Bihar State Elect.Board & Anr vs Ram Deo Prasad Singh & Ors on 8 September, 2011

Supreme Court of India
Bihar State Elect.Board & Anr vs Ram Deo Prasad Singh & Ors on 8 September, 2011
Bench: Aftab Alam, R.M. Lodha
                                                                                                REPORTABL
                                                                                                  E  


                        IN THE SUPREME COURT OF INDIA


                          CIVIL APPELLATE JURISDICTION




                           CIVIL APPEAL NO. 7754 OF 2011 

                [ARISING OUT OF SLP (CIVIL) NO.126 OF 2009]





Bihar State Electricity Board & Anr.                                           ....Appellants




                                                Versus




Ram Deo Prasad Singh & Ors.                                                   ....Respondents 





                                        J U D G M E N T

Aftab Alam,J.

1. Leave granted.

2. The appellants, Bihar State Electricity Board and its Chairman were

the defendants in a suit filed by respondents 1 to 8, the plaintiffs. The

respondents were the workmen of the Board and at the material time, i.e., in

2

the year 1974 they were working as security guards at Patratu Thermal

Power Station, Hazaribagh. They were proceeded against on certain charges

of misconduct. In the domestic enquiry the charges were established and on

the basis of the findings of the domestic enquiry, they were dismissed from

service on November 11, 1975. After 4 years of dismissal from service they

filed a suit (T.S. No. 95/1979) in the court of Munsiff V, Patna, seeking

declarations that their dismissal was bad, unconstitutional and inoperative in

law and they would be legally deemed to have continued in service.

3. The trial court allowed the suit by judgment and decree dated August

29, 1981. The appeal preferred by the appellants against the judgment and

decree passed by the trial court (Title Appeal No. 147 of 1981/62/2004) was

dismissed by the Additional District Judge, fast track court No. 2, Patna, by

judgment dated January 18, 2006. The appellants, then, brought the matter

before the High Court in second appeal (SA No. 97 of 2006) but this too was

dismissed by judgment and order dated September 22, 2008. The appellants

are now before this Court assailing the judgments and decree passed against

them.

4. In view of section 89 of the Bihar Reorganisation Act, 2000 the

judgments of the High Court and the first appellate court appear to be

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manifestly illegal and without jurisdiction. It may be noted that the district

of Hazaribagh, where Patratu Thermal Power Station is situated, was earlier

part of the State of Bihar but on bifurcation of the State with effect from

November 15, 2000, the appointed date under the Reorganisation Act it

forms part of the newly created State Jharkhand. Section 89 of the

Reorganisation Act dealing with transfer of pending proceedings provides as

follows –

“89.”Transfer of pending proceedings –

(1) Every proceeding pending immediately before the

appointed day before the court (other than the High

Court), tribunal, authority or officer in any area which

on that day falls within the State of Bihar shall, if it is

a proceeding relating exclusively to the territory,

which as from that day is the territory of Jharkhand

State, stand transferred to the corresponding court,

tribunal, authority or officer of that State.

(2) If any question arises as to whether any proceeding

should stand transferred under sub-section (1), it shall

be referred to the High Court at Patna and the decision

of that High Court shall be final.

        (3)                  In this section, -

               a)    "proceeding" includes any suit, case or appeal; and

b) “corresponding court, tribunal authority or officer”

in the State of Jharkhand means, –

(i) the court, tribunal, authority or officer in

which, or before whom, the proceeding would

have laid if it had been instituted after the

appointed day; or

(ii) in case of doubt, such court, tribunal, authority, or

officer in that State, as may be determined after the

appointed day by the Government of that State or

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the Central Government, as the case may be, or

before the appointed day by the Government of the

existing State of Bihar to be the corresponding

court, tribunal, authority or officer.”

(emphasis added)

From a bare reading of section 89 of the Act, it is evident that on the

appointed date the appeal preferred against the judgment and decree passed

by the Munsiff stood transferred to a corresponding court in the State of

Jharkhand. The transfer of the appeal took place by operation of law and the

Additional District Judge, Patna was denuded of all authority and

jurisdiction to proceed with the matter or to hear and decide the appeal. It

follows equally that the Patna High Court had no jurisdiction to hear and

decide the second appeal arising from the suit.

5. From the judgment of the Patna High Court it appears that one of the

three substantial questions of law arising in the second appeal related to the

question of jurisdiction of the first appellate court to hear the appeal and the

question was framed as follows: –

“3. Whether the lower appellate court had the jurisdiction to

hear the title appeal after coming into force of the Bihar Re-

organisation Act, 2000?

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6. The High Court answered the question in the negative, but in doing so

it sought to side-step section 89 of the Re-organisation Act in curious ways.

In paragraphs 9 and 10 of the judgment it held and observed as follows: –

“9. It is not in dispute that when the title suit was

filed the said Act had not come into force and even

when the title appeal was filed in the year 1981 the

said Act was not in force and the said Act came

into force in the year 2000 and it was made

effective from 15.11.2000 much after the title

appeal had been admitted and was pending for

hearing. Furthermore, there was an issue before the

trial court with respect to the jurisdiction of the

court to try the suit as objection was raised by the

defendants that the suit should have been filed at

Hazaribagh and the said issue was framed as issue

no. (iv) but the same was not pressed by the

defendants before the trial court and hence it

appears to have been conceded by them that the

court at Patna had jurisdiction to try the suit.

10. Section 89 of the Act specifically provides that

a suit or an appeal pending in the territory of

reorganised State of Bihar would stand transferred

to the State of Jharkhand if the subject matter of

the suit falls within the State of Jharkhand. But it is

also provided that if any question arises as to

whether it shall be referred to Patna High Court

and decision of that High Court shall be final.

However, in the instant case it is quite apparent

that the title appeal remained pending for about

four years after coming into force of the aforesaid

Act but the defendants who were the appellants in

that Court never raised any such question with

regard to the jurisdiction of the Court nor any such

matter was ever referred to the High Court at Patna

as per the said provisions of Law. Hence, in these

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circumstances the learned court of appeal below

was quite justified in hearing the said title appeal

and deciding it on merits.”

7. The High Court is wrong on all scores. The fact that the appeal against

the judgment and decree passed by the Munsiff was filed before the

bifurcation of the State and on the appointed date (November 15, 2000) the

appeal was already pending before the Additional District Judge has no

bearing on the issue. Section 89 relates to proceedings pending on the

appointed date and not to proceeding that might be filed after that date.

Secondly, the objection in regard to the territorial jurisdiction, raised before

the trial court was in an altogether different context. The objection before the

trial court was based on the ground that the plaintiffs-workmen were

working at Patratu Thermal Power Station and their dismissal had taken

place there. The cause of action having arisen at Patratu, the suit ought to

have been filed before a court under whose territorial jurisdiction Patratu

Thermal Power Station is situate. The objection was not pressed before the

trial court presumably because the head office of the Board being at Patna it

was believed that the plaintiffs could file the suit at Patna as well. But the

objection taken before the Munsiff, whether pressed or given up, could have

no bearing on the transfer of the proceedings on the bifurcation of the State

in terms of section 89 of the Reorganisation Act.

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8. The third ground given by the High Court that the defendants who were

the appellants before the Additional District Judge never raised the question

with regard to the jurisdiction of the court nor any such question was

referred to the Patna High Court for its decision, is equally misconceived

and untenable. As noted above, the transfer of the proceedings in terms of

section 89 of the Act is to take place by operation of law and is not

dependant upon any objection raised by any of the two sides.

9. In light of the above, it must be held that the judgment passed by the

first appellate court was illegal and without jurisdiction and equally without

jurisdiction is the judgment and order passed by the Patna High Court.

10. Further, quite strangely the High Court lost sight of the fact that it was

affirming a decree that was no longer executable or enforceable in the State

of Bihar. Section 62 of the Reorganisation Act contains provisions relating

to Bihar State Electricity Board besides two other Corporations and in so far

as relevant for the present provides as under: –

“62. Provisions as to Bihar State Electricity Board, State

Warehousing Corporation and State Road Transport

Corporation.-

(1) The following bodies corporate constituted for the existing

State of Bihar, namely:-

(a) the State Electricity Board constituted under the

Electricity Supply Act, 1948 (54 of 1948);

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(b) the State Warehousing Corporation established under the

Warehousing Corporations Act, 1962 (58 of 1962);

(c) the State Road Transport Corporation established under

the Road Transport Act, 1950 (64 of 1950),

shall, on and from the appointed day, continue to function in

those areas in respect of which they were functioning

immediately before that day, subject to the provisions of this

section and to such directions as may, from time to time, be

issued by the Central Government.

(2) Any directions issued by the Central Government under sub-

section (1) in respect of the Board or the Corporation shall

include a direction that the Act under which the Board or the

Corporation was constituted shall, in its application to that

Board or Corporation, have effect subject to such exceptions

and modifications as the Central Government thinks fit.

(3) The Board or the Corporation referred to in sub-section

(1) shall cease to function as from, and shall be deemed

to be dissolved on such date as the Central Government

may, by order, appoint; and upon such dissolution, its

assets, rights and liabilities shall be apportioned between

the successor States of Bihar and Jharkhand in such

manner as may be agreed upon between them within one

year of the dissolution of the Board or the Corporation,

as the case may be, or if no agreement is reached, in such

manner as the Central Government may; by order,

determine:

Provided that any liabilities of the said Board relating to

the unpaid dues of the coal supplied to the Board by any public

sector coal company shall be provisionally apportioned between

the State Electricity Boards constituted respectively in the

successor States of the existing State of Bihar or after the date

appointed for the dissolution of the Board under this sub-

section in such manner as may be agreed upon between the

Governments of the successor States within one month of such

dissolution or if no agreement is reached, in such manner as the

Central Government may, by order, determine subject to

reconciliation and finalisation of the liabilities which shall be

completed within three months from the date of such

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dissolution by the mutual agreement between the successor

States or failing such agreement by the direction of the Central

Government:

Provided further that an interest at the rate of two per

cent higher than the Cash Credit interest shall be paid on

outstanding unpaid dues of the coal supplied to the Board by

the public sector coal company till the liquidation of such dues

by the concerned State Electricity Board constituted in the

successor States on or after the date appointed for the

dissolution of the Board under this sub-section.

………………………..”

In terms of sub-section 3 of section 62, Jharkhand State Electricity Board

came into existence on April 1, 2001. After that date it is no longer possible

for the Bihar State Electricity Board to reinstate the respondents as security

guards at Patratu Thermal Power Station where they were working at the

time of dismissal from service.

11. Thus, looked at from any angle, the judgments passed by the first

appellate court and the High Court are untenable in law and the decree

passed by the trial court, in the absence of Jharkhand State Electricity Board

having been impleaded as a defendant, is rendered non-executable in the

State of Bihar.

12. Mr. S.B. Sanyal, learned senior advocate, appearing for the plaintiffs-

respondents, submitted that the case may be transferred to an appropriate

1

court in the State of Jharkhand from the stage of the first appeal against the

judgment and decree passed by the Munsiff, Patna. And before that court the

plaintiffs-respondents might take steps for impleadment of the Jharkhand

State Electricity Board as one of the defendants.

13. We are completely disinclined to take that course for the following

reasons.

14. It may be recalled that the respondents were dismissed from service

on November 11, 1975. They filed the suit four years later at Patna and tried

to overcome the bar of limitation by pleading that they first came to know

about their dismissal from service when they went to collect their wages in

October, 1976. The Munsiff strangely accepted the plea.

15. Secondly, before filing the suit at Patna, they had filed suits being title

suit Nos. 65, 66, 67 and 72 of 1975 before the Munsiff, Hazaribagh. Those

suits were dismissed for default. Before the Patna court an objection was

raised on behalf of the defendants-appellants regarding the maintainability of

the suit in terms of Order 9 Rule 4 of the Code of Civil Procedure. The

plaints of the suits filed at Hazaribagh were produced before the Patna court

but the objection was overruled on the ground that the Board omitted to get

1

the plaintiffs’ signatures on the plaints and vakalatnamas filed before the

Hazaribagh court formally proved.

16. Thirdly and most importantly the suit filed by the plaintiffs was itself

not maintainable. It may be recalled that plaintiffs worked as security guards

at the Thermal Power Station, they were, therefore, without doubt workmen

within the meaning of the Industrial Disputes Act, 1947 and their service

conditions were governed by the standing orders framed under the Industrial

Establishment (Standing Orders) Act, 1946 and the relevant rules framed by

the Board. It was, therefore, open to the respondents to raise an industrial

dispute concerning their dismissal from service. A suit seeking reinstatement

was therefore clearly barred and not maintainable. The issue stands settled

by the decision of this Court in The Premier Automobiles Ltd. v. Kamlekar

Shantaram Wadke of Bombay and Others, (1976) 1 SCC 496. In paragraphs

23 and 24 of the judgment this Court held as follows: –

“23. To sum up, the principles applicable to the

jurisdiction of the Civil Court in relation to an

industrial dispute may be stated thus:

(i) If the dispute is not an industrial dispute, nor

does it relate to enforcement of any other

right under the Act the remedy lies only in

the civil court.

(ii) If the dispute is an industrial dispute arising

out of a right or liability under the general or

common law and not under the Act, the

1

jurisdiction of the civil court is alternative,

leaving it to the election of the suitor

concerned to choose his remedy for the

relief which is competent to be granted in a

particular remedy.

(iii) If the industrial dispute relates to the

enforcement of a right or an obligation

created under the Act, then the only remedy

available to the suitor is to get an

adjudication under the Act.

(iv) If the right which is sought to be enforced

is a right created under the Act such as

Chapter V-A then the remedy for its

enforcement is either Section 33-C or the

raising of an industrial dispute, as the case

may be.

24. We may, however, in relation to principle No.

2 stated above hasten to add that there will hardly

be a dispute which will be an industrial dispute

within the meaning of Section 2(k) of the Act and

yet will be one arising out of a right or liability

under the general or common law only and not

under the Act. Such a contingency, for example,

may arise in regard to the dismissal of an

unsponsored workman which in view of the

provision of law contained in Section 2A of the

Act will be an industrial dispute even though it

may otherwise be an individual dispute. Civil

Courts, therefore, will have hardly an occasion to

deal with the type of cases falling under principle

No. 2. Cases of industrial disputes by and large,

almost invariably, are bound to be covered by

principle No. 3 stated above.”

17. We, thus, come to the inescapable conclusion that the plaintiffs-

respondents’ suit was itself not maintainable and was liable to be dismissed.

1

18. For the reasons discussed above the appeal is allowed. The judgments

and decree coming under challenge are set aside and the suit filed by the

plaintiffs-respondents is dismissed.

19. In the facts of the case there will be no order as to costs.

……………………………J.

(Aftab Alam)

……………………………J.

(R.M. Lodha)

New Delhi;

September 8, 2011.

M/S. Divya Exports vs M/S. Shalimar Video Company & Ors on 2 September, 2011

Supreme Court of India
M/S. Divya Exports vs M/S. Shalimar Video Company & Ors on 2 September, 2011
Author: ……..J.
Bench: G.S. Singhvi, Asok Kumar Ganguly
                                                                           NON-REPORTABLE


                     IN THE SUPREME COURT OF INDIA

                       CIVIL APPELLATE JURISDICTION


                       CIVIL APPEAL NO.6438 OF 2005





M/s. Divya Exports                                                   ... Appellant


                                          Versus


M/s. Shalimar Video Company

and others                                                           ... Respondents




                                   J U D G M E N T

G.S. Singhvi, J.

1. This appeal is directed against the judgment of the learned Single

Judge of the Andhra Pradesh High Court whereby he allowed the appeal

filed by respondent No.1 and decreed the suit filed by the said respondent

for grant of a declaration that it is having exclusive worldwide video rights

of VCD/DVD and other formats of video rights in respect of 15 Telugu films

for which it had entered into an agreement dated 27.8.2001 with M.

Srinivasa Rao and also for restraining the appellant and respondent Nos.2

and 3 from producing or selling VCDs/DVDs or any other video format of

those films in any form of exploitation.

2

2. M/s. Vijaya Production Private Limited (hereinafter referred to as “the

Producer”) produced 15 Telugu films. By an agreement dated 28.9.1987,

the Producer granted the sole and exclusive video rights of the films to M/s.

Jyothi Video for a period of seven years. During the currency of that

agreement, the Producer gifted the films to M/s. Nagireddy Charities

(respondent No.3) represented by its Managing Trustee, Shri B. Nagireddy.

Respondent No.3 entered into an agreement of lease with respondent No.2-

M/s. Vijaya Pictures whereby the rights of theatrical and non-theatrical

distribution, exhibition and exploitation including video and TV rights were

given to respondent No.2 for the areas of Andhra and Nizam for a period of

20 years commencing from 1.1.1975 for a consideration of Rs.20 lakhs. By

another agreement dated 25.6.1990 (Exhibit A-4) the term of agreement

dated 10.1.1975 was extended by 70 years with effect from 1.1.1995. The

relevant portions of that agreement are extracted below:

“Whereas the Lessors are the absolute owners in possession of

the negatives, holding the entire rights for the Indian Union of

the Telugu Talkie pictures produced by M/s Vijaya productions

Private Ltd., as specified hereunder, the rights of which have

been assigned absolutely by way of gift by the said Vijaya

Productions Private Ltd., in favour of the Lessors.

Whereas the Lessors have already granted to the Lessees, the

exclusive lease rights of exploitation of their several Black and

White and Colour pictures for the territory of Andhra and

Nizam by way of agreement of lease dated 10.1.1975 for a

3

period of 20 years from 1st of January, 1975. Whereas the

Lesees have approached the Lessors to grant unto them the

exclusive lease rights of Theatrical and Non-theatrical

distribution, exhibition and exploitations of the several pictures

by way of lease, in respect of the areas of Andhra and Nizam as

known in the Film Trade, for a further period of 70 (seventy)

years from the date of expiry of the present lease agreement i.e.

from 1st January 1995 and to transfer complete pictures

negatives in favour of the Lesees herein.

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:-

1. The Lessors hereby grant us the Lessees as the rights of

Theatrical and Non-Theatrical distribution, exhibition and

exploitation by way of lease of the following Black and White

Telugu Pictures produced by M/s Vijaya Productions Pvt. Ltd.

Madras 600 020 including the video and T.V. Rights thereof

1. Shavukaru

2. Pathala Bhairavi

3. Pellichehi Choodu

4. Chandraharam

5. Missamma

6. Maya Bazar

7. Appuchesi Pappukudu

8. Jagadekaveerunikatha

9. Gundamma Katha

10. C.I.D.

12. Umachandi Gowrishankula Katha

13. Rechukka Pagatichukka

for the Areas of Andhra and Nizam, and to appropriate to

themselves the proceeds earned by them on the said pictures by

such exploitation for a period of 70 (seventy) years from 1st

January 1995.

4. The Lessees shall have the power to assign this agreement

either in part and/or whole to third parties at their discretion,

without in any manner affecting the rights of the Lessors under

this agreement.

4

5. It is agreed that the Lessors shall not lease out, sell or exhibit

the pictures in the territories for which the rights of exploitation

are herein be granted, till the expiry of the agreement. The

Lessees also shall not exhibit the pictures in any station outside

the territory leased herein.

7. It is understood between the parties herein that this

agreement is without prejudice to the 16mm rights; T.V. and

Video rights committed by the producers Vijaya Productions

(P) Ltd for the various periods with the parties concerned and

the Lessees herein are entitled for the said rights after the expiry

of the periods committed thereunder.”

3. A third agreement dated 11.12.1995 (Exhibit A-5) was entered into

between respondent Nos.3 and 2 whereby and whereunder copyright for

broadcasting of films through satellites, cassettes, disc, cable, wire, wireless

or any other system including its transmission through cable system without

restriction of geographical areas was assigned to respondent No.2 for a sum

of Rs.8 lakhs. The relevant portions of the third agreement are also

extracted below:

“Now, This Agreement Witneseth:

1. The Assignors irrevocably assign to the Assignees the

copyright for broadcasting the said films through satellite,

cassette, disc, cable, wire, wireless or any other system

including its transmission through cable system without

restriction of geographical areas and for this purpose the

assigners are authorized to make such copies of recordings on

film, taps, disc or such other media as may be required.

5

2. The Assignors have already delivered to the Assigners the

concerned version of the picture and sound negatives of the said

films as per the Agreement dated 25-6-1990 between the

Assignors and Assignees.

3. The Assignees shall have the full right to broadcast the said

Films after subtitling, editing, deleting any portion, altering

colour or inserting advertisement, or broadcasting the excerpts,

or programme including the excerpts, or part of whole of the

sound track only, at their sole and absolute discretion.

4. The Assignees shall be entitled to assign their rights under

this Agreement in part or in full to any other party and to

broadcast through any authority or agency, at their sole and

absolute discretion including Doordharshan’s Terrestrial

Primary Channels.”

4. After five years, respondent No.2 entered into an agreement of lease

dated 30.7.2001 with M. Srinivasa Rao and granted him rights of theatrical

and non-theatrical (excluding satellite rights) exhibition and 35 mm

exploitation, video, VCD, DVD, Audio and 16 mm by way of lease in

respect of 14 films for the areas of Andhra and Nizam for a period of 60

years for a consideration of Rs.10 lakhs. Paragraphs 5 to 9 of that agreement

read as under:

“5. The Lessees shall have the power to assign this agreement

either in part or whole to third parties at their discretion,

without any manner affecting the rights of the lessors under this

agreement.

6. The lessors hereby grant to the lessees the rights of theatrical

and non-theatrical (excluding satellite rights) exhibition and

6

35mm exploitation, video, VCD, DVD, Audio and 16mm by

way of lease of the following.

7. It is agreed the lessors shall not lease out, sell or exhibit the

pictures in the territories for which the rights of exploitations

herein granted till the expiry of this agreement.

8. In case the original procedures M/s Vijaya Productions Pvt.

Ltd. or lessors herein require any prints of the pictures lease out

herein for any overseas exploitation the same share be delivered

by the lessees herein at cost.

9. It is understood between the parties herein that 16mm rights,

video rights committed by the producers Vijaya Productions

Pvt. Ltd. with the parties concerned was expired. The lessees

herein are entitled for the said rights.”

5. M. Srinivasa Rao executed an agreement dated 17.8.2001 in favour of

respondent No.1 and granted CDs, VCDs, DVDs, copyrights for

transferring, processing, recording, duplication, copying, taping on to video

grams, discs, CDs, VCDs, DVDs and the digital formats for commercial and

private exhibition of the 15 films for the entire world.

6. Three days prior to the execution of the aforesaid agreement,

respondent No.3 entered into an agreement dated 14.8.2001 with the

appellant and assigned it exclusive DVD rights, VCD rights and internet

rights (worldwide web TV rights) by way of lease in respect of the 15 films

7

for the entire world including Indian Union Territory for a period of 60 years

in lieu of a consolidated royalty amount of Rs.1,50,000/-.

7. Within 8 days of the execution of agreement dated 17.8.2001,

respondent No.1 got published a notice in the newspaper dated 25.8.2001

declaring that it had purchased DVD and VCD rights for 15 Telugu films

produced by M/s. Vijaya Production. Thereupon, respondent No.3 issued

telegram to respondent No.1 and called upon it to stop production of DVDs

and VCDs. In its reply dated 31.12.2001, respondent No.1 relied upon

agreement dated 17.8.2001 executed by M. Srinivasa Rao and claimed that it

had purchased all the rights in respect of the 15 films. By way of rejoinder,

respondent No.3 informed respondent No.1 that it had not sold or assigned

any rights to respondent No.2 or M. Srinivasa Rao to produce DVDs and

VCDs.

8. After exchange of notices, respondent No.1 filed suit for grant of

relief to which reference has been made in the opening paragraph of this

judgment. It also applied for and was granted ex parte injunction by the trial

Court on 23.6.2003, which was vacated on 22.8.2003. The appeal preferred

by respondent No.1 was dismissed by the Division Bench of the High Court.

8

9. In the written statement filed by the appellant through its Managing

Partner Bh. Sudhakar Reddy, which was adopted by respondent No.3, it was

pleaded that the rights of VCDs/DVDs had not been assigned by respondent

No.3 to respondent No.2 and, as such, M. Srinivasa Rao could not acquire

any such rights from respondent No.2 and assign the same to respondent

No.1. In a separate written statement, respondent No.2 claimed that in terms

of agreement dated 15.12.1995 executed with respondent No.3, it had

acquired the rights for future technical development in the field of

cinematography. Respondent No.2 pleaded that after accepting a sum of

Rs.8 lakhs, respondent No.3 had assigned irrevocable copyright for

broadcasting the said films through satellite, cassette, disc, cable, wire,

wireless or any other system including its transmission through cable system

without restriction of geographical areas and for this purpose, the assignees

were authorised to make copies of recording of films, disc, tape or such

other media as may be required. Respondent No.2 admitted that it had

entered into an agreement dated 30.7.2001 with M. Srinivas Rao for

assignment of the rights acquired by it under agreements dated 25.6.1990

and 15.12.1995.

9

10. On the pleadings of the parties, the trial Court framed the following

issues:

“1) Whether this court has territorial jurisdiction to maintain

the suit?

2) Whether the suit is bad for non joinder of necessary

parties?

3) Whether the agreement dt. 25.6.1990 will include

VCD/DVD rights and whether the plaintiff is entitled to

claim the broadcasting rights thereunder coupled with the

agreement dt. 15.2.2002 and thereby the plaintiff is

entitled for the manufacture and sale of the VCDs/DVDs

of the suit films?

4) Whether the plaintiff is entitled for the relief of

declaration and the injunction sought for?

5) To what relief?”

11. After considering the pleadings of the parties and evidence produced

by them, the trial Court held that the suit was bad for non joinder of M.

Srinivasa Rao, who is said to have assigned rights to respondent No.1. This

is evinced from the following observations made by the learned trial Court:

“The plaintiff is claiming his right through M. Srinivasa Rao

from whom the plaintiff has obtained an agreement for

assignment of the rights over the suit schedule films. When the

defendants 1 and 3 have come forward with a specific

contention that the M. Srinivasa Rao have no right at all to

assign the VCD and DVD rights the plaintiff ought to have

impleaded the said M. Srinivasa Rao as a party to the suit. But

the plaintiff has not chosen to bring him on record and he has

10

deposed in his cross examination that he has no grievance at all

against M. Srinivas Rao and therefore he thought that it is not

necessary to bring him on record. It is important to note that

the plaintiff is claiming right through M. Srinivas Rao. He has

purchased the rights from the 2nd defendant and because the

dispute is that he has conveyed the rights which was not

covered by the agreement under which he got the assignment in

his favour from the 2nd defendant the plaintiff ought to have

impleaded M. Srinivasa Rao as one of the parties and in spite of

the objection taken by the other side the plaintiff has not chosen

to bring the Srinivasa Rao on record but only satisfied by

saying that he has no grievance against Srinivas Rao. This

issue to be held as against the plaintiff holding that the

necessary party Srinivas Rao is not brought on record and

therefrom the suit is bad for non joinder of necessary party and

Issue No.2 is held accordingly.”

12. The trial Court then referred to agreements dated 25.6.1990 and

15.12.1995 executed between respondent Nos.2 and 3, agreement dated

30.7.2001 entered into between respondent No.2 and M. Srinivasa Rao as

also agreement dated 14.8.2001 executed by M. Srinivasa Rao in favour of

respondent No.1, referred to the provisions of the Copyright Act, 1957, two

judgments of the Madras High Court and concluded that the plaintiff has

failed to make out a case for grant of declaration and injunction.

13. In the appeal filed by respondent No.1, the learned Single Judge

framed the following questions:

11

“1. Whether the assignment of copyrights made by the third

defendant in favour of first defendant is true and valid?

2. Whether the assignment of copyrights made by the third

defendant in favour of second defendant confers the right of

manufacturing and selling VCDs/DVDs and whether the rights

assigned and conferred under Exs.A.4 and A.5 are only meant

for `broadcasting’ the suit films and if so, what is the effect

thereof?

3. Whether the non-joinder of the person by name

Srinivasarao, who was allegedly the assignee from the second

defendant and assignor in favour of the plaintiff, would vitiate

the suit? or

Whether the plaintiff can be non-suited for non-joinder of one

Srinivasarao who was allegedly the assignee from the second

defendant and assignor of the plaintiff?”

14. Although, the trial Court had not framed any issue which could give

rise to question No.1 and in the appeal filed by the respondent no such

prayer was made, the learned Single Judge invoked Order XLI Rule 24 of

the Code of Civil Procedure, 1908 (CPC) and justified the framing of first

question by recording the following observations:

“The first point as formulated by this Court in this appeal was

not framed by the trial court as an issue in the suit. But in my

considered view, the trial court ought to have framed this issue

also in the light of the specific averment made by the plaintiff

in the plaint that the acquisition of rights by the first defendant-

M/s Divya Exports from the 3rd defendant-M/s Nagireddy

Charities, represented by its Trustee-Venugopal Reddy was

totally false and baseless having regard to the fact that Sri B.

Nagireddy, the original Managing Trustee of the 3rd defendant-

12

M/s Nagireddy Charities, had already given away the

copyrights during the year 1995 itself in favour of the second

defendant. Hence, having regard to the said specific averment

made by the plaintiff in the plaint and also in the light of the

specific ground taken by the plaintiff in this appeal with regard

to the application of Section 73 of the Indian Trusts Act 1881

(for short “the Trusts Act”), I deem it absolutely necessary to

formulate the first point for consideration, exercising the

jurisdiction of this Court under Order 41, Rule 24 C.P.C. For

this reason, this Court formulated the first point as stated supra.

From the submissions made at the Bar by the learned Counsel

appearing for the parties, it could be seen that the whole

controversy revolves around Exs.A.4 and A.5 and Ex.A.3 on

one side and Ex.A.3 on one side and Ex.B.1 on the other.”

The learned Single Judge then referred to the pleadings and oral as

well as documentary evidence produced by the parties, Sections 73 and 74 of

the Trusts Act and held that Exhibit B.1 executed by respondent No.3 in

favour of the appellant was not valid. Paragraphs 52 to 55 and 58 of the

impugned judgment, which contain the reasons recorded by the learned

Single Judge for arriving at the said conclusion, are extracted below:

“52. What is more interesting to note is that no trust deed or

any other document was pressed into service by the first

defendant while getting himself examined as D.W.1 to clarify

or explain that Mr. Venugopalreddy had acquired the status of a

trustee of M/s Nagireddy Charities in order to effectively

represent the trust and to execute Ex.B.1 document in favour of

the first defendant. Interestingly, D.W.1 was the Special Power

of Attorney Holder also, representing M/s Nagireddy Charities.

53. In other words, totally an alien, not connected with the

affairs of M/s Nagireddy Charities, but a beneficiary under

13

Ex.B.1, was examined as D.W.1, representing both defendant

No.1 and defendant No.3. No document relating to

appointment of Venugopalreddy as a trustee of M/s Nagireddy

Charities, authorizing Venugopalreddy to represent trust has

been brought on record and no person directly connected with,

and having knowledge of the affairs of M/s Nagireddy Charities

had been examined on behalf of the defendants.

54. It is to be remembered that the suit was instituted in the

year 2003 and during the pendency of the suit Mr. B. Nagireddy

was very much alive, of course, totally in a state of

indisposition. In such circumstances, I am of the considered

view that the burden heavily lies on either the first defendant or

the third defendant to establish the change in trusteeship of M/s

Nagireddy Charities, in which case alone Ex.B.1 document can

be called as a validly and legally executed document by

Venugopalreddy in the capacity of the trustee of M/s Nagireddy

Charities in favour of the first defendant. Unfortunately, no

other witness, except D.W.1, was examined in this behalf.

55. It is well-known principle that a person who has no

proper authorization to represent a trust cannot enter into

agreements with third parties in order to bind the trust – even if

such agreements are entered into, such agreements are not valid

in the eye of law. In the instant case, the first defendant and the

third defendant – M/s Nagireddy Charities, represented by its

Power of Attorney Holder have utterly failed to establish the

capacity of Venugopalreddy as trustee to execute Ex.B.1

agreement assigning the VCDs and DVDs copyrights in respect

of the suit schedule films in favour of the first defendant during

the lifetime of Sri Nagireddy, the Managing Trustee of M/s

Nagireddy Charities. This is a strong and suspicious

circumstance, which compels this Court, to hold that Ex.B.1

was not executed by a proper and authorized person

representing the third defendant-trust, conveying the copyrights

of VCDs and DVDs in favour of the first defendant. Further,

when Mr. Venugopalreddy’s authority as trustee to execute

Ex.B.1 is in serious doubt, first defendant, who is the

beneficiary of the said document cannot be placed on a higher

and comfortable position that Mr. Venugopalreddy.

14

58. From the perusal of the impugned judgment it could be

seen the court below while discussing issues 3 and 4, without

going to the aspect of validity or otherwise of the assignment of

copyright in favour of first defendant by third defendant,

incidentally recorded a finding basing on the Xerox copy of a

document Ex.A-12, that the plaintiff is estopped from raising a

plea that B. Venugopal Reddy has no authority to represent

third defendant trust. But a perusal of Ex.A-12 discloses that it

is only a reiteration of assignment of broadcast rights under

Ex.A-5. In this context it is to be noted that Ex.A-12 is only a

Xerox copy and the original is not filed. No reasons were

recorded by the trial court with regard to the admissibility of the

said document. Even assuming that the said document was

really executed by B. Venugopal Reddy in favour of second

defendant, as already noticed, it is only a reiteration or

confirmation of Ex.A-5. Further there is no cross-examination

by the defendants 1 and 3 on this aspect and there is also no

reference to this document in the written statements filed by

them. Therefore, so long as the execution of Ex.A-4 was agreed

to have been in subsistence by virtue of its execution by B.

Nagi Reddy, Managing Trustee of third defendant assigning

rights for a period of seventy years, Ex.A-12 does not gain any

significance. If Ex.A-12 is to be accepted, notwithstanding the

admissibility or otherwise of it, at best it has to be presumed

that B. Venugopal Reddy had become the Managing Trustee of

third defendant as on the date of execution of Ex.A-12 dated

15-2-2002. But in the present case, the whole dispute is with

regard to the authority of B. Venugopal Reddy to execute Ex.B-

1 document in the capacity of trustee of third defendant in

favour of first defendant, which is a prior transaction. In other

words the genesis of the rights of assignment of broadcast is

Exs.A-4 and A-5, but not Ex.A-12. Furthermore, the reasons for

bringing into existence of the controversial Ex.A-12 is not

explained in the evidence of either of the parties and as its

execution is subsequent to the execution of Ex.B-1, on which

defendants 1 and 3 are mustering their claim of copyright of

VCDs and DVDs, the same is not relevant and inconsequential.

Hence, the finding of the trial court that the plaintiff is estopped

15

to question the validity or otherwise of the trusteeship of B.

Venugopal Reddy for third defendant is not justifiable.”

15. Although, learned senior counsel appearing for the parties made

elaborate arguments on the merits of the findings recorded by the learned

Single Judge with reference to questions No.2 and 3 and produced

publications titled Copinger and Skone James on Copyright (15th Edition),

Goldstein on Copyright (3rd Edition) Volume 1 and the judgments of

different High Courts, we do not consider it necessary to examine the same

because in our considered view, the learned Single Judge was not at all

justified in non-suiting the appellant by recording a finding that Exhibit B.1

was invalid.

16. Since the trial Court had not framed specific issue touching the

validity of agreement Exhibit B.1, the parties did not get effective

opportunity to lead evidence in support of their respective cases. In the

absence of any issue, the trial Court did not even advert to the question

whether or not agreement Exhibit B.1 was valid. The evidence available on

the record was not at all sufficient for deciding that question and yet the

learned Single Judge decided that question by drawing inferences from the

statements made by the witnesses examined by the parties with reference to

16

the issues framed by the trial Court and returned a negative finding on the

validity of Exhibit B.1.

17. In our view, in the peculiar facts of this case, the learned Single Judge

was not at all justified in invoking Order XLI Rule 24 CPC. If at all the

learned Single Judge felt that the trial Court should have framed specific

issue on the validity of agreement Exhibit B.1, then he should have

remanded the matter to the trial Court with a direction to frame such an issue

and decide the suit afresh. The omission on the part of the learned Single

Judge to adopt that course has resulted in manifest injustice to the appellant.

18. In the result, the appeal is allowed. The impugned judgment is set

aside and the case is remitted to the trial Court with the direction that it shall,

after considering the pleadings of the parties, frame an additional issue on

the validity of agreement Exhibit B.1 executed between respondent No.1 and

respondent No.3, give opportunity to the parties to produce evidence and

decide the suit afresh without being influenced by any of the observations

made by the High Court and this Court.

17

19. Since the matter is sufficiently old, we direct the trial Court to dispose

of the matter as early as possible but latest within nine months from the date

of receipt/production of copy of this judgment. The parties are directed to

appear before the trial Court on 10.10.2011.

20. The Registry is directed to send a copy of this judgment to IX

Additional Chief Judge, City Civil Court (Fast Track Court), Hyderabad by

fax.

……………………………….J.

[G.S. Singhvi]

…………………………

……..J.

[Asok Kumar Ganguly]

New Delhi;

September 02, 2011.

Chandigarh Admn. Th. Dir. Pub. … vs Usha Kheterpal Waie & Ors on 2 September, 2011

Supreme Court of India
Chandigarh Admn. Th. Dir. Pub. … vs Usha Kheterpal Waie & Ors on 2 September, 2011
Author: R.V.Raveendran
Bench: R.V. Raveendran, Markandey Katju
                                                     1




                                                                          Reportable


                    IN THE SUPREME COURT OF INDIA


                     CIVIL APPELLATE JURISDICTION


                      CIVIL APPEAL NO. 7570 OF 2011

                     [Arising out of SLP (C) No.3568/2006]




Chandigarh Administration through the

Director Public Instructions (Colleges), Chandigarh              ... Appellant


Vs.


Usha Kheterpal Waie & Ors.                                       ... Respondents





                                 J U D G M E N T

R.V.RAVEENDRAN,J.

Leave granted.

2. There are four Government Arts and Science colleges in Union

Territory of Chandigarh. Till 1988, the Chandigarh Administration,

appellant herein, used to fill the vacancies of the post of Principal of the Arts

and Science colleges by deputation from neighbouring States of Punjab and

Haryana. When the post of Principal in Government College for Boys,

2

Sector 11, Chandigarh was due to fall vacant on 29.2.1988 on

superannuation of a deputationist, two UT cadre lecturers filed an

application before the Central Administrative Tribunal, Chandigarh, seeking

a direction that UT cadre lecturers from the Government Arts & Science

Colleges should be considered for the post of Principal instead of taking

someone on deputation from the neighbouring states. The said application

was ultimately disposed of with a direction to the Chandigarh

Administration to consider the case of the applicants and other lecturers of

UT cadre who may fall within the zone of consideration as may be

determined by a competent authority, for regular appointment to the post of

Principals of the Government Arts & Science colleges, on the basis of

relevant criteria, and appoint those who were found suitable. In pursuance of

the said order, the Chandigarh Administration fixed 30 years experience as

Lecturer as the eligibility criterion for promotion of lecturers to the post of

Principal, though at that time (1989-90) there were no lecturer with 30 years

experience in the cadre. As no UT cadre lecturer possessed such experience,

again deputationists were appointed as Principals in the said colleges.

3. Feeling aggrieved, the UT cadre lecturers again approached the

Tribunal and their applications were allowed by the Tribunal by order dated

3

12.1.1991, quashing the order prescribing 30 years experience as also the

order appointing deputationists. Thereafter, whenever vacancies arose, it is

stated that the appellant promoted UT cadre lecturers as Principals. It may be

mentioned that persons so promoted did not possess a Ph.D. degree.

4. By notification dated 13.1.1992, Chandigarh Administration adopted

the corresponding Service Rules of Punjab with effect from 1.4.1991 to

govern the conditions of service of its employees, where it had no rules

governing the matter. The effect of it was that the provisions of Punjab

Educational Service (College Grade) (Class I) Rules, 1976 (as amended in

1983 (for short `1976 Punjab Rules’) became applicable in regard to the

recruitment of candidates to UT college cadre. Under the said 1976 Punjab

Rules, the qualification and experience for appointment to the service was as

under: For direct recruitment : (a) MA, first division or high second

division (50%) in relevant subject or an equivalent degree of a foreign

university with eight years teaching experience; (b) Ph.D. with eight years

teaching experience; By promotion : Experience of working as a lecturer for

a minimum period of eight years.

4

5. When matters stood thus the Administrator, Chandigarh

Administration, framed and notified the “Chandigarh Educational Service

(Group A Gazetted) Government Arts and Science College Rules, 2000 (for

short `Recruitment Rules’) vide notification dated 29.3.2000 published in

the Gazette dated 1.4.2000. The said Rules were framed in consultation with

the Union Public Service Commission (`UPSC’ for short) and sent to the

Government of India for being issued in the name of the President of India.

As per the said Rules, the appointment to the posts of Principal in

Government Arts and Science Colleges was 25% by direct recruitment and

75% by promotion. The said rules prescribed the educational qualification of

Ph.D. for appointment to the post of Principal by direct recruitment. The

appellant advertised a post of Principal (which was falling vacant on

31.7.2001) on 14.7.2001 prescribing the following eligibility criteria as per

the said Rules :

“Educational and other qualifications required for direct recruits :

Essential: (i) A Doctorate degree or equivalent with at least 55% marks at

the Master’s Degree level from a recognized university or equivalent; (ii)

12 years teaching experience of degree classes in a college affiliated to a

university or equivalent.”

6. Respondents 1 to 4 had joined UT Colleges (Arts & Science) cadre in

1969 and 1970 and were serving as lecturers in the Government Arts &

Science Colleges. None of them possessed a Ph.D. degree. They filed OA

5

No.684/CH/2001 before the Central Administrative Tribunal challenged the

said Recruitment Rules and the advertisement dated 14.7.2001, as

unconstitutional and for a direction that they along with other eligible

candidates from the UT cadre should be considered for promotion to the said

post. It was contended that the Administrator of the Union Territory had no

power to make the said Recruitment Rules, as it was only the President of

India who was competent to frame such rules under Article 309 of the

Constitution of India. They also contended that on earlier occasions the

appellant had promoted lecturers as Principals without insisting upon the

qualification of Ph.D.; and that though they did not possess Ph.D. degree,

having regard to the eligibility criteria earlier being applied, they were

eligible for being considered for the post of Principals, and the Chandigarh

Administration should fill the vacancies of Principals, by applying the

eligibility criteria which was prevalent prior to the making of the said

recruitment rules.

7. The appellant, in its statement of objections filed before the Tribunal

conceded that the “power to notify the recruitment rules for Class I Posts

vested with the President of India”. The appellant stated that they had

forwarded the Recruitment Rules to the government of India under cover of

6

letter dated 21.9.2001, to notify the said Rules under the name of President

of India, and such notification was awaited. They contended that pending

publication of the Rules, they could resort to recruitment in terms of the

draft Rules on the basis of administrative instructions. The appellant also

contested the application by contending that the post in question was

required to be filled under the direct recruitment quota, and none of the

applicants were eligible as they did not possess Ph.D. degree, which was the

qualification prescribed by the university Grants Commission (`UGC’ for

short) and approved by the UPSC, and therefore none of them could be

considered for appointment to the said post.

8. The said application (OA No.648 – CH of 2001) was allowed by the

Tribunal, by order dated 22.4.2002. The Tribunal held that in the absence of

any recruitment rules prescribing such qualification, Ph.D. degree was not an

eligibility requirement for the post of Principal. The Tribunal held that UGC

guidelines would not apply as the Rules providing for 25% by direct

recruitment was not in force; and that even if the new rules were to be duly

framed, such Rules would apply only to future vacancies and not to the

vacancies which arose on 31.7.2001. The Tribunal held that in the absence

of any Rules, it was appropriate to take guidance from its earlier judgments

7

dated 12.9.1989 and 12.11.1991 which accepted the administrative

instructions dated 20.8.1987 permitting UT cadre lecturers to be promoted as

Principals, even though they did not possess any Ph.D. degree. The Tribunal

also rejected the contention of the appellant that as per notification dated

13.1.1992, the 1976 Punjab Rules became applicable under which 75% of

the posts had to be filled by promotion and 25% by direct recruitment with

Ph.D as an eligibility requirement, on the ground that no material was placed

to show that the said 1976 Punjab Rules were ever followed for appointing

Principals in UT of Chandigarh. The Tribunal therefore quashed the

advertisement dated 14.7.2001 inviting applications for the post of Principal

and directed the appellant to fill the vacancy according to law, keeping in

view the eligibility criteria and the past practice till the Rules are framed and

notified by the competent authority. The said order of the Tribunal was

challenged by the appellant before the High Court. The High Court

dismissed the writ petition by impugned order dated 26.10.2005, affirming

the findings of the Tribunal.

9. Feeling aggrieved, the appellant has filed this appeal by special leave

raising the following contentions: (i) When appellant has framed the draft

Rules in consultation with UPSC and had been placed the Rules before the

8

central government, for being notified under the name of the President of

India, pending such notification of the Rules, it was entitled to invite

applications for the post of Principal in terms of the said Rules by treating

them as draft rules under consideration. (ii) The Tribunal and the High Court

could not substitute the eligibility requirements prescribed by the appellant.

(iii) The Tribunal and the High Court could not have ignored the notification

dated 13.1.1992 adopting the corresponding Punjab Rules to govern the

service of its employees wherever there were no rules of the Chandigarh

Administration. (iv) The 1976 Punjab Rules were applicable, and in terms of

it, the advertisement for filling one post of Principal by direct recruitment by

prescribing the eligibility requirement of Ph.D was valid. The appellant also

pointed out that another bench of the Tribunal by order dated 3.8.1995 in

OA No.844-CH of 1994 has clearly held that the 1976 Punjab Rules would

apply to recruitment/employment, having regard to the notification dated

13.1.1992 of the Chandigarh Administration adopting the Punjab Rules; and

as there was a clear divergence between the two decisions of the Tribunal,

the High Court could not have mechanically affirmed the decision of the

Tribunal that the 1996 Punjab Rules were inapplicable.

9

10. The first question for our consideration is whether the appellant could

have prescribed in the advertisement, the educational qualifications for the

post of Principal in terms of its 2000 Recruitment rules. The Administrator

of the Chandigarh Administration made the Chandigarh Educational Service

(Group A) Gazetted Government Arts & Science College Rules, 2000 vide

notification dated 29.3.2000 and published it in the Gazette dated 1.4.2000.

The said Rules were made in consultation with the UPSC, taking note of the

UGC guidelines prescribing Ph.D. degree as an eligibility criteria for the

post of Principals to be filled by direct recruitment. The Rules were sent to

the Central Government for being notified in the name of the President of

India and were pending consideration. It is in these circumstances the

appellant advertised the post in terms of the said Rules, by prescribing the

educational qualification of Ph.D. for direct recruitment to the post of

Principal. In Abraham Jacob vs. Union of India [1998 (4) SCC 65], this

Court held that where draft rules have been made, an administrative decision

taken to make promotions in accordance with the draft rules which were to

be finalized later on, was valid. In Vimal Kumari vs. State of Haryana [1998

(4) SCC 114], this Court held that it is open to the Government to regulate

the service conditions of the employees for whom the rules were made, even

if they were in their draft stage, provided there is a clear intention on the part

10

of the Government to enforce those rules in the near future. In this case, the

High Court however rejected the advertisement on the ground that the

regular rules were not notified by the President of India even after five years,

when the High Court decided the matter. But what is relevant to test the

validity of the advertisement, was the intention of the appellant when the

advertisement was issued. At that time, the appellant had the clear intention

to enforce the Recruitment Rules in future as they had been made in

consultation with UPSC, in accordance with the UGC guidelines and the

Rules had been sent to the Central Government for being notified by the

President and the matter was pending consideration for a few months when

the advertisement was issued. The appellant at that time had no inkling that

there would be inordinate delay or the Rules may not be notified by the

President. Therefore, the advertisement in terms of the 2000 Recruitment

rules was valid.

11. Even in the absence of valid rules, it cannot be said that the

advertisement was invalid. In exercise of its executive power, the appellant

could issue administrative instructions from time to time in regard to all

matters which were not governed by any statute or rules made under the

Constitution or a statute. In fact it is the case of the respondents that the

11

appellant had issued such instructions on 20.8.1987 directing that the

lecturers from UT cadre should be promoted as principals. In fact, the

administrator of appellant had issued a notification on 13.1.1992 adopting

the corresponding Punjab Rules to govern the service conditions of its

employees. If so, the administrator of appellant could issue fresh directions

in regard to qualifications for recruitment. The Recruitment Rules made by

the Administrator were duly notified. Though they were not rules under

Article 309, they were nevertheless valid as administrative instructions

issued in exercise of executive power, in the absence of any other Rules

governing the matter. Once the recruitment rules, made by the

Administrator, were notified, they became binding executive instructions

which would hold good till the rules were made under Article 309.

Therefore, the advertisement issued in terms of the said Recruitment Rules

was valid.

12. The Tribunal and High Court also committed an error in holding that

the appellant could not prescribe the qualifications of Ph.D. for the post of

principal merely because earlier the said educational qualification was not

prescribed or insisted. The Recruitment Rules were made in consultation

with UPSC, to give effect to the UGC guidelines which prescribed Ph.D.

12

degree as the eligibility qualification for direct recruitment of Principals. In

fact, even the 1976 Punjab Rules prescribed Ph.D. degree as a qualification.

In several States, Ph.D. is a requirement for direct recruitment to the post of

a college Principal. When the said qualification is not unrelated to the duties

and functions of the post of Principal and is reasonably relevant to maintain

the high standards of education, there is absolutely no reason to interfere

with the provision of the said requirement as an eligibility requirement. It is

now well settled that it is for the rule-making authority or the appointing

authority to prescribe the mode of selection and minimum qualification for

any recruitment. Courts and tribunals can neither prescribe the qualifications

nor entrench upon the power of the concerned authority so long as the

qualifications prescribed by the employer is reasonably relevant and has a

rational nexus with the functions and duties attached to the post and are not

violative of any provision of Constitution, statute and Rules. [See J.

Rangaswamy vs. Government of Andhra Pradesh – 1990 (1) SCC 288 and

P.U. Joshi vs. Accountant General – 2003 (2) SCC 632]. In the absence of

any rules, under Article 309 or Statute, the appellant had the power to

appoint under its general power of administration and prescribe such

eligibility criteria as it is considered to be necessary and reasonable.

Therefore, it cannot be said that the prescription of Ph.D. is unreasonable.

13

13. The Tribunal and the High Court have held that in the years 1989 and

1991, the Tribunal had accepted the earlier administrative instructions dated

20.8.1987 which required the UT cadre employees to be considered for the

post has to be followed. The fact that at that time Ph.D. degree was not

insisted upon, does not mean that for all times to come, Ph.D. degree could

not be insisted. Ph.D. degree was made a qualification because UGC

guidelines required it for direct recruitment post and the UPSC approved the

same. Therefore, merely because on some earlier occasions, the posts of

Principal were filled by UT cadre lecturers without Ph.D. degree, it cannot

be argued that the Ph.D. degree cannot be prescribed subsequently.

14. The Tribunal and High Court were not justified in holding that 1976

Punjab Rules were not applicable on the ground that no material had been

placed to show that they were followed while appointing a principal in the

past. The fact that the appellant had issued a notification dated 13.1.1992

adopting the corresponding Punjab Rules governing the conditions of

service of its employees, is not disputed. Therefore when appellant acted in

accordance with the said directions, it is not necessary to consider whether

there were any occasion between 1992 to 2001 to invoke the said rules or

whether they were in fact invoked. The notification dated 13.1.1992 could

14

not have been brushed aside in the manner done by the Tribunal and the

High Court.

15. In view of the above, we allow this appeal and set aside the order

dated 22.4.2002 of the Tribunal and the order dated 26.10.2005 of the High

Court. The original application (OA No.648 – CH of 2001) filed by

respondents 2 to 5 before the Tribunal is dismissed. The prayer that

Chandigarh Administration should be directed to fill the vacancies of

Principals in accordance with the eligibility criteria as was prevalent prior to

the issue of the notification dated 14.7.2001, is rejected. The notification

prescribing educational qualification of doctorate degree or equivalent with

55% marks at the Master’s Degree Level examination or 12 years teaching

experience of degree classes in a college affiliated to any university or

equivalent is upheld as validly prescribing the qualifications for filling the

post by direct recruitment.

…………………………..J.


                                                          (R V Raveendran)





New Delhi;                                                ...............................J.

September 2, 2011.                                        (Markandey Katju)            


Bhilwara Dugdh Utpadak Sahakari … vs Vinod Kumar Sharma Dead By Lrs & Ors on 1 September, 2011

Supreme Court of India
Bhilwara Dugdh Utpadak Sahakari … vs Vinod Kumar Sharma Dead By Lrs & Ors on 1 September, 2011
Bench: Markandey Katju, Chandramauli Kr. Prasad
                                                                                       REPORTABLE


                           IN THE SUPREME COURT OF INDIA 


                           CIVIL  APPELLATE  JURISDICTION 


                            CIVIL   APPEAL NO.  2585  OF  2006





BHILWARA DUGDH UTPADAK

 SAHAKARI S. LTD.                                                           Appellant (s)


                                          VERSUS


VINOD KUMAR SHARMA DEAD BY 

LRS & ORS.                                                                  Respondent (s)

O R D E R

Heard learned counsel for the appearing parties.

This Appeal has been filed against the impugned judgments dated 23.08.2004 and

dated 21.09.2004 passed by the High Court of Judicature at Rajasthan.

This Appeal reveals the unfortunate state of affairs prevailing in the field of labour

relations in our country.

In order to avoid their liability under various labour statutes employers are very often

resorting to subterfuge by trying to show that their employees are, in fact, the employees

of a contractor. It is high time that this subterfuge must come to an end.

Labour statutes were meant to protect the employees/workmen because it was

realised that the employers and the employees are not on an equal bargaining position.

Hence, protection of employees was required so that they may not be exploited.

However, this new technique of subterfuge has been adopted by some employers in

recent years in order to deny the rights of the workmen under various labour statutes by

showing that the concerned workmen are not their employees but are the

employees/workmen of a contractor, or that they are merely daily wage or short term or

casual employees when in fact they are doing the work of regular employees.

This Court cannot countenance such practices any more. Globalization/liberalization

in the name of growth cannot be at the human cost of exploitation of workers.

The facts of the case are given in the judgment of the High Court dated 23.08.2004

and we are not repeating the same here. It has been clearly stated therein that subterfuge

was resorted to by the appellant to show that the workmen concerned were only workmen

of a contractor. The Labour Court has held that the workmen were the employees of the

appellant and not employees of the contractor. Cogent reasons have been given by the

Labour Court to come to this finding. The Labour Court has held that, in fact, the

concerned workmen were working under the orders of the officers of the appellant, and

were being paid Rs 70/- per day, while the workmen/employees of the contractor were

paid Rs. 56/- per day.

We are of the opinion that the High Court has rightly refused to interfere with this

finding of fact recorded by the Labour court.

The Judgment of this Court in Steel Authority of India vs. National Union Waterfront

Workers (2001) 7 SCC 1 has no application in the present case. In that decision the

question was whether in view of Section 10 of the Contract Labour (Regulation and

Abolition) Act, 1970 the employees of contractors stood automatically absorbed in the

service of the principal employer. Overruling the decision in Air India Statutory

Corporation vs. United Labour Union, (1997) 9 SCC 377 this Court held that they did

not.

In the present case that is not the question at all. Here the finding of fact of the

Labour Court is that the respondents were not the contractor’s employees but were the

employees of the appellant. The SAIL judgment (Supra) applies where the employees

were initially employees of the contractor and later claim to be absorbed in the service of

the principal employer. That judgment was considerating the effect of the notification

under Section 10 of the Act. That is not the case here. Hence, that decision is clearly

distinguishable.

Mr. Puneet Jain, learned counsel for the appellant submitted that the High Court has

wrongly held that the appellant resorted to a subterfuge, when there was no such finding

by the Labour Court. The Labour Court has found that the plea of the employer that the

respondents were employees of a contractor was not correct, and in fact they were the

employees of the appellant. In our opinion, therefore, it is implicit in this finding that

there was subterfuge by the appellant to avoid its liabilities under various labour statutes.

For the reasons given above, there is no infirmity in the impugned judgment of the

High Court. The Appeal is dismissed accordingly. No costs.

……………………………………………J

[MARKANDEY KATJU]

……………………………………………J

[CHANDRAMAULI KR. PRASAD]

NEW DELHI;

SEPTEMBER 01, 2011

Yograj Infras.Ltd vs Ssang Yong Engineering & … on 1 September, 2011

Supreme Court of India
Yograj Infras.Ltd vs Ssang Yong Engineering & … on 1 September, 2011
Bench: Altamas Kabir, Cyriac Joseph
                                                    REPORTABLE





              IN THE SUPREME COURT OF INDIA



                  CIVIL APPELLATE JURISDICTION



             CIVIL APPEAL NO.7562    OF 2011

       (Arising out of SLP(C) No.25624 of 2010)





YOGRAJ INFRASTRUCTURE LTD.                ...     APPELLANT  





           Vs.





SSANG YONG ENGINEERING AND 

CONSTRUCTION CO. LTD.                     ...     RESPONDENT





                      J U D G M E N T

ALTAMAS KABIR, J.

1. Leave granted.

2. The Appellant is a company incorporated under

the Companies Act, 1956, while the Respondent is a

2

company incorporated under the laws of the Republic

of Korea with its registered office at Seoul in

Korea and its project office at New Delhi.

3. On 12th April, 2006, the National Highways

Authority of India, New Delhi (NHAI) awarded a

contract to the Respondent, SSang Yong Engineering

and Construction Co. Ltd., hereinafter referred to

as “SSY”, for the National Highways, Sector II

Project, Package: ABD-II/C-8, for upgradation to

Four Laning of Jhansi-Lakhnadon Section, KM 297 to

KM 351 of NH 26 in the State of Madhya Pradesh.

The total contract amount was 2,19,01,16,805/-.

On 13th August, 2006, SSY entered into a Sub-

Contract with the Appellant Company for carrying

out the work in question. The Work Order of the

entire project was granted to the Appellant by the

Respondent on back-to-back basis. Clause 13 of the

Agreement entered into between the Respondent and

the Appellant provided that 92% of all payments for

3

the work done received by the Respondent from NHAI,

would be passed on to the Appellant. Clauses 27

and 28 provided for arbitration and the governing

law agreed to was the Arbitration and Conciliation

Act, 1996. On 31st October, 2006, the Appellant

furnished a Performance Bank Guarantee for

6,05,00,000/- to the Respondent and it also

invested about 88.15 crores in the project. Three

more Bank Guarantees, totaling 5,00,00,000/-, for

release of mobilization advance were also furnished

by the Appellant on 29th May, 2009. On 22nd

September, 2009, the Respondent Company issued a

notice of termination of the Agreement, inter alia,

on the ground of delay in performing the work under

the Agreement.

4. On account of the above, the Appellant filed an

application before the District and Sessions Judge,

Narsinghpur, Madhya Pradesh, under Section 9 of the

Arbitration and Conciliation Act, 1996, praying for

4

interim reliefs. A similar application under

Section 9 of the above Act was filed by the

Appellant before the same Court on 30th December,

2009, also for interim reliefs. Ultimately, on 20th

May, 2010, the dispute between the parties was

referred to arbitration in terms of the Agreement

and a Sole Arbitrator, Mr. G.R. Easton, was

appointed by the Singapore International

Arbitration Centre on 20th May, 2010. On 4th June,

2010, the Appellant filed an application before the

Sole Arbitrator under Section 17 of the aforesaid

Act being SIAC Arbitration No.37 of 2010, inter

alia, for the following reliefs :

     "a.    restrain               the         SSY          from         encashing 

            Performance                             Bank                 Guarantee 

No.101BGPGO63040001 dated 31.10.06 of

Syndicate Bank, Nehru Place, Delhi of

6.05 crores;

b. restrain the SSY from enchashing three

Bank Guarantees furnished towards the

mobilization advance bearing numbers

101 BGFG 091490001 of 1 Crore, 101

BGFG 091490002 of 1 Crore and 101

5

BGFG 091490003 of 3 Crores, totaling

to 5 Crores;

c. direct SSY to release a sum of

144,42,25,884/- along with the

interest @ 36% till realization of

nationalized bank of India for the

aforesaid amount and keep it alive

till passing of the final Award.

d. restrain SSY from removing, shifting,

alienating or transferring in any

manner either itself or through any of

its agents/employees, the plant,

machineries, equipments, vehicles and

materials, in other words maintain

status-quo, till the passing of the

final arbitral award;

e. grant any other appropriate interim

measures of protection in favour of

the Cross-Claimant/applicant, which in

the esteemed opinion of this Hon’ble

Tribunal are just and proper in the

facts and circumstance of the case;”

5. The Respondent also filed an application under

Section 17 of the above Act before the Sole

Arbitrator on 5th June, 2010, for interim reliefs.

After considering both the applications, the

Arbitrator passed an interim order on 29th June,

2010, in the following manner :

6

“1. The respondent is to immediately

release, for use by the Claimant, the

items of plant, machinery and equipment

(PME) numbered 1,5,7,8,10,19,20,21,22,23

and 32, as listed in Annexure A (Machinery

Details) of the Claimant’s Application

dated 5 June 2010.

2. The respondent is restrained from

creating any third party interest in, or

otherwise selling, leasing or charging,

the PME or other assets presently located

at the work site and/or the camp site and

which are owned by the respondent, without

the permission of this Tribunal.

3(i). The claimant is permitted to use

the aggregates, which have been identified

in Annexure D (engineer’s Statement of

Materials at Site for September 2009) of

the Claimant’s Application dated 5 June

2010 as a total quantity of 274,580 cubic

metres, for the carrying out of the works

in accordance with the terms and

conditions of the Main Agreement and the

Agreement dated 13 August, 2006 between

the parties.

3(ii)           The   respondent   is   to   give   the 

Claimant              access                  to              the            aggregate 

stockpiles                 where              the                  abovementioned 

quantity of material is currently held.

The above interim orders are made with the

objective of enabling the construction

work on the project to continue while the

disputes between the parties are resolved

in these arbitration proceedings (ref.

Terms or Reference dated 23 June 2010).

7

The parties have liberty at short notice,

if any of the above directions require

clarification or amendment in order to

ensure proper implementation.

The respondent has leave (until 6 July

2010) to make a further application for

the provision of security by the claimant

in relation to the PME and aggregates.”

6. Aggrieved by the aforesaid interim order passed

by the learned Arbitrator, the Appellant herein,

which was the respondent before the learned

Arbitrator, filed Appeal No.2 of 2010 on 2nd July,

2010 before the learned District Judge,

Narsinghpur, under Section 37(2)(b) of the

Arbitration and Conciliation Act, 1996, for setting

aside the same. On behalf of the respondent it was

contended in the said appeal that the same was not

maintainable before the learned District Judge,

Narsinghpur, since the seat of the arbitration

proceedings was in Singapore and the said

proceedings were governed by the laws of Singapore.

Accepting the submissions advanced on behalf of the

8

respondent, the learned District Judge dismissed

the appeal as not maintainable on 23rd July, 2010,

without deciding the matter on merits.

7. The appellant then moved Civil Revision No.304

of 2010, before the High Court on 26th July, 2010.

The same was dismissed by the High Court on 31st

August, 2010, against which the Special Leave

Petition (now appeal) has been filed.

8. Appearing for the Company, Ms. Indu Malhotra,

learned Senior Advocate, submitted that the stand

taken on behalf of the respondent that the PMEs had

to remain on site even in case of termination of

the Agreement, was without any basis, since after

the Agreement dated 13th August, 2006, the parties

had agreed in the Meeting held on 23rd September,

2006 that in case of termination of the Agreement

between the parties, the respondent would transfer

the PMEs to the appellant. Ms. Malhotra further

clarified that Clause 4 of the Agreement related

9

only to the PMEs and not to the aggregates, since

it had been admitted by the respondent that in case

the aggregates were not made available to them,

they could buy the same from the open market. It

was further clarified that there were only two

machines out of 35 machines which formed the

subject matter of the interim application, i.e.,

Hotmix Plant and Crusher, which were in the

possession of the appellant and the value thereof

would be approximately 7 crores and a sum of 7.20

crores had already been deducted by the respondent

towards the repayment of the Arab Bank Loan for the

said PMEs. Ms. Malhotra submitted that it was

incorrect to say that the Project was stopped

because of the Stay Order passed by this Court as

the respondent had further subcontracted the work

to Khara and Tarakunde Infrastructure Pvt. Ltd.,

Ramdin Ultratech Pvt. Ltd. and others. Ms.

Malhotra contended that apart from the Hotmix Plant

and Crusher all the remaining PMEs had been removed

10

by the respondent after the passing of the order

29th June, 2010.

9. On the question of the applicable law in

respect of the arbitral proceedings, Ms. Malhotra

contended that the Arbitration and Conciliation

Act, 1996, enacted in India is the applicable law

of arbitration. Ms. Malhotra submitted that in

terms of the Agreement arrived at between the

parties, it is only the Indian laws to which the

Agreement would be subjected. She pointed out that

Clause 28 of the Agreement provides that the

Agreement would be subject to the laws of India and

that during the period of arbitration, the

performance of the Agreement would be carried out

without interruption and in accordance with its

terms and provisions. Accordingly, having

explicitly agreed that the Agreement would be

subject to the laws of India, from the very

commencement of the arbitration till its

11

conclusion, the law applicable to the arbitration

would be the Indian law. In other words, all

interim measures sought to be enforced would

necessarily have to be in accordance with Sections

9 and 37(2)(b) of the 1996 Act.

10. Ms. Malhotra submitted that Clause 27.1, which

forms part of Clause 27 of the agreement, which is

the arbitration clause, provides that the

proceedings of arbitration shall be conducted in

accordance with the SIAC Rules. In other words,

the provisions of SIAC Rules would apply only to

the arbitration proceedings, but not to appeals

from such proceedings. Ms. Malhotra submitted that

the right to appeal from an interim order under

Section 37(2)(b) is a substantive right provided

under the 1996 Act and was not governed by the SIAC

Rules.

11. Ms. Malhotra also urged that Rule 1.1 of the

SIAC Rules, which, inter alia, provides that where

12

the parties agreed to refer their disputes to the

SIAC for arbitration, it would be deemed that the

parties had agreed that such arbitration would be

conducted in accordance with the SIAC Rules. If,

however, any of the SIAC Rules was in conflict with

a mandatory provision of the applicable law of

arbitration from which the parties could not

derogate, that provision from the applicable law of

the arbitration shall prevail. Ms. Malhotra

submitted that Rule 32 of the SIAC Rules is one of

such Rules which provides that if the seat of

arbitration is Singapore, then the applicable law

of arbitration under the Rules would be the

International Arbitration Act, 2002, of Singapore.

However, Section 37(2)(b) of the 1996 Act being a

substantive and non-derogable provision, providing

a right of appeal to parties from a denial of an

interim measure, such a provision protects the

interest of parties during the continuance of

arbitration and as a consequence, Rule 32 of the

13

SIAC Rules which does not provide for an appeal, is

in direct conflict with a mandatory non-derogable

provision contained in Section 37(2)(b) of the 1996

Act.

12. Ms. Malhotra then went on to submit that Part I

of the 1996 Act had not been excluded by Clause 27

of the Agreement and the 1996 Act would, therefore,

apply to the said Agreement. Ms. Malhotra

submitted that in the decision of this Court in

Bhatia International Vs. Bulk Trading S.A. [(2002)

4 SCC 105], which was reiterated in Venture Global

Engg. Vs. Satyam Computer Services Ltd. [(2008) 4

SCC 190] and Citation Infowares Ltd. Vs. Equinox

Corporation [(2009) 7 SCC 220], it has been clearly

held that where the operation of Part I of the 1996

Act is not expressly excluded by the arbitration

clause, the said Act would apply. In any event, in

the instant case, Clause 28 of the Agreement

expressly provides that the Agreement would be

14

subject to the laws of India and that during the

period of arbitration the parties to the Agreement

would carry on in accordance with the terms and

conditions contained therein. Accordingly, on

account of the application of Part I of the 1996

Act, the International Arbitration Act, 2002 of

Singapore would have no application to the facts of

this case, though, the conduct of the proceedings

of arbitration would be governed by the SIAC Rules.

13. Ms. Malhotra urged that the High Court had

erred in coming to the conclusion that since under

Clause 27 of the Agreement, the parties had agreed

that the arbitral proceedings would be conducted in

accordance with the SIAC Rules and by virtue of

Rule 32 thereof, the jurisdiction of the Indian

Courts stood ousted. Ms. Malhotra urged that the

High Court had failed to appreciate the provisions

of Clause 28 of the Agreement while arriving at

such a conclusion. Ms. Malhotra reiterated her

15

earlier submissions that Rule 32 of the SIAC Rules

is subject to Rule 1.1 thereof which provides that

if any of the said Rules was in conflict with the

mandatory provision of the applicable law of the

arbitration, from which the parties could not

derogate, that provision shall prevail. Ms.

Malhotra submitted that the finding of the High

Court being contrary to the provisions agreed upon

by the parties, such finding was liable to be set

aside. Ms. Malhotra submitted that the very fact

that the respondents had approached the District

Court, Narsinghpur, in India and had filed an

application under Section 9 of the 1996 Act

therein, indicated that the respondent also

accepted the applicability of the 1996 Act. Ms.

Malhotra pointed out that in the application the

respondent has indicated as follows :

“That, the work of Contract, which was

executed between the petitioner and

respondent is well within the jurisdiction

of this Hon’ble Court at Narsinghpur.

16

Thus, this Hon’ble Court has jurisdiction

to pass an order on this application under

Section 9 of the Arbitration and

Conciliation Act, 1996.”

14. Ms. Malhotra urged that having regard to

Section 42 of the 1996 Act, it is in the District

Court of Narsinghpur where the application under

Section 9 of the Arbitration and Conciliation Act,

has been filed which has jurisdiction over the

arbitral proceedings at all stages. Ms. Malhotra

pointed out that the High Court had erroneously

held that Section 42 was not applicable to an

appeal and was applicable only for filing an

application, without appreciating the wordings of

Section 42 which provides that Courts shall have

jurisdiction over the arbitral proceedings also.

Ms. Malhotra urged that with regard to the said

findings of the High Court, the order impugned was

liable to be set aside.

17

15. Ms. Malhotra submitted that the stand of the

respondent that in view of clause 27 of the

Agreement, the law governing the arbitral

proceedings would be the SIAC Rules, was not

tenable, in view of Clause 28 which without any

ambiguity provides that the Agreement would be

subject to the laws of India and that during the

period of arbitration the parties to the Agreement

would carry on, in accordance with the terms and

conditions contained therein. Accordingly, it is

the Arbitration and Conciliation Act, 1996, which

would be the proper law or the law governing the

arbitration.

16. Ms. Malhotra submitted that apparently there

was a misconception in the minds of the learned

Judges of the High Court as to the concept of the

`proper law’, of the Arbitration Agreement and the

`Curial Law’ governing the conduct and procedure of

the reference. Ms. Malhotra submitted that while

18

the proper law of the Arbitration Agreement governs

the law which would be applicable in deciding the

disputes referred to arbitration, the Curial law is

the law which governs the procedural aspect of the

conduct of the arbitration proceedings. It was

urged that in the instant case while the proper law

of the arbitration would be the Arbitration and

Conciliation Act, 1996, the Curial law would be the

SIAC Rules of Singapore. Ms. Malhotra submitted

that the said difference in the two concepts had

been considered by this Court in Sumitomo Heavy

Industries Ltd. Vs. ONGC [(1998) 1 SCC 305] and

NTPC Vs. Singer [(1992) 3 SCC 551], in which the

question for decision was what would be the law

governing the arbitration when the proper law of

the contract and the Curial law were agreed upon

between the parties. In the said cases this Court

observed that in many circumstances the applicable

law would be the same as that of the proper law of

contract and the Curial law, but it was not

19

uncommon to encounter the incumbent Curial law in

cases where the parties had made an express choice

of arbitration in a jurisdiction which was

different from the jurisdiction with which the

contract had the closest real connection.

17. Ms. Malhotra submitted that in the absence

of any express choice, the proper law of the

contract would be the proper law of the Arbitration

Agreement. Ms. Malhotra submitted that in the

instant case, admittedly the proper law of contract

is the law of India and since the parties have not

expressly made any choice regarding the law

governing the Arbitration Agreement, the proper law

of contract, namely, the Arbitration and

Conciliation Act, 1996, would be the proper law of

the Arbitration Agreement. Ms. Malhotra urged that

ultimately the right to appeal which is a

substantive right under the 1996 Act would be

governed by the said Act and the instant appeal,

20

is therefore, liable to be allowed, and the order

of the High Court, impugned in the appeal, was

liable to be set aside.

18. Within the fact situation indicated on

behalf of the appellant, Mr. Dharmendra Rautray,

learned Advocate, appearing for the respondent

Company, submitted that the issues involved in the

present appeal were (i) whether the Indian Courts

would have jurisdiction to entertain an appeal

under Section 37 of the Arbitration and

Conciliation Act, 1996, against an interim order

passed by the Arbitral Tribunal with its seat in

Singapore; (ii) Whether the “law of arbitration”

would be the International Arbitration Act, 2002,

of Singapore; and (iii) whether the “Curial law”

would be the laws of Singapore?

19. Mr. Rautray submitted that apparently on the

alleged failure of the appellant to complete the

work awarded under the contract within the

21

stipulated period of 30 months from the date of

commencement of the work, the respondent had to

give an undertaking to the National Highways

Authority of India by way of a Supplementary

Agreement dated 11th February, 2009, to achieve a

monthly rate of progress of work, failing which the

aforesaid authority would be entitled to exercise

all its rights under the main agreement and even to

terminate the same with immediate effect. Mr.

Routray submitted that on account of the failure of

the appellant to live up to its commitments, the

respondent who had suffered heavy financial loss

and damages on account of such breach, issued

notice of termination on 22nd September, 2009,

pursuant to Clause 23.2 of the Agreement.

20. Thereafter, the parties entered into settlement

talks, as provided for in Clause 26 of the

Agreement and signed the minutes of the meeting

dated 28th September, 2009. The settlement talks

22

between the parties having failed, the

respondent/claimant, invoked Clause 27 of the

Agreement for reference of the disputes to

arbitration in accordance with the Singapore

International Arbitration Centre Rules (SIAC

Rules). The respondent/claimant filed a Statement

of Claim on 16th August, 2010, before the Sole

Arbitrator, Mr. Graham Easton, claiming a sum of

221,36,91,097/- crores from the appellant. Both

the parties filed applications before the learned

Arbitrator seeking interim relief under Rule 24 of

the SIAC Rules on 5th June, 2010. In their

application for interim relief under Rule 24 of the

SIAC Rules, the respondent, inter alia, prayed for

release of all plants, machineries and equipment

belonging to the respondent; injunction against the

appellant from removing all plants, machineries,

equipment, materials, aggregates, etc., owned by

the respondent from the work site and/or camp site;

a restraint order against the appellant from

23

creating any third party interest or otherwise

sell, lease, charge the plants, machineries,

equipment, materials, etc., at the work site and/or

camp site and to permit the respondent to use the

PMEs and materials, aggregates, etc., for carrying

out the works in accordance with the terms and

conditions of the main Agreement and the

Supplementary Agreement dated 13th August, 2006.

21. The Sole Arbitrator appointed by the SIAC by

its order dated 29th June, 2010, directed the

appellant to, inter alia, release for use by the

respondent all plants and equipment. The appellant

was also restrained from creating any third party

interest, or otherwise to deal with the properties

at the work site and/or camp site and permit the

respondent to use the aggregates of a total

quantity of 27,580 cubic metres for carrying out

the works. The Sole Arbitrator, while dealing with

the applications filed by both the parties under

24

Rule 24 of the SIAC Rules, also recorded that the

interim orders were being made with the object of

allowing the construction work on the project to

continue while the dispute between the parties were

resolved in these arbitration proceedings and in

order to ensure that the progress of the project

was not hampered, while the parties waited for the

outcome of the arbitration proceedings.

22. Mr. Routray submitted that the appeal filed

by the appellant before the District Court,

Narasinghpur, under Section 37 of the Arbitration

and Conciliation Act, 1996, against the

abovementioned order of the learned Arbitrator

dated 29th June, 2010, was dismissed on 23rd July,

2010, on the ground of maintainability and lack of

jurisdiction. The Civil Revision filed against the

said order was dismissed by the Madhya Pradesh High

Court by its order dated 31st August, 2010. While

dismissing the Revision, the High Court, inter

25

alia, observed that under Clause 27.1 of the

Agreement, the parties had agreed to resolve their

dispute under the provisions of SIAC Rules which

expressly or, in any case, impliedly also adopted

Rule 32 of the said Rules which categorically

indicates that the law of arbitration under the

said Rules would be the International Arbitration

Act, 2002, of Singapore. The Special Leave

Petition, out of which the present appeal arises,

has been filed by the appellant against the said

order dated 31st August, 2010.

23. Mr. Routray further submitted that the

parties had, inter alia, agreed that the seat of

arbitration would be Singapore and that the

arbitration proceedings would be continued in

accordance with the SIAC Rules, as per Clause 27.1

of the Agreement. It was also agreed that the

proper law of the agreement/contract dated 13th

August, 2006, between the appellant and the

26

respondent would be the Indian law and the proper

law of the arbitration would be the Singapore law.

24. Mr. Routray submitted that an application

under Section 9 of the 1996 Act was filed before

the District Court on 30th December, 2009, prior to

the date of invocation of the arbitration

proceedings and before the Curial law, i.e., the

Singapore law, became operative. On the said

application, the District Judge by his order dated

10th March, 2010, directed the applicant to submit

its case before the Arbitrator at Singapore. Mr.

Routray pointed out that in the present case, the

parties had expressly chosen the applicable laws to

each legal disposition while entering into the

Agreement dated 13th August, 2006. Mr. Routray

submitted that the parties had expressly agreed

that the proper law of the contract would be the

Indian Law, the proper law of the arbitration would

be the Singapore International Arbitration Act,

27

2002 and the Curial law would be Singapore law,

since the seat of arbitration was in Singapore.

Mr. Routray submitted that as observed by this

Court in Sumitomo Heavy Industries Ltd. Vs. ONGC

Ltd. & Ors. [(1998) 1 SCC 305], the Curial law,

besides determining the procedural powers and

duties of the Arbitrators, would also determine

what judicial remedies are available to the

parties, who wished to apply for security for costs

or for discovery or who wished to challenge the

Award once it had been rendered and before it was

enforced.

25. As to the filing of Application under

Section 9 by the appellant before the District

Court at Narsinghpur, Mr. Routray submitted that

the High Court had correctly held that the

proceedings had been initiated by the parties in

the Court of District Judge, Narasinghpur, before

the matter was referred to the Arbitrator and the

28

same was decided taking into consideration such

circumstances. However, once the dispute was

referred to the Arbitrator, the parties could not

be permitted to deviate from the express terms of

the Agreement under which the SIAC Rules came into

operation.

26. Mr. Routray submitted that the Section 9

application had been filed before the Curial law

became operative and in view of the agreement

between the parties the Indian Arbitration and

Conciliation Act, 1996, would not apply to the

arbitration proceedings and the same would be

governed by the Singapore laws.

27. Mr. Routray then proceeded to the next

important question as to whether choice of the

“seat of arbitration” by the parties confers

exclusive jurisdiction on the Courts of the seat of

arbitration to entertain matters arising out of the

contract. Learned counsel submitted that choice of

29

the seat of arbitration empowered the courts within

the seat of arbitration to have supervisory

jurisdiction over such arbitration. Mr. Routray

has referred to various decisions of English Courts

which had laid down the proposition that even if

the arbitration was governed by the law of another

country, it would not entitle the objector to mount

a challenge to the Award in a country other than

the seat of arbitration. It is not necessary to

refer to the said judgments for a decision in this

case.

28. Mr. Routray submitted that the decision of this

Court in NTPC Vs. Singer (supra) relates to the

applicability of the Indian Arbitration Act, 1940,

and the Foreign Awards (Recognition and

Enforcement) Act, 1961, to a foreign award sought

to be set aside in India under the provisions of

the 1940 Act. It was submitted that the said

decisions have no relevance to the question raised

30

in the present case which raises the question as to

whether the Indian Courts would have jurisdiction

to entertain an appeal under Section 37 of the 1996

Act against an interim order of the Arbitral

Tribunal, despite the parties having expressly

agreed that the seat of arbitration would be in

Singapore and the Curial law of the arbitration

proceedings would be the laws of Singapore. Once

again referring to the decision in the NTPC case,

Mr. Routray submitted that in paragraph 46 of the

judgment, this Court had, inter alia, observed that

Courts would give effect to the choice of a

procedural law other than the proper law of

contract only where the parties had agreed that the

matters of procedure should be governed by a

different system of law. Mr. Routray submitted

that in the above-mentioned case, this Court was

dealing with a challenge to a “domestic award” and

not a “foreign award”. Section 9(b) of the Foreign

Awards (Recognition and Enforcement) Act, 1961,

31

provides that the said Act would not apply to an

award, although, made outside India, but which is

governed by the laws of India. Accordingly, all

such awards were treated as domestic awards by the

1961 Act and any challenge to the said award,

could, therefore, be brought only under the

provisions of the 1940 Act. Mr. Routray further

submitted that the law of arbitration in the NTPC

case (supra) was Indian law as opposed to the facts

of the present case, where the parties had agreed

that the law of arbitration would be the

International Arbitration Act, 2002, of Singapore.

29. Mr. Routray urged that by virtue of Clause 27

of the Agreement dated 13th August, 2006, and by

accepting the SIAC Rules, the parties had agreed

that Part I of the Arbitration and Conciliation

Act, 1996, would not apply to the arbitration

proceedings taking place in Singapore. According

to Mr. Routray, the said decision was reiterated in

32

the Terms of Reference that the arbitration

proceedings would be governed by the laws of

Singapore. Mr. Routray further urged that even in

the decision relied upon by the appellant in the

case of Bhatia International, this Court had held

that parties by agreement, express or implied,

could exclude all or any of the provisions of Part

I of the 1996 Act. Consequently, in Bhatia

International this Court had held that exclusion of

Part I of the 1996 Act could be by virtue of the

Rules chosen by the parties to govern the

arbitration proceedings.

30. As far as applicability of Section 42 of the

1996 Act is concerned, the Jabalpur Bench of the

Madhya Pradesh High Court had held that by express

agreement parties had ousted the jurisdiction of

the Indian Courts, while the arbitration

proceedings were subsisting. Accordingly, the

jurisdiction of the Indian Courts stood ousted

33

during the subsistence of the arbitration

proceedings and, accordingly, it is only the laws

of arbitration as governed by the SIAC Rules which

would govern the arbitration proceedings along with

the procedural law, which is the law of Singapore.

31. In order to appreciate the controversy that has

arisen regarding the applicability of the

provisions of Part I of the Arbitration and

Conciliation Act, 1996, to the proceedings being

conducted by the Arbitrator in Singapore in

accordance with the SIAC Rules, it would be

necessary to look at the arbitration clause

contained in the agreement entered into between the

parties on 13th August, 2006. Clause 27 of the

Agreement provides for arbitration and reads as

follows :

“27. Arbitration.

27.1 All disputes, differences arising

out of or in connection with the Agreement

shall be referred to arbitration. The

34

arbitration proceedings shall be conducted

in English in Singapore in accordance with

the Singapore International Arbitration

Centre (SIAC) Rules as in force at the

time of signing of this Agreement. The

arbitration shall be final and binding.

27.2 The arbitration shall take place in

Singapore and be conducted in English

language.




       27.3     None of the Party shall be entitled 

       to         suspend         the         performance         of         the 

Agreement merely by reason of a dispute

and/or a dispute referred to arbitration.”

32. Clause 28 of the Agreement describes the

governing law and provides as follows :

“This agreement shall be subject to the

laws of India. During the period of

arbitration, the performance of this

agreement shall be carried on without

interruption and in accordance with its

terms and provisions.”

33. As will be seen from Clause 27.1, the

arbitration proceedings are to be conducted in

Singapore in accordance with the SIAC Rules as in

force at the time of signing of the agreement.

There is, therefore, no ambiguity that the

35

procedural law with regard to the arbitration

proceedings, is the SIAC Rules.

34. Clause 27.2 makes it clear that the seat of

arbitration would be Singapore.

35. What we are, therefore, left with to consider

is the question as to what would be the law on the

basis whereof the arbitral proceedings were to be

decided. In our view, Clause 28 of the Agreement

provides the answer. As indicated hereinabove,

Clause 28 indicates that the governing law of the

agreement would be the law of India, i.e., the

Arbitration and Conciliation Act, 1996. The

learned counsel for the parties have quite

correctly spelt out the distinction between the

“proper law” of the contract and the “curial law”

to determine the law which is to govern the

arbitration itself. While the proper law is the

law which governs the agreement itself, in the

absence of any other stipulation in the arbitration

36

clause as to which law would apply in respect of

the arbitral proceedings, it is now well-settled

that it is the law governing the contract which

would also be the law applicable to the Arbitral

Tribunal itself. Clause 27.1 makes it quite clear

that the Curial law which regulates the procedure

to be adopted in conducting the arbitration would

be the SIAC Rules. There is, therefore, no

ambiguity that the SIAC Rules would be the Curial

law of the arbitration proceedings. It also

happens that the parties had agreed to make

Singapore the seat of arbitration. Clause 27.1

indicates that the arbitration proceedings are to

be conducted in accordance with the SIAC Rules.

The immediate question which, therefore, arises is

whether in such a case the provisions of Section

2(2), which indicates that Part I of the above Act

would apply, where the place of arbitration is in

India, would be a bar to the invocation of the

provisions of Sections 34 and 37 of the Act, as far

37

as the present arbitral proceedings, which are

being conducted in Singapore, are concerned.

36. In Bhatia International (supra), wherein while

considering the applicability of Part I of the 1996

Act to arbitral proceedings where the seat of

arbitration was in India, this Court was of the

view that Part I of the Act did not automatically

exclude all foreign arbitral proceedings or awards,

unless the parties specifically agreed to exclude

the same.

37. As has been pointed out by the learned Single

Judge in the order impugned, the decision in the

aforesaid case would not have any application to

the facts of this case, inasmuch as, the parties

have categorically agreed that the arbitration

proceedings, if any, would be governed by the SIAC

Rules as the Curial law, which included Rule 32,

which categorically provides as follows :

38

“Where the seat of arbitration is

Singapore, the law of the arbitration

under these Rules shall be the

International Arbitration Act (Cap. 143A,

2002 Ed, Statutes of the Republic of

Singapore) or its modification or re-

enactment thereof.”

38. Having agreed to the above, it was no longer

available to the appellant to contend that the

“proper law” of the agreement would apply to the

arbitration proceedings. The decision in Bhatia

International Vs. Bulk Trading S.A. [(2002) 4 SCC

105], which was applied subsequently in the case of

Venture Global Engg. Vs. Satyam Computer Services

Ltd. [(2008) 4 SCC 190] and Citation Infowares Ltd.

Vs. Equinox Corporation [(2009) 7 SCC 220], would

have no application once the parties agreed by

virtue of Clause 27.1 of the Agreement that the

arbitration proceedings would be conducted in

Singapore, i.e., the seat of arbitration would be

in Singapore, in accordance with the Singapore

International Arbitration Centre Rules as in force

39

at the time of signing of the Agreement. As

noticed hereinabove, Rule 32 of the SIAC Rules

provides that the law of arbitration would be the

International Arbitration Act, 2002, where the seat

of arbitration is in Singapore. Although, it was

pointed out on behalf of the appellant that in Rule

1.1 it had been stated that if any of the SIAC

Rules was in conflict with the mandatory provision

of the applicable law of the arbitration, from

which the parties could not derogate, the said

mandatory provision would prevail, such is not the

case as far as the present proceedings are

concerned. In the instant case, Section 2(2) of

the 1996 Act, in fact, indicates that Part I would

apply only in cases where the seat of arbitration

is in India. This Court in Bhatia International

(supra), while considering the said provision, held

that in certain situations the provision of Part I

of the aforesaid Act would apply even when the seat

of arbitration was not in India. In the instant

40

case, once the parties had specifically agreed that

the arbitration proceedings would be conducted in

accordance with the SIAC Rules, which includes Rule

32, the decision in Bhatia International and the

subsequent decisions on the same lines, would no

longer apply in the instant case where the parties

had willingly agreed to be governed by the SIAC

Rules.

39. With regard to the effect of Section 42 of the

Arbitration and Conciliation Act, 1996, the same,

in our view was applicable at the pre-arbitral

stage, when the Arbitrator had not also been

appointed. Once the Arbitrator was appointed and

the arbitral proceedings were commenced, the SIAC

Rules became applicable shutting out the

applicability of Section 42 and for that matter

Part I of the 1996 Act, including the right of

appeal under Section 37 thereof.

41

40. We are not, therefore, inclined to interfere

with the judgment under appeal and the appeal is

accordingly dismissed and all interim orders are

vacated.

41. There will be no order as to costs.

…………………………………………J.

(ALTAMAS KABIR)

…………………………………………J.

(CYRIAC JOSEPH)

New Delhi

Dated:01.09.2011

Nitinbhai Saevantilal Shah & Anr vs Manubhai Manjibhai Panchal & Anr on 1 September, 2011

Supreme Court of India
Nitinbhai Saevantilal Shah & Anr vs Manubhai Manjibhai Panchal & Anr on 1 September, 2011
Author: J Panchal
Bench: J.M. Panchal, H.L. Gokhale
                                                            Reportable


               IN THE SUPREME COURT OF INDIA


              CRIMINAL APPELLATE JURISDICTION


        CRIMINAL APPEAL NO. 1703  OF 2011

         (Arising out of SLP (Criminal) No. 723 of 2011)




Nitinbhai Saevatilal Shah & Another              ... Appellant



                             Versus



Manubhai Manjibhai Panchal & Another             ... Respondents





                         J U D G M E N T

J.M. PANCHAL, J.

Leave Granted.

2. This appeal by grant of special leave, is directed against

judgment dated August 9, 2010, rendered by the learned

Single Judge of High Court of Gujarat at Ahmedabad in

Criminal Revision Application No. 529 of 2003, by which

1

the conviction of the appellants recorded by the learned

Metropolitan Magistrate, Ahmedabad in Summary Case

No. 2785 of 1998 under Section 138 of Negotiable

Instruments Act, 1881 and confirmed by the learned

Additional City Sessions Judge, Court No. 13,

Ahmedabad is maintained but the sentence imposed

upon the appellants for commission of said offence is set

aside and matter is remanded to the learned Magistrate

for passing appropriate order with regard to sentence and

compensation, if any under Section 357 of Cr. P.C. within

three months, after giving the parties reasonable

opportunity of being heard.

3. The respondent No.1 herein is original complainant. He

was doing business in the name of Navkar Steel Pvt. Ltd.

The Complainant is known to the appellant No.1. The

appellant No.1 is the Director of appellant No.2 which is

a private limited company. It is the case of the

complainant that the appellant No.1 had borrowed hand

loan from him and in order to pay the legal dues, the

2

appellant No.1 had given a cheque dated October 13,

1998 for the sum of Rs.11,23,000/- drawn on the State

Bank of India. The cheque was signed by the appellant

No.1 on behalf of the appellant No.2. The complainant

presented the cheque for realization in the Central Bank

of India. The cheque was dishonoured and sent back to

the complainant with a memorandum dated October 15,

1998 mentioning that the cheque was dishonoured

because of insufficiency of funds. Thereupon, the

complainant served a demand notice dated October 28,

1998 which was returned unserved as unclaimed on

November 5, 1998. Therefore another notice was served

by post under Postal Certificate. The appellants failed to

pay the amount mentioned in the notice within 15 days

from the date of receipt of notice. Therefore, the

complainant filed complaint in the Court of learned

Metropolitan Magistrate, Court No.2, Ahmedabad on

December 15, 1998 and prayed to convict the appellants

under Section 138 of the Act. On the basis of the

complaint, Summary Case No. 2785 of 1998 was

3

registered and after recording verification, the learned

Magistrate had issued process.

4. The complainant examined himself and his witnesses

and also produced documentary evidence in support of

his case set up in the complaint. The appellants did not

lead any defence evidence. However, the appellant No.1

in his statement recorded under Section 313 of the Code

stated that his signature was obtained on the blank

paper by kidnapping him and writing was written on it

and that false complaint was lodged by misusing the

signed blank cheque.

5. After the evidence was recorded by the learned

Metropolitan Magistrate as stated above, he came to be

transferred and therefore, ceased to exercise jurisdiction

in the case. He was succeeded by another learned

Metropolitan Magistrate who had and who exercised such

jurisdiction. On August 03, 2001, a pursis was filed

before the learned Metropolitan Magistrate by the

appellants as well as the original complainant i.e. the

4

respondent No.1 herein, declaring that the parties had no

objection to proceed with the matter on the basis of

evidence recorded by predecessor in office of the learned

Metropolitan Magistrate in terms of Section 326 of the

Code. On the basis of said pursis the learned

Metropolitan Magistrate considered the evidence led by

the complainant and heard the learned counsel for the

parties.

6. The learned Metropolitan Magistrate by judgment dated

February 13, 2003, delivered in Summary Case No. 2785

of 1998, convicted both the appellants under Section 138

of the Act and sentenced each of them to suffer simple

imprisonment for three months with fine of Rs.3,000/-

i/d simple imprisonment for 15 days.

7. Feeling aggrieved, the appellants preferred Criminal

Appeal No.19 of 2003 in the Court of the learned

Additional City Sessions Judge at Ahmedabad. The

learned Judge found that conviction of the appellants

recorded under Section 138 of the Act was perfectly just

5

but noticed that the appellant No. 2 is a private limited

company and therefore, could not have been sentenced to

simple imprisonment for three months. Therefore, the

learned Additional City Sessions Judge, Court No.13,

Ahmedabad by judgment dated October 16, 2003

dismissed the appeal but set aside sentence of simple

imprisonment of three months imposed upon the

appellant No.2 and maintained the full sentence imposed

upon appellant No.1 as well as sentence of fine of

Rs.3,000/- imposed upon the appellant No.2.

8. Dissatisfied with the judgment of the First Appellate

Court, the appellants preferred Criminal Revision

Application No.529 of 2003 in the High Court of Gujarat

at Ahmedabad. The learned Single Judge by judgment

dated August 09, 2010, maintained conviction of the

appellants under Section 138 of Negotiable Instrument

Act, but set aside final order of sentence imposed upon

the appellants and remanded the matter to the learned

Magistrate for passing appropriate order of sentence and

6

compensation, if any payable under Section 357 of the

Code, within three months, after giving to the parties

reasonable opportunity of being heard, which has given

rise to the instant appeal.

9. This Court has heard the learned counsel for the parties

and considered the documents forming part of the

appeal.

10. Section 326 of the Code deals with the procedure to be

followed when any Magistrate after having heard and

recorded the whole or any part of the evidence in an

enquiry or a trial, ceases to exercise jurisdiction therein

and is succeeded by another Magistrate who exercises

such jurisdiction. Section 326 of the Code reads as

under :-

“326. Conviction or commitment on evidence

partly recorded by one Magistrate and partly

by another:- (1) Whenever any Judge or

Magistrate after having heard and recorded the

whole or any part of the evidence in an inquiry

or a trial, ceases to exercise jurisdiction therein

and is succeeded by another Judge or

Magistrate who has and who exercises such

jurisdiction, the Judge or Magistrate so

succeeding may act on the evidence so recorded

7

by his predecessor, or partly recorded by his

predecessor and partly recorded by himself :

Provided that if the succeeding

Judge or Magistrate is of opinion that further

examination of any of the witnesses whose

evidence has already been recorded is necessary

in the interests of justice, he may re-summon

any such witness, and after such further

examination, cross-examination and re-

examination, if any, as he may permit, the

witness shall be discharged.

(2) When a case is transferred

under the provisions of this Code from one

Judge to another Judge or from one Magistrate

to another Magistrate, the former shall be

deemed to cease to exercise jurisdiction therein,

and to be succeeded by the latter, within the

meaning of sub-section (1).

(3) Nothing in this section

applies to summary trials or to cases in which

proceedings have been stayed under section 322

or in which proceedings have been submitted to

a superior Magistrate under section 325.”

11. Section 326 is part of general provisions as to inquiries

and trials contained in Chapter XXIV of the Code. It is

one of the important principles of criminal law that the

Judge who hears and records the entire evidence must

give judgment. Section 326 is an exception to the rule

that only a person who has heard the evidence in the

case is competent to decide whether the accused is

innocent or guilty. The Section is intended to meet the

8

case of transfers of Magistrates from one place to another

and to prevent the necessity of trying from the beginning

all cases which may be part-heard at the time of such

transfer. Section 326 empowers the succeeding

Magistrate to pass sentence or to proceed with the case

from the stage it was stopped by his preceding

Magistrate. Under Section 326 (1), successor Magistrate

can act on the evidence recorded by his predecessor

either in whole or in part. If he is of the opinion that any

further examination is required, he may recall that

witness and examine him, but there is no need of re-trial.

In fact Section 326 deals with part-heard cases, when

one Magistrate who has partly heard the case is

succeeded by another Magistrate either because the first

Magistrate is transferred and is succeeded by another, or

because the case is transferred from one Magistrate to

another Magistrate. The rule mentioned in Section 326

is that second Magistrate need not re-hear the whole case

and he can start from the stage the first Magistrate left it.

However, a bare perusal of sub Section (3) of Section 326

9

makes it more than evident that sub Section (1) which

authorizes the Magistrate who succeeds the Magistrate

who had recorded the whole or any part of the evidence

in a trial to act on the evidence so recorded by his

predecessor, does not apply to summary trials. The

prohibition contained in sub Section (3) of Section 326 of

the Code is absolute and admits of no exception. Where

a Magistrate is transferred from one station to another,

his jurisdiction ceases in the former station when the

transfer takes effect.

12. Provision for summary trials is made in chapter XXI of

the Code. Section 260 of the Code confers power upon

any Chief Judicial Magistrate or any Metropolitan

Magistrate or any Magistrate of the First Class specially

empowered in this behalf by the High Court to try in a

summary way all or any of the offences enumerated

therein. Section 262 lays down procedure for summary

trial and sub Section (1) thereof inter alia prescribes that

in summary trials the procedure specified in the Code for

10

the trial of summons-case shall be followed subject to

condition that no sentence of imprisonment for a term

exceeding three months is passed in case of any

conviction under the chapter.

13. The manner in which record in summary trials is to be

maintained is provided in Section 263 of the Code.

Section 264 mentions that in every case tried summarily

in which the accused does not plead guilty, the

Magistrate shall record the substance of evidence and a

judgment containing a brief statement of the reasons for

the finding. Thus the Magistrate is not expected to

record full evidence which he would have been, otherwise

required to record in a regular trial and his judgment

should also contain a brief statement of the reasons for

the finding and not elaborate reasons which otherwise he

would have been required to record in regular trials.

14. The mandatory language in which Section 326 (3) is

couched, leaves no manner of doubt that when a case is

tried as a summary case a Magistrate, who succeeds the

11

Magistrate who had recorded the part or whole of the

evidence, cannot act on the evidence so recorded by his

predecessor. In summary proceedings, the successor

Judge or Magistrate has no authority to proceed with the

trial from a stage at which his predecessor has left it.

The reason why the provisions of sub-Section (1) and (2)

of Section 326 of the Code have not been made applicable

to summary trials is that in summary trials only

substance of evidence has to be recorded. The Court

does not record the entire statement of witness.

Therefore, the Judge or the Magistrate who has recorded

such substance of evidence is in a position to appreciate

the evidence led before him and the successor Judge or

Magistrate cannot appreciate the evidence only on the

basis of evidence recorded by his predecessor. Section

326 (3) of the Code does not permit the Magistrate to act

upon the substance of the evidence recorded by his

predecessor, the obvious reason being that if succeeding

Judge is permitted to rely upon the substance of the

evidence recorded by his predecessor, there will be a

12

serious prejudice to the accused and indeed, it would be

difficult for a succeeding Magistrate himself to decide the

matter effectively and to do substantial justice.

15. The High Court by the impugned judgment rejected the

contention regarding proceedings having been vitiated

under Section 461 of the Code, on the ground that

parties had submitted pursis dated August 3, 2001 and

in view of the provisions of Section 465 of the Code, the

alleged irregularity cannot be regarded as having

occasioned failure of justice and thus can be cured. The

reliance placed by the High Court, on the pursis

submitted by the appellants before the learned

Metropolitan Magistrate declaring that they had no

objection if matter was decided after taking into

consideration the evidence recorded by his predecessor-

in-office is misconceived. It is well settled that no

amount of consent by the parties can confer jurisdiction

where there exists none, on a Court of law nor can they

13

divest a Court of jurisdiction which it possesses under

the law.

16. The cardinal principal of law in criminal trial is that it is

a right of an accused that his case should be decided by

a Judge who has heard the whole of it. It is so stated by

this Court in the decision in Payare Lal Vs. State of

Punjab, AIR 1962 SC 690 : (1962 (1) Crl LJ 688). This

principle was being rigorously applied prior to the

introduction of Section 350 in the Code of Criminal

Procedure, 1898. Section 326 of the new Code deals with

what was intended to be dealt with by Section 350 of the

old Code.

From the language of Section 326(3) of the Code, it is

plain that the provisions of Section 326(1) and 326(2) of the

new Code are not applicable to summary trial. Therefore,

except in regard to those cases which fall within the ambit of

Section 326 of the Code, the Magistrate cannot proceed with

the trial placing reliance on the evidence recorded by his

predecessor. He has got to try the case de novo. In this view

14

of the matter, the High Court should have ordered de novo

trial.

17. The next question that arises is as to from what stage the

learned Metropolitan Magistrate Ahmedabad, should

proceed with the trial de novo. As it has been seen that

Section 326 of the new Code is an exception to the

cardinal principle of trial of criminal cases, it is crystal

clear that if that principle is violated by a particular

Judge or a Magistrate, he would be doing something not

being empowered by law in that behalf. Therefore,

Section 461 of the new Code would be applicable.

Section 461 of the new Code narrates irregularities which

vitiate proceedings. The relevant provision is Clause (l).

It reads as follows:-

“461. Irregularities which vitiate proceedings:-

If any Magistrate, not being empowered by law in

this behalf, does any of the following things,

namely;

                      x     x      x      x       x


            (l)  tries an offender;


                      x     x      x      x       x





                                                                                  15


          his proceedings shall be void."




A plain reading of this provision shows that the proceedings

held by a Magistrate, to the extent that he is not empowered

by law, would be void and void proceedings cannot be

validated under Section 465 of the Code. This defect is not a

mere irregularity and the conviction of the appellants cannot,

even if sustainable on the evidence, be upheld under Section

465 of the Code. In regard to Section 350 of the old Code, it

was said by Privy Council in Pulukuri Kotayya Vs. Emperor,

AIR 1947 P.C. 67 that “when a trial is conducted in a manner

different from that prescribed by the Code, the trial is bad, and

no question of curing an irregularity arises; but if the trial is

conducted substantially in the manner prescribed, but some

irregularity occurs in the course of such conduct, the

irregularity can be cured under Section 537”.

18. This is not a case of irregularity but want of competency.

Apart from Section 326 (1) and 326 (2) which are not

applicable to the present case in view of Section 326 (3), the

Code does not conceive of such a trial. Therefore, Section 465

16

of the Code has no application. It cannot be called in aid to

make what was incompetent, competent. There has been no

proper trial of the case and there should be one.

19. For the foregoing reasons the appeal succeeds. The

judgment dated August 09, 2010 rendered by the learned

Single Judge of the High Court of Gujarat at Ahmedabad in

Criminal Revision Application No. 529 of 2003 upholding

conviction of the appellants for the offence under Section 138

of the Act is hereby set aside. The matter is remanded to the

learned Metropolitan Magistrate for retrial in accordance with

law. The record shows that the appellant No.1 has resorted to

dilatory tactics to delay the trial. The appellant No.1 is

directed to remain present before the learned Metropolitan

Magistrate when required without fail. If the appellant No. 1

fails to remain present before the learned Metropolitan

Magistrate, it would be open to the learned Metropolitan

Magistrate to take necessary steps including issuance of non-

bailable warrant for securing his presence. Having regard to

the facts of the case the learned Metropolitan Magistrate is

17

directed to complete the trial of the case as early as possible

and preferably within five months from the date of receipt of

the writ from this Court. Subject to above mentioned

observations the appeal stands disposed of.

………………………..J.

(J.M. PANCHAL)

………………………..J.

(H.L. GOKHALE)

NEW DELHI

SEPTEMBER 01, 2011.

18

19

****

Sanjoy Narayan Ed.In Ch. … vs Son. High Court Of Allahabad Thr. … on 30 August, 2011

Supreme Court of India
Sanjoy Narayan Ed.In Ch. … vs Son. High Court Of Allahabad Thr. … on 30 August, 2011
Bench: Mukundakam Sharma, Anil R. Dave
                                                   1


                          IN THE SUPREME COURT OF INDIA                REPORTABLE
                    CRIMINAL APPELLATE JURISDICTION

                    CRIMINAL APPEAL NO. 1683/2011
             (Arising out of SLP(Crl.) No. 4876 of 2011)



SANJOY NARAYAN EDITOR IN CHIEF HINDUSTAN & ORS.   Appellant(s)

                 VERSUS

HON. HIGH COURT OF ALLAHABAD THR. R.G.            Respondent(s)



                                  O R D E R

1. Leave granted.

2. This appeal is directed against the order dated

04.04.2011 passed by the Allahabad High Court.

3. The appellants being aggrieved by the aforesaid order

had filed this appeal on which we issued notice. On service

of the notice, the respondent has also entered appearance

through counsel.

4. We have heard the counsel appearing for the parties.

The appellants have now filed an affidavit which is on record

tendering unqualified apology for the publication of article

in question in Hindustan Times on 20.09.2010 out of which

contempt proceedings arise.

5. The media, be it electronic or print media, is

2

generally called the fourth pillar of democracy. The media,

in all its forms, whether electronic or print, discharges a

very onerous duty of keeping the people knowledgeable and

informed.

6. The impact of media is far-reaching as it reaches not

only the people physically but also influences them mentally.

It creates opinions, broadcasts different points of view,

brings to the fore wrongs and lapses of the Government and all

other governing bodies and is an important tool in restraining

corruption and other ill-effects of society. The media

ensures that the individual actively participates in the

decision-making process. The right to information is

fundamental in encouraging the individual to be a part of the

governing process. The enactment of the Right to Information

Act is the most empowering step in this direction. The role

of people in a democracy and that of active debate is

essential for the functioning of a vibrant democracy.

7. With this immense power, comes the burden of

responsibility. With the huge amount of information that they

process, it is the responsibility of the media to ensure that

they are not providing the public with information that is

factually wrong, biased or simply unverified information. The

right to freedom of speech is enshrined in Article 19(1)(a) of

3

the Constitution. However, this right is restricted by

Article 19(2) in the interest of the sovereignty and integrity

of India, security of the State, public order, decency and

morality and also Contempt of Courts Act and defamation.

8. The unbridled power of the media can become dangerous

if check and balance is not inherent in it. The role of the

media is to provide to the readers and the public in general

with information and views tested and found as true and

correct. This power must be carefully regulated and must

reconcile with a person’s fundamental right to privacy. Any

wrong or biased information that is put forth can potentially

damage the otherwise clean and good reputation of the person

or institution against whom something adverse is reported.

Pre-judging the issues and rushing to conclusions must be

avoided.

9. This is exactly what has happened in the present case.

The then Chief Justice of the Allahabad High Court who has

otherwise proved himself to be a competent and good Judge

wherever he was posted during his career was brought under a

cloud by the reporting which is the subject matter of this

petition. His image was sought to be tarnished by a newspaper

report which was apparently based on surmises and conjectures

and not based on facts and figures. The dignity of the courts

4

and the people’s faith in administration must not be tarnished

because of biased and unverified reporting. In order to avoid

such biased reporting, one must be careful to verify the facts

and do some research on the subject being reported before a

publication is brought out.

10. We are glad that the persons against whom contempt

proceedings were initiated for a wrong and incorrect reporting

about the then Chief Justice as aforesaid have understood

their mistake and have expressed their repentance through

their advocate and also themselves by filing an unqualified

apology before us for the wrong done.

11. On going through the impugned order also we find that

apology tendered before the Allahabad High Court was not

accepted only because it was felt that the same was not

unqualified. Now, by filing an affidavit they have tendered

unconditional apology.

12. The judiciary also must be magnanimous in accepting an

apology when filed through an affidavit duly sworn, conveying

remorse for such publication. This indicates that they have

accepted their mistake and fault. This Court has also time

and again reiterated that this Court is not hypersensitive in

matter relating to Contempt of Courts Act and has always shown

5

magnanimity in accepting the apology. Therefore, we accept

the aforesaid unqualified apology submitted by them and drop

the proceeding.

13. With the aforesaid observations, we order for closure

of the proceedings initiated against the appellants herein

under the Contempt of Courts Act by keeping the affidavit

filed by the appellants on record with a direction to the

appellants to publish the apology as stated in the affidavit

in the first page of Lucknow edition of Hindustan Times to be

published on 01.09.2011 and also at such other place, wherever

there was any such publication, in a daily issue of the

newspaper at some prominent place of the newspaper.

14. We appreciate the gesture of the counsel appearing for

the parties and also for the fact they endorse the same view

as expressed in this order.

15. The appeal is disposed of in terms of the aforesaid

directions and observations.

…………………..J
(Dr. MUKUNDAKAM SHARMA)

………………….J
(ANIL R. DAVE)

NEW DELHI,
AUGUST 30, 2011

6

ITEM NO.2 COURT NO.11 SECTION II

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (Crl) No(s).4876/2011

(From the judgement and order dated 04/04/2011 in CACRL
No.20/2010 of The HIGH COURT OF JUDICATURE AT ALLAHABAD)

SANJOY NARAYAN EDITOR IN CHIEF HINDUSTAN & ORS. Petitioner(s)

VERSUS

HON. HIGH COURT OF ALLAHABAD THR. R.G. Respondent(s)

(With appln(s) for stay and office report)

Date: 30/08/2011 This Petition was called on for hearing today.

CORAM :

HON’BLE DR. JUSTICE MUKUNDAKAM SHARMA
HON’BLE MR. JUSTICE ANIL R. DAVE

For Petitioner(s) Mr. A. Sharan, Sr. Adv.

Mr. Ajay Singh, Adv.

Mr. Amit Anand Tiwari, Adv.

For Respondent(s) Mr. Ravi P. Mehrotra, Adv.

Mr. Vibhu Tiwari, Adv.

UPON hearing counsel the Court made the following
O R D E R

Leave granted.

The appeal is disposed of in terms of the signed
reportable order.

       (NAVEEN KUMAR)                       (RENU DIWAN) 
       COURT MASTER                         COURT MASTER

(Signed reportable order is placed on the file)

7

Mohan Singh vs State Of Bihar on 26 August, 2011

Supreme Court of India
Mohan Singh vs State Of Bihar on 26 August, 2011
Author: Ganguly
Bench: Asok Kumar Ganguly, Deepak Verma
                                                                    REPORTABLE



                  IN THE SUPREME COURT OF INDIA

                  CRIMINAL APPELLATE JURISDICTION





                  CRIMINAL APPEAL NO.663 OF 2010 





Mohan Singh                                  .....Appellant(s)





             - Versus -





State of Bihar                               ....Respondent(s)





                            J U D G M E N T

GANGULY, J.

1. This criminal appeal has been preferred from the

judgment of the High Court in Criminal Appeal (DB)

No. 1338 of 2007, dated 3.9.2008, whereby the High

Court upheld the judgment and order of conviction

passed by the learned Additional Sessions Judge,

Fast Track Court-IV, Motihari, East Champaran in

Sessions Trial No. 101/16 of 2006/2007. The learned

Sessions Court held the appellant guilty of criminal

1

conspiracy for murder under sections 120B of IPC and

of extortion under section 387 of IPC and sentenced

him to undergo rigorous imprisonment for life and

was fined for Rs.25,000/- for the offence of

criminal conspiracy for murder under section 120B,

in default of which he was to further undergo simple

imprisonment for 1 year. He was further sentenced

for seven years rigorous imprisonment under section

387 IPC and was fined Rs.5,000/-, in default of

which to undergo simple imprisonment for six months.

2. The facts of the case are that the informant Shri

Vikas Kumar Jha gave a fardbeyan to the effect that

at about 5.00 P.M. on 23.7.2005, he had received a

call on his telephone number 06252-239727, inquiring

about his elder brother Shri Anil Kumar Jha. The

informant stated before the police that his elder

brother, the owner of a medical store, on the said

date had been out of town. He submitted that he had

communicated the same to the caller. Upon such

reply, the caller disclosed himself as Mohan Singh,

2

the appellant herein, and asked the informant to

send him Rs.50,000/-. The informant submitted that

he had similar conversations with the caller three

to four times in the past. However, he then received

another telephone call on 25.7.2005 from a cell

phone number 9835273765. The caller threatened him

that since the demand of money had not been

fulfilled, the informant should be ready to face the

consequences.

3. Upon his elder brother’s return, the informant had

narrated the events to him. However, his elder

brother did not take the threat seriously.

4. On 3.8.2005, at about 9.00 P.M. when the informant

was at a place called Balua Chowk, he had received a

call from his driver Shri Dhanai Yadav on his cell

phone to the effect that informant’s elder brother

and their father, Shri Sureshwar Jha, had been shot

at while they were in their medical store, and that

both of them had been rushed to Sadar Hospital. On

3

reaching Sadar Hospital, the informant saw the dead

body of his elder brother. He was intimated by the

people there that his father had been shifted to

another hospital called Rahman’s Nursing Home. He

was also told that the shots had been fired by one

Laxmi Singh and Niraj Singh. Having heard this, the

informant rushed to Rahman’s Nursing Home, where his

injured father told him that while Niraj Singh

cleared the medical store of all the other people,

Laxmi Singh had fired shots at him and Anil Kumar

Jha with an A.K. 47 rifle, before fleeing from the

scene. After narrating such events, his father

became unconscious.

5. The informant further stated that his family had

actually known the appellant and Laxmi Singh from an

earlier incident in 2004, when on the occasion of

Durga Puja, the two had sent a messenger to Anil

Kumar Jha’s medical store, demanding Rs.50,000/- or

to face death in the alternative. He submitted that

pursuant to this, they had preferred a complaint

4

before the police, and that the matter was sub

judice. He further stated that he had actually met

the appellant once prior to the telephone calls when

the latter had asked for money, as contribution for

celebrations of Sarswati Puja and Durga Puja. The

informant thus stated that his father and brother

had been attacked by Laxmi Singh and Niraj Singh at

the instance of Mohan Singh for not having paid the

extortion money. The informant said so on the

identification of the voice of the telephone caller

as that of the appellant. He, however, did not

follow up the calls made on 23rd and 25th of July,

2005 either with the appellant in person, or with

the authorities of Motihari jail where the appellant

was in fact lodged at the time of the calls. These

statements of the informant were supported by the

informant’s father Sureshwar Jha, and his other

brother Sunil Kumar Jha.

6. On the basis of this fardbeyan, Motihari Town Police

Station Case No.246/2005 was registered on 3.8.2005

5

against the appellant Mohan Singh, Laxmi Singh,

Niraj Singh and others. The investigating officer

submitted that he had known the appellant to have as

many as seven criminal cases for murder, kidnapping

for ransom and loot, pending against him. However,

he submitted that he had received the phone number

attributed to the appellant only from the informant.

Though he submitted that as many as nine calls had

been made between the phone numbers attributed to

the appellant and Laxmi Singh, and that he had

retrieved the records of calls made by the number

attributed to the appellant and that of the

informant, he had not been able to establish as to

who were the registered owners of the SIM cards.

7. The learned Sessions Court in the course of trial

took note of the fact that identities of the

registered owners of the said SIM cards had not been

established by the police, but it did not give much

emphasis on this on the grounds that the informant’s

family had known the appellant and Laxmi Singh long

6

enough and had known about their common intention to

extort money. On these findings the learned Sessions

Court found the appellant guilty.

8. On appeal the learned Division Bench upheld the

conviction inter alia on the grounds that the

informant himself and his family had known the

appellant and Laxmi Singh from before.

9. Even though the High Court in the impugned judgment

held that identification by voice and gait is risky,

but in a case where the witness identifying the

voice had previous acquaintance with the caller, the

accused in this case, such identification can be

relied upon. The High Court also held that direct

evidence in a conspiracy is difficult to be

obtained. The case of conspiracy has to be inferred

from the conduct of the parties. The High Court

relied upon the evidence of the informant, PW.4 and

on Exts. 9 and 10 where the conversation between

PW.4 and the appellant was recorded. The High Court

7

also relied upon the evidence of PW.1 Dhanai Yadav,

who was sitting inside the medical store of the

deceased Anil Kumar Jha at the time of the incident.

PW.1 was a witness to the incident of Laxmi Singh

firing shots at the deceased and his father

Sureshwar Jha. The High Court also relied upon the

evidence of PW.2 Surehswar Jha, the injured witness.

The High Court found that the evidence of PW.2 and 4

is unblemished and their evidence cannot be

discarded. The High Court also relied upon the

evidence of PW.4 as having identified the voice of

the appellant.

10. On appreciation of the aforesaid evidence, the High

Court came to the conclusion that Mohan Singh was

performing one part of the act, and Laxmi Singh

performed another part, both performing their parts

of the same act. Thus the case of conspiracy was

made out.

8

11. Assailing such finding of the Sessions Court which

has been affirmed by the High Court, the learned

Counsel appearing for the appellant argued that the

appellant cannot be convicted under section 120-B

and given the sentence of rigorous imprisonment for

life in view of the charges framed against the

appellant.

12. In order to appreciate this argument, the charges

framed against the appellant are set out below:

“FIRST – That you, on or about the

day of at about or during the period

between 23.7.05 & 3.8.05 agreed with Laxmi

Narain Singh, Niraj Singh & Pankaj Singh

to commit the murder of Anil Jha, in the

event of his not fulfilling your demand,

as extortion of a sum of Rs.50,000/- and

besides the above said agreement you did

telephone from Motihari Jail to Vikash Jha

in pursuance of the said agreement

extending threat of dire consequences if

the demand was not met and then on 3.8.05

the offence of murder punishable with

death was committed by your companions

Laxmi Narain Singh and Niraj Singh and you

thereby committed the offence of criminal

conspiracy to commit murder of Anil Jha

and seriously injured Sureshwar Jha and

thereby committed an offence punishable

under Section 120-B of the Indian Penal

Code, and within my cognizance.

9

SECONDLY – That you, during the period

between 23.7.05 & 3.8.05 at Hospital gate

Motihari P.S., Motihari Town Dist. East

Champaran, Put Vikash Jha in fear of death

and grievous hurt to him and his family

members in order to commit extortion on

telephone and thereby committed an offence

punishable under Section 387 of the Indian

Penal Code, and within my cognizance and I

hereby direct that you be tried by me on

the said the charge.

Charges were read over and explained

in Hindi to the accused and the accused

pleaded not guilty as charged. Let him be

tried.”

13. Admittedly, no complaint of any prejudice by the

appellant was raised either before the trial Court

or in the High Court or in the course of examination

under Section 313 Cr.P.C.

14. These points have been raised before this Court for

the first time. In a case where points relating to

errors in framing of charge or even misjoinder of

charge are raised before this Court for the first

time, such grievances are not normally considered by

this Court. Reference in this connection may be

10

made to the decision of a three-Judge Bench of this

Court in the case of Mangal Singh and others v.

State of Madhya Bharat reported in AIR 1957 SC 199.

Justice Imam delivering a unanimous opinion of the

Court held in paragraph 5 at page 201 of the report

as follows:-

“It was, however, urged that there had

been misjoinder of charges. This point does

not seem to have been urged in the High

Court because there is no reference to it in

the judgment of that Court and does not seem

to have been taken in the Petition for

special leave. The appellants cannot,

therefore, be permitted to raise this

question at this stage.”

15. However, instead of refusing to consider the said

grievance on the ground of not having been raised at

an earlier stage of the proceeding, we propose to

examine the same on its merits.

16. The purpose of framing a charge is to give

intimation to the accused of clear, unambiguous and

precise notice of the nature of accusation that the

accused is called upon to meet in the course of a

11

trial. (See decision of a four-Judge Bench of this

Court in V.C. Shukla v. State Through C.B.I.,

reported in 1980 Supplementary SCC 92 at page 150

and paragraph 110 of the report). Justice Desai

delivering a concurring opinion, opined as above.

17. But the question is how to interpret the words in a

charge? In this connection, we may refer to the

provision of Section 214 of the Code. Section 214 of

the Code is set out below:

“214. Words in charge taken in sense of

law under which offence is punishable. In

every charge words used in describing an

offence shall be deemed to have been used

in the sense attached to them respectively

by the law under which such offence is

punishable.”

18.The other relevant provisions relating to charge may

be noticed as under:

“211. Contents of charge.- (1) Every

charge under this Code shall state the

offence with which the accused is charged.

(2) If the law which creates the offence

gives it any specific name, the offence

12

may be described in the charge by that

name only.

(3) If the law which creates the offence

does not give it any specific name, so

much of the definition of the offence must

be stated as to give the accused notice of

the matter with which he is charged.

(4) The law and section of the law against

which the offence is said to have been

committed shall be mentioned in the

charge.

(5) The fact that the charge is made is

equivalent to a statement that every legal

condition required by law to constitute

the offence charged was fulfilled in the

particular case.

(6) The charge shall be written in the

language of the Court.

(7) If the accused, having been previously

convicted of any offence, is liable, by

reason of such previous conviction, to

enhanced punishment, or to punishment of a

different kind, for a subsequent offence,

and it is intended to prove such previous

conviction for the purpose of affecting

the punishment which the Court may think

fit to award for the subsequent offence,

the fact date and place of the previous

conviction shall be stated in the charge;

and if such statement has been omitted,

the Court may add it at any time before

sentence is passed.

215. Effect of errors. No error in stating

either the offence or the particulars

required to be stated in the charge, and

no omission to state the offence or those

particulars, shall be regarded at any

stage of the case as material, unless the

13

accused was in fact misled by such error

or omission, and it has occasioned a

failure of justice.

464. Effect of omission to frame, or

absence of, or error in, charge. (1) No

finding sentence or order by a Court of

competent jurisdiction shall be deemed

invalid merely on the ground that no

charge was framed or on the ground of any

error, omission or irregularity in the

charge including any misjoinder of

charges, unless, in the opinion of the

Court of appeal, confirmation or revision,

a failure of justice has in fact been

occasioned thereby.

(2) If the Court of appeal, confirmation

or revision is of opinion that a failure

of justice has in fact been occasioned, it

may-

(a) in the case of an omission to

frame a charge, order that a

charge be framed and that the

trial be recommenced from the

point immediately after the

framing of the charge;

(b) in the case of an error, omission

or irregularity in the charge,

direct a new trial to be had upon

a charge framed in whatever

manner it thinks fit:

Provided that if the Court is of

opinion that the facts of the case are

such that no valid charge could be

preferred against the accused in respect

of the facts proved, it shall quash the

conviction.”

14

19. While examining the aforesaid provisions, we may

keep in mind the principles laid down by Justice

Vivian Bose in Willie (William) Slaney v. State of

Madhya Pradesh reported in (1955) 2 SCR 1140. At

page 1165 of the report, the learned judge

observed:-

“We see no reason for straining at the

meaning of these plain and emphatic

provisions unless ritual and form are to

be regarded as of the essence in criminal

trials. We are unable to find any magic or

charm in the ritual of a charge. It is the

substance of these provisions that count

and not their outward form. To hold

otherwise is only to provide avenues of

escape for the guilty and afford no

protection to the innocent.”

20. The aforesaid observation of Justice Vivian Bose in

William Slaney (supra) has been expressly approved

subsequently by this Court in V.C. Shukla (supra).

21. Reference in this connection may be made to the

decision of this Court in the case of Tulsi Ram and

others v. State of Uttar Pradesh reported in AIR

15

1963 SC 666. In that case in paragraph 12 this

Court was considering these aspects of the matter

and made it clear that a complaint about the charge

was never raised at any earlier stage and the

learned Judges came to the conclusion that the

charge was fully understood by the appellants in

that case and they never complained at the

appropriate stage that they were confused or

bewildered by the charge. The said thing is true

here. Therefore, the Court refused to accept any

grievance relating to error in the framing of the

charge.

22. Subsequently, in the case of State of Andhra Pradesh

v. Cheemalapati Ganeswara Rao and another reported

in AIR 1963 SC 1850, this Court also had to consider

a similar grievance. Both in the case of Tulsi Ram

(supra) as also in the case of Cheemalapati (supra)

the charges were of conspiracy. The same is also a

charge in the instant case. Repelling the said

grievance, the learned Judges held that the object

16

in saying what has been set out in the first charge

was only to give notice to the accused as to the

ambit of the conspiracy to which they will have to

answer and nothing more. This Court held that even

assuming for a moment that the charge is cumbersome

but in the absence of any objection at the proper

time and in the absence of any material from which

the Court can infer prejudice, such grievances are

precluded by reason of provision of Section 225 of

the Cr.P.C. Under the present Code it is Section

215 which has been quoted above.

23. Reference in this connection may also be made in the

decision of this Court in Rawalpenta Venkalu and

another v. The State of Hyderabad reported in AIR

1956 SC 171 at para 10 page 174 of the report. The

learned Judges came to the conclusion that although

Section 34 is not added to Section 302, the accused

had clear notice that they were being charged with

the offence of committing murder in pursuance of

their common intention. Therefore, the omission to

17

mention Section 34 in the charge has only an

academic significance and has not in any way misled

the accused. In the instant case the omission of

charge of Section 302 has not in any way misled the

accused inasmuch as it is made very clear that in

the charge that he agreed with the others to commit

the murder of Anil Jha. Following the aforesaid

ratio there is no doubt that in the instant case

from the evidence led by the prosecution the charge

of murder has been brought home against the

appellant.

24. In K. Prema S. Rao and another v. Yadla Srinivasa

Rao and others reported in (2003) 1 SCC 217 this

Court held that though the charge specifically under

Section 306 IPC was not framed but all the

ingredients constituting the offence were mentioned

in the statement of charges and in paragraph 22 at

page 226 of the report, a three-Judge Bench of this

Court held that mere omission or defect in framing

of charge does not disable the criminal court from

18

convicting the accused for the offence which is

found to have been proved on the evidence on record.

The learned Judges held that provisions of Section

221 Cr.P.C. takes care of such a situation and

safeguards the powers of the criminal court to

convict an accused for an offence with which he is

not charged although on facts found in evidence he

could have been charged with such offence. The

learned Judges have also referred to Section 215 of

the Cr.P.C., set out above, in support of their

contention.

25. Even in the case of Dalbir Singh v. State of U.P.,

reported in (2004) 5 SCC 334, a three-Judge Bench of

this Court held that in view of Section 464 Cr.P.C.

it is possible for the appellate or revisional court

to convict the accused for an offence for which no

charge was framed unless the court is of the opinion

that the failure of justice will occasion in the

process. The learned Judges further explained that

in order to judge whether there is a failure of

19

justice the Court has to examine whether the accused

was aware of the basic ingredients of the offence

for which he is being convicted and whether the main

facts sought to be established against him were

explained to him clearly and whether he got a fair

chance to defend himself. If we follow these tests,

we have no hesitation that in the instant case the

accused had clear notice of what was alleged against

him and he had adequate opportunity of defending

himself against what was alleged against him.

26. In State of Uttar Pradesh v. Paras Nath Singh

reported in (2009) 6 SCC 372 this Court, setting out

Section 464 of Cr.P.C., further held that whether

there is failure of justice or not has to be proved

by the accused. In the instant case no such

argument was ever made before the Trial Court or

even in the High Court and we are satisfied from the

materials on record that no failure of justice has

been occasioned in any way nor has the appellant

suffered any prejudice.

20

27. In Annareddy Sambasiva Reddy and others v. State of

Andhra Pradesh reported in (2009) 12 SCC 546 this

court again had occasion to deal with the same

question and referred to Section 464 of Cr.P.C. In

paragraph 55 at page 567 of the report, this Court

came to the conclusion that if the ingredients of

the section charged with are obvious and implicit,

conviction under such head can be sustained

irrespective of the fact whether the said section

has been mentioned or not in the charge. The basic

question is one of prejudice.

28. In view of such consistent opinion of this Court, we

are of the view that no prejudice has been caused to

the appellant for non-mentioning of Section 302

I.P.C. in the charge since all the ingredients of

the offence were disclosed. The appellant had full

notice and had ample opportunity to defend himself

against the same and at no earlier stage of the

proceedings, the appellant had raised any grievance.

21

Apart from that, on overall consideration of the

facts and circumstances of this case we do not find

that the appellant suffered any prejudice nor has

there been any failure of justice.

29. In the instant case, in the charge it has been

clearly mentioned that the accused-appellant has

committed the murder of Anil Jha. By mentioning that

the accused has committed the murder of Anil Jha all

the ingredients of the charge have been mentioned

and the requirement of Section 211, sub-section (2)

has been complied with. Therefore, we do not find

any substance in the aforesaid grievance of the

appellant.

30. Now the only other point on which argument has been

made on behalf of the appellant is that in the

instant case appellant was in jail at the time of

the commission of the offence. It has been

submitted that his involvement in the whole episode

has been argued for only on the evidence of PW.4 who

22

is said to have identified his voice on the basis of

some telephone calls.

31. These are essentially questions of fact and after a

concurrent finding by two courts normally this Court

in an appeal against such finding is slow and

circumspect to upset such finding unless this Court

finds the finding to be perverse.

32. However, on the legal issue one thing is clear that

identification by voice has to be considered by this

Court carefully and on this aspect some guidelines

have been laid down by this Court in the case of

Kirpal Singh v. The State of Uttar Pradesh reported

in AIR 1965 SC 712. In dealing with the question of

voice identification, construing the provisions of

Section 9 of the Indian Evidence Act, this Court

held:

“…It is true that the evidence about

identification of a person by the timbre of

his voice depending upon subtle variations

23

in the overtones when the person recognising

is not familiar with the person recognised

may be some-what risky in a criminal trial.

But the appellant was intimately known to

Rakkha Singh and for more than a fortnight

before the date of the offence he had met

the appellant on several occasions in

connection with the dispute about the

sugarcane crop….”

(para 4, page 714 of the report)

33. Relying on such identification by voice this Court

held in Kripal Singh (supra) that it cannot come to

the conclusion that the identification of the

assailant by Rakkha Singh was so improbable that

this Court would be justified in disagreeing with

the opinion of the Court which saw the witness and

formed its opinion as to its credibility and also of

the High Court which considered the evidence against

the appellant and accepted the testimony (see para

4, page 714 of the report). The same principles

will apply here. PW.4 in his evidence clearly

stated that the appellant gave him a phone call

asking for money on 23.7.2005 and again on 25.7.2005

when the appellant threatened him of dire

consequences for not paying the money. PW.4 also

stated in his evidence that he got an ID caller

installed in his phone and he informed the police of

24

the phone number of the caller which is of the

appellant. PW.4 also stated in his evidence that he

had direct talks with the appellant at hospital

chawk prior to the incident when he used to demand

money from him and other shopkeepers at the time of

Durga Puja and Saraswati Puja. PW.4 specifically

stated that he can identify the voice of Mohan

Singh. The first I.O. of the case (PW.6) in his

evidence also stated that during investigation

mobile No.9835273765 of Mohan Singh was found and

mobile No.9431428630 of Laxmi Singh was also found.

P.W. 8, the other I.O. of the case stated that on

23.7.2005, four calls were made between the mobile

phones of Laxmi Singh and Mohan Singh. Then six more

calls were made by Laxmi Singh to Mohan Singh on

3.08.2005, i.e. on the day of the incident itself.

The printout details of these phone calls were

produced before the Court. So both the Trial Court

and High Court considered the evidence of PW.6 and

PW.8 who were the investigating officers in this

case, apart from the evidence of PW.4, other

witnesses and the materials on record before coming

25

to the conclusion. The fact that the name of

registered allottees the SIM cards of these mobile

phones could not be traced is not relevant in this

connection. This Court finds that from para 19

onwards of the judgment by the High Court these

aspects have received due consideration.

34. The learned counsel for the appellant relied on some

judgments in support of his contention that in the

facts of this case voice identification cannot be

accepted. The learned counsel relied on a judgment

of this Court in the case of Nilesh Dinkar Paradkar

v. State of Maharashtra reported in (2011) 4 SCC

143. In that case the voice in the telephone was

tapped and then the voice was recorded in a cassette

and the cassette was then played to identify the

voice. Therefore, there is a substantial factual

difference with the facts in the case of Nilesh

(supra) and the facts of the present case. Apart

from that in Nilesh (supra), the High Court

acquitted A1 to A4 and this Court finds that the

26

evidence against Nilesh was identical. Therefore,

this Court held that the conclusion of the High

court in acquitting Accused 1, 2, 3 and 4 has

virtually “destroyed the entire substratum of the

prosecution case” (see para 28 of the report).

Since that decision was passed on tape recorded

version of the voice, the principles decided in that

case, even though are unexceptionable, cannot be

applied to the present case.

35. The other case on which reliance was placed by the

learned counsel for the appellant was in the case of

Inspector of Police, Tamil Nadu v. Palanisamy alias

Selvan reported in (2008) 14 SCC 495. In that case

this Court held that identification from voice is

possible but in that case no evidence was adduced to

show that witnesses were closely acquainted with the

accused to identify him from his voice and that too

from very short replies. Therefore, this case

factually stands on a different footing. In the

instant case the evidence of PW.4 that he knows the

27

voice of the appellant was not challenged nor was it

challenged that the mobile no. 9835273765 is not

that of the appellant. Nor has the evidence of PW.8

been challenged that on 3.8.2005 eight calls were

recorded between the mobiles of the appellant and

his conspirator Laxmi Singh.

36. The next decision on which reliance was placed by

the learned counsel for the appellant was rendered

in the case of Saju v. State of Kerala reported in

(2001) 1 SCC 378. In Saju (supra) this Court

explained the principles of Section 10 of the

Evidence Act, as follows:-

“Evidene Act, 1872 – Sec.10 – Condition

for applicability of

Act or action of one of the accused cannot

be used as evidence against the other.

However, an exception has been carved out under

Section 10 of the Evidence Act in the case of

conspiracy. To attract the applicability of

Section 10 of the Evidence Act, the court must

have reasonable ground to believe that two or

more persons had conspired together for

committing an offence. It is only then that

the evidence of action or statement made by one

of the accused could be used as evidence

against the other.”

28

37. If we apply the aforesaid principles to the facts of

the present case it is clear that there is enough

evidence to furnish reasonable ground to believe

that both the appellant and Laxmi Singh had

conspired together for committing the offence.

Therefore, the principles of this case do not help

the appellant.

38. Learned counsel for the appellant also relied upon

the decision of this Court in the case of Yogesh

alias Sachin Jagdish Joshi v. State of Maharashtra

reported in (2008) 10 SCC 394. In paragraph 25 at

page 402 of the report this Court laid down the

following principles:-

“Thus, it is manifest that the meeting of

minds of two or more persons for doing an

illegal act or an act by illegal means is

sine qua non of the criminal conspiracy but

it may not be possible to prove the

agreement between them by direct proof.

Nevertheless, existence of the conspiracy

and its objective can be inferred from the

surrounding circumstances and the conduct of

the accused. But the incriminating

circumstances must form a chain of events

from which a conclusion about the guilt of

29

the accused could be drawn. It is well

settled that an offence of conspiracy is a

substantive offence and renders the mere

agreement to commit an offence punishable,

even if an offence does not take place

pursuant to the illegal agreement.”

39. In view of the aforesaid principles, this Court

finds that no assistance can be drawn from the

aforesaid decision to the case of the appellant in

this case.

40. Reliance was also placed on the decision of this

Court in the case of S. Arul Raja v. State of Tamil

Nadu reported in (2010) 8 SCC 233. In that case

this Court held that mere circumstantial evidence to

prove the involvement of the accused is not

sufficient to meet the requirements of criminal

conspiracy and meeting of minds to form a criminal

conspiracy has to be proved by placing substantive

evidence. In the instant case, as discussed above,

substantive evidence was placed to prove the meeting

of minds between the appellant and Laxmi Singh about

the murder of the victim. In evidence which has

30

been noted hereinabove in the earlier part of the

judgment it clearly shows that there is substantial

piece of evidence to prove criminal conspiracy.

41. Reliance was also placed by the learned counsel for

the appellant on the decision of this Court in the

case of Mohd. Khalid v. State of West Bengal

reported in (2002) 7 SCC 334. In that case, this

court held that offence of conspiracy can be proved

by either direct or circumstantial evidence. In

paragraph 24 at page 354 of the report the following

observations have been made:-

“Conspiracies are not hatched in the open,

by their nature, they are secretly planned,

they can be proved even by circumstantial

evidence, the lack of direct evidence relating

to conspiracy has no consequence.”

42. For the reasons discussed above, this Court does not

find that there is any reason to interfere with the

concurrent finding in the instant case. This Court,

therefore, does not find any reason to take a view

different from the one taken by the High Court.

31

43. The appeal is dismissed and the conviction of the

appellant under Section 120B of IPC for life

imprisonment is affirmed.

…………………..J.

(ASOK KUMAR GANGULY)

…………………..J.

New Delhi                              (DEEPAK VERMA)

August 26, 2011





                                 32


Man Singh vs Maruti Suzuki India Ltd.& Anr on 26 August, 2011

Supreme Court of India
Man Singh vs Maruti Suzuki India Ltd.& Anr on 26 August, 2011
Bench: Aftab Alam, R.M. Lodha
                                                                                    NON-REPORTABLE


                     IN THE SUPREME COURT OF INDIA


                      CIVIL APPELLATE JURISDICTION


                       CIVIL APPEAL NO. 7389 OF 2011 

            [ARISING OUT OF SLP (CIVIL) NO.9211 OF 2010]





Man Singh                                                            ... Appellant


                                          Versus





Maruti Suzuki India Ltd. & Another                                   ... Respondents





                                       O R D E R

1. Leave granted.

2. The relationship of employer and workman between the appellant

and the respondent – company was brought to end in terms of a voluntary

retirement scheme (in short “VRS”) introduced by the management of the

company in September, 2011. The appellant, however, alleged that he

was made to take voluntary retirement under duress and, in reality, his

removal from service was illegal and unjustified. On those allegations he

2

raised an industrial dispute. The appropriate Government referred the

dispute for adjudication before the Labour Court, Gurgaon, vide order

dated December 4, 2006. The reference is in the following terms:

“Whether the termination of service of Shri Man Singh

on the basis of VRS Scheme by the Management was

justified and correct, if not, to what relief is he entitled?”

3. The respondent – company challenged the competence and validity

of the reference in a Writ Petition (CWP No.3358/2009) before the

Punjab and Haryana High Court. On behalf of the respondent – company,

it was contended that having accepted the full monetary benefits under the

VRS, it was no longer open to the appellant to question or challenge his

termination of service and, in any case, any adjudication on the dispute

raised by the appellant should not be allowed to proceed while he retained

all the monetary benefits collected by him under the scheme.

4. A learned single Judge of the High Court upheld the respondent’s

contention and while disposing of the Writ Petition by judgment and

order dated November 23, 2009 made the following directions:-

“To make the scales even, the Labour Court will undertake

the adjudication on the reference, if only the workman

deposits the amount which he has received into Court with

interest from the date when he has received to the date of

deposit calculated at 7.5% per annum. If the deposit is not

made within 60 days from the date when reference was issued

3

to him, the reference made by the Government shall stand

annulled.

The writ petition is disposed of in the above terms.”

5. The appellant challenged the order passed by the single Judge in an

intra-court appeal but a Division Bench of the High Court dismissed his

appeal [(L.P.A. No.82 of 2010)(O & M)] by a brief order, dated January

21, 2010.

6. The appellant has now brought this matter to this Court. On behalf

of the appellant, it is submitted that the High Court in exercise of its writ

jurisdiction could not interfere with the reference made by the appropriate

Government and the direction to deposit in court the amount received by

him under the VRS along with interest at the rate of 7.5% per annum as

the condition for the reference to proceed, was quite unreasonable,

inequitable and illegal.

7. The submission made on behalf of the appellant is fully answered

by an earlier decision of this Court in Ramesh Chandra Sankla and others

versus Vikram Cement and others (2008) 14 SCC 58. In Ramesh

Chandra Sankla a number of workmen of Vikram Cement Company who

had ceased to be the employees of Company after accepting full benefits

under the scheme of voluntary retirement moved the Labour Court under

4

section 31 of the Madhya Pradesh Industrial Relations Act, 1960 making

the same allegations against the Company as the appellant in this case. In

that case, the Labour Court declined to decide certain issues framed at the

instance of the management as preliminary issues. The management’s

appeal against the decision of the Labour Court not to decide those issues

as preliminary issues was rejected by the Industrial Court. The writ

petition filed by the management was dismissed by a learned single Judge

on the ground that the orders passed by the Labour Court and affirmed by

the Industrial Court were interlocutory in nature. The management took

the matter before the Division Bench which held that the writ petitions

filed by the Company were under Article 227 of the Constitution and the

single Judge was exercising supervisory jurisdiction; hence, intra-court

appeals were not maintainable and the appeals filed by the Company were

liable to be dismissed on that score alone. Even while holding that the

management’s appeals were liable to be dismissed as not maintainable,

the Division Bench went on to hold that since the workmen had

approached the Labour Court after having received the benefits under the

scheme, it would be equitable to direct the concerned employees to return

the benefits so received to the employer subject to the undertaking by the

5

Company that in the event the Labour Court allowed the claim and

granted benefits to the workmen, the same would be restored to them by

the Company with interest at the rate of 6% per annum.

8. The workmen challenged the order of the Division Bench before

this Court inter alia on the ground that having held that the management’s

appeals were not maintainable, the Division Bench had no jurisdiction to

make the impugned direction. This Court repelled the workmen’s

contention and in paragraphs 100 and 101 of the decision held and

observed as follows:-

“100. Even otherwise, according to the workmen, they were

compelled to accept the amount and they received such

amount under coercion and duress. In our considered

opinion, they cannot retain the benefit if they want to

prosecute claim petitions instituted by them with the Labour

Court. Hence, the order passed by the Division Bench of the

High Court as to refund of amount cannot be termed unjust,

inequitable or improper. Hence, even if it is held that a

“technical” contention raised by the workmen has some

force, this Court which again exercises discretionary and

equitable jurisdiction under Article 136 of the Constitution,

will not interfere with a direction which is in consonance with

the doctrine of equity. It has been rightly said that a person

“who seeks equity must do equity”. Here the workmen claim

benefits as workmen of the Company, but they do not want to

part with the benefit they have received towards retirement

and severance of relationship of master and servant. It simply

cannot be permitted. In our judgment, therefore, the final

direction issued by the Division Bench needs no interference,

6

particularly when the Company has also approached this

Court under Article 136 of the Constitution.

101. For the foregoing reasons, in our opinion, the order

passed by the Division Bench of the High Court deserves to

be confirmed and is hereby confirmed. The payment which

is required to be made as per the said order should be made

by the applicants intending to prosecute their claims before

the Labour Court, Mandsour. In view of the fact, however,

that the said period is by now over, ends of justice would be

served if we extend the time so as to enable the applicants to

refund the amount. We, therefore, extend the time up to 31-

12-2008 to make such payment. We may, however, clarify

that the claim petitions will not be proceeded with till such

payment is made. If the payment is not made within the

period stipulated above, the claim petitions of those

applicants will automatically stand dismissed. The Labour

Court will take up the claim petitions after 31-12-2008.”

The present case is squarely covered by the decision of this Court in

Ramesh Chandra Sankla (supra). We, thus, find no merit in the

submission made on behalf of the appellant that the High Court had no

jurisdiction to make a direction for refund of the entire amount received

by the appellant as a condition precedent for the reference to proceed.

9. We, however, feel that the imposition of interest at the rate of 7.5%

per annum was a little harsh and unwarranted. Having regard to the fact

that the appellant is no longer in service, we feel that the ends of justice

would meet if the direction for refund is confined only to the principal

amount received by the appellant under VRS. We, accordingly, modify

7

the order of the High Court to this limited extent and direct the appellant

to refund the amount received by him under VRS, without any interest. In

case the amount, as directed, is deposited by the appellant by November

30, 2011, the reference shall proceed in accordance with law, otherwise it

would stand quashed.

10. The appeal stands disposed of subject to the above observations and

directions.

……………………………J.

(Aftab Alam)

……………………………J.

(R.M. Lodha)

New Delhi;

August 26, 2011.

Chakas vs State Of Punjab & Ors on 24 August, 2011

Supreme Court of India
Chakas vs State Of Punjab & Ors on 24 August, 2011
Author: …………………….J.
Bench: Dalveer Bhandari, Deepak Verma
                                                  1




                                                       REPORTABLE



                  IN THE SUPREME COURT OF INDIA



                   CIVIL APPELLATE JURISDICTION



                  CIVIL APPEAL NO. 7258   OF 2011

             [Arising out of S.L.P.(C)No.1578 of 2007]



Chakas                                        ....Appellant

 

                    Versus



State of Punjab & Ors.                         ....Respondents



                       W I T H



C.A.No.7259/2011[Arising out of SLP(C) No.659 of 2007];

C.A.No.7260/2011[Arising out of SLP(C) No.5447 of 2007];

C.A.No.7261/2011[Arising out of SLP(C) No.3319 of 2007];

C.A.No.7262/2011[Arising out of SLP(C) No.4982 of 2007];

C.A.No.7263/2011[Arising out of SLP(C) No.8073 of 2007];

C.A.No.7264/2011[Arising out of SLP(C) No.8649 of 2007];

C.A.No.7265/2011[Arising out of SLP(C) No.8653 of 2007];

C.A.No.7266/2011[Arising out of SLP(C) No.9210 of 2007];

C.A.No.7267/2011[Arising out of SLP(C) No.12156 of 2007];

C.A.No.7268/2011[Arising out of SLP(C) No.12765 of 2007];

C.A.No.7269/2011[Arising out of SLP(C) No.14818 of 2007];

C.A.No.7270/2011[Arising out of SLP(C) No.7253 of 2007];

C.A.No.7272/2011[Arising out of SLP(C) No.14422 of 2007];

C.A.No.7271/2011[Arising out of SLP(C) No.14424 of 2007];

C.A.No.7273-7304/2011 [Arising out of SLP(C) No.1798-1829 

of 2008];

C.A.No.7305/2011[Arising out of SLP(C) No.11844 of 2008];

C.A.No.7306-7315/2011 [Arising out of SLP(C) No.9426-9435 

of 2008];

C.A.No.7316/2011[Arising out of SLP(C) No.21198 of 2008];

C.A.No.7317/2011[Arising out of SLP(C) No.5427 of 2009];


                                                2




                           A N D 

C.A.No.7318-7322/2011 [Arising out of SLP(C) No.10838-10842

                                           of 2010];





                          J U D G M E N T

Deepak Verma, J.

1. Leave granted.

2. Question as to what would be proper, adequate, just

and reasonable compensation to be awarded to the

appellant for the land acquired by the respondent

State, has once again cropped up for our

consideration in this and the connected appeals.

3. In this appeal, the land owner, whose land has been

acquired by the State of Punjab is before us for

enhancement of compensation awarded to him by the

High Court and the beneficiary respondent No. 3 M/s.

Nahar Industries Infrastructure Corporation Ltd.

(hereinafter shall be referred to as ‘the

Corporation’) has preferred separate appeals for

3

reduction of the compensation awarded to the

appellant by the High Court. Since both set of

appeals arise out of the common judgment and order

pronounced by the learned Single Judge in Regular

First Appeal No. 1072 of 1999 in the High Court of

Punjab and Haryana at Chandigarh on 03.05.2006, they

have been heard analogously and are being disposed

of by this common judgment and order.

4. It may be noted that for the sake of brevity and

convenience, facts of appeal arising out of SLP(C)

No.1578 of 2007 have been taken into account.

5. Short facts, shorn of unnecessary details are

mentioned hereinbelow:

Respondent No. 1 – State of Punjab, for the

purposes of setting up of an Industrial Focal Point in

Tehsil Rajpura District Patiala issued a notification

on 13.11.1992 under Section 4 of the Land Acquisition

Act (hereinafter shall be referred to as ‘the Act’)

for acquiring 550.03 acres in villages Lalru,

4

Jalalpur, Lehli, and Hassanpur of the aforesaid Tehsil

and District. The public purpose mentioned in the

same was for Industrial Focal Point. Subsequently, by

issuance of another notification under Section 6 of

the Act, on 08.04.1993, the aforesaid land was

declared to have been acquired. Thereafter, the Land

Acquisition Collector started the process of computing

the amount of compensation to be awarded to the land

owners. The Land Acquisition Officer pronounced his

award on 12.9.1994 fixing different rates per acre for

the lands of four villages. The appellant and other

land owners feeling highly dissatisfied with the

amount of compensation so assessed by the Land

Acquisition Officer, preferred references under

Section 18 of the Act to the Civil Court at Patiala.

6. The matter was accordingly referred to the

Additional District Judge, Patiala for working out the

amount of compensation to be awarded to the appellant

and other such similarly situated appellants. Both

5

the parties led evidence before the Reference Court.

On the basis of the evidence so adduced by the

parties, the Reference Court was pleased to assess the

value of the entire acquired land in four villages at

a uniform rate and consequently held that the land

owners were entitled to receive compensation of Rs.

1.5 lakh per acre, besides the individual claims made

by land owners with regard to super structure, trees

and other facilities available in their respective

lands were also taken into consideration. The land

owners were also held entitled for the statutory

benefits as per the amended provisions of the Act.

7. Still not being satisfied with the amount of

compensation so awarded to them, the land owners

preferred appeals before the High Court under Section

54 of the Act, whereas the beneficiary respondent No.

3 herein the Corporation also preferred appeals

purportedly, for reduction of the compensation awarded

to the appellant. The Learned Single Judge heard the

6

matters together and disposed of by the common

judgment and order, which is being impugned, once

again by both sides on a variety of grounds.

8. We have accordingly heard Mr. L. Nageswara Rao,

Senior Advocate ably assisted by M/s Navin Chawla,

Gaurav Kaushik, Tushar Singh praying for further

enhancement of compensation and Mr. Anil Grover, AAG,

Punjab with Mr. Kuldip Singh and Mr. Neeraj Kumar

Jain, Senior Advocate with Mr. Sanjay Singh Advocate

for the respondent Corporation at length and perused

the records.

9. Certain dates material for deciding the said

appeal are mentioned hereinbelow:





1     Notification under Section 4 of the  Issued on 13.11.1992       For acquisition of 550.03 acres 

      Act                                                             of land


2     Notification under Section 6 of the  Issued on 08.04.1993

      Act


3     Award of Land Acquisition           Passed on 12.09.1994

      Officer


4     Award of the Reference Court        Dated 07.12.1998            Amount of compensation at 

                                                                      Rs.1.50 lakhs per acre


5     Judgment and order of the High      Pronounced on 03.05.2006    Fixing the rate of compensation 

      Court                                                           at Rs.2.75 lakhs per acre.


                                      7




10. Shri L. Nageswara Rao, Senior Advocate appearing

for the appellant contended before us that the High

Court committed a grave error in computation of the

base price on the strength of the average price worked

out from the sale deeds Exh. P.1, P.2, P.3, P.8, and

P.15 and further committed another grave error in

deducting amounts from the same. According to him, in

the process, the amount of compensation awarded is

much lower than what should have been awarded. On the

other hand, learned counsel for respondent Mr. Anil

Grover, AAG, Punjab and Mr. Neeraj Kumar Jain, Senior

Advocate appearing for respondent No.3 submitted that

the appellant has only been able to prove the market

value of the land from the sale deed at Rs. 2.85 lacs

per acre. He further contended that there was no

mistake committed by the Court in taking out the

average price for working out the amount of

compensation to be awarded to the appellant.

8

11. Learned counsel for respondent No. 3 Mr. Neeraj

Kumar Jain strongly contended before us that the

Corporation has preferred appeals for deduction of the

amount, primarily on the ground that more deductions

should have been made than what was allowed by the

High Court and in any event no case has been made out

for further enhancement of amount of compensation,

which is already exorbitant and higher.

12. First of all, we would like to deal with the

location and potentiality of the acquired land. From

the evidence of P.W 31 Charanjit Singh, Patwari of

Halqa of all the four villages, it is clearly made

out that all these villages are adjoining each other

and form a compact block. He has further admitted

that more than 80 to 85 industries near and adjoining

the acquired land are already running and doing their

business since long. The area acquired has been

reserved for industrial purposes. He has further

deposed that if the land had not been acquired, many

9

factories would have sprung up in the acquired land.

The details of the industries which are already

running in vicinity have been given vividly by him.

It is also not in dispute that the said land is

situated on the Ambala-Chandigarh Highway.

13. The evidence of other government officials, who

had appeared before the Reference Court, reflects that

the land acquired have great Industrial potential as

more than 80-85 big industries have already set up

their factories in the close vicinity to the acquired

land. They have admitted that the acquired land is

situated on the main Ambala-Chandigarh Highway. From

the evidence adduced by respondent Nos. 1 and 2, it

cannot be disputed that it was a valuable land for the

land owners and it had great potential. Obviously, in

1992, the market value of the same, at the time of

issuance of notification under Section 4 of the Act,

would be much more than what has been awarded to them

vide the impugned judgment.

10

14. However, the question which still remains for

consideration is, on what basis, should the amount of

compensation is to be worked out. The appellant to

prove his case with regard to market value of the land

had produced many sale deeds but only relevant

following five sale deeds are taken into

consideration:

Exhibit No. Dated of sale deed Price paid Price per acre

P.1 16.08.1990 1,20,000 3,02,157

P.2 16.08.1990 1,50,000 3,51,219

P.3 16.08.1990 1,50,000 3,51,219

P.8 20.04.1993 17,34,000 4,08,000

P.15 04.06.1990 9,75,000 2,99,041

15. The appellant had also examined the vendors of

the aforesaid sale deeds to show the genuineness and

correctness of the same. The most appropriate sale

deed touching the issuance of notification under

Section 4 is Exh. P.8. The base price of the land per

acre according to this comes to Rs. 4,08,000/-. The

total area of the land so purchased was 20 Bighas and

8 biswas. Before execution of the sale deed, an

11

Agreement to Sell dated 30.10.1992 (Exh. P.45) was

executed between the vendor and vendee. As required

under the law, permission was sought from the Income

Tax Department which granted a Clearance Certificate

Exh. P.44.

16. It is also pertinent to mention here that the land

so sold covered under (Exh.P.8) sale deed neither

belonged to any of the land owners nor they had any

interest whatsoever in the said deed. Thus, it can

safely be assumed that it was a genuine and bona-fide

transaction between two parties, who had nothing to do

with the acquisition of land of the appellant. It was

not executed for the purposes of creating evidence as

Agreement to sell (Exh. P.45) is dated 30.11.1992,

before the issuance of Notification under Section 4 of

the Act. On the said date, it could not have been

imagined that the adjoining land is going to be

acquired shortly. The said land is almost abutting

the acquired land. It is also manifest that the

12

Agreement dated 13.10.1992 is very close to the

notification issued on 13.11.1992 under Section 4 of

Act. The whole transaction executed under the Sale

deed Exh. P.8 fully proves and establishes the case of

the appellant. As per this sale deed, the base price

of the land would come to Rs. 4,08,000/- per acre.

According to us, the correct base price would be Rs.

4,08,000/- per acre.

17. It is profitable to refer to the following

judgment of this Court on this issue. (1969) 1 MLJ

(SC) 45 Shri Rani M. Vijayalakshmamma Rao Bahadur Vs.

Collector of Madras. Relevant para 2 is reproduced

hereinbelow:

“It seems to us that there is substance in

the first contention of Mr. Ram Reddy.

After all when land is being compulsorily

taken away from a person he is entitled to

say that he should be given the highest

value which similar land in the locality

is shown to have fetched in a bona fide

transaction entered into between a willing

purchaser and a willing seller near about

the time of the acquisition. It is not

disputed that the transaction represented

13

by Ex Rule 19 was a few months prior to

the notification under Section 4, that it

was a bona fide transaction and that it

was entered into between a willing

purchaser and a willing seller. The land

comprised in the sale deed is 11 grounds

and was sold at Rs. 1951 per ground. The

land covered by Rule 27 was also sold

before the notification but after the land

comprised in Ex. Rule 19 was sold. It is

true that this land was sold at Rs. 1096

per ground. This, however, is apparently

because of two circumstances. One is that

betterment levy at Rs.500/- per ground had

to be paid by the vendee and the other

that the land comprised in it is very much

more extensive, that is about 93 grounds

or so. Whatever that may be, it seems to

us to be only fair that where sale deeds

pertaining to different transactions are

relied on behalf of the Government, that

representing the highest value should be

preferred to the rest unless there are

strong circumstances justifying a

different course. In any case we see no

reason why an average of two sale deeds

should have been taken in this case.”

18. The said judgment has been considered by this

Court reported in (2008) 14 SCC 745 General Manager,

Oil and Natural Gas Corporation Ltd. Vs. Rameshbhai

Jivanbhai Patel and Anr. wherein the Division Bench

14

has considered this aspect of the matter succinctly in

para 13, 14 and 15 reproduced hereinbelow:

13) Primarily, the increase in land

prices depends on four factors: situation

of the land, nature of development in

surrounding area, availability of land for

development in the area, and the demand

for land in the area. In rural areas,

unless there is any prospect of development

in the vicinity, increase in prices would

be slow, steady and gradual, without any

sudden spurts or jumps. On the other hand,

in urban or semi-urban areas, where the

development is faster, where the demand for

land is high and where there is

construction activity all around, the

escalation in market price is at a much

higher rate, as compared to rural areas.

In some pockets in big cities, due to rapid

development and high demand for land, the

escalations in prices have touched even 30%

to 50% or more per year, during the

nineties.

14) On the other extreme, in remote

rural areas where there was no chance of

any development and hardly any buyers, the

prices stagnated for years or rose

marginally at a nominal rate of 1% or 2%

per annum. There is thus a significant

difference in increases in market value of

lands in urban/semi-urban areas and

increases in market value of lands in the

rural areas. Therefore, if the increase in

market value in urban/semi-urban areas is

about 10% to 15% per annum, the

15

corresponding increases in rural areas

would at best be only around half of it,

that is, about 5% to 7.5% per annum. This

rule of thump refers to the general trend

in the nineties, to be adopted in the

absence of clear and specific evidence

relating to increase in prices. Where

there are special reasons for applying a

higher rate of increase, or any specific

evidence relating to the actual increase in

prices, then the increase to be applied

would depend upon the same.

15)Normally, recourse is taken to the mode

of determining the market value by

providing appropriate escalation over

the proved market value of nearby lands

in previous years (as evidenced by sale

transactions or acquisitions), where

there is no evidence of any

contemporaneous sale transactions or

acquisitions of comparable lands in the

neighbourhood. The said method is

reasonably safe where the relied-on sale

transactions/acquisitions precede the

subject acquisition by only a few years,

that is, up to four to five years.

Beyond that it may be unsafe, even if it

relates to a neighbouring land. What

may be a reliable standard if the gap is

of only a few years, may become unsafe

and unreliable standard where the gap is

larger. For example, for determining

the market value of a land acquired in

1992, adopting the annual increase

method with reference to a sale or

acquisition in 1970 or 1980 may have

many pitfalls. This is because, over

16

the course of years, the “rate” of

annual increase may itself undergo

drastic change apart from the likelihood

of occurrence of varying periods of

stagnation in prices or sudden spurts in

prices affecting the very standard of

increase.”

19. The Reference Court committed a grave error in

deducting 50% of the value assessed by him, towards

development charges and further reduced the said

amount for the reasons not assigned by him. The

learned Single Judge vide the impugned judgment has

enhanced the amount of compensation but committed an

error in fixing the base price as 2,75,000/- per acre

for the acquired land, applying the doctrine of

reasonable cut to the average price worked out by him

at Rs.3,42,527/- per acre. We do not approve of the

reasonings adopted either by the reference Court or by

the High Court. How much amount is to be deducted

from the base price would depend on various factors.

20. As mentioned hereinabove, in the case in hand the

bulk of the land that is almost 525 acres has been

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given to respondent No.3, the Corporation for setting

up its own industry and other infrastructure thereon.

Thus, the lands likely to be used towards roads,

sewage and other such facilities would be minimum as

most of the vacant land would be utilised by

respondent No. 3 for its own benefits.

21. Needless to say, once the industry is set up, it

would be for the financial benefit and gain of

respondent No.3 year after year. Thus, looking to the

matter from all angles, respondent No. 3 – Corporation

would be a great beneficiary at the cost of depriving

the appellant – land owner of his sole livelihood of

agriculture.

22. Therefore, it is neither desirable nor proper to

deduct more than 10% of the amount in the base price

fixed by us at Rs. 4,08,000/-. We accordingly do so.

23. The question with regard to the deduction to be

made also stands settled by this Court in

Atma Singh (dead) through Lrs. and Ors. Vs. State of

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Haryana and Another. (2008) 2 SCC 568. The relevant

portion thereof are reproduced herein below:

“14) The reasons given for the principle

that price fetched for small pots cannot

form safe basis for valuation of large

tracts of land, according to cases

referred to above, are that substantial

area is used for development of sites like

laying out roads, drains, sewers, water

and electricity lines and other civic

amenities. Expenses are also incurred in

providing these basic amenities. That

apart it takes considerable period in

carving out the roads making sewers and

drains and waiting for the purchasers.

Meanwhile the invested money is blocked up

and the return on the investment flows

after a considerable period of time. In

order to make up for the area of land

which is used in providing civic amenities

and the waiting period during which the

capital of the entrepreneur gets locked up

a deduction from 20% onward, depending

upon the facts of each case, is made.

15) The question to be considered is

whether in the present case those factors

exist which warrant a deduction by way of

allowance from the price exhibited by the

exemplars of small plots which have been

filed by the parties. The land has not

been acquired for a housing colony or

government office or an institution. The

land has been acquired for setting up a

sugar factory. The factory would produce

goods worth many crores in a year. A

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sugar factory apart from producing sugar

also produces many by-products in the same

process. One of the by-products is

molasses, which is produced in huge

quantity. Earlier, it had no utility and

its disposal used to be a big problem.

But now molasses is used for production of

alcohol and ethanol which yield lot of

revenue. Another by-product begasse is

now use for generation of power and press

mud is utilized in manure. Therefore,

the profit from a sugar factory is

substantial. Moreover, it is not confined

to one year but will accrue every year so

long as the factory runs. A housing

board does not run on business lines.

Once plots are carved out after

acquisition of land and are sold to

public, there is no scope or earning any

money in future. An industry established

on acquired land, if run efficiently,

earns money or makes profit every year.

The return from the land acquired for the

purpose of housing colony, or offices, or

institution cannot even remotely be

compared with the land which has been

acquired for the purpose of setting up a

factory or industry. After all the

factory cannot be set up without land and

if such land is giving substantial return,

there is no justification for making any

deduction from the price exhibited by the

exemplars even if they are of small plots.

It is possible that a part of the acquired

land might be used for construction of

residential colony for the staff working

in the factory. Nevertheless, where the

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remaining part of the acquired land is

contributing to production of goods

yielding good profit, it would not be

proper to make a deduction in the price of

land shown by the exemplars of small plots

as the reasons for doing so assigned in

various decisions of this court are not

applicable in the case under

consideration.”

24. In the light of the aforesaid contention and

taking cue from the settled position of law decided by

this Court in the aforesaid matters, we are of the

firm opinion that the base price has to be fixed @ Rs.

4,08,000/- per acre. Keeping in mind that more than

525 acres has been given to respondent No. 3 –

Corporation, which in turn has set up its factory, a

deduction of 10% on the aforesaid amount would be

reasonable. Needless to say on the aforesaid amount,

the appellant would be entitled for statutory benefits

as mandated under the amended provisions of the Act.

This appeal and the connected appeals filed by land

owners are hereby allowed and the appeals filed by

respondent No.3 are dismissed.

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25. The Reference Court is hereby directed to

recalculate the amount of compensation to be awarded

to the appellants and all such other land owners whose

lands have been acquired in the light of the direction

as contained hereinabove and to pay them the remainder

amount within a period of 2 months from the date of

communication of this order.

26. For the foregoing reasons, this and the connected

appeals preferred by land owners are hereby allowed

and those filed by the Corporation are dismissed with

costs throughout. Counsel’s fee quantified at Rs.

10,000/- in each Appeal.

…………………….J.

[DALVEER BHANDARI]

…………………….J.

[DEEPAK VERMA]

New Delhi

August 24, 2011

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