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Indian Laws - Case Laws
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2025 (3) TMI 374
Dishonour of Cheque - prayer to transfer Criminal Case pending in the court of Judicial Magistrate Ist Class, Chandigarh (UT) to the court of Metropolitan Magistrate, Coimbatore, Tamil Nadu, essentially on the ground that no cause of action could be said to have arose for the bank to lodge the complaint for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - lack of territorial jurisdiction of the court in which the complaint is filed - exercise of powers under Section 406 of the Cr.P.C. to transfer the said complaint to the court having territorial jurisdiction to try the offence - expression “that for the ends of justice, this Court can transfer any criminal case or appeal to any place.” in Section 406 Cr.P.C. embraces in itself the lack of territorial jurisdiction of the court to try the offence under Section 138 N.I. Act.
HELD THAT: -This court in the case of Yogesh Upadhaya and Another v. Atlanta Limited [2023 (2) TMI 884 - SUPREME COURT] had the occasion to consider the plea for transfer filed under Section 406 Cr.P.C. in connection with six complaint cases filed under Section 138 and 142 of the N.I. Act respectively. While considering the plea for transfer, the court had the opportunity to consider Section 142(2) contained in the statute book along with Section 142-A.
Further, reliance placed on Dashrath Rupsingh Rathod v. State of Maharashtra, [2014 (8) TMI 417 - SUPREME COURT], wherein it was held that the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank is located, i.e., where the cheque is dishonoured upon presentation and not where the complainant’s bank is situated.
The Court after examining the Statement of Objects and Reasons in the N.I. Amendment Act, 2015, stated that the insertion of Sections 142(2) and 142-A in the N.I. Act was a direct consequence of the judgment in Dashrath Rupsingh Rathod [2014 (8) TMI 417 - SUPREME COURT]. Section 142(2) now makes it clear that the jurisdiction to try such an offence would vest only in the Court within whose jurisdiction the branch of the Bank where the cheque was delivered for collection, through the account of the payee or holder in due course, is situated. The newly inserted Section 142-A further clarifies this position by validating the transfer of pending cases to the Courts conferred with such jurisdiction after the amendment came into force.
The Court noted that the non obstante clause was already present in the original Section 142(1) and was not introduced by way of the amendments in the year 2015, along with Section 142(2). The non obstante clause merely has reference to the manner in which cognizance is to be taken in an offence under Section 138. The same must not be construed to mean that the power of this Court to transfer pending criminal proceedings under Section 406 CrPC stands abrogated thereby in respect of an offence under Section 138 of the NI Act.
A case is transferred by virtue of the powers under Section 406 if there is a reasonable apprehension on the part of a party to a case that justice will not be done. There, however, must be reliable material from which it can be inferred that there are impediments that are interfering or likely to interfere, either directly or indirectly, with the cause of justice.
A proceeding which is void under Section 461 cannot be saved by Section 462 - HELD THAT:- The focus of clause (l) of Section 461 18 is on the “offender” and not on the “offence”. If clause (l) had used the words “tries an offence” rather than the words “tries an offender”, the consequence might have been different - the jurisdiction of a criminal Court is normally relatable to the offence and in some cases, to the offender, such as cases where the offender is a juvenile (section 27) or where the victim is a women [the proviso to clause (a) of section 26]. But Section 461(l) focuses on the offender and not on the offence. The saving clause contained in Section 462 of the Code of 1973 is in pari materia with Section 531 of the Code of 1898.
The transfer of cases under Section 406 Cr.P.C. may be allowed when there is a reasonable apprehension backed by evidence that justice may not be done and mere convenience or inconvenience of the parties may not by itself be sufficient enough to pray for transfer. The court has to appropriately balance the grounds raised in the facts and circumstances of each case and exercise its discretion in a circumspect manner while ordering a transfer under Section 406.
In Maneka Sanjay Gandhi, it was held that as a general rule, it is the complainant who has the right to choose the forum that has jurisdiction over the subject matter and the courts do not interfere with such a right unless circumstances that hamper the ends of justice are brought to the notice of the court by the other party.
Section 142 of the N.I. Act in clear terms, provides the complainant with the right to lodge a complaint, before a court, within whose jurisdiction, the branch of the bank where the cheque is delivered for collection, is situated. Therefore, the argument of the accused that another court might also be empowered to take cognizance of the matter under Section 142, since the cause of action arose within that jurisdiction, cannot by itself be a ground for seeking transfer under Section 406 of the Cr.P.C.
A conjoint reading of Section 142(2)(a) along with the explanation thereof, makes the position emphatically clear that, when a cheque is delivered or issued to a person with liberty to present the cheque for collection at any branch of the bank where the payee or holder in due course, as the case may be, maintains the account then, the cheque shall be deemed to have been delivered or issued to the branch of the bank, in which, the payee or holder in due course, as the case may be, maintains the account, and the court of the place where such cheque was presented for collection, will have the jurisdiction to entertain the complaint alleging the commission of offence punishable under Section 138 of the N.I. Act. In that view of the position of law, the word ‘delivered’ used in Section 142(2)(a) of the N.I. Act has no significance. What is of significance is the expression ‘for collection through an account’. That is to say, delivery of the cheque takes place where the cheque was issued and presentation of the cheque will be through the account of the payee or holder in due course, and the said place is decisive to determine the question of jurisdiction.
For the purpose of transfer of any case or proceedings under Section 406 of the Cr.P.C., the case must fall within the ambit of the expression “expedient for the ends of justice”. Mere inconvenience or hardship that the accused may have to face in travelling from Coimbatore to Chandigarh would not fall within the expression “expedient for the ends of justice”. The case must fall within any of the five situations as narrated in para 49 of this judgment. It is always open for the petitioner accused to pray for exemption from personal appearance or request the Court that he may be permitted to join the proceedings online.
Conclusion - No case is made out for transfer of the proceedings in question under 406 CrPC.
Petition dismissed.
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2025 (3) TMI 373
Stay of penalty orders - whether the execution of penalty orders passed by the NCDRC can be stayed under the interim moratorium provisions of Section 96 of the IBC? - HELD THAT:- There is a fundamental distinction between civil and criminal proceedings concerning a debt moratorium. While civil proceedings are generally stayed under IBC provisions, criminal proceedings, including penalty enforcement, do not automatically fall within its ambit unless explicitly stated by law. The penalties imposed by the NCDRC are regulatory in nature and arise due to noncompliance with consumer protection laws. They are distinct from "debt recovery proceedings" under the IBC.
It is well settled that there exists a distinction between punitive actions and criminal proceedings. While a criminal proceeding is initiated by the State against an accused to determine guilt and impose penal consequences, punitive actions in the regulatory sphere, such as those imposed by the NCDRC, are meant to ensure compliance with the law and to act as a deterrent against future violations. Section 27 of the CP Act empowers consumer fora to impose penalties to ensure adherence to consumer protection norms. These penalties do not arise from any "debt" owed to a creditor but rather from the failure to comply with the remedial mechanisms established under consumer law. Unlike a criminal prosecution, which requires the establishment of mens rea, the penalties imposed by NCDRC are regulatory in nature and aim to protect the public interest rather than to punish criminal behaviour.
The moratorium under Section 96 of the IBC is intended to provide temporary relief to debtors by preventing certain proceedings against them during the resolution process. However, this protection is not absolute and does not extend to all categories of debts. The legislative intent behind the moratorium is to ensure that the debtor's assets are preserved for an efficient resolution process and to prevent creditors from taking unilateral actions that may frustrate the objective of insolvency proceedings. However, the statutory scheme of the IBC makes it clear that the protection under the moratorium does not cover all forms of liabilities, particularly those classified as "excluded debts" under Section 79(15) of the IBC.
In the present case, the damages awarded by the NCDRC arise from a consumer dispute, where the appellant has been held liable for deficiency in service. Such damages are not in the nature of ordinary contractual debts but rather serve to compensate the consumers for loss suffered and to deter unethical business practices. Courts and tribunals, including the NCDRC, exercise their statutory jurisdiction to award such damages, and these are distinct from purely financial debts that may be subject to restructuring under the IBC - Since such damages are covered under "excluded debts" as per Section 79(15) of the IBC, they do not get the benefit of the moratorium under Section 96 of the IBC, and their enforcement remains unaffected by the initiation of insolvency proceedings.
Judicial precedents support the view that statutory penalties and regulatory actions do not automatically fall within the ambit of an insolvency moratorium. In P. Mohanraj [2021 (3) TMI 94 - SUPREME COURT] this Court held that a moratorium under Section 14 of the IBC extends to proceedings under Section 138 of the NI Act. However, a distinction between debt recovery proceedings and punitive actions needs to be created, and therefore all criminal liabilities do not fall within the scope of the moratorium unless explicitly covered under the IBC. Consequently, penalties imposed by regulatory bodies in the public interest cannot be stayed merely because insolvency proceedings are ongoing.
Conclusion - The penalties imposed by the NCDRC are regulatory in nature and do not constitute "debt" under the IBC. The moratorium under Section 96 of the IBC does not extend to regulatory penalties imposed for non-compliance with consumer protection laws.
The appellant is directed to comply with the penalties imposed by the NCDRC within a period of eight weeks from the date of this judgment - Appeal dismissed.
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2025 (3) TMI 372
Right of Micro and Small Enterprises to supply 25% of goods and services to be procured by the Government and its instrumentalities under its Procurement Policy - legality of minimum turnover clauses prescribed in the Notice Inviting Tenders issued by the Government and its instrumentalities - rights and duties flowing out of Section 11 of the Micro, Small and Medium Enterprises Development Act, 2006, prescribing a Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012.
Right of Micro and Small Enterprises to supply 25% of goods and services to be procured by the Government and its instrumentalities under its Procurement Policy - HELD THAT:- The first statutory recognition of MSMEs, measures for their protection, promotion and grant of special benefits was through the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. The 1993 Act was repealed by the comprehensive and promising regime under the present Micro, Small and Medium Enterprises Development Act in 2006, which not only created different classes of enterprises under Section 7, but also established an Advisory Committee to advise the Central government regarding the classification of enterprises, a National Board for MSMEs under Section 3, the functions of which are provided in Sections 5 and 6, inter alia to deal with, “factors affecting the promotion and development of micro, small and medium enterprises and review the policies and programmes of the Central Government” and to “make recommendations on matters referred to it by the Central Government which are necessary or expedient for facilitating the promotion and development and enhancing the competitiveness of the micro, small and medium enterprises”.
Clause 3 of the policy sets annual goals of procurement from MSEs from the financial year 2012-13 itself. The object of the said clause is to achieve an overall procurement of a minimum of 25 percent of total annual purchases of products and services from MSEs within a period of 3 years. Sub-clause (3) clarifies that after a period of 3 years, commencing from 2015, the overall procurement goal “shall be made mandatory”. The consequence of non-compliance with the mandate is contemplated under sub-clause (4), where the ministries, departments and public sector undertakings that fail to meet the annual goal are obligated to justify with reasons and are made answerable to the Review Committee.
Having considered the provisions of the Act and the MSE Procurement Preference Policy, 2012, it is opined that there is no mandatory minimum procurement ‘right’ of an individual MSE. However, there is certainly a statutory foundation for the Procurement Preference Policy, 2012, having force of law as it ‘encapsulates a mandate and discloses a specific purpose’. Clause 3 of the policy mandating procurement of 25 per cent of supply from MSEs is simply the statutory duty of the bodies constituted under the Act and the Policy - It is, therefore, necessary to ensure that in the functioning of these bodies, there is efficiency in administration, expertise through composition, integrity through human resources, transparency and accountability, and response-ability through regular review, audits and assessments.
Shifting the focus of judicial review to functional capability of these bodies is not to be understood as an argument for alternative remedy, much less as a suggestion for judicial restraint. In fact, this shift is in recognition of an important feature of judicial review, which performs the vital role of institutionalizing authorities and bodies impressed with statutory duties, ensuring they function effectively and efficiently. The power of judicial review in matters concerning implementation of policy objectives should transcend the standard power of judicial review to issue writs to perform statutory duty and proceed to examine whether the duty bearers, the authorities and bodies constituted properly and also whether they are functioning effectively and efficiently. By ensuring institutional integrity institutional objectives are achieved. Further, effective and efficient performance of the institutes can reduce unnecessary litigation.
The Review Committee, specifically entrusted with this duty, should resolve this issue. Under sub-clause (2) of clause 12, the Review Committee is specifically entrusted with the twin duties of (i) reviewing the 358 items exclusively reserved for MSEs and (ii) considering the request of the ministries, departments and public sector undertakings for exemption from 25% on a case-to-case basis. The Review Committee also has the obligation to ‘‘monitor the achievements of the policy’’. As the Review Committee is entrusted with reviewing and monitoring the performance of the sector, we are of the opinion that this body, comprising domain experts, must examine this issue, take an appropriate decision and ensure its implementation.
The respondents, in particular the Review Committee constituted under clause 12 of the Procurement Preference Policy 2012 are directed to examine this issue of mandatory procurement of 25 per cent of goods and services by the Government, its departments and instrumentalities from the MSEs under clause 3 of the Policy and notify whether the said procurement would be independent of the 358 items reserved for procuring from MSEs and take such action as is necessary for compliance of the Procurement Order 2012 and upload its decisions for the purpose of clause 5 of the Policy. The necessary action shall be taken within 60 days from the order.
Is the prescription of mandatory minimum turnover clause in NITs violative of articles 14 and 19 of the Constitution, provisions of the MSMED Act and the Procurement Preference Policy, 2012? - HELD THAT:- The two most relevant criteria for framing suitable conditions in NIT relate to the ‘capacity’ and ‘capability’ of the bidder. In Association of Registration Plates v. Union of India, [2004 (11) TMI 600 - SUPREME COURT]; Krishnan Kakkanth v. Govt. of Kerala, [1996 (10) TMI 478 - SUPREME COURT], Ugar Sugar Works Ltd. v. Delhi Administration [2001 (3) TMI 1008 - SUPREME COURT]; M.R.F. Ltd. v. Inspector Kerala Govt., [1998 (11) TMI 674 - SUPREME COURT] this Court had an occasion to examine a tender clause which read, “The tenderers/bidders of the joint-venture partners together must have had a minimum annual turnover equivalent to INR 30 crores in the immediately preceding last year. At least 25% of this turnover must be from the licence plate business. Certificate confirming and the certification of this minimum 25% turnover being from licence plate business will have to be provided duly attested by a chartered accountant/any bank to be attached in support of fulfilment of this condition”.
The law as applicable for procurement through MSEs stands on a different footing. This is for the reason that there is a statutory prescription for notifying a procurement preference policy (Section 11), and in furtherance of such a statutory prescription, the Preference Policy 2012 has been notified mandating procurement of a minimum of 25 per cent from the Micro and Small enterprises. Although it is generally permissible for the government, and its instrumentalities to provide minimum turnover criteria wherever “public safety, health, critical security equipment, etc.”,26 are involved, it must be ensured that such prescriptions do not defeat the Procurement Order 2012 - The Procurement Order 2012 declares the procurement preference obligations of the State and therefore statutory and executive authorities are bound to implement the same. Minimum turnover clauses cannot undermine or override the Procurement Preference Policy 2012.
Apart from the earlier direction relating to mandatory procurement, we also direct the authorities under the Act, including the Review Committee and in particular the Grievance Cell, which is specifically entrusted with the obligation to redress “imposition of unreasonable conditions in tenders floated by Government Departments or agencies that put Micro and Small Enterprises at a disadvantage” to examine limits of minimum turnover clauses and issue necessary and appropriate policy guidelines.
Conclusion - i) The Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012 has force of law as it is formulated in exercise of power under Section 11 of the Act and also encapsulates the purpose and object of the Act. ii) Though there is no mandatory minimum procurement ‘right’ for an individual MSE there is certainly a statutorily recognized obligation on the authorities and the bodies under the Act and the Procurement Order 2012 to implement the mandate which is subject to judicial review. iii) The judicial review will primarily ensure proper constitution and effective functioning of the authorities the National Board for MSMEs, the Advisory Committee, the Facilitation Council, the Review Committee and the Grievance Cell and leave the policy and decision making to them. iv) The respondents, and in particular, the Review Committee constituted under clause 12 of the Procurement Preference Policy 2012 to examine the issue of mandatory procurement of 25 per cent of goods and services by the Government, and its instrumentalities from MSEs under clause 3 of the Policy in the context of clause 11 providing for reservation of specific items for procurement and take such action as is necessary for effective implementation of the Policy within a period of 60 days from the date of the order. v) The respondents, including the Review Committee and in particular the Grievance Cell, shall examine and declare limits of the minimum turnover clauses with respect to MSEs and issue appropriate policy guidelines within a period of 60 days from the date of our order.
Petition disposed off.
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2025 (3) TMI 371
Seeking grant of bail to the petitioner who had been in custody since December 2018, exceeding six years - HELD THAT:- Considering the facts and circumstances of the case and in particular that the petitioner, who was extradited in December, 2018, has been in custody since then, i.e. more than six years by now, and according to the learned senior counsel, appearing for the respondent-CBI, despite filing three charge-sheets and two supplementary charge-sheets, the investigation is still on going, as is also apparent from the counter affidavit, and the fact that the trial has not yet commenced, we are inclined to grant bail to the petitioner on such terms and conditions as may be determined by the Trial Court in connection with FIR/RC No.RC-217-2013-A0003 dated 12.03.2013.
The CBI will make appropriate request before the Trial Court for imposing necessary conditions before releasing the petitioner on bail.
SLP disposed off.
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2025 (3) TMI 370
Overriding provisions of nomination on provisions relating to succession - Amendments to Section 39 of the Insurance Act, 1938, specifically sub-sections (7) and (8), confer a "beneficial interest" to certain nominees, thereby excluding heirs from succeeding to the benefits of an insurance policy under personal law - HELD THAT:- The right of a nominee under Section 39 of the Act of 1938, vis-à-vis the right of an heir under the personal law, was considered in Smt. Sarbati Devi & Anr vs Smt. Usha Devi, [1983 (12) TMI 319 - SUPREME COURT] wherein the Apex Court has held that there is nothing in Section 39 of the Act of 1938 (before amendment) to hold that the provision overrides the law relating to succession.
The ratio in Smt. Sarbati Devi's case [1983 (12) TMI 319 - SUPREME COURT] is followed in various other cases where the provisions relating to nomination are interpreted to hold that such provisions do not override the law relating to succession.
It is required to be emphasised that the Apex Court and various Courts, despite the use of the expression “vest absolutely” or “Notwithstanding anything contained in any law for the time being in force” and “to the exclusion of all” in various provisions of law governing nominations have held that such provisions have to be understood in the background of the scheme of the Act in which the provisions relating to nomination are found. The contentions suggesting nomination overriding the provisions of law have been rejected, in various decisions.
Section 39(7) and (8) of the Act of 1938, seem to suggest a different category of succession not provided in personal law, (Hindu Succession Act) but running contrary to personal law. The provision meddling with the law of succession does not fit in the Scheme of the Act of 1938 which occupies a different field in the Seventh Schedule as compared to “Succession’’ which is found in a different List and Entry. In the light of the discussions made above, it is difficult to hold that the Parliament has enacted a parallel law relating to succession in so far as benefits flowing from the policy of insurance.
Under the unamended provision, the nominee had an obligation to distribute the benefits flowing from the policy to the legal heirs. Under Section 39(7), there is no such obligation as long as there is no claim by the legal heirs. In the absence of any claim by legal heirs, the title vests in beneficiary nominee. However, if there is a claim by the legal heir/s, then the nominee's claim has to yield to the personal law governing succession.
Coming to the facts of the case, the appellant who is the mother of late Ravi Somanakatti, the insured, is one of the Class-I heirs, along with widow and minor son of the insured. Since this Court has taken a view that the Section 39 of the Act of 1938 does not override the provisions of Hindu Succession Act, 1956, the appellant who is the nominee described in Section 39(7) of the Act of 1938 cannot claim absolute ownership over the benefits flowing from the insurance policy as other Class-I heirs of the deceased have also laid a claim over the benefits flowing from the policy - Though the Trial Court has not noticed the amended Section 39 and decreed the suit for partition by referring to un-amended Section 39, this Court is confirming the judgment and decree for the reasons already recorded.
Conclusion - i) The amended Section 39 is not intended to override the provisions of law relating to succession. ii) The expression 'beneficial interest' in Section 39(7) and 'beneficial title' in Section 39(8) should be interpreted to mean that such nominees or their legal representatives will get beneficial title over the benefits if the testamentary and non-testamentary heirs do not claim the benefits. iii) In the absence of any claim by legal heirs, the title vests in the beneficiary nominee. However, if there is a claim by the legal heir/s, then the nominee's claim has to yield to the personal law governing succession.
Appeal dismissed.
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2025 (3) TMI 325
Preventive detention under Section 3(1) of the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 - HELD THAT:- The orders of detention passed against Ashraf Hussain Choudhary and Adaliu Chawang cannot be sustained. The authorities concerned paid mere lip service to the mandatory requirements and mechanically went through the motions while dealing with the cases of these two individuals. The proposals submitted by the Investigating Officer noted the fact that both the detenus were arrested on 12.04.2024 and that they had not been released on bail. Reference was also made to their involvement in earlier cases.
In the case of Adaliu Chawang, the Investigating Officer stated that she was arrested in Meghalaya in connection with FIR dated 21.04.2021 but noted that she was not treated as absconding after being granted bail.
In the case of Ashraf Hussain Choudhary, the Investigating Officer stated that he was earlier arrested in connection with a case registered by Dimapur East PS in the year 2022, but noted that he was also not absconding in relation thereto after securing bail.
The Investigating Officer, however, did not state anything about either of the detenus seeking bail in relation to Narcotics PS Case No. 005/24, after being arrested on 12.04.2024. The covering letters dated 14.05.2024 and 17.05.2024 addressed by the Additional Director General of Police to the Special Secretary, Home Department, Government of Nagaland, reiterated the factum of both the detenus having been arrested on 12.04.2024 and their being in judicial custody on that date. He, however, went on to state that, if granted bail, there was a great chance of both of them continuing with illicit trafficking of narcotic drugs and psychotropic substances. There was no basis whatsoever for this ipse dixit statement, as it is an admitted fact that neither Ashraf Hussain Choudhary nor Adaliu Chawang had applied for bail at the time the detention orders were passed against them.
The material placed on record reflects that the detaining authority, viz., the Special Secretary, Home Department, Government of Nagaland, did not even make separate grounds of detention but merely acted upon the proposals for detention forwarded to her by the Additional Director General of Police (Administration), Nagaland. The cryptic orders of detention passed by her on 30.05.2024 merely recorded that she was satisfied, on careful examination of such proposals and other supporting documents, that sufficient grounds were made out for the detention of Ashraf Hussain Choudhary and Adaliu Chawang.
The Gauhati High Court erred in the application of settled legal norms while testing the validity of the impugned detention orders - Appeal allowed.
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2025 (3) TMI 256
Dishonour of Cheque - Security Cheque against renting / leasing of property - whether the appellant-accused is liable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) for the dishonour of four post-dated cheques issued to the respondent-complainant, and whether the amount of compensation awarded by the lower courts was justified? - HELD THAT:- It is evident from the record that the appellant-accused was prosecuted for the dishonour of four post-dated cheques totalling to an amount of Rs.9,00,000/- which were issued by him in favour of the respondent-complainant and on presentation, had been dishonoured with an endorsement ‘funds insufficient’. In regard to the dishonour of these four post-dated cheques, the respondentcomplainant instituted four separate complaints. The trial Court convicted the appellant-accused under Section 138 of the NI Act concluding that the specific plea taken by the appellant-accused that he had repaid a sum of Rs.5,00,000/- to the respondentcomplainant was not controverted by the respondent-complainant by way of any rejoinder or counter to the reply notice submitted by the appellant-accused - the trial Court while convicting the appellantaccused for the offence punishable under Section 138 of the NI Act confined the sentence of fine, to Rs.3,00,000/- with simple interest @ 6% per annum from the date of the cheques till realisation, to be paid by the appellant-accused to the respondent-complainant. From the said amount of Rs.3,00,000/-, a sum of Rs.5,000/- was directed to be forfeited to the State Exchequer towards defraying expenses. In default, the appellant-accused was directed to undergo simple imprisonment for a period of one year.
Despite the decree, the respondent-complainant failed to vacate the subject flat on which the appellant-accused, being the decree-holder, was compelled to institute execution proceedings. The Small Causes Court, Bengaluru after perusing the bailiff report which stated that the respondent-complainant(judgment debtor) had locked the subject flat, vide order dated 2nd January, 2020, directed police assistance to break open the locks in order to ensure that the decree is satisfied and possession of the subject flat is handed over to the appellant-accused(decree holder). In compliance of the aforesaid order, the locks were broken and possession of the subject flat was handed over to the appellant accused( decree holder) on 8th January, 2020.
The appellant-accused was definitely not liable to refund the entire security deposit amount of Rs.9,00,000/- covered by the post-dated cheques, to the respondent-complainant because he was entitled to deduct the amount of due rent and maintenance from the said amount. Hence, the respondent-complainant failed to lead evidence to conclusively establish that the entire amount under the post-dated cheques was a legally enforceable debt against the appellantaccused.
Conclusion - The appellant-accused was definitely not liable to refund the entire security deposit amount of Rs.9,00,000/- covered by the post-dated cheques, to the respondent-complainant because he was entitled to deduct the amount of due rent and maintenance from the said amount.
The impugned judgments, dated 6th March, 2018 passed by the appellate Court and dated 8th July, 2024 passed by the High Court are hereby, quashed and set aside. The judgment dated 9th November, 2016 rendered by the trial Court is restored - Appeal allowed in part.
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2025 (3) TMI 255
Dishonour of Cheque - seeking quashing of criminal proceedings initiated against the Appellant(s) under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 - vicarious liability of non-executive directors - HELD THAT:- This Court has consistently held that non-executive and independent director(s) cannot be held liable under Section 138 read with Section 141 of the NI Act unless specific allegations demonstrate their direct involvement in affairs of the company at the relevant time.
In Pooja Ravinder Devidasani v. State of Maharashtra & Anr., [2014 (12) TMI 1070 - SUPREME COURT], this Court while taking into consideration that a non-executive director plays a governance role, they are not involved in the daily operations or financial management of the company, held that to attract liability under Section 141 of the NI Act, the accused must have been actively in charge of the company’s business at the relevant time. Mere directorship does not create automatic liability under the Act. The law has consistently held that only those who are responsible for the dayto- day conduct of business can be held accountable.
There is no material on record to suggest that they were responsible for the issuance of the cheques in question. Their involvement in the company’s affairs was purely non-executive, confined to governance oversight, and did not extend to financial decisionmaking or operational management - The complaint lacks specific averments that establish a direct nexus between the Appellant(s) and the financial transactions in question or demonstrate their involvement in the company’s financial affairs.
Conclusion - Non-executive directors cannot be held liable under Section 138 read with Section 141 of the NI Act without specific allegations of their direct involvement in the company's affairs.
Appeal allowed.
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2025 (3) TMI 254
Dishonour of Cheque - appellant (director of company) is a signatory to the cheque or not - HELD THAT:- As the appellant is not a signatory to the cheque, he is not liable under Section 138 of the 1881 Act. As it is only the signatory to the cheque is liable under Section 138, unless the case is brought within the four corners of Section 141 of the 1881 Act, no other person can be held liable.
There are twin requirements under sub-Section (1) of Section 141 of the 1881 Act. In the complaint, it must be alleged that the person, who is sought to be held liable by virtue of vicarious liability, at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. A Director who is in charge of the company and a Director who was responsible to the company for the conduct of the business, are two different aspects. The requirement of law is that both the ingredients of sub-Section (1) of Section 141 of the 1881 Act must be incorporated in the complaint. Admittedly, there is no assertion in the complaints that the appellant, at the time of commission of the offence, was in charge of the business of the company. Therefore, on a plain reading of the complaints, the appellant cannot be prosecuted with the aid of sub-Section (1) of Section 141 of the 1881 Act.
Conclusion - The appellant, who was not a signatory to the cheque and did not meet the requirements under Section 141(1) of the 1881 Act, could not be held liable under Section 138.
Appeal allowed.
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2025 (3) TMI 253
Liability of defendant to pay the plaintiff with interest as prayed in the plaint - suit promissory note was supported by consideration or not - discharge of a lawfully owed debt payable under the suit promissory note or not - discharge of legal presumption or not - HELD THAT:- It is needless to state that as per Section 118(a) of the Negotiable Instruments Act, 1881 until the contrary is proved, it shall be presumed that every negotiable instrument was made or drawn for consideration. This presumption can be rebutted by the opposing party by way of evidence that the instrument was not issued for consideration effectively disproving the initial presumption. In other words, it is obligatory on the part of the court to raise the initial presumption in every case where the factual basis for the raising of the presumption has been established. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence.
In Kundan Lal Rallara v. The Custodian, Evacuee Property Bombay [1961 (3) TMI 100 - SUPREME COURT], the Hon'ble Supreme Court has held that the presumption of law under Section 118 of the Negotiable Instruments Act could be rebutted, in certain circumstances, by a presumption of fact raised under Section 114 of the Evidence Act.
Whether the execution of Ex.A.1-Promissory Note and Ex.A.2-Cheque have been proved to attract the legal presumption? - Whether the defendant has brought out circumstances to discharge such legal presumption? - HELD THAT:- Though it was stated by the plaintiff that Ex.A.1 Promissory Note was executed by the defendant on 09.09.2014 and Ex.A.2 Cheque dated 15.10.2016 was issued by the defendant in discharge of the legally owned debt under the promissory note, during cross examination, it was clearly admitted by the plaintiff that he was an Electrical Contractor for the defendant mill. P.W.2-P.K.Rajendran in his crossexamination stated that he was present at the time of borrowal of the suit loan by the defendant, but in the chief examination he never spoke about the execution of promissory note nor stated that Ex.A.1 was signed by the defendant in his presence. P.W.2’s evidence had proceeded as if he had signed as a witness on the promissory note.
The burden shifts to the plaintiff to establish the fact that consideration was passed on to the defendant under Ex.A.1 promissory note. The plaintiff has placed much reliance on Ex.A.10-Statement of Account from Axis Bank for the period between 01.08.2024 and 31.08.2024 and Ex.A.11- Statement of Account from Canara Bank for the period between 01.09.2014 to 26.09.2015 relating to Roja Textiles. According to him, from 01.08.2014 to 30.08.2014, he has sufficient funds in the account.
To show whether the plaintiff was running Roja Textiles or not, no material whatsoever was produced by the plaintiff. Even if it is assumed that the plaintiff was running that company, merely showing the income in the account of Roja Textiles would not by itself prove that the plaintiff had sufficient means at the relevant point in time, i.e., on the date of the Ex.A.1 promissory note dated 09.09.2014. Ex.A.10 and Ex.A.11 do not show any entry to prove that the amount had been withdrawn from his bank account to pay the consideration under the promissory note. Therefore, merely showing that some amount is lying in the bank account, by producing a bank statement, it cannot be said that the burden of establishing passing of consideration has been discharged. When the plaintiff was working as an electrical contractor in the defendant's mill and he was aware of the fact that the defendant's mill had been closed and was sold in the year 2013, still by reciting in the promissory note as if the mill was run by the defendant even in the year 2014 and getting a cheque in 2016 drawn by the company that was closed in the year 2013 is highly improbable. It goes against the normal prudence of an ordinary man.
It is further to be noted that though the promissory note was said to be executed on 09.09.2014, a suit was not filed immediately for recovery of money due on the promissory. On the contrary, pursuant to the so-called cheque (Ex.A.2), which was returned dishonored for the reason “account closed,” a notice was caused to the defendant, and thereafter, a private complaint under Section 200 of Cr.P.C. was filed against the defendant alleging an offence under Section 138 of the Negotiable Instruments Act, 1881, before the jurisdictional magistrate - The trial court has completely lost sight of all these aspects of the matter and erred in decreeing the suit of the plaintiff by granting the relief of recovery of money against the defendant.
Conclusion - The plaintiff failed to establish the passing of consideration and the execution of the promissory note and cheque. The defendant successfully rebutted the presumption of consideration and execution under the Negotiable Instruments Act.
The appeal suit is allowed.
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2025 (3) TMI 185
Rejection of application filed by the appellant herein, seeking leave to appeal against the judgment and order - acquittal of the offence punishable under Section 138 of the Negotiable Instruments Act - issuance of statutory notice - HELD THAT:- It is inclined to remand the matter to the High Court, it is not proposed to say anything further. However, all that we want to say at this stage is that the High Court while declining to grant leave, should have kept in mind Section 139 of the NI Act as well as Section 118 of the NI Act. The High Court should have tried to consider the case of the complainant applying the two provisions to the facts of the case, more particularly, having regard to the evidence on record oral as well as documentary. This aspect has not been touched even by the Trial Court and therefore, it was necessary for the High Court to look into it closely.
The impugned order passed by the High Court is set aside - Appeal disposed off.
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2025 (3) TMI 184
Interpretation of statute - Section 11 of the Arbitration and Conciliation Act, 1996 - Whether disputes between partners of a limited liability partnership (LLP) and the LLP can at all be covered by the arbitration agreement contained in a limited liability partnership agreement (LLP Agreement) to which the LLP is not a signatory? - HELD THAT:- Under Item 1 of the First Schedule the mutual rights and duties of the LLP and its partners, subject to the LLP Agreement, is governed by the provisions of the First Schedule. Item 14 of the First Schedule provides that all disputes among partners arising out of the LLP Agreement that cannot be resolved in terms of the LLP Agreement, shall be referred to arbitration under the Arbitration Act. This is another statutory indication that the subject matter of the LLP Agreement includes duties owed by partners to the LLP and also duties owed to the partners by the LLP. This would necessarily render the LLP a necessary party to the arbitration proceedings relating to the LLP’s operations and governance, despite the LLP not being a signatory to the LLP Agreement. Therefore, even if there had been no arbitration clause at all in the LLP Agreement, the First Schedule would lead to an arbitration agreement being in existence in the eyes of law, for disputes among the partners.
The dispute at hand relates to the expulsion of a partner from the LLP. Whether the Managing Partner alone was responsible for it and other partners acquiesced in or approved of that decision is a subject matter of merits of the dispute. Whether the expelled partner’s conduct warranted expulsion, is a question that would necessarily require examination of the injury, if any, occasioned to the LLP’s interests by such partner’s conduct for the drastic step of expulsion to be taken. Therefore, it would be simply impossible for this Court to reject this Application under Section 11.
The upshot of this contention is that the LLP is not a necessary party to the dispute. Even a plain reading of the invocation notice addressed to Kothari would show that it was issued to him in his capacity as the Managing Partner. Therefore, to read it as a personal dispute of Radia with Kothari in his individual capacity is a misconceived contention. This argument has to be stated to be rejected. The dispute inter alia relates to expulsion of Radia. The expulsion is from the LLP. The cause for expulsion would necessarily have to relate to the injury allegedly occasioned to the LLP and to its partners, by the alleged conduct of Radia that led to the expulsion.
Conclusion - The objections raised by the Respondents to allowing this Section 11 Application are totally devoid of merit. Despite the existence of an arbitration clause in the LLP Agreement and in Item 14 of the First Schedule, the contention that the LLP itself is extraneous to the very LLP Agreement governing the LLP, in my opinion, is untenable and frivolous. Such objections have been raised evidently to delay and frustrate the commencement of arbitration proceedings.
Applocation disposed off.
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2025 (3) TMI 183
Challenge to impugned order, rejecting the petition filed u/s 210 Cr.PC. - proceedings under Section 138 of the N.I. Act should be stayed or quashed - HELD THAT:- From the record it is seen that a petition for quashing was also filed by the petitioners praying for quashing of the CID (Assam) P.S. Case No. 03/2017 and accordingly the further proceeding was also stayed by this Court vide order dated 14.11.2018 and which was registered as Criminal Petition No. 828/2017 was subsequently allowed by quashing the CID Case No. 03/2017. During pendency of the CID case, the complaint case u/s 138 of the N.I. Act was filed alleging the dishonour of cheque amounting to Rs. 81 lacs. But, from the perusal of the records and the annexures filed along with the petition, it is seen that the subject matter of both the cases cannot be considered as same or similar one to pass any order to stay the proceedings by calling any police report in connection with CID P.S. Case No. 03/2017. In CID P.S. Case No. 03/2017 the allegation of misappropriation of money was amounting to Rs. 1,36,97,352/- whereas the Criminal Case No. 3204/2017 is only in connection with the dishonour of cheque amounting to Rs. 81 lacs which is alleged to have been issued by the present petitioners.
From the entire facts and circumstances of the case, it is seen that the subject matter of both the proceedings cannot be considered as same or similar to stay the proceedings of the criminal complaint case. More so, it is also seen that the CID (Assam) Case No. 03/2017 has already been quashed by this Court and hence the question of stay of the present proceeding also does not arise at this stage.
Further, the alternative prayer of the petitioners to convert the prayer of the present case for setting aside and quashing of the entire criminal proceeding also cannot be entertained at present for quashing of the entire case by invoking power u/s 482 Cr.PC.
Conclusion - The learned Trial Court below committed no irregularity or mistake by passing the order dated 12.10.2018 by rejecting the prayer of the petitioners filed u/s 210 Cr.PC and hence there is no reason for setting aside and quashing the said order by invoking the power u/s 482 Cr.PC and hence this Court is of the opinion that there is no need of any interference in the order passed by the learned JMFC dated 12.10.2018 in C.R. Case No. 3204 of 2017.
Petition dismissed.
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2025 (3) TMI 182
Dishonour of Cheque - vicarious liability of directors - it is alleged that Trial Court has mechanically passed the summoning orders without appreciating that the petitioners were not involved in the day-to-day affairs of the accused company - violation of principles of natural justice - HELD THAT:- It is well settled that under Section 138/ 141 of NI Act, the complainant is to make the particular averment in the complaint, to the effect that the accused person was the director of the accused company at the relevant time and is responsible for its day-to-day affairs, and therefore is vicariously liable for the offence. Thereafter, the onus of proving that at the relevant time, the accused persons were not the directors of the accused company and were not responsible for its day-to-day affairs, lies upon the accused persons and the same is matter of trial.
It must be borne in mind that Section 141 of the NI Act is a penal provision that creates vicarious liability for the accused. The petitioners have been implicated on the premise that they were responsible for the day-to-day affairs of the company. It is also settled that every person, regardless of whether they are in charge of the company during each series of act necessary to constitute the offence under Section 138 read with Section 141 of the NI Act or not, could be proceeded against if they are in charge of the affairs of the company even during one of the omissions’ that is necessary to constitute an offence under Section 138 read with Section 141 of the NI Act.
The Court can exercise its jurisdiction only upon unimpeachable and uncontroverted evidence being placed on record, however, in the absence of such evidence, the fact whether the accused person is responsible for the affairs of the accused company becomes a factual dispute, which is to be seen during trial - In a situation where the accused moves the Court for quashing even before the trial has commenced, the Court’s approach should be careful not to prematurely extinguish the case by disregarding the legal presumption supporting the complaint.
The factual issues that serve as defences in the case are not appropriate for determination under the powers conferred by Section 482 of the CrPC at this stage. It is well-established that this Court should refrain from expressing any views on disputed questions of fact in proceedings under Section 482 of the CrPC, as doing so could pre-empt the findings of the trial court.
Conclusion - Considering the contradicting material on record, the documents adduced by the petitioners cannot be said to be of such sterling and unimpeachable quality that it merits the quashing of the summons and consequential proceedings thereof. It cannot be said that the petitioners are not responsible for the functioning of the accused company or that the complaint is bereft of the requisite ingredients so as to proceed against the petitioners.
This Court finds no reason to interfere with the impugned orders - petition dismissed.
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2025 (3) TMI 181
Dishonour of Cheque - invocation of jurisdiction of this Court under Section 482 Cr.P.C - application for sending the alleged cheque to handwriting expert for determination of the age of the contents and the signature has been turned down - HELD THAT:- The petitioner has indeed not disputed his signature contained in the cheque. Therefore, the trial court has rightly rejected the prayer for sending the cheque and other exhibits to handwriting experts. The trial court has also taken into consideration the delayed motion of the petitioner to send the exhibits to the handwriting experts. Although the judgments in subject cited by both the parties at the Bar are conflicting views on the subject but the fact remains that under the statutory command every case under Section 138 of the N.I. Act needs to be concluded within a stipulated time framed as prescribed under Section 143 of the N.I. Act.
In the instant case, the complaint was filed on 24.02.2020 and about five years have gone by. However, the matter is still pending for conclusion of the trial. In that scenario, the trial court’s order rejecting the application of the petitioner appears to be unquestionable. At the same time, right of an accused to defend in the criminal case is indefeasible. In the case of present nature when presumption is operating against the petitioner, which is rebuttable in nature, the right of the petitioner-accused to lead evidence in his rebuttal is also inalienable right. Therefore, the petitioner being accused has right to adduce all evidence under his command to disprove the case of the complainant-opposite party.
The petitioner should get at least an opportunity to lead his evidence in rebuttal. Therefore, it is open for the petitioneraccused to obtain report from a private handwriting expert and place it on record, if so advised. It is also open for the petitioner to lead any other evidence to prove his case on his defence, but that should not be at the cost of delaying the proceeding inordinately.
Conclusion - The petitioner is allwoed an opportunity to present defense evidence, including expert reports, to rebut the complainant's case.
The CRLMC is disposed of.
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2025 (3) TMI 180
Dishonour of cheque - insufficient funds - discharge of legal liability or not - plaintiff proved the transaction led to execution of Ext.A1, so as to get the suit amount, as claimed or not - trial court went wrong in holding that the plaintiff proved Ext.A1 and the defendant’s case is contrary, to be acted upon - HELD THAT:- On reappreciation of the available evidence, the case of the plaintiff as to borrowing of Rs.3,00,000/- during the month of January, 2005, by the defendant and consequential issuance of Ext.A1 cheque dated 31.05.2005, were proved by the evidence of PW1, since the substantive evidence given by PW1 in this regard was not shaken. The defendant, in fact, had inconsistent contentions. That is to say, before filing the written statement, when Exts.A6 and A8 notices were issued, the case of the defendant was that the plaintiff was attempting to misuse the blank signed papers and blank signed cheques of the defendant, stolen away by Sri.Vijayakumar. But, thereafter in the the written statement even the signature in the cheque was also denied.
It is the well settled law that, when a fact is disputed, the evidence to prove the same is substantive evidence, though corroborative evidence also can be adduced to support the substantive evidence. Indubitably, corroborative evidence will not stand unless there is no substantive evidence. In the instant case, the substantive evidence as that of the plaintiff in the matter of transaction, which led to execution of Ext.A1 cheque was not shaken during cross-examination. Therefore, presumptions under Section 118 (a) to (g) of the NI Act is to be adjudged in favour of the plaintiff. The inconsistent case put up by the defendant is not supported by even remote piece of evidence and therefore the said case not at all established, inturn the presumptions in favour of the plaintiff not rebutted. In such view of the matter, the trial court rightly granted decree. In fact, the said verdict does not require any interference.
In view of the above, remand cannot be made merely for the purpose of enabling a party to fill up the lacuna in the evidence. Accordingly, the remand plea at the instance of the learned counsel for the defendant also is liable to fail.
Conclusion - The presumption under Section 118 of the NI Act in favor of the holder of a negotiable instrument and the necessity for defendants to provide credible evidence to rebut such presumptions.
The appeal stands dismissed and the verdict under challenge stands confirmed. Considering the nature of the case, there is no reason to disallow the cost of this proceedings to the plaintiff/respondent.
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2025 (3) TMI 179
Maintainability of petition - availability of alternative remdy of appeal - jurisdiction of RERA - non-compliance with certain provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA Act) - HELD THAT:- There is a bestowment of a statutory right in any aggrieved person to file a complaint with the authority or before the adjudicating officer, thus relating to any violations or contraventions qua any provisions of the Act or of the rules and regulations made thereunder, and, the said statutory endowment is stated therein to be ably raisable against any promoter, allottee or Real Estate Agent, as the case may be. Resultantly, therebys, the issue relating to the exercising of able jurisdiction, upon, the apposite complaint rather becomes more pointedly underpinned, on the supra provisions relating to the adjudicatory capacity of the RERA, than visa-vis respective omissions being made to either sub-Section 1 to Section 3 of RERA Act or to the second proviso to sub-Section 1 of Section 3 of RERA Act.
The vesting of jurisdictional competence, in the RERA authority, is pinpointedly grooved upon the bestowment of a remedy to the aggrieved, thus through the statutory mandate enclosed in Section 31 of RERA Act, than upon, the necessity of compliances being made by the promoter, vis-a-vis the mandate which occurs in sub-Section 1 of the Section 3 of RERA Act. Moreover therebys wants if any of compliances rather even by the competent authority, vis-à-vis, the mandate enclosed in the second proviso to sub-Section 1 of Section 3 of RERA Act, thus is not the apposite statutory precursor rather for vesting the competent adjudicatory jurisdiction in the RERA Authorities.
Since the gamut of the apposite jurisdictional provisions, relating to the conferment of competent adjudicatory jurisdiction, upon the RERA vis-a-vis the instant controversy, when but also naturally covers promoter(s), who irrefutably also is the present petitioner, as he has evidently in terms of the definition of ‘promoter’, offered through Annexure P-3 rather the subject project for sale to the prospective buyers. Resultantly, when on makings of plain and literal interpretation of the supra provisions, but manifests that therebys the competent adjudicatory jurisdiction vis-a-vis complaints, as received from any ill act of even a promoter, as the present petitioner, thus is, hence becomes conferred upon the RERA authorities.
Conclusion - i) The writ petition was not maintainable due to the availability of an alternative appellate remedy under the RERA Act. ii) The jurisdiction of the RERA Authority to adjudicate complaints, even in the absence of project registration under Section 3, confirmed. iii) The non-registration of the project did not invalidate the RERA Authority's jurisdiction or render its actions coram non judice.
Petition dismissed.
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2025 (3) TMI 115
Calculation of limitation in filing a complaint case under the Consumer Protection Act, 2019 - six months are required to be counted from the date of the indemnity cum undertaking, i.e. 10th January 2015 or not - HELD THAT:- The initial cause of action indeed arose in July 2015 after the six-month period expired, however, the Court cannot be amiss to the fact that the parties had been pursuing the matter with the respondent by way of letters, meetings, and even with the escrow agent, who, in turn, did his own back and forth with the owner, before finally releasing the flats in escrow in favour of the appellants. Further, as can be seen from the reliefs extracted supra, what has been claimed is the security of the title they received upon the respondent's default. The complaint case has not been filed seeking the flats in escrow for which the cause of action did arise on 10th July 2015, and hence the same limitation cannot be applied to a subsequent situation, which is that the appellants already have the flats with them. They only seek that the same be registered in their name and not alienated to any third party henceforth.
The NCDRC have committed an error on the face of record. Finding the view taken by it to be ex-facie erroneous, the impugned order set aside with particulars mentioned in paragraph 1 of this order. The complaint filed by the appellant is within time.
Appeal disposed off.
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2025 (3) TMI 114
Ownership and possession of suit property - right, title, or interest in the subject matter of the agency of holder of the General Power of Attorney (GPA) along with an Agreement to Sell, to execute the registered sale deed - legality of registered sale deed.
Relationship between the Executant and Holder of General Power of Attorney - HELD THAT:- A power of attorney derives its basic principles from Chapter X of the Contract Act which provides for "Agency" along with Sections 1A and 2 respectively of the Powers of Attorney Act, 1882. Agency is a fiduciary relationship between two persons, where one explicitly or implicitly agrees that the other will act on their behalf to influence their legal relations with third parties, and the other similarly agrees to act in this capacity or does so based on an agreement. The relationship between the executant of a general power of attorney and the holder of the power is one of principal and agent. A principal is bound by the acts done by an agent or the contracts made by him on behalf of the principal. Likewise, power of attorney in the nature of contract of agency authorizes the holder to do acts specified by the executant, or represent the executant in dealings with third persons.
In the case of Syed Abdul Khader v. Rami Reddy & Ors., [1978 (11) TMI 158 - SUPREME COURT], this Court held that the relation between the donor of the power and the donee of the power is one of the principal and agent having its genesis in a contract. It further observed that the term "agency" refers to the relationship in which one person has the authority or ability to establish legal relations between a principal and third parties. This relationship arises when a person, known as the agent, has the authority to act on behalf of another, called the principal, and agrees to do so.
In State of Rajasthan v. Basant Nahata, [2005 (9) TMI 620 - SUPREME COURT], while dealing with the challenge to the constitutional validity of Section 22A of the Registration Act, it was held that a deed of power of attorney is a document of convenience empowering the agent to act for the principal or manage the affairs of the principal.
From the above exposition of law, it is settled that power of attorney is a creation of an agency by which the grantor/donor/executant authorizes the grantee/donee/holder/attorney to do the acts specified on his behalf, which will be binding on the executant as if the acts were done by him - In the present case, the original owner, executant of the POA, holds the position of a principal. Whereas, the holder of the POA is an agent. There is no gainsaying in the fact that the original owner by executing the POA dated 04.04.1986 in favour of the holder entered into a principal-agent relationship with each other.
Independent Reading of the General Power of Attorney and the Agreement to Sell - 'Interest' in Power of Attorney - HELD THAT:- In the present case, it is evident from para 1 of the GPA executed by the original owner in favor of the holder that the POA was to look after, maintain, manage the Scheduled Property. Para 2 states that the attorney can enter into any agreement with any person with respect to the Scheduled Property for any amount, receive advance amount, to execute deeds in favor of such persons, issue proper discharge - Lastly, para 8 states that the attorney is generally entitled to do all acts required in respect of the Suit Property which are not specifically mentioned and that the GPA is irrevocable.
Nature of Power of Attorney - HELD THAT:- The import of the word "general" in a POA refers to the power granted concerning the subject matter. The test to determine the nature of POA is the subject matter for which it has been executed. The nomenclature of the POA does not determine its nature. Even a POA termed as a 'general power of attorney' may confer powers that are special in relation to the subject matter. Likewise, a 'special power of attorney' may confer powers that are general in nature concerning the subject matter. The essence lies in the power and not in the subject-matter.
A three-Judge Bench of this Court settled the rules of interpretation applicable to power of attorney in Timblo Irmaos Ltd., Margo v. Jorge Anibal Matos Sequeira, [1976 (12) TMI 193 - SUPREME COURT]. It was held that words used in a POA must be interpreted in the context of the whole; the purpose of the powers conferred must then be examined through the circumstances in which it was executed; and finally, necessary powers must be implied.
Further, a mere use of the word 'irrevocable' in a POA does not make the POA irrevocable. If the POA is not coupled with interest, no extraneous expression can make it irrevocable. At the same time, even if there is no expression to the effect that the POA is irrevocable but the reading of the document indicates that it is a POA coupled with interest, it would be irrevocable.
Applying the above exposition of law in the facts of the present case, it is evident from the tenor of POA that is not irrevocable as it was not executed to effectuate security or to secure interest of the agent. The holder of POA could not be said to have an interest in the subject-matter of the agency and mere use of the word 'irrevocable' in a POA would not make the POA irrevocable. The High Court was right in holding that the holder did not have any interest in the POA. When the High Court observes that the power of attorney does not explicitly state the reason for its execution, it implies that its nature is general rather than special.
From the independent reading of the POA and the agreement to sell, the submissions of the appellants fail on two grounds, first, the POA is general in nature and does not secure agent's right in the subject-matter of the agency, and secondly, an agreement to sell simpliciter does not confer ownership in the immovable property so as to transfer a better title to anyone else.
Combined Reading of the General Power of Attorney and the Agreement to Sell - HELD THAT:- Section 17(1)(b) prescribes that any document which purports or intends to create, declare, assign, limit or extinguish any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property is compulsorily registerable. Whereas, Section 49 prescribes that the documents which are required to be registered under Section 17 will not affect any immovable property unless it has been registered - Even from the combined reading of the POA and the agreement to sell, the submission of the appellants fails as combined reading of the two documents would mean that by executing the POA along with agreement to sell, the holder had an interest in the immovable property. If interest had been transferred by way of a written document, it had to be compulsorily registered as per Section 17(1)(b) of the Registration Act. The law recognizes two modes of transfer by sale, first, through a registered instrument, and second, by delivery of property if its value is less than Rs. 100/-.
The High Court rightly held that even though the GPA and the agreement to sell were contemporaneous documents executed by the original owner in favour of the holder, this alone cannot be a factor to reach the conclusion that she had an interest in the POA - even though the GPA and the agreement to sell were contemporaneous documents executed by the original owner in favour of the same beneficiary, this cannot be the sole factor to conclude that she had an interest in the subject-matter. Even if such an argument were to persuade this Court, the document must have been registered as per Section 17(1)(b) of the Registration Act. In the absence of such registration, it would not be open for the holder of the POA to content that she had a valid right, title and interest in the immovable property to execute the registered sale deed in favour of appellant no. 2.
Effect of Suit for Injunction simpliciter - HELD THAT:- Where the question of title is "directly and substantially" in issue in a suit for injunction, and where a finding on an issue of title is necessary for granting the injunction, with a specific issue on title raised and framed, a specific prayer for a declaration of title is not necessary. As a result, a second suit would be barred when facts regarding title have been pleaded and decided by the Trial Court. In the present suit, the findings on possession rest solely on the findings on title. The Trial Court framed a categorical issue on the ownership of the appellants herein. To summarize, where a finding on title is necessary for granting an injunction and has been substantially dealt with by the Trial Court in a suit for injunction, a direct and specific prayer for a declaration of title is not a necessity.
Conclusion - The GPA and the agreement to sell were contemporaneous documents executed by the original owner in favor of the holder, but this alone cannot be a factor to conclude that she had an interest in the POA. Even if such an argument were to persuade the Court, the document must have been registered as per Section 17(1)(b) of the Registration Act. The practice of transferring an immovable property via a GPA and agreement to sell has been discouraged.
It is concluded that no error not to speak of any error of law could be said to have been committed by the High Court in passing the impugned judgment - appeal dismissed.
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2025 (3) TMI 113
Jurisdiction of the Civil Court in entertaining the suit having barred either expressly or by necessary implication - challenge to ex parte ad interim order of injunction passed by the Trial Court at the behest of the defendant/respondent who neither appeared in the said suit at the time of passing impugned order nor filed the pleading raising such issue - HELD THAT:- The question often arises when the regulatory authority is not empowered to execute its order or direction as a decree of a Civil Court whether it can exercise such power vested upon the Appellate Tribunal under the said Act. It is no longer res integra that the authority exercises the powers and assumes jurisdiction on the basis of a statute enacted in this regard and cannot travel beyond the peripheral thereof. The moment the legislatures consciously did not incorporate specific provision conferring the power and the jurisdiction in such manner, the regulatory authority cannot assume such jurisdiction.
The exclusion of the jurisdiction of a Civil Court should not be inferred readily except when it is so excluded explicitly or by necessary implication and/or the statute in question provides adequate and satisfactory alternative remedy to a party; in other words, the ouster of Civil Court can only be assumed if the authority under the statute can exercise all powers vested upon the Civil Court. In the event the statute provides that the authority is vested with the power not only to adjudicate the dispute which is capable to be adjudicated by the Civil Court but also to execute the same in the manner as is done by the Civil Court, the exclusion can be inferred by necessary implication in absence of any express provision.
Inspiration in this regard can be drawn from a Division Bench judgment of this Court in case of Mandira Mookerjee vs. District Consumer Disputes Redressal Forum & Ors., [2004 (12) TMI 737 - CALCUTTA HIGH COURT] where an identical issue arose whether the Consumer Forum is competent to pass an order for specific performance of an agreement for sale of an immovable property. It is held that under the Specific Relief Act which recognises the right of the specific performance of a contract available to a party agreed but it does not contain any express provision that it can only be done by the Civil Court and not otherwise. The reference was made to a hypothetical situation where the parties under an agreement agreed to resolve the dispute through private fora i.e. arbitration and the arbitrator was empowered to pass an order for specific performance.
Section 79 of the Act has to be interpreted in such a manner and the moment the jurisdiction of the Civil Court is ousted, it cannot pass any order be it in a form of ex parte, interim or temporary injunction. The Apex Court in Hasham Abbas Sayyad vs. Usman Abbas Sayyad & Ors., [2006 (12) TMI 491 - SUPREME COURT] held that any order passed by an authority lacking the inherent jurisdiction would be regarded as nullity.
Conclusion - RERA Act being a complete Code providing the exhaustive mechanism not only for the adjudication of the disputes, adherence of an obligation of the respective parties but also to execute the same as if it is a decree passed by the Civil Court. It thus excludes the jurisdiction of the Civil Court.
Appeal allowed.
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