Supreme Court

Beli Ram Vs. Rajinder Kumar and Ors.

MANU/SC/0715/2020

23.09.2020

Motor Vehicles

When the driver of a vehicle involved in an accident does not have a valid driving licence, insurance company is not liable to pay compensation

In facts of present case, the first Respondent herein, met with an accident while driving a truck owned by the Appellant, under whom, he was gainfully employed. The consequence for the first Respondent was 20 per cent permanent disability. The first Respondent herein filed a petition under the Workmen's Compensation Act, 1923 ('the Compensation Act') before the Commissioner, seeking compensation of an amount of Rs. 5,00,000, impleading the Appellant and second Respondent herein - the insurance company which had insured the vehicle. These proceedings resulted in an award by the Commissioner granting Rs. 94,464 for the injuries suffered and Rs. 67,313 towards medical expenses of the first Respondent. The compensation amount was mulled on to the second Respondent as insurer, while the interest was directed to be paid by the Appellant herein.

The parties to the proceedings filed appeals aggrieved by different aspects of the award. An intrinsic part of the consideration by the High Court was the issue raised about the validity of the driving licence of the first Respondent at the time of the accident. The driving licence was endorsed by the Superintendent of R & LA Office, Udaipur but the licence expired on 6th September, 1996 and there was no endorsement for renewal thereafter. Thus, the first Respondent was driving the vehicle as the driver of the Appellant herein for almost three years without the licence being renewed.

The aforesaid aspect of the non-validity of the driving licence weighed with the High Court while passing the impugned judgment, absolving the insurance company of any liability and fastening the same upon the Appellant herein on account of there being a material breach of the insurance policy. The sole question of law for consideration in the present appeals is whether in case of a valid driving licence, if the licence has expired, the insured is absolved of its liability.

Once the basic care of verifying the driving licence has to be taken by the employer, though a detailed enquiry may not be necessary, the owner of the vehicle would know the validity of the driving licence as is set out in the licence itself. It cannot be said that, thereafter he can wash his hands off the responsibility of not checking up whether the driver has renewed the licence. The licence in the instant case, has not been renewed for a period of three years and that too in respect of commercial vehicle like a truck. The Appellant showed gross negligence in verifying the same.

The Delhi High Court in Tata AIG General Insurance Co. Ltd. v. Akansha and Ors., found that, the driving licence having expired led to the natural finding that there was no valid driving licence on the date of the accident. The initial onus was discharged by the insurance company in view of the licence not being valid on the date of the accident. The onus, thereafter, shifted to the owner/insured to prove that, he had taken sufficient steps to ensure that there was no breach of the terms and conditions of the insurance policy. Since, no evidence had been led in this behalf, a presumption was drawn that, there was willful and conscious breach of the terms and conditions of the insurance policy.

The Appellant has permitted to let the first Respondent driver drive the truck with an expired licence for almost three years. It is clearly a case of lack of reasonable care to see that the employee gets his licence renewed, further, if the original licence is verified, certainly the employer would know, when the licence expires. And here it was a commercial vehicle being a truck. The Appellant has to, thus, bear responsibility and consequent liability of permitting the driver to drive with an expired licence over a period of three (3) years. Appeals dismissed.

Relevant

Tata AIG General Insurance Co. Ltd. v. Akansha and Ors. MANU/DE/0612/2015

Tags : Accident Compensation Liability

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Income Tax Appellate Tribunal

ACIT, New Delhi vs. Sidhavandan Enterprises

MANU/ID/0785/2020

23.09.2020

Direct Taxation

Burden is upon the Assessee to prove identity of the creditor, creditworthiness of the creditors and genuineness of the transaction

The Assessee is a company and filed return of income showing loss of Rs.35,53,560. The Assessing Officer, (AO) noted that, in assessment year under appeal, the Assessee Company has received an amount of unsecured loan of Rs.2 crores from Varrenyam Securities Pvt. Ltd., The AO noted back ground of the case with regard to bogus accommodation entry provided by various entities controlled by S.K. Jain and V.K. Jain and Investigation conducted by Investigation Wing of the Department. The AO has given an opportunity to the Assessee to prove creditworthiness of the investor and genuineness of the transaction and required the Assessee to produce Director Director of Varrenyam Securities Pvt. Ltd., and C.A. who has arranged the funds in the matter. However, both the above persons were not produced.

The AO after considering the fact that, burden is upon the Assessee to prove the ingredients of Section 68 of the Income Tax Act, 1961 (IT Act) i.e., identity of the creditor, creditworthiness of the of the creditors and genuineness of the transaction, found that assessee failed to prove the same, therefore, addition of Rs.2 crores was made against the Assessee under Section 68 of the IT Act, 1961. The assessee challenged the addition before the Learned Commissioner of Income Tax CIT(A). The learned CIT(A) deleted the addition.

The matter requires reconsideration at the level of the Learned CIT(A). It is well settled Law that, burden is upon the Assessee under Section 68 of the IT Act to prove identity of the creditor, its creditworthiness and genuineness of the transaction in the matter. The AO in the present case directed the Assessee to produce Director of the lender Company and the person who has arranged the amount in question, but, both of them were not produced before AO for examination on behalf of AO. The Learned CIT(A) in his finding has merely referred to the facts noted in the preceding A.Y. 2012-013 with regard to loan transaction between the assessee and the Investor Company. Merely because loan is repaid through banking channel in assessment year by itself may not be a ground to delete the addition because ultimately Assessee shall have to prove the ingredients of Section 68 of the IT Act to the satisfaction of the AO.

According to Section 250(6) of the IT Act, the Learned CIT(A) is required to mention point for determination and reasons for decision in the appellate order while deciding the appeal. The impugned findings of the Ld. CIT(A) however clearly show that, he did not mention the evidence and material on record in the light of finding of fact arrived at by the AO in appellate order. The Learned CIT(A) has also not recorded any finding of fact for deleting the addition in the matter.

Since the Learned CIT(A) has not recorded any finding of fact for assessment year under appeal i.e., A.Y. 2013-2014, therefore, the matter requires reconsideration at the level of the Learned CIT(A). The Order of the Learned CIT(A) is set aside and matter restored to his file with a direction to re-decide the appeal of Assessee in accordance with Law by giving reasons for decision in appellate order.

Tags : Genuineness Transaction Deletion Legality

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High Court of Uttarakhand

Rajendra Singh Bhandari Vs. State of Uttarakhand and Ors.

MANU/UC/0215/2020

21.09.2020

Criminal

At stage of cognizance and summoning, merits of the case cannot be tested and it is impermissible for the Court to enter into the factual arena to adjudge the correctness of the allegations

Present application has been filed under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) to quash the Charge Sheet in Case Crime registered with Police Station and cognizance order passed by the learned Chief Judicial Magistrate, under Section 125 of the Representation of the People Act, 1951 (' the Act, 1951') along with entire proceedings, pending in the court of Chief Judicial Magistrate.

Section 482 of the CrPC envisages three circumstances in which the inherent jurisdiction may be exercised, namely, "to give effect to an order under the Code, or, to prevent abuse of the process of any Court, or, to secure the ends of justice." This inherent jurisdiction though wide should not be capriciously or arbitrarily exercised, but should be exercised in appropriate cases, ex debito justitiae to do real and substantial justice. While exercising jurisdiction under this section, the Court does not function as a Court of Appeal or Revision. Therefore, quashing of charge-sheet or setting aside the cognizance order on the appreciation of evidences is not justified.

In Lee Kun Hee and others vs. State of U.P. and others, the Hon'ble Supreme Court held that, the Court in exercise of its jurisdiction under Section 482 of the CrPC cannot go into the truth or otherwise of the allegations and appreciate evidence, if any, available on record.

In the instant case, cognizance has been taken in the offence punishable under Section 125 of the Act, 1951. It is the fundamental duty of every citizen to promote harmony and the spirit of common brotherhood and fraternity amongst all the people of India transcending religious, linguistic and regional or sectional diversities. For fair and peaceful election, during the election campaign, party or candidate should not indulge in any activity which may create mutual hatred or cause tension between different classes of the citizens of India on ground of religion, race, caste, community or language.

In the present case, the learned Chief Judicial Magistrate took the cognizance after considering the evidences available on the record. It is well settled that at the time of considering of the case for cognizance and summoning, merits of the case cannot be tested and it is wholly impermissible for this Court to enter into the factual arena to adjudge the correctness of the allegations. This Court would not also examine the genuineness of the allegations since this Court does not function as a Court of Appeal or Revision, while exercising its jurisdiction under Section 482 of the CrPC.

In present matter, it cannot be said that, there are no allegations against the applicant. Learned counsel for the applicant could not able to show at this stage that, allegations are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the applicant. The use of expression "promotes or attempts to promote" in Section 125 of the Act, 1951 shows that, there has to be mens rea on the part of the accused to commit the offence of promoting disharmony amongst different religions under Section 125, whereas, the case of the applicant is that this matter is launched by the political opponents. These allegations are required to be tested only at the time of trial. Present Court cannot hold a parallel trial in an application under Section 482 of the of the CrPC.

Therefore, in the light of the facts and circumstances of the present case, the present case does not fall in any category set out in the judgment of State of Haryana and others Vs. Bhajan Lal and others. Accordingly, the prayers for quashing the charge-sheet and setting aside the cognizance order along with entire proceedings are refused. The application, filed under Section 482 of the CrPC, is dismissed.

Relevant

State of Haryana and Ors. vs. Ch. Bhajan Lal and Ors. MANU/SC/0115/1992
, Lee Kun Hee and others vs. State of U.P. and others, MANU/SC/0076/2012

Tags : Cognizance Proceedings Quashing of

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Income Tax Appellate Tribunal

Income-tax Officer vs. Buniyad Developers, New Delhi

MANU/ID/0771/2020

21.09.2020

Direct Taxation

If the Assessee has mistakenly included any amount which is exempted from the payment of Income-tax, Revenue is under obligation to grant the refund of tax paid in excess by him

In facts of present case, the Assessee is a company, deriving income from agricultural activities and earning from investments. For the assessment year 2009-10, they have filed their return of income declaring nil income but paid tax on book profits under Section 115JB of the Income Tax Act, 1961 (IT Act) at Rs.5,73,70,009. The return was processed under Section 143(1) of the IT Act.

Subsequently, during the assessment proceedings relating to assessment year 2010-11, learned Assessing Officer noticed that the Assessee claimed exempt income to the tune of Rs.21,71,74,573 on account of profit on sale of agricultural land and the learned Assessing Officer treated the agricultural land as capital asset under Section 2(14)(iii) of the IT Act and income arising out of transfer of such land under the head 'Long-term Capital gains'. Assessing Officer noticed that in F.Y. 2009-10 also, the lands were sold in part and that there has been no income declared in respect of its profits of Rs.5,58,61,180 earned on sale of land.

The Assessing Officer accordingly issued notice under Section 148 of the Act and after hearing the assessee made an addition of Rs.5,41,38,217 with interest income of Rs.21,90,212. The assessee preferred appeal before the learned Commissioner of Income Tax (CIT(A)) and argued that, income earned from sale of land is exempt under Section 10 of the Act, as the land sold by the assessee was in village Kishora, which is more than 8 Kms. away from the Municipal limits. The assessee further argued that even for the purpose of Section 115JB, the profits arising from sale of agricultural land cannot be added to the book profits under the provisions of Section 115JB(2)(k)(ii) of the IT Act.

The learned CIT(A) found that, since the village where the sold land was located was 8 Kms away from the Municipal limits, the very basis of Assessing Officer for reopening the assessment proceedings for the AY 2009- 10has no locus standi, as the Assessing Officer himself admitted the said fact. He, therefore, allowed the contention of the Assessee on that ground.

Learned CIT(A) further considered the contention of the Assessee that, under the provisions of Section 115JB(2)(k)(ii) of the IT Act, the profits derived from sale of an agricultural land, which is exempt under Section 10 of the IT Act, has to be reduced from the book profits and therefore, the Assessee is entitled to relief even in respect of the amount that was offered to tax. Learned CIT(A) accepted the same and since the addition itself was exempt as the land sold was outside the purview of capital assets defined under Section 2(14) of the Act and exempt under Section 10 of the Act, the same requires to be reduced from the book profits under Section 115JB of the Act. Learned CIT(A), therefore, directed the Assessing Officer to compute the tax in accordance with law by reducing the amount of income to which any of the provisions of Section 10 of the Act applies, if the said amount is credited to the profit and loss account.

The Supreme Court in the case of CIT vs. Shelly Products and Another, held that if the Assessee had, by mistake and inadvertence or on account of ignorance included in his income any amount which is exempt from payment of Income-tax or is not income within the contemplation of law, the Assessee may bring the same to the notice of the Revenue, which if satisfied, may grant the assessee necessary relief and refund the tax paid in excess, if any.

It an admitted fact that, the land that was sold was located in village Kishora, which is more that 8 kms away from municipal limits and the profits earned on sale of such land are exempt under Section 10 of the IT Act. Further, provisions of section 115JB(2)(k)(ii) of IT Act provide that, the amount of income to which any of the provisions of Section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, shall be reduced from computation of book profit, if any such amount is credited to the statement of profit and loss.

In present matter, the Assessee computed the book profits while crediting the sale consideration of agricultural land to the profit and loss account and offered the same to tax. It is a mistake. In view of the decision of Hon'ble Supreme Court in the case of Shelly Products, such a mistake has to be rectified by the Revenue Authorities, when it is brought to their notice and they are satisfied with the genuineness of the claim. Therefore, when the learned CIT(A) is satisfied that, the income which is exempt under Section 10 of the Act is included in the book profit under Section 115JB of IT Act, which should not be done, the learned CIT(A) is justified in directing the learned Assessing Officer to follow the law and to compute the tax in accordance with provisions of Section 115JB of the IT Act by reducing the amount of income to which Section 10 applies, if such amount is credited to the profit and loss account. The action of the learned CIT(A) is perfectly legal and does not suffer any infirmity. The appeal of the Revenue is dismissed.

Tags : Additions Exemption Direction

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Supreme Court

Sagufa Ahmed vs Upper Assam Plywood Products Pvt.

MANU/SC/0697/2020

18.09.2020

Limitation

NCLAT is empowered to condone the delay upto a period of 45 days

The Appellants have come up with the present appeals, challenging an order passed by the National Company Law Appellate Tribunal (‘NCLAT’) dismissing an application for condonation of delay as well as an appeal as time barred. The Appellants claim to hold 24.89% of the shares of a company by name Upper Assam Plywood Products Private Limited, which is the first Respondent herein. The Appellants moved an application before the Guwahati Bench of the National Company Law Tribunal (‘NCLT’) for the winding up of the company. The said petition was dismissed by the NCLT by an order.

The contentions raised by the learned counsel for the Appellants are two¬fold namely (i) that the Appellate Tribunal erred in computing the period of limitation from the date of the order of the NCLT, contrary to Section 421(3) of the Companies Act, 2013, and (ii) that the Appellate Tribunal failed to take note of the lockdown as well as the order passed by this Court on 23rd March, 2020 in Suo Motu Writ Petition, extending the period of limitation for filing any proceeding with effect from 15th March, 2020 until further orders.

Rule 50 of the National Company Law Tribunal Rules, 2016 also mandates the Registry of the NCLT to send a certified copy of the final order to the parties concerned free of cost. Section 421(1) of Act, provides for a remedy of appeal to the Appellate Tribunal as against an order of NCLT. Sub¬-Section (3) of Section 421 of Act, prescribes the period of limitation for filing an appeal and the proviso thereunder confers a limited discretion upon the Appellate Tribunal to condone the delay.

Therefore, it is true, as contended by the Appellants, that the period of limitation of 45 days prescribed in Section 421(3) of Act, would start running only from the date on which a copy of the order of the Tribunal is made available to the person aggrieved. Under Section 420(3) of the Act read with Rule 50, the Appellants were entitled to be furnished with a certified copy of the order free of cost.

From 19th December, 2019, the date on which the counsel for the Appellants received the copy of the order, the Appellants had a period of 45 days to file an appeal. This period expired on 2nd February, 2020. By virtue of the proviso to Section 421(3) of Act, the Appellate Tribunal was empowered to condone the delay upto a period of period of 45 days. This period of 45 days started running from 2nd February, 2020 and it expired even according to the Appellants on 18th March, 2020. The Appellants did not file the appeal on or before 18th March, 2020, but filed it on 20th July, 2020. It is relevant to note that, the lock down was imposed only on 24.03.2020 and there was no impediment for the Appellants to file the appeal on or before 18th March, 2020.

The Appellants cannot take refuge under the order dated 23rd March, 2020. Extension by Order dated 23rd March, 2020 of this Court was only “the period of limitation” and not the period upto which delay can be condoned in exercise of discretion conferred by the statute. The above order passed by this Court was intended to benefit vigilant litigants who were prevented due to the pandemic and the lockdown, from initiating proceedings within the period of limitation prescribed by general or special law. Therefore, the expression “prescribed period” appearing in Section 4 of the Limitation Act, 1963 cannot be construed to mean anything other than the period of limitation. Any period beyond the prescribed period, during which the Court or Tribunal has the discretion to allow a person to institute the proceedings, cannot be taken to be “prescribed period”. Therefore, the Appellants cannot claim the benefit of the order passed by this Court on 23rd March, 2020, for enlarging, even the period up to which delay can be condoned. The second contention is thus, untenable. Appeals dismissed.

Tags : Prescribed period Delay Condonation

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High Court of Delhi

Indoco Remedies Ltd. Vs. Bristol Myers Squibb Holdings Ireland Unlimited Company and Ors.

MANU/DE/1737/2020

18.09.2020

Intellectual Property Rights

Court cannot grant interlocutory injunction, unmindful of the existence of a prima facie case merely on basis of public interest

Present application, preferred by the Appellant praying for permitting the applicant to manufacture and sell its product "APIXABID", a generic product of the formulation "Apixaban", during the COVID-2019 pandemic. Further, prayer is for permission, to the Applicant, to sell, and authorise the sale of, approximately 58,000 strips of APIXABID, stated to have been manufactured by the Applicant, prior to the passing of the judgment, dated 24th December, 2019, by the learned Single Judge.

As on date, the order dated 24th December, 2019, of the learned Single Judge, continues to hold the field. Short of merits, this Court is unaware of any law, which would permit interference, with the said order, or frustrate the operation thereof, by way of any interlocutory directions.

Even if it were to be assumed, that there is a shortage of Apixaban, and that the drug is needed for COVID-2019 treatment, that cannot empower present Court to allow clearing of products which infringe the patent of Bristol Myers and, thereby, allow violation of the injunction granted by the learned Single Judge vide order dated 24th December, 2019, without returning a finding, in the first instance, that the order is prima facie, unsustainable on merits. Grant of interlocutory relief, it is well settled, requires cumulative satisfaction of three indicia of existence of a prima facie case, balance of convenience and irreparable loss to the person seeking interim injunction, were injunction not to be granted.

The Supreme Court, in its decisions in Ramniklal N. Bhutta v. State of Maharashtra and Raunaq International Ltd. v. I.V.R. Construction Ltd. added, as another important criterion, the element of public interest. That, however, does not mean that, merely on supposed public interest, a Court can grant interlocutory injunction, unmindful of the existence of a prima facie case, or the considerations of balance of convenience and irreparable loss. Far less could any such direction be granted where, as on date, the judgment dated 24th December, 2019, of the learned Single Judge, is still in place, merely on the ground of perceived public interest.

Present Court have also perused, minutely, the material placed on record, by the applicant, as demonstrating that public interest lay in allowing the sale of the aforesaid 58,000 strips of APIXABID. Even cumulatively, the material does not disclose any such overwhelming public interest, as would justify the grant of the reliefs prayed in the application.

The perception, on the part of the applicant, that there is a shortage of affordable Apixaban in the market and that, therefore, permission to sell the 58,000 strips of APIXABID, manufactured by it, ought to be granted, is merely a perception, and nothing more. The material on record is hopelessly inadequate to sustain the submission. Application dismissed.

Relevant

Ramniklal N. Bhutta v. State of Maharashtra MANU/SC/0279/1997
and Raunaq International Ltd. v. I.V. R. Construction Ltd. MANU/SC/0770/1998

Tags : Public interest Permission Sale

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