution, nor
has any explanation for not examining him as a witness been
given by the prosecution and, therefore, non-examination of
Upen Das is fatal to the prosecution story.
5. The learned counsel for the State while justifying the
impugned judgment and order, would submit that the concurrent
findings on facts by the Sessions Court and the High Court need
not be interfered by this Court.
504
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
6. The question that requires to be noticed and answered
is, whether this Court in exercise of the powers under Article
136 of the Constitution of India, can upset the concurrent findings
of fact recorded by the Trial Court and the Appellate Court. Shri
M.N. Rao, learned senior counsel for the appellants, submits
B that this court can take a different view and also come to
different conclusion than the one arrived at by the Trial and the
Appellate Court, if this Court prima facie comes to the
conclusion that the findings of fact reached by the Trial Court
and confirmed by the High Court suffers from any patent error
of law or has resulted in miscarriage of justice. In our view, the
C
law on this issue is now well settled by several pronouncements
made by this court.
A
7. In Dhananjay Shanker Shetty vs. State of Maharashtra,
[(2002) 6 SCC 596], it is stated that :
D
E
F
D
E
“Ordinarily, after appraisal of evidence by the two
courts below and recording concurrent verdict of
conviction, this Court does not interfere with the same, but
where it is found that compelling grounds exist and there
would be failure of justice, a duty is enjoined upon it to
reappraise the evidence itself for doing complete justice
in the case.”
8. In Ravinder Parkash & Anr. vs. State of Haryana,
[(2002) 8 SCC 426], it is observed :
F
G
G
H
H
“…..It is true normally this Court would not substitute its
subjective opinion of the evidence with that of concurrent
findings of the two courts below. However, having
considered the findings of the courts below, we have
noticed that the trial court, though by a lengthy judgment
has found the appellants guilty, we have found that finding
is not supported by the material on record. Therefore, we
have considered the prosecution evidence independently
and have disagreed with the same for reasons mentioned
in this judgment. We have not done this by merely
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 505
OF ASSAM [H.L. DATTU, J.]
substituting our subjective satisfaction but we have done
the same for reasons based on material on record…….”
(Para 14)
9. In Bharat vs. State of Madhya Pradesh, [(2003) 3 SCC
106], it is observed that :
“….The prosecution has to prove its case against the
appellant beyond reasonable doubt. The chain of
circumstances, in our opinion, is not complete so as to
sustain the conviction of the appellant. There is thus no
substance in the contention urged on behalf of the State
that this Court may not interfere in the concurrent findings
of fact of the courts below.” (Para 12 )
10. In Mousam Singha Roy & Ors. vs. State of West
Bengal, [(2003) 12 SCC 377], it is stated :
“We are also aware that this Court does not disturb
the concurrent findings of the courts below if the same are
based on legal evidence merely because another view is
possible. Thus, keeping in mind the caution expressed by
Baron Alderson (supra) as also the need to respect the
concurrent findings of the two courts below, we have
assessed the evidence in this case very carefully, but in
spite of the same we are unable to concur with the findings
of the courts below. In our opinion, both the courts below
have departed from the rule of prudence while appreciating
the evidence led by the prosecution.” (Para 29 )
506
A
B
(i) The powers of this Court under Article 136 of the
Constitution are very wide but in criminal appeals this
B
[2010] 11 S.C.R.
Court does not interfere with the concurrent findings of fact
save in exceptional circumstances.
(ii) It is open to this Court to interfere with the findings
of fact given by the High Court, if the High Court has acted
perversely or otherwise improperly.
(iii) It is open to this Court to invoke the power under
Article 136 only in very exceptional circumstances as and
when a question of law of general public importance arises
or a decision shocks the conscience of the Court.
C
C
(iv) When the evidence adduced by the prosecution
fell short of the test of reliability and acceptability and as
such it is highly unsafe to act upon it.
D
D
E
E
F
11. In Ganga Kumar Srivastava vs. State of Bihar, [(2005)
6 SCC 211], it is observed :
“From the aforesaid series of decisions of this Court
on the exercise of power of the Supreme Court under
Article 136 of the Constitution following principles emerge:
A
SUPREME COURT REPORTS
G
H
(v) Where the appreciation of evidence and finding
is vitiated by any error of law of procedure or found
contrary to the principles of natural justice, errors of record
and misreading of the evidence, or where the conclusions
of the High Court are manifestly perverse and
unsupportable from the evidence on record. (Para 10)
12. This Court, in exercise of its powers under Article 136
of the Constitution, will not re-open the findings of the High
Court when there are concurrent findings of facts and there is
no question of law involved and the conclusion is not perverse.
F Article 136 of the Constitution, does not confer a right of appeal
on a party. It only confers a discretionary power on the Supreme
Court to be exercised sparingly to interfere in suitable cases
where grave miscarriage of justice has resulted from illegality
or misapprehension or mistake in reading evidence or from
G ignoring, excluding or illegally admitting material evidence.
[See Basudev Hazra v. Matiar Rahaman Mandal – AIR 1971
SC 722].
H
13. Keeping in view the aforesaid settled legal principles,
we now proceed to examine the main contention canvassed
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 507
OF ASSAM [H.L. DATTU, J.]
by learned senior counsel Shri M.N. Rao, appearing for the
appellant. It is submitted that in the instant case, the
investigating officer (PW8), has recorded/prepared the inquest
report on 7.6.1997 at 9.30 PM and at the instance of PW1, the
first information report was recorded by PW8 on 7.6.1997 at
11.30 PM under Sections 147, 148, 149, 341, 342, 325, 326
and 302 of IPC against four persons and, therefore, it is
contended that since FIR is lodged after inquest was held, the
FIR is not reliable. Alternatively, it is contended that in a case
under Section 302 read with Section 32 IPC, First Information
Report cannot be lodged after the inquest has been held.
Reliance, as we have already stated, is on the decision of this
Court in Balkasingh’s case (supra) and in Ramesh Babu Rao
Devaskar’s case (supra).
14. In Balaka Singh’s case, it was observed by this Court,
that the names of four accused out of nine were missing in the
body of the Inquest Report and this omission was not explained
and, therefore, it lead to the probability that FIR must have been
prepared after the preparation of Inquest Report. That was a
case where there were nine accused persons and the names
of five accused were mentioned in the Inquest Report. The
A.S.I. had no valid explanation for the same. It was also found
by the Court that FIR was registered subsequently. Therefore,
the observation of this Court is to be understood in that
background. We do not think that this decision lays down that
under all circumstances, the First Information Report loses its
authenticity, if it is filed after Inquest Report.
15. In Ramesh Babu Rao Devaskar’s case, First
Information Report was lodged after inquest was held and the
same was based on the version of alleged eye witness. This
court was of the view that there was no explanation why FIR
was not lodged by eye witness and also noticed that the name
of only one accused was mentioned in the FIR. However, in the
Inquest Report statements of Panch witnesses recorded to the
effect that some unknown assailants killed the deceased. Apart
508
A
B
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A from the above omission, copy of the FIR was sent to the
concerned Magistrate after four days, sharing of common
object by other accused persons with the accused who was
named in the FIR was not made out and one of the PWs turned
hostile and testimony of other two PWs was not reliable. In view
B of these discrepancies, this Court, on facts, held it would be
hazardous to record conviction of the accused.
16. In the present case, there is the documentary evidence
in the form of G.D. entry No.164 recorded by PW-8 in the
General Diary on 07.06.1997 at about 6.30 P.M. That entry was
C made on the telephonic message/information supplied by
Asabuddin Mazumdar, PW-3. It is clearly stated therein by PW3 that a man named Fanilal Das was lying in a serious condition
on the side of verandah of Chandan Das. It was on receipt of
this information that PW-8 went to the place of occurrence of
D the incident, drew up the inquest report, made seizure of the
material objects and recorded the statement of those present,
including PW-1. Admittedly, the inquest report is prepared by
PW-8 at 9.30 P.M. and the formal FIR is lodged by PW-1 at
11.30 P.M. The learned senior counsel Shri M.N. Rao, by
E placing his fingers on the admission made by PW-8 in his
evidence would contend, that, FIR loses its authenticity if it is
lodged after the inquest report is recorded. This submission of
the learned counsel is a general proposition and may not be
true in all cases and all circumstances. This general proposition
F cannot be universally applied, by holding that if the FIR is lodged
for whatever reason after recording the inquest report the same
would be fatal to all the proceedings arising out of the Indian
Penal Code.
17. The Inquest Report is prepared under Section 174
Cr.P.C. The object of the inquest proceedings is to ascertain
whether a person has died under unnatural circumstances or
an unnatural death and if so, what the cause of death is? The
question regarding the details as to how the deceased was
assaulted or who assaulted him or under what circumstances
H he was assaulted, is foreign to the ambit and scope of the
G
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 509
OF ASSAM [H.L. DATTU, J.]
proceedings under Section 174 Cr.P.C. The names of the
assailants and the manner of assault are not required to be
mentioned in the inquest report. The purpose of preparing the
inquest report is for making a note in regard to identification
marks of the accused. The inquest report is not a substantive
evidence. Mention of the name of the accused and eye witness
in the inquest report is not necessary. Due to non-mentioning
of the name of the accused in the inquest report, it cannot be
inferred that FIR was not in existence at the time of inquest
proceedings. Inquest report and post mortem report cannot be
termed to be substantive evidence and any discrepancy
occurring therein can neither be termed to be fatal nor even a
suspicious circumstance which would warrant a benefit to the
accused and the resultant dismissal of the prosecution case.
The contents of the inquest report cannot be termed as
evidence, but they can be looked into to test the veracity of the
witnesses. When an officer incharge of Police Station receives
information that a person had committed suicide or has been
killed or died under suspicious circumstances, he shall inform
the matter to the nearest Magistrate to hold Inquest. A criminal
case is registered on the basis of information and investigation
is commenced under Section 157 of Cr.P.C. and the
information is recorded under Section 154 of Cr.P.C. and,
thereafter, the inquest is held under Section 174 Cr.P.C. This
Court, in the case of Podda Narayana Vs. State of Andhra
Pradesh [AIR 1975 SC 1252], has indicated that the
proceedings under Section 174 Cr. P.C. have limited scope.
The object of the proceedings is merely to ascertain whether
a person has died in suspicious circumstances or an unnatural
death and if so, what is the apparent cause of the death. The
question regarding details as to how the deceased was
assaulted or who assaulted him or under what circumstances,
he was assaulted is foreign to the ambit and scope proceeding
under Section 174. Neither in practice nor in law was it
necessary for the Police to mention these details in the Inquest
Report. In George Vs. State of Kerala AIR 1998 SC 1376, it
has been held that the Investigating Office is not obliged to
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A investigate, at the stage of Inquest, or to ascertain as to who
were the assailants. In Suresh Rai Vs. State of Bihar AIR 2000
SC 2207, it has been held that under Section 174 read with
Section 178 of Cr. P.C., Inquest Report is prepared by the
Investigating Officer to find out prima facie the nature of injuries
B and the possible weapon used in causing those injuries as also
possible cause of death.
18. This Court has consistently held that Inquest Report
cannot be treated as substantive evidence but may be utilized
for contradicting the witnesses of the Inquest. Section 175 Cr.
C
P.C. provides that a Police Officer proceedings under Section
174 may, by an order in writing, summon two or more persons
for the purpose of the said investigation. The provisions of
Sections 174 and 175 afford a complete Code in itself for the
purpose of inquiries in cases of accidental or suspicious
D deaths.
19. Section 2 (a) of the Cr.P.C. defines “Investigation” as
including all the proceedings under this code for the collection
of evidence conducted by the police officer.
E
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E
20. Section 157 of the Code says that if, from the
information received or otherwise an officer incharge of a police
station has reason to suspect the commission of an offence
which he is empowered to investigate, he shall forthwith send
a report of the same to the Magistrate concerned and proceed
F in person to the spot to investigate the facts and circumstances
of the case, if he does not send a report to the Magistrate, that
does not mean that his proceedings to the spot, is not for
investigation. In order to bring such proceedings within the
ambit of investigation, it is not necessary that a formal
G registration of the case should have been made before
proceeding to the spot. It is enough that he has some
information to afford him reason even to suspect the
commission of a cognizable offence. Any step taken by him
pursuant to such information, towards detention etc., of the said
H offence, would be part of investigation under the Code.
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 511
OF ASSAM [H.L. DATTU, J.]
21. In Maha Singh vs. State (Delhi Administration),
[(1976) SCC 644], this court considered a case in which police
officer arranged a raid after recording a complaint, but before
sending it for registration of the case. It was held in that case
that “the moment the Inspector had recorded a complaint with
a view to take action to track the offender, whose name was
not even known at that stage, and proceeded to achieve the
object, visited the locality, questioned the accused, searched
his person, seized the note and other documents, turns the
entire process into investigation under the Code.
22. In State of U.P. vs. Bhagwant Kishore, [AIR 1964 SC
221], this court stated that “Though ordinarily investigation is
undertaken on information received by a police officer, the
receipt of information is not a condition precedent for
investigation.”
23. The principles now well settled is that when information
regarding a cognizable offence is furnished to the police that
information will be regarded as the FIR and all enquiries held
by the police subsequent thereto would be treated as
investigation, even though the formal registration of the FIR
takes place only later.
24. Assuming that some report was made on telephone
and that was the real First Information Report, this by itself
would not affect the appreciation of evidence made by the
learned Sessions Judge and the conclusions of fact drawn by
him. The FIR under Section 154 Cr. P.C. is not a substantive
piece of evidence. Its only use is to contradict or corroborate
the maker thereof. Therefore, we see no merit in the submission
made by learned counsel for the appellants.
25. Now we focus our attention to the merits of the appeal.
The Postmortem was conducted by Dr. Ashit Som (PW6). From
the Postmortem Report of the deceased Fanilal Das, it appears
that injuries on their examination were found to be ante mortem
in nature. In his opinion, death is due to shock and
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A haemorrhage resulting from the injuries sustained which were
caused by blunt weapons. Unfortunately, the doctor has not
stated in his report whether the injuries sustained by the
deceased were of homicidal in nature. Therefore, we have seen
the report furnished by the doctor, who, as per his post mortem
B report found lacerated wound over the middle of frontal region
of the scalp with fracture of frontal bone corresponding to the
injury, lacerated wound over right parietal of the scalp
6cmx2cmx2cm fracture of parietal bone, two incisior and two
canine teeth of both jaws were dislocated. Dislocation of both
C elbow and ankle joint was also there. He has further opined that
the injuries were fresh and caused by a blunt object. It has come
in the evidence of PW-8 that immediately after the inquest report
was prepared, the body of the deceased was sent for post
mortem. This would coincide with this evidence on this aspect.
D Secondly, the seizure report which is marked as one of the
exhibit in the evidence, he has clearly stated the material
objects seized by him, such as nylon rope, bamboo stick, iron
chain, dao, rod and lathi etc. A little comparison of these seized
objects and the wounds found on the body of the deceased, a
safe inference can be drawn that this part of evidence of this
E
witness can be believed, since it corroborates with the opinion
of the Doctor, PW-6. Therefore, it can be safely inferred that
the deceased died because of the injuries sustained by the
assault made by other persons and not by self inflicted wounds.
F
26. The prosecution case solely rests on the evidence of
PW1. She is the wife of the deceased. PW2, though turned
hostile, has spoken to a part of the incident. PW3 is the U.D.P.
Secretary of Paikan Bazar. He is alleged to have gone to
Paikan Tempur Bazar to purchase sweets and having heard
G from the people gathered on the side of the verandah of
Chandu Das’s house at the Paikan Bazar, that Fanilal Das lying
in a serious condition, he informed the Police from Ballu Das’s
telephone. This version of PW3 appears to be correct. This
information, in fact, triggered the Investigating Agency to reach
H
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 513
OF ASSAM [H.L. DATTU, J.]
the place of incident after making necessary entries in the
Registers at the Police Station.
27. The evidence of PW1 requires a thorough scrutiny.
PW1 is the wife of the deceased. According to her, one
Upendra Das informed her that the accused persons including
the appellants are assaulting her husband in Kunja Mohan’s
house and on receiving the information, it is further stated by
her, that she immediately rushed to that place and found that
the accused persons had tied the hands of her husband and
were assaulting him. It has also come in her evidence that she
saw all the accused persons dragging her husband inside their
house. She has further stated around that time, the Police Party
reached the spot and took her husband in a vehicle and she
also accompanied her husband in the same vehicle and on
arriving at the hospital, the doctors declared that her husband
was dead and after inquest of the dead body, she returned
home with the help of police and immediately she lodged the
First Information Report (Ext.1). In her cross-examination,
suffice it to say, that nothing very striking except minor
contradiction has been elicited, which would not shake her
credibility. In fact, she has stated that immediately after the
Postmortem of the dead body, she lodged the FIR with the
Police and she has further denied the suggestion that she did
not tell the police that the accused persons had assaulted her
husband and killed him while he was returning home from
Hailkandi Town on a Rickshaw. Therefore, two important
aspects emerge from her evidence before the Trial Court.
Firstly, she has seen that her husband was tied by means of a
rope in the house of Kunj Mohan Das and secondly, the
accused persons including the appellants were assaulting her
husband. The case of the prosecution and the fate of the
accused entirely depend on her version and, therefore, as we
said earlier, it is on her testimony that the fate of these accused
persons/appellants really hinges. The reasons for not examining
Upendra Das, who is supposed to have informed PW1 about
the incident, is not explained by the prosecution. Therefore, we
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A might have to eschew this part of the evidence of PW1, since
no effort is made by the prosecution to explain the reason for
non-examination of one of the important persons, who is said
to have informed PW1 about the assault and dragging of the
deceased into the house of first accused, who is not before us.
B Then, the next question that would arise is, can we believe, as
has been done by both the Courts below, the other part of the
testimony of this witness. At this juncture, we intend to add that
if the prosecution fails to explain the reason for non-examination
of an important witness, who is supposed to have informed the
C alleged incident, should the accused persons go scot free. It
is a difficult question, sometimes difficult to answer. Since, it
is noticed by this Court time and again that in number of
criminal cases, because of sloppy attitude shown by the
prosecution, the real culprit goes scot free. It is no doubt true
that when her statement was recorded under Section 161
D
Cr.P.C., she had not implicated four other accused persons but
certainly implicated the appellants and two other accused
persons. Merely because she has made some improvement
in the FIR lodged by her, we cannot totally discard her
testimony.
E
28. PW8 is the Investigating Officer. He was attached to
Hailakandi Police Station. He was the one who visited the place
of occurrence on being directed to do so by the office-in-charge
of the Police Station. In his evidence, he has stated that Iti
F Mohan Das-PW3 took him to the place of occurrence and he
found the injured Fanilal Das tied at the veranda of the accused
persons. It has also come in his evidence that on reaching the
place of occurrence, he drew up sketch map of the place of
occurrence, and seized incriminating materials. He has also
G stated that he removed the injured to Hailakandi Civil Hospital
where the Medical Officer declared him dead. It has also come
in his evidence that he was the one who prepared the Inquest
Report. He further narrates that PW2 informed him that the
deceased was travelling in his rickshaw and at that time,
H Chandra Das@Smritikanta and two unknown persons dragged
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 515
OF ASSAM [H.L. DATTU, J.]
him out of the rickshaw and assaulted him by means of rod,
hunter etc. Though PW2 turned hostile, their part of evidence
supports the case of the prosecution. In his cross examination,
defence has elicited from him that Inquest Report was prepared
by him at 9.30 PM and FIR was registered at 11.30 PM. Much
was made at out of this admission by learned senior counsel
arguing for the appellants, we have already answered this issue
while considering the issue that whether FIR loses all
authenticity if written after Inquest Report. The other important
admission that was made by him that when he recorded the
statement of PW1, she did not mention the names of Subhash,
Bela Krishna and Rajan, but had mentioned the names of all
the other accused persons. Her version that she went to the
place of occurrence on being informed to her about the
assaulting of her husband by the accused persons is
corroborated in his testimony. It is also of some importance that
PW-1 for the first time, in her evidence before the Court,
implicated them and that is how, they were arrayed as coaccused and tried along with others. The learned Trial Judge,
however, has acquitted those accused persons. In our view,
rightly so. In our opinion, it is not necessary for the prosecution
to examine every other witness cited by them in the chargesheet. Mere non-examination of some persons does not
corrode the vitality of the prosecution version, particularly, the
witnesses examined have withstood the cross-examination and
pointed to the accused persons as perpetrators of the crime.
The Trial Court and the High Court have come to the conclusion
that the evidence of PW1 is trustworthy and reliable. We have
also carefully perused the evidence of PW1, whose evidence
is corroborated by PW-8 and the Postmortem report issued by
PW6, we are convinced that the Trial Court and the High Court
were justified in believing the testimony the testimony of PW1.
29. Manilal Das – PW2 is declared hostile by the
prosecution. However, in his examination-in-chief, he says that
he was carrying Fanilal Das in his Rickshaw and he stopped
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[2010] 11 S.C.R.
A the Rickshaw at Tepur Bazar on the request made by the
deceased and it is at that time, the deceased had a quarrel
with some people and some persons assaulted him with blunt
objects. In his cross-examination by the learned counsel for the
prosecution, he denies the suggestions put to him with
B reference to his statement made under Section 161 Cr. P.C.
before the Investigating Officer.
30. Md. Asaf Ali Majumdar – PW3, Md. Masuraff Ali
Barbhuiya – PW4, Harmendra Das-PW5 are brought in by the
prosecution as eye-witnesses to the occurrence. But all of them
C have turned hostile. Unfortunately, the trend in this country
appears to be, as the time passes, dead are forgotten and the
living with a criminal record are worshipped and adored and
no witness would like to speak against them. The Trial Court
and the High Court has not given any credence to their
D evidence.
E
31. The testimony of Itimohan Das –PW7 has some
relevance. He is a local tea shop owner. He has stated that he
accompanied the Police to the house of the accused and found
E the deceased tied with a rope in the verandah of Kunja Mohan.
He also states that he saw some injuries on the body of the
deceased person. He also confirms that the Investigating Officer
seized a chain, a lathi, one dao and a rope.
F
F
G
H
32. In our view, having carefully seen the evidence of PW1,
which is corroborated by the postmortem report issued by PW6
and the evidence of PW8, it is trustworthy and reliable. The Trial
Court and the High Court have accepted her evidence while
holding that the accused persons in furtherance of the common
intention, assaulted Fanilal Das and killed him. We do not find
G any good reason to upset this finding of the Trial Court and the
High Court.
33. The learned senior counsel submitted that the High
Court in a most casual manner has rejected the appeals filed
H by the accused. This assertion, in our opinion, is not justified.
SRI SAMBHU DAS @ BIJOY DAS & ANR. v. STATE 517
OF ASSAM [H.L. DATTU, J.]
[2010] 11 S.C.R. 518
The High Court has arrived at its findings after examination and
consideration of the main features of evidence. It is only
thereafter, the High Court has affirmed the findings of the trial
court while convicting the accused persons.
A
A
34. In view of the foregoing discussion, we do not see any
merit in this appeal. Accordingly, it is dismissed.
B
B
D.G.
M/S. SUSHILA CHEMICALS PVT. LTD. AND ANR.
v.
BHARAT COKING COAL LTD. AND ORS.
(Civil Appeal Nos. 8037-8038 of 2010)
SEPTEMBER 15, 2010
[ALTAMAS KABIR AND A.K. PATNAIK, JJ.]
Appeal dismissed.
C
D
E
F
G
Coal: New Coal Distribution Policy – Check on blackmarketing of coal – Agreement for supply of coal by
Government Company for use in the plants of consumers –
Term of agreement that the coal was meant for use in the
plants of consumers and not for sale or diversion in open
market – Criminal case by CBI against consumers alleging
sale of coal in open market – Suspension of supply of coal –
Writ petition challenging suspension – Single judge of High
Court quashing the order of suspension – Division Bench of
High Court holding that in larger interest suspension of supply
was correct – On appeal, held: There were materials with the
CBI in support of the allegations made that the consumers
were not utilizing the allotted coal in their plants but were
selling the same in black-market – Government Company is
bound by the policy decision of the Government of India and
since under the Coal Distribution Policy, mis-utilization of
allotted coal and black-marketing of such coal by the
consumers was to be checked, the Government Company did
not act arbitrarily or unreasonably to suspend the supplies of
coal, since they entertained a serious doubt on the basis of
the FIR lodged by the CBI – Single judge of High Court,
therefore erred in allowing the writ petitions – Code of Criminal
Procedure, 1973 – ss.226, 482 – Administrative law – Policy
decision – Government contracts – Constitution of India, 1950
– Article 14.
The Ministry of Coal adopted a new coal distribution
H
518
SUSHILA CHEMICALS PVT. LTD. AND ANR. v.
BHARAT COKING COAL LTD.
519
policy under which coal was to be supplied to different
consumers through a Fuel Supply Agreement (FSA) at
notified prices to be fixed and declared by Coal India Ltd.
In terms of the policy, respondent no.1, a subsidiary of
Coal India Ltd. entered into an FSA with the appellants
for supply of coal. The terms of the FSA provided that the
total quantity of coal supplied to the appellants under the
agreement was meant for use in the plants of the
appellants and the same could not be sold or diverted or
transferred for any purpose whatsoever and in the event
the appellant did so, respondent no. 1 would terminate
the FSA without any damages whatsoever payable to the
appellants.
On 7.6.2009, the CBI registered an FIR against 10
consumers including the appellants alleging inter alia that
the consumers entered into criminal conspiracy with the
then General Manager of respondent no.1 and lifted huge
quantity of coal and instead of utilizing the same in their
respective plants sold the same in the open market on
higher prices and as a result respondent no.1 suffered a
loss of 4.3 crores and thereby the accused made
corresponding wrongful gain to themselves. Respondent
no.1 passed an order suspending the supply of coal to
the appellants. The appellants filed writ petition before the
High Court challenging the suspension of the supply of
coal by respondent no.1 to the appellants.
The single judge of the High Court quashed the order
directing suspension of supply of coal to the appellants
holding that there was no provision in the FSA for
suspension of supply of coal to the appellants on account
of criminal case instituted regarding misuse of the coal.
The Division Bench of the High Court, however, allowed
the appeals and held that in the larger interest,
resumption of supply of coal cannot be directed. The
520
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[2010] 11 S.C.R.
A appellants filed the instant appeals challenging the order
of Division Bench of the High Court.
Dismissing the appeals, the Court
B
C
D
E
F
G
H
HELD: 1. The FIR lodged by the CBI contained
B allegations of mis-utilization of and sale of the allotted
coal by the appellants in the open market. As a matter of
fact, in the charge sheet which was filed after
investigation in the Court of Special Judge, CBI Cases,
it was stated that a search was conducted at the plant
C premises of the appellants in June 2009 by the CBI
officials in the presence of independent witnesses during
which the plants of the appellants were found to be nonfunctional and the names of employees/workers as per
the Attendance Register as well as other documents
D relating to sale of finished goods as produced by the
appellants were found to be fake and fabricated as full
particulars, addresses etc. were not provided in the
records in respect of such employees/workers engaged
and the purchasers of finished goods and thus the
E quantity of coal issued to the appellants-companies was
not utilized in their plants but sold in the black-market. It
was thus clear that there were materials with the CBI in
support of the allegations made in the FIR against the
appellants that they were not utilizing the allotted coal in
F their plants but were selling the same in black-market, but
these materials could not be placed before the Court
because the CBI was not impleaded as a respondent in
the writ petitions filed by the appellants. The Coal India
Ltd. and respondent no.1 are Government Companies
and are bound by the policy decisions of the Government
G
of India, Ministry of Coal, and since under the new Coal
Distribution Policy formulated pursuant to the
observations of the Supreme Court in *Ashoka
Smokeless Coal India (P) Ltd., mis-utilization of allotted
H
SUSHILA CHEMICALS PVT. LTD. AND ANR. v.
BHARAT COKING COAL LTD.
521
coal and black-marketing of such coal by the appellants
was to be checked, the Coal India Limited and
respondent no.1 did not act arbitrarily or unreasonably
to suspend the supplies of coal under FSA to the
appellants, if they entertained a serious doubt on the
basis of the FIR lodged by the CBI that the supplies of
coal, if made, to the appellants may be mis-utilized by the
appellants and may be sold in the open market. [Paras
11-12] [529-B-F; 530-B-D]
*Ashoka Smokeless Coal India (P) Ltd. & Ors. v. Union
of India & Ors. (2007) 2 SCC 640, relied on.
2. It is settled law that even in the domain of
contractual matters, the High Court can entertain a writ
petition on the ground of violation of Article 14 of the
Constitution when the impugned act of the State or its
instrumentality is arbitrary, unfair or unreasonable or in
breach of obligations under public law. However, the
public authorities are essentially different from private
persons. Even while taking decision in respect of
commercial transactions, a public authority must be
guided by relevant considerations and not by irrelevant
ones. [Para 13] [530-E-G]
Sterling Computers Ltd. v. M/s M & N Publications
Limited and Others (1993) 1 SCC 445, relied on.
Kumari Shrilekha Vidyarthi v. State of U.P. (1991) 1 SCC
537; ABL International Ltd. & Anr. v. Export Credit Guarantee
Corporation of India Ltd. & Ors. (2004) 3 SCC 553; Noble
Resources Ltd. v. State of Orissa & Anr. (2006) 10 SCC 236,
referred to.
3. It is true, as was held by the single judge of the
High Court, that Clause 13(1) of FSA provides that in the
event the appellants fail to pay any amount including any
interest due to respondent no.1 under FSA within a
522
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[2010] 11 S.C.R.
A period of 30 days of the same falling due, respondent
no.1 shall have the right to suspend supplies of coal to
the appellants, but Clause 13(1) does not stipulate that
in no other contingency the respondent no.1 can
suspend supplies of coal under FSA to the appellants.
B Moreover, Clause 13(1) of FSA enumerates the three
options available to respondent no.1 in case the dues
towards the price of coal and interest is not paid by the
appellants and it does not provide for the different
contingencies in which respondent no.1 can suspend the
C supplies of coal to the appellants. Respondent no.1 will
also have the right to suspend supplies of coal to the
appellants where it has doubts that the appellants may
mis-utilize the allotted coal and divert or sell the same in
open market because, as would be clear from Clause 4.4
of the FSA and the new Coal Distribution Policy decision
D
dated 18.10.2007, the very object of FSA as well as policy
decision of the Government is to allot coal to the
appellants for utilization in their plants and not for any
other purpose. Therefore, if the FIR lodged by the CBI,
which is a premier investigation agency of the Central
E Government, created serious doubts that the allotted coal
may be diverted or sold in the open market instead of
being utilized in the plants of the appellants, respondent
no.1 would be within its rights to suspend the supplies
of coal to the appellants till the doubts are cleared in
F appropriate proceedings. The Division Bench of the High
Court was, therefore, right in setting aside the judgment
and order of the single judge quashing the order of
respondent no.1 suspending supplies of coal to the
appellants. [Paras 14, 15] [531-B-H; 532-A]
G
Case Law Reference:
H
(2004) 3 SCC 553
referred to
Para 6
(2006) 10 SCC 236
referred to
Para 6
SUSHILA CHEMICALS PVT. LTD. AND ANR. v.
BHARAT COKING COAL LTD.
523
(2007) 2 SCC 640
referred to
Para 10
(1991) 1 SCC 537
relied on
Para 13
(1993) 1 SCC 445
relied on
Para 13
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
8037-38 of 2010.
524
A
B
From the Judgment & Order dated 27.10.2009 of the High
Court of Judicature at Patna in LPA Nos. 1265 & 1266 of 2009.
Jaideep Gupta, M.L. Varma, S.B. Upadhyay, Anupam Lal
Das, Abhishek Kumar, Gaurav Agrawal, Manish Kumar Saran,
Rajendra Krishna, Ratan Kumar Chaudhary, Santosh Mishra,
Dharmendra Kumar Sinha for the appearing parties.
The Judgment of the Court was delivered by
C
D
A. K. PATNAIK, J. 1. Leave granted.
2. These appeals are against the common judgment and
order dated 27.10.2009 passed by the Division Bench of the
Patna High Court in L.P.A Nos.1265 and 1266 of 2009.
3. The relevant facts very briefly are that pursuant to public
advertisements issued by Coal India Limited (respondent No.2
herein) calling upon entrepreneurs to establish coal based
industries on the basis of technology developed by the Central
Mines, Planning and Design Institute Ltd., the appellants
purchased the technology and established plants for
manufacturing special smokeless fuel during 1990-1991. The
subsidiary of Coal India Limited, Bharat Coking Coal Limited
(for short `BCCL'), the respondent No.1 herein, recommended
grant of linkage of 5,000 MT of coal to the plants of the
appellants and Coal India Limited granted coal linkage to the
appellants and the appellants continued to run their respective
plants and manufacture special smokeless fuel by processing
the coal supplied by BCCL to them. On 18.10.2007, the
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Government of India, Ministry of Coal discontinued the
traditional linkage system and in its place adopted a new coal
distribution policy under which coal was to be supplied to
different consumers through a Fuel Supply Agreement (for short
`FSA') at notified prices to be fixed and declared by Coal India
B Limited. In accordance with this new policy, BCCL entered into
FSA with the two appellants for supply of coal. Clause 4.4 of
FSA provided that the total quantity of coal supplied to the
appellants under the agreement is meant for use in the plants
of the appellants and the appellants shall not sell or divert or
C transfer the coal for any purpose whatsoever and in the event
they engage or plan to engage into any such re-sale or trade,
the BCCL shall terminate the FSA forthwith without any liabilities
or damages whatsoever payable to the appellants. On
07.06.2009, the Central Bureau of Investigation (for short the
`CBI') registered First Information Report (FIR) against 10
D
consumers including the appellants alleging inter alia that the
ten consumers entered into a criminal conspiracy with Shri
Udayan Bhattacharya, the then General Manager (S&M) of
BCCL and in furtherance thereof, lifted 11,94,940 tonnes of coal
and instead of utilizing the same in their respective plants, sold
E the same in the open market at higher prices and as a result
BCCL has suffered a loss of Rs.4,36,15,300/- approximately
and the accused have made corresponding wrongful gain to
themselves. In the FIR, the CBI further stated that the facts
disclosed the commission of offences punishable under
F Section 120-B read with Sections 420, 467, 471 of the Indian
Penal Code (for short `IPC') and Section 13(2) read with
Section 13(d) of the Prevention of Corruption Act, 1988 by Shri
Udayan Bhattacharya and the proprietors of different consumer
firms and therefore a criminal case be registered and the
G investigation be taken up. The Chairman of the Coal India
Limited thereafter advised the Chairman-cum-Managing
Director of BCCL to suspend supply of coal to the firms named
in the FIR including the appellants and accordingly BCCL
suspended supply of coal to the appellants by a wireless
H
SUSHILA CHEMICALS PVT. LTD. AND ANR. v.
BHARAT COKING COAL LTD. [A.K. PATNAIK, J.]
525
message dated 13.06.2009. BCCL also issued notices to them
to explain why FSA executed in favour of the appellants should
not be cancelled on the basis of the FIR lodged by the CBI
containing the allegations that the appellants were involved in
a criminal conspiracy leading to the breach of terms and
conditions of FSA.
4. Aggrieved, the appellants filed writ petitions Nos. 8144
of 2009 and 8311 of 2009 before the Patna High Court
challenging the suspension of supply of coal by BCCL to the
appellants by the Wireless Message dated 13.06.2009 and the
learned Single Judge, who heard the writ petitions, held in his
common judgment and order dated 26.08.2009 that clause 13
of the FSA was the only clause which provided for suspension
of supply of coal to the units of the appellants and this clause
provided that suspension shall be permissible when the
appellants failed to pay any amount towards purchase price or
interest thereon and there was no provision in the FSA for
suspension of supply of coal to the appellants on the ground
that a criminal case has been instituted regarding misuse of
the coal. The Learned Single Judge further held that misuse of
coal by the appellants was however germane as per clause 15
of FSA for termination of the agreement and the General
Manager (S&M) vide his letter dated 16.07.2009 has issued a
show cause to the appellants for termination of the agreement
on the ground of misuse of coal and institution of FIR. The
learned Single Judge, therefore, quashed the order directing
suspension of supply of coal to the appellants and allowed the
writ petitions.
5. The respondents then challenged the common judgment
and order dated 26.08.2009 before the Division Bench of the
Patna High Court in L.P.A. Nos. 1265 and 1266 of 2009 and
in the common judgment and order dated 27.10.2009, the
Division Bench placed reliance on a judgment of the Division
Bench of the Patna High Court dated 05.07.2002 passed in
M/s. Central Coal Field Limited vs. M/s, Aman Lime Works
526
A
B
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A (LPA No.701 of 2002) and held that in the larger interest,
resumption of supply of coal cannot be directed by the court
so long as the respondents do not consider the explanation of
the appellants in response to the show cause notice issued by
the respondents and allowed the appeals but directed the
B appellants to take a final decision pursuant to the show cause
notice dated 16.07.2009 at an early date.
C
C
D
D
E
E
F
F
G
G
H
H
6. Mr. Jaideep Gupta, learned counsel for the appellants,
submitted that the reasons given by the Division Bench of the
High Court in reversing the order passed by the learned Single
Judge are not correct. He submitted that the plants of the
appellants, admittedly, were manufacturing smokeless fuel and
the object of the FSA executed by the BCCL in favour of the
appellants was to provide coal for the plants of the appellants
manufacturing smokeless fuel and, therefore, suspension of
supplies of coal by BCCL without terminating the agreement
(FSA) is unreasonable and arbitrary and violative of Article 14
of the Constitution and for this reason the learned Single Judge
had quashed the suspension of supplies of coal by the BCCL
to the appellants. He further submitted that the BCCL
suspended supplies of coal to the plants of the appellants only
on the basis of the allegations in the FIR lodged by the CBI.
He argued that as BCCL did not have sufficient materials in
its possession, the suspension of supplies of coal to the
appellants was arbitrary and unreasonable and violative of
Article 14 of the Constitution. He cited the decisions of this
Court in ABL International Ltd. & Anr. v. Export Credit
Guarantee Corporation of India Ltd. & Ors. [(2004) 3 SCC
553] and Noble Resources Ltd. v. State of Orissa & Anr.
[(2006) 10 SCC 236] for the proposition that a writ petition was
maintainable against the State and its instrumentalities and
functionaries even in contractual matters of the State if their
action is found to be violative of Article 14 of the Constitution
or in the breach of public law or vitiated by mala fides or ulterior
motives.
SUSHILA CHEMICALS PVT. LTD. AND ANR. v.
BHARAT COKING COAL LTD. [A.K. PATNAIK, J.]
527
7. Mr. Gupta next submitted that the learned Single Judge
of the High Court had rightly held that under Clause 13.1 of
FSA, suspension of coal supply is permitted only on the limited
ground of non-payment of the dues by the appellants to the
BCCL towards amount of the price of the coal and any interest
thereon and not on any other ground and, therefore, BCCL
could not suspend the supply of coal to the appellants on the
mere institution of the criminal case by the FIR lodged by the
CBI. He submitted that after the judgment and order of the
Division Bench of the High Court, the appellants submitted their
explanation in reply to the show-cause notice dated 16.07.2009
of the BCCL, but the BCCL has passed the orders on
03.02.2010 holding that the appellants have failed to submit
substantial proof regarding end use of the coal in their plants
for which the coal was delivered as per FSA and hence
resumption of supply of coal to the appellants cannot be agreed
to. He submitted that since the respondents have not terminated
FSA for supply of coal to the appellants this Court should direct
the respondents to resume supply of coal to the appellants.
8. Mr. Anupam Das, learned counsel for the respondents,
submitted that the FIR lodged by a premier investigating
agency like the CBI and the chequered history of the appellants
before the FIR were sufficient for the BCCL to suspend the
supply of coal to the appellants under FSA. He submitted that
in any case investigation into the allegations made in the FIR
has already been completed by the CBI and charge sheet has
been filed against the appellants which vindicate the stand taken
by the respondents that the appellants were diverting coal meant
for their plants for sale in the open market.
9. Mr. Das further submitted that the Division Bench of the
Patna High Court has rightly held that in larger public interest
resumption of supply of coal could not be ordered. He submitted
that in the orders dated 03.02.2010 the BCCL have taken view
that the documents submitted on behalf of the appellants only
prove payment of sales tax and the appellants have failed to
528
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A
A submit substantial proof regarding the end use of the coal in
the plants for which coal was delivered as per FSA and hence
the resumption of supply of coal to the appellants cannot be
agreed to.
B
B
C
C
D
D
E
E
F
F
G
G
H
H
10. Mr. Das cited the observations of this Court in Ashoka
Smokeless Coal India (P) Ltd. & Ors. Vs. Union of India &
Ors. [(2007) 2 SCC 640] in Para 188 at Page 703 on the need
to control black marketing and mis-utilization of coal. He
submitted that it is pursuant to these observations of this Court
that the new Coal Distribution Policy has been framed to
discontinue the Linkage System which could not check the
menace of black marketing and diversion of coal to the open
market and supply of coal on strict terms and conditions
stipulated in FSA to the consumers has been contemplated to
ensure proper utilization of the coal in the plants. He submitted
that this is why in Clause 4.4 of the FSA it is clearly provided
that the total quantity of coal supplied to the appellants under
the agreement is meant for use in the plants of the appellants
and the appellants shall not sell/divert and/or transfer the coal
for any purpose whatsoever and in the event they engage or
plans to engage into any such resale or trade, the BCCL shall
terminate the FSA forthwith without any liabilities and damages
whatsoever payable to the appellants. He submitted that
therefore the BCCL can suspend supply of coal to the
appellants if the appellants have not been able to establish that
the coal already supplied to the appellants has been used in
the plants of the appellants. He submitted that Clause 13 of
FSA, which provides that if the appellants fail to pay any amount
including any interest due to the BCCL towards purchase price
of the coal the BCCL can suspend supply of coal to the
appellants, is not exhaustive of the contingencies in which the
BCCL can suspend supply of coal to the appellants.
11. We have considered the submissions of the learned
counsel for the parties and we are unable to accept the
contention of the appellants that the Division Bench of the High
SUSHILA CHEMICALS PVT. LTD. AND ANR. v.
BHARAT COKING COAL LTD. [A.K. PATNAIK, J.]
529
Court should have sustained the judgment and order of the
learned Single Judge of the High Court quashing the order
suspending the supplies of coal to the appellants under FSA.
The learned Single Judge of the High Court had held that BCCL
could not suspend the supplies of coal to the appellants on the
mere institution of a criminal case by the FIR lodged by the CBI.
The FIR lodged by the CBI contained allegations of misutilization of the allotted coal and sale of the allotted coal by
the appellants in the open market. As a matter of fact, in the
charge sheet which has been filed after investigation in the
Court of Special Judge, CBI Cases, Dhanbad, it is stated that
a search was conducted at the plant premises of the appellants
in June 2009 by the CBI officials in the presence of
independent witnesses during which the plants of the appellants
were found to be non-functional and the names of employees/
workers as per the Attendance Register as well as other
documents relating to sale of finished goods as produced by
the appellants were found to be fake and fabricated as full
particulars, addresses etc. were not provided in the records in
respect of such employees/workers engaged and purchasers
of finished goods and thus the quantity of coal issued to the
appellants-companies was not utilized in their plants but sold
in the black-market. It was thus clear that there were materials
with the CBI in support of the allegations made in the FIR
against the appellants that they were not utilizing the allotted
coal in their plants but were selling the same in black-market,
but these materials could not be placed before the Court
because the CBI was not impleaded as a respondent in the
writ petitions filed by the appellants.
12. We further find that in the counter-affidavit filed in the
High Court in reply to the writ petitions filed by the appellants,
Coal India Limited and BCCL have pleaded that under Clause
4.4 of FSA the appellants were required to utilize the entire
quantity of coal allotted to them in their respective plants and
had undertaken not to sell/divert/transfer the coal for any
purpose whatsoever and as the FIR lodged by the CBI
530
A
B
C
D
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A disclosed breach of this clause of FSA, Coal India Limited and
BCCL had to suspend the supplies of coal to prevent further
diversion of coal by the appellants and this decision was taken
pending a final decision regarding termination of FSA in terms
of Clause 15 thereof. Thus, the case of the respondents herein
B before the High Court was that suspension of supply of coal
has been ordered to prevent further diversion of coal by the
appellants. The Coal India Limited and BCCL are Government
Companies of the Government of India and are bound by the
policy decisions of the Government of India, Ministry of Coal,
C and since under the new Coal Distribution Policy formulated
pursuant to the observations of this Court in Ashoka Smokeless
Coal India (P) Ltd. & Ors. v. Union of India & Ors. (supra) misutilization of allotted coal and black-marketing of such coal by
the appellants was to be checked, the Coal India Limited and
BCCL did not act arbitrarily or unreasonably to suspend the
D
supplies of coal under FSA to the appellants, if they entertained
a serious doubt on the basis of the FIR lodged by the CBI that
the supplies of coal, if made, to the appellants may be misutilized by the appellants and may be sold in the open market.
E
E
F
F
G
G
H
H Obviously, one such relevant consideration which the Coal India
13. It is settled by a series of decisions of this Court
starting from Kumari Shrilekha Vidyarthi v. State of U.P.
[(1991) 1 SCC 537] that even in the domain of contractual
matters, the High Court can entertain a writ petition on the
ground of violation of Article 14 of the Constitution when the
impugned act of the State or its instrumentality is arbitrary, unfair
or unreasonable or in breach of obligations under public law.
In Sterling Computers Ltd. v. M/s M & N Publications Limited
and Others [(1993) 1 SCC 445] in para 28, however, this Court
held:
"Public authorities are essentially different from those of
private persons. Even while taking decision in respect of
commercial transactions a public authority must be guided
by relevant considerations and not by irrelevant ones."
SUSHILA CHEMICALS PVT. LTD. AND ANR. v.
BHARAT COKING COAL LTD. [A.K. PATNAIK, J.]
531
Limited and BCCL as public authorities have to consider is
whether continuation of supply of coal to the appellants may not
lead to mis-utilization or black-marketing of the coal by the
appellants which are prohibited under FSA and the policy
decision of the Government considering the allegations made
by the CBI in the FIR on the basis of the reliable information
received.
14. It is true as has been held by the learned Single Judge
of the High Court that Clause 13(1) of FSA provides that in the
event the appellants fail to pay any amount including any interest
due to BCCL under FSA within a period of 30 days of the same
falling due, BCCL shall have the right to suspend supplies of
coal to the appellants, but Clause 13(1) does not stipulate that
in no other contingency the BCCL can suspend supplies of coal
under FSA to the appellants. Moreover, Clause 13(1) of FSA
enumerates the three options available to BCCL in case the
dues towards the price of coal and interest is not paid by the
appellants and it does not provide for the different
contingencies in which BCCL can suspend the supplies of coal
to the appellants. In our considered opinion, the BCCL will also
have the right to suspend supplies of coal to the appellants
where it has doubts that the appellants may mis-utilize the
allotted coal and divert or sell the same in open market
because, as would be clear from Clause 4.4 of the FSA and
the new Coal Distribution Policy decision dated 18.10.2007,
the very object of FSA as well as policy decision of the
Government is to allot coal to the appellants for utilization in their
plants and not for any other purpose. Therefore, if the FIR
lodged by the CBI, which is a premier investigation agency of
the Central Government, created serious doubts that the allotted
coal may be diverted or sold in the open market instead of being
utilized in the plants of the appellants, the BCCL would be within
its rights to suspend the supplies of coal to the appellants till
the doubts are cleared in appropriate proceedings.
15. The Division Bench of the High Court was, therefore,
532
A
B
D
E
F
G
H
[2010] 11 S.C.R.
A right in setting aside the judgment and order of the learned
Single Judge quashing the order of the BCCL suspending
supplies of coal to the appellants. We accordingly dismiss these
appeals with liberty to the appellants to challenge the orders
dated 03.02.2010 in which the BCCL has held that the
B appellants have failed to submit substantial proof regarding the
end use of the coal in their plants. No costs.
D.G.
C
SUPREME COURT REPORTS
Appeals dismissed.
[2010] 11 S.C.R. 533
M/S COAL INDIA LIMITED & ORS.
v.
COAL CONSUMERS ASSOCIATION & ORS.
(Special Leave Petition (C) No. 21959 of 2010 etc.)
SEPTEMBER 15, 2010
534
A
B
[ALTAMAS KABIR AND A.K. PATNAIK, JJ.]
Interim Orders:
Coal – Fuel Supply Agreement – Condition – Industrial
consumers not to sell/divert and/or transfer coal for any
purpose – FIR registered against G.M., BCCL and ten
industrial consumers – BCCL suspending supply of coal to
ten suspects as also 45 other industrial consumers against
whom no FIR was lodged – High Court staying operation of
order suspending supplies to non-accused – HELD: BCCL
has the right to suspend supplies of coal where it has doubts
that the purchaser may mis-utilize the allotted coal and divert
or sell it in open market because, as it was clear from Clause
4.4 of FSA and the New Coal Distribution Policy dated
18.10.2007, the very object of FSA as well as policy decision
of the Government is to allot coal to the purchasers for
utilization in their plants and not for any other purpose – The
FIR lodged by the CBI, which is a premier investigation
agency of the Central Government, created serious doubts
that the allotted coal may have been diverted or sold in the
open market instead of being utilized in the plants of the
purchasers and, therefore, BCCL was within its rights to
suspend the supplies of coal to the purchasers in these cases
till the doubts were cleared in appropriate proceedings –
However, no FIR has been lodged by the CBI alleging that
the supplies of coal made to the 45 industrial consumers have
not been utilized in their respective industrial units –
Moreover, Para 3.1 of the New Coal Distribution Policy dated
18.10.2007, clearly states that the State Governments may
take appropriate steps to evaluate the genuine consumption
C
D
E
F
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A and monitor the use of coal supplied to units in small and
medium sector – Sufficient materials have been filed before
the High Court by the non-accused to show that the agencies
of the State Government, have evaluated the genuine
consumption and monitored the use of coal by the industrial
B consumers in their respective industries – It also appears that
BCCL issued notices dated 3.2.2010 and 8.6.2010 to the 45
industrial consumers to furnish documents in proof of the enduse of coal allotted to them for their respective industries for
the financial year 2009-2010 and the respondents furnished
C some materials pursuant to the notices, but instead of
examining those materials, BCCL has suspended the
supplies of coal to the 45 industrial consumers on 1.7.2010
soon after the CBI filed charge sheets on 28.6.2010 against
the then General Manager of BCCL and the ten industrial
consumers against whom CBI had lodged the FIR on
D
7.6.2010 – The materials placed before the High Court prima
facie show that the order of BCCL suspending the supplies
of coal to the 45 industrial consumers was arbitrary and unfair
and the High Court was justified in staying the order dated
1.7.2010 as an interim measure – Government of India,
E Ministry of Coal, New Distribution Policy dated 18.10.2007.
F
M/s Coal India Limited & Ors. v. Alok Fuels (P) Ltd. &
Ors. decided by Supreme Court on 15.9.2010; M/s Sushila
Chemicals Pvt. Ltd. & Anr. v. Bharat Coking Coal Ltd. & Ors.
decided by Supreme Court on 15.9.2010 – relied on.
Case Law Reference:
G
G
Relied on
para 8
Relied on
para 8
CIVIL APPELLATE JURISDICTION : SLP (Civil) No.
21959 of 2010.
From the Judgment & Order dated 26.07.2010 of the High
H
H
COAL INDIA LIMITED & ORS. v. COAL CONSUMERS 535
ASSOCIATION & ORS.
Court of Judicature at Allahabad in W.P. (C) No. 42231 of
2010.
536
A
WITH
SLP (C) Nos. 21972, 21973 & 21974 of 2010.
B
Anupam Lal Das, Abhishek Kumar for the Petitioners.
Ranjit Kumar, Jaideep Gupta, Manish Kr. Saran for the
Respondents.
The Order of the Court was delivered by
C
ORDER
A. K. PATNAIK, J. 1. These Special Leave Petitions are
directed against the interim orders dated 26.07.2010 passed
by a Division Bench of the Allahabad High Court in Writ Petition
C-Nos.42231, 42760, 42229 and 42708 of 2010 by which the
orders dated 01.07.2010 of Bharat Coking Coal Limited
(BCCL), thepetitioner No.2, suspending supply of coal to 45
industrial consumers for their industrial units had been stayed
till the matters were to be taken up for admission/orders by the
High Court.
2. The relevant facts very briefly are that prior to 2007
industrial consumers were granted coal linkages for utilization
in their small scale industries. On 18.10.2007, the Government
of India, Ministry of Coal, formulated a New Coal Distribution
Policy by which coal linkages were discontinued and instead
coal was to be supplied to various consumers including small
scale industriesunder the terms and conditions of Fuel Supply
Agreement (for short `FSA'). Accordingly, petitioner No.2
entered into FSA with different industrial consumers of coal.
Clause 4.4 of FSA stipulated that the total quantityof coal
supplied pursuant to the agreement is meant foruse in the
industry of the purchaser and the purchaser shall not sell/divert
and/or transfer the coal for any purpose whatsoever and the
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A same shall be treated as material breach of the agreement and
in the event that the purchaser engages or plans to engage into
any such resale or trade, the seller shall terminate the
agreement forthwith without any liabilities or damages
whatsoever payable to the purchaser. Clause 15.1.5 of FSA
B further provided that in the event that the purchaser resells or
diverts the coal purchased pursuant to the agreement, the seller
shall have the right to terminate the agreement forthwith. On
07.06.2009, however, the Central Bureau of Investigation (for
short `CBI'), on receipt of credible information, registered an
C FIR under Section 120B read with 420, 467 and 471 of the
Indian Penal Code together with Section 3(2) read with 13(1)(d)
of the Prevention of Corruption Act, 1988 against Shri Udayan
Bhattacharya, the then General Manager (S&M), BCCL,
Dhanbad, and ten industrial consumers alleging that the coal
sold by BCCL to the ten industrial consumers have been sold
D
in the open market and not utilized in their respective plants.
On the basis of the allegations in the FIR, supplies of coal to
the ten industrial consumers were suspended on 13.06.2009,
some of whom challenged the suspension of supply of coal in
writ petitions before the different High Courts. After
E investigation, the CBI filed charge sheet on 28.06.2008 against
Shri Bhattacharya and the ten industrial consumers in respect
of whom the FIR had been lodged. Soon thereafter, on
01.07.2010 the petitioner No.2 issued orders suspending
supply of coal to 45 industrial consumers against whom no FIR
F had been lodged by the CBI.
3. Aggrieved, the respondents filed the Writ Petitions in
the Allahabad High Court in July, 2010 praying inter alia for
quashing the order dated 01.07.2010 suspending supplies of
G the coal to the members of the respondent-association in
Special Leave Petition [C] Nos.21972 of 2010 and to the
respondents in Special Leave Petitions (C) Nos. 21973 and
21974 of 2010 and by the interim orders dated 26.07.2010 the
Division Bench of the High Court stayed the operation of the
H order dated 01.07.2010 suspending supplies of coal.
COAL INDIA LIMITED & ORS. v. COAL CONSUMERS 537
ASSOCIATION & ORS. [A.K. PATNAIK, J.]
4. Mr. Anupam Lal Das, learned counsel for the petitioners,
submitted that it will be clear from Clause 4.4 of FSA that the
coal supplied to the industrial consumers is meant for use in
their industries and, therefore, the petitioner No.2 issued notice
dated 03.02.2010 to all the 45 industrial consumers to show
the end-use of the coal lifted during the financial year 2009-2010
duly supported by documentary proof and the industrial
consumers submitted some documents in support of end-use
of coal, but the documents were not sufficient to prove the enduse of the coal. He submitted that petitioner No.2 issued
another notice dated 08.06.2010 to the industrial consumers
to submit documents and details as per proforma enclosed
along with the notice and yet the industrial consumers could not
prove the end-use of the coal lifted by them from the petitioner
No.2 under FSA and in the circumstances the petitioner No.2
had no option but to pass the order dated 01.07.2010
suspending the supply of coal to the 45 industrial consumers.
He submitted that by the order dated 01.07.2010 the petitioner
No.2 also gave notice to the 45 industrial consumers to prove
by documents that the coal supplied to them were utilized in
accordance with Clause 4.4 of FSA. He submitted that on
these facts the High Court was not at all justified in staying the
suspension-cum-show cause notice dated 01.07.2010 issued
by the petitioner No.2 to the 45 industrial consumers.
5. Mr. Ranjit Kumar, learned counsel appearing for the
respondents in Special Leave Petition [C] No.21959 of 2010,
on the other hand, submitted that Clause 13.1 of FSA is the
only provision conferring a right on the petitioner No.2 to
suspend supplies of coal in the event the purchaser fails to pay
any amount including any interest due to the petitioner No.2
under the agreement and, therefore, the petitioner No.2 had no
right to suspend the supplies of coal on the ground that the
industrial consumers have not been able to produce proof of
the end-use of the coal in their industrial units. He further
submitted that Clause 4.4 of FSA, on which the petitioners rely,
itself confers a right on the petitionerNo. 2 to physically verify
538
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A the end-use of coal and it was always open to the petitioners
to physically verify the industrial units of the industrial consumers
to find outwhether the industrial unit was genuine and whether
the industrial unit was consuming the coal supplied by the
petitioners. He submitted that surprisingly in the letter dated
B 01.07.2010 (Annexure R1/9), the Chairman/Managing Director
of the petitioner No.2 has proposed to the Chairman of
petitioner No.1 that physical inspection of the industrial units by
the coal companies should be withdrawn from FSA to safeguard
the interest of the officials of the coal companies. He
C vehemently submitted that all this would show that supplies of
coal to the 45 industrial consumers have been suspended bythe
order dated 01.07.2010 only to protect the officers of petitioner
No.2. He further submitted that Para 3.1 of the New Coal
Distribution Policy in the Office Memorandum dated
18.10.2007 of the Government ofIndia, Ministry of Coal, makes
D
it clear that the State Governments are to take appropriate
steps to evaluate the genuine consumption and to monitor the
use of coal.He submitted that accordingly the General
Managers of the District Industries Centres of the State
Government have furnished reports about the end-use of coal
E for the year 2009-2010 to petitioner No.2 in respect of different
industrial consumers by various communications, copies of
which were annexed to the Writ Petitions filed in the High Court
and the High Court was, therefore, justified in passing the
impugned interim orders staying the order dated 01.07.2010
F of the petitioner No.2 suspending supplies of coal to the 45
industrial consumers.
6. Mr. Jaideep Gupta, learned counsel appearing for the
respondents in Special Leave Petition (C) 21973 of 2010,
G submitted that by the notice dated 03.02.2010 the respondents
were called upon to show the end-use of coal lifted during the
financial year 2009-2010 duly supported by documentary proof
and also to get corroborative documents authenticated by the
concerned District/State officials along with a certificate from
H the officers certifying the working status of the units of the
COAL INDIA LIMITED & ORS. v. COAL CONSUMERS 539
ASSOCIATION & ORS. [A.K. PATNAIK, J.]
respondents and by the notice dated 08.06.2010 the
respondents were required to submit documents and details
as per proforma enclosed along with the notice to show the enduse of coal in their industrial units on monthly basis. He
submitted that in response to the two notices dated 03.02.2010
and 08.06.2010 the respondents had furnished the required
documents including the certificates furnished by the District
Industries Centre, as would be evident from the letter dated
13.02.2010 of the respondents and its enclosures annexed to
the counter of the respondents as Annexure R1/1(Colly) and
letter dated 06.03.2010 of the respondents annexed to the
counter of the respondents as Annexure R1/2(Colly). He
submitted that despite the fact that the respondents produced
all the required documents before the petitioner No.2 as called
for in the notices dated 03.02.2010 and 08.06.2010, the
petitioner No.2 suspended supplies of coal to the respondents
by the impugned order dated 01.07.2010. He submitted that
all these documents were filed by the respondents along with
the Writ Petition and, therefore, the High Court was justified in
staying the order of suspension.
540
A
B
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A that the FIR lodged by the CBI, which is a premier investigation
agency of the Central Government, created serious doubts that
the allotted coal may have been diverted or sold in the open
market instead of being utilized in the plants of the purchasers
and hence the petitioner No. 2 was within its rights to suspend
B the supplies of coal to the purchasers in these cases till the
doubts were cleared in appropriate proceedings.
C
C
D
D
7. The submissions made by Mr. Ranjit Kumar and Mr.
Jaideep Gupta were adopted by Mr. Manish Kumar Saran
appearing for the respondents in Special Leave Petition (C)
Nos. 21972 and 21974 of 2010.
E
E
8. We have today delivered judgments in M/s Coal India
Limited & Ors. v. Alok Fuels (P) Ltd. & Ors. and also in M/s
Sushila Chemicals Pvt. Ltd. & Anr. v. Bharat Coking Coal
Ltd. & Ors. in which we have held that the petitioner No.2 has
the right to suspend supplies of coal to the purchaser of coal
where it has doubts that the purchaser may mis-utilize the
allotted coal and divert or sell in open market because, as it
was clear from Clause 4.4 of FSA and the New Coal
Distribution Policy dated 18.10.2007, the very object of FSA
as well as policy decision of the Government is to allot coal to
the purchasers for utilization in their plants and not for any other
purpose. In two judgments delivered today, we have also held
F
F
G
G
H
H
9. In the facts of these cases, however, we find that no FIR
as such has been lodged by the CBI alleging that the supplies
of coal made to the 45 industrial consumers have not been
utilized in their respective industrial units. Moreover, Para 3.1
of the New Coal Distribution Policydated 18.10.2007 of the
Government of India, Ministry of Coal, clearly states that the
State Governments may take appropriate steps to evaluate the
genuine consumption and monitor the use of coal supplied to
units in small and medium sector like smokeless fuel, brick kiln,
coke oven units, etc. We find that sufficient materials have been
filed before the High Court by the respondents along with their
Writ Petitions to show that the agencies of the State
Government, namely, the District Industries Centres, have
evaluated the genuine consumption and monitored the use of
coal by the industrial consumers in their respective industries.
It also appears that the petitioner No.2 issued notices dated
03.02.2010 and 08.06.2010 to the 45 industrial consumers to
furnishdocuments in proof of the end-use of coal allotted to them
for their respective industries for the financial year 2009-2010
and the respondents had furnished some materials pursuant to
the notices dated 03.02.2010 and 08.06.2010 but instead of
examining those materials relating to the end-use of coal in the
industrial units of the industrial consumers furnished by the
respondents, petitioner No.2 has suspended the supplies of
coal on 01.07.2010 soon after the CBI filed charge sheets on
28.06.2010 against Shri Udayan Bhattacharya, the then General
Manager of the petitioner No.2, and the ten industrial
consumers against whom CBI had lodged the FIR on
07.06.2010. The materials placed before the High Court prima
COAL INDIA LIMITED & ORS. v. COAL CONSUMERS 541
ASSOCIATION & ORS. [A.K. PATNAIK, J.]
[2010] 11 S.C.R. 542
facie show that the order dated 01.07.2010 of petitioner No.2
suspending the supplies of coal to the 45 industrial consumers
was arbitrary and unfair and the High Court was justified in
staying the order dated 01.07.2010 as an interim measure.
A
A
10. We accordingly dismiss the Special Leave Petitions
and vacate the interim orders passed by this Court. We make
it clear that the observations made in this order will not influence
the High Court in deciding the Writ Petitions on merits. No
costs.
B
B
R.P.
C
SLP dismissed.
STATE OF U. P. & ORS.
v.
NEERAJ CHAUBEY & ORS.
(SLP (C) Nos. 26922-26923 of 2010)
SEPTEMBER 16, 2010
[P. SATHASIVAM AND DR. B. S. CHAUHAN, JJ.]
HIGH COURT:
Allocation of business – Held: Full Bench of the High
Court has rightly held* that the Chief Justice is the master of
roster – He has full power, authority and jurisdiction in the
matter of allocation of business of the High Court which flows
not only from the provisions contained in sub-section (3) of
D s. 51 of the States Re-organisation Act, 1956, but inheres in
him in the very nature of things – The Chief Justice enjoys a
special status and he alone can assign work to a Judge sitting
alone and to the Judges sitting in Division Bench or Full
Bench – He has jurisdiction to decide which case will be heard
by which Bench – A Judge or a Bench of Judges can assume
E
jurisdiction in a case pending in the High Court only if the
case is allotted to him or them by the Chief Justice – Strict
adherence of this procedure is essential for maintaining
judicial discipline and proper functioning of the court – No
departure from this procedure is permissible.
F
PUBLIC INTEREST LITIGATION:
C
Entertaining of a matter as public interest litigation – In
a service law matter, the writ petition was not listed before the
G Division Bench of the High Court as per its direction – In reply
to the show cause, in the affidavit filed by the officer
concerned, problems faced due to lack of space were
highlighted – The Division Bench directing the State
Government to submit a status report about sanctioning of
H
542
STATE OF U. P. & ORS. v. NEERAJ CHAUBEY &
ORS.
543
funds for construction of High Court building complex – Status
report filed indicating the steps taken – High Court directing
the senior officers of the State Government and the Central
Government to appear in person on the date of next hearing
– Held: Directions regarding construction of new High Court
building and early sanction of required funds for execution of
the work cannot be faulted with – In fact, Lucknow Bench of
the High Court needs a spacious building as early as possible
– However, the Court expressed its concern about the
procedure adopted by the Division Bench in an unconnected
matter treating it as PIL and keeping the issue before the
same Bench – In case an application is filed and the Bench
comes to the conclusion that it involves some issues relating
to public interest, the Bench may not entertain it as a Public
Interest Litigation but the court has its option to convert it into
a Public Interest Litigation and ask the Registry to place it
before a Bench which has jurisdiction to entertain the PIL as
per the Rules, guidelines or by the roster fixed by the Chief
Justice – The Bench cannot convert itself into a PIL Bench
and proceed with the matter itself – State permitted to move
an application before the Chief Justice of the High Court for
appropriate directions – The impugned order directing the
officials to appear before the High Court on the date fixed –
shall remain stayed – The instant order of stay shall continue
till further orders to be passed by the appropriate Bench
dealing with the PIL after the orders of the Chief Justice – Bar
Association is free to move a writ petition as regards
construction of High Court building complex before the
appropriate bench having jurisdiction over PIL.
*Maya Dixit and Ors. Vs. State of U.P. and Ors. [2010] 8
ADJ 631 (F.B.), approved.
State of Maharashtra vs. Narayan AIR 1982 SC 1198;
Inder Mani vs. Matheshwari Prasad 1996 (7) Suppl.
SCR 400 = (1996) 6 SCC 587; State of Rajasthan vs.
Prakash Chand & Ors. 1997 (6) Suppl. SCR 1 = (1998) 1
SCC 1; R. Rathinam vs. State by DSP, District Crime Branch,
544
A
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Madurai District, Madurai & Anr., 2000 (1) SCR 718 = (2000)
2 SCC 391; Jasbir Singh vs. State of Punjab, 2006 (7)
Suppl. SCR 174 = (2006) 8 SCC 294, relied on.
Case Law Reference:
B
C
D
B
C
[2010] 8 ADJ 631 (F.B.)
approved
para 8
AIR 1982 SC 1198
relied on
para 9
1996 (7) Suppl. SCR 400
relied on
para 9
1997 (6) Suppl. SCR 1
relied on
para 9
2000 (1) SCR 718
relied on
para 9
2006 (7) Suppl. SCR 174
relied on
para 9
CIVIL APPELLATE JURISDICTION : SLP (Civil) Nos.
D 26922-26923 of 2010.
From the Judgment & Order dated 16.07.2010 &
25.08.2010 of the High Court of Judicature at Allahabad
Lucknow Bench, Lucknow in Writ Petition No. 1872 of 1986.
E
F
E
F
Harish N. Salve, Sunil Gupta, Shail K. Dwivedi, AAG, R.K.
Gupta, Rajeev K. Dubey, Kamlendra Mishra for the Petitioners.
Rakesh Dwivedi, Vivek Raj Singh, Karunesh S. Pawar,
Abhindra Maheshwari, Amit Singh, Vishwajit Singh for the
Respondents.
The following Order of the Court was delivered
ORDER
G
G
Permission to file SLPs is granted.
Taken on board.
H
State of U.P. and their officials aggrieved by the interim
orders dated 16.07.2010 and 25.08.2010 passed in W.P. No.
H 1872 of 1986 by the High Court of Judicature at Allahabad,
STATE OF U. P. & ORS. v. NEERAJ CHAUBEY &
ORS.
545
Lucknow Bench, Lucknow have filed the above SLPs.
W.P. No. 1872 of 1986 was filed by one Dr. Neeraj
Chaubey for redressal of his grievance regarding an
advertisement for appointment on the post of Assistant
Professor. In the said advertisement, the eligibility criteria was
fixed as teaching experience of 7 years whereas according to
the Statutory Rules, the teaching experience required is only 5
years. The aforesaid writ petition was not listed as per the
directions of the Division Bench of the High Court which passed
the impugned order. The Registry of the High Court was
directed to show cause as well as a cost of Rs. 2,000/- was
also awarded on the Joint Registrar of the High Court. In
response to the aforesaid direction, one of the officials of the
Registry in his affidavit highlighted certain problems about want
of space for keeping the court records, sitting space for officials
and officers of the Registry. Taking note of the said facts, the
Division Bench, in the order dated 16.07.2010, directed the
State Government to submit a Status Report about sanctioning
of funds for construction of new High Court Building Complex
at Gomati Nagar, Lucknow. It is further seen that even after filing
of Status Report and affidavit highlighting the steps taken, by
the impugned order dated 25.08.2010, the same Division
Bench directed the Cabinet Secretary, the Chief Secretary, the
Principal Secretary (Law), State of U.P. and Member
Secretary, Planning Commission and representative of Ministry
of Law and Justice not below the rank of Joint Secretary,
Government of India to appear in person along with the records
on the next date of hearing on 20.09.2010. Questioning both
the above said directions, State of U.P. filed these SLPs.
Heard Mr. Harish N. Salve, learned senior counsel for the
petitioners and Mr. Rakesh Dwivedi, learned senior counsel for
Oudh Bar Association.
Though Oudh Bar Association is not a party in these
SLPs, but considering the importance of the issue, the said Bar
Association intends to file appropriate petition before the High
Court for construction of the new High Court Building Complex
546
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A at Lucknow. We heard their counsel also.
At the outset, we may point out that directions regarding
construction of new High Court building and early sanction of
required funds for execution of the work cannot be faulted with.
In fact, the High Court of Judicature at Allahabad, Lucknow
B Bench, Lucknow needs more spacious building as early as
possible. However, we are concerned about the procedure
adopted by the Division Bench issuing such directions in an
unconnected matter treating it as PIL and keeping the issue
before the same Bench.
C
In this regard, it is brought to our notice that the Full Bench
decision of the same High Court of Allahabad, while answering
the reference made to a larger bench in W.P. No. 34197 of
2010 (Smt. Maya Dixit & Ors. vs. State of U.P. & Ors.)
decided on 13.09.2010, dealt with the issues involved herein.
D
The High Court had taken note of various judgments of this
Court including State of Maharashtra vs. Narayan, AIR 1982
SC 1198; Inder Mani vs. Matheshwari Prasad, (1996) 6 SCC
587; State of Rajasthan vs. Prakash Chand & Ors., (1998) 1
E SCC 1, R. Rathinam vs. State by DSP, District Crime Branch,
Madurai District, Madurai & Anr., (2000) 2 SCC 391 and
Jasbir Singh vs. State of Punjab, (2006) 8 SCC 294 and
various judgments of High Courts and came to the conclusion
that the Chief Justice is the master of roster. The Chief Justice
has full power, authority and jurisdiction in the matter of
F
allocation of business of the High Court which flows not only
from the provisions contained in sub-section (3) of Section 51
of the States Re-organisation Act, 1956, but inheres in him in
the very nature of things. The Chief Justice enjoys a special
status and he alone can assign work to a Judge sitting alone
G and to the Judges sitting in Division Bench or Full Bench. He
has jurisdiction to decide which case will be heard by which
Bench. If the Judges were free to choose their jurisdiction or
any choice was given to them to do whatever case they may
like to hear and decide, the machinery of the court would
H collapse and the judicial work of the court would cease by
STATE OF U. P. & ORS. v. NEERAJ CHAUBEY &
ORS.
[2010] 11 S.C.R. 548
547
generation of internal strife on account of hankering for a
particular jurisdiction or a particular case. The Court held that
a Judge or a Bench of Judges can assume jurisdiction in a
case pending in the High Court only if the case is allotted to
him or them by the Chief Justice. Strict adherence of this
procedure is essential for maintaining judicial discipline and
proper functioning of the court. No departure from this
procedure is permissible.
In case an application is filed and the Bench comes to the
conclusion that it involves some issues relating to public interest,
the Bench may not entertain it as a Public Interest Litigation but
the court has its option to convert it into a Public Interest
Litigation and ask the Registry to place it before a Bench which
has jurisdiction to entertain the PIL as per the Rules, guidelines
or by the roster fixed by the Chief Justice but the Bench cannot
convert itself into a PIL and proceed with the matter itself.
In view of the decision of the Full Bench of the High Court
of Allahabad, which we hold is in accordance with law and in
consonance with the rules and procedure, Mr. Harish N. Salve,
learned senior counsel for the petitioner-State of U.P., seeks
permission to move an application in respect of the matter in
issue before the Chief Justice of the High Court for appropriate
directions. We permit the State to move such application. The
impugned order directing the officials to appear before the Court
on 20.09.2010 shall remain stayed. The present order of stay
shall continue till further orders being passed by the appropriate
Bench dealing with the PIL after the orders of the Chief Justice.
Mr. Rakesh Dwivedi, representing Oudh Bar Association
informed this Court that the Association intends to file an
independent petition in respect of the matter in issue, namely,
construction of High Court building. We make it clear that the
Bar Association is free to move such writ petition before the
appropriate Bench having jurisdiction over PIL.
A
A
B
B
SLPs disposed of.
SEPTEMBER 16, 2010
[ALTAMAS KABIR AND A.K. PATNAIK, JJ.]
C
D
E
F
G
The Special Leave Petitions are disposed of accordingly.
R.P.
V. RANGANATHAN
v.
N. BASKARAN AND ORS.
(Special Leave Petition (c) No. 18247 of 2006)
H
Service law: Appointment of Principal – Unsuccessful
candidate seeking direction upon the authority to appoint him
C to the post instead of selected candidate – Tribunal directing
the authority to appoint him to the post – Writ petitions by the
selected candidate and the authority – High Court allowing
the writ petitions – Held: No reason to interfere with the order
of the High Court – Appointment process was fair, transparent
D and reasonable – Challenge by unsuccessful candidate was
not for quashing of appointment made and his prayer was
limited to a direction to the authority to appoint him to the post
– Education Department was also not given an opportunity
of hearing by tribunal – Moreover, the selection list showed
E that the unsuccessful candidate was placed at rank 10 and
in the reserve list there were three more candidates placed
over him– Administrative law – Opportunity of hearing.
The petitioner and respondent no.1 applied for the
post of Principal in Government Higher Secondary
F School and on the basis of preliminary scrutiny were
called for interview alongwith the other candidates.
Respondent no.1 was selected for the post. The
petitioner filed original application (OA) before the Central
Administrative Tribunal seeking direction upon the
G U.P.S.C. to appoint him to the said post under the
Scheduled Caste category instead of respondent no.1.
The tribunal allowed the OA. Respondent no.1 and
U.P.S.C. filed writ petitions challenging the order of the
tribunal. The High Court allowed the writ petitions. The
548
H
V. RANGANATHAN v. N. BASKARAN AND ORS.
549
instant special leave petition was filed challenging the
order of the High Court.
550
A
Dismissing the special leave petition, the Court
HELD: 1. There was no reason to differ with the views
expressed by the High Court regarding the work
experience of respondent no.1 at the Higher Secondary
level which was found to be 10 years and 4 months,
whereas the period of qualifying service was 10 years.
The methodology adopted by the respondents in arriving
at such finding was fair and transparent and also
reasonable. Furthermore, the petitioner had not even
prayed for quashing of the appointment issued to
respondent no.1 and his prayer in the OA before the
Tribunal was limited to a direction being given to the
U.P.S.C. to appoint him to the post of Principal in a Higher
Secondary School in Pondicherry under the Scheduled
Caste category instead of respondent No.1. Besides,
before setting aside the appointment of respondent no.1,
no opportunity was given to the Secretary, Education
Department, Government of Pondicherry, to answer the
questions which were raised by the petitioner. The
selection list produced by the U.P.S.C. showed that the
petitioner was placed at rank No.10 in the reserve list and
even in the reserve list there were three more candidates
placed above him. Considering the same, there was no
reason to interfere with the order of the High Court. [Paras
14, 15] [554-F-G; 555-A-D]
CIVIL APPELLATE JURISDICTION : SLP (Civil) No.
18247 of 2006.
B
A
SUPREME COURT REPORTS
[2010] 11 S.C.R.
K.V. Vishwanathan, G. Balaji, Mahalakshmi Pavani (for
Mahalakshmi Balaji & Co.) for the Petitioner.
R. Venkatramani, Gurukrishna Kumar, Srikala Gurukrishna
Kumar, Binu Tamta, Upasana Nath, V.G. Pragasam, S.J.
Aristotle, Prabu Rama Subramanian, Aljo K. Joseph for the
B
Respondents.
The Judgment of the Court was delivered by
C
D
E
ALTAMAS KABIR, J. 1. The Respondent No.1 herein,
Shri
N. Baskaran, and the Union Public Service Commission
C
filed two separate writ petitions, being W.P. Nos.41237 of 2005
and 10771 of 2006, challenging the order passed by the
Central Administrative Tribunal, Chennai Bench, on 7th
December, 2005 in O.A. No.689 of 2004. The relief prayed for
D by the Petitioner herein, who was the Applicant in the Original
Application, was for a direction upon the Union Public Service
Commission (U.P.S.C.) to appoint him to the post of Principal
in a Higher Secondary School in Pondicherry under the
Scheduled Caste category instead of Shri N. Baskaran,
pursuant to order No.F.1/114/2003-R.III dated 16th July, 2004,
E
issued by the said Respondent. The said relief was
subsequently amended in the following manner :-
F
F
G
G
H
H
From the Judgment & Order dated 23.08.2006 of the High
Court of Judicature at Madras in WP Nos. 41237 of 2005 &
10771 of 2006.
"Under these circumstances, it is prayed that this
Hon'ble Tribunal may be pleased to implead the third
respondent as party respondent in O.A.No.689/2004 so as
to quash the appointment order issued by the 3rd
respondent in his letter in Ref.No.A.12012/CS/EBN/E. 1/
2004 dated 13.8.2004 and thus render justice."
2. The facts, which led to filing of the two writ petitions,
indicate that the Secretary, U.P.S.C., invited applications for
appointment to three vacancies to the post of Principal,
Government Higher Secondary Schools in Pondicherry, by
Advertisement No.17 published in the "Employment News" on
13th September, 2003. Out of the said three vacancies, one
V. RANGANATHAN v. N. BASKARAN AND ORS.
[ALTAMAS KABIR, J.]
551
was reserved for a candidate from the Scheduled Castes
category. It appears that in the vacancies for candidates
belonging to Scheduled Castes, 48 applications were received
and on the basis of preliminary scrutiny, 11 candidates were
short-listed and called for interview on 9.3.2004. Both, Shri N.
Baskaran and Shri V. Ranganathan, the Petitioner and the
Respondent No.1 in Writ Petition No.41237/2005, were among
the 11 candidates who were called for the interview. Apparently,
based on his performance in the interview, Shri N. Baskaran
was selected for the post as per the Selection List published
on 16.7.2004. It is thereafter that Shri V. Ranganathan filed the
above-mentioned O.A.No.689 of 2004 before the Chennai
Bench of the Central Administrative Tribunal. The Tribunal, by
its order dated 7.12.2005, allowed the Original Application and
also directed the official respondents to appoint the Applicant
as the Principal of the concerned Higher Secondary School.
Aggrieved thereby, Shri N. Baskaran challenged such selection
in Writ Petition No.41237 of 2005.
3. One of the conditions which had to be fulfilled by the
candidate for being eligible to be appointed in terms of the
advertisement was to have 10 years' teaching experience in a
Higher Secondary School. As per Shri N. Baskaran's version,
he had more than 18 years total experience of teaching.
However, according to the Union Public Service Commission,
as far as the Higher Secondary level is concerned, he had only
10 years and 4 months of teaching experience. It is Shri
Baskaran`s case that he also possessed a Post Graduate
Degree in Chemistry and a Post Graduate Degree in
Education. It was, therefore, claimed on his behalf that he was
fully qualified for selection and appointment to the post of
Principal of a Higher Secondary School.
4. On Shri N. Baskaran's behalf it was submitted that the
service rendered by him in the Higher Secondary Schools as
well as at the Higher Secondary level should be taken into
account for calculating the period of qualifying service. It was
552
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A mentioned that Shri Baskaran had handled Chemistry as a
subject at a Higher Secondary level. That apart, the educational
qualification for a teacher working in a Polytechnic is the same
as that of teachers working in Higher Secondary Schools. In
addition to the above, as far as the service rendered by Shri
B Baskaran in the District Institute of Education and Training is
concerned, the same would also have to be taken into
consideration for computing the years of service at a Higher
Secondary level as the educational qualifications prescribed for
teachers in Higher Secondary Schools and the District Institute
C of Education are the same and both the posts are
interchangeable and carry the same scale of pay.
5. As far as Shri V. Ranganathan is concerned, it was
stated on behalf of the U.P.S.C. that although he had been
short-listed and was also called for the interview to fill up the
D vacancies in question, he could not be recommended by the
Interview Board for the post of Principal as his merit position
at Serial No.10 did not bring him within the zone of
consideration for filling up the said post. Accordingly, his case
was not considered for the purpose of filling up one of such
E vacancies.
F
6. The Tribunal rejected the contentions made on behalf
of Shri Baskaran and allowed the application filed by the
Petitioner herein and directed the concerned respondents to
appoint him as the Principal of the Higher Secondary School.
Challenging the said order of the Tribunal, the Respondent No.1
herein filed Writ Petition No.41237 of 2005 and the UPSC filed
Writ Petition No.10771 of 2006.
7. Before the High Court it was the case of the U.P.S.C.
G that the name of Shri V. Ranganathan was not recommended
for the post of Principal as his merit position in the Selection
List did not bring him within the zone of consideration and since
Shri N. Baskaran had the required teaching experience of 10
years, he was recommended for appointment.
H
V. RANGANATHAN v. N. BASKARAN AND ORS.
[ALTAMAS KABIR, J.]
553
8. It was also the case of the U.P.S.C. that as far as
Polytechnics are concerned, after the completion of the 10th
standard, instead of joining the 11th standard, students join
diploma courses, and, as such, duties at the Polytechnic level
is equivalent to studies at the Higher Secondary level.
Whenever there was necessity, the Government had spared Shri
Baskaran's services to the Polytechnics and he had worked at
the Higher Secondary level in the said Polytechnics. The further
case of the Respondent No.1 was that having obeyed the order
passed by the Government from time to time, the same could
not be placed against him when it came to computing the period
of his service.
9. In addition to the above, it was also pointed out that the
U.P.S.C. had produced the selection list in which the Petitioner
herein has been ranked at number 10 in the reserve list and
even in the reserve list there were three more candidates
placed above him. The High Court allowed the two Writ
Petitions Nos.41237 of 2005 and 10771 of 2006 and the other
pending applications were closed.
10. The stand on behalf of the U.P.S.C. appears to have
been strongly opposed on behalf of the Petitioner herein. It was
contended that if the interpretation given by the Tribunal with
regard to experience, as indicated in the advertisement, is to
be accepted, the service rendered in Higher Secondary
Schools and also at the Higher Secondary level, would have
to be taken into consideration for determining the period of
qualifying service.
11. Appearing for the Petitioner herein, Mr. K.V.
Vishwanathan, learned Senior Advocate, submitted that the
findings of the High Court were in places at variance with the
findings of the Tribunal in computing the years of experience
at the Higher Secondary level which Shri N. Baskaran had
acquired. It was pointed out that it was the High Court's own
finding that since the system of Higher Secondary Schools is
in vogue only in some States, it would be totally impossible to
554
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A go by the term "Higher Secondary School" which was not in
use in the other States.
12. According to Mr. Vishwanathan, this was a classic case
for issuance of writ in the nature of quo-warranto since
undoubtedly the Respondent No.1 had usurped the right of the
B
Petitioner to be appointed as Principal of the Higher Secondary
School in question. It was also urged that the very procedure
adopted for selection of candidates to fill up the three vacant
posts of Principal was invalid and the Petitioner was entitled
to be considered for appointment to the post of Principal of one
C of the three Schools on the basis of his qualifications and
experience.
13. Mr. Gurukrishna Kumar and Ms. Binu Tamta, learned
Advocates appearing for the Respondent No.1 and the
D U.P.S.C. respectively, both contended that there are different
grades of teachers in the Higher Secondary Schools/Senior
Secondary Schools/Inter Colleges in the country which
comprise of Classes VI to XII and not all teachers teach
students in Classes XI and XII which constitute the core classes
E of the Higher Secondary Schools. It was further contended that
the interpretation of experience of 10 years teaching in Higher
Secondary Schools was meant to comprise such teaching
experience of students belonging to the Higher Secondary
Section for the purpose of short listing of candidates for
selection to the post.
F
14. Having considered the submissions made on behalf
of the respective parties, we see no reason to differ with the
views expressed by the High Court regarding the work
experience of the Respondent No.1 at the Higher Secondary
G level which was found to be 10 years and 4 months, whereas
the period of qualifying service was 10 years. The methodology
adopted by the respondents in arriving at such finding is fair
and transparent and also reasonable. Furthermore, as has
been pointed out by the High Court, the Petitioner herein had
H not even prayed for quashing of the appointment issued to the
V. RANGANATHAN v. N. BASKARAN AND ORS.
[ALTAMAS KABIR, J.]
[2010] 11 S.C.R. 556
555
Respondent No.1 on 13th August, 2004, and his prayer in the
Original Application before the Tribunal was limited to a
direction being given to the U.P.S.C. to appoint him to the post
of Principal in a Higher Secondary School in Pondicherry under
the Scheduled Caste category instead of the Respondent No.1
herein. In addition to the above, no opportunity was also given
to the Secretary, Education Department, Government of
Pondicherry, to answer the questions which had been raised
by the Petitioner before setting aside the appointment of the
Respondent No.1 herein.
A
A
B
B
15. However, what is of cardinal importance is the fact that
from the selection list produced by the U.P.S.C., it will be seen
that the Petitioner herein had been placed at rank No.10 in the
reserve list and even in the reserve list there were three more
candidates placed above him. Considering the same, in
agreement with the views expressed by the High Court, we are
also not inclined to interfere with the order impugned and the
Special Leave Petition is, accordingly, dismissed, but without
any order as to costs.
C
D.G.
SLP dismissed.
THE INDURE LTD. AND ANOTHER
v.
COMMERCIAL TAX OFFICER AND ORS.
(Civil Appeal No. 1123 of 2003)
SEPTEMBER 20, 2010
[DALVEER BHANDARI AND DEEPAK VERMA, JJ.]
D
Central Sales Tax Act, 1956 – s. 5(2) – Sales tax
exemption – Award of works contract by NTPC to appellant
C Company – For erection of plant on turnkey basis – Appellant
Company importing pipes and thereafter, selling them to
NTPC – Claim for sales tax exemption u/s. 5(2) by appellant
Company – Held: Appellant Company is entitled to claim
benefit u/s. 5(2) – Pipes were imported on account of the
D contract entered into between the Company and NTPC, and
were used exclusively for erection and commissioning of plant
– Failure on part of Revenue Authorities to establish that the
pipes were not used in the plant – Goods were imported for
completion of project of NTPC on turnkey basis – Thus, by
virtue of Article 286(1)(b) pipes not taxable – Also certain
E
other items imported by the Company to be used in the plant
were given benefit of sales tax – Thus, order passed by
Authorities, tribunal as also High Court rejecting the claim not
sustainable and are set aside – Constitution of India, 1950 –
Article 286(1)(b).
F
N.T.P.C awarded contracts to the appellant-Company
for performing the work of erection of Ash Handling plant
on Turnkey Basis. Certain items were sought to be
imported for completion of the project. The Company was
G granted Special Import License for importing ‘MS’ Pipes.
The pipes were imported and, thereafter, sold to N.T.P.C.
The Company sought exemption from imposition of sales
tax under Section 5(2) of the Central Sales Tax Act, 1956
as the sale was in the course of import. The Commercial
556
H
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS.
557
Tax Officer, rejected the claim and raised a demand of
certain amount as sales tax. The other Authorities, the
tribunal and the Division Bench of the High Court upheld
the order. Therefore, the appellant filed the instant appeal.
Allowing the appeal, the Court
HELD: 1.1 Import had occasioned only on account
of the covenant entered into between the appellantCompany and N.T.P.C. and the imported pipes were used
exclusively for erection and commissioning of the plant.
The respondents failed to establish that these pipes were
not used in the plant of N.T.P.C. [Para 37] [571-B-C]
558
A
B
C
M/s. Binani Bros (P) Ltd. vs. Union of India and Ors.
(1974) 1 SCC 459, held inapplicable.
K.G. Khosla and Co. vs. Deputy Commissioner of
Commercial Taxes (1966) 3 SCR 352; State of Maharashtra
vs. Embee Corporation, Bombay 1997 (7) SCC 190; Deputy
Commissioner of Agricultural Income Tax And Sales Tax,
Ernakulam vs. Indian Explosives Ltd. 1985 (4) SCC 119,
referred to.
1.2. The appellant-Company had imported the goods
into India for completion of the Project on Turnkey Basis
of N.T.P.C. Such import would fall within the
Constitutional umbrella. Thus, by virtue of Article 286(1)(b)
of the Constitution of India, 1950, it would not be taxable.
[Para 43] [576-E-F]
Minerals and Metals trading Corporation of India Ltd. v.
Sales Tax Officer 1998 (7) SCC 19, referred to.
1.3. The ground sought to be raised for the first time
before this Court that ‘MS’ Pipes were put to
manufacturing process and thereby converted into
distinct end product, had not been raised before any of
the Authorities earlier. It was not the respondent’s case
D
E
F
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A that pipes so imported were not necessary components
for the erection and commissioning of the plant. The said
pipes were used as components in the Ash Handling
Plant in the same condition as they were imported
without altering its originality. Thus, the ground which
B was sought to be raised before this Court for the first time
was not rightly considered by any of the Authorities. It is
not fit and proper to consider the same at this belated
stage. [Para 42] [576-C-E]
1.4. Alongwith ‘MS’ Pipes, the Company also
imported 11 other components/ items to be used in the
plant for its erection and commissioning. Other 11
imported goods, utilised by the Company in the erection
of the plant were held to be sales in the course of import
made by the Company to N.T.P.C and accordingly benefit
D under Section 5(2) of the Central Sales Tax Act, 1956 was
granted by the State Government. Only the component
‘MS’ Pipes was denied the benefit. The Sales Tax
Assessment Order passed by Assistant Commissioner
(Commercial Tax), Ghaziabad, State of Uttar Pradesh
E shows that such benefit accrued to the Company for
remaining 11 items. Since ‘MS’ Pipes were shipped at
Calcutta Port, thus, it was the respondents who treated
them exigible for Sales Tax. If the benefit of the Sales Tax
exemption was given to the Company for 11 components/
F items, there is no reason to deny the benefit in respect
of ‘MS’ Pipes. [Paras 34 and 35] [569-F-H; 570-A-C]
C
G
1.5. In the facts and circumstances of the case, the
order passed by Division Bench of the High Court as also
the orders passed by the Tribunal and the other
G
Authorities cannot be sustained in law, and are set aside
and quashed. The appellant is entitled to claim benefit of
Section 5(2) of the Act. [Para 44] [577-B-C]
H
H
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS.
559
Case Law Reference:
(1966) 3 SCR 352
Referred to.
Para 36
(1997) 7 SCC 190
Referred to.
Para 37
(1985) 4 SCC 119
Referred to.
Para 38
(1974) 1 SCC 459
Referred to.
Para 39
(1998) 7 SCC 19
Held inapplicable
Para 43
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1123 of 2003.
560
A
Appellant No. 1 is a Limited Company duly incorporated
under the provisions of Companies Act, 1956, engaged in the
business of Works contract. Appellant No. 2 was working for
gain as Senior Manager of Appellant No. 1 (hereinafter referred
to as ‘the Company’).
B
B
3. Tenders were invited by N.T.P.C on 08.01.1988 for
submitting bids for Ash Handling Plant Package for its Farakka
Super Thermal Power Project, Stage-II, by way of International
Competitive Bidding, popularly known as Global Tender.
C
C
D
A.K. Ganguli, Avijit Bhattacharjee, Ananya Kar, Sarbani
Kar, Bidyabrata Acharya for the Respondents.
The Judgment of the Court was delivered by
E
DEEPAK VERMA, J. 1. Following questions of law
projected, are required to be adjudicated by this Court in the
aforesaid Appeal:(i) Whether import of MS Pipes by Appellants was
pursuant to a term of contracts between Appellant No.1 and
National Thermal Power Corporation Limited (for short
‘N.T.P.C.’).
(ii) Whether import of said MS Pipes and supply
thereof by the Appellant No. 1 to N.T.P.C. Constitutes an
integral and inseparable part of the Contracts between
them.
[2010] 11 S.C.R.
A
From the Judgment & Order dated 19.10.2001 of the High
Court at Calcutta in W.P.T.T. No. 7 of 2000.
S. Ganesh, Amar Dave, Gaurav Goel, Mahesh Agarwal,
Rishi Agrawala (for E.C. Agrawala) for the Appellants.
SUPREME COURT REPORTS
4. The scope of work involved in such package included
designing and engineering, manufacture, inspection and testing
at suppliers works, packing, transportation to site, unloading,
storage and handling at site, erection, testing and
commissioning of complete Ash Handling Plant for 2 x 500 MW
D Steam Generating Units (for short ‘the plant’). Such type of
works contract is known as ‘On Turnkey Basis’. Bids made by
bidders were to cover whole of the work as abovementioned.
Bid made by any person not covering the entire scope of work
was liable to be treated as incomplete and could be rejected
E on that ground only. The bidder was required to quote a lump
sum price in its proposal for the entire scope of work covered
under the bid documents. It further required that bidders shall
indicate the bid price in their home currency or in US dollars.
F
F
G
G
H
H
2. Brief history of the case is as under:-
5. The aforesaid project of Ash Handling Plant for 2 x 500
MW Steam Generating Units was to be partially financed by a
credit/loan from International Bank for Reconstruction and
Development (for short ‘IBRD’) or by International Development
Association (for short ‘IDA’).
6. Pursuant to issuance of notice to invite tender, the
Company submitted its bid furnishing therein all the information
as required by the aforesaid notice and also indicated its bid
price inclusive of foreign expenditure.
7. Thereafter, a meeting was convened between the
INDURE LTD. AND ANR. v. COMMERCIAL TAX
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561
officials of N.T.P.C. and authorized representatives of the
Company, at N.T.P.C’s Office on 21.07.1988, wherein various
terms and conditions were discussed between the parties
regarding erection of plant for which the Company had
submitted its bid.
8. Since project was partially financed by credit/loan from
IDA or IBRD and in view of the terms of Import Export Policy,
Volume-I (April, 1988 to March, 1991) supplies made in such
project under the procedure of International Competitive
Bidding were to be treated as ‘deemed exports’. Suppliers to
such project enjoyed benefit of customs duty exemption for
import and unless the part of the contract involving importation
of equipments and accessories for use in such project is not
separately treated as a supply contract such benefit cannot be
availed of at all by the importer on such importation.
9. The total contract was agreed to be divided into two
separate contracts, (i) Supply Contract, and (ii) Erection
Contract, with a cross fall breach clause wherein breach of
either of the contracts would entitle the owner/ contractee
(N.T.P.C) to cancel the other contract also.
10. In the said meeting itself, it was agreed between the
Company and N.T.P.C that separate formulae shall be
applicable in respect of calculation of price adjustment for
indigenous supplies and imported supplies. It was, further,
agreed that if Sales Tax on imported items is leviable due to
future enactment of sale/interpretation of law/ interpretation of
law by court, the same will be reimbursed by N.T.P.C to the
Company at actuals against documentary evidence.
11. By way of Letter of Award dated 16.08.1988, N.T.P.C
awarded two contracts to the Company for performing the work
of erection of aforesaid plant on Turnkey Basis. Even though,
two contracts were entered into between the parties but in
nutshell it was only one contract for the simple reason that
N.T.P.C kept a right with it with regard to cross fall breach
562
A
B
[2010] 11 S.C.R.
A clause meaning thereby that default in one contract would
tantamount to default in another and whole contract was liable
to be cancelled.
B
C
C
D
D
E
E
F
SUPREME COURT REPORTS
F
12. In the said Letter of Award, clause 2 deals with intent
and scope of award and is reproduced hereinbelow:“2.1. We confirm having accepted your proposal dated
March 28, 1988 and mentioned in at para 1.1 (ii) above,
read in accordance with communications/ clarifications/
agreements referred to at para 1.1 above and award on
you the ‘Supply Contract’ for the work of design,
engineering, manufacture, shop testing, inspection and
testing of manufacture works, inspection and testing at
manufacturer’s works, packing and forwarding from your
manufacturing works/ place of despatch (both in India) and
successful performance testing at NTPC site and handling
over of the 2 x 500 MW Ash Handling Plant for Farakka
STPP, Stage-II on F.O.R. place of despatch in India basis.
The items which are not specifically mentioned in the
specifications, but are needed to complete the equipment
package shall also be furnished by you unless otherwise
specifically excluded in our bid documents read with
Agreed Amendments.”
In clause 4.5, the exchange rate of currencies of the
various countries had been indicated.
In clause 4.5.1 and 4.5.2, Price Adjustment is indicated but
relevant portion thereof, is reproduced hereinbelow:-
G
H
G
H
“4.5.1. ….....For equipment of Non-Indian origin, you shall
submit the details of the indices and co-efficient in line with
the provisions of Bid Documents within three months of the
date of this Award Letter.
4.5.2. The list of components/ material/ equipment to be
imported by you, for which the adjustment on exchange rate
variation is to be made under US$, DM and J Yen will be
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
563
furnished by you within three months of the date of this
Award Letter. The items as declared as per these lists shall
only be eligible for exchange rate variation claims.”
13. It, further, contemplated that ownership of equipment
supplied by the Company, under the supply portion of the
contract shall vest exclusively with N.T.P.C upon despatch in
India and negotiation of despatch document with N.T.P.C. Term
of Contract Agreement contemplated that the Company
guaranteed to the N.T.P.C that the equipment package under
the contract shall meet the ratings and performance parameters,
as stipulated in the Technical Specifications (Volume-II) and in
the event of any deficiencies found in the requisite performance
figures, N.T.P.C. may at its option reject the equipment
package and recover the payment already made or alternatively
accept it on the terms and conditions and subject to levy of the
liquidated damages in terms of contract.
14. Since during the course of the discussion it was
decided that project would need certain imported items to be
used exclusively for the plant, the Company had written a letter
to N.T.P.C on 02.11.1988 inviting its attention, with regard to
clause 4.5.2 of the Letter of Award, giving details of the items
to be imported for the said project. As many as twelve different
type of components were sought to be imported for completion
of the project.
564
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A
B
B
C
D
E
SUPREME COURT REPORTS
[2010] 11 S.C.R.
17. Alongwith the Annexures submitted by the Company
full specifications of the MS Pipes were also given. It also
contained details of other items required to be imported by the
Company in accordance with the list presented to N.T.P.C., for
completion of the project.
18. Necessary declaration required to be furnished by the
Company was complied with, the Licensing Authority clearly
mentioning therein that all components sought to be imported
were to be exclusively used by it for the aforesaid project of
N.T.P.C. Accordingly, Special Import License was granted to
C
the Company for importing MS Pipes of various diameters upto
500 MB with different wall thickness together with other
components to be imported for usage in the said plant.
19. Admittedly, there is no dispute that MS Pipes were
D imported from outside India (South Korea) and were sold to
N.T.P.C., Farakka. According to Appellant such sales were
covered under Section 5(2) of the Central Sales Tax Act, 1956
(hereinafter shall be referred as ‘Act’) and had been exempted
from imposition of Sales Tax under Section 5(2)(a)(v) of the
E Bengal Finance (Sales Tax) Act, 1941 (for short ‘BFST Act’).
20. It is worth mentioning here that M/s. Daewoo
Corporation Limited, South Korea was specifically directed by
the Company to emboss on each pipe the following marking:
15. MS Pipe to be imported from M/s. Daewoo
Corporation, South Korea, was one of the items shown in the
list prepared by the Company which was subsequently
presented to N.T.P.C.
F
16. The Company, thereafter, submitted an application
before DGTD, Import Export Directorate, New Delhi on
23.02.1989 for Special Imprest Import License against Turnkey
contract for supply of complete Ash Handling System to
N.T.P.C’s Farakka Super Thermal Power Project (2 x 500 MW).
G
F
“NTPC-FARAKKA STG-II (2 X 500 MW)
INDURE LIMITED (ASH HANDLING)”
H
21. The special marking on each pipe would go to show
that it was to be exclusively used as an integral component of
G the said project. The Special Imprest Import License was
granted to the Company on 21.08.1989 by Controller of Imports
and Exports with specific condition that the goods supplied
therein shall be used exclusively for the plant of N.T.P.C. only.
H
22. After the pipes were received at Calcutta port the same
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
565
were transported to Farakka in the month of December, 1989
and End Use Certificate was issued on 03.06.1991 by
N.T.P.C., Farakka Super Thermal Power Project certifying that
MS Pipes imported from M/s. Daewoo Corporation of South
Korea had been supplied fully to N.T.P.C. in terms of their Letter
of Award/ purchase order.
23. The Company, thereafter, filed its Return claiming
benefit under Section 5(2) of the Act as sale in the course of
import. The Commercial Tax Officer, Durgapur Charge, in
assessment proceedings disallowed the claim of the Company
and raised a demand of Rs. 12,60,795.00/- as Sales Tax.
Company preferred an appeal under Section 11(1) of the
BFST Act before Assistant Commissioner (Commercial Taxes)
but the same also came to be dismissed and the order of the
Commercial Tax Officer was confirmed. The Revision
Application was moved against the said order before West
Bengal Commercial Taxes Appellate and Revisional Board, but
after contest the said Revision Application was also dismissed
against the Company. It, thereafter, preferred an application
under S.8 of the West Bengal Taxation Tribunal Act, 1987
before the West Bengal Taxation Tribunal, challenging the
orders passed by the authorities below but the same was also
rejected. The Appellants were then constrained to file a Writ
Petition before Division Bench of the High Court of Calcutta,
challenging the said orders. However, the Appellant’s Writ
Petition also came to be dismissed by the Division Bench of
the said Court on 19.10.2001, giving rise to this appeal.
24. The case of the Respondents right from the very
beginning had been that it was neither obligatory nor mandatorily
required for the Company to have imported the goods in
question. There was no contractual or legal obligation on their
part to do so. The only obligation required to be performed by
the Company under the terms of the Letter of Award and the
contract was to design, supply, erect and commissioning the
Ash Handling Plant for N.T.P.C., irrespective of the components
566
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A to be used therein. Appellant’s further obligation was that the
materials used in the execution of the said contract should
conform to the specification stipulated by N.T.P.C. Such
supplies would be effected by the Company either from imports
or procured from within the country.
B
25. Furthermore, learned counsel for the Respondents
have contended that the imports effected by the Company were
on its own accord and under special licensing scheme which
enabled it to import raw materials and components, for
manufacturing in India. The imports if at all to be made were
C
subject to a further condition that the Company would in the
process of manufacturing of the goods add at least 33 percent
value to them before exporting the manufactured goods. In
terms of the declarations made by the Company to the
Licensing Authority, the Appellant was not to ‘trade’ in the
D imported goods and undertook to re-export them after further
manufacturing and value addition of atleast 33 percent. The sale
made to N.T.P.C. by the Company was, therefore, not of the
goods which were imported by the Company. Thus, provisions
contained in Section 5(2) of the Act would not at all be attracted.
E
26. As per the Special Import License granted to the
Company, it was entitled to divert the goods by re-using them
in the manufacture of other goods or by transferring them to
another actual user in accordance with the Import Export Policy.
F
27. The imports thus, made by the Company was neither
pursuant to any stipulation in the Contract nor as an incidence
thereof. Section 5(2) of the Act, covers only those cases, which
occasions the import. The decisions on which the Appellants
have placed reliance have considered the question whether the
G sales therein had occasioned the import. In none of those cases
did the contracts for sale stipulate any condition with regard to
the imports in question. In other words, they have contended
that imports or exports, as the case may be, did not occasion
the sales in question. It has also been their case that actual user
H license had not been obtained by the assessee. The Company
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
567
was only acting on behalf of the ultimate purchaser for whom
the work was being conducted.
28. It has also been contended by them that the decisions
on which reliance has been placed by the Appellants, in
unequivocal terms emphasised that the transaction of import
and the transaction of sale have to be so integrated to each
other as to form one single chain without a break. The various
factors, including contractual stipulation, are considered only to
ascertain if the integrated chain is maintained to fulfill the
conditions laid down in Section 5(2) of the Act. That is to say
such sale or purchase occasioned the import.
29. They have, therefore, strenuously submitted that the
Appellants have lost before all the Authorities below and the
reasoning adopted by West Bengal Taxation Tribunal has been
affirmed by Division Bench of the High Court, thus, no case for
interference has been made out in this Appeal, which deserves
dismissal.
30. In the Written Submissions of the Respondents, they
have further taken the following plea:It is thus clearly established that the goods which
were imported by the Appellant, were to be imported by
them for their own purposes though ultimately to be utilised
for N.T.P.C’S Ash Handling Plant. The goods were to
undergo processing at the premises of the Appellant and
only after their conversion into a final product were to be
handed over to N.T.P.C. The Appellants thus clearly
admitted that there was to be a value addition to the
equipments which were to be imported from the foreign
sellers before they could be utilised for the Ash Handling
Plant.
Not only the Appellant utilised the Special Imprest
License on import of the goods with the declaration that
the imports were in the nature of raw material components
568
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B
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D
E
F
G
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C
SUPREME COURT REPORTS
[2010] 11 S.C.R.
which would be utilised for further manufacturing in its
premises and with value addition thereon would be sold
to N.T.P.C, but even when the imported goods were
dispatched to the site office of the Appellant at N.T.P.C
Farakka, the Appellant made a declaration under FORM
XXX, prescribed under the West Bengal Sales Tax Rules
to the following effect:
“We also undertake to duly account to you the
disposal of above goods and to pay tax on the sales
thereof in accordance with the provisions of the said Act.”
(‘Act’ in this context, refers to Bengal Finance (Sales Tax)
Act, 1941).
31. In this Court Respondents have taken a further plea that
Company had admitted that the raw materials imported by it
D were manufactured by it. Further, with a view to secure the value
addition of at least 33 percent, such raw materials cannot
remain the same after being processed into final product. At
least the Company has produced no material to substantiate
the claim that the raw material imported by it remained the same
E even after value addition. Since the Company was seeking
exemption under the Act, the burden squarely fell on it to
establish that they were entitled to such exemption.
Furthermore, the Respondents have also argued that it was
required to be established by the Company that the goods
imported and dispatched to Farakka would also be in the nature
F
of raw materials or components or it underwent further
processing at the site office of the Company and then with value
addition thereon were sold to N.T.P.C to be used exclusively
for the plant which it failed to establish or prove. For all these
reasons Respondents have contended that the matter having
G been dealt with and considered from all angles, no case for
interference has been made out and the Appeal being devoid
of any merit and substance deserves to be dismissed.
32. We have, accordingly, heard learned Senior Counsel
Shri
S. Ganesh and Mr. Amar Dave, Mr. Gaurav Goel, Mr.
H
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
569
570
Mahesh Agarwal, Mr. Rishi Agrawala and Mr. E.C. Agrawala,
Advocates for the Appellants and Mr. A.K. Ganguli, learned
Senior Counsel and Mr. Avijit Bhattacharjee, Advocate for
Respondents at length and perused the record.
A
33. For proper adjudication of the Appeal it is foremost
important to consider the provision of Section 5(2) of the Act,
which is reproduced hereinbelow:-
B
“5. When is a sale or purchase of goods said to take place
in the course of import or export.
C
5.1. xxx
xxx
xxx
xxx
5.2. A sale or purchase of goods shall be deemed to take
place in the course of the import of the goods into the
territory of India only if the sale or purchase either
occasions such import or is effected by a transfer of
documents of title to the goods before the goods have
crossed the customs frontiers of India.”
5.3. xxx
xxx
xxx
xxx
5.4. xxx
xxx
xxx
xxx
5.5. xxx
xxx
xxx
xxx”
34. Before we proceed to decide the questions of law as
projected hereinabove, one material fact pertinent to the issue
involved in this Appeal requires special mention. We have
already mentioned hereinabove that alongwith MS Pipes, the
disputed goods in this Appeal, the Company had also imported
11 other components/ items to be used in the plant for its
erection and commissioning. Other 11 imported goods, utilised
by the Company in the erection of the plant have been held to
be sales in the course of import made by Company to N.T.P.C
and accordingly benefit under Section 5(2) of the Act has been
granted by the concerned State Government. It was only this
particular component MS Pipes, which has been denied this
D
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
A benefit.
35. Sales Tax Assessment Order passed by Assistant
Commissioner (Commercial Tax), Ghaziabad, State Of Uttar
Pradesh has been filed before us to show that such benefit has
been accrued to the Company for remaining 11 items. Since
B
MS Pipes were shipped at Calcutta Port, thus it was
Respondents who treated them exigible for Sales Tax. If the
benefit of the Sales Tax exemption has been given to the
Company for 11 components/ items there is no reason why it
is to be denied in respect of MS Pipes. This we are quoting
C
so that the facts may be put on record correctly.
36. Leading case dealing with Section 5(2) of the Act is
reported in (1966) 3 SCR 352, K.G. Khosla & Co. Vs. Deputy
Commissioner of Commercial Taxes decided by a
D Constitution Bench of this Court. In the aforesaid judgment, two
questions were projected for consideration by the Constitution
Bench namely, if the sales were in the course of import within
the meaning of Section 5(2) of the Act; and, secondly if the
property in the goods passed in Belgium and consequently the
E sales were outside the State within the meaning of Article
286(1)(a) of the Constitution. The Constitution Bench was of the
opinion that the assessee must succeed on the first point and
it will not be necessary to deal with the second point. Court has
held as under:-
F
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G
G
H
H
“The next question that arises is whether the
movement of axle-box bodies from Belgium into Madras
was the result of a covenant in the contract of sale or an
incident of such contract. It seems to us that it is quite clear
from the contract that it was incidental to the contract that
the axle-box bodies would be manufactured in Belgium,
inspected there and imported into India for the consignee.
Movement of goods from Belgium to India was in
pursuance of the conditions of the contract between the
assessee and the Director-General of Supplies. There was
no possibility of these goods being diverted by the
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
571
assessee for any other purpose. Consequently we hold
that the sales took place in the course of import of goods
within Section 5(2) of the Act, and are, therefore, exempt
from taxation.”
37. In the case in hand, it is to be noted that import had
occasioned only on account of the covenant entered into
between the Company and N.T.P.C. and the imported pipes
were used exclusively for erection and commissioning of the
plant. Respondents have failed to establish that these pipes
were not used in the plant of N.T.P.C. Similar question had
again come up for consideration before two learned Judges
of this Court reported in (1997) 7 SCC 190, State of
Maharashtra Vs. Embee Corporation, Bombay wherein it has
been held as under:“9. In this case (K.G. Khosla & Co.(P) Ltd. Vs. Dy.
Commissioner of Commercial Taxes), the Constitution
Bench specifically held that sale need not precede the
import and this decision is a complete answer to the
argument advanced by the learned counsel for the
appellant.
10. Learned counsel then tried to argue that the decision
of the Constitution Bench in Khosla case is not applicable
to the present case as in the said case, the materials were
to be inspected at Belgium and London and thereafter the
goods were to enter into India. This argument is not correct.
In Khosla case the inspection of goods was to be carried
out in Belgium as well as on arrival into India. In the present
case, the inspection was to be done on arrival of goods
into India and as such, there is no distinction on facts
between the present case and that of Khosla. Learned
counsel then urged that the decision of the Constitution
Bench in Khosla case has not been correctly decided and
as such this case be referred to a larger Bench. We have
considered the matter and found that Khosla case has held
the field nearly more than three decades and its
572
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
correctness has not been doubted so far. We, therefore,
reject the prayer of learned counsel for the appellant.
11. Learned counsel then urged that this case is covered
by decisions of this Court in the cases of Binani Bros. (P)
Ltd. v. Union of India, Mohd. Serajuddin v. State of Orissa
and K. Gopinathan Nair v. State of Kerala. The decision
of this Court in the case of Binani Bros. is distinguishable
as in that case no obligation was imposed on the appellant
to supply the imported goods to DGS&D after they had
been imported and the same could be directed to other
channels. Similarly, the decision of this Court in the case
of Mohd. Serajuddin is not applicable to the present case
as in that case it was found that the appellant in the said
case sold the goods directly to the Corporation which
entered into a contract with a foreign buyer and it was found
that the immediate cause of export was the contract
between the foreign buyer who was the importer and the
Corporation who was the exporter. Such sales were
described as back-to-back contract. This decision rested
on the peculiar facts of that case. We are, therefore, of the
view that the appellant cannot derive any assistance from
the said decision. The last case which was brought to our
notice was K. Gopinathan Nair v. State of Kerala. In the
said case, on facts it was found that on account of the sale
to CCI by foreign exporters raw cashewnuts were
imported into India. The importer being the CCI and not
the local user, this Court held that principles evolved by it
in para 12 of the judgment were not applicable to that
case. We do not, therefore, find that this decision is helpful
to the appellant’s case.
12. The result of the aforesaid discussion is that while
interpreting the expression “sale occasions import”
occurring in sub-section (2) of Section 5 of the Act, it is
not necessary that a completed sale should precede the
import.”
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
573
38. Test to determine if the sales were in the course of
import has been elaborately considered in a judgment of
learned three Judges’ Bench of this Court reported in (1985)
4 SCC 119, Deputy Commissioner of Agricultural Income
Tax And Sales Tax, Ernakulam Vs. Indian Explosives Ltd.
39. Para 4 thereof dealing with the issue is reproduced
hereinbelow and finally in para 6 while distinguishing (1974) 1
SCC 459 in the matter of M/s. Binani Bros (P) Ltd. Vs. Union
of India and Others, it has been held as under:“4. The test of integral connection or inextricable link
between the sale and the actual import or export in order
that the sale could become a sale in the course of import
or export has been clearly enunciated by this Court in Ben
Gorm Nilgiri Plantations Company case. There the
question related to sale of tea which was claimed to be in
the course of export out of the territory of India and though
by majority it was held that the sales in question were not
“in the course of export”, the Court at p. 711 of the Report
laid down the test thus:
A sale in the course of export predicates a
connection between the sale and export, the two activities
being so integrated that the connection between the two
cannot be voluntarily interrupted, without a breach of the
contract or the compulsion arising from the nature of the
transaction. In this sense to constitute a sale in the course
of export it may be said that there must be an intention on
the part of both the buyer and the seller to export, there
must be obligation to export, and there must be an actual
export. The obligation may arise by reason of statute,
contract between the parties, or from mutual understanding
or agreement between them, or even from the nature of
the transaction which links the sale to export. A transaction
of sale which is a preliminary to export of the commodity
sold may be regarded as a sale for export, but is not
necessarily to be regarded as one in the course of export,
574
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B
B
C
C
D
D
E
E
F
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
unless the sale occasions export. And to occasion export
there must exist such a bond between the contract of sale
and the actual exportation, that each link is inextricably
connected with the one immediately preceding it. Without
such a bond, a transaction of sale cannot be called a sale
in the course of export of goods out of the territory of India.
Conversely, in order that the sale should be one in the
course of import it must occasion the import and to
occasion the import there must be integral connection or
inextricable link between the first sale following the import
and the actual import provided by an obligation to import
arising from statute, contract or mutual understanding or
nature of the transaction which links the sale to import
which cannot, without committing a breach of statute or
contract or mutual understanding, be sapped (sic snapped).
6. Counsel for the appellant fairly conceded that the facts
in K.G. Khosla & Co. case were on all fours with the facts
obtaining in the instant appeals and that the ratio of that
decision would appear to govern the question arising in
these appeals, but he contended that a different view has
been taken by this Court in Binani Bros (P) Ltd. v. Union
of India and in view of this later decision the High Court
ought not to have applied the ratio of K.G. Khosla & Co.
decision to this case. It is not possible to accept this
contention as in our view Binani Bros case is clearly
distinguishable on two material aspects. In that case the
assessee itself held the import licence and the goods were
imported on the strength of such import licence and not on
the strength of any Actual Users’ Licence as is the case
here. Secondly, unlike in the present case there was no
term or condition prohibiting diversion of the goods after
the import. In fact, it is these two factors obtaining in the
instant case which establish the integral connection or
inextricable link between the transactions of sale and the
actual import making the sales in the course of import. In
fact as pointed out earlier, the movement of the goods from
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
575
the foreign country to India was in pursuance of the
requirements flowing from the contract of sale between the
respondent-assessee and the local purchaser and as such
the sales in question must be held to be in the course of
import.”
40. Learned Counsel for Respondents has placed reliance
on Binani Bros. supra specially para 14, reproduced
hereinbelow:“14. Be that as it may, in the case under consideration we
are concerned with the sales made by the petitioner as
principal to the DGS&D. No doubt, for effecting these
sales, the petitioner had to purchase goods from foreign
sellers and it was these purchases from the foreign sellers
which occasioned the movement of goods in the course
of import. In other words, the movement of goods was
occasioned by the contracts for purchase which the
petitioner entered into with the foreign sellers. No
movement of goods in the course of import took place in
pursuance to the contracts of sale made by the petitioner
with the DGS&D. The petitioner’s sales to DGS&D were
distinct and separate from his purchases from foreign
sellers. To put it differently, the sales by the petitioner to
the DGS&D did not occasion the import. It was purchases
made by the petitioner from the foreign sellers which
occasioned the import of the goods. The purchases of the
goods and import of the goods in pursuance to the
contracts of purchases were, no doubt, for sale to the
DGS&D. But it would not follow that the sales or contracts
of sales to DGS&D occasioned the movement of the
goods into this country. There was no privity of contract
between DGS&D and the foreign sellers. The foreign
sellers did not enter into any contract by themselves or
through the agency of the petitioner to the DGS&D and the
movement of goods from the foreign countries was not
occasioned on account of the sales by the petitioner to
DGS&D.”
576
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
41. However, we are of the considered opinion that it has
not been the Respondents’ case that the MS Pipes imported
by the Company were not used for the erection and
commissioning of the plant for N.T.P.C. Thus, from the facts of
Binani Bros supra, it is clearly spelt out that the facts of the case
B in hand are different. Thus, the ratio of the said case would not
be applicable to it.
A
42. In fact, the ground, sought to be raised for the first time
before this Court that MS Pipes were put to manufacturing
process and thereby converted into distinct end product had
C not been raised before any of the Authorities earlier. It was not
the Respondents case that pipes so imported were not
necessary components for the erection and commissioning of
the plant. Admittedly, the said pipes were used as components
in the Ash Handling Plant in the same condition as they were
D imported without altering its originality. Thus, the ground which
was sought to be raised before us for the first time has not been
considered by any of the Authorities and in our opinion rightly
so. Thus, we also do not deem it fit and proper to consider the
same at this belated stage.
E
43. Apart from the aforesaid reasons, we are also of the
considered opinion that such import would fall within the
Constitutional umbrella. It is also to be noted that Company had
admittedly imported the goods into India for completion of the
F Project on Turnkey Basis of N.T.P.C. Thus, by virtue of Article
286 (1) (b) of the Constitution, it would not be taxable. For ready
reference, Article 286 (1) (b) of the Constitution is reproduced
hereinbelow:
G
G
H
H
“286. Restrictions as to imposition of tax on the sale or
purchase of goods – (1) No law of a State shall impose,
or authorise the imposition of, a tax on the sale or
purchase of goods where such sale or purchase takes
place(a) outside the State; or
INDURE LTD. AND ANR. v. COMMERCIAL TAX
OFFICER AND ORS. [DEEPAK VERMA, J.]
[2010] 11 S.C.R. 578
577
(b) in the course of the import of the goods into,
or export of the goods out of, the territory of India.
A
A
44. In the facts and circumstances of the case we are of B
the opinion that the order passed by Division Bench of the High
Court as also the orders passed by Tribunal and other
Authorities cannot be sustained in law. Same are hereby set
aside and quashed. Appellant is held entitled to claim benefit
C
of Section 5(2) of the Act.
B
See (1998) (7) SCC 19 Minerals & Metals Trading
Corporation of India Ltd. Vs. Sales Tax Officer.
45. We have been given to understand that pursuant to the
demand notice issued by Respondents, the Company has
already deposited the Sales Tax liability “under protest”.
Respondent State would refund the same to the Company with D
Simple Interest at the rate of 6 percent from the date of its
deposit till its refund within a period of three months, from the
date of communication of the said order. In case amount is not
refunded within three months, from the date of communication
of said order, then Respondents would be liable to pay
E
Compound Interest on the amount deposited by Appellants with
the Respondents at the rate of 12 percent per annum.
Appeal allowed.
SEPTEMBER 21, 2010
[ALTAMAS KABIR AND A.K. PATNAIK, JJ.]
CONTRACT:
C
D
E
46. The Appeal thus, stands allowed with costs throughout,
Counsel’s fee Rs. 50,000/-.
N.J.
VILLAYATI RAM MITTAL (PVT.) LTD.
v.
UNION OF INDIA & ANR.
(SLP (C) No. 12144 of 2009)
F
G
Tender – Forfeiture of earnest money – Tender for
construction work – Tender notice – Clause stipulating
forfeiture of earnest money on revocation of offer – Tenderer
whose bid was found lowest, sending a letter to employer
making correction of a figure in its tender – Correction treated
as revocation of offer and earnest money forfeited by
employer – Held: When earnest money is furnished by a
tenderer it forms part of the price if the offer of the tenderer is
accepted or it is refunded to the tenderer if someone else’s
offer is accepted, but if for some fault or failure on the part of
the tenderer the transaction or the contract does not come
through, the party inviting the tender is entitled to forfeit the
earnest money furnished by that tenderer – The facts, in the
instant case, clearly establish that the tenderer was not willing
to stand by its original offer for the work and was willing to do
the work only at the revised bid – The High Court was thus
right in coming to the conclusion that the tenderer had revoked
its offer for the work – It was, thus, a case where on account of
failure on the part of the tenderer to stand by its offer, the
transaction or the contract did not come through and,
therefore, the employers were entitled to forfeit the earnest
money furnished by the tenderer in terms of Clause 6 of the
Notice.
Contract – Earnest money – Connotation of.
H
578
VILLAYATI RAM MITTAL (PVT.) LTD. v. UNION OF
INDIA & ANR.
579
Words and Phrases – ‘Earnest money’ – Connotation
580
A
of.
Shri Hanuman Cotton Mills & Ors. v. Tata Air Craft
Limited 1970 (3) SCR 127 = (1969) 3 SCC 522; H.U.D.A.
& Anr. v. Kewal Krishan Goel & Ors. etc. 1996 (2) Suppl.
SCR 587 = (1996) 4 SCC 249, relied on.
1970 (3) SCR 127
relied on
Para 7
1996 (2) Suppl. SCR 587
relied on
Para 7
AIR 1926 PC 1
relied on
Para 7
25 Times LR 745
relied on
Para 7
CIVIL APPELLATE JURISDICTION : SLP (Civil) No.
12144 of 2009.
B
C
C
D
D
E
E
F
F
G
3. Aggrieved, the petitioner filed Writ Petition (C)
No.14998 of 2004 under Article 226 of the Constitution before
the High Court of Delhi, but by the impugned judgment the High
Court dismissed the Writ Petition after holding that the
G correction of the bid made by the petitioner amounted to
revocation of its original offer and hence the respondent No.2
was entitled to forfeit the earnest money furnished by the
petitioner in terms of Clause 6 of the Notice.
H
H
P.P. Malhotra ASG, Purnima, Rajeev Sharma, Anil Katiyar,
B. Krishna Prasad for the Respondents.
The Order of the court was delivered by
ORDER
2. The relevant facts very briefly are that the petitioner is a
private limited company carrying on inter alia the business of
construction. In April 2004, respondent No.2 published a notice
inviting tenders for construction of married accommodation at
Shankar Vihar-II, Pocket, Delhi Cantonment, at an estimated
cost of Rs.40 crores (for short “the Notice”). Clause 6 of the
Notice stipulated that the tenderer shall furnish earnest money
of Rs.40 lacs in the form of FDR from a nationalized bank
drawn in favour of the Director General, Married
Accommodation Project, Kashmir House, Rajaji Marg, New
Delhi. Clause 6 also stipulated that if the firm revokes its offer
during the validity period, the earnest money furnished by the
firm shall be forfeited. In response to the Notice, the petitioner
submitted its offer along with earnest money of Rs.40 lacs.
When the tenders were opened on 05.05.2004, the offer of the
petitioner was found to be the lowest at Rs.32 crores for the
work. On 06.05.2004, however, the petitioner sent a letter to
the respondent No.2 making a correction of a figure in its tender
to read as Rs.32,76,000/- instead of Rs.23,76,000/-. As a
result of this correction, the offer of the petitioner for the work
increased from Rs.32 crores to Rs.41 crores. Respondent No.2
treated this correction made by the petitioner in its tender as
revocation of its offer and forfeited the earnest money of Rs.40
lacs furnished by the petitioner.
B
From the Judgment & Order dated 15.10.2008 of the High
Court of Delhi at New Delhi in WP (C) No. 14998 of 2004.
Ambrish Kumar, Dhruv Mahta, Pankaj Bhagat, Dr. Sushil
Balwada for the Petitioners.
[2010] 11 S.C.R.
A the judgment dated 15.10.2008 of the Division Bench of the
High Court of Delhi in Writ Petition (C) No.14998 of 2004.
Chiranjit Singh v. Har Swarup AIR 1926 PC 1; Summer
and Leivesley v. John Brown & Co. 25 Times LR 745,
referred to.
Case Law Reference:
SUPREME COURT REPORTS
A. K. PATNAIK, J. 1. This Special Leave Petition under
Article 136 of the Constitution of India has been filed against
4. Learned counsel for the petitioner submitted that the
VILLAYATI RAM MITTAL (PVT.) LTD. v. UNION OF
INDIA & ANR. [A.K. PATNAIK, J.]
581
High Court failed to appreciate that the tender of the petitioner
was initially defective in as much as the earnest money, which
was furnished by the petitioner, was not in accordance with
Clause 6 of the Notice. He explained that Clause 6 of the Notice
provided that the earnest money was to be in the form of FDR
from a nationalized bank, but the FDR of Rs.40 lacs furnished
by the petitioner was from UTI Bank, which was not a
nationalized bank. He further submitted that the petitioner had
to make the correction in the figure so as to read as
Rs.32,76,000/- instead of Rs.23,76,000/- because a mistake
had been committed by the petitioner while calculating the figure
and, therefore, soon after the tender was opened on
05.05.2004 the petitioner submitted the letter dated 06.05.2004
to the respondent No.2 correcting the aforesaid mistake in the
calculation of the figure. He submitted that the respondent No.2
ought not to have treated the letter dated 06.05.2004 as
revocation of the offer of the petitioner. Learned counsel for the
petitioner further submitted that in any case the entire Notice
was recalled and a fresh Notice was issued by respondent No.2
inviting tenders at a revised estimated cost. According to
learned counsel for the petitioner, since the tender process in
respect of which the petitioner had furnished the earnest money
was cancelled, respondent No.2 should have refunded the
earnest money to the petitioner.
5. Learned counsel for the respondents, on the other hand,
supported the impugned judgment of the High Court and relied
on the counter affidavit filed on behalf of the respondents in the
High Court as well as in this Court.
582
A
B
C
D
[2010] 11 S.C.R.
A consequence of the change in the figures, the offer of the
petitioner for the work was enhanced from Rs.32 crores to
Rs.41 crores and, therefore, the original offer of Rs.32 crores
for the work stood revoked. In para 12 of the counter affidavit
filed in reply to the Writ Petition in the High Court the
B respondents have stated that after receiving the letter dated
06.05.2004 of the petitioner correcting the figures in its tender,
the respondents sent letters to the petitioner giving opportunity
to the petitioner to withdraw its letter dated 06.05.2004 on or
before 04.06.2004 and yet the petitioner did not withdraw its
C letter dated 06.05.2004. These facts clearly establish that the
petitioner was not willing to stand by its original offer of Rs.32
crores for the work and was willing to do the work only at the
revised bid of Rs.41 crores. The High Court was thus right in
coming to the conclusion that the petitioner had revoked its offer
of Rs.32 crores for the work.
D
7. The legal principles relating to “Earnest Money’ are well
settled. In Chiranjit Singh v. Har Swarup [AIR 1926 PC 1], the
Judicial Committee of the Privy Council held:
E
E
F
F
6. We find that Clause 6 of the Notice clearly stipulated
that “if any firm revokes its offer during the validity period, its
G
earnest money shall be forfeited”. Hence, the question that
arose before the High Court for decision was whether the
petitioner by revising one of the figures in its tender from
Rs.23,76,000/- to Rs.32,76,000/- revoked its offer and the High
Court has taken the view in the impugned judgment that as a
H
SUPREME COURT REPORTS
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“Earnest money is part of the purchase price when the
transaction goes forward: it is forfeited when the
transaction falls through, by reasons of the fault or failure
of the vendee”.
These observations of the Judicial Committee have been
quoted in the judgment of this Court in Shri Hanuman Cotton
Mills & Ors. v. Tata Air Craft Limited [(1969) 3 SCC 522] in
which the principles relating to earnest money have been laid
down.
8. Similarly, in H.U.D.A. & Anr. v. Kewal Krishan Goel &
Ors.,etc. [(1996) 4 SCC 249], this Court quoted the following
observations of Hamilton, J. in Summer and Leivesley v. John
Brown & Co. [25 Times LR 745] with regard to the meaning of
‘earnest’ :
VILLAYATI RAM MITTAL (PVT.) LTD. v. UNION OF
INDIA & ANR. [A.K. PATNAIK, J.]
“‘Earnest’ … meant something given for the purpose of
binding a contract, something to be used to put pressure
on the defaulter if he failed to carry out his part. If the
contract went through, the thing given in earnest was
returned to the giver, or, if money, was deducted from the
price. If the contract went off through the giver’s fault the
thing given in earnest was forfeited.”
9. It is thus clear that when earnest money is furnished by
a tenderer it forms part of the price if the offer of the tenderer
is accepted or it is refunded to the tenderer if someone else’s
offer is accepted, but if for some fault or failure on the part of
the tenderer the transaction or the contract does not come
through, the party inviting the tender is entitled to forfeit the
earnest money furnished by that tenderer.
10. In facts of the present case, the respondents have
stated in their reply to the Writ Petition before the High Court
that as a consequence of the failure of the petitioner to stand
by its offer dated 05.05.2004 the tender for the work had to be
re-invited by the respondent No.2 on revised costs of the
construction and in the circumstances, the respondent No.2 had
to forfeit the earnest money of the petitioner. This was thus a
case where on account of failure on the part of the petitioner
to stand by its offer, the transaction or the contract did not come
through and therefore the respondents were entitled to forfeit
the earnest money furnished by the petitioner in terms of Clause
6 of the Notice.
11. For these reasons, we are not inclined to interfere with
the impugned judgment of the High Court and we accordingly
dismiss the Special Leave Petition with no order as to costs.
R.P.
[2010] 11 S.C.R. 584
583
SLP dismissed.
A
A
B
B
P. RAJAN SANDHI
v.
UNION OF INDIA & ANR.
(Civil Appeal No. 4095 of 2006)
SEPTEMBER 21, 2010
[MARKANDEY KATJU AND T. S. THAKUR, JJ.]
SERVICE LAW:
C
D
E
F
C
WORKING
JOURNALISTS
AND
OTHER
NEWSPAPER EMPLOYEES (CONDITIONS OF SERVICE)
AND MISCELLANEOUS PROVISIONS ACT, 1955:
s.5(1) – Payment of gratuity – Assistant Editor in a
printing and publishing company – Dismissed from service
D after a disciplinary inquiry – Claim for gratuity – Held: Not
maintainable – There is a difference between the provisions
for denial of gratuity under the Payment of Gratuity Act and
in the Working Journalists Act – Under the Working
Journalists Act, gratuity can be denied if the service is
E terminated as a punishment inflicted by way of disciplinary act,
as has been done in the instant case – s.5 of the Working
Journalists Act being a special law will prevail over s.4(6) of
the Payment of Gratuity Act, which is a general law –
s.5(1)(a)(i) of the Working Journalists Act does not require any
F allegation of proof of any damage or loss to, or destruction
of, property, etc. as is required under the general law, i.e. the
Payment of Gratuity Act – All that is required under the
Working Journalists Act is that the termination should be as
a punishment inflicted by way of disciplinary action, which is
G the position in the case at hand – Thus, if the service of an
employee has been terminated by way of disciplinary action
under the Working Journalists Act, he is not entitled to gratuity
– Payment of Gratuity Act, 1972 – s.4(6).
H
584
P. RAJAN SANDHI v. UNION OF INDIA & ANR.
585
G. P. Singh’s Principles of Statutory Interpretation Ninth
Edition, 2004 pp. 133 and 134 – referred to.
586
A
A
B
B
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4095 of 2006.
From the Judgment & Order dated 29.07.2005 of the High
Court of Kerala at Ernakulam in W.A. No. 2131 of 2002 (D).
C
The following Order of the Court was delivered
ORDER
D
The learned counsel for the appellant relies on Section 4(6)
of the Payment of Gratuity Act, 1972 (39 of 1972) which reads
as under :E
E
The facts of the case have already been set out in the
impugned judgment and hence we are not repeating the same
here, except wherever necessary.
The appellant herein was an Assistant Editor in
Mathrubhumami Printing and Publishing Company Limited,
(respondent No. 2 herein) which is a newspaper publishing
company. The appellant was charge-sheeted for making false
allegations against the Managing Director of respondent No.
2 and of using discourteous language and for other various
misconduct. An enquiry was conducted and, after giving him
opportunity of hearing, the enquiry office found him guilty. The
appellant was ultimately dismissed from service on 20.06.1988.
An industrial dispute was raised and the Industrial Tribunal
upheld the order of dismissal. The appellant challenged the
order of the Industrial Tribunal by filing a Writ Petition which was
dismissed. Thereafter, the appellant unsuccessfully challenged
the dismissal of the Writ Petition by filing a Writ Appeal which
was dismissed. Special Leave Petition filed by the appellant
against the dismissal of the Writ Appeal was also dismissed
by this Court.
The claim of the appellant for gratuity was rejected by the
C Management of respondent No. 2 against whose order the
appellant has filed a Writ Petition which has been allowed by
the learned single Judge of the High Court. However, by the
impugned judgment passed in Writ Appeal No. 2131 of 2002
the Division Bench of the High Court set aside the judgment of
D the learned single Judge. Hence, this appeal by special leave.
Heard the learned counsel for the parties.
This Appeal, by special leave, has been filed against the
impugned judgment of the High Court of Kerala dated
29.07.2005 passed in W.A. No. 2131 of 2002.
[2010] 11 S.C.R.
In this round of litigation, now the question is about the
appellant’s claim for gratuity.
Ron Sastian, Lakshmi Raman Singh for the Appellant.
K.V. Viswanathan, B. Ragunath, Abhishek Kaushik (for
Mahalakshmi Balaji & Co.) Sushma Manchanda, Sonia
Malhotra, B. Krishna Prasad for the Respondents.
SUPREME COURT REPORTS
F
G
F
G
“Section 4(6) Notwithstanding anything contained in subsection (1),(a)The gratuity of an employee, whose services have been
terminated for any act, wilful omission or negligence
causing any damage or loss to, or destruction of, property
belonging to the employer shall be forfeited to the extent
of the damage or loss so caused;
(b)The gratuity payable to an employee may be wholly or
partially forfeited –
(i) If the services of such employee have been
terminated for his riotous or disorderly conduct or
any other act of violence on his part, or
H
H
(ii) If the services of such employee have been
P. RAJAN SANDHI v. UNION OF INDIA & ANR.
587
terminated for any act which constitutes an offence
involving moral turpitude, provided that such offence
is committed by him in the course of his
employment.”
The learned counsel further submits that since no damage
or loss to, or destruction of, property of the employer was
alleged or proved against the appellant nor was he alleged to
have committed any riotous or disorderly conduct or any other
act of violence or any offence involving moral turpitude, his claim
for gratuity could not have been denied.
On the other hand, the learned counsel for respondent No.
2 relies on Section 5(1)(a)(i) of the Working Journalists and
Other Newspaper Employees (Conditions of Service) and
Miscellaneous Provisions Act, 1955 [for short ‘the Working
Journalists Act’]. The relevant part of Section 5 is as under :-
588
A
B
C
D
“Section 5. Payment of gratuity.-(1) Where –
(a) any working journalist has been in continuous service,
whether before or after the commencement of this Act, for
not less than three years in any newspaper establishment,
and –
(i) his services are terminated by the employer in relation
to that newspaper establishment for any reason
whatsoever, otherwise than as a punishment inflicted by
way of disciplinary act, or
X
It may be seen that there is a difference between the
provisions for denial of gratuity in the Payment of Gratuity Act
B
and in the Working Journalists Act. Under the Working
Journalists Act gratuity can be denied if the service is
terminated as a punishment inflicted by way of disciplinary act,
as has been done in the instant case. We are of the opinion
that Section 5 of the Working Journalists Act being a special
C law will prevail over Section 4(6) of the Payment of Gratuity Act
which is a general law. Section 5 of the Working Journalists
Act is only for working journalists, whereas the Payment of
Gratuity Act is available to all employees who are covered by
that Act and is not limited to working journalists. Hence, the
D Working Journalists Act is a special law, whereas the Payment
of Gratuity Act is a general law. It is well settled that special
law will prevail over the general law, vide G.P. Singh’s ‘Principles
of Statutory Interpretation’, Ninth Edition, 2004 pp. 133, 134.
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The special law, i.e., Section 5(1)(a)(i) of the Working
Journalists Act, does not require any allegation of proof of any
damage or loss to, or destruction of, property, etc. as is
required under the general law, i.e., the Payment of Gratuity Act.
All that is required under the Working Journalists Act is that the
termination should be as a punishment inflicted by way of
disciplinary action, which is the position in the case at hand.
Thus, if the service of an employee has been terminated by way
of disciplinary action under the Working Journalists Act, he is
not entitled to gratuity.
For the reasons above stated, we see no infirmity in the
impugned judgment of the High Court. The Appeal is dismissed
accordingly. No costs.
R.P.
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[2010] 11 S.C.R.
establishment gratuity which shall be equivalent to fifteen
days’ average pay for every completed year of service or
any part thereof in excess of six months.”
A
XX
the working journalist or, in the case of his death, his
nominee or nominees or, if thee is no nomination in force
at the time of the death of the working journalist, his family,
as the case may be, shall, without prejudice to any benefits
or rights accruing under the Industrial Disputes Act, 1947
(14 of 1947), be paid, on such termination, retirement,
resignation or death, by the employer in relation to that
SUPREME COURT REPORTS
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Appeal dismissed.
590
[2010] 11 S.C.R. 589
RITESH TEWARI & ANR.
v.
STATE OF U.P. & ORS.
(Civil Appeal No. 8178 of 2010)
SEPTEMBER 21,2010
A
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B
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C
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D
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E
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[P. SATHASIVAM AND DR. B.S. CHAUHAN, JJ.]
Urban Land (Ceiling and Regulation) Act, 1976 – s. 10(4)
– Acquisition of vacant land in excess of ceiling limit –
Assessment orders of surplus land attaining finality – Transfer
of surplus land by original tenure holders in favour of Samiti
– Subsequent transfer of surplus land in favour of appellants
– Meanwhile, proceedings by Authorities to effectuate
deemed vesting of land in the State – Inter-departmental
communications between two officers of the Department – Writ
petition by appellants for quashing the communications and
direction to restrain the Authorities to interfere with their
possession – Maintainability of – Held: Not maintainable –
Contents of inter-departmental communication cannot be said
to be subject matter of writ petition – If an order is bad in its
inception, it does not get sanctified at a later stage – In view
of ss. 5 and 10, transfer of such land by tenure holders in
favour of Samiti, null and void – Failure of appellants in
disclosing the date of Notification issued u/s. 10(1) – Transfer
of land in favour of Samiti for construction of residential
houses illegal – Alleged sale deed in favour of Samiti being
a void transaction, all subsequent transactions merely to be
ignored – No pleadings present for proper adjudication of the
case – Also no special feature present warranting exercise of
equitable discretionary jurisdiction in favour of appellants –
True facts not elicited – Urban Land (Ceiling and Regulation)
Repeal Act, 1999 – Plea – Equity – Constitution of India, 1950
– Article 226 – Evidence Act, 1872 – s. 165.
The original tenure holders transferred a major part
589
SUPREME COURT REPORTS
[2010] 11 S.C.R.
of land declared surplus under the Urban Land (Ceiling
and Regulation) Act, 1976 with them in favour of Sahkari
Awas Samiti on 20th April 1982, even though assessment
orders were passed against the original tenure holders.
The Authorities under the Act, published a Notification
which effectuated the deemed vesting of such land in the
State. They directed the tenure holders to handover the
possession. However, the Authorities did not take over
the actual physical possession. Certain members of the
Samiti sold the land to ‘S’ who further sold it to the
appellants by sale deed dated 15th June 2006. In the
mean while, the stood 1976 Act repealed. Certain interdepartmental communications took place between the
two officers of the Government Department. They wrote
letter dated 30th June, 2008 and letter dated 18th July,
2008. The appellants filed writ petition seeking quashing
of the inter-departmental communications and direction
to restrain the respondents from interfering with the
actual and physical possession of the lands. The High
Court dismissed the writ petition. Therefore, the
appellants filed the instant appeal.
Dismissing the appeal, the Court
F
G
HELD: 1.1. The appellants had not approached the
High Court for quashing an order passed by the authority
F under the 1976 Act. The letters dated 30th June, 2008 and
18th July, 2008 are part of the record. The contents of
such a communication between two officers of the
departments of the Government could not be the subject
matter of the writ petition. The appellants could not have
approached the High Court for the relief sought by them.
G
The writ petition was certainly not maintainable. [Paras
10 and 11] [600-B; 601-B]
1.2. The ex-parte orders of assessment of surplus
land against the original tenure holders have been placed
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RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 591
on record. The said assessment orders were not
challenged by them and attained finality. In view of the
provisions of Sections 5 and 10 of the Act of 1976,
transfer of such land by them in favour of anyone was
not only prohibited but null and void. [Para 15] [602-e-f]
1.3. The High Court after considering the provisions
of Sections 5 (3) and 10 (4) of the 1976 Act and taking note
of the fact that the appellants did not disclose the date
of notification under Section 10(1) of the Act nor annexed
the copy of the same and further presuming that the said
notice must have preceded the notice under Section
10(3) of the Act reached the conclusion that the transfer
which had been effected by the recorded tenure holders
in favour of the Samiti on 20th April, 1982 was deemed
to be null and void by operation of law under Sections
5(3) and 10(4) of the Act. There is no reason to take a
contrary view. More so, a further examination of the
correctness of the said finding at the behest of the
appellants is not desirable for the reasons that they did
not disclose even the date of notification issued under
Section 10(1) of the Act. The user of the land could not
be changed in view of the provisions of Section 10(4) of
the Act. The alleged transfer by the recorded tenure
holders in favour of the Samiti for the purpose of
construction of residential houses was totally illegal.
[Para 17] [603-E-H]
1.4. The sale-deed in favour of the Samiti dated 20th
April, 1982 is not on record. There is nothing to establish
whether the sale deed was a genuine, forged or
fabricated document. Merely making a statement that it
was a registered sale deed and, therefore, it was genuine,
cannot be accepted. There is no such presumption in law.
There is nothing to ascertain who had been the
transferors and who were the transferees. None of the
subsequent sale deeds is on record. Therefore, the
592
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
genuineness of either of the alleged sale deeds cannot
be tested. There are no pleadings as to under what
circumstances the sale deeds have been executed and
as to whether the original tenure holders have received
any consideration. [Para 18] [604-A-C]
1.5. A party has to plead the case and produce/
adduce sufficient evidence to substantiate his
submissions made in the petition and in case the
pleadings are not complete, the court is under no
obligation to entertain the pleas. The instant appeal
C
definitely does not contain pleadings required for proper
adjudication of the case. A party is bound to plead and
prove the facts properly. In absence of the same, the court
should not entertain the point. [Para 19] [604-D; 605-BC]
D
Bharat Singh and Ors.vs. State of Haryana and Ors. AIR
1988 SC 2181; Vithal N.Shetti and Anr. vs. Prakash N.
Rudrakar and Ors. (2003) 1 SCC 18; Devasahayam (Dead)
by Lrs. vs. P. Savithramma and Ors. (2005) 7 SCC 653; Sait
E Nagjee Purushotham and Co.Ltd. vs. Vimalabai Prabhulal
and Ors. (2005) 8 SCC 252; Rajasthan Pradesh V.C.
Sardarshahar and Anr. vs. Union of India and Ors. AIR 2010
SC 2221, relied on.
1.6. The power under Article 226 of the Constitution
is discretionary and supervisory in nature. It is not
exercised merely because it is lawful to do so. The extraordinary power in writ jurisdiction does not exist to set
right mere errors of law which do not occasion any
substantial injustice. A writ can be issued only in case of
G a grave miscarriage of justice or where there has been a
flagrant violation of law. The writ court has not only to
protect a person from being subjected to a violation of
law but also to advance justice and not to thwart it. The
Constitution does not place any fetter on the power of the
H extra-ordinary jurisdiction but leaves it to the discretion
F
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS.
593
594
of the court. However, as the power is discretionary, the A
court has to balance competing interests, keeping in
mind that the interests of justice and public interest are
coalesce generally. A court of equity, when excising its
equitable jurisdiction must act so as to prevent
perpetration of a legal fraud and promote good faith and B
equity. An order in equity is one which is equitable to all
the parties concerned. Petition can be entertained only
after being fully satisfied about the factual statements
and not in a casual and cavalier manner. [Para 20] [605D-G]
C
Champalal Binani vs. the Commission of Income Tax,
West Bengal and Ors. AIR 1970 SC 645; Chimajirao
Kanhojirao Shrike & Anr.v. Oriental Fire and General
Insurance Co. Ltd. AIR 2000 SC 2532; LIC of India v. Smt.
Asha Goel and Anr. AIR 2001 SC 549; The State Financial D
Corporation and Anr. v. M/s. Jagdamba Oil Mills and Anr. AIR
2002 SC 834; Chandra Singh v. State of Rajasthan and Anr.
AIR 2003 SC 2889; Punjab Roadways, Moga through its
General Manager v. Punja Sahib Bus and Transport Co. and
E
Ors. (2010) 5 SCC 235, relied on.
1.7. Where a party’s claim is not founded on valid
grounds, the party cannot claim equity. A party that
claims equity must come before the court with clean
hands as equities have to be properly worked out F
between parties to ensure that no one is allowed to have
their pound of flesh vis-à-vis the others unjustly. The
equity jurisdiction is exercised to promote honesty and
not to frustrate the legitimate rights of the other parties.
The instant appeal does not present any special feature
G
warranting exercise of equitable discretionary jurisdiction
in favour of the appellants. [Paras 21 and 25] [606-B; 607A]
Sikkim Subba Associates v. State of Sikkim (2001) 5
SCC 629, relied on.
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A
SUPREME COURT REPORTS
[2010] 11 S.C.R.
Andhra Pradesh State Financial Corporation v. M/s. Gar
Re-Rolling Mills and Anr. AIR 1994 SC 2151; M.P. Mittal v.
State of Haryana and Ors. AIR 1984 SC 1888; State of
Maharashtra and Ors. v. Prabhu (1994) 2 SCC 481, referred
to.
B
1.8. If an order is bad in its inception, it does not get
sanctified at a later stage. A subsequent action/
development cannot validate an action which was not
leveled at the inception, for the reason that the illegality
strikes at the root of the order. It would be beyond the
C competence of any authority to validate such an order. It
would be ironical to permit a person to retry upon a law,
in violation of which he has obtained the benefits. In the
instant case, the alleged sale deed dated 20th April, 1982
in favour of the Samiti was a void transaction, all
D subsequent transactions have merely to be ignored.
[Paras 26 and 29] [607-B-C; F-G]
Upen Chandra Gogoi vs. State of Assam and Ors.
(1998)3 SCC 381; Satchidananda Misra vs. State of Orissa
E and Ors. (2004) 8 SCC 599; Regional Manager SBI vs.
Rakesh Kumar Tewari (2006) 1 SCC 530, relied on.
F
C.Albert Morris vs. K. Chandrasekaran and Ors. (2006)
1 SCC 228; Mangal Prasad Tamoli(dead) by Lrs. vs.
Narvadeshwar Mishra (dead) by Lrs.and Ors. (2005) 3 SCC
422, referred to.
1.9. Section 165 of the Evidence Act, 1872 empowers
the court to ask questions relevant, irrelevant, related or
unrelated to the case to the party to ascertain the true
G facts. The party may not answer the question but it is not
permitted to tell the court that the question put to him is
irrelevant or the facts the court wants to ascertain are not
in issue. Exercise of such a power is necessary for the
reason that the judgment of the court is to be based on
H relevant facts which have been duly proved. A court in
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 595
any case cannot admit illegal or inadmissible evidence for
basing its decision. It is an extra-ordinary power
conferred upon the court to elicit the truth and to act in
the interest of justice. A wide discretion has been
conferred on the court to act as the exigencies of justice
require. Thus, in order to discover or obtain proper proof
of the relevant facts, the court can ask the question to the
parties concerned at any time and in any form. The power
is to be exercised with an object to subserve the cause
of justice and public interest, and for getting the evidence
in aid of a just decision and to uphold the truth. The
purpose being to secure justice by full discovery of truth
and an accurate knowledge of facts, the court can put
questions to the parties, except those which fall within
exceptions contained in the said provision itself. In the
instant case, in spite of all efforts, true facts could not be
elicited. [Para 30, 31] [608-A-G]
596
A
B
C
D
A
B
C
D
Jamatraj Kewalji Govani vs. State of Maharashtra AIR
1968 SC 178; Zahira Habibulla H.Sheikh and Anr. vs. State
of Gujarat and Ors. (2004) 4 SCC 158, relied on.
E
Pt. Madan Swaroop Shrotiya Public Charitable Trust vs.
State of U.P. and Ors. (2000) 6 SCC 325; Ghasitey Lal Sahu
and Anr. vs. Competent Authority (2004) 13 SCC 452;
Mukarram Ali Khan vs. State of Uttar Pradesh and Ors. (2007)
11 SCC 90; Sulochana Chandrakant Galande vs. Pune
Municipal Transport and Ors. JT (2010) C 298, referred to.
F
E
F
Case Law Reference:
(2000) 6 SCC 325
referred to.
Para 13
(2004) 13 SCC 452
referred to.
Para 13
(2007) 11 SCC 90
referred to.
Para 13
JT (2010) C 298
referred to.
Para 13
AIR 1988 SC 2181
relied on.
Para 19
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
(2003) 1 SCC 18
relied on.
Para 19
(2005) 7 SCC 653
relied on.
Para 19
(2005) 8 SCC 252
relied on.
Para 19
AIR 2010 SC 2221
relied on.
Para 19
AIR 1970 SC 64
relied on.
Para 20
AIR 2000 SC 2532
relied on.
Para 20
AIR 2001 SC 549
relied on.
Para 20
AIR 2002 SC 834
relied on.
Para 20
AIR 2003 SC 2889
relied on.
Para 20
(2010) 5 SCC 235
relied on.
Para 20
(2001) 5 SCC 629
relied on.
Para 21
AIR 1994 SC 2151
referred to.
Para 22
AIR 1984 SC 1888
referred to.
Para 23
(1994) 2 SCC 481
referred to.
Para 24
(1998) 3 SCC 381
relied on.
Para 26
(2004) 8 SCC 599
relied on.
Para 26
(2006) 1 SCC 530
relied on.
Para 26
(2006) 1 SCC 228
referred to.
Para 27
(2005) 3 SCC 422
referred to.
Para 28
AIR 1968 SC 178
relied on.
Para 30
(2004) 4 SCC 158
relied on.
Para 30
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8178 of 2010.
H
H
From the Judgment & Order dated 21.1.2009 of the High
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 597
Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
45169 of 2008.
598
A
A
Jayant Bhushan, Nikunj Dayal, Ritesh Tiwari, Pramod
Dayal for the Appellants.
S.R. Singh, Manoj Kumar Dwivedi, Ashutosh Sharma,
Gunnam Venkateswara Rao, Ashok K. Srivastava, Shaiwal
Srivastava for the Respondents.
B
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The Judgment of the Court was delivered by
DR. B.S. CHAUHAN, J. 1. Leave granted.
2. This appeal has been preferred against the judgment
and order dated 20th January, 2009, passed by the High Court
of judicature at Allahabad in Civil Misc. Writ Petition No. 45169
of 2008 by which the prayer of the appellants to quash certain
inter-departmental communications has been rejected.
Facts:
3. One Mawasi, resident of Saraivega Hemlet of village
Kakratha, Tehsil and District Agra, had two sons, namely, Sukha
and Shyama. Shyama has only one son namely, Rammo.
Descendents of Sukha have been Ballo, Radhe Ram, Babu and
Sohan Singh. They were having certain land in Gata Nos. 870,
258, 192, 258/2 and 258/5 measuring 9 Bighas 14 Biswas
situate in the revenue estate of Village Kakratha Pragana,
Tehsil and District Agra. The Urban Land (Ceiling and
Regulation) Act, 1976 (hereinafter called ‘the Act 1976’) came
into force in the State of Uttar Pradesh with effect from 17th of
February, 1976. The aforesaid tenure holders were subjected
to the provisions of the aforesaid Act 1976. They had filed their
respective declaration as required under the Act 1976,
however, the record reveals that ex-parte assessment orders
had been passed against all of them under Section 8(4) of the
Act 1976 on 30th January, 1981, 31st January, 1981, 30th
March, 1981, 8th May, 1981 and 25th May, 1981, declaring an
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
area of land as surplus.
4. The original tenure holders did not challenge the said
assessment orders in appeal or writ jurisdiction, thus they
attained finality. It is stated that the said tenure holders
transferred the major part of land so declared as surplus with
them on 20th April, 1982 in favour of Mayur Sahkari Awas
Samiti. The authorities under the Act 1976 proceeded against
those tenure holders under Section 10 (3) publishing a
Notification dated 6.7.1993 which effectuated the deemed
vesting of such land in the State. Notices under Section 10(5)
were issued on 31st March, 1993; 13th September, 1993; and
18th February, 1994, directing the said tenure holders to hand
over the possession to the statutory authority, however, there
is nothing on record to show that actual physical possession
was taken by the statutory authorities in exercise of their power
under Section 10(6) of the Act of 1976.
5. The pleadings in this appeal reveal that certain members
of Mayur Sahkari Awas Samiti had sold their land to M/s Savy
Homes (P) Ltd. who in turn further sold the land to the present
appellants vide sale deed dated 15th June, 2006. Appellants
further claim to have applied for sanction of plan for construction
of buildings and the same was accorded by the statutory
authorities under the Municipal Law. Appellants also claim to
have developed the land.
6. The Act 1976 was repealed with effect from 18th March,
1999 vide Urban Land (Ceiling and Regulation) Repeal Act,
1999 (hereinafter called the Act 1999). The appellants
apprehended that they could be dispossessed by the
authorities in view of certain inter-departmental communications
G contained in letters dated 30th June, 2008 and 18th July, 2008,
and thus, preferred Civil Miscellaneous Writ Petition No. 45169
of 2008 before the High Court of Judicature at Allahabad for
quashing of the same and for a direction restraining the
respondents to interfere with the actual and physical possession
H of the land of the appellants. The said writ petition has been
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 599
[DR. B.S. CHAUHAN, J.]
dismissed by the impugned judgment and order dated 20th
January, 2009. Hence, this appeal.
600
A
A
Rival claims of the Parties:
7. Shri Jayant Bhushan, learned senior counsel appearing
for the appellants, has submitted that the authorities under the
Act 1976 have never exercised the power under Section 10(6)
of the Act 1976 and, thus, possession of the land in dispute
had never been taken by the State and after commencement
of the Act 1999, the proceedings stood abated. Therefore, the
question of interference with the land in dispute does not arise.
The High Court erred in taking into consideration the locusstandi of the appellants and holding that the transfer in favour
of the appellants was consequential to the void transaction in
favour of Mayur Sahkari Awas Samiti. Hence, the appeal
deserves to be allowed.
8. On the contrary, Shri S.R. Singh, learned senior counsel
appearing for the respondents, has vehemently opposed the
appeal contending that once the assessment had been made
under Section 8(4) of the Act 1976, against the original tenure
holders, the sale in favour of Mayur Sahkari Awas Samiti was
void. Further, the transfer in favour of M/s Savy Homes (P) Ltd.
and the subsequent transfer in favour of the appellants being
consequential remained inexecutable and unenforceable, thus,
a nullity. Once an order in inception is bad, it cannot have
sanctity at a subsequent stage by other subsequent orders/
developments. The original tenure holders are nowhere involved
and none of them has been impleaded in these proceedings.
No evidence has been placed on record to show that the sale
deed in favour of Mayur Sahkari Awas Samiti was genuine.
More so, the writ petition was filed for quashing the interdepartmental communications, thus, the writ petition itself was
not maintainable. The appellants had never received any show
cause notice from the statutory authorities. No proceedings
have ever been initiated against them or their predecessorsin- interest. The appeal lacks merit and is liable to be
dismissed.
SUPREME COURT REPORTS
[2010] 11 S.C.R.
9. We have considered the rival submissions made by the
learned counsel for the parties and perused the record.
Case on merits:
B
B
10. The appellants had not approached the High Court for
quashing an order passed by the authority under the Act 1976.
The relevant reliefs claimed by the appellants–writ petitioners
have been as under :
“(i) to issue a suitable writ, order or direction in the nature
of mandamus directing the respondents not to interfere in
the actual physical peaceful possession and construction
of the petitioners’ multi storied building known as `Ganpat
Green Apartment’ situated at Khasra Plot No. 258, Village
Kakraitha, Tehsil Sadar, District Agra.
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(ii) To issue a suitable writ, order or direction in the nature
of certiorari and to quash the directions contained in the
letters dated 30th June, 2008 and 18th July, 2008
(Annexures 19 & 20 to the writ petition).
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(iii) To issue suitable writ, order or direction constituting an
enquiry committee to enquire into the role of and to fix
responsibility on the erring respondents for the illegal and
undue harassment of the petitioners in respect of the
construction in question as also for the publication of the
press reports dated 26.08.2008 (Annexure 21 to the writ
petition) damaging irredeemably the business, reputation
as well as goodwill of the petitioners and to direct such
authority found responsible for the said illegal acts to
compensate the petitioners for the aforesaid damage
caused to their business, reputation and goodwill.”
H
11. The letters referred to hereinabove are part of the
record. The said letters are communications from the Deputy
Collector (Sadar), Agra to Additional District Collector, (A),
Prescribed Authority, Urban Land, Agra dated 30th June, 2008;
and from Additional District Collector, (A), Prescribed Authority,
H
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 601
[DR. B.S. CHAUHAN, J.]
Urban Land, Agra to Secretary, Agra Development Authority
dated 18th July, 2008.
602
A
A
We fail to understand as to how the contents of such a
communication between two officers of the departments of the
government can be the subject matter of the writ petition. The
appellants could not have approached the High Court for the
aforesaid relief sought by them. The writ petition was certainly
not maintainable.
B
B
12. Be that as it may, in view of the fact that the High Court
has decided the case on merit and we have also heard the case
on merit, the issue of the maintainability of writ petition remains
merely academic.
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D
Shri Jayant Bhushan, learned senior counsel appearing for
the appellants has submitted that as the State Government had
not taken possession of the land in exercise of its powers under
Section 10(6) of the Act 1976, on commencement of the Act
1999 into force, the proceedings stood abated and the
respondents have no business to interfere with the peaceful
possession and enjoyment of the property.
13. We find full force in the submissions so made by Shri
Jayant Bhushan to a certain extent, and hold that all
proceedings pending before any court/authority under the Act
1976, stood abated automatically on commencement of the Act
1999 in force, provided the possession of the land involved in
a particular case had not been taken by the State. Such a view
is in consonance with the law laid down by this court in Pt.
Madan Swaroop Shrotiya Public Charitable Trust Vs. State
of U.P. & Ors., (2000) 6 SCC 325; Ghasitey Lal Sahu & Anr.
Vs. Competent Authority, (2004) 13 SCC 452; Mukarram Ali
Khan Vs. State of Uttar Pradesh & Ors., (2007) 11 SCC 90;
and Smt. Sulochana Chandrakant Galande Vs. Pune
Municipal Transport & Ors., JT (2010)C 298.
14. The aforesaid conclusion leads us further to the
question as to whether the appellants have any justifiable cause
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SUPREME COURT REPORTS
[2010] 11 S.C.R.
to approach the court. Firstly, no proceedings had ever been
initiated against the appellants by the authorities under the Act
1976. Secondly, the State authorities, the respondent herein,
failed miserably to perform their statutory duties and it appears
that they could not muster the courage to take the actual
physical possession of the land in dispute in spite of issuance
of notice under Section 10(5) of the Act 1976 in the year 1993.
More so, the so-called authorities could issue notices under
Section 10 of the Act 1976 after a lapse of twelve years as the
assessment of surplus land became final in 1981 itself. Such
an indifferent attitude on the part of the authorities is not worth
commendable rather it is condemnable, but that does not mean
that court should decide only the effect of repealing Act 1999
in these proceedings at the behest of the appellants in absence
of the original tenure holders and subsequent transferees
inasmuch as in the fact-situation of this case where the
appellants, for the reasons best known to them, did not
consider it proper to place either of the sale deeds on record.
15. The ex-parte orders of assessment of surplus land
against the original tenure holders have been placed on record.
E Admittedly, the said assessment orders had not been
challenged by them and attained finality. In view of provisions
of Sections 5 and 10 of the Act of 1976, transfer of such land
by them in favour of anyone was not only prohibited but null and
void. Section 5 (1) of the Act 1976 provided that transfer of
F vacant land in excess of the ceiling limit at any time during the
period commencing on the appointed day and ending with the
commencement of this Act, by way of sale, mortgage gift, lease
or otherwise, the extent of the land so transferred shall also be
taken into account in calculating the extent of vacant land held
G by such person.
Section 5(3) provided that transfer of vacant land or part
thereof effected by a recorded tenure holder having land in
excess of the ceiling limit subsequent to the commencement
of Act of 1976 by way of sale, mortgage or lease until he had
H furnished a statement under Section 6, and a Notification under
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 603
[DR. B.S. CHAUHAN, J.]
604
A
A
(4) During the period commencing on the date of
publication of the Notification under sub-section (1) and
ending with the date specified in the declaration made
under sub-section (3).
B
B
(i) no person shall transfer by way of sale, mortgage, gift,
lease or otherwise any excess vacant land (including any
part thereof) specified in the Notification aforesaid and any
such transfer made in contravention of this provision shall
be deemed to be null and void; and
C
C
(ii) no person shall after or cause to be altered the use of
such excess vacant land.” (Emphasis added)
D
D
E
E
F
F
G
G
H
H
Section 10(1) has been published would be deemed to be null
and void.
16. Section 10 (4) of the Act 1976 reads as follows:
“10. Acquisition of vacant land in excess of ceiling limit.
17. The High Court after considering the said statutory
provisions and taking note of the fact that the appellants did
not disclose the date of notification under Section 10(1) of the
Act 1976, nor annexed the copy of the same and further
presuming that the said notice must have preceded the notice
under Section 10(3) of the Act 1976, reached the conclusion
that the transfer which had been effected by the recorded tenure
holders in favour of Mayur Sahkari Awas Samiti on 20th April,
1982 was deemed to be null and void by operation of law
under Sections 5(3) and 10(4) of the Act 1976. We do not see
any cogent reason to take a contrary view. More so, a further
examination of the correctness of the aforesaid finding at the
behest of the appellants is not desirable for the reasons that
they did not disclose even the date of notification issued under
Section 10(1) of the Act 1976. More so, the user of the land
could not be changed in view of the provisions of Section 10(4)
of the Act 1976. The alleged transfer by the recorded tenure
holders in favour of Mayur Sahkari Awas Samiti for the purpose
of construction of residential houses was totally illegal.
SUPREME COURT REPORTS
[2010] 11 S.C.R.
18. The sale deed in favour of Mayur Sahkari Awas Samiti
dated 20th April, 1982 is not on record. There is nothing to
establish whether the sale deed was a genuine, forged or
fabricated document. Merely making a statement that it was a
registered sale deed and, therefore, it was genuine, cannot be
accepted. There is no such presumption in law. There is nothing
to ascertain who had been the transferors and who were the
transferees therein. None of the subsequent sale deeds is on
record. Therefore, the genuineness of either of the alleged sale
deeds can be tested. There are no pleadings as under what
circumstances the sale deeds have been executed and as to
whether the original tenure holders have received any
consideration.
19. It is a settled proposition of law that a party has to plead
the case and produce/adduce sufficient evidence to
substantiate his submissions made in the petition and in case
the pleadings are not complete, the Court is under no obligation
to entertain the pleas. In Bharat Singh & Ors. Vs. State of
Haryana & Ors., AIR 1988 SC 2181, this Court has observed
as under:“In our opinion, when a point, which is ostensibly a
point of law is required to be substantiated by facts, the
party raising the point, if he is the writ petitioner, must
plead and prove such facts by evidence which must
appear from the writ petition and if he is the respondent,
from the counter affidavit. If the facts are not pleaded or
the evidence in support of such facts is not annexed to
the writ petition or the counter-affidavit, as the case may
be, the Court will not entertain the point. There is a
distinction between a hearing under the Code of Civil
Procedure and a writ petition or a counter-affidavit. While
in a pleading, i.e. a plaint or written statement, the facts
and not the evidence are required to be pleaded. In a writ
petition or in the counter affidavit, not only the facts but also
the evidence in proof of such facts have to be pleaded and
annexed to it.” (Emphasis added)
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 605
[DR. B.S. CHAUHAN, J.]
(See also Vithal N. Shetti & Anr. Vs. Prakash N. Rudrakar &
Ors., (2003) 1 SCC 18; Devasahayam (Dead) by LRs. Vs. P.
Savithramma & Ors., (2005) 7 SCC 653; Sait Nagjee
Purushotham & Co. Ltd. Vs. Vimalabai Prabhulal & Ors.,
(2005) 8 SCC 252; and Rajasthan Pradesh V.S.
Sardarshahar & Anr. Vs. Union of India & Ors., AIR 2010 SC
2221).
The present appeal definitely does not contain pleadings
required for proper adjudication of the case. A party is bound
to plead and prove the facts properly. In absence of the same,
the court should not entertain the point.
20. The power under Article 226 of the Constitution is
discretionary and supervisory in nature. It is not issued merely
because it is lawful to do so. The extraordinary power in writ
jurisdiction does not exist to set right mere errors of law which
do not occasion any substantial injustice. A writ can be issued
only in case of a grave miscarriage of justice or where there
has been a flagrant violation of law. The writ court has not only
to protect a person from being subjected to a violation of law
but also to advance justice and not to thwart it. The Constitution
does not place any fetter on the power of the extraordinary
jurisdiction but leaves it to the discretion of the court. However,
being that the power is discretionary, the court has to balance
competing interests, keeping in mind that the interests of justice
and public interest are coalesce generally. A court of equity,
when exercising its equitable jurisdiction must act so as to
prevent perpetration of a legal fraud and promote good faith
and equity. An order in equity is one which is equitable to all
the parties concerned. Petition can be entertained only after
being fully satisfied about the factual statements and not in a
casual and cavalier manner. (Vide Champalal Binani Vs. The
Commissioner of Income Tax, West Bengal & Ors., AIR 1970
SC 645; Chimajirao Kanhojirao Shrike & Anr. v. Oriental Fire
and General Insurance Co. Ltd., AIR 2000 SC 2532; LIC of
India v. Smt. Asha Goel & Anr., AIR 2001 SC 549; The State
Financial Corporation & Anr. v. M/s. Jagdamba Oil Mills &
606
A
A
B
B
C
C
SUPREME COURT REPORTS
[2010] 11 S.C.R.
Anr., AIR 2002 SC 834; Chandra Singh v. State of Rajasthan
& Anr., AIR 2003 SC 2889; and Punjab Roadways, Moga
through its General Manager v. Punja Sahib Bus and
Transport Co. & Ors, (2010) 5 SCC 235).
21. Where a party’s claim is not founded on valid grounds,
the party cannot claim equity. A party that claims equity must
come before the court with clean hands as equities have to be
properly worked out between parties to ensure that no one is
allowed to have their pound of flesh vis-à-vis the others unjustly.
(vide: Sikkim Subba Associates v. State of Sikkim (2001) 5
SCC 629).
22. In Andhra Pradesh State Financial Corporation v. M/
s. GAR Re-Rolling Mills & Anr., AIR 1994 SC 2151, this Court
observed:-
D
D
“Equity is always known to defend the law from clefty
evasions and new subtelities invented to evade law.”
23. In M.P. Mittal v. State of Haryana & Ors., AIR 1984
SC, 1888, this Court held:
“…….it is open to the High Court to consider whether, in
the exercise of its undoubted discretionary jurisdiction, it
should decline relief to such petitioner if the grant of relief
would defeat the interests of justice. The Court always has
power to refuse relief where the petitioner seeks to invoke
its writ jurisdiction in order to secure a dishonest
advantage or perpetrate an unjust gain.”
E
E
F
F
G
24. This Court in State of Maharashtra & Ors. v. Prabhu,
(1994) 2 SCC 481 considered the scope of equity jurisdiction
of the High Court under Article 226 of the Constitution and
G pointed out as follows:
H
H
“It is the responsibility of the High Court as custodian of
the Constitution to maintain the social balance by
interfering where necessary for sake of justice and
refusing to interfere where it is against the social interest
and public good.”
RITESH TEWARI & ANR. v. STATE OF U.P. & ORS. 607
[DR. B.S. CHAUHAN, J.]
608
25. The present appeal does not present any special
feature warranting exercise of equitable discretionary
jurisdiction in favour of the appellants. The equity jurisdiction is
exercised to promote honesty and not to frustrate the legitimate
rights of the other parties.
A
26. It is settled legal proposition that if an order is bad in
its inception, it does not get sanctified at a later stage. A
subsequent action/development cannot validate an action which
was not lawful at its inception, for the reason that the illegality
strikes at the root of the order. It would be beyond the
competence of any authority to validate such an order. It would
be ironical to permit a person to rely upon a law, in violation of
which he has obtained the benefits. (Vide Upen Chandra
Gogoi Vs. State of Assam & Ors., (1998) 3 SCC 381;
Satchidananda Misra Vs. State of Orissa & Ors., (2004) 8
SCC 599; and Regional Manager, SBI Vs. Rakesh Kumar
Tewari, (2006) 1 SCC 530).
B
B
C
C
D
D
E
E
F
F
27. In C. Albert Morris Vs. K. Chandrasekaran & Ors.,
(2006) 1 SCC 228, this Court held that a right in law exists only
and only when it has a lawful origin.
28. In Mangal Prasad Tamoli (dead) by LRs.Vs.
Narvadeshwar Mishra (dead) by LRs. & Ors., (2005) 3 SCC
422, this Court held that if an order at the initial stage is bad in
law, then all further proceedings consequent thereto will be nonest and have to be necessarily set aside.
[2010] 11 S.C.R.
A court wanted to ascertain were not in issue.
29. In the instant case, as we have observed that the
alleged sale deed dated 20th April, 1982 in favour of Mayur
Sahkari Avas Samiti has been a void transaction, all
subsequent transactions have merely to be ignored.
30. While hearing this appeal, we made a futile exercise
to ascertain the true facts and find out the bona fides of the
appellants. For that purpose, we put certain questions to the
learned counsel for the appellants. Shri Jayant Bhushan,
learned Senior counsel persistently answered that the facts, the
SUPREME COURT REPORTS
Section 165 of the Evidence Act, 1872 empowers the
Court to ask questions relevant, irrelevant, related or unrelated
to the case to the party to ascertain the true facts. The party
may not answer the question but it is not permitted to tell the
Court that the question put to him is irrelevant or the facts the
court wants to ascertain are not in issue. Exercise of such a
power is necessary for the reason that the judgment of the court
is to be based on relevant facts which have been duly proved.
A court in any case cannot admit illegal or inadmissible
evidence for basing its decision. It is an extraordinary power
conferred upon the court to elicit the truth and to act in the
interest of justice. A wide discretion has been conferred on the
court to act as the exigencies of justice require. Thus, in order
to discover or obtain proper proof of the relevant facts, the court
can ask the question to the parties concerned at any time and
in any form. “Every trial is voyage of discovery in which truth
is the quest”. Therefore, power is to be exercised with an
object to subserve the cause of justice and public interest, and
for getting the evidence in aid of a just decision and to uphold
the truth. The purpose being to secure justice by full discovery
of truth and an accurate knowledge of facts, the court can put
questions to the parties, except those which fall within
exceptions contained in the said provision itself. (Vide :
Jamatraj Kewalji Govani Vs. State of Maharashtra, AIR 1968
SC 178; and Zahira Habibulla H. Sheikh & Anr. Vs. State of
Gujarat & Ors. (2004) 4 SCC 158.
31. In the instant case, in spite of all our sincere efforts,
we could not succeed in eliciting the true facts.
G
G
32. In view of above, we do not find any force in the appeal
on merit and it is, accordingly, dismissed. No order as to costs.
N.J.
H
H
Appeal dismissed.