SUPREME COURT

• SERVICE

Union of India (UOI) and Anr. Vs. S. Thakur (Decided on 17.10.2008)

Revised pay scale - Benefit of - Power of High Courts to issue certain writs - Appeal invoked to the extra ordinary jurisdiction of the High Court

The plea that as restructuring of cadre and redistribution of posts was involved in so far as the Assistant Directors were concerned and therefore the policy decision taken by the State Government to give benefit of upgraded scale to an Assistant Director (Executive) should not have been interfered with by the Tribunal and by the High Court is devoid of merits. There is no dispute nor there can be any, to the principle that fixation of pay and date from which the benefit of revised pay scale would be admissible is the function of the Executive and the scope of judicial review of such an administrative decision is very limited. However, it is equally well-settled that the Courts would interfere with the administrative decisions pertaining to pay fixation and pay parity as well as the date from which the revised pay scales would be made applicable if it is found that such a decision is unreasonable, unjust and prejudicial to a section of employees. High Court was justified in not interfering with the same while exercising powers under Article 226 of the Constitution.

• NARCOTICS

The Superintendent, Narcotic Control Bureau Vs. Parash Singh (Decided on 15.10.2008)

Punishment for contravention in relation to cannabis plant and cannabis - Protection in respect of conviction for offences - Prohibition of certain operations - Appeal challenged ruling of the High Court holding that new offence was created because a higher punishment was imposed

It is manifest from Article 20(1) that it prohibits (1) making an Act for the first time and then making that law retrospective. In other words it is not permissible to create an offence retrospectively (2) the infraction of the penalty may not be higher than what is prescribed in law which was in force at the time of the commission of the offence. It needs to be noted that the validity of Amendment Act was challenged before this Court in Basheer @ N.P. Basheer v. State of Kerala. The validity of the act was upheld. In State through CBI Delhi v. Gian Singh, it was held with reference to Article 20(1) of the Constitution that it is a fundamental right of every person that he should not be subjected to greater penalty than what the law prescribes and no ex-post facto legislation is permissible for escalating the severity of the punishment. But if any subsequent legislation down grades the harshness of the sentence for the same offence, it would be salutary principal for administration of criminal justice to suggest that the said legislative benevolence can be extended to the accused who awaits judicial verdict regarding sentence. The High Court was not justified in holding that new offence was created. Before the amendment as well as after the amendment the ingredients of Section 8 remain same and there was no amendment in this provision. Only punishment for contravention in relation to cannabis plant and cannabis i.e. Section 20 of the Act has been amended by the Amendment Act. No new offence was created by the Amendment Act.

• CRIMINAL

Ishwar Singh Vs. State of Madhya Pradesh (Decided on 17.10.2008)

Attempt to murder - Compounding of offences - Quantum of sentence - Appellant prays for their released by treating the sentence already undergone by the Appellant-accused as sufficient, which was charged for the commission of offences punishable under Section 307 read with Section 34, Indian Penal Code, 1860 and also prays to dispose of appeal on the basis of compromise between the parties

It cannot be gainsaid that an offence punishable under Section 307, IPC is not a compoundable offence. Section 320 of the Code of Criminal Procedure, 1973 expressly states that no offence shall be compounded if it is not compoundable under the Code. At the same time, however, while dealing with such matters, this Court may take into account a relevant and important consideration about compromise between the parties for the purpose of reduction of sentence. In Jetha Ram v. State of Rajasthan, Murugesan and Ors. v. Ganapathy Velar MANU/SC/2358/2000 and Ishwarlal v. State of M.P, this Court, while taking into account the fact of compromise between the parties, reduced sentence imposed on the appellant-accused to already undergone, though the offences were not compoundable. But it was also stated that in Mahesh Chand v. State of Rajasthan MANU/SC/0268/1988, such offence was ordered to be compounded. It would not be appropriate to order compounding of an offence not compoundable under the Code ignoring and keeping aside statutory provisions. In our judgment, however, limited submission of the learned Counsel for the appellant deserves consideration that while imposing substantive sentence, the factum of compromise between the parties is indeed a relevant circumstance which, the Court may keep in mind. Considering the totality of facts and circumstances, ends of justice would be met if the sentence of imprisonment awarded to the appellant (Accused No. 1) is reduced to the period already undergone.

State of Andhra Pradesh Vs. Bajjoori Kanthaiah and Anr. (Decided on 20.10.2008)

Saving of inherent power of High Court - Quashing of FIR - Appeal challenged against to the Judgment of the High Court in quashing the FIR on being moved by application under Section 482 of the Code of Criminal Procedure, 1973 by the accused for quashing the FIR

Exercise of power under Section 482 of the Code in a case of this nature is the exception and not the rule. The Section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. The scope of exercise of power under Section 482 of the Code and the categories of cases where the High Court may exercise its power under it relating to cognizable offences to prevent abuse of process of any court or otherwise to secure the ends of justice were set out in some detail by this Court in State of Haryana v. Bhajan Lal. The powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. High Court being the highest Court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard and fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage. In proceeding instituted on complaint, exercise of the inherent powers to quash the proceedings is called for only in a case where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of the inherent powers under Section 482 of the Code. Ultimately, the acceptability of the materials to fasten culpability on the accused persons is a matter of trial. These are not the cases where it can be said that the FIR did not disclose commission of an offence. Therefore, the High Court was not justified in quashing the FIR. The action of the High Court in quashing the FIR in each case cannot be maintained and are set aside.

Manoj Sharma Vs. State and Ors. (Decided on 16.10.2008)

Saving of inherent power of High Court - Power of High Courts to issue certain writs - Jurisdiction of High Court - Whether a First Information Report under Sections 420/468/471/34/120B IPC can be quashed either under Section 482 of the Code of Criminal Procedure or under Article 226 of the Constitution, when the accused and the complainant have compromised and settled the matter between themselves

In Pepsi Food Limited v. Special Judicial Magistrate MANU/SC/1090/1998, Supreme Court has observed that where the Court will exercise jurisdiction under Section 482 of the Code could not be inflexible or rigid formulae to be followed by the Courts could not be laid down. Exercise of such power would depend upon the facts and circumstances of each case but with the sole object of preventing abuse of the process of any Court, or otherwise to secure the ends of justice. It was also observed that it is well settled that these powers have no bar, but the same was required to be exercised with utmost care and caution.

The ultimate exercise of discretion under Section 482 Cr.P.C. or under Article 226 of the Constitution is with the Court which has to exercise such jurisdiction in the facts of each case. It has been explained that the said power is in no way limited by the provisions of Section 320 Cr.P.C. The High Court's refusal to exercise its jurisdiction under Article 226 of the Constitution for quashing the criminal proceedings cannot be supported. Once the complainant decided not to pursue the matter further, the High Court could have taken a more pragmatic view of the matter. A perusal of Section 320 shows that offences under Section 468, 471, 34 and 120B IPC (with are mentioned in the FIR in question) cannot even be compounded with the permission of the Court. In fact, Section 320(9) Cr.P.C. expressly states that no offence shall be compounded except as provided by this Section. It apparently follows, therefore, that except for Section 420 IPC, which can be compounded with the permission of the Court in view of Section 320(2), the other provisions mentioned in the FIR in question could not be compounded even with the permission of the Court. It, prima facie, seems to follow that the offences mentioned in the FIR were not compoundable except in relation to the allegations about Section 420 IPC. Even otherwise, it ordinarily would not be a legitimate exercise of judicial power under Article 226 of the Constitution or under Section 482 Cr.P.C. to direct doing something which the Cr.P.C. has expressly prohibited. There can be no doubt that a case under Section 302 IPC or other serious offences like those under Sections 395, 307 or 304B cannot be compounded and hence proceedings in those provisions cannot be quashed by the High Court in exercise of its power under Section 482 Cr.P.C. or in writ jurisdiction on the basis of compromise.

Asraf Sk. and Anr. Vs. State of West Bengal (Decided on 20.10.2008)

Murder - Whether circumstantial evidence and the circumstances do warrant conclusion of guilt of the accused

The circumstances from which an inference as to the guilt of the accused is drawn have to be proved beyond reasonable doubt and have to be shown to be closely connected with the principal fact sought to be inferred from those circumstances.

In Bhagat Ram v. State of Punjab MANU/SC/0158/1954, it was laid down that where the case depends upon the conclusion drawn from circumstances the cumulative effect of the circumstances must be such as to negative the innocence of the accused and bring the offences home beyond any reasonable doubt.

In C. Chenga Reddy and Ors. v. State of A.P. MANU/SC/0928/1996, Supreme Court has observed that, the circumstances from which the conclusion of guilt is drawn should be fully proved and such circumstances must be conclusive in nature in a case based on circumstantial evidence. Moreover, all the circumstances should be complete and there should be no gap left in the chain of evidence. Further the proved circumstances must be consistent only with the hypothesis of the guilt of the accused and totally inconsistent with his innocence.

In Hanumant Govind Nargundkar and Anr. v. State of Madhya Pradesh MANU/SC/0037/1952, it was observed 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.

Lokesh Singh Vs. State of U.P. and Anr. (Decided on 21.10.2008)

Bail - Grant of - When bail may be taken in case of non-bailable offence - Special powers of High Court or Court of Session regarding bail - Section 120B, 302, 437 and 439 of Code of Criminal Procedure, 1973 - Appeal challenging order passed by the High Court granting bail to the accused for alleged commission of offences punishable under Sections 302 and 120B of the Indian Penal Code, 1860

At the stage of granting bail a detailed examination of evidence and elaborate documentation of the merits of the case has not to be undertaken. But that does not mean that while granting bail some reasons for prima facie concluding why bail was being granted is not required to be indicated. In Kalyan Chandra Sarkar v. Rajesh Ranjan @ Pappu Yadav and Anr. MANU/SC/0214/2004, it held that the court granting bail should exercise its discretion in a judicious manner and not as a matter or course. Though at the stage of granting bail a detailed examination of evidence and elaborate documentation of the merit of the case need not be undertaken, there is a need to indicate in such orders reasons for prima facie concluding why bail was being granted particularly where the accused is charged of having committed a serious offence. Any order devoid of such reasons would suffer from non-application of mind. It is also necessary for the court granting bail to consider among other circumstances, the following factors also before granting bail; they are,(a) The nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, (b) Reasonable apprehension of tampering with the witness or apprehension of threat to the complainant. The conditions laid down under Section 437(1)(i) are sine qua non for granting bail even under Section 439 of the Code.

In Puran v. Rambilas and Anr. MANU/SC/0326/2001, it held that the concept of setting aside the unjustified illegal or perverse order is totally different from the concept of cancelling the bail on the ground that the accused has misconducted himself or because of some new facts requiring such cancellation. In Gurcharan Singh v. State (Delhi Admn.), Supreme Court has made clear that, if, however, a Court of Session had admitted an accused person to bail, the State has two options. It may move the Sessions Judge if certain new circumstances have arisen which were not earlier known to the State and necessarily, therefore, to that court. The State may as well approach the High Court being the superior court under Section 439(2) to commit the accused to custody. When, however, the State is aggrieved by the order of the Sessions Judge granting bail and there are no new circumstances that have cropped up except those already existing, it is futile for the State to move the Sessions Judge again and it is competent in law to move the High Court for cancellation of the bail. This position follows from the subordinate position of the Court of Session vis-a-vis the High Court. High Court was not justified in granting bail to accused. The order of granting bail is set aside.

• CIVIL

Kesho Ram (Dead) by Lrs. Vs. Hem Raj (Decided on 23.10.2008)

Review - Order of rejection not appealable - Objections to order granting application - Maintainability of the Letters Patent Appeal - Substance on Order 47 Rule 7(2) of Code of Civil Procedure, 1908

An order rejecting an application in review was not appealable and the only remedy for having such an order for set aside was to file an application for review under Order 47 Rule 7(2), but when such an application had been dismissed, no further application could be entertained by virtue of Order 47 Rule 9 of C.P.C. A perusal of Clause 12 of the Letters Patent also spelt out that an order in revision was not appealable under the said clause and that in any case, it was open to the appellant to challenge the order in appeal. We are, therefore, of the opinion that all the observations/findings recorded by the Letters Patent Bench were non est being completely unauthorized in law. We, however, give liberty to the appellant to challenge the order in appropriate legal proceedings with a further direction that it shall be open to the appellant, should an appeal be filed, to move an application for condonation of delay which would be considered with sympathy.

HIGH COURT

• Law of Contract

MADRAS HIGH COURT

Rajshree Sugars and Chemicals Limited rep. by its Director and Chief Operating Officer Mr. R. Varadaraj Vs. AXIS Bank Limited, formerly known UTI Bank Limited rep. by its Assistant Vice-President, (Treasury Markets Group), Mr. Malmarughan Vaikuntam and AXIS Bank Limited rep. by its Senior Manager Decided On: 14.10.2008 MANU/TN/0893/2008

What is expressly permitted by law, cannot be held to be opposed to public policy 

Derivative Contracts – Plaintiff a listed company, engaged in the manufacture and export of sugar to foreign countries having External Commercial Borrowings (ECB) from Banks – Company as an exporter and borrower has receivables and payables in foreign currencies respectively – Pursuant to fluctuating rate of exchange of foreign currencies Plaintiff decided to hedge the risk against such fluctuations and accordingly, on 14.5.2004, entered into a I.S.D.A. (International Swaps and Derivatives Association) Master Agreement with UTI Bank Limited (Now AXIS Bank Limited)– Pursuant to the ISDA Master Agreement, atleast 10 deals were struck between the parties out of which 9 were already matured and the present dispute pertained to the 10th deal – In terms of the above deal, Defendant paid USD 100,000 to the Plaintiff – However, after 6 months, the Plaintiff sent a letter claiming that the entire structure as per the contract dated got knocked out with no liability to either of the parties – Bank in reply challenged the claim and contended that the contract was still alive and that the Bank was prepared to work out suitable risk mitigation structures – Plaintiff by way of present suit challenged the deal as void ab-initio, illegal, violative of RBI Guidelines, opposed to public policy and unenforceable and not binding on the Plaintiff – Whether deal liable to be outright rejection – Plaintiff assailed deal as illegal contending that their receivables and payables were not denominated in Swiss Franc and hence a FOREX option in USD/CHF was wholly unauthorised and not permitted

Held, truly the plaintiff's foreign currency payables and receivables were denominated only in US Dollors and not in Swiss Franc, but as evident from the Master circulars and the Regulations there was no compulsion for a person to have dealings only with reference to the Indian rupee – Relevant Master circulars expressly permitted customers to hedge their receivables and payables against a third currency instead of Indian rupee, subject only to two conditions namely that such third currency should be a permitted currency and that it should be actively traded in the market. Swiss Franc satisfies both conditions – Further conditions imposed by Schedule-I to the "Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 it was clear that even the currency of hedge and tenor was left to the choice of the customer – Therefore contention raised by the Plaintiff not sustainable 

Derivative Contracts – Whether the deal was not as per the underlying exposure – Whether the deal was violative of the Master Circulars

Held, schedule-I to the Regulations did imposes an obligation upon the authorised dealer to satisfy itself about the genuineness of the underlying exposure through documentary evidence – But the purpose of the same is to prevent Bankers from indulging in "kite flying operations" throwing public money into heavy risks – Further the Master Circular No. 06/2006-07 dated 1.7.2006 issued by the Reserve Bank of India on "Risk Management and Inter Bank Dealings" gives a leverage to the authorised dealers – Conditions stipulated were applicable to cross currency opion contracts also and hence contention raised that there was no underlying exposure, cannot be heard to be raised by the plaintiff who made a declaration in contract in question that it was entering into this transaction solely for the purpose of hedging its foreign currency Balance sheet exposure – Declaration is binding on the plaintiff and the same was sufficient for the defendant bank to enter into the deal – Hence contention raised rejected as untenable 

Derivative Contracts – Whether the Defendant Bank had an obligation under the Master Circulars to see if there is a risk management policy in place in the plaintiff company and that they failed to ensure this 

Held, contention raised wholly untenable – In the instant case, the Bank had in fact obtained, such a declaration which formed part of OPT 727 – Apart from the declaration a separate declaration was also obtained by the Bank from the plaintiff, signed by authorized signatory on behalf of the plaintiff who also signed a "Risk Disclosure Statement" after signing the ISDA Master Agreement – Statement shows that the plaintiff was aware of a variety of risks associated with the deal, such as Market Risk, Basis Risk, Operational Risk and Legal, Regulatory and Tax Risks and it also contained an undertaking by the plaintiff that they will get only into those derivatives transactions as are permitted by the laws of the country including RBI guidelines – Now if Plaintiff says that there was no risk management policy, it would mean that the declaration made on their behalf was false and if it was so the plaintiff cannot take advantage of the fact that it was false 

Derivative Contracts – Whether the payment by the bank amounted to the payment of a premium, prohibited by the Regulations and the Master Circulars

Held, Plaintiff had received the payment and also understood the nature and purpose of the payment as anything but a premium. Contention that the amount of USD 100,000 paid by the Bank to the plaintiff is a premium has arisen out of a misconception. Fact that the deal has exposed the plaintiff to the possibility of a huge financial loss cannot be a ground to declare the contract as null and void, illegal or opposed to public policy. Plaintiff not entitled to any injunction restraining the bank from enforcing the contract OPT 727. Counter injunctions prayed for by the defendant Bank also rejected since the defendant free to work out their remedies in an appropriate manner. Bank open to work out their remedies in a manner known to law 

Derivative Contracts – Whether Contract entered a wager – Plaintiff contended that the contract is violative of the Master circulars and Regulations issued by the Reserve Bank of India and consequently hit by Section 23 of the Contract Act – Plaintiff further contended that since there was no underlying exposure, the contract was, per se, speculative and a wagering contract, hit by Section 30 of the Contract Act – Whether contract in question hit by Section 23 and/or Section 30 of the Contract Act

Held, the entire structure of the deal between the plaintiff and the defendant under the impugned contract, showed some contingencies in which USD 100,000 becomes payable by the Bank to the Plaintiff and other contingencies when the Plaintiff becomes obliged to buy USD 20 million at the rate of 1.3300 Swiss Franc per 1 USD from the Bank – Thus the plaintiff stands to gain at times, while the Bank stands to gain at other times – Gain for the plaintiff is intended to off-set the loss that they may incur in their foreign currency receivables or payables – Therefore, when the value of USD appreciates against Indian currency, the value of their receivables go up in terms of Indian rupee, but at the same time, the value of foreign currency payables would also go up on account of ECB – A converse situation would arise if the value of USD depreciates – Therefore the payment of USD 100,000 prescribed under the deal is to hedge the plaintiff against the risk – Purchase under contract in question would certainly make the plaintiff lose a huge amount but that by itself would not make the contract a wager – As per the terms the performance of the contract can always be compelled by the Plaintiff insisting on actual delivery and if actual delivery can be compelled, it cannot be termed as a wager – Further there was nothing to show any common intention between the plaintiff and the Bank to enter into a wagering transaction, a sine quo non for the transaction to be dumped as a wager – Sequence of events in the instant case also showed that the transaction in question, from its very nature, cannot be termed as a wager 

Test to determine whether Contract a wager

Held, there exist three tests to be satisfied if a contract is to be termed as a wager – Firstly, there must be two persons holding opposite views touching a future uncertain event – Secondly, one of those parties is to win and the other is to lose upon the determination of the event – Thirdly, both the parties have no actual interest in the occurrence or non-occurrence of the event, but have an interest only on the stake – In the instant case the first test was satisfied as there are 2 parties, but, the second test may not be satisfied since the plaintiff may not always stand to lose – If the plaintiff loses in the underlying contract on account of currency fluctuation, it may get compensated by the hedging and vice versa – Therefore both parties cannot be taken to be winners or losers in absolute terms – Present is a contract like a contract of insurance, where, on the happening of an uncertain event, the sum assured becomes payable 

Claim of money – Recovery thereof by Bank as debt – Validity challenged – Suit for declaration and permanent injunction – Maintainability thereof questioned – Bar of Civil jurisdiction by virtue of Sections 18 and 41(b) of the Specific Relief Act, 1963 – Section 6(1) of the Banking Regulation Act, 1949 – Whether Plaintiff entitled to injunctive relief in view of bar of Specific Relief Act – Whether Suit filed by the Plaintiff not maintainable – Whether Defendant entitled to initiate claim before the Debt Recovery Tribunal – Defendant contended that if the contingency provided in the contract gives rise to a claim for money by the Bank upon the Plaintiff, it would come within the definition of the word "debt", which it is entitled to recover before the appropriate Tribunal, as and when such contingency arises – Plaintiff can raise such issues only when Bank initiates any such action – Plaintiff on the contrary contended that when the whole transaction assailed as null and void and illegal, no rights and obligations flowed out of such a contract and the question of the Defendant invoking the provisions of Debt Act of 1993 does not arise

Held, definition of the word "debt" in Section 2(g) of the DRT Act includes any liability claimed as due from any person, by a Bank, during the course of any business activity undertaken by the Bank – Therefore, if the claim of the Bank has arisen during the course of any business activity undertaken by the Bank, then the amount so claimed by the Bank would certainly come within the meaning of the word "debt" as defined in Section 2(g) – If the transaction falls within any one of the forms of business covered by Section 6(1) of the Regulation Act, 1949, it would certainly be the business activity undertaken by the Bank – Consequently, a claim that arises during the course of such a business activity undertaken by the Bank, would come within the definition of the word "debt" in Section 2(g) – Transactions in derivatives, fall within the category of "business activity undertaken by the Bank" as they are covered by Section 6(1) of the Regulation Act – If the transaction in question gives rise to a claim by the Bank, of any liability, on the part of the Plaintiff, the Defendant may certainly be able to invoke the provisions of 1993 Act – However this would lead to mean that as a corollary, the present suit to be barred by Section 18 of 1993 Act – However in view of various decisions of apex Court relied upon by the Defendant, the suits were not thrown out as not maintainable but were only transferred to the Tribunals for being treated as set off or counter claim and for being tried along with an application of the Bank – Present suit thus maintainable 

Meaning of Derivatives

Held, in simple terms, derivatives are financial instruments whose values depend on the value of other underlying financial instruments – As defined by the International Accounting Standard (IAS) derivatives is defined as a financial instrument (a) whose value changes in response to the change in a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or similar variable (sometimes called the 'underlying'); (b) that requires no initial net investment or little initial net investment relative to other types of contracts that have a similar response to changes in market conditions; and (c) that is settled at a future date – Derivatives actually are assets, whose values are derived from values of underlying assets which can be commodities, metals, energy resources, and financial assets such as shares, bonds, and foreign currencies 

• CRIMINAL

BOMBAY HIGH COURT 

Avinash Bhosale Vs. Union of India (UOI) Directorate of Revenue Intelligence, Mumbai Zonal Unit-13, Enforcement Directorate and State of Maharashtra (Decided on 08.10.2008) MANU/MH/0932/2008

Impounding of passport - Applicability of Criminal Procedure Code (Cr.P.C.) - Section 104; Income Tax Act - Section 131 and 131(3); Passport Act - Sections 10, 10(3) and 23 - Whether any authority carrying out investigation and/or inquiry under the Foreign Exchange Management Act and/or under the Income Tax Act has authority, in law, to impound the passport.

In the Oxford Dictionary impound means to take legal or formal possession. In the present case, the passport of the appellant is in possession of CBI right from the date it has been seized by CBI. Under Cr.P.C., the Court is empowered to impound any document or thing produced before it whereas the Act speaks specifically of impounding of the passport. The Supreme Court in a judgment in the case of Suresh Nanda v. Central Bureau of Investigation reported in MANU/SC/7020/2008; in no uncertain terms, held that the Passports Act is a complete code in relation to impounding of the passport and even a Court exercising powers under Section 104 of the Criminal Procedure Code has no authority, power or jurisdiction to impound a passport. It is held that Passports Act is a special legislation dealing with a specific subject and hence for impounding of the passport, one has to have recourse to the provisions of the Passports Act. When there exists a special act, the general provision would yield to the specific provision. While interpreting the term documents appearing in Section 104 of the Cr.P.C., the Apex Court has held that the term documents cannot be so widely read so as to include passport. The Apex Court has further clarified that the act of seizure of a document would be referable to a given point of time when the document is taken possession of and retention of the document over a period of time would tantamount to impounding of document. Impound means to keep in custody of the law. There must be some distinct action which will show that documents or things have been impounded. The passport can only be impounded by having recourse to the provisions of the Passport Act by the authority vested with the power under the said Act.

• SERVICE

DELHI HIGH COURT 

Jitender Singh Tyagi Vs. Director of Education and Ors. (Decided on 03.10.2008) MANU/DE/1432/2008

Appellant appointed as Physical Education Teacher - Appellant's services were terminated - Representation made against illegal act - Prior approval of the Director of Education essential for termination of services - Appellant re-appointed instead of reinstatement - Appellant transferred to other branch - Representation made before Director of Education - Order passed directing withdrawal of transfer - Respondents insisted on the transfer - Writ Petition filed by the Appellant - Direction to withdraw the transfer of the Appellant - Whether Writ petition of Mandamus is maintainable

In the case of Saraswati Industrial Syndicate Ltd. v. Union of India (1974) 2 SCC 630 the Court has held that as a general rule the order will not be granted unless the party complained of has known what it was that he was required to do, and it must be shown by evidence that there was a distinct demand of that which the party seeking the mandamus desires to enforce, and that demand was met by a refusal. It is the duty of the Court to be vigilant to apply the principal in every case to which it can be made applicable. In the case of Praga Tools Corporation v. CA Imanual, the Supreme Court has held that the writ of mandamus can also be issued to a private body. In Vaish College Society v. Lakshmi Narain AIR 1974 All 1, the Supreme Court has held that the management, a purely private and non-statutory body, would be amenable to judicial review through mandamus when it performed a statutory function. Respondents 2 and 3 are disobeying and defying an order under the Delhi School Education Act, 1973 by which they are bound to withdraw the transfer order of the Appellant and therefore, a writ of mandamus can be issued to the Respondents to comply with the Order dated 22.06.2006.

BOMBAY HIGH COURT 

Arati Durgaram Gavandi Vs. Managing Director, Tata Metaliks Limited and Ors. (Decided on 06.10.2008) MANU/MH/0936/2008

Sexual harassment - Whether or not such conduct constitutes an offence under law or a breach of the service rules, an appropriate complaint mechanism should be created in the employer's organization for redress of the complaint made by the victim.

It is necessary and expedient for employers in work places as well as other responsible persons or institutions to observe certain guidelines to ensure the prevention of sexual harassment of women. In Vishaka Vs State of Rajasthan, the Supreme Court held that gender equality includes protection from sexual harassment and the right to work with dignity, which is a universally recognized basic human right.2 The Supreme Court noted that there was a global acceptance by International Conventions of the common minimum requirements of this right. The Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) requires all States who are parties thereto to take appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on a basis of equality of men and women, the same rights, in particular, (a) The right to work as an inalienable right of all human; and (b) The right to protection of health and safety in working conditions. The Convention takes note of the fact that equality in employment can be seriously impaired when women are subjected to gender specific violence such as sexual harassment in the work place. The Convention was ratified by the Government of India on 25th June 1993. The Supreme Court held that the constitutional guarantee of gender equality in Article 15 must be construed in the context of the obligation assumed by India as a party to the Convention. The Supreme Court held that in the absence of legislation enacted to enforce the basic human right to gender equality and the guarantee against sexual harassment, more particularly against sexual harassment at the work place, the Court was laying down guidelines and norms for due observance at all work places or other institutions. These norms and guidelines shall continue to hold the field until legislation is enacted. The Supreme Court directed that these guidelines and norms be treated as law declared by the Court under Article 141 of the Constitution of India.

RAJASTHAN HIGH COURT 

Bhawani Singh Charan Vs. State of Rajasthan and Ors. (Decided on 23.09.2008) MANU/RH/0526/2008

Three-tier selection process i.e., Preliminary Examination, Main Examination and viva voce - the Rajasthan State & Subordinate Services (Direct Recruitment by Combined Competitive Examination) Rules, 1999 - Rule 15- Whether interviewing large unmanageable number of candidates makes the selection process casual and superficial.

In the case of composite process of selection i.e. the three-tier selection process comprising of written examination and interview of the candidates fresh from Likewise, referring to judgment of the Supreme Court in the case of Vikram Singh and Anr. v. Subordinate Services Selection Board Haryana and Ors. reported in MANU/SC/0234/1991, the apex Court, in that judgment, categorically observed that where there is a composite test consisting of a written examination followed by a viva voce test, the number of candidates to be called for interview in order of the marks obtained in the written examination, should not exceed twice or at the highest, thrice the number of vacancies to be filled. If a viva voce test is to be carried out in a thorough and scientific manner, as it must be in order to arrive at a fair and satisfactory evaluation of the personality of a candidate, the interview must take anything between 10 to 30 minutes. In the circumstances, it would be impossible to carry out a satisfactory viva voce test if a large unmanageable number of candidates are to be interviewed. The interviews would then tend to be casual, superficial and sloppy and the assessment made at such interviews would not correctly effect the true measure of the personality of the candidate.

GUJARAT HIGH COURT 

Director General and Anr. Vs. Daxa Vaghela (Decided on 06.10.2008) MANU/GJ/0648/2008

Punitive transfer- Allegation of mala fide was made out by the respondent- Whether apprehension of mala fide intention can claim to revoke transfer on the ground that it is punitive transfer

The claim of the respondent that her transfer was punitive in as much as she had committed certain lapses in issuing invitation cards for fashion show organized two months ago. While pursuing the pleadings, if it is evident that the allegation of mala fide made by the respondent No. 1 is vague and based on apprehension and not on definite materials. There was no reason to read between the lines and come to a conclusion that the impugned order of transfer was punitive. Also it is indisputable that the services of the respondent is transferable.

• INTELLECTUAL PROPERTY RIGHTS

DELHI HIGH COURT 

Espn Star Sports Vs.  Global Broadcast News Ltd. and Ors. (Decided On: 26.09.2008) MANU/DE/1442/2008 

Applicability of Section 61- the Copyright Act 1957 - Whether the provisions under Section 61 of the Copyright Act, 1957 to make the owner party to infringement suit mandatory.

The rationale for Section 61 is to obviate the possibility of any rival claim from the owner of copyright or other allied rights and to avoid multiplicity of litigation. In any suit or other proceeding regarding infringement of copyright instituted by an exclusive licensee, the owner of the copyright shall be made a party. This provision has been made to enable the owner of the copyright to dispute the claim of the exclusive licensee. It would be anomalous if the owner of the copyright is bound to comply with Section 61 yet the owner of a species of copyright can maintain his suit without complying with Section 61.Hence it becomes mandatory.

• BANKING

GUJARAT HIGH COURT 

Tripada Stone Quarry Vs. The Gujarat State Finance Corporation (Decided on 06.10.2008) MANU/GJ/0646/2008

Whether the Gujarat State Finance Corporation can invoke the power under Section 29 of the State Finance Corporation Act against the property of the Surety, who stood as the guarantor for the loan transaction.

While reading the Act, the intentions of Parliament in enacting Section 29 and 31 of the Act was not similar is very clear. Whereas Section 29 of the Act consists of the property of the industrial concern, Section 31 takes into its fold both the property of the industrial concern and as that of the surety. None of the provisions control each other. Parliament intended to provide an additional remedy for recovery of the amount in favour of the Corporation by proceeding against a surety only in terms of Section 31 of the Act and not under Section 29 thereof. Also the highest Court of land has observed that power under Section 29 of the Act is not available to the State Financial Corporation against the property of the guarantor, and if it is desirous to take possession of the property of the guarantor, it has to resort proceedings under Section 31 of the Act and only by intervention of the Court, the possession can be taken.

• PROPERTY

MADRAS HIGH COURT 

Uttamchand Galada, Vasanth Bala Galada, Manish Galada and P. Vasantha Kumari vs. The State of Tamil Nadu rep. by its Secretary, Housing and Urban Development Department, The Chennai Metropolitan Development Authority rep. by its Member-Secretary and The Chief Executive Officer, Chennai Metropolitan Development Authority (Decided on 17.10.2008) MANU/TN/0912/2008

Acquisition Proceedings - The Petitioner was a purchaser of the land - No locus standi to claim exclusion as a matter of right - The lands were required for public purpose for which the original acquisition proceedings were initiated - If the petitioners want to possess any land, they can purchase developed plots from the second respondent - Government Order Ms. No. 134 is under challenge by the petitioners and whether the land was excluded from the larger land.

Held, Section 48(1) of The Land Acquisition Act, 1894, gives power to the State to withdraw from the acquisition proceedings but it does not specify any particular procedure for making the exclusion. G.O. Ms. No. 497, dated 23.3.1987 only expresses the Government's intention and the said decision is not published in the Government Gazette and the order itself shows that the District Revenue Officer has been asked to send proposals for denotification but no such proposal has been sent to the Government and no such notification has ever been published in the gazette. It cannot be said that the petitioners, who are the subsequent purchasers from the original land owners who suffered acquisition proceedings, cannot contend that there is a valid order of exclusion under Section 48 of the Act and therefore, the legal position of the petitioners cannot be made out.

• MOTOR VEHICLE

MADRAS HIGH COURT

The Managing Director, Tamil Nadu State Transport Corporation Ltd. vs. Murugesan (Decided on 13.10.2008) MANU/TN/0919/2008

Multiplier Method for Calculating Compensation - Negligence on part of the Appellant - Compensation granted to the Respondent by the Tribunal on the basis of Multiplier Method - Whether Appellant liable to pay compensation calculated on the basis of Multiplier Method

Held, that there is no infirmity with the findings of the Tribunal that the Appellant's bus driver and the conductor were at the fault because of which the accident occurred in which the respondent suffered serious injuries and compensation of Rs. 73,000/- was granted to the Respondent. The Court relying on the decision of United India Insurance Co. Ltd., v. Veluchamy and Anr. MANU/TN/1486/2004, held that the Tribunal was not justified in granting compensation on the basis of multiplier method because 'multiplier method' cannot be mechanically applied to ascertain the future loss of income or earning power, injury would amount to loss of employment etc. and mainly it depends upon the avocation or profession or nature of employment being attended by the injured at the time of accident.

• Civil

MADRAS HIGH COURT

Rajshree Sugars and Chemicals Limited rep. by its Director and Chief Operating Officer Mr. R. Varadaraj Vs. AXIS Bank Limited, formerly known UTI Bank Limited rep. by its Assistant Vice-President, (Treasury Markets Group), Mr. Malmarughan Vaikuntam and AXIS Bank Limited rep. by its Senior Manager (Decided on 14.10.2008) MANU/TN/0893/2008

Grant of leave – Clause 12 of the Letters Patent Appeal – Presence of Jurisdiction clause in the Contract conferring exclusive jurisdiction upon the Courts in Mumbai by use of the word “only” or “alone” – Whether leave granted proper

Held, clause as contained in the ISDA Master Agreement does not confer exclusive jurisdiction by the use of the words "only" or "alone" – In view of averments made in the pleadings, part of the cause of action arose at Chennai within the jurisdiction – Grant of leave to sue thus proper.

Relief of Interim injunction – Plaintiff sought interim order of injunction restraining the Bank from acting in furtherance of the impugned contract, by initiating any proceedings for recovery from the plaintiff and/or initiating any measures or proceedings to recover any amount

Held, the principles laid down in Modi's case, make it clear that an anti suit injunction cannot be granted when the jurisdiction of a Court is invoked on the basis of a jurisdiction clause contained in a contract, except to a limited extent – Question as to whether the proceedings were vexatious or oppressive or whether they could be initiated in a Forum non-conveniens were all said to be other relevant considerations, for the grant of such an injunction – Therefore when the invokation of the jurisdiction of a Court on the basis of a jurisdiction clause contained in an agreement, itself cannot be curtailed by an anti suit injunction, the question of injuncting a party from invoking the jurisdiction of a special Forum statutorily created to decide certain disputes, does not arise – In the instant case Act 51 of 1993 creates a special Tribunal and confers jurisdiction upon the Tribunal to decide all claims made by Banks and Financial Institutions – Therefore the Respondent cannot be injuncted from initiating any proceedings for recovery of any money due to them, before the Debts Recovery Tribunal.

Suit assailing Contract as null and void – Maintainability thereof questioned for want of cause of action – Defendant bank contended that under OPT 727 no cause of action would arise till the contingency stipulated therein arises or till the expiration date (or fixing date) is reached – Whether suit disclosed no cause of action

Held, the bar is to be seen while enforcing the contractual obligations – When a contract is assailed as null and void, the cause of action cannot be said to arise only on the expiration date – In view of the nature of the relief prayed for, it cannot be said that the plaint disclosed no cause of action.

DELHI HIGH COURT

Karm Kumar versus Union of India and Others (Writ Petition (C) No. 3049 of 2008, Decided on 1.10.2008) 

Whether individual sport federations in the absence of any uniform sports policy can subject prospective players to their whims and fancies - Petitioners son, as stated in the petition, represented India at the junior level in squash championships outside India was denied from participating in selection trials for the Asian Junior Championship on the ground that since he was holding the British passport, as his father was born there, even though he himself being born and brought up in Delhi, cannot participate in the event 

Held - The Government was directed to review why the National Sports federations are hesitant or are not following the uniform sports policy, meant to serve the best sports interest in the country. A concern was expressed on the rule framed by the Squash Rackets Federation of India, which prohibited persons of Indian origin from participating in the national championship. Unless policies are properly and adequately followed, the Country’s future in the arena of sport cannot be made competitive. The plea raised by the Squash federation that the rule under scrutiny was framed to protect interests of native Indian players against foreign nationals who relatively has an upper edge over the native aspirants. It was held that if the native Indian players cannot be groomed to compete against foreign players or nationals, they could never be expected to perform well in an international event.

TRIBUNAL

• RIGHT TO INFORMATION

CENTRAL INFORMATION COMMISSION

Shri Iftikhar Hasan Vs. Cantonment Board (Decided on 06.10.2008) MANU/CI/0300/2008

Meaning of Information - Appellant applied to the CPIO - Seeking information on the functioning of the Cantonment Board - Section 7(9) of RTI Act, 2005 - Disproportionately divert the resources of this office - Appeal filed before the F.A.A. & C.E.O - Held, Appellant not denied of the information and Appeal Dismissed - Second Appeal filed by the Appellant - Whether CPIO's order of not providing information to Appellant justified

According to Section 2(f) of The Right to Information Act, information means anything which is in material form and as per Section 2(j) of The Right of Information Act, right to information means information accessible that is held by or under the control of any public authority. Therefore information to qualify for access under Right to Information Act must be information in material form. Information sought by Appellant cannot be defined as information Under Section 2(f) and is, therefore, not accessible under RTI Act 2005 but the Appellant may inspect the information sought by him because as per the provisions there was no refusal on the part of the Respondent.