Motor Vehicle Laws in India

Government of india
India having 48.65 lakh km of road network is the second largest in the World.
At present, National Highway network of about 92,851 km comprises only 1.9% of the total length of roads, but carries over 40% of the total traffic across the length and breadth of the country.
The Central Government, which is responsible for development and maintenance of NHs, implements the work on agency basis. The State Governments (State PWDs), Border Roads Organisation (BRO) and National Highways Authority of India (NHAI) are the implementing agencies for the development and maintenance works on NH. As on 30th April, 2014, 32,037 km length of NHs were entrusted to NHAI, 44,591 km to State PWDs, 4,830 km to BRO and 11,393 km is yet to be entrusted.

CENTRAL MOTOR VEHICLES RULES, 1989

Government of india

The Central Motor Vehicles Rules, 1989

Published vide Notification G.S.R. 590 (E), dated 2.6.1989, published in the Gazette of  India, Extraordinary, Part, 2, Section 3, dated 2.6.1989

 

CHAPTER-I
PRELIMINARY

1. Short title and commencement

2. Definitions

CHAPTER II
LICENSING OF DRIVERS OF MOTOR VEHICLES
GENERAL

3. General.

4. Evidence is to the correctness of address and age.

5. Medical certificate

6. Exemption from production of medical certificate

7. Affixing of photograph to medical certificate.

8. [Omitted]

9. Educational qualifications for drivers of goods carriages carrying dangerous or hazardous goods

LEARNER’S LICENCE

10. Application for learner’s licence

11. Preliminary test

12. Consent of parent or guardian in the case of application by minor

13. Form of learner’s licence

DRIVING LICENCE

14. Application for a driving licence

15. Driving test

16. Form of driving licence.

17. Addition to driving licence

18. Renewal of driving licence

19. Refund of fee

20. Driving licence to drive motor vehicle belonging to the Defence Department

DISQUALIFICATION

21. Powers of licensing authority to disqualify

ENDORSEMENT IN DRIVING LICENCE

22. Endorsement by courts

STATE REGISTER

23. State Register of driving licences

DRIVING SCHOOL AND ESTABLISHMENTS

24. Driving schools and establishments

25. Duration of a licence renewal thereof.

26. Issue of duplicate licence

27. General conditions to be observed by the holder of licence

28. Power of the licensing authority to suspend or revoke licence.

29. Appeal.

30. Procedure for appeal.

31. Syllabus for importing instruction in driving of motor vehicles.

31A. Temporary licence.

32. Fees

CHAPTER III
REGISTRATION OF MOTOR VEHICLES
TRADE CERTIFICATE

33. Condition for exemption from registration

34. Trade certificate.

35. Grant or renewal of trade certificate.

36. Refund.

37. Period of validity

38. Issue of duplicate certificate

39. Use of trade registration mark and number.

40. Restrictions on use of trade certificate or trade registration mark and number.

41. Purposes for which motor vehicle with trade certificate may be used.

42. Delivery of vehicle subject to registration.

43. Register of trade certificate.

44. Suspension or cancellation of trade certificate.

45. Appeal.

46. Procedure for appeal

REGISTRATION

47. Application for registration of motor vehicles.

48. Issue of certificate of registration.

49. Registration records to be kept by the registering authority.

50. Form and manner of display of registration marks on the motor vehicles.

51. Size of letters and numerals of the registration mark.

52. Renewal of certificate of registration

53. Issue of duplicate certificate of registration

54. Assignment of new registration mark.

55. Transfer of ownership.

56. Transfer of ownership on death of owner of the vehicle.

57. Transfer of ownership of vehicle purchased in public auction.

58. No-objection certificate.

59. Change in residence.

60. Endorsement of hire-purchase agreements, etc.

61. Termination of Hire-purchase agreements, etc.

CERTIFICATE OF FITNESS

62. Validity of certificate of fitness

63. Regulation and control of authorised testing station.

64. Duration of letter of authority.

65. General conditions to be observed by the holder of letter of authority.

66. Issue of duplicate letter of authority.

67. Supervision of authorised testing stations.

68. Power of registering authority or Regional Transport Authority to call for information.

69. Power of registering authority to suspend or cancel the letter of authority or forfeit security deposit

70. Appeal.

71. Procedure for appeal.

72. Voluntary surrender of letter of authority

73. Tax clearance certificate to be submitted to the testing station

REGISTRATION OF VEHICLES BELONGING TO THE CENTRAL GOVERNMENT
USED FOR DEFENCE PURPOSE

74. Assignment of registration marks to the vehicles belonging to the Central Government used for defence purposes

STATE REGISTER OF MOTOR VEHICLES

75. State Register of Motor Vehicles.

SPECIAL PROVISIONFOR REGISTRATION OF MOTOR VEHICLES
OF DIPLOMATIC OFFICERS, ETC.

76. Registration of vehicles of diplomatic and consular officers

76A. Application of rules 76 to 80 to organisations notified under the United Nations (Privileges and Immunities) Act, 1947

77. Exhibition of registration mark.

78. Assignment of new registration mark on removal of vehicle to another State.

79. Suspension and cancellation of registration of vehicle registered under rule 76.

80. Transfer or disposal of motor vehicle registered under rule 76.

FEES

81. Fees.

CHAPTER IV
CONTROL OF TRANSPORT VEHICLES
TOURIST PERMITS

82. Tourist permits.

83. Authorisation fee.

84. Right of operation.

85. Additional conditions of tourist permit.

85B. Additional conditions of every tourist permit in respect of motor cabs.

NATIONAL PERMITS

86. Application for national permit.

87. Form, contents and duration of authorisation.

88. Age of motor vehicle for the purpose of national permit.

89. Quarterly return to be filed by a national permit holder.

90. Additional conditions for national permit.

CHAPTER V
CONSTRUCTION, EQUIPMENT AND MAINTENANCE
OF MOTOR VEHICLES
PRELIMINARY

91. Definitions.

92. General.

OVERALL DIMENSION

93. Overall dimension of motor vehicles.

SIZE, NATURE AND CONDITION OF TYRES

94. Condition of tyres.

95. Size and ply rating of tyres.

BRAKES, STEERING GEARS, SAFETY GLASS AND WINDSCREEN WIPERS

96. Brakes.

97. Brakes for trailers.

98. Steering gears.

99. Forward and backward motion.

100. Safety glass.

101. Windscreen wiper.

102. Signalling devices, direction indicators and stoplights.

103. Position of the indicator.

104. Fitment of reflectors.

105. Lamps.

106. Deflection of lights.

107. Top lights.

108. Use of red or white light.

109. Parking light.

110. Lamp on auto-rickshaws and three-wheelers with engine capacity not exceeding 500 cc.

111. Prohibition of spotlights, etc.

SMOKE, VAPOUR, SPARK, ASHES, GRIT AND OIL

112. Exhaust gases.

113. Location of exhausts pipes.

114. Exhaust pipes of public service vehicles.

115. Emission of smoke, vapour, etc. from motor vehicles.

116. Test for smoke emission level and carbon monoxide level for vehicles.

SPEED GOVERNORS

117. Speedometer.

118. Speed governor.

REDUCTION OF NOISE

119. Horns.

120. Silencers.

121. Painting of motor vehicles.

CHASSIS NUMBER AND ENGINE NUMBER

122. Embossment of the chassis number and engine number and date of manufacture.

SAFETY DEVICES
SAFETY DEVICES FOR DRIVERS, PASSENGERS AND ROAD USERS

123. Safety devices in motor cycle.

124. Safety, standards of components.

125. Commencement

126. Prototype of every motor vehicle to be subject to test.

126A. Testing agencies.

127. Quality certificate by manufacturer.

SPECIAL PROVISIONS

128. Tourist vehicles other than motor cabs, etc.

129. Transportation of goods of dangerous or hazardous nature to human life.

129A. Spark arrester.

130. Manner of display of class labels.

131. Responsibility of the consignor for safe transport of dangerous or hazardous goods.

132. Responsibility of the transporter or owner of goods carriage.

133. Responsibility of the driver.

134. Emergency information panel.

135. Driver to be instructed.

136. Driver to report to the police station about accident.

137. Class labels.

CHAPTER VI
CONTROL OF TRAFFIC

138. Signals and additional safety measures for motor cycle.

139. Production of licence and certificate of registration.

CHAPTER VII
INSURANCE OF MOTOR VEHICLES AGAINST THIRD PARTY RISKS

140. Definitions.

INLAND INSURANCE

141. Certificate of insurance.

142. Cover notes.

143. Issue of certificate and cover notes.

144. Transfer of certificate of insurance.

145. Exclusion of advertising matter.

146. Certificates or cover notes lost, destroyed, torn, soiled, defaced or mutilated.

147. Records to be maintained by authorised insurers.

148. Record of exempted vehicles.

149. Supply of information.

150. Furnishing of copies of reports to Claims Tribunal.

151. Establishment of fund.

152. Amount of the fund.

153. Investment of the fund.

154. Securities held as a deposit in the fund.

155. Deposit procedure.

156. Interest on deposit.

157. Withdrawal.

158. Settlement of claims.

FOREIGN INSURANCE

159. List of foreign insurers.

160. Guarantor of foreign insurer.

161. Endorsement of certificate of foreign insurance.

162. Validity of certificate of foreign insurance.

163. Maintenance of records by the guarantor.

CHAPTER VIII
OFFENCES, PENALTIES AND PROCEDURE

164. Offences for the purpose of section 208.

FORMS
ANNEXURES
APPENDIX
SCHEDULE

 



OTHER LAWS

  1. Motor Vehicles Act, 1988
  2. Central Motor Vehicles (Accreditation of Bus Body Builders) Order, 2007
  3. Central Motor Vehicles (Regulation of Bus Service Between Agartala And Dhaka) Rules, 2002
  4. Central Motor Vehicles (Regulation of Bus Service Between Calcutta and Dhaka) Rules, 2000
  5. Central Motor Vehicles (Regulation of Bus Service Between New Delhi and Lahore) Rules, 2000
  6. Central Motor Vehicles (Regulation of Bus Service between Amritsar and Lahore) Rules, 2006
  7. Central Motor Vehicles (Regulation of Bus Service between Amritsar and Nankana Sahib) Rules, 2006
  8. Central Motor Vehicles Rules,1989
  9. Driving Licence(Conditions For Exemption) Rules, 1992
  10. Maximum Speed Limit

State of Himachal Pradesh Vs. Raj Kumar [SC 2018 JANUARY ]

KEYWORDS:-CONVICTION RESTORED-

Capture

DATE:-January 8, 2018-

  • Prosecution case is based on circumstantial evidence. It is well settled that in a case based on circumstantial evidence, the circumstances from which an inference of guilt is sought to be drawn must be cogently and frmly established and that those circumstances must be conclusive in nature unerringly pointing towards the guilt of the accused. Moreover all the circumstances taken cumulatively should form a complete chain and there should be no gap left in the chain of evidence. Further the proved circumstances must be consistent only with the hypothesis of the guilt of the accused and totally inconsistent with his innocence.
  • While appreciating the evidence of a witness, the approach must be whether the evidence of the witness read as a whole appears to be truthful in the given circumstances of the case. Once that impression is formed, it is necessary for the court to scrutinize the evidence more particularly keeping in view the drawbacks and infrmities pointed out in the evidence and evaluate them to fnd out whether it is against the general tenor of the prosecution case. Jeewan Lal (PW-1) is the son of the deceased Meena Devi residing with her and the accused in the same house, and a natural witness to speak about the occurrence.

ACTS: -Section 302 IPC –

SUPREME COURT OF INDIA

State of Himachal Pradesh Vs. Raj Kumar

[Criminal Appeal No. 31 of 2018 arising out of SLP (CRL.) No. 1204 of 2015]

R. BANUMATHI, J.

Leave granted.

2. This appeal preferred by the State challenges the judgment of the High Court of Himachal Pradesh in Criminal Appeal No.559 of 2008 acquitting the respondent under Section 302 IPC by setting aside his conviction and the sentence of life imprisonment imposed upon him by the trial court.

3. Husband of deceased Meena Devi passed away about eleven years ago prior to the incident. Meena Devi was residing with her son Jeewan Lal (PW-1), daughter Rekha Devi (PW-2) and accused Raj Kumar (brother-in-law) in the joint family house. On 23.08.2007 at 08.30 p.m., while Meena Devi was taking meal along with her family, respondent-accused came there in drunken condition and started abusing Meena Devi and her children PW-1 and PW-2 without any reason and threatened to kill them. Barf Devi-grandmother of PW-1 who was present in the house took Jeewan Lal (PW-1) to adjoining sleeping room and bolted the room from outside. She asked Rekha Devi (PW-2) daughter of deceased to go to the house of her maternal uncle Anant Ram (PW-3).

While being inside the room, PW-1 heard the cries of his mother Meena Devi and from the window saw the respondent-accused taking her mother towards the house of another accused Om Prakash. After few hours, accused opened the door and told him that his mother had run away from the house and that he should tell the same to his maternal uncle Anant Ram (PW-3). Under such threat from respondent-accused and another accused Ramesh Kumar, PW-1 told his maternal uncle (PW-3) that his mother had run away from the house. On 24.08.2007 at about 02.00 a.m., Anant Ram (PW-3) came to the house of accused. Thereafter, PW-1 and PW-3 went to Dharampur Police Station and informed the police about missing of Meena Devi.

On 25.08.2007, they again went to the police station Dharampur and at about 11.00-11.30 a.m; at the time Anant Ram (PW-3) received a phone call from Nek Ram informing that the dead body of deceased Meena Devi was found hanging from a tree at Ghat Bahu forest. Thereafter, PW-1 and PW-3 along with police party went to the spot and found that the dead body of Meena Devi was hanging from the branch of a pine tree with a plastic rope, tied around her neck. Statement of PW-1 was recorded, based on which, case in FIR No.250 of 2007 was registered under Section 302 IPC and Section 201 read with Section 34 IPC.

4. Initial investigation was conducted by Sub-Inspector of Police Sat Prakash (PW-20) and further investigation was conducted by Inspector of Police LR Thakur (PW-22). PW-22 prepared spot map, inquest and conducted further investigation. Dr. Vivek Banyal (PW-24) conducted autopsy and opined that “….death was because of haemorrhagic shock due to rupture of spleen and anti-mortem injuries suggesting gagging. Hanging was post-mortem”.

Accused Raj Kumar was taken to custody on 25.08.2007 and he was interrogated. Confession statement of accused was recorded on 27.08.2007 which led to the recovery of a lady shirt from the room of the house of accused Ramesh Kumar which was under construction. Upon completion of investigation, chargesheet was fled against accused Raj Kumar, Ramesh Kumar, Om Prakash and Barf Devi under Section 302 IPC and Section 201 read with Section 34 IPC.

5. To bring home the guilt of the accused, in the Sessions Court, prosecution has examined as many as twenty four witnesses and marked number of exhibits and material objects. In the questioning under Section 313 Cr.P.C., the accused denied all the incriminating circumstances and evidence and pleaded that he is innocent. The accused has not offered any explanation on the death of deceased Meena Devi.

6. Based upon the evidence of Anant Ram (PW-3) and Bhindra Devi (PW-15), the trial court held that Meena Devi suffered harassment at the hands of her brother-in-law (respondent-accused). The trial court held that Jeewan Lal (PW-1) son of the deceased had spoken about the overt act of the accused in beating the deceased and that the accused taking away Meena Devi from the house. The trial court held that no reasonable explanation was forth coming from the accused for the death of the deceased Meena Devi who was living jointly with the respondent-accused. On those fndings, the trial court convicted the respondent-accused under Section 302 IPC and Section 201 IPC read with Section 34 IPC and sentenced him to undergo imprisonment for life. Other accused Ramesh Kumar and Om Prakash were acquitted. Accused Barf Devi remained absconding.

7. In the appeal preferred by the accused, the High Court observed that Jeewan Lal (PW-1) son of the deceased, while deposing as witness before the court in narrating the whole incident, had made improvements and hence, PW-1 is not a reliable witness. The High Court further held that there were bald assertions regarding dispute, but no specifc motive was attributed to the accused for committing murder of the deceased Meena Devi. Observing that the case of prosecution suffers from serious infrmities, the High Court allowed the criminal appeal fled by the respondent-accused thereby setting aside the conviction and the sentence of life imprisonment imposed upon him. Being aggrieved, the State is before us.

8. We have heard the learned counsel for the parties and perused the impugned judgment and materials on record.

9. Prosecution case is based on circumstantial evidence. It is well settled that in a case based on circumstantial evidence, the circumstances from which an inference of guilt is sought to be drawn must be cogently and frmly established and that those circumstances must be conclusive in nature unerringly pointing towards the guilt of the accused. Moreover all the circumstances taken cumulatively should form a complete chain and there should be no gap left in the chain of evidence. Further the proved circumstances must be consistent only with the hypothesis of the guilt of the accused and totally inconsistent with his innocence.

10. In a case, based on circumstantial evidence, the inference of guilt can be drawn only when all the incriminating facts and circumstances are found to be incompatible with the innocence of the accused. In Trimukh Maroti Kirkan v. State of Maharashtra (2006) 10 SCC 681, it was held as under:-

“12. ………..The normal principle in a case based on circumstantial evidence is that the circumstances from which an inference of guilt is sought to be drawn must be cogently and frmly established; that those circumstances should be of a defnite tendency unerringly pointing towards the guilt of the accused; that the circumstances taken cumulatively should form a chain so complete that there is no escape from the conclusion that within all human probability the crime was committed by the accused and they should be incapable of explanation on any hypothesis other than that of the guilt of the accused and inconsistent with their innocence.”

The same principle was reiterated in State of Rajasthan v. Kashi Ram (2006) 12 SCC 254, Ganesh Lal v. State of Rajasthan (2002) 1 SCC 731, State of Maharashtra v. Suresh (2000) 1 SCC 471 and State of Tamil Nadu v. Rajendran (1999) 8 SCC 679.

11. After death of her husband, Meena Devi was living with her children viz. Jeewan Lal (PW-1) and Rekha Devi (PW-2) along with the accused Raj Kumar in the joint family. In their evidence, PW-1 and PW-2 clearly stated that on 23.08.2007, respondent came in drunkard condition and threatened to kill them. Jeewan Lal (PW-1) who is the son of deceased Meena Devi clearly stated that he had heard the cries of his mother and also seen accused taking his mother towards the house of accused Om Parkash.

On 25.08.2007, body of Meena Devi was found hanging from a pine tree in the nearby forest. PW-24-Dr. Vivek Banyal who conducted the autopsy has clearly said that “anti-mortem injuries were caused due to gagging and hanging process of dead body was post-mortem”.

12. In his evidence, Jeewan Lal (PW-1) stated that he was threatened by the accused Om Parkash to make telephonic call to his maternal uncle Anant Ram (PW-3) that Meena Devi had run away from the house and under such threat Jeewan Lal (PW-1) informed Anant Ram (PW-3) accordingly. After Anant Ram (PW-3) came to the village at 02.00 a.m. on 24.08.2007, PW-1 and PW-3 went to P.P. Dharampur and informed them about missing of Meena Devi. Meena Devi was living with her brother-in-law/accused along with her children. If Meena Devi was so missing, the natural conduct of the accused was to inform the police and also Anant Ram (PW-3). But that was not done.

In view of Section 106 of the Evidence Act, burden is cast upon the accused, being the inmate of the house to give a cogent explanation as to how Meena Devi died. No reasonable explanation is forthcoming from the accused as to why he had neither lodged the complaint nor informed the police about the missing of Meena Devi. The respondent-accused being inmate of the house cannot get away by simply keeping quiet and offering no explanation. This is a strong militating circumstance against the respondent indicating that he might be responsible for the commission of the offence.

13. The motive attributed to the accused is that he had frequently quarrelled with the deceased and also assaulted her. A dispute is also suggested pertaining to the land of one Swami who wanted to give his property solely to the deceased Meena Devi which was not acceptable to the accused. Yet another motive attributed to the accused was his greed for the fxed deposit of Rs.1,20,000/- which had become due payable to the deceased on 13.08.2007. PW-15 Bhindra Devi, sister-in-law of the deceased in her evidence had clearly stated that as and when Meena Devi visited her house, Meena Devi used to tell her about the suffering meted out to her by the accused Raj Kumar.

Further, Bhindra Devi (PW-15) had clearly spoken about the motive attributed to the accused. From the evidence of PW-15, it is brought out that the accused Raj Kumar is a chronic drunkard. On previous occasion, respondent-accused had beaten Meena Devi and he had entered into compromise with Meena Devi by assuring her that he would not beat her in future. Evidence of PW-15 as to the motive attributed to the accused was not properly appreciated by the High Court.

14. Jeewan Lal (PW-1) has clearly spoken as to the attack on Meena Devi by the accused on the night of 23.08.2007 and the subsequent threat to PW-1 by the accused and one Om Prakash. The trial court which had the opportunity of seeing and observing demeanour of the witnesses held that Jeewan Lal (PW-1) is a trustworthy witness. While so, the High Court was not right in doubting the version of Jeewan Lal (PW-1) on the ground that PW-1 made improvements in his version. In his statement (Ex.P/A) dated 25.08.2007, Jeewan Lal (PW-1) did not disclose the participation qua accused Nos. 2 and 3 namely Ramesh Kumar and Om Parkash in the commission of the offence. Evidence of Jeewan Lal (PW-1) cannot be doubted simply because names of Ramesh Kumar and Om Prakash were not mentioned in his statement recorded on 25.08.2007 immediately after bringing down the hanging body of Meena Devi from the tree.

The circumstances in which PW-1 was placed at that time, is to be kept in view. PW-1 was only aged nineteen years. On the night of 23.08.2007, he had heard the cries of his mother at the time when she was beaten. PW-1 and PW-3 had been searching for Meena Devi for more than twenty four hours that is from 24.08.2007 to 25.08.2007, only to fnd her dead. PW-1 was already threatened by accused Om Parkash to inform Anant Ram (PW-3) that Meena Devi had run away. On 25.08.2007, when PW-1’s statement was recorded, he must have been in trauma and fear psychosis. In such circumstances, omission to mention the names of Om Parkash and Ramesh Kumar in his statement (Ex.P/A) does not render PW-1’s evidence untrustworthy. Upon proper appreciation of the evidence, the trial court observed that evidence of PW-1 inspires confdence of the court. While so, in our view, the High Court ought not to have doubted the version of PW-1 and his credibility.

15. While appreciating the evidence of a witness, the approach must be whether the evidence of the witness read as a whole appears to be truthful in the given circumstances of the case. Once that impression is formed, it is necessary for the court to scrutinize the evidence more particularly keeping in view the drawbacks and infrmities pointed out in the evidence and evaluate them to fnd out whether it is against the general tenor of the prosecution case. Jeewan Lal (PW-1) is the son of the deceased Meena Devi residing with her and the accused in the same house, and a natural witness to speak about the occurrence. Evidence of PW-1 is cogent and natural and is consistent with the prosecution case. The High Court was not right in doubting the evidence of PW-1 on the ground of alleged improvements made by Jeewan Lal (PW-1) and rejecting his evidence on the premise that there were certain improvements.

16. As pointed out by the Sessions Judge, deceased Meena Devi was last seen alive in the company of accused Raj Kumar and the accused did not satisfactorily explain the missing of deceased Meena Devi and the same is a strong militating circumstance against the accused. Meena Devi who was residing in the same house with the accused and was last seen alive with the accused, it is for him to explain how the deceased died. The accused has no reasonable explanation as to how the body of Meena Devi was found hanging from the tree. As held in Kashi Ram case, it is for the accused to explain as to what happened to the deceased. If the accused does not throw light on the fact which is within his knowledge, his failure to offer any explanation would be a strong militating circumstance against him.

17. As pointed out earlier, in his questioning under Section 313 Cr.P.C., the accused simply denied the evidence of incriminating circumstance put to him and pleaded that he is innocent. A feeble attempt was made by the defence to suggest that the deceased consumed poison and committed suicide. Viscera of deceased Meena Devi was sent to FSL Tungand. As per FSL report, no poison was detected in the viscera of the deceased. In our considered view, the trial court rightly rejected the plea suggested by the defence.

18. As pointed out earlier, in a catena of judgments, this Court held that when conviction is based on circumstantial evidence, there should not be any gap in the chain of circumstances; the accused is entitled to the beneft of doubt. In the present case, by cogent and convincing evidence, prosecution has established the circumstances:-

(i) Motive (evidence of PW-15);

(ii) accused beating the deceased and taking her away (Evidence of PW-1);

(iii) Death of Meena Devi is homicidal (evidence of PW-24);

(iv) Conduct of accused in not reporting to the police about missing of the deceased Meena Devi; and

(v) Absence of explanation from the accused as to the death of the deceased.

The circumstances relied upon by the prosecution are proved by cogent and reliable evidence. The circumstances cumulatively taken form a complete chain pointing out that the murder was committed by the accused and none-else.

19. In the appeal, the High Court has not properly appreciated the evidence and intrinsic worth of testimony of prosecution witnesses and the formidable circumstances established by the prosecution against the accused. The High Court entertained fanciful doubts and rejected the credible evidence of Jeewan Lal (PW-1) on slender grounds. Due to mis-appreciation of evidence, the High Court set aside the conviction and caused a miscarriage of justice. Reasonings of the High Court for acquitting the accused are unsustainable and the impugned judgment cannot be sustained.

20. In the result, the impugned judgment is set aside and the appeal is allowed. The conviction of the respondent under Section 302 IPC and the sentence of life imprisonment imposed on him by the trial court are affirmed. The respondent shall be taken into custody to serve the remaining sentence.

 (R. BANUMATHI)

 (UDAY UMESH LALIT)

New Delhi;

January 8, 2018

Union Territory, Chandigarh Administration and Ors. Vs. Pradeep Kumar and Another [SC 2018 JANUARY]

KEYWORDS:-STANDAR OF PROOF-

Capture

DATE:-January 08, 2018-

  • While the standard of proof in a criminal case is the proof beyond all reasonable doubt, the proof in a departmental proceeding is preponderance of probabilities. Quite often criminal cases end in acquittal because witnesses turn hostile. Such acquittals are not acquittals on merit. An acquittal based on benefit of doubt would not stand on a par with a clean acquittal on merit after a full-fledged trial, where there is no indication of the witnesses being won over.

SUPREME COURT OF INDIA

Union Territory, Chandigarh Administration and Ors. Vs. Pradeep Kumar and Another

[Civil Appeal No. 67 of 2018 arising out of SLP(C) No.20750 of 2016] [Civil Appeal No. 68 of 2018 arising out of SLP(C) No.23855 of 2016] [Civil Appeal No. 69 of 2018 arising out of SLP(C) No.23726 of 2016] [Civil Appeal No. 70 of 2018 arising out of SLP(C) No. 8905 of 2017]

R. BANUMATHI, J.

1. Leave granted

2. The question involved in these appeals is whether the candidature of the respondents who had disclosed their involvement in the criminal cases and also their acquittal could be cancelled by the Screening Committee on the ground Page No. 1 of 15 that they are not suitable for the post of constable in Chandigarh Police and whether the court can substitute its views for the decision taken by the Screening Committee. Since the facts and issues are almost identical in all these appeals, they were heard together and shall stand disposed of by this common judgment. For convenience, we would deal with the facts in appeal arising out of SLP(C) No. 20750 of 2016

3. On 14.03.2010, an advertisement was issued by UT Chandigarh Police through its Deputy Inspector General of Police inviting applications from the candidates to fill up 1200 temporary posts of Constable (Executive) in Chandigarh Police with essential qualification as prescribed in the advertisement with instructions for filling online application form.

The recruitment was to be done as per guidelines thereon as well as standing order governing the recruitment of constables. Guideline No.2(A)(a) deals with the circumstances when the candidate does not disclose the factum of his involvement in the attestation form and the same is found subsequently from the verification report.

The candidature of such candidates will be cancelled as per aforesaid guideline without making any reference to any Committee for further probe into the conduct of the candidate. In Guideline No.2(A)(b), it is prescribed that if a candidate has disclosed his involvement in some criminal case in the attestation form, then such case will be referred to Screening Committee to assess his suitability for appointment in Chandigarh Police irrespective of the fact that the case is under investigation, trial or resulted in conviction or acquittal.

4. Respondents were declared successful in the recruitment for the post of Constable (Executive) in Chandigarh Police after clearing the Physical Efficiency Test, Physical Measurement Test, written test and interview. However, the respondents were denied the employment on the ground that the respondents had been prosecuted in a criminal trial for the offences under Section 323 IPC and Section 506 read with Section 34 IPC and were acquitted by the trial court vide judgment dated 29.01.2010 giving them benefit of doubt. The case was referred to the Committee headed by Senior Superintendent of Police and it was found that the respondents were not suitable for appointment as Constables in the Chandigarh Police.

5. Aggrieved, respondents filed OA before CAT. CAT vide order dated 24.07.2012 allowed the OA and set aside the orders of the Screening Committee and directed the competent authority to consider the names of the respondents for appointment to the post of Constable. The State filed writ petition before the High Court which came to be dismissed for all the respondents except Ombir holding that there was no concealment of criminal antecedents. Being aggrieved, the State has preferred these appeals.

6. Contention of the appellant is that acquittal of a person does not entitle him to be appointed as a matter of right and the appointing authority may still find such a person unfit to be appointed to the post. It was urged by the appellant that even though the respondents were acquitted in the criminal case, the appointment of the respondents to the post of Constable in Chandigarh police which is a disciplined force, was found not desirable by the appointing authority.

It was submitted that the respondents were not honourably acquitted of the offences and the acquittal was only based on the extension of benefit of doubt. Contention of the appellant is that the post of Constable in disciplinary force demands an impeccable integrity and track record besides good character and suitability. Further contention is that the court cannot overreach the jurisdiction of the Screening Committee by substituting its own view in the decision of the said Committee and hence, the impugned judgment of the High Court and the Tribunal is not sustainable.

7. Per contra, contention of the respondents is that the criminal case against the respondents was a case of ‘no evidence’ and the acquittal of the respondents is an honourable acquittal and the same cannot be termed to be the case of ‘benefit of doubt’. Moreover, respondents had fairly disclosed the factum of facing criminal trial by giving complete details while applying for the job and there was no suppression on the part of the respondents. On behalf of the respondents, much reliance was placed upon Joginder Singh v. Union Territory of Chandigarh and others (2015) 2 SCC 377.

8. On the basis of the aforesaid rival contentions urged on behalf of both the parties, the following points arise for consideration:-

(i) Whether the contention of respondents that they were honourably acquitted and that they should not be deprived of being appointed to the post of Constable is acceptable?

(ii) Whether the High Court was right in setting aside the decision of the Screening Committee and directing the authorities to consider the respondents to the post of Constable in the disciplined police force?

9. On 23.06.2010, the Inspector General of police, UT Chandigarh issued Standing Order No.44 of 2010 laying down the guidelines to consider cases of candidates selected in Chandigarh Police on having found involvement in criminal cases in the past. This standing order deals with the cases of candidates before issuance of appointment and after issuance of appointment and joining. Relevant portion of the said Guidelines reads as under:-

“GUIDELINES (A) CASES BEFORE ISSUE of APPOINTMENT

(a) The candidature will be cancelled in case the candidate does not disclose the fact of his involvement and/or arrest in criminal case(s), complaint case(s), preventive proceedings etc. in the attestation form and the fact is subsequently found out from any verification report Page No. 6 of 15 received from the District authorities or for any/other source.

(b) If a candidate has disclosed his involvement and/or arrest in criminal cases(s), complaint case(s), preventive proceedings etc. the case will be referred to the Screening Committee to assess his suitability for appointment in Chandigarh Police irrespective of the fact that the case is under investigation, trial or decided in conviction or acquittal. ………”

In Guideline 2(A)(b), it is prescribed that if a candidate has disclosed his involvement in some criminal case in the attestation form then such case will be referred to Screening Committee to assess his suitability for appointment in Chandigarh Police irrespective of the fact that the case is under investigation, trial or decided in conviction or acquittal. In the present case, in all the cases of respondents, the aforesaid situation arises. On noticing the acquittal of the candidates, the cases of respondents were referred to Screening Committee. The Screening Committee carefully examined the cases of the respondents and the reasonings for their acquittal and the candidature of the respondents were rejected finding them not suitable.

10. The acquittal in a criminal case is not conclusive of the suitability of the candidates in the concerned post. If a person is acquitted or discharged, it cannot always be inferred that he was falsely involved or he had no criminal antecedents. Unless it is an honourable acquittal, the candidate cannot claim the benefit of the case. What is honourable acquittal, was considered by this Court in Deputy Inspector General of Police and Another v. S. Samuthiram (2013) 1 SCC 598, in which this Court held as under:-

“24. The meaning of the expression “honourable acquittal” came up for consideration before this Court in RBI v. Bhopal Singh Panchal (1994) 1 SCC 541. In that case, this Court has considered the impact of Regulation 46(4) dealing with honourable acquittal by a criminal court on the disciplinary proceedings. In that context, this Court held that the mere acquittal does not entitle an employee to reinstatement in service, the acquittal, it was held, has to be honourable. The expressions “honourable acquittal”, “acquitted of blame”, “fully exonerated” are unknown to the Code of Criminal Procedure or the Penal Code, which are coined by judicial pronouncements. It is difficult to define precisely what is meant by the expression “honourably acquitted”. When the accused is acquitted after full consideration of prosecution evidence and that the prosecution had miserably failed to prove the charges levelled against the accused, it can possibly be said that the accused was honourably acquitted.”

11. Entering into the police service required a candidate to be of good character, integrity and clean antecedents. In Commissioner of Police, New Delhi and Another v. Mehar Singh (2013) 7 SCC 685, the respondent was acquitted based on the compromise. This Court held that even though acquittal was based on compromise, it is still open to the Screening Committee to examine the suitability of the candidate and take a decision. Emphasizing upon the importance of character and integrity required for joining police force/discipline force, in Mehar Singh case, this Court held as under:-

“23. A careful perusal of the policy leads us to conclude that the Screening Committee would be entitled to keep persons involved in grave cases of moral turpitude out of the police force even if they are acquitted or discharged if it feels that the acquittal or discharge is on technical grounds or not honourable. The Screening Committee will be within its rights to cancel the candidature of a candidate if it finds that the acquittal is based on some serious flaw in the conduct of the prosecution case or is the result of material witnesses turning hostile.

It is only experienced officers of the Screening Committee who will be able to judge whether the acquitted or discharged candidate is likely to revert to similar activities in future with more strength and vigour, if appointed, to the post in a police force. The Screening Committee will have to consider the nature and extent of such person’s involvement in the crime and his propensity of becoming a cause for worsening the law and order situation rather than maintaining it. In our opinion, this policy framed by the Delhi Police does not merit any interference from this Court as its object appears to be to ensure that only persons with impeccable character enter the police force.

24. We find no substance in the contention that by cancelling the respondents’ candidature, the Screening Committee has overreached the judgments of the criminal court. We are aware that the question of co-relation between a criminal case and a departmental enquiry does not directly arise here, but, support can be drawn from the principles laid down by this Court in connection with it because the issue involved is somewhat identical, namely, whether to allow a person with doubtful integrity to work in the department.

While the standard of proof in a criminal case is the proof beyond all reasonable doubt, the proof in a departmental proceeding is preponderance of probabilities. Quite often criminal cases end in acquittal because witnesses turn hostile. Such acquittals are not acquittals on merit. An acquittal based on benefit of doubt would not stand on a par with a clean acquittal on merit after a full-fledged trial, where there is no indication of the witnesses being won over. In R.P. Kapur v. Union of India AIR 1964 SC 787 this Court has taken a view that departmental proceedings can proceed even though a person is acquitted when the acquittal is other than honourable.

25. The expression “honourable acquittal” was considered by this Court in S. Samuthiram (2013) 1 SCC 598. In that case this Court was concerned with a situation where disciplinary proceedings were initiated against a police officer. Criminal case was pending against him under Section 509 IPC and under Section 4 of the Eve-Teasing Act. He was acquitted in that case because of the non-examination of key witnesses. There was a serious flaw in the conduct of the criminal case. Two material witnesses turned hostile. Referring to the judgment of this Court in RBI v. Bhopal Singh Panchal (1994) 1 SCC 541, where in somewhat similar fact situation, this Court upheld a bank’s action of refusing to reinstate an employee in service on the ground that in the criminal case he was acquitted by giving him benefit of doubt and, therefore, it was not an honourable acquittal, this Court held that the High Court was not justified in setting aside the punishment imposed in the departmental proceedings.

This Court observed that the expressions “honourable acquittal”, “acquitted of blame” and “fully exonerated” are unknown to the Criminal Procedure Code or the Penal Code. They are coined by judicial pronouncements. It is difficult to define what is meant by the expression “honourably acquitted”. This Court expressed that when the accused is acquitted after full consideration of the prosecution case and the prosecution miserably fails to prove the charges levelled against the accused, it can possibly be said that the accused was honourably acquitted. …………….

33. So far as respondent Mehar Singh is concerned, his case appears to have been compromised. It was urged that acquittal recorded pursuant to a compromise should not be treated as a disqualification because that will frustrate the purpose of the Legal Services Authorities Act, 1987. We see no merit in this submission. Compromises or settlements have to be encouraged to bring about peaceful and amiable atmosphere in the society by according a quietus to disputes. They have to be encouraged also to reduce arrears of cases and save the litigants from the agony of pending litigation. But these considerations cannot be brought in here. In order to maintain integrity and high standard of police force, the Screening Committee may decline to take cognizance of a compromise, if it appears to it to be dubious. The Screening Committee cannot be faulted for that. ……………

35. The police force is a disciplined force. It shoulders the great responsibility of maintaining law and order and public order in the society. People repose great faith and confidence in it. It must be worthy of that confidence. A candidate wishing to join the police force must be a person of utmost rectitude. He must have impeccable character and integrity. A person having criminal antecedents will not fit in this category. Even if he is acquitted or discharged in the criminal case, that acquittal or discharge order will have to be examined to see whether he has been completely exonerated in the case because even a possibility of his taking to the life of crimes poses a threat to the discipline of the police force.

The Standing Order, therefore, has entrusted the task of taking decisions in these matters to the Screening Committee. The decision of the Screening Committee must be taken as final unless it is mala fide. In recent times, the image of the police force is tarnished. Instances of police personnel behaving in a wayward manner by misusing power are in public domain and are a matter of concern. The reputation of the police force has taken a beating. In such a situation, we would not like to dilute the importance and efficacy of a mechanism like the Screening Committee created by the Delhi Police to ensure that persons who are likely to erode its credibility do not enter the police force. At the same time, the Screening Committee must be alive to the importance of the trust reposed in it and must treat all candidates with an even hand.” The same principle was reiterated in State of Madhya Pradesh and Others v. Parvez Khan (2015) 2 SCC 591.

12. While considering the question of suppression of relevant information or false information in regard to criminal prosecution, arrest or pendency of criminal case(s) against the candidate, in Avtar Singh v. Union of India and Others (2016) 8 SCC 471, three-Judges Bench of this Court summarized the conclusion in para (38). As per the said decision in para (38.5), “In a case where the employee has made declaration truthfully of a concluded criminal case, the employer still has the right to consider antecedents, and cannot be compelled to appoint the candidate.”

13. It is thus well settled that acquittal in a criminal case does not automatically entitle him for appointment to the post. Still it is open to the employer to consider the antecedents and examine whether he is suitable for appointment to the post. From the observations of this Court in Mehar Singh and Parvez Khan cases, it is clear that a candidate to be recruited to the police service must be of impeccable character and integrity. A person having criminal antecedents will not fit in this category. Even if he is acquitted or discharged, it cannot be presumed that he was honourably acquitted/completely exonerated. The decision of the Screening Committee must be taken as final unless it is shown to be mala fide. The Screening Committee also must be alive to the importance of the trust repose in it and must examine the candidate with utmost character.

14. In the case in hand, the details of the criminal cases in which the respondents were involved and the reasonings for their acquittal and the consideration by the Screening Committee are as under:-

Party Name/ SLP No.

Allegations

Reasons for acquittal

Consideration by the Screening Committee

Pradeep Kumar SLP(C) No. 20750/16

  • FIR under Sections 148, 149, 323 and 506 IPC.
  • Appeared outside the class room of the complainant therein along with other people.
  • Carrying lathis and axe and started beating the complainant and other persons of his village.
  • PW-1 (complainant) and PW-2 turned hostile and denied all the contents of complaint.
  • Witnesses admitted their signature on complaint but said that they were obtained on blank papers.
  • IO did not appear.
  • Therefore the trial was closed as no useful purpose could be served by examining the remaining witnesses.
  • Accused acquitted because star witnesses turned hostile and thus accused got benefit of doubt.
  • Appears that witnesses have been won over.
  • Accused 19 years age at the time of commission of offence.

Narender Kumar SLP (C) No.20750 /16

  • FIR under Sections 148, 149, 323 and 506 IPC.
  • Appeared outside the class room of the complainant therein along with other people.
  • Carrying lathis and axe and started beating the complainant and other persons of his village.
  • PW1 (complainant) and PW2 turned hostile and denied all the contents of complaint.
  • Witnesses admitted their signature on complaint but said that they were obtained on blank papers.
  • IO did not appear.
  • Therefore the trial was closed as no useful purpose could be served by examining the remaining witnesses.
  • Accused acquitted because star witnesses turned hostile and thus accused got benefit of doubt.
  • Appears that witnesses have been won over.
  • Accused 21 years age at the time of commission of offence.

Party Name/ SLP No.

Allegations

Reasons for acquittal

Consideration by the Screening Committee

Ajay Kumar SLP (C) No.23855 /16

  • FIR under Sections 323, 307 and 34 IPC.
  • Inflicted severe injuries to the sons of the complainant by inflicting blows with hockey sticks and kicks and fist blows to them.
  • Delay of four days in lodging the complaint.
  • Prosecution could not come out with clear motive.
  • Two witnesses were withheld by the prosecution.
  • Benefit of doubt given to the accused.
  • Ajay Kumar has been involved in commission of heinous bodily injury.
  • Acquitted on the basis of benefit of doubt.

Paramjeet Singh SLP (C) No.237 26/16

  • FIR under Sections 323 and 506 IPC.
  • Appeared at a satsang along with other accused. Started creating hindrance in the same and thereafter upon the complainant.
  • Trying to stop him gave knife blows to the complainant.
  • Caused injury to other persons with iron rod.
  • Threatened to kill the persons with a pistol.
  • Complainant/solitary eye witness admitted the evidence but denied the involvement of accused.
  • Stated that assailants were unidentified persons.
  • Stated his signatures were obtained by police on blank papers.
  • Accused acquitted as the solitary eye witness turned hostile.
  • Considered the same to be a case of benefit of doubt.

Ombir SLP(C) No.8905/ 17

  • FIR under Sections 323, 354, 506/34 IPC.
  • Allegation is that Ombir along with other co-accused persons in furtherance of their common intention outraged the modesty of one Sudesh (complainant).
  • Caused hurt to her, after which the complainant was admitted in the hospital.
  • The complainant and one Pradeep (PW2) has turned hostile and therefore prosecution evidence was closed and the accused acquitted.
  • The accused was acquitted as the complainan t did not support the case of the prosecution .
  • The accused has committed offence of outraging modesty of woman and has been acquitted on the benefit of doubt.

15. From the above details, we find that the Screening Committee examined each and every case of the respondents and reasonings for their acquittal and taken the decision. While deciding whether a person involved in a criminal case has been acquitted or discharged should be appointed to a post in a police force, nature of offence in which he is involved, whether it was an honourable acquittal or only an extension of benefit of doubt because of witnesses turned hostile and flaws in the prosecution are all the aspects to be considered by the Screening Committee for taking the decision whether the candidate is suitable for the post.

As pointed out earlier, the Screening Committee examined each and every case and reasonings for their acquittal and took decision that the respondents are not suitable for the post of Constable in Chandigarh Police. The procedure followed is as per guideline 2(A)(b) and object of such screening is to ensure that only persons with impeccable character enters police force. While so, the court cannot substitute its views for the decision of the Screening Committee.

16. On behalf of the respondents, much reliance was placed upon Joginder Singh v. Union Territory of Chandigarh and Others (2015) 2 SCC 377. In the said case, the appellant thereon was charged under Sections 148, 149, 323, 325 and 307 IPC but acquitted by the trial court holding that the prosecution has failed to prove the charges levelled against him since complainant as well as injured eye witnesses failed to identify the assailants and the complainant had stated that his signature was obtained on a blank sheet by the Investigating Officer. The case involved was a family dispute. In such facts and circumstances, this Court held that acquittal of appellant Joginder Singh was an honourable acquittal and hence, he should not be denied appointment to the post in question. The decision in Joginder Singh case does not advance the case of the respondents herein.

17. In a catena of judgments, the importance of integrity and high standard of conduct in police force has been emphasized. As held in Mehar Singh case, the decision of the Screening Committee must be taken as final unless it is mala fide. In the case in hand, there is nothing to suggest that the decision of Page No. 17 of 15 the Screening Committee is mala fide. The decision of the Screening Committee that the respondents are not suitable for being appointed to the post of Constable does not call for interference. The Tribunal and the High Court, in our view, erred in setting aside the decision of the Screening Committee and the impugned judgment is liable to be set aside.

18. In the result, the impugned judgment is set aside and the appeals are allowed. The cancellation of candidature of the respondents is upheld.

No costs.

(R. BANUMATHI)

 (UDAY UMESH LALIT)

New Delhi;

January 08, 2018

Dineshbhai Chandubhai Patel Vs. State of Gujarat & Ors.[SC 2018 JANUARY]

KEYWORDS:-INHERENT POWER OF HIGH COURT-

Capture

DATE:-January 5, 2018-

  • Once the Court finds that the FIR does disclose prima facie commission of any cognizable offence, it should stay its hand and allow the investigating machinery to step in to initiate the probe to unearth the crime in accordance with the procedure prescribed in the Code.
  • The very fact that the High Court in this case went into the minutest details in relation to every aspect of the case and devoted 89 pages judgment to quash the FIR in part lead us to draw a conclusion that the High Court had exceeded its powers while exercising its inherent jurisdiction under Section 482 of the Code. We cannot concur with such approach of the High Court.
  • The inherent powers of the High Court, which are obviously not defined being inherent in its very nature, cannot be stretched to any extent and nor can such powers be equated with the appellate powers of the High Court defined in the Code. The parameters laid down by this Court while exercising inherent powers must always be kept in mind else it would lead to committing the jurisdictional error in deciding the case. Such is the case here

ACTS:- Sections 34, 114, 120-B , 420 ,465 ,468, 471 and 476 of the Indian Penal Code, 1860 (hereinafter referred to as “IPC”) read with Sections 3, 7 and 11 7 of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989.

SUPREME COURT OF INDIA

Dineshbhai Chandubhai Patel Vs. State of Gujarat & Ors.

[Criminal Appeal No. 12 of 2018 arising out of S.L.P. (CRL.) No.5155 of 2017]

Balubhai Ravjibhai Ahir Vs. State of Gujarat & Ors.

[Criminal Appeal No.13 of 2018 arising out of S.L.P. (CRL.) No.5322 of 2017]

Arjun Shankarbhai Rathod Vs. Harishbhai Ramanbhai Rathod & Ors. Etc. Etc.

[Criminal Appeal No.15 of 2018 arising out of S.L.P. (CRL.) No.5476 of 2017]

Manish Patel (Advocate) Vs. Harishbhai Ramanbhai Rathod & Ors. Etc. Etc.

[Criminal Appeal No. 14 of 2018 arising out of S.L.P. (CRL.) No.5475 of 2017]

Harishbhai Ramanbhai Rathod Vs. State of Gujarat & ANR.

[Criminal Appeal No.16 of 2018 arising out of S.L.P. (CRL.) No.5500 of 2017]

Manharbhai Muljibhai Kakadia Vs. State of Gujarat & Ors.

[Criminal Appeal No. 17 of 2018 arising out of S.L.P. (CRL.) No.5867 of 2017]

Abhay Manohar Sapre, J.

1. Leave granted.

2. These appeals are filed against the common final judgment and order dated 10.07.2017 passed by the High Court of Gujarat at Ahmedabad in Criminal Misc. Application (for quashing and set aside FIR/Order) No. 16731 of 2016 with Crl. Misc. Appln. Nos. 13733, 14842/2016, SPCRA Nos. 4387, 4357, 4951/2016, Crl.Misc. Appln. No. 32440/2016 in Crl. Misc. Appln. No.16731/2016 whereby the Single Judge of the High Court partly allowed the application for quashing the FIR.

3. In order to appreciate the issues involved in this bunch of appeals, it is necessary to state few relevant facts. The facts are taken from the SLP paper books.

4. The dispute arising between the parties to this bunch of appeals essentially relates to a piece of land bearing Survey No. 96/3/2, Block No. 121, admeasuring 5281 sq. mts., Plot No. 71, admeasuring 3475 sq. mts. of Town Planning Scheme No. 36 (Althan), situated at village Althan, Taluka & city -Surat (hereinafter referred to as “the disputed land”).

5. The disputed land was jointly owned by the members of one Rathore family, who according to them, belonged to Halpai caste.

6. Six members of the Rathore Family (hereinafter referred to as the Complainants) filed one joint complaint to the Commissioner of Police, Surat on 25.04.2011 (Annexure-P-2) complaining therein that one person by name – Dineshbhai Chandubhai Patel in conspiracy with several other named persons jointly defrauded and deceived the complainants by taking advantage of their illiteracy, poverty and unawareness got executed bogus Power of Attorney with bogus signatures in relation to the disputed land. It was alleged that these persons again in furtherance with the conspiracy got the disputed land transferred in favour of several persons and illegally got the construction maps sanctioned to enable them to do construction over the disputed land.

7. In short and in substance, the grievance of the complainants was that the above named persons conspired together and snatched away from the complainants their aforementioned valuable land by committing fraud, cheating, deception, breach of trust etc. on them.

8. The complainants enclosed all disputed documents along with their complaint to show prima facie case alleged to have been committed by 6  above-named persons and prayed to the Commissioner of Police to investigate the entire case in relation to their land and bring the investigation to its logical end by first registering the FIR and then after holding a proper investigation, file the charge sheet in the competent Court against all those found involved in the case and prosecute them for the offences which they have allegedly committed and punish them under the Indian Penal Code and other related Acts.

9. This was followed by another complaint (Annexure P-6) filed with the Collector (SIT), Surat on 23.01.2012 against six named persons seeking therein the prosecution of those persons for having committed the alleged offences punishable under Sections 34, 114, 120-B , 420 ,465 ,468, 471 and 476 of the Indian Penal Code, 1860 (hereinafter referred to as “IPC”) read with Sections 3, 7 and 11 7 of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989. The complaint also set out the allegations with details alike the previous one with some new facts.

10. Yet another third complaint was filed with the Collector, District Disputes Redressal Forum, Surat (Annexure-P-13) on 07.10.2013 by one of the complainants against named persons making more or less same allegations made in the first two complaints with more detailed facts seeking to prosecute them for the commission of offences named in the earlier complaints.

11. It is these three complaints which led to registration of the FIR (CR No.I.C.R. No. 90 of 2016) on 06.06.2016 with Khatodara Police Station, Surat giving rise to filing of several criminal applications, bail petitions etc. one after the other at the 8 instances of the named accused persons and others alleged to be involved in the cases.

12. These cases were filed in the lower Court, the High Court and also in this Court one after the other during the last 4 years. The Courts passed several orders with observations made therein.

13. The present bunch of appeals arises out of the criminal applications filed by the named accused persons in the aforementioned three complaints under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “the Code”) in the Gujarat High Court seeking therein a prayer to quash the aforementioned FIR.

14. By impugned judgment dated 10.07.2017, the Single Judge of the High Court partly allowed the criminal applications and passed the following operative portion of the judgment contained in Para 88 which reads as under:

“(1) The First Information Report, so far as the offence punishable under Sections 406, 420, 120B of the Indian Penal Code and the Atrocities Act is concerned, is quashed. The investigation as regards the allegations of creating the two bogus power of attorneys and erasing of 73AA is concerned, shall be completed by the Commissioner of Police, Surat in accordance with law.

(2) The Commissioner is also directed to undertake the investigation as regards the persons, who had approached the land owners and had obtained the thumb impressions on the complaints addressed to the Commissioner of Police, Surat. To put it in other words, I direct the Commissioner to undertake proper investigation as regards the allegations of blackmailing and extortion leveled against the particular persons.”

15. It is against this judgment, both parties, i.e., the complainants and the accused persons have felt aggrieved and filed these appeals.

16. So far as the accused persons are concerned, they have challenged that part of the order by which the High Court has dismissed their criminal applications and declined to quash the FIR in relation to some offences alleged against them. According to the accused persons, the High Court should have quashed the entire FIR instead of quashing part of it.

17. So far as the complainants are concerned, they have challenged that part of the judgment by which the High Court has quashed the FIR in relation to some offences. According to the Complainants, the High Court should have upheld the entire FIR as it being legal and proper, it should have been given full effect in accordance with law against the accused persons.

18. This is how, the entire controversy is now again raised before this Court in this bunch of appeals by way of special leave at the instance of the complainants and accused persons in their respective appeals.

19. Heard Mr. Mukul Rohtagi, Dr. A.M. Singhvi, Mr. Yatin Oza, Ms. Meenakshi Arora and Mr. Shamik Sanjanwala, learned senior counsel for the 11 accused persons and Mr. Dushyant Dave and Mr. Harin P. Raval, learned senior counsel for the complainants.

20. Mr. Mukul Rohatgi, Dr. A.M. Singhvi, Mr. Yatin Oza and Ms. Meenakshi Arora, learned senior counsel appearing for the accused persons, in their respective appeals, strenuously contended that the High Court had rightly quashed the FIR in part but erred in not proceeding to quash the FIR in full because in the light of the findings on which the FIR was quashed in part, nothing then remained for the investigating authorities to probe in the remaining FIR which was upheld.

21. It is this submission, which was elaborated by all the senior counsel by placing reliance on several documents, observations of the High Court made in the earlier round of litigation and in the impugned judgment with a view to show that the entire FIR is an abuse of legal process and caused harassment to the accused persons. It was urged that FIR does not make out any much less prima facie case against any of the accused persons as the parties having settled the matter in writing and the complainants having accepted the huge consideration from the accused persons, there does not arise any cause to the Complainants to now file such belated FIR against the accused persons in relation to the subject matter in question. According to the learned counsel, it is also barred.

22. In reply, learned senior counsel Mr. Dushyant Dave and Harin P. Rawal appearing for the complainants urged that the High Court should have dismissed the criminal applications filed by the accused persons and upheld the entire FIR as a whole for being probed as, according to them, the FIR did disclose prima facie cognizable offences against the accused persons named therein. It was urged that keeping in view the nature of the offences, the law of limitation does not apply as has been held by this Court in number of similar cases.

23. Learned counsel further urged that there was no justification much less legal justification on the part of the High Court to have quashed the FIR in part and hence the judgment to that extent deserves to be set aside.

24. It is this submission, which was elaborated by the learned senior counsel by placing reliance on several documents filed by them including placing reliance on the observations of the High Court in the earlier round of litigation and the impugned judgment and at the same time also denied the documents filed by the accused persons including their contents and correctness.

25. Having heard the learned counsel for the parties at length and on perusal of the record of the case, we are inclined to accept the submissions of the learned counsel appearing for the Complainants finding force therein whereas we do not find any merit in the submissions urged by the learned counsel appearing for the accused persons.

26. The law on the question as to when a registration of the FIR is challenged seeking its quashing by the accused under Article 226 of the Constitution or Section 482 of the Code and what are the powers of the High Court and how the High Court should deal with such question is fairly well settled.

27. This Court in State of West Bengal & Ors. vs. Swapan Kumar Guha & Ors. (AIR 1982 SC 949) had the occasion to deal with this issue. Y.V. Chandrachud, the learned Chief Justice speaking  for Three Judge Bench laid down the following principle: “Whether an offence has been disclosed or not must necessarily depend on the facts and circumstances of each particular case. If on a consideration of the relevant materials, the Court is satisfied that an offence is disclosed, the Court will normally not interfere with the investigation into the offence and will generally allow the investigation in the offence to be completed for collecting materials for proving the offence.

The condition precedent to the commencement of investigation under S.157 of the Code is that the F.I.R. must disclose, prima facie, that a cognizable offence has been committed. It is wrong to suppose that the police have an unfettered discretion to commence investigation under S.157 of the Code. Their right of inquiry is conditioned by the existence of reason to suspect the commission of a cognizable offence and they cannot, reasonably, have reason so to suspect unless the F.I.R., prima facie, discloses the commission of such offence. If that condition is satisfied, the investigation must go on. The Court has then no power to stop the investigation, for to do so would be to trench upon the lawful power of the police to investigate into cognizable offences.”

28. Keeping in view the aforesaid principle of law, which was consistently followed by this Court in later years and on perusing the impugned judgment, we are constrained to observe that the High Court without any justifiable reason devoted 89 pages judgment (see-paper book) to examine the aforesaid question and then came to a conclusion that some part of the FIR in question is bad in law because it does not disclose any cognizable offence against any of the accused persons whereas only a part of the FIR is good which discloses a prima facie case against the accused persons and hence it needs further investigation to that extent in accordance with law.

29. In doing so, the High Court, in our view, virtually decided all the issues arising out of the case like an investigating authority or/and appellate authority decides, by little realizing that it was exercising its inherent jurisdiction under Section 482 of the Code at this stage.

30. The High Court, in our view, failed to see the extent of its jurisdiction, which it possess to exercise while examining the legality of any FIR complaining commission of several cognizable offences by accused persons. In order to examine as to whether the factual contents of the FIR disclose any prima facie cognizable offences or not, the High Court cannot act like an investigating agency and nor can exercise the powers like an appellate Court. The question, in our opinion, was required to be examined keeping in view the contents of the FIR and prima facie material, if any, requiring no proof.

31. At this stage, the High Court could not appreciate the evidence nor could draw its own inferences from the contents of the FIR and the material relied on. It was more so when the material relied on was disputed by the Complainants and visa-se-versa. In such a situation, it becomes the job of the investigating authority at such stage to probe and then of the Court to examine the questions once the charge sheet is filed along with such material as to how far and to what extent reliance can be placed on such material.

32. In our considered opinion, once the Court finds that the FIR does disclose prima facie commission of any cognizable offence, it should stay its hand and allow the investigating machinery to step in to initiate the probe to unearth the crime in accordance with the procedure prescribed in the Code.

33. The very fact that the High Court in this case went into the minutest details in relation to every aspect of the case and devoted 89 pages judgment to quash the FIR in part lead us to draw a conclusion that the High Court had exceeded its powers while exercising its inherent jurisdiction under Section 482 of the Code. We cannot concur with such approach of the High Court.

34. The inherent powers of the High Court, which are obviously not defined being inherent in its very nature, cannot be stretched to any extent and nor can such powers be equated with the appellate powers of the High Court defined in the Code. The parameters laid down by this Court while exercising inherent powers must always be kept in mind else it would lead to committing the jurisdictional error in deciding the case. Such is the case here.

35. On perusal of the three complaints and the FIR mentioned above, we are of the considered view that the complaint and FIR, do disclose a prima facie commission of various cognizable offences alleged by the complainants against the accused persons and, therefore, the High Court instead of dismissing the application filed by the accused persons in part should have dismissed the application as a whole to uphold the entire FIR in question.

36. Learned counsel for the accused persons after the arguments were over filed brief note and placed reliance on 2 decisions of this Court reported in (2015) 11 SCC 730 and (2011) 3 SCC 351 in support of their contentions. We have perused the 2 decisions. In our view, both the decisions are distinguishable on facts, whereas the decision on which we have placed reliance is more on the point. It is for the reason that in the first place, the 2 decisions relied on by the learned counsel for the accused persons were the cases where a complaint was filed in the Court under Section 138 of the Negotiable Instruments Act and in other case under some sections of IPC. It is this complaint which was  sought to be quashed by invoking the inherent jurisdiction under Section 482 of the Code. Such is not the case here. Secondly, the decision therefore turned on the facts involved in respective cases.

37. In the case at hand, the challenge is especially to registration of the FIR. This Court in Swapan Kumar Guha (supra) case examined the exercise of inherent powers of the High Court in the context of a challenge to an FIR. In our view, therefore, the law laid down in Swapan Kumar Guha (supra) is directly applicable to the facts of this case as against the law laid down in the two cited decisions.

38. In the light of foregoing discussion, it is now necessary that the matter, which is subject matter of FIR in question, needs to be investigated in detail by the investigating authorities in accordance with procedure prescribed in the Code.

39. We have purposefully refrained from making any observation on the merits and also refrained from giving our reasoning on factual issues arising out of the case, else it may cause prejudice to the parties and also hamper the on-going investigating process undertaken by the police authorities.

40. Though learned senior counsel appearing for the parties argued the issues touching the merits of the case by referring to hundreds of documents but, in our view, it is wholly unnecessary to enter into the factual arena once we record a finding that a prima facie case is made out on reading the FIR including the documents enclosed therein. We, therefore, do not consider it necessary to go in detail of their submissions. Needless to say, all these submissions and unproved and disputed documents on which reliance was placed by the parties would be dealt with at a later stage as and when the occasion arises.

41. In view of foregoing discussion, the appeals filed by the complainants, i.e., criminal appeals @ S.L.P. (Crl.) Nos. 5476 & 5475 of 2017 are allowed. The impugned judgment is set aside. As a sequel to our order, the appeals filed by the accused persons, i.e., criminal appeals @ S.L.P.(Crl.) Nos. 5155, 5322, 5500 & 5867/2017 are dismissed.

42. As a consequence, the criminal applications filed by the accused persons under Section 482 of the Code out of which these appeals arise are dismissed.

43. Since the FIR is pending for quite some time, we direct the investigating authorities to complete the investigation of the case without any bias and prejudices strictly in accordance with law and proceed ahead expeditiously.

44. Before parting, we consider it proper to clarify that this order should not be construed as having decided any issue on merits either way. The investigating authorities would not, therefore, be influenced in any manner by any of the observations made by the lower Courts and the High Court in their respective orders while investigating the matter.

 [R.K. AGRAWAL]

 [ABHAY MANOHAR SAPRE]

New Delhi;

January 5, 2018

National Kamgar Union Vs. Kran Rader Pvt. Ltd. Ors[SC 2018 JANUARY]

KEYWORDS:- INDUSTRIAL DISPUTE-ARTICLE 227- ARTICLE 136-

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  • It is the duty of the High Court while exercising the supervisory jurisdiction to see that the subordinate Court has exercised its powers in accordance with law and did not commit any illegality or perversity in reaching to its conclusion. While recording a finding, if it is noticed by the High Court that the subordinate Court has failed to take into consideration the material evidence or recorded a finding without there being any evidence, then the High Court would be entitled to interfere in such finding in exercise of its supervisory jurisdiction under Article 227 of the Constitution. Such is the case here.
  • Once the Courts record a finding on such question, be that of concurrence or reversal, the finding is usually held binding on this Court while hearing the appeal under Article 136 of the Constitution.  It is only when such finding is found to be against any provision of law or evidence or is found to be wholly perverse to the extent that no average judicial person could ever record such finding, it would not be held binding on the superior Court.

  • This Court has, however, cautioned that it must be remembered that even if the question raised is one of the mixed question of fact and law, this Court would not readily interfere with the conclusion of the Tribunal unless it is satisfied that said conclusion is manifestly or obviously erroneous.

DATE:-January 5, 2018

ACTS:-Trade Union Act, 1926,Section 25 FFA of the Industrial Disputes Act, 1947 , Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971,

SUPREME COURT OF INDIA

National Kamgar Union Vs. Kran Rader Pvt. Ltd. Ors.

[Civil Appeal No.20 of 2018 arising out of S.L.P. (C) No.18413 of 2015]

Abhay Manohar Sapre, J.

1. Leave granted.

2. This appeal is filed by the appellant-Trade Union against the final judgment and order dated 12.09.2014 passed by the High Court of Judicature at Bombay in Writ Petition No.5241 of 2003 whereby the High Court allowed the writ petition filed by respondent No.1-Kran Rader Pvt. Ltd. and set aside the award dated 08.04.2003 passed by the Industrial Court, Pune in a Complaint (ULP) No.544 of 1990 and, in consequence, dismissed the complaint filed by the appellant herein.

3. In order to appreciate the short issue involved in the appeal, it is necessary to set out few relevant facts infra.

4. The appellant is the Trade Union registered under the Trade Union Act, 1926 having several members working in Factories. Respondent No.1 owned a factory (manufacturing unit) at Pune. This Unit was originally owned by respondent Nos. 2 and 3 who, in turn, sold it to respondent No.4 in 1991 and then it was owned by respondent No.1. The Unit was engaged in the manufacture of several components like Traction Gears for supply to Railways, forging for oil industries and other manufacturing units etc. The members of the appellant-Union were working in respondent No.1’s factory at all relevant time.

5. In 1990, respondent No.1 suffered business loss in running the said manufacturing unit and, therefore, decided to close down the said unit permanently. With that end in view, respondent No.1 served a notice of closure to the State Government (Maharashtra) under Section 25 FFA of the Industrial Disputes Act, 1947 (in short, “ID Act”) on 29.08.1990 with a copy to the appellant-Union expressing therein their intention to close the operation of the Unit on expiry of 60 days with effect from 29.10.1990.

6. The appellant-Union, felt aggrieved of the closure notice issued by respondent No.1, filed complaint against respondent No.1 under Section 28 read with Items 9 and 10 of the Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as “the Act”) in the Industrial Court at Pune in October 1990 being Complaint(ULP) No.544/1990.

7. In substance, the grievance of the appellant in their complaint was that since respondent No.1 had employed more than 100 workers on an average per working day for preceding 12 months in their manufacturing unit, the provisions of Chapter VB (Section 25-K) of the ID Act and, in turn, all the relevant provisions contained therein were applicable to respondent No.1. It was alleged that due to this reason, it was obligatory upon respondent No.1 to have ensured compliance of all the relevant provisions applicable for closure of the Unit.

It was alleged that since admittedly the relevant provisions applicable to closure were not complied with by respondent No.1, a case was made out under the ID Act read with the Act to seek a declaration that the intended closure declared by respondent No.1, vide their notice dated 29.08.1990, is illegal under the ID Act read with the Act with a further grant of all consequential reliefs to each worker arising out of grant of such declaration sought by the appellant in the Complaint in their favour.

8. Respondent No.1 (employer) filed a reply and denied therein the allegations made by the appellant-Union in their complaint. According to Respondent No.1 they never employed more than 100 workers in their Unit so as to attract the rigor of Chapter VB and other related provisions of the ID Act to give effect to the closure. In other words, according to respondent No.1, the strength of workers working in their Unit was always less than 100 in number, therefore, the provisions of Chapter VB and the related provisions of the I.D. Act had no application to respondent No.1. It was, therefore, contended that the decision taken by respondent No.1 to close the Unit with effect from 29.10.1990 was legal, proper and in accordance with law and hence could not be faulted with.

9. The parties adduced evidence (documentary/oral) in support of their respective 6 contentions. The Industrial Court, by its award dated 08.04.2003, allowed the appellant’s complaint. It was held that respondent No.1 had employed 115 workers at all relevant time in their Unit, therefore, the provisions of Chapter VB of the ID Act were required to be followed while effecting the closure of the Unit. It was held that since the relevant provisions were not complied with by respondent No.1, the closure in question was bad in law entitling the members of the appellant-Union to claim all consequential benefits arising therefrom as if there was no closure of the Unit.

10. Respondent No.1 felt aggrieved and filed a writ petition before the Bombay High Court. By impugned judgment, the Single Judge allowed the writ petition and while setting aside of the award of the Industrial Court dismissed the appellant’s complaint. The High Court held that the total strength of the workers working at all relevant time in respondent No.1’s Unit was 99 and not 115 as 7 held by the Industrial Court. It was held that due to this reason, it was not necessary for respondent No.1 to ensure compliance of the provisions of Chapter VB of the ID Act while declaring the closure of their Unit.

11. The appellant-Union felt aggrieved and filed the present appeal by way of special leave in this Court.

12. Heard Mr. B.H. Marlapalle, learned senior counsel for appellant and Mr. D.J. Bhanage and Mr. Sanjay R. Hegde, learned senior counsel for respondents.

13. Having heard the learned counsel for the parties at length and on perusal of the record of the case, we find no good ground to interfere in the impugned judgment of the High Court. In other words, the reasoning assigned by the High Court appears to be just and reasonable calling no interference for the reasons mentioned hereinbelow.

14. The main question, which arises for consideration in this appeal, is only one, viz., how many workers were working in the Unit of respondent No.1 at all relevant time, whether the strength of the workers was above 100 or below 100. In other words, the question, which arises for consideration, is whether the provisions of Section 25-K of Chapter VB of the ID Act were applicable to respondent No. 1-Unit at the relevant time.

15. If the strength of the workers was above 100 at the relevant time, in that event, the provisions of Section 25-K were applicable to respondent No.1 whereas if the strength was below 100, in such event, the provisions of Section 25K had no application. In the case of former, the appellant-Union succeeds and in the case of later, respondent No.1 succeeds.

16. As mentioned above, the Industrial Court held that 115 workers were found working at the relevant time whereas the High Court held that 99  workers were found working in the Unit of respondent No.1 at the relevant time.

17. There can be no dispute to the proposition that the question as to what is the total strength of the workers employed in the Unit or, in other words, how many workers were working in a particular unit is essentially a question of fact. Such question is required to be decided by the Courts on appreciation of evidence adduced by the parties.

18. Once the Courts record a finding on such question, be that of concurrence or reversal, the finding is usually held binding on this Court while hearing the appeal under Article 136 of the Constitution.

19. It is only when such finding is found to be against any provision of law or evidence or is found to be wholly perverse to the extent that no average judicial person could ever record such finding, it would not be held binding on the superior Court.

20. When the question arises as to what is the status of a “workman”, this Court has held that it has to be inferred as a matter of law from facts found and if the question involved is one of drawing a legal inference as to the status of a party from facts found, it is not a pure question of fact. It is held that if the inference drawn by the Tribunal in regard to the status of the workman involved the application of certain legal tests, it necessarily becomes a mixed question of fact and law.

21. This Court has, however, cautioned that it must be remembered that even if the question raised is one of the mixed question of fact and law, this Court would not readily interfere with the conclusion of the Tribunal unless it is satisfied that said conclusion is manifestly or obviously erroneous. (See AIR 1967 SC 428)

22. With a view to examine the question from both angels which is taken note of above, we perused the evidence and also called upon the parties to file additional evidence before this Court and it was filed.

23. Having perused the record, we are not inclined to interfere in the finding recorded by the High Court though of reversal. In other words, we are inclined to agree with the reasoning of the High Court and accordingly hold that the total strength of workers employed at the relevant time in respondent No.1’s Unit was 99 and that the status of disputed employees could not be conclusively proved to be that of a “workman” for the reasons stated infra.

24. First, the High Court assigned the reasons as to why the finding of the Industrial Court holding the strength of workers as 115 is not factually and legally sustainable. Second, the reasons assigned are neither arbitrary nor against the record and nor perverse to that event so as to call for any interference by this Court. Third, in these circumstances, this Court would be slow to appreciate the entire evidence afresh on this question in this appeal and lastly, such being a question of fact or a mixed question of law and fact, it is binding on this Court.

25. Inspite of this, we have gone through the evidence with a view to find out as to whether the High Court has committed any jurisdictional error in reaching to its conclusion. In our view it is not. We notice that the Industrial Court held that there was no dispute regarding the status of 79 workers. The dispute of status of an employee was confined only to 36 employees, namely, whether their status was that of the “worker” or “supervisor”. The Industrial Court, however, held that the status of all the 36 employees was that of “worker” and accordingly recorded a finding that 79+36 = 115 employees were working as “worker” in the Unit at the relevant time.

26. The High Court, however, while reversing the aforementioned finding of the Industrial Court came 13 to a conclusion that out of 36 employees, only 20 employees could be regarded as “worker” and, therefore, the total strength of workers at all relevant time was 79+20 = 99. In our opinion, the High Court rightly held that there was no cogent evidence adduced by the appellant to prove the status of remaining 16 employees as to whether they also could be regarded as “worker” employed in the Unit and, therefore, it was not possible to hold that the total strength of the workers at the relevant time was more than 100, i.e., 115.

27. We, while concurring with the reasoning of the High Court, also find that since the Industrial Court did not elaborately discuss the issue regarding the status of employees while holding the strength of workers at 115 except clubbing 36(20+16) with 79, the High Court was right in going into the evidence to the extent permissible and reversed the finding of Industrial Court. In our view, the Industrial Court should have examined the status of each such disputed employee independently for holding whether they could also be regarded as “worker”. It was, however, not done so.

28. Mr. B.H. Marlapalle, learned senior counsel for the appellant-Union, strenuously argued with the help of the entire evidence and the relevant provisions of the Factories Act, 1948 and the Payment of Wages Act including the statutory forms prescribed in the two Acts for filing the details of workers working in the Unit that the finding of the Industrial Court appears to be more plausible and reasonable as compared to the finding recorded by the High Court on this question and hence the finding of the Industrial Court deserves to be restored.

29. We cannot accept this submission of learned counsel for the appellant in the light of what we have held above. In our view, the appellant, in order to prove the status of 16 employees, did not adduce any cogent evidence as against the evidence of the respondent No.1. It is, therefore, not possible for this Court to hold that the finding of the High Court is wholly arbitrary or illegal or against the evidence. We do not wish to go into this factual question any more.

30. Learned counsel for the appellant then urged that the High Court has committed a jurisdictional error when it went on to re-appreciate the evidence and then reversed the finding of the Industrial Court under Article 227 of the Constitution. In our view, it does not appear to be so.

31. It is the duty of the High Court while exercising the supervisory jurisdiction to see that the subordinate Court has exercised its powers in accordance with law and did not commit any illegality or perversity in reaching to its conclusion.

32. While recording a finding, if it is noticed by the High Court that the subordinate Court has failed to take into consideration the material evidence or recorded a finding without there being any evidence, then the High Court would be entitled to interfere in such finding in exercise of its supervisory jurisdiction under Article 227 of the Constitution. Such is the case here.

33. In the light of foregoing discussion, we do not consider proper to disturb the findings recorded by the High Court which are more plausible and reasonable rather than that of the Industrial Court.

34. In view of the foregoing discussion, we also hold that respondent No.1 had employed 99 workers in their manufacturing Unit at the time of declaring the closure of the Unit in 1990. Since the strength of workers was below 100, it was not necessary for respondent No.1 to ensure compliance of Chapter VB. In other words, in such circumstances, the provisions of Section 25-K had no application to respondent No.1.

35. This takes us to examine the next question as to how much compensation and under which heads the workers are entitled to receive from respondent No.1 (Company).

36. Learned counsel for respondent No.1, however, stated that out of total workers, most of the workers have settled their claims by accepting the compensation offered by respondent No.1 voluntarily. Learned counsel stated that the compensation paid to each worker consisted of

(i) amount of Gratuity payable under the Payment of Gratuity Act,

(ii) closure compensation payable under the I.D. Act, and over and above these two statutory payments of compensation, the respondent No.1 also paid 30 days’ wages for each completed year of service as ex gratia payment to each worker. It was also stated that now hardly 16 workers or so remain unpaid because they did not accept the compensation when offered to them and preferred to prosecute the present litigation.

37. Learned counsel for respondent No.1 stated that the total compensation paid to every worker in 1990-1991 varies between Rs.1 lakh to Rs.2 lakhs.

38. Taking into consideration the aforementioned background facts and circumstances of the case, we consider it just and proper to award in lump sum a compensation of Rs.2,50,000/- (Rs.Two Lakhs and Fifty Thousand) to each worker who did not accept the compensation.

39. Let Rs.2,50,000/- (Rs.Two Lakhs and Fifty Thousand) be paid to each such worker after making proper verification. If any worker is not available for any reason, the amount payable to such worker be paid to his legal representatives or nearest relatives, as the case may be, after making proper verification.

40. Respondent No.1 will, accordingly, deposit the entire compensation payable to all such workers with details in the Industrial Court, Pune. A notice will then be served to each worker or his legal 19 representatives, as the case may be, by the Industrial Court to enable the workers to withdraw the amount from the Industrial Court.

41. The amount will be paid to every worker or his nominee as the case may be by the demand draft issued in his/her name or in the name of legal representatives, as the case may be. It will be duly deposited in his/her Bank account to enable him/her to withdraw the same.

42. The appellant would submit necessary details of each such worker before the Industrial Court. The Industrial Court would ensure compliance of the directions of this Court and complete all formalities within three months from the date of this order.

43. We make it clear that this order is applicable only to those workers who did not accept the compensation from respondent No.1.

44. In other words, those workers who already accepted the compensation will not be entitled to get any benefit of this order.

45. With these directions, the appeal stands disposed of finally.

 [R.K. AGRAWAL]

 [ABHAY MANOHAR SAPRE]

New Delhi;

January 5, 2018

M/s. Inox Wind Ltd. Vs. M/s. Thermocables Ltd [SC 2018 January]

KEYWORDS:-APPOINTMENT OF ARBITRATOR-STANDARD FORM OF CONTRACT-

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DATE:-January 05, 2018-

  • Though general reference to an earlier contract is not sufficient for incorporation of an arbitration clause in the later contract, a general reference to a standard form would be enough for incorporation of the arbitration clause.
  • The purchase order is a single contract and general reference to the standard form even if it is not by a trade association or a professional body is sufficient for incorporation of the arbitration clause.

ACTS:-Section 11 (6) of the Arbitration and Conciliation Act, 1996

HISTORY: The Appellant,  issued a notice dated 30.10.2014 proposing the name of a sole arbitrator in terms of the Standard Terms and Conditions. In the absence of any response, the Appellant moved the High Court of Judicature at Allahabad by filing an application under Section 11 (6) of the Act.

SUPREME COURT OF INDIA

M/s. Inox Wind Ltd. Vs. M/s. Thermocables Ltd.

[Civil Appeal No. 19 of 2018 arising out of SLP (Civil) No.31049 of 2016]

L. NAGESWARA RAO, J.

1. Leave granted.

2. This appeal is directed against the judgment of the High Court of Judicature at Allahabad dismissing the application filed by the Appellant under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’).

3. The Appellant is a manufacturer of wind turbine generators (WTGs). The Respondent is engaged in the business of manufacture of wind power cables and other types of cables. Two purchase orders dated 13.12.2012 and 02.02.2013 were issued by the Appellant to the Respondent for supply of cables for their WTGs. According to the Purchase Order, the supply was to be according to the terms mentioned in the order and the Standard Terms and Conditions that were attached thereto. Apart from the other conditions, the Standard Terms and Conditions contain a clause pertaining to dispute resolution. The said clause provides for a dispute to be resolved by a sole arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The material on record indicates that the Respondent accepted all the terms and conditions mentioned in the Purchase Order except the delivery period as is evident from a letter dated 15.12.2012.

4. The Respondent, pursuant to the Purchase Order, supplied wind power cables to the Appellant. While laying the cables supplied by the Respondent-company, the Appellant discovered that the outer sheaths of the cables of 150 sq. mm. were cracked. This forced them to stop the WTGs so as to avert damage to expensive equipment. According to the Appellant, the Respondent-company did not replace the cables. The Appellant, therefore, was constrained to issue a notice dated 30.10.2014 proposing the name of a sole arbitrator in terms of the Standard Terms and Conditions. In the absence of any response, the Appellant moved the High Court of Judicature at Allahabad by filing an application under Section 11 (6) of the Act.

5. The High Court dismissed the said application by holding that an arbitrator cannot be appointed as the Appellant did not prove the existence of an arbitration agreement. The High Court relied upon the judgment of this Court in M.R. Engineers and Contractors Private Limited v. Som Datt Builders Limited, (2009) 7 SCC 696 to hold that there is no special reference to the arbitration clause in the standard terms and conditions, so the arbitration clause cannot be said to have been incorporated into the purchase order.

6. We have heard the counsel for the Appellant and Respondent. The judgment of this Court in M.R. Engineers’ case (supra) was relied upon by both the parties. Before proceeding further, it would be necessary to appreciate the ratio of the said judgment. A few facts necessary to understand the dispute in the said case are that the Appellant therein was a sub-contractor of the Respondent. The Appellant was entrusted a part of the work by the Respondent-contractor which pertained to ‘construction of project directorate building’. It was mentioned in the sub-contract that it shall be carried out as per the terms and conditions applicable to the main contract.

A dispute arose between the parties which made the Appellant therein to approach the High Court for appointment of an arbitrator under Section 11 (6) of the Arbitration and Conciliation Act, 1996. The High Court of Kerala rejected the application on the ground that the arbitration clause in the main contract was not incorporated by reference in the contract between the Appellant and Respondent therein. In the appeal before this Court, the Appellant submitted that his case was squarely covered by Section 7 (5) of the Act and that the arbitration clause from the main contract was incorporated by reference in the sub contract between him and the Respondent.

7. This Court considered the scope of Section 7 (5) of the Act and held that a conscious acceptance of the arbitration clause found in another document is necessary for the purpose of incorporating it into the contract. It was further held that general rules of construction of contracts would have to be followed as there were no guidelines in Section 7(5) regarding the conditions that need to be fulfilled before construing a reference to a portion of a contract as a reference incorporating the whole of it along with the arbitration clause contained in it. While distinguishing ‘reference’ to another document from ‘incorporation’, this Court observed that the relevant factor was the intention of the parties either to adopt the document in its entirety or to borrow specific portions of the said document. In this connection, the Court held as follows: (M.R. Engineers’ case, para 17-19)

“17. We will give a few instances of incorporation and mere reference to explain the position (illustrative and not exhaustive). If a contract refers to a document and provides that the said document shall form part and parcel of the contract, or that all terms and conditions of the said document shall be read or treated as a part of the contract, or that the contract will be governed by the provisions of the said document, or that the terms and conditions of the said document shall be incorporated into the contract, the terms and conditions of the document in entirety will get bodily lifted and incorporated into the contract.

When there is such incorporation of the terms and conditions of a document, every term of such document (except to the extent it is inconsistent with any specific provision in the contract) will apply to the contract. If the document so incorporated contains a provision for settlement of disputes by arbitration, the said arbitration clause also will apply to the contract.

18. On the other hand, where there is only a reference to a document in a contract in a particular context, the document will not get incorporated in entirety into the contract. For example, if a contract provides that the specifications of the supplies will be as provided in an earlier contract or another purchase order, then it will be necessary to look to that document only for the limited purpose of ascertainment of specifications of the goods to be supplied. The referred document cannot be looked into for any other purpose, say price or payment of price. Similarly, if a contract between X and Y provides that the terms of payment to Y will be as in the contract between X and Z, then only the terms of payment from the contract between X and Z, will be read as part of the contract between X and Y. The other terms, say relating to quantity or delivery cannot be looked into.

19. Sub-section (5) of Section 7 merely reiterates these well-settled principles of construction of contracts. It makes it clear that where there is a reference to a document in a contract, and the reference shows that the document was not intended to be incorporated in entirety, then the reference will not make the arbitration clause in the document, a part of the contract, unless there is a special reference to the arbitration clause so as to make it applicable.”

8. Relevant passages from Russell on Arbitration 23 rd Edition (2007) which were relied upon by this Court for interpretation of Section 7 (5) of the Arbitration and Conciliation Act, 1996 are as under: (M.R. Engineers’ case, para 20-21)

“20. The following passages from Russell on Arbitration throw considerable light on the position while dealing with Section 6(2) of the (English) Arbitration Act, 1996 corresponding to Section 7(5) of the Indian Act. (See pp. 52-55, 23rd Edn.):

“Reference to another document.-The terms of a contract may have to be ascertained by reference to more than one document. Ascertaining which documents constitute the contractual documents and in what, if any, order of priority they should be read is a problem encountered in many commercial transactions, particularly those involving shipping and construction. This issue has to be determined by applying the usual principles of construction and attempting to infer the parties’ intentions by means of an objective assessment of the evidence.

This may make questions of incorporation irrelevant, if for example it is clear that the contractual documents in question are entirely separate and no intention to incorporate the terms of one in the other can be established. However, the contractual document defining and imposing the performance obligations may be found to incorporate another document which contains an arbitration agreement. If there is a dispute about the performance obligations, that dispute may need to be decided according to the arbitration provisions of that other document. This very commonly occurs when the principal contractual document refers to standard form terms containing an arbitration agreement.

However the standard form wording may not be apt for the contract in which the parties seek to incorporate it, or the reference may be to another contract between parties at least one of whom is different. In these circumstances it may be possible to argue that the purported incorporation of the arbitration agreement is ineffective.

The draftsmen of the Arbitration Act, 1996 were asked to provide specific guidance on the issue, but they preferred to leave it to the court to decide whether there had been a valid incorporation by reference. (Para 2.044) *** Subject to drawing a distinction between incorporation of an arbitration agreement contained in a document setting out standard form terms and one contained in some other contract between different parties, judicial thinking seems to have favoured the approach of Sir John Megaw in Aughton, namely, that general words of incorporation are not sufficient. Rather, particular reference to the arbitration clause needs to be made to comply with Section 6 of the Arbitration Act, 1996, unless special circumstances exist. (Para 2.047) Reference to standard form terms.-

If the document sought to be incorporated is a standard form set of terms and conditions the courts are more likely to accept that general words of incorporation will suffice. This is because the parties can be expected to be more familiar with those standard terms including the arbitration clause.” (Para 2.048)

21. After referring to the view of Sir John Megaw in Aughton Ltd. v. M.F. Kent Services Ltd. [(1991) 57 BLR 1] that specific words were necessary to incorporate an arbitration clause and that the reference in a sub-contract to another contract’s terms and conditions would not suffice to incorporate the arbitration clause into the sub-contract, followed in Barrett & Son (Brickwork) Ltd. v. Henry Boot Management Ltd.[1995 CILL 1026] , Trygg Hansa Insurance Co. Ltd. v. Equitas Ltd. [(1998) 2 Lloyds’ Rep 439] and AIG Europe (UK) Ltd. v. Ethniki [(2000) 2 All ER 566 (CA)] and Sea Trade Maritime Corpn. v. Hellenic Mutual War Risks Assn. (Bermuda) Ltd. No. 2 [2006 EWHC 2530] , Russell concludes:

“The current position therefore seems to be that if the arbitration agreement is incorporated from a standard form a general reference to those terms is sufficient, but at least in the case of reference to a non-standard form contract in the context of construction and reinsurance contracts and bills of lading a specific reference to the arbitration agreement is necessary.”

9. This Court also discussed the scope of Section 7 (5) of the Act and summarised as follows: (M.R. Engineers’ case, para 24)

“24. The scope and intent of Section 7(5) of the Act may therefore be summarised thus:

(i) An arbitration clause in another document, would get incorporated into a contract by reference, if the following conditions are fulfilled:

(1) the contract should contain a clear reference to the documents containing arbitration clause,

(2) the reference to the other document should clearly indicate an intention to incorporate the arbitration clause into the contract,

(3) the arbitration clause should be appropriate, that is capable of application in respect of disputes under the contract and should not be repugnant to any term of the contract.

(ii) When the parties enter into a contract, making a general reference to another contract, such general reference would not have the effect of incorporating the arbitration clause from the referred document into the contract between the parties. The arbitration clause from another contract can be incorporated into the contract (where such reference is made), only by a specific reference to arbitration clause.

(iii) Where a contract between the parties provides that the execution or performance of that contract shall be in terms of another contract (which contains the terms and conditions relating to performance and a provision for settlement of disputes by arbitration), then, the terms of the referred contract in regard to execution/performance alone will apply, and not the arbitration agreement in the referred contract, unless there is special reference to the arbitration clause also.

(iv) Where the contract provides that the standard form of terms and conditions of an independent trade or professional institution (as for example the standard terms and conditions of a trade association or architects association) will bind them or apply to the contract, such standard form of terms and conditions including any provision for arbitration in such standard terms and conditions, shall be deemed to be incorporated by reference. Sometimes the contract may also say that the parties are familiar with those terms and conditions or that the parties have read and understood the said terms and conditions.

(v) Where the contract between the parties stipulates that the conditions of contract of one of the parties to the contract shall form a part of their contract (as for example the general conditions of contract of the Government where the Government is a party), the arbitration clause forming part of such general conditions of contract will apply to the contract between the parties.”

10. It was ultimately found that the intention of the parties was not to incorporate the main contract in its entirety into the sub-contract. Further, this Court held that the arbitration clause in the main contract was inapplicable to the contract between the parties as the main contract was between the Public Works Department, Government of Kerala and the contractor in which the arbitration clause contemplated appointment of a committee of three arbitrators, with one each to be appointed by the State of Kerala and the Respondent therein and the third to be nominated by the Director General Road Development, Ministry of Surface Transport Roads in Government of India. Appointment of a committee of arbitrators with representatives of State of Kerala and the Government of India was totally irrelevant for the contract between the contractor and the sub-contractor.

11. Section 6 (2) of the Arbitration Act, 1996 which extends to England, Wales and Northern Ireland is in pari materia with Section 7 (5) of the Arbitration and Conciliation Act, 1996 and it reads as under:-

“6. Definition of arbitration agreement. …

(2) The reference in an agreement to a written form of arbitration clause or to a document containing an arbitration clause constitutes an arbitration agreement if the reference is such as to make that clause part of the agreement.”

12. It will be useful to understand the interpretation of the incorporation issue in England. The question whether the general words of incorporation are sufficient to incorporate an arbitration agreement arose for consideration of the High Court of Justice, Queen’s Bench Division, Commercial Court in Sea Trade Maritime Corporation v. Hellenic Mutual War Risks Association (Bermuda) Limited, The Athena [2006] EWHC 2530 (Comm). In the said case the difference between incorporation in a single contract case and a two contract case was recognized. If there is a reference to a secondary document in a contract between two parties and that secondary document is a contract to which at least one party is different from the parties to the contract in question, it would be a two contract case.

In other words, if the secondary document is between other parties or if only one of the parties to the contract in dispute is party to an earlier contract to which a reference is made, then it would be a two contract case. In such a contract general reference to the earlier contract would not be sufficient to incorporate the arbitration clause. However, if the reference is to standard terms in a contract that would be a case of ‘single contract’ and the use of general words to incorporate the arbitration agreement by a reference is permissible. As the reference in that case was to a standard form of contract which was a single contract case, Justice Langley held that the general words of incorporation were enough to incorporate an arbitration clause.

13. The question of incorporation of the arbitration clause from an earlier contract by general reference into a later contract came up for consideration before the Queen’s Bench Division again in Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal SAL [2010] EWHC 29 (Comm). The contract in the said case pertained to sale of 10,000 metric tons of steel scrap. There were several terms in the contract under the headings material, quantity, price, shipment, discharge, rate, payment and final weight. Apart from the said terms, the contract contained a clause which was in the following terms: “All the rest will be same as our previous contracts.”

14. The dispute that arose in that case was whether general words mentioned above were capable of incorporating an arbitration clause. The difference in approach between cases in which the parties incorporate the terms of a contract between the other parties or between one of them with a third party on the one hand and those in which they incorporate the standard terms on the other hand, was noticed. The following broad categories in which the parties attempt to incorporate an arbitration clause were recognized by the Court, which are as follows:

“(1) A and B make a contract in which they incorporate standard terms. These may be the standard terms of one party set out on the back of an offer letter or an order, or contained in another document to which reference is made; or terms embodied in the rules of an organisation of which A or B or both are members; or they may be terms standard in a particular trade or industry.

(2) A and B make a contract incorporating terms previously agreed between A and B in another contract or contracts to which they were both parties (3) A and B make a contract incorporating terms agreed between A (or B) and C. Common examples are a bill of lading incorporating the terms of a charter to which A is a party; reinsurance contracts incorporating the terms of an underlying insurance; excess insurance contracts incorporating the terms of the primary layer of insurance; and building or engineering sub contracts incorporating the terms of a main contract or sub-sub contracts incorporating the terms of a sub contract.

(4) A and B make a contract incorporating terms agreed between C and D. Bills of lading, reinsurance and insurance contracts and building contracts may fall into this category.”

15. In Habas’s case (supra), Justice Christopher Clarke followed the ratio in the case of ‘the Athena’ (supra) and held that in single contract cases (categories 1 and 2), a general reference would be sufficient for incorporation of an arbitration clause from a standard form of contract. In cases falling under categories 3 and 4 mentioned above which are two contract cases, it was held that a stricter rule has to be followed by insisting on a specific reference to the arbitration clause from an earlier contract. Reliance placed on the judgment of Sir John Megaw in Aughton v MF Kent Services [1991] 31 Con L.R. 60 was repelled in the following terms:

“53 I do not regard myself as bound by the decisions of the Court of Appeal in Aughton v Kent and The Ethniki to reach a different conclusion. Both were two-contract cases. Further the judgments of Sir John Megaw and Lord Justice Ralph Gibson are, in part in conflict so as to preclude either of them being binding authority even in a two contract case. The agreement of Evans LJ with Sir John Megaw’s ” analysis of the authorities with regard to arbitration clauses and specifically with regard to the incorporation of charterparty arbitration clauses into bills of lading ” was obiter.”

16. The point pertaining to the independent nature of an arbitration clause being determinative of the dispute pertaining to incorporation was also dealt with in the said judgment as follows:

“51 Like Langley J, however, I do not accept that, in a single contract case, the independent nature of the arbitration clause should determine whether it is to be incorporated. A commercial lawyer would probably understand that an arbitration clause is a separate contract collateral to another substantive contract and that the expression “arbitration clause” is, on that account, something of a misnomer for “the arbitration contract which is ancillary to the primary contract”.

But a businessman would have no difficulty in regarding the arbitration clause (as he would call it) as part of a contract and as capable of incorporation, by appropriate wording, as any other term of such a contract; and it is, as it seems to me to a businessman’s understanding that the court should be disposed to. give effect. A businessman who had agreed with his counterparty a contract with 10 specific terms under various headings and then agreed with the same counterparty terms 1-5 under the same headings as before and, as to the rest, that all the terms of the previous contract should apply, would, I think, be surprised to find that “all” should be interpreted so as to mean “all but the arbitration clause”.

17. For a better understanding of the single and two contract cases and reference to standard form terms it is relevant to examine Russell on Arbitration 24 th Edition (2015) which is as under: (See pp. 52-54, 24rd Edn.) “Reference to standard form terms, single and two contract cases. If the document sought to be incorporated is a standard form set of terms and conditions the courts are more likely to accept that general words of incorporation will suffice. This is because the parties can be expected to be more familiar with those standard terms, including the arbitration clause.

In Sea Trade Maritime Corp v. Hellenic Mutual War Risks Association (Bermuda) Ltd, (The “Athena”) No.2 the Court drew a distinction between what is described as a “two contract case”, that is where the arbitration clause is contained in a secondary document which is a contract to which at least one party is different from the parties to the contract in question, and “a single contract case” where the arbitration clause is in standard terms to be found in another document.

Relying on dictum of Bingham LJ in Federal Bulk Carries Inc v. C. Itoh & Co Ltd (The “Federal Bulker”), Langley J stated that: “In principle, English law accepts incorporation of standard terms by the use of general words and, I would add, particularly so when the terms are readily available and the question arises in the context of dealings between established players in a well-known market. The principle, as the dictum makes clear, does not distinguish between a term which is an arbitration clause and one which addresses other issues. In contrast, and for the very reason that it concerns other parties, a “stricter rule” is applied in charterparty/bills of lading cases. The reason given is that the other party may have no knowledge nor ready means of knowledge of the relevant terms. Further, as the authorities illustrate, the terms of an arbitration clause may require adjustment if they are to be made to apply to the parties to a different contract.”

The Court therefore reinforced the distinction between incorporation by reference of standard form terms and of the terms of a different contract, and concluded that in a single contract case general words of incorporation are sufficient, whereas by its nature a two contract case may require specific reference to the other contract, unless the secondary document is stated to be based on standard form terms containing an arbitration agreement. In that case, presumably specific reference to the arbitration clause would not be needed.

As discussed below, this approach has been endorsed in subsequent cases, albeit drawing a slightly different but “material” distinction between incorporation of the terms of a separate contract – standard or otherwise – made between the same parties which are treated as “single contract” cases, even where there is in fact more than one contract; and those where the terms to be incorporated are contained in a contract between one or more different parties which are treated as the “two contract” cases. (Para 2-049)

Extension of the single contract cases. Recently, the courts appear to have extended the “single contract” principle applicable to standard form contracts, where general words of incorporation will suffice, to other types of contract where the same rationale can be said to apply. Thus, if the document sought to be incorporated is a bespoke contract between the same parties, the courts have accepted this as a “single contract” case where general words of incorporation will suffice, even though the other contract is not on standard terms and constitutes an entirely separate agreement.

The rationale for this approach is that the parties have already contracted on the terms said to be incorporated and are therefore even more likely to be familiar with the term relied on than a party resisting incorporation of a standard term. Put another way, if general words of incorporation are sufficient for the latter, they should be even more so for the former. The courts also appear to have accepted as a “single contract” case a situation where the contract referred to is between one of the parties to the original contract and a third party, where the contracts as a whole “were entered into in the context of a single commercial relationship”.(Para 2-050)

[Emphasis Supplied]

18. This Court in M.R. Engineers’ case, which is discussed in detail supra, held the rule to be that an arbitration clause in an earlier contract cannot be incorporated by a general reference. The exception to the rule is a reference to a standard form of contract by a trade association or a professional institution in which case a general reference would be sufficient for incorporation of an arbitration clause. Reliance was placed by this Court on Russell on Arbitration 23 rd Edition (2007) . The development of law regarding incorporation after the judgment in M.R. Engineers requires careful consideration.

It has been held in Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 (Comm) that a standard form of one party is also recognized as a ‘single contract’ case. In the said case, it was also held that in single contract cases general reference is enough for incorporation of an arbitration clause from a standard form of contract. There is no distinction that is drawn between standard forms by recognized trade associations or professional institutions on one hand and standard terms of one party on the other. Russell on Arbitration 24 th Edition (2015) also takes note of the Habas’s case.

19. We are of the opinion that though general reference to an earlier contract is not sufficient for incorporation of an arbitration clause in the later contract, a general reference to a standard form would be enough for incorporation of the arbitration clause. In M.R. Engineers this Court restricted the exceptions to standard form of contract of trade associations and professional institutions. In view of the development of law after the judgment in M.R. Engineers’ case, we are of the opinion that a general reference to a consensual standard form is sufficient for incorporation of an arbitration clause. In other words, general reference to a standard form of contract of one party will be enough for incorporation of arbitration clause.

A perusal of the passage from Russell on Arbitration 24th Edition (2015) would demonstrate the change in position of law pertaining to incorporation when read in conjunction with the earlier edition relied upon by this Court in M.R. Engineers’ case. We are in agreement with the judgment in M.R. Engineer’s case with a modification that a general reference to a standard form of contract of one party along with those of trade associations and professional bodies will be sufficient to incorporate the arbitration clause.

20. In the present case, the purchase order was issued by the Appellant in which it was categorically mentioned that the supply would be as per the terms mentioned therein and in the attached standard terms and conditions. The Respondent by his letter dated 15.12.2012 confirmed its acceptance of the terms and conditions mentioned in the purchase order except delivery period. The dispute arose after the delivery of the goods.

No doubt, there is nothing forthcoming from the pleadings or the submissions made by the parties that the standard form attached to the purchase order is of a trade association or a professional body. However, the Respondent was aware of the standard terms and conditions which were attached to the purchase order. The purchase order is a single contract and general reference to the standard form even if it is not by a trade association or a professional body is sufficient for incorporation of the arbitration clause.

21. For the aforementioned reasons, the appeal is allowed and the judgment of the High Court is set aside. Justice Sushil Harkauli is appointed as the Arbitrator to adjudicate the dispute between the parties.

 [S.A. BOBDE]

 [L. NAGESWARA RAO]

New Delhi;

January 05, 2018

Leena Vivek Masal Vs. State of Maharashtra & ANR.[SC 2018 January]

KEYWORDS:-issuing process-Article 136 –

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DATED:-January 5, 2018-

  • The order issuing process against the appellants being purely interim in nature having been passed in exercise of its discretionary powers finding prima facie case to entertain the complaint filed by respondent No. 2, cannot be interfered with in our appellate jurisdiction under Article 136 of the Constitution. It is more so when the appellants would get full opportunity to raise all factual and legal pleas in accordance with law while contesting the complaint on merits.

ACT:- Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989

HISTORY: Proceedings arise out of interim order dated 30.09.2008 passed by the Judicial Magistrate in Regular Case No.6 of 2008 whereby the Magistrate issued process summons against the appellants herein in relation to the complaint filed by respondent No. 2 under the provisions of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (hereinafter referred to as “the Act”) seeking appellants’ prosecution for commission of the offences under the Act. The complaint is pending for its final disposal on merits.

SUPREME COURT OF INDIA

Leena Vivek Masal Vs. State of Maharashtra & ANR.

[Criminal Appeal No. 9 of 2018 arising out of S.L.P. (CRL.) No.4678 of 2013]

Manisha Uday Sonar Vs. State of Maharashtra & ANR.

[Criminal Appeal No.10 of 2018 arising out of S.L.P. (CRL.) No.4690 of 2013]

Leena Vivek Masal Vs. State of Maharashtra & ANR.

[Criminal Appeal No.11 of 2018 arising out of S.L.P. (CRL.) No.5207 of 2013]

Abhay Manohar Sapre, J.

1. Leave granted.

2. These appeals are filed by two accused persons against the final judgment and order dated 21.02.2013 passed by the High Court of Judicature at Bombay in Crl.W.P. Nos. 2252/2011, 2251/2011 and 652/2012 which, in turn, arise out of the order dated 30.09.2008 passed by the Judicial Magistrate, Fast Court, Uran in Regular Case No. 6 of 2008.

3. It is not necessary to set out the factual details of the case in the light of the order that we are passing.

4. The present proceedings arise out of interim order dated 30.09.2008 passed by the Judicial Magistrate in Regular Case No.6 of 2008 whereby the Magistrate issued process summons against the appellants herein in relation to the complaint filed by respondent No. 2 under the provisions of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (hereinafter referred to as “the Act”) seeking appellants’ prosecution for commission of the offences under the Act. The complaint is pending for its final disposal on merits.

5. Having heard the learned counsel for the parties and on perusal of the record of the case, we are inclined to dispose of these appeals with following observations:

6. First, as mentioned above, these appeals arise out of an interim order passed by the Magistrate by which he has issued process summons of the complaint filed by respondent No. 2 against the appellants;

Second, when admittedly the complaint filed by respondent No. 2 against the appellants is pending consideration for its disposal on its merits and the appellants will get an opportunity to file reply and raise all the pleas and adduce evidence in  accordance with law, therefore, we do not consider it proper to interfere in the impugned order;

Third, the complaint filed by respondent No. 2 would be decided by the Magistrate on the basis of evidence adduced by the parties keeping in view the law applicable to the issues arising in the case;

and lastly, the order issuing process against the appellants being purely interim in nature having been passed in exercise of its discretionary powers finding prima facie case to entertain the complaint filed by respondent No. 2, cannot be interfered with in our appellate jurisdiction under Article 136 of the Constitution. It is more so when the appellants would get full opportunity to raise all factual and legal pleas in accordance with law while contesting the complaint on merits.

7. So far as the observations made by the Magistrate in its earlier order dated 30.06.2006 in Regular Criminal Case No. 114/2005 is concerned, all that we need to say is that it will be for the Magistrate to decide its effect on the present proceedings at the time of final disposal of the complaint in accordance with law.

8. We make it clear that the Magistrate, who is seized of the complaint, would decide it on merits uninfluenced by any observations made by the High Court in the impugned order.

9. With these observations, the appeals stand disposed of finally.

10. Let the complaint be decided by the Magistrate expeditiously, as directed above.

 [R.K. AGRAWAL]

 [ABHAY MANOHAR SAPRE]

New Delhi;

January 5, 2018

Susme Builders Pvt. Ltd. Vs. Chief Executive Officer, Slum Rehabilitation Authority and Ors.[SC 2018 JANUARY]

KEYWORDS:-Slum-Compensation-Article 142 of the Constitution-

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DATE:-January 04, 2018-

  • When a slum, owned by any authority or person, is handed over to the developer, in addition to rehabilitating the slum dwellers, the developer also has to compensate the owner.
  • This is a case where the earlier Bench of this Court had invoked its power under Article 142 of the Constitution of India and we also feel that it is a fit case for invocation of this Court’s jurisdiction under Article 142 of the Constitution of India.

ACTS:-Development Control Regulations for Greater Bombay, 1991 under the Maharashtra Regional & Town Planning Act, 1966 -Section 13 of the Slum Act

SUPREME COURT OF INDIA

Susme Builders Pvt. Ltd. Vs. Chief Executive Officer, Slum Rehabilitation Authority and Ors.

[Civil Appeal No(S). 18121 of 2017]

Deepak Gupta, J.

1. A dream turned into a nightmare. The dream of over 800 slum dwellers who also happen to be owners of the land of having a permanent roof over their head has not turned into reality for more than three decades. The slum dwellers are embroiled in various litigations. There are many powerful persons involved, be they builders, promoters and even those slum dwellers who have managed to become office bearers of the society of slum dwellers. Learned senior counsel appearing for the parties produced before us graphic photographs showing the sordid conditions in which these slum dwellers continue to reside despite having entered into an agreement with the appellant more than 30 years back to develop the slums and rehabilitate the slum dwellers in proper accommodation.

THE FACTUAL BACKGROUND:

2. This case has a long and chequered history and has some features which are unique to it. The land in question measuring 23018.50 square meters is situated in the heart of Mumbai i.e. Santacruz (East), Mumbai. This land earlier belonged to the Ardeshir Cursetji Pestonji Wadia Trust, hereinafter referred to as ‘the Trust’. A slum had developed 3 over the said land. The slum dwellers formed an Association known as ‘the Shivaji Nagar Residents’ Association. It appears that the Trust had initiated some litigation for eviction of the slum dwellers. On 19.03.1980 a consent decree appears to have been passed in this litigation whereby the Trust agreed to transfer the entire land to the slum dwellers in case the slum dwellers formed a society.

The slum dwellers thereafter constituted a society in the name and style of Om Namo Sujlam Suflam Co-operative Housing Society, Respondent No. 3 herein (hereinafter referred to as ‘the Society’). About 800 slum dwellers formed the Society, which was registered under the Maharashtra Co-operative Societies Act, 1960. In furtherance to the decree, the Trust executed a deed of transfer in favour of the Society (Respondent No. 3 herein), transferring the entire land to the Society on 20.02.1985. Thus, this is a unique case where the slum is owned by the Society of which the slum dwellers themselves are the members. The slum dwellers are, therefore, also the owners of the land in question.

3. It would be pertinent to mention that the land in question was declared to be a slum under Section 4 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (hereinafter referred to as ‘the Slum Act’) firstly on 16.08.1977 and again on 07.12.1983.

4. On 15.09.1985, a General Body Meeting of the Society was held and in this meeting it was decided to appoint M/s. Susme Builders Private Limited, hereinafter referred to as ‘Susme’ (the appellant herein), to develop the property. Thereafter, a development agreement was entered into between the Society and Susme on 27.02.1986. It was agreed that there were about 800 occupants on the land in question and each one of the slum dwellers would be provided accommodation measuring 240 sq. ft. built up area with carpet area of 190 sq. ft.

The agreement also contained a condition that the slum dwellers could purchase additional area of 60 or 110 sq. ft. by paying for the extra area at the rate of Rs. 350 per sq. ft.. The project was to be completed within a period of 5 years. Consequent to the agreement, the Society executed a power of attorney in favour of the nominee of Susme on 07.04.1986 virtually empowering it to act on behalf of the Society.

5. Admittedly, no work was done as per the terms of the agreement and nothing was constructed during this period. The stand of Susme is that during the period some public interest litigations were filed, hence the plot of land was not developed.

6. Thereafter, the Development Control Regulations for Greater Bombay, 1991 under the Maharashtra Regional & Town Planning Act, 1966 (for short ‘DCR’) were enforced. As per these DCRs, each one of the slum dwellers was entitled to a tenement of 180 sq. ft. free of cost. Therefore, the general body of the Society met on 30.10.1994 and passed a resolution that the earlier agreement be modified and a tenement of 225 sq. ft. carpet area be given to each slum dweller.

Thereafter, letter of intent in terms of the DCR was issued in favour of the Society and Susme on 05.04.1995. As per this letter of intent, each slum dweller was to be alloted 225 sq. ft. area. Susme was also to comply with the guidelines laid down for redevelopment of notified slums. It was made clear that first the existing slum dwellers were to be rehabilitated and only thereafter, free sale could be done in the open market. Susme was specifically directed to carry out the activities as per the activity chart and in terms of Regulation No. 33(10) of the DCR within five years from the date of issue of the commencement certificate. Thereafter, another agreement was entered between the Society and Susme on 10.07.1995 and in terms of this agreement each slum dweller was entitled for a tenement of 225 sq. ft.; 180 sq. ft. free of cost and 45 sq. ft. at the cost of Rs. 14,350/-.

7. In terms of the letter of intent dated 05.04.1995 and the agreement, Susme was to construct 12 buildings of ground plus seven floors for re-housing the slum dwellers and project affected persons on about 11,000 sq. mtrs. of land and remaining 12,497 sq. mtrs. was to be developed for the 7 purpose of free sale. During the pendency of this agreement, Susme constructed two buildings in which 128 slum dwellers were rehabilitated. This was the only progress which took place.

8. The DCR was amended in 1997. Under the new DCR, each slum dweller was entitled to a flat having carpet area of 225 sq. ft.. Naturally, the slum dwellers wanted, that as per the amended DCR, which was more beneficial to them, they should be granted a larger flat having carpet area of 225 sq. ft.. Therefore, another meeting of general body was held on 10.08.1997. In this meeting it was resolved that fresh negotiations be held with Susme and that Susme should carry out further development under the amended Regulation 33(10) and that 70% residents should consent for the redevelopment. Thereafter, another supplementary agreement was entered into between the Society and Susme on 07.01.1998.

In this agreement, it was stated that there are 867 occupants, out of which 825 are occupying residential premises, are occupying shops and 15 are occupying industrial units. This agreement also provided that tenements to be provided to each of the residential occupants would have a carpet area of 225 sq. ft.. Relevant portion of the agreement reads as follows: “The parties are aware that under the Slum Redevelopment Scheme and the Development Control Regulations each slum dweller is entitled to, a tenement admeasuring 225 sq. ft. carpet area. As regards 27 shops, the shops members shall be entitled to get such area as they are entitled under Sec. 23(10) of D.C. Regulations 1991 amended from time to time.

As regards 15 Industrial Units it is agreed that the Developer shall negotiate with them directly for developing the area occupied by them and the society agrees to sign and execute such papers and writings required by the Developer for that purpose.” Clause 26 of this agreement provided that the plans shall be submitted by the developer to the Slum Redevelopment Authority (for short ‘the SRA’) according to Regulation 33(10) of DCR, 1991 as amended from time to time. This agreement was treated to be a supplementary agreement to the earlier agreement.

9. Susme, on behalf of the Society, also moved the SRA for permission to convert the old SRD Scheme into a new slum rehabilitation scheme. The SRA granted letter of intent on 27.01.1998 and approval was granted for conversion of the scheme. Clause 19 of the letter of intent provided that Susme would submit the agreements with photographs of wife and husband in respect of all the eligible slum dwellers before issue of commencement certificate for sale building, or three months as agreed by the developer, whichever is earlier.

10. One writ petition was filed by the Shivaji Nagar Residents’ Association being Writ Petition No. 1301 of 1999 challenging the sanction by the SRA in favour of Susme on the ground that Susme had not obtained consent of 70% of the slum dwellers. The said writ petition was dismissed on 13.12.1999. The relevant portion of the Judgment reads as follows:- “We have heard learned counsel appearing for the parties. We do not find any substance in the contentions raised by the petitioners. It is required to be noted that some 109 slum dwellers filed Writ Petition No. 497 of 1997 raising identical challenge to the scheme and the said petition came to be withdrawn unconditionally on 10th July, 1997. Thereafter, as indicated earlier, two new buildings were constructed and the eligible slum dwellers were put in possession of their respective tenements.

Under the 1997 scheme the builder is required to enter into agreement with individual members and accordingly 582 agreements have already been signed between the parties. There is 10 also no merit in the contention of the petitioners that consent of 70% of the Slum dwellers was required under the 1991 scheme. On perusal of the said scheme it is clearly seen that consent of 70% of the slum dwellers was not required and what was contemplated was that if 70% of the Slum dwellers join the society, which is interested in the rehabilitation of the slum dwellers, then such society would be eligible to apply for sanction of the same under DCR 33(10).

It is not disputed before us that practically all the slum dwellers have been enrolled as members of the society and, therefore, it is not possible to hold that the requirement of 1991 scheme was not complied with. It is also pertinent to note that the proceedings of the general body meeting dated 13th October, 1994 were not challenged by the petitioners or any other slum dwellers by adopting appropriate remedy. Indeed, the general body meeting had unanimously, resolved to modify the agreement in terms of the 1991 scheme and it is too late to challenge the resolution for the first time by way of the present petition which was filed in 1999.

As regards the, 1997 scheme there is a Specific provision for conversion, of the old scheme into a new scheme and accordingly the proposal for conversion was accepted by the authorities and in pursuance of the acceptance, two new buildings have been constructed at an estimated cost of Rs. 5 crores. In our opinion, this petition suffers from gross delay and laches. It is clearly seen that the petitioners were aware of the sanction granted to the society under the 1991 scheme as well as the 1997 scheme. The construction on the property began in 1996 and two buildings have already been constructed. Under the circumstances, we do not find any reason to interfere in writ jurisdiction under Article 226 of the Constitution.”

11. After Susme had completed 80% construction of the two rehabilitation buildings, it applied for grant of Transfer of Development Rights (for short ‘TDR’) in terms of the amended DCR and sold the same. Occupation certificate in respect of these two buildings was issued on 03.11.1998. While granting permission it was observed on the file as follows:-

“Further, as per policy & DCR 33(10) it is necessary that agreements with more than 70% slum dwellers as per new scheme is required. This was pointed out to CEO (SRA) during discussion, when CEO (SRA) instructed to submit agreements with 70% slum dwellers before second phase of T.D.R. Developers have informed that out of 869 slum dwellers, they have submitted 450 agreements to the office of S.R.A. (52%).”

12. On 07.07.1999, the architects of Susme, on instructions of Susme, submitted 12 files containing 580 numbers of individual agreements with members of the Society and undertook to file the remaining individual agreements to make up 70% in due course of time. On 18.01.2000, Susme was again asked to furnish 70% individual agreements of eligible slum dwellers. Susme replied that in terms of judgment of the Bombay High Court dated 13.12.1999, it was not required to file 70% individual agreements. Under the 1997 amended DCR, the developer was entitled to a higher Floor Space Index (for short ‘the FSI’).

Therefore, Susme submitted fresh plans for construction of 14 storey buildings plus ground floor as against the earlier plan submitted for seven storey buildings plus ground floor buildings. These plans were submitted sometime in the year 1998. However, it appears that the plans were not sanctioned and Susme also did not pursue the matter earnestly with the authorities.

13. Thereafter, on 13.02.2001, SRA informed Susme that the request of Susme for approving amended plans for slum rehabilitation scheme was not considered since the plot under reference was affected by the Coastal Regulation Zone Notification (for short ‘the CRZ Notification’). Then Susme along with the Society filed Writ Petition No. 2269 of 2001 in which the main prayer was for setting aside the CRZ objection and it was also prayed that the petitioner be permitted to complete the rehabilitation scheme. In this petition, an interim order was passed on 07.08.2002.

14. The Government of Maharashtra during this period also appointed a one man Commission headed by Shri Chandrashekhar Prabhu to enquire into the complaints made with regard to the Society and the manner in which the rehabilitation scheme was implemented. Susme and the Society jointly filed Writ Petition No. 1854 of 2004 against this Commission. It was alleged that the SRA had handed over all the files to Shri Chandrashekhar Prabhu. However, an order was passed on 01.03.2005 in the aforesaid writ petition in which a statement was made on behalf of the SRA that all the concerned files had been retrieved from Shri Prabhu and, therefore, the decision on the plans would be taken within four weeks. The Petition was accordingly disposed of.

15. In 2005 itself it was clarified by the authorities that the property in question does not fall in CRZ, Part I and only a portion of the property falls in the CRZ, Part II. The architects of Susme applied for approval of construction of transit accommodation and this approval was granted by the SRA on 18.08.2005. This was, however, subject to the condition that agreements with individual slum dwellers would be executed before demolition of existing structure on the site. Again complaints were made by some people that transit camps were not constructed as per the approved plans and the SRA issued stop work notice on 14.03.2006.

16. Another supplementary agreement was entered into between Susme and the Society on 05.09.2006. This agreement had a clause that the developer i.e. Susme was to deal only with the Managing Committee of the Society. This agreement also provided that any of the Directors of Susme would be treated to be the attorneys of the Society. This agreement also provided that Susme had offered to pay a sum of Rs.75,000/- to each member of the Society having a structure not exceeding 17.00 sq. mtrs. and Rs.1,00,000/- to each of those members whose structure is of more than 17.00 sq. mtrs.. It is, however, not clear whether this amount was actually paid or not. An extraordinary general body meeting of the Society was held on 22.02.2009.

In this meeting it was pointed out that the members of the Society were not taken into confidence by the Managing Committee while issuing power of attorney in favour of the developer and changes to the detriment of the members have been made by the Managing Committee in collusion with Susme. It was also pointed out that agreements were entered into by the Managing Committee with Susme behind the back of the members of the Society. The majority of the members demanded for cancellation of the agreement made with Susme. It would not be out of place to mention that the old Managing Committee had been voted out and a new Managing Committee had taken over during this period.

Thereafter, another general body meeting was held on 29.03.2009 and the minutes of the meeting dated 22.02.2009 were approved. In this meeting it was also pointed out that now Susme had offered to make new plans giving each slum dweller a tenement of 269 sq. ft. carpet in terms of the new circular. But, the benefit of such bigger tenements was not made available to those who were already housed in the rehabilitation buildings. In effect, in this meeting it was decided to terminate the agreement with Susme.

17. Susme, thereafter, invoked the arbitration clause in the agreement and filed a petition for grant of interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 on 29.10.2009. The said arbitration petition was withdrawn on 16 26.06.2012 with liberty to Susme to file a suit. However, the Society was restrained from implementing the Resolution terminating the agreement till 13.07.2012. Civil suit No. 1588 of 2012 was filed by Susme on 10.07.2012 in the High Court of Bombay against the Society and M/s. J.G. Developers Private Limited.

18. The Society made a complaint to the SRA on 05.04.2009 that Susme was not developing the project as per the agreement and necessary action be taken by the SRA against Susme. On 15.06.2009, a communication was sent to the Society on behalf of SRA that since Susme had constructed two buildings and is in the process of construction of transit camp, the developer Susme should be allowed to continue and the request for change of developer was virtually rejected.

There is some dispute as to whether this letter was signed by the Chief Executive Officer or the Executive Engineer but that is not very material for the decision of the case. On 24.07.2009, the Society terminated the agreement with Susme by a written notice. The Society made another complaint to the SRA and on 08.09.2009, the SRA issued notice to Susme in terms of Section 13(2) of the Slum Act, but it appears, that no action was taken pursuant to this notice.

19. Thereafter, on 14.09.2009, the Society entered into an agreement with M/s J.G. Developers Private Limited, respondent no.4 (hereinafter referred to as ‘J.G. Developers’). In this agreement J.G. Developers agreed to provide permanent alternative accommodation measuring 269 sq. ft. carpet area to each of the eligible members having residential premises. Sufficient alternative accommodation was also to be provided to those occupying commercial/industrial premises. In Clause (4) of the agreement, it was mentioned that since the Society was the owner of the plot, the developer would also grant it 72,000/- sq. ft. carpet area free of cost for use by the members of the Society.

This was crystallized in the supplementary agreement entered on 22.09.2009 between the Society and J.G. Developers. In terms of this supplementary agreement, 155 members occupying double residential premises would be entitled to additional area of 18 150 sq. ft. and 614 members having single residential premises would be entitled to 75 sq. ft. additional area. This effectively meant that those having single residential area would get a tenement of 344 sq. ft. and those having double residential area would get a tenement of 419 sq. ft.. J.G. Developers took the responsibility of getting permission for giving this extra area. Thereafter, J.G. Developers entered into individual agreements with some of the members of the Society in terms of the agreement and supplementary agreement as referred to above.

20. Complaint No. 30 was filed on 21.09.2006 before the Anti-Corruption Bureau, which was referred to the High Power Committee (for short ‘the HPC’), in which it was complained that the names of the occupants at Serial No. 774 to Serial No. 852 of the list of occupants issued on 21.06.1993 by the Additional Collector, Encroachment, are bogus and are based on fabricated documents. Notice was issued on this complaint. On 04.06.2011, Susme again wrote to the SRA to process the proposal submitted to SRA on 01.10.2008. Similar request was made on 16.07.2011 also.

21. Thereafter, on 11.08.2011, show cause notice under Section 13(2) of the Slum Act was issued by the SRA to Susme as to why the SRA should not determine the right granted to Susme to develop the land and entrust the work of rehabilitation of the slum of the Society to some other agency. The reasons for issuing the notice are contained in Annexure- A, which reads as follows:

“1) The LOI for conversion of SRA scheme was issued u/No.SRA/ChE/110/HE/PL/LOI dt. 27/01/1998. It is reported by the Secretary that the developer has failed and neglected to complete the work of Rehab building within the stipulated period as per LOI condition and committed the breach of the terms and conditions of the sanctioned S.R. Scheme.

2) As per complaint of Society, the Developer have not taken effective steps for speedy implementation of Scheme and shown wilful negligence.” Susme replied to the notice. Even the Society submitted its reply to the notice and stated that there was inordinate delay in completing the scheme. Written submissions were filed by all sides. Finally, by order dated 24.02.2012, the SRA set aside the appointment of Susme as developer mainly on two grounds:-

(i) that there was unexplained delay in carrying out the work under the rehabilitation scheme and,

(ii) Susme had failed to show that it had filed individual agreements with 70% slum dwellers. The SRA, instead of handing over the work to another agency, held that since the Society had already entered into an agreement with J.G. Developers, it may get the scheme implemented through it. Susme filed an appeal being No. 39 of 2012 before the HPC. This appeal was dismissed on 18.06.2012. This order of the HPC was challenged by filing Writ Petition No. 1718 of 2012, on the ground that one of the Members of the HPC was not entitled to hear the appeal.

This writ petition was allowed on 14.08.2012 and the matter was remanded back to the HPC. Thereafter, the HPC again heard the appeal and dismissed the same on 10.10.2012. Against this order of the HPC, the appellant filed Writ Petition No. 5 of 2013, which was rejected by the Bombay High Court by the impugned order dated 11.06.2014 and it is this order of the High Court which is under challenge in this appeal. In the meantime, on 03.08.2012 the Bombay High Court in the suit filed by Susme, refused to grant any interim relief.

22. Letter of intent dated 29.10.2012 was issued by the SRA in favour of the Society, J.G. Developers and also its architects. In this letter of intent approval was given for FSI of 3.78 for slum portion, 3.18 for slum portion in lieu of 128 tenements with carpet area of 20.90 sq. mtrs., already constructed and 2.58 for slum portion in CRZ-II. Effectively, the FSI for the developer had increased substantially. In this letter of intent it was mentioned that the eligible slum dwellers would be re-housed in residential tenements of carpet area of 25 sq. mtrs. (269 sq.ft.) or 20.90 sq. mtrs. (225 sq.ft.). It is thus apparent that no permission was granted for giving larger tenements to the eligible slum dwellers.

23. In another Special General Meeting of the Society held on 13.07.2014, it was decided by majority vote to cancel the agreement with J.G. Developers. It was also decided that in view of the cancellation of appointment of J.G. Developers, the Managing Committee should select a new and capable developer and the offer made by such developer should be put up before the next general body meeting. The Society terminated the appointment of J.G. Developers on 25.08.2014. J.G. Developers challenged the termination of their agreement by filing Civil Suit No. 756 of 2014 on 19.09.2014 and in this civil suit an interim order was passed on 24.09.2014.

24. After the termination of the agreement with J.G. Developers on 25.08.2014, on 26.08.2014 the Managing Committee of the Respondent No. 3, the Society, entered into consent terms with Susme again appointing Susme as the developer.

25. Susme filed the present petition for special leave to appeal challenging the decision of the High Court of Bombay in Writ Petition No. 5 of 2013, before this Court. The respondents put in appearance even before the notice was issued and on 27.03.2015 this Court has passed the following order:

“Heard Mr. Fali S. Nariman, learned senior counsel for the petitioner, Mr. P.C. Chidambaram, learned senior counsel and Mr. Mihir Joshi, learned counsel for respondent no.4, Mr. Kapil Sibal, learned senior counsel for respondent no.3, Mr. C.U. Singh, learned senior counsel for respondent no.1 and Mr. Raval, learned senior counsel for the applicant in IA No.5/14 along with their assisting counsel.

2. The present case frescoes a labyrinthine chequered history that can flummox the prudence of the wise, for the procrastination in putting an end to a litigation. But, a pregnant one, it is a problem created by human beings by use of adroit proclivity at their best and, therefore, as advised at present, this Court is obliged to take recourse to an innovative method, at least to attempt at a solution.

3. We need not reflect the nature of orders passed in various cases fought between the parties. Suffice it to mention that they have invoked the power of the authorities under the Maharashtra Slum Areas (Development, Clearance and Redevelopment) Act, 1971, instituted civil suits on the original side of the Bombay High Court and sometimes the society, namely, Om Namo Sujlam Sujlam Co-operative Housing Society, respondent no.3 herein, has changed its colour as chameleon with afflux of time may be yielding to the “hydraulic pressures of time” and thereby eventually, in all possibilities, making the slum dwellers of the area, i.e., C.T.S. No.7627, 7627/1 to 852 admeasuring 23018.50 sq. mtrs. situated at village Kolekalyan at Santacruz (East), Mumbai remain in that pathetic condition as they were since 1986, as if the parties have nurtured the notion that they can arrest time. Be that as it may, a solution has to be thought of.

4. In course of hearing Mr. Chidambaram, appearing for respondent no.4, assiduously asserted that he has got the 24 consent from 70% of the eligible slum dwellers and, therefore, the society is absolutely justified in entering into an agreement which is called a “development agreement”. Mr. F.S. Nariman, learned senior counsel, determined not to lag behind, would astutely asseverated that he has the consentum of 70% of eligible slum dwellers and hence, his case cannot be brushed aside. We have been apprised by Mr. Kapil Sibal, learned senior counsel appearing for respondent no.3, that at present there are slightly more than 800 eligible slum dwellers. Mr. Raval, learned senior counsel appearing for the assumed authorised authority of the society, would present that it is the respondent no.3 who has been correctly granted the privilege of development agreement inasmuch as there was a verification with regard to the consent earlier.

5. In our considered opinion, regard being had to the special features of the case which includes the longevity of the case and indefatigable spirit in which the parties are determined to fight, we think there should be appropriate verification of the consent of the eligible slum dwellers in praesenti. Regard being had to the same, we request Mr. Justice B.N. Srikrishna, formerly a Judge of this Court, to verify the factum of consentum of the eligible slum dwellers. The Slum Rehabilitation Authority represented by the Chief Executive Officer either by himself or by any responsible high level officer nominated by him shall assist Mr. Justice B.N. Srikrishna in this regard.

6. As secretarial staff would be required for this purpose, the petitioner and the respondent no.4 shall deposit a sum of Rs.5,00,000/- (Rupees five lacs only) each so that the verification can be expedited. In addition, learned Judge may fix his honorarium which shall be paid proportionately, as agreed to by the petitioner and the respondent no.4.

7. The parties are at liberty to file documents to facilitate the process of verification with regard to consentum in praesenti before the learned Judge. We repeat at the cost of repetition that such a mode has been adopted, regard being had to the special phenomena of the case. As we have taken recourse to such a method any other the litigation pending in any forum in this regard shall remain stayed.

8. Needless to say, the interim order of status quo passed in this special leave petition, except the directions which have been issued hereinabove, shall remain in force.

9. Let this matter be listed on 09.07.2015 awaiting the report from Mr. Justice B.N. Srikrishna.”

26. Thereafter, Justice B.N. Srikrishna, former Judge of this Court carried out the mandate, which he was required to do in terms of the aforesaid order. He decided that voting should be held by secret ballot. He categorized the voters in four categories.

Category “A”

Persons who were original slum dwellers and continue to be occupants as on the cut-off date i.e. 27th March 2015.

Category “B”

Persons who claim to exercise their vote as a result of legal heir ship.

Category “C”

Persons who claim to have become members of the Society by reason of sale and transfer of the shares.

Category “D”

79 persons whose eligibility is under challenge before the Competent Authority as per the directions of the High Power Committee.

He found that there were 867 slum dwellers in the four categories:

Category “A”

263

Category “B”

318

Category “C”

207

Category “D”

79

Total

867

Four separate ballot boxes were kept i.e. one for each category and the result of the voting is tabulated as follows:

Category

Total Eligible Voters

Voter turn-out at the Poll on 22/11/2015

Votes polled by Petitioner

Votes Polled by Respondent No.4

Invalid Votes

“A”

263

191

108

70

13

“B”

318

275

179

84

12

“C”

207

172

126

43

03

“D”

079

013

010

03

Total

867

651

423

200

28

Thereafter, Justice Srikrishna submitted his report setting out the voting pattern but did not make any recommendation.

CONTENTIONS:

27. The main contention raised on behalf of the appellant- Susme by Shri F.S. Nariman, learned senior counsel is that the order dated 27.03.2015 is an order passed by this Court in exercise of its extraordinary jurisdiction either under Article 136 or under Article 142 of the Constitution of India. It is submitted that this order was passed with a view to settle all disputes between the parties. It is urged that this Court cannot go behind this order especially when there is no application filed for recall of the said order. It is also urged that I.A.No. 10 of 2015 filed by J.G. Developers for modification of the order, was rejected. It is contended that since Justice B.N. Srikrishna has found that the majority supports Susme, the appeal should be allowed and Susme be permitted to carry on with the project.

28. The other contentions raised on behalf of the appellant- Susme by Shri Darius Khambata, learned senior counsel are:

(a) that Section 13(2) of the Slum Act is wholly inapplicable;

(b) that the notice under Section 13(2) was given only in respect of delay and not in respect of 70% consent and hence the SRA, the HPC and the High Court fell in error in insisting on 70% consent;

(c) that when migration of the scheme took place from redevelopment scheme to slum rehabilitation scheme, 70% consent was not necessary.

29. On behalf of J.G. Developers it is contended by Shri Gopal Subramanium, learned senior counsel that the intention of this Court was to find out whether any party had support of 70% of the slum dwellers or not. It is also contended that it was not the intention of this Court to bypass the legal provisions and this Court is not bound by the aforesaid order. In the alternative, it is submitted that the exercise carried out by Justice B.N. Srikrishna only shows that as on date there are more people with Susme. It is contended that the Bombay High Court has consistently held that there should be no competitive voting inter se developers because that gives rise to many malpractices with the developers trying to outbid each other by giving sops to the voters.

It is contended that the consistent view till now has been that once the slum dwellers have given consent for one developer or have entered into an agreement with a developer then they cannot be permitted to withdraw the consent, otherwise, it will lead to chaos and no slum rehabilitation scheme would be implemented. It is also contended that the matter should be decided on merits and not on the basis of this order. It is also contended that Susme does not have the support of 70% of the slum dwellers.

30. It is also contended on behalf of J.G. Developers that Susme is guilty of unexplained delay and the slum dwellers are suffering and, therefore, the Society had rightly decided to enter into a fresh agreement with J.G. Developers. It is also urged that Susme had never obtained the consent of 70% of the slum dwellers, which was mandatory. It is also contended that Susme had taken advantage of trading of the development rights by assuring the SRA that it would get 70% consent. It is further urged that Susme never contested the issue of 70% consent earlier.

31. Here, it would be pertinent to mention that the Society has two factions. One faction supports Susme and the other faction supports J.G. Developers. The faction supporting Susme states that it has terminated the agreement with J.G. Developers and cannot be forced to get the development work done through J.G. Developers. The other faction alleges that there is no valid existing agreement with Susme.

32. The following issues arise for decision in this case:

(i) What is the scope, ambit and effect of the order of this Court dated 27.03.2015;

(ii) What is the scope of powers under Section 13(2) of the Slum Act;

(iii) Whether the SRA has any power to remove the developer;

(iv) Whether in the notice issued under Section 13(2) of the Slum Act the issue of 70% consent was raised;

(v) Whether support of 70% of the slum dwellers is mandatory and whether slum dwellers are entitled to withdraw their consent;

(vi) Whether Susme delayed the construction of the Scheme, and is, therefore, not entitled to any relief;

(vii) Whether Susme is entitled to continue with the Scheme;

(viii) In case Susme is not entitled to continue with the scheme whether respondent no. 4 J.G. Developers is entitled to continue with the rehabilitation scheme.

THE SCOPE, AMBIT AND EFFECT OF THE ORDER OF THIS COURT DATED 27.03.2015:

33. Relevant portion of order dated 27.03.2015 has been quoted hereinabove. The main contention of Mr. Nariman, learned senior counsel appearing for the appellant is that this order is an order passed under Article 142 or Article 136 of the Constitution and is binding upon the parties. On the other hand, it was urged by M/s Gopal Subramanium and Neeraj Kishan Kaul, learned senior counsel appearing for the respondents that the order in question is not a binding order. In the alternative, it was submitted that even if the order is binding, this Court can interpret the order and even as per 32 the said order, the appellant is not entitled to continue with the Scheme.

34. At the outset, we may note that judicial propriety and discipline requires that a Coordinate Bench must respect the order of an earlier Bench. In fact, even a larger Bench should not brush aside the order passed by an earlier Bench even if it be a smaller Bench unless the order is in issue before the larger Bench. Suffice to say that the order in question holds the field. It has not been recalled and prayer for modification in I.A. No. 10 was rejected on 13.05.2015. Therefore, the order of this Court dated 27.03.2015 holds the field and we are bound by the same. At the same time, it is our duty to decipher what was the intention of the Bench while passing the order and to find out what the Court intended to do by the said order.

35. In Para 2 of the order, the Division Bench has noted the long and chequered history of the case and has noted that the 33 Court had to take recourse to an innovative method to try and find a solution. It is thus apparent that this is an order falling within the ambit of Article 142 to do complete justice between the parties. The Court was aware that the slum dwellers were suffering due to the long protracted litigation. Therefore, the Court felt the need to find an innovative solution. In Para 3 of the order, the Court has noted the factual aspects and again emphasized the need to find a solution to resolve the various issues. The Court was obviously moved by the pathetic condition in which most of the slum dwellers continued to reside.

36. Para 4 of the order is very important because it notes the contention of learned counsel appearing for J.G. Developers, who had emphatically stated that his client had the consent of 70% of the eligible slum dwellers and, as such, the Society was justified in entering into a development agreement with his client. On the other hand, learned senior counsel appearing for the appellant equally strongly refuted this claim and claimed that his client had the consent of 70% eligible 34 slum dwellers. It is in this context that the directions contained in Para 5 of the order dated 27.03.2015 were passed wherein this Court directed “…….there should be appropriate verification of the consent of the eligible slum dwellers in praesenti.” Justice B.N. Srikrishna was requested to verify the factum of the consent of the eligible slum dwellers.

37. The contention raised on behalf of Susme is that there is no mention of “70%” in the direction given in Para 5 of the order and, therefore, all that Justice B.N. Srikrishna was required to do was to ascertain consent of the slum dwellers in praesenti. It is contended that almost 70%, and at least much more than the majority, have exercised their choice in favour of Susme and, thus, there is no reason why the appeal should not be allowed. Susme should be permitted to carry on the development work in terms of the agreement entered into with the respondent no. 3-Society. It is also urged that as far as respondent no. 4 is concerned, it has got hardly 30% of the votes and, therefore, there is no question of awarding the contract to respondent no. 4.

38. We are not in agreement with this submission. It is settled law that a judicial order or judgment has to be read as a whole and a single line or phrase cannot be read out of context. A judgment is not to be interpreted like a statute. As far as the order dated 27.03.2015 is concerned, the intention of the Court, will have to be deduced from the entire order. We cannot read the phrase “…….there should be appropriate verification of the consent of the eligible slum dwellers in praesenti.” in isolation. This has to be read in the context of the rival contention of the contesting parties that each one of them had the consent of more than 70% of the slum dwellers.

According to us, this Court was not oblivious of the requirements of the Slum Act though it may not have explicitly referred to them. It is obvious from Para 4 of the order dated 27.03.2015 that learned counsel for both the parties claimed that their respective clients had the support of 70% of the slum dwellers. Obviously, both of them could not be correct. This factual dispute could not be decided in these proceedings. This was the dispute which was referred for resolution to Justice B.N. Srikrishna. We may observe that Justice B.N. Srikrishna in the first effective procedural order dated 27.04.2015, rightly understood the order to mean as follows:

“After carefully perusing the Order dated 27th March, 2015 made by the Hon’ble Supreme Court and the submissions made in writing and through Counsel and representatives on behalf of the Petitioners as well as the Respondents, I am of the view that the best way of verifying the factum of consentum of the eligible slum dwellers in praesenti would be to hold a secret ballot under my aegis and after counting the votes, make a report to the Court as to whether more than 70% of the eligible slum dwellers are in favour of the redevelopment agreement being signed with the Petitioner or Respondent No.4.”

39. It is, thus, clear that Justice B.N. Srikrishna had understood that he was to ascertain whether 70% of the eligible slum dwellers are in favour of the redevelopment scheme signed with the appellant-Susme or with respondent no. 4. We are clearly of the view that a holistic reading of the order admits of no other meaning. The only dispute raised before this Court on 27.03.2015 was which of the builders had the support of the 70% of the slum dwellers. Since this factual dispute could not be decided in Court, Justice B.N. Srikrishna was requested to do this job. It is not necessary for us to go into the other arguments raised with regard to the effect of the order because, according to us, this order admits of no other interpretation. Admittedly, neither the appellant nor respondent no. 4 has received 70% support.

40. Further, the words ‘in praesenti’ only mean that the Court wanted the verification of the consent of the eligible slum dwellers as on date of passing of the order. ‘In praesenti’ cannot be read to mean ‘present and voting’. It only means eligible slum dwellers as on 27.03.2015. Justice B.N. Srikrishna has divided the slum dwellers into four categories; 263 were the original slum dwellers, 318 were the legal heirs, 207 were those who had become members by means of sale and transfer of shares and 79 voters were disputed.

We may note that during these entire proceedings not a single complaint has been filed that an ineligible slum dweller was permitted to vote or that an eligible slum dweller was not permitted to vote. The procedure followed by Justice B.N. Srikrishna is absolutely correct and no error can be found in 38 this regard. Therefore, we have no hesitation in accepting the report submitted by Justice B.N. Srikrishna.

41. Out of 867 total eligible voters only 651 voted and the appellant secured 423 votes, which would mean 64.98% or roughly 65% of the votes polled. But, if we were to calculate this percentage from the total number of slum dwellers i.e. 867 then the percentage is 48.78%, which is less than 50%. In case we exclude 79 votes which are doubtful, then the total eligible voters would be 788 and the appellant secured 413 i.e. 52.41% of the total eligible slum dwellers, well below the magic figure of 70%. We are unable to accept the contention of Mr. Nariman that to put an end to all litigation, the Court only wanted to find out who had the majority. That, according to us, is not the essence of the order dated 27.03.2015.

It is true that 70% is not reflected in the direction given in Para 5 of the order but as earlier noted by us, the directions have to be understood in view of the intention of the Court, which was to find out that which of the builders had the support of 70% of the slum dwellers.

Unfortunately, both the developers do not enjoy 70% support, though it is true that the appellant has the support of more than twice the number of slum dwellers as compared to respondent no. 4. Since neither Susme nor J.G. Developers has the support of 70% slum dwellers, the order dated 27.03.2015 cannot be taken to its logical conclusion and we have to decide the appeal on merits.

THE SCOPE OF POWERS UNDER SECTION 13(2) OF THE SLUM ACT:

42. Relevant portion of Section 13 of the Slum Act which is the bone of contention between the parties reads as follows;

“13. (1) Notwithstanding anything contained in subsection (10) of section 12, the Slum Rehabilitation Authority may, after any area is declared as the Slum Rehabilitation Area, if the landholders or occupants of such area do not come forward within a reasonable time, with a scheme for re-development of such land, by order, determine to redevelop such land by entrusting it to any agency for the purpose.

(2) Where on declaration of any area as a Slum Rehabilitation Area the Slum Rehabilitation Authority, is satisfied that the land in the Slum Rehabilitation Area has been or is being developed by the owner in contravention of the plans duly approved, or any restrictions or conditions imposed under sub-section (10) of section 12, or has not been developed within the time, if any, specified under such conditions, it may, by order, determine to develop the land by entrusting it to any agency recognised by it for the purpose: Provided that, before passing such order, the owner shall be given a reasonable opportunity of showing cause why such order should not be passed.”

43. Shri Darius Khambata, learned senior counsel appearing for Susme urged that under Section 13(2) of the Slum Act, the SRA is entitled to take action only against the owner. He also submits that Section 13(2) will apply only when there is violation of the conditions imposed under sub-section 10 of Section 12 of the Slum Act and the condition with regard to the time should also be a condition contained in sub-section 10 of Section 12. He submits that there is no power to take action under this section against the developer. According to him, action could have been taken by the SRA against the Society but not against Susme.

44. We cannot accept such a wide submission. According to us, under Section 13(2) of the Slum Act, the SRA has the authority to take action and hand over the development of land to some other recognized agency under three circumstances:

i. When there is contravention of the plans duly approved;

ii. When there is contravention of any restriction or condition imposed under sub-section 10 of Section 12 of the Slum Act; and

iii. When the development has not taken place within time, if any, specified.

45. The requirement to complete the development within time may be there in the letter of intent issued by the SRA or may be in the agreement entered into between the owner/developer with the slum dwellers. Such condition, if violated, would attract the provisions of Section 13(2) of the Slum Act. Over and above that, when a clearance order is passed, then in terms of sub-section 10 of Section 12, the competent authority can include a condition with regard to the time within which the development should be completed and in that case also Section 13(2) would be attracted. We are not, however, able to accept the very wide argument that 42 in case of delay, the condition that is violated must be laid down under Section 12(10) of the Slum Act.

46. There may be cases where the slum dwellers do not offer any resistance and willingly consent to move into transit accommodation provided by the owner/developer. Therefore, the conditions laid down under Section 12(10) will come into play only when there is a clearance order, but in case there is no clearance order, then under Section 13(2), the SRA would be empowered to take action when there is violation of any plan or when there is violation of any condition relating to developing the project within time. The time limit can, some time, be provided in the letter of intent, in the agreement or even in the regulations.

47. Having held so, we are of the view that Shri Darius Khambata, learned senior counsel, is right in his submission that normally under Section 13(2) of the Slum Act, action by the SRA has to be taken against the owner. Here, we may repeat that this is a unique case where the slum dwellers are the members of the owner-Society. The Society, in turn, has given power of attorney to the builder. The builder virtually has two roles – one as developer and the other as power of attorney holder of the owner. Both are closely interlinked and inextricably mixed with each other. Therefore, though normally we would have accepted the contention that under Section 13(2) action can only be taken against the owner, in the present case, we are unable to accept this contention in its totality.

We may point out that even the SRA, in its order, has itself noted that since the Society is the owner of the plot of land, it is empowered and within its right to terminate the agreement executed with the said developer for breaches committed by the developer. It has, however, held that a private dispute between the Society and the developer cannot prevent the SRA from discharging its obligations. The SRA agreed with the submission made by the Society that Susme had not completed the project within time. It has taken action under Section 13(2) of the Slum Act. The action taken 44 by the SRA is to remove Susme as developer which amounts to cancelling the letter of intent issued in favour of Susme.

48. Otherwise, there would be an anomalous situation where the Society would have terminated its contract with Susme but the letter of intent issued by the SRA would continue to hold the field and it would be entitled to develop the land. The Society approached the SRA, in fact, asking it to take action against Susme. Since the SRA is the authority which issued the letter of intent, it will definitely have the power to cancel the letter of intent.

49. We are of the considered view that in the peculiar facts and circumstances of the case where the slum dwellers are virtually the owners of the land as members of the owner Society, the SRA had the power under Section 13(2) of the Slum Act to issue the order dated 24.02.2012.

WHETHER THE SRA HAS ANY OTHER POWER TO REMOVE THE DEVELOPER:

50. Even if we were to assume that the SRA did not enjoy this power under Section 13(2) of the Slum Act, we are of the considered view that since it was the SRA which issued this letter of intent, it necessarily must have the power to cancel the same. The SRA can also derive this power under clauses (c) and (d) of sub-section (3) of Section 3A of the Slum Act, which read as under:

“3A. (1) Notwithstanding anything contained in the foregoing provision, the State Government may, by notification in the Official Gazette, appoint an authority to be called the Slum Rehabilitation Authority for such area or areas as may be specified in the notification; and different authorities may be appointed for different areas.

xxx xxx xxx

(3) The powers, duties and functions of the Slum Rehabilitation Authority shall be,-

xxx xxx xxx

(c) to get the Slum Rehabilitation Scheme implemented;

(d) to do all such other acts and things as may be necessary for achieving the objects of rehabilitation of slums.”

51. A bare reading of these provisions shows that in terms of clause (c) and (d) of sub-section (3) of Section 3A of the Slum Act, the SRA not only has the power, but it is duty bound to get the slum rehabilitation scheme implemented and to do all such other acts and things as will be necessary for achieving the object of rehabilitation of slums. In this case, the SRA was faced with a situation where the slum dwellers were suffering for more than 25 years and, therefore the action taken by SRA to remove Susme for the unjustified delay was totally justified.

52. A perusal of the various provisions of the Slum Act would show that normally in a case falling under the Slum Act, it is the owner of the land, whether it be the Government, a statutory authority or a private person, who will be interested in the development work. Normally, the occupiers will be encroachers of slum land.

Therefore, there will be a conflict of interest between the occupiers and the owner. The owner, in turn, will always engage a developer/builder to carry out the development work. In case the owner gives a power of attorney to the developer, as in the present case, the developer now has two identities –

(i) the power of attorney holder of the owner and

(ii) the developer. As far as the present case is concerned, the Society is made up of the members who are occupiers and this Society has given power of attorney to the developer-Susme. Therefore, the developer Susme is actually having a dual role of owner and developer. Both the letters of intent have been issued in favour of the Society, Susme and the architects of Susme. Susme could not have carried out the development work on the basis of its agreement with the Society. It needed the permission of the SRA. Therefore, SRA can obviously revoke such permission.

WHETHER IN THE NOTICE ISSUED UNDER SECTION 13(2) THE ISSUE OF 70% CONSENT WAS RAISED:

53. Shri Darius Khambata, learned senior counsel, has raised another contention that there is no allegation in the notice under Section 13(2) of the Slum Act that Susme has violated any provisions of the Act, Regulations or Scheme in not getting consent of 70% of the slum dwellers. We have gone through all the three notices and find that, in fact, in the 48 notices there is no specific allegation in this behalf. On the other hand, Shri Gopal Subramanium, learned senior counsel appearing for J.G. Developers, urges that in the last notice reference has been made to violation of DCR and this will obviously include violation of requirement of consent of 70% slum dwellers.

54. We are unable to accept the contention of Shri Gopal Subramanium, learned senior counsel. When a notice is issued to a party it must be clearly told what are the allegations which it must meet. The notice should be clear and unambiguous.

55. There was no allegation in the notice(s) that the right to develop granted in favour of Susme was liable to be revoked because it had not obtained consent of 70% of the slum dwellers. The reference to Regulation 33(10) also did not specifically raise the issue of 70% consent. Susme was never put to notice by the SRA that its right to develop the land may be cancelled because of not having consent of 70% slum dwellers. It was confined to the issue of delay. We answer this issue accordingly.

56. However, we are of the view that while considering the issue of delay, the SRA was justified in making reference to the various communications made by Susme and its architects seeking time to obtain consent of 70% slum dwellers and, therefore, while dealing with the issue of delay, we shall take into consideration all these matters.

WHETHER SUPPORT OF 70% OF THE SLUM DWELLERS IS MANDATORY AND WHETHER SLUM DWELLERS ARE ENTITLED TO WITHDRAW THEIR CONSENT:

57. It would be important to note that under DCR of 1991, which were initially applicable to this project, a Scheme for rehabilitation could be initiated where more than 70% of the eligible hutment dwellers on the land agreed to the redevelopment scheme by becoming members of a cooperative society. Thereafter, the Scheme was to be considered by the 50 authorities for implementation. Relevant portion of the DCR reads as follows:

“INITIATION OF THE SCHEME:-

Where more than 70% of the eligible hutment dwellers on the land agree to join the redevelopment scheme and become members of the cooperative society, the scheme should be considered for implementation.”

58. Under Development Control Regulations 33(10) of 1991, the essential requirement was that at least 70% of the slum dwellers had to form a society with a view to redevelop the slum area. In case 70% slum dwellers did not join, there could be no rehabilitation scheme. As far as the present case is concerned, it is not disputed that more than 70% slum dwellers had formed the respondent no. 3-Society. It is the admitted case of the parties that 800 out of 867 slum dwellers formed respondent no. 3-Society, which is 92.27%.

59. DCRs of 1991 were amended in 1997.

Clause 1.15 of Appendix (IV) of the amended DCR provided that 70% or more of eligible hutment dwellers in a slum must agree to join a rehabilitation scheme before it can be considered for approval. This clause reads as follows: “Where 70 per cent of more of the eligible hutmentdwellers in a slum or pavement in a viable stretch at one place agree to join a rehabilitation scheme, it may be considered for approval: Provided that nothing contained herein shall apply to Slum Rehabilitation Projects undertaken by the State Government or Public authority or as the case may be a Government Company as defined in section 617 of the Companies Act, 1956 and being owned and controlled by the State Government.”

Clause 1.16 of Appendix (IV) of this DCR reads as follows:

“In respect of those [eligible] hutment-dwellers on site who do not join the Project willingly the following steps shall be taken:-

(i) Provisions for all of them shall be made in the rehabilitation component of the scheme.

(ii) The details of the actual tenement that would be given to them by way of allotment by drawing lots for them on the same basis as for those who have joined the Project will be communicated to them in writing by the Managing Committee of the Co-operative Housing Society. [If it is registered or the developer and in case of dispute decision of the CEO/SRA shall be final and binding on all the parties concerned.

(iii) The transit tenement that would be allotted to them would also be indicated alongwith those who have joined the Project.

(iv) If they do not join the scheme within 15 days after the approval has been given to the Slum Rehabilitation Project on that site, then action under the relevant provisions including sections 33 and 38 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 as amended from time to time, shall be taken and their hutments will be removed, and it shall be ensured that no obstruction is caused to the scheme of the majority of persons who have joined the scheme willingly.”

60. It is thus obvious that under the amended DCR, not only 70% or more of the eligible hutment dwellers must first agree to join a rehabilitation scheme before it is taken up for consideration, but the owner/developer or cooperative society must also enter into individual agreements with each of these eligible hutment dwellers. We may also point out that the amended DCR in clause 1.16 of Appendix IV provides that even in respect of those eligible hutment dwellers who do not join the project willingly, the developer/builder has to make provision for accommodation of these hutment dwellers in the scheme.

They are entitled to the same benefits as the hutment dwellers who actually join the scheme. They are also entitled to similar transit accommodation as is allotted to those who willingly join the scheme. Further, the regulations also provided that if such hutment dwellers do not join the scheme and do not accept the transit accommodation or the completed premises, then they can be removed from their hutments and it will be ensured that these hutment dwellers do not cause any hindrance to the project.

61. Very lengthy arguments were addressed by learned counsel on the issue whether 70% support of the slum dwellers is mandatory. A large number of authorities have also been cited but, in our view, it is not necessary to refer to the various authorities because the bare provisions of law are sufficient to decide this issue. A bare reading of DCR of 1991 makes it absolutely clear that under the said DCR at least 70% of the slum dwellers/occupiers have to get together and form a Society for the purpose of slum re-development scheme.

Therefore, unless 70% slum dwellers agree to form a Society, the provisions of the Slum Act could not be invoked to frame an SRD scheme. Under the amended DCR of 1997, there is a change and the change is that now the developer/owner was required to enter into agreements with 70% of the slum dwellers and unless 70% of the slum dwellers agree, the slum rehabilitation scheme cannot be entertained. The magic figure remains at 70%. The idea behind it is that more than 2/3 of the occupiers must agree for the rehabilitation scheme.

62. As pointed out above, even if the remaining minority slum dwellers do not agree to be part of the scheme, the owner/developer is duty bound to make adequate arrangements for their rehabilitation under the scheme and they can join the scheme, and can take benefit of the scheme even at any later stage. We are, therefore, of the considered view that 70% consent of the occupiers is mandatory. As clarified above, we are not dealing with this aspect in relation to the order of the SRA because the notice under Section 13(2) did not raise this issue. However, we are clearly of the view that under the 1997 DCR the owner is required to produce individual agreements with 70% slum dwellers before the scheme can be taken up for consideration.

63. The circulars issued by the SRA, specially Circular dated 21.08.1997, 19.09.1998 and Circular No. 27 permit conversion of old approved SRD Scheme to new SRA Scheme under the provisions of Clause No.10.1 of Appendix IV of DCR. In the present case, the scheme was initiated under the 55 old DCR of 1991. There is no manner of doubt that the Society was formed by more than 90% of the occupiers.

64. The migration was done to the Scheme of 1997. There is no clear cut provision in the 1997 DCR as to how this migration has to be done. Since there is no clear cut provision, we may presume that while migrating, it was not necessary for Susme to have individual agreements with 70% of the slum dwellers.

We may, however, point out that it was Susme who applied for migration to the new Scheme, obviously because the new Scheme gave greater benefits to the developer. When migration was done, it was on the clear cut understanding that after the migration, the provisions of amended DCR would be applicable. When this application of the Society and Susme for conversion was taken up, it was noticed that one of the main objections was that there were no individual agreements with the slum dwellers.

65. Later, Susme submitted agreements of 450 of the eligible slum dwellers and stated in writing that the remaining to make up 70% would be submitted before start of Phase II of the construction. Fresh letter of intent dated 27.01.1998, in terms of the new DCR, was issued in favour of Susme and approved in accordance with Clause No.33(10) and Appendix IV of amended DCR subject to certain conditions. Clause 19 of the letter reads as follows: “That you shall submit the Agreements with the photographs of wife and husband on the agreements with all the eligible slum dwellers before issue of CC for sale bldg., or 3 months as agreed by developer whichever is earlier. And the name of the wife of the eligible occupier of hut shall be incorporated with joint holder of the tenements to be allotted in rehabilitation building.”

66. A bare perusal of this condition makes it clear that Susme was directed to submit agreements with all the eligible slum dwellers before commencement certificate for sale building was issued or within three months, as agreed by it. It has been urged by Shri Darius Khambata, learned senior counsel that, as per this condition, the agreements have to be submitted only at the stage when the commencement certificate is to be issued. It would also be important to note that even before the rehabilitation building numbers 5 and 6 were completed, Susme was granted TDR to the extent of 40% of the construction of building nos. 5 and 6, which they sold in the open market. The relevant portion of the note dated 16.02.1998 is extracted hereinbelow: “Further as per policy & DCR 33(10) it is necessary that agreements with more than 70% slum dwellers as per new scheme is required.

This was pointed out to CEO (SRA) during discussion, when CEO (SRA) instructed to submit agreements with 70% slum dwellers before second phase of T.D.R. Developers have informed that out of 869 slum dwellers, they have submitted 450 agreements to the office of S.R.A. (52%).” When Susme applied for permission to sell the TDR, the SRA ordered that 70% agreements should be submitted before Phase II TDR and, further, Susme was informed by the SRA that it has only submitted the agreements with 450 slum dwellers which comes to barely 52%.

The Bombay High Court, therefore, rightly recorded that Susme accepted the condition of 70% consent requirement when it accepted these conditions and sold the TDR. Thereafter, on 03.11.1998, occupation certificate was issued in favour of Susme with 58 regard to two rehabilitation buildings. Relevant portion of communication dated 03.11.1998 reads as under: “That the 70 percentage individual agreements with slum dwellers shall be submitted before further approval/CC.”

67. On 24.12.1998, the SRA permitted Susme to take 90% benefit of the TDR equivalent. Relevant portion of this note reads as follows: “As per policy it is necessary that agreements with minimum 70% slum dwellers for new scheme is required. It is also mentioned in the previous report sidelined ‘x’ at page 35. Architect has to submit 70% agreements before granting Phase-II TDR. At present 52 (sic 520) agreements (60%) out of 869 are submitted in this office as mentioned in the letter of Architect as at page…….However, these two Rehab Bldgs are physically occupied and list of documents rehoused is submitted at P-164 to 171 Phase II T.D.R. can be recommended if agreed. In view of above pending requirement if CEO (SRA) agreed TDR equivalent to 0.90 x 3720.90 = 3348.81 (1295 SQ.MT. released in Phase I + 2051.81 sq.mt. to be released & Phase II) sq. mt. Phase II TDR will be recommended to M.C.G.M. “

68. It was noted that Susme was required to submit agreements with 70% of the slum dwellers. On 07.07.1999 Susme, through its architects, sent a letter to respondent no. 1 forwarding 580 individual agreements of the members of the Society and also undertook to submit the remaining, to make 70% in due course. SRA pointed out in its letter dated 59 25.07.2001 addressed to Susme that out of the agreements submitted, only 372 were correct.

69. Here, it will be pertinent to note some other relevant facts. On 11.05.1999, some slum dwellers filed Writ Petition No. 1301 of 1999, challenging the letter of intent dated 27.01.1998 in favour of Susme on various counts including the ground that Susme had failed to obtain consent of 70% or more of the eligible slum dwellers. This petition was dismissed on 13.12.1999 and we have quoted the relevant portion of the Bombay High Court in the earlier part of the judgment. According to Susme, in view of this judgment, it was not required to obtain 70% consent of the slum dwellers. We do not think this is what was said by the High Court. We may note that the main contention by the appellant before the High Court was that the consent of 70% of the slum dwellers was not required under the 1991 Scheme.

The High Court held, and rightly so, that under the 1991 DCR what was required was that 70% of the slum dwellers joined the Society, which was interested in the rehabilitation of slum dwellers 60 and there was no requirement that there should be consent from 70% slum dwellers. The High Court did not discuss at all, the issue whether 70% consent was required under the 1997 Scheme. This judgment will have no bearing on the present case.

70. As we have already indicated above, in a migration from 1991 Scheme to 1997 Scheme, obviously 70% individual agreements cannot be obtained prior to submission of the Scheme. However, while granting migration, the SRA can lay down conditions and such conditions can also be laid down during the course of the Scheme. From the facts narrated above it is more than amply clear that the SRA envisaged, and Susme clearly understood, that it had to obtain consent of 70% of the slum dwellers. Even in the resolutions of the Society authorizing Susme to take up the development work entered after DCRs were amended it was clearly mentioned that amended Regulation 33(10) would govern the agreements. Susme cannot now say that it is not governed by the amended regulations. Even the letters issued by the architects of Susme clearly indicate that they would make up the balance to achieve 70% agreements.

The main dispute is by when this should have been done. Initially, time was given till commencement certificate of the sale building was issued. This was a meaningless condition because if this condition was to be applied after the rehabilitation buildings had been built, then having the consent of the slum dwellers would be an exercise in futility because by then they would have been thrown out of their dwellings. We can, at best, understand this to mean commencement of the rehabilitation buildings. The slum dwellers are interested with the rehabilitation buildings and not with the free sale buildings. Later on, when applying for permission to trade their development rights, Susme clearly understood and undertook that it would furnish the consent forms of 70% of the slum dwellers.

The architects of Susme, in fact, deposited 580 individual agreements but out of these, only 372 were found to be correct. Thereafter, Susme took a U-turn and, relying upon the judgment of the Bombay High Court in CWP No.1301 of 1999, took a stand that it was not required to submit agreements with 70% slum dwellers. This stand was not legally tenable. Susme cannot be permitted to back out of its commitments. The agreements with 70% slum dwellers should have been provided within a reasonable time and, though almost 20 years have elapsed since the second letter of intent was granted in favour of Susme, it has till date failed to submit such agreements. We may again reiterate that we are not dealing with this issue for the purpose of removing Susme but only for the purpose of showing that Susme delayed the project because it failed to get consent from 70% of the occupiers.

WHETHER SUSME DELAYED THE CONSTRUCTION OF THE SCHEME, AND IS, THEREFORE, NOT ENTITLED TO ANY RELIEF:

71. With regard to the issue whether the appellant is responsible for the delay in implementation of the Scheme, at the outset, we may note, that both the SRA and the High Court have dealt with this issue in detail and come to a concurrent finding of fact that Susme was responsible for the delay in implementation of the Scheme. Since this is a finding of fact and dealt with in detail by the High Court, we are not required to examine this contention in detail.

However, at the insistence of the learned senior counsel for Susme we have gone through the voluminous record. From the facts which are set out in this regard it is apparent that Susme first entered into an agreement with the Society on 27.02.1986 committing to complete the project in 5 years. Unfortunately, from 1986 to 1991, nothing was done and the only excuse is that some public interest litigation was pending.

On 25.03.1991, the DCRs were brought into force. On 09.10.1992, the appellant obtained permission for development of the property on certain conditions. It would be important to note that in the letter of 09.10.1992, while granting permission, it was stated that the developer should produce agreement of all the existing occupiers within six months and the development work is to be completed within two years, though the time could be extended for genuine reasons. Admittedly, no work was done during this period also. On 05.04.1995, letter of intent was issued in favour of Susme. In this letter also, there was a stipulation that Susme should produce the agreement with all the slum dwellers.

Thereafter, Susme entered into a fresh agreement with the Society. During this period of 9 long years, not an inch of construction was raised nor any portion of the property developed. Thereafter, in a meeting of General Body of the Society held on 12.11.1995, a resolution was passed that each slum dweller be provided 225 sq. ft. carpet area. This was accepted by Susme and crystallized in the agreement dated 07.01.1998. Between 15.01.1996 to 01.02.1996 Susme obtained ‘intimations of disapproval’ which, in fact, are sanctions for construction for rehabilitation buildings and started construction of two rehabilitation buildings nos. 5 and 6.

Susme’s proposal for conversion of SRD Scheme to SRA Scheme was approved in January, 1998 and fresh letter of intent was issued in favour of Susme on 27.01.1998. During this period, two rehabilitation buildings were constructed but nothing further was done. There is virtually no explanation as to why the remaining rehabilitation buildings were not constructed during this period except to 65 state that fresh plans were never approved.

It is more than obvious from the facts narrated above that Susme never earnestly pursued the authorities for approval of the plans and the reason is not far to seek – the reason being Susme did not have consent/agreements of 70% slum dwellers. It is more than obvious that Susme was buying time on one excuse or the other. On 18.01.2000, the SRA called upon the appellant to submit revised plans in respect of rehabilitation buildings within 10 days of the receipt of the letter. In reply thereto, the architects of Susme sent a letter on 27.01.2000 expressing their intention to start Phase II of the project but, at the same time, sought waiver of the requirement of obtaining 70% consent from the slum dwellers.

This clearly shows that Susme was using this excuse to delay the construction. On 05.01.2001, Susme addressed a letter to the SRA praying that the plan submitted in 1997 be approved. Thereafter, the SRA did not consider Susme’s proposal since, according to the SRA, the proposal was affected by the Coastal Regulations Zone (CRZ) Notification.

72. On 07.07.2001, Susme and the Society filed Writ Petition No. 2269 of 2001, in the Bombay High Court seeking removal of the remarks which indicated that part of the property of the Society was being affected by the CRZ Notification. A perusal of the writ petition and the other documents clearly shows that the entire property was not affected by the CRZ Notification, but only a part thereof. On 07.08.2002, in the petition filed by Susme and the Society, the Bombay High Court passed an order, relevant portion of which reads as follows:

“Prima facie, having perused the affidavit of Dr. Munshil Gautam filed before this Court on 24th June, 2002 and the documents annexed thereto it does appear that the property in question is affected by CRZ regulations. Respondent No. 2 and 3 have already placed Coastal Zone remark which is of course impugned in the present petition but until the petitioners are granted relief as prayed, the petitioners cannot raise any construction in the area which is covered by CRZ regulation. We accordingly observe that during the pendency of petition the petitioners shall not raise any construction in the property in question which is affected by CRZ regulation.”

73. It is apparent from the aforesaid order that stay was granted not to raise construction in the area which is covered by the CRZ Notification. No material has been brought on 67 record to show that the entire plot was covered by the CRZ Notification and it is amply clear that only a portion of the plot was covered by the CRZ Notification and nothing prevented Susme from raising construction on that portion of the land which was not affected by the CRZ Notification. On 09.05.2005, Susme’s architects sought approval of plans for transit accommodation.

This permission was granted on 18.08.2005, but a condition was laid down that 70% agreements must be submitted before the existing structures are demolished. On 14.03.2006, the SRA issued notice to Susme to stop work on various grounds including nonsubmission of demarcation from the competent authority permitting the transit camp to be set up. Thereafter, on 05.09.2006, Susme and the Society entered into another agreement and on 03.04.2008, respondent no. 1 revoked the order dated 29.05.2006, after Susme obtained permission from the State Government allowing the transit camps to remain.

It is apparent that sometime in the year 2005, it was clarified by the concerned authorities that Susme’s construction was not affected by the CRZ Notification. It is 68 obvious that only a portion of the land was affected by the CRZ Notification and nothing prevented Susme from constructing the buildings which were to be constructed on land not falling within the CRZ Notification. However for reasons known only to Susme, it withdrew the Writ Petition No.2269 of 2001 only on 07.04.2008.

It was only thereafter that respondent no. 3-Society passed a resolution on 29.03.2009, terminating the development agreement with Susme. Even after that, the SRA on 15.06.2009 issued a letter that the Society’s request for change of developer need not be considered. On 14.09.2009, the Society entered into agreement with respondent no. 4 – J.G. Developers Pvt. Ltd.. Thereafter, civil litigation started. It has also been urged on behalf of Susme that, in the meantime, a one man Commission was constituted and due to the constitution of this Commission, work was affected.

74. After going through all the material placed on record, we are clearly of the view that the finding given by the SRA that the appellant was responsible for the delay, is a finding based on appreciation of material on record. It cannot be said to be a perverse finding. It is a finding of fact and, therefore, the Bombay High Court was justified in coming to the conclusion that it could not set aside this finding of fact in writ jurisdiction.

We may, however, add that since lengthy arguments were addressed, we have ourselves gone through the various documents and though there may have been a few stop orders and a few occasions when Susme may not have been able to raise the construction but, by and large, Susme was itself guilty of delaying the construction for no reason at all. We, therefore, hold that Susme was rightly held responsible for the delay in implementation of the rehabilitation scheme and, as such, we find no error in the impugned order.

WHETHER SUSME IS ENTITLED TO CONTINUE WITH THE SCHEME:

75. With regard to the issue whether the appellant is entitled to continue with the Scheme; in view of the findings given above, we are clearly of the view that Susme is not entitled to 70 continue with the rehabilitation Scheme on account of the fact that it has been responsible for the delay in completion of the project for an inordinately long time. Susme has not been able to explain the delay. We are dealing with slum dwellers and Susme cannot take the benefit of technical points to defeat the rights of the slum dwellers.

The claim of Susme that it had the support of 70% slum dwellers, was contested before Justice Srikrishna and his findings clearly reveal that Susme does not have the support of 70% of the slum dwellers. We are of the view, that since the notice by the SRA to Susme did not make any specific allegation with regard to Susme not having 70% consent, that portion of the order of the SRA, setting aside the right to develop the land on the ground of lack of 70% consent, may have been beyond the scope of the notice. However, this issue was argued before the HPC and the High Court and on rival claims being made, this Court vide order dated 27.03.2015, referred this dispute to Justice Srikrishna, who has submitted his report.

76. In writ proceedings, the petitioner must show that both in law and in equity it is entitled to relief. In this case, both equity and law are against Susme. It has dealt with slum dwellers in a highly inequitable manner. The law and the conditions of the letter of intent as well as the conditions imposed in the various letters issued by the SRA clearly required Susme to produce agreements with at least 70% of the slum dwellers. This, Susme has miserably failed to do.

We may also add that though Susme may have remained the same entity in name, there have been, at least, three changes in the promoters of Susme and these transfers of shareholdings obviously must have been done for consideration. It is more than obvious that Susme, as a legal entity, was treating the slum dwellers only as a means of making money and, therefore, we are clearly of the view that Susme is not entitled to any relief.

IN CASE SUSME IS NOT ENTITLED TO CONTINUE WITH THE SCHEME WHETHER RESPONDENT NO. 4 J.G. DEVELOPERS IS ENTITLED TO CONTINUE WITH THE REHABILITATION SCHEME:

77. The next issue is whether J.G. Developers is entitled to any relief and can be permitted to continue with the rehabilitation scheme. In this behalf, we may note that the conduct of J.G. Developers is not above board. It is more than obvious that when respondent no. 3-Society entered into a development agreement with respondent no. 4, the members were given a false hope and dream that the size of their flats would go up.

78. Under the terms of this agreement, J.G. Developers agreed to provide permanent alternative accommodation of 344 sq. ft./419 sq. ft. carpet area to the slum dwellers. J.G. Developers also entered into individual agreements and under these agreements, it agreed to provide 344 sq. ft./419 sq. ft. carpet area to some residents. It is obvious that a false promise was held out by J.G. Developers that the carpet area of the flat would be increased from 269 sq. ft. to 344 sq. ft./419 sq. ft.. Obviously, the slum dwellers, who had been waiting for 23 long years for a flat admeasuring 269 sq. ft. would happily accept the offer of a flat of 344/419 sq. ft..

79. From the communications addressed by the SRA, it is obvious that J.G. Developers was legally not entitled to make this offer. It is submitted by Shri Gopal Subramanium, learned senior counsel that J.G. Developers was willing to sacrifice its free sale area to give a larger flat. However, he has failed to submit even one document to show that the SRA had agreed to this proposal of the J.G. Developers.

In fact, the communication sent by SRA clearly shows that the proposal was not accepted. It is, therefore, obvious that J.G. Developers had hoodwinked the members of the Society in entering into an agreement with it by holding out a false promise that they would be given much larger flats. As such, we are unable to accept the request of respondent no. 4- M/s. J.G. Developers, to be permitted to continue with the project.

We may also note that the Society has terminated its agreement with the J.G. Developers. We are not going into the question whether this has been done rightly or wrongly, but the fact is that the agreement stands terminated. We may also note that in the voting conducted by Justice Srikrishna, J.G. Developers failed to get the consent of 70% slum dwellers and, in fact, it has got less than 1/2 of the votes, as compared to Susme, and its support is even less than 30%.

80. It was urged before us that agreements once entered into and the consent once given, cannot be withdrawn. We are totally in agreement with the same. However, if the consent is obtained by misrepresentation of facts, then that is no consent. Now, when the position stands clarified that the slum dwellers would get flats of 269 sq. ft. area only, J.G. Developers has failed to get support of even 30% of the slum dwellers.

81. In view of the above discussion, we are clearly of the view that J.G. Developers is not entitled to continue with the project and is not entitled to any relief.

LAW LAID DOWN BY THE BOMBAY HIGH COURT:

82. Our attention was drawn to various judgments of the Bombay High Court that consent once given by the slum dwellers should not be permitted to be withdrawn. It was also brought to our notice that the Bombay High Court has consistently held that voting inter se developers should not be done. It has been the consistent view of the Bombay High Court that in case voting is done, then this will lead to developers trying to buy out the slum dwellers and then no rehabilitation scheme would attain fruition.

We totally agree with the aforesaid views of the Bombay High Court. We must remember that slum dwellers normally belong to the poorest section of the society. They can be tempted to change their mind. In the present case itself, the slum dwellers shifted from Susme to J.G. Developers for two reasons –

(i) Susme had delayed the project and (ii) J.G. Developers made a promise that it would give a flat of 344 sq. ft./419 sq. ft. area, which promise was obviously a false promise. The view of the Bombay High Court that consent once given should not be permitted to be withdrawn, is absolutely the right view. Otherwise, a person may give consent one day, withdraw it the second day and review the consent the third day, leaving the Scheme in a perpetual state of flux. For the aforesaid reasons, we agree with the Bombay High Court that there should be no inter se bidding between the builders.

The proper course is that the scheme of the developer who is the first choice, should be placed before the slum dwellers and if it gets 70% votes, then the Scheme can be considered, but if it does not get 70% consent, then obviously, the second developer can be considered. However, competitive bidding should not be done because that can lead to a very unholy practice of developers trying to buy out the slum dwellers, which is also not in the interest of the rehabilitation scheme.

83. As far as the present case is concerned, this Court while passing the order dated 27.03.2015, made a departure because of the peculiar facts of this case. The present case because of its own unique facts cannot be treated as a precedent in other cases with regard to action taken in this case.

CONCLUSION:

84. In view of the above discussion, we arrive at the following conclusions:

1. That the order dated 27.03.2015 was passed in exercise of jurisdiction vested in this Court under Article 142 of the Constitution of India and is an order binding on the parties;

2. That vide order dated 27.03.2015, this Court wanted Justice B.N.Srikrishna to find out whether Susme or J.G. Developers had the consent of 70% slum dwellers;

3. That, as a result of the Report submitted by Justice B.N. Srikrishna, both Susme and J.G. Developers have failed to show that they enjoyed support of the 70% of the slum dwellers;

4. That, in the peculiar facts and circumstances of this case, where the owners and occupiers are virtually  one, the SRA had the jurisdiction to invoke the provisions of Section 13(2) of the Slum Act to revoke and set aside the right to develop and cancel the letter of intent granted in favour of Susme. Even if it be assumed that Section 13(2) is not applicable, then the SRA could have exercised this power under Section 3A (3)(c) and (d) of Slum Act.

5. That the notice issued by the SRA to Susme was only on the ground of delay and the issue of obtaining 70% consent was not specifically raised in the notice. Consequently, the order dated 24.02.2012 passed by the SRA in so far as it rejects the case of Susme for lack of 70% consent is beyond the terms of the notice. Therefore, this part of the judgment of the Bombay High Court, holding that Susme was aware about this allegation, is not accepted and is set aside;

6. That, Susme was responsible for the delay in implementation of the Scheme and construction of the buildings and, therefore, the SRA was justified in setting aside the appointment of Susme as developer 79 and impliedly cancelling the letter of intent issued in its favour vide order dated 24.02.2012;

7. That, Susme has failed to show that it has the consent/agreements of 70% of the slum dwellers even today and, therefore, is not entitled to any relief from this Court; and

8. That J.G. Developers obtained the consent of the members of the Society by holding out a false promise of a larger flat and, therefore, the agreements entered into by J.G. Developers with the slum dwellers are legally unconscionable and not enforceable and, as such, J.G. Developers is also not entitled to continue with the Scheme.

RELIEF:

85. This, as pointed out earlier, is a very unusual case. We have held that both the contesting developers are not entitled to any relief. It is our duty to ensure that these owners who also happen to be slum dwellers do not live in sub-human conditions for eternity.

86. We are not only disappointed with the conduct of Susme, but also with the conduct of those persons who were the office-bearers of the Society whichever faction they may belong to. It is more than obvious that the two rival developers and the office-bearers of the Society were playing with the lives of large number of slum dwellers. We are not going into this issue in detail but, if we were to carefully examine the various agreements entered into by Susme with the Society, we find that though the members may have been entitled to larger flat in each subsequent agreement but, in fact, it was the builder, who was the biggest gainer as the advantage of higher FSI was cornered by the builder.

Only a small portion of this advantage was being transferred to the slum dwellers and a large portion was being retained by the builder. Another important aspect is that, in this case, it is the occupiers who, through the Society, are also the owners of the land. In our view, in addition to the flats which they would be entitled to as slum dwellers or occupiers or encroachers of land, they should have been given some benefits as owners of the land.

When a slum, owned by any authority or person, is handed over to the developer, in addition to rehabilitating the slum dwellers, the developer also has to compensate the owner. We see no reason why, in the present case, the slum dwellers, who are the owners, should also not be given some adequate compensation for the land which they own. It is these 800 plus slum dwellers, who own this 23018.50 sq. mtrs. of land, which would be valuing thousands of crores of rupees and, therefore, we see no reason why the slum dwellers, who also happen to be the owners of the land, should also not be compensated for the price of the land.

87. This is a case where the earlier Bench of this Court had invoked its power under Article 142 of the Constitution of India and we also feel that it is a fit case for invocation of this Court’s jurisdiction under Article 142 of the Constitution of India. Hence, in exercise of this Court’s power under Article 142 of the Constitution of India, we issue the following directions/orders for doing complete justice:

1. That the SRA shall within three weeks of the receipt of this order, invite letters of interest from renowned builders/developers, who have the capacity and experience to take up such a large project by issuing advertisements in not less than three newspapers having wide circulation in Mumbai, one each in English, Hindi and Marathi;

2. The advertisement may be brief but all necessary details must be incorporated in the advertisement. The details of the project including a copy of this judgment should be made available on the website of the SRA;

3. After the letters of interest are submitted, the SRA shall consider which is the best offer and while considering the best offer, it shall ensure that the terms offered to the occupiers are in no manner disadvantageous to them when compared to the last offer made by Susme in regard to the area of flat offered, the nature of construction and other facilities available on the site. The SRA must, while evaluating the proposals, take into consideration the past record of the party/person expressing interest: it shall also take into consideration the financial viability of such party/person and, therefore, it may ask such party/person to submit all the documents to support their financial viability. In case of any doubt, the SRA can move appropriate application before this Court;

4. The persons who express interest must be willing to give an assurance that they will submit plans within one month of the approval of their proposal and all the concerned authorities must, within 15 days thereafter, raise objections, if any, giving the successful bidder a chance to remove the objections, if any, within one month thereafter;

5. Thereafter, the concerned authorities should ensure that the plans are approved and sanctions granted latest within two months of the submission of the original plans. The successful developer should undertake to complete the rehabilitation of part of the project to rehabilitate all eligible occupiers/slum dwellers within a period of two years from the date of sanction of the plan. The successful bidder must give a bank guarantee of Rs. 200,00,00,000/- (Rupees Two Hundred crores only) to ensure that it does not violate the terms and conditions of the rehabilitation scheme.

In case of violation of the terms and conditions of the rehabilitation scheme without reasonable cause, the SRA will be entitled to invoke the bank guarantee, after giving notice to the developer;

6. Keeping in view the fact that the slum dwellers are also the owners, the developers may also indicate what benefit they will give to the members of the Society either in cash or in kind by means of giving additional built up area out of their own free sale area to such members of the Society;

7. The SRA shall monitor the progress of the Scheme to ensure that it is completed within the time granted by this Court;

8. No Court or authority shall pass any order which will in any manner affect the implementation of the directions/orders issued by us;

9. The Society, its members, the SRA and all concerned will render complete assistance to the builder/developer, who is awarded the project by the SRA; and

10. That all pending litigation shall be disposed of in view of the aforesaid orders passed by us and shall be disposed of by the Court(s) accordingly.

88. We may also point out that vide order dated 12.10.2017 this Court directed that elections to respondent no. 3-Society be conducted on or before 31.12.2017. These elections were held on 17.12.2017 and a new Managing Committee was constituted. This Managing Committee held its first meeting on 31.12.2017 and has filed an affidavit on 03.01.2018 praying that the mandate recorded in the Report of Justice B.N. Srikrishna be implemented. It has also referred to the proposed amendment to the DCR whereby the requirement for consent is being reduced from 70% to 50%. We have taken this affidavit on record. It does not in any manner affect the view which we have taken.

89. Pending application(s), if any, stand(s) disposed of.

90. The SRA to file status report by 31.03.2018. List on 09.04.2018.

(Madan B. Lokur)

 (Deepak Gupta)

New Delhi

January 04, 2018