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1979 (1) TMI 250
Issues:
Conviction under Section 409, 467, and 477A of the Indian Penal Code, and Section 5(2) of the Prevention of Corruption Act based on misappropriation allegations.
Analysis:
The appellant, a school Principal, was convicted for drawing funds on a contingent bill, including a salary for a non-existent employee, Pancham Chowkidar. The prosecution's case primarily relied on a confession document, Ex P-12, where the appellant admitted to the misappropriation. However, the appellant later claimed the confession was obtained under duress, casting doubt on its reliability. The Special Judge acquitted the appellant of charges related to other items mentioned in the same confession, indicating inconsistencies. The courts overlooked these discrepancies, leading to a flawed conviction.
The central evidence, Ex P-12, was further discredited due to procedural irregularities during its recording. The appellant's statement under Section 342 Cr.PC raised concerns about the confession's authenticity, as he alleged coercion in its creation. Additionally, the appellant's acquittal in a related case involving similar charges discredited the confession's veracity. The courts failed to consider these critical factors, undermining the prosecution's case.
The case's foundation on a complaint by a dismissed clerk, Yagya Narain, raised suspicions of ulterior motives. Yagya Narain's delayed complaint after his dismissal suggested personal vendetta rather than genuine concerns. The absence of Pancham Chowkidar's name in the attendance register was inconclusive evidence, as other employees without register mentions were not questioned. Moreover, Pancham's acknowledgment of a receipt contradicted the prosecution's claim of non-payment, weakening their case.
Witness testimonies regarding Pancham's presence at the school during nighttime challenged the prosecution's narrative. The appellant's defense highlighted inconsistencies in the prosecution's evidence, emphasizing Pancham's role and the lack of concrete proof of misappropriation. Ultimately, the Supreme Court overturned the conviction, citing insufficient evidence to substantiate the charges. The appellant was acquitted, emphasizing the prosecution's failure to prove guilt beyond a reasonable doubt.
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1979 (1) TMI 249
Issues Involved:
1. Continuation of relief under section 80J for the assessment year 1969-70.
2. Deduction under section 80G for donations made in kind.
3. Application of section 40(a)(v) regarding expenditure on the guest house.
Detailed Analysis:
Issue 1: Continuation of Relief under Section 80J
The primary issue was whether the relief granted under section 80J for the assessment year 1968-69 should continue for the subsequent year 1969-70. The Income Tax Officer (ITO) initially disallowed this continuation, arguing that the expansion of the cement manufacturing unit did not constitute a new industrial undertaking. The Appellate Assistant Commissioner (AAC) disagreed, noting that the relief granted in the initial year had not been withdrawn and should continue for four years. The Income Tax Appellate Tribunal (ITAT) upheld the AAC's decision, emphasizing that the relief for the initial year had not been disturbed, making the ITO's attempt to withdraw it for the subsequent year unjustified. The High Court affirmed this view, stating that the ITO could not withhold or withdraw the relief without disturbing the relief granted in the initial year.
Issue 2: Deduction under Section 80G for Donations Made in Kind
The second issue concerned the deduction of Rs. 1,051 for cement bags donated to a public charitable trust. The ITO disallowed this deduction, arguing that donations must be in cash to qualify under section 80G. The AAC allowed the deduction, referencing a decision by the Bombay High Court in CIT v. Associated Cement Co. Ltd., which permitted such deductions. The ITAT and subsequently the High Court upheld this view, stating that the substance of the transaction should be considered, and the donation, although in kind, was essentially equivalent to a cash donation.
Issue 3: Application of Section 40(a)(v) Regarding Expenditure on the Guest House
The third issue was whether the expenditure of Rs. 88,701 on repairs to the guest house occupied by the Managing Director should be classified as revenue or capital expenditure. The ITO considered it capital expenditure, while the AAC allowed it as terminal allowance under section 32(1)(iii). The ITAT modified this, directing the ITO to apply section 40(a)(v) and limit the allowance to Rs. 12,000, resulting in a minimum disallowance of Rs. 76,701. The High Court referenced its earlier decision in Addl CIT v. Tarun Commercial Mills Ltd., concluding that section 40(c) should apply to directors, overriding section 40(a)(v). Therefore, the High Court answered in favor of the assessee, stating that the Tribunal's application of section 40(a)(v) was unjustified.
Conclusion:
1. Continuation of Relief under Section 80J: The High Court upheld the continuation of relief under section 80J for the assessment year 1969-70, stating that the ITO could not withdraw the relief without disturbing the initial year's relief.
2. Deduction under Section 80G for Donations Made in Kind: The High Court affirmed that donations in kind could be considered equivalent to cash donations for the purposes of section 80G, allowing the deduction of Rs. 1,051.
3. Application of Section 40(a)(v) Regarding Expenditure on the Guest House: The High Court ruled that section 40(c) should apply, not section 40(a)(v), and thus the minimum disallowance of Rs. 76,701 was unjustified.
Costs:
The Commissioner of Income Tax (CIT) was ordered to pay the costs to the assessee in both references.
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1979 (1) TMI 248
Issues:
1. Trading account addition of Rs. 4,000
2. Non-allowance of depreciation on truck
Trading Account Addition of Rs. 4,000:
The appeal involved disputes regarding a trading account addition of Rs. 4,000 and the non-allowance of depreciation on a truck. The assessee, a partnership concern deriving income from stone sales, had a turnover of Rs. 2,79,216. The net profit, subject to depreciation, was Rs. 55,903 as per accounts, resulting in a 16% profit rate. The Income Tax Officer (ITO) made an addition of Rs. 4,000 considering past history and discrepancies in labor payments. The ld. AAC confirmed this addition based on the assessee's past record. The assessee argued that similar additions were accepted in previous years. The tribunal, considering the past history and account defects, upheld the addition of Rs. 4,000, stating it was justified.
Non-Allowance of Depreciation on Truck:
The second issue pertained to the non-allowance of depreciation on a truck (RSR 4311). Although the truck was registered in another person's name, the assessee had control and possession of it for business purposes. The assessee claimed depreciation of Rs. 27,473, which was rejected by the ITO and the ld. AAC on the grounds of non-ownership. The assessee argued that despite legal ownership by another individual, the truck was under their exclusive control and used for business. Citing a Bangalore Tribunal decision allowing depreciation on a car under similar circumstances, the assessee contended for depreciation entitlement. The tribunal, following precedent cases, held that the assessee was entitled to depreciation on the truck.
In conclusion, the appeal partially succeeded, with the tribunal ruling in favor of the assessee on the issue of depreciation on the truck.
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1979 (1) TMI 247
Issues:
1. Validity of suspension and termination of services of the appellant.
2. Interpretation of the agreement between the appellant and respondent 1.
3. Entitlement of the appellant to a declaration of continued service and reinstatement.
4. Calculation of arrears of salary and damages.
5. Mitigation of damages by the appellant.
Analysis:
Issue 1: Validity of suspension and termination of services
The appellant, appointed as the Head Mistress of a school, was suspended and later had her services terminated by the Executive Committee of the Society. The High Court initially decreed in favor of the appellant, stating the suspension was invalid due to the improper constitution of the Committee. However, the Division Bench later ruled that while the dismissal was wrongful, the appellant was only entitled to damages, not reinstatement. The Supreme Court held that the appellant, being an employee of a private institution, was governed by the terms of the contract, which allowed for termination with notice. The Court cited a previous judgment to support the conclusion that the appellant was only entitled to damages, not reinstatement.
Issue 2: Interpretation of the agreement
The Court examined the agreement between the appellant and respondent 1, which outlined the terms for termination of services. While the order terminating the appellant's services was found to be unlawful for lack of proper notice, the Court emphasized that the mutual rights and obligations of the parties were governed by the contract. Therefore, even if the dismissal was wrongful, the appellant was entitled to damages as per the terms of the agreement.
Issue 3: Entitlement to a declaration of continued service and reinstatement
The appellant sought a declaration that she continued to be in service and reinstatement. The High Court ruled against this, stating that the appellant was only entitled to damages. The Supreme Court agreed, emphasizing that the appellant, being an employee of a private institution, was not entitled to a declaration of continued service or reinstatement.
Issue 4: Calculation of arrears of salary and damages
The Court addressed the calculation of arrears of salary and damages. It noted that the appellant was entitled to three years' arrears of salary due to the invalidity of the suspension and absence of a termination order until a certain date. The Court also awarded the appellant an additional sum equivalent to three months' salary as provided in the agreement.
Issue 5: Mitigation of damages
The Court considered the appellant's failure to mitigate damages by seeking alternative employment. Despite the appellant's claim amounting to a substantial sum, the Court noted her lack of effort to secure other employment opportunities. Therefore, the Court affirmed the High Court's judgment with a modification to award the appellant an additional sum equivalent to three months' salary.
In conclusion, the Supreme Court upheld the High Court's judgment, granting the appellant damages but not reinstatement, and awarded additional compensation equivalent to three months' salary.
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1979 (1) TMI 246
Issues Involved:
1. Constitutionality of Section 3(1) and (3) of the Imports and Exports (Control) Act, 1947.
2. Legality of the Exports (Control) Order, 1977, and the Exports (Control) Twenty-Seventh Amendment Order, 1978.
3. Validity of the Public Notice dated June 5, 1978.
4. Application of the principles of promissory estoppel.
Detailed Analysis:
1. Constitutionality of Section 3(1) and (3) of the Imports and Exports (Control) Act, 1947:
The petitioners challenged the constitutionality of Section 3(1) and (3) of the Act on the grounds that they offend Articles 14, 19(1)(f) and (g), and 31 of the Constitution. The contention was that these provisions suffer from excessive delegation and lack of legislative guidelines, which leads to uncanalised and arbitrary power being vested in the executive.
2. Legality of the Exports (Control) Order, 1977, and the Exports (Control) Twenty-Seventh Amendment Order, 1978:
The petitioners contended that the Exports (Control) Order, 1977, as amended by the Twenty-Seventh Amendment Order, 1978, was unconstitutional because it imposed a total ban on the export of teak wood in sawn sizes without any relevant considerations or data. The petitioners argued that the ban was excessive, disproportionate, and irrational, and lacked any reasonable classification or nexus. It was also claimed to be discriminatory and violative of the principles of promissory estoppel.
3. Validity of the Public Notice dated June 5, 1978:
The petitioners challenged the Public Notice dated June 5, 1978, which banned the export of teak wood in sawn sizes, on the grounds of arbitrariness and violation of Articles 14, 19(1)(f) and (g), and 31 of the Constitution. The petitioners argued that the notice was discriminatory and lacked any intelligible criteria. The retrospective fixing of May 19, 1978, as the cut-off date for applications for export licenses was also challenged as irrational and without any basis.
4. Application of the Principles of Promissory Estoppel:
The petitioners argued that the principle of promissory estoppel was applicable in this case because the government had announced an export policy for teak wood for the year 1978-79 in March 1977, based on which the petitioners had entered into firm contracts and received advance payments. The subsequent imposition of a total ban on the export of teak wood in sawn sizes was claimed to be a violation of the doctrine of promissory estoppel.
Judgment:
Constitutionality of Section 3(1) and (3):
The court did not pronounce upon the constitutionality of Section 3(1) and (3) of the Act, assuming their validity for the purpose of this judgment. However, it was noted that Section 3 does not lay down any legislative policy or guidelines, especially in the absence of rules framed under Section 8. The court suggested that the Central Government should frame rules under Section 8 to provide guidelines for the exercise of power under Section 3.
Legality of the Exports (Control) Order, 1977, and the Exports (Control) Twenty-Seventh Amendment Order, 1978:
The court held that the impugned ban brought in by the Exports (Control) Twenty-Seventh Amendment Order, 1978, was invalid and unconstitutional. The total ban was found to be arbitrary and based on no intelligible criteria. The respondents failed to produce any relevant material or data to justify the imposition of the total ban. The court concluded that the ban was imposed without any basis and was excessive, disproportionate, and discriminatory.
Validity of the Public Notice dated June 5, 1978:
The court struck down the Public Notice dated June 5, 1978, on the grounds that it was arbitrary, discriminatory, and in violation of Article 14 of the Constitution. The retrospective fixing of May 19, 1978, as the cut-off date was found to be irrational and without any basis. The notice also discriminated between Letters of Credit and advance payments without any intelligible criteria.
Application of the Principles of Promissory Estoppel:
The court held that the principle of promissory estoppel was fully attracted in this case. The petitioners had acted on the basis of the government's announced export policy for the year 1978-79 and had entered into firm contracts and received advance payments. The subsequent imposition of the total ban was a violation of the doctrine of promissory estoppel.
Relief:
The court declared the Exports (Control) Twenty-Seventh Amendment Order, 1978, and the Public Notice dated June 5, 1978, as invalid, illegal, unconstitutional, and arbitrary. A mandamus was issued directing the respondents to issue necessary export licenses to the petitioners to export teak in sawn sizes against firm contracts entered into before June 5, 1978, upon submission of fresh applications, proof of firm contracts, proof of advance payments, and identification of the source of procurement of the teak in sawn sizes sought to be exported. The petitioners were also awarded costs.
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1979 (1) TMI 245
Issues Involved:
1. Applicability of the Bombay Industrial Relations Act, 1946 to the appellant Bank.
2. Jurisdiction of the Labour Court vs. the Registrar under the Cooperative Societies Act.
3. Interpretation of "any dispute touching the business or management of the Society" under the Cooperative Societies Act.
4. Whether the dispute qualifies as an industrial dispute or a civil dispute.
Detailed Analysis:
1. Applicability of the Bombay Industrial Relations Act, 1946 to the appellant Bank:
The appellant Bank argued that the Bombay Industrial Relations Act, 1946 (B.I.R. Act) was not applicable to it as it was a Cooperative Society governed by the Gujarat Cooperative Societies Act. However, the Court noted that by Notification No. BIR-1362-5-H, dated March 2, 1963, the Government of Gujarat directed that all provisions of the B.I.R. Act shall apply to the business of banking by Cooperative Banks in Saurashtra and Kutch areas. The Court concluded that the appellant is a Cooperative Society engaged in the business of banking and, as such, the B.I.R. Act is applicable to it by virtue of the said Notification.
2. Jurisdiction of the Labour Court vs. the Registrar under the Cooperative Societies Act:
The appellant contended that the dispute should be adjudicated by the Registrar under the Cooperative Societies Act, not by the Labour Court. The Court examined the relevant provisions of both the Bombay Cooperative Societies Act, 1925 and the Gujarat Cooperative Societies Act, 1961. It noted that Section 96 of the 1961 Act, which includes a non-obstante clause, mandates that any dispute touching the constitution, management, or business of a Society shall be referred to the Registrar. However, the Court emphasized that the nature of the dispute raised by the second respondent (termination due to alleged victimization for trade union activities) is an industrial dispute, which falls under the jurisdiction of the Labour Court as per the B.I.R. Act.
3. Interpretation of "any dispute touching the business or management of the Society" under the Cooperative Societies Act:
The Court analyzed whether the dispute falls within the scope of "any dispute touching the business or management of the Society" as per Section 96 of the Gujarat Cooperative Societies Act, 1961. The term "dispute" was interpreted in a narrower sense, limited to contested claims of a civil nature, which could have been decided by civil or revenue courts but for the provisions of compulsory arbitration by the Registrar. The Court concluded that a dispute involving the termination of an employee due to victimization for trade union activities does not fall within this scope and is instead an industrial dispute.
4. Whether the dispute qualifies as an industrial dispute or a civil dispute:
The Court determined that the second respondent's claim (alleging unfair termination due to trade union activities and seeking reinstatement with back wages) is not a civil dispute but an industrial dispute. The Court highlighted that such disputes, which do not stem from the contract of employment but from statutory rights under the B.I.R. Act, can only be resolved by the Labour Court. The Court referred to previous judgments, including Cooperative Central Bank Ltd. v. Additional Industrial Tribunal, Hyderabad, which established that disputes regarding conditions of service of workmen employed by a society are not disputes touching the business of the society and fall outside the jurisdiction of the Registrar.
Conclusion:
The Supreme Court dismissed the appeal, holding that the Labour Court has jurisdiction over the industrial dispute raised by the second respondent, and the Bombay Industrial Relations Act, 1946 is applicable to the appellant Bank. The dispute does not fall within the scope of "any dispute touching the business or management of the Society" under the Gujarat Cooperative Societies Act, 1961. The Court awarded costs against the appellant and directed an honorarium to be paid to the amicus curiae.
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1979 (1) TMI 244
Issues Involved:
1. Registration of the award.
2. Errors apparent on the face of the award.
3. Division of tenancy rights and compliance with the West Bengal Tenancy Act, 1956.
4. Arbitrator's competence to deal with the assets of the company.
5. Completeness of the award.
6. Valuation of shares.
7. Preparation and use of the annexed plan.
8. Limitation for filing the application to set aside the award.
Issue-wise Detailed Analysis:
1. Registration of the Award:
The award was challenged on the ground that it created or extinguished rights in immovable properties and was not registered. However, during the pendency of the application, the award was registered after obtaining an extension of time from the Registrar of Assurances. Consequently, the question of the award's validity due to non-registration was no longer relevant.
2. Errors Apparent on the Face of the Award:
The contention was that the arbitrator had divided the assets of the company, which he was not competent to do. The court noted that the company, a party to the arbitration agreement, was akin to a partnership in a private limited company. The arbitrator did not commit an error of law by distributing the assets in satisfaction of claims against the company. The court reiterated that it could not sit in appeal over the arbitrator's conclusions unless there was an error apparent on the face of the award.
3. Division of Tenancy Rights and Compliance with the West Bengal Tenancy Act, 1956:
It was argued that the award divided tenancy rights without proper consent from the landlords, violating the West Bengal Tenancy Act, 1956. The court found evidence of the landlords' consent in letters and testimonies presented before the arbitrator. The arbitrator's findings were based on this evidence, and thus, the award was not in violation of the Tenancy Act.
4. Arbitrator's Competence to Deal with the Assets of the Company:
The challenge was that the arbitrator was incompetent to divide the company's assets. The court held that in the context of a private limited company, where the company was a party to the arbitration and there were claims by shareholders against the company, the arbitrator did not violate any legal principles by distributing the assets. The company's participation in the arbitration agreement and the evidence of claims justified the arbitrator's actions.
5. Completeness of the Award:
The award was alleged to be incomplete as it did not address all disputed properties. The court observed that the properties not specifically dealt with by the award were to remain with the company. The arbitrator's omission to deal with certain properties did not render the award incomplete.
6. Valuation of Shares:
The arbitrator's valuation of shares at Rs. 250 each was contested. The court found that there was sufficient evidence on the company's assets to support the arbitrator's valuation. The arbitrator's decision on share valuation was thus upheld.
7. Preparation and Use of the Annexed Plan:
It was argued that the annexed plan, on which the award was based, was prepared without giving parties an opportunity to make submissions, violating natural justice principles. The court noted that the division of the shop room was discussed extensively, and rival submissions were made on various plans. The annexed plan represented the arbitrator's modifications based on these discussions. The court found no breach of natural justice in the arbitrator's reliance on the annexed plan.
8. Limitation for Filing the Application to Set Aside the Award:
The application to set aside the award was alleged to be barred by limitation. The court noted the relevant dates and the procedural aspects concerning the filing of the award. Despite the contention that the award was not properly filed until the stamp duty was paid, the court inclined to think the application was barred by limitation. However, given the decision on other aspects, the court did not rest its decision solely on this ground.
Conclusion:
The application to set aside the award was dismissed on all grounds. The court found no merit in the challenges raised against the award and upheld the arbitrator's decisions. The other applications challenging the award were also dismissed, with no order as to costs.
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1979 (1) TMI 243
Issues Involved:
1. Validity of the appointment of respondent No. 6 as Principal by direct recruitment.
2. Whether the post of Principal was a 'deputation post'.
3. Whether the Union Public Service Commission (UPSC) exceeded its power by relaxing essential qualifications.
4. Whether respondent No. 6 possessed the requisite essential qualifications.
5. Whether the selection process was vitiated due to bias by Dr. O.S. Sehgal.
Issue-wise Detailed Analysis:
1. Validity of the appointment of respondent No. 6 as Principal by direct recruitment:
The primary issue was whether the appointment of respondent No. 6, Smt. Prem Lata Dewan, by the Chandigarh Administration to the post of Principal, Government Central Crafts Institute for Women, Chandigarh, through direct recruitment via the UPSC, was invalid. The court held that there was no breach of the instructions issued by the Central Government under Section 84 of the Punjab Reorganisation Act, 1966. The Chandigarh Administration had the option to either directly recruit or request names from Punjab or Haryana. The post was not a "deputation post" and thus could be filled by direct recruitment through the Commission.
2. Whether the post of Principal was a 'deputation post':
The court examined the directions issued by the Central Government under Section 84 of the Punjab Reorganisation Act, 1966. The instructions indicated that posts in the Union territory of Chandigarh would be filled mainly by deputation from Punjab and Haryana. However, the court interpreted the term "mainly" to mean "substantially" or "as far as practicable." It concluded that the instructions were not binding in perpetuity and that the Chandigarh Administration had the authority to fill the post by direct recruitment if necessary.
3. Whether the UPSC exceeded its power by relaxing essential qualifications:
The appellant contended that the UPSC had no power to relax the essential qualifications without the prior concurrence of the Chandigarh Administration. The court found that there was no statute or regulation prescribing qualifications for the post of Principal. The Chandigarh Administration, in consultation with the UPSC, had suggested certain qualifications, and the UPSC had reserved the power to relax these qualifications in the advertisement. The court held that the UPSC acted within its powers in relaxing the qualifications for suitable candidates.
4. Whether respondent No. 6 possessed the requisite essential qualifications:
The court noted that the essential qualifications were prescribed in consultation with the UPSC and included a relaxation clause. Respondent No. 6, Smt. Prem Lata Dewan, held a three-year Diploma in Home Science, which was considered equivalent to the required qualifications. The court found that the UPSC had appropriately exercised its discretion in relaxing the qualifications and that respondent No. 6 was qualified for the post.
5. Whether the selection process was vitiated due to bias by Dr. O.S. Sehgal:
The appellant alleged bias by Dr. O.S. Sehgal, Director, Technical Education, Chandigarh, who assisted the Selection Committee. The court found no sufficient evidence to support allegations of malafides or bias. The court emphasized that the burden of proving bias lies heavily on the person making the allegation. The Selection Committee had evaluated the candidates based on merit, and there was no indication that Dr. Sehgal influenced the selection process improperly.
Conclusion:
The court concluded that the Chandigarh Administration was within its rights to appoint respondent No. 6, Smt. Prem Lata Dewan, as Principal through direct recruitment via the UPSC. The directions under Section 84 of the Punjab Reorganisation Act were not applicable, and there was no breach of these directions even if they applied. The UPSC had the authority to relax qualifications, and there was no evidence of bias in the selection process. The appeal was dismissed, and the appointment of respondent No. 6 was upheld.
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1979 (1) TMI 242
Issues Involved:
1. Creditor's petition for winding-up under section 433(e) read with section 434(1)(a) of the Companies Act, 1956.
2. Dispute over the liability to pay contractual compensation and standard rent.
3. Allegation of the respondent-company's insolvency and being a "bubble" company.
Detailed Analysis:
1. Creditor's Petition for Winding-Up:
The petitioners, tenants of certain premises, filed a winding-up petition against the respondent-company for non-payment of compensation amounting to Rs. 49,000 from June 1, 1975, to April 30, 1978. The petitioners had previously granted permission to the respondent-company to use and occupy the premises under a leave and licence agreement dated May 8, 1972, for a fixed period of three years, with a monthly compensation of Rs. 1,000 and Rs. 400 per month as commission for services. The respondent-company paid the compensation in advance for the three-year period but failed to pay from June 1, 1975. The petitioners issued a statutory notice under section 434 of the Companies Act, 1956, which the respondent-company denied, citing ongoing declaratory suit and standard rent application in the Court of Small Causes at Bombay.
2. Dispute Over Liability to Pay Contractual Compensation and Standard Rent:
The petitioners argued that the respondent-company's contractual liability to pay compensation at Rs. 1,400 per month was evident from the leave and licence agreement. They contended that the application for fixation of standard rent did not nullify this liability, and no interim standard rent had been fixed by the court. The petitioners claimed the respondent-company was a trespasser and demanded compensation at Rs. 75 per day. The respondent-company, however, filed for standard rent fixation, asserting their position as tenants and the applicability of the amended Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, which capped licence charges to standard rent levels. The court concluded that a bona fide dispute existed regarding the compensation payable, which was under adjudication before a competent court.
3. Allegation of Insolvency and Being a "Bubble" Company:
The petitioners alleged that the respondent-company was insolvent, describing it as a "bubble" company with a paid-up share capital of Rs. 200 and significant carried forward losses and sundry creditors. The respondent-company countered, showing reduced debt and ongoing business operations. The court found no material evidence of the respondent-company's inability to meet its liabilities and deemed the insolvency allegation reckless and unfounded. The court referenced historical cases to highlight the gravity of such allegations and concluded that calling the respondent-company a "bubble" was unjustified.
Conclusion:
The court determined that both grounds for winding-up under section 433(e) read with section 434(1)(a) and section 433(f) were not well-founded. The petition was deemed an attempt to exert pressure rather than a legitimate claim for winding-up. The petition was dismissed with costs, and the court clarified that its observations were prima facie and would not affect pending proceedings between the parties.
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1979 (1) TMI 241
Issues Involved:
1. Legality of the second investigation and charge-sheet filed in the Delhi Court.
2. Jurisdiction of the Delhi Court in taking cognizance of the second charge-sheet.
3. Whether the two conspiracies (Ambala and Delhi cases) were the same.
4. The statutory right of the police to investigate further after a charge-sheet has been filed and cognizance taken by the Magistrate.
5. Whether the withdrawal of the case from the Ambala Court and subsequent actions constituted an abuse of process.
Detailed Analysis:
1. Legality of the Second Investigation and Charge-Sheet Filed in the Delhi Court:
The court examined whether the second investigation and the subsequent charge-sheet filed in the Delhi Court were lawful. It was determined that the police had the statutory right and duty to investigate every cognizable offence and that this right did not end with the submission of a charge-sheet under Section 173(1) of the Criminal Procedure Code (CrPC). The court emphasized that the police could continue to investigate if fresh facts came to light, and such further investigation was not barred by the earlier submission of a charge-sheet or the Magistrate taking cognizance of the offence.
2. Jurisdiction of the Delhi Court in Taking Cognizance of the Second Charge-Sheet:
The court held that the Delhi Court had jurisdiction to take cognizance of the second charge-sheet. It was noted that the police's statutory right to investigate did not require prior sanction from the Magistrate and that the Magistrate's cognizance of the offence did not preclude further investigation by the police. The court referred to the Criminal Procedure Code, 1898, which allowed for continued investigation even after a charge-sheet had been filed and cognizance taken.
3. Whether the Two Conspiracies (Ambala and Delhi Cases) Were the Same:
The court compared the First Information Reports (FIRs) and charge-sheets of both cases. It found that the conspiracies were not identical. The Ambala case involved a narrower conspiracy between Malik and Mehra to obtain possession of the pillars by cheating and misappropriation. In contrast, the Delhi case involved a broader conspiracy, including the Narang brothers, to export the stolen pillars to London. The court concluded that the two conspiracies were different in scope, objectives, and participants, even though they were related.
4. The Statutory Right of the Police to Investigate Further After a Charge-Sheet Has Been Filed and Cognizance Taken by the Magistrate:
The court affirmed that the police's right to investigate further was not exhausted by the submission of a charge-sheet or the Magistrate taking cognizance. It cited several precedents and the Law Commission's recommendations, which supported the view that the police could continue to investigate if new evidence emerged. The introduction of Section 173(8) in the Criminal Procedure Code, 1973, further clarified this right by allowing for further investigation and submission of supplementary reports.
5. Whether the Withdrawal of the Case from the Ambala Court and Subsequent Actions Constituted an Abuse of Process:
The court found no evidence of malice or abuse of process in the withdrawal of the case from the Ambala Court and the subsequent filing of the charge-sheet in the Delhi Court. It was noted that the withdrawal was done transparently, with the prosecuting agency informing the Ambala Court about the Delhi case. The court concluded that the actions of the investigating agency were lawful and did not constitute an abuse of process.
Conclusion:
The appeals were dismissed, and the court upheld the legality of the second investigation and the jurisdiction of the Delhi Court in taking cognizance of the case. The court also affirmed the police's right to further investigate even after a charge-sheet had been filed and cognizance taken by the Magistrate.
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1979 (1) TMI 240
Issues:
1. Validity of the alleged transfer of shares by Jagannath Gupta.
2. Allegations of wrongful possession and distribution of shares by Bidya Bhushan Gupta and Padam Chand Gupta.
3. Allegations of mismanagement, oppression, and continuous losses in the company.
4. Stay order on winding up proceedings based on pending investigation under Sections 235/237 of the Companies Act.
Detailed Analysis:
Issue 1: The validity of the alleged transfer of shares by Jagannath Gupta is in question. The respondent alleges that Jagannath Gupta nominated successors for his shares in a resolution passed during his lifetime. However, the petitioner contests the authenticity of the meeting minutes and claims that the transfer was wrongful and illegal.
Issue 2: Bidya Bhushan Gupta and Padam Chand Gupta are accused of wrongfully taking possession of shares after the deaths of Jagannath Gupta and Bhuran Devi. The distribution of shares among family members is alleged to be in contravention of the law and the company's Articles of Association. The petitioner claims deprivation of legal rights to the shares and non-delivery of share certificates.
Issue 3: The company is accused of mismanagement, oppression, and continuous losses. Bidya Bhushan Gupta and Padam Chand Gupta are said to have controlled the company's affairs, leading to the sale of properties at undervalued prices and continuous losses without any dividend declaration. The petitioner alleges that the company's substratum has disappeared.
Issue 4: The High Court issued a stay order on winding up proceedings based on a pending investigation under Sections 235/237 of the Companies Act. However, it was found that no inspectors had been appointed, and no parallel investigation by the Central Government was ongoing. The High Court's decision to stay the proceedings was deemed erroneous, and the case was sent back for disposal on its merits. The discretionary nature of the Central Government's power to direct investigations under the Act was highlighted, emphasizing that such investigations may not be a substitute for winding up proceedings in court.
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1979 (1) TMI 239
Issues Involved:
1. Discrimination in the distribution of seats among eligible students from different regions.
2. Validity of the selection process for medical college admissions.
3. University-wise allocation of seats.
4. Implementation of a uniform entrance examination.
5. Temporary solution for the current academic year.
Detailed Analysis:
1. Discrimination in the Distribution of Seats:
The High Court invalidated a transitory scheme of admission to the medical colleges of Kerala on the ground of discrimination in the distribution of seats among eligible students from two disparate regions of the State. The scheme was struck down due to the unequal allocation of seats, which led to confusion in the admission process. The Supreme Court recognized the historical academic disparity between the Travancore-Cochin and Malabar regions and acknowledged the State's efforts to address this imbalance by setting up institutions like the Calicut Medical College.
2. Validity of the Selection Process:
The High Court found the selection process discriminatory due to the unequal treatment of marks obtained by students from different universities. It stated that comparing marks from different universities with varying standards is not a proper mode of determining comparative merit. The Supreme Court, however, did not find substantial evidence to support the claim of significant differences in syllabi and evaluation standards between the Kerala and Calicut Universities. It emphasized that minor differences do not constitute discrimination under Article 14 of the Constitution.
3. University-wise Allocation of Seats:
The Supreme Court upheld the principle of university-wise allocation of seats as constitutionally valid, drawing on the precedent set in Chanchala's case. It stated that candidates passing through qualifying examinations held by a university form a class by themselves, and such classification has a reasonable nexus with the object of the rules. However, the Court found fault with the additional criterion of allocating seats based on the proportion of students registered for pre-degree and B.Sc. courses in the two universities, as it undermined the purpose of addressing Malabar's backwardness.
4. Implementation of a Uniform Entrance Examination:
The High Court suggested that a uniform entrance examination would be the best method for selection to secure uniformity of standards. The Supreme Court acknowledged this as a viable solution but noted the practical challenges and resistance from the student community. The Court recognized the need for gradual implementation and endorsed the State Government's long-term plan to unify curricula and examination standards across the two universities.
5. Temporary Solution for the Current Academic Year:
For the current academic year, the Supreme Court directed the State Government to admit 30 additional students from the Calicut University, maintaining the overall seat allocation of 166 for Calicut University and 317 for Kerala University. This temporary measure was aimed at avoiding disruption and ensuring fairness. The Court ordered the concerned universities and the Medical Council of India to accommodate the additional students and emphasized the need for swift action to implement the long-term unification of syllabi and examination standards by May 31, 1979.
Conclusion:
The Supreme Court allowed the appeal and the writ petition, directing the State Government to adjust the admissions for the current academic year and to work towards a unified examination system for future admissions. The Court's decision sought to balance the need for immediate relief with long-term solutions to ensure fairness and equality in the admission process.
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1979 (1) TMI 238
Issues involved: Conviction u/s 161 IPC and u/s 5(2) read with u/s 5(1)(d) of Prevention of Corruption Act based on lack of valid sanction.
Conviction u/s 161 IPC and u/s 5(2) read with u/s 5(1)(d) of Prevention of Corruption Act:
The appellant was convicted under the aforementioned sections and sentenced to rigorous imprisonment and fine. The High Court reversed the acquittal judgment by the Special Judge. The prosecution alleged that the appellant accepted a bribe, which was witnessed by P.Ws. 1 and 3. However, a crucial legal issue was raised regarding the validity of the sanction u/s 6 of the Prevention of Corruption Act. The Resolution of the Sanctioning Authority did not specify the facts constituting the offence or the grounds of satisfaction. The absence of such crucial details rendered the sanction invalid. The prosecution failed to produce the note containing the facts before the Sanctioning Authority, which is essential for a valid sanction. The Court emphasized that a valid sanction is a prerequisite for prosecuting a public servant and without it, the proceedings are void ab initio. The Court clarified that the presumption under section 4 of the Prevention of Corruption Act does not apply to the Sanctioning Authority and cannot substitute for the lack of essential details in the sanction. Despite a request to produce additional evidence at a later stage, the Court held that the prosecution had sufficient opportunity during the trial to present all necessary materials. Ultimately, the Court concluded that the prosecution lacked a valid sanction, rendering the Special Judge's jurisdiction invalid, leading to the quashing of convictions and sentences against the appellant.
This summary provides a detailed breakdown of the legal judgment, focusing on the issues involved and the Court's analysis regarding the lack of a valid sanction in the prosecution of the appellant.
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1979 (1) TMI 237
Issues involved: Conviction u/s 34 of Mysore Excise Act based on search without compliance with statutory provisions.
Judgment Summary:
The appellant was convicted u/s 34 of the Mysore Excise Act for possessing liquor found in a car he was driving. The appellant's counsel argued that the search conducted by the Excise Inspector was without jurisdiction as it did not comply with the provisions of section 54 of the Excise Act. The Supreme Court agreed with this contention, emphasizing the importance of statutory safeguards for citizen's liberty. The Court noted that the Excise Inspector failed to record grounds for reasonable belief before searching the car, thus violating section 54. The High Court's dismissal of this legal issue was criticized for not analyzing the impact of sections 53 and 54, which are crucial safeguards against unfounded prosecution. Despite the argument that the word "place" does not include a car, the Court clarified that the definition of "place" under the Act encompasses a vehicle like a car. As a result of the non-compliance with section 54, the search was deemed without jurisdiction, leading to the appellant's acquittal as the conviction was set aside.
Conclusion: The appeal was allowed, and the appellant was acquitted of the charges.
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1979 (1) TMI 236
Issues Involved:
1. Vires of Order XXI, Rule 15(1)(c) of the Supreme Court Rules.
2. Constitutional interpretation of Article 134(1) and Article 134(2) of the Indian Constitution.
3. Application and scope of Article 145(1)(b) and Article 145(1)(d) of the Indian Constitution.
4. Procedural fairness under Article 21 of the Indian Constitution.
5. Validity of Section 384 of the Criminal Procedure Code, 1973.
Detailed Analysis:
1. Vires of Order XXI, Rule 15(1)(c) of the Supreme Court Rules:
The primary issue was the constitutional validity of Order XXI, Rule 15(1)(c) of the Supreme Court Rules, which allows for the summary dismissal of certain appeals. The appellant argued that this rule was ultra vires as it permitted the Supreme Court to dismiss appeals ex parte without a full-fledged hearing, which they claimed was contrary to the constitutional mandate provided under Article 134 of the Indian Constitution. The court examined whether the rule infringed upon the substantive right of appeal and whether it was consistent with the procedural fairness required by law.
2. Constitutional Interpretation of Article 134(1) and Article 134(2):
Article 134(1) provides an absolute right of appeal to the Supreme Court in specific cases, such as where a death sentence is imposed for the first time or in reversal of an acquittal. Article 134(2) allows Parliament to confer additional appellate powers on the Supreme Court. The court held that appeals under Article 134(1)(a) and (b) are of such grave importance that they necessitate a full hearing, including notice to the State and examination of the entire record, to ensure that the right to life and liberty is not compromised.
3. Application and Scope of Article 145(1)(b) and Article 145(1)(d):
Article 145(1)(b) empowers the Supreme Court to frame rules regarding the procedure for hearing appeals, while Article 145(1)(d) specifically deals with rules for the entertainment of appeals under Article 134(1)(c). The court interpreted these provisions to mean that procedural rules should not infringe upon the substantive right of appeal. The court upheld the rule but restricted its application to ensure it did not violate the constitutional guarantee of a fair hearing.
4. Procedural Fairness under Article 21:
The court emphasized that any procedure established by law must be fair, just, and reasonable, as mandated by Article 21 of the Constitution. The court held that summary dismissal of appeals involving death or life sentences without a full hearing would be arbitrary and unfair, thus violating Article 21. The court insisted on a comprehensive hearing process, including notice to the State and examination of records, to uphold the principles of natural justice.
5. Validity of Section 384 of the Criminal Procedure Code, 1973:
Section 384 allows appellate courts to dismiss appeals summarily. The court found that while this provision is generally valid, its application must be restricted in cases involving severe penalties like death or life imprisonment. The court read down Section 384 to ensure it aligns with constitutional principles, requiring a full hearing in such grave cases.
Conclusion:
The majority judgment upheld the vires of Order XXI, Rule 15(1)(c) of the Supreme Court Rules and Section 384 of the Criminal Procedure Code but imposed significant restrictions on their application. The court mandated that in cases involving death or life sentences, a full hearing with notice to the State and examination of the entire record is necessary to comply with constitutional requirements. This ensures procedural fairness and protects the right to life and liberty as enshrined in the Constitution. The dissenting opinion argued that the rule is within the Supreme Court's rule-making power and does not violate any statutory or constitutional provisions. The court directed that notice be issued to the respondent in the appeal.
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1979 (1) TMI 235
The appellant was convicted under Customs Act, 1962 and Gold Control Act. Sentenced to two years' rigorous imprisonment and fined Rs. 2,000 under each act. Imprisonment reduced to time served, fines of Rs. 30,000 imposed. Allowed to pay Rs. 10,000 within a month and balance within six months. Appeal dismissed.
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1979 (1) TMI 234
Issues involved: Conviction u/s 27 (a) (i) of Drugs and Cosmetics Act, 1940, enhancement of sentence by High Court, interpretation of legal provisions u/s 27 and u/s 18A read with section 28.
In this case, the appellant was convicted u/s 27 (a) (i) of the Drugs and Cosmetics Act, 1940, and sentenced to one year of rigorous imprisonment and a fine of Rs. 200. The High Court modified the sentence from imprisonment till the rising of the Court to one year of rigorous imprisonment. The appellant was found in possession of 17,000 white tablets at a railway station, leading to the charges. The appellant pleaded guilty but argued that the prosecution failed to prove the essential ingredients of section 27. The Court analyzed the legal provisions and held that mere possession of the tablets does not constitute an offense u/s 27 without evidence of manufacturing, selling, or stocking for sale. The conviction u/s 27 (a) (i) was set aside, and the appellant was acquitted of this charge.
Regarding the second charge, the appellant's refusal to disclose the source of the tablets fell within the scope of section 28, which mandates disclosure upon request. The appellant's act of non-disclosure warranted punishment u/s 28, with a maximum sentence of one year. The Court considered the appellant's confession, young age, and family background in deciding the sentence. The conviction u/s 28 was upheld, but the sentence was reduced to the time already served. The fine of Rs. 200 was maintained under section 28, not u/s 27 (a) (i). The appellant was ordered to pay the fine within a month, and the appeal was allowed in part, resulting in the appellant's immediate release.
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1979 (1) TMI 233
Issues Involved:
1. Constitutionality of the Thirty-ninth Constitutional Amendment.
2. Validity of the 1970 notification under the Mines and Minerals (Regulation and Development) Act, 1957.
3. Authority of the Central Government under Section 9(3) of the Act to issue notifications.
4. Legislative competence concerning Section 9 of the Act.
5. Excessive delegation of power to the Central Government.
Issue-wise Detailed Analysis:
I. Constitutionality of the Thirty-ninth Constitutional Amendment:
The petitioner contended that the Thirty-ninth Constitutional Amendment, which inserted the Mines and Minerals (Regulation and Development) Act, 1957 into the Ninth Schedule, was violative of the rule of law as laid down in Kesavananda Bharati's case (AIR 1973 SC 1461). The court rejected this contention, stating that the protection under Article 31B given to the Act does not violate the concept of the basic structure of the Constitution. The court found no merit in the argument and rejected the first contention.
II. Validity of the 1970 Notification:
The petitioner argued that the 1970 notification was ineffective and void as it was published within four years from the earlier notification issued in 1968, violating proviso (b) to Section 9 of the Act. The court agreed, noting that the 1970 notification was issued within four years of the 1968 notification, making it unlawful. Previous judgments from various High Courts, including the Gujarat High Court, had also struck down the 1970 notification on similar grounds. Consequently, the 1970 notification was declared void and unenforceable.
III. Authority of the Central Government under Section 9(3) of the Act to Issue Notifications:
The petitioner raised several points under this issue:
- Revision of Rates Before Four Years: The court found that only the 1970 notification violated the four-year rule, not the 1962 and 1968 notifications.
- Exceeding 20% of Sale Price as Royalty: The court clarified that proviso (a) to Section 9 limits the Central Government's power to fix the rate of royalty to not exceed 20% of the sale price at the pit's head. The court concluded that the rate fixed by the Central Government did not exceed this limit.
- Fixed Royalty and Classification: The court held that the Central Government could adopt one of the two methods prescribed by Parliament (percentage of sale price or fixed rate per tonne) and that splitting limestone into different grades for royalty purposes was within its power. The court found no violation of legislative policy in the 1962 and 1968 notifications.
- Rebate: The court upheld the Central Government's authority to grant rebates on specific types of limestone, viewing it as an aspect of the power to fix royalty rates. The court found this within the scope of Section 9(3).
IV. Legislative Competence Concerning Section 9 of the Act:
The petitioner argued that Section 9 of the Act was unconstitutional as it fell under Entry 50 of the State List, not Entry 54 of the Union List. The court disagreed, stating that the Act was enacted under Entry 54, which pertains to the regulation of mines and mineral development in the public interest. The court explained that royalty is a payment for minerals removed or consumed and is not a tax. Therefore, Section 9 falls under the Union List, making it within the legislative competence of Parliament. The court rejected the petitioner's contention.
V. Excessive Delegation of Power to the Central Government:
The petitioner argued that the Act conferred excessive power on the Central Government without providing objective standards or norms, leading to arbitrary exercise of power. The court found that the power to amend royalty rates implicitly included the power to classify minerals and grant rebates. The court assumed that the Central Government would exercise its power reasonably and in public interest, as ensured by Section 28, which subjects notifications to parliamentary review. The court rejected the contention of excessive delegation of power.
Conclusion:
Except for the 1970 notification, which was declared ultra vires Section 9(3) and void, all other contentions raised by the petitioner were rejected. The petition was partly allowed, and the rule was made absolute to the extent of declaring the 1970 notification void, with no order as to costs.
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1979 (1) TMI 232
Issues Involved:
1. Ownership and entitlement to the suit property.
2. Validity and effect of the agreement dated 2.4.1960.
3. Payment and contribution towards the purchase price and expenses.
4. Registration and conveyance of the property.
5. Legal implications under Section 66 of the Civil Procedure Code.
6. Estoppel and enforceability of the unregistered agreement.
7. Reliefs and entitlements of the plaintiffs.
Issue-wise Detailed Analysis:
1. Ownership and Entitlement to the Suit Property:
The plaintiffs filed a suit for the declaration of their title to 3/4th share of the suit property and premises, claiming co-ownership based on an agreement dated 2.4.1960. The defendant denied the co-ownership claim, asserting that he purchased the property in a court auction as the absolute owner. The trial court decreed the suit in favor of the plaintiffs, but the High Court dismissed it, leading to this appeal.
2. Validity and Effect of the Agreement Dated 2.4.1960:
The plaintiffs relied on the agreement dated 2.4.1960, signed by all parties, which stated that the bid for the property was made jointly in co-ownership. The defendant contended that the agreement was only a security for a loan and not intended to be acted upon. The court found inconsistencies in the evidence provided by the plaintiffs regarding the agreement and its execution.
3. Payment and Contribution Towards the Purchase Price and Expenses:
The plaintiffs claimed they contributed Rs. 10,000 each towards the purchase price and Rs. 3,500 each towards expenses. The defendant admitted receiving Rs. 10,000 from each of plaintiffs 2 and 3 but claimed it was a loan. The court found that plaintiffs 2 and 3 failed to prove the additional payment of Rs. 3,500 each, and the first plaintiff failed to prove any payment towards the consideration.
4. Registration and Conveyance of the Property:
The property was ultimately conveyed and registered in the name of the defendant alone. The plaintiffs did not provide a satisfactory explanation for why they did not insist on the bid being confirmed in their joint names. The defendant also did not explain why he applied for the sale confirmation in favor of all parties and later accepted the conveyance in his name alone.
5. Legal Implications Under Section 66 of the Civil Procedure Code:
The defendant raised a legal argument that the suit was barred under Section 66 of the Civil Procedure Code, which prohibits suits claiming title under a purchase certified by the court on the ground that the purchase was made on behalf of the plaintiff. The court found that Section 66 did not apply as the sale was conducted by a Receiver under the High Court Rules, not under the Civil Procedure Code.
6. Estoppel and Enforceability of the Unregistered Agreement:
The defendant argued that the plaintiffs could not rely on the unregistered agreement to claim title. The court noted that the plaintiffs' claim was based on co-ownership and not solely on the unregistered agreement. The court permitted the legal question to be raised but found that it did not affect the maintainability of the suit.
7. Reliefs and Entitlements of the Plaintiffs:
The court concluded that the plaintiffs 2 and 3 were entitled to 1/4th share each in the property upon payment of Rs. 3,500 each towards expenses. The plaintiffs were also entitled to their share of the rents collected by the defendant, estimated at Rs. 25,000 each. The first plaintiff was not entitled to any relief, and the suit was dismissed concerning him. The appeal was allowed to the extent of partition and separate possession of 1/4th share each for plaintiffs 2 and 3, with directions for a decree in terms of the compromise reached by the parties.
Conclusion:
The appeal was allowed to the extent that plaintiffs 2 and 3 were granted 1/4th share each in the property upon payment of their share of expenses, and they were entitled to their share of rents collected. The first plaintiff's claim was dismissed. The parties were allowed to enter into a compromise and report it to the court for the final decree.
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1979 (1) TMI 231
Issues involved:
The appeal involves a question regarding the entitlement of the appellants to use a disputed passage in a building as part of their lease for the first floor portion.
Summary:
The dispute arose when the first respondent decided to demolish a portion of the building, including the main entrance from Errabalu Chetty Street, which provided access to the appellants' tenement on the first floor. The appellants objected and filed a suit seeking injunction, claiming that the disputed passage was essential to their tenancy and also an amenity under the Madras Buildings (Lease and Rent Control) Act, 1960. The trial court dismissed the suit, finding that the disputed passage was not part of the demise or an essential element of the contract of tenancy. The lower Appellate Court, however, decreed the suit, but the High Court in a second appeal reversed this decision and dismissed the suit.
The appellants contended that the High Court should not have interfered with the lower Appellate Court's finding that the disputed passage was part of their tenancy. They argued that the use of the passage was either part of the demise or an easement enforceable against successors. However, the Supreme Court held that the High Court was correct in its decision. The High Court found that the disputed passage was not part of the tenancy but merely provided access to the tenement, based on the address used by the appellants and the common use of the passage by multiple tenants.
The Supreme Court further considered whether the appellants could claim the disputed passage as an easement of necessity. It was noted that the sale deed did not reserve the passage in favor of the lessor, and alternative access through Vanniar Street had been provided to all tenants. Therefore, the Court concluded that the appellants were not entitled to the use of the disputed passage as an easement of necessity. Additionally, the argument that the passage was granted as an easement to all tenants was dismissed due to lack of evidence supporting such a claim.
In conclusion, the Supreme Court dismissed the appeal, upholding the High Court's decision to deny the appellants' claim to the disputed passage, and ordered the appellants to pay costs.
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