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1980 (3) TMI 275
Issues Involved:
1. Legality of the petitioner's detention beyond 90 days without bail.
2. Application of judicial mind by the Magistrate in remanding the accused to custody.
3. Entitlement of the petitioner to bail based on the co-accused's bail status.
4. Legality of the remand order under Section 309 of the Code of Criminal Procedure.
Issue-wise Detailed Analysis:
1. Legality of the petitioner's detention beyond 90 days without bail:
The petitioner was arrested on 21st November 1979, and the period of remand permissible under Section 167 of the Code of Criminal Procedure (the Code) expired on 19th February 1980. The petitioner contended that he was entitled to bail upon the expiry of this period. According to Section 167, a Magistrate can authorize detention up to a maximum period of 90 days for offences punishable with death, life imprisonment, or imprisonment for not less than 10 years. The Court clarified that the period of 90 days does not include the initial 24 hours during which the accused can be detained by the police under Section 57 of the Code. Therefore, the 90 days started from 22nd November 1979 and expired on 19th February 1980. The police filed a charge sheet on 19th February 1980, and the Magistrate took cognizance and adjourned the case to 27th February 1980, indicating the application of judicial mind.
2. Application of judicial mind by the Magistrate in remanding the accused to custody:
The petitioner argued that the Magistrate did not apply judicial mind while remanding him to custody and that there was no express order of remand under Section 309 of the Code. The Court noted that taking cognizance of an offence means an application of judicial mind for taking further action. The Magistrate's order dated 19th February 1980, which directed the production of the petitioner on 27th February 1980, indicated that she applied her judicial mind and intended to proceed further with the case. Although the order lacked comprehensiveness due to inadvertence, it did not imply the absence of judicial mind application.
3. Entitlement of the petitioner to bail based on the co-accused's bail status:
The petitioner did not raise any argument regarding the release of co-accused Durbeen Singh on bail. However, the Court considered this matter. The Sessions Judge had granted bail to Durbeen Singh on 20th December 1979, under the impression that there was no offence of murder involved. The Court observed that this order might have been based on a misunderstanding and called for reconsideration. The Sessions Judge was directed to reconsider the bail order for Durbeen Singh, considering the correct facts, and the prosecution was given the liberty to apply for bail cancellation.
4. Legality of the remand order under Section 309 of the Code of Criminal Procedure:
The Court discussed the transition from Section 344 of the old Code to Section 309 of the present Code. Section 344 required an express order of adjournment and remand, which was omitted in Section 309. The Court concluded that the legislature no longer required an express order of remand to judicial custody. The Magistrate's order to produce the petitioner on 27th February 1980 implied that the petitioner was to be kept in custody until that date. Therefore, the remand to custody under Section 309 was valid, and the petitioner's right to bail under Section 167 did not accrue.
Conclusion:
The petition for bail was rejected as the detention was legal under Section 309 of the Code, and there were reasonable grounds to believe that the petitioner was involved in offences punishable with death or life imprisonment. The Sessions Judge was instructed to reconsider the bail granted to co-accused Durbeen Singh.
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1980 (3) TMI 274
Issues Involved:
1. Territorial jurisdiction of the court.
2. Effect of non-presentment of cheques.
3. Limitation period for filing the suit.
4. Entitlement to interest and other claimed amounts.
Issue-wise Detailed Analysis:
Issue No. 1: Territorial Jurisdiction
The court's jurisdiction to entertain the suit was conceded by the defendants, as the pronote was executed in Delhi and the cheques were drawn on a bank in Delhi. Therefore, the issue was decided in the affirmative.
Issue No. 2: Effect of Non-presentment of Cheques
The court examined whether the non-presentment of the 21 post-dated cheques extended the limitation period under Section 19 of the Limitation Act, 1963. It was concluded that the mere issuance of post-dated cheques does not extend the limitation period unless the cheques are encashed. The court noted that the cheques were not presented due to their seizure by the Income Tax authorities, which was beyond the plaintiff's control. However, it was held that non-presentment and dishonour are mutually exclusive, and the drawer's liability remains if no damage is suffered due to non-presentment.
Issue No. 3: Limitation Period
The court acknowledged the loan and the issuance of post-dated cheques but noted that the suit was filed beyond the extended limitation period. The court held that the issuance of cheques did not constitute part payment under Section 19 of the Limitation Act. Furthermore, the court determined that the cheques issued before June 23, 1973, did not save the limitation for the suit filed on October 29, 1976. However, the court allowed relief based on the 20 cheques that were due within three years of the suit's institution.
Issue No. 4: Entitlement to Interest and Other Amounts
The court held that the plaintiff was entitled to the amount of Rs. 53,500 based on 20 cheques, excluding the first cheque due on September 30, 1973, which was barred by limitation. The court awarded interest at the rate of 6% per annum from the date each cheque was encashable until realization, as per Section 80 of the Negotiable Instruments Act. The plaintiff was also entitled to proportionate costs.
Relief:
The court decreed the suit in favor of the plaintiff for Rs. 53,500 with interest at 6% per annum from the respective dates of the cheques until realization and proportionate costs.
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1980 (3) TMI 273
Issues involved: Interpretation of jurisdiction under Section 25 of the Tamil Nadu Buildings (Lease and Rent Control) Act regarding eviction grounds and the distinction between appellate and revisional jurisdiction.
Summary:
1. The appellant, a sub-tenant, faced eviction by the respondent tenant under Section 10 of the Act for various grounds, which were initially dismissed by the Rent Controller and Appellate Authority. However, the High Court allowed the eviction application, leading to the appellant's appeal. The main contention was whether the High Court overstepped its revisional powers in overturning the concurrent findings of the lower tribunals. The debate centered on the broad jurisdiction under Section 25 of the Act, with the appellant arguing against excessive interference by the High Court based on the facts established by the subordinate tribunal.
2. The distinction between "appeal" and "revision" was deliberated upon, highlighting that appellate jurisdiction typically involves a rehearing on both law and fact, while revisional jurisdiction is akin to a supervisory power to ensure lower tribunals act within legal boundaries. The extent of revisional jurisdiction is determined by the conferring statute, aiming to maintain adherence to legal procedures and principles of justice. In this case, the language of the Tamil Nadu Act indicated a narrower revisional scope compared to appellate jurisdiction, emphasizing the High Court's role in supervising rather than reevaluating factual findings.
3. Section 25 of the Act grants the High Court the authority to review decisions of the appellate authority, emphasizing the need for satisfaction with the regularity and correctness of proceedings. Despite the broad language used, the term "revision" implies a restricted jurisdiction compared to "appeal," suggesting a supervisory function for the High Court. The judgment underscored that the High Court should not intervene in factual findings merely due to disagreement, aligning with the principle that revisional power is not equivalent to a second appeal court.
4. The debate over whether a landlord's bona fide requirement constitutes a mixed question of fact and law was raised, referencing previous cases. However, the judgment emphasized that the mere classification of a question as mixed does not automatically warrant revisional intervention. It was crucial to demonstrate unreasonable decision-making leading to a miscarriage of justice for the High Court to intervene. Ultimately, the appeal was allowed, the High Court's judgment was overturned, and the decision of the appellate court was reinstated, emphasizing the limited scope of revisional power under the Act.
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1980 (3) TMI 272
Issues Involved:
1. Claim for promotion to Supertime Grade II.
2. Validity of promotions of respondents 4 to 24.
3. Interpretation of Rule 8(3) of 1966 Rules.
4. Transfer of Dr. B.S. Jain and its legality.
5. Appellant's eligibility and refusal of the Simla post.
6. Alleged legal malice and creation of posts.
7. Validity of promotions of respondents 9 and 23.
8. Appellant's locus standi to challenge promotions.
9. Consequences of setting aside the promotion of Dr. P.C. Sen.
Issue-Wise Detailed Analysis:
1. Claim for Promotion to Supertime Grade II:
The appellant, an ophthalmic surgeon, claimed he should have been promoted to Supertime Grade II from February 18, 1971. He argued that a post in Ophthalmology at Willingdon Hospital was created on that date, and he, being the seniormost and qualified, should have been promoted.
2. Validity of Promotions of Respondents 4 to 24:
The appellant challenged the promotions of respondents 4 to 24 to Supertime Grade II on various dates between February 1971 and July 17, 1978, arguing that these promotions violated Rule 8(3) of the 1966 Rules.
3. Interpretation of Rule 8(3) of 1966 Rules:
Rule 8(3) provides for recruitment to Supertime Grade II both by promotion and direct recruitment. The appellant contended that the post created in Supertime Grade II in Ophthalmology should have been filled by promotion from the Specialists' grade, not by transfer or direct recruitment.
4. Transfer of Dr. B.S. Jain and Its Legality:
The appellant argued that the transfer of Dr. B.S. Jain to the newly created post in Supertime Grade II at Willingdon Hospital was in violation of the statutory rule. He claimed that the post should have been filled by promotion from within the Specialists' grade.
5. Appellant's Eligibility and Refusal of the Simla Post:
The appellant refused the post of Chief Ophthalmologist-cum-Associate Professor of Ophthalmology at Himachal Pradesh Medical College, Simla, arguing that he was not qualified for the teaching post. The court found that his refusal was based on personal reasons rather than a lack of qualification.
6. Alleged Legal Malice and Creation of Posts:
The appellant alleged that the government created posts to accommodate certain individuals, ignoring the requirements of the hospital. The court found no evidence to support this claim, stating that the creation and abolition of posts is a matter of government policy and administrative necessity.
7. Validity of Promotions of Respondents 9 and 23:
The appellant contended that respondents 9 and 23 were ineligible for promotion due to adverse comments from the Madras High Court regarding their negligence. The court found that their promotions were approved by the Departmental Promotion Committee and the UPSC, and the appellant would not benefit from invalidating their promotions.
8. Appellant's Locus Standi to Challenge Promotions:
The court held that the appellant was not qualified to challenge the promotions of respondents 4 to 24, as they were promoted to posts in specialities other than ophthalmology, for which the appellant was not qualified.
9. Consequences of Setting Aside the Promotion of Dr. P.C. Sen:
The appellant argued that he should be considered for promotion from September 1971, when Dr. P.C. Sen's promotion was set aside. The court found no justification for this, noting that the appellant had refused a promotion to Simla and there was no material to show he was qualified for the post of Director of Health Services, Manipur.
Conclusion:
The court dismissed the appeal, finding no substance in the appellant's contentions and holding that the promotions of respondents 4 to 24 were valid. The appellant's refusal to accept the Simla post was based on personal reasons, and there was no evidence of legal malice in the creation of posts. The appellant was not qualified to challenge the promotions of respondents 4 to 24, and there was no basis for considering him for promotion from September 1971. The appeal was dismissed with no order as to costs.
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1980 (3) TMI 271
Issues Involved:
1. Constitutionality of the admission scheme for postgraduate medical courses.
2. Allocation of marks for additional qualifications like diplomas.
3. Reservation for candidates from outside the state.
4. Adherence to procedural requirements in the admission process.
5. Validity of government directives modifying selection criteria.
6. Equitable relief for students affected by the High Court's decision.
Issue-wise Detailed Analysis:
1. Constitutionality of the Admission Scheme:
The court emphasized that admissions to higher professional education must align with constitutional imperatives, specifically Articles 14 and 15. The Kerala State's admission scheme was criticized for provincialism and failing to uphold the principles of equal opportunity and national integrity. The court suggested the need for a national consensus on admissions to postgraduate courses to avoid annual litigation and ensure fairness.
2. Allocation of Marks for Additional Qualifications:
The selection process included awarding 10% extra marks to diploma holders. The court found this reasonable as it recognized additional accomplishments relevant to postgraduate studies. However, the issue arose whether candidates could claim these marks if their diploma certificates were obtained after the application deadline but before the selection process.
3. Reservation for Candidates from Outside the State:
The Kerala State reserved only 2% of seats for candidates from outside the state, which the court found insufficient and violative of Articles 14 and 15. The court held that this reservation was a "clever device to oust the 'outside' University Graduates" and did not meet the constitutional requirement of equal opportunity. The court directed the state to reconsider and formulate a more inclusive policy.
4. Adherence to Procedural Requirements:
The High Court invalidated the admissions of certain candidates because their diploma certificates were not attached to their applications, as required by the prospectus. The Supreme Court disagreed, stating that while proof of qualification is necessary, the method of proof should not be rigid. The court held that the possession of a diploma before the application deadline is essential, but the proof of it can be submitted later, provided it is before the selection process.
5. Validity of Government Directives Modifying Selection Criteria:
The court upheld the government's directive allowing candidates to submit their diploma certificates before the selection process rather than with the application. This directive was seen as a practical solution to administrative delays and was not considered arbitrary or illegal.
6. Equitable Relief for Students:
The Supreme Court criticized the High Court's decision to quash the entire selection process, which would have resulted in a wasted academic year. The court emphasized the need for constructive judicial intervention to minimize disruption and ensure that students already admitted could continue their studies. The court directed that two additional seats be created to accommodate deserving candidates, ensuring that no seats were wasted and academic progress was not unduly hampered.
Conclusion:
The Supreme Court's judgment focused on balancing constitutional principles with practical considerations to ensure fairness in admissions to postgraduate medical courses. It highlighted the need for a more inclusive and equitable admission policy, while also providing immediate relief to affected students by allowing them to continue their studies and creating additional seats where necessary. The court's approach emphasized flexibility in procedural requirements and the importance of substantive justice over rigid adherence to form.
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1980 (3) TMI 270
Issues:
1. Quashing of criminal proceedings under Sections 506 and 507 of the Indian Penal Code.
2. Legality of criminal proceedings based on the cognizability of the offenses.
3. Interpretation of the Criminal Law Amendment Act, 1932 regarding cognizability and bailability of offenses.
4. Validity of the notification issued under the Criminal Law Amendment Act, 1932.
5. Request for quashing proceedings based on lack of prima facie case.
Analysis:
Issue 1: Quashing of criminal proceedings under Sections 506 and 507 of the Indian Penal Code
The petitioner filed a Writ Petition seeking to quash the criminal proceedings against him under Sections 506 and 507 of the Indian Penal Code, contending that these offenses are not cognizable. The petitioner also raised some allegations concerning Judicial Officers, which were deemed irrelevant to the main issue.
Issue 2: Legality of criminal proceedings based on the cognizability of the offenses
The Delhi administration, in response, stated that the petitioner had been convicted and sentenced for contempt of court based on a complaint filed by a Judicial Officer. The criminal proceedings under Sections 506 and 507 of the Indian Penal Code were initiated as a result of this complaint, leading to the arrest of the petitioner. The administration argued that the offense under Section 506 is cognizable, and therefore, the proceedings were valid.
Issue 3: Interpretation of the Criminal Law Amendment Act, 1932 regarding cognizability and bailability of offenses
The counsel for the Delhi Administration referred to the Criminal Law Amendment Act, 1932, which empowers the State Government to declare certain offenses as cognizable and non-bailable. The Act allows the State Government to specify offenses under Sections 188 and 506 of the Indian Penal Code as non-bailable and cognizable in a particular area through a notification.
Issue 4: Validity of the notification issued under the Criminal Law Amendment Act, 1932
A notification was issued in 1933 declaring offenses under Sections 186, 188, 189, and 506 of the Indian Penal Code as cognizable and offenses under Sections 188 and 506 as non-bailable in the Delhi Province. The Court affirmed that the offenses charged against the petitioner were cognizable and non-bailable in the Union Territory of Delhi, as per the notification issued under the Amendment Act, 1932.
Issue 5: Request for quashing proceedings based on lack of prima facie case
The petitioner sought to quash the proceedings citing the absence of a prima facie case despite several prosecution witnesses being examined. However, the Court noted that no grounds were raised in the Writ Petition regarding the lack of a prima facie case. As such, the Court declined to address this point and dismissed the Writ Petition based on its conclusions regarding the cognizability and bailability of the offenses charged against the petitioner.
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1980 (3) TMI 269
Issues:
1. Validity of settlement of a shop under Assam Excise Rules.
2. Financial capacity of the appellant for settlement.
3. Compliance with rules and disclosure of financial information.
4. Judicial review of administrative decisions under Article 226 of the Constitution.
Detailed Analysis:
1. The case involved a dispute regarding the settlement of a shop under the Assam Excise Rules. The Deputy Commissioner settled the shop with the appellant for a specific period, which was challenged by another party, respondent 1. The Board of Revenue stayed the settlement order based on financial concerns raised by respondent 1 and eventually settled the shop with respondent 1. The appellant challenged this decision through a writ petition before the High Court, which was dismissed.
2. The key issue was the financial capacity of the appellant for the settlement. The Board found that the appellant did not have the necessary financial capacity to run the shop satisfactorily. The appellant's financial information, as disclosed in the prescribed form, did not fully disclose all financial sources, and discrepancies were found in the sources of funds used to pay for the shop settlement. The Board considered the appellant's financial status and his ability to finance the settlement in reaching its decision.
3. The analysis focused on the compliance with rules and the disclosure of financial information. The appellant failed to disclose a significant financial account with a balance of Rs. 5,900/-, which was used to pay the former lessee for taking possession of the shop. The Board noted that the appellant did not provide accurate information during the inquiry process and failed to produce necessary documents, such as the Pass Book, to verify the source of funds. The lack of complete disclosure and verification of financial information raised concerns about the legitimacy of the transaction.
4. The judgment also addressed the judicial review of administrative decisions under Article 226 of the Constitution. The High Court, in its writ jurisdiction, did not act as a court of appeal but reviewed the decision of the Board for any jurisdictional errors. The court emphasized that findings of fact by a domestic tribunal cannot be interfered with unless there is a jurisdictional error. The court highlighted the importance of compliance with rules and the need for full disclosure of financial information in administrative decisions.
Overall, the judgment upheld the decision of the Board regarding the settlement of the shop, emphasizing the importance of accurate financial disclosure and compliance with rules in such matters. The appellant's failure to provide complete and accurate financial information led to the dismissal of the appeal, highlighting the significance of transparency and adherence to regulations in administrative decisions.
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1980 (3) TMI 268
Issues involved: Competing claims for promotion as Brigadiers in the Directorate of Military Farms, challenge to immutability of 1964 policy statement under Art. 14 of the Constitution.
Competing Claims for Promotion: The case involved the competing claims of the petitioner and the third respondent for promotion as Brigadiers in the Directorate of Military Farms, with the expectation of becoming the Director of Military Farms upon promotion. The third respondent was in a select list made in 1971, while the petitioner was left out. The petitioner challenged any fresh selection that would supersede the 1971 list, arguing that the 1964 policy statement should not be arbitrarily departed from without proper reformulation and communication of a new policy. The High Court had issued a writ forbidding a fresh selection, leading to the appeal before the Supreme Court.
Challenge to Immutability of 1964 Policy Statement: The Supreme Court acknowledged that the 1964 policy statement was made by the Union of India's executive power and was not issued under any rules or regulations. It emphasized that the Union of India had the authority to change or adjust the policy as needed, as long as it did so fairly and without arbitrariness. The Court highlighted the importance of acting in accordance with Article 14 of the Constitution, ensuring that any new policy, if framed, should be done fairly and made known to all concerned parties. The Central Government expressed willingness to abide by the Court's directions and consider the need for a new policy, with a time-bound restriction of one month for any new policy formulation.
Conclusion: The Supreme Court directed the Central Government to consider the need for a new policy, if necessary, regarding the Directorate of Military Farms within one month. It allowed for legitimate representations to be made by concerned parties within a week, emphasizing the importance of a fair and transparent process in any policy formulation or selection process. The Court disposed of the Writ Petition and Civil Appeal based on the above directives, ensuring that the Central Government acts fairly and in compliance with the Court's directions.
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1980 (3) TMI 267
Issues Involved:
1. Applicability of Section 5 of the Limitation Act, 1963 to applications under Section 91 of the Punjab Land Revenue Act.
2. Whether such applications must necessarily be filed before a court for Section 29(2) of the Limitation Act to apply.
3. Inherent powers of the Lt. Governor to entertain applications filed beyond the prescribed period.
Detailed Analysis:
Issue 1: Applicability of Section 5 of the Limitation Act, 1963
The primary issue was whether Section 5 of the Limitation Act, 1963 applies to applications under Section 91 of the Punjab Land Revenue Act. The respondent filed an application to set aside a sale beyond the 30-day period prescribed under Section 91. The Lt. Governor initially held that the Limitation Act was not applicable and thus did not condone the delay. The learned single Judge, however, held that Section 5 of the Limitation Act was applicable due to Section 29(2) of the Limitation Act, which states that the provisions of Sections 4 to 24 of the Limitation Act apply to any special or local law unless expressly excluded. This interpretation was supported by precedents, including the Supreme Court case Vidyacharan Shukla v. Khub Chand Baghel, which held that Section 29(2) applies even when the Limitation Act does not prescribe a time limit for a particular appeal but the special law does. Therefore, the provisions of Section 5 of the Limitation Act were held to be applicable to the application under Section 91 of the Punjab Land Revenue Act.
Issue 2: Necessity of Filing Before a Court
The appellant contended that Section 29(2) of the Limitation Act applies only to applications filed before civil or criminal courts. This argument was rejected based on several precedents, including Vasanji Ghela & Co. v. The State of Maharashtra, which held that Section 29(2) and Section 5 of the Limitation Act could be availed for applications before tribunals and not necessarily courts. The court also referred to the Kerala State Electricity Board v. T.P. Kunhhaliumma, which overruled earlier decisions that restricted the applicability of the Limitation Act to courts. The court concluded that the word "application" in Section 29(2) includes applications made to a persona designata and is not restricted to courts alone.
Issue 3: Inherent Powers of the Lt. Governor
Even if Section 5 of the Limitation Act was deemed inapplicable, the court held that the Lt. Governor would still have inherent powers to entertain applications filed beyond the prescribed period if there were sufficient reasons. The court emphasized that rejecting an application solely on the ground of delay, without considering the reasons for the delay, would lead to grave injustice. The Lt. Governor's error was in assuming he had no power to entertain the application beyond 30 days due to the inapplicability of the Limitation Act, which was a misinterpretation of the law. The court held that the Lt. Governor should have considered whether there were sufficient grounds for the delay, notwithstanding the Limitation Act.
Conclusion
The court dismissed the appeal, affirming that Section 5 of the Limitation Act, 1963 applies to applications under Section 91 of the Punjab Land Revenue Act. It also held that such applications do not need to be filed before a court for Section 29(2) to apply and that the Lt. Governor has inherent powers to entertain applications filed beyond the prescribed period if there are sufficient reasons. The matter was rightly remitted back to the Lt. Governor for reconsideration on merits.
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1980 (3) TMI 266
Issues:
- Suit for ejectment from a house
- Admissibility of Sarkhat as evidence
- Res judicata based on a previous judgment
Analysis:
1. The plaintiff filed a second appeal in a suit for ejectment from a house, claiming that the defendants were occupying the house as licensees under the original owner. The main issue was the admissibility and effect of the Sarkhat (rent note) executed by the father of the defendants, establishing the relationship of landlord and tenant. The lower appellate court dismissed the suit, citing the Sarkhat as inadmissible in evidence due to lack of registration, thus raising questions about the landlord-tenant relationship.
2. The plaintiff's claim was based on the relationship of landlord and tenant, not solely on property title. The Sarkhat, not being a lease under Section 107 of the T. P. Act, was argued to be admissible as evidence of the lease transaction, even without registration. Reference to Mulla's T. P. Act supported the view that a rent note can establish the relationship between parties, even if not compulsorily registrable.
3. The lower appellate court relied on the Supreme Court case of Mst. Kirpal Kaur v. Bachan Singh, deeming the rent note in the present case as compulsorily registrable and inadmissible. However, the court misapplied the decision, as the rent note did not change the nature of possession and was an admission of a tenancy agreement. Another case, Jai Narain Dass v. Smt. Zubeda Khatoon, highlighted that an unregistered rent note could be admissible for collateral purposes, such as determining possession rights.
4. The defendant-respondents raised a plea of res judicata based on a previous judgment, which was dismissed by the trial court and not addressed by the lower appellate court. The certified copy of the judgment from a related case was admitted but found to be irrelevant as the issues in the present case were not decided in the previous suit, thus not establishing res judicata.
5. With no other points raised, the appeal was allowed, setting aside the lower appellate court's judgment. The trial court's decree for ejectment of the defendants from the house, recovery of arrears, and future damages was restored with costs throughout, as the findings in favor of the plaintiff were not challenged or disturbed during the appeal process.
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1980 (3) TMI 265
Issues:
1. Deductibility of annual remuneration paid to directors under the head "Profits and gains of business or profession."
2. Interpretation of Section 40(c) of the Income-tax Act, 1961 regarding the disallowance of excessive or unreasonable remuneration.
3. Burden of proof on the taxpayer to establish the deductibility of remuneration.
4. Application of precedents in determining the reasonableness of remuneration paid to directors.
Analysis:
The judgment by the Allahabad High Court dealt with four references under section 256(2) of the Income-tax Act, 1961, concerning the deductibility of annual remuneration paid to directors by two companies. The crux of the matter was whether the remuneration paid to directors was justified under the head "Profits and gains of business or profession." The Income-tax Officer disallowed the claims, leading to appeals by the assessees before the Appellate Tribunal.
The court analyzed Section 40(c) of the Income-tax Act, which disallows deductions for remuneration if deemed excessive or unreasonable by the Income-tax Officer. The burden of proof rested on the taxpayer to establish the deductibility of such remuneration. The court emphasized the need for evidence linking the remuneration to specific beneficial activities for the company. In the absence of such evidence, the remuneration could be disallowed under the Act.
The judgment referred to precedents such as the Nund & Samont Co. case and the J. B. Bottling Co. case, highlighting the importance of demonstrating the link between remuneration and beneficial services rendered by directors. The court rejected arguments that mere responsibility-sharing by directors justified remuneration, emphasizing the requirement for tangible evidence of beneficial activities beyond board meetings.
Ultimately, the court upheld the disallowance of remuneration, ruling in favor of the department. The decision underscored the necessity for concrete evidence linking remuneration to beneficial activities for the company to qualify for deduction. The Commissioner was awarded costs, and the judgment set a precedent for future cases involving the deductibility of director remuneration under the Income-tax Act.
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1980 (3) TMI 264
Issues Involved:
1. Locus standi of the appellant to file an appeal.
2. Validity of land acquisition proceedings under the amended Land Acquisition Act.
Summary:
Locus Standi of the Appellant:
The appellant, a private company, challenged the Bombay High Court's dismissal of its Letters Patent Appeal. The High Court had ruled that the appellant had no locus standi to file the appeal as it was not a "person interested" within the meaning of s. 18(1) of the Land Acquisition Act. The Supreme Court, however, held that the definition of "a person interested" in s. 18 is inclusive and must be liberally construed to include any person who may be directly or indirectly interested in the title to the land or in the quantum of compensation. The Court cited several precedents supporting this view, including the case of Sunder Lal v. Paramsukh das, which stated that a person becomes "interested" if they claim an interest in the compensation to be awarded. The Court concluded that the appellant was indeed a "person interested" as it had to pay the compensation and was thus interested in the quantum of compensation. Therefore, the High Court erred in dismissing the appeal on the ground of locus standi.
Validity of Land Acquisition Proceedings:
The second issue was whether the land acquisition proceedings were cured by s. 7 of the amending Act. The Supreme Court referred to the case of R.L. Arora v. State of U.P., which upheld the constitutional validity of the amendments to the Land Acquisition Act but laid down certain conditions for validating acquisitions made before July 20, 1962. One of the essential conditions was that the land must have vested in the Government. In this case, the respondents (petitioners before the High Court) had pleaded that they were still in possession of the land, and this was not denied by the Government. The Supreme Court found that the possession of the entire land had not passed to the Government, and thus the acquisition was not complete. Consequently, the acquisition proceedings were void, and the invalidity could not be cured by s. 7 of the amending Act. The appeal was dismissed on this ground, with no orders as to costs.
Conclusion:
The Supreme Court dismissed the appeal, holding that the appellant had locus standi to file the appeal but the land acquisition proceedings were invalid as the land had not vested in the Government.
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1980 (3) TMI 263
Issues Involved:
1. Applicability of the Kerala Joint Hindu Family System (Abolition) Act, 1975 (Act 30 of 1976) to the Cochin royal family.
2. Correctness of the composition of the Board.
3. Effect of the Supreme Court's previous order on the partitioning work done by the Board.
4. Date of division in status and determination of the number of shares.
Issue-wise Detailed Analysis:
1. Applicability of the Kerala Joint Hindu Family System (Abolition) Act, 1975 (Act 30 of 1976) to the Cochin royal family:
The Kerala Joint Hindu Family System (Abolition) Act, 1975, aimed to abolish the joint family system among Hindus in Kerala, converting joint family ownership into tenancy-in-common. Section 4(2) of the 1976 Act specifies that from the date of the Act's enforcement (1-12-1976), joint family properties would be held as tenants in common. The Proclamation of 1124 and Act 16 of 1961, which governed the Cochin royal family, were not repealed by the 1976 Act. The 1978 Act further amended the 1976 Act and the 1961 Act, emphasizing the continued applicability of the Proclamation and the 1961 Act to the Cochin royal family. Thus, the family was divided in status as of 1-12-1976, with shares determined per capita, including unborn children as specified in Section 4 of the 1961 Act.
2. Correctness of the composition of the Board:
The Supreme Court acknowledged an error in its previous judgment regarding the composition of the Board. The earlier judgment incorrectly stated that the Board was composed of the seniormost members of the four branches of the family. The correct position, as per Section 4 of the Proclamation, is that the Board consists of five trustees nominated by the Maharaja, ensuring representation for each of the four main thavashies. The Court clarified that the Board's composition was valid and that the Board had been functioning correctly for decades.
3. Effect of the Supreme Court's previous order on the partitioning work done by the Board:
The Board argued that the Supreme Court's previous order nullified the extensive work done for partitioning the properties, including valuations and provisional allotments. The Court recognized the Board's substantial efforts, stating that the work done should not be wasted. However, the Court emphasized that the Board's decisions must comply with natural justice, allowing affected members to file objections. The Court directed the Board to make the draft partition deed available for inspection and to consider objections within specified timelines. The Court also suggested the possibility of appointing a judicial functionary, such as a retired judge, to review the Board's decisions if all parties agreed.
4. Date of division in status and determination of the number of shares:
The contentious issue was the date of division in status, which determined the number of shares and eligible members. The Board proceeded on the basis that the division in status occurred on 1-12-1976, resulting in 719 members. The opposing parties argued that the division occurred on 6-1-1978, the date of the 1978 Act's promulgation, potentially increasing the number of members. The Court concluded that the division in status occurred on 1-12-1976, as per the 1976 Act, and that the 1978 Act's amendments did not alter this date. The Proclamation and the 1961 Act continued to apply, with the Board responsible for partitioning the properties based on the shares determined as of 1-12-1976.
Conclusion:
The Supreme Court allowed the review petition in substantial part, clarifying the applicability of the 1976 Act to the Cochin royal family, correcting the error regarding the Board's composition, and ensuring that the Board's partitioning work complied with natural justice. The Court affirmed that the division in status occurred on 1-12-1976, with the Board responsible for effecting the partition based on this date.
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1980 (3) TMI 262
Issues Involved:
1. Notification of big areas as Market Areas without rendering services.
2. Validity of creation of Market Areas or Market Yards.
3. Validity of appointment of Mandi Samitis (Market Committees).
4. Absence of machinery in the Rules for adjudication of disputes.
5. Fixation of minimum market fee at 1% for all Market Committees.
6. Lack of application of mind in issuing the notification dated 11-4-1978.
7. Multi-point levy of market fee.
8. Retrospective operation of the law brought by U.P. Act 7 of 1978.
9. Levy of market fee on goods not produced within the market area.
10. Levy of market fee on both paddy and rice.
11. Levy of market fee on hides and skins.
12. Levy of market fee on wood or timber and not on furniture or Catechu.
13. Levy of market fee on wood cut from the jungle by manufacturers.
14. Levy of market fee on Kirana goods brought from outside the market area.
15. Levy of market fee on tobacco or Tendu leaves and not on bidis.
16. Levy of market fee in municipal areas and Nyaya Panchayats.
17. Levy of market fee on rab salawat and rab galawat.
18. Levy of market fee on goods brought into a market area and dispatched outside without transactions.
19. Levy of market fee on controlled commodities.
20. Liability to pay market fee without a license.
21. Levy of market fee on matchboxes, soyabin products, Articles sold by Kisan Products Ltd., and Pan.
22. Levy of market fee on vendors of fruits and vegetables through Commission Agents.
23. Levy of market fee only on transactions where the seller is a producer.
24. Levy of market fee only on transactions where the seller is the purchaser of agricultural produce.
Issue-wise Detailed Analysis:
Points 1 to 4:
The court held that the notification of big areas as Market Areas does not offend any provision of law. Any area, big or small, including towns and villages, can be declared as Market Area under Section 6 of the Act. Market Yards have been established, and traders are required to take out licenses under Section 9(2) read with Section 11 of the Act. The court emphasized that the question of rendering service and its correlation to the charging of fees has been elaborately discussed in the decision of Kewal Krishan Puri's case. The court also noted that Market Committees have not been constituted yet in accordance with the provisions of Section 13 of the Act but temporarily under the Uttar Pradesh Krishi Utpadan Mandi Samitis (Alpakalik Vyawastha) Adhiniyam, 1972. The court expressed the need for a machinery for adjudication of disputes under the Rules but stated that in the absence of such machinery, market fees can still be levied and collected.
Point 5:
The court held that the fixing of the minimum of 1% fee by itself is not illegal but would be subject to the rendering of adequate services as explained in Kewal Krishan Puri's case. The facts presented were too meager to indicate that services to the extent of the fee levied at 1% are not being rendered. The court upheld the levy of market fees at 1% throughout the State of Uttar Pradesh by all the Market Committees, stating it does not go beyond the quid pro quo theory discussed in Puri's case.
Point 6:
The notification dated 11-4-1978 indicated that 250 Market Committees have been constituted and about 115 items have been selected for the levy of market fees. The court found that none of the items specified in the notification could not be covered by the Schedule, which is part of the Act. The definition of agricultural produce is very wide, and the challenge to the notification on the ground of lack of application of mind was rejected.
Point 7:
The court held that there cannot be any multi-point levy of market fees in the same market area. Section 17(iii)(b) of the Act, as amended by U.P. Act 7 of 1978, specifies that market fees are payable on transactions of sale of specified agricultural produce in the market area at rates not less than one percentum and not more than one and a half percentum of the price of the agricultural produce sold. The court clarified that if the produce is purchased from a producer directly, the trader shall be liable to pay the market fee to the Committee. However, if the same produce or any product of the same produce is sold to another trader, neither the seller-trader nor the purchaser-trader can be made to pay the market fee again.
Point 8:
The court held that the retrospective operation of the law brought by U.P. Act 7 of 1978 is not bad. The court stated that if market fees have been realized by any Market Committee in respect of transactions of sale of agricultural produce taking place between 12-6-1973 and the coming into force of U.P. Act 7 of 1978, no market fee under the amended law can be realized again. However, if market fees have not yet been realized, they can be realized in accordance with the amended provision of the law.
Point 9:
The court held that market fees could be levied on transactions of goods not produced within the limits of a particular market area by the Market Committee of that area, provided the transactions take place within the limits of that market area. The court found no provision in the Act or the Rules to limit the operation of the law to agricultural produce produced in that area.
Point 10:
The court clarified that if paddy is purchased in a particular market area by a rice miller and converted into rice, the rice miller will be liable to pay market fees on his purchase of paddy from the agriculturist-producer under Sub-clause (2) of Section 17(iii)(b). He cannot be asked to pay market fees again on the transaction of rice. The court emphasized that market fees should be levied and collected in relation to the transaction of paddy alone.
Point 11:
The court held that market fees are leviable on transactions of hides and skins as no market fees can be charged on transactions of sale and purchase of animals in a market area in the State of Uttar Pradesh, the same having not been included in the notification. If animals were included in the notification, no market fees could be charged on hides and skins in the same market area.
Point 12:
The court held that market fees can be charged on the purchase of wood by a trader from a producer, but no fees can be charged on the sale of furniture manufactured by the purchaser of wood. The court left the question of fact regarding Catechu to be decided by the Market Committees concerned in the first instance and then by a court of law.
Point 13:
The court held that the license involved the sale of wood and a right to go to the land to cut that wood. The licensee-producer of wood would be a purchaser of agricultural produce within the meaning of Sub-clause (2) of Section 17(iii)(b) of the Act, liable to pay market fees, regardless of the use made of the wood.
Point 14:
The court held that Kirana goods included in the notification brought from outside a particular market area or even from outside the State of Uttar Pradesh are chargeable to market fees when their sale takes place in a particular market area. If sold to consumers, no market fees can be levied in view of the proviso added in 1979.
Point 15:
The court held that market fees can be charged on transactions of tobacco as it is included in the notification. The court emphasized that market fees will be leviable if tobacco is purchased in the same market area from an agriculturist in accordance with Sub-clause (2) or under Sub-clause (3) otherwise. Similar is the position regarding tendu leaves. The court noted that bidi cannot be treated as agricultural produce and no market fees are being charged on the transactions of bidi.
Point 16:
The court rejected the argument that no market committee could be constituted in a municipal area or a Nyaya Panchayat, finding no substance in this point.
Point 17:
The court held that rab galawat and rab salawat cannot be subjected to a separate charge of market fees apart from the transaction of rab. Market fees can be levied on the first transaction of rab taking place in any market area in accordance with any of the Sub-clauses of Section 17(iii)(b).
Point 18:
The court held that no market fees can be charged if goods are merely brought into a market area and dispatched outside without any transaction of sale taking place therein. If the bringing of goods and their dispatch are as a result of transactions of purchase and sale taking place outside the market area, no fees can be levied.
Point 19:
The court rejected the argument that no market fees can be levied on controlled commodities, stating that even if a commodity is sold pursuant to controlled regulations, it is still a transaction of sale.
Point 20:
The court held that a producer-trader will be required to take out a license in accordance with Section 9(2) of the Act. The court emphasized that merely for the lapse of not taking out a license, a trader cannot escape the liability to pay market fees.
Point 21:
The court held that market fees can be charged only on the transactions of purchase of wood, soyabin, and other agricultural produce, and not on the sale of products after processing.
Point 22:
The court held that when fruits and vegetables are sold through a commission agent by the producer, the commission agent is liable to pay the market fees and can realize it from the purchaser. The burden does not fall on the producer.
Point 23:
The court rejected the argument that market fees can be charged only on transactions where the seller is the producer of agricultural produce, stating that even traders under certain circumstances have been made liable to pay such fees.
Point 24:
The court rejected the argument that market fees can be charged only on transactions where the seller is the purchaser of agricultural produce, stating that the plain meaning of the section cannot be cut down.
Conclusions:
The court held that market fees should be regularized and charged in the light of this judgment. Any amounts realized contrary to this judgment should be refunded by the Market Committee concerned within six months. Market fees due from traders should also be charged and paid within six months. Disputed questions of fact should be decided by the Market Committee quickly, leaving the person concerned to agitate the matter in a court of law, preferably in the High Court. The court emphasized that services should be rendered by the various Market Committees in the light of the judgment in Kewal Krishan Puri's case. The appeals and writ petitions were partly allowed and partly dismissed with no order as to costs.
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1980 (3) TMI 261
Issues involved:
The validity of a notice issued under section 7 of the Administration of Evacuee Property Act, 1950 and the subsequent proceedings based on it.
Summary:
The appeal arose from a notice issued under section 7 of the Administration of Evacuee Property Act, 1950, leading to a declaration of the appellant as an evacuee. The notice was challenged in a writ petition before the High Court, which was dismissed. The notice lacked specific grounds and failed to comply with Rule 6 of the Administration of Evacuee Property (Central) Rules, 1950. The declaration of the appellant as an evacuee under multiple clauses of section 2(d) was found to be invalid as it exceeded the scope of the notice. The proceedings were initiated without proper evidence or basis, rendering them invalid.
The High Court's order dismissing the writ petition was overturned by the Supreme Court, quashing the notice and all subsequent proceedings. The Court emphasized the importance of a valid notice under section 7 and the necessity for compliance with Rule 6 in such matters. The lack of specific grounds in the notice and the initiation of proceedings without proper evidence were highlighted as key reasons for declaring the proceedings invalid. The appeal was allowed, and no costs were awarded as the respondents did not contest the appeal.
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1980 (3) TMI 260
Issues Involved:
1. Whether the respondents' conduct amounted to Contempt of Court.
2. Whether the application for contempt was barred by limitation.
3. Whether the filing of the application dated December 14, 1972, constituted a specific act of contempt.
Summary:
Issue 1: Whether the respondents' conduct amounted to Contempt of Court.
The respondents, M/s. Madhya Pradesh Khair Industries, represented by Om Prakash Agrawal, engaged in a series of legal maneuvers to circumvent orders from both the Patna and Calcutta High Courts. They filed multiple applications before a Single Judge of the Calcutta High Court to nullify or circumvent orders from Division Benches, thereby obstructing the due course of judicial proceedings. The Supreme Court noted that "abuse of the process of the Court calculated to hamper the due course of a judicial proceeding or the orderly administration of justice... is a contempt of Court." The respondents' actions were deemed to be a "daring 'raid' on the Court" and an abuse of the judicial process, thus constituting Criminal Contempt u/s 2(c) of the Contempt of Courts Act.
Issue 2: Whether the application for contempt was barred by limitation.
The Patna High Court dismissed the State of Bihar's application for contempt on the grounds that it was filed beyond the one-year limitation period prescribed by section 20 of the Contempt of Courts Act. The High Court held that the material allegation related to the filing of the application dated April 7, 1971, which was beyond the limitation period. However, the Supreme Court disagreed, emphasizing that the continuous contumacious conduct of the respondents should be taken into account, particularly the application dated December 14, 1972.
Issue 3: Whether the filing of the application dated December 14, 1972, constituted a specific act of contempt.
The Supreme Court found that the application dated December 14, 1972, was an abuse of the process of the Court, intended to obstruct the proceedings in the money suit in the Court of the Subordinate Judge, Palamau. The Court noted that this application was made despite an earlier order from the Division Bench of the Calcutta High Court permitting the money suit to proceed. The Supreme Court held that the filing of this application was a clear act of Criminal Contempt of Court, as it was calculated to obstruct the due course of a judicial proceeding and the administration of justice.
Conclusion:
The Supreme Court allowed the appeal, finding the respondents guilty of Criminal Contempt of Court. The respondents' conduct was deemed reprehensible, warranting condemnation by the imposition of a sentence. Each respondent was sentenced to pay a fine of Rs. 500, in default of which they would undergo simple imprisonment for two weeks. The appeal was thus allowed.
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1980 (3) TMI 259
Issues:
1. Liability of the petitioner for compensation in a road accident case.
2. Consideration of criminal case acquittal in civil suit for compensation.
3. Quantum of compensation and dismissal of cross-claims.
4. Judicial approach towards road accidents, liability, and compensation.
5. Need for no-fault liability legislation and timely disposal of accident cases.
Analysis:
1. The Supreme Court upheld the High Court's decision holding the petitioner vicariously liable to pay compensation for a road accident where a stage carriage hit a high tension wire, resulting in casualties. Despite the driver's acquittal in a criminal case, the court found the driver's rashness and negligence to be the cause of the accident, leading to the petitioner's liability for compensation under the Motor Vehicles Act.
2. The court rejected the argument that the civil suit for compensation should follow the acquittal in the criminal case, emphasizing the difference in the standards of culpable rashness under the law of tort and negligence under criminal law. The court affirmed the High Court's decision to hold the petitioner liable for compensation based on the evidence presented before the Accidents Claims Tribunal.
3. The High Court moderately fixed the quantum of compensation, which the Supreme Court found reasonable. Despite a potential case for enhancement, the court declined to interfere with the High Court's decision on compensation. Additionally, the cross-claims were dismissed by the High Court, and the Supreme Court upheld this dismissal as well.
4. The Supreme Court highlighted the prevalence of road accidents in the country, particularly involving truck and bus drivers operating at night. The court emphasized the need for courts to infer culpability from circumstances in cases of road accidents to ensure that innocent victims receive compensation and negligent drivers and owners are held accountable. The court criticized judicial laxity that allows transport operators to escape liability and called for no-fault liability legislation to address the issue effectively.
5. The court expressed concern over the delay in the disposal of accident cases, leading to postponed compensation for victims. The court urged states to appoint an adequate number of tribunals and High Courts to ensure quick disposal of cases to prevent further trauma and injustice for victims. The court dismissed the petitioner's plea under Article 136 of the Constitution, emphasizing the importance of considering human suffering in cases involving operational negligence.
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1980 (3) TMI 258
Issues involved:
The case involves allegations of murder and allied offenses against police officers, the jurisdictional hurdle in granting bail, and the responsibility of the State in ensuring justice and upholding the rule of law.
Allegations of Murder and Allied Offenses:
The petitioner, a complainant in a criminal case, accused 2 Sub-Inspectors and 8 Constables of murder and related offenses under various sections of the Penal Code. The complaint detailed a gruesome incident where the victim was shot and killed by one of the Sub-Inspectors, leading to non-bailable warrants being issued. The accused policemen claimed self-defense, alleging the victim was a criminal who resisted arrest. The courts emphasized the need for an impartial trial and cautioned against pre-judging guilt based on preliminary evidence.
Jurisdictional Hurdle in Granting Bail:
The petitioner argued that the accused, not in custody, should not be eligible for bail as per Section 439 of the Criminal Procedure Code. However, the accused had surrendered before the Sessions Judge, establishing judicial jurisdiction for bail consideration. The courts clarified that custody, for bail purposes, includes physical presence before the court and submission to its authority. Despite irregularities in the bail application process, the Sessions Court exercised its discretion to grant bail, which was upheld by the High Court.
Responsibility of the State:
The Supreme Court expressed concern over the accused police officers potentially abusing their freedom and highlighted the need for the Inspector General of Police to monitor their conduct closely. Criticism was directed at the State for allowing the accused officers to remain on duty despite serious charges, emphasizing the importance of upholding the rule of law and ensuring justice for all. The Court urged the State to take corrective measures and sent a copy of the judgment to the Home Ministry for necessary action to prevent similar errors in the future.
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1980 (3) TMI 257
Issues Involved:
1. Validity of the "Circumstances and Property Tax".
2. Application of Article 276(2) of the Constitution.
3. Legislative competence of the State Legislature to impose the tax.
Summary:
1. Validity of the "Circumstances and Property Tax":
The Supreme Court examined the validity of the "Circumstances and Property Tax" imposed by the Zila Parishad, Bareilly, and the Town Area Committee of Kuraoli. The tax was initially imposed by the District Board of Bareilly under the District Boards Act, 1922, and continued under the U.P. Kshetra Samitis and Zila Parishads Act, 1961. The appellants challenged the tax's constitutional validity, arguing it was a tax on income, which the local authorities were not competent to levy.
2. Application of Article 276(2) of the Constitution:
The appellants contended that the tax on "circumstances and property" was essentially a tax on professions, trades, callings, and employments, and thus, the total amount payable could not exceed Rs. 250 per annum as per Article 276(2) of the Constitution. The Full Bench of the Allahabad High Court, however, held that the tax was a composite tax on a person's status and financial position, not merely on professions, trades, callings, or employments. Consequently, the limitation under Article 276(2) did not apply.
3. Legislative Competence of the State Legislature:
The Supreme Court affirmed that the tax on "circumstances and property" is not a tax on income but a composite tax on a person's financial position and status. The Court held that the tax falls within the legislative competence of the State Legislature under Entries 49 and 60 of List II of the Seventh Schedule, which relate to "taxes on lands and buildings" and "taxes on professions, trades, callings, and employments," respectively. The Court also noted that the tax could be referable to other entries in List II, such as Entry 58, which relates to "taxes on animals and boats."
The Court rejected the view that the tax fell under the residuary entry (Entry 97 of List I) and thus required saving under Article 277 of the Constitution. The Court emphasized that the substance of the tax, rather than its name, determines its legislative competence.
Conclusion:
The Supreme Court upheld the validity of the "Circumstances and Property Tax" in both appeals, dismissing the appeals with costs. The tax was deemed within the legislative competence of the State Legislature and not subject to the limitations of Article 276(2) of the Constitution.
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1980 (3) TMI 256
Issues Involved:
1. Notification of large areas as Market Areas without rendering services.
2. Validity of creation of Market Areas or Market Yards.
3. Validity of the appointment of Mandi Samitis (Market Committees).
4. Absence of machinery for adjudication of disputes in the Rules.
5. Fixation of minimum market fee by all Market Committees.
6. Alleged lack of application of mind in issuing the notification dated 11-4-1978.
7. Prohibition of multi-point levy of market fees.
8. Retrospective operation of the law brought by U.P. Act 7 of 1978.
9. Levy of market fee on goods not produced within a particular market area.
10. Levy of market fee on both paddy and rice.
11. Levy of market fee on hides and skins but not on animals.
12. Levy of market fee on wood but not on furniture or Catechu.
13. Levy of market fee on wood cut from jungles by manufacturers.
14. Levy of market fee on Kirana goods brought from outside the market area.
15. Levy of market fee on tobacco, Tendu leaves, and bidis.
16. Levy of market fee in municipal areas or Nyaya Panchayats.
17. Levy of market fee on rab salawat and rab galawat.
18. Levy of market fee if goods are brought into a market area and dispatched without transactions.
19. Levy of market fee on controlled commodities.
20. Levy of market fee if no license is issued or taken.
21. Levy of market fee on matchboxes, soyabin products, Kisan Products Ltd. articles, and Pan (betel leaves).
22. Levy of market fee from vendors of fruits and vegetables through their Commission Agents.
23. Levy of market fee only on transactions where the seller is a producer.
24. Levy of market fee only on transactions where the seller is the purchaser of agricultural produce.
Detailed Analysis:
Points 1 to 4:
The court found no substance in these points. Large areas can be declared as Market Areas under Section 6 of the Act. Market Yards have been established under Section 7, and the temporary Market Committees are legally constituted under the Uttar Pradesh Krishi Utpadan Mandi Samitis (Alpakalik Vyawastha) Adhiniyam, 1972. The absence of a dispute adjudication machinery in the Rules does not invalidate the levy or collection of market fees. The court expressed hope that such machinery would be established soon.
Point 5:
The fixing of a minimum market fee at 1% by the legislature is not illegal, provided adequate services are rendered. The facts did not indicate that services to the extent of the fee levied at 1% were not being rendered. The court upheld the levy of market fees at 1% throughout Uttar Pradesh.
Point 6:
The notification dated 11-4-1978, which constituted 250 Market Committees and specified 115 items for market fee, was found to be valid. The definition of agricultural produce is broad and includes various items specified in the Schedule.
Point 7:
The court held that there cannot be any multi-point levy of market fees in the same market area. Market fees can be levied only once on a specific transaction of agricultural produce within a market area. However, fees can be levied on fresh transactions in different market areas.
Point 8:
The retrospective amendment of Section 17(iii)(b) by U.P. Act 7 of 1978 is valid. Market fees already realized cannot be re-levied, but fees not yet realized can be collected under the amended law. The court found no reason to invalidate the retrospective operation of the law.
Point 9:
Market fees can be levied on transactions of goods not produced within the limits of a particular market area, provided the transactions take place within that area. The court found no provision in the Act or Rules limiting the operation of the law to agricultural produce produced within a specific market area.
Point 10:
The court clarified that market fees can be levied on either paddy or rice but not both within the same market area. If paddy is purchased and converted into rice, the fee is levied on the paddy transaction. If paddy is brought from another market area, the fee can be levied on the rice transaction.
Point 11:
Market fees can be levied on transactions of hides and skins, but not on animals, as animals are not included in the notification. The court rejected the argument that hides and skins are not agricultural produce.
Point 12:
Market fees can be charged on the purchase of wood but not on the sale of furniture. The court left the question of Catechu to be decided by the Market Committees and courts, as it involves factual determination.
Point 13:
The court held that the license to cut wood involves a sale transaction, making the licensee liable to pay market fees. The use of wood by the manufacturer is immaterial for fee liability.
Point 14:
Market fees can be levied on Kirana goods included in the notification, even if brought from outside the market area, provided the sale takes place within the market area.
Point 15:
Market fees can be levied on transactions of tobacco and Tendu leaves but not on bidis. Bidi manufacturers purchasing tobacco and Tendu leaves are liable to pay market fees on those transactions.
Point 16:
The court rejected the argument that no market committee can be constituted in a municipal area or Nyaya Panchayat, finding no substance in this point.
Point 17:
Market fees can be levied on the first transaction of rab, but not on rab galawat and rab salawat if they are by-products. The court left factual disputes to be decided by the Market Committees and courts.
Point 18:
Market fees cannot be levied if goods are brought into a market area and dispatched without any transaction of sale taking place within that area.
Point 19:
The court rejected the argument that market fees cannot be levied on controlled commodities, holding that such transactions still qualify as sales.
Point 20:
A producer-trader must take out a license and pay market fees. The court distinguished this case from Raunaq Ram Tara Chand & Ors. v. The State of Punjab & Ors., finding that market fees can be charged even if no license is taken.
Point 21:
Market fees can be charged on the purchase of wood, soyabin, and other agricultural produce but not on the sale of processed products like matchboxes or soyabin products.
Point 22:
Market fees can be charged on transactions of fruits and vegetables sold through commission agents, with the liability falling on the commission agent and ultimately the purchaser.
Points 23 and 24:
The court rejected the argument that market fees can only be charged on transactions where the seller is a producer or purchaser of agricultural produce. The court approved the Patna High Court's view, holding that traders can also be liable for market fees.
Conclusions:
The court directed that market fees should be regularized and charged in light of this judgment. Any fees realized contrary to this judgment should be refunded within six months, and fees due should be paid within the same period. Disputed questions of fact should be decided by the Market Committees and, if necessary, by the High Court. The court expressed hope that services would continue to be rendered by the Market Committees in light of the judgment in Kewal Krishan Puri's case. The appeals and writ petitions were partly allowed and partly dismissed with no order as to costs.
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