The Lawyer's Digest is a collection of concise summaries of judgments passed by the Supreme Court of India over the course of a month.

Topics have been sub-divided into areas of law for ease of reading. Here are the summaries of judgments passed in December 2023.

In Sushma Shivkumar Daga & Anr. v. Mahurkumar Ramkrishnaji Bajaj & Ors, it was noted that the arbitration clause was sufficiently and widely worded to cover all civil suits between the parties. It was further reiterated that the underlying principles of Sections 8 and 11, particularly after the 2015 amendments, was to ensure minimum judicial intervention except on the ground where, prima facie, no valid arbitration agreement exists or the dispute is “manifestly non-arbitrable”. It was further held that, to minimise judicial interference, tribunals were given powers to examine all jurisdictional issues such as the existence and validity of an arbitration clause under Section 16.

[Aniruddha Bose J., Sudhanshu Dhulia J.]

[Keywords: Section 8 of the Arbitration & Conciliation Act 1996, 246th Law Commission Report, 2015 Amendments, judicial interference, “any dispute, in relation to these agreements or in relation to any matter touching or arising from this Agreement, shall be referred to arbitration”]

In Cox & Kings Ltd v. SAP India Pvt. Ltd, the Supreme Court upheld the validity of the ‘Group of Companies’ Doctrine. The applicability of the doctrine, as was first found in the case of Chloro Controls v. Trent Severn Water Purification Inc, was doubted by a co-ordinate bench of the Supreme Court in Cox & Kings (3 judges) which necessitated a reference to a five-judge bench to decide on the validity of the doctrine. Per the Group of Companies doctrine, as laid down in Chloro Controls, in exceptional cases a non-signatory to an arbitration agreement can still be made a party provided that the four tests of subject-matter commonality, direct relationship between parties, composite nature of the transaction necessitating the non-signatory’s performance and a composite reference to parties, are met. The Court, upon emphasizing on the need to adopt a pragmatic view to consent, bearing in mind the commercial realities of the day where often, the party undertaking to perform in the contract may be a non-signatory, proceeded to uphold the doctrine. The Court added a caveat that the doctrine was evolved specifically in the context of arbitration and that the determination of the conduct of a non-signatory party is a fact-based exercise. The threshold for the application of the doctrine was found to be the implied consent of the non-signatory as evinced by its conduct. Further, the Court observed that the origin of the doctrine cannot be traced to the phrase “claiming through or under them” as it appears in Sections 8, 35, and 45 of the Arbitration Act, and to such extent, proceeded to hold the reasoning in Chloro Controls as incorrect. 

[D.Y Chandrachud CJ, Hrishikesh Roy J, J.B Pardiwala J, P.S Narasimha J, Manoj Misra J]

[Keywords: group of companies doctrine, persons claiming through or under them, separate legal personality, single economic entity, consent evinced from conduct, non-signatory to arbitration agreement, composite transaction] 

In Sayunkta Sangarsh Samiti & Anr. v. The State of Maharashtra & Ors, it was held that private agreements cannot be enforced in Slum Rehabilitation Schemes as against the statutory mandate of the Slum Rehabilitation Authority, Maharashtra. In the case before it, the bench noted that despite Section 42 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act 1971, which proscribed civil suits, the developer had filed a civil suit against some slum dwellers and eventually entered into private agreements with them. The terms of the agreement/ consent terms were found to be contrary to the rules and regulations.

[Aniruddha Bose J., Sudhanshu Dhulia J.]

[Keywords: Dharavi, Byculla and Khar, bubonic plague, Bombay Improvement Trust, Bombay Development Department, Slum Areas (Improvement and Clearance) Act 1956, Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act 1971, Maharashtra Regional and Town Planning Act 1966, Development Control Regulations, J.R. Boricha Marg, “Guidelines for the Implementation of Slum Rehabilitation Schemes in Greater Mumbai”]

In M/s North Eastern Chemicals Industries (P) Ltd. & Anr. v. M/s Ashok Paper Mill (Assam) Ltd. & Anr., the bench held that the Jogighopa Act is not governed by the prescription of limitation under Article 116 of the Limitation Act since an appeal against an order of the Commissioner of Payments was not an appeal under the Code of Civil Procedure (CPC) since Assam had categorically limited the CPC’s application to only certain aspects of the Jogighopa Act. The sui generis nature of the appeal was evident from the fact that the Jogighopa Act allowed a High Court judge to be the Commissioner of Payments and provided an appeal therefrom to the division bench. It was further held that, in the absence of any particular period of time prescribed to file an appeal, the same would be governed by the principle of ‘reasonable time’ i.e. by virtue of its very nature, no straitjacket formula could be laid down and it had to be determined as per the facts and circumstances of each case.

[Abhay S. Oka J., Sanjay Karol J.]

[Keywords: Article 116 of the Limitation Act 1963, Jogighopa (Assam) Unit of Ashok Paper Mills Limited (Acquisition Transfer of Undertaking) Act 1990, expression unius est exclusion alterius]

In Delhi International Airport Ltd. v. Airport Economic Regulatory Authority (AERA) and Ors., a Miscellaneous Application was filed on the ground of discovery of ‘new and important piece of evidence’, i.e., a correspondence between the Ministry of Civil Aviation and AERA. The Court held that since the nature of jurisdiction exercised by it was predicated on two specialist authorities / tribunals having applied their mind to it, it remanded the matter to the TDSAT to examine the impact of the aforesaid correspondence and take an independent view on the same since the same could not be done in the earlier round of litigation.

[Sanjay Kishan Kaul J., M.M. Sundresh J.]

[Keywords : Aeronautical charges, remand, Hypothetical Regulatory Asset Base, DIAL and MIAL, State Support Agreement, Single Till mechanism, cost recovery principle]

In Mohammad Abdul Walid v. Niloufer, the Supreme Court laid down the principle that a party to a civil suit who is deposing as a witness can be confronted with fresh documents at the stage of cross-examination. The Court found fault with a judgment delivered by the Bombay High Court and observed that while it is permissible to confront a witness during cross-examination with a fresh document, the same is not permissible with a party to a civil suit. 

The Court examined the provisions of the Civil Procedure Code and the Evidence Act in detail to observe that for the purposes of adducing evidence, both a ‘party’ and a ‘witness’ stand on the same footing. The Court added that, otherwise, the legislature would have differentiated explicitly between a witness simpliciter and a witness who is a party for the purpose of Order XVIII Rule 3A. Further, the Court examined Section 120 of the Indian Evidence Act in considerable detail to hold that parties to a suit are competent witnesses. The Court concluded that there cannot be an artificial distinction between “witness” and a party who happens to be a witness in a civil suit.

[B.R Gavai J, Sanjay Karol J]

[Keywords: cross-examination, fresh documents, witness, party to a suit who is also a witness, artificial distinction]

In In Re: Article 370 of the Constitution, a Constitution Bench of the Supreme Court unanimously upheld the abrogation of Article 370 of the Constitution by the Government of India. The majority opinion was penned by CJI DY Chandrachud, and he was joined by BR Gavai J. and Surya Kant J. Sanjay Kishan Kaul J. and Sanjiv Khanna J. penned concurrent opinions.

[DY Chandrachud CJI., BR Gavai J., Surya Kant J., Sanjay Kishan Kaul J., Sanjiv Khanna J.] 

In Ram Kishor Arora v. Directorate of Enforcement, it was held that the expression “as soon as may be”, contained in Section 19 of Prevention of Money Laundering Act 2002, was required to be construed as “as early as possible without avoidable delay” or “within reasonably convenient” or “reasonably requisite” period of time. It was noted that since there was a duty cast on the concerned officer to forward a copy of the order along with the material in his possession to the Adjudicating Authority immediately after the arrest of the person, and to take the person arrested to the concerned court within 24 hours of the arrest, thus the reasonably convenient or reasonably requisite time to inform the arrestee about the grounds of his arrest would be twenty-four hours of the arrest. The Bench noted that the Court in Pankaj Bansal's case directed State agencies to furnish the grounds of arrest in writing as a matter of course, “henceforth” i.e. from the date of the pronouncement of the judgment. On the facts before it, the bench held that an arrest would not be illegal under Section 19 of the PMLA if the Enforcement Directorate handed over the document containing the grounds of the arrest to arrestee and took it back after obtaining the endorsement and his/her signature thereon, as a token of s/he having read the same, and in not furnishing a copy thereof to the arrestee at the time of arrest would render the arrest illegal under Section 19 PMLA.

[Bela M. Trivedi J., Satish Chandra Sharma J.]  

[Keywords: Vijay Madanlal Choudhary, Pankaj Bansal, Article 22(1) of the Constitution, doctrine of binding precedent, per incuriam]

[Note: In this judgment, the bench discussed the doctrine of binding precedent even though it did not go so far as to hold, leave alone discuss, whether the judgment of the two-judge bench in Pankaj Bansal was inconsistent with the judgment of the larger bench in Vijay Madanlal Choudhary.]

In Afjal Ansari v. State of Uttar Pradesh, the Supreme Court, by a 2:1 majority, overturned the judgment of the Allahabad High Court upholding the conviction of the appellant under the Uttar Pradesh Gangsters Act, 1986 read with Section 389(1) of CrPC and consequently restored his membership to the Lok Sabha as the elected representative of the Ghazipur Constituency. The appellant had been convicted by a Special Court for offences under the 1986 UP Gangsters Act, based on circumstantial evidence. The Court found that the conviction by the trial court is not based on cogent evidence, and was rather premised on certain old FIRs (six FIRs) arraigning the appellant as an accused, in which cases a trial was conducted and the appellant was acquitted. The High Court’s refusal to grant a stay on the conviction was held to be incorrect by the Supreme Court, finding that the appellant was a Member of the Legislative Assembly and that his disqualification by virtue of sustaining the conviction would result in irreparable injury to the electorate which cannot be compensated. The Court declined to comment on the aspect of criminalization of politics by holding that courts ought to apply the law strictly. However, Justice Dipankar Dutta dissented from the majority judgment of the full bench, by reasoning that the appellant’s status as a Member of Parliament ought not to be a ground for suspending the conviction within the narrow grounds under Section 389(1) of CrPC. 

[Surya Kant J., Ujjal Bhuyan J, Dipankar Dutta J]

[Keywords: U.P Gangsters Act, 1986, s.389(1) of Cr.P.C, Gang chart, Conspiracy, Extortion, Acquittal in the Old FIR, Suspension of sentence, Stay on Conviction, Irreparable harm to the electorate, by-election, strict interpretation.]

In Saumya Chaurasia v. Directorate of Enforcement, the Supreme Court refused to intervene to set aside the decision of the Chhattisgarh High Court denying the appellant bail against her arrest under provisions of the Prevention of Money Laundering Act. The issue arose upon the arrest of the respondent, following the arrest and trial of one Suryakant Tiwari by the Karnataka Police for offences under the IPC which were also scheduled offences under the PMLA. The appellant contended that certain scheduled offences under the Act had been dropped from the chargesheet. She submitted that the High Court had perused a chargesheet filed on June 8 and a cognisance order filed on June 16, but had refused to recognise the absence of scheduled offences against her. Notably, the chargesheet was filed and the cognisance was taken after the High Court had reserved the judgment. During the hearing of the Special Leave Petition, Court asked the appellant during oral submissions if the chargesheet and the cognizance order were brought to the notice of the High Court, to which the petitioners' lawyers answered in the affirmative. However, it later emerged that the chargesheet was not actually produced before the High Court. Citing the Supreme Court Rules, the bench in its judgment emphasised that special leave petitions should be confined to the pleadings before the lower court and any necessary annexures. In this connection, the Court also criticised the oversight in verifying facts by appellant's legal team. On merits the Court observed that prima facie evidence was collected by the respondent disclosing the involvement of the respondent, in her capacity as the Deputy Secretary of the Chief Minister’s Office, Chhattisgarh. The Court observed, citing Vijay Madanlal Chowdhary v. Union of India that until the time the FIRs against Suryakant Tiwari were quashed or until he was discharged or acquitted, the scheduled offences stand against the appellant and her arrest was not unlawful. 

[Aniruddha Bose J, Bela Trivedi J]

[Keywords: Prevention of Money Laundering Act, schedule offences, unlawful arrest, bail, proceeds of crime, incorrect statement without verification]

In Manik Hiru Jhangiani v. State of Madhya Pradesh, the appellant was the proprietor of a chain of retail stores, and was charged on in November 2010 with the offence of misbranding certain food items under the Prevention of Food Adulteration Act, 1954 which has been repealed with effect from August 5, 2011. While Section 16 of the 1954 Act imposes penalty for the offence of misbranding with imprisonment for a period less than three years and/or a fine not exceeding ₹ 1,000, a subsequent introduction of the Food Safety and Standards Act, 2006 also penalizes the offence of misbranding. The Court observed that it is not possible to charge the appellant with penal provisions under two different statutes for the same offence as per the Rule against double jeopardy under Article 20(1) of the Constitution of India. Noting that at the time of commission of the offence, both the 1954 Act and the 2006 Act were in force and that the 2006 Act has an overriding provision, the Court observed that the High Court ought to have quashed the proceedings against the appellant commenced under the 1954 Act. Having held thus, the Court proceeded to set aside the High Court’s order confirming the penalty on the appellant and allowed the appeal. 

[Abhay S. Oka J, Sanjay Karol J]

[Keywords: Prevention of Food Adulteration Act, 1954, Food Safety and Standards Act, 2006, Rule against double jeopardy, penal provisions for the same offence under two different statutes, inconsistency between statutes] 

In Chhote Lal v. Rohtash & Ors, the appellant complainant moved the Supreme Court challenging the High Court’s order acquitting the respondent accused as against the conviction and sentence imposed by the trial court against the respondent accused for charges inter alia involving Section 302 (murder) of the Indian Penal Code. Both the appellant complainant and three of the respondents were part of the Delhi Police and on the date of the incident, the appellant was travelling with the deceased whereafter they were knocked down by the accused and escorted away. The deceased was subsequently found murdered and disposed off by burning of his remains. While the trial court convicted the accused, the High Court observed that the conviction based on circumstantial evidence does not establish the guilt of the accused beyond reasonable doubt. The Court could not find fault with the High Court’s reasoning and thus declined to intervene and set aside the High Court’s order. 

[Abhay S. Oka J, Pankaj Mithal J]

[Keywords: guilt beyond reasonable doubt, bald statement, absence of injuries on the complainant, acquittal] 

In Amanat Ali v. State of Karnataka and others, the bench invoked its powers under Article 142 of the Constitution and followed its principles laid down in Amish Devgan v. Union of India and others (2021) 1 SCC 1, and directed the consolidation of FIRs registered in Madhya Pradesh for being tried together as one trial as far as possible as multiplicity of proceedings would “not be in the larger public interest…” At the same time, the bench refused to or a transfer on an inter-State basis. 

[BR Gavai J., Aravind Kumar J.]

[Keywords: consolidation of cases, consolidation of FIRs]

In Surjit Singh v. State of Punjab, the bench noted that the dying declaration, allegedly recorded, would have to be discarded since the doctor, who attested to the fitness of the deceased making that declaration, was not examined. [Abhay S Oka J., Pankaj Mithal J.]

[Keywords: dying declaration, murder]

In Sekaran v. The State of Tamil Nadu, the challenge was to a judgment of the High Court which convicted the appellant for an offence under Section 304 Part II, and sentenced him to five years of rigorous imprisonment. The Court held that there was no legal bar in convicting an accused resting on part of the evidence if found credible. However, where the evidence is so inseparable that any attempt to separate them would destroy the substratum on which the prosecution version is founded, the Court would be within its legal limits to discard the evidence in its entirety. On facts, the delay in lodging FIR without a proper explanation, and there being no cogent evidence, led the Court to grant benefit of doubt and acquit the appellant.

[BR Gavai J., Dipankar Datta J., Aravind Kumar J.]

[Keywords : Delay in FIR, part evidence, beyond reasonable doubt, acquittal, hostile witness] 

In Ram Lal v. State of Rajasthan and Ors., two issues arose. First, whether the dismissal of the appellant from service pursuant to the departmental enquiry was justified. Second, the effect of the acquittal by the appellate judge in the criminal trial, on the order of dismissal passed in the departmental enquiry. The Court held that the enquiry officer had drawn an inference about the proof of charges by ignoring crucial and relevant evidence on record, and the Disciplinary Authority and the Appellate Authority had merely reiterated those findings. Accordingly, the disciplinary proceedings were quashed. Insofar as the second issue is concerned, the Court held that since the appellant was acquitted after full consideration of prosecution evidence, and after noticing that the prosecution had miserably failed to prove the charges, the benefit of the same ought to flow to him. The appellant was, accordingly, reinstated with all consequential benefits including seniority, notional promotions and fitment of salary.

[JK Maheswari J., K.V. Viswanathan J.]

[Keywords : Departmental enquiry, trial, not proved, disproved, disciplinary proceedings, reinstatement, back wages]

In Union of India v. Air Commodore N.K Sharma (Retd), the issue before the Supreme Court concerned the correctness of the order passed by the Armed Forces Tribunal, which directed the appellant-Union to reinstate the respondent to the post of JAG (Advocate) while his superannuation age of 57 years passed by in 2014. The facts reveal that the respondent qualified as a Judge Advocate in 1991, and whereafter in 2010, he was appointed as the JAG. As of 2013, the respondent in his Parent Branch was elevated to the rank of Air Commodore by respective Promotion Boards. As things stood thus, in 2012 the Ministry of Defence designated the post of JAG with the rank of an Air Vice Martial (AVM). At the time of the respondent’s promotion as an Air Commodore and a JAG within the terms of AFI 71/74, another person had been serving as the AVM. The respondent’s grievance was that upon superannuation of the previous officer, the post of JAG laid vacant, despite which there was no Promotion Board constituted for promotions amongst his course mates, noting that the Air Force has no separate policy for promotion of officers serving in legal duties. Such a Promotion Board for his parent branch was not constituted until 2015 by which time the respondent completed 57 years and has thus superannuated as per the conditions of his Parent Branch. While the Promotion Board has granted him disproportionate marks, noting that respondent is the only JAG amongst his course-mates eligible for the rank of JAG (Air), his promotion was not accepted by the Ministry. The Armed Forces Tribunal ruled in the respondent’s favour, and directed the appellant to reinstate the respondent to the rank of JAG (Air), and also directed the appellant to form a policy for promoting officers performing legal duties. Finding that both the directions by the Armed Forces Tribunal to be beyond its remit as a quasi-judicial authority constituted under the Armed Forces Act, the Supreme Court set aside the impugned order. 

[Abhay S. Oka J., Sanjay Kumar J]

[Keywords: Armed Forces Act, Promotion Board, Separate Policy for promotion, Superannuation, quasi-judicial body] 

In State of Haryana v. Dinesh Singh, the Supreme Court examined the meaning of the term “contemplate” as it appears in Rule 9 of the Haryana Civil Service (Executive Branch) Rules, 2008. The instant case was initiated after the respondent challenged his disqualification for promotion upon the State government’s finding that disciplinary proceedings were contemplated against him as on the date of consideration. The respondent accrued a qualification for promotion when his name was included in the list of employees eligible for promotion was forwarded by the Principal Secretary (Finance) to the Chief Secretary. While an earlier letter dated April 17, 2017 ambiguously refers to November 1, 2018 as the uniform cut-off date for reckoning a candidate’s eligibility under all the sub-clauses of Rule 9 (which included a condition as to the age of a candidate), a subsequent communication redressed the anomaly and restricts the date of November 1, 2018 as a cut-off only with respect to candidate’s age. The lis before the courts in the instant matter, however, pertained to a different eligibility condition concerning pendency/ contemplation of disciplinary proceedings. On finding that November 1, 2018 was not the cut-off date for the said condition, the Court proceeded to hold that as on the date of consideration, i.e. August 31, 2019, the State Government contemplated initiating disciplinary proceedings against the respondent and he was consequently ineligible for promotion. 

[M.M Sundresh J., Aravind Kumar J]

[Keywords: Haryana Civil Service (Executive Branch) Rules, 2008, uniform cut-off date, anomaly, intention of the rule-maker, contemplation, disciplinary proceedings] 

In UP Singh v. Punjab National Bank, the petitioner was appointed as a clerk-cum-cashier in 1977 by the respondent. He was sentenced with suspension in 1982 for disorderly conduct. He was later awarded punishment of withholding two graded increments and a transfer to another branch upon enquiry. The petitioner failed to comply with the sentencing order transferring him. However the bi-partite agreement between the petitioner and respondent laid down the terms of service, which stated that the respondent bank had the option of deeming voluntary retirement in the event of the petitioner employee’s non-compliance with the order. The petitioner, upon being voluntarily retired, challenged the order imposing punishment after six years, wherafter he had succeeded before a tribunal. The tribunal’s award however, was set aside by the single judge and division bench of the High Court. The Supreme Court noted, on the facts of the case, that the respondent bank has been magnanimous in retiring the petitioner, after repeated reminders for rejoining the duty went unanswered. Holding that the relationship of master-servant persists even during the period of suspension, the Court refused to intervene and sustained the judgments of the High Court.

[Hima Kohli J, Rajesh Bindal J]

[Keywords: master-servant relationship, bipartite agreement, transfer, voluntary retirement, suspension] 

In Sanjay Pandurang Kalate v. Vistra ITCL (India) Limited and Ors., an appeal was filed under Section 62 of the Insolvency and Bankruptcy Code, 2016, against an order of the NCLAT dismissing an appeal against an NCLT order on the ground of limitation. On facts, the NCLT finally heard the application of the applicant on May 17, 2023. In the order uploaded by the Registry of the NCLT on May 30, 2023, the order carried the date of May 17, 2023. The appeal was e-filed on July 10, 2023. The question was whether the limitation of 45 days would run from May 17, 2023 or May 30, 2023.  The Court held that limitation would start running from the date of pronouncement. As to when is an order deemed to have been pronounced, the Court relied upon Rules 146, 150 and 151 of the NCLT Rules to note that there was a clear distinction between the ‘hearing’ of an appeal and ‘pronouncement’ of an order. Since the cause list for May 17, 2023 indicated that the case was listed for admission and not for pronouncement, it was held that limitation would start running only from May 30, 2023. The appeal was held to have been filed beyond 30 days, but within the condonable period of further 15 days. Thus, the appeal was restored to the NCLAT to consider as to whether the appellant had shown sufficient cause for condoning the delay beyond 30 days. Importantly, it was also reiterated that e-filing of an appeal would stop the limitation, and physical filing was not required for the said purpose.  

[Dr. Dhananjaya Y Chandrachud, CJI., J B Pardiwala J., Manoj Misra J.]

[Keywords : Insolvency and Bankruptcy Code, 2016, limitation, outer limit of 45 days, hearing and pronouncement, substantive order, e-filing, mandatory physical filing]

In Shakti Yezdani v. Jayanand Jayant Salgaonkar, the Supreme Court was called upon to examine Section 109(A) of the Companies Act allowing a company to vest the shares in a nominee to the exclusion of other persons, in relation to rights accruing to legal heirs of the testator concerning the subject shares. The Court examined the purpose of vesting of shares upon the nominee under Section 109(A) of the Companies Act, to be a stop-gap measure following the death of the holder of shares, thereby allowing the nominees to step in and protect the shares until the legal representatives can take the appropriate steps. The Court negated the contentions of the respondent that the term ‘vest’ used in Section 109(A) signifies the legislature’s intention to bestow ownership of the shares unto the nominees following the shareholders’ death. The Court concluded that provisions of Companies Act cannot be interpreted in a manner that would defeat the entitlement of persons under the appropriate succession laws. On a conspectus of judgments concerning the term ‘nominate’, the Court held that nomination would not lead to the nominee obtaining absolute title over the property. In holding so, the Court noted that the use of a non-obstante clause does not signify a legislative intent to bestow title on the nominee.

[Hrishikesh Roy J, Pankaj Mithal J]

[Keywords: Section 109(A), nominate, vest, to the exclusion of others, absolute title, nominee, legal representative, succession]

In Selvaraj v. Revathi, the appellant approached the Supreme Court against an order passed by the High Court in revision proceedings in a child custody case. Before the High Court, the appellant challenged the orders of the first appellate court and trial court’s interim orders in 2014, whereby the custody of the child was granted to the respondent (mother). However, the Court observed that the interim order granting custody with the mother has not been complied with and that the child remained with the appellant (father) since he (child) was aged two. Noting the circumstances of the case, the Supreme Court appointed V Mohana, Senior Counsel to act as a mediator between the parties to arrive at a settlement. Pursuant to the report made by the counsel, the Court allowed the appellant to retain the custody of the child but granted visitation rights to the mother, bearing in mind the welfare of the child. 

[Vikram Nath J, Rajesh Bindal J]

[Keywords: visitation rights, interim order, custody, welfare of the child, mediation, affected child]

In Commissioner of Income Tax v. M/s Jindal Steel & Power Ltd, the dispute between the parties concerned the quantum of deduction payable under Section 80 IA of the Income Tax Act, 1961 to the respondent assessee. The respondent was engaged in the business of manufacturing steel ingots, wherein its requirement of power exceeded the supply provided by the State Electricity Department. Hence, the respondent established captive power plants supplying electricity to its industrial units, and at the same time, supplying the excess power to the State Electricity Board. While the State supplied electricity to the respondent’s industrial units at a price of ₹3.72 per unit, the excess power was sold by the respondent to the State at a price of ₹2.83 per unit. During the Assessment for the year 2001-2002, the Assessing Officer disallowed the respondent assessee’s claim for deductions, which was based on the unit price of ₹3.72 under Section 80 IA on the ground that the maximum permissible deduction must be based on the same price at which the excess power was sold to the Electricity department. Before the Supreme Court, the question was what was the open market value of the electricity so produced and sold between two parties at arm’s length. The Court observed that the statutory regime did not permit the respondent to sell the electricity to a third party unless the State refused to purchase the same. Further, it was observed how the pricing is determinable by the State to a great extent, since power generation was the State’s monopoly. It was thus held that ₹2.82 per unit was not the market value of the electricity and that the High Court’s order allowing the full deduction warranted no interference. 

[B.V Nagarathna J, Ujjal Bhuyan J]

[Keywords: Deduction, Captive power plants, arm’s length transaction, open market value, monopoly of the state, inflated profits] 

In M/s Greater Ashoka Land Development Company v. Kanti Prasad Jain, the respondent filed a suit for specific performance, directing the appellant to deliver the agreed-upon plot of land purchased at the rate of ₹25 per square yard, pursuant to an advertisement for the sale of plots of land in Ashoka Enclave, Faridabad in 1961. Thereafter, in 1963 and 1971 there were certain statutory amendments in Haryana necessitating further approvals from the respondent and a revised price of ₹135 per square yard was demanded by the appellant for the sale of the plot. It was observed that the demand for additional money was made in 1981. Thereafter, the respondent sought details regarding the layout and the size of the plot that was being offered. When the appellant did not provide the details sought by the respondent, the respondent filed a suit for specific performance with an alternative prayer for damages, which was decreed by the trial court. The first appellate court reversed the trial court’s decree, which in turn was set aside by the High Court. Before the Supreme Court, the appellant sought the setting aside of the High Court’s order on grounds of limitation and the decree being beyond the relief prayed for by the respondent. Noting that there has been an egregious delay of six decades in resolving the respondent’s plea, the Supreme Court refused to intervene and ordered the payment of damages to the respondent at ₹50,00,000.  

[Vikram Nath J, Rajesh Bindal J]

[Keywords: refund of earnest money deposit, suit for specific performance, damages, provisional booking of plot, furnishing of basic information] 

In Kanaiyalal Mafatlal Patel v. State of Gujarat and Ors, the appeal before the Supreme Court arose from the proceedings initiated under Section 31 of the Gujarat Prevention of Fragmentation and Consolidation of Holdings Act, 1947, assailing the sale deed executed between the appellant buyer and the respondents 6-9 (vendors) in 2007. It was noted that the appellant and respondents 6-9 were family members claiming inheritance to respective parcels of the subject property belonging to one Shankarbhai Durgadas who is the grandfather of the appellant and respondents 6-9. Subsequent to a partition amongst the sons of Shankarbhai Durgadas, respondents 6-9 agreed to convey the property to the appellant for a reduced sale consideration, which was also confirmed by the father of respondents 6-9 as per the appellant in 2007. However, in 2012 proceedings were commenced before the Pranth Officer (Revenue), Gandhinagar District assailing the 2007 sale deed under the 1947 Act. An order was passed allowing the claim of respondents 6-9 and cancelling the sale deed. While an appeal against the Pranth Officer’s order was pursued in 2015, the appellant claimed he had no knowledge of the same and instead asserted that he challenged the Pranth Officer’s order in 2017 which was dismissed in 2017 on the ground of res judicata. The revision proceedings before the High Court initiated by the appellant were also dismissed. Noting that there are findings of fact that required detailed adducing of evidence, the Supreme Court remanded the matter to the Pranth Officer for a fresh adjudication. 

[C.T Ravikumar J, Sanjay Kumar J]

[Keywords: Gujarat Prevention of Fragmentation and Consolidation of Holdings Act, 1947, irrigated land, confirmation of sale deed, reduced sale consideration, res judicata]

In M/s Darvell Investment and Leasing (India) Pvt. Ltd. and Ors. v. The State of West Bengal and Ors., the issue pertained to cancellation of a caste certificate issued to respondent no. 15. In case the respondent belonged to the Scheduled Tribe community, permission was required for selling a land. But in case he wasn’t, no permission was required. The father of the said respondent was engaged as a driver by the State Transport Corporation on January 1, 1973 in the general category and until his termination on November 30, 1987, he never claimed before his employer that he belonged to the Scheduled Tribe category. The respondent no.15 took a stand that that his original Caste Certificate had been lost but never lodged a complaint or FIR. Also, lands were sold earlier by his father under the general category and the same were never challenged earlier on the ground that the father belonged to the ST community, or that therefore, the land could not have been alienated without prior permission of the authorities. The respondent  challenged the sale deeds, registered on August 30, 1983, only in the year 2004 on the basis of the case certificate issued to him subsequently. Thus, on facts, the judgment of the High Court was set aside.

[Vikram Nath J., Rajesh Bindal J.]

[Keywords : Caste certificate, permission to sell, challenge to sale deeds] 

About the authors: Subhro Prokas Mukherjee, Sahil Tagotra, Abhinav Hansaraman and Venkata Supreeth K are advocates mainly practicing in Delhi before the Supreme Court of India.