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2008 (12) TMI 813
Issues Involved:
1. Whether the terms of a consent decree can be varied by the executing court.
2. Applicability of Section 74 of the Indian Contract Act to the consent decree.
3. Reasonableness of the interest rate stipulated in the consent decree.
Summary:
Issue 1: Variation of Consent Decree by Executing Court
The Supreme Court addressed whether the terms of a consent decree can be varied by the executing court. The appellants had filed a suit for declaration and permanent injunction regarding their share in the suit property, which was settled through a compromise petition u/s Order XXIII Rule 3 of the Code of Civil Procedure, 1908. The compromise included terms for payment and interest in case of default. The respondents failed to make the payment as stipulated, leading to an execution application by the appellants. The High Court had directed the executing court to reconsider the interest rate under Section 74 of the Indian Contract Act, which the executing court reduced to 14% and the High Court further reduced to 9%. The Supreme Court held that an executing court cannot go behind the decree and has no jurisdiction to modify it, emphasizing that the decree must be executed as it is.
Issue 2: Applicability of Section 74 of the Indian Contract Act
The High Court had remitted the matter to the executing court to decide whether the interest rate of 18% per annum was penal and unreasonable under Section 74 of the Indian Contract Act. The Supreme Court, however, found that the executing court and the High Court had no jurisdiction to invoke Section 74 to modify a valid decree passed by a competent court. The Court cited precedents, including Sova Ray and Anr. v. Gostha Gopal Dey and Ors., to assert that a default clause in a compromise decree is not necessarily penal and does not attract Section 74.
Issue 3: Reasonableness of the Interest Rate
The Supreme Court noted that interest becomes leviable either under a statute or a contract and that the stipulated interest rate of 18% per annum was not inherently unreasonable. The Court rejected the High Court's reduction of the interest rate to 9% per annum, stating that there are precedents where interest rates of 18% or even 21% per annum have been upheld. The Court concluded that the executing court and the High Court had erred in reducing the interest rate without any legal basis.
Conclusion:
The Supreme Court set aside the impugned judgment and directed the executing court to proceed with the execution of the decree as it stands. The appeals were allowed with costs, and counsel's fee was assessed at Rs. 25,000/-.
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2008 (12) TMI 812
The Supreme Court of India dismissed the Special Leave Petition on facts, while keeping the question of law open. Delay was condoned.
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2008 (12) TMI 811
Maintainability of application - an application u/s 482 of the Code of Criminal Procedure, 1973, can be dismissed only on the premise that an alternative remedy of filing a revision application u/s 397 of the Code is available?
High Court committed a serious error in rejecting the application filed by appellants u/s 482 of the Code without entering into the merit of the matter.
HELD THAT:- Indisputably issuance of summons is not an interlocutory order within the meaning of Section 397 of the Code. This Court in a large number of decisions beginning from R.P. Kapur v. State of Punjab [1960 (3) TMI 45 - SUPREME COURT] to Som Mittal v. Govt. of Karnataka 2008 [2008 (2) TMI 866 - SUPREME COURT] has laid down the criterion for entertaining an application u/s 482. Only because a revision petition is maintainable, the same by itself, in our considered opinion, would not constitute a bar for entertaining an application u/s 482 of the Code.
Even where a revision application is barred, as for example the remedy by way of Section 115 of the Code of Civil Procedure, 1908 this Court has held that the remedies under Articles 226/227 of the Constitution of India would be available.
Even in cases where a second revision before the High Court after dismissal of the first one by the Court of Sessions is barred u/s 397(2) of the Code, the inherent power of the Court has been held to be available.
The power of the High Court can be exercised not only in terms of Section 482 of the Code but also in terms of Section 483 thereof.
Inherent power of the High Court is not conferred by statute but has merely been saved thereunder. It is, thus, difficult to conceive that the jurisdiction of the High Court would be held to be barred only because the revisional jurisdiction could also be availed of.
It may be true, as has been noticed by the High Court that thereunder availability of appellate or revisional jurisdiction of the High Court did not fall for its consideration but in our considered opinion it is wholly preposterous to hold that Adalat Prasad [2004 (8) TMI 647 - SUPREME COURT], so far as it related to invoking the inherent jurisdiction of the High Court is concerned, did not lay down good law. The High Court in saying so did not only read the said judgment in its proper perspective; it misdirected itself in saying so as it did not pose unto itself a correct question.
For the reasons aforementioned the impugned judgment cannot be sustained which is set aside accordingly. The High Court is directed to consider the matter afresh on merits. The appeal is allowed.
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2008 (12) TMI 810
Issues Involved:
1. Quashing of summons issued in Crime No. 32 of 2005.
2. Allegations of criminal conspiracy, cheating, and criminal breach of trust u/s 120B, 409, and 420 IPC.
3. Civil liability vs. criminal liability in the context of a contractual dispute.
Summary:
1. Quashing of Summons:
The appellants challenged the judgment dated 2.3.2006 by the High Court of Madras, which dismissed their applications for quashing the summons issued in Crime No. 32 of 2005. The complaint was filed by a partner of M/s. Aarbee Apparels Impex under Sections 120B, 409, and 420 IPC.
2. Allegations of Criminal Conspiracy, Cheating, and Criminal Breach of Trust:
The complaint alleged that the appellants, who are associated with M/s. T.M.S. Fashion Private Limited, approached Aarbee Apparels Impex for the supply of garments to a German buyer. Despite issuing inspection certificates, the buyer rejected the goods as sub-standard. The complainant accused the appellants of misrepresentation regarding the quality of goods and the validity of the Letter of Credit, leading to financial losses.
3. Civil Liability vs. Criminal Liability:
The Supreme Court noted that the dispute arose from a contractual relationship and the allegations did not reveal any misrepresentation at the time of contract formation. The Court emphasized that the liability of the appellants, if any, was civil in nature. The ingredients of the offenses under Sections 420, 405, and 409 IPC were not met as there was no deception or fraudulent inducement at the time of contract formation, nor was there any criminal breach of trust.
Conclusion:
The Supreme Court concluded that the allegations pertained to a civil dispute over defective goods and did not constitute a cognizable offense. The impugned judgment was set aside, and the summons issued to the appellants were quashed. The appeal was allowed.
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2008 (12) TMI 809
Cheating - Application filed u/s 482 - agreement to manufacture a machine to purify and desalt the dyes of a particular quality and quantity - said machine did not conform to the specifications contained in the order placed with the firm - refusal to take the delivery thereof.
HELD THAT:- For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence u/s 420 of the IPC can be said to have been made out.
There exists a distinction between pure contractual dispute of civil nature and an offence of cheating. Although breach of contract per se would not come in the way of initiation of a criminal proceeding, there cannot be any doubt whatsoever that in absence of the averments made in the complaint petition wherefrom the ingredients of an offence can be found out, the court should not hesitate to exercise its jurisdiction u/s 482 of the CrPC.
Section 482 of the Code of Criminal Procedure, saves the inherent power of the court. It serves a salutary purpose viz. a person should not undergo harassment of litigation for a number of years although no case has been made out against him - We may reiterate that one of the ingredients of cheating as defined in Section 415 of the IPC is existence of an intention of making initial promise or existence thereof from the very beginning of formation of contract.
A matter which essentially involves dispute of a civil nature should not be allowed to be the subject matter of a criminal offence, the latter being not a shortcut of executing a decree which is non-existent. The Superior Courts, with a view to maintain purity in the administration of justice, should not allow abuse of the process of court. It has a duty in terms of Section 483 of the Code of Criminal Procedure to supervise the functionings of the trial courts.
We may notice a decision of this Court in from State of Madhya Pradesh v. Awadh Kishore Gupta [2003 (11) TMI 584 - SUPREME COURT] held that it is open to the High Court to quash the same in exercise of the inherent powers u/s 482 of the Code. It is not, however, necessary that there should be meticulous analysis of the case before the trial to find out whether the case would end in conviction or acquittal. The complaint has to be read as a whole. If it appears that on consideration of the allegations in the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court.
No exception can be taken to the aforementioned principles of law, as therein also it has categorically been held that exercise of inherent power u/s 482 is permissible where allegations set out in the complaint do not constitute the offence for which cognizance has been taken by the Magistrate. It is evidently a case of that nature.
Therefore, the judgment of the High Court cannot be sustained - appeal is allowed.
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2008 (12) TMI 808
Issues Involved:
1. Maintainability of proceedings under the Rent Control Act.
2. Fixation of fair rent by the Rent Controller and the Appellate Authority.
3. Exemption of buildings owned by public charitable institutions from the Rent Control Act.
4. Determination of the value of the land and built-up area for fair rent calculation.
Issue-wise Detailed Analysis:
1. Maintainability of Proceedings under the Rent Control Act:
The petitioner/tenant argued that the proceedings under the Rent Control Act were not maintainable as the respondent/landlord, a Public Charitable Institution, was exempt from the Act per a notification (G.O.Ms. No. 2000, Home, dated 16-8-1976) issued under Section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. This contention was previously raised and rejected by the Rent Controller and the Appellate Authority. The court analyzed the objects and purposes of the respondent society, which included the protection of animals and promotion of vegetarianism. Despite these charitable objectives, the court found no evidence of property or funds dedicated for public charitable purposes, registration under Section 12-A of the Income Tax Act, or any obligation in the nature of a trust. Consequently, the court held that the respondent had waived the benefit of exemption and that the proceedings were maintainable.
2. Fixation of Fair Rent by the Rent Controller and the Appellate Authority:
The Rent Controller initially fixed the fair rent at Rs. 38,693/- per month, which was contested by both parties. The Appellate Authority dismissed the tenant's appeal and enhanced the fair rent to Rs. 53,190/-. The court examined the built-up area and the rate of construction as determined by the Engineers of both parties. The Rent Controller and the Appellate Authority largely accepted the measurements and rates provided by the tenant's Engineer, with minor adjustments. The court found no fault with the adoption of 15% for basic amenities and the age of the building being fixed at 70 years by the Appellate Authority.
3. Exemption of Buildings Owned by Public Charitable Institutions from the Rent Control Act:
The court discussed the nature of exemptions under Sections 29 and 30 of the Rent Control Act. The exemption under Section 29 is discretionary and can be granted or withdrawn by the government, whereas the exemption under Section 30 is statutory and applies to all buildings meeting specific criteria. The court emphasized that exemptions conferred as a benefit or privilege must be claimed by the entitled person and can be waived. The court referred to the Supreme Court's decision in Lachoo Mal v. Radhye Shyam, which held that benefits conferred by the Act could be waived unless contracting out was expressly prohibited by the statute. The court concluded that the respondent had waived the exemption benefit under the notification and upheld the maintainability of the proceedings.
4. Determination of the Value of the Land and Built-up Area for Fair Rent Calculation:
The court scrutinized the determination of the land value and built-up area by the Rent Controller and the Appellate Authority. The Engineers of both parties provided different measurements and rates. The Rent Controller and the Appellate Authority accepted the measurements and rates provided by the tenant's Engineer, with the Appellate Authority fixing the land value at Rs. 70,00,000/- per ground based on a rational assessment of the evidence, including Sale Deeds marked as exhibits. The court found no material irregularity or illegality in the Appellate Authority's determination of the land value and cost of construction and upheld the enhanced fair rent.
Conclusion:
The court dismissed the Civil Revision Petitions, finding no justification to interfere with the Appellate Authority's order on both the maintainability and merits of the case. The connected miscellaneous petition was also dismissed.
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2008 (12) TMI 807
Validity of exercise of administrative power by the BIAL for issuing the tender documents in favour of respondents 5 to 9 by short-listing without assigning reasons for ignoring the petitioner - arbitrary and discriminatory - Award of contract in favour of 5th respondent - Whether the nature of duties performed by BIAL at the International Airport and operation of flights is a statutory function under Section 12 of Airport Authorities Act, 1994? - opportunity to offer financial bid to the 9th respondent -
HELD THAT:- The action of the BIAL in short listing respondent Nos. 5 to 9 and excluding the petitioner company from issuance of the tender despite the fact that it has got qualification, experience in the Indian market as per the eligibility criteria enumerated in the EOI, it has been running its business in various international and national airports in different parts of other countries and our country which are referred to in the earlier paragraphs of the judgment, it is one of the important aspect which should have been weighed in the mind of the selection committee of the third respondent keeping in view that it is discharging public functions and the premises is a public premises. Therefore in the concession agreement, it has been specifically stated that Chapter V(A) of the A.A.I.A Act is applicable to the premises in question to follow the procedure for eviction of unauthorized occupants of the Airport availing the provisions are on the lines of Public Premises (Eviction of Unauthorized Occupants) Act, 1971 is made applicable to the premises of the third airport which is being managed by BIAL is one of the strong and powerful indicator that airport premises is a public premises in terms of the definition of Section 2(c) of the PP(EOUC) Act and the BIAL is managing it, therefore it is a State which we have already answered while answering issue No. 1 to 3 by assigning valid and cogent reasons with reference to the provisions of the Act and law laid down by the Apex Court in catena of cases referred to supra.
Therefore, the decision of the Supreme Court in Ashok Marketing Ltd. v. Punjab National Bank [1990 (8) TMI 393 - SUPREME COURT] in which decision Dwarkadas Marfatia's decision[1989 (4) TMI 315 - SUPREME COURT] is considered and it has been held that every activity of public authority especially in the background of the assumption on which the authority enjoys immunity from the rigours of Rent Act would not act as private landlords must be judged by that standard.
In view of our reasons recorded above as we have already held it is discharging public function, the further allegations made against the 4th respondent that action of the respondent No. 3 suffers from malice for the reason that the 4th respondent who has issued invitation for expression of interest has been an employee of Zurich Airport Authority and he was interested in the contract being awarded to respondent No. 5 which is Swiss Entity and further allegations made at para 34 in the writ petition that the 5th respondent was unit of Swiss Air (SAIR) which has also owned the Zurich Airport and Flughafen Zuerich AG, shareholder of BIAL were both owned by Swiss Air and it; went bankrupt in 2001. (both the units were sold).
Although respondents' objection is that he was an employee of the Zurich Airport Authority and there was no such company whereas he admits that he was an employee of Zurich Airport Authority which holds 17% shares in BIAL and further contention of the 5th respondent that 5th respondent is owned and controlled by two Italian Companies and further it is the contention that the 4th respondent alone do not makes a decision but the BIAL decided the matter. This fact is falsified by the affidavit of Airport Authority of India, which clearly stated in para 9 that the matter was never placed before the Board of Directors of the Company.
Therefore, it is clear that Board of Directors including two promoters were kept out from the decision making process, short listing and final choice of awarding contract ignoring the experience of the petitioner to render good service to the Indian Consumer. The contention is that it is a mala fide exercise of power.
We have already held that the short listing is bad and opportunity was not given to the petitioner to submit its tender and participate in the competition, and reasons not assigned for excluding the petitioner and opportunity was not given to the 9th respondent to participate in the financial bid and not giving opportunity to the petitioner and 9th respondent to offer their financial bid for the purpose of establishing retail duty free shop in the Airport run by BIAL on such terms and conditions certainly it would have offered best price that could have increased the percentage of revenue to the second respondent-A.A.I out of the gross income that would have been earned by the BIAL. Issuing tender to the 5th respondent as already stated is not only arbitrary exercise of power by BIAL but also lacks transparency. Matter was not decided by the Board of Directors as stated by the second respondent in its affidavit at para 9 referred to supra and not given opportunity to the 9th respondent though it was in the short list, it has submitted its tender as we have to answer that as held in the Reliance Company's case referred to supra and also in other cases referred to supra, short listing and awarding of contract in favour of the 5th respondent is not only arbitrary, the same is against the public interest but also is at the instance of the 4th respondent
Therefore, we have to answer that in discharging its public duty, it has not followed the well settled principle of law in awarding contract in favour of 5th respondent which is clear case of legal malice and the same is writ large on the face of the record. Therefore, we have to answer issue Nos. 7 to 9 in favour of the petitioner.
Thus, the Writ Petition. Rule made absolute. The short-listing of respondent Nos. 5 to 9 and awarding of contract in favour of 5th respondent is hereby quashed. The 3rd respondent is directed to re-do the matter afresh from the stage of submission of E.O.I by petitioner and others keeping in view the observations made in this order and the principles laid down by the decisions of Apex Court. The entire process shall be completed by BIAL within 45 days from the date of receipt of a copy of this order and further we direct respondent No. 1-Union of India and respondent No. 2-A.A.I to see that the above directions issued to BIAL should be complied with.
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2008 (12) TMI 806
Issues Involved:
1. Whether the plaintiff is entitled to a perpetual injunction.
2. Whether the suit for injunction simpliciter is maintainable without a relief of declaration.
3. Whether the provisions of the Benami Transactions (Prohibition) Act, 1988 are applicable.
Summary:
Issue 1: Entitlement to Perpetual Injunction
The plaintiff instituted Original Suit No.640 of 2003 for perpetual injunction, claiming to have purchased the suit property in the name of the first defendant (his son) in benami and leased it to the defendants. The trial Court dismissed the suit, finding the plaintiff's contentions unconvincing. The first appellate Court reversed this decision, granting the injunction based on the plaintiff's claim of benami purchase. The High Court, however, noted that the plaintiff failed to establish the alleged landlord-tenant relationship and admitted that the defendants were trespassers, thus invalidating his claim for injunction.
Issue 2: Maintainability of Suit for Injunction Simpliciter
The High Court emphasized that in a suit for injunction simpliciter, title issues can only be incidentally considered if there are necessary pleadings and issues framed regarding title. The trial Court did not frame any issue regarding title, and the first appellate Court erroneously decided on the benami transaction without proper pleadings or issues. The High Court cited the Supreme Court's decision in Anathula Sudhakar, which outlines that a suit for injunction should primarily address possession, and title issues should lead to a comprehensive suit for declaration if they involve complicated questions of fact and law.
Issue 3: Applicability of Benami Transactions (Prohibition) Act, 1988
The plaintiff claimed the suit property was purchased in benami in the name of the first defendant. The High Court found that the plaint did not specifically aver that the plaintiff and first defendant were coparceners or that the property was for the benefit of the coparcenary, which is necessary to invoke Section 4(3)(a) of the Benami Transactions (Prohibition) Act, 1988. The High Court concluded that the plaintiff is barred from raising the plea of benami transaction u/s 4(1) of the Act and failed to prove the benami nature of the transaction.
Conclusion:
The High Court allowed the second appeal, setting aside the first appellate Court's judgment and restoring the trial Court's decision. The plaintiff's suit for perpetual injunction was dismissed, and the provisions of the Benami Transactions (Prohibition) Act, 1988 were deemed inapplicable due to insufficient pleadings and proof.
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2008 (12) TMI 805
Issues involved: Dispute over cheque dishonour u/s 138 of NI Act in the context of a marital settlement agreement.
Summary:
Issue 1: Settlement agreement and cheque dishonour
The petitioner, father-in-law, issued post-dated cheques as part of a settlement agreement with the complainant, his daughter-in-law, in a marital dispute. The complainant lodged a complaint u/s 138 of NI Act when one of the cheques was dishonoured. The trial court summoned the petitioner based on the complaint.
Details:
The settlement involved the petitioner agreeing to pay the complainant a sum of Rs. 2.5 crores and seeking mutual divorce. However, the cheque in question was dishonoured as it was to be encashed upon quashing of the FIR, which had not occurred. The petitioner argued that the cheque was not for any existing debt or liability towards the complainant.
Issue 2: Legal liability and enforceability
The complainant contended that the petitioner had a liability towards her as per the settlement agreement, making him liable u/s 138 of NI Act. The petitioner argued that he had no legal obligation to pay the amount as the settlement conditions were not met.
Details:
The complainant claimed that the petitioner's liability was established by the settlement terms and the bail granted to him. However, the court found that the cheque was not issued for any legally enforceable debt or liability towards the complainant.
Conclusion:
The High Court quashed the complaint and summoning order, stating that the cheque was not issued for a legally enforceable debt. The court emphasized that the settlement did not fully materialize, and the petitioner had no legal liability towards the complainant. The petitioner was within his rights to stop the cheque payment as per the settlement terms.
Significant Legal Reference:
The court referred to the provisions of Section 138 of the NI Act, emphasizing the need for a legally enforceable debt or liability for the offence to be established.
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2008 (12) TMI 804
Issues Involved:
1. Jurisdiction and Scope of Article 227 of the Constitution of India.
2. Ownership and Prior Use of the Trade Mark "Camel Collection."
3. Dishonest Adoption of the Trade Mark.
4. Transborder Reputation and Passing Off.
5. Compliance with Sections 9, 11(a), 11(e), and 18(1) of the Trade Marks and Merchandise Act, 1958.
Issue-wise Detailed Analysis:
1. Jurisdiction and Scope of Article 227 of the Constitution of India:
The court emphasized that the power under Article 227 is to be exercised sparingly and only to keep subordinate courts within their bounds, not for correcting mere errors. The High Court's role is not to act as an appellate authority to reappraise evidence but to ensure that the tribunals do not exceed their jurisdiction or commit gross errors of law. The court cited several precedents, including Waryam Singh v. Amarnath and Surya Dev Rai v. Ram Chander Rai, to highlight the limited scope of intervention under Article 227.
2. Ownership and Prior Use of the Trade Mark "Camel Collection":
The petitioner claimed ownership of the "Camel Collection" trademark, citing global registrations and long-standing use. However, the appellate Board found no substantial evidence linking the petitioner's documents to the ownership of the trademark. The documents provided were associated with RJ Reynolds Tobacco Company (RJR) and not directly with the petitioner. The court upheld the appellate Board's finding that the petitioner failed to establish ownership or prior use in India.
3. Dishonest Adoption of the Trade Mark:
The respondents adopted the "Camel Collection" trademark in 1992 and used it extensively. The appellate Board found no evidence that the respondents were aware of the petitioner's trademark at the time of adoption. The court noted that even if the respondents had manufactured garments for a German licensee, there was no proof that the garments bore the "Camel" trademark. The court agreed with the appellate Board's conclusion that the adoption was not dishonest.
4. Transborder Reputation and Passing Off:
The petitioner argued that the "Camel" brand had a transborder reputation, citing the availability of Camel brand cigarettes in duty-free shops and advertisements. However, the appellate Board found no evidence of the brand's reputation in India. The court reiterated that transborder reputation requires substantial evidence of recognition and goodwill in the country, which the petitioner failed to provide. The court dismissed the claim of passing off due to lack of evidence.
5. Compliance with Sections 9, 11(a), 11(e), and 18(1) of the Trade Marks and Merchandise Act, 1958:
The petitioner contended that the registration of the "Camel Collection" trademark by the respondents violated Sections 9, 11(a), 11(e), and 18(1) of the Act. However, the appellate Board and the Registrar of Trade Marks found that the respondents' use of the trademark was legitimate and did not infringe on the petitioner's rights. The court upheld these findings, stating that the petitioner's objections were not supported by evidence.
Conclusion:
The court found no patent error or infirmity in the appellate Board's order. The Civil Revision Petitions were dismissed, and the registration of the "Camel Collection" trademark in favor of the respondents was confirmed. The court also declined to consider new documents submitted by the petitioner, as they were not presented before the lower authorities. The connected miscellaneous petitions were closed, and no costs were awarded.
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2008 (12) TMI 803
Issues Involved:
1. Limitation for raising a claim u/s Clause 54.
2. Applicability of arbitration agreement post completion of contract.
3. Jurisdiction of civil court u/s 8 of the Arbitration Act, 1940.
4. Validity of contractual clauses providing for limitation.
Summary:
Limitation for Raising a Claim u/s Clause 54:
The appellant contended that the High Court erred in not considering that the limitation for raising a claim as envisaged under Clause 54 is not applicable in this case. The appellant argued that the period of 30 days should be counted from the date the claim was rejected by the appellate authority on 26.2.1992. The respondent, however, maintained that Clause 54 must be invoked during the tenure of the contract and not after its completion and acceptance of the final bill.
Applicability of Arbitration Agreement Post Completion of Contract:
The appellant argued that the court's role u/s 8 of the Arbitration Act was only to determine if there was a triable issue, not to delve into the merits of the claim. The respondent countered that the final bill's acceptance without demur ended the contract and, consequently, the arbitration agreement. The Supreme Court noted that the arbitration agreement, contained in clauses 37, 54, and 55, must be interpreted in light of the contract's language and does not cover claims raised post-completion.
Jurisdiction of Civil Court u/s 8 of the Arbitration Act, 1940:
The appellant filed an application u/s 8 of the Arbitration Act for the appointment of an arbitrator. The civil judge opined that the application was within the limitation period specified in Article 137 of the Limitation Act, 1963, and appointed an arbitrator. However, the High Court allowed the respondent's revision application, overturning the civil judge's decision. The Supreme Court emphasized that the civil court's jurisdiction u/s 8 or 20 of the Act can only be invoked if the disputes fall within the arbitration agreement's scope.
Validity of Contractual Clauses Providing for Limitation:
The Supreme Court highlighted that contractual clauses providing for limitation are valid and enforceable. Clause 54 does not envisage raising claims for extra or additional work after the contract's completion. The court referenced "The Vulcan Insurance Co. Ltd. v. Maharaj Singh and Anr." to support the validity of such clauses, noting that a clause providing for limitation to lodge a claim is not invalid.
Conclusion:
The Supreme Court upheld the High Court's decision, emphasizing that the arbitration clause could not be invoked post-completion of the contract and acceptance of the final bill. The appellant's claims were not raised within the stipulated period, and thus, the arbitration agreement did not apply. The contractual clauses providing for limitation were deemed valid and enforceable.
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2008 (12) TMI 802
Principles of natural justice - Application filed under Order 8 Rule 10 of the Code of Civil Procedure rejected - orders passed by the trial Court as also the Revisional Court without assigning any reason therefor.
HELD THAT:- Provisions of Order 8 Rule 1 of the Code of Civil Procedure having been held to be directory in nature by this Court in Kailash v. Nanhku and Ors.[2005 (4) TMI 542 - SUPREME COURT], this Court may not exercise its discretionary jurisdiction under Article 136 of the Constitution of India.
The matter was yet again considered by a three-judge Bench of this Court in R.N. Jadi & Brothers and Ors. v. Subhashchandra [2007 (7) TMI 662 - SUPREME COURT] held that; ''It is necessary to emphasise that the grant of extension of time beyond 30 days is not automatic, that it should be exercised with caution and for adequate reasons and that an extension of time beyond 90 days of the service of summons must be granted only based on a clear satisfaction of the justification for granting such extension, the court being conscious of the fact that even the power of the court for extension inhering in Section 148 of the Code, has also been restricted by the legislature. It would be proper to encourage the belief in litigants that the imperative of Order 8 Rule 1 must be adhered to and that only in rare and exceptional case, will the breach thereof will be condoned.''
In view of the authoritative pronouncements of this Court, we are of the opinion that the High Court should not have allowed the writ petition filed by the respondent, particularly, when both the learned trial judge as also the Revisional Court had assigned sufficient and cogent reasons in support of their orders.
The High Court allowed the writ petition and thereby set aside the orders passed by the trial Court as also the Revisional Court without assigning any reason therefor. The jurisdiction of the High Court under Article 226 and 227 of the Constitution of India is limited. It could have set aside the orders passed by the ld trial Court and the Revisional Court only on limited ground, namely, illegality, irrationality and procedural impropriety.
The High Court did not arrive at a finding that there had been a substantial failure of justice or the orders passed by the trial Court as also by the Revisional Court contained error apparent on the face of the record warranting interference by a superior Court in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India.
Therefore, the impugned judgment of the High Court cannot be sustained. It is set aside accordingly. The appeal is allowed.
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2008 (12) TMI 801
Issues involved: Appeal by revenue under Gift-tax Act against ITAT order quashing Gift-tax assessment in assessee's case.
Summary:
1. The appeal was filed by the revenue against the ITAT order quashing the Gift-tax assessment in the assessee's case for the assessment year 1989-90. The dispute arose from the declaration of two types of gifts - outright gift and revocable gift, specifically related to the gift of 6000 equity shares. The Assessing Officer alleged that the gift had escaped assessment and valued the bonus shares received by the donee as taxable. The appellate authority affirmed this assessment, but the Tribunal set it aside, stating that bonus shares were part of the original gift and not liable to gift tax based on a previous assessment for the year 1982-83.
2. The High Court referred to previous judgments emphasizing that revocable gifts could be recognized for taxation purposes under the Act, even though they may be void under general law. It was noted that bonus shares continued to be the property of the donee even after the revocation of the gift. The revenue contended that the value of bonus shares should be subject to gift tax under Section 4(1)(c) of the Act, supported by the Supreme Court's decision in Escorts Farms (Ramgarh) Ltd. case, which considered bonus shares as income from the original shares.
3. The Court held that the Tribunal erred in interfering with the assessment based on the 1982-83 case, as the present case involved different circumstances where the gift was not revocable for a certain period. It was emphasized that bonus shares were indeed subject to gift tax, as per Section 6(2) of the Act. Therefore, the appeal by the revenue was allowed, setting aside the Tribunal's order and reinstating that of the Assessing Officer.
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2008 (12) TMI 800
Substantial question of law - suit for partition claiming share - Whether the High Court, while exercising its jurisdiction u/s 100 of the Code of Civil Procedure, could, while dictating the judgment, frame an additional question of law and allow the same without even referring to the questions of law formulated at the time of admission - HELD THAT:- Principal contention raised on behalf of the defendant-respondent, in their written statement, as noticed hereinbefore, was non-existence of any relationship between the parties. We, however, do not mean to suggest that defendants cannot raise inconsistent pleas but the same should have been kept in mind by the High Court. It might or might not have been possible for the High Court to consider the question of law raised on the basis of the facts found by the courts below, but, indisputably, the High Court without recording sufficient reasons, could not allow the appellant to raise absolutely a new contention which was beyond the pleadings of the parties.
The High Court furthermore proceeded on the presumption that the plaintiff and the defendants belong to the fourth generation of Nanjappa. In holding so, the High Court wrongly included the propositors as the first generation. The plaintiff and the defendants were the third generation of the propositors.
The High Court did not deal with the substantial questions of law formulated at the time of admission at all. We, therefore, are of the opinion that the impugned judgment cannot be sustained. It is set aside accordingly and the matter is remitted to the High Court for consideration of the matter afresh. In the event, the High Court opines that any substantial question of law should be framed suo motu or at the instance of the appellant before it, viz., respondent herein, it shall give an opportunity of hearing to appellant.
Appeal is allowed on the aforementioned terms. In the facts and circumstance of the case, however, there shall be no order as to costs.
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2008 (12) TMI 799
Decree for specific performance u/s 16(c) - forged signature in the agreement of sale - Whether an agreement of sale (Ext. 2) executed only by the vendor, and not by the purchaser, is valid?
HELD THAT:- Since the trial Court analyzed and compared the opinion of two experts with materials placed before them and preferred to accept the opinion of expert examined by the side of the plaintiff, there is no reason to dispute the said conclusion. In the light of the controversy the Division Bench of the High Court also compared the signature found in other documents such as vakalatnama, written statement with that of the signature found in Ext.2 and concluded that the signature found in the agreement of sale was that of the defendant Ms. Kanika Bose. We are of the view that there is no valid reason to disturb the factual finding based on acceptable materials. The learned Single Judge of the High Court committed an error in taking a contrary view.
As evident from the fact that the document is signed by the vendor and duly witnessed by four witnesses and was delivered to the purchaser. Apart from a separate endorsement made on the date of the agreement itself by the vendor acknowledging the receipt as advance, it also contains a second endorsement (which is also duly witnessed) by the vendor, acknowledging the receipt of a further sum and confirming that the total earnest money received. This shows that the purchaser accepted and acted in terms of the agreement which was signed, witnessed and delivered to her as a complete instrument and that she then obtained an endorsement thereon by the vendor, in regard to second payment.
If the agreement was not complete, the vendor would not have received a further amount and endorsed an acknowledgement thereon. the evidence of the witnesses also shows that there was a concluded contract. Therefore, even though the draftsman who prepared the agreement might have used a format intended for execution by both vendor and purchaser, the manner in which the parties had proceeded, clearly demonstrated that it was intended to be executed only by the vendor alone. Thus we hold that the agreement of sale (Ext. 2) signed only by the vendor was valid and enforceable by the purchaser.
The trial Court and the Division Bench also concluded that the plaintiff had fulfilled the conditions as stated in Section 16(c) of the Specific Relief Act and in that event the plaintiff is entitled decree for specific performance which was rightly granted by the trial Court. Though ld Counsel for the appellants pointed out that the claim of the plaintiff that she was put in possession of a portion of the suit property in part performance was not accepted by the trial Court, in the light of the categorical findings about the validity of Ext. 2 and satisfactory proof of other conditions for granting the decree for specific performance, we are unable to accept the said contention. On the other hand, we agree with the conclusion arrived at by the Division Bench and hold that the agreement of sale was enforceable and the trial Court has rightly granted decree which was affirmed by the Division Bench of the High Court.
Looked at from any angle, the judgment of the Division Bench of the High Court setting aside the order of the Single Judge and affirming the judgment and decree of the trial Court, does not warrant any interference by this Court. Consequently, the appeal fails and the same is dismissed.
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2008 (12) TMI 798
Issues involved: Dispute between two brothers over ownership and possession of a property, lower appellate court's decision to dismiss the suit for permanent injunction, framing of additional issues by the appellate court without remitting them to the trial court for recording evidence.
Ownership and Possession Dispute: The plaintiff-appellant filed a suit against his brother and nephew seeking permanent injunction over a property he claimed to have owned and possessed for 30 to 35 years. The trial court decreed the suit in favor of the plaintiff, but the appellate court reversed this decision, stating that the disputed land was not identifiable and the plaintiff failed to prove his title or possession.
Additional Issues Framed by Appellate Court: The lower appellate court framed three additional issues in the appeal, out of which two were found to be redundant as they were already framed by the trial court. The remaining issue was whether the disputed property was identifiable on the spot. The defendants argued that the property was not identifiable as its boundaries were not disclosed in the plaint.
Identification of Disputed Property: The plaintiff had described the disputed land by its plot number in the Nagar Panchayat records, which was plot No. 358. Despite the defendants' claim that this plot number was recorded for the first time in 1993, it had been consistently present in the records since 1994. The High Court emphasized that the property was identifiable based on the plot number, even if the exact area or boundaries were not explicitly mentioned in the plaint.
Legal Considerations: The High Court referred to Order VII Rule 3 of the Civil Procedure Code, which requires the plaint to contain a description of the property sufficient for identification. It was noted that the plaintiff had adequately identified the land by its plot number, as per the records. The court also cited precedents discouraging remand of cases when evidence is sufficient for a final decision.
Decision and Conclusion: The High Court held that the lower appellate court erred in finding the disputed land as unidentifiable, especially when the plot number provided clear identification. The court reinstated the trial court's decision in favor of the plaintiff, emphasizing that the ownership and possession were adequately proven. The appeal was allowed, setting aside the lower appellate court's judgment and affirming the trial court's decision. Each party was directed to bear their own costs.
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2008 (12) TMI 797
Issues involved: Dispute over dishonoured cheques, liability under Section 138 of the Negotiable Instruments Act, 1881, decree under Order XXXVII of the CPC.
Summary:
1. The case involved the appellants purchasing Carbon Black from the respondents on credit, leading to a dispute when cheques worth &8377; 31,25,398 were dishonoured due to insufficient funds.
2. Legal notice and proceedings under Section 138 of the NI Act were initiated by the respondents after the dishonoured cheques.
3. The respondents filed a suit under Order XXXVII of the CPC claiming a total amount of &8377; 30,62,949 with interest, including an additional amount for 'C' Forms not supplied.
4. The learned Single Judge passed a decree in favor of the respondents for &8377; 30,62,949 along with interest, as the appellants admitted liability for a portion but disputed the rest.
5. The appellants' request for time to file a written statement was denied as per the proviso to Order XXXVII Rule 2 Sub-rule (3) of the CPC, leading to the grant of the decree in favor of the respondents.
6. Despite considering granting limited leave to defend upon depositing a portion of the amount, the appellants expressed inability to comply, resulting in the dismissal of the appeals.
Conclusion: The appeals were dismissed, upholding the impugned judgment of the learned Single Judge based on the dishonoured cheques and the legal provisions of the CPC.
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2008 (12) TMI 796
Prayer to Quash the Proceedings - Cognizance of offence punishable under Sections 406 and 420 of the Indian Penal Code, 1860 (`IPC') - hire purchased finance - HELD THAT:- The appellants have introduced a fabricated letter dated 24.6.1995. It is their stand that the entire amount was paid and, therefore, on receiving the full payment, the appellants ought to have returned the cheques which were held only as a collateral security. It is not in dispute that the proceedings u/s 138 are pending. That being so, the question of proceeding for alleged breach of trust does not arise.
It is interesting to note that the respondent does not dispute issuance of cheques. Even a casual reading of the complaint does not show that the ingredients of Section 406 IPC are in any event made out. It is also not understandable as to how Section 294 has any application to the facts of the case much less Section 506 IPC. In addition to this, perusal of the complaint apparently shows the ulterior motive. It is clear that the proceeding initiated by the respondent clearly amounted to abuse of the process of law. In State of Haryana v. Bhajan Lal [1992 (12) TMI 234 - SUPREME COURT] ; ''(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.''
The case at hand falls under category (7). Therefore, in view of what has been stated in Bhajan Lal's case (supra), the proceedings before learned SDJM, stand quashed. The appeal is allowed.
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2008 (12) TMI 795
Issues Involved:1. Justification of sustaining penalty at 100% in absence of concealment or furnishing inaccurate particulars. 2. Justification of imposing penalty u/s 271(1)(c) without finding mens rea or deliberate intention to avoid tax. Summary:Issue 1: Justification of sustaining penalty at 100% in absence of concealment or furnishing inaccurate particularsThe appellant contended that the Tribunal erred in sustaining the penalty at 100% despite acknowledging the failure to offer the provision for gratuity to tax as a human error and a silly mistake. The Tribunal also noted that the Assessing Officer ignored this during the regular assessment. The appellant argued there was no wilful concealment, as the audit report u/s 44AB was duly filed, and the provision for payment of gratuity was clearly stated as not allowable u/s 40A(7). The appellant maintained that there was no evidence of evasion or concealment of tax, and thus, the penalty was unsustainable in law. The appellant cited precedents where the courts held that the burden of proof lies on the Revenue to establish concealment or furnishing of inaccurate particulars, and bona fide explanations by the assessee should not attract penalties. Issue 2: Justification of imposing penalty u/s 271(1)(c) without finding mens rea or deliberate intention to avoid taxThe respondent argued that the appellant's conduct attracted Section 271(1)(c) of the Act, as the original return did not disclose the income in question, and the revised return filed under protest also failed to do so. The respondent highlighted that the appellant, a reputed Chartered Accountant firm, should not have committed such an error. The Tribunal's decision to impose a 100% penalty was based on the appellant's failure to disclose the income despite several opportunities. The court noted that Section 271(1)(c) imposes strict liability for concealment or inaccurate particulars, and wilful concealment is not necessary for civil liability under this section. The court also referenced the Supreme Court's ruling that mens rea is not essential for imposing penalties for civil obligations. Conclusion:The court dismissed the appeal, affirming the Tribunal's decision to impose a 100% penalty. The court concluded that the appellant failed to discharge their strict liability to furnish true and correct particulars of accounts while filing the return. The penalty under Section 271(1)(c) is a civil liability, and mens rea is not required for such penalties.
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2008 (12) TMI 794
Issues Involved:
1. Date of caderisation for the unified cadre of District Judges.
2. Legality and discrimination of the proviso to Rule 4(1) of the Maharashtra Judicial Service (Seniority) Rules, 2007.
Issue-Wise Detailed Analysis:
Issue 1: Date of Caderisation
The petitioners argued that the caderisation (merger of various judicial posts into a single cadre of District Judges) should be effective from 31.3.1994, based on the Supreme Court's orders in All India Judges Association I and II. They contended that the State of Maharashtra did not seek a review or extension of the Court's directions, making 31.3.1994 the appropriate date for caderisation.
The Supreme Court, however, clarified that the directions in All India Judges Association I and II were to bring uniformity in designations and hierarchies, not necessarily to unify multiple categories into a single cadre. The necessity for caderisation arose with the Shetty Commission's recommendations, which were accepted by the Court in All India Judges Association III, with the implementation date set as 1.7.1996. The Court concluded that the caderisation date of 1.7.1996 was appropriate and dismissed the argument for an earlier date.
Issue 2: Legality and Discrimination of Proviso to Rule 4(1)
The petitioners contended that the proviso to Rule 4(1), which protected the seniority of judicial officers appointed between 1.7.1996 and 31.3.2003, was illegal and discriminatory. They argued that this proviso created inconsistencies and contradicted the principle of equality by safeguarding the interests of a specific group at the expense of others.
The Court examined the recommendations of the Justice Kapadia and Justice Gokhale Committees, which both supported the unification of the cadre with effect from 1.7.1996. The Court noted that the caderisation was not mandated until the Shetty Commission's recommendations were accepted in 2002, with a deadline for implementation by 31.3.2003. Therefore, it was necessary to protect the seniority of those appointed to higher posts during this period, as they were appointed without any enforceable direction for caderisation.
The Court upheld the proviso to Rule 4(1), stating that it was neither discriminatory nor illegal, and was a necessary measure to protect the legitimate expectations of those appointed to higher posts between 1.7.1996 and 31.3.2003. The Court concluded that the petitioners did not have a legal right to be placed above those recruited to higher posts during this period.
Conclusion
The Supreme Court upheld the Maharashtra Judicial Service (Seniority) Rules, 2007, including the proviso to Rule 4(1). The writ petition was dismissed, affirming the date of caderisation as 1.7.1996 and validating the protection of seniority for judicial officers appointed between 1.7.1996 and 31.3.2003.
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