23 November 2020


Supreme Court

Venkatesan Balasubramaniyan vs. The Intelligence Officer,D.R.I. Bangalore




Default bail granted erroneously can be cancelled by high court under Section 439(2) of Cr.PC

Present appeals have been filed against the common judgment of the High Court in Criminal Petition filed by the Respondent before the High Court. By the impugned judgment, the petition filed by Respondent under Section 439(2) of Code of Criminal Procedure, 1973 (CrPC) has been allowed cancelling the bail granted to the Appellants by Metropolitan Sessions Judge.

The Appellants’ car by which they were travelling from Omerga to Hyderabad was intercepted by the D.R.I. officials and from the possession of the Appellants 45.874 Kgs of narcotic substance was recovered. Complaint under Section 36A(1)(d) of The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) for offences under Section 8(c) punishable under Section 21(c), 22(c), 23(c), 28 and 29 read with Section 38 of the NDPS Act has been filed by Intelligence Officer, D.R.I. in Omerga Court.

It is true that, the bail granted under Section 167(2) of CrPC could have been cancelled under Section 439(2) of CrPC. The provisions of Section 439(2) CrPC specifically empower the High Court or the Court of Session to cancel such bail.

It is true that two offences, one at Hyderabad being at the instance of D.R.I., Hyderabad was registered and another case by the D.R.I., Bangalore. A combined complaint taking care of both the offences was filed before the Special Court, Omerga wherein offences committed by the accused were also inquired and dealt with. There is ample material in the complaint that, the transportation of narcotic substance started from Omerga, Maharashtra and was being allegedly to be taken to Chennai and intercepted at Hyderabad. The complaint, which has been brought on the record gives the detailed facts including the journey and the interception of Appellants at Hyderabad. The combined complaint having been filed on 6th July, 2018, i.e., well within 180 days, the High Court did not commit any error in cancelling the default bail granted to the Appellants.

There is no ground for interfering with the impugned judgment of the High Court. Regular bail application under Section 439 of CrPC was filed before the Omerga Court by the Appellants, which was withdrawn on 25th September, 2018, present Court is of the view that, it is open for the Appellants to file regular bail application before Omerga Court under Section 439 of CrPC afresh. Appeals dismissed.

Tags : Bail Cancellation Legality

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High Court of Delhi

Kirti Nagpal vs Rohit Girdhar




False, baseless, scandalous, malicious and unproven allegations made in the written statement may amount to cruelty

By way of the present appeal, the Appellant-wife has impugned the judgment passed by the learned Principal Judge, Family Courts, whereby the Court, while rejecting the relief sought under Section 12(1)(a) and (c), has allowed the petition of the Respondent by granting divorce under Section 13(1)(ia), of the Hindu Marriage Act, 1955 ('HMA').

It is true that, cruelty has not been defined in the HMA. It can be physical or mental. It is primarily contextual, pertaining to human behaviour or conduct with respect to matrimonial duties and obligations. It is therefore, essential to see whether the conduct of the party is of such a nature, that a reasonable person would neither tolerate the same, nor be reasonably expected to live with the other party.

It is now no longer res integra that false, baseless, scandalous, malicious and unproven allegations made in the written statement may amount to cruelty. In the present case, the allegations in the Written Statement are grave and serious accusations, which are likely to impact Respondent's self-image and adversely affected his mental well-being. Thus, there is no infirmity in the findings and observations of the trial Court that, the allegation of the Appellant in the Written Statement with respect to the impotency clearly falls within the concept of cruelty as defined under law.

Present Court do not agree with the Appellant that, cruelty in the present case was not a sustained or severe one. The Supreme Court has elaborately discussed the concept of mental cruelty in Samar Ghosh v. Jaya Ghosh. Indeed, mental cruelty is a state of mind and what might be cruelty in one case may not be so in another case, as observed by the Trial Court. The Court has carefully examined the facts and evidence and observed that the allegations are scandalous and malicious. Appellant persistently humiliated the Respondent causing him mental agony, pain and suffering. The cruelty in the instant case is of enduring and profound nature. Thus, notwithstanding the fact that there is no allegation of cruelty in the original petition, the Trial Court was justified to conclude that, it was of grave nature that caused lasting disruption in the relationship between the parties. The Appellant's conduct of making unfounded allegations has continued right up to the appellate stage. It is also abundantly clear that due to the mental pain, agony and suffering caused by the false accusations, the Respondent cannot be asked to put up with the conduct of the Appellant and to continue to live with her.

Present Court also do not find any infirmity in the approach of the Learned Trial Court by placing reliance upon the judgment in Samar Ghosh v. Jaya Ghosh, on the aspect of irretrievable breakdown of marriage. Undisputedly, the Appellant and the Respondent have been separated for more than eight years and since the separation has continued for a sufficient length of time, it can be presumed that, the marriage has irretrievably broken down. There has been a prolonged and continuous separation, and the matrimonial bond is beyond repair. There is no merit in the present appeal. Appeal dismissed.

Tags : Cruelty Divorce Grant

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Supreme Court

Kaledonia Jute And Fibres Pvt. Ltd. Vs. Axis Nirman And Industries Ltd. & Ors.




Any creditor of a company can seek transfer of winding up proceeding pending before a High Court to a National Company Law Tribunal

A financial creditor has come up with present appeal on being aggrieved by an order passed by the Company Court (High Court of Allahabad), refusing to transfer the winding up petition pending therein, to the National Company Law Tribunal (NCLT). The main issues that arise for consideration in present appeal are: (i) what are the circumstances under which a winding up proceeding pending on the file of a High Court could be transferred to the NCLT and (ii) at whose instance, such transfer could be ordered.

Girdhar Trading Co., the 2nd Respondent herein, filed a petition in Company Petition before the High Court of Allahabad under Section 433 of the Companies Act, 1956, for the winding up of the first Respondent Company, on the ground that the Company was unable to pay its debts. The Company Court ordered notice to the 1st Respondent herein, but the 1st Respondent failed to appear before the Company Court. Therefore, by an order, the Company Court ordered the admission of the Company Petition and also directed publication of the advertisement of the petition in accordance with Rule 24 of the Companies (Court) Rules, 1959.

The Company Court passed an order on 22nd August, 2016 keeping the winding up order dated 10th March, 2016 in abeyance. However, the Company Court directed the Official Liquidator to continue to be in custody of the assets of the Company. While things stood thus, the Appellant herein, claiming to be a creditor of the first Respondent herein, moved an application before the NCLT, Allahabad under Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘IBC, 2016’). The claim of the Appellant herein before the NCLT was that, the 1st Respondent was due and liable to pay a sum of Rs.32 lakhs and that despite repeated demands, the 1st Respondent failed to pay the said amount. Thereafter, the Appellant moved an application in Civil Miscellaneous Application before the Company Court (High Court) seeking a transfer of the winding up petition to the NCLT, Allahabad. This application was rejected by the Company Court by a cryptic order on the sole ground that, the requirement of Rule 24 had already been complied with and that a winding up order had already been passed.

The Companies Act, 1956 does not define the expression “party”. The Companies (Court) Rules, 1959 also does not define the expression “party”. The Companies Act 2013 does not define the expression “party”. The Companies (Transfer of pending proceedings) Rules, 2016 also does not define the expression “party”. Even the IBC, 2016 does not define the expression “party”. But there are certain clues inherently available in the Companies Act, 1956, to indicate the persons who may come within the meaning of the expression “party to the proceedings”.

The proceedings for winding up of a company are proceedings in rem to which the entire body of creditors is a party. The proceeding might have been initiated by one or more creditors, but by a deeming fiction, the petition is treated as a joint petition. The official liquidator acts for and on behalf of the entire body of creditors. Therefore, the word “party” appearing in the 5th proviso to Clause (c) of Sub-section (1) of Section 434 of Act cannot be construed to mean only the single petitioning creditor or the company or the official liquidator. The words “party or parties” appearing in the 5th proviso to Clause (c) of Sub¬section (1) of Section 434 would take within its fold any creditor of the company in liquidation.

If any creditor is aggrieved by any decision of the official liquidator, he is entitled under the 1956 Act to challenge the same before the Company Court. Once he does that, he becomes a party to the proceeding, even by the plain language of the section.

As observed by this Court in Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd., the object of IBC will be stultified, if parallel proceedings are allowed to go on in different fora. If the Allahabad High Court is allowed to proceed with the winding up and NCLT is allowed to proceed with an enquiry into the application under Section 7 of IBC, the entire object of IBC will be thrown to the winds.

The Petitioner herein will come within the definition of the expression “party” appearing in the 5th proviso to Clause (c) of Sub-section (1) of Section 434 of the Companies Act, 2013 and that, the Petitioner is entitled to seek a transfer of the pending winding up proceedings against the first Respondent, to the NCLT. The restriction under Rules 5 and 6 of the Companies (Transfer of Pending Proceedings) Rules, 2016 relating to the stage at which a transfer could be ordered, has no application to the case of a transfer covered by the 5th proviso to clause (c) of sub-section (1) of Section 434 of Act. Therefore, the impugned order of the High court rejecting the petition for transfer on the basis of Rule 26 of the Companies (Court) Rules, 1959 is flawed.

The impugned order is set aside and the proceedings for winding up pending before the Company Court (Allahabad High Court) against the first Respondent herein, is ordered to be transferred to the NCLT, to be taken up along with the application of the Appellant under Section 7 of the IBC. Appeal allowed.


Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. MANU/SC/0080/2019

Tags : Pending proceedings Transfer NCLT

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High Court of Delhi

Vikas Bajaj and Anr. Vs. Kanika Investments Ltd.




A common order for summoning in different cases cannot be passed, when parties are unrelated

Vide the present petition; the Petitioners have sought quashing of the summoning order and all subsequent proceedings qua complaint case under Section 138 of the Negotiable Instruments Act, 1881, pending before the learned Trial Court.

It has been submitted on behalf of the Petitioner that, the complaint filed by the Respondent bearing Complaint Case No. 1565/19 was under Section 25(1) read with Section 26 of the Payment & Systems Act and Section 138 read with Section 148 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881 and not simplicitor under the Negotiable Instruments Act, 1881 and that a common order could not have been passed by the learned Trial Court in Complaint Case No. 1566/19, 1567/19 as well as in the Complaint Case No. 1565/19.

The present petition has been filed assailing the impugned order. It was submitted on behalf of the Petitioner that, the prescribed procedure as provided under the Payment & Settlement Systems Act, 2007, for determination of the aspect of liabilities for alleged commission of offences is provided thereunder and that the offences mentioned under the said enactment are not completely in pari materia with the provisions under the Negotiable Instruments Act, 1881.

In the circumstances of the instant case as it has been brought forth clearly through the record that, even the parties to Complaint Case No. 1566/2019, 1565/2019 (out of which the impugned order arises) and Complaint Case No. 1567/19, do not relate to the same parties and apparently no such common order could have been passed in relation to Complaint Case No. 1565/19 with other cases.

In the circumstances, as no common order could have been passed by the learned Trial Court in the circumstances, where the parties to the case also differ and where it was incumbent on the learned Trial Court to ascertain the applicability of the provisions of Payment & Settlements Systems Act, 2007, to the averments made to the complaint in Complaint Case No. 1565/19, the impugned order is thus set aside with the matter being remanded back to the learned Trial Court to consider the aspect of summoning.

Tags : Summons Common order Validity

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Income Tax Appellate Tribunal

Unity Industries, Bangalore vs. Income Tax Officer



Direct Taxation

When assessee proves business/commercial expediency, disallowance under Section 40A(3) of IT Act is unwarranted

The assessee is a partnership firm engaged in the business of manufacturing and fabrication of machine components. The assessment under Section 143(3) of Income Tax Act, 1961 (IT Act) was completed vide order. Subsequently, the Assessing Officer (AO) issued notice under Section 154 of the IT Act for the reason that, the assessee had made cash transaction amounting to Rs.1,25,738 during the relevant assessment year in contravention of provisions of Section 40A(3) of the IT Act. The assessee submitted objections vide letter to the notice issued under Section 154 of the IT Act. It was submitted that, the assessee firm commenced its operation in August 2013 and the bank account of the assessee firm was not active. It was stated that, the assessee had some business orders in the meanwhile and for purchase of raw material out of commercial expediency had to make cash payments, since the assessee was new in the field. The objections raised by the assessee was rejected and the AO passed an order under Section 154 of the IT Act by adding a sum of Rs.1,25,738 to the total income by invoking the provisions of Section 40A(3) of the IT Act.

Aggrieved by the order passed by the AO under Section 154 of the IT Act, the assessee filed an appeal to the first appellate authority. The CIT(A) confirmed the order of the Assessing Officer passed under Section 154 of the IT Act. Aggrieved by the order of the CIT(A), the assessee has filed present appeal before the Tribunal. The learned Counsel for the assessee submitted that the AO has not doubted the genuineness of the transaction and order passed under Section 154 of IT Act is a mere change of opinion, which is outside the purview of the said section.

The jurisdictional High Court for assessment year 2005-2006 in case of M.K. Agrotech Private Limited v. Addl.CIT had held that, if the assessee proves the genuineness of the business expediency, it can still claim the expenditure, as an allowable deduction. In the instant case, the AO has not doubted the genuineness of the transaction. Therefore, taking proceedings under Section 154 of the IT Act only goes to show that, it is only a mere change of opinion, which is outside the mandate of the said section. The Hon'ble Supreme Court in the case of ITO v. Volkart Brothers held that, a mistake apparent on the record must be an obvious and patent mistake and not something which could be established by a long-drawn process of reasoning on points on which there might conceivably be two opinions. Since the assessee in the given facts, had proved that, there is commercial / business expediency in making cash purchases, the mistake cannot be stated to be obvious and apparent from record.

In view of Judgment of the Hon'ble jurisdictional High Court in the case of M.K. Agrotech Pvt. Ltd. v. Addl.CIT and the order of Jaipur ITAT in the case of A. Daga Royal Arts v. ITO, present Tribunal observed that, the disallowance under Section 40A(3) of the IT Act, in a proceedings is uncalled for and present Tribunal quash the same. The appeal filed by the assessee is allowed.

Tags : Disallowance Additions Legality

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High Court of Kerala

Manu M. John and Ors. Vs. C.P. Thomas




The question of jurisdiction is a question of law and can be raised at any point of time

The Petitioners seeks to quash Exhibit P-9 order, granting leave to Respondent to amend the plaint. Whether a civil Court can consider an application when its jurisdiction is alleged to be barred by operation of law is the question that is agitated for the second time before present Court. It is submitted that, the original petition be allowed by setting aside Exhibit P-9 order and matter be remitted back to the Trial Court.

The Honourable Supreme Court in R. Rajagopal Reddy (dead) by LRs and others v. Padmini Chandrasekharan (dead) by LRs has held that, the Act will not apply to suits, claims and action to enforce any right in property held benami against person in whose name such property is held, only if such proceeding is initiated prior to the coming into force of the Act i.e., w.e.f. 5th September, 1988, the date on which the prohibition came into operation.

The case set up by the Respondent is that plaint 'B' schedule property was purchased by him in the name of Mary -- his sister as per sale deed in the year 1991, which is after the coming of the Act. The suit was instituted only in 2012. Thus, there is no doubt, if it is established that the transaction falls within the foul of the Act, the jurisdiction of the Trial Court stands barred.

In T.M. Bagasarwalla v. H.R. Industries, the Honourable Supreme Court has held that, when an objection as to jurisdiction of a civil Court is raised to entertain a suit and to pass any interim orders therein, the Court should decide the question of jurisdiction in the first instance at the earliest possible time. In Hiralal Vallabbram v. Sheth Kasturbhai Lalbhai and others, the Honourable Supreme Court has held that, the question of jurisdiction is a question of law and can be raised at any point of time.

This Court had in Exhibit P-8 judgment succinctly directed the Court below to consider the question whether the suit need to be transferred to the Adjudicating Authority. However, the Court by Exhibit P-9 impugned order allowed the application for amendment, by holding that the argument addressed does not have any impact on the amendment.

Exhibit P-9 order is erroneous and unsustainable in law and is liable to be interfered with because when the Petitioners have raised a specific plea that the suit is hit by the prohibitions under Sections 4 and 45 of the Act, the Trial Court ought to have considered the said question as a preliminary issue, as laid down in T.M. Bagasarwalla v. H.R. Industries, before making an endeavor to decide on Exhibit P-5 application. Matter remitted back to the Trial Court for de novo consideration, to decide on the maintainability of the suit in view of Sections 4 and 45 of the Prohibition Of Benami Property Transactions Act, 1988, as contemplated under Order VII Rule 11 (d) of the Code of Civil Procedure, 1908 (CPC) or decide whether the suit has to be transferred in light of Section 65 of the Act, in which case the Trial Court shall try the question as a preliminary issue, as provided under Order XIV Rule 2 (2) of the CPC.


R. Rajagopal Reddy (dead) by LRs and others v. Padmini Chandrasekharan (dead) by LRs [MANU/SC/0061/1996
], Hiralal Vallabbram v. Sheth Kasturbhai Lalbhai and others [MANU/SC/0337/1967
], T.M. Bagasarwalla v. H.R. Industries [(MANU/SC/0280/1997
], Hiralal Vallabbram v. Sheth Kasturbhai Lalbhai and others [MANU/SC/0337/1967

Tags : Amendment Plaint Jurisdiction

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Supreme Court

Umc Technologies Private Ltd. vs Food Corporation Of India




For a valid blacklisting order, show cause notice must clearly mention intention to blacklist the noticee

Present appeal is directed against the order passed by the High Court. By the impugned order, the High Court has dismissed the writ petition and has upheld the validity of the order passed by Respondent no.1, namely Food Corporation of India (‘the Corporation’) through its Deputy General Manager (Personnel), who is Respondent no. 2 herein, to terminate a contract of service with the Appellant and to blacklist the Appellant from participating in any future tenders of the Corporation for a period of 5 years. The sole issue that falls for determination is whether the Corporation was entitled to and justified in blacklisting the appellant for 5 years from participating in its future tenders.

It is the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose right or interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that, before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Assistant Custodian General, Evacuee Property, Lucknow and Anr., has held that, it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard.

Specifically, in the context of blacklisting of a person or an entity by the state or a state corporation, the requirement of a valid, particularized and unambiguous show cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatization that accrues to the person/entity being blacklisted. Not only does blacklisting takes away this privilege, it also tarnishes the blacklisted person’s reputation and brings the person’s character into question. Blacklisting also has long-lasting civil consequences for the future business prospects of the blacklisted person.

A prior show cause notice granting a reasonable opportunity of being heard is an essential element of all administrative decision-making and particularly in decisions pertaining to blacklisting which entail grave consequences for the entity being blacklisted. In these cases, furnishing of a valid show cause notice is critical and a failure to do so would be fatal to any order of blacklisting pursuant thereto.

For a show cause notice to constitute the valid basis of a blacklisting order, such notice must spell out clearly, or its contents be such that it can be clearly inferred therefrom, that there is intention on the part of the issuer of the notice to blacklist the noticee. Such a clear notice is essential for ensuring that the person against whom the penalty of blacklisting is intended to be imposed, has an adequate, informed and meaningful opportunity to show cause against his possible blacklisting. It was incumbent on the part of the Corporation to clarify in the show cause notice that it intended to blacklist the Appellant, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same.

The mere existence of a clause in the Bid Document, which mentions blacklisting as a bar against eligibility, cannot satisfy the mandatory requirement of a clear mention of the proposed action in the show cause notice. The show cause notice does not fulfil the requirements of a valid show cause notice for blacklisting. The order of blacklisting the Appellant clearly traversed beyond the bounds of the show cause notice which is impermissible in law. As a result, the consequent blacklisting order cannot be sustained. The order passed by the High Court is set aside. The Corporation’s order is quashed only so far as it blacklists the appellant from participating in future tenders. Appeal allowed.

Tags : SCN Intention Natural justice

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