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Indian Laws - Case Laws
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2024 (3) TMI 907 - SC ORDER
Framing of charges - Owning of assets disproportionate to known sources of income - Whether the courts below were justified in refusing to quash and set aside the order on charge dated 21.02.2006 and the charges as framed on 28.02.2006? - Case against the Additional Chief Architect in New Delhi Municipal Corporation - HELD THAT:- In the present case, the probative value of the Orders of the Income Tax Authorities, including the Order of the Income Tax Appellate Tribunal and the subsequent Assessment Orders, are not conclusive proof which can be relied upon for discharge of the accused persons. These orders, their findings, and their probative value, are a matter for a full-fledged trial. In view of the same, the High Court, in the present case, has rightly not discharged the appellants based on the Orders of the Income Tax Authorities.
In RADHESHYAM KEJRIWAL VERSUS STATE OF WEST BENGAL [2011 (2) TMI 154 - SUPREME COURT], this Court was concerned with a fact situation where the Petitioner therein was being prosecuted under the Foreign Exchange Regulation Act, 1973 for payments made by him in Indian currency in exchange for foreign currency without any general or specific exemption from the Reserve Bank of India. The Enforcement Directorate had commenced both an adjudication proceeding and a prosecution under the provisions of the Foreign Exchange Regulation Act, 1973. It so transpired that the Adjudicating Officer found that no documentary evidence was available to prove the foundational factum of the Petitioner therein entering into the alleged transactions which fell foul of the Act and thereafter directed that the proceedings be dropped.
There are no merit in these appeals and the appeals are dismissed.
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2024 (3) TMI 906 - BOMBAY HIGH COURT
Dishonour of Cheque - vicarious liability of directors - sufficient averments to issue process against the directors, including the Petitioners or not - HELD THAT:- The liability under Section 141 of the Act, 1881 for commission of the offence punishable under Section 138 of the Act, is in the nature of a vicarious liability. It is trite that vicarious liability for an offence is required to be strictly construed. From the text of Section 141 of the Act, it becomes evident that the liability is incurred not on account of the position a person holds, but by reason of the role such person plays in the management of the affairs of the company. Liability does not depend upon the designation or status of the person sought to be roped in. Conversely, it could be shown that though a person does not hold a particular designation, yet he was in-charge of and responsible to the affairs of the company, and, therefore, liable to be prosecuted by invoking the constructive criminality under Section 141 of the Act.
In the case of POOJA RAVINDER DEVIDASANI VERSUS STATE OF MAHARASHTRA & ANOTHER [2014 (12) TMI 1070 - SUPREME COURT], the Supreme Court enunciated that the law laid down by the Supreme Court is that for making a director of a company liable for the offence committed by the company under Section 141 of the Act, there must be specific averments against the director showing as to how and in what manner, such director was responsible for the conduct of the business of the company.
The facts in the case of SUNITA PALITA & OTHERS VERSUS M/S PANCHAMI STONE QUARRY [2022 (8) TMI 55 - SUPREME COURT], appear to be on all four with the case at hand, as the Appellants therein were also shown to be independent and non-executive directors of the company. Non-executive directors are not involved in the day to day affairs of the company or in running of its business. The endeavour of Mr. Kumar to bank upon the information disclosed in the annual statement of account does not advance the cause of the Respondent No. 1 – complainant. The very fact that the Petitioners were made members of the audit and corporate social responsibility committee appears to be in consonance with the role of the Petitioners as independent non-executive directors of Isinox Ltd.
The complaints singularly lack any averment that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, the Petitioners. In the absence of such averments, the prosecution of the Petitioners by invoking the provisions contained in Section 141(2) of the Act also, would be legally impermissible.
The conspectus of aforesaid discussion is that the prosecution of the Petitioners who are the independent non-executive directors of Isinox Ltd. for an offence punishable under Section 138 read with Section 141 of the Act, 1881 would amount to abuse of the process of the court and wholly unjustifiable - Petition allowed.
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2024 (3) TMI 905 - DELHI HIGH COURT
Dishonour of Cheque - legally enforceable debt or not - insufficiency of funds - seeking leave of the Court to summon bank officials along with record pertaining to the concerned bank account for the financial years 2019-2020 and 2020-2021 - Section 311 Cr.P.C. read with Section 91 Cr.P.C. - HELD THAT:- The singular reason for filing an application under Section 311 Cr.P.C. by the Petitioner was to prove through the bank officials and the financial statements that there were sufficient funds in the bank account pertaining to which the dishonoured cheques were issued, so as to set up a defence against the alleged offence under Section 138 of the NI Act. As rightly pointed out by counsel for Respondent No. 2, learned MM has noted in the impugned order itself that the dishonour of cheques was not on account of insufficiency of funds or exceeding arrangement. In fact, the learned Court has categorically noted, after referring to bank return memos Exs. CW-1/8, CW-1/9, CW-1/10 and CW1/11 and the evidence of Respondent No. 2’s witness CW-1 that reason for dishonour of the cheques in question was ‘payment stopped by drawer’.
The apprehension of the Petitioner is misplaced and no infirmity is found with the impugned order, warranting interference by this Court. Moreover, Respondent No. 2 has reiterated its stand that the funds maintained by the Company/accused were neither insufficient nor the amounts under the impugned cheques exceeded arrangement.
Petition disposed off.
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2024 (3) TMI 904 - MADRAS HIGH COURT
Levy of stamp duty on schemes of amalgamation or restructuring - Validity of the Circular dated 20.11.2018, issued by the Inspector General of Registration in No. 49282/P1/2018 and / or G.O.(Ms.) No. 29, Commercial Taxes and Registration (J1) dated 01.03.2019 and G.O.(Ms.) No. 47, Commercial Taxes and Registration (J1) dated 19.02.2020.
Whether or not the order of the Court sanctioning the scheme of amalgamation / restructuring or merger can be deemed to be an instrument? - HELD THAT:- The Hon'ble Supreme Court in the HINDUSTAN LEVER VERSUS STATE OF MAHARASHTRA [2003 (11) TMI 335 - SUPREME COURT] dealt with the similar definition of the term 'instrument' under the Bombay Stamp Act and held that on a consideration of Section 394 of the Companies Act, it is clear that upon such Orders of the Court, the undertaking of the transferor company stood transferred to the transferee company with all its movable, immovable and tangible assets and on presentation of certified copy of the said Order of the Court to the Registrar of Companies, the transferor of company stands amalgamated in the transferee company along with all its assets and liabilities and as such the Court Order along with the amalgamation scheme appended to it, is an instrument - In the present context, whereunder the Registrar being a public officer, under Section 35 is mandated not to act upon in the scheme of amalgamation, unless it is duly stamped, the said argument of certified copy will not hold good. Therefore, the submissions made on behalf of the petitioners in this regard is rejected and the question is answered that the Orders of Court/Tribunal sanctioning schemes of amalgamation/restructuring/de-merger etc., along with such schemes appended thereto, shall be ‘instruments’ within the meaning for the purposes of the Act.
Whether or not amalgamation / restructuring can be termed as a transfer inter vivos amounting to conveyance? - HELD THAT:- The scheme of amalgamation results in transfer of the rights, assets and liabilities of the transferor company vesting in the transferee company in praesenti and therefore there is a transfer inter vivos - it can be seen that amalgamation, merger or other such arrangements shall be within the meaning of ‘conveyance’ in more than one sense. As a matter of fact, such schemes, originally being dealt with under Sections 391-394 of the Companies Act, 1953 and now under Chapter XV (Sections 230-240) of the Companies Act, 2013. Except doing away with the definition of ‘transferor company’ and ‘transferee company’ in respect of amalgamation and imposing certain additional requirements of disclosure etc., the essential features of the transactions remains the same - the order sanctioning amalgamation / restructuring appended by the scheme as such is an instrument of conveyance liable to duty under Article -23 of the Act and no further legislative action is necessary to bring the same within the ambit of duty.
As far as the impugned circular dated 20.11.2018 is concerned, it only attempts to clarify the existing position by quoting the relevant Judgments and addressing the registering officers that they should be aware that the scheme of amalgamation submitted by the Companies and sanctioned by the High Court are classifiable as ‘Conveyance’ and will be subject to duty under Article -23 of Schedule -I of the Act - there are no illegality in the said Circular dated 20.11.2018.
If the Orders are instruments amounting to conveyance, then whether the levy in the present manner, that is, prescription through an executive order is valid? - HELD THAT:- As far as the notification in G.O.Ms.No.29 dated 01.03.2019, it states that it is to reduce the duty chargeable under the Act. Therefore, the State of Tamil Nadu is well within its powers to reduce or remit the duty chargeable under the Act. So long as the power is exercised to reduce the duty chargeable under the Act, the same would be perfectly in order. When it is only a question of reduction or remitting, it can be by an Order passed in exercise of power under Section 9(1)(a) of the Act.
If so, the mode of computation, that is, 2 % of the value of the immovable property or 0.6 % of the net value of the shares transferred whichever is higher is in order? - HELD THAT:- While exercising the powers under Section 9(1)(a), reducing the duty from 5 % to 2 % of the market value of the property is a clear and fair exercise of power and it merely reduces the duty chargeable as per Article- 23. As far as the second limb of the notification, to compute the Stamp Duty on 0.6 % of the aggregate of the market value of the shares and then adopt the value whichever is higher is concerned, firstly it introduces a new mode of computation, which is not found in Article -23. Therefore, the same tantamounts to amending Article -23, which would require legislative action. Secondly, it was pointed out across the bar that there are several instances where the aggregate market value of the shares in respect of the transferee company which is amalgamated may run to several crores, whereas it may have an immovable property of a meagre value within the State of Tamil Nadu in which case, as per the notification if 0.6% of the aggregate market value of the shares which is higher would only be taken, then the same would result in increase in duty which would be more than 5 % of the duty chargeable under Article- 23 - to the last sentence of the notification contained in the impugned Government Order, in G.O.(Ms.) No. 29 dated 01.03.2019, i.e., “or 0.6 percent of the aggregate of the market value of the shares, whichever is higher” alone is struck down and rest of the notification shall stand.
Whether the retrospective application of the impugned Government Order with effect from 01.04.1956, by way of G.O.Ms.No.47 dated 19.02.2020 is valid? - HELD THAT:- Conveyance it was chargeable at various rates periodically prescribed and is presently at the rate of 5 % . It can be seen that from 01.04.1956 at no point of time, it was less than 2% and the G.O.(Ms.) No. 29 dated 01.03.2019 only reduces the duty to 2 %. Therefore the petitioners have no ground to complain of G.O.(Ms.) No. 47 dated 19.02.2020, which only makes the application of the beneficial provision of G.O.(Ms.) No. 29 dated 01.03.2019 as retrospective. As a matter of fact, Section 9(1) (a) of the Act itself expressly authorises the State to exercise such a power retrospectively. Thus, the retrospective applicability per se cannot be termed as illegal - the G.O.(Ms.) No. 47 dated 19.02.2020 is upheld.
Whether the stamp duty paid in other States, while registering the amalgamation orders are liable to be taken into account and set off as against the duty payable, while presenting the document for registration in the State of Tamil Nadu? - HELD THAT:- Once the instrument is already presented for registration in other States and again presented for registration within the State of Tamil Nadu, then, Section 19 -A of the Act, which is a Tamil Nadu amendment of the Indian Stamp Act, 1899, which will come into play - The very question was dealt with in detail by the Constitution Bench of the Hon'ble Supreme Court in New Central Jute Mills Co. Ltd. And Ors Vs. State of West Bengal and Ors., [1963 (1) TMI 65 - SUPREME COURT] while considering the identical provision 19 -A of the Uttar Pradesh amendment. The Hon'ble Supreme Court has held that though the execution of instrument may be in other States, when the instrument relates to any property situate within the State, then the liability also arises with reference to the State, where the property is situate also.
Thus, it is clear that upon presentation in the State of Tamil Nadu, the duty has to be calculated as per the rate payable in Tamil Nadu and thereafter, upon comparison, if the duty paid in any other State is higher than the State of Tamil Nadu, then the same has to be taken into consideration and no duty shall be payable. If the duty paid is lesser than what is payable in the State of Tamil Nadu, then whatever amount paid is to be set off and the balance duty is to be paid on the instrument of amalgamation.
Appeal disposed off.
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2024 (3) TMI 842 - GAUHATI HIGH COURT
Rejection of bid as petitioner had not submitted the IT return - Specific criteria for bids of the tenders - petitioner submits that no specific years for filing Income Tax Returns were mentioned in the Tender Notice. Further in terms of Section 44 AB(a) read with Explanation 2 of Section 139 of the Act, 1961, the due date for submitting the return of income for auditing the same was 31st day of October of the assessment year, as the petitioner’s gross receipts was over Rs. 1 Crore for the year ending 31.03.2022. As such, there was no opportunity for the petitioner to have submitted the IT return for the year 2022-2023, in terms of the tender notice dated 06.08.2023
HELD THAT:- The clauses of the tender notice requiring the bidders to submit their IT Return for the last Assessment Year and the Financial Statement of last 3 years from the Chartered Accountant have been submitted by the petitioner. The only problem that has arisen is that the State respondents wanted the IT Return for the Assessment Year 2023-2024. This Court is well aware of the judgments of the Supreme Court, which is to the effect that the decision-making process of the employer or the owner of project in accepting or rejecting the bid of a tenderer should not be interfered with, unless the decisions are found to be arbitrary and irrational. A mere disagreement with the decision-making process or the decision of the Administrative Authority is no reason for a Writ Court to interfere in a tender proceeding, as the author of a tender document is the best person to understand and appreciate it’s requirement and interpret it’s documents.
The problem that however arises in the present case is that the respondents have not stated clearly, the specific years of the Financial Statement that were required by the tenderers. In the present case, the petitioner whose gross receipts was over Rs. 1 crore, was required to have his Income Return audited, in terms of Section 44 AB(a) read with Explanation 2 of Section 139 of the Act, 1961. When the statutory law provides that the petitioner had until 31st October of the Assessment Year to have his return on income audited, there was no infirmity with the petitioner not submitting his Income Tax Return for the period prior to 2022-2023, as the period for submitting the same for auditing had not expired as per the Act, 1961. This is purely due to the fact that the State respondents in the tender notice have not clearly specified the years for which the IT Returns were required to be submitted by the tenderers.
Thus this Court is of the view that in terms of the judgment of the Supreme Court in Dutta Associates Pvt. Ltd. [1996 (11) TMI 490 - SUPREME COURT] the respondents have not been transparent, fair and open, as the respondents should have made a clarification/specification in the tender notice.
This Court is of the view that the petitioner’s bid would have to be considered to be valid. In the alternative, the respondents should give an opportunity to the petitioner to submit the IT Return for the Assessment Year 2023-2024. The respondents shall thereafter consider the petitioner’s bid along with all other valid bidders.
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2024 (3) TMI 841 - ALLAHABAD HIGH COURT
Prayer to direct the respondent- C.B.I. to furnish/ supply the copy of the post trap memo - seeking to know the reason of arrest - HELD THAT:- hat is reflected from the record is that all the three persons against whom allegations were levelled by the complainant have been arrested. This Court is not in a position to appreciate the stand taken by the C.B.I. before the court below, which is evident from the reply filed by the C.B.I., before the Special Court, a copy of which has been placed at Page No.43 of the paper book, wherein it is stated that accused Punit Singh has not signed on post trap memorandum, hence, same is not falling in the category of recovery memo and also that the investigation of the case is at initial stage and vital witnesses are yet to be examined and documents are to be collected and thus, the copy of the post trap memo cannot be provided to the accused.
The concept of fair trial may not be confined only to the prosecution and the same with equal force is applicable to the accused and if there is nothing extraordinary, in usual course, the copies of necessary documents must be provided to the accused persons of a crime, even at the stage of investigation and so much material should be provided by the investigating agency to the accused which may at least reflect the necessary evidence and material appearing against accused resulting in his arrest and confinement.
This Court is of the considered view that the Central Bureau of Investigation should have provided a copy of post trap memo of date 31.1.2024 to the applicant - Application allowed.
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2024 (3) TMI 840 - DELHI HIGH COURT
Dishonour of Cheque - petitioner has not responded to the legal notice - complaint lacks necessary averments - vicarious liability of Director - HELD THAT:- In the present case, the petitioner has placed on record unimpeachable and uncontroverted material in the form of DIR-11, which is also accompanied by receipt issued by the Ministry of Corporate Affairs of issuance of the said form. The said form indicates that the petitioner who even otherwise was only a non-executive additional director, had resigned from the said post much prior to the date on which the subject cheques came to be dishonoured. The Form DIR-11 as well as the other documents placed on record have not been disputed by learned counsel for the respondent during the course of arguments.
Reference in this regard may be made to the decision of SUNITA PALITA & OTHERS VERSUS M/S PANCHAMI STONE QUARRY [2022 (8) TMI 55 - SUPREME COURT] wherein it was observed when a complaint is filed against a Director of the company, who is not the signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contention in the complaint, that such Director was in charge of and responsible for conduct of the business of the Company or the Company, unless such Director is the designated Managing Director or Joint Managing Director who would obviously be responsible for the company and/or its business and affairs.
The second issue whether a written guarantee or a letter of guarantee by an erstwhile Director would make him vicariously liable came up before the Supreme Court in POOJA RAVINDER DEVIDASANI VERSUS STATE OF MAHARASHTRA & ANOTHER [2014 (12) TMI 1070 - SUPREME COURT], wherein it was held that the same may amount to a civil liability but not vicarious liability under the NI Act.
The Court even otherwise, is also convinced that the complaint is bereft of appropriate pleadings alleging that the petitioner was in charge of, and responsible for the conduct of the business of the accused company - In the totality of the facts and circumstances, the petitioner cannot be made responsible for the dishonour of cheque, and the continuation of the criminal complaint against him would be nothing but an abuse of the process of law.
The petition is allowed.
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2024 (3) TMI 789 - SUPREME COURT
Dishonour of Cheque - vicarious liability of the director - appellant was in-charge of day-to-day affairs of the Company or not - HELD THAT:- In the case of SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [2005 (9) TMI 304 - SUPREME COURT], this Court was considering the question as to whether it was sufficient to make the person liable for being a director of a company under Section 141 of the Negotiable Instruments Act, 1881. This Court considered the definition of the word “director” as defined in Section 2(13) of the Companies Act, 1956 - It was held that merely because a person is a director of a company, it is not necessary that he is aware about the day-today functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different.
It could thus clearly be seen that this Court has held that merely reproducing the words of the section without a clear statement of fact as to how and in what manner a director of the company was responsible for the conduct of the business of the company, would not ipso facto make the director vicariously liable.
It can thus be clearly seen that there is no averment to the effect that the present appellant is in-charge of and responsible for the day-to-day affairs of the Company. It is also not the case of the respondent that the appellant is either the Managing Director or the Joint Managing Director of the Company - It can thus clearly be seen that the averments made are not sufficient to invoke the provisions of Section 141 of the N.I. Act qua the appellant.
The judgment and order passed by the High Court dated 26th April, 2022 is quashed and set aside - Appeal allowed.
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2024 (3) TMI 750 - DELHI HIGH COURT
Ex-parte ad-interim injunction against the appellants - Defamatory Article authored by Defendant Nos. 3-5 and published by Defendant Nos. 1 and 2 as stated in the present Suit are defamatory to the Plaintiff - Article titled as “India Regulator Uncovers $241 Million Accounting Issue at Zee” was published on the website about the status of the Zee-Sony merger as well as an ongoing investigation carried out by the the Securities and Exchange Board of India qua the Respondent.
Appellants’ contend that appellant nos. 1 & 2 are companies incorporated under the Companies Act, 1956 and operate and function as a media publication under the name of “Bloomberg”. The appellant no. 3 is the Editor, South Asia and Middle East, of the appellant no. 1 company and the appellants’ no. 4 & 5 are journalists of the appellant no. 1 company. The respondent is a company incorporated under the Companies Act and is engaged inter alia in the business of media and entertainment.
As submitted Article in question is not only ex-facie defamatory but also suffers from inherent contradictions. The headline of the said Article is deceptive which in no manner is in consonance with the contents mentioned in the body of the Article. The headline is an eyecatcher and the Article is against the spirit of journalistic conduct. SEBI has not released any so called finding, which bear any connection to the purported $ 241 million diversion of funds. The Article has not only implicated the respondents as being guilty of the diversion of illegal funds but has also taken the liberty to fix the quantum of such a fictitious amount. It was submitted that a malicious story has been cooked to intentionally tarnish the reputation & public image of the respondent and there is 15% drop in the share price of the respondent.
HELD THAT:- The position of law is well settled with respect to the scope of interference by an appellate Court in an interlocutory injunction granted by the Court of first instance while exercising its discretion and substituting its own discretion.
It is settled law that unless there is a grave urgency shown as to entertain an appeal against an ex-parte ad-interim order, an appeal is not maintainable either under Order XLI Rule 1 of the Code of Civil Procedure or under Section 10 of the Delhi High Court Act against an ex-parte ad-interim order. Order XXXIX Rule 3 read with Order XLIII Rule 1 of the Code of Civil Procedure shows that in fact no appeal lies against an order passed under Order XXXIX Rule 3 of the Code of Civil Procedure. It is also settled law as laid down by the Hon’ble Supreme Court in the case of Wander Ltd & Anr vs Antox India Pvt. Ltd.[1990 (4) TMI 280 - SUPREME COURT] that it will not be appropriate for the Appellate Court to substitute its own discretion differently from the discretion exercised by the Court of first jurisdiction.
As would be evident from the impugned order, the learned ADJ has clearly taken into consideration relevant factors for the purpose of grant of ex-parte ad-interim injunction. Further, there is no final adjudication on the subject matter of the suit which is at the very threshold. The learned ADJ is yet to hear the Appellants and dispose of the interim application.
Insofar as the other submissions of the Appellants on their defence and the documents placed with their written submissions are concerned, these issues were not placed before the learned ADJ. The appellants have rushed to this Court without exploring the option of filing their reply to the application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure and/ or application under Order XXXIX Rule 4 of the Code of Civil Procedure for modification of the ex-parte ad-interim order.
A reading of the impugned order suggests that the learned ADJ applied his mind to the facts of this case and satisfied himself that prima facie there was enough material to come to the conclusion for the purpose of granting an ex-parte ad-interim injunction, otherwise the entire purpose of filing the application would have been rendered infructuous. Being conscious of the provisions of Order XXXIX Rule 3A of the Code of Civil Procedure, the learned ADJ has fixed the next date of hearing as 26.03.2024 for deciding the application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure. I, thus, do not find any ground to interfere with the order impugned herein. Consequently, the appeal along with pending applications, stands dismissed.
However, in case of any kind of urgency, the parties are at liberty to approach the Court of learned ADJ for an early hearing. It is clarified that the appellants to comply with the directions of learned ADJ vide order dated 01.03.2024 within three days from today.
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2024 (3) TMI 749 - BOMBAY HIGH COURT
Disqualification of qualified bidder - disqualified on the ground that false information regarding ‘GST’ number was incorporated in the Tender submitted by the Petitioner - HELD THAT:- It is trite law that Tendering Authority has right to incorporate the conditions of Tender and also seek the compliance from the bidders. Pertinently, in present case condition no.11 mandates that Bidders must furnish GST numbers as well as the details of returns for financial year 2022-2023 certified by the Competent Authority. It is not the case of the Respondents that the petitioner has misrepresented or submitted false documents depicting that he is complaint of the condition no.11. The aforesaid fact was very well before the Tendering Authority since the Petitioner had not submitted the GST returns or the certificate of clearance. However, the Committee of 11 Class-1 officers, on scrutiny of the technical bids, declared the petitioner as qualified. Pertinently, one more bidder, who has not submitted GST returns, is also declared as qualified, although technical evaluation report takes special note of such non-compliance, disqualification was not ordered on that count.
The condition no.11 under the tender was waived by the Tendering Authority. Pertinently, there is a reason for such waiver. As can be seen from the notification issued by the Ministry of Finance, Government of India, (Department of Revenue) – Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or Local Authority or Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution has been exempted.
It is, therefore, evident that waiver of condition no.11 by the Tendering Authority was based on rational. Such waiver is neither a mistake of fact or accidental omission. This appears to be thoughtful decision to waive unessential tender condition - the Tendering Authority/Respondent no.3 has chosen not to insist condition no.11 since it was of little or no significance or it was classified as non-essential condition of eligibility being ancillary or subsidiary with main object to be achieved by the condition. It is well settled that Tendering Authority may deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases.
Once it is concluded that there was deliberate/thoughtful waiver of the condition no.11 by the Tendering Authority, by which the petitioner was declared as qualified, although he was not holding GST registration or clearance certificate, it is difficult to justify the subsequent order disqualifying petitioner relying upon the same condition - when the petitioner objected to such an action of respondent no.3 through his representation and later-on by filing present petition, a show cause notice appears to have been issued to him quoting non-compliance of the condition no.11 and, consequently, second impugned order of disqualification of the petitioner has been passed.
The Petitioner is qualified and entitled to participate in the further process of E-Tender floated under notice dated 13.7.2023 and entitled to be dealt with as the Lowest Bidder (L-1) - Petition allowed in part.
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2024 (3) TMI 586 - SUPREME COURT
Constitutional validity of Electoral Bond Scheme and the provisions of the Finance Act 2017 which amended the provisions of the Representation of People Act 1951 and the Income Tax Act 1961 - non-disclosure of information regarding the funding of political parties is violative of the right to information of citizens under Article 19(1)(a) of the Constitution or not - crux of the submission of the SBI is that the matching of information to ascertain who contributed to which political party is a time-consuming process since the information is maintained in two separate silos - HELD THAT:- The Miscellaneous Application filed by the SBI seeking an extension of time for the disclosure of details of the purchase and redemption of Electoral Bonds until 30 June 2024 is dismissed. SBI is directed to disclose the details by the close of business hours on 12 March 2024.
During the pendency of the proceedings before the Constitution Bench, ECI had, in compliance with the interim order passed by this Court, filed its statements which have been maintained in the custody of the Court. Copies of the statements which were filed by the ECI before this Court would be maintained in the Office of the ECI. ECI shall forthwith publish the details of the information which was supplied to this Court in pursuance of the interim orders on its official website.
The Miscellaneous Application for extension of time shall accordingly stand dismissed.
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2024 (3) TMI 585 - HIMACHAL PRADESH HIGH COURT
Legislative competence, the constitutional validity and the vires of the Himachal Pradesh Water Cess on Hydropower Generation Act, 2023 - Case of State is that Since water is a State’s subject matter and comes under entry 17 of List-II, therefore, the State has legislative competence to make law and hence there is no violation of article 265 of the Constitution of India.
Nature and event of taxation under the impugned Act - HELD THAT:- The power to tax is on generation of electricity and user of water is only incidental. The “user of water” is not being taxed and it is only the “user of water for generation of electricity”, who is being taxed. Therefore, it is a tax on generation of electricity. If it was the quantum of water used, then the height from which the water would fall as a measure to determine the rate of cess would be wholly irrelevant. It is evidently clear from the aforesaid notification dated 16.02.2023 that the quantification is not based on the use of water, but is based on the height from which the water falls. The “use of water” in fact does not go by the text of the impugned Act. It is “generation of electricity” that is the “bone” and “water drawn” is only the “flesh”. The taxable event is “hydropower generation” and not the “usage of water” because if there is no generation, then there is no “tax”. Moreover, if the cess was on “usage of water”, then how could the height, at which the water falls on the turbine, be made the taxable event?
It is settled principle of law that standard adopted as a measure of levy, although not determinative, is at least indicative of the nature of the tax. Weighed alongwith and in the light of other relevant circumstances, the method adopted by the legislature would be relevant in determining the character of the impost.
The impugned levy varies in quantum with the quantum of electricity generated but not the quantum of water drawn and, thus, makes it clear that its character or nature is such that it is inextricable with electricity generation. Thus, there are no hesitation to answer the point in favour of the petitioners by concluding that by the impugned Act cess is sought to be imposed on “generation of electricity” as against “water” and, therefore, it is a misnomer that tax is levied on “water” and not “generation of electricity”, and is, therefore, not a water tax - answered in favour of petitioners.
Pith and substance of the taxing legislation which assumes significance not to the question of bonafides or malafides but in examining the competence of the legislature - HELD THAT:- In determining whether an enactment is a legislation with respect to the given power, what is relevant is whether in its “pith and substance”, it is law upon the subject matter in question. Therefore, it is necessary here to subject the impugned Act to the test of “pith and substance” to ascertain its true intent and character, which is relevant in determining as to which list it would fall under and also to trace the State's competence to have promulgated the impugned Act arises. As per Article 265, no tax can be levied or collected except by authority of law.
Competence of the State to promulgate the impugned Act whether can be traced to Entry 49 of List-II to the Seventh Schedule of the Constitution as contended by the State - HELD THAT:- It is well settled that while the widest amplitude should be given to the language used in one entry, every attempt has to be made to harmonise its contents with those of other entries, so that the latter may not be rendered nugatory.
Competence to promulgate the impugned Act whether can be traced to Entry 50 of List-II as contended by the State - HELD THAT:- The State's competence to impose impugned levy cannot be traced to Entry 50 of List-II as contended by it. Activity of non-consumptive drawl of water for generation of hydropower, where the water drawn is allowed to flow back to its source, being a single inextricable event cannot be brought under the purview of taxing mineral rights - even Entry 50 of List-II cannot be held to countenance the States’ taxation on water drawl for generation of electricity.
Competence to promulgate whether can be traced to Entry 45 of List-II - HELD THAT:- The State's competence to promulgate the impugned Act cannot be traced to Entry 49 of List-II. Therefore, Rekchand's case [1997 (5) TMI 441 - SUPREME COURT] is not applicable in the present case and the State's competence cannot be traced to Entry 45 of List-II - in Rekchand case, the levy was imposed on drawl of flowing water by artificial contrivance for industrial purpose. The rates of such levy were specified under Resolution. It was on account of the definition of land under the Transfer of Property Act, 1882, which included right to water flowing therefrom, the said levy was sustained by the Hon'ble Supreme Court under Entry 45, List-II.
Competence to promulgate whether can be traced to Entries 17 & 18 read with 66 of List-II as a “tax” - HELD THAT:- The State has relied on Entries 17 & 18 of List-II to demonstrate its competence to have legislated the Impugned Act. In this regard, it is a settled principle of law that taxation entries are distinct from general regulatory entries. Entries 1 to 44 in List-II are regulatory, whereas Entries 45 to 63 are taxing entries. Therefore, the legislative competence to impose any tax on water drawn for hydropower generation cannot be imposed by the State by referring to Entries 17 & 18 of List-II being regulatory entry - considering the charging section, taxable event and nature of levying under the impugned Act as well as subjecting the impugned Act to the test of “pith and substance”, it is absolutely clear that the impugned Act imposes tax on generation of electricity and not merely on water as a subject or on drawl of water, which the State is not competent to do. It also imposes an inter-State tax on inter-State supply of electricity for which again the State is not competent to do so.
Competence to promulgate whether can be traced to Entries 17, 18 read with 66 of List II as a “fee - HELD THAT:- Once it is held that the cess sought to be imposed by the impugned Act is not on the “water drawn” but on the “generation of electricity”, then, it is the Central Government alone which could levy tax on generation electricity - Noticing that electricity is goods - the Hon’ble Supreme Court CST vs. M.P. Electricity Board [1968 (11) TMI 85 - SUPREME COURT] observed that levy of State duty on production of electricity is covered with the phrase “other goods manufactured” in Entry 84 of List I and this is within the exclusive jurisdiction of the Parliament. Consequently, it was declared that the State has competence to levy tax only on the sale and consumption of electricity - the Hon’ble Supreme Court held that the levy on generation of electricity is not within the legislative competence of the State - Point answered in favor of petitioner.
Without prejudice, the impugned Act is unconstitutional for it suffers from vice of excessive delegation - HELD THAT:- In the instant case, three essential components can be clearly identified within the impugned statute, which are taxable events, “the person liable to pay tax” and the “rate of tax”. However, the impugned legislation fails to identify the fourth and equally critical component i.e. measure of tax, which is the value on which the rate of tax will be applied for computing the tax liability - In exercise of powers vested under Section 15(2) of the impugned Act that the State Government issued a Notification dated 26.08.2023, whereby the tariff structure on water cess was fixed on the basis of “Head”. However, even the said notification failed to prescribe the measure of tax and instead proceeded to prescribe tariff rate without any indication or measure on which such tariff rate will be applied. Moreover, measure of tax being vague, based upon the “assessment” or water drawn, which would form the basis of the tax imposed is also vague and fraught with lack of adequate guidelines, as is evident from the combined reading of Section 12 with Section 17 of the impugned Legislation.
The preamble of the impugned Act merely states that it is an act to levy water cess on hydropower generation in the State of Himachal Pradesh, the Statement of Objects and reasons merely states that the objective of the impugned Act is revenue generation. Therefore, on account of having delegated power to fix rates of impugned levy to Government of Himachal Pradesh without any legislative policy or guidance, the impugned Act is unconstitutional - point is accordingly answered in favour of the petitioners.
Promissory Estoppel - HELD THAT:- The question of promissory estoppel has been rendered academic and, therefore, need not be answered.
To conclude, it was held as follows:
(i) The provisions of the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, are declared to be beyond the legislative competence of the State Government in terms of Articles 246 and 265 of the Constitution of India and, thus, ultra vires the Constitution.
(ii) Consequently, the Himachal Pradesh Water Cess on Hydropower Electricity Generation Rules 2023, are also quashed and set aside.
(iii) Sections 10 and 15 of the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, as have been made applicable to the existing projects, are also declared to be ultra vires the Constitution and are accordingly quashed and set aside.
(iv) The amount, if any, recovered by the respondents from the petitioners under the provisions of the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023 and the Rules framed thereunder are ordered to be refunded within four weeks from today.
(v) The letter/notice issued by the State Government/Himachal Pradesh State Commission for Water Cess on Hydropower Generation pursuant to the impugned Act, Rules, seeking recovery of water cess from the petitioners, are declared as illegal and are accordingly quashed and set aside.
The petition is allowed.
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2024 (3) TMI 584 - DELHI HIGH COURT
Seeking exemption from pre-litigation mediation, as required by Section 12-A of the Commercial Courts Act, 2015 - Proceedings u/s 138 of the Negotiable Instruments Act, 1881 - suit for recovery alongwith interest and future interest - HELD THAT:- The plaintiff’s case here is predicated only on the fact that it has already undertaken efforts to settle the disputes between parties. Appellant refers to in paragraph 3 of the application, wherein it is stated that the parties were also referred to mediation. However, I do not find this case to be supported by the documents annexed to the application. There is no report of any mediation centre stating that mediation has failed. The orders of the learned Judicial Magistrate, Chandigarh, annexed to the application, also demonstrate only that the parties submitted before the Court that there was chance of compromise, but the attempt was ultimately found to be futile.
In the present case, there is no record that an attempt has been made in mediation, and that no urgent relief is sought. Pre-litigation mediation was therefore mandatory.
The application is consequently dismissed, and the plaint is also rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908. The suit is accordingly dismissed.
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2024 (3) TMI 583 - CALCUTTA HIGH COURT
Arbitration agreement - Refusal to grant work order - L1 bidder in the tender process - forfeiture of the Earnest Money Deposit (EMD) - GST payable was @ 12% - Subsequently, by a notification of the Government, rate was enhanced from 12% to 18% - Wednesbury test - it is argued that if prayer of the petitioner, is allowed, would tantamount to a modification of the tender terms - since there was an acceptance on the part of the parties with regard to the tender conditions, the same has to be treated on the same footing as a contract.
HELD THAT:- In the facts of the present case, although the State takes a stand that the prayer of the petitioner would tantamount to rewriting the contract between the parities, it is not so in view of the Memorandum issued by the State itself on November 22, 2022. The said Memorandum, in no uncertain terms, provides for enhancement of GST by 6% from 12% to 18%, even in cases where work order has been issued. In cases where the tender is under process and there is clear indication of rate of GST @ 12%, the Memorandum provides for enhancement by 6% on account of GST. The acceptance order dated January 16, 2023 was issued subsequent to the November 22, 2022 Memorandum and, as such, was subject to the operation of the said Memorandum.
Since the petitioner had participated in the tender before the enhancement of GST from 12% to 18%, the provisions of the Memorandum dated November 22, 2022 were squarely applicable in the present case. Thus, the respondent authorities ought to have honoured the commitment of the State issued by way of a Memorandum dated November 22, 2022 by enhancing the GST from 12% to 18% and/or permit the petitioner to refurnish the quotations by incorporating such 6% enhancement, which was the precise request of the petitioner vide its communication dated April 17, 2023.
It is well-settled that State actions have to be scrutinized on a higher standard of fairness than the action of private employers.
Supreme Court in [2019 (3) TMI 600 - SUPREME COURT] categorically applied the Wednesbury test and opened up a window for judicial review even regarding the tender terms where there is arbitrariness, discrimination, unreasonableness and malice. The present instance is one where there is palpable arbitrariness and discrimination against the petitioner insofar as the respondents refused to apply the provision of the Memorandum dated November 22, 2022 to the petitioner, despite the petitioner coming under the purview of the same.
Hence, on the score of such arbitrariness and discrimination, the respondent authorities fail the Wednesbury test and, as such, their action is palpably unreasonable and discriminatory against the petitioner.
Since the expression of the petitioner’s interest to terminate the tender was obviously under State coercion and duress, the same cannot said to be an unqualified intention on the part of the petitioner or any admission on the part of the petitioner regarding termination of the tender or the work order envisaged thereunder. Hence, the said action of the petitioner cannot be held to be on such a high footing that the same would preclude the petitioner’s very challenge to the respondents’ action in not giving effect to the Memorandum dated November 22, 2022 in respect of the petitioner.
Thus, the respondents were duty-bound to permit the petitioner to enhance the GST rates by 6 per cent in terms of their own Memorandum dated November 22, 2022 read in conjunction with Notification No. 03/22-Central Tax (Rate) dated July 13, 2022 whereby the enhancement of GST rates took effect, coupled with WBGST Rate Notification No. 1393-FT dated August 23, 2022 whereby the State of West Bengal adopted the GST enhancement.
Thus, the impugned action of the respondents in refusing such request of the petitioner and consequential refusal to issue work order and forfeiture of the EMD cannot be sustained.
Thus, as a consequence of the setting aside of the refusal by the respondents to give the work order to the petitioner, all subsequent action taken by the State, including subsequent tender, if any issued, are hereby set aside.
The respondents shall issue work order to the petitioner by permitting the petitioner to incorporate the enhancement of 6% to the GST rates in its freshly quoted rates. Such fresh quotation shall be given by the petitioner to the respondent authorities within a week from date. Upon such rates being served on the respondent authorities, the respondent authorities shall issue the work order in terms thereof in favour of the petitioner pursuant to the tender-in-question. Alternatively, the respondent will be at liberty to refund the entire earnest money paid by the petitioner with interest @ of 10% till the date of such payment to the petitioner, in which case subsequent action taken by the State in issuing fresh tender shall be sustained.
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2024 (3) TMI 486 - JAMMU & KASHMIR AND LADAKH HIGH COURT
Dishonour of Cheque - civil nature dispute - main contention of the petitioners is that the transaction between them and respondent No. 2 was purely of civil nature as such, the respondents could not have given a criminal colour to it by registering the impugned FIR - whether in the face of aforesaid nature of dispute between the parties, it would be open to set the criminal proceedings into motion at the instance of one party to the dispute against the other and whether this Court in exercise of its jurisdiction under Section 482 Cr.P.C. can quash impugned proceedings?
HELD THAT:- This issue has been discussed and deliberated upon by the Supreme Court in the case of INDIAN OIL CORPORATION VERSUS NEPC INDIA LTD & ORS [2006 (7) TMI 575 - SUPREME COURT] has held that A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not.
From the foregoing enunciation of the law on the subject, it is clear that a commercial transaction or a contractual dispute apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. It is also clear that the scope of a civil proceeding is different from a criminal proceeding and the mere fact that the allegations relate to a commercial transaction or breach of contract for which a civil remedy is available, is not by itself a ground to quash the criminal proceedings.
In the present case, the petitioner-Mohd Afzal Beigh despite having the knowledge that he was not the owner of the property in question, represented to respondent No. 2 that he is owner of the property in question.
Whether the action of petitioner-Mohd. Afzal Beigh amounts to the offence of cheating? - HELD THAT:- The fraudulent intention on the part of petitioner Mohd Afzal Beigh was existing there from the very inception of the transaction between the parties. It is not a case where petitioner-Mohd Afzal Beigh was owner of the property and he had agreed to sell the said property to respondent No. 2 and for any reason, he could not execute the sale deed, but it is a case, where he falsely represented to respondent No. 2 that he is owner of the property in question, which he was not. So from the very beginning, he was knowing that it was not within his power and competence to execute the sale deed in respect of the land in question in favour of respondent No. 2, but despite this, he entered into agreement to sell with respondent No. 2 and made her to part with partial amount of sale consideration. Thus, offence under Section 420 IPC, which is a cognizable offence, is made out from the allegations made in the complaint and the material available on record.
Petitioner-Mohd Afzal Beigh has executed a number of affidavits declaring therein that he has received an amount of Rs. 1.80 crores from respondent No. 2, which he has been unable to repay to her. Subsequently cheques have also been issued by his wife petitioner- Fehmida Kouser in connection with repayment of the aforesaid amount but the cheques have been dishonoured, in respect of which separate proceedings are stated to be pending. There are allegations against the petitioners that after receiving the amount from respondent No. 2 they have diverted the funds and out of the said funds, petitioner-Abdul Rashid Beigh has constructed a building in his village. This prima facie goes on to show that the petitioners were having fraudulent intention while entering into transaction with respondent No. 2 and all the petitioners appear to be having a role in it.
The power under Section 482 Cr.P.C. to quash the criminal proceedings has to be exercised sparingly only in deserving cases in the circumstances illustrated in the aforesaid judgment. Even allegations of mala fides against the informant by itself is not a ground for quashing the criminal proceedings. The defence set up by the petitioners particularly the petitioners-Abdul Rashid and Fehmida Kouser can be looked into by the Investigating Agency during the investigation of the case and not by this Court in their proceedings by holding a mini trial. Having regard to the fact that allegations made in the impugned FIR disclose commission of cognizable offences, therefore, exercise of jurisdiction under Section 482 Cr.P.C. to quash the proceedings in the instant case would amount to stifling a legitimate prosecution, which is not permissible in law.
There are no merit in the instant petitions. The same are dismissed.
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2024 (3) TMI 443 - SC ORDER
Market fee/mandi shulk - Whether ghee is a product of livestock under the provisions of The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966? - whether the Government notification (G.O. Ms. No.286 dated 05.07.1994), which inter alia notifies ghee as one of the products of livestock for the purpose of regulation of purchase and sale of ghee in all notified market areas was published after due compliance of the procedure contemplated under the provisions of the Act?
HELD THAT:- The argument that “ghee” is not a product of livestock is baseless, and bereft of any logic. The contrary argument that “ghee” is indeed a product of livestock is logically sound. Livestock has been defined under Section 2(v) of the Act, where Cows and buffalos are the livestock. Undisputedly, “ghee” is a product of milk which is a product of the livestock.
The majority opinion of the Full Bench decision in Kommisetty Nammalwar [2009 (5) TMI 1021 - ANDHRA PRADESH HIGH COURT] while referring to the judgments of this Court in Park Leather Industry (P) Ltd. v. State of U.P. [2001 (2) TMI 893 - SUPREME COURT]]; Kishan Lal v. State of Rajasthan [1990 (3) TMI 323 - SUPREME COURT]; Ram Chandra Kailash Kumar v. State of U.P. [1980 (3) TMI 262 - SUPREME COURT] and Smt. Sita Devi (Dead) by LRs. v. State of Bihar & Ors. [1994 (11) TMI 439 - SUPREME COURT] held that all animal husbandry products would fall within the meaning of ‘products of livestock’ as defined under Section 2 (xv) of the Act. Further, the majority decision has also held that the inclusion of “ghee” as a livestock product cannot be faulted merely because it is derived from another dairy product. It was observed by the High Court that even though “ghee” is not directly obtained from milk, which is a product of livestock, it would still be a “product of a product of livestock”.
The second argument of the appellant that the procedure given under Section 3 of the Act has not been followed, is also not correct. There is a basic difference between the notification which has to be made under Section 3 of the Act and the notification which has to be made subsequently under Section 4 of the Act. What has to be done under Section 3 is a onetime measure where the Government notifies an area where purchase and sale of agricultural produce, livestock and products of livestock can be made. This is a one-time exercise - A perusal of Sections 3 and 4 of the Act clearly shows that whereas a draft notification is mandatory under Section 3 and so is the hearing of objections to the draft notification, there is no similar provision under Section 4 of the Act.
Market fee - HELD THAT:- Since the 1994 notification had an effect which made ‘Ghee’ a product that could be regulated under provisions of the Act, Market Committees were empowered to levy fee on the sale and purchase of ‘ghee’ as per section 12 of the Act. During the pendency of the matter before the High Court, the appellants were not required to pay market fee as they were granted interim protection by the High Court. After the majority decision of the High Court in Kommissetty Nammalwar [2009 (5) TMI 1021 - ANDHRA PRADESH HIGH COURT], market committees started issuing demand notices to the producers of ‘Ghee’ asking them to pay fees from the date of the notification in the year 1994 to the date of the High Court judgment i.e. 01.05.2009.
As per section 4(2) of the Act, the Market Committee has the duty to enforce the provisions of the Act within a notified area. Section 4(3), which empowers Market Committees to establish markets within the notified area, also directs that these Market Committees have to provide facilities in the markets for the purchase and sale of notified products. Appellants’ argument that these Market Committees did not provide any facilities has already been dealt with and rejected by the High Court and we are also of the same view as that taken by the High Court. The appellants have availed the facility given by the Market Committee and hence they are liable to pay the fee.
Appeal dismissed.
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2024 (3) TMI 442 - CALCUTTA HIGH COURT
Criminal breach of trust - loan and its repayment - dishonest intention or not - proceeding under Section 138 of the N.I. Act is pending - Parallel proceedings or not - HELD THAT:- In the present case, the dispute relates to a loan and its repayment. There is absolutely no material on record to prima facie show that the accused has dishonestly mis-appropriated or converted the property for his own use. There is a strong case of repayment in this case.
In respect of the present dispute even though a proceeding under Section 138 of the N.I. Act is pending, the present case under Sections 406/409/420/120B of IPC on the same dispute is maintainable as, though the facts may overlap but the ingredients of offences in the two proceedings are entirely different.
In the present case, admittedly there was a business transaction between the parties but there is no case against the petitioners that he dishonestly induced the complainant. There was neither any deceit nor any inducement to deceive the complainant. The transaction was admittedly for the benefit of both the parties. The fact of wrongful loss of one resulting in wrongful gain of another is not present in this case as loan has been admitted and the dispute relates to its repayment. Thus the ingredients required to constitute the offence under Section 420 IPC are clearly absent in the present case.
In the present case there is no materials to show that there was any existence of dishonest/fraudulent intention while making any initial promise that is from the beginning of formation of contract - The petitioners were repaying the loan as agreed, when they decided to the clear the dues prematurely.
In the Present case, there is no substance in the allegations and no material exists to prima facie make out the complicity of the petitioner in a cognizable offence as alleged. As such the proceedings in this case should be quashed by exercising this courts inherent powers for ends of justice and to prevent the abuse of process of the court.
Revision application allowed.
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2024 (3) TMI 441 - DELHI HIGH COURT
Dishonour of Cheque - application seeking summoning of the records/documents/books of accounts mentioned in the said application for purposes of cross-examination of the Authorised Representative of the respondent/complainant company dismissed - HELD THAT:- The present petition was first listed before this Court on 26.04.2022. This Court directed the petitioner to file a three page summary clearly identifying the documents of which the petitioner seeks summoning before the learned Trial Court, and referring to the relevance of the said documents within the context of the proceedings under Section 138 of the NI Act instituted by the respondent against the petitioner.
The petitioner is seeking the production of documents only with the intent of conducting a fishing and roving inquiry and to, in fact, embarrass the trial. Such attempt of the petitioner cannot be allowed to succeed. In any case, if the learned Trial Court is later of the opinion that these documents were relevant to be produced by the respondent for proving the case against the petitioner, the Court will draw an adverse inference of their non-production against the respondent. However, at this stage, this Court is of the opinion that the documents, production of which are sought for by the petitioner, are neither relevant nor necessary for a proper and fair adjudication of the Complaint filed by the respondent.
In KAILASH VERMA VERSUS PUNJAB STATE CIVIL SUPPLIES CORPN. [2005 (1) TMI 406 - SUPREME COURT], the Supreme Court has held the power under Section 482 of the Criminal Procedure Code has to be exercised sparingly and such power shall not be utilised as a substitute for second revision. Ordinarily, when a revision has been barred under Section 397(3) of the Code, the complainant or the accused cannot be allowed to take recourse to revision before the High Court under Section 397(1) of the Criminal Procedure Code as it is prohibited under Section 397(3) thereof. However, the High Court can entertain a petition under Section 482 of the Criminal Procedure Code when there is serious miscarriage of justice and abuse of the process of the court or when mandatory provisions of law are not complied with and when the High Court feels that the inherent jurisdiction is to be exercised to correct the mistake committed by the revisional court.
There are no merit in the present petition. The same is, accordingly, dismissed.
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2024 (3) TMI 399 - JAMMU AND KASHMIR AND LADAKH HIGH COURT
Dishonour of Cheque - acquittal of accused - evidence on record has not been properly appreciated by the learned trial court - appellant submits that the evidence produced by the respondent/accused before the trial court does not rebut the said presumption as the same is contradictory and un-reliable in nature - whether there was a compromise between the parties in pursuance whereof any payments were made by the respondent to the appellant? - HELD THAT:- The facts relating to issuance of cheques and dishonour of the cheques for insufficiency of funds are not in dispute, therefore, in terms of Section 139 of the NI Act, it has to be presumed that the appellant has received the cheques in discharge of whole or part of the debt or liability. However, the said presumption is rebuttable, as is clear from the provisions contained in Section 139 of the NI Act.
The Supreme Court has, in the case of RANGAPPA VERSUS SRI MOHAN [2010 (5) TMI 391 - SUPREME COURT] while discussing the legal position as regards the nature of presumption that arises under Section 139 of the NI Act and the standard of proof required to rebut such presumption, observed it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of ‘preponderance of probabilities’. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.
From a perusal of the afore-quoted observations of the Supreme Court, it is clear that once a presumption arises in terms of Section 139 of the NI Act on the basis of the facts proved on record, the person against whom presumption is drawn is not precluded from rebutting it and proving the contrary. It is also clear that the rebuttal does not have to be conclusively established but the person against whom the presumption has arisen, has to adduce such evidence in support of his defence that the Court may either believe the defence to exist or consider its existence to be reasonably probable. The standard of reasonability has to be that of a prudent person.
Adverting to the facts of the instant case, the respondent/accused while making his statement under Section 242 of the J&K Cr. P.C. has clearly stated that after issuance of the cheques in question, there was a compromise between the parties before SHO, Police Station, Chanderkote, DW-Diljit Singh as the appellant/complainant had held up his vehicle at Chanderkote. It is his defence that during the compromise an amount of Rs. 50,000/- was paid to the complainant and the balance amount was paid to him after withdrawing the same from the ATM after some days, but in spite of this, he did not return the cheques. In order to establish this defence, the respondent/accused has examined DW-Shafiq Ahmad and DW-Mohd Amin, who were working as Mates with the respondent. The statement of the then SHO, Police Station, Chanderkote, Diljit Singh has also been recorded.
The defence of respondent/accused that he had paid the cheque amount to the appellant, even before the same were presented for encashment, appears to be probable.
So far as the allegation regarding receipt of demand notice by respondent/accused is concerned, the same has never been put to him to seek an explanation from him at the time of recording his statement under Section 242 of J&K Cr.PC. The learned Magistrate did not explain the particulars of the fact relating to service of demand notice upon him while recording his statement under Section 242 of the J&K Cr. P.C., though it is an essential ingredient of offence under Section 138 of NI Act. The statement of the accused under Section 342 Cr.P.C. has not been recorded at all by the learned trial Magistrate on the ground that no such statement was required to be recorded in a summons trial case. Thus, even the evidence regarding service of demand notice has not been put to the accused for seeking his explanation.
The view taken by the learned trial Magistrate that there was no requirement of recording the statement of the accused under Section 342 Cr. P.C. is not in accordance with law. Thus, even in summons trial cases a criminal court is obliged to question the accused generally on the case after the witnesses of the prosecution have been examined.
It is a settled law that the incriminating circumstances, regarding which no explanation has been called from the accused, cannot be used against him while deciding veracity of the accusation against him. The evidence which has not been put to an accused has to be eschewed from consideration. Therefore, the evidence, as regards service of demand notice upon the respondent/accused having not been put to him, cannot be taken into consideration while deciding the veracity of the accusations against him.
If the drawer of the cheque pays a part of whole of the sum between the period the when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque. Therefore, unless the part payment is endorsed on the cheque as per the Section 56 of the NI Act, the complaint under Section 138 of NI Act would not be maintainable once part payment is made by the accused - even if the contention of the learned counsel for the appellant that payment of Rs. 2,10,000/- by the accused to the appellant is not sufficiently proved, still then in the absence of endorsement on the cheques regarding receipt of Rs. 40,000/-, the complaint could not have proceeded.
This Court is of the considered view that the accused/respondent has succeeded in probablizing his defence so as to rebut the presumption that had arisen in favour of the appellant/complainant. The view taken by the learned trial court is definitely a passible one, as such, this Court does not find any ground to interfere in the impugned judgment passed by said court - Appeal dismissed.
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2024 (3) TMI 398 - DELHI HIGH COURT
Dishonour of Cheque - Seeking setting aside of summoning order - vicarious liability on partner of a firm - requirements of Section 141 of the NI Act, satisfied or not, especially in view of the fact that in a previous complaint between the same parties, with respect to the same subject matter, the present petitioner was not named as an accused (as a person in-charge of conduct of day to day affairs of the accused partnership firm).
HELD THAT:- In the present case as noted hereinabove, the allegation with respect to the present petitioner is to the extent that she alongwith with other accused in the said complaint were partners of the partnership firm and “are responsible for the day to day affairs of the Accused No. 1 and are incharge and in control and management of the Accused No. 1”. A further reading of the complaint reflects that the subject matter of the same was a Development Agreement dated 16.03.2018 for developing a land owned by respondent no. 2. It is an admitted case that the said agreement has not been signed by the present petitioner. It is a matter of record that respondent no. 2, in the previous complaint filed on the basis of said Development Agreement did not implead the present petitioner as an accused.
The name of the petitioner is conspicuously not mentioned as an accused or a person responsible for the affairs of the said partnership firm. In the complaint that is the subject matter of the present petition, no averment has been made by respondent no. 2, to state that the petitioner, although not named in the previous complaint but on account of some subsequent development, came to know that she was incharge of affairs and also responsible for conduct of business of the accused partnership firm at the relevant time. In view of the fact that the previous complaint did not name the present petitioner, it was incumbent upon respondent no. 2 to place on record more particulars about the role of the present petitioner in the complaint.
The petitioner is admittedly a 65 years old lady and the accused partnership firm is a family concern. The reliance placed by respondent no. 2 on Income Tax Returns for the financial year 2015-16, filed under the signatures of the petitioner cannot bring her case within Section 141 of the NI Act. As held in SIBY THOMAS VERSUS M/S. SOMANY CERAMICS LTD. [2023 (10) TMI 487 - SUPREME COURT] it is be shown that the petitioner was responsible for the affairs of the partnership and in control of the same for the relevant transaction, .i.e., present cheques in question which are dated 27.07.2018 and 05.08.2018. Admittedly, the petitioner is not a signatory to the cheque. Apart from the above basic averment, nothing has been placed on record to show the petitioner’s involvement in the firm or with respect to the subject transaction.
The summoning order dated 25.07.2019, arising out of CC No. 344/2019, qua the petitioner, is hereby quashed - petition allowed.
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