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2021 (8) TMI 1396
Validity of Revision u/s 263 - CIT noted difference of sale consideration and value determined by Stamp Valuation Authority in respect of 12 such persons and that the AO failed to verify and applying the correct law - PCIT set aside the assessment order and directed to verify the sale deed for the year under consideration and pass the assessment order afresh by giving adequate opportunity to the assessee - assessee argued No fair and proper opportunity was given by CIT - HELD THAT:- It is an admitted fact that ld. PCIT issued show-cause notice u/s 263 dated 13/03/2021 for fixing the date of hearing on 31/03/2021. PCIT passed the order on 31/03/2021 itself.
We find that assessee filed copy of reply dated 31/03/2021 before the ld. PCIT.
We find that ld. PCIT has not recorded the contents of reply filed by the assessee. We, instead of going on the merit and demerit of the issues identified by ld. PCIT for revision find that the ld. PCIT passed the order in a hasty manner and without giving fair and proper opportunity. Therefore we deem it appropriate to restore the case back to the file of ld. PCIT to decide the issues identified by him afresh after giving opportunity of hearing to the assessee.
Appeals filed by the assessee are allowed for statistical purpose.
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2021 (8) TMI 1395
Revision u/s 263 - As per CIT there is failure on the part of the AO to assess the income of the assessee u/s. 144/147 of the Act and found it erroneous as it is prejudicial to the interest of the revenue - HELD THAT:- The impugned order has been passed by the Ld. PCIT without affording proper opportunity of being heard to the assessee. Though the three (3) notices were issued by the Revenue fixing the date of hearing, but finally, the adjournment application as part of the record before us, though suggests the request for adjournment on behalf of the assessee before the ld. PCIT made, the same is not reflecting in the order passed by the ld. PCIT dt. 13-03-2020, issued after four(4) days from the date of making such request.
In that event, we find that the principle of natural justice has not been properly adhered to. Therefore, for the ends of justice, we find it fit and proper to set aside the issue to the file of the PCIT with a further direction upon him to adjudicate the matter on merits positively upon granting an opportunity of being heard to the assessee and upon taking into consideration the evidences. Appeal of the assessee is allowed for statistical purpose.
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2021 (8) TMI 1394
Seeking adjournment of appeal - appeal was dismissed on monetary grounds - Revenue informs that there has been an error in the Final Order as the litigation policy was applicable only for central excise and service tax matters and not to Customs matter.
The learned advocate for the assessee mentioned that this appeal arise from same common impugned order wherein the Commissioner (Appeals) has set aside the absolute confiscation of gold which was seized from the appellant. So the appellant assessee is in appeal against the order for penalty and redemption fine whereas Revenue is in appeal against modification of absolute confiscation to simple confiscation.
HELD THAT:- These appeals are adjourned. Both the appeals are tagged together. Put up this matter for further order as and when the bench is available after three months.
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2021 (8) TMI 1393
Rejection of petition submitted by the writ petitioner seeking to modify the punishment of removal from service imposed on him into one of compulsory retirement was set aside and certain directions were issued - HELD THAT:- The courts cannot assume the function of disciplinary/departmental authorities and to decide the quantum of punishment and nature of penalty to be awarded, as this function is exclusively within the jurisdiction of the competent authority, but, an exception is carved out therein to the effect that if the co-delinquent is awarded lesser punishment by the disciplinary authority even when the charges of misconduct was identical or the co-delinquent was foisted with more serious charges, then the Court is at liberty to interfere with the punishment. In such case, instead of remitting the matter back, the Court can substitute a suitable punishment.
The writ petitioner is entitled for the similar treatment, that has been extended to N.Subramanian and after passage of time, remitting the matter again to the authorities would not serve any purpose. Thus, directing the authorities to modify the punishment imposed on the writ petitioner to the one that has been imposed on N.Subramanian would meet the ends of justice. Thus, the learned Single Judge rightly set aside the Government Order refusing to extent such benefit to him.
The Writ Appeal is dismissed and the order of the learned Single Judge is confirmed.
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2021 (8) TMI 1392
Contempt of Court - Wilful Disobedience or not - failure of a party to comply with an undertaking, on the basis of which a conditional order of stay was granted - HELD THAT:- It is true that this Court has held in a series of decisions that the wilful breach of the undertaking given to the Court amounts to contempt of Court under Section 2(b) of the Act. But the Court has always seen (i) the nature of the undertaking made; (ii) the benefit if any, reaped by the party giving the undertaking; and (iii) whether the filing of the undertaking was with a view to play fraud upon the court or to hoodwink the opposite party.
The distinction between an order passed on consent terms and an order passed solely on the basis of an undertaking given to court and the distinction between a person playing fraud on the court thereby obstructing the course of justice and a person playing fraud on one of the parties, was brought out by this Court in BABU RAM GUPTA VERSUS SUDHIR BHASIN [1979 (4) TMI 164 - SUPREME COURT] where it was held that In the instant case, we have already held that there is neither any written undertaking filed by the appellant nor was any such undertaking impliedly or expressly incorporated in the order impugned. Thus, there being no undertaking at all the question of breach of such an undertaking does not arise.
There is no dispute on facts that the mortgaged properties have now been sold and with extraordinary efforts, the Bank has also taken possession. The petitioners have also spent 11 days in custody out of the total period of imprisonment of three months imposed by the High Court. In such circumstances, we think that it is sufficient punishment for the petitioners.
Therefore, the SLP is disposed of upholding the finding of the learned Single Judge and the Division Bench of the High Court that the petitioners are guilty of contempt of court, but reducing the period of sentence from three months to the period of imprisonment already suffered/undergone by the petitioners - application disposed off.
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2021 (8) TMI 1391
Rectification of mistake - mistake being apparent on the face of record - Ground 11 to 13 - Transfer pricing adjustment on account of payment of service fees to Cadbury Holding Limited - method followed by TPO for making adjustment was not a method prescribed under the Act.
HELD THAT:- We find that the related facts and circumstances of the issue raised by the assessee in the grounds no.11 to 13 of the present appeal is materially identical to the issue decided by us vide grounds no.8 to 11, in Para–14, 15 and 16, wherein we have allowed the issue while following the decision of the Co–ordinate Bench of the Tribunal rendered in Kodak India Pvt. Ltd. [2013 (11) TMI 667 - ITAT MUMBAI]. Since the issue raised in these grounds no.11 to 13, are identical to the issue decided by us in grounds no.8 to 11 vide Para–14, 15 and 16, as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) and allow these grounds.
Corporate tax adjustment on account of alleged excess deduction u/s 80-IC of the Act - We notice that the Co–ordinate Bench has accepted the method of allocation with regard to interest, VRS decrease in stock, direct expenses, direct marketing cost and selling & distribution expenses, royalty and technical fees. The bench has remitted back to AO only the other overhead for verification. Now before us, it is brought to our notice that all operational and establishment expenses were uniformly allocated and there is no separate category of “Other Overheads”. Accordingly, we also deem it fit to remit only for limited purpose of verification of aspect of allocation method adopted to the file of the Assessing Officer. Accordingly, the ground raised by the assessee is allowed for statistical purposes.
Misc. application is allowed.
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2021 (8) TMI 1390
Addition u/s 14A r.w.r. 8D - exempt income necessarily be earned in the AY in question for the applicability of the said provision - HELD THAT:- Issue notice.
Tag with M/S IL AND FS ENERGY DEVELOPMENT COMPANY LTD. [2018 (5) TMI 2126 - SC ORDER]
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2021 (8) TMI 1389
Seeking approval of the Resolution Plan approved by the Committee of Creditors which plan was submitted by Respondent No.1 - Whether Resolution Plan has provision to transfer personal properties of the Appellants who had given their personal properties as security in favour of the Corporate Debtor, whom Corporate Debtor took loan?
HELD THAT:- Under Section 61(3) of the IBC that the Resolution Plan as approved by the Adjudicating Authority is in contravention of the provisions of law and there have been material irregularities in exercise of powers by the Adjudicating Authority when it directed the Appellants, that the owners of the premises as mentioned in the judgment shall enter into Tripartite Agreements for transfer of the premises (as mentioned in para 18 of impugned order). In fact, if para 18 is seen, after describing the properties in the chart there is also portion added which says that the Financial Creditors shall be at liberty to proceed against the properties of the Promoters erstwhile Directors/ Guarantors “other than those mentioned above to recover their balance”. This, in the Resolution Plan would be blank cheque given to proceed even with regard to any other property also of the Personal Guarantors.
Thus, without resorting to appropriate proceedings against the Personal Guarantors of Corporate Debtor this is irregular exercise of powers.
The Resolution Plan approved by the Adjudicating Authority is rejected. All actions taken in consequence of the impugned order approving the Resolution Plan shall stand set aside - appeal allowed.
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2021 (8) TMI 1388
Seeking to increase the authorized share capital without paying any fees / Stamp duty to the RoC - HELD THAT:- The Adjudicating Authority while approving the Resolution Plan has expressly covered the issues as required for the approval of the plan and nowhere such waival is explicitly or implicitly provided for - there are no reason that when a new company takes over and starts at a new slate and take certain management decision then everything cannot be exempted at a later stage as it is a business decision to expand the business and based on those probability of cash inflow, cash outflow is provisioned for.
There are no merits in the appeal - appeal dismissed.
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2021 (8) TMI 1387
Exemption u/s 11 - AO examined the activity of the assessee and held that it falls under General Public Utility and is charging fees from customers and has obtained Intellectual Property Rights (IPR) from Belgium and transferring through license agreement use of such IPR and un-species, thus covered by the proviso to Section 2(15) - whether assessee’s activities are not within the purview of the section 2(15)? - CIT(A) allowed deduction - HELD THAT:- Revenue could not show us that the above order of the co-ordinate bench has been reversed by the Hon’ble High Court. In view of this the order of the co-ordinate bench in assessee’s own case for earlier year binds - Accordingly, we hold that the assessee is entitled to the benefit of Section 11 and 12 of the Act and there is no infirmity in the order of the ld. CIT (Appeals). Accordingly, ground No. 1 of both the appeals are dismissed.
Claim of the depreciation, despite the assessee has claimed the whole cost of the assets as application of the income at the time of purchase of those assets has been allowed by the ld. CIT (Appeals) following the decision of Indraprastha Cancer Society [2014 (11) TMI 733 - DELHI HIGH COURT] - We do not find any infirmity in the order of the ld. CIT (Appeals) in allowing the claim of depreciation to the assessee for both the years.
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2021 (8) TMI 1386
Validity of faceless assessment u/s 144B - notice of demand, issued u/s 156 and the notice issued for initiating penalty proceedings u/s 270A - HELD THAT:- As per sub-clauses (b) and (c) of clause (xvi) of Section 5(1) of the 2019 Scheme, read with Section 144B(7)(vii) oblige the revenue, to follow the principles of natural justice, where there is a variation made in the taxable income to the prejudice of the assessee. [See Ritnand Balved Education Foundation vs. National Faceless Assessment Centre [2021 (6) TMI 17 - DELHI HIGH COURT]].
A perusal of the impugned assessment order would show that, variation has been made in the taxable income to the prejudice of the assessee.The record shows that, the assessee had claimed exemptions under Section 11/12 of the Act, and thus, declared its income in the relevant AY i.e., 2018-2019, as “Nil”.
AO via the impugned assessment order has made an addition to the taxable income of the assessee.
In view of this, it is evident that variation was made to declared taxable income of the assessee which, as noticed above, was Nil, albeit, without issuance of a show cause notice-cum-draft assessment order. Admittedly, the assessee had no opportunity to respond to the additions made.
Given these admitted circumstances, the impugned assessment order as also the consequential notices, issued under Section 156 and 270A would have to be set aside.
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2021 (8) TMI 1385
Restraint from taking possession of the property in the Appellant's possession - eviction from the Secured Asset without due process of law - protected tenant (of secured asset) under the provisions of the Maharashtra Rent Control Act 1999 - HELD THAT:- Procedural mechanism for taking possession of the Secured Asset is provided Under Section 14 of the SARFAESI Act. Section 17 of the SARFAESI Act provides for the right of appeal to any person including the borrower to approach Debt Recovery Tribunal (DRT). Section 17 has been amended by Act No. 44 of 2016 providing for challenging the measures to recover secured debts (for short, "the Amendment"). Under the Amendment, possession can be restored to the borrower or such other aggrieved person. This Amendment has come into force w.e.f. 1st September, 2016.
This Court in HARSHAD GOVARDHAN SONDAGAR VERSUS INTERNATIONAL ASSETS RECONSTRUCTION CO. LTD & ORS [2015 (11) TMI 1315 - SUPREME COURT] has held that right of appeal is available to the tenant claiming under the borrower. In KANAIYALAL LALCHAND SACHDEV VERSUS STATE OF MAHARASHTRA [2011 (2) TMI 1277 - SUPREME COURT] this Court has held that DRT can not only set aside the action of the secured creditor but even restore the status quo ante. Therefore, an alternative remedy was available to the Appellant to challenge the impugned order Under Section 17 of the SARFAESI Act even before the amendment to Section 17 of the SARFAESI Act - However, given that the instant appeal has been pending consideration before this Court from the year 2016, it is proposed to examine the case on merits without directing the Appellant to avail the alternative remedy.
In Harshad Govardhan Sondagar this Court has categorically held that if the tenancy claim is for any term exceeding one year, the tenancy can be made only by a registered instrument.
A Three-Judge Bench of this Court in BAJARANG SHYAMSUNDER AGARWAL VERSUS CENTRAL BANK OF INDIA & ANOTHER [2019 (9) TMI 569 - SUPREME COURT], after considering almost all decisions of this Court, in relation to the right of a tenant in possession of the secured asset, has held that if a valid tenancy under law is in existence even prior to the creation of the mortgage, such tenant's possession cannot be disturbed by the secured creditor by taking possession of the property. If a tenancy under law comes into existence after the creation of a mortgage but prior to issuance of a notice Under Section 13(2) of the SARFAESI Act, it has to satisfy the conditions of Section 65-A of the Transfer of Property Act, 1882. If a tenant claims that he is entitled to possession of a Secured Asset for a term of more than a year, it has to be supported by the execution of a registered instrument.
In the present case, first of all there is a serious doubt as to the bona fide of the tenant, as there is no good or sufficient evidence to establish the tenancy of the Appellant. According to the Appellant, he is a tenant of the Secured Asset from 12.06.2012. However, the documents produced in support of his claim are xerox copies of the rent receipts and the first xerox copy of the rent receipt is of 12.05.2013 which is after the date of creation of the mortgage - even if the tenancy has been claimed to be renewed in terms of Section 13(13) of the SARFAESI Act, the Borrower would be required to seek consent of the secured creditor for transfer of the Secured Asset by way of sale, lease or otherwise, after issuance of the notice Under Section 13(2) of the SARFAESI Act and, admittedly, no such consent has been sought by the Borrower in the present case.
There are no merit in these appeals which are accordingly dismissed.
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2021 (8) TMI 1384
Prolonged suspension for more than six years - case of Revenue is that the writ court, after granting a direction to the criminal court to conclude the proceedings in a time bound manner, should not have directed revocation of suspension, as the result of the criminal proceedings itself would give a solution to the issue as to whether the suspension of the petitioner is to be revoked or not - HELD THAT:- Under similar circumstances, a Division Bench of this Court in the case of The Deputy Inspector General of Police, Coimbatore Range, Coimbatore vs. S.Govindaraj, [2011 (11) TMI 875 - MADRAS HIGH COURT] while considering Rule 3(e)(5) of the Tamil Nadu Police Subordinate Services (Discipline and Appeal) Rules, 1955, has categorically held that after a period of six months from the date of suspension, if an incumbent has to be paid 75% of his salary by way of subsistence allowance, such a person could be posted in a nonsensitive post, may be in a far off place.
In the case on hand, the appellants have not followed the regulations laid down under Tamil Nadu Electricity Board Employee's Discipline and Appeal Regulations 9 clause (dd) and (e) - A thorough reading of the said regulations would clearly show that the rule empowers the appellants herein, at any time, to revoke the suspension order. But, the appellants, have failed to consider the request for reviewing the order of prolonged suspension in spite of his representations.
Thus, the learned single Judge has held that an employee cannot be kept under a prolonged suspension just because there is a criminal case pending against him and has categorically came to a conclusion that the subsistence allowance should not be paid to him without extracting any work from him - there are no error or defect in the order of the learned single Judge's observation that the appellants can consider posting the respondent herein/writ petitioner in a non-sensitive post and extract work from the petitioner rather than paying the subsistence allowance for no work.
Appeal dismissed.
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2021 (8) TMI 1383
Advance Authorization Scheme - export of items namely “Gold Medallions and Coins" or "Any Jewellery manufactured by fully mechanized process” - HELD THAT:- There are no reason to interfere in the matter. The Special Leave Petition is, accordingly, dismissed.
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2021 (8) TMI 1382
Rejection of claim of the petitioner under the Mukhyamantri Kisan Avam Sarvahit Bima on the ground that the claim is time barred - HELD THAT:- In compliance of this Court’s order dated 02.07.2021, the petitioner has paid the sum of Rs. 5 lakhs to the respondent no.1 and has filed proof of making such payment.
Issue notice, returnable in six weeks.
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2021 (8) TMI 1381
Validity of Status report filed by M/s Grant Thornton, who were appointed as Forensic Auditors - report indicates that the auditors were not provided complete access to all electronic records, including those which were in possession of the Chief Financial Officer, Unitech Limited. - HELD THAT:- The contents of the communication dated 16 August 2021 and the material which has come on the record indicate that, despite the orders of this Court, irregularities are taking place within the precincts of the Tihar Central Jail where the two accused have been lodged. These activities undermine the authority of the Court and will derail the investigation which has been ordered by the Directorate of Enforcement.
It is directed that both the accused, Sanjay Chandra and Ajay Chandra be shifted from Tihar Central Jail to the premises of Arthur Road Jail, Mumbai and Taloja Central Jail, Mumbai, respectively. The video conferencing facility at the Jails to which the accused are being transferred shall be made available so as to enable them to record their presence in the court proceedings where their presence is required.
Copies of the interim and final reports of M/s Grant Thornton, forensic auditors appointed by this Court shall be furnished to the Directorate of Enforcement. Copies of the reports shall be handed over in a sealed cover to Ms Shraddha Deshmukh, counsel assisting Ms Madhavi Divan for onward transmission to the Directorate of Enforcement - List the Special Leave Petition after six weeks, and a status report shall be filed by ED on the investigation.
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2021 (8) TMI 1380
Deemed dividend - Partnership firm - purchase of shares in the name of partners - HC [2011 (7) TMI 288 - DELHI HIGH COURT] held that appellant company being beneficial share holder hence loans accepted is added as deemed divided - HELD THAT:- Interlocutory Application is an application for withdrawal of the appeals in light of the Direct Tax Vivad se Vishwas Act, 2020. Application is allowed.
Consequently, Appeals stand dismissed as withdrawn.
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2021 (8) TMI 1379
Depreciation on computers disallowed u/s 40(a)(ia) - HELD THAT:- Issue decided in favour of assessee as relying on Tally Solutions Pvt. Ltd case [2020 (12) TMI 1160 - KARNATAKA HIGH COURT] Section 40(a)(i) and (ia) provides for disallowance only in respect of expenditure, which is revenue in nature, therefore, the provision does not apply to a case of the assessee whose claim is for depreciation, which is not in the nature of expenditure but an allowance. The depreciation is not an outgoing expenditure and therefore, provisions of section 40(a)(i) and (ia) are not applicable.
In the absence of any requirement of law for making deduction of tax out of expenditure, which has been capitalized and no amount was claimed as revenue expenditure, no disallowance under section 40(a)(i) and (ia) would be made.
Depreciation is a statutory deduction available to the assessee on a asset, which is wholly or partly owned by the assessee and used for business or profession. Depreciation is an allowance and not an expenditure, loss or trading liability. Commissioner (Appeals) has held that the payment has been made by the assessee for an outright purchase of Intellectual Property Rights and not towards royalty and therefore, the provision of section 40(a)(i) is not attracted in respect of a claim for depreciation. Decided in favour of the assessee.
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2021 (8) TMI 1378
Validity of impugned notice - respondents submits that due to mistake on the part of the assessing officer, the impugned notice dated November 12, 2020 has been issued - HELD THAT:- Considering the submissions of the parties and on perusal of the records, this writ petition is disposed of by quashing the impugned notice dated November 12, 2020 and the subsequent notice dated December 18, 2020 without calling for affidavits.
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2021 (8) TMI 1377
Constitutional Validity of Part II of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 (Act 1 of 2021) - card game of rummy on the virtual platform - offering poker in cyberspace - private body which seeks to regulate diverse forms of games offered to be played on the internet in the country in which the other petitioners, who provide platforms for playing the games, are members - primary ground urged to assail the impugned legislation is in it apparently prohibiting games of skill, if played for any prize or stakes; which, according to the petitioners, is in flagrant disregard of the law laid down by the Supreme Court that competitions in games of skill are business activities and, thus, protected under Article 19(1)(g) of the Constitution of India.
The substance of the State's submission is that the legislature as the rightful representative of the people in the State perceives betting in cyberspace to be pernicious and since the State has exclusive authority under the Constitution to legislate in the field of betting, the amending statute passes muster as the object of the legislation is to arrest the addiction of gambling and ensure that citizens do not rush to their doom by falling prey to such addiction.
HELD THAT:- At the end of the day, a balance has to be struck between the extent to which the State can impose restrictions to protect a class or certain classes of persons and the reasonableness of such restrictions qua the ordinary individual who may resist the same, whether or not the statutory measure is intended to protect such individual - Oftentimes, when the State takes a paternalistic attitude, it seeks to legally regulate private life. This brings about a conflict between both the authority and the desirability on the part of the State to legislate in areas where it perceives that the individual in general or certain classes of individuals require protection and the private rights of the individual and every citizen's freedom of choice. State paternalism, by and large, is understood to mean the phenomenon in which the State acts as the guardian and protector of its citizens or a class or classes of citizens who are perceived to be vulnerable in certain situations or are thought to be generally weak and incapable of protecting themselves. When a statute is attacked on the ground of overbearing paternalism, a cost-benefit analysis is called for, not in mathematical terms, but only to assess whether by and large the benefit in the form of public good outweighs the cost of the individual being deprived of his choice.
State paternalism through legislation can span the ordinary areas of protecting children or women or the elderly or persons with disabilities by enacting remedial statutes to undo the historical or longstanding neglect or oppression or exploitation of certain classes of persons and even to protect persons performing certain duties, as in the workspace. Paternalistic legislation may regulate the conduct of an activity depending on where, as a result of the limitation of resources involved in such activity, regulation is deemed imperative; or, it may seek to regulate the perceived undesirability of the over-indulgence in certain activities - Like a parent seeking to protect her child and assuming that the child is incapable of deciding what is good for her and what is not, the State considers the individual or class of individuals sought to be protected as defenceless and incapable of making the correct choice. The more natural the activity that is sought to be controlled, the greater is the degree of authoritarianism in the elimination of the exercise of choice by the individual or the class of individuals sought to be protected as vulnerable by legislation born out of State paternalism.
Every game or like activity depends on an element of chance. One team at a cricket match may bat in perfect sunshine on a flat wicket, but the other may bat on a sticky wicket upon rain intervening in the interregnum. However, ordinarily, it is expected that the more skillful would take the unexpected-the chance element-in its stride and the greatest upsets remain etched in our memories because the expected dexterity of the acknowledged skillful was felled by the less-gifted - Gambling and gaming have developed secondary meanings in judicial parlance. Indeed, such words had attained such connotations in the pre-constitutional era that the nomen juris cannot be shrugged off to understand such words to mean or imply anything other than how they have been judicially interpreted. Irrespective of what meanings are ascribed to these words in dictionaries, gambling is equated with gaming and the activity involves chance to such a predominant extent that the element of skill that may also be involved cannot control the outcome. A game of skill on the other hand, may not necessarily be such an activity where skill must always prevail; however, it would suffice for an activity to be regarded as a game of skill if, ordinarily, the exercise of skill can control the chance element involved in the activity such that the better skilled would prevail more often than not.
Since the discussion here has to be confined to the validity of the impugned Amending Act, the several tests enunciated in the authoritative judicial pronouncements brought to bear on the subject by the parties need to be understood and applied. For a start, K.R. Lakshmanan instructs that when a game of skill is distinct from a game of chance, on the preponderance of the skill element involved, the activity would be protected by Article 19(1)(g) of the Constitution and competitions involving games of skill have to be regarded as business activities.
The amended Act encompasses within its sweep all sporting activities, if played for a prize, whether between two class teams in a school or between two schools in an inter-school competition, if there is a trophy to be won; leave alone the ATP prize-money or ranking tournaments organised in the city. Goodbye to IPL and Test matches, too, from Tamil Nadu since cash rewards are offered therein - The wording of the amending Act is so crass and overbearing that it smacks of unreasonableness in its every clause and can be seen to be manifestly arbitrary. Whatever may have been the pious intention of the legislature, the reading of the impugned statute and how it may operate amounts to a baby being thrown out with the bathwater and more. And, irrespective of the noblest of intentions, the effect of the provisions of the impugned statute is the primary consideration for assessing the validity thereof.
There is little doubt that the State has the authority by virtue of the Constitution to enact a law pertaining to betting and gambling; just as the State has due authority in such regard, inter alia, in respect of public order; sports, entertainments and amusements; and, offences against laws with respect to any of the matters in the State List. The petitioners here have not challenged the legislative competence in such sense that the State lacks the power to enact any law pertaining to betting and gambling - There is no doubt that the activity of gambling and the inextricable element of betting involved therewith has a deleterious impact on certain individuals and can even be ruinous. So much is accepted. The immediate question that arises is whether it was necessary to go the distance that the Amending Act has charted out to completely stultify and negate skill altogether. If, prima facie, the impugned legislation is seen to impose restrictions or altogether curb the exercise of skill in a particular domain, the onus is on the State to justify not only the need therefor but also the extent thereof. No attempt has been made in such regard apart from the anecdotal reference to some suicides and the subjective perception of the evil of addiction.
There appears to be a little doubt that both rummy and poker are games of skill as they involve considerable memory, working out of percentages, the ability to follow the cards on the table and constantly adjust to the changing possibilities of the unseen cards. Poker may not have been recognised in any previous judgment in this country to be a game of skill, but the evidence in such regard as apparent from the American case even convinced the Law Commission to accept the poker as a game of skill in its 276th Report.
The legislation assailed herein has to be regarded as something done by the legislature capriciously, irrationally and without adequate determining principle such that it is excessive and disproportionate, to borrow the words of Shayara Bano [2017 (9) TMI 1302 - SUPREME COURT].
The doctrine of severability would also not apply in the present case as the concept of the expanded meaning of gaming runs through the entirety of the Amending Act; so much so that it cannot be gauged with any element of certainty as to which part of the amendments the legislature would have intended to be retained as valid even if the legislature was aware that some parts thereof were invalid. In fine, it must be said that the Amending Act in its application to the Act of 1930 is so disproportionate to the objects that it sets out to achieve that no meaningful part of it-even a sliver-can be reasonably allowed to be retained or upheld as valid.
The impugned Part II of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 (Act 1 of 2021), which amends the Tamil Nadu Gaming Act, 1930, is declared to be ultra vires the Constitution in its entirety and struck down as a consequence. Nothing herein will prevent an appropriate legislation conforming to the constitutional sense of propriety being brought in the field of betting and gambling by the State.
Petition allowed.
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