Case
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[2010] 11 S.C.R. 311
PUNJAB NATIONAL BANK AND ORS.
V.
K.K. VERMA
(Civil Appeal No. 7416 of 2010)
SEPTEMBER 7, 2010
[R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]
Service Law - Departmental Inquiry - Punjab National
Bank Officers Employees (Discipline and Appeal)
Regulations, 1977 Regulation 7(2) and 9 - Right of C
employee to represent against the adverse findings in an
inquiry report - Nationalized bank - Employee allegedly
committed serious irregularities/lapses while discharging his duties - Served with charge-sheet and consequently removed
from service - Held: Nationalized bank is an instrumentality D
of the State, and is always expected to act in fairness and to
follow the principles of natural justice - The service
regulations in question contained the requirement to furnish
a copy of the inquiry report, and the order of the Disciplinary
Authority recording its disagreement therewith, to the
employee, prior to any decision on the penalty, in order to
secure to him an opportunity to make his submissions on the
adverse findings and to prove his innocence - By not giving
the inquiry report and the adverse order of the disciplinary
authority, the employee was denied the opportunity to
represent, before the finding of guilt was arrived at, and
thereby he was certainly prejudiced - Constitution of India,
1950 - Article 311(2) - Natural justice.
The respondent, a Manager in the appellant-bank,
allegedly committed serious irregularities / lapses while G
discharging his duties. He was served with a charge-
sheet which contained in all four charges. Departmental
inquiry was held against the respondent in terms of the
312 SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Punjab National Bank Officers Employees (Discipline and
Appeal) Regulations, 1977.
The Inquiry Officer submitted report stating that the
first three charges were established but not the fourth
one. The Disciplinary Authority accepted the finding of
the Inquiry Officer in respect of the first three charges but
reversed its finding as regards charge no.4 inasmuch as
it found the respondent guilty in regard to a part of that
charge as well; and consequently imposed the major
penalty of removal of the respondent from service.
The respondent challenged the order of his removal
from service by filing a writ petition. He contended that
he was not furnished with a copy of the inquiry report
D he was not afforded an appropriate opportunity to defend
himself resulting in denial of principles of natural justice
and causing him great prejudice. The writ petition was
allowed by the Single Judge of the High Court. The order
was upheld by the Division Bench of the High Court.
Aggrieved, the employer-bank filed the instant appeal
contending that it was not mandatory for it to furnish the
inquiry report since the same became necessary only
after the Supreme Court judgment in the case of Mohd.
Ramzan Khan* which judgment itself declared that the
law declared therein was to be applied prospectively and
that the order of removal of the respondent was passed
prior to the said judgment.
Per contra, the respondent-employee contended that
Gall that the judgment in Mohd. Ramzan's case did was to
remove the doubts which arose due to the changes
brought into Article 311(2) of the Constitution by the 42nd
Constitutional amendment; and in any event Regulations
before the issuance of the order of removal and thereby
PUNJAB NATIONAL BANK AND ORS. v. Κ.Κ. 313
VERMA
7(2) and 9 the 1977 regulations made it obligatory for the A
appellant to furnish a copy of the inquiry report to the
respondent.
Disposing of the appeal, the Court
HELD:1.1. The right to represent against the findings
in the inquiry report to prove one's innocence is distinct
from the right to represent against the proposed penalty.
It is only the second right to represent against the
proposed penalty which is taken away by the 42nd
Constitutional Amendment. The right to represent against C
the findings in the report is not disturbed in any way. In
fact, any denial thereof will make the final order
vulnerable. [Para 28] [334-B-E]
1.2. The right of an employee to represent against the
adverse findings in an inquiry report is referrable to
Article 311(2) of the Constitution of India. The import of
this provision was explained by a Constitution Bench**
of the Supreme Court which held that it included both the
opportunities to an employee, namely, to deny one's guilt
and establish innocence, which he can, only if he is
informed about the charges and the imputations in
support, and secondly, an opportunity to make a
representation on the proposed punishment. The
Fifteenth Amendment to the Constitution w.e.f 6th
October, 1963 amended Article 311 (2), and further F
clarified the position in this behalf. The import of this
change was explained by another Constitution Bench £
which in terms noted that it is well settled that the public
servant who is entitled to the protection of Article 311,
must get two opportunities to defend himself. First, to G
defend the charge against him and prove his innocence,
which opportunity is to be given by giving him the report
against him, and then a second notice when the
government decides provisionally about the proposed
314 SUPREME COURT REPORTS
[2010] 11 S.C.R.
A punishment, as to why the same should not be imposed.
The 42nd Amendment effected in 1976 once again
amended sub-article 311 (2). In Mohd. Ramzan Khan's
case, this Court was concerned with the question as to
whether the 42nd Amendment brought about any change
in the matter of supply of a copy of the report which is a
part of the first stage, and the effect of non-supply thereof
on the punishment proposed. It is only with a view not to
affect the inquiries which were conducted in the
meanwhile that the Court held that those inquiries will not
be affected, and though it was only declaring the law, the
propositions laid down therein will apply prospectively.
This was basically to protect the actions which were taken
during the interregnum i.e after the 42nd Amendment
became effective until it was explained as above in this
judgment. [Paras 17, 18, 19, 20] [326-A-E; G-H; 327-A-F;
328-B-C]
*Union of India vs. Mohd. Ramzan Khan 1991 (1) SCC
588, Explained.
**Khem Chand v. Union of India AIR 1958 SC 300;
£ Union of India v. H.C. Goel AIR 1964 SC 364 and Union
of India & Anr. v. Tulsiram Patel 1985 (3) SCC 398, referred
to. 2.1. Regulation 7(2) of the Punjab National Bank
F Officers Employees (Discipline and Appeal) Regulations,
1977 requires the Disciplinary Authority to record its
reasons for disagreement wherever it disagrees with the
findings of the inquiry officer while Regulation 9 provides
for communicating to the employee concerned, the orders
G passed under Regulation 7, apart from providing him with
a copy of the inquiry report. These regulations will have
to be read as laid down only with a view to provide an
opportunity to the employee to represent against the
findings to the extent they are adverse to him. Then only
H they will become meaningful. The service regulations of
PUNJAB NATIONAL BANK AND ORS. v. Κ.Κ. 315
VERMA the appellant are concerning the discipline and conduct A
in a nationalized bank which is an instrumentality of the
state. The instrumentalities of the state have always been
expected to act in fairness, and following the principles
of natural justice has always been considered as a
minimum expectation in that behalf. The above B
regulations will, therefore, have to be read as containing
the requirement to furnish a copy of the inquiry report and
the order of the Disciplinary Authority recording its
disagreement therewith to the employee prior to any
decision on the penalty being arrived at. That will secure
to the delinquent employee an opportunity to make his
innocence. [Para 23] [330-C-F]
2.2. It is clear that where the service rules with regard
to the disciplinary proceedings themselves made it D
obligatory to supply a copy of the report to the
employees, it would act as an exception. The direction
that the judgment in Mohd. Ramzan Khan will not apply
retrospectively, will not cover such service regulations
and the concerned employers will have to continue to E
give a copy of the inquiry report to the delinquent
employees, as provided in their service regulations. [Para
26] [332-B-C]
2.3. In the instant case, it is clear that the appellants F
had not followed their own Regulations which clearly
require the disciplinary authority to record the reasons
where it differed from the inquiry officer. The Regulations
also clearly lay down that a copy of the inquiry report and
the order of disagreement are to be provided to the
employee. In the present case, one is concerned with the
stage where the Disciplinary Authority differs with the
inquiry officer on his findings. This is prior to arriving at
the guilt of the employee. His right to receive the report
and defend at that stage before the guilt is established
submissions on the adverse findings and to prove his
316 SUPREME COURT REPORTS
[2010] 11 S.C.R.
A punishment, as to why the same should not be imposed.
The 42nd Amendment effected in 1976 once again
amended sub-article 311 (2). In Mohd. Ramzan Khan's
case, this Court was concerned with the question as to
whether the 42nd Amendment brought about any change in the matter of supply of a copy of the report which is a
part of the first stage, and the effect of non-supply thereof
on the punishment proposed. It is only with a view not to
affect the inquiries which were conducted in the
meanwhile that the Court held that those inquiries will not
be affected, and though it was only declaring the law, the
propositions laid down therein will apply prospectively.
This was basically to protect the actions which were taken
during the interregnum i.e after the 42nd Amendment
became effective until it was explained as above in this
judgment. [Paras 17, 18, 19, 20] [326-A-E; G-H; 327-A-F;
328-B-C]
D
E
*Union of India vs. Mohd. Ramzan Khan 1991 (1) SCC
588, Explained.
**Khem Chand v. Union of India AIR 1958 SC 300;
£ Union of India v. H.C. Goel AIR 1964 SC 364 and Union
of India & Anr. v. Tulsiram Patel 1985 (3) SCC 398, referred
to.
2.1. Regulation 7(2) of the Punjab National Bank
F Officers Employees (Discipline and Appeal) Regulations,
1977 requires the Disciplinary Authority to record its
reasons for disagreement wherever it disagrees with the
findings of the inquiry officer while Regulation 9 provides
for communicating to the employee concerned, the orders
G passed under Regulation 7, apart from providing him with
a copy of the inquiry report. These regulations will have
to be read as laid down only with a view to provide an
opportunity to the employee to represent against the
findings to the extent they are adverse to him. Then only
H they will become meaningful. The service regulations of
PUNJAB NATIONAL BANK AND ORS. v. Κ.Κ. 317
VERMA
Corporation and Anr. v. Kailash Chandra Ahuja 2008 (9) SCC A
31, referred to.
Case Law Reference:
1991 (1) SCC 588
held inapplicable
Para 14
B
1993 (4) SCC 727
relied on
Para 15
AIR 1958 SC 300
referred to
Para 17
AIR 1964 SC 364
referred to
Para 18
1998 (7) SCC 84
relied on
Para 24
C
AIR 1963 SC 1612
referred to
Para 25
AIR 2005 SC 3742
referred to
Para 27
1985 (3) SCC 398
referred to
Para 28
D
AIR 1967 SC 1353
referred to
Para 29
1996 (6) SCC 415
referred to
Para 30
2008 (9) SCC 31
referred to
Para 30
E
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
7416 of 2010.
From the Judgment & Order dated 31.01.2008 of the High
Court of Punjab & Haryana at Chandigarh in LPA No. 17 of
2008.
Dhruv Mehta, Yashraj Singh Deora, Sarv Mitter, R.K.
Gautam (for Mitter & Mitter Co.) for the Appellants.
F
Rohit Arya, Nitin Gaur, S.K. Sabharwal for the Respondent. G
The Judgment of the Court was delivered by
GOKHALE J. 1. Leave granted.
H
318
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A
2. This appeal by the appellant Bank seeks to challenge
the judgment and order dated 31.1.2008 rendered by Division
Bench of the Punjab and Haryana High Court dismissing LPA
No. 17 of 2008 filed by the appellant 3ank with costs. The
impugned judgment was rendered in an appeal arising out of
B the judgment dated 26.11.2007 by a Single Judge of that court
whereby the Learned Single Judge had allowed the Writ Petition
No. 2756 of 1986 filed by the respondent challenging his
removal from service by the order of the appellant dated
17.4.1985.
C
3. The two impugned judgments have interfered with the
order of removal on the ground of not furnishing the respondent
a copy of the inquiry report before issuing the order of
punishment and thereby not affording him an appropriate
opportunity to defend resulting into denial of principles of natural
D justice causing him great prejudice. The appellant Bank has
raised the question in this appeal as to whether the respondent
was entitled either in law or as per the rules governing his
service conditions to a copy of the inquiry report before issuance
of the order of punishment.
E
F
G
H
4. Short facts leading to the appeal are as follows:
The respondent was working as a Manager of appellant's
branch at Jallianwalan Bagh, Amritsar. He was served with a
Charge Sheet dated 12.8.1983 which contained in all four
charges. They were principally as follows:
(1)
He connived with the borrowers and showed undue
favour to them by throwing bank's norms to winds.
In that, amongst others particulars, it was alleged
that when he has on leave from 09.02.1982 to
17.02.1982, he visited the office to issue the bank
guarantee in the favour of Income Tax Officer,
Amritsar on behalf of M/s Des Raj Aggarwal & Co.
PUNJAB NATIONAL BANK AND ORS. v. Κ.Κ. 319
VERMA [H.L. GOKHALE, J.]
(2) The second charge was that he submitted wrong A
information to the authorities thereby concealed the
factual state of affairs of the branch from the
authorities.
(3) The third charge was that he allowed unauthorized
facilities to various parties during the period of
credit squeeze for which his powers had been
withdrawn.
(4) The fourth charge consisting of three parts reads as
follows:
B
C
(i) He misused his official position to secure undue benefit
for himself. He was given a personal allowance of Rs. 147/
- per month from 01.07.1979 at the time of fitment of the
salary under PNB Officer Employees (Service) D
Regulations, 1979, which was to be adjusted out of annual
grades increment @ 1/3rd of the increment of the year. He
did not allow the person concerned to make any
adjustment from the increments released in his favour.
(ii) He was sanctioned a refundable loan by the Trustees E
of the Provident Fund against his Provident Fund in 1973.
He did not pay instalments. The balance as on 30.6.1981
was 5291/-.
(iii) The Regional Office, Amritsar sanctioned a consumer
loan of Rs. 5000/- to Shri Verma for purchase of fridge.
He showed the purchase of the said item from M/s
Electronics Services Centre having cash credit limits with
the Branch without actually purchasing the fridge. The firm
M/s Electronics Service Centre is not dealing in
F
G
refrigerators/fridges. The amount of fridge was paid cash
through a cash order at the counter.
5. The respondent denied these allegations. According to
him they were vague and general in nature. At the highest they
may be considered as procedural lapses/minor irregularities H
320 SUPREME COURT REPORTS
[2010] 11 S.C.R.
A during the discharge of duties. They would certainly not amount
to moral turpitude, requiring a departmental enquiry for a major
penalty.
B
C
6. A regular departmental inquiry was held thereafter into
those allegations in terms of the Punjab National Bank Officers
Employees (Discipline and Appeal) Regulations 1977, framed
under Section 19 of the Banking Companies (Acquisition and
Transfer of Undertaking Act) 1970. The inquiry officer submitted
his report dated 7.2.1985 returning a finding that the first three
charges were established but not the fourth one.
7. As can be seen from the earlier narration, Charge No.
4 was in three parts. The first part of this charge was that the
respondent used his official position to secure undue benefit
for himself. In that it is alleged that he was given a personal
D allowance of Rs. 147/- from 01.07.1979 which was to be
adjusted out of annual grades increment at one-third of the
increment of the year. The respondent did not allow the person
concerned to make any adjustment from the increments
released in his favour. As far as this aspect is concerned the
E inquiry officer held as follows:-
Non-adjustment of the personal allowance
Mr. Verma was given a personal allowance of Rs. 147/-
per month with effect from 01.07.1979 i.e. at the time of fitment
F of salary under the PCT which was to be adjusted out of the
annual graded increment at the rate 1/3rd of the increment of
the year but did not adjust as per the above norms.
This fact cannot be proved as he can never give such
G things in writing for not deducting 1/3rd of the graded increment.
He might have verbally asked the Establishment Clerk not to
adjust, but here it is doubtful and the benefit of this should go
to Mr. Verma.
H
The salary bill is sent every month for post audit to Regional
Manager Office and it should have been pointed out by the
PUNJAB NATIONAL BANK AND ORS. v. K.K. VERMA321
[H.L. GOKHALE, J.]
Regional Officer of this lapse, whereas it was pointed out on A
29.05.1981, followed by reminders of date 17.07.1981,
08.09.1981, and finally on 21.4.1982 exhibit page 32 which was
duly deposited by Verma in three instalments with the kind
permission of the R.M. Amritsar exhibit page 31.
B
8. The second part of this Charge No. 4 was that the
respondent was sanctioned a refundable loan from the
Provident Fund Department but he did not pay the instalments
and the balance as on 30.6.1983 was Rs. 6381/-. The inquiry
officer held that this charge was proved. (This is however a
situation of not refunding a small portion of the advance which
C
could be adjusted later on).
9. The third part of charge No. 4 was that the respondent
had taken consumer loan of Rs. 5000/- for purchasing a
refrigerator. It was alleged that he had purchased the item from D
M/s Electronic Service Centre which was having cash credit
limits with the Bank. Infact he had not purchased the fridge and
that firm was not dealing with refrigerators at all. The inquiry
officer held that the respondent came from a well to do family
and was financially of good means. He is living in a bungalow E
owned by himself and it was difficult to believe that he was not
already having any refrigerator. He, therefore, held that no
refrigerator was purchased by him from that concern.
10. The disciplinary authority vide its order dated
30.3.1985 accepted the finding of the inquiry officer in respect
of the first three charges but differed with its finding on charge
No. 4. He was of the view that the charges were serious and
therefore decided to impose the major penalty of removal of
respondent from service. In the said order, as regards Charge
No. 4 (i) the Disciplinary Authority observed as follows:-
F
G
"As regards the findings of Enquiry Officer with
regard to non-deduction and adjustment of 1/3rd of the
graded increment towards personal allowance, I do not
agree with him that there is nothing on record which could H
322 SUPREME COURT REPORTS
[2010] 11 S.C.R.
A
B
show that Shri Verma had instructed the Establishment
Clerk not to adjust this part of increment towards personal
allowance. Shri Verma must have been signing salary bill
as a final signatory and if deductions were not adjusted
towards adjustment of personal allowance he could point
out to the office. It shows, he intentionally did not permit
this adjustment to get personal benefit."
C
D
E
F
G
H
11. The impugned order of removal passed by the
disciplinary authority reads as follows:-
Ref:ZO:DAC:
"Punjab National Bank
Shri K.K. Verma,
215-Green Avanue,
Amritsar
Zonal Office
Chandigarh.
Dated 17.4.1985
Reg: Departmental Enquiry against you - chargesheet
Dated 12.8.83.
You were served with chargesheet dated 12.8.83 for
the serious irregularities/lapses committed by you while
working as manager, BO: Jallianwala Bagh, Amritsar. To
know the truth of imputations of lapses on your part,
enquiry proceedings were initiated against you in terms of
PNB Officer employees (D & A) Regulations, 1977
(Clause-6) and for this purpose Shri A.L. Pahwa, Manager,
BC:Akali Market, Amritsar, was appointed as Enquiry
Officer and Shri A.K. Aggarwal, Manager PF Deptt., HO,
New Delhi was appointed as Presenting Officer. The
Enquiry officer has since submitted his report alongwith
relevant records of the proceedings in the above matter. I
have carefully gone through the report alongwith the entire
record of the enquiry proceedings and agree with the
findings of the Enquiry Officer and hold you guilty of the
aforesaid serious irregularities/lapses.
PUNJAB NATIONAL BANK AND ORS. v. K.K. VERMA 323
[H.L. GOKHALE, J.]
Keeping in view the above, I decide to impose upon A
you the major penalty of your removal from the service of
the Bank with immediate effect.
A copy of the detailed orders passed by the undersigned
in regard to the above matter alongwith a copy of the
Enquiry report is enclosed herewith.
Sd/-
Disciplinary Authority
Deputy General Manager"
B
12. The respondent thereafter preferred a Departmental C
appeal and then a review petition, both of which came to be
rejected. Being aggrieved by that order, the respondent filed
the above referred Writ Petition to a Single Judge of the Punjab
and Haryana High Court who allowed that Writ Petition. The
learned Single Judge set aside the order of removal. He has D
further observed that it will be open to the competent authority
to decide the question of proposed punishment after following
principles of natural justice by furnishing the respondent a copy
of the enquiry report and affording him opportunity of hearing
in the context of proposed punishment. As stated above, the E
appeal filed by the appellants herein from that judgment also
came to be dismissed. Being aggrieved by both these
judgments, the appellant has filed the present appeal by special
leave. The main submission of the appellant has been that the
appellant was not required to give a copy of the inquiry report F
prior to the decision of the disciplinary authority, and the order
of removal could not be interfered on that ground.
13. Now, what is material to note is, that the respondent
was not furnished with a copy of the inquiry report, and the
disciplinary authority straightforward passed the order of G
removal which has been quoted earlier. The report of the inquiry
officer and the detailed order of the Disciplinary Authority
became available to the respondent only alongwith the order
of removal, and he did not have any opportunity to make his
submissions on that report to defend the charges anytime prior H
324 SUPREME COURT REPORTS
[2010] 11 S.C.R.
A to the punishment of removal being decided and imposed. It
was therefore, canvassed on behalf of the respondent before
the Learned Single Judge that the action of the appellant was
violative of principles of natural justice. He had not been
furnished with the copy of the report any time prior to his
removal and it was particularly necessary when the disciplinary
authority had ultimately differed with the finding on Charge No.
4 rendered by the inquiry officer which became known only after
the inquiry report and the detailed order of the Disciplinary
Authority was received alongwith the removal order. He would
have made submissions on his innocence and would have
pointed out to the disciplinary authority that even the first three
charges were not established. There is no dispute with respect
to the fact that the inquiry report was not furnished to the
respondent earlier. The Learned Single Judge had specifically
asked the appellant whether they had furnished a copy of the
inquiry report to the respondent and he recorded in this order
that they could not produce any material from the concerned
file to show that a copy of the report had been furnished to the
respondent. That apart, the Division Bench also held that the
order of removal was a mechanical order passed without going
into the findings referred in the report, (which were in favour of
the respondent at least on charge No. 4) and without explaining
as to why the disciplinary authority had differed from the inquiry
officer on Charge No. 4.
B
C
D
E
F
14. It was canvassed on behalf of the appellant that it was
not mandatory for them to furnish the inquiry report, which had
become necessary only after the judgment of the Apex Court
dated 20.11.1990 rendered in the case of Union of India vs.
G Mohd. Ramzan Khan [1991 (1) SCC 588]. The judgment in
Mohd. Ramzan (supra) would not apply to the present case
since the order of removal in the present case was passed prior
to this judgment on 17.4.1985 and the judgment in Mohd.
Ramzan itself declared that the law declared therein was to be
H applied as a prospective one. This plea was raised by the
appellant before the Division Bench but it was turned down
PUNJAB NATIONAL BANK AND ORS. v. Κ.Κ. VERMA 325
[H.L. GOKHALE, J.]
holding that the principles of natural justice were always there A
to protect the right of hearing to be provided to the delinquent
official, before awarding him the punishment, and that the
judgment in Mohd. Ramzan Khan had only recognized this
position and made it mandatory.
15. The learned counsel for the appellant pressed into
service the following observations in para 33 of the Judgment
of the Constitution Bench in Managing Director, ECIL,
Hyderabad and Ors. versus B. Karunakar and Ors. reported
in 1993 (4) SCC 727.
"
...
B
C
It is for the first time in Mohd. Ramzan Khan
case that this court laid down the law. That decision made
the law laid down there prospective in operation i.e.
applicable to the orders of punishment passed after
November 20, 1990. The law laid down was not applicable D
to the orders of punishment passed before that date
notwithstanding the fact that the proceedings arising out
of the same were pending in courts after that date. The
said proceedings had to be decided according to the law
prevalent prior to the said date which did not require the E
authority to supply a copy of the enquiry officer's report to
the employee. The only exception to this was where the
service rules with regard to the disciplinary proceedings
themselves made it obligatory to supply a copy of the
report to the employee." (emphasis supplied)
16. The counsel for the respondent on the other hand
submitted that the right to receive the inquiry report and to make
submissions thereon to prove one's innocence was always
available to the employees of Government and Public Bodies.
All that the judgment in Mohd. Ramzan Khan's case did was
to remove the doubts which arose due to the changes brought
into Article 311(2) by the 42nd Constitutional amendments. The
judgment made the law declared prospective only to avoid the
difficulties that would arise in inquiries held prior thereto.
326
SUPREME COURT REPORTS
[2010] 11 S.C.R.
17. In this connection, it is to be noted that as far as the
right of an employee to represent against the adverse findings
in an inquiry report is concerned, the same is referrable to Article
311(2) of the Constitution of India. Article 311 (2) in the original
Constitution read as follows:-
"311. (2) No such person as aforesaid shall be
dismissed or removed or reduced in rank until he has been
given a reasonable opportunity of showing cause against
the action proposed to be taken in regard to him."
The import of this provision was explained by a Constitution
Bench of this Court in Khem Chand v. Union of India [AIR 1958
SC 300]. It held that it included both the opportunities to an
employee, namely to deny one's guilt and establish innocence,
which he can, only if he is informed about the charges and the
Dimputations in support, and secondly an opportunity to make a
representation on the proposed punishment.
18. The Fifteenth Amendment to the Constitution w.e.f 6th
October, 1963 amended Article 311 (2), and further clarified the
E position in this behalf. The amended Article 311 (2) reads as
follows:-
"311. (2) No such person as aforesaid shall be
dismissed or removed or reduced in rank except after an
enquiry in which he has been informed of the charges
against him and given a reasonable opportunity of being
heard in respect of those charges and where it is proposed,
after such inquiry, to impose on him any such penalty, until
he has been given a reasonable opportunity of making
representation on the penalty proposed, but only on the
basis of the evidence adduced during such inquiry."
The import of this change was explained by another
Constitution Bench in Union of India v. H.C. Goel [AIR 1964
SC 364] which in terms noted that it is well settled that the public
servant who is entitled to the protection of Article 311, must get
PUNJAB NATIONAL BANK AND ORS. v. K.K. VERMA 327
[H.L. GOKHALE, J.]
two opportunities to defend himself. First, to defend the charge A
against him and prove his innocence, which opportunity is to
be given by giving him the report against him, and then a
second notice when the government decides provisionally about
the proposed punishment, as to why the same should not be
imposed.
19. The 42nd Amendment effected in 1976 once again
amended sub-article 311 (2) as follows:-
"311. (2) No such person as aforesaid shall be
dismissed or removed or reduced in rank except after an C
enquiry in which he has been informed of the charges
against him and given a reasonable opportunity of being
heard in respect of those charges.
Provided that where it is proposed, after such inquiry,
to impose upon him any such penalty, such penalty may
be imposed on the basis of the evidence adduced during
such inquiry and it shall not be necessary to give such
person any opportunity of making representation on the
penalty proposed:"
20. In Mohd. Ramzan Khan's case (supra) the Court was
concerned with the question as to whether the 42nd Amendment
brought about any change in the matter of supply of a copy of
the report which is a part of the first stage, and the effect of non-
supply thereof on the punishment proposed. The Court F
considered the various judgments on this aspect and held in
paragraph 18 of the judgment as follows:-
"We make it clear that wherever there has been an
Inquiry Officer and he has furnished a report to the
disciplinary authority at the conclusion of the inquiry holding
the delinquent guilty of all or any of the charges with
proposal for any particular punishment or not, the
delinquent is entitled to a copy of such report and will also
be entitled to make a representation against it, if he so
328 SUPREME COURT REPORTS
[2010] 11 S.C.R.
desires, and non-furnishing of the report would amount to
violation of rules of natural justice and make the final order
liable to challenge hereafter." (emphasis supplied)
It is only with a view not to affect the inquiries which were
conducted in the meanwhile that the Court held that those
inquiries will not be affected, and though it was only declaring
the law, the propositions laid down therein will apply
prospectively. This was basically to protect the actions which
were taken during the interregnum i.e after the 42nd
Amendment became effective until it was explained as above in this judgment.
21. Counsel for the appellant submitted that appellant's
action was protected since the impugned order of removal was
passed during this interregnum. On the other hand, the counsel
D for the respondent pointed out that though the observations in
Karunakar (extracted above) explained the prospective
application of the propositions in Mohd. Ramzan Khan, it also
made it clear that where the service rules themselves made it
obligatory, it was necessary | This case is about a bank manager, K.K. Verma, who was accused of several irregularities while working at the Punjab National Bank. The bank conducted a departmental inquiry into these allegations and ultimately decided to remove Verma from his job. Verma challenged this decision in court, arguing that the bank had violated his right to a fair hearing by not providing him with a copy of the inquiry report before deciding to remove him.
The case highlights a critical aspect of natural justice – the right of a person to be informed of the accusations against them and to have a chance to defend themselves before any action is taken. In India, this right is enshrined in Article 311(2) of the Constitution, which applies to government employees.
The courts ultimately agreed with Verma's argument, emphasizing the importance of giving an employee a copy of the inquiry report. They stressed that this is crucial not only to allow the employee to defend against the allegations but also to ensure that they have an opportunity to challenge the disciplinary authority's findings if they differ from those of the inquiry officer.
The case involved several legal points:
The right to representation : Employees have a right to present their case and defend themselves against the charges made against them. This right includes the right to be informed of the accusations and to receive a copy of the inquiry report before any decision is taken against them.
The role of disciplinary authority : The disciplinary authority, in this case, the Punjab National Bank, has the power to decide on the punishment to be imposed on the employee. However, they are bound by the principles of natural justice and must follow the procedures laid down in the service rules.
The applicability of the law : The Supreme Court ruled that the principle of providing an employee with a copy of the inquiry report applies prospectively, meaning it applies to cases after a specific date (in this case, November 20, 1990). This ensures that the employees are not prejudiced due to legal changes made after the initial inquiry.
The court's decision in this case reaffirms the importance of fairness and transparency in disciplinary proceedings involving government employees. It establishes that providing a copy of the inquiry report is a fundamental requirement for ensuring a fair hearing and upholding the principles of natural justice. This ensures that employees are treated fairly and are not unjustly punished without an opportunity to defend themselves. |
[2009] 16 (ADDL.) S.C.R. 695
ASHOK KUMAR
V.
VED PRAKASH & ORS.
(Civil Appeal No. 8417 of 2009)
DECEMBER 17, 2009
[TARUN CHATTERJEE AND V. S. SIRPURKAR, JJ.]
Haryana Urban (Control of Rent and Eviction) Act, 1973:
A
B
s. 13 - Eviction of tenant from non-residential premises C
on ground of bona fide need of landlord - HELD: Correct
interpretation of bona fide requirement of landlord of a
residential building must include a non-residential building as
well - Rent Controller and High Court rightly allowed the
petition of landlord - Bonafide requirement being for purposes D
of son of landlord, on landlord's death, question of abatement
of eviction proceedings cannot arise at all - Abatement - East
Punjab Urban Rent Restriction Act, 1949 – s. 13.
-
Precedent:
-
Decision of Court having regard to a particular enactment
HELD: Holds persuasive value while considering
constitutionality of a similar provision albeit in a different
legislation - Haryana Urban (Control of Rent and Eviction) Act,
1973.
E
F
An order of eviction of the tenant from non-residential
premises was passed by the Rent Controller under the
Haryana Urban (Control of Rent and Eviction) Act, 1973
on the ground of bona fide need of the landlord. The order
was affirmed by the appellate authority and the High G
Court. In the instant appeal filed by the tenant, the
question for consideration before the Court was: whether
the landlord would be entitled to evict his tenant from a
non-residential premises on the ground of bonafide
695
H
}
696 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A requirement under the Haryana Urban (Control of Rent
and Eviction) Act, 1973 when s.13 of the Act provides for
eviction of the tenant only in case of residential building?
B
Dismissing the appeal, the Court
HELD: 1.1. Long before the Haryana Urban (Control
of Rent and Eviction) Act, 1973, s.13 of the East Punjab
Urban Rent Restriction Act, 1949 before its amendment,
contained provisions for eviction of a tenant from
residential as well as non-residential premises. In 1956,
C the Legislature, by introducing an amendment to the East
Punjab Rent Act, deleted the word "non-residential
premises" from s.13 with the result that after the
amendment, a landlord could not seek eviction of his
tenant from non-residential premises for his bonafide
E
D requirement which was originally available to the
landlord. The constitutionality of the said amendment was
challenged and this Court declaring the amendment
constitutionally invalid, restored the original provisions
of the Act, to the effect that landlord can seek eviction of
a tenant from a non-residential building as well on the
ground of his bona fide need. Thus, in view of the decision
of this Court, a landlord can seek eviction of his tenant
on the ground of bonafide requirement not only from
residential premises but also from non-residential
premises under the East Punjab Rent Act. As regards the
plea of appellant that the decision and reasoning
concerning East Punjab Rent Act, cannot apply to the
question arising in the instant case under the Haryana
Rent Act, suffice it to say, there is no reason as to why
the decision concerning one legislation cannot hold
persuasive value for the Court, while considering the
constitutionality of a very similar provision, albeit in a
different legislation.[Para 10,11, 15 and 25] [702-D-H; 704-
F-G; 708-F]
F
G
¥-
+
-
H
Harbilas Rai Bansal vs. State of Punjab 1995 (6) Suppl.
697
SCR 178 = 1996 (1) SCC 1; Gyan Devi Anand vs. Jeevan A
Kumar 1985 (1) Suppl. SCR 1 = (1985) 2 SCC 683; Rakesh
Vij vs. Dr. Raminder Pal Singh Sethi and others 1985 (1)
Suppl. SCR 1 = 2005 (8) SCC 504; Mohinder Prasad Jain
vs. Manohar Lal Jain 2006 (2) SCR 513 = 2006 (2) SCC 724,
relied on.
State of Madhyapradesh v. G.C.Mandawar 1955 SCR
158 = AIR 1954 SC 493 - cited.
1.2. The correct interpretation of bonafide requirement
of a landlord of a residential building must include a non-
residential building as well. It cannot be said that an
eviction petition filed by a landlord for eviction of a tenant
cannot be filed u/s 13 of the Act when such eviction
proceeding relates to a non-residential building. [Para 20
• and 21] [707-A-B; 707-F]
Satyawati Sharma (Dead) by LRs. vs. Union of India and
another 2008 (6) SCR 566 = 2008 (5) SCC 287, relied on.
Common Cause vs. Union of India and Ors. JT 2003
(Suppl.2) SC 270, Padmasundara Rao and Ors. vs. State of
Tamil Nadu and Ors. (2002) 3 SCC 533, Union of India vs.
Deoki Nandan Aggarwal 1991 (3) SCR 873 = AIR 1992 SC
96, Naveen Kohli vs. Neethu Kohli 2006 (4) SCC 558; and
Vishnu Dutt Sharma vs. Manju Sharma 2009 (3) SCALE 425,
cited.
B
C
D
E
F
1.3. It is not in dispute that the original landlord died
during the pendency of the revision in the High Court.
Looking at the averments made in the eviction petition,
where the original landlord has categorically pleaded that G
the requirement was for his son who has become the
landlord because of the death of the original plaintiff, the
question of abatement of the eviction proceedings cannot
arise at all. That apart, the plea regarding abatement of
H
ASHOK KUMAR v. VED PRAKASH & ORS. 698
A eviction proceedings due to death of original landlord
was not even raised by the tenant before the High Court
when the original landlord died and the respondents
were substituted in his place. [Para 26] [708-G-H; 709-A-
C]
B
Case Law Reference:
1995 (6) Suppl. SCR 178 relied on
para 11
1985 (1) Suppl. SCR 1 relied on
para 13
C
1985 (1) Suppl. SCR 1 relied on
para 15
2006 (2) SCR 513
relied on
para 17
JT 2003 (Suppl.2) SC 270 cited
Para 18
(2002) 3 SCC 533
cited
Para 18
D
1991 (3) SCR 873
cited
Para 18
2006 (4) SCC 558
cited
Para 18
2009 (3) SCALE 425
cited
Para 18
E
2008 (6) SCR 566
relied on
para 20
1955 SCR 158
cited
para 24
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
F 8417 of 2009.
G
From the Judgment & Order dated 5.3.2007 of the High
Court of Punjab and Haryana at Chandigarh in C.R. No. 3943
of 2005.
Gagan Gupta for the Appellant.
G.D. Rustagi and Anis Ahmed Khan for the Respondents.
The Judgment of the Court was delivered by
H
699
TARUN CHATTERJEE, J. 1. Leave granted.
A
2. This appeal has been filed by the tenant/appellant from
the judgment and final order dated 3rd of March, 2007 passed
by the High Court of Punjab & Haryana at Chandigarh in Civil
Revision Case No.3943 of 2005 whereby the High Court had
dismissed the civil revision case and affirmed the order of the
B
appellate authority as well as of the Rent Controller thereby
directing eviction of the tenant/appellant from a shop
constructed on the ground floor at Plot No.12, bearing Municipal
No.179 (a), Ward No.3, New Anaj Mandi, Sohna, District
Gurgaon (Haryana) (hereinafter referred to as the 'tenanted
premises').
C
3. The case made out by the original landlord Mr. Om
Prakash (since deceased) in his eviction petition can be
narrated as follows:
D
The tenanted premises was let out to the tenant/appellant
in the year 1982 in which the appellant was carrying on the
business of Commission Agent. The case of bonafide
requirement as pleaded by the original landlord was that the
original landlord and his two sons were carrying on the same
business as that of the appellant and as the original landlord
had decided to settle his elder son Ved Prakash in the tenanted
E
premises in the business of Commission Agent and the
younger son Arun Kumar in another shop occupied by another
tenant, he was constrained to file the eviction petition on the
ground of bonafide requirement and a separate eviction
proceeding was also filed against the other tenant by the
original landlord. In spite of repeated reminders to the tenant/
F
appellant to vacate the tenanted premises, the tenant/appellant
having failed to vacate the same, the original landlord was
G
+ constrained to file the eviction proceeding against the tenant/
appellant.
4. The tenant/appellant entered appearance and contested
the eviction proceeding denying the material allegations made H
700 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A in the application for eviction. In his written objection, the tenant/
appellant had categorically denied that the respondent had any
bonafide requirement for use and occupation of his son for
starting a business of Commission Agent in the tenanted
premises. Accordingly, the tenant/appellant sought for dismissal
B of the eviction petition.
C
5. The Rent Controller, Gurgaon, by his order dated
31.05.2004, had allowed the application for eviction inter alia
holding that the original landlord had successfully proved his
bonafide requirement of the tenanted premises. Feeling
aggrieved by this order of the Rent Controller, an appeal was
taken by the tenant/appellant before the Appellate authority
which affirmed the findings of the Rent Controller, Gurgaon and
dismissed the appeal of the tenant/appellant. Again feeling
aggrieved by the order of the appellate authority, a revision
D petition was filed by the appellant before the High Court of
Punjab and Haryana which was dismissed by the impugned
order affirming the findings of the Appellate Authority as well
as of the Rent Controller, Gurgaon. Be it mentioned herein that
the original landlord, as noted hereinearlier, died during the
E pendency of the Civil Revision case in the High Court and the
present respondents were substituted in his place.
F
6. Before us, the pivotal issue that was seriously raised
by the learned counsel for the appellant was as follows: -
(i)
G
H
Whether the landlord would be entitled to evict his
tenant from a non-residential premises on the
ground of bonafide requirement under the Haryana
Urban (Control of Rent and Eviction) Act, 1973
(hereinafter referred to as the 'Act') when Section
13 of the Act provides for eviction of the tenant only
in case of residential building if the landlord
requires it for his own occupation, and is not
occupying another residential building in the urban
area concerned and has not vacated such building
without sufficient cause after the commencement of
→
1
701
ASHOK KUMAR v. VED PRAKASH & ORS.
[TARUN CHATTERJEE, J.]
East Punjab Urban Rent Restriction Act, 1949 in A
the said urban area?
7. On the aforesaid issue, we have heard the learned
counsel appearing for the parties and examined the materials
on record. According to the learned counsel for the appellant, B
since Section 13 of the Act does not permit a landlord to evict
a tenant who is in occupation of a non-residential building on
the ground of bonafide requirement, the question of evicting the
appellant from the tenanted premises under Section 13 of the
Act would not arise at all. This submission of the learned
counsel for the tenant/appellant was seriously contested by the
learned counsel for the respondent. Before we take up this
issue for our consideration, it would be appropriate to refer to
Section 13 of the Act which runs as under :-
C
"Eviction of tenants-
(1) A tenant in possession of a building or rented land
shall not be evicted therefrom except in accordance
with the provisions of this section.
(2)
D
....(Omitted because it is not
E
necessary for our purpose)
(3) A landlord may apply to the controller for an order
directing the tenant to put the landlord in
possession-
(a) in case of residential building, if-
(i)
F
he requires it for own occupation, is not
occupying another residential building in the
urban area concerned and has not vacated G
such building without sufficient cause after the
commencement of 1949 Act in the said
urban area."
8. A plain reading of Section 13 of the Act would show that H
702 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A it permits a landlord to evict a tenant only from a residential
premises and not from the non-residential premises. It is an
admitted position that the landlord/respondent sought to evict
the tenant from the tenanted premises for his own use and
occupation, which was let out for non-residential purposes.
B
C
9. The Act was enacted by the Legislature in order to
control the increase of rent of certain buildings and rented lands
situated within the limits of urban areas and the eviction of
tenants therefrom. Section 2 (g) of the Act defines "residential
building" which means any building which is not a non-
residential building. Section 11 of the Act prohibits conversion
of a residential building into a non-residential building. Section
13 of the Act deals with eviction of a tenant.
10. At this stage, we need to consider a different Act
D namely, the East Punjab Urban Rent Restriction Act, 1949 (in
short "East Punjab Rent Act"), which was enacted long before
the Act of 1973, with which, we are concerned as we find that
somewhat similar provisions have been enacted in both the
Acts by the Legislature. Section 13 of the East Punjab Rent
E Act, before its amendment, contained provisions for eviction of
a tenant from a residential as well as from a non-residential
premises. However, the Legislature, by introducing an
amendment to the East Punjab Rent Act, had deleted the word
"non-residential premises" from Section 13 of the Act, from
F which it will be clear that the landlord cannot seek eviction of a
tenant after amendment from a non-residential premises for his
bonafide requirement which was available to the landlord
before the introduction of the Amendment Act in 1956. This
amendment was introduced by East Punjab Rent Restriction
G (Amendment) Act 1956, which came into force on 24th of
September, 1956.
11. The constitutionality of the Amendment Act of 1956 by
which deletion of the word "non-residential premises" for
eviction of a tenant on the ground of bonafide requirement under
H Section 13 of the East Punjab Rent Act came under challenge
703
ASHOK KUMAR v. VED PRAKASH & ORS.
[TARUN CHATTERJEE, J.]
in this Court in the case of Harbilas Rai Bansal vs. State of A
Punjab 1996 (1) SCC 1, in which this Court held the aforesaid
amendment of the East Punjab Rent Act as unconstitutional and
directed as follows :-
"We allow the appeal, set aside the impugned judgment B
of the High Court, declare the above said provisions of the
amendment as constitutionally invalid and as a
consequence restore the original provisions of the Act
which were operating before coming into force of the
amendment. The net result is that a landlord-under the Act-
can seek eviction of a tenant from a nonresidential building
on the ground that he requires it for his own use. The
C
parties to bear their own costs."
12. After the amendment of Section 13 of the East Punjab
Rent Act, by which the word "non-residential premises" was
deleted by judicial pronouncement, a landlord seeking eviction
of his tenant on the ground of bonafide requirement would be
entitled to file such eviction proceeding not only in respect of a
residential premises, but also from a non-residential premises.
D
E
13. While deciding the constitutionality of the aforesaid
amendment of the East Punjab Rent Act, this Court in the
aforesaid decision namely, Harbilas Rai (supra) had also
considered another decision of this Court in Gyan Devi Anand
vs. Jeevan Kumar (1985) 2 SCC 683. In Gyan Devi Anand
(supra), this Court also felt the difficulty of the landlord to evict
his tenant in respect of a non-residential premises. While
considering this aspect, this Court in that decision observed
as under :-
F
"The legislature in its wisdom did recognise this fact and G
the Legislature has provided that bona fide requirement
of the landlord for his own use will be a legitimate ground
under the Act for the eviction of his tenant from any
residential premises. This ground is, however, confined to
residential premises and is not made available in case of H
-
704 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A commercial premises. A landlord who lets out commercial
premises to a tenant under certain circumstances may
need bona fide the premises for his own use under
changed conditions in some future date should not in
fairness be deprived of his right to recover the commercial
premises. Bona fide need of the landlord will stand very
much on the same footing in regard to either class of
permises, residential or commercial. We therefore,
suggest that Legislature may consider the advisability of
making the bona fide requirement of the landlord a ground
of eviction in respect of commercial premises as well."
14. From the aforesaid observation of this Court, it is
therefore clear that this Court in 1985 felt this difficulty and
suggested that suitable legislation or amendment to the Statute
should be made by the Legislature.
15. In Gian Devi (supra), the question that was raised
before the Constitutional Bench was whether under the Delhi
Rent Control Act, 1958, the statutory tenancy in respect of
commercial premises was heritable or not. While answering
E this question in Gian Devi Anand (supra), this Court answered
the question in the affirmative. The observations that were
made by this Court in Gian Devi Anand (supra), as noted
hereinealier, were made, keeping in view the hardship being
caused to the landlords of non-residential premises, who cannot
F evict their tenants even on the ground of bonafide requirement
for personal use. Accordingly, in view of our discussions made
hereinabove and in view of the observations made by this Court
in the aforesaid two decisions, the only conclusion that can be
drawn is that a landlord can seek eviction of his tenant on the
G ground of bonafide requirement not only from residential
premises but also from a non-residential premises under the
East Punjab Rent Act.
16. This view was also approved by a Three-Judge Bench
decision of this Court in Rakesh Vij vs. Dr. Raminder Pal
Η Singh Sethi and others 2005 (8) SCC 504 in which, it has been
A
1
705
ASHOK KUMAR v. VED PRAKASH & ORS.
[TARUN CHATTERJEE, J.]
held that eviction of a tenant who is occupying a non-residential A
premises of a landlord, on the ground of bonafide requirement
under the East Punjab Rent Act, would be available in which
the decision in Harbilas' case (supra) was followed.
17. Following the decision of the Harbilas' Case (supra) B
and the other decisions referred to hereinabove, this Court in
a recent decision reported in Mohinder Prasad Jain vs.
Manohar Lal Jain 2006 (2) SCC 724 held that a landlord is
entitled to seek eviction of a tenant under the Act from a non-
residential building on the ground that the landlord bonafide
required the tenanted premises for his own use and occupation.
In para 5 of the said decision in that case, this Court observed
as under :-
C
"We may notice that this Court in Harbilas Rai Bansal v.
State of Punjab held such a provision to be D
unconstitutional, whereas in Gian Devi Anand v. Jeevan
Kumar somewhat different note was struck. The question
recently fell for consideration before a three-Judge Bench
of this Court in Rakesh Vij v. Dr. Raminder Pal Singh
Sethi wherein this Court upheld the ratio laid down in E
Harbilas Rai Bansal (supra) stating:
We allow the appeal, set aside the impugned judgment of
the High Court, declare the abovesaid provisions of the
amendment as constitutionally invalid and as a
consequence restore the original provisions of the Act
which were operating before coming into force of the
amendment. The net result is that a landlord "under the
Act" can seek eviction of a tenant from a non- residential
building on the ground that he requires it for his own
use. (Emphasis supplied)"
F
G
18. In view of the aforesaid decision of this Court, which
followed the earlier decisions although on different Rent Acts,
we need not delve on this question any further but our Judgment
will not be completed if we do not consider the decisions cited H
706 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A by the learned counsel on behalf of the appellant. As noted
hereinearlier, the learned counsel for the appellant submitted
before us that since the Act only permits a landlord to evict a
tenant on the ground of bonafide requirement from a residential
building and nothing has been stated in that provision or right
B has been created on the landlord to evict a tenant from a non-
residential building on the ground of bonafide requirement, it
is not open to the landlord to apply for eviction of a tenant from
a non-residential premises on the ground of bonafide
requirement when such ground was not specifically conferred
D
C by the Legislature under Section 13 of the Act or to the landlord
to apply for eviction of the tenant from the non-residential
premises. Therefore, according to the learned counsel for the
appellant, the decision in Mohinder Prasad Jain (supra), which
was delivered under the Act, is not a good law and, therefore,
the matter may be referred to a larger Bench for consideration
of this question. In support of this submission, the learned
counsel for the appellant had cited a number of decisions
namely, Common Cause vs. Union of India and Ors. JT 2003
(Suppl.2) SC 270, Padmasundara Rao and Ors. vs. State of
Tamil Nadu and Ors. (2002) 3 SCC 533, Union of India vs.
Deoki Nandan Aggarwal AIR 1992 SC 96, Naveen Kohli vs.
Neethu Kohli 2006 (4) SCC 558 and Vishnu Dutt Sharma vs.
Manju Sharma 2009 (3) SCALE 425.
E
19. We have carefully considered the aforesaid decisions
F of this Court, as noted hereinearlier. It is difficult to accept that
the decisions cited by the learned counsel for the appellant in
support of his aforesaid submission will lead us to hold that the
landlord shall not be entitled to evict a tenant from a non-
residential premises for bonafide requirement, when such
G ground for eviction has been made available only in case of
residential premises. In our view, the view taken in Mohinder
Prasad Jain (Supra) cannot be said to be a bad law on the
ground that it was really an usurpation of legislative duties on
the part of the Court by any stretch of imagination.
H
८
707
ASHOK KUMAR v. VED PRAKASH & ORS.
[TARUN CHATTERJEE, J.]
20. Therefore, the decisions cited by the learned counsel A
for the appellant cannot be relied upon for the purpose of
holding that the Court is not conferred with the power to
entertain an eviction petition against a tenant relating to non-
residential premises as, in our view, the correct interpretation
of bonafide requirement of a landlord of a residential building B
must include a non-residential building as well in view of the
decisions referred to hereinabove. In this connection, we may
also add that it may be pertinent to note that in the case of
Satyawati Sharma (Dead) by LRs. vs. Union of India and
another 2008 (5) SCC 287, a similar provision in the Delhi C
Rent Act, 1958 was found to be unconstitutional. In this
connection, reference may be made to para 38 of the said
decision, which reads as under:-
{
-
"38. In view of the above discussion, we hold that Section
14(1)(e) of the 1958 Act is violative of the doctrine of
equality embodied in Article 14 of the Constitution of India
insofar as it discriminates between the premises let for
residential and non-residential purposes when the same
are required bona fide by the landlord for occupation for
himself or for any member of his family dependent on him
and restricts the latter's right to seek eviction of the tenant
from the premises let for residential purposes only.
D
E
21. Thus, in view of the overall discussions made
hereinabove, we are unable to accept the submission of the F
learned counsel for the appellant that an eviction petition filed
by a landlord for eviction of a tenant cannot be filed under
Section 13 of the Act when such eviction proceeding relates
to a non-residential building.
22. Before parting with this Judgment, a short submission
of the learned counsel for the appellant needs to be dealt with.
According to the learned counsel for the appellant, the case of
Harbilas (supra) and Rakesh Vij (Supra) were rendered on the
amendments made to East Punjab Rent Act, whereas the case
G
H
708 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A of Mohinder Prasad Jain (supra) and the issue before us
concerned removing a classification which existed from the
inception of the legislation.
23. Therefore, according to the learned counsel for the
B appellant, a decision and reasoning concerning East Punjab
Rent Act cannot apply to a question with respect to the present
Act because both the legislations are products of different
legislatures and the rationale behind one cannot be compared
at par with that of the other.
C
D
E
24. The learned counsel for the appellant, in support of this
contention, relied on a decision of this Court in the case of State
of Madhyapradesh v. G.C.Mandawar, AIR 1954 SC 493 and
strong reliance on para 9 of this decision was pressed by the
learned counsel for the appellant, which may be quoted :-
Paragraph 9: "It is conceivable that when the same
Legislature enacts two different laws but in substance they
form one legislation, it might be open to the Court to
disregard the form and treat them as one law and strike it
down, if in their conjunction they result in discrimination. But
such a course is not open where, as here, the two laws
sought to be read in conjunction are by different
Governments and by different legislatures."
25. There is no quarrel in the aforesaid principle laid down
F by this Court in the aforesaid decision. However, we do not see
why the decision concerning one legislation cannot hold
persuasive value for the Court, while considering the
constitutionality of a very similar provision, albeit in a different
legislation.
G
H
26. It is not in dispute that the original landlord died, as
noted herein, during the pendency of the Civil Revision case
in the High Court. There is a faint argument of the learned
counsel for the appellant that on such date, the requirement of
the landlord had perished. In our view, there is no merit in this
709
ASHOK KUMAR v. VED PRAKASH & ORS.
[TARUN CHATTERJEE, J.]
submission of the learned counsel for the appellant. Looking A
at the averments made in the eviction petition, where the
original landlord has categorically pleaded that the requirement
was for his son who presently is the landlord because of the
death of the original plaintiff, the question of abatement of the
eviction proceeding cannot arise at all. That apart, the B
submission so made before us by the learned counsel for the
appellant was not even raised by the appellant before the High
Court where the original landlord died and the present
respondents have been substituted in his place.
27. In this view of the matter, we do not find any substance
in the submission of the learned counsel for the appellant. No
other question was raised by the learned counsel for the
appellant in support of this appeal and accordingly, we do not
find any merit in this appeal. The appeal is thus dismissed.
There will be no order as to costs.
R.P.
C
D
Appeal dismissed.
==End of OCR for page 15== | This case, Ashok Kumar vs. Ved Prakash, involves a dispute over the eviction of a tenant from a non-residential property. The tenant, Ashok Kumar, was running a commission agent business from a shop leased from the original landlord, Om Prakash.
Om Prakash decided to set up his sons, Ved Prakash and Arun Kumar, in similar businesses. They wanted to use the shop occupied by Ashok Kumar and another shop occupied by a different tenant. To achieve this, Om Prakash filed eviction petitions against both tenants.
The Rent Controller ruled in favor of Om Prakash, finding that he had a genuine need to evict the tenants to establish his sons' businesses. The tenant, Ashok Kumar, challenged this decision in the High Court, arguing that the Rent Control Act only allowed eviction from residential properties, not non-residential ones. The High Court upheld the Rent Controller's decision.
Finally, Ashok Kumar appealed the High Court decision to the Supreme Court. The Supreme Court examined the case, looking at the language of the Rent Control Act and considering previous rulings on similar cases.
The Supreme Court delved into the history of rent control laws in India. The East Punjab Urban Rent Restriction Act of 1949 originally allowed landlords to evict tenants from both residential and non-residential properties based on a genuine need. However, in 1956, the law was amended to remove non-residential properties from the list, making it harder for landlords to evict tenants from such properties. This amendment was later declared unconstitutional by the Supreme Court.
The Supreme Court reasoned that the amendment, which limited eviction rights to only residential properties, was unfair. Landlords should have the right to evict tenants from non-residential properties too, if they have a genuine need for those properties. The Court emphasized that the purpose of rent control laws was not to completely restrict a landlord's right to use their own property.
However, the Supreme Court acknowledged that the original landlord had passed away during the legal proceedings. The tenant argued that this should cause the eviction proceedings to be dismissed, citing rules of abatement in legal cases. However, the Supreme Court dismissed this argument, pointing out that the original landlord’s son had taken over the case and continued the eviction proceedings.
The Supreme Court finally upheld the decisions of the Rent Controller and the High Court. They ruled that landlords do have the right to evict tenants from non-residential properties based on a genuine need, similar to their rights regarding residential properties. The Court also stressed that the law was not meant to unfairly favor tenants over landlords.
As a result of this ruling, the tenant was ordered to vacate the non-residential property, allowing the original landlord's son to start his business there. The Supreme Court's decision clarifies the scope of rent control laws in India, emphasizing that landlords have the right to reclaim their properties, even non-residential ones, based on legitimate needs, even if a tenant has been occupying the property for a long time. |
[2010] 3 S.C.R. 70
A
SECURITIES AND EXCHANGE BOARD OF INDIA
V.
AJAY AGARWAL
(Civil Appeal No. 1697 of 2005)
B
FEBRUARY 25, 2010
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
C
Securities and Exchange Board of India Act, 1992 -
Enactment of - Purpose - Held: The Act was enacted to
achieve the twin purposes of promoting orderly and healthy
growth of securities market and for protecting the interest of
investors - The Act is pre-eminently a social welfare
legislation.
D
Securities and Exchange Board of India Act, 1992:
s.11 - Amendment of - Done on several occasions – To
keep pace with "felt necessities of time" - Amendment made
in sub-section (4) of s.11 in 2002 - Objects and reasons
discussed.
E
s.11B - Introduction of - Vide amendment made in 1995
- Objects and reasons discussed.
F
s.11B - Applicability of - With retrospective effect – Held:
s.11-B being procedural in nature can be applied
retrospectively - If law affects matters of procedure, then
prima facie it applies to all actions, pending as well as future
- On facts, entire basis of the order of Appellate Tribunal that
s.11-B cannot be applied retrospectively, was passed on an
erroneous basis.
G
Constitution of India, 1950 – Art. 20(1) - Protection
under, against ex-post facto law - When available - Held: It
is available only where the person concerned is held guilty
of having committed an "offence" and is subjected to a
"penalty".
H
Words and Phrases - "offence" - Meaning of -
Discussed - Code of Criminal Procedure, 1973 – s.2(n) -
General Clauses Act, 1897.
SECURITIES AND EXCHANGE BOARD OF INDIA v. 71
AJAY AGARWAL
A
the violations were alleged against him, the appellant-
Board did not have the power either under s.11B or under
s.11(4)(b) of the Act since the enabling provisions came
by way of amendment in 1995 and 2002 respectively,
while the alleged violations surfaced prior to coming into
B effect of those amendments. This contention weighed
with the Appellate tribunal and the respondent was given
the protection against ex-post facto law. Hence the
present appeal.
C
Allowing the appeal, the Court
HELD: 1. The order of the Appellate Tribunal is
quashed and the order of the appellant-Board is upheld.
[Para 54] [90-B]
D
Govinddas and others v. Income Tax Officer and another
1976 (103) ITR 123 (S.C.), distinguished.
M/s Reliance Jute and Industries Ltd. v C.I.T West
Bengal, Calcutta 1980 (1) SCC 139 and Controller of Estate
Duty, Gujarat-l, Ahmedabad v. M.A. Merchant and etc. AIR
E 1989 SC 1710, referred to.
2..Though s.11B and s.11(4)(b) of the Securities and
Exchange Board of India Act, 1992 came by way of
amendment in 1995 and 2002 respectively, by the time
F the appellant-Board passed the order on 31st March 2004,
all the amendments were on the statute. Even if the said
amendments to the Act were allowed to operate
prospectively, by the time the order was passed by the
Board, it was empowered by the said amendments to do
so. Therefore, without giving any retrospective operation
G to those provisions, the impugned order could be passed
by the Board inasmuch as the amendments in question
empowered the Board to pass such an order when it
passed the order. [Paras 21, 22 and 23] [83-E; 83-F; 83-
G]
72 SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
the violations were alleged against him, the appellant-
Board did not have the power either under s.11B or under
s.11(4)(b) of the Act since the enabling provisions came
by way of amendment in 1995 and 2002 respectively,
while the alleged violations surfaced prior to coming into
B effect of those amendments. This contention weighed
with the Appellate tribunal and the respondent was given
the protection against ex-post facto law. Hence the
present appeal.
C
Allowing the appeal, the Court
HELD: 1. The order of the Appellate Tribunal is
quashed and the order of the appellant-Board is upheld.
[Para 54] [90-B]
D
Govinddas and others v. Income Tax Officer and another
1976 (103) ITR 123 (S.C.), distinguished.
M/s Reliance Jute and Industries Ltd. v C.I.T West
Bengal, Calcutta 1980 (1) SCC 139 and Controller of Estate
Duty, Gujarat-l, Ahmedabad v. M.A. Merchant and etc. AIR
E 1989 SC 1710, referred to.
2..Though s.11B and s.11(4)(b) of the Securities and
Exchange Board of India Act, 1992 came by way of
amendment in 1995 and 2002 respectively, by the time
F the appellant-Board passed the order on 31st March 2004,
all the amendments were on the statute. Even if the said
amendments to the Act were allowed to operate
prospectively, by the time the order was passed by the
Board, it was empowered by the said amendments to do
so. Therefore, without giving any retrospective operation
G to those provisions, the impugned order could be passed
by the Board inasmuch as the amendments in question
empowered the Board to pass such an order when it
passed the order. [Paras 21, 22 and 23] [83-E; 83-F; 83-
G]
73 SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
3.1. In the present case, s.11-B of the Act was
invoked even at the show cause stage. Therefore, it
cannot be said that any provision has been invoked in
the midst of any pending proceeding initiated by the
Board. The respondent was, thus, put on notice that the
Board is invoking its power under s.11-B which was
available to it under the law on the date of issuance of
show cause notice. [Para 25] [84-B]
3.2. In the premises, it cannot be said that any new
provision has been invoked in connection with any
pending proceeding. Nor can it be contended by the
respondent that there was any unfairness in the
proceeding. Respondent was given adequate notice of
the charges in the show cause notice. He was given an
opportunity to reply to the show cause notice and,
thereafter, a fair opportunity of hearing was given before
the order was passed by the Board. The entire gamut of
a fair procedure was thus observed. [Para 26] [84-C-D]
3.3. Also, there is no challenge to the amended
provisions of the law. Even if the law applies
prospectively, the Board could not be prevented from
acting in terms of the law which existed on the day the
Board passed its order. [Para 27] [84-E]
4.1. It cannot be held that protection under Article
20(1) of the Constitution in respect of ex-post facto laws
is available to the respondent. [Para 38] [87-B]
4.2. The right of a person of not being convicted of
any offence except for violation of a law in force at the
time of the commission of the act charged as an offence
and not to be subjected to a penalty greater than that
which might have been inflicted under the law in force at
the time of the commission of the offence, is a
Fundamental Right guaranteed under our Constitution
only in a case where a person is charged of having
committed an "offence" and is subjected to a "penalty".
[Para 29] [84-H; 85-A-B]
4.2. In the instant case, the respondent has not been
held guilty of committing any offence nor has he been
subjected to any penalty. He has merely been restrained
by an order for a period of five years from associating
with any corporate body in accessing the securities
market and also has been prohibited from buying, selling
or dealing in securities for a period of five years. The
order of restrain for a specified period cannot be equated
with punishment for an offence, as defined under the
General Clauses Act, 1897. On a comparison of the two
definitions of "offence", one under s.2(n) of the Code of
Criminal Procedure, 1973 and the other under the General
Clauses Act, it is found that there are common links
between the two. An offence would always mean an act
of omission or commission which would be punishable
by any law for the time being in force. [Paras 30, 32, 33
and 34] [85-C; 85-F; 85-H; 86-A]
Rao Shiv Bahadur Singh and another v. State of Vindhya
Pradesh AIR 1953 SC 394; State of West Bengal v. S.K.
Ghosh AIR 1963 SC 255 and Director of Enforcement v.
M.C.T.M. Corporation Pvt. Ltd. and others (1996) 2 SCC 471,
relied on.
5.1. From the legislative intent for enacting the
Securities and Exchange Board of India Act, 1992, it
transpires that the same was enacted to achieve the twin
purposes of promoting orderly and healthy growth of
securities market and for protecting the interest of the
investors. The requirement of such an enactment was felt
in view of substantial growth in the capital market by
increasing participation of the investors. In fact such
enactment was necessary in order to ensure the
confidence of the investors in the capital market by
giving them some protection. The said Act is pre-
eminently a social welfare legislation seeking to protect
the interests of common men who are small investors.
[Paras 39 and 40] [87-C; 87-D]
5.2. It is a well known canon of construction that
when Court is called upon to interpret provisions of a
social welfare legislation the paramount duty of the Court
is to adopt such an interpretation as to further the
purposes of law and if possible eschew the one which
frustrates it. [Para 41] [81-E]
6.1. A perusal of s.11, sub-section 2(a) of the Act
makes it clear that the primary function of the Board is
to regulate the business in stock exchanges and any
other securities markets and in order to do so it has been
entrusted with various powers. Section 11 had to be
amended on several occasions to keep pace with the 'felt
necessities of time'. One such amendment was made in
Sub Section (4) of s.11 of the Act, which gives the Board
the power to restrain persons from accessing the
securities market and to prohibit such persons from
being associated with securities market to buy and sell
or deal in securities. Such an amendment came in 2002.
From the statement of objects and reasons of the
Amendment Act of 2002, it appears that the Parliament
thought that in view of growing importance of stock
market in national economy, SEBI will have to deal with
new demands in terms of improving organisational
structure and strengthening institutional capacity.
Therefore, certain shortcomings which were in the
existing structure of law were sought to be amended by
strengthening the mechanisms available to SEBI for
investigation and enforcement, so that it is better
equipped to investigate and enforce against market
malpractices. [Paras 43, 44, 45 and 46] [87-G-H; 88-A-B;
88-C; 88-D-E]
6.2. s.11-B of the Act which empowers the Board to
issue certain directions also came up by way of
amendment in 1995 by Act 9 of 1995. The Statements of
Objects and Reasons of such amendment show one of
the objects is to empower the Board to issue regulations
without the approval of the Central Government. s.11-B
of the Act thus empowers the Board to give directions in
the interest of the investors and for orderly development
of securities market, which is one of the twin purposes
to be achieved by the said Act. Therefore, by the 1995
amendment by way of s.11-B, the appellant Board has
been empowered to carry out the purposes of the said
Act. [Para 47] [88-E-G]
7.1. In the absence of any challenge to the
provisions, which came by way of amendment, it cannot
be said that even though Board is statutorily empowered
to exercise functions in accordance with the amended
law, its power to act under the law, as amended, will stand
frozen in respect of any violation which might have taken
place prior to the enactment of those provisions. It is
nobody's case that Board has exercised those powers
in respect of a proceeding which was initiated prior to the
enactment of those provisions. In fact Board issued the
show cause notice in terms of s.11-B and considered the
reply of the respondent. In such a situation, there has
been no infraction in the procedure. Therefore, the entire
basis of the order of the Appellate Tribunal that provision
of s.11-B cannot be applied retrospectively has been
passed on an erroneous basis. Provisions of s.11-B
being procedural in nature can be applied retrospectively.
It is a time honoured principle if the law affects matters
of procedure, then prima facie it applies to all actions,
pending as well as future. [Paras 48, 49, 50, 51] [88-Η; 89-
A-C; 89-D; 89-D-F]
7.2. No one has a vested right in any course of
procedure. A person's right of either prosecution or
defence is conditioned by the manner prescribed for the
time being by the law and if by the Act of Parliament, the
mode of proceeding is altered, and then no one has any
other right than to proceed under the alternate mode.
[Para 52] [89-G-H]
K.Eapan Chako v. The Provident Investment Company
(P.) Ltd. AIR 1976 SC 2610 and Union of India v. Sukumar
Pyne AIR 1966 SC 1206, relied on.
Maxwell's Interpretation of Statutes, 11th Edition, p.216,
referred to.
Case Law Reference:
1976 (103) ITR 123 (S.C.) distinguished
Para 13
1980 (1) SCC 139
referred to
Para 16
AIR 1989 SC 1710
referred to
Para 16
AIR 1953 SC 394
relied on
Para 35
AIR 1963 SC 255
relied on
Para 36
(1996) 2 SCC 471
relied on
Para 37
AIR 1976 SC 2610
relied on
Para 5
AIR 1966 SC 1206
relied on
Para 53
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s).
1697 of 2005.
From the Judgment & Order dated 09.12.2004 as
modified by order dated 03.02.2005 by the Securities
Appellate Tribunal Mumbai in Review Application No. 122 of
2004 in Appeal No. 85 of 2004.
Altaf Ahmed, Bhargava V. Desai, Rahul Gupta, Nikhil
Sharma for the Appellant.
Indrajeet Das (for Kuldip Singh, NP) for the Respondent(s).
The Judgment of the Court was delivered by:
GANGULY, J. 1. The question which arises for
consideration in this appeal is whether Section 11-B of the
Securities and Exchange Board of India Act, 1992 (for short,
'the Act') could be invoked by the Chairman of the Securities
and Exchange Board of India (for short, 'SEBI') in conjunction
with Sections 4(3) and 11 for restraining the respondent from
associating with any corporate body in accessing the securities
market and prohibiting him from buying, selling or dealing in
securities.
2. The factual background in which the present appeal
arises is noted as under.
3. The respondent was appointed the Joint Managing
Director of Trident Steel Limited (hereafter referred to as "the
said Company) on or about 20th May 1993. The Board initiated
certain preliminary investigations about the affairs relating to
public issues by the said Company on the basis of a complaint
received from a member of Bombay Stock Exchange (for short
B.S.E.). The public issue of the said Company was of 52 lacs
shares of Rs.10 each at a premium of Rs.3.50 per share
aggregating to Rs.7 crore 2 lacs. The Lead Managers to the
issue were Bank of Baroda and Apple Industries Limited. Such
issues opened on 26th November, 1993 and closed on
December 1993 and one of the Directors of the Company
appeared to be the chief promoter of the same.
4. The complaint was to the effect that there was
misstatement in the prospectus filed by the company at the time
of the public issue with regard to alleged non-disclosure of
pledge of 7 lac 50 thousand shares held in the company by
directors of the company to avail of working capital from Bank
of Baroda. The second | **The Case:** Securities and Exchange Board of India (SEBI) vs. Ajay Agarwal
**The Issue:** The heart of this case revolves around the applicability of amendments to the Securities and Exchange Board of India Act, 1992. Specifically, could SEBI use its powers under the amended law to take action against a person for violations that occurred **before** those amendments came into effect?
**Background:**
* **SEBI:** The Securities and Exchange Board of India (SEBI) is the regulatory body for the securities market in India. Its primary role is to protect investors and ensure the market's integrity.
* **The Complaint:** SEBI received a complaint against Trident Steel Limited and its directors, including Ajay Agarwal (the respondent). The complaint alleged irregularities in the company's public issue, including:
* Misleading information in the prospectus.
* Non-disclosure of pledged shares.
* Non-receipt of dividends by investors.
* **SEBI's Investigation:** SEBI investigated and found substance in the allegations. It issued a show-cause notice to Ajay Agarwal, asking why he should not be barred from the securities market.
* **SEBI's Order:** In 2004, SEBI, using its powers under Sections 4(3), 11, and 11B of the SEBI Act, barred Ajay Agarwal from associating with any company in the securities market for five years.
* **The Amendments:** Crucially, Sections 11B and 11(4)(b) of the SEBI Act, which granted SEBI the power to issue such orders, were introduced by amendments in 1995 and 2002, respectively. The violations in question occurred **before** these amendments.
**Ajay Agarwal's Appeal:** Ajay Agarwal appealed SEBI's order to the Securities Appellate Tribunal (SAT). His argument was based on the principle of "ex-post facto law," meaning "after the fact."
* **Ex-Post Facto Law:** This principle generally prohibits punishing someone for an act that was not considered a crime when it was committed. Applying this to the case, Agarwal argued that he couldn't be penalized under amendments that didn't exist when the alleged violations took place.
* **SAT's Decision:** SAT agreed with Agarwal, finding that Section 11B couldn't be used retrospectively (i.e., applied to past events). They reasoned that SEBI's powers were limited to violations committed **after** the amendments.
**SEBI's Appeal to the Supreme Court:** SEBI appealed SAT's decision to the Supreme Court.
**Supreme Court's Analysis and Ruling:**
The Supreme Court analyzed several critical aspects of the case:
1. **Interpretation of Social Welfare Legislation:** The Court recognized the SEBI Act as a social welfare legislation designed to protect investors' interests. It emphasized that when interpreting such legislation, courts should favor interpretations that fulfill the law's purpose rather than hinder it.
2. **Applicability of the Amendments:** The Court observed that by the time SEBI issued its order in 2004, the relevant amendments were already in force. Even if the amendments were to be applied only prospectively (to future events), SEBI was still empowered to act because the order was passed **after** the amendments came into effect.
3. **No Unfairness to the Respondent:** The Court dismissed the argument that applying the amended law was unfair to Agarwal. He was given a show-cause notice, ample opportunity to respond, and a fair hearing – fulfilling the requirements of due process.
4. **Ex-Post Facto Law:** The Court clarified the scope of the "ex-post facto" principle. It noted that this principle primarily protects against being convicted of an "offence" and subjected to a "penalty" for an act that was not a crime when committed.
* **No Offence or Penalty:** In Agarwal's case, the Court found that he was not being charged with a crime or being punished but was being restrained from the market to protect investors. This restraint did not constitute a "penalty" as understood in criminal law.
5. **Procedural Laws:** The Court highlighted the distinction between "substantive law" (which defines crimes and punishments) and "procedural law" (which governs the legal process). It determined that Section 11B was procedural, outlining SEBI's powers to act. The Court emphasized that procedural laws, unlike substantive ones, can generally be applied retrospectively unless explicitly stated otherwise.
**Supreme Court's Conclusion:**
* The Supreme Court found that the Securities Appellate Tribunal had erred in its application of the law.
* The Court held that SEBI was empowered to pass the order against Ajay Agarwal, even though the alleged violations occurred before the amendments to the SEBI Act.
* The Court allowed SEBI's appeal and upheld the order restraining Ajay Agarwal from the securities market.
**Key Takeaways:**
* **Protection of Investors:** The Supreme Court's decision emphasizes the importance of protecting investors' interests in the securities market.
* **Evolution of Law:** The case demonstrates how laws can be amended to address new challenges and that such amendments, especially procedural ones, can have implications for past conduct.
* **Balancing of Rights:** The judgment reflects the delicate balance between individual rights and the broader public interest, particularly in regulating complex sectors like the securities market.
In essence, the Supreme Court's ruling clarified the powers of regulatory bodies like SEBI and confirmed that they could use amended laws to take action against market misconduct, even if the violations occurred before the amendments, as long as due process is followed and the actions are not considered criminal penalties. |
[2010] 13 (ADDL.) S.C.R. 966
ISHWAR NAGAR CO-OP.HOUSE BUILDING SOCIETY
V.
PARMA NAND SHARMA AND ORS.
(Civil Appeal No.9671 of 2010)
NOVEMBER 15, 2010
[DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE,
JJ.]
Delhi, Cooperative Societies Rules, 1973:
r.25(2) - Retrospective or prospective in effect - Held:
r.25(2) operates in future, though the basis for taking action
is the factum of acquiring a plot in the past - Thus, when by
virtue of r.25(2), a member is deemed to have ceased to be
a member of the society, the cessation operates from April
2, 1973, when the rules came into force - Merely because a
person who had become a member of the society at a point
of time when the disqualification mentioned in r.25 was not in
existence and because of the said rule would cease to be a
member of the society would not necessarily mean that the
said rule is retrospective - r.25(2) is not retrospective - Delhi
Co-operative Societies Act, 1972 - s.97(1) - Cooperative
Societies - Retrospective operation.
r.25 - Applicability of, when property purchased in the
name of HUF - Held: r.25(1)(c)(i) provides an exception in
case of persons who are only co-sharers in the joint family
property - Disqualification of membership as laid down in
sub-rule (l)(c)(i) shall not be applicable in case of co-sharers
of property whose share is less than 66.72 sq. m. (80 yds) of
land - In the instant case, the share of the member in the
purchased property was more than the prescribed limit -
Thus, the said exception was not applicable to his case -
Even otherwise, ownership by HUF is ownership of property
by the family members and consequently the same would
clearly fall within the prohibition and bar of allotment as
contained in clause 5(a) of the lease deed - In terms of
clause 5 (a) of the lease deed, the appellant society was under
an obligation not to allot a residential plot to a person, who
was owning a property in the city of Delhi - Therefore, it was
obligatory for the Society not to allot plots of land to such
persons who own any residential property either in their own
name or in the name of their family member.
r.25 - Acquisition of separate accommodation by a
member of the Cooperative Housing Society - Termination
of membership by appellant-society - Validity of – Held: In
the light of r.25, the action of the appellant-society would be
valid if the said property was found to be a residential house
In self-assessment property tax forms filled by the member
with respect to the said property, the member opposed the
assessable value shown in the assessment notice on the
ground that the building on the said plot was under self-
occupation for residence and self professional-medical work
only and was a single-unit house - The said information about
the nature and status of his property was furnished by the
member under his own declaration For retaining the
membership of the appellant-society, he cannot claim that the
said property was used purely for commercial purpose.
Delhi Co-operative Societies Act, 1972:
s.97(1) - Power of Lt. Governor under, to frame r.25(2) –
Held: r.25(2) prescribes that a member would cease to be a
member on incurring certain disqualifications - r.25(2) does
not in any manner go beyond the ambit of rule making
authority given u/s.97(1) of the Act - The object of a co-
operative society is not to earn profits but to enable the
members to improve their economic conditions by helping
them in their pursuits - Thus, the cooperative societies which
seek to obtain the land at concessional rate from the
government to build houses must necessarily have a
limitation that only members who are in real need of houses
should be permitted to become members and to take the
benefit of land allotment - Cooperative Societies.
Bye-laws of Ishwar Nagar Cooperative Housing Building
Society, 1962:
Bye-law 8(vii) - Acquisition of separate accommodation
Disqualification of member - Held: Bye-laws of the society
regulate the management of the society and govern the
relationship between society and members inter se
They
are in the nature of Articles of Association of a company
registered under the Companies Act - If they are consistent
with the Act and Rules, the members are bound by them
Bye-law 8(vii) showed that purchasing a house or a plot of land
for construction of a house, either in his own name or in name
of any of his dependants, disqualifies a member of the society
to continue as one
The said bye-law was neither
inconsistent with the Bombay Cooperative Societies Act, 1925
under which the appellant society was governed nor was it
contrary to Delhi Cooperative Societies Act, 1972 and the
Rules framed thereunder - Therefore, a member of the
society who acted in violation of the said bye law was liable
to have his or her membership removed from the appellant-
society - Delhi Co-operative Societies Act, 1972 - Delhi
Cooperative Societies Rules, 1973 r.25
Bombay
Cooperative Societies Act, 1925.
Bye-law No. 5(i)(e) - Expression "eligible to be a
member" - Interpretation of - Held: The verb "be" has two
meanings, namely, to exist, and to become - Constitution of
India, 1950
Article 102(1).
Cooperative Societies: Meaning and object of.
Words and phrases: Word 'be' - Meaning of - Constitution
of India, 1950 – Article 102(1).
Respondent no.1 was enrolled as a member of the
appellant-cooperative society on 11.3.1961. In 1962, he
purchased a property in Kailash Colony in the name of
the HUF consisting of himself, his wife and children and
raised construction on it. According to the appellant-
society, the construction was a residence-cum-nursing
home while respondent no.1 claimed it to be only a
nursing home. The appellant-society terminated the
membership of respondent-1 on the ground that as per
rule 25(1)(c) of the Delhi Cooperative Societies Rules,
1973 upon owning another property, the appellant would
not be entitled to be member of a cooperative housing
society.
The questions which arose for consideration in the
instant appeal were whether Rule 25 of the Rules had a
retrospective application in debarring a member of a co-
operative society who enrolled as a member of the
society and acquired separate property before the Rules
came into force; whether bye-laws of the society could
debar respondent no.1 on acquisition of a separate
residential/dwelling house in Delhi; whether the property
purchased in the name of HUF would debar respondent
no.1 to continue as a member of the appellant-society;
and whether the nature of the property purchased was
residential or commercial.
:
Allowing the appeal, the Court
HELD: 1.1. A perusal of Rule 25(2) of Delhi
Cooperative Societies Rules, 1973 would make it clear
that after the said Rules came into force, if a member had
already become subject to any disqualification specified
in sub- rule (1), he would be deemed to have ceased to
be a member from the date when the disqualification was
incurred. In the instant case, the relevant rule was Rule
25(1)(c)(i). The said Rule also stipulated that no person
shall be eligible for admission as a member of the co-
operative society, if he owns a residential house or a plot
of land for the construction of a residential house in any
of the territory of Delhi, in his own name or in the name
of his spouse or any of his dependent children, on lease-
hold or free-hold basis. It is incorrect to say that Rule 25
was not applicable to his case as the said rule was not
retrospective and the alleged disqualification of
purchasing the said property had incurred prior to the
adoption of the Rules. Merely because a person who had
become a member of the society at a point of time when
the disqualification mentioned in Rule 25 was not in
existence and because of the said rule would cease to
be a member of the society does not necessarily mean
that the said rule is retrospective. The most concrete
cases wherein laws are made retrospective are those in
which the date of commencement is earlier than
enactment, or which validate some invalid law, otherwise,
every statute affects rights which would have been in
existence but for the statute and a statute does not
become a retrospective one because a part of the
requisition for its action is drawn from a time antecedent
to its passing. In this view of the matter, Ruie 25(2) is not
retrospective. All that Rule 25(2) does is that it operates
in future, though the basis for taking action is the factum
of acquiring a plot in the past. Thus when by virtue of
Rule 25(2), a member is deemed to have ceased to be a
member of the society, the cessation operates from April
2, 1973, when the rules came into force. [Paras 8, 12, 15]
[981-A-F; 984-A-H; 985-A; 986-D-F]
State of Maharashtra v. Vishnu Ramachandra 1961 Cri
L. J 450 - relied on.
Queen v. Vina (1875) 10 Q.B 195; Re: Solicitors Clerk
(1957) 3 ΑΗ. E.R. 617 – referred to.
Craise on Statute Law 17th edition page 386, referred
to.
1.2. Section 97(1) of the Delhi Co-operative Societies
Act, 1972 gives the power to the Lt. Governor to frame
rules to carry out the purposes of the Act. The specific
provisions as are contained in several clause of sub-
section (2) of Section 97 are merely illustrative and they
cannot be read as restrictive of the generality of powers
prescribed by sub section (1) of Section 97. The particular
matters given in sub-section (2) only illustrate and do not
exhaust all the powers conferred. The power to frame
rules given under Section 97(1) of the Act is not
controlled by the list mentioned in sub-section (2) and the
Lt. Governor can make rules for any of the purposes of
the Act. A co-operative society may be defined as a
voluntary association of individuals combined to achieve
an improvement in their social and economic conditions
through the common ownership and democratic
management of the instruments of wealth. The voluntary
organizations like cooperative societies suit the needs of
poor and weaker sections. The object of a co-operative
society is not to earn profits but to enable the members
to improve their economic conditions by helping them in
their pursuits. Thus, the cooperative societies like the
one in instant case which seek to obtain land at
concessional rate from the government and to build
houses must necessarily have a limitation that only
members who are in real need of houses should be
permitted to become members and to take the benefit of
land allotment. In the garb of a cooperative society, a
person cannot be permitted to avoid the stress of market
prices and take a concessional advantage in obtaining a
plot. Thus, Rule 25(2) does not in any manner go beyond
the ambit of rule making authority given under
Section 97(1) of the Act. [Paras 10, 11] [981-C-E; 983-G-
H; 984-A-D]
Afzal Ullah v. State of Uttar Pradesh AIR 1964 SC 264;
Rohtak Hissar District Electricity Supply Co. Ltd. v. State of
Utter Pradesh and Ors. AIR 1966 SC 1471 - relied on.
Row's Encyclopedia of Co-operative Societies Law in
India, Vol. 2, page 1 - referred to.
2. The Bye-laws of Ishwar Nagar Cooperative
Housing Building Society, 1962 came into force on
3.10.1962. The eligibility conditions for enrollment as a
member of the society were provided in chapter III of the
said bye-laws. Bye-law No. 8 (vii) provides for cessation
of membership. A perusal to the bye-law would make it
clear that on purchasing a house or a plot of land for
construction of a house, either in his own name or in the
name of any of his dependants, disqualifies a member of
the society to continue as one. The Bye-laws of the
society regulate the management of the society and
govern the relationship between society and members
inter se. They are similar in nature to the Articles of
Association of a company registered under the
Companies Act. If they are consistent with the Act and
the Rules, the members are bound by them. Bye-law 8(vii)
was neither inconsistent with the Bombay Cooperative
Societies Act, 1925 under which the appellant society was
governed nor was it contrary to Delhi Cooperative
Societies Act, 1972 and the Rules framed thereunder.
Therefore, a member of the society who acted in violation
of the said bye-law was liable to have his or her
membership removed from the appellant-society. The
expression "eligible to be a member" is used in the 1962
bye-law 5(i)(e). The verb "be" has two meanings, namely,
(a) to exist, and (b) to become. The former refers to the
existence of state of affairs in present while the latter
refers to the coming into existence of a new state of
affairs. In Article 102(1) of the Constitution, the word "be"
is used in the sense of "exist" as contrasted to "become".
Under Article 102(1), a person is disqualified for "being
chosen as" and also for "being a member of either
Houses of Parliament" etc. The dichotomy is between
becoming a member and continuing to be a member of
parliament. It is, therefore, to be concluded that even
under Bye-law 5(i)(e) of Bye-laws of Ishwar Nagar
Cooperative Housing Building Society, 1962, respondent
no.1 was disabled from continuing to be members of the
society. [Paras 16, 17, 18, 21] [986-G-H; 987-C-E, G-H;
988-A; 989-A-F]
Zoroastrian Coop. Housing Society Ltd. v. District
Registrar, Coop. Societies (Urban), (2005) 5 SCC 632
relied on.
3.1. Sub-rule (1)(c)(i) of Rule 25 provides an exception
in case of persons who are only co-sharers in the joint
family property, in that the disqualification of membership
as laid down in sub-rule (l)(c)(i) shall not be applicable in
case of co-sharers of property whose share is less than
66.72 sq. m. (80 yds) of land. In the instant case, the said
property is admeasuring 1080 yds and there are 3 со-
sharers of the property, i.e. respondent no.1 and his two
children, (after the death of wife) and the share of
respondent no.1 would be more than the prescribed limit.
In this regard, the said exception is not applicable to the
case of respondent no.1. [Para 22] [990-A-C]
3.2. Further, a perpetual lease deed with respect to
the land allotted to the appellant society was executed on
06.04.1978 by the President of India through the Delhi
Administration. In terms of clause 5 (a) of the said lease
deed, the appellant society was under an obligation not
to allot a residential plot to a person, who was owning a
property in the city of Delhi. Therefore, as per terms of
allotment of the land to the appellant, it was obligatory for
the society not to allot plots of land to such persons who
own any residential property either in their own name or
in the name of their family member. When the Hindu
Undivided Family of the respondent consists only of his
own family members, namely, his wife, son and the
daughter, obviously ownership of the said property by
the Hindu Undivided Family of the respondent is
ownership of property by the family members and
consequently the same would clearly fall within the
prohibition and bar of allotment as contained in clause 5
(a) of the lease deed. [Para 22] [990-D-E]
4. In the light of Rule 25, the action of the appellant-
society would be justified if the said property is found to
be residential house. The mere fact that respondent no.1
had shown in affidavits and correspondences the said
property as his address would not prove that the property
is a residential house as being a doctor running a nursing
home, he had to remain invariably in his workplace for
very long hours. However, in self-assessment property
tax forms filled by respondent no.1 with respect to the
said property, respondent no.1 opposed the assessable
value shown in the assessment notice on the ground that
the building on the said plot was a new constructed
building and was under self-occupation for residence
and self professional-medical work only and was a single-
unit house. The respondent for the purpose of being
member of the appellant-society cannot claim the said
property used purely for commercial purpose when he
himself claimed the said property being used for
residential purpose also. The said information about the
nature and status of his property in Kailash Colony was
furnished by the respondent under his own declaration
and by certifying that the said particulars filled in the form
are true and correct the best of his knowledge. The
information was relevant and material to conclude that
the said property in Kailash Colony was also used as a
residential property and, therefore, the contention for
respondent no.1 that it was exclusively a commercial
property cannot be accepted. [Para 23] [991-E-H; 992-A-
HD]
AIR 1964 SC 264
relied on
Para 10
AIR 1966 SC 1471
relied on
Para 10
1961 Cri L. J 450
relied on
Para 12
(1875) 10 Q.B 195
referred to
Para 13
(1957) 3 ΑΗ. E.R. 617
referred to
Para 13
(2005) 5 SCC 632
relied on
Para 17
CIVIL APPELLTAE JURISDICTION: Civil Appeal No.
9671 of 2010.
From the Judgment & Order dated 28.3.2008 of the High
Court of Delhi at New Delhi in W.P.(C) No. 474 of 1982.
P.S. Narsimha, Abhay Kumar, K. Parmeshwar, Ritesh K.
Chowdhary, Tenzing Tsering, Madhumita Singh for the
Appellant.
Arun Mohan, Sameer Parekh, Arvind Bhatt, Sumit Goel,
Pallavi Sharma, Smita Bhargava, R.K. Gupta, Shashi Gupta,
Parekh & Co., Indira Sawhney, Shweta Verma, Anil Katiyar,
Sharmila Upadhyay for the Respondents.
The Judgment of the Court was delivered by
DR. MUKUNDAKAM SHARMA, J. 1. Leave granted.
2. This Appeal is directed against the judgment and order
dated 28/03/2008 in W.P. No. 474/1982 of the High Court of
Delhi wherein the High Court allowed the writ petition filed by
the respondent-1 and whereby resolution and order dated 14th
January, 1978 passed by the appellant and the order of the
Registrar, Cooperative Societies dated 17th May, 1978 and the
order of the Deputy Registrar dated 5th November, 1981
whereby the name of the respondent-1 had been removed from
the list of members of the appellant-society were quashed and
set aside.
3. The respondent-1, Dr. Parmanand Sharma was enrolled
as a member of the appellant society vide membership No. 35
on 11th March 1961. In 1968, he purchased a property bearing
No. A-19/A, Kailash Colony, New Delhi in the name of his
Hindu Undivided Family consisting of respondent-1, his wife
and two minor children in 1968 and a structure was constructed
thereon in 1969. According to the appellant-society, this
construction is a residence-cum-nursing home, whereas
respondent-1 claims it to be only a nursing home, to which
question we will refer later. In this chain of events, the
membership of the respondent-1 was terminated from the
appellant society on the ground that the respondent-1 owned
another property, i.e., 19/A, Kailash Colony, in Delhi, since as
per rule 25 (1)(c) of the Delhi Cooperative Societies Rules, 1973
(hereinafter referred to as "the Rules"), upon owning another
property, the appellant was not entitled to be member of a
Cooperative Housing Society. The respondent-1 was also
expelled on 14th January 1978 from the society under section
36(1) of the Delhi Cooperative Societies Act, 1972 (hereinafter
referred to as "the Act") for being a persistent defaulter, since
he had not paid the dues demanded by the society. The action
of the society expelling the respondent-1 was approved by the
Registrar, Cooperative Societies on 17th May 1978. On 26th
February 1980, an application was filed by respondent-1 under
Section 60 of the Act for reference of dispute to arbitration. The
reference was dismissed on 5th November, 1980. Being
aggrieved, the respondent filed a writ petition before the High
Court, wherein the High Court by the impugned judgment and
order dated 28/03/2008 held that 19/A, Kailash Colony, Delhi
was being used for running a nursing home, i.e., for a
cornmercial purpose and therefore, that would not constitute a
violation of Rule 25 of the Rules. By the said order, the HC set
aside the expulsion orders.
4. The present appeal is directed against the above
impugned judgment and order of the High Court by way of
Special Leave Petition on which we heard the counsel
appearing for the parties at length. The learned counsel for the
appellant contended that on the ground floor of the said
property, the respondent-1 is running a nursing home and that
he is residing on the first floor. In that view, the appellant
contended that the property was being used for residential
purposes. Counsel for the appellant also submitted that the
respondent-1 in his various correspondences, pleadings and
affidavits has shown the property as his address which is
conclusive proof that he is residing in the said property.
Moreover, it was also contended that respondent-1 had been
unable to disclose where he was alternatively residing and no
documents had been furnished to show that the said property
was being used exclusively and solely for commercial purpose.
In this regard, it was submitted that the user of the said property
being a resident therein, this not only violates Rule 25 of the
Rules, but also is contrary to the bye laws of the society and
the terms of perpetual lease agreement entered between Govt.
of India and the appellant society, in pursuance of which the
respondent-1 would be entitled as being member of the
appellant-society. On the other hand, the learned counsel for the
respondent-1 refuted the claims made by the appellant
contending that the said property was used solely for a nursing
home, and since respondent-1 remained in the nursing home
for most of the time as a doctor, therefore it was solely for
convenience's sake that he used the address to further
correspondence. This aspect, it was submitted, would not
render the property residential in any way. Further, counsel for
respondent-1 contended that the said property was purchased
in the name of the HUF, and not in respondent-1's name, and
therefore the latter cannot be expelled from the membership of
the appellant-society. He also submitted that the respondent-1
cannot be expelled because of purchase of the said property
was facilitated before the Rules came into force in exercise of
power granted under the Delhi Cooperative Societies Act,
1972. It was further contended that at the time of acquisition of
membership of the said society, the appellant's society was
governed by the Bombay Cooperative Societies Act, 1925,
which doesn't have any provision disqualifying a member of a
cooperative society on acquisition of another property in Delhi.
Rule 25 has no retrospective application; therefore it was
submitted that expulsion of the respondent-1 is non est in law.
5. After hearing the parties in detail the questions which
arise in this appeal are: -
1.
Whether Rule 25 of the Rules has a retrospective
application in debarring a member of a co-
operative society who enrolled as a member of the
society and acquired separate property before the
Rules came into force?
Whether bye laws of the society can debar the
respondent-1 on acquisition of a separate
residential/dwelling house in Delhi?
Whether the property purchased in the name of
HUF can debar the respondent-1 to continue as a
member of the appellant-society?
Whether the nature of the property purchased is
residential or commercial?
Issue I
6. As far as applicability of Rule 25 of the Rules is
concerned, the learned counsel for the appellant contended that
the provisions contained in Rule 25 are applicable to all the
members of the society, whether enrolled before or after the
enactment of the Delhi Co-operative Societies Rules, 1973
and in view of the said rule, the respondent-1 was ineligible to
continue to be a member of the society and his membership
was correctly terminated in accordance with law. In contrast, the
learned counsel for the respondent-1 contended that at the time
of enrolment of respondent-1 and subsequent to purchasing of
the property, the co-operative societies in Delhi were governed
by the Bombay Co-operative Societies Act, 1925 as extended
to Delhi Co-operative Societies Rules, 1950. There was no
prohibition whatsoever at the relevant time for a person who
was a member of the co-operative society from purchasing any
property. Subsequently, on 24.4.1973, the Delhi Co-operative
Societies Act and Delhi Co-operative Societies Rules, 1973
came into force and the earlier Act and the 1950 Rules stood
repealed. The 1973 rules prescribed eligibility criteria for
admission under the said Rule 25 and the eligibility criteria for
admission are not same as required for continuation. Moreover,
it was contended that Rule 25 has no retrospective application.
7. Rule 25 reads as follows: -
"Disqualification for Membership- (1) No person shall be
eligible for admission as a member of a co-operative
society if he
(a) has applied to adjudicated an insolvent or is an
undischarged insolvent; or
(b) has been sentenced for any offence other than an
offence not involving moral turpitude and dishonesty and
a period of five years has not elapsed from the date of
expiry of the sentence:
(c) in the case of membership of a housing society:-
(i) owns a residential house or a plot of land for the
construction of a residential house in any of the approved
or un-approved colonies or other localities in the National
Capital Territory of Delhi, in his own name or in the name
of his spouse or any of his dependent children, on lease
hold or free-hold basis or on power of attorney or on
agreement for sale;
Provided that disqualification of membership as laid down
in sub-rule (l)(c)(i) shall not be applicable in case of co-
sharers of property whose share is less than 66.72 sq.
metres of land; Provided further that the said
disqualification shall not be applicable in case of a person
who has acquired property on power of attorney or through
agreement for sale and on conversion of the property from
leasehold to freehold on execution of conveyance deed for
it, if such person applies for the membership of the housing
society concerned; (Amended on 6.8.97)
(ii) he deals in purchase or sale of immovable properties
either as principal or as agent in the national Capital
Territory of Delhi: or (iii) he or his spouse or any of his
dependent children is a member of any other housing
society except otherwise permitted by the Registrar.
2. Notwithstanding anything contained in the rules or the
bye-laws of the co-operative society, if a member
becomes, or has already become, subject to any
disqualification specified in sub-rule (1), he shall be
deemed to have ceased to be a member from the date
when the disqualifications were incurred.
3. A member who ceases to be a member of a co-
operative society under sub-rule (2), shall not be entitled
to exercise rights of memberships or incur liability as
member with effect from the date referred to in sub-rule
(2) but as from the date he becomes a creditor of the co-
operative society in respect of the amount due to him on
account of paid up share capital, deposit, cost of land
deposited or any other amount paid by him to the co-
operative society as its member. As from the date of his
ceasing to be a member or the society under sub-rule (2),
the amount standing to his credit shall be paid to him by
the co-operative society within 3 months and when the co-
operative society is already under liquidation, the amount
due to him will be credited as a debt due to a third party
from the co-operative society.
4. If any question as to whether a member has incurred
any of the disqualification referred to in sub-rule (1) arises,
it shall be referred to the Registrar for decision. His
decision shall be final and binding on all concerned. The
power of the Registrar under this rule shall not be delegated
to any other person appointed to assist the Registrar."
8. A perusal to Rule 25(2) makes it clear that after the said
Rules came into force, if a member has already become
subject to any disqualification specified in sub rule (1), he would
be deemed to have ceased to be a member from the date
when the disqualification was incurred. In the present case, the
rule which is to be considered is Rule 25(1)(c)(i). The said Rule
also stipulates that no person shall be eligible for admission
as a member of the co-operative society, if he owns a
residential house or a plot of land for the construction of a
residential house in any of Territory of Delhi, in his own name
or in the name of his spouse or any of his dependent children,
on lease-hold or free-hold basis. The learned counsel for the
respondent-1 contended that since the said rule does not
come within the ambit of power given under Section 97(2) of
the Act to the Lt. Governor who is empowered to make rules
about the conditions to be complied with by persons applying
for admission or admitted as members, the same cannot be
applied to the person who have already become a member to
disqualify him for the act done prior to coming into force of the
Rules. Further it was also contended that the said power is
limited by section 98 of the Act which repeals the earlier Act
and saves the right, privileges or obligations accrued or incurred
under the earlier Act repealed.
9. The first consideration in this regard is whether Section
97 of the Act permits the Lt. Governor to make the above
disputed provision of rule 25. Section 97 of the Act reads as
follows:
"97 (1) The Lieutenant Governor may, for any co-operative
society or class of co-operative societies, make rules to
carry out the purposes of this Act.
(2) In particular, and without prejudice to the generally of
the foregoing power, such rules may provide for all or any
following matters, namely... -
....(v)The conditions to be complied with by persons
applying for admission or admitted as members, for the
election admission of members, and for the payment to be
made and the interest to be acquired before the exercise
of the right of membership."
10. A perusal of the aforementioned provision indicates
that the power to frame rules is given by S. 97(1) to the Lt.
Governor to make rules to carry out the purposes of this Act
and the list of subjects mentioned in sub rule (2) is merely
illustrative as is clear when it says that "In particular, and
without prejudice to the generally of the foregoing power, such
rules may provide for all or any matters contained therein". It
is well-settled that the specific provisions as are contained in
several clause of sub-section (2) of 97 are merely restrictive
and they cannot be read as restrictive of the generality of powers
prescribed by sub section (1) of S. 97. The particular matters
given in sub section (2) only illustrate and do not exhaust all the
powers conferred. In that connection reference may be made
to two analogous cases. First to that of Afzal Ullah v. State of
Uttar Pradesh reported at AIR 1964 SC 264 wherein principles
for interpreting a provision similar in objective (of the United
Provinces Municipalities Act, 1916) were laid down. This Court
in the said case, held:
"13. ........It is now well-settled that the specific provisions
such as are contained in the several clauses of Section
298(2) are merely illustrative and they cannot be read as
restrictive of the generality of powers prescribed by
Section 298(1). If the powers specified by Section 298(1) | This legal case revolves around a dispute between Ishwar Nagar Co-operative Housing Building Society (the Society) and one of its members, Dr. Parma Nand Sharma (Dr. Sharma). The heart of the matter lies in Dr. Sharma's ownership of a property in Kailash Colony, New Delhi, which the Society argued disqualified him from continuing as their member.
**Setting the Stage: Co-operative Housing Societies and their Rules**
Co-operative Housing Societies are formed to help people, particularly those from economically weaker sections, access land at concessional rates from the government and build houses. They are based on the principle of shared ownership and democratic management. To ensure the system's integrity and benefit those genuinely in need, these societies have rules and regulations governing membership and property ownership.
**The Dispute Unfolds: A Clash of Interpretations**
Dr. Sharma joined the Society in 1961. In 1968, he purchased a property in Kailash Colony under the name of his Hindu Undivided Family (HUF), which included his wife and children. This was before the Delhi Cooperative Societies Rules, 1973 (the Rules) came into effect.
The Society argued that Rule 25 of the 1973 Rules disqualified Dr. Sharma from continuing as a member because he owned another property. Rule 25 essentially states that members cannot own a residential house or land for residential construction within Delhi. The Society initiated proceedings to terminate his membership in 1978.
**Dr. Sharma's Defense: A Matter of Timing and Usage**
Dr. Sharma countered the Society's claim on several grounds:
* **Timing of the Rule:** He argued that since he purchased the property before the 1973 Rules came into effect, Rule 25 shouldn't apply retrospectively to him.
* **Property Usage:** He argued that the Kailash Colony property housed only his nursing home and wasn't used for residential purposes. He claimed to be using it as his address for mere convenience.
* **HUF Ownership:** He asserted that the property was purchased under the HUF, not in his name, and therefore shouldn't disqualify his membership.
**The Courtroom Drama: Arguments and Judgments**
The case went through various legal stages, culminating in the Supreme Court of India. The Court carefully analyzed the arguments presented by both sides.
* **Retrospectivity of Rule 25:** The Court referred to legal precedents and concluded that Rule 25, while coming into effect in 1973, applied to situations that existed prior to its enactment. The judges clarified that a law isn't considered retrospective simply because it considers past events; it's retrospective only if it alters the legal consequences of those past events.
* **Bye-laws of the Society:** The Court examined the Society's bye-laws, which are similar to a company's Articles of Association and are binding on its members. The judges found that even if a specific bye-law mentioning the disqualification wasn't effectively communicated, the general bye-law regarding eligibility for membership still applied.
* **HUF Ownership and Lease Agreement:** The Court dismissed the argument of HUF ownership, stating that since the HUF comprised only Dr. Sharma's immediate family, ownership by the HUF essentially meant ownership by the family members, including Dr. Sharma. The Court also highlighted that the lease agreement under which the Society received land specifically prohibited allotment to members owning residential property in Delhi.
* **Property Usage:** Analyzing evidence, including property tax forms and objection letters submitted by Dr. Sharma himself, the Court concluded that the Kailash Colony property was indeed used for residential purposes. While Dr. Sharma claimed it housed only his clinic, the court found his claim inconsistent with his own statements in official documents.
**The Final Verdict: Upholding the Spirit of Cooperation**
The Supreme Court ultimately ruled in favor of the Society, upholding Dr. Sharma's expulsion. The judges emphasized that co-operative housing societies are meant to provide affordable housing options to those in need. Allowing members to own additional residential properties would defeat the purpose of these societies and be unfair to those genuinely seeking housing solutions.
**Lessons Learned: Transparency, Fairness, and the Spirit of Cooperation**
This case provides valuable insights into the functioning of co-operative housing societies and highlights the importance of transparent rules and their consistent application. It underscores that while owning a property is a right, it comes with responsibilities, especially when participating in a cooperative endeavor meant to benefit a larger community. |
[2010] 1 S.C.R. 768
A
COMMISSIONER OF INCOME TAX, DELHI
V.
M/S. KELVINATOR OF INDIA LIMITED
(Civil Appeal Nos. 2009-2011 of 2003)
JANUARY 18, 2010
B
[S.H. KAPADIA, AFTAB ALAM AND SWATANTER
KUMAR, JJ.]
Income Tax Act, 1961: s. 147 - Power to reassess - The
C word "opinion" inserted in s. 147 after the enactment of Direct
Tax Laws (Amendment) Act, 1987 i.e. prior to 1st April, 1989,
vested arbitrary powers in the Assessing Officer to reopen past
assessments on mere change of opinion - The concept of
"change of opinion" stood obliterated with effect from 1st April,
D 1989, i.e. after substitution of s.147 of the Act by Direct Tax
Laws (Amendment) Act, 1989 - Direct Tax Laws (Amendment)
Act, 1987 - Circular No.549 dated 31st October, 1989.
E
The question which arose for consideration in the
present appeal is whether the concept of "change of
opinion" stands obliterated with effect from 1st April,
1989, i.e. after substitution of section 147 of the Income
Tax Act, 1961 by Direct Tax Laws (Amendment) Act, 1989.
F
Dismissing the appeals, the Court
HELD: Post-1st April, 1989, power to re-open is much
wider. The words "reason to believe" need to be given a
schematic interpretation failing which, Section 147 of the
Income Tax Act, 1961 would give arbitrary powers to the
G Assessing Officer to re-open assessments on the basis
of "mere change of opinion", which cannot per se be
reason to re-open. The Assessing Officer has no power
to review but he has the power to re-assess. But re-
assessment has to be based on fulfillment of certain pre-
H
768
COMMISSIONER OF INCOME TAX, DELHI v. 769
KELVINATOR OF INDIA LIMITED
condition and if the concept of "change of opinion" is A
removed, as contended on behalf of the Department,
then, in the garb of re-opening the assessment, review
would take place. Hence, after 1st April, 1989, Assessing
Officer has power to re-open, provided there is "tangible
material" to come to the conclusion that there is B
escapement of income from assessment. Reasons must
have a live link with the formation of the belief. Under the
Direct Tax Laws (Amendment) Act, 1987, Parliament not
only deleted the words "reason to believe" but also
inserted the word "opinion" in Section 147 of the Act. C
However, on receipt of representations from the
Companies against omission of the words "reason to
believe", Parliament re-introduced the said expression
and deleted the word "opinion" on the ground that it
would vest arbitrary powers in the Assessing Officer. The
Circular No.549 dated 31st October, 1989, stated that the
omission of expression 'reason to believe' from section
147 would give arbitrary powers to the Assessing Officer
to reopen past assessments on mere change of opinion.
The Amending Act, 1989, has again amended section 147
to reintroduce the expression 'has reason to believe' in
place of the words 'for reasons to be recorded by him in
writing, is of the opinion'. Other provisions of the new
section 147, however, remain the same. [Para 6] [772-C-
D
E
Η; 773-A-E]
F
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
2009-2011 of 2003.
From the Judgment & Order dated 19.04.2002 of the High
Court of Delhi at New Delhi in I.T.C. No.4 of 2000 and dated
15.05.2002 in i.T.A. No. 81 of 2000.
WITH
C.A. No. 2520 of 2008.
G
H
770 SUPREME COURT REPORTS [2010] 1 S.C.R.
A
Arijit Prasad, Kunal Bahri, B.V. Balaram Das for the
Appellant.
Kavita Jha, Bhargava V. Desai, Rahul Gupta, Nikhil
Sharma for the Respondent.
B
The Judgment of the Court was delivered by
S.H. KAPADIA, J. 1. Heard learned counsel on both sides.
2. A short question which arises for determination in this
batch of civil appeals is, whether the concept of "change of
opinion" stands obliterated with effect from 1st April, 1989, i.e.,
after substitution of Section 147 of the Income Tax Act, 1961
by Direct Tax Laws (Amendment) Act, 1989?
C
3. To answer the above question, we need to note the
D changes undergone by Section 147 of the Income Tax Act,
1961 [for short, "the Act"). Prior to Direct Tax Laws
(Amendment) Act, 1987, Section 147 reads as under:
E
"Income escaping assessment.
147. If--
[a] the Income-tax Officer has reason to believe that, by
reason of the omission or failure on the part of an assessee
to make a return under section 139 for any assessment
year to the Income-tax Officer or to disclose fully and truly
all material facts necessary for his assessment for that
year, income chargeable to tax has escaped assessment
for that year, or
F
[b] notwithstanding that there has been no omission or
failure as mentioned in clause
(a) on the part of the assessee, the Income- tax Officer has
in consequence of information in his possession reason
to believe that income chargeable to tax has escaped
G
H
COMMISSIONER OF INCOME TAX, DELHI v. 771
KELVINATOR OF INDIA LIMITED [S.H. KAPADIA, J.]
assessment for any assessment year, he may, subject to A
the provisions of sections 148 to 153, assess or reassess
such income or recompute the loss or the depreciation
allowance, as the case may be, for the assessment year
concerned (hereafter in sections 148 to 153 referred to as
the relevant assessment year)."
B
4. After enactment of Direct Tax Laws (Amendment) Act,
1987, i.e., prior to 1st April, 1989, Section 147 of the Act, reads
as under:
"147. Income escaping assessment.-- If the Assessing C
Officer, for reasons to be recorded by him in writing, is of
the opinion that any income chargeable to tax has escaped
assessment for any assessment year, he may, subject to
the provisions of Sections 148 to 153, assess or reassess
such income and also any other income chargeable to tax D
which has escaped assessment and which comes to his
notice subsequently in the course of the proceedings under
this section, or recompute the loss or the depreciation
allowance or any other allowance, as the case may be, for
the assessment year concerned (hereafter in this section E
and in Sections 148 to 153 referred to as the relevant
assessment year)."
5. After the Amending Act, 1989, Section 147 reads as
under:
"Income escaping assessment.
F
147. If the Assessing Officer has reason to believe that any
income chargeable to tax has escaped assessment for
any assessment year, he may, subject to the provisions of G
sections 148 to 153, assess or reassess such income and
also any other income chargeable to tax which has
escaped assessment and which comes to his notice
subsequently in the course of the proceedings under this
section, or recompute the loss or the depreciation
H
772 SUPREME COURT REPORTS [2010] 1 S.C.R.
allowance or any other allowance, as the case may be, for
the assessment year concerned (hereafter in this section
and in sections 148 to 153 referred to as the relevant
assessment year)."
A
B
6. On going through the changes, quoted above, made to
Section 147 of the Act, we find that, prior to Direct Tax Laws
(Amendment) Act, 1987, re-opening could be done under
above two conditions and fulfillment of the said conditions alone
conferred jurisdiction on the Assessing Officer to make a back
assessment, but in section 147 of the Act [with effect from 1st
April, 1989], they are given a go-by and only one condition has
remained, viz., that where the Assessing Officer has reason to
believe that income has escaped assessment, confers
jurisdiction to re-open the assessment. Therefore, post-1st
April, 1989, power to re-open is much wider. However, one
D needs to give a schematic interpretation to the words "reason
to believe" failing which, we are afraid, Section 147 would give
arbitrary powers to the Assessing Officer to re-open
assessments on the basis of "mere change of opinion", which
cannot be per se reason to re-open. We must also keep in mind
E the conceptual difference between power to review and power
to re-assess. The Assessing Officer has no power to review;
he has the power to re-assess. But re-assessment has to be
based on fulfillment of certain pre-condition and if the concept
of "change of opinion" is removed, as contended on behalf of
F the Department, then, in the garb of re-opening the assessment,
review would take place. One must treat the concept of "change
of opinion" as an in-built test to check abuse of power by the
Assessing Officer. Hence, after 1st April, 1989, Assessing
Officer has power to re-open, provided there is "tangible
G material" to come to the conclusion that there is escapement
of income from assessment. Reasons must have a live link with
the formation of the belief. Our view gets support from the
changes made to Section 147 of the Act, as quoted
hereinabove. Under the Direct Tax Laws (Amendment) Act,
H 1987, Parliament not only deleted the words "reason to believe"
C
COMMISSIONER OF INCOME TAX, DELHI v. 773
KELVINATOR OF INDIA LIMITED [S.H. KAPADIA, J.]
but also inserted the word "opinion" in Section 147 of the Act. A
However, on receipt of representations from the Companies
against omission of the words "reason to believe", Parliament
re-introduced the said expression and deleted the word
"opinion" on the ground that it would vest arbitrary powers in
the Assessing Officer. We quote hereinbelow the relevant B
portion of Circular No.549 dated 31st October, 1989, which
reads as follows:
"7.2 Amendment made by the Amending Act, 1989, to
reintroduce the expression `reason to believe' in Section
147.--A number of representations were received against
the omission of the words 'reason to believe' from Section
147 and their substitution by the 'opinion' of the Assessing
Officer. It was pointed out that the meaning of the
expression, `reason to believe' had been explained in a
number of court rulings in the past and was well settled and
its omission from section 147 would give arbitrary powers
to the Assessing Officer to reopen past assessments on
mere change of opinion. To allay these fears, the Amending
Act, 1989, has again amended section 147 to reintroduce
the expression 'has reason to believe' in place of the words E
'for reasons to be recorded by him in writing, is of the
opinion'. Other provisions of the new section 147, however,
remain the same."
For the afore-stated reasons, we see no merit in these civil
appeals filed by the Department, hence, dismissed with no
order as to costs.
F
D.G. Appeals dismissed.
C
D | This case deals with the power of the Indian tax authorities to reopen past tax assessments. It clarifies the conditions under which such reassessments are valid, ensuring fairness and preventing arbitrary actions by tax officials.
**Background:**
At the heart of the matter is Section 147 of the Income Tax Act, 1961, which allows the Assessing Officer (AO) to reopen past tax assessments if they have "reason to believe" that income chargeable to tax has escaped assessment.
**The Legal Back and Forth:**
The law went through a series of amendments, causing confusion about the AO's power to reopen assessments:
* **Before 1987:** The AO needed "reason to believe" based on specific situations, like the taxpayer's failure to file a return or disclose all necessary information.
* **Direct Tax Laws (Amendment) Act, 1987:** This amendment replaced "reason to believe" with "is of the opinion," raising concerns about giving the AO unchecked power to reopen assessments based on mere whims.
* **Direct Tax Laws (Amendment) Act, 1989:** This amendment addressed the concerns by reinstating "reason to believe" in place of "is of the opinion."
**The Case at Hand:**
This appeal before the Supreme Court revolved around whether the concept of "change of opinion" by the AO was enough to justify reopening a past assessment, especially after the 1989 amendment.
The Supreme Court, in its judgment dated January 18, 2010, clarified the law, ultimately favoring the taxpayer:
**The Court's Reasoning and Holding:**
1. **No Arbitrary Power:** The Court emphasized that the AO cannot arbitrarily reopen assessments based on a mere "change of opinion." This would be akin to a "review," a power not vested with the AO.
2. **Tangible Material Required:** The Court held that "reason to believe" must be based on "tangible material" indicating that income chargeable to tax has genuinely escaped assessment.
3. **Live Link with Belief:** The reasons for reopening the assessment must be directly connected to the formation of the AO's belief that income escaped assessment.
4. **Legislative Intent:** The Court referred to the legislative history of Section 147, highlighting that the 1989 amendment aimed to curb the arbitrary use of power by the AO and reinstate safeguards for taxpayers.
**Impact of the Judgment:**
This landmark judgment provided much-needed clarity on the scope of Section 147, safeguarding taxpayers from arbitrary reassessments:
* **Protection from Harassment:** It prevents tax officials from using their power to reopen assessments without proper justification, protecting taxpayers from potential harassment.
* **Ensuring Fairness:** It ensures that reassessments are initiated only when concrete evidence suggests an escapement of income from taxation.
* **Promoting Transparency:** The judgment emphasizes the need for transparency and a clear link between the reasons given and the decision to reopen an assessment.
**Layman Summary:**
Imagine you filed your tax returns a few years ago, and now the tax officer wants to revisit your assessment based on a "change of opinion." This judgment states that a mere "change of opinion" isn't enough. The tax officer needs concrete evidence, like new information or previously undiscovered documents, proving you might have underpaid your taxes. This protects taxpayers like you from arbitrary actions by tax officials and ensures fairness in the system.
**Conclusion:**
The Supreme Court's judgment in this case is crucial for both taxpayers and tax authorities. It strikes a balance between the need for efficient tax collection and the protection of taxpayer rights. The court's interpretation of Section 147 underscores the principle that the power to reassess should be exercised judiciously and not as a tool for harassment or unjustified scrutiny. |
*
[2010] 7 S.C.R. 881
S.K. DASGUPTA & ORS.
V.
VIJAY SINGH SENGAR & ORS.
(Civil Appeal of 6794 of 2003)
MAY 5, 2010*
[HARJIT SINGH BEDI AND K.S. RADHAKRISHNAN,
Contempt of Court
JJ.]
A
B
C
Contempt petition before High Court - Arising out of
directions by High Court in a writ petition filed in public interest
to officials of State Electricity Board to provide uninterrupted
supply of electricity to government Hospitals and street lights
to be on during nights, throughout the State - High Court
directing impleadment of senior Members of the Board and D
others as contemnors and ordering inquiry to be held by CBI
-
HELD: The directions made by High Court are clearly
beyond courts' jurisdiction in a public interest litigation as
they interfere with the functioning of independent State
agencies in matters which are beyond their control insofar as
uninterrupted supply of electricity is concerned - It cannot be
ignored that shortage of power is a phenomenon common
to the entire country and to single out Members of the Board
E
or the Regulatory Commission for failure to comply with the
directions of the High Court which are incapable of F
compliance, is not called for - Officers of the Board have
repeatedly come to Court to explain that the situation was
beyond their control and that the shortfall in the supply of
electric power was not of their making nor in their control -
High Court ignored this basic fact and passed orders which G
were incapable of compliance - Order of the High Court set
aside and contempt proceeding discharged - Public Interest
Litigation.
Judgment Recd. on 26.7.2010
881
H
A
B
C
D
E
F
G
H
882 SUPREME COURT REPORTS
PUBLIC INTEREST LITIGATION:
[2010] 7 S.C.R.
Jurisdiction in public interest litigation- Held: Is to be
invoked sparingly and with rectitude and any order made
therein must be reasonable and must not reflect the pique of
the court, more particularly, as it is not court's business to
attempt to run the government in a manner which the court
thinks is the proper way - Judicial restraint.
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
6794 of 2003.
From the Judgment & Order dated 1.4.2003 of the High
Court of Judicature of M.P. Bench at Gwalior (M.P.) in CP (C)
No. 37 of 2003 in W.P. No. 677 of 2003.
WITH
C.A. Nos. 6795 & 6796 of 2003.
Ashiesh Kumar, B.S. Banthia for the appearing parties.
The following Order of the Court was delivered
ORDER
These appeals arise out of a contempt petition wherein a
Single Judge of the Madhya Pradesh High Court, Gwalior
Bench, in his order dated 1st April, 2003 has ordered an
enquiry against some officials and members of the M.P. State
Electricity Board by the Central Bureau of Investigation and
arrayed some senior Members of the Board and others as
contemnors as well.
The facts are as under:
The respondent, Vijay Singh Sengar, a practising
Advocate at Jabalpur, filed a writ petition in public interest
pointing out that patients in Government hospitals were
suffering great agony on account of un-scheduled load-
shedding from 6.30 a.m. to 8.30 a.m. and 7.00 p.m. to 8.00
p.m. and that the entire State was plunged into darkness taking
S.K. DASGUPTA & ORS. v. VIJAY SINGH SENGAR & 883
ORS.
the State back to the 'Stone Age Days'. Alongwith the writ A
petition a large number of newspaper cuttings were also
appended, to substantiate the pleas that had been raised.
During the hearing of the petition several senior officers of the
Board were summoned to Court including Mr. R.N. Mishra, the
Chief Engineer (O & M). It was also observed in an interim B
order made by the Court that the Board had undertaken to take
all measures to supply electricity for street lights and that in a
democratic set up it was the responsibility of the State to
maintain all essential services and the basic amenities of life.
It was also observed that it was a matter of common
knowledge that the absence of the power supply to Government
hospitals caused great discomfort, pain and constituted a
danger to the patients who were admitted therein. By an order
dated 13th September, 2001, a direction was accordingly given
in the following terms:
C
D
"We, therefore, as an interim measure, direct
respondents 1 and 2 to maintain round the clock electricity
supply in the Government Hospitals throughout the State.
We further direct that the street lights shall be kept on
throughout the State between sunset and sunrise.
The above directions be carried out in letter and spirit
forthwith, even at the cost of discontinuing with the
scheduled load shedding as a whole with the only exception
in the event of the Madhya Pradesh Electricity Board itself
not getting the power supply, or a 'Grid Failure' beyond
their control It is further being made clear that any breach
of the above directions would be viewed seriously.
List for further orders on 27/9/2001.
Let a copy of this order be supplied to Shri Sanjay Seth,
Additional Advocate General, today for necessary compliance."
E
F
G
It appears that a special leave petition was filed against
the aforesaid order but the same was dismissed in view of the
fact that the M.P. Electricity Regulatory Commission had H
884 SUPREME COURT REPORTS
[2010] 7 S.C.R.
A passed certain effective orders and no orders were thus thought
to be called from the Court. It appears that another public
interest litigation was subsequently filed and an order was made
on 17th March, 2003 while issuing notice that "there shall be
no power cut during night time until further orders."
B
Another petition was filed before the Indore Bench,
highlighting the difficulties being faced in the State due to
interrupted supply of electricity by the Board and by an interim
order officers of the M.P. Electricity Regulatory Commission
were also directed to be present so that some method could
C be devised to reduce the rigour of the power cuts in force.
D
E
The matter was thereafter adjourned time and again to see
if the directions given by the Court from time to time were
effectively complied with. It was also observed during the
course of the proceedings before the Indore Bench that the
Court could not be a mere spectator to the miseries being felt
by the public and that the arguments made on behalf of the staff,
Board and State agencies that the Court could not interfere in
policy matters, could be ignored as it was the bounden duty of
the Court to ensure the welfare of the State citizens. The Court
accordingly observed that it appeared that the officials of the
Electricity Board and the Regulatory Commission were not
serious in implementing the directions of the Court and they
were prima facie guilty of having committed contempt of Court.
Contempt notices were accordingly issued on 26th March,
F 2003. The officers of the Board appeared before the Court
and pointed out that the situation was beyond their control but
they were sternly warned that any further neglect of the Court's
orders would be viewed seriously. The Court also felt that the
Court's direction to the concerned officer that if a power cut
G could not be avoided they were to intimate to the Registrar of
the Court (as to why the power cuts had been imposed) had
been flouted and the Courts interference was thus essential on
which further directions were issued on Ist April, 2003 in the
following terms,
H
S.K. DASGUPTA & ORS. v. VIJAY SINGH SENGAR & 885
ORS.
"Accordingly, the Director, C.B.I., New Delhi, shall A
constitute a team of officers not associated with the State
of M.P. to be headed by an officer not below the rank of
Joint Director to conduct an impartial enquiry with the help
of the experts of the Central Electricity Authority on the
following terms of reference.
(1) As to reasons leading to violation of this Court's
order directing not to resort to power cuts after 8.30 in the
night.
B
(2) As to justification being in the nature of situation C
beyond control, if any, for power cuts in violation of this
Court's order after 8.30 in the night:
(3) As to individual liability of the contemners or any
other person for deliberate violation of this Court's orders
in the absence of a justification as such:
(4) As to veracity of claims of the Boad and the Govt.
regarding non-availability of surplus electricity form any
source for purchase at any cost:
D
(5) As to willful disobedience by the M.P.S.E.B., Е
Headquarters, Jabalpur, if any, by ignoring request of the
Board's establishment at Gwalior to strictly adhere to this
Court's directions on power cuts in the night:
(6) As to fabrication and manipulation of records, if
any, for justification of the Board/the Government's actions
in resorting to power cuts; and
5
(7) As to any other area of enquiry, which the
Director, C.B.I. thinks appropriate for proper adjudication
of this Contempt Petition.
(10) We would like to indicate that, in view of prima
facie deliberate violations of this Court's order the only way,
we are left with to reiterate the rule of law is to punish the
F
G
H
886 SUPREME COURT REPORTS
[2010] 7 S.C.R.
A
contemners or persons responsible for such violation by
warding exemplary punishments
11 even by involving our powers under Article 215
of the Constitution of impose punishments proportionate
to damage caused to the credibility of this Institution,
irrespective of the quantum of sentence prescribed under
the Contempt of Courts Act. Besides, as there has been
incidents of suicide by the students, due to power cuts
during crucial periods of examinations and as there is
commotion in the society on that count, C.B.I., shall take
up the inquiry at the earliest and shall exercise all such
powers as are enshrined in the Cr.P.C. and other relevant
statues.
B
C
D
(11) As it is submitted that (i) Shri Baleshwar
Sharma, chief Managing Director,, (ii) Shri R.K.Verma,
Chief managing Director and (iii) Shri R.S.Yadav, Chief
Engineer, have been inadvertently left out from the array
of contemners, they are directed to be so added and be
issued with notices of contempt today itself.
E
(12) the C.B.I. Shall also record all the power cuts
henceforth and incorporate the same in its report. keeping
in view the fact, that each power cut shall constitute an
independent offence of the Contempt of this Court.
F
(13) A copy of this order be immediately sent by a
special messenger and also by fax to the Director, C.B.I.,
New Delhi.
(14) The C.B.I. shall submit an interim report within
one month and final report within two months."
G
It is against the order dated Ist April, 2003 that a special
leave petition was filed and while after issuing notice.
proceedings before the High Court had been stayed as well.
The respondents though served have not put in appearance on
which leave has also been granted. We have accordingly gone
H
S.K. DASGUPTA & ORS. v. VIJAY SINGH SENGAR & 887
ORS.
through the matter with the assistance of the learned counsel A
for the appellant.
We are of the opinion that the directions made by the High
Court in the impugned judgment are clearly beyond the Courts
jurisdiction in a Public Interest Litigation as they interfere with
the functioning of independent State agencies in matters which
are beyond their control insofar as uninterrupted supply of
electricity is concerned. We cannot ignore that a shortage of
power is a phenomena common to the entire country and to
single out Members of the Board or the Regulatory Bommission
for failure to comply with the directions of the Court, which are
B
C
incapable of compliance, is not called for.
The direction that the matter should be referred to Central
Bureau of Investigation for enquiry is to our mind completely
misplaced. There is no finding of the Court or even a D
suggestion of any misconduct on any attempt to forestall the
uninterrupted supply of electricity to the State or Government
hospitals. We, thus do not find any justification in the direction
that the CBI investigates matters which are purely technical
and administrative in nature. We must emphasize once again E
that a Public Interest Litigation is to be invoked sparingly and
with rectitude and any order made in this situation must be
reasonable and must not reflect the pique of the Court more
particularly as it is not the Courts business to attempt to run
the Government in a manner which the Court thinks is the
proper way. The officers of the Board had repeatedly come to
Court to explain that the situation was beyond their control and
F
that the short fall in the supply of electric power was not of their
making or in their control. The High court ignored this basic fact
and passed orders which were incapable of compliance.
G
We therefore allow these appeals and set aside the order
dated 1st April 2003 and discharge the contempt proceeding.
R.P.
Appeals allowed.
==End of OCR for page 7== | This case, S.K. Dasgupta & Ors. v. Vijay Singh Sengar & Ors., revolves around the issue of frequent power cuts in the state of Madhya Pradesh, India, and highlights the limits of judicial intervention in matters of public interest litigation.
**The Problem:**
Vijay Singh Sengar, a lawyer, filed a public interest lawsuit (PIL) in the Madhya Pradesh High Court, raising concerns about the severe hardship caused by unscheduled power cuts, particularly affecting hospitals and patients. He argued that the State Electricity Board was not taking adequate measures to address the situation.
**The High Court's Intervention:**
The High Court, moved by the plight of the people, issued a series of increasingly stringent directions to the Electricity Board:
* **Uninterrupted Power Supply to Hospitals and Street Lights:** The Court initially directed the Board to ensure 24/7 power supply to government hospitals and keep street lights on throughout the night.
* **No Night-Time Power Cuts:** Later, the Court prohibited any power cuts after 8:30 p.m. across the state.
* **Contempt Proceedings and CBI Inquiry:** When the power situation didn't improve significantly, the Court initiated contempt proceedings against senior officials of the Electricity Board and ordered an inquiry by the Central Bureau of Investigation (CBI) into the matter. The CBI was tasked with investigating various aspects, including the reasons behind the power cuts, the Board's efforts to address the issue, and the accountability of officials.
**The Appeal to the Supreme Court:**
Aggrieved by the High Court's order, particularly the CBI inquiry and contempt proceedings, the officials of the Electricity Board appealed to the Supreme Court of India.
**The Supreme Court's Decision:**
The Supreme Court overturned the High Court's order, highlighting several crucial points:
* **Limits of Judicial Intervention in PIL:** The Court emphasized that while public interest litigation is a powerful tool to address issues of public concern, judicial intervention must be exercised with restraint and within the bounds of the law. Courts cannot overstep their jurisdiction and delve into the day-to-day functioning of government departments, particularly in policy matters.
* **Power Shortage - A National Issue:** The Court acknowledged that power shortage was a complex problem affecting the entire country, not just Madhya Pradesh. Singling out and punishing officials for a nationwide issue was deemed unjustified.
* **Practical Constraints and Board's Efforts:** The Supreme Court considered the arguments presented by the Electricity Board, acknowledging their limitations in completely preventing power cuts due to factors beyond their control. The Court noted that the Board officials had repeatedly tried to explain the situation to the High Court, but their pleas were ignored.
**Key Takeaways:**
* **Separation of Powers:** The case underscores the importance of the separation of powers between the judiciary and the executive. While the judiciary can direct the executive to act within the law, it cannot dictate the "how" or take over the executive's functions.
* **Judicial Restraint in PIL:** This case exemplifies the need for judicial restraint in public interest litigation. While courts have a duty to protect public interest, they must not overstep their bounds and delve into technical matters best left to experts and administrators.
* **Understanding Complex Issues:** The Supreme Court's decision highlights the need for a nuanced understanding of complex issues like power shortages. Courts must consider various factors and practical constraints before issuing directions, ensuring their orders are executable and do not overburden government agencies.
In conclusion, the Supreme Court, while recognizing the importance of addressing public grievances like power cuts, emphasized the importance of judicial restraint in public interest litigation. The Court clarified that courts cannot substitute their judgment for that of the executive and must exercise their powers within the framework of law and practicality. |
## [2010] 14 (ADDL.) S.C.R. 577
**MAN SINGH (D) BY LRS.**
**V.**
**RAM KALA (D) BY LRS. & ORS.**
**(Civil Appeal No. 7179 of 2005)**
**DECEMBER 09, 2010**
**[AFTAB ALAM AND R.M. LODHA, JJ.]**
**Hindu Succession Act, 1956** - ss.6 and 9 - Joint hindu family - Coparcenary property - Devolution of interest - Held: Until disruption of joint family status takes place, neither coparcener nor other heirs entitled to share in the joint family property, can claim with certainty the exact share in that property - Widow, sons and daughters are Class I heirs - Succession among heirs in Class I takes simultaneously and to the exclusion of all other heirs - On facts, 'S'-father died intestate leaving behind property - Appellant-son born to third wife of 'S' from her first marriage with 'L' filing suit against his mother claiming certain property by virtue of family settlement, decreed - Thereafter, suit by respondent-son of first wife of 'S' seeking declaration that decree in favour of appellant is null and void - Holding by three courts that decree in favour of appellant not binding on first respondent, does not call for interference - In absence of any pleadings or evidence in the suit by appellant against his mother, that shares among the heirs of the father were determined by agreement or otherwise, share of mother in the joint family property was not identified, thus, could not have alienated 1/5th share in the property to her son - Courts below erred in determining shares among the heirs of the father in absence of the daughters, Class I heirs - Determination of shares among heirs of the father not sustainable and set aside.
'S' died intestate leaving his two widows, 'N' and 'SH', son 'RK' and three daughters. The respondent-
577
'RK' was the son of 'S' from his first wife 'P' who predeceased him. The appellant-'MS' was the son of 'SH' born to her from her first marriage with 'L'. The appellant filed a suit against his mother 'SH' seeking declaration to the effect that the appellant is the owner of the land
in place of first respondent on basis of the family settlement entered into between him and his mother in the year 1978; and that his mother had acquired 1/5th share in the property after the death of 'S'. 'SH' admitted the claim and the suit was decreed. First respondent filed a suit against the appellant and 'SH' that the decree passed in favour of the appellant be declared null and void and not binding on first respondent. The trial court decreed the suit filed by first respondent. The appellant filed a first appeal and the same was partly allowed holding that the first decree would not affect the rights of first respondent. First respondent filed second appeal. During pendency, the appellant and first respondent died and their legal representatives were brought on record. The High Court allowed the second appeal.
Disposing of the appeal, the Court
HELD: 1.1 The conclusion arrived at by the three courts that the decree dated 09.03.1979 was not binding on the first respondent is right and proper and calls for no interference. It is pertinent that in the earlier suit filed by the appellant against his mother in which the decree dated 09.03.1979 was passed, it was not even the case of the appellant or his mother 'SH' that shares among heirs of 'S' were determined by agreement or otherwise. Till disruption of joint family status takes place, neither coparcener nor the other heirs entitled to share in the joint family property can claim with certainty the exact share in that property. [Para 12] [585-H; 586- A-C]
Appovier Alias Seetaramier v. Rama Subba Aiyan and
Ors. (1866) 11ΜΙΑ 75; A. Raghavamma and Anr. v. A. Chenchamma and Anr. AIR 1964 SC 136; Kalyani (Dead) By LRs. v. Narayanan and Ors. 1980 (Supp) SCC 298 - referred to.
Principles of Hindu Law by Mulla; Vol. I 17th Edn - referred to.
1.2 Widow, sons and daughters are Class I heirs and in terms of Section 9 of the Hindu Succession Act, 1956, the succession among heirs in Class I takes simultaneously and to the exclusion of all other heirs. [Para 18] [589-E]
Gurupad Khandappa Magdum vs. Hirabai Khandappa Magdum and Ors. (1978) 3 SCC 383; Smt. Raj Rani vs. Chief Settlement Commissioner, Delhi and Ors. (1984) 3 SCC 619 - referred to.
1.3 In the absence of any pleading or evidence, in the suit filed by the appellant that shares among heirs of 'S' were determined by agreement or otherwise, the share of 'SH' was not identified and, thus, she could not have alienated 1/5th share in the property to the appellant. In any case, determination of the shares in the absence of the three daughters of 'S', who were also Class I heirs in the Schedule appended to the 1956 Act could not have been done. All the three courts fell in grave error in determining the shares of 'SH' and the first respondent, even though the three daughters were not party in the suit. The whole exercise by the three courts in this regard was unnecessary, uncalled for and in violation of principles of natural justice. [Para 18] [590- A-C]
1.4 The judgment of the High Court to the extent that the decree dated March 9, 1979 is not binding on the first respondent, is upheld. However, the
determination of shares among the heirs of 'S' by the High Court cannot be sustained and is set aside. It would be open to the heirs of 'S' to prosecute appropriate remedy for determination of their respective shares and claim partition in accordance with law, if so advised. [Para 19] [590-D-F]
**Case Law Reference:**
(1866) 11 ΜΙΑ 75 - Referred to - Para 12
AIR 1964 SC 136 - Referred to - Para 13
1980 (Supp) SCC 298 - Referred to - Para 14
(1978) 3 SCC 383 - Referred to - Para 18
(1984) 3 SCC 619 - Referred to - Para 18
**CIVIL APPELLATE JURISDICTION :** Civil Appeal No. 7179 of 2005.
From the Judgment & Order dated 07.01.2004 of the High Court of Punjab & Haryana at Chandigarh in R.S.A. No. 259 of 1982 (Ο & Μ).
Neeraj Kr. Jain, Sachin Jain, Dr. Kailash Chand for the Appellants.
Manoj Swarup, Ankit Swrup, Ashok Anand, Rameshwar Prasad Goyal for the Respondents.
**The Judgment of the Court was delivered by**
**R.M. LODHA, J.** 1. This appeal, by special leave, is directed against the judgment dated January 7, 2004 passed by the High Court of Punjab and Haryana whereby the second appeal preferred by present respondents 1(i) to (vi) was allowed and the judgment and decree dated December 21, 1981 passed by the Additional District Judge (III), Kurukshetra was set aside and the judgment and decree dated August
31, 1981 passed by Sub-Judge, Ist Class, Kaithal was restored.
2. Soran, resident of Village Bandrana, Tehsil Kaithal, District Kurushetra, Haryana died intestate leaving two wives - Nanhi and Shingari, one son Ram Kala and three daughters - Chameli, Panmehswari and Boghri - him surviving. Soran's first wife was Pratapi who pre-deceased him. Ram Kala was born out of that wedlock. Chameli, Panmeshwari and Boghri are daughters of Shingari from the loins of Soran. Prior to her marriage with Soran, Shingari was married to Lachhman and a son Man Singh was born from her first marriage.
3. Man Singh (since deceased - now represented by his wife - hereinafter referred to as 'the appellant') filed a suit against his mother Shingari on March 6, 1979 in the Court of Sub-Judge, IInd Class, Kaithal. The prayer was for 'a decree for/declaration to the effect that the plaintiff is owner in possession of the land mentioned in para no. 1(a)(b) of the plaint in place of the defendant based on the family settlement entered into between him and his mother on January 1, 1978. He averred that on the basis of the family settlement, he was given possession of the land mentioned in para 1 of the plaint and his mother agreed that she would get the revenue entries of the suit land corrected in his favour but those entries have not been corrected. He alleged that his mother was seeking to back out of the family settlement.
4. Shingari filed written statement on March 9, 1979 and admitted appellant's claim in the suit. As there was no contest from Shingari, the Sub-Judge, IInd Class, Kaithal decreed appellant's suit as prayed on that day itself.
5. The appellant, as noted above, was Shingari's son born of her first marriage with Lachhman and he had no claim in the property left by Soran. The claim made by the appellant against his mother was founded on the basis that his mother had acquired 1/5th share in the property after the
death of Soran. Having come to know of the decree passed in favour of the appellant, Ram Kala (since deceased - now represented by his legal heirs - hereinafter referred to as the 'first respondent') instituted a suit against appellant and Shingari praying therein that the decree dated March 9, 1979 be declared null and void and the appellant be restrained from interfering with the possession of the first respondent in respect of the said land. The first respondent set up the case that the property of Soran has devolved on his heirs according to the Hindu Succession Act, 1956 and Shingari inherited 1/ 10th share in the property left by his father and she had no right to alienate the suit land in favour of the appellant.
6. The appellant traversed the averments made by the first respondent and set up diverse pleas justifying the decree dated March 9, 1979.
7. On the basis of the pleadings of the parties, the trial court framed as many as nine issues and after recording the evidence, decreed the suit filed by the first respondent on August 31, 1981 and held that the decree dated March 9, 1979 was null and void and not binding on the first respondent.
8. As against the decree passed by the Sub-Judge, Ist Class, Kaithal, the appellant preferred civil first appeal which was heard by Additional District Judge (III), Kurukshetra. The Additional District Judge partly allowed the appeal; modified the decree passed by the Sub-Judge Ist Class, Kaithal on August 31, 1981 by holding that the findings recorded by the trial court on issue nos. 5 and 6 were wrong but maintained that the decree dated March 9, 1979 would not affect the rights of the first respondent.
9. The first respondent challenged the decree passed by the Additional District Judge (III) in the second appeal before the High Court. During the pendency of the second appeal the appellant as well as first respondent died and their legal representatives were brought on record. In the opinion of the
High Court, the only substantial question of law for consideration in second appeal was, whether there could be any estoppel against the statute. The High Court while dealing with the said question held as under:
"Indisputably, Soran died intestate leaving behind his two widows, three daughters and one son. It is also the undisputed position that all the widows of a deceased are entitled to only one share. It is also not disputed that sons, grandsons and great grandsons acquire interest in the joint Hindu family property by birth. In the present case Smt. Shingari, who had given birth to three daughters, from the loins of Soran, had suffered a collusive decree in civil suit No. 165 of 1979 on 9.3.1979 in favour of Man Singh (defendant No. 1), who was her son from the loins of her earlier husband, and thereby she had alienated one-fifth share from the property which belonged to Soran, Ram Kala being the only male child of Soran, had acquired one-half share in the property of Soran on the very day he was born. Thus, as per Explanation 1 to Section 6 of the Act, Soran was the owner of only one half share in the suit property as the other half belonged to Ram Kala plaintiff. After the death of Soran, only one-half of the suit property could be distributed amongst his legal heirs. According to the undisputed position of law, Ram Kala, Chameli, Panmeswari and Buggari were entitled to one-fifth share each out of the one-half share of Soran Deceased. The rest of one-fifth share out of the one-half share of Soran is to be divided between the two widows, namely, Nanhi and Shingari, thus, both Nanhi and Shingari were jointly entitled to one-tenth share of the total suit property and each one of them was entitled to only one-twentieth share, after the death of Nanhi, the property left behind by her was to be divided among the remaining legal heirs, i.e. Smt. Shingari, Ram Kala, Chameli, Panmeswari and Buggari. Thus, Smt. Shingari was entitled to only 1/20th
Share + 1/100th share out of the total suit property. On the other hand, Ram Kala was entitled to one half + 1/ 10th + 1/100th share out of the total suit property. As Smt. Shingari had alienated one-fifth share in favour of her son Man Singh out of the total suit property, which is much beyond her share in the suit property, the impugned decree dated 9.3.1979 (Ex. P6) is null and void and is not binding on the rights of the plaintiff (Ram Kala). It is well-settled that there can be no estoppel against the statute. In case, the plaintiff was not aware of his right in the suit property at the time of filing of the suit in the trial Court, it does not mean that his share is to be usurped by Smt. Shingari and her son Man Singh (defendants)."
10. It is pertinent to notice here that insofar as the decree dated March 9, 1979 is concerned, all the three courts have concurrently held that the said decree was not binding on the first respondent, although reasons recorded for that conclusion were different. The trial court recorded the following reasons in this regard:
"With regard to issue no. 5 and 6, it is observed that it has been found in issues no. 2 and 3 above that Smt. Shingari inherited 1/ 20th share of the property of Soran deceased on his death and she further inherited 1/100th share (1/5th share of 1/20th share) on the death of Nanhi. Thus the total share of Smt. Shingari is less than 1/ 5th which he alienated in favour of defendant no. 1 Man Singh through impugned decree passed in Civil Suit No. 165/79. Consequently, the decree is liable to be set aside and the plaintiff is entitled to the relief claimed by him."
11. The first appellate court did not agree with the trial court's finding as regards Shingari's share in the properties left by Soran and held as under:
"The learned counsel for the appellant has then contended that the findings of the learned Trial Court on Issue No. 5 and 6 are also liable to be reversed. There is considerable force in the argument of the learned counsel. The learned Trial Court set aside the decree passed is Civil Suit No. 165/1979 on the ground that the share of Smt. Shingari defendant no. 2 was less than 1/ 5th and that she having admitted the claim of Man Singh defendant no. 1 to the extent of 1/5th share, the entire decree was liable to be set aside. However, in view of my findings on Issue No. 1 that the plaintiff was entitled to 1/5th share on the death of Soran and that he further inherited 1/50th on the death of Smt. Nanhi, the entire decree passed in Civil Suit No. 165/1979 could not be set aside by the learned trial court. The plaintiff is only entitled to get the relief to the extent that the decree passed in the said suit, effecting his right in the suit property, would not binding on him. This would mean that the said decree to the extent of 1/50th share (which the plaintiff was entitled to inherit on the death of Nanhi) would not be binding on the plaintiff. It has been held in AIR 1941 Lahore 402 D.B. that the party challenging the collusion decree can get it declared as void, so far as his interest are concerned. Accordingly, I hold that the entire decree passed in Civil Suit No. 165/1979 could not be set aside and that the only relief of which the plaintiff is entitled to is that the said decree could not effect his share 1/5th and 1/50th share in the suit property. According, the finding of the learned trial court on issue No. 5 and 6 are set aside and the said issue are accordingly decided and it is held that the decree passed in Civil Suit 165/79 shall not effect the rights of the plaintiff, to the extent of his share, as held above, and the plaintiff is entitled to the relief to that extent."
12. We have already noticed the view of the High Court above. In our opinion, the conclusion arrived at by the three
courts that the decree dated March 9, 1979 was not binding on the first respondent is right and proper and calls for no interference. However, we maintain the conclusion not for the reasons given by the High Court or the two courts below but for the reasons which we indicate hereinafter. Pertinently, in the earlier suit filed by the appellant against his mother in which the decree dated March 9, 1979 was passed, it was not even the case of the appellant or his mother Shingari that shares among heirs of Soran were determined by agreement or otherwise. Till disruption of joint family status takes place, neither coparcener nor the other heirs entitled to share in the joint family property can claim with certainty the exact share in that property. In the case of Appovier Alias Seetaramier v. Rama Subba Aiyan & Ors.¹, Lord Westbury speaking for the Judicial Committee (Privy Council) observed, 'According to the true notion of an undivided family in Hindoo law, no individual member of that family, whilst it remains undivided, can predicate of the joint and undivided property, that he, that particular member, has a certain definite share.'
13. In A. Raghavamma and Anr. v. A. Chenchamma and Anr.², this Court reiterated the legal position that a member of a joint Hindu family can bring about his separation in status by a definite and unequivocal declaration of his intention to separate himself from the family and enjoy his share in severalty. While dealing with the question whether a member of a joint Hindu family becomes separated from the other members of the family by mere declaration of his unequivocal intention to divide from the family without bringing the same to the knowledge of the other members of the family, after noticing the Hindu Law texts and series of decisions by the Privy Council, it was held that a member of joint Hindu family seeking to separate himself from others will have to make known his intention to the other members
of the family from whom he seeks to separate, even though no actual division takes place. This Court in paragraph 32 of the report held as under:
"32. It is, therefore, clear that Hindu law texts suggested and Courts evolved, by a process of reasoning as well as by a pragmatic approach that, such a declaration to be effective should reach the person or persons affected by one process or other appropriate to a given situation."
14. In Kalyani (Dead) By LRs. v. Narayanan and Ors.³, this Court explained the concept of partition in Mitakshara Hindu Law in paragraph 10 as under:
"Partition in one sense is a severance of joint status and coparcener of a coparcenary is entitled to claim it as a matter of his individual volition. In this narrow sense all that is necessary to constitute partition is a definite and unequivocal indication of his intention by a member of a joint family to separate himself from the family and enjoy his share in severalty. Such an unequivocal intention to separate brings about a disruption of joint family status, at any rate, in respect of separating member or members and thereby puts an end to the coparcenary with right of survivorship and such separated member holds from the time of disruption of joint family as tenant-in-common. Such partition has an impact on devolution of shares of such members. It goes to his heirs displacing survivorship. Such partition irrespective of whether it is accompanied or followed by division of properties by metes and bounds covers both a division of right and division of property."
In paragraph 20 of the report, this Court stated thus:
"Till disruption of joint family status takes place no coparcener can claim what is his exact share in
coparcenary property. It is liable to increase and decrease depending upon the addition to the number or departure of a male member and inheritance by survivorship. But once a disruption of joint family status takes place, coparceners cease to hold the property as joint tenants but they hold as tenants-in-common."
15. In Principles of Hindu Law by Mulla; Vol. I (17th Edition) as regards the right of wife, it is stated that a wife cannot herself demand a partition, but if a partition does take place between her husband and his sons, she is entitled (except in Southern India) to receive a share equal to that of a son and to hold and enjoy that share separately even from her husband (Article 315 at Page 506).
16. Section 6 of the Hindu Succession Act, 1956 (for short, '1956 Act') provides for devolution of interest in coparcenary property. Prior to Hindu Succession (Amendment) Act, 2005, Section 6 read as follows:
"S. 6. Devolution of interest in coparcenary property.- When a male Hindu dies after the commencement of this Act, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act:
Provided that, if the deceased had left surviving him a female relative specified in Class I of the Schedule or a male relative, specified in that class who claims, through such female relative, the interest of the deceased in Mitakshara Coparcenary property shali devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship.
Explanation 1. -For the purposes of this section, the interest of a Hindu Mitakshara coparcener shall be
deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.
Explanation 2.-Nothing contained in the proviso to this section shall be construed as enabling a person who has separated himself from the coparcenary before the death of the deceased or any of his heirs to claim on intestacy a share in the interest referred to therein."
17. Section 9 of the 1956 Act provides for order of succession among heirs in the Schedule. It reads as under:
"S. 9. Order of succession among heirs in the Schedule.-Among the heirs specified in the Schedule, those in Class I shall take simultaneously and to the exclusion of all other heirs; those in the first entry in Class II shall be preferred to those in the second entry; those in the second entry shall be preferred to those in the third entry; and so on in succession."
18. Widow, sons and daughters are Class I heirs and in terms of Section 9, the succession among heirs in Class I takes simultaneously and to the exclusion of all other heirs. Mr. Neeraj Jain, learned senior counsel for the appellant strenuously urged that in view of proviso to Section 6, which is attracted in the present case as the normal rule provided for by that Section does not apply and the fact that Soran left behind him two wives, one son and three daughters at the time of his death and one of the surviving wives had also died, Shingari's share in the property would be at least 1/5th and, therefore, High Court was clearly in error in holding that Shingari alienated much beyond her share to the appellant. In this regard, learned senior counsel relied upon, (i) Gurupad Khandappa Magdum vs. Hirabai Khandappa Magdum and others⁴ and (ii) Smt. Raj Rani vs. Chief Settlement
Commissioner, Delhi and others⁵. We are afraid, in the absence of any pleading or evidence in the suit filed by the appellant that shares among heirs of Soran were determined by agreement or otherwise, the share of Shingari was not identified and, thus, she could not have alienated 1/5th share in the property to the appellant. In any case, determination of the shares in the absence of the three daughters of Soran, who were also Class I heirs in Schedule appended to the 1956 Act could not have been done. All the three courts fell in grave error in determining the shares of Shingari and the first respondent even though the three daughters were not party in the suit. The whole exercise by the three courts in this regard was unnecessary, uncalled for and in violation of principles of natural justice.
19. For the foregoing reasons, we confirm the judgment of the High Court to the extent it has been held therein that the decree dated March 9, 1979 is not binding on the first respondent. However, the determination of shares among the heirs of Soran by the High Court cannot be sustained and we set aside the same. The appeal is disposed of accordingly. It will be open to the heirs of Soran to prosecute appropriate remedy for determination of their respective shares and claim partition in accordance with law, if so advised. The parties shall bear their own costs.
N.J. Appeal disposed of.
4. (1978) 3 SCC 383.
5. (1984) 3 SCC 619.- | This Indian Supreme Court case revolves around a family property dispute after a man named Soran passes away without a will (intestate). The central issue is whether a mother, Shingari, could legally give away a portion of this inherited property to her son, Man Singh, from a previous marriage.
Here's a breakdown of the situation and the court's decision:
The Family:
Soran: The deceased owner of the disputed property. He had two wives: Nanhi (deceased before this case) and Shingari.
Ram Kala: Son of Soran and Nanhi. He is one of the key parties fighting for his rightful inheritance.
Man Singh: Son of Shingari from a previous marriage. He is the other key party, claiming ownership of land based on his mother's actions.
Other Children: Soran and Shingari also had three daughters, and Soran had other children from his marriage to Nanhi.
The Dispute:
Man Singh's Claim: Man Singh filed a lawsuit against his mother, Shingari, claiming they had a "family settlement" where she agreed to give him a portion of the land she inherited from Soran. The court ruled in his favor since Shingari didn't contest the claim.
Ram Kala's Challenge: When Ram Kala found out, he filed his own lawsuit arguing that the previous judgment was invalid and that Man Singh had no right to their father's property. His argument rested on the concept of Hindu Succession law, which dictates how property is divided within a family after a person dies without a will.
The Court's Decisions:
Initial Rulings: Three different courts, including the trial court and two appellate courts, all agreed that the first judgment favoring Man Singh was flawed. They found that Man Singh, not being a direct descendant of Soran, shouldn't have received any property.
Supreme Court: The Supreme Court upheld the lower courts' decisions, stating that Man Singh's claim was indeed invalid. The judges clarified several crucial aspects of Hindu Succession law:
Joint Family Property: Until a joint Hindu family decides to formally divide their shared ancestral property (disruption of joint family status), no individual member can claim a specific share of it.
Class I Heirs: The law prioritizes "Class I heirs," which includes the widow, sons, and daughters, who inherit the property equally and simultaneously, excluding anyone outside this group.
Shingari's Limited Rights: The court highlighted that Shingari only inherited a small portion of Soran's property. She had no legal right to give away a larger share, especially to someone outside the Class I heirs.
The Outcome:
The Supreme Court's ruling meant that the land wrongly given to Man Singh had to be returned. However, the court also recognized that simply invalidating the initial judgment wasn't enough.
Need for Proper Division: The judges instructed the family to initiate a proper legal process to determine the rightful shares of each heir according to Hindu Succession law. This meant taking into account Soran's wives, his sons, and, importantly, his daughters who were initially left out of the equation.
In Essence:
This case reinforces the importance of clear inheritance laws, especially in cases where there is no will. The court's decision protects the rights of all legal heirs and ensures fair distribution of property according to established legal principles. It also highlights that attempting to circumvent these laws, even within a family, will not be tolerated by the courts. |
"[2009] 16 (ADDL.) S.C.R. 526\nA\nB\nLAXMI KANT BAJPAI\nV.\nHAZI YAQOOB & ORS.\n(Civil Appeal No. 42(...TRUNCATED) | "## The Case of Disputed Voting Districts: Laxmi Kant Bajpai v. Hazi Yaqoob\n\nThis case revolves ar(...TRUNCATED) |
"[2010] 14 (ADDL.) S.C.R. 997\nANJANI MOLU DESSAI\nV.\nSTATE OF GOA & ANR.\n(Civil Appeal No. 8042 o(...TRUNCATED) | "## Land Acquisition Case: Anjani Molu Dessai vs. State of Goa (Simplified Explanation)\n\nThis case(...TRUNCATED) |
"[2009] 15 (ADDL.) S.C.R. 413\nHARYANA STATE INDUSTRIAL DEV. CORPΝ.\nV.\nSHAKUNTLA & ORS.\n(Civil A(...TRUNCATED) | "This Indian Supreme Court case, *Haryana State Industrial Dev. Corpn. v. Shakuntla & Ors*. (2009), (...TRUNCATED) |
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