SUPREME COURT

• CRIMINAL LAW

Mustkeem @ Sirajudeen Vs. State of Rajasthan (Decided on 13.07.2011) MANU/SC/0795/2011

Conviction based on Circumstantial Evidence - Challenge against thereto - Trial Court convicted the Appellants for offences punishable under Section 302/34 of the Indian Penal Code (IPC), 1860 - High Court dismissed the appeal of the Appellants - Hence this appeal - Whether the prosecution had fully established the guilt of the accused

Held, It is well settled  law that where the 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. No doubt, it is true that conviction can be based solely on circumstantial evidence but it should be decided on the touchstone of law relating to circumstantial evidence, which has been well settled by law by this Court. In the instant case, the recovery of the weapons on disclosure of the Appellants itself was doubtful. The witness of Recovery Memo was declared hostile and another witness admitted that signatures were obtained on the memos and annexures at the Police Station itself. Prosecution failed to establish as to why none of the local persons were called to be the witnesses. The conduct of the prosecution appears to be extremely doubtful and renders the case as concocted, to falsely implicate the Appellants. This lacuna should have been explained by the prosecution more so when the whole case rested only on circumstantial evidence. Thus looking to the matter from all angles court opined that it would not be safe and proper to hold the Appellants guilty for commission of offence. Hence, it is found that the appreciation of evidence in a case, which is entirely based on circumstantial evidence, is vitiated by serious errors and on that account miscarriage of justice has been occasioned, then the Court will certainly interfere even with the concurrent findings recorded by the trial court and the High Court . The judgment and order of conviction as recorded by Trial Court and confirmed by High Court in Appellants appeals cannot be sustained in law. The same are, therefore, hereby set aside and quashed. Appeals are allowed

• LAW OF EVIDENCE

Disclosure by Accused - Scope and Ambit of Section 27 of the Evidence Act, 1872 

Held, with regard to Section 27 of the Act, what is important is discovery of the material object at the disclosure of the accused but such disclosure alone would not automatically lead to the conclusion that the offence was also committed by the accused. In fact, thereafter, burden lies on the prosecution to establish a close link between discovery of the material objects and its use in the commission of the offence. What is admissible under Section 27 of the Act is the information leading to discovery and not any opinion formed on it by the prosecution.

• LAW OF ARBITRATION

Union of India (UOI) Vs. Krafters Engineering and Leasing (P) Ltd. (Decided on 12.07.2011) MANU/SC/0765/2011

Grant of Interest by Arbitrator - Challenge against thereto - Dispute arose after the completion of work which was assigned to Respondents - High Court directed for appointment of Arbitrator but since Arbitrator could not be appointed in prescribed time Respondent invoked the jurisdiction of Umpire - Appellant filed a petition before the Single judge of the High court against the award which was dismissed which was subsequently dismissed by Division Bench as well - Hence this appeal - Whether an arbitrator has jurisdiction to grant interest despite the agreement prohibiting the same

Held, where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes or refer the dispute as to interest as such to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view. In the case in hand Clause 31 of the agreement bars payment of any interest or damage to the contractor for any reason whatsoever. Hence, no pre-reference or pendente lite interest was payable to the Respondent. Further, Clause 16(2) of GCC and Clause 30 of SCC do not contain any prohibition on the arbitrator to grant interest. Therefore, the High Court was not right in interfering with the arbitrator's award on the matter of interest on the basis of the aforesaid clauses. Section 37(1) of the new Act by using the words "unless otherwise agreed by the parties" categorically clarifies that the arbitrator is bound by the terms of the contract insofar as the award of interest from the date of cause of action to the date of award. Therefore, where the parties had agreed that no interest shall be payable, the Arbitral Tribunal cannot award interest between the date when the cause of action arose to the date of award. In the light of the above principle and in view of the specific prohibition of contract contained in Clause 1.15, the arbitrator ceases to have the power to grant interest. The award of the arbitrator granting interest in respect of the amount payable to the contractor under the contract as well as the order of the learned Single Judge and the Division Bench of the High Court confirming the same set aside. Appeal Allowed

• SERVICE LAWS

Union of India (UOI) and Anr. Vs. Ram Singh Thakur and Ors. (Decided on 14.07.2011) MANU/SC/0832/2011

Direction for Induction - Validity of - Central Administrative Tribunal directed the Railway Board to formulate a suitable scheme for induction of the Respondents and similarly placed employees of other co-operative societies in regular Group 'D' posts and alternatively also as Casual Group 'D' employees in the railways, which was subsequently upheld by the High Court - Hence this appeal - Whether Tribunal was correct in directing the induction of Respondents

Held, the order of the Tribunal as well as the impugned judgments of the High Court were totally unwarranted and illegal. There is broad separation of power in the Indian Constitution. It is not proper for the Judiciary to encroach into the domain of the Legislature or the Executive. The framing of a scheme such as the one done by the Tribunal and approved by the High Court was a purely executive function, and could not validly be done by the judiciary. The direction to frame a scheme for appointment can only be given by the Executive and that too according to Article 16 and other provisions of the Constitution. Appeal allowed and the impugned judgments of the High Court as well as the order of the Tribunal are set aside.

Jagdish Parwani Vs. Union of India (UOI) and Ors. (Decided on 15.07.2011) MANU/SC/0823/2011

Claim for pay protection - Rejection thereof - Appellant claimed for Pay Protection on the basis of the notification issued by the Ministry of Personnel, Public Grievances and Pensions (Department of Personnel & Training) dated 07th August, 1989 which was rejected - Tribunal directed the Respondents to fix pay of the Appellant by giving him pay protection within six months and also to pay him the arrears of pay and allowances which was reversed by the High Court on ground that Tribunal committed grave error in granting pay protection to the Appellant - Hence this appeal

Held, Notification dated 28th February , 1992 clearly stipulates that an employee of the State Government Undertaking selected for post in Central Government on direct recruitment basis would be entitled to pay protection upon appointment in Central Government only effective from 1st , February, 1992. The Appellant having joined the MES, Ministry of Defence prior to the aforesaid date was not entitled to the benefit of the aforesaid notification which was issued much after his joining date and, therefore, the benefit of the aforesaid notification is not available to the Appellant. In the present case it cannot be said that a notification issued after two years of the appointment of the Appellant which is also specifically stated to have been issued with prospective effect is applicable in his case. Hence, High Court was justified in setting aside the order of the Tribunal as the Tribunal has misread and misinterpreted the facts as also the legal principles in law. Appeal dismissed.

HIGH COURTS

• CRIMINAL LAW

PUNJAB AND HARYANA HIGH COURT

Surinder Kumar Gupta and Anr. Vs. State of Punjab (Decided on 11.07.2011) MANU/PH/1894/2011

Corruption - Conviction - Challenge against thereto - Special Judge convicted the Appellants for offences punishable under sections 7 and 13(1) (d) read with Section 13(2) of the Prevention of Corruption Act, 1988 - Hence this appeal - Whether the Special Judge was correct in convicting the Appellants

Held, statements of prosecution witnesses inspire confidence and their veracity was tested in lengthy cross-examination. There is no reason why they would depose falsely against the accused or would implicate the Appellant in a false case. Even the Investigating Officer had no reason to plant a false case on the accused. Emphasis on behalf the Appellants, that license for brick kiln could not be issued as electricity wires were passing over the proposed site of brick kiln, is completely misplaced and merit less. Even before application for license for installation of brick kiln was moved and entertained, the accused could have no knowledge of the proposed site of brick kiln nor could they know that electricity lines were passing over the said site. Omission to mention name of Appellant No. 2 in the FIR rather depicts the truthfulness of the prosecution version. Prosecution has successfully established the charge against both the accused beyond reasonable doubt. Conviction of Appellants confirmed sentence of Appellants reduced.

RAJASTHAN HIGH COURT

Bhanwarlal Vs. State of Rajasthan (Decided on 14.07.2011) MANU/RH/0546/2011

Prosecution for carrying Excisable articles - Section 69 (2-B) of the Excise Act, 1950 - Petitioners were charge sheeted under provisions of Sections 14/54 and 19/54 of the Excise Act - Hence this appeal - Whether the vehicle owned by the Petitioner was not at all carrying any excisable article, thus, the provisions of Section 69 (2-B) of the Act of 1950 were not applicable

Held, as per Section 69(2-B) "whenever any excisable article is seized under Sub-section (1), the District Excise Officer shall have, and, notwithstanding anything contained in any other law for the time being in force, any Court, Tribunal or other authority shall not have, jurisdiction to make order with regard to the possession, delivery, disposal and release of such property". Hence it is apparent that District Excise Officer is having exclusive jurisdiction to make an order with regard to possession, delivery, disposal and release of a property i.e. seized with excisable article. In the instant matter the Jeep No. RJ-06/UA-1320 was not at all seized with or excisable article. As such, the provisions of Section 69 (2-B) of the Act of 1950 are not required to be brought into picture in the instant matter. Therefore, Petition allowed and Additional Chief Judicial Magistrate, directed to consider and decide the application preferred by the Petitioner as per provisions of Section 457 Code of Criminal Procedure afresh on merits.

• SERVICE LAWS

ALLAHABAD HIGH COURT

State of U.P. thru Principal Secretary Home and Ors. Vs. State Public Service Tribunal and Anr. (Decided on 11.07.2011) MANU/UP/1474/2011

Departmental Proceedings - Dismissal From Service - Sub rule (b) of Rule 8(2) of U.P. Police Officers of Subordinate Rank (Punishment & Appeal) Rules, 1991- Petitioners have challenged the Order of State Public Service Tribunal which allowed the claim of Opposite Party No.2 with liberty to the Petitioner to proceed with Opposite Party No.2 afresh in accordance to law - Whether the Order of Tribunal was justified

Held, in the present case, the only reason given for dispensing with that enquiry was that it was considered not feasible or desirable to procure witnesses of the security/other Railway employees since this will expose these witnesses and make them ineffective in the future. The Court questions as to how can witnesses appearing at a confronted enquiry, are likely to suffer personal humiliation and insults saying that these are normal witnesses and they could not be said to be placed in any delicate or special position in which asking them to appear at a confronted enquiry would render them subject to any danger to which witnesses are not normally subjected and hence these ground constitute no justification for dispensing with the enquiry. There is total absence of sufficient material or good ground for dispensing with the enquiry no order as to costs. The impugned order of dismissal from service of the Petitioner has been passed purportedly in exercise of the power under Rule 8(2)(b) of Rules 1991. Clause (b) of Rule 8(2) mandates that it is essential that the authority empowers to inflict major punishment must feel satisfied that for some reason or the other, the enquiry cannot be held but that reason has also to be recorded in writing which should indicate that it was not reasonably practicable to hold such inquiry and unless such a finding is recorded, the order passed under the said provision, would become bad. Further, the reasons, so recorded, must be also valid and relevant and not merely a camouflage. It is not pure subjective satisfaction of the authority to dispense with the inquiry but his discretion is circumscribed by the requirement of recording such a reason which, of course, has to be a valid reason for which the inquiry cannot be practicably held, meaning thereby if the documents, witnesses or the material on which the inquiry is to be conducted is available and there is no other legal or practical impediment, there would be no reason to dispense with the inquiry and pass the order of major punishment. Clause (2) of Rule 8 is a substantive provision and does not lay down any exception or confers any discretion upon the empowered authority of not holding an enquiry into the charges of misconduct against a police officer and to pass order without affording an opportunity. It is only in the proviso (b) an exception is carved out but exception cannot take place of a rule and has to apply in the circumstances given therein and in-fact heavy burden lies upon the empowered authority to show that the order has been passed strictly within the four corners of the statute and all the relevant ingredients have been taken into account. No illegality or infirmity in the Judgement of the Tribunal. Petition Dismissed.

• LABOUR AND INDUSTRIAL LAWS

PATNA HIGH COURT

Employees State Insurance Corporation through its Regional Director and Employees State Insurance Corporation Vs. Uma Shankar Bajaj, Son of Sri S.R. Bajaj, Proprietor Gokul Mini Restaurant (Decided on 11.07.2011) MANU/BH/0655/2011

Demand of Contribution - Set aside - Section 82 of the Employees State Insurance Act, 1948 (E.S.I. Act) - Employees State Insurance Court set aside the demand of contribution made by the Appellant - Hence this appeal - Whether the Employees State Insurance Court was correct in setting aside the demand of contribution of the Appellant

Held, in the evidence of Respondent , it has specifically been admitted that in the restaurant 13-14 persons were employed. He has also admitted that inspection was conducted in his restaurant in paragraph No. 1 of his deposition whereas in the order impugned the learned 'Insurance Court' has recorded that there was no evidence about 14 persons since name of 14 persons and other details were not disclosed. Besides this, perusal of inspection report which is on record also makes it clear that 14 persons were regularly employed in the restaurant. Hence, the 'Insurance Court' has committed apparent error of record. Moreover, the objects of E.S.I. Act is primarily for the welfare of employees and for welfare of the employees in accordance with law demand for contribution of employer i.e. Respondent was made. Since the 'Insurance Court' has recorded a finding which is contrary to the materials available on record hence, impugned order set aside and Appeal Allowed

• DIRECT TAXATION LAWS

CALCUTTA HIGH COURT

Stewart Holl (India) Ltd. Vs. Commissioner of Income Tax (Decided on 13.07.2011) MANU/WB/0460/2011

Benefit - Entitlement of - Sub-Section 3(a) of Section 80HHC of the Income Tax Act, 1961 - Appellant a Public Limited Company claimed benefit provided in Sub-Section 3(a) of Section 80HHC as blending of tea amounts to processing within the meaning of said provision which was turned down by the Assessing Officer which was subsequently affirmed by the Commissioner of Income-tax (Appeals) and the Tribunal - Hence this appeal - Whether the blending of different types of tea comes within the purview of the word "processed" within the meaning of Section 80HHC (3a) of the Act

Held, where an Assessee, being an Indian company or a person resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the Assessee, a deduction of the derived by the Assessee from the export of such goods or merchandise. In Nilgiri's case Court held that he different brands of tea which were mixed by the Assessee for the purpose of producing a tea mixture of a different kind and quality according to the formula evolved by them, there was plainly and indubitably processing of different brands of tea, because these brands of tea experienced, as a result of mixing, qualitative change, in that the tea mixture which came into existence was of different quality and flavour than the different brands of tea which went into the mixture, But the benefit granted in the Nilgiri's case cannot cannot be extended in the present case to the Respondent Assessee because the word processing has been specifically omitted in the statute. The activity of the Respondent Assessee in the present case also amounts to 'processing'. Section 35(1)(b) governing the instant case incorporated the terms 'manufacture' and 'production' and omitted the term 'processing'. Tribunal committed a substantial error of law in refusing the benefit of Sub-section (3a) of Section 80HHC of the Act. Order of Assessing Officer set aside and Respondents directed to give Appellants the benefit of Section in terms Sub-section (3a) of Section 80 HHC of the Act.

TRIBUNALS

• CONSUMER LAW

National Consumer Disputes Redressal Commission, New Delhi

Kailash Malhotra W/o Late Shri K.L. Malhotra Vs. Centre for Sight (Hospital), Dr. Mahipal Singh Sachdev (Surgeon) and New India Assurance Co. Ltd. (Decided on 12.07.2011) MANU/CF/0198/2011

Medical Negligence - Application for calling of expert opinion - Section 21 of the Consumer Protection Act, 1986 - Petitioner filed a complaint for gross medical negligence before the State Commission - During the pendency of complaint Respondents filed an application for calling for the expert opinion which was allowed by the State Commission - Hence this Revision - Whether the State Commission was justified in allowing the Application of the Respondents

Held, it is a case of medical negligence and the State Commission has rightly sought the expert opinion particularly highlighting the points of negligence, in order to arrive at a just and fair decision. The order passed by State Commission is in the interest of both the parties and no prejudice has been caused to the Petitione. It is well settled that the powers of this Commission as a Revisional Court under Section 21(b) of the Act, are very limited and have to be exercised only, if there is some prima facie jurisdictional error in the impugned order or the fora below have acted with any material irregularity. The impugned order, does not suffer from any jurisdictional error or legal error and the same is based on sound reasoning, it does not call for any interference nor there is any infirmity or erroneous exercise of the jurisdiction. Hence present Revision Petition dismissed

• Direct Taxation Laws

ITAT MUMBAI

Nalanda Packaging Private Limited Vs. The Income Tax Officer (Decided on 15.07.2011) MANU/IU/0680/2011

Computation of Capital Gains - Section 50 C of the Income Tax Act, 1961 - Assessee sold certain property by adopting sale consideration at Rs.41 lacs but the Assessing Officer noted that as per stamp duty authority the value was Rs.76,53,500 - The explanation given by the Assessee was not accepted by the Assessing Officer - Hence, his appeal

Held, It is noticed that since the Assessee raised objection before the Assessing Officer on the question of stamp value being higher than the fair market value, it became incumbent upon the Assessing Officer to refer the matter to the Valuation Officer in terms of section 50C(2). As this course of action has not been followed by the AO and the valuation determined by the stamp valuation authority has been taken as a base for computing the capital gain, in our considered opinion, it would be just and fair if the impugned order is set aside and the matter is restored to the file of A.O. We order accordingly and direct him to comply with the mandate of section 50C(2) and decide this issue afresh accordingly.

Non-granting of deduction under section 54 EC - Assessee claimed deduction under section 54 EC relying on the Judgment ACE Builders Pvt. Ltd. which was disallowed by the Assessing Officer on ground that said Judgment was not binding as the matter was not contested before Supreme court - CIT (A) in appeal held that deduction under section .54EC was not allowable on ground that the Assessee did not get the legitimate ownership in the said property till June 2005 and hence up to this period he was only having leasehold rights to occupy the property -Hence this appeal

Held, finding given by the learned CIT(A) is different from the reasons on which disallowance was made by the Assessing Officer. As there is no reference in the impugned order to any opportunity granted by the learned CIT(A) before reaching this conclusion, naturally the Assessee could not have got any occasion to prove its case. Learned A.R.  placed  certain additional evidence. As the appreciation of this additional evidence has not been done by the Assessing Officer , hence, impugned order on this issue is set aside and the matter is restored to the file of A.O and heard afresh. Appeal Allowed