Supreme Court

Dahiben Vs. Arvindbhai Kalyanji Bhanusali (D) thr. L.Rs. and Ors.

MANU/SC/0508/2020

09.07.2020

Property

Non-payment of a part of the sale price would not affect the validity of the sale

The present Civil Appeal has been filed to challenge the impugned Judgment passed by a Division Bench of the Gujarat High Court, which affirmed the Order of the trial Court, allowing the application filed by Defendant Nos. 2 and 3/Respondent Nos. 2 and 3 herein under Order VII Rule 11(d), Code of Civil Procedure, 1908 (CPC) holding that the suit filed by the Appellant and Respondent Nos. 9 to 13 herein (the "Plaintiffs") was barred by limitation. The subject-matter of the present proceedings pertains to a plot of agricultural land of old tenure ("suit property") which was in the ownership of the Plaintiffs.

The land was under restrictive tenure as per Section 73AA of the Land Revenue Code. The Plaintiffs filed an application before the Collector, to obtain permission for selling the suit property to Respondent No. 1/Defendant No. 1, which was non-irrigated, and stated that they had no objection to the sale of the suit property. After obtaining permission from the Collector, the Plaintiffs sold the suit property to Respondent No. 1 herein. The Respondent No. 1 subsequently sold the suit property to Respondent Nos. 2 and 3 herein vide registered Sale Deed.

The Plaintiffs filed Special Civil Suit against the original purchaser i.e. Respondent No. 1, and also impleaded the subsequent purchasers i.e. Respondent Nos. 2 and 3 as Defendants. It was prayed that the Sale Deed dated 2nd July, 2009 be cancelled and declared as being illegal, void, ineffective and not binding on them, on the ground that the sale consideration fixed by the Collector, had not been paid in entirety by Respondent No. 1. The Trial Court, on the basis of the settled position in law, held that the suit of the Plaintiffs was barred by limitation, and allowed the application under Order VII Rule 11(d) of CPC. The High Court affirmed the findings of the Trial Court, and held that the suit was barred by limitation, since it was filed beyond the period of limitation of three years. Aggrieved by the impugned Judgment and Order passed by the High Court, the original Plaintiff No. 1 has filed the present Civil Appeal.

The test for exercising the power under Order VII Rule 11 of CPC is that, if the averments made in the plaint are taken in entirety, in conjunction with the documents relied upon, would the same result in a decree being passed. If on a meaningful reading of the plaint, it is found that the suit is manifestly vexatious and without any merit, and does not disclose a right to sue, the court would be justified in exercising the power under Order VII Rule 11 of CPC. The power under Order VII Rule 11 of CPC may be exercised by the Court at any stage of the suit, either before registering the plaint, or after issuing summons to the Defendant, or before conclusion of the trial, as held by this Court in the judgment of Saleem Bhai v. State of Maharashtra. Order VII Rule 11(d) provides that where a suit appears from the averments in the plaint to be barred by any law, the plaint shall be rejected.

If the case made out in the Plaint is to be believed, it would mean that almost 99% of the sale consideration allegedly remained unpaid throughout. It is, however inconceivable that if the payments had remained unpaid, the Plaintiffs would have remained completely silent for a period of over 5 and ½ years, without even issuing a legal notice for payment of the unpaid sale consideration, or instituting any proceeding for recovery of the amount, till the filing of the present suit in December 2014.

In Vidyadhar v. Manikrao and Anr., this Court held that the words "price paid or promised or part paid and part promised" indicates that actual payment of the whole of the price at the time of the execution of the Sale Deed is not a sine qua non for completion of the sale. Even if the whole of the price is not paid, but the document is executed, and thereafter registered, the sale would be complete, and the title would pass on to the transferee under the transaction. The non-payment of a part of the sale price would not affect the validity of the sale. Once the title in the property has already passed, even if the balance sale consideration is not paid, the sale could not be invalidated on this ground. In order to constitute a "sale", the parties must intend to transfer the ownership of the property, on the agreement to pay the price either in praesenti, or in future. The intention is to be gathered from the recitals of the sale deed, the conduct of the parties, and the evidence on record.

In view of the law laid down by this Court, even if the averments of the Plaintiffs are taken to be true, that the entire sale consideration had not in fact been paid, it could not be a ground for cancellation of the Sale Deed. The Plaintiffs may have other remedies in law for recovery of the balance consideration, but could not be granted the relief of cancellation of the registered Sale Deed.

The delay of over 5 and ½ years after the alleged cause of action arose in 2009, shows that the suit was clearly barred by limitation as per Article 59 of the Limitation Act, 1963. The Plaintiffs have failed to discharge the onus of proof that the suit was filed within the period of limitation. The plaint is therefore, liable to be rejected under Order VII Rule 11(d) of CPC. Reliance is placed on the recent judgment of this Court rendered in Raghwendra Sharan Singh v. Ram Prasanna Singh (Dead) by LRs.5 wherein this Court held the suit would be barred by limitation under Article 59 of the Limitation Act, if it was filed beyond three years of the execution of the registered deed.

The present suit filed by the Plaintiffs is clearly an abuse of the process of the court, and bereft of any merit. The Trial Court has rightly exercised the power under Order VII Rule 11 of CPC, by allowing the application filed by Respondent Nos. 2 & 3, which was affirmed by the High Court. The present Civil Appeal is dismissed with costs of Rs. 1,00,000 payable by the Appellant to Respondent Nos. 2 and 3, within a period of twelve weeks from the date of this Judgment.

Relevant

Saleem Bhai v. State of Maharashtra. MANU/SC/1185/2002
, Vidyadhar v. Manikrao and Anr. MANU/SC/0172/1999

Tags : Sale deed Registration Validity

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High Court of Tripura

Golam Mostafa Seekh Vs. The State of Tripura and Ors.

MANU/TR/0238/2020

07.07.2020

Criminal

If the special statute provides a different procedure, the provisions of the Cr. PC would not apply to the extent of inconsistency

By means of present petition filed under Section 397/401 read with Section 482 of Code of Criminal Procedure, 1973 (CrPC), the order taking cognizance of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) read with Section 420 of Indian Penal Code, 1860 (IPC), has been challenged on the solitary ground that cognizance was taken in contravention of the provisions of Section 142 and Section 138(c) of the NI Act. According to the Petitioner, the cognizance as taken by the impugned order is beyond the period of limitation, as prescribed by Section 142(b) of the NI Act.

Both in Section 138 and Section 142 of the NI Act, a special provision, distinct from the provisions of the CrPC in respect of limitation in taking cognizance has been made. It is apparent that the special statute rolls out distinctly different procedure. It is equally well settled that, if the special statute provides a different procedure, the provisions of the CrPC would not apply to the extent of inconsistency. In view of Section 138 and Section 142 of the NI Act, if the cognizance of dishonor of cheque for insufficiency of fund is taken in absence of element of 'cheating', the cognizance has to be taken under Section 142(b) of the NI Act.

In the complaint filed by the Respondent No. 2 in the Court of the Chief Judicial Magistrate, there has been allegation of breach of trust but there is no allegation of pre-meditative culpable mind to defraud the complainant, the Respondent No. 2 herein. Unmindful of required materials, the cognizance under Section 420 of IPC has been taken. There is no hesitation to hold that cognizance under Section 420 IPC is bereft of materials. Even if the allegations are believed as a whole, no ingredients of the offence punishable under Section 420 of IPC are available.

The limitation in terms of Section 142 of the NI Act for instituting the complaint had expired on 10th December, 2018. The complaint has been filed on 21st December, 2018 without seeking leave of the court for extension of time for instituting the complaint as provided below Section 142(1)(b) which provides that such complaint has to be filed within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138 of the NI Act. In the case in hand, the cause arose on 11th November, 2018 when 15 days from the date of receiving the notice demanding payment of the cheque amount had expired.

The proviso below Section 142(1)(b) of the NI Act has further laid down that cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfied the court that he had sufficient cause for not making the complaint within such period. There is no dispute that there was no attempt or application filed from the complainant seeking the court's leave or to satisfy the court that the complainant was prevented by sufficient cause for not making complaint within the said period. The Court does not have any power to condone the said period unless the complainant satisfied the court in respect of his disability in filing the complaint within the period, as prescribed by law. But the Court below has committed apparent error by taking cognizance of the offence punishable under Section 138 of the NI Act.

As this Court has observed that there is no material of Section 420 of IPC, at least from the complaint no such material is coming to the fore, and as such, the cognizance under Section 420 of IPC was wholly unwarranted. As a result, that part of the order is set aside in exercise of the inherent power as provided under Section 482 of CrPC. Since it has been quite categorically observed that, no attempt or application was submitted for satisfying the court how the complainant was prevented from not approaching the court in time, the complaint was wholly time barred.

Accordingly, the order taking cognizance is set aside but considering the mistake in understanding the law, present Court would remand the complaint to the court of the Chief Judicial Magistrate, by providing the Respondents an opportunity to file an application explaining the reasons for not approaching the court in time so that there can be due consideration under proviso to Section 142(1)(b) of the NI Act, Such application shall be filed within 15 days. Petition allowed.

Tags : Dishonour Cheque Cognizance Legality

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Supreme Court

Aruna Oswal vs Pankaj Oswal

MANU/SC/0507/2020

06.07.2020

Company

Dispute as to inheritance of shares is a civil dispute cannot be decided in proceedings under Section 241/242 of Companies Act, 2013

Present appeals have been preferred against the judgment passed by the National Company Law Appellate Tribunal, New Delhi, (‘the NCLAT’) in Company Appeal, thereby affirming the order passed by the National Company Law Tribunal (‘the NCLT’) concerning maintainability of the applications filed under Sections 241 and 242 of the Companies Act, 2013. The case is the outcome of a family tussle. Late Abhey Kumar Oswal, during his lifetime, held as many as 5,35,3,960 shares in Oswal Agro Mills Ltd., a listed company. Pankaj Oswal, respondent No.1, filed a partition suit being claiming entitlement to one-¬fourth of the estate of Abhey Kumar Oswal.

Learned senior counsel appearing on behalf of Aruna Oswal, wife of the deceased, vehemently argued that the appellant was the sole nominee of shares of erstwhile shareholder Late Abhey Kumar Oswal. In view of the provisions contained in Section 71 of the Companies Act, 2013 Respondent No.1 could not claim any interest in the said shares because of the nomination. After excluding shares in the name of mother Aruna Oswal, respondent No.1 Pankaj Oswal would have only 0.03% of the shareholding in Oswal Agro Industries Ltd. Given the provisions in Section 244 of the Act, as respondent no.1 lacked requisite shareholding of 10%, as such, the application was not maintainable under Sections 241 and 242 of the Act. Abhey Kumar Oswal died intestate. Because of the provisions of Section 72 of the Act, all the rights vested in Aruna Oswal, the appellant. Thus, the shareholding purchased by Respondent No.1 to the extent of 0.03% in May, 2017 after filing of civil suit, did not bestow any right upon him to maintain the company petition. The application could not be said to be maintainable.

Admittedly, Respondent No.1 is not holding the shares to the extent of eligibility threshold of 10% as stipulated under Section 244 of Act in order to maintain an application under Sections 241 and 242 of Act. The question as to the right of respondent no.1 is required to be adjudicated finally in the civil suit. The decision in a civil suit would be binding between the parties on the question of right, title, or interest. It is the domain of a civil court to determine the right, title, and interest in an estate in a suit for partition.

In Sangramsinh P. Gaekwad and Ors. v. Shantadevi P. Gaekwad (Dead) through LRs. and Ors., it was held that the dispute as to inheritance of shares is eminently a civil dispute and cannot be said to be a dispute as regards oppression and/or mismanagement so as to attract Company Court’s jurisdiction under Sections 397 and 398 of Act. Adjudication of the question of ownership of shares is not contemplated under Section 397 of Act. In M/s. Dale & Carrington Invt. (P) Ltd. and Anr. v. P.K. Prathapan and Ors., the question of locus standi to entertain the petition under sections 397 and 398 of the Companies Act, 1956, which are pari materia to Sections 241 and 242 of the Companies Act, 2013, was considered. This Court held that in order to maintain the petition, one should have requisite number of shares in the company on the date of filing of the petition.

The High Court in the pending civil suit passed an order maintaining the status quo concerning shareholding and other properties. Because of the status quo order, shares have to be held in the name of Mrs. Aruna Oswal until the suit is finally decided. The question of right, title, and interest is essentially adjudication of civil rights between the parties, as to the effect of the nomination decision in a civil suit is going to govern the parties' rights. It would not be appropriate to entertain these parallel proceedings and give waiver as claimed under Section 244 of Act before the civil suit's decision. Respondent No.1 had himself chosen to avail the remedy of civil suit, as such filing of an application under Sections 241 and 242 of Act after that is nothing but an afterthought.

In the facts and circumstances, it would not be appropriate to permit Respondent No.1 to continue the proceedings for mismanagement initiated under Sections 241 and 242 of Act, that too in the absence of having 10% shareholding and firmly establishing his rights in civil proceedings to the extent he is claiming in the shareholding of the companies.

Present Court refrains to decide the question finally in these proceedings concerning the effect of nomination, as it being a civil dispute, cannot be decided in present proceedings and the decision may jeopardise parties' rights and interest in the civil suit. With regard to the dispute as to right, title, and interest in the securities, the finding of the civil Court is going to be final and conclusive and binding on parties.

In order to maintain the proceedings, the Respondent should have waited for the decision of the right, title and interest, in the civil suit concerning shares in question. The entitlement of Respondent No.1 is under a cloud of pending civil dispute. Present Court deems it appropriate to direct the dropping of the proceedings filed before the NCLT regarding oppression and mismanagement under Sections 241 and 242 of the Act with the liberty to file afresh. Impugned orders passed by the NCLT as well as NCLAT are set aside, and the appeals are allowed.

Relevant

Sangramsinh P. Gaekwad and Ors. v. Shantadevi P. Gaekwad (Dead) thr. Lrs. and Ors. MANU/SC/0052/2005
, Dale and Carrington Invt. (P) Ltd. and Ors. v. P.K. Prathapan and Ors. MANU/SC/0748/2004

Tags : Shares Civil dispute Maintainability

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High Court of Delhi

Aarka Sports Management Pvt. Ltd. Vs. Kalsi Buildcon Pvt. Ltd.

MANU/DE/1347/2020

06.07.2020

Arbitration

Once the seat is determined, the Court of that place shall have exclusive jurisdiction to deal with all matters relating to arbitration agreement between the parties

The Petitioner is seeking appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The arbitration agreement between the parties is contained in clause 15 of the operation, maintenance and management agreement dated 16th March, 2018.

The arbitration agreement as well as notice of invocation is not disputed. Learned counsel for the Respondent however disputes the jurisdiction of present Court to entertain this petition. According to the Respondent, Delhi is neither the seat of arbitration nor any cause of action arose at Delhi. The agreement was drawn at Ranchi; the agreement was signed at Lucknow and the place of performance/execution of the agreement was Patna, Bihar.

Learned counsel for the Petitioner urged at the time of the hearing that, this Court has exclusive jurisdiction to entertain this petition under clause 15.1 which specifically provides that the jurisdiction of the agreement shall be exclusively with the Courts at New Delhi.

Section 20 (1) of the Act, 1996 empowers the parties to determine the seat of arbitration. The parties are at liberty to choose a neutral seat of arbitration where neither the cause of action arose nor the parties reside or work and Sections 16 to 20 of the Code of Civil Procedure, 1908 (CPC) would not be attracted. Once the seat is determined, the Court of that place shall have exclusive jurisdiction to deal with all matters relating to arbitration agreement between the parties.

If the parties have not determined the seat of arbitration, the seat of arbitration shall be determined by the Arbitral Tribunal under Section 20(2) of the Act, 1996. If the parties have not agreed on the seat of the arbitration, the Court competent to entertain an application under Section 11 of the Act, 1996 would be the “Court” as defined in Section 2(1) (e) of the Act read with Sections 16 to 20 of the CPC.

The arbitration agreement dated 16th March, 2018 does not stipulate any seat of arbitration as the parties had not agreed on the seat of the arbitration under Section 20(1) of the Act, 1996. In that view of the matter, the seat of the arbitration shall be determined by the Arbitral Tribunal under Section 20(2) of the Act, 1996. Since the parties have not agreed on the seat of the arbitration, the Court within the meaning of Section 2(1)(e) of Act, 1996 read with Sections 16 to 20 of CPC would be competent to entertain an application under Section 11 of the Act,1996.

This Court lacks territorial jurisdiction as Delhi is not the seat of arbitration; no cause of action arose at Delhi and the respondent does not work at Delhi. The agreement was drawn at Ranchi, signed at Lucknow and was to be performed at Patna.

The Petitioner could have succeeded, if the agreement had provided the seat of arbitration to be Delhi. In that case, this Court would have exclusive jurisdiction to entertain this application. Clause 15.1 which provides for exclusive jurisdiction of Delhi Courts, is not valid as the parties cannot confer jurisdiction on a Court which otherwise has no jurisdiction. The jurisdiction, in the present case, has to be determined according to Section 2(1)(e) of the Act, 1996 read with Sections 16 to 20 of the CPC. This Court holds that it has no territorial jurisdiction to entertain this Arbitration petition. The petition is dismissed with liberty to the petitioner to approach the Court of competent jurisdiction.

Tags : Agreement Dispute Jurisdiction

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National Consumer Disputes Redressal Commission

Vinod Khanna vs. R.G. Stone urology and leproscopy hospital & ors.

MANU/CF/0351/2020

06.07.2020

Consumer

Uniform use of the pre-printed and fixed ‘informed consent cum undertaking’ form on the part of the hospital is unfair trade practice

The Complainant aged about 65 years in second week of January, 2010 suffered pain in abdomen and difficulty in passing urine. Being aggrieved by the negligent treatment at OP-1, the Complainant suffered injury and complications at the hand of OP-2, complainant filed the instant complaint before this Commission and prayed compensation of Rs. 1,88,37,602.

The OPs 1 and 2 resisted the complaint and denied the allegations.. The complaint was disposed of by State Commission on 16th August, 2017 on the ground of lack of pecuniary jurisdiction. The time of seven years was elapsed before the State Commission and the instant complaint was filed before present commission on 15th February, 2018. In view of factual position, the cause of action was continuous, therefore present complaint is maintainable before present commission, and the delay is condoned.

As per medical literature the injection pricks does not cause fistulae or grave injury. Commonly to drain prostatic abscess trans rectal needle aspiration is used. On the basis of the entire medical record and the evidence on file including the expert opinion of the medical board of Maulana Azad Medical College, New Delhi, there is no deficiency in service / medical negligence / unfair trade practice on the part of the opposite party no. 2 (doctor). In respect of ‘consent’, in this particular case, having regard to the signatures of the patient and his sister as witness on the ‘informed consent cum undertaking’, the entire medical record, the affidavit of the opposite party no. 2 (doctor), the affidavit of the opposite party no. 1 (hospital) and the expert opinion of the medical board of Maulana Azad Medical College, present Tribunal finds it to be ‘informed consent’.

Present Tribunal notes that, a pre-printed and fixed ‘informed consent cum undertaking’ form, with blank spaces for limited select handwritten entries and for the signatures has been used. The main body of the form is pre-printed and fixed. It can fit into any procedure, any doctor, and any patient, after filling up the blank spaces for the limited select handwritten entries and getting / affixing the signatures. This to be administrative arbitrariness and one-sided high handedness, and to be unfair and deceptive, on the part of the opposite party no. 1 (hospital), for which, though, the complainant has not been prejudiced in this particular case.

The uniform use of the pre-printed and fixed ‘informed consent cum undertaking’ form on the part of the opposite party no. 1 (hospital) to be unfair trade practice within the meaning of Section 2(1)(r) of the Consumer Protection Act, 1986. A cost of Rs. 10 lakh is imposed on the opposite party no. 1 (hospital), to be deposited with the Consumer Legal Aid Account of this Commission and the opposite party no. 1 (hospital) is directed to discontinue its said unfair trade practice with immediate effect.

Tags : Deficiency Service Compensation

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High Court of Kerala

K. Kaikkalan Vs. State

MANU/KE/1721/2020

03.07.2020

Criminal

When the evidence of the official witnesses is trustworthy and credible, there is no reason not to rest the conviction on the basis of their evidence

In facts of instant case, the Excise Circle Inspector (PW3) of Hosdurg Excise Range found the Petitioner/accused with a can containing three litres of arrack. The trial court framed charge against the accused under Section 8(1) read with 8(2) of the Abkari Act. The accused pleaded not guilty and claimed to be tried. The trial court found the accused guilty of the offence punishable under Section 8(1) read with 8(2) of the Abkari Act and convicted him thereunder. The accused filed Criminal appeal before the Court of Session, challenging the order of conviction and sentence passed against him by the trial court.

The appellate court confirmed the conviction against the accused but modified the substantive sentence of imprisonment imposed on him by the trial court and reduced it to rigorous imprisonment for a period of six months. Aggrieved by the concurrent verdicts of guilty and conviction made against him by the Courts below and the sentence imposed on him by the appellate court, the accused has filed instant revision petition. Learned counsel for the Petitioner has contended that the testimony of the excise officers, which is not corroborated by the evidence of independent witnesses, cannot form the basis of conviction against the accused.

It is trite that, when the evidence of the official witnesses is trustworthy and credible, there is no reason not to rest the conviction on the basis of their evidence. It is for the accused, through cross-examination or through any other materials, to show that the evidence of the official witnesses is either unreliable or at least unsafe to be acted upon. There is no legal proposition that evidence of official witnesses, unless supported by independent evidence, is unworthy of acceptance. Evidence of police or excise officers cannot be discarded merely on the ground of their desire to see the success of the case. However, prudence requires that the evidence of such officers, who are interested in the outcome of the result of the case, shall be carefully scrutinized and independently appreciated. If the testimony of an official witness is found to reliable and trustworthy, the court can definitely act upon the same.

Credibility of a witness has to be tested on the touchstone of truthfulness and trustworthiness. It is not the law that official witnesses should not be relied upon and their evidence cannot be accepted unless it is corroborated in material particulars by the testimony of independent witnesses. Evidence of such officers must be considered on its own merits and its own inherent improbabilities.

There is no whisper of an allegation that PW3 and PW4 or any other excise officer had any motive to falsely implicate the petitioner in a case of this nature. There is nothing to show that the excise officers have falsely implicated the petitioner in the case with a view to settle any personal score with him. No semblance of even a suggestion was made to PW3 and PW4 in the cross examination to indicate even remotely that they had any animosity against the petitioner.

This is a case in which there is evidence to find that the very same sample, which was drawn by PW3 at the spot of the occurrence from the liquid contained in the can seized from the possession of the petitioner, had reached the chemical examiner for analysis. The link evidence is complete and unbroken in this case.

Section 53A (5) of the Abkari Act states that, notwithstanding anything contained in the Indian Evidence Act, 1872 or the Code of Criminal Procedure, 1973, any Court trying an offence under the Act, shall treat the inventory certified by the Magistrate as primary evidence in respect of such offence. Learned counsel for the Petitioner has not pointed out any infirmity in the inventory prepared by the authorised officer and the certificate issued by the learned Magistrate.

Discretion exercised by subordinate courts in the matter of appreciation of evidence and in choosing to accept the evidence will not normally be interfered with lightly by this Court exercising the correctional jurisdiction in revision. There is no illegality, impropriety or perversity in the appreciation of evidence by the Courts below.

The Petitioner now faces a substantive sentence of rigorous imprisonment for a period of six months and a default sentence of imprisonment for a period of three months. The quantity of arrack found in the possession of the Petitioner was only three litres. There is no material to show that he has got criminal antecedents. In such circumstances, present Court is satisfied that leniency can be shown on the question of substantive sentence of imprisonment imposed on the Petitioner. Conviction of the Petitioner for the offence under Section 8(1) read with 8(2) of the Abkari Act is confirmed. The sentence imposed on the petitioner by the courts below is modified and reduced. The revision petition is allowed in part.

Tags : Conviction Evidence Credibility

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