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Indian Laws - Case Laws
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2025 (3) TMI 112
Entitlement to restoration of the subject property - petitioner has not made a pre-deposit in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- The petitioner does not dispute that the property was mortgaged by the father on 13th April, 2012. The petitioner also does not dispute that the medical document alleging her father’s mental illness or incapacity is dated 22nd August, 2015, i.e., post the creation of the mortgage. This submission alongwith the contention that her share in the said property cannot be put to auction by the bank are all disputed questions of facts which can only be adjudicated by DRT or DRAT. It is apparent from the submissions that the petitioner has stepped into the shoes of the borrower as she is claiming her rights upon the mortgaged property. It is also clear that the respondent no.1/bank has the first charge on the said mortgage property.
It is apparent that the petitioner has to comply with the statutory requirement of making a pre-deposit in terms of Section 18 of the SARFAESI Act. No application seeking waiver of the pre-deposit was filed before the DRAT. In the present petition, there is no averment as to why pre-deposit has not been made by the petitioner. It is trite that pre deposit is mandatory in the absence whereof, the DRAT may not be able to entertain an appeal filed by a party.
Petition dismissed.
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2025 (3) TMI 60
Interest on Refund of the stamp duty paid on a lost e-stamp paper - whether the court should fold its hands and deny relief to a person, who has lost the e-stamp paper, only because the draftsman has omitted the use of such expression explicitly in the Statute? - HELD THAT:- When a person is deprived of the use of his money to which he is legitimately entitled, he has a right to be compensated for the deprivation which may be called interest or compensation. Interest is paid for the deprivation of the use of money in general terms which has returned or compensation for the use or retention by a person of a sum of money belonging to other.
In the case of Secretary, Irrigation Department, Government of Orissa v. G.C. Roy, [1991 (12) TMI 268 - SUPREME COURT], a Constitution Bench of this Court opined that a person deprived of use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This is also the principle of Section 34 of the Civil Procedure Code.
Interest of normal accretion on capital - HELD THAT:- If on facts of a case, the doctrine of restitution is attracted, interest should follow. Restitution in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order what has been lost to him in execution of decree or order of the Court or in direct consequence of a decree or order. The term “restitution” is used in three senses, firstly, return or restoration of some specific thing to its rightful owner or status, secondly, the compensation for benefits derived from wrong done to another and, thirdly, compensation or reparation for the loss caused to another.
In Hari Chand v. State of U.P. [2011 (2) TMI 1638 - ALLAHABAD HIGH COURT], the Allahabad High Court dealing with similar controversy in a stamp matter held that the payment of interest is a necessary corollary to the retention of the money to be returned under order of the appellate or revisional authority. The High Court directed the State to pay interest @ 8% for the period, the money was so retained i.e. from the date of deposit till the date of actual repayment/refund.
Considering the reasons assigned by the learned Single Judge while taking the view that the respondents could not have declined to refund the amount and the fact that the retention of the said amount was for a long time and further the appellants were left with no other option but to approach the High Court, it is opined that the appellants are entitled to have interest on Rs. 28,10,000/-.
Conclusion - Interest is not a penalty or punishment at all, but it is the normal accretion on capital. The appellants are entitled to hae interest.
Appeal disposed off.
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2025 (3) TMI 3
Rejection of appeal on account of suppression of material facts - whether there was any material suppression of fact on the part of the appellant’s father while obtaining an insurance policy or not? - HELD THAT:- In the case of Satwant Kaur Sandhu [2009 (7) TMI 1375 - SUPREME COURT], there was suppression of material fact relating to health of the insured and in those circumstances, the respondent insurance company was held to be justified in repudiating the insurance contract.
An insurance is a contract uberrima fides. It is the duty of the applicant to disclose all facts which may weigh with a prudent insurer in assuming the risk proposed. These facts are considered material to the contract of insurance, and its non-disclosure may result in the repudiation of the claim. The materiality of a certain fact is to be determined on a case-to-case basis. The aforementioned judgements illustrate instances of material facts, wherein the non-disclosure of certain medical conditions was held to be material in the context of a Mediclaim policy.
In Rekhaben Nareshbhai Rathod [2019 (4) TMI 1454 - SUPREME COURT], the repudiation of the policy by the insurer was within a period of two years from the commencement of the insurance cover on the ground of nondisclosure of a material fact and suppressing/non-disclosing a pre-existing life insurance. In the said case, the expression “material”, in the context of insurance policy, was defined as any contingency or event that may have an impact upon the risk appetite or willingness of the insurer to provide insurance cover.
In the facts of this case the respondent-insurer decided to issue a policy to the father of the appellant herein even though it was aware that there was another policy for a higher sum assured which was taken by the insured from Aviva. Thus, the insurer was also aware of the fact that the insured had capability and capacity to pay the premium for the policy obtained from Aviva and was confident that the insured had the capacity to pay the premium in respect of the policy which was issued to the insured by the respondent-insurer for a sum lesser assured being Rs.25 lakh only. Consequently, the repudiation of the policy, in the facts and circumstances of the present case, was improper. Therefore, the appellant herein is entitled to the benefit of the policy which was issued by the respondent herein.
Conclusion - The concept of "material facts" in insurance contracts requires disclosure of information that would influence a prudent insurer's decision to accept the risk. Failure to mention about other policies does not amount to a material fact in relation to the policy availed and consequently, the claim could not have been repudiated by the respondent company.
Appeal allowed.
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2025 (3) TMI 2
Gift Deed - Valid instrument or not - time limitation - seeking grant of permanent injunction restraining the defendants/appellants from selling, mortgaging, encumbering or alienating the suit property on the strength of the said document - HELD THAT:- The entire impugned judgment does not reflect formulation of any issue at all, although issues have been supposedly decided by their respective numbers. The issues originally framed in the suit, which are a part of the paper book, also do not reflect any issue on violation of Clause II (6). Rather, the learned Trial Judge observed in her judgment that the “only” bone of contention between the parties was fraud, whereas she does not adjudicate in favour of the plaintiff on such count by holding that the deed was vitiated by fraud at all.
By such observation regarding the only bone of contention being fraud, the learned Trial Judge made it explicitly evident that she did not formulate the alleged violation of Clause II (6) as an issue for the parties to address.
Clause II (6) provides that the lessees shall not assign or transfer in any way or mortgage the subject land without the previous consent in writing of the Chairman of the Board of Trustees of the CIT. However, we do not find any clause within the four corners of the lease deed which invalidates such a transfer, even if made without such written prior permission.
The maximum consequence which might have visited the lessees in the event of breach of any of the covenants of the lease deed, including Clause II (6), would be non-renewal of the lease after the expiry of its normal tenure of 99 years - the violation of Clause II (6) is not otherwise fatal to the validity of such transfer, made without any prior written consent of the CIT.
In the gift deed itself, sufficient explanation for transfer of the property in favour of the donee in exclusion of the donor’s children was given. The donor stated that she had great love and affection for the done, who happened to be her daughter-in-law and the donee maintained great regards and esteem in her behaviour and dealings with the donor. It was further stated that the sons and daughters of the donor were well established in their lives. The husband of Rama, who subsequently shot off a letter which has been relied on by the respondent, was a confirming party to the deed and endorsed the transfer of the said land and premises in favour of the donee by way of gift by reason of natural love and affection for the donee, which is also recorded in the deed itself - in view of the intrinsic evidence available in the disputed deed itself, there is no reason why the court should go behind the deed and try to read into the mind of the donor any intention contrary to the execution of the deed.
Conclusion - The learned Trial Judge acted patently contrary to the law and materials on record in declaring the disputed gift deed to be void and not binding on the plaintiff and granting permanent injunction against the defendants from selling, mortgaging, encumbering, alienating the suit property on the strength of the said document dated May 22, 1985.
Appeal is allowed on contest without costs, thereby setting aside the impugned judgment and decree dated February 8, 2017 passed by the learned Judge, Second Bench, City Civil Court at Calcutta in Title Suit No. 1738 of 1992 and dismissing the said suit.
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2025 (3) TMI 1
Dishonour of Cheque - respondent has been acquitted of the offence under section 138 of the Negotiable Instruments Act, 1881 - misinterpretation and misapplication of the statutory presumption contained in sections 118 and 139 of the NI Act - complainant was competent to depose in relation to the matter or not - HELD THAT:- As per section 118 (a) of the NI Act, a statutory presumption must be drawn in favour of a complainant that every negotiable instrument (such as a cheque) is made or drawn for consideration until the contrary is proved by the accused person - Section 139 of the NI Act goes further to cast the onus on the accused of proving that a cheque was not received by a holder in discharge of a debt or other liability owed.
The learned Magistrate has opined that the defence sought to be raised by the respondent that the subject cheques were being held by the appellant as ‘security’ was “a sham defence”. Furthermore, the learned Magistrate has, in so many words, also recorded that the respondent admits to the issuance of the subject cheques and the signatures appearing thereon.
However, in what is evidently a complete misinterpretation, misconstruction and misapplication of the statutory presumption contained in sections 118 (a) and 139 of the NI Act, and as interpreted by the courts, the learned Magistrate then proceeds to hold that the appellant (complainant) had failed to establish that there was a legally enforceable debt. In the opinion of this court, this inference drawn by the learned Magistrate is at complete odds with the foundational presumptions contained in sections 118 (a) and 139 of the NI Act, which presumptions hold good unless and until the contrary is proved by the accused person.
The fact that the cheques were issued as ‘security’ is answered in the MoM dated 17.10.1997 and letter dated 08.11.1997, whereby the respondent has admitted to owing a debt of about Rs. 94 lacs to the appellant, which would entitle the appellant to encash the subject cheques for the sum of Rs. 30 lacs towards part-payment of the debt. Therefore, the respondent cannot be heard to say that the subject cheques, which were admittedly issued as ‘security’ towards a possible future debt, cannot be encashed to satisfy a part of such debt, which debt stands admitted in the afore-noted MoM and letter.
Conclusion - i) The statutory presumption under Sections 118 and 139 of the NI Act was not rebutted by the respondent, and the Magistrate's judgment was based on a misinterpretation of these provisions. ii) The defense of 'blank signed' cheques as security is invalid, as the cheques were issued towards a debt acknowledged by the respondent.
The dismissal of the criminal complaints by the learned Magistrate is unsustainable in law and deserves to be set aside - Appeal allowed.
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2025 (2) TMI 1105
Seizure of Gold bars - stolen property linked to fraudulent transactions involving M/s. Globe International - Conviction of Accused No. 3 (Nandkumar Babulal Soni) under Sections 120B and 411 of the IPC - Acquittal of the Accused - HELD THAT:- In the case at hand, the Trial Court has held in para 120 that whether the gold bars which were sold by M/s. CN to Mr. Mukesh Shah of M/s. Globe International are the same or not has not been proved beyond reasonable doubt. It is held by the Trial Court that the distance between may and must is very vast and prosecution has to cover that distance to reach the destination of must, however, the prosecution in this case could not achieve that level of proof. With this finding of the Trial Court, it is surprising as to how the appellant can be convicted for committing offence under Sections 120B and 411 of the IPC. Once the courts below have found that the seized gold bars, (Article 2) are not the same gold bars, conviction under Sections 120B and 411 of the IPC cannot be sustained.
The High Court impliedly held that witnesses connected with M/s CN have failed to identify the seized gold. However, in the opinion of the High Court, the same is not relevant because the appellant has failed to prove lawful acquisition of gold. It is failed to understand, when the prosecution has failed to prove the identity of seized gold as being the same gold which were sold by M/s. CN to M/s. Globe International, how the appellant is liable to prove lawful acquisition of gold visà- vis the stolen gold.
In Mohan Lal vs. State of Maharashtra [1979 (4) TMI 178 - SUPREME COURT], this Court held that the prosecution has to prove that the accused was in possession of property which he had reason to believe that it was stolen property.
Conclusion - In view of the fact that the identity of the seized property being the stolen property has not been established, Vijaya Bank is not entitled to the possession of the seized gold.
Appeal dismissed.
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2025 (2) TMI 1104
Violation of the appellant's right under Article 22(1) of the Constitution of India - appellant was not informed of the grounds for his arrest - offences under Sections 409, 420, 467, 468 and 471 read with Section 120-B of the Indian Penal Code - HELD THAT:- As far as Article 22(1) is concerned, compliance can be made by communicating sufficient knowledge of the basic facts constituting the grounds of arrest to the person arrested. The grounds should be effectively and fully communicated to the arrestee in the manner in which he will fully understand the same. Therefore, it follows that the grounds of arrest must be informed in a language which the arrestee understands - Once a person is arrested, his right to liberty under Article 21 is curtailed. When such an important fundamental right is curtailed, it is necessary that the person concerned must understand on what grounds he has been arrested. That is why the mode of conveying information of the grounds must be meaningful so as to serve the objects stated.
The requirement of informing the person arrested of the grounds of arrest is not a formality but a mandatory constitutional requirement. Article 22 is included in Part III of the Constitution under the heading of Fundamental Rights. Thus, it is the fundamental right of every person arrested and detained in custody to be informed of the grounds of arrest as soon as possible. If the grounds of arrest are not informed as soon as may be after the arrest, it would amount to a violation of the fundamental right of the arrestee guaranteed under Article 22(1). It will also amount to depriving the arrestee of his liberty. The reason is that, as provided in Article 21, no person can be deprived of his liberty except in accordance with the procedure established by law - In a given case, if the mandate of Article 22 is not followed while arresting a person or after arresting a person, it will also violate fundamental right to liberty guaranteed under Article 21, and the arrest will be rendered illegal. On the failure to comply with the requirement of informing grounds of arrest as soon as may be after the arrest, the arrest is vitiated. Once the arrest is held to be vitiated, the person arrested cannot remain in custody even for a second.
The grounds of arrest must exist before the same are informed. Therefore, in a given case, even assuming that the case of the police regarding requirements of Article 22(1) of the constitution is to be accepted based on an entry in the case diary, there must be a contemporaneous record, which records what the grounds of arrest were. When an arrestee pleads before a Court that grounds of arrest were not communicated, the burden to prove the compliance of Article 22(1) is on the police - When an arrested person is produced before a Judicial Magistrate for remand, it is the duty of the Magistrate to ascertain whether compliance with Article 22(1) has been made. The reason is that due to non-compliance, the arrest is rendered illegal; therefore, the arrestee cannot be remanded after the arrest is rendered illegal. It is the obligation of all the Courts to uphold the fundamental rights.
Conclusion - i) Non-compliance with Article 22(1) will be a violation of the fundamental rights of the accused guaranteed by the said Article. Moreover, it will amount to a violation of the right to personal liberty guaranteed by Article 21 of the Constitution. Therefore, non-compliance with the requirements of Article 22(1) vitiates the arrest of the accused. Hence, further orders passed by a criminal court of remand are also vitiated. ii) When a violation of Article 22(1) is established, it is the duty of the court to forthwith order the release of the accused. That will be a ground to grant bail even if statutory restrictions on the grant of bail exist. The statutory restrictions do not affect the power of the court to grant bail when the violation of Articles 21 and 22 of the Constitution is established.
Appeal allowed.
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2025 (2) TMI 1103
Invocation of constitutional writ jurisdiction of this Court under Articles 226 and 227 of the Constitution of India with a prayer to quash multiple FIRs - offence under Sections 420, 467, 468 and 471 of the IPC - HELD THAT:- In the instant case, it is the case of the prosecution that the petitioner collected huge amount of money from the intending purchasers without even purchasing the plots of land for construction of flats. The intending purchasers paid their money entrusting the petitioner that they would get their home but said money was misappropriated. Even from the investigation made by the ED, it is revealed that with the help of the money collected from the market, the petitioner purchased flats on his own money.
Collection of money without the permission of RERA and purchasing and identifying the plot prima facie suggests that from the very beginning of transaction, the petitioner had a dishonest intention of deception and false inducement on the basis of which money was collected.
Conclusion - The allegations of fraudulent intent and misappropriation of funds in real estate transactions can constitute criminal offences, even if they arise from contractual relationships. Multiple FIRs can be justified when each pertains to a separate transaction.
There are no reason to quash the FIRs instituted against the petitioner. As a result, the instant writ petition is dismissed on contest.
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2025 (2) TMI 1049
Dishonour of Cheque - vicarious liability of directors of the accused company - whether the petitioners had knowledge or were involved in the transaction alleged in the complaint? - HELD THAT:- It is relevant to note that this Court can quash complaints under the NI Act at the pretrial stage in the exercise of its inherent jurisdiction under Section 482 of the CrPC if such unimpeachable material is brought forth by the accused persons which indicates that they were not concerned with the issuance of the cheques or that no offence is made out from the admitted facts.
The Hon’ble Apex Court in the case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) [2022 (4) TMI 1434 - SUPREME COURT] had discussed the scope of interference by the High Court against the issuance of process under the NI Act and held that 'Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited.'
In line with the dictum of the Hon’ble Apex Court in Rathish Babu Unnikrishnan v. State (NCT of Delhi), thus, while exercising the power under Section 482 of the CrPC to quash a complaint at the pre-trial stage, it is pertinent for this Court to examine whether the factual defence is of such impeachable nature that the entire allegations made in the complaint is disproved.
In accordance with Section 141 of the NI Act, in instances where the principal offender under Section 138 of the NI Act is a company, every person who at such time when the cheque was dishonoured, and no subsequent payment was made, was in charge of the business of the company, and was responsible for the conduct of business, is deemed to be guilty of the offence under Section 138 of the NI Act.
It is trite law that a person cannot be arrayed as an accused person merely due to association with the accused company in capacity of a Director.
In the present case, the evidence presented by the petitioners was sufficient to disprove the allegations without the need for a trial, as the complaint lacked specific averments about the petitioners' roles - the petitioners were not in charge of and responsible for the conduct of the business of the company at the time the offence was committed. Therefore, they could not be held vicariously liable under Section 138 read with Section 141 of the NI Act.
Conclusion - The evidence presented was sufficient to demonstrate that the directors were not responsible for the conduct of the business of the company at the time of the offence.
Petition allowed.
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2025 (2) TMI 941
Challenge to judgment of conviction and order on sentence passed against accused Nos. 1 and 2 - Acceptance of illegal gratification by the accused - Income Tax Officers - appreciation of acceptance of illegal gratification by the accused.
Whether the findings of the Trial Court in respect of the demand and acceptance of illegal gratification by the accused is justified? - HELD THAT:- The evidence of P.W.8 who is the shadow witness to the incident would indicate that there was no demand of illegal gratification by accused No. 3. However, P.W.1 was handing over the amount of Rs. 2,50,000/- to accused No. 3, at that time, the accused No. 3 was apprehended by the respondent-CBI. On conjoint reading of the evidence of P.W.1, 2 and 8, it can be inferred that the prosecution has failed to establish the demand and acceptance of illegal gratification by accused Nos. 1 and 2. The Trial Court ought to have appreciated the evidence in such a manner before arriving at a conclusion that the accused are found guilty of offence punishable under Section 7 of the P.C. Act.
Whether the Trial Court is justified in appreciating the electronic evidence? - HELD THAT:- Though P.W.8 supported the case of the prosecution in respect of the said mahazar, the evidence of PWs.1 and 8 would clearly indicate that both these witnesses have not seen the removal of the memory card from the said M.O.6. Further, it would indicate that they have not heard the conversations said to have been transferred to the Compact Discs (CD). In the absence of collecting the certificate as required under Section 65-B of the Indian Evidence Act to prove the electronic evidence in respect of the memory card, it is unsafe to rely on the evidence of the said electronic device. Though the prosecution has tried to impress the Court that the conversations that had taken place between the parties were transferred to CDs, which are identified as M.O.s 1, 7 and 9, as the primary evidence itself proved to be unacceptable, the remaining portions ought not to have been considered by the Trial Court. However, the Trial Court grossly committed an error in considering the said evidence. Therefore, the findings of the Trial Court in respect of the electronic evidence, is opposed to the settled principle of law.
Whether the findings of the Trial Court in recording the conviction is justified? - HELD THAT:- The lack of credible evidence of demand and acceptance, coupled with inadmissible electronic evidence, undermined the Trial Court's conviction. The conviction was unjustified and should be set aside.
Conclusion - i) The demand and acceptance of illegal gratification were not proven beyond a reasonable doubt, as required under Section 7 of the P.C. Act. ii) The electronic evidence was inadmissible due to the lack of a Section 65-B certificate, and the Trial Court erred in considering it. iii) The conviction based on insufficient evidence and misappreciation of the law was unjustified.
The judgment of conviction and order on sentence by the III Additional District and Sessions Judge and Special Judge, Dharwad is set aside - appeal allowed.
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2025 (2) TMI 796
Validity of auction conducted by respondent No.1 (Bank) for the sale of the secured asset - right of redemption of the secured asset by respondent No.2 under Section 13(8) of the SARFAESI Act - HELD THAT:- Section 54 of the Transfer of Property Act, 1882, defines a “sale” as the transfer of ownership in exchange for a price that is either paid, promised, or part-paid and part-promised. This provision further describes the manner in which a sale is effected. It stipulates that, in the case of tangible immovable property valued at one hundred rupees or more, the transfer can be made only through a registered instrument. The use of the term “only” signifies that, for tangible immovable property valued at one hundred rupees or more, a sale becomes lawful only when it is executed through a registered instrument. Where the sale deed requires registration, ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. The registration of the sale deed for an immovable property is essential to complete and validate the transfer. Until registration is effected, ownership is not transferred.
In the present case, the original owner/borrower, Champa Ben Kundia, ‘sold’ the secured asset to her son, Chandu Bhai by an unregistered sale deed dated 28.04.2000. Subsequently, the basement of the secured asset was “transferred” to Satnam Singh and Surinder Wadhwa through another unregistered sale deed dated 30.03.2001. Further, an unregistered agreement to sell, dated 23.04.2001, allegedly transferred the basement of the secured asset to respondent No.2. Therefore, all the documents relied upon by respondent No.2 to claim ownership of the basement of the secured asset are unregistered documents and fail to meet the requirements of a valid sale under Section 54 of the Transfer of Property Act.
This Court in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde [2024 (2) TMI 1516 - SUPREME COURT] held that the conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with Section 17 of the Registration Act, 2008. Till then, there is no conveyance in the eyes of law.
It is now a well-settled principle that a sale by way of public auction cannot be set aside until there is any material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion. This Court in V.S. Palanivel vs. P. Sriram [2024 (9) TMI 625 - SUPREME COURT] held that unless there are some serious flaws in the conduct of the auction as for example perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have.
Conclusion - i) The Ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. ii) A public auction sale cannot be set aside without evidence of "material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion.
The impugned order of the High Court is set aside - Appeal allowed.
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2025 (2) TMI 795
Dishonour of Cheque - legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881 - discharge of rebuttal of presumption of consideration under Sections 118(a) and 139 of the NI Act - HELD THAT:- In the present case, learned Trial Court has categorically observed that the petitioner herein failed to prove its case beyond reasonable doubt and the respondent has created reasonable doubt over the veracity of the story of the petitioner.
It is pertinent here to discuss the law regarding the nature and extent of legal presumption in favour of complainant under NI Act and the possibility and manner of rebuttal of the same by the accused while balancing reverse onus of proof under the NI Act and presumption of innocence of accused under normal criminal jurisprudence.
The Hon’ble Supreme Court in Kumar Exports v. Sharma Carpets [2008 (12) TMI 682 - SUPREME COURT] has held that where the complainant (respondent therein) did not produce any books of account or stock register maintained in the course of regular business or any acknowledgement for delivery of goods to establish that as a matter of fact woolen carpets were sold to the appellant therein (accused), it was opined that the complainant has failed to establish its case under section 138 of NI Act as required under law.
This Hon’ble Court in Pine Product Industries & Another v. R.P. Gupta & Sons & Another [2006 (12) TMI 553 - DELHI HIGH COURT] has held that if the complaint itself is vague about the nature of liability in discharge of which the cheques were issued and no details as to how the amount in question was arrived at, mere liability of the respondent to pay her dues towards purchase of goods is not enough to proceed under section 138 of NI Act.
It is now well settled that the accused can always rely upon the material and circumstances brought on record by the complainant. It is also well settled law that the accused is not required to prove innocence by establishing the defence beyond all reasonable doubts as accused can always prove his innocence on basis of preponderance of probabilities - in the instant nature of the particular case in hand, the mandatory presumption under sections 118 (a) read with section 139 of NI Act does not relieve the petitioner from establishing the foundational facts.
From a perusal of the testimonies, it is clear that the petitioner did not lead any evidence regarding transaction, supply of materials against which the cheques in question were issued. Further, the bills have neither been placed on record nor proved by the complainant/petitioner - the witnesses of the petitioner cannot be treated as credible witnesses and neither the sale tax forms nor the statement of account can be relied upon safely, due to various inconsistencies and contradictions. Hence, the learned Trial Court has correctly acquitted the respondent.
Conclusion - The respondents have successfully rebutted the statutory presumption under section 118 (a) read with 139 of NI Act. Once the respondent has successfully rebutted the presumption, the petitioner is not able to prove its case beyond reasonable doubt. The impugned judgment passed by the learned Trial Court is well reasoned based upon the evidences and materials and documents placed on record.
The leave to appeals are dismissed.
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2025 (2) TMI 794
Dishonour of Cheque - Challenge to order directing the payment of interim compensation under Section 143A of the Negotiable Instruments Act, 1881 - HELD THAT:- A perusal of the reasoning given by the learned Metropolitan Magistrate if tested on the touchstone of the law laid down in Rakesh Ranjan Srivastava [2024 (4) TMI 719 - SUPREME COURT] shows that the learned Metropolitan Magistrate has not prima facie evaluated the merits of the case of the complainant nor the defence of the petitioner/accused has been considered. Further, there is neither any application of mind to the quantum of interim compensation to be granted nor the factors like, nature of the transaction, the relationship, if any, between the accused and the complainant, financial distress etc. have been considered.
Somewhat similar is the position in case of the impugned order passed by the learned Principal District & Sessions Judge, South-East, District Court Saket, New Delhi. The revisional court has not even prima facie evaluated the merits of the case set up in the complaint as well as defence of the petitioner/accused. The factors to be borne in mind for deciding the quantum of interim compensation have also not been adverted to.
Conclusion - The matter is remanded back to the learned Metropolitan Magistrate for deciding the application of the complainant/respondent under Section 143A of the Act afresh, keeping in mind the law down in Rakesh Ranjan Srivastava.
Petition disposed off by way of remand.
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2025 (2) TMI 737
Recovery of deficit stamp duty and penalty - whether the appellant is liable to pay stamp duty and penalty on the agreement to sell dated 03.09.2003 allegedly executed between the appellant and the mother of Respondent No.1 in respect of the suit property? - HELD THAT:- In the instant case, the agreement to sell executed between the appellant and mother of the Respondent No.1, specifically states that “this property is in your occupation on rental basis and it will not be part of the sale transaction. After completion of sale transaction, the possession of the said property will be given to you on the ownership basis. This makes it very clear that the suit property was occupied by the appellant on a rental basis and it would not be a part of the sale transaction. Further, there was a clause, by which, timeline was given for execution of sale deed. Since the possession was admittedly given to the appellant even before the date of agreement, implying acquisition of possessory rights protected under Section 53A of the Transfer of Property Act, the same requires payment of proper stamp duty.
The agreement to sell includes a clause stating that physical possession had already been handed over to the appellant, regardless of the basis of such possession. This satisfies the requirement to treat the instrument as a ‘conveyance’ within the meaning of Explanation I to Article 25 of Schedule I of Bombay Stamp Act, with only the formality of executing the sale deed remaining. Pertinently, it is to be pointed out that the appellant filed a suit for specific performance of the agreement to sell against the respondents; Respondent No.1 filed a suit seeking eviction of the appellant from the subject property; and both the suits are pending, which clearly establish the possession of the property by the appellant. Therefore, the said document is liable for payment of stamp duty at the hands of the appellant.
The Courts below impounded the document and directed the same to be sent to the Registrar of Stamps for recovery of deficit stamp duty and penalty as per law, by the orders impugned herein, which is perfectly correct. However, it is made clear that as per the second proviso to Article 25, if the stamp duty is already paid or recovered on the agreement to sell, then, the same shall be deducted while computing the stamp duty payable, when the sale deed is executed; and the recovery shall be restricted only to the extent of difference in stamp duty and the entire penalty from the date of execution of the agreement to sell till the date of payment of stamp duty.
Conclusion - The agreement to sell, which involved possession, is a conveyance for stamp duty purposes under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act. The duty is on the instrument, and possession, whether current or agreed, triggers the duty.
There are no reason to interfere with the orders passed by the Courts below - appeal dismissed.
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2025 (2) TMI 736
Exemption from Property Tax to educational institutions operated by registered charitable trusts and registered u/s 12A - Investigation of objections by Commissioner u/s 148 of Municipal Corporation Act, 1956 - as submitted clear statutory provision u/s 136 (c) of Municipal Corporation Act, 1956 has exempted all the educational institutions run and operated by charitable trusts, educational institutions, which are registered u/s 12A of the Income Tax Act, 1961 and the said institution is wholly exempted for the payment of property tax and other educational institutions may be given a rebate of up to fifty per cent of the property tax - as submitted there is a efficacious alternative remedy available to the petitioner in terms of Section 184 of Municipal Corporation Act, 1956 which provides appeal against any notice of demand issued under subsection (1) of section 174, without availing such efficacious alternative remedy, there is no reasonable justification to the petitioner to directly approach the High Court.
HELD THAT:- Petitioner No. 3/educational institution continuously raised the objection, the said institution is under the exempted category under Section under Section 136 (c) of Municipal Corporation Act, 1956 and there is a specific procedure if any such objection has been raised about the valuation of the property tax that the Commissioner shall give a notice in writing to the objector of the time and place at which his objection will be investigated and after giving the opportunity of personal hearing to the objector, any such objection has been determined, when a query has been put to the learned Senior Counsel, from the record, it is explicit that no such procedure has been followed, though the legislature in clear terms mandated to fix the time and place to hear the objection.
This Court finds appropriate to direct the competent authority/Respondent No. 1/ Commissioner, Municipal Corporation, Bhilai to decide the objection raised by the petitioner No. 3/educational institution in terms of procedure stipulated under Section 148 of Municipal Corporation Act, 1956 (hereinafter referred to as ‘1956 Act’) and it is further expected from the said authority that if any document is required from the authority of the income tax, reasonable time of at least eight weeks must be given to the petitioner No. 3/educational institution to obtain any such certificate from the competent authority.
This Court makes a serious note that though the objection has been raised for more than a decade, but no proper speaking order has been passed and the matter has not been finally determined. So, it is expected from the authority to decide the issue in an expeditious manner and pass a fresh speaking order preferably within an outer limit of 06 months. Till such adjudication, no coercive steps shall be taken for the earlier notices and the same shall be kept in abeyance.
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2025 (2) TMI 674
Dishonour of Cheque - vicarious liability of non-executive director - case of appellant is that Appellant had resigned from the company well before the offence occurred - Section 141 of the NI Act - HELD THAT:- This Court has consistently held that a mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the NI Act. Liability is contingent upon specific allegations demonstrating the director’s active involvement in the company’s affairs at the relevant time.
In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another, [2005 (9) TMI 304 - SUPREME COURT], this Court laid down that mere designation as a director is not sufficient; specific role and responsibility must be established in the complaint.
Upon perusal of the record and submissions of the parties, it is evident that the Appellant was neither a signatory to the dishonoured cheques nor was he actively involved in the financial decision-making of the company. Moreover, he resigned from the post of independent non-executive director on 03.05.2017, duly notified through Form DIR-11 and DIR-12 to the Registrar of Companies - Petitioner’s role in the accused company was limited to that of an independent non-executive director, with no financial responsibilities or involvement in the day-to-day operations of the company. Furthermore, he was not responsible for the conduct of its business.
Conclusion - The Appellant cannot be held vicariously liable under section 141 of the NI Act. The complaints do not meet the mandatory legal requirements to implicate him.
The Impugned Judgment and Order dated 06.08.2019 of the High Court is set aside - Appeal allowed.
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2025 (2) TMI 673
Dishonour of Cheque - nullification of conviction and sentence under Section 138 of the Negotiable Instruments Act by High Court based on a compromise reached between the parties after the appellate court has confirmed the conviction - HELD THAT:- It is well settled that inherent power of the Court can be exercised only when no other remedy is available to the litigants and nor a specific remedy as provided by the statute. It is also well settled that if an effective, alternative remedy is available, the High Court will not exercise its inherent power, especially when the Revision Petitioner may not have availed of that remedy. The power can be exercised by the High Court to secure the ends of justice, prevent abuse of the process of any court and to make such orders as may be necessary to give effect to any order under this Code or Act, depending upon the facts of the given case. This Court can always take note of any miscarriage of justice and prevent the same by exercising its power. These powers are neither limited, nor curtailed by any other provision of the Code or Act. However, such inherent powers are to be exercised sparingly and with caution.
In the instant case, it is true that the appeal was dismissed and the conviction and sentence was upheld by the appellate court, but it cannot be lost sight of the fact that this Court has power to intervene in exercise of its power only with a view to do the substantial justice or to avoid a miscarriage and the spirit of compromise arrived at between the parties. This is perfectly justified and legal too.
In the case of Krishan Vs. Krishnaveni, [1997 (1) TMI 529 - SUPREME COURT], Hon'ble the Apex Court has held that though the inherent power of the High Court is very wide, yet the same must be exercised sparingly and cautiously particularly in a case where the applicant is shown to have already invoked the revisional jurisdiction under section 397 of the Code. Only in cases where the High Court finds that there has been failure of justice or misuse of judicial mechanism or procedure, sentence or order was not correct, the High Court may in its discretion prevent the abuse of process or miscarriage of justice by exercising its power.
Merely because the litigation has reached to a revisional stage or that even beyond that stage, the nature and character of the offence would not change automatically and it would be wrong to hold that at revisional stage, the nature of offence punishable under Section 138 of the N.I. Act should be treated as if the same is falling under table-II of Section 320 IPC.
In the instant case, the problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute, furthermore, the arguments on behalf of the Govt. Advocate (crl.side) on the fact that unlike Section 320 Cr.P.C., Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court.
Conclusion - Taking into account the fact that the parties have settled the dispute amicably by way of compromise, this Court is of the view that the compounding of the offence as required to be permitted.
The present Criminal Revision Case is disposed of in terms of Memorandum of Compromise arrived at between the parties to this litigation out of Court.
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2025 (2) TMI 616
Maintainability of writ petition under Article 226 of the Constitution of India - Muthoot Finance Ltd. to be considered as State or not - alleged breached statutory rules and regulations framed by the Reserve Bank of India (RBI) - whether the company could be considered a "State" or an entity performing public functions under Article 12 of the Constitution? - HELD THAT:- In the case of LIC of India v. Escorts Ltd. [1985 (12) TMI 289 - SUPREME COURT], it was contended before this Court that the Life Insurance Corporation was an instrumentality of the State and was debarred by Article 14 from acting arbitrarily. It was also contended that it was obligatory upon the Corporation to disclose the reasons for its action complained of, namely, its requisition to call an extra-ordinary general meeting of the company for the purpose of moving a Resolution to remove some Directors and appoint others in their place. Such argument was opposed by the State, contending that the actions of the State or an instrumentality of the State, which do not properly belong to the field of public law but belong to the field of private law, were not subject to judicial review.
A body, public or private, should not be categorized as “amenable” or “not amenable” to writ jurisdiction. The most important and vital consideration should be the “function” test as regards the maintainability of a writ application. If a public duty or public function is involved, any body, public or private, concerned or connection with that duty or function, and limited to that, would be subject to judicial scrutiny under the extraordinary writ jurisdiction of Article 226 of the Constitution of India.
Conclusion - i) A writ petition under Article 226 is maintainable against entities performing public functions or duties, not merely due to regulatory compliance. ii) The distinction between public law and private law is crucial in determining the maintainability of writ applications. iii) The function test is essential in assessing whether an entity is performing a public duty.
The petitions are dismissed.
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2025 (2) TMI 587
Acceptance of bid and subsequently encashing the bank guarantee - typographical error - valid agreement or not - Section 20 of the Indian Contract Act, 1872 - whether BRO was justified in accepting the bid of Rs.1,569, and on the failure of the Appellant to execute the agreement asking for forfeiture vide encashment of bank guarantee of Rs.15,04,64,000? - HELD THAT:- A mistake may be unilateral or mutual, but it is always unintentional. If it is intentional, it ceases to be a mistake. Mistakes or errors, though avoidable, are committed inadvertently. They have varied consequences in law. As per Section 20 of the Indian Contract Act, 1872 whereby both parties to an agreement are under a mistake as to matter of fact essential to an agreement, the agreement is void. The explanation to Section 20 says that an erroneous opinion as to the value of the thing which forms the subject matter of an agreement is not deemed to be a mistake as a matter of fact. This will not be a case covered by Section 20 of the Contract Act. However, this is not the first time that this question has arisen either before this Court or Courts outside of India.
In West Bengal State Electricity Board [2001 (1) TMI 921 - SUPREME COURT], the private party, the bidder did not succeed for several reasons, including the factum that the error was not obvious and self-evident. Further, the correction of such mistakes after one and a half months after the opening of the bids would have violated the express clauses relating to the computation of the bid amount. Thus, waiver of the rule or conditions in favour of the one bidder would have created unjustifiable doubts in the minds of others impairing the rule of transparency and fairness and providing room for manipulation for awarding contracts.
The Appellant was at fault and had made the mistake, of having failed to add the required zeros in the financial bid. The plea of a system glitch should not be accepted, as others had successfully uploaded their bids without a problem - BRO justified encashing the bank guarantee by citing delays caused by issuing a second notice inviting bids. This claim is baseless, as BRO was aware of the Rs.1,569/- error. Instead of declaring the bid non est due to the clear mistake, BRO asked the appellant to justify the bid, cancelled the notice, declared the Appellant a defaulter, invoked the bank guarantee, and issued a fresh notice inviting bids.
BRO’s claim that the delay was entirely due to the Appellant’s mistake is flawed, ignoring BRO’s own lapses. Mistakes, including by authorities, should be resolved through corrective steps. A practical approach could have avoided the delay, which was caused by BRO’s refusal to acknowledge the Appellant’s genuine error and the unwarranted cancellation of the bid - the Appellant is directed to pay Rs.1 crore to BRO, as a consequence of their error. Upon receiving this payment, BRO shall return the Appellant’s original bank guarantee or demand draft of Rs.15.04 crores within one week.
Conclusion - M/s ABCI was at fault for the mistake but criticized BRO for not acknowledging the error promptly. The BRO's refusal to acknowledge the mistake and its subsequent actions caused unnecessary delays in the project.
Appeal allowed.
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2025 (2) TMI 586
Liquidated damages for delay in delivery of the plant and machinery - Section 74 of the Indian Contract Act, 1872 - HELD THAT:- The High Court rightly rejected the appellant's contention that the claim for damages of Rs.107.54 has been concluded against the respondent. The High Court rightly observed that if that were so, this Court would not have confirmed the order of remand to the Arbitral Tribunal even on the said issue.
Penalties/liquidated damages were stipulated for the delay in delivering machinery and plant, failure to give the guaranteed performance of continuous fermentation plant, failure to provide a guaranteed performance with respect to steam, and failure to give a guaranteed performance with respect to power. Even the rates of liquidated damages have been laid down - Careful perusal of the claim made before the Arbitral Tribunal by the appellant shows that the claim for the sum of Rs.107.54 lakhs was not based on clause 21 of the agreement. It is not the appellant's case that the respondent was called upon to replace the plant and machinery, and as the respondent failed to do so within a reasonable time, the appellant replaced the plant and machinery by themselves. The claim was on account of a refund of the amount spent by the appellant on the plant, as is evident from paragraph 16 of the statement of claim.
The claim was not made in terms of Clause 21 of the Agreement. The claim was not on account of the breach of warranty. What is claimed is virtually the refund of the amount spent - the appellant was not entitled to the claim of Rs.68.15 lakhs as it was claimed in the statement of claim as the refund of the amount spent by the appellant on the acquisition of plant and machinery.
Conclusion - The appellant got liquidated damages as provided in the agreement on account of breaches committed by the respondent. The claim for damages of the appellant will remain confined to what is expressly provided under the Agreement in view of Section 74 of the Contract Act. The appellant retained the plant and machinery and did not take the benefit of clause 21. Therefore, as rightly held by the High Court, the appellant was not entitled to the claim of Rs.68.15 lakhs as it was claimed in the statement of claim as the refund of the amount spent by the appellant on the acquisition of plant and machinery.
There are absolutely no error in the view taken by the High Court, and accordingly, the appeal is dismissed.
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