[
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"data": {
"case_title": "SUPREME COURT OF INDIA | Appeal (Crl.) 1425 of 2004 | Israr v. State Of Uttar Pradesh | 06/12/2004",
"case_details": "Case: Appeal (Crl.) 1425 of 2004 | Israr v. State Of Uttar Pradesh",
"generated_outcome": "ALLOWED",
"reference_outcome": "DISMISSED",
"case_record": "The appellant, Israr, was convicted under Section 302 read with Section 34 of the Indian Penal Code, 1860, for the murder of Zamil Ahmad. The deceased was attacked on the night of October 4, 1979, by the appellant and his co-accused, Afzal. The prosecution's case was that the appellant caught the deceased from behind while Afzal inflicted knife blows. The deceased raised an alarm, and eyewitnesses (PW-3, PW-4, PW-5) arrived at the scene and saw the occurrence before the accused fled. The deceased was hospitalized and later died on October 9, 1979, due to peritonitis and broncho-pneumonia. The initial FIR was lodged under Section 324 IPC, later altered to Section 307 IPC, and finally to Section 302 IPC after the death. The trial court convicted both accused, and their appeal to the Allahabad High Court was dismissed. The defense argued that the eyewitnesses were partisan, identification was difficult due to poor light, there was no common intention, and the death was due to medical negligence. The prosecution contended that the eyewitnesses' testimony was credible and Section 34 was applicable.",
"generated_judgment": "\nOkay, let's go through this step by step. The user provided the case details and the legal issues. They want the judgment structured using the FIRAC framework. First, I need to make sure I understand all the facts and the issues. \n\nThe case involves Israr being convicted under Section 302 IPC with Section 34 for murder. The prosecution claims he and Afzal attacked Zamil Ahmad, leading to his death. The defense argues there's no common intention, eyewitnesses are unreliable, and the death was due to medical negligence. The FIR was initially under Section 324, then changed to 307, then 302. The High Court dismissed the appeal, and now the case is being reviewed.\n\nThe legal issues identified are about common intention, eyewitness credibility, and cause of death. The rules would include the IPC sections, especially 302, 34, and the burden of proof. The analysis needs to check if the appeal is maintainable. The defense's arguments are about the lack of common intention and the reliability of the eyewitnesses. \n\nFirst, I need to check if the appeal is maintainable. The defense's arguments are all about the evidence and legal interpretation, so the appeal is maintainable. Then, the analysis must address each issue. \n\nFor the common intention under Section 34, the prosecution must show that both accused shared the intention to commit murder. The eyewitnesses saw the attack, so their testimony could support this. However, the defense says the identification was difficult due to poor lighting. The court needs to determine if the evidence is sufficient. \n\nRegarding the eyewitnesses, even if the lighting was poor, their testimony might still be credible if corroborated by other evidence. The defense's claim that they are partisan might not be enough to dismiss their testimony if there's no evidence of bias. \n\nThe cause of death is a key point. The deceased died of peritonitis and broncho-pneumonia. The prosecution says the attack caused these injuries, but the defense argues medical negligence. The court must determine if the attack directly led to the death, considering the medical report. \n\nThe FIR alteration from 324 to 307 to 302 might be a procedural point, but the user's case facts don't mention any challenge to that. The court might not need to address it unless it's relevant to the evidence. \n\nIn the conclusion, the court needs to decide if the conviction should be allowed or dismissed. If the prosecution's evidence is sufficient to prove common intention, eyewitness credibility, and causation, then the appeal is dismissed. Otherwise, it's allowed. \n\nI need to structure all this into the FIRAC framework, making sure each section is clear and addresses the issues. Also, ensure that the conclusion uses either \"ALLOWED\" or \"DISMISSED\" as required.\n\n\n### Facts: \n1. The appellant, Israr, was convicted under Section 302 IPC (murder) read with Section 34 IPC (common intention) for the death of Zamil Ahmad. \n2. The attack occurred on October 4, 1979, with Israr and Afzal (co-accused) allegedly attacking the deceased from behind. \n3. Eyewitnesses (PW-3, PW-4, PW-5) arrived at the scene and testified to witnessing the attack before the accused fled. \n4. The deceased was hospitalized and died on October 9, 1979, due to peritonitis and broncho-pneumonia. \n5. The initial FIR was lodged under Section 324 IPC (assault), later altered to Section 307 IPC (attempted murder), and finally to Section 302 IPC (murder) after the death. \n6. The trial court convicted both accused, and the Allahabad High Court dismissed their appeal. \n7. The defense argued that the eyewitnesses were partisan, identification was difficult due to poor lighting, there was no common intention, and the death was due to medical negligence. \n8. The prosecution contended that the eyewitnesses' testimony was credible and that Section 34 IPC applied. \n\n---\n\n### Issues: \n1. **Was there a common intention between the appellant and Afzal to commit the murder, as required under Section 34 IPC?** \n2. **Were the eyewitnesses' testimonies reliable and credible despite the poor lighting conditions at the scene?** \n3. **Was the deceased's death a direct result of the attack by the appellant and Afzal, or was it due to medical negligence?** \n\n---\n\n### Rules: \n1. **Section 302 IPC**: Murder is the act of causing death with the intention to cause death or with the knowledge that the act is likely to cause death. \n2. **Section 34 IPC**: Common intention is the shared intent to commit an act, which makes all participants liable as if they had committed the act themselves. \n3. **Burden of Proof**: The prosecution must establish the facts of the case beyond reasonable doubt. \n4. **Credibility of Eyewitnesses**: Testimony must be evaluated for reliability, consistency, and corroboration. \n5. **Causation**: The prosecution must prove that the accused's actions directly caused the deceased's death, excluding contributory factors like medical negligence. \n\n---\n\n### Analysis: \n1. **Maintainability of the Appeal**: \n The appeal is maintainable as it challenges the trial court's findings on key legal and factual issues, including the application of Section 34 IPC, the credibility of eyewitnesses, and the causation of death. \n\n2. **Common Intention (Section 34 IPC)**: \n The prosecution's case relies on the eyewitnesses' testimony to establish that both Israr and Afzal acted in concert. While the defense argues that identification was difficult due to poor lighting, the eyewitnesses' accounts of the attack (e.g., Israr catching the deceased from behind while Afzal inflicted knife blows) provide a coherent narrative. The court must determine whether the prosecution met the burden of proof to show a shared intent to commit murder. If the evidence supports this, Section 34 IPC applies. \n\n3. **Eyewitness Credibility**: \n The defense's claim that the eyewitnesses were partisan lacks evidence of bias or inconsistency in their testimony. The poor lighting conditions do not invalidate their accounts if corroborated by other evidence, such as the nature of the injuries and the sequence of events. The court must assess whether the testimony is sufficient to establish the accused's involvement. \n\n4. **Causation and Medical Negligence**: \n The deceased's death was attributed to peritonitis and broncho-pneumonia, which the prosecution links to the attack. The defense argues that medical negligence caused the death. However, the prosecution's case hinges on the attack being the proximate cause of the deceased's injuries, which led to the fatal complications. The court must evaluate whether the medical report excludes the attack as a contributing factor. \n\n---\n\n### Conclusion: \nThe prosecution has sufficiently established the common intention between the appellant and Afzal under Section 34 IPC, the credibility of the eyewitnesses, and the causal link between the attack and the deceased's death. The defense's arguments fail to meet the burden of proof required to overturn the conviction. **ALLOWED**.",
"reference_judgment": "The Judgment was delivered by : Hon'ble Justice Arijit Pasayat\nLeave granted.\nAppellant calls in question legality of the judgment rendered by a Division Bench of the Allahabad High Court upholding his conviction for offences punishable under Section 302 read with Section 34 of the Indian Penal Code, 1860 (in short 'IPC'). The appellant faced trial along with one Afzal @ Patel. Both of them were convicted in the aforesaid manner and each was sentenced to undergo imprisonment for life.\nIn a nutshell prosecution version which led to trial of the appellant along with his co-accused is as follows :\nZamil Ahmad (hereinafter referred to as 'deceased') had his grocery shop in mohalla Gali Darjiyan, P.S, Kotwali, Muzaffarnagar City. Accused Afzal had forcibly demanded money from Kalloo, younger brother of the deceased. Kalloo had told this fact to deceased and when he complained to accused Afzal he threatened to Kill him.\nOn the night of 4.10.1979 at about 9.30 p.m. Zamil deceased after closing his shop was returning to his house in mohalla Khala Bazar along with Imran (PW-2). When he reached in front of Maszid Kunharan Near Mohalla Khalla Bazar accused Afzal alias Patel and his uncle accused-appellant Israr met him and they started saying that he had got them arrested and no body would save them. Accused-appellant caught hold of the deceased from the back and accused Afzal inflicted knife blows on him. Deceased raised alarm and hearing his alarm, Noor on him. Deceased raised alarm and hearing his alarm, Noor Hahi (PW-3), Iqbal (PW-4) and sayeed (PW-5) rushed to the sopt and saw the occurrence. When the witnesses tried to intervene the accused person ran way flashing knife. Imran (PW-2) took Zamil Ahmad to Disrict Hospital, Muzaffarnagar where his injuries were examined by Dr. R.K. Tandon who found three incised wounds on his person and prepared injury report (Ext. Ka.17). After admitting Zamil Ahmad in District Hospital, Muzaffarnagar, Imran (PW-2) prepared written report (Extn. Ka.2) and came to the Police Station Kotwali where he lodged written report at about 11.15 p.m. On the basis of written report chik F.I.R. (Ext. Ka. 9) was prepared by Constable Rajendra Singh (PW-7) who made an endorsement of the same at G.D. report (Ext. Ka-10) and registered a case against both the accused under Section 324 IPC. Imran (PW-2) also deposited blood stained shirt of the deceased Zamil Ahmad which was taken into possession by Constable Rajendra Singh vide recovery memo (Ext. Ka-3).\nThe investigation of the case was taken by Fateh Singh (PW-8), who arrested the accused persons. On receipt of injury report the case was altered to one under Section 307 IPC on 6.10.1979.\nThe dying declaration of deceased was reported on 7.10.1979 by Sri Jag Prasad, Executive Magistrate, Muzaffarnagar (CW-1). The condition of Zamil Ahmad was serious and, therefore, on the night of 8/9.10.1979 he was shifted to All India Institute of Medical Sciences, New Delhi, where he died on the night of 9.10.1979 at about 11.15 p.m. information regarding his death was received at Police Station, Vijay Nagar, New Delhi, S.I. Ram Niwas (PW-6) of P.S. Vijay Nagar, New Delhi, came to All India Institute of Medical Sciences, New Delhi, where he conducted inquest report (Ext, Ka-5) and other relevant papers. He sealed the dead body of the deceased and sent the same for postmortem.\nAutopsy on the dead body of the deceased was conducted at Delhi on 10.10.1979 by Dr. P.C. Dixit (PW-1) who found two stitched wounds and one incised wound as ante-mortem injuries and cause of death due to peritonitis and broncho pneumonia. He prepared postmortem report and the case was altered to one under Section 302 IPC.\nAfter completion of investigation charge sheet was placed and the accused persons who were committed to the Court of Sessions faced trial. They pleaded innocence. Stand of the appellant was that Noor Hahi (PW-3) and Yunus caused injuries on Afzal on 15.5.1979. Noor Hahi was witness against Afzal in a case under Section 25 of the Arms Act. Both Noor Hahi and Afzal were friends and they had falsely implicated them. To further the prosecution version 8 witnessess were examined. Jag Prasad, Executive Magistrate (CW-1) and Dr. T.N. Mathur (CW-2) were examined as court witnesses. Imran (PW-2), Noor Hahi (PW-3), Iqbal (PW-4) and Sayeed (PW-5) were stated to be eye witnesses. The accused persons examined one Rahmat Hahi (DW-1) in support of their stand. Considering the evidence on record, trial Court found them guilty. It is to be noted that PW-2 made a departure from the statement made during investigation. The other witnesses categorically stated that the accused-appellant caught hold of the deceased thereby facilitating the knife blows by Afzal. Both the convicted accused persons filed appeal before the Allahabad High Court. By the impugned judgment the appeal was dismissed and conviction and sentence were affirmed.\nIn support of the appeal Mr. Salmad Khurshid, learned senior counsel submitted that the evidence of the so called eye witnesses does not inspire confidence. There was no light which could have facilitated the identification. The so-called eye witnesses were partisan witnesses, being friends and relatives of the deceased. In any event, Section 34 has no application. There is nothing on record to show that the accused had any common intention to cause death of the deceased. Doctor's evidence was that the cause of death of the deceased. Doctor's evidence was that the cause of death was due to Peritonitis and Broncho Pneumonia. It was, therefore, submitted that even if there was any injury sustained with proper medical treatment and care, life of the deceased could have been saved. It was further submitted that one of the witnesses stated that the accused appellant fired a gun shot which the trial Court disbelieved. This shows exaggerations by the witnesses. It was, therefore, submitted that the courts below were not justified in finding the accused appellant guilty.\nIn response, learned counsel for the State submitted that the evidence of the eye witnesses is clear and cogent. Merely because the witnesses were friends or relatives of the accused, that cannot be ground to discard their credible and cogent evidence. The part played by the appellant has been vividly described by the witnesses and, therefore, Section 34 IPC has been right applied.\nWe shall first deal with the contention regarding interestedness of the witnesses for furthering prosecution version. Relationship is not a factor to affect credibility of a witness. It is more often than not that a relation would not counsel actual culprit and make allegations against an innocent person. Foundation has to be laid if plea of false implication is made. In such cases, the court has to adopt a careful approach and analyse evidence to find out whether it is cogent and credible.\nIn Dalip Singh and Ors. v. The State of Punjab, AIR (1953) SC 364 it has been laid down as under :\n \"A witness is normally to be considered independent unless he or she springs from sources which are likely to be tainted and that usually means unless the witness has cause, such as enmity against the accused, to wish to implicate him falsely. Ordinarily a close relation would be the last to screen the real culprit and falsely implicate an innocent person. It is true, when feelings run high and there is personal cause for enmity, that there is a tendency to drag in an innocent person against whom a witness has a grudge along with the guilty, but foundation must be laid for such a criticism and the mere fact of relationship far from being a foundation is often a sure guarantee of truth. However, we are not attempting any sweeping generalization. Each case must be judged on its own facts. Our observations are only made to combat what is so often put forward in cases before us as a general rule of prudence. There is no such general rule. Each case must be limited to and be governed by its own facts.\" \nThe above decision has since be followed in Guli Chand and Ors. v. Slate of Rajasthan, [1974] 3 SCC 698 in which Vadivelu Thevar v. State of Madras, AIR (1957) SC 614 was also relied upon.\nWe may also observe that the ground that the witness being a close relative and consequently being a partisan witness, should not be relied upon, has no substance. This theory was repelled by this Court as early as in Dalip Singh's case (supra) in which surprise was expressed over the impression which prevailed in the minds of the Members of the Bar that relatives were not independent witnesses. Speaking through Vivian Bose, J. it was observed :\n \"We are unable to agree with the learned Judges of the High Court that the testimony of the two eyewitnesses requires corroboration. If the foundation for such an observation is based on the fact that the witnesses are women and that the fate of seven men hangs on their testimony, we know of no such rule. If it is grounded on the reason that they are closely related to the deceased we are unable to concur. This is a fallacy common to many criminal cases and one which another Bench of this Court endeavoured to dispel in - 'Rameshwar v. State of Rajasthan', AIR (1952) SC 54 1951 ILO SC 24 at p.59). We find, however, that it unfortunately still persists, if not in the judgments of the Courts, at any rate in the arguments of counsel.\" Again in Masalti and Ors. v. State of U.P., AIR (1965) SC 202 1964 ILO SC 393 this Court observed : (p. 209-210 para 14) :\n\"But it would, we think, be unreasonable to contended that evidence given by witnesses should be discarded only on the ground that it is evidence of partisan or interested witnesses........The mechanical rejection of such evidence on the sole ground that it is partisan would invariably lead to failure of justice. No hard and fast rule can be laid down as to how much evidence should be appreciated. Judicial approach has to be cautious in dealing with such evidence; but the plea that such evidence should be rejected because it is partisan cannot be accepted as correct.\"\n To the same effect is the decision in State of Punjab v. Jagir Singh, AIR (1973) SC 2407 and Lehna v. State of Haryana, [2002] 3 SCC 76 . Stress was laid by the accused-appellants on the non-acceptance of evidence tendered by some witnesses to contend about desirability to throw out entire prosecution case. In essence prayer is to apply the principle of \"falsus in uno falsus in omnibus\" (false in one thing, false in everything). This plea is clearly untenable. Even if major portion of evidence is found to be deficient, in case residue is sufficient to prove guilt of an accused, notwithstanding acquittal of number of other co-accused persons, his conviction can be maintained. It is the duty of Court to separate grain from chaff. Where chaff can be separated from grain, it would be open to the Court to convict an accused notwithstanding the Fact that evidence has been persons. Falsity of particular to prove guilt of other accused persons. Falsity of particular material witness or material particular would not ruin it from the beginning to end. The maxim \"falsus in uno falsus in omnibus\" has no application in India and the witnesses cannot be branded as liar. The maxim \"falsus in uno falsus in omnibus \" has not received general acceptance nor has this maxim come to occupy the status of rule of law. It is merely a rule of caution. All that it amounts to, is that in such cases testimony may be disregarded, and not that it must be disregarded. The doctrine merely involves the question of weight of evidence which a Court may apply in a given set of circumstances, but it is not what may be called 'a mandatory rule of evidence'. (See Nisa Ali v. The State of Uttar Pradesh, AIR (1957) SC 366 ). The above position was elaborately discussed in Sucha Singh and Anr. v. State of Punjab, (2003) 6 JT SC 348 .\nComing to the plea relating to non-probability of identification, the evidence of PW-3 is very relevant. He has stated that the occurrence took place at the time of isha prayers which are concluded at about 9.30 p.m. There was light of the moon as well as of the neighbouring houses and the electric poles in the lane. The date of occurrence was 11th day of Lunar month and the place of occurrence is near the mosque as well as many houses close by. Therefore, identification was possible. Further a known person can be identified from a distance even without much light. The evidence of PW-3 has also been corroborated by the evidence of others. Evidence of PWs 3 to 5 proves that identification was possible.\nIn addition, the dying declaration which was recorded by CW-1 clearly establishes the roles played by the accused persons. Nothing has been shown as to how the same suffer from any infirmity. It is to be noted that before the trial Court the accused persons did not dispute that the death of the deceased was a result of injuries found by PW-1. Merely on the hypothetical plea that the deceased could have been saved with better treatment, the charge of murder does not get diluted. The plea is clearly untenable in view of the Explanation 2 appended to Section 299 IPC. The evidence of PW-3 to PW-5 is consistent that the accused appellant restrained the movement of the decided and held him while the other co-accused inflicted the knife blows.\nSection 34 has been enacted on the principle of joint liability in the doing of a criminal act. The Section is only a rule of evidence and does not create a substantive offence. The distinctive feature of the Section is the element of participation in action. The liability of one person for an offence committed by another in the course of criminal act perpetrated by several persons arises under Section 34 if such criminal act is done in furtherance of a common intention of the persons who join in committing the crime. Direct proof common intention is seldom available and, therefore, such intention can only be inferred from the circumstances appearing from the proved facts of the case and the proved circumstances. In order to bring home the charge of common intention, the prosecution has to establish by evidence, whether direct or circumstantial, that there was plan or meeting of mind of all the accused persons to commit the offence for which they are charged with the aid of Section 34, be it pre-arranged or on the spur of moment; but it must necessarily be before the commission of the crime. The true contents of the Section are that if two or more persons intentionally do an act jointly, the position in law is just the same as if each of them has done it individually by himself. As observed in Ashok Kumar v. State of Punjab, AIR 1977 SC 109 , the existence of a common intention amongst the participants in a crime is the essential element for application of this Section. It is not necessary that the acts of the several persons charged with commission of an offence jointly must be the same or identically similar. The acts may be different in character, but must have been actuated by one and the same common intention in order to attract the provision.\nAs it originally stood the Section 34 was in the following terms:\n \"When a criminal act is done by several persons, each of such persons is liable for that act in the same manner as if the act was done by him alone.\" \nIn 1870, it was amended by the insertion of the words \"in furterance of the common intention of all\" after the word \"persons\" and before the word \"each\", so as to make the object of Section 34 clear. This position was noted in Mahbub Shah v. Emperor, AIR (1945) Privy Council 118 .\n The Section does not say \"the common intention of all\", nor does it say \"and intention common to all\". Under the provisions of Section 34 the essence of the liability is to be found in the existence of a common intention animating the accused leading to the doing of a criminal act in furtherance of such intention. As a result of the application of principles enunciated in Section 34, when an accused is convicted under Section 302 read with Section 34, in law it means that the accused is liable for the act which caused death of the deceased in the same manner as if it was done by him alone. The provision is intended to meet a case in which it may be difficult to distinguish between acts of individual members of a party who act in furtherance of the common intention of all or to prove exactly what part was taken by each of them. As was observed in Ch. Pulla Reddy and Ors. v. State of Andhra Pradesh, AIR (1993) SC 1899 , Section 34 is applicable even if no injury has been caused by the particular accused himself. For applying Section 34 it is not necessary to show some overt act on the part of the accused. The above position was highlighted recently in Anil Sharma and Ors. v. Stale of Jharkahand, [2004] 5 SCC 679 .\nIn Abrahim Sheikh & Ors. v. State of West Bengal, AIR (1964) SC 1263 this Court stated that no doubt a person is only responsible ordinarily for what he does and Section 38 IPC ensures that. But Section 34 as well and Section 35 provided that if the criminal act is the result of the common intention, then every person who did the criminal act with such intention would be responsible for the total offence irrespective of the share which he had in its perpetration. The logic, highlighted illuminatingty by the Judicial Committee in the illustrious case of Barendra Kumar Ghosh v. Emperor, AIR (1925) PC1 , is that in crimes as in other things \"they also serve who only stand and wait\".\nSection 34 has, therefore, been rightly applied.\nIn view of the legal and factual position noted above, the irresistible conclusion is that the accused appellant ha been rightly held guilty and convicted. There is no merit in this appeal which is accordingly dismissed.\n",
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"case_title": "SUPREME COURT OF INDIA | Criminal Appeal Nos. 1727-1730 of 2010 | Union Of India And Others v. Sabyasachi Jyoti And Others | 01/02/2018",
"case_details": "Case: Criminal Appeal Nos. 1727-1730 of 2010 | Union Of India And Others v. Sabyasachi Jyoti And Others",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The respondents, sailors in the Indian Navy, were charged with misconduct for making recruitment examination results available to unauthorized persons for pecuniary gain. Enquiry proceedings were conducted under Regulations 25 to 28 of the Navy Part II (Statutory) Regulations. The respondents allegedly admitted guilt through confessional statements. The Investigating Officer found them guilty and imposed penalties, which were approved by the Superior Authority and upheld by the Central Government upon review. The High Court of Bombay set aside these findings and penalties, ruling that Regulation 27 mandated reading out charges and providing a copy of the charge-sheet, and its omission breached the delinquents' right to a fair opportunity. The appellants challenged this High Court order. The Supreme Court perused the record and found that the delinquents were fully aware of the charges, evidenced by their confessional statements and written statements in their own handwriting. The court noted that the plea of involuntary confessions was raised late, and the delinquents had the assistance of Defence Officers. The court also found sufficient material to support the authorities' original view, considering these proceedings as departmental rather than criminal, thus not bound by strict evidence rules.",
"generated_judgment": "Based on the given facts, the appeal should be **DISMISSED**.\n\n### Reasoning:\n\n1. **Awareness of Charges:**\n - The Supreme Court reviewed the record and found that the respondents (sailors) were fully aware of the charges against them. This is evidenced by their confessional statements and written statements in their own handwriting. Therefore, the argument that they were unaware of the charges does not hold.\n\n2. **Plea of Involuntary Confessions:**\n - The Supreme Court noted that the plea of involuntary confessions was raised late. Typically, such pleas need to be raised promptly during the investigation or trial phase. Since the respondents did not raise this issue earlier, it is reasonable to conclude that their confessions were voluntary.\n\n3. **Assistance of Defence Officers:**\n - The respondents had the assistance of Defence Officers. This suggests that they had adequate legal representation and were not unrepresented during the proceedings. Their ability to present their case and challenge the charges should have been adequately addressed.\n\n4. **Departmental Proceedings:**\n - The Supreme Court classified these proceedings as departmental rather than criminal. Departmental proceedings are subject to different procedural rules compared to criminal trials. The strict evidentiary rules applicable in criminal cases do not necessarily apply here. Thus, the absence of formal reading out of charges and provision of a copy of the charge-sheet, while important in criminal proceedings, may not be strictly necessary in departmental proceedings.\n\n5. **Material Supporting Guilt:**\n - The Supreme Court found sufficient material to support the authorities' original view. This indicates that there is substantial evidence to uphold the findings of misconduct and the penalties imposed.\n\n6. **High Court's Ruling:**\n - The High Court's decision to set aside the findings and penalties was based on the omission of reading out the charges and providing a copy of the charge-sheet. However, the Supreme Court's review overturned this decision, finding that these omissions did not violate the respondents' rights to a fair opportunity.\n\nGiven these points, the Supreme Court's final determination stands that the respondents were fully aware of the charges and that there is sufficient evidence to support the original findings. Therefore, the appeal should be dismissed.\n\n**Conclusion:** DISMISSED",
"reference_judgment": "The Order of the Court was as follows :\n1. The challenge in these appeals by way of special leave is to an order of the High Court of Bombay dated 7th August, 2008 by which the findings on guilt recorded against the respondents - delinquents who were sailors in the Indian Navy have been set aside along with the penalty/punishment imposed.\n2. The respondents were charged with misconduct of making available the resultsof recruitment examination(s) to unauthorized persons for undue pecuniary gain. The procedure contemplated by Regulations 25 to 28 of the Regulations for the Navy Part II (Statutory) (hereinafter referred to as \"the Regulations\") which govern the proceedings of enquiry were brought into force and the delinquent - respondents allegedly admitted their guilt by making confessional statements. Taking into account the same and the other materials on record the Investigating Officer competent to deal with the matter recorded a finding of guilt and imposed penalty including confinement which was approved by the next Superior Authority. The review petitions filed by the delinquent - respondents against the aforesaid order were also dismissed by the Central Government. In the resultant writ petitions, the High Court took the view that under Regulation 27 of the Regulations it was mandatory on the part of the concerned authority to read out the charges framed against the delinquents and make available to them a copy of the charge-sheet. As the same was not done, the High Court construed the aforesaid deficiency to be amounting to a breach of the rights of the delinquents to a fair opportunity. Consequently, the findings recorded and the penalty/punishment imposed were set aside. Aggrieved, the present appeals have been filed.\n3. We have heard the learned counsels for the parties.\n4. We have perused the photocopies of the Original Record pertaining to the proceedings held against the delinquents - respondents which have been brought on record by the appellants by filing an Additional Affidavit on 16th August, 2010. A reading of the proceedings recorded, insofar as the communication of the charges to the delinquents is concerned, their admission of guilt and the version(s) put forward by them, in our considered view, clearly indicate that though the charges may not have been read over or a copy of the memo of charges may not have been furnished to the delinquents, the delinquents were in full know of the charges leveled against them. This is not only evident from the confessional statement of the delinquents but also from the statement submitted by them in the course of the enquiry in their own handwriting. If the records proves and establishes the above facts we cannot understand how the alleged failure of the Union of India to read out the charges to the delinquents - respondents could have caused any prejudice to them so as to enable the High Court to take the view recorded in the impugned order.\n5. Learned counsel for the respondents- delinquents has made vehement submissions before us with regard to the involuntary nature of the confessional statements; reliance placed on the statement of one delinquent to determine the liability of another; and also the breach of elementary principles of a fair adjudication.\n6. Even though we do not agree with the order of the High Court and the same is liable to be interdicted on the grounds mentioned above, to satisfy the judicial conscience, in view of the emphatic submissions made at the bar on behalf of the delinquents - respondents, we have perused the entire of the records in- original, photocopies of which had been brought on record in the Additional Affidavit of the appellants. The statement of the delinquents - respondents recorded in their own handwriting in the course of the proceedings bare ample testimony to the fact that the delinquents - respondents were in full know of the charges leveled against them and they had virtually admitted their guilt. Insofar as the confessional statements are concerned, the plea with regard to involuntariness of the same was raised at a very advanced stage i.e. in the review petitions before the Central Government. The fact that the delinquents had the services of Defence Officers who were in the ranks of Medical Assistants First Class, Commander and Lieutenant Commander (Special Duties Regulating) is another fact that cannot be ignored in adjudging the acceptability of the version put forward on behalf of the respondents - delinquents with regard to involuntary nature of the confession. That apart, if the statements of Master Suresh Nambiar and Prakash Sharma, Medical Assistants First Class are to be considered we find sufficient material to sustain the view that has been taken by the Authorities below before the same were interdicted by the High Court. The proceedings against the respondents will not be governed by strict rules of evidence so as to exclude from consideration the statement of one delinquent for the purposes of finding out the involvement of another. The present proceedings in which the respondents - delinquents have been found to be liable are more in the nature of a departmental proceeding which is distinct and different from a criminal trial.\n7. Viewed in the aforesaid context and having regard to what has been stated above we interfere with the order of the High Court; set aside the same and allow these appeals.\nThe appeals are allowed in terms of the signed order.\nAppeals allowed",
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"case_title": "SUPREME COURT OF INDIA | CRIMINAL APPEAL NO.523 OF 2024 (@ SPECIAL LEAVE PETITION (CRL.) NO.6562 OF 2021) | Bharat Sher Singh Kalsia v. State Of Bihar, State Of Bihar & Anr. | 31/01/2024",
"case_details": "Case: CRIMINAL APPEAL NO.523 OF 2024 (@ SPECIAL LEAVE PETITION (CRL.) NO.6562 OF 2021) | Bharat Sher Singh Kalsia v. State Of Bihar, State Of Bihar & Anr.",
"generated_outcome": "DISMISSED",
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"case_record": "The appeal arises from a High Court order dismissing a prayer to quash FIR No.87 of 2011, registered under Sections 467, 468, 469, and 471 of the IPC. The FIR alleged that Raj Kumar Karan Vijay Singh, acting as a Power of Attorney (PoA) holder for the informant Maharaj Kumar Man Vijay Singh and other family members, sold a portion of their property to the appellant. The PoA, executed on 12.04.1994, granted authority for property management, litigation, and executing deeds. The informant alleged that the PoA holder sold property without the principals' signatures, misappropriated funds, and failed to render accounts. Consequently, a legal notice was issued to revoke the PoA and demand sale details. The police filed a final report indicating offences under Sections 409, 467, 468, 471, and 420 IPC, leading to the Chief Judicial Magistrate taking cognizance. A civil suit (Original Suit No.27 of 2011) filed by the informant and others in Dehradun to set aside the sale deed and for rendition of accounts was dismissed on 07.12.2017. The civil court found the PoA holder authorized to sell and receive consideration, deeming the sale deed valid and rejecting claims of non-knowledge and entitlement to accounts. The PoA was cancelled on 09.01.2011, significantly after the sale deed's execution on 24.08.2000. The appellant contended that the Sale Deed was executed based on a valid PoA, consideration was paid, and the PoA was neither forged nor withdrawn at the time of sale. He argued that the dispute was civil in nature, the Buxar courts lacked territorial jurisdiction as the sale occurred in Dehradun, and the dismissal of the civil suit validated the transaction, making the criminal prosecution an abuse of process.",
"generated_judgment": "### Facts:\n1. **FIR and Allegations**: The case involves FIR No.87 of 2011 registered under Sections 467, 468, 469, and 471 of the Indian Penal Code (IPC). It alleges that Raj Kumar Karan Vijay Singh, as a Power of Attorney (PoA) holder, sold property belonging to Maharaj Kumar Man Vijay Singh and others without their signatures, among other grievances.\n \n2. **Power of Attorney (PoA)**: The PoA, dated 12.04.1994, authorized the holder to manage property, including litigation and executing deeds. A legal notice sought revocation of the PoA due to alleged wrongdoings, and the PoA was eventually cancelled on 09.01.2011.\n\n3. **Sale of Property**: The disputed sale deed was executed on 24.08.2000, with the PoA still in effect at that time. The appellant asserts that the sale and consideration were lawful and properly authorized by the PoA.\n\n4. **Civil Suit**: In Original Suit No.27 of 2011, the civil court dismissed the plaintiff’s claims on 07.12.2017, affirming the validity of the sale deed executed by the PoA holder.\n\n5. **Police and Judicial Cognizance**: The police filed a final report under Section 173 of CrPC identifying offences under Sections 409, 467, 468, 471, and 420 IPC, leading the Chief Judicial Magistrate to take cognizance of the case.\n\n6. **Jurisdiction and Nature of Suit**: The appellant contends that the Buxar court lacked jurisdiction, the issues being civil in nature, and the dismissal of the civil suit should preclude criminal prosecution.\n\n### Issues:\n1. Whether the High Court erred in dismissing the prayer to quash the FIR under Sections 467, 468, 469, and 471 of the IPC.\n\n2. Whether the PoA was valid and sufficient at the time of the property sale to authorize the PoA holder to execute the sale deed.\n\n3. Whether the civil court’s finding that the sale deed was valid precluded the initiation or continuation of criminal proceedings.\n\n4. Whether there was an abuse of process in pursuing criminal charges following the dismissal of the civil suit.\n\n5. Whether the Buxar courts had the territorial jurisdiction to handle the criminal case.\n\n6. Whether there is evidence of forgery or misappropriation by the PoA holder, justifying the criminal charges.\n\n### Rules:\n1. **Quashing of FIR**: Under Section 482 of the CrPC, the High Court has inherent powers to quash FIRs in exceptional circumstances to prevent abuse of the process of any court.\n\n2. **Power of Attorney Validity**: For a PoA to be valid, it must confer specific authority, including transactional powers, and must not be exercised as a fraud upon the principal(s).\n\n3. **Civil vs. Criminal Nature**: A matter involving criminal conduct can be tried criminally despite a civil decision, especially if there are allegations of forgery or fraud.\n\n4. **Jurisdiction**: Criminal jurisdiction is determined by the location of the offence or where key acts constituting the offence occurred, generally allowing multiple venues depending on where acts related to the offence took place.\n\n5. **Abuse of Process**: This principle prevents the legal system from being used in a way that is unfair, unjust, or inappropriate to the nature of the proceedings.\n\n### Analysis:\n1. **Maintainability**: The appeal is maintainable as it challenges the High Court's order dismissing the quash prayer, which impacts the appellant's legal rights and the continuation of a criminal proceeding against him.\n\n2. **Validity of FIR Quash**: The High Court’s decision not to quash the FIR was based on valid criminal allegations that go beyond civil disputes (Issue 1 and Analysis of Rule 3). The presence of potential criminal actions like forgery allows for criminal proceedings irrespective of civil judgments.\n\n3. **Power of Attorney**: Given the facts that the sale deed was executed while the PoA was in effect and no forged signatures were claimed solely, the PoA appeared valid at the time. However, the criminal charges background involving potential misappropriation justifies inquiry (Issue 2 and Rule 2).\n\n4. **Jurisdiction**: Considering the principal beneficiaries' interests being partially in the jurisdiction or related serious allegations having aspects operating in multiple locations, Buxar courts could have territorial relevance (Issue 5 and Rule 4).\n\n5. **Abuse of Process**: The civil suit’s dismissal does not necessarily nullify a legitimate criminal claim, especially when the essential nature of the claims involves criminal liabilities, such as alleged misconduct beyond the civil scope (Issue 4 and Rule 5).\n\n6. **Evidence of Forgery/Misappropriation**: Criminal charges remain sustainable, as the allegations suggest breaches beyond ordinary civil disputes, needing judicial examination, particularly given the financial stakes and authority entrusted under the PoA (Issue 6 and Rule 3).\n\n### Conclusion:\nThe appeal is **DISMISSED**. The High Court was justified in not quashing the FIR as the allegations embody potential criminal conduct requiring further judicial evaluation. The appellant's arguments regarding jurisdiction, prior civil findings, and abuse of process do not preclude the legitimate pursuit of criminal proceedings under the laws specified.",
"reference_judgment": "Heard learned counsel for the parties.\n2. Leave granted.\n3. The present appeal arises out of the Final\nJudgment and Order dated 12.03.2021 (hereinafter 2\nreferred to as the “Impugned Judgment”) passed in\nCriminal Miscellaneous No.42776 of 2013 by the\nHigh Court of Judicature at Patna (hereinafter\nreferred to as the “High Court”) by which the\nprayer for quashing First Information Report\nNo.87 of 2011 dated 19.03.2011 (hereinafter\nreferred to as the “FIR”) registered at Dumraon\nPolice Station, Buxar, Bihar under Sections 467,\n468, 469 and 471 of the Indian Penal Code, 1860\n(hereinafter referred to as the “IPC”), has been\ndismissed.\nTHE BRIEF FACTS:\n4. The informant/respondent no.2 Maharaj Kumar\nMan Vijay Singh @ Man Vijay Singh gave a\nstatement in writing to the Station House\nOfficer, Dumraon Police Station alleging that Raj\nKumar Karan Vijay Singh, s/o Group Captain Late\nMaharaj Kumar Ran Vijay Singh had sold off\nproperty belonging to 5 persons of the 3\ninformant’s family, including the informant\nhimself. It was alleged that the informant and\nhis family members had earlier given a Power of\nAttorney (hereinafter referred to as the “PoA”)\nto Raj Kumar Karan Vijay Singh in respect of and\nas owners of property bearing Khasras No.459G,\n472, 474, 475, 476 and 478B and further Khasra\nNo.459E situated in Village Karbari Grant, Tehsil\nVikasnagar, Pargana Pachwain, District Dehradun.\nIt was stated that the informant Maharaj Kumar\nMan Vijay Singh and his brother Kumar Chandra\nVijay Singh, both sons of Maharaja Kamal Singh,\nSmt. Sangeeta Kumari, Indumati, Ran Vijay Singh,\nhis father’s Sister, father, sisters and Aunt\nexecuted a PoA on 12.04.1994 for management and\nmaintenance of their property. It was provided\ntherein that the PoA holder shall pursue\nlitigation, file plaint after obtaining signature\nof the land owners/principals of the PoA. It was\nalleged that some portion of the property of the 4\ninformant and others was sold to the present\nappellant and on such knowledge, the informant\nsent a Legal Notice to the PoA-holder directing\nhim to give the details of the sale made in\nconspiracy with the appellant and a Notice was\nalso given to revoke the PoA but the agent did\nnot give any information/reply to the informant\nand others who had executed the PoA. In this\nbackdrop, and as such, the criminal case was\ninstituted. It was alleged that criminal acts\nwere committed by the accused, including the\nappellant, by misusing the PoA and alleging that\nthey had misappropriated the property, did not\nrendition the account(s) and that the Sale Deed\nwas fraudulent as it was without obtaining the\nsignatures of the land-owners/Principals of the\nPoA-holder. Upon investigation, the police had\nsubmitted final report finding a case under\nSections 409, 467, 468, 471 and 420, IPC and the\nlearned Chief Judicial Magistrate, Buxar 5\nthereupon took cognizance of the offences under\nSections 409, 467, 468, 471 and 420, IPC on\n18.11.2014 in GR No.515 of 2011.\n5. During the pendency of Criminal\nMiscellaneous No.42776 of 2013 on the file of the\nHigh Court, originally filed for quashing the\nFIR, the appellant filed Interlocutory\nApplication No.1261 of 2017 seeking amendment of\nthe prayer to include quashing of the order dated\n18.11.2014 mentioned above.\nSUBMISSIONS BY THE APPELLANT:\n6. Learned senior counsel for the appellant\nsubmitted that the appellant is merely the vendee\nof a portion of the land which was included in\nthe PoA given to Raj Kumar Karan Vijay Singh on\n7. He contended that the Sale deed dated\n24.08.2000 was on the basis of the PoA given to 6\nMan Vijay Singh, s/o Kamal Singh by the land-\nowners/principals. It was submitted that it was\nan internal matter between the land-\nowners/executors of the said PoA with regard to\nthe terms, which obviously were binding, inter\nse, between the parties.\n8. Learned senior counsel drew the attention of\nthe Court to the contents of the PoA, especially\nClause 3 thereof and submitted that the same\nentitled the PoA-holder to execute any type of\nDeed and to receive consideration on behalf of\nthe land-owners/executors of the PoA and get such\nDeed registered. Thus, it was contended that the\nfollowing was not in dispute: (a) the PoA was\nadmittedly neither forged nor withdrawn; (b)the\nappellant was the vendee of a piece of land\ncovered under the PoA, and (c)for such sale,\nvaluable consideration had also been paid. In\nthis view, it was submitted, the appellant could 7\nnot be held liable for any misdeed, much less,\nany criminal act.\n9. Learned senior counsel submitted that the\nRevisional Court was right that cognizance, as\nfar as the appellant is concerned, was totally\nillegal as no offence was made out against the\nappellant. It was further contended that even on\nthe jurisdictional issue, the Sale Deed in\nquestion was executed at Dehradun, Uttarakhand\nand the land is also situated in Dehradun. It was\nsubmitted that even the consideration was paid in\nDehradun. It was contended that the informant\nalso filed Original Suit No.27 of 2011 in the\nCourt of the learned Additional District Judge,\nVikas Nagar, Dehradun for setting aside the Sale\nDeed executed in favour of the appellant by the\nPoA holder and for rendition of accounts, which\nwas dismissed and it was found that the PoA-\nholder/agent was duly authorized thereunder to\nsell the property after receiving consideration 8\namount on behalf of the land-owners/principals,\nwho were also not entitled to rendition of\naccounts. Thus, it was submitted that in a civil\nproceeding wherein the right of the PoA-holder to\nsell the property in question had been upheld and\nthe appellant having bought the property from\nsuch PoA holder of the land covered under the\nPoA, the present FIR itself is misuse and abuse\nof the process of law, as far as the appellant is\nconcerned. Further, he submitted, that the\ncancellation of the PoA was only on 09.01.2011,\ni.e., after almost 10½ years after the execution\nof the sale deed on 24.08.2000.\n10. Moreover, it was contended that the issue\nbeing purely of civil nature i.e., there being a\ndispute as to whether the PoA-holder has paid to\nthe land-owners/principals money received for\nthe land sold, at best, it may give rise to a\ncause of action to the principals on the civil 9\nside against the PoA-holder, but the appellant\ncould not be dragged into any such controversy.\n11. Learned senior counsel submitted that at the\ntime of the sale, the PoA was valid and Clauses 3\nand 11 read with 5 gave full authority to the\nPoA-holder to sell the property, get the Sale\nDeed registered and receive consideration. He\nsubmitted that Clause 15, on which the\ncomplainant has relied, was not applicable.\nFurther, neither in the FIR nor in the order\ntaking cognizance or even in the Legal Notice(s),\nis there any reference to the appellant, and the\nchargesheet merely states that the seller/PoA-\nholder did not have the right to sell. It was\ncontended that while granting anticipatory bail\nto the appellant, the High Court by order dated\n20.02.2014 in Criminal Miscellaneous No.44830 of\n2013, which was heard and decided with Criminal\nMiscellaneous No.45146 of 2013 filed by the PoA-\nholder, the said PoA-holder had taken the stand 10\nthat he was ready to give/return the sale proceed\namounts to the informant, without admitting to\nthe case of the informant and subject to such\ncondition, he was also granted anticipatory bail.\n12. On the civil nature of the dispute, it was\nsubmitted that the issue pertains to\ninterpretation of various clauses of the PoA,\nwhich cannot be done in a criminal proceeding and\nrightly the Revisional Court had held it to be a\ncivil dispute. It was also pointed out that the\nBuxar Courts would lack territorial jurisdiction.\n13. It was submitted that the Original Suit\nNo.27 of 2011, filed by the respondent no.2 and\nothers, at Dehradun, was prior to filing of the\nFIR, which was dismissed by order dated\n07.12.2017 holding that the PoA holder had the\nright to sell the land, receive the consideration\nand hence the Sale deed was valid. The contention\nthat the respondent no.2 and others had no 11\nknowledge of the Sale Deed dated 24.08.2000 could\nnot be believed and the suit was also held to be\ntime-barred as the prayer was for setting aside\nthe Sale Deed dated 24.08.2000.\n14. Learned senior counsel relied upon the\ndecision in Mukul Agrawal v State of Uttar\nPradesh, (2020) 3 SCC 402, wherein at Paragraph\n71, it has been held that the finding of the\nCivil Court that the agreement was not a forged\ndocument, makes the very substratum of the\ncriminal complaint vanish.\n15. Reliance was also placed on the decision of\nK G Premshankar v Inspector of Police, (2002) 8\nSCC 87, where at Paragraphs 15, 16, 30-322,\n1‘7. In view of the conclusive opinion of the appellate court that the agreement dated 30-3-1988 was not a forged\ndocument, the very substratum of the criminal complaint vanishes. In the circumstances to allow the appellants to be\nprosecuted will only be a complete abuse of the process of law. The proceedings in Complaint Case No. 2705 of\n2003 are therefore quashed and the appeal is allowed.’\n2‘15. Learned Additional Solicitor-General Shri Altaf Ahmed appearing for the respondents submitted that the\nobservation made by this Court in V.M. Shah case [(1995) 5 SCC 767 : 1995 SCC (Cri) 1077] that\n“the finding recorded by the criminal court, stands superseded by the finding recorded by the civil court and\nthereby the finding of the civil court gets precedence over the finding recorded by the criminal court”\n(SCC p. 770, para 11)\nis against the law laid down by this Court in various decisions. For this, he rightly referred to the provisions of\nSections 41, 42 and 43 of the Evidence Act and submitted that under the Evidence Act to what extent judgments\ngiven in the previous proceedings are relevant is provided and therefore it would be against the law if it is held that\nas soon as the judgment and decree is passed in a civil suit the criminal proceedings are required to be dropped if\nthe suit is decided against the plaintiff who is the complainant in the criminal proceedings. 12\nSections 40-43, of the Indian Evidence Act, 1872\nhave been interpreted with regard to the\nrelevance of decision of a Civil Court on\ncriminal proceedings against the same person(s)\npertaining to the same cause. As far as\nterritorial jurisdiction is concerned, it was the\nstand of the learned senior counsel that the only\nlink in the chain is that the PoA was executed at\n16. In our view, the submission of learned Additional Solicitor-General requires to be accepted. Sections 40 to 43 of\nthe Evidence Act provide which judgments of courts of justice are relevant and to what extent. Section 40 provides\nfor previous judgment, order or a decree which by law prevents any court while taking cognizance of a suit or\nholding a trial, to be a relevant fact when the question is whether such court ought to take cognizance of such suit or\nto hold such trial. Section 40 is as under:\n“40. Previous judgments relevant to bar a second suit or trial.—The existence of any judgment, order or\ndecree which by law prevents any court from taking cognizance of a suit or holding a trial, is a relevant fact\nwhen the question is whether such court ought to take cognizance of such suit or to hold such trial.”\nxxx\n30. What emerges from the aforesaid discussion is — (1) the previous judgment which is final can be relied upon as\nprovided under Sections 40 to 43 of the Evidence Act; (2) in civil suits between the same parties, principle of res\njudicata may apply; (3) in a criminal case, Section 300 CrPC makes provision that once a person is convicted or\nacquitted, he may not be tried again for the same offence if the conditions mentioned therein are satisfied; (4) if the\ncriminal case and the civil proceedings are for the same cause, judgment of the civil court would be relevant if\nconditions of any of Sections 40 to 43 are satisfied, but it cannot be said that the same would be conclusive except as\nprovided in Section 41. Section 41 provides which judgment would be conclusive proof of what is stated therein.\n31. Further, the judgment, order or decree passed in a previous civil proceeding, if relevant, as provided under\nSections 40 and 42 or other provisions of the Evidence Act then in each case, the court has to decide to what extent\nit is binding or conclusive with regard to the matter(s) decided therein. Take for illustration, in a case of alleged\ntrespass by A on B's property, B filed a suit for declaration of its title and to recover possession from A and suit is\ndecreed. Thereafter, in a criminal prosecution by B against A for trespass, judgment passed between the parties in\ncivil proceedings would be relevant and the court may hold that it conclusively establishes the title as well as\npossession of B over the property. In such case, A may be convicted for trespass. The illustration to Section 42 which\nis quoted above makes the position clear. Hence, in each and every case, the first question which would require\nconsideration is — whether judgment, order or decree is relevant, if relevant — its effect. It may be relevant for a\nlimited purpose, such as, motive or as a fact in issue. This would depend upon the facts of each case.\n32. In the present case, the decision rendered by the Constitution Bench in M.S. Sheriff case [AIR 1954 SC 397 :\n1954 Cri LJ 1019] would be binding, wherein it has been specifically held that no hard-and-fast rule can be laid\ndown and that possibility of conflicting decision in civil and criminal courts is not a relevant consideration. The law\nenvisages\n“such an eventuality when it expressly refrains from making the decision of one court binding on the other, or\neven relevant, except for limited purpose such as sentence or damages”.’ 13\nBuxar, but in the present case, there is no\ndispute with regard to execution of the PoA and\nthe dispute relates only to execution of the Sale\nDeed which occurred in Dehradun where the land\nlies. Thus, the submission was that the Courts at\nBuxar would not have any jurisdiction in the\npresent matter.\n16. Learned senior counsel summed up his\narguments by contending that all points raised\nbefore us had been taken before the High Court\nbut have not been dealt with in the Impugned\nJudgment.\nSUBMISSIONS BY THE RESPONDENT NO.2:\n17. Per contra, learned senior counsel appearing\nfor respondent no.2 submitted that the case\nbefore the High Court was confined to the\nquestion of territorial jurisdiction and it was\nobserved that the same depends upon evidence.\nThus, it was submitted that territorial 14\njurisdiction does not go to the root of the\nmatter, but is merely for administrative\nconvenience. Reliance was placed on the decision\nin Smt. Raj Kumari Vijh v Dev Raj Vijh, (1977) 2\nSCC 190, the relevant being at Paragraph 73.\n18. It was submitted that the appellant has\nwilfully purchased the land of the complainant on\nthe strength of the PoA, which itself required\nthe assent of the land-owners/principals for sale\nof land, as would be clear from Clause 15 of the\nPoA.\n19. Learned senior counsel, in the alternative\ntook the stand that if relief was granted to the\n3 ‘7. Section 531 of the Code reads as follows:\n“531. No finding, sentence or order of any criminal court shall be set aside merely on the ground that the\ninquiry, trial or other proceeding in the course of which it was arrived at or passed, took place in a wrong\nsessions division, district, sub-division or other local area, unless it appears that such error has in fact\noccasioned a failure of justice.”\nThe section therefore relates to a defect of jurisdiction. As has been stated by this Court in Purushottamdas Dalmia\nv. State of West Bengal [(1962) 2 SCR 101 : AIR 1961 SC 1589 : (1961) 2 Cri LJ 728] there are two types of\njurisdiction of a criminal court, namely, (1) the jurisdiction with respect to the power of the court to try particular\nkinds of offences, and (2) its territorial jurisdiction. While the former goes to the root of the matter and any\ntransgression of it makes the entire trial void, the latter is not of a peremptory character and is curable under\nSection 531 of the Code. Territorial jurisdiction is provided “just as a matter of convenience, keeping in mind the\nadministrative point of view with respect to the work of a particular court, the convenience of the accused who will\nhave to meet the charge levelled against him and the convenience of the witnesses who have to appear before the\nCourt”. Sub-section (8) of Section 488 in fact provides that proceedings under the section “may be taken against\nany person in any district where he resides or is, or where he last resided with his wife or, as the case may be, the\nmother of the illegitimate child”. This therefore is ordinarily the requirement as to the filing of an application under\nSection 488 within the limits of the jurisdiction of the Magistrate concerned.’ 15\nappellant with regard to quashing of the FIR, it\nmay be confined to the appellant and not of the\nFIR as a whole, where the other co-accused has\nbeen charge-sheeted and summoned to face trial.\nIt was urged that it may be left open to the\nTrial Court to summon the appellant if the\nevidence so warrants, under Section 319, Code of\nCriminal Procedure, 1973 (hereinafter referred to\nas the “CrPC”).\nSUBMISSIONS ON BEHALF OF THE STATE:\n20. A counter has been filed on behalf of the\nState of Bihar opposing the prayer made in the\npresent appeal and justifying the prosecution of\nthe appellant on the basis of the FIR.\nANALYSIS, REASONING AND CONCLUSION:\n21. Having considered the facts and submissions\nby the learned counsel for the parties, this\nCourt finds that a case for interference has been\nmade out. The undisputed and admitted facts are 16\nthat the PoA was executed by the land-\nowners/principals, including respondent no.2 and\nothers on 12.04.1994, in favour of the person\nfrom whom the appellant purchased the land on\n22. It is also a fact that the PoA-holder\nexecuted a Sale Deed and got it registered at\nDehradun in favour of the appellant as also that\nthe land is located in Dehradun. Much has been\nsaid with regard to a harmonious reading of the\nvarious clauses of the PoA viz. Clauses 3, 11 and\n15 which read as under:\n‘3. To execute any type of deed and to\nreceipt consideration, if any, on our\nbehalf and to get the Registration\ndone of the same.\n11. To sell moveable or immoveable\nproperty including land, live stock,\ntrees etc. and receive payment of such\nsales on our behalf.\n15. To present for registration all\nthe sale deeds or other documents\nsigned by us and admit execution there\nof before the District Registrar or\nthe Sub-Registrar or such other 17\nOfficer as may have authority to\nregister the said deeds and documents\nas the case may be and take back the\n23. A mere perusal of the above indicates that\nas per Clause 3, the PoA-holder was authorised to\nexecute any type of deed, to receive\nconsideration in this behalf and to get the\nregistration done thereof. Clause 11 of the PoA\nfurther makes it clear that the PoA-holder had\nthe authority to sell movable or immovable\nproperty including land, livestock, trees etc.\nand receive payment of such sales on behalf of\nthe land-owners/principals. However, Clause 15 of\nthe PoA, which has been strenuously relied upon\nby the respondent no.2, while opposing the\npresent appeal, states that the PoA-holder was\nauthorized to present for registration the sale\ndeed(s) or other documents signed by the land-\nowners/principals and admit execution thereof\nbefore the District Registrar or the Sub-18\nRegistrar or such other officer as may have\nauthority to register the said deeds and\ndocuments, as the case may be, and take back the\n24. Thus, the Court is required to interpret\nharmoniously as also logically the effect of a\ncombined reading of the afore-extracted clauses.\nAs such, our endeavour would, in the first\ninstance, necessarily require us to render all\nthree effective and none otiose. In order to do\nso, this Court would test as to whether all the\nthree clauses can independently be given effect\nto and still not be in conflict with the other\nclauses.\n25. With this object, when the three clauses are\nread, it is obvious, at the cost of repetition,\nthat Clause 3 pertains to execution of any type\nof deed and receiving consideration, if any, on\nbehalf of the land-owners/principals and to get 19\nthe registration thereof carried out. Basically,\nthis would take care of any type of deed by which\nthe PoA-holder was authorized to execute and also\nreceive consideration and get registration done\n26. Clause 11 of the PoA deals specifically with\nregard to sale of movable or immovable property\nincluding land and receiving payments of such\nsales on behalf of the land-owners/principals.\n27. In this eventuate, Clauses 3 and 11 of the\nPoA together authorized the PoA-holder to execute\ndeeds, including of/for sale, receive\nconsideration in this regard and proceed to\nregistration upon accepting consideration on\n28. Coming to Clause 15 of the PoA, which states\nthat the PoA-holder was authorized to present for\nregistration the sale deeds or other documents\nsigned by the land-owners/principals and admit 20\nexecution thereof, is, in our understanding in\naddition to Clauses 3 and 11 of the PoA and not\nin derogation thereof. The reason to so hold is\nthat besides the contingencies where the PoA-\nholder had been authorized to execute any type of\ndeed and receive consideration and get\nregistration done, which included sale of\nmovable/immovable property on behalf of the land-\nowners/principals, the land owners/principals had\nalso retained the authority that if a Sale Deed\nwas/had been signed by them, the very same PoA-\nholder was also authorized to present it for\nregistration and admit to execution before the\nauthority concerned.\n29. Thus, in the instant case, had it been a\nsituation where the land-owners/principals had\nexecuted a Sale Deed in favour of any third party\nprior to the Sale Deed executed and registered by\nthe PoA-holder with regard to the property in\nquestion, and the PoA-holder had not presented 21\nthe said Sale Deed and had gone ahead with\nhimself executing and getting registered a\ndifferent or a subsequent Sale Deed in favour of\nthe appellant, the matter would be entirely\ndifferent. Therefore, clearly, there is no\ncontradiction between Clauses 3, 11 and 15 of the\nPoA. To restate, Clause 15 of the PoA is an\nadditional provision retaining authority for sale\nwith the land-owners/principals themselves and\nthe process whereof would also entail\npresentation for registration and admission of\nits execution.\n30. We are of the considered opinion that all\nthree clauses are capable of being construed in\nsuch a manner that they operate in their own\nfields and are not rendered nugatory. That apart,\nwe are mindful that even if we had perceived a\nconflict between Clauses 3 and 11, on the one\nhand, and Clause 15 on the other, we would have\nto conclude that Clauses 3 and 11 would prevail 22\nover Clause 15 as when the same cannot be\nreconciled, the earlier clause(s) would prevail\nover the later clause(s), when construing a Deed\nor a Contract. Reference for such proposition is\ntraceable to Forbes v Git,1 AC 2564, as\napprovingly taken note of by a 3-Judge Bench of\nthis Court in Radha Sundar Dutta v Mohd. Jahadur\nRahim, AIR 1959 SC 24. However, we have been\nable, as noted above, to reconcile the three\nclauses in the current scenario.\n31. Another fact which cannot be lost sight of,\nis that it is apparent that the matter relates to\na dispute among the co-sharers as the PoA-holder\nis the son of one of the co-sharers/principals\nnamely Smt. Indumati R. V. Singh.\n4 ‘The principle of law to be applied may be stated in few words. If in a deed an earlier clause is followed by a later\nclause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as\nrepugnant and the earlier clause prevails. In this case the two clauses cannot be reconciled and the earlier\nprovision in the deed prevails over the later. Thus, if A covenants to pay 100 and the deed subsequently provides\nthat he shall not be liable under his covenant, that later provision is to be rejected as repugnant and void, for it\naltogether destroys the covenant. But if the later clause does not destroy but only qualifies the earlier, then the\ntwo are to be read together and effect is to be given to the intention of the parties as disclosed by the deed as a\nwhole. …’ 23\n32. The PoA and its execution/registration not\nbeing in dispute, the only controversy relating\nto the Sale Deed executed by the PoA-holder in\nfavour of the appellant in Dehradun for property\nlocated at Dehradun would thus, in the emerging\nfactual matrix, clearly be an issue for the\nCourts at Dehradun to examine, much less give\nrise to any cause of action at Buxar.\n33. We may add that this issue of jurisdiction\nis limited to the transaction of the execution of\nthe Sale Deed in favour of the appellant, and not\nto any other controversy or dispute the land-\nowners/principals may have, either inter-se or\nagainst the PoA-holder. Moreover, a suit filed by\nthe land-owners/principals at Dehradun prior to\nthe lodging of the FIR, for the same cause of\naction, has been dismissed in favour of the\nappellant, where a specific plea to cancel the\nSale Deed stands rejected. 24\n34. In sum, the dispute, if any, is between the\nland-owners/principals inter-se and/or between\nthem and the PoA-holder. We think it would be\nimproper to drag the appellant into criminal\nlitigation, when he had no role either in the\nexecution of the PoA nor any misdeed by the PoA-\nholder vis-à-vis the land-owners/principals.\nMoreover, the entire consideration amount has\nbeen paid by the appellant to the PoA-holder.\n35. On an overall circumspection of the entire\nfacts and circumstances, we find that the\nImpugned Judgment needs to be and is hereby set\naside. This Court has held that in the\nappropriate case, protection is to be accorded\nagainst unwanted criminal prosecution and from\nthe prospect of unnecessary trial5. We quash FIR\nNo.87 of 2011 dated 19.03.2011, Dumraon Police\nStation, Buxar, Bihar as also the order taking\n5 Priyanka Mishra v State of Madhya Pradesh, 2023 SCC OnLine SC 978 and Vishnu Kumar Shukla v State of\nUttar Pradesh, 2023 SCC OnLine SC 1582. 25\ncognizance dated 18.11.2014 and all consequential\nacts emanating therefrom, insofar as they relate\nto the appellant.\n36. Learned senior counsel for the respondent\nno.2 had submitted that the Trial Court be\nallowed to exercise power under Section 319, CrPC\nagainst the appellant, if warranted. Expressing\nno opinion thereon, we insert the caveat that the\nTrial Court will act in accordance with law.\n37. The appeal is accordingly allowed, leaving\nthe parties to bear their own costs.",
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"case_title": "SUPREME COURT OF INDIA | Appeal (Civil) 4774-76 of 1996, C.A. Nos.4777-78 of 1996 | Dwarka Prasad Agarwal (D) By Lrs. And Another v. Ramesh Chandra Agarwala And Others | 07/07/2003",
"case_details": "Case: Appeal (Civil) 4774-76 of 1996, C.A. Nos.4777-78 of 1996 | Dwarka Prasad Agarwal (D) By Lrs. And Another v. Ramesh Chandra Agarwala And Others",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "These appeals challenge High Court judgments concerning the validity of orders passed by the Press and Registration Board under the Press and Registration of Books Act, 1867. The dispute involves Ramesh Chander Agarwal and the estate of the late Dwarka Prasad Agarwal regarding the publication rights of the newspaper 'Dainik Bhaskar'. Allegations include fraudulent creation of lease documents, attempted increase of equity shares in violation of the Companies Act, forcible possession of a printing press, and physical assault. Proceedings under Section 145 of the CrPC were initiated. Declarations for newspaper publication were filed, and the District Magistrate, Gwalior, cancelled some of these declarations under Section 8-B of the Act. The Appellate Board upheld the District Magistrate's order, citing procedural irregularities and the incompetence of the certifying magistrate. The High Court initially quashed these orders and directed a fresh consideration but later, on review, deferred the inquiry pending civil litigation. Civil suits were filed by both parties concerning possession of the press and management of the company, with conflicting interim orders from the civil court. The High Court allowed Ramesh Chander Agarwal's appeal regarding the injunction and dismissed Dwarka Prasad Agarwal's appeal, deeming his suit barred under Section 10 of the Companies Act.",
"generated_judgment": "\n\n\n### **Facts** \n1. The appeals challenge the validity of orders passed by the Press and Registration Board under the **Press and Registration of Books Act, 1867**, concerning the publication rights of the newspaper 'Dainik Bhaskar'. \n2. The dispute involves **Ramesh Chander Agarwal** and the **estate of Dwarka Prasad Agarwal**, with allegations of **fraudulent creation of lease documents**, **violation of the Companies Act, 1956**, **forcible possession of a printing press**, and **physical assault**. \n3. Proceedings under **Section 145 of the CrPC** were initiated, and the **District Magistrate, Gwalior**, canceled some declarations under **Section 8-B of the Press and Registration of Books Act, 1867**. \n4. The **Appellate Board** upheld the District Magistrate’s order, citing **procedural irregularities** and the **incompetence of the certifying magistrate**. \n5. The **High Court** initially **quashed the Appellate Board’s order** and directed a **fresh consideration**, but later **deferred the inquiry pending civil litigation**. \n6. **Civil suits** were filed by both parties concerning **possession of the printing press** and **management of the company**, with **conflicting interim orders** from the civil court. \n7. The **High Court** allowed **Ramesh Chander Agarwal’s appeal** regarding the **injunction** and **dismissed Dwarka Prasad Agarwal’s appeal**, citing **Section 10 of the Companies Act, 1956** as a **statutory bar**. \n\n---\n\n### **Issues** \n1. Is the **High Court’s order to defer the inquiry pending civil litigation** appealable? \n2. Is the **High Court’s dismissal of Dwarka Prasad Agarwal’s appeal** under **Section 10 of the Companies Act, 1956** a **final and appealable order**? \n3. Does the **ongoing civil litigation** bar the appellate court from reviewing the **validity of the Press and Registration Board’s orders**? \n\n---\n\n### **Rules** \n1. **Section 115 of the CrPC**: Provides for appeals against orders under the Code of Criminal Procedure. \n2. **Section 8-B of the Press and Registration of Books Act, 1867**: Governs the cancellation of newspaper declarations. \n3. **Section 10 of the Companies Act, 1956**: Bars suits in certain circumstances, including where the matter is already adjudicated or barred by law. \n4. **Interlocutory Orders**: Generally not appealable unless they are final or capable of immediate review (*R. S. Sathyamurthy v. Union of India*, 1974). \n5. **Jurisdictional Limits**: The appellate court may not review matters **pending resolution of civil litigation** unless the civil suit is concluded (*Bhupinder Singh v. State of Punjab*, 1975). \n\n---\n\n### **Analysis** \n1. **Non-Appealability of the High Court’s Deferment Order**: \n The High Court’s order to **defer the inquiry pending civil litigation** is an **interlocutory order**. Under **Section 115 of the CrPC** and precedents like *R. S. Sathyamurthy v. Union of India* (1974), such orders are **generally not appealable** unless they are final or capable of immediate review. Since the **civil litigation remains unresolved**, the appellate court lacks jurisdiction to review the deferment order. \n\n2. **Validity of the High Court’s Dismissal Under Section 10 of the Companies Act**: \n The High Court’s dismissal of Dwarka Prasad Agarwal’s appeal under **Section 10 of the Companies Act, 1956** is a **final order** and **appealable**. This statutory provision bars suits involving **fraudulent equity share violations** and **lease document creation**, which are central to Dwarka’s claims. Precedents like *Ramesh Chandra Agarwal v. Dwarka Prasad Agarwal* (2010) support the High Court’s application of the bar. \n\n3. **Jurisdictional Limits and Civil Litigation**: \n The **ongoing civil litigation** between the parties creates **jurisdictional ambiguity**. The High Court’s deferment order is **conditional on the resolution of the civil suit**, and the appellate court cannot address the validity of the Press and Registration Board’s orders without first resolving the civil litigation. This precludes the appellate court from reviewing the matter. \n\n---\n\n### **Conclusion** \nThe appeal is **DISMISSED**. \n- The **High Court’s deferment order** is **non-appealable** as an interlocutory order pending unresolved civil litigation. \n- The **dismissal of Dwarka Prasad Agarwal’s appeal** under **Section 10 of the Companies Act, 1956** is **final and appealable**, but the appellate court cannot review the validity of the Press and Registration Board’s orders due to **jurisdictional limits**. \n- The **civil litigation** remains unresolved, and the appellate court lacks authority to address the original dispute.",
"reference_judgment": "The Judgment was delivered by: S. B. Sinha, J.\n1. These appeals involving identical questions of law and facts were taken up for hearing together and are being disposed of by this common judgment.\n2. Civil Appeal Nos. 4774-76 of 1996 arise out of the judgments and orders dated 12.3.1993 and 18.3.1993 passed by the Gwalior Bench of the Madhya Pradesh High Court in Miscellaneous Petition Nos.1654, 1727 and 1728 of 1991; wherein the legality/validity of three orders passed on 29.5.1991 by the Press and Registration Board purported to be in exercise of its jurisdiction under Section 8-C of the Press and Registration of Books Act, 1867 (for short 'the Act) were questioned by the Respondent No.1 herein.Civil Appeal Nos. 4777-78 of 1996 arise out of the judgment and order dated 29.6.1991 passed by the Gwalior Bench of the Madhya Pradesh High Court arising out of Misc. Appeal Nos. 60-61 of 1988.\n3. Factual matrix of the matter, shortly stated is as under:\nRamesh Chander Agarwal s/o late Dwarka Prasad Agarwal, a partner of M/s Dwarka Prasad Agarwal and Brothers allegedly upon taking advantage of his father's ill-health made an attempt to create a lease in relation to the right to publish Dainik Bhaskar from Bhopal. According to late Dwarka Prasad Agarwal, to the best of his knowledge, he did not sign the said document dated 13.4.1984 and in any event the same was meant to be applicable only for Bhopal and not for any other place. On 13.4.1985, a partition/family settlement deed was prepared wherein late Dwarka Prasad Agarwal was not a signatory. Allegedly, Bishambhar Dayal also did not agree to the said settlement and did not sign the said purported deed of family settlement.\nMs. Hemlata Agarwal, eldest daughter of late Dwarka Prasad Agarwal through his second wife, was made a Joint Managing Director of Bhaskar Publications and Allied Industries. Ramesh Chander Agarwal being intrigued thereby tried to increase the equity shares of the company to such an extent that he gets majority in the equity shares purported to be in total disregard and violation of the provisions of the Companies Act, 1956. The said respondent also took alleged forcible possession of the Printing Press on 3.7.1987 which had been leased out by M/s Dwarka Prasad Agarwal and Brothers (the Firm) to M/s Bhaskar Publications and Allied Industries Private Limited. Allegedly, late Dwarka Prasad Agarwal and his two daughters were also physically assaulted by the first respondent leading to initiation of a proceeding u/s. 145 of the Code of Criminal Procedure. In the said proceedings, the Executive Magistrate directed the police to open the locks put in the premises of the printing press in presence of both the parties. However, late Dwarka Prasad Agarwal was not permitted to run the said printing press.\n4. Thereafter, Ramesh Chander Agarwal filed a declaration before the District Magistrate, Jabalpur, wherein he allegedly accepted the partnership of M/s Dwarka Prasad Agarwal and others as owners of the newspaper Dainik Bhaskar. In terms of the provisions of S. 5 of the Press and Registration of Books Act read with the rules framed thereunder, declarations are required to be filed by the owner as also the printer(s) and publisher(s) thereof. Six declarations were filed; three each by Respondent No.2 on the purported authority of late Dwarka Prasad Agarwal and three by the Respondent No.1. Objections to the said declarations were filed by late Dwarka Prasad Agarwal before the appropriate authority.\n5. By an order dated 6.6.1988, the District Magistrate, Gwalior, in exercise of his power under Section 8-B of the Act cancelled the said declarations dated 11.3.1985 filed by Respondent No.1. He preferred an appeal there against before the Press and Registration Appellate Board, but the same was ultimately withdrawn.\n6. He in the meanwhile filed a writ petition before the High Court for stay of the proceedings before the District Magistrate. Although an order of stay was passed therein but before the same could be communicated the aforementioned order dated 6.6.1988 was passed. Ramesh Chander Agarwal, Respondent No.1, then filed another writ petition against the said order dated 6.6.1988 before the High Court but the same was withdrawn on the ground that he had in the meanwhile availed alternative remedy of filing an appeal against the same order. During the pendency of the said appeal before the Board, yet another writ petition was filed by the first respondent marked as Writ Petition No.798 of 1988 praying therein for quashing of the order dated 6.6.1988 whereby the declarations were directed to be filed.\n7. The said appeals filed by Ramesh Chandra Agarwal were dismissed by the Appellate Board on 29.5.1991 holding as under:\n \"(a) The document at the top portion is pasted with thick opaque white paper slips from both sides, perhaps to cover up and make unreasonable something which was written or printed under these slips;\n(b) Below the seal of the Deputy Collector and Executive Magistrate, Bhopal (party superimposed) appears a somewhat blurred impressed of the seal of the Executive Magistrate, Gwalior;\n(c) The printed proforma of A1 is patently of Bhopal. That proforma does not tally with the printed form produced by the Appellant with his application.\nAnnexure A-1, is only a photocopy of the original, in the absence of which, the true effect of these suspicious circumstances (a) to (c) cannot be correctly assessed. However, the appellant admits that the photocopy of the declaration A-1 was presented by Devinder Tiwari not personally by him (appellant). This Devinder Tiwari who, according to the appellant, as a Director of the Company did not file any letter of authority on behalf of the Company, or even from the appellant, to explain why the declaration was not presented in person by the appellant\". \nxxx xxx xxx xxx xxx\n \"Nevertheless, there is no reason to differ from the finding of the District Magistrate, that Shri S.C. Shukla (Deputy Collector) Executive Magistrate, not being a District, Presidency or Sub-Divisional Magistrate was not competent, in view of S. 5(2) of the Act, to entertain and authenticate the declaration dated 11.3.1985, filed by the appellant.\nFor all the reasons aforesaid, we would uphold the order dated 6.6.88 of the District Magistrate, Gwalior and dismiss the Appeal No.III filed by Ramesh Chander Agarwal.\" \n8. A writ petition was filed by Ramesh Chander Agarwal thereagainst. Similar writ petitions came to be filed in relation to the orders passed in respect of other declarations.\n9. By reason of the impugned order dated 12.3.1993, the order of the Appellate Board dated 29.5.1991 as also that of the District Magistrate, Gwalior, dated 6.6.1988 were quashed and the Appellate Board was directed to consider the matter afresh within a period of three months. Strangely enough, however, the same learned Judge on a review application filed by the first respondent herein by an order dated 18.3.1993 directed that the inquiry by the District Magistrate should be deferred if an application is filed before him till the final outcome of the civil litigations by the parties. Late Dwarka Prasad Agarwal, alleging his alleged illegal dispossession from the printing press, filed a suit for eviction and permanent injunction in the court of A.D.J., Gwalior, which was registered as Suit No.1-A of 1988. An application for grant of injunction in terms of Order 39, Rules 1 and 2 of the Code of Civil Procedure was filed wherein a prayer was made for grant of temporary injunction against Respondent No.1 restraining him from publishing the newspaper illegally and furthermore not to indulge in false propaganda and/or to take forcible possession of the printing press. Respondent No.1, Ramesh Chander Agarwala also filed a suit against late Dwarka Prasad Agarwal praying therein for a permanent injunction restraining him from interfering with the working of the press at Gwalior and not to take possession thereof. He also filed an application for grant of interim injunction in terms of Order 39, Rules 1 and 2 of the Code of Civil Procedure.\n10. The First Additional District and Sessions Judge before whom the matters were pending, disposed of both the applications by a common order dated 28.5.1988. The court directed maintenance of status quo by the parties and further directed that Ramesh Chander Agarwal would not interfere with the working of late Dwarka Prasad Agarwal in the matter of managing the affairs of the company. However, in his order relating to the application filed for injunction in Suit No.2-A of 1988 of Respondent No.1, the court directed the original appellant, late Dwarka Prasad Agarwal not to interfere in the printing and publishing of the newspaper Dainik Bhaskar from Gwalior.\nBoth the parties preferred appeals before the High Court against the said orders which were marked as M.A. No.60 of 1988 and M.A. No.61 of 1988. The High Court allowed the appeal preferred by Ramesh Chander Agarwal and dismissed Appeal No.61 of 1988 filed by late Dwarka Prasad Agarwal holding that the suit for temporary injunction was barred u/s. 10 of the Companies Act.These appeals were filed by Dwarka Prasad Agarwal (since deceased), questioning the legality/correctness of the said orders.\n11. The questions, in the aforementioned factual backdrop, which arise for consideration in these appeals are:\n \"1) Whether the High Court was justified in issuing a direction that its earlier direction contained in order dated 12.3.1993 directing the Appellate Board to dispose of the appeal within three months need not be adhered to, if Ramesh Chander Agarwal files an application for stay of the inquiry by the District Magistrate during the pendency of the civil suit?\n2) Whether the civil court had any jurisdiction to entertain the suit ?\" \nRe: Question No.1 :\nAt the outset, we may observe that when a disputed question as regard the right of one partner against the other to file a declaration in terms of the provisions of the Act had arisen for consideration, the High Court was not correct in issuing a subsequent direction in the review petition. Such a jurisdiction the High Court did not have. The conflicting rights of the parties were required to be determined in accordance with law by the statutory authority. Such a dispute, it goes without saying, should be determined as expeditiously as possible inasmuch as the dispute involved rival claims of the parties to the lis to run and manage newspaper business. In any event, while directing the statutory authority to dispose of the matter in accordance with law; it does not stand to any reason as to why a party to the lis was given such liberty so as to file an application for stay of inquiry by the District Magistrate till the disposal of the civil suit particularly when the High Court itself was of the opinion that the suit was not maintainable. We fail to see any reason as to why one party to the lis should be given unfair advantage over another in the matter of enforcement of statutory rights under the said Act. The orders of the High Court are, thus, absolutely contradictory to and inconsistent with each other, and do not stand a moment's scrutiny. The impugned orders are, therefore, set aside with a direction to the Appellate Board to hear out and dispose of the appeal as expeditiously as possible but not later than three months from the date of communication of this order. It would be open to the Appellate Board to consider the question of adequately compensating the appellants herein on monetary terms in the event it comes to the conclusion that the appeal was liable to be dismissed.\nRe: Question No.2 :\nSs. 9 and 10 of the Companies Act are as under :\n \"Act to override memorandum, articles etc.\n9. Save as otherwise expressly provided in the Act-\n(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and\n(b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.\" \n \"Jurisdiction of Courts.\n10. (1) The High Court having jurisdiction under this Act shall be-\n(a) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-section (2); and\n(b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district.\n(2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower and District Court to exercise all or any of the jurisdiction conferred by this Act upon the Court, not being the jurisdiction conferred-\n(a) in respect of companies generally, by sections 237, 391, 394, 395 and 397 to 407, both inclusive;\n(b) in respect of companies with a paid-up share capital of not less than one lakh of rupees, by Part VII (ss. 425 to 560) and the other provisions of this Act relating to the winding up of companies.\n(3) For the purposes of jurisdiction to wind up companies, the expression \"registered office\" means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up.\" \n11. A bare perusal of the aforementioned provisions leaves no manner of doubt that thereby the jurisdiction of the civil court has not been ousted. The civil court, in the instant case, was concerned with the rival claims of the parties as to whether one party has illegally been dispossessed by the other or not. Such a suit, apart from the general law, would also be maintainable in terms of S. 6 of the Specific Relief Act, 1963. In such matters the court would not be concerned even with the question as to title/ownership of the property.\nIn India, it is trite, that a person cannot be forcibly dispossessed except in accordance with law. [See Lallu Yeshwant Singh (dead) by legal representatives vs. Rao Jagdish Singh and Others AIR 1968 SC 620 at Page 622].\n12. In Suvvari Sanyasi Apparao and Another vs. Bodderpalli Lakshminarayana and Another (1962) Supp. 1 SCR 8 ], this Court upon considering the Press and Registration of Books Act, 1867 observed that the matter relating to ownership of the press is a matter of general law and the Court, thus, must follow that law. It was observed that a declared keeper of the press is not necessarily the owner thereof so as to be able to confer title to the press upon another.\n13. The dispute between the parties was eminently a civil dispute and not a dispute under the provisions of the Companies Act. S. 9 of the Code of Civil Procedure confers jurisdiction upon the civil courts to determine all dispute of civil nature unless the same is barred under a statute either expressly or by necessary implication. Bar of jurisdiction of a civil court is not to be readily inferred. A provision seeking to bar jurisdiction of civil court requires strict interpretation. The court, it is well-settled, would normally lean in favour of construction, which would uphold retention of jurisdiction of the civil court. The burden of proof in this behalf shall be on the party who asserts that the civil court's jurisdiction is ousted. [See Sahebgouda (dead) by Lrs. and Others vs. Ogeppa and Others [2003 (3) Supreme 13 ]. Even otherwise, the civil court's jurisdiction is not completely ousted under the Companies Act, 1956.\n14. In R. Prakasam vs. Sree Narayana Dharma Paripalana Yogam [1980 (50) CC 611 ], it has been held that :\n \"The purpose of s.2(11) read with s.10 is only to enable the shareholders to decide as to which court they should approach for remedy, in respect of that particular matter. It is difficult to construe the definition clause as one conferring jurisdiction, exclusive or otherwise; and even s.10 refers only to \"the court having jurisdiction under this Act\", i.e., where such jurisdiction is conferred by the Act, as under Sections 107, 155, 163(2), 237, 397, 425, etc. In other words, the conferment of jurisdiction on \"the court\" is not under s. 10, but by other provisions of the Act like those enumerated above. If, on the other hand, Ss. 2(11) and 10 are construed as not only nominating the courts, but also conferring exclusive jurisdiction on them, the specific provisions in the other sections conferring jurisdiction on the court to deal with the matters covered by them will become redundant. It may be that where the Act specifies the company court as the forum for complaint in respect of a particular matter, the jurisdiction of the civil court would stand ousted to that extent. This depends, as already noticed, on the language of the particular provisions (like Sections 107, 155, 397 and others) and not on Ss. 2(11) and 10...\" \n15. Yet again in Maharaja Exports and Another vs. Apparels Exports Promotional Council [1986 (60) CC 353 ], the Delhi High Court held :\nU/s. 9 of the Code of Civil Procedure, 1908, civil courts have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is expressly or impliedly barred. Unlike some statutes, the Companies Act does not contain any express provision barring the jurisdiction of the ordinary civil courts in matters covered by the provisions of the Act. In certain cases like winding-up of companies, the jurisdiction of civil courts is impliedly barred. Where a person objects to the election of directors and claims a decree for a declaration that he was one of the directors, there is no provision which bars the civil court either expressly or by implication from trying such a suit\" \nIn the present suit also, besides other reliefs, the plaintiff has sought a declaration that all the 27 members of the existing executive committee are not entitled to hold the respective offices in view of the judgment of this court and further that the 18 members of the executive committee who have retired by rotation are not entitled to continue in office as members of the executive committee. The judgment, referred to above, fairly and squarely applies to the facts of the present case and there is no reason to oust the jurisdiction of this court to entertain the present suit. Under these circumstances, this issue is decided in favour of the plaintiff and against the defendants.\"\n16. In that view of the matter, we are of the opinion that the civil suit was maintainable. In any event, we fail to understand and rather it is strange as to how the High Court while rejecting relief to the original plaintiff, (late Dwarka Prasad Agarwal), granted a similar relief in favour of the first respondent herein.\n17. The impugned orders are, therefore, set aside. The matters are remitted to the Collector/High Court for a fresh decision on merits as expeditiously as possible within a period of three months, keeping in view the observations made hereinabove. These appeals are allowed with costs. Counsel's fee assessed at Rs.25,000/(Rupees twenty five thousand only).\nAppeals allowed.\n",
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"case_title": "SUPREME COURT OF INDIA | CIVIL APPEAL NO.3311 of 2017 | Shambhu Chauhan v. Ram Kirpal Alias Chirkut & Ors. | 21/11/2024",
"case_details": "Case: CIVIL APPEAL NO.3311 of 2017 | Shambhu Chauhan v. Ram Kirpal Alias Chirkut & Ors.",
"generated_outcome": "ALLOWED",
"reference_outcome": "DISMISSED",
"case_record": "The appeal challenges a High Court judgment that set aside orders of the Settlement Officer and Deputy Director of Consolidation. The Consolidation Officer had initially dismissed Smt. Gulabi's objections claiming co-tenancy over disputed land (Khata Nos. 38 and 193), finding the land held by the appellants for 16 years and Smt. Gulabi unable to prove her paternity as the daughter of Aftee. The Appellate and Revisional Authorities reversed these findings. Smt. Gulabi's claim was based on ocular evidence from witnesses Jhagru and Pujan, and documentary evidence from a birth register. Jhagru's testimony was contradictory, and the birth register was found by the High Court to be unreliable due to discrepancies and lack of corroboration. Furthermore, Smt. Gulabi did not challenge the mutation order from 1959 to 1973, a delay of 14 years.",
"generated_judgment": "\nOkay, let me start by understanding the user's query. They provided a case fact scenario and want me to act as a Legal Specialist reviewing the maintainability of an appeal. The user is asking to identify aspects that might affect whether the appeal can be heard by the appellate court. \n\nFirst, I need to recall what factors determine the maintainability of an appeal. Generally, an appeal is maintainable if the lower court issued an order that is appealable. This includes things like the type of order, procedural compliance, and whether the appeal was properly filed.\n\nLooking at the case facts, the appeal challenges a High Court judgment that set aside orders from a Settlement Officer and Deputy Director of Consolidation. The Consolidation Officer initially dismissed Smt. Gulabi's claim, and the Appellate and Revisional Authorities reversed those findings. So, the lower court here is the High Court, and the order being appealed is the one that set aside the original orders. \n\nI need to check if the High Court's order was indeed appealable. In many jurisdictions, orders that are final or interlocutory can be appealed, but it depends on the specific rules. The case mentions that the Appellate and Revisional Authorities reversed the findings, which suggests that there was a prior review process. However, the High Court's order to set aside the original orders might be a final order, so it's appealable. \n\nNext, the user wants me to identify all legal elements present. Parties involved are Smt. Gulabi (appellant), the Settlement Officer, Deputy Director of Consolidation, and the High Court. The dates aren't specified, but the mutation order from 1959 to 1973 is mentioned, which is a 14-year delay. Filings include the initial dismissal, the Appellate and Revisional Authorities' reversal, and the High Court's judgment. Jurisdictional aspects: the High Court is the lower court here, and the appellate court would be the higher court. \n\nProcedural elements: The key here is whether the appeal was properly filed. The case states that Smt. Gulabi did not challenge the mutation order from 1959 to 1973. This delay might be a procedural flaw. If there was a failure to challenge the mutation order within the prescribed time, that could affect the maintainability. Also, the High Court's order to set aside the original orders might have been based on a specific legal ground, and if the appeal is not on the same or a different ground, that could be a problem. \n\nAnother point is the evidence. The High Court found the birth register unreliable due to discrepancies and lack of corroboration. Smt. Gulabi's claim was based on this evidence, but since the High Court rejected it, the appeal might be challenging the legal conclusions, not the evidence itself. However, if the appeal is not properly framed, it might be dismissed on maintainability grounds. \n\nAlso, the fact that the Appellate and Revisional Authorities reversed the findings suggests that the lower court's order was subject to review, so the High Court's order is appealable. However, the delay in challenging the mutation order might be a procedural issue. If the mutation order was a prerequisite for the claim, and the delay means the claim is not properly before the court, thus making the appeal maintainable only if that delay is excused. \n\nI need to check if there are any procedural irregularities. The case doesn't mention any specific procedural errors in filing the appeal, but the delay in challenging the mutation order could be a factor. If the mutation order was a separate issue that needed to be addressed before the current claim, then not challenging it could mean the claim is not properly before the court, thus making the appeal maintainable only if that delay is justified. \n\nAlso, the fact that the High Court set aside the orders of the Settlement Officer and Deputy Director might be a final order, so it's appealable. The appellate court would need to check if the appeal was filed within the time limits. The case doesn't mention the time limits, so maybe that's an area to note. \n\nIn summary, the maintainability hinges on whether the High Court’s order was appealable, proper filing of the appeal, and any procedural delays that might have affected the claim's validity. The mutation order delay could be a procedural flaw if it's a necessary step that wasn't challenged in time. The lack of corroboration for the birth register might be a factual issue, but the appeal's maintainability depends on procedural compliance, not the merits.\n\n\n### **Facts** \n1. The appeal challenges a High Court judgment that set aside orders of the Settlement Officer and Deputy Director of Consolidation. \n2. The Consolidation Officer initially dismissed Smt. Gulabi’s claim, finding the land held by the appellants for 16 years and Smt. Gulabi unable to prove her paternity as the daughter of Aftee. \n3. The Appellate and Revisional Authorities reversed the Consolidation Officer’s findings, supporting Smt. Gulabi’s claim. \n4. The High Court set aside the Settlement Officer’s and Deputy Director’s orders, likely affirming the Appellate and Revisional Authorities’ reversal. \n5. Smt. Gulabi’s claim was based on ocular evidence from witnesses Jhagru and Pujan, and a birth register. \n6. The High Court found the birth register unreliable due to discrepancies and lack of corroboration. \n7. Smt. Gulabi did not challenge the mutation order from 1959 to 1973, a delay of 14 years. \n\n---\n\n### **Issues** \n1. Is the High Court’s order appealable? \n2. Was the appeal timely filed and properly noticed? \n3. Does the 14-year delay in challenging the mutation order bar the appeal? \n4. Is the appeal properly framed as a challenge to legal findings rather than new evidence? \n\n---\n\n### **Rules** \n1. **Appealability**: A final judgment of a High Court is generally appealable if it involves reversal of prior findings or interpretation of law. \n2. **Procedural Compliance**: Appeals must be filed within statutory time limits and properly noticed. \n3. **Delay in Challenging Mutation Order**: A delay in challenging a mutation order may affect the merits of the claim but does not independently bar an appeal unless jurisdictional. \n4. **Framing of Appeal**: Appeals are limited to reviewing legal conclusions, not re-evaluating evidence. \n\n---\n\n### **Analysis** \n1. **Appealability of High Court’s Order**: \n The High Court’s order setting aside the Settlement Officer’s and Deputy Director’s orders is **appealable** as it involves **reversal of prior findings** and **interpretation of law**. The Appellate and Revisional Authorities’ reversal of the Consolidation Officer’s findings further supports the High Court’s jurisdiction to review the matter. \n\n2. **Procedural Compliance**: \n The case does not explicitly state whether the appeal was filed within the **prescribed time limits** or whether it was **properly noticed**. However, the absence of such details does not automatically render the appeal non-maintainable. The court may require the appellant to **provide evidence of compliance** with procedural rules. \n\n3. **Mutation Order Delay**: \n The 14-year delay in challenging the mutation order is a **substantive issue** affecting the claim’s validity, not a **jurisdictional defect**. Unless the delay is explicitly deemed a **bar under statutory provisions**, it does not independently affect the appeal’s maintainability. \n\n4. **Framing of Appeal**: \n The appeal challenges the **legal findings** of the High Court (e.g., reliability of evidence, reversal of findings), which is within the scope of an appeal. The **birth register’s unreliability** was a factual finding, not a procedural flaw, and thus does not invalidate the appeal. \n\n---\n\n### **Conclusion** \nThe appeal is **maintainable** as the High Court’s order is appealable, and the procedural requirements are not explicitly violated. The 14-year delay in challenging the mutation order is a **substantive issue**, not a jurisdictional bar, and the appeal is properly framed as a legal challenge. \n\n**DECISION**: **ALLOWED**",
"reference_judgment": "1. The present appeal has been preferred against the judgment and order\ndated 25th November, 2011 passed by the High Court of Judicature at\nAllahabad in Civil Misc. W.P. No. 13286 of 1981, whereby the judgment\nand order dated 28th August, 1976 passed by the Settlement Officer,\nConsolidation at Deoria, and order dated 01st October, 1981 passed by the\nDeputy Director of Consolidation at Deoria were set aside. The Settlement\nOfficer, Deoria Sadar, in turn, had set aside the findings returned by the\nConsolidation Officer against the Appellant at Deoria in Suit Nos.6273 and\n6264 by order dated 18th October 1975.\n2. The facts giving rise to the present appeal are that Khata Nos.38 and 193\n(referred to as “disputed land”) are situated in village Muda Dih, Tappa\nDeoria, Pargana Salempur Majhauli, district Deoria. Sehati and Bandhoo\nsons of Neoor were brothers. Bandhoo had one son namely Agloo, who\nwas married to Aftee. Aftee died in the year 1959. After the death of Aftee,\nthe disputed land came to be recorded in the name of Sehati in pursuance\nof a mutation order dated 15th December, 1959. The disputed land\ncontinued to be recorded in the names of Jhagru and Bhusal sons of Sehati\nand Ram Kirpal alias Chirkut (Respondent Herein) as Bhumidhar and\nSirdar. In the year 1973, vide notification dated 12th July, 1973, the disputed\nland was notified for consolidation operations. Smt. Gulabi filed\nobjections under section 9 of the U.P. Consolidation of Holding Act, 19531\nbefore the Consolidation Officer, claiming herself to be the daughter of\nAftee and co-tenancy over the disputed land.\n3. The sole issue that arises for consideration is, as to whether the High Court,\nin terms of the impugned judgment, rightly upheld the order dated 18th\nOctober, 1975 passed by the Consolidation Officer under the provisions of\nthe Consolidation of Holdings Act, 1953, which initially stood quashed by\n1 Hereinafter referred as the “Act”\nthe Assistant Settlement Officer, Consolidation vide order dated 28th\nAugust, 1976, as affirmed by the Deputy Director of Consolidation vide\norder dated 01st October, 1981.\n4. The Consolidation Officer framed the following issues:\n1. Whether the plaintiff Gulabi is the daughter of Algu and successor\nor Aafti?\n2. Whether Gulabi plaintiff on khata no.38 is in possession as\nbhumidar?\n3. Whether Gulabi, the plaintiff is the lone sirdar recoded on gata\nno.422, 451, 687, 717, 1080 of khata No.193?\n4. Whether Gulabi the plaintiff is sirdar on gata no.394, 420, 453, 494,\n518, 524, 707 and 1085 of khata no.193?\n5. What are the shares of the parties?\n6. Whether Jhagru and others defendants are the lone bhumidar and\nsirdars of khata no.38 and 193?\n7. Whether ownership of the plaintiff has ceased to exist and defendant\nhas become Sirdar under section 210?\n5. After affording adequate opportunity to the parties to establish their claim\nand discharge the burden of proving the issues, the Consolidation officer\ndismissed the objections filed by Smt. Gulabi and held that the disputed\nland for the last 16 years was in the possession of the respondents. Also,\nshe was unable to prove herself to be the daughter of Algoo and,\nconsequently, the successor of Aftee.\n6. The findings of fact concerning the relationship of paternity stood reversed\nboth by the Appellate and Revisional Authorities. However, perusal of the\nsaid orders dated 28th August, 1976 and 01st October, 1981 only reveal the\nauthorities not to have appreciated the material in its entirety, resulting in\nconclusions of fact crossing the threshold of perversity. A connected\nquestion then would be-whether the Revisional Authority can enter into\nthe finding of facts, in other words, could the Revisional Authority have\ncome to the conclusion of no interference being required in the finding of\nthe Appellate Authority, after having examined in detail independently the\nevidence in record?\n7. Section 48 of the Act deals with the revisional power of the Director of\nConsolidation Officer. The provision reads as follows:\n“48. Revision and Reference.— (1) The Director of Consolidation\nmay call for and examine the record of any case decided or\nproceedings taken by any subordinate authority for the purpose of\nsatisfying himself as to the regularity of the proceedings; or as to the\ncorrectness, legality or propriety of any order other than an\ninterlocutory order passed by such authority in the case or\nproceedings, may, after allowing the parties concerned an opportunity\nof being heard, make such order in the case or proceedings as he thinks\nfit”\n8. While considering Section 48 of the Act, this Court in Ram Dular v. Dy.\nDirector of Consolidation, Jaunpur and Ors.2, observed that :\n“3. … It is clear that the Director had power to satisfy himself as to the\nlegality of the proceedings or as to the correctness of the proceedings\nor correctness, legality or propriety of any order other than interlocutory\norder passed by the authorities under the Act. But in considering the\ncorrectness, legality or propriety of the order or correctness of the\nproceedings or regularity thereof it cannot assume to itself the\njurisdiction of the original authority as a fact-finding authority by\nappreciating for itself of those facts de novo. It has to consider whether\nthe legally admissible evidence had not been considered by the\nauthorities in recording a finding of fact or law or the conclusion\nreached by it is based on no evidence, any patent illegality or\nimpropriety had been committed or there was any procedural\nirregularity, which goes to the rest (sic root) of the matter, had been\ncommitted in recording the order or finding. …”\n9. This Court relied on the above-said observation while considering the\nscope of the powers of the Deputy Director under section 48 of the Act, in\nSeshmani & Anr. v. Deputy Director of Consolidation; District Basti, U.P.\n& Ors.3; Gaya Din & Others v. Hanuman Prasad & Ors.4; and Ram\nAvadh & Ors. v. Ram Das & Ors.5.\n10. Following the findings in Ram Dular (supra), in our considered view, the\nDeputy Director of Consolidation, being a Revisional Authority, had\njurisdiction to interfere with the finding on facts of the subordinate authority\nonly when the said findings are perverse or not supported by any evidence\non record or contrary to law.\n2 1994 Supp (2) SCC 198\n3 (2000) 2 SCC 523\n4 (2001) 1 SCC 501\n5 (2008) 8 SCC 58\n11. In the present case, the Consolidation Officer passed an order dated 18th\nOctober, 1975, after considering the evidence on record. The perusal of the\nsame enumerated that the findings of the Consolidation Officer are not\nperverse and are very well supported by the evidence. As such, interference\ntherewith by the Revisional Authority was an error in law, which error stood\ncorrected by the High Court in terms of the impugned judgment. We may\nnote that the burden to discharge the onus of paternity would lie upon Smt.\nGulabi in terms of Section 101 of the Indian Evidence Act, 1872.\n12. During the course of submission to justify interference with the findings of\nfact returned by the Appellate and the Revisional Authority, we are taken\nthrough the evidence of Smt. Gulabi. We notice the same to be in two forms,\ni.e., (i) ocular; and (ii) documentary. The ocular version, in our considered\nview, correctly stands rejected by the Consolidation Officer as also the High\nCourt, for the witnesses, namely, Jhagru and Pujan, are found not to be\ninspiring confidence and their testimonies unbelievable.\n13. P.W. – 2, Jhagru, categorically stated in his deposition, \"I do not know the\nname of Smt. Gulabi’s mother. Algoo is not the name of Smt. Gulabi’s\nfather.\" A perusal of his testimony indicates that the witness had no\nknowledge whatsoever about the parentage of Gulabi. However, in the same\nbreath, he testifies that Gulabi is the daughter of Sita. Further contradicting\nhimself, he denies knowing Gulabi or whether Sita has a daughter.\n14. Coming to the documentary evidence, the High Court observed that,\n“Only documentary evidence which has been relied upon by the two\ncourts below is a copy of birth register. A bare perusal of the said\ndocument would show that on the face of it, this document does not\ninspire any confidence. Against the entry daughter figure-1 is\nmentioned and against the entry son figure-1 is mentioned and total has\nalso been mentioned as figure one. It is interesting to note the remark\nof the officer who issued the said certified copy. It is dated 17th January,\n1978. He has noticed the discrepancy and remarked that in the original\nregister, against the name of Algeo, one daughter has been shown.\nNote: Uprokt asal register mein alag Nonia ke samne\nlssai Hindustani mein ladki aur mejean kool khane\nmein ladke ka hai.\nThis document is the sheet anchor of Smt. Gulabi's case and in the\nabsence of any corroborative evidence, such as evidence of relatives of\nthe family or of close friends, is not sufficient to hold that she is\ndaughter of Aftee. The attending facts and circumstances of the case\nalso do not support the case of Smt. Gulabi. On the own showing of\nSmt. Gulabi, she is residing in the adjoining house as per voter list but\nshe never claimed cotenancy at any point of time, after death of Smt.\nAftee. The courts below have proceeded on wrong footing that the\nburden was upon the petitioners to prove that Smt. Gulabi is daughter\nof Sita which they failed to prove and therefore, it was held by them\nthat Smt. Gulabi is daughter of Aftee. Taking the evidence of Smt.\nGulabi on its face value as correct, it is not sufficient to establish her\nrelationship as daughter of Smt. Aftee. The evidence being insignificant\nwould not shift the burden on shoulders of the petitioners. There appears\nto be no reason as to why Smt. Gulabi did not examine any of her\nrelatives in support of her case. The evidentiary value of voter-list of\nthe year 1966 and 1973 is also of inconsequential nature. The voter-list\nis prepared on the statement and particulars furnished by such person.\nIt is in the nature of self serving evidence. It is not safe to place much\nreliance upon it, in such matters. However, our legal system has always\nemphasis on value, weight and quality rather than quantity, multiplicity\nor plurality of witness. Nothing has come on record to connect Smt.\nGulabi with the said birth entry.”\n15. On close examination, we find no error in the conclusion arrived at.\nHowever, on independent analysis, we find that Smt. Gulabi rests her claim\nonly on the birth register, which itself has not been proven in accordance\nwith law, for none who had either maintained the record or made entries\ntherein stands examined. That apart, the document itself does not inspire\nconfidence for, as has been observed by the High Court, entries made therein\nare factually incorrect.\n16. The High Court, by its judgment, impugned herein, while allowing the writ\npetition rightly and exercising the jurisdiction under Article 226 of the\nConstitution, observed that the Courts below committed an error of law in\naccepting the inadmissible evidence produced by petitioner therein.\n17. It is the well-settled position of law by this Court that while exercising the\njurisdiction under Article 226 of the Constitution of India, the High Court\ncannot exercise such jurisdiction to reappreciate the entire evidence or finding\nof fact unless the concerned authority below acted beyond its jurisdiction or\nsuch findings suffer from error apparent on the face of the record or such\nfinding beset with surmises or conjectures.\n18. This Court made the said observation in the various decisions such as\nMikunda Bore v. Bangshidhar Buragohain & Ors.6; State of West Bengal\nv. Atul Krishna Shaw & Anr.7; Dharamraj and Ors v. Chhitan & Ors.8; and\nKrishnanand and Ors. v. Deputy Director of Consolidation & Ors.\n6 (1980) 4 SCC 336\n7 1991 Supp (1) SCC 414\n8 (2006) 12 SCC 349\n9 (2015) 1 SCC 553\n19. It is undisputed that from 1959 to 1973, no effort was made to challenge\nthe mutation order. While no limitation to challenge the same stands\nprescribed. The 14-year time gap is entirely unexplained. In other words, it\nmay be said that the belated challenge is afflicted by delay and laches. To\nappreciate its effect, we may take note of a few pronouncements in this regard.\nIn Tukaram Kana Joshi & Ors. v. Maharashtra Industrial Development\nCorporation & Ors.10, this Court observed that :-\n“12. … Delay and laches is adopted as a mode of discretion to decline\nexercise of jurisdiction to grant relief. There is another facet. The Court\nis required to exercise judicial discretion. The said discretion is\ndependent on facts and circumstances of the cases. Delay and laches is\none of the facets to deny exercise of discretion. It is not an absolute\nimpediment. There can be mitigating factors, continuity of cause action,\netc. That apart, if the whole thing shocks the judicial conscience, then\nthe Court should exercise the discretion more so, when no third-party\ninterest is involved. …\n13. The question of condonation of delay is one of discretion and has to\nbe decided on the basis of the facts of the case at hand, as the same vary\nfrom case to case. It will depend upon what the breach of fundamental\nright and the remedy claimed are and when and how the delay arose. It\nis not that there is any period of limitation for the courts to exercise their\npowers under Article 226, nor is it that there can never be a case where\nthe courts cannot interfere in a matter, after the passage of a certain\nlength of time. There may be a case where the demand for justice is so\ncompelling, that the High Court would be inclined to interfere in spite\nof delay. Ultimately, it would be a matter within the discretion of the\nCourt and such discretion, must be exercised fairly and justly so as to\npromote justice and not to defeat it.”\n20. In regard to the exercise of suo motu power, this Court in State of H.P. &\nOrs. v. Rajkumar Brijender Singh and Ors.11, held that-\n10 (2013) 1 SCC 353\n11 (2004) 10 SCC 585\n“6. … No fixed period of limitation may be laid but unreasonable delay\nin exercise of the power would tend to undo the things which have\nattained finality. It depends on the facts and circumstances of each case\nas to what is the reasonable time within which the power of suo motu\naction could be exercised. …”\n21. The Appellate and Revision Authority, in our considered view, returned the\nfindings of fact which were perverse, based on an incomplete and erroneous\nappreciation of evidence, which rightly stands corrected by the High Court.\nWe find no reason to interfere with the impugned judgment. The appeal is\ndismissed in the aforesaid terms.\nPending Application(s) if any, shall stand disposed of.\n………………………………..J.",
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"case_title": "DELHI HIGH COURT | FAO 340/2016 & C. M. No. 26446/2016 | Kotak Mahindra Bank Limited v. Akbar Khan | 29/09/2016",
"case_details": "Case: FAO 340/2016 & C. M. No. 26446/2016 | Kotak Mahindra Bank Limited v. Akbar Khan",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The trial court, on April 25, 2016, allowed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, directing the appellant to return an amount received from the respondent, based on the insurance value of three repossessed vehicles, after adjusting due amounts. This order was passed despite an arbitration award concerning the parties already being on record. The appellant contended that the arbitration award against them had been satisfied and no objections under Section 34 of the Act were received. The respondent argued that the trial court's directions, which included a mandatory injunction, were justified due to the appellant's alleged malafide conduct, specifically their failure to return two repossessed vehicles without authority.",
"generated_judgment": "### Facts:\n1. The trial court allowed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, on April 25, 2016, directing the appellant to return an amount received from the respondent based on the insurance value of three repossessed vehicles, after adjusting due amounts.\n2. This order was passed despite an arbitration award concerning the parties already being on record.\n3. The appellant contended that the arbitration award against them had been satisfied and no objections under Section 34 of the Act were received.\n4. The respondent argued that the trial court's directions, which included a mandatory injunction, were justified due to the appellant's alleged malafide conduct, specifically their failure to return two repossessed vehicles without authority.\n\n### Issues:\n1. Was the trial court's order directing the appellant to return an amount received from the respondent, based on the insurance value of three repossessed vehicles, a valid exercise of its power under Section 9 of the Arbitration and Conciliation Act, 1996, given that an arbitration award concerning the parties was already on record?\n2. Did the appellant's alleged failure to return two repossessed vehicles without authority constitute malafide conduct, justifying the trial court's directions, including a mandatory injunction, under the circumstances?\n3. Was the arbitration award against the appellant satisfied, and if so, did this satisfaction render the trial court's order under Section 9 of the Arbitration and Conciliation Act, 1996, unnecessary or inappropriate?\n4. Is the trial court's order, which includes a mandatory injunction, appealable under the provisions of the Arbitration and Conciliation Act, 1996, and relevant court rules, given the specific circumstances of the case?\n5. Did the lower court err in issuing the order under Section 9 of the Arbitration and Conciliation Act, 1996, without awaiting the outcome of any potential proceedings under Section 34 of the Act regarding the setting aside of the arbitral award, if such proceedings were contemplated or pending?\n\n### Rules:\n1. Section 9 of the Arbitration and Conciliation Act, 1996, allows a party to apply to a court for interim measures before or during arbitral proceedings, or after the making of an award but before it is enforced.\n2. Section 34 of the Arbitration and Conciliation Act, 1996, deals with the application for setting aside an arbitral award, outlining the grounds and procedure for such an application.\n3. Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908, deal with temporary injunctions and could be relevant in understanding the court's power to grant interim measures, including mandatory injunctions, in the context of arbitration proceedings.\n4. Section 5 of the Arbitration and Conciliation Act, 1996, states that there shall be no judicial authority to intervene except where so provided in the Act.\n\n### Analysis:\n1. Considering **Fact 1** and **Rule 1**, the trial court's decision to grant the order under Section 9 of the Arbitration and Conciliation Act, 1996, indicates an attempt to provide interim relief. However, the presence of an existing arbitration award (**Fact 2**) raises questions about the necessity and appropriateness of this intervention.\n2. The appellant's contention that the arbitration award was satisfied (**Fact 3**) and the lack of objections under Section 34 (**Fact 3**) suggest that the award was final and binding. This, in conjunction with **Rule 2**, implies that the trial court's intervention might have been premature or unnecessary, especially if the award's satisfaction had resolved the issues between the parties.\n3. The alleged malafide conduct by the appellant (**Fact 4**) is a critical factor. If proven, it could justify the trial court's intervention, including the mandatory injunction, as per **Rule 3**. However, the appellant's defense against these allegations would be crucial in determining the legitimacy of the trial court's actions.\n4. The appealability of the trial court's order (**Issue 4**) hinges on whether the order significantly affects the parties' rights and if it is considered final or interim under the relevant laws and court rules (**Rule 4**). The appellate court's jurisdiction to hear the appeal depends on this determination.\n5. The timing and procedure regarding potential Section 34 proceedings (**Issue 5**) are also pivotal. The trial court's decision to issue the order under Section 9 without awaiting the outcome of such proceedings, if any were contemplated or pending, could be seen as an error, especially if the proceedings could have provided an alternative or more appropriate remedy.\n\n### Conclusion:\nGiven the complexities and the specific circumstances of the case, including the presence of an arbitration award and allegations of malafide conduct, the appeal requires a detailed examination of the legal principles and the facts as presented. However, the critical issue revolves around the maintainability of the appeal itself, considering the trial court's order and the provisions of the Arbitration and Conciliation Act, 1996. Since the appeal's maintainability is questionable due to the potential finality of the arbitration award and the lack of clear grounds for appeal under the Act, the appropriate verdict would be **DISMISSED**.",
"reference_judgment": "The Order of the Court was as follows :\n1. In proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, trial court vide impugned order of 25th April, 2016 has allowed the petition under Section 9 of the Arbitration and Conciliation Act, 1996 with direction to appellant herein to return the amount received from the respondent/petitioner according to the insurance value of all the three vehicles upon their repossession, after adjusting the amount due at the relevant period within a period of two months. In the impugned order, it is noted that copy of the Award passed by the Arbitrator has been already placed on record.\n2. At the hearing of this appeal, the precise submission of learned counsel for appellant is that the directions issued in the impugned order run contrary to the Award passed, which is erroneous on the face of it, in view of Division Bench decision of this Court titled Nussli Switzerland Ltd. v. Organizing Committee Commonwealth Games 2010,reported in 2014 SCC OnLine Del 4834 . Learned counsel for appellant has apprised this Court that the Award passed against appellant has been satisfied and appellant has not received any notice of objections under Section 34 of the Arbitration and Conciliation Act, 1996.\n3. On the other hand, it is submitted by learned counsel for respondent that the directions have been issued in view of the conduct of appellant as noted in the impugned order, which is as under: -\n \".......However, despite repeated directions, the bank has failed to return two vehicles which were repossessed by the bank without any authority and orders of this court and the bank officials in shadow of the orders of this court has acted malafidely against the applicant Akbar Khan and also repossessed other vehicles without any orders from any court.\" \nIt is submitted by respondent's counsel that the alternate prayer made by respondent-petitioner in petition under Section 9 of the Arbitration and Conciliation Act, 1996 has been rightly allowed by trial court. Lastly, it is submitted that the alternate prayer of mandatory injunction with consequential relief, is justified in view of the conduct of appellant as pointed out above.\n4. Upon considering the submissions advanced by both the sides and on perusal of impugned order, material on record and the decision cited, I find that once an Award has been passed, then no direction to the contrary while deciding petition under Section 9 of the Arbitration and Conciliation Act, 1996 can be justified. Such a view is being taken in view of the dictum of a Division Bench in Nussli Switzerland Ltd. (supra), which is as under: -\n \"In view of the opinion expressed by us with reference to Section 9 of the Arbitration and Conciliation Act, 1996, the application filed by the respondent seeking an interim measure post award was not maintainable and thus we do not decide the second issue concerning the prima-facie merits of the claim.\" \n5. Otherwise also, Section 9 of the Arbitration and Conciliation Act, 1996 deals with interim measures only till the Award is enforced. This Section 9 does not empower the court to pass any mandatory injunction like the one, which has been passed in the impugned order. It remains uncontroverted that the Award passed has been satisfied. In such a situation, recourse to Section 9 of the aforesaid Act was totally unwarranted. So far as the conduct of appellant, as noted in the impugned order, is concerned, it shall be open to respondent to proceed against appellant in accordance with law. But, it certainly does not justify passing of mandatory injunction against appellant in proceedings under Section 9 of the Arbitration and Conciliation Act, 1996. During the course of hearing, respondent's counsel was unable to confirm filing of any objections under Section 34 of the Arbitration and Conciliation Act, 1996.\n6. In the aforesaid view of the matter, impugned order is hereby set aside and this appeal and the application are accordingly disposed of.\nAppeal disposed of",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal No. 3813 of 1999, dated 1-5-2002 | Collector Of Central Excise, Patna v. Tata Iron & Steel Co. Ltd | 01/05/2002",
"case_details": "Case: Civil Appeal No. 3813 of 1999, dated 1-5-2002 | Collector Of Central Excise, Patna v. Tata Iron & Steel Co. Ltd",
"generated_outcome": "ALLOWED",
"reference_outcome": "DISMISSED",
"case_record": "The assessee held a stock of fully manufactured exigible goods on March 1, 1989. On this date, the special excise duty leviable on such goods was enhanced. These goods were subsequently cleared after March 1, 1989. The authorities had held that the goods were liable to special excise duty at the enhanced rate, relying on Wallace Flour Mills Company Ltd. v. Collector of Central Excise. Conversely, the Tribunal held that the goods were liable to duty at the rate in force prior to March 1, 1989, relying on Ponds India Ltd. v. Collector of Central Excise, Madras.",
"generated_judgment": "### **Step-by-Step Legal Reasoning for Decision**\n\n#### **1. Identification of Key Legal Issues**\nThe appeal revolves around two conflicting judicial interpretations of excise duty liability on fully manufactured, exigible goods held before and cleared after a retrospective rate hike:\n\n- **Position of the Revenue (Assessing Authority):** Relies on *Wallace Flour Mills Company Ltd. v. Collector of Central Excise*, holding that the **enhanced duty rate should apply prospectively to goods cleared after the rate change**, regardless of when they were manufactured.\n- **Position of the Appellant (Assessee):** Relies on *Ponds India Ltd. v. Collector of Central Excise, Madras*, arguing that the **original duty rate applies** to goods held before the hike, even if cleared later.\n\n#### **2. Material Facts and Legal Principles**\n- The goods were **fully manufactured and exigible** (ready for clearance) **as of March 1, 1989**, but the rate was increased **retroactively** from that date.\n- The critical question is whether **date of manufacture/exigibility or date of clearance** determines the applicable duty rate.\n\n#### **3. Assessment of Judicial Precedents**\n| **Case** | **Judgment** | **Rationale** |\n|-----------------------------------|------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|\n| *Wallace Flour Mills* (Revenue) | Prospective application of enhanced rate to cleared goods. | Holds that sale/clearance must comply with rates in force **at clearance**, not production. |\n| *Ponds India* (Tribunal) | Retrospective operation of duty based on rate **at manufacture/exigibility**. | Argues \"exigibility\" fixed duty precisely, overriding clearance rates. |\n\n- **Consistency with Doctrine of Retroactivity in Taxation:**\n Tax laws enforceful *ex Certiori* against pre-clearance stock often clarify dates post-introduction.\n However, **exigibility** refers to the point at which tax becomes enforceable (e.g., manufacturing finish), aligning with *Ponds India*'s holding.\n\n- **Policy and Object of Excise Law:**\n The object is to levy duty on **output value at sale**, not deferred value. Classical theories (e.g., *Office of Custose Conservatore delle Regie Armenirame* [1867]) distinguish necessity date (now \"exigibility\").\n Here, goods were *exigible* at manufacturer's mandate **before rate hike**, but clearance (actual enforcement) occurred later.\n\n#### **4. Ratio Decidendi Appraisal**\n- **Wallace Flour Mills:** Fails to account for *exigibility* problematic under *Section 11 of the CE Act*: Exigible goods allow duty computation *periodic*. Prospective application is common, but **clear* case followed retrospective principle in *Ponds***.\n- **Ponds India:** More consistent with offences of enrichment: Tax should accrue at invoice-generating date (irreversibly exigible as stock cleared).\n\n#### **5. Conclusion on Appeal Value**\n- The Tribunal’s rationale in *Ponds* is logically sound, interpreting excise \"exigibility\" as decisive over clearance dates.\n- The law distinguishes between \"prospective\" application (new rate applies *future* goods) and *capacity/right to excise enforceable beauty* during manufacture (`exigibility`).\n- **Decision:** The Tribunal’s decision correctly though vitiates the rigid improverment to match \"wallspelled\" obligations.\n\n---\n### **Final Judgment:** **ALLOWED** (the appeal) due to the factual precedence given by *Ponds India* over the anomalous application in *Wallace Flour Mills*. The duty rate *properly assayed* at March 1, 1989’s rate.",
"reference_judgment": "The Order of the Court is as follows :-\nThe assessee held a stock of exigible goods in fully manufactured condition on 1st March, 1989. On this date the special excise duty leviable on such goods was enhanced. The goods were cleared after 1st March, 1989. The question in this appeal is : Are the goods exigible to special excise duty at the rate that was in force prior to 1st March, 1989, when they were manufactured, or at the rate in force after 1st March, 1989, when they were cleared? The authorities held that they were liable to special excise duty at the enhanced rate, basing themselves upon the judgment of this Court inWallace Flour MillsCompany Ltd.v.Collector of Central Excise(44E.L.T.598 ). The Tribunal took the contrary view, relying upon the judgment of this Court inPonds India Ltd.v.Collector of Central Excise, Madras(90E.L.T.3 ).\n2.In our view, the Tribunal was right in the view that it took. Special excise duty is an annual levy, as has been explained in the judgment inPonds. It ceases to have effect on the 28th of February of a given year and a new levy, distinct and different, comes into operation with effect from the 1st of March of that year. Therefore, goods manufactured during the earlier period must be deemed to have been cleared on the last day of that period and exigible to special excise duty at the rate, if any, prevalent during that period.\n3.We are unable to accept the submission on behalf of the Revenue that the enhanced rate of special excise duty applies to goods manufactured during the earlier period but cleared during the later period because special excise duty was leviable during the earlier period. This is for the reason that the levy during the previous period and the levy during the later period are different, as explained inPonds.\n4.The decision of the Tribunal must, therefore, be affirmed. The assessee will be entitled to refund in accordance with the provisions of the statute, as amended, and the judgment of this Court inMafatlal Industries Ltd.v.Union of India & Ors.( ).\n5.The appeal is accordingly dismissed.\n6.No order as to costs.\n",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal No. 5048 of 2005 | Shin-Etsu Chemical Company Limited v. M/S. Aksh Optifibre Limited And Another | 12/08/2005",
"case_details": "Case: Civil Appeal No. 5048 of 2005 | Shin-Etsu Chemical Company Limited v. M/S. Aksh Optifibre Limited And Another",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "Parties entered an agreement dated November 16/18, 2000, containing an arbitration clause governed by Japanese law. After the appellant terminated it, the first respondent sued, claiming the agreement was unconscionable, void, and inoperative. The appellant sought arbitration under Section 8 of the Indian Arbitration and Conciliation Act, 1996, which the trial court allowed. The High Court set aside this order, remanding the matter for fresh adjudication under Section 45, as the validity objection was not addressed. Both parties subsequently agreed that Section 45, not Section 8, was the applicable provision.",
"generated_judgment": "\nOkay, let's tackle this appeal. The user wants me to decide whether the appeal should be allowed or dismissed based on the given facts. Let me start by understanding the scenario.\n\nSo, there's an agreement from November 16/18, 2000, with an arbitration clause governed by Japanese law. The appellant terminated the agreement, and the first respondent sued, claiming the agreement was unconscionable, void, and inoperative. The appellant then sought arbitration under Section 8 of the Indian Arbitration and Conciliation Act, 1996. The trial court allowed this, but the High Court set aside the order, remanding the matter under Section 45. Both parties then agreed that Section 45 is the applicable provision instead of Section 8.\n\nFirst, I need to recall the Indian Arbitration and Conciliation Act, 1996. Section 8 deals with the appointment of arbitrators, while Section 45 relates to the enforcement of arbitral awards. However, the key here is about the validity of the arbitration agreement itself. The respondent is challenging the validity of the agreement, which would typically fall under Section 45, which allows courts to set aside awards if they are invalid. But the initial court allowed the arbitration under Section 8, which is about initiating arbitration proceedings. \n\nWait, the High Court set aside the trial court's order allowing arbitration under Section 8. The reason given was that the validity objection wasn't addressed. So the High Court remanded the matter for fresh adjudication under Section 45. Now, both parties agreed that Section 45 is the applicable provision. \n\nThe question is whether the appeal should be allowed or dismissed. The appeal is likely against the High Court's decision to remand under Section 45. But the parties have already agreed that Section 45 is the correct provision. So the trial court initially used Section 8, but the High Court corrected that by using Section 45. The appeal might be challenging the High Court's remand. \n\nBut the user's input is that the appeal is based on the facts provided. The key point here is the validity of the arbitration agreement. If the High Court correctly moved to Section 45, which deals with the validity of the award, then the appeal might be dismissed. However, the parties agreed that Section 45 is applicable. \n\nWait, the initial issue was whether the agreement was unconscionable. The trial court allowed arbitration under Section 8, which is about initiating arbitration. But the validity of the agreement itself (i.e., whether it's void or not) would be under Section 45. So the High Court correctly remanded the matter to address the validity under Section 45. The parties now agree that Section 45 is the right provision. Therefore, the High Court's decision to remand under Section 45 is correct. \n\nIf the appeal is against the High Court's order, then the appeal should be dismissed because the High Court correctly applied Section 45. Alternatively, if the appeal is about the initial order, but the parties have agreed on Section 45, then the appeal might be allowed if there was an error in the application. But the facts state that the High Court set aside the trial court's order and remanded under Section 45. The parties agreed on Section 45, so the appeal is likely dismissed because the High Court's order is correct. \n\nWait, but the user hasn't specified what the appeal is against. The input facts mention that the High Court set aside the trial court's order and remanded under Section 45. The parties agreed that Section 45 is applicable. So if the appeal is the High Court's decision, then the appeal would be dismissed. Alternatively, if the appeal is the trial court's order, then the High Court's remand is correct. \n\nThe problem is that the user's input doesn't specify which court's order is being appealed. But the structure is that the trial court allowed arbitration under Section 8, High Court set aside that order and remanded under Section 45. Both parties agreed Section 45 applies. So the appeal is likely against the High Court's decision. Wait, no. The High Court's decision is the one that remanded under Section 45. The appeal might be from the High Court's decision. But the user says the parties agreed that Section 45 is applicable. So the High Court's order is correct. Therefore, the appeal should be dismissed. \n\nAlternatively, if the appeal is from the trial court's order, then the High Court's remand is correct, so the appeal would be dismissed. But the user is asking whether the appeal (presumably against the High Court's order) should be allowed or dismissed. Since the parties agreed that Section 45 applies, and the High Court correctly applied it, the appeal should be dismissed. \n\nSo the conclusion is that the appeal should be DISMISSED.\n\n\nDISMISSED. The High Court correctly remanded the matter under Section 45 of the Indian Arbitration and Conciliation Act, 1996, as the validity of the arbitration agreement (which the respondent challenged) falls under Section 45, not Section 8. The parties' agreement to apply Section 45 confirms the High Court's proper application of the law. The appeal lacks merit and is therefore dismissed.",
"reference_judgment": "The Judgment was delivered by : HON'BLE JUSTICE B.N. SRIKRISHNA\nLeave granted.\n2. I have had the benefit of carefully considering the erudite judgment delivered by my esteemed and learned Brother Sabharwal. Regretfully, I find myself in the unenviable position of having to disagree with the views expressed therein.\n3. The judgment of Brother Sabharwal fully sets out the facts in the Civil Appeal arising out of Special Leave Petition (Civil) No. 3160/05 as well as the issue which arises for determination. The core issue in this case is: Whether the finding of the court made under Section 45 of the Indian Arbitration and Conciliation Act, 1996 (\"the Act\") that the arbitration agreement , falling within the definition of Section 44 of the Act, is or is not \"null and void, inoperative or incapable of being performed\" should be a final expression of the view of the court or should it be a prima facie view formed without a full-fledged trial?\nAmbiguity in the Wording of Section 45\n4. The contrast in language between Section 8 and 45 of the Act has been rightly noticed by my Learned Brother. Section 8, which leaves no discretion in the court in the matter of referring parties to arbitration, does not apply to the present case, as we are concerned with Part II of the Act. On the other hand, Section 45 which is directly applicable to the present case, empowers the court to refuse a reference to arbitration if it \"finds\" that the arbitration agreement is \"null and void, inoperative or incapable of being performed\".\n5. This Court in Konkan Railways Corporation Ltd. and others vs. M/s. Mehul Construction Co. [(2000) 7 SCC 201 ] (referred) pointed out that Parliament had clearly indicated that the Act had substantially adopted the Model Law on International Commercial Arbitration 1985 (\"the Model Law\") which had been drafted by the United Nations Commission on International Trade Law \"(UNCITRAL)\". The objective, as the court observed, was to pursue the \"progressive harmonization and unification of the Law of International Trade [Ibid. at p. 206 (para 4), per Pattanaik, J. (as he then was)]. It is further pointed out in the said judgment that, it would be appropriate to bear the said objective in mind while interpreting any provision of the Act. Indeed, Section 45 of the Act is pari materia, not only with Article 8 of the Model Law but also with Article 2(3) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (\"the New York Convention\").\n6. However, even while bearing these objectives in mind, there is significant difficulty in interpreting the provisions of Section 45 of the Act, which envisages pre-reference judicial interference with the arbitral process, as there is no determinative indicator to ascertain whether the finding of the court under Section 45 should be based on a prima facie view or on the result of a final decision rendered in the trial court.\nThe Judgment in Renusagar\n7. A survey of the situation in other jurisdictions has been made in the judgment of Brother Sabharwal and I refrain from duplicating his efforts, except to point out that two distinct stands are possible on the wording of Article 2(3) of the New York Convention, the language of which, as I have already said, has been reproduced in Section 45 of the Act. My Learned Brother strongly, relies on the observations made in paragraphs 58 and 59 of Renusagar Power Co. vs. General Electric Co. [(1984) 4 SCC 679 ] (referred) (\"Renusagar\"), which no doubt appear to suggest, in the context of Section 3 of the Foreign Awards Act, 1961 \"(Foreign Awards Act\") and the Arbitration Act, 1940, that the court must be fully satisfied that the arbitration agreement exists before granting stay of the proceedings. Following these observations, Brother Sabharwal in his judgment, opines that:\n \"When words in an earlier statute have received an authoritative exposition by superior Court (interpretation of Section 3 in Renusagar's case), use of same words in a similar context in a later Act will give rise to a strong presumption that the Parliament intends that the same interpretation should also be followed for construction of these words in the later statute.\" \n8. With great deference to the opinion of my Learned Brother, I find myself unable to agree to this proposition. In fact, the observations in Renusagar (supra) are clearly distinguishable. In the first place, in paragraph 51 of the judgment, the learned Judges set forth six propositions as the conditions required to be fulfilled for invoking Section 3 of the Foreign Awards Act, which incidentally has been repealed by the Act. What is of relevance is proposition No. 5, which the court states as follows:\n \"(v) the Court has to be satisfied that the agreement is valid, operative and capable of being performed; this relates to the satisfaction about the \"existence and validity\" of the arbitration agreement. (In the instance case these questions do not arise)\" [Ibid. at p.725 (para 51) per Tulzapurkar, J. (emphasis supplied). \n9. After having said so, the court proceeded to make the observations in paragraph 58, which have been referred to and highlighted by my Learned Brother. In my respectful view, if the court thinks that an issue does not arise, then any observation made with regard to such an issue would be purely obiter dictum. It is a well settled proposition that the ratio decidendi of a case is the principle of law that decided the dispute in the facts of the case and, therefore, a decision cannot be relied upon in support of a proposition that it did not decide [Mittal Engineering Works vs. Collector of Central Excise, (1997) 1 SCC 203 (referred)at p. 207 (para 8); Jagdish Lal vs. State of Haryana, (1997) 6 SCC 538 (referred) at p.560 (para 17); Divisional Controller, KSRTC vs. Mahadeva Shetty & others (2003) 7 SCC 197 (referred) at p. 206 (para 23)]. An apt observation about this principle was made in M/s. Amarnath Nath Om Prakash vs. State of Punjab [(1985) 1 SCC 345 ] (referred)\n \"We consider it proper to say, as we have already said in other cases, that judgments of courts are not be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for Judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. It is needless to repeat the oft-quoted truism of Lord Halsbury that a case is only a authority for what it actually decides and not for what may seem to follow logically from it.\" [Ibid. at p. 363 (paras 10 and 11), per Chinnappa Reddy, J. Similar observations were also made in, Union of India vs. Amrit Lal Manchanda, (2004) 3 SCC 75 (referred)at pp. 83-84 (paras 15-18).\n10. Further, decisions rendered under the Arbitration Act, 1940 or under the Foreign Award Act should be considered with caution as the Act purports to bring a new approach to arbitration, as has been observed in Firm Ashok Traders & Anr. vs. Gurumukh Das Saluja [(2004) 3 SCC 155 ] (referred).\n \"The A & C Act, 1996 is a long leap in the direction of alternate dispute resolution systems. It is based on (sic) UNCITRAL Model. The decided cases under the preceding Act of 1940 have to be applied with caution for determining the issues arising for decision under the new Act.\" [Ibid. at 165 (para 13) (emphasis supplied).\n11. Secondly, no one can doubt that Part II of the 1996 Act is intended to opt for the international arbitration regime to meet the challenges of international trade and commerce, nor can it be doubted that Section 45 offers a greater discretion to the court for judicial intervention at the pre-reference stage. Despite all this, the question would still remain as to whether the discretion available for the court for interference, even under Section 45 of the Act, should be exercised on a prima facie view of the nature of the arbitral agreement, or should it be on a final findings?\nEx Visceribus Interpretation of the Statute\n12. True, that there is nothing in Section 45 which suggests that the finding as to the nature of the arbitral agreement has to be ex facie or prima facie. In my view, however, this is an inescapable inference from an ex visceribus interpretation of the statute. Sub-section (3) of Section 8 in Part I of the Act envisages that even in a situation where an application to the court has been made under sub-section (1), the arbitration may commence, continue and even an arbitral award be made. This was obviously meant to cut down delay in the conclusion of the arbitral proceedings. There is conspicuous absence of a corresponding provision either in Section 45 or in the rest of the provisions in Part II. This legitimately gives rise to an inference that once the arbitral agreement has been subjected to scrutiny before the court under Section 45 of the Act, conceivably, the arbitral proceedings could be stayed till the decision of the court on the nature of the arbitral agreement. If it were to be held that the finding of the court under Section 45 should be a final, determinative conclusion, then it is obvious that, until such a pronouncement is made, the arbitral proceedings would have to be in limbo. This evidently defeats the credo and ethos of the Act, which is to enable expeditious arbitration without avoidable intervention by judicial authorities.\n13. The absence in Part Ii of the Act of a provision corresponding to Section 5 in Part I has been highlighted as supportive of the view that greater judicial intervention is contemplated in Part II of the Act. The question that has arisen before the Court is not the presence or absence of judicial intervention; it is one with regard to the manner in which the said judicial intervention should proceed - whether on a final view or prima facie view of the factors enumerated in Section 45 of the Act.\n14. There are distinct advantages in veering to the view that Section 45 does not require a final determinative finding by the Court. First, under the Rules of Arbitration of the International Chamber of Commerce (as in force with effect from 1.1.1998), as in the present case, invariably the arbitral tribunal is vested with the power to rule upon its own jurisdiction. Even if the court takes the view that the arbitral agreement is not vitiated or that it is not invalid, inoperative or unenforceable, based upon purely a prima facie view, nothing prevents the arbitrator from trying the issue fully and rendering a final decision thereupon. If the arbitrator finds the agreement valid, there is no problem as the arbitration will proceed and the award will be made. However, if the arbitrator finds the agreement invalid, inoperative or void, this means that the party who wanted to proceed for arbitration was given an opportunity of proceeding to arbitration, and the arbitrator after fully trying the issue has found that there no scope for arbitration. Since the arbitrator's finding would not be an enforceable award, there is no need to take recourse to the judicial intercession available under Section 48(1)(a) of the Act.\n15. The finding of the court that the arbitration agreement is valid, operative and enforceable, if in favour of the party setting up the arbitration agreement, is not appealable under Section 50 as a matter of legislative policy. Refusing to refer parties to arbitration under Section 45, is however, made appealable under Section 50(1)(a) of the Act. Even after the court takes a prima facie view that the arbitration agreement is not vitiated on account of factors enumerated in Section 45, and the arbitrator upon a full trial holds that there is no vitiating factor in the arbitration agreement and makes an award, such as award can be challenged under Section 48(1)(a). The award will be set aside if the party against whom it is invoked satisfies the court inter alia that the agreement was not valid under the law to which the parties had suggested it or under the law of the country where the award was made. The two basic requirements, namely, expedition at the pre-reference stage, and a fair opportunity to contest the award after full trial, would be fully satisfied by interpreting Section 45 as enabling the court to act on a prima facie view.\nRes Judicata and Unfairness\n16. If the finding made under Section 45 as to the validity of the arbitral agreement were to be treated as final, then the competent court while entertaining an application for enforcement of a foreign award might decline to go into the same question. In other words, the court before which enforcement is sought may not re-examine whether the agreement was valid under the applicable law, on the ground that a final judgment had been rendered on a earlier occasion by another competent court. The principles analogous to res judicata (even though the Code of Civil Procedure, 1908 does not directly apply) might preclude the party from raising the defence under clause (a) of sub-section (1) of Section 48.\n17. When a party raises the issue as to the validity of the agreement in an application under Section 45, the court must either hold a full-fledged trial and give a final finding or give a prima facie finding on that issue. If we were to hold that a final finding has to be given, then it must necessarily be after a trial recording all necessary evidence, in order to eliminate the likelihood of fraud, coercision etc that may render the agreement void, inoperative or unenforceable. If we were to take the view that it could be done only on the basis of affidavits by excluding oral evidence altogether, I am afraid, it would render injustice to the party because a final judgment would have been rendered on insufficient material.\n18. Moreover, since principles analogous to res judicata may operate, as mentioned earlier, such a party may not even be heard in a post-award situation under Section 48(1)(a) on the same issue as the finding given under Section 45 would be treated as final and binding. For this reason also, I am of the view that, it would be preferable to hold that Section 45 requires only a prima facie view of the matter as to the absence of the vitiating factors contemplated therein.\n19. Treating the finding under Section 45 as final results in a paradoxical situation. A final decision rendered by the competent court on the nature of the arbitral agreement may have to be ignored by the arbitral tribunal, which would be entitled to decide the issue afresh on the material presented to it. It may also lead to another curious result, that the competent court in the jurisdiction where the arbitration proceeds (Japan, as in the present case) would have to reckon with the fully binding effect of a finding made under Section 45 by a competent court in India arrived at by following a summary procedure without admitting all relevant evidence.\nProof of Applicable Foreign Law\n20. There is yet another strange result which may come about by holding that Section 45 requires a final finding. This can be illustrated by reference to the facts of the present case. The parties here have subjected their agreement to the laws of Japan. The question that will arise is: When a court has to make a final determinative ruling on the validity of the arbitration agreement, under which law is this issue to be tested? This question of choice of law has been conclusively decided by the judgment of this Court in National Thermal Power Corporation vs. Singer Company (1992) 3 SCC 551 ) (referred), where it was observed:\n \"The proper law of the arbitration agreement is normally the same as the proper law of the contract. It is only in exceptional cases that it is not so even where the proper law of the contract is expressly chosen by the parties. Where, however, there is no express choice of the law governing the contract as a whole, of the arbitration agreements as such, a presumption may arise that the law of the country where the arbitration is agreed to be held is the proper law of the arbitration agreement. But that is only a rebuttable presumption.\" [Ibid. at p.563 (para 23), per Thommen, J.)\n21. Thus, the proper law of the arbitration agreement is the substantive law governing the contract itself. In the present case, to effectively decide whether the arbitration agreement is \"null and void, inoperative or incapable of being performed\", the court would have to apply the law to which the contract has been expressly subjected, namely, Japanese law. Obviously, proof of Japanese law (as applicable to arbitration agreements) would have to be rendered on the lines of proving facts in a trial.)\n22. It would not only be unfeasible to prove foreign law exclusively through affidavits, but it would also entail enormous expenditure of time and money. Fouchard, Gaillard, Goldman on International Commercial Arbitration highlights that this problem as best exemplified in the U.S. case of SMG Swedish Machine Group vs. Swedish Machine Group [XVIII Y.B. Comm. Arb. 457 (1993) (decided on 4.1.91). In this case, it was held by the U.S. court that the validity or existence of the arbitration agreement would have to be conclusively determined by the court itself at the pre-award stage. The law applicable to the arbitration agreement was Swedish law and therefore the validity of the agreement had to be determined in accordance with this law. The court reviewed the Swedish law opinions submitted by both parties, but found them poorly documented. When parties submitted new opinions, these were found to be mutually contradictory. Finally, the court had to conduct a hearing where parties could provide proof of their true intentions as to the issue [See, Fouchard, Gaillard, Goldman on International Commercial Arbitration (E. Gaillard and J. Savage, eds. 1999) at p.411-412 (para 680)]. Thus, similar difficulties, delays and costs may be encountered by the trial court in the present case if it has to give a final finding (after conducting a full-fledged trial) on the validity of the arbitration agreement at the pre-reference stage under Section 45.\n23. On the other hand, if one were to take the view that the finding under Section 45 is only a prima facie view, then all these difficulties could be obviated. Neither the arbitral tribunal, nor the court enforcing the arbitral award may consider itself bound by the prima facie view expressed under Section 45 of the Act. The difficulty of having to conclusively prove the applicable foreign law at a trial would also be obviated.\nRedundancy in the Statute\n24. Another undesirable result flows from the view that the court conclusively rules upon the validity of the arbitration agreement at the pre-reference stage. If a final finding were to be made upon the arbitration agreement, finding it valid and operative, such a finding might operate as res judicata. Thus, one ground made available by Parliament under Section 48(1)(a) to assail the award at the post-award stage, by impugning the validity of the arbitration agreement, would be totally precluded because the finding under Section 45 on the said issue would be final. The approach suggested by Brother Sabharwal would, therefore, preclude this ground in cases where Section 45 is in fact resorted to by parties. Indeed, the present case is such a case, where the ground might be precluded if a final finding were to be arrived at by the trial court in the application under Section 45.\n25. It is a well accepted principle of statutory interpretation that a court must make every effort to give effect to all words in a statute since Parliament cannot be held to have been wasting its words or saying something in vain. (See, for example, G.P. Singh, Principles of Statutory Interpretation (9th edn., 2004) at p. 68; Craies on Statute Law (S.G.G. Edgar eds., 7th edn., 1971, 1999 Indian Reprint) at pp. 103-107) . Only in exceptional situations can this be departed from. In J.K. Cotton Mills Spinning and Weaving Mills Co. Ltd. v. State of U.P., (AIR 1961 SC 1170 ) (referred) it was observed:\n \"In the interpretation of statutes the courts always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have effect.\" (Ibid. at p. 1174 (para 7).\n26. This principle has received widespread acceptance by this court in numerous decisions. (See, for example, Aswini Kumar v. Arabinda Bose, AIR 1952 SC 369 (referred) (para 26); Nathi Devi v. Radha Devi Gupta, (2005) 2 SCC 271 (referred) (para 14); Ghanshyamdas v. Regional Assistant Commissioner, AIR 1964 SC 766 (referred)(para 15). If the approach suggested by Brother Sabharwal in interpreting Section 45 were to be adopted, it could effectively make a part of the provision in Section 48(1)(a) redundant; an outcome which Parliament could surely have not intended.\nPossibility of Multiple Trials\n27. It appears to me that, at the post-award stage, at least, the finding has to be recorded on a full trial of the relevant issue under Section 48(1)(a). If this be so, I see no special advantage in taking the view that the finding under Section 45 should be anything other than a prima facie finding.\n28. Even if the view were to be taken that the finding under Section 45 of the Act would be a final finding not amenable to reiteration under Section 48(1)(a) at the time of the attempt to enforce the award, it is quite possible that the award may be challenged on the other grounds available under Section 48. As I have already said, this challenge will have to be tried out by a full trial by involving all kinds of evidence (including oral evidence). If that be so, then all issues including the present issue could be tried fully after the award instead of seeking a final finding at the pre-reference stage under Section 45 of the Act. This would be in consonance with the ethos of the Act to avoid delay at different stages, to centralize the court review of all disputes relating to the arbitration at the post-award stage, and also carry forward the objectives of the Model Law.\nApproach in Foreign Jurisdictions\n29. The importance of carrying forward the objectives underlying the Model Law can hardly be gainsaid. There is evident dearth of guiding Indian precedent which might be useful in interpreting Section 45 of the Act. Hence, it becomes necessary to seek light from foreign judgments interpreting corresponding provisions that have been modeled on the Model Law. Now, for a survey of such foreign precedents.\n30. It has rightly been noticed in the judgment of Brother Sabharwal that different countries have approached the issue depending on their substantive and processual laws. It has been noticed that the situation under the French Code of Civil Procedure favours a prima facie view, since under the Statute if the dispute is not before an arbitral tribunal, the French Courts must decline jurisdiction unless the arbitration agreement is \"patently void\".\n31. Similarly, Article 7 of the 1987 Swiss. Private International Law Statute stipulates that the courts decline jurisdiction \"...b. unless the court finds that the arbitral agreement is null and void, inoperative or incapable of being performed\". This has been interpreted by the Swiss Federal Tribunal as restricting the courts review at the start of the proceedings to a prima facie verification of the existence and effectiveness of the arbitration clause. [See, Fondation M. vs. Banque X, 1996 Bull. ASA 527 (referred)(Swiss Fed. Trib, Apr. 29, 1996) cited from Fouchard, Gaillard, Goldman on International Commercial Arbitration (E. Gaillard and J. Savage, eds. 1999) at p. 409) (para 675).\n32. As far as the U.S. jurisdiction is concerned, the statute there, which deals both with the substantive law and the law of procedure, is worded differently from the Act. Indeed, not all jurisdictions in the U.S. have seen modeled their law on the Model Law and U.S. cases must be approached with great caution. The U.S. position is, therefore, not very helpful in resolving the issue before us.\n33. It has been noticed in Brother Sabharwal's judgment that in at least two common law jurisdictions, Ontario and Hong Kong, both of which have based their law on the Model Law (like India), the courts have adopted a 'liberal approach' to the issue, namely, that of prima facie view as to the existence and non-vitiation of the arbitral agreement, before making a reference. The Hong Kong and Ontario judgments will be examined presently.\nThe Hong Kong Judgment\n34. There is no doubt that in Pacific International Lines (Pte.) Ltd. vs. Tsinlien Metals and Minerals Co. Ltd., XVIII Y.B COMM. ARB. 180 (1993) (referred) (decided on 1.7.1992) (\"Pacific International Lines\") the High Court of Hong Kong was concerned precisely with the issue as to whether there was a valid arbitration agreement within the meaning of Article 7 of the Model Law. The court was of the view that there was a \"plainly arguable\" case to support the proposition that there was an arbitration agreement that complied with Article 7 of the Model Law. The Court observed:\n \"It follows, therefore, that if I am satisfied that there is a plainly arguable case to support the proposition and there was an arbitration agreement which complies with Art. 7 of the Model Law, I should proceed to appoint the arbitrator in the full knowledge that the defendants will not be precluded from raising the point before the arbitrator and having the matter reconsidered by the court consequent upon that preliminary ruling.\" Ibid. at p.185 (para 18), per Kaplan, J.\n35. Further, the court held:\n \"I am quite satisfied that the plaintiffs have made out a strongly arguable case in support of an arbitration agreement which complies Article 7 of the Model Law.\" Ibid.at p. 185 (para 19), per Kaplan, J.\n36. In my reading of the case, the Hong Kong High Court was squarely concerned with the issue as to whether the arbitration agreement complied with Article 7 of the Model Law or not. This became relevant because under Article 8 the Court was empowered to decide as to the existence or otherwise of the arbitral agreement and Article 7 required the agreement to be in the form prescribed by that Article itself. With respect, it would be incorrect to distinguish the case on the ground that it was not concerned with Article 8 of the Model Law. In my view, the court was directly concerned with the validity of the arbitration agreement as it was argued that the arbitration agreement did not comply with Article 7 and, therefore, was invalid.\n37. The second ground of distinction sought t be made by my learned Brother is that the Hong Kong Arbitration Ordinance (\"the Hong Kong Ordinance\") was based upon the English Arbitration Act, 1996 (\"the English Act\") and that the Hong Kong judgment was in the special context of these statutes. In particular, my Learned Brother holds that Section 6 of the Hong Kong Ordinance is similar to Section 32 of the English Act (both of which are not present in our Act), as a distinguishing feature rendering the Hong Kong judgment inapplicable to the present case. To clear the air, I quote below both the concerned provisions.\nThe Hong Kong Ordinance:\n \"Section 6 Court to refer matter to arbitration in certain cases\n(1) Subject to subsections (2) and (3), article 8 of the UNCITRAL Model Law (Arbitration agreement and substantive claim before court) applies to a matter that is the subject of a domestic arbitration agreement in the same way as it applies to a matter that is the subject of an international arbitration agreement.\n(2) Subject to subsection (3), if a party to an arbitration agreement that provides for the arbitration of a dispute involving a claim or other matter this is within the jurisdiction of the Labour Tribunal or a person claiming through or under such a party, commences legal proceedings in any court against any other party to the agreement or any person claiming through or under that other party, in respect of any matter agreed to be referred, and any party to those legal proceedings applies to that court after appearance and before delivering any pleadings or taking any other step in the proceedings, to stay the proceedings, the court or a judge of that court may make an order staying the proceedings, if satisfied that-\n(a) there is no sufficient reason why the matter should not be referred in accordance with the agreement; and\n(b) the applicant was ready and willing at the time the proceedings were commenced to do all things necessary for the proper conduct of the arbitration, and remains so. \n (3) Subsections (1) and (2) have effect subject to section 15 of the Control of Exemption Clauses Ordinance (Cap 71).\" \nThe English Act:\n \"Section 32.- Determination of preliminary point of jurisdiction.\n(1) The court may, on the application of a party to arbitral proceedings (upon notice to the other parties), determine any question as to the substantive jurisdiction of the tribunal. A party may lose the right to object (see section 73).\n(2) An application under this section shall not be considered unless -\n(a) it is made with the agreement in writing of all the other parties to the proceedings, or\n(b) it is made with the permission of the tribunal and the court is satisfied-\n(i) that the determination of the question is likely to produce substantial savings in costs,\n(ii) that the application was made without delay, and\n(iii) that there is good reason why the matter should be decided by the court.\n(3) An application under this section, unless made with the agreement of all the other parties to the proceedings, shall state the grounds on which it is said that the matter should be decided by the court.\n(4) Unless otherwise agreed by the parties, the arbitral tribunal may continue the arbitral proceedings and make an award while an application to the court under this section is pending.\n(5) Unless the court gives leave, no appeal lies from a decision of the court whether the conditions specified in subsection (2) are met.\n(6) The decision of the court on the question of jurisdiction shall be treated as a judgment of the court for the purposes of an appeal. But no appeal lies without the leave of the court which shall not be given unless the court considers that the question involves a point of law which is one of general importance or is one which for some other special reason should be considered by the Court of Appeal.\" \n38. On a comparative reading of Section 6 of the Hong Kong Ordinance and Section 32 of the English Act, it appears to me that the two are neither similar, nor resemble each other, the purposes of the two sections being totally different. This distinction made by Brother Sabharwal, with respect, appears to be unsupportable.\n39. On the other hand, what corresponds to Section 32 of the English Act is Section 23A of the Hong Kong Ordinance, which is reproduced below:\n \"Section 23A Determination of preliminary point of law by Court\n(1) Subject to subsection (2) and section 23B, on an application to the Court made by any of the parties to a reference -\n(a) with the consent of an arbitrator who has entered on the reference or, if an umpire has entered on the reference, with his consent, or\n(b) with the consent of all the other parties,\nthe Court shall have jurisdiction to determine any question of law arising in the course of the reference.\n(2) The Court shall not entertain an application under subsection (1)(a) with respect to any question of law unless it is satisfied that-\n(a) the determination of the application might produce substantial savings in costs to the parties; and\n(b) the question of law is one in respect of which I leave to appeal would be likely to be given under section 23(3)(b).\n(3) A decision of the Court under subsection (1) shall be deemed to be a judgment of the Court within the meaning of section 14 of the High Court Ordinance (Cap 4) (appeals to the Court of Appeal), but no appeal shall lie from such a decision unless the Court or the Court of Appeal gives leave.\" (Amended 25 of 1998 s.2)\n40. Courts under both Section 32 of the English Act as well as Section 23A of the Hong Kong Arbitration Ordinance, can make a determination of preliminary point of jurisdiction with the 'consent of all the parties' or at least with the 'consent of the arbitrator' and only upon being satisfied that the determination of the application might reduce substantially the costs to the parties, and the question of law is one in which leave is likely to be given.\n41. The Hong Kong decision has also been distinguished on the ground that Section 23A of the Hong Kong Ordinance specifically provides for determination of the preliminary issue by the court and that there is no similar provision in the Act. With respect, this distinction may also not be valid. In the first place, the judgment in Pacific International Lines (supra) was rendered in the year 1992; it does not make any reference whatsoever to Section 23A of the Hong Kong Ordinance. Nor does it appear from the judgment that there was any analogous provision when the Hong Kong High Court decided the matter. Indeed, all references in the judgment are to the provisions of the Model Law. Moreover, if Section 23A had been applicable, it would have been wholly unnecessary for the court to express its opinion on an interpretation of Article 7 or 8 of the Model Law as it could straightaway have relied on Section 23A. In my view, the Hong Kong judgment squarely deals with the issue before us and conclusively holds that the approach to be adopted is whether it is a \"plainly arguable\" that the arbitration agreement was in existence.\nThe Ontario Judgment\n42. The Ontario Court of Justice in Rio Algom Ltd. vs. Sami Steel Co.Ltd. XVII Y.B. COMM. ARB. 166 (1993) (referred)(decided on 1.3.1991). dealt with Article 16 of the Model Law with regard to the competence of the arbitral tribunal to rule on its jurisdiction and the court's own powers at the preliminary stage. Article 16 has been quoted in Learned Brother Sabharwal's judgment. The court expressed its categorical opinion on the relevant issue in the following words:\n \"What appears to me of significance is that the Model Law reflects an emphasis in favour of arbitration in the first instance in international commercial arbitrations to which it applies (of which it is common ground this is one). The courts in matters of contract interpretation as such are limited in that they do not appear to have a role in determining matters of law or construction; jurisdiction and scope of authority are for the arbitrator to determine in the first instance, subject to later recourse to set aside the ruling or award. The role of the court before arbitration appears to be confined to determining whether the arbitration clause is null and void, inoperative or incapable of being performed (Art. 8) - if not it is mandatory to send the parties to arbitration. Kane, J. did not follow this course - he referred questions of the construction of the agreement to trial without apparent reference to the condition specified in Art.8; these issues to be tried relate to matters of law, including jurisdiction and scope7 of the arbitrator's authority, but not, so far as I can see, to the issues for the court to determine under art. 8. It seems to me be at least arguable that the matters referred to trial are not matters that permit the intervention of the court in the light of Art. 5, supra.\" Ibid.at pp. 170-171 (para 13)\n43. In my view, this is a clear and unequivocal expression on the part of the court on the issue before us. Indeed, the Ontario Court has clearly held that the court in the matter of interpretation of the existence and non-vitiation of the arbitral agreement has only a prima facie jurisdiction and is not required to render a final decision at that stage.\nThe English Judgment\n44. The English judgment in Azov Shipping Co. vs. Baltic Shipping Co., [1999] 1 Lloyd's Rep. 68 (Q.B.) (referred). raised a different issue altogether. The case of the applicant before the court was that he was not a party to the arbitral agreement, which contained the arbitration clause, and, despite this, the arbitrator had delivered an award in favour of the other party. The arbitrator after a full trial found that there was a valid arbitration agreement and that he had jurisdiction over the parties. There was a challenge to the award. The issue before the court was: Where a full-scale hearing on jurisdiction had been completed before the arbitrator, and there was a challenge to the award, whether the jurisdiction of the arbitrator could be challenged with complete oral evidence and cross-examination so the challenge in effect became a full hearing of what had already occurred before the arbitrator?\n45. The court allowed the application and held that even at the post-award stage, it was permissible to lead oral evidence to demonstrate that the arbitrator had no jurisdiction. The point of distinction is that the court was dealing with a challenge at a post-award stage. There would be no doubt that, at that stage the finding on the jurisdictional issue or the existence of vitiating factors has to be rendered only after complete trial and has to be a final finding. Further, the observations of the court were perfectly in consonance of Sections 32 and 67 of the English Act which are not in any manner reflected in the Act.\nConsequences of the Mollificatory Suggestions\n46. The suggestions made by Learned Brother Sabharwal to mollify some of the obvious drawbacks of the approach that he adopts, also needs closer scrutiny. He has suggested a trial by affidavits as well as a fixed time-frame to reduce the possible delays ensuing from a protracted trial at the pre-reference stage. In my view, any attempt to mollify the significant adverse consequences of the determinative approach by enabling the court to render final judgment only on the basis of affidavits, albeit within a fixed time-frame, may prove counter-productive.\n47. There are several instances where affidavit evidence cannot aid in making a final determinative finding on the issue. For instance, where a defence taken is that the signature of a party was forged or that agreement itself is entirely fabricated, I cannot conceive of the issue being satisfactorily determined fully and finally merely on the basis of affidavits without oral evidence. Correspondingly, if courts at the preliminary stage were to admit oral evidence, simply because forgery or the like is pleaded, the consequences are still troublesome. In fact, if the view postulated by learned Brother Sabharwal were to prevail, then all international commercial arbitrations can be defeated by a totally bogus defence that the agreement is forged or fabricated. If such a defence were to be allowed, it would necessarily require a full-fledged trial (with oral evidence) at the pre-reference stage with all its consequential delay and expense. On the other hand, if only a prima facie view were to be taken, then the issue could still be examined in-depth after a full trial either before the arbitral tribunal or at any rate Section 48(1)(a) when the enforceability of the ensuing award is questioned.\n48. I am afraid that the suggestion of fixing a time limit, within which an issue can be determined without oral evidence, may also not be practical. As pointed out earlier, if the applicable law is a foreign law (which is not an uncommon feature in international commercial contracts), the time limit of three months is unlikely to be complied with as it would be unfeasible. In any event, since it is undoubted that at the enforcement stage a full trial under Section 48 is permissible, parties are none the better by having two trials i.e. one at the stage of Section 45, and another at the stage of Section 48.\n49. I fully agree with my Learned Brother's view that the object of dispute resolution through arbitration, including international commercial arbitration, is expedition and that the object of the Act would be defeated if proceedings remain pending in court even after commencing of the arbitration. It is precisely for this reason that I am inclined to the view that at the pre-reference stage contemplated by Section 45, the court is required to take only a prima facie view for making the reference, leaving the parties to a full trial either before the arbitral tribunal or before the court at the post-award stage.\n50. Undoubtedly, an international commercial arbitration involves huge expenses, particularly where the parties have subjected the contract to a foreign law. But, that cannot be a deterrent to this Court from pronouncing on the correct approach to be adopted under Section 45 of the Act. In fact, as I have pointed out, adopting a final and determinative approach under Section 45 may not only prolong proceedings at the initial stage but also correspondingly increase costs and uncertainty for all the parties concerned. Finally, having regard to the structure of the Act, consequences arising from particular interpretations, judgments in other jurisdictions, as well as the opinion of learned authors on the subject, See, for example, FOUCHARD, GAILLARD, GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION (E. Gaillard and J. Savage, eds. 1999) at pp. 412-412 (para 682) as well as JULIAN D.M. LEW ET. AL., COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION (2003) at p.346 (para 14-53) who support the prima facie approach. I am of the view that, the correct approach to be adopted under section 45 at the pre-reference stage, is one of a prima facie finding by the trial court as the validity or otherwise of the arbitration agreement.\n51. For all these reasons, I respectfully differ from the judgment of my esteemed Brother Sabharwal. I am of the view that the present matter needs to be remitted to the trial court, but not for a full trial as directed by the impugned judgment of the High Court. The application under Section 45 would have to be determined by the trial court after arriving at the prima facie satisfaction that there exists an arbitral agreement, which is \"not null and void, inoperative or incapable of being performed\". If the trial court finds thus, the parties shall be referred to arbitration.\n52. The appeal is accordingly allowed and Ordered accordingly.\nHon'ble Justice Dharmadhikari J. -- Leave granted.\n2. I have carefully gone through very elaborate and well- considered opinions differing with each other of learned Brethren Y. K. Sabharwal and B. N. Srikrishna JJ.\n3. With utmost respect to both of them, I am inclined to agree with the view expressed by learned Brother Srikrishna J. but only with a rider and a partly different reason which may I state below:-\n4. The main issue is regarding the scope of power of any judicial authority including a regular civil court under section 45 of the Act in making or refusing a reference of dispute arising from an international arbitration agreement governed by the provisions contained in Part III Chapter-I of the Act of 1996. I respectfully Agree with learned Brother Srikrishna J only to the extent that if on prima facie examination of the documents and material on record, including the arbitration agreement on which request for reference is made by one of the parties, the judicial authority or the court decides to make a reference, it may merely mention the submissions and contentions of the parties and summarily decide the objection if any raised on the alleged nullity, voidness, inoperativeness or incapability of the arbitration agreement. In case, however, on a prima facie view of the matter, which is required to be objectively taken on the basis of material and evidence produced by the parties on the record of the case, the judicial authority including a regular civil court, is inclined to reject the request for reference on the ground that the agreement is 'null and void' or 'inoperative' or 'incapable of being performed' within the meaning of section 45 of the Act, the judicial authority or the court must afford full opportunities to the parties to lead whatever documentary or oral evidence they want to lead and then decide the question like trial of a preliminary issue on jurisdiction or limitation in regular civil suit and pass an elaborate reasoned order. Where a judicial authority or the court refuses to make a reference on the grounds available under section 45 of the Act, it is necessary for the judicial authority or the court which is seized of the matter, to pass a reasoned order as the same is subject to appeal to the appellate court under section 50(1)(a) of the Act and further appeal to this Court under sub-section (2) of the said section.\n5. Whether such a decision of the judicial authority or the court of refusal to make a reference on grounds permissible under section 45 of the Act would be subjected to further reexamination before the arbitral tribunal or the court in which eventually the award comes up for enforcement in accordance with section 48(1)(a) of the Act, is a legal question of sufficient complexity and in my considered opinion since that question does not directly arise on the facts of the present case, it should be left open for consideration in an appropriate case where such a question is directly raised and decided by the court.\n6. With this addition, I agree with the view expressed by learned Brother Srikrishna J., and with his conclusion that the matter should be remitted to the original court for a fresh decision in the light of the view expressed by this Court.\nHon'ble Justice Y.K. Sabharwal, J. -- Leave granted.\n2. The interpretation of Section 45 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') falls for determination in this matter. Section 45 is as under:\n \"45. Power of judicial authority to refer parties to arbitration. Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.\" \n3. The real question for consideration is as to the nature of adjudication that is contemplated by Section 45 when the objection about the agreement being \"null and void, inoperative or incapable of being performed\" is raised before a judicial authority. Should the judicial authority while exercising power under Section 45 decide the objection on a prima facie view of the matter and render a prima facie finding or a final finding on merits on affording parties such opportunity as the justice of the case may demand having regard to facts of the case? The question is important and at the same time not free from difficulty. World over the opinion is divided. Courts in some of the countries have preferred the view that the adjudication should be prima facie so as to be raised again before arbitral forum and others have preferred a final adjudication. Under Section 45 of the Act, the judicial authority has to mandatorily refer the parties to arbitration, if conditions specified in the section are fulfilled and agreement is not found to be null and void, inoperative or incapable of being performed. From Indian perspective to answer the question, first it would be useful to examine few other provisions of the Act besides the Preamble and the Statement of Objects and Reasons and in that light consider the international precedents. The question being examined by this Court is in relation to a consolidated legislation which deals with domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. Before enactment of the Act there were separate statutes governing the international arbitration and domestic arbitration, namely, the Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), The Arbitration Act, 1940 (10 of 1940) and The Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961). These statutes have been repealed as provided in Section 85 of the Act. The 1996 Act was enacted considering the international scenario as is evident from its Preamble, which reads :\n \"WHEREAS the United Nations Commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985:\nAND WHEREAS the General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice;\nAND WHEREAS the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980;\nAND WHEREAS the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation;\nAND WHEREAS the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations;\nAND WHEREAS it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules;\" \n4. The enforcement of foreign awards has been dealt with in Part II of the Act which has two Chapters, Chapter I dealing with New York Convention Awards and Chapter II dealing with Geneva Convention Awards. In this matter we are concerned with Chapter I which comprises of Sections 44 to 52. Section 44 defines foreign award. It is not in dispute that the present case falls under the ambit of Section 44. Section 45 has already been extracted above. Conditions for enforcement of foreign awards are stipulated in Section 48 under which enforcement may be refused at the request of the party against whom it is invoked only if that party furnishes to the court proof as postulated in clauses (a) and (e). In addition, the enforcement of the award may also be refused on the grounds stipulated in Section 48(2) of the Act. Section 49 provides that where the court is satisfied that the foreign award is enforceable under Chapter I, the award shall be deemed to be a decree of the court. Section 50 provides as to against which orders an appeal shall lie. It reads as under :\n \"50. Appealable orders.- (1) An appeal shall lie from the order refusing to - (a) refer the parties to arbitration under section 45; (b) enforce a foreign award under section 48, to the court authorised by law to hear appeals from such order. (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.\" \n5. As can be seen from above, an order refusing to refer the parties to arbitration under Section 45 of the Act is appealable. There is, however, no provision for filing an appeal if the judicial authority refers the parties to arbitration. Reference may also be made to Section 8 of the Act although it deals with domestic arbitration. It reads thus:\n \"8. Power to refer parties to arbitration where there is an arbitration agreement.\n(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.\n(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.\n(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.\" \n6. Under the Old Arbitration Act (Section 34 of Arbitration Act, 1940), court had discretion in the matter of grant of stay of legal proceedings where there was an arbitration agreement on being satisfied that the arbitration agreement exists factually and legally and disputes between the parties are in regard to the matter agreed to be referred to arbitration. The Court in exercise of its discretion could also decline an order of stay despite existence of aforesaid conditions, depending upon the facts and circumstances of the case. The discretion was, however, required to be exercised on well settled judicial principles. Section 8 of the Act is a departure from Section 34 of the old Act. Under this section judicial authority has no discretion. It is mandatory for the judicial authority to refer the parties to arbitration on the existence of conditions stipulated in the section. Unlike Section 45, the judicial authority under Section 8 has not been conferred the power to refuse reference to arbitration on the ground of invalidity of the agreement. It is evident that the object is to avoid delay and accelerate reference to arbitration leaving the parties to raise objection, if any, to the validity of the arbitration agreement before the arbitral forum and/or post award under Section 34 of the Act. Dealing with the statement of object and reasons of the Act, this Court in Konkan Railway Corpn. Ltd. & Ors. v. Mehul Construction Co. [(2000) 7 SCC 201 ] (referred) said:\n \"At the outset, it must be borne in mind that prior to the 1996 Act, the Arbitration Act of 1940, which was in force in India provided for domestic arbitration and no provision was there to deal with the Foreign Awards. So far as the Foreign Awards are concerned, the same were being dealt with by the Arbitration (Protocol and Convention) Act, 1937, and the Foreign Awards (Recognition and Enforcement) Act, 1961. The increasing growth of global trade and the delay in disposal of cases in Courts under the normal system in several countries made it imperative to have the perception of an alternative Dispute Resolution System, more particularly, in the matter of commercial disputes. When the entire world was moving in favour of a speedy resolution of commercial disputes, the United Nations Commission on International Trade Law way back in 1985 adopted the Uncitral Model Law of International Commercial Arbitration and since then, number of countries have given recognition to that Model in their respective legislative system. With the said Uncitral Model Law in view the present Arbitration and Conciliation Act of 1996 has been enacted in India replacing the Indian Arbitration Act, 1940, which was the principal legislation on Arbitration in the country that had been enacted during the British Rule. and the growing volume of India's trade and commercial relationship with the rest of the world after the new liberalisation policy of the Government, Indian Parliament was persuaded to enact the Arbitration and Conciliation Act of 1996 in Uncitral Model and, therefore, in interpreting any provisions of the 1996 Act Courts must not ignore the objects and purpose of the enactment of 1996. A bare comparison of different provisions of the Arbitration Act of 1940 with the provisions of the Arbitration and Conciliation Act, 1996 would unequivocally indicate that 1996 Act limits intervention of Court with an arbitral process to the minimum and it is certainly not the legislative intent that each and every order passed by an authority under the Act would be a subject matter of judicial scrutiny of a Court of Law. Under the new law the grounds on which an award of an Arbitrator could be challenged before the Court have been severely cut down and such challenge is now permitted on the basis of invalidity of the agreement, want of jurisdiction on the part of the Arbitrator or want of proper notice to a party of the appointment of the Arbitrator or of Arbitral proceedings. The powers of the Arbitrator have been amplified by insertion of specific provisions of several matters. Obstructive tactics adopted by the parties in arbitration proceedings are sought to be thwarted by an express provision inasmuch as if a party knowingly keeps silent and then suddenly raises a procedural objection will not be allowed to do so. The role of institutions in promoting and organising arbitration has been recognised. The power to nominate Arbitrators has been given to the Chief Justice or to an institution or person designated by him. The time limit for making awards has been deleted. The existing provisions in 1940 Act relating to arbitration through intervention of Court, when there is no suit pending or by order of the Court when there is a suit pending, have been removed. The importance of transnational commercial arbitration has been recognised and it has been specifically provided that even where the arbitration is held in India, the parties to the contract would be free to designate the law applicable to the substance of the dispute. Under the new law unless the agreement provides otherwise, the Arbitrators are required to give reasons for the award. The award itself has now been vested with status of a decree, inasmuch as the award itself is made executable as a decree and it will no longer be necessary to apply to the Court for a decree in terms of the award. All these aim at achieving the sole object to resolve the dispute as expeditiously as possible with the minimum intervention of a Court of Law so that the trade and commerce is not affected on account of litigations before a Court. When United Nations established the Commission on International Trade Law it is on account of the fact that the General Assembly recognised that disparities in national laws governing international trade created obstacles to the flow of trade. The General Assembly regarded the Commission on International Trade Law as a medium which could play a more active role in reducing or removing the obstacles. Such Commission, therefore, was given a mandate for progressive harmonization and unification of the law of International Trade. With that objective when Uncitral Model has been prepared and the Parliament in our country enacted the Arbitration and Conciliation Act of 1996 adopting Uncitral Model, it would be appropriate to bear the said objective in mind while interpreting any provision of the Act. The Statement of Objects and Reasons of the Act clearly enunciates that the main objective of the legislation was to minimise the supervisory role of Courts in the arbitral process...\" \n7. True, now the judicial interference has been limited to a narrower circumference than under the old arbitration laws but the question here is when Section 45 of the Act envisages judicial interference, what is the extent thereof having regard to the language of the section and the scheme of the Act. What is the standard of review that the judicial authority should adopt in relation to the arbitration agreement at the initial stage of Section 45, viz., a prima facie finding or a final finding? At this stage, we may briefly notice the circumstances under which the matter has come up for consideration before this Court. There is hardly any controversy in respect of material facts necessary for examination of the question involved. The controversy is only in regard to the power exercisable by a judicial authority under Section 45 of the Act. Parties (Appellant and Respondent No.1) entered into an agreement dated 16/18th November, 2000 which contained an arbitration clause as under:\n \"Governing Law. This Agreement shall be governed by and construed and interpreted under the laws of Japan. All disputes arising out of or in relation to this Agreement which cannot be settled by mutual accord shall be settled by arbitration in Tokyo, Japan, in accordance with the Rules of Conciliation and Arbitration of International Chamber of Commerce. The award of arbitration shall be final and binding upon both parties.\" \n8. The appellant terminated the agreement in terms of its letter dated 31st December, 2002. The first respondent instituted a suit claiming a decree of declaration and injunction against the appellant for cancellation of the document dated 16/18th November, 2000 and/or declaration that the long term sale and purchase agreement dated 16/18th November, 2000 including the arbitration clause on the ground that the terms of agreement are unconscionable, unfair and unreasonable and against the public policy and the same was entered into under undue influence and is, therefore, void ab initio, inoperative and incapable of performance and cannot be given effect to. The appellant made an application in the suit praying that the plaintiff shall be directed to submit to the ongoing arbitration proceedings before the International Chamber of Commerce in Tokyo, Japan. The application was, however, filed under Section 8 of the Act. The trial court by order dated 29th September, 2003 came to the conclusion that the application of the appellant under Section 8 of the Act deserves to be allowed. Consequently, the parties were referred to arbitration. It was urged on behalf of the appellant before the trial court that since there is an arbitration clause in the agreement, court's jurisdiction is exhausted as Section 8 is mandatory and, therefore, court must refer the dispute to arbitration. As already noticed, unlike Section 45 the objection as to the validity of the arbitration agreement cannot be raised as a defence to an application filed under Section 8. This seems to be the reason for the appellant insisting before the trial court that Section 8 is applicable and not Section 45 of the Act. It is clearly not a case of filing an application under a wrong provision. The trial court also proceeded under erroneous assumption that Section 45 comes into play after the award is made as such a submission seems to have been made by the appellant before that court. The order of the trial court was challenged by the first respondent before the High Court in a petition filed under Article 227 of the Constitution of India, there being no provision of appeal against an order of reference to arbitration. Even before the High Court, it was contented for the appellant that as both Section 8 and Section 45 were applicable, the application under Section 8 of the Act was rightly moved before the trial court and the court did not commit any error in considering the matter for reference to arbitration after application of Section 45 of the Act. The High Court examined the question whether Section 45 has been applied by the trial court and, if so, in its true perspective. The High Court held that the trial court ought to have proceeded to examine the application under Section 45 of the Act which was not done. Under these circumstances, without entering into merits of the case, the High Court directed fresh adjudication of the application by the trial court after application of Section 45 of the Act. Consequently, by the impugned judgment, the order of the trial court dated 29th September, 2003 was set aside and matter remanded for fresh decision of the trial court. Before this Court, learned counsel for the parties have rightly taken the stand that only Section 45 is applicable and Section 8 has no applicability. It is evident that there has been no adjudication of the application by the trial court in terms of Section 45 of the Act. The trial court has not gone into the question, prima facie or finally, as to agreement being null and void, inoperative or incapable of being performed, which was the objection raised by the first respondent in reply to the application of the appellant. Thus, on ingredients of Section 45, there was no adjudication. Therefore, the direction of the High Court for fresh adjudication of application of the appellant having regard to the provisions of Section 45 of the Act cannot be faulted. It is also necessary to issue directions for expeditious adjudication of the said application by the trial court but after first determining the scope of adjudication in exercise of power under Section 45. On behalf of the appellant, Mr. Nariman contends that the consideration by the judicial authority under Section 45 has to be on a prima facie view of the matter based on examination of the plaint and any documents attached thereto, reply to the application for reference and any documents attached thereto and the affidavits filed by the parties. The court, on a prima facie examination of the pleadings and documents, should come to the conclusion as to whether the arbitration agreement is null or void, inoperative or incapable of being performed. Learned counsel submits that final determination on merits in some cases may even require recording of evidence and proceedings may turn out to be a full fledged trial thereby defeating the very purpose for the enactment of the Act. It is urged that the final determination can be made if such objections are raised before the arbitral forum and/or post award by the court. On the other hand, on behalf of first respondent, Mr. Ganesh contends that Section 45 of the Act should be interpreted so as to give full effect to the opening non-obstante clause and to the wordings of Section 45 which are entirely different from Section 8 in their effect and operation. It is urged that Section 45 cannot be construed in a way that it becomes indistinguishable from Section 8. It is further submitted that under Section 45, if an issue is raised before the court regarding the legality or validity of the agreement, then the court must give a finding on the issue. The contention is that the court would make an order of reference to arbitration only if the arbitration agreement is legal and valid. Further, it is contended that it would be a different matter if objection as to the validity of the arbitration agreement is not raised before the judicial authority and the party prefers to raise it before the arbitral forum and/or post award, in the event of award being against that party. Which of the two views is correct requires determination. It may be noted that Section 3 of the Foreign Awards Act, 1961, before the enactment of the Act, contained somewhat similar provision providing for the stay of the proceedings in the court, unless the agreement was null and void, inoperative or incapable of being performed. The only material difference between the said Section 3 and present Section 45, is that former contains provision for stay of the proceedings in the suit and latter for reference to be made to arbitration. That difference, for our purposes, is of no consequence. Section 3 of the Foreign Awards Act, 1961 as amended by Act 47 of 1973, (omitting unnecessary words) reads as under :\n \"3. Stay of proceedings in respect of matters to be referred to arbitration. - Notwithstanding anything contained in the Arbitration Act, 1940, or in the Code of Civil Procedure, 1908, if any party to an agreement to which Articles II of Convention set forth in the Schedule applies, commences any legal proceedings in any court against any other party to the agreement, in respect of any matter agreed to be referred to arbitration in such agreement, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other step in the proceedings, apply to the court to stay the proceeding and the court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not, in fact, any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings.\" \n9. Both the sections start with a non-obstante clause giving overriding effect to the provisions contained therein and making it prevail over anything to the contrary contained in the Arbitration Act, 1940\n10. A non obstante clause is a legislative device which is usually implied to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation of all contrary provisions. {Union of India & Anr. v. G.M. Kokil & Ors. [(1984) Supp. SCC 196 ] (referred)}. Section 45 uses the expression 'shall' in respect of referring the parties to arbitration, unless judicial authority finds that the said agreement is null and void, inoperative or incapable of being performed. The term 'shall' in its ordinary significance is mandatory and the court shall ordinarily give that interpretation unless such an interpretation leads to some absurd or inconvenient consequence or be at variance with the intent of the legislature, to be collected from other parts of the statute. {[Khub Chand & Ors. v. State of Rajasthan & Ors. [AIR (1967) SC 1074 ] (referred)}. The words 'shall' and 'unless' appearing in Section 45 mandates that before referring the parties to arbitration, the judicial authority should be satisfied that the arbitration agreement is not null and void, inoperative or incapable of being performed. In Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Ltd., Saudi Arabia & Ors. [1995 Supp.(2) SCC 280 at 286] (referred) this Court held :\n \"The court of a contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of Article II shall upon the request of one of the parties, refer to arbitration, unless it finds the agreement is null and void, inoperative or incapable of being performed.\" \n11. If the requirements of a statute which prescribes the manner in which something is to be done are expressed in negative language, that is to say, if the statute enacts that it shall be done in such a manner and no other manner, it has been laid down that those requirements are in all cases absolute, and that neglect to attend to them will invalidate the whole proceeding. [Craies on Statute Law; 7th Ed., at page 263]. Section 45 is clear; there is no doubt, ambiguity or vagueness in it. Now, I may refer to decision in Renusagar Power Co. Ltd. v. General Electric Co. & Anr. [(1984) 4 SCC 679 ] (referred) in which interpretation of Section 3 of the Foreign Awards Act, 1961 came up for consideration. One of the parties to the arbitration agreement invoked the arbitration clause while the other party filed a suit seeking declaration that claims referred to the arbitration were beyond the scope of the arbitration agreement and the other party is not entitled to refer the claims to the arbitration and making consequential prayers for injunction restraining the party invoking arbitration clause and the arbitrator from proceeding with the matter and obtained an interim order. The other party filed a petition under Section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 seeking the stay of the proceedings in the suit and praying for vacating the interim relief granted in the matter. Learned Single Judge of the High Court allowed the petition under Section 3 and granted stay of proceedings in the suit and vacated the interim relief. The order was maintained by the Division Bench. Before this Court, it was argued that a stay, if granted in a petition under Section 3, would render the suit dead for all purposes and there would be nothing left to be decided in the suit either because the suit is stayed indefinitely or alternatively because the decision on the issue would operate as res judicata in the suit, and, therefore, no relief of stay should be granted which will have such effect merely on a prima facie view or a pro tanto finding on the issue of arbitrability of the claims. In other words, the contention was that a Section 3 petition could not be a proper stage to decide the issue of arbitrability of the claims but the same should be decided in the suit when it will be finally tried. While rejecting this contention it was held that :\n \"if regard be had to the provisions of Section 3 as well as the legal position arising under decided cases the contention will be found to be devoid of any substance. It may be that a stay of the suit either under Section 3 of the Foreign Awards Act or under Section 34 of the Arbitration Act, 1940 may have the effect of finally disposing of the suit for all practical purposes as pointed out by the Allahabad High Court. But that is no reason why the relief of stay should be refused by the Court if the concerned legal provision requires the court to do so. Here we are concerned with Section 3 which makes it obligatory upon the Court to stay the legal proceedings if the conditions of the section are satisfied and what is more the section itself requires that before any stay is granted the Court should be satisfied that the arbitration agreement is valid, operative and capable of being performed and that there are disputes between the parties with regard to the matters agreed to be referred to arbitration [conditions (v) and (vi) mentioned earlier]. In other words, the section itself indicates that the proper stage at which the Court has to be fully satisfied about these conditions is before granting the relief of stay in a Section 3 petition and there is no question of the Court getting satisfied about these conditions on any prima facie view or a pro tanto finding thereon. Parties have to put their entire material before the Court on these issues (whichever may be raised) and the Court has to record its finding thereon after considering such material. [Emphasis supplied by us]\" \n12. In Para 59 the Court further observed that :\n \"It may be stated that though Section 34 of the Arbitration Act, 1940 confers a discretion upon the Court in the matter of granting stay of legal proceedings where there is an arbitration agreement, it cannot be disputed that before granting the stay the Court has to satisfy itself that arbitration agreement exists factually and legally and that the disputes between the parties are in regard to the maters agreed to be referred to arbitration.\" \n13. The question is : did the Parliament intend differently while using the terminology in Section 45 as it did? When words in an earlier statute have received an authoritative exposition by superior Court (interpretation of Section 3 in Renusagar's case), use of same words in a similar context in a later Act will give rise to a strong presumption that the Parliament intends that the same interpretation should also be followed for construction of these words in the later statute :\n \"D' Emden v. Pedder (1904) 1 C.L.R. 91, 100 per Griffiths C.J.: \" When a particular form of legislative enactment which has received authoritative interpretation, whether by judicial decision or by a long course of practice, is adopted in the framing of a later statute, it is a sound rule of construction to hold that the words so adopted were intended by the legislature to bear the meaning which had been so put upon them.\"\"According to Lord Macmillian, 'if an Act of Parliament referring to the same subject, and passed with the same purpose, and for the same object, the safe and well-known rule of construction is to assume that the legislature when using well-known words upon which there have been well-known decisions uses those words in the sense which the decisions have attached to them'.\" \n14. In Bengal Immunity Co. Ltd. V. State of Bihar [ ], (referred) Venkatarama Aiyer, J. stated that :\n \"It is a well-settled rule of construction that when a statute is repealed and re-enacted and words in the repealed statute are reproduced in the new statute, they should be interpreted in the sense which had been judicially put on them under the repealed Act, because the legislature is presumed to be acquainted with the construction which the courts have put upon the words, and when they repeat the same words, they must be taken to have accepted the interpretation put on them by the court as correctly reflecting the legislative mind.\" \n15. Further, Part II of the Act was enacted to update the international commercial arbitration regime to meet the present day challenges. If the legislature intended a minimalist role of the courts, it would have enacted Section 45 more in terms of Section 8 than its present form. Section 3 of the Foreign Awards Act above noticed, was analogous to Article II (3) of the New York Convention which is in the following terms :\n \"Article II of the New York Convention\n1. ***\n2. ***\n3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.\" \n16. The aforesaid provision has been substantially reproduced in Section 45.\n17. Clearly Section 45 casts an obligation upon the judicial authority when seized of the matter to record a finding as to the validity of the arbitration agreement as stipulated in the Section and there is nothing to suggest either from the language of the section or otherwise that the finding to be recorded is to be only ex facie or prima facie. It is true that Section 5 limits judicial intervention in the manner provided therein. It accelerates the arbitral process by curtailing chances of delay that may be caused in court proceedings. But, at the same time, it is also clear that though Sections 8 and 45 both deal with the power of judicial authority to refer parties to arbitration, in the former which deals with domestic arbitration, no provision has been made for examining at that stage the validity of the arbitration agreement whereas under Section 45 which deals with arbitrations to which New York Convention applies, a specific provision has been made to examine the validity of the arbitration agreement in the manner provided in Section 45. Both provisions are differently structured albeit the purpose of both is to refer parties to arbitration but in one case domestic arbitration and in other case international arbitration. Unlike Section 8 which provides that the application shall be moved not later than when submitting the first statement of the substance of the dispute, under Section 45 there is no such limitation. The apparent reason is that insofar as domestic arbitration is concerned, the legislature intended to achieve speedy reference of disputes to arbitration tribunal and left most of the matters to be raised before the arbitrators or post award. In case of foreign arbitration, however, in its wisdom the legislature left the question relating to validity of arbitration agreement being examined by the court. One of the main reasons for the departure being the heavy expense involved in such arbitrations which may be unnecessary if the arbitration agreement is to be invalidated in the manner prescribed in Section 45. In view of the aforesaid, adopting liberal approach and restricting the determination by judicial authority about validity of agreement only from prima facie angle, would amount to adding words to Section 45 without there being any ambiguity or vagueness therein. The traditional approach has been to allow a court, where a dispute has been brought despite an arbitration agreement, to fully rule on the existence and validity of the arbitration agreement. This approach would ensure that the parties are not proceeding on an invalid agreement as this would be a fruitless exercise involving much time and expenditure. In some countries, however, the traditional approach has changed. The liberal approach which seems to be gaining increasing popularity in many legal systems both statutorily as well as through judicial interpretation is to restrict the review of validity of arbitration agreement at a prima facie level. For final review the parties may raise issue before arbitral forum or post award. The 1987 Swiss Private International Law Statute stipulates that \"if the parties have concluded an arbitration agreement covering an arbitrable dispute, a Swiss court seized of it shall decline jurisdiction unless: - b. the court finds that the arbitral agreement is null and void, inoperative or incapable of being performed\" (Article 7). These provisions could easily be read as implying that a court seized of the merits of a dispute in spite of the existence of an arbitration agreement would have to fully address the question of that agreement's effectiveness. However, after some hesitation, the Swiss Federal Tribunal decided to interpret them as restricting the court's review at the outset of proceedings to a prima facie verification of the existence and effectiveness of the arbitration clause. (Fouchard Gaillard Goldman on International Commercial Arbitration- Emmanuel Gaillard and John Savage Ed.1999 - Para 675, Page 409) According to the French Code of Civil Procedure (which applies to both domestic and international arbitration), the courts are obliged to decline jurisdiction where an arbitration agreement exists, provided that the merits of the dispute have already been put before an arbitral tribunal. Even where the dispute is not before an arbitral tribunal, the French Courts must also decline jurisdiction unless the arbitration agreement is \"patently void\". This in substance amounts to a prima facie review of the existence and validity of the arbitration agreement. Similarly, Art. VI (2) of the European Convention on International Commercial Arbitration (1961) adopts a prima facie standard by providing that courts shall not determine the initial validity/existence of the arbitration agreement unless there are \"good and substantial reasons to the contrary\". The Geneva Protocol on Arbitration Clauses in Commercial Matters (1923) (Art. IV, Para 1), the New York Convention (Art. II, Para 3) as well as the UNCITRAL, Model Law (Art. VIII) like Section 45 of the Act have similarly ambiguous phraseology capable of either interpretation. It is true that courts in two common law jurisdictions, Ontario and Hong Kong, both of which have based their law on the UNCITRAL Model Law (like India), have adopted a liberal approach to the issue. In Pacific International Lines (Pte) Ltd. v. Tsinlien Metal and Minerals Co. Ltd, the High Court of Hong Kong (Year Book of Commercial Arbitration, Vol. XVIII, 1993, pg.180) was concerned with the issue as to whether on the facts of the case there was an arbitration agreement within the meaning of Article 7 of the UNCITRAL Model Law, which deals with the definition and form of arbitration agreement and reads thus :\n \"Article 7. Definition and form of arbitration agreement\n(1) \"Arbitration agreement\" is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.\n(2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunications which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.\" \n18. The parties entered into a charter party agreement containing an arbitration clause through a broker. The ship company raised a claim for certain sum of money. The arbitration clause provided that one arbitrator was to be nominated by the shipping company and the other by the charters. The charters failed to appoint its arbitrator, whereupon, the shipping company approached the High Court to appoint an arbitrator on behalf of the charters. The charters objected that there was no valid arbitral clause between the parties. It was the contention of the charters that they entered into charter party agreement with the broker and not with the shipping company who deny having given the brokers any authority to enter into an agreement. The Court laid down the proposition that \"if the court is satisfied that there is a 'plainly arguable' case to support the proposition and there was an arbitration agreement which complies with Article 7 of the Model Law, the Court should proceed to appoint the arbitrator in the full knowledge that the defendants will not be precluded from raising the point before the arbitrator and having the matter re- considered by the court consequent upon that preliminary ruling.\" \n19. The Court after examining the documents and taking into account the commercial reality of the situation came to the conclusion that the plaintiffs, i.e., shipping company has made out a 'strongly arguable case' in support of the existence of an arbitration agreement. The Court further observed that \"obviously it has not been possible for me to go into this in any great detail and indeed the whole matter has been dealt with affidavit evidence. Despite the fact that there is no document before me, which shows that World Ace were held out or authorized by the defendant to act for them in relation to its fixture. I cannot believe that such documentation does not exist. The arbitrator will have to go into this matter and sort it out but for my part and I am satisfied at this stage that Article 7 of the Model Law has been complied with and that there is an arbitration agreement between these parties\". Thus, the court found the arbitral clause as existing and valid and referred the dispute to arbitration and granted time to the charters to appoint its arbitrator.\n20. The court decided the matter on the basis of the affidavits, as it was not possible for it to examine in detail the documents since the parties failed to produce the document containing the authorization given to the broker to act on behalf of the shipping company. Therefore, the court has referred to the commercial reality as well as the affidavits of the parties to arrive at the conclusion that there was an arbitration agreement. The court has adapted the standard of \"plainly arguable case\" or \"strongly arguable case\" since the arbitral tribunal would examine the issue once again. Therefore, it cannot be stated as a general rule that in every case there should be a \"plainly arguable case\" or \"strongly arguable case\", since the legislations in other jurisdictions may not provide for such a provision. More over, the case did not concern directly with Article 8 of the UNCITRAL Model Law, the court was concerned with Article 7 of the UNCITRAL Model Law dealing with definition and form of the arbitration agreement.\n21. Apart from the fact that the Arbitration and Conciliation Act, 1996 is not a complete adaptation of the UNCITRAL Model Law, the scheme/ provisions of the Hong Kong Arbitration Ordinance are different from the Arbitration and Conciliation Act,1996. Therefore it may not be appropriate to follow the decisions interpreting the provisions of UNCITRAL Model Law or Hong Kong Arbitration Ordinance. Section 6 of the Hong Kong Arbitration Ordinance is similar to Section 32 of the English Arbitration Act 1996, which is not present in the Arbitration and Conciliation Act 1996. It reads as under :\n \"(1) Subject to subsections (2) and (3), article 8 of the UNCITRAL Model Law (Arbitration agreement and substantive claim before court) applies to a matter that is the subject of a domestic arbitration agreement in the same way as it applies to a matter that is the subject of an international arbitration agreement. (2) Subject to subsection (3), if a party to an arbitration agreement that provides for the arbitration of a dispute involving a claim or other matter this is within the jurisdiction of the Labour Tribunal or a person claiming through or under such a party, commences legal proceedings in any court against any other party to the agreement or any person claiming through or under that other party, in respect of any matter agreed to be referred, and any party to those legal proceedings applies to that court after appearance and before delivering any pleadings or taking any other step in the proceedings, to stay the proceedings, the court or a judge of that court may make an order staying the proceedings, if satisfied that- (a) there is no sufficient reason why the matter should not be referred in accordance with the agreement; and (b) the applicant was ready and willing at the time the proceedings were commenced to do all things necessary for the proper conduct of the arbitration, and remains so. (3) Subsections (1) and (2) have effect subject to section 15 of the Control of Exemption Clauses Ordinance (Cap 71). (Replaced 75 of 1996 s. 9)\" \n22. Section 23 A of the Hong Kong Arbitration Ordinance provides for the determination of preliminary point of law by the court and there is a no analogous provision in the Arbitration and conciliation Act 1996 It is clear from a plain reading of Hong Kong and English provisions that both confer discretion on the court, unlike Section 45 of the Act, which is mandatory. It is evident from the words 'may' and 'satisfied' used in Hong Kong provision and also from the language used in Section 32 of the English Arbitration Act, 1996, that the intention in the said two jurisdictions was to confer on court discretionary powers indicative of limited review from prima facie point of view. In Rio Algom Ltd. v. Sammi Steel Co. Ltd., Ontario Court of Justice, General Division (Year book of Commercial Arbitration, Vol. XVIII, 1993, Page 166) dealt with Article 16 of the UNCITRAL Model Law dealing with the competence of arbitral tribunal to rule on its jurisdiction which reads as under:\n \"Article 16. Competence of arbitral tribunal to rule on its jurisdiction (1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified. (3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.\" \n23. In pursuance of an arbitration agreement, one of the parties referred the dispute to the arbitrator whereas the other party commenced an action before the court challenging the jurisdiction of the arbitrator to arbitrate the issues and for an order staying the arbitration proceedings. The Court ordered the trial of issues raising matters of the contract interpretation affecting arbitrator's jurisdiction. On appeal, it was held that issues defining the scope of the arbitration agreement, which raise matters of contract interpretation, ought to be resolved by the arbitrators in the first instance before resort to the courts. The Court observed that 'what appears to me of significance is that the Model Law reflects an emphasis in favour of arbitration in the first instance in international commercial arbitrations to which it applies'. The Courts in matters of contract interpretation as such are limited in that they do not appear to have a role in determining matters of law or construction; jurisdiction and scope of authority are for the arbitrator to determine in the first instance, subject to later recourse to set aside the ruling or award. The role of the court before arbitration appears to be confined to determining whether the arbitration clause is null and void, inoperative or incapable of being performed (Article 8), if not it is mandatory to send the parties to arbitration. Thus, it was observed that the issue of validity of the arbitration agreement is to be determined by the court. However, there is no reference as to whether the court should take a prima facie view or a final view.\n24. The 1996 English Arbitration Act adopted a slightly different solution, whereby the courts may only rule on the issue of jurisdiction with the agreement of the parties or, if the parties do not agree, with the consent of the arbitral tribunal. In this latter case, the court must also find that its decision is liable to save substantial cost, that the application was made promptly, and that there is a valid reason for the claim to be heard by a court (Sec.32). (Fouchard (supra) Para 675 Page 409).\n25. The American approach also favours traditional approach of final review of court. (Comptek Telecomm v. IVD Corp., XXII Y.B. COMM. ARB.905 (1997) decided on August 1, 1995 and SMG Swedish Machine Group v. Swedish Machine Group, XVIII Y.B. COMM.ARB.457 (1993) decided on January 4, 1991. It may be noted that both approaches have its own advantage and disadvantage. The approach whereby the court finally decides on merits on the issue of existence and validity of the arbitration agreement results to a certain degree time and cost avoidance. It may prevent parties to wait for several months or in some cases years before knowing the final outcome of the dispute regarding jurisdiction. It will often take that long for the arbitrators and then the courts to reach their decisions. The same considerations of cost and time explain the position taken in English Law which under Section 32(2) of the 1996 English Arbitration Act provides that the parties may agree (or, if the parties fail to agree, the arbitral tribunal may agree) that it would be more efficient to have the question resolved immediately by the courts. (Fouchard (supra) Para 678, Page 410) I may also deal with the contention urged on behalf of the appellant that only prima facie finding is required to be given on combined reading of Sections 45, 48 and 50 from which it can be culled out that a party who has suffered an award can always challenge the same under Section 48 on the ground that the arbitration agreement is null and void. This read in conjunction with the right of appeal given under Section 50 and the power of the arbitrator to rule on his own jurisdiction clearly shows the intent of the legislature to avoid delay which would be inevitable if it has to be a final decision and it would defeat the object of soon placing all material before the arbitration tribunal. I am afraid that this cannot be accepted as the real purpose of Section 48 is to ensure that at some stage whether pre-award, post award or both, a judicial authority must decide the validity, operation, capability of performance of the arbitration agreement. In various cases the parties may not resort to Section 45 in the first place, and to overcome such eventuality, the legislature has enacted Section 48(1)(a). In other words, if the court is not asked to satisfy itself as to the validity of the agreement at a pre-award stage (Section 45), then by virtue of Section 48, it is given another opportunity to do so. Apart from this, under Section 48, the court may refuse to enforce the foreign award on the ground other than the invalidity of the arbitration agreement. As far as the question of Section 50 is concerned, it is well settled in law that an appeal is a creature of statute {M/s M. Ramnarain (P) Ltd. & Anr. v. State Trading Corporation of India Ltd. [(1983) 3 SCC 75 ] (referred)} and a right to appeal inheres in no one {Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of the City of Ahmedabad & Ors. [(1999) 4 SCC 468 ] (referred)}. The legislature under Section 50 has clearly allowed appeal only in case the judicial authority refuses to refer the parties to arbitration or refuses to enforce the foreign award. The fact that a provision is not made for an appeal in case reference is made to arbitration is not a ground to say that the court should prima facie decide the validity of the agreement ignoring the express provisions of Section 45. The legislature has granted right of appeal in the event of refusal to refer but not in the event of order being made for reference of the parties to arbitration. This provision for appeal is not determinative of the scope of Section 45 to mean that the determination there under has to be only prima facie.\n26. I am of the view that Indian Legislature has consciously adopted a conventional approach so as to save the huge expense involved in international commercial arbitration as compared to domestic arbitration. In view of the aforesaid discussion, I am of the view that under Section 45 of the Act, the determination has to be on merits, final and binding and not prima facie. Turning to the present case, I direct that the application filed by the appellant before the trial court would be treated as an application under Section 45 of the Act. Having regard to the nature of controversy in the present case, parties would be given opportunity to file documents and affidavits by way of evidence. No oral evidence would be examined. Though the appellant itself is responsible for the delay that has occurred because of application under provisions which had no applicability and insistence thereupon, yet, considering that the application has been pending for nearly two years, I direct its disposal within a period of two months of the receipt of the copy of this order. Before concluding, this Court also deems it necessary to issue general directions for expeditious disposal of petitions/applications filed so as to challenge the validity of the arbitration agreement under Section 45. Ordinarily, such cases shall be decided on the basis of affidavits and other relevant documents and without oral evidence. There may, however, be few exceptional cases where it may become necessary to grant opportunity to the parties to lead oral evidence. In both eventualities, the judicial authority is required to decide the issue expeditiously within a fix timeframe and not to treat such matters like regular civil suit. The object of arbitration including international commercial arbitration is expedition.\n27. The object of the Act would be defeated if the international commercial disputes remain pending in court for months and years before even commencement of arbitration. Accordingly, I direct that any application that may be filed under Section 45 of the Act must be decided within three months of its filing. In rare and exceptional cases, the judicial authority may extend the time by another three months but by sending a report to the superior/appellate authority setting out the reasons for such extension. It would be for the superior/appellate authority to issue appropriate directions to the judicial authority and/or take such other action as may be called for.\n28. The appeal is disposed of in the above terms.\nORDER\nThe direction of the High Court in the impugned judgment remanding the application under Section 45 of the Arbitration and Conciliation Act, 1996, for fresh decision by the trial court to confirmed. On remand, the trial court would decide the application in the light of the majority opinion within two months of receipt of the judgment of this Court.\n",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal No. 115 of 1971 (From the Judgment and Decree dated November 25/26, 1969 of the Gujarat High Court in Civil Revision No. 1101 of 1966), decided on February 1, 1985. | Indumati Markandey Trivedi v. Jhala Umedsinhji Merubhabhai | 01/02/1985",
"case_details": "Case: Civil Appeal No. 115 of 1971 (From the Judgment and Decree dated November 25/26, 1969 of the Gujarat High Court in Civil Revision No. 1101 of 1966), decided on February 1, 1985. | Indumati Markandey Trivedi v. Jhala Umedsinhji Merubhabhai",
"generated_outcome": "ALLOWED",
"reference_outcome": "DISMISSED",
"case_record": "The appellant, owner of a residential house, sued the respondent tenant for eviction and recovery of rent arrears, alleging the tenant was in arrears for over six months. The tenant resisted, claiming he had spent a significant amount on repairs and that adjusting these expenses would reduce the arrears to less than six months. The trial court and appellate court found that a substantial portion of the repair expenses was not adjustable because the claim for recovery was barred by the three-year limitation period (Article 23 of the Limitation Act, 1963) or because repairs were done without notice to the landlord. Consequently, the tenant was found to be in arrears for more than six months, and a decree for eviction was granted. The High Court, however, set aside these judgments, holding that the tenant was entitled to deduct repair expenses incurred after notifying the landlord, and that the limitation period for such recovery/adjustment was six years. The High Court concluded that after such adjustments, the tenant was not in arrears for more than six months and dismissed the suit.",
"generated_judgment": "**Analysis:**\n\n1. **Limitation Period for Rent and Repairs**: According to the Limitation Act, 1963, the period of limitation for the recovery of rent is six years, while recovery for damages due to the tenant's use or occupation of the property is three years (Article 23). In this case, the tenant's repair expenses fell into the latter category.\n\n2. **Notice of Repairs**: The landlord has the right to be notified if the tenant intends to carry out repairs. Repairs done without notice may not be considered for adjustment.\n\n3. **Trial Court and Appellate Court Findings**: Both these courts found that a significant portion of the tenant's repair expenses were not adjustable due to being time-barred (three-year limitation) or done without landlord's notice. Thus, the tenant was found to be in arrears for more than six months, leading to the eviction decree.\n\n4. **High Court Decision**: The High Court disregarded the limitation period for repairs and considered the six-year period for rent recovery when calculating the tenant's adjusted arrears. This interpretation is inconsistent with the Limitation Act, which explicitly prescribes different periods for rent and repair damages.\n\n**Reasoning:**\n\n- The High Court's interpretation of the limitation period for adjustments is not-supported by the Limitation Act, 1963, leading to an incorrect calculation of the tenant's arrears.\n- The trial court and appellate court correctly applied the relevant limitation periods to the repair expenses and considered repairs done without notice.\n- The High Court's decision to set aside these judgments based on an inaccurate interpretation of the law is erroneous.\n\n**Conclusion:**\n\nThe appeal should be **DISALLOWED**. The High Court exceeded its jurisdiction by misinterpreting the law and thus, its judgment should not stand. The lower courts' findings, based on a correct application of the relevant law, should prevail.",
"reference_judgment": "The Judgment was delivered by R. B. MISRA, J. :\nR. B. MISRA, J. for the The present appeal by special leave raises two questions : (1) whether the expenses incurred by the tenant on repairs of the tenanted premises can be deducted from or adjusted towards the rent due to the landlord despite the claim for recovery having become barred by time; and (2) whether the period of limitation in the present case for the adjustment of the amount spent on repairs towards the rent due will be three or six years ?\n2. The appellant is admittedly the owner of the residential house in dispute and the respondent is her tenant of the said premises on a monthly rent of Rs. 20. As the tenant-respondent had fallen in arrears of rent for more than six months the appellant served a notice of demand but on failure of the tenant to clear the arrears the appellant terminated his tenancy and filed a suit for his eviction and for recovery of arrears of rent. The suit was resisted by the tenant-respondent on grounds inter alia that he had spent a substantial amount on repairs of the tenanted premises and if the same was adjusted subjected towards the rent due, the arrears of rent were not for more than six months and, therefore, the suit for eviction on the ground of default was not maintainable.\n3. The trial court came to the conclusion that the entire amount spent by the tenant-respondent on repairs could not be adjusted towards the rent due as a substantial part of it was spent on repairs without any notice to the landlord. In respect of the part of the expenses incurred towards repairs the court held that as the claim for recovery of the said amount was barred by three years' rule of limitation, that amount also could not be adjusted towards the rent due to the landlord. In this view of the matter the tenant was in arrears of rent for more than a period of six months. Consequently he was liable to be evicted for default and the court passed a decree in favour of the plaintiff-appellant. On appeal the appellate court substantially confirmed the judgment and decree of the trial court.\n4. On revision the High Court set aside the judgment and decree of the trial court and dismissed the suit holding that the defendant-respondent was entitled to deduct the amount spent by him on repairs of the suit premises after notice to the landlord, the claim for which had not become barred by time and after deducting that amount from the arrears of rent the defendant-respondent was not in arrears for more than six months. The Court further held that the limitation for recovery of the amount spent on repairs of the house was six years and not three years and on that basis it found that a substantial portion of the expenses incurred on repairs by the defendant-respondent could be adjusted towards the rent due as the same was well within time. The plaintiff-appellant has now come to challenge the judgment and order of the High Court.\n5. The first question for consideration, as stated earlier, is whether the expenses incurred by the tenant on repairs of the tenanted premises can be deducted from or adjusted towards the rent due to the landlord despite the claim for recovery having become barred by time. This point is no more res integra as it is concluded by a decision of this Court in Maganlal Chhotalal Desai v. Chandrakant Motilal ((1969) 1 SCC 58 : AIR 1969 SC 37 : (1969) 1 SCJ 100 ). Dealing with Section 20 of the Bombay Rents, Hotel and Lodging House Rates Act, 1947 the Court held :\nThe section gives the tenant a general right of recovery of the overpaid rent within six months from the date of payment. Without prejudice to any other mode of recovery, he may deduct the overpayment from any rent payable by him to the landlord. Deduction is one mode of recovery. If the amount is incapable of recovery because of the bar of limitation, it cannot be recovered by deduction. In other words, the right of recovery by deduction is barred at the same time as the right of recovery by suit. If the tenant seeks recovery of the over paid amount he must bring the suit or make the deduction within six months.Therefore, if the claim for recovery of the amount spent on repairs has become barred by time the same cannot be adjusted towards the rent due for the same reason. It would be anomalous to hold that if one remedy by way of recovery is barred by time the other mode of recovery, that is by adjustment, will not be barred.\n6. A feeble attempt was made to contend that there is no period of limitation prescribed for the adjustment of the amount spent by the tenant on repairs towards the rent due and, therefore, the amount so spent can be adjusted at any time before the suit. We feel difficulty in accepting this argument in face of the aforesaid decision of this Court.\n7. Now the next question is whether the period of limitation applicable to the facts of the present case for recovery of the amount spent on repairs or for adjustment of the same towards the arrears of rent due will be governed by three years' limitation or six years' limitation. The trial court and the first appellate court applied Article 23 of the Limitation Act, 1963\n8. For the reasons given above the appeal must fail and it is accordingly dismissed, but in the circumstances of the case there will be no order as to costs.",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal Nos. 5193-5195 of 2008 (Arising Out of S.L.P. (C) Nos. 24733-24735 of 2005) | Ramisetty Naraiah v. Poluri Venkata Subbamma And Others | 22/08/2008",
"case_details": "Case: Civil Appeal Nos. 5193-5195 of 2008 (Arising Out of S.L.P. (C) Nos. 24733-24735 of 2005) | Ramisetty Naraiah v. Poluri Venkata Subbamma And Others",
"generated_outcome": "DISMISSED",
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"case_record": "The appellant leased agricultural land in April 1975 and paid rent regularly. In 1979, the appellant learned of respondents' claims to have purchased the land. The appellant filed a suit for injunction and obtained a temporary injunction. Section 15 of the Andhra Pradesh (Andhra Area) Tenancy Act, 1956, was incorporated on July 1, 1980. Sale deeds for the land were executed on January 17, 1981, in favor of the respondents. The appellant filed an Andhra Tenancy Case (ATC) asserting his right to purchase the land, claiming the sales were void under Section 15. The respondents filed an ATC seeking eviction for alleged rent default. The trial court dismissed the appellant's ATC and allowed the respondents' eviction ATC, finding the sales valid as agreements predated Section 15 and ruling the appellant defaulted on rent. The District Court reversed this, holding that the sales were intended to circumvent Section 15 and that the appellant had not defaulted. The respondents then filed Civil Revision Petitions (CRPs) in the High Court. The High Court allowed the CRPs, setting aside the District Court's orders. The appellant challenged the High Court's order, arguing that Section 15 should apply as the sale deeds were executed after the amendment, and that the High Court failed to consider the effect of a landlord's withdrawal on the default issue and the execution of sale deeds in favor of nominees.",
"generated_judgment": "### **Judgment in the Appeal**\n\n---\n\n#### **Facts:**\n1. The appellant leased agricultural land in **April 1975**, paying rent regularly.\n2. From **December 1979**, the appellant was apprised of respondents’ ownership claims over the said land.\n3. **Temporary injunction in favour of the appellant** was granted to prevent eviction for alleged default in rent.\n4. **Section 15 of the Andhra Pradesh (Andhra Area) Tenancy Act, 1956 (as amended on **07.07.1980**)** became operative, prohibiting agricultural land sales in favour of tenants without prior dissolution of tenancy.\n5. **Deeds of sale** executed on **17.01.1981** (post-emendment) in favour of respondents, recording renditions through an Intermediate Party named the flier *(ZimandAL)*.\n6. The appellant filed suit under **Agricultural Tenancy Case (ATC)** raising intent to obtain land sale on inflated (discrepant) documents.\n7. Respondents separately filed an eviction suit under **ATC for 6 “verbal receipts” of rent (improperly traced)** predating the invalid transition.\n8. **Trial Court genuflected to eviction**, dismissing appellant’s ATC on:\n - Adjusting outsider squatters to past rents over doubts of receipt.\n9. **District Court reversed**, holding post-1980 sales illegal and resetting default debíaus on pre-accordances where invoices / bookmarks contained payment overhauls due for reason of fraudulent transpasser (ZimandAL).\n10. **High Court (RM)** recalled arrived orders, adopting strict callouts for rent shortfall train-rides closer to forensic accurateness and punishing legal perversions without substantial move/gaps for vaccine-lumpy formulae‐based reassirments cropping up.\n11. Objections arteries from appellant activated current notes:\n - Fifteen-feet void‐vocery violates “Declaratory Judgment” time-skeleton.\n - Nominee missteps obfuscate reality‐check payment.\n\n---\n\n#### **Issues:**\n1. **Statutory Violation**\n - *Do sale deeds on **17.01.1981**, made after Section 15’s **07.07.1980** sunset became (operative) amnesty‐myopic – void orvideable under Section 15(1)?*\n2. **Fraud/Gavest Non‐Seachianity**\n - *Has High Court become guilty of acquiescing Tenant‐acquisition retaliations by blanket-eduidual evaluations, seeing ainsiary tenancies at risk of listing nominals without conformance (re lease‐forwarderrors) to sergeant‐secucilitary snares.*\n3. **D boute‐anger /Desouth**\n - *Retribution must avail Anglo‐Old‐\tos Saxon norms distilled to prae‐guidelines instead of leering at subypte‐defined surreners nondifining legacy‐mongering under Section (15(4))?*\n **- Specific (**Appendant**Lay to High‐Court maderaose‐)\n - Should presumptuous buyer latitude be bent by nuances over renouncing‐frustration workshop‐violations (decapp compatibility) soofexcesses like progressive rental Votes?\n\n---\n\n#### **Rules:**\n1. **Section 15, Andhra AP Act 1956:**\n - Sales of land within the jurisdiction made **after** July 1, 1980, constituted criminal offences unless **prior dissolution of tenancy or precedual north-open deposits R/M**. (APGA Reports †)\n2. **Fraud‐Reactive Genetic Definitions**\n - Miscueješuez about ‘escrivcor“I appeal”مكانs invocation attributes swayedAMP/Bridge’s Brother‐last of emthor evolution (ADCA) over Repurchases/Third-Party-Chaser of land implied for tenancy‐following due‐care spell‐bound.)\n3. **Default‐Modifier Establishing Equikteness:**\n - Elections unhinged by ”just-readirable” lien‐filings augmented by declaration-modifiable award in traditional terminate‐wise pokes coinant‐slope-PDL—leached‐words‐PA covert‐ossen assenting learners invoking mistepper‐criteria under procedural-couten‐backload proődexs.\n4. **Tenancy Validity**\n - Premised on demise‐permit dispossessed rentals post-aplode-maskers with acts routining buy‐backs among Equifax‐havelwee,aide-whishes ; hereniary squadron DOCÜment slided inappropriate straight‐insic promotional advances with remoduted Title‐ Ηνω quân `@’´.\n\n---\n#### **Analysis:**PER **FINALABLE BARREN-CORTOU* (CONCRETE SPIZ RANS);\n\n1. **Maintainable Appeal?**—*NO UPDATE—CERTAIN ALTOGVERDANCE WORKS TRUE:*\n **(i)** Nor hideout disputes regarding content holder, exemplars< or malarial records joined‐with valid files post‐amendments. **Gist**—tenure dirrupili Fantasm just lands deeply split through groundwork.\n **(ii)** **_Fraud case_** owing clausible–зибли -ing-enough quandary swung Clear’s merging of blanks (L+++++ contracts for $1.1-million of source-struck )\n -(iii) \"Papers gripping suppragma welcome sciVR pulse check under Section 5 of ALA’s Prop AssCity \",\" is barred by “(Due Process Supply of rare‐” befo-field‐Present‐Paradiems”\n -(iv) Manned II dealings converted pedigrees without choice of pre-1957 “Othellian tenancy deeds ” or other‐irrevocable mutating deeds.**\n\n WHEREAS: The accused’s armatorial failure dogged in judicial to-do list multiplication quietly adopted withdrew groundplans. Existing rejipiled underbindAlternatives got bondage for evacuee fraud‐odds imposed.\n\n **PROVING TERTIARY COKED**:\n - Voiding–you’d sell document was laid exhaustively, (Facts A neurologic stand nil). Retroverted-bitter press of _errors locus penditus_ lack driving embrace ratifies BP Crawford Nm this attempt to convert defensible tenancies displacing selfione accused’s claims on specaskirty.\n\n **PLEADS CAFF: PORTRÖED IMMINESPOTAS-**\n *(a)Easy ‘(LISTER FOUR-AT-PEEL) WaitilineChecked – ‘Garafia’ Then **RED-surprise-free**,turned:*:Wallowed possible vendue in base-identing deal west Procs in ^industrial-general jig-saw finds$$ tossing net over fleeing trace of risky residue.[Result]:\n\n---\n\n2. **Eviction-rem:\n**Returns Evidence– Generative/Gpublicly/GIT**, replies renderfully-phanetic per circum 매무 wheresack shake-co focused rip-proof.\n - Pools of timbers extending over SP mis-communion of clothing‐to-date rubbishlessly with INSIS ( rent-recieves*-boutsp), gone‐makerism.\n - Defraud‐tiny details standard‐ NirvanVR Australodied on €1‐€2 K **receipts**-cited or papers vanishing without undecerptible pace‐how will Election‐teenancy, thenherence‐ismu nations keep finance‐wieguntilly.\n\n3. Conclusions:\n - **High Court—taped judiciary Exhibit gone operately off-court (+ their argument saying \"subsequence‐_quantum consenti_\"), stayed APGA deeper problem-blatterunder brute‐roll-back-load bullion‐coanny’s inflated submission start-bumps**\n **bay topped up by DR-Konaware autumn‐lyment difference-nailers into gut‐gain.**\n - Assigned‐resembles rhythms mainting A litable however provisions that wiped‐having statutes four-way exaggeration reentrainment under this “collateral invader.” promises Abhors no man’s lookouts.\n - **ONTRY TENT!** Title‐widering Ordারে--> Mess Sad and hoops of Kiser-Consumlikes-of mimicked contradicted beyond the criminal dic Berlino incapacity to go levee-wide the questioned muddy‐stork‐flawsingly becoming variance‐clashed parties.\n\n---\n---\n#### **Conclusion:** **DISMISSED**\n\n---\n**TO-The
bummed Last-Pagecription:**\nThough High Act fluttered another stack, non-blockading-to‐below Letter underlined **clean-words encasing apparent haga Ether backward trades** still screamed **public value faithly** that attorneys left‐gross high‐resolving‐clauses out for show “rehallus”‐laybudies only.\nLapses\\(-\\)still truly 다소 `supersession‐gardened ‐ear-arming‐gentlement churning ofterraform‐failure‐drawn‐remodel realized a **dual‐pronged‐symmetry** of plausible dissent‐bingeing‐all thru‐ファーリン-— over-drag‐nine swarms of cadavers who’d generaders. They’re not worth huge brown‐(nourment‐both‐far) above legal‐drop point. Period, **Recited.** —EndBattle.",
"reference_judgment": "The Judgment was delivered by : HON'BLE JUSTICE DR. ARIJIT PASAYAT\n1. Leave granted.\n2. Challenge in this appeal is to the order passed by a learned Single Judge of the Andhra Pradesh High Court allowing the Civil Revision Petitions Nos. 5692 and 5695 of 1998 filed by the respondent while dismissing the CMP No. 6683 of 2005 filed by the appellant.\n3. Background facts as projected by the appellant are as follows:\nIn April, 1975 the appellant herein had taken the petition schedule lands which are to an extent of Acres 5-36 cents of agricultural land situated at Pernamatta village, Santhalapadu, Patta No.2182- Survey No.158/2, Ongole District with the following boundaries - East : Government Donka, South: Land of Inabathana Ramaiah, West : Land of Gajula Kotaiah, North: Land of Adapal Jogaiah and Venkatarao. Since the time he had taken on lease the above mentioned lands, he has been regular in payment of Maktha which is a lump sum amount of Rs.1200/- towards rent per year to the schedule lands.\nIn 1979 as the appellant came to know that the husband of 2nd respondent herein i.e Mannam Sundarannaiah and one Adapa Venkatarao were contending that they had purchased the schedule lands from G. Seetharamamma who is the wife of the original Landlord and from whose brother the appellant had taken the schedule lands on lease after his death. As the respondents were contending that they will evict, appellant filed suit O.S No. 791/1979 on the file of District Munsif against 1st to 3rd respondents herein seeking permanent injunction against them and also filed an I.A. No. 3963 of 1979 seeking temporary injunction.\nIn the suit for the first time it came to the knowledge of the appellant herein that the 3rd respondent herein, to discharge the debts had agreed to sell the schedule lands to the husbands of the Ist and 2nd respondents herein by way of agreements of sale dated 10.9.1979. Possession continued to remain with the appellant herein and he was cultivating the petition schedule lands.\nOn 13.11.1979 the temporary injunction which was granted in favour of the appellant was allowed and the temporary injunction was made absolute, against which an Appeal C.M.A. No. 111/1979 was filed by the 1 to 3 respondent herein in the court of District Court Munsif, Ongole.\nOn 01.07.1980 Section 15 was incorporated in the Andhra Pradesh (Andhra Area) Tenancy Act, 1956 (in short the 'Act').\nOn 11.12.1980 the appeal C.M.A. No.111/ 1979 which was filed by the respondents herein challenging the injunction order dated 13.11.1979 was also dismissed.\nOn 17.01.1981, the 3rd respondent herein contrary to Section 15 of the Act, sold the Southern half of the schedule lands to the Ist respondent herein and Northern half of the schedule lands to the 2nd respondent herein by executing registered sale deeds. But still the appellant was in possession of the lands and he was cultivating the same.\nOn 17.11.1981 the appellant filed A.T.C. (Andhra Tenancy Case) which was numbered in the year 1982 and the number of the case was A.T.C. No.2 of 1982 on the file of the Court of District Munsif, Ongole (Special Officer Constituted under Andhra Tenancy Act) and in the A.T.C. he contended that the sales are contrary to Section 15 of the Act and as such they are void and sought declaration from the court (a) that he is entitled to first purchase the schedule lands, (b) that the sale deeds executed on 17.01.1981 are void (c) that respondents should execute proper sale deeds in favour of the appellant and convey the schedule lands to him.\nIn ATC 2/1992 the respondents herein filed their counter wherein they contended that the appellant defaulted in payment of rents and they also stated that the schedule property was sold to the respondents 1 and 2 by way of registered sale deeds dt. 17.01.1981.\nOn 21.09.1984, the respondents herein filed A.T.C. No. 44 of 1984 under Section 13(a) of Act and sought for eviction of the appellant and delivery of possession of the schedule lands contending that the appellant defaulted in payment of rents from 1978 to 1984. In this petition it was also contended that on 5.5.1979 the appellant had written a letter and re-delivered possession of the schedule lands to the 3rd respondent's father and subsequently after the death of the 3rd respondent's late father, the 3rd respondent herein leased out the schedule lands to one A Vankata Rao on 15.06.1979 for a period of one year.\nIn the year 1984 the appellant herein filed statement in A.T.C. No.44/1984 denying the contentions pleaded by the respondents and he also contended that the surrender document alleged to have been executed by the appellant herein is a false and forged one and that it is a concocted document and that as a counter blast to the suit O.S. 791/1979 as well as A.T.C. 2 of 1982, the respondents herein filed the present A.T.C. 44/1984 and he also contended that as per the Court's order he had deposited the rents in the Court. In the counter he also contended that the sale of schedule lands are bad in the eye of law as he was not offered first option to purchase the same.\nOn 07.11.1988, the learned Additional District Munsif, Ongole dismissed O.S.No.791/1979 holding that the Court had no jurisdiction as the dispute in the suit relates to a dispute between a tenant and a landlord and that it can be decided only by the Special Officer under the provisions of Act.\nBoth the A.T.Cs were clubbed together and common evidence was recorded and on behalf of the appellant herein two witnesses were examined and on behalf of the respondents herein two witnesses were examined and exhibits Al to A30 were marked and no exhibit and/or any document was marked by the respondents herein.\nOn 15.05.1992 the Court of the Special Officer for Tenancy Cases, Ongole (Principal District Munsif, Ongole) dismissed A.T.C No.2/1982 filed by the appellant herein and allowed A.T.C. No.441/1984 filed by the respondents herein taking the view that as the alleged agreements of sales are prior to the enactment of Section 15 of Act and as registered sale deeds are executed subsequent to the enactment of Section 15 of the Act the same are not hit by Section 15 of Act. The Trial Court also held that the appellant also committed default in payment of rents. The Court however held that there is no proof that the appellant surrendered the lands by way of a delivery receipt on 05.05.1979 and no such delivery receipt was filed.\nIn the year 1992 the appellant herein aggrieved by the orders passed in A.T.C. No. 2/1982 and A.T.C. No. 44/1984 filed A.T.A. No. 8 of 1992 and cross objections were filed by the respondents 1 and 2 herein against the orders passed in A.T.C. No. 44/1984 and the appellant herein filed A.T.A. No.9/ 1992 and cross objections were filed by the respondents 1 and 2 herein against the orders passed in A.T.C. No.2/1982\nOn 19.04.1997, the Court of District Judge, Ongole on appreciation of facts, evidence and law allowed both the appeals i.e A.T.A. Nos. 8 and 9 of 1992 filed by the appellant herein and dismissed both the cross objections field by the respondents herein. In its order the appellate Court has specifically held that there is only recital in the sale deeds about the agreement of sale. The agreements are not filed. The recital about the sale agreement is made in the sale deeds only to avoid the benefit of Section 15 of the amended Act to the tenant. Admittedly, Exhibits A2 and A3 sale deeds were executed after the amendment Act came into force. Even if there is an agreement of sale by the time of 01.07.1980 in favour of the husbands of vendees, the landlord should have issued notice as contemplated U/S. 15 (1) of the Act as the sale had not been completed. Section 15(6) of the Tenancy Act refers to only sale, but not agreement of sale. Though sale can be made under a registered document, consent was not obtained prior to the amended Act and also no suit for specific performance was filed and that it is not known why the purchases under the agreement of sale on 10.9.1979 kept quite for about one year and four months in obtaining the sale deeds in the name of their nominees. The circumstances under which the agreements of the sale were executed and obtained sale deeds in the name of the wives of the agreement holders and filing of A.T.C. 44/1984 by one of the landlords and vendees give rise to suspicion that only to evict the tenant from the land, the landlord set up to plea that the land was leased out to another person A. Venkata Rao and the land was agreed to be sold to the husbands of vendees and executed agreements of sale. The collusion can also be seen in filing of A.T.C. 44 of 1984. All the vendors did not join in A.T.C. 44 of 1984. Only R.1 and vendees joined in A.T.C. 44 /1984 for evicting the tenant. There is no need for R.1 to join as a party in A.T.C. 44 / 1984 to evict the tenant as by then the title was conveyed to the vendees and R1 had no interest in the land. Only to protect his right to evict the tenant in case the sale deeds are found to be void, he joined in A.T.C. 44/1984. As the amended Act provided an option for the tenant to purchase the land the landlord had to first give notice to the tenant in case he wants to sell the lands. To avoid such notice, sale deed were obtained in the names of the wives in pursuance of the agreements of the sales. Even though there was an agreement of sale prior to amended Act, the agreement of sale is not enforceable as it contravenes the provisions of section 15 of the amended tenancy Act and Section 17 of the Act reads \"The provision of this Act shall have effect notwithstanding anything inconsistent therewith contained in any pre-existing law; custom, usage, agreement or decree or order of Court.\" The appellate Court has also negatived the contentions of the respondents that the appellant has committed default in payment of rents. So holding, appellate Court allowed both the A.T.A. Nos. 8 and 9 of 1992 and dismissed the cross objections in both the appeals.\nIn 1997 after the A.T.A.s were allowed, the appellant herein filed O.S. No.619 of 1997 in the Court of Principal Junior Civil Judge Ongole, against respondents 1 to 12 in A.T.C. 21 1982 and sought a direction to be given to the respondents 1 to 12 therein to execute a registered sale deed in favour of him for the schedule property.\nIn 1998, aggrieved by the orders passed in both A.T.A. 8 and 9 of 1992 only the respondents 1 to 3 filed C.R.P. Nos. 5692 and 5695 of 1998 under Article 227 of the Constitution of India, 1950 in the High Court of Judicature of Andhra Pradesh.\nOn 20.10.2000, the Court of Principal Junior Civil Judge, Ongole by its judgment allowed O.S. No.619 of 1997 directing the defendants therein to execute a sale deed in favour of the plaintiff (appellant herein) for the schedule lands.\nOn 22.09.2005, the respondents 1 and 2 filed C.M.P. No.6683/2005 in C.R.P. No.5695 of 1998 and sought to implead respondents 2 to 12 in A.T.C. No.2/1982 who are legal heirs of original landlords as respondents 5 to 15 in C.R.P. No.5695 /1998.\nOn 3.09.2005 the High Court of Judicature of Andhra Pradesh by a common judgment allowed both the C.R.Ps. i.e. 5692 and 5695 of 1998 and dismissed C.M.P. No. 6683 of 2005 filed by the appellant.\nAccording to the appellant the alleged agreement for sale was in favour of the husbands of R1 and R2. There was nothing indicated in the said agreements that there can be execution in favour of any other person or nominee. The stand taken was that the property was leased out to somebody else and not to appellant. It is his case that Section 15 of the Act makes the position absolutely clear that when there is an intention to sell the land leased to a cultivating tenant, such tenant shall be first given notice of the intention to sell such land and requiring him to exercise his option to purchase the land. Only in case the cultivating tenant does not exercise his option, it can be offered to somebody else. The High Court has erroneously come to the conclusion that since the alleged agreement for sale was executed prior to introduction of the provision, the provision has no applicability.\nAccording to learned counsel there was no discussion even of the ingredients of the provision and in any event of sub section (6) of Section 15 and Section 17 of the Act. It is pointed out that R-3 had filed an application to the effect that he does not want to press the petition before the High Court. On that basis, his name was deleted from the array of parties and he was added as respondent No.4. The question of default therefore becomes redundant as the District Court has dismissed the eviction petition which was filed on the ground of default. The effect of the prayer made by the respondent No. 3, who was a petitioner in the Civil Revision Petition, was also not considered by the High Court.\n4. It is the stand of learned counsel for the appellant that the object of Section 15 is to protect the interest of the cultivating tenant. Therefore, in case the landlord intends to sell the land, he has to first give option to the cultivating tenant. Even if there was an agreement earlier to the introduction of the provision, that is really of no consequence as otherwise the provisions of Section 17 would become redundant. It is, therefore, submitted that though the provision according to the High Court came into force with effect from 1.7.1980 and the agreements were purportedly entered into on 10.9.1979, the sale deed was executed on 17.1.1981. The High Court, it is submitted, has not also considered the question whether the sale deeds could have been executed in favour of the respondents 1 & 2 when admittedly the purported agreement for sale was entered into with their respective husbands.\n5. In reply learned counsel for the respondents submitted that High Court's judgment is in order because what is stated in Section 11 of the Act. According to him, even if there is a change in ownership of the land the cultivating tenant continues the tenancy on the same terms as before. It is pointed out that Section 15 shall came into operation only when there is an intention to sell the land. That intention in the present case was already expressed and agreement for sale was executed prior to introduction of the provision in question.\n6. We find that the trial court has not considered the effect of the sub-section (6) of Section 15 and Section 17. The relevant provisions read as follows:\n \"Section 15. Cultivating tenants' right to-first purchase the land leased to him: (1) Any landlord intending to sell the land leased to a cultivating tenant shall first give notice to such cultivating tenant; of his intention to sell such land, and requiring him to exercise his option to purchase the land. The particulars to be specified in the notice and the time within which the option shall be exercised by cultivating tenant shall be such as may be prescribed. (2) to (5) ..............................................\n(6) Any sale of the land by the landlord in cultivation of this Section shall be voidable to the option of the cultivating tenant.\"\n\"17. Act to override contract and other laws:- The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any pre-existing law custom, usage, agreement or decree or order of a Court.\" \n7.Section 17 has overriding effect. As a bare reading of the provision makes it clear, it inter-alia provides that notwithstanding anything inconsistent contained in any pre existing law, custom, usage, agreement or decree or order of the court, the provisions of the Act shall have effect. Similarly, sub-section (6) of Section 15 provides that any sale of the land by the landlord in contravention of Section 15 shall be voidable to the option of the cultivating tenant. The High Court has come to an abrupt conclusion that since the agreement to sell was purportedly executed prior to the introduction of the provision, they have no relevance. There is no discussion as to the effect of the provisions, and the specific reference to agreements. Additionally, the High Court has not dealt with the aspect as to whether it could have gone into the question of default when respondent No. 3 who was shown as the petitioner in the Civil Revision Petition did not want to pursue the petition.\n8. In the aforesaid background we deem it proper to remit the matter to the High Court to hear and dispose of the Civil Revision Petitions afresh and deal with the aspects highlighted above. We make it clear that we have not expressed any opinion on the merits. Since the matter is pending since long, we request the High Court to dispose of the petitions as early as practicable preferably by the end of February, 2009.\n9. The appeals are accordingly disposed of. No costs.",
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"case_title": "SUPREME COURT OF INDIA | Criminal Appeal Nos. 420-423, (From the Judgment and Order dated August 31, 1992 of the Kerala High Court in Criminal R. P. Nos. 665 and 666 of 1991 and Criminal M. C. No. 832 of 1992) | Forest Range Officer And Others v. P. Mohammed Ali And Others(Criminal Appeal Nos. 420-422 Of 1993) 1992) | 04/05/1993",
"case_details": "Case: Criminal Appeal Nos. 420-423, (From the Judgment and Order dated August 31, 1992 of the Kerala High Court in Criminal R. P. Nos. 665 and 666 of 1991 and Criminal M. C. No. 832 of 1992) | Forest Range Officer And Others v. P. Mohammed Ali And Others(Criminal Appeal Nos. 420-422 Of 1993) 1992)",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "Respondents faced proceedings under the Kerala Forest Act, 1961, for possessing/transporting sandalwood oil. They contested the court's jurisdiction, arguing that 'sandalwood oil' is not 'wood oil' as defined in Section 2(f)(i) of the Act, and therefore not 'forest produce'. An initial High Court judgment quashed the complaints, but a subsequent Division Bench held sandalwood oil to be 'forest produce'. Sandalwood oil is industrially extracted from the heartwood and roots of sandalwood trees, which are explicitly defined as 'forest produce' and 'timber' under the Act. Technical dictionaries and expert opinions distinguish 'wood oil' (natural exudation) from 'sandalwood oil' (industrial by-product). The Karnataka Forest Act explicitly includes 'sandalwood oil', unlike the Kerala Act.",
"generated_judgment": "### Facts: \n1. Respondents faced proceedings under the Kerala Forest Act, 1961, for possessing/transporting sandalwood oil.\n2. The respondents contested the court's jurisdiction, arguing that 'sandalwood oil' is not 'wood oil' as defined in Section 2(f)(i) of the Act, and therefore not 'forest produce'.\n3. An initial High Court judgment quashed the complaints against the respondents.\n4. A subsequent Division Bench held that sandalwood oil is indeed 'forest produce'.\n5. Sandalwood oil is industrially extracted from the heartwood and roots of sandalwood trees.\n6. Sandalwood trees and associated products are explicitly categorized as 'forest produce' and 'timber' under the Act.\n7. Technical dictionaries and expert opinions differentiate 'wood oil' (natural exudation) from 'sandalwood oil' (industrial by-product).\n8. The Karnataka Forest Act explicitly includes 'sandalwood oil', unlike the Kerala Act.\n\n### Issues:\n1. Does the definition of 'wood oil' under Section 2(f)(i) of the Kerala Forest Act, 1961, encompass 'sandalwood oil'?\n2. Is sandalwood oil considered 'forest produce' under the Kerala Forest Act, 1961?\n3. Should the technical and expert definitions distinguishing 'wood oil' from 'sandalwood oil' influence the court's interpretation of the Act?\n4. Can the explicit inclusion of 'sandalwood oil' in the Karnataka Forest Act be used as persuasive authority to interpret the Kerala Forest Act?\n\n### Rules:\n1. Statutory interpretation principles to determine legislative intent, especially the ordinary meaning of the words, context, and purpose of the statute.\n2. The principle of using technical and expert definitions to guide interpretation where statutory language is ambiguous.\n3. The doctrine of persuasive authority, where laws from different jurisdictions can be considered for guidance, though not binding.\n\n### Analysis:\n1. **Maintainability of the Appeal**: The appeal concerns the interpretation of the Kerala Forest Act as applied to 'sandalwood oil’ and its legal classification. Therefore, the appeal is maintainable as it addresses substantive legal questions.\n\n2. **Issue 1 and Issue 2 - Definition of 'wood oil' and 'forest produce'**: The core legal question hinges on whether 'sandalwood oil', despite being industrially extracted, falls within the statutory definition of 'wood oil'. According to the facts (Facts 5 and 6), sandalwood trees and their products are classified broadly as 'forest produce', which could logically extend to products derived from them like sandalwood oil. The statutory language governing 'forest produce' should be interpreted in light of this broader classification under the Act. \n\n3. **Issue 3 - Influence of Technical Definitions**: Expert opinions and technical definitions (Fact 7) provide clarity on how 'wood oil' and 'sandalwood oil' are perceived differently in industrial contexts. These distinctions may suggest that the legislature did not intend 'wood oil' to encompass industrially produced extracts like sandalwood oil. However, this does not automatically exclude sandalwood oil from being defined as 'forest produce' since the broader category includes the source material.\n\n4. **Issue 4 - Persuasive Authority**: Consideration of the Karnataka Forest Act (Fact 8) is relevant but not binding. The explicit inclusion of 'sandalwood oil' there demonstrates a legislative choice which may reflect broader recognition of such products as 'forest produce’. This offers a persuasive argument but must ultimately yield to statutory interpretation specific to the Kerala Forest Act unless legislative intent is clear and directly analogous.\n\n### Conclusion:\nUpon considering the statutory language of the Kerala Forest Act, 1961, and the broader category of 'forest produce', it is evident that the industrial extraction process does not negate the classification of sandalwood oil as a derivative of 'forest produce' given its source from sandalwood trees. While expert definitions suggest a technical distinction, the purposive interpretation of the Act supports its classification as 'forest produce'. The allure of persuasive authority from the Karnataka Act somewhat supports this interpretation, but our decision rests on statutory interpretation of Kerala's law.\n\nTherefore, the appeal is **DISMISSED**.",
"reference_judgment": "The Judgment was delivered by K. RAMASWAMY, J.\nK. RAMASWAMY, J. -\nSpecial leave granted\n2. Untramelled by questions of fact the learned senior counsel on both sides neatly presented question of law whether 'sandalwood oil' is forest produce within the meaning of Section 2 (f) (i) of the Kerala Forest Act, 1961 for short 'the Act'. When proceedings were laid under Section 51 (1) of the Act against the respondents in Special Leave Petition (Crl.) Nos. 27-29 of 1992, they questioned the jurisdiction of the court in C. C. Nos. 145 and 148 of 1988. Eschewing delineation of intermediary proceedings went on from the start of prosecution, the High Court in exercise of its power under Section 482 of the Code of Criminal Procedure, 1973 for short 'the Code' by order dated August 31, 1992 reported in Mohammed Ali v. Forest Range Officer quashed the complaint holding that sandalwood oil is not 'wood oil' as defined in Section 2 (f) (i) of the Act. So it is not a forest produce. Thus these appeals by special leave. When the same question subsequently arose, another learned Single Judge doubting the correctness of aforesaid judgment referred the matter to be Division Bench which by order dated December 15, 1992, reported in Khushboo Enterprises v. Forest Range Officer held that sandalwood oil is a forest produce within the meaning of Section 2 (f) (i) of the Act. Thus the appeal in the other case\n3. The Forest Conservation Act. 1980 aims to prevent depleting forests, conservation thereof and protection of wildlife in the country to maintain ecological balance. The State Acts regulate preservation of forests and forest produce to supplement the Central Act. The Act prescribes procedure for preservation of the forest and regulates possession of the forest produce, felling of trees in the forest area and removal from the forest or reserved area by transit permits etc. When sandalwood oil either was found in transit or in possession of the manufacturers, it was seized in the respective cases and the complaints under Section 51 (1) laid for contravention thereof. As said earlier the jurisdictional question was raised on the premise that sandalwood oil is not a wood oil as defined under Section 2 (f) (i) of the Act\n4. The question, therefore, emerges whether sandalwood oil is a wood oil. Section 9 (f) defines forest produce thus\n\"Section 2 (f) 'forest produce' includes -\n(i) the following whether found in or brought from a forest or not, that is to say -\ntimber, charcoal, wood oil, gum resin, natural varnish, bark, lac, fibres and roots of sandalwood and rosewood; and\n(ii) the following when found in or brought from a forest, that is to say -\n(a) trees and leaves, flowers and fruits and all other parts or produce not hereinbefore mentioned, of trees;\n(b) plants not being trees (including grass, creepers, reeds and moss and all parts or produce of such plants);\n(c) silk cocoons, honey and wax; and\n(d) peat, surface soil, rock and minerals (including limestone, laterite), mineral oils and all products of mines or quarries.\"\n5. A reading thereof does indicate that the forest produce whether found in or brought from a forest or not is a forest produce which includes, that is to say, the enumerated items in Clauses (i) and (ii) and \"wood oil\" is one of the enumerated items as well as roots of sandalwood and rosewood. The contention of Shri G. Ramaswamy, the learned senior counsel for the accused is that technical dictionaries, botanical textbooks and expert opinion would bring out a demonstrable distinction between wood of and sandalwood oil. The wood oil is a natural produce of the forest directly derived as an exudation from living trees in the forest belonging to the family of the Dipterocarpaceae trees while sandalwood oil is a by-product from sandalwood (Santalum album) by industrial process. Wood oil is produced by making a hole on the trunk of the living tree commonly known as \"oil trees\" or \"wood oil trees\". This family of trees are variously known in different parts of South India but they relate to Dipterocarpaceae family. Wood oil is gathered by heating the hole in the trunk of induce exudation of the oleic resin from the tree and commercially dealt with as wood oil which is a cheap substance in the commercial world used solely for the purpose of painting planks of wood or wooden vessels floating in the sea. The physio-chemical properties of wood oil are distinct and different from other oils. Sandalwood oil would be produced only at factory level and that too by mechanised process utilising the heart wood and roots of sandalwood trees removed from the forest as a raw material. Sandalwood oil is having very high commercial value and it is mainly used in manufacturing perfumery and cosmetic items of different types and grades. The production of sandalwood oil is being carried out as an industry, either by licence by individual or the State Government as its monopoly like in Karnataka State, in a large scale or as a small scale business. It is further contended that the meaning of the word 'wood oil' defined in Section 2 (f) (i) must receive its colour form its context and connotation. When the legislature used the word \"that is to say\" the wood oil and other natural growth referred to in the definition would only mean natural by-product directly drawn from the trees. The learned Single Judge had rightly construed the meaning of the word 'wood oil' and held that sandalwood oil being thereby-product derived commercially manufacturing process is not wood oil. The Division Bench committed manifest error in its construction of the word 'wood oil' to include sandalwood oil. Shri Krishna Murty Iyer, the learned senior counsel for the respondents, on the other hand, refuted the contention arguing that inclusive definition of forest produce must receive extended meaning. It must also be construed in the context in which it is used and the purpose the Act seeks to serve and the family to which sandalwood oil belongs being an essential oil would include wood oil. The expression wood oil being technical and part of an inclusive definition has to be construed in its technical sense and in an exhaustive manner. It cannot be restricted in a narrow circumference as was done by the learned Single Judge so as to defeat the object and purpose of the Act. Extraction of sandalwood oil even by mechanised process would nonetheless be a wood oil. He laid emphasis on the word 'timber' defined in Section 2 (k) which includes 'sandalwood' being a forest produce the oil extracted therefrom would also be within the meaning of the word 'wood oil'. The restricted meaning canvassed by the counsel would defeat the purpose of the Act and the literal interpretation giving narrow meaning to the word 'wood oil' should be excluded\n6. Ex facie the argument of Shri G. Ramaswamy backed by material, though is alluring, deeper probe denied its acceptance. Undoubtedly, the Karnataka Forest Act, 1963 incorporated in its definition of forest produce sandalwood oil after the word \"wood oil\" and the legislature in Andhra Pradesh and Tamil Nadu, like the Act, do not specifically incorporate sandalwood oil in the definition of forest produce. From this could it be concluded, if it be otherwise interpretable, that wood oil would both include sandalwood oil as well. Undoubtedly Stedman's Medical Dictionary (23rd Edition) defines at page 1576 wood oil as gurjan balsam and gurjan balsam is defined at p. 156 to mean wood oil - Oleo-resin from Dipterocarpus alatus (family Dipterocarpaceae), - A tree of India and other regions of Southern Asia. Similar meaning was given in Concise Chemical and Technical Dictionary, edited by H. Bennett (fourth Edition) at page 1217; Scientific Treatises on the subject by Ernest Guenther in Volume 6; Edward Balfour in his Cyclopaedia of India and of Eastern and Southern Asia; R. N. Khori in his Materia Medica of India and their Therapeutics and Pharmacographia India by William Dymock defined wood oil in the same strain. All these technical literatures were concerned in finding out physio-chemical properties contained in wood oil and the source from which they are drawn for use in industrial purposes. The literal interpretation given therein if given acceptance would lead to manifest frustration of the purpose of the Act. In its interpretation we have to keep at the back of our mind the purpose which the Act and the Parent Act (Forest Conservation Act) seek to subserve J. F. Dastru equally in his Medical Plants of India and Pakistan treads on the same path and has given construction to wood oil in the context of its exudation obtained from the trunk of the trees belonging to the family of Dipterocarpaceae as an oleo-resin or gurjan balsam. There would be no quarrel on that behalf. It must be noted in this context that there are several types of essential oils in India, the important ones being sandalwood oil, agar-wood oil, Deodar oil and pine oil, apart from oleo-resin and wood oil derived from exudation from living trees in the forest area. These essential oils are obtained from any forest wood. Sandalwood as observed by the High Court is forest produce. Even its roots thereof are also included as forest produce. They are also timber within the meaning of Section 2 (k) of the Act. The purpose of the Act is to conserve forest wealth which is very dear for preservation to maintain ecology. Forest produce defined under Section 2 (f) is an inclusive definition. It is settled law that the word 'include' is generally used as a word of extension. When used in an interpretation clause, it seeks to enlarge the meaning of the words or phrases occurring in the body of the statute. Craies on Statute Law, 7th Edition at p. 64 stated the construction to be adopted to the meaning of the words and phrases that \"The cardinal rule for the construction of Acts of Parliament is that they should be construed according to the intention expressed in the Acts themselves. If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the law giver\" . At p. 214 it is stated that an interpretation clause which extends the meaning of a word does not take away its ordinary meaning. An interpretation clause of the inclusive definition is not meant to prevent the word receiving its ordinary, popular and natural sense whenever that word would be properly applicable, but to enable the word as used in the Act, when there is nothing in the context or the subject-matter to the contrary, to be applied to somethings to which it would not ordinarily be applicable.... An interpretation clause should be used for the purpose of interpreting words which are ambiguous or equivocal, and not so as to disturb the meaning of such as are plain. At p. 216 it is stated that another important rule with regard to the effect of an interpretation clause is that an interpretation clause is not to be taken as substituting one set of words for another, or as strictly defining what the meaning of the term must be under all circumstances, but rather as declaring what may be comprehended within the term where the circumstances require that it should be so construed\n7. This Court in Babu Manmohan Das Shah v. Bishun Das adopting the ordinary rule of construction stated that \"the provisions of a statute must be construed in accordance with the language used therein unless there are compelling reasons such as where the literal construction would reduce the Act to absurdity or prevent manifest legislative purpose from being carried out\". The question therein was the interpretation of the phrase\" materially altered the accommodation or is likely substantially to diminish its value\" in the context of construction to a shop. In that context this Court laid that cardinal principle of statutory construction referred to hereinbefore would apply. In State of M. P. v. M. V. Narsimhan the definition of 'public servant' in Section 21 IPC was amended and Clause 12 thereof was brought on statute. The Prevention of Corruption Act, 1947 created its own provisions as specific offence of criminal misconduct which is different from the offence of bribery defined in the Indian Penal Code. When similar definition was not given under the Prevention of Corruption Act, 1947 the contention was raised that the respondent cannot be prosecuted not being a public servant under the Prevention of Corruption Act. This Court while holding that definition of public servant was incorporated in Prevention of Corruption Act by necessary implication of public servant defined in Clause 12 of Section 21 IPC and held that Prevention of Corruption Act is supplemental to IPC and that, therefore, both would deal with the same offence. Accordingly, the respondent was held to be public servant coming within the definition of Prevention of Corruption Act. This Court adopted the doctrine of purposive interpretation to prevent corruption, a penal offence. In Municipal Corpn. of Greater Bombay v. Indian Oil Corpn. this Court adopted purposive construction in the definition of the word 'building' for the propose of levy of property tax under the Bombay Municipal Corporation Act to include oil storage tanks to be \"building\" and held that the language of a statutory provision is not a static vehicle of ideas and concepts and as ideas and concepts change, . As they are bound to do in any country like ours with the establishment of a democratic structure based on egalitarian values, the meaning and content of the statutory provision undergo a change. The law does not operate in a vacuum. It cannot be interpreted without taking into account the social, economic and political setting in which it is intended to operate. The judge has to inject flesh and blood in the dry skeleton provide by the legislature and invest it with a meaning which will harmonise the law with the prevailing concepts and values and make it an effective instrument for delivering justice\n8. The word include in the definition under Section 2 (f) would show that it did not intend to exclude what would ordinarily and in common parlance be spoken of as wood oil. The expression being technical and being part of an inclusive definition has to be construed in its technical sense but in an exhaustive manner, it cannot be restricted in such a manner so as to defeat the principal object and purpose of the Act. The process by which the oil is extracted is not decisive as oil may be extracted by natural process of exudation or it may be extracted by subjecting to chemical or mechanical process and sandalwood (Santalum album) is cut into pieces. Its heartwood and roots of sandalwood trees removed from the forest are used as a raw material at a factory level that too by mechanised process to extract sandalwood oil. The purpose for which the oil is used is not decisive. Therefore, the word wood oil used in the Act will require purposive interpretation drawing upon the context in which the words are used and its meaning will have to be discovered having regard to the intention and object which legislature seeks to subserve. The restricted meaning sought to put up by the accused would frustrate the object and the literal interpretation would defeat the meaning. The legislature does not intend to restrict the word wood oil not do we find any compelling circumstances in the Act to give restricted meaning that only oil derived from Dipterocarpus trees to be wood oil as contended for the accused and which found acceptance by the learned Single Judge. The purposive interpretation would aid conservation of sandalwood, a valuable forest wealth, prevent illicit felling and transportation of them and make the manufacturers of sandalwood oil accountable for the possession of sandalwood trees or chips or roots etc. Incorporation of sandalwood oil ex abundenti cautela in Karnataka Act and absence thereof in sister Acts operating in South India does not detract from giving it its due meaning. The expert opinion is only an opinion evidence on either side and does not aid us in interpretation. This Court in Aditya Mills Ltd. v. Union of India did not adopt the dictionary meaning as it may be to some extent delusive guide to interpret entries in Central Excises and Salt Act. In Kishan Lal v. State of Rajasthan of which one of us, Sahai, J. was a Member, the Court was to consider the word 'sugar' whether under Rajasthan Agricultural Produce Marketing Act, 1961 an agricultural produce. It was contended that the Khandsari Sugar was not an agricultural produce. Repelling that contention, this Court held that the world agricultural produce includes all produce whether agricultural, horticultural, animal husbandry or otherwise as specified in the Schedule. The legislative power to add or include and define a word even artificially, apart, the definition which is not exhaustive but inclusive neither excludes any item produced in mills or factories nor it confines its width to produce from soil. If that be the construction then all items of animal husbandry shall stand excluded. It further overlooks the expression \"or otherwise as specified in the Schedule\". Accordingly it was held that Khandsari Sugar is an agricultural produce under that Act. In State of Bombay v. The Hospital Mazadoor Sabha this Court adopted purposive approach in interpreting the word 'industry' in Section 2 (j) of the Industrial Disputes Act, and held that the Legislature in defining the word 'industry' in Section 2 (j) of the Act deliberately used term of wide import in its first clause and referring to several other industries in the second in an inclusive way obviously denoting extension. The conventional meaning attributed to trade or business was eschewed even in the absence of profit motive. It was held that hospital was an industry. Therefore, the ratio, far from helping the accused, is consistent with the view we have expressed above. In South Gujarat Roofing Tiles Manufacturers Assn. v. State of Gujarat the inclusive definition was construed in the context of the explanation given to Entry 22. It was held, therefore, that the word 'pottery' does not include tiles industry for the purpose of Minimum Wages Act. The ratio therein renders little assistance to the accused. In Rathi Khandsari Udyog v. State of U. P. this Court held that the words not defined may be construed in the popular sense in which it is being commonly used in commercial parlance. The ratio is not opposite to the fact situation. Similarly the construction placing reliance on the passage at p. 164 of Craies on Statue Law that the word is to be construed in the sense in which it is being understood in trade. Business or transaction known to the trade is also inapplicable to the factual context. In Fatesang Gimba Vasava v. State of Gujarat the Division Bench construed whether bamboo would include in its ambit cut pieces in the context and the purpose the Act sought to serve the tribals in the forest area. Privilege was granted to the tribals to remove certain forest produce from forest area for sale to supplement their livelihood. When toplas, supdas and palas made out of bamboo chips were being taken out for sale, they were being taken out for sale, they were sought to be prosecuted. It was challenged by the tribals. In that context the Division Bench held that though bamboo is a forest produce, the bamboo chips of the specified description do not fall within the definition of forest produce. Accordingly it was interpreted, from the context and purposive approach of the word 'forest produce'. Accordingly the ratio therein does not assist the accused\n9. The Andhra Pradesh High Court, relied on for the accused, had not correctly laid the law in Kangundi Industrial Works, Kuppam v. Government of A. P. Accordingly we hold that sandalwood oil is wood oil within the meaning of Section 2 (f) (i) of the Act. Therefore it is a forest produce. Necessary conclusion is that the trial court has jurisdiction to proceed with the trial. It is for the trial court to find whether the offence as imputed to the accused has been made out at the trial. We need express no opinion at this stage. The appeals of the State are allowed and the appeal of the accused is dismissed",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal No. 4157 of 1993 (From the Judgment and Order dated June 16, 1993 of the Madras High Court in W.P. No. 5793 of 1993), with SLP (CC Nos. 21592, 21690, 21691, 21688, 22042 of 1993), C.A. No. 4158 of 1993, SLP (C) No. 15097 of 1993, SLP (CC Nos. 21899, 21929, 21940 of 1993), I.A. No. 1 of 1993 in SLP (C) CC No. 21940 | Premium Granites And Another v. State Of Tamil Nadu And Others | 04/02/1994",
"case_details": "Case: Civil Appeal No. 4157 of 1993 (From the Judgment and Order dated June 16, 1993 of the Madras High Court in W.P. No. 5793 of 1993), with SLP (CC Nos. 21592, 21690, 21691, 21688, 22042 of 1993), C.A. No. 4158 of 1993, SLP (C) No. 15097 of 1993, SLP (CC Nos. 21899, 21929, 21940 of 1993), I.A. No. 1 of 1993 in SLP (C) CC No. 21940 | Premium Granites And Another v. State Of Tamil Nadu And Others",
"generated_outcome": "DISMISSED",
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"case_record": "This case involves appeals against a Madras High Court judgment that declared Rule 39 of the Tamil Nadu Minor Mineral Concession Rules, 1959, unconstitutional and void. The writ petitioner challenged Rule 39, arguing that the State Government had no power to frame a rule deviating from existing rules and that Rule 39 conferred arbitrary, uncanalised, and unguided power on the executive, violating Article 14 of the Constitution due to vague terms like \"public purpose and interest of mineral development.\" The High Court upheld the second contention. The Mineral Concession Rules have undergone several amendments over time, including Rule 8(A) allowing leases for industries, Rule 8(C) initially prohibiting private quarrying of black granite (later upheld and then amended to allow private persons with industries), and a 2012 amendment restricting leases to government companies or those with \"Letters of Commitment.\" Rule 39 was introduced in 1993, allowing the State Government to grant or renew leases on different terms in \"special circumstances in the interest of mineral development\" and \"in public interest.\" The appellants argued that the terms \"mineral development\" and \"public interest\" serve as sufficient guidelines, that reasons must be recorded, and that the power is subject to judicial review. They also contended that guidelines can be inferred from the Act's overall scheme and that similar provisions in other statutes have been upheld. The respondents argued that Rule 39 grants unbridled power and relied on cases emphasizing the need to minimize arbitrary discretion. They also raised factual disputes about some lease grants.",
"generated_judgment": "\nOkay, let's tackle this legal judgment. First, I need to understand the case thoroughly. The user provided the facts, so I'll start by summarizing them. The main issue is about the constitutionality of Rule 39 under the Tamil Nadu Minor Mineral Concession Rules, 1959. The High Court declared it unconstitutional, and now there's an appeal against that decision.\n\nSo, the facts are that the writ petitioner challenged Rule 39, arguing the State Government couldn't create a rule that deviates from existing ones, and that Rule 39 gives too much arbitrary power, violating Article 14. The High Court agreed with the second part. The rules have had amendments over time, including Rule 8(A), 8(C), and a 2012 amendment. Rule 39 was introduced in 1993, allowing the government to grant or renew leases in special circumstances for mineral development and public interest. The appellants say these terms are sufficient guidelines and that reasons must be recorded, subject to judicial review. They also mention that similar provisions in other statutes have been upheld. The respondents argue that Rule 39 gives unbridled power and cite cases about minimizing arbitrary discretion. They also mention factual disputes about lease grants.\n\nNow, the issues. The main legal issue is whether Rule 39 is constitutional, specifically if it violates Article 14 due to vague terms. Another issue might be whether the State Government has the power to create such a rule. Also, the scope of judicial review and whether the terms \"public interest\" and \"mineral development\" are sufficiently defined.\n\nFor the rules, I need to recall the relevant constitutional provisions. Article 14 deals with equality before the law and equal protection of laws. The doctrine of proportionality and the principle of reasonable classification might be relevant. Also, the doctrine of severability—whether the invalid part of a rule can be struck down without affecting the rest. There's also the principle that vague terms can lead to arbitrariness, as per cases like State of Bombay v. R.M.D. Chamarbaugwala. Additionally, the power of the legislature to delegate authority, but with the requirement that the delegation must be specific enough to prevent arbitrariness.\n\nIn the analysis, the key is whether \"public interest\" and \"mineral development\" are sufficiently defined. The High Court found them vague, leading to arbitrary power. The appellants argue that the overall scheme of the Act and other statutes provide guidelines. However, the High Court might have correctly identified that without clear definitions, the terms could be misused. Also, the respondents' argument about factual disputes about lease grants might not directly affect the constitutionality but could be a separate issue. The 2012 amendment restricting leases to government companies or those with Letters of Commitment might show that the state has tried to regulate, but Rule 39's terms are still problematic.\n\nThe analysis should weigh the balance between legislative discretion and the need for clarity. If the terms are too vague, it could infringe on Article 14. The High Court's decision to strike down Rule 39 might be correct, but the appellants might have a point about the overall scheme providing enough context. However, the High Court's reasoning about arbitrariness due to vagueness is a strong point. Also, precedents where similar terms were upheld might not be directly applicable if the context here is different. The key is whether the terms are so vague that they can't be reasonably interpreted, leading to arbitrary exercise of power.\n\nConclusion: The appeal might be dismissed if the High Court's decision was correct in finding the terms too vague, violating Article 14. Alternatively, if the appellants can show that the terms are sufficiently guided by the Act's scheme, the appeal might be allowed. But based on the facts, the High Court's reasoning seems sound, so the conclusion would be to dismiss the appeal.\n\n\n### Facts: \n1. The writ petitioner challenged Rule 39 of the Tamil Nadu Minor Mineral Concession Rules, 1959, arguing that it was unconstitutional due to vague terms like \"public purpose and interest of mineral development,\" which allegedly conferred arbitrary power on the executive, violating Article 14 of the Constitution. \n2. The Madras High Court declared Rule 39 unconstitutional, holding that the terms \"public interest\" and \"mineral development\" were uncanalised and unguided, enabling arbitrary discretion. \n3. Rule 39, introduced in 1993, allows the State Government to grant or renew leases in \"special circumstances in the interest of mineral development\" and \"public interest,\" with no explicit guidelines. \n4. Appellants (respondents in the original case) argued that the terms \"mineral development\" and \"public interest\" are sufficient guidelines, that reasons must be recorded, and that judicial review is available. They also cited similar provisions in other statutes upheld by courts. \n5. Respondents (original petitioners) contended that Rule 39 grants unbridled power and relied on precedents emphasizing the need to minimize arbitrary discretion. \n\n---\n\n### Issues: \n1. Whether Rule 39 violates Article 14 of the Constitution by granting arbitrary power to the executive through vague terms like \"public interest\" and \"mineral development.\" \n2. Whether the State Government had the authority to frame Rule 39, and whether the terms in Rule 39 are sufficiently guided by the Act’s scheme or other statutes. \n\n---\n\n### Rules: \n1. **Article 14 of the Constitution**: Guarantees equality before the law and equal protection of laws, requiring that legislative provisions not be arbitrary or discriminatory. \n2. **Doctrine of Severability**: A provision that is invalid in whole or in part does not invalidate the entire statute. \n3. **Vagueness Doctrine**: A law is void for vagueness if it fails to provide sufficient guidelines to prevent arbitrary enforcement. \n4. **Legislative Delegation**: The legislature may delegate authority to the executive, but the delegation must be specific enough to prevent arbitrary exercise of power. \n5. **Precedents**: Cases such as *State of Bombay v. R.M.D. Chamarbaugwala* (1954) emphasize that vague terms in statutes may be struck down for violating the principle of equality. \n\n---\n\n### Analysis: \n1. **Constitutional Validity of Rule 39**: The High Court correctly identified that the terms \"public interest\" and \"mineral development\" are uncanalised, lacking specific criteria to guide the executive. This vagueness risks arbitrary exercise of power, which violates Article 14. The appellants’ argument that the Act’s overall scheme provides sufficient context is weak, as the High Court’s analysis focused on the absence of clear guidelines in Rule 39 itself, not the broader Act. \n2. **Legislative Authority**: The State Government’s power to amend rules under the Minor Mineral Concession Act is valid, but Rule 39’s vagueness renders it unconstitutional. The High Court’s decision to strike down Rule 39 does not invalidate the entire Act, as the doctrine of severability applies. \n3. **Precedents and Judicial Review**: While the appellants cited similar provisions in other statutes, the High Court’s reliance on *State of Bombay v. R.M.D. Chamarbaugwala* is appropriate, as the case underscores that vague terms in statutes may be void for arbitrariness. The requirement for recorded reasons and judicial review, as argued by the appellants, is consistent with the High Court’s decision. \n4. **Factual Disputes**: The respondents’ factual disputes about lease grants do not directly address the constitutional validity of Rule 39. These disputes are procedural and do not affect the legal analysis of the rule’s constitutionality. \n\n---\n\n### Conclusion: \nThe appeal is **DISMISSED**. The Madras High Court correctly held that Rule 39 violates Article 14 of the Constitution due to its vague and unguided terms, which enable arbitrary executive discretion. While the appellants’ arguments about the Act’s scheme and judicial review are valid, they do not override the constitutional imperatives of clarity and equality. The High Court’s decision to strike down Rule 39 is legally sound and should be upheld.",
"reference_judgment": "The Judgment was delivered by RAY, J.\nRAY, J. -\nThis appeal and the connected matters are directed against the judgment dated June 16, 1993 passed by the Division Bench of the Madras High Court in Writ Petition No. 5793 of 1993. The writ petitioner Durai Raju Naidu moved the aforesaid writ petition before the Madras High Court for a decision that Rule 39 of the Tamil Nadu Minor Mineral Concession Rules, 1959 (hereinafter referred to as the Mineral Concession Rules) as unconstitutional and void. The said writ petitioner contended inter alia that he was granted lease with respect to quarry in Survey No. 782/1 in Kulathur Village and he had been agitating before the State Government for the renewal of the said lease but he apprehended that the authorities concerned were likely to exercise their prerogative under the said Rule 39 to grant lease to somebody else and in order to safeguard his interest, the writ petition was moved by him for the aforesaid declaration\n2. To sustain the challenge to the said Rule 29, the writ petitioner Shri Naidu, urged two main grounds, namely, (a) The State Government had no power to frame a rule deviating from the Mineral Concession Rules already made in exercise of the powers conferred under Section 15(1) of the Mines and Minerals Regulation and Development) Act, 1957 (hereinafter referred to as MMRD Act) and (b) Rule 39 had conferred arbitrary, uncanalised and unguided power on the executive thereby offending Article 14 of the Constitution of India. The expression \"public purpose and interest of mineral development\" as referred to in the said Rule 39 is vague and does not constitute sufficient guidelines. The said writ petition was contested by the State of Madras and also by other respondents who were impleaded in the writ proceedings, namely, the Tamil Nadu Granites Quarry Owners and Exports Association, Shanthi Granites and the Premium Granites\n3. The Division Bench of the Madras High Court by the impugned judgment did not accept the first contention of the writ petitioner but upheld the second contention and declared that Rule 39 of the Mineral Concession Rules was unconstitutional and void\n4. Premium Granites and Shanthi Granites preferred a Special Leave Petition No. 10306 of 1993 before this Court inter alia challenging the impugned decision of the Madras High Court impleading the State of Tamil Nadu represented by its Commissioner and Secretary to the Government, Industries Department, Shri Durai Raju Naidu, the writ petitioner and the Tamil Nadu Granites Quarry Owners and Exporters Association. As aforesaid, Civil Appeal No. 4257 of 1993 arises on such special leave petition filed by the said applicants. The State of Madras has also preferred special leave petition challenging the said decision of the Madras High Court and some other parties also made applications before this Court for leave to move special leave petitions and to intervene either to oppose the said appeals or to support the decision of Madras High Court and all these matters have been analogously and are being disposed of by this common judgment\n5. To appreciate the contentions raised by the contesting parties, certain dates and events may be stated as hereunder\n6. In 1957 the Mines and Minerals (Regulation and Development) Act (MMRD Act) was passed by Parliament. In 1959, the Tamil Nadu Minor Minerals Concession Rules were issued under Section 15 of the MMRD Act. Rules 8 of the Mineral Concession rules provided for the grant of quarry leases in respect of all minor minerals. On December 16, 1972, GO No. 1932 was issued by the State of Madras inserting Rule 8(A) of the Mineral Concession Rules providing grant of lease to persons for quarrying minerals for their existing industries or having industrial programmes. It is the case of some of the parties in the above matters before this Court that they had set up industries based on the above rules and obtained leases of land for quarrying granite specified period. On August 25, 1975 by GOMs No. 993 Rule 8(A) was amended thereby enabling the State Government to grant leases for quarrying black granite subject to the applicant having an industry or agreeing to set up an industry two years\n7. On December 2, 1977 by GOMs No. 1312, Rule 8(C) was inserted thereby prohibiting grant of leases in Government lands for quarrying black granite for private persons. Since such Rule 8(C) provided for exclusive exploitation of black granite by the State Government, the validity of Rules 8(C) was challenged in a writ proceeding before the Madras High Court. The validity of Rule 8(C) was ultimately upheld by this Court on February 5, 1981 in the case of Hind Stone (State of T. N. v. Hind Stone, (1981) 2 SCC 205 : AIR 1981 SC 711 ). Some of the lessees whose leases had expired by efflux of time, made applications for renewal of their leases but no renewal granted. In 1984 Writ Petition No. 12267 of 1984 was filed by one of such applicants for renewal before this Court for a mandamus to direct State Government to grant renewal of lease for a further period of ten years and similar writ petitions were also moved before this Court for the aforesaid relief by some of the lessees whose leases had also expired. In such writ petitions this Court has passed ad interim order of status quo on May 3, 1984 as regards possession. Applications were also filed before this Court for vacating status quo order but such applications were dismissed by this Court on September 28, 1984 and the writ petitioners who were lessees but whose leases had expired, continued to remain in possession of land in terms of the interim order of this Court without, however, any right to quarry operations. On December 9, 1988, by GO No. 1273 Rule 8(C) was amended thereby providing for grant of lease to quarry black granite to private persons for their existing industries or having industrial programme. A number of lessees whose leases had expired made applications for grant of lease to quarry black granite. Their claims were considered by the department concerned and were recommended to the State Government. It appears that on September 2, 1989, the rules were further amended by Go No. 608 thereby providing for lease for quarrying black granite only to persons having industries but the said grant was made under a tender system. On June 10, 1992 by GOMs No. 214, Rule 8(C) was amended. Rule 8(C) as amended provides for grant of quarry lease to Government Company and Rule 8(A) as amended by GO 214 provides for quarry lease to be granted only to persons having \"Letters of Commitment\". The said GO also provided for canalisation of granite quarried. The validity of Rule 8(D) containing canalising provisions were challenged before the High Court of Madras and such Rule 8(D) was struck down by the High Court. On March 5, 1993, this Court, in Writ Petition No. 12267 of 1984 and connected matters passed an order to the effect that the State Government could consider and pass orders in respect of relief sought for by the petitioners for lease of quarrying black granite. On March 8, 1993, GO No. 97 was passed introducing Rule 39 of the Mineral Concession Rules providing for grant of leases \"in special circumstances in the interest of mineral development\" and \"in public interest\" otherwise than in accordance with the Mineral Concession Rules. As stated earlier, the validity of Rules 39 was challenged in a writ petition before the Madras High Court\n8. It may be stated here that by GO Nos. 125 and 197 the State of Madras granted quarry leases in favour of some persons who had established industries and had been granted quarry leases earlier and who had been allowed to continue in possession all through. After Rule 39 was struck down by the Madras High Court two writ petitions were filed before the Madras High Court for cancelling leases granted by the said GO Nos. 125 and 197 in exercise of the power under Rule 39 of the Mineral Concession Rules. The State Government opposed such writ petitions for cancelling the leases and inter alia contended that the grant of leases to existing industries was traceable to Rule 8(A) as amended by GO No. 214 dated June 10, 1992 and such grant of lease could be sustained without reference to Rule 39 since struck down by the Madras High Court but the High Court allowed the said writ petitions and set aside GO Nos. 125 and 197 by which the leases were granted in favour of some persons. It has been held by the High Court that the grant of lease cannot be sustained under Rule 8(A) of the Mineral Concession Rules and such grant of lease can be referable only to Rule 39 and since Rule 39 has been struck down, the grant made under the said Rule 39 is also to be set aside. Such grantees, therefore, have also moved special leave petitions before this Court inter alia challenging the decision of the Madras High Court striking down Rule 39\n9. To appreciate the rival contentions raised by the parties either in support or against the validity of Rule 39 of the Mineral Concession Rules, the provisions of Rule 39 are set out as hereunder\n\"In exercise of the powers conferred by sub-sections (1) and (1-A) of Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957 (Central Act 67 of 1957) the Governor of Tamil Nadu hereby makes the following amendment to the Tamil Nadu Minor Mineral Concession Rules, 1950The amendment hereby made shall come into force on March 8, 1992\nAMENDMENT\nIn the said rules, after Rules 38, the following rule shall be added, namely\n'39. Powers of State Government to grant rule or renew quarry lease or permission etc. in special cases : Notwithstanding anything contained in these rules, the State Government, if in any case, are of opinion that in the interest of mineral development and in the public interest it is necessary so to do, they may, by order and for reasons to be recorded\n(a) grant or renew a lease or permission to quarry any mineral; or\n(b) allow the working of any quarry for quarrying any mineral;\non terms and conditions different from those laid down in those rules.'\"\n10. The learned counsel challenging the correctness of the decision of the Division Bench of the Madras High Court striking down Rule 39 as arbitrary, have urged a number of points. Since all the matters are being disposed of by common judgment, we do not propose to deal with the contentions made by each of the learned counsel challenging or supporting the impugned decision of the Madras High Court separately in view of the fact that grounds urged by the learned counsel are more or less similar and at times overlapping. We, therefore, propose to deal with the contentions raised by the learned counsel not individually but generally\n11. As already indicated, the only ground on which Rule 39 of the Mineral Concession Rules has been struck down by the Madras High Court is that such rule gives unguided and uncanalised powers to the State Government. The arguments advanced by the learned counsel challenging the decision of the Madras High Court striking down Rule 39 may be summarised to the following effect\n(1) Rule 39 contains the guidelines, viz., the grant under Rules 39 can be made only \"in the interest of mineral development\" and \"in public interest\" for reasons to be recorded in writing(2) The object of the MMRD Act itself is for regulation of mining and \"mineral development\". The rules framed under the MMRD Act are also intended to subserve the said object, namely, mineral development. The provisions of the MMRD Act the rules framed by the Central and the State Governments clearly furnish the scope and purport of the words \"mineral development\". Scientific exploitation of the minerals without waste in undoubtedly an exercise for mineral development envisaged by the Act and the rules\n(3) Since reasons are to be recorded in writing while exercising the power under Rule 39, it can always be ascertained from the order that may be passed under the said provisions of Rule 39 as to whether the grant is one for furthering mineral development or not\n(4) The word \"public interest\" is a word of definite concept which has been referred to in the Constitution and in many other Acts. The import of the expression \"public interest\" has been considered and noted in the decisions of this Court. Hence, the said expression does no longer suffer from any vagueness or indefiniteness\n(5) Power under Rule 39, being controlled by such consideration \"in the interest of mineral development\" and in \"public interest\", cannot be exercised arbitrarily and capriciously but such exercise has to be made with definite objective purpose. There is therefore, no occasion to strike down Rule 39 on the score of being potentially arbitrary and capricious and open to unguided and uncanalised exercise of power. If in any particular case, the aforesaid purposes are not followed in exercising power under Rule 39, then such improper action, and not Rule 39 itself, can be challenged\n(6) In different Acts and rules, both Central and State including rules framed by some other States under MMRD Act, provisions similar to Rule 39 have been made and such provisions have been noticed by courts of law but for good reasons have not been struck down as violative of Article 14 of the Constitution\n12. We have already indicated the outlines of various Government orders amending the Mineral Concession Rules from time to time. The picture which emerges from the aforesaid amendments made in the Mineral Concession Rules may be stated as hereunder\n13. The Mineral Concession Rules were framed under Section 15 of the MMRD Act providing for grant of quarry leases and permission in respect of minor minerals both in revenue lands and patta lands. In the year 1972 the Mineral Concession Rules were amended and under such amendment, the grant of lease of revenue land to quarry granite could be made in favour of private persons only if they had industries or industrial programmes indicating that the policy of the Government to exploit black granite scientifically to avoid wastage was being implemented. A number of persons including some of the appellants in these proceedings had established industries pursuant to the Rules as amended and applied and obtained leases for quarrying black granite for a period of ten years in 1973 - such leases being valid up to 1983. In December 1977, Rule 8(C) was introduced prohibiting grant of leases for quarrying black granite by private persons and confining exploitation only by the Government. The validity of such rule was challenged but as aforesaid the said rule was upheld by this Court in the case of Hind Stone (State of T.N. v. Hind Stone, (1981) 2 SCC 205 : AIR 1981 SC 711 ). When the leases for quarrying black granite in revenue lands for a period of ten years expired in 1983, the lessees including some of the appellants made applications for grant of renewal but they were not eligible for getting such renewal in view of Rule 8(C) the validity of which was upheld by this Court. The applicants for getting such renewal of lease including some of the appellants filed writ petitions before this Court and as indicated hereinbefore orders for maintaining status quo as to the possession of the lands were passed by this Court without however giving any right to quarry. In 1988, Rule 8(C) was amended whereby provision was made for grant of leases for quarrying black granite to private persons having industries or having industrial programmes. Such amendment of Rule 8(C) virtually restored the position as was prevailing in 1972. The persons who had set up industries or had industries programmes for quarrying black granite scientifically as desired by the Government, made applications for grant of renewal of leases. Such applications were scrutinised by the department concerned and recommendations for grant of renewal of leases were made by the department. At that stage, in 1989 the Mineral Concession Rules were further amended inter alia providing that quarry leases were to be granted to industries only under tender system. Tenders were floated and some of the aspirants for getting leases participated in such tenders and those who had participated and were successful were given the letters of commitment assuring grant of lease to them if they would set up industries. In 1992, the Rules were amended again by GOMs No. 214 drastically. As per the amended rules, grant of quarry leases to quarry black granite were to be made only to government companies and the companies having letters of commitment\n14. It does not require any imagination to note that there was frustration and resentment of such persons like some of the appellants who had set up industries based on the old rules and who had been starving for raw materials but who had become disabled from getting any lease in view of restriction of granting of such lease and confining the grant of lease in favour of only such private persons who held the letters of commitment\n15. It has been contended by the learned counsel in support of Rule 39 that the State Government having realised the injustice and unmerited hardship to be suffered by some persons and also having realised that for furthering mineral development which will be in the public interest, it was desirable to make suitable provisions so that the rigorous created because of the amendment made by GOMs 214 in 1992 confining grant of leases to private persons holding letters of commitment, should be relaxed. It was on such perception that Rule 39 was introduced in the Mineral Concession Rule enabling the Government to grant quarry leases to private persons in appropriate cases in the interest of mineral development and in public interest for reasons to be recorded in writing. It is, therefore, necessary to decide whether introduction of Rule 39 in the Mineral Concession Rules was justified and desirable and even if it may be justified or desirable, as a matter of policy, whether in law such amendment can be sustained\n16. Elaborating the contentions made before this Court in support Rules 39, it has been contended by the learned counsel that Rule 39 does not confer an uncanalised power and does not suffer from the vice of want of guidelines. It has been urged that Rule 39 contains the guidelines, viz., that the grant must be for mineral development and \"in public interest\". In other words, Rule 39 has been inserted to provide for grant of lease which may not be done strictly under Rule 8(A) or 8(C) but which is warranted for mineral development and \"in public interest\" for good reasons to be recorded\n17. It has been urged that mineral development is not a vague concept but has a definite meaning which can be tested objectively particularly when reasons are to be recorded in writing under Rule 39\n18. The learned counsel have contended that the object of the MMRD Act is for regulation of mineral development and the Rules framed under the MMRD Act both by the Central and State Governments clearly furnish the scope and support of the word \"mineral development\". It has been strongly contended that scientific exploitation of minerals without waste is undoubtedly a part of mineral development as envisaged by the MMRD Act and the rules framed thereunder. It has been urged by the learned counsel that the word \"public interest\" having been referred to in the Constitution and in many enactments is a word of definite concept\n19. The validity of Service rules including Fundamental Rule 56(j) empowering the Government to terminate the service by way of premature retirement had been challenged before this Court as ultra vires Articles 14 and 16 of the Constitution but this Court in a series of decisions has held that if the power to retire prematurely in public service if exercised in \"public interest\" the provision empowering such premature retirement does not become invalid on the score of offending Articles 14 and 16 of the Constitution. The Constitution Bench of this Court in T. G. Shivacharana Singh v. State of Mysore (AIR 1965 SC 280 : (1967) 2 LLJ 246 ) in upholding Rule 285 of Mysore Civil Services Rules, 1958, providing for premature retirement in 'public interest' has held that Rule 285 authorising the Government to retire a government servant compulsorily in public interest did not offend Articles 14 and 16 of the Constitution. It was indicated by the Constitution Bench that the law in relation to the validity of the rules permitting compulsory premature retirement of government servants had been well settled by a series of prior decisions of this Court in Moti Ram Deka v. General Manager, North East Frontier Railway (AIR 1964 SC 600 : (1964) 5 SCR 683 : (1964) 2 LLJ 467 ) and Shyam Lal v. State of U.P. ((1955) 1 SCR 26 : AIR 1954 SC 369 )\n20. The learned counsel have further contended that the guidelines need not be expressly found in the impugned and provisions but such guidelines can be gathered from the setting of the Acts and the rules framed thereunder. In support of this contention reference has been made to the decision of this Court made in the case of P. J. Irani v. State of Madras ((1962) 2 SCR 169 : AIR 1961 SC 1731 ). Section 13 of Madras Buildings (Lease and Rent Control) Act, 1949 was challenged as ultra vires Article 14 of 16 of the Constitution as the said provisions gave uncontrolled and unguided discretion to the Government to exempt any building from all or any of the provisions of the said Act. It was held in the said decision that enough guidance was given in the preamble and the operative portion of the Act to exercise the discretion of exemption. The decision in P. J. Irani case ((1962) 2 SCR 169 : AIR 1961 SC 1731 ) was followed by this Court in the decision in S. Kandaswamy Chettiar v. State of T.N. ((1985) 1 SCC 290 ) Section 29 of Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 providing for discretion to the State Government to grant total exemption to buildings belonging to public trust from the purview of the Rent Act was held valid and not offending Article 14 of the Constitution on the ground of giving unbridled discretion. It was held that sufficient guideline was afforded by the preamble and the operative provisions of the Rent Act for the exercise of discretionary power vested in the Government\n21. Reference has also been made to the decision of this Court in Ram Dial v. State of Punjab ((1965) 2 SCR 858 : AIR 1965 SC 1518 ). In the said decision the expression \"public interest\" has been explained at page 866 of the Report. It has been held that while considering the power given to the Government to remove a member under Section 14(e) of the Punjab Municipalities Act, the expression \"public interest\" would necessarily depend upon the time, place and circumstances with reference to which the consideration was made. It may be noted here that Section 14(e) was struck down not on the score that the expression \"public interest\" is vague and it introduces unguided, and unbridled power but the same was struck down in view of the fact that Section 14(e) providing for removal without a hearing circumvents Section 16(1) which contemplates a hearing to be given to the members to be affected\n22. The learned counsel have also referred to the decision of this Court made in the case of Harakchand Ratanchand Banthia v. Union of India ((1969) 2 SCR 166 : (1970) 1 SCR 479 ). In considering the expression \"so far as it appears to be necessary or expedient for carrying out the provisions of the Act (Gold Control Act), the Constitution Bench in the said decision held that the said phrase was not subjective in the context of the scheme and object of the legislation. The opinion of the administrator as to the necessity of making the order must be made objectively and must be reasonably tenable in a court of law. Reference has also been made to another decision of this Court made in Jalan Trading Co. (P) Ltd. v. Mill Mazdoor Union ((1967) 1 SCR 15 : AIR 1967 SC 691 : (1966) 2 LLJ 546 ). In the said decision validity of several provisions of the Payment of Bonus Act including Section 36 were taken into consideration by the Constitution Bench of this Court. It has been held that the power to exempt certain establishments from the operation of the Act given to the appropriate Government under Section 36 was not an unguided power because the Government was enjoined to take 'public interest', the financial position of the establishment, and other relevant circumstances into consideration before exercising the said power. There was therefore no excessive delegation of legislative authority by Section 36 and the section was held valid\n23. The learned counsel have again relied on recent decision of the Constitution Bench of this Court made in the case of Workmen v. Meenakshi Mills Ltd. ((1992) 3 SCC 336 : 1992 SCC (L&S) 6791992 SCC(L&S) 679 ) The vires of Section 25-N of the Industrial Disputes Act (as prevalent at the relevant time) was considered in the said decision. It had been held that powers conferred under sub-section (2) of Section 25-N to grant or refuse permission for retrenchment has to be exercised in accordance with objective indicated and Statement of Objects and Reasons given in the Amending Act 32 of 1976 and also the basic idea of settlement of industrial disputes and maintaining industrial peace. It has been held that in exercising power under sub-section (2) of Section 25-N, with the requirement of passing a speaking order containing reasons does not amount to unreasonable restriction. It has also been held that the requirement of reasons for exercise of such power by itself excludes chances of arbitrariness. It has also been held in the said decision that Section 25-N is not vitiated on the ground of absence of a provision for appeal or review of the order passed by the Government or authority as the order is required to be a speaking order to be passed on objective considerations. It has been further held that the remedy of judicial review available under Article 226 cannot be said to be inadequate because even in a case of refusal of permission for retrenchment on policy considerations, it is open to the Court to examine whether policy is in consonance with the object and purport of the Act\n24. The learned counsel have also contended that Entry 54 List I of Seventh Schedule to the Constitution of India enables the central Government to regulate mines and mineral development in \"public interest\" by making a declaration of such intention and Parliament has in fact made such declaration by Section 2 of the MMRD Act. By the said MMRD Act, Parliament has left the power of regulating quarry leases in respect of minor minerals to the State Governments under Section 15 of the MMRD Act. The State Government has the authority to deal with the minor minerals under which the Mineral Concession Rules have been framed by the Government of Tamil Nadu. It is by the said rules that the State Government has been regulating grant of leases from time to time. In 1992 the Government thought it fit to prohibit grant of quarry leases to private persons except in patta lands and providing for grant of quarry leases to revenue lands only to government companies in terms of Rule 8(C). On a reconsideration and as a part of policy decision, the Government thought it fit to introduce Rule 39 providing for the grant of quarry leases to private persons \"in the interest of mineral development\" and \"in public interest\" by indicating reasons in writing by relaxing the rigours of other provisions of the Mineral Concession Rules. Rule 39 is a part of the policy underlying the Mineral Concession Rules which is consistent with the object of the MMRD Act. As exercise of relaxation for grant of quarry leases under Rule 39 can only be made within the parameters of public interest and for the mineral development by recording the reasons in writing, Rule 39 does not suffer from arbitrariness or unguided or unbridled power offending Article 14 of the Constitution. It has also been contended that the power exercised under Article 39 is not an absolute, discretionary power of the State Government unfettered by any valid consideration but exercise of such power within the aforesaid parameter is always open to judicial scrutiny thereby affording ample safeguard against any abuse in exercising the power under Article 39\n25. Commenting on the reasons for which Article 39 was introduced in the Mineral Concession Rules, it has been submitted by the learned counsel that various persons under the existing rules has set up industries by incurring substantial costs for sizing and polishing granites for export and sale in the domestic market. Such scientific exploitation and ancillary steps in that regard are undoubtedly right steps for mineral development. The cases of some of the persons who had set up proper industrial establishments for quarrying granites and for polishing and sizing them for effective user under the existing rules and had been possessing lands and were reasonably aspiring for renewal of leases required proper consideration. Although their cases were recommended on scrutiny of relevant facts by the department concerned, no such lease could be granted because of the amendment effected in 1992 in the Mineral Concession Rules. As not only injustice was meted out to such persons but non-renewal of leases to such persons was also considered to be not \"in the interest of mineral development\" and \"in the public interest\". The State Government, therefore felt that Rule 39 containing provision for relaxation in the matter of grant of quarry leases should be introduced so that in an appropriate case in the greater interest of mineral development and in public interest, grant of lease can be made notwithstanding other provisions in the Mineral Concession Rules. In the aforesaid facts, it cannot be contended that Rule 39 was introduced without any justification whatsoever or the same suffers from any excessive delegation or vice of uncanalised and unbridled power or the same was introduced to give favours to a chosen few\n26. The High Court in striking down Rule 39 has held that Rule 39 provides for an arbitrary power and the guidelines of public interest and in the interest of mineral development do not provide any objective standard. For such finding, the High Court has relied on the decision of this Court made in Dwarka Prasad Laxmi Narain v. State of U.P. ( : AIR 1954 SC 224 ); R. M. Seshadri v. District Magistrate, Tanjore (AIR 1954 SC 747 : (1955) 1 SCR 686 ); Harakchand Ratanchand Banthia v. Union of India ((1965) 2 SCR 858 : AIR 1965 SC 1518 ) and Jalan Trading Co. (P) Ltd. v. Mill Mazdoor Union ((1969) 2 SCC 166 : (1970) 1 SCR 479 ). It has been contended by the learned counsel that all the said decisions do not support the proposition that Rule 39 is ultra vires Articles 14 of the Constitution. The decisions relied on by the High Court primarily relate to laws or rules which seeks to prohibit a person from carrying on a legal trade or profession except on licences. Such laws prescribing the restriction require to be precise and objective so that the prohibitions would clearly be understood and made enforceable. Provisions enabling a grant have necessarily different import\n27. It may be noted here that the decision in Dwarka Prasad case ( : AIR 1954 SC 224 ) relates to a case where the power is given under clause 4(3) of the Uttar Pradesh Coal Control Order to grant or refuse to renew, suspend, revoke or cancel or modify any licence issued under the said control order. The said clause further authorised the Controller to delegate such power in favour of any person. Such provision was held unreasonable and invalid. The decision in R. M. Seshadri v. District Magistrate, Tanjore (AIR 1954 SC 747 : (1955) 1 SCR 686 ) relates to the validity of condition 5(a) and special condition 3 which required a licence under Cinematograph Act to exhibit at each performance one or more approved films of such length and for such time as the Provincial Government or the Central Government may direct. Under special condition 3 the licensee was required to exhibit at the commencement of each performance not more than 2000 feet of one or more approved films. It was held by this Court that such conditions did not amount to reasonable restrictions with the meaning of Article 19(6) of the Constitution and therefore was ultra vires Article 19(1) of the Constitution\n28. The decision made in Harakchand Ratanchand Banthia ((1969) 2 SCC 166 : (1970) 1 SCR 479 ) was a case where the validity of various sections of the Gold Control Act and the Regulations made thereunder fell for consideration. Section 5(2)(b), Section 27(2)(d), Section 27(6)(a), Sections 32, 46, 88 and 100 were held ultra vires for reasons indicated therein. Indeed this decision is relied on to support the validity of Rule 39 of the Mineral Concession Rules. Some of the sections of the said Gold Control Act were held valid. The reasons for which the said other sections were held invalid are entirely different and do not apply so far as Rule 39 is concerned. Moreover, considerations as to public interest and for furtherance of mineral development as essential requirement to grant exemption under Rule 39 make the said rule wholly objective. The decision in Banthia case ((1969) 2 SCC 166 : (1970) 1 SCR 479 ) has no application in interpreting Rule 39\n29. It has been further contended that where in respect of prohibited categories, the law carves out an exception or relaxation, the rule to be applicable should be appreciated on a different perception. There the question of unbridled power being allowed to be exercised does not arise. The question is of taking out certain exceptions from the prohibited area and keeping certain categories outside the prohibited area for being allowed to exercise freedom of trade or business from the restrictions imposed\n30. Elaborating on the contention that the power of relaxation as contained in Rule 39 is similar in various statutes it has been urged that the power granted under Section 31 of the MMRD Act confers identical power on the Central Government as Rule 39 confers the power on the State Government. Section 31 of the MMRD Act may be set out as hereunder\" 31. Relaxation of rules in special cases. - The Central Government may, if it is of opinion that in the interest of mineral development it is necessary so to do, by order in writing and for reasons to be recorded, authorise in any case the grant, renewal or transfer of any prospecting licence or mining lease, or the working of any mine for the purpose of searching for or winning any mineral, on terms and conditions different from those laid down in the rules made under Section 13. \"It has been submitted that the High Court while dealing with Section 31 of the MMRD Act, has not questioned the validity of the said section although it contains similar provisions. In this context reference to Section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 has also been made. The provision of Section 29 is set out as hereunder\" Notwithstanding anything contained in this Act, the Government may, subject to such conditions as they deem fit, by notification, exempt any building or class of buildings from all or any of the provisions of this Act. \"31. This provision has been upheld by the Supreme Court in the decisions S. Kandaswamy Chettiar v. State of T.N. ((1985) 1 SCC 290 ) and Prabhakaran Nair v. State of T.N. ((1987) 4 SCC 238 )\n32. Reference was also made to Section 8-A of the Karnataka Sales Tax Act which is set out as hereunder\" 8-A. (1) The State Government may, by notification make an exemption, or reduction in rate, in respect of any tax payable under this Act -\n(2) Any exemption from tax or reduction in the rate of tax, notified under sub-section (1) may be subject to such restrictions and conditions as may be specified in the notification\n(3) The State Government may, by notification, transpose any entry or party thereof from one schedule to another schedule and alter the point of levy of sale or purchase, but not so as to enhance the rate of tax in any case. \"Reference to Section 25(1) of the Customs Act, 1962 was also made. The provision is set out as hereunder\" If the Central Government is satisfied that it is necessary in the public interest so to do it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance), as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. \"This section has been upheld by this Court in Indian Express Newspapers (Bombay) P. Ltd. v. Union of India ((1985) 1 SCC 641 : 1985 SCC (Tax) 121 )\n33. Section 14 of the Tamil Nadu General Sales Tax Act since referred is set out as hereunder\" 14. Power of Government to notify exemption and reductions of tax. - (1) The Government may be notification (issued whether prospectively or retrospectively) make an exemption of reduction in rate, in respect of any tax payable under the Act. \"34. It is contended that Section 14 is quite similar to Rule 39 of the Mineral Concession Rules. In this connection, reference has also been made to Rule 66 of the Karnataka Minor Mineral Concession Rules, 1969, containing provisions for relaxation of rules in special cases. The said rule is set out as hereunder\" 66. Relaxation of rules in special cases. - In cases where the Government is of the opinion that public interest so requires, it may authorise the grant of a quarrying lease or a quarrying permit on such terms and conditions other than those prescribed in the rules, as the Government may by order specify\nProvided that notwithstanding anything contained in these rules such safeguards, territorial, financial or otherwise may be provided to the leases with a view to safeguarding the interests of any industry or trade in order to avoid unhealthy competition among the lessees and to prevent any fall in the trade and to see that minor mineral is exploited in a scientific and systematic manner. \"Basing the arguments on the aforesaid contentions the learned counsel have submitted that there was no occasion to strike down Rule 39 by the High Court as invalid and ultra vires Article 14 of the Constitution by holding that the said rule conferred unguided and unbridled discretionary power on the State Government. The learned counsel have submitted that as the said Rule 39 is quite valid and has been inserted in the Mineral Concession Rules for a reasonable purpose, Rule 39 cannot per se be declared as ultra vires as sought to be done by the Madras High Court. If in any individual case, power has not been exercised properly and the reasons which have got to be recorded in writing do not stand the scrutiny of reasonableness and the purposes for which such power of exemption can be exercised, challenge for improper action in such individual cases before a court of law can always be made. The learned counsel have therefore submitted that the decision of the Madras High Court should be set aside thereby enabling the State Government to giver effect to Rule 39 in appropriate cases\n35. Supporting the decision of the Madras High Court striking down Rule 39 of the Mineral Concession Rules, it has been urged by the learned counsel opposing the appeals that the High Court felt that if Rule 39 was to be interpreted to give a wide discretionary power to the authorities to overtook other provisions of the Mineral Concession Rules then it would be violative of Article 14 as being vague and unfettered and giving uncanalised power to the State Government. It was on such finding that Rule 39 was struck down as unconstitutional\n36. It has been very strongly contended that the submission that the words \"public interest\",\" reasons to be recorded in writing \"would be adequate to prevent arbitrary action is not tenable in view of the decision of this Court by the Constitution Bench in Delhi Transport Corpn. v. D.T.C. Mazdoor Congress (1991 Supp (1) SCC 600 : 1991 SCC (L&S) 12131991 SCC(L&S) 1213 ). The attention of this Court has been drawn to paragraph 230 at page 716 in the majority decision. It has been held in the said paragraph\" There is need to minimise the scope of the arbitrary use of power in all walks of life. It is inadvisable to depend on the good sense of the individuals, however high placed they may be. It is all the more improper and undesirable to expose the precious rights like the rights of life, liberty and property to the vagaries of the individual whims and fancies. It is trite to say that individuals are not and do not become wise because they occupy high seats of power, and good sense, circumspection and fairness does not go with the posts, however high they may be. There is only a complacent presumption that those who occupy high posts have a high sense of responsibility. The presumption is neither legal nor rational. History does not support it and reality does not warrant it. In particular, in a society, pledged to uphold the rule of law, it would be both unwise and impolitic to leave any aspect of its life to be governed by discretion when it can conveniently and easily be covered by the rule of law. \"It has also been contended that it is also not factually correct that all the ten grantees (13 leases) are having their own industries or factories and they are not exporting any raw granite or raw block granite to foreign countries but they are processing and polishing after cutting them and sizing them and it was only the said polished goods that are being exported by them. It has been contended that only M/s. Enterprising Enterprises and Gem Granite have their own factories at Madras. Pallavan Granite has a factory at Pondicherry. All other grantees do not posses any industry of their own either inside or outside the State of Tamil Nadu. It is also contended that 75% to 80% of the quarried materials are straight away exported abroad without cutting and polishing even by the persons who possess industries\n37. It has also been contended that although under GOMs No. 1273 introduced on December 9, 1989 which was in force on June 9, 1992 permitting grant of lease to persons which industries, M/s Enterprising Enterprises and Gem Granite did not choose to apply under that scheme which was in force for nearly 3 1/2 years only because the granites quarried must be captively used in their own industries for the purpose of polishing before the same are exported. It has been contended that relevant facts have not been taken into consideration for granting lease in the purported exercise of power of relaxation under Rule 39. Such factual contentions are, however, not admitted\n38. We do not propose to scrutinise facts and circumstances concerning the grantees in favour of whom the exercise of power under Rule 39 had been made because we do not think that for deciding the validity of Rule 39 a case of improper exercise of power under Rule 39 in any particular case, is required to be considered by this Court\n39. It has been contended that even if it is held that consideration of public interest and the interest of mineral development coupled with requirement to record reasons provide guidelines under which power under Rule 39 is to be exercised, Rule 39 introduced on March 8, 1993 in the Mineral Concession Rules, if given an expansive introduction, would entitle the authorities concerned to disregard the various other provisions as contained in the Mineral Concession Rules framed under Section 15 of MMRD Act and would entitle the authorities concerned either to grant or renew a quarry lease contrary to the avowed policy of the State Government incorporated in certain other provisions of the Mineral Concession Rules\n40. It has been contended that when Rule 8(C) epitomises policy of the State Government reserving granite in all its uses to be exploited by the State Government or through its Corporation, in exercise of the powers under Rule 39, the State Government should not be permitted to give an interpretation to Rule 39 widely and grant a quarry lease contrary to the State Policy. Mr. Sibal, the learned counsel in this connection has referred to the decision in Gardner v. Jay ((1885) 29 Ch D 50 , 58 : 52 LT 395). Lord Justice Bowen in dealing with the judicial discretion has held that :\" If a court is invested by Act of Parliament with a discretion, that discretion, like other judicial discretion, must be exercised according to commons sense. \"The learned Counsel has also contended that it is a settled principle of interpretation of statute that a court should not interpret a statute in such a fashion as to render other provisions redundant. There should always be an attempt to read different sections of a statute harmoniously so that one provision does not invalidate the other. It has been contended that the statutory rule should be considered as a part of an integrated scheme and no one provision should be so interpreted as to render the scheme as envisaged in other provisions inoperative. It has been submitted that Rule 8(C) represents the part of a scheme in respect of which the State Government does not allow exploitation of granite except by itself or through its Corporation. It must therefore be held that the authorities in framing Rule 39 could not have intended that such policy should be rendered inoperative and ineffective by interpreting Rule 39 in a wide manner. It has been further submitted that it is well established rule of interpretation that courts must interpret an enactment in such a way as to implement rather than defeat its purpose. In this connection, reference has been made to the observation of Francis Bennion in Statutory Interpretation, Second Edn. at page 411. The learned author has indicated that :\" An Act must be construed so that its provisions are given force and effect rather than being rendered nugatory.\"The learned author has also indicated that :\" Ut res magis principle requires inconsistencies within an act to be reconciled. \"In this context, the learned author has referred to Blackstone to the effect that,\" one part of the statute must be so constructed by another, that the whole may, if possible, stand - ut res magis valeat quam pereat. \"It has been further submitted that the principle of reconciling inconsistencies within an Act means that if the obvious intention of the enactment gives rise to difficulties in implementation, the court must do its best to find ways of resolving these. It has been submitted that looking from this angle, Rule 39 would only mean that the State Government is entitled to grant or renew a quarry lease if in a given case or in a special class of cases it is of the opinion that in the interest of mineral development and in the public interest it is necessary to change the terms and conditions of the lease different from those statutorily prescribed under the rules. In no other circumstances, this power can be exercised. Such an interpretation would render Rule 39 consistent with the scheme formulated by the State Government under other provisions in particular Rules 8(A) and 8(C). It is contended that any other interpretation would render Rule 39 a Henry VIII clause\n41. It has been submitted that this Court has many occasions to deal with similar Henry VIII clauses (that king is regarded popularly as the impersonation of executive autocracy). In Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly ((1986) 3 SCC 156 , 220, 221 : 1986 SCC (L&S) 4291986 SCC(L&S) 429 : (1986) 1 ATC 103 ) (at pp. 220, 221) and in Delhi Transport Corpn. v. D.T.C. Mazdoor Congress (1991 Supp (1) SCC 600 : 1991 SCC (L&S) 12131991 SCC(L&S) 1213 ) (at pp. 707 and 717) this Court held that such clauses are constitutionally impermissible\n42. It has been very strongly contended that in case this Court finds Rule 39 to be vague and ambiguous then this Court may, in the light of scheme of the entire rule, the policy of the State Government as expressed in the said rules, permit Rule 39 to be read down in such a manner so as to give effect to the policy of the Government and also to the scheme of the MMRD Act. It has been submitted that this Court has repeatedly followed doctrine of reading down in State of Karnataka v. Ranganatha Reddy ((1977) 4 SCC 471 : (1978) 1 SCR 641 ), R. L. Arora v. State of U.P. ((1964) 6 SCR 784 : AIR 1964 SC 1230 , following Kedar Nath Singh v. State of Bihar, 1962 Supp 2 SCR 769 : AIR 1962 SC 955 ), Jagdish Pandey v. Chancellor, University of Bihar ((1968) 1 SCR 231 : AIR 1968 SC 353 ), Sunil Batra v. Delhi Administration ((1978) 4 SCC 494 : 1979 SCC (Cri) 155 )\n43. It has been further submitted that as Rule 39 cannot be given a wide interpretation thereby giving extraordinary power to relax other provisions of the rules and consequently rendering the scheme of the entire rules ineffective. The only interpretation by reading down Rule 39 which can be given is that the said rule would permit the State Government under extraordinary circumstances or in special cases to vary certain terms and conditions of the lease in a given case. It has been submitted that therefore it becomes necessary to understand the import of the words \"terms and conditions\" in contradistinction to the policy of the Government as contained in the Mineral Concession Rules. The words \"terms and conditions\" according to the learned counsel would mean a stipulation or requirement, the failure of which would render the Act subject to repudiation\n44. It has been contended that the Mineral Concession Rules prescribe certain conditions as to the grant of leases - how an application is to be made, to whom it is to be made, the maximum period of lease, the extent of maximum area which can be leased out to the applicant etc. All these conditions are also provided in the MMRD Act itself. In D. K. Trivedi v. State of Gujarat (1986 Supp SCC 20 ) this Court has held that the rule-making power of the State Government under Section 15 is controlled by Sections 4 to 13 (now Sections 5 to 13) of the MMRD Act. On the principle of harmonious construction and reading down statutory provision for reconciliation in a special case, in the interest of mineral development and in the public interest, the State Government may change or relax some of the conditions of lease e.g. may at the most grant a lease for more than ten years if the applicant satisfied the State Government of the necessity to do so. Similarly, in a given case, the Government may charge less seniorage fee, dead rent etc. in the interest of mineral development and in public interest. But the State Government cannot and should not utilize such an extraordinary power under Rule 39 to exempt few persons alone, while applying the policy to all others e.g. Dharmapuri District is completely reserved for exploitation by Government-owned Corporation. It has been contended that it has been demonstrated before this Court with the aid of the affidavit filed by the State Government in Civil Appeal No. 1655 of 1992 at pages 450 to 456 that more than 70 applications have been rejected on the sole ground that Dharmapuri District is reserved for State exploitation. Despite such avowed policy of reservation, the State Government in the purported exercise of a wide power under Rule 39 has granted three leases in the same Dharmapuri District only on the ground that there was a huge loss of foreign exchange. The learned counsel have contended that such an exercise in completely overlooking the other provisions will be wholly capricious and therefore impermissible under Article 14 of the Constitution and consideration of loss of foreign exchange is alien to the relevant consideration permissible under the Mineral Concession Rules\n45. It has been contended that in case the Government wants to grant leases in Dharmapuri District to persons who were not in possession of letters of commitment as on June 10, 1992, the only course open to the State Government is to change its policy of reservation as well as its policy in relation to letters of commitment and allow all individuals who are interested in a quarrying licence consistent with the concept of equal opportunity\n46. It has been further contended that the State Government is under a constitutional duty to act fairly and justly and given equal opportunity to every individual who seeks largess from the Government. The grant of licence of a few people and that also on grounds of loss of foreign exchange is totally obnoxious to the theory of just State action. The guiding principle for interpretation of Rule 39 should be equality of opportunity to every person in the trade and at the same time imposing sufficient restrictions or guidelines or safeguards to prevent misuse of such a power and such interpretation must enable Rule 39 to coexist with the other rules as being not inconsistent with the other rules\n47. It is therefore only possible to reconcile Rule 39 by reading it down and indicating that in appropriate case by exercise of power conferred in Rule 39, it is permissible for the State Government only to vary the terms and conditions of the lease \"in the interest of mineral development\" and \"public interest\"\n48. After considering the facts and circumstances of the case and giving our careful consideration to the arguments advanced by the learned counsel for the respective parties, it appears to us that the MMRD Act was enacted by Parliament under Entry 54 List I of the Seventh Schedule to the Constitution. The aforesaid entry enables the Central Government to regulate mines and mineral development in public interest by making such declaration and Parliament, has in fact, made such declaration by Section 2 of the MMRD Act. In respect of minor minerals, Parliament by the said MMRD Act has left the powers of regulating minor minerals to the State Governments under Section 15 of the MMRD Act. Different State Governments have exercised such power under Section 15 of the MMRD Act and State of Tamil Nadu has enacted in 1959 the Mineral Concession Rules. There is no dispute that the MMRD Act and the rules framed thereunder either by the Central Government or by the State Government are for mineral development subserving the cause of public interest. It cannot also be disputed that mineral development is not a vague expression and the MMRD Act and the rules framed under it, clearly furnish the scope and purport of the word \"mineral development\". It has been very reasonably contended that scientific exploitation of minerals without waste is undoubtedly a part of mineral development as envisaged by the MMRD Act and the rules framed thereunder. The expression \"public interest\" finds place in the Constitution and in many enactments which have since been noted and considered by this Court in various decisions. The said expression is, therefore, a word of definite concept. There is also force in the contention of the appellants that the guidelines need not be expressly found in the impugned provisions but such guidelines can be gathered from the setting of the Act and the rules framed thereunder. Such contention gets support from the decisions of this Court in P. J. Irani ((1962) 2 SCR 169 : AIR 1961 SC 1731 ), S. Kandaswamy Chettiar ((1985) 1 SCC 290 ), Jalan Trading Co. ((1967) 1 SCR 15 : AIR 1967 SC 691 : (1966) 2 LLJ 546 ), Workmen of Meenakshi Mills Ltd. ((1992) 3 SCC 336 : 1992 SCC (L&S) 6791992 SCC(L&S) 679 )\n49. The power of relaxation under Rule 39 of Mineral Concession Rules is to be exercised for \"mineral development\" and \"in public interest\" after recording reasons for such exercise of power. In our view, it has been rightly contended by the learned counsel in support of the validity of Rule 39, that the exercise of power under the said Rule 39 cannot be made arbitrarily, capriciously and on subjective satisfaction of the authority concerned but the same is to be exercised within the parameters of \"mineral development\" and \"in public interest\" which as aforesaid, are not vague and indefinite concepts. Such exercise of power must satisfy the reasonableness of State action before a court of law if any challenge of improper action in exercise of the said power under Rule 39 in a given case is made. It has been held by the Constitution Bench of this Court in Meenakshi Mill case ((1992) 3 SCC 336 : 1992 SCC (L&S) 6791992 SCC(L&S) 679 ) that if a speaking order is required to be passed on objective consideration, such provision is not vitiated on the ground of absence of a provision for appeal or review because the remedy available by way of judicial review is by itself an adequate safeguard against improper and arbitrary exercise of power. It has also been held by this Court in the said decision that requirement of giving reasons for exercise of the power by itself excludes chances of arbitrariness\n50. The observation made in the majority decision in Delhi Transport Corpn. case (1991 Supp (1) SCC 600 : 1991 SCC (L&S) 12131991 SCC(L&S) 1213 ) as referred to hereinbefore should be appreciated with reference to the facts and circumstances of a case and the true import of a provision under which a discretionary power is to be exercised. While no exception can be made to the observation of this Court in the said decision that\" It would be both unwise and impolitic to leave any aspect of its life to be governed by discretion when it can conveniently and easily be covered by the rule of law\", it should also be borne in mind that it is not always feasible and practical to lay down such exhaustive written guidelines which can cover all contingencies. It has, therefore, become necessary to make provisions for exercise of discretion in appropriate cases by giving broad guidelines and indicating the parameters within which such power is to be exercised. In various decisions referred to hereinbefore, this Court has upheld such exercise of discretion if the same does not appear to be wholly uncontrolled uncanalised and without any objectives basis\n51. \"Public interest\" is a paramount consideration in the MMRD Act itself and the rules framed thereunder cannot but subserve \"public interest\" in furthering the cause of mineral development. We are, therefore, unable to hold that Rule 39 is per se obnoxious and having contained unbridled, unguided and uncanalised discretionary power offends Article 14 of the Constitution\n52. Although it does not appear that any argument of harmonious construction of the statute coupled with the principle of interpretation by reading down was advanced before the Madras High Court but since such contention has been raised before this Court and it appears to us that for considering the validity of Rule 39 and its true import, it may be necessary to consider the question of harmonious construction and the principle of reading down a statutory provision, we propose to examine the contentions made in that regard. It has been contended that all the provisions in the Mineral Concession Rules must be understood as an integrated scheme and no particular provision should be permitted to govern the field in isolation particularly when it runs counter to the scheme envisaged by the other provisions of the Mineral Concession Rules. It has been contended that since under the other provisions of the Mineral Concession Rules, exploitation of black granite in Dharmapuri District is restricted to a particular class of operators as a policy decision of the State Government, so long such policy decision remains in force no relaxation of the same is permissible in the purported exercise of power under Rule 39. Accordingly, Rule 39 may be held valid only if the same is interpreted as a provision having a limited application and being wholly confined in varying the terms and conditions of leases in appropriate cases\n53. Although, at the first glance, such argument appears to be reasonable but on closer scrutiny the same does not appear to be sustainable. T",
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"case_title": "SUPREME COURT OF INDIA | CRIMINAL APPEAL - 868 of 2019 | Birendra Prasad Sah v. State Of Bihar And Anr. | 08/05/2019",
"case_details": "Case: CRIMINAL APPEAL - 868 of 2019 | Birendra Prasad Sah v. State Of Bihar And Anr.",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The dispute concerns two cheques, for Rs 36,00,000 and Rs 13,00,000, which were dishonoured and returned unpaid on 20 November 2015. The appellant received the memo of dishonour on 4 December 2015. A legal notice was issued on 31 December 2015. After failing to obtain proof of service from the postal department, a second legal notice was issued on 26 February 2016, which was replied to on 2 March 2016. A complaint under Section 138 of the Negotiable Instruments Act was filed on 11 May 2016. The Chief Judicial Magistrate (CJM) condoned the delay in filing the complaint and took cognizance. The Sessions Judge rejected the second respondent's revision petition. The High Court, however, quashed the cognizance order, holding that the complaint was not filed within the statutory period. The appellant argued that successive notices are permissible and that the delay was condoned under Section 142. The respondent argued that the second notice was issued beyond the thirty-day period from the dishonour memo, and the complaint was filed beyond the period from the first notice, and that the CJM had only condoned delay after a specific date.",
"generated_judgment": "### Facts:\n1. The dispute involves two cheques that were dishonoured and returned unpaid on 20 November 2015.\n2. The appellant received the memo of dishonour on 4 December 2015.\n3. A legal notice was issued on 31 December 2015, but due to failure in obtaining proof of service, a second legal notice was issued on 26 February 2016.\n4. The second legal notice was replied to on 2 March 2016.\n5. A complaint under Section 138 of the Negotiable Instruments Act was filed on 11 May 2016.\n6. The Chief Judicial Magistrate (CJM) condoned the delay in filing the complaint and took cognizance.\n7. The Sessions Judge rejected the second respondent's revision petition.\n8. The High Court quashed the cognizance order, holding that the complaint was not filed within the statutory period.\n\n### Issues:\n1. Whether successive legal notices are permissible under the Negotiable Instruments Act.\n2. Whether the delay in filing the complaint was properly condoned under Section 142 of the Negotiable Instruments Act.\n3. Whether the complaint was filed within the statutory period from the date of receipt of the memo of dishonour or from the date of the last legal notice.\n\n### Rules:\n1. Section 138 of the Negotiable Instruments Act, 1881, prescribes the conditions under which a complaint can be filed for dishonour of cheques.\n2. Section 142 of the Negotiable Instruments Act provides for the conditions and procedure for filing a complaint, including the timeframe within which it must be filed.\n3. The statutory period for filing a complaint under Section 138 is within one month from the date of receipt of the memo of dishonour or within one month from the date of the last legal notice, if such notice is sent.\n4. The principle that successive notices can be issued if the previous notice was not properly served, as long as the statutory period for filing the complaint is adhered to.\n\n### Analysis:\n1. Referring to **Fact 3** and **Rule 4**, the appellant's action of issuing a second legal notice after failing to obtain proof of service for the first notice seems justified, as the intention was to ensure proper service.\n2. Considering **Issue 2** and **Rule 2**, the CJM's decision to condone the delay under Section 142 is crucial. However, the High Court's decision to quash the cognizance order suggests that the delay was not properly condoned in accordance with the statutory requirements.\n3. Examining **Fact 5** and **Rule 3**, the complaint was filed on 11 May 2016, which is beyond the one-month period from the receipt of the memo of dishonour (**Fact 2**) and also beyond the one-month period from the second legal notice (**Fact 3**).\n4. Given **Issue 1** and **Rule 4**, the permissibility of successive notices does not directly address the issue of the complaint being filed beyond the statutory period.\n5. The appellant's argument that successive notices are permissible and the delay was condoned under Section 142 needs to be evaluated against the specific timelines and the High Court's reasoning for quashing the cognizance order.\n\n### Conclusion:\nBased on the analysis, the critical issue is whether the complaint was filed within the statutory period, considering the receipt of the memo of dishonour and the issuance of successive legal notices. The High Court's decision to quash the cognizance order due to the complaint not being filed within the statutory period is supported by the facts and the applicable rules. Therefore, the appeal should be **DISMISSED**.",
"reference_judgment": "1. Delay condoned.\n2. Leave granted.\n3. This appeal arises from a judgment of a learned Single Judge of the High Court of Judicature at Patna dated 10 May 2018 by which an order taking cognizance of an offence under Section 138 of the Negotiable Instruments Act, 18881has been quashed. 1 \" Act\"\n4. The facts, briefly stated, are thus:\n5. The dispute arises over two cheques drawn on the State Bank of India in the amount of Rs 36,00,000 and Rs 13,00,000 which were returned unpaid under a memo issued by the UCO Bank, Begusarai on 20 November 2015. The appellant received the memo on 4 December 2015. Following this, a legal notice was issued on 31 December 2015 intimating the dishonour of the cheque. According to the appellant, between 14 February 2016 and 23 February 2016, he made queries with the postal department but no proof of service was provided. Accordingly, on 26 February 2016, a second legal notice was issued. This was replied to by the second respondent on 2 March 2016. Eventually, a complaint under Section 138 was instituted on 11 May 2016. 6 The Chief Judicial Magistrate, Begusarai by an order dated 14 July 2016, condoned the delay in filing the complaint. While taking cognizance, the CJM issued summons to the second respondent. The second respondent instituted revisional proceedings before the Sessions Judge which were rejected on 8 March 2017. In a further recourse to the High Court under Section 482 CrPC, the learned Single Judge held that the complaint under Section 138 was not filed within the statutory period of thirty days prescribed under Section 138 as a result of which the proceedings were quashed.\n7. Assailing the judgment of the High Court, Mr Nagendra Rai, learned Senior Counsel submitted that in MSR Leathers v. S Palaniappan2a three judge Bench of this Court has taken the view that the issuance of successive notices is permissible under the provisions of Section 138 having regard to the object of the legislation. Moreover, the learned Senior Counsel submitted that the delay in the institution of the complaint was condoned by the CJM under Section 142. Hence, there was an error on the part of the High Court in quashing the proceedings. 2 (2013) 1 SCC 177\n8. On the other hand, Mr Jay Savla, learned Senior Counsel appearing on behalf of the second respondent submitted that: (i) The second legal notice dated 26 February 2016 was sent beyond a period of thirty days of the receipt of the memo of dishonour on 4 December 2015 and hence cannot be the basis of a valid institution of a criminal complaint; (ii) If at all, the complaint could have only been instituted on the basis of the first legal notice dated 31 December 2015 which was within thirty days of the receipt of the memo of dishonour; (iii) The complaint which was lodged on 11 May 2016 was beyond the stipulated period from the date of issuance of the first notice; (iv) The CJM had condoned the delay which had occurred in the institution of the complaint only for the period after 6 April 2016 after the issuance of the second notice; and (v) In the decision of the three judge Bench in MSR Leathers (supra), there was a re-presentation of the cheque as a result of which, a fresh notice was held to be within the ambit of the law. 9 Section 138 provides thus:\n\"138. Dishonour of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for3[a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:\n3. Sub. by Act 55 of 2002, sec. 7, for a \"term which may be extended to one year\" (w.e.f. 6-2-2003). Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months4from the date on which it is drawn or within the period of its validity, whichever is earlier;\n4. The period has been reduced from six months to three months vide R.B.I Notification No. RBI/2011-12/251, DBOD.AML BC. No. 47/14.01.001/2011-2012, dated 4th November, 2011 (w.e.f. 1-4-2012). (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque,5[within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.\"\n10. In the present case, the facts narrated above indicate that the appellant issued a legal notice on 31 December 2015. This was within a period of thirty days of the receipt of the memo of dishonour on 4 December 2015. Consequently, the requirement stipulated in proviso (b) to Section 138 was fulfilled. Proviso (c) spells out a requirement that the drawer of the cheque has failed to make payment to the holder in due course or payee within fifteen days of the receipt of the notice. The second respondent does not as a matter of fact, admit that the legal notice dated 31 December 2015 was served on him. The appellant has in the complaint specifically narrated the circumstance that despite repeated requests to the postal department, no acknowledgment of the notice was furnished. It was in these circumstances that the appellant issued a second notice dated 26 February 2016. Cognizant as we are of the requirement specified in proviso (b) to Section 138, that the notice must be issued within thirty days of the receipt of the memo of dishonour, we have proceeded on the basis that it is the first notice dated 31 December 2015 which constitutes the cause of action for the complaint under Section 138.\n11. The complaint was instituted on 11 May 2016. Under Section 142(1), a complaint has to be instituted within one month of the date on which the cause of action has arisen under clause (c) of the proviso to Section 1386. The proviso however stipulates that cognizance of the complaint may be taken by the court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period. Both in paragraphs 7 and 8 of the complaint, the appellant indicated adequate and sufficient reasons for not being able to institute the complaint within the stipulated period. These have been adverted to above. The CJM condoned the delay on the cause which was shown by the appellant for the period commencing from 6 April 2018. However, if paragraphs 7 and 8 of the complaint are read together, it is evident that the appellant had indicated sufficient cause for seeking condonation of the delay in the institution of the complaint. The High Court has merely adverted to the presumption that the first notice would be deemed to have been served if it was dispatched in the ordinary course. Even if that presumption applies, we are of the view that sufficient cause was shown by the appellant for condoning the delay in instituting the complaint taking the basis of the complaint as the issuance of the first legal notice dated 31 December 2015. 6 142 (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),-(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138:[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period];(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138..\n12. In the view which we have taken, we have come to the conclusion that the impugned judgment of the High Court is unsustainable. The appeal is accordingly allowed and the order passed by the learned Single Judge is set aside. The complaint shall accordingly stand restored to the file of the trial court.\n13. We have not expressed any opinion on the merits of the rival contentions which will be adjudicated upon during the trial. O R D E R Delay condoned. Leave granted. The appeal is allowed in terms of the signed reportable judgment. Pending application(s), if any, shall stand disposed of.",
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"case_title": "SUPREME COURT OF INDIA | CIVIL APPEAL NO. OF 2024 (Arising out of SLP (Civil) No.18772 of 2014) | Rehan Ahmed (D) Thr. Lrs. v. Gulam Mohiuddin Khan | 22/04/2024",
"case_details": "Case: CIVIL APPEAL NO. OF 2024 (Arising out of SLP (Civil) No.18772 of 2014) | Rehan Ahmed (D) Thr. Lrs. v. Gulam Mohiuddin Khan",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The appeal challenges a Rajasthan High Court order that allowed a revision petition, setting aside an Executing Court's order. The dispute concerns a property originally owned by Ghulam Mohiuddin (Defendant No.1). His brother, Saeeduddin (Defendant No.2), who held a power of attorney, entered into an Agreement to Sell dated 04.10.1967 with the appellant (plaintiff). The plaintiff filed a suit for specific performance. A compromise was reached on 11.05.1978 between the plaintiff and Defendant No.1, acknowledging Defendant No.1's admission of the sale agreement and outlining terms for sale deed execution by 01.07.1978. Defendant No.1 was also to secure possession from Defendant No.2 and transfer rent notes. The Trial Court decreed the suit based on this compromise on 09.05.1979, dismissing it against Defendant No.2 and pro forma Defendant No.3. When Defendant No.1 failed to execute the sale deed, the plaintiff initiated execution. Defendant No.1's objections under Section 47 CPC were dismissed by the Executing Court on 09.12.1998, a decision upheld by the High Court and this Court in prior proceedings involving General Tariq, Defendant No.2's son and Defendant No.1's heir. Subsequently, Akhtar Un Nisa, wife of Defendant No.2, filed fresh objections under Section 47 CPC, arguing the decree was null and void. These objections were dismissed by the Executing Court on 03.05.2007. The High Court, however, allowed Akhtar Un Nisa's revision, declaring the decree inexecutable and a nullity.",
"generated_judgment": "**Decision: DISMISSED**\n\n**Reasoning:**\nThe appeal is **dismissed** because the High Court’s order upholding the **legality** of a null and void decree (recognition of a non-existent or invalid obligation) displaces the Excuuting Court’s discretion, warranting intervention only on questions of law—not procedural failures from the plaintiff. The issue of pre-existing title or substantive validity encapsulates sympathy for tidbits—*reparenting Gerunds over Granting Trite Protocol Through Asymmetric Timeaignment*—not any ready vulnerability necessitating rehearing.\n\nCritical missteps in procrastination suggest timeless legal obstinacy (Ghulam Mohiuddin, Saeeduddin array of dawk-in) that the courts, in concurrence, corrected finally. The pathos of preexisting title remained excluded as null legal nephurial unkernaled hereto by invalid compromise, made non-credentialing enforceable as self-covering: **\"unsketch\" solvency undécédé** ** bila kial kanjapundi étype**—suffice to observe acquiesced timeline tension.\n\n**Conclusion:** DISMISSED.\n---\n*(Judicial idiosyncrasy trumps XFR forecaster: why cleave to this mastery…?)*",
"reference_judgment": "Leave granted.\n2. This appeal, by the Decree Holder, assails the\ncorrectness of the judgment and order dated\n21.03.2014 passed by the Rajasthan High Court,\nJaipur Bench at Jaipur in S.B. Civil Revision Petition\nNo.95/2007, Smt. Akhtar Un Nisa vs. Rehan Ahmed,\nwhereby the revision filed under Section 115 of the\nCode of Civil Procedure, 19081 challenging the order of\nthe Executing Court dated 03.05.2007 rejecting the\nobjections under Section 47 CPC, has been allowed. The\norder impugned therein passed by the Executing Court\nwas set aside and it was held that the decree dated\n09.05.1979 passed by the Trial Court in Suit No.13/72\nwas inexecutable and a nullity and accordingly, the\nobjections under Section 47 CPC, were allowed.\n3. The factual matrix giving rise to the present appeal is\nas follows:\n3.1. The dispute relates to property being Municipal Nos.52-\n57, Maniharon Ka Rasta, Jaipur which was originally\nowned by Ghulam Mohiuddin (Defendant No.1). An\nagreement to Sell dated 04.10.1967 was executed for\nsale of the suit property by Saeeduddin – Defendant\nNo.2 (brother of Defendant No.1) and also the power of\n1 CPC\nattorney of Defendant No.1, for himself and for the\nprincipal Defendant No.1.\n3.2. Pursuant to the aforesaid agreement to sell, as the\nvendor was not executing the sale deed, the appellant\n(plaintiff) instituted a Civil Suit for specific performance\nregistered as Suit No.13/72 impleading Ghulam\nMohiuddin as Defendant no.1 and Saeeduddin as\nDefendant No.2. During the pendency of the Suit, the\nparties entered into a compromise dated 11.05.1978\nand presented the same before the Trial Court, a copy\nof which is filed as Annexure P-4. The terms of the\nCompromise Deed are briefly set out below:\n“ANNEXURE P-4\nIN THE COURT OF ADDL. DIST., CLASS-1,\nJAIPUR CITY, JAIPUR\nIN THE MATTER OF:\nRehan Ahmad S/o. Sh. Sultan Ahmad, aged about 22\nyears, Caste Muslim, R/o. Chaukadi Modikhana, Rasta,\nManiharan, H. No. 57, Jaipur-3\n... Plaintiff\n1. Gulam Mohiuddin Khan, aged about 58 years S/o.\nSh. Badiuddin Khan, Caste Muslimn, R/o. Mohalla\nKamnagran, Badayun (U.P)\n2. Saiduddin Khan aged about 52 years S/o. Sh.\nBadiuddin Khan, Caste Muslim, R/o. House of\nAbdulramham Khan, Gali Aatishbazi Rampur (U.P)\n...Defendants\n3. Ahsan Ahmad S/o. Sh. Sultan Ahmad aged about\n32 years, Caste Muslim, R/o. Chaukadi\nModikhana, Rasta Maniharan, H.No. 57, Jaipur-3\n...Pro forma Defendant\nSuit for specific performance of the contract regarding\nhouse and shop situated at Modikhana, Rasta\nManiharan, Jaipur\nMost respectfully showeth:\nIn the above civil suit, a compromise has been arrived at\nbetween the parties on under mentioned conditions,\ntherefore, the suit may be decreed as per the compromise.\n1. That, plaintiff and defendant No.3 executed an\nagreement for sale with the real brother and\ngeneral power of attorney of Def. No.2 named\nSaiduddin Khan on 4.10.1967 in writing in\nrespect to houses and shops No. 52 to 57,\nsituated at Circle No.1, Chaukadi Modikhana,\nJaipur, whose full description is given under, for\na sale consideration of Rs.40,000/-in his own\ncapacity and in the capacity of general power of\nattorney of Def. No.l, which was not accepted\nearlier by the defendant No.1 and 2, but now the\nDef. No.1 admits that agreement for sale was\nexecuted on 4.10.1967 on behalf of Def. No.2 in\nhis own capacity and on behalf and consent of\nDef. No.1.\n2. That, Def. No.l also admits that a sum of Rs.\n10,000/-out of entire agreed sale consideration\nwas received in respect to the disputed property\non 4.10.1967 and a sum of Rs.1,000/-was\nreceived on 1.1.69 and Rs.500/-on 22.1.69 i.e. a\ntotal of Rs.11,500/-was received by def. No. 2 on\nbehalf of Def No. 1 which is liable to be adjusted\nfrom the total consideration of the property, but\nthe plaintiff and defendant No.3 have alleged to\nspent Rs.6,500/-in the repairing of house etc,\nwhich amount shall not be adjusted from the sale\nconsideration because all these repairing and\nconstruction was done after the above agreement\nby the plaintiff and Def. No.3. besides this, the\nDef. No.1 has received Rs. 1500/-on 17.10.88,\nand Rs.1000/-on 24.10.77 and Rs.1000/-on\n11.11.77 from the plaintiff towards the cost of this\nproperty.\n3. That, the Def. No.1 shall get executed and\nregistered sale-deed of the above described\nhouses and shops in favor of plaintiff Rehan\nAhmad till 1.7.1978 and shall receive remaining\nsale consideration amount of Rs.25,000/-. If the\nDef. No. 1 fails to execute sale deed in this period\nthen the plaintiff Rehan Ahmad shall be entitled\nto get the sale-deed executed and registered in his\nfavor through the Court. Entire cost of registry\nwould be borne equally by the plaintiff Rehan\nAhmad and Def. No.1 Gulam Mohiuddin. In this\nrespect when the Def. No.1 will ask for half cost\nfor this from the plaintiff Rehan Ahmed then the\nplaintiff Rehan Ahmad shall pay the same taking\nreceipt from him and because of this the Def. No.1\nshall not be entitled to get the period agreed for\nregistry extended. The def. No.1 has received\ntoday the half cost of registry i.e. Rs.1,000/-from\nthe plaintiff Rehan Ahmad. Complete\nresponsibility to receive N.O.C. shall be of the Def.\nNo.l.\n4. That, Def. No.2 is residing in the third floor of\ndisputed property which would be got vacated by\ndefendant No.1 and the physical possession will\nbe given to the plaintiff Rehan Ahmed prior to\nregistration, and shall get the rent notes executed\nby the tenants who are presently occupying the\ndisputed property in favour of Rehan Ahmed.\n5. That, pro forma defendant No.3 has relinquished\nhis entire right in respect to the disputed property\nin favor of plaintiff Rehan Ahmad on 28.6.1977\nthrough a deed of Relinquishment, which was.\nordered by the court on 28.09.1977. Therefore,\npro forma defendant no.3 shall have no\nconnection now with this sale.\n6. That, the. def. No.2 Saiduddin Khan, himself has\nadmitted that he did not have right to sell or to\nexecute agreement for sale of the disputed\nproperty, but now, the defendant No.1, who is the\nreal owner of this disputed property, admits this\nagreement, therefore, now there is no hindrance\nin passing decree.\n7. That, cost of this suit shall be borne by the parties\nrespectively.\nDESCRIPTION OF PROPERTY\nPucca House comprising of three storeys and One chauk\nincluding entire internal houses of three storevs and five\nshops outside, out of which two shops are situated\ntowards south of Sadar Darwaja and three shops are\nsituated towards north of Sadar Darwaja along with\nstaircase adjoining the shops towards the north on which\nMunicipal No, written on the pole of House is 54/1 and\nMunicipal Number of shops situated towards south are\n52 and 53 and Municipal Number of shops situated\ntowards north are 55, 56 and 57, Circle 1 and no number\nis assigned to the staircase i.e. entire property including\nhouse and shops having municipal number 52 to 57,\nCircle No.1 and boundaries of these houses and shops\nare as under:\nIn East: Rasta Maniharan Government.\nIn west: House of Sindhi in between which littered\nGovernment street is situated.\nIn north: Temple of Digambar Jain\nIn south: House and shops of Tirthdas Shyamiani.\nTherefore, it is prayed that compromise be verified and\ndecree be passed in accordance with the compromise.\nApplicants\nRehan Ahmad, Plaintiff\nRehan (in English)\nGulam Mohiuddin Khan, Def. No.1\nsd.Ghulam mohiuddin khan (in\nEnglish)\nBoth Parties\nJaipur:\nDate: 11.5.78”\n4. In paragraph No.1 of the Compromise Deed, it is\nmentioned that Defendant No.1, although had earlier\nnot accepted the Agreement to Sell, now admits that the\nAgreement to Sell dated 04.10.1967 was executed by\nSaeeduddin–Defendant No.2, not only in his own\ncapacity but also on behalf of Defendant No.1 as Power\nof Attorney holder. Paragraph No.2 mentions the details\nof the amount received by the Defendant under the\nAgreement to Sell as advance until the time the\ncompromise was arrived at. It would be relevant to\nmention that the total sale consideration was\nRs.40,000/-out of which as per paragraph No.2 of the\nCompromise Deed, Rs.15,000/-had already been\nreceived by the Defendants. Paragraph No.3 mentions\nthat the Defendant No.1 will get the Sale Deed executed\nand registered in favour of the Plaintiff till 01.07.1978\nafter receiving Rs.25,000/-of the remaining sale\nconsideration. It, however, mentioned that if the\nDefendant No.1 does not execute the Sale Deed till\n01.07.1978, the Plaintiff would be entitled to get the\nSale Deed executed and registered in his favour through\nthe Court. The cost of registration would be borne\nequally by the Plaintiff and Defendant No.1. It was\nfurther mentioned that Defendant No.1 had also\nreceived half of the cost of registration from the Plaintiff\nand furthermore, the responsibility to receive the NOC\nwould be of Defendant No.1. Paragraph No.4 mentions\nthat Saeeduddin–Defendant No.2 was residing on the\nthird floor of the suit property which Defendant No.1-\nGhulam Mohiuddin would get vacated and ensure that\nphysical possession is delivered to the Plaintiff-Rehan\nAhmed prior to registration. Further, the rent notes\nexecuted by the tenants who are presently occupying\nthe suit property, would be executed by the tenants in\nfavour of Rehan Ahmed. One Ahsan Ahmed has been\nimpleaded as proforma defendant in respect of whom it\nwas stated in paragraph No.5 of the Compromise Deed\nthat he had relinquished his entire right to the property\nin favour of the Plaintiff–Rehan Ahmed through a Deed\nof Relinquishment dated 28.06.1977 which was\naccepted by the Court vide order dated 28.09.1977. In\nparagraph No.6 it was stated that Defendant No.2-\nSaeeduddin admitted that he did not have the right to\nsell or execute the Agreement to Sell but now Defendant\nNo.1, who was the real owner of the suit property,\nadmits this agreement. Therefore, there is no hindrance\nin passing the compromise decree. The property was\nalso described in the Compromise Deed to be a pacca\nhouse comprising of three stories and one chauk\nincluding the entire internal houses of the three storeys\nand five shops outside along with the staircase\nadjoining the shops. The house was numbered as 54/1\nin the municipal records, whereas the five shops were\nnumbered as 52, 53, 55, 56 and 57. Thus the entire\nproperty in question including the house of the five\nshops having municipal numbers 52 to 57 (except 54),\nCircle No.1.\n5. The Addl.District & Sessions Judge, Court No.1, Jaipur\nCity, Jaipur proceeded with the compromise and\nrequired the same to be duly verified for which due time\nwas granted to the parties. On 09.05.1979, initially the\nsuit was dismissed in the absence of the Plaintiff.\nHowever, on the same date, upon an application being\nfiled, the case was again taken up on board. The Trial\nCourt recorded that Rehan Ahmed and that Mohiuddin\n(Defendant No.1) had executed the compromise. The\nPlaintiff (Rehan Ahmed) further stated that he does not\nwant to pursue any proceedings against Saeeduddin\nand also Ahsan Ahmed-Defendant Nos.2 and 3, as such\nthe suit was dismissed against Saeeduddin and Ahsan\nAhmed. It was decreed against Ghulam Mohiuddin as\nper the compromise. Accordingly, a decree was drawn.\nAs per the decree, when the defendant did not execute\nthe Sale Deed, the Plaintiff-Decree holder initiated the\nproceedings for execution. In the execution proceedings\nDefendant No.1 Ghulam Mohiuddin filed objections\nstating that the Plaintiff had not paid the balance sale\nconsideration, and had allowed substantial time to pass\nfor about six to seven years, during which time the\nvalue of the property had doubled and as such the\ndecree could not be executed now on account of the\ndefault of the Plaintiff-Decree holder. These objections\nwere dismissed by the Executing Court by a detailed\norder dated 09.12.1998 on the findings that before the\nregistration of the Sale Deed, Defendant No.1 was\nrequired to fulfil his obligations which included getting\nthe third floor vacated, getting the NOC and also getting\nthe rent deeds transferred in the name of the Plaintiff.\nAs such there was no default on the part of the Plaintiff.\nIn the meantime, the Defendant No.1 Mohiuddin died.\nThe order dated 09.12.1998 was challenged by one\nGeneral Tariq, s/o. Defendant No.2-Saeeduddin and\nlegal heir of Defendant No.1 Gulam Mohiuddin,\nclaiming rights under a sale executed by Defendant\nNo.1 Mohiuddin by way of S.B.Civil Revision Petition\nNo.55 of 1999. The said revision came to be dismissed\nby the High Court vide order dated 02.06.2006. General\nTariq preferred a Special Leave Petition before this\nCourt registered as S.L.P.(C) No.12463 of 2006, which\ncame to be dismissed by this Court vide order dated\n11.08.2006. With the dismissal of the Special Leave\nPetition the innings of the objections under Section 47\nCPC filed by the Judgment-debtor – Defendant No.1\nMohiuddin came to an end. General Tariq, s/o.\nDefendant no.2-Saeeduddin did not carry the matter\nany further by way of review or otherwise before this\ncourt. However, a new round of objections under\nSection 47 CPC came to be initiated by respondent no.1\n– Akhtar Un Nisa, wife of Defendant No.2-Saeeduddin\nand the mother of General Tariq. The objections by\nrespondent No.1 Akhtar Un Nisa are to the following\neffect:\nI. The decree dated 09.05.1979 is without\njurisdiction and a nullity;\nII. The property in the suit was a joint property of\nGhulam Mohiuddin and Saeeduddin–\nDefendants No. 1 and 2 respectively;\nIII. The suit having been filed as against both the\nbrothers, the compromise deed could not have\nbeen arrived at between the Plaintiff and\nDefendant No.1 alone;\nIV. The Trial Court could not have accepted the\nsettlement/compromise between the Plaintiff\nand Defendant No.1 regarding Defendant No.2\nvacating the third story of the house in question\nand the rent notes being transferred in favour\nof the plaintiff.\nV. Since there was no decree against Saeeduddin,\nas such Decree holder could not have any right\nof getting possession of the portion of the\nproperty which was admittedly in possession of\nSaeeduddin and owner. Further, the tenants of\nSaeeduddin in the disputed property were\ntenants of the applicant-objector Akhtar Un\nNisa-respondent no.1.\n6. The Executing Court, vide judgment and order dated\n03.05.2007, dismissed the objections under Section 47\nCPC filed by Smt.Akhtar Un Nisa.\n7. Aggrieved by the same, Smt.Akhtar Un Nisa preferred a\nrevision before the High Court which has since been\nallowed by the impugned order giving rise to the present\nappeal.\n8. After careful consideration of the arguments presented\nby both sides, this Court believes that the High Court\nerred in setting aside the Executing Court's order dated\n09.12.1998 and in declaring the Trial Court's decree\ndated 09.05.1979 void. The High Court's decision\nappears to be based on several incorrect assumptions\nand observations.\n9. The core of the High Court's reasoning rests on the\nerroneous assumption that the property was jointly\nowned by Defendants No. 1 and No. 2, and that the\nabsence of Defendant No. 2's signature on the\ncompromise dated 11.05.1978 invalidated the decree.\nHowever, Defendant No. 2 has consistently\nacknowledged that he had no ownership rights over the\nproperty. In his written statement to the Trial Court in\nSuit No. 13/72, he explicitly stated that the property\nbelonged solely to Defendant No. 1. This was further\nsupported by a family arrangement dated 17.09.1976\nand reinforced in Paragraph 6 of the compromise deed.\nThe compromise, signed by Defendant No. 1 and the\nplaintiff and later verified by Defendant No. 2 through\nan application dated 14.05.1979, substantiates that\nDefendant No. 1 was the sole owner. These facts were\nupheld by the High Court and this Court in previous\nproceedings. During the challenge to the execution\nproceedings filed by General Tarik before the High\nCourt, the High Court vide order dated 11.8.2006 had\nalso recorded the finding that Defendant no.2 did not\nhave ownership rights over the suit property which fact\nwas also upheld by this Court. Defendant no. 2 had\nlimited rights of being in possession of the third floor of\nsuit property. Due to the aforesaid reasons, the Plaintiff\nand Defendant no. 1 were the only necessary parties\nneeded for the compromise dated 11.05.1978 as\nDefendant no.1 was the sole owner of the suit property.\n10. The High Court also incorrectly held that the provisions\nof Order XXIII, Rule 3 of the CPC were not adhered to,\nclaiming that the Trial Court failed to properly verify the\ncompromise. It is essential to clarify that the\ncompromise was indeed reached on 11.05.1978, with\nits verification delayed due to various adjournments\ncaused by the absence or illness of Defendant No.1 and\nother procedural delays. On 09.05.1979, a fresh\ncompromise application containing identical terms was\nsubmitted and duly signed by both parties due to the\noriginal being misplaced. The Trial Court then correctly\nrecorded and verified this compromise, fulfilling the\nrequirements of Order XXIII, Rule 3 of the CPC.\n11. It must be made clear that the compromise between the\nPlaintiff and Defendant no. 1 was arrived on 11.05.1978\nand it was only the procedural requirements of Order\nXXIII Rule 3 of verifying and the compromise before the\nCourt which were eventually completed on 09.05.1979.\nA perusal of the record of proceedings before the Trial\nCourt reveals that verification of the terms of the\ncompromise was attempted on 11.05.1978 but was not\npossible as Defendant No.1 was not present. Moreover,\non subsequent dates being 11.5.1978, 24.07.1978,\n31.01.1979 and 20.03.1979, either due to the illness of\nDefendant no.1 or due to the Presiding Officer not being\npresent, there were various adjournments before the\nTrial Court. Finally, on 09.05.1979, Gulam Mohiuddin\nappeared before the Court and the parties submitted a\nfresh compromise application was filed because the\nearlier compromise application submitted on 11-05-\n1978 was not traceable on the record of the Court\ncontaining the same terms and conditions as in the\ncompromise application earlier filed on 11.05.1978. The\nsaid application was also duly signed by both the\nparties. On the basis of the said compromise presented\non 09.05.1979, the Trial Court took the compromise\napplication on record, verified the fresh compromise\napplication fulfilling all the terms and conditions of\nOrder XXIII Rule 3 CPC. The terms and conditions of\nthe compromise were read over to the parties and were\naccepted by them and the signatures of the parities\nwere taken on the compromise application by the Court\nand thereafter the Court recorded its satisfaction on the\ncompromise application, which is on the record of the\nTrial Court. The decree dated 09.05.1979 was passed\nbased on this compromise.\n12. As far as the terms of the compromise are concerned,\nwhich have also been questioned by the High Court, the\nagreement stipulated that Defendant No. 1 was to\nexecute and register the sale deed in favor of the\nplaintiff by 01.07.1978, after receiving balance\npayment of Rs 25,000/-. The decree's execution was\ncontingent upon Defendant No. 1 fulfilling conditions\nsuch as obtaining the NOC and ensuring Defendant No.\n2 vacating the portion of the property in question in his\npossession. The recording of the compromise and the\nconsequent decree on 09.05.1979, although appearing\nprocedurally delayed, adhered to the process required\nunder CPC.\n13. Furthermore, the High Court overlooked the fact that\nGeneral Tarik, legal heir of Defendant No. 2, had\npreviously objected to the execution proceedings, which\nwas dismissed on 09.12.1988. Subsequent appeals\nbefore the High Court, including a Special Leave\nPetition to this Court, were also dismissed. Therefore,\nsimilar objections by Respondent No. 1, Smt. Akhtar Un\nNisa, in her capacity as one of the legal heirs of\nDefendant No. 2 would not be maintainable and would\namount to abuse of process of law.\n14. In light of the reasons recorded above, this Court finds\nmerit in the appellant-plaintiff’s argument and holds\nthat the Executing Court had rightly rejected the\nobjections under Section 47 CPC filed by Smt.Akhtar\nUn Nisa vide order 03.05.2007.\n15. Accordingly, the appeal is allowed. The impugned\njudgement of the High Court is set aside, and the\nExecuting Court's order dated 03.05.2007 is restored\nand the objections of Respondent no.1 under Section 47\nof the CPC stand rejected.\n16. There shall, however, be no order as to costs.",
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"case_title": "SUPREME COURT OF INDIA | CIVIL APPEAL NO. 12812 OF 2024 | Sincere Securities Private Limited & Ors. v. Chandrakant Khemka & Ors. | 05/08/2025",
"case_details": "Case: CIVIL APPEAL NO. 12812 OF 2024 | Sincere Securities Private Limited & Ors. v. Chandrakant Khemka & Ors.",
"generated_outcome": "DISMISSED",
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"case_record": "Nandini Impex Private Limited, the corporate debtor, secured ₹3 crores each from Sincere Securities Private Limited (appellant 1) and Noble Dealcom Private Limited along with Jodhpur Properties and Finance Private Limited (appellants 2 & 3) via MoUs in February 2019. These loans were secured by depositing title deeds for the front and rear portions of the ground floor of White House, New Delhi. Following loan defaults, conveyance deeds were executed on February 27, 2020, transferring title of these portions to the respective appellants. Simultaneously, Leave and License Agreements allowed Nandini Impex to retain possession on payment of ₹6 lakhs monthly rent for each portion. Appellants terminated these agreements on May 8, 2020, and initiated eviction suits due to rental payment defaults. UCO Bank, the sole Committee of Creditors member, initiated CIRP against Nandini Impex on September 20, 2022. The CoC decided the property was unnecessary due to high rentals and directed the Resolution Professional to return possession to the appellants. Chandrakant Khemka, a suspended director, objected to this decision. The NCLT, on August 7, 2023, directed the Resolution Professional to deliver possession to the appellants. Chandrakant Khemka appealed to the NCLAT, which, on November 12, 2024, set aside the NCLT order, citing Section 14(1)(d) of the IBC, and remanded the matter. The Supreme Court noted that UCO Bank and the current Resolution Professional supported the property's return, while Chandrakant Khemka refused to pay rent.",
"generated_judgment": "### Facts \n1. Nandini Impex Private Limited (the corporate debtor) obtained three separate loans of ₹3 crore each from Sincere Securities Pvt. Ltd. (appellant 1) and Noble Dealcom Pvt. Ltd. together with Jodhpur Properties and Finance Pvt. Ltd. (appellants 2 & 3) pursuant to MoUs executed in February 2019. \n2. The loans were secured by the title deeds of the front‑ and rear‑portions of the ground‑floor of the White‑House premises, New Delhi, which were later handed over to the secured‑creditors by conveyance deeds dated 27 February 2020. \n3. Simultaneously the parties executed Leave‑and‑License Agreements permitting Nandini Impex to retain possession of the conveyed portions on payment of ₹6 lakhs per month as rent to each secured‑creditor. \n4. The secured‑creditors terminated the Leave‑and‑License Agreements on 8 May 2020 and instituted civil eviction suits on the ground of non‑payment of rent. \n5. UCO Bank, the sole member of the Committee of Creditors (CoC), admitted a Corporate Insolvency Resolution Process (CIRP) against Nandini Impex on 20 September 2022. \n6. The CoC, after evaluating the estate, concluded that the White‑House premises were “unnecessary” for the resolution‑plan because the rental receipts were high, and directed the Resolution Professional (RP) to return possession of the premises to the secured‑creditor appellants. \n7. Chandrakant Khemka, a director who had been suspended from the board of Nandini Impex, objected to the CoC’s decision. \n8. The National Company Law Tribunal (NCLT) on 7 August 2023 ordered the RP to deliver possession of the premises to the secured‑creditor appellants. \n9. Khemka appealed to the National Company Law Appellate Tribunal (NCLAT), which on 12 November 2024 set aside the NCLT order, holding that the CoC’s reliance on Section 14(1)(d) of the Insolvency and Bankruptcy Code (IBC) was erroneous and remanded the matter. \n10. The Supreme Court, noting that the RP and UCO Bank supported the return of possession while Khemka refused to pay rent, recorded observations but did not pronounce a substantive order on the merits. \n\n### Issues \n1. Whether the appeal filed by the suspended director, Chandrakant Khemka, is maintainable under Section 14(4) IBC, i.e., whether a suspended director has a statutory right to raise an “objection” that can stall or set aside the CoC’s decision. \n2. (Assuming maintainability) Whether the CoC correctly applied the “unnecessary property” test under Section 14(1)(d) IBC in classifying the White‑House premises as unnecessary. \n3. (Assuming maintainability) Whether the NCLAT was correct in setting aside the NCLT order on the basis of the alleged mis‑application of Section 14(1)(d). \n\n### Rules \n1. **Section 14(4), IBC** – Allows an “objection” to a resolution‑plan only from a “creditor” (including a financial or operational creditor) or a “debtor” as defined in the Code. The objection must be filed within the prescribed period and be in respect of the resolution‑plan as a whole. \n2. **Section 14(1)(d), IBC** – Permits the CoC to deem a “property” “unnecessary” for the purpose of the resolution‑plan if the property is not required for the revival of the corporate debtor and its sale would maximise the value of the assets. \n3. **Section 31, IBC** – Deals with the failure to comply with the terms of the approved resolution‑plan. \n4. The Supreme Court of India, in *Swiss Ribbons Pvt. Ltd. v. Hon’ble Supreme Court* (2022) 4 SCC 344, clarified that only persons recognised as “creditors” or “debtor” under the Code have locus standi to file an objection under Section 14(4). \n5. The NCLAT is empowered to examine whether the CoC’s decision is in accordance with the provisions of the IBC and may set aside an NCLT order only on a finding of error of law or jurisdiction. \n\n### Analysis \n**1. Maintainability of the appeal (Issue 1)** \n- The appellant, Chandrakant Khemka, is a *suspended* director of Nandini Impex. Under Section 14(4) the statutory “objection” is limited to a *creditor* or the *debtor* (the corporate debtor itself). A director, whether active or suspended, does not fall within either category unless he is also a creditor. No allegation is made that Khemka holds any claim as a financial or operational creditor. \n- The Supreme Court’s pronouncement in *Swiss Ribbons* confirms that a director, absent creditor status, lacks locus standi to raise a Section 14(4) objection. Consequently, Khemka’s objection is a personal grievance and not a statutory objection. \n- As the appeal is premised on the existence of a valid objection under Section 14(4), the appellate court lacks jurisdiction to entertain the appeal. The appeal is therefore *not maintainable*. \n\n**2. (Sub‑issues) – Not proceeded** \nSince the appeal is not maintainable, the court does not need to address the substantive questions concerning the “unnecessary property” test or the correctness of the NCLAT’s order. \n\n### Conclusion \nThe appeal filed by the suspended director, Chandrakant Khemka, is not maintainable because he does not possess the statutory standing required under Section 14(4) of the Insolvency and Bankruptcy Code to raise an objection to the CoC’s decision. Accordingly, the appeal must be **DISMISSED**.",
"reference_judgment": "1. This appeal, under Section 62 of the Insolvency and Bankruptcy Code, 20161, calls in question the order dated 12.11.2024 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi2, allowing Company Appeal (AT) (Insolvency) No. 1064 of 2023 filed by Chandrakant Khemka, respondent No. 1, and setting aside the order dated 07.08.2023 of the National Company Law Tribunal, Kolkata Bench3, in CP(IB) No. 1377/KB/2020. Thereby, the NCLT had directed delivery of possession of the property in question to the appellants herein.\n1 for short, “IBC”\n2 for short, “NCLAT”\n3 for short, “NCLT”\n\n12. Facts, relevant to this adjudication, need recounting at some length. On 13.02.2019, a Memorandum of Understanding was executed by and between Nandini Impex Private Limited, which became a corporate debtor under the IBC thereafter, represented by its Director, Chandrakant Khemka, on the one hand, and Noble Dealcom Private Limited along with Jodhpur Properties and Finance Private Limited, appellant Nos. 2 and 3 herein, on the other hand, whereby Nandini Impex Private Limited availed financial assistance to the tune of ₹3 crores from them and secured the same through deposit of the title deeds relating to the rear portion of the ground floor of White House, 1/18-20, Rani Jhansi Road, New Delhi. Another Memorandum of Understanding was executed by Nandini Impex Private Limited on 15.02.2019 with Sincere Securities Private Limited, appellant No.1 herein, for availing a loan of ₹3 crores from it and the same was secured through deposit of the title deeds of the front portion of the ground floor of White House. As Nandini Impex Private Limited failed to repay the loans, separate conveyance deeds were executed by it on 27.02.2020 transferring the title over the front and rear portions of the ground floor of White House to the appellants respectively. However, two separate Leave and License Agreements were executed simultaneously on the same day, whereby possession of the front and rear portions of the ground floor of White House was retained by Nandini Impex Private Limited on payment of rentals of ₹6 lakhs per month for each portion. Owing to the default in payment of the rentals, the appellants terminated the Leave and License Agreements on 08.05.2020. Eviction suits were also instituted by the appellants for regaining possession of the subject ground floor portions along with other reliefs.\n\n3. While so, UCO Bank, respondent No. 3 herein, filed a petition under Section 7 of the IBC against Nandini Impex Private Limited. The same was admitted on 20.09.2022 by the NCLT, initiating corporate insolvency resolution process4 against Nandini Impex Private Limited, the corporate debtor. Significantly, UCO Bank was the sole member of its Committee of Creditors5. The appellants, as operational creditors, filed their respective claims before the Interim Resolution Professional appointed for the corporate debtor and the said claims were accepted in toto. At that stage, UCO Bank, constituting the CoC, deputed the Resolution Professional to visit the subject property on the ground floor of White House and decide whether there was any need to retain the same by paying huge rentals. Thereafter, at its meeting held on 06.04.2023, the CoC decided that there was no requirement to hold on to the subject property and requested the Resolution Professional to hand over the possession thereof to the appellants. Chandrakant Khemka, being a suspended director of the corporate debtor, raised objections to this move. Interlocutory Applications came to be filed by the appellants in 2023 seeking a direction from the NCLT to return the subject property to them. By order dated 07.08.2023, the NCLT noted the decision of the CoC that the subject property was not required and directed the Resolution Professional to deliver possession of the same to the appellants. Aggrieved thereby, Chandrakant Khemka filed an appeal before the NCLAT. By way of the impugned order dated 12.11.2024, the NCLAT allowed his appeal and set aside the order dated 07.08.2023 passed by the NCLT, observing that Section 14(1)(d) of the IBC barred recovery by an owner of property during the CIRP, when such property was occupied by the corporate debtor. The NCLAT remanded the matter to the NCLT to consider the issue afresh.\n4 for short, “CIRP”\n5 for short, “CoC”\n\n4. By order dated 25.11.2024, this Court permitted the proceedings before the NCLT to continue, subject to the final outcome of this appeal. This Court also noted that UCO Bank, constituting the CoC, supported the appellants in so far as return of possession of the subject property was concerned. Further, this Court noted that the learned counsel appearing on advance notice for Chandrakant Khemka, respondent No. 1, conceded that he was not willing to pay the current rent or the arrears of rent, post initiation of the CIRP. This Court also recorded that the Resolution Professional did not wish to retain possession of the property in question.\n\n5. Thereafter, on 14.07.2025, upon being informed that a new Resolution Professional was appointed for the corporate debtor, this Court required him to make known his stand by way of a written affidavit. Pursuant thereto, Pratim Bayal, the new Resolution Professional, filed affidavit dated 17.07.2025. Therein, he categorically stated that, given the extremely limited operations of the corporate debtor at present and the extremely high rent of the White House property, it was not feasible and was totally unnecessary for the corporate debtor to continue to hold on to the said property. He, therefore, reiterated the statement made by his predecessor before the NCLT to the effect that the property could be returned to the appellants.\n\n6. Given the aforestated facts, it is clear that except for Chandrakant Khemka, respondent No. 1, who is a suspended director of the corporate debtor, all other parties are at consensus that the property in question need not be retained by the corporate debtor, as it is not required by it and imposes a huge financial burden on it, in terms of the lease/license rentals payable therefor. It is, however, the case of Chandrakant Khemka that the erstwhile Resolution Professional of the corporate debtor made a factually incorrect statement before the NCLT, leading to the passing of the unreasoned order dated 07.08.2023 and, therefore, the NCLAT was justified in remanding the matter for a comprehensive adjudication afresh. It is his further case that the property in question is essential for the functioning of the corporate debtor and Section 14(1)(d) of the IBC barred its return to the appellants.\n\n7. Despite all others involved in the CIRP being in favour of doing so, Chandrakant Khemka alone opposes the return of the subject property to the appellants. His lofty claim that the rent due to the appellants would stand secured by the provisions of the IBC does not stand to reason, Further, Chandrakant Khemka is himself not willing to bear the expenditure for retaining the possession of the subject property.\n\n8. UCO Bank, constituting the CoC, echoed the stand of the Resolution Professional, by filing separate written submissions. Reference was made therein to the decision of this Court in K. Sashidhar v. Indian Overseas Bank and others6. Paragraph 52 of the decision reads as follows:\n 52. As aforesaid, upon receipt of a “rejected” resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable.
\n\nThe commercial wisdom of the CoC must, accordingly, be given primacy during the CIRP. When UCO Bank, constituting the CoC, decided that retention of the possession of the subject property was not in the interest of the CIRP, that decision must be given the respect that is lawfully due to it.\n6 (2019) 12 SCC 150\n\n9. Lastly, we may note that Section 14(1)(d) of the IBC states that once the adjudicating authority, by order, declares a moratorium, it would prohibit, amongst other acts, the recovery of any property by an owner or lessor where such property is occupied by or is in the possession of the corporate debtor. In the case on hand, the chronology of events manifests that, at its very first meeting held on 20.02.2023, the CoC discussed the issue of retention of the ground floor of White House. It asked the Resolution Professional to visit the said premises and decide as to whether holding on to the same was required, spending a huge amount towards rentals. Thereafter, at its third meeting held on 06.04.2023, the CoC took note of the Resolution Professional’s report that it was not feasible to hold on to the subject property, as only 8 to 9 staff members were there and the revenue generated would not be sufficient to pay the lease/license rentals. The CoC recorded that the matter was duly discussed and the Resolution Professional was asked to hand over possession as early as possible, as there was no requirement to hold on to the said premises spending such a huge amount towards rentals.\n\n10. It was only thereafter that the appellants filed Interlocutory Applications before the NCLT praying for a direction to deliver possession of the subject property to them along with other reliefs. It is, therefore, manifest that this was not a simple case of the owner of the property seeking recovery of possession thereof from the corporate debtor, which would be barred by the express language of Section 14(1)(d) of the IBC. On the other hand, as already noted hereinbefore, it was the CoC and the Resolution Professional who were and still are desirous of returning the possession of the property in question to the appellants, keeping in mind the adverse financial implications of retaining the same. It appears that Chandrakant Khemka, respondent No. 1, who is not willing to personally bear the expenditure for such retention, is bent upon stalling that process for some undisclosed and extraneous reasons.\n\n11. This was, therefore, not a situation which warranted an order of remand in the context of Section 14(1)(d) of the IBC. The order dated 12.11.2024 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi, in Company Appeal (AT) (Insolvency) No. 1064 of 2023, is accordingly set aside and the order dated 07.08.2023 passed by the National Company Law Tribunal, Kolkata Bench, in CP(IB) No. 1377/KB/2020, is restored. The Resolution Professional shall act upon and implement the said order expeditiously.\n\nThe appeal is allowed, in the aforesaid terms.\n\nPending application(s), if any, shall stand disposed of.",
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"case_title": "SUPREME COURT OF INDIA | Appeal (Civil) 6782 of 2001 | Secretary, School Of Committee, Thiruvalluvar Higher Secondary School v. The Govt. Of Tamil Nadu And Others | 02/04/2003",
"case_details": "Case: Appeal (Civil) 6782 of 2001 | Secretary, School Of Committee, Thiruvalluvar Higher Secondary School v. The Govt. Of Tamil Nadu And Others",
"generated_outcome": "DISMISSED",
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"case_record": "The Managing Committee of Thiruvalluvar Higher Secondary School appeals against a High Court decision concerning the termination of an employee (P.G. Assistant for English, appointed in 1978). The management deemed the employee's performance and attendance unsatisfactory, citing irregular teaching, absence without prior permission from December 1, 1984, and failure to pass a mandatory Tamil language examination. Memos were issued regarding these deficiencies, and charges were framed. Despite show cause notices, the employee did not respond. The management terminated the employee's services effective December 1, 1984, and sought approval from the Chief Educational Officer (CEO) as per Rule 17 of the Tamil Nadu Recognised Private Schools (Regulation) Rules, 1974. The CEO refused approval, deeming the allegations not grave enough for dismissal. An appeal to the Joint Director was rejected, and the CEO later directed reinstatement with back wages. The management challenged this in the High Court, arguing that student welfare necessitated disciplinary action and that the authorities overstepped their jurisdiction by examining punishment proportionality. The High Court dismissed the appeal. The employee, who has since been superannuated, appeared in person, claiming to be a victim of mala fides. The State Government has been paying the employee's salary based on interim court orders.",
"generated_judgment": "**CONCLUSION: DISMISSED.**\n\n### **Rationale:**\nThe appeal fails on all material grounds due to a **lack of substantial errors of law or fact** in the process followed:\n\n1. **Sufficient Evidence for Dismissal** – The record confirms the grounds stated (irregular teaching, unauthorized absence, and failure to pass a qualifying examination) as demonstrably viable under administrative discipline. The Demonstrations in earnest followed, with the employee not responding—material that Mastersավորced their containment.\n\n2. **Procedural Strict Communications**: The management complied with legal wellreacied by this Rule 17, seeking CEO’s veil on time. The CEO’s stay call **not oppress/search but case-specific** (*Role 31(1)(c)* broadly covered ‘unsatisfactory services.’ Multiple charges and per collation was at lawful interpretation.\n\n3. **High Court Ruling Grounds Valid**: The school argued studentability motives (e.g., correcting intra-school misconduct habits), not exceeding jurisdiction. The High Court *fully assessed* the proportionality of dismissal admissible disciplinary action beyond 1st years lin-this teacher’s 36 years’ duration (e.g., not analogous to punitive salary dedctions).\n\n4. **No Mala fides Misconduct—Writ in *Recap***: Superannuation matter *is locked*, establishing arbitrary cruelty accusation a rejection of the facts.\n\nThus, failure recurrence— Wald independently, Pursuant to stopping order criteria as meeting procedural/statutory ‘constituted force rules’—isopposably dismissed for *no viable merits.*",
"reference_judgment": "The Judgment was delivered by : Arijit Pasayat, J.\n1. Undaunted by reverses before the departmental authorities and the High Court, the Managing Committee of Thiruvalluvar Higher Secondary School (hereinafter referred to as the 'management') has filed this appeal. The controversy lies within u narrow compass and factual position being undisputed, a brief reference thereto would suffice.\n2. The 5th respondent (hereinafter referred to as the 'employee') was appointed as P.G. Assistant for teaching English in 1978. According to management, his behaviour and performance was not satisfactory and that he was highly irregular both in attendance as well as in teaching. A memorandum was sent to him and to another teacher on 14.1.1983 stating therein that they would be required to pass examination conducted by the State of Tamil Nadu in Tamil language before the end of the academic year in order to qualify for the posts they were holding, failing which appropriate action was to be taken. From 1.12.1984, the employee did not attend school.\n3. The management was of the view that since he had not taken prior permission from the school and had not chosen to intimate the school authorities; it resulted in dislocation of the teaching. Prior to his long absence, he had not been taking classes regularly. The students were put to grave and irreparable loss and hardship. Students as well as their parents complained about the deficiencies of the employee in not taking classes regularly and leaving the classes in the middle. He had also not completed portions of the lessons for the 11th standard. Several requests were made to the employee to attend classes, but he turned down their requests. On 29.8.1984, the management issued another memo to him seeking a clarification as to whether he had passed the Tamil examination. On 31.8.1984, the management issued another memo to the employee stating therein that since he had not attended the school for very long period without obtaining prior permission and as he had cancelled the classes and left for home early, same amounted to deficiency in service, misconduct and warranted action. Charges were framed and the employee was called upon to submit his reply to the charges. Another memo was issued on 30.10.1984 containing similar charges.\n4. Additionally, it was indicated that as he had not completed portions of the lessons for 11th standard and the students and parents had complained. He was required to show cause in respect of the allegations. On 24.1.1985 memo of charges was also issued to him, inter alia, indicating that since he had not passed the Tamil examination as required, and since he had failed to discharge his duties diligently having absented from school frequently without prior permission and having not taken classes regularly, there was serious dislocation of work and inconvenience to the students. On 13.3.1985, the show cause notice was issued indicating that in spite of opportunity given; he had failed to respond and was called upon to submit his explanation as to why his services should not be terminated for violation of code of conduct prescribed for teachers employed in private schools.\n5. Another copy of the show cause notice was served through another mode on 9.4.1985. The employee did not respond to the show cause notice. Therefore, a decision was taken by school committee unanimously to terminate his services w.e.f. 1.12.1984, the date from which he had stopped attending the school. On 9.5.1985, letter was written to the Chief Educational Officer, respondent No.3 (in short the 'CEO') seeking his approval for term (nation of employee's services in terms of Rule 17 of the Tamil Nadu Recognised Private Schools (Regulation) Rules, 1974 (hereinafter referred to as the 'Rules'). On 29.8.1985 letter was written to the District Educational Officer, respondent No.4 (in short the 'DEO') requesting for early action in the matter.\n6. The DEO issued a notice to the employee but there was no response thereto. On 3.12.1985, DEO sent a report to the CEO. inter alia, indicating that the employee had not denied any of the charges and since the management had produced materials in support of the charges, sanction for dismissal should be granted. On 21.4.1987, an enquiry was conducted by the authorities and the employee was called to the school. But he did not make any effective participation. Again, an enquiry was conducted by the CEO on 23.4.1987. After seeing the employee, the CEO was prima facie of the view that he was psychic.\n7. Finally, on 24.4.1987 the CEO passed an order refusing permission for termination on the ground that the allegations which constituted foundation for the proposed order of termination, were not so grave as to warrant punishment like dismissal. Therefore, permission was refused. Aggrieved by the said order, the Management preferred an appeal under Section 41 of the Tamil Nadu Recognised Private Schools (Regulation) Act, 1973 (in short the 'Act') to the Joint Director of School Education (Secondary), Directorate of School Education (in short the 'Joint Director'). The appeal was rejected. inter alia, observing that though the employee did not give any reply to the charges as against him though he appeared before the CEO twice, yet the charges were not so grave as to warrant dismissal. The Joint Director wrote to the management that if it does not pay the wages directly to the employee, action should be taken for making direct payment to him.\n8. On 9.3.1988. CEO asked the management for re instatement of the employee with back wages. Aggrieved by such direction, management preferred a revision before the State Government. It was indicated that the very purpose for which a teacher is appointed is to impart teaching to the students. If the teacher was deficient in teaching and was irregular in taking classes, that is a very serious matter warranting termination of service. It also took a stand that since it had neither suspended the employee nor terminated his services and awaiting approval of the concerned authority, the question of reinstatement and paying back wages did not arise. In fact, the employee had not worked and abandoned work. But the DEO again directed the management to reinstate the employee and pay him back wages failing which the steps regarding direct payment were to be taken. Aggrieved by these orders, the Management filed a writ petition before the Madras High Court. Learned Single Judge was of the view that in terms of what is required under Section 22(1) of the Act, prior approval for effecting termination was necessary. This was intended to be a safeguard to protect the interest of the teacher so that there is no victimisation. An appeal was preferred before the Division Bench, inter alia, taking a stand that disciplinary action was taken was necessary in the interest of the Institution and the students whose interest was of paramount consideration.\n9. The authority and the learned Single Judge lost sight of this vital aspect. The Division Bench dismissed the appeal holding that the authorities had considered the materials on record and, therefore, no interference was called for.\n10. In support of the appeal, Mr. L. Nageshwara Rao, learned senior counsel submitted that the authorities and the High Court were not justified in their views and approach. It was submitted that Section 22 has not been interpreted in the proper perspective. Action of the authorities was beyond jurisdiction. They could not have gone into the question of the proportionality of punishment, as it was beyond the scope of their authority. Secondly, even if it is conceded for the sake of argument that there was jurisdiction to deal with the quantum of punishment, yet there was no application of mind in considering the relevant materials.\n11. Finally, it was submitted that if any amount has to be paid, the same has to be borne by the State Government as the post was a sanctioned and aided post. Another teacher has been appointed and the management is paying his salary. In elaborating the first ground of challenge, it was submitted that if the authorities can decide the quantum of punishment aspect, it would mean as if they are acting as an appellate authority. In case of approved action, appeal is provided under Section 23 of the Act and the effected employee is given an opportunity to prefer an appeal. There is also a scope for second appeal in terms of Section 24 of the Act. Proportionality is not within the domain of approved authority.\n12. The satisfaction of the approving authority is limited to consider whether adequate and reasonable grounds exist for taking action in the manner proposed by the management. The authorities and the High Court have lost sight of the fact that what was of paramount consideration is the welfare of the institution and the students in particular. A teacher, who is deficient in teaching as well as irregular, does not meet the requirements of a teacher, as one would expect him to be. This aspect which was of vital importance has been lost sight of, and not taken note of by the authorities and the High Court. The employee reflected very casual approach and even has absented from duty on several occasions for very long periods and after 1.12.1984 has not bothered to join duty. The employee who appeared in person supported the action and took the stand that he is victim of circumstances, and mala fides, and the management has been unfair to him. He claimed to be an ideal teacher for whom truth and honesty are the key-words.\n13. Learned counsel for the State Government submitted that pursuant to the interim directions given by this Court, the State has been paying the employee the amounts of salary directed to be paid. In fact, it has filed an interlocutory application No. 2 for modification of this Court's order. With reference to the counter affidavit filed in appeal, it is pointed out that the management has not drawn the amount sanctioned to it on the ground that it cannot make payment of said amount to a person (the teacher appointed in place of the employee) whose appointment has not been approved and, therefore, it was paying from its own funds. It was further submitted that the management has, in spite of the fact that no order of stay has been passed, not taken back the employee to service. Since no approval was given to the proposed order of termination, for all prActical purposes, there was no termination of the services of the employee and if any amount has to be paid, the same has to be borne by the management\n14. For considering the rival submissions, a few provisions need to be quoted. The pivotal provisions are Sections 22(1) and (2) and Rule 17(1) which so far as relevant read as follows:\n \"Section 22- Dismissal, removal or reduction in rank or suspension of teachers or other persons employed in private school- (1) Subject to any rule that may be made in this behalf, no teacher or other person employed in any private school shall be dismissed, removed, or reduced in rank nor shall his appointment be otherwise terminated except with the prior approval of the competent authority.\n(2) Where the proposal to dismiss, remove or reduce in rank or otherwise terminate the appointment of any teacher or other person employed in any private school is communicated to the competent authority, that authority shall, if it is satisfied that there are adequate and reasonable grounds for such proposal, approve such dismissal, removal, reduction in rank or termination of appointment.\nRule 17, Dismissal, removal or reduction in rank or suspension of teachers or other person employed in private schools:- \n(1) The competent authorities to accord prior approval for the dismissal. removal or reduction in rank of a teacher or other person employed in any private school, shall be the District Educational Officer in respect of teacher or other person employed in Pre-Primary, Primary and Middle Schools and the Chief Educational Officer in respect of teacher or other person employed in High Schools, Higher Secondary Schools and Teachers' Training Institutes.\" \n15. Though attempt was made to contend that at the stage of consideration under Section 22(1) and 22(2) and Rule 17(1), there is no scope for looking into the proportionality of punishment aspect, the same is clearly without any substance. What an authority is required to do at that stage is to see whether the proposed punishment is to be approved. Obviously, it has to consider whether the punishment as proposed is proper one; otherwise there is no need for seeking its approval. The crucial words used in sub-section (2) of Section 22 are \"adequate and reasonable ground\" for the proposal.\n16. The proposal relates to dismissal, removal or reduction in rank or otherwise termination of appointment of any teacher or any other person employed in a private school. While considering whether adequate and reasonable ground exist for giving approval, the authority is certainly required to look into the gravity of the proved charges and whether the punishment as proposed commensurates with it. Any other interpretation would make the question of approval an exercise in futility.\n17. Stand of the learned counsel for the Management is that if adequate and reasonable grounds exist for the action, then no other question needs to be looked into. This argument overlooks a vital aspect that the adequacy and reasonableness of grounds are relateable to the proposals for the enumerated actions. The proposed Actions being punishments, there is an inbuilt requirement to see whether the quantum of punishment commensurates with the gravity of the proved charges. Therefore, clearly the authority has jurisdiction to decide the question as to whether the punishment proposed commensurates with the proved charges. One of the related pleas was that if quantum of punishment is permitted to be considered, it would partake charActer of an appeal. This plea is equally untenable. Sections 22 and 23 operate in different fields. At the stage of consideration under Section 22, the teacher does not get any opportunity for presenting his side of the case. This opportunity is provided under Sections 23 or 24 as the case may be.\n18. The authority under Section 22 takes decision on the material placed before it by the management. So the question of action under Section 22 partaking appellate charActeristics does not arise. The second plea of learned counsel for the management was even if the authority had jurisdiction, there was no application of mind, as relevant factors have not been looked into. The basic duties of a teacher and what is expected from him were highlighted. It was strenuously contended that the welfare of the students' aspect was not even taken note of.\n19. The role a teacher plays in shaping the career and future of a student needs no great emphasis. In olden times, a teacher was considered equal to God. He is required to ensure good conduct of his pupils in addition to teaching lessons to them. The situation has not changed now so far as this basic concept is concerned. But nevertheless, the number of such teachers is sadly on the decline, and instead of tribe of such teachers increasing, it is alarming decreasing. A teacher is required to remove darkness and ignorance from the minds of students. But present day experiences show that the teachers are themselves ill-equipped and take their jobs very casually. No doubt, there are exceptions and those teachers who belong to the exception category are trying their best to make up the deficiency of their brothers in service.\n20. In the hands of these ill-equipped teachers, the destiny of the students does not get moulded in the way it ought to be. The centres of learning are becoming trade and money-making business centres. Learned counsel for the appellant is correct in his submission that welfare of the students has to receive utmost priority. But his submission that there was no application of mind by the authorities to the materials has not borne out from the records. The appellate authority has addressed itself to the relevant factors in greater details and has come to the conclusion that CEO was justified in not according approval for the proposed action of dismissal.\n21. Learned Single Judge and the Division Bench have put their seal of approval on the findings recorded. Learned counsel for the appellant further submitted that once the disciplinary authority comes to a view that there was adequate material for imposing a particular punishment; the approving authority should not lightly interfere with the findings. This submission holds good only when the authority does not apply its mind to the materials forming the foundation of the proposed action. When after consideration of the material, it comes to a conclusion that the proposed punishment is harsh or disproportionate to the proved charges; the scope of interference with the finding is rather limited. This is because the approving authority has to consider whether the proved charges on the facts and the materials justify a particular action. Since reasons have been given on consideration of the materials, there is no scope for interference.\n22. The order of the authorities declining to accord approval does not suffer from any infirmity. The High Court was justified in declining to interfere.\n23. Another point urged by learned counsel for the appellant was that the direction for the back wages in its entirety is not justified because the employee absented from duty without sanctioned leave for long periods and even on some dates he went away during the school period and even abandoned the classes on several days. This certainly is a factor which needed consideration by the authorities. Except for the enumerated categories for other actions no approval is necessary. Authority acting under Section 22 could not have indicated any other aspect. Looking into the circumstances of the case, we feel that payment of 60% salary for the concerned period up to the date of superannuation (since we are told that the employee has been superannuated in the meantime) shall be proper. The undisputed position is that the charges have been proved. The question as to who will make the payment to the employee is a matter between the management and the Government. (The payment has, in any event, to be made, at the first instance, by the Management). So far as the question of re-imbursement is concerned, we do not think it necessary to give any direction in that regard, so far as the present dispute is concerned. No further orders are to be passed in the application for modification of earlier interim orders passed.\nThe appeal is disposed of accordingly.\nAppeal disposed of\n",
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"case_title": "SUPREME COURT OF INDIA | Criminal Appeal - 1627 of 2019 | Union Of India And Ors. v. Sepoy Pravat Kumar Behuria | 06/11/2019",
"case_details": "Case: Criminal Appeal - 1627 of 2019 | Union Of India And Ors. v. Sepoy Pravat Kumar Behuria",
"generated_outcome": "ALLOWED",
"reference_outcome": "DISMISSED",
"case_record": "The Respondent, enrolled in the Indian Army in 2002, was dismissed from service on 23.07.2012 following a Summary Court Martial. On 02.06.2011, he assaulted Subedar Satyendra Singh Yadav with a Talwar, causing a skull fracture and internal bleeding. A Court of Inquiry was convened, and summary of evidence was recorded. The Respondent declined to cross-examine witnesses during these proceedings and made no statement in his defence, though he voluntarily stated he attacked without provocation. The Summary Court Martial found him guilty under Section 326 of the IPC. The Respondent appealed to the Armed Forces Tribunal, alleging procedural irregularities, including being kept in close arrest without proper authorization, denial of participation in the Court of Inquiry and summary of evidence, hasty conduct of the Court Martial (45 minutes), and inconsistency between medical and oral evidence regarding the injury. The Tribunal accepted these contentions, finding inconsistencies between the medical report (compressed injury) and the weapon used (sharp-edged Talwar), noting the absence of blood and fingerprints on the weapon, and concluding that the proceedings were conducted hastily and without following prescribed rules, specifically Rules 179, 180, 115, and 116. The Tribunal also noted that the Respondent's signatures appeared to be taken in advance on blank papers.",
"generated_judgment": "### **Facts:**\n1. The Respondent was enrolled in the Indian Army in 2002 and was dismissed from service on **23.07.2012** following a **Summary Court Martial**.\n2. On **02.06.2011**, the Respondent assaulted **Subedar Satyendra Singh Yadav** with a **Talwar**, causing a **skull fracture and internal bleeding**.\n3. A **Court of Inquiry** was convened, and a **summary of evidence** was recorded.\n4. The Respondent **declined to cross-examine witnesses** and made **no statement in his defence**, though he **voluntarily admitted** attacking without provocation.\n5. The **Summary Court Martial found him guilty under Section 326 of the IPC** (voluntarily causing grievous hurt).\n6. The Respondent appealed to the **Armed Forces Tribunal (AFT)**, alleging:\n - **Procedural irregularities**, including:\n - Being kept in **close arrest without proper authorization**.\n - **Denial of participation** in the Court of Inquiry and summary of evidence.\n - **Hasty conduct of the Court Martial** (completed in **45 minutes**).\n - **Inconsistency between medical and oral evidence** regarding the injury.\n7. The **AFT accepted these contentions**, noting:\n - **Inconsistencies** between the **medical report** (compressed injury) and the **weapon used** (sharp-edged Talwar).\n - **Absence of blood and fingerprints** on the weapon.\n - **Proceedings were conducted hastily** and **without following prescribed rules** (Rules **179, 180, 115, and 116**).\n - The Respondent’s **signatures appeared to be taken in advance on blank papers**.\n\n### **Issues:**\n1. **Whether the Summary Court Martial proceedings were conducted in violation of procedural rules, rendering the conviction unlawful?**\n2. **Whether the inconsistencies in evidence and alleged coercion justify setting aside the dismissal?**\n\n### **Rules:**\n1. **Article 142 of the Constitution of India** – The Supreme Court and High Courts have the power to pass any order necessary for doing complete justice in any case or matter pending before them.\n2. **Army Act, 1950 (Sections 115, 116, 179, 180)** – These sections prescribe procedural safeguards in Court Martial proceedings, including:\n - **Right to a fair hearing** (Rule 115).\n - **Proper recording of evidence** (Rule 116).\n - **Adequate time for defence** (Rule 179).\n - **Proper authorization for arrest** (Rule 180).\n3. **Principles of Natural Justice** – Require fairness, impartiality, and an opportunity to defend oneself.\n4. **Precedents on Procedural Irregularities in Court Martial** – Courts have set aside convictions where fundamental procedural violations occurred (e.g., **Union of India v. Col. K.S. Kahlon**).\n\n### **Analysis:**\n1. **Procedural Violations (Facts 6, 7; Rules 2, 3, 4):**\n - The **AFT found violations of Rules 179, 180, 115, and 116**, which are **mandatory procedural safeguards** in Court Martial proceedings.\n - The **hasty conduct (45 minutes)** and **lack of proper authorization for arrest** (Rule 180) **deprived the Respondent of a fair trial**.\n - The **pre-signed blank papers** suggest **coercion or lack of free consent**, violating **natural justice principles**.\n\n2. **Inconsistencies in Evidence (Facts 6, 7; Rule 3):**\n - The **medical report (compressed injury) vs. weapon (Talwar)** discrepancy raises **reasonable doubt** about the prosecution’s case.\n - The **absence of blood and fingerprints** further weakens the prosecution’s evidence.\n\n3. **Respondent’s Conduct (Facts 3, 4):**\n - While the Respondent **admitted the attack**, his **refusal to cross-examine witnesses** does not negate the **procedural violations** or **evidentiary inconsistencies**.\n - The **lack of proper defence opportunity** (Rule 115) makes the conviction **vulnerable to challenge**.\n\n### **Conclusion:**\nGiven the **gross procedural violations**, **inconsistent evidence**, and **lack of a fair trial**, the **appeal is ALLOWED**. The dismissal from service is set aside, and the Respondent is entitled to a **fresh inquiry** in accordance with the law.",
"reference_judgment": "1. This Appeal is filed against the judgment of the Armed Forces Tribunal, Regional Bench, Lucknow (hereinafter, 'the Tribunal') by which the order of dismissal of the Respondent dated 23.07.2012 was set aside.\n2. The Respondent was enrolled in the Indian Army as Sepoy in the Unit 981 AD Regiment Workshop on 02.02.2002. He was posted at Jamnagar on 01.06.2011 and was scheduled to be on the third night duty from 04:00 hrs to 06:00 hrs. Thus, he was excused from physical training parade. On 02.06.2011, at about 07:45 1 hrs, he assaulted Subedar/Master Technical (Communication) Satyendra Singh Yadav, with a Talwar (grass cutting tool) without any provocation. Initially, the Respondent hit Subedar/Master Technical (Communication) Satyendra Singh Yadav on his head from behind and when Subedar/Master Technical (Communication) Satyendra Singh Yadav turned around, the Respondent hit on his forehead with the Talwar. When the Respondent attempted to give a third blow, Naib Subedar A. P. Singh intervened. Subedar/Master Technical (Communication) Satyendra Singh Yadav was immediately shifted to Gokul Hospital, Jamnagar and a surgery was conducted by a Neurosurgeon as his skull bone was fractured leading to internal bleeding and blood clotting in the brain.\n3. The Court of Inquiry was convened against the Respondent by Colonel Sanjay Khanna, Commanding Officer, 48 AD Regiment on 03.06.2011 to investigate into the circumstances which led the Respondent using criminal force against Subedar/Master Technical (Communication) Satyendra Singh Yadav. Nine witnesses were examined and the Respondent declined to cross- examine the witnesses though he was given an opportunity. The Respondent also did not make any statement in his defence. After appreciating the material on record, the Court of Inquiry recommended action to be initiated against the Respondent.\n4. The proceedings for recording the summary of evidence were initiated by Lt. Col. Amarvir Singh. Twelve witnesses were examined on behalf of the prosecution between 10.06.2011 and 15.06.2011. According to the Appellants, the Respondent declined to cross-examine the prosecution witnesses. The Respondent had voluntarily given a statement that he hit the victim with a grass cutting tool without any provocation. Thereafter, on 20.10.2011, additional summary of evidence was recorded. Two additional witnesses were examined and witness No. 2 and 12 were re-examined in the presence of the Respondent. The prosecution alleges that the Respondent refused to cross-examine the witnesses though he was given an opportunity to do so.\n5. By an order dated 23.07.2012, the Summary Court Martial found the respondent guilty and imposed the sentence of dismissal from service.\n6. The order dated 23.07.2012 was questioned by the Respondent before the Tribunal. The Respondent contended that he was kept in close arrest from 02.06.2011 to 05.10.2011 without the permission from the Chief of the Army Staff. It was further contended that he was not given an opportunity to participate in the Court of Inquiry and during the recording of summary of evidence. He complained that the Summary Court Martial was conducted in a hasty manner. The entire proceedings before the Court Martial was completed within a period of 45 minutes. It was further argued on his behalf that the oral evidence was inconsistent with the medical evidence. The Respondent's case was that there was no incised wound on the head of the victim though the Respondent is alleged to have used a Talwar which is a sharp-edged weapon. He submitted before the Tribunal that non- compliance of the provisions of the Army Act, 1950 and the Army Rules, 1954 (hereinafter, 'the Rules') vitiated the Summary Court Martial proceedings.\n7. The Tribunal accepted the submissions made on behalf of the Respondent and held that there was an irreconcilable inconsistency between the medical evidence and the oral testimonies of the witnesses. According to the medical certificate, the injury caused to Subedar/Master Technical Satyendra Singh Yadav was a compressed injury whereas the Respondent is alleged to have wielded a grass cutting tool which is sharp-edged. The Tribunal also found that there was no blood on the weapon and the prosecution was unable to prove that there were any finger prints of the Respondent on the weapon. The Tribunal agreed with the Respondent that the Summary Court Martial was conducted in a hasty manner. The entire enquiry was completed within a period of 45 minutes. After perusing the record of the summary of evidence, the Tribunal was of the opinion that the signatures of the Respondent appear to have been taken before the proceedings were held. The Tribunal found that the signatures of the Respondent were at the right-side corner at the bottom of every page. On some pages where the depositions of the witnesses concluded at the middle of the page, the signature of the Respondent was found at the right side at the bottom of the page. After examining the material on record, the Tribunal held that the Respondent was not afforded an opportunity as provided in Rules 179 and 180 of the Rules. The Tribunal was of the further opinion that the procedure prescribed in Rules 115 and 116 of the Rules which deals with recording the plea of guilt of a delinquent was not followed. After a detailed discussion, the Tribunal ruled in favour of the Respondent by holding that the imposition of the penalty of dismissal was with a pre-determined mind and was arrived at without following the procedure prescribed by law.\n8. We have heard Mr. R. Balasubramanian, learned Senior Counsel for the Appellants and Mr. Sudhanshu S. Pandey, learned counsel appearing for the Respondent. The Court of Inquiry was ordered against the Respondent to investigate the circumstances under which he used criminal force against Subedar/Master Technical, Satyendra Singh Yadav. The Court of Inquiry assembled on 03.06.2011. During the Court of Inquiry, the statement of the Respondent was recorded in which he stated that he was not provided liquor at 20:00 hrs on 01.06.2011 by Subedar/Master Technical Satyendra Singh Yadav. He was angry about the refusal of liquor due to which he attacked the victim by using Talwar on the morning of 02.06.2011. Other witnesses, including the victim Subedar/Master Technical Satyendra Singh Yadav were examined in the Court of Inquiry.\n9. We have perused the original record relating to the summary of evidence which was recorded between 10.06.2011 to 15.06.2011. The signatures of the Respondent are found on the right- hand side at the bottom of each page, at the same place on each page. The manner in which the signatures of the officer who recorded the summary of evidence and the other officers were put on certain pages would clearly show that the signature of the Respondent was taken in advance on blank papers. The statement of the Respondent was recorded under Rule 23 (2) of the Rules. Lt. Col. Amarvir Singh who recorded the summary of evidence certified that the summary of evidence containing 40 pages were recorded by him in the presence of the Respondent and that Clauses (1), (2), (3) and (4) of Rule 23 have been complied with while recording the summary of evidence. Even on this certificate, whereas the signature of Lt. Col. Amarvir Singh is at the center of the page, the signature of the Respondent is found at the right-hand side at the bottom of the page. The second half of the page is left blank. A bare perusal of the recording would indicate that the signatures of the Respondent were obtained and filled up with the depositions of the witnesses later. The contention of the Appellant that the summary of evidence was recorded in the presence of the Respondent is not acceptable. We have also perused the additional summary of evidence which was recorded on 20.10.2011. The original record discloses that the signatures of the Respondent were taken earlier as there is a huge gap on certain pages between the place where the depositions have ended and the place where the signature of the Respondent is found. The certificate given by the officer recording additional summary of evidence on 20.10.2011 actually ends with his signature at the center of the page and the signature of the Respondent was found at the bottom of the page without anything being written in between.\n10. After the judgment was reserved, the learned Senior Counsel appearing for the Union of India, handed over the original record pertaining to the Court of Inquiry. The proceedings of the Court of Inquiry were conducted between 04.06.2011 and 08.06.2011 during which the statements of the Respondent and the other witnesses were recorded. The signature of the Respondent is found on the left-hand side at the bottom of each page. The statement of witness No.3, Naib Subedar A. P. Singh ends at the middle of page No.9 of the original record. The signature of the Respondent is found at the left-hand side at the bottom of the said page. Major Hemant Juneja, who was the Presiding Officer of the Court of Inquiry appears to have signed at the bottom of each page on the right-hand side. On some pages where the deposition ended at the center of the page, signature of Major Hemant Juneja is found. Resultantly, on some pages, the signature of the Presiding Officer i.e. Major Hemant Juneja is found at the appropriate place i.e. immediately after the deposition has ended, as well as at the right-hand side of the bottom of the page.\n11. The Summary Court Martial was held on 23.07.2012. The Respondent was charged for committing an offence under Section 326 of the Indian Penal Code, 1860 by causing grievous hurt to Subedar/Master Technical Satyendra Singh Yadav. We agree with the Tribunal that the entire Summary Court Martial was held in a hasty manner. The enquiry commenced at 12.45 p.m. and concluded at 1.30 p.m. and the sentence was imposed at 2.30 p.m.\n12. It is clear from the record that Respondent was not given an opportunity to cross examine the witnesses whose statements were recorded in the summary of evidence. The proceedings of Court of Inquiry, recording of summary of evidence and the Summary Court Martial have been conducted without following the procedure prescribed by the Act and the Rules.\n13. The Tribunal examined the evidence on record to hold that the prosecution failed to establish the guilt of the Respondent. The irreconcilable inconsistency between the medical evidence and ocular testimony, lack of scientific evidence like finger prints on the weapon and the absence of blood on the weapon have been taken into account by the Tribunal to hold that the charge against the Respondent was not proved.\n14. It is trite law that judgments of acquittal should not be disturbed unless there are substantial or compelling reasons. The substantial or compelling reasons to discard judgment of acquittal were examined by this Court in Ghurey Lal v. State of Uttar Pradesh1which are as follows: 1 (2008) 10 SCC 450 \" 1....... i) The trial Court's conclusion with regard to the facts is palpably wrong; ii) The trial Court's decision was based on an erroneous view of law; iii) The trial Court's judgment is likely to result in \"grave miscarriage of justice\"; iv) The entire approach of the trial Court in dealing with the evidence was patently illegal; v) The trial Court's judgment was manifestly unjust and unreasonable; vi) The trial Court has ignored the evidence or misread the material evidence or has ignored material documents like dying declarations/ report of the Ballistic expert, etc. vii) This list is intended to be illustrative, not exhaustive.\n2. The Appellate Court must always give proper weight and consideration to the findings of the trial Court.\n3. If two reasonable views can be reached - one that leads to acquittal, the other to conviction - the High Courts /appellate Courts must rule in favour of the accused.\"\n15. Applying the law laid down by this Court as stated above, we are of the opinion that the judgment of the Tribunal should not be interfered with.\n16. We have carefully examined the evidence. A view that the respondent is guilty is possible on a scrutiny of the oral evidence. However, the relevant factors taken into account by the Tribunal present another probable view. It is settled law that if two views can be reached, the one that leads to acquittal has to be preferred to the other, which would end in conviction. That apart, there is a clear violation of Rules 179 and 180 of the Rules and the respondent was deprived of an opportunity to defend himself.\n17. For the aforementioned reasons, the judgment of the Tribunal is upheld and the Appeal is dismissed.",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal No. 12645 of 1996 | Madan Mohan Rajgarhia v. Messrs Mahendra R. Shah And Brothers And Another | 31/07/2003",
"case_details": "Case: Civil Appeal No. 12645 of 1996 | Madan Mohan Rajgarhia v. Messrs Mahendra R. Shah And Brothers And Another",
"generated_outcome": "ALLOWED",
"reference_outcome": "DISMISSED",
"case_record": "The appellant, engaged in the purchase and sale of shares, utilized the services of the respondent, a broker at the Bombay Stock Exchange. A dispute arose, leading the appellant to file a suit for recovery of Rs. 5,63,334/-. Upon receiving summons, the respondent filed an application under Section 34 of the Indian Arbitration Act, 1940, seeking to stay the proceedings on the ground that an arbitration provision covered the dispute. The learned Single Judge of the High Court accepted this contention and stayed the suit. The appellant's First Appeal against this order was dismissed. The appellant then filed the present appeal by way of special leave petition. The bills for transactions contained two arbitration clauses: one on the front, defining 'non-member' to 'include a remisier, authorized clerk or employee of any other person with whom the members shares (brokerage)', and another on the back, stating 'In the event of any claim... arising between you and us out of these transactions the matter shall be referred to arbitration'. The appellant contended that as he was not a remisier, authorized clerk, or employee, nor did he share brokerage, he was not covered by the definition of 'non-member', arguing that 'any other person' should be interpreted narrowly (ejusdem generis).",
"generated_judgment": "To evaluate the appeal, we need to assess whether the arbitration clause should apply to the appellant under the principles of contractual interpretation, particularly considering the doctrine of ejusdem generis, which the appellant has invoked. Here are the critical steps:\n\n1. **Understanding the Dispute and Legal Framework**:\n - The dispute involves the appellant and the respondent, a broker at the Bombay Stock Exchange, regarding the recovery of a certain sum.\n - The respondent invoked Section 34 of the Indian Arbitration Act, 1940, to stay court proceedings, arguing that an arbitration clause covered the dispute.\n - The arbitration clause defines 'non-member' and contains provisions that may apply to the appellant.\n\n2. **Interpretation of the Arbitration Clause**:\n - The arbitration clause includes two parts:\n - A definition on the front of the bills: \"non-member\" to \"include a remisier, authorized clerk or employee of any other person with whom members share (brokerage).\"\n - An arbitration agreement on the back: \"In the event of any claim... arising between you and us out of these transactions the matter shall be referred to arbitration.\"\n - The appellant argues that he does not fall within the definition of 'non-member' as he is not a remisier, authorized clerk, or employee, nor does he share brokerage. Here, he relies on the ejusdem generis principle, which suggests that where general words follow an enumeration of specific items, the general words are construed to apply only to items of the same kind.\n\n3. **Application of Ejusdem Generis**:\n - The specific items listed are \"remisier, authorized clerk or employee of any other person with whom members share (brokerage).\"\n - 'Any other person' is the general term following this list. Under ejusdem generis, 'any other person' should be interpreted as similar to the specific items preceding it, which are specifically related to brokerage or employment in broker-related roles.\n - The appellant’s situation must be evaluated to see if he fits within this context. If his activities do not involve brokerage or employment in a related role, the ejusdem generis argument suggests he may not be covered by the arbitration clause.\n\n4. **Judicial Precedents and Interpretation**:\n - Courts typically look to the intention of the parties when interpreting contract terms. If the language is ambiguous, they may lean towards a narrower interpretation unless clearly stated otherwise.\n - The intention behind arbitration clauses is often to provide a streamlined dispute resolution process, but they must clearly specify the parties they cover.\n\n5. **Decision**:\n - Given the appellant’s argument and the principle of ejusdem generis, there is a valid reason to believe that the arbitration provision might not encompass the appellant if he does not fit the specific categories or a similar context.\n - Previous court decisions often favor the party not drafting ambiguous terms unless explicitly stated otherwise. Here, the ambiguity exists concerning whether the term 'any other person' extends to the appellant's role and activities.\n\nBased on the above analysis, the appeal hinges on how the term 'any other person' is interpreted within the arbitration clause. Given the appellant’s strong argument based on ejusdem generis and the ambiguity around 'any other person,' it seems fair that this matter should be considered, potentially in a non-arbitral forum, unless the clause is unequivocally applicable.\n\n**Conclusion**: The appeal is **ALLOWED** to provide a more thorough examination of whether the arbitration clause applicability, as contested by the appellant, should indeed exclude him based on the principles of contractual interpretation and ejusdem generis.",
"reference_judgment": "The Order of the Court is as follows\n1. The appellant herein was engaged in the business of purchase and sale of shares and for that purpose he had been utilizing the services of the defendant, who is a broker at the Bombay Stock Exchange. The appellant herein filed a suit for recovery of Rs. 5,63, 334/- against M/s. Mahendra R. Shah & Bros., who are the respondents herein. The respondents herein on receipt of the summons in the suit, filed an application under Section 34 of the Indian Arbitration Act, 1940 for staying the proceeding on the ground that there is a provision for arbitration as regards the dispute in the suit. The learned Single Judge of the High Court accepted the contention of the respondents herein and directed the stay of proceedings of the suit. Aggrieved, the appellant filed the First Appeal from the said order, which was dismissed. It is against the said order of the High Court, the appellant has filed this appeal by way of special leave petition.\n2. Learned counsel appearing for the appellant urged that the arbitration clause printed on the bills does not include the persons like plaintiff and, therefore, the appellant being a non-member is not required to seek arbitration. We do not find any merit in the contention. One clause of the Bill, which is printed on the front, reads as under:\n \"All the claims (whether admitted or not) difference and disputes between a member and a non-member or a non-member (the terms \"non-member\" shall include a remisier, authorized clerk or employee of any other person with whom the members shares (brokerage) arising out of or in relation to dealing transactions and contracts made subject to the rules and bye-laws and regulations of the Exchange or with reference to anything incidental thereto or in pursuance thereof or relating their construction, fulfillment or validity or relating to the rights, obligation and liabilities of remisier, authorised clerk, employees or any other persons with whom the member shares brokerage in relation to such dealings, transactions and contracts shall be referred to and decided by arbitration as provided in the rules, bye-laws and regulations of the Exchange.\" \n3. Another clause of the Bill, which is printed on the back side, reads as under:\n \"In the event of any claim (whether admitted or not) difference or dispute arising between you and us out of these transactions the matter shall be referred to arbitration in Bombay as provided in the Rules, Bye-laws and Regulations of the Stock Exchange, Bombay\". \n4. The learned counsel appearing for the appellant urged that a non-member will only be covered if he falls under the definition of a non-member. Since the appellant is neither a remisier or authorised clerk or employee or shares any brokerage with the member, he cannot be covered by the said definition and, therefore, the said rules, definition and bye-laws do not apply to him. In fact, the argument is that the words 'any other person\" should take colour from the preceding words, namely, 'remiser, authorised clerk or employee' and since the appellant is not one of those mentioned, he does not fall within the expression 'any other person'. T he reading of clause quoted above, as a whole, would clearly show that this clause is quite wide and comprehensive enough to cover the case of the plaintiff. In order to make it comprehensive, unauthorised clerk and employee and other persons like remisier, who are or have been receiving brokerage form the members of the Exchange have been included in the definition of non-member person. In fact by including these categories, the definition of a 'non-member' has been widened. The inclusion of such persons does not mean that no person like the appellant who is not a member of the Exchange has been excluded from the definition of the non-member. This aspect may be examined from another angle. The other Clause in the same bill puts the matter beyond doubt. The said clause shows that any claim (whether admitted or not) difference or dispute arising between you and us' out of these transactions the matter shall be referred to arbitration in Bombay as providing in the rules, bye-laws and regulations of the Stock Exchange. It does not show that what does it contemplate as regards arbitration clause printed on the front of the Bill, and that it provides for arbitration and the persons like appellant are included therein.\n5. For the aforesaid reasons, we do not find any merit in the appeal. It, accordingly, fails and is dismissed. There shall be no order as to costs.",
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"case_title": "SUPREME COURT OF INDIA | Criminal Appeal No. 317 of 2008 (Arising Out of Slp (Crl) No.4661 of 2007) | S.K. Alagh v. State Of Uttar Pradesh And Others | 15/02/2008",
"case_details": "Case: Criminal Appeal No. 317 of 2008 (Arising Out of Slp (Crl) No.4661 of 2007) | S.K. Alagh v. State Of Uttar Pradesh And Others",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "M/s. Akash Traders was an Area Wholesale dealer for Britannia Industries Limited (the Company). The dealership was terminated. Despite this, the complainant sent two demand drafts totaling Rs. 1,68,000/- on 14.09.2000 for goods. The company reiterated the termination of the dealership. The proprietor of M/s. Akash Traders filed a complaint under Section 406 IPC against the appellant (Managing Director of the Company), but the company was not made an accused. The demand drafts were in the company's name. After the complainant's death and substitution, the Magistrate summoned the appellants. The Magistrate discharged the accused under Section 245(2) CrPC, finding no criminal intent due to the delay in returning the drafts being attributable to banking processes and the fact that the drafts were eventually received back by the complainant. The revisional court allowed the complainant's revision, stating the Magistrate erred by not allowing evidence under Section 244 CrPC. The High Court dismissed the appellant's application under Section 482 CrPC, finding a prima facie case.",
"generated_judgment": "In evaluating the appeal, it's essential to consider the sequence of legal proceedings and the reasoning provided by the courts at different levels.\n\n1. **Initial Complaint and Discharge**: The complainant, M/s. Akash Traders, filed a complaint under Section 406 IPC. The Magistrate discharged the accused, finding no criminal intent. This was based on the conclusion that the delay in returning the drafts was due to banking processes and that the drafts were eventually returned to the complainant.\n\n2. **Revision by Complainant**: The complainant appealed, and the revisional court found that the Magistrate erred by not allowing evidence under Section 244 CrPC. As a result, the revision was allowed.\n\n3. **High Court's Decision**: The High Court dismissed the appellant's application under Section 482 CrPC, indicating that there was a prima facie case to be answered. This suggests that the High Court found merit in the revisional court's decision to allow the revision, implying that the Magistrate's decision to discharge might have been premature or without sufficient regard to evidence that could have been presented.\n\nConsidering these facts, the sequence of judicial decisions indicates that the higher courts found procedural and substantive grounds to question the Magistrate's discharge of the accused. The High Court's dismissal of the Section 482 CrPC application further supports the position that a prima facie case existed, warranting further examination.\n\nTherefore, based on the facts provided and the decisions of the revisional court and the High Court, the appeal should be **DISMISSED**.",
"reference_judgment": "The Judgment was delivered by : HON'BLE JUSTICE S. B. SINHA\n1. Leave granted.\n2. M/s. Akash Traders was an Area Wholesale dealer of Britannia Industries Limited (the Company) for Azamgarh, U.P. Dealership of Respondent No.2 was terminated by the said company. It was earlier informed that goods will be delivered only upon receipt of demand drafts issued by it. Complainant sent two demand drafts for a sum of Rs.18, 000/- and Rs.1, 50, 000/- for supply of goods on 14.9.2000 despite the fact that the dealership had been terminated earlier.\n3. The said demand drafts were sent to the appellant through the local Sales In-charge of the Company. It is stated that the complainant refused to take the same back.\n4. A new Area Wholesaler for Azamgarh was appointed by the company.\n5. A demand was made by the complainant to deliver goods by a letter dated 24.9.2000 stating that the company owes him a sum of Rs.1, 00, 000/-. The stand of the company that his dealership had been terminated was reiterated by a letter dated 25.9.2000.\n6. Ashok Kumar Aggarwal, purported to be the proprietor of the firm M/s. Akash Traders, filed a complaint petition in the court of Chief Judicial Magistrate, Azamgarh against the appellant herein for commission of an offence under Section 406 of the Indian Penal Code, 1860. Britania Industries Ltd. was not impleaded as an accused therein.\n7. On or about 17.2.2001, i.e., after filing of the complaint petition, the dealer accepted the said demand drafts being dated 8.1.2002 for a sum of Rs.1, 68, 000/-. On or about 25.2.2001, Ashok Kumar Aggarwal, the original complainant expired. A substitution application was filed by the second respondent-Alok Kumar Aggarwal on or about 19.4.2001.\n8. Inter alia, relying on or on the basis of the allegations made in the complaint petition that 'the company with mala fide intention neither sent the goods, nor returned the money'; an order for summoning the appellants was passed on 8.5.2001. A publication to that effect was also made in an article in a local newspaper.\n9. An application for recalling the order summoning before the learned Chief Judicial Magistrate was filed by the appellant. The learned Chief Judicial Magistrate, by an order dated 13.12.2001 discharged the accused in terms of Section 245(2) of the Code Of Criminal Procedure, 1973, holding :\n \"From the perusal of the record, this fact has come to light that in between the complainant M/s. Akash Traders, Azamgarh and Britannia Industries Ltd., Kolkata an agreement was made. M/s. Akash Traders were the authorized agent of Britannia Industries Ltd. and according to terms and conditions of the Agreement, Britannia Industries Ltd. used to supply biscuit to M/s. Akash Traders, Azamgarh. On 8.9.2000, Britannia Industries Ltd. terminated the agency regarding agreement as a result of which in between the parties dispute arose. It is the submission of the complainant that on 13.9.2001 bank draft of Rs.1, 68, 000/- was sent in favour of Britannia Industries Ltd. but on behalf of the accused the above amount did not return till 7.2.2001 to the complainant. The pleading on behalf of the accused is that the bank draft of Rs.1, 68, 000/- was returned to M/s. Akash Traders on 8.1.2001 and its payment was received by the complainant on 19.2.2001 under protest. Both the parties regarding the above reference after the case being decided this legal position has been made clear that if in any matter civil or criminal case is made out then on the basis of obtaining civil relief the proceedings of the suit could not be terminated. In the present matter, it has to be decided that whether in between both the parties during the business transactions prima facie criminal case was found? If in the present case any criminal case is not found then under Section 245(2) Code Of Criminal Procedure, 1973 the accused could be released at any stage. After the termination of agreement in between the accused and the complainant regarding agency on 13.9.2001 bank draft for an amount of Rs.1, 68, 000/- was sent to Britannia Industries Ltd. for the supply of biscuits. Prior to this also agreement dated 8.9.2000 has already been terminated regarding the agency in favour of M/s. Akash Traders Azamgarh. The complainant for receiving back an amount of Rs.1, 68, 000/- sent letters dated 11.10.2000 and 21.10.2000 but till 7.2.2001, the complainant did not receive back the above amount of Rs.1, 68, 000/-. But from the perusal of the photo copy of the letter enclosed with the file of bank draft of State Bank of India, Keshavpuram, Delhi it has become clear that bank draft No.597805 dated 8.1.2001 for an amount of Rs.1, 68, 000/ had already been prepared in favour of M/s. Akash Traders, Azamgarh and after the departmental proceedings of clearance on 19.2.2001 the complainant had received back the amount on 19.2.2001. Thus, it is clear that the applicant/accused had transferred an amount of Rs.1, 68, 000/- on 8.1.2001in favour of the complainant M/s. Akash Traders through Bank Draft, thus, in transaction whatever delay was made in returning back the amount of bank draft that has been committed due to proceedings relating to payment being done due to banking process and looking to the aforesaid facts it becomes clear that on the side of applicant/accused there was no intention of criminal misappropriation and, thus, there is no appropriate basis to initiate any action against the accused. Therefore, under Section 245(2) Code Of Criminal Procedure, 1973 the proceedings of the case are terminated and the accused is released.\" \n10. A revision application was filed thereagainst by the complainant which, by reason of an order dated 5.6.2002, was allowed, stating :\n \"It is clear from the perusal of the file that the learned Chief Judicial Magistrate in the impugned order dated 13.12.2001 has not granted any opportunity of adducing the evidences in detail under the provisions of Section 244 Code Of Criminal Procedure, 1973 but by not granting any opportunity to adduce the evidences by the complainant under Section 244 Code Of Criminal Procedure, 1973 has passed the impugned order under the provisions of Section 245(2) Code Of Criminal Procedure, 1973 which is not legal and proper. Under the provisions of Section 244 Code Of Criminal Procedure, 1973the complainant must be granted opportunity of filing the evidences in detail as per the law. Under the above, provisions, the charges are framed against the accused persons after the evidences are taken on record otherwise not, that is to say, passing of order under Section 245 Code Of Criminal Procedure, 1973 would be proper and justifiable.\" \n11. An application filed by the appellant before the High Court in terms of Section 482 of the Code Of Criminal Procedure, 1973 was dismissed by the High Court by reason of the impugned judgment, stating :\n \"From the perusal of the allegations made against the applicants and from the perusal of the impugned order, it appears that prima facie offence is made out against the applicant and there is no procedural mistake in taking cognizance and summoning the applicants, therefore, the prayer for quashing the impugned orders dated 8.5.2001 passed by the learned Magistrate, Azamgarh and 5.6.2002 passed by the learned Additional Sessions Judge, Fast Track Court No.2, Azamgarh is refused.\nThe interim stay order dated 3.7.2002 is vacated.\nAccordingly, this application is dismissed.\" \n12. The short question which arises for consideration is as to whether the complaint petition, even if given face value and taken to be correct in its entirety, disclosed an offence as against the appellant under Section 406 of the Indian Penal Code, 1860.\n13. Section 405 defines 'criminal breach of trust' to mean :\n Section 405.'Criminal breach of trust'\nWhoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits \"criminal breach of trust\".\" \n14. Appellant No.1 is the Managing Director of the Company. Respondent No.3 was its General Manager. Indisputably, the company is a juristic person. The demand drafts were issued in the name of the company. The company was not made an accused. The dealership agreement was by and between M/s. Akash Traders and the company.\n15. Mr. Pramod Swarup, learned counsel appearing on behalf of Responent No.2, in support of the order passed by the learned Chief Judicial Magistrate as also the High Court, submitted that as, prima facie, the appellant was in charge of and was in control of the business of the company, he would be deemed to be liable for the offence committed by the company.\n16. Indian Penal Code, 1860, save and except some provisions specifically providing therefor, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence.\n17. A criminal breach of trust is an offence committed by a person to whom the property is entrusted.\n18. Ingredients of the offence under Section 406 are :\n \"(1) a person should have been entrusted with property, or entrusted with dominion over property;\n(2) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so;\n(3) that such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.\" \n19. As, admittedly,drafts were drawn in the name of the company, even if appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Indian Penal Code, 1860. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the company itself.{See Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya [(2006) 10 SCC 581]} .\n20. We may, in this regard, notice that the provisions of the Essential Commodities Act, 1955, Negotiable Instruments Act, 1881, Employees' Provident Funds and Miscellaneous Provisions Act, 1952 etc. have created such vicarious liability. It is interesting to note that Section 14A of the 1952 Act specifically creates an offence of criminal breach of trust in respect of the amount deducted from the employees by the company. In terms of the explanations appended to Section 405 of the Indian Penal Code, 1860, a legal fiction has been created to the effect that the employer shall be deemed to have committed an offence of criminal breach of trust. Whereas a person in charge of the affairs of the company and in control thereof has been made vicariously liable for the offence committed by the company along with the company but even in a case falling under Section 406 of the Indian Penal Code, 1860 vicarious liability has been held to be not extendable to the Directors or officers of the company. {See Maksud Saiyed v. State of Gujarat and Ors. [2007 (11) SCALE 318]} .\n21. The High Court, therefore, committed a manifest error in passing the impugned judgment.\n22. For the reasons aforementioned, the impugned judgment cannot be sustained. It is set aside accordingly. The appeal is allowed. Respondent No.2 is liable to bear the costs of the appellant for causing harassment to him which is quantified at Rs.1, 00, 000/- (Rupees one lac only).",
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"case_title": "SUPREME COURT OF INDIA | CIVIL APPELLATE JURISDICTION: Civil Appeal No. 317 of 1976. Appeal from the Judgment and Order dated the 13th February, 1976 of the Jammu &Kashmir High Court in Election Petition No. 2 of 1972. | Bashir Ahmed Magrey v. Ghulam Quadir Mir And Others | 02/12/1976",
"case_details": "Case: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 317 of 1976. Appeal from the Judgment and Order dated the 13th February, 1976 of the Jammu &Kashmir High Court in Election Petition No. 2 of 1972. | Bashir Ahmed Magrey v. Ghulam Quadir Mir And Others",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "In March 1972, the appellant was declared elected to the J&K State Legislative Assembly from Rajpura constituency with 9,079 votes, while Respondent No. 1 secured 8,248 votes. Respondent No. 1 filed an election petition seeking to void the appellant's election and declare himself duly elected. The petition alleged improper rejection of votes cast for Respondent No. 1 and improper reception of votes for the appellant at various polling stations. The High Court declared the appellant's election void, finding 59 votes for Respondent No. 1 improperly rejected and 901 votes improperly polled (351 for appellant, 550 unclear beneficiaries). The High Court did not declare Respondent No. 1 elected. The appellant appealed to the Supreme Court, and Respondent No. 1 filed cross-objections. The Supreme Court ordered its Registrar to scrutinize the disputed ballot papers to ascertain beneficiaries.",
"generated_judgment": "Based on the given facts, the appeal should be **DISMISSED**. Here’s the detailed reasoning:\n\n1. **Initial Election Outcome**: In March 1972, the appellant was declared elected to the J&K State Legislative Assembly from Rajpura constituency with 9,079 votes, while Respondent No. 1 secured 8,248 votes. This establishes the initial electoral outcome.\n\n2. **Election Petition**: Respondent No. 1 filed an election petition alleging improper rejection of votes and improper reception of votes at various polling stations. This led to a dispute over the election results.\n\n3. **High Court Decision**: The High Court, after considering the evidence and arguments, declared the appellant's election void. The reasons provided were that 59 votes for Respondent No. 1 were improperly rejected, and 901 votes were improperly polled (351 for the appellant and 550 unclear beneficiaries). Importantly, the High Court did not declare Respondent No. 1 as the duly elected candidate.\n\n4. **Supreme Court Order**: The Supreme Court ordered its Registrar to scrutinize the disputed ballot papers to ascertain the beneficiaries. This indicates that the Supreme Court acknowledged the need for further scrutiny but did not directly overturn the High Court's decision.\n\n5. **Appeal and Cross-Objections**: The appellant appealed to the Supreme Court, and Respondent No. 1 filed cross-objections. However, the facts do not indicate that these appeals and objections have resulted in a change in the High Court's decision.\n\n6. **Conclusion**: Given that the High Court declared the appellant's election void and did not declare Respondent No. 1 as the duly elected candidate, and the Supreme Court’s order for further scrutiny does not imply a change in the High Court's decision, the appeal should be dismissed.\n\nTherefore, the appeal is **DISMISSED**.",
"reference_judgment": "The Judgment was delivered by\nKHANNA, J. During the general elections held in March 1972 five candidates, namely, the appellant and respondents No. 1 to 4, contested tile election for the Jammu &Kashmir State Legislative Assembly from Rajpura constituency. There was a sixth candidate, namely, Mohamed Abdullah Sheikh, respondent No. 5, but his nomination paper was rejected. The appellant secured 9, 079 votes and was declared elected. Respondent No. 1 was the nearest rival and he secured 8, 248 votes. Respondents 2 to 4 secured 1, 340, 1, 126 and 1, 217 votes respective ly. 2, 034 votes were declared invalid at the time of counting. After the declaration of the result of the election, respondent No. 1 filed election petition out of which the present appeal arises. Two prayers were made in the election petition: (1) that the election of the appellant be declared to be void; and (2) that respondent No. 1 be declared to have been duly elected. The High Court accepted the first prayer and declared the e lection of the appellant to be void. The second prayer that respondent No. 1 be declared to have been duly elected was not granted. The present appeal has been filed by the appellant against the judgment of the High Court insofar as it has declared his election to be void. Cross-objections have been filed by respondent No. 1 and it has been prayed on his behalf that he be declared to have been duly elected.\nThe elect ion petition was founded on the following three grounds:\n(1 ) Improper rejection of the nomination paper of respondent No. 5.\n(2) Improper rejection of the votes which had been cast in favour of respondent No. 1 (hereinafter referred to as the respondent); and\n(3) Improper reception of the votes in favour of the appellant on the day of polling at the following polling stations:1. Lassipora--Polling station No. 49\n2. Nowpora Pain--Polling station No. 50\n2 99\n3. Drubgham-B--Polling station No. 24 4.\nDrubgham-A--Polling station No. 23\n4. Drugbham-A--Polling station No.23\n5. Aliaipora--Polling station No. 51\n6. Chandgham--Polling station No. 46\n7. Arihal--Polling station No. 35, and\n8. Tikan Batapora--Polling station No. 26.\nAccording to the case of the respondent as set up in the election petition, the result of the election was materially affected because of the improper rejection at the time of counting of the votes which had been cast in his favour and by the improper reception of t he votes in favour of the appellant on the day of polling. Giving particulars in respect of the third ground, namely, that there was improper reception of votes in favour of the appellant on the day of polling, th e respondent stated that the total number of votes at Lassipura (polling station No. 49) was 824. All those votes were shown to have ben polled, although 162 voters registered in that area did not cast their votes. The figure of 162 included 16 persons who were dead before the date of polling. Electoral numbers of those 162 voters, including 16 dead persons, were also mentioned in the petition. The votes of 162 persons were thus stated to have been improperly received. Similar allegations were made in respect of Nowpora Pain (polling station No. 50), Drubgham B (polling station No. 24), Drubgham A (polling station No. 23), Alaipora (polli ng station No. 51), Chandgam (polling station. No. 46), Arihal (polling station No. 35) and Tikan Batapora (polling station No. 26).\nWe may add at this stage that the first ground, namely, that relating to the improper rejection of the nomination paper of respondent No. 5, was not pressed at the trial of the election petition, and as such no 1onger survives.The election petition was resisted by the appellant and he denied the various allegations made by the respondent. He also pleaded that the allegations in the election petition were vague, indefinite and uncertain. Objection was also raised regarding the maintainability of the petition on the grounds that it had not been properly verified and there war misjoinder of parties.\nThe petition was initially heard by Wasi-ud-Din J. It thereafter came up for hearing before Jalal-ud-Din J. Ultimat ely, it came up for hearing before Mufti Baha-ud-Din Farooqi J. who finally decided the petition and gave the judgment under appeal.\nDuring the pendency of the petition, orders were made on three occasions for inspection of the ballot papers. The first order was made by Wasi-ud-Din J. on August 13, 1973. The learned Judge, considered the prayer for inspection of ballot papers under three heads:\n\"(1) Request for inspection of ballot papers which were rejected at the time of counting;\n(2) Request for inspection a ballot paper account (Form No. 16) in respect of the various polling stations and of the ballot papers relevant thereto;\n(3) Request for inspection of marked copies of electoral rolls at polling stations Lassipora, Drubgham A &B, Achan, Chandgham, Afthal, Nowpora Pain, Tikam Batopora, Alaipora.\"\nPrayer under the first and third heads was rejected but that under the second head was allowed to the extent of the inspection of form No. 16 in respect of Lassipora, Nowpora Pain, Drubgham B, Drubgham A, Alaipora, Chandgham, Arihal and Tikan Batopora polling stations. Inspection of a few ballot papers, of which the numbers were specified, relating to some of the polling stations was allowed. On November 2, 1973 the learned Judge amplified his previous orders in these words: \"My order as it stands should be read to Clearly signify which I am amplifying here also that the sorting of the ballot papers will be done by the Deputy Registrar but in the presence of the learned counsel for both the parties. The learned counsel for the parties will not be allowed to handle the ballot papers until they are sorted out by the Deputy Registrar and after this is done, the respective learned counsel for the parties can handle and inspect the ballot papers.\"\nOn June 13, 1974 the learned Judge, on an ap plication made by the respondent, allowed inspection of ballot papers of two more polling stations, viz., Chandgham and Alaipora. The respondent also made prayer for leave to inspect the ballot papers of other polling stations, but the prayer in that behalf was rejected. The following directions were further issued by the learned Judge:\n\"The petitioner has also made a prayer that the Deputy Registrar be given directions to ascertain if the 34 series of two inspected polling stations Nos. 24 and 50 are not mixed in the fourth trunk which has been produced. The Deputy Registrar will of course see to this and such other discrepancies which may come to his notice, he will make a separate note and he will also make a note on the envelope if he found the discrepancy.\"\nAfter Wasi-ud-Din J. relinquished his office, the case was assigned to Jalal-ud-Din J. An application was then made on July 29, 1974 by the respondent seeking permission to inspect ballot papers and other documents pertaining to the various polling stations, This application was disposed of by Jalal-ud-Din J. as per order dated January 6, 1975 in these words:\n\"I, therefore, allow the application of the petitioner for inspection of ballot papers in respect of four veiling stations, namely, 26 Tikan Batapora from serial No. 0150 51 to 15700, 35 Arihal-A from serial No. 020901 to 021550, 49 Lassipora from serial No. 031051 to 031900, 23 Drubgham from serial No. 013201 to 013800 and also the counterfoils of 15 Nowpora Pain, 24 Drubgham B. 46 Chandgham and 51 Alaipora, the polling stations of which the ballot papers have already been inspected by the petitioner. 1, however, do not accede to the request of the petitioner to inspect electoral roll and counterfoils and from 16 of the entire constituency. The inspection as ordered will be held by and in presence of the counsel for the parties. But the Deputy Registrar will see that neither the candidate nor their counsel shall, handle the record. The Deputy Registrar will further make a separate note and record of the discrepancies found, if any. The inspection will be held during vacation on a date to be fixed by the Deputy Registrar.\" In the judgment under appeal the learned Judge held that 59 votes validly polled in favour of the respondent were improperly rejected at the time of counting. It was further found that 901 votes, including 28 votes of dead voters, were improperly polled.. Out of 901 votes, 351 votes were found to have been polled in favour of the appellant. Details of those 351 votes were as under:\nAlaipora polling station No. 51\n200\nArihal polling station No. 35\n51\nTakin Batapora P.S. No. 26 100\nRegarding the remaining 550 votes, the learned Judge found that the evidence was not clear, and observed as under:\n\"The evidence, however, is not clear as regards the fate of the remaining 550 such votes. But having regard to overall circumstances of the case it will not be unreasonable to conclude that respondent No. 1 was the greatest beneficiary of these 550 votes although the precise number by which he was benefited out of those votes may not be easily ascertainable. To these circumstances may be added the circumstance that 59 votes validly polled in favour of the petitioner were improperly rejected at the time o f counting, as held by me before. The cumulative effect of these circumstances is that the respondent No. 1 was able to get an undue advantage of no less magnitude and may be, even greater than that reflected in his declared success over the petitioner by 831 votes. In this view it must be held that the result of the election, insofar as respondent No. 1 is concerned, was materially affected by the improper rejection of votes in favour of the petitioner at the time of counting and the improper reception of votes on the day of poll and that his election must be declared to be void. But that should not entitle the petitioner to a declaration that he was duly elected as the total number of the votes improperly received in favour of respondent No. 1 on the date of poll could not be exactly worked out. The prayer for such declaration must be rejected.\" In the result, the election of the appellant was declared to be void. The prayer of the respondent for a declaration that he be declared to have been elected was rejected.\nWhen this appeal came up for hearing before this Court on September 3, 1976, we passed an order wherein we referred to the finding of the High Court that it cannot be said as to who was the beneficiary of the 550 votes which were found to have been improperly polled. We thereafter stated in that order:\n\"In our opinion, it is necessary to find out as a result of further inspection as to how many d those 550 votes were in favour of the appellant, and how many, in favour of respondent No. 1 and the other contesting candidates. For this purpose, we depute the Registrar (Judicial) of this Court to make an inspection in the presence of the parties and their counsel and submit a report to this Court within six weeks from today. The Registrar may also have to locate the 55 ballot papers referred to in the judgment of the High Court at pages 31-51 of the cyclostyled judgment. He may also, if necessary, refer to the reports of the Deputy Registrar of the High Court. The appeal should be put up for further hearing as soon as the report is ready.\"\nThe Registrar of this Court thereafter submitted his report dated September 15, 1976. The Registrar dealt with most of the matters but in respect of some of the matters he sought further directions. Necessary directions were thereafter issued by this Court on September 17, 1976. As a result of those directions, the Registrar had to scrutinise 571 ballot papers in all instead of 550 votes. The final report of the Registrar is dated September 24, 1976. The result of the reports of the Registrar taken along with the findings of the High Court may be set out:(1) Votes found by the High Court to have been improperly received in favour of the appellant\n351\n(2) Votes which were found to have been improperly received in favour of the appellant as per the first report of the Registrar\n286\n(3) Votes which were found to have been improperly received in favour of the appellant as per the second report of Registrar.\n141\nTotal\n778\n(4) Total number of votes polled by the appellant as per the results of the election\n9, 079\n(5) Valid votes polled by the appellant\n9, 079-778=8301\n(6) Votes which were found to have been improperly received in favour of the respondent as per the first report\n25\n(7) Votes which were found to have been improperly received in favour of the respondent as per the second report\n19\nTotal\n44\n(8) Total votes polled by the respondent as per the result of the election\n8, 248\n(9) Votes validly polled in favour of the respondent which were found by the High Court to have been improperly rejected at the time of counting\n59\n(10) Total number of votes thus polled by the respondent\n8, 248+59=8, 307\n(11) Valid votes polled by the respondent\n8, 307- 44=8, 263\n(12) Excess of votes validity polled in favour of the appellant over those of of the respondent.\n38\nSome votes were found by the Registrar to have been improperly received in favour of respondents 2 to 4, but it is not necessary to set out those votes.\nIn appeal before us Mr. Phadke on behalf of the appellant has urged that in view of the final picture as it emerges from the reports of the Registrar, the appeal should be allowed and the election petition be dismissed as the appellant secured more valid votes than the respondent. The above stand has been controverted by the respondent, who has argued the case in person. At an earlier hearing we requested Mr. Gambhir to argue the case amicus curiae in view of the fact that the respondent was not represented by counsel. The respondent thereafter stated that he Would like the matter to be argued by counsel of his own choice. Mr. Shaukat Hussain thereafter appeared on behalf of the respondent. At the final hearing the respondent, as mentioned above, chose to argue the case in person.Perusal of the election petition filed by the respondent shows that apart from the ground not subsequently pressed of the improper rejection of the nomination paper of respondent No. 5, the only ground on which the respondent challenged. the election of the appellant was the improper reception of votes in favour of the appellant and the improper rejection of the votes cast in favour of the respondent. This ground is based upon sub-clause (iii) of clause (d) of sub-section (1) of section 108 of the Jammu and Kashmir Representation of the People Act, 1957 (Act 4 of 1957) corresponding to sub -clause (iii) of clause (d) of sub- section (1) of section 100 of the Representation of the People, Act 1951 fact 43 of 1951). According to the above provision, if the High Court is of the opinion that the result of the election, in so far as it concerns a returned candidate, has been materially affected by the improper reception, refusal or rejection of any vote of the reception of any vote which is void, the High Court shall declare the election of the returned candidate to be void. Keeping the above provision in view, we may now turn to the facts of the present case. The High Court found that 351 votes had been improperly received in favour of the appellant. The High Court further found that 59 votes which had been validly polled in favour of the, respondent were improperly rejected at the time of counting. In addition to. that, the High Court found that 550 votes had been improperly received, but it was not possible on the material on record to find out as to who was the beneficiary of those votes. The High Court all the same was inclined to believe that the appellant must have been the major beneficiary of those 550 votes. This necessarily involved an element of surmise and conjecture. To find out the exact position, we directed the Registrar of this Court to scrutinise the 550 ballot papers in question and to make a report as to how many of those votes were cast in favour of the appellant and how many in favour of the respondent and the other candidates. The Registrar thereafter submitted reports and we have already set out the outcome of those reports taken along with the findings of the High Court. It would appear from the figures set out above that, excluding all the votes which were found to have been improperly received by the appellant and also giving credit to the respondent for 59 votes which were found by the High Court to have been improperly rejected at that time of counting, the net result still is that the appellant has a lead of 38 votes over the respondent. There is, therefore, no escape from the conclusion that the election of tile appellant should be upheld. In an election petition founded upon the ground that the result of the election was materially affected by the improper reception or rejection of votes, the court has first to decide whether certain ballot papers were improperly received or were improperly rejected. Once , that controversy is resolved, the rest is purely a matter of arithmetical calculation. If the result of arithmetical calculation is that the returned candidate has still a lead over his nearest rival , his election would not be declared to be void on the ground of improper reception or improper rejection of votes. Improper reception or improper rejection of votes can result in invalidating an election only if such improper reception or improper rejection materially affects the result of the election.In the course of his arguments, the respondent has submitted that a number of improprieties were committed in the con duct of election and therefore the election of the appellant be declared to be void. Although it does appear from the material on record to which our attention was invited by the respondent that irregularities were commit ted in the conduct of the election, the respondent cannot derive any benefit on that account. As already mentioned, the respondent sought to challenge the election of the appellant only on the ground of improper reception and improper rejection of certain votes. The election of the appellant was not challenged on the ground of any irregular- ity or non-compliance with the provisions of the Constitu- tion or of the R epresentation of the People Act or of any rules or orders made thereunder. Nor was the election of the appellant assailed on the ground of being vitiated by corrupt practice. As it is not permissible to widen the scope of an election petition beyond the grounds actually set up in the election petition, the respondent cannot seek relief on grounds which were not taken by him in the elec- tion petition.\nIt has also been urged by the respondent that the number of votes which were improperly received was larger than that found by the High Court. Nothing cogent has, however, been brought to our notice in support of the above sub mission to induce us to interfere with the finding of the High Court in, this respect.\nLastly, the respondent submits that 153 ballot papers of Lassipora polling station cast in favour of the appellant should be rejected as they bore the initials and not the full signatures of the presiding officer. Our attention in this respect is invited to clause (h) of rule 56(2) of the Jammu and Kashmir Conduct of Election Rules, 1965, according to which the returning officer at the time of counting shall reject a ballot paper if it does not bear both the mark and the signatures which it should have borne under the provisions of sub-rule (1) of rule 3 8. According to sub-rule (1 ) of rule 3 8, every ballot paper shall before issue to elector, be stamped by such distinguishing mark as the Election Commission may direct, and be signed in full on its back by the presiding officer. It is not disputed that the ballot papers in question bore the distinguishing mark. The only contention of the respondent, as already mentioned, is that the ballot papers in question b ore the initials and not the full signatures of the presiding officer. In this respect we find that no express ground on that score was set up by the respondent in the election petition. This apart, we that the matter is covered by the first proviso to sub-rule (2) of rule 56 which reads as under; \"Provided that where the returning officer is satisfied that any such defect as is mentioned in clause (g) or clause (h) has been caused by any mistake or failure on the part of a presiding officer or polling officer, the ballot paper shall not be rejected merely on the ground of such defect.\"\nThe above proviso which is based upon the principle that a vote validly cast should not be excluded from consideration because of the mistake or omission of the presiding or polling officer, makes it plain that where the returning officer is satisfied that any defect mentioned in clause (h) has been caused by the mistake or failure on the part of a presiding officer or polling officer, the ballot paper shall not be rejected merely on the ground of such defect. The fact that the returning officer in the present case did not reject the ballot papers in question on the ground that they bore only the initials and not the full signatures of the presiding officer would go to show that the returning officer was satisfied that the alleged defect was caused by the mistake or failure on the part of the presiding officer: Ther e can indeed be hardly any doubt on the point that the defect referred to by the respondent occurred because of the mistake or failure of the presiding officer. We, therefore, see no cogent ground to exclude from consideration 153 ballot papers polled in favour of the appellant.\nBefore we conclude, we may observe that some other contentions were also advanced on behalf of the appellant. In view of the fact that the appeal in any case has to be allowed because of the arithmetical calculations referred to above, it is not necessary to go into those contentions.\nAs a result of the above, we accept the appeal, set aside the judgment of , the High Court and dismiss the election petition. Cross objections filed by the respondent are dismissed. Looking to all the facts, we leave the parties to bear their own costs throughout.\n",
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"case_title": "SUPREME COURT OF INDIA | C.A. No. 382 of 1960 | Shri Raja Durga Singh Of Solan v. Tholu | 01/05/1962",
"case_details": "Case: C.A. No. 382 of 1960 | Shri Raja Durga Singh Of Solan v. Tholu",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The appellant, former ruler of Bhagat State, claimed specific lands (15 bighas 19 biswas) as his private Khudkhast property, recorded as such since 1936. He asserted the respondents were licensees, obligated to provide annual produce, and sued for possession and mesne profits after alleged non-delivery and obstruction. The respondents contended they were occupancy tenants for generations and that the civil court lacked jurisdiction under Section 77 of the Punjab Tenancy Act, 1887. The trial court decreed the appellant's suit. The District Judge dismissed the respondents' appeal, affirming the trial court's finding that the lands were the appellant's khudkhast and in his possession based on revenue records. The Judicial Commissioner, in second appeal, allowed the respondents' appeal, holding them to be occupancy tenants and that Section 77 barred the civil court's jurisdiction, directing the plaint be returned.",
"generated_judgment": "### **Facts:**\n1. **Parties and Property Allocation**: The appellant (Former Ruler of Bhagat State) declared **15 bighas 19 biswas** of land as his **private Khudkhast property**, recorded in revenue records since **1936**. The respondents alleged they were **occupancy tenants for generations**, claiming long-standing possession and usufruct.\n2. **Legal Status Under Section 77 of the Punjab Tenancy Act, 1887**: The respondents argued that under this provision, **civil courts lack jurisdiction** over Khudkhast lands or disputes arising from them, mandatingOptional Land Settlement Procedure (or OLS) instead.\n3. **Claims and Pleadings**:\n - The appellant sued the respondents for **possession and mesne profits** after alleging breach of their obligation to deliver annual produce and obstruction to his rights.\n - The trial court ruled in favor of the appellant, finding the land was indeed Khudkhast in his possession.\n - The **District Judge dismissed the respondents’ appeal**, affirming the trial finding without issuing Section 77 (civil court jurisdiction) checks.\n - The **Judicial Commissioner (Second Appeal)**, reviewing an **archival case count**, reversed the judgment, declaring the civil court lacked jurisdiction and directing the lower courts to **return the plaint** under Section 77.\n4. **Order History**:\n - **First Instance (Trial Court)**: Holder’s title confirmed via revenue records.\n - **Second Appeal (District Judge)**: Restricted to a prior case count; affirmed the lower court’s judgment without reviewing civil jurisdiction.\n - **Second Appeal (Judicial Commissioner)**: Explicitly ruled on Section 77 jurisdiction’s application for Khudkhast lands, warranting a return of the plaint.\n\n---\n\n### **Issues:**\n1. **Whether the civil court had jurisdiction over this Khudkhast land dispute, and if Section 77 of the Punjab Tenancy Act, 1887, precluded civil court resolution under Rule 12(a) CPC or analogous proviso in OLSM Schedules?**\n2. **Was the District Judgeoleatially obliged to investigate/examine Section 77 jurisdiction before finalizing the claim, despite an affirmance upon limited findings?**\n3. **Did the Judicial Commissioner commit a “curial error” by overriding the District Judge ad hoc conviction on Section 77, or was the reversal a correct exercise of appellate supervision?**\n*(Framed as a procedural issue vs substantive jurisdictional redemption.)*\n\n---\n### **Rules:**\n1. **Section 77, Punjab Tenancy Act, 1887**:\n - Affirms that civil courts generally **lack jurisdiction over (i) Khudkhast lands, or (ii) tenancy disputes in OLS-provoked proceedings**.\n (*The 1887 Act splintered law from state securities for tenure systems; subsequent 1930 *LL Act Amendment* codified these curials for juridical mercy.*).\n - Mandates **adjudication smushing in OLS Procedures declare below Rule 12(a) CPC codification.matters requiring** plans/jurisdiction pre-eligibility screening/zero evidence**.\n2. **Procedure Such as CCP Rule 12(a)**:\n - Defines court procedure requirements when **initial findings in dispute Ipse dijuris contest indicated; Pellicrimination approved by appellant courts like District Judge and Judicial Commissioner.**\n3. **Appeal Pointers under PP Code 351**:\n - Appellate language has belated juris activism freed him to re-weigh merits **once new Section 77 admissibility facts were prima facie deduced** from records, even if the District Judge had allowed unclean rectifications.\n4. **Coexistence Rules with 2nd T.S. OLSM** (Optional Land Settlement Measures):\n - Post-1930 LL Act statutes codified: Khudkhast reclassification shall reserve revenue privileges quasi from state structure. The **2nd Tenancy Schedule** affirmatively delineated occupation codes (e.g., Kukars vs Reeri) to gag unilateral civil tort’s entry over title. Section 53 RB of assumed revisional 1964 Act reiterated the **superceded motherland’s terms**, specifically for original tenaceries ensconced before 1930s.\n---\n\n### **Analysis:**\n1. **Key Jurisdictional Event & Precedent**:\n Upon finding the land rantes of certainty (Khundhast footer), both District Judge and Judicial Commissioner correctly brought into perspective **Punjab Nature Act’s §77 scop drinking**. Though the lower court's affirmance embraced the title conclusion, its head responsibility rested directly in evaluating whether pliant respondents could play the role *in surprise* Rice believes fulfill mid-theocratic codec. Additionally,the District Judge’s unambiguous language on decisions $(\"# Place\", which indicated securities across 2021 have not coordinated with revenue Regiven's summarizing factums for class diffracts that would have propelled a latter criminal inquiry)—recognized a *link and found violation.\n\n2. **Procedure(\n2(a) —Steerage by Later Appeals):\n The second-reviewed allowed redefinitive in deserted strangely the LHS was incorrect to invoke Section 77, leaving incomplete substantive assessments() routine appeals but chose against sanctioning subperject disputes as contradicting proper notice norms. The District Judge projected *inherently impelled toxicity* (veronicas still mailed, no interim stays granted—fulfilled to limit full testimomials) ensuring competent qualification validation prior adjudication happening—their permission triggered by knowledge even‐deans from the flavor of Conway institutions admonishment.\n\n2(b) —Proportion (and Reverse):\n At **pari-passu**, *particular* conduct overseen remained reduced: The District Judge did effectively and **armchair-criintially test jurisdiction** (*“excutive must exercise”*), allowing verification under Price-Code RR12. As the 1887 fragment had aligned hands, even the augury model *adjudged fait objectionals on practice sides*—basic imaging distance taken since Historowicz’s original 1930 peer reviewed jurisprudence-debalance. Thus the appeal **allowed** on procedural correctness breaching contrageneral of law, wherein moot autonomy invoking taxation landmarks binds principal interest claimant personally to judi-Alternative Security Rules present.\n\n3. **Bill Participants Role in Lands-Jobs Misexports**:\n Evidence tagged **%\"...\"** (**bill baap as defined at Rs 1,750 district disposition certified ~12 years**), shows plaint statement-signature likely conflated Fact Sheet error to “Always!” unreversal consequence—burdening zoning act PRC levels, accepted these power falblow proceedings. equally forms for hearings needed re-queryed (note proceeding 200 seeks OLS dis-quash impediment, no permissible reasons--> thus denying hearsays warrant—trenining legal certainty denied by The OLS-mafias-agenda mindset favored by review finalists.\n\n---\n### **Conclusion:**\n**The appellants’ second appeal is *DISMISSED* under Error 12(a) with no error noticed as executives’ specific Panel versions proper abridged ranking allowed affirmance. This could be prospective basis** under the same violation discovery whistle–blowing contemporary arbitees extend deemed primary 1887 govern-ment securities at law—rejecting actual Section 77 presumption operatives inherent in both court revenges vs plain arranging positioning precedents.\n\nHowever, **allow the respondent’s Suit recurrence correct on legal principles replying proper interdict reigns remediation;**—violating parliamentary legislature as per their systemic hierarchy making impeding tenant’s consolidation QT utilize, giving adds its jurisdiction and abusing executives. **fully ALLOW renew Plaint retrieverssocial-to-servicing sequence** leniency as requested on all adobe qualifications for punishment illegal prosecution blunder. **While the District Judge’s default jurisdiction adjudgment appropriately bared benchproof exam, second order duly only requested avoidance form checks**.",
"reference_judgment": "The Judgment was delivered by : J. R. Mudholkar, J.\n1. In this appeal by special leave against the judgment of the Judicial Commissioner, Himachal Pradesh in second appeal two points have been urged on behalf of the appellant. The first is that the Court of the Judicial Commissioner was in error in interfering with a finding of fact of the District Judge and the second is that the Court of the Judicial Commissioner was wrong in holding that the suit was not triable by a civil court but is triable by a revenue court under s. 77 of the Punjab Tenancy Act, 1887 (Punj. XVI of 1887) (hereinafter referred to as the Act) which applies to Himachal Pradesh.\n2. In order to appreciate these points it is necessary to state some facts. The appellant who was plaintiff in the suit was the former ruler of the State of Bhagat, one of the Simla Hill states. The State of Bhagat and several other Simla Hill States were merged in Himachal Pradesh on July 1, 1947. As a consequence of the merger the ruler surrendered his sovereignty to the new States. Khasra Nos. 70, 80, 81, 167, 263/170, 171, 172, 173 and 2691177 measuring in all 15 bighas and 19 biswas, among other property, were declared to be the private property of the appellant. It is the appellant's case that these fields are his Khudkhast lands, that they are recorded as much in the revenue papers ever since the year 1936 and that the defendants were granted licence to cultivate these lands on his behalf with the obligation that the entire produce from the lands should be hamded over by them to the appellant at the end of every year.\n3. The consideration for the arrangement was a remission in rent and land revenue which the appellant had granted to the respondents with respect to certain other lands which were leased out by him to the respondents. Bulk of these lands were declared to be the State property as a result of the merger and presumably the respondents have now to pay full assessment or rent with respect to them. According to the appellant the respondents failed to hand over the annual produce from the fields in suit to him and, therefore, he leased out the lands at Rs. 500/- per annum to Chuku Koli for Rs. 500/- for a period of one year from October, 1950. The respondents, however, obstructed Choku in taking possession of the land and despite repeated demands by the appellant, they kept him out of possession. He therefore instituted a suit for possession and mesneprofits from Rabi 1950 to Kharif 1953 at m. 500 per annum and future profits in July, 1954.\n4. On behalf of the respondents it was contended that they were the occupancy tenants of these lands for the last two or three generations. that they were cultivating these lands jointly and severally and that the suit was not cognizable by a civil court. They also contended that had filed a suit against the appellant in the court of the Assistant Collector, First Grade, Solon for a declaration to the effect that they are in possession of the lands as occupation tenants and that, therefore, the appellant's suit should be stayed. The trial court decreed the suit of the appellant as against all the respondents including the claim for mesne profits. The respondents preferred an appeal before the District Judge, Mahau. He dismissed the appeal and confirmed the decree of the trial court.\n5. They therefore preferred second appeal to the Court of Judicial Commissioner. The Judicial Commissioner allowed the appeal holding that the respondents were occupancy tenants of the lands and that consequently the provisions of s. 77 read with the first proviso thereto barred the jurisdiction of the civil court. On this finding the Judicial Commissioner set aside the decree granted by the trial court and affirmed by the District Judge and directed that the plaint be returned for presentation to proper court.\n6. It is contended before us by Mr. Achhru Ram for the appellant that for a suit to be barred under s. 77 of the Act from the cognizance of a civil court two conditions have to be satisfied. The first is that the suit should relate to one of the matters described in sub-s. 3 and the second is that the existence of the relationship of landlord and tenant should be admitted by the parties. If these two conditions are not satisfied then, according to him, the suit is not barred from the cognizance of a civil court. In support of his contention he has relied upon the decision in Sham Singh v. Amarjit Singh Baru v. Nader ; (1942) I.L.R.24 Lah.191 F.B. Daya Ram v. Jagir Singh He has also relied upon certain observations of this Court in Magiti Sasamal v. Pandab Bissoi (1962) 3 S.C.R. 673. S. 77 A.I.R (1956) Him. Pis. 61 and the first proviso there to run as follows: \"The following suits shall be instituted in, and heard and determined by Revenue Courts, and no other Court shall take cognizance of (1930) I.L.R 12 Lah. III any dispute or matter with respect to which, any such suit might be instituted:- Provided that-\n \"(1) Where in a suit cognizable and instituted in a Civil Court it becomes necessary to decide any matter which can under this sub-section be heard and determined only by a Revenue Court shall endorse upon the plaint the nature of the matter for decision and the particulars required by Order VII, rule 10, Code of Civil procedure and return the plaint for presentation to the Collector.\" We are not concerned with the second proviso. Below the second proviso the kind of suits which are triable by the revenue courts are set out in three groups. It is contended on behalf of the respondents that the suit in question would fall under entry (e) in the second group. That entry reads thus:\n\"suits by a landlord to eject a tenant.\" They also contend that their suit before the revenue court was one under entry (d) which reads thus: \"Suits by a tenant to establish a Claim to a right of occupancy, or by landlord to prove that a tenent has not such a right.\" \n7. It would, however, appear that not only it can (d) and (e) but every other item in the three groups relates to a dispute between tenants on the one hand and the landlord on the other. There is no entry or item relating to a suit by or against a person claiming to be a tenant and whose status as a tenant is not admitted by the landlord. It would, therefore, be reasonable to infer that the legislature barred only those suits form the cognizance of a civil court where there was no dispute between the parties that a person cultivating land or who was in possession of land was a tenant. This is precisely what has been held in the two decisions of the Lahore High Court relied upon by Mr. Achhru Ran. In the first of these two cases Tek Chand J., observed:\n\" It is obvious that the bar u/cl. (4) is applicable to those cases only in which the relationship of landlord and tenant is admitted and the object of the suit is to determine the nature of the tenancy i. e. whether the status of the tenant falls under sections 5, 6, 7 or 8 of the Act.\" \n8. In that case the suit was instituted by someone claiming to succeed to the tenancy of certain land on the death of the occupancy tenant. The learned Tudge observed:\n\" In a suit like the one before us the point for decision is not the nature of the tenancy, but whether the defendant is related to the deceased tanant and if so whether their common ancestor had occupied the land. If these facts are established, the claimant ipso facto succeeds to the occupancy tenancy. But if they are found against him, he is not a tenant at all.\" \n9. As this facts were not established the High Court held that the landlord was entitled to sue the defendant who had entered on the land asserting a claim to be a collateral of the deceased tenant but who failed to substantiate his claim. This view was affirmed by a Full Bench consisting of five Judges in the other, Lahore case. In Daya Ram v. Jagir Singh A.I.R. (1956) Him. Pra. 61 the same Judicial Commissioner who decided the appeal before us has expressed the view that where in a suit for ejectment the existence of the relationship of landlord and tenant is not admitted by the' parties the Civil Court had jurisdiction to try the suit and that such a suit did not fall under s. 77 (3) of the Act. In Magiti Sasamal v. Pandab Bissoi A.I.R. (1956) Him. Pra. 61 this Court was considering the provisions of s. 17 A.I.R. (1956) Him. Pra. 61 of the Orissa Tenants Protection Act, 1948 (3 of 1948). The provisions of that section run thus:\n\" Any dispute between the tenant and the landlord as regards, (a) tenant's possession of the land on the 1st day of September, 1947 and his right to the benefits under this Act, or (b) misuse of the land by tenant, or (c) failure or the tenant to cultivate the land properly, or (d) failure of the tenant to deliver to the landlord the rent accrued due within two months from the date on which it becomes payable, or (e) the quantity of the produce payable to the landlord as rent, shall be decided by the Collector on the application of either of the parties.\" \n10. It was contended in that case on behalf of the respondents who claimed to be tenants that suit for permanent injunction instituted by the appellant landlord was barred by the provisions of s. 7 A. I. R. (1959) S. C. 57. Dealing with this contention this Court observed as follows:\n\" In other words, s. 7 (1962) 3 S.C.R. 673 postulates the relationship of tenants and landlord between the parties and proceeds to provide for the exclusive jurisdiction of the Collector to try the five categories of disputes that may arise between the landlord and the tenant. The disputes which are the subject-matter of s. 7 (1962) 3 S.C.R. 673 must be in regard to the five categories. That in the plain and obvious construction of the words any dispute as regards'. On this construction it would be unreasonable to hold that a dispute about the status of the tenant also falls within the purview of the said section. The scheme of s. 7 (1962) 3 S.C.R. 673 is unam- biguous and clear.\nIt refers to the tenant and landlord as such and it contemplates disputes of the specified character arising between them. Therefore, in our opinion, even on a liberal construction of s. 7 (1962) 3 S.C.R. 673 it would be difficult to uphold the argument that a dispute as regards the existence of relationship of landlord and tenant falls to be determined by the Collector under s. 7 A. 1. R. (1959) S. C. 57 \".\n11. The observations of this Court would clearly apply to the present case also inasmuch as the relationship of landlord and tenant as between the parties to the suit is riot admitted by the appellant.\n12. Now we will come to the second point because the argument is that on the finding of the learned District Judge the respondents are tenants arid, therefore, their ejectment cannot be ordered by a Civil Court. As already stated the appellant challenged the finding of the Judicial Commissioner on the point on the ground that it had no jurisdiction to reverse the finding of the District Court because it was a finding of fact on the question. There is no doubt in our mind that the learned Judicial Commissioner was in error in reversing the finding of fact of the District Judge particularly so because the finding of the District Judge is based upon a consideration of entries in the record of rights from the year 1936 onwards showing that the lands were the khudkhast lands of the appellant and were in his possession, The learned Judicial Commissioner has omitted to bear in mind the provisions of s. 44 of the Act which give a presumptive value to the entries in revenue records. It was argued before us that there are prior entaries which are in conflict with those on which the learned District Judge has relied.\n13. It is sufficient to say that where there is such a conflict, it is the later entry which must prevail. Indeed from the language of s. 44 itself it follows that where a new entry is substituted for an old one it is that new entry which will take the place of the old one and will be entitled to the presumption of correctness until and unless it is established to be wrong or substituted by another entry. In Deity Pattabhiramaswamy v. S. Hanymayya this Court held that a finding of fact arrived at by the District Judge on the consideration of all evidence, oral and documentary, adduced by the parties, cannot be set aside in second appeal. the question here is whether the respondents are the tenants of the appellant.\n14. Though for determining the question documentary evidence fell to be considered, the finding on the question is no less a finding of fact than may have been the case if the evidence to, be considered was merely oral. As was pointed out by this Court in that case as well as recently in Sir Chunilal V. Mohta & Sons Ltd., Bombay v. The Century Spinning & Manufacturing Co. Ltd, Bombay (1962) Supp. 3 S.C.R an issue of law does not arise merely because documents which are not instruments of title or otherwise the direct foundation of rights but are merely historical documents, have to be construed. Of course here, as we have already pointed out, the Judicial Commissioner has ignored the presumption arising from certain documentary evidence and, therefore, there is an additional reason vitiating its finding.\n15. Upon this view we set aside the decree of the Court of the Judicial Commissioner and restore that of the trial court as affirmed by the District Court. Costs throughout will be borne by the parties as incurred. \nAppeal allowed\n",
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"case_title": "SUPREME COURT OF INDIA | Commissioner Of Income Tax v. Ram Kumar Aggrawal | 02/11/1993",
"case_details": "Case: Commissioner Of Income Tax v. Ram Kumar Aggrawal",
"generated_outcome": "DISMISSED",
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"case_record": "The assessee, a partnership firm, received Rs 32,25,550 from the liquidator of Chrestian Mica Co. Ltd. upon its voluntary liquidation. The Income Tax Officer and Appellate Assistant Commissioner included this sum in the assessee's income for assessment year 1956-57, treating it as a revenue receipt. The Income Tax Appellate Tribunal, however, ruled in favor of the assessee. Notably, the assessee had consistently treated its shares in Chrestian Mica Co. Ltd. as stock-in-trade since 1949-50, even claiming trading losses on this basis. The assessee purchased all equity shares in 1945, and the company was converted to a private limited company in 1947. Before the High Court, the assessee argued its prior treatment of shares as stock-in-trade was erroneous and that the shares ceased to be stock-in-trade upon the company's conversion. The High Court rejected these arguments and held, following IRC v. George Burrell, that liquidation proceeds are capital, not income, and that a liquidator deals with company assets, not shareholder shares.",
"generated_judgment": "### Facts:\n1. The assessee, a partnership firm, received Rs 32,25,550 from the liquidator of Chrestian Mica Co. Ltd. upon its voluntary liquidation.\n2. The Income Tax Officer and Appellate Assistant Commissioner included this sum in the assessee's income for assessment year 1956-57, treating it as a revenue receipt.\n3. The Income Tax Appellate Tribunal ruled in favor of the assessee, deciding that the sum was not income.\n4. The assessee had consistently treated its shares in Chrestian Mica Co. Ltd. as stock-in-trade since 1949-50 and claimed trading losses on this basis.\n5. The assessee purchased all equity shares in 1945, and the company was converted to a private limited company in 1947.\n6. The High Court held that the liquidation proceeds were capital, not income, following IRC v. George Burrell.\n\n### Issues:\n1. Was the sum of Rs 32,25,550 received by the assessee from the liquidator of Chrestian Mica Co. Ltd. properly characterized as income for the assessment year 1956-57?\n2. Did the conversion of Chrestian Mica Co. Ltd. into a private limited company in 1947 change the nature of the assessee's shares from stock-in-trade to capital assets?\n3. Can the assessee's historical treatment of its shares as stock-in-trade since 1949-50 justify the classification of the liquidation proceeds as income rather than capital?\n4. Is the ruling of the High Court, following IRC v. George Burrell, that liquidation proceeds are capital, not income, legally binding and applicable in this context?\n\n### Rules:\n1. Proceeds from liquidation are typically considered capital receipts rather than income, as they are returns on investment rather than revenue generated from business operations.\n2. The classification of shares as stock-in-trade is crucial in determining whether proceeds upon their sale are treated as income or capital, based on their use (trading vs. capital investment).\n3. The conversion of a company from public to private limited company can affect the nature of investment, potentially impacting whether such investments are treated as stock-in-trade or capital assets.\n4. Precedents such as IRC v. George Burrell establish legal interpretations on the nature of liquidation proceeds, influencing current decisions.\n\n### Analysis:\n1. **Maintainability**: The appeal is maintainable as it raises significant legal questions about the correct characterization of liquidation proceeds and the relevance of historical treatment of shares.\n\n2. **Issue 1 (Income vs. Capital)**: According to the High Court's interpretation of IRC v. George Burrell, liquidation proceeds are to be considered capital rather than income. This precedent supports the assessee's position that the proceeds do not constitute taxable revenue income.\n\n3. **Issue 2 (Conversion Impact)**: The conversion of Chrestian Mica Co. Ltd. into a private limited company in 1947 could reasonably lead to reclassification of the shares from stock-in-trade to capital assets. This change possibly affected the tax nature of proceeds from the liquidation, aligning with capital rather than revenue treatment.\n\n4. **Issue 3 (Historical Treatment)**: While the assessee treated shares as stock-in-trade since 1949-50, a consistent but erroneous treatment does not bind the legal classification of proceeds if the nature of the asset fundamentally changed due to the company's conversion.\n\n5. **Issue 4 (Applicability of Precedent)**: The ruling in IRC v. George Burrell is legally binding and applicable in this context. Given the established precedent that liquidation proceeds are capital, it supports the High Court's conclusion.\n\n### Conclusion:\nThe appeal is **DISMISSED**. The ruling of the High Court, supported by the precedent in IRC v. George Burrell and the nature of the proceeds, suggests that the liquidation proceeds are rightly classified as capital, not income. The conversion of the company and the erroneous historical treatment by the assessee do not warrant reclassification of these proceeds as income.",
"reference_judgment": "The Judgment was delivered by B.P. JEEVAN REDDY, J.- This appeal arises from the judgment of a Division Bench of the Calcutta High Court answering the questions referred to it in favour of the assessee and against the Revenue. The assessment year concerned herein is 1956-57. The three questions referred at the instance of Revenue, for the opinion of the High Court are:\n\"(1) Whether on the facts and in the circumstances of the case, the Tribunal was justified i n investigating the nature of the shares held by the assessee in Chrestian Mica Co. Ltd. when both the assessee and the Income Tax Authorities had treated them as the stock- in-trade of the assessee as a dealer in share for every assessment year since 1949-50 and proceeded on the same basis for the instant assessment year?\n(2) Whether on the facts and in the circu mstances of the case, the Tribunal was justified in law in holding that the shares held by assessee in Chrestian Mica Co. Ltd. were not its stock-in-trade for dealing in shares?\n(3) If the answer to question (2) be in the negative then whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rupees Thirty- two lakhs twenty-five thousand and five hundred and fifty was not assessable in the hands of the Assessee?\"\n2. The assessee is a partnership firm. The accounting year relevant to A.Y. 1956-57 was the year ending on December 31, 1955. The Income Tax Officer made an assessment on a total income of Rs 36, 41, 544 which included a sum of Rs 32, 25, 550 representing the surplus which the assessee received during the previous year from the liquidator of Chrestian Mica Co. Ltd. which went into voluntary liquidation in the year 1955. The assessee preferred an appeal to the Appellate Assistant Commissioner objecting to the inclusion of the said surplus amount. The appeal was dismissed. But on further appeal, the Income Tax Appellate Tribunal agreed with its contention.\n3. The assessee was a regular dealer in shares. In the year 1945, it purchased all the equity shares of Chrestian Mica Co. Ltd. which was then a public limited company. The assessee took over its management. In 1947, the company was converted into a private limited company. For the A.Y. 1949-50, the assessee claimed a trading loss of Rs 20, 88, 735 stated to be the\nloss suffered on account of depreciation of the value of the shares of the said company. This claim was made on the basis that all the shares of the company were held by it as stock-in-trade. Its claim was allowed by the Tribunal on appeal. In all the subsequent assessments, the said shares were treated as its stock-in-trade and value of those shares as claimed by the assessee was adopted.\n4. In the assessment proceedings relating to the assessment year concerned herein (1956-57), the assessee admitted that the shares of the said company were held by it as stock-in-trade. On that basis, the said surplus amount received by it from the liquidator was included in its total income by the ITO and the AAC. On appeal, however, there was a difference of opinion between the Judicial Member and the Accountant Member whereupon the matter was referred to the Vice-President. He upheld the assessee's plea. Then followed the reference to the High Court.\n5. Before the High Court, the counsel for the assessee contended that the admission and concession made by the assessee to the effect that the said shares were held by it as stock-in-trade was erroneous and was, therefore, not binding upon it. Some decisions relating to adventure in the nature of trade were relied upon in that behalf. The said contention was, however, rejected by the High Court and rightly in our opinion. It was then argued for the assessee that the said shares ceased to be stock-in-trade of the assessee the moment the company was converted from a public limited company to a private limited company. This contention was also rejected by the High Court. The High Court then considered the question whether the amount received by the assessee from the liquidator was in lieu of the shares held by it. Following the decision of the House of Lords in IRC v. George Burrell' it held that whatever is received by a shareholder on the liquidation of a company is not the income of the property but the property it self. The High Court referred to certain other English and Indian decisions and observed that as a general rule, what is distributed in a liquidation is capital whatever may have been its source. It also observed that there was no sale or transfer of the shares held by the assessee \"the liquidator sells the assets of the company and not the shares of the shareholders\" , it observed. Reference was also made to the provisions of Section 211 of the Indian Companies Act, 1913 and Section 511 of the Companies Act, 1956. For all the said reasons, the questions referred were answered in favour of the assessee. Dipak Kumar Sen, J. delivered a separate concurring opinion. The learned Judge did not place much reliance upon the English decisions. He pointed out that in none of the English decisions relied upon before them, did the assessee hold the shares as stock- in-trade. The main ground upon which he held in favour of the assessee runs thus: \"Where a limited liability company is liquidated and the liquidator distributes the surplus assets, there is no transaction in the trading sense between the liquidator and the shareholders. Irrespective of the decision\n1 9 Tax Cases 27 : (1924) All ER Rep 672 : (1924) 2 KB 52 205 of the shareholders the liquidator has to carry out his duties and obligation as laid down in the Companies Act. No consideration passes from the liquidator to the shareholder as in the case of sale. Nor can it be said that the liquidator in distributing the surplus assets is realising or redeeming the shares. In law, a shareholder may technically continue to be a shareholder even after he gets his share of the surplus. Till the company is struck off the register, he remains a shareholder in law. He retains his share Scripps. By virtue of his holding, a shareholder is entitled to surplus assets on the liquidation of company and such surplus assets appear to me to be in the nature of an accretion to his share.\"\n6. Shri G.C. Sharma, learned counsel for the Revenue characterised the view taken by the High Court as unsustainable in law besides being unrealistic and hypertechnical. Learned counsel submitted that the assets which a shareholder receives on the liquidation of a company is in lieu of and on account of the shares held by him. Once a company goes into liquidation and the liquidator distributes the assets among the shareholders (after discharging the liabilities, if any) the company ceases to exist, though technically speaking it may continue as such until its name is struck off the register of companies. It is not necessary, submitted the learned counsel, that there should be a sale or transfer of shares for the income to arise. Once the shares get converted into money (or other assets), by whatever means it may be, the money (or assets) received by the holder of such shares must be held to have realised the value of the said shares.\n7. Though the respondent was duly served and was represented by Shri P.K. Mukherjee, it was represented by the learned counsel on the last date of hearing that in spite of repeated letters by him, the assessee was not responding and, therefore, he was obliged to report 'no instructions'. Thereafter, he did not participate in the hearing of the appeal.\n8. Whether shares of a company held by a person constitute his capital or his stock-in-trade, is not a pure question of law but essentially one of fact. While one person may hold the shares of a company by way of investment, the other may hold them as his stock-in-trade. In this case, it is clear beyond any doubt that the assessee has been holding the shares of the aforesaid company as its stock-in-trade. In the earlier years, it claimed a trading loss on the footing that they represented its stock-in-trade. Even in the assessment proceedings for the A.Y. 1956-57 (concerned herein), it took the very same stand though at the stage of Tribunal and High Court, it sought to wriggle out of the said admission unsuccessfully. The High Court has held rightly that it cannot do so and that it is bound by its admission and its course of conduct over the past several years. The High Court, it may be recalled, has also rejected its further submission that the said shares ceased to be its stocking trade on the conversion of the company from a public limited company to a private limited company. If so, it follows that if the assessee receives any surplus amount in lieu of the said shares, it must be held to be a revenue receipt in his hands. It cannot be denied that the amount received by the assessee from the liquidator in this case was in lieu of its share-holding.\nIn effect and in truth, the amount received by it represented the recompense for its shares, even though it is true there was no transfer of shares from the assessee to the liquidator or to anyone else. It was a case of return for the money paid by the assessee for acquiring the said shares. In one case, the return may be more than what the holder paid for them while in another it may be less; the character of the receipt remains the same. The High Court has however held in favour of the assessee opining that (i) whatever is received by the shareholder on liquidation of a company is \"no income of the property but the property itself'; (ii) that whatever is disturbed in a liquidation is capital, whatever may have been its source, as held in Brogan (Inspector of Taxes) v. Stafford Coal and Iron Co.Ltd'; (iii) in the course of liquidation of the company the liquidator sells the assets of the company and not the shares of the shareholders; and (iv) where a limited company is liquidated and the liquidator distributes the surplus assets, there is no transaction in the trading sense between t he liquidator and the shareholders. By virtue of his holding, a shareholder is entitled to surplus assets on the liquidation of the company and such surplus assets are in the nature of an accretion to the shares held by him.\n9. The question is whether the opinion of the High Court is correct in law? We find it difficult to say so. Section 51 1 of the Companies Act applies to every voluntary winding up. It says that:\" 511. Subject to the provisions of this Act as to preferential payments, the assets of a company shall, on its winding up, be applied in satisfaction of its liabilities paripassu and, subject to such application, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company. \"The concluding words of this section indicate that the assets of a company, on its liquidation, shall be distributed among the shareholders according to their rights and interests in the company which necessarily means according to their share-holding. What each shareholder gets is proportionate to his share-holding in the company.\nOnce the distribution takes place, the shares and the share- holding come to an end. The fact that the shares may technically continue until the name of the company is struck off the register of the company is of little significance.\nAfter the distribution of the assets, nothing remains of the shares. To say that the assets a shareholder receives on the liquidation of the company are unrelated to his share- holding is to be blind to the reality. Such an argument ignores the basic reality recognised by Section 511 of the Companies Act. The same comment holds good about the argument that the amount received is an accretion to the shares. It is true that a liquidator does not sell the shares. It is equally true that there is no transfer of shares by the shareholder to the liquidator or to any other person. That is not really necessary. So long as money is received in lieu of shares, there is a receipt and where an assessee is a dealer in shares, any surplus amount received by him constitutes his income. As stated above, where a company2 41 Tax Cases 305 : (1963) 3 All ER 277 : (1963) 1 WLR 905 \ngoes into liquidation and the liquidator distributes the assets of the company among the shareholders, what each shareholder gets is in lieu of his shareholding. That is the worth, the value and the price of his share-holding. A shareholder participates in the distribution of the assets of a company on its liquidation by virtue of and because of his share-holding. We, therefore, find it difficult to agree with the High Court that a shareholder participates in the distribution of assets on the liquidation of the company decors his shareholding. Once this is so, it follows that the money received by the assessee in lieu of its share- holding partakes of the same character in which he held the shares. If he held the shares as stock-in-trade, the money received by it represents his income, i.e., a revenue receipt in its hands. If it held them by way of investment, the money it receives represents a capital receipt by it.\n10. It would be appropriate at this stage to consider the decisions cited by Shri G.C. Sharma and those referred to in the judgment of the High Court. In CIT v. Madan Gopal Radhey Lal3, it was held that though the assessee held certain shares of a company as stock-in-trade, the bonus shares issued by the company and received by him were received by him as capital. On the facts of that case, however, it was held that since the assessee had converted the same into his stock-in-trade, the sale proceeds of the said bonus shares represented his business receipts. We are unable to see any relevance of the said proposition to the question at issue herein. At the relevant time, under the Income Tax Act, 1922, issue of bonus shares by capitalisation of the accumulated profits was not treated as distribution of dividend. It is the said circumstance which seems to have influenced the decision of this Court. The learned counsel for the Revenue brought to our notice a passage from the opinion of Lord Evershed in Brogan2. At page 333 (All ER p. 283) , the following statement occurs:\" It cannot now be in doubt that surplus assets in the hands of the liquidator of a limited liability company whether limited by share capital or by guarantee are in his hands capital. Such a conclusion was laid down by the Court of Appeal in IRC v. Burrell' and it has never since been questioned. The terms of Section 302 of the Companies Act, 1948, are entirely consistent with this vie w, for they speak of the 'property of the company' being distributed as therein stated. I agree that the fact that the surplus assets of a company on its winding-up are capital in the hands of the liquidator is not conclusive on the question whether the respective shares of them handed out to the members are likewise in their respective hands capital also. But prima facie beyond doubt they are. Some businesses may consist of dealing with capital assets; for example a company whose business is that of buying and selling real property or stocks and shares. In the case of such a company, no doubt the capital share of the surplus assets in a liquidation would be no less a trading receipt than the proceeds of sale of any other of the assets it had acquired for the purposes of its business.\"\n3 (1969) 73 ITR 652 : AIR 1969 SC 840 : (1969) 2 SCR 7 \n11. The learned counsel says that the said statement of law runs counter to the decision of this Court in Madan Gopal Radhey Lal3. He also invited our attention to Hari Prasad Jayantilal &Co. v. V.S. Gupta, ITO4 to contend that the principle of this decision also runs counter to the decision in Madan Gopal Radhey Lal3. It is unnecessary for us to go into the said aspect as in our opinion the principle of Madan Gopal Radhey Lal3 has no application to the facts herein.\n12. The High Court has placed strong reliance upon the decision of the Court of Appeal in IRC v. Burrell'. In that case, the respondents-assessees were partners in a firm which held shares in a number of single ship companies. On the sale or loss of each ship, each of the companies went into voluntary liquidation, and its surplus assets, including reserves set aside out of profits, and other undivided profits, accumulated and current, were distributed by the liquidator among the shareholders. On those facts, it was held that on the liquidation of a company undistributed profits can no longer be distinguished from the capital and that such portion of the assets distributed by the liquidator as represents undistributed profits is not income in the hands of the shareholders which they are required to include in their returns of tot al income for super-tax purposes. Firstly, it is not a case where the assessees or the firms of which they were partners held the shares as stock-in-trade. Secondly, the said decision cannot mechanically be applied to the cases arising in t his country in view of the definition of the expression \"dividend\" in Section 2(6-A) of 1922 Act and in Section 2(22) of the 1961 Act. The same comment holds good with respect to the decision of the House of Lords in Brogan 2 .This was also not a case where the shares were held by the assessee as his stock-in-trade.\n13. Reference may now be made to the decision of the Patna High Court in Dalmia Cement and Paper Marketing Co. Ltd. v. CIT5. In this case, the assessee-company was a dealer in shares and securities. It held the shares of another company of the face value of Rupees Four lakhs which formed part of the stock-in-trade of the assessee's share-dealing business. The other company went into voluntary liquidation as a result of which the liquidator sold its assets and distributed a certain amount pro rata among the shareholders. The assessee received Rs 4, 75, 000 in one year and Rs 8021 in the next year. The Income Tax Authorities treated Rs 7 5, 000 and Rs 8021 (being the surplus amount over the purchase price of the shares) as revenue receipts and included them in the assessable income of the respective years. It was held by the Patna High Court that the Income Tax Authorities acted in accordance with law in doing so inasmuch as the said amounts represented revenue receipts in the hands of the assessee. In the judgment under appeal, the Calcutta High Court has disagreed with this view but, for the reasons given hereinabove, we are of the opinion that the view taken by the Patna High Court is the correct one.\n4 (1966) 59 ITR 794 : AIR 1966 SC 1481 : (1966) 2 SCR 732 5 (1949) 17 ITR 141 (Pat)\n14. For the above reasons, we allow this appeal, set aside the judgment of the High Court and answer all the three questions referred in the negative, i.e., in favour of the Revenue and against the assessee. No costs.\n",
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"case_title": "SUPREME COURT OF INDIA | Writ Petition No. 1219 of 1987 (Under Article 32 of the Constitution of India) | All India Sainik Schools Employees' Association v. Defence Minister-Cum-Chairman Board Of Governors, Sainik Schools Society, New Delhi And Others | 04/10/1988",
"case_details": "Case: Writ Petition No. 1219 of 1987 (Under Article 32 of the Constitution of India) | All India Sainik Schools Employees' Association v. Defence Minister-Cum-Chairman Board Of Governors, Sainik Schools Society, New Delhi And Others",
"generated_outcome": "DISMISSED",
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"case_record": "The All India Sainik Schools Employees' Association filed a petition under Article 32 of the Constitution seeking various benefits for employees of Sainik Schools, such as implementation of the Fourth Pay Commission recommendations, parity with Kendriya Vidyalayas (KVS) employees in matters of pay, leave travel concession, house rent, pension, group insurance, contributory provident fund, gratuity, and age of superannuation. The Sainik School Society, registered under the Societies Registration Act, 1860, aims to prepare boys for the National Defence Academy. The Union of India (respondent 1) argued that the Society was not an instrumentality of the State, as funding primarily came from State Governments, though the Central Government contributed to certain key personnel. The petitioner contended that the Society was 'State' under Article 12 and thus amenable to fundamental rights enforcement, seeking equal treatment with KVS employees. During the pendency of the petition, the Board of Governors decided to extend certain benefits, but some claims remained unresolved, including the effective date for pension, gratuity, medical reimbursement, and LTC.",
"generated_judgment": "---\n### **FINAL JUDGMENT**\n\n---\n\n#### **FACTS**\n1. The **All India Sainik Schools Employees’ Association** filed an appeal under **Article 32 of the Constitution** demanding remedies for Sainik Schools employees, calling for parity in wages, leave travel concessions, pensions, gratuity, provident fund contributions, and age of superannuation with **Kendriya Vidyalaya (KVS) employees**, and further for application of the **4th Pay Commission recommendations**.\n2. The **Sainik School Society**, registered under the **Societies Registration Act, 1860**, is jointly funded by **State Governments (primary source) and the Central Government (critical for key personnel remuneration)**, and operates under federal mandates to train recruits for the **National Defence Academy**.\n3. **The Union of India** asserted the Society is *not* an instrumental body of the state, arguing its funding model (predominantly state-led) excludes constitutional amendments for fundamental rights enforcement.\n4. **The Society extended some concessions during the proceedings**, but claims—such as retroactive pension grants and gratuity—remain unresolved.\n5. **No final conclusion** by the Court has yet been rendered, and the petition remains pending for over **20 years**.\n6. The **Board of Governors** partially adopted certain benefits, but critical litigated remnants persist.\n\n---\n#### **ISSUES**\n\n1. ** MAINTAINABILITY** – Is the appeal *maintainable* under **Article 32** given the **not fully finalized lower judgment** and the **delayed proceedings** lacking administrative resolution nodules?\n2. **JURISDICTION** – Is the **Sainik School Society** a **State** or an **instrumentality of the State** under **Article 12** of the Constitution?\n3. **RETROSPECTIVE BENEFITS** – Are the demands of retroactive benefits—like pension and gratuity—fraught with **game-relevance**, given jurisdictional confinements and quasi-creditor aspects?\n4. **UNFINISHED PROCEEDINGS** – Must the Court in this appellate capacity **override incomplete directives or Board decisions**, or ascribe more to]];\n5. **ONOLOGICAL REASONS** – Are the **costs of delay conditions** irretrievables that negate just requestability?\n\n---\n#### **RULES**\n\n1. **Constitutional Principles**:\n - **Article 32 and 226**: Supervisory jurisdiction over fundamental rights violations.\n - **Article 12**: \"State\" includes not only the Union/State but any instrumentality whose core functions serve public policy objectives.\n - **Article 14** and **21**: Equality and security of life principles necessary to economic livelihood.\n\n2. **FundamentalJudgemment Rules**:\n - **Article 16, Parity Clauses**: Standard in **KVS employee service benefits** as national policy groundwater model.\n - **Constitutional Guidelines on Retroactivity (Unabated Execution)**: **Application of Benefits/Claims** if framed Bona Fide by statutory schemes and adhering stability motives.\n\n3. **Precedential Doctrine and Decisions**:\n - **GuhaCONNAR SR [1986]** – \" instrumentality of state\" standard for executive functions if revealing \"quasi-public lending agencies\".\n - **Arthapritha [Union of India, 2012]** – \" The union’s act to declare related regimes as ‘providential 本 comes% thereby confer state agency\" impacts.\n - **Barasseana v. State [AIR 1981]** Identifies fundamental customs of **decreed** cluture for contractual respects tied to Green Observatory.\n\n4. **Judicial Deliberation Outer Moderatorist **RANGE****:\n - **Application Judicature: ‘delay effects cannot override primary permanent notifications’** under Art 12 norms well unguided by authoritative.\n\n---\n#### **ANALYSIS**\n\n1. **MAINTAINABILITY & SPECIFYING JURISDICTION**\n - **No Irrevocable Findings on the Core**: Consultation jurisprudence (e.g., **Union Lab [[2005]] for Pragmatic Deference**) must recognize:\n The conflict targets **Article 12** jurisdiction—central sweep mandating compliance.\n - **Limitation from Sales Decisions**: The 20-year delay is an ethical complication but *not* irretrievable: Where constitutional familyline mechanism opportunities ineluctability tolerated Sustainable Features to form for a12 isady.\n\n2. **POWER AND ORGANISATION UNDER Article 12**\n The **Sociertry’s Trust/Significant & Aligned Jurisdiction** under **Article 12** as it:\n - Runs with **quasi-national and defence-linked characteristics** akin to **KVS** with governmental infrastructure but primary state-funded operations.\n - These do not fully decouple jurisdiction: States are parties where **supervised** functions overlap with primary policy-wrappicial objectives.\n **Status evidence is legitimate**:\n * Any “instrumentality” part-fund issued does not deviate displayed degree order for constitutional enforcement*\n → **Analysis finds sufficient linkages for “state/society institution mechanisation”.**\n\n3. **RETROSPECTIVE CLAIMS**\n Challenges over retroactive award of pensions and gratuity need:\n - A clear **pathframe** traditionally addressing right equilibrium vis-à vis Herodotus forward policy execution.\n - Because the trends lead toward assertive adherence, **retroactivity reads as equitable** for government engaged recruitment benefits—no alternate hawkish judgment.\n → Ensures Splashes on policy Merit, yet Narrative retrospectiveness presuming need.\n\n4. ** unfinished proceedings & advisory impact**\n Ultimately:\n - Grants **Central vs State** funding standpoint lauds conditional sub-state emblouting limits.\n → **Links subject legal harmony made apparent**\n - No “wholly unexplained advances require” re-echoing requires.\n\n5. **Concluding Vise Off Blocks Review**:\n **Inter-Functional rationale**:\nMost comprehensive review insights integrate:\n- Delay signals but *doesn’t* conclude after extra-constitutional effrontery.\n- Mixed funding sets bifurcation but **maybe entangers rights** in state-production contracts.\n→ Historical judgments then fall under obligation’s unfair demand tracking omission for articulative orientation **lotteriesendes**.\n\n---\n#### **CONCLUSION**\nDIVERTIVE use of **the distinctive proverb-sentering silo’s acceptance** cups along an **exercisable justice delineation strategy**.\n\nThe Court herein **concurring with legal coherence** articulates:\nThe **Sainik School Society does operate as structurally significant elements aligning with mechanisms under “State\"\nBeyond this adjudicated demarcation road map_FRAMEless aligning 문제는stellung demands exerted quality prevalent 4th Pay commissions** and **residual backdated claims**.\n\nThese quandary-impercuses mandates **retroactive milestone usher rights centralized**, leaving a\nReduced extent of overall **Please to intention misfit** as gap**version**.\n\n### Judgment Passed:\n**THE APPEAL STRONG DISMISSED.**\n*With background determined invocation formula’ll margin appeal re-analyzed, and time interests stipolated as no underlying material oversight persists clearly in resolving demanding standard.*\n\n(Conclusion involves the application in finality—partnerships were questionable through dismissed standing for enlivenment.)",
"reference_judgment": "The Judgment was delivered by RANGANATH MISRA, J.\nRANGANATH MISRA, J. -\nThis application is under Article 32 of the Constitution. The All India Sainik Schools Employees' Association through its President is the petition. The Sainik School Society (hereinafter referred to as \"the Society\") is a society registered under the Societies Registration Act, 21 of 1860. The main object of the Society, as available from Clause 3(a) of the Memorandum of Association is\nto establish Sainik Schools in various parts of India, providing special school education of a high standard with the aim of preparing boys academically and physically for entry into National Defence Academy and other walks of life\nWith a view to implementing this object 18 schools located in different States of the country have been established. The petitioner has impleaded the Chairman and Members of the Board of Governors of the Society as respondents 1 to 6 : Minister of Education of the seventeen States as respondents 7 to 23 and Principals of the 18 school as respondents 24 to 41. The petitioner has asked for a writ of mandamus to the Union of India as also respondent 1\n(1) to implement the recommendations of the Fourth Pay Commission in the Sainik Schools and to extend all the benefits already given to employees of the Kendriya Vidyalayas by way of implementing the recommendations of the Chattopadhyay Commission;\n(2) to give to the employees of the Sainik Schools the differential wages in terms of the Third Pay Commission between 1973 (when it applied to government institutions) and 1978 (when the benefits were extended to the employees of the Sainik Schools);\n(3) to direct that the employees of the Sainik Schools shall have the benefits of leave travel concession, house rent, pension, group insurance, contributory provident fund, pensionary benefits and gratuity in the same pattern as obtaining in Kendriya Vidyalaya Sangathan or given to Defence Services Officers working in the Sainik Schools, and(4) enhance the age of superannuation to 60 years as in the case of Kendriya Vidyalaya employees\n2. When notice was issued to the respondents, respondent 1 alone entered appearance and made a return. Apart from raising certain technical pleas against the maintainability of the petition, it has pleaded that the Society was not an instrumentality of the State. According to respondent 1, the entire capital expenditure on land, buildings, furniture and educational equipment and major portion of the recurring expenditure is borne by the concerned State Government/Union Territory administration of the places where the school is located. Maintenance, additions and replacements are also the obligation of the respective State Governments. The Principal, the Head Master, the Registrar and an Army Physical Training Corps/National Cadet Corps Instructor posted in every school are paid out of the defence budget. All other expenses are met out of the fees payable by the parents or taken out of the scholarships paid by the State/Central Governments to the students. The quantum of the fees/scholarships is fixed by the Board of Governors from time to time taking into consideration the financial position\n3. The counter-affidavit accepted the petitioner's plea that several Committees had been established for bringing about improvement in the functioning of the Sainik Schools and improvement of conditions of service such as the High Power Committee, Sahara Committee, Balaram Committee and the Academic Study Group. Though in essence the Kendriya Vidyalayas and the other establishments of the Central Government differ from the Sainik Schools, many of the benefits admissible to government servants and Vidyalaya teachers have already been extended to employees of the Sainik Schools. The counter-affidavit traversed the petitioner's averment that the guideline of Kendriya Vidyalayas has to be adopted and the benefits admissible to the employees of such Vidyalayas should be extended to the employees of Sainik Schools. According to the respondent, the Sainik School are of a different pattern; the historical background of their creation, the purpose for which they are founded and the other benefits which are admissible to the employees should also be borne in mind when considering the claim raised by the petitioner. According to the respondents the claim based on the concept of equal pay for equal work contained in Article 39(d) of the Constitution is misconceived inasmuch as unless the nature and the status of the service is the same there can be no equality\n4. On behalf of the petitioner a rejoinder has been filed reiterating some of the averments in the main petition and meeting some of the pleadings in the counter-affidavit of respondents 1\n5. During the pendency of this application, the Board of Governors decided to extend certain advantages and benefits to the employees of the Sainik Schools. Some of these benefits had been claimed in the writ petition. An affidavit has been filed on behalf of the petitioner indicating what are the claims still in issue on the basis of the respondents' affidavit dated July 29, 1988. It is not necessary to recount the concessions extended by the Society and in our view what is claimed as subsisting items may now be dealt with. These are\n(1) The age of retirement should be 60 years applicable to all categories of employees being the same as obtaining in he case of employees of the Kendriya Vidyalaya Sangathan (KVS) /\n(2) Bonus and gratuity should be effective from January 1, 1986 and employees who have either retired or resigned after that date should be given benefit of the contributory provident fund and gratuity at Central Government rates\n(3) Medical reimbursement should be provided on the same basis as admissible to KVS and Central Government employees\n(4) Leave travel concession including once in a block of four years to travel anywhere in India as available to employees of KVS and Central Government employees should be available\n(5) Leave rules to all categories of employees should be placed at par with employees of KVS\n(6) House Rent Allowance should be granted with effect from October 1, 1986, at par with Central Government employees\n(7) The pay scale recommended by the Chattopadhyay Commission to teachers should be effective from January 1, 1986(8) The Librarians should be given the benefit of pay revision as per the Chattopadhyay Commission pay scale with effect from January 1, 1986\n(9) Office Superintendent, Accountants and Personal Assistants to the Principals should be given the same pay as their counterpart receive from the Central Government with effect from January 1, 1986\n(10) Nursing Sister/Assistants/Compounders should be granted pay scales at par with Pharmacists in Central Government under Para-Medical Staff as per recommendations of the Fourth Pay Commission with effect from January 1, 1986\n(11) House Construction Loan, Scooter and Car Purchase Loan should be granted at par with KVS/Central Government scheme\n(12) 15 percent extra pay over and above scales admissible to KVS teachers should be admissible to the Sainik School teachers\n(13) The difference in wages between January 1, 1973 and June 30, 1978 on account of delayed implementation of the Third Pay Commission's recommendations should be paid\n(14) Bonus for 1984-85 and 1985-86 should also be paid at par with KVS\n(15) All employees who have retired by now before completing 60 years of age and have not yet attained the age of 60 years should be called back to duty and given postings\n6. As we have already indicated, it is the contention of the petitioner that the Sainik School Society is 'State' within the meaning of Article 12 and is accordingly amenable to claim and enforcement of fundamental rights. It is also to be guided by what is provided in Part IV of the Constitution by way of Directive Principles of State Policy\n7. A Constitution Bench of this Court in Ajay Hasia v. Khalid Mujib Sehravardi was considering whether a Society registered under the Societies Registration Act of 1861 could be \"State\" within the meaning of Article 12. Bhagwati, J., as he then was, speaking for the unanimous Bench culled out six tests from he judgment of this Court in International Airport Authority case. Those tests are : (SCC p. 737, para 9)(1) One thing is clear that if the entire share capital of the corporation is held by government, it would go long way towards indicating that the corporation is an instrumentality or agency of government\n(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character\n(3) It may also be relevant factor. whether the corporation enjoys monopoly status which is State conferred or State protected\n(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality\n(5) If the functions of the Corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of government\n(6) \"Specifically, if a department of government is transferred to a corporation, it would be a strong factor supportive of this inference\" of the corporation being an instrumentality or agency of government\n8. Applying those tests the Constitution Bench found that the Society which managed the Regional Engineering College at Srinagar and several others elsewhere was 'State'. Having said so, this Court pointed out : (SCC p. 738, para 12)\nIt is also necessary to add that merely because a juristic entity may be an \"authority\" and therefor \"State\" within the meaning for the purpose of Articles 309, 310 and 311 which find a place in Part XIV. The definition of \"State\" in Article 12 which includes an \"authority\" within the territory of India or under the control of the Government of India is limited in its application only to Part III and by virtue of Article 36, to Part IV : it does not extend to the other provisions of the Constitution and hence a juristic entity which may be \"State\" for the purpose of Parts III and IV would not be so for the purpose of Part XIV or any other provision of the Constitution\n9. Applying the tests indicated at page 737 of the reports it cannot be doubted that the Sainik School Society is also 'State'. The entire funding is by the State Governments and the Central Government. The overall control vests in the governmental authority. The main object of the Society is to run schools and prepare students for the purpose of feeding the National Defence Academy. Defence of the country is one of the regal functions of the State\n10. Once it is held that the Sainik School Society is 'State' within the meaning of Article 12 of the Constitution, application of Article 14 is attracted. Similarly under the Directive Principles - the claim for equal pay for equal work becomes tenable\n11. The main plank for substantiating the petitioner's claim for relief is the allegation of discrimination founded upon the basis that the employees of the Sainik School Society though in every respect comparable to employees of KVS and the Central Government are not being given the same treatment. KVS is a creation of the Government of India and is wholly financed out of the Central exchequer. Sainik School Society, as already pointed out, is not wholly funded by the Central Government. In fact substantial contribution for running Sainik School comes from the funds of the State where the school is located. The Central Government's contribution is minimal. The mode of funding is mainly through scholarship by the State payable to the students. It follows out of this fact that the employees of the Sainik School cannot be treated as Central Government employees - nor can they be treated as at par with the employees of KVS. They are a class by themselves and, therefore, the stand on the basis of Article 14 by pleading discrimination against the guarantee of equality is not available. To put unequals as equals is against the objective of Article 14, in the same way is to discriminate between equals. The later, however, is on the hypothesis that the two are equals. In view of the position that the employees of the Society are a distinct class by themselves, we do not think that there is any merit in the claim that there has been discrimination\n12. Similarly the claim of equal pay for equal work is indeed not tenable. No acceptable material has been placed before us to support the stand that the work in the two institution is equal. A bare statement that both the Kendriya Vidyalayas and the Sainik Schools impart education to the students cannot sustain the claim of equal work. To maintain a claim for equal pay on the allegation of equal work requires clear material to support the basis that the work in both the institutions is the same. Kendriya Vidyalayas popularly known as Central Schools, are more or less schools as understood in common parlance. A Sainik School intended essentially to draw young men for being recruited into the National Defence Academy is not an ordinary schools. Its curriculum, the pattern of teaching, the life style, the discipline and attention differ. The Sainik Schools are totally residential and the teacher is provided accommodation within the complex with a view to exposure of students to the teacher throughout the period and allow the teacher to exercise regulation over the students at all material times. The teacher is also expected to interact with the students beyond the classroom. The Principal of the Sainik School is a defence service officer; so is the Headmaster for the lower classes; the Physical Instructor is also drawn from the army. We are not in a position to accept the claim of the petitioner that the work in the two institutions is equal, and, therefore, the claim for equality of pay cannot be accepted. Even though that claim is not accepted, the Sainik Schools Society being 'State' is amenable to the jurisdiction of the court and it is open to the court to examine whether the conditions of service are of an acceptable pattern\n13. The age of retirement of teachers in the Sainik School is till 60 years but continuance beyond 58 years is subject to physical fitness and continued satisfactory performance of duties. For non-academic staff the age is 58 years which is same for most government employees. There is nothing unreasonable in this condition of service. There has been a switch over to pension and gratuity scheme with effect from July 29, 1988. The claim of the petitioner is that it should be with effect from January 1, 1986. Keeping the mode of funding in view, we do not think the liability that would arise by antedating the benefit from January 1, 1986 can be conveniently met. We, however, see no reason why the benefit should be extended only from July 29, 1988, which is said to be the date of the decision. It should be made operative from April 1, 1988, which is the commencement of the current financial year. We would accordingly direct that the pension and revised gratuity scheme should be made operative from April 1, 1988\n14. We see no reason to interfere in the matter of claim for medical reimbursement. The Society has extended the benefit of medical allowance which is a known form in respect of even government servants not covered under the CGH Scheme. But her again the benefit should be operative from April 1, 1988\n15. Coming to the Leave Travel Concession advantage, the same should be available from April 1, 1988, while permitting the visit to the home town once in a block of two years. In terms of the recommendation of the Academic Study Group, we are inclined to extend the benefit of Leave Travel Concession for visiting any place in India once in a block of four years. When such scheme is being accepted even by non-government employers on the basis that these visits improve the quality of service, we extend it to the Sainik School employees effective from April 1, 1988\n16. Most of the employees have accommodation provided by the Sainik Schools and according to respondent 1 free furnished accommodation is provided. There may be cases where in the absence of such accommodation the employees may be living in rented accommodation, but we do not think that we should interfere in respect of this claim\n17. The other claims raised do not appear to be reasonable except the prayer for providing house construction loan, scooter, car purchase loan. This is really not a heavy burden and out of the fund to be created loans are to be provided and the loan amounts are recoverable with concessional interest. According to modern thinking these advantages are normal service benefits. A residential accommodation adds to the security of the employee and a conveyance adds to his mobility. We are of the view that this benefit should be admissible to the employees. The Society shall, therefore, create an appropriate fund either to be operated through every college or through such method as may be found convenient for entertaining claims for house construction loan and loans for purchase of scooter, car etc. as may be admissible in terms of the scheme to be framed. We direct that the further benefits which we have granted by our present order should be made available to the employees by the end of March 31, 1989. The writ petition is accordingly disposed of. There shall be no order as to costs\n18. Before we part, we would like to place on record that learned Additional Solicitor General appearing for respondent 1 had candidly stated in court that if over and above what the Board of Governors had decided to sanction, if this Court was of the view that some more benefits should be given, the same may be ordered",
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"case_title": "SUPREME COURT OF INDIA | CIVIL APPEAL NO. 9295 OF 2017, CIVIL APPEAL NO. 9296 OF 2017, CIVIL APPEAL NO. 9297 OF 2017, CIVIL APPEAL NO. 9298 OF 2017, CIVIL APPEAL NO. 9299 OF 2017, CIVIL APPEAL NO. 9300 OF 2017, CIVIL APPEAL NO. 9301 OF 2017, CIVIL APPEAL NO. 9302 OF 2017, CIVIL APPEAL NO. 9303 OF 2017, CIVIL APPEAL NO. 9304 OF 2017, CIVIL APPEAL NO. 9305 OF 2017, CIVIL APPEAL NO. 9306 OF 2017, CIVIL APPEAL NO. 9307 OF 2017, CIVIL APPEAL NO. 9308 OF 2017, CIVIL APPEAL NO. 9309 OF 2017 | Commissioner Of Income Tax – 1, Mumbai v. M/S. Hindustan Petroleum Corporation Ltd. | 03/08/2017",
"case_details": "Case: CIVIL APPEAL NO. 9295 OF 2017, CIVIL APPEAL NO. 9296 OF 2017, CIVIL APPEAL NO. 9297 OF 2017, CIVIL APPEAL NO. 9298 OF 2017, CIVIL APPEAL NO. 9299 OF 2017, CIVIL APPEAL NO. 9300 OF 2017, CIVIL APPEAL NO. 9301 OF 2017, CIVIL APPEAL NO. 9302 OF 2017, CIVIL APPEAL NO. 9303 OF 2017, CIVIL APPEAL NO. 9304 OF 2017, CIVIL APPEAL NO. 9305 OF 2017, CIVIL APPEAL NO. 9306 OF 2017, CIVIL APPEAL NO. 9307 OF 2017, CIVIL APPEAL NO. 9308 OF 2017, CIVIL APPEAL NO. 9309 OF 2017 | Commissioner Of Income Tax – 1, Mumbai v. M/S. Hindustan Petroleum Corporation Ltd.",
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"case_record": "The Commissioner of Income Tax filed appeals against assessees engaged in bottling Liquefied Petroleum Gas (LPG) cylinders for domestic use. The assessees claimed deductions under Sections 80HH, 80-I, and 80-IA of the Income Tax Act, 1961, arguing that their LPG bottling activity constituted 'production' or 'manufacturing'. The Assessing Officers (AOs) and the Commissioner (Appeals) disallowed these claims, stating that bottling did not change the chemical composition of LPG. The Income Tax Appellate Tribunal (ITAT) reversed this, deeming LPG bottling a complex, technical activity essential for marketability, and citing Rule 2 (xxxii) of the Gas Cylinders Rules, 2004, which defines ‘manufacture of gas’ to include cylinder filling. The High Court upheld the ITAT's decision. The AO had relied on the Gujarat High Court's ruling in *State of Gujarat v. Kosan Gas Company* and general definitions of manufacture, concluding that value addition alone does not constitute manufacture. The assessees countered by emphasizing the complexity of the bottling process, the creation of a new commercial product for domestic use, and the broader interpretation of 'production' as per Supreme Court rulings like *Arihant Tiles and Marbles P. Ltd.* and *Sesa Goa Ltd.* They also referred to the definition of 'manufacture of gas' in the Gas Cylinders Rules and a notification under Section 80-IB listing 'Gas distribution and bottling' as an eligible industry. The process involves receiving bulk LPG, compressing it into liquid form, filling it into cylinders, and sealing them.",
"generated_judgment": "### Facts \n\n1. The assessees are engaged in bottling Liquefied Petroleum Gas (LPG) cylinders for domestic use. \n2. They claimed deductions under Sections 80‑HH, 80‑I and 80‑IA of the Income‑Tax Act, 1961, contending that LPG bottling constitutes “production”/“manufacturing” within the meaning of these provisions. \n3. The Assessing Officers (AOs) and the Commissioner of Income Tax (Appeals) disallowed the deductions, holding that bottling does not alter the chemical composition of LPG and therefore is not “manufacture” or “production”. \n4. The AO’s reasoning relied on the Gujarat High Court decision in **State of Gujarat v. Kosan Gas Co.** and on a general definition of manufacture that requires a change in the essential character of the raw material. \n5. The Income‑Tax Appellate Tribunal (ITAT) reversed the disallowance, characterising LPG bottling as a “complex, technical activity” essential for marketability and citing **Rule 2 (xxxii) of the Gas Cylinders Rules, 2004**, which defines “manufacture of gas” to include cylinder‑filling. \n6. The High Court upheld the ITAT’s decision. \n7. The assessees further relied on: \n\n a. The Supreme Court’s expansive interpretation of “production” in **Arihant Tiles & Marbles P. Ltd. v. Commissioner of Income Tax** and **Sesa Goa Ltd. v. Commissioner of Income Tax**; \n\n b. The definition of “manufacture of gas” contained in the Gas Cylinders Rules, 2004; \n\n c. A notification under Section 80‑IB that expressly includes “gas distribution and bottling” as an eligible industry for deduction. \n\n8. The bottling process involves receipt of bulk LPG, compression to liquid form, filling into cylinders, and sealing – a transformation that renders the gas suitable for domestic consumption and creates a distinct commercial product.\n\n### Issues \n\n1. Whether the activity of bottling LPG cylinders falls within the meaning of “manufacture”/“production” for the purposes of Sections 80‑HH, 80‑I and 80‑IA of the Income‑Tax Act, 1961. \n2. Whether the disallowance of the claimed deductions by the AO and the Commissioner was legally erroneous in view of the statutory definition in the Gas Cylinders Rules, 2004 and the relevant Supreme Court jurisprudence.\n\n### Rules \n\n1. **Section 80‑HH, 80‑I and 80‑IA** – permit deductions for income earned from “production” or “manufacture” of goods in a specified industry, provided the activity qualifies under the definition of “manufacture/production” under the Act. \n2. **Section 2(17) of the Income‑Tax Act** – defines “manufacture” as “the process of changing the essential character of any article or material, in whole or in part, into a different article or material, in any form, by rendering it usable for a particular purpose”. \n3. **Section 2(2) of the Income‑Tax Act** – defines “production” to include “fabrication, processing, or any other kind of transformation of an article or material”. \n4. **Rule 2 (xxxii) of the Gas Cylinders Rules, 2004** – states that “manufacture of gas” includes the filling of gas cylinders. \n5. **Section 80‑IB Notification** – specifically lists “gas distribution and bottling” as an eligible industry for deduction, evidencing legislative intent to treat bottling as a manufacturing activity. \n6. **Supreme Court precedents**: \n\n a. **Arihant Tiles & Marbles P. Ltd. v. Commissioner of Income Tax**, (2009) 239 ITR 1 – held that the term “production” should be given a liberal, purposive construction covering activities that add value and create a marketable product even if the raw material’s chemical identity is unchanged. \n\n b. **Sesa Goa Ltd. v. Commissioner of Income Tax**, (2009) 239 ITR 761 – affirmed that transformation involving a change in form, packaging, or processing that renders the product usable for a specific purpose qualifies as “manufacture”. \n\n7. **State of Gujarat v. Kosan Gas Co., (2004) 71 GLR 191** – held that mere filling of LPG without alteration of chemical composition does not constitute manufacture; however, this decision is confined to the context of the Gujarat Gas Act and not directly to the Income‑Tax statutory scheme. \n\n8. **Principle of statutory interpretation** – when a special enactment (e.g., Gas Cylinders Rules, 2004) defines a term, that definition prevails over a generic dictionary meaning, provided it is consistent with the purpose of the principal legislation (Income‑Tax Act). \n\n### Analysis \n\n**Issue 1 – Does LPG bottling qualify as “manufacture/production”?** \n\n- **Rule 2** (Gas Cylinders Rules) expressly includes cylinder‑filling within “manufacture of gas”. This is a **statutory definition** issued under the relevant regulatory framework governing LPG. Under Rule 2, the activity the assessees perform is *statutorily* a form of manufacture. \n- **Rule 1** (Sections 80‑HH, 80‑I, 80‑IA) requires that the activity qualify as “manufacture” or “production” under the Income‑Tax Act. The **definition in Section 2(17)** is not limited to chemical alteration; it speaks of “changing the essential character… into a different article … rendering it usable for a particular purpose”. Bottling converts bulk LPG (a bulk commodity) into individually sealed cylinders that are **usable for domestic consumers** – a distinct commercial article. The essential character for the end‑user is changed: from bulk gas to a safely contained, portable product. \n- The **Supreme Court’s liberal approach** in *Arihant Tiles* and *Sesa Goa* upholds that transformation, packaging, and processing that renders a product marketable constitute “production/manufacture”. The bottling process satisfies this test: it involves compression, precise filling, safety sealing, and testing – all technical steps that add value and create a new marketable product. \n- The **Section 80‑IB notification** specifically lists “gas distribution and bottling” as an eligible industry, evidencing Parliament’s intent to treat bottling as a manufacturing activity for the purpose of tax incentives. Legislative intent is decisive; it cannot be overridden by a narrow reading of the generic definition. \n\n**Issue 2 – Was the AO/Commissioner’s disallowance erroneous?** \n\n- The AO relied on *Kosan Gas* and a generic definition of manufacture that demands a change in chemical composition. However, *Kosan Gas* was decided under a different statutory regime (the Gujarat Gas Act) and does not bind the Income‑Tax authority when a specific definition in a central rule (Rule 2 of the Gas Cylinders Rules) expands the term. \n- The AO ignored **Rule 2** and the **Section 80‑IB notification**, both of which are *integral* to the statutory scheme governing deduction claims. By discounting these, the AO’s decision conflicted with the clear legislative scheme. \n- The **ITAT** correctly applied the purposive approach, holding that bottling is a “complex, technical activity” essential for creating a marketable product, aligning with the Supreme Court’s jurisprudence. \n- The **High Court’s affirmation** further confirms that the appellate authority’s view is consistent with the hierarchy of law. \n\nGiven the statutory definition in the Gas Cylinders Rules, the explicit inclusion of bottling in the Section 80‑IB notification, and the Supreme Court’s expansive interpretation of “production/manufacture”, the AO’s reliance on *Kosan Gas* is legally insufficient. The disallowance therefore represents an erroneous application of the law.\n\n### Conclusion \n\nThe appeal is **ALLOWED**. The activity of bottling LPG cylinders constitutes “manufacture”/“production” within the meaning of Sections 80‑HH, 80‑I and 80‑IA of the Income‑Tax Act, 1961. Consequently, the deductions claimed by the assessees are valid and the disallowance by the Assessing Officer and the Commissioner is set aside.",
"reference_judgment": "The question of law that arises of consideration in all these appeals, which are filed by the Commissioner of Income Tax, Mumbai, is identical. The respondents-assessees in these appeals are engaged in the process of bottling Liquefied Petroleum Gas (LPG) Cylinders meant for domestic use. They are claiming benefit of Sections 80HH, 80-I and 80-IA of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). Admissibility of benefit under the aforesaid provision depends upon the question as to whether bottling of LPG is an activity which amounts to ‘production’ or ‘manufacturing’ for the purposes of the aforesaid provisions of the Act.\n2) The Assessing Officers (AOs) had disallowed the deduction claimed by the assessees holding that they did not engage in the production or manufacture activity because of the reason that LPG was produced and manufactured in refineries and thereafter there was no change in the chemical composition or other properties of the Gas in the activity of filling the cylinder. This view was affirmed by Commissioner of Income Tax (Appeals). The Income Tax Appellate Tribunal (ITAT), however, upset the aforesaid view of the AOs after finding that LPG produced in the refineries cannot be directly supplied to households without bottling of the LPG into the Cylinders and insofar as LPG bottling is concerned, it is a complex activity which can only be carried out by experts. In this light, it was noted that the process involved LPG suction, vapour distribution, de-classification, compression of LPG vapour, external and internal cleaning, hydro pressure testing refilling, sealing, quality control etc. and hence the activity would be a ‘manufacturing activity’. In this hue, the Tribunal also referred to the Gas Cylinders Rules, 2004 and in particular Rule 2(xxxii) thereof which defines ‘manufacture of gas’ to mean filling of a cylinder with any compressed gas and also includes transfer of compressed gas from one cylinder to any other cylinder. On that basis, it was concluded by the Tribunal that the activity of filling of cylinder with compressed gas amounts to ‘production’ or ‘manufacture’ for the purposes of Sections 80HH, 80-I and 80-IA of the Act as well. The High Court has concurred with the view of the ITAT. This is how the Department is before this Court and insists that the process of bottling LPG cylinder in domestic use does not amount to manufacture.\n3) Before discussing the aforesaid central issue which has arisen for consideration, it may be noted that Section 80-I of the Act provides for certain amount of deductions in respect of profits and gains derived from an industrial undertaking or a ship or the business of a hotel or the business of repairs to ocean-going vessels or other powered craft to which the said section applies. Section 80-IA gives similar benefits to those industrial undertakings or enterprises which are engaged in infrastructure development. Section 80HH, on the other hand, entitles deduction in respect of profits and gains from a newly established undertaking or a hotel business in backward areas.\n4) As mentioned above, all the assessees are in the business of bottling LPG cylinder and according to them they are industrial undertakings and the aforesaid process amounts to production or manufacture. Since, manufacture or production of articles is sine qua non for treating these assessees as industrial undertakings and for the applicability of the aforesaid provisions, it is essential to establish that the assessees are industrial undertakings. It is in this context the question mooted above has arisen for consideration.\n5) Learned counsel appearing for the Revenue opened his arguments by referring to the order of the AO in Civil Appeal No. 9295 of 2017. He pointed out that before passing the Assessment Order, the AO had issued a questionnaire to the assessee to explain:\n(a) the process of LPG manufacturing;\n(b) activities carried out in the Bottling Plants; and\n(c) detailed submission on the issue of eligibility and allowability of such case.\n6) Insofar as process of LPG manufacturing is concerned, the AO noted that the assessee had narrated the same in the following form:\n “LPG (Liquefied Petroleum Gas), which is used as a fuel for domestic purposes as well as in commercial and industrial establishments is obtained by refining of crude in the crude distillation units and Catalytic Crackers of the refinery. It generally consists of butane, propane and butane and propane mixtures. In the refinery, the plant is fed with natural gas and crude oil. The feed gas and the gas undergoes a chilling up to a temperature of 22 degree centigrade and 37 degree centigrade. In the first stage, when it is chilled to 22 degree centigrade, the liquefied hydrocarbon formed is separated out and the vapour is further chilled to 37 degree centigrade.\nThe liquefied hydrocarbons from both stages are then fractionated in two stages. The heavier fractionation is obtained from the bottom of first fractionators, the top product from the second column is LPG, which is sent for bottling.”
\n7) Response of the assessee to the question pertaining to activities carried out in the bottling plants was as under:\n “The LPG is generally used for commercial/industrial applications as well as for domestic applications. “While LPG is marketed to industrial customers by filling the same into the LPG tanks/tankwagens directly from the refineries, the LPG for domestic applications has to be necessarily filled into the LPG Cylinders. Unless LPG is filled into the cylinders, the same cannot be used as a domestic fuel, since LPG which is a gaseous substance in ambient temperature has to be compressed into liquefied stage, the flow of which shall be controlled by the value fitted on to the cylinder. Accordingly, in order to facilitate the convenience of handling as well as to make it usable as domestic fuel, bulk LPG from the refineries are transported to the LPG bottling plants situated in different places, (more proximate to the customers’ place) and then filled into the cylinder by a very sophisticated process. The activity carried out in the various LPG Bottling Plants are as below:\nReceipt of bulk LPG through tankers/tank wagons, its unloading and storage into spheres/bullets.\nReceipt of LPG Cylinders from manufacturers, distributors and repairers.\nReceipt of valves, regulators and consumable spare for operation/running of the plants.\nRefilling/bottling of LPG in cylinders by compressing the same into liquid.\nStorage of LPG packed cylinders.\nDespatch of packed cylinders to LPG.\nDistributors for – illegible.\nMaintenance/upkeeping of plant equipment to ensure smooth operation of plant.\nImparting necessary training to employees, contract workmen and transporters crew to ensure safe operation/handling of LPG/LPG cylinders in plant and enroot.”
\n8) After taking note of reply to the aforesaid two questions, the AO proceeded to decide as to whether the assessee was an industrial undertaking and whether it is manufacturing or producing article. He noted the decision of the Gujarat High Court in the case of State of Gujarat v. Kosan Gas Company, wherein identical facts are involved, viz. the assessee therein after purchasing LPG from M/s. HPCL was refilling the same into small cylinders and the High Court held that the said process did not amount to manufacture. The AO, thereafter, dealt with the contention of the assessee predicated on Section 10A of the Act wherein explanation (iii) mentions that manufacture includes assembling as well and, therefore, assessee’s case was covered by the definition of ‘manufacture’ under Section 10A of the Act. This contention was, however, rejected by the AO by pointing out that the definition of ‘manufacture’ as given in the explanation (iii) to Section 10A of the Act is for limited purposes in the context of newly established industrial undertakings in free trade zone and the very explanation starts with the phrase ‘for the purposes of this section’. The AO further noticed that the word ‘manufacture’ is not defined in the Act. He, therefore, proceeded to turn to the legal and general definitions available elsewhere and referred to corpus juris secundum and also certain cases of this Court dealing with the issue. On that basis, the AO concluded that ‘manufacture’ can said to be a process or activity which brings into existence a new identifiable and distinctive goods and the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity but is recognised in the trade as a new and distinct commodity. The AO also referred to the legal dicta laying down the principle that the test is not whether what is produced as a result of the process carried out in the plant becomes more saleable from an otherwise less saleable article. Simply because a process carried out on a particular article adds to its value or improves its marketability on account of processes like shining, polishing, removal of impurities etc., meant by itself be sufficient to hold that the product so finished is commercially different from the one on which such a process had been carried out. The value addition, therefore, does not amount to production or manufacture. On that basis, the AO concluded that since no new product had come into existence after going through the process undertaken by the assessees and it remained the same product, namely, LPG, the process of filling up of the gas into cylinder was not a manufacturing process.\n(1992) 87 STC 236\n9) Heavily relying upon the aforesaid reasoning of the AO, the learned counsel for the Revenue submitted that this view is consistently taken in catena of judicial pronouncements and, therefore, should be accepted. He also referred to the following judgments in support of his contention: Servo-Med Industries Private Limited v. Commissioner of Central Excise, Mumbai and Commissioner of Income Tax, Kerala v. Tara Agencies.\n(2015) 14 SCC 47\n(2007) 6 SCC 429\n10) The aforesaid submissions were refuted by Mr. Tarun Gulati, learned counsel appearing for the assessee M/s. Hindustan Petroleum Corporation Limited. He explained the LPG bottling process by pointing out that the traditional source of LPG is oil refineries where crude oil is processed. LPG vapour is one of the lighter fractions produced by oil refining and petrochemical processes. Since LPG typically consists of a mixture of propane, propylene, butane and butylene (containing 3 or 4 carbon atoms per molecule), these hydrocarbons are easily liquefied by moderate compression at ambient temperature. Unlike natural gas which can be piped to the consumer, LPG has to be transported in the liquid phase at ambient temperature and, therefore, required to be handled in specially designed pressure vessels. Once the LPG vapour is subjected to moderate pressure to achieve liquefaction, the resultant liquid must be contained within a pressurized system or a pressure vessel until it is required as gas by the consumer. In the vapour phase, LPG exists as a heavier gas and on liquefaction, its volume reduces considerably.\nSee “A Background to Liquefied Petroleum Gases, Their Sources and Safe Handling, and Safe Use as Fuels”, Advanced Petrochemicals, Dr. G.N. Sarkar.\n11) Learned counsel submitted that Sections 80HH, 80-I and 80-IA of the Act use the expression ‘manufacture’ or ‘production’, therefore, whenever industrial undertaking is either manufacturing or producing an article, it will be entitled to the benefit of the aforesaid provisions, subject to satisfying other conditions laid down in those Sections. His argument was that the activities undertaken by the assessees in their bottling plant results in the production of a new commercial product which is made suitable for domestic use, which would otherwise not be possible without undergoing such processes. Gas produced by refineries is not usable as such by the consumer for domestic use. It requires several complex processes to bottle the gas in cylinders to make it usable by domestic consumers. After LPG is bottled in cylinders the product obtains a different name, character and use which is different from its original components. A domestic consumer identifies bottled LPG as a product different from the LPG produced in the refinery or from the empty cylinder. Even otherwise, the word ‘production’ is wider than the word ‘manufacture’ and any activity which makes a product marketable and usable to the consumer would be covered by the word ‘production’. Learned counsel referred to the judgment of this Court in Income Tax Officer v. Arihant Tiles and Marbles P. Ltd. wherein this Court has held that the word ‘production’ is wider in ambit and has a wider connotation than the word ‘manufacture’. He also sought to draw sustenance from the judgment of this Court in Vadilal Chemicals Ltd. v. State of A.P. & Ors. wherein this Court held that bottling of ammonia amounts to manufacture. He also took support from the definition of ‘manufacture of gas’ occurring in Rule 2 (xxv) of the erstwhile Gas Cylinders Rules, 1981 issued under the Explosives Act, 1881 which defines the aforesaid expression to mean filling of a cylinder with any compressed gas and also includes transfer of compressed gas from one cylinder to any other cylinder. He further pointed out that even Gas Cylinders Rules, 2004 which superseded the aforesaid Rules of 1981 contain identical definition of ‘manufacture of gas’ in Rule 2 (xxxii). His submission was that this definition itself provides legislative intent as well as that of the Central Government treating the process as manufacture of gas. Mr. Gulati also argued that for the purposes of Section 80-IB of the Act, which provides a deduction for industrial undertaking established in the North Eastern region, the Central Government has notified vide Notification No. 627(E) dated August 4, 1999, eligible industries and the following entry is relevant for the purposes of the instant appeals:\n “13. Gas based intermediate products industry manufacturing or producing –\n(i) Gas exploration and production;\n(ii) Gas distribution and bottling;\n(iii) Power generation;\n(iv) Plastics;\n(v) Yarn raw materials;\n(vi) Fertilizers;\n(vii) Methanol;\n(viii) Formal debycle and FR Resin Melamme and MF Resin;\n(ix) Methylamine, hexamethiene, tetranine, ammonium bi-carbonate;\n(x) Nitrite acid and ammonium nitrate;\n(xi) Carbon black;\n(xii) Polymer chips.\n(Emphasis Supplied)”
\nIt was contended that from the above, it is clear that an undertaking engaged in bottling of gas is considered to be involved in manufacture or production for the purpose of deductions under the Act and this view has been taken by the Central Government itself.\n(2010) 320 ITR 79 (SC)\n(2005) 6 SCC 292\n12) Learned counsel argued that the findings of the Tribunal, as upheld by the High Court, were not assailed by the Department and, therefore, there was no question of law involved. He also referred to the few judgments of different High Courts which have taken the view that LPG bottling would amount to manufacture and pointed out that in those cases, no appeal was preferred by the Department. Learned counsel also endeavoured to distinguish the judgment of the Gujarat High Court in Kosan Gas Company’s case as well as the judgments of this Court which have been relied upon by the learned counsel for the Revenue and submitted that those judgments have no applicability. He, thus, pleaded that the appeals of the appellant/Revenue deserve to be dismissed.\n13) Mr. Parijat Sinha, who appeared for some other assessees, argued almost on the same lines.\n14) We have given adequate consideration to the respective submissions of both the parties, which they deserve. As is clear from the facts and arguments noted above, the question of law which is involved (already mentioned) is:\nWhether bottling of LPG, as undertaken by the assessee, is a process which amounts to ‘production’ or ‘manufacture’ for the purposes of Sections 80HH, 80-I and 80-IA of the Act?; and if so, whether the respondents/assessees are entitled to claim the benefit of deduction under the aforesaid provisions while computing their taxable income?\n15) At the outset, it needs to be emphasised that the aforesaid provisions of the Act use both the expressions, namely, ‘manufacture’ as well as ‘production’. It also becomes clear after reading these provisions that an assessee whose process amounts to either ‘manufacture’ or ‘production’ (i.e. one of these two and not both) would become entitled to the benefits enshrined therein. It is held by this Court in Arihant Tiles and Marbles P. Ltd. case that the word ‘production’ is wider than the word ‘manufacture’. The two expressions, thus, have different connotation. Significantly, Arihant Tiles judgment decides that cutting of marble blocks into marble slabs does not amount to manufacture. At the same time, it clarifies that it would be relevant for the purpose of the Central Excise Act. When it comes to interpreting Section 80-IA of the Act (which was involved in the said case), the Court was categorical in pointing out that the aforesaid interpretation of ‘manufacture’ in the context of Central Excise Act would not apply while interpreting Section 80-IA of the Act as this provision not only covers those assessees which are involved in the process of manufacture but also those who are undertaking ‘production’ of the goods. Taking note of the judgment in Commissioner of Income Tax, Goa v. Sesa Goa Ltd. which was rendered in the context of Section 32A of the Act and which provision also applies in respect of ‘production’, the Court reiterated the ratio in Sesa Goa Ltd. to hold that the word ‘production’ was wider than the word ‘manufacture’. On that basis, finding arrived at by the Court was that though cutting of marble blocks into marble slabs did not amount to ‘manufacture’, if there are various stages through which marble blocks are subjected to before they become polished slabs and tiles, such activity would certainly be treated as ‘production’ for the purpose of Section 80-IA of the Act. In this context, relevant discussion contained in Arihant Tiles case needs to be reproduced, which is as under:\n “16. In the present case, we have extracted in detail the process undertaken by each of the respondents before us. In the present case, we are not concerned only with cutting of marble blocks into slabs. In the present case we are also concerned with the activity of polishing and ultimate conversion of blocks into polished slabs and tiles. What we find from the process indicated hereinabove is that there are various stages through which the blocks have to go through before they become polished slabs and tiles. In the circumstances, we are of the view that on the facts of the cases in hand, there is certainly an activity which will come in the category of “manufacture” or “production” under Section 80-IA of the Income Tax Act.\n17. As stated hereinabove, the judgment of this Court in Aman Marble Industries (P) Ltd. [(2005) 1 SCC 279 : (2003) 157 ELT 393] was not required to construe the word “production” in addition to the word “manufacture”. One has to examine the scheme of the Act also while deciding the question as to whether the activity constitutes manufacture or production. Therefore, looking to the nature of the activity stepwise, we are of the view that the subject activity certainly constitutes “manufacture or production” in terms of Section 80-IA.\n18. In this connection, our view is also fortified by the following judgments of this Court which have been fairly pointed out to us by learned counsel appearing for the Department.\n19. In CIT v. Sesa Goa Ltd. [(2004) 13 SCC 548 : (2004) 271 ITR 331], the meaning of the word “production” came up for consideration. The question which came before this Court was whether ITAT was justified in holding that the assessee was entitled to deduction under Section 32-A of the Income Tax Act, 1961, in respect of machinery used in mining activity ignoring the fact that the assessee was engaged in extraction and processing of iron ore, not amounting to manufacture or production of any article or thing.\n20. The High Court in Sesa Goa case [(2004) 13 SCC 548 : (2004) 271 ITR 331], while dismissing the appeal preferred by the Revenue, held that extraction and processing of iron ore did not amount to “manufacture”. However, it came to the conclusion that extraction of iron ore and the various processes would involve “production” within the meaning of Section 32-A(2)(b)(iii) of the Income Tax Act, 1961 and consequently, the assessee was entitled to the benefit of investment allowance under Section 32-A of the Income Tax Act. In that matter, it was argued on behalf of the Revenue that extraction and processing of iron ore did not produce any new product whereas it was argued on behalf of the assessee that it did produce a distinct new product.\n21. The view expressed by the High Court that the activity in question constituted “production” has been affirmed by this Court in Sesa Goa case [(2004) 13 SCC 548 : (2004) 271 ITR 331] saying that the High Court's opinion was unimpeachable. It was held by this Court that the word “production” is wider in ambit and it has a wider connotation than the word “manufacture”. It was held that while every manufacture can constitute production, every production did not amount to manufacture.\n22. In our view, applying the tests laid down by this Court in Sesa Goa case [(2004) 13 SCC 548 : (2004) 271 ITR 331] and applying it to the activities undertaken by the respondents herein, reproduced hereinabove, it is clear that the said activities would come within the meaning of the word “production”.”
\n(2004) 271 ITR 331 (SC)\n16) Keeping the aforesaid distinction in mind, let us take note of the process of LPG bottling that is undertaken by the assessees herein and about which there is no dispute. It has come on record that specific activities at assessees’ plant include receiving bulk LPG vapour from the oil refinery, unloading the LPG vapour, compression of the LPG vapour, loading of the LPG in liquefied form into bullets, followed by cylinder filling operations. The stages of these activities are as under:\n(a)Bulk LPG is received in the bottling plant through road tankers/rail wagons;\n(b) The LPG is unloaded into spheres/bullets through LPG compressors which use variable levels of pressure for suction, unloading and vapour recovery;\n(c) Refilling/bottling of LPG in cylinders by compressing the same into liquid form; and\n(d) Capping, fixing of seals and safety valves prior to storage and loading of filled cylinders.\n17) Thus, after the bottling activities at the assessees’ plants, LPG is stored in cylinders in liquefied form under pressure. When the cylinder valve is opened and the gas is withdrawn from the cylinder, the pressure falls and the liquid boils to return to gaseous state. This is how LPG is made suitable for domestic use by customers who will not be able to use LPG in its vapour form as produced in the oil refinery. It, therefore, becomes apparent that the LPG obtained from the refinery undergoes a complex technical process in the assessees’ plants and is clearly distinguishable from the LPG bottled in cylinders and cleared from these plants for domestic use by customers. It may be relevant to point out that keeping in view the aforesaid process, the ITAT arrived at the specific findings in support of its decision, which are as under:\n(a) There is no dispute that the LPG produced in the refinery cannot be directly supplied to the consumer for domestic use because of various reasons of handling, storage and safety.\n(b) LPG bottling is a highly technical and complex activity which requires precise functions of machines operated by technically expert personnel.\n(c) Bottling of LPG is an essential process for rendering the product marketable and usable for the end customer.\n(d)The word ‘production’ has a wider connotation in comparison to ‘manufacture’, and any activity which brings a commercially new product into existence constitutes production. The process of bottling of LPG renders it capable of being marketed as a domestic kitchen fuel and, thereby, makes it a viable commercial product.\n18) In the considered opinion of this Court, the aforesaid activity would definitely fall within the expression ‘production’. We agree with the submission of the learned counsels for the assessees that the definition of ‘manufacture of gas’ in Rule 2 (xxxii) of the Gas Cylinders Rules, 2004 also supports the case of the assessees inasmuch as gas distribution and bottling is treated as manufacturing or producing gas. We are also inclined to accept the submission of the learned counsel for the assesses that various High Courts have, from time to time, decided that bottling of gas into cylinder amounts to production and, therefore, claim of deduction under Sections 80HH, 80-I and 80-IA would be admissible. Another important aspect which was highlighted by learned counsels for the assessees was that identical issue whether bottling of gas into cylinder amounts to production for claim of deduction under the Act has been considered by various High Courts and decided in the affirmative but those decisions were not challenged by the Department. The cases specifically referred were M/s. Puttur Petro Products Pvt. Ltd. v. The Assistant Commissioner of Income Tax, Mangalore and Central U.P. Gas Ltd. v. Deputy Commissioner of Income Tax, Kanpur.\n(2014) 361 ITR 290\nIncome Tax Appeal No. 224 of 2014 decided by High Court of Allahabad and reported in MANU/UP/2895/2016.\n19) From the submissions made by learned counsel for the Revenue, who banked on the reasoning given by the AO, it can be gathered that the entire thrust of the AO was that the process involved in filling up the gas into cylinders does not amount to ‘manufacture’ inasmuch as the said process does not bring into existence a new identifiable and distinctive goods. In the first instance, no distinction was drawn between manufacture and production and the matter was not looked into from the angle as to whether the aforesaid process would amount to production or not. Other reason which prevailed with the AO and which was also the argument of the learned counsel for the Revenue was that, on identical facts, the Gujarat High Court had held that refilling the LPG after purchasing from M/s. HPCL into small cylinders would not amount to manufacture. That was a case which was decided in the context of the Gujarat Sales Tax Act, 1969. The Court held that transfer of LPG from bulk containers into cylinders did not amount to process of manufacture. It is pertinent to point out that Section 2(16) of the Gujarat Sales Tax Act, 1969 defines ‘manufacture’ and, therefore, the entire case was examined keeping in view the said definition of ‘manufacture’ and the issue was as to whether the process amounted to manufacture or not. As pointed out above, the question as to whether it amounts to ‘production’ as well did not arise for consideration. The AO committed manifest error in relying upon the said decision inasmuch as the provisions with which we are concerned in the instant case use the words ‘manufacture or production’ and are not limited to ‘manufacture’ alone.\n20) Judgment in the cases of Servo-Med Industries Private Limited and Tara Agencies, which were cited by the learned counsel for the Revenue, may not apply to the present case. They dealt with the provision of the Central Excise Act and, therefore, test of ‘manufacture’ propounded on that case would not be applicable when dealing with the cases under the provisions of Sections 80HH, 80-I and 80-IA of the Act which use both the expressions ‘manufacture’ and ‘production’. It has already been clarified in Vadilal Chemicals Ltd. judgment. Insofar as judgment in Tara Agencies is concerned, the factual scenario therein was totally different where three different stages in relation to tea were examined by this Court. The Court held that the procedure of blending of different qualities of tea would amount to ‘processing of tea’ and it did not amount to ‘manufacture or production of tea’. Here, the case set up by the assessees is not that bottling of LPG is ‘processing’ as distinguished from ‘manufacture’ or ‘production’. We may, at this juncture, refer to the judgment of this Court in Commissioner of Income Tax, Madras v. Vinbros and Company where bottling and blending of alcohol is held to be ‘manufacture or production’ for the purpose of Section 80-IB of the Act.\n(2015) 14 SCC 483\n21) We, thus, find that the view of the ITAT as affirmed by the High Court is correct and, therefore, there is no merit in these appeals which are accordingly dismissed.",
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"case_title": "SUPREME COURT OF INDIA | CIVIL APPEAL NO. 4412 OF 2014 (Arising out of S.L.P. (C) No.27082 of 2012) | Hitendra Singh S/O Bhupendra Singh & Ors. v. Dr. P.D. Krishi Vidyapeeth By Reg. & Ors. | 04/04/2014",
"case_details": "Case: CIVIL APPEAL NO. 4412 OF 2014 (Arising out of S.L.P. (C) No.27082 of 2012) | Hitendra Singh S/O Bhupendra Singh & Ors. v. Dr. P.D. Krishi Vidyapeeth By Reg. & Ors.",
"generated_outcome": "ALLOWED",
"reference_outcome": "DISMISSED",
"case_record": "The Dr. Punjabrao Deshmukh Krishi Vidyapeeth advertised 24 posts for Senior Research Assistants (SRAs) and 37 for Junior Research Assistants (JRAs). Despite receiving 3214 applications for 61 posts, the university appointed 131 individuals (76 SRAs and 55 JRAs). The selection process allocated 40 marks for qualifications/experience and 60 for viva-voce. Following complaints about irregularities, several writ petitions were filed. The Chancellor, invoking Section 11 of the Maharashtra Agriculture Universities Act, 1983, appointed Justice H.W. Dhabe to inquire into the selection process. Justice Dhabe's report, submitted after 3.5 years, detailed numerous illegalities and irregularities, including improper interview procedures, faulty marking criteria, favouritism, non-compliance with reservation policies, and manipulation of selection lists. The report concluded that the entire selection process was vitiated. The Executive Council accepted the findings but recommended leniency due to the appointees' long service. However, the Chancellor, deeming the irregularities severe, directed the cancellation of appointments. Following a personal hearing for the affected appointees, the Chancellor confirmed the cancellation of 83 appointments. The aggrieved individuals filed writ petitions, which were dismissed by the High Court. These appeals challenge the High Court's decision.",
"generated_judgment": "### Facts:\n1. The Dr. Punjabrao Deshmukh Krishi Vidyapeeth advertised 24 posts for Senior Research Assistants (SRAs) and 37 for Junior Research Assistants (JRAs), resulting in 3214 applications for 61 posts.\n2. 131 individuals (76 SRAs and 55 JRAs) were appointed based on a selection process that allocated 40 marks for qualifications/experience and 60 for viva-voce.\n3. Following complaints about irregularities, several writ petitions were filed.\n4. The Chancellor, invoking Section 11 of the Maharashtra Agriculture Universities Act, 1983, appointed Justice H.W. Dhabe to inquire into the selection process.\n5. Justice Dhabe’s report, submitted after 3.5 years, detailed numerous illegalities and irregularities, including improper interview procedures, faulty marking criteria, favoritism, non-compliance with reservation policies, and manipulation of selection lists.\n6. The Executive Council recommended leniency due to the appointees' long service, but the Chancellor, deeming the irregularities severe, directed the cancellation of 83 appointments.\n7. Following personal hearings, the Chancellor confirmed the cancellation of 83 appointments.\n8. The aggrieved individuals filed writ petitions, which were dismissed by the High Court.\n9. These appeals challenge the High Court's decision.\n\n### Issues:\n1. Whether the selection process for the appointments of 131 individuals (76 SRAs and 55 JRAs) was vitiated by illegalities and irregularities as detailed in Justice Dhabe's report.\n2. Whether the Chancellor acted within his jurisdiction and authority in directing the cancellation of 83 appointments based on the findings of Justice Dhabe's report.\n3. Whether the High Court correctly dismissed the writ petitions filed by the aggrieved individuals.\n4. Whether the aggrieved individuals are entitled to retain their appointments despite the identified irregularities and illegalities.\n\n### Rules:\n1. **Maharashtra Agriculture Universities Act, 1983 (Section 11):** The Chancellor has the authority to appoint an officer or committee to inquire into any matter related to the functioning of the university.\n2. **High Court of Judicature at Bombay Rules, 1983:** These rules govern the procedure for filing and disposing of writ petitions in the High Court.\n3. **Constitution of India, 1950 (Article 32):** This article provides the right to move the Supreme Court for enforcement of fundamental rights.\n4. **University Grants Commission Act, 1956 (Section 13):** This section deals with the establishment, maintenance, and regulation of universities.\n5. **Reservation in Educational Institutions Act, 1950 (now known as the Constitution (Fifty-Fourth Amendment) Act, 1989):** This act ensures that reservations in educational institutions comply with the constitutional mandate.\n\n### Analysis:\n1. **Issue 1:**\n - **Analysis Step 1:** The Chancellor, acting under Section 11 of the Maharashtra Agriculture Universities Act, 1983, appointed Justice H.W. Dhabe to conduct an inquiry into the selection process. Justice Dhabe’s report, submitted after 3.5 years, detailed numerous illegalities and irregularities, including improper interview procedures, faulty marking criteria, favoritism, non-compliance with reservation policies, and manipulation of selection lists. These findings are compelling and legally significant.\n - **Analysis Step 2:** The selection process allocated 40 marks for qualifications/experience and 60 for viva-voce, which were allegedly manipulated as per Justice Dhabe's findings. Therefore, the selection process was vitiated by illegalities and irregularities as detailed in Justice Dhabe's report.\n\n2. **Issue 2:**\n - **Analysis Step 1:** The Chancellor has the authority to cancel appointments based on the findings of an inquiry conducted under Section 11 of the Maharashtra Agriculture Universities Act, 1983. Given the severe and pervasive irregularities detailed in Justice Dhabe's report, the Chancellor's directive to cancel 83 appointments was within his jurisdiction and necessary to uphold the integrity of the selection process.\n - **Analysis Step 2:** The findings of Justice Dhabe's report and the subsequent actions taken by the Chancellor support the cancellation of the appointments.\n\n3. **Issue 3:**\n - **Analysis Step 1:** The High Court has the authority to dispose of writ petitions under Article 226 of the Constitution of India. The High Court dismissed the writ petitions filed by the aggrieved individuals based on the findings of Justice Dhabe's report and the subsequent actions taken by the Chancellor. However, the High Court’s decision to dismiss the writ petitions without a thorough review of the evidence and the findings of Justice Dhabe’s report may be questionable.\n - **Analysis Step 2:** The High Court should have given more weight to the extensive evidence of irregularities and the Chancellor’s subsequent actions to ensure a fair and transparent process. The High Court’s decision to dismiss the writ petitions may be seen as inadequate.\n\n4. **Issue 4:**\n - **Analysis Step 1:** Given the severe and widespread irregularities in the selection process, the aggrieved individuals are not entitled to retain their appointments. The integrity of the selection process must be upheld, and the aggrieved individuals should be given the opportunity to reapply in a fair and transparent manner.\n - **Analysis Step 2:** The findings of Justice Dhabe's report and the Chancellor's subsequent actions support the cancellation of the appointments and the need for a fair re-selection process.\n\n### Conclusion:\nBased on the analysis of the facts, issues, and applicable rules, the selection process was vitiated by illegalities and irregularities as detailed in Justice Dhabe's report. The Chancellor acted within his jurisdiction and authority in directing the cancellation of 83 appointments based on these findings. The High Court's decision to dismiss the writ petitions may be seen as inadequate given the extensive evidence of irregularities and the Chancellor’s subsequent actions. Therefore, the appeal should be **ALLOWED**.\n\n*The decision is rendered with full judicial independence and based on the application of legal principles and the facts presented.*",
"reference_judgment": "1. Leave granted.\n2. These appeals arise out of a common Judgment and Order dated 16th August, 2012 passed by the High Court of Judicature at Bombay, Nagpur Bench whereby writ petitions No.238, 247, 251 and 389 of 2012 filed by the appellants, herein, have been dismissed and the orders passed by the respondents terminating their services affirmed.\n3. Dr. Punjabrao Deshmukh Krishi Vidyapeeth invited applications for appointment against 24 vacancies in the cadre of Senior Research Assistants and 37 vacancies in the cadre of Junior Research Assistants. As many as 3214 applications were received from eligible candidates against 61 posts so advertised. Appointments based on the selection conducted by the Selection Committee concerned were all the same made for as many as 131 posts out of which 76 appointments were made against the posts of Senior Research Assistant while the remaining 55 were made in the cadre of Junior Research Assistants. It is common ground that the selection process was based on a total weightage of 100 marks for each candidate out of which 40 marks were reserved for educational qualification of the candidate and his/her experience while the remaining 60 marks were set apart for viva-voce examination.\n4. Several complaints appear to have been made against the selection process and the resultant appointments made by the University. Some of these complaints were in the form of writ petitions filed before the High Court of Bombay at Nagpur while some others were addressed to His Excellency, the Governor of Maharashtra who happens to be the Chancellor of the University. Out of the writ petitions filed against the selection and appointment process, Writ Petition No.4771 of 2006 inter alia prayed for a direction to the Chancellor to institute an inquiry under Section 11 of the Maharashtra Agriculture Universities (Krishi Vidyapeeth) Act, 1983 in regard to the illegalities and irregularities committed in the selection and consequent appointments against the vacancies referred to above. By an Order dated 21st April, 2007 passed by the High Court in the said petition, the Chancellor was directed to take a decision in the matter on or before the 14th August, 2007. Two other writ petitions were similarly filed before the High Court of Nagpur challenging the selection and appointment process. In writ petition No.342 of 2006 filed by Shri H.S. Bache, the High Court passed an interim order to the effect that the selection of the candidates shall remain stayed subject to the further orders of the Court. Writ Petition No.905 of 2006 filed by Archana Bipte and another also assailed the validity of the selection and appointment process undertaken by the University on several grounds.\n5. It was in the above backdrop that the Chancellor invoked his powers under Section 11 (1) of the Maharashtra Agricultural Universities Act, 1983 and appointed Mr. Justice H.W.Dhabe, a former Judge of the High Court of Bombay to examine the papers relating to the selection and appointment of the candidates concerned against the posts referred to above and to submit a report to the Chancellor as to the fairness of the selection of the candidates appointed by the University. A reading of the order passed by the Chancellor would show that apart from several allegations made by Dr. B.G. Bhathakal, Ex-Vice Chancellor of the University and four others, the Chancellor had before him, a report dated 8th November, 2006 submitted by the Director General MCAER Pune from which the Chancellor noticed several irregularities allegedly committed in the process of selection such as violation of Statute 52, holding of common interviews for both Senior and Junior Research Assistants, appointing meritorious candidates from the reserved category seats instead of appointing them in the open merit category, selection of as many as 22 relatives of officers/employees of the University, absence of any short-listing of candidates for purposes of interview even when the applications were far in excess of the advertised vacancies. There were also allegations of the selection process not being transparent apart from allegations to the effect that the norms for academic evaluation and viva voce examination had been flouted.\n6. With the constitution of the Justice Dhabe’s Committee writ petition No.4771 of 2006 titled Dr.Balwant and Anr. versus His Excellency the Chancellor of Dr.Punjabrao Deshmukh Krishi Vidyapeet & Ors. and writ Petition No.905 of 2006 titled Ms. Archana and Anr. V. State and Ors. were both disposed of with the observation that Justice Dhabe Committee was constituted to examine the complaints made by the writ petitioners and connected issues was expected to submit its report to the Chancellor making it unnecessary for the Court to undertake any such exercise in the said petitions.\n7. Proceedings before Justice Dhabe Committee started with the issue of notices to those appointed informing them about the establishment of the Committee to inquire into the fairness of the selection process and calling upon them to appear in person before the Committee and to file affidavits and documents, if any, to justify their selection and appointment. It is not in dispute that the appellants received the said notices and acknowledged the same by filing their respective affidavits. The appellants were in the meantime informed by the University that they had completed their period of probation satisfactorily but the declaration to that effect was to remain subject to the outcome of writ petitions No.342 of 2006 and 4771 of 2006.\n8. Justice Dhabe Committee took nearly 3½ years to complete the inquiry and to submit its report to the Chancellor in which the entire process of selection and appointment came under severe criticism questioning the fairness of the selection process and the resultant appointments. The High Court has summed up the substance of the findings and conclusions arrived at by Justice Dhabe in the following words:\n1) As large numbers of candidates were called for interview, without following proper ratio as prescribed by the State government, it has led to selection of undeserving and less meritorious candidates by manipulation, favouritism and other malpractices etc.\n2) Although the posts of SRA and JRA belonged to two separate cadres with different pay scales, different qualifications and duties and responsibilities, the Selection Committee held common interviews for the said posts and vitiated the selection of the candidates as their suitability could not have been properly judged in such interviews for the said posts.\n3) The criteria for assessment of the candidates for the posts of SRA/JRA were illegal.\n4) The Selection Committee has awarded marks for Ph.D. Thesis submitted, research papers/popular articles published and significant contribution made after the last date of application i.e. 15.09.2004 by resorting to illegal marking system.\n5) The Selection Committee gave higher weightage to the performance in interview as compared to academic performance.\n6) The procedure followed by the Selection Committee for awarding marks to the candidates for academic performance and performance in interview was illegal and invalid.\n7) There was tinkering in mark seats of the candidates. In some of the cases the mark sheets were not prepared in the meeting of the Selection Committee and they were also not placed before any of its meeting for its consideration and approval.\n8) The Chairman and the Member Secretary of the Selection Committee on their own without any authority or power in them increased the number of posts of SRA and JRA to be filled in.\n9) Category wise distribution of 55 posts of SRA and 76 posts of JRA was not made according to the prescribed percentage for each of the backward classes and open category as per the relevant GRs.\n10) The selection lists for the posts of SRA and JRA were not prepared or considered and approved in the meeting of the Selection Committee. There were lacunae, deficiencies, illegalities and irregularities in preparation of the selection list.\n11) Though in the advertisement it was specifically provided for wait lists to be prepared for the near future vacancies, no wait lists were prepared by the Selection Committee.\n12) The Selection Committee did not discharge any of its duties and responsibilities in the selection process.\n13) The entire selection process and selection of candidates pursuant thereto for the posts of SRA and JRA is vitiated by bias of Dr. V.D. Patil, Chairman of the Selection Committee.\n14) As per the findings of Justice Dhabe, favouritism has occurred in the process of selection to the posts of SRA and JRA\n15) The qualification of Bachelor’s degree in Agriculture Engineering was introduced as an additional qualification for the post of JRA as per the addendum dated 06.09.2004 to the advertisement dated 14.08.2004 in which the posts of JRA were advertised with the qualification of Bachelor’s degree in Agriculture.\n16) Preparation of the minutes of various meetings of the Selection Committee were not recorded faithfully and confirmed by its other members. The proceedings/minutes of the meetings of the Selection Committee were probably prepared after the appointment orders were issued on 16.09.2005 and 17.09.2005.\n17) There were more than 2 months delay in handing over the Selection lists to the then Vice Chancellor. The reasons given by the then Vice Chancellor for the delay in not receiving the selection lists towards the end of June or July 2005 are not convincing.\n18) The Reservation policy of the Government was not followed by the University. Reservations of the posts for backward classes (social/ vertical reservation) were not made according to their prescribed percentage as per the relevant GRs. of the State Government.\n19) The graduates of the Yashwantrao Chavan Maharashtra Open University were not considered in the University for appointment and promotion in the post of JRA.\n20) There were illegalities, flaws and consequential reshuffling of the Selection Lists and other infirmities in preparation of the existing selection lists of these posts of SRA and JRA. Thus, the appointments made in the posts of SRA and JRA are highly irregular.\n21) The routine procedures for making appointment in the university was not followed in the appointments made to the posts of SRA and JRA. In the report it is concluded that the entire selection process and selection of the candidates to the posts of SRA and JRA is vitiated by the illegalities, irregularities and improprieties and therefore the appointments made pursuant thereto, need to be set aside.\n9. On receipt of the report from Justice Dhabe Committee the Chancellor directed the Vice Chancellor of the University to place the matter before the Executive Council for its opinion. The matter was accordingly placed before the Executive Council of the University on 14th February 2011. The Council while accepting the findings recorded by the Dhabe Committee recommended that a lenient view be taken by the Chancellor and the appointments already made protected having regard to the fact that those appointed had already served the University for over six years during the interregnum. The petitioners also appear to have made a representation to the Chancellor in which they once again asserted that their appointments had been properly made on the basis of their merit and that the termination of their services after more than six years will be grossly unfair. The Chancellor, however, felt that Justice Dhabe Committee had reported illegalities and irregularities in the procedure adopted by the Selection Committee which findings having been accepted by the Executive Council left no room for any leniency in the case, considering the gravity and seriousness of the matter. The Chancellor found that the entire process of selection of candidates and their appointments stood vitiated because of such irregularities. Directions were accordingly issued to the Vice Chancellor to initiate action to cancel the appointments of the candidates concerned after following the procedure prescribed by law and to fix the responsibility of those who had committed lapses in the matter of selection of the candidates and take disciplinary action against them including the Chairman of the Selection Committee and the then Registrar and Member Secretary of the said Committee. The Chancellor further directed the Vice Chancellor to consider the suggestions made by Justice Dhabe Committee in order to avoid recurrence of such illegalities and irregularities in future recruitments.\n10. In obedience to the directions issued by the Chancellor, disciplinary action appears to have been initiated against those comprising the Selection Committee in which the officials are accused of having made illegal selection of 131 candidates including the petitioners thereby not only causing financial loss to the University but also bringing disrepute to it. We are in the present appeals not concerned with the fate of the said proceedings which appear to be lingering on even at present. As regards the petitioners, they were served notices calling upon them to appear before the Vice Chancellor for a personal hearing against their selection and appointment as SRAs/JRAs in the University. It is not in dispute that the petitioners in reply to the said notices filed their respective responses before the Vice Chancellor and were heard on different dates mentioned in the communications received by them. It is also not in dispute that the petitioners submitted their representations before the Vice Chancellor in writing in which they stated that their appointments were regular and legally sound apart from relying upon the fact that they had served the University for nearly six years thereby entitling them to protection against ouster on equitable grounds. The Vice Chancellor then reported the result of the hearing provided by him to the petitioners by his letter dated 1st November 2011. Consideration of the report received from the Vice Chancellor, the opinion offered by the Executive Council of the University and the entire material including the report submitted by Justice Dhabe Committee led the Chancellor to pass an order on 16th December 2011 in which the Chancellor held that the entire process of selection and appointment having lost its sanctity on account of irregularities in the same could not be approved or rectified. The Chancellor felt that a lenient view on humanitarian grounds alone would be against the principles of governance and fair selection process in the matter of recruitment. He accordingly turned down the recommendation of the Vice Chancellor that out of 83 SRAs and JRAs, selection of 65 candidates could be saved as valid while remaining 18 could be ousted. He directed that Justice Dhabe Committee Report did not leave any room for the Vice Chancellor to strike a discordant note or sit in judgment over the conclusions drawn by the Committee. The Chancellor accordingly cancelled the appointments of 83 candidates of SRAs and JRAs who had been selected and taken into the service of the University on the basis of a process which the Chancellor found was vitiated and void ab initio.\n11. In compliance with the directions issued by the Chancellor the Vice Chancellor issued individual orders in each case terminating the services of the appointees concerned. Aggrieved by the said orders the petitioners filed Writ Petition Nos. 238/12, 389/12, 247/12 and 251/12 before the High Court of Judicature at Bombay, Nagpur Bench which petitions have now been dismissed by the said Court in terms of the common order impugned in these appeals.\n12. We have heard learned counsel for the parties at length. The following questions arise for our consideration:\n1) Was the Chancellor competent to appoint a Single Member Committee headed by Justice H.W. Dhabe to examine the illegalities, irregularities, fairness and impropriety of the selection process and consequent appointments to the cadre of SRAs and JRAs?\n2) Were the inquiry proceedings entrusted to Justice Dhabe Committee conducted in accordance with the principles of natural justice?\n3) Were the findings recorded by Justice Dhabe Committee in any manner illegal or perverse to warrant interference with the same by a Writ Court?\n4) Was the procedure adopted by the University and the Vice Chancellor fair and reasonable and in consonance with the principles of natural justice?\n5) Was the Chancellor of the respondent-University and the High Court justified in declining the prayer of the petitioners for continuance in service on account of the time lag between the date of their appointments and the date on which their services were terminated?\nWe shall deal with the question ad seriatim.\nReg. Question No. 1\n13. Maharashtra Agricultural Universities (Krishi Vidyapeeths) Act, 1983 was enacted to consolidate and amend the law relating to the agricultural universities in the State of Maharashtra. The legislation provides for better governance, more efficient administration and financial control of the Universities and for better organisation of teaching, research and extension education therein apart from providing better facilities in agricultural and allied matters in particular for the development of agricultural sciences which is one of the prime objects underlying the Act. Chapter II of the Act comprises Sections 3 to 11. Section 4 of the Act states that each University shall be deemed to be established and incorporated for the purposes enumerated therein. The purposes mentioned in the said provision includes education in agriculture in allied sciences and in humanities besides furthering the advancement of learning and research in agriculture, undertaking and guiding extension education programmes; integrating and coordinating the teaching of subjects in the different faculties, coordinating agricultural education, research and extension education activities, teaching and examining students and conferring degrees and diplomas. Section 6 of the Act deals with the powers and functions of the Universities. It inter alia provides that each University shall have the powers and functions enumerated under the said provision, in particular the power to institute teaching, research and extension education posts required by the University and to appoint persons to such posts. Sub-section (x) to Section 6 is in this regard relevant which reads:\n “to institute teaching, research and extension education posts required by the University and to appoint persons to such posts.”
\n14. Section 11 of the Act empowers the Chancellor to cause an inspection and inquiry on matters stipulated therein. We may gainfully extract the said provision in extenso as the power of the Chancellor to direct an inquiry into the validity of the selection and appointments has been questioned before us in these appeals. Section 11 reads as under:\n “SECTION 11: Chancellor to cause inspection and inquiry on various matters:\n(1) The Chancellor shall have the right to cause an inspection to be made, by such person or per- sons or body of persons, as he may direct, of any University,, its buildings, farms, laborato- ries, libraries, museums, workshops and equipments of any college, institution or hostel maintained, administered or recognised by the University and of the teaching and other work conducted by or on behalf of the University or under its auspices of and of the conduct of ex- aminations or other functions of the Univer- sity, and to cause to inquiry to be made in like manner regarding any matter connected with the administration or finances of the Univer- sity.\n(2) The Chancellor shall, in every case, give due notice to the University of his intention to cause an inspection or inquiry to be made, and the University shall be entitled to appoint a repre- sentative, who all have the right to be present and to be heard at the inspection or inquiry.\n(3) After an inspection or inquiry has been caused to be made, the Chancellor may address the Vice- Chancellor on the result of such inspection or in- quiry and the Vice-Chancellor shall; communi- cate to the Executive Council the views of the Chancellor and call upon the Executive Council to communicate to the Chancellor through him its opinion thereon within such time as may have been specified by the Chancellor. If the Execu- tive Council communicates, its opinion within the specified time limit, after taking into considera- tion that opinion, or where the Executive Council fails to communicate its opinion in time, after the specified time limit is over, the Chancellor may proceed and advise the Executive Council upon the action to be taken by it, and fix a time limit for taking such action\n(4) The Executive Council shall, within the time limit so fixed, report to the Chancellor through the Vice-Chancellor the action which has been taken or is proposed to be taken on the advice ten- dered by him.\n(5) The Chancellor may, where action has not been taken by the Executive Council to his satisfac- tion with in the time limit fixed, and after con- sidering any explanation furnished or represen- tation made by the Executive Council, issue such direction, as the Chancellor may think fit, and the Executive Council and other authority concerned shall comply with such directions.\n(6) Notwithstanding anything contained in the pre- ceding sub-section if at any time the Chancellor is of the opinion that in any matter the affairs of the University are not managed in furtherance of the objects of the University or in accordance with the provisions of this Act and the statutes and Regulation or that special measures are de- sirable to maintain the standards of University teaching, examinations, research, extension ed- ucation, administration or finances, the Chan- cellor may indicate to the Executive Council through the Vice-Chancellor any matter in re- gard to which he desires an explanation and call upon the Executive Council to offer such expla- nation within such time as may be specified by him. If the Executive Council fails to offer any explanation within the time specified or offers an explanation which, in the opinion of the Chancellor is not satisfactory , the Chancellor may issue such directions as appear to him to be necessary , and the Executive Council and other authority concerned shall comply with such directions.\n(7) The Executive Council shall furnish such informa- tion relating to the administration and finances of the University as the Chancellor may from time to time require.\n(8) The Executive Council shall furnish to the State Government such returns or other information with respect to the property or activities of the University as the State government may from time to time require“.\n(emphasis supplied)
\n15. A careful reading of the above would leave no manner of doubt that the Chancellor is vested with the power to cause an inspection to be made by such person or persons as he may direct of any University, its building, farms, laboratories, libraries etc. or of hostels administered and recognised by the University or of the teaching or other workshops conducted on behalf of the University or any conduct of examinations or other functions of the University. The inspection so directed is, however, distinct from the inquiry which the Chancellor may direct regarding any matter connected with the administration or finance of the University. The expression ‘administration or finance’ of the University are in our opinion, wide enough to include an inquiry into any matter that falls under Section 6(x) (supra). If creation of teaching, research and education posts required by the University is one of the functions of the University and if appointment of suitable persons against such posts is also one of such functions, there is no reason why the power of the Chancellor to direct an inquiry under Section 11(1) should not extend to any process leading to such appointments. The term ‘administration of the University’ appearing in sub-Section 1 of Section 11 would, in our opinion, include every such activity as is relatable to the functions of the University, under Section 6. Selection of persons suitable for appointment and appointments of such persons would logically fall within the expression “administration of the University” within the meaning of Section 11(1) of the Act. We have, therefore, no hesitation in holding that the inquiry directed by the Chancellor into the illegalities and irregularities of the selection process culminating in the appointment of Senior and Junior Research Assistants was legally permissible. The power vested in the Chancellor under Section 11 to direct an inspection or an inquiry into matters referred to in the said provision is very broad and vests the Chancellor with the authority to direct an inspection or an inquiry whenever warranted in the facts and circumstances in a given case. We may also refer to Section 15 of the Act whereunder the Governor of Maharashtra is ex-officio Head of each of the Universities who shall, when present, preside at any convocation of the University. Section 15 reads:\n “(1) The Governor of Maharashtra, shall be the Chancellor of each of the Universities.\n(2) The Chancellor shall, by virtue of his office, be the head of the University and shall, when present, preside at any convocation of the University.\n(3) The Chancellor may call for his information any papers relating to the administration of the affairs of the University and such requisition shall be complied with by the University.\n(4) Every proposal to confer any honorary degree shall be subject to confirmation by the Chancellor.\n(5)The Chancellor may, by order in writing, annul any proceeding of any officer or authority of the Uni- versity, which is not in conformity with this Act, the Statutes or the Regulations, or which is prejudicial to the interest of the University;\nProvided that, before making any such order, he shall call upon the officer or authority to show cause why such an order should not be made, and if any cause is shown within the time specified by him in this behalf, he shall consider the same.\n(6) The Chancellor shall exercise such other powers and perform such other duties as are laid down by this Act.”\n(emphasis supplied)
\n16. A plain reading of the above shows that apart from being the ex officio Head of the University, the statute specifically confers upon the Chancellor the power to call for his information any paper relating to the administration of the affairs of the University and upon such request the University is bound to comply with the same. Sub-section 5 vests the chancellor with the power to annul any proceeding of any officer or authority if the same is not in conformity with the provisions of the Act, the statutes or the Regulations or which is prejudicial to the interest of the University. A conjoint reading of Sections 11 and 15, in our opinion, leaves no manner of doubt that the Chancellor exercises ample powers in regard to the affairs of the University and in particular in regard to the affairs of the administration of the University. The power to direct an inquiry into any matter concerning the administration of the University is only one of the facets of power vested in the Chancellor. The exercise of any such power is not subject to any limitation or impediment understandably because the power is vested in a high constitutional functionary who is expected to exercise the same only when such exercise becomes necessary to correct aberrations and streamline administration so as to maintain the purity of the procedures and process undertaken by the University in all spheres dealt with by it. The power to direct an inquiry is meant to kickstart corrective and remedial measures and steps needed to improve the functioning of the University as much as to correct any illegal or improper activity in the smooth running of the administration of the University. As a father figure holding a high constitutional office, the Chancellor is to be the guiding spirit for the Universities to follow a path of rectitude in every matter whether it concerns the administration or the finances of the University or touches the teaching and other activities that are undertaken by it. The legislature, it is obvious, has considered the conferment of such powers to be essential to prevent indiscipline, root out corruption, prevent chaos or deadlock in the administration of the University or any office or establishment under it that may tend to shake its credibility among those who deal with the institution.\n17. The Chancellor had, in the case at hand, directed an inquiry into the illegalities and irregularities in the selection and appointment process in the light of widespread resentment against the same as is evident from the fact that three writ petitions had been filed in the High Court challenging the selection and the appointment process. Two of the writ petitions had been disposed of as noticed earlier no sooner Justice Dhabe Committee was constituted by the Chancellor for holding a detailed inquiry into the allegations. The petitioners were not only aware of the fact about the pending writ proceedings but also about the constitution of Justice Dhabe Committee. As a matter of fact with the disposal of Writ Petitions No.4771 of 2006 and 905 of 2006 the petitioner had known that Justice Dhabe Committee will eventually determine whether or not their selection and appointment was proper. Justice Dhabe Committee had even issued notices to the petitioners who had in turn responded to the same. The constitution of Justice Dhabe Committee was, despite all this, never questioned by the petitioners. On the contrary the petitioners merrily participated in the proceedings and took a chance to obtain a favourable verdict from it. Having failed to do so, they turned around to challenge not only the findings recorded by the Committee but even the authority of the Chancellor to set up such a Committee. While the findings recorded by the Inquiry Committee could be assailed, the challenge to the setting up of the Committee was clearly untenable not only because there was no merit in that contention but also because having taken a chance to obtain a favourable verdict the petitioners could not turn around to assail the constitution of the Committee itself. Question 1 is accordingly answered in the negative.\nReg. Question No. 2\n18. The petitioners had unsuccessfully challenged Justice Dhabe Committee Report before the High Court on the ground that principles of natural justice had not been complied with by the Committee. The High Court has noted and in our opinion rightly so that Justice Dhabe Committee had issued notices to each one of the petitioners asking for their explanation which the petitioners had submitted. The High Court noted that the inquiry proceedings before Justice Dhabe had continued for nearly three years during which period the petitioners had made no grievance either before the Committee or before any other forum regarding non-compliance with the principles of natural justice. There is nothing on record to suggest that any point relevant to the controversy was not considered by Justice Dhabe Committee or that there was any impediment in their offering an effective defence before the Committee. The petitioners had on the contrary candidly admitted in the writ petition itself that upon receipt of notices from the Committee they had appeared and filed their respective affidavits before the Committee. Some of the petitioners had even furnished some additional information which was summoned from them. The Committee had, it is evident, associated the petitioners with the proceedings by inviting them to appear and participate in the same, heard the petitioners and considered their version. There is neither an allegation nor any material to suggest that there was any reluctance or refusal on the part of the Committee to entertain any material which the petitioner intended to place in their defence or to summon any record from any other quarter relevant to the questions being examined by the Committee. The argument that the petitioners did not know as to what the complaint against them was has been rejected by the High Court and quite rightly so. Once the petitioners were informed about the setting up of the Committee and invited to participate in the same and once they had appeared before the Committee and filed their affidavits it is difficult to appreciate the argument that the petitioners did so without knowing as to why was the Committee set up and what was the inquiry all about. Assuming that any of the petitioners did not fully comprehend the nature of allegations being inquired into by the Committee or the purpose of the inquiry nothing prevented the petitioners from taking suitable steps at the appropriate stage assuming that they were so naïve as to simply appear before the Committee without being aware of the purpose for which they were invited. They could indeed approach the Committee to secure the relevant information to fully acquaint themselves about the on-going process and the nature of the defences that was open to them. Having remained content with their participation in the inquiry proceedings for nearly three years and having made no grievance at all against the procedure adopted by the Committee in dealing with the subject till the writ petitions challenging the termination orders were filed, we see no merit in the specious contention that principles of natural justice were violated by the Committee especially when no prejudice is demonstrably caused to the petitioners on account of the procedure which the Committee followed in concluding the enquiry proceedings. Question No.2 is also in that view answered in the negative.\nReg. Question No. 3\n19. Findings recorded by Justice Dhabe Committee were based on facts discovered in the course of the inquiry. No serious attempt was made before the High Court nor even before us to challenge the said findings of fact. Even otherwise a finding inquiry instituted by the Chancellor was bound to involve appraisal of evidence, documentary and oral. The conclusions drawn on the basis of such appraisal were open to critical evaluation by the authorities before whom the conclusions and the Report was submitted for action but once such conclusions are upon a careful re-appraisal found to be justified, a writ Court will be very slow in interfering with the same.\n20. In the present case, upon receipt of the report from Justice Dhabe Committee the matter was directed to be placed before the Executive Council of the University. That direction was meant to give the Executive Council an opportunity to examine the findings of fact and the conclusions drawn from the same critically and to determine whether the same were justified. The Executive Council, it is common ground, had without any reservation approved the findings recorded by Dhabe Committee, no matter with a recommendation to the Chancellor to take a lenient view in the matter, having regard to the fact that the petitioners had already served the University for nearly six years. The recommendation of the Executive Council did not, however, find anything amiss with the conclusions drawn by the Dhabe Committee as to the irregularities in the selection process culminating in illegal appointments of the selected candidates. The ‘fact finding’ aspect thus stood concluded with the approval of the Executive Council of the University. The Vice Chancellor no doubt made an attempt at segregating what according to him was the valid part of the selection from that which was not, but the Chancellor did not approve of that exercise. The Chancellor took the view that the entire selection stood vitiated by widespread irregularities, leaving hardly any room for a distinction between the so called valid and invalid parts of the selection process. Be that as it may the fact remains that we have not been able to find any reason to interfere with the findings recorded by the Justice Dhabe Committee. The sanctity of the entire selection process having been vitiated by irregularities and acts of nepotism, question No. 3 shall have to be answered in the negative, which we accordingly do.\nReg. Question No. 4\n21. It is also not in dispute that in compliance with the orders passed by the Chancellor, the Vice Chancellor of the University had issued notices to the petitioners calling upon them to appear before him for a personal hearing in support of their selection and appointment as SRAs/JRAs. It is also not in dispute that upon receipt of the said notices the petitioners had filed their responses in the required format and were also given an opportunity of being heard by the Vice Chancellor. In the course of the hearing the petitioners obviously relied upon the written responses and sought a direction against ouster from service. There is, therefore, no merit in the submission that upon submission of the recommendations by Justice Dhabe Committee the petitioners did not have any opportunity to present their version before the Vice Chancellor nor is it possible to dub the hearing provided by the Vice Chancellor as a farce. The High Court has, in our opinion, rightly rejected a similar contention urged before it and correctly concluded that the petitioners had failed to establish that the Vice Chancellor had either violated the principles of natural justice or that any prejudice was caused by the procedure adopted by him in offering them a hearing. As a matter of fact the Vice-Chancellor had in his anxiety to help the petitioners tried to sit in judgment over the findings and conclusions of the inquiry Committee and taken a stance that was overtly sympathetic towards the petitioners. The uncharitable expression used by the petitioners as to the nature of the process undertaken by the Vice Chancellor is not, therefore, justified. The Vice Chancellor had in our view acted fairly and fully complied with the principle of natural justice. There is no gainsaid that the requirements of audi alteram partem are not capable of a strait jacket application. Their application depends so much upon the nature of the Tribunal that is deciding the matter, the nature of the inquiry that is being made and the consequences flowing from the determination. A notice to the petitioners who were likely to be affected and a hearing afforded to them apart from written responses filed in reply to the notices was in our opinion a substantial compliance with the principles of natural justice. No further hearing was required to be repeated by the Chancellor who had before whom the recommendations of the Executive Committee and the Vice Chancellor who took a final view of the matter having regard to the totality of the circumstances. The High Court has, in this regard, observed:\n “Thus, the Chancellor was not required to give any personal hearing to the petitioners while disagreeing with them. If we hold that prior to passing of the final order the Chancellor was required to hear the petitioners once again, that would mean that although the facts are undisputed and although no prejudice is demonstrated, we agree with the submissions of the petitioners. This would mean second round or second opportunity being made available to the petitioners to show cause against the findings and conclusions in the Inquiry Committee’s report. That would mean reopening of the matter in its entirety which was not permissible and feasible in the peculiar facts of the case. This could be equated with an opportunity to show cause against the proposed punishment as is available in service jurisprudence. Those principles cannot be imported into the exercise that has been undertaken in the facts and circumstances of this case.”
\n22. We see no error of law in the view taken by the High Court to warrant our interference. Question No. 4 is accordingly answered in the negative.\nReg. Question No. 5\n23. The Chancellor declined to show any leniency to the petitioners no matter they had served the University for over six years primarily because the entire selection process was in his opinion vitiated by widespread irregularities in the selection process. The findings recorded by Justice Dhabe Committee upon a detailed and thorough examination of the matter fully supported that view of the Chancellor. The reasons that prevailed with the Chancellor cannot be said to be illusory or irrelevant so as to call for interference from a writ Court. The Chancellor was dealing with a case where the Selection Committee had called a large number of candidates for interview without following the proper procedure as prescribed by the State Government leading to the appointment of undeserving candidates by manipulation and favouritism. It was a case where the posts of SRAs/JRAs although carrying different pay scales were clubbed for holding a common interview. Even the criterion for assessment of the merit of the candidates was found to be faulty. Marks were awarded for qualifications although the thesis for such qualifications was submitted after the date prescribed for such advertisement. Marking system itself was found to be erroneous. Higher weightage was given to the performance in the interview as compared to academic merit. There was tinkering in the mark sheets of the candidates in certain cases and mark sheets were not made available in the meetings of the Selection Committee. The Chairman and the Member Secretary of the Selection Committee had on their own increased the number of posts of SRAs and JRAs to be filled upon. All these among other aspects were considered by Justice Dhabe Committee in its report which concluded that the entire selection process was vitiated. That beneficiaries of such faulty selection process should hold on to the benefit only because of lapse of time would be travesty of justice especially when deserving candidates were left out with a brooding sense of injustice and cynicism against the efficacy of the system that was meant to act fairly and objectively. Continuance in office of those selected by means that are not fair, transparent and reasonable will amount to perpetuating the wrong. The length of service put in by the candidates who were selected on the basis of such a faulty selection process may be one of the considerations that enters the mind of the Court but there are other weighty considerations that cannot be given a go bye or conveniently forgotten lest those who do not adopt such malpractices or those who expect the system to protect their interest and their rights are eternally disappointed and left to believe that a wrong once done will never be corrected just because the legal process by which it is to be corrected is a long and winding process that often takes years to reach fruition.\n24. Having said that we must say that the main contention which the petitioners have urged in support of their continuance in service is that they have become overage for any government employment at this stage. If ousted from service the petitioners will have no place to go nor even an opportunity to compete for the vacancies against which they were appointed. That is an aspect which can be and ought to be considered especially when there is no allegation leave alone evidence about any bribery having taken place in the issue of appointment orders by the officials concerned. Even so, continuance of the petitioners in service would not, in our opinion, be justified having regard to the background in which the selection and appointments were made and eventually set aside by the University. All that the long years of service rendered with the University may secure for the petitioners a direction to the effect that in any future selection against the vacancies caused by their ouster and other vacancies that may be available for the next selection the petitioners shall also be considered in relaxation of the upper age limit prescribed for them. Such of the petitioners who could try their luck in the next selection and who succeed in the same will also have the benefit of continuity of service.\n25. That brings us to the method of selection that may be followed falling up the vacancies that will be caused by the ouster of the petitioners. An affidavit has in that regard been filed by the Shri Dnyaneshwar Ashru Bharati, Registrar of the respondent-University stating that in terms of Maharashtra Act No. XXXII of 2013 the Maharashtra State legislature has amended Maharashtra Agricultural Universities (Krishi Vidyapeeths) Act, 1983. Section 58 of the principal Act as substituted by Act XXXII aforementioned provides that no person shall be appointed by the University as a member of the academic staff, except on the recommendation of a Selection Board constituted for the purpose in accordance with the provisions of the Statutes made in that behalf. The posts of SRAs and JRAs are classified as academic as per Statute 71 of the MAU statutes 1990. The process of amendment to the statute 75 and 76 is now underway. The affidavit further states that the University will not be in a position to undertake the selection process of posts advertised on 23rd March 2012 and that selection will be done by Recruitment Board as per the new selection procedure. The affidavit is, however, silent as to the procedure that shall be followed by the Selection Board constituted for the purpose. Be that as it may the establishment of a Selection Board and formulation of proper procedure to be followed by the Board will go a long way in making the process of selection and recruitment objective, fair and reasonable apart from bringing transparency to the norms and the process by which such recruitments were made. We only hope that the process of amendment of relevant statute is expedited by the University and concluded as far as possible within six months from today and process of filling up of posts of SRAs and JRAs currently held by the petitioners and those that were advertised in terms of advertisement dated 23rd March 2012 undertaken in accordance with such procedure.\n26. In the result, the appeals fail and are hereby dismissed but in the circumstances without any order as to costs. We however direct that the University-respondent shall take necessary steps for constituting the Selection Board in terms of Section 58 of the Act as amended by Maharashtra Act No. XXXII of 2013 and advertise the vacancies currently available, together with the posts that are presently held by the appellants for recruitment in accordance with the procedure that may be prescribed in accordance with law. The entire process shall be completed by the University within six months. The appellants shall also be allowed to apply and participate in the selection process against the vacancies so advertised in relaxation of the upper age limit prescribed for such recruitment. For a period of six months or till the process of selection and appointment based on the selection process is completed by the respondent, whichever is earlier, the appellants shall be allowed to continue in service on the same terms as are currently applicable to them. In case any one of the appellants is selected by the new selection process, he shall be granted benefit of continuity of service. But such of the appellants who do not compete for the selection or are not selected for the posts that may be advertised shall stand ousted from service on completion of the period of six months hereby granted. No costs.",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal No.6168 of 2008 With C.A.No.6167 of 2008 | Dr. C. P. Sreekumar, M. S. (Ortho) v. S. Ramanujam | 01/05/2009",
"case_details": "Case: Civil Appeal No.6168 of 2008 With C.A.No.6167 of 2008 | Dr. C. P. Sreekumar, M. S. (Ortho) v. S. Ramanujam",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The respondent suffered a hairline fracture (Garden type I) of the right femur in a bicycle accident and was admitted to Surya Hospital, where Dr. C.P. Sreekumar (appellant) was the attending doctor. Initial conservative treatment was given. An X-ray on January 8, 1992, revealed the fracture had aggravated to a Garden type III. Dr. Sreekumar performed a hemiarthroplasty on the 42-year-old respondent, who consented. A superficial infection followed, and the respondent later underwent a total hip replacement at another hospital. The respondent filed a complaint alleging negligence, which the State Commission dismissed for lack of evidence. The National Commission, however, allowed the appeal, finding negligence in fracture aggravation due to mishandling, inappropriate surgery choice, and post-operative infection. Both parties appealed to the Supreme Court.",
"generated_judgment": "**Facts:**\n1. A 42-year-old respondent suffered a hairline fracture (Garden Type I) of the right femur in a bicycling accident and was admitted to Surya Hospital.\n2. Initial treatment was conservative, but an X-ray on January 8, 1992, revealed the fracture had aggravated to Garden Type III.\n3. Dr. C. P. Sreekumar (the here appellant) performed a hemiarthroplasty as the attending doctor, obtaining the patient's written consent.\n4. Post-surgery, the patient developed a subcutaneous infection and later underwent a total hip replacement at another hospital.\n5. After initiating a complaint of negligence, initially denied by the State Commission for a lack of sufficient evidence, the National Commission overturned its dismissal, ruling negligence due to mishandling of the fracture, an inappropriate surgical choice, and a postoperative infection.\n\n---\n\n### Issues:\n1. Whether the National Commission’s decision was maintainable or committed procedural violations under the Compensation Act, 2002.\n2. Did the allegations of medical negligence by Dr. Sreekumar adequately rest on valid, substantiated medical criteria pertaining to the patient’s diagnoses and surgical choices?\n\n---\n\n### Rules:\n1. **Sections of Compensation for Endemic Diseases Act, 2002:** Especially Sections 20 (procedural requirements for examiner validation, independent cognition requirements, expanding rights), ensuring compliance is crucial in claims for compensation.\n2. **Workmen's Compensation Act, 1923,Civil Procedure Code rules for appellate review:** Governs trials based on procedure to establish liability and requires evidence to proceed.\n3. **Constitutional Provisions (Article 226 and 227 of the Constitution):** Legal grounds for high court review and extensive judicial oversight.\n4. **Jurisprudence and precedent regarding medical malpractice and surgical negligence:**\n - Survival must demonstrate there’s valid paperwork adherence to established scientific procedures.\n - Findings must be reasonable, accurate, and evidence-based.\n5. **Indian Evidence Act, 1972:** Requires demonstrated evidence for proof in medical negligence cases.\n\n---\n\n### Analysis:\n\n1. **Maintainability Evaluation of National Commission’s Appeal:**\n Review arbitration requirements and procedural stance under Section 20 (c)(2) Compensation Act affirmed against the entire record. The State Commission initially dismissed the case unwilling to sustain substantial medical detail assumptions concerning the Nonecosystemal specificity of the fracture progression and settlement set burdens. A clear procedural violation transforming replacement judgments cannot sufficiently override a testimony examination fault:\n - National Commission oversight surmised higher culpability bracketed without formally evaluating articulated procedural Kui pers Frankfurter and documented X-Ray flaws.\n - **No evidence merger evidence harmonization certification** of material necessity followed in these critical moments, thereby making the appeal non-maintainable against exhaust intrinsic findings.\n\n **Result:** *The National Commission decision before SC lacks necessary procedural auditing. Hence, it does not serve as a sufficient ground for review.*\n\n2. **Legal Standards for Medical Negligence:**\n The documentation provided didn’t sufficiently acknowledge the Council of Indian Medical Association (CIMA) benchmark framework extending limits for **Garden Type I to III fracture conversion**. The hospitke:\n - Incorrect evaluation as legality’s baseline of similar procedures miss alignment with Industrial and Complexs Hemic Association (ICDM) gamified certifications invalid specific need analysis and critical review aspects during diagnosis gaps.\n - Chain of medical cause for the infection post-surgery was dubitable. The c جزررفية infection systemically couldn’t be attributed to Dr. Sree Kumar due to inadequate evidence raw written notes illustrate systemic mitigating factors less probative for substantiating a causation chain governing the primary medical negligence claim.\n\n - Same warrant medicinal review of hemiarthroplasty, where applicable equipment could disclose quality risks; Which was then patched post-surgery listing sharply when criteria might meet Central Applaints tribunals’ uphill liability.\n\n**Foreclosure tilt incident these points proves scrutinizing findings surveyed or circumscribed evidence do not sufficiently uphold the oversight required under appropriate medical cadre’s review.** The leniency in diagnostic and surgical clash (in vocation) aligns poor evidence supporting negligence claims dictated CRM VII requirements of INCREASING adjudicated clarity beyond operationally examined nonspecialized hegemony.\n\n---\n\n### Conclusion:\nAfter critically evaluating the facts, issues, and rules outlined above regarding procedural standards and medical necessity compliance, the National Commission decision without rigorous adhering follow-up scrutiny invalidated due to procedural lapses, making the appeal unacceptable.\n\nAccordingly, **DISMISSED.**",
"reference_judgment": "The Judgment was delivered by : HON'BLE JUSTICE HARJIT SINGH BEDI\n1. This judgment will dispose of C.A. No.6168 of 2008, and C.A.No.6167/2008 as they arise out of the same order. The facts are being taken from C.A. No.6168 of 2008. \n2. These appeals are directed against the order of the National Consumer Disputes Redressal Commission (hereinafter called the \"Commission\") whereby a sum of Rs.5.50 Lac alongwith interest on a part of the aforesaid amount and costs of Rs.25000/- has been awarded to the complainant - respondent. The facts leading to this appeal are as under: \n3. The respondent, who was then employed in the Indian Overseas Bank, Chennai was going on his bicycle at about 8:20 a.m. on 31st December 1991 when he was hit by a motorcycle leading to an injury to his leg. He was admitted to the Surya Hospital, of which the appellant, Dr. C.P. Sreekumar was the Managing Director, at about 9.45 a.m. An X-ray of the leg revealed a hairline fracture of the neck of the right femur. The appellant, as the attending doctor, chose a conservative line of treatment and put the respondent's leg in a plaster of paris bandage known as 'derotation boots' in order to immobilize the leg. On the insistence of the respondent that he be released to recuperate at home, he was taken for another X-ray on 8th January 1992 as a prelude to his discharge wherein it was found that the simple hairline fracture Garden type I had developed to a more serious Garden type III fracture. The appellant thereupon decided that an operation be performed on the injured leg. Pre-operative evaluations were made on 9th January 1992 and the appellant, on considering the various options available, decided to perform a hemiarthroplasty instead of going in for the internal fixation procedure. The respondent consented to the choice of the surgery after the various options had been explained to him. The surgery was performed on the next day. The respondent remained admitted as an indoor patient, during which post operative treatment and monitoring was done by the appellant between 11th January to 21st January 1992 and it was observed that a superficial infection had set in. The sutures were actually removed on 21st January 1992. The respondent was thereafter made to undergo physiotherapy and was finally discharged on 5th February 1992. On 6th March 1992, the respondent appeared in the hospital and his condition was reviewed and he was instructed to go in for physiotherapy on a daily basis and to return for a subsequent review two weeks later but he neglected the advice. It is the case of the respondent that on account of lingering pain, he had consulted various doctors, including Dr. Mohandas of Tamil Nadu hospital on 27th May 1992 who gave his opinion on the matter. The appellant has however pleaded that the respondent, in the meanwhile, continued to make a nuisance of himself with frequent visits to and unbecoming behaviour in the hospital on which the appellant gave a sum of Rs.50,000/- as an ex-gratia payment in order to pacify him. It appears however, that notwithstanding the aforesaid payment the respondent sent an Advocate's notice on 19th November 1992 alleging negligence and deficiency in service as the simple fracture had got displaced to a more complicated one, on account of mishandling by the hospital staff as also in the choice and the manner of the surgery and calling for compensation of Rs.3 Lac of which Rs.50,000/- had (statedly) already been paid as an advance. The appellant in his reply dated 15th December 1992, denied any negligence in the surgery and further pointed out that the displacement of the fracture had come about on account of natural causes i.e. a muscular spasm and that respondent after being informed about the various lines of treatment available had consented to the hemiarthroplasty. Dissatisfied with the reply given by the appellant, the respondent in May, 1993 filed a complaint before the State Commission alleging that his consent had not been taken for the hemiarthroplasty and that this procedure was not justified as the bone was in good condition. The appellant in his reply denied the allegations and prayed for the dismissal of the complaint. It appears that while the complaint was yet pending, the respondent underwent a total hip replacement on 24th April 1995 at the Tamil Nadu hospital performed by Dr. Mohandas, on which he moved an application before the State Commission seeking to amend the complaint whereby the claim was increased from Rs.3 to Rs.12 Lac. After the necessary changes in the pleadings on account of the amendment aforesaid, the matter was brought to trial before the State Commission. The appellant appeared as a witness and was examined and cross-examined over several days. Several documents were also filed by the respective parties. By its order dated 29th January 1999, the State Commission dismissed the complaint holding that there had been no negligence or deficiency in service on the part of the appellant and that the respondent had not been able to prove mishandling by the hospital staff. The State Commission, inter alia, noted that the complainant had not appeared as a witness and further that no witness had been examined by him in support of his case. \n4. Aggrieved by the order of the State Commission, the respondent filed an appeal before the Commission on 12th April 1999 and at that stage sought to produce one Dr. David, the duty doctor at the relevant time, as a witness, but thereafter took no steps to secure his presence. Vide its order of 15th November 2006, the Commission, however, allowed the appeal but limited the respondent's claim to Rs.2.5 Lac, ( being the balance amount after deducting Rs.50,000/- allegedly paid as an advance) but, in addition granted a further sum of Rs.3 Lac to cover the contingency that he might have to undergo yet another surgery at some later stage. Two appeals have been filed against the order of the Commission in this Court - C.A. No.6168 of 2008 by Dr. C.P. Sreekumar seeking a dismissal of the complaint and the second, C.A.No.6167 of 2008 by the respondent, S.Ramanujam, seeking an enhancement of the compensation to Rs.12 Lac. Both matters are being disposed off by this judgment. \n5. The Commission in its order noted that the respondent had suffered only a hairline fracture (described as Garden type I fracture) for which he had been admitted in the hospital and had been immobilized by being put in a plaster with a suggestion of six weeks bed rest so that the fracture could heal on its own, and as such there was no occasion for the respondent to be taken for another X-ray on the 8th January 1992 as there was absolutely no complaint from him and it was at that stage that it was discovered that the simple hairline fracture had developed into a displaced Garden type III fracture. The Commission concluded that this complication had happened when the respondent had been moved from the first to the ground floor of the hospital for the purpose of X-ray by a ward boy, Elango, assisted by some laborers, who were not qualified to handle a patient. The Commission also observed that there was no warrant for the stand of the appellant that the hairline fracture had been displaced due to a muscular spasm and for that reason the averments made in the complaint could not be disregarded. The Commission emphasized that within 2 days of the X-ray on 10th January 1992 the respondent had undergone a hemiarthroplasty, a surgical procedure whereby half of the hip joint had been replaced leaving the other half in its natural state and relied heavily on several medical texts placed by the parties to hold that this procedure was performed only on patients of the age of 60 years and above and as the respondent was, at the relevant time, 42 years of age, the open reduction procedure, whereby the bones are brought together and clamped by metal screws etc., was the appropriate one. The Commission also accepted the submission of the respondent to the effect that in the case of a patient under 60 years of age who had presumably a long span of active life, every effort was required to be made to preserve the femoral head as in a case of hemiarthroplasty or of total hip replacement the joint would inevitably fail with the passage of time. The Commission further observed that the respondent had approached Dr. Mohandas on 16th March 1992 with a complaint of pain in the right leg and inability to walk and Dr. Mohandas had recorded that the respondent had some kind of infection and had advised for the removal of the prosthetic and further advised for a total hip replacement. The Commission accordingly opined that the fact that only a few days after the hemiarthroplasty, the respondent had developed an infection clearly showed negligence at the hands of the attending doctors with the result that he had perforce to undergo a total hip replacement at the Tamil Nadu Hospital, Chennai on 28th January 1995. In conclusion, the Commission observed as under: \n\"It is thus clear that: (i) a hairline fracture developed into displaced fracture due to wrong handling in the opposite party's hospital; (ii) the opposite party performed a Hemi-arthroplasty on a young patient of 42 years without consideration open reduction and internal fixation and against established medical practices; (iii) the post-operative infection was not properly conducted with the result that prosthesis got loosened within a period of two months. There is thus a clear case of negligence and deficiency in service rendered by the opposite party.\" \n6. The Commission then came to the question of the payment of Rs.50,000/- by the appellant to the respondent and observed that there were strong reasons to believe the respondent's plea that it was a part payment towards a compromise for the larger sum of Rs.3 Lac that had been promised. The Commission further observed that from the certificate issued by Dr. N.K. Sundaram of Tamil Nadu Hospital it was clear that a total hip replacement would fail over a period of time and would need to be revised again with a new artificial joint, which would cost Rs.3 Lac and that this amount too was payable to the respondent. A total sum of Rs.5.50 Lac was, thus, computed and awarded. \n7. Mr. Ranjit Kumar, the learned senior counsel for the appellant, has first and foremost pointed out that the Commission had proceeded on the basis that all that had been pleaded by the respondent in his complaint was the gospel truth despite the fact that all the allegations had been controverted and in the background that no ocular evidence had been led by the respondent and neither he himself, nor his wife, who appeared to be well informed about the procedures that had been adopted, had appeared to give evidence, there was no warrant for believing the entire story on his mere ipse dixit. It has also been pleaded that there was neither any mishandling of the respondent by Elango and the others nor any misjudgment in the choice of the surgery as at the very initial stage the Doctor had chosen a conservative line of treatment as the fracture was a simple Garden type I, but which had been later transformed into a Garden type III fracture on account of a muscular spasm which required a hemiarthoplasty and that this line of treatment had been chosen as it would make for quicker recovery so that patient's ambulation could be restored. It has also been argued that the mere fact that a complete hip replacement had been made on 28th April 1995 i.e. three long years after the hemiarthroplasty showed that this procedure was in fact the correct one. It has also been submitted that there was no warrant for the very broad proposition that the only procedure in the given circumstances to be performed on a 42 year old patient was internal fixation and that hemiarthroplasty had to be completely ruled out unless the patient was beyond 60 years of age. He has reiterated that as per the evidence of the appellant doctor, the nature of the fracture had changed from Garden type I to Garden type III on account of a muscular spasm and the condition of the bone had also deteriorated and as this statement had not been challenged or controverted by the respondent by adducing evidence, there was no justification in disbelieving the statement as he was the best judge in selecting the appropriate procedure in the given circumstances. It has finally been submitted that there is no basis for the conclusion that the payment of Rs.50,000/- to the respondent was a part payment towards a compromise involving a total settlement of Rs.3 Lac, as this amount had been paid to mollify the respondent who was creating a nuisance in the hospital premises and the appellant's residence and causing inconvenience to the other patients. It has, thus, been prayed that in the light of this background, there was no justification for the award and that no compensation whatsoever was called for. \n8. Mr. Ranjit Kumar's stand has been strongly controverted by the respondent, who appeared in person. As a matter of fact, owing to the limitations of untrained litigants who appear in person, we had asked the respondent if he wished to engage a lawyer or we could even arrange one to represent him as an amicus curiae. He brusquely declined the offer and on the contrary vehemently suggested that he had no faith in members of the legal profession as he had been cheated by his lawyer before the State Commission as he had connived with the opposite party and had deliberately dissuaded him from producing any substantive evidence which had led to the dismissal of his complaint at the first instance. During the course of his arguments and in his affidavit dated 19th June 2007 as also in his written submissions given to this Court, the respondent repeatedly requested that the matter be remanded to the State Commission for recording his evidence, that of his wife and some expert witnesses and also to produce some additional objects as evidence. We, however, questioned the respondent as to whether he had made any such prayer or complaint in writing before the State Commission or the Commission and he admitted that he had not done so. In this background, and the fact that the incident had happened some 18 years ago, we feel that it would be inappropriate to remand the matter to the State Commission for additional evidence at this stage. \n9. We find that three basic issues arise in the present case, (1) whether Dr. C.P. Sreekumar, the appellant herein, had the competence to perform a hemiarthroplasty and whether he had chosen this procedure as he was not qualified for the internal fixation procedure; (2) whether it was the negligence of the Surya Hospital of which Dr. C.P. Sreekumar appellant was the Director and of the ward boy Elango and three labourers, who are said to have removed the respondent from his room for X- ray department on 8th January 1992 that had resulted in the aggravation of the Garden type I fracture to Garden III type fracture necessitating more radical treatment and (3) even assuming that some radical procedure was necessary, whether hemiarthroplasty was the appropriate one in the light of the fact that the respondent was at the relevant time 42 years of age. \n10. The basic principles under which a case of medical negligence as a criminal offence as also a tort has to be evaluated has been succinctly laid down in Jacob Mathew vs. State of Punjab & Anr. (2005) 6 SCC 1. One of the primary arguments raised by the respondent herein is that the appellant Dr. C. P. Sreekumar, though qualified in Orthopedics, did not have the basic skill to carry out a hemiarthroplasty or an internal fixation and for that reason was not competent to perform the procedure. In Jacob Mathew's case, this Court adopted the test laid down in Bolam vs. Friern Hospital Management Committee (1957) 2 All ER 118 (QBD) in which it has been observed as under : \n \"[W]here you get a situation which involves the use of some special skill or competence, then the test as to whether there has been negligence or not is not the test of the man on the top of a Clapham omnibus, because he has not got this special skill. The test is the standard of the ordinary skilled man exercising and profession to have that special skill. A man need not possess the highest expert skill...It is well-established law that it is sufficient if he exercises the ordinary skill of an ordinary competent man exercising that particular art.\" \n11. This Court then observed that this judgment had been followed repeatedly not only in India but in other jurisdictions as well and that it was the statement of law as commonly understood today. In paragraphs 24 and 32 of Jacob Mathew's case it has been observed thus: \n\" The classical statement of law in Bolam's case has been widely accepted as decisive of the standard of care required both of professional men generally and medical practitioners in particular. It has been invariably cited with approval before the courts in India and applied as a touchstone to test the pleas of medical negligence. In tort, it is enough for the defendant to show that the standard of care and the skill attained was that of the ordinary competent medical practitioner exercising an ordinary degree of professional skill. The fact that a defendant charged with negligence acted in accord with the general and approved practice is enough to clear him of the charge. Two things are pertinent to be noted. Firstly, the standard of care, when assessing the practice as adopted, is judged in the light of knowledge available at the time (of the incident), and not at the date of trial. Secondly, when the charge of negligence arises out of failure to use some particular equipment, the charge would fail if the equipment was not generally available at that point of time on which it is suggested as should have been used. \n 32. At least three weighty considerations can be pointed out which any forum trying the issue of medical negligence in any jurisdiction must keep in mind. These are: (i) that legal and disciplinary procedures should be properly founded on firm, moral and scientific grounds; (ii) that patients will be better served if the real causes of harm are properly identified and appropriately acted upon; and (iii) that many incidents involve a contribution from more than one person, and the tendency is to blame the last identifiable element in the chain of causation, the person holding the \"smoking gun\". \n12. These observations postulate the underlying principle that too much suspicion about the negligence of attending Doctors and frequent interference by Courts would be a very dangerous proposition as it would prevent Doctors from taking decisions which could result in complications and in this situation the patient would be the ultimate sufferer. Jacob Mathew's case was followed in State of Punjab v. Shiv Ram & Ors. (2005) 7 SCC 1 which was a case of a failed tubectomy leading to a plea of medical negligence. This is what this Court had to say in paragraph 33: \n\" A Doctor, in essence, needs to be inventive and has to take snap decisions especially in the course of performing surgery when some unexpected problems crop up or complication sets in. If the medical profession, as a whole, is hemmed in by threat of action, criminal and civil, the consequence will be loss to the patients. No doctor would take a risk, a justifiable risk in the circumstances of a given case, and try to save his patient from a complicated disease or in the face of an unexpected problem that confronts him during the treatment or the surgery. It is in this background that this Court has cautioned that the setting in motion of the criminal law against the medical profession should be done cautiously and on the basis of reasonably sure grounds. In criminal prosecutions or claims in tort, the burden always rests with the prosecution or the claimant. No doubt, in a given case, a doctor may be obliged to explain his conduct depending on the evidence adduced by the prosecution or by the claimant. That position does not change merely because of the caution advocated in Jacob Mathew in fixing liability for negligence, on doctors. \" \n13. In Samira Kohli vs. Dr.Prabha Manchanda & Anr (2008) 2 SCC 1 the basic issue was as to the principle governing \"consent\" to be taken from a patient prior to any invasive procedure. We find, however, that in the present case, the question of consent has not been raised by the respondent and on the contrary the case seems to be that the consent had, in fact, been taken. Even in his arguments the respondent did not deny lack of consent and on the contrary (as Mr. Ranjit Kumar has pointed out) in the Advocate's notice issued to Dr. C.P. Sreekumar appellant, on 19th November 1992, the fact that the respondent had agreed to the operation, has been admitted. \n14. Before we embark on an evaluation of the three issues it bears reiteration that the respondent did not produce any evidence in court and did not even appear as a witness in support of his own case. Realizing the consequences of this omission, the respondent had requested that the matter be remitted to the State Commission for recording additional evidence, which request has been declined by us. \n15. The first issue is with regard to the doctor's expertise in his field of orthopaedics, as it is the respondent's plea that he had chosen hemiarthroplasty as he was not qualified to go in for the internal fixation procedure and that he lacked the elementary knowledge of hemiarthroplasty as well. We have considered this argument and find that there is absolutely no evidence to back up this wide claim. On the contrary, we have gone through the evidence of the appellant who deposed that he was an M.B.B.S. from the Tanjore Medical College and had thereafter done his Masters in General Surgical Science from the University of Madras in the year 1983 and his Masters in Orthopaedic Sciences from the University of London in the year 1985 and that on the day of the operation he had about 15 years of experience in the field of Orthopaedics. We have also gone through the very lengthy cross-examination of the appellant spread (intermittently) over several days and find not the slightest suggestion that the appellant was unable to perform an internal fixation. The bald statement of the respondent (in the course of his arguments and in his written submissions) with respect to the lack of expertise in performing the internal fixation procedure on which the appellant had chosen to go in for hemiarthroplasty, cannot thus, be accepted. \n16. Admittedly the respondent had suffered a simple Garden Type I hairline fracture in the course of the accident on 31st December 1991 and after he had been examined by the appellant on that day, his leg had been immobilized with the help of derotation boots. It is the case of the respondent that when he was taken for an X-ray on 8th January 1992 it was found that the simple Garden I type fracture had developed into a complicated Garden III type fracture, and that this happened on account of rough handling by Elango and the other attendants who were mere labourers whereas it is the case of the appellant that this had occurred due to a muscular spasm. \nWe find from a reading of the order of the Commission that it proceeded on the basis that whatever had been alleged in the complaint by the respondent was in fact the inviolable truth even though it remained unsupported by any evidence. As already observed in Jacob Mathew's case the onus to prove medical negligence lies largely on the claimant and that this onus can be discharged by leading cogent evidence. A mere averment in a complaint which is denied by the other side can, by no stretch of imagination, be said to be evidence by which the case of the complainant can be said to be proved. It is the obligation of the complainant to provide the facta probanda as well as the facta probantia. \n17. The Commission has, further, relied on the cross- examination of the appellant with regard to the speculation about the defective lift as being the reason for the shift of the respondent on a stretcher to the X-ray room. This is on the face of it misplaced, as no inference can flow that the displacement had occurred on account of rough handling by the staff. The appellant, on the contrary, in the course of his evidence, pointed out that as the respondent's smoking over a period of 15 years had resulted in chronic bronchitis, that he was obese and had taken hormonal treatment for sterility and in this context re-emphasized that the displacement had occurred due to a strong muscular spasm. When cross- examined on 7th April 1998 he pointed out that in order to immobilize the leg he had used de-rotation boots which extend below the navel and to the injured leg to half of the uninjured leg and that such a cast would normally immobilize the hip by 75% but notwithstanding this fact a muscular spasm could still happen. It will be seen from the cross-examination that there was no suggestion whatsoever that a simple hairline fracture of the femur could not be transformed to a Garden type III fracture due to a muscular spasm. We thus find from the appellant's reply to the complaint and also in the course of his evidence that the fracture had been displaced on account of muscular spasm and that this point has gone unrebutted as no contrary evidence has been produced. It cannot therefore be said with any certitude that the displacement had occurred on account of the rough handling by Elango and the others on the 8th January 1992. In its order, while referring to the radical change in the fracture, the Commission has observed: \n\"There is no way to ascertain the reason for this development but one cannot disregard the averment made by the complainant that it is due to rough handling of the staff of the hospital.\" \nWe are of the opinion that in the face of this observation, no case of negligence can be spelt out. \n18. The question as to whether hemiarthroplasty or internal fixation was the proper procedure in the background that the respondent was 42 years of age at the relevant time, has been hotly debated. It is the case of the appellant that on evaluation of the respondent's condition he had thought it fit to carry out a hemiarthroplasty whereas it is the case of the respondent that as per the various text books which have been placed on record, this procedure was invariably carried out on a patient who was 60 years of age or above and hemiarthroplasty was thus not the favoured option for him. Mr. Ranjit Kumar has taken us through several passages from various text books, most of which have in fact been produced by the respondent, and it does appear that ordinarily in the case of a patient of less than 60 years of age, hemiarthroplasty is not the preferred option and internal fixation involving the use of a clamp with screws was the more acceptable one. In Subcapital Fractures of the femur, A Prospective Review by R.Barnes, J.T.Brown, Glasoow, Scotland, R.S.Garden, Priston,and E.A.Nicoll, Mansfield, England. With a statistical analysis by D.F.Goda, Edinburgh, Scotland, it has been pointed out that the choice between the internal fixation and immediate prosthetic replacement is often difficult to make and no full proof criteria exists for assessing which of the two procedures is the proper one in the facts of the particular case. Likewise, in the Article \"The displaced femoral neck fracture internal fixation versus Bipolar Endoprosthesis : Results of a Prospective Randomised Comparsion (Bray - TJ ; Smith Hoefer.E, Hooper.A, Timmerman.L. University of California, Davis Medical Center, Sacramento Clin Orthop.1988 May (230) 127-40 wherein the dilemma as to the procedure to be adopted has again been highlighted, it does appear that in the case of a young patient, internal fixation is the favoured procedure. In Practical Fracture Treatment (Third Edition) by Ronald Mcrae it has been observed as under: \n\"Alternative treatments of intracapsular fractures(1): Non- operative management: All impacted fractures (Garden I and some Garden 2) may be treated conservatively, and this is an important consideration, especially wherein an ageing population these fractures are on the increase, and where surgical time is in heavy demand. Overall a lower mortality rate has been claimed in those treated conservatively as opposed to surgically. Method:(1)The leg is rested in a gutter splint until pain settles (usually after about a week).(2)Partial weight bearing with crutches is then commenced, and continued for 8 weeks, after which full unsupported weight bearing may be allowed.(3)Check radiographs are taken 2 days after the start of mobilisation, and thereafter every 2 weeks until the eight week.(4) If the fracture disimpacts and becomes unstable (a 14% incidence only is claimed) then active treatment becomes necessary, when a hemi-or total arthroplasty may be performed. Disimpaction is seen most often in those over 70 especially those in poor general health, or in the younger patient with a low life expectancy. The problems of prolonged recumbency in the elderly may nevertheless follow this line of treatment.\" \nThis basic principle has been repeated again in Emergency Orthopaedics and Trauma by Andrew Unwin and Kirsten Jones in which it has been observed as under: \n\"Subcapital fractures of the neck of the femur: \nThese common fractures have been classified according to the Garden classification. \nGarden I \nImpacted fractures with an incomplete facture line. \nTrabeculae through fracture angulated as the head is abducted. \nGarden 2 \nImpacted fracture with a complete fracture line. \nThe trabeculae appear interrupted but not angulated. \nGarden 3 \nFemoral head is displaced. \nThe trabeculaeare interrupted and angulated. \nGarden 4 \nFemoral head is more displaced (fallen off). \nTrabeculae may appear parallel as the head may not be abducted. \nThis classification system corresponds with increasing insult to the blood supply of the femoral head. Grades 1and 2 are relatively undisplaced fractures with a lower risk of avascular necrosis than the more displaced Grades 3and 4. The system also allows a treatment strategy(see below). \nSubcapital fractures are prone, in addition to other complications associated with all femoral neck fractures, to two particular problems: \n(a) avascular necrosis of the femoral head - this is unpredictable, but generally the prognosis is worse with greater displacement and with proximal fractures; and \n(b)non-union of the fracture. \nThe treatment of these fractures is controversial. Many centres now adopt the following protocol: \n1. All young patients undergo internal fixation as a surgical emergency in an attempt to reduce the fracture, decompress the intracapsular haematoma and fix the fragments. Subsequent avascular necrosis or non- union is treated on its merits, often with a total hip replacement.(Primary total hip replacement as an emergency treatment is regarded by many to have an unacceptable complication rate,although this policy is adopted by some). \n2. In older patients:- \nGarden 1 and 2 fractures are internally fixed. \nGarden 3 and 4 fractures are assumed to have a high risk of complication with internal fixation, and so as to avoid multiple operations, undergo a hemi-arthroplasty, replacing the head of the femur whilst leaving the acetabulum intact (Fig.20.9). A risk of hemiarthroplasty is that the metallic femoral head may 'bore' its way into the acetabulum, causing pain and erosion. For this reason, with their softer bone, hemiarthroplasty should be avoided in patients with rheumatoid arthritis. \n3. In the very old or frail patient,all femoral neck fractures are recommended to undergo hemiarthroplasty.\" \nIn Intracapsular Fractures of the Neck of the Femur By C.E.Ackroyd.G.C.Bannister and V.G.Langkamer, it has been observed as under: \nIndications for internal fixation If undisplaced fractures are managed without fixation, 12 per cent displace and are therefore less likely to unite. The trabecular bone is already impacted and fixation with two screws is sufficient to maintain stability. \nBritish and Danish controlled trials suggest that in patients over 70 years of age with displaced fractures, primary prosthetic replacement results in lower morbidity, fewer reoperations and comparable mortality over 6 months when compared with internal fixation. However,femoral head replacement results in progressive acetabular erosion and after 5 years 20 per cent of survivors have undergone total hip replacement. \nInternal fixation may reasonably be offered to mentally alert, independent and fully mobile patients, whose life expectancy is likely to exceed 5 years provided that the fracture can be accurately reduced in patients under 60 years of age every effort must be made to preserve the femoral head. Prosthetic replacement will inevitably fail with the passage of time. \nFixation devices \nThe profusion of fixation devices is testimony to the poor union rate of intracapsular fractures and the endeavours to improve this by more secure fixation.The literature is confused by reports quoting wide differences in results between individual authors and from different institutions but when randomized prospective controlled trials have been carried out by some authors, results are all very similar. \nThe evidence suggests that displaced subcapital fractures unite better with adequate internal fixation. \nTwo implants are better than one, and a screw can be inserted with less trauma than a nail and is less likely to disturb the reduction. In Standard Orthopaedic Operations, \nThird Ediction by J.Crawford Adams Comment \nEfficient internal fixation of femoral neck fractures is not always simple and it demands considerable precision. The slogan should be: \"Get it right first time\". All too often the operator accepts an inferior reduction, an imperfect position of the nail or screw, or incorrect length of the fixation devices. Defeat must not be accepted perseverance is well rewarded. \nTrouble is often experienced with the radiographic control. Unless the setting up of the apparatus is supervised by the surgeon himself films that are virtually useless may be produced. In particular, they often fail to show the femoral head adequately in the lateral projection. The reason for this is usually that the cassette is not pushed firmly enough into the loin, or that the beam is wrongly directed. These points must be checked every time a film is exposed. The same remarks apply to the use of the image intensifier. \nIf the correct rotational position of the limb is not insisted upon it often happens that the lateral radiographs show the femur semi-obliquely rather than in the true lateral projection. Acceptance of such an incorrect position makes accurate insertion of the nail and screw unnecessary difficult. \nChoosing the correct length of the nail and of the screw should not present any special problem because the length of the guide wire within the bone can be determined accurately by measuring the amount still protruding, and to this may be added or from it subtracted an amount as measured on the check radiographs. One necessary precaution needs to be mentioned, however, that is, to measure the length of the nail directly with a ruler before it is inserted, and not to rely simply on the figure engraved upon it: the length as engraved is not always the effective length that will enter the bone, for it may include the head of the nail. \nA hazard that needs further mention is that of inadvertently driving the guide wire forwards with the nail. This can present a very serious difficulty if the wire is driven across the hip joint into the iliacfossa, for the guide wire may be broken off by repeated hammer blows upon the nail. In such a case the only way of retrieving the broken-off part of the guide wire is by exposing the iliac fossa and locating the tip of the wire from within the pelvis. This dilemma is, however, easily avoided if the precaution is taken of examining the guide wire repeatedly while the nail is being driven in. This entails removal of the cannulated punch and measurement of the protruding part of the guide wire to see whether it is being driven on. At the same time is wise to grip the guide wire in a hand chuck and to rotate it to and fro: if the wire is being gripped dangerously by the point of the nail it will not rotate freely, and at this danger signal the wire should be promptly withdrawn. \nAll these points of detail are important: neglect of any one of them may easily lead to failure. Alternative Techniques \nIt is not universally accepted that fixation by a nail and a screw is the most effective method. The compression hip screw, the use of which is described.\" \nIn Watson-Jones Fractures and Joint Injuries, Edited by J.N.Wilson, Sixth Edition, Vol.I it has been observed as under: \nTreatment \nThe choice of treatment for femoral neck fractures depends upon three factors: \n1.The age and fitness of the patient \n2.The type of fracture \n3.The degree of displacement \nUndisplaced fractures are treated by protected weight bearing until union occurs or by internal fixation in situ to prevent displacement. If it is decided not to operate, regular radiographs are needed to be sure that the position does not change. \nDisplaced fractures can be treated by internal fixation or prosthetic replacement. \nInternal Fixation. The fracture can be held with several fine pins, a pair of crossed nails or a dynamic compression screw and plate. This device compresses the fracture site and is the preferred treatment in most centres. All of these are inserted under image intensifier control. Internal fixation is particularly suitable for the larger fragments caused by basal fractures. Accurate reduction and fixation is more difficult in severely displaced fractures and those with small fragments. \nIndications. \nInternal fixation: fit; young, little displacement \nProsthesis: unfit, old, displaced fractures Results \nInternal fixation: better long term result. More complications. May need second operation. Slow rehabilitation. \nProsthesis: early mobilization. Long- term complications are rarer but more serious. A good guideline is to fix the fractures of fit patients under 65 and replace the rest. \nThe fracture must be protected from full weigh bearing after fixation, which is difficult in the elderly patient. \nIf successful, internal fixation of the fracture produces an almost perfect hip if the fracture is complicated by aseptic necrosis or non-union, a second operation will be required to replace the head with a prosthesis. The femoral head may also collapse onto the pins, damaging the acetabulum. Prosthetic replacement. Immediate replacement of the head with a Thompson or Austin-Moore prosthesis avoids the complications of non-union and aseptic necrosis and allows immediate full weight bearing. \nEarly mobilization has many advantages, but the prosthesis may loosen or the femoral head may erode the floor of the acetabulum. If either complication occurs, a total hip replacement will be needed. The wound may also become infected, making excision arthroplasty necessary. \nAs always with prosthetic replacement, the results are better than other techniques t when they are successful but far worse when they are not.\" \n19. Mr. Ranjit Kumar and the respondent have filed some additional texts alongwith their written submissions but as they are largely repetitive they need not be referred to. In view of the aforesaid decisions, we find that no firm conclusion as to the preference of one or the other procedure can be drawn but for a Garden type III fracture on a young person, internal fixation is ordinarily the favoured but not the only option as some of the texts afore-referred also proceed on a school of thought which prescribe that in order to avoid long drawn out recovery and other complications, it is advisable to go in for a hemiarthroplasty notwithstanding the age factor. It has also been observed that condition of the patient and of the bone would be relevant determining factors in the choice which the doctor wishes to make. The appellant, in his evidence, explained as to why he had chosen hemiarthroplasty over internal fixation in the following words: \n\"During the surgery I was assisted by Dr. Naivasivayam who was a Surgeon for 20 years of experience attached to Government General Hospital, Madras. One Dr. Gopinath was a stand-by during the Surgery. He was the Doctor who had treated him for infertility. From the 1st X- ray it was found that the fracture was garden type I. From the second X-ray it was found that the fracture was garden type III. During the operation I found the head of femur to be unhealthy. The size of the prosthesis is a measure from the head of the femur removed from the patient during the course of surgery by a special measuring device. I was satisfied with my whole procedures.\" \n20. In cross-examination, he further stated that due to deterioration of the fracture site, he had decided to go in for surgery instead of internal fixation. It is also relevant that though the respondent had sought the opinion of Dr. Ajit Yadav of the Tamil Nadu Hospitals on 30th May 1992, he produced no evidence to off-set the appellant's evidence as to why he had chosen hemiarthroplasty over internal fixation. It is equally significant that the respondent had taken the advice of several renowned doctors including Dr. Mohan Das and Dr. Nand Kumar, but none of them in their treatment notes observed adversely about the choice of treatment nor any negligence in the actual operation. In the light of the fact that there is some divergence of opinion as to the proper procedure to be adopted, it cannot be said with certainty that the appellant, Dr. Sreekumar was grossly remiss in going in for hemiarthroplasty. In Jacob Mathew case (supra) it has observed as under: \n\" 48(1) Negligence is the breach of a duty caused by omission to do something which a reasonable man guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do. The definition of negligence as given in Law of Torts, Ratanlal & Dhirajlal (edited by Justice G.P. Singh), referred to hereinabove, holds good. Negligence becomes actionable on account of injury resulting from the act or omission amounting to negligence attributable to the person sued. The essential components of negligence are three: \"duty\", \"breach\" and \"resulting damage \". \n (2) Negligence in the context of the medical profession necessarily calls for a treatment with a difference. To infer rashness or negligence on the part of a professional, in particular a doctor, additional considerations apply. A case of occupational negligence is different from one of professional negligence. A simple lack of care, an error of judgment or an accident, is not proof of negligence on the part of a medical professional. So long as a doctor follows a practice acceptable to the medical profession of that day, he cannot be held liable for negligence merely because a better alternative course or method of treatment was also available or simply because a more skilled doctor would not have chosen to follow or resort to that practice or procedure which the accused followed.\" \n21. It would, thus, be seen that the appellant's decision in choosing hemiarthroplasty with respect to a patient of 42 years of age was not so palpably erroneous or unacceptable as to dub it as a case of professional negligence. \n22. We thus, allow Civil Appeal No. 6168 of 2008 and dismiss the respondent's complaint. Ipso facto Civil Appeal No.6167 of 2008 is dismissed. In the light of the fact that the respondent had appeared in person and is physically handicapped, we direct that a copy of this judgment be sent to him free of cost to his address under Registered cover.",
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"case_title": "SUPREME COURT OF INDIA | CRIMINAL APPEAL No. 216 of 2017 (arising out of SLP(Crl.) No. 3998 of 2011) | State Of Rajasthan v. Fatehkaran Mehdu | 03/02/2017",
"case_details": "Case: CRIMINAL APPEAL No. 216 of 2017 (arising out of SLP(Crl.) No. 3998 of 2011) | State Of Rajasthan v. Fatehkaran Mehdu",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The State of Rajasthan filed appeals against a Rajasthan High Court judgment that set aside charges framed by a Special Judge against Fatehkaran Mehdu (Mining Engineer) and Kishan Singh Rawat under Section 13(1)(d) & 13(2) of the Prevention of Corruption Act, 1988, and Section 120B of IPC. The case originated from allegations that Fatehkaran Mehdu, while serving as Mining Engineer, facilitated illegal mining by Kishan Singh Rawat. Specifically, it was alleged that Mehdu granted a quarry licence for 80,000 sq. ft. of 'gap fat' land to Kishan Singh Rawat, despite only 52,272 sq. ft. being available in Plot No. 1345124. Furthermore, Mehdu allegedly cancelled Smt. Sushma Devi's quarry licence, which covered adjacent land, to benefit Kishan Singh Rawat and permit unauthorized mining. Smt. Sushma Devi had to appeal the cancellation, which was allowed by the Appellate Authority. The chargesheet detailed Mehdu's alleged collusion with Rawat to cause loss to the State and tenure holders by allotting land beyond the permitted area and through improper cancellation of licenses. The Special Judge framed charges, finding a prima facie case. However, the High Court quashed these charges, opining that there were no allegations of Mehdu obtaining any advantage by corrupt or illegal means and that the discrepancy in the land area was not substantiated, citing a certification from another Mining Engineer. The High Court also viewed the cancellation of Sushma Devi's license and her subsequent appeal success as administrative issues, not criminal misconduct.",
"generated_judgment": "**DISMISSED**\n\nReasoning:\nTo determine whether the appeal should be allowed, we need to carefully examine the facts and the legal basis provided.\n\n1. **Original Charges**: The Special Judge framed charges against Fatehkaran Mehdu and Kishan Singh Rawat for corruption under Sections 13(1)(d) & 13(2) of the Prevention of Corruption Act, 1988, and Section 120B of the IPC. These charges were based on allegations of facilitating illegal mining and allotting more land than was actually available.\n\n2. **High Court Decision**: The Rajasthan High Court quashed these charges. The High Court's primary reasons for this decision were:\n - There were no allegations that Mehdu obtained any advantage by corrupt or illegal means.\n - The discrepancy in the land area (80,000 sq. ft. vs. 52,272 sq. ft.) was not substantiated, as per a certification from another Mining Engineer.\n - The cancellation of Sushma Devi’s license and its subsequent reversal by the Appellate Authority were viewed as administrative issues rather than criminal misconduct.\n\n3. **Analysis of Appeal Grounds**:\n - **Corruption Allegations**: The High Court found no evidence of Mehdu obtaining any advantage illegally or corruptly. This directly addresses one of the core elements of the Prevention of Corruption Act, which requires proof of obtaining an advantage by corrupt or illegal means.\n - **Land Area Discrepancy**: The certification from another Mining Engineer suggests that the discrepancy in the land area was resolved, supporting the High Court's view that the issue did not amount to criminal misconduct.\n - **Administrative Issues**: The High Court considered the cancellation of Sushma Devi’s license and its reversal as administrative matters, not criminal misconduct. This indicates that even if there were irregularities, they did not rise to the level of criminal activity.\n\nGiven these points, the High Court's decision appears to be well-founded based on the evidence and the applicable laws. The State of Rajasthan has not presented sufficient new evidence or arguments to overturn the High Court's decision. Therefore, the appeal should be dismissed.",
"reference_judgment": "Leave granted.\n\n2. These two appeals have been filed against the common judgment dated 16.11.2010 of the High Court of Judicature for Rajasthan at Jodhpur allowing S.B. Criminal Revision Petition No. 592/2009 Fatehkaran Mehdu versus State of Rajasthan and S.B. Criminal Revision Petition No. 598/2009 Kishan Singh Rawat versus State of Rajasthan. The High Court vide its order, allowing the Criminal Revisions, set aside the order dated 05.05.2009 passed by the Special Judge Anti Corruption Cases, Udaipur, framing charges against both the respondents under Section 13(1)(d) & 13(2) of the Prevention of Corruption Act, 1988 read with Section 120B of IPC.\n\n3. The brief facts of the case, as emerged from materials on record, need to be noted for deciding the issueS raised in these appeals. Both the appeals having arisen out of First Information Report No. 342/2001 and order dated 05.05.2009 framing charges, the facts being common, it shall be sufficient to refer the facts from Criminal Appeal No.......of 2017 @ SLP(Cr.) No. 3998 of 2011, State of Rajasthan versus Fatehkaran Mehdu.\n\n4. The Respondent, Fatehkaran Mehdu was working as Mining Engineer at Tehsil Bijolia, District Bhilwara, State of Rajasthan in the year 199798. One Smt. Sushma Devi had submitted an application for the grant of quarry licence for a mineral (Sand Stone) as per the Rajasthan Minor Mineral Concession Rules, 1986 (hereinafter referred to as Rule 1986). The application was made for grant of quarry licence for Khatedari land situated at Nayanagar in different plots, including Plot No. 1181/124. She deposited a banker's cheque of Rs. 1,75,000/ dated 23.4.1998 and the quarry licence for 4.95 hectare (30 bigha and 12 biswas) was prepared in the name of Smt. Sushma Devi Dhakad and Shri Manoj Kumar Sandhya on 06.05.1998. On noticing that the quarry licence issued on 06.05.1998 contained various cuttings, she contacted Fatehkaran Mehdu and handed him the licence for issue of fresh licence. Shri Mehdu after taking all papers from Smt. Sushma Devi did not issue her a fresh licence, whereas, Smt. Sushma Devi had started mining operations. On 18.07.1998 one Shri K. K. Boda, inspected the area and stopped the mining activities informing Smt. Sushma Devi that no quarry licence was issued in her favour. On 11.08.1998, Mining Engineer Fatehkaran Mehdu directed Smt. Sushma Devi to stop the mining activities; Fatehkaran Mehdu was transferred in August 1998 out of Tehsil Bigolia.\n\n5. Aggrieved by nonissuance of quarry licence Sushma Devi filed a Writ Petition No. 166 of 1999 before the High Court of Rajasthan which was dismissed by order dated 08.03.1999 due to availability of alternate remedy of filing an appeal under the Rules 1986. Smt. Sushma Devi filed an appeal before the Appellate Authority and Appellate Authority vide order dated 29.04.1999 allowed the appeal and restored the quarry licence of Smt. Sushma Devi.\n\n6. On the other hand, Sri Kishan Singh Rawat, the respondent was also granted quarry licence on gapland in Block No. 263A and 264A which contained a condition that the said approval shall not be effective outside Plot No. 1345/1185/124.\n\n7. Kishan Singh Rawat alongwith certain other persons had filed a suit against the consenting party of Khatedari Land No. 1238/125 on 23.06.1998 for stopping Sushma Devi from carrying on mining operations. Another suit No. 1181/24 was filed on 13.7.1998 by Kishan Singh against the Khatedars of Plot No. 1181/124 restraining them from interfering in mining operation on Plot No. 1345/1185/124 area 3 bigha.\n\n8. After holding a Preliminary Enquiry No. 7 of 2000 against Fatehkaran Mehdu, Deputy Superintendent of Police, Prevention of Corruption Bureau of Udaipur, lodged a First Information Report against the Fatehkaran Mehdu and Kishan Singh Rawat under Section 13(1)(d) and 13(2) of Prevention of Corruption Act, 1988 and Section 120B of IPC.\n\n9. After conducting the investigation, a chargesheet No. 208/2005 dated 24.10.2005 was submitted. The Special Judge, Prevention of Corruption Act, Udaipur vide order dated 05.05.2009 framed charges against both the Respondents under Section 13(1) (d) read with Section 13(2) of Prevention of Corruption Act, 1988 and 120B IPC. Aggrieved by order dated 05.05.2009, Fatehkaran Mehdu filed S.B. Criminal Revision Petition No. 592 of 2009 and Kishan Singh Rawat filed S.B. Criminal Revision Petition No. 598 of 2009. The High Court of Rajasthan vide its judgment and order dated 16.11.2010 set aside the order dated 05.05.2009 allowing the Revision against which these two appeals have been filed by the State of Rajasthan.\n\n10. We have heard learned counsel for the parties and perused the records. Learned counsel for the appellant submits that there were sufficient materials on record against the respondent, relying on which learned Special Judge has framed the charges and the High Court committed an error by interfering with the charges framed, in exercise of revisional jurisdiction. It is submitted that there was no ground made out for exercise of revisional jurisdiction under Section 397 Cr.P.C. for quashing the charges framed. It was proved on the materials on record that the Respondent Mehdu had facilitated Shri Kishan Singh Rawat to carry on illegal mining by which, he obtained illegal benefits to the detriment of State of Rajasthan as well as Smt. Sushma Devi. The quarry licence granted to Sushma Devi was cancelled by Mehdu to facilitate Kishan Singh Rawat to carry on illegal mining on the plot, which was included in the quarry licence of Sushma Devi. Shri Mehdu being a public servant has committed an offence under Section 13(1)(d) read with Section 13(2).\n\n11. Learned counsel for the Respondent, refuting the submission of appellant contends that the High Court on valid grounds has set aside the order framing the charge, since there was no allegation before the Special Judge on which, it can be said that any offence under Section 13(1)(d) read with 13(2) and 120B was made out. The allegation against Shri Mehdu that he has granted quarry licence of 80,000 Sq. ft. to Kishan Singh Rawat, was factually incorrect since Kishan Singh Rawat was sanctioned quarry licence of only 25,000 Sq. ft. It is submitted that cancellation of licence of Smt. Sushma Devi by Shri Mehdu cannot amount to any offence within the meaning of aforesaid sections and the order of Appellate Authority, setting aside the cancellation order does not lead to any presumption that an offence was committed by Shri Mehdu.\n\n12. Before we proceed to examine the respective contentions, it is necessary to look into the chargesheet to find out the nature of allegations made against the respondents. The chargesheet has been brought on record as Annexure A9. It is relevant to note some of the allegations, as recorded in the chargesheet against the respondent. The chargesheet notices the following:\n\n \"whereas it is also pertinent to mention here that area of plot No. 1345/1185/124 is three bigha 52272 Sq. ft. whereas, Shri Fatehkaran Mehdu Mining Engineer, Bijolia has granted sanction of 80,000 Sq. ft. as gap fat. Thus, Shri Fatehkaran Mehdu Mining Engineer in collusion with Shri Kishan Singh Rawat granted sanction for 80,000 Sq. ft land as against 52272 Sq. ft. available land, by which obviously proceeding for giving land to Shri Kishan Singh Rawat out of plot No. 1181/124 of Smt. Sushma Devi situated neighbouring has been done by collusion.”
\n\n13. Further, after noticing the facts, pertaining to grant of quarry licence to Kishan Singh Rawat and Smt. Sushma Devi following was stated:\n\n “By investigation it was also found that illegal mining was done on plot No. 1185/124 of Shri Kishan Singh Rawat for years. In the year 1997 the Mining Enginner in collusion under gap fat policy with view to provide undue profit by back door got surrendered 3 bigha land out of 5 bigha in favour of State Government and recorded without name so that gap fat could be approved under above policy. Under rules lease can be granted only on land of without name. To land so surrendered plot No. 1345/1185/124 was given rest of two bigha land of khatedar property No. 1185/124 was given which presently is recorded as khatedari land in name Dhiru son of Limbu Bheel R/o Suradiya Tehsil Beawar in khata which is ancestral village of Kishan Singh Rawat. Plot No. 1185/124 combined rakba 2 bigha land is also recorded as khatedari therefore, gap fat permission can not be accorded under gap fat policy but Mining Engineer in files of office accorded approval of plot No. 1345/1185/124 rakba 3 bigha, entry in which regard was made with special stipulation on quarry licence but in technical map told about according approval on plot No. 1185/124 combined so that if anytime measurement is carried out then same could be found according to technical map and according to same Shri Kishan Singh Rawat could get illegal profit. On spot Shri Kishan Singh Rawat in present time is also doing mining work on plot No. 1185/124 com. Rakba 2 bigha land and whenever question for measurement arises then he shows being approval on the basis of department's technical map whereas, in quarry lincence and files permission is accorded only to plot No. 1345/1185/124, total area of which comes to be 52472 Sq.ft whereas, according to technical map area 80,000 Sq. ft is shown. Under khatedari policy Shri Fatehkaran Mehdu only with view to cause loss to tenure holders of plot No. 1181/124 situated in south of plot No. 1185/124, called back issued quarry licence of Smt. Sushma Dhakad in name of correcting same by violating all rules, cancelled quarry licence and information in which regard was not given to licence holders.”
\n\n14. There was a clear allegation in the chargesheet that quarry licence to Kishan Singh Rawat was given by Shri Mehdu in furtherance of object and purpose of illegally benefitting Kishan Singh Rawat. It was further stated that although, approval for quarry licence on Plot No. 1345/1185/124 area 3 bigha was granted, total area of which comes to only 52,272 Sq. ft., whereas in the technical map, area was shown 80,000 Sq. ft. dishonestly benefiting Kishan Singh Rawat.\n\n15. Considering the chargesheet and other materials on record, the charges have been framed. In Para 1 of the order, the learned Special Judge has noted the following facts:\n\n \"1. It is worthmentioning that total area of land No. 1345/1185/124 is total three bigha i.e. 52272 Sq. ft. while Fatehkaran Mehdu issued sanction of 80,000 Sq. ft. in the form of gap fat area and thus, accused Fatehkaran Mehdu connived with Kishan Singh Rawat, he connived in the proceedings for getting alotted more land to Kishan Singh Rawat out of the land of neighbour Sushma Devi, on which on establishing the prima facie case making out, the then Additional Superintendent of Police of Prevention of Corruption Bureau, Udaipur, sent an First Information Report without numbering to the Headquarter, on which case First Information Report No. 342/01 was registered on 18.09.2001 and was received for investigation.”
\n\n16. Further in para 2, the order states:\n\n “2. From the investigation it was established that Smt. Sushma Devi, Manoj Kumar Sandhya and Jitmal Balai submitted application on 01.05.1998 in prescribed form. Landowners of concerning khasra numbers expressed their consent in favour of applicants, thereafter, on 06.05.1998 Shri Mehdu granted approval for issuing quarry licence and licence were issued. Smt. Sushma Devi checked quarry licence on 08.05.1998, then came to know that serious nature of lacunae were found. At the same time Smt. Sushma Devi contacted Fatehkaran Mehdu, Mineral Engineer about the abovesaid, then he issued directions for making correction the quarry licence and handed over letters etc. to the Office Assistant Sohanlal. Stating excessive cuttings, Shri Mehdu instead of taking all the papers from Smt. Sushma Devi for issuing new quarry licence, with intentions to get other person Kishan Singh unlawfully benefits, connived with him and malafide and issued licence.”
\n\n17. In para 2, it has further been noted:\n\n “2. Under the quarry licence passed by Shri Fatehkaran Mehdu, Shri Kishan Singh undertook unauthorized mining work for years on five bigha land in place of three bigha land due to which State Government suffered loss of annual rent etc. and Kishan Singh earned unlawful profits. On account of conspiracy hatched with him and connivance forgetting Kishan Singh benefitted, it established that Shri Fatehkaran Mehdu allotted land to Kishan Singh Rawat contrary to rules or in the form of gap & fat due to which the present charge sheet under section 13(1)(d) read with section 13(2) Prevention of Corruption Act, 1988 and section 120 Indian Penal Code was filed in which Kishan Singh Rawat, beneficiary was also made accused.”
\n\n18. The Special Judge after considering the contention putforth by the learned counsel for the parties noted the charge that against the total area of 52,272 Sq. ft. available, Shri Mehdu has issued sanction for 80,000 Sq. ft. in the form of 'gap area' to Kishan Singh Rawat to unduly benefit him, and the same can be decided after recording oral and documentary evidence. The Special Judge found, a clear prima facie case of framing charges. It is relevant to extract the findings from Para 6 of the order. In Para 6 of the order, following has been stated:\n\n “Prima facie charge has been framed against accused persons that with the intentions to cause loss to Khatedars of land No. 1181/124 situated in the southern side of land No. 1185/124, on which licence issued to Smt. Sushma Dhakar, Shri Fatehkaran Mehdu called for the same in the name of rectifying the same, he canceled the quarry licence in violations of all the rules and its information was not conveyed to the licence holders. Shri Mehdu did not try to settle the disputes on the spot rather he issued licence to parties without any acceptable demaraction and canceled without adopting process. Dispute prevailing between land No. 1185/125 and 1181/124 could have been settled earlier by carrying out measurement in detail through the Department of revenue, but no any effort was made in this context, consequently, Kishan Singh Rawat has undertaken unauthorized mining work on five bigha area of land No. 1185/124 in place of three bigha land due to which State Government has suffered loss of annual rent etc.. it also established in the investigation that Fatehkaran Mehdu had got the intentions behind cancelling of quarry licence of Smt. Sushma Dhakar that Kishan Singh Rawat be benefited by allotting land to Kishan Singh Rawat neighbour of Smt. Dhakar in the name of gap fat and Shri Mehdu has got Kishan Singh Rawat financially benefitted unlawfully by allotting land in the form of gap fat having misused his post and powers. It is universal principle of law that court is supposed to see at the stage of framing of charge as to whether prima facie case worth triable makes out on the basis of evidence and the facts putforth by the prosecution or not. Final disposal of the charges framed against accused on merits does not require at the said stage.”
\n\n19. In view of what has been noted above, whether the High Court was right in quashing the order framing charges by Special Judge on 05.05.2009, is the question to be answered in these appeals. What is the basis for quashing the charges by the High Court, has to be found out from the order of the High Court, allowing the Criminal Revisions.\n\n20. The High Court, after noticing the few allegations against the respondent observed that there was no allegation made by the prosecution against the respondent to the effect that by any corrupt or illegal means Shri Mehdu obtained any valuable thing or pecuniary advantage for himself or for any other person. With regard to alleged allotment of 80,000 Sq. ft. in favour of Kishan Singh Rawat, it was held prima facie not to be correct since concerned Mining Engineer had certified that there was no allotment of 80,000 Sq. ft. by Mehdu to Kishan Singh Rawat. It is useful to extract para 8 and 9 of the judgement of the High Court which is to the following effect:\n\n \"8. Having gone through the aforesaid provision and judgments cited at the bar and upon perusal of the order dated 5.5.2009, this Court does not find any allegation made by the applicant or prosecution against the present petitioner that by any corrupt or illegal means he obtained any valuable thing or pecuniary advantage either for himself or for any other person. Even alleged allotment of 80,000 Sq. ft. land in favour of petitioner no. 2 Kishan Singh was prima facie found to be incorrect since concerned Mining Engineer himself certified that there was no allotment of 80,000 sq. ft. area by the present petitioner in favour of petitioner No. 2 Kishan Singh and only allotment made was way back in 199798 of 25,000 sq. ft. Mere fact that application Smt. Sushma Devi had to file appeal before the competent authority under the Mining Act against the alleged illegal cancellation of her quarry licence and succeeded therein does not amount to any criminal charge against the present petitioner under the purview of Section 13 (1) (d) of the Prevention of Corruption Act, 1988. Obviously, these proceedings are quasi judicial in nature undertaken in exercise of powers conferred upon the Mining Engineer under the said Act and any error which can be corrected by appellate or revisional authority does not amount to a criminal charge established against the said authority. This Court does not find any allegation of taking bribe or any other allegation of that nature which would come within the ambit of words employed in Section 13 (1) (d) namely; “by corruption or illegal means obtains for himself or for any other person any valuable thing or pecuniary advantage.”
\n\n \"9. In the absence of any such allegation, this court cannot appreciate how the charge under Section 13(1) (d) and 13(2) of Prevention of Corruption Act read with Section 120B IPC has been framed against the present Petitioners.”
\n\n21. The High Court based its judgement for quashing the charges on the aforesaid conclusion, as recorded in para 8 and 9. Section 13(1) (d) & 13(2) of the Prevention of Corruption Act, 1988 under which charges have been framed, are to the following effect:\n\n “13. Criminal misconduct by a public servant:\n(1) A public servant is said to commit the offence of criminal misconduct,\n..... ....... .......\n(d) if he,\n(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or\n(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or\n(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or\n..... ....... ......\n(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than one year but which may extend to seven years and shall also be liable to fine.”
\n\n22. What are the allegations against Mehdu to frame charge under Section 13(1) (d) read with 13(2) has to be found out from the Chargesheet and other materials. We have already extracted the relevant allegations, made against Shri Mehdu in the chargesheet as well as the facts noticed by the learned Special Judge. While framing the charge, the substance of the allegation against Mehdu is that he has granted a quarry licnece to Kishan Singh Rawat on three bigha area of plot No. 1345/1185/124, total area of which comes to 52,272 Sq. ft. whereas, he was sanctioned 80,000 Sq.ft. Further allegation is that Mehdu permitted Kishan Singh Rawat to indulge in unauthorised mining over the larger area than that of granted to him putting the Government as well as Smt. Sushma Devi to loss. The High Court in its order has observed that it has been certified by the present Mining Engineer that Mehdu had never sanctioned alleged 80,000 Sq.ft. in favour of Kishan Singh Rawat for which observation, the High Court based a letter dated 13.11.2009 filed as Annexure A11 in the appeal, which was also taken on the record by the High Court. The said letter was addressed to Fatehkaran Mehdu in reply to his querry, as to whether, Kishan Singh Rawat was granted quarry licence for 80,000 Sq. ft. The answer given in the said letter dated 03.11.2009 is to the following effect:\n\n \"As per the information sought with regard to the captioned subject, as per the record available in the office no licence of 80,000 Sq. ft. has been granted to Shri Kishan Singh Rawat in Arazi No. 1185/124 Mauza village Nayanagar, Tehsil Bijoliya, District – Bhilwara. In the circumstances, it is not possible to give the copy. In the year 19971998, the quarry licence holder in Plot No. 263 A and 264 A of Arazi No. 1185/124 Shri Gopal Singh Rawat S/o Shri Anna Singh Rawat R/o Suradia Tehsil Byawar, District Ajmer (Rajasthan) was granted permission and quarry licence of total 1250012500 Sq. ft. The said quarry licence was transferred in the name of Kishan Singh Rawat S/o Devi Singh Rawat resident of Suradia, Tehsil Byawar District Ajmer (Rajasthan), which is not effective at present.”
\n\n23. The Respondents have brought on record the copy of the quarry licence granted to Kishan Singh Rawat as Annexure A3 and A4 which indicates that two quarry licences were for 12500 Sq. ft each. It appears that the High Court failed to advert the substance of allegation against Shri Mehdu, as we have already noticed from the chargesheet that Shri Mehdu although, granted quarry licence only for three bigha gap land in Plot No. 1345/1185/124, but technical map issued by Shri Mehdu was to an area of 80,000 Sq. ft, which was a source for Kishan Singh Rawat to carry on unauthorised mining over the larger area than that of actually allotted to him.\n\n24. In the chargesheet following has been specifically noted :\n\n \"....On spot Shri Kishan Singh Rawat in present time is also doing mining work on plot No. 1185/124 com. Rakba 2 bigha land and whenever question for measurement arises then he shows being approval on the basis of department's technical map whereas, in quarry lincence and files permission is accorded only to plot No. 1345/1185/124, total area of which comes to be 52472 Sq.ft whereas, according to technical map area 80,000 Sq. ft is shown.”
\n\n25. As noted above, learned Special Judge had observed that final adjudication of charge cannot be made unless oral and documentary evidence are received. The High Court has not adverted to the technical map which mentions 80,000 Sq. Ft. and without adverting to that allegation, has erroneously observed that there is no allegation which may come within the meaning of 13 (1) (d) read with 13(2) of the Act. Both chargesheet and order of the learned Special Judge have specifically noted the allegations, which clearly makes out an offence under Section 13(1)(d) and 13(2) of Prevention and Corruption Act, 1988 and Section 120B I.P.C.\n\n26. The scope of interference and exercise of jurisdiction under Section 397 of Cr.P.C. has been time and again explained by this Court. Further, the scope of interference under Section 397 Cr.P.C. at a stage, when charge had been framed, is also well settled. At the stage of framing of a charge, the court is concerned not with the proof of the allegation rather it has to focus on the material and form an opinion whether there is strong suspicion that the accused has committed an offence, which if put to trial, could prove his guilt. The framing of charge is not a stage, at which stage final test of guilt is to be applied. Thus, to hold that at the stage of framing the charge, the court should form an opinion that the accused is certainly guilty of committing an offence, is to hold something which is neither permissible nor is in consonance with scheme of Code of Criminal Procedure.\n\n27. Now, reverting to the limit of the scope of jurisdiction under Section 397 Cr. P.C., which vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept in the proceeding.\n\n28. It is useful to refer to judgment of this Court in Amit Kapoor and Ramesh Chander and Another, (2012) 9 SCC 460, where scope of Section 397 Cr. P.C. have been succinctly considered and explained. Para 12 and 13 are as follows:\n\n \"12.Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a wellfounded error and it may not be appropriate for the court to scrutinize the orders, which upon the face of it bears a token of careful consideration and appear to be in accordance with law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes, but are merely indicative. Each case would have to be determined on its own merits.”
\n\n “13. Another wellaccepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much advanced stage in the proceedings under the CrPC.”
\n\n29. The Court in para 27 has recorded its conclusion and laid down principles to be considered for exercise of jurisdiction under Section 397 particularly in context of quashing of charge framed under Section 228 Cr. P. C. Para 27, 27(1), (2), (3), (9), (13) are extracted as follows:\n\n \"27. Having discussed the scope of jurisdiction under these two provisions, i.e., Section 397 and Section 482 of the Code and the fine line of jurisdictional distinction, now it will be appropriate for us to enlist the principles with reference to which the courts should exercise such jurisdiction. However, it is not only difficult but is inherently impossible to state with precision such principles. At best and upon objective analysis of various judgments of this Court, we are able to cull out some of the principles to be considered for proper exercise of jurisdiction, particularly, with regard to quashing of charge either in exercise of jurisdiction under Section 397 or Section 482 of the Code or together, as the case may be:\n\n27.1) Though there are no limits of the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases.\n27.2) The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere.\n\n27.3) The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge.\n\n27.9) Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction; the Court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice.\n\n27.13) Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or records but is an opinion formed prima facie.”
\n\n30. Applying the above tests, we are of the considered opinion that High Court erred in quashing the charges framed by the order dated 05.05.2009. In result, both the appeals are allowed. The order of the High Court is set aside and the order dated 05.05.2009 is restored. The learned Special Judge may proceed with the trial in accordance with the law expeditiously.\n",
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"case_title": "SUPREME COURT OF INDIA | Appeal (Civil) 2440 of 2007, Civil Appeal No. 2440 of 2007 (@ Special Leave Petition (Civil) No.11391 of 2005) | Messrs Gas Authority Of India Limited And Another v. Messrs Keti Construction (I) Limited And Others | 11/05/2007",
"case_details": "Case: Appeal (Civil) 2440 of 2007, Civil Appeal No. 2440 of 2007 (@ Special Leave Petition (Civil) No.11391 of 2005) | Messrs Gas Authority Of India Limited And Another v. Messrs Keti Construction (I) Limited And Others",
"generated_outcome": "DISMISSED",
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"case_record": "Gas Authority of India (GAIL) awarded four construction contracts to M/s Keti Construction (I) Ltd. (Contractor) in 1995, including a specific contract dated 28.9.1995, all containing an arbitration clause (Clause 107). On 16.2.1999, GAIL sent a panel of three names, including Justice N.N. Goswami (Retd.), suggesting a single arbitrator for all disputes. The Contractor invoked arbitration on 17.7.1999, requesting a panel, and subsequently sent its own panel on 28.10.1999. GAIL reiterated its original panel on 15.11.1999, confirming it covered all four contracts. On 10.12.1999, the Contractor unilaterally nominated Brig. Nardip Singh (Retd.) as arbitrator. GAIL appointed Justice N.N. Goswami (Retd.) on 13.1.2000 and requested Brig. Nardip Singh to desist. The Contractor did not appear before Justice N.N. Goswami, file claims, or raise jurisdictional objections. Justice N.N. Goswami issued a 'no claim award' on 19.4.2000. The Contractor filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, in the Delhi High Court to set aside the award, alleging invalid appointment under Section 34(2)(v). A Single Judge dismissed the petition, but a Division Bench allowed the Contractor's appeal under Section 37, setting aside the award and directing arbitration by Brig. Nardip Singh. GAIL appealed to the Supreme Court.",
"generated_judgment": "\nOkay, let's start by breaking down the case. The user provided the facts and the issue analysis, and now I need to structure the legal judgment using the FIRAC framework. Let me go through each part step by step.\n\nFirst, the **Facts**. The case involves GAIL awarding four contracts to Keti Construction with an arbitration clause. In 1999, GAIL suggested a panel of three arbitrators, including Justice N.N. Goswami. The Contractor invoked arbitration, sent their own panel, and then unilaterally nominated Brig. Nardip Singh. GAIL appointed Goswami, but the Contractor didn't appear, leading to a no-claim award. The Contractor then petitioned under Section 34 to set aside the award, arguing invalid appointment. The Single Judge dismissed it, but the Division Bench allowed the appeal, setting aside the award and directing arbitration with Singh. GAIL appeals to the Supreme Court.\n\nNow, the **Issues**. The main legal issues are about the validity of the arbitration appointment and whether the Contractor's actions invalidated the arbitrator. The user has already identified three issues, so I need to ensure they are clearly stated.\n\n**Rules** would include the relevant sections of the Arbitration and Conciliation Act, 1996, particularly Sections 34 and 37, as well as the arbitration clause (Clause 107). Also, the procedural requirements for appointing arbitrators and the grounds for setting aside an award under Section 34(2)(v) are key.\n\n**Analysis** needs to check if the appeal is maintainable. Since the Supreme Court is reviewing the lower courts' decisions, the appeal is maintainable. Then, the analysis should address the validity of the arbitration appointment. The Contractor's unilateral nomination of Singh might have been a procedural issue, but GAIL's appointment of Goswami under the original panel (which included Goswami) could be valid. The Division Bench found the appointment invalid, but the Supreme Court must determine if that was correct. The Contractor's failure to appear might not invalidate the appointment but could affect the award's enforceability. However, the primary issue is the appointment's validity.\n\n**Conclusion** would depend on whether the Supreme Court upholds the Single Judge's dismissal or the Division Bench's order. If the appointment was valid, the appeal should be dismissed. If invalid, the appeal might be allowed.\n\nI need to ensure all these points are covered in the structured judgment without adding external information. Let me organize this into the FIRAC framework as specified.\n\n\n### Facts: \n1. GAIL awarded four construction contracts to M/s Keti Construction (I) Ltd. in 1995, all containing an arbitration clause (Clause 107). \n2. On 16.2.1999, GAIL proposed a panel of three arbitrators, including Justice N.N. Goswami (Retd.), for all disputes. \n3. The Contractor invoked arbitration on 17.7.1999, submitted its own panel on 28.10.1999, and GAIL reiterated its panel on 15.11.1999. \n4. The Contractor unilaterally nominated Brig. Nardip Singh (Retd.) as arbitrator on 10.12.1999, and GAIL appointed Justice N.N. Goswami on 13.1.2000. \n5. The Contractor did not appear before Justice N.N. Goswami, file claims, or raise jurisdictional objections, leading to a \"no claim award\" on 19.4.2000. \n6. The Contractor petitioned under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the award, alleging invalid appointment under Section 34(2)(v). \n7. A Single Judge dismissed the petition, but a Division Bench allowed the appeal under Section 37, setting aside the award and directing arbitration by Brig. Nardip Singh. \n8. GAIL appealed to the Supreme Court. \n\n---\n\n### Issues: \n1. Was the arbitration clause (Clause 107) in the contracts sufficient to require the parties to appoint a single arbitrator, and did GAIL’s appointment of Justice N.N. Goswami comply with that clause and the Arbitration Act? \n2. Did the Contractor’s unilateral nomination of Brig. Nardip Singh, after GAIL had appointed Justice N.N. Goswami, constitute a valid challenge to the appointment, thereby rendering Goswami’s appointment invalid under Section 34(2)(v)? \n3. Was the failure of the Contractor to appear before the appointed arbitrator and raise jurisdictional objections sufficient grounds to set aside the award under Section 34? \n\n---\n\n### Rules: \n1. **Section 34(2)(v)** of the Arbitration and Conciliation Act, 1996: An award may be set aside if the appointment of the arbitrator was invalid. \n2. **Section 37** of the Act: A party may appeal an order under Section 34 to the High Court. \n3. **Section 16** of the Act: Parties may agree on the method of appointing arbitrators. \n4. **Clause 107** of the contracts: Contains an arbitration clause, which is enforceable under the Act. \n5. **Procedural compliance**: The Act requires parties to follow the agreed-upon method of appointing arbitrators, and unilateral actions may invalidate the process if they conflict with the agreement. \n\n---\n\n### Analysis: \n1. **Maintainability of the Appeal**: The appeal is maintainable as it challenges the validity of the arbitration award and the appointment process, which are within the scope of the Arbitration Act. \n\n2. **Validity of the Arbitration Clause and Appointment**: \n - Clause 107 explicitly mandates arbitration, and the parties agreed on a method of appointing arbitrators (via a panel). GAIL’s proposal of a panel (including Justice N.N. Goswami) was consistent with the clause. \n - The Contractor’s unilateral nomination of Brig. Nardip Singh after GAIL had already appointed Goswami did not comply with the agreed procedure. The Act requires parties to follow the agreed method, and unilateral actions cannot override this. \n - Section 34(2)(v) applies to invalid appointments, but the Contractor’s failure to challenge the appointment during the arbitration process (e.g., by not appearing or filing objections) undermines its argument. \n\n3. **Impact of Contractor’s Non-Participation**: \n - The Contractor’s absence from the arbitration proceedings does not invalidate the appointment of the arbitrator. The validity of the appointment is independent of the parties’ participation. \n - The Division Bench’s reliance on the Contractor’s non-participation to set aside the award was incorrect. Section 34(2)(v) addresses the validity of the appointment, not the parties’ conduct during the proceedings. \n\n4. **Supreme Court’s Role**: \n - The Division Bench’s order to direct arbitration under Brig. Nardip Singh was based on an incorrect interpretation of the arbitration clause and procedural compliance. \n - The Single Judge’s dismissal of the petition was correct, as the appointment of Justice N.N. Goswami was valid under the clause and the Act. \n\n---\n\n### Conclusion: \n**DISMISSED** \nThe appeal is **DISMISSED** because the appointment of Justice N.N. Goswami as the arbitrator was valid under Clause 107 and the Arbitration Act. The Contractor’s unilateral nomination and non-participation do not invalidate the appointment, and the Division Bench’s order to set aside the award was legally erroneous. The Supreme Court upholds the Single Judge’s decision and rejects the Contractor’s petition.",
"reference_judgment": "The Judgment was delivered by : HON'BLE JUSTICE G. P. MATHUR\n1. Leave granted.\n2. This appeal, by special leave, has been preferred against the judgment and order dated 7.12.2004 of a Division Bench of Delhi High Court by which the appeal filed by M/s Keti Construction (I) Ltd. - Contractor (Respondent No.1 herein) under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') was allowed and the judgment and order dated 20.10.2003 of a learned Single Judge by which the petition filed by respondent no.1 under Section 34 of the Act was dismissed, was set aside and the award given by the arbitrator (respondent no.2 in the present appeal) on 19.4.2000, was also set aside. It was further directed that Brig. Nardip Singh (Retd.) who was appointed by respondent no.1 shall proceed with the arbitration in accordance with law and give the award.\n3. Gas Authority of India (GAIL, appellant no.1 herein) awarded four contracts for its project at Petro-Chemical Complex, Dibiyapur, District Etawah (U.P.) to M/s Keti Construction (I) Ltd., Indore (Contractor), which is arrayed as respondent no.1 in the present appeal. All the four contracts were awarded in the year 1995 and they related to construction of certain types of houses for GAIL Vihar Township, pre-mix bitumen carpeting and repair of roads in GAIL Vihar Colony, construction of external sewerage line and construction of certain residential quarters in UPPC Complex, Dibiyapur. Certain disputes arose between the parties regarding completion of the construction work in accordance with the design and cost of construction, etc. The contracts entered into between the parties contained arbitration clause. Appellant no.1 referred the dispute with regard to contract dated 28.9.1995 for arbitration to Justice N.N. Goswami (Retd.) who was formerly a Judge of Delhi High Court. The arbitrator gave a 'no claim award' on 19.4.2000. Respondent no.1 filed a petition under Section 34 of the Act in the Delhi High Court for setting aside the award. A learned Single Judge who heard the petition, after detailed discussion of the material on record, found that the petition was devoid of merits and accordingly dismissed the same by the judgment and order dated 20.10.2003. Respondent no.1 then preferred an appeal before the Division Bench of the High Court under Section 37 of the Act which allowed the same by the judgment and order dated 7.12.2004 and set aside the award of the arbitrator. It was further directed in the order that parties shall appear before Brig. Nardip Singh (Retd.) who had been nominated as arbitrator by respondent no.1 (contractor) and he shall proceed in accordance with law and give the award.\n4. The principal ground on which the petition under Section 34 of the Act had been filed by respondent no.1 was that it had invoked the arbitration clause by sending a notice to appellant no.1 on 17.7.1999 and accordingly the appellant no.1 was required to send a panel of three names for arbitration within 30 days of receipt of notice. Since appellant no.1 did not respond to the notice and did not send a panel within 30 days, it forfeited its right to nominate a panel and thereafter respondent no.1 sent its own panel on 28.10.1999. Appellant no.1 again did not make any response and did not choose anyone from the panel nominated by respondent no.1 and accordingly it informed appellant no.1 on 10.12.1999 that it had selected Brig. Nardip Singh (Retd.) as an arbitrator and the said arbitrator entered upon the reference on 6.1.2000. Appellant no.1 appointed Justice N.N. Goswami (Retd.) as an arbitrator subsequently on 13.1.2000 which appointment was not valid being contrary to the terms of the agreement entered into between the parties. Respondent no.1 thus submitted that the appointment of Justice N.N. Goswami (Retd.) was invalid and the award given by him was liable to be set aside in view of Section 34(2)(v) of the Act.\n5. The petition was contested by the appellants on the grounds, inter alia, that appellant no.1 had already sent a panel of three names on 16.2.1999 in which the name of Justice N.N. Goswami (Retd.) was mentioned at serial no.1 and it was mentioned that disputes between the parties relating to all the contracts be resolved by the same arbitrator. In reply to the notice of respondent no.1, the appellants' advocate Mr. Sushil Chauhan had sent a reply on 31.7.1999 asking to choose any one from the said panel. This was again reiterated by a letter dated 15.11.1999 when respondent no.1 sent its own panel on 28.10.1999. The appointment of Brig. Nardip Singh (Retd.) as an arbitrator made by respondent no.1 which was communicated by its letter of 10.12.1999 was challenged by appellant no.1 by sending a letter dated 31.12.1999 and a letter was also sent in this regard to Brig. Nardip Singh (Retd.) to desist from proceeding with arbitration. It was further submitted that respondent no.1 did not challenge the jurisdiction of the arbitrator appointed by appellant no.1 in accordance with Section 16 of the Act. The contractor did not at all appear before the arbitrator appointed by appellant no.1, viz. Justice N.N. Goswami (Retd.) and did not submit any statement of claim. In these circumstances, there was no ground for setting aside the award made by Justice N.N. Goswami (Retd.) on 19.4.2000 and the petition under Section 34 of the Act filed by respondent no.1 was liable to be dismissed.\n6. We have heard Mr. Mohan Parasaran, Additional Solicitor General for the appellant and Mr. P.C. Markanda, Senior Advocate for respondent no.1 and have perused the record.\n7. Gas Authority of India (appellant no.1 herein) awarded four contracts to M/s Keti Construction (I) Ltd. (respondent no.1 herein) for various construction work at its Petro-Chemical Complex, Dibiyapur, District Itawah (U.P.) which were as follows :-\n \"(A) Work Order No. CE/AUR/Ph-II Extn. B. Works/ 97A/95 dated 26.5.95: Balance work of construction of C-6 and D-2 Houses at GAIL Vihar Township, Dibiyapur; (\nB) Work Order No. CE/115/Auriaya/Gail/Gail Vihar Road Work/95 dated 10.2.95: Construction of premix bitumen carpeting and repairs of roads in Gail Vihar Colony and Compressor station;\n(C) Work Order No. CE/137/Auriaya/Ext/SER/95 dated 1.11.95: Construction of external sewerage line at UPPC Nagar, Dibiyapur; and\n(D) Work Order No. CE/136/Auriaya/Housing/95 dated 28.9.95: Construction of residential quarters Type A-25 units, Type B-105 units, Type C-55 units for UPPC Complex, Dibiyapur.\" \n8. The dispute here pertains to contract no. (D) dated 28.9.1995. Clause 107 of the agreement, which is relevant for the controversy in dispute reads as follows :\n \"107.1 All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the WORKS or the execution or maintenance thereof of this CONTRACT or the rights touching or concerning the WORKS or the execution effect thereof or to the rights or liabilities or the construction meaning operation or effect whether during or after completion of the CONTRACT or whether before or after determination, foreclosure or breach of the CONTRACT (other than those in respect of which the decision of any person is by the CONTRACT expressed to be final and binding) shall after written notice by either party to the CONTRACT to the other of them and to the Appointing Authority hereinafter mentioned be referred for adjudication to a sole arbitrator to be appointed as hereinafter provided.\n107.2 For the purpose of appointing the sole arbitrator referred to above, the Appointing Authority will send within thirty days of the receipt of the notice to the CONTRACTOR, a panel of three persons who shall all be presently unconnected with the organization for which the WORK is executed.\nThe CONTRACTOR shall on receipt of the names, as aforesaid, select any one of the persons named to be appointed as a sole Arbitrator and communicate his name to the Appointing Authority within thirty days of receipt of names. The Appointing Authority shall thereupon without any delay appoint the said person as the sole arbitrator. If the CONTRACTOR fails to communicate such selection as provided above within the period specified, the Appointing Authority shall make the selection and appoint the selected as the Sole Arbitrator.\nIf the Appointing Authority fails to send to the CONTRACTOR the panel of three names as aforesaid within the period specified, the CONTRACTOR shall send the Appointing Authority a panel of three names of persons who shall all be unconnected with either party. The Appointing Authority shall on receipt of the names as aforesaid select any one of the persons named and appoint him as the sole arbitrator. If the Appointing Authority fails to select the person and appoint him as the sole Arbitrator within 30 days of the receipt of the panel and inform the CONTRACTOR accordingly, the CONTRACTOR shall be entitled to appoint one of the persons from the panel as the sole arbitrator and communicate his name to the Appointing Authority.\nIf the Arbitrator so appointed is unable to or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever, another sole arbitrator shall be appointed as aforesaid.\nThe WORK under the CONTRACT shall, however, continue during the Arbitration proceedings and no payment due or payable to the CONTRACTOR shall be withheld on account of such proceedings.\nThe Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties fixing the date of the first hearing.\nThe Arbitrator may, from time to time, with the consent of the parties, enlarge the time for making and publishing the award.\nThe venue of the arbitration shall be New Delhi.\nThe fees, if any, of the Arbitrator shall, if required to be paid before the award is made and published, be paid half AND half by each of the parties. The costs of the reference and of the award including the fees, if any, of the Arbitrator shall be in the discretion of the Arbitrator who may direct to and by whom and in what manner, such costs or any part thereof shall be paid and may fix or settle the amount of costs to be so paid.\nThe award of the Arbitrator shall be final and binding on both the parties.\nSubject to aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or re- enactment thereof and the rules made thereunder, and for the time being in force, shall apply to the arbitration proceedings under this clause.\" \nA perusal of clause 107 would show that on a dispute being raised by the contractor, the appointing authority was required to send a panel of three names to the contractor and he was entitled to select anyone of them as sole arbitrator and to communicate his decision to the appointing authority within 30 days. Thereafter, the appointing authority was under an obligation to appoint the said person as sole arbitrator. However, if the appointing authority failed to send the panel of three names within the stipulated period, the contractor was given the option to send a panel of three names to appellant no.1, which was required to select anyone of them and communicate the said fact within 30 days.\n9. The plea taken by respondent no.1 is that the completion certificate with regard to the work in dispute was issued on 24.1.1998 and it wrote several times for settling the accounts. It invoked the arbitration clause on 17.7.1999 by sending a letter to the appointing authority to send a panel but as there was no response, it sent its own panel of three names on 28.10.1999 and finally informed vide letter dated 10.12.1999 that it had nominated Brig. Nardip Singh (Retd.) as the arbitrator. Voluminous correspondence was exchanged between the parties and many such letters were placed on record before the learned Single Judge of the High Court. It appears that some dispute had been raised by respondent no.1 regarding balance work of construction of C-6 and D-2 numbers of houses at GAIL Vihar Township at Dibiyapur and a letter had been sent by it to appellant no.1 on 16.1.1999. A reply was given on behalf of appellant no.1 to respondent no.1 on 16.2.1999, relevant part of which reads as under :-\n \"Sir,\nThis has reference to your letter vide ref. no.IND.KT.44(6)/99 DATED 16/1/99, we would like to bring to your kind notice that you have not so far informed us the nature of disputes you want to refer for resolution by the Arbitrator.\nHowever, in the meantime, we are suggesting you a panel of three persons to select one of them as Sole Arbitrator :\n1. Mr. Justice N.N. Goswami Retd. Judge Delhi High Court\n2. Dr. Avtar Singh Professor of Law\n3. Mr. Harish Chandra Director General CPWD (Retd.) & Ex. Member UPSC\nFurther, it is suggested to appoint the same Arbitrator and to club the Arbitration proceedings in both the matters so as to reduce on cost and time incurred in the said Arbitration.\nAccordingly, you are called upon to select any one of the above named persons as Sole Arbitrator in both the matters.\" \n10. The evidence on record shows that in connection with the dispute with regard to all the four contracts several meetings had taken place in the office of GAIL also and in the office of their consultant, M/s C.P. Kukreja & Associates in which the representatives of respondent no.1 had participated. This fact is not in dispute that several meetings did take place to resolve the dispute regarding all the four contracts between the representatives of appellant no.1 and respondent no.1. The Senior Manager (Civil) of appellant no.1 sent a letter dated 15.11.1999 to respondent no.1 which has considerable bearing on the controversy in hand and, therefore, the same is being reproduced below :-\n \"Ref.:CE/GAIL/99\nNovember 15, 1999\nM/s Keti Constructions (I) Ltd.\n31/6, Sneh Nagar, Main Road\nOpp. Sapna Sangeeta Theatre\nIndore (MP).\nSUBJECT : DISPUTES RELATING TO :\n(A) WORK ORDER NO.: CE/AUR/PH-II EXTN. B. WORKS/97A/95 DATED 26.05.95. BALANCE WORK OF CONSTRUCTION OF C-6 AND D-2 NOS. OF HOUSES AT GAIL VIHAR TOWNSHIP, DIBIYAPUR;\n(B) WORK ORDER NO. CE/115/AURIAYA/GAIL/ GAIL VIHAR ROAD WORK/95 DATED 10.02.95 CONSTRUCTION OF PREMIX BITUMEN CARPETING AND REPAIRS OF ROADS IN GAIL VIHAR COLONY AND COMPRESSOR STATION.\n(C) WORK ORDER NO. CE/137/AURIAYA/EXT/ SER/95 DATED 1.11.95: CONSTRUCTION OF EXTERNAL SEWERAGE LINE AT UPPC NAGAR, DIBIYAPUR.\n(D) WORK ORDER NO. CE/136/AURIAYA/ HOUSING/95 DATED 28.9.95 CONSTRUCTION OF RESIDENTIAL QUARTERS TYPE A-25 UNITS, TYPE B-105 UNITS, TYPE C-55 UNITS FOR UPPC COMPLEX, DIBIYAPUR.\nDear Sir,\nKindly recall various meetings held in our office and also in the office of Consultant, M/s C.P. Kukreja Associates in respect of the above referred contracts and the disputes arising therefrom, wherein it was agreed between us to settle the disputes amicably and through discussions. Despite this clear understanding, you had vide your letters dated 25.08.98 invoked Arbitration clause in respect of Work Order Nos. : (1) CE/AUR/PH-II/EXTN. B. WORK/97A/95 dated 26.05.95 relating to balance work of Construction of C-6 and D-2 number of houses at GAIL Vihar Township of Dibiyapur and (2) CE/115/AURIAYA/GAIL/GAIL VIHAR ROAD WORK/95 dated 10.2.95 relating to construction of premix bitumen carpeting and repairs of roads in Gail Vihar Colony & Compressor Station.\nSubsequently, vide your letters dated 5.10.98 in respect of the above work orders, you submitted a panel of three Arbitrators asking us to select one of them to act as Sole Arbitrator on the above two cases. However, we responded to your communications vide our letters dated 16.02.99 and as per the terms of the contract suggested the following panel of three distinguished persons :-\n1. Mr. Justice N.N. Goswami (R) Judge Delhi High Court\n2. Dr. Avtar Singh, (V) Prof. of Law, IIM, Lucknow.\n3. Mr. Harish Chandra, Director General CPWD (Retd.) & Ex-Member, UPSC.\nYou were requested to select any of them to act as Sole Arbitrator. However, no action has been taken by you so far and even the issues which seem to have been resolved by discussions have not been confirmed, keeping the matters pending unnecessarily.\nDuring our meetings, we have suggested to you that all the disputes arising out of the above contracts which cannot be settled by mutual discussions, may be referred to a Sole Arbitrator selected by you from among the panel of distinguished persons mentioned above, so that the resolution of disputes by reference to Arbitration becomes cost effective, economical and quick.\nIn view of the above, you are requested once again to select any of the persons mentioned herein to act as a Sole Arbitrator in all the above disputes.\nAssuring you of our best co-operation at all times.\nYours faithfully,\nSd/-\n(P.K. Sarkar )\nSr. Manager (Civil)\" \n11. It may be noted that the above noted letter of 15.11.1999 was written by the Senior Manager (Civil) of appellant no.1 in connection with the disputes relating to all the four contracts, viz. (A), (B), (C) and (D). In this letter reference was made to the earlier letter dated 16.2.1999 sent by appellant no.1 and the same panel of three names in which name of Justice N.N. Goswami (Retd.) was at serial no.1 was reiterated. The last paragraph of the above quoted letter is very important where it was clearly mentioned that the dispute arising out of the four contracts which cannot be mutually settled may be referred to a sole arbitrator selected by respondent no.1 from amongst the persons mentioned in the panel so that the resolution of disputes by reference to arbitration becomes cost effective, economical and quick. Towards the end of the letter a request was made to respondent no.1 to select anyone of the persons mentioned in the said letter to act as sole arbitrator in all the above disputes, which means all the disputes relating to contract nos.(A), (B), (C) and (D). It is, therefore, clear that a panel of three names had been sent by the appellant to respondent no.1 on 16.2.1999 which was categorically reiterated in the letter dated 15.11.1999, sent by the Senior Manager (Civil) of Gas Authority of India Ltd. (appellant no.1) to respondent no.1. This letter was not confined to any particular contract but specifically referred to all the four contracts including the disputed contract no.(D) dated 28.9.1995. The stand of appellant no.1 was quite reasonable that if all the disputes were referred to a single arbitrator, the arbitration proceedings would be cost effective, economical and quick. After receipt of this letter dated 15.11.1999, wherein the earlier panel communicated vide letter dated 16.2.1999 had been reiterated, there was no occasion for respondent no.1 to appoint Brig. Nardip Singh (Retd.) as arbitrator by sending a communication to that effect subsequently on 10.12.1999. The stand of the appellant had been made very clear and explicit by the aforesaid two letters and it was not required to respond again specifically to the letter dated 28.10.1999 sent by respondent no.1 to select an arbitrator from the panel intimated by it. The stand of respondent no.1 to the effect that as the appellant did not respond to its letter dated 28.10.1999, it selected Brig. Nardip Singh (Retd.) by sending a communication on 10.12.1999 is, therefore, wholly unjustified.\n12. There is contemporaneous evidence which shows that a number of meetings had taken place between the representatives of appellant no.1 and the representatives of respondent no.1, wherein effort was made to resolve the disputes without reference to arbitration and an understanding had been reached between the parties that unresolved disputes of all the four contracts shall be referred to a sole arbitrator to make the arbitration proceedings quick and cost effective. After respondent no.1 had sent the letter dated 10.12.1999 to the appellant that it had nominated Brig. Nardip Singh (Retd.) for the purpose of arbitration, the Senior Deputy Manager (Law) of appellant no.1 sent a letter to him on 31.12.1999 requesting him to desist from entering upon the reference or taking any further steps in view of the fact that in the meeting held between the representatives of the two organisations, it was clearly agreed that the matter shall be referred to a sole arbitrator and respondent no.1 was expected to select a name from the panel suggested by appellant no.1. The letter is self-eloquent and is being reproduced below :-\n\n \"December 31, 1999\nBrig. Nardip Singh\nChief Engineer, MES (Retd)\nB-64, Sector 30\nNOIDA\nDear Sir,\nSub : Letter by Keti Const. Ltd. IND/KTIL/908/99 dated 20.12.99 in the matter of construction of residential quarters of UPPC, Dibiyapur, Etawah, U.P.\nThis has reference to the captioned communication on the subject cited above.\nM/s Keti Constructions have been awarded contracts by GAIL for execution of a number of its projects. In relation to some of which contracts including the contract in question now sought to be placed before you, certain disputes are alleged to remain outstanding, as per Keti Constructions.\nKeti Constructions made their requests for resolution of interse disputes with GAIL by reference to Arbitration, including in the contract in question.\nUpon receipt of these requests of Keti Constructions by GAIL, GAIL made suggestion for resolution of disputes by a Sole Arbitrator and sent to Keti Constructions a panel of three distinguished persons who may be appointed as Sole Arbitrator. Thereupon, Keti Constructions came forward for negotiations. During these discussions/negotiation, the representatives of Keti Constructions were repeatedly suggested to refer all unresolved issues of various contracts to a Sole Arbitrator selected by them from amongst the panel suggested by GAIL. Representatives of Keti Constructions agreed to our suggestion as it was less time consuming and GAIL in turn took liberal view on various issues with clear objective of resolving these disputes without reference to arbitration. These efforts yielded results and the requests for arbitration of Keti Constructions were withdrawn by them.\nAs all these matters were between two organisations and it was clearly agreed by the parties to refer unresolved disputes of all contracts to a sole arbitrator to make the arbitration proceedings quick and cost effective. We would have expected Keti Constructions to have sent a name from the panel suggested by GAIL in accordance with the spirit of the discussions held and the principles accepted therein for resolution of interse disputes, which have been acted upon as aforesaid. Unfortunately, Keti Constructions has unilaterally sought to nominate your goodself, despite the overwhelming record to the contrary.\nIn this factual background we request you to desist from entering upon the reference or taking any further steps in pursuance to the captioned communication, keeping the cherished values you have maintained in high esteem all through your distinguished career in armed forces.\nAssuring you of our best attention at all times.\nYours faithfully,\nSd/-\n(CH. HARNATH )\nSR. DY. MANAGER (LAW)\nCC to\nKeti Constructions (I) Ltd.\n31/6, Sneh Nagar, Main Road\nOpposite Sapna Sangeeta Theatre\nINDORE 452 001 (M.P.)\" \n13. It may be noted that the four contracts (A), (B), (C) and (D) were awarded on different dates in quick succession between 10.2.1995 and 1.11.1995 and related to various construction works in Petro-Chemical Complex, Dibiapur, District Etawah (U.P.). The terms of the agreement have to be understood in a broad commonsense manner. The material placed on record before the learned Single Judge shows that the discussion which took place in the meetings held between the representatives of appellant no.1 and representatives of respondent no.1 were not confined to the dispute relating to a single contract, but they related to disputes concerning all the four contracts. It will not be proper to segregate or compartmentalize the correspondence exchanged between the parties as if a particular letter was confined to a particular contract alone. The correspondence exchanged between the parties is not like evidence in a suit or trial where a piece of evidence given in a particular suit or trial cannot be read or taken into consideration in another suit or trial. The stand of the appellant right from the beginning was that all the disputes should be referred to a single arbitrator, which will be cost effective, economical and quick. There can be no doubt this stand was very reasonable. Appellant no.1 had sent a panel on 16.2.1999, which was reiterated in the communication dated 15.11.1999. In these circumstances, respondent no.1 was not at all entitled to nominate Brig. Nardip Singh (Retd.) as an arbitrator which it chose to do subsequently on 10.12.1999. We do not find anything wrong on the part of the appellant when it intimated vide letter dated 15.11.1999 that a panel had already been sent earlier on 16.2.1999 for appointment of a single arbitrator for resolution of all the disputes between the parties.\n14. According to the appellants, after respondent no.1 had sent the notice dated 17.7.1999 invoking the arbitration clause, a reply thereto was given on their behalf by Mr. Sushil Chauhan, Advocate, on 31.7.1999 wherein it was mentioned as under :\n \"Ref: Your letter IND/KT/522/99 dated 17.7.99 Pursuant to the discussions held on various occasions by you and my client, GAIL officials with regard to settlement of disputes and appointment of sole arbitrator, I am instructed by my client, Gas Authority of India Ltd. (GAIL) to call upon you to select the sole arbitrator from the names of three distinguished persons already suggested by my clients during discussions in response to your notices. Please take further necessary action.\" \nRespondent No.1 has seriously challenged the receipt of the letter dated 31.7.1999 sent by Mr. Sushil Chauhan. It has been urged that the said letter was not sent by registered post and was not received by them. We have, therefore, not taken into consideration the said letter. There is other material on record to show that a panel of three names had already been sent by appellant no.1 to respondent no.1 which was a sufficient compliance of the clause of the agreement. There is neither any such clause in the agreement nor there is any requirement in law that for each of the contract (A), (B), (C) and (D) a separate panel ought to have been sent. The same panel could very well be utilized for resolving the disputes arising out of the four contracts. In fact, as suggested on behalf of the appellant, it would have been more convenient, time saving and economical to have the same person as arbitrator in resolving the disputes between the parties with regard to all the contracts. The view to the contrary taken by the Division Bench of the High Court is clearly erroneous in law.\n15. Appellant no.1 sent a communication to Justice N.N. Goswami (Retd.) on 13.1.2000 appointing him as sole arbitrator for resolution of disputes relating to the contract in question and a copy of this letter was also sent to respondent no.1. Justice N.N. Goswami (Retd.) then entered upon the reference and sent notices to the parties on 11.2.2000 to appear before him on 6.3.2000. Respondent no.1, however, chose not to put in appearance before Justice N.N. Goswami (Retd.). On 28.3.2000, the arbitrator passed an order holding that his appointment as arbitrator was in accordance with the terms of the agreement, but in the interest of justice he would give another notice to respondent no.1. The relevant part of the order passed by him reads as under :\n \"In terms of my order dated 6.3.2000, M/s Gas Authority have produced the complete file. On perusal of the file and after hearing Mr. Chauhan, prima facie I am satisfied that my appointment as Arbitrator is in accordance with the terms of Agreement between the parties. I would have proceeded further, but in the interest of justice I feel that one final notice be served on M/s Keti Constructions before publishing the Award.\nTo come up on April 18, 2000 at 6.30 p.m. The parties may file their statements of claim before the next date of hearing.\" \nSince respondent no.1 did not appear on the date fixed, the arbitrator passed an order fixing 19.4.2000 as the next date of hearing. A no claim award was finally given by him on 19.4.2000.\n16. Respondent no.1 did not at all appear before the arbitrator appointed by appellant no.1. Respondent no.1 neither filed any statement of claim nor raised any plea of jurisdiction before the arbitrator. Section 16 of the Act says that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. In Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd. (2002) 2 SCC 388 in para 21 a Constitution Bench of 5 learned Judges has ruled that if the arbitral Tribunal has been improperly constituted, it would be open to the aggrieved party to require the Arbitral Tribunal to rule on its own jurisdiction in view of Section 16 of the Act. It was also observed that the expression used in Sub-section (1) that the \"Arbitral Tribunal may rule on any objections with respect to the existence or validity of the arbitration agreement\" shows that the Arbitral Tribunal's authority under Section 16 is not confined to the width of its jurisdiction, but goes to the very root of its jurisdiction and there is no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted. This decision has been partly overruled on another point by a larger bench of 7 learned Judges in S.B.P. & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618 , but the aforesaid view has not been dissented from or reversed. This will be evident from the conclusions arrived at by the larger bench which have been summarized in para 47 of the report and sub-para (ix) thereof reads as under :-\n \"In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act.\" \n17. It will be useful to take note of the preamble of the Arbitration and Conciliation Act, 1996 which reads as under :-\nWHEREAS the United Nations Commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985;\nAND WHEREAS the General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice;\nAND WHEREAS the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980;\nAND WHEREAS the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation;\nAND WHEREAS the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations;\nAND WHEREAS it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules;\nThe Preamble of the Act makes it amply clear that the Parliament has enacted the Arbitration and Conciliation Act, 1996 almost on the same lines as the Model Law, which was drafted by United Nations Commission on International Trade Law. In Sundaram Finance Ltd. v. NEPC Ltd. AIR 1999 SC 565 it has been observed that the provisions of the Arbitration and Conciliation Act, 1996 should be interpreted keeping in mind the Model Law as the concept under the present Act has undergone a complete change. It will, therefore, be useful to take note of the corresponding provisions of the UNCITRAL Model Law. Article 16 of the Model Law, which corresponds to Section 16 of the Act, is being reproduced below :\nUNCITRAL Model Law\n \"Article 16. Competence to rule on own jurisdiction.-\n(1) The Arbitral Tribunal has the power to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For the purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.\n(2) A plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than in the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the Arbitral Tribunal is exceeding the scope of its authority shall be raised promptly after the Arbitral Tribunal has indicated its intention to decide on the matter alleged to be beyond the scope of its authority. The Arbitral Tribunal may, in either case, admit a later plea if it considers the delay justified.\n(3) The Arbitral Tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. In either case, a ruling by the Arbitral Tribunal that it has jurisdiction may be contested by any party only in an action for setting aside the arbitral award.\" \nThe commentary on the three paragraphs of the Model Law has been given under the headings A, B, C and D. Note 1 under heading A and Note 11 under heading D, which are relevant for the controversy in hand, are being reproduced below :\n\"A. \"Kompetenz-kompetenz\" and separability doctrine, paragraph (1).\n1. Article 16 adopts the important principle that it is initially and primarily for the Arbitral Tribunal itself to determine whether it has jurisdiction, subject to ultimate Court control (see below paras 12-14). Paragraph (1) grants the Arbitral Tribunal the power to rule on its own jurisdiction. Including any objections with respect to the existence or validity of the arbitration agreement. This power, often referred to as \"Kompetenz-kompetenz\", is an essential and widely accepted feature of modern international arbitration but, at present is not yet recognised in all national laws.\nD. Ruling by Arbitral Tribunal and judicial control, paragraph (3) [Corr. to Section 16(5), (6)]\n11. Objections to the Arbitral Tribunal's jurisdiction go to the very foundation of the arbitration. Jurisdictional questions are, thus, antecedent to matters of substance and usually ruled upon first in a separate decision, in order to avoid possible waste of time and costs. However, in some cases, in particular, where the question of jurisdiction is intertwined with the substantive issue, it may be appropriate to combine the ruling on jurisdiction with partial or complete decision on the merits of the case. Article 16 (3), therefore, grants the Arbitral Tribunal discretion to rule on a plea referred to in paragraph (2) either as a preliminary question or in an award on the merits.\nSo, the commentary on the Model Law which was drafted by UNCITRAL and has been adopted by many countries including India shows that where a party asserts that the arbitral tribunal has not been properly constituted or it has no jurisdiction, then such a plea must be raised before the arbitral tribunal right at the beginning and normally not later than in the statement of defence.\n18.The whole object and scheme of the Act is to secure an expeditious resolution of disputes. Therefore, where a party raises a plea that the arbitral tribunal has not been properly constituted or has no jurisdiction, it must do so at the threshold before the arbitral tribunal so that remedial measures may be immediately taken and time and expense involved in hearing of the matter before the arbitral tribunal which may ultimately be found to be either not properly constituted or lacking in jurisdiction, in proceedings for setting aside the award, may be avoided. The commentary on Model Law clearly illustrates the aforesaid legal position.\n19. Where a party has received notice and he does not raise a plea of lack of jurisdiction before the arbitral tribunal, he must make out a strong case why he did not do so if he chooses to move a petition for setting aside the award under Section 34(2)(v) of the Act on the ground that the composition of the arbitral tribunal was not in accordance with the agreement of the parties. If plea of jurisdiction is not taken before the arbitrator as provided in Section 16 of the Act, such a plea cannot be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award, unless good reasons are shown.\n20. Though respondent no.1 had ample opportunity to appear before Justice N.N. Goswami (Retd.) and raise a plea of jurisdiction to the effect that he had been wrongly appointed as arbitrator by appellant no.1, yet, it chose not to do so. This feature of the case weighs heavily against respondent no.1. The learned Single Judge has taken this fact as an additional ground for rejecting the petition filed by respondent no.1 under Section 34 of the Act and we are in agreement with the said view.\n21. For the reasons discussed above, the appeal is allowed with costs throughout and the judgment and order dated 7.12.2004 of the Division Bench of the High Court is set aside. The judgment and order dated 20.10.2003 of the learned Single Judge dismissing the petition under Section 34 of the Act, which was filed by respondent no.1, is affirmed.\n",
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"case_title": "SUPREME COURT OF INDIA | CIVIL APPEAL NOS - 2826 of 2016 | Welspun Specialty Solutions Limited (Formerly Known As Remi\nMetals Gujarat Ltd.) v. Oil And Natural Gas Corporation Ltd. | 13/11/2021",
"case_details": "Case: CIVIL APPEAL NOS - 2826 of 2016 | Welspun Specialty Solutions Limited (Formerly Known As Remi\nMetals Gujarat Ltd.) v. Oil And Natural Gas Corporation Ltd.",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "Welspun Specialty Solutions Limited (formerly Remi Metals Gujarat Ltd.) appealed against the High Court of Uttarakhand's decision to set aside an arbitration award in its favor against Oil and Natural Gas Corporation Ltd. (ONGC). The dispute arose from purchase orders (POs) issued by ONGC to Remi Metals for seamless steel casing pipes. The POs stipulated delivery within 16-40 weeks and included clauses stating time was of the essence and allowing for liquidated damages (LDs) at 0.5% per week for delayed supplies, up to 5% of the contract price. During contract execution, ONGC granted several extensions to Remi Metals, and during these extensions, ONGC deducted US $8,07,804.03 and Rs. 1,05,367/- as LDs. Remi Metals claimed these LDs, along with other amounts, before an Arbitral Tribunal. The Tribunal found that time was not of the essence, and therefore, LDs could not be granted, but allowed ONGC to retain Rs. 2,09,28,995/- representing actual damages. The District Court largely upheld the Tribunal's findings but modified arbitration costs. The High Court, however, reversed the Tribunal and District Court, holding that time was of the essence and ONGC was justified in recovering LDs, as the Arbitral Tribunal and District Judge had erred in requiring proof of actual loss.",
"generated_judgment": "### Facts:\n1. Welspun Specialty Solutions Limited (formerly Remi Metals Gujarat Ltd.) entered into purchase orders (POs) with Oil and Natural Gas Corporation Ltd. (ONGC) for the supply of seamless steel casing pipes.\n2. The POs stipulated delivery within 16-40 weeks and included clauses stating that time was of the essence and allowed for liquidated damages (LDs) at 0.5% per week for delayed supplies, up to 5% of the contract price.\n3. During contract execution, ONGC granted several extensions to Remi Metals, but during these extensions, ONGC deducted US $8,07,804.03 and Rs. 1,05,367/- as LDs.\n4. Remi Metals claimed these LDs, along with other amounts, before an Arbitral Tribunal.\n5. The Arbitral Tribunal found that time was not of the essence and thus LDs could not be granted, but allowed ONGC to retain Rs. 2,09,28,995/- representing actual damages.\n6. The District Court largely upheld the Tribunal's findings but modified arbitration costs.\n7. The High Court of Uttarakhand reversed the Tribunal and District Court, holding that time was of the essence and ONGC was justified in recovering LDs, as the Arbitral Tribunal and District Judge had erred in requiring proof of actual loss.\n8. Welspun Specialty Solutions Limited appealed against the High Court's decision.\n\n### Issues:\n1. Whether the High Court erred in setting aside the Arbitral Tribunal's award by holding that time was of the essence and that ONGC was justified in recovering LDs without proof of actual loss.\n2. Whether the Arbitral Tribunal and District Court correctly interpreted the contract terms regarding time being of the essence and the applicability of LDs.\n\n### Rules:\n1. **Arbitration and Conciliation Act, 1996 (Section 34)**: A court may set aside an arbitral award if it finds that the award is in conflict with the public policy of India, including the principles of natural justice.\n2. **Contract Law Principles**: The interpretation of \"time is of the essence\" clauses depends on the intent of the parties and the circumstances of the case. Courts generally uphold such clauses unless there is evidence of waiver or estoppel.\n3. **Liquidated Damages**: Liquidated damages are enforceable if they are a genuine pre-estimate of loss and not a penalty. The party seeking to enforce LDs must show that the conditions for their application were met.\n4. **Precedents on Arbitral Awards**: Courts should not lightly interfere with arbitral awards unless there is a clear error of law or procedural impropriety (e.g., *ONGC Ltd. v. Saw Pipes Ltd.*, 2003).\n\n### Analysis:\n1. **Interpretation of \"Time is of the Essence\" (Fact 2, Issue 1, Rule 2)**:\n - The POs explicitly stated that time was of the essence, which is a strong indication that the parties intended strict adherence to delivery timelines.\n - The Arbitral Tribunal's finding that time was not of the essence may have been based on ONGC's grant of extensions (Fact 3), which could imply a waiver or estoppel. However, the High Court correctly noted that extensions do not necessarily negate the \"time is of the essence\" clause unless there is clear evidence of a waiver.\n - The High Court's decision aligns with established contract law principles that such clauses are enforceable unless waived.\n\n2. **Enforceability of Liquidated Damages (Fact 3, Issue 1, Rule 3)**:\n - The LDs clause was clearly defined in the POs, and ONGC deducted amounts in accordance with the agreed terms.\n - The Arbitral Tribunal erred in requiring proof of actual loss, as LDs are enforceable without such proof if the conditions for their application are met (e.g., *Dunlop Pneumatic Tyre Co. v. New Garage and Motor Co.*, 1915).\n - The High Court correctly held that the Tribunal's requirement for actual loss was inconsistent with the nature of LDs.\n\n3. **Judicial Deference to Arbitral Awards (Fact 6, Issue 2, Rule 4)**:\n - While courts should generally defer to arbitral awards, they may intervene if the award is patently illegal or against public policy.\n - The High Court's intervention was justified because the Tribunal's interpretation of the contract and LDs was legally flawed, not merely a factual dispute.\n\n### Conclusion:\nThe High Court correctly set aside the Arbitral Tribunal's award by upholding the \"time is of the essence\" clause and the enforceability of liquidated damages. The Tribunal's error in requiring proof of actual loss for LDs was a clear legal mistake, warranting judicial intervention. Therefore, the appeal is **DISMISSED**.",
"reference_judgment": "1. Leave granted in SLP (C) No. 19203 of 2012.\n2. Civil Appeal Nos. 2826-2827 of 2016, preferred by Welspun Specialty Solutions Limited (formerly known as Remi Metals Gujarat Ltd.) hereinafter referred to as 'Remi Metals' for the sake of brevity and clarity, have been filed impugning the judgments and orders dated 14.10.2008 and 27.07.2010 of the High Court of Uttarakhand at Nainital in AO Nos.472 and 466 of 2005 and Review Petition No. 1340 of 2008 in AO No. 472 of 2005 respectively. Civil Appeal arising out of SLP(C) No. 19203 of 2012, preferred by Oil and Natural Gas Corporation Ltd. (hereinafter referred to as 'ONGC' for the sake of brevity and clarity), has been filed impugning the judgment and order dated 27.07.2010 of the High Court of Uttarakhand at Nainital in Review Petition No. 1340 of 2008 in AO No. 472 of 2005.\n3. The short question which arises for determination by this Court is whether the impugned judgment was correct in setting aside the arbitration award in favour of the ONGC.\n4. Before we analyse the case at hand, it is necessary for us to have a brief understanding of the facts. A global tender was floated by the ONGC for purchase of aggregate quantity of 3,93,297 metres of seamless steel casing pipes. Remi Metals was a successful bidder. It claims that it had bid to supply pipes as a supplier on behalf of Volski Tube Mills, Russia. In furtherance of the same, 4 purchase orders (POs) No. 275, 276, 277 and 286 were issued in the following manner:\n5. It was mentioned in the POs that the delivery period will commence within 16 weeks and will be completed in 40 weeks, or earlier, from the date of the PO.\n6. Some of the important conditions mentioned in the POs, which were common to all the POs, are as under:\n9. i) The time and date of delivery is the essence of the supply order and delivery must be completed not later than the date specified therein. ii) It must be noted that delayed supplies even delivery and/or accepted by the purchaser will be treated as supplied/effected after schedule period without prejudice to Failure and Termination Clause. iii) Even when extension in delivery period is granted, such acceptance of extension as the case may be will be without prejudice to claim damages under Failure and Termination Clause unless purchaser clearly waives his right in writing to recover such damages with the approval of competent authority.\n7. Further, relevant provisions of the General Terms and Conditions appended with the POs are as follows:\n10. FAILURE AND TERMINATION CLAUSE/LIQUIDATED DAMAGES: Time and date of delivery shall be essence of the contract. If the contractor fails to deliver the stores, or any instalment thereof within the period fixed for such delivery in the schedule or at any time repudiates the contract before the expiry of such period, the purchaser may, without prejudice to any right or remedy, available to him to recover damages for breach of contract :- (a) Recover from the contractor as agreed liquidated damages and not by way of penalty, a sum equivalent to 1/2% (half percent) of the contract price of the whole unit per week for such delay or part thereof (this is an agreed, genuine pre- estimate of damage duly agreed by the parties) which the contractors has failed to deliver within the period fixed for delivery in the schedule, where delivery thereof is accepted after expiry of the aforesaid period. It may be noted that such recovery of liquidated damages may be up to 5% of the contract price of whole unit of stores which the contractor has failed to deliver within the period fixed for delivery; or (...) (e) It may further be noted that the clause (a) above provides for recovery of liquidated damages on the cost of contract price of delayed supplies whole unit at the rate of 1/2% (half percent) of the contract price of the whole unit per week for such delay or part thereof up to a ceiling of 5% of the contract price of delayed supplies (whole unit). Liquidated damages for delay in supplies thus accrued will be recovered by the paying authorities of the purchaser specified in the supply order, from the bill for payment of the cost of material submitted by the contactor or his foreign principals in accordance with the term of supply order or otherwise.\n8. During the execution of contract, there were certain delays in meeting the obligation as required under the contract. In this context, various extensions were given by the ONGC to fulfil their obligation. The extensions were granted as follows: Remi Metals accepted the aforesaid extensions and satisfied the contract.\n9. In this context, it may be noted that the ONGC had deducted an aggregate amount of US $8,07,804.03 and Rs.1,05,367/- as liquidated damages from various bills submitted by the Remi Metals. There were other claims which were disputed by the Remi Metals which were claimed before a panel of arbitrators.\n10. In detail, the Remi Metals' claims were hereunder: CLAIM TITLE AMOUNT Refund of Liquidated damages claimed by ONGC US $807,804.03 and Rs. 1,05,367/- Customs Duty Reimbursement Rs. 1,90,43,037/- Interest on Delayed Payments US $2,44,121.03 and Rs. 5,76,244.31 Amount Short Received under invoices Rs. 18,11,456.72 Failure to Furnish \"C\" forms US $2,44,649.39 Handling Charges Payable on ONGC Rs. 24,86,369.86 Wrongful reduction of price for balance 8.55% (16,174.78m) under PO No. 275 US $83,324.38 Award of the above amounts - with 18% interest from the date on which it ought to have been paid by ONGC and further interest till date of payment\n11. The Arbitral Tribunal, on hearing the parties, had framed 17 issues, of which we are concerned only with the following: (i) Was time the essence of the Agreement to make supplies under the four Purchase Orders and was the delivery date to be reckoned from the date of the supply order? (ii) Was ONGC justified in recovering liquidated damages of US $8,07,804.03 and Rs.1,05,367/-? (iii) Was the Claimant entitled to extension of delivery dates without levy of liquidated damages on account of force majeure condition as stated in paragraphs 12.D.3 and 12.D.4 of the Statement of Claim? (iv) Was ONGC entitled to impose liquidated damages on the basis of the entire value of the Purchase Orders? (v) Is the Claimant entitled to refund of any part of the amount recovered by ONGC as liquidated damages? (vi) Is the Claimant entitled to US $2,44,121.03 and Rs.5,76,244.21 as interest on delayed payment as in Exhibit 'H' to the Statement of Claim? (vii) Whether the Claimant is entitled to any interest? If so, at what rate and for what period?\n12. The Arbitral Tribunal, at the outset, held that merely having a clause in the contract making time the essence of it would not be determinative; rather, an overall view having regard to all the terms of contract are to be taken into consideration. Further, they noted that contracts containing provision for extension of time or payment of penalty on default would dilute the obligation of timely performance and render the clauses imbuing time as essence of the contract ineffective. Additionally, the Arbitral Tribunal also noted that generally, under construction contracts, time is not the essence. Ultimately, on this issue, the Arbitral Tribunal noted as under: \"43.29. It may also be stated that the supply of material in the instant case was not for any specific purpose or urgent requirement. The tender was a global tender for general requirement as stated by Mr. K. Bhattacharya (RW-1). 43.30. Besides, the contract provides for imposition of LD and/or termination of the contract. It may also be noticed that ONGC could extend the time for delivery and in fact ONGC did extend the delivery period without levying any LD. These and other stipulations in the contract are a clear indication that the time was not the essence of contract.\"\n13. On the aspect of liquidated damages, the Arbitral Tribunal held that liquidated damages, which are pre-estimated damages, cannot be granted as there was no breach of contract due to the fact that time was not the essence. Accordingly, the Arbitral Tribunal proceeded to determine the actual damages based on the evidence furnished.\n14. It was ONGC's estimation that there were four categories of tangible losses, namely: (i) revenue loss; (ii) loss due to the use of higher ppf/grade casing; (iii) loss due to intra/inter- regional transportation; and (iv) loss due to foreign exchange fluctuation. In total, such losses were estimated to be to the tune of Rs.3,80,64,830/-. The estimation was as follows: AMOUNT CATEGORY Revenue loss Rs.95,72,332/- Loss due to the use of higher/ppf grade casing Rs.10,97,883/- Loss due to intra/inter-regional transportation Rs.90,09,950/- Loss due to foreign exchange fluctuation Rs.1,83,84,668/- Total: Rs.3,80,64,833/-\n15. The said estimation was accepted by the Arbitral Tribunal. However, it was also held that ONGC would not be entitled to claim any damage for losses incurred during the extended period of delivery where liquidated damages were expressly waived. The losses claimed during such period without imposition of liquidated damages are to the tune of Rs.1,71,35,838, which were excluded from the total computation of loss by the Arbitral Tribunal. Ultimately, it was held that ONGC would be entitled to retention of Rs.2,09,28,995/- or its equivalent in US dollars at the rate as on date of the award, i.e. US $ 440,610.42/-1, out of the total liquidated damages (US $ 8,07,804.03 and Rs.1,05,367/-) recovered. 1 https://www.rbi.org.in/scripts/PublicationsView.aspx?id=15268 1 USD = 47.5 INR end of year 2002-03\n16. Aggrieved by the award of the Arbitral Tribunal, the ONGC filed a Section 34 petition before the District Court claiming that the award of the Arbitral Tribunal was not in tune with the contract, which is a justifiable ground for interference. They sought to address the concern on delayed acceptance by stating that such acceptance was valid and permissible under contract law and the liquidated damages imposed on such acceptance was legally valid. Further, they pointed out that liquidated damages could have been given as the same was a genuine and reasonable pre- estimate of the possible damages negotiated between the parties at the time of entering into contract.\n17. The District Court, by order dated 19.07.2005, held that the Tribunal was correct in holding that time was not the essence of the contract and only the losses actually suffered could be granted. However, the District Judge modified the costs of arbitration from Rs.25 lakhs to Rs.9,40,000/-.\n18. Both parties, aggrieved by the order of the District Judge, appealed the same before the High Court of Uttarakhand in AO Nos.472 of 2005 and 466 of 2005 under Section 37 of the Arbitration and Conciliation Act, 1996. The High Court, by impugned order dated 14.10.2008 held that both the arbitral award and order of the District Judge erred in construction of the contract with respect to whether time was the essence or not. Further, the High Court has reasoned that the Arbitral Tribunal as well as District Judge committed gross error in arriving at a conclusion that ONGC had to prove loss suffered before recovering any damages. Moreover, the decree in respect of cost of arbitration was upheld by the High Court. Accordingly, AO No.472 of 2005 filed by ONGC was allowed and AO No.466 of 2005 filed by Remi Metals (now Welspun) was dismissed.\n19. Aggrieved by the aforesaid order, review petitions being Review Petition Nos.1340 of 2008 and 1339 of 2008 were filed which were disposed of with the following observation: \"...The judgement and order passed by the District Judge, Dehradun, in Arbitration Case No.31 of 2004 th dated 19 July, 2005, is modified to the extent that the appeal with regard to Claim Nos. 1 and 2 is th allowed, while the judgement and order dated 19 July, 2005, passed by the District Judge, Dehradun, shall remain intact with regard to claim Nos. 3 to 7...\"\n20. Aggrieved by the order passed in the review petitions, both parties have filed these appeals before this Court.\n21. Mr. Shyam Divan, learned senior counsel, appearing for Remi Metals (now Welspun), has submitted that: The view taken by the Arbitral Tribunal was reasonable, plausible and can be sustained. Time was not the essence of the contract, as the contract provided for extension of time as well as for liquidated damages. Further, once ONGC waived the liquidated damages in the first two extensions, they could not have claimed liquidated damages for further extensions of delivery date. This Court should not interfere or set aside awards in a casual manner, while doing so this Court should come to a clear understanding that the award was patently illegal. [See Associate Builders v. Delhi Development Authority (2015) 3 SCC 49 : (AIR 2015 SC 620) pg. 67]\n22. Learned Counsel appearing for ONGC has submitted that: That the imposition of liquidated damages has already been upheld under similar circumstance by earlier judgment in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 : (AIR 2003 SC 2629). The award cannot be sustained as in a contract having provision for liquidated damages, unliquidated damages cannot be given. Reading of the contract makes it clear that the time was of the essence, which was also signified in every extension given. The award interprets the contractual clauses in a manner which is not reasonable and plausible.\n23. Before we analyse the award, we need to first ascertain the scope of Section 34 of Arbitration Act, before the 2015 amendment, which provided for certain specific grounds for challenge. Section 34, as it existed, reads as under: 34 Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- ... (b) the Court finds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. \n(Emphasis supplied)\n The limited grounds provided under Section 34 of the Act, has been interpreted by this Court on numerous occasions. In this case at hand, the challenge of award is based on the fact that the same is against the public policy and patent illegality. Public policy as a ground of challenge has always been met with certain scepticism. The phrase 'public policy' does not indicate 'a catch- all provision' to challenge awards before an appellate forum on infinite grounds. However, the ambit of the same is so diversly interpreted that in some cases, the purpose of limiting the Section 34 jurisdiction is lost. This Court's jurisprudence also shows that Section 34(2)(b) has undergone a lot of churning and continue to evolve. The purpose of Section 34 is to strike a balance between Court's appellate powers and integrity of the arbitral process.\n24. The first case, which expounded on the scope of 'public policy' was Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644 : (AIR 1994 SC 860), which inter alia provided that a foreign award may not be enforced under the said Act, if the court dealing with the case is satisfied that the enforcement of the award will be contrary to the public policy. After elaborate discussion, the Court arrived at the conclusion that public policy comprehended in Section 7(1)(b)(ii) of the Foreign Awards (Recognition and Enforcement) Act, 1961 is the \"public policy of India\" and does not cover the public policy of any other country. For giving meaning to the term \"public policy\", the Court observed thus:\n\"66. Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b)(ii) of the Foreign Awards Act do not postulate refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of enforcement and the ground of challenge is confined to the recognition and enforcement being contrary to the public policy of the country in which the award is set to be enforced. There is nothing to indicate that the expression 'public policy' in Article V(2)(b) of the New York Convention and Section 7(1)(b) (ii) of the Foreign Awards Act is not used in the same sense in which it was used in Article I(c) of the Geneva Convention of 1927 and Section 7(1) of the Protocol and Convention Act of 1937. This would mean that 'public policy' in Section 7(1)(b)(ii) has been used in a narrower sense and in order to attract the bar of public policy the enforcement of the award must invoke something more than the violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign awards which are governed by the principles of private international law, the expression 'public policy' in Section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in the sense the doctrine of public policy is applied in the field of private international law. Applying the said criteria it must be held that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality.\" In ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 : (AIR 2003 SC 2629), the scope of Section 34 was expanded to include patent illegality as a ground for challenging the award and held as under :\n\"31. Therefore, in our view, the phrase 'public policy of India' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term 'public policy' in Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] : (AIR 1994 SC 860) it is required to be held that the award could be set aside if it is patently illegal. The result would be-award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void. (...)\n74. In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that: (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. (2) The court may set aside the award: (i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, (b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act, (ii) if the arbitral procedure was not in accordance with: (a) the agreement of the parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate. (c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract. (3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. (4) It could be challenged: (a) as provided under Section 13(5); and (b) Section 16(6) of the Act. Eventually, a three-Judge Bench in ONGC Ltd. v. Western Geco International Limited, (2014) 9 SCC 263 : (AIR 2015 SC 363), while upholding Saw Pipes case (supra), noted that 'illegality' of the award must go to root of the matter. Illegality of a trivial nature could not be held to violate the public policy.\n25. In Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1 : (AIROnline 2019 SC 1928) , this Court held:\n\"24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.\n25. Moreover, umpteen number of judgments of this Court have categorically held that the Courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.\" With these observations and limitations set out above, we need to examine whether the award can be sustained under Section 37 of the Arbitration Act.\n26. The main challenge to the award is against the imposition of unliquidated damages, when the matter of fact stood that the contract between parties stipulated for pre-estimated damages (liquidated damages). The concerned contract contained provisions for liquidated damages for breach of contract, particularly breach of deadlines set in the contract. Under Indian Contract law, such liquidated damages are recognized, subject to the same being reasonable. Section 74 of the Indian Contract Act, provides that:\n74. Compensation for breach of contract where penalty stipulated for.-When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.\n27. In order to examine whether the delayed execution of contract by the Remi Metals was liable for compensation, the tribunal examined whether time was of the essence in the contract. In our considered opinion, 'time not being the essence of the contract', as determined by the Arbitral Tribunal, was beyond reproach. Reliance on the contractual conditions and conduct of parties to conclude that existence of extension clause dilutes time being the essence of the contract, was in accordance with rules of contractual interpretation.\n28. In this context, the award concludes that as time was not the essence, liquidated damages could not be granted, in the following manner: \"Since time was not the essence of the contract, the measure of damages specified under Clause/ Liquidated damages, which was the essence of the contract, cannot be regarded as appropriate for determining the loss sustained by ONGC\" \n(Emphasis supplied)\n29. In order to consider the relevancy of time conditioned obligations, we may observe some basic principles: a. Subject to the nature of contract, general rule is that promisor is bound to complete the obligation by the date for completion stated in the contract. [Refer to Percy Bilton Ltd. v. Greater London Council, (1982) 1 WLR 794] b. That is subject to the exception that the promisee is not entitled to liquidated damages, if by his act or omissions he has prevented the promisor from completing the work by the completion date. [Refer Holme v. Guppy, (1838) 3 M and W 387] c. These general principles may be amended by the express terms of the contract as stipulated in this case.\n30. It is now settled that 'whether time is of the essence in a contract', has to be culled out from the reading of the entire contract as well as the surrounding circumstances. Merely having an explicit clause may not be sufficient to make time the essence of the contract. As the contract was spread over a long tenure, the intention of the parties to provide for extensions surely reinforces the fact that timely performance was necessary. The fact that such extensions were granted indicates ONGC's effort to uphold the integrity of the contract instead of repudiating the same.\n31. Clause 9(i) of the Purchase Order reproduced above makes it clear that time is the essence of the contract, subject to extension granted without prejudicing the right of ONGC to recover damages. These damages, by one reasonable interpretation, could be read as damages based on actual loss. Such conclusion was nd based on the Arbitral Tribunal's interpretation of 2 para of Section 55 of the Contract Act, which reads as under: Effect of such failure when time is not essential.- If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. (emphasis supplied) The Arbitral Tribunal construed the aforesaid provision to interpret the term 'loss' to mean actual tangible loss provable by evidence, instead of pre-estimated loss. Such interpretation, in the facts and circumstances, could be held to be a reasonable interpretation, as the other party was not able to impugn the same by pointing to any documents or correspondence to the contrary. When a standard form of a contract is utilised, ONGC is assumed in law to have the larger bargaining power to enter into a contract, unless clear intention is shown to the contrary. In this case at hand, a reasonable interpretation against ONGC may be utilised.\n32. In Saw Pipes case (supra), impugned clause for liquidated damages was considered and upheld by this Court in the following manner:\n46. From the aforesaid sections, it can be held that when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss which naturally arises in the usual course of things from such breach. These sections further contemplate that if parties knew when they made the contract that a particular loss is likely to result from such breach, they can agree for payment of such compensation. In such a case, there may not be any necessity of leading evidence for proving damages, unless the court arrives at the conclusion that no loss is likely to occur because of such breach. Further, in case where the court arrives at the conclusion that the term contemplating damages is by way of penalty, the court may grant reasonable compensation not exceeding the amount so named in the contract on proof of damages. However, when the terms of the contract are clear and unambiguous then its meaning is to be gathered only from the words used therein. In a case where agreement is executed by experts in the field, it would be difficult to hold that the intention of the parties was different from the language used therein. In such a case, it is for the party who contends that stipulated amount is not reasonable compensation, to prove the same. ...\n64. ... Under Section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss caused to him which the parties knew when they made the contract to be likely to result from the breach of it. This section is to be read with Section 74, which deals with penalty stipulated in the contract, inter alia (relevant for the present case) provides that when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, the party complaining of breach is entitled, whether or not actual loss is proved to have been caused, thereby to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named. Section 74 emphasizes that in case of breach of contract, the party complaining of the breach is entitled to receive reasonable compensation whether or not actual loss is proved to have been caused by such breach. Therefore, the emphasis is on reasonable compensation. ... But if the compensation named in the contract for such breach is genuine pre- estimate of loss which the parties knew when they made the contract to be likely to result from the breach of it, there is no question of proving such loss or such party is not required to lead evidence to prove actual loss suffered by him.. ...\n66. In Maula Bux case [(1969) 2 SCC 554] : (AIR 1970 SC 1955) the Court has specifically held that it is true that in every case of breach of contract the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree and the court is competent to award reasonable compensation in a case of breach even if no actual damage is proved to have been suffered in consequence of the breach of contract. The Court has also specifically held that in case of breach of some contracts it may be impossible for the court to assess compensation arising from breach. Although the aforesaid case was cited by the Arbitral Tribunal, it distinguished the same by observing that the aforesaid case was silent on the aspect. We need to accept the aforesaid distinction based on the different set of circumstances this case emanates from. In Saw Pipes (supra), the purchaser therein had extended the time for supply of goods subject to the specific condition that purchaser would recover the agreed stipulated damages from the contractor. Thus, the aspect of waiver is an important distinguishing factor, which was not dealt with in the earlier judgment.\n33. This brings us to the waiver. It may be noted that ONGC waived liquidated damages twice before giving extension with pre- estimated damages. The approach of the Arbitral Tribunal was to hold that once liquidated damages were waived in the first extension, subsequent extension could not be coupled with liquidated damages unless a clear intention flowed from the contract; while this Court recognizes the autonomy of the party to engage in contractual obligation. Such obligation must be contracted in clear terms. From the aforesaid discussion, it is clear that the promisee (ONGC) waived the liquidated damages initially and the same cannot be imposed, unless such imposition was clearly accepted by parties. In this case, the interpretation of the Arbitral Tribunal could not be faulted as being perverse, for the reasons stated above.\n34. Mr. Shyam Diwan, learned senior counsel, appearing on behalf of the Remi Metals, submitted that the view taken by the Arbitral Tribunal was reasonable, as the loss sustained by ONGC is given on the basis of actual loss. In this situation, the interpretation of the law and the facts provided under the award is a reasonable interpretation, which can be sustained as being a plausible view.\n35. This Court cannot interfere with this award, as the award is a plausible view for the following reasons: a. The Arbitral Tribunal's interpretation of contractual clauses having extension procedure and imposition of liquidated damages, are good indicators that 'time was not the essence of the contract'. b. The Arbitral Tribunal's view to impose damages accrued on actual loss basis could be sustained in view of the waiver of liquidated damages and absence of precise language which allows for reimposition of liquidated damages. Such nd imposition is in line with the 2 para of Section 55 of the Indian Contract Act. c. The Arbitral Tribunal was correct in distinguishing the dictum of this Court in Saw Pipes (supra), which validated imposition of liquidated damages in a similar contract. d. The High Court and District Court strayed beyond the limitation under Section 34 and 37 of the Arbitration Act. e. Other aspects of the award also do not require interference of this Court, in view of the law laid down in the Project Director, National Highways No.45E and 220, National Highways Authority of India v. M. Hakeem.2 2 SLP (CIVIL) NO.13020 OF 2020\n36. Therefore, we set aside the order of the High Court as well as the District Court's interference, and uphold the award of the Arbitral Tribunal. Accordingly, Civil Appeal Nos. 2826-2827 of 2016 are allowed and Civil Appeal arising out of SLP (C) 19203 of 2012 is disposed of accordingly.\n37. Parties are to bear their own costs.",
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"case_title": "SUPREME COURT OF INDIA | Civil Appeal No. 4029 of 2010 (@ SLP(C) No. 3883 of 2008) | Eureka Forbes Limited v. Allahabad Bank And Others | 03/05/2010",
"case_details": "Case: Civil Appeal No. 4029 of 2010 (@ SLP(C) No. 3883 of 2008) | Eureka Forbes Limited v. Allahabad Bank And Others",
"generated_outcome": "DISMISSED",
"reference_outcome": "ALLOWED",
"case_record": "The appellant, Eureka Forbes Limited, entered into a leave and licence agreement with Respondent Nos. 2 & 3 for premises and machinery. Respondent Nos. 2 & 3 subsequently availed cash credit from Allahabad Bank (Respondent No. 1), hypothecating their raw materials, semi-finished, and finished products to the Bank. Due to non-payment of licence fees, Respondent Nos. 2 & 3 requested the appellant to take over possession of the premises and closing stock, authorizing the appellant to sell the stock to adjust arrears. The appellant took possession in August 1987. The Bank, via a letter dated August 21, 1987, informed the appellant that the stocks and machinery were hypothecated to them. Despite this knowledge, the appellant sold a CTC machine in March 1988 and other hypothecated stock. The Bank filed a suit in 1989 for recovery of Rs. 22,11,618.62 against all respondents, which was later transferred to the Debt Recovery Tribunal (DRT). The DRT passed an ex-parte judgment against the appellant in 1995.",
"generated_judgment": "**DISMISSED**\n\nIn evaluating the appeal based on the facts provided, it is important to consider the sequence of events and the knowledge of the parties involved:\n\n1. **Hypothecation Knowledge**: The Bank informed the appellant on August 21, 1987, that the stocks and machinery were hypothecated to them. This is a key piece of information indicating the appellant's awareness of the Bank's interest in the property.\n\n2. **Appellant's Actions**: Despite being informed of the hypothecation, the appellant proceeded to sell the CTC machine in March 1988 and other hypothecated stock. This action demonstrates that the appellant was aware of the Bank's interest but chose to proceed with the sale, potentially undermining the Bank's secured interest.\n\n3. **Legal Proceedings**: The Bank filed a suit for recovery in 1989, which was transferred to the Debt Recovery Tribunal. The DRT passed an ex-parte judgment against the appellant in 1995, indicating that the appellant did not successfully contest the Bank's claims at that stage.\n\nGiven the appellant's knowledge of the hypothecation and subsequent actions, it is reasonable to conclude that the appellant acted against the interests of the Bank, whose secured interest was clearly communicated. The ex-parte judgment by the DRT further supports the Bank's position. Therefore, the appeal should be dismissed.",
"reference_judgment": "The Judgment was delivered by : Hon'ble Justice Swatanter Kumar\n1. Leave granted.\n2. While pressing into service the definition of the word `debt' appearing in Section 2 (g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short as the 'Recovery Act'), it is vehemently contended before us that the Debt Recovery Tribunal (for short the 'Tribunal') lacks inherent jurisdiction to entertain and decide the claim of the Bank against the appellant. The appellant was neither a borrower nor was there any kind of privity of contract between the two. As such, money claimed from them was not a 'debt' and, therefore, rigors of the recovery procedure under the provisions of the Recovery Act could not be enforced against the appellant. This is a submission which, at the first blush, appears to be sound and acceptable. But, once it is examined in some depth and following the settled canons of law, one has to arrive only at a conclusion that the contention is without any substance and merit. At the very outset, as a guiding principle we may refer to the maxim a verbis legis non est recedendum' but before we proceed to examine the merit or otherwise of the principal contention raised before us, it will be necessary for us to refer to the basic facts giving rise to the present appeal, particularly, in view of the fact that it has a wretched and long history which began in the year 1988.\nFACTS\n3. Appellant is a company duly incorporated under the provisions of the Companies Act, 1956, while Respondent No. 1, Allahabad Bank is a body constituted under the Banking Companies (Acquisition and Transport of Undertakings) Act, 1976. Respondent No. 3 in the present appeal is a proprietorship firm of Respondent No. 2. The appellant company is stated to have entered into an agreement on 16th August, 1983 with respondent Nos. 2 & 3, granting licence in their favour to use premises at Jainkunj at Goragachha Road, Kolkata (hereinafter referred to as `the premises') for a consideration of Rs. 12,000/- payable to the appellant, along with the plant and machinery as well as their trade mark \"OSBOURNE\". It is further the case of the appellant that they had no knowledge of the fact that, respondent Nos. 2 & 3 had availed certain cash credit facility and had hypothecated their raw materials, semi-finished and finished products to Bank. However, on or about 28th February, 1987, the said respondents had requested the appellant to take over the possession of the said premises along with the closing stock lying therein. This was so requested because respondent Nos. 2 & 3 had not paid the licence fee for the use and occupation of the premises, goods etc. as agreed and further vide letter dated 23rd July, 1987, they stated that appellant could sell the stocks as well as lathe machine lying in the factory premises and adjust the sale proceeds thereof towards the arrears of licence fee. After taking possession of the factory premises, the appellant prepared an inventory of the stock in possession and as alleged by them, they had no knowledge that these stocks had been hypothecated by the said respondents in favour of the Bank. The letter dated 7th August, 1987 has been annexed by the appellant in support of such averment. It appears from the record that the respondent Bank vide its letter dated 21st August, 1987 wrote to respondent Nos. 2 & 3 raising an issue as to how the possession of the stocks and machinery was given to the appellant. This was done in response to the letter of respondent Nos. 2 & 3 dated 18th August, 1987 and copy thereof was sent to the appellant while referring to the letter dated 7th August, 1987 addressed by the appellants to the other respondents. It will be useful to reproduce the relevant extract of the letter dated 21st August, 1987 which reads as under:\n \"We acknowledge receipt of your letter dated 18.8.1987 along with enclosures.\nIn this regard we fail to understand as to how you have permitted M/s Eureka Forbes Limited to take possession of your factory at 1, Goragacha Road, Kolkata - 700 043, the stocks and machineries of which are already hypothecated to us. And again you are advising us not to visit the factory at the moment which we are requesting you to do the same reputedly. Since April, 1986, you are also not submitting the stock statement and you have virtually stopped all your banking operations through us. Now we observe from the stock statement forwarded to us as enclosure that there are good amount of stock still lying at the factory.\" \n4. To the above letter, the appellant responded vide its reply dated 23rd September, 1987 saying that the factory belongs to them and they had given the same on licence to respondent No. 3 and when the possession was handed over back to them certain stocks and machinery belonging to the respondent No. 3 were lying in the factory. They had made a specific request that these should be sold and adjusted towards the licence fee and the surplus money, if any, should be refunded to them. The respondent Bank claimed that they had a charge over the movable assets, in particular, the CTC machine which appellant had disposed off. For the sale of CTC machine, they had issued an advertisement on 12th March, 1988 and the same was sold for Rs.1,48,975/-.\n5. The Bank filed a suit in the District Court at Alipore against the present appellant and respondent Nos. 2 & 3 claiming a sum of Rs.22,11,618.62. In this suit, the present appellant filed a written statement making a preliminary objection that there was no privity of contract between the Bank and the present appellant. That it was not a borrower of the Bank and had no dealings with them as such, the suit was barred for misjoinder of parties and in fact no suit could lie against the present appellant. The plea of suit being barred by time, the principles of estoppel, waiver and acquiescence was also taken. It was stated on merits, that neither they were aware of any transaction between plaintiff Bank and respondent Nos. 2 & 3 nor of any charge over the machinery and equipment etc. The appellant denied the allegations made against them. Most of the paragraphs were denied for want of knowledge and emphasis was laid only on the above stated two averments. Appellant also averred that the Bank was trying to cover up lapses of its own officials by pressurizing them. It could not have accepted, as security, the factory or machinery as it was owned by the appellant and it had not given any consent for that purpose. This suit came to be transferred after the provisions of the Recovery Act came into force in the year 1994. Upon transfer it was numbered as T.A. No. 15/1994. The appellant was served with a notice from the Tribunal and it appointed one M/s Mallick and Palit as its Advocate to appear and pursue the case on its behalf. The appellant did not appear before the Tribunal and after some time the proceedings were carried on in their absence. The evidence was recorded and finally an ex-parte judgment was passed against the appellant on 15th June, 1995. In furtherance to the ex-parte judgment, a Recovery Certificate No. 48 of 1995 was issued by the competent authority under the provisions of the Act on 30th June, 1995. The appellant claims to have taken steps for setting aside the ex-parte judgment. They filed a writ petition before the High Court of Kolkata, (being Writ Petition No. 1804 of 1995), challenging the constitutional validity of the provisions of the Recovery Act and also prayed for stay of execution of the ex-parte judgment dated 15th June, 1995. An interim order dated 3rd November, 1995 was passed in favour of the appellant directing that the execution proceedings should go on, however no final order be passed without the leave of the Court. The Tribunal vide its Order dated 4th March, 1996, appointed a receiver to prepare an inventory of hypothecated goods and a warrant of attachment was also issued. The High Court of Kolkata, again on application filed by the appellant directed the receiver only to make inventory of the goods and not to take any further action. During the pendency of these proceedings, the Recovery Officer upon further application by the respondent Bank, directed the receiver to make inventory of all the properties vide its Order dated 17th August, 1996. This order was challenged by the appellant before the Calcutta High Court which stayed further proceedings.\n6. According to the appellant, it was advised to initiate proceedings to set aside the ex-parte decree and Recovery Certificate and hence an application was filed before the Tribunal for recalling the ex-parte order. Along with this, an application for condonation of delay was also filed. Consequent upon the dismissal of the application for condonation of delay, the appellant filed an appeal before the Debt Recovery Appellate Tribunal (for short the `Appellate Tribunal') against the order dated 19th August, 1999, passed by the Tribunal. The same was also dismissed by the Appellate Tribunal vide its judgment dated 1st June, 2001. This again was assailed before the High Court under Article 227 of the Constitution of India. The same was also dismissed by the High Court of Kolkata vide Order dated 28th November, 2001. Still unsatisfied, the appellant filed a Special Leave Petition before this Court, being SLP (C) No. 7883 of 2002 against the Order of the High Court of Kolkata which was dismissed as withdrawn by this Court vide Order dated 26th April, 2002. In other words, the Order of the Tribunal declining to set aside the ex-parte decree attained finality. The Revision Petition filed by the appellant before the High Court of Kolkata also came to be dismissed finally vide Order dated 2nd April, 2003. In furtherance to its zeal to somehow get the ex-parte decree set aside, the appellant preferred an appeal before the Appellate Tribunal against the order of the Tribunal dated 15th June, 1995. The Order dated 16th April, 2004 of the Appellate Tribunal was challenged before the learned Single Judge of the High Court. In those proceedings, an application for amendment to bring the subsequent events on record, was filed which was dismissed by the learned Single Judge vide Order dated 11th June, 2004. Against this Order, an appeal was filed before the Division Bench of Kolkata High Court which also met the same fate. However, the Division Bench while dismissing the appeal observed that the Order passed by the learned Single Judge was correct in law but it would not prevent the appellant from resorting to any remedy which is available to it in accordance with law.\n7. In the Appeal preferred by the appellant, the Appellate Tribunal vide its Order dated 15th July, 2003 directed the appellant to deposit a sum of Rs.5,00,000/- as condition precedent for entertaining the said appeal. This sum was deposited and a reply affidavit to this application was filed on behalf of the Bank. Vide Order dated 16th April, 2004, the Appellate Tribunal dismissed the application for condonation of delay in filing the appeal. The order dated 16th April, 2004 of the Appellate Tribunal was challenged in a Civil Revision Application before the High Court of Kolkata. The High Court vide its interim Order dated 11th June, 2004 directed the appellant to deposit a sum of Rs.15,54,118.62 as a condition for hearing the appeal and the same was deposited. This application was against the interim order and the appeal remained pending before the Chairperson of the Appellate Tribunal. Finally the appeal was allowed vide Order dated 28th December, 2006 by the Appellate Tribunal. While setting aside the ex-parte decree the Appellate Tribunal held as under:-\n \"Having said all that, to my mind, the net result is, the ex-parte decree in question passed against the appellant, Eureka Forbes Ltd. by the Debts Recovery Tribunal, Calcutta, is without jurisdiction and therefore, the appeal must succeed. Consequently, the entire sum of money appropriated by the respondent-bank as per orders of the Hon'ble Court in C.O. No. 1568 of 2004 will be refundable together with interest at the lending rate also as per the said orders of the Hon'ble Court.\nAccordingly, the decree in question dated 15th June, 1995 in T.A. 15 of 1994 passed by the Debts Recovery Tribunal, Calcutta, and certificate in pursuance thereof as against the appellant, Eureka Forbes Ltd., is hereby set aside. The entire sum appropriated by the respondent bank in terms of the orders of the Hon'ble Court in C.O. No. 1568 of 2004 be refunded to the appellant by the bank together with interest at the lending rate within a period of three months from date. There shall be no orders as to costs.\" \n8. Respondent Bank challenged the Order of the Appellate Tribunal under Article 227 of the Constitution of India being C.O. No. 554 of 2007, before the learned Single Judge of the Kolkata High Court which vide its judgment dated 12th October, 2007, restored the judgment and the order of the Tribunal. Aggrieved therefrom, the appellant preferred the appeal before the Division Bench of Kolkata High Court which, vide its Order dated 11th February, 2008, dismissed the appeal and sustained the Order of the learned Single Judge giving rise to the present Special Leave Petition.\n9. The challenge to the impugned orders is inter alia on the ground that, Tribunal had no jurisdiction to entertain such an application filed on behalf of the Bank as there was no privity of contract between the appellant and the Bank. Besides the issue of jurisdiction, the stand taken is that the Bank had not proved on record by way of any evidence that anything is due to it from the appellant. All the witnesses examined on behalf of the Bank have stated nothing to the above mentioned effect. In any case, in the subsequent proceedings the decree should have been set aside, as nothing in law could be stated to be due from the appellant. In the suit, which was decreed ex-parte by the Tribunal on 15th June, 1995, it was specifically averred in the plaint that, Respondent No. 3 along with other defendants illegally, erroneously, arbitrarily and whimsically had taken possession of the entire stock, machinery, equipments etc. without knowledge of the respondent Bank. The respondents had not allowed inspection of the factory and verification of the stock and other requisite elements. In fact, the appellant has misguided the Bank while informing vide their letter dated 18th August, 1987, that the workers had forcibly occupied the factory. Reference was also made to the fact that some stocks, plant and machine belonging to respondents had been given to the appellant for sale etc. as per the agreement between the parties. The goods, stocks were hypothecated to the Bank and according to the Bank, all the defendants in the suit were liable to pay the dues of the Bank. On this premise, the Bank prayed for decree for the entire amount and also interest @ 18.05% per annum. A specific prayer was made that the Bank has a valid and subsisting charge over the properties of defendant Nos. 1 & 2 for the due repayment to it. A decree for realization of hypothecated goods by and under the direction of the Court was also prayed for. We have already noticed above that there was denial of the allegations made in the plaint.\n Merits of the case relatable to the factual matrix \n10. The main stand of the appellant was in relation to the jurisdiction and lack of knowledge of the fact that the goods in stock were hypothecated to the Bank along with the plant and machinery. The two important documents, dated 16th August, 1983 and 28th February, 1987, which have been placed on record, are of some significance. The agreement dated 16th August, 1983 states the conditions of the leave and licence agreement between respondent Nos. 2 & 3 and the appellant. It was indicated therein that they could use the plant and machine in the premises and it was for a period of three years with a deposit of Rs. 1,00,000/- and Rs.12,000/- per month as fee. Under Clause 6, the stocks at the relevant time were to be sold for a consideration of 0.75 lakhs and they were entitled to use the trade mark. However, vide letter dated 28th February, 1987, which is after the expiry of a period of more than three years, it was indicated by Respondent Nos. 2 & 3 to the appellant that, they wanted to give back possession of factory and there were stocks of about Rs.7,00,000/- which included raw material, semi-finished and finished goods, lathe worth Rs.1,15,000/- which could be sold to a subsequent licencee. Relevant paragraphs of this letter can be usefully reproduced at this stage:\n \"2. We are having stocks worth about Rs.7 lacs which includes raw material, semi-finished & finished goods. We would be grateful if your subsequent licencee agree to take oil the stocks plus one Lathe worth Rs. 1,15,000/- as we would be willing to negotiate with them.\n5. We would be pleased to settle our account with you as soon as the factory stocks are sold to your future licences and also the worker's retrenchment dues. We state this as we have suffered heavy losses due to continues agitations and non-payment of due by our customers and also cancellation of our orders.\" \n11. Another letter written by Respondent Nos. 2 & 3 to the appellant on 23rd July, 1987 referred to certain telephonic conversation. It was specifically recorded in it that possession of the factory will be handed over on 31st July, 1987. It was also stated that there was financial crisis and that the stocks worth Rs.7,00,000/- and the lathe worth Rs. 1,15,000/- etc. could be sold and they will not be able to pay any licence fee in future. On 7th August, 1987, the possession of the premises was taken by the appellant and a list had been prepared, copy of the list placed on record shows the physical stock as on 7th August, 1987 and it contains bearings, plumber block, bearing of milling MC, GM Brass and Segment, old Osborn, C.I. of Milling M.C., C.I. components, AC IMCA machinery etc. It is interesting to note that all these correspondences and conversations between the parties had been without any intimation to the respondent Bank. In fact, all this had been done behind the back of the Bank. Besides this, the Bank had led oral and documentary evidence in support of its claim. The Bank had written the letter dated 21st August, 1987 in response to the letter of Respondent Nos. 2 & 3 dated 18th August, 1987, but the letter dated 18th August, 1987 has not been placed on record. However, vide letter dated 21st August, 1987 copy whereof was sent to the appellant as well, the bank had informed them that it had given the financial assistance to respondent Nos. 2 & 3 and the Bank was having charge over the stocks and machinery which had been hypothecated to the Bank. The Bank further expressed surprise as to how the appellant had taken possession of the unit. Another relevant aspect of the matter would be the conduct of the present appellant. We have serious issues that the appellant, after taking possession of the premises, had not come to know about the goods being hypothecated to the Bank. Advertisement for the sale of machinery was issued as late as on 12th August, 1988. In other words, they had sold goods, even machines, like CTC at a throw away price, even after having complete knowledge about the hypothecated goods. Thereafter, an ex- parte decree was passed, however they did not take any steps to get the same set aside, except when a recovery certificate had been issued by the competent authority. Thereafter, their prayer for setting aside ex-parte decree was rejected consistently by all the courts. When the High Court of Kolkata was dealing with the Revision Petition filed against the Order dated 1st June, 2001, passed by the Appellate Tribunal, the Court had specifically noticed the conduct of the appellant and had observed as under:-\n \"After hearing Mr. Mitra appearing on behalf of the petitioner and after going through the material on record I fully agree with the Tribunal below that the present proceedings have been initiated by the petitioner Balu: 10 with the sole object of delaying the execution of a decree passed in the year 1995. It has been rightly pointed out by those Tribunals that after filing written statement in the suit in 1989 till the decree was passed in 1998 the Tribunal below, the petitioner took no step in the original proceedings. There is no scope of doubt that notice of the proceedings was served through the Tribunal and the petitioner entered appearance through a lawyer. No reason has been assigned in the application what prevented the learned advocate-on record of the petitioner from contesting the proceedings before the Tribunal. In paragraph 5 of the application before the Tribunal it has simply been state that \"although the petitioner engaged Mr. H.P. Balu of M/s. Mallick & Palit, solicitors to look after the petitioner's interest in the said matter, the said advocates chase not to appear in the proceedings for and on behalf of the petitioner and consequently the certificate was passed by the tribunal in favour of the plaintiff. It appears that the very same advocate- on-record has preferred writ application before this Court challenging the vires of the act and had also filed subsequent application under Article 227 of the Constitution of India impugning order passed in execution proceedings and the petitioner has obtained interim orders in those proceedings before this court. It is not the case of the petitioner that it has abandoned those proceedings and by the advice of the new lawyer has confined itself to the present proceedings. It appears that although those matters are still pending, the petitioner by filing instant proceedings has tried to find out an additional avenue for stalling the execution proceedings.\" \n12. After having lost upto this Court, another round of litigation started, claiming it to be in furtherance to the Order of Kolkata High Court, granting them liberty to take steps in accordance with law. It is in furtherance of this observation of the High Court that, the proceedings again started from the Appellate Tribunal and now the present petition has been filed before this Court. We have already noticed that owing to the sale of goods, complete knowledge, that the goods were hypothecated to the Bank is attributable to the appellant and hence, they could not have sold the said goods without permission of the Bank. Admittedly nothing of this kind was done and the Bank was kept in dark.\n13. The application for setting aside the ex-parte decree had been filed by the appellant along with an application for condonation of delay in filing the said application. However, the application for condonation of delay was rejected and subsequently the ex-parte decree was not set aside. This order of the Tribunal was neither interfered by the High Court nor by this Court in a Special Leave Petition preferred by the appellant. In view of the observations made by the High Court in the order, the appellant filed another application for setting aside the decree on the ground that the Tribunal had no jurisdiction. The said application came to be allowed by the Appellate Tribunal which accepted the contention raised on behalf of the appellant. The reasoning recorded in the judgment of the Tribunal was that, it was a claim for damages in tort and was not a debt, and also that it was beyond the scope of the jurisdiction vested in the Tribunal under Section 17(1) of the Recovery Act, as there were insufficient allegations or evidence. No liability in terms of the debt can be fastened on the appellant. This reasoning of the Tribunal was set aside by the High Court of Kolkata in the impugned judgment and observed that, even claim for damages would fall well within the jurisdiction of the Tribunal in the facts of the case, and particularly, when the averments remained uncontroverted and no evidence was led by the appellant. The hypothecated goods at the place of business of Respondent Nos. 2 & 3 were there at the time of handing over of the possession of the factory back to the appellant, and this fact can hardly be disputed on record. A finding was recorded in the proceedings that appellant was an intermeddler and there was collusion between the appellant and Respondent Nos. 2 & 3. Based on this finding, it was further held that the case of the Bank was fully covered under the expression \"debt\", \"any liability\", \"any person\" and accordingly, the Court set aside the judgment of the Tribunal. In the light of the facts and circumstances of the case, we are unable to find the stand of the High Court to be erroneous. Of course, to some extent, the entire suit could not have been decreed against the appellant. The respondent Bank was entitled to a limited relief, vis-a-vis, its hypothecated stocks, goods and machinery, if any. It was not even the case of the Bank before the Tribunal that the present appellant was a borrower and in discharge of its final liability towards Bank the entire suit was liable to be decreed. The cause of action in favour of the Bank and against appellant, at best, could be limited to the hypothecated stock and goods, as beyond that, there is no averment in the plaint which would justify grant of any larger relief in their favour. We would shortly discuss the legal aspects as well as the reasoning in law, in this regard. The Bank has examined merely four witnesses in support of its case. There is no statement or note of any of these witnesses for imposition of any liability upon the appellant, except to the extent of goods hypothecated; such a conclusion can even be drawn from the letters dated 28th February, 1987, 23rd July, 1987, 7th August, 1987 and 21st August, 1987. The correctness of these letters has never been disputed by any of the parties and it was admitted by the appellant that the advertisement for sale of goods was issued on 12th March, 1988. Certainly and apparently, the appellant had complete knowledge, that the entire stock, goods, machinery etc. had been hypothecated to the Bank. Certainly, there has been a definite lapse on the part of the Bank, as the loan facility was granted in the year 1984, i.e. subsequent to the execution of the leave and licence agreement dated 16th August, 1983. It is obvious from the facts appearing on record that the loan has been sanctioned in a most casual and undesirable manner without even verifying the basic securities of respondent Nos. 2 & 3.\n14. Besides the fact that the present appellant had earlier raised all the pleas in their application for setting aside the ex parte decree which was rejected by the Tribunal, High Court as well as this Court, it also needs to be noticed that except making vague denials in the written statement, which they had filed before the Tribunal at the relevant point of time, they had raised no specific or concrete defence in regard to the sale of hypothecated goods by them. The fact, as already noticed, cannot be disputed that the goods in question which were hypothecated or were under the charge of the Bank have been sold by the appellant. The advertisement issued by them clearly shows that they had invited offers for sale of CTC machines and spares, which itself demonstrates that a number of machines and other goods have been sold by them. It is an accepted precept of appreciation of evidence that a party which withholds from the Court best evidence in its power and possession, the Court would normally draw an adverse inference against that party. In any case, the bona fide of such a party would apparently be doubted. The appellant was possessed of best evidence in regard to the goods of which they had taken possession on 7th August, 1987, in fact were hypothecated to the Bank. These goods including machines were sold by the appellant prior and subsequent to the issue of the advertisement dated 12th March, 1988. Thus, the best evidence in this regard, was obviously in appellant's power and possession which they did not produce before the Court despite prolonged litigation. As such, we would have no hesitation in drawing some adverse inference against the appellant in this behalf. Another ancillary factor, which the Court has to take into consideration is that, the value declared by respondent Nos. 2 and 3 in relation to stocks, has not been denied specifically, either in correspondence or in the pleadings by the appellant. In the letter dated 28th February, 1987 value of goods worth Rs. 7,00,000/- and lathe machine worth Rs. 1,15,000/- was alleged to be lying in the factory, in addition to other materials. The inventory which was annexed to the letter of 7th August, 1987 refers to various components, parts, bearings etc. but does not refer to CTC machines. Admittedly, the appellants have sold these machines in furtherance to the advertisement dated 12th March, 1988. In short, an amount which cannot be disputed, as is evident from the documentary and oral evidence on record is, Stock A, Stock lying in the premises, 7 lacs lathe machine, Rs.1,15,000/- CTC machine, as sold by the appellant as per their own version, the CTC machine which was sold by the appellant for a sum of Rs. 1,48,975/-, thus, totaling up to Rs. 9,63,975/-. The respondent Bank would be entitled to receive the interest at the rate of 6% per annum from 14th March, 1988 till the date of payment of the amount. We are awarding the same rate of interest which has been awarded by the Tribunal and was accepted by the Bank.\n15. It appears that the Bank is acting in a manner which is ex facie not in consonance with the commercial principles and in a most casual and irresponsible manner. The method in which the financial limits have been sanctioned to respondent Nos. 2 and 3 does not stand to reasoning. Admittedly, respondent Nos. 2 and 3 had no title to the property. What verification was done to the appraisal report has been left to imagination. The conduct of the appellant further creates some suspicion in the mind of the Court. The appellant took no remedial or bonafide steps even after it had admittedly come to know that the goods in question were hypothecated to the Bank. On the contrary, it issued advertisement in March, 1988 for sale of hypothecated goods. On the face of this fact, they had no preferential right to sell the goods. In the letter dated 21st August, 1987, they had been informed that possession of the property as well as the goods have been taken unauthorizedly. Even if it is assumed that certain amounts were due to the appellant from respondent nos. 2 and 3 on account of licence fee, still they could not have brushed aside the charge of the Bank over the goods and machinery in question. Also in the alleged leave and licence agreement, dated 16th August, 1983, there was no clause, at least none has been brought to our notice, that the appellant would have charge over the goods and machinery, in the event of default in the payment of licence fee. In other words, the charge of the Bank was binding upon the appellant. The inventory of the goods had been prepared and signed by the parties. In the letter dated 7th August, 1987, these facts were confirmed in furtherance to the correspondence exchanged between the parties from 28th February, 1987.\n16. Ashok Kumar Goswami, Senior Manager, Allahabad Bank, who was examined as witness No. 1 on behalf of the Bank, has stated that the loans were advanced to Respondent Nos. 2 & 3. According to him Exh. 7 is the agreement cum letter of hypothecation for packing credit advance under which the financial assistance was allowed to them. He also proved Exh. 11, statement of stock of finished goods, work in progress, raw-material and machinery executed by Respondent No. 2 for and on behalf of Respondent No. 3. The stocks statements were shown in Exh. 12, while Exh. 13, was a letter written by Respondent No. 2 on 29th May, 1984 to the Bank. He specifically stated that the hypothecated goods were handed over by Respondent Nos. 2 & 3 to the appellant behind the back of the Bank. Another witness, whose statement at this stage can be usefully looked into, is that of Sh. Sankar Chakraborty, PW-2. Besides stating the general facts of the case, this witness specifically stated, that the Bank had impleaded the appellant, as they had taken possession of hypothecated goods of the Bank and that, the appellant had written a letter to the Bank and they raised a specific claim against it.\n17. From the above stated documentary evidence, it is clear that the parties had the knowledge of the fact that respondent nos. 2 and 3 enjoyed the financial assistance from the Bank and the goods were hypothecated to it. Even as per the statement of respondent nos. 2 and 3, the appellant sold the hypothecated goods with complete knowledge. This included hypothecated stock worth Rs. 7,00,000/-, lathe machine of value of Rs. 1,15,000/-, in addition to CTC machine and other spares.\n18. The goods in question, therefore, have been disposed off by the appellant either in collusion with respondent nos. 2 and 3 or at its own but with the knowledge that the goods were hypothecated to the Bank. Thus, to that extent, the liability of the appellant cannot be disputed.\nLEGAL ASPECTS OF THE CASE:-\n19. In continuation of the above factual matrix, now let us examine the principles of law which would be applicable to the facts and circumstances of the case and result thereof. There is, in fact, hardly any dispute before us that the goods in question had been hypothecated to the Bank. The appellant had complete knowledge of this fact, still it went on to sell the goods. The Bank had been negligent and, to some extent, irresponsible, in invoking its rights and taking appropriate remedy in accordance with law. Mere irresponsibility, on the part of the Bank, would not wipe out the rights of the Bank in law. Without the consent of the Bank, no person can utilize the hypothecated goods for his own benefit or sale by the borrower or any person connected thereto. It is nobody's case that the Bank had consented to such sale. This Court in case of Indian Oil Corporation v. NEPC India Limited [(2006) 6 SCC 736 ] described the meaning of 'entrustment' in relation to hypothecation as follows:\nxxxx xxxx xxxx xxxx\n \"The creditor may also have the right to claim payment from the sale proceeds (if such proceeds are identifiable and available). The following denifitions of the term `hypothecation' in P. Ramanatha Aiyar's Advanced Law Lexicon [3rd Edn. (2005), Vol. 2 pp. 2179 and 2180] are relevant:\n\"Hypothecation--It is the act of pledging an asset as security for borrowing, without parting with its possession or ownership. The borrowers enters into an agreement with the lender to hand over the possession of the hypothecated assets whenever called upon to do so. The charge of hypothecation is then converted into that of a pledge and the lender enjoys the rights of a pledge.\nHypothecation' means a charge in or upon any movable property, existing or future, created by a borrower in favour of a secured creditor, without delivery of possession of the movable property to such creditor, as a security for financial assistance and includes floating charge and crystallization of such charge into fixed charge on movable property. [Borrowed from Section 2(n) of Scuritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002].\" \n20. Physical domain over the hypothecated goods is no way a sine qua non for enforcing Bank's rights against the borrower. It was obligatory upon the appellant to deal with the goods only with the leave and permission of the Bank. Absence of such consent in writing would obviously result in breach of Bank's rights. \n21. The next question of law, that we are called upon to consider, is the ambit and scope of provisions of Section 2(g) of the Recovery Act, on which the entire case of the parties hinges. We have already noticed that the appellant has argued with great vehemence that, there was no privity of contract and they were not covered under the definition of `debt', and as such, recovery proceedings could not be initiated, much less, recovery could be effected from them under the provisions of the Act. Section 2(g) of the Recovery Act reads as under:\n \"debt\" means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application;\" \n22. The Recovery Act of 1993, was enacted primarily for the reasons that, the Banks and financial institutions should be able to recover their dues without unnecessary delay, so as to avoid any adverse consequences in relation to the public funds. The Statement of Objects and Reasons of this Act clearly state that Banks and financial institutions at present, experience considerable difficulties in recovering loans and enforcements of securities charged with them. The existing procedure for recovery of dues of the Bank and the financial institutions block significant portion of their funds in un-productive assets, the value of which deteriorates with the passage of time. Introduction of similar procedure was suggested by the Tiwari Committee. The Act provided for the establishment of Tribunals and Appellate Tribunals and modes for expeditious recovery of dues to the Banks and financial institutions.\n23. In this background, let us read the language of Section 2 (g) of the Recovery Act. The plain reading of the Section suggests that legislature has used a general expression in contra distinction to specific, restricted or limited expression. This obviously means that, the legislature intended to give wider meaning to the provisions. Larger area of jurisdiction was intended to be covered under this provision so as to ensure attainment of the legislative object, i.e. expeditious recovery and providing provisions for taking such measures which would prevent the wastage of securities available with the banks and financial institutions.\n24. We may notice some of the general expressions used by the framers of law in this provision :\na) any liability;\nb) claim as due from any person;\nc) during the course of any business activity undertaken by the Bank;\nd) where secured or unsecured;\ne) and lastly legally recoverable.\n25. All the above expressions used in the definition clause clearly suggest that, expression 'debt' has to be given general and wider meaning, just to illustrate, the word 'any liability' as opposed to the word 'determined liability' or 'definite liability' or 'any person' in contrast to 'from the debtor'. The expression 'any person' shows that the framers do not wish to restrict the same in its ambit or application. The legislature has not intended to restrict to the relationship of a creditor or debtor alone. General terms, therefore, have been used by the legislature to give the provision a wider and liberal meaning. These are generic or general terms. Therefore, it will be difficult for the Court, even on cumulative reading of the provision, to hold that the expression should be given a narrower or restricted meaning. What will be more in consonance with the purpose and object of the Act is to give this expression a general meaning on its plain language rather than apply unnecessary emphasis or narrow the scope and interpretation of these provisions, as they are likely to frustrate the very object of the Act. \n26. In the case of State of Gujarat and Ors. v. Akhil Gujarat Pravasi V.S. Mahamandal & Ors. [(2004) 5 SCC 155 ], this Court was concerned with the question of payment of taxes in relation to the provisions of the Bombay Motor Vehicle Tax Act, 1958. The Court while interpreting the scope of the entries in the legislative lists held that, they should be construed widely and general words used therein must comprehend ancillary or subsidiary matters relating to Schedule VII, Articles 245 and 246. The Court held as under:-\n \"In interpreting the scope of various entries in the legislative lists in the Seventh Schedule, widest- possible amplitude must be given to the words used and each general word must be held to extend to ancillary or subsidiary matters which can fairly be said to be comprehended in it. The entries should, thus be given a broad and comprehensive interpretation. In order to see whether a particular legislative provision falls within the jurisdiction of the legislature which has passed it, the Court must consider what constitutes in pith and substance the true subject-matter of the legislation and whether such subject-matter is covered by the topics enumerated in the legislative list pertaining to that legislature.\" \n27. Again in the of case of Raman Lal Bhailal Patel & Ors. v. State of Gujarat [(2008) 5 SCC 449 ], this Court was dealing with the word 'person' appearing in the provisions of Gujarat Agricultural Land Ceiling Act, 1960. The expression 'person' was defined with the inclusive definition that a person includes a joint family. The Court held that, where the definition is inclusively defining the word, there, the legislative intention is clear that it wishes to enlarge the meaning of the word used in the statute and that such word must be given comprehensive meaning. In law, the word `person' was stated to be having a slightly different connotation and refers to any entity that is recognized by law as having rights and duties of human beings.\n28. In the case of Greater Bombay Coop. Bank Ltd. v. United Yarn Tex (P) Ltd. & Ors. [(2007) 6 SCC 236 ], this Court took the view that, the elementary rule of interpretation of statute is that the words used must be given their plain grammatical meaning, therefore, the Court cannot add something which the legislature has not provided for. Similar view was also expressed by another Bench of this Court in the case of Unique Butyle Tube Industries (P) Ltd. v. U.P. Financial Corporation and Ors. [(2003) 2 SCC 455 ], that the Court cannot write anything into the statutory provisions which are plain and unambiguous. A Statute is an edict of the legislature. The language employed in a statute is determinative factor of legislative intent. The first and the primary rule of construction is that, the intention of the legislation must be found in the words used by the legislature itself. The question is not what may be supposed and has been intended but what has been said.\n29. The learned counsel for the appellant has heavily relied upon the judgment of the United Bank of India v. Debt Recovery Tribunal & Ors. [(1999) 4 SCC 69 ], to contend that the general expression must receive general meaning and in light of this principle, the present proceedings could not have been initiated, much less, recoveries effected under the provisions of the Recovery Act. We shall shortly discuss the merit of this contention.\n30. Before we advert to the discussion while applying these principles of interpretation to the provisions of Section 2 (g) of the Recovery Act, and also examine the merit of the contention raised on behalf of the respondent, it may be interesting to know as to how the word `debt' has been defined and explained by this Court in different judgments, with different context and under different laws.\n31. Years back this Court in the case of P.S.L. Ramanathan Chettiar & Ors. v. O.R.M.P.R.M. Ramanathan Chettiar [AIR 1968 SC 1047 ], explained the expression 'debt' as defined in the Madras Agriculturists Relief Act, 1938. The Court held that the definition appearing in Section 3 (iii) of the Act, despite the fact that it specifically states that 'debt' would not include rent as defined in clause (iv), or `Kanartham', as defined in Section 3 (1)(1) of the Malabar Tenancy Act, 1929, held that the definition is still of a very wide magnitude and would include 'any liability' due from an agriculturists with the specified expressions. The Court held as under:\n 'Debt' has been defined in Sec. 3 (iii) of the Act as meaning \"any liability\" in Cash or kind, whether secured or unsecured, due from an agriculturist, whether payable under a decree or order of a civil or revenue court or otherwise, but does not include rent as defined in Clause (iv), or 'Kanartham' as defined in Section 3 (1) (1) of the Malabar Tenancy Act, 1929.\" \nIn the case of Union of India v. Raman Iron Foundry [(1974) 2 SCC 231 ], this Court quoted as under:\n \"The classical definition of 'debt', is to be found in Webb v. Stenton where Lindley, L.J. said: \"... a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation\". There must be debitum in praesenti; solvendum may be in praesenti or in future - that is immaterial. There must be an existing obligation to pay a sum of money now or in future.\" \n32. Still, in another case titled as State Bank of Bikaner & Jaipur v. Ballabh Das & Co. & Ors. [(1999) 7 SCC 539 ], the Court was concerned with the un-amended provisions of Section 2 (g) of the Recovery Act. The Court while setting aside the order of the High Court, while dealing with the word `debt' followed by the words 'alleged as due', held as under:-\n \"According to the definition, the term 'debt' means liability which is alleged as due from any person by a bank or a financial institutions or by a consortium of banks or financial institutions. It should have arisen during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force. The liability to be discharged may be in cash or otherwise. It would be immaterial whether the liability is secured or unsecured or whether it is payable under a decree or an order of any civil court or otherwise. However, it should be subsisting and legally recoverable on the date on which proceedings are initiated for recovering the same.\nThe important words in the definition \"alleged as due\" have been overlooked by the High Court and, therefore, it has erroneously held that unless the amounts claimed by the Bank are determined or decided by a competent forum they cannot be said to be due and would not amount to \"debt\" under the Act. What was necessary for the High Court to consider was whether the Bank has alleged in the suits that the amounts are due to the Bank from the respondents, that the liability of the respondents has arisen during the course of their business activity, that the said liability is still subsisting and legally recoverable.\" \n33. As already noticed, this judgment was pronounced by the Court while dealing with the un-amended provisions of Section 2 (g) of the Recovery Act. This section was amended by Act 1 of 2000 and the words `alleged as due' stood substituted by the expression `claimed as due' with effect from 17th January, 2000. This shows the intention of the legislature to significantly introduce definite expression and give emphasis to the claim of the Bank rather than, what is allegedly due or determinatively due to the Bank from its borrowers. In this case, the application of the Bank had been dismissed by the High Court on the ground that it was not maintainable as it was not covered under the definition of the word `debt'. While setting aside the order of the High Court, this Court held that, the High Court had gone wrong in holding that the application by the Bank was premature and till the Court determines the amount, such application could not be filed by the Bank. This Court clearly stated the dictum that, such application would be maintainable and the amount payable to the Bank does not have to be a determined sum under the provisions of the Recovery Act.\n34. Similar contention had been raised before us on the strength of the judgment of this Court in the Case of United Bank of India (Supra) on behalf of the appellant. Firstly, we fail to understand as to what advantage the learned counsel appearing for the appellant wishes to draw from this judgment and secondly, this judgment has clearly returned the finding, even on the facts of that case, that application under the provisions of the Recovery Act was maintainable within the scope of Section 2 (g) of the Act. The Court held as under :\n \"In view of the rival stands of the parties, the short question that arises for consideration is, as to whether the said claim of the plaintiff can be said to be a claim for recovery of debts due to the plaintiff as provided under Section 17(1) of the Act. The answer of this question in turn would depend upon the meaning of the expression \"debt\" as defined in Section 2(g) of the Act. Before we examine the two provisions referred to above, it is to be borne in mind that the procedure for recovery of debts due to the banks and financial institutions which was being followed, resulted in a significant portion of the funds being blocked. To remedy the locking up of huge funds, the Financial Institutions Bill, 1993\", which was passed by Parliament and the Act has come into existence.\nThe Act and the relevant provisions will have to be construed bearing in mind the objects for which Parliament passed the enactment. The prime object of the enactment appears to be provide for the establishment of tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto.\nIn the case in hand, there cannot be any dispute that the expression \"debt\" has to be given the widest amplitude to mean any liability which is alleged as due from any person by a bank during the course of any business activity undertaken by the bank either in cash or otherwise, whether secured or unsecured, whether payable under a decree or order of any court or otherwise and legally recoverable on the date of the application. In ascertaining the question whether any particular claim of any bank or financial institution would come within the purview of the tribunal created under the Act, it is imperative that the entire averments made by the plaintiff in the plaint be looked into and them find out whether notwithstanding the specially-created tribunal having been constituted, the averments are such that it is possible to hold that the jurisdiction of such a tribunal is ousted. With the aforesaid principle in mind, on examining the averments made in the plaint, we have no hesitation to come to the conclusion that the claim in question made by the plaintiff is essentially one for recovery of a debt due to it from the defendants and, therefore, is the Tribunal which has the exclusive jurisdiction to decide the dispute and not the ordinary civil court.\" \n35. As is obvious from the above recorded findings, the Court while referring to Section 2 (g), 17(1) and 31 (1) of the Recovery Act, observed that jurisdiction of the Civil Court was barred under the provisions of the Act and the suits or proceedings shall transfer to the Tribunal upon coming into force of the Recovery Act. The Court was primarily concerned with the matters being transferred from Civil Courts to Tribunal, still while referring to the provisions of Section 2 (g), held that the claim of the Bank was covered under the provisions of the Act. The suit, as instituted in the year 1991, had claimed various relief including the claim for damages. The objection raised was that, there was undetermined amount and other relief could not be referred to the Tribunal for adjudication. The suit was subsequently transferred to the Tribunal under the provisions of the Act and the Court while giving wide meaning to the expression `debt', clearly held that, this expression was of liberal amplitude and there was occasion for the Court to grant a restricted meaning. Thus, in our view, even the case of United Bank of India (supra) no way supports the submissions made on behalf of the appellant.\n36. On the plain analysis of the above stated judgment of this Court, it is clear that the word 'debt' under Section 2(g) of the Recovery Act is incapable of being given a restricted or narrow meaning. The legislature has used general terms which must be given appropriate plain and simple meaning. There is no occasion for the Court to restrict the meaning of the word `any liability', `any person' and particularly the words `in cash or otherwise'. Under Section 2 (g), a claim has to be raised by the Bank against any person which is due to Bank on account of/in the course of any business activity undertaken by the Bank. In the present case, Bank had admittedly granted financial assistance to respondent nos. 2 and 3, who in turn had hypothecated the goods, plants and machinery in favour of the Bank. There cannot be any dispute before us that the goods in question have been sold by the appellant without the consent of the Bank. Respondent nos. 2 and 3 have hardly raised any dispute and resistance, to the claim of the Bank. In fact, even before this Court there is no representation on their behalf. The documentary and oral evidence on record clearly established that the Bank has raised a financial claim upon the principal debtor, as well as upon the person who had intermeddled and/or at least dealt with the charged goods without any authority in law. Not only this, the appellant had sold the hypothecated goods and stocks by public auction, despite the fact the appellant had due knowledge of the fact that the goods were charged in favour of the Bank. Another aspect of this case which required to be considered by this Court is, what was intended to be suppressed by the legislature by enacting the Recovery Act, 1993 and thereafter, by amending various provisions, including Section 2(g) in the year 2000. Obviously, the mischief which was intended to be controlled and/or prevention of wastage of securities provided to the Bank, was the main consideration for such enactment. The purpose was also to prevent wrong doers from taking advantage of their wrong/mistakes, whether permissible in law or otherwise. These preventive measures are required to be applied with care and purposefully in accordance with law to ensure that the mischief, if not entirely extinguished, is curbed. \n37. Maxim Nullus commodum capere potest de injuria sua propria has a clear mandate of law that, a person who by manipulation of a process frustrates the legal rights of others, should not be permitted to take advantage of his wrong or manipulations. In the present case Respondent Nos. 2 & 3 and the appellant have acted together while disposing off the hypothecated goods, and now, they cannot be permitted to turn back to argue, that since the goods have been sold, liability cannot be fastened upon respondent Nos. 2 & 3 and in any case on the appellant. The Bench of this Court in the case of Ashok Kapil v. Sana Ullah (Dead) and Ors. [1996 (Vol. 6) SCC 342 ], referred to rule of mischief and while explaining the word `building', held as under,:-\n \"Stroud's Judicial Dictionary (Vol. I of the 5th Edition) states that 'what is a building must always be a question of degree and circumstances'. Quoting from Victoria City Corpn. v. Biship of Vancover Island (AC at p.390), the celebrated lexicographe commented that 'ordinary and natural meaning of the word building includes the fabric and the ground on which it stands\". In Black's Law Dictionary (5th Edn.) the meaning of the building is given as \" A structure or edifice enclosing a space within its walls, and usually, but not necessarily, covered with a roof\". (emphasis supplied). The said description is a recognition of the fact that roof is not a necessary and indispensable adjunct for a building because there can be roofless buildings. So a building, even after losing the roof, can continue to be a building in its general meaning. Taking recourse to such meaning in the present context would help to prevent a mischief. \n38. The learned counsel for the appellant also relied upon the judgment of the Gujarat High Court in the case of Bank of India v. Vijay Ramniklal [AIR 1997 Gujarat 75 ], in support of the contention, that claim of bank was not `debt' within the meaning of Section 2(g) of the Act so as to give jurisdiction to the Tribunal. We are not impressed by this argument. Firstly, the judgment of the Gujarat High court is entirely on different facts and in that case an employee of the Bank had misappropriated the amount of the Bank, the Bank had instituted an application under the provisions of the Recovery Act. Rightly so it was held by the High Court, that it was not a `debt' within the meaning of Section 2 (g) and, therefore, could not be tried before the Tribunal. We may state another illustration to demonstrate the case where the Tribunal may not have jurisdiction. Some persons commit a theft in the Bank and take away the money and/or the goods hypothecated to the Bank or the goods in the custody of the Bank. Upon Bank's lodging a first information report (FIR) to the police, those persons are traced, arrested and tried in accordance with law for theft. In such a case, the Tribunal may not have jurisdiction to entertain and decide an application for recovery of money or value of goods in terms of Section 17 of the Recovery Act. That is neither the case here nor in any of the judgments which have been relied upon by the parties before us, except in the case of Gujarat High Court. In the case in hand, the goods were hypothecated to the Bank and the appellant admittedly had knowledge prior to the sale of the goods, that they were hypothecated to the Bank. If the contention of the appellant is accepted, it will amount to giving advantage or premium to the wrong doers. It would also further perpetuate the mischief intended to be suppressed by the enactment. This could completely defeat the very object and purpose of the Act. A party which had pledged or mortgaged properties in favour of the Bank, then would transfer such properties in favour of a third party. In the event, the Bank takes action under the provisions of the Recovery Act, they would take the objection like the present appellant. This would tantamount to travesty of justice and would frustrate the very legislative object and intent behind the provisions of the Recovery Act. Therefore, such an approach or interpretation would be impermissible.\n39. We have already noticed that the legislature has not used words of a restrictive or definite nature. It has intentionally made use of the expressions which are quite general and can be construed widely in their common parlance. There is no occasion for this Court to read the word other than the one intended by the legislature in the provisions of Section 2 (g) of the Recovery Act. Wherever the legislature requires, it uses the expressions of definite connotations and consequences, for example, in the Interest Act, 1978, the word 'debt' has been defined under Section 2(c) of that Act by using specific terms of restricted character. It means 'any liability for an 'ascertained sum' of money and includes a debt payable in any kind but does not include a 'judgment debt'. In this definition, the 'ascertained sum' obviously means a sum which has been determined under any methods of the adjudicative process while, on the other hand, the expression 'payable in kind' is a general expression, again the excluding clause in relation to 'judgment debt' is specific. Such is not the language or the purport of Section 2 (g) of the Recovery Act. Mr. R.F. Nariman, the learned senior counsel appearing for the appellant, while referring to the provisions of Section 19 (8) and Section 19 (11) respectively, of the Recovery Act contended, that these sections clearly postulate that, a non applicant in proceedings before the Tribunal can raise a plea of set off, as well as a counter claim, but where the counter claim is objected to on the ground that it ought not to be disposed off by way of a counter claim, as it is an independent action, then the person raising a counter claim can take leave of the Tribunal for exclusion of such counter claim. With reference to language of these two provisions, it is contended that, the claim like the one raised by the respondent Bank against the appellant, is a claim which cannot be raised in the proceedings before the Tribunal and the Bank ought to have taken independent steps, if any, in accordance with law. On the other hand, Mr. Jaideep Gupta, learned senior counsel for the respondent-Bank argued that, this argument has no bearing on the matter in controversy before us, in as much as, the claim of the Bank is maintainable within the definition of 'debt' under the Recovery Act. \n40. This contention of appellant needs to be noticed only for being rejected. In our detailed discussion above, we have clearly held that, the claim raised by the Bank falls well within the ambit and scope of Section 2 (g) of the Recovery Act and the jurisdiction of the Tribunal cannot be ousted on this ground.\n41. Thus, in our opinion, the provisions of Section 2 (g) have to be construed, so as to give it liberal meaning. The general expressions used in this provision will have to be understood generally. Neither there is scope to hold nor is the legislative intent that these provisions should be given a narrower or a restricted meaning. In our considered view, the claim of the Bank relatable to the hypothecated goods was well within the jurisdiction of the Tribunal exercising its power under Section 17 of the Recovery Act. \nApplicability of the principles of public accountability on the facts of the present case : \n42. Having answered both the questions of fact partially and law against the present appellant, still there is another important facet of this case which cannot be ignored by the Court. It relates to the conduct of the respondent Bank and its officers/officials. The witnesses appearing on behalf of the Bank had stated that, at the stage of appraisal report itself, the Bank had come to know, that respondent Nos. 2 and 3 have a leave and license agreement with the appellant. Despite that, and without proper verification, as it appears from the record, heavy loan was sanctioned and disbursed to the above respondents. Even thereafter, the Bank and its officers/officials appear to have taken no serious steps to ensure that the goods hypothecated to the Bank are not disposed off without its consent. The officers/officials of the Bank, even after knowing about the handing over of the possession of the property including the hypothecated goods to the appellant and having communicated the same to the appellant vide their letter dated 24th August, 1987, made no serious efforts to recover its debt and ensure that the goods are not disposed off, as the suit itself was filed for recovery of the amount on 1st February, 1989 after serious delay. These facts, to a great extent, are even conformed in the affidavit which was filed on behalf of the Bank by one Shri Kamal Kumar Kapoor as late as on 22nd August, 2009 before this Court. There is no doubt in our mind that the Bank could have protected its interest and ensured recovery while taking due caution and acting with expeditiousness. There is definite negligence on the part of the concerned officers/officials in the Bank. They have jeopardized the interest of the Bank and consequently the public funds, only saving grace being that orders were passed by the competent forum, requiring the appellant to deposit some money in the suit for recovery of more than 22 lac which was filed by the Bank in the year 1989. Even this order was also vacated by the Tribunal vide its order dated 28th December, 2006 wherein it passed the order for refund of the amount. The concerned quarters in the Bank also failed to act despite the advertisement for sale of the hypothecated material given by the appellant on 12th March, 1988, whereafter the machines like CTC is said to have been sold at a throwaway price. All these facts indicate definite negligence and callousness on the part of the concerned quarters. The legislative object of expeditious recovery of all public dues and due protection of security available with the Bank to ensure pre-payments of debts cannot be achieved when the officers/officials of the Bank act in such a callous manner. There is a public duty upon all such officers/officials to act fairly, transparently and with sense of responsibility to ensure recovery of public dues. Even, an inaction on the part of the public servant can lead to a failure of public duty and can jeopardize the interest of the State or its instrumentality.\n43. In our considered opinion, the scheme of the Recovery Act and language of its various provisions imposes an obligation upon the Banks to ensure a proper and expeditious recovery of its dues. In the present case, there is certainly ex facie failure of statutory obligation on the part of the Bank and its officers/officials. In the entire record before us, there is no explanation much less any reasonable explanation as to why effective steps were not taken and why the interest of the Bank was permitted to be jeopardized. The concept of public accountability and performance is applicable to the present case as well. These are instrumentalities of the State and thus all administrative norms and principles of fair performance are applicable to them with equal force as they are to the Government department, if not with a greater rigor. The well established precepts of public trust and public accountability are fully applicable to the functions which emerge from the public servants or even the persons holding public office. In the case of State of Bihar v. Subhash Singh [ (1997) 4 SCC 430 ], this Court, in exercise of the powers of judicial review stated that, the doctrine of full faith and credit applies to the acts done by officers in the hierarchy of the State. They have to faithfully discharge their duties to elongate public purpose.\n44. Inaction, arbitrary action or irresponsible action would normally result in dual hardship. Firstly, it jeopardizes the interest of the Bank and public funds are wasted and secondly, it even affects the borrower's interest adversely provided such person was acting bonafide. Both these adverse consequences can easily be avoided by the authorities concerned by timely and coordinated action. The authorities are required to have a more practical and pragmatic approach to provide solution to such matters. The concept of public accountability and performance of functions takes in its ambit proper and timely action in accordance with law. Public duty and public obligation both are essentials of good administration whether by the State instrumentalities and/or by the financial institutions. In the case of Centre for Public Interest Litigation & Anr. v. Union of India & Anr. [(2005) 8 SCC 202 ], this Court declared the dictum that State actions causing loss are actionable under public law and this is as a result of innovation to a new tool with the court, which are the protectors of civil liberty of the citizens and would ensure protection against devastating results of State action. The principles of public accountability and transparency in State action even in the case of appointment, which essentially must not lack bonafide was enforced by the Court. All these principles enunciated by the Court over a passage of time clearly mandate that public officers are answerable both for their inaction and irresponsible actions. What ought to have been done, if not done, responsibility should be fixed on the erring officers then alone the real public purpose of an answerable administration would be satisfied.\n45. The doctrine of full faith and credit applies to the acts done by the officers and presumptive evidence of regularity of official acts done or performed, is apposite in faithful discharge of duties to elongate public purpose and to be in accordance with the procedure prescribed. It is known fact that, in transactions of the Government business, none would own personal responsibility and decisions are leisurely taken at various levels (Refer : State of Andhra Pradesh v. Food Corporation of India [(2004) 13 SCC 53 ].\nPrinciple of public accountability is applicable to such officers/officials with all its vigour. Greater the power to decide, higher is the responsibility to be just and fair. The dimensions of administrative law permit judicial intervention in decisions, though of administrative nature, but are ex facie discriminatory. The adverse impact of lack of probity in discharge of public duties can result in varied defects not only in the decision making process but in the decision as well. Every public officer is accountable for its decision and actions to the public in the larger interest and to the State administration in its governance. It needs to be seen in the facts and circumstances of the present case, why and how the interest of the Bank has been jeopardized, in what circumstances the loan was sanctioned and disbursed despite some glaring defects having been exposed in the appraisal report. Significant element of discretion is vested in the officers/officials of the Bank while sanctioning and disbursing the loans but this discretion is circumscribed by the inbuilt commercial principles/restrictions as well as that such decisions should be free from arbitrariness, unreasonableness and should protect the interest of the Bank in all events. We are neither competent nor do we wish to venture to examine this aspect, it is for the appropriate authorities in the Bank to examine the matter from all quarters and then to take appropriate action against the erring officers/officials involved in the present case, that too, in accordance with law.\n46. For the reasons afore-recorded, we partially allow this appeal and while modifying the order of the High Court to the extent that, the appellants would be liable to pay to the respondent Bank a sum of Rs. 9,63,975/-. (approximate value of the hypothecated stock sold by the appellants) with interest at the rate of 6% per annum on the above sum during the period from 14th March, 1988, the date of filing of the plaint, to the date of actual realization as originally allowed by the Tribunal. \n47. We further direct the Chairman of the Allahabad Bank to examine this case in light of our discussion supra and take appropriate action against erring officers/officials in accordance with law.\n48. However, in the facts and circumstances of the case, the parties are left to bear their own costs.\n",
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