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2023 (5) TMI 509
Dishonour of Cheque - insufficient funds - petitioner were involved in day-to-day affairs of the company so as to warrant their summoning by the learned Magistrate or not - Section 138 and 141 of the NI Act - HELD THAT:- It is settled law that only those directors, who were incharge of and responsible for day to day affairs of the company can be made liable under Section 141(1), or those directors, managers, officers etc. of the company due to whose negligence, connivance or consent the offence under Section 138 has been committed can be made liable under Section 141(2) - In the present case, the complainant has alleged that the accused company had issued the cheque in question for an amount of Rs. 19,98,779/- in favour of the complainant as part-payment for discharge of its debt, however, the same had got dishonored upon its presentation for the purpose of encashment. The complainant has averred in the complaint that accused no. 2 to 5 are the directors of the accused company and accused no. 6 is the company secretary as well as signatory of the accused company, as per the details available on MCA website, and all of them were therefore, responsible for day to day functioning of the accused company.
Upon perusal of record, including the minutes of meetings annexed with the present petition, it is revealed that petitioner no. 1 was present in every meeting, minutes of which have been annexed, which prima facie indicate that she was responsible for day to day functioning of the accused company. As far as petitioner no. 2 is concerned, the mere fact that he was, at the relevant time, not present in India does not absolve her of her responsibilities towards the company and at times it may be possible that though one may not be physically present in India, however, in this age of technology one can take part in day-to-day affairs of the company and perform all the acts that a director is required to perform while being in a foreign country. Even otherwise, the veracity of such claims cannot be examined at this stage by this Court. It is also not the case of these petitioners that they were not the whole time directors or were non-functional directors of the accused company - Similarly, the presence of petitioner no. 3 can be seen in majority of the minutes of meetings annexed with the petition. As observed, a company secretary can also be held liable as per Section 141(2) of NI Act if it can be proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of company secretary. As per details of MCA website and as also averred by complainant, petitioner no. 3 is also a signatory of the accused company.
Considering the overall facts and circumstances of the case as well as the material placed on record, this Court is of the opinion that the contentions raised before this Court at this stage are triable issues which can be decided only during the course of trial by leading evidence before the learned Trial Court and therefore, this Court does not deem it a fit case to exercise its powers under Section 482 Cr.P.C. for setting aside the summoning order and complaint qua petitioners at this stage when trial has still not yet commenced and the accused persons have merely been summoned by the Trial Court.
Petition dismissed.
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2023 (5) TMI 426
Arbitration proceedings - in a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015, the old Act shall be applicable (pre-amendment 2015) or the new Act? - HELD THAT:- Section 11(6A) has been inserted by Amendment Act, 2015, by which the powers of the Court dealing with an application under Section 11(6) of the Act are restricted and as per section 11(6A), the powers of the Court while deciding application under Section 11(6) of the Act are confined to the examination of the existence of an arbitration agreement, which powers were not restricted in the pre-amendment Act, 2015. However, Section 26 of the Amendment Act, 2015 provides that nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree - as per section 21 of the principal Act the arbitral proceedings can be said to have commenced on the date on which a request for the dispute to be referred to the arbitration is received by the respondent. At this stage, it is required to be noted that by Amendment Act, 2015, Sections 34 and 36 of the Arbitration Act also came to be amended and the interference of the Court in challenge to the award has been restricted and/or narrowed down.
The question of applicability of the Arbitration Amendment Act, 2015 fell for consideration before this Court in catena of decisions - In the case of M/S MAYAVTI TRADING PVT. LTD. VERSUS PRADYUAT DEB BURMAN [2019 (9) TMI 1548 - SUPREME COURT], it is observed and held that the position of law that prevails after insertion of section 11(6A) is that Supreme Court or, as the case may be, the High Court, while considering any application under Sections 11(4) to 11(6) is to confine itself to examination of existence of arbitration agreement, nothing more, nothing less, and leave all other preliminary issues to be decided by arbitrator.
In the case of BCCI [2018 (3) TMI 812 - SUPREME COURT], it is observed and held that the Amendment Act, 2015 is prospective in nature. However, it is required to be noted that in the case of BCCI, this Court was considering the proceedings under sections 34 and 36 of the Amendment Act, 2015 and to that while interpreting section 26, it is observed that the Amendment Act is prospective in nature, and will apply even to those arbitral proceedings that are commenced, as understood by section 21 of the principal Act, prior to the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force.
The notice invoking arbitration clause was issued on 26.12.2013, i.e., much prior to the Amendment Act, 2015 and the application under Section 11(6) of the Act has been preferred/filed on 27.04.2016, i.e., much after the amendment Act came into force, the law prevailing prior to the Amendment Act, 2015 shall be applicable and therefore the High Court has rightly entered into the question of accord and satisfaction and has rightly dismissed the application under section 11(6) of the Act applying the principal Act, namely, the Arbitration and Conciliation Act, 1996, prevailing prior to the Amendment Act, 2015.
In a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015 and the application under Section 11 for appointment of an arbitrator is made post Amendment Act, 2015, the provisions of pre-Amendment Act, 2015 shall be applicable and not the Amendment Act, 2015 - Appeal dismissed.
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2023 (5) TMI 425
Dishonour of Cheque - deposit a minimum of 20% of fine/compensation - seeking waiving off the payment of 20% of amount of fine imposed upon the petitioners as per section 148 NI Act - setting aside the order whereby suspension of sentence was ordered to be vacated due to non-payment of said amount - HELD THAT:- The aim, object and purport of Section 148 was explained by the Hon’ble Apex Court in SURINDER SINGH DESWAL @ COL. S.S. DESWAL AND OTHERS VERSUS VIRENDER GANDHI [2019 (5) TMI 1626 - SUPREME COURT] wherein it was categorically held that the use of words “may” in Section 148 must be construed as “shall” in order to give force to the actual intent behind insertion of such provision under the NI Act, 1881 - A perusal of the aforesaid decision of Hon’ble Apex Court also reveals that though the Appellate Court is required to ordinarily direct an accused/appellant to deposit a minimum of 20% of fine/compensation imposed upon him, either on its own while ordering suspension of sentence under Section 389 Cr.P.C. or upon an application moved by the complainant under Section 148 NI Act, the Appellate Court, however, may choose to not impose such a condition upon an accused/appellant for “special reasons” to be assigned or recorded.
The only ground on which waiver under Section 148 of NI Act is sought is that the petitioners have a good case of acquittal in the appeal in view of the above-stated facts. This ground alone, in the opinion of this Court, is not sufficient to exempt the petitioners from depositing 20% of the fine amount imposed by the learned Trial Court, as per Section 148 of NI Act. The fact remains that the parties were heard and their evidence was recorded and appreciated by the same Court in both the Complaint cases arising out of same set of facts, and the judgments were also passed on the same day. The merits of the appeal filed by the petitioners and their contentions cannot be considered while exercising powers under Section 148 of NI Act - every accused convicted under Section 138, who files an appeal against conviction, believes to have a good case for acquittal. This, by no stretch of imagination, can be held to fall within the purview of “special reasons” to allow a convict under Section 138 to not deposit a portion of the fine imposed upon him during the pendency of appeal.
Suspension of sentence of the petitioners was vacated upon their failure to deposit the 20% of fine amount and they were asked to surrender within 7 days - HELD THAT:- The legal position with respect to imposition of condition to deposit a percentage of fine/compensation amount while granting suspension of sentence in a case under Section 138 of NI Act, was explained by the Hon’ble Apex Court in case of SURINDER SINGH DESWAL @ COL. S.S. DESWAL AND OTHERS VERSUS VIRENDER GANDHI [2019 (5) TMI 1626 - SUPREME COURT] where it was held that It is for the Appellate Court who has granted suspension of sentence to take call on non-compliance and take appropriate decision. What order is to be passed by the Appellate Court in such circumstances is for the Appellate Court to consider and decide. However, non-compliance of the condition of suspension of sentence is sufficient to declare suspension of sentence as having been vacated.
Merely because the condition to deposit 20% of the fine amount was not imposed upon the petitioners at the time of suspension of sentence by the learned Appellate Court, it cannot be held that the vacation of order of suspension of sentence upon non-fulfilment of such a condition imposed subsequently by the learned Appellate Court was bad in law.
Considering the mandate of Section 148 NI Act as explained by Apex Court in Surinder Singh Deswal-I and the powers of Appellate Court in revoking the suspension of sentence apropos Section 148 NI Act as explained by the Apex Court in Surinder Singh Deswal-II, this Court finds no infirmity in the impugned order dated 06.01.2023 whereby the petitioners have been directed to surrender, upon non-fulfilment of condition under Section 148 NI Act - the petitioners are directed to deposit 20% of the amount of fine imposed by the learned Trial Court, within 10 days from today, in default of which the petitioners shall surrender before the Trial Court concerned within one week of last day on non-payment of aforesaid amount.
Petition is disposed off.
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2023 (5) TMI 424
Validity of Arbitral Award - main ground for challenging the award is that the learned Arbitral Tribunal while passing the award has not taken into consideration any evidence led by the parties, particularly, by the petitioner - Violation of principles of natural justice - goods which were got manufactured from the third parties, known as Bought Out Products (BOP) i.e., materials, parts and equipments, etc. procured for the project by the claimant from the approved sub-contractors, the petitioner refused to reimburse the Excise Duty and CST.
HELD THAT:- As far as, Section 34 of the Act is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may not interfere on merits. The Court may only interfere on the limited ground provided under Section 34(2)(b)(ii) of the Act i.e. of the award is against the public policy of India. As per the legal position clarified through decisions of this Court that violation of Public Policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of justice of India, conflict with justice or morality and existence of patent illegality in the arbitral award. The concept of the fundamental policy of Indian law would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice and reasonableness.
As per the Section 34 of the Act, the award of the learned Arbitral Tribunal can be challenged on the ground if the award is contrary to the public policy, patent illegality and passed without any evidence. In the instant case, the main ground for challenging the award is that the learned Arbitral Tribunal while passing the award has not taken into consideration any evidence led by the parties, particularly, by the petitioner.
The genesis of the dispute is to determine whether the petitioner was contractually liable to pay aforesaid amount i.e. Rs. 3,89,92,930/- in respect of the taxes, levies and duties towards BOP to the respondent - The learned Arbitral Tribunal, while interpreting the Clause 14 of the Contract, reached on the conclusion that the petitioner is obligated to pay the taxes and duties and there is no difference between the payment of taxes and duties in respect of manufactured goods and BOP. Taking view of the reason assigned in the interpretation, there are no error or illegality in the said interpretation of the learned Arbitral Tribunal. The learned Arbitral Tribunal has also rejected the arguments of the applicant regarding the applicable taxes and duties and held that “the moment taxes and duties become applicable in respect of supplies to the respondent, they are reimbursable under Clause 14.1. That clause does not state that such taxes and duties were to be payable by the claimant directly to the Government. The expression “applicable” is to be understood in the context of manufacturing of goods and not with reference to the person. The sub-contractor while paying excise duty had passed on the burden to the claimant and the claimant therefore, became entitled to the payment or reimbursement thereof from the respondent.”
The learned Arbitral Tribunal rightly interpreted the term “at actuals” as “none of the contractual provisions qualify for the respondent’s obligation as confining to manufactured products only. On the contrary, the language is wide and all encompassing and includes BOP as well. The expression “actual” in this context refers the taxes, duties and levies actually paid to the exchequer.” Therefore, as per the contract, there is no distinction between the respondent and the sub-contractor. The Schedule 7 does not in any way affect the tax liability of the petitioner towards the respondent. The Schedule 7 merely stated an estimate amount which may be paid to the petitioner and was not based on the actuals.
The learned Arbitral Tribunal has rightly rejected the argument of the applicant on the aspect that reimbursement of taxes on account of BOP supplies was not made by the petitioner on 4th March, 2015 and 15th May, 2015. The petitioner acknowledged reimbursement of taxes and duties for BOP and such liability was not disputed/refuted by the petitioner.
In Delhi Airport Metro Express Private Limited vs. Delhi Metro Rail Corporation Limited, [2021 (9) TMI 1479 - SUPREME COURT], the Hon’ble Supreme Court held that The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and therefore, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award.
Hence, the law which has been settled by the Hon’ble Supreme Court is that the scope of interference with an arbitral award under Section 34 of the Act is fairly limited and narrow. The Court shall not sit in an appeal while adjudicating a challenge to an award which is passed by an Arbitrator, the master of evidence, after due consideration of facts, circumstances, evidence and material before him.
There are no reason to interfere in the impugned award as there is no perversity or illegality or error in the said award - petition dismissed.
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2023 (5) TMI 324
Dishonour of Cheque - Funds Insufficient - Signatory of Cheques - vicarious liability of Directors - whether Directors signing the resolution i.e. Vipul Kant Upadhyay and Amit Kumar Gupta shall be fully collectively or individually responsible for repayment of the loan and other dues? - HELD THAT:- As per loan agreement no. 3143 dated 20.09.2016, the accused company through its directors i.e. the aforesaid petitioners had obtained loan to the tune of Rs. 55,00,000/- for a period of 30 months and in lieu thereof, had agreed to issue 29 EMI cheques in favour of complainant. Similarly, as per loan agreement no. 3112 dated 23.04.2016, the accused company through its aforesaid petitioners had obtained loan to the tune of Rs. 35,00,000/- for a period of 24 months and in lieu thereof, had agreed to issue 23 EMI cheques in favour of complainant. The present petitioners i.e. Vipul Kant Upadhyay and Amit Kumar Gupta were the two ‘Borrowers’ in the loan agreements and the said agreements also bear the signatures of both these petitioners. The Demand Promissory Notes and their Receipts have also been executed and signed by these petitioners.
The petitioner Vipul Kant Upadhyay was also one of the guarantors in these loan agreements. Moreover, he was the Managing Director of the accused company at the time of entering into the loan agreements and issuing several cheques. Even if the plea of learned counsel for petitioners that blank signed cheques or post-dated cheques were misused by the complainant is concerned, in this context, it will be relevant to take note of the decision of Hon’ble Apex Court in BIR SINGH VERSUS MUKESH KUMAR [2019 (2) TMI 547 - SUPREME COURT] where it was held that If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
The material on record also shows clearly that the petitioner Amit Kumar Gupta was a Whole-time Director of the accused company at the time of entering into the transactions with the accused company and it is not the case of petitioner that he was any non-functional or independent director, not concerned with the affairs of the company. As inferred prima facie from the loan agreement, the cheques in question were issued as post-dated duly signed cheques with the knowledge and consent of the said petitioner and he had also executed all the relevant documents for the purpose of obtaining loan from the complainant.
Ground that petitioners Vipual Kant Upadhyay and Amit Kumar Gupta had resigned before the date of issuance of cheque - HELD THAT:- Firstly, the copies of Form DIR-12 placed on record are not the certified copies issued by the Ministry of Corporate Affairs. Secondly, as already observed in preceding discussion, the complainant has carved out the specific role of these petitioners in obtaining loans, executing loan agreements as well as in signing and issuing cheques in question. The veracity of the allegations and the genuineness of the documents pertaining to alleged resignation of these petitioners before the dishonor of cheques cannot be tested at this stage before this Court and the same has to be decided on the basis of relevant documents and evidence to be produced at the stage of trial - If the plea of petitioners is accepted that since they were not a part of the accused company at the time when cheques were dishonoured, proceedings against them be quashed at the outset, it would in fact, amount to throttling the trial by snatching away the right of respondent to examine during before the Court, the signatory of the cheques as well as signatory of the loan agreements, board resolutions and other documents in that regard.
Considering the overall facts and circumstances of the case, this Court is of the opinion that there was sufficient material on record before the learned Magistrate to issue summons against the petitioners herein. The role of each petitioner in commission of offence, if any, can become clear only during the course of trial, and cannot be examined in detail by this Court while exercising jurisdiction under Section 482 Cr.P.C. - this Court finds no reasons to interfere with the impugned summoning orders passed by learned Magistrate.
Petition dismissed.
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2023 (5) TMI 323
Dishonour of Cheque - vicarious liability of the Director of the company - petitioner had resigned more than a month prior to even issuance of cheque in question - issuance of summons to petitioner in such case is valid or not? - HELD THAT:- The issues regarding date of resignation, including as to whether or not or when the resignation letter was actually sent to Board of Directors, or as to when were the details qua resignation updated on the MCA website are all triable issues, especially in view of lack of certain relevant documents as discussed in preceding paras, in the present case. The material placed on record by the petitioner is not sterling incontrovertible material or unimpeachable material to show that petitioner was not involved either in day to day activities of the company or had no role in issuance of cheque in question - this Court does not find it a fit case to quash the summoning order dated 24.04.2018 passed by learned Metropolitan Magistrate at the very threshold.
The present petition stands dismissed.
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2023 (5) TMI 322
Validity of Arbitral Award - activity of providing storage godowns to store goods - appellant contended that the Arbitrator after having held that the claim for rental charges is outside the scope of the Agreement, ought to have invoked Section 70 of the Contract Act and ordered for compensation of the appellant for the rental/storage charges - HELD THAT:- The extent of judicial scrutiny under Section 34 of the Act is limited and the scope of interference is narrow. Under Section 37 of the Act, the extent of judicial scrutiny and scope of interference is further narrowed down - An appeal under Section 37 is more or less akin to a second appeal, the first appeal being to the Court by way of objections under Section 34 of the Act. Where there are concurrent findings of facts and law, the Appellate Court would be very cautious and reluctant to interfere into the findings returned in the Award by the Arbitral Tribunal and confirmed by the Court under Section 34 of the Act.
The consolidated rate as fixed under the Annexure will not be subject to any escalation and considering the Clauses in the Agreement, there is no scope for the claimant to make any new claim under any head for whatsoever reason. This finding was rendered by the Arbitrator by taking into consideration Clause 2 and Clause 6 of the Agreement. On carefully going through the same, the appellant has been given the absolute responsibility to take delivery of the goods from the nominated godowns of FCI, arrange for the transportation of the goods after weighment, ensure the safety of the goods and accept full responsibility in respect of the goods and indemnify the 1st respondent for any loss or damages to the goods, to protect the consignment from damages during transportation, stocking and loading into the ship at the port, to arrange for the temporary storage of the goods in godown at port before loading into the vessel and to make all arrangements to bring back the goods rejected by the Surveyor to the godown belonging to MMTC.
The Arbitrator while dealing with this issue has held that the storage in godown before the goods are loaded in the port, is the responsibility of the appellant and it cannot be called as an additional work as claimed by the appellant. The Arbitrator has also taken into consideration Clause 6 which deals with the rates fixed and payable by the 1st respondent. This Clause makes it clear that there shall be no escalation of the consolidated rates agreed for whatsoever reason. The Arbitrator also took into consideration, the Annexure to the Agreement which provides for item wise rates fixed.
The Arbitrator has come to a conclusion that there were deliberations between the parties before the rates were fixed and that is the reason why Clauses 2.15, 6.1 and 6.8 were incorporated in the Agreement and hence, there is no scope for the appellant to claim compensation beyond what has been fixed under the Agreement. The Arbitrator has given a finding to the effect that the claim made by the appellant goes beyond the scope of the Agreement. This finding cannot be read in isolation and it must be read along with the other reasonings given by the Arbitrator - The learned counsel for the appellant was not right in interpreting the same as if the storage charges fell beyond the scope of the Agreement and hence, Section 70 of the Contract Act will apply and consequently, the appellant will be entitled for restitution of the storage charges.
In the considered view of this Court, while exercising the jurisdiction under Section 37 of the Act, this Court is only expected to see if the finding rendered by the Arbitrator and as confirmed by the District Judge under Section 34 of the Act, is a possible and plausible interpretation of the terms of Agreement. This Court holds that the terms of the contract has been construed in a reasonable manner and the Award passes muster. Just because an alternative view on facts and interpretation of contract exists, that can never be a ground for interfering with an Award - there is no need for this Court to go into the other issue pertaining to the applicability of Section 70 of the Contract Act. This issue will arise for consideration only if this Court holds that the appellant has done extra work/additional work which is not founded in the Agreement. Hence, the interpretation given to Section 70 of the Contract Act qua the Principle of Quantum Meruit by the Arbitrator, does not require a finding in this appeal.
This Court does not find any ground to interfere with the Award passed by the Arbitrator and as confirmed by the District Court under Section 34 of the Act - Appeal dismissed.
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2023 (5) TMI 321
Seeking grant of Interim Bail - right to speedy trial of offenders facing criminal charges is implicit in the broad sweep and content of Article 21 as interpreted by this Court - HELD THAT:- When provisions of law curtail the right of an accused to secure bail, and correspondingly fetter judicial discretion (like Section 37 of the NDPS Act, in the present case), this court has upheld them for conflating two competing values, i.e., the right of the accused to enjoy freedom, based on the presumption of innocence, and societal interest as observed in VAMAN NARAIN GHIYA VERSUS STATE OF RAJASTHAN [2008 (12) TMI 446 - SUPREME COURT] (“the concept of bail emerges from the conflict between the police power to restrict liberty of a man who is alleged to have committed a crime, and presumption of innocence in favour of the alleged criminal”). They are, at the same time, upheld on the condition that the trial is concluded expeditiously.
The Constitution Bench in KARTAR SINGH VERSUS STATE OF PUNJAB [1994 (3) TMI 379 - SUPREME COURT] made observations to this effect. In Shaheen Welfare Association v. Union of India [[1996 (2) TMI 597 - SUPREME COURT]] again, this court expressed the same sentiment, namely that when stringent provisions are enacted, curtailing the provisions of bail, and restricting judicial discretion, it is on the basis that investigation and trials would be concluded swiftly.
The conditions which courts have to be cognizant of are that there are reasonable grounds for believing that the accused is “not guilty of such offence” and that he is not likely to commit any offence while on bail. What is meant by “not guilty” when all the evidence is not before the court? It can only be a prima facie determination - Given the mandate of the general law on bails (Sections 436, 437 and 439, CrPC) which classify offences based on their gravity, and instruct that certain serious crimes have to be dealt with differently while considering bail applications, the additional condition that the court should be satisfied that the accused (who is in law presumed to be innocent) is not guilty, has to be interpreted reasonably. Further the classification of offences under Special Acts (NDPS Act, etc.), which apply over and above the ordinary bail conditions required to be assessed by courts, require that the court records its satisfaction that the accused might not be guilty of the offence and that upon release, they are not likely to commit any offence. These two conditions have the effect of overshadowing other conditions. In cases where bail is sought, the court assesses the material on record such as the nature of the offence, likelihood of the accused co-operating with the investigation, not fleeing from justice: even in serious offences like murder, kidnapping, rape, etc. On the other hand, the court in these cases under such special Acts, have to address itself principally on two facts: likely guilt of the accused and the likelihood of them not committing any offence upon release.
Incarceration has further deleterious effects - where the accused belongs to the weakest economic strata: immediate loss of livelihood, and in several cases, scattering of families as well as loss of family bonds and alienation from society. The courts therefore, have to be sensitive to these aspects (because in the event of an acquittal, the loss to the accused is irreparable), and ensure that trials – especially in cases, where special laws enact stringent provisions, are taken up and concluded speedily.
The appellant is directed to be enlarged on bail, subject to such conditions as the trial court may impose - Appeal allowed.
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2023 (5) TMI 233
Cancellation of bail granted to petitioner - High Court observed that the mere fact that the charge-sheet had been filed could not be considered as a change in circumstances - HELD THAT:- After the charge-sheet was submitted before the competent Court under Section 173 of the Code of Criminal Procedure 1973, the appellant moved for bail afresh. The order passed by the Trial Judge granting bail on the ground that the charge-sheet had been submitted and that the other accused were on bail was eminently fair and reasonable. The order of the High Court directing that the appellant be arrested immediately and seeking an explanation from the Second Additional Sessions Judge was wholly disproportionate and was not warranted. Such orders of the High Court produce a chilling effect on the District judiciary. The members of the district judiciary cannot be placed in a sense of fear if they were to exercise the jurisdiction lawfully entrusted to them for granting bail in appropriate cases. The order of the Trial Judge does not indicate that he had applied the wrong principles of law. Quite to the contrary, the exercise of the discretion to grant bail, having due regard to the nature of the offence, the fact that other accused had been granted bail and the charge-sheet had been submitted, was appropriate.
The appellant was in custody from 29 June 2022 till 16 August 2022, when he was granted bail by the Trial Court. As a result of the cancellation of bail by the High Court on 2 December 2022, he was taken into custody until he was released in pursuance of the order of this Court dated 24 February 2023 granting bail - the impugned order of the High Court dated 2 December 2022 is set aside.
The application for cancellation of bail shall accordingly stand dismissed.
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2023 (5) TMI 232
Continuation of protection granted to petitioner - HELD THAT:- The protection granted to the petitioner by order dated 13.01.2023 deserves to be continued. Accordingly, the said order dated 13.01.2023 is made absolute while further providing that it shall be required of the petitioner to fully cooperate with the investigation and to abide by the terms and conditions as may be imposed by the Trial Court.
Petition disposed off.
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2023 (5) TMI 179
Rejection of applications under Section 8 of the Arbitration and Conciliation Act, 1996 - reference of dispute to arbitration of a Sole Arbitrator if mutually agreed - tripartite agreement - dispute beyond the scope of agreement - whether the parties were required to be referred to arbitration by allowing the applications moved by the appellant under Section 8 of the Act of 1996? - HELD THAT:- In the case of Sukanya Holdings [2003 (4) TMI 435 - SUPREME COURT], while dealing with the question of applicability of Section 8 of the Act, as then existing, this Court underscored the requirements of correlation of subject-matter of the suit and subject-matter of the arbitration agreement and, inter alia, held that the suit should be in respect of “a matter” which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced — “as to a matter” which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Section 8. The words “a matter” indicate that the entire subject-matter of the suit should be subject to arbitration agreement.
As explained by this Court in Ameet Lalchand Shah [2018 (5) TMI 680 - SUPREME COURT], the amendment to Section 8 after the aforesaid decision in Sukanya Holdings could be seen in the background of the recommendations of 246th Law Commission Report in which, inter alia, it was observed that as per the proposed amendment, judicial authority would not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, it would refer the dispute to arbitration and leave the existence of arbitration agreement to be finally determined by the Arbitral Tribunal.
All the relevant aspects of the matter came up for fuller exposition by a 3-Judge Bench of this Court in the case of Vidya Drolia [2020 (12) TMI 1227 - SUPREME COURT]. In the said case, basically, the reference came to be made to the bench of three judges when the ratio expressed in the case of Himangi Enterprises v. Kamaljeet Singh Ahluwalia [2017 (10) TMI 566 - SUPREME COURT], to the effect that landlord-tenant disputes governed by the provisions of the Transfer of Property Act, 1882 were not arbitrable, was doubted.
In the case of Oil and Natural Gas Corporation [2022 (4) TMI 1350 - SUPREME COURT], another 3-Judge Bench of this Court essentially dealt with the group companies doctrine and application of alter ego principle in arbitration making a party not assenting to a contract containing arbitration clause to be nevertheless bound by the clause if that party is ‘alter ego’ of an entity who is a party to the arbitration agreement.
In the case of Intercontinental Hotels Group [2020 (12) TMI 1227 - SUPREME COURT], the Court has essentially proceeded on the enunciation in Vidya Drolia (supra) even while accepting the requirement of constituting larger bench to settle the jurisprudence of the implication of non-stamping or under-stamping on the arbitration agreement. This Court, however, provided that until decision by the larger bench, the matters at pre-appointment stage be not kept pending. Not much of dilation is required in that regard.
The submissions made by the appellant with reference to the amendment of Section 8 of the Act of 1996 and the later decisions of this Court in interpretation of the amended Section 8 do not inure to the benefit of the appellant. This is for the simple reason that no such conjunction can be provided to the original licence agreement dated 07.04.2005 and the tripartite agreement involving the Bank dated 06.07.2006 and 23.01.2008, whereby the arbitration clause could be held applicable to the tripartite agreement too. This is apart from the fact that in the frame of the suit and various other reliefs claimed, involving subsequent purchasers too and the allegations of fraud, the dispute cannot be said to be arbitrable at all. The present one cannot be said to be a case involving any “doubt” about non-existence of arbitration agreement in relation to the dispute in question.
There being no doubt about non-existence of arbitration agreement in relation to the entire subject-matter of the suit, and when the substantive reliefs claimed in the suits fall outside the arbitration clause in the original licence agreement, the view taken by the High Court does not appear to be suffering from any infirmity or against any principle laid down by this Court.
On the facts and in the circumstances of the present case and in the nature of transactions as also the nature of reliefs claimed in the suit, the view taken by the Commercial Court and the High Court in declining the prayer of the appellant for reference to arbitration cannot be faulted - Appeal dismissed.
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2023 (5) TMI 178
Fault in giving service of hair cut - saloon of the Hotel ITC Maurya - Consumer Protection - hair cut was not done according to the instructions of appellant - whether there was a deficiency in service or not would be a question of fact? - Correctness of compensation awarded by National Consumer Disputes Redressal Commission [the NCDRC] - HELD THAT:- The NCDRC, based upon the evidence led which included the affidavits, photographs, CCTV footage, whatsapp chats and other material on record, came to the conclusion that there was deficiency in service. We are not inclined to interfere with the said finding regarding deficiency in service as the same is based upon appreciation of evidence and thus would be a pure question of fact.
On account of such deficiency in service, what would be an adequate compensation taking into consideration the various claims made by the respondent, either under different heads or a lumpsum amount? - HELD THAT:- From a perusal of the impugned order of the NCDRC we do not find reference to or discussion on any material evidence to quantify the compensation - In this respect, this Court repeatedly requested the respondent, who was appearing in person, to refer to the material which she had placed before the NCDRC with respect to her present job at the time when she undertook the hair styling on 12.04.2018. This Court also required her to produce the material regarding her advertising and modelling assignments in the past or for which she had entered into a contract or agreement for the present and future with any of the brands to show her expected loss. The respondent utterly failed to demonstrate from the record filed before the NCDRC or before this Court regarding the above queries.
In the absence of any material with regard to her existing job, the emoluments received by her, any past, present or future assignments in modeling which the respondent was likely to get or even the interview letter for which the respondent alleges she had gone to the saloon to make herself presentable, it would be difficult to quantify or assess the compensation under these heads. What could be quantified was compensation under the head of pain, suffering and trauma. However, amount of Rs. 2 Crores would be extremely excessive and disproportionate - This Court, therefore, is of the view that the NCDRC fell in error by awarding compensation to the tune of Rs.2 crores without there being any material to substantiate and support the same or which could have helped the NCDRC to quantify the compensation.
The respondent if she has material to substantiate her claim may be given an opportunity to produce the same. Once deficiency in service is proved then the respondent is entitled to be suitably compensated under different heads admissible under law. Question is on what basis and how much. Let this quantification be left to the wisdom of the NCDRC based upon material if any that may be placed before it by the respondent - the order of NCDRC awarding Rs.2 crores as compensation for loss of income, mental breakdown and trauma and pain and suffering is set aside - matter remitted to the NCDRC to give an opportunity to the respondent to lead evidence with respect to her claim of Rs.3 crores. In case such evidence is led then adequate right of rebuttal be given to the appellant.
Appeal allowed.
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2023 (5) TMI 177
Seeking compliance of order of HC dated 1.12.2022 in the Contempt application filed u/s 12 of the Contempt of Courts Act for punishing the Opposite Party for willful disobedience of the judgment and order passed by this Court - HELD THAT:- Prima facie, a case has been made out for punishing the opposite party for willful disobedience of the judgment and order passed in the aforesaid writ petition.
No notice is issued to the opposite party at this stage. The opposite party is granted three months’ further time to comply with the order dated 01.12.2022 passed by this Court in Writ Petition [2022 (12) TMI 1404 - ALLAHABAD HIGH COURT] from the date of production of a certified copy of this order.
The applicant shall supply a duly stamped registered envelope addressed to the opposite party and another self-addressed envelope to the office within two weeks from today. The office shall send a copy of this order along with the self-addressed envelope of the applicant with a copy of contempt application to the opposite party within one week thereafter and keep a record thereof.
The opposite party shall comply with the directions of the writ court and intimate the applicant the order through the self-addressed envelope within a week thereafter.
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2023 (5) TMI 176
Seeking grant of anticipatory bail - petitioner has absented himself willfully despite the undertaking given by his wife and his counsel before the trial Court - HELD THAT:- This Court is sanguine of the fact that in the other connected petitions the interim protection has been granted in the light of the various orders passed by this Court as well as by the Apex Court. Since, in the present case the petitioner has absented himself willfully despite the undertaking given by his wife and his counsel before the trial Court.
To meet the ends of justice and keeping in view the orders passed in the cases of other co-accused in various petitions, which are still pending for final hearing, the petitioner is directed to surrender before the trial Court within a period of one week from today and apply for regular bail.
Application disposed off.
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2023 (5) TMI 131
Right of the auction purchaser - Validity of Auction of properties of borrower by the Bank - decree for specific performance of the agreement to sale - Section 13(4) of the SARFAESI Act - an agreement to sale was executed between the bank and the borrower for a sale of Flat No.6401 on 16.06.2016. At this stage, it is required to be noted that the said agreement to sale was executed by the borrower without informing/obtaining any consent from the DRT as well as the Bank and the permission, if any, given to the borrower earlier obtained only to the seven flats which were already recognized by the DRT on 25.02.2016. - Thereafter, the said property was auctioned by the bank following the due procedure.
HELD THAT:- It is required to be noted that in the MoU dated 10.04.2016 between the borrower and the respondent no.1 in Clause No.4 it was specifically provided that first the party should obtain clearance of sale from DRT/SBH so that they can process with further agreement to sale. Thus, as such respondent no.1 at the relevant time was aware about the pending DRT proceedings. Still the respondent no.1 entered into the agreement to sale with the borrower on 16.06.2016. At this stage, it is pertinent to note that thereafter when the Bank issued a public notice on 28.07.2016 for auctioning the properties of the borrower. Before the date of auction, on 24.08.2016 the borrower filed an application before the DRT praying for stay of all proceedings of the Bank pursuant to the auction notice dated 28.07.2016.
Calculatively the respondent no.1 filed the writ petition before the High Court challenging the e-auction notice and that too after conducting of the e-auction on 31.08.2016 and the sale in favour of the appellant was confirmed. The aforesaid facts were pointed out before the High Court and despite the same the High Court has allowed the writ petition which is not sustainable at all. By the impugned order the respondent no.1 has got the relief which as such the borrower failed to get from the DRT. On the aforesaid grounds the impugned judgment and order passed by the High Court is unsustainable.
Even at the time when the respondent no.1 entered into the agreement to sale/MoU he was aware about the proceedings pending before the DRT which is apparent from Clause 4 of the MoU. Therefore, respondent no.1 and/or his heirs cannot be permitted to get the benefit of his own wrong and cannot be permitted to get the benefit of a void transaction - It is directed that on the full payment of the auction sale consideration by the appellant (after deducting the 25% of the amount already deposited earlier) with 9% interest from the date of auction till the actual amount is paid, to be paid within a period of four weeks from today, the sale certificate be issued in favour of the appellant with respect to Flat No.6401. Whatever the amount is already deposited by the respondent no.1/his heirs shall be returned to the respondent no.1 (now his heirs) with the interest at 9% from the date of such deposit till the actual date of return which shall be returned within a period of four weeks from today.
The impugned judgment and order passed by the High Court is hereby quashed and set aside - Appeal allowed.
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2023 (5) TMI 89
Suit for recovery of dues - Jurisdiction of the court to entertain the suit - equipments supplied by defendant to the plaintiff satisfy the specifications mentioned in the purchase order or not - Number 160 found in the basic equipment Fine Lift FH 160 refers to weight lifting capacity of the equipment or it refers to the total weight of the gripper - plaintiff has acknowledged supply of equipments as per the specifications or not - rejection of equipments which were supplied by defendant to the plaintiff as per the purchase order.
Whether the equipments supplied by defendant to the plaintiff satisfy the specifications mentioned in the purchase order? - Whether the Number 160 found in the basic equipment Fine Lift FH 160 refers to weight lifting capacity of the equipment or it refers to the total weight of the gripper as well the job carrying capacity of the basic equipment? - HELD THAT:- From the communications exchanged between the parties, this Court is surprised to find that the defendant, who had promised to demonstrate the functioning of equipments with a carrying capacity of 130 kg, did not come forward to fulfill their promise. The defendant, at one stage, felt disappointed and insisted only payment. It is now established that the defendant, who has undertaken to successfully install the machines before the release of final payment, started demanding payment, which is not required as per the revised terms as mentioned in the invoice - this Court has no hesitation to hold that the defendant has not fulfilled its obligation under the contract and that they purposely delayed installation to the satisfaction of the plaintiff, as undertaken by them during middle of the installation. Though the defendant made an attempt to convince the plaintiff to improve the performance as per specifications, they did not accomplish and hence this Court is unable to accept the case of defendant.
This Court has no reason to disbelieve the evidence of P.W.2 as regards the actual weight of gripper especially when the plaintiff's application for appointment of Advocate Commissioner was dismissed on the objection of defendant and the evidence of P.W.2 was not controverted. This Court finds no truth in the case of defendant.
The issues are answered in favour of the plaintiff and against the defendant. This Court holds that the defendant failed to supply equipments to the plaintiff, satisfying the specifications mentioned in the purchase order. This Court also holds that the understanding of the plaintiff and defendant at the time of placing purchase order is that the weight carrying capacity of the equipment at all angles should be upto 160 kg and the actual weight of gripper has no relevance while denoting the equipment as FH 160. In other words, the Number 160 found in the basic equipment Fine Lift FH 160 would only refer to job lifting capacity of the equipment, irrespective of the weight of the gripper.
Whether the plaintiff has acknowledged supply of equipments as per the specifications and in accordance with the purchase order and failed to pay balance amount as per the contract? - Whether the plaintiff is justified in rejecting the equipments which were supplied by defendant to the plaintiff as per the purchase order under Ex.B1 dated 09.02.2007 and filing the suit for recovery of money? - HELD THAT:- In the present case, though the defendant was bound to discharge the burden lies on them, they failed to produce even the Brochure to establish their story about the Number 160 found in the purchase order. This Court has already seen that the case of defendant is not consistent and the evidence of D.W.1 is liable to be rejected. Though the trial Court has not considered the report given by P.W.2 and the evidence of P.W.2, this Court has no reasons to disbelieve them atleast as to the actual weight of gripper, as the appellant/defendant has not cross-examined the witness on this aspect. Though this Court has repeatedly held in several cases that the purchaser is bound to pay the contract price when he accepts the goods, in the present case, the plaintiff is entitled to reject the goods when the goods did not satisfy the specifications as per the terms of contract.
The plaintiff has parted with substantial money to the defendant towards supply of equipments. When the plaintiff's right to reject the goods is upheld, the consequence that would follow is that the plaintiff is also entitled to interest. Since interest claimed is only 12% p.a., and the transaction being commercial, this Court is justified in granting 12% p.a. interest for the period from 02.10.2008 to 28.02.2010 and 6% p.a. thereafter till date of realisation - issues are answered in favour of the respondent/plaintiff and against the appellant/defendant.
The decree of the trial Court is confirmed. In addition, there shall be a decree granting interest at the rate of 12% p.a. for the period from 02.10.2008 to 28.02.2010 and at the rate of 6% p.a. thereafter till the date of realisation. Upon making payment of the amount as per the decree, it is open to the defendant to take delivery of all the equipments supplied by them to plaintiff.
Appeal dismissed.
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2023 (5) TMI 45
Seeking removal of defendants 2 to 8 from the Trusteeship of the 1st defendant Maha Semam Public Charitable Trust - seeking direction to defendants 2 to 8 to render accounts relating to the Maha Semam Public Trust properties along with the original documents, title deed etc - seeking to order inventory of the movable and immovable properties of the 1st defendant Maha Semam Trust - seeking for settling a scheme for a proper administration of the 1st defendant Maha Semam Trust in future - seeking to direct payment of cost of this suit.
Prima Facie case - HELD THAT:- The control of the 9th respondent Company was transferred to M/s.DWM [a foreign investor] following the revocation of proxies on 25.10.2011 coupled with the subsequent change in Board composition by resignation of 2nd and 9th respondents successively on 25.10.2011 and 29.11.2011 respectively. These facts are not in dispute as the plaintiffs have not denied the factual events stated in the counter affidavit filed by the 9th respondent before the Hon’ble Judge. Therefore, the prayer in OA.No.520/2013 even on the date of application is not maintainable. As it is pointed out earlier, there cannot be an injunction to over turn an event that has occurred by operation of law.
The very object behind this litigation by filing a suit under Section 92 of CPC is on the basis of serious allegation that the 2nd respondent/2nd defendant, the promoter of 9th respondent Company after his induction in the 1st respondent Trust, diverted the funds of the Trust by formulating a systematic and a calculated design. It is admitted that no document is produced by the petitioners to show systematic diversion of funds of Trust in favour of 9th respondent Company. The plaintiffs now rely upon the interim report of the Advocate Commissioner pointing out that he could not collect the Books of Accounts and other details from the 1st respondent/Trust. The object of the Trust is not to carry on business and no activity with profit motive. No one could assume accumulation of huge funds by Trust. The 9th respondent is an independent Company incorporated under the Companies Act, 1956. The 2nd respondent is not in the Management of 9th respondent Company and is no more in control of 9th respondent Company after the increase of share capital with the investment of Rs.50 Crores from M/s.DWM. The Court is unable to find anything to probablise the case of petitioners.
This Court has already referred to the findings of the Hon’ble Judge regarding collusion among family members of the 1st respondent Trust. It appears that the 1st plaintiff is no more. The petitioners are not the shareholders or persons interested in the affairs of the 9th respondent Company. This Court is also convinced that the suit was engineered by the 2nd respondent/2nd defendant in collusion to get an order what the 2nd respondent may require but would not get directly against 9th respondent.
In the case on hand, this Court has already found that the Hon’ble Judge while disposing of the application, has gone in depth to lift the veil and identify the real cause for the litigation and the real person behind the litigation. Therefore, the conduct of petitioners in this case militates against the bona fide as held by this Court earlier. Further, from the whole gamet of facts, this Court finds that the petitioners have not come to Court with clean hands.
Legal Injury - HELD THAT:- The Hon’ble Judge already recorded the finding that the petitioners have not come with clean hands. In the present case, this Court has already indicated that the petitioners have not sought for any interim relief to protect the interest of the 1st respondent/Trust in relation to the mischief as stated in the plaint, played by the 2nd defendant and his family members who allegedly diverted funds of Trust. This would also show the conduct of the petitioners targeting the 9th respondent Company alone - this court finds no prima facie case or balance of convenience in favour of petitioners/plaintiffs to grant any interim injunction as prayed for and we also find that serious injury is likely to be caused to the 9th respondent in case this Court extend the order of status quo any further.
Petition dismissed.
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2023 (5) TMI 4
Pledge of shares - whether the accused No.1 Company was entitled to invoke the pledge at any time in the event of default or not? - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- In the event of any of the events occurring in sub-clauses (a) to (i) of Clause 9 of the ICDA, the lender would be entitled at its discretion to enforce its rights as mentioned in the ICDA, Deed of Personal Guarantees, Corporate Guarantee and LoP. A perusal of sub-clause (a) of Clause 9 of the ICDA would reveal that, if any installment of interest required to be paid as per the ICDA remains unpaid even after the expiry of 3 days from the respective due date for payment, accused No.1 Company was entitled to enforce its rights as mentioned in Clause 9 of the ICDA. Similarly, if any shortfall in the security pledged vide LoP executed, subject to which facility was granted, was not replenished even after giving due Notice, accused No.1 Company was entitled to invoke Clause 9 of the ICDA.
A perusal of Clause 5 of the LoP would reveal that the Pledgee was entitled to invoke the pledge at any time in the event of default or otherwise for as many number of shares as the Pledgee/lender deems fit in its sole discretion. It further provided that such invocation of pledge would not amount to sale of shares to the lender and the borrower would not be entitled to any credit/adjustment on such invocation/transfer of shares to the lender’s account on that date - A perusal of the terms of the ICDA as well as the LoP would clearly reveal that, in the event of any of the events occurring as provided in Clause 9 of the ICDA, accused No. 1 Company was entitled to sell the shares either to itself, its group companies or to any outsider. The accused No.1 Company had also agreed not to dispute or claim any loss on account of the price at which such securities were sold. 16. A perusal of the entire complaint would reveal that the only allegation is that accused No.1 Company had sold the shares to itself when the market price of the shares had fallen.
The complainant/respondent No.1 has attempted to turn a purely contractual dispute between the parties into a criminal case. Not only that, there is an inordinate delay in lodging the complaint. Though the complainant/respondent No.1 was aware about the sale of the shares in the year 2001, it did not do anything except filing an application before the learned Arbitrator. According to the complainant/respondent No.1, it received the information from the BSE and NSE in the year 2006, which fortified its suspicion about the fraud being played. Even thereafter, for a period of 5 years, it was silent and filed the complaint only in the year 2011 - though an attempt was made at the time of hearing to contend that it has only filed the complaint after it came to know about the fraud in the year 2009, there is no averment to that effect in the complaint.
It is found that the complaint, taken at its face value, does not disclose that any of the ingredients of the offence complained of have been made out. In the totality of the circumstances, it is found that the present complaint is nothing else but an abuse of process of law - appeal allowed.
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2023 (5) TMI 3
Suit for a decree directing the appellant to execute a deed of cancellation in respect of the Development Agreement - prayer for the delivery of possession of the suit property - application under Rule 11 of Order VII of the Code of Civil Procedure, 1908 filed on the ground that in view of the arbitration clause in the Development Agreement, the dispute ought to be referred to arbitration - HELD THAT:- The dispute, whether the Development Agreement stands cancelled or whether the agreement can be lawfully cancelled, is a dispute arising out of or in connection with the Development Agreement. Therefore, as per the arbitration clause, if the issue concerning cancellation is not mutually resolved, the same must be referred to arbitration.
The only ground on which the High Court has interfered is that the adjudication pursuant to invocation of Section 31 of the Specific Relief Act is an adjudication in rem. However, in the case of Deccan Paper Mills Company Limited1, this Court has categorically held that it is impossible to hold that an action instituted under Section 31 of the Specific Relief for cancellation of an instrument is an action in rem. In view of the applicability of the arbitration clause to the dispute subject matter of the suit filed by the respondent, the learned Trial Judge was justified in passing an order under Section 8 of the Arbitration Act by directing that the dispute be referred to the arbitration.
The impugned judgment and order of the High Court is set aside - the judgment and order of the Trial Court is restored - appeal allowed.
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2023 (5) TMI 2
Stamp duty - Asserting value of immovable property - Comprehensive sale of all the assets and, in a single transaction - Whether it is permissible to draw up a conveyance for only a part of such transaction for seeking registration? - whether the Registration Authorities are empowered to go behind an ostensible instrument and ascertain the stamp duty payable on the actual transaction? - applicability of GoMS 103 dated 07.02.2001.
HELD THAT:- In Member, Board of Revenue [1955 (10) TMI 27 - SUPREME COURT], this Court had the occasion to expound the law by interpreting Sections 3, 4, and 5 of the Indian Stamp Act. In the said case, the Respondent therein had executed a power of attorney. The power of attorney countenanced power being conferred on the agent by the respondent in his individual capacity and also in other capacities such as trustee, etc. The question which inter alia fell for decision was whether the word ‘matter’ in Section 5 was to be conflated with category - this court has held that When two words of different import are used in a statute in two consecutive provisions, it would be difficult to maintain that they are used in the same sense, and the conclusion must follow that the expression “distinct matters” in Section 5 and “descriptions” in Section 6 have different connotations - In other words, the Court apparently approved of the view taken that the Court should look at the instrument as it stood.
When it comes to the definition of ‘immovable property’ in the Transfer of Property Act, it has been defined as ‘not including standing timber, growing crops or grass’. In the Registration Act, 1908, immovable property includes, apart from land and buildings, things attached to the earth or permanently fastened to anything which is attached to the earth but not including standing timber, growing crops or grass. Most importantly, we cannot also be oblivious that Section 8 of the Transfer of Property Act declares that in the absence of an express or implied indication, a transfer of property passes to the transferee all the interests, which the transferor was capable of passing in the property and in the legal incidents thereof. Such incidents includes, inter alia, where the property is land, all things attached to the earth. When the property is machinery attached to the earth, the movable parts thereof also are comprehended in the transfer.
The mere fact that there is no express reference to plant and machinery in the Recital Clause cannot mean that the interest in the plant and machinery which stood attached to the land, which was scheduled, was not conveyed to the first respondent. The value of, what was actually purchased, has been expressly set out in the Preamble to the sale deed.
The effort of respondents 1 and 2 was to avoid payment of the stamp duty as due in law. The Division Bench erred in not noticing the true purport of the sale deed in conjunction with Section 8 of the Transfer of Property Act and the definition of the word ‘immovable property’, which we have adverted to. Viewed in the context of Duncans Industries Limited (supra) and Member, Board of Revenue (supra), as also the other attendant facts, including the contents of the Preambular portion, as also the conduct of the Respondents 1 and 2, it would be clear that the sale deed operated to convey the rights over the plant and machinery as well, which was comprised in the land scheduled in the sale deed. As far as the plant and machinery is concerned, it must, however, be only such plant and machinery, which was permanently embedded to the earth and answering the description of the immovable property as defined. It would appear that such an inquiry was not done to ascertain the same by the appellants.
The second appellant will ascertain the value of plant and machinery on the basis of it answering the description of the immovable property as understood in law.
The Appeal filed against the Judgment in Writ Appeal No. 2457 of 2005 is partly allowed.
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