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Indian Laws - Case Laws
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2024 (8) TMI 1268
Shifting and demolition of the school by DSGMC - whether the appellant-DSGMC has any valid ground so as to assail the impugned judgment of the High Court dated 9th December, 2009, whereby the NDMC was directed to reimburse the pay and perquisites including the pension and other benefits accruing to the staff of the school and “then to recover the same from the appellant-DSGMC”? - HELD THAT:- Admittedly, the school in question being run by the appellant-DSGMC was receiving 95% grant from NDMC, and the same was closed down without due approval of the Director (Education), NDMC. As a consequence, the appellant-DSGMC cannot be allowed to take the shield of Rule 47 of the Delhi Education Rules so as to claim that the burden of re-employment and payment of salaries of the surplus teachers and the nonteaching staff upon closure of the school would be that of the NDMC. The question of absorption only arises when the closure of the school is done in accordance with law, which requires a full justification and prior approval of the Director as per Rule 46 supra. Since the closure of the school in question was undertaken de hors Rule 46, the argument advanced on behalf of the appellant- DSGMC that the onus to absorb the surplus teaching and nonteaching staff would be that of the NDMC, has no legal sanction and cannot be sustained.
There are no merit in Civil Appeal preferred by the appellant-DSGMC, which are hereby dismissed.
Seeking reimbursement of the entire amount from the DSGMC to staff - HELD THAT:- Since the principal amount has already been paid by the appellant-NDMC, there is no reason for this Court to interfere with the direction given by the Delhi High Court for payment of interest to the respondents, i.e., staff of the school, in terms of the impugned judgment - it is directed that appellant-NDMC shall pay all remaining dues including interest to the respondents-staff of the school, within a period of eight weeks from today - It is clarified and reiterated that the appellant-NDMC shall be entitled to take recourse of the appropriate remedy for reimbursement of the amounts paid to respondents-staff of the school from the DSGMC, in case the DSGMC voluntarily fails to reimburse the said amount.
Appeal disposed off.
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2024 (8) TMI 1267
Dishonour of cheque - seeking quashing of summoning order and complaint under Section 138 read with Sections 141 and 142 of the NI Act - vicarious liability of a Director - HELD THAT:- There is unanimity in judicial opinion that necessary, specific and unambiguous averments ought to be made in a complaint under Section 138 of the NI Act, before the person accused of the offence is subjected to criminal prosecution and it is not enough to make a general and bald allegation that the person was in charge of the day to day affairs of the company. The least that is required is to ascribe a specific role to a person before any criminal liability can be fastened on him/her and from the complaint itself, a reasonable and plausible inference must be discernible that the person accused was in charge of and responsible to the firm for the conduct of its business, with a caveat that a hyper-technical approach should not be adopted in quashing the complaints since the laudable object is to prevent dishonour of cheques and sustain the credibility of commercial transactions, for which avowed purpose Legislature has enacted Sections 138 and 141 of the NI Act.
In SABITHA RAMAMURTHY & ANR. VERSUS RBS. CHANNABASAVARADHYA [2006 (9) TMI 490 - SUPREME COURT] the Supreme Court restated the requirements of Section 141 of the NI Act and held that the complainant must make a clear statement of fact to enable the Court to arrive at a prima facie opinion, even if the allegations are that the accused is vicariously liable. Section 141 of the NI Act raises a legal fiction where a person although not personally liable for commission of an offence, would be vicariously liable but before a person can be made vicariously liable, strict compliance with statutory requirements is to be insisted.
Coming to the facts of the present case, perusal of Form No. DIR-12 of the accused company BTIL reflects that Petitioners No. 1 and 3 were Independent Non-Executive Directors while Petitioner No. 2 was Non-Executive Director at the time of commission of the alleged offence. In view of Section 141 of NI Act and Section 149 of Companies Act, 2013, Petitioners could be held vicariously liable only if it was shown that they were in charge of and responsible for the conduct of the business of the company at the time of commission of offence and not otherwise and complainant was required to specifically aver in the complaint as to how the Petitioners were in charge of day to day affairs of the company BTIL as well as conduct of its business, as per settled law - There are no allegations that Petitioners had any role in the dishonour of the cheque on presentation and admittedly, Petitioners were not the signatories.
It is settled that Section 141 is a penal provision creating vicarious liability and must be strictly construed and therefore, bald cursory statements in the complaint in the absence of a specific role being ascribed to a Director and without spelling out how and in what manner the accused were in charge of or responsible to the accused company for the conduct of its business, vicarious liability cannot be fastened. It is also settled that it is not enough to state in the complaint that a particular person was a Director, Managing Director, CEO, etc. As held by the Supreme Court in S.M.S. Pharmaceuticals [2005 (9) TMI 304 - SUPREME COURT] it may be that in a given case, a person may be a Director but may know nothing about the day to day functioning of the company and there is no universal rule that a Director is in charge of its everyday affairs.
Sections 138 and 141 of the NI Act were introduced in the Act to encourage the wider use of a cheque and to enhance the credibility of the instrument. The intent of the Legislature in carrying out the amendment was to encourage people to have faith in the efficacy of banking transactions and use of cheques as negotiable instruments. To balance, a penal provision was enacted to ensure that the drawer of a cheque does not misuse the provisions and honours his commitment. The issue herein concerns the criminal liability arising out of dishonour of a cheque. Normally, the criminal liability is not vicarious i.e. one cannot be held criminally liable for the act of another. Section 141 of NI Act is, however, an exception where the offence under Section 138 is committed by a Company but the liability extends to the officers of the Company, subject to fulfilment of the conditions under Section 141, as a caveat - The present complaint fails to pass muster and basis the same, no criminal liability can be fastened on the Petitioners.
Since the contents and averments in the complaint are insufficient to attract the provisions under Section 141 (1) of NI Act, the impugned order dated 14.12.2017 passed by learned MM (NI Act), Patiala House Courts, New Delhi, in CC No. 16632/2017 is set-aside to the extent of issuing summons to the present Petitioners for alleged commission of the offence punishable under Section 138 of Negotiable Instruments Act, 1881.
Petition allowed.
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2024 (8) TMI 1200
Criminal breach of trust - Quashing of summoning order - offence punishable under Sections 406, 420 & 120B respectively of the Indian Penal Code, 1860 - Vicarious liability of the office bearers - non-application of mind - HELD THAT:- The impugned order passed by the High Court is a fine specimen of total nonapplication of mind. Although the complaint was filed for the offence punishable under Sections 406, 420 and 120B respectively of the IPC yet the Additional Chief Judicial Magistrate thought fit to take cognizance and issue process only for the offence of criminal breach of trust as defined under Section 405 of the IPC and made punishable under Section 406 of the IPC - even if the entire case of the complainant is accepted as true no offence worth the name is disclosed.
Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the CrPC, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the appellant Nos. 2 and 3 respectively herein who are none other than office bearers of the appellant No. 1 Company. When the appellant No. 1 is the Company and it is alleged that the company has committed the offence then there is no question of attributing vicarious liability to the office bearers of the Company so far as the offence of cheating or criminal breach of trust is concerned - Vicarious liability of the office bearers would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.
Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well - The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed.
There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously.
There is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of cases on charge of criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it.
The magistrate must carefully apply its mind to ascertain whether the allegations, as stated, genuinely constitute these specific offences. In contrast, when a case arises from a FIR, this responsibility is of the police – to thoroughly ascertain whether the allegations levelled by the informant indeed falls under the category of cheating or criminal breach of trust. Unfortunately, it has become a common practice for the police officers to routinely and mechanically proceed to register an FIR for both the offences i.e. criminal breach of trust and cheating on a mere allegation of some dishonesty or fraud, without any proper application of mind.
The impugned order passed by the High Court is set aside so also the order passed by the Additional Chief Judicial Magistrate, Khurja, Bulandshahar taking cognizance upon the complaint - Appeal allowed.
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2024 (8) TMI 1141
Challenge to award under Section 34 of the Arbitration and Conciliation Act, 1996 - Arbitrator accepted the claim of loss on the ground of on-site establishment ‘as permissible’ to the extent of 3% of the contract amount by the Hudson’s formula for expenses of engineers, supervisors, etc. - interest claim.
HELD THAT:- The conclusion of the High Court, “that it appears that the bills were paid soon after they were prepared” or that, “in that case there could not have been any claim for interest” cannot qualify as grounds for interference under Section 37. Equally, the approach of the High Court in holding that the Arbitrator neither established nor discussed the questions posed by it is not a ground to set aside the Award. The reasoning of the Arbitrator is reflected in that portion of the Award extracted hereinabove and we see nothing perverse in it. Nor such conclusion is against our public policy. The scope of Section 37 is enunciated in many decisions of this Court, and we apply the principles laid down therein to the facts of the present case.
The judgment of the High Court in relation to claim no. 4 is set aside - the Award is restored and thereby the judgment of the District Court upheld the Award.
Interest claim - HELD THAT:- While pendente lite interest is a matter of procedural law, prereference interest is governed by substantive law. CENTRAL BANK OF INDIA VERSUS RAVINDRA [2001 (10) TMI 1065 - SUPREME COURT]. Therefore, the grant of pre-reference interest cannot be sourced solely in Section 31(7)(a) (which is a procedural law), but must be based on an agreement between the parties (express or implied), statutory provision (such as Section 3 of the Interest Act, 1978), or proof of mercantile usage - the High Court had no reason to interfere with the Arbitral Award with respect to grant of pre-reference interest, since the Contract between parties does not prohibit the same.
Appeal disposed off.
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2024 (8) TMI 1140
Seeking an appropriate Writ or Direction to the effect that the personal bonds and sureties executed by the petitioner registered at P.S. Sadar, District Gurugram, shall hold good for eleven other bail orders passed in his favour from the Courts of different States - Whether the petitioner entitled to the relief of treating the personal bond and one set of sureties already furnished as holding good for the other bail orders also?
HELD THAT:- From time immemorial, the principle has been that the excessive bail is no bail. To grant bail and thereafter to impose excessive and onerous conditions, is to take away with the left hand, what is given with the right. As to what is excessive will depend on the facts and circumstances of each case. In the present case, the petitioner is experiencing a genuine difficulty in finding multiple sureties. Sureties are essential to ensure the presence of the accused, released on bail. At the same time, where the court is faced with the situation where the accused enlarged on bail is unable to find sureties, as ordered, in multiple cases, there is also a need to balance the requirement of furnishing the sureties with his or her fundamental rights under Article 21 of the Constitution of India.
An order which would protect the person’s fundamental right under Article 21 and at the same time guarantee the presence, would be reasonable and proportionate. As to what such an order should be, will again depend on the facts and circumstances of each case.
It is directed that for the FIRs pending in each of the States of Uttar Pradesh, Rajasthan, Punjab and Uttarakhand, in each State, the petitioner will furnish his personal bond for Rs. 50,000/- and furnish two sureties who shall execute the bond for Rs. 30,000/- each which shall hold good for all FIRs in the concerned State, for cases mentioned in the chart set out hereinabove. The same set of sureties is permitted to stand as surety in all the States. This direction will meet the ends of justice and will be proportionate and reasonable.
Petition allowed.
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2024 (8) TMI 1139
Sufficient ground to proceed as contemplated under Section 227 of the Criminal Procedure Code - whether the materials collected during investigation even if admitted for the sake of the arguments discloses commission of an offence under Section 306 and 420 of the Indian Penal Code?
HELD THAT:- It is true that additionally there is charge under Section 420 of the Indian Penal Code. The main offence is under Section 306 of the Indian Penal Code. If there is delivery of the property in pursuance to the cheating, it is punishable under Section 420 of the Indian Penal Code. There is an allegation that the Applicant induced the deceased to join her company. The deceased has given all his best for the progress of the Company. It will not fall under Section 420 of the Indian Penal Code, because there is no delivery of the property. The first informant in his supplementary statement has stated about issuance of the cheque after the incident. Cheque is of Rs. 4,50,000/- and cash of Rs. 41,83,000/-.
If the deceased is upset due to the decision of the Applicant, we cannot say that she has intentionally aided the deceased to commit suicide. A person may not like decision of another person. Ultimately whether to continue business or personal relation is choice of the parties. If other party may not like that decision and if he puts to an end to his life, it does not fall within the meaning of the intentionally aiding under Section 107 of the Indian Penal Code.
The learned trial Judge has failed to consider the provision of Section 107 of the Indian Penal Code. Learned Judge has failed to consider the absence relationship in between acts alleged and the consequence - Merely on account of the dispute, it cannot be said that it can be abetment. This Court has taken this view after perusing the statements and panchnamas on one hand and considering the ingredients of the Section 306 read with Section 107 of the Indian Penal Code on the other hand.
The Order dated 10/04/2015 passed by the Court of the Additional Sessions Judge, Greater Mumbai in Sessions Case No. 658 of 2014 is set aside - Applicant is discharged for an offence under Sections 306 and 420 of the Indian Penal Code - Revision application is allowed.
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2024 (8) TMI 1096
Challenge to order passed by the Ministry of Labour, Government of India by which the appropriate Government has refused to make reference for settlement of dispute arose between the parties - HELD THAT:- Several grounds were raised by the petitioner including non-compliance of the provisions contained under Section 25G of the Act of 1947, while terminating the services of the petitioner. Reply to the aforesaid application was submitted by the respondents and an objection was taken therein that the petitioner had hardly worked for only 85 days with the respondents, hence, under these circumstances, none of the provisions of the Act of 1947 were attracted and no dispute arose between the parties, which was required to be adjudicated by the Labour Court by making a reference.
Considering the application filed by the petitioner and reply submitted by the respondents, the competent authority refused to make reference only on a technical count that the petitioner has worked for 85 days only and he could not substantiate his claim for further employment with any documentary evidence.
Whether under these circumstances, the order passed by the authority dated 05.07.2010 is legally sustainable in the eye of law or not? - HELD THAT:- In the case of Telco Convoy Drivers Mazdoor Sangh and another vs. State of Bihar and Others [1989 (4) TMI 342 - SUPREME COURT], the Hon’ble Apex Court had held that though while considering the question of making reference under section 10(1) of the Act of 1947, the Government is entitled to form an opinion as to whether an industrial dispute “exists or is apprehended”, but it is not entitled to adjudicate the dispute itself on its merits. While exercising power under Section 10(1) of the Act of 1947, the function of the appropriate Government is an administrative function and not a judicial or quasi judicial function. It, therefore, cannot delve into the merits of the dispute and take upon itself the determination of the lis.
The impugned order dated 05.07.2010 stands quashed and set aside. The matter is remitted to the appropriate Government for making reference of the dispute - Petition disposed off.
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2024 (8) TMI 1048
Prosecution for the offences punishable under the Narcotic Drugs and Psychotropic Substances Act, 1985 - illegal transport of pentazocine, a psychotropic substance, from Hajipur to Lucknow by train for being sold in the market as an intoxicating item - HELD THAT:- In the facts of the case, the consignment was booked by accused no.1, and therefore, he was found to be transporting the psychotropic substance in contravention of Section 8(c) of the NDPS Act. There is no allegation against the appellant of transporting the contraband. The consignment was booked in the name of the accused no.1 as per the prosecution case. Therefore, unless it is proved that the appellant had supplied the consignment to accused no.1 or was a part of a criminal conspiracy to commit an offence under Section 22(c), the appellant cannot be punished.
Perusal of the evidence of accused no.3, who was examined as a defence witness, shows that he was carrying on the business of M/s Maheshwari Medical in his wife's name. He stated that he issued invoices for sending Fortwin injections to the appellant. However, there is no evidence on record to show that accused no.3 procured the contraband that is the subject matter of the prosecution and handed it over to the appellant or accused no.1.
There is no recovery from the appellant of any incriminating material. There is no evidence to show that the contraband tried to be transported by accused no.1 by railway parcel was delivered by or on behalf of the appellant to accused no.1. There is no evidence of any conspiracy against the appellant. Therefore, the respondent has not established the offences punishable under Sections 22(c) and 29 of the NDPS Act against the appellant beyond a reasonable doubt - In the charge, there is no reference to the allegation of commission of an offence under Section 29 of the NDPS Act.
However, it is not necessary to go into the question of whether non-framing of charge under Section 29 of the NDPS Act has resulted in the failure of justice. The reason is that there is absolutely no legal evidence on record to show that the contraband attempted to be transported by accused no.1 by a railway parcel was supplied to him by the appellant. There is no evidence of the appellant's participation in any conspiracy.
The conviction of the appellant cannot be sustained - the impugned judgments set aside and the appellant is acquited of all charges against him - appeal allowed.
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2024 (8) TMI 1047
Detention order - smuggling - contraband gold - baggage - Non-supply of relevant documents (WhatsApp chats) - right of the detenus under Article 22(5) of the Constitution of India - HELD THAT:- In the present case, the detenue had sought the copies of the said WhatsApp chats. However, the Division Bench of the High Court in the present case, while rejecting the case of the detenue, observed that the detaining authority had arrived at a subjective satisfaction on the basis of various documents and that non-supply of the WhatsApp chats would not vitiate the detention order. It, therefore, held that the findings of the Coordinate Bench of the same High Court in the cases of Nushath Koyamu [2022 (6) TMI 326 - KERALA HIGH COURT] and other connected matters in respect of other detenus could not be followed in the present case.
The Division Bench of the High Court while passing the impugned judgment and order should have followed the view taken by another Division Bench of the same High Court specifically when the grounds of detention and the grounds of challenge were identical in both the cases. In the event, the Division Bench of the High Court was of the view that the earlier decision of the Coordinate Bench of the same High Court was not correct in law, the only option available to it was to refer the matter to a larger Bench.
Order of detention is quashed and set aside - Appeal allowed.
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2024 (8) TMI 1046
Dishonour of Cheque - burden of proof to rebut the presumption - presumption under Sections 118(a) and 139, NI Act - Section 313 of CrPC - HELD THAT:- When presumption under Section 139 was raised, Trial Court ought to have conducted proceedings basis that the cheque was issued in discharge of a debt or liability towards the complainant. At this juncture, the onus was on the accused to rebut the presumption under Section 139. Had the accused been successful in rebutting said presumption, the onus would have then shifted onto the complainant/appellant. The fundamental flaw on part of Trial Court was failing to note effect of the presumption under Section 139 NI Act. As a result, Trial Court erroneously proceeded to deliberate upon want of evidence on part of appellant/complainant i.e. no interest was charged, friendly relations between the parties were not proved, financial capacity not established, and most importantly, guilt of the accused was not proved beyond reasonable doubt.
Supreme Court in Sumeti Vij v. Paramount Tech Fab Industries [2021 (3) TMI 383 - SUPREME COURT] observed that statement under Section 313 CrPC is not substantive evidence of defence by accused, and hence, same is insufficient for the purpose of rebuttal of presumption under Section 139 NI Act. Much like the present case, in Sumeti Vij accused had not replied to legal notices sent, nor had made any payments thereafter. Furthermore, while accused gave a statement under Section 313 CrPC, defence evidence was not led therein even though accused pleaded not guilty and claimed trial.
Presumption under Section 139 read with Section 118 of the NI Act is essentially based on pure common sense. Instead of having the accused prove to the contrary, the accused is acquitted, as in this case, without having led any defence evidence and purely relying upon the inconsistencies in the affirmative proof provided by the complainant. The law and its application, is therefore turned on its head.
This Court is of the view that there was a fundamental error in the approach taken by the Trial Court whereby it went on to dissect the case put up by the appellant, instead of first examining whether the respondents had rebutted the presumption under Section 139 of NI Act.
The impugned order is set aside - appeal allowed.
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2024 (8) TMI 1045
Seeking grant of bail - involvement in business of prohibited drugs and for recovery of 3600 tablets of Lomotil and 298 tablets of Alprax 0.5 - HELD THAT:- Taking into consideration the entire facts and circumstances, but without commenting on merits thereon it is required to be considered at the time of adjudication of bail application, it is opined that petitioner may be enlarged on bail in present case at this stage.
The petitioner is ordered to be enlarged on bail, subject to fulfilment of conditions imposed - petition allowed.
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2024 (8) TMI 956
Doctrine of prospective overruling - Demands for tax under state legislation pertaining to Entries 49 and 50 of List II of the Seventh Schedule - Infringement of fundamental rights in Part III of the Constitution - HELD THAT:- The doctrine of prospective overruling is applied when a constitutional court overrules a well-established precedent by declaring a new rule but limits its application to future situations. The underlying objective is to avert injustice or hardships. The doctrine was applied by the courts in the US on the basis that the US Constitution “neither prohibits nor requires retroactive effect.
The US Supreme Court has considered the existence of a statute or judicial decision as an “operative fact” having “consequences which cannot justly be ignored” or “erased by a new judicial declaration. Therefore, it was held that the effect of a subsequent ruling as to invalidity may have to be considered in light of various aspects.
This Court has adopted the doctrine of prospective overruling, partly inspired by the jurisprudence developed in the US. In GOLAKH NATH VERSUS STATE OF PUNJAB [1967 (2) TMI 95 - SUPREME COURT] a Bench of eleven Judges of this Court was called upon to decide the validity of the Constitution (Seventeenth Amendment) Act 1964 which included certain state agrarian laws in the Ninth Schedule of the Constitution. The majority held that an amendment to the Constitution was “law” according to the definition under Article 13. Further, it was held that constitutional amendments are also subject to limitations prescribed under Article 13 (2).
In JINDAL STAINLESS LTD. AND ANR. VERSUS STATE OF HARYANA AND ORS. [2016 (11) TMI 545 - SUPREME COURT (LB)] a Bench of nine Judges of this Court held that a non-discriminatory tax does not per se constitute a restriction on the right to free trade, commerce and intercourse guaranteed under Article 301. This Court overruled long-standing precedents that held that taxes, except for compensatory taxes, offend Article 301.
The total amount, that is the principal plus the interest, due by the assesses in the pending matters may be substantial in comparison to their total net worth. Steel Authority of India has stated on affidavit that retrospective application of MADA (supra) will lead to revival of cumulative demands to the tune of approximately Rupees three thousand crores from different States. The delay in the court proceedings should not be to the detriment of the assesses.
While the States may levy or renew demands of tax, if any, pertaining to Entries 49 and 50 of List II of the Seventh Schedule in terms of the law laid down in the decision in MADA the demand of tax shall not operate on transactions made prior to 1 April 2005 - The time for payment of the demand of tax shall be staggered in instalments over a period of twelve years commencing from 1 April 2026 - The levy of interest and penalty on demands made for the period before 25 July 2024 shall stand waived for all the assesses.
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2024 (8) TMI 841
Constitutionality of Electoral Bond Scheme and provisions in cognate legislation including those Representation of the People Act 1951, the Companies Act 2017 and the Income Tax Act, 1961 - invocation of jurisdiction under Article 32 of the Constitution - HELD THAT:- At the present stage, absent a recourse to the remedies which are available under the law to pursue such grievances, it would both be premature and inappropriate for this Court; premature because the intervention of this Court under Article 32 of the Constitution must be preceded by the invocation of normal remedies under the law and contingent upon the failure of those remedies; and inappropriate because the intervention of this Court, at the present stage, would postulate that the normal remedies which are available under the law would not be efficacious.
This Court entertained a batch of petitions challenging the constitutional validity of statutory provisions embodying the Electoral Bond Scheme and the consequential amendments which were made to diverse statutes. The only remedy for challenging such legislative changes lies in the invocation of the power of judicial review. Allegations involving criminal wrong doing, on the other hand, are of a distinct nature where recourse to the jurisdiction of this Court under Article 32 of the Constitution should not be taken as a matter of course particularly, in view of the remedies available in law.
The constitution of an SIT headed by a former Judge of this Court or otherwise should not be ordered in the face of remedies which are available under the law governing the criminal procedure. Likewise, matters, such as the reopening of assessments pertain to the specific statutory jurisdiction conferred upon assessing authorities under the Income Tax Act 1961 and other statutes.
The jurisdiction under Article 32 of the Constitution is declined to be exercised - petition dismissed.
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2024 (8) TMI 775
Rejection of bail under IPC and UAPA - allegation is that, the first floor premises are being used for objectional activities of an organisation called Popular Front of India (PFI) - reasonable grounds for believing that the accusations against the appellant are prima facie true, or not - Section 43D (5) of the UAPA - HELD THAT:- There is nothing in the charge sheet which shows that the appellant has taken part in or has committed unlawful activities as defined in the UAPA. There is no specific material to show that the appellant advocated, abetted, or incited commission of any unlawful activities. A terrorist act is defined in Section 15(1). Assuming that the co-accused were indulging in terrorist acts or were making any act preparatory to the commission of terrorist acts, there is absolutely no material on record to show that there was any conspiracy to commit any terrorist act to which the appellant was a party. There is no material produced on record to show that the appellant advocated, abetted, advised, or incited the commission of terrorist acts or any preparatory activity.
Taking the charge sheet as correct, it is not possible to record a prima facie finding that the appellant knowingly facilitated the commission or preparation of terrorist acts by letting out the first floor premises. Again, there is no allegation in the charge sheet against the appellant that he organised any camps to impart training in terrorism.
On plain reading of the charge sheet, it is not possible to record a conclusion that there are reasonable grounds for believing that the accusation against the appellant of commission of offences punishable under the UAPA is prima facie true - it is impossible to record a prima facie finding that there were reasonable grounds for believing that the accusation against the appellant of commission of offences under the UAPA was prima facie true. No antecedents of the appellant have been brought on record.
There was no reason to reject the bail application filed by the appellant - appellant is directed to be enlarged on bail on the terms and conditions as may be fixed by the Special Court. For that purpose, the appellant shall be produced before the Special Court within a maximum of 7 days from today - Appeal allowed.
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2024 (8) TMI 774
Dishonour of cheque - legally enforceable liability - rebuttable presumption - burden on the respondent to rebut the presumption by introducing evidence was initially not done for no justifiable/valid reason - plea for adducing additional evidence under Section 391 of the Code, the presumption has not been dislodged as required under law, and still the accused has been acquitted.
HELD THAT:- This Court in DASHRATH RUPSINGH RATHOD VERSUS STATE OF MAHARASHTRA & ANOTHER [2014 (8) TMI 417 - SUPREME COURT] held that “An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank.” The fact that the cheque was issued as a consequence of failure to repay the loan taken by the respondent from the appellant to which the interest was added would more or less settle the issue. However, in the present case, a discrepancy apropos the rate of interest, whether it be 1.8%, 2.4% or 3% per month was not sufficient to disbelieve the claim of the appellant.
The reasoning given by the Appellate Court, having taken note of the Tamil Nadu Act, fails to appreciate that even going by what has been written on the pronote i.e., 1.8% per month would lead to the interest being 21.6% per annum, which also is above the cap of 12% per annum prescribed in the Tamil Nadu Act. Thus, if the parties amongst themselves, agreed to a rate which is not in conformity with the Tamil Nadu Act, it was for the respondent to raise an objection or move the appropriate forum for getting the same corrected/taken care of, so that the interest rate did not exceed 1% per month but having agreed to a rate of 1.8% per month, the subsequent amount of interest calculated @ 3% per month does not have much force for it was upon the respondent to challenge the rate of interest. The respondent also cannot be said to be a layman, and being a subscriber to a chitfund company, he is expected to be aware of the laws and also of what is beneficial for him.
The Appellate Court’s order as also the impugned judgment are set aside. The order of the learned Trial Court stands restored albeit with certain modifications. It is considered appropriate to direct the respondent to pay fine amounting to one and a half (1½) times the amount mentioned in the cheque - Appeal allowed.
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2024 (8) TMI 706
Dishonour of Cheque - Time-barred debt and its acknowledgment - whether cheques were issued for a legally enforceable debt or other liability should be decided only at the time of trial and not at this stage? - HELD THAT:- The issue as to whether by subsequent conduct did the Petitioner promise the Respondent to pay the amount or not is a question of fact which can be decided only in trial. The Apex Court in Yogesh Jain vs. Sumesh Chadha, [2022 (10) TMI 1198 - SUPREME COURT] has held that the issue as to whether the debt is time barred or is legally enforceable or not ought not to be considered at the initial stage.
The object of the NI Act is to enhance the acceptability of cheques and inculcate faith in the efficiency of negotiable instruments for transaction of business. In the opinion of this Court, the true purport of Section 138 of the NI Act would not be fulfilled if the debt or other liability is interpreted to include only a debt that exists as on the date of drawing of the cheque. The Parliament has used the expression debt or other liability and the explanation appended to Section 138 of the NI Act states that the debt would mean a legally enforceable debt, however, the expression also uses the word other liability. In the opinion of this Court, the word other liability would have to be something other than a legally enforceable debt and must be given a meaning of its own. The legislature has purposely used two distinct phrases i.e., legally enforceable debt and other liability.
The issue as to whether the debt is time barred or is legally enforceable or not or as to whether the cheques were deposited after an understanding was reached between the parties regarding payment of liability or as to whether the cheques could have been deposited at any time for repayment of liability or whether it was a part discharge of liability etc. cannot be decided at the time of issuing of summons and the same can be considered only in the trial and not at this stage.
This Court is not inclined to quash the present complaint at this juncture. The Ld. Trial Court is requested to proceed with the complaint in accordance with law - Petition disposed off.
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2024 (8) TMI 705
Dishonour of Cheque - Maintainability of petition - Liability of partners - equal and efficacious remedy of appeal - Complaint not maintainable for the reason that it does not have the necessary averments against the Petitioners - whether the complaint, as framed, should be permitted to proceed ahead or should the complaint be quashed for want of necessary averments? - HELD THAT:- The position of a Partner is distinct from Director of a company. Section 18 of the Partnership Act specifically provides that a partner is an agent of the firm for the purpose of business of the firm. Section 19 states that the act of a partner which is done to carry on the business of the kind carried on by the firm, binds the firm. Section 23 states that an admission or representation made by a partner concerning the affairs of the firm is evidence against the firm, if it is made in the ordinary course of business. Section 25 states that every partner is liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner.
In a company, every Director is not responsible for the conduct of the business of the company but in a partnership firm all the working partners are responsible for the conduct of day-to-day business of the firm as every partner is a representative of the other partners of the firm. In view of the above, the averment that an accused is a partner is sufficient to show that that partner is responsible for the conduct of the affairs of the firm. All the judgments relied on by the learned Counsel for the Petitioner, which pertains to directors of a firm, are, therefore, clearly distinguishable.
A perusal of the abovementioned Section shows that until and unless a public notice of the retirement is given, a partner of the firm continues to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement. There is nothing on record to show that a public notice has been given. However, since Ms. Anju Khanna, i.e. the Petitioner No. 1 herein, was only a sleeping partner of the firm, this Court is inclined to exercise its jurisdiction under Section 482 Cr.P.C to quash the Complaint qua Ms. Anju Khanna, i.e. Petitioner No. 1 herein only. As far as Petitioners No. 2 & 3 are concerned the complaint shall proceed ahead against them.
The Petition is disposed of.
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2024 (8) TMI 704
Dishonour of Cheque - discharge of the legal debt/liability - preponderance of probablities - whether Respondent had paid back the money or not and if not, the same was payable? - HELD THAT:- Indisputably, Respondent has been acquitted by the learned Trial Court and therefore, the first issue that needs consideration is the scope and ambit of interference by an Appellate Court in a judgment acquitting the accused. Appellate Court has, no doubt, wide powers to re-appreciate the evidence in an appeal against acquittal and come to a different conclusion, on facts and law, but there is no gainsaying that this power must be exercised with due care and caution since the presumption of innocence at the start of the trial is strengthened by acquittal of the accused by a judicial order.
It is a settled law that in matters relating to dishonour of cheques, Courts have to consider whether the ingredients of Section 138 of NI Act are made out and if so, whether the accused is able to rebut the statutory presumption under Section 139 of NI Act.
Coming to the present case, the undisputed position that obtains is that Respondent admitted execution of promissory note Ex. CW1/B and agreement Ex. CW1/C as well as his signatures on 7 cheques in question Ex. CW1/E and Ex. CW1/H-1 to Ex. CW1/H-6. It is also established through cheque return memos dated 12.07.2010 and 06.08.2010, Ex. CW1/F and by Ex. CW1/I-1 to Ex. CW1/I-6, that on presentation with the bank, all 7 cheques were returned unpaid with remarks “Funds Insufficient”.
Whether Respondent had any legally enforceable debt or liability to pay the allegedly due amount under the cheques in question to the Petitioner? - HELD THAT:- Reading Section 139 and applying the same, there is little doubt that since Petitioner was the holder of the cheques in question and the signatures on the cheques were not denied by the Respondent, presumption shall be drawn that the cheques were issued for discharge of a debt or other liability. The presumption under Section 139 of NI Act is, however, a rebuttable presumption. At this stage, I may allude to observations of the Supreme Court in BASALINGAPPA VERSUS MUDIBASAPPA [2019 (4) TMI 660 - SUPREME COURT], wherein the Supreme Court, before proceeding to the judgments under Sections 118 and 139 of NI Act noticed the general principles pertaining to burden of proof on an accused especially in a case where some statutory presumption regarding guilt of the accused has to be drawn.
In RANGAPPA VERSUS SRI MOHAN [2010 (5) TMI 391 - SUPREME COURT] the Supreme Court observed that presumption under Section 139 of NI Act is rebuttable and it is open to the accused to raise a defence and contest that the cheque was not issued in furtherance of an enforceable debt or liability. It was also held that in the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden and therefore when an accused has to rebut the presumption under Section 139 of NI Act, the standard of proof for doing so is “preponderance of probabilities”.
This Court is unable to find any infirmity in the finding of the Trial Court that Respondent was able to set up a plausible defence, which on the principle of preponderance of probability, rebutted the presumption in favour of the Petitioner under Section 139 of NI Act. Execution of agreement Ex. CW1/D-8 reflecting the execution of documents regarding transfer/sale of the property as security for loan of Rs.25 lacs; Respondent being in possession of the coloured photocopies of the documents executed on 27.11.2009 coupled with absence of any explanation by the Petitioner on how these were with the Respondent; doubts over availability of funds to the extent of Rs.50 lacs with the Petitioner; his failure to prove the alleged two separate transactions of purchase of property and loan, certainly raises doubts over Petitioner’s version and defence of the Respondent appears to be a probable defence.
Thus, presumption under Section 139 of the NI Act stands rebutted. Once presumption under Section 139 was rebutted by the Respondent, burden of proof shifted on the Petitioner and as held by the learned Trial Court, Petitioner was unable to discharge the burden and the Respondent was rightly acquitted of the offence punishable under Section 138 of NI Act. Thus, no ground for grant of leave to appeal is made out.
Petition seeking leave to appeal is hereby dismissed.
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2024 (8) TMI 653
Enforcement of an arbitral award expressed in foreign currency - what is the correct and appropriate date to determine the foreign exchange rate for converting the award amount expressed in foreign currency to Indian rupees? - what would be the date of such conversion, when the award debtor deposits some amount before the court during the pendency of proceedings challenging the award?
HELD THAT:- In the present case, it is important to note the terms on which the two deposits of Rs. 7.5 crores and Rs. 50 lakhs were made. From the order of the High Court dated 15.10.2010, it is clear that such order for deposit of Rs. 7.5 crores and for furnishing a bank guarantee of an Indian bank for the release of the deposit was made in accordance with the consent of the parties.
The facts in this case are similar to Renusagar [1993 (10) TMI 232 - SUPREME COURT] for an analogy to be drawn. Here as well, the deposit was made during the pendency of the proceedings under the objections petition. It was permitted to be withdrawn against a bank guarantee of an Indian bank. Here the respondent was entirely unable to withdraw the amount, while the issue there was that it was only unable to convert the amount to US dollars. However, in both cases, the respondent failed to move the Court for necessary orders to be able to receive and utilise the amount. In this case, there is the added fact that the respondent consented to the deposit and the condition requiring security. In light of these similarities, it is appropriate to adopt the Court’s approach in Renusagar.
The deposit of Rs. 7.5 crores stands converted as on the date of deposit (22.10.2010), when the rate of exchange as submitted by the appellants is 1 euro = Rs. 59.17. The submission that the respondent was unable to furnish a bank guarantee of an Indian bank, also rejected. This argument is only to serve its own interest to be able to benefit from a higher exchange rate but does not address the principle that operates while enforcing a sum expressed in foreign currency.
A similar logic underscores the statutory provisions in Order 21, Rule 1 and Order 24 of the Code of Civil Procedure, 190852 to determine whether interest will continue to operate on an amount deposited before a court - A constitution bench of this Court in Gurpreet Singh v. Union of India [2006 (10) TMI 493 - SUPREME COURT] extensively discussed the rules governing interest calculation when the defendant/ judgment-debtor deposits some part of the amount. Order 24 governs deposits at the pre-decretal stage and Order 21, Rule 1 at the post-decretal stage.54 The essence of these provisions is that on any amount deposited into the court, interest shall cease to run from the date when the depositor serves a notice to the plaintiff/decree-holder. Similarly, when payment is tendered to the decree-holder outside the court, interest ceases on such amount even if the payment is refused.
Order 21, Rule 1 embodies a rule of prudence that once the amount is tendered to the decree-holder by the judgmentdebtor, whether in the form of a court deposit or other forms of payment such as demand draft or cheque, the judgment-debtor cannot be made liable to then pay interest on such amount.
It is clear that the exchange rate on 22.10.2010 would apply to that extent and non-withdrawal by the respondent of Rs. 7.5 crores was in its own discretion and inaction. However, since the order of 03.06.2011 permits withdrawal of Rs. 50 lakhs on the completion of the proceedings, that would be the appropriate date for determining the exchange rate. Here, the revision proceedings were complete on 01.07.2014. Hence, it would be appropriate to apply the exchange rate as on this date to convert the deposit of Rs. 50 lakhs.
The statutory scheme of the Act makes a foreign arbitral award enforceable when the objections against it are finally decided. Therefore, as per the Act and the principle in Forasol (supra), the relevant date for determining the conversion rate of foreign award expressed in foreign currency is the date when the award becomes enforceable - When the award debtor deposits an amount before the court during the pendency of objections and the award holder is permitted to withdraw the same, even if against the requirement of security, this deposited amount must be converted as on the date of the deposit - After the conversion of the deposited amount, the same must be adjusted against the remaining amount of principal and interest pending under the arbitral award. This remaining amount must be converted on the date when the arbitral award becomes enforceable, i.e., when the objections against it are finally decided.
Appeal allowed in part.
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2024 (8) TMI 652
Enforcement of a money-award rendered in favour of the petitioner - Calculation of rate of interest on the money award - to be calculated on the basis of the bank rate fixed by the Reserve Bank of India (RBI) as on the appointed date or be calculated on the basis of the fluctuating rates at different points of time as notified by the RBI from the appointed date till the date of payment - Section 16 of the MSME Act - HELD THAT:- Upon a comprehensive assessment of the provisions of Section 16, the inevitable conclusion is that the interest envisaged therein is to be paid at the rate of three times the RBI notified rates, the incidence of which would be at each monthly rest, meaning thereby that the rates would be fluctuating along with the RBI-notified rates at variable points of time, to be taken at each monthly interval which is the point of incidence of such rates.
Accordingly, the version of the award-debtor is accepted. The rate of interest has to be calculated from the appointed date till the date of repayment, calculated on the basis of compound interest with monthly rests, the rate of interest being taken at each point of incidence at each monthly rest, in terms of the RBI rates prevalent at that point of time, multiplied by three. Hence, the award-debtor is to pay interest to the award-holder at the variable rates of interest as notified by the RBI from time to time, multiplied by three, throughout the period, calculated at each monthly interval at the then prevailing rates.
The mode of calculation having thus been determined, the award-debtor is directed to make the full payment of interest as per the calculations in the light of the observations above to the award-holder within four (04) weeks from date. For such purpose, along with such payment of the entire interest component over and above the principal awarded amount, deducting the amounts already paid/deposited in terms of court orders, the award-debtor shall also file in court a copy of the detailed calculations for arriving at the amount paid to the award-holder.
The award holder will be at liberty to withdraw (if deposited), alternatively utilize (if paid directly) the amount already deposited/paid by the award debtor.
The matter shall next be listed under the heading “For Orders” on August 6, 2024 when the award-debtors shall file an affidavit of compliance, showing payment of such entire amount of interest along with the principal to the award-holder, annexing to the said affidavit a break-up of the detailed calculations of interest till the date of payment.
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