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SUPREME COURT

Criminal Laws

Negotiable Instrument Act, 1881

Aneeta Hada vs. Godfather Travels and Tours Pvt. Ltd. (Decided On: 08.05.2008)

Dishonour of cheque - Whether Company liable to be prosecuted under Section 138 of te Negotiable Instruments Act by virtue of Section 141 of the Act in the absence of prosecution of the person incharge of the affairs or other Directors of the company?

The prosecution of the Company is a sine qua non for prosecution of the other persons who fall within the second and third categories of the candidates, viz., everyone who was in-charge and was responsible for the business of the company and any other person who was a director or managing director or secretary or officer of the company with whose connivance or due to whose neglect the company had committed the offence. However, Honorable Justice V.S. Sirpurkar while giving his dissenting judgment observed that even if the prosecution proceedings against the company were not taken or could not be continued, it is no bar for proceeding against the other persons falling within the purview of sub-sections (1) and (2) of Section 141 of the Act.

Negotiable Instrument Act, 1881

Lalit Kumar Sharma and Anr. v. State of U.P. and Anr. (Decided On: 06.05.2008)

Dishonour of cheque - Second cheque issued in pursuance to compromise arrived at between the parties in lieu of the originally issued cheque returned dishonoured - Whether dishonour of second cheque created new liability

The cheque issued in terms of the compromise does not create a new liability, as the same was not issued towards payment of debt, but was issued as part of a settlement between the parties. To make a person liable under Section 138 of the NI Act the cheque has to be issued in discharge of a liability.

Tax Laws

Income-tax Act, 1961

American Hotel and Lodging Association Educational Institute v. Central Board of Direct Taxes and Ors. (Decided On: 09.05.2008)

Income not included in total income - Income from any university or other educational institution - Scope of enquiry by the Prescribed Authority (PA) under Section 10(23C)(vi) read with the third proviso thereto inserted by Finance Act, 1998

With the insertion of the provisos to Section 10(23C)(vi) the applicant who seeks approval for exemption from including the income in the total income has not only to show that it is an institution existing solely for educational purposes which was also the requirement under Section 10(22) but it has now to obtain initial approval from the PA, in terms of Section 10(23C)(vi) by making an application in the standardized form as mentioned in the first proviso to that section. Third proviso was inserted along with other provisos because there was no monitoring mechanism to check abuse of exemption provision. PA is given vast powers under all the provisos enumerated under Section 10(23C)(vi) and by virtue of third proviso it can ascertain while judging the genuineness of the activities of the applicant institution as to whether the applicant applies its income wholly and exclusively to the objects for which it is constituted/established before giving final approval to the exemption application. Hence, third proviso contains monitoring conditions/requirements like application, accumulation, deployment of income in specified assets whose compliance depends on events that have not taken place on the date of the application for initial approval. In other words it can be considered as monitoring conditions stipulated as conditions by the PA subject to which approval could be granted. And this proviso has to be read in harmony with the other provisos.

Application or accumulation of income in India - Whether the words "in India" should be read into Section 10(23C)(vi) and/or in the third proviso thereto

Impartation of education must be in India if applicant desires exemption under Section 10(23C)(vi) and that excess/deficit of income over expenditure will not decide whether the applicant exists for profit or not. The reason is that the "non-profit" qualification has to be tested against the Indian activities.

Excise

Prachi Industries v.Commissioner of Central Excise, Chandigarh (Decided On: 28.03.2008) - MANU/SC/7410/2008

Manufacture - Whether swaging constitutes manufacture in terms of Section 2(f) of Central Excise Act, 1944

Swaging is a process, which imparts a change of lasting character to the plane MS pipe or tube by use of dies, which exists in the machine. After the process of swaging the identity of the plane MS pipe or tube undergoes a change both in terms of form, shape and user. Therefore, the process of swaging amounts to manufacture under Section 2(f) of the Act.

Commissioner of Central Excise, Chandigarh v. Gurdaspur Distillery Decided On: 05.03.2008 - MANU/SC/7266/2008

Captive consumption - Levy of duty - Whether Methane gas classifiable under Chapter Heading 2711.29 of Central Excise Tariff Act, 1985 is liable to excise duty when consumed captively and not marketed

An article does not become liable to excise duty merely because of its specification in the Schedule to the Central Excise Tariff Act, 1985 unless it is salable and known to the market.

Arbitration LAWS

Arbitration ACT, 1940

Union of India (UOI) and Anr. vs. Raunaq International Ltd. (Decided On: 08.05.2008)

Arbitrability of claim - Whether Court while deciding an application under Section 20 of the Arbitration Act, 1940 can consider the issue as to what is arbitrable and what is not, or judicial officer's role is only ministerial or mechanical in nature i.e. referring the dispute to arbitrator if there is an arbitration agreement and a disputes has arisen out of the contract between the parties

While dealing with a petition under Section 20, the court has to examine: (i) whether there is an arbitration agreement between the parties, (ii) whether the difference which has arisen is one to which the arbitration agreement applies, and (iii) whether there is a cause, shown to be sufficient, to decline an order of reference to the arbitrator. The reference to an arbitrator on a petition filed under Section 20 is not a function to be discharged mechanically or ministerially by the court; it is a consequence of judicial determination. The Court has to apply its mind to the requirements of Section 20 and has to form an opinion, that the difference sought to be referred to arbitral adjudication is one to which the arbitration agreement applies. Hence, an issue as to arbitrability of claim is available for determination at all the three stages viz., while making reference to arbitration, in the course of arbitral proceedings and while making the award a rule of the court. While deciding the application under Section 20 arbitrability of the claim can be decided by the Court.

CONSTITUTIONAL LAWS

Interpretation of Statute

Seema Silk and Sarees and Anr. vs. Directorate of Enforcement and Ors. (Decided On: 12.05.2008)

Constitutionality of 18 (2) and (3) of FERA vis-à-vis validity of the Constitution 39th Amendment - Whether Sections 18(2) and 18(3) of the Act placing the burden of proof upon the accused must be held to be a law having draconian character and should be declared as unconstitutional even though the Act is placed in ninth Schedule and is protected by virtue of Article 31 B - Whether discrimination made between a domestic trader and an exporter in the said provisions is violative of Article 14

In terms of Article 31B, none of the Acts specified in the Ninth Schedule is ultra vires even if it is inconsistent with or takes away or abridges any of the rights conferred by any provisions of Part III of the Constitution of India. Even otherwise the Act could not be held to be unconstitutional under Article 14. A discrimination on the ground of valid classification which answers the test of intelligible differentia does not attract the wrath of Article 14 of the Constitution of India. Hardship, by itself, may not be a ground for holding the said provision to be unconstitutional. Further, a legal provision does not become unconstitutional only because it provides for a reverse burden. The question as regards burden of proof is procedural in nature. The presumption raised against the trader is a rebuttable one. The accused in such an event would be entitled to show that he has not violated the provisions of the Act. Hence, Sections 18(2) and 18(3) of the Act placing the burden of proof upon the accused could not be held to be unconstitutional. A domestic trader and an exporter stand on different footings and such classifications stands the tests of Article 14 and could not be held to be violative.

Interpretation of Statute

P. Venugopal vs. Union of India (UOI) (Decided On: 08.05.2008)

Tenure appointment - Premature termination - Discriminatory legislation - Whether Section 11 (1A) of the All India Institute of Medical Sciences (Amendment) Act, 2007 constitutionally valid

If a person is appointed for tenure, principle of superannuation does not apply. Once a person is appointed to a tenure post, his appointment to the said post begins when he joins and it comes to an end on the completion of tenure unless curtailed on justifiable grounds. The curtailment of the term of five years can only be made for justifiable reasons and compliance with principles of natural justice for premature termination of the term of a Director of AIIMS is squarely applied to the case of the present employee as well and will also apply to any future Director of AIIMS. Thus, there was never any permissibility for any artificial and impermissible classification between the present employee on the one hand and any future Director of AIIMS on the other when it relates to the premature termination of the term of office of the Director. Such an impermissible classification through a one man legislation clearly falls foul of Article 14 of the Constitution being an apparent case of "naked discrimination" and renders the impugned proviso as void, ab initio and unconstitutional. Further, the impugned proviso to Section 11(1A) itself states that it is carrying out premature termination of the tenure of the present employee. Such a premature termination is without following the safeguards of justifiable reasons and notice. Proviso to Section 11A of the AIIMS Act is, therefore, hit by Article 14 of the Constitution and is ultra vires and unconstitutional and accordingly it is struck down.

CIVIL LAWS

Registration Act

K. Raghunandan and Ors. Vs. Ali Hussain Sabir and Ors. (Decided On: 14.05.2008)

Application of Section 17(2)(vi) of the Registration Act, 1908 - Registration of consent terms

If the consent terms create a right for the first time as contra-distinguished from recognition of a right, registration thereof would be required, if the value of the property is Rs. 100/- and upwards. The statute must be construed having regard to the purpose and object thereof. Sub-section (1) of Section 17 of the Act makes registration of the documents compulsory. Sub-section (2) of Section 17 of the Act excludes only the applications of Clauses (b) and (c) and not Clause (e) of Sub-section (1) of Section 17. If a right is created by a compromise decree or is extinguished, it must compulsorily be registered. Clause (vi) is an exception to the exception. If the latter part of Clause (vi) of Sub-section (2) of Section 17 of the Act applies, the first part thereof shall not apply.

 

HIGH COURT

Labour Laws

Delhi High Court

National Insurance Co. Ltd. Vs. Kanshi Ram and Ors. (Decided On: 01.05.2008) MANU/DE/0716/2008

Compensation under the Workmen's Compensation Act -- Payment of Interest thereon -- Whether Insurance Company liable to pay interest, when the policy does not contain a covenant requiring it to pay interest incase claim gets allowed.

A focussed analysis of the judgment of the Hon'ble Supreme Court in Ved Prakash's case (MANU/SC/0956/1997) makes clear the distinction placed in policies excluding clause pertaining to liability of the insurance company to pay interest vis-à-vis a policy silent on the issue of payment of interest by the insurance company. Liability arising under Section 4-A of the Workmen's Compensation Act to pay interest on the principal amount as imposed upon the insured was not required to be met by the insurance company. However in the instant case it was not the case of the insurance company that the policy of insurance excluded liability to pay interest by incorporating a clause in the contract in said terms.

Payment of Interest on compensation - Whether interest on compensation to be assessed with effect from the death of the workman

In case of injury or death, information is to the employer as the injured workman or in death case, the dependents of the deceased workman would not be having the particulars of the insurance company and to that extent it may be possible for the insurance company to maintain an argument that liability to pay interest qua the insurance company has to be restricted from the date of intimation of the death or the accident was given to it. In the instant case, the fact of the death of the workman came to the knowledge of the insurance company, if not earlier, at least when notice was received from the office of the Commissioner Workmen's Compensation intimating that a claim had been received. No reasons were forthcoming as to why the insurance company did not proceed to forthwith deposit the compensation payable. The factum of death, the vehicle being insured, the nature of employment of the deceased and his death during the course of employment was not disputed. Insurance Company on receiving notice of claim from the Commissioner Workmen's Compensation was required to refer to the formula prescribed under the Act and apply the applicable indices to compute the compensation payable.

 

Civil laws

CPC

Uttaranchal High Court

Mohd. Hasan S/o Makdum Baksh Vs. U.P. Sanchalak Chakbandi and Ors. (Decided On: 25.03.2008) - MANU/UC/0003/2008

Power of Review - Whether exercised as an alternative mode of appeal or to permit the parties to provide another opportunity of hearing on merit

The review petition can be filed only for consideration of important matters or evidence which, by mistake or error on the face of the record could not be considered when the order was passed. The power of review cannot be exercised as an alternative mode of appeal or to permit the parties to provide another opportunity of hearing on merit, more so when the grounds taken by the review petitioner in the review application have already been discussed and considered on merit.

Court Fees

Bombay High Court

Girish Kanaiyalal Munshi Vs. Sudha Girish Munshi and Kirtidev Girish Munshi (Decided On: 06.05.2008) - MANU/MH/0402/2008

Exemption from court fee - As per the Government Notification dated 1st October 1994 duly amended by an explanatory notification dated 23rd March, 2000 - Can be sought by a woman litigant who files a petition for grant of Probate of a Will?

Interpretation of Notification makes it amply clear that the term 'property disputes' would be restricted to only those concerning or arising out of matrimonial matters and hence exclude petitions filed for probate of Wills. The Notification is a beneficial piece of legislation and an extended meaning to the words 'property disputes'. A petition for probate of a Will is neither a petition in relation to any 'property dispute' nor does it 'arise out of or concern a matrimonial matter.' It is in relation to the validity or otherwise of a Will. Furthermore it is pertinent to differentiate between matrimonial matters and matrimonial relationship and hence the term 'matrimonial matters' arising in the Notification of 23/03/2000 cannot be replaced by 'matrimonial relationship' so as to bring a petition filed by a widow for probate of her deceased husband's Will, within the ambit of the Notification. Lastly, the words 'property dispute arising out of or concerning matrimonial matters' should be given their plain and simple meaning, that is, a dispute arising between parties to a marriage and should therefore exclude testamentary petitions wherein not only is there an absence of a dispute, other than in cases when somebody files a caveat, it is not a matter between two parties to a marriage. Hence, a woman litigant who files a Petition for grant of Probate of a Will is not exempted from payment of Court Fees, as per Government Notification dated 1st October 1994, duly amended by an explanatory Notification dated 23rd March, 2000.

 

 

Criminal Laws

Dishonour of Cheque

Delhi High Court

Satish Kumar and Anr. Vs. State and Ors. (Decided On: 23.04.2008) MANU/DE/0710/2008

Arraign a person as accused in a complaint under Sections 138 and 141 NI Act - What are the requirements of law for the same where the principal accused is a company?

To arraign a person as accused two important elements required to be present in a complaint, namely, First, the person, in addition to the Company, who is sought to be made as an accused should be stated to be in charge of the affairs of the Company and responsible to it for the conduct of its business and Secondly, there should be an averment in the complaint to the effect that such person was in that capacity at the time of commission of the offence. If both the elements not cumulatively present, the requirement of Section 141 NI Act cannot be held to be satisfied and a person cannot be arraigned as accused under Sections 138 and 141 NI Act.

 

Rajasthan High Court

Nand Lal and Ors. Vs. The State of Rajasthan (Decided On: 23.04.2008) MANU/RH/0175/2008

Essential ingredients - What are the essential ingredients to constitute offence under Section 307 of the Indian Penal code?

There are two important ingredients to constitute offence unser Section 307 of IPC. Firstly, an intention of or knowledge relating to commission of murder and secondly, the doing of an act towards it. Thus, for the purpose of Section 307 of IPC, what is material is the intention or the knowledge and not the consequence of the actual act done, for the purpose of carrying out the intention. The consequence clearly contemplates the act which is done with the intention of causing death, but which fails to bring about the intended consequence on account of intervening circumstances. The intention or knowledge of the accused must be such, as is necessary to constitute murder. In the absence of intention or knowledge, which is the necessary ingredients of Section 307, there can be no offence of attempt to murder.

Relevant factors - What are the factors relevant for proving intention of the accused to commit the offence of attempt to murder under Section 307 of IPC?

Intent, which is a state of mind, cannot be proved by precise direct evidence as a fact, which can only be detected or inferred from other factors. Some of the relevant considerations may be the nature of the weapon used, the place where injuries were inflicted, the nature of the injuries and the circumstances in which the incident took place. The mere show of caution or touching the revolver on the head, is not enough to prove an intention in using it, unless it was shown to exist.

 

Tax Laws

Income Tax Act

Rajasthan High Court

CIT Vs. Mewar Oil General Mills Ltd. (Decided On: 19.03.2008) MANU/RH/0130/2008

Depreciation on Generator - Whether admissible @ 30% as "renewable energy device", as per item (xiii) to Clause (10A) of IIID of Appendix-1 of Rule 5

As held by this Court in the case of CIT v. Agarwal Transformers P. Ltd. ", a reading of the entry showed that it was inclusive, it referred to two different items, namely, electric generators and, secondly, pumps running on wind energy. Therefore, electric generator sets fall under renewable energy devices and the Tribunal rightly allowed depreciation at the rate of 30 per cent. On the basis of entry III-D, item (10A), Clause (xiii) of Appendix I to the Income-tax Rules, 1962." Thus, in view of the said judgment as per the item (xiii) Clause (10A) of III D of Appendix-1, 30% depreciation would be applicable in case of generator.

Customs

Madras High Court

Commissioner of Customs v. M/s. Virudhunagar Textile Mills Ltd. Decided on 25.01.2008 - MANU/TN/0317/2008

Recovery of Refund - Whether the amount erroneously refunded could be recovered by filing an appeal under Section 129D of the Customs Act, 1962 unless a demand notice was issued under Section 28(1) of the Act

Where any amount of duty had already been refunded to an Assessee under Section 27 of the Customs Act, it was not open to the Revenue on the ground of erroneous refund to proceed for recovery of the amount from them under Section 129D of the Act after expiry of the period of limitation prescribed for demand notice under Section 28(1) of the Act. Right recourse for the Revenue was to issue a Show Cause Notice within the prescribed period

Service Tax

Punjab & Haryana High Court

Commissioner of C. Ex. Vs. United Plastomers (Decided On: 20.02.2008) - MANU/PH/0280/2008

Services provided as dealer/commission agent - Whether covered under the 'Clearing and Forwarding Agent Service' as defined under Section 65 of the Finance Act, 1994?

As per Section 65(23) of the Finance Act, 1994, "Clearing and Forwarding Agent" means any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consignment agent. Use of the words "either directly or indirectly, connected with clearing and forwarding operations in any manner" is indicative of the fact that the scope of the services to be provided by the clearing and forwarding agent is all encompassing in that. It covers not only the person directly dealing with the goods but it would also include indirect services which are connected with the clearing and forwarding operations such as facilitating and promoting the sale of goods from the factory, warehouse and other outlets; timely collection of payments, realization of dues from the buyers and making timely payments to the principal, attending to the satisfaction of the customers, dealing with the matters connected with sales tax, Octroi, local taxes, and so on. These activities being indirectly related for the activity of clearing and forwarding operations are clearly covered within the ambit of the definition of 'clearing and forwarding agent'. Thus, services provided as dealer/commission agent covered under the 'Clearing and Forwarding Agent Service'.

Other Taxes

Bombay High Court

The Municipal Corporation of Greater Bombay and The Dy. Assessor and Collector (Octroi), Municipal Corporation of Gr. Bombay Vs. Bengal Iron Corporation (Decided On: 28.04.2008) MANU/MH/0382/2008

Pipe fittings - Whether included in the definition of the term "pipes" as occurring in Item 47 of Schedule H to the Bombay Municipal Corporation (Levy of Octroi) Rules, 1965?

As per the decision of the Apex Court in the case of Bharat Forge and Press Industries Pvt. Ltd. v. Collector of Central Excise, pipe fittings do not cease to be pipes and tubes. They are only a species thereof. The Apex Court observed that "Thus, answer to this question would be that the term pipe fittings would be included in the term pipes and pipe fittings are only a species of the generatic item "Pipes".

Pipes/pipe fittings, which are sanitary fittings - Whether classified as sanitary fittings or as pipes in Item 47 of Schedule H to to the Bombay Municipal Corporation ( Levy of Octroi) Rules, 1965 and leviable to octroi at the rate of 2.5%?

As held by the Division Bench of this court in the case of Smt. Nupur Khandelwal v. Municipal Corporation of Greater Bombay "A pipe may be used for the purpose of sanitation but that by itself cannot change its description as "pipe" and convert it into "sanitary fitting". More so when the legislation has specifically incorporated item "iron and steel pipes" as a separate and distinct commodity under Item 47 for the purpose of levy of octroi". Thus, octroi will be levied under Item 47 the Municipal Corporation (Octroi Rules) 1965 at the rate of 2.5% subject to any statutory amendment.

 
     
 
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