Judgments
Supreme Court
D. Khosla and Company Vs. The Union of India (Neutral Citation: 2024 INSC 587)
MANU/SC/0846/2024
07.08.2024
Arbitration
Courts are not supposed to grant interest on interest except where it has been specifically provided under the statute
The sole issue before present Court is whether interest is payable on interest or whether 15% interest per annum awarded would be on the principal sum award plus 12% per annum interest on it for the pre- award period.
In the petition preferred by the Petitioner before the High Court, it held that as the Arbitrator had used word 'simple interest' and had not specifically awarded compound interest, therefore, the Petitioner is only entitled to simple interest @ 12% per annum on the amount awarded as compensation for the pre-award period and simple interest @ 15% per annum for the post-award period only on the amount of compensation awarded. Aggrieved by the judgment and order of the High Court and that of the Principal Senior Civil Judge, the Petitioner has preferred this Special Leave Petition.
It is evident that, ordinarily courts are not supposed to grant interest on interest except where it has been specifically provided under the statute or where there is specific stipulation to that effect under the terms and conditions of the contract. There is no dispute as to the power of the courts to award interest on interest or compound interest in a given case subject to the power conferred under the statutes or under the terms and conditions of the contract but where no such power is conferred ordinarily, the courts do not award interest on interest.
Neither the Act specifically empowers the Arbitrator or the court to award interest upon interest or compound interest nor there any other provision which provides for grant of compound interest or interest upon interest. Even Section 34 of Code of Civil Procedure, 1908 (CPC) is silent in this regard whereas Sub-section (3) of Section 3 of the Interest Act specifically prohibits the same.
A plain reading of the award and decree reveals that interest awarded under the award has been dissected into two parts. The first part relates to the pre-award period from the date of the completion of the work till the passing of the award whereas the second part is the post-award period commencing from the date of the award till the satisfaction of the award. In the first part, simple interest @ 12% per annum has been awarded on the 'amount awarded' whereas in the second part, interest @ 15% per annum has been awarded referring to the 'amount awarded'. The amount awarded in both the situations has to be the same and cannot be two distinct amounts.
The award and the decree nowhere specifically contemplate for awarding 15% interest per annum on the amount awarded including the interest component i.e. the pre-award interest. This could not have been done even otherwise as there is no provision to that effect under the relevant statutes or the contract. No material has been placed or as a matter of fact before any court below to show that the terms and conditions of the contract contained any such provision.
Present Court do not deem it appropriate under the facts and circumstances of the case to exercise our discretionary jurisdiction under Article 136 of the Constitution of India so as to interfere with the opinion expressed concurrently by the two courts below. Petition dismissed.
Tags : Interest Award Power
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Income Tax Appellate Tribunal
Ramdas Sitaram Patil, Kolhapur vs. Assistant Commissioner of Income-Tax
MANU/IP/0189/2024
07.08.2024
Direct Taxation
There is no bar under law to claim deduction simultaneously under Section 54 and Section 54F of IT Act in respect of the same asset
The Appellant is an individual, filed the Return of Income for the A.Y. 2016-17 on 07.03.2017 declaring total income of Rs.96,55,810. Against the said return of income, the assessment was completed by the Assessing Officer (AO) vide order passed under Section 143(3) of the Act at a total income of Rs.2,59,13,610. While doing so, the AO disallowed the claim for deduction of income. The solitary issue in the present appeal revolves round the entitlement of assessee for deduction under Section 54 and 54F of the Income-tax Act, 1961 (IT Act).
From the perusal of the assessment order, it would reveal that the AO had denied the claim for deduction under Section 54 and 54F, firstly on the ground that no deduction can be claimed simultaneously in respect of the new residential house and secondly, the new residential property was purchased before one year prior to the sale of original asset.
Admittedly, the sale consideration was paid prior to the one year before the sale of original asset. There is no bar under law to claim deduction simultaneously Section 54 and Section 54F in respect of the same asset. The crucial fact which needs to be determined in the present case is the date of purchase of the new residential property. It is settled position of law that the crucial date for the purpose of determination is when the property is purchased for the purpose of Section 54 and the date when the possession and control of the property is given to the purchaser's hands.
The recital of the sale deed clearly says that possession of the property was taken on 31st March, 2015 which is within the period of one year before the date of sale of original asset. The covenants in the sale deed executed and registered are conclusive in the absence of any evidence to the contrary. The finding of the learned CIT(A) that it is a fabricated document is a mere bald allegation and cannot be sustained in the eyes of law. The appellant is entitled for deduction under Section 54/54F as claimed by the assessee. Appeal of the assessee is allowed.
Tags : Assessment Deduction Entitlement
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Supreme Court
Shifana P.S. Vs. The State of Kerala and Ors. (Neutral Citation: 2024 INSC 580)
MANU/SC/0838/2024
06.08.2024
Service
The equivalence of a qualification is not a matter that can be determined in exercise of power of judicial review
The Appellant, appeared in the written test on 10th October, 2009 and cleared the exam. The KPSC invited the Appellant vide letter dated 03rd October, 2011 for the interview requiring her to produce the equivalency certificate evidencing that B.Sc (Polymer Chemistry) is equivalent to B.Sc(Chemistry).
The Appellant claims that the University of Calicut had issued a certificate verifying that B.Sc (Polymer Chemistry) offered by the said University is recognised as equivalent to its B.Sc (Chemistry) course for the purpose of employment and higher studies.
The KPSC released the final merit list. However, the Appellant's name did not figure therein. Being aggrieved by her non-selection, the Appellant preferred original application before the learned Tribunal seeking a direction that the Respondents be commanded to include her name at the appropriate position in the final merit list according to the marks which she had obtained in the written test held by the KPSC. The original application preferred by the Appellant came to be rejected by the Tribunal vide judgment, holding that the Appellant failed to meet the qualifying criteria and thus she was ineligible for appointment to the post of High School Assistant(Physical Science).The Appellant assailed the order passed by the Tribunal in the High Court. The learned Division Bench rejected the petition filed by the Appellant.
Indisputably, the qualifying criterion prescribed for the post advertised vide notification dated 30th April, 2008 was a degree in B.Sc (Chemistry). Admittedly, the Appellant does not hold such a degree. It is the case of the Appellant that B.Sc (Polymer Chemistry) degree acquired by her is required to be treated as equivalent to a degree in B.Sc (Chemistry). However, the said argument does not hold water and is misconceived.
This Court in the case of Zahoor Ahmad Rather and Ors. v. Sheikh Imtiyaz Ahmad and Ors. has held that judicial review can neither expand the ambit of the prescribed qualifications nor decide the equivalence of the prescribed qualifications with any other given qualification. Therefore, the equivalence of a qualification is not a matter that can be determined in the exercise of the power of judicial review. Whether a particular qualification should or should not be regarded as equivalent is a matter for the State, as the recruiting authority, to determine.
In Unnikrishnan C.V. and Ors. v. Union of India and Ors., a three Judge Bench of this Court, while relying upon the earlier judgment in the case of Guru Nanak Dev University v. Sanjay Kumar Katwal and Anr., held that equivalence is a technical academic matter, it cannot be implied or assumed. Any decision of the academic body of the University relating to equivalence should be by specific order or resolution, duly published.
The fervent plea advanced on behalf of the Appellant that the University of Calicut had issued a certificate dated 10th October, 2011 verifying that B.Sc (Polymer Chemistry) course of the said University is recognised as equivalent to its B.Sc (Chemistry) course is also not tenable in light of the observations made by this Court in the case of Unnikrishnan C.V. In view of the settled principles of law flowing from the above precedents, Appellant was not qualified for the post advertised vide notification dated 30th April, 2008.There is no justifiable reason so as to interfere with the judgment rendered by the High Court. Appeal dismissed.
Tags : Appointment Advertisement Eligibility
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High Court of Delhi
Mazid In JC Vs. State of NCT of Delhi and Ors. (Neutral Citation: 2024 DHC 5841)
MANU/DE/5115/2024
06.08.2024
Criminal
Extra judicial confession is considered as a weak type of evidence and is only used as a corroborative link to lend credibility to other evidence on record
The present application has been filed under section 439 of Code of Criminal Procedure, 1973 (CrPC) seeking regular bail in connection with FIR under Sections 302 of Indian Penal Code, 1860 (IPC). It is submitted that, the Petitioner does not have any criminal record. He, therefore, urges the Court to enlarge the Petitioner on bail.
Undisputedly, the case of the prosecution is not premised on an ocular account. It is a case based on circumstantial evidence and the only circumstance which has been pressed into service is an extra judicial confession allegedly made by the accused/petitioner.
It is trite law that extra judicial confession is considered as a weak type of evidence and is only used as a corroborative link to lend credibility to the other evidence on record. The probative value of the testimonies of the witnesses, as well as, their credibility will though be examined by the learned Trial Court at an appropriate stage but an overview of the statements of the material witnesses tilts the balance in favour of the petitioner for granting regular bail to him.
At this stage, it cannot be overlooked that there is a presumption of innocence in favour of the accused/petitioner. That apart, the petitioner is already in custody for almost 4 years and the conclusion of trial does not appear to be anywhere in sight as the prosecution has cited 23 witnesses, out of which only 08 have been examined till date.
It is also not the case of the prosecution that, the Petitioner has a criminal record or there is possibility of the Petitioner fleeing from justice in the event he is enlarged on bail. On the contrary, the Petitioner did not abscond and remained available for investigation at all relevant times. Further, all the material witnesses have already been examined, therefore, does not appear to be any apprehension that the petitioner is likely to tamper with evidence in case he is enlarged on bail. The Petitioner is entitled to grant of regular bail pending trial. Petition stands disposed of.
Tags : Bail Grant Entitlement
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High Court of Delhi
Prosafe International Pvt. Ltd. Vs. North Delhi Municipal Corporation (Neutral Citation: 2024 DHC 5840)
MANU/DE/5135/2024
06.08.2024
Commercial
Operation of a statute could not be curbed by private action of parties
The Petitioner is a company, which claims to be a 'small' enterprise under Section 2(m) of the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act") and is essentially aggrieved by the impugned notification dated 28th March, 2019, whereby, the erstwhile North Delhi Municipal Corporation ("MCD") unilaterally appointed a former judicial officer as the sole Arbitrator regarding the disputes/claims submitted by the Petitioner in respect of the purchase order dated 27th April, 2016 for supply of 3,29,916 pairs of shoes for use of children studying in municipal schools of MCD.
Main issue arises for consideration is whether the provisions of the MSMED Act will have precedence over the provisions of the Arbitration and Conciliation Act, 1996 ("Arbitration Act")?
The issue, however, is no longer res integra. The Supreme Court in the case of Gujarat State Civil Supply Corporation, has held that the Arbitration Act in general governs the law of arbitration and conciliation, whereas the MSMED Act governs the specific class of disputes arising between explicit categories of persons to be resolved by following a definite process through a particular forum.
The issue is settled by the authoritative pronouncements of the Supreme Court in the case of Silpi Industries v. Kerala SRTC and Gujarat State Civil Supply Corporation vs. Mahakali Foods Pvt. Ltd. Therefore, this Court unequivocally holds that the provisions of the MSMED Act will have precedence over the Arbitration Act.
The supply has been made by the Petitioner not on the basis of the LOI for the first supply agreement but on the basis of the fresh supply agreement which was specifically directed by the MCD itself to be entered into on the compliance of certain terms and conditions. Moreover, a perusal of the second LOI would indicate that it was a precursor to the second supply agreement and was meant to enjoin the petitioner with a fresh set of obligations and required various compliances for proceeding with the second agreement. In such a scenario, the MCD could not be permitted to go back and self-servingly read it as a part and parcel of the first agreement.
In the absence of there being any adverse material on record, the Court finds that the Petitioner did have the certificate as on 26.04.2016 i.e., the date of execution of the second supply agreement, which is the genesis of the entire claim in question. It is trite law that the operation of a statute could not be curbed by private action of parties. The impugned notification was bad in law, for being without legal sanction and in violation of the special enactment of MSMED Act, the applicable law in the facts and circumstances of the case. The impugned notification dated 28th March, 2019 and all consequential proceedings emanating therefrom, are set aside. Petition allowed.
Tags : Arbitrator Appointment Notification
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Income Tax Appellate Tribunal
Nirav Chandrakantbhai Bhalani vs. The Pr. Cit, Ahmedabad
MANU/IB/0348/2024
06.08.2024
Direct Taxation
Validity of a notice issued under Section 263 of IT Act based on incorrect grounds or unsupported evidence can be questioned
Present appeal is filed by the Assessee as against the order passed by the Principal Commissioner of Income Tax, in exercise of his revisionary jurisdiction under Section 263 of the Income Tax Act, 1961 for the Assessment Year (AY) 2016-2017. Assessee argued that, the decision of the Learned PCIT to review the order of the AO in exercise of his jurisdiction under Section 263 of Act is not valid.
The AO issued notices under Sections 143(2) and 142(1) of the Act and made specific inquiries relating to purchase of immovable property along with other aspects of assessee's financial statements. The assessee responded to these inquiries, providing some documents including purchase deed.
Section 263 of the Act empowers the Learned PCIT to revise any order passed by the AO if it is erroneous and prejudicial to the interests of the revenue. An order can be considered erroneous if it is passed without proper verification, inquiry, or based on incorrect facts or law and it is prejudicial to the interests of the revenue if it results in the loss of revenue or incorrect computation of taxable income.
In the present case, it is evident that even after persistent requests by the assessee, the AO could not provide the documentary evidence based on which the assessment was reopened and passed order under Section 147 read with Section 144 of the Act. It is only the case where the evidence available with the Learned PCIT gave rise to suspicion about its veracity that further scrutiny is called for. The circumstances can certainly be termed as inadequate inquiry. Therefore, the Learned PCIT is not wrong in assuming jurisdiction under Section 263 of the Act.
The validity of a notice issued under Section 263 of the Act based on incorrect grounds or unsupported evidence can be questioned. If the reasons cited in the notice are factually incorrect or legally unsustainable, the notice can be challenged as invalid. The Learned PCIT must have sufficient evidence to support the claim that the order is erroneous and prejudicial to the interests of the revenue. Mere suspicion or conjecture is not sufficient.
It is evident that for the Learned PCIT to invoke Section 263 of the Act, it must be conclusively proven that the AO's order is both erroneous and prejudicial to the interests of the revenue. In present case, the AO made inadequate inquiries, during the proceedings; the AO could not provide any documentary evidence that formed the basis for reopening the assessment. This lack of evidence supports the conclusion that the Learned PCIT's action of setting aside the order of AO and directing him to pass a fresh order is unwarranted. The order passed by the Learned PCIT under Section 263 is set aside. The appeal of the Assessee is partly allowed.
Tags : Assessment Review Jurisdiction
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