Guru @ Gurubaran & Ors. Vs. State represented by Inspector of Police 27/09/2019

Life sentenced converted-The The accused can only be held guilty of having committed the offence under Section 324 IPC. He has already undergone imprisonment for around 11 years and, therefore, his conviction under Section 302 IPC is altered to Section 324 IPC and the sentence is reduced to the period of incarceration already undergone.

ACTS: Section 302, Indian Penal Code

SUPREME COURT OF INDIA

Guru @ Gurubaran & Ors. Vs. State represented by Inspector of Police

[Criminal Appeal No. 1893 of 2010]

Deepak Gupta, J.

1. This appeal is filed by Accused Nos. 1, 2, 3, 5 and 9 against the judgment of the High Court whereby Guru @ Gurubaran (A1) and Durai @ Durairajan (A2) have been convicted under Section 302, Indian Penal Code (IPC) and sentenced to imprisonment for life and to pay a fine of Rs.1000/each with default sentence of 3 months rigorous imprisonment (RI). As far as Vettri @ Vetrivell (A3) is concerned, he was convicted under Section 324 IPC on two counts and sentenced to one year RI on each count and fine of Rs.1000/with default sentence of 3 months. Narayanan (A5) and Srinivasan (A9) along with other accused were convicted under Section 323 IPC and sentenced to undergo six months RI and pay fine of Rs.1000/each with default sentence of 3 months. All the sentences were to run concurrently.

2. The prosecution case is that Parasuraman (PW14), son of deceased Saroja and Munusamy Pillai (PW1), was in love with Uma, the younger sister of A1. They both got married and after the marriage, PW14 lived in his wife’s house. However, Saroja (deceased) did not approve of this. Thereafter, PW14 came back to his house. On 03.03.1998, it is alleged that Jayaraman (A4) assaulted Nagarajan (PW2), brother of Saroja and brotherinlaw of PW1. To settle the dispute, a Panchayat was called the next day. It is admitted that this Panchayat was called at the instance of A1. The Panchayat was to be conducted in the evening. However, since the Pradhan of the Panchayat was indisposed, the Panchayat could not be held.

Thereafter, PW2, his sister Saroja (deceased), his wife Rani (PW7), Murugan (PW13) and Naveen Kumar, son of PW2 and PW7 stood outside the house of PW2 talking amongst themselves. According to him, PW13 had come to the village because of the Panchayat. While they were standing there, A1 came armed with a sickle (Koduval), A2 armed with an Iron Pipe, A3 armed with a sickle (Koduval) and A4 to A9 carrying thick wooden staffs in their hands. It is alleged that A1 attacked deceased Saroja with a sickle on the front portion of her head and said that it was only because of her that the younger sister of A1 has to live separately from her husband. A2 gave a blow on the back of the neck of Saroja with an iron pipe.

The other accused are alleged to have attacked Saroja with wooden staffs in their hand. When the family members of Saroja tried to protect her, all the accused surrounded her and, as such, they could not protect her. According to the eyewitnesses, they were also attacked by the members of the aggressive party. The version of all the eyewitnesses is similar.

3. However, there are some discrepancies with regard to the manner in which the said incident took place. According to PW1, on the date of Panchayat, first a verbal altercation took place between the two sides and then the attack took place whereas, according to PW2 and some of the other eyewitnesses, the attack took place without any provocation. We are of the considered view that for the purpose of deciding this appeal, we can even presume that there was some verbal altercation between the two sides.

4. The occurrence is not denied. The main defence is that there was a free fight on both sides and that there is no evidence to show that there is prior meeting of minds. The accused had not been convicted under Section 34 or Section 149 IPC and, therefore, each individual accused can only be convicted for the injury attributed to that individual. Therefore, it becomes relevant to refer to the medical evidence of the autopsy surgeon Dr. Rajamani, Assistant Surgeon (PW3).

The injuries are as follows:

“1. An Antemortem red, oblique lacerated wound measuring 6cm x 1cm x 1cm, exposing the bones over the left frontal region of scalp, 1 cm away from the midline with bleeding and blood clots. On Exploring the wound, echymosis seen behind the scalp over the frontal, parietal, temporal and back of skull. There is a fracture of frontal bone measuring 5 cm in length, vertical, para sagittally and 1cm away from midline over the left side, extended to upwards to fronto parietal junction, and another fracture line which is adjacent to it and slightly oblique from the frontal bone to towards fronto parietal junction, 4cm x 1/8 on and on exposing the skull bones blood clots seen over the membranes of the leftcerebral hemisphere of brain on the frontal, parietal, temporal and occipital region, of the brain. Both fractures are involving inner and outer table of the skull.

2. An abrasions varying size from 3cm to 21/2cm x 1/4 cm with ½ cm different from each other, oblique, placed over middle 1/3 of right side neck.

3. An AM abrasion 21/2cm x 1/4 cm obliquely placed 1cm away from injury No.2 on right side of neck.

4. An AM swelling whole of the anterior and lateral side of right side neck. On exposing the injury No.2, 3, 4 minor blood clots under the skin of neck and congestion of sternomastoid muscle and blood clots seen in anterior and lateral side of right side neck.”

5. The doctor states that these injuries caused the death. The first injury is a lacerated wound and it is urged by Mr. S. Nagamuthu, learned senior counsel, that this injury could not have been caused by sickle (Koduval), which is a sharpedged weapon. A sickle is an instrument mainly meant for cutting grass and crops. The inner side is sharp but the outer side is blunt. While using it as an instrument of agriculture only, the sharp edge is used but while using it as a weapon of offence, more often than not, it will be the outer side which will be used to hit the victim. The doctor has opined that the injury could have been caused by a sickle which is MO1 and, therefore, the medical evidence fully corroborates the version of all the eyewitnesses.

6. It was next urged that the offence was not of murder but may amount to culpable homicide not amounting to murder. It has been urged that the case would fall within Exception 4 to Section 300 IPC, which reads as follows:

“Exception 4 – Culpable homicide is not murder if it is committed without premeditation in a sudden fight in the heat of passion upon a sudden quarrel and without the offender having taken undue advantage or acted in a cruel or unusual manner.”

7. We are of the view that the accused cannot take benefit of this Exception. It has come in evidence that all the accused persons came armed. Two were armed with sickles, one with an iron pipe and the other with wooden staffs. Even if it is assumed that they may not have come with the intention of killing, the fact that they were armed, clearly indicates that the occurrence did not take place in the heat of passion, upon a sudden quarrel. As pointed out above, both sides were coming to attend a Panchayat to settle a dispute. Where was the need to carry arms if the intention was only to settle a dispute? Even otherwise, we feel that Exception 4 is not applicable because the manner in which the blow was given right on the middle of the head, brings this case squarely within clause “Fourthly” of Section 300 IPC, which reads as follows:

“300. Murder –

xxx xxx xxx

Secondly xxx xxx xxx

Thirdly xxx xxx xxx

Fourthly If the person committing the act knows that it is so imminently dangerous that it must, in all probability, cause death or such bodily injury as is likely to cause death, and commits such act without any excuse for incurring the risk of causing death or such injury as aforesaid.”

8. A1 should have known that the act which he is performing, of hitting the deceased on the head with a sickle with such great force causing fracture of the skull, is so dangerous that it would have imminently caused death. Therefore, we find no reason to alter the sentence or conviction of Guru @ Gurubaran (A1).

9. However, as far as Durai @ Durairajan (A2) is concerned, since the High Court has held that neither Section 34 nor Section 149 IPC are applicable, each accused will only be responsible for his own acts and injuries. In this behalf, reference was made to a judgment of this Court in the case of Atmaram Zingaraji vs. State of Maharashtra[1 (1997) 7 SCC 41]. There is no appeal by the State. As far as A2 is concerned, he is alleged to have given a blow with an iron pipe on the back of the neck of the deceased. This resulted in injury numbers 2 and 3.

They are merely abrasions and could not have caused death. Therefore, the accused can only be held guilty of having committed the offence under Section 324 IPC. He has already undergone imprisonment for around 11 years and, therefore, his conviction under Section 302 IPC is altered to Section 324 IPC and the sentence is reduced to the period of incarceration already undergone. As far as Vettri @ Vetrivell (A3), Narayanan (A5) and Srinivasan (A9) are concerned, we find no reason to interfere with the judgment of the High Court as each has been held guilty for the offence which they have committed.

10. In view of the above, the appeal of Accused Nos. 1, 3, 5 and 9 is dismissed and the appeal of Accused No. 2 is allowed and his conviction is altered from offence punishable under Section 302 IPC to offence punishable under Section 324 IPC and the sentence is reduced to the period of incarceration already undergone.

11. Accused Appellant Nos.1 & 2 were granted bail vide this Court’s order dated 08.01.2018. In view of the above, bail bond of Appellant No.1 (A1) is cancelled. He shall be taken into custody forthwith to serve remaining period of the sentence and bail bond of Appellant No.2 (A2) is discharged. Pending application(s), if any, stand(s) disposed of.

J. (Deepak Gupta)

J. (Aniruddha Bose)

New Delhi

September 27, 2019


Md. Abrar Vs. Meghalaya Board of Wakf & ANR-26/09/2019

Mutawalliship of the waqf-In order to establish a claim of hereditary succession to mutawalliship, the intention of the waqif, as manifested either through the directions given in the waqf deed or the creation of a custom, is of paramount importance.

We are of the considered opinion that this principle also applies in determining which class of heirs is included or excluded from mutawalliship. Therefore it has to be seen whether in the present case, having regard to the terms of the waqf deed, the waqif intended to exclude his descendants through the female line from mutawalliship of the waqf.

ACTS: Waqfs Act, 1995

SUPREME COURT OF INDIA

Md. Abrar Vs. Meghalaya Board of Wakf & ANR.

[Civil Appeal No. 4025 of 2010]

BENCH: J. (N.V. Ramana) J. (Mohan M. Shantanagoudar) J. (Ajay Rastogi)

MOHAN M. SHANTANAGOUDAR, J.

1. This appeal arises out of judgment dated 28.01.2009 of the Shillong Bench of the Gauhati High Court. The High Court by the impugned judgment dismissed the appellant’s revision petition and confirmed the order of the Wakf Tribunal dated 19.3.2008 dismissing the appellant’s application seeking appointment as joint mutawalli, along with Respondent No.2, of his predecessor’s waqf property.

2. The facts giving rise to this appeal are as follows: One Haji Elahi Baksh (‘waqif’), who was resident of Shillong, executed a registered waqf deed dated 9.11.1936 dedicating properties belonging to himself, his son Md. Shafi and his soninlaw cum nephew Haji Kammu Mia to the waqf. The relevant clauses of the waqf deed are reproduced as follows:

“1. The settlor’s son Md Shafi and son in law Kammu Mia, son of late S.K. Gajnu, shall be joint Mutawallis during their lifetime.

2. On the death of either of the joint mutawallis, the survivor shall be the sole Mutawalli for the time being and shall have power to nominate his successor from the family line of the settlor.

3. Each successive Mutawallis thereafter shall have the right to nominate his successor from the same source.

5. Should a Mutawalli die without nominating a successor, the senior most member among the lineal descendants of the said Md Shafi and Kammu Mia, if otherwise competent shall be entitled to hold the office of Mutawalli.” Md. Shafi died on 20.12.1960, whereupon the surviving mutawalli among the joint mutawallis, namely Haji Kammu Mia became the sole mutawalli. However Kammu Mia did not appoint the successor to the deceased Md. Shafi. Hence Respondent No. 2 in the present appeal, Md. Sulaiman, who is the son of the late Md. Shafi, approached the Assam Wakf Board, which had territorial jurisdiction at that time, seeking appointment as joint mutawalli with Kammu Mia.

The Assam Wakf Board, by order dated 4.3.1973, found that under Clause 2 of the waqf deed dated 9.11.1936 (supra), the surviving mutawalli from amongst the joint mutawallis was required to nominate the successor of the deceased mutawalli from the waqif’s family line. Since the surviving mutawalli Kammu Mia had failed to do so, the Wakf Board, taking note of the fact that Respondent No. 2 was the son of the deceased mutawalli, appointed him as joint mutawalli along with Kammu Mia. It is relevant to note that this order was not challenged by any of the parties herein.

Thereafter, Respondent No. 2 Md. Sulaiman acted as the joint mutawalli along with Kammu Mia, till Kammu Mia’s death on 2.2.1980, upon which Md. Sulaiman became the sole mutawalli. However, this time it was Md. Sulaiman who failed to nominate a successor to the deceased Kammu Mia. This was even though Kammu Mia during his lifetime; by deed dated 19.2.1973 had nominated his daughter’s son Md. Taiyab as his successor, which fact was also communicated to the Assam Wakf Board. In the meantime a separate Wakf Board, i.e. Respondent No.1 was constituted for the State of Meghalaya.

Respondent No. 1 by order dated 7.2.1980 recognized Md. Sulaiman as the sole mutawalli. Aggrieved by the same, Md. Taiyab approached Respondent No. 1 seeking appointment as the sole mutawalli; however his application was dismissed on the ground that he does not belong to the waqif’s family line. His appeal against the order dated 7.2.1980 was dismissed by orders of the Assistant Deputy Commissioner and Additional Deputy Commissioner of Wakfs respectively. Further, the High Court dismissed Md. Taiyab’s suit against Respondent No. 1 due to lack of notice to the Wakf Board as required under Section 56 of the Wakfs Act, 1954.

3. Md. Taiyab again served notice on Respondent No. 1 in 2002, after coming into force of the Waqfs Act, 1995 (‘1995 Act’). The Wakf Tribunal by order dated 19.7.2006 relied upon Section 25 of the Indian Succession Act, 1925 to interpret the term ‘family line of the settlor’ as stated in the waqf deed. Section 25 of the Indian Succession Act provides as follows:

“25. Lineal consanguinity.-

(1) Lineal consanguinity is that which subsists between two persons, one of whom is descended in a direct line from the other, as between a man and his father, grandfather and greatgrandfather, and so upwards in the direct ascending line, or between a man and his son, grandson, greatgrandson and so downwards in direct descending line…” Hence the Wakf Tribunal concluded that since Md. Taiyab was Kammu Mia’s descendant through the female line, he could not be regarded as a direct lineal descendant, and hence was not eligible for appointment as mutawalli. Additionally, one Md. Zakaria, who was also Kammu Mia’s daughter’s son, was impleaded before the Tribunal in the same matter seeking appointment as joint mutawalli.

The Tribunal rejected Md. Zakaria’s claim as well, holding that it was the intent of the wakif that Md. Shafi and Kammu Mia would enjoy joint mutawalliship only during their lifetime. Such joint mutawalliship was to cease on the death of either of the joint mutawallis, and thereafter the surviving mutawalli and his successors would continue as the sole mutawalli. Md. Zakaria filed a revision petition against the Tribunal’s order dated 19.7.2006 under Section 83(9) of the 1995 Act whereas Md. Taiyab filed a writ petition challenging the same order. The High Court by common order dated 25.7.2007 in W.P. No. 184/2006 and C.R.(P) No. 26/2006 dismissed both petitions, affirming the Tribunal’s findings.

With respect to the issue of joint mutawalliship, the High Court found that the trust property included property of the deceased Kammu Mia. Hence the waqif would have definitely intended that one person from Kammu Mia’s family should be included in the management of the trust. Therefore Kammu Mia’s descendants would be entitled to be appointed as a joint mutawalli along with the descendants of Md. Shafi.

However, the Court simultaneously observed that while Part IV of the Indian Succession Act excludes applicability to Muslim persons, in the absence of any definition of lineal descendants in the 1995 Act or any authoritative pronouncement of Mohammedan law in this regard, the definition under Section 25 of the Indian Succession Act could be taken into consideration for interpreting the meaning of the term ‘family line’. Since Kammu Mia was not survived by any son, his descendants through the female line could not be considered for the office of joint mutawalliship.

Further, that allowing the same as a matter of law would lead to additional expansion in the list of claimants which would not be in the interest of administration of the trust property. This Court by order dated 7.9.2007 in SLP (C) No. 15494 of 2007 and by order dated 13.12.2007 in SLP (C) Nos. 2431624318 of 2007 declined to grant leave to appeal to Md. Zakaria and Respondent No. 1 Wakf Board respectively, though it observed that ‘Question of law, if any, is left open.’

4. In view of this Court’s observation, the appellant herein, Md. Abrar, who is the brother of Md. Zakaria and also a descendant of Kammu Mia through the female line, approached the Wakf Tribunal seeking appointment as a joint mutawalli. The Tribunal by order dated 19.3.2008 dismissed the appellant’s application on the ground that the High Court order dated 25.7.2007 had attained finality and hence the question of mutawalliship has been decided. The appellant filed a revision petition before the High Court challenging the Tribunal order dated 19.3.2008. The High Court, in substantial reliance upon the decision of the Calcutta High Court in Md. Eshaque v. Md. Amin, AIR 1948 Cal 312, held that while the founder’s female children may be considered as his successors for mutawalliship, the descendants of the founder’s daughters would not be considered as lineal descendants under Mohammedan law, “unless there is a special term in the wakf deed indicating an intention to the contrary” (emphasis supplied). Hence the appellant was excluded from consideration for mutawalliship.

5. The High Court further found that there was no provision in the waqf deed dated 9.11.1936 for the appointment of another joint mutawalli by the surviving mutawalli after the death of one of the original joint mutawallis. The concept of joint mutawalliship would cease to have any effect after the death of any of the original joint mutawallis. The surviving mutawalli is only empowered to nominate his successor. Further, that once a daughter gets married, she becomes a member of other families and her children cannot be the direct lineal descendants of her father. Hence, it is only after the direct lineal descendants of the waqif are exhausted that Kammu Mia’s descendants can be considered for appointment as mutawallis. The High Court also found that there was no custom or usage to the contrary supporting the appointment of joint mutawallis after the death of Md. Shafi and Kammu Mia.

Hence this appeal.

6. Heard both sides. It is relevant to note that Respondent No. 2 Md. Sulaiman, the present mutawalli of the waqf, has not appeared before this Court contesting the appellant’s case. Respondent No. 1, Meghalaya Wakf Board, is agreeable to appoint the appellant as a joint mutawalli along with Respondent No. 2. However, Respondent No. 1 has only sought a clarification in so far as the common order of the High Court dated 25.7.2007, in W.P. No. 184/2006 and C.R.(P) No. 26/2006, had found that the waqif had intended that Kammu Mia’s descendants should continue as one of the joint mutawallis. Whereas the High Court in the impugned judgment made a contradictory finding to the effect that the waqf deed dated 9.11.1936 provided for the cessation of joint mutawalliship upon the death of either of the original joint mutawallis.

7. Since this Court in SLP (C) No. 15494 of 2007 and SLP (C) Nos. 2431624318 of 2007 has declined leave to appeal against the High Court order dated 25.7.2007, we will not be interfering with the findings therein, but will limit our conclusions to the questions of law and fact raised in the present appeal. The two issues which arise for our consideration in the present appeal are: First, whether a person from the waqif’s family line could succeed to the vacant post of joint mutawalli after the death of any of the two original joint mutawallis? Second, if the first issue is answered in the affirmative, whether joint mutawalliship can be held by the appellant herein, though he is Kammu Mia’s daughter’s son?

8. With respect to the first issue, we may refer to the following observations of learned author Mulla in Principles of Mahomedan Law (21st edn., 2017, Prof. Iqbal Ali Khan ed.) (for short “Mulla”) on page 253, which were relied upon by the High Court in the impugned judgment:

“S 205A. Succession where two are more mutawallis are jointly appointed.

Where two or more mutawallis are appointed as joint mutawallis i.e., as joint holders of a single office, and there is no direction, express or implied, given by the waqif and where there is no evidence of custom supporting a usage to the contrary, the office of mutawalliship held jointly will pass on the death of one holder to the survivor or survivors… …A, B and C are appointed joint mutawallis of a waqf. There is no direction in the waqfnama with regard to what is to happen if one of them were to die and there is no evidence of custom. A dies, but before he dies he appoints X as a mutawalli to succeed him. X cannot act as mutawalli because on the death of A, the mutawalliship passes to B and C, and A has no power to appoint X as a mutawalli.”

(emphasis supplied)

The aforementioned illustration cited by Mulla is taken from the decision of the Privy Council in Haji Abdul Razaq v. Sheikh Ali Baksh, (194748) 75 IA 172. Abdul Razaq was referred to by the Calcutta High Court in its decision in Commissioner of Wakfs v. Asraful Alam Shani and another, AIR 1975 Cal 162, which was in turn relied upon by the High Court in the impugned judgment. Asraful Alam Shani (supra) was a case similar to the present case wherein two persons were appointed as joint mutawallis, and after the death of one, the surviving mutawalli claimed to be the sole mutawalli. The High Court upon consideration of the terms of the waqf deed in Asraful Alam Shani found that the intention of the waqifs was that upon the death of any one of them, the survivor shall be the sole mutawalli. Any person nominated by either of the mutawallis as their successor during their lifetime could only assume the office when both joint mutawallis died.

9. From the above discussion it can be said that ordinarily, upon the death of one of the joint mutawallis, the surviving mutawalli becomes the sole mutawalli of the waqf property. In a case where there are more than two joint mutawallis, after the death of one of the mutawallis, only the remaining mutawallis would be entitled to continue as joint mutawallis. Any successor nominated by the deceased mutawalli can only assume office after the death of the original mutawallis, unless there is an express or implied direction in the waqfnama to the contrary. Hence in the present case, it has to be seen what scheme of succession was laid down in the waqf deed dated 9.11.1936 (relevant portion quoted supra). Upon perusal of the terms of the waqf deed, we are of the considered opinion that the waqif intended that after the death of any of the original joint mutawallis, the survivor was required to nominate a person from the waqif’s family line to succeed the deceased.

It is crucial to note that Clause 2 of the waqf deed dated 9.11.1936 provides that upon the death of either of the joint mutawallis, the survivor shall be the sole mutawalli ‘for the time being.’

(emphasis supplied)

This differentiates the waqf deed from the present waqf deed in Asraful Alam Shani (supra) where it was simpliciter stated that upon the death of either of the joint mutawallis, the survivor shall become the sole mutawalli. The phrasing of the waqf deed dated 9.11.1936 indicates that the waqif intended that after the death of either of the mutawallis, the survivor shall continue as the sole mutawalli only for a temporary period. In the interim, the survivor is required to nominate a competent successor to the deceased mutawalli from the waqif’s family line, and thereafter, the said successor shall have the right to nominate his successor (i.e. successor’s successor) from the same source.

Further, having regard to the fact that the waqf was constituted of properties belonging to Md. Haji and Kammu Mia, it can be inferred that the waqif intended that the succeeding mutawalli should be nominated from the descendants of the deceased mutawalli. It is unreasonable that the waqif would have wanted the surviving mutawalli to continue as a sole mutawalli, and administer the properties of the deceased in exclusion of the family members of the deceased mutawalli, unless the family line of the deceased mutawalli was to be exhausted. Our interpretation of the waqf deed in the above terms is supported by the order of the Assam Wakf Board dated 4.3.1973 allowing Respondent No. 2’s claim to be appointed as joint mutawalli together with the deceased Kammu Mia.

The Wakf Board strongly condemned the deceased Kammu Mia for continuing as sole mutawalli and observed that this indicated a desire on his part to misappropriate the income of the waqf for his own family, to the exclusion of the other descendants of the waqif. The aforesaid order of the Wakf Board has not been challenged by the respondents in the present appeal at any point of time. We find it difficult to understand how it can lie to Respondent No. 2 to seek appointment as joint mutawalli after his father’s death as his father’s heir and deny the same right to the descendants of his erstwhile comutawalli Kammu Mia.

10. Therefore, what remains to be decided is whether the appellant can be construed as part of the ‘family line’ of the waqif Haji Elahi Baksh as required under Clause 2 of the waqf deed. It is relevant to note that the issue for consideration before us is not whether the waqif’s daughter or a female descendant can be the mutawalli, but whether the offspring of the daughter can be considered for mutawalliship. The High Court in the impugned judgment negatived this contention in reliance upon the decision of the Calcutta High Court in Md. Eshaque (supra). In Md. Eshaque, the waqif provided for the devolution of mutawalliship in the waqf deed as follows (relevant portion):

“Clause (a). -…the said office stall devolve till the passing of ages (i.e. for ever) and repetition of months, as God the merciful wills upon the offspring of my son (ba farzandani- farzandam) from generation to generation (Naslan baad naslin) womb after womb (batnam baad batnin)…

Clause (b).-But, whoever from among the male issue of my son and of the children (off spring) of my son, is learned and God fearing, and virtuous, and adorned with the ornament of truth and purity, and embellished with the qualities of fidelity and honesty and celebrated for, and qualified with laudable qualities and pleasing manners, shall be appointed to the office of the aforesaid ‘tawliat’.

Clause (d).-And, if from among the children of the Mutwalli, several persons are found to adorned and qualified with the aforesaid attributes, then the person who is seniormost in age among them be entitled to the ‘tawliat’, and, supposing they be equal in age, then one of them shall be entitled according to the advice of religions Musalmans and sober (i.e. pious) learned men, and so long as there exist male issue, the said office shall not be transferred to female issue.”

Clause (e).-“If by Divine decree the male issues become extinct, then it shall be transferred to the females, with the same aforesaid conditions as are applicable to the class of males and with the same…” (emphasis supplied)

In that case, the original mutawalli’s son died without any issue. The question which arose for consideration was whether the son of the mutawalli’s widowed daughter was competent to succeed as mutawalli. The High Court, upon extensive consideration of the opinions of Mohammedan jurists on this point, came to the conclusion that the Persian word ‘farzand’ used in the waqf deed (the Arabic synonym of which is ‘aulad’) is legally understood to include both sons and daughters in the male line, but exclude any descendants, of whatever gender, in the female line. Importantly, we find from a careful perusal of the decision, that the High Court in Md. Eshaque (supra) did not rule as a matter of law that mutawalliship can never devolve upon the descendants through the female line. In the same decision, the High Court noted that in an earlier decision of the Bombay High Court in Sheikh Karimodin v. Nawab Mir Sayad Alam Khan, 10 Bom. 119., it was held that the expression ‘ahfad’, if used in the waqf deed, would be wide enough to cover descendants of the daughter as well. The clauses of the waqf deed in Md. Eshaque also expressly indicated that preference was to be given to the male issue over the female issue.

11. In an earlier decision of the Calcutta High Court in Wares Ali v. Sheikh Shamsuddin, (1936) 63 Cal. L.J. 573, the High Court found that since the waqif herself had appointed the son of a daughter as mutawalli, the expression ‘legal heirs’ in the waqfnama must be taken to include lineal descendants in both the male and female line. In Syed Mahomed Ghouse v. Sayabarin Sahib (deceased), AIR 1935 Mad 638, similar terms ‘batnam bad batnam’ and ‘naslan bad naslan’ were used in the waqf deed with regard to succession to mutawalliship. The Madras High Court held, referring to the decision in Sheikh Karimodin (supra) as follows:

“The primary meaning of the words ‘Batnam bad batnam’ seems to be generation after generation: see Wilson’s Glossary and Durga Prasad’s Arabic dictionary. It is contended by Mr. Rangachari, also by the Advocate for the sixth defendant, that these words exclude the cognate descendants. It seems to be so in the case of private grants. In the case of documents relating to private property, the words have now become words of limitation and as such they indicate absolute estate and in the case of absolute estate agnate heirs being residuaries exclude cognates under the Mahomedan law.

But where these words occur in documents laying down the line of devolution for a religious office, such as the managership of a wakf, the above said consequence does not necessarily follow. There the words generation after generation must be taken literally and we do not see any reason why at least in the case of descendants of a person claiming through females they should be excluded. It has been contended relying on Abdul Ganne Kasam v. Hussen Miya Rahimtula and Shah Ahmud Hossain v. Shah Mohiooddeen Ahmad that descendants through females should not be regarded as members of the family and must be regarded as strangers.

The word ‘family’ itself is ambiguous. In this decision it is used in the sense of agnate heirs. In a larger sense a man’s descendants through females are equally members of his family and certainly under Muhammadan Law are heirs though they are remote heirs and they can come in by the use of the appropriate words, for example, by the use of the word “Ahfad,” as in Shekh Karimodin v . Nawab Mir Sayad Alam Khan. The passages relied on in the various text books no more than summarise the effect of these decisions and do not help us further. The word “Naslan” certainly includes all descendants: vide Tyabji’s Muhammadan Law, S. 508 and “Naslan bad Naslan” indicates all descendants;

That is how it was translated in Ali Muqtada Khan v. Abdul Hamid Khan. On the whole therefore we come to the conclusion that the words ‘batnam bad batnam’ in Ex. D and the words ‘naslan bad naslan’ in Ex. M are not intended to exclude the descendants through females. Baillie’s Mahomedan Law, page 579 does not indicate a contrary view. We have therefore to consider the relative merits of all the claimants including the descendants through females.”

(emphasis supplied)

Accordingly, the High Court in Syed Mahomed Ghouse (supra) confirmed the subordinate court’s finding that the son of a female descendant would be qualified to manage the waqf property.

12. From the above discussion, we may conclude that it cannot be said as a rule of law that cognatic heirs of the waqif have no right to succeed to mutawalliship. As Mulla notes on page 90 and as observed in Fyzee’s Outlines of Muhammedan Law (5th edn., 2008, Prof. Tahir Mahmood ed., page 339), daughter’s children and their descendants are also included as descendants of the deceased under Muslim law, though they are considered a more distant class of heirs than agnatic heirs. Rather, as we have found in our earlier discussion on the issue of succession to joint mutawalliship mentioned supra, it is the interpretation of the waqf deed which is germane in each case.

We may also refer, in this regard, to the recent decision of a two-judge Bench of this Court, comprising of myself and Rastogi J., where we have held that in order to establish a claim of hereditary succession to mutawalliship, the intention of the waqif, as manifested either through the directions given in the waqf deed or the creation of a custom, is of paramount importance (See Aliyathammuda Beethathebiyyappura Pookoya & Ors. v. Pattakal Cheriyakoya & Ors., C.A. No. 9586/2010, judgment dated August 1, 2019). We are of the considered opinion that this principle also applies in determining which class of heirs is included or excluded from mutawalliship. Therefore it has to be seen whether in the present case, having regard to the terms of the waqf deed, the waqif intended to exclude his descendants through the female line from mutawalliship of the waqf. In the present case, Kammu Mia was the husband of the daughter of the waqif Haji Elahi Baksh. Therefore Kammu Mia’s descendants would naturally be Haji Elahi Baksh’s descendants through the female line, and the waqif must have been aware of this while drafting the waqf deed.

If the waqif had intended to exclude his descendants through the female line from succession to mutawalliship, he would have expressly stated that after the death of either the original joint mutawallis, only Md. Shafi’s descendants would be eligible to succeed to mutawalliship. However, the waqf deed dated 9.11.1936 clearly provides that either of the surviving mutawallis may nominate a successor as he thinks fit and that if mutawalli does not nominate a successor, the senior most member amongst the lineal descendants of either Md. Shafi or Kammu Mia would be competent to hold mutawalliship, without any preference given to Md. Shafi’s descendants.

Hence it is clear that the waqif not only included the direct descendants of his son but also his descendants through the female line, which includes Kammu Mia’s daughter’s descendants, as part of his ‘family line.’ The High Court’s finding that the waqif intended that the mutawalliship should devolve upon Kammu Mia’s descendants only after the waqif’s direct lineal descendants are exhausted is patently incorrect in as much as the waqf deed does not contain any such stipulation.

13. However, having regard to the fact that there may be several such descendants in the female line who are vying for mutawalliship, we do not wish to make a specific finding in regard to whether the appellant is entitled to the said office.

Section 63 of the 1995 Act is useful to refer to at this juncture:

“63. Power to appoint mutawallis in certain cases.- When there is a vacancy in the office of the mutawalli of a waqf and there is no one to be appointed under the terms of the deed of the waqf, or where the right of any person to act as mutawalli is disputed the Board may appoint any person to act as mutawalli for such period and on such conditions as it may think fit.” In the present case, since Respondent No. 2 has shown a disinclination to nominate a successor to the deceased Kammu Mia, as provided for under the terms of the waqf deed, we direct Respondent No. 1 to appoint a competent person from amongst the said Kammu Mia’s descendants, as it thinks fit, to succeed to joint mutawalliship. This is provided that the said successor shall thereafter have the right to nominate his successor, per Clause 3 of the waqf deed. We also direct that the said successor shall, in the event of the death of Respondent No. 2, nominate a successor from Respondent No. 2’s family line, which includes descendants through the female line, so as to avoid any further dispute in this regard.

14. The appeal is allowed in the above terms, and the impugned judgment is set aside.

J. (N.V. Ramana)

J. (Mohan M. Shantanagoudar)

J. (Ajay Rastogi)

New Delhi;

September 26, 2019


BOOK REFERRED: Mulla in Principles of Mahomedan Law (21st edn., 2017, Prof. Iqbal Ali Khan ed.)

Leeladhar (D) through LRS. Vs. Vijay Kumar (D) through LRS-26/09/2019

Specific performance of the contract-The agreement was an agreement to sell and after entering into the agreement to sell, Appellant received the full sale consideration and handed over the possession to Respondent, the question of exercising any discretionary favour to the appellant does not arise.

CAUSE: The respondents filed a suit in the Court of Civil Judge, praying for specific performance of the contract and also prayed that if any part of the disputed land is not found in their possession, then possession be given to them. In the alternative, they prayed for refund of Rs.40,000/along with interest.

ACT: Section 20(2) (c) of the Specific Relief Act, 1963

SUPREME COURT OF INDIA

Leeladhar (D) through LRS. Vs. Vijay Kumar (D) through LRS. & Ors.

[Civil Appeal No. 7282 of 2009]

DEEPAK GUPTA, J.

One Leeladhar, the original appellant herein, entered into an agreement to sell 18 bighas of land for a sum of Rs.40,000/with Deshraj, father of the plaintiffs respondents herein on 15.02.1985. Admittedly, an amount of Rs.35,000/was paid in advance. This agreement to sell was registered on 18.02.1985. On 26.03.1985 another document (Exhibit P14) was entered into between the parties. Leeladhar was paid balance Rs.5,000/and the subsequent agreement notes that he gave possession of the land to Deshraj. On 20.01.1988, Deshraj issued a legal notice to Leeladhar asking him to get the sale deed executed. According to the plaintiffs, they and their father went to the office of the Sub-Registrar on 15.02.1988 for this purpose. But Leeladhar did not turn up. Deshraj expired on 16.05.1988 and, thereafter, the respondents herein filed a suit in the Court of Civil Judge, Nainital praying for specific performance of the contract and also prayed that if any part of the disputed land is not found in their possession, then possession be given to them. In the alternative, they prayed for refund of Rs.40,000/along with interest.

2. In the written statement, Leeladhar took the plea that the agreement in question was a sham document. Deshraj was a moneylender but did not have a licence to do money lending. Therefore, he used to get such documents executed to secure the loans advanced by him. It was also pleaded that Leeladhar had returned the entire amount along with interest to Deshraj on 03.03.1987. This suit was decreed by the trial court. Leeladhar filed an appeal, which was partly allowed by the first appellate court holding that the plaintiffs were not entitled to the discretionary relief of specific performance. This judgment was challenged before the High Court. The second appeal was allowed and the matter was remanded to the first appellate court to decide the case afresh in light of the provisions of Section 20(2) (c) of the Specific Relief Act, 1963. After remand, the Additional District Judge dismissed the appeal of Leeladhar and upheld the order of the trial court. The second appeal filed by Leeladhar before the High Court was dismissed and, hence, this appeal.

3. The main ground raised by Shri Vikas Singh, learned senior counsel appearing for the appellants is that in terms of Section 20(2)(c), the decree of specific performance could not have been granted in favour of the plaintiffs respondents herein. It is submitted that the document was a sham document. It was further urged that possession is not with the plaintiffs and the fact that Deshraj had executed various documents but had not filed suit for specific performance with regard to those contracts indicated that this document (Exhibit P13) was also executed only to secure the repayment of the loan. It is also prayed that in the peculiar facts and circumstances of the case, discretion should be exercised in favour of appellants. On the other hand, Shri P.K. Jain, learned counsel appearing for the respondents submits that all the courts below have given a concurrent finding of fact that the document executed was an agreement to sell and Leeladhar had received the full amount, transferred possession and, therefore, is not entitled to urge that the decree of specific performance should not be granted.

4. We may note a few salient facts. The agreement to sell (Exhibit P13) is registered on 18.02.1985. Rs.35,000/out of Rs.40,000/was paid. The balance Rs.5,000/was paid when the document (Exhibit P14) was executed on 26.03.1985. As far as delay is concerned, we are of the considered view that there is no delay in filing the suit. The suit is within limitation. Further, in this case, even as per the appellants, the possession of the land was with the plaintiff respondent. Therefore, they were in no hurry to get the sale deed executed and this does not disentitle them from getting the relief of specific performance.

5. As far as the issue of Deshraj being a moneylender and having got this document executed only to secure repayment of amount is concerned, all the courts below have found as a fact that this is not the case. The finding is that an agreement to sell was executed. Shri Singh has made reference to the order passed by the first appellate court in the first round. That order having been set aside by the High Court, cannot help the appellants. After remand, the first appellate court clearly held that the documents in question relied upon by Leeladhar could not be used by him because they were only copies and if actually, he had repaid those loans then he would have got originals back from Deshraj. Though various judgments have been cited before us, we do not feel it necessary to refer to the same because once we come to the conclusion that the agreement was an agreement to sell and after entering into the agreement to sell, Leeladhar received the full sale consideration and handed over the possession to Deshraj, the question of exercising any discretionary favour to the appellant does not arise.

6. Section 20(2)(c) of the Specific Relief Act reads as follows:

“20. Discretion as to decreeing specific performance. –

(1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.

(2) The following are cases in which the court may properly exercise discretion not to decree specific performance:-

(a) xxx xxx xxx

(b) xxx xxx xxx

(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.

Explanation 1.-Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).

Explanation 2.- The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.”

7. To take benefit of clause (c) of subsection (2) of Section 20 of the Specific Relief Act, the defendant in a suit for specific performance must show that he entered into the contract under the circumstances which though rendering the contract voidable, make it inequitable. In the present case, once we hold that the document entered was an agreement to sell and not a sham transaction, the appellants can take no benefit of this provision.

8. In view of the above, we find no merit in the appeal which is accordingly dismissed. Pending application(s), if any, stand(s) disposed of

J. (Deepak Gupta)

J. (Aniruddha Bose)

New Delhi

September 26, 2019


 

Central Bureau of Investigation etc. Vs. Mrs. Pramila Virendra Kumar Agarwal & ANR. etc 25/09/2019

The absence of sanction no doubt can be agitated at the threshold but the invalidity of the sanction is to be raised during the trial. In the instant facts, admittedly there is a sanction though the accused seek to pick holes in the manner the sanction has been granted and to claim that the same is defective which is a matter to be considered in the trial.

ACTS: Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988

SUPREME COURT OF INDIA

Central Bureau of Investigation etc. Vs. Mrs. Pramila Virendra Kumar Agarwal & ANR. etc.

[Criminal Appeal Nos. 14891490 of 2019 arising out of SLP (Criminal) Nos. 8968-8969 of 2019 arising out of Diary No. 23350/2017]

A.S. Bopanna,J.

Delay condoned.

2. Leave granted.

3. The appellant Central Bureau of Investigation (CBI) is before this Court assailing the order dated 14.12.2015 passed by the High Court of Judicature at Bombay in Criminal Revision Application Nos. 284/2013 and 323/2013. Through the said order the High Court has allowed the Criminal Revision Application No. 284/2013 and discharged the accused No. 2 and further the Criminal Revision Application No. 323/2013 filed by the appellant herein was dismissed.

4. The brief facts limited to the disposal of these appeals is that the first respondent in both these appeals, namely, Smt. Pramila Virendra Kumar Agarwal and Shri Virendra Kumar Agarwal were charged under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988 (‘P.C. Act’ for short) and Section 109 of IPC. The respondent No. 1 in SLP (Crl.) D.No. 23350/2017 is the wife of the respondent No.2. They are charged as accused No. 2 and accused No. 1 respectively and are proceeded against in CBI, ACB Special Case No. 21/2010. In the said proceedings both the accused filed separate applications seeking their discharge. The application of accused No. 1 Shri Virendra Kumar Agarwal was registered as Exhibit 13 while that of accused No. 2 Smt. Pramila Virendra Kumar Agarwal was registered as Exhibit 20. The Special Court on consideration of the application for discharge has allowed the application of accused No. 1 – Shri Virendra Kumar Agarwal through the order dated 15.01.2013 and discharged him from the offences charged against him under FIR No. RC 49(A)/2007:CRI:ACE:Mumbai. Insofar as the application filed by accused No. 2 Smt. Pramila Virendra Kumar Agarwal the Special Court through the order dated 22.02.2013 had rejected the application.

5. In that background the appellant herein – CBI claiming to be aggrieved by the discharge of accused No. 1 had filed the Criminal Revision Application No. 284/2013 before the High Court. The accused No. 2, Smt. Pramila Virendra Kumar Agarwal claiming to be aggrieved by the rejection of her application for discharge had filed the Criminal Revision Application No. 323/2013 before the High Court. Since both the Criminal Revision Applications were arising out of the same proceedings before the Special Court, in Special Case No. 21/2010, the High Court had clubbed and considered the same and disposed of through the common order dated 14.12.2015 by which the Revision Application of the accused No. 2 was allowed while the Revision Application of the appellant herein assailing the discharge of accused No. 1 was dismissed. It is in that light the appellant herein – CBI has instituted these appeals assailing the said common order dated 14.12.2015.

6. Heard Shri K.M. Natraj, learned Additional Solicitor General, for the appellant and Ms. Sonia Mathur, learned Senior Advocate, for the private respondents as also Shri Nishant Katneshwarkar, learned standing counsel for the State of Maharashtra and perused the appeal papers.

7. The learned Additional Solicitor General at the outset would point out that the High Court though had taken up both the Revision Applications and disposed of the same through the common order and in the operative portion has allowed the application of accused No. 2 and dismissed the Revision Application of the appellant herein, the order impugned does not indicate any reasons for consideration and disposal of the Revision Application whereby the appellants had challenged the discharge order of accused No. 1. It is further contended that the reasons as assigned by the Special Court as also the High Court for discharge of the accused on the ground that they were not provided opportunity to explain and the explanation offered is not a part of the charge sheet is not justified. It is contended that in the criminal investigation such procedure is not contemplated and as such both the Courts have committed an error.

It is also contended by the learned Additional Solicitor General that the Special Court as well as the High Court has erred in concluding that the sanction for prosecution is not done in accordance with law since that aspect can only be considered during trial and not in the manner as has been done presently since the contention was of defective sanction and not that the proceedings was without sanction. It is his case that the proceedings were initiated against the private respondents herein based on information received and when the investigation revealed disproportionate assets the charge sheet was filed in that regard. The correctness of the charge is to be established with evidence during trial and in that circumstance the discharge granted based on certain assumptions is not justified.

8. The learned senior counsel for the private respondents on the other hand sought to contend that the initial order of discharge of accused No. 1 by the Special Court and the subsequent order of discharge of accused No. 2 by the High Court is on proper consideration and the same do not call for interference. It is contended that though the prosecution has sought to charge the private respondents herein alleging that they had during the check period i.e. 01.01.1994 to 21.10.2007 accumulated assets to the tune of Rs. 1,06,89,194/- disproportionate to the known source of income, the agency has wrongly clubbed the assets of both the private respondents merely because they are husband and wife.

It is contended that both of them are employed and have their separate earning and as such the clubbing of the assets would not be justified. It is contended, in that circumstance if the individual assets of the accused No. 1 and 2 are taken into consideration the charge of accumulation of disproportionate assets would not be justified. In that light it is contended that the Special Court as also the High Court having appreciated these aspects has found the charge to be not justified.

The learned senior counsel has further sought to refer to the details of the income during the check period as also the assets of each of the accused to contend that the charge is not justified and in that circumstance if the provisions in Section 13(1)(e) of the P.C. Act is kept in view the charge was without basis. It is also the contention of the learned senior counsel that the sanction order is without application of mind and is non est since such sanction order has also been granted in the background of clubbing the income of two public servants who had independent source of income and were assessed to tax independently. Hence the learned senior counsel sought to sustain the order passed by the High Court which is impugned herein.

9. In the background of contention as urged, a perusal of the order would indicate that the High Court has not separately considered the correctness or otherwise of the order passed by the Special Court, one while rejecting the discharge application of the accused No. 2 and the other while allowing the discharge application of accused No. 1. However, a perfunctory consideration has been made by raising the question for consideration as to whether the Investigating Officer was under obligation to record explanation offered by the accused and whether such explanation should be part of the charge sheet and in that light a question is also raised as to whether the sanctions for prosecution were defective.

10. While addressing the same the High Court has referred to the decisions of this Court wherein it is held that the investigation must be fair and reasonable and that the Enquiry Officer must not act under any preconceived idea of guilt of the accused person. The judgment of the Bombay High Court in the case of N.P Lotlikar vs. C.B.I was referred to indicate that it was held therein that mere possession of assets is not an offence but failure to explain or account for the same would amount to an offence. The said decision was also relied upon since it was held therein that before registration of offence an opportunity ought to have been given to the accused to explain the source of funds for acquiring and possessing the assets.

Having taken note of the same the learned Judge of the High Court has also taken note of the submission of the learned Special Prosecutor who had pointed out that during the investigation the accused were called and their statements were recorded. However, not being satisfied with the submission to that effect, the learned Judge was of the opinion that the Investigating Officer ought to have given specific opportunity to the accused for submitting an explanation. Thus, having considered the same to be a lapse it was held that if sanctions for prosecutions were sought in that circumstance, the Sanctioning Authority would not have an opportunity to see the explanation and, therefore, sanction also would be defective.

11. Firstly, it is to be taken note that as contended by the prosecution, in the course of the investigation the accused have been summoned and their statements have been recorded which by itself is for the purpose that they were required to provide an explanation with regard to the assets which were according to the prosecution disproportionate to the known source of income. The said procedure to be followed in the course of investigation does not contemplate the consideration of the explanation in the nature of a mini trial, if not satisfactory, even before the charge sheet is filed based on the material collected and the statement recorded in the course of investigation. The details indicated in the charge sheet after making reference to the income and expenditure is as hereunder:

A) The value of the assets of the beginning of the check period as per Statement “A” 1,30,000/-

B) The value of the assets at the end of the check period as per Statement “B” 1,34,45,426/-

C) The total assets found during the check period (BA) 1,33,15.426/-

D) The total income found during the check period as per Statement “C” 51,02,106/-

E) The total expenditure during check period as per Statement “D” 24,75,874/-

F) Likely saving during check period (DE) 26,26,232/-

G) The Disproportionate assets (CF) Viz 209.50% 1,06,89,194/12.

Even if it is accepted that the above statement is on clubbing the income and assets of the husband and wife who have individual source of income, the very details furnished by the CBI before the High Court by splitting it in the individual capacity will also prima facie indicate the nature of the income and the disproportionate assets allegedly possessed by them at Rs.47,93,946/and Rs.56,75,812/- respectively.

The High Court in fact has not adverted on that aspect to arrive at a conclusion that in that circumstance even if the case as put forth by the investigating agency is taken as correct the same would not constitute an offence and, therefore, they are to be discharged, which in fact is the nature of consideration required. Further the Special Court also has merely stated that it has perused the documents and a reference in that regard is made to the document at Serial No. 3, namely, the Agreement of Sale of Flat No. A 305, Shiv Geeta Cooperative Housing Society Ltd., Vasai. In any event the conclusion reached therein had been assailed before the High Court but the High Court has not adverted to those aspects of the matter.

13. Further the issue relating to validity of the sanction for prosecution could have been considered only during trial since essentially the conclusion reached by the High Court is with regard to the defective sanction since according to the High Court, the procedure of providing opportunity for explanation was not followed which will result in the sanction being defective. In that regard, the decision in the case of Dinesh Kumar vs. Chairman, Airport Authority of India, (2012) 1 SCC 532 relied upon by the learned Additional Solicitor General would be relevant since it is held therein that there is a distinction between the absence of sanction and the alleged invalidity on account of nonapplication of mind. The absence of sanction no doubt can be agitated at the threshold but the invalidity of the sanction is to be raised during the trial. In the instant facts, admittedly there is a sanction though the accused seek to pick holes in the manner the sanction has been granted and to claim that the same is defective which is a matter to be considered in the trial.

14. In the above background, the impugned order would indicate that the High Court has not adverted to the charge made against the accused wherein the charge against the accused No. 2 is also of abetting the commission of offence by the accused No.1 and in that regard the conclusion reached by the High Court is not that the charge is not sustainable for the reasons recorded by it. In fact, neither there is any reasons recorded nor application of mind to that aspect. Insofar as the question raised and considered by the High Court, no credence whatsoever has been given to the case of the prosecution that the statement of the accused has been recorded which also forms the basis of the charge sheet and the explanation thus accorded by the accused does not provide satisfactory answer for the charge of disproportionate assets. In that regard the High Court has proceeded at a tangent and has on that basis also arrived at the conclusion that the sanction for prosecution is not proper.

15. Further it is noticed that the High Court has recorded that the statement of the accused made to the police during investigation is not admissible and the procedure adopted during investigation is found to be defective. Such conclusion would arise for consideration only during trial and if the statement made is retracted and there is no other material or evidence on record to establish the charge. Hence the very manner in which the High Court has proceeded to consider the matter is erroneous and the conclusion reached is unsustainable. The private respondents/accused in any event would have the opportunity of putting forth their defence in the trial and as such all contentions in that regard are to be left open and any of the observations herein are limited to the consideration of the applications for discharge and the same shall not prejudice the case of the accused. It is for the said reason we have not thought it appropriate to advert more into the contentions relating to the charge except for noticing the charge made relating to the disproportionate assets without stating on its correctness or otherwise.

16. In that view, the order dated 14.12.2015 passed by the High Court and order dated 15.01.2013 passed by Special Court are set aside. The proceedings in Special Case No.21 of 2010 is restored to file of the Special Court. All contentions on merits of both the sides are left open to be urged before the Special Court in accordance with law.

17. Accordingly, the appeals are allowed with no order as to cost. All pending applications shall stand disposed of.

J. (R. BANUMATHI)

J. (A.S. BOPANNA)

New Delhi,

September 25, 2019

Jignesh Shah & ANR. Vs. Union of India & ANR-25/09/2019

SUPREME COURT OF INDIA JUDGMENTS

A winding up proceeding is a proceeding ‘in rem’ and not a recovery proceeding, the trigger of limitation, so far as the winding up petition is concerned, would be the date of default. Questions as to commercial solvency arise in cases covered by Sections 434(1) (c) of the Companies Act, 1956, where the debt has first to be proved, after which the Court will then look to the wishes of the other creditors and commercial solvency of the company as a whole.

The stage at which the Court, therefore, examines whether the company is commercially insolvent is once it begins to hear the winding up petition for admission on merits. Limitation attaches insofar as petitions filed under Section 433(e) are concerned at the stage that default occurs for, it is at this stage that the debt becomes payable.

where a debt is clearly owed, but the exact amount of debt is disputed, the company will be held to be unable to pay its debts.

ACT: Section 7 application under the Insolvency and Bankruptcy Code, 2016 / Limitation Act, 1963

BENCH: J. (R.F. Nariman) J. (R. Subhash Reddy) J. (Surya Kant)

SUPREME COURT OF INDIA

Jignesh Shah & ANR. Vs. Union of India & ANR.

[Writ Petition (Civil) No.455 of 2019] WITH- SEE BELOW

R.F. Nariman, J.

W.P.(C) No.645 of 2019

1. The issues involved in Writ Petition (Civil) No.645 of 2019 are entirely different from the Writ Petition (Civil) No.455 of 2019 and its other connected matters. This writ petition is accordingly de-tagged from Writ Petition (Civil) No.455 of 2019. The Registry is directed to list this writ petition separately.

[W.P.(C) No.455 of 2019 & Civil Appeal (Diary No.16521 of 2019]

2. Delay is condoned. Civil Appeal (Diary No. 16521 of 2019) is admitted.

3. Writ Petition (Civil) No.455 of 2019 and Civil Appeal (Diary No. 16521 of 2019) have been filed by Shri Jignesh Shah and Smt. Pushpa Shah respectively, both of whom are shareholders of La-Fin Financial Services Pvt. Ltd. (hereinafter “La-Fin”) assailing the order of the National Company Law Tribunal, Mumbai Bench (hereinafter referred to as the “NCLT”) admitting a winding up petition that was filed by IL & FS Financial Services Ltd. (hereinafter referred to as “IL & FS”) against La-Fin before the High Court of Judicature at Bombay (hereinafter referred to as the “Bombay High Court”), which was transferred to the NCLT and then heard as a Section 7 application under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to the “the Code”).

4. The brief facts necessary to appreciate the narrow controversy that arises in Writ Petition (Civil) No.455 of 2019 and its connected matters are as follows:

(i) On 20th August, 2009, a share purchase agreement was executed between Multi-Commodity Exchange India Limited (hereinafter referred to as “MCX”), MCX Stock Exchange Limited (hereinafter referred to as “MCX-SX”) and IL & FS, whereby IL & FS agreed to purchase 442 lakh equity shares of MCX-SX from MCX.

(ii) Pursuant to this agreement, La-Fin, as a group company of MCX, issued a ‘Letter of Undertaking’ to IL & FS on 20th August, 2009 (hereinafter referred to as the “Letter of Undertaking”) stating that La-Fin or its appointed nominees would offer to purchase from IL & FS the shares of MCX-SX after a period of one year, but before a period of three years, from the date of investment. On facts, this period of three years expired in August, 2012.

(iii) IL & FS, therefore, by its letter dated 3rd August, 2012, exercised its option to sell its entire holding of shares in MCX-SX, and called upon La-Fin to purchase these shares in accordance with the Letter of Undertaking. On 16th August, 2012, La-Fin replied that it was under no legal or contractual obligation to buy the aforesaid shares.

(iv) Thereafter, correspondence between the parties continued, until finally, on 19th June, 2013, IL & FS filed a Suit No.449 of 2013 in the Bombay High Court for specific performance of the Letter of Undertaking by La-Fin or, in the alternative, for damages. It is important to note that the cause of action for the suit – as stated in the plaint – arose on 16th August, 2012, i.e. the day La-Fin purportedly refused to honour its obligation under the Letter of Undertaking. (v) On 13th October, 2014, a learned Single Judge of the Bombay High Court passed an injunction order restraining La-Fin from alienating its assets pending disposal of the suit, subject to attachments of La-Fin’s properties that had been made by the Economic Offences Wing of the Mumbai Police (hereinafter referred to as the “EOW”) during the pendency of the suit. An appeal against this order was dismissed by a Division Bench of the Bombay High Court on 11th September, 2015.

(vi) On 3rd November, 2015, a statutory notice under Section 433 and 434 of the Companies Act, 1956 was issued by IL & FS to La-Fin, referring to the attachment by the EOW, and stating that La-Fin was obviously in no financial position to pay the sum of INR 232,50,00,000/- which, according to IL & FS, was owing to them as of 31st October, 2015. On 18th November, 2015, a reply was promptly given by La-Fin to the aforesaid notice referring to the pending suit, and stoutly disputing the fact that any amount was due and payable. The reply went on to state that La-Fin was otherwise commercially sound and that the statutory notice issued under Sections 433 and 434 of the Companies Act, 1956 was only a pressure tactic.

(vii) On 21st October, 2016, a winding up petition (hereinafter referred to as the “Winding up Petition”) was then filed by IL & FS against La-Fin in the Bombay High Court under Section 433(e) of the Companies Act, 1956.

(viii) The Code came into force on 1st December, 2016, and as a result, as per the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the Winding up Petition was transferred to the NCLT as a Section 7 application under the Code. The statutory form under these Rules, namely, Form-1 was filled up by IL & FS indicating that the date of default was 19th August, 2012.

(ix) On 28th August, 2018, the said Winding up Petition was admitted by the NCLT as an application under Section 7 of the Code, stating on a reading of the share purchase agreement and the Letter of Undertaking that a financial debt had, in fact, been incurred by La-Fin. The National Company Law Appellate Tribunal (hereinafter referred to as the “NCLAT”) by an order dated 21st January, 2019 dismissed the appeal filed by Shri Jignesh Shah against the aforesaid admission order, agreeing with the NCLT that the aforesaid transaction would fall within the meaning of “financial debt” under the Code, and that the bar of limitation would not be attracted as the Winding up Petition was filed within three years of the date on which the Code came into force, viz., 1st December, 2016.

(x) A Writ Petition was filed by Smt. Pushpa Shah against these orders in the Bombay High Court, challenging certain provisions of the Code, with which we are not directly concerned. Writ Petition (Civil) No.455 of 2019 was then filed in this Court on 4th April, 2019 challenging the constitutionality of certain provisions of the Code, as well as the NCLT and NCLAT orders, after which the Civil Appeal (Diary No. 16521 of 2019) was also filed against the NCLAT order under Section 62 of the Code.

5. Dr. Abhishek Manu Singhvi, learned Senior Advocate appearing on behalf of the Petitioners/Appellants, did not go into the merits of the case, but has raised only the statutory bar of limitation against IL & FS. According to the learned Senior Advocate, after this Court’s judgment in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates 2018 SCC OnLine 1921, it is clear that the Limitation Act, 1963 (hereinafter referred to as the “Limitation Act”) would apply to all Section 7 applications that are filed under the Code and that the residuary Article, i.e., Article 137 of the Limitation Act would be attracted to the facts of this case. Inasmuch as the Winding up Petition that has been transferred to the NCLT was filed on 21st October, 2016, i.e., beyond the period of three years prescribed (as the cause of action had arisen in August, 2012), it is clear that a time-barred winding up petition filed under Section 433 of the Companies Act, 1956 would not suddenly get resuscitated into a Section 7 petition under the Code filed within time, by virtue of the transfer of such petition.

He relied heavily on B.K. Educational Services Pvt. Ltd. (supra) which, according to him, covered this case on all fours. In addition, he relied upon High Court judgments, Judgments from the United States of America, and one English judgment to buttress the proposition that the mere filing of a suit for specific performance would not in any manner impact the limitation period for a winding up petition, which as a separate and independent remedy, must fall or stand on its own legs. He also painstakingly took us through the statutory notice under Sections 433 and 434 sent by IL & FS, as well as the Winding up Petition filed by IL & FS, and relied heavily on the fact that the Form-1 (which was filled by IL & FS in order to transfer the aforesaid Winding up Petition to the NCLT) itself stated that the date of default was 19th August, 2012, clearly indicating that the Winding up Petition, being beyond three years of the cause of action, was time-barred.

6. On the other hand, Shri Neeraj Kishan Kaul, learned Senior Advocate appearing on behalf of the Respondents IL & FS, argued that the cause of action for the suit and the cause of action for the Winding up Petition filed were separate and distinct. He argued that it is well-settled that a winding up petition cannot be filed in order to recover a debt, but is a proceeding ‘in rem’, which involves commercial insolvency of the company sought to be wound up. Therefore, according to the learned Senior Advocate, the cause of action for filing the Winding up Petition arose only in 2015/2016, after Shri Jignesh Shah (the Petitioner before us) was arrested; after attachment of the assets of La-Fin; and as stated in the Winding up Petition, after La-Fin’s assets had fallen from being worth around INR 1000 crores in 2013, to only being worth around INR 200 crores in October, 2016.

He relied on several judgments to support this argument. According to him, the suit that was filed by IL & FS for specific performance of the Letter of Undertaking on 19th June, 2013 kept alive the debt that was owed to his client and, therefore, in any event, the Winding up Petition filed after such debt was kept alive would be in time, notwithstanding that it was filed at a subsequent period after the suit. According to him, in any event, limitation being a mixed question of fact and law, at best the matter ought to be remanded to the NCLT for a determination on this mixed question.

7. Having heard the learned Senior Counsel for the parties, it is important to first advert to this Court’s decision in B.K. Educational Services Pvt. Ltd. (supra) in which Section 238A of the Code was referred to, which states as follows:

“238A. Limitation.-

The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be.” 8. In paragraph 7 of the said judgment, the Report of the Insolvency Law Committee of March, 2018 was referred to as follows:

“7. Having heard the learned counsel for both sides, it is important to first set out the reason for the introduction of Section 238A into the Code. This is to be found in the Report of the Insolvency Law Committee of March, 2018, as follows:

“28. APPLICATION of LIMITATION ACT, 1963

28.1 The question of applicability of the Limitation Act, 1963 (“Limitation Act”) to the Code has been deliberated upon in several judgments of the NCLT and the NCLAT. The existing jurisprudence on this subject indicates that if a law is a complete code, then an express or necessary exclusion of the Limitation Act should be respected.1 In light of the confusion in this regard, the Committee deliberated on the issue and unanimously agreed that the intent of the Code could not have been to give a new lease of life to debts which are timebarred. It is settled law that when a debt is barred by time, the right to a remedy is time-barred.2 This requires being read with the definition of ‘debt’ and ‘claim’ in the Code. Further, debts in winding up proceedings cannot be time-barred,3 and there appears to be no rationale to exclude the extension of this principle of law to the Code.

28.2 Further, non-application of the law on limitation creates the following problems: first, it re-opens the right of financial and operational creditors holding time-barred debts under the Limitation Act to file for CIRP, the trigger for which is default on a debt above INR one lakh. The purpose of the law of limitation is ” to prevent disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have been lost by a party’s own inaction, negligence or latches “4. Though the Code is not a debt recovery law, the trigger being ‘default in payment of debt’ renders the exclusion of the law of limitation counter-intuitive. Second, it re-opens the right of claimants (pursuant to issuance of a public notice) to file time-barred claims with the IRP/RP, which may potentially be a part of the resolution plan. Such a resolution plan restructuring time-barred debts and claims may not be in compliance with the existing laws for the time being in force as per section 30(4) of the Code.

28.3 Given that the intent was not to package the Code as a fresh opportunity for creditors and claimants who did not exercise their remedy under existing laws within the prescribed limitation period, the Committee thought it fit to insert a specific section applying the Limitation Act to the Code. The relevant entry under the Limitation Act may be on a case to case basis. It was further noted that the Limitation Act may not apply to applications of corporate applicants, as these are initiated by the applicant for its own debts for the purpose of CIRP and are not in the form of a creditor’s remedy.”

(emphasis supplied)

9. After referring to Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, the Court extracted passages from the judgment in M.P. Steel Corporation v. CCE (2015) 7 SCC 58 and then concluded:

“20. A perusal of this judgment would show that limitation, being procedural in nature, would ordinarily be applied retrospectively, save and except that the new law of limitation cannot revive a dead remedy. This was said in the context of a new law of limitation providing for a longer period of limitation than what was provided earlier. In the present case, these observations are apposite in view of what has been held by the Appellate Tribunal. An application that is filed in 2016 or 2017, after the Code has come into force, cannot suddenly revive a debt which is no longer due as it is time-barred.

21. In State of Kerala v. V.R. Kalliyanikutty, (1999) 3 SCC 657, (“V.R. Kalliyanikutty”), this Court dealt with whether a time-barred debt can be recovered by resorting to recovery proceedings under the Kerala Revenue Recovery Act of 1968. In stating that the said Act cannot extend to recovery of a time-barred debt, this Court stated in paragraph 8, “8. …… In every case the exact meaning of the word “due” will depend upon the context in which that word appears.”

22. It was held in that case that Section 17(3) of the Kerala Revenue Recovery Act, 1968 made it clear that a person making payment under protest will have a right to institute a suit for refund of the whole or part of the sum paid by him under protest. It was thus held that when the right to file such a suit is expressly preserved, there is a necessary implication that the shield of limitation available to a debtor in a suit is also preserved, as a result of which, a wide interpretation of the expression “amount due” to include time-barred debts would destroy an important defence available to a debtor in a suit against him by the creditor, and may fall foul of Article 14 of the Constitution of India.

23. Another judgment referred to by learned counsel for the appellants is contained in Union of India v. Uttam Steels Ltd., (2015) 13 SCC 209. Here the question was whether Section 11-B of the Central Excise Act as amended on 12.05.2000 would apply to the fact situation in that case. Section 11-B provided a longer period of limitation by substituting “six months” with “one year”. Since the rebate application was filed within a period of one year, the respondent contended that they were within time. This Court held, in paragraph 10, that limitation, being procedural law, would ordinarily be retrospective in nature. This is however with one proviso superadded, which is that the claim made under the amended provision should not itself have been a dead claim in the sense that it was time-barred before the amending Act came into force, bringing a larger period of limitation with it. On the facts of that case, it was held that since the claim for rebate was made beyond the period of six months but within the extended period of one year, such extended period would not avail the respondent in that case.

24. In Allied Motors (P) Ltd. v. CIT, (1997) 3 SCC 472, this Court took the view that the amendment made to Section 43-B in the Income Tax Act was retrospective, holding: “14. …… As observed by G.P. Singh in his Principles of Statutory Interpretation, 4th Edn. at p. 291: “It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended.” In fact the amendment would not serve its object in such a situation unless it is construed as retrospective……”

25. In the present case also, it is clear that the amendment of Section 238A would not serve its object unless it is construed as being retrospective, as otherwise, applications seeking to resurrect time-barred claims would have to be allowed, not being governed by the law of limitation.” The Court then held:

“38. This case is most apposite. As in the present case, and as is reflected in the Insolvency Law Committee Report of March, 2018, the legislature did not contemplate enabling a creditor who has allowed the period of limitation to set in to allow such delayed claims through the mechanism of the Code. The Code cannot be triggered in the year 2017 for a debt which was time barred, say, in 1990, as that would lead to the absurd and extreme consequence of the Code being triggered by a stale or dead claim, leading to the drastic consequence of instant removal of the present Board of Directors of the corporate debtor permanently, and which may ultimately lead to liquidation and, therefore, corporate death. This being the case, the expression “debt due” in the definition sections of the Code would obviously only refer to debts that are “due and payable” in law, i.e., the debts that are not time-barred.” Finally, the Court held:

“48. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.”

10. This judgment clinches the issue in favour of the Petitioner/Appellant. With the introduction of Section 238A into the Code, the provisions of the Limitation Act apply to applications made under the Code. Winding up petitions filed before the Code came into force are now converted into petitions filed under the Code. What has, therefore, to be decided is whether the Winding up Petition, on the date that it was filed, is barred by lapse of time. If such petition is found to be time-barred, then Section 238A of the Code will not give a new lease of life to such a time-barred petition. On the facts of this case, it is clear that as the Winding up Petition was filed beyond three years from August, 2012 which is when, even according to IL & FS, default in repayment had occurred, it is barred by time.

11. Dr. Singhvi relied upon a number of judgments in which proceedings under Section 433 of the Companies Act,1956 had been initiated after suits for recovery had already been filed. These judgments have held that the existence of such suit cannot be construed as having either revived a period of limitation or having extended it, insofar as the winding up proceeding was concerned. Thus, in Hariom Firestock Limited v. Sunjal Engineering Pvt. Ltd. (1999) 96 Comp Cas 349, a Single Judge of the Karnataka High Court, in the fact situation of a suit for recovery being filed prior to a winding up petition being filed, opined:

“8…To my mind, there is a fallacy in this argument because the test that is required to be applied for purposes of ascertaining whether the debt is in existence at a particular point of time is the simple question as to whether it would have been permissible to institute a normal recovery proceeding before a civil court in respect of that debt at that point of time. Applying this test and de hors that fact that the suit had already been filed, the question is as to whether it would have been permissible to institute a recovery proceeding by way of a suit for enforcing that debt in the year 1995, and the answer to that question has to be in the negative.

That being so, the existence of the suit cannot be construed as having either revived the period of limitation or extended it. It only means that those proceedings are pending but it does not give the party a legal right to institute any other proceedings on that basis. It is well settled law that the limitation is extended only in certain limited situations and that the existence of a suit is not necessarily one of them. In this view of the matter, the second point will have to be answered in favour of the respondents and it will have to be held that there was no enforceable claim in the year 1995, when the present petition was instituted.”

12. Likewise, a Single Judge of the Patna High Court in Ferro Alloys Corporation Ltd. v. Rajhans Steel Ltd. (2000) Comp Cas 426 also held:

“12….In my opinion, the contention lacks merit. Simply because a suit for realisation of the debt of the petitionercompany against opposite party No. 1 was instituted in the Calcutta High Court on its original side, such institution of the suit and the pendency thereof in that court cannot enure for the benefit of the present winding up proceeding. The debt having become time-barred when this petition was presented in this court, the same could not be legally recoverable through this court by resorting to winding up proceedings because the same cannot legally be proved under section 520 of the Act. It would have been altogether a different matter if the petitioner-company approached this court for winding up of opposite party No. 1 after obtaining a decree from the Calcutta High Court in Suit No. 1073 of 1987, and the decree remaining unsatisfied, as provided in clause (b) of sub-section (1) of section 434. Therefore, since the debt of the petitioner-company has become time-barred and cannot be legally proved in this court in course of the present proceedings, winding up of opposite party No. 1 cannot be ordered due to non-payment of the said debt.”

13. In Rameswar Prasad Kejriwal & Sons Ltd. v. M/s. Garodia Hardware Stores (2002) 108 Comp Cas 187, a money suit that was filed in 1994 was decreed in 1997, after which a winding up petition under Section 433 of the Companies Act, 1956 was filed in 2001. In this fact situation, the learned Single Judge held:

“13. It is an admitted position that the cause of action of the company arose in 1992. The suit was filed in 1994 and the decree was obtained in 1997. But on the basis of the said debt which is said to be merged in the decree, the winding up petition cannot be filed after the period of limitation that means after a period of three years.

14. It is not in dispute that in the instant case, the period of limitation is covered by residuary article namely Article 137 of Limitation Act. A special Bench of this Court, in the case of Hari Mohan Dalai v. Parmeshwar Shau , reported in 56 Indian Law Reports, 61, has made certain observations on how the residuary article is to be construed.

15. Construing the provisions of Article 181 the residuary article under the old Act, Chief Justice Rankin, speaking for the Special Bench, held that “In Article 181 the legislature makes provisions not for any definite type of cases but for an unknown number of cases of all kinds. The provision which it makes specific as regard the period of limitation, but as regarded the terminus a quo it is content to state in general language and quite simply the fundamental principle that, for the purposes of any particular application, time is to run from the moment at which the applicant first had the right to make it.”

16. This Court goes by the same principle and holds that period of limitation should be counted from 1992. But assuming it is not counted from 1992, it has to be counted from 1997. Therefore, considering the matter from all possible angles, this Court is of the view that instant winding up petition has become barred on the date on which it is presented. It cannot be held that in case of winding up petition, limitation period will be 12 years which may be the case in matters of execution of a decree.

17. Therefore, this winding up petition is, therefore, dismissed but in the facts of this case, there will be no order as to costs.”

14. In Dr. Dipankar Chakraborty v. Allahabad Bank & Ors. 2017 SCC OnLine Cal 8742, the fact situation was that a suit had been filed by the petitioner in the City Court at Calcutta for damages against the Allahabad Bank. The Bank, in turn, filed a proceeding under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in 2001 before the Debt Recovery Tribunal, Calcutta. The Civil Suit was also transferred to the Debt Recovery Tribunal, Calcutta where both proceedings were pending adjudication. Meanwhile, under the Securitisation and Restructure of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as the “SARFAESI Act”), a notice dated 3rd March, 2016 was issued under Section 13(2) of the SARFAESI Act. The question which arose before the Court was whether the invocation of the SARFAESI Act, being beyond limitation, would be saved because of the pending proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Court negatived the plea of the Bank, stating:

“22. Section 14 of the Limitation Act, 1963 permits exclusion of the time taken to proceed bona fide in a Court without jurisdiction. Such section permits a plaintiff to present the same suit, if the Court of the first instance, returns a plaint from defect of jurisdiction or other causes of like nature, being unable to entertain it. In the present case, a secured creditor is not withdrawing a proceeding pending before the Debts Recovery Tribunal under Section 19 of the Act of 1993 to invoke the provisions of the Act of 2002. Rather the secured creditor is proceeding, independent of its right to proceed under the Act of 1993, while invoking the provisions of the Act of 2002.

This choice of the secured creditor to invoke the Act of 2002 is independent of and despite the pendency of the proceedings under the Act of 1993, has to be looked at from the perspective of whether or not such an action meets the requirement of Section 36 of the Act of 2002, when the secured creditor is proposing to take a measure under Section 13(4) of the Act of 2002. Although, a secured creditor, as held in Transcore (supra), is entitled to take a remedy or a measure as available in the Act of 2002, despite the pendency of other proceedings, including a proceeding under Section 19 of the Act of 1993, in respect of the self-same cause of action, in my view, the invocation of such independent right under the Act of 2002, has to be done within the period of limitation prescribed under the Limitation Act, 1963 in terms of Section 36 of the Act of 2002.

The Act of 2002 gives an independent right to a secured creditor to proceed against its financial assets and in respect of which such asset the secured creditor has security interest. The right to proceed, however, is subject to the adherence to the provisions of limitation as enshrined in the Limitation Act, 1963. The provisions of the Limitation Act, 1963 are, therefore, attracted to a proceeding initiated under the Act of 2002. That being the legal position, the invocation of the provisions of the Act of 2002 in the facts of the present case, on July 5, 2011, without there being an extension of the period of limitation by the act of the parties cannot be sustained.

xxx xxx xxx

25. The issues raised are, therefore, answered by holding that, the initiation of the proceedings by the bank was barred by the laws of limitation on July 5, 2011 and all proceedings taken by the bank consequent upon and pursuant to the notice under Section 13(2) of the Act of 2002 dated July 5, 2011 are quashed including such notice.”

15. In Indo Alusys Industries v. Assotech Contracts (India) Ltd. 2009 (110) DRJ 384, a learned Single Judge of the Delhi High Court opined that a suit for recovery and a winding up proceeding are distinct and independent remedies, as follows:

“12. So far as the objection that the petitioner has filed a suit disentitling it to maintain the present petition is concerned, it is well settled that the right to bring a winding up action is statutory conferred under Section 433 of the Companies Act, 1956. However, no person has a statutory right to winding up of a company incorporated under the Companies Act, 1956. Action to recover amounts and to winding up of the company are two wholly distinct and independent remedies. It is not necessary that every petition under Section 433 of the Companies Act, 1956 ends up in an order of winding up. Several essential factors as public interest, justice and convenience enter into the consideration before the prayed for order results. The nature of the defence and extent of dispute raised by the respondent also impact adjudication in winding up action. At the same time, limitation for seeking the remedy of recovery against the company continues to run. The two remedies are not alternative remedies. More often than not, as a matter of abundant caution, parties do not wait for final decision in one remedy before invoking the other.

xxx xxx xxx

14. In view of the above, mere filing of the suit by the petitioner in order to protect its right and by way of abundant caution certainly would not prohibit filing of the winding up petition or preclude the petitioner from maintaining the same.”

16. In Board of Regents of the University of the State of New York et. al. v. Mary Tomanio 100 S. Ct. 1790, the Supreme Court of the United States of America held that a federal action under the Civil Rights Act of 1871 was barred by the application of a three-year New York statute of limitations. What was argued was that the federal remedy became available only as a consequence of the State remedy being denied, as the Respondent had commenced a proceeding in the New York states courts attacking a decision of the Board of Regents not to grant a waiver of a licence to practice as a chiropractor. By November 1975, the appeals in the State proceedings being exhausted, and the Respondent being denied any relief, the Respondent instituted an action in the Federal District Court on 25th June, 1976. The Supreme Court of the United States of America held that the second action was clearly barred by the law of limitation, being filed three years after the cause of action had arisen. It was held that once the limitation period started running, it did not stop because a separate and independent remedy had been pursued in the meanwhile. The Court held: “No section of the law provides, however, that the time for filing a cause of action is tolled during the period in which a litigant pursues a related, but independent cause of action.”

17. In Martiza Alamo-Hornedo v. Juan Carlos Puig and Jose Perez-Riera 745 F.3d 578, the US Court of Appeals, First Circuit held on the facts of the case, that a separate and independent action which was otherwise barred by limitation could not be brought within limitation merely because a prior suit had been filed. The Court held:

“4. The plaintiff also suggests that her prior suit in the Court of First Instance somehow tolled the statute of limitations. This suggestion is fanciful.

5. To begin, exhaustion of state remedies is not a condition precedent to the maintenance of a section 1983 action. See Patsy v. Bd. of Regents , 457 U.S. 496, 516, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982); Rogers v. Okin, 738 F.2d 1, 5 (1st Cir. 1984). Thus, the commencement and pendency of a state proceeding ordinarily does not toll the limitations period for a parallel action under Section 1983. See, e.g., Rodriguez-Garcia v. Municipality of Caguas , 354 F.3d 91, 93 (1st Cir.2004); Ramirez de Arellano v. Alvarez de Choudens , 575 F.2d 315, 319 (1st Cir. 1978). The plaintiff attempts to parry his thrust by noting that, under Puerto Rico law, the statute of limitations can be “interrupted” by, among other things, suing on the relevant claim. P.R. Laws Ann. tit. 31, 5303. Once the court action “comes to a definite end,” the “statute of limitations begins to run anew.” Rodriguez- Gracia , 354 F.3d at 97 (internal quotation marks omitted).

*582. The plaintiff’s reliance on this principle elevates hope over reason. In order to have the tolling effect desired by the plaintiff, the complaint in the first action “must assert causes of action identical to” those asserted in the second action. Id. (internal quotation marks omitted).

6. The identicality requirement has three facets. The two actions “must seek the same form of relief”; they “must be based on the same substantive claims”; and they “must be asserted against the same defendants in the same capacities.” Id. at 98. The plaintiff offers no developed argumentation sufficient to show that she satisfies these conditions. In all events, it is readily apparent that the plaintiff has not satisfied the identicality requirement. The first action, brought in the Court of First Instance, sought the equitable remedies of reinstatement and back pay; the second action, brought in the federal district court, sought the legal remedies of compensatory and punitive damages. Thus, it is nose-on-the-face plain that the two actions did not seek the “same form of relief.” We hasten to add that this conclusion breaks no new ground.

This court has held, squarely and repeatedly, that under Puerto Rico law, “seeking only equitable relief does not toll the statute of limitations where the subsequent complaint… seeks damages.” Nieves-Vega v. Ortiz-Quinones, 443 F.3d 134, 137 (1st Cir. 2006) (collecting cases). In view of the plaintiff’s failure to satisfy the first facet of the identicality requirement, we need not inquire into the other two facets. Puerto Rico law is pellucid that a plaintiff who seeks to interrupt the running of a statute of limitations on this basis must satisfy all three facets of the identicality requirement. See, e.g., Santana-Castro v. Toledo-Davila , 579 F.3d 109, 116 (1st Cir. 2009); Nieves- Vega , 443 F.3d at 137-38.

That ends this aspect of the matter. When all is said and done, the plaintiff’s decision to sit idly by while the proceedings in the Court of First Instance unfolded dooms her tardy attempt to assert a federal claim. Although waiting for the Commonwealth court’s ruling may have served to strengthen the plaintiff’s belief that her firing was illegal, there is no requirement that a period who wishes to pursue a Section 1983 claim premised on an allegedly wrongly termination of employment await an independent finding that her dismissal was unlawful. Consequently, the plaintiff’s election to await a ruling by the Court of First Instance does not justify her failure to bring her federal claim within the time allotted by statute.”

18. In Re Karnos Property Co. Ltd. (1989) 5 B.C.C. 14, a learned Single Judge of the Chancery Division (Companies Court) held that a local authority’s petition to wind up a company for non-payment of rates was barred by the law of limitation, being presented more than six years after the cause of action arose. The fact that the rate demanded had been the subject of distress warrants did not in any manner impact the limitation period for the winding up petition. It was thus held: “Applying those words to the petition proceedings now in train it seems that the cause of the proceedings arose at the latest when the company failed to pay the latest rate demand on 1 April 1981. That is more than six years before the presentation of the petition. Accordingly I conclude that the petition must be dismissed because it is founded on rates unpaid for more than six years. In other words a local authority petition for non-payment of rates is subject to the provisions of the Limitation Acts. Mr. Acton for the local authority conceded, as I understand, that rates unpaid for six years and never the subject of a distress warrant were irrecoverable in any way; so that the local authority ceases to be a creditor and thus may not petition.

But, said Mr. Acton, once a distress warrant has been obtained it remains always available for execution and thus preserves the local authority its character as a creditor and ever able to petition. I do not accept this submission. If one assumes that the two distress warrants issued in this case remain available to the local authority, I do not think it follows that the provisions of the Limitation Acts that I have mentioned do not operate to stop the presentation of a petition. The effect of Section 2(1) of the 1939 Act (or Section 9(1) of the 1980 Act) is that a petition may not be presented if six years have passed since the rates were demanded. There is nothing there to qualify the position if a distress warrant happens to be current. A petition lies not because a distress warrant has been or may be issued but because a local authority is a “creditor” as that word is and has been used in the Companies Acts (see the North Bucks case). The remedies by way of distress and petition are separate and distinct.”

19. The aforesaid judgments correctly hold that a suit for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a winding up proceeding. In law, when time begins to run, it can only be extended in the manner provided in the Limitation Act. For example, an acknowledgement of liability under Section 18 of the Limitation Act would certainly extend the limitation period, but a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding up proceeding.

20. Shri Kaul, however, relied heavily on the judgment of a Single Judge of the Bombay High Court reported as Re: Messrs: Bhimji Nanji and Co. (1969) Mh.L.J. 827. That case arose under the Presidency-towns Insolvency Act, 1909, the question raised being as follows:

“4. Whether the debt on the basis of which the petition for adjudication is presented and an adjudication order is sought should be a subsisting debt at the date of the hearing of the petition or is it enough that it subsisted at the date of the presentation of the petition?” Section 13 of the Presidency-towns Insolvency Act, 1909 laid down what factors are required to be proved by a petitioning-creditor at the hearing of the petition before the Court. Section 13(2) of the said Act, which fell for consideration before the Bombay High Court, is set out hereinbelow: “At the hearing the Court shall require proof of –

(a) the debt of the petitioning creditor, and (b) the act of insolvency or, if more than one act of insolvency is alleged in the petition, some one of the alleged acts of insolvency.” The observation that was made by the Court which is relied upon heavily by Shri Kaul is contained in paragraph 9, which is set out hereinbelow:

“9. Mr. Shah urged that if this view were accepted by the Court it would cause great hardship to the creditor. Once an insolvency petition is presented by a creditor, he normally expects that the adjudication order would be passed at the hearing of his petition and simply because the hearing of the petition is delayed not for any default on his part but say on account of the exigencies of the Court work the creditor will have to meet the fate which he may not have thought of or contemplated, if in the meantime the debt becomes barred by limitation. I do not see any hardship arising to the creditor as suggested by Mr. Shah, for it would be open to the creditor or rather it would be his duty to see that he keeps the debt alive either by means of an acknowledgement or part payment or by filing a suit in respect thereof in a proper court well within the period of limitation, but to my mind, it is clear that mere pendency of an insolvency petition without anything more cannot have the effect of saving the limitation prescribed by the Indian Limitation Act.”

The context in which the learned Single Judge made an observation that the filing of a suit within limitation would keep the debt alive, is in the context of Section 13 of the Presidency-towns Insolvency Act, 1909 – which requires that the debt of the petitioning creditor should be alive even at the hearing of the insolvency petition. Obviously, if at the hearing of the petition, the debt was time-barred, the stringent result of insolvency of the individual concerned would not follow. It is in this context that the learned Single Judge held that a debt would be subsisting at the date of hearing of the insolvency petition if a suit was filed to recover it within the period of limitation.

The context of Section 13 of the Presidency-towns Insolvency Act, 1909 is far removed from the present context, in which what has to be seen is whether a winding up proceeding has been filed within the limitation period provided. In the facts of the present case, no question as to subsistence of a live debt at the hearing of a winding up petition is at all involved. This case is, therefore, wholly distinguishable.

21. Shri Kaul then relied strongly on the rationale for laws of limitation generally, which was set out in Rajender Singh and Ors. v. Santa Singh and Ors. (1973) 2 SCC 705 as follows:

“17. The policy underlying statutes of limitation, spoken of as statutes of “repose”, or of “peace” has been thus stated in Halsbury’s Laws of England Vol. 24, p. 181 (para 330):

“330. Policy of Limitation Acts.- The Courts have expressed at least three differing reasons supporting the existence of statutes of limitation, namely:

( 1 ) that long dormant claims have more of cruelty than justice in them,

( 2 ) that a defendant might have lost the evidence to disprove a stale claim, and

( 3 ) that persons with good causes of actions should pursue them with reasonable diligence.”

18. The object of the law of limitation is to prevent disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have been lost by a party’s own inaction, negligence, or laches.” These observations are apposite in the context of the facts of the present case. It is clear that IL & FS pursued with reasonable diligence the cause of action which arose in August, 2012 by filing a suit against La-Fin for specific performance of the Letter of Undertaking in June, 2013. What has been lost by the aforesaid party’s own inaction or laches, is the filing of the Winding up Petition long after the trigger for filing of the aforesaid petition had taken place; the trigger being the debt that became due to IL & FS, in repayment of which default has taken place.

22. At this stage, it is necessary to set out Section 433(e) and Section 434 of the Companies Act, 1956, which read as follows:

“433. Circumstances in which company may be wound up by Tribunal.- A company may be wound up by the Tribunal,-

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(e)if the company is unable to pay its debts;”

“434. Company when deemed unable to pay its debts.-

(1) A company shall be deemed to be unable to pay its debts-

(a)if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding one lakh rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor;

(b)if execution or other process issued on a decree or order if any Court or Tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part; or

(c) if it is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, the Tribunal shall take into account the contingent and prospective liabilities of the company.

(2) The demand referred to in clause (a) of sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf, or in the case of a firm if it is signed by any such agent or legal adviser or by any member of the firm.” A reading of the aforesaid provisions would show that the starting point of the period of limitation is when the company is unable to pay its debts, and that Section 434 is a deeming provision which refers to three situations in which a Company shall be deemed to be “unable to pay its debts” under Section 433(e). In the first situation, if a demand is made by the creditor to whom the company is indebted in a sum exceeding one lakh then due, requiring the company to pay the sum so due, and the company has for three weeks thereafter “neglected to pay the sum”, or to secure or compound for it to the reasonable satisfaction of the creditor.

“Neglected to pay” would arise only on default to pay the sum due, which would clearly be a fixed date depending on the facts of each case. Equally in the second situation, if execution or other process is issued on a decree or order of any Court or Tribunal in favour of a creditor of the company, and is returned unsatisfied in whole or in part, default on the part of the debtor company occurs. This again is clearly a fixed date depending on the facts of each case. And in the third situation, it is necessary to prove to the “satisfaction of the Tribunal” that the company is unable to pay its debts. Here again, the trigger point is the date on which default is committed, on account of which the Company is unable to pay its debts.

This again is a fixed date that can be proved on the facts of each case. Thus, Section 433(e) read with Section 434 of the Companies Act, 1956 would show that the trigger point for the purpose of limitation for filing of a winding up petition under Section 433(e) would be the date of default in payment of the debt in any of the three situations mentioned in Section 434.

23. Shri Kaul relied upon several well-known judgments, which lay down the law under Section 433 and 434 of the Companies Act, 1956. He relied upon M/s Madhusudan Gordhandas & Co. v. Madhu Woollen Industries Pvt. Ltd. (1971) 3 SCC 632, wherein in a case of a winding up petition filed under Section 433(e), the High Court had rejected the claim of the Appellant to wind up the Company as creditors of the Company. Unlike the present case, the Appellant therein gave no statutory notice to raise any presumption of inability to pay debts. In this context, this Court held:

“20. Two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. (See London and Paris Banking Corporation [(1874) LR 19 Eq 444] ) Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been properly was not allowed. (See Re. Brighton Club and Horfold Hotel Co. Ltd. [(1865) 35 Beav 204] )

21. Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt, see Re. A Company. [94 SJ 369] Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debt precisely See Re Tweeds Garages Ltd. [1962 Ch 406] The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends.” The Court then stated that as the making of a winding up order is discretionary, the Court will ordinarily consider the wishes of all the creditors, and if they are opposed to winding up the company, the Court may, in its discretion, refuse such order. What was relied upon strongly by Shri Kaul was paragraph 29, in which the Court held:

“29…In determining whether or not the substratum of the company has gone, the objects of the company and the case of the company on that question will have to be looked into. In the present case the company alleged that with the proceeds of sale the company intended to enter into some other profitable business. The mere fact that the company has suffered trading losses will not destroy its substratum unless there is no reasonable prospect of it ever making a profit in the future, and the court is reluctant to hold that it has no such prospect. (See Re Suburban Hotel Co. [(1867) 2 Ch App 737] and Davis and Co. v. Brunswick ( Australia ) Ltd. [(1936) 1 AER 299])…The company has not abandoned objects of business. There is no such allegation or proof. It cannot in the facts and circumstances of the present case be held that the substratum of the company is gone. Nor can it be held in the facts and circumstances of the present case that the company is unable to meet the outstandings of any of its admitted creditors. The company has deposited in court the disputed claims of the appellants. The company has not ceased carrying on its business. Therefore, the company will meet the dues as and when they fall due. The company has reasonable prospect of business and resources.”

24. According to Shri Kaul, it was not possible for his client to approach the High Court with a winding up petition as on the date on which he filed the suit for specific performance, because La-Fin (i.e. the Company sought to be wound up), could not be said to have lost its substratum as on such date. It was for this reason that he approached the winding up Court in 2016, when the assets of La- Fin, which, as of 2013 were worth over INR 1000 crores, had in 2016 become only worth INR 200 crores.

25. This judgment does not take Shri Kaul’s argument any further. Nowhere in the Winding up Petition is it alleged that the company sought to be wound-up has lost its substratum, in the sense that there is no reasonable prospect of it ever making a profit in the future, nor can it be said that the company had abandoned its business and is, therefore, unable to meet the outstandings owed by it. On the other hand, what emerges from this judgment (and paragraph 21 therein in particular), is that it is not open for a company to say that a debt is undisputed, that it has ability to pay the debt, but will not pay the debt.

Equally, where a debt is clearly owed, but the exact amount of debt is disputed, the company will be held to be unable to pay its debts. What has to be seen in each case is whether the debt is bona fide disputed. If so, without more, a winding up petition would then be dismissed. One other thing must be noticed at this stage. The trigger for limitation is the inability of a company to pay its debts. Undoubtedly, this trigger occurs when a default takes place, after which the debt remains outstanding and is not paid. It is this date alone that is relevant for the purpose of triggering limitation for the filing of a winding up petition.

Though it is clear that a winding up proceeding is a proceeding ‘in rem’ and not a recovery proceeding, the trigger of limitation, so far as the winding up petition is concerned, would be the date of default. Questions as to commercial solvency arise in cases covered by Sections 434(1) (c) of the Companies Act, 1956, where the debt has first to be proved, after which the Court will then look to the wishes of the other creditors and commercial solvency of the company as a whole. The stage at which the Court, therefore, examines whether the company is commercially insolvent is once it begins to hear the winding up petition for admission on merits. Limitation attaches insofar as petitions filed under Section 433(e) are concerned at the stage that default occurs for, it is at this stage that the debt becomes payable. For this reason, it is difficult to accept Shri Kaul’s submission that the cause of action for the purposes of limitation would include the commercial insolvency or the loss of substratum of the company.

26. The next judgment referred to and relied upon by Shri Kaul is Pradeshiya Industrial & Investment Corporation of U.P. v. North India Petrochemicals Ltd. and Anr. (1994) 3 SCC 348. In this case, it was found that Dalmia Industries had resorted to arbitration proceedings, in which there was a substantial dispute raised on the amount claimed. The passage strongly relied upon by Shri Kaul is set out hereinbelow:

“27. What then is inability when the section says “unable to pay its dues”? That should be taken in the commercial sense. In that, it is unable to meet current demands. As stated by William James, V.C. it is “plainly and commercially insolvent – that is to say, that its assets are such, and its existing liabilities are such, as to make it reasonably certain – as to make the Court feel satisfied – that the existing and probable assets would be insufficient to meet the existing liabilities”. (In European Life Assurance Society, Re [LR (1869) 9 Eq 122] ; V.V. Krishna Iyer & Sons v. New Era Mfg. Co. Ltd. [(1965) 35 Comp Cas 410 : (1965) 1 Comp LJ 179 (Ker)])” This passage is in the context of an order under 433(e) of the Companies Act, 1956 being discretionary, which is referred to in the preceding paragraph 25. As stated hereinabove, the facts as to commercial insolvency are to be pleaded and proved at the admission stage of the winding up petition; the trigger for the winding up proceeding for limitation purposes, as has been stated hereinabove, being the date of default.

27. Shri Kaul then relied upon Mediquip Systems (P) Ltd. v. Proxima Medical System GMBH (2005) 7 SCC 42 and in particular, paragraphs 18 and 23 thereof, which state as follows:

“18. This Court in a catena of decisions has held that an order under Section 433( e ) of the Companies Act is discretionary. There must be a debt due and the company must be unable to pay the same. A debt under this section must be a determined or a definite sum of money payable immediately or at a future date and that the inability referred to in the expression “unable to pay its debts” in Section 433( e ) of the Companies Act should be taken in the commercial sense and that the machinery for winding up will not be allowed to be utilised merely as a means for realising debts due from a company.

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23. The Bombay High Court has laid down the following principles in Softsule (P) Ltd., Re [(1977) 47 Comp Cas 438 (Bom)] : (Comp Cas pp. 443-44) Firstly, it is well settled that a winding-up petition is not legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. If the debt is not disputed on some substantial ground, the court/Tribunal may decide it on the petition and make the order. Secondly, if the debt is bona fide disputed, there cannot be “neglect to pay” within the meaning of Section 433(1)( a ) of the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to pay its debts is not substantiated.

Thirdly, a debt about the liability to pay which at the time of the service of the insolvency notice, there is a bona fide dispute, is not “due” within the meaning of Section 434(1)( a ) and non-payment of the amount of such a bona fide disputed debt cannot be termed as “neglect to pay” the same so as to incur the liability under Section 433( e ) read with Section 434(1)( a ) of the Companies Act, 1956. Fourthly, one of the considerations in order to determine whether the company is able to pay its debts or not is whether the company is able to meet its liabilities as and when they accrue due. Whether it is commercially solvent means that the company should be in a position to meet its liabilities as and when they arise.”

28. The Bombay High Court judgment referred to in paragraph 23 of the judgment above states the law on winding up petitions filed under Section 433(a) of the Companies Act, 1956 correctly. The primary test is set out in paragraph 1, which is that a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the Company. Absent such dispute, the petition may be admitted. Equally, where the debt is bona fide disputed, there cannot be ‘neglect to pay’ within the meaning of Section 434(1)(a) of the Companies Act, 1956 so that the deeming provision then does not come into play. Also, the moment there is a bona fide dispute, the debt is then not ‘due’. The High Court also correctly appreciates that whether the company is commercially solvent is one of the considerations in order to determine whether the company is able to pay its debts or not.

29. Even on the facts of this case, the Winding up Petition alleges that the ultimatum to the Respondent company asserting that the Respondent company was legally obliged to purchase the requisite shares in accordance with the terms of the Letter of Undertaking was on 7th January, 2013. By this date at the very latest, the cause of action for filing a petition under Section 433(e) certainly arose. Also, as has been correctly pointed out by Dr. Singhvi, the statutory notice given on 3rd November, 2015 does not refer to any facts as to the commercial insolvency of La-Fin. The statutory notice only refers to the suit proceedings and attachment by the EOW which had taken place long before in December 2013. Factually, therefore, no basis is laid for the legal contentions argued before us by Shri Kaul.

30. In the Winding up Petition itself, what is referred to is the fall in the assets of La-Fin to being worth approximately INR 200 crores as of October, 2016, which again does not correlate with 3rd November, 2015, being the date on which the statutory notice was itself issued. This again is only for the purpose of appointing an Officer of the Court as Official Liquidator in order to manage the day-to-day affairs and otherwise secure and safeguard the assets of the Respondent company. There is no averment in the petition that thanks to these or other facts the Company’s substratum has disappeared, or that the Company is otherwise commercially insolvent. It is clear therefore that even on facts, the company’s substratum disappearing or the commercial insolvency of the company has not been pleaded. Whereas, in Form-1, upon transfer of the winding up proceedings to the NCLT, what is correctly stated is that the date of default is 19th August, 2012; making it clear that three-years from that date had long since elapsed when the Winding up Petition under Section 433(e) was filed on 21st October, 2016.

31. We therefore allow Civil Appeal (Diary No. 16521 of 2019) and dispose of the Writ Petition (Civil) No.455 of 2019 by holding that the Winding up Petition filed on 21st October, 2016 being beyond the period of three-years mentioned in Article 137 of the Limitation Act is time-barred, and cannot therefore be proceeded with any further. Accordingly, the impugned judgment of the NCLAT and the judgment of the NCLT is set aside.

[SLP(C) (Diary No.13468 of 2019]

[T.P. (C) No.817 of 2019]

32. In view of the aforesaid, nothing survives insofar as Special Leave Petition (Diary No.13468 of 2019) and Transfer Petition (Civil) No.817 of 2019 are concerned, and they are accordingly disposed of as having become infructuous.

J. (R.F. Nariman)

J. (R. Subhash Reddy)

J. (Surya Kant)

New Delhi:

September 25, 2019.


[Civil Appeal No. of 2019 Arising Out of Special Leave Petition (Civil) No.______ of 2019]

[D. No.13468 of 2019]

[Transfer Petition (Civil) No.817 of 2019]

[Civil Appeal No. 7618-19 of 2019]

[D. No.16521 of 2019]

[Writ Petition (Civil) No.645 of 2019]

Govindbhai Chhotabhai Patel & Ors. Vs. Patel Ramanbhai Mathurbhai-23/09/2019

In the absence of any evidence of any forgery or fabrication and in the absence of specific denial of the execution of the gift deed, the Donee was under no obligation to examine one of the attesting witnesses of the gift deed.

Specific denial of execution of gift is an unambiguous and categorical statement that the donor did not execute the document. It means not only that the denial must be in express terms but that it should be unqualified, manifest and explicit. It should be certain and definite denial of execution.

Act: Sec 68 of the Indian Evidence Act

FROM: High Court of Gujarat in the second appeal

SUPREME COURT OF INDIA

Govindbhai Chhotabhai Patel & Ors. Vs. Patel Ramanbhai Mathurbhai

[Civil Appeal No. 7528 of 2019 arising out of SLP (Civil) No. 4382 of 2019]

HEMANT GUPTA, J.

1. Leave granted.

2. The order passed by the High Court of Gujarat on September 5, 2018 in second appeal is the subject matter of challenge in the present appeal on behalf of the plaintiffs-appellants.

3. The appellants are sons of Chhotabhai Ashabhai Patel1 who died on December 6, 2001. During his life time, he purportedly executed a gift deed dated November 15, 1977 in favour of defendant Ramanbhai Mathurbhai Patel2.

4. The parties went to trial on the following issues:

(i) Whether the plaintiffs prove that the disputed gift deed is fabricated?

(ii) Whether the plaintiffs prove that the suit properties are ancestral properties and late Chhotabhai Ashabhai had no right to execute the gift deed?

(iii) Whether the plaintiffs prove that the defendant has no right, title or interest over the said property?

(iv) Whether the plaintiffs prove that they are entitled to get the relief as prayed for?

(v) Whether the defendant proves that the plaintiffs have no right to file the present suit?

(vi) What order and decree?

5. The High Court framed five substantial questions of law and after giving findings on such substantial questions of law, the judgment and decree passed by the learned Trial Court on February 10, 2014 and the judgment and decree passed by the First Appellate Court on October 9, 2017 were set aside.

6. The findings recorded by the High Court, inter alia, are that execution of the gift deed was not specifically denied in the suit filed. Therefore, it is not necessary for the Donee to examine one of the attesting witnesses in terms of proviso to Section 68 of the Indian Evidence Act, 1872. It is also held that the suit property is not ancestral property. The property was purchased by Ashabhai Patel, father of the Donor and it is by virtue of Will executed by Ashabhai Patel, property came to be owned by the Donor in the year 1952-1953. The High Court, thus, held that the Donor was competent to execute the gift deed dated November 15, 1977 as the property was not ancestral in the hands of Donor. The relevant findings on such questions which arose for consideration in the second appeal, read as under:

“92. Once again, at the cost of repetition, I state that Section 68 of the Evidence Act has been thoroughly misconstrued by the Courts below. The occasion for applying the rule of exclusion from evidence in Section 68 arises when a party seeking to rely upon a document requiring attestation, fails to prove it in a given manner. As observed by me earlier, the party will then not be able to use it as evidence. But this procedural disability against use of a document as evidence cannot by any stretch be regarded as an affirmative finding that the grounds of attack for avoidance of the deed as claimed in the original relief or cancellation subsisted. The plaintiff cannot succeed relying upon the weakness or a flaw in the case set up by the defendant. The law is that the plaintiff can succeed in the suit only on the strength of his own case.

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105. The case of the plaintiffs is very specific. According to them, the suit properties were purchased by their grandfather and those properties came to be devolved upon their father by Testamentary disposition i.e. on the strength of the will of their grandfather. The Hindu Law, as it stands today, clearly postulates that if it is a self-acquired property of the father, it falls into the hands of his sons not as coparcenary property, but would devolve on them in their individual capacity. Where the property is a self-acquired property of the father, it falls into the hands of his son in his individual capacity and not as coparcenary property in such case son’s son cannot claim right in such property.

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108. In view of the above, I hold that the suit properties devolved upon the father of the plaintiffs could not be said to be coparcenary property. The properties were purchased by the grandfather of the plaintiffs, as pleaded and admitted by the plaintiffs themselves. Such self-acquired properties of the grandfather came to be devolved upon the father of the plaintiffs by way of a ‘will’ i.e. testamentary disposition. In such circumstances, it could be said that the properties are self-acquired properties of the father of the plaintiffs. The succession would have been in accordance with Section 8 of the Hindu Succession Act. When the properties could be said to be self-acquired properties of the father of the plaintiffs, then the father could have definitely transferred those properties by way of a gift deed.

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114. In view of the above, I hold that the suit properties were self-acquired properties of the father of the plaintiffs, and in such circumstances, it was open for the father of the plaintiffs to execute the gift deed in favour of the defendant.”

7. Learned counsel for the appellants submitted that the High Court has exceeded its jurisdiction in second appeal as findings recorded by the First Appellate Court were not specifically dealt with. It is, thus, argued that the interference in the second appeal is contrary to judgment of this Court in Thulasidhara & Anr. v. Narayanappa & Ors.4. It is argued that the appellants have produced old revenue record and from the documents (Exhibits 107 to 126), the property is proved to be ancestral and such is the finding recorded by the Trial Court and the First Appellate Court. Such evidence was not controverted by the Donee. It is argued that the findings recorded by the High Court that the property devolved on the Donor by virtue of a Will, therefore, it ceases to be an ancestral property is contrary to the judgment of this Court in C.N. Arunachala Mudaliar v. C.A. Muruganatha Mudaliar & Anr.5. The reliance is also placed upon judgment of this Court in Shyam Narayan Prasad v. Krishna Prasad & Ors.6 that selfacquired property of a grandfather devolves upon his son as ancestral property.

8. On the other hand, learned counsel for the Donee argued that the plaintiffs have failed to prove that the property was ancestral property after admitting that their grandfather has purchased the property and given it under Will to their father to the exclusion of other family members. The argument raised by learned counsel for the appellants that the High Court has exceeded its jurisdiction by reversing the findings of fact recorded by the First Appellate Court does not hold good as the very reasoning recorded has been found to be illegal. It is argued that judgment in C.N. Arunachala Mudaliar is to the effect that the property bequeathed or gifted to a son by a Mitakshara father will be treated as self-acquired property in the hands of Donee.

9. The first and the foremost question required to be examined is as to whether the appellants have proved that the property in the hands of Donor was ancestral property.

10. Govindbhai Chhotabhai Patel (PW-1) has stated, vide Exhibit 34, that the property in question was purchased by his grandfather Ashabhai Patel and after death of his grandfather, property was owned by the Donor according to the inheritance since 1952-1953. The appellants stated in the cross-examination that there was family partition in the year 1964 between the Donor and his two brothers Chimanbhai Patel and Motibhai Patel. It is, thus, sought to be argued that since the property was partitioned in 1964, therefore, the Donor has acquired the property not as self-acquired property but as ancestral property.

11. We find that a statement in the cross-examination that there was partition between the Donor and his two brothers will not make the property ancestral in the hands of Donor. The Will executed by the father of Donor has not been produced by the appellants to show as to what was intended by his grandfather when the Will was executed in favour of Donor. It is admitted fact that grandfather purchased the property, thus, such self-acquired property came to be bequeathed to the Donor even as per the judgment relied upon by the Appellant.

12. This Court in three Judge Bench in C.N. Arunachala Mudaliar considered the question as to whether the properties acquired by defendant No. 1 under Will are to be regarded as ancestral or selfacquired property in his hands. It is a case where the plaintiff claimed partition of the property in a suit filed against his father and brother. The stand of the father was that the house property was the self-acquired properties of his father and he got them under a Will executed in the year 1912. It was held that father of a Joint Hindu family governed by Mitakshara law has full and uncontrolled powers of disposition over his self-acquired immovable property and his male issue could not interfere with these rights in any way.

The Court while examining the question as to what kind of interest a son would take in the self-acquired property of his father which he receives by gift or testamentary bequest from him, it was held that Mitakshara father has absolute right of disposition over his self-acquired property to which no exception can be taken by his male descendants. It was held that it was not possible to hold that such property bequeathed or gifted to a son must necessarily rank as ancestral property. It was further held that a property gifted by a father to his son could not become ancestral property in the hands of the donee simply by reason of the fact that the donee got it from his father or ancestor.

13. The Court found that such questions have been answered in different ways by different High Courts. The Calcutta High Court held that properties become ancestral property in the hands of his son as if he had inherited it from his father but in other High Courts, the question is treated as one of construction to be decided in each case with reference to its facts as to whether the gifted property was intended to pass to the sons as ancestral or selfacquired property.

14. The Bombay High Court in Jugmohan Das v. Sir Mangal Das7 held that if the son takes by devise, the property continues to be self-acquired in his hands. A man can give away his self-acquired property to whomsoever it pleases, including his own sons and that property so given would be considered self-acquired in the hands of the donee. The Court held as under: “I now come to the question, whether a son, to whom a father leaves his self-acquired property by will, takes the estate by devise or by descent. This is a most important point, perhaps the most important point in the case. For, if the son takes by devise, the property would, in my opinion, continue to be self-acquired in his hands, and a ready means would be afforded by the use of the testamentary power of checking enforced partitions…

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The principle is now settled beyond question, that under Hindu law a man may alienate his property to the same extent by a will as he might by a gift inter vivos. In the Tagore Case (Ind. Ap. Sup. Vol. at p. 68) their Lordships of the Privy Council say: “A gift by will is, until revocation, a continuous act of gift up to the moment of death, and does then operate to give the property disposed of to the persons designated as beneficiaries. They take, upon the death of the testator, as if he had given the property in his life-time.” A bequest by will, therefore, is a gift made in contemplation of death. It only differs from a gift in the fact that it takes effect at a future time instead of immediately. But it must clearly be governed and controlled by the general rules regarding gift. Now, there is no doubt that a man can give away selfacquired property to whomsoever he pleases, including his own sons; and there is no doubt that property so given would be considered self-acquired in the hands of the donee. It would, therefore, follow that property given by will would equally be self-acquired in the hands of the devisee.”

15. Such view of the Bombay High Court was accepted by the Allahabad High Court8 and the Lahore High Court9. This Court in C.N. Arunachala Mudaliar approved the view of the Bombay High Court and held as under:

“9. … It was held, therefore, that the father of a joint Hindu family governed by Mitakshara law has full and uncontrolled powers of disposition over his self-acquired immovable property and his male issue could not interfere with these rights in any way. This statement of the law has never been challenged since then and it has been held by the various High Courts in India, and in our opinion rightly, that a Mitakshara father is not only competent to sell his self-acquired immovable property to a stranger without the concurrence of his sons [Vide Muddun v. Ram, 6 WR 71] but he can make a gift of such property to one of his own sons to the detriment of another [ Vide Sital v. Madho, ILR 1 All 394] ; and he can make even an unequal distribution amongst his heirs [Vide Bawa v. Rajah, 10 WR 287].

10. So far the law seems to be fairly settled and there is no room for controversy. The controversy arises, however, on the question as to what kind of interest a son would take in the self-acquired property of his father which he receives by way of gift or testamentary bequest from him, vis-a-vis his own male issue. Does it remain self-acquired property in his hands also, untrammeled by the rights of his sons and grandsons or does it become ancestral property in his hands, though not obtained by descent, in which his male issue become co-owners with him?……

11. In view of the settled law that a Mitakshara father has right of disposition over his self-acquired property to which no exception can be taken by his male descendants, it is in our opinion not possible to hold that such property bequeathed or gifted to a son must necessarily, and under all circumstances, rank as ancestral property in the hands of the donee in which his sons would acquire co-ordinate interest…”

16. Still further, it was held that the father’s gifts are exempt from partition. The reason for this distinction is that the theory of equal ownership between the father and the son in the ancestral property is not applicable to the father’s gifts at all. The Court held as under:

“12. …But when the father obtains the grandfather’s property by way of gift, he receives it not because he is a son or has any legal right to such property but because his father chose to bestow a favour on him which he could have bestowed on any other person as well. The interest which he takes in such property must depend upon the will of the grantor. A good deal of confusion, we think, has arisen by not keeping this distinction in mind. To find out whether a property is or is not ancestral in the hands of a particular person, not merely the relationship between the original and the present holder but the mode of transmission also must be looked to; and the property can ordinarily be reckoned as ancestral only if the present holder has got it by virtue of his being a son or descendant of the original owner.

The Mitakshara, we think, is fairly clear on this point. It has placed the father’s gifts under a separate category altogether and in more places than one has declared them exempt from partition. Thus in Chapter I, Section 1, Placitum 19 Mitakshara refers to a text of Narada which says: “Excepting what is gained by valour, the wealth of a wife and what is acquired by science which are three sorts of property exempt from partition; and any favour conferred by a father.”

xx xx xx

15. Another argument is stressed in this connection, which seems to have found favour with the learned Judges of the Patna High Court who decided the Full Bench case [Vide Bhagwat v. Mst. Kaporni , ILR 23 Pat 599] referred to above. It is said that the exception in regard to father’s gift as laid down in placitum 28 has reference only to partition between the donee and his brothers but so far as the male issue of the donee is concerned, it still remains partible. This argument, in our opinion, is not sound. If the provision relating to self-acquisition is applicable to all partitions, whether between collaterals or between the father and his sons, there is no conceivable reason why placitum 28, which occurs in the same chapter and deals with the identical topic, should not be made applicable to all cases of partition and should be confined to collaterals alone.

The reason for making this distinction is undoubtedly the theory of equal ownership between the father and the son in the ancestral property which we have discussed already and which in our opinion is not applicable to the father’s gifts at all. Our conclusion, therefore, is that a property gifted by a father to his son could not become ancestral property in the hands of the donee simply by reason of the fact that the donee got it from his father or ancestor.”

17. This Court further held that on reading of the Will as a whole, the conclusion becomes clear that the testator intended the legatees to take the properties in absolute rights as their own self-acquired property without being fettered in any way by the rights of their sons and grandsons. In other words, he did not intend that the property should be taken by the sons as ancestral property. Consequently, the appeal was allowed and the suit for partition by the son against his father was dismissed.

18. In other case reported as Pulavarthi Venkata Subba Rao & Ors. v. Valluri Jagannadha Rao (deceased) by his Heirs & LRs & Ors.10, life estate was given by Valluri Jagannadha Rao to his two sons, Srivatsankara Rao and Narasimha Rao. There was a condition that if any of his sons left no son, the sons of his other son would be entitled to the properties at the end of the life estate. The High Court held that the properties taken by two sons of Narasimha Rao under Will were their separate properties and not ancestral properties as there was no such intention in the Will. This Court held as under:

“8. The contention of the judgment-debtors was that there were two persons who were legatees under the will. They took the villages not as ancestral properties but as self-acquired properties, and the peshkash payable on these two villages must be divided between them before Section 3(ii), proviso (D) of the Act was made applicable. The contention on the side of the decree-holders was that these properties were held by an undivided Hindu family and the sons of Narasimha Rao took the properties under the will as ancestral properties, and the peshkash in respect of the two villages must be added together for the purpose of the application of the said proviso.

The High Court held that the properties taken by the two sons of Narasimha Rao under the will, were their separate properties and not ancestral properties, as there were no words to show a contrary intention. The High Court also referred to the conduct of the respondents in partitioning the villages and held that the property was held not jointly but in definite shares. The High Court, therefore, held that the peshkash in respect of the two villages could not be aggregated. The High Court, accordingly, broke up the peshkash in respect of Kalagampudi and the three-fifth share of Pedamamidipalli into two halves and held that as each son of Narasimha Rao was required to pay only his share, the peshkash paid by them individually did not exceed Rs 500 mentioned in proviso (D), and that the judgment-debtors were, therefore, agriculturists. This part of the case was not challenged before us by the learned Advocate-General of Andhra Pradesh. Indeed, the decision of the High Court is supported by C.N. Arunachala Mudaliar v. C.A. Muruganatha Mudaliar [(1954) SCR 243], in respect of the character of the property inherited by the two sons of Narasimha Rao, and this fundamental fact could not be questioned…..”

19. Learned counsel for the appellants has referred to Shyam Narayan Prasad. That is a case in which the property in question was held to be ancestral property by the Trial Court. The plaintiffs therein being sons and grandson of one of the sons of Gopal Prasad, the last male holder was found to have equal share in the property. The question examined was whether the property allotted to one of the sons of Gopal Prasad in partition retains the character of coparcenary property. It was the said finding which was affirmed by this Court. This Court held as under: “12. It is settled that the property inherited by a male Hindu from his father, father’s father or father’s father’s father is an ancestral property. The essential feature of ancestral property, according to Mitakshara Law, is that the sons, grandsons, and great grandsons of the person who inherits it, acquire an interest and the rights attached to such property at the moment of their birth. The share which a coparcener obtains on partition of ancestral property is ancestral property as regards his male issue. After partition, the property in the hands of the son will continue to be the ancestral property and the natural or adopted son of that son will take interest in it and is entitled to it by survivorship.”

20. The question examined in the aforesaid case was in respect of status of the property after partition. The said question is not arising in the present case as it is not a question of partition but testamentary succession in favour of the Donee.

21. In view of the undisputed fact, that Ashabhai Patel purchased the property, therefore, he was competent to execute the Will in favour of any person. Since the beneficiary of the Will was his son and in the absence of any intention in the Will, beneficiary would acquire the property as self-acquired property in terms of C.N. Arunachala Mudaliar case. The burden of proof that the property was ancestral was on the plaintiffs alone. It was for them to prove that the Will of Ashabhai intended to convey the property for the benefit of the family so as to be treated as ancestral property. In the absence of any such averment or proof, the property in the hands of Donor has to be treated as self-acquired property. Once the property in the hands of Donor is held to be self-acquired property, he was competent to deal with his property in such a manner he considers as proper including by executing a gift deed in favour of a stranger to the family.

22. The other material question is whether the appellants have specifically denied the execution of the gift deed in terms of proviso to Section 68 of the Evidence Act, to make it mandatory for the defendant to examine one of the attesting witnesses to prove the Gift deed in his favour.

23. Section 68 of the Evidence Act, reads as under:

“68. Proof of execution of document required by law to be attested- If a document is required by law to be attested, it shall not be used as evidence until one attesting witness at least has been called for the purpose of proving its execution, if there be an attesting witness alive, and subject to the process of the court and capable of giving evidence: Provided that it shall not be necessary to call an attesting witness in proof of the execution of any document, not being a will, which has been registered in accordance with the provisions of the Indian Registration Act, 1908 (16 of 1908), unless its execution by the person by whom it purports to have been executed is specifically denied.”

24. A gift deed is required to be compulsorily attested in terms of Section 123 of the Transfer of Property Act, 1882. Similar is the provision in respect of execution of a Will which is required to be attested in terms of Section 63 of the Indian Succession Act, 1925. Section 68 of the Evidence Act makes it mandatory to examine one of the attesting witnesses for the purpose of proving of the execution of Will but such limitation is not applicable in respect of proof of execution of any document which has been registered in accordance with provisions of the Indian Registration Act, 1908, unless the execution is specifically denied.

25. The gift deed (Ex.104) is registered and that all the requirements of Section 123 of the Transfer of Property Act have been fulfilled, is the finding of the Trial Court. The learned Trial Court recorded the following findings: “However, as far as it is concerned with the gift deed of Exh-104, in order to prove that Late Chhotabhai Ashabhai executed this gift deed in favour of the defendant in fully conscious state, it is necessary as per section – 123 of the Transfer of Property Act that this gift deed should be signed by the executer in presence of the two witnesses that means it should be executed in the presence of two attesting witnesses. Moreover, it should be proved that such gift deed is registered. Looking to the gift deed at Exh – 104, it is an undisputable fact that it is properly registered before the Sub Registrar, Padra. It is also an indisputable fact that (1) Bhikhabhai Ramabhai and (2) Karshanbhai Dhulabhai have put their signatures in this gift deed as the attesting witnesses. Thus, it is found that all the requirements of section 123 of the Transfer of Property Act have been fulfilled. However, along with this, it is also necessary to examine the attesting witnesses of the deed.”

26. The argument of the learned counsel for the appellants is that the attesting witnesses of the gift deed are Bhikhabhai Ramabhai and Karsanbhai Dhulabhai, whereas Solanki Bhikhabhai Ramabhai and Vaid Alkaben Vinodchandra are the witnesses at the time of registration of the document. It is argued that the attesting witnesses of the document have not been examined which is a mandatory requirement to prove execution of the gift deed in terms of Section 68 of the Evidence Act. The High Court has held that the appellants have not denied specifically the execution of the gift deed, therefore, it was not necessary for the Donee to examine one of the attesting witnesses.

27. The issue No. 1 framed by the Trial Court is whether the gift deed is fabricated. Such issue arises on the basis of averments made in the plaint wherein, the appellants have admitted the execution of the gift deed but alleged that Donee has made unsuccessful effort for grabbing the property. The appellants have, inter alia, pleaded that Chanchalben, wife of the Donor, died in August, 1997. Thus, there was no reason for the Donor to execute the gift deed as real nephews of the Donor were taking complete control of the Donor. The other ground of challenge was that the attesting witnesses have no relation with the Donor nor they are friends of the Donor. It was also alleged that the gift is not for religious reasons or to any religious trust or institution or for public use nor the consent has been sought by the Donor from the appellants. The specific averments in the plaint are as under:

“2) The deceased Chhotabhai Ashabhai who was the father of plaintiff Nos. 1 to 4 and plaintiff Nos. 1 to 4 were living in USA (America) since many years and the deceased Chhotabhai Patel and the mother of plaintiff Nos. 1 to 4 Chanchalben wife of Chhotabhai Ashabhai who had expired in and around August, 1997, and since August, 1997, deceased Chhotabhai Ashabhai was living alone thus, taking advantage of his loneliness the defendant on 15/11/1997 executed one gift deed which was registered in the office of Sub-Registrar, Padra at Sr. No. 1004 made unsuccessful efforts for grabbing the said property thus, the plaintiffs are constrained to file this suit, on the grounds which are stated as under:

(a) The deceased Chhotabhai Ashabhai was not in any manner related to the defendant Ramanbhai Mathurbhai.

(b) The deceased Chhotabhai Ashabhai Patel and his wife Chanchalben wife of Chhotabhai Ashabhai Patel were living in America since many years prior to 1997.

(c) Chanchalben the wife of deceased Chhotabhai Ashabhai had expired during the period of August, 1997, thus, on 15/11/1997, there was no reason for Chhotabhai to execute the gift deed, not only that but the real nephews of the deceased Chhotabhai Ashabhai who were living at Ghayaj were taking complete care of deceased Chhotabhai Ashabhai, thus, outside their knowledge, at any time the deceased Chhotabhai had no reason to execute deed.

(d) In the gift deed dated 15/11/1997, the witnesses that have signed

(1) Bhikhabhai Ramabhai and

(2) Karshanbhai Dhulabhai who were not having any kind of relations with the deceased Chhotabhai Ashabhai and/or they were not even related as his friends. There was no reason of making the gift deed in their presence.

(e) In the gift deed dated 15/11/1997 the details of the date of the unregistered Will executed by deceased Chhotabhai Ashabhai is kept blank and the date and registration number of the registered Will is also kept blank, and in this manner, with incomplete details the gift deed is registered which is made hastily which supports the facts of the plaintiffs. (f) In the gift deed dated 15/11/1997 it is clearly evident that the signature of the deceased Chhotabhai Ashabhai is forged, and in this manner on the basis of the forged signature the gift deed is registered, in this regard we are constrained to file the present suit.

(g) The gift deed dated 15/11/1997 which is contrary to the provisions of law, therefore, also by such gift deed the defendant does not acquire any rights, interests or claims on the said property…..”

28. The appellants refer to Will dated December 3, 2001 said to be executed by the Donor in their favour. But no issue has been framed in respect of Will propounded by the appellants. In fact, no attesting witness of the Will has been examined. Therefore, the Will relied upon by the appellants cannot be said to be proved.

29. The High Court held that the appellants have not led any evidence that signature of their father on the gift deed was forged as neither the specimen signature nor writings of their father for the purpose of comparing the disputed signature on the gift deed have been attempted. There is no report of an expert in respect of signatures of the Donor on the gift deed nor any request was made for sending the document to the Forensic Science Laboratory. The High Court held as under:

“67. In my view, the plaintiffs have miserably failed to prove any forgery. If it is the case of the plaintiffs that the signature of their father on the disputed gift deed is forged, then the burden is on them to establish and prove by leading cogent evidence that the signature is forged by another. A mere doubt or assertion or an allegation of forgery by itself is not sufficient to even prima facie draw an inference of fraud. The plaintiffs tried to rely upon the ‘will’ said to have been executed by their late father just two days before his demise in the year 2001. One of the cousins of the plaintiffs took out the ‘will’ out of the blue and handed over to the plaintiffs. The plaintiffs tried to capitalize on this ‘will’ because in the said ‘will’, there is a thumb impression of the father of the plaintiffs i.e. the testator.

The plaintiffs thereby tried to create a doubt in the mind of the Courts below that the father was illiterate and was unable to put his signature. However, if the plaintiffs wanted to rely upon the ‘will’, they should have produced the original and proved the same in accordance with law by examining one of the attesting witnesses to the said ‘will’. The ‘will’ has not even been exhibited, and therefore, there is no question of looking into the same. The entire approach of the Trial Court could be said to be erroneous and has led to a serious miscarriage of justice. I am of the view that the plaintiffs have practically led no evidence even to prima facie create a doubt that the signature of their father on the gift deed is forged. The plaintiffs could have produced the specimen signature or writings of their father, if any, for the purpose of comparing the disputed signature on the gift deed. The Trial Court could have been asked to seek an opinion of an expert in this regard by sending the document to the Forensic Science Laboratory.

Nothing of this sort was done. All that has been asserted in the evidence is that the father had no good reason to execute the gift deed in favour of the defendant, more particularly, when the sons were taking good care of their father. This hardly could be termed as evidence with regard to fraud or forgery. The plaintiffs have not even pleaded or deposed that their father was illiterate and was not able to put his signature. If the evidence on record is looked into, then the plaintiffs have in substance just expressed doubts as regards the signature of their father.”

30. At this stage, we may reiterate that though the learned Trial Court has discussed the evidence on record but in view of the finding that the property is ancestral, no finding was recorded whether the gift deed is forged or not as per the issue framed. The First Appellate Court in a short judgment affirmed the finding of the learned Trial Court. The Trial Court has not retuned any finding that the gift deed is forged. Therefore, the High Court was within its jurisdiction to decide the Issue No. 1 on the basis of evidence led by the parties.

31. The appellants challenged the gift deed on account of probabilities as the witnesses were not related to the family or the friends or that the gift was not for religious or charitable purposes. The other challenge was on the ground of forgery or fabrication. The entire reading of the plaint does not show that there was any specific denial of execution of the gift deed.

32. The appellants have referred to the judgments in Rosammal Issetheenammal Fernandez (Dead) by LRs & Ors. v. Joosa Mariyan Fernandez & Ors.11 and K. Laxmanan v. Thekkayil Padmini & Ors.12. However, we find that both the judgments are not applicable to the facts of the present case. In Rosammal, the appellant had filed a suit for partition and challenged the execution of the gift deed, settlement deed and the Will. The High Court found that the execution of the gift deed was specifically denied. After finding so, the High Court recorded the following findings:

“11. Under the proviso to Section 68 the obligation to produce at least one attesting witness stands withdrawn if the execution of any such document, not being a will which is registered, is not specifically denied. Therefore, everything hinges on the recording of this fact of such denial. If there is no specific denial, the proviso comes into play but if there is denial, the proviso will not apply. In the present case as we have held, there is clear denial of the execution of such document by the plaintiff, hence the High Court fell into error in applying the said proviso which on the facts of this case would not apply. In view of this the very execution of the gift deed, Exhibit B-1 is not proved. Admittedly in this case none of the two attesting witnesses has been produced. Once the gift deed cannot be tendered in evidence in view of the noncompliance of Section 68 of the Indian Evidence Act, we uphold that the plaintiff has successfully challenged its execution…”

33. In the facts of the said case, the High Court found that there is specific denial of execution of the gift deed, therefore, in the absence of examining one of the attesting witnesses, the gift deed is not proved.

34. In K. Laxmanan, a suit was filed by daughter claiming estate of Chathu on the basis of natural succession. The defendant (son of Chathu) relied upon a gift deed (Ex.B-2) as well as Will in his favour. The High Court held that both the attesting witnesses were not examined, therefore, the gift deed and Will are not proved to be executed. It was found that gift deed was relied upon in the written statement which was specifically denied in the affidavit filed in respect of injunction applications.

The Court held as under:

“29. Pleadings as we understand under the Code of Civil Procedure (for short “the Code”) and as is defined under the provision of Rule 1, Order 6 of the Code consist only of a plaint and a written statement. The respondent-plaintiff could have filed a replication in respect to the plea raised in the written statement, which if allowed by the court would have become the part of the pleadings, but mere non-filing of a replication does not and could not mean that there has been admission of the facts pleaded in the written statement. The specific objection in the form of denial was raised in the affidavits filed in respect of the injunction applications which were accepted on record by the trial court and moreover the acceptance on record of the said affidavit was neither challenged nor questioned by the present appellant.”

35. In the abovesaid case, the plaintiff claimed natural succession whereas the defendant relied upon gift deed. In the aforesaid judgments, it has been held as a matter of fact that there was specific denial of execution of gift deed. But in the present case, the appellants came out with the plea of forgery and fabrication of the gift deed which is based on different allegations and proof than the proof of document attested.

36. Order VI Rule 4 of the Code of Civil Procedure, 1908 warrants that in all cases in which allegation of any misrepresentation, fraud, breach of trust, wilful default, or undue influence, the necessary particulars are required to be stated in the pleadings.

37. In Badat and Co. Bombay v. East India Trading Co.13, considering the provisions of Order VIII Rule 3, it was held that written statement must deal specifically with each allegation of fact in the plaint and when a defendant denies any such fact, he must not do so evasively and answer the points of substance. If his denial of the said fact is not specific but evasive, the said fact shall be taken to be admitted.

38. The appellants went to trial on the basis of fabrication of gift deed. The appellants have admitted the execution of the gift deed but alleged the same to be forged or fabricated. However, the appellants have not been able to prove any forgery in the execution of the gift deed.

39. Dashrath Prasad Bajooram v. Lallosingh Sanmansingh & Anr.14 was dealing with the issue as to whether defendant No. 1 executed the mortgage deed with proper attestation and for consideration. Considering the proviso to Section 68 of the Evidence Act, the Court held that word ‘specific’ has to be given some meaning appearing in proviso to Section 68. The Court held as under:

“11. That however raises the question whether a mere general denial of a document or not admitting it can be regarded as a specific denial. It will be observed that the proviso to Section 68 of the Evidence Act speaks of a specific denial. Some meaning must be given to the word ‘specific’. It must mean something over & above a general denial. Accordingly in my judgment it is not sufficient to have a mere general denial to; attract the provisions of S. 68.

That was the distinction drawn in ‘Jhillar v. Rajnarain’, AIR (22) 1935 All 781 at p. 784 : (156 IC 45) & in ‘Laehman Singh v. Surendra Bahadur Singh’, 54 All 1051 at p. 1058 : (AIR (19) 1932 All 527 FB). But those decisions must in my opinion be held to have gone too far in view of the decision of their Lordships of the P.C. in ‘Surendra Bahadur v. Behari Singh’, AIR (26) 1939 PC 117 : (ILR 1939 KAR 222). In view of what their Lordships have stated it must now be accepted that if a party specifically says that he does not admit a particular fact that amounts to a specific denial within the meaning of the proviso to Section 68 of the Evidence Act. But the P.C. decision is, in my opinion, distinguishable.

12. In the P.C. case both execution & attestation were expressly not admitted. It was not a case of a mere general denial of the document. The written statement there was in these terms: “The contesting deft. does not admit the execution & completion of the document sued on” & at the trial, the P.C. said “it was contended on behalf of Lachman Singh that the execution & ‘due attestation’ of the bond……had not been proved.”

13. The case is in my opinion different when there is no specific denial or when the fact of execution is not specifically not admitted but there is a mere general denial. As I have said, some meaning must be given to the words ‘specifically denied’. So also some meaning must be given to the provisions of O. 8 R. 3 of the CPC which state that “It shall not be sufficient for a deft. in his written statement to deny generally the grounds alleged by the pltf., but the deft. must deal specifically with each allegation of fact of which he does not admit the truth……”

40. In Kannan Nambiar v. Narayani Amma & Ors.15, the Division Bench of the Kerala High Court was considering a suit filed by daughter of a donee claiming share in the property. The gift deed was admitted in evidence without any objection. The Court held that specific denial of execution of gift is an unambiguous and categorical statement that the donor did not execute the document. The Court held as under:

“14. Ab initio we have to examine whether there is any specific denial of the execution of the document, in the pleadings. Before considering whether there is specific denial we have to consider what is the exact requirement demanded when the proviso enjoins a specific denial. ‘Specific’ means with exactness, precision in a definite manner (See Webster’s 3rd New International Dictionary). It is clear, that something more is required to connote specific denial in juxtaposition to general denial. See Dashrath Prasad v. Lallosing (AIR. 1951 Nag. 343)

15. We think that specific denial of execution of gift is an unambiguous and categorical statement that the donor did not execute the document. It means not only that the denial must be in express terms but that it should be unqualified, manifest and explicit. It should be certain and definite denial of execution. What has to be specifically denied is the execution of the document. Other contentions not necessarily and distinctly referring to the execution of the document by the alleged executant cannot be gathered, for the denial contemplated in the proviso. xx xx xx 18. The question which elicited the above answer gives a clear understanding of the case of the defendants as they understood their case. Defendants have no case that no document was executed by Anandan Nambiar. Their case is that the document is not valid because it had been executed under circumstances which would render the document invalid. There is no specific denial of the execution of the document. The respondents can seek the aid of the proviso to S. 68 of the Evidence Act. No defect in not calling an attesting witness to prove the document. We do not think that we can ignore Ext. A1 gift deed on the ground that no attesting witness has been called for, for proving the gift deed.”

41. The facts of the present case are akin to the facts which were before the Kerala High Court in Kannan Nambiar. The appellants have not denied the execution of the document but alleged forgery and fabrication. In the absence of any evidence of any forgery or fabrication and in the absence of specific denial of the execution of the gift deed in the manner held in Kannan Nambiar, the Donee was under no obligation to examine one of the attesting witnesses of the gift deed. As per evidence on record, the Donee was taking care of the Donor for many years. The appellants were residing in the United States but failed to take care of their parents. Therefore, the father of the appellants has executed gift deed in favour of a person who stood by him. We find that there is no error in the findings recorded by the High Court.

42. Thus, we do not find any error in the judgment of the High Court which may warrant interference in the present appeal and accordingly, the appeal is dismissed.

J. (L. NAGESWARA RAO)

J. (HEMANT GUPTA)

NEW DELHI;

SEPTEMBER 23, 2019.


1 for short, ‘Donor’

2 for short, ‘Donee’

3 for short, ‘Evidence Act’

4 (2019) 6 SCC 409

5 AIR 1953 SC 495

6 (2018) 7 SCC 646

7 (1886) I.L.R. 10 Bom 528

8 Parsotam v. Janki Bai, ILR 29 All 354

9 Amarnath v. Guran, AIR 1918 Lah 394

10 AIR 1967 SC 591

11 (2000) 7 SCC 189

12 (2009) 1 SCC 354

13 AIR 1964 SC 538

14 AIR 1951 Nag 343

15 1984 SCC OnLine Ker 174 : 1984 KLT 855


 

M/s. Canara Nidhi Ltd. Vs. M. Shashikala and Others-23/09/2019

The proceedings under Section 34 of the Act are summary in nature.

Issues need not be stuck at the stage of hearing a Section 34 application, which is a summary procedure

The scope of enquiry in the proceedings under Section 34 of the Act is restricted to a consideration whether any of the grounds mentioned in Section 34(2) or Section 13(5) or Section 16(6) are made out to set aside the award. The grounds for setting aside the award are specific. It is imperative for expeditious disposal of cases that the arbitration cases under Section 34 of the Act should be decided only with reference to the pleadings and the evidence placed before the arbitral tribunal and the grounds specified under Section 34(2) of the Act.

When the order of the District Judge dismissing the application filed by respondent Nos.1 and 2 does not suffer from perversity, the High Court, in the exercise of its supervisory jurisdiction under Articles 226 and 227 of the Constitution of India, ought not to have interfered with the order

ACTS: Section 34 of the Arbitration and Conciliation Act, 1996 /Order XIV Rule 1 of Civil Procedure Code

SUPREME COURT OF INDIA

M/s. Canara Nidhi Ltd. Vs. M. Shashikala and Others

[Civil Appeal No. 7544-7545 of 2019 arising out of SLP(C) Nos. 35673-74 of 2014]

R. BANUMATHI, J.

1. Leave granted.

2. In the application under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act) seeking to set aside the award, whether the parties can adduce evidence to prove the specified grounds in sub-section (2) to Section 34 of the Act, is the question falling for consideration in these appeals.

3. These appeals arise out of the judgment dated 12.09.2014 passed by the High Court of Karnataka at Bangalore in Writ Petition Nos.18374-75 of 2010 (GM-RES) in and by which the High Court set aside the order passed by the District Judge and directed the District Judge to “recast the issues” and permit respondent Nos.1 and 2 to file affidavits of their witnesses and also permitting cross-examination of the witnesses.

4. Brief facts which led to filing of these appeals are as under:- The appellant is the financial institution and the appellant advanced a loan of Rs.50,00,000/- to respondent No.1 and respondent Nos.2, 4 and 5 to 8 were the guarantors in respect of such loan. The loan was secured by a mortgage with deposit of title deeds and respondent No.1 is also said to have executed a demand promissory note for repayment of the loan. There was an arbitration clause in the agreement to resolve dispute between the parties. It is alleged that the first respondent did not repay the loan and failed to discharge the liabilities arising out of the transaction. The dispute between the appellant and the first respondent was referred to arbitration to the third respondent-Arbitrator. Before the arbitrator, both the parties adduced oral and documentary evidence. The arbitrator passed an award dated 15.12.2007 and directed the respondents to pay an amount of Rs.63,82,802/- with interest on Rs.50,00,000/- at 14% per annum from 11.08.2000 and cost of Rs.52,959/-.

5. Assailing the award, respondent No.1 filed AS No.1 of 2008 under Section 34 of the Act in the Court of District Judge at Mangalore. Before the District Judge, respondent Nos.1 and 2 filed an application under Section 151 CPC to permit the respondents to adduce evidence. The appellant filed objections to the said application. By the order dated 02.06.2010, the learned District Judge dismissed the said application. Holding that the grounds urged in the application can very well be met with by the records of the arbitration proceedings and by perusing the arbitral award, the learned District Judge further held that in any event, there is no necessity of adducing fresh evidence in the application filed under Section 34 of the Act.

6. Aggrieved by the dismissal of their application under Section 151 CPC, respondent Nos.1 and 2 filed writ petitions before the High Court under Articles 226 and 227 of the Constitution of India. The High Court by the impugned judgment allowed the writ petitions and directed the learned District Judge to “recast the issues” and allow respondent Nos.1 and 2 to file affidavits of their witnesses and further allow cross-examination of the witnesses. After referring to the judgment in Fiza Developers and Inter-Trade Private Limited v. AMCI (India) Private Limited and another (2009) 17 SCC 796, the High Court observed that in order to prove the existence of the grounds under Section 34(2) of the Act, respondent Nos.1 and 2 are permitted to file affidavits of their witnesses. In the impugned judgment, the High Court concluded that the reasoning of the District Judge not permitting respondent Nos.1 and 2 to file their own affidavits and affidavits of other witnesses to prove their case is erroneous and opposed to settled principles of law. As pointed out earlier, the learned District Judge was directed to “recast the issues” and the court below was directed to permit respondent Nos.1 and 2 to file affidavits of their witnesses and extend corresponding opportunity to the appellant to place their evidence by affidavit. Being aggrieved, the appellant has preferred these appeals. This Court ordered notice vide order dated 06.01.2015 and further ordered that there shall be stay of the proceedings in AS No.1 of 2008.

7. Assailing the impugned judgment, Mr. S.N. Bhat, learned counsel appearing for the appellant submitted that it is wellsettled that proceedings under Section 34 of the Act is summary in nature and the scope of the said proceedings is very limited. It was submitted that the validity of the award has to be decided on the basis of the materials produced before the arbitrator and there is no scope for adducing fresh evidence before the court in the proceedings under Section 34 of the Act. The learned counsel submitted that the High Court, in the present case, misread the ratio of the decision of the Supreme Court in Fiza Developers. It was inter alia urged that in any event, in the present case, respondent Nos.1 and 2 did not make out any exceptional grounds for permission to lead fresh evidence in the proceedings under Section 34 of the Act and the learned District Judge rightly rejected the application filed by respondent Nos.1 and 2 for permission to lead evidence. The learned counsel urged that the High Court erred in interfering with the order passed by the trial court in interlocutory application.

8. Reiterating the findings of the impugned judgment of the High Court, Ms. E.R. Sumathy, learned counsel appearing for respondent Nos.1 and 2 submitted that in order to prove the grounds stated in the application filed under Section 34 of the Act adducing additional evidence is necessary. It was submitted that respondent Nos.1 and 2 sought to adduce evidence to prove the grounds enumerated under Section 34(2) (a) of the Act. The learned counsel submitted that the grounds for setting aside the award are specific and therefore, necessarily respondent Nos.1 and 2 will have to plead and prove the grounds mentioned in Section 34(2) of the Act and prove the same and the High Court rightly allowed the writ petitions giving an opportunity to respondent Nos.1 and 2 to adduce evidence in the proceedings under Section 34 of the Act.

9. The proceedings under Section 34 of the Act are summary in nature. The scope of enquiry in the proceedings under Section 34 of the Act is restricted to a consideration whether any of the grounds mentioned in Section 34(2) or Section 13(5) or Section 16(6) are made out to set aside the award. The grounds for setting aside the award are specific. It is imperative for expeditious disposal of cases that the arbitration cases under Section 34 of the Act should be decided only with reference to the pleadings and the evidence placed before the arbitral tribunal and the grounds specified under Section 34(2) of the Act.

10. The learned counsel for respondent Nos.1 and 2 submitted that in view of Rule 4(b) of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001, (Karnataka High Court Arbitration Rules) all the proceedings of the Civil Procedure Code, 1908 shall apply to such proceedings and therefore, the High Court rightly allowed the writ petitions and permitted respondent Nos.1 and 2 to file their own affidavits and also the affidavits of the witnesses. Rule 4(b) of the Karnataka High Court Arbitration Rules provides that all the proceedings of the Civil Procedure Code shall apply to such proceeding/application filed under Sections 14 or 34 of the Act insofar as they could be made applicable. Rule 4(b) of Karnataka High Court Arbitration Rules, in our view, are only procedural. In Fiza Developers, the Supreme Court noticed Rule 4(b) of Karnataka High Court Arbitration Rules and made it clear that there is no wholesale or automatic import of all the provisions of Civil Procedure Code into the proceedings under Section 34 of the Act as that will defeat the very purpose and object of the Arbitration Act, 1996.

11. In Fiza Developers, the question which arose for consideration by the court was whether issues as contemplated under Order XIV Rule 1 of Civil Procedure Code should be framed in the application under Section 34 of the Act. The court held that framing of issues as contemplated under Order XIV Rule 1 CPC is not required in an application under Section 34 of the Act which proceeding is summary in nature. In paras (14), (17), (21) and (24) of Fiza Developers, it was held as under:-

“14. In a summary proceeding, the respondent is given an opportunity to file his objections or written statement. Thereafter, the court will permit the parties to file affidavits in proof of their respective stands, and if necessary permit cross-examination by the other side, before hearing arguments. Framing of issues in such proceedings is not necessary. We hasten to add that when it is said issues are not necessary, it does not mean that evidence is not necessary. ……..

17. The scheme and provisions of the Act disclose two significant aspects relating to courts vis-à-vis arbitration. The first is that there should be minimal interference by courts in matters relating to arbitration. Second is the sense of urgency shown with reference to arbitration matters brought to court, requiring promptness in disposal. ……….

21. We may therefore examine the question for consideration by bearing three factors in mind. The first is that the Act is a special enactment and Section 34 provides for a special remedy. The second is that an arbitration award can be set aside only upon one of the grounds mentioned in sub-section (2) of Section 34 exists. The third is that proceedings under Section 34 requires to be dealt with expeditiously. ……..

24. In other words, an application under Section 34 of the Act is a single issue proceeding, where the very fact that the application has been instituted under that particular provision declares the issue involved. Any further exercise to frame issues will only delay the proceedings. It is thus clear that issues need not be framed in applications under Section 34 of the Act.”

12. Though this Court held that the applications under Section 34 of the Act are summary proceedings, an opportunity to the aggrieved party has to be afforded to prove existence of any of the grounds under Section 34(2) of the Act. This court thus permitted the applicant thereon to file affidavits of his witnesses in proof thereof. In para (31) of Fiza Developers, this Court held as under:-

31. Applications under Section 34 of the Act are summary proceedings with provision for objections by the respondent defendant, followed by an opportunity to the applicant to “prove” the existence of any ground under Section 34(2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the respondent-defendant to place his evidence by affidavit. Where the case so warrants, the court permits cross-examination of the persons swearing to the affidavit. Thereafter, the court hears arguments and/or receives written submissions and decides the matter. This is of course the routine procedure. The court may vary the said procedure, depending upon the facts of any particular case or the local rules. What is however clear is that framing of issues as contemplated under Rule 1 of Order 14 of the Code is not an integral part of the process of a proceedings under Section 34 of the Act.”

13. After referring to the judgment in Fiza Developers, in the impugned judgment, the High Court held that respondent Nos.1 and 2 are to be afforded an opportunity to file their and their witnesses’ affidavits in proof of their case to prove the grounds set out in Section 34(2)(a) of the Act.

14. After the decision in Fiza Developers, Section 34 was amended by Act 3 of 2016 by which sub-sections (5) and (6) of Section 34 were added to the Principal Act w.e.f. 23.10.2015. Sub-sections (5) and (6) to Section 34 of the Act read as under:-

“34. Application for setting aside arbitral award.- (1)-(4) …….. (5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. (6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.”

15. The judgment in Fiza Developers was considered by Justice B.N. Srikrishna Committee which reviewed the institutionalisation of the arbitration mechanism and pointed out that opportunity to furnish proof in proceedings under Section 34 of the Arbitration Act has led to inconsistent practices. The said Committee reported as under:-

“5. Amendment to Section 34(2)(a) of the ACA: Sub-section (2) (a) of Section 34 of the ACA provides for the setting aside of arbitral awards by the court in certain circumstances. The party applying for setting aside the arbitral award has to furnish proof to the court. This requirement to furnish proof has led to inconsistent practices in some High Courts, where they have insisted on Section 34 proceedings being conducted in the manner as a regular civil suit. This is despite the Supreme Court ruling in Fiza Developers & Inter-Trade (P) Ltd. v. AMCI (India) (P) Ltd. (2009) 17 SCC 796 that proceedings under Section 34 should not be conducted in the same manner as civil suits, with framing of issues under Rule 1 of Order 14 of the CPC. In light of this, the Committee is of the view that a suitable amendment may be made to Section 34(2)(a) to ensure that proceedings under Section 34 are conducted expeditiously. Recommendation: An amendment may be made to Section 34(2) (a) of the Arbitration and Conciliation Act, 1996, substituting the words ‘furnishes proof that’ with the words ‘establishes on the basis of the Arbitral Tribunal’s record that’.”

[Report of Justice B.N. Srikrishna Committee quoted in Emkay Global Financial Services Ltd. v. Girdhar Sondhi (2018) 9 SCC 49]

16. Based upon Justice B.N. Srikrishna Committee’s report, Section 34 of the Principal Act has been amended by Arbitration and Conciliation (Amendment) Act, 2019 as under:-

“7. Amendment of Section 34.-In Section 34 of the principal Act, in sub-section (2), in clause (a), for the words “furnishes proof that”, the words “establishes on the basis of the record of the Arbitral Tribunal that” shall be substituted.”

17. After referring to Justice B.N. Srikrishna Committee’s report and other judgments and observing that the decision in Fiza Developers must be read in the light of the amendment made in Section 34(5) and Section 34(6) of the Act and amendment to Section 34 of the Arbitration Act, 1996, in Emkay Global Financial Services Limited v. Girdhar Sondhi (2018) 9 SCC 49, it was held as under:-

“21. It will thus be seen that speedy resolution of arbitral disputes has been the reason for enacting the 1996 Act, and continues to be the reason for adding amendments to the said Act to strengthen the aforesaid object. Quite obviously, if issues are to be framed and oral evidence taken in a summary proceeding under Section 34, this object will be defeated. It is also on the cards that if Bill No. 100 of 2018 is passed, then evidence at the stage of a Section 34 application will be dispensed with altogether. Given the current state of the law, we are of the view that the two early Delhi High Court judgments in Sandeep Kumar v. Ashok Hans 2004 SCC OnLine Del 106, Sial Bioenergie v. SBEC Systems 2004 SCC OnLine Del 863, cited by us hereinabove, correctly reflect the position in law as to furnishing proof under Section 34(2)(a). So does the Calcutta High Court judgment in WEB Techniques and Net Solutions (P) Ltd. v. Gati Ltd. 2012 SCC OnLine Cal 4271. We may hasten to add that if the procedure followed by the Punjab and Haryana High Court judgment in Punjab SIDC Ltd. v. Sunil K. Kansal 2012 SCC Online P & H 19641 is to be adhered to, the time-limit of one year would only be observed in most cases in the breach. We, therefore, overrule the said decision. We are constrained to observe that Fiza Developers was a step in the right direction as its ultimate ratio is that issues need not be struck at the stage of hearing a Section 34 application, which is a summary procedure.

However, this judgment must now be read in the light of the amendment made in Sections 34(5) and 34(6). So read, we clarify the legal position by stating that an application for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the arbitrator. However, if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)( a ), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties.

We, therefore, set aside the judgment in Girdhar Sondhi v. Emkay Global Financial Services Ltd. 2017 SCC OnLine Del 12758 of the Delhi High Court and reinstate that of the learned Additional District Judge dated 22-9-2016. The appeal is accordingly allowed with no order as to costs.” The legal position is thus clarified that Section 34 application will not ordinarily require anything beyond the record that was before the arbitrator and that cross-examination of persons swearing in to the affidavits should not be allowed unless absolutely necessary.

18. The question falling for consideration is whether the present case is such an exceptional circumstance that it was necessary to grant opportunity to respondent Nos.1 and 2 to file affidavits and to cross-examine the witnesses is made out. The affidavit filed by the respondents along with application filed under Section 151 CPC does not indicate as to what point the first respondent intends to adduce except stating that the first respondent intends to adduce additional evidence relating to the subject of dispute. The affidavit does not disclose specific documents or evidence required to be produced except stating that the first respondent intends to adduce additional evidence or otherwise the first respondent will be subjected to hardship in the arbitration suit filed by her under Section 34 of the Act. As rightly contended by the learned counsel appearing for the appellant that there are no specific averments in the affidavit as to the necessity and relevance of the additional evidence sought to be adduced.

19. By perusal of the award, it is seen that before the arbitrator, respondent No.1 filed her written statement and other respondents also filed separate written statements. It was contended that the documents were forged. Both parties adduced oral and documentary evidence. The appellant led evidence by examining two witnesses Balakrishna Nayak (PW-1) and B.A. Baliga (PW-2) and exhibited documents P1 to P47. Respondent Nos.1 and 2 also examined five witnesses viz. M. Shashikala (RW-1), Mamatha @ Mumtaz Hameed (RW- 2), Latha (RW-3), Chitralekha Umesh (RW-4) and B.R. Nagesh (RW-5).

Respondent Nos.1 and 2 also produced documentary evidence Ex.-R1 to R13. As held by the District Judge, the grounds urged in the application can very well be considered by the evidence adduced in the arbitration proceedings and considering the arbitral award. Further, the application filed by respondent Nos.1 and 2 seeking permission to adduce evidence, no ground was made out as to the necessity of adducing evidence and what was the nature of the evidence sought to be led by respondent Nos.1 and 2. The proceedings under Section 34 of the Act are summary proceedings and is not in the nature of a regular suit.

By adding sub-sections (5) and (6) to Section 34 of the Act, the Act has specified the time period of one year for disposal of the application under Section 34 of the Act. The object of sub-sections (5) and (6) to Section 34 fixing time frame to dispose of the matter filed under Section 34 of the Arbitration Act, 1996 is to avoid delay and to dispose of the application expeditiously and in any event within a period of one year from the date of which the notice referred to in Section 34(5) of the Act is served upon the other party. In the arbitration proceedings, the parties had sufficient opportunity to adduce oral and documentary evidence.

The High Court did not keep in view that respondent Nos.1 and 2 have not made out grounds that it is an exceptional case to permit them to adduce evidence in the application under Section 34 of the Act. The said directions of the High Court amount to retrial on the merits of the issues decided by the arbitrator. When the order of the District Judge dismissing the application filed by respondent Nos.1 and 2 does not suffer from perversity, the High Court, in exercise of its supervisory jurisdiction under Articles 226 and 227 of the Constitution of India, ought not to have interfered with the order passed by the District Judge and the impugned judgment cannot be sustained.

20. In the result, the impugned judgment dated 12.09.2014 passed by the High Court of Karnataka at Bangalore in Writ Petition Nos.18374-75 of 2010 (GM-RES) is set aside and these appeals are allowed. The order of the District Judge dismissing the application filed under Section 151 CPC in AS No.1 of 2008 is affirmed. The learned District Judge shall take up AS No.1 of 2008 and dispose of the same expeditiously in accordance with the law. No costs.

J. [R. BANUMATHI]

J. [A.S. BOPANNA]

New Delhi;

September 23, 2019

D. Sasi Kumar Vs. Soundararajan-23/09/2019

SUPREME COURT OF INDIA JUDGMENTS

RENT CONTROL: If as on the date of filing the petition the requirement subsists and it is proved, the same would be sufficient irrespective of the time-lapse in the judicial process coming to an end.

ACT: Sections 10(3)(a)(iii) and 14(1)(b) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960

SUPREME COURT OF INDIA

D. Sasi Kumar Vs. Soundararajan

[Civil Appeal Nos. 7546-7547 of 2019 arising out of SLP (Civil) Nos. 12365-66 of 2019]

A.S. Bopanna,J.

1. Leave granted.

2. The appellant herein was the petitioner before the Principal District Munsif/Rent Controller in the petition seeking eviction of the respondent therein. The said proceedings resulted in an appeal filed by the appellant herein before the Rent Control Appellate Authority (subCourt) which upheld the decision of the Rent Controller. Against the said concurrent orders the respondent herein approached the High Court of Judicature at Madras in the Civil Revision Petition. The High Court reversed the concurrent decisions, which is assailed by the appellant herein. Since the rank assigned to the parties is different in the various proceedings, for the sake of convenience and clarity the appellant herein who was the original petitioner before the Rent Control Court would be referred to as the ‘landlord’, while the respondent therein would be referred to as the ‘tenant’.

3. The brief facts are that the landlord contending to be the owner of the petition schedule premises had filed the petition under Sections 10(3)(a)(iii) and 14(1)(b) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (‘Act’, 1960′ for short) seeking for an order to direct the tenant to vacate and deliver the peaceful possession of the petition schedule property to the landlord. The manner in which the landlord had become the owner of the property based on a partition deed dated 24.02.1997 was referred. The tenant was in occupation of the premises for nonresidential purpose on a monthly rental of Rs.600/-.

The landlord contended that the premises is bonafide required by him for setting up a garment shop and in that regard had further contended that since the premises requires alterations to be made in that regard, the landlord also intended to demolish the existing structure and put up a construction suitable for his purpose. The tenant had appeared and opposed the said petition by filing his objection statement, denying the entire case of the landlord including his claim to ownership over the property as well as the jural relationship. It was contended that the intention of the landlord is only to secure higher rent and as such the claim cannot be considered as a bonafide requirement.

4. The Rent Control Court on having taken note of the rival contentions had framed two points for its consideration. The entire consideration revolved on the claim made by the landlord for own use and occupation as also the alternate premises available to the tenant. In order to establish the claim, the landlord examined himself as PW1 and marked the documents at Exhibits P1 to P5. The tenant, on the other hand, examined three witnesses and relied upon the documents at Exhibits R1 to R9. The Court of the Rent Controller on analysing the documents and the evidence of the parties arrived at the conclusion that the claim as put forth by the landlord is established and accordingly on allowing the petition had directed eviction of the tenant by granting two months time to vacate.

5. The tenant claiming to be aggrieved was before the Appellate Authority in the statutory appeal provided under Section 23 of the Act, 1960. The Appellate Authority having adverted to the contentions has reappreciated the oral as well as the documentary evidence. In that background making detailed reference to the legal position from the decisions cited before it had upheld the order dated 19.01.2011 passed by the Rent Control Court and had dismissed the appeal. Against such concurrent orders the tenant approached the High Court in the Civil Revision Petition. The High Court once again referring to the evidence and the conclusion reached by the courts below had differed from the same and accordingly allowed the petition by holding that the bonafide requirement as claimed by the landlord had not been proved. It is in that view the landlord claiming to be aggrieved is before this Court in this appeal.

6. Heard Shri R. Balasubramanium, learned senior counsel appearing for the landlord and Shri R. Gopalakrishnan, learned counsel for the tenant and perused the appeal papers.

7. At the outset it is to be taken note that the Civil Revision Petition before the High Court is not to be considered as in the nature of an appeal. The scope of consideration is only to take note as to whether there is any perversity in the satisfaction recorded by the original Court, namely, the Rent Controller and in that light as to whether the Appellate Authority under the statute has considered the aspect in the background of the evidence to arrive at the conclusion to its satisfaction. The reappreciation of the evidence in the Civil Revision Petition to indicate that another view is possible would not arise. To that extent, a perusal of the impugned order indicates that the High Court in fact has proceeded as if the entire evidence required reappreciation by it. In that background what is necessary to be taken note at this juncture is as to whether the Rent Controller has considered the matter in its correct perspective by satisfying himself of the bonafide claim, as required under Section 10(3)(e) of the Act, 1960 and the hardship if any to the tenant as contemplated under the proviso thereto.

8. In the instant case what is necessary to be taken note is that the tenant despite being in possession and knowing the ownership of the property and also paying the rent, has sought to urge a contention denying the jural relationship. The said aspect has been taken note by the Rent Controller and taking into consideration the partition deed dated 24.02.1997 and further taking into account the fact that the rent was being paid, has answered the said issue in favour of the landlord. Insofar as the requirement of the premises by the landlord the evidence as tendered has been taken note. In that regard the claim put forth is that the landlord intends to run a garment shop for which the premises is required and he also intends to demolish and reconstruct.

It is no doubt true that in an appropriate case when eviction is sought under Section 14(1)(b) of the Act, in proof thereof the approved plan for construction and financial capacity to construct is to be established. However, in the instant facts it is noticed that the eviction sought is not just for demolition and construction but is also for the bonafide use to set up a garment shop. The landlord, in that direction had also contended that the shop would require alteration and, in that view, he has decided to demolish and reconstruct. When that be the case even if not demolished and reconstructed the requirement of the premises is to run a garment shop even if it be by altering the premises to that extent. In that circumstance the eviction was also sought under Section 10(3)(a)(iii) of the Act, 1960.

9. Since the tenant was running a metal shop, the fact that the premises was suitable for running a garment shop cannot be in dispute. That apart what is also to be kept in view is, apart from the bonafide requirement of the landlord the consideration relating to hardship of the tenant, even if kept in view, in the instant case the Rent Controller has referred to the cross-examination of the tenant who was examined as RW1 wherein he has admitted that he has two buildings as business places in addition to the business being run in the petition schedule premises. Though he states that one floor is used as a godown and the other is in the name of his wife, the fact remains that he is running the business in the other shop for the benefit of his family.

In that circumstance when the need of the landlord was weighed in the background of the fact that the tenant had another premises wherein he is carrying on the business the Rent Controller as a statutory authority under the Act was of the opinion that the evidence available on record would be sufficient and recorded the satisfaction as provided under Section 10(3)(e) of the Act, 1960 and arrived at the conclusion that the landlord requires the premises for his bonafide occupation. Such conclusion while being taken note by the Appellate Authority has also received a similar consideration. In that light the nature of findings as recorded by the High Court is not appropriate in the facts and circumstance of the present case.

10. It is no doubt true that as observed by the High Court the plan for construction and the financial capacity to construct has not been placed as evidence. However, as already indicated above, the nature of the requirement as stated by the landlord would be for running a garment shop which in any event could be run in the premises as it exists with minor alterations though the desire of the landlord is also to demolish and reconstruct. Therefore, in that circumstance the mere nonproduction of the approved plan or the documents to indicate financial capacity at this juncture cannot be held fatal in the instant facts. That apart as indicated above, the need of the landlord while being examined has been weighed in the background of the fact that the tenant owns two other premises and no hardship will be caused. Though the High Court has in that regard also recorded that no documentary evidence is placed, the fact of possession of alternate premises has been admitted by the tenant in his cross-examination. There can be no better proof than admission.

11. Further the High Court has also erroneously arrived at the conclusion that the bonafide occupation as sought should be not only on the date of the petition but it should continue to be there on the date of final adjudication of rights. Firstly, there is no material on record to indicate that the need as pleaded at the time of filing the petition does not subsist at this point. Even otherwise such conclusion cannot be reached, when it cannot be lost sight that the very judicial process consumes a long period and because of the delay in the process if the benefit is declined it would only encourage the tenants to protract the litigation so as to defeat the right. In the instant case it is noticed that the petition filed by the landlord is of the year 2004 which was disposed of by the Rent Controller only in the year 2011.

The appeal was thereafter disposed of by the Appellate Authority in the year 2013. The High Court had itself taken time to dispose of the Revision Petition, only on 06.03.2017. The entire delay cannot be attributed to the landlord and deny the relief. If as on the date of filing the petition the requirement subsists and it is proved, the same would be sufficient irrespective of the time-lapse in the judicial process coming to an end. This Court in the case of Gaya Prasad vs. Pradeep Srivastava, (2001) 2 SCC 604 has held that the landlord should not be penalised for the slowness of the legal system and the crucial date for deciding the bonafide requirement of landlord is the date of application for eviction, which we hereby reiterate.

12. Therefore, in the present facts the bonafide requirement as claimed by the landlord stands established. The learned counsel for the tenant as an alternative submission had sought for sufficient time to vacate and handover the vacant possession if the tenant was required to vacate the premises, which also needs to be addressed in the order.

13. In the result the order dated 06.03.2017 passed by the High Court in CRP (NPD) No. 3754/2013 and MP No. 1/2013 is set aside. The order dated 19.01.2011 passed by the Principal District Munsif/Rent Controller, Vellore, Vellore District in Rent Control Original Petition No.43/2004 is restored. Taking into consideration all aspects, the tenant is granted time till 31.01.2021 to vacate and handover vacant possession of the premises to the landlord subject to the undertaking being filed in four weeks, wherein it be undertaken to voluntarily vacate and handover possession on or before 31.01.2021, without creating any thirdparty rights or damage to the property. The rents shall also be paid without default.

14. Accordingly, the appeals are allowed with no order as to costs. All pending applications shall stand disposed of.

J. (R. BANUMATHI)

J. (A.S. BOPANNA)

New Delhi,

September 23, 2019

Vasant Ganpat Padave (D) by LRS. & Ors. Vs. Anant Mahadev Sawant (D) through LRS. & Ors-18/09/2019

SUPREME COURT OF INDIA JUDGMENTS

Statutory Interpretation: Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the Court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational construction. The task of interpretation of a statutory provision is an attempt to discover the intention of the Legislature from the language used. It is necessary to remember that language is at best an imperfect instrument for the expression of human intention. It is well to remember the warning administered by Judge Learned Hand that one should not make a fortress out of dictionary but remember that statutes always have some purpose or object to accomplish and sympathetic and imaginative discovery is the surest guide to their meaning.

Act: Maharashtra Tenancy and Agricultural Lands Act, 1948 

SUPREME COURT OF INDIA

Vasant Ganpat Padave (D) by LRS. & Ors. Vs. Anant Mahadev Sawant (D) through LRS. & Ors.

[Civil Appeal No. 11774 of 2018]

[Civil Appeal Nos. 11775-11798 of 2018]

R.F. Nariman, J.

1. This case has been referred to a Three-Judge Bench by a detailed judgment of a Division Bench of this Court reported as Vasant Ganpat Padave v. Anant Mahadev Sawant (2019) 2 SCC 788. The relevant facts that are necessary for determination of the controversy before us are set out in paragraphs 3 to 5 of the referral order as follows:

“3. One Balwant Sawant was landlord of Survey No. 92/2, corresponding to new Survey No. 31 Hissa No. 2/10, admeasuring about 0.01.3 H.R. at Village Padavewadi, Taluka & District Ratnagiri. Balwant Sawant died on 10-5-1950 leaving behind Smt Indirabai Balwant Sawant, his widow as his legal heir and representative. Smt Indirabai Balwant Sawant, widow became the owner of the said property. Her name was mutated in the revenue records. The Bombay Tenancy and Agricultural Lands Act, 1948 was amended by Act 15 of 1957. Section 32 as amended provided that on 1-4-1957 (Tillers’ Day), every tenant shall be deemed to have purchased from the landlord free from all encumbrances the land held by him as a tenant.

The predecessor of the appellants were tenants prior to 1956-1957 i.e. prior to 1-4-1957. The proceedings for declaring the appellants as purchaser under Section 32-G were initiated during the lifetime of the landlady, Smt Indirabai Balwant Sawant but the mutation Entry No. 1341 recorded that since landlady Indirabai Balwant Sawant is a widow, the proceedings as contemplated under Section 32-G are suspended. On 12-5-1975, Smt Indirabai Balwant Sawant executed last will and testament in favour of Anant Mahadev Sawant, Respondent 1. Smt Indirabai Balwant Sawant died on 7-5-1999. The name of Respondent 1 was mutated in the revenue records on 29-2-2000, with regard to which no notice was issued to the appellants, hence they were not aware of either the death of Indirabai or mutation in favour of Respondent 1.

4. In the year 2008, when the appellants came to know that the landlady has died and in her place, name of Respondent 1 has been mutated, they filed an application on 5-9-2008 before Respondent 2 – Additional Tahsildar & A.L.T. Ratnagiri, Maharashtra for fixing the purchase price under Section 32-G of the Maharashtra Tenancy and Agricultural Lands Act, 1948 (hereinafter referred to as “the 1948 Act”). Respondent 1 filed reply and opposed the said application. Respondent 2 allowed the application of the appellants by order dated 9-9-2011. Respondent 2 held that predecessors of the appellants were tenants prior to 1956-1957. Proceedings under Section 32-G for declaring the appellants as purchasers were initiated during the lifetime of the landlady and the same were suspended on 8-1-1964 during the lifetime of the landlady being a widow.

Respondent 2 fixed the purchase price and directed the appellants to deposit the same to enable issue of sale certificate in favour of the appellants. Aggrieved against the order dated 9-9-2011, Respondent 1 filed an appeal under Section 74 of the 1948 Act before Respondent 3, Sub-Divisional Officer, Ratnagiri, Maharashtra. Respondent 3 allowed the appeal vide its order dated 8-1-2013. Respondent 3 held that the appellant ought to have issued notice under Section 32-F within the time as prescribed and no notice having been issued within the time as prescribed, the appellants have lost right of purchase.

5. The appellants, aggrieved by the order of the Sub-Divisional Officer, filed a revision application before the Maharashtra Revenue Tribunal. There were other revisions filed by several other tenants who were aggrieved by the order of the Sub-Divisional Officer. The Maharashtra Revenue Tribunal by a common order dated 20-4-2013 dismissed the revisions and confirmed the order of the Sub-Divisional Officer. The Maharashtra Revenue Tribunal held that applicants were under legal obligation to give intimation expressing their desire to purchase within time stipulated under Section 32-F, which having not been given, no right of purchase is available to applicants. Aggrieved against the judgment of the Maharashtra Revenue Tribunal, writ petitions were filed by the appellants and several other similarly situated tenants. All the writ petitions were dismissed by common judgment dated 1-8-2014 [Arjun Hari Kamble v. Anant Mahadev Sawant, 2014 SCC OnLine Bom 4931] of the High Court, against which judgment, these appeals have been filed.”

2. After setting out various provisions of the Maharashtra Tenancy and Agricultural Lands Act, 1948 (hereinafter referred to as “the Act”), as amended, and after referring to various judgments of this Court dealing, in particular, with Section 32-F of the Act, the Division Bench then stated:

“30. The ratio of the abovenoted judgments can be restated in the following words:

30.1. For a landlord suffering from a disability on the Tillers’ Day i.e. 1-4-1957, the deemed purchase shall be suspended.

30.2. Landlord suffering from a disability has a right under Section 31(3) of the Act to give notice of termination of tenancy and file an application for possession.

30.3. Under Section 31(3), a minor, within one year from the date on which he attains majority; a successor-in-title of a widow within one year from the date on which her interest in the land ceases to exist; and landlord within one year from the date on which his/her mental or physical disability ceases to exist, can also give an application for termination of tenancy and possession.

30.4. Under Section 32-F, tenant has right to purchase where landlord was minor or a widow or a person subject to mental or physical disability within one year from the expiry of the period during which such landlord is entitled to terminate the tenancy under Section 31.

30.5. The tenant, in event, does not exercise his right of purchase within the period as prescribed under Section 32-F(1)(a), his/her right to purchase shall be lost.

31. In the present case, it is undisputed fact that the landlady died on 7-5-1999 and within one year thereafter her successor-in-title did not exercise his right under Section 31(3) and thereafter within one year tenant has not given any intimation for purchase as contemplated by Section 32-F. The question to be answered is as to whether in the above facts, the Sub-Divisional Officer, Revenue Tribunal as well as the High Court were right in their conclusion that right of the tenant i.e. the appellant has lost, he having not issued any intimation for purchase of the land within one year from expiry of the period as contemplated under Section 31(3).

32. The ratio of this Court as noticed above, especially in the judgments of this Court in Appa Narsappa Magdum [Appa Narsappa Magdum v. Akubai Ganapati Nimbalkar, (1999) 4 SCC 443] , Sudam Ganpat Kutwal [Sudam Ganpat Kutwal v. Shevantabai Tukaram Gulumkar, (2006) 7 SCC 200] and Tukaram Maruti Chavan [Tukaram Maruti Chavan v. Maruti Narayan Chavan, (2008) 9 SCC 358] , clearly supports the submission of the learned counsel for the respondents that the appellants having not exercised their right to purchase under Section 32-F(1) read with Section 32-F(1-A) within the time prescribed, the right of purchase of the tenant is lost. But there is one aspect of the matter which needs to be noted and has not been considered in the above judgments rendered by two-Judge Benches of this Court which we shall notice hereinafter.” The Division Bench then laid emphasis upon the Statement of Objects and Reasons to the 1969 Amendment of the 1948 Act and opined:

“37. Amendment in Section 32-F(1)(a) added by Act 49 of 1969 expressly covered a case of landlord who was minor and has attained majority. Intimation by a minor landlord who has attained majority has been made a statutory obligation of the landlord so that tenant may exercise his right of purchase. The other two categories which are a widow or a person subject to mental or physical disability have not been expressly included in the amendment incorporated by Act 49 of 1969. The Statement of Objects and Reasons of the amendment given in 1969 as well as the express provisions of such amendment are for the purposes and object to enable the tenant to exercise right of purchase.

When for one category of landlord i.e. minor it is mandated that he will intimate the tenant after he attained the majority so that tenant may be enabled to exercise the right of purchase, we are of the view that the same object has to be read in two other categories of landlord that is the successor-in-title of a widow and a landlord whose mental or physical disability has been ceased. When the legislative object is to facilitate a tenant of a disabled landlord after cessation of disability to exercise right of purchase, the same benefit needs to be extended to other two categories of disabled landlord. We do not find any distinction in three categories of disabled landlords nor tenant of a landlord who was a minor can be put on any higher footing as compared to other landlords suffering from the above two disabilities.

The question may be asked that amendment only expressly included the landlord who has attained majority to send intimation and the legislature consciously did not include the other two categories of landlord i.e. successor-in-interest of a widow and landlord of a mental and physical disability ceases to exist. The Objects and Reasons and express amendment made by Act 49 of 1969 were with a view to enable the tenant to exercise his right of purchase. The said legislative intendment is to be extended to all tenants of landlords who were suffering from disability on the Tillers’ Day, whether successor-in-title of a widow or a landlord whose mental or physical disability ceases. All the three categories of tenants should be extended the same benefit and provision should be interpreted so that all tenants may be enabled to exercise their right of purchase effectively and in real sense.

38. As in the present case, the tenant’s case is that he was unaware of the death of the landlady since for the last several years she was living in Bombay, the date of knowledge of death of the landlady cannot be said to be an irrelevant factor and unless the tenant is aware of the death of landlady or in case of landlord suffering from physical or mental disability, how he will exercise his right of purchase, is an important question. The 1948 Act and the amendments made by the 1969 Act were with intent to facilitate tenants to exercise their right. The amendments by Act 15 of 1957 was agrarian reform making tillers of the soil the owners of the land which was done to achieve the object of making all tillers of the soil as owners of the land. While interpreting the provisions of Section 32-F(1-A) as well as Section 31(3), the purpose and object of the 1948 Act, amendments made therein from time to time cannot be lost sight off.

39. When Section 32-F of the 1948 Act gives right to purchase to a tenant whose landlord was suffering from a disability on Tillers’ Day, the exercise of right to purchase by such tenant has to be interpreted in a manner so as to make the exercise of right meaningful and effective. The abovesaid right cannot be defeated on the ground that it was not exercised within the period prescribed when the tenant is unaware as to when the period has begun.

40. The period prescribed for exercising the right to purchase is not a period of limitation but a reasonable period prescribed for the exercise of a right. The knowledge of cessation of disability of landlord by the tenant can only be commencement of the period prescribed.

41. When a statute gives a right to a tenant, statute needs to be interpreted in a manner so as to make the right workable, effective and meaningful. Such right cannot be defeated unless it is proved that tenant, even after knowing that disability has ceased, does not exercise his right within the period prescribed.

42. A two-Judge Bench judgment of this Court in Appa Narsappa Magdum [Appa Narsappa Magdum v. Akubai Ganapati Nimbalkar, (1999) 4 SCC 443] has expressly rejected the submission that tenant had no intimation of the death of landlady. Further judgments of this Court in Sudam Ganpat Kutwal [Sudam Ganpat Kutwal v. Shevantabai Tukaram Gulumkar, (2006) 7 SCC 200] and Tukaram Maruti Chavan [Tukaram Maruti Chavan v. Maruti Narayan Chavan, (2008) 9 SCC 358] also laid down the same ratio. The judgments in the above three cases were rendered by the two-Judge Benches in which cases the amendments made by Act 49 of 1969 were neither raised nor considered. We, thus, are of the view that the ratio laid down in the above cases needs to be reconsidered and explained in view of the object and purpose for which amendments were made in Section 32-F(1)(a) by Act 49 of 1969 as noticed above. We, thus, refer to the following questions for consideration of a larger Bench:

42.1. (1) Whether the object and purpose of amendment made in Section 32-F(1)(a) by Act 49 of 1969 is also relevant and applicable for exercise of right to purchase by a tenant of landlord who was widow or suffering from mental and physical disability on Tillers’ Day?

42.2. (2) Whether the successor-in-interest of a widow is also obliged to send an intimation to the tenant of cessation of interest of the widow to enable the tenant to exercise his right of purchase.

42.3. (3) In the event the answer to above Question (1) or (2) is in the affirmative, whether decision of this Court in Appa Narsappa Magdum [Appa Narsappa Magdum v. Akubai Ganapati Nimbalkar, (1999) 4 SCC 443] , Sudam Ganpat Kutwal [Sudam Ganpat Kutwal v. Shevantabai Tukaram Gulumkar, (2006) 7 SCC 200] and Tukaram Maruti Chavan [Tukaram Maruti Chavan v. Maruti Narayan Chavan, (2008) 9 SCC 358] needs reconsideration and explanation.

43. Let the papers be placed before the Hon’ble the Chief Justice for constituting a larger Bench. In the meantime, we direct that the parties shall maintain the status quo.”

3. We have heard Shri Aniruddha Joshi, learned Advocate for the Appellant and Shri Ajit S. Bhasme, learned Senior Advocate for the Respondent. Shri Joshi painstakingly took us through various provisions of the 1948 Act and was at pains to point out that it was a social welfare legislation enacted in furtherance of an Agrarian Reform Programme and was, therefore, covered by Article 31A of the Constitution of India. He laid great emphasis, in particular, upon the Amendment Acts of 1956 and 1969. By the first mentioned Amendment Act, the statutory scheme was to divest an absentee landlord of his title and vest title directly in the cultivating tenant of agricultural land. The landlord was given only a limited right to ask for resumption of his land provided certain very stringent conditions were met, provided that such application was made on or before Tillers’ Day i.e. 1st April, 1957.

He argued that in the case of three categories of persons, namely, widows, minors and persons suffering from a disability, the right of the cultivating tenant to become owner was only postponed, and Section 32-F must be read narrowly so as not to interfere with the statutory right of purchase of the cultivating tenant. The 1969 Amendment made this clear, but was limited only to one of the three categories, namely, minors. According to him, therefore, to sub-serve the object sought to be achieved by the 1956 Amendment, it is clear that whether a cultivating tenant is a tenant under a minor on the one hand, or a widow or a person with a disability on the other, should make no difference to the fact that once the landlord’s disability ceases, the tenant must first know that such disability has ceased before he can meaningfully exercise the statutory right given to him within the period prescribed.

According to him, all the Division Bench Judgments of this Court, which have held that such knowledge is immaterial, are wrong in law and need to be overruled. He stated that a manifestly absurd result would be reached if we were to so construe Section 32-F of the Act. According to him, the one year within which the cultivating tenant may exercise his statutory right of purchase is only after the period of disability has ceased, in that, for example, the widow has died and one year has elapsed from the date of her death within which she has not exercised any right to resume the land. If the Division Bench Judgments of this Court are correct, then since the period of one year from this date has also elapsed for the reason that the tenant had no knowledge of the widow’s death and, therefore, was not able to apply in time, the result would be that such lands would then have to be distributed under Section 32-P, under which the first preference is given again to the absentee landlord who may then be given back this land to the extent and in the manner provided by the Act.

This would turn the Object of the 1956 Amendment on its head, as an absentee landlord would, after not availing of any right to resumption, get back agricultural land from a cultivating tenant only because the cultivating tenant had no knowledge of a fact which was exclusively within the landlord’s domain. According to him, therefore, applying the golden rule of interpretation, if the literal reading of Section 32-F were to lead to this absurd result, it is possible for us as interpreters of the law to add or subtract words which would remove this absurdity, which can only be the counting of the one year period, so far as the cultivating tenant is concerned, from the date of knowledge of the death of the widow. He cited a number of judgments in support of this proposition.

He also argued that in any event, if Section 32-F were to be construed literally, it would violate Article 14 as it would discriminate between cultivating tenants who are similarly situate, namely, tenants whose statutory right to become owners has been postponed on account of the landlord’s disability. Whereas in the case of minors, the landlord is bound to intimate the tenant of the date on which such minor attains majority, so that he may exercise his statutory right in a meaningful way, there is no such obligation on a widow’s successors to inform the tenant of the death of the widow, resulting in persons who are similarly situate being deprived of their statutory right for no fault of theirs, and contrary to the Object sought to be achieved by the 1956 Amendment.

4. On the other hand, Shri Ajit Bhasme, took us through various provisions of the Act and argued that the rent by a cultivating tenant needs to be paid at least annually by 31st May every year, which would enable the cultivating tenant to know that his landlady widow has died, as otherwise rent paid to a dead person cannot be credited to such person’s account. He also made an emotional appeal to the Court that in all these cases, most landlords and tenants were villagers who would definitely come to know of a widow’s death by word of mouth, given Indian village society. On law, he argued that the Division Bench judgments were correct. Section 32-F contains a non-obstante clause, which must be given full effect. Further, the legislature is free to recognise degrees of harm and can, therefore, pick up one class among three classes, where the need is felt most, for protection.

He referred to the Statement of Objects and Reasons of the Amendment Act of 1969 and argued that the legislature was cognizant of the fact that a large number of cases relating to minors had come to their knowledge, which is why the legislature alleviated the rigor of the Section in so far as minor landlords were concerned. He also argued that times and clime had changed, and the impoverished tenant of yesterday is the rich tenant of today, as opposed to the impoverished landlord who continues to remain so. According to him, the literal rule of statutory interpretation must apply, and it is not possible for us to add or subtract words in Section 32-F when the meaning is plain and unambiguous. He then dealt with some of the judgments that were cited by Shri Joshi and attempted to distinguish them.

5. Having heard the learned counsel for the parties, it is important to first advert to the Scheme of the 1948 Act. Section 2(6) refers to persons who cultivate personally.

Explanation – I is important and is set out hereinbelow:

“2. Definitions.-In this Act, unless there is anything repugnant in the subject or context,

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(6) “to cultivate personally”…

Explanation I – A widow or a minor, or a person who is subject to physical or mental disability, or a serving member of the armed forces shall be deemed to cultivate the land personally if such land is cultivated by servants, or by hired labour, or through tenants.” The deeming provision contained in Explanation I makes it clear that the four categories mentioned are deemed to cultivate land personally even if such land is cultivated through tenants.

6. Under Section 2(8), “land” is defined as referring to land which is used for agricultural purposes. Under Section 2(18), “tenant” includes three categories of persons – deemed tenants under Section 4, protected tenants and permanent tenants, as defined. Under Section 4 of the Act, a person who cultivates lawfully any land belonging to another person shall be deemed to be a tenant if such land is not cultivated personally by the owner or a member of his family or by a servant on wages payable in cash or kind or by a mortgagee in possession. Under Section 4-B tenancies cannot be terminated merely on the ground that the period fixed by an agreement has expired. Section 31 is important and is set out hereinbelow:-

“31. Landlord’s right to terminate tenancy for personal cultivation and non-agricultural purpose.-

(1) Notwithstanding anything contained in Sections 14 and 30 but subject to Sections 31-A to 31-D (both inclusive), a landlord (not being a landlord within the meaning of Chapter III-AA) may, after giving notice and making an application for possession as provided in sub-section (2), terminate the tenancy of any land (except a permanent tenancy), if the landlord bona fide requires the land for any of the following purposes:-

(a) for cultivating personally, or

(b) for any non-agricultural purpose.

(2) The notice required to be given under sub-section (1) shall be in writing, shall state the purpose for which the landlord requires the land and shall be served on the tenant on or before the 31st day of December, 1956. A copy of such notice shall, at the same time, be sent to the Mamlatdar. An application for possession under Section 29 shall be made to the Mamlatdar on or before the 31st day of March, 1957.

(3) Where a landlord is a minor, or a widow, or a person subject to mental or physical disability then such notice may be given and an application for possession under Section 29 may be made,-

(i) by the minor within one year from the date on which he attains majority;

(ii) by the successor-in-title of a widow within one year from the date on which her interest in the land ceases to exist;

(iii) within one year from the date on which mental or physical disability ceases to exist; and

(iv)*** Provided that where a person of such category is a member of a joint family, the provisions of this sub-section shall not apply if at least one member of the joint family is outside the categories mentioned in this sub-section unless before the 31st day of March, 1958 the share of such person in the joint family has been separated by metes and bounds and the Mamlatdar on inquiry is satisfied that the share of such person in the land is separated, having regard to the area, assessment, classification and value of the land, in the same proportion as the share of that person in the entire joint family property, and not in a large proportion.”

7. Under Section 31-A, the right of a landlord to terminate a tenancy in order to cultivate the land personally himself is subjected to very stringent conditions. He can take possession of the land leased only to the extent of the ceiling area, provided the income that is obtained from such land is the principal source of income for his maintenance, and not otherwise. If more tenancies than one are held under the same landlord, then the landlord is competent to terminate only such tenancies which are shortest in point of duration. Under Section 31-B, a tenancy can only be terminated to the extent of half the area of the land leased to the tenant and no more. Section 32 is the Section by which agrarian reform, as mentioned hereinabove, is actually achieved. This Section is important and is set out hereinbelow:

“32. Tenants deemed to have purchased land on tillers’ day –

(1) On the first day of April 1957 (hereinafter referred to as “the tillers day”) every tenant shall, subject to the other provisions of this section and the provisions of the next succeeding sections, be deemed to have purchased from his landlord, free of all encumbrances subsisting thereon on the said day, the land held by him as tenant, if, –

(a) Such tenant is a permanent tenant thereof and cultivates land personally;

(b) Such tenant is not a permanent tenant but cultivates the land leased personally; and

(i) the landlord has not given notice of termination of his tenancy under Section 31; or

(ii) notice has been given under Section 31, but the landlord has not applied to the Mamlatdar on or before the 31st day of March, 1957 under Section 29 for obtaining possession of the land; or

(iii) the landlord has not terminated this tenancy on any of the grounds specified in Section 14, or has so terminated the tenancy but has not applied to the Mamlatdar on or before the 31st day of March, 1957 under Section 29 for obtaining possession of the land: Provided that if an application made by the landlord under Section 29 for obtaining possession of the land has been rejected by the Mamlatdar or by the Collector in appeal or in revision by the Maharashtra Revenue Tribunal under the provisions of this Act, the tenant shall be deemed to have purchased the land on the date on which the final order of rejection is passed. The date on which the final order of rejection is passed is hereinafter referred to as “the postponed date”.

Provided further that the tenant of a landlord who is entitled to the benefit of the proviso to sub-section (3) of Section 31 shall be deemed to have purchased the land on the 1st day of April 1958, if no separation of his share has been effected before the date mentioned in that proviso.

(1A) (a) Where a tenant, on account of his eviction from the land by the landlord, before the 1st day of April, 1957, is not in possession of the land on the said date but has made or makes an application for possession of the land under sub-section (1) of Section 29 within the period specified in that sub-section, then if the application is allowed by the Mamlatdar, or as the case may be, in appeal by the Collector or in revision by the Maharashtra Revenue Tribunal, he shall be deemed to have purchased the land on the date on which the final order allowing the application is passed.

(b) Where such tenant has not made an application, for possession within the period specified in sub-section (1) of Section 29 or the application made by him is finally rejected under this Act, and the land is held by any other person as tenant on the expiry of the said period or on the date of the final rejection of the application, such other person shall be deemed to have purchased the land on the date of the expiry of the said period or as the case may be, on the date of the final rejection of the application.

(1B) Where a tenant who was in possession on the appointed day and who on account of his being dispossessed before the 1st day of April 1957 otherwise than in the manner and by an order of the Tahsildar as provided in Section 29, is not in possession of the land on the said date and the land is in the possession of the landlord or his successor-in-interest on the 31st day of July 1969 and the land is not put to a non-agricultural use on or before the last mentioned date, then, the Tahsildar shall, notwithstanding anything contained in the said Section 29, either suo motu or on the application of the tenant, hold an inquiry and direct that such land shall be taken from the possession of the landlord or, as the case may be, his successor-in-interest, and shall be restored to the tenant; and thereafter, the provisions of this Section and Section 32-A to 32-R(both inclusive) shall, in so far as they may be applicable, apply thereto, subject to the modification that the tenant shall be deemed to have purchased the land on the date on which the land is restored to him.

Provided that, the tenant shall be entitled to restoration of the land under this sub-section only if he undertakes to cultivate the land personally and of so much thereof as together with the other land held by him as owner or tenant shall not exceed the ceiling area.

Explanation – In this sub-section, “successor-in-interest” means a person who acquires the interest by testamentary disposition or devolution on death.” Section 32-F is the Section that falls for construction in the present case and is set out in toto hereinbelow:

“32-F. Right of tenant to purchase where landlord is minor, etc.-

(1) Notwithstanding anything contained in the preceding sections,-

(a) where the landlord is a minor, or a widow, or a person subject to any mental or physical disability, the tenant shall have the right to purchase such land under Section 32 within one year from the expiry of the period during which such landlord is entitled to terminate the tenancy under Section 31 and for enabling the tenant to exercise the right of purchase, the landlord shall send an intimation to the tenant of the fact that he has attained majority, before the expiry of the period during which such landlord is entitled to terminate the tenancy under Section 31:

Provided that where a person of such category is a member of a joint family, the provisions of this sub-section shall not apply if at least one member of the joint family is outside the categories mentioned in this sub-section unless before the 31st day of March 1958 the share of such person in the joint family has been separated by metes and bounds and the Mamlatdar on inquiry is satisfied that the share of such person in the land is separated, having regard to the area, assessment, classification and value of the land, in the same proportion as the share of that person in the entire joint family property and not in a larger proportion.

(b) where the tenant is a minor, or a widow, or a person subject to any mental or physical disability or a serving member of the armed forces, then subject to the provisions of clause (a), the right to purchase land under Section 32 may be exercised, –

(i) By the minor within one year, from the date on which he attains majority;

(ii) By the successor-in-title of the widow within one year from the date on which her interest in the land ceases to exist;

(iii) Within one year from the date on which the mental or physical disability of the tenant ceases to exist;

(iv) Within one year from the date on which the tenant ceases to be a serving member of the armed forces:

Provided that where a person of such category is a member of a joint family, the provisions of this sub-section shall not apply if at least one member of the joint family is outside the categories mentioned in this sub-section unless before the 31st day of March, 1958 the share of such person in the joint family has been separated by metes and bounds and the Mamlatdar on inquiry is satisfied that the share of such person in the land is separated, having regard to the area, assessment, classification and value of the land, in the same proportion as the share of that person in the entire joint family property, and not in a larger proportion.

(1-A) A tenant desirous of exercising the right conferred on him under sub-section (1) shall give an intimation in that behalf to the landlord and the Tribunal in the prescribed manner within the period specified in that sub-section: Provided that, if a tenant holding land from a landlord (who was a minor and has attained majority before the commencement of the Tenancy and Agricultural Lands Laws (Amendment) Act, 1969) has not given intimation as required by this sub-section but being in possession of the land on such commencement is desirous of exercising the right conferred upon him under sub-section (1), he may give such intimation within a period of two years from the commencement of that Act. (2) The provisions of Sections 32 to 32-E (both inclusive) and Sections 32-G to 32-R (both inclusive) shall, so far as may be applicable, apply to such purchase”

8. Section 32-G is also important, in that, it is only after notice to the tenant that the price of the land to be paid by the tenant to the erstwhile landlord is then determined. The relevant sub-sections of this Section states as follows:

“32G. Tribunal to issue notice and determine price of land to be paid by tenants. –

(1) As soon as may be after the tillers’ day the Tribunal shall publish or cause to be published a public notice in the prescribed form in each village within its jurisdiction calling upon, –

(a) all tenants who under Section 32 are deemed to have purchased the lands,

(b) all landlords of such lands, and

(c) all other persons interested therein, to appear before it on the date specified in the notice. The Tribunal shall issue a notice individually to each such tenant, landlord and also, as far as practicable, other person calling upon each of them to appear before it on the date specified in the public notice.

(2) The Tribunal shall record in the prescribed manner the statement of the tenant whether he is or is not willing to purchase the land held by him as a tenant.

(3) Where any tenant fails to appear or makes a statement that he is not willing to purchase the land, the Tribunal shall by an order in writing declare that such tenant is not willing to purchase the land and that the purchase is ineffective: Provided that if such order is passed in default of the appearance of any party, the Tribunal shall communicate such order to the parties and any party on whose default the order was passed may within 60 days from the date on which the order was communicated to him apply for the review of the same.

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(5) In the case of a tenant who is deemed to have purchased the land on the postponed date the Tribunal shall, as soon as may be after such date determine the price of the land.”

9. Under Section 32-M, a purchase by a tenant is ineffective on his failure to pay purchase price, as a result of which land shall then be at the disposal of the Tribunal to be disposed in the manner set out in Section 32-P. Under Section 32-O, in respect of any tenancy created after Tillers’ Day, such tenant cultivating personally shall be entitled, within one year from the commencement of such tenancy, to purchase from the landlord the land held by him to the extent of the ceiling area permissible. This can only be done if the tenant gives an intimation in that behalf to the landlord and the Tribunal within the period prescribed. Section 32-P is also important and is set out hereinbelow:

“32P. Power of Tribunal to resume and dispose of land not purchased by tenant. –

(1) Where the purchase of any land by tenant under Section 32 becomes ineffective under Sections 32-G or 32-M or where a tenant fails to exercise the right to purchase the land held by him within the specified period under Sections 32F, 32O, 33C or 43-1D the Tribunal may suo motu or on an application made on this behalf land in case other than those in which the purchase has become ineffective by reason of Section 32-G or 32-M, after holding a formal inquiry direct that the land shall be disposed of in the manner provided in sub-section (2).

(2) Such direction shall provide –

(a) that the former tenant be summarily evicted;

(b) that the land shall, subject to the provisions of Section 15, be surrendered to the former landlord;

(c) that if the entire land or any portion thereof cannot be surrendered in accordance with the provisions of Section 15, the entire land or such portion thereof, as the case may be, notwithstanding that it is a fragment, shall be disposed of by sale to any person in the following order of priority (hereinafter called “the priority list”):-

(i) a co-operative farming society the members of which are agricultural labourers, landless persons or small holders or a combination of such persons;

(ii) agricultural labourers;

(iii) landless persons;

(iv) small holders;

(v) a co-operative farming society of agriculturists (other than small holders) who hold either as owner or tenant or partly as owner and partly as tenant, landless in area than an economic holding and who is an artisans;

(vi) an agriculturist (other than a small holder) who holds either as owner or tenant as partly as owner and partly as tenant landless in area than an economic holding and who are artisan;

(vii) any other co-operative farming society;

(viii) any agriculturist who holds either as owner or tenant or partly as owner and partly as tenant land larger in area than an economic holding but less in area than the ceiling area;

(ix) any person, not being an agriculturist, who intends to take to the profession of agriculture:

Provided that the State Government may, by notification in the Official Gazette give in relation to such local areas as it may specify, such priority in the above order as it thinks fit to any class or person who, by reason of the acquisition of their land for any development project approved for the purpose by the State Government have been displaced, and require to be re-settled.”

10. In Sri Ram Ram Narain Medhi v. State of Bombay AIR 1959 SC 459, the 1956 Amendment to the Tenancy and Agricultural Lands Act came up for consideration. One of the arguments made was that since the landlord’s right was not extinguished statutorily on Tillers’ Day, the said Act was not protected by Article 31A. This argument was negatived holding:

“41. These observations were confined to suspension of the right of management of the estate and not to a suspension of the title to the estate. Apart from the question whether the suspension of the title to the estate for a time, definite or indefinite would amount to a modification of a right in the estate within the meaning of Article 31-A(1)(a), the position as it obtains in this case is that there is no suspension of the title of the landlord at all. The title of the landlord to the land passes immediately to the tenant on the tiller’s day and there is a completed purchase or sale thereof as between the landlord and the tenant.

The tenant is no doubt given a locus penitentiae and an option of declaring whether he is or is not willing to purchase the land held by him as a tenant. If he fails to appear or makes a statement that he is not willing to purchase the land, the Tribunal shall by an order in writing declare that such tenant is not willing to purchase the land and that the purchase is ineffective. It is only by such a declaration by the Tribunal that the purchase becomes ineffective.

If no such declaration is made by the Tribunal the purchase would stand as statutorily effected on the tiller’s day and will continue to be operative, the only obligation on the tenant then being the payment of price in the mode determined by the Tribunal. If the tenant commits default in the payment of such price either in lump or by instalments as determined by the Tribunal, Section 32-M declares the purchase to be ineffective but in that event the land shall then be at the disposal of the Collector to be disposed of by him in the manner provided therein. Here also the purchase continues to be effective as from the tiller’s day until such default is committed and there is no question of a conditional purchase or sale taking place between the landlord and tenant. The title to the land which was vested originally in the landlord passes to the tenant on the tiller’s day or the alternative period prescribed in that behalf.

This title is defeasable only in the event of the tenant failing to appear or making a statement that he is not willing to purchase the land or committing default in payment of the price thereof as determined by the Tribunal. The tenant gets a vested interest in the land defeasable only in either of those cases and it cannot, therefore, be said that the title of landlord to the land is suspended for any period definite or indefinite. If that is so, there is an extinguishment or in any event a modification of the landlord’s right in the estate well within the meaning of those words as used in Article 31-A(1)(a).”

11. Importantly, the judgment also referred to the right of the tenant to purchase land where the landlord is a minor or a widow or a person subject to a mental or physical disability, and the Court stated that such right is postponed till one year after the cessation of disability.

12. This judgment was followed in Amrit Bhikaji Kale v. Kashinath Janardhan Trade (1983) 3 SCC 437, the Court holding:

“6. The Tenancy Act was comprehensively amended by Amending Act 15 of 1957. The amendment brought in a revolutionary measure of agrarian reforms making tiller of the soil the owner of the land. This was done to achieve the object of removing all intermediaries between tillers of the soil and the State. Section 32 provides that by mere operation of law, every tenant of agricultural land situated in the area to which the Act applies shall become by the operation of law, the owner thereof. He is declared to be a deemed purchaser without anything more on his part. A Constitution Bench of this court in Sri Ram Ram Narain Medhi v. State of Bombay [1959 Supp 1 SCR 489, 518-19 : AIR 1959 SC 459 : 1959 SCJ 679] held that:

“The title of the landlord to the land passes immediately to the tenant on the tillers’ day and there is a completed purchase or sale thereof as between the landlord and the tenant. The title of the land which was vested originally in the landlord passes to the tenant on the tillers’ day and this title is defeasible only in the event of the tenant failing to appear or making a statement that he is not willing to purchase the land or commit default in payment of the price thereto as determined by the Tribunal.” Therefore, it is unquestionably established that on the tillers’ day, the landlord’s interest in the land gets extinguished and simultaneously by a statutory sale without anything more by the parties, the extinguished title of the landlord is kindled or created in the tenant. That very moment landlord-tenant relationship as understood in common law or Transfer of Property Act comes to an end.

The link and chain is broken. The absent non-cultivating landlord ceases to have that ownership element of the land and the cultivating tenant, the tiller of the soil becomes the owner thereof. This is unquestionable. The landlord from the date of statutory sale is only entitled to receive the purchase price as determined by the Tribunal under Section 32-G. In other words, the landlord ceases to be landlord and the tenant becomes the owner of the land and comes in direct contact with the State. Without any act of transfer inter vivos the title of the landlord is extinguished and is created simultaneously in the tenant making the tenant the deemed purchaser. It is an admitted position that on April 1, 1957 Tarachand was the landlord and Janardhan was the tenant. Tarachand landlord was under no disability as envisaged by Section 32-F. Therefore on April 1, 1957 Janardhan became deemed purchaser and Mr Lalit could not controvert this position.

7. If Janardhan became the deemed purchaser on tillers’ day, the relationship of landlord and tenant between Tarachand and Janardhan came to be extinguished and no right could be claimed either by Tarachand or anyone claiming through him such as Ashoklal or the present purchasers on the footing that they are the owners of the land on or after April 1, 1957. This basic fact is incontrovertible.

8. It may be mentioned that Section 32-F has no application to the facts of this case. Section 32-F postponed the date of compulsory purchase by the tenant where the landlord is a minor or a widow or a person subject to mental or physical disability on the tillers’ day. Section 32-F has an overriding effect over Section 32 as it opens with a non-obstante clause. The combined effect of Sections 32-F and 32 would show that where the landlord is under no disability as envisaged by Section 32-F the tenant of such landlord by operation of law would become the deemed purchaser but where the landlord is of a class or category as set out in Section 32-F such as a minor, a widow or a person subject to any mental or physical disability, the date of compulsory sale would be postponed as therein provided.

Now, if Tarachand, the landlord was under no disability and he was alive on April 1, 1957 and he was the owner, his tenant Janardhan became the deemed purchaser. This conclusion, in our opinion, is unassailable.”

13. It can thus be seen that the Scheme of the 1948 Act, and in particular, the 1956 Amendment, which introduced Tillers’ Day, is that an absentee landlord’s rights in the land must give way to a cultivating tenant. Statutorily, on Tillers’ Day, the landlord is divested of title and the tenant is vested with title to agricultural land which he cultivates by dint of his own effort. It is only in three cases that such purchase becomes ineffective – if the tenant fails to appear within the time prescribed after notice is given to him, or appears and declines purchase, or if the tenant fails to pay the entire purchase price.

The widow, the minor and the person subject to a disability are placed on the same pedestal, and throughout their widowhood, minority or period of disability are deemed to cultivate the land personally through their tenants – the Explanation – I to Section 2(6) makes this clear. As we have seen from the case law extracted above, in the vast majority of cases, the landlord is divested of his title on a fixed date i.e. 1st April, 1957. It is only in exceptional cases where the landlord is a widow, minor or a person subjected to disability that this right of the tenant is postponed. What is important to note is that it is to the knowledge of both landlord and tenant that the tenant becomes the owner statutorily on a fixed date i.e. 1st April, 1957.

Even otherwise, on postponed dates that are mentioned under Section 32, the tenant shall be deemed to have purchased the land on such postponed date under the first proviso to sub-section (1) of Section 32 when an application for possession made by the landlord under Section 29 is finally rejected – a date that is to the knowledge of both landlord and tenant. Also, under the circumstances prescribed under Section 32(1A), again the tenant shall be deemed to have purchased the land on a date on which a final order is passed by the Tribunal in the circumstances mentioned in the said sub-section. Again, under sub-section (1B), in the circumstances mentioned in the aforesaid sub-section, land gets restored to the tenant upon which deemed purchase takes place. Statutorily, therefore, in all cases covered by Section 32, the landlord is divested of his title either on Tillers’ Day or on a postponed date which is to the knowledge of the tenant, as the aforesaid date is on and from a final order of a Tribunal or a Tahsildar, as the case may be.

14. Section 32-G is a very important pointer to the fact that a tenant must be put on notice in order that the purchase price of land be determined by the Tribunal. This notice under Section 32-G(1) is in the form of a public notice in the prescribed form in each village. Apart from this, the Tribunal shall also issue a notice individually to each tenant calling upon him to appear before it on the date specified in the notice. The same is the case of a tenant who is deemed to have purchased the land on the postponed date under Section 32-G(5). Again, when we come to Section 32-O in respect of tenancies created after Tillers’ Day, a tenant cultivating personally shall be entitled, within one year from the commencement of such tenancy, to purchase such land within the ceiling area.

What is important is that under sub-section (1A), this right is to be exercised by giving an intimation in that behalf to the landlord and the Tribunal in the prescribed manner within the period of one year. This again is a date which is within the knowledge of the tenant as the period of one year is calculated from the commencement of his tenancy. It can thus be seen that in the case of postponed dates under Section 32 and the right of a tenant in respect of tenancies created after Tillers’ Day, the tenant is to exercise his statutory right knowing fully well that if he does not do so within the prescribed period or does not pay purchase price, the purchase either becomes ineffective or the right cannot be exercised. In all these cases, what is important to notice is that the tenant knows of the time within which he must exercise his rights.

15. We now come to the Section which needs to be interpreted. Section 32-F was introduced by the Amendment Act of 1956 as part of a scheme of agrarian reform. The reason for the non-obstante clause, with which the Section begins, is that the cultivating tenant in all cases where the landlord is a minor, a widow or a person subjected to a disability, does not statutorily become owner of the agricultural land cultivated personally by him on Tillers’ Day. This is for the reason that under Section 2(6) Explanation- I, these three categories of landlords are deemed to cultivate personally through such tenant. The entitlement of terminating a tenancy under any one of these three categories is contained in Section 31(3).

In any of these three cases, the moment the disability ceases i.e. that the land in question no longer belongs to a minor, as he has become major, or to a widow, as she has died or transferred her share with permission under Section 63, or to a person whose mental or physical disability ceases, one year is granted for such persons to apply for resumption of the land on the ground that such persons wish to personally cultivate the said land, pursuant to which an application for possession of land under Section 29 may then be made. In case this is done within the time prescribed, the tenant’s right to purchase does not fructify. It is only when this is not done within the period of one year, as aforestated, that the postponed right of the tenant springs into being.

16. Prior to the Amendment Act of 1969, on a plain literal reading of Section 32-F(1)(a), it is true that a tenant had to exercise this right within a period of one year from the expiry of the one year spoken of in Section 31(3) of the Act. Literally speaking, therefore, even if the tenant does not know when the minor became major or when the widow died or transferred her share, this right would cease on the expiry of one year.

17. Realising that this would cause immense hardship for want of knowledge of a special fact which is only within the landlord’s ken, the legislature stepped in and amended Section 32-F. The Statement of Objects and Reasons for this Amendment Act is as follows:

“STATEMENT OF OBJECTS AND REASONS

It has come to the notice of the Government that a number of tenants in the Bombay area and the Vidarbha region of the State, failed to acquire ownership right in the lands held by them on account of their being dispossessed from the land otherwise than in the manner laid down in the relevant tenancy law. It is, therefore, expedient to amend the tenancy laws in force in these regions for safeguarding the interest of these dispossessed tenants. It is also noticed that a large number of tenants in the Bombay area of the State holding land from landlords who were minors have lost right to purchase land for their failure to give intimation within the period laid down in sub-section (1-A) of Section 32, It is, therefore, necessary to give these tenants a fresh opportunity to purchase land. Section 32-F is, therefore, being suitably amended for that purpose.

As a result of the decision of the Supreme Court of India, in Mussamia Imam Haider Bax Razvi v. Rabari Gobindbhai Ratnabhai [Mussamia Imam Haider Bax Razvi v. Rabari Gobindbhai Ratnabhai, AIR 1969 SC 439] from the judgment of the High Court of Gujarat regarding jurisdiction of civil court in certain matters, it has also become necessary to suitably amend certain sections of the tenancy laws in force in the three regions of the State. The Bill seeks to achieve the above objects.”

18. Paragraph 2 of the Statement of Objects and Reasons indicates that an amnesty scheme is necessary, in that a large number of tenants in the Bombay area who are minors have lost the right to purchase as they have failed to give the necessary intimation within the period laid down by statute. Under this amnesty scheme, if a tenant held land from a landlord who was a minor and who had obtained majority before the commencement of the 1969 Amendment and no intimation had been given, two years extra was given from the date of commencement of that Act in which such intimation may be given. This statutory object, reflected in paragraph 2 of the Statement of Objects and Reasons, is carried out by the proviso to sub-section (1A) inserted by the 1969 Amendment Act into Section 32-F.

19. Simultaneously, the same Amendment Act inserted into sub-section (1)(a), the following: “and for enabling the tenant to exercise the right of purchase, the landlord shall send an intimation to the tenant of the fact that he has attained majority, before the expiry of the period during which such landlord is entitled to terminate the tenancy under Section 31:” The addition of these words into Section 32-F(1)(a) would show that the legislature, in keeping with the object sought to be achieved statutorily divesting the landlord of his title and handing over the land to the cultivating tenant, cannot possibly be achieved unless a special fact within the knowledge of the landlord alone is first intimated to the tenant, so that he may then, with knowledge that the minor landlord has now turned major, meaningfully exercise his right of purchase under the Act.

20. It seems to us that the vast majority of cases which came to the notice of the legislature were cases of landlords who were minor at the time of the 1956 Amendment Act and who turned major only thereafter. The amnesty scheme contained in sub-section (1A), was, therefore, limited only to such cases. Unfortunately, the legislature, when it inserted words into sub-section (1)(a) of Section 32-F, appears to have forgotten that these words will govern the right of tenants which has been postponed on account of a landlord’s disability. What appears to have been missed is the fact that, apart from minors, there are two other categories mentioned in Section 32-F(1)(a), all of whom would stand on the same footing insofar as the tenant is concerned.

It would be wholly anomalous for a tenant to be told that if his landlord happened to be a minor who has attained majority later, he must first be intimated of this fact before he can meaningfully exercise his right of purchase; whereas to a tenant who is similarly situate when the landlord is a widow, in which case no such intimation need be made, the tenant would suffer for no fault of his as the tenant would have no knowledge of the date of death of the widow (which is a special fact known only to her family), such tenant’s right of purchase being extinguished by time. It seems that the draftsman of the 1969 Amendment was overwhelmed with the amnesty scheme laid down in Section 32-F (1A), which then spilled over to the amendment made in Section 32-F(1)(a), thereby unintentionally leaving out the two other categories of landlords, where the same intimation needs to be made to the tenant, as the death of the widow and/or the ceasing of disability are special facts known only to the landlord and his family, just as in the case of a minor turning major.

21. It has rightly been argued by learned counsel appearing on behalf of the Appellant that an absurd situation would be created by a literal reading of Section 32-F(1)(a). The landlord being a widow is protected until her death. After her death, one year is given to her successors in interest to exercise the right of resumption. When this does not take place one year is granted from the expiry of this first one year to the tenant to exercise his statutory right. This cannot be done because the tenant does not know of the death of the widow.

As a result, this very land which was not required by the landlord’s successors in interest for personal cultivation, goes back to the landlord under Section 32-P in cases in which the landlord either has no land within the ceiling limit or some land which does not exhaust the ceiling limit. This anomaly indeed turns the entire scheme of agrarian reform on its head. We have thus to see whether the language of Section 32-F can be added to or subtracted from, in order that the absurdity aforementioned and the discrimination between persons who are similarly situate be obviated.

The Golden Rule of Interpretation

22. In Grey v. Pearson (1857) LR 6 HL Cas 61, what is referred to as the Golden rule of literal interpretation was stated as follows: “… I have been long and deeply impressed with the wisdom of the rule, now, I believe, universally adopted, at least in the Courts of Law in Westminster Hall, that in construing wills and indeed statutes, and all written instruments, the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no farther.

This is laid down by Mr Justice Burton, in a very excellent opinion, which is to be found in Warburton v. Loveland [Warburton v. Loveland, (1831) 2 Dow & Cl 480 : 6 ER 806] (see ante, p. 76. n.)” (Emphasis supplied) 23. In an early Privy Council judgment in Salmon v. Duncombe (1886) 11 AC 627, Ordinance No. 1 of 1856 as it applied to Natal was up for construction. In order to make sense of the provision, the Privy Council found it necessary to cross out certain words of the Ordinance. This they did by stating: “It is, however, a very serious matter to hold that when the main object of a statute is clear, it shall be reduced to a nullity by the draftsman’s unskilfulness or ignorance of law. It may be necessary for a Court of Justice to come to such a conclusion, but their Lordships hold that nothing can justify it except necessity or the absolute intractability of the language used.

And they have set themselves to consider, first, whether any substantial doubt can be suggested as to the main object of the legislature; and, secondly, whether the last nine words of sect. 1 are so cogent and so limit the rest of the statute as to nullify its effect either entirely or in a very important particular. As to the broad intention of those who framed the Ordinance, their Lordships cannot find that anybody has ever intimated a doubt, nor do they find it possible to entertain one, that it was intended to give to all the Queen’s subjects, resident or settled in Natal, the option of disposing by will according to English law, of property both real and personal which otherwise would devolve according to Natal law.

The title may be looked at for aid in finding out the object. The preamble is of great importance in finding out the object. They have been quoted above, and nobody who reads to the end of the preamble and there stops, can doubt that the object is to provide a substantial measure substituting English law for Natal law in the cases mentioned. That object is carried into effect by sect. 1, on which the subsequent sections turn. Now suppose that sect. 1 ended with the words “in this district” or with the words “intents and purposes.” Though it would then be very inartificially drawn, it would not be difficult to construe it so as to give effect to the before declared object. The conditional words “could or might exercise” would require the implication of an unexpressed condition; otherwise, the sentence would result in a nullity.

But the implication would be by no means a difficult one. By implying after the words “customs of England” the addition “over property subject to those laws and customs,” the enactment would become sensible and harmonious. The difficulty is, and their Lordships quite agree that it is a great difficulty, that a condition which is apparently and at first sight the correlative condition of the conditional words “could or might exercise” is expressed by the last nine words of the section. And the question is whether that expression excludes all other implications. If such a construction left a substantial operative effect to the enactment, it might be necessary to answer that question in the affirmative; but, as it destroys the expressed objects altogether unless the word “resident” be construed to mean “domiciled,” and in that case destroys the expressed objects so far as regards real property, their Lordships answer it in the negative.

It is true that they cannot find a sensible meaning for the nine words in question. Very likely the draftsman, whose want of skill is shown by other expressions in the Ordinance, attributed to residence a legal effect which it does not possess. But he does not make the legislature say that the powers conferred are not to be any greater powers than would be conferred by a residence in England. He makes it in the rest of the section use terms which, with the easy implication that is necessary to give them meaning and to harmonize with the declared objects, confer the power of escaping from Natal law and coming under English law; and he then adds words which may add nothing to what has gone before, but which ought not without necessity to be construed so as to destroy all that has gone before.

A man exercising the powers conferred does not in any way violate or contravene the nine words in question. He does exercise these powers as if he resided in England, because it is perfectly immaterial for their exercise whether he is supposed to reside in England or not, and because wherever he is supposed to reside he exercises them in the same way. It is very unsatisfactory to be compelled to construe a statute in this way, but it is much more unsatisfactory to deprive it altogether of meaning. Their Lordships chose the lesser of two difficulties.”

24. In an early judgment of our Court, Tirath Singh v. Bachittar Singh & Ors (1955) 2 SCR 457, this Court had to construe the proviso to Section 99(1)(a)(ii) of the Representation of People Act, 1951. The Court held: “…But it is a rule of interpretation well-established that, “Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence”.

(Maxwell’s Interpretation of Statutes, 10th Edn., p. 229). Reading the proviso along with clause (b) thereto, and construing it in its setting in the section, we are of opinion that notwithstanding the wideness of the language used, the proviso contemplates notice only to persons who are not parties to the petition.” The Court, therefore, restricted the word “person” appearing in the said proviso to mean only persons who are not parties to the election petition. This was done, given the fact that the object of the proviso was to give notice to persons who had hitherto not been given notice of the election petition. Obviously, the parties to the election petition were persons who knew of the existence of such petition.

25. In Ramaswamy Nadar v. State of Madras (1958) SCR 739, this Court found it necessary to supply words which were not found in Section 423(1)(a) of the Criminal Procedure Code. This the Court did as follows: “…But this argument is wholly ineffective because in either view of the matter the court has to supply some words in answer to the question “find him guilty of what?” According to the appellant, those additional words should be “of such offence as has been charged and of which he had been acquitted”, and according to the other view, “of the offence disclosed”. If, in construing the section, the court has to supply some words in order to make the meaning of the statute clear, it will naturally prefer the latter construction which is more in consonance with reason and justice.”

26. In State of Madhya Pradesh v. Azad Bharat Finance Co. & Anr. (1966) Supp. SCR 473, Section 11 of the Opium (Madhya Bharat Amendment) Act, 1955 was construed as being permissive and not obligatory as follows: “…It is well recognised that if a statute leads to absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence, (vide Tirath Singh v. Bachittar Singh [(1955) 2 SCR 457 at 464] ). Secondly, it is a penal statute and it should, if possible, be construed in such a way that a person who has not committed or abetted any offence should not be visited with a penalty. Thirdly, if the meaning suggested by Mr Shroff is given, Section 11(d) of the Madhya Bharat Act may have to be struck down as imposing unreasonable restrictions under Article 19 of the Constitution. Bearing all these considerations in mind, we consider that Section 11 of the Madhya Bharat Act is not obligatory and it is for the court to consider in each case whether the vehicle in which the contraband opium is found or is being transported should be confiscated or not, having regard to all the circumstances of the case.”

27. In Budhan Singh v. Nabi Bux (1970) 2 SCR 10, this Court held that the expression “held” occurring in Section 9 of the U.P. Zamindari Abolition and Reforms Act, 1950 must mean “lawfully held” thereby adding the word “lawfully”. The Court held: – “…Before considering the meaning of the word “held” in Section 9, it is necessary to mention that it is proper to assume that the lawmakers who are the representatives of the people enact laws which the society considers as honest, fair and equitable. The object of every legislation is to advance public welfare. In other words as observed by Crawford in his book on Statutory Constructions the entire legislative process is influenced by considerations of justice and reason. Justice and reason constitute the great general legislative intent in every piece of legislation. Consequently where the suggested construction operates harshly, ridiculously or in any other manner contrary to prevailing conceptions of justice and reason, in most instances, it would seem that the apparent or suggested meaning of the statute, was not the one intended by the law-makers. In the absence of some other indication that the harsh or ridiculous effect was actually intended by the legislature, there is little reason to believe that it represents the legislative intent.”

28. In Commissioner of Income Tax, Central Calcutta v. National Taj Traders (1980) 1 SCC 370, this Court construed Section 33-B of the Indian Income Tax Act, 1922 in order to avoid a manifestly absurd result as follows: “…According to the construction contended for by the assessee and which found favour with the High Court the answer was in the affirmative because sub-section (2)(b), on its literal construction, was absolute. In our view such literal construction would lead to a manifestly absurd result, because in a given case, like the present one, where the Appellate Authority (Tribunal) has found (a) the Income Tax Officer’s order to be clearly erroneous as being prejudicial to the interests of the Revenue, and (b) the Commissioner’s order unsustainable as being in violation of principles of natural justice, how should the Appellate Authority exercise its appellate powers?

Obviously it could not withhold its hands and refuse to interfere with Commissioner’s order altogether, for, that would amount to perpetuating the Commissioner’s erroneous order, nor could it merely cancel or set aside the Commissioner’s wrong order without doing anything about the Income Tax Officer’s order, for, that would result in perpetuating the Income Tax Officer’s order which had been found to be manifestly erroneous as being prejudicial to the revenue. But such result would flow from the view taken by the High Court which has held that the Tribunal acted properly in vacating the Commissioner’s order but did not act properly in directing him to dispose of the proceedings afresh after giving opportunity to the assessee. Such manifestly absurd result could never have been intended by the Legislature.

xxx xxx xxx

A literal construction placed on sub-section (2)(b) would lead to such manifestly absurd and anomalous results, which, we do not think, were intended by the Legislature. These considerations compel us to construe the words of sub-section (2)(b) as being applicable to suo motu orders of the Commissioner in revision and not to orders made by him pursuant to a direction or order passed by the Appellate Tribunal under sub-section (4) or by any other higher authority. Such construction will be in consonance with the principle that all parts of the section should be construed together and every clause thereof should be construed with reference to the context and other clauses thereof so that the construction put on that particular provision makes a consistent enactment of the whole statute.”

29. In K.P. Verghese v. ITO (1981) 4 SCC 173, this Court dealt with the correct interpretation of Section 52 of the Income Tax Act, 1961. Read literally, the moment there is transfer of a capital asset by an amount less than the fair market value, the fair market value is to be taken instead of the stated consideration. This Court read into Section 52 the fact that it would have no application in case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. The Court held:

“5. …The task of interpretation of a statutory enactment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. It is an attempt to discover the intent of the legislature from the language used by it and it must always be remembered that language is at best an imperfect instrument for the expression of human thought and as pointed out by Lord Denning, it would be idle to expect every statutory provision to be “drafted with divine prescience and perfect clarity”.

We can do no better than repeat the famous words of Judge Learned Hand when he laid: “… it is true that the words used, even in their literal sense, are the primary and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.”

We must not adopt a strictly literal interpretation of Section 52 sub-section (2) but we must construe its language having regard to the object and purpose which the legislature had in view in enacting that provision and in the context of the setting in which it occurs. We cannot ignore the context and the collocation of the provisions in which Section 52 sub-section (2) appears, because, as pointed out by Judge Learned Hand in most felicitous language: “… the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes, and no degree of particularity can ever obviate recourse to the setting in which all appear, and which all collectively create.” Keeping these observations in mind we may now approach the construction of Section 52 sub-section (2).

6. The primary objection against the literal construction of Section 52 sub-section (2) is that it leads to manifestly unreasonable and absurd consequences. It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision but they can certainly help to fix its meaning. It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided.

There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement – and it is quite well-known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement – the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price at which the property is sold by more than 15 per cent of such agreed price.

This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness and justice that in such cases, where there is clearly no under-statement of consideration in respect of the transfer and the transaction is perfectly honest and bona fide and, in fact, in fulfilment of a contractual obligation, the assessee who has sold the property should be liable to pay tax on capital gains which have not accrued or arisen to him. It would indeed be most harsh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him.

It is difficult to conceive of any rational reason why the legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carries out such contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income which has neither arisen to the assessee nor has been received by him. If we may take another illustration, let us consider a case where A sells his property to B with a stipulation that after some time which may be a couple of years or more, he shall re-sell the property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of re-sale, if, in the meanwhile, the market price has shot up and exceeds the agreed price by more than 15 per cent? Many other similar situations can be contemplated where it would be absurd and unreasonable to apply Section 52 sub-section (2) according to its strict literal construction.

We must therefore eschew literalness in the interpretation of Section 52 sub-section (2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the court may modify the language used by the legislature or even “do some violence” to it, so as to achieve the obvious intention of the legislature and produce a rational construction (vide Luke v. Inland Revenue Commissioner [(1963) AC 557] ).

The Court may also in such a case read into the statutory provision a condition which, though not expressed, is implicit as constituting the basic assumption underlying the statutory provision. We think that, having regard to this well-recognised rule of interpretation, a fair and reasonable construction of Section 52 sub-section (2) would be to read into it a condition that it would apply only where the consideration for the transfer is understated or in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. There are several important considerations which incline us to accept this construction of Section 52 sub-section (2).”

30. In CIT v. J.H. Gotla (1985) 4 SCC 343, the true construction of Section 24(2) of the Income Tax Act, 1922 was before the Court. Following Verghese’s case (supra), the Court held:

“44. Our attention was also drawn to the decision in the case of Manickam and Co. v. State of T.N. [(1977) 1 SCC 199 : 1977 SCC (Tax) 165 : (1977) 39 STC 12, 18] as well as Craies on Statute Law (6th Edn), p. 147. 45. In the case of K.P. Varghese v. IT0 [(1981) 4 SCC 173 : 1981 SCC (Tax) 293 : (1981) 131 ITR 597] this Court emphasised that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided.

46. Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the Court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational construction. The task of interpretation of a statutory provision is an attempt to discover the intention of the Legislature from the language used. It is necessary to remember that language is at best an imperfect instrument for the expression of human intention. It is well to remember the warning administered by Judge Learned Hand that one should not make a fortress out of dictionary but remember that statutes always have some purpose or object to accomplish and sympathetic and imaginative discovery is the surest guide to their meaning.

47. We have noted the object of Section 16(3) of the Act which has to be read in conjunction with Section 24(2) in this case for the present purpose. If the purpose of a particular provision is easily discernible from the whole scheme of the Act which in this case is, to counteract the effect of the transfer of assets so far as computation of income of the assessee is concerned then bearing that purpose in mind, we should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result i.e. result not intended to be subserved by the object of the legislation found in the manner indicated before, and if another construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction.

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48. In view of the aforesaid and in view of the attitude of the law-makers in dealing with this problem as evidenced by the amendment and in the circular originally issued prior thereto and bearing in mind that under the scheme of the Act where the wife or minor child carries on a running business, the right to carry forward the loss in the running business would be available to the wife or minor child if they themselves were assessed but the right would be completely lost if the 46 individual in whose total income the loss is to be included is not permitted to carry forward the loss under Section 24(2); since that would be the result of the strict literal construction it is apparent that that could not have been the intent of the Parliament. Therefore, where Section 16(3) of the Act operates, the profits or loss from a business of the wife or minor child included in the total income of the assessee should be treated as the profit or loss from a “business carried on by him” for the purpose of carrying forward and set-off of such loss under Section 24(2) of the Act.”

In another tax case, this Court, in State of Tamil Nadu v. Kodaikanal Motor Union (P) Ltd. (1986) 3 SCC 91, while construing Section 10-A of the Central Sales Tax Act, 1956, held:

“17. The courts must always seek to find out the intention of the legislature. Though the courts must find out the intention of the statute from the language used, but language more often than not is an imperfect instrument of expression of human thought. As Lord Denning said it would be idle to expect every statutory provision to be drafted with divine prescience and perfect clarity. As Judge Learned Hand said, we must not make a fortress out of dictionary but remember that statutes must have some purpose or object, whose imaginative discovery is judicial craftsmanship. We need not always cling to literalness and should seek to endeavour to avoid an unjust or absurd result. We should not make a mockery of legislation. To make sense out of an unhappily worded provision, where the purpose is apparent to the judicial eve “some” violence to language is permissible. (See K.P. Varghese v. ITO [(1981) 4 SCC 173, 180-82 : 1981 SCC (Tax) 293, 300-302 : (1981) 131 ITR 597, 604-606] and Luke v. Inland Revenue Commissioner [(1964) 54 ITR 692 (HL)] .)

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19. … The presumption canvassed to be raised that the true effect of the words “if the offence had not been committed” was to presume a situation in which the undertaking given by the assessee had been carried out even though in fact the same had not been carried out. That would be an absurd result. In our opinion the use of the expression “if” simpliciter, was meant to indicate a condition, the condition being that at the time of assessing the penalty, that situation should be visualised wherein there was no scope of committing any offence. Such a situation could arise only if the tax liability fell under sub-section (2) of Section 8 of the Act. The scheme of Section 8 indicated that concessional rates contemplated by sub-section (1) thereof would be available only with reference to those goods which are covered by the declarations in Form ‘C’. The moment it is found that in respect of particular quantity of goods the undertaking given by the assessee in Form ‘C’ declaration has not been carried out, the goods were presumed to be such in respect of which no undertaking was existing.

Therefore such goods would be liable to normal tax contemplated under sub-section (2) of Section 8. Therefore, the penalty should be worked out only on the basis of the normal rates prescribed under sub-section (2) of Section 8. That would make sense. That is a reasonably possible construction. That would avoid absurd result.”

31. In Hameedia Hardware Stores v. B. Mohanlal (1988) 2 SCC 513, Section 10(3)(a)(iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 was read harmoniously with the other provisions of the Act, as a result of which the words “if the landlord required it for his own use or for the use of any member of his family” were read into sub-clause (iii). This was done for the reason:

“10. …If the two sub-clauses are not so read, it would lead to an absurd result. The non-residential building referred to in sub-clause (ii) is a building which is used for the purpose of keeping a vehicle or adapted for such use and all other non-residential buildings fall under sub-clause (iii). The State Legislature cannot be attributed with the intention that it required a more stringent proof by insisting upon proof of bona fides of his requirement or need also when a landlord is seeking eviction of a tenant from a garage than in the case of a non-residential building which is occupied by large commercial house for carrying on business.

The learned counsel for the respondent was not able to explain as to why the State Legislature gave greater protection to tenants occupying premises used for keeping vehicles or adapted for such use than to tenants occupying other types of non-residential buildings. It is no doubt true that the court while construing a provision should not easily read into it words which have not been expressly enacted but having regard to the context in which a provision appears and the object of the statute in which the said provision is enacted the court should construe it in a harmonious way to make it meaningful.”

32. This judgment was followed in Surjit Singh Kalra v. Union of India (1991) 2 SCC 87 as follows:

“19. True it is not permissible to read words in a statute which are not there, but “where the alternative lies between either supplying by implication words which appear to have been accidentally omitted, or adopting a construction which deprives certain existing words of all meaning, it is permissible to supply the words” (Craies Statute Law, 7th edn., p. 109). Similar are the observations in Hameedia Hardware Stores v. B. Mohan Lal Sowcar [(1988) 2 SCC 513, 524-25] where it was observed that the court construing a provision should not easily read into it words which have not been expressly enacted but having regard to the context in which a provision appears and the object of the statute in which the said provision is enacted the court should construe it in a harmonious way to make it meaningful. An attempt must always be made so to reconcile the relevant provisions as to advance the remedy intended by the statute. (See: Sirajul Haq Khan v. Sunni Central Board of Waqf [1959 SCR 1287, 1299 : AIR 1959 SC 198] .)

20. The tenant of course is entitled to raise all relevant contentions as against the claim of the classified landlords. The fact that there is no reference to the word bona fide requirement in Sections 14-B to 14-D does not absolve the landlord from proving that his requirement is bona fide or the tenant from showing that it is not bona fide. In fact every claim for eviction against a tenant must be a bona fide one. There is also enough indication in support of this construction from the title of Section 25-B which states “special procedure for the disposal of applications for eviction on the ground of bona fide requirement”.”

33. In C.W.S. (India) Limited v. Commissioner of Income Tax (1994) Supp. 2 SCC 296, Section 40(c)(iii) of the Income Tax Act, 1961 came up for discussion. The Court held:

“10. Now, it may be noticed that Section 40(a)(v) is only an expanded version of Section 40(c)(iii). The idea was to bring the allowances in respect of the assets owned by the assessee, which assets are used by its employee for his own purposes or benefit, within the net of ceiling. Section 40(c)(iii) did not cover such allowances and this was sought to be remedied. The idea was certainly not to bring about a different treatment of two situations in Section 40(a)(v) referred to as clauses (i) and (ii) in this judgment. The consequence of accepting the assessee’s interpretation would be that while the ceiling on expenditure would apply to a case falling under clause (i), no such ceiling would apply to a case falling under clause (ii) unless the employee governed by clause (ii) is also provided a benefit, amenity or perquisite falling under clause (i).

The consequence would not only be discriminatory but also very incongruous, almost absurd. In principle, there is no distinction between the two cases or two situations, as they may be called. We are satisfied that the mere use of the word “such” in clause (ii) should not have the effect of driving the court to place an interpretation upon the said clause which is not only discriminatory but is highly incongruous…In this connection, we may refer to the well-recognised rule of interpretation of statutes that where a literal interpretation leads to absurd or unintended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity. The following passage from Maxwell’s Interpretation of Statutes (12th Edn.) may usefully be quoted:

“1. Modification of the language to meet the intention.-Where the language of the statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity which can hardly have been intended, a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence. This may be done by departing from the rules of grammar, by giving an unusual meaning to particular words, or by rejecting them altogether, on the ground that the legislature could not possibly have intended what its words signify, and that the modifications made are mere corrections of careless language and really give the true meaning.

Where the main object and the intention of a statute are clear, it must not be reduced to a nullity by the draftman’s unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. Lord Reid has said that he prefers to see a mistake on the part of the draftsman in doing his revision rather than a deliberate attempt to introduce an irrational rule: ‘The canons of construction are not so rigid as to prevent a realistic solution.'” We are, therefore, of the opinion that the Full Bench of the Kerala High Court was right in taking the view it did on this aspect and we agree with it.”

34. In Molar Mal v. Kay Iron Works (P) Ltd. (2000) 4 SCC 285, this Court construed a provision of the Haryana Urban (Control of Rent and Eviction) Act, 1973 by interpreting the proviso to Section 13(3) of the said Act by adding certain words as follows:

“12. …We agree with this contention of the landlord that normally the courts will have to follow the rule of literal construction which rule enjoins the court to take the words as used by the legislature and to give it the meaning which naturally implies. But, there is an exception to this rule. That exception comes into play when application of literal construction of the words in the statute leads to absurdity, inconsistency or when it is shown that the legal context in which the words are used or by reading the statute as a whole, it requires a different meaning.

In our opinion, if the expression “entitled to apply again” is given its literal meaning, it would defeat the very object for which the legislature has incorporated that proviso in the Act inasmuch as the object of that proviso can be defeated by a landlord who has more than one tenanted premises by filing multiple applications simultaneously for eviction and thereafter obtain possession of all those premises without the bar of the proviso being applicable to him.

We are of the opinion that this could not have been the purpose for which the proviso is included in the Act. If such an interpretation is given then the various provisos found in sub-section (3) of Section 13 would become otiose and the very object of the enactment would be defeated. Any such interpretation, in our opinion, would lead to absurdity. Therefore, we have no hesitation in interpreting the proviso to mean that the restriction contemplated under that proviso extends even up to the stage when the court or the tribunal is considering the case of the landlord for actual eviction and is not confined to the stage of filing of eviction petition only.”

35. In Union of India v. Hansoli Devi (2002) 7 SCC 273, this Court construed Section 28-A of the Land Acquisition Act, 1894 by eschewing a literal interpretation thereof, and reading into the Section the words “and that reference is entertained and answered”. The Court stated:

“9. …It is no doubt true that the object of Section 28-A of the Act was to confer a right of making a reference, (sic on one) who might have not made a reference earlier under Section 18 and, therefore, ordinarily when a person makes a reference under Section 18 but that was dismissed on the ground of delay, he would not get the right of Section 28-A of the Land Acquisition Act when some other person makes a reference and the reference is answered. But Parliament having enacted Section 28-A, as a beneficial provision, it would cause great injustice if a literal interpretation is given to the expression “had not made an application to the Collector under Section 18” in Section 28-A of the Act.

The aforesaid expression would mean that if the landowner has made an application for reference under Section 18 and that reference is entertained and answered. In other words, it may not be permissible for a landowner to make a reference and get it answered and then subsequently make another application when some other person gets the reference answered and obtains a higher amount. In fact in Pradeep Kumari case [(1995) 2 SCC 736] the three learned Judges, while enumerating the conditions to be satisfied, whereafter an application under Section 28-A can be moved, had categorically stated (SCC p. 743, para 10) “the person moving the application did not make an application to the Collector under Section 18”.

The expression “did not make an application”, as observed by this Court, would mean, did not make an effective application which had been entertained by making the reference and the reference was answered. When an application under Section 18 is not entertained on the ground of limitation, the same not fructifying into any reference, then that would not tantamount to an effective application and consequently the rights of such applicant emanating from some other reference being answered to move an application under Section 28-A cannot be denied. We, accordingly answer Question 1(a) by holding that the dismissal of an application seeking reference under Section 18 on the ground of delay would tantamount to not filing an application within the meaning of Section 28-A of the Land Acquisition Act, 1894.”

36. Given the fact that the object of the 1956 Amendment, which is an agrarian reform legislation, and is to give the tiller of the soil statutory title to land which such tiller cultivates; and, given the fact that the literal interpretation of Section 32-F(1)(a) would be contrary to justice and reason and would lead to great hardship qua persons who are similarly circumstanced; as also to the absurdity of land going back to an absentee landlord when he has lost the right of personal cultivation, in the teeth of the object of the 1956 Amendment as mentioned hereinabove, we delete the words “.. of the fact that he has attained majority..”. Without these words, therefore, the landlord belonging to all three categories has to send an intimation to the tenant, before the expiry of the period during which such landlord is entitled to terminate the tenancy under Section 31.

Section 32-F to be read in conformity with Article 14 of the Constitution of India

37. In R.L. Arora v. Union of India (1964) 6 SCR 784, this Court laid down that: “It is well settled that if certain provisions of law construed in one way will be consistent with the constitution, and if another interpretation would render them unconstitutional, the Court would lean in favour of the former construction: (see Kedar Nath Singh v. State of Bihar) [(1962) Supp 2 SCR 769].” 38. In Shri Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar (1959) SCR 279, this Court summarised the case law under Article 14 in the form of six propositions. We are concerned here with proposition (d), which reads as follows: “… The principle enunciated above has been consistently adopted and applied in subsequent cases. The decisions of this Court further establish-

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(d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest;” Based on this proposition, Shri Bhasme has argued that the legislature in the present case has recognised a certain degree of harm, namely, to tenants of minor landlords and may, therefore, confine itself to such cases where the need is deemed to be clearest.

39. Proposition (d) has been later clarified in the seminal judgment of this Court, In Re Special Courts Bill, 1978, (1979)1 SCC 380. A Constitution Bench of this Court in paragraph 72 of the aforesaid judgment, after referring to Ram Krishna Dalmia’s case (supra) and other judgments, stated 13 propositions insofar as Article 14 is concerned. We are directly concerned with propositions (1), (3), (6) and (8) which are set out as follows:

“72. As long back as in 1960, it was said by this Court in Kangsari Haldar that the propositions applicable to cases arising under Article 14 “have been repeated so many times during the past few years that they now sound almost platitudinous”. What was considered to be platitudinous some 18 years ago has, in the natural course of events, become even more platitudinous today, especially in view of the avalanche of cases which have flooded this Court. Many a learned Judge of this Court has said that it is not in the formulation of principles under Article 14 but in their application to concrete cases that difficulties generally arise. But, considering that we are sitting in a larger Bench than some which decided similar cases under Article 14, and in view of the peculiar importance of the questions arising in this reference, though the questions themselves are not without a precedent, we propose, though undoubtedly at the cost of some repetition, to state the propositions which emerge from the judgments of this Court insofar as they are relevant to the decision of the points which arise for our consideration. Those propositions may be stated thus:

“(1) The first part of Article 14, which was adopted from the Irish Constitution, is a declaration of equality of the civil rights of all persons within the territories of India. It enshrines a basic principle of republicanism. The second part, which is a corollary of the first and is based on the last clause of the first section of the Fourteenth Amendment of the American Constitution, enjoins that equal protection shall be secured to all such persons in the enjoyment of their rights and liberties without discrimination of favouritism. It is a pledge of the protection of equal laws, that is, laws that operate alike on all persons under like circumstances.

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(3) The constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exact or scientific exclusion or inclusion of persons or things. The courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is not palpably arbitrary.

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(6) The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise even degree of evil, but the classification should never be arbitrary, artificial or evasive.

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(8) The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while Article 14 forbids class discrimination by conferring privileges or imposing liabilities upon persons arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liabilities proposed to be imposed, it does not forbid classification for the purpose of legislation, provided such classification is not arbitrary in the sense abovementioned.”

To proposition (d) in Ram Krishna Dalmia’s case (supra) an exception has been engrafted in proposition (6) contained hereinabove. The law may recognise degrees of harm, but in so doing the classification should never be arbitrary, artificial or evasive. This is repeated by way of a proviso to proposition (8) as well. We have referred to the Statement of the Objects and Reasons for the 1969 Amendment. Paragraph 2 thereof stated that a large number of cases involving minor landlords had come to the notice of the legislature, for which reason the amnesty scheme mentioned in sub-section (1A) of Section 32-F was enacted. However, what was forgotten by the draftsman when the addition to Section 32-F(1)(a) was made was the fact that Section 32F(1)(a) referred to three categories of landlords and not only one. The words added by the 1969 amendment thus gave relief to tenants only qua minor landlords and not the other two categories. Obviously, the classification made in favour of tenants of minor landlords as opposed to tenants of landlords of the other two categories is a classification which is arbitrary in nature. This being the case, such classification would ordinarily have to be struck down as being violative of Article 14 of the Constitution of India.

40. However, instead of striking down such classification as a whole, what can be done is to strike down the words “..of the fact that he has attained majority..”, as a result of which, what is added by the 1969 Amendment to Section 32-F(1)(a) now ceases to be discriminatory, as it is applicable to tenants of all three categories of landlords.

41. In Shayara Bano v. Union of India (2017) 9 SCC 1, this Court referred to the positive aspect of the fundamental right contained in Article 14 thus: “62. Article 14 of the Constitution of India is a facet of equality of status and opportunity spoken of in the Preamble to the Constitution.

The Article naturally divides itself into two parts-(1) equality before the law, and (2) the equal protection of the law. Judgments of this Court have referred to the fact that the equality before law concept has been derived from the law in the UK, and the equal protection of the laws has been borrowed from the 14th Amendment to the Constitution of the United States of America. In a revealing judgment, Subba Rao, J., dissenting, in State of U.P. v. Deoman Upadhyaya [State of U.P. v. Deoman Upadhyaya, (1961) 1 SCR 14 : AIR 1960 SC 1125 : 1960 Cri LJ 1504] , AIR p. 1134 para 26 : SCR at p. 34 further went on to state that whereas equality before law is a negative concept, the equal protection of the law has positive content. The early judgments of this Court referred to the “discrimination” aspect of Article 14, and evolved a rule by which subjects could be classified. If the classification was “intelligible” having regard to the object sought to be achieved, it would pass muster under Article 14’s anti-discrimination aspect. Again, Subba Rao, J., dissenting, in Lachhman Dass v. State of Punjab [Lachhman Dass v. State of Punjab, (1963) 2 SCR 353 : AIR 1963 SC 222] , SCR at p. 395, warned that: (AIR p. 240, para 50)

“50. … Overemphasis on the doctrine of classification or an anxious and sustained attempt to discover some basis for classification may gradually and imperceptibly deprive the Article of its glorious content.” He referred to the doctrine of classification as a “subsidiary rule” evolved by courts to give practical content to the said Article.

63. In the pre-1974 era, the judgments of this Court did refer to the “rule of law” or “positive” aspect of Article 14, the concomitant of which is that if an action is found to be arbitrary and, therefore, unreasonable, it would negate the equal protection of the law contained in Article 14 and would be struck down on this ground.”

42. Hiralal P. Harsora v. Kusum Narottamdas Harsora (2016) 10 SCC 165, is a case in point. In this judgment, this Court struck down a portion of Section 2(q) of the Protection of Women from Domestic Violence Act, 2005. Section 2(q) of the said Act defined “Respondent” as meaning any adult male person who is, or has been in a domestic relationship with the aggrieved person and against whom the aggrieved person has sought any relief. This Court having regard to the object sought to be achieved by the Act, struck down the expression “adult male” as follows:

“39. A conspectus of these judgments also leads to the result that the microscopic difference between male and female, adult and non-adult, regard being had to the object sought to be achieved by the 2005 Act, is neither real or substantial nor does it have any rational relation to the object of the legislation. In fact, as per the principle settled in Subramanian Swamy [Subramanian Swamy v. CBI, (2014) 8 SCC 682 : (2014) 6 SCC (Cri) 42 : (2014) 3 SCC (L & S) 36] judgment, the words “adult male person” are contrary to the object of affording protection to women who have suffered from domestic violence “of any kind”. We, therefore, strike down the words “adult male” before the word “person” in Section 2(q), as these words discriminate between persons similarly situate, and far from being in tune with, are contrary to the object sought to be achieved by the 2005 Act.

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44. An application of the aforesaid severability principle would make it clear that having struck down the expression “adult male” in Section 2(q) of the 2005 Act, the rest of the Section is left intact and can be enforced to achieve the object of the legislation without the offending words. Under Section 2(q) of the 2005 Act, while defining “respondent”, a proviso is provided only to carve out an exception to a situation of “respondent” not being an adult male. Once we strike down “adult male”, the proviso has no independent existence, having been rendered otiose.”

43. In Secretary, Mahatama Gandhi Mission v. Bhartiya Kamgar Sena (2017) 4 SCC 449, this Court referred copiously to the judgment in D.S. Nakara v. Union of India, (1983) 1 SCC 305, and then held:

“88. What is the remedy open to the citizen and the corresponding obligation of the judiciary to deal with such a situation, where the inequalities are created either by the legislation or executive action? Traditionally, this Court and the High Courts have been declaring any law, which created inequalities to be unconstitutional, but in Nakara case [D.S. Nakara v. Union of India, (1983) 1 SCC 305 : 1983 SCC (L & S) 145] this Court realised that such a course of action would not meet with the obligations emanating from a combined reading of the directive principles and Article 14. Therefore, this Court emphatically laid down in Nakara case [D.S. Nakara v. Union of India, (1983) 1 SCC 305 : 1983 SCC (L & S) 145] that it is possible to give an appropriate inductive relief by eliminating the factors, which creates the artificial classification leading to a discriminatory application of law.”

44. Respectfully following the law laid down in these judgments, and in order to read Section 32-F(1)(a) in conformity with Article 14, we eliminate the words “..of the fact that he has attained majority..” so that the intimation that is to be made by the landlord has to be made to tenants of all the three categories of landlords covered by the provision.

45. It now remains to deal with some of the judgments of this Court on the interpretation of Section 32-F. In Anna Bhau Magdum v. Babasaheb Anandrao Desai (1995) 5 SCC 243, a minor landlord attained majority in 1965 i.e. before the 1969 Amendment Act came into force. After adverting to the amendments made in 1969, this Court held that for this reason the amendment did not apply to the facts of that case. It was also found, as a matter of fact, that despite knowing that the Respondent landlord would attain majority on 17.1.1965, the tenant gave no intimation as required by sub-section (1A) to Section 32-F even within the amnesty period of two years granted by the said sub-section.

The only argument made on behalf of the tenant in that case was that since there is an automatic purchase, the provisions of sub-section (1A) are directory in nature. This was turned down stating that the consequences of non-compliance of Section 32-F (1A) are laid down in Section 32-P(1) and that, therefore, the time period contained in sub-section (1A) of Section 32-F is mandatory in nature. This case is wholly distinguishable on its facts and lays down the law on Section 32-F(1A) with which we are not immediately concerned.

46. However, in Appa Narsappa v. Akubai Ganapati (1999) 4 SCC 453, this Court referred to the landlady widow on the facts of that case who had died in 1965, prior to the coming into force of the Amendment Act of 1969. In this factual scenario, since the tenant did not comply with the timeline of one year given to him, the right to purchase of the tenant was stated to have come to an end. The argument that one year should be from the date of knowledge was turned down in the following terms:

“4. It was submitted by the learned counsel that this being a welfare legislation enacted for the benefit of tenants should be construed in a liberal manner. He also submitted that the heirs of the landlady had not given any intimation to the appellant about her death and therefore he could not have known who were the heirs of the landlady and given intimation to them. He submitted that the period of one year should be counted from the date of the knowledge of the tenant. We cannot accept this submission because the language of Sections 32-F and 31 is quite clear and the period of one year will have to be counted in accordance with the said provisions and not from the date of the knowledge of the tenant. The provision of law being clear, we cannot in such a case grant relief on the basis of equity.” Since this judgment does not square with object sought to be achieved by the 1956 Amendment to the 1948 Act or to the declaration of law in this judgment, it does not state the law correctly and is, therefore, overruled.

47. The next judgment that was cited before us is Sudam Ganpat Kutwal v. Shevantabai Tukaram (2006) 7 SCC 200. After setting out the relevant provisions of the Act, this Court held that on the facts of that case since Section 31(3) had ceased to apply, Section 32-F(1) did not apply at all, as a result of which there was no need for the tenant to issue any notice of intimation to the landlord. The other judgments that were cited were distinguished in paragraph 27 stating that they were all judgments in which Section 32-F(1A) would apply. The facts of this case again are far removed from the facts of the present case and the judgment has, therefore, no application to the law laid down in the present case.

48. The next judgment cited before us is Tukaram Maruti Chavan v. Maruti Narayan Chavan, (2008) 9 SCC 358. This judgment followed the law laid down in Appa Narsappa (supra) and on facts held that the Appellant tenant had complete knowledge of the death of the widow in that case, as a result of which the Appellant’s contention that he was confused as to who was the true owner was turned down. To the extent that this judgment follows the law laid down in Appa Narsappa (supra), this judgment also does not lay down the law correctly and is overruled to this extent.

49. It now only remains to consider some of Shri Bhasme’s other arguments. The argument made based on Section 14(1)(a) that since a tenant is bound to pay the rent every year before the 31st May thereof, the tenant is bound to know that the person to whom he is paying rent has since died and that, therefore, knowledge cannot be brought in to the construction of Section 32-F need not detain us.

On facts in the present case, the landlady was actually at Mumbai, whereas the tenant was at Ratnagiri. Also, Section 14(1)(b) makes it clear that in case the tenant fails to pay rent before the 31st May of every year, the landlord must first give a three months’ notice in writing informing the tenant that he has not so paid the rent, within which period the tenant is given time to remedy the breach. On facts, there is nothing to show that any such notice was given. The other emotive argument that in the agricultural village world everyone knows about everybody else and that, therefore, it may be assumed that a villager at Ratnagiri will know about his landlord’s death equally cannot apply on the facts of this case as the landlord lived and died in Mumbai. The other emotive argument about the reverse situation obtaining today as opposed to the situation obtaining in 1956, namely, that it is tenants who are now well off and landlords who are poor is again a perception of learned counsel which has no bearing either on the facts of this case or the law that needs to be laid down.

50. The questions referred to us are now answered as follows:

(i) The object of the Amendment Act of 1969 is relevant and applicable in deciding the scope of the right to purchase by a tenant of a landlord who was a widow or suffering from mental or physical disability on Tillers’ day.

(ii) The successor-in-interest of a widow is obliged to send an intimation to the tenant of cessation of interest of the widow to enable the tenant to exercise his right of purchase.

(iii) The decision in Appa Narsappa (supra) stands overruled. The decision in Sudam Ganpat (supra) stands distinguished as stated in paragraph 47 of the judgment. The decision in Tukaram Maruti (supra), to the extent that it follows the law laid down in Appa Narsappa (supra), stands overruled. We, therefore, allow the appeals and set aside the judgment of the High Court dated 1st August, 2014. As a result, the tenant’s intimation of purchase of 2008 will now be taken on record by the authorities under the Act, who may now proceed under the Act to determine purchase price and its payment consequent upon which the postponed right of the tenant in this case to own the land will then come into being upon the statutory conditions being met. The appeals are disposed of accordingly.

J. (R.F. Nariman)

J. (R. Subhash Reddy)

J. (Surya Kant)

New Delhi

September 18, 2019.


 

Karuppanna Gounder Vs. State represented by the Inspector of Police – 17/09/2019

SUPREME COURT OF INDIA JUDGMENTS

Accused acquitted : The question is whether the death of the deceased could be attributed to the injury caused by the appellant A1. The appellant is alleged to have used the Sammatti (hammer) and he gave a blow at the back of the head or on the neck of the deceased. Both the injuries do not correspond with the injury of the back of the head or neck. These injuries can be related to the attack made by A2 Rajendran, A3 and A4, who have alleged to have used iron rods. Unfortunately, A3 and A4 have been acquitted and A2 has only been convicted for causing simple injury with a weapon.we give benefit of doubt to the appellant no.1, acquitting him of the offence of murder but convict him under Section 324, IPC.

ACT: Section 302, Indian Penal Code, 1860 and 324

SUPREME COURT OF INDIA

Karuppanna Gounder Vs. State represented by the Inspector of Police

[Criminal Appeal No. 557 of 2010]

DEEPAK GUPTA, J.

1. This appeal filed by the accused appellant is directed against the judgment and order of the High Court of Madras dated 19.12.2008, whereby conviction of the appellant no.1 (A1) under Section 302, Indian Penal Code, 1860 (IPC for short) has been upheld. Since appellant No.2 (A2 Rajendran) has died during the pendency of this appeal, the appeal shall stand abated in so far as appellant no.2 is concerned.

2. The facts of the case are that Chinnappa Gounder (deceased) was the neighbour of the first accused. They both had adjacent landed properties and shared a common boundary. There was a common well on this boundary which was also divided between the appellant no.1 and the deceased. A dividing wall was there in the well.

3. The appellant had initiated some civil proceedings and appear to have obtained an order permitting accused no.1 to repair the well. On 17.07.2000, Karuppanna Gounder, his soninlaw Rajendran, his wife Thangaiyee, his son Mayakrishnan, and some others were removing sand from their portion of the well when PW6, son of the deceased Chinnappa Gounder objected to this action since they were dropping the sand on the passage used by the deceased and his family.

4. On this a quarrel ensued and there was a verbal altercation between the parties. The first accused Karuppanna Gounder attacked Chinnappa Gounder with a Sammatti (hammer), and A2, his son-in-law used a Koduval (sickle) to attack Chinnappa Gounder on the head. A4 and A5 attacked the deceased with iron rods and hit him on the head while the other accused attacked the deceased with stones and sticks. When PW6 tried to intervene he was also attacked by the accused. Thereafter, Chinnappa Gounder was taken to the hospital where he died. After completing all investigations, the police filed a report under Section 173 of the Code of Criminal Procedure, 1973 against the appellant no.1 and 12 other accused. They pleaded not guilty and claimed trial. After trial, the trial court found A1Karuppanna Gounder guilty of charge of murder and he was awarded life imprisonment. A2Rajendran was also held guilty under Section 302, 307, 324 of IPC and was awarded life imprisonment for the offence of murder. All the other accused who were charged for various offences including murder were acquitted by the trial court.

5. The High Court upheld the sentence of the A1appellant herein, but as far A2soninlaw, Rajendran was concerned, it was held that the injuries caused on the skull of the deceased Chinnappa Gounder were fatal. However, as per the medical opinion this injury could not have been caused with Koduval (sickle). Since the injury was a lacerated wound, the High Court held that it could not have been caused by a sharp-edged weapon. The court further held that there was no attempt to murder by A2 but he caused simple injuries to 4 persons i.e., PW6, PW9, PW10 and PW11, and awarded 3 years rigorous imprisonment.

6. We have heard Mr. S. Nagamuthu, learned senior counsel appearing for the appellant no.1. The main issue is whether the injury caused by the appellantA1 can be said to be the cause of death of the deceased. There are many eyewitnesses, including PW1, A. Senthil Kumar. Since the depositions made by all of them are similar, we are only referring to the statement of PW1.

7. According to this witness, after the verbal altercation took place, the appellantA1 and his son Kandasamy returned to their house but came back to the place of occurrence soon along with their son-in-law Rajendran. It is alleged that the appellantA1 chased the deceased with Sammatti (hammer) in his hand and gave a blow with the hammer on the back side of the head of the deceased. Here we may mention that there is some variation in the translation because at some places it is mentioned as back of the neck and in some places as back of the head. Be that as it may, the injury allegedly caused to Chinnappa Gounder by the appellant no.1 was at the back of the head. Chinnappa sat down raising a cry. Then A2Rajendran hit him on the centre of the head with a Koduval (sickle). A3 and A4 allegedly hit the deceased at the place where A2Rajendran had hit the deceased. We may point out that in cross-examination all have admitted that both the appellants gave only one blow each to the deceased Chinnappa Gounder.

8. As observed above, the High Court held that the injury on the centre of the head could not have been caused by the Koduval (sickle) only on the ground that the injury was a lacerated wound and, therefore, could not have been caused with a sharpedged weapon. We are of the view that this view of the High Court may not be correct because a Koduval (sickle) has a sharp side on the inner portion and a blunt side on the outer portion. Injury could have been caused by the outer side of the Koduval (sickle). Unfortunately, the State has not filed any appeal and since the occurrence took place 19 years back, we may not reopen the matter.

9. Now coming to the postmortem report, there are 4 injuries mentioned out of which two are relevant and they are as follows:”

1. Laceration 10 x 2 cm bone deep on middle of head in parietal area.

2. Compound fracture skull with laceration 10x4x3 cm deep from frontal to parietal area of head. Brain matter is exposed with injury to membranes.”

10. The first injury is 10 x 2 cm bone deep on the middle of the head in the parietal area meaning from the centre of the skull towards the back. The second injury which is a bigger injury goes from the frontal to the parietal area. The injury was caused with such great force that the skull broke into many pieces and the brain matter had come out of the skull.

11. The question is whether the death of the deceased could be attributed to the injury caused by the appellant A1. The appellant is alleged to have used the Sammatti (hammer) and he gave a blow at the back of the head or on the neck of the deceased. Both the injuries do not correspond with the injury of the back of the head or neck. These injuries can be related to the attack made by A2 Rajendran, A3 and A4, who have alleged to have used iron rods. Unfortunately, A3 and A4 have been acquitted and A2 has only been convicted for causing simple injury with a weapon. Furthermore, since only one accused is left, we cannot take recourse to the provisions of Section 34 or Section 149 IPC.

12. In view of the above, we give benefit of doubt to the appellant no.1, acquitting him of the offence of murder but convict him under Section 324, IPC. The appellant has already undergone sufficient punishment for that offence and, therefore, his sentence is modified to the period already undergone by him. The appellant is on bail, his bail bonds are discharged. The appeal is partly allowed in the aforesaid terms. Application(s), if any, shall also stand dismissed.

J. (Deepak Gupta)

J. (Aniruddha Bose)

New Delhi

September 17, 2019