9 December 2019


Supreme Court

State of Odisha and Ors. Vs. Manju Naik




Minimum service stipulated in Rules cannot be ignored while considering claim for invalid pension

Present appeal arises out of the judgment whereunder the High Court has dismissed the Appellants' challenge to the order of the Odisha Administrative Tribunal under which the authorities were directed to consider sanction of invalid pension in favour of late Sagar Naik (husband of the Respondent) and thereafter settle family pension in favour of the Applicant, under the provisions of the Orissa Civil Services (Pension) Rules - 1992 ("the Pension Rules").

The issue to be considered here is whether the minimum qualifying service prescribed under the Pension Rules can be ignored for the purpose of consideration of invalid pension under Rule 39 of the Pension Rules. As a corollary, whether the Tribunal or the High Court erred in directing invalid pension for a government employee who did not have the qualifying service, prescribed under the Pension Rules.

The Respondent's husband was retired on the ground of mental infirmity and hence, the service gratuity was paid and the widow had received the same, without any demur. She never raised any claim for invalid pension either at the time of retirement or even when she approached the Tribunal i.e. 14 years later in the year 2010. Nevertheless, the Tribunal went beyond the prayers in the Original Application (O.A.) and ordered for invalid pension for late Sagar Naik and then following his death, ordered for family pension for the widow.

An employee becomes entitled to pension by stint of his long service for the employer and, therefore, it should be seen as a reward for toiling hard and long for the employer. The Pension Rules provide for a qualifying service of 10 years for such entitlement. A particular provision of the statute should be construed with reference to other provisions of the same statute so as to construe the enactment as a whole. The provision of a Rule cannot be used to defeat another Rule unless it is impossible to effect reconciliation between them. Pension as already stated is earned by stint of continuity and longevity of service and minimum qualifying service should therefore be understood as the requirement for invalid pension as well.

The condition of qualifying service prescribed in the Pension Rules must be satisfied to become eligible for invalid pension and the arguments made to the contrary that invalid pension can be claimed under Rule 39 without satisfying the stipulated qualifying service mentioned in the same Rules, do not appeal to present Court. The Respondent's husband who had served for lesser years then the 10 years qualifying service, was found entitled by his employers to service gratuity only, because of his premature retirement on the ground of mental incapacitation. The dues toward service gratuity were paid accordingly. The Pension Rules definitely envisaged that there could be a situation where an employee may not be eligible for pension benefits for not satisfying the prescribed qualifying service of 10 years.

In a case like present one, the need for compassion and the compliance of the norms has to be balanced. The allowable gratuity benefits were granted on account of the Respondent's husband and after he died, the widow was appointed in a government job under the Rehabilitation Assistance Scheme. Thus, the needed means of sustenance was provided to the deceased's family.

The Respondent's husband had not served for ten years and was therefore, he disentitled for regular pension, he cannot also be held entitled to invalid pension. The different provisions of the Pension Rules cannot be read in isolation and must be construed harmoniously and the requirement of qualifying service cannot be said to be irrelevant for claiming different service benefits under the same Rules. Here, the employee did not satisfy the requirement of qualifying service and therefore the invalid pension could not have been ordered for him, under Rule 39 of the Pension Rules.

The Respondent never prayed for invalid pension for her husband in her O.A. and yet the Tribunal as well as the High Court granted her the unclaimed relief. Such additional munificence, in addition to the job provided to the first Respondent under the Rehabilitation Assistance Scheme for the sustenance of the deceased's family, was unwarranted and the impugned order cannot be sustained. The impugned orders of Tribunal and the High Court are set aside. Appeal allowed.

Tags : Qualifying service Pension Entitlement

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Supreme Court

The Maharashtra State Co-operative Bank Ltd. Vs. Babulal Lade and Ors.




Only expressly created statutory first charges under Central and State laws can take precedence over claims of secured creditors

Present appeal arises out of judgment passed by High Court. Vide the impugned judgment, the High Court has directed the issuance of a recovery certificate against the Appellant herein, thereby modifying the order passed by the Industrial Court, Maharashtra. Learned Senior Counsel for the Appellant argued that, the High Court erred in applying Section 529A of the Companies Act, 1956 as Section 167 of the Societies Act, 1960 specifically bars the application of the Companies Act to co-operative societies, as is the case with the Karkhana in present case.

The issue that arises for consideration in this appeal is whether, in the facts of present case, employees' dues can take precedence over the claim of the secured creditor in respect of the proceeds from sale of secured assets of the Karkhana under the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002. (SARFAESI Act).

The recovery certificate issued under Section 50 of the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act) only makes employees' dues recoverable as arrears of land revenue. Thus, it is clear that such employees' dues would fall under the category of claims captured by Section 169(2), and can only take priority over unsecured claims.

Further, as has been held by this Court in Central Bank of India v. State of Kerala, only expressly created statutory first charges under Central and State laws can take precedence over the claims of secured creditors under the SARFAESI Act. It is not enough to merely provide for recovery of dues as arrears of land revenue. Given that Section 50 of the MRTU & PULP Act falls short of expressly making the employees' dues a 'first charge', it cannot be said that such dues have priority over the claims of the Appellant-Bank, which is a secured creditor. Thus, under the scheme of the Land Revenue Code and the MRTU & PULP Act, the employees' dues cannot claim priority over the claim of the Appellant-Bank.

On facts, in terms of Section 13(7) of the SARFAESI Act, the distribution of money received by the Appellant-Bank should be done as per the sale contract with Respondent No. 5. The Appellant-Bank is liable to satisfy the employees' dues as per its undertaking in the sale letter dated 08.03.2010. However, in view of the fact that all other liabilities, including statutory liabilities were agreed to be borne by the subsequent purchaser, statutory liabilities in respect of employees, such as provident fund, gratuity, bonus etc., would have to be borne by Respondent No. 5 herein. A subsequent attempt by the Appellant-Bank to interpret the sale contract in a manner that reduces the scope of its liability to provident fund dues cannot be given effect.

Section 529A of the Companies Act, which gives workers' dues a priority over all other debts, cannot be applied to the instant case, in view of Section 167 of the Societies Act. Merely by virtue of being recoverable as arrears of land revenue, the employees' dues, in respect of which a recovery certificate had been issued by the Industrial Court, cannot be treated as a paramount charge in terms of Section 169(1) of the Land Revenue Code, 1966. Instead, under 169(2) of the Land Revenue Code, 1966, they would take precedence only over unsecured claims.

At the same time, the Appellant-Bank does not enjoy any paramount charge over the sale proceeds either. Instead, as per Section 13(7) of the SARFAESI Act, the sale letter dated 8th March, 2010 and the sale certificate dated 14th September, 2010 constitute a contract which displaces the order of distribution stipulated under the said provision.

The cumulative effect of documents is that, the Appellant-Bank must pay the employees' dues out of the sale proceeds from the auctioned property. To this extent, the recovery certificate issued by the Industrial Court may be executed against the Appellant. Further, given the significant delay in payment of the salaries to the employees, such recovery shall be made by the Collector within a period of six months. All other dues in respect of the secured property, including any unpaid statutory dues in relation to employees (provident fund, gratuity, bonus, etc.) shall be paid by Respondent No. 5 within a period of six months. The instant appeal is disposed of accordingly.


Central Bank of India v. State of Kerala, MANU/SC/0306/2009

Tags : Sale Secured assets Proceeds

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Supreme Court

The Great Eastern Shipping Co. Ltd. Vs. State of Karnataka and Ors.



Sales Tax/VAT

A tax on sale or purchase of goods includes a tax for transfer of right to use goods

The question involved in the appeal is whether it is open to the State of Karnataka to levy Sales Tax in view of the Time Charter Agreement dated 8th January, 1998 and whether it amounts to transfer of the right to use goods within the meaning of Section 5C of the Karnataka Sales Tax Act, 1957 ("the KST Act") read with Article 366(29A) (d) of the Constitution of India, 1950.

The Appellant-The Great Eastern Shipping Co. Ltd. filed a writ petition questioning the competence of the State Government to impose a sales tax in respect of the goods which are used within the territorial waters of India. The Appellant owns a tug (towing vessel, namely "Kumari Tarini"). The company entered into a Charter Party Agreement with New Mangalore Port Trust on 8th January, 1998. It agreed to make available the services of tug, for the purposes provided in the agreement along with the master and other personnel of the company to the Port Trust for six months.

The Assistant Commissioner of Income Tax vide notification directed the company to register itself as a dealer under the provisions of the KST Act on the ground that, the agreement attracted tax under Section 5C thereof. The company in the reply repudiated the claim on the ground that, there was no transfer of right to use the goods given by the company to the Port Trust as the possession and custody of the tug continued with it.

The company filed a writ petition on the ground that, the KST Act does not extend to territorial waters of India situated adjacent to the landmass of the State of Karnataka. Thus, the State is not authorised to exact any tax on the hire charges received from the Port Trust. The learned Single Judge dismissed the writ petition, aggrieved thereby the company preferred a writ appeal. The same has also been dismissed; hence, the appeal has been filed. A Division Bench of the High Court of Karnataka has rejected the submission raised by the Appellant that State of Karnataka has no power over the territorial waters.

A tax on the sale or purchase of goods includes a tax for transfer of right to use goods as that is deemed to be a sale. The question that arises for consideration is whether there is a transfer of the right to use the vessel. It has to be considered in view of the charter agreement entered into between the company and the Port Trust. The tender documents pursuant to which agreement has been entered into contains the conditions and instructions to tenderers. The pre-qualification criteria provide that, the tenderer has to submit the documents regarding ownership or possession of tug on bareboat/committed demise charter hire of tugs.

To constitute a transaction for the transfer of right to use of goods, essential is, goods must be available for delivery. In the instant case, the vessel was available for delivery and in fact, had been delivered. There is no dispute as to the vessel and the charterer has a legal right to use the goods, and the permission/licence has been made available to the charterer to the exclusion of the contractor. Thus, there is complete transfer of the right to use. Thus in view of the provisions inserted in Article 366(29A) (d), Section 5C, and definition of 'sale' in Section 2 of the KST Act, there is no room for doubt that there is a transfer of right to use the vessel.

The Charter Party Agreement qualifies the test laid down by this Court. Applying the substance of the contract and the nominal nature test, the vessel was available, when the agreement for the right to use the goods has taken place. The vessel was available at the time of transfer, deliverable, and delivered and was at the exclusive disposal for six months round the clock with the charterer port trust. The use of license and permission was at the disposal of the charterer and to the exclusion of the contractor/transferor. It was not open to the contractor to permit the use of the vessel by any other person for any other purpose.

Present Court in the 20th Century Finance Corporation Ltd. & Anr. v. State of Maharashtra , has considered for Article 366(29A)(d) of Constitution, the taxable event is the transfer of the right to use the goods regardless of when or whether the goods are delivered for use. The deemed sale takes place at the site where the right to use the goods is transferred. It is of no relevance where the goods are delivered under the right to transfer to use them. The situs of the agreement is relevant, which is admittedly within the territory of Karnataka. The situs of the deemed sale is in Mangalore, and the decision of a Constitution Bench of this Court in the 20th Century Finance Corporation Ltd. & Anr. v. State of Maharashtra is binding and effectively repels the submission to the contrary.

Charter party has been entered into admittedly in Mangalore, and the ship is used at the New Mangalore Port by the New Mangalore Port Trust. Though vessel was used in the territorial waters, makes no difference with respect to exigibility of sales-tax under the provisions of the KST Act in view of the decision of this Court in 20th Century.

The Charter Party Agreement tantamount to a deemed sale as there was a transfer of right to use the vessel as provided in Article 366(29A)(d) read with Section 5C or Section 2(j) of the Karnataka Sales Tax Act. Thus, the transaction is liable to be taxed by the concerned authorities in the State of Karnataka. Appeal dismissed.


20th Century Finance Corporation Ltd. & Anr. v. State of Maharashtra MANU/SC/0412/2000

Tags : Agreement Transaction Tax Levy

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Supreme Court

Embassy Property Developments Pvt. Ltd. Vs. State of Karnataka and Ors.




High Court can intervene if NCLT passes order in matter relating to Public Law

Two seminal questions of importance raised in present matter is whether the High Court ought to interfere, under Article 226/227 of the Constitution of India, 1950 with an Order passed by the National Company Law Tribunal in a proceeding under the Insolvency and Bankruptcy Code, 2016, ignoring the availability of a statutory remedy of appeal to the National Company Law Appellate Tribunal and if so, under what circumstances; and whether questions of fraud can be inquired into by the NCLT/NCLAT in the proceedings initiated under the Insolvency and Bankruptcy Code, 2016 (IBC).

There are three appeals, one filed by the Resolution Applicant, the second filed by the Corporate Debtor through the Resolution Professional and the third filed by the Committee of Creditors, all of which challenge an Interim Order passed by the Division Bench of High Court of Karnataka in a writ petition, staying the operation of a direction contained in the order of the NCLT, on a Miscellaneous Application filed by the Resolution Professional. Learned Senior Counsel appearing on behalf of the Resolution Applicant assailed the impugned Order on the ground that, when an efficacious alternative remedy is available under Section 61 of IBC, 2016, the High Court of Karnataka ought not to have entertained a writ petition and that too against an Order passed by the Chennai Bench of NCLT.

The decision of the Government of Karnataka to refuse the benefit of deemed extension of lease, is in the public law domain and hence, the correctness of the said decision can be called into question only in a superior Court which is vested with the power of judicial review over administrative action. The NCLT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior Court having the power of judicial review over administrative action.

The NCLT is not even a Civil Court, which has jurisdiction by virtue of Section 9 of the Code of Civil Procedure, 1908 (CPC) to try all suits of a civil nature excepting suits, of which their cognizance is either expressly or impliedly barred. Therefore, NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which, it is called upon to administer.

From a combined reading of Sub-section (4) and Sub-section (2) of Section 60 with Section 179 of IBC, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the government under the provisions of Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act, 1957) and the Rules issued there-under. The only provision which can probably throw light on this question would be Sub-section (5) of Section 60 of IBC, as it speaks about the jurisdiction of the NCLT. Clause (c) of Sub-section (5) of Section 60 of IBC is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. But a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase "arising out of or in relation to the insolvency resolution" appearing in Clause (c) of Sub-section (5) of IBC.

Wherever the corporate debtor has to exercise rights in judicial, quasi-judicial proceedings, the resolution professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5).

Therefore, in the light of the statutory scheme as culled out from various provisions of the IBC, 2016 it is clear that wherever the corporate debtor has to exercise a right that falls outside the purview of the IBC, 2016 especially in the realm of the public law, they cannot, through the resolution professional, take a bypass and go before NCLT for the enforcement of such a right.

NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplemental Lease Deeds for the extension of the mining lease. Since, NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice.

Though NCLT and NCLAT would have jurisdiction to enquire into questions of fraud, they would not have jurisdiction to adjudicate upon disputes such as those arising under MMDR Act, 1957 and the Rules issued thereunder, especially when the disputes revolve around decisions of statutory or quasi-judicial authorities, which can be corrected only by way of judicial review of administrative action. Hence, the High Court was justified in entertaining the writ petition and there is no reason to interfere with the decision of the High Court. Appeals dismissed.

Tags : NCLT Jurisdiction Public law

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Supreme Court

Keystone Realtors Pvt. Ltd. Vs. Anil V. Tharthare and Ors.




Fresh environmental clearance necessary for expansion beyond limits approved by Prior EC

The present Civil Appeal arises from an order of the Principal Bench of the National Green Tribunal. In its order, the NGT held that, the increase in the total construction area of the Appellant's project was an "expansion" under a Notification dated 14 September 2006 of the Ministry of Environment and Forests. The NGT found that, the Appellant had undertaken an "expansion" as set out in Paragraph 2 of the EIA Notification without complying with the regulatory procedure prescribed. The Appellant was directed to deposit an amount of Rupees one crore with the Central Pollution Control Board. Noting that the construction at the project site had been completed, the NGT appointed a five-member expert committee to study the impact of the Appellant's expanded project and to suggest remedial measures.

The issue before this Court is whether the 'amended' EC dated 13 March 2014 granted by the State Environment Impact Assessment Authority (SEIAA) without following the procedure stipulated in paragraph 7(ii) of the EIA Notification is valid.

In a case where the text of the provisions requires interpretation, present Court must adopt an interpretation which is in consonance with the object and purpose of the legislation or delegated legislation as a whole. The EIA Notification was adopted with the intention of restricting new projects and the expansion of new projects until their environmental impact could be evaluated and understood. It cannot be disputed that as the size of the project increases, so does the magnitude of the project's environmental impact. This Court cannot adopt an interpretation of the EIA Notification which would permit, incrementally or otherwise, project proponents to increase the construction area of a project without any oversight from the Expert Appraisal Committee or the SEAC, as applicable.

The procedure set out under paragraph 7(ii) of the EIA Notification exists to ensure that where a project is expanded in size, the environmental impact on the surrounding area is evaluated holistically considering all the relevant factors including air and water availability and pollution, management of solid and wet waste and the urban carrying capacity of the area. This was not done in the case of the Appellant's project. It was not open to the third Respondent to grant an 'amendment' to the EC without following the procedure set out in paragraph 7(ii) of the EIA Notification.

As on the date of the impugned order, construction at the project site had already been completed. A core tenet underlying the entire scheme of the EIA Notification is that construction should not be executed until ample scientific evidence has been compiled so as to understand the true environmental impact of a project. By completing the construction of the project, the Appellant denied the third and fourth Respondents the ability to evaluate the environmental impact and suggest methods to mitigate any environmental damage. At this stage, only remedial measures may be taken. The NGT has already directed the Appellant to deposit Rupees one crore and has set up an expert committee to evaluate the impact of the Appellant's project and suggest remedial measures.

In view of circumstances, the directions of the NGT are upheld and the committee is directed to continue its evaluation of the Appellant's project so as to bring its environmental impact as close as possible to that contemplated in the EC dated 2 May 2013 and also suggest the compensatory exaction to be imposed on the Appellant. The appeal is dismissed.

Tags : Environmental impact Regulatory procedure Compliance

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High Court of Himachal Pradesh

Vipin Kumar and Ors. Vs. Kiran Bala and Ors.




High Court has inherent power to quash criminal proceedings even in the cases which are not compoundable but where parties have settled the matter between themselves

By way of present petitions filed under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) a prayer has been made on behalf of the Petitioner(s), for quashing of private complaint pending before the learned Additional Chief Judicial Magistrate under Sections 323, 149, 341, 354, 380, 452, 509 and 506 read with Section 34 of Indian Penal Code, 1860 (IPC) and FIR under Sections 341, 323, 504 and 34 of IPC, registered with Police Station as well as consequent proceedings pending before the court below, on the basis of compromise/amicable settlement arrived inter-se parties.

Since the petitions have been filed under Section 482 CrPC, this Court deems it fit to consider the present petitions in the light of the judgment passed by Hon'ble Apex Court in Narinder Singh and others versus State of Punjab and another, whereby Hon'ble Apex Court has formulated guidelines for accepting the settlement and quashing the proceedings or refusing to accept the settlement with direction to continue with the criminal proceedings. Hon'ble Apex Court has returned the findings that power conferred under Section 482 of the CrPC is to be distinguished from the power which lies in the Court to compound the offences under section 320 of the CrPC. No doubt, under section 482 of the CrPC, the High Court has inherent power to quash the criminal proceedings even in those cases which are not compoundable, where the parties have settled the matter between themselves. However, this power is to be exercised sparingly and with great caution.

Hon'ble Apex Court has though held that, heinous and serious offences of mental depravity, murder, rape, dacoity etc. cannot appropriately be quashed though the victim or the family of the victim have settled the dispute, but it has also observed that while exercising its powers, High Court is to examine as to whether the possibility of conviction is remote and bleak and continuation of criminal cases would put the accused to great oppression and prejudice and extreme injustice would be caused to him by not quashing the criminal cases. Hon'ble Apex Court has further held that, Court while exercising power under Section 482 CrPC can also be swayed by the fact that settlement between the parties is going to result in harmony between them, which may improve their future relationship.

Hon'ble Apex Court in its judgment rendered in State of Tamil Nadu v R Vasanthi Stanley, has reiterated that Section 482 of CrPC preserves the inherent powers of the High Court to prevent an abuse of the process of any court or to secure the ends of justice and has held that the power to quash under Section 482 of CrPC is attracted, even if the offence is non-compoundable. In the aforesaid judgment Hon'ble Apex Court has held that while forming an opinion whether a criminal proceedings or complaint should be quashed in exercise of its jurisdiction under Section 482 of CrPC, the High Court must evaluate whether the ends of justice would justify the exercise of the inherent power.

In view of the averments contained in the petition as well as the submissions made by the learned counsel for the parties that, the matter has been compromised. In view of the well settled proposition of law as well as the compromise being genuine, complaint, pending before the learned Additional Chief Judicial Magistrate as well as consequent proceedings pending before the court below are ordered to be quashed and set-aside. The present petitions are allowed.


Narinder Singh and others versus State of Punjab and another MANU/SC/0235/2014
, State of Tamil Nadu v R Vasanthi Stanley MANU/SC/1028/2015

Tags : Complaint Quashing of Settlement Parties

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