SUPREME COURT

• MOTOR VEHICLES  LAWS

Indra Devi & Ors. v. Bagada Ram & Anr. (Decided on 18.08.2010)

No fault compensation - Refund of Paid Compensation - Sections 166 and 140of the Motor Vehicles Act, 1988 - Whether the claimants can be directed to refund the compensation amount in case wherein the deceased himself was responsible for the said accident?

Held, that the nature of the `no fault compensation' payable under section 140 of the Act. Tribunal was patently in error, in directing for the refund of the amount of `no fault compensation' already paid to the claimants, to the Insurance Company. High Court was equally in error in missing out this grave mistake in the judgment and Order passed by the Tribunal and not setting it right. Therefore, Order of the Tribunal insofar as it permits the Insurance Company (Respondent no.2) to recover the amount of interim compensation along with the interest from the claimants/Appellants is set aside . Appeal allowed

• CRIMINAL LAWS

S.S. Chheena v. Vijay Kumar Mahajan & Another (Decided on 12.08.2010) MANU/SC/0585/2010

Abetment of suicide - Absence of any credible evidence or material on record against the Appellants - Appellants were responsible for abetting the suicide and sought for trial under section 306 of Indian Penal Code, 1860 - Whether it would be just and fair to let the party alleged of committing offence in the absence of any credible material against him?

Held, abetment involves a mental process of instigating a person or intentionally aiding a person in doing of a thing. Without a positive act on the part of the accused to instigate or aid in committing suicide, conviction cannot be sustained . In this case, no conviction was held to be legally sustainable in the absence of any credible evidence or material on record against the appellant . Under Section 306 Indian Penal Code there has to be a clear mens rea to commit the offence. The order of framing a charge under section 306 Indian Penal Code against the appellant is palpably erroneous and unsustainable. Thus it would not be just and fair to the appellant to face a criminal trial in absence of any credible material against him. Consequently, the order of framing charge under section 306 Indian Penal Code against the Appellant is quashed and all proceedings pending against him are also set aside .

Indirect Tax Practitioners Association v. R.K. Jain (Decided on 12.08.2010) MANU/SC/0593/2010

Contempt of Courts - Criminal contempt - Articles 129 , 142 and  51A(h) of the Constitution of India, 1950 -1) Whether Respondent violated the undertaking filed in this Court in Contempt Petition? 2) Whether editorial was intended to scandalise the functioning of CESTAT or the same amounted to interference in the administration of justice? 3) Whether contents of the editorial constitute criminal contempt within the meaning of Section 2(c) of the Contempt of Courts Act, 1971?

Held, sole purpose of writing said letters was to enable the concerned authorities to take corrective measures but nothing appears to have been done by them to stem the rot .No material has been placed before this Court to show that the Finance Minister or the Revenue Secretary, Government of India had taken any remedial action in the context of the issues raised by the Respondent. Therefore, it is not possible to hold the Respondent guilty of violating the undertaking given to this Court. Editorial criticism cannot be castigated as an attempt to scandalise or lower the authority of the Court or other judicial institutions or as an attempt to interfere with the administration of justice except when such criticism is ill motivated or is construed as a deliberate attempt to run down the institution or an individual Judge is targeted for extraneous reasons . What the Respondent projected was nothing but true state of the functioning of CESTAT on administrative side and to some extent on judicial side . By doing so, he had merely discharged the constitutional duty of a citizen enshrined in Article 51A(h) .Substituted Section 13 represents an important legislative recognition of one of the fundamentals of our value system, i.e. Truth. Amended Section enables the Court to permit justification by truth as a valid defence in any contempt proceeding if it is satisfied that such defence is in public interest and the request for invoking the defence is bona fide .

M.A.A. Annamalai v. State of Karnataka & Another (Decided on 12.08.2010) MANU/SC/0586/2010

Liability Of Director after Resignation - Offences under Under section 420 of Indian Penal Code, 1860 read with section 3, 4, 5 and 6 of the Money Circulation and Banning Act, 1978 after his tenure - Whether the Appellant could be held responsible for any activities of the company after he ceased to be a Director of the company?

Held, primary requirement to make out an offence of cheating under section 415 punishable under section 420 of IPC is dishonest/fraudulent intention at the time of inducement is made. In the present case, appellant ceased to be a Director of the company from 27t12..1997 whereas the alleged offences, if any, were committed during the period from 24.5.1998 to 17.9.1999 . Therefore, appellant cannot be held responsible for any activities of the company after he ceased to be a Director of the company. Further, no specific allegation against the Appellant in FIR . Impugned judgment of High Court set aside and proceedings initiated against the Appellant quashed.

• ARBITRATION LAWS

Venture Global Engineering v. Satyam Computer Services Ltd. and Anr (Decided on 11.08.2010) MANU/SC/0584/2010

Inclusion of additional Pleadings - High court rejected to bring certain new facts on record and also file additional pleadings in respect of the same under Order VIII, Rule 9 of the Code of Civil Procedure, 1908 on the ground that a wrong provision has been quoted in the amendment petition - Whether High court was justified in not allowing the appellant to bring certain new facts on record and also file additional pleadings in respect of the same under Order VIII, Rule 9 of the CPC on the ground that a wrong provision has been quoted in the amendment petition?

Held, while dealing with a prayer for amendment, Courts normally prefer substance to form and techniques and the interest of justice is one of most relevant considerations. Therefore, if a party is entitled to amend its pleadings, having regard to the justice of the case, the right of the party to amend cannot be defeated just because a wrong Section or a wrong provision has been quoted in the amendment petition. If the concealed facts, disclosed after the passing of the award, have a causative link with the facts constituting or inducing the award, such facts are relevant in a setting aside proceeding and award may be set aside as affected or induced by fraud. In the present case, question is one of relevance of the materials which the Appellant wants to bring on record by way of amendment in its plea for setting aside the award and whether the award will be set aside or not is a different question and that has to be decided by the appropriate Court. The approach of the High Court in rejecting the Appellant's prayer for amendment, inter alia, on the ground that a wrong provision has been quoted in the amendment petition, is obviously a very hyper technical one. In the interest of justice and considering the fairness of procedure, the Court should allow the Appellant to bring those materials on record as those materials are not wholly irrelevant or they may have a bearing on the Appellant's plea for setting aside the award.

• INDIRECT TAX LAWS

SALES TAX

The Commissioner of Trade Tax, U.P. v. S/S. Parikh Gramodyog Sansthan (Decided on 11.08.2010) MANU/SC/0587/2010

Classification under Uttar Pradesh Trade Tax Act, 1948, Entries 16 and 74(f) - Whether the 'Voltage Stabilizer' manufactured and sold ought to be taxed as electrical goods under Entry No. 16 of Schedule to U. P. Trade Tax Act, 1948 or as electronic goods under Entry No. 74(f) of the Notification No.1223 dated 31.03.1992?

Held, On the ground that electrical goods involve the consumption of electricity, whereas an electronic device functions through the creation of an electron vacuum in the semiconductor material so voltage stabilizers were 'electronic' goods and not 'electrical' goods .A voltage stabilizer might have many components some of which use electricity but this cannot be the sole reason for classifying it as an electrical good. Hence, voltage stabilizer is electronic goods, for the purpose of taxation under Uttar Pradesh Trade Tax Act . Order of Tribunal upheld

• TENANCY LAWS

Trust Jama Masjid Waqf No. 31 v. M/s Lakshmi Talkies and Ors. (Decided on 16.08.2010)

Fixation Of Rent - U. P. Urban Buildings (Regulation of Lettings, Rent and Eviction) Act, 1972 - Lease was executed for a term of 7 years High Court allowed Writ Petition in part and fixed the rent at Rs. 2500/- p.m. payable from June 1, 1984 - Whether High Court justified in fixing the rent of the said land at the rate of Rs. 2500/- p.m. solely based on circle rate fixed under the Stamp Rules?

Held, the circle rate fixed under the Stamp Rules is ordinarily general rate for a particular area and may provide some indication but such rate cannot be decisive of the prevalent market value of the concerned land. An exemplar showing sale of nearby land may help in determining the market value of the demised land but there is no exemplar here . The valuer's report, however, shows that the demised land is situate on the main road from Holy Gate to Collectorate and Civil Lines near the Roadways Bus Stand and Mathura-Cantt., Railway Station. The High Court has not taken into consideration the valuer's report and the evidence let in by the landlord at all. We are, thus, satisfied that the High Court was not justified in fixing the rent of the said land at the rate of Rs. 2500/- p.m. solely based on the circle rate fixed under the Stamp Rules. The consideration of the matter by the High Court suffers from legal flaw and cannot be sustained.

Chaturbhuja Modi & Ors. v. State of Orissa & Anr. (Decided on 12.08.2010) MANU/SC/0588/2010

Land acquisition - Enhancement of compensation - Section 4(1) and 18 of the Land Acquisition Act, 1894 -Land was acquired for Orissa State Financial Corporation - Appellants sought for enhanced the compensation to Rs. 1,50,000/- per acre more than market rate - Whether compensation could be enhanced?

Held, A certified copy of the registered sale deed was only evidence that could be considered and relied upon. Although the Sale deed was not an excellent comparison in terms of area and land whose sale was evidenced it also indicates that a sales transaction completed at around the same time as the acquisition of the said land and sale deed also concerns a plot that was in geographical proximity to the acquired land .So compensation could not be enhanced .After giving some variations and discount the High Court fixed the compensation at the rate of Rs. 3,00,000/- per acre which seems to be just and proper.

HIGH COURT

• INDIRECT TAX LAWS

CUSTOMS

BOMBAY HIGH COURT

Malaysian Airlines and Others v. UOI (Decided on 09.08.2010 ) MANU/MH/0879/2010

Delay in payment of Foreign Travel Tax - Imposition of penalty under section 38(3) of the Finance Act, 1979 - Adjudicating Authority imposed penalty for late payment of Foreign Travel Tax -

1) Whether power to impose penalty under section 38(3) of the Act is excisable only in case of "failure to pay the tax" and not where there is only a delay in the payment of tax?

2) Whether authorities were justified in imposing and sustaining penalty in consonance with subsection (3) of section 38 of the Finance Act, 1979 ignoring rule 11 of the FTT Rules?

Held, 1) as per the provisions of the Act, amount of FTT collected becomes due within fifteen days from the date of collection thereof .Failure to pay within this prescribed time frame would mean non-payment or failure to pay.If any person fails to pay within the statutory period of fifteen days, then such person is well within the sweep of the words "failure to pay". Once the period of fifteen days is over and breach in payment of tax is committed, then it is immaterial when the defaulter in future is making the payment. Hence concept of failure to pay can also be quoted with non-payment.

(2) relyed on the Cases Iran National Airlines v. Union of India and Delhi High Court judgment in Combatta Aviation Ltd. v. Union of India Court held that there was no fault on the part of the Adjudicating Authority either in complying with the provisions of the Act or in the decision making process .

• SERVICE LAWS

DELHI HIGH COURT

Shailesh Singh v. Union Of India (Decided on 10.08.2010) MANU/DE/1868/2010

Premature repatriation challenged - Petitioner, an officer of the IPS was repatriated to his parent organization - Respondent contended that person who proceeds on deputation for a fixed tenure does not have any vested right to work in the transferee department for the period stipulated and in the exigency of service the tenure may be curtailed - Whether there was any mala fide in law when impugned order of premature repatriation was passed ?

Court found neither malice nor ill will against the petitioner and the decision making authority has acted very transparently and as was to be expected, the complaints against the petitioner have categorically been found to be without substance. The petitioner has been consulted with respect to the complaints. While looking into the complaints, the authority got the feel of the work culture imposed in the office by the petitioner and as noted by us hereinabove a bona-fide decision has been taken that how-so-ever good may be the intentions of the petitioner, the strict regimented regime sought to be put into place by Petitioner was not warranted. Court may only add that it may happen that a most competent person with the most honest intention may not gel with the working of the office since the same requires a wholly different approach to the problems faced.

• EXCISE LAWS

PUNJAB HIGH COURT

Commissioner of Central Excise v. M/s Federal Mogul Goetze (I) Ltd.( Decided on 16.08.2010)

Cenvat Credit - Service tax liability - Rule 9 (1) (e) of Cenvat Credit Rules - Whether the Hon'ble CESTAT was justified in allowing availment of Cenvat Credit on the basis of TR-6 Challans issued by a person other than the service provider, which is not a prescribed document in terms of Rule 9 (1)(e) of the CENVAT Credit Rules, 2004 for availing the CENVAT Credit by service provider?

As there was no dispute about the fact that during the period from Aug'05 to Dec'05, M/s Star Professional Services, who had issued the invoice and on the basis of which CENVAT Credit has been taken by the Appellant, neither had the service tax registration nor had paid the service tax. However, from the letter dt. 20.07.05 of M/s Star Security & Employment addressed to the Asstt. Commissioner, it is seen that in this letter they had informed the Department that they are providing cleaning service through a sister concern M/s Star Professional Service under the same management and premises and that they would like to pay the service tax under the firm Star Security&Employment to save additional work load. This shows that service was being provided by M/s Star Security & Employment through M/s Star Professional Services and M/s Star Security & Employment had discharged the service tax liability under TR-6 Challan. There is no dispute about the fact that M/s Star Security and Employment at that time had service tax registration and discharged the service tax liability. TR-6 challan during the period of dispute was a valid document on the basis of which CENVAT credit could not be taken. In view of this, Court view that the credit has been rightly taken on the basis of TR-6 challans which are in the name of Star Security & Employment and who were providing the cleaning services through their sister concern M/s Star Professional Service. , it would not be correct to deny the CENVAT credit to the Appellant.

So its clear from the finding recorded above that the service provider who issued invoices was the sister concern of M/s Star Security and Employment which was already registered and had discharged service tax liability under TR-6 challan. There was, thus, no ground to reject the claim for CENVAT Credit. The finding being not in any manner perverse, no substantial question of law arises.

  • PROPERTY LAWS

MADRAS HIGH COURT

S. Alagammal v. Mariammal (Decided on 11.08.2010)

Mortgage deed - Condonation of delay of 370 days - Petition filed under section 5 of the Limitation Act 1963 - Whether this Petition was barred by limitation?

Held,if a Petition filed under section5 of the Limitation Act, 1963 (36 of 1963) in a casual manner without proving the cause mentioned therein, the same should not be allowed as a routine course. The Court must thoroughly applied its mind so as to find out as to whether the cause mentioned therein is really bona fide or genuine. If a petition is filed under section 5 of the Limitation Act, 1963 (36 of 1963) in a casual manner and the petitioner therein has adopted indolent, insouciant attitude, the same should be summarily thrown out. In the instant case, it has already been pointed out that on the side of the revision petitioner/petitioner, the reason given in the petition has not at all been proved and under the said circumstances also, the petition in question is liable to be dismissed .

• TRIBUNAL

Godrej & Boyce Mfg. Co. Ltd. Mumbai. v. Dy. Commissioner of Income Tax (Decided on 12.08.2010) MANU/MH/0879/2010

Direct Taxation - Disallowance towards expenses attributed to the earning of the dividend income - Tribunal impugned judgment held that Sub-sections (2) and (3) of Section 14A are procedural in nature and have retrospective effect and remanded the matter to the AO for re-computing the disallowance.

1. Whether Section 14A is attracted in the case of dividend income received from shares and income from mutual funds ?

2. Whether a plain and grammatical construction of Section 14A lead to absurdity ?

3. Whether Sub-sections (2) and (3) of Section 14A and of Rule 8D are constitutionally valid ?

4. Whether the order of restoration passed by the Tribunal was justified in the present case ?

Held

1. Income from dividend and income from mutual funds falling within the ambit of Section 10(33) of the Income Tax Act 1961, as was applicable for Assessment Year 2002-03 is not includible in computing the total income of the assessee as they do not form part of the total income under Section 10(33). Hence, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to such income which does not form part of the total income under the Act, by virtue of the provisions of Section 14A(1).

2. Section 14A is founded on a valid rationale that the basic principle of taxation is to tax net income that is to say, gross income minus the expenditure. What Section 14A effectuates is that a shareholder should not get the benefit both of an exemption under Section 10(33) and also a deduction in respect of the expenditure laid out towards earning tax free income. If the dividend income had not been exempt under Section 10(33), the Revenue would have taxed such dividend income and the assessee would have been entitled to a deduction in respect of its expenditure in relation to that income. Section 14A ensures that the shareholder whose income from dividend is not included in the total income of a previous year shall not claim a deduction in respect of the expenditure incurred in relation to earning such income. Thus, no absurdity would result on the application of the literal interpretation of Section 14A.

3. The provisions of Sub-sections (2) and (3) of Section 14A of the Income Tax Act 1961 are constitutionally valid. The provisions of Rule 8D of the Income Tax Rules which have been notified with effect from 24 March 2008 and to apply with effect from Assessment Year 2008-09 are neither ultra vires of the provisions of Section 14A or Section 14A(2) nor does offend Article 14 of the Constitution. Even prior to Assessment Year 2008-09, when Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of Section 14A (1).

4. In the present case, the provisions of Rule 8D shall have no application to Assessment Year 2002-03 which is under consideration . The principle underlying Section 14A(1) that no deduction can be claimed in respect of the expenditure incurred in relation to income which does not form part of the total income under the Act would have to be given effect to. The dividend income earned by the assessee for relevant Assessment Year does not form part of the total income in view of the provisions of Section 10(33) as they then stood. Hence, the expenditure which has been incurred in relation to the earning of that income would have to be apportioned and disallowed. Even if Rule 8D has no application to Assessment Year 2002-03 the Assessing Officer would be duty bound to compute the extent of the disallowance by the application of a reasonable method having regard to all the facts and circumstances of the case and in order to facilitate this exercise, an order of remand to the Assessing Officer would be necessary.