SUPREME COURT

• CIVIL  LAWS

Shantidevi Kamaleshkumar Yadav vs. State of Maharashtra and Ors. (Decided on 26.08.2008)

Whether restarting the proceedings/ hearings of the case closed for orders before the Case Scrutiny Committee for passing of orders, without notice to Appellant amounts to non-observance of principles of Natural Justice

Impugned judgment in consonance with the principles of natural justice, equity, good conscience and fairness, was set aside and t he matter was remitted to the Caste Scrutiny Committee to decide the case afresh after hearing the learned Counsel for the parties. The Caste Scrutiny Committee was directed to ensure that no hearing or deliberation takes place after the conclusion of hearing without notice to the Appellant.

• TAX LAWS

Sales Tax/VAT

State of Andhra Pradesh and Ors. vs. Larsen and Tourbo Ltd. and Ors. (Decided on 26.08.2008)

Whether the goods employed by the sub- contractors occur in the form of a single deemed sale or multiple deemed sales

The principle of law laid down in this regard was clarified by the Hon'ble Supreme Court in the case of Builders' Association of India, which reads as under:

"Ordinarily unless there is a contract to the contrary in the case of works contract the property in the goods used in the construction of a building passes to the owner of the land on which the building is constructed, when the goods or materials used are incorporated in the building."

According to the Department, there was two deemed sales, one from the main contractor to contractee and the other from sub-contractor(s) to the main contractor, in the event of the contractee not having any privity of contract with the sub-contractor(s). If one keeps in mind the above quoted observation in the case of Builders' Association of India, the position becomes clear that even if there is no privity of contract between the contractee and the sub- contractor, that would not do away the principle of transfer of property by the sub-contractor by employing the same on the property belonging to the contractee. This reasoning is based on the principle of accretion of property in goods. It is subject to the contract to the contrary. Thus in such a case the work, executed by a sub-contractor, results in a single transaction and not as multiple transactions. This reasoning is also borne out by Section 4(7), which refers to value of goods at the time of incorporation in the works executed. If the argument of the Department is to be accepted it would result in plurality of deemed sales, which would be contrary to Article 366(29A)(b) of the Constitution as held by the impugned judgment of the High Court. Moreover, it may result in double taxation which may make the 2005 Act vulnerable to challenge as violative of Articles 14, 19(1)(g) and 265 of the Constitution of India as held by the High Court in its impugned judgment. Where a VAT dealer awards any part of the contract to a registered sub-contractor, no tax shall be payable on the consideration paid for the sub-contract. Therefore, the principle to be adopted in all such cases is that the property in the goods would pass to the owner/ contractee on its incorporation in the works executed. This principle finds place in Sub-section 7(a) of Section 4 of the 2005 Act.

• ARBITRATION

Punjab Agro Industries Corpn. Ltd. vs. Kewal Singh Dhillon (Decided on 25.08.2008)

Whether rejection of application for appointment of arbitrator under Section 11(4) of the Arbitration and Conciliation Act, 1996 can be challenged by way of writ Petition

Whether the writ petition under Article 227 maintainable against the order of the Civil Judge, Senior Division (designate of the Chief Justice) and the High Court was wrong in assuming that the writ petition was not maintainable in view of the decision of the Hon'ble Supreme Court of India in S.B.P. & Co. v. Patel Engineering Ltd

Though the order under Section 11(4) of the Arbitration Act is a judicial order, having regard to Section 11(7) relating to finality of such orders, and the absence of any provision for appeal, the order of the Civil Judge was open to challenge in a writ petition under Article 227 of the Constitution. The decision in SBP case does not bar such a writ petition. The observations of this Court in SBP that against an order under Section 11 of the Act, only an appeal under Article 136 of the Constitution would lie, is with reference to orders made by the Chief Justice of a High Court or by the designate Judge of that High Court. The said observations do not apply to a subordinate court functioning as Designate of the Chief Justice. This Court has repeatedly stressed that Article 136 is not intended to permit direct access to this Court where other equally efficacious remedy is available and the question involved is not of any public importance; and that this Court will not ordinarily exercise its jurisdiction under Article 136, unless the appellant has exhausted all other remedies open to him. Any such contention that the order of the Civil Judge, Sr. Division rejecting a petition under Section 11 of the Act could only be challenged, by recourse to Article 136 is untenable. The decision in SBP case did not affect the maintainability of the writ petition.

• CRIMINAL LAWS

Ganesh vs. State of Karnataka and Ors. (Decided on 20.08.2008)

Whether acquittal of large number of co-accused can be a ground to discard the evidence of trustworthy witnesses in a case of conviction under section 302 read with section 149 of the Indian Penal Code, 1860

As a rule of universal application, it cannot be said that when a portion of the prosecution evidence is discarded as unworthy of credence, there cannot be any conviction. It is always open to the court to differentiate between an accused who has been convicted and those who have been acquitted. The maxim "falsus in uno, falsus in omnibus" is merely a rule of caution. As has been indicated by this Court in Sucha Singh case in terms of felicitous metaphor, an attempt has to be made to separate the grain from the chaff, truth from falsehood. When the prosecution is able to establish its case by acceptable evidence, though in part, the accused can be convicted even if the co-accused have been acquitted on the ground that the evidence led was not sufficient to fasten guilt on them. But where the position is such that the evidence is totally unreliable, and it will be impossible to separate the truth from falsehood to an extent that they are inextricably mixed up, and in the process of separation an absolutely new case has to be reconstructed by divorcing essential details presented by the prosecution completely from the context and background against which they are made, conviction cannot be made.

State of Himachal Pradesh vs. Sardara Singh (Decided on 27.08.2008)

Whether the dismissing summarily the application under section 378 of the Code of Criminal Procedure against the acquittal directed by the Trial Court on the ground that the evidence of the official witnesses could not be accepted was contrary to the previous decisions of Hon'ble Supreme Court

If the trial Court was not careful in appraising the entire evidence, while arriving at a conclusion, the High Court was obliged to undertake such an exercise by entertaining the appeal. The High Court in a situation where trial Court on the facts of this case did not performed its duties enjoined on it by law, ought to have granted leave and thereafter as a first court of appeal, re-appreciated the entire evidence on the record independently and returned its findings objectively as regards guilt or otherwise of the accused. On plainest consideration of justice, the High Court should have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Court order not sustainable. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at". Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance

B. Venkat Swamy Vs. Vijaya Nehru and Anr. (Decided on 25.08.2008)

Whether the acquittal as directed by Division Bench of the High Court in an offence punishable under sections 498A and 302 of the Indian Penal Code, 1860, High Court failed to notice that the evidence on record was sufficient to fasten the guilt on the accused persons when as pleaded the evidence on record clearly showed a complete chain of circumstances.

The Hon'ble Supreme Court has consistently laid down that where a case rests squarely on circumstantial evidence, the inference of guilt can be justified only when all the incriminating facts and circumstances are found to be incompatible with the innocence of the accused or the guilt of any other person.

Sir Alfred Wills in his admirable book "Wills' Circumstantial Evidence" (Chapter VI) lays down the following rules specially to be observed in the case of circumstantial evidence: (1) the facts alleged as the basis of any legal inference must be clearly proved and beyond reasonable doubt connected with the factum probandum; (2) the burden of proof is always on the party who asserts the existence of any fact, which infers legal accountability; (3) in all cases, whether of direct or circumstantial evidence the best evidence must be adduced which the nature of the case admits; (4) in order to justify the inference of guilt, the in culpatory facts must be incompatible with the innocence of the accused and incapable of explanation, upon any other reasonable hypothesis than that of his guilt, (5) if there be any reasonable doubt of the guilt of the accused, he is entitled as of right to be acquitted".

The conviction can be based solely on circumstantial evidence but it should be tested by the touch- stone of law relating to circumstantial evidence as held in Hanumant Govind Nargundkar and Anr. v. State of Madhya Pradesh (MANU/SC/0037/1952) that,"

It is well to remember that in cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should be in the first instance be fully established and all the facts so established should be consistent only with the hypothesis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and tendency and they should be such as to exclude every hypothesis but the one proposed to be proved. In other words, there must be a chain of evidence so far complete as not to leave any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused".

Again as held in Sharad Birdhichand Sarda v. State of Maharashtra (MANU/SC/0111/1984), it was held that onus was on the prosecution to prove that the chain is complete and the infirmity of lacuna in prosecution cannot be cured by false defence or plea. The conditions precedent in the words of this Court, before conviction could be based on circumstantial evidence, must be fully established. They are:

(1) the circumstances from which the conclusion of guilt is to be drawn should be fully established. The circumstances concerned `must' or `should' and not `may be' established;

(2) the facts so established should be consistent only with the hypothesis of the guilt of the accused, that is to say, they should not be explainable on any other hypothesis except that the accused is guilty;

(3) the circumstances should be of a conclusive nature and tendency;

(4) they should exclude every possible hypothesis except the one to be proved; and

(5) there must be a chain of evidence so complete as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused and must show that in all human probability the act must have been done by the accused.

In the instant case, the High Court noted several factors to hold that prosecution has not established the accusations.

• SERVICE

General Manager, State Bank of India and Ors. Vs. Anju Jain (Decided on 25.08.2008)

Whether dependent of an employee who had died or retired on medical ground but whose service record was blemished on account of disciplinary action can be a ground for denial compassionate appointment in the Bank

Appointment on compassionate ground is never considered a right of a person. In fact, such appointment is violative of rule of equality enshrined and guaranteed under Article 14 of the Constitution. As per settled law, when any appointment is to be made in Government or semi-Government or in public office, cases of all eligible candidates must be considered alike. That is the mandate of Article 14. Normally, therefore, State or its instrumentality making any appointment to public office, cannot ignore such mandate. At the same time, however, in certain circumstances, appointment on compassionate ground of dependents of deceased employee is considered inevitable so that the family of the deceased employee may not starve. The primary object of such scheme is to save the bereaved family from sudden financial crisis occurring due to death of the sole bread earner. It is thus an exception to the general rule of equality and not another independent and parallel source of employment. If disciplinary proceedings have been initiated against an employee and the charges levelled against such employee are proved and he is punished, it is indeed a relevant consideration for not extending the benefit to dependent of such employee on the ground that he was punished. To us, it cannot be said that it is a case of double jeopardy or a dual punishment. Compassionate appointment is really a concession in favour of dependents of deceased employee. If during his carrier, he had committed illegalities and the misconduct is proved and he is punished, obviously his dependents cannot claim right to the employment.

• INTELLECTUAL PROPERTY RIGHTS

Patents (Amendment) Act, 2005

J. Mitra and Co. Pvt. Ltd. Vs. Asst. Controller of Patents and Desig. and Ors. (Decided on 21.08.2008)

Whether appeal against decisions made by the Controller of Patent pertaining to "pre-grant oppositions" had to be preferred to Appellate Board or to the High Court in view of the promulgation of the Patent (Amendment) Act, 2005 - Whether said amendment will affect an appeal preferred to High Court before its enforcement

An Act cannot be said to commence or to be in force unless it is brought into operation by legislative enactment or by the exercise of authority by a delegate empowered to bring it into operation.

By Patents (Amendment) Act, 2005 for the first time a dichotomy was inserted in the Patent Law by providing vide Section 25(1) for "opposition to pre-grant" and vide Section 25(2) for "opposition to post-grant" of patent. By reason of Patents (Amendment) Act, 2005, the kind of opposition available under the said 1970 Act is different from what existed earlier. Previously, there was no "post-grant opposition". Previously, the only provision of challenge by an interested party was a "pre-grant" challenge under Section 25(1) as it then stood. Therefore, the Legislature intended an appeal under Section 117A(2) to the Appellate Board from any decision, order or direction of the Controller, inter alia, under Section 25(4) which refers to the power of the Controller to maintain, amend or revoke the patent.

Legislature intended to provide for two types of scrutiny followed by one statutory appeal to the Appellate Board against "post-grant proceedings". However, the Legislature intended that there shall be only one statutory appeal against grant of patent. The Legislature intended to obliterate appeal from "pre-grant proceedings", which existed earlier. However, it was left to the Executive to bring the enacted law into force vide notification. For some unknown reasons, the amended Sections 116 and 117A(2) were not brought into force till 2.4.07 whereas the concept of "pre- grant" and "post-grant" oppositions were brought into force w.e.f.1.1.2005. This is where the legislative intent got defeated during the interregnum. If an appeal is filed during the interregnum it has to be preferred as per the Section 116, as it stood on 19.10.06 under the Patents (Amendment) Act, 1999. On that date, the amended Section 117A, suggested by Patents (Amendment) Act, 2005, was not brought into force. On 19.10.06 the old law prevailed under which an appeal lay before the High Court.

HIGH COURT

• TENANCY LAWS

ANDHRA PRADESH HIGH COURT

Mungamuru Srinivasulu Reddy Vs.Sowdagar Ifjanullah Khan (Decided on 14.07.2008) MANU/AP/0263/2008

Whether the jurisdiction of the Civil Court is not excluded by the provisions of A.P. Buildings (Lease, Rent & Eviction) Control Act, 1960

To determine as to whether the jurisdiction of the Civil Court hit by the provisions of A.P. Act, is predominantly a question of fact, which is to be decided on the strength of oral evidence and also the documentary evidence available on record. Both the Courts recorded concurrent findings to the effect that a civil suit under the jurisdiction of Civil Court is perfectly maintainable, since what had been leased out was only a vacant site. Hence, it does not hit by the A.P. Buildings (Lease, Rent & Eviction) Control Act, 1960.

DELHI HIGH COURT

Bharat Bhushan Vij Vs. Arti Teckchandani (Decided on 08.08.2008) MANU/DE/1092/2008

Scope of Bonafide requirement under Section 14(1)(e)of the Delhi Rent Control Act - Whether the landlady earlier residing with her children or relative can claim eviction of the tenant on the grounds of bonafide requirement under Section 14(1)(e) ,if she wants a separate accommodation later on

Where a landlady wants to live in her own accommodation and she has no other accommodation available with her, the landlady has a right to get her property vacated for her bona fide necessity. It does not matter whether she was earlier residing with her children or relative. Where a person is living in somebody else's accommodation even if this somebody else is related to him as son, father or mother, his desire and right to live in his own accommodation cannot be negated. Since, the landlady had no other accommodation except this one that was occupied by the tenant and the other accommodation where she was living, belonged to her son and not to her. It is not for the tenant to dictate terms to the landlord as to how he or she should live and where to live. Petition dismissed.

• PROPERTY LAWS

ANDHRA PRADESH HIGH COURT

Akella Venkata Rama Subrahmanya Sarma Vs. Annangi Sreeramamurti (Decided on 16.07.2008) MANU/AP/0262/2008

Whether the execution of the agreement of sale entered into by Manager/ head of the family cannot be enforced, if the plaint schedule property is the joint family property of Appellant-Defendant and his sons and the sons are not parties to the agreement

For a transaction to be regarded as for the benefit to the family it need not be of defensive character so as to be binding on the family. In each case the court must be satisfied from the material before it that it was in fact such as conferred or was reasonably expected to confer benefit on the family at the time it was entered into then such transaction is to be regarded as family benefit. Hence, any execution of the agreement of sale entered into by the Manager/ head of family can be enforced if such transaction is for the benefit of the family.

• BANKING

ANDHRA PRADESH HIGH COURT

Indian Bank Vs. Prisma Home Appliance Pvt. Ltd. (in liquidation) (Decided on 18.07.2008) MANU/AP/0268/2008

Whether any sale conducted by the bank in pursuance of the sale certificate and the decree obtained before the Debt Recovery Tribunal proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, without intervention of the Company Court or issuing any notice to the Official Liquidator especially where the said company was ordered to be wound up, is void

A Debt Recovery Tribunal acting under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 would be entitled to order the sale and to sell the properties of the debtor, even if a company in liquidation, through its Recovery Officer but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him.

• TAX LAWS

EXCISE

ANDHRA PRADESH HIGH COURT

Commissioner of Central Excise Vs. Shriram Refrigeration Industries [Presently known as Tecumseh Products India Ltd.] (Decided on 02.05.2008) MANU/AP/0293/2008

Whether appeal can lie to the Appellate Tribunal in cases where the dispute relates to the question whether the noticee is the manufacturer of the excisable goods or not

In an appeal against an order passed by the Commissioner CESTAT, the appeal would lie only to the apex Court and not to the Appellate Tribunal in view of section 35L of the Central Excise Act, 1944.

CUSTOMS

THE HIGH COURT OF GUJARAT AT AHMEDABAD

Commissioner of Customs Vs. Filco Trade Centre (P) Ltd. and anr.( Decided on. 06.08.2008) MANU/GJ/0522/2008

Statutory obligation under Section 123 of the Customs Act 1962-Whether the import of goods of foreign origin(ball bearings) by the respondent came under the category of smuggled goods/prohibited items

Indian Manual for Export Import Policy and Procedures, 1992-97 relating to Negative list of imports makes it clear that the items which are restricted for the purposes of import are all consumer goods of industrial origin, agricultural origin, goods in Semi or completely Knocked Down condition and ready to assemble or in finished form.The goods must be the consumer goods available to a consumer for the purposes of consumption by the person and the Consumption should be in the nature of personal use. Ball bearings cannot be termed as consumer goods - a negative burden cannot be cast on respondent assessee show that import is permissible even if ball bearings are neither prohibited goods nor restricted goods. Appeal dismissed.

INCOME TAX

Punjab And Haryana High Court

Hind Samachar Ltd. Vs. Union of India (UOI) and Ors. and CIT Vs. Hind Samachar Ltd. (Decided on 11.03.2008) MANU/PH/0502/2008

Whether a return filed under the IT Act by a company is mandatorily required to be signed by its managing director under Section 140(c) of the Act or it can be filed by an authorized signatory duly appointed by a resolution of the board of directors

The Taxation Laws (Amendment) Act, 1975 substituted the existing Clause (c) w.e.f. 1st April, 1976. Prior to its amendment, the provision provided that in the case of a company, the return could be signed by the principal officer of the company. However, after amendment, it has specifically been provided that a valid return shall be signed by the managing director of the company and in his absence, by any director thereof. It is well-settled that wherever the statute provides for carrying out a particular thing in a specified manner, then it has to be done in that manner and in no other manner. The tenor of the language used in the aforesaid provision leaves no manner of doubt that the provision is mandatory and the word 'shall' has to be read in that context and it cannot be read to mean 'may'

Whether under Section 292B of the Act, non-signing of a return by its managing director, or where there is no managing director, by any director thereof, is a curable defect and the AO is required to provide opportunity to the assessee under Section 139(9) of the Act to cure such a defect

Section 292B of the Act provides that no return of income shall be invalid merely by reason of any mistake, defect or omission, if such return is, in substance and effect in conformity with or according to the intent and purpose of the Act. The section has its applicability to those cases where purely technical objection without substance arises in a case of a return of income. Section 139(9) of the Act contains a non obstante clause, namely, 'notwithstanding anything contained in any other provision of this Act' and would, therefore, override the other provisions of the IT Act including Section 292B. If any curable defect is noticed in the return, the AO is required to provide an opportunity to the assessee to rectify the same within the stipulated time and in a case where any of the specified defects is not removed within the time allowed under Section 139(9), the return shall be treated as an invalid or non est return.

• LABOUR AND INDUSTRIAL

BOMBAY HIGH COURT

Maharashtra State Electricity Board through Executive Engineer, M.S.E.B. Vs. Gangabai W/o. Late Shamrao Sudke (Decided on 06.08.2008) MANU/MH/0674/2008

Whether an employer liable under the Workmen's Compensation Act when it is to be determined as to whether the accident arose out of and in the course of employment

There is a substantial question of law to be considered in appeal against order of Workmen's Compensation Commissioner. Merely because accident occurred during duty hours of workman, it could not be held that the accident arose out of and in the course of employment. If it can be said that deceased was riding a motorcycle when he suffered the accident. The evidence on record suggested that the deceased met with an accident, which occurred when he had left the official place of work. And there was no evidence on record at all to indicate that he was sent out for the official duty when he met with the accident. Nor was there any evidence on record to establish the fact that there was a practice of sending the general workers out on official duty during their shift timings. So, in the facts and circumstances it was held that the deceased had gone out during duty hours to attend his private work and therefore the employer was not liable.

• DIRECT TAXATION

BOMBAY HIGH COURT

SET Satellite (Singapore) Pte Ltd., a Company incorporated and registered under the laws of Singapore Vs.Deputy Director of Income-tax International Taxation, Rg.2(1) and Director of Income-tax, International Taxation (Decided on 22.08.2008) MANU/MH/0739/2008

Whether Appellant who is the resident of Singapore and carrying on marketing activities in India for advertisement slots by canvassing advertisements in India through its dependent is liable to the Tax liability in India

Appellant claimed that they did not have a permanent establishment and their dependent agent was remunerated on an arm's length basis. As this income from various activities has been assessed to tax in the hands of their agents, It could not be further assessed in the hands of appellant.

Held, in DIT (International Taxation) v. Morgan Stanley and Co.Inc while dealing with the Double Tax Avoidance Agreement (DTAA) court had already ruled out that if the correct arm's length price is applied and paid by the agents in India then nothing further would be left to be taxed in the hands of the Foreign Enterprise. CBTD (Central Board of Direct Taxes) vide Circular No. 742 has made it clear that it would be fair and reasonable that the taxable income is computed at 10% of the gross profits and in the instant case as far as marketing services are concerned by the arm's length principle then whatever is required is already paid.

Moreover, the CBTD Circular No. 23 dated July 23, 1969 clearly sets out that where a non-resident 's sales to Indian customers are secured through the services of an agent in India, the assessment in India of the income arising out of the transaction will be limited to the amount of profit which is attributable to the agent's services, provided that the non-resident principal's business activities in India are wholly channalized through his agent; the contracts to sell are made outside India and the sales are made on a principal-to-principal basis .appellants fulfills all these criterias. Merely because tax on income was paid for some assessment years would not stop the assesses from contending that its income is not liable to tax. Appeal allowed in favour of Assessee.