Supreme Court

Patel Engineering Ltd. Vs. North Eastern Electric Power Corporation Ltd. (NEEPCO)

MANU/SC/0447/2020

22.05.2020

Arbitration

Ground of patent illegality is available under the statute for setting aside a domestic award, if decision of arbitrator is perverse

In the facts of present case, learned sole arbitrator has passed the arbitral award dated 29th March, 2016 in respect of Package-I holding. Similar Declaratory Arbitral Awards were passed by the learned sole arbitrator in respect of the other two Arbitral References in respect of contracts pertaining to Package-II and Package-III of the project.

Respondent-North Eastern Electric Power Corporation Ltd. (NEEPCO) filed three applications under Section 34 of the Arbitration and Conciliation Act, 1996 before the Additional Deputy Commissioner (Judicial), challenging the three arbitral awards. The Additional Deputy Commissioner (Judicial) vide common judgment rejected the applications under Section 34 of the Act and upheld all the three arbitral awards. The Respondent- NEEPCO filed three appeals under Section 37 of the Act before the High Court. By the common judgment, High Court allowed the Respondent’s appeals and set aside the common judgment passed by the Additional Deputy Commissioner (Judicial).

Aggrieved by the common judgment, the Petitioner preferred special leave petitions before the Supreme Court. The Supreme Court vide order dismissed all the three SLPs filed by the Petitioner holding that, the Court is not inclined to interfere. After dismissal of the SLPs, the Petitioner filed review petitions before the High Court on the ground that, the judgment of the High Court suffers from error apparent on the face of the record as it had not taken into consideration the amendments made to Arbitration and Conciliation Act, 1996 by Amendment Act of 2015. The said review petitions came to be dismissed by the High Court vide the impugned orders.

In Board of Control for Cricket in India v. Kochi Cricket Private Limited and Others, the Supreme Court held that the Amendment Act, 2015 would apply to Section 34 petitions that are made after 23rd October, 2015 (the day on which the Amendment Act came into force). In the present case, admittedly, after the arbitral awards are dated 29th March, 2016, the applications under Section 34 of the Act were filed before the Judicial Commissioner, the provisions of the Amendment Act would apply.

Patent illegality as a ground for setting aside a domestic award was first expounded in the judgment of Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd. where this Court was dealing with a domestic award. This Court gave a wider interpretation to the ‘public policy of India’. The Court held that an award would be “patently illegal”, if it is contrary to the substantive provisions of law; or, provisions of the 1996 Act; or, terms of the contract.

The present case arises out of a domestic award between two Indian entities. The ground of patent illegality is a ground available under the statute for setting aside a domestic award, if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view.

While dealing with the appeal under Section 37 of the Act, the High Court has considered the matter at length, and held that while interpreting the terms of the contract, no reasonable person could have arrived at a different conclusion and that the awards passed by the arbitrator suffer from the vice of irrationality and perversity. The Petitioner has failed to make out any error on the face of the judgment. The High Court by the impugned order rightly dismissed the review petitions and there is no ground warranting interference with the impugned order. Petitions dismissed.

Tags : Award Patent illegality Arbitrator

Share :

Top

High Court of Delhi

Ramanand &Ors. Vs. Dr. Girish Soni&Anr.

MANU/DE/1072/2020

21.05.2020

Tenancy

Temporary non-use of premises due to the lockdown cannot be construed as rendering the lease void

The present revision petition was filed by the Appellants/Tenants (“Tenants”) challenging the order passed by the learned Senior Civil Judge-cum-Rent Controller (“RC”) granting a decree of eviction in respect of tenanted premises. The Tenants run a shoe store called ‘Baluja’ in Khan Market. The Landlord i.e., Respondent No.1 (“Landlord”) is a Dentist. The tenanted premises was given on rent for commercial purposes through a lease deed executed on 1st February, 1975 at Rs.300 per month. In 2008, the Respondents filed an eviction petition under Section 14(1)(e) of the Delhi Rent Control Act, 1958 (“DRC Act”). Initially, leave to defend was granted by the RC on 31st March, 2012. However, vide the impugned order dated 18th March, 2017, a decree for eviction was passed. The Tenants filed an appeal against the impugned order which was dismissed by the Rent Control Tribunal (“RCT”) vide order dated 18th September, 2017 on the ground that the same is not maintainable. Hence, the present petition is filed challenging the eviction order.

The case is governed by the provisions of the Delhi Rent Control Act, 1958. Section 56 of the Indian Contract Act, 1872 (ICA) does not apply to tenancies. The Tenants also do not urge that the tenancy is void under Section 180 (B)(e) of the TPA. The tenants are also not ‘Lessees’ as an eviction decree has already been passed against them.

Thus, for a lessee to seek protection under Sub-section 108(B)(e) of Transfer Of Property Act, 1882 (TPA), there has to be complete destruction of the property, which is permanent in nature due to the force majeure event. Until and unless, there is a complete destruction of the property, Section 108(B)(e) of TPA cannot be invoked. In view of the above settled legal position, temporary non-use of premises due to the lockdown which was announced due to the COVID-19 outbreak cannot be construed as rendering the lease void under Section 108(B)(e) of the TPA. The tenant cannot also avoid payment of rent in view of Section 108(B)(l) of TPA. The tenanted premises are located in the prime commercial area of Khan Market for running of a shop. It is well-known that the commercial area of Khan Market is a sought-after location for business purposes.

The monthly payment of Rs.3.5 lakhs has been fixed by this Court, as a condition for grant of stay for continued use and occupation, after the decree of eviction was passed. The Tenants do not wish to vacate the property due to the lockdown but wish to continue to occupy the property. The amount being paid, when compared to the prevalent market rent in the area, is on the lower side. This is clear from a perusal of the lease deed of a neighbouring property placed on record by the Landlord. Even if the said lease deed is to be ignored and not taken on record, judicial notice can be taken of the fact that the prevalent rent in Khan Market is amongst the highest in the whole of Asia. The amount being paid by the Tenants, though substantial, is on the lower side as compared to other properties in Khan Market.

The Tenants are ‘unauthorised occupants’ of the tenanted premises as a decree of eviction has already been passed. The monthly payment of rent being made has been fixed by this Court vide the interim order dated 25th September, 2017 in view of the judgment of the Supreme Court in Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd.,. The use and occupation charges have to be determined in a manner so as to fully compensate the Landlord as if the Landlord had let out the property to a third party. The Tenants are continuing to occupy the premises and do not intend to vacate the same. In any case, the compensation ought to be reasonable and should make up for the loss caused to the Landlord due to delay in execution of the eviction decree. These factors completely tilt the balance in favour of the Landlord.

There is no contractual condition that permits non-payment or suspension of rent. There are cases where the central and state governments may have, from time to time, given protection to some classes of tenants such as migrants, labourers, students, etc. The present case is not covered by any of executive orders. The Tenants’ application for suspension of rent is thus liable to be rejected as while invoking the doctrine of suspension of rent on the basis of a force majeure event, it is clear from the submissions made that the Tenants do not intend to surrender the tenanted premises. While holding that suspension of rent is not permissible in these facts, some postponement or relaxation in the schedule of payment can be granted owing to the lockdown.

It is accordingly directed that the Tenants shall now pay the use and occupation charges for the month of March, 2020 on or before 30th May 2020 and for the months of April, 2020 and May, 2020 by 25th June, 2020. From June 2020 onwards, the payment shall be strictly as per the interim order dated 25th September 2017. Subject to these payments being made, the interim order already granted shall continue. The application is disposed of.

Tags : Eviction Suspension Rent Entitlement

Share :

Top

High Court of Delhi

M/s Prithvi Singh vs. Asst. Commissioner (South), Govt of NCT of Delhi

MANU/DE/1070/2020

20.05.2020

Civil

Findings of fact cannot be re-opened and questioned under writ jurisdiction of the Court, the Court can only interfere in cases of no evidence

The present set of petitions challenges the orders passed by the learned Appellate Authority, Department of Food Supplies and Consumer Affairs, dismissing the appeals filed by the Petitioner(s) and upholding the decision of the Respondent cancelling the authorization of the Fair Price Shop(s) (“FPS”) of the Petitioner(s).

The learned counsel for the Petitioner submits that, the Appellate Authority has wrongly placed reliance on the Notification dated 2nd January, 2009. He submits that, from the reply received to a query under the Right to Information Act, 2005, it was evident that the said Notification was never put in operation. In any case, the verification of the Ration Card Holders was to be confined only to those persons who were attached to the particular FPS. In the present case, the allegation is with respect to 90 Ration Card Holders, who were admittedly not attached with the Petitioner’s FPS and therefore, it was not for the Petitioner to have verified them. He further submits that in any case, with the operation of the ePOS System having been followed, the 2009 Notification had become redundant and inapplicable.

The learned counsel for the petitioner further submits that in terms of the Instructions/Circular dated 28th December, 2017, portability was permitted in all FPS connected to ePoS. The petitioner could not have denied the supply of food grains to the Ration Card Holders only because the Ration Card Holders were not attached to the Petitioner. Therefore, merely because the Ration Card Holders were not attached to the petitioner, an adverse inference could not have been drawn against the petitioner.

Under Article 226 of the Constitution of India, the High Court does not act as a Court of Appeal over the decision of the Authorities. The scope of inquiry before the High Court is restricted to considering whether the Authorities have followed the prescribed procedure and Principles of Natural Justice. As far as the evidence is concerned, the Court can only interfere in cases of “no evidence”. Where there is some evidence which the Authority entrusted with the duty to hold inquiry has accepted and where such evidence may reasonably support the conclusion arrived at by such Authority, the Court cannot re-evaluate such evidence to arrive at an independent finding on the same. The Authorities are the sole judge of facts. The High Court in exercise of its power under Article 226 of the Constitution of India only exercises Supervisory Jurisdiction and not Appellate Jurisdiction over such Authorities.

The findings of fact cannot be re-opened and questioned under Writ jurisdiction of the Court. A finding of fact recorded by the Tribunal cannot be challenged on grounds of evidence being insufficient or inadequate to sustain a finding. The issue of adequacy or sufficiency of evidence led on a particular point and the inference of what fact is to be drawn on the said finding are within the exclusive jurisdiction of the Tribunal.

The Respondent has been able to establish that 90 Card Holders did not belong to the area allocated to the Petitioner. Though it may be accepted that portability was allowed where FPS were connected to ePOS, the fact that these Card Holders were not attached to the Petitioner and had not taken the food grains from the petitioner in the month of January and February, 2018, should have raised suspicion in the mind of the petitioner regarding their authenticity. These 90 Card Holders were in fact, not even residing at the given address. Though it may be true that the Petitioner was not directly responsible for carrying out the verification for all such Card Holders, this fact would be an important link in the totality of the circumstances alleged against the Petitioner.

88 out of these 90 Card Holders were given ration by the petitioner only through the OTP method. Though, the Petitioner alleges that there was a flaw in the BEL device application, the fact that this happened to such a large extent only in cases where the Card Holders were not attached to the Petitioner, again becomes an important consideration. Admittedly, the Petitioner had given ration in 460 transactions through Bio-Metric method and another 35 through IRIS method; OTP method was used only in 114 transactions out of which 90 were for persons who were not attached to the petitioner and were not found residing at the given address. The fact that 44 out of these 90 Card Holders were given ration by the petitioner at odd hours is also an important circumstance.

It is not for this Court to re-appreciate the evidence considered by the Appellate Authority in reaching its conclusion that, these transactions were not genuine. This Court is only confined to scrutinize, if this is a case of “no evidence”. The Petitioner has not been able to make out such a case. Further, as held by the Supreme Court, in a case such as present, the Respondent is not to prove its case beyond a reasonable doubt but only on preponderance of probabilities of evidence. In case of circumstantial evidence, even though the Petitioner is able to explain individually one or the other circumstance alleged against him, circumstances taken collectively, does not make it to be a case of “no evidence”. There is no merit in the present petition and same is accordingly dismissed.

Tags : Fair Price Shop Cancellation Legality

Share :

Top

Supreme Court

The Workmen Through The Convener vs.Ravuthar Dawood Naseem

MANU/SC/0449/2020

19.05.2020

Labour and Industrial

To constitute civil contempt, it must be established that disobedience is wilful, deliberate and with full knowledge of consequences

The grievance in present petitions is about non¬-compliance of direction given to the Respondent¬-Food Corporation of India to regularise and departmentalise the concerned workers who had initiated industrial disputes before the Industrial Tribunal under Section 10(1)(d) of the Industrial Disputes Act, 1947.

The Petitioners submits that the direction given by the Tribunal and upheld by the Madras High Court including by this Court is unambiguous. It mandates the Respondent Corporation to regularise the concerned workers in the Departmental Labour System, as has been done in other cases adverted to by the Tribunal and the Madras High Court in the respective award/judgment.

The Respondent Corporation would contend that, it has already regularised the eligible employees, who were party to the two References, under Direct Payment System (DPS) and nothing further was required to be done. It is urged that in both the References, the claim was restricted to regularisation of the concerned employees after abolition of the contract labour system. There was no prayer for absorbing the concerned employees under any specific system of regular labour prevailing in the Corporation.

In order to punish a contemnor, it has to be established that disobedience of the order is “wilful”. The word “wilful” introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one's state of mind. “Wilful” means knowingly intentional, conscious, calculated and deliberate with full knowledge of consequences flowing therefrom. It excludes casual, accidental, bona fide or unintentional acts or genuine inability. Wilful acts does not encompass involuntarily or negligent actions. The act has to be done with a “bad purpose or without justifiable excuse or stubbornly, obstinately or perversely”. Wilful act is to be distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It does not include any act done negligently or involuntarily. The deliberate conduct of a person means that he knows what he is doing and intends to do the same. Therefore, there has to be a calculated action with evil motive on his part.

Even if there is a disobedience of an order, but such disobedience is the result of some compelling circumstances under which it was not possible for the contemnor to comply with the order, the contemnor cannot be punished. “Committal or sequestration will not be ordered unless contempt involves a degree of default or misconduct.”

As it is indisputable that the Corporation has four systems of labour engagement including the Direct Payment System (DPS), the petitioner¬-Union(s) ought to have sought specific relief against the Corporation in that regard. The issue as to regularisation of the concerned workmen under particular labour system had not been put in issue before the Tribunal and upto this Court. A general direction came to be issued to regularise and departmentalise them. Resultantly, the Respondents were left with the only option to regularise the concerned workmen as per the extant applicable policy of the Organisation, under the Direct Payment System (DPS).

In the present case, no specific direction has been given to the Corporation to regularise the concerned workmen only in the Departmental Labour System. Furthermore, the Departmental Labour System is now a dying cadre and the policy of the Corporation at the relevant time entailed regularisation of such workmen only under the Direct Payment System (DPS). Thus, no contempt action can be initiated on the basis of general direction to the Respondents to regularise and departmentalise the concerned workmen. No case for initiating contempt action against the Respondent Corporation and its officers has been made out. Accordingly, present petitions are dismissed.

Tags : Contempt action Initiation Grounds

Share :

Top

High Court of Delhi

Principal Commissioner Of Income vs. Open Solutions Software Services

MANU/DE/1063/2020

18.05.2020

Direct Taxation

Assessee has right to challenge inclusion of comparable, even if it clears the filters

By way of the present appeal under Section 260A of the Income Tax Act, 1961 ('the Act'), the Appellant (Revenue) assails the impugned order passed by the Income Tax Appellate Tribunal ('ITAT'). The grievance of the Appellant is against the exclusion of four comparables introduced by the Transfer Pricing Officer ('TPO') for benchmarking the international transaction of rendition of software services by the Respondent.

From the exposition of law in Rampgreen Solutions Pvt. Ltd. v. CIT and the other judgments, it is clear that even while applying the TNM method, comparables cannot be picked on the basis of broad classification under various heads, and that the actual functional profile of the comparable must be similar, if not same, to that of the taxpayer-assessee. In comparability analysis, the business environment; demand and supply of the services; assets employed, and, competence to provide different services are factors which would have a material bearing on the profitability of the entities and, therefore, regard must be had to such factors.

In the application of the TNM method, broad similarity in the domain of services is not enough and the overall FAR analysis of the comparable sought to be used must be similar with the taxpayer-assessee. On a perusal of the impugned order passed by the ITAT, present Court finds that none of the comparables have been excluded solely on the ground of high turnover. The primary reason for excluding the four comparables in question is on account of the dissimilarity in the overall profile of the said comparables with the Respondent-assessee.

In view of the above, it emerges that none of the comparables have been excluded on the ground of high turnover alone. The test of functional similarity applied by the Tribunal is in consonance with the legal position. Therefore, there is no merit in the contentions urged by the Revenue. Equally meritless is the contention of the Revenue regarding the bar to challenge the comparables after the acceptance of the filters. The filters are applied to narrow down the search to find the comparables that are closest to the assessee. The use of filters has to be necessarily validated from the annual reports. Since the TPO would have to do this exercise on the basis of the actual data in the report of the comparables, he would surely have the freedom to adopt or reject the comparables. It cannot held that merely because a comparable clears the filters, its inclusion in the list of comparables is immune to challenge by the assessee. The appeal is dismissed.

Tags : Comparables Exclusion Legality

Share :

Top

Income Tax Appellate Tribunal

The Assistant Commissioner of Income Tax, Chennai. Vs. M/s. Vodafone South Ltd.

MANU/IX/0102/2020

18.05.2020

Direct Taxation

TDS provisions under Section 194H of IT Act is not applicable on sale of recharge vouchers and pre-paid vouchers to sole distributors

Present cross appeals filed by the Revenue as well as the assessee are directed against the common order of the learned Commissioner of Income Tax (Appeals). The Assessee has challenged the order of CIT(A) in confirming the order of the Assessing Officer passed under Section 201(1) /201(1A) of the Income Tax Act, 1961 on the ground that, the order passed by the TDS Officer is bad in law and void-ab-initio, since such order has been passed beyond the limitation period specified under Section 201(3) of the Act.

Before the learned CIT(A), it was a submission of the assessee that, the assessee was covered by the provisions of Section 201(3) of the Act and hence, the order under section 201(1) of the Act cannot be passed beyond the limitation period. Clause (i) to section 201(3) of the Act specifies that, no order shall be made under sub-section (1) of section 203 of the Act deeming a period to be an assessee in default for failure to deduct the whole or any part of the tax from a resident in India, at any time after the expiry of two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed. Here, the assessee has not deducted TDS under Section 194H of the Act and thus, the question of filing of quarterly statement as required under Section 200 of the Act by the assessee does not arise. Therefore, the assessee is not covered by the provisions of Section 201(3)(i) of the Act. Accordingly, CIT(A) has validly confirmed the order passed under Section 201(1)/201(1A) of the Act. Thus, the ground raised by the assessee stands dismissed for both the assessment years.

The ground raised in the appeal of the Revenue is that, CIT(A) has erred in holding that the sale of recharge vouchers and prepaid vouchers and prepaid cards to the sole distributors does not establish Principal-Agent relationship liable to TDS under Section 194H of the Act and also held that no tax at source was deductible provided the assessee satisfied the conditions relating to treatment of discount in the books of accounts.

The assessee company is a mobile/cellular service provider. While completing the assessments for the assessment years 2008-09 and 2009-10, the Assessing Officer found that, the assessee has not deducted the TDS on discounts allowed for prepaid SIM Cards/ Talktime as distributor margin. After considering the clarifications of the assessee, the Assessing Officer passed the orders under Section 201(1)/ 201(1A) of the Act for the assessment years by determining TDS under Section 194H of the Act. On appeal, by following the decision of the Tribunal in assessee’s own case, CIT(A) held that, the provisions of Section 194H of the Act are not attracted in the case of the assessee and no tax at source was deductible provided that the assessee satisfies the conditions laid down by the ITAT relating to the treatment given by the assessee in their books of accounts. Aggrieved, the Revenue is in appeal before the Tribunal for both the assessment years.

By extracting the relevant portion of the order of the Tribunal in assessee’s own case and following the same, CIT(A) held that the provisions of Section 194H of the Act are not attracted in the case of the assessee and no tax at source was deductible provided the assessee satisfied the conditions relating to treatment of discount in the books of accounts. Thus, the CIT(A) has rightly followed the decision of the Tribunal in assessee’s own case. Thus, there is no infirmity in the order passed by the CIT(A). Accordingly, the grounds raised by the Revenue are dismissed. In the result, both the appeals filed by the assessee as well as the Revenue are dismissed.

Tags : Levy TDS provisions Applicability

Share :