Month: February 2018

CBDT Notification: Centralized Communication Scheme, 2018

MASTI

The CBDT has issued a Notification dated 22nd February, 2018 to notify the Centralized Communication Scheme 2018.

The Centralized Communication Scheme 2018 provides for the electronic issuance of notices to taxpayers and prescribes the format in which the information and documents have to be furnished.

The Scheme provides that notices to taxpayers will be issued by the centralized communication centre under Section 133C of the Income-tax Act, 1961 through email or by placing a copy in the registered account on the portal, followed by an intimation by short messaging service (SMS).

Text of CBDT Notification on Centralised Communication Scheme, 2018

MINISTRY OF FINANCE
(Department Of Revenue )
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION

New Delhi, the 22nd February, 2018

S.O. 771(E).—In exercise of powers conferred by sub-section (3) of section 133C of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following scheme for centralised issuance of notice, namely:—

1. Short title and commencement-(1) This scheme may be called the Centralised Communication Scheme, 2018.

(2) It shall come into force on the date of its publication in the Official Gazette.

2. Definitions.- (1) In this scheme, unless the context otherwise requires,—

(a) “Act” means the Income-tax Act, 1961 (43 of 1961);

(b) “Director General” means the Director General of Income-tax appointed under sub-section (1) of section 117 of the Act and authorised by the Board in this behalf;

(c) “Principal Director General” means the Principal Director General of Income-tax appointed under subsection (1) of section 117 of the Act and authorised by the Board in this behalf;

(d) “Designated authority” means the income-tax authority prescribed under sub-section (1) of Section 133C of the Act who is in charge of the Centralised Communication Centre;

(e) “Portal” means the web portal of the Centralised Communication Centre.

(2) The words and expressions used herein but not defined and defined in the Act shall have the meaning respectively assigned to them in the Act.

3. Issue and service of notice- (1) The Centralised Communication Centre shall issue notice to any person requiring him to furnish information or documents for the purpose of verification of information in his possession.

(2) The notice shall be issued under digital signature of the designated authority.

(3) The notice shall be served by delivering a copy by electronic mail, or by placing a copy in the registered
account on the portal followed by an intimation by Short Message Service.

(4) The information or documents called for under sub-paragraph (1) shall be furnished on or before the date
specified in the notice as specified in paragraph 4.

(5) The designated authority shall also run sustained campaign to ensure compliance by way of sending electronic mails, Short Message Service, reminders, letters and outbound calls.

4. Response to notice- (1) The Centralised Communication Centre may prescribe a machine readable structured format for furnishing the information or documents by the person in response to the notice issued under subparagraph (1) of paragraph 3.

(2) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall specify the procedure, formats and standards for furnishing response to the notices.

5. No personal appearance-No person shall be required to appear personally or through authorised representative before the designated authority at the Centralised Communication Centre in connection with any proceedings.

6. Power to specify procedure and processes-(1) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify from time to time, procedures and processes for effective functioning of the Centralised Communication Centre, including the following matters, namely:-

(a) format and procedure for issue of notice;

(b) receipt of any information or document from the addressee in response to notice;

(c) mode and format for issue of acknowledgment of the response furnished by the addressee;

4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(d) provision of web portal facility including login facility, tracking status of verification, display of relevant details, and facility of download;

(e) call centre to answer queries and provide support services, including outbound calls and inbound calls seeking information or clarification;

(f) managing administration functions such as receipt, scanning, data entry, storage and retrieval of information
and documents in a centralised manner;

(g) grievance redressal mechanism in the Centralised Communication Centre.

[Notification No. 12/2018/F.No. 370142/22/2017-TPL]
NIRAJ KUMAR, Under Secy.

Per Incuriam: Supreme Court Explains Entire Law

MASTI

In the latest judgement of the Supreme Court reported as INDORE DEVELOPMENT AUTHORITY vs. SHAILENDRA CIVIL APPEAL No.20982 OF 2017, the entire law on the principle of Per Incuriam has been explained in great detail after referring to all earlier judgements of the Supreme Court and High Courts on the subject.

Justice Arun Mishra, who has authored the judgement of the Supreme Court, has explained that a judgement can be said to be “per incuriam” if it has been delivered in ignorance of the statutory provisions.

The Supreme Court has laid down that a judgement can be said to “per incuriam” if another binding judgement has been disregarded by the Court.

In order words, the concept of “per incuriam” means that a given decision is in disregard of the previous decisions of the Court itself, or that it was rendered in ignorance of the terms of an applicable statute or of a rule having the force of law, the Supreme Court has laid down in the latest judgement.

PRINCIPLE OF PER INCURIAM:

146. The concept of “per incuriam” signifies those decisions rendered in ignorance or forgetfulness of some inconsistent statutory provisions, or of some authority binding on the Court concerned. In order words, the concept means that a given decision is in disregard of the previous decisions of the Court itself, or that it was rendered in ignorance of the terms of an applicable statute or of a rule having the force of law.

147(a). In practice, per incuriam, is taken to mean per ignoratium, as observed by this Court in Mamleshwar Prasad v. Kanahaiya Lal, (1975) 2 SCC 232, thus:

“5. A litigant cannot play fast and loose with the Court. His word to the Court is as good as his bond and we must, without more ado, negative the present shift in stand by an astute discovery of a plea that the earlier judgment was rendered per incuriam.

 

6. The wisdom which has fallen from Bowen, L.J. in Ex Parte Pratt 52 Q.B. 334, though delivered in a different context, has wider relevance to include the present position. The learned Lord Justice observed :

“There is a good old-fashioned rule that no one has a right to conduct himself before a tribunal as if he accepted its jurisdiction, and then afterwards, when he finds that it has decided against him, to turn round and say, "You have no jurisdiction".

7. Certainty of the law, consistency of rulings and comity of courts- all flowering from the same principle-coverage to the conclusion that a decision once rendered must later bind like cases. We do not intend to detract from the rule that, in exceptional instances, whereby obvious inadvertence or oversight a judgment fails to notice a plain statutory provision or obligatory authority running counter to the reasoning and result reached, it may not have the sway of binding precedents. It should be a glaring case, an obtrusive omission.

No such situation presents itself here and we do not embark on the principle of judgment per incuriam.”

147(b). In A.R. Anutulay v. R.S. Nayak, (1988) 2 SCC 602, this Court has observed:

“42. It appears that when this Court gave the aforesaid directions on 16th February 1984, for the disposal of the case against the appellant by the High Court, the directions were given oblivious of the relevant provisions of law and the decision in Anwar Ali Sarkar’s case (supra). See Halsbury’s Laws of England, 4th End, Vol. 26, page 297, para 578 and page 300, the relevant notes 8, 11 and 15; Dias on Jurisprudence, 5th Edn., pages 128 and 130; Young v. Bristol Aeroplane Co. Ltd. [1944] 2 AER 293. Also see the observations of Lord Goddard in Moore v. Hewitt [1947] 2 A.E.R. 270-A and Penny v. Nicholas [1950] 2 A.E.R. 89. "per incuriam" are those decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the Court concerned, so that in such cases some part of the decision or some step in the reasoning on which it is based, is found, on that account to be demonstrably wrong. See Morelle v. Wakeling [1955] 1 All E.R. 708. Also, see State of Orissa v. The Titaghur Paper Mills Co. Ltd. [1985]3SCR26 . We are of the opinion that in view of the clear provisions of Section 7(2) of the Criminal Law Amendment Act, 1952 and Articles 14 and 21 of the Constitution, these directions were legally wrong.”

47. In support of the contention that a direction to delete wholly the impugned direction of this Court be given, reliance was placed on Satyadhvan Ghoshal v. Deorajini Devi [1960] 3 SCR 590 . The ratio of the decision as it appears from pages 601 to 603 is that the judgment which does not terminate the proceedings, can be challenged in an appeal from final proceedings. It may be otherwise if subsequent proceedings were independent ones.” (emphasis supplied)

147(c). In State of Uttar Pradesh v. Synthetics and Chemicals Ltd., (1991) 4 SCC 139, as to per incuriam this court has observed:

“40. ‘Incuria literally means ‘carelessness’. In practice per in curium appears to mean per ignoratium.’ English Courts have developed this principle in relaxation of the rule of stare decisis. The ‘quotable in law’ is avoided and ignored if it is rendered, in ignoratium of a statute or other binding authority’. 1944 1KB 718 Young v. Bristol Aeroplane Ltd.. Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey AIR (1962) SC 83 this Court while pointing out the procedure to be followed when conflicting decisions are placed before a bench extracted a passed from Halsbury’s Laws of England incorporating one of the exceptions when the decisions of an appellate court is not binding.”

147(d). In Municipal Corporation of Delhi v. Gurnam Kaur, (1989) 1 SCC 101, it was held that decision of ignorance of rule is per incuriam,the court has observed:

“11. ….A decision should be treated as given per incur am when it is given in ignorance of the terms of a statute or of a rule having the force of a statute……”

147(e). In Narmada Bachao Andolan (III) v. State of Madhya Pradesh, AIR 2011 SC 1989, this court has observed: “61. Thus, "per incuriam" are those decisions given in ignorance or forgetfulness of some statutory provision or authority binding on the Court concerned, or a statement of law caused by inadvertence or conclusion that has been arrived at without application of mind or proceeded without any reason so that in such a case some part of the decision or some step in the reasoning on which it is based, is found, on that account to be demonstrably wrong.” (emphasis supplied)

148. To refer the case to larger Bench, reliance was placed by the landowners on Sant Lal Gupta v. Modern Coop. Societies Ltd. 2010 13 SCC 336 laying down thus:

“17. A coordinate bench cannot comment upon the discretion exercised or judgment rendered by another coordinate bench of the same court. The rule of precedent is binding for the reason that there is a desire to secure uniformity and certainty in law. Thus, in judicial administration precedents which enunciate rules of law form the foundation of the administration of justice under our system. Therefore, it has always been insisted that the decision of a coordinate bench must be followed. (Vide: Tribhovandas Purshottamdas Thakkar v. Ratilal Motilal Patel and Ors. AIR 1968 SC 372; Sub-Committee of Judicial Accountability v. Union of India and Ors. (1992) 4 SCC 97; and State of Tripura v. Tripura Bar Association and Ors. (1998) 5 SCC 637).

18. In Rajasthan Public Service Commission and Anr. v. Harish Kumar Purohit and Ors. (2003) 5 SCC 480, this Court held that a bench must follow the decision of a coordinate bench and take the same view as has been taken earlier. The earlier decision of the coordinate bench is binding upon any latter coordinate bench deciding the same or similar issues. If the latter bench wants to take a different view than that taken by the earlier bench, the proper course is for it to refer the matter to a larger bench.”

 

149. It was contended on behalf of the landowners that since the decisions of Pune Municipal Corporation as well as of Shivraj case (supra) are of Three Judges bench then propriety requires that the case should be referred to a Larger Bench. With respect to Shivraj (supra) it is apparent that no view has been expressed by the Division Bench making reference itself, as observed that upon reading the decision of this court in Union of India & Ors. v. Shivraj & Ors. (2014) 6 SCC 564, they have not found any view on the question arising namely whether the period during which interim stay has been enjoyed should be extended while considering the provisions of Section 24(2) of the Act of 2013. Division Bench of this court in order dated 12.1.2016, while making reference has rightly observed thus:

“We have considered the views expressed in Sree Balaji Nagar Residential Association (supra) and Union of India &Ors. v. Shiv Raj and others (supra). At the outset, we clarify that upon reading the decision of the three Judge Bench of this Court in Union of India and other versus Shiv Raj and others, we do not find any view of the bench on the question arising, namely, whether the period during which the award had remained stayed should be excluded for the purposes of consideration of the provisions of Section 24(2) of the Act of 2013. Insofar as the decision of the coordinate bench of this Court in Sree Balaji Nagar Residential Association (supra) is concerned, having read and considered paragraphs 11 and 12 thereof, as extracted above, it is our considered view that the legal effect of the absence of any specific exclusion of the period covered by an interim order in Section 24(2) of the Act of 2013 requires serious reconsideration having regard to the fact that it is an established principle of law that the act of the court cannot be understood to cause prejudice to any of the contesting parties in a litigation which is expressed in the maxim “actus curiae neminem gravabit”.

150. In Pune Municipal Corporation (supra) the land acquisition had been quashed by the High Court in the year 2008. Most of the special leave petitions were filed in this court in the year 2008. The High Court has quashed the acquisition proceedings and has directed restoration of the possession. When the High Court has quashed the acquisition, there was no room for this court to entertain the submissions based upon section 24(2) of the Act of 2013. There was no question of payment of compensation to the owners or depositing it in the court as land acquisition itself had been quashed in 2008. There was no subsisting acquisition and award. When Act of 2013 came into force thus no question could have been raised as to non-compliance with section 24 for five years or more. Thus, there was no question of taking possession or payment of compensation as per provisions contained in section 24(2). The provisions contained in section 24 could not be said to be applicable after quashing/lapse of the proceedings. Thus, when the provisions of section 24 were not attracted to the fact situation of the case in Pune Municipal Corporation (supra), the decision cannot be said to be an authority on a question which, in fact, did not arise for consideration of this court. Thus, the decision rendered on a question which was not germane to the case cannot be said to be a binding precedent it is obiter dicta and thus has to be ignored.

151. When the High Court has quashed the land acquisition in Pune Municipal Corporation (supra), as we have held that period of interim stay has to be excluded once the High Court has quashed the land acquisition in case it was illegally quashed, the maxim actus curiae neminem gravabit would come to the rescue for the acquiring body and it could not have said that acquisition had lapsed, thus there was no lapse under section 24(2). There was no question of taking possession or payment of compensation once the acquisition had been quashed. This court in Pune Municipal Corporation (supra) had not dwelled upon the merit of the decision of the High Court quashing the land acquisition and has outrightly decided the case on the basis of section 24(2). It obviously had no application to the fact situation of the case. As such a decision cannot be said to be an authority on the aforesaid.

152. With respect to the decision of this court in Pune Municipal Corporation (supra) we have given deep thinking whether to refer it to further Larger Bench but it was not considered necessary as we are of the opinion that Pune Municipal Corporation (supra) has to be held per incuriam, inter alia for the following reasons:

1. The High Court has quashed land acquisition, in Pune Municipal Corporation case (supra), as such provisions of section 24(2) of the Act of 2013 could not be said to be applicable. It was not surviving acquisition then compliance of section 24(2) by taking possession or by payment of compensation for five years or more did not arise as acquisition had been quashed by the High Court in 2008.

2. It was not held in Pune Municipal Corporation (supra) that High Court has illegally set aside the acquisition. In case, High Court had set aside the acquisition in an illegal manner then also maxim ‘actus curiae neminum gravabit’ would have come to the rescue to save acquisition from being lapsed and a period spent in appeal in this Court was to be excluded.

3. The provisions of Section 24(2) could not be said to be applicable to the case once acquisition stood quashed in 2008 by the High Court. Thus, there was no occasion for this court to decide the case on aforesaid aspect envisaged under section 24(2) of the Act of 2013.

4. That statutory rules framed under section 55 of Act of 1894 and orders having statutory force issued under, constitutional provisions or otherwise by various State Governments were not placed for consideration before this court in Pune Municipal Corporation case (supra)

5. Provisions of section 34 prevailing practice of deposit, and binding decisions thereunder section 34 of the Act of 1894 were not placed for consideration of this court while deciding the case.

6. The proviso to section 24(2) was not placed for consideration which uses different expression ‘deposited’ than ‘paid’ in main section 24(2) which carry a different meaning.

7. What is the meaning of expression ‘paid’ as per various binding decisions of this court when the obligation to pay is complete as held in Straw Board Manufacturing Co. Ltd., Saharanpur v. Gobind (supra), Management of Delhi Transport Undertaking v. The Industrial Tribunal, Delhi & Anr. (supra), Indian Oxygen Ltd. v. Narayan Bhoumik (supra) and the Benares State Bank Ltd. v. The Commissioner of Income Tax, Lucknow, (supra) and other decisions were not placed for consideration.

8. The binding decisions of the court as to the consequence of non-deposit in Hissar Improvement v. Smt. Rukmani Devi & Anr. (supra), Kishan Das & Ors. v. State of U.P. & Ors. (supra) and Seshan & Ors. v. Special Tehsildar & Land Acquisition Officer, SPICOT, Pudukkottai (supra) etc. were not placed for consideration while deciding the case.

9. The maxim “nullus commodum capere potest de injuria sua propria” i.e. no man can take advantage of his own wrong of filing litigation and effect of refusal to receive compensation was not placed for consideration while deciding the aforesaid case.

10. There is no lapse of acquisition due to the non deposit of amount under the provisions of Act of 1894 or Act of 2013. In this regard, the provision of section 77 and 80 relating to payment and deposit under Act of 2013 which corresponds to section 31 and 34 were not placed for consideration of this court while rendering the aforesaid decision.

11. The past practice for more than a century, of deposit in treasury, as per rules/ orders and decisions were not placed for consideration. It was not open to invalidate such deposits made in treasury without consideration of the provisions, prevailing practice, and decisions under the Act of 1894.

The decision rendered in Pune Municipal Corporation (supra), which is related to Question No.1 and other decisions following, the view taken in Pune Municipal Corporation (supra) are per incuriam. The decision in Shree Balaji (supra) cannot be said to be laying down good law, is overruled and other decisions following the said decision to the extent they are in conflict with this decision, stand overruled. The decision in DDA v. Sukhbir Singh (supra) is partially overruled to the extent it is contrary to this decision. The decisions rendered on the basis of Pune Municipal Corporation (supra) are open to be reviewed in appropriate cases on the basis of this decision.

Service Of Notice U/s 143(2) For Making Assessment

MASTI

Section 143(2) of the Income-tax Act was interpreted in the latest judgement of the Supreme Court in INCOME TAX OFFICER, ETAWAH VERSUS DHARAM NARAIN CIVIL APPEAL NO(S). 2262 OF 2018.

The Supreme Court held in the judgement that the non-availability of the respondent – Assessee to receive the notice sent by registered post as many as on two occasions and service of notice on 19th October, 2006 on the authorized
representative of the respondent Assessee whom the respondent Assessee now disowns is sufficient to draw an inference of deemed service of notice on the respondent – Assessee and sufficient compliance of the requirement of Section 143(2) of the Income Tax Act, 1961.

This judgement of the Supreme Court is important on the law of service of notice u/s 143(2) of the Income-tax Act, 1961 as a precondition to making the assessment.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 2262 OF 2018

[ARISING OUT OF SPECIAL LEAVE PETITION

(CIVIL) NO.9174 OF 2015

INCOME TAX OFFICER, ETAWAH …APPELLANT(S)
VERSUS
DHARAM NARAIN …RESPONDENT(S)
ORDER

1. Leave granted.

2. By the impugned order, the High
Court has quashed the notice dated 16th
October, 2006 issued under Section 143(2)
of the Indian Tax Act, 1961 to the
respondent – Assessee by allowing the writ
petition filed by the said Assessee.
Aggrieved, the Revenue is in appeal before
this Court.

3. Admittedly, under the provisions of
Section 143(2) of the Income Tax Act, 1961
(as then in force) the notice has to be
served on the respondent – Assessee latest
by 30th October, 2006. In the present case,
notice was issued on 16th October, 2006
which was dispatched on 18th October, 2006
by registered post. The materials on
record indicate that on two occasions the
notice sent by registered post could not
be served on the respondent – Assessee as
he was not available and that it was served
on the authorized representative of the
respondent – Assessee on 19th October, 2006.

The question, therefore, that arises in the
writ petition was whether in such
circumstances the requirement under Section
143(2) of the Income Tax Act, 1961 was met
by the Revenue. The High Court answered
the question in the negative taking the
view that what is required to be satisfied
by the Revenue is service of notice and not
mere issuance thereof.

4. It will not be necessary for us to
decide the aforesaid question in the
present case which is being kept open for
decision in an appropriate case. We have
taken the aforesaid view as the present
case is capable of being resolved on its
own peculiar facts.

5. The non-availability of the
respondent – Assessee to receive the notice
sent by registered post as many as on two
occasions and service of notice on 19th
October, 2006 on the authorized
representative of the respondent Assessee
whom the respondent Assessee now disowns,
in our considered view, is sufficient to
draw an inference of deemed service of
notice on the respondent – Assessee and
sufficient compliance of the requirement of
Section 143(2) of the Income Tax Act, 1961.

6. On the aforesaid view that we have
taken we are of the opinion that the High
Court was not right in coming to the
impugned conclusion in the facts of the
instant matter. We, accordingly, allow
this appeal and set aside the order of the
High Court.

………………..,J.
(RANJAN GOGOI)
……………….,J.
(R. BANUMATHI)

NEW DELHI
FEBRUARY 19, 2018

Discounts and Rebates not part of ‘Sale Price’ | Refund of tax paid on excess amount

MASTI

The Supreme Court’s latest judgement in Universal Cylinders Limited vs. Commercial Taxes Officer interpreted Section 2(39) of the Rajasthan Sales Tax Act, 1994, which defines ‘sale price’.

In the judgement it is noted that under section 2(39) “sale price” means the amount paid or payable to a dealer as consideration for the sale less any sum allowed by way of any kind of discount or rebate according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof.

The Supreme Court followed the judgement in IFB Industries Limited v. State of Kerala1, where the issue was with regard to the definition of ‘turnover’.

The Supreme Court held that to take the benefit of trade discount and to make it eligible for exemption, all that the assessee is required to prove was that the purchaser had paid only the sum originally charged less the discount and that this should be a regular practice in the trade.

In the judgement in Universal Cylinders Limited vs. Commercial Taxes Officer, the Supreme Court direct that the assessee shall be refunded the amount of sales tax paid on the excess amount.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 2431 OF 2018
(@SLP (C) NO(S).23659 OF 2015)
M/s. Universal Cylinders Limited …. Appellant(s)
Versus
The Commercial Taxes Officer … Respondent(s)
With
CIVIL APPEAL NO(S). 2432 OF 2018
(@SLP (C) NO(S).23664 OF 2015)
CIVIL APPEAL NO(S). 2433 OF 2018
(@SLP (C) NO(S).23667 OF 2015)
CIVIL APPEAL NO(S). 2434 OF 2018
(@SLP (C) NO(S).23668 OF 2015)

J U D G M E N T

Deepak Gupta J.

1. Leave granted.

2. Since a common question of law arises in these appeals,
they are being disposed of by this common judgment. Briefly
stated the facts are that the appellantassessee
manufactures cylinders for storage of Liquefied Petroleum Gas (LPG). At the
relevant time, the entire production was for supply to
Government owned companies viz. M/s. Indian Oil
Corporation Ltd.(for short ‘the IOC’), M/s Bharat Petroleum
Corporation Ltd., and M/s Hindustan Petroleum Corporation
Ltd.. It is not disputed that the cost of the cylinders was
determined by the Ministry of Petroleum and Natural Gas (for
short ‘the MoP & NG’) under the pricing policy.

3. On 04.05.2000, the IOC placed an order for supply of
73380 numbers of 14.2 Kg. LPG cylinders which was to be
made by 31.08.2000. Clause 3 of the supply order reads as
follows:

“You can charge a provisional price of Rs.
682.00 for 14.2 Kg cylinders. Pricing formula is
under review by the Government and the final
prices applicable after 01.07.99 will be only as
per approval of MOP & NG.”

4. The appellantassessee
supplied the cylinders and
charged the amount of Rs. 682/per
cylinder and also
charged sales tax on the same in accordance with law. Similar
supply orders were placed by the other companies also.

5. On 31.10.2000, the IOC sent a letter to the appellant
that after review of the prices, the price of 14.2 Kg. cylinders
has been again provisionally revised to Rs.645/with
effect
from 01.07.1999. Relevant portion of the letter reads thus :“
Pending finalization of the report and the short
time available to recover the cost due to the
proposed cylinder tender, Industry has decided
to revise the provisional basic price of 14.2 Kg
cylinder to Rs. 645/with
effect from
01.07.1999. Accordingly we will be recovering
the differential amounts from your bills. Final
adjustments would be made later on after
finalization of the cylinder price.”

6. Thereafter, the oil companies deducted/adjusted the
excess payment of Rs.37/and
proportionate sales tax
thereon from the payments due to the assessee. Thereafter
the assessee approached the Assessing Authority for refund of
the sales tax paid on the excess sale amount i.e. Rs.37/.

The
case of the assessee was that he had paid tax on the
provisional price of Rs.682/per
cylinder. After the price had
been reduced to Rs.645/,
he was only entitled to Rs.645/.

The oil companies had taken refund of the amount of Rs.37/and,
therefore the tax paid on the excess amount be refunded
to him. The assessee also urged that this amount of Rs.37
should not be counted in its total turnover.

7. The Assessing Officer rejected the claim of the assessee
on the ground that there is no provision under the Act for
reducing or refunding the amount of tax once the amount of
tax has been paid. It was also observed that the arrangement
of the assessee with the oil companies was in the nature of a
private agreement and the sales tax department had nothing
to do with this. The appeals filed by the assessee against the
assessment order before the Deputy Commissioner of Appeals
were partly allowed. Thereafter, the RespondentRevenue
approached the Tax Board, which allowed the appeals of the
Revenue. Being aggrieved, the assessee approached the High
Court by filing revision petitions, which were dismissed.
Hence, the present appeals.

8. To appreciate the rival contentions of the parties, we
may make reference to Section 2(39) of the Rajasthan Sales
Tax Act, 1994, which defines ‘sale price’ as under:

“2(39) “sale price” means the amount paid or
payable to a dealer as consideration for the sale
less any sum allowed by way of any kind of
discount or rebate according to the practice
normally prevailing in the trade, but inclusive of
any sum charged for anything done by the
dealer in respect of the goods at the time of or
before the delivery thereof.”

9. Reference may also be made to Section 2(44) of the
Rajasthan Sales Tax Act, 1994 which defines ‘turnover’ as
under:

“2(44) “turnover” means the aggregate amount
received or receivable by a dealer for sales as
referred to in clause (38) including the purchase
price of the goods which are subject to purchase
tax under section 11 of the Act;

Explanation : Tax charged or collected and
shown separately in the sale bill/cash
memorandum or in the accounts shall not form
part of turnover.”

10. The High Court held that since the words ‘paid’,
‘payable’, ‘amount received’ and ‘or receivable’ have been used
in the aforesaid two sections, the assessee was entitled to
receive the amount of Rs.682/per
cylinder and if he has
given any discount, he cannot claim refund of the same and
the price of the cylinder cannot be said to be Rs.645/per
cylinder. The High Court also held that the goods were
delivered at Rs.682/per
cylinder and this amount was
collected and therefore, no amount should be refunded.

11. We have heard learned counsel for the parties and a
number of decisions have been cited.

12. In IFB Industries Limited v. State of Kerala1, the
issue was with regard to the definition of ‘turnover’. This
court held that to take the benefit of trade discount and to
make it eligible for exemption, all that the assessee is required
to prove was that the purchaser had paid only the sum
originally charged less the discount and that this should be a
regular practice in the trade.

1 (2012) 4 SCC 618

13. Reliance has also been placed on the judgment of the
Gujarat High Court in ONGC v. State of Gujarat2, wherein
in similar circumstances, it was held that the discount does
not form part of the sale price. A similar view was taken by
the Madhya Pradesh High Court in Gail India Ltd. v. State
of M.P.3. The facts of this case were that the petitioner
company GAIL, a Public Sector Undertaking, was doing
business of supply of various petroleum products including
LPG. The price of LPG and kerosene was regulated and
controlled by the Public Planning and Analysis Cell (PPAC).
The assessee supplied LPG to the oil companies on the basis
of provisional price and final bill invoice was issued after the
price was settled by the PPAC and credit note or debit note
was issued. The High Court after referring to the judgment
of this Court in IFB Industries Ltd. (supra), held that both
the provisional price and the final price are controlled by the
PPAC. The change in sale price is due to the direction by the
PPAC and is not within the control of the assessee. It held
2 2014 SCC Online Guj 15385 (Tax Appeal No. 50 of 2014)
3 (2014) 72, VST 161
that even though the credit note may have been issued on the
basis of the provisional price, the price to be taken into
consideration for calculating the turnover and the sale price
must be the actual price received by the assessee.

14. Learned counsel for the respondent has relied upon a
judgment of this Court in the case of MRF Ltd. v. Collector
of Central Excise, Madras4. We are of the opinion that this
judgment has no relevance to this case since it is a judgment
arising out of the Excise Act where the tax is attracted the
moment the goods are removed from the factory gate.
15. In our view, a bare reading of Section 2(39) of the
Rajasthan Sales Tax Act, which defines “sale price” clearly
indicates that it is the price which is either paid or payable to
a dealer as consideration for the sale. The definition itself
makes it clear that any sum by way of any discount or rebate
according to the practice normally prevailing in the trade shall
be deducted and shall not be included in the sale price. The

4 (1997) 5 SCC 104.

definition of ‘turnover’ means the aggregate amount received
or receivable by a dealer.

16. In the instant case, when the orders were placed with the
assessee, the price was not finalized by the MoP & NG. There
was a clear cut stipulation in the purchase order that the
price of Rs.682/is only a provisional price subject to review
and it was clearly understood by the parties that the final
price applicable after 01.07.1999 will be the price as approved
by the MoP & NG. Therefore, though the assessee may have
received Rs.682/per cylinder, it was under a legal obligation
only to receive that price which was fixed by the MoP & NG.
This price could have been higher than Rs.682/per cylinder,in which event the assessee would have had to collect and
deposit with the Rajasthan Sales Tax Department sales tax on
the excess amount. However, since the price of the cylinder
has been reduced, the assessee cannot charge more than the
price fixed, is bound to refund the excess amount collected
and is therefore legally entitled to get refund of the tax paid
on the excess amount.

17. We may also note that it is undisputed that the assessee
had to refund the amount of Rs.37/per
cylinder to the oil
companies. Therefore, what it has actually received is only
Rs.645/per
cylinder. What was legally receivable by it was
the amount to be finally fixed by the MoP & NG i.e. Rs. 645/per
cylinder. In the supply order only a provisional price was
fixed. We have also taken into consideration the fact that the
price fixation is not in the hands of the assessee. It is not
even in the hands of the oil companies. The price is fixed by
the MoP & NG and in such an eventuality, the amount
actually payable is the amount to be fixed by the MoP & NG
and that is also the amount which the assessee is legally
entitled to receive.

18. In view of the above discussion, we allow the appeals, set
aside the judgment of the High Court and direct that the
assessee shall be refunded the amount of sales tax paid on
the excess amount. The order of the Deputy Commissioner is
restored. The assessee shall be entitled to interest at the rate
of 9% per annum on the amount payable to it from the date of
the order of the Deputy Commissioner till payment of the
amount.

19. Pending applications, if any, shall also stand
disposed of.

………………………..J.
(Madan B. Lokur)

…………………………J.
(Deepak Gupta)

New Delhi
February 23, 2018

S. 143(1)(a) Adjustment For Section 36(1)(viii) bad debts disallowance

MASTI

The latest Bombay High Court judgement considers whether an adjustment u/s 143(1)(a) of the Income-tax Act, 1961, relating to disallowance of the claim for bad debts under Section 36(1)(viii) in respect of a sum of Rs.1,69,37,818/- representing “provision for doubtful overdue installments under hire purchase finance agreements”.

In the judgement, the Bombay High Court has held that while mere making of provision for bad debts will not by itself (on application of amended law) entitle the party to deduction, yet it would be a matter where the assessee should be given an opportunity to establish its claim.

The Bombay High Court judgement holds that by producing its evidence of the manner in which it treated the provision of bad debts written off in accounts as well as in its Balance Sheet.

It is finally held in the judgement of the Bombay High Court that the disallowance cannot be made by intimation under section 143(1)(a) of the Act, as it requires that a party be given an opportunity to establish its claim before disallowing it. It would have been a completely different matter if the Apex Court had ruled that in no case can provision for bad debts be allowed as a bad debt under section 36(1)(vii) of the Act.

It was observed in the judgement by the Bombay High Court that the allowance of the claim of provision for bad debt is entirely dependent upon how it is reflected in the Balance Sheet and its accounts. Therefore, for the above purpose it is necessary that the party to be given an opportunity to establish its claim. Therefore, in the present facts, adjustment by way of disallowing deduction by intimation under section 143(1)(a) of the Act is not proper.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX REFERENCE NO. 25 OF 2000

Bajaj Auto Finance Ltd. .. Applicant
v/s.
Commissioner of Income Tax, Pune .. Respondent

Ms. Vasanti Patel for the applicant Mr. Charanjeet Chanderpal a/w Ms. Namita Shirke for the respondent CORAM : M.S. SANKLECHA & RIYAZ I. CHAGLA J.J.

Judgment Reserved on : 12th February, 2018.

Judgment Pronounced on : 23rd February, 2018. ORAL JUDGMENT : (Per M.S. Sanklecha, J.)

1. This Reference under Section 256(1) of the Income Tax Act, 1961 (the Act) at the instance of the applicant assessee seeks our opinion on the following question of law:-

(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the Assessing Officer was justified in making an adjustment u/s 143(1)(a) relating to disallowance of the claim for bad debts under Section 36(1)(viii) in respect of a sum of Rs.1,69,37,818/- representing “provision for doubtful overdue installments under hire purchase finance agreements”?

2. This Reference relates to Assessment Year 1993-94. The facts Uday S. Jagtap 1 of 15 25-2000-ITR-Judgment=.doc leading tot he present Reference as set out in the Statement of Case are as under :-

“2. The assessee company had debited in its profit and loss account a sum of Rs.1,69,37,818/- representing “provision for doubtful overdue installments under Hire Purchase Finance Agreements”. In its return of income, the assessee claimed the said provision as bad debts u/s 36(1)(vii) of the Income Tax Act. In the Notes on computation of total income submitted with the return, it was clarified that the said amount was claimed as a deduction, relying on the decision of the Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala (130 ITR 95). The Assessing Officer disallowed the claim u/s 141(1)(a) on the ground that the amount represented mere provision for doubtful debts and, as such, could not be treated as bad debts. The assessee filed an application u/s 154 for deletion of the adjustment. It was contended before the Assessing Officer that the adjustment could not be made in respect of a provision for doubtful installments, as its allowability was a debatable issue. The Assessing Officer rejected the application u/s 154.

3. It was contended before the learned C.I.T.(A) that since the “provision for doubtful overdue installments under Hire Purchase Agreement” had been debited to the profit and loss account, the assessee should be treated to have satisfied the conditions laid down u/s 36(1)(vii) read with Sec.36(2). In this regard, reliance was placed on the decision in the case of Vithaldas H. Dhanjibhai Bardanwala V. Commissioner of Uday S. Jagtap 2 of 15 25-2000-ITR-Judgment=.doc Income Tax, (130 ITR 95 – Guj.) and Industrial Credit & Investment Corporation of India Ltd. V. IAG (32 ITD 315 – Bom.Trib). It was further contended that since the courts have held that once the condition for ‘writing off’ is satisfied and the concerned amount has been debited to the profit and loss account and credited to Bad Debt Reserve account, it was not necessary to actually write off the concerned bad debt in the ledger account of the concerned parties. In view of this, the question whether “provision for overdue installments” was an allowable deduction or not was a debatable issue and accordingly could not be made the subject matter of adjustment u/s 143(1)(a) of the Act. According to the assessee, since the Assessing Officer was not competent to examine the claim of deduction of ‘provision’ without conducting further enquiries in the matter, which was permissible only after issuing a notice u/s 143(2), he was not competent to issue intimation of adjustment and reject the assessee’s prayer made for rectification u/s 154.

4. Before the Tribunal, the same pleas were reiterated as had been made in the first appeal. Further reliance was placed upon the decision of the Bombay High Court in the case of Khatau Junkar Ltd. V. K.S. Pathania (196 ITR 55), decision of the Delhi High Court in S.R.F. Charitable Trust Vs. Union of India (193 ITR 95) and the decision of the Bombay High Court in Bank of America N.T. & S.A. Vs. Dy.CIT (200 ITR 739)

5. As against the above, it was submitted by the learned departmental representative that the assessee’s claim of deduction in respect of “provision for doubtful overdue Uday S. Jagtap 3 of 15 25-2000-ITR-Judgment=.doc installments under Hire Purchase Finance Agreements” was prima facie inadmissible on the basis of the information available in the return, accounts and documents within the meaning of clause (iii) of first proviso to claim (a) of sub-sec. (1) of sec. 143 and, therefore, the Assessing Officer was fully justified in issuing an intimation of adjustment. The assessee in fact had made a separate claim of deduction for an amount of Rs.47,42,762/- in respect of ‘bad debts’. This claim of bad debts appeared separately immediately after the claim of ‘provision for doubtful overdue installments under Hire Purchase Finance Agreements” in Schedule 10 of the assessee’s accounts for the year. Thus, according to its own showing of the assessee, the claim of deduction of Rs.1,69,37,818/- on account of “provision for doubtful overdue installments under Hire Purchase Finance Agreements” was a distinct and separate item of deduction and was not treated as equivalent to a claim for bad debts. Elaborating his discussion, the learned departmental representative submitted that, firstly, the “provision for doubtful overdue installments” could not validly be held to be write off of irrevocable debts so as to be treated as bad debt. Secondly, this claim was not made with reference to any specific debts which were perceived to be bad debt. Rather, it was a provision of an ad-hoc nature and was part of the annual exercise which the assessee made in all the preceding years and the subsequent years. With a view to buttress his argument, the learned departmental representative referred to the annual reports and accounts of the assessee for the immediately preceding and subsequent years. In the Uday S. Jagtap 4 of 15 25-2000-ITR-Judgment=.doc accounts for all these years, the claim of deduction on account of “provision for doubtful overdue installments under Hire Purchase Finance Agreements” had been reversed in the immediately succeeding year to the last rupee. In all these years, a separate claim of deduction had always been made in respect of the debts which were perceived as ‘bad debts’. According to the learned departmental representative, debiting the profit and loss account with the total amount of overdue installments under Hire Purchase Agreements and treating them collectively as doubtful debts and making provision for them could not be held to be equivalent to write off irrevocable debts as bad debts. In this connection, the learned departmental representative referred to the following decisions:-

(1) Kantilal Chimanlal Shah V. CIT(26 ITR 303 Bom).

(2) Sidhramappa Andannappa Manvi V.CIT(21 ITR 333 Bom.) (3) Jethabhai Hirji & Jethabhai Ramdas V.CIT(120 ITR 792.Bom.) (4) Jadhavji Narsidas & Co. V. CIT(47 ITR 411-Bom.) (5) CIT V. Pranlal Kesurdas (49 ITR 931 – Bom.)

6. The Tribunal, after consideration of all the relevant facts and circumstances and the relevant provisions of law and the case law cited before it, came to be conclusion that on the basis of the return of income itself and the accounts and documents accompanying it, the claim of “provision for doubtful overdue installments under Hire Purchase Finance Agreements” was clearly distinct and separate from one of claim of bad debt and Uday S. Jagtap 5 of 15 25-2000-ITR-Judgment=.doc was prima facie inadmissible on its own tenor. The Assessing Officer was, therefore, justified in issuing an intimation of adjustment and rejecting the assessee’s application u/s 154. For the same reason, the learned CIT(A) was justified in dismissing the assessee’s appeal. The assessee’s appeal before the Tribunal was accordingly dismissed.”

6. Ms. Patel, learned Counsel appearing in support of the application submits as under :-

(a) relief / deduction of provision of bad debt claimed in the return of income cannot be disallowed by way of intimation under Section 143(1)(a) of the Act when the issue prima facie gives rise to a debatable issue;

(b) the claim for deduction of provision for bad debts under Section 36(1)(vii) of the Act was made on basis of the decision of Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala Vs. Commissioner of Income Tax, 130 ITR 95 as is evident from note in the return. Therefore, disallowance of a claim which has been allowed by High Court, would at the very least be a debatable issue;

(c) the words “prima facie inadmissible” found in clause (iii) of Section 143(1)(a) of the Act, has been construed by this Court in Khatau Junkar Ltd. Vs. K.S. Pathania, 196 ITR 157 to mean not available on the face of it i.e. where no further inquiry is necessary to Uday S. Jagtap 6 of 15 25-2000-ITR-Judgment=.doc hold so. However, when there is a different interpretation accepted by Court, then, adjustment under Section 143(1)(a) of the Act is not permissible. It would at the very least require giving an opportunity to the assessee to support his claim before disallowing the same.

(d) Instruction No.1814 dated 4th April, 2009 issued by the Central Board of Direct Taxes (CBDT) explains the scope of the word “prima facie disallowance” under Section 143(1)(a) of the Act as being different from a debatable issue. It clarifies that a debatable issue is one where a claim made by an assessee on the basis of a decision of a Court / Tribunal. A debatable claim cannot be disallowed by an intimation under Section 143(1)(a) of the Act; and

(e) the decision of the Apex Court in Vijaya Bank Vs. Commissioner of Income Tax, 323 ITR 166, also supports the view that at the relevant time, the issue of allowing provision for bad debts as a deduction under Section 36(1)(vii) of the Act is an debatable issue. Therefore, could not be dis-allowed by way of intimation under Section 143(1)(a) of the Act.

7. On the other hand, Mr. Chanderpal, learned Counsel appearing for the Revenue tendered written submissions on behalf of the Revenue making the following submissions :-

(a) That out of 8 issues raised by the Tribunal, only 3 major issues

can be inferred from the said 8 questions which are as under :-

“(a) Allowance of a provision for bad and doubtful debts.

(b) With regard to the above, the provisioning for doubtful debts on account of irrecoverably of outstanding interest income on loans being doubtful of recovery.

(c) The writing back of amounts recovered later”; and

(b) There is no place for equity in fiscal laws. Therefore, mere provision would not make it bad debt as a provision lacks certainty. For the purposes of write off under Section 36(1)(vii) of the Act, there must be certainty of debt becoming irrecoverable. Thus, it is submitted that the view of the Tribunal is correct and the question as proposed should be answered in favour of the Revenue.

8. Before dealing with the rival contentions, it would be necessary to reproduce Section 143(1)(a) of the Act, at the relevant time which read as under :-

“143(1)(a) Where a return has been made under Section 139, or in response to a notice under sub-section (1) of section 142, –

(i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be Uday S. Jagtap 8 of 15 25-2000-ITR-Judgment=.doc deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly ; and

(ii) if any refund is due on the basis of such return, it shall be granted to the assessee:

Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely :

(i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified;

(ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed:

(iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed ; ….

Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustment.

Provided ……”

9. The written submission as filed by the Revenue ignores the fact that only one question has been referred to us for consideration. The issue referred to us is in respect of applicability of Section 143(1)(a) of the Act to disallow a claim for provision for bad debt by intimation i.e. without calling upon the assessee to explain its claim. On this issue, the written submission proceeds on the basis that a plain reading of Section 36(1)(vii) of the Act would only mean an assured and / or certain irrecoverability of debt. Therefore, it is submitted that the Uday S. Jagtap 9 of 15 25-2000-ITR-Judgment=.doc intimation under Section 143(1)(a) of the Act cannot in the present facts be faulted. In fact, the written submissions states, “Litera Leges, certainty concept and on the concept that there is no equity on fiscal law irrespective of any judgment of any Hon’ble Court or Tribunal a go-by cannot be given to the aforesaid interpretations given in this written submission”. The above submission that decision of the Court and / or Tribunal interpreting a provision is to be ignored by the Assessing Officer, if accepted will ring the death knell of Rule of law in the country. The Assessing Officer is bound by the views of the Court. The above submission ignores the hierarchal system of jurisprudence in our country.

10. The issue that arises for our consideration is whether an adjustment by intimation under Section 143(1)(a) of the Act can be made where the issue which arises for consideration is a debatable issue. In the present facts, the computation of total income submitted along with return indicates that claim for bad debts has been made by relying upon the decision of Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala (supra)

11. However, the Assessing Officer completely ignored the note made Uday S. Jagtap 10 of 15 25-2000-ITR-Judgment=.doc by the applicant in its computation of return, indicating that the basis of claim for bad debts is the decision in Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (surpa). In the above case, even a provision debited to the profit and loss account was allowed as bad debts, where corresponding credit entires are posted in the bad debts reserve account. It held that is was not necessary to post credit entries in the ledger account of the concerned parties. It was on the basis of the aforesaid decision of the Gujarat High Court that the claim in respect of the provision for bad debts was made by the applicant assessee. Once, reliance is placed upon a decision of a Court and / or Tribunal to make a claim, then even if the Assessing Officer has a different view and does not accept the view, yet the claim itself becomes debatable. This is so laid down in Instruction No.1814 dated 4 th April, 1989 issued by the CBDT in respect of the scope of prima facie disallowance under Section 143(1)(a) of the Act. In fact, paragraph no.9 thereof provides that where a claim for deduction has been made on the basis of a decision of a High Court / Tribunal, then, even if there is contrary view expressed by another High Court and / or Tribunal or an appellate Authority, the issue itself becomes debatable. In such cases, no adjustment under Section 143(1)(a) of the Act is permissible. Thus, disallowance of a claim can be made only after hearing the assessee who has made the Uday S. Jagtap 11 of 15 25-2000-ITR-Judgment=.doc claim.

12. Further, our Court in Khatau Junkar Ltd. (supra) had while dealing with the word “prima facie inadmissible” in clause (iii) of Section 143(1)(a) of the Act has held that the word “prima facie” means on the face of it the claim is not admissible. It means the claim does not require any further inquiry before disallowing the claim. The Court observed that where a claim has been made which requires further inquiry, it cannot be disallowed without hearing the parties and / or giving the party an opportunity to submit proof in support of its claim. In the absence of Section 143(1)(a) of the Act being read in the above manner i.e. debatable issues cannot be adjusted by way of intimation under Section 143(1)(a) of the Act, would lead to arbitrary and unreasonable intimations being issued leading to chaos.

13. In the present facts, it is undisputed that the decision of Gujarat High Court was referred to in the computation of income. Thus, the Assessing Officer could not have disallowed the claim on a prima facie view that the same is inadmissible. In fact, there can be no dispute that even according to the Assessing Officer, the issue was debatable. This is evident from the fact when the applicant assessee had filed an Uday S. Jagtap 12 of 15 25-2000-ITR-Judgment=.doc application under section 154 of the Act for deletion of the adjustment made of provision of bad debts by intimation under Section 143(1)(a) of the Act, it was disallowed on the ground that it is a debatable issue. This itself would indicate that whether the claim of a provision for bad debts is deductible under Section 36(1)(vii) of the Act or not is debatable. Further, the above claim for deductions as made by the applicant was by following the decision of the Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (Supra). Thus, a debatable issue. Therefore, the same could not have been disallowed by way of an intimation under section 143(1)(a) of the Act.

14. We are conscious of the fact that Section 36(1)(vii) of the Act was amended by the Finance act, 2001 by insertion of Explanation to Section 36(1)(vii) of the Act w.e.f. 1 st April, 1989. We are also conscious of the fact that while disposing of a Reference under Section 256(1) of the Act, the question proposed for our opinion shall be answered taking into account the subsequent amendment to the law with retrospective effect, as they are clarificatory in nature.

15. In the aforesaid background, we find that the insertion done by Explanation to Section 36(1)(vii) of the Act (w.e.f. 1989) would arise Uday S. Jagtap 13 of 15 25-2000-ITR-Judgment=.doc for consideration while answering the proposed question in respect of Assessment Year 1993-94. The above amendment by addition of Explanation to Section 36(1)(vii) of the Act was a subject matter of consideration by the Supreme Court in Vijaya Bank (supra). In the above decision, the Court while applying the amended law, held that mere debit of a provision to the profit and loss account will not by itself be sufficient to constitute bad debts (write off). This must be accompanied by simultaneously also reducing the loans and advances from the asset side of the Balance Sheet. This would ensure that the amount shown as loans and advances (debtors) is net of the provisions made for bad debts.

16. Therefore, in the present facts, while mere making of provision for bad debts will not by itself (on application of amended law) entitle the party to deduction, yet it would be a matter where the assessee should be given an opportunity to establish its claim. This by producing its evidence of the manner in which it treated the provision of bad debts written off in accounts as well as in its Balance Sheet. Therefore, the disallowance cannot be made by intimation under section 143(1)(a) of the Act, as it requires that a party be given an opportunity to establish its claim before disallowing it. It would have Uday S. Jagtap 14 of 15 25-2000-ITR-Judgment=.doc been a completely different matter if the Apex Court had ruled that in no case can provision for bad debts be allowed as a bad debt under section 36(1)(vii) of the Act. The allowance of the claim of provision for bad debt is entirely dependent upon how it is reflected in the Balance Sheet and its accounts. Therefore, for the above purpose it is necessary that the party to be given an opportunity to establish its claim. Therefore, in the present facts, adjustment by way of disallowing deduction by intimation under section 143(1)(a) of the Act is not proper.

17. In the above view, the question as raised for our opinion is answered in the negative i.e. in favour of the applicant assessee and against the respondent Revenue.

18. The Reference is disposed of in the above terms. No order as to costs.

(RIYAZ I. CHAGLA, J.) (M.S. SANKLECHA, J.)

Law On Oppression Or Mismanagement U/s 397, 398 Companies Act

MASTI

The latest Bombay High Court judgement in Abdul Wahid Abdul Gaffor Khatri vs. Safe Heights Developers Pvt. Ltd COMPANY APPEAL NO.22 OF 2013 explains the law on sections 397 and 398 of the Companies Act which deal with oppression of the minority and mismanagement.

The Bombay High Court has held in the judgement that it is well settled, as held, inter alia, by the Hon’ble Supreme Court in 1V.S. Krishnan & Ors .v. Westfort Hi-Tech Hospital Limited & Ors. and followed in 2Purnima Manthena & Anr. v. Renuka Datla & Ors that an Appeal under Section 10-F of the Companies Act, would lie only on a question of law.

It has been pointed out in the judgement of the Bombay High Court that Section 10-F expressly states that the Appeal will lie only on a question of law arising out of the order. It is further held by the Hon’ble Supreme Court that the CLB is the final authority on facts, unless, such findings are perverse, based on no evidence or are otherwise arbitrary.

The Bombay High Court judgement further emphasizes that it is further well settled that an order passed by the CLB under Sections 397 and 398 is a discretionary order as held by the Hon’ble Supreme Court in V. S. Krishnan (supra) and in 3Sangramsinh P. Gaikwad v. Shantadevi P. Gaikwad. Being a discretionary relief, the Appellate Court, i.e. the High Court ought not to interfere with the judg- ment or replace the same with its own exercise of discretion, particu- larly given the restrictive scope of Section 10-F.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

IN ITS COMPANY JURISDICTION

COMPANY APPEAL NO.22 OF 2013
IN
CLB/COMPANY PETITION NO.52 OF 2012

1) Abdul Wahid Abdul Gaffor Khatri )
Director, B/110,Jaan Mohmed Apartment )
Fairdeal Road, Off. S.V.Road, Jogeshwari )
(West) Mumbai-400 102 )

2) Abdul Aziz Mohd. Husain Qureshi )
Director, B-305, Basera Apartment )
FDC Road, Jogeshwari (West) )
Mumbai-400 102 )

3) Shahid Abdul Wahid Khatri )
B/110 Jaan Mohmed Apartment, )
Fairdeal Road, Off. S.V.Road, )
Jogeshwari (West), Mumbai-400 102 )….Appellants/
Org.Petitioners
V/s.
1) M/s.Safe Heights Developers Pvt. Ltd. )
Nirman House, L.P. Poddar Marg, )
College Road, Nasik-422 005, Maharashtra )

2) Ashutosh Jayant Joshi )
Additional Director, Bungalow No.35, )
Park Street, RSC 2, Sardar Patel Nagar, )
MHADA Versova, Andheri (West) )
Mumbai-400 053 )

3) Deepak Navnitray Mehta )
Director, Flat No.201, B/4, Sector-2 )
Shanti Nagar Mira Road (East), Dist.Thane )

KJ

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Pin Code : 401 107 )

4) Nemichand Lalitprasad Poddar )
Additional Director, Poddar House, Patil )
Colony Lane No.3, College Road, )
Nashik 422 005 )

5) Jaiprakash Sitaram Goel )
Additional Director, Shop No.302, 4th Floor )
Sun Mahu Commercial Complex, )
Pune-411 001, Maharashtra )

6) Mahendra Nemichand Poddar )
Director, Poddar House, Patil Colony, )
Lane No.3, College Road, Nashik-422 005 )

7) Vipul Nemichand Poddar )
Director, Poddar House Patil Colony )
Lane No.3, College Road, Nashik-422 005 )

8) Hitesh Nemichand Poddar )
Director Poddar House, Patil Colony )
Lane No.3, College Road, Nashik-422 005 )

9) Amit Jaiprakash Goel )
Director, 5, San Mahu Complex, )
Opp.Poona Club, Bund Garden Road, )
Camp, Pune-411 001 )

10) Atul Jaiprakash Goel )
Director, 5, San Mahu Complex )

KJ

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Opp. Poona Club, Bund Garden Road )
Camp, Pune-411 001 )

11) Rajesh Dhanji Savla )
Director, 102, Abhipsa Kamla Nehru Road )
No.2, Kandivli (West), Mumbai-400 067 )

12) Jayant Dattatraya Joshi )
Additional Director, Bungalow No.35, )
S.V.P.Nagar, Near Lokhandwala Complex )
Andheri (West) Mumbai-400 053 )….Original Respondent
Nos.1 to 12.
—-

Mr.Abhishek Khare a/w Ms.Prapti Kedia i/by Khare Legal Chambers for appellants.

Mr.Rohaan Cama i/by Hafeezur Rahman for respondent nos.1, 2, 4 to

12.

—-

CORAM : K.R.SHRIRAM,J

RESERVED ON : 14.2.2018
PRONOUNCED ON : 24.2.2018

Judgment :-

1 The present appeal has been filed under Section 10 F of

the Companies Act 1956 and impugns the order dated 18.12.2012 passed by the Company Law Board (CLB) in the petition filed by the appellants, inter alia, under Sections 397 and 398 of the Companies Act 1956 alleging oppression and mis-management on the part of respondent nos.2 to 10.

2 The brief facts as it appears from the appeal memo are as

under :-

(i) On 4.7.2005 respondent no.1 company was

incorporated. The authorized, issued and paid up equity share capital of respondent no.1-Safe Heights Developers Pvt. Ltd. (the Company) at the time of incorporation was Rs.2,00,000/- divided into 20,000 equity shares of Rs.10/- each. Appellant no.1 and appellant no.2 and respondent no.2 and respondent no.3 were the first directors and shareholders of the company at the time of incorporation and account was opened in the name of the company on 7.7.2005 with Samata Sahakari Bank Ltd. in which appellant no.1 and respondent no.2 were the signatories.

(ii) On 27.6.2006 an account was opened in the name of company with HDFC Bank, Goregaon branch in which appellant no.2 and respondent no.2 were joint signatories. Respondent no.2 resigned from office of director on 2.11.2006 which was accepted by Board and form 32 was filed accordingly with Registrar of Companies (ROC).

(iii)On 6.11.2006 an Extra-ordinary General Meeting was called in which the authorized capital of the company was increased from Rs.2,00,000/- to Rs.5,00,000/-.

(iv) On 14.3.2007 in another Extra-ordinary General Meeting the authorized share capital of the company was increased from Rs.5,00,000/- to Rs.55,00,000/-.

(v) On 3.9.2007 form 32 was filed by the company for appointment of respondent nos.3,4 & 5 as additional directors. On 3.9.2007 form no.2 was filed by respondent no.2 for allotment of 2,30,000 equity shares of Rs.10 each at par and 25,000 preference shares at par of Rs.10 each to himself.

(vi) On 3.9.2007 Resolution was passed by the company to shift the registered office of the company to a Fort office by filing form no.18. Thereafter registered office was shifted to Nasik.

(vii) On 7.9.2007 it is alleged by appellants that respondent no.2, to bring appellants share holding under minority, allotted 2,26,000 equity shares of Rs.10 each at premium of Rs.120 and 25,000 preference shares of Rs.10 each at par by filing form no.2 w.e.f 23.8.2007 to the family members and company in which respondent nos.4 & 5 were interested and this allotment was without any notice, meeting, knowledge and consent of Board of Directors. It is also alleged that on 15.12.2007 respondent KJ 6/33 CA22.13.doc no.2 again filed form no.2 for allotment of 24,000 equity shares of Rs.10 each at a premium of Rs.120 per share w.e.f. 22.9.2007 to one Geeta Constructions Pvt. Ltd. wherein respondent no.5 is an interested director.

(viii) On 5.11.2007, appellants caused a Show Cause Notice issued to respondent nos.2 & 3 calling upon them to explain their misconduct and activities detrimental to the interest of the company and to return the books of accounts, correspondence, original agreements, records and registers of the company.

(ix) On 7.11.2007 respondent no.2 replied stating that appellants had sold their stake in the Company and the matter was settled, with one Mr.Deepak M.Mehta, who was acting as mediator/escrow agent for the purpose. 3 It should be noted that the appellants’ counsel made oral submissions and followed it with 49 pages of written submissions. I have to note that the written submissions filed on behalf of appellants far exceed what was argued before the court and raises new points which were not pressed before the court. Reliance has been placed on several new judgments on points which were neither urged before the Company Law Board nor pressed before this Court when the matter KJ 7/33 CA22.13.doc was argued.

4 Broadly stated, the issues raised by the appellants were as under :-

(a) By a rights issue in 2007, the shareholding of the Petitioners had been diluted; allegedly no notices were given for the meetings pertaining to the rights issue;

(b) The Respondents had caused the registered office of the Company to be shifted on two occasions; allegedly no notices were given for the meetings pertaining to the shifting of the registered office; and

(c) disputes pertaining to appointment and removal of directors.

5 The CLB has analysed in detail the various submis- sions made by the Appellants, and after considering the factual matrix, the submissions made on both sides and the position in law, passed a detailed, comprehensive judgment dismissing the Petition, but directing the Respondents to buy out the Petitioners’ shareholding.

Limited Scope of Section 10-F

1. It is well settled, as held, inter alia, by the Hon’ble Supreme Court in 1V.S. Krishnan & Ors .v. Westfort Hi-Tech Hospital Limited & Ors. and followed in 2Purnima Manthena & Anr. v. Renuka Datla & Ors that an Appeal under Section 10-F of the Companies Act, would lie only on a question of law. Section 10-F expressly states that the Appeal will lie only on a question of law arising out of the order. It is further held by the Hon’ble Supreme Court that the CLB is the final authority on facts, unless, such findings are perverse, based on no evidence or are otherwise arbitrary.

2. It is further well settled that an order passed by the CLB under Sections 397 and 398 is a discretionary order as held by the Hon’ble Supreme Court in V. S. Krishnan (supra) and in 3Sangramsinh P. Gaikwad v. Shantadevi P. Gaikwad. Being a discretionary relief, the Appellate Court, i.e. this Court ought not to interfere with the judg- ment or replace the same with its own exercise of discretion, particu- larly given the restrictive scope of Section 10-F.

6. The Hon’ble Madras High Court in the case of 4M. Palanis- amy & Ors. v. S.V.T. Spinning Mills (P) Ltd &Ors. reiterated the 1 (2008) 3 SCC 363 2 (2016) 1 SCC 237 3 AIR 2005 SC 809 4 [2011] 101 CLA 346 (Mad.) KJ 9/33 CA22.13.doc aforesaid principles and held that as the CLB is the final authority on facts, while exercising powers under Section 10-F of the Act, the Hon’ble High Court ought not to re-appreciate the evidence analysed by the CLB. Reliance was placed on the judgment of the Hon’ble Andhra Pradesh High Court in D.Ramkishore Vs. Vijaywada Shavebrokes Ltd. (2008) 86 CLA 285 (AP) which in turn had relied upon various judgments of the Hon’ble Supreme Court to hold that there was no jurisdiction under Section 10-F to entertain an Appeal on the grounds of erroneous findings of fact, however gross the error may seem to be. It was further held by the Hon’ble Andhra Pradesh High Court that absent a conclusion that the judgment was not sup- ported by any evidence or that it was unreasonable and perverse, the decision of the CLB is final even though the Hon’ble High Court might not, on the same materials, have come to the same conclusion. 7 Shri Khare relied upon the judgment in 5Dale Carrington Invt Private Limited & Anr. v. P. K. Prathapan & Ors. to contend that the Hon’ble High Court could go into questions of fact. This con- tention is misplaced; in paragraph 36 of this judgment the Hon’ble Su- preme Court held that the judgment of the CLB “was given in a very cursory and cavalier manner” and that the CLB has not gone into the issues which were germane for the decision of the controversy in-

5 (2005) 1 SCC 212

volved in the case. This is not applicable to the detailed and compre- hensive judgment rendered by the CLB in the present case. 8 The Appellants’ submissions proceed on a fundamentally erroneous basis that the scope of this Court’s jurisdiction under Sec- tion 10-F is not limited to adjudication of questions of law arising out of the order, but also extends to questions of facts in certain circum- stances. This is a misreading of the judgments of the Hon’ble Supreme Court. It is clear that the scope of jurisdiction of this Court is restricted to a question of law and only if it can be held that a find – ing of fact is perverse and based on no evidence, then that perversity itself may be treated as a question of law. This is not to say that this Court would be required to minutely analyse the judgment of the CLB on all factual aspects and arrive at a conclusion that a particular fact ought to have been considered differently, or that some other conclu- sion ought to have been arrived at on the facts. This Court would tru- ly be required to assess the judgment of the CLB holistically to ascer- tain whether the judgment is based on no evidence and is therefore perverse. In the present case, under no circumstances can it be said that the judgment of the CLB is either perverse or cursory or based on no evidence. The Appellants are attempting to treat the present pro- ceedings as a First Appeal and are in effect seeking that this Court KJ 11/33 CA22.13.doc delve deeply into the facts and exercise its discretion to replace the discretionary judgment of the CLB. This is impermissible in law and is contrary to the judgments of the Hon’ble Supreme Court and High Courts which were cited on behalf of the Respondents. 9 In my view, the order of the CLB in the present case can in no circumstances be said to be either perverse, based on no evidence or arbitrary. The CLB has analysed the factual and legal position in depth and has arrived at a conclusion on facts that no case of oppres- sion and / of mismanagement has been made out by the Appellants. From paragraphs 23 to 45 of the judgment at pages 84 to 95, the CLB has analysed all the issues raised including but not limited to:

• service of notice by UPC (paragraphs 23 to 25); • the Appellants having exited the Company after receiving the loan amount given by them, (paragraph 25); • the rights issue and the reasons for the same being to in-

fuse funds into the Company (paragraphs 26 to 28); • shifting of the registered office (paragraphs 29-30); • termination of directorship being outside the ambit of sections 397 / 398 (paragraph 35);

KJ 12/33 CA22.13.doc • the Appellants having come with unclean hands and hav-

ing suppressed material facts (paragraphs 36 to 38); and • gross delay and laches in the Appellants’ having ap-

proached the CLB (paragraphs 39-40).

The above findings of fact cannot be interfered with by this Court in the exercise of the narrow jurisdiction under Section 10-F of the Companies Act, 1956.

10 Shri Khare submitted that there were various facts that the CLB, in the present case, ought to have noticed from the record but did not. Even if what Shri Khare says is correct, i.e., if it is the griev- ance of the Appellants that any material facts which were relied upon or any submission which was raised were not reflected in the judg- ment, it was incumbent upon the Appellants to draw the attention of the CLB to the same by filing a proper application for review or clari- fication. As held by the Hon’ble Supreme Court in 6Daman Singh v. State of Punjab, when no such application for review or clarification has been made, a party or its counsel is not entitled to submit to the superior court that a certain ground had been argued to which no ref- erence is found in the judgment.

Delay and Laches in filing the Petition

11. This Court, in the context of a similarly discretionary order un- der Section 111 of the Companies Act, 1956, in 7Sulochana Neelkanth Kalyani v. Takle Investments Co. & Ors., has held that exercise of such discretion could certainly be affected by inordinate and unexplained delay and laches and that any such delay may render granting of the relief inequitable, as there could be equities arising in favour of other parties as a result of such delay and also such delay may give rise to a case of acquiescence, waiver or estoppel. These aspects would be for the CLB to assess and would depend upon the facts and circumstances of each case.

12. In the Petition filed by the Appellants before the CLB, the Ap- pellants have set out the various acts, which according to them con- stituted oppression and mismanagement, including the rights issue and the shifting of the registered office. Thereafter it is the case of the Appellants that when they became aware of the purported conduct of Respondent Nos. 2 and 3 “then on 5th November 2007” they issued a show cause notice to Respondent Nos. 2 and 3. This show cause no- tice was followed by a letter on the same date addressed to Respond- ent Nos. 2 and 3. This letter was replied to by a letter dated 7 th 7 2016(4)Bom.C.R.272 KJ 14/33 CA22.13.doc November 2007 addressed by Respondent No. 3 setting out, inter alia, that the Appellants had exited the Company after accepting their loan, and that the registered office of the Company had been shifted . In response, the Appellants, through Appellant No. 2, addressed a let- ter dated 6th December 2007, inter alia, threatening that the Appel- lants would take necessary action under the provisions of the Com- panies Act. As per the stated case in the Appellants’ Rejoinder in the petition before CLB, the Appellants claimed that they conducted an ROC search and learnt of the acts of oppression and mismanagement in or about December 2007 – January 2008.

13. Pertinently, despite full knowledge from November 2007 – January 2008 of all the acts complained of in the Petition, no steps were taken by the Appellants to approach the CLB until July 2011 as noted by the CLB in paragraph 39 of the judgment. There was no ex- planation whatsoever from the Appellants to explain this significant delay aside from stating that they had preferred a representation to the Registrar of Companies. This explanation was rightly rejected by the CLB while noting that the reliefs which could be granted by the CLB could never have been granted by ROC, and therefore this could not be a reason for not approaching the CLB earlier.

14. In the written submissions of the Appellants also, there is no cogent explanation for the Appellants’ delay in approaching the CLB. It is simply contended that the alleged acts of oppression were contin- uing and culminated in the removal of the Appellants as Directors in 2011. Firstly, from the record before the CLB, as reflected in the judgment, the only ground to justify the delay pressed before the CLB, and indeed before this Court in arguments, was that the Appellants were prosecuting proceedings before the Registrar of Companies. No case of continuous oppression and/or mismanagement appears to have been pressed before the CLB and certainly not before this Court and it is impermissible to seek to introduce a new case in Written Submissions, particularly one which is on a factual basis. Even other- wise, there is no justification for the gross delay in approaching the CLB, and the CLB in the exercise of its discretion has held that the de- lay was excessive. This exercise of discretion by the CLB ought not to be interfered with by this Court in its narrow jurisdiction under Sec- tion 10-F of the Companies Act, 1956.

15. Therefore, I find nothing wrong in the CLB concluding that on the ground of delay and laches alone, the Petition could have and ought to have been dismissed even without going into the allegations raised by the Appellants.

Unclean Hands

16 The CLB has, after a detailed consideration of the Appellants’

conduct, arrived at a finding of fact that the Appellants had sup- pressed material facts and had not come with clean hands, having in- dulged in various acts of misconduct as set out in the order, including running a parallel Board of Directors, holding meetings without any notice (as opposed to the Respondents having shown UPC records for service of notice for their meetings) and appointing / removing direct- ors at their whim. The CLB has rightly noted that a party seeking re- lief in an equitable jurisdiction must itself act equitably (i.e., a person who wants equity must do equity), and has arrived at a conclusion that the Appellants have not acted equitably. 17 In their submissions, the Appellants have sought to deflect atten- tion from their own defaults by alleging defaults on the part of the Respondents. The Appellants have not been able to deny the illegali- ties committed by them, but have simply alleged that the same yard- stick was not applied to the Respondents. This stand is factually in- correct in as much as the Appellants did not give any notice for their meeting, whereas the Respondents had given notice by UPC. Even otherwise, it is the Appellants who have approached the CLB in the exercise of its equitable jurisdiction, and it is the Appellants who must KJ 17/33 CA22.13.doc show that they have acted equitably and with clean hands. It is no an- swer to contend that their illegalities are justified by alleged illegali- ties on the part of the Respondents, which in themselves have been denied.

In these circumstances, on this ground also, I see no reason to interfere in factual findings of the CLB ON THE THREE ISSUES RAISED 18 As stated earlier, the Appellants had broadly raised three issues of alleged oppression and mismanagement. It should be noted that they are issues of fact which have been conclusively decided by the CLB and as held in M.Palanisamy & Ors. (supra), the CLB is the final authority on facts.

The rights issue of shares and the service of notices by UPC:

19 Respondents, in their Affidavit in Reply to the Company Petition have set out at length the sequence of events pertaining to the rights issue of shares, the funds raised by virtue of the rights issue and the details of service of notices for various meetings in this re- gard. The Respondents have also placed on record the relevant docu- ments in relation to the rights issue, including the UPC register for KJ 18/33 CA22.13.doc service of notices on Appellant Nos. 1 and 2. The UPC register admit- tedly bears a stamp sufficient for service upon both Appellant Nos. 1 and 2 and no other party has raised a grievance that notices were not served upon them.

20 A grievance was raised by the appellants that the UPC proofs at pgs. 351 and 354 appear to be identical. While this is purely a factual matter which ought not to detain this Court, the Appellants ought to have pointed out that the UPCs at pgs. 351 and 354 pertain to com- munications both dated 19th February 2007, and therefore potentially the same UPC proof would be sufficient if both communications were forwarded under the same UPC certificate and/or in the same packet. These are factual matters, which if had been pressed before the CLB would duly have been answered by the CLB after hearing both sides, but this aspect was not urged, as is apparent from the judgment of the CLB.

21 In this context, the CLB has rightly held on the basis of Section 53 of Companies Act, 1956, that there arises a rebuttable presumption that the documents were served on the Appellants under certificate of posting. As held by the Hon’ble Supreme Court in the case of V. S. Krishnan (supra) relying on the judgment of the Hon’ble Supreme KJ 19/33 CA22.13.doc Court in 8M. S. Madhusoodhanan v. Kerala Kaumudi Private Lim- ited, the burden was on the addressee, i.e., the Appellants herein, to rebut the statutory presumption and show that the notice had not been received by them. Admittedly in the present case no such at- tempt has been made by the Appellants to show that the notice was in fact not received by them. In the circumstances, it cannot be said that the CLB judgment is perverse or unreasonable or arbitrary on this score.

22 The Appellants have sought to rely upon certain judgments on the aspect of service of notice for meetings. Broadly stated, the said judgments only lay down the accepted proposition that notice of a meeting ought to be given to the shareholder / director. The said judgments have no application in the present case, as it is not the case of the Respondents that no notice was given, but in fact notices were sent by post under certificate of posting (UPC). As aforesaid, the re- buttable presumption under Section 53 having arisen, and having not been rebutted by the Appellants, the CLB has rightly held in favour of the Respondents in this regard. The judgments cited by the Appel- lants are dealt with hereunder:

(i) Dr. T. M. Paul v. City Hospital (Pvt.) Ltd. & Ors. This

judgment only states that notice of a meeting ought to be given under Section 286, with which principle there can be no dispute. However, in the present case CLB has ac- cepted that notices were in fact given under UPC.

(ii) Sri Parmeshwari Prasad Gupta v. The Union of India In this case, it was an admitted position that no notice was given to the director of the Company, which is com- pletely different from the facts of the present case.

(iii) Mr. Satish Kumar Singh v. Omkaleshwar Colonisers Private Limited – again this judgment only lays down the principle that notice must be served, which has been done in the present case;

(iv) 12M/s. Micromeritics Engineers Pvt. Ltd. & Ors. v. S. Mun usamy- in the facts of the case in question, there was no proof that the notice of the meeting was sent by post as held by the Hon’ble Madras High Court in the last sentence of paragraph 34. This is very different from the facts of the present case.

9 1998 SCC On Line Ker 367 10 (1973) 2 SCC 543 11 (217 SCC On Line NCLT 339 12 (2002-4-L.W.394) KJ 21/33 CA22.13.doc

(v) Malleswara Finance and Investments Co. P. Ltd. v.

Company Law Board and Others -in the facts of that case the CLB, after taking into consideration all the materials, held that there was no evidence of posting, which is oppos- ite to the factual finding in the present case.

(vi) M. S. Madhusoodhanan v. Kerala Kaumudi Private Lim ited (supra) – This judgment in fact aides the Respondents and has been followed in the context of Sections 397 / 398 in V. S. Krishnan’s case (supra) to hold that once a rebut- table presumption arises under section 53, the burden lies on the addressee, i.e., the Appellants herein to rebut the same.

Reliance was placed by the Appellants on paragraph 115 of M.S.Madhusoodhanan (supra) to contend that when the relationship between the parties was embittered the proof of service of notice by a certificate of posting must be viewed with suspicion. It is pertinent to note that in the present case, after the meeting of 14 th March 2007 as set out later, in which the Appellants have participated in raising the share capital, and until the issuance of the show cause notice on 5 th November 2007, (during which time the notices were sent by UPC) 13 (1994 SCC Online Mad 552) KJ 22/33 CA22.13.doc there is no record whatsoever to show that the relationships between the parties was in any manner embittered. During this period between March 2007 and November 2007 there was no embitterment whatso- ever and it was during this period that the rights issue took place cul- minating on 22nd September 2007, as also the shifting of the re- gistered office in April 2007 and July-August 2007. Hence, the notices sent for these meetings under UPC during this period, cannot possibly be required to be viewed with any suspicion on the ground of purpor- ted embitterment, or otherwise.

23 Before the CLB, the case of the Appellants was that the UPC no- tices were infirm and should not be relied upon because relations be- tween the parties were embittered. Before this Court, it was urged that the UPCs could not be relied upon in respect of Board Meetings and that the presumption under Section 53 applied to general meet- ings of the company. This contention is misleading. While Section 53 does raise a presumption in respect of notices for meetings of mem- bers of the company, under Section 286 of the Companies Act, 1956, there is no format provided for service of notices to Directors. The CLB has dealt with the argument which was urged, namely that the notice through UPC should not be presumed as sufficient proof of ser- vice; this argument of UPC notice for Board Meeting does not appear KJ 23/33 CA22.13.doc to have been urged before the CLB. Even otherwise, under Section 286 of the Companies Act, 1956 no specific mode of service is provid- ed for. The UPC proofs were duly produced before the CLB even for meetings of the Board of Directors, and there was nothing placed on record by the Appellants to show that they were either not available at the time when the notices were served or that they could not or were not in a position to receive the same. Even otherwise, the CLB has rightly held that after knowledge of those resolutions being passed by November 2007 – January 2008, no steps were taken by the Appel- lants to approach the CLB for redressal of their grievances for close to four years. On the contrary, the Appellants held their own meetings without even attempting to send notices thereof to the Respondents; what has weighed with the CLB therefore is the inequitable conduct on the part of the Appellants and this factual finding cannot to be in- terfered with.

24 Even otherwise, the rights issue having been done in the in- terest of the Company with a view to infuse funds into the Company, can under no circumstances be said to be an act of oppression. The Hon’ble Supreme Court in the case of 14Needle Industries (India) Limited v. Needle Industries Newey India Holdings Limited – relied upon in V. S. Krishnan (supra), has held that if the shares are issued in 14 AIR 1981 SC 1298 KJ 24/33 CA22.13.doc the larger interest of the Company and bonafide with a view to enable capital to be raised, the rights issue cannot be termed as oppressive. 25 In the present case, in the meeting of the Board of Directors held on 14th February 2007 and confirmed in an EGM held on 14 th March 2007 it was decided to raise the authorised share capital of the Company from Rs. 5,00,000/- to Rs. 55,00,000/-. The explanatory statement for the meeting held on 14 th March 2007, placed on record by the Appellants themselves , bearing Appellant No.1’s digital signa- ture, expressly records that the shareholding was being increased as the Company “wishes to enhance its current business greatly”, and that the present authorised capital of the Company was “very small and would be a constraint to the growth of the Company”. Admittedly, validity of these meetings which were referred to in paragraphs ii(a) and (b) of the Respondents’ Reply , and the Appellant Nos. 1 and 2’s presence have been accepted in paragraph 6 of the Appellants’ Rejoin- der .

26 The rights issue was thus obviously contemplated as being the avenue for increasing the funds of the Company and for the growth of the Company. The CLB has recorded a finding of fact (in paragraph

28) that the rights issue was necessary for the growth of the Company and therefore the action of issuing the shares could not be termed as KJ 25/33 CA22.13.doc oppressive to the Appellants and/or mismanagement of the affairs of the Company.

27 Pertinently, despite being party to the above meetings, at no point did the Appellants seek to subscribe to the rights issue, and did not even make such enquiries for several years prior to filing the present Petition. The reason for this was clearly because the rights is- sue which commenced from April 2007, was not of interest to the Ap- pellants, as the Appellants had received back the sum loaned by them to the Company to the tune of Rs.73,00,000/- . The Appellants had accepted back the loan as they did not desire to partake in the func- tioning of the Company.

28 The Appellants have no explanation for their having taken back their loan, save and except to contend that this was not reflective of their disinterest in the company. In this regard, the CLB has arrived at a finding of fact, based on the conduct of the Appellants and this finding ought not to be interfered with in exercise of jurisdiction un- der Section 10-F. As a matter of fact, after accepting their loan amounts back in or about March 2007, at no point did the Appellants write a single letter or demand to participate or show any interest in participating in the company until issuance of the show cause notice on 5th November 2007. If the Appellants truly desired to partake in KJ 26/33 CA22.13.doc the management of the company and felt that they had been wrongly prevented from doing so, any reasonable person would have ap- proached the appropriate forum, i.e., the CLB in 2007 itself. Howev- er, no such steps were taken by the Appellants until July 2011. 29 In the circumstances, even on merits it cannot be said that the rights issue was either oppressive or done behind the back of the Ap- pellants.

Shifting of registered office:

30 The Appellants have sought to raise certain factual contentions as to where the notices for the Registered Office shifting were posted from. These are all factual matters, which would turn on evidence as to where Respondent No.2 resided and where he posted the notices from. It is not necessary that the notices be posted only from the Post Office adjacent to the Registered Office of the Company. Be that as it may, this factual analysis is beyond the scope of this Court’s jurisdic- tion under Section 10-F of the Companies Act, 1956. 31 The Appellants raised a grievance that the registered office of the Company was shifted from Jogeshwari to Sir P. M. Road in April 2007 and thereafter from Mumbai to Nashik in July – August 2007.

32 It has to be noted that the jurisdiction of the ROC was not changed, and there was no prejudice whatsoever caused to the Com- pany by virtue of the change of the registered office. The sequence of events relating to the shifting of the registered office have been set out in paragraphs (i) to (iii) of the Reply filed by the Respondents in the CLB .

33 As laid down by the Hon’ble Supreme Court in 15Hanuman Prasad Bagri v. Bagress Cereals Private Limited, shifting of the re- gistered office by itself may not be a reason or a ground to be raised in a Petition under Sections 397 / 398 as long as the Company did not suffer much loss on account of the shifting and no case was made out to show that such exercise was undertaken to put oppressive pres- sure or pain upon the Petitioners. As in the case that was before the Hon’ble Supreme Court, there is nothing in the present case to show that any prejudice was/is caused to the Appellants or that any waste- ful expenditure amounting to mismanagement was incurred on behalf of the Company by shifting of the registered office. 34 Pertinently, it is the admitted position that the UPC amount paid was Rs.3/-. It is more than sufficient for service on Appellant Nos.1 and 2; the other Directors and Shareholders being part of the 15 [2001] 33 SCL 78 (SC) KJ 28/33 CA22.13.doc Respondent Group, may well have been served by other means – they have raised no objection as to service or receipt of the notices. Once again this aspect is purely factual and is being dealt with only in light of the contentions raised by the Appellants. The crucial factor re- mains that shifting of the Registered Office has caused no prejudice to the Company, and is not oppressive in the least. There is nothing to show that the shifting was done to prejudice the Appellants. 35 Thus this contention does not constitute oppression or misman- agement.

Directorial disputes 36 The Appellants have relied upon an RTI Application of 2012 to contend that no notice was received of the meeting for removal of the Appellants as Directors. It appears from the impugned judgment that this issue of the RTI Reply was not pressed before the CLB. Even oth- erwise, it is pertinent to note that in all the various allegations of not having received notice for various meetings, the Appellants have not sought to obtain any RTI on the delivery of notices for all the meet- ings which are the subject matter of dispute between 2007 and 2010, but have only purported to obtain an RTI for a meeting held in 2011. Be that as it may, the Appellants have been removed by resolutions KJ 29/33 CA22.13.doc and with appropriate Form 32’s filed, to the satisfaction of the ROC. It is nobody’s case that the ROC has thereafter raised any objections to the filing of the Forms or indeed to the manner of removal of the Ap- pellants.

37 As held by the Hon’ble Supreme Court in Hanuman Prasad Bagri v. Bagress Cereals Private Limited (supra) directorial disputes are bey- ond the jurisdiction of the CLB under Sections 397 and 398. Thus, the same cannot be raised before the CLB as rightly held by the CLB in paragraph 35 of the judgment.

38 Further the Company is not under any circumstances either a family company or a closely held quasi partnership, in which circum- stances potentially directorial disputes may be raised. The judgments relied upon by the Appellants in this regard will have no application to a company such as Respondent No.1. Further, it does not appear that this issue of ‘quasi-partnership’ was pressed before the CLB, and was not pressed in arguments before this Court. 39 The judgments placed in the Written Submissions, are, to a sub- stantial extent, on points not raised before the CLB or before this Court in the arguments canvassed by the Appellants. The said judg- ments pertain to several aspects which were neither pressed before the CLB or before this Court, and to the extent that the same are KJ 30/33 CA22.13.doc placed in reliance of a case not pressed before the CLB or this Hon’ble Court, the judgments ought to be disregarded. Nevertheless, the said judgments are broadly dealt with hereinbelow: 40 As regards 16Dushyant D.Anjaria Vs. M/s.Wall Street Finance Ltd. ; 17Yogendra Kumar Maheshwari Vs. Registrar of Companies; and 18P.Natarajan V/s. Central Government, of the Compilation are in cases which were not under Section 397/398. 41 As regards Dushyant D.Anjaria (supra), Yogendra Kumar (supra); P.Natarajan (supra) ; 19 Sishu Ranjan Dutta Vs. Bhola Nath Paper House Ltd.,; 20Harikumar Rajah V/s.Sovereign Dairy Ltd. (Mad) ; 21Hindusthan Co-operative Insurance Society Ltd. In re ; 22Sintex Industries Ltd., In re, pertain to appointment of (Addi- tional) Directors and the tenure thereof. The appointment and dura- tion of Directors is a matter beyond the scope of jurisdiction of the CLB, and in any case is not the grievance urged before this Court. 42 As regards 23Zora Singh V/s. Amrik Singh Hayer; 24Rajiv Ku- mar Singh V/s. Shree Narayan Developers P. Ltd. and Ors.;

Ashok Kumar and Ors. V/s. Shree Janki Cold Storage P. Ltd. and 16 2001(1)Mah. L.J.701 17 2011 SCC Online Gau 143 18 (2004) 1 CTC 340 19 (1983) 53 Comp Cas 883 20 (1999) 19 SCL 391 (Mad) 21 (1961) 31 Comp Cas 193 (Cal) 22 (2010)156 Comp Cas 367 23 (2009) 149 Comp Cas 328 (P&H) 24 (2010) 153 Comp Cas 370 (CLB) 25 (2010) 153 Comp Cas 222 KJ 31/33 CA22.13.doc Ors.; 26Swapan Dasgupta Vs. Navin Chand Suchanti, pertain to notices for meetings and the issue of UPC. This issue has been dealt with above. The judgments turn purely on the facts of their respective cases. In the present case, the CLB has arrived at a conclusion that the notices appear to have been served on the Appellants, and even in respect of the Board Meetings, it cannot be disputed that there are UPC proofs of the notices.

43 As regards Needle Industries India Ltd. (supra) ; 27Mrs.- Farhat Sheikh V/s. Esemen Metalo Chemicals Pvt. Ltd. ; 28Rashmi Seth V/s. Chemon India Pvt. Ltd. ; 29Ram Babu V/s. Target Con- structions Pvt. Ltd. and Ors. ; and 30Mrs.Gurpreet Gill V/s. Pump- kin Studio P. Ltd. & Ors., the same pertain to issue of shares. As set out earlier, the impending Rights Issue was to the knowledge of the Appellants; even otherwise, at no point had they sought to exercise their purported right of pre-emption as is now sought to be contended in the Appellants’ Written Submissions. The Appellants in fact had ac- cepted repayment of their loan by March 2007 and were clearly not interested in the functioning of the company. Pertinently, even after having full knowledge, as per their own case, in November 2007, the Appellants did not take steps to challenge the Rights Issue or to seek 26 (1988) 64 Comp Cas 562 (Cal) 27 (1996) 87 Comp Cas 290 CLB 28 (1995) 82 Comp Cas 563 (CLB) 29 (2009) 151 Comp Cas 71 (CLB) 30 (2010) 158 Comp Cas 195 (CLB) KJ 32/33 CA22.13.doc allotment of shares to them in the ensuing several years. In any event, the judgments relied upon take the position that if the Rights Issue is not bonafide but is only for the purpose of enabling a party to obtain a majority, then such action will constitute oppression; this is not so in the present case. The CLB has concluded that funds were re- quired for which the Rights Issue was carried out, and therefore it cannot be said that the same was not bonafide. 44 As regards 31Sanjay Paliwal and Anr. Vs. Paliwal Hotels Pvt. Ltd., ; 32Rajesh Patil V/s. Moonshine Films Pvt. Ltd. ; 33M.L.Arora V/s. Green Valley Frozen Food Ltd. & Ors. ; and 34A.Kalyani V/s. Vale Exports P. Ltd., the same pertain to the allegation of continuous oppression and mismanagement, to justify the delay in filing of the Company Petition. As set out above, the contention of continuous op- pression and mismanagement culminating in the removal of the Ap- pellants as Directors in 2011, was not the ground urged before the CLB to justify the delay. The ground urged was as to the pendency of proceedings before the ROC, and it is in that context that the CLB has rightly held that the explanation for the delay is unjustifiable. Even otherwise, the explanation given by the Appellants cannot be counte- nanced, as the events of which they complained, had to a material ex- 31 (2008) 141 Comp Cas 270 (CLB) 32 (2008) 141 Comp Cas 482 (CLB) 33 (2008) 142 Comp Cas 320 (CLB) 34 (2004) 119 Comp Cas 974 (CLB) KJ 33/33 CA22.13.doc tent, culminated in 2007 itself, and there is no justification for the de- lay in approaching the CLB.

45 In the circumstances, the Appeal ought to be dismissed as it does not give rise to any question of law. The factual findings are strictly matters which were within the province of the CLB. The CLB having exercised its discretion after analysing the evidence before it, this Court cannot to replace the discretionary order passed by the CLB with any contrary order.

46 Even otherwise, on the findings of delay/laches and unclean hands, the present Appeal ought to be dismissed as the CLB has rightly declined to exercise its equitable jurisdiction in favour of the Appellants.

47 As noted earlier, even on the merits, the Appellants’ case is un- tenable and contrary to the record.

48 No case of oppression or mismanagement has been made out, and the Appeal ought to be dismissed, with costs which is fixed in the sum of Rs.2 lakhs. Appellants to pay this amount within 4 weeks by way of cheque drawn in favour of the advocate on record for Re- spondents.

(K.R.SHRIRAM,J) KJ

Divorce By Mutual Consent: Supreme Court Grants Custody Of Child

MASTI

By this judgement, the Supreme Court held that the marriage between Sudarsana Rao Gadde and Karuna Gadde is dissolved by a decree of divorce by mutual consent under Section 10A of the Indian Divorce Act, 1869. In the Settlement, the parties have agreed on visitation and custody rights of the child.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 2287/2018
(ARISING FROM SLP (C) NOS.17055 OF 2017)

SUDARSANA RAO GADDE APPELLANT(S)

VERSUS

KARUNA GADDE RESPONDENT(S)

J U D G M E N T

KURIAN, J.

Leave granted.

2. The appellant is before this Court, aggrieved by the order dated 16.06.2017 passed in Civil Revision No.1804/2017. The disputes are matrimonial in nature.

3. We had made several attempts for a peaceful and amicable settlement of the disputes, through Mediators and also by the Court itself. In this connection, we may reproduce an order of this Court dated 01.08.2017:-

“The parties are before us on account of a prolonged litigation for the custody of their minor child Ayush.

The parties along with the grandparents are here for quite a few days. We painfully note that the child has not been attending school for the last one month.

Thanks to the intervention of Mr. P.S. Narasimha, learned Additional Solicitor General, thanks to the strenuous efforts of learned Senior counsel appearing for both sides, thanks to the cooperation extended by the parties and finally due to the steps taken by this Court, the parties have now arrived at a settlement.

The agreement dated 01.08.2017, duly signed by both the parties and their respective counsel has been handed over to us in the Court today.

The parties are present before us today. The parties are directed to act according to the terms of the settlement which shall also form part of this order.

We direct both parties not to institute any case or petition or any complaint against each other or the members of the family on both sides. They will not approach any forum with regard to any of the disputes between the parties or on the custody of the child or on visitation without the leave of this Court.

All litigations pending between the parties shall remain stayed until further orders.

We direct the petitioner Sudarsana Rao Gadde to hand over the child at the residence of Karuna Gadde-respondent before 1 p.m. on 02.08.2017. In case the presence of both the parents is required in the school, they shall communicate with each other and both of them shall be present in the school.

Post this matter on 20.02.2018.”

4. Today, the parties are personally present before us along with their child-Aayush. In Clause 2 (vi) of the Settlement, the parties have agreed on visitation and custody rights. In view of the long litigations between the parties they have prayed for a decree of divorce by mutual consent. Having interacted with the parties, we find that they have taken a conscious decision without being influenced by any other extraneous factors. Accordingly, the marriage between the appellant/Sudarsana Rao Gadde and respondent/Karuna Gadde is dissolved by a decree of divorce by mutual consent under Section 10A of the Indian Divorce Act, 1869. The Settlement dated 01.08.2017 arrived at between the parties is already on record and the same shall form part of this judgment.

5. We direct the parties to strictly abide by the terms of Settlement.

6. Now that the parties have settled their disputes, we do not think it necessary to relegate them to the respective Courts where other litigations are pending between them as they have agreed to put an end to all the litigations. Accordingly, G.W.O.P. No. 2222 of 2016 on the file of the Family Court at Rangareddy District, Miyapur, Hyderabad will stand disposed of in terms of the Settlement dated 01.08.2017. O.P.

No.2223/2016 pending before the Family Court at Rangareddy District, Miyapore Hyderabad is decreed as per the abovementioned Settlement.

7. In terms of the Settlement, we restrain the parties from instituting any fresh case against each other in respect of any dispute arising out of the Settlement dated 01.08.2017, without express permission from this Court.

8. The appeal is, accordingly, disposed of.

9. Pending applications, if any, shall stand disposed of.

10. There shall be no orders as to costs.

……………………..J.

[KURIAN JOSEPH] ……………………..J. [MOHAN M. SHANTANAGOUDAR] NEW DELHI;

FEBRUARY 20, 2018.

Latest Judgement On Public Premises (Eviction of Unauthorised Occupants) Act, 1971 By Supreme Court

MASTI

The Supreme Court judgement considers the seminal question whether the order passed by the City Civil Court in exercise of power under Section 9 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, as an Appellate Officer, is in the capacity of a Civil Court or persona designata?

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 15536 OF 2017
(Arising out of SLP (Civil) No.11348 of 2013)

Life Insurance Corporation of India …..APPELLANT

:Versus:

Nandini J. Shah & Ors. …..RESPONDENTS

JUDGMENT

A.M. Khanwilkar, J.

1. The seminal question posed in this appeal, by special leave, is whether the order passed by the City Civil Court in exercise of power under Section 9 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, as an Appellate Officer, is in the capacity of a Civil Court or persona designata? Signature Not Verified When this special leave petition was listed for admission on 12.09.2017, the Court passed the following order :

―Heard Mr. Ranjit Kumar, learned Solicitor General appearing on behalf of the petitioner and Ms. Sonal, learned counsel appearing on behalf of the respondents.

As the issue was to be debated with regard to the maintainability of the Letters Patent Appeal, learned Solicitor General has placed reliance on Radhey Shyam & Anr. vs. Chhabi Nath & Ors., (2015) 5 SCC 423 and Ram Kishan Fauji vs. State of Haryana & Ors., (2017) 5 SCC 533.

Ms. Sonal, learned counsel representing the respondents, would contend that there is no quarrel about the proposition that when a challenge is made to the order passed by the Civil Court in a writ proceeding, it has to be treated as a proceeding under Article 227 of the Constitution of India and, therefore, no Letters Patent Appeal would lie. But in a case under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, the Estate Officer cannot be considered as a Court and further the appellate forum would decide the appeal under Section 9 of the Act as the appellate officer and as per the decision rendered by the Division Bench of the Bombay High Court in Nusli Neville Wadia vs. New India Assurance Co. Ltd., 2010 (2) Mh.L.J.978, which has placed reliance on a judgment of the Delhi High Court in N.P.Berry vs. Delhi Transport Corporation and Anr. 15(1979) DLT 108 (para 19), it is not a Civil Court and therefore, the order passed by the said appellate forum can be challenged under Sections 226 and 227 of the Constitution of India and in that event, an intra-court appeal would be maintainable.

List for further hearing on 21.09.2017.‖ The hearing on admission of the special leave petition continued on 21.09.2017 when the Court passed the following order :

―Leave granted.

Heard Mr.Ranjit Kumar, learned senior counsel for the appellant and Ms.Sonal for the respondents.

In the course of hearing Mr.Ranjit Kumar, learned senior counsel appearing for the appellant submitted that Letters Patent Appeal at the instance of the respondents before the High Court of Judicature at Bombay was not maintainable.

Ms.Sonal, learned counsel appearing for the respondents has, per contra, argued that the appeal was maintainable. As we have heard the matter at length with regard to maintainability of the Letters Patent Appeal before the Division Bench of the High Court, it is appropriate to render a judgment.

In view of the aforesaid, judgment is reserved.

Learned counsel for the parties shall submit written submissions by 3rd October, 2017.‖

3. By this judgment, we shall answer the preliminary issue as to whether the Letters Patent Appeal filed by the contesting respondents before the High Court of Judicature at Bombay against the decision of the learned Single Judge rendered in a writ petition (purportedly filed under Articles 226 and 227 of the Constitution of India), questioning the correctness and validity of the decision of the City Civil Court, Mumbai in Miscellaneous Civil Appeal No.121 of 2011 dated 03.04.2012, which was affirmed by the learned Single Judge, was maintainable.

4. We may now advert to the brief factual background giving rise to this appeal: On or around 2nd May 2005, the appellant initiated eviction Case No. 21 and 21A of 2015 against the respondents before the Estate Officer under Sections 5 and 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (for short “the Act”) for eviction of the respondents from the licenced premises on 3rd floor, 49-55, Bombay Samachar Marg, Fort, Mumbai 400023 admeasuring about 258 sq. ft. including a balcony of 38 sq. ft., recovery of damages and recovery of arrears towards repairs and maintenance charges amounting to Rs. 1364/-. The eviction was sought on two grounds: (a) respondent No.1 had illegally and unauthorisedly sublet, assigned or transferred the licenced premises or part thereof to a partnership firm (respondent No.2) and three companies (respondent Nos. 3 to 5); and (b) respondent No. 1 was in arrears of repair and maintenance charges amounting to Rs. 1364/-.

5. Respondent Nos.1 and 2 filed their Reply, stating inter alia that respondent No.1‟s grandfather Shri P.T. Shah was the original tenant of the premises since before 1937. At that time, the building in which the premises are situated was owned by the predecessor-in-title of the appellant. Respondent Nos.1 and 2 traced the devolution of rights in the premises and pointed out that respondent No.2 was a partnership firm of the daughter-in-law of the original tenant, her daughter (present respondent No.1), Shri R.C. Vakharia and Shri K.C. Vakharia. It was also pointed out that respondent No.3 was never incorporated and it never came into existence. It was further pointed out that respondent Nos.4 and 5 were private limited companies wholly owned by the family members of the original tenant, in which the 100% shareholding and all the directors were the daughter-in-law of the original tenant and her immediate family members viz., the daughter-in-law of the original tenant, her daughter, her son-in-law and her grandson. Sub-letting, assignment or transfer of the premises or any part thereof to respondent Nos.2 to 5 was denied. Respondent No.1 asserted that she was in occupation, control and possession of the premises and regularly paid rent of Rs. 895/- per month to the appellant. It was also pointed out that respondent No.1 was not in any arrears. The calculation of damages was seriously disputed. Respondent Nos.3 to 5 did not appear before the Estate Officer. Evidence was led before the Estate Officer by the appellant and respondent Nos.1 and 2.

6. By its Order dated 5th February 2011, the Estate Officer held that respondent No.1 was not in arrears of repairs and maintenance charges as alleged by the appellant. However, it held that respondent No.1 had unauthorisedly sub-let the premises to respondent Nos.2 to 5. The Estate Officer also held that the appellant was entitled to damages from the respondents at the rate of Rs.48,142/- per month from 1st December, 2004 till restoration of possession with simple interest at the rate of 9% per annum.

7. Respondent Nos.1 and 2 challenged the aforesaid order of the Estate Officer before the Appellate Officer under Section 9 of the Act, being the designate of the Principal Judge of the City Civil Court at Mumbai. The appellant did not challenge the finding of the Estate Officer insofar as he had held that respondent No.1 was not in arrears of repairs and maintenance charges. The said finding has become final.

8. By its order dated 3rd April, 2012, the Appellate Officer held that (a) there was no subletting to the partnership firm (respondent No.2), as it was established that it was the firm of the original occupant and (b) there was nothing to show that respondent Nos.3 to 5 also belonged to the original occupant as no document was produced showing their constitution and hence, it amounted to subletting. The Appellate Officer upheld the order of eviction passed by the Estate Officer and the order for damages along with interest.

9. Respondent Nos.1 and 2 challenged the aforesaid orders of the Estate Officer and the Appellate Officer before the learned Single Judge of the Bombay High Court by way of Writ Petition No.4337 of 2012. Respondent Nos.1 and 2 prayed for issuance of a Writ of Certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction under Articles 226 and 227 of the Constitution of India and to set aside the Judgment and Orders of the Appellate Officer and the Estate Officer. The appellant did not challenge the finding of the Appellate Officer insofar as it had held that there was no subletting by respondent No.1 to the partnership firm (respondent No.2). The said finding has become final.

10. By its order dated 14th August 2012, the learned Single Judge of the Bombay High Court dismissed the aforesaid Writ Petition filed by respondent Nos.1 and 2 by holding that respondent Nos.3 to 5 are separate legal entities; the authorities below had concurrently held that the appellant had established its case in that behalf and that no material was produced before it for taking a different view in the matter.

11. Respondent Nos.1 and 2 challenged the aforesaid order of the learned Single Judge before the Division Bench of the Bombay High Court vide Letters Patent Appeal No.181 of 2012.

12. The Division Bench of the Bombay High Court by its Order dated 12th October, 2012, rejected the preliminary objection of the appellant that the Letters Patent Appeal was not maintainable against the order of the learned Single Judge and also allowed the appeal on merits holding that documents showing that 100% shareholding of respondent Nos.4 and 5 belonged to the occupant and her immediate family members and that all the directors of respondent Nos.4 and 5 were the occupants and immediate family members, were on record, which fact has not been taken into consideration by the Appellate Officer. The Division Bench held that by lifting the corporate veil, it can be seen that the companies are alter egos of the occupant and that there is no subletting to the Companies.

13. On the question of maintainability of the Letters Patent Appeal, the Division Bench of the High Court answered the same in the following words:

―13. Firstly we will deal with the contention regarding maintainability of this Letters Patent Appeal. Learned counsel for the Respondents urged that earlier writ petitions challenging the orders passed in proceedings under the Public Premises Act were being entertained by the Division Bench and after the decision of the Full Bench of this Court in the case of M/s. Prakash Securities Private Limited V/s. LIC of India [2012 (4) Bom. C.R.1] dated 26 April 2012, they are now being placed before the Single Judge. He contended that if the appeal is entertained from the orders passed by the learned Single Judge in such petitions, then the object of amending rules for hearing of such petitions by the Single Judge for expeditious disposal will be lost. Learned counsel for appellants on the other hand has drawn our attention to the memo of the petition and the impugned order of the learned Single Judge wherein it is mentioned that the petition is filed and was entertained under Articles 226 & 227 of the Constitution of India, and contended that therefore the appeal is maintainable.

14. It is true that the petitions arising out of the order passed under the Public Premises Act were being heard by the Division Bench. This was being done due to observation of the Division Bench of this Court in the case of Nusli Neville Wadia V/s. New India Assurance Co. Ltd.

& Another [2010 (4) Bom. C.R. 807]. However by an order dated 15 November 2011, another Division Bench of this Court expressed doubt about the correctness of the observation made in the case of Nusli Neville Wadia (supra) and referred the issue as to whether the petitions arising out of the orders passed under the Public Premises Act should be heard by the Division Bench or Single Judge, to the Full Bench for consideration. The Full Bench in the case of Prakash Securities [2012 (4) Bom. C.R. 1] (supra) found that clause 3 of the Rule 18 of Chapter XVII of the Bombay High Court Appellate Side Rules 1960 was wide enough to include orders passed by any quasijudicial authority under any enactment, even if such explanation is not covered by clause 1, 2, 4 to 43 of Rule 18. The Full Bench found that the order passed by quasijudicial authority under the Public Premises Act is also covered by Rule 18 (3) so as to indicate that the petitions under Articles 226 & 227 of the Constitution of India challenging such orders are to be heard and decided by the Single Judge. Reference was accordingly disposed of by the Full Bench by its judgment dated 26 April 2012. The Full Bench held that the Appellate Side Rules as they stand, provide that the petitions challenging the orders passed under the Public Premises Act are required to be heard by the learned Single Judge and therefore the observations made in the case of Nusli Neville Wadia (supra), were not correct. The petitions relating to orders passed under Public Premises Act were being entertained by the Division Bench when the rules provided that they should be entertained by the Single Judge. Therefore there was no conscious decision to remove the petitions arising from orders passed under the Public Premises, from Division Bench and to place them before Single Judge. In fact Full Bench found that these petitions were being wrongly entertained by the Division Bench.

15. In the judgment of the Full Bench there is no indication that Letters Patent Appeal arising out of the orders passed by the Single Judge in proceedings under the Public Premises Act will not be maintainable. If Letters Patent Appeals are otherwise maintainable, judgment of the Full Bench does not take away that right in respect of petitions challenging the orders passed under Public Premises Act. Therefore the argument advanced by the learned counsel on maintainability of the appeal on this ground cannot be accepted. Maintainability was not contested on any other ground. In the present case, the petitioner has invoked both Articles 226 and 227 of the Constitution of India. The learned Judge also has referred to the said Articles in the impugned order. Furthermore, the Respondent Corporation is itself amenable to writ jurisdiction of this Court, being a public corporation. There is therefore no substance in the preliminary objection raised by the learned counsel for the Respondent that the appeal is not maintainable and that it should be dismissed at the threshold without looking at the merits of the matter.‖

14. This appeal by the appellant assails the opinion expressed by the Division Bench not only on maintainability of the Letters Patent Appeal but also on merits, whereby the Division Bench reversed the finding of fact recorded by the Estate Officer and affirmed by both, the City Civil Court, being the Appellate Officer and the learned Single Judge, whilst rejecting the writ petition filed by the respondents. However, the argument presently is confined to the preliminary issue about the maintainability of the Letters Patent Appeal and if that contention of the appellant was to be accepted, it would not be necessary for us to examine the other matter raised in the appeal about the merits of the finding and conclusion recorded by the Division Bench, being without jurisdiction. Instead, the contesting respondents will have to be relegated to question the judgment of the learned Single Judge in that behalf and if such appropriate remedy is resorted to by the contesting respondents, only then it would become necessary to analyse the same in those proceedings.

15. According to the appellant, the interplay of Section 9 of the 1971 Act read with the other provisions in the same Act, such as Sections 3, 8 and 10, makes it amply clear that the jurisdiction exercised by the Appellate Officer, namely the City Civil Court Judge, in an appeal under Section 9 of the Act, is in his capacity as a Civil Court and not persona designata. If so, the remedy under Article 227 of the Constitution of India alone could be availed in the fact situation of the present case and not under Article 226, for issuance of a Writ of Certiorari. In the present case, although the writ petition filed by the contesting respondents was labelled as one under Articles 226 and 227 of the Constitution of India, considering the nature and substance of the challenge, reasoning and nature of the order passed by the learned Single Judge it could be pursued only under Article 227 of the Constitution of India and not under Article 226 or for that matter under Article 226 read with Article 227 of the Constitution of India. Resultantly, the Division Bench committed manifest error in entertaining the Letters Patent Appeal against the decision of the learned Single Judge of the same High Court. To buttress the contention that the District Judge/Judicial Officer, referred to in Section 9 of the 1971 Act, does not exercise powers as persona designata, reliance has been placed on the exposition of this Court in Thakur Das (Dead) by LRs Vs. State of M.P. & Anr.1 and in the cases of Mukri Gopalan Vs. Cheppilat Puthanpurayil Aboobacker2, Thakur Jugal Kishore Sinha Vs. Sitamarhi Central Coop Bank Ltd.3, Central Talkies Ltd. Vs. Dwarka Prasad4, Brajnandan Sinha Vs. Jyoti Narain5, Virender Kumar Satyawadi Vs. State of Punjab6, Maharashtra State Financial Corporation Vs. Jaycee Drugs & Pharmaceuticals (P) Ltd.7 and Asnew Drums (P) Ltd. Vs. Maharashtra State Finance Corporation8. In support of the contention that the order of the District Judge/Appellate Officer would be amenable only to jurisdiction under Article 227 of the Constitution of India, reliance has been placed on the decision of Radhey Shyam & Another Vs. Chabbi Nath & Ors.9 and Ram 1 1978 (1) SCC 27 2 1995 (5) SCC 5 3 1967 (3) SCR 163 4 1961 (3) SCR 495 5 1955 (2) SCR 955 6 1955 (2) SCR 1013 7 1991 (2) SCC 637 8 1971 (3) SCC 602 9 2015 (5) SCC 423 Chander Aggarwal & Anr. Vs. State of Uttar Pradesh & Anr.10 This contention is further elaborated on the basis of the exposition in the case of Ram Kishan Fauji Vs. State of Haryana11 and Jogendrasinghji Vijaysinghji vs State of Gujarat12, wherein the Court observed that the maintainability of Letters Patent Appeal would depend on the pleadings in the writ petition, nature and character of the order passed by the learned Single Judge and the type of directions issued, regard being had to the jurisdictional perspective in the constitutional context. The appellant invited our attention to the judgment of the learned Single Judge wherein the submissions made on behalf of the writ petitioners (contesting respondents) have been noted in paragraphs 9 to 11 and 15 and that of the appellant in paragraphs 12 and 16, as also the findings recorded by the learned Single Judge in paragraphs 19 to 24. It was urged that the jurisdiction exercised by the learned Single Judge was plainly ascribable to exercise of power of superintendence under Article 227 and not of exercise of power to issue a writ or in the nature of certiorari under Article 226 of the Constitution of India. It was contended that the Letters Patent Appeal filed by the 10 1966 Supp. SCR 393 11 2017(5) SCC 533 12 2015 (9) SCC 1 contesting respondents before the Division Bench, therefore, was not maintainable.

16. Per contra, the respondents would urge that the District Judge/Appellate Officer exercises power under Section 9 of the 1971 Act as persona designata and not as a Civil Court. Alluding to the decisions to which we will advert to a little later, the respondents contend that when a special statute creates an Appellate Officer and where it refers to the Presiding Judge and not to the Court to be such Appellate Officer, then it can be said that the reference has been made to the Judge as persona designata. It is also well known that where the authority is the creation of a statute and is indicated or identified by a official designation or as one of a class, the provisions of statute would have to be looked into to determine whether the intention was to single him out as persona designata, his official designation being merely a further description of him. The legislative scheme concerning the Act under consideration does not indicate, in any manner, much less by necessary implication, that he can exercise powers of the Court for adjudication of the appeal. However, the powers and jurisdiction to be exercised have been circumscribed by the special law for which reason also he would be a persona designata. Furthermore, the Act gives finality to the order passed by the appellate officer in terms of Section 10, which is indicative of the fact that the appellate officer acts as a persona designata and not as a Court. The provisions of the 1971 Act are a self-contained code delineating the powers, jurisdiction and procedure different from general laws such as Civil Procedure Code or Criminal Procedure Code. At the same time, the jurisdiction of the ordinary courts has been barred in respect of the matters to be dealt with under the statute. It is submitted that keeping in mind the historical background of the 1971 Act, it is not permissible to consider the appellate officer referred to in Section 9 of the Act as discharging powers and jurisdiction of a Court. The appellate officer referred to in Section 9 of the Act merely acts as a persona designata. To buttress this contention, reliance has been placed on the decisions of the High Courts dealing with this question, interpreting Section 9 of the 1971 Act and analogous provisions in the concerned State Public Premises Act, namely; Nusli Neville Wadia Vs. New India Assurance Co. Ltd.13; Prakash Securities Pvt. Ltd. Vs. Life Insurance Corp. of India & Anr.14; N.P. Berry Vs. Delhi Transport Corporation15; State 13 2010 (2) Mh. L.J. 978 14 2012 (4) Bom. C.R.1 15 15 (1979) DLT 108 of Mysore Vs. P. Shankaranarayana Rao16; Ganga Ram Dohrey Vs. State of U.P.17; and Sizerali Mohamedali Lodhia Vs. Gujarat State Road Transport Corp.18.

17. Reliance has been placed also on the other decisions of the High Courts dealing with the question as to when the appointment of an appellate authority albeit a judicial officer has been treated as persona designata under laws other than Public Premises Act, namely, M/s. Pitman‟s Shorthand Academy Vs. M/s. B. Lila Ram & Sons19; M. Abdul Wahid Sahib Vs. Dewanjee Abdul Khader Sahib20; C.S. Balarama Iyer & Anr. Vs. Krishnan Kunchandi21; Y. Mahabaleswarappa Vs. M. Gopalasami Mudaliar22; Keshav Ramchandra Vs. Municipal Borough, Jalgaon & Ors.23; Jagmohan Surajmal Marwadi Vs. Venkatesh Gopal Ranade.24; Municipality of Sholapur Vs. Tuljaram Krishnasa Chavan;25 Thavasikani Nadar Vs. The Election 16 (1975) 2 Kar. LJ 280 17 AIR 2002 Allahabad 238 18 2001 (2) Guj. L.R. 1120 19 AIR (37) 1950 East Punjab 181 20 AIR 1947 Madras 400 21 AIR 1968 Kerala 240 AIR 1935 Madras 673 23 AIR 1946 Bombay 64 24 AIR 1933 Bombay 105 25 AIR 1931 Bombay 582 Commissioner26; Bathula Krishna Brahman & Ors. Vs. Daram Chenchi Reddy & Ors.27

18. Our attention has also been invited to other decisions taking the view that the appellate authority cannot be treated as persona designata but as a Court while dealing with the provisions of Public Premises Act and other laws, namely, Jinda Ram Vs. UOI28; M. Papa Naik Vs. Commissioner City Municipal Council29; Surindra Mohan Vs. Dharam Chand Abrol30; Kiron Chandra Bose Vs. Kalidas Chatterji31; P. Venkata Somaraji & Ors. Vs. Principal Munsif & Ors.32 and S. Srinivas Rao Vs. High Court of A.P.33 Our attention is also invited to the decisions of this Court in the case of Central Talkies (supra); Ram Chander Aggarwal (supra); Collector, Varanasi Vs. Gauri Shanker Misra & Ors.34; Thakur Das (supra); Hanskumar Kishanchand Vs. Union of 26 (1974) II Madras LJR 44 27 AIR 1959 AP 129 28 (1999) 2 MP LJ 221 29 (1996) 3 Kant LJ 86 30 AIR 1971 J&K 76 31 AIR 1943 Calcutta 247 AIR 1968 AP 22 AIR 1989 AP 258 34 AIR 1968 SC 384 India35 and Naresh Shridhar Mirajkar Vs. State of Maharashtra36.

19. The respondents have also relied on the definition of the expression persona designata given in Osborn‟s Concise Law Dictionary, 2005 Edition and P. Ramanatha Aiyar‟s Advance Law Lexicon, 5th Edition. According to the respondents, therefore, the remedy against the decision of the appellate officer available to the respondents was only by way of writ petition under Articles 226 and 227 of the Constitution and the respondents, in fact, invoked the same by filing a writ petition which was initially decided by the learned Single Judge whose decision could be challenged by way of an intra-court letters patent appeal before the Division Bench of the same High Court.

20. We have heard Mr. Ranjit Kumar, learned Solicitor General appearing for the appellant and Ms. Sonal, learned counsel appearing for the respondents.

21. Indubitably, in the context of provisions of the 1971 Act, the question raised in the present appeal has not received the attention 35 AIR 1958 SC 947 AIR 1967 SC 1 of this Court thus far. The decisions of this Court pressed into service by both sides, which has had occasion to examine the purport of expression persona designate, are in reference to the provisions of other Central and State enactments. However, the exposition in those cases will have bearing on the matter in issue before us. In that, the principle underlying the exposition in those cases can be applied for answering the question under consideration in reference to the provisions of the 1971 Act and Section 9 in particular. We, therefore, deem it apposite to advert to the decisions of this Court before we proceed to analyse the legislative scheme of the 1971 Act.

22. In the case of Thakur Das (supra) rendered by a three-Judge Bench, this Court examined two contentions in reference to the purport of Section 6C of the Essential Commodities Act, 1955. The first question was whether the judicial authority constituted by the State Government under the said provision, to hear appeals against the order of confiscation that may be made by the licensing authority under Section 6A of the said Act, is not an inferior criminal court subordinate to the High Court and amenable to the revisional jurisdiction of the High Court under Section 435 read with Section 439 of the Code of Criminal Procedure? The said contention required this Court to consider whether the judicial authority appointed under Section 6C of the said Act would be persona designata, despite the fortuitous circumstance that it happens to be the Sessions Judge. In paragraphs 7 and 8 of the reported decision, this Court noted thus:

“7. If the Sessions Judge presiding over the Sessions Court is the judicial authority, the question is: would it be an inferior criminal court subordinate to the High Court for the purposes of Sections 435 and 439 of the Criminal Procedure Code? At the one end of the spectrum the submission is that the judicial authority appointed under Section 6-C would be persona designata and that if by a fortuitous circumstance the appointed judicial authority happens to be the Sessions Judge, while entertaining and hearing an appeal under Section 6-C it would not be an inferior criminal court subordinate to the High Court and, therefore, no revision application can be entertained against his order by the High Court. While conferring power on the State Government to appoint appellate forum, the Parliament clearly manifested its intention as to who should be such Appellate Authority. The expression “judicial” qualifying the “authority” clearly indicates that that authority alone can be appointed to entertain and hear appeals under Section 6-C on which was conferred the judicial power of the State. The expression “judicial power of the State” has to be understood in contradistinction to executive power. The framers of the Constitution clearly envisaged courts to be the repository of the judicial power of the State. The Appellate Authority under Section 6-C must be a judicial authority. By using the expression “judicial authority” it was clearly indicated that the Appellate Authority must be one such pre-

existing authority which was exercising judicial power of the State. If any other authority as persona designata was to be constituted there was no purpose in qualifying the word “authority” by the specific adjective “judicial”. A judicial authority exercising judicial power of the State is an authority having its own hierarchy of superior and inferior court, the law of procedure according to which it would dispose of matters coming before it depending upon the nature of jurisdiction exercised by it acting in judicial manner. In using the compact expression “judicial authority” the legislative intention is clearly manifested that from amongst several pre-existing authorities exercising judicial powers of the State and discharging judicial functions, one such may be appointed as would be competent to discharge the appellate functions as envisaged by Section 6-C. There is one in-built suggestion indicating who could be appointed. In the concept of appeal inheres hierarchy and the Appellate Authority broadly speaking would be higher than the authority against whose order the appeal can be entertained. Here the Appellate Authority would entertain appeal against the order of Collector, the highest revenue officer in a district. Sessions Judge is the highest judicial officer in the district and this situation would provide material for determining Appellate Authority. In this connection the legislative history may throw some light on what the legislature intended by using the expression ―judicial authority‖. The Defence of India Rules, 1962, conferred power on certain authorities to seize essential commodities under certain circumstances. Against the seizure an appeal was provided to the State Government whose order was made final. By the Amending Act 25 of 1966 Sections 6-A to 6-D were introduced in the Act. This introduced a basic change in one respect, namely, that an order of confiscation being penal in character, the person on whom penalty is imposed is given an opportunity of approaching a judicial authority. Earlier appeal from executive officer would lie to another executive forum. The change is appeal to judicial authority. Therefore, the expression clearly envisages a pre-existing judicial authority has to be appointed Appellate Authority under Section 6-C. When the provision contained in Section 6-C is examined in the background of another provision made in the order itself it would become further distinctly clear that pre-existing judicial authority was to be designated as Appellate Authority under Section 6-C. A seizure of essential commodity on the allegation that the relevant licensing order is violated, would incur three penalties: (1) cancellation of licence; (2) forfeiture of security deposit; and (3) confiscation of seized essential commodity, apart from any prosecution that may be launched under Section 7. In respect of the first two penalties an appeal lies to the State Government but in respect of the third though prior to the introduction of Section 6-C an appeal would lie to the State Government, a distinct departure is made in providing an appellate forum which must qualify for the description and satisfy the test of judicial authority. Therefore, when the Sessions Judge was appointed a judicial authority it could not be said that he was persona designata and was not functioning as a court.‖ ―8. Sections 7 and 9 of the Code of Criminal Procedure, 1898, envisage division of the State into various Sessions Divisions and setting up of Sessions Court for each such division, and further provides for appointment of a Judge to preside over that Court. The Sessions Judge gets his designation as Sessions Judge as he presides over the Sessions Court and thereby enjoys the powers and discharges the functions conferred by the Code. Therefore, even if the judicial authority appointed under Section 6C is the Sessions Judge it would only mean the Judge presiding over the Sessions Court and discharging the functions of that Court. If by the Sessions Judge is meant the Judge presiding over the Sessions Court and that is the appointed appellate authority, the conclusion is inescapable that he was not persona designata which expression is understood to mean a person pointed out or described as an individual as opposed to a person ascertained as a member of a class or as filling a particular character (vide Central Talkies Ltd. v. Dwarka Prasad and Ram Chandra v. State of U.P.).‖ (emphasis supplied) The Court also considered the cleavage of opinion amongst the High Courts on the construction of the expression “judicial authority” used in Section 6C of the Essential Commodities Act. In paragraphs 9 to 11, this Court answered the same in the following words:

“9. Our attention was drawn to a cleavage of opinion amongst High Courts on the construction of the expression ―judicial authority‖ used in Section 6-C. In State of Mysore v. Pandurang P. Naik, the Mysore High Court was of the opinion that though a District and Sessions Judge was appointed as a judicial authority by the State Government in exercise of the powers conferred by Section 6-C of the Act in that capacity it would not be an inferior criminal court within the meaning of Section

435. Same view was taken by the Gujarat High Court in State of Gujarat v. C.M. Shah. The exact specification of the Appellate Authority constituted by the notification could not be gathered from the judgment but it appears that the appeal was heard by the Additional Sessions Judge which would indicate that even if a District and Sessions Judge was appointed as ―judicial authority‖ that expression would comprehend the Additional Sessions Judge also or the Sessions Judge could transfer such appeal pending before him to Additional Sessions Judge which was a pointer that he was not a persona designata. After referring to certain sections of the Code of Criminal Procedure it has been held that the Additional Sessions Judge hearing an appeal under Section 6-C is not an inferior criminal court within the meaning of Section 435(1). Our attention was also drawn to State of Madhya Pradesh v. Vasant Kumar. Only a short note on this judgment appears in 1972 Jabalpur Law Journal 80 but it clearly transpires that the point under discussion has not been dealt with by the Court.

10. As against this, this very question was examined by a Full Bench of the Andhra Pradesh High Court in Public Prosecutor (A.P.) v. L. Ramayya. Two questions were referred to the Full Bench. The first was: whether the District and Sessions Judge who is appointed judicial authority for hearing appeals under Section 6C is a persona designata or an inferior Criminal Court, and the second was: whether even if it is an inferior Criminal Court, a revision application against the order of the appellate authority would lie to the High Court? The Full Bench answered the first question in the affirmative. While summing up its conclusions, the Court held that when a judicial authority like an officer who presides over a court is appointed to perform the functions, to judge and decide in accordance with law and as nothing has been mentioned about the finality or otherwise of the decisions made by that authority, it is an indication that the authority is to act as a court in which case it is not necessary to mention whether they are final or not as all the incidents of exercising jurisdiction as a court would necessarily follow. We are in broad agreement with this conclusion.

11. We are accordingly of the opinion that even though the State Government is authorised to appoint an Appellate Authority under Section 6C, the Legislature clearly indicated that such appellate authority must of necessity be a judicial authority. Since under the Constitution the courts being the repository of the judicial power and the officer presiding over the court derives his designation from the nomenclature of the Court, even if the appointment is made by the designation of the judicial officer the Appellate Authority indicated is the Court over which he presides discharging functions under the relevant Code and placed in the hierarchy of courts for the purposes of appeal and revision. Viewed from this angle, the Sessions Judge, though appointed and appellate authority by the notification, what the State Government did was to constitute an appellate authority in the Sessions Court over which the Sessions Judge presides. The Sessions Court is constituted under the Code of Criminal Procedure and indisputably it is an inferior criminal court in relation to High Court. Therefore, against the order made in exercise of powers conferred by Section 6-C a revision application would lie to the High Court and the High Court would be entitled to entertain a revision application under Sections 435 and 439 of the Code of Criminal Procedure, 1898 which was in force at the relevant time and such revision application would be competent.‖ (emphasis supplied)

23. In paragraph 8 of the same judgment, this Court unambiguously concluded that as the nomenclature „Sessions Judge‟ means the Judge presiding over the Sessions Court and that being the appointed appellate authority, the conclusion is inescapable that he was not persona designata, which expression is understood to mean a person pointed out or described as an individual, as opposed to a person ascertained as a member of a class or as filling a particular character. These observations are founded on the decision in the cases of Central Talkies Ltd. (supra) and Ram Chander Aggarwal (supra).

24. Another instructive exposition is in Mukri Gopalan (supra) (two Judges). In this case, the Court was called upon to consider the sweep of Section 18 of the Kerala Buildings (Lease and Rent Control) Act, 1965. The same envisages that the power of the appellate authority can be conferred by the Government on such officers and such authorities not below the rank of Subordinate Judge. In paragraph 7, this Court restated the well settled position that an authority can be styled to be persona designata if powers are conferred on a named person or authority and such powers cannot be exercised by anyone else. The relevant extract of paragraph 7 of the reported decision reads thus: “7. As noted earlier the appellate authority, namely the District Judge, Thallassery has taken the view that since he is a persona designata he cannot resort to Section 5 of the Limitation Act for condoning the delay in filing appeal before him. So far as this reasoning of the appellate authority is concerned Mr Nariman, learned counsel for respondent fairly stated that he does not support this reasoning and it is not his say that the appellate authority exercising powers under Section 18 of the Rent Act is a persona designata. In our view the said fair stand taken by learned counsel for respondent is fully justified. It is now well settled that an authority can be styled to be persona designata if powers are conferred on a named person or authority and such powers cannot be exercised by anyone else. The scheme of the Act to which we have referred earlier contraindicates such appellate authority to be a persona designata. It is clear that the appellate authority constituted under Section 18(1) has to decide lis between parties in a judicial manner and subject to the revision of its order, the decision would remain final between the parties. Such an authority is constituted by designation as the District Judge of the district having jurisdiction over the area over which the said Act has been extended. It becomes obvious that even though the District Judge concerned might retire or get transferred or may otherwise cease to hold the office of the District Judge his successor-in-office can pick up the thread of the proceedings from the stage where it was left by his predecessor and can function as an appellate authority under Section

18. If the District Judge was constituted as an appellate authority being a persona designata or as a named person being the appellate authority as assumed in the present case, such a consequence, on the scheme of the Act would not follow. In this connection, it is useful to refer to a decision of this Court in the case of Central Talkies Ltd. v. Dwarka Prasad. In that case Hidayatullah, J. speaking for the Court had to consider whether Additional District Magistrate empowered under Section 10(2) of Criminal Procedure Code to exercise powers of District Magistrate was a persona designata. Repelling the contention that he was a persona designata the learned Judge made the following pertinent observations:

‗… A persona designata is „a person who is pointed out or described as an individual, as opposed to a person ascertained as a member of a class, or as filling a particular character‟. In the words of Schwabe, C.J. in Parthasaradhi Naidu v. Koteswara Rao, personae designatae are „persons selected to act in their private capacity and not in their capacity as Judges‟. The same consideration applies also to a well-known officer like the District Magistrate named by virtue of his office, and whose powers the Additional District Magistrate can also exercise and who can create other officers equal to himself for the purposes of the Eviction Act. The decision of Sapru, J. in the Allahabad case, with respect, was erroneous.‘ Applying the said test to the facts of the present case it becomes obvious that appellate authorities as constituted under Section 18 of the Rent Act being the District Judges they constituted a class and cannot be considered to be persona designata. It is true that in this connection, the majority decision of the High Court in Jokkim Fernandez v. Amina Kunhi Umma also took a contrary view. But the said view also does not stand scrutiny in the light of the statutory scheme regarding constitution of appellate authority under the Act and the powers conferred on and the decisions rendered by it.‖ (emphasis supplied) It may be useful to advert to the exposition in paragraphs 8 and 13 of this decision, which reads thus:

―8. Once it is held that the appellate authority functioning under Section 18 of the Rent Act is not a persona designata, it becomes obvious that it functions as a court. In the present case all the District Judges having jurisdiction over the areas within which the provisions of the Rent Act have been extended are constituted as appellate authorities under Section 18 by the Govt. notification noted earlier. These District Judges have been conferred the powers of the appellate authorities. It becomes therefore, obvious that while adjudicating upon the dispute between the landlord and tenant and while deciding the question whether the Rent Control Court’s order is justified or not such appellate authorities would be functioning as courts. The test for determining whether the authority is functioning as a court or not has been laid down by a series of decisions of this court. We may refer to one of them, in the case of Thakur Jugal Kishore Sinha v. Sitamarhi Central Coop. Bank Ltd. In that case this court was concerned with the question whether the Assistant Registrar of Cooperative Societies functioning under Section 48 of the Bihar and Orissa Cooperative Societies Act, 1935 was a court subordinate to the High Court for the purpose of Contempt of Courts Act, 1952.

While answering the question in the affirmative, a division bench of this court speaking through Mitter, J placed reliance amongst others on the observations found in the case of Brajnandan Sinha v. Jyoti Narain wherein it was observed as under:-

‗It is clear, therefore, that in order to constitute a court in the strict sense of the term, an essential condition is that the court should have, apart from having some of the trappings of a judicial tribunal, power to give a decision or a definitive judgment which has finality and authoritativeness which are the essential tests of a judicial pronouncement.‘ Reliance was also placed on another decision of this court in the case of Virindar Kumar Satyawadi v. The State of Punjab. Following observations found at page 1018 therein were pressed in service.

‗It may be stated broadly that what distinguishes a court from a quasi-judicial tribunal is that it is charged with a duty to decide disputes in a judicial manner and declares the rights of parties in a definitive judgment. To decide in a judicial manner involves that the parties are entitled as a matter of right to be heard in support of their claim and to adduce evidence in proof of it. And it also imports an obligation on the part of the authority to decide the matter on a consideration of the evidence adduced and in accordance with law. When a question therefore arises as to whether an authority created by an Act is a court as distinguished from a quasi-judicial tribunal, what has to be decided is whether having regard to the provisions of the Act it possesses all the attributes of a court.‘ When the aforesaid well settled tests for deciding whether an authority is a court or not are applied to the powers and functions of the appellate authority constituted under Section 18 of the Rent Act, it becomes obvious that all the aforesaid essential trappings to constitute such an authority as a court are found to be present. In fact, Mr. Nariman learned Counsel for respondent also fairly stated that these appellate authorities would be courts and would not be persona designata. But in his submission as they are not civil courts constituted and functioning under the Civil Procedure Code as such, they are outside the sweep of Section 29(2) of the Limitation Act. It is therefore, necessary for us to turn to the aforesaid provision of the Limitation Act. It reads as under :

‗29(2). Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law.‘ A mere look at the aforesaid provision shows for its applicability to the facts of a given case and for importing the machinery of the provisions containing Sections 4 to 24 of the Limitation Act the following two requirements have to be satisfied by the authority invoking the said provision.

(i) There must be a provision for period of limitation under any special or local law in connection with any suit, appeal or application.

(ii) The said prescription of period of limitation under such special or local law should be different from the period prescribed by the schedule to the Limitation Act.‖ (emphasis supplied) ―13. As per this sub-section, the provisions contained in certain sections of the Limitation Act were applied automatically to determine the periods under the special laws, and the provisions contained in other sections were stated to apply only if they were not expressly excluded by the special law. The provision (Section 5) relating to the power of the court to condone delay in preferring appeals and making applications came under the latter category. So if the power to condone delay contained in Section 5 had to be exercised by the appellate body it had to be conferred by the special law. That is why we find in a number of special laws a provision to the effect that the provision contained in Section 5 of the Limitation Act shall apply to the proceeding under the special law. The jurisdiction to entertain proceedings under the special laws is sometimes given to the ordinary courts, and sometimes given to separate tribunals constituted under the special law. When the special law provides that the provision contained in Section 5 shall apply to the proceedings under it, it is really a conferment of the power of the court under Section 5 to the Tribunals under the special law – whether these tribunals are courts or not. If these tribunals under the special law should be courts in the ordinary sense an express extension of the provision contained in Section 5 of the Limitation Act will become otiose in cases where the special law has created separate tribunals to adjudicate the rights of parties arising under the special law. That is not the intension of the legislature.‖ (emphasis supplied)

25. Again in the case of Asnew Drums Pvt. Ltd. (supra), decided by a three-Judge Bench, this Court considered the question whether an appeal under Section 32(9) of the State Financial Corporation Act, 1951, was maintainable before the High Court. Section 31(1) of the said Act required the Board to apply to the District Judge within the limits of an industrial concern which was carrying out the whole or a substantial part of its business or for one or more of the reliefs specified. Such application could be made inter alia for an order for the sale of the property pledged, mortgaged or as security for the loan or advance or for an ad- interim for transfer or removing its machinery or plant or equipment from the premises of the industrial concern with the permission of the Board, where such removal is apprehended. The question considered by this Court was whether by using the words “in the manner provided in the CPC” in Section 32(8) of the concerned Act, the legislature intended to include the provisions in the Code dealing with appeals. The Court after analyzing the provisions of the Act answered the same in the following words:

―10. The question which really arises is whether by using the words “in the manner provided in the CPC” in Section 32(8) the Legislature intended to include the provisions in the Code dealing with appeals. There is no doubt that under the CPC an order setting aside or refusing to set aside a sale in execution of a decree is appealable under Order XLIII Rule 1 (j). It is difficult to understand why the scope of the language should be cut down by not including appeals provided under the CPC within the ambit of the words “in the manner provided in the CPC”. “Manner” means method of procedure and to provide for an appeal is to provide for a mode of procedure. The State Financial Corporation lends huge amounts and we cannot for a moment imagine that it was the intention of the Legislature to make the order of sale of property, passed by the District Judge, final and only subject to an appeal to the Supreme Court under Article 136, of the Constitution.

11. The learned Counsel for the respondents contended that, wherever the Legislature wanted to provide for an appeal to the High Court, it did so specifically. In this connection he pointed out that Sub-section (9) of Section 32 provided that “any party aggrieved by an order under Sub-section (5) or Sub-section (7) may, within thirty days from the date of the order, appeal to the High Court and upon such appeal the High Court may, after hearing the parties, pass such orders thereon as it thinks proper.” It is true that an appeal has been expressly provided in this case but the reason for this is that if there had been no specific provision in Sub-section (9), no appeal would lie otherwise because it is not provided in Sub-section (5) or Sub-section (7) that the District Judge should proceed in the manner provided in the CPC.

12. We are not impressed by the argument that the Act confers jurisdiction on the District Judge as persona designata because Sub-section (11) of Section 32 provides that “the functions of a district judge under this section shall be exercisable (a) in a presidency town, where there is a city civil court having jurisdiction, by a judge of that court and in the absence of such court, by the High Court; and

(b) elsewhere, also by an additional district Judge.” These provisions clearly show that the District Judge is not a persona designata.

13. It was contended that the whole idea of the Act was to have expeditious execution as otherwise large funds of the State Financial Corporation would be locked up during execution proceedings. If this was the intention of the Legislature, it would have expressly provided that no appeal would lie against an order made under Sub- section (8) of Section 32.‖ (emphasis supplied) The Court opined that the legislative intent was amply clear that the District Judge was not a persona designata.

26. Once again, in the case of Maharashtra State Financial Corporation (supra), decided by a three-Judge Bench of this Court, while considering the provisions of State Financial Corporation, 1951, following the decision of this Court in Central Talkies Ltd. (supra), restated that the District Judge exercising jurisdiction under Sections 31 & 32 of the Act was not a persona designata but was a court of ordinary civil jurisdiction. This can be discerned from the dictum in paragraph 26 of the judgment which reads thus:

―26. We may now state our reasons for holding that even if Section 46B of the Act was not there the provisions of the Code for the execution of a decree against a surety who had given only personal guarantee would, in the absence of any provision to the contrary in the Act, be applicable. In view of the decision of this Court in The Central Talkies Ltd., Kanpur v. Dwarka Prasad, where it was held that a persona designata is a person selected as an individual in his private capacity, and not in his capacity as filling a particular character or office, since the term used in Section 31(1) of the Act is “District Judge” it cannot be doubted that the District Judge is not a persona designata but a court of ordinary civil jurisdiction while exercising jurisdiction under Sections 31 and 32 of the Act. In National Sewing Thread Co. Ltd. v. James Chadwick & Bros. Ltd. while repelling the objection that an appeal under the Letters Patent against the judgment of a Single Judge passed in an appeal against the decision of the Registrar under Section 76(1) of the Trade Marks Act, 1940 was not maintainable it was held at pages 1033-34 of the Report:

(SCR pp.1033-34) „Obviously after the appeal had reached the High Court it has to be determined according to the rules of practice and procedure of that Court and in accordance with the provisions of the charter under which that Court is constituted and which confers on it power in respect to the method and manner of exercising that jurisdiction. The rule is well settled that when a statute directs that an appeal shall lie to a Court already established, then that appeal must be regulated by the practice and procedure of that Court. This rule was very succinctly stated by Viscount Haldane L.C. in National Telephone Co., Ltd. v. Postmaster-General, in these terms:-

„When a question is stated to be referred to an established Court without more, it, in my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches.‟ The same view was expressed by their Lordships of the Privy Council in Adaikappa Chettiar v. R.

Chandrasekhara Thevar, wherein it was said: ‗Where a legal right is in dispute and the ordinary Courts of the country are seized of such dispute the Courts are governed by the ordinary rules of procedure applicable thereto and an appeal lies if authorised by such rules, notwithstanding that the legal right claimed arises under a special statute which does not, in terms confer a right of appeal.‘ Again in Secretary of State for India v. Chellikani Rama Rao, when dealing with the case under the Madras Forest Act their Lordships observed as follows:

‗It was contended on behalf of the appellant that all further proceedings in Courts in India or by way of appeal were incompetent, these being excluded by the terms of the statute just quoted. In their Lordships’ opinion this objection is not well-founded. Their view is that when proceedings of this character reach the District Court, that Court is appealed to as one of the ordinary Courts of the country, with regard to whose procedure, orders, and decrees the ordinary rules of the Civil Procedure Code apply.‟ Though the facts of the cases laying down the above rule were not exactly similar to the facts of the present case, the principle enunciated therein is one of general application and has an apposite application to the facts and circumstances of the present case. Section 76 of the Trade Marks Act confers a right of appeal to the High Court and says nothing more about it. That being so, the High Court being seized as such of the appellate jurisdiction conferred by Section 76 it has to exercise that jurisdiction in the same manner as it exercises its other appellate jurisdiction and when such jurisdiction is exercised by a single Judge, his judgment becomes subject to appeal under Clause 15 of the Letters Patent there being nothing to the contrary in the Trade Marks Act.”

(emphasis supplied)

27. The question regarding the purport of expression persona designata also arose for consideration in other cases decided by this Court to which our attention has been invited. In the case of Ramchandra Aggarwal (supra), this Court was called upon to consider whether the District Judge has jurisdiction under Section 24 of the Code of Civil Procedure to transfer a reference made by a Magistrate to a particular Civil Court under Section 146 of the Code of Criminal Procedure to another Civil Court, in relation to proceedings under Section 145 of the Code of Criminal Procedure initiated before the Magistrate on the basis of a report of the police.

The Court relied on its earlier decision in the case of Balakrishna Udayar Vs. Vasudeva Aiyar,37 and observed in paragraph 3 of the reported decision as follows:

―3. In Balakrishan Udayar v. Vasudeva Aiyar 44 I.A. 261, Lord Atkinson has pointed out the difference between a persona designata and a legal tribunal. The difference is this that the ‗determination of a persona designata are not to be treated as judgments of a legal tribunal‘. In the Central Talkies Ltd. v. Dwarka Prasad, this Court has accepted the meaning given to the expression persona designata in Osborn’s Concise Law Dictionary, 4h edn. p. 263 as ‗a person who is pointed out or described as an individual, as opposed to a person ascertained as a member of a class, or as filling a particular character.‘ Section 146(1) Cr.P.C. empowers a Magistrate to refer the question as to whether any, and if so, which of the parties was in possession of the subject- matter of dispute at the relevant point of time to a civil court of competent jurisdiction. The power is not to refer the matter to the presiding Judge of a particular civil court but to a court. When a special or local law provides for an adjudication to be made by a constituted court – that is, by a court not created by a special or local law but to an existing court – it in fact enlarges the ordinary jurisdiction of such a court. Thus where a special or local statute refers to a constituted court as a court and does not refer to the presiding officer of that court the reference cannot be said to be a persona designata. This question is well settled. It is, therefore, unnecessary to say anything more on this part of the case except that cases dealing with the point have been well summarised in the recent decision in Chatur Mohan v. Ram Behari Dixit.‖ (emphasis supplied) 44 IA 261

28. Before we dilate on the matter in issue any further, it is apposite to take note of the relevant provisions of the 1971 Act, as were in force prior to 22nd June, 2015, applicable to the present case. The same read thus:

―2. Definitions.- In this Act, unless the context otherwise requires,-

1[***]

(b) ‗estate officer‘ means an officer appointed as such by the Central Government under section 3;

xxx xxx xxx xxx xxx (fa) ‗statutory authority‘, in relation to the public premises referred to in clause (e) of this section, means,-

(i) in respect of the public premises placed under the control of the Secretariat of either House of Parliament, the Secretariat of the concerned House of Parliament,

(ii) in respect of the public premises referred to in item (i) of sub-clause (2) and in item (iv) of sub-clause (3) of that clause, the company or the subsidiary company, as the case may be, referred to therein,

(iii) in respect of the public premises referred to in item

(ii) of sub-clause (2) of that clause, the corporation referred to therein,

(iv) in respect of the public premises referred to, respectively, in items (iii), (iv), (vi) and (vii) of sub- clause (2) of that clause, the University, Institute or Board, as the case may be referred to therein, and

(v) in respect of the public premises referred to in sub-

clause (3) of that clause, the Council, Corporation or Corporations, Committee or Authority, as the case may be, ref erred to in that sub-clause;‖ ―3. Appointment of estate officers.- The Central Government may, by notification in the Official Gazette,-

(a) Appoint such persons, being gazetted officers of Government or of the Government of any Union Territory or officers of equivalent rank of the statutory authority, as it thinks fit, to be estate officers for the purposes of this Act:

Provided that no officer or the Secretariat of the Rajya Sabha shall be so appointed except after consultation with the Chairman of the Rajya Sabha and no officer of the Secretariat of the Lok Sabha shall be so appointed except after consultation with Speaker of the Lok Sabha:

Provided further that an officer of a statutory authority shall only be appointed as an estate officer in respect of the public premises controlled by that authority; and

(b) define the local limits within which, or the categories of public premises in respect of which, the estate officers shall exercise the powers conferred, and perform the duties imposed, on estate officers by or under this Act.‖ ―8. Power of estate officers.- An estate officer shall, for the purpose of holding any inquiry under this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely:-

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) any other matter which may be prescribed.‖ ―9. Appeals.—(1) An appeal shall lie from every order of the estate officer made in respect of any public premises under section 5 or section 5B or section 5C or section 7 to an appellate officer who shall be the district judge of the district in which the public premises are situate or such other judicial officer in that district of not less than ten years standing as the district judge may designate in this behalf.

(2) An appeal under sub-section (1) shall be preferred,—

(a) in the case of an appeal from an order under section

5. [within twelve days] from the date of publication of the order under sub-section (1) of that section;

(b) in the case of an appeal from an order [under section 5B or section 7, within twelve days] from the date on which the order is communicated to the appellant; [and]

(c) in the case of an appeal from an order under section 5C, within twelve days from the date of such order: Provided that the appellate officer may entertain the appeal after the expiry of the said period, if he is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. (3) Where an appeal is preferred from an order of the estate officer, the appellate officer may stay the enforcement of that order for such period and on such conditions as he deems fit:

Provided that where the construction or erection of any building or other structure or fixture or execution of any other work was not completed on the day on which an order was made under section 5B for the demolition or removal of such building or other structure or fixture, the appellate officer shall not make any order for the stay of enforcement of such order, unless such security, as may be sufficient in the opinion of the appellate officer, has been given by the appellant for not proceeding with such construction, erection or work pending the disposal of the appeal;

(4) Every appeal under this section shall be disposed of by the appellate officer as expeditiously as possible.

(5) The costs of any appeal under this section shall be in the discretion of the appellate officer.

(6) For the purposes of this section, a presidency- town shall be deemed to be a district and the chief judge or the principal judge of the city civil court therein shall be deemed to be the district judge of the district.‖ (emphasis supplied) ―10. Finality of orders.- Save as otherwise expressly provided in this Act, every order made by an estate officer or appellate officer under this Act shall be final and shall not be called in question in any original suit, application or execution proceeding and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.‖ ―15. Bar of jurisdiction.- No court shall have jurisdiction to entertain any suit or proceeding in respect of-

(a) the eviction of any person who is in unauthorised occupation of any public premises, or

(b) the removal of any building, structure or fixture or goods, cattle or other animal from any public premises under section 5A, or

(c) the demolition of any building or other structure made, or ordered to be made, under section 5B, or (cc) the sealing of any erection or work or of any public premises under section 5C, or

(d) the arrears of rent payable under sub-section (1) of section 7 or damages payable under sub-section (2), or interest payable under sub-section (2A), of that section, or

(e) the recovery of –

(i) costs of removal of any building, structure or fixture or goods, cattle or other animal under section 5A, or

(ii) expenses of demolition under section 5B, or

(iii) costs awarded to the Central Government or statutory authority under sub-section (5) of section 9, or

(iv) any portion of such rent, damages, costs of removal, expenses of demolition or costs awarded to the Central Government or the statutory authority.‖ We may now advert to the provisions in the Public Premises (Eviction of Unauthorised Occupants) Rules, 1971.

―9. Procedure in appeals.- (1) An appeal preferred under section 9 of the Act shall be in writing, shall set forth concisely the grounds of objection to the order appealed against, and shall be accompanied by a copy of such order.

(2) On receipt of the appeal and after calling for and perusing the record of the proceedings before the estate officer, the appellate officer shall appoint a time and place for the hearing of the appeal and shall give notice thereof to the estate officer against whose order the appeal is preferred, to the appellant and to the head of the department or authority in administrative control of the premises.‖

29. The avowed purpose for enacting the 1971 Act was to provide for a speedy remedy for taking possession of the public premises which were in unauthorized occupation. For achieving the said goal, an Estate Officer is appointed under Section 3 of the Act who has been given powers to issue notice of show cause and initiate proceedings for eviction and recovery of outstanding rental dues and damages in respect of public premises. Section 8 empowers the Estate Officer to exercise the same powers as are vested in a civil court under the Code of Civil Procedure, 1908. We are not called upon to consider the question as to whether the Estate Officer, while exercising powers invested in him, acts as a court or has the trappings of a court. The only question that we have attempted to answer is whether the appointment of the appellate officer referred to in Section 9 of the Act before whom an appeal shall lie, is in the capacity of persona designata or as a court.

30. Sub-section (1) of Section 9 is the core provision to be kept in mind for answering the point in issue. It postulates that an appeal shall lie from every order of the estate Officer, passed under the Act, to an Appellate Officer. As to who shall be the Appellate Officer, has also been specified in the same provision. It predicates the District Judge of the district in which the public premises are situated or such other judicial officer in that district of not less than 10 years standing as the District Judge to be designated for that purpose. The first part of the provision does suggest that the appeal shall lie to an Appellate Officer, however, it does not follow therefrom that the Appellate Officer is persona designata. Something more is required to hold so. Had it been a case of designating a person by name as an Appellate Officer, the concomitant would be entirely different. However, when the Appellate Officer is either the District Judge of the district or any another judicial officer in that district possessing necessary qualification who could be designated by the District Judge, the question of such investiture of power of an appellate authority in the District Judge or Designated Judge would by no standards acquire the colour or for that matter trappings of persona designata. In the first place, the power to be exercised by the Appellate Officer in terms of Section 9 is a judicial power of the State which is quite distinct from the executive power of the State. Secondly, the District Judge or designated judicial officer exercises judicial authority within his jurisdiction. Thirdly, as the Act predicates the Appellate Officer is to be a District Judge or judicial officer, it is indicative of the fact of a pre existing authority exercising judicial power of the State. Fourthly, District Judge is the creature of Section 5 of the Maharashtra Civil Courts Act, 1869, who presides over a District Court invariably consisting of more than one Judge in the concerned district. The District Court exercises original and appellate jurisdiction by virtue of Sections 7 and 8 respectively, of the 1869 Act and is the principal Court of original civil jurisdiction in the district within the meaning of C.P.C., as per Section 7 of that Act. As per Section 8 of the Act of 1869, the District Court is the Court of appeal from all decrees and orders passed by the subordinate Courts from which an appeal lies under any law for the time being in force. As per Section 16 of that Act, the District Judge can refer to any Additional District Judges subordinate to him, any original suits and proceedings of a civil nature, applications or references under Special Acts and miscellaneous applications. The Additional District Judges have jurisdiction to try such suits and to dispose of such applications or references. Section 17 of that Act envisages that an Additional District Judge shall have jurisdiction to try the appeals as may be referred to him by the District Judge. Section 19 of that Act, is a provision to invest power on the Additional District Judges, with powers of District Judge. The hierarchy of judicial officers of the District Court can be culled out from the 1869 Act. On the similar lines, the Bombay City Civil Court has been constituted under Section 3 of the Bombay City Civil Court Act, 1948, with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature arising within the Greater Bombay except a suit or proceedings which are cognizable by the High Court referred to therein and by Small Causes Court. Section 7 of this Act envisages that when the City Civil Court consists of more than one Judge, each of the Judges may exercise all or any of the powers conferred on the Court by the said Act or any other law for the time being in force. Clause (b) of Section 7 stipulates that the State Government may appoint any one of the Judges to be the Principal Judge and any two other Judges to be called the Additional Principal Judges. The Principal Judge has been given authority to make such arrangements as he may think fit for the distribution of the business of the Court among the various Judges thereof. In other words, the District Judge or Principal Judge exercises judicial power of the State and is an authority having its own hierarchy of superior and inferior Courts, the law of procedure according to which it would dispose of matters coming before it depending on its nature and jurisdiction exercised by it, acting in judicial manner. The District Judge or Principal Judge of the City Civil Court is the officer presiding over the Court and derives his description from the nomenclature of the Court. Even if the District Judge/Principal Judge of the City Civil Court might retire or get transferred, his successor-in-office can pick up the thread of the proceedings under Section 9 of the 1971 Act from the stage where it was left by his predecessor and can function as an appellate authority. The District Judge/Principal Judge of the City Civil Court and other judicial officers of these Courts possessing necessary qualifications constitute a class and cannot be considered as persona designata. The Appellate Officer, therefore, has to function as a Court and his decision is final in terms of Section 10 of 1971 Act. The legislative intent behind providing an appeal under Section 9 before the Appellate Officer to be the District Judge of the concerned District Court in which the public premises are situated or such other judicial officer in that district possessing necessary qualification to be designated by the District Judge for that purpose, is indicative of the fact that the power to be exercised by the Appellate Officer is not in his capacity as persona designata but as a judicial officer of the pre existing Court. The historical background of the 1971 Act would make no difference to the aforementioned analysis.

31. Indeed, the expression used in Section 9 is “Appellate Officer” and not “Appellate Authority” as has been used in Section 6C of the Essential Commodities Act, 1955, considered by the Supreme Court in the case of Thakur Das (supra). That, however, would neither make any difference nor undermine the status of the District Judge or the designated judicial officer so as to reckon their appointment as persona designata. The thrust of Section 9(1) is to provide for remedy of an appeal against the order of the Estate Officer before the District Judge who, undeniably, is a pre existing authority and head of the judiciary within the district, discharging judicial power of the State including power to condone the delay in filing of the appeal and to grant interim relief during the pendency of the appeal. Though described as an Appellate Officer, the District Judge, for deciding an appeal under Section 9, can and is expected to exercise the powers of the civil court.

32. In the case of Nusli Neville Wadia (supra) the Division Bench was essentially called upon to answer the contention raised before it that, considering Chapter XVII Rule 18 of the Bombay Appellate Side Rules, 1960, the petition in terms of Rule 18 must be heard by a learned Single Judge of that Court or by the Division Bench and whether the Division Bench has no jurisdiction to hear and decide the appeal against the decision of the City Civil Court/District Court in proceedings arising from the 1971 Act. The analysis by the Division Bench therefore, was with reference to the said plea. Indeed, the Division Bench also adverted to the aspect as to whether the Principal Judge, City Civil Court was acting as a Court or persona designata. It merely followed the decisions in the case of N.P. Berry (supra) and Shri Mahesh N. Kothari and Others Vs. Life Insurance Corporation of India and another in Writ Petition No.6846 of 2005, decided on 05.10.2006, wherein it has been held that the legislature did not confer power on the District Judge or a Principal Judge of the City Civil Court to hear the appeals as such but has chosen to designate the authority as an Appellate Officer making it clear, that the power was conferred in his capacity as persona designata. The Division Bench has also adverted to the decisions in Gangadhar Bapurao Gadre Vs. Hubli Municipality38 dealing with Section 22 of the Bombay District Municipality Act; Municipality of Sholapur Vs. Tuljaram Krishnasa Chavan39 dealing with provisions of Bombay City Municipalities Act; Keshav Ramchandra (supra), dealing with Section 15 of the provisions of Bombay Municipal Act and Jagmohan Surajmal Marwadi (supra), and held that the District Judge exercised his power as a persona designata.

33. We will therefore traverse through the decisions adverted to in Nusli Neville Wadia‟s case (supra). Before we examine those decisions, it is apposite to take note of the Full Bench judgment of the Bombay High Court in the case of Prakash Securities Pvt. Ltd. (supra). The question referred to the Full Bench, reads thus:

―Whether a writ petition arising out of order passed under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 should be placed before a learned Single Judge of this Court in Accordance with Rule 18 (3) of the Chapter XVII of the Bombay High Court Appellate Side Rules, 1960 or should be placed before a Division Bench?‖ 38 1925 B.L.R. 519 39 AIR 1931 Bombay 582 The Full Bench analysed the scheme of the Bombay High Court Appellate Side Rules, 1960 and opined that the order passed by the quasi judicial authority under the Act of 1971 is also covered by Rule 18 (3) and writ petition under Article 226 or 227 of the Constitution of India against such a decision must be heard and decided by the learned Single Judge of the High Court. In paragraph 8, finally, the Full Bench observed thus:

―8. Since the Public Premises Act, 1971 is not an enactment made by Parliament in exercise of powers under Article 323-B, the question of applying the above direction of the Supreme Court in L. Chandra Kumar case cannot arise. We are, therefore, unable to agree with the view taken by the Division Bench in Nusli Neville Wadia case (supra). It is clear that under the provisions of Rule 18(3) of Bombay High Court Appellate Side Rules, 1960, a petition under Articles 226 and/or 227 of the Constitution challenging the order of the Appellate Authority under the Public Premises Act, 1971 will be required to be heard and decided by a learned Single Judge of this Court. The decision in Nusli Neville Wadia case is, therefore, overruled in so far as the Division Bench in Nusli Neville Wadia case has taken a view that when the order is passed by a Tribunal under a legislation relating to any subject referable to Article 323- B(2) of the Constitution, the petitions challenging such orders will have to be necessarily heard by the Division Bench. It is clarified that the directions given by the Supreme Court in L. Chandra Kumar case will apply only when the Tribunal is established under a law which is specifically made by the appropriate legislature in exercise of powers conferred by Articles 323-A or 323-B. Merely because a legislation, existing in future, deals with a subject referable to any sub-clause in Clause (2) of Article 323-B of the Constitution, such legislation does not by itself become a legislation under Article 323-B of the Constitution.‖

34. Indubitably, the Full Bench was “not” called upon to examine the issue as to whether the remedy of an appeal under Section 9 of the Act, 1971 before the Appellate Officer, is before an authority exercising powers in his capacity as a persona designata or as a Civil Court.

35. We may now turn to the decision of the Delhi High Court in N.P. Berry (supra), on which reliance has been placed by the Bombay High Court in Nusli Neville Wadia‟s case (supra). The main point considered by the Delhi High Court was about the distinction between a “Judge” acting as a persona designata and that as a “Court”, in the context of an order passed by an additional district judge of Delhi acting as an Appellate Officer under Section 9 of 1971 Act.

36. We may reiterate that, in the present case, we are not concerned with the question as to whether the Estate Officer functions as a Court whilst exercising powers under the 1971 Act, an issue which was also considered by the Delhi High Court. It also dealt with the question as to whether the Appellate Officer defined in Section 9 of the 1971 Act, acts as a persona designata and not as a Court. The Delhi High Court opined that the mere fact that the Appellate Officer is a District Judge is not conclusive to hold that he has to act as a Court. It went on to observe that if that had been the intention of the legislature, Section 9 would have empowered either the Court of a District Judge or at any rate, the District Judge as such to hear the appeals. This view expressed by the Delhi High Court, in our opinion, is untenable, keeping in mind the exposition in the case of Thakur Das (supra) and Mukri Gopalan (supra) in particular.

37. Indeed, the Delhi High Court could not have noticed the aforementioned decisions of this Court, wherein it has been observed that a persona designata is a person who is pointed out or described as an individual as opposed to a person ascertained as a member of a class, or as filling a particular character. We are conscious of the fact that the decision in Thakur Das (supra) was in relation to the purport of Section 6C of the Essential Commodities Act and the decision in Mukri Gopalan (supra) was in respect of Section 18 of the Kerala Buildings (Lease and Rent Control) Act, 1955. As noted earlier, Section 6C of the Essential Commodities Act refers to the “judicial authority” appointed by the State Government concerned and Section 18 of the Kerala Buildings (Lease and Rent Control) Act refers to such officers and authorities not below the rank of Subordinate Judge to exercise the powers of the appellate authority. However, the principle underlying these enunciations will apply on all fours to the dispensation stipulated in the 1971 Act. For, it predicates that the Appellate Officer shall be the District Judge of the district in which the premises are situated or such other judicial officer designated by the District Judge.

38. The Bombay High Court in Nusli Neville Wadia‟s case largely relied upon the decision of the Delhi High Court in N.P. Berry‟s case. We are bound by the dictum in the case of Thakur Das (supra) decided by a three-Judge Bench of this Court wherein it is observed that the expression “judicial” qualifying the “authority” clearly indicates that that authority alone can be appointed to intervene and hear the appeals on which was conferred the judicial powers of the State. By a reference to judicial authority, it is indicative of the fact that the appellate authority must be one such pre-existing authority which was exercising judicial powers of the State and if any authority as persona designata was to be constituted, there was no purpose in qualifying the word “authority” by the specific adjective “judicial”. The thrust of the exposition is that the “judicial authority” which is a pre-existing authority exercising judicial power of the State, is a strong indication of legislative intent to depart from the dispensation of persona designata when a person is pointed out or described as an individual, as opposed to a person ascertained as a member of a class, or as filling a particular character. That view has been reiterated even in Mukri Gopalan (supra).

39. Notably, the expression “appellate officer” has not been defined in the 1971 Act, unlike the definition of “estate officer” contained in Section 2(1)(b) of that Act. The appellate officer cannot be considered as a statutory authority, as defined in the dictionary clause in Section 2(1)(fa) of the 1971 Act. In the case of Thakur Das (supra), in paragraph 9, while analyzing the cleavage of opinion of the High Courts, it is noticed that the expression “judicial authority” would comprehend the Additional Sessions Judge or the Sessions Judge could transfer such appeal pending before him to Additional Sessions Judge which was a pointer to the fact that he was not a persona designata. Even in respect of the appeal under Section 9 of the 1971 Act, the Principal Judge of the City Civil Court or District Judge is competent to hear the appeal himself or designate some other judicial officer within his jurisdiction possessing requisite qualification. It will be useful to advert to Section 7 of the City Civil Courts Act and Sections 3, 5 & 7 of the Maharashtra Civil Courts Act. It is implicit in Section 9 read with the provisions of the Acts constituting the District Judiciary that the head of the district judiciary is the District Judge or Principal Judge of the City Civil Court and Section 9 of the 1971 Act makes it explicit, by investing authority in the District Judge or Principal Judge of the City Civil Court, to designate any other judicial officer within his jurisdiction possessing essential qualifications, to hear such appeals. This is a clear departure from the appointment of a District Judge as a persona designata. The Additional District Judge or judicial officer possessing essential qualification, therefore, is not an inferior appellate officer within the meaning of Section 9 of the 1971 Act. In our opinion, there is enough indication in Section 9 of the 1971 Act to spell out the legislative intent that the remedy of appeal before the appellate officer is not before a persona designata but a pre-existing judicial authority in the district concerned.

40. The Delhi High Court also considered the question as to whether the power exercised by the appellate officer is in his capacity of a Court or otherwise. Relying on Mulla‟s Code of Civil Procedure, 13th Edition Volume I, Page 500, it has been observed that where the word used in the enactment giving the special jurisdiction is not “Court” but “judge”, the entire enactment is to be looked into to find out whether the matter is to be decided by him as a Court or in his personal capacity. It went on to observe that no authority is forthcoming to show that when the word “Court” is not used at all, the District Judge or a Subordinate Judge functioning under a statute is held to be a Court even when the statute itself shows that he is to function as an appellate officer or with some designation other than that of a Court, and further when CPC has not been applied as a procedure to be followed by the judge and when there is no indication that the judge is to function as a Court. It then observed that the Court is a creation of a statute either under CPC or Punjab Courts Act. In the final analysis, the Delhi High Court concluded that the appellate officer cannot be regarded as a Court and must, therefore, be regarded as a persona designata.

41. The fact that there is no express indication in the 1971 Act about the procedure to be adopted or followed by the appellate officer, it would not follow therefrom that the District Judge or designated judicial officer who hears the appeals under Section 9, does so not as a Court but as a persona designata. For the reasons already alluded to we have no hesitation in holding that the remedy of appeal under Section 9 before the Appellate Officer is not as a persona designata but to a pre-existing judicial authority. In that case, the procedure for hearing of the appeals will be governed by the provisions under the 1971 Act and Rules framed thereunder and including the enactment under which the judicial authority has been created, such as Maharashtra Civil Courts Act and City Civil Courts Act. [See para 26 of Maharashtra State Financial Corporation (supra), reproduced in earlier part of this judgment in para 26]. Such a pre-existing judicial authority, by implication, would be bound to follow the procedure underlying the said enactments and also observe the doctrine of fairness in affording opportunity. Since the edifice on which the conclusions reached by the Delhi High Court, that an appellate officer is persona designata and not a Court, cannot be countenanced in law, the Bombay High Court decisions in Nusli Neville Wadia‟s case (supra) and also Prakash Securities Pvt. Ltd. (supra), cannot hold the field to that extent for the same logic.

42. Our attention was invited to yet another decision in the case of State of Mysore Vs. P. Shankaranarayana Rao (supra). The learned Single Judge of the Karnataka High Court examined the question under consideration as to whether the District Judge who is constituted as an appellate officer under Section 10 of the Karnataka Public Premises (Eviction of Unauthorised Occupants) Act, 1961, acts as a Court or as a persona designata? The decision in Virindar Kumar Satyawadi Vs. State of Punjab40 was referred to, wherein it was observed that what distinguishes a Court from a quasi-judicial authority is that it is charged with a duty to decide disputes in a judicial manner and declare rights of parties in a definitive judgment. To decide in a judicial manner involves that the parties are entitled as a matter of right to be heard in support of their claim and to adduce evidence in support of it. Further, it also imports an obligation on the part of the authority to decide the matter on a consideration of the evidence adduced and in accordance with law. The distinction between the Court and quasi- judicial tribunal has to be decided having regard to the provisions of the Act and if it possesses all the attributes of a Court. Referring to Section 10 of the Karnataka Act, which provides that an appeal shall lie from every order of the competent officer made in respect of any public premises, to an appellate officer who shall be “only” the District Judge having jurisdiction over the area, the Court eventually concluded that the intention of enacting the term “appellate officer” in Section 10 is indicative of the fact that the AIR 1956 SC 153 District Judge must act as appellate officer with limited jurisdiction to dispose of the appeal in the manner set out by the provisions of Section 10 itself, which means that he cannot exercise the general powers of the District Court. It went on to observe that a finality is attached to the order of the District Judge in terms of Section 11 of the Karnataka Act is a further indication that a judge must act only as a persona designata and not as a Court. In the 1971 Act, however, the appeal under Section 9 can be heard and decided not only by the District Judge himself but by any other judicial officer of the District Court possessing requisite qualifications designated for that purpose.

43. In the case of Sizerali Mohamedali Lodhia (supra), the provisions of Section 9 of the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972, came up for scrutiny. The Gujarat High Court was essentially concerned with the question as to whether the remedy of revision against the order passed by the appellate officer in an appeal preferred under Section 9 of the Gujarat Public Premises Act (which is analogous to Section 9 of the 1971 Act), was maintainable before the High Court. The argument before the Gujarat High Court was that even if it is taken that the appellate officer is not persona designata but a Court, the question arises as to whether the order passed by the appellate officer under Section 9 of the Gujarat Public Premises Act is such against which remedy under Section 115 of the CPC lies. After analyzing the decisions noted in paragraph 11 of the judgment, including the cases of Thakur Das and Mukri Gopalan (supra), the Court went on to observe that since the order of the appellate officer has been made final in terms of Section 10 of the State Act, it cannot be assailed under Section 115 of the CPC before the High Court in its revisional jurisdiction. It finally concluded in paragraph 15 that assuming for the sake of argument that the remedy of revision lies, it would not be an efficacious alternative remedy so as to throw out the petition under Article 226 and/or Article 227 of the Constitution of India. The High Court, therefore, examined the issue on merits.

44. The next case commended to us is the decision of Full Bench of East Punjab High Court in M/s. Pitman‟s Shorthand Academy (supra), rendered in Civil Revision Application filed under Section 115 of CPC, against the decision of the Subordinate Court in rent proceedings arising from Punjab Urban Rent Restriction Act, 1947. The Court analysed the provisions of the State Rent Act and opined that the functions of the Controllers and Appellate Authorities under the Act did not indicate any attribute of a Court of law. In other words, the legislative intent behind appointing the Controllers and Appellate Authorities was to appoint them as persona designata and not as Court. This decision need not detain us for the reasons already alluded to in the earlier part of the judgment which are founded on the principles underlying the exposition of this Court in Thakur Das and Mukri Gopalan, in particular.

45. In case of Ganga Ram Dohrey (supra), the question considered was whether there is a specific provision given in the U.P. Public Premises (Eviction of Unauthorised Occupants) Act, 1972, to transfer the appeal and since there is no provision in the Act by which Section 24 of CPC has been made applicable whether the application under Section 24 of CPC for transfer of case was maintainable? The Court relying on the decision in the case of Abid Ali Vs. District Judge, Baharaich,41 concluded that application under Section 24 of CPC was not maintainable, for, the proceedings before the District Judge under Section 9 of the U.P. Public Premises Act were not other proceedings under the Code of Civil Procedure as envisaged by Section 24 of CPC.

(1987 Allahabad Law Journal 179)

46. In the Case of Jinda Ram (supra), the Division Bench of the Madhya Pradesh High Court was called upon to consider the maintainability of revision application under Section 115 of Civil Procedure Code against an order passed by the District Judge as an Appellate Officer under Section 9 of the 1971 Act. After considering the conflicting decisions of the same High Court on the point, the Division Bench held that an order passed by the Appellate Officer under Section 9 is amenable to revisional jurisdiction of the High Court under Section 115 of Civil Procedure Code. The Court relied upon the exposition of this Court in the case of Mukri Gopalan (supra) wherein it has been observed that the appellate authorities constituted under the enactment constitute a class and cannot be considered as a persona designata. Further, the appellate authority functions as a Court. The Court also referred to another decision of this Court in Shyam Sunder Agarwal and Co. Vs. Union of India42 wherein it has been held that appellate order having been passed by a Civil Court, constituted under a special statute subordinate to the High Court though made final under the Act, it is amenable to revisional jurisdiction of the High Court under Section 115 of the Code of Civil Procedure. The Court relied upon 42 (1996) 2 SCC 132 other decisions of this Court to buttress the conclusion that the remedy of revision under Section 115 of C.P.C. was available against an order passed by the District Judge on an appeal under Section 9 of the Act. Be that as it may, we are certain that remedy under Article 227 of the Constitution of India is availed against the decision of the Appellate Officer.

47. In the case of M. Papa Naik (supra) the Court was called upon to examine the purport of Section 9 of the Karnataka Public Premises (Eviction of Unauthorised Occupants) Act, 1974. Even in this case the question was whether a remedy of revision or writ petition would lie against the order passed by the District Judge on an appeal preferred under Section 10 of the State Act. The Court concluded that the order passed by the District Judge as an appellate authority under Section 9 of the State Act does not cease to be a Court subordinate to the High Court and any order passed by him is amenable to the jurisdiction of the High Court under Section 115 C.P.C.. In support of this conclusion, the learned Single Judge relied upon the exposition in the case of Central Talkies Ltd. (supra) and Parthasaradhi Naidu Vs. Koteswara Rao.43 43 ILR (1924) 47 Mad 369

48. Even though the respondents have invited our attention to other decisions of High Courts and also of Supreme Court which have analysed the provisions of other legislations, it is unnecessary to dilate on those decisions as we intend to apply the principles underlying the decisions of three-Judge Bench of this Court in Thakur Das (supra), Asnew Drums Pvt. Ltd. (supra), Maharashtra State Financial Corporation (supra), Ram Chander Aggarwal (supra) and Mukri Gopalan (supra), in particular, to conclude that the Appellate Officer referred to in Section 9 of the 1971 Act, is not a persona designata but acts as a civil court.

49. In other words, the Appellate Officer while exercising power under Section 9 of the 1971 Act, does not act as a persona designata but in his capacity as a pre existing judicial authority in the district (being a District Judge or judicial officer possessing essential qualification designated by the District Judge). Being part of the district judiciary, the judge acts as a Court and the order passed by him will be an order of the Subordinate Court against which remedy under Article 227 of the Constitution of India can be availed on the matters delineated for exercise of such jurisdiction.

50. Reverting to the facts of the present case, the respondents had resorted to remedy of writ petition under Article 226 and 227 of the Constitution of India. In view of our conclusion that the order passed by the District Judge (in this case, Judge, Bombay City Civil Court at Mumbai) as an Appellate Officer is an order of the Subordinate Court, the challenge thereto must ordinarily proceed only under Article 227 of the Constitution of India and not under Article 226. Moreover, on a close scrutiny of the decision of the learned Single Judge of the Bombay High Court dated 14.08.2012 we have no hesitation in taking the view that the true nature and substance of the order of the learned Single Judge was to exercise power under Article 227 of the Constitution of India; and there is no indication of Court having exercised powers under Article 226 of the Constitution of India as such. Indeed, the learned Single Judge has opened the judgment by fairly noting the fact that the writ petition filed by the respondents was under Articles 226 and 227 of the Constitution of India. However, keeping in mind the exposition of this Court in the case of Ram Kishan Fauji (supra) wherein it has been explicated that in determining whether an order of learned Single Judge is in exercise of powers under Article 226 or 227 the vital factor is the nature of jurisdiction invoked by a party and the true nature and character of the order passed and the directions issued by the learned Single Judge. In paragraph 40 of the reported decision, the Court adverting to its earlier decision observed thus:

―40. xxx xxx xxx Whether the learned Single Judge has exercised the jurisdiction Under Article 226 or Under Article 227 or both, would depend upon various aspects.

There can be orders passed by the learned Single Judge which can be construed as an order under both the articles in a composite manner, for they can co-exist, coincide and imbricate. It was reiterated that it would depend upon the nature, contour and character of the order and it will be the obligation of the Division Bench hearing the letters patent appeal to discern and decide whether the order has been passed by the learned Single Judge in exercise of jurisdiction Under Article 226 or 227 of the Constitution or both. The two-Judge Bench further clarified that the Division Bench would also be required to scrutinise whether the facts of the case justify the assertions made in the petition to invoke the jurisdiction under both the articles and the relief prayed on that foundation. The delineation with regard to necessary party not being relevant in the present case, the said aspect need not be adverted to.‖ Again in paragraphs 41 and 42, which may be useful for answering the matter in issue, the Court observed thus:

―41. We have referred to these decisions only to highlight that it is beyond any shadow of doubt that the order of civil court can only be challenged Under Article 227 of the Constitution and from such challenge, no intra-court appeal would lie and in other cases, it will depend upon the other factors as have been enumerated therein.

42. At this stage, it is extremely necessary to cull out the conclusions which are deducible from the aforesaid pronouncements. They are:

42.1 An appeal shall lie from the judgment of a Single Judge to a Division Bench of the High Court if it is so permitted within the ambit and sweep of the Letters Patent.

42.2 The power conferred on the High Court by the Letters Patent can be abolished or curtailed by the competent legislature by bringing appropriate legislation. 42.3 A writ petition which assails the order of a civil court in the High Court has to be understood, in all circumstances, to be a challenge Under Article 227 of the Constitution and determination by the High Court under the said Article and, hence, no intra-court appeal is entertainable. 42.4 The tenability of intra-court appeal will depend upon the Bench adjudicating the lis as to how it understands and appreciates the order passed by the learned Single Judge. There cannot be a straitjacket formula for the same.‖ (emphasis supplied)

51. In the case of Radhey Shyam (supra) decided by a three- Judge Bench, this Court after analyzing all the earlier decisions on the point, restated the legal position that in cases where judicial order violated the fundamental right, the challenge thereto would lie by way of an appeal or revision or under Article 227, and not by way of writ under Article 226 and Article 32. The dictum in paragraphs 25, 27 and 29 of this decision is instructive. The same read thus:

“25. It is true that this Court has laid down that technicalities associated with the prerogative writs in England have no role to play under our constitutional scheme. There is no parallel system of King’s Court in India and of all other courts having limited jurisdiction subject to supervision of King’s Court. Courts are set up under the Constitution or the laws. All courts in the jurisdiction of a High Court are subordinate to it and subject to its control and supervision Under Article 227. Writ jurisdiction is constitutionally conferred on all High Courts. Broad principles of writ jurisdiction followed in England are applicable to India and a writ of certiorari lies against patently erroneous or without jurisdiction orders of Tribunals or authorities or courts other than judicial courts. There are no precedents in India for the High Courts to issue writs to subordinate courts. Control of working of subordinate courts in dealing with their judicial orders is exercised by way of appellate or revisional powers or power of superintendence Under Article 227. Orders of civil court stand on different footing from the orders of authorities or Tribunals or courts other than judicial/civil courts. While appellate or revisional jurisdiction is regulated by statutes, power of superintendence Under Article 227 is constitutional. The expression “inferior court” is not referable to judicial courts, as rightly observed in the referring order in paras 26 and 27 quoted above.

26. XXX XXX XXX

27. Thus, we are of the view that judicial orders of civil courts are not amenable to a writ of certiorari Under Article 226. We are also in agreement with the view of the referring Bench that a writ of mandamus does not lie against a private person not discharging any public duty. Scope of Article 227 is different from Article

226.

28. XXX XXX XXX

29. Accordingly, we answer the question referred as follows:

29.1 Judicial orders of civil court are not amenable to writ jurisdiction under Article 226 of the Constitution;

29.2 Jurisdiction Under Article 227 is distinct from jurisdiction Under Article 226.

29.3 Contrary view in Surya Dev Rai is overruled.‖ (emphasis supplied)

52. Similar view has been expressed in Jogendrasinghji (supra). In this decision, it has been held that the order passed by the Civil Court is amenable to scrutiny only in exercise of jurisdiction under Article 227 of the Constitution of India and no intra court appeal is maintainable from the decision of a Single Judge. In paragraph 30 of the reported decision, the Court observed thus:

―30. From the aforesaid pronouncements, it is graphically clear that maintainability of a letters patent appeal would depend upon the pleadings in the writ petition, the nature and character of the order passed by the learned Single Judge, the type of directions issued regard being had to the jurisdictional perspectives in the constitutional context. Barring the civil court, from which order as held by the three-Judge Bench in Radhey Shyam (supra) that a writ petition can lie only Under Article 227 of the Constitution, orders from tribunals cannot always be regarded for all purposes to be Under Article 227 of the Constitution. Whether the learned Single Judge has exercised the jurisdiction Under Article 226 or Under Article 227 or both, needless to emphasise, would depend upon various aspects that have been emphasised in the aforestated authorities of this Court. There can be orders passed by the learned Single Judge which can be construed as an order under both the articles in a composite manner, for they can co-exist, coincide and imbricate. We reiterate it would depend upon the nature, contour and character of the order and it will be the obligation of the Division Bench hearing the letters patent appeal to discern and decide whether the order has been passed by the learned Single Judge in exercise of jurisdiction Under Article 226 or 227 of the Constitution or both. The Division Bench would also be required to scrutinize whether the facts of the case justify the assertions made in the petition to invoke the jurisdiction under both the articles and the relief prayed on that foundation. Be it stated, one of the conclusions recorded by the High Court in the impugned judgment pertains to demand and payment of court fees. We do not intend to comment on the same as that would depend upon the rules framed by the High Court.‖ In the concluding part of the reported judgment in paragraph 44, the Court observed thus:

―44. We have stated in the beginning that three issues arise despite the High Court framing number of issues and answering it at various levels. It is to be borne in mind how the jurisdiction under the letters patent appeal is to be exercised cannot exhaustively be stated. It will depend upon the Bench adjudicating the lis how it understands and appreciates the order passed by the learned Single Judge. There cannot be a straight-jacket formula for the same. Needless to say, the High Court while exercising jurisdiction Under Article 227 of the Constitution has to be guided by the parameters laid down by this Court and some of the judgments that have been referred to in Radhey Shyam (supra).‖

53. In paragraph 45.2 of the same judgment, the Court authoritatively concluded that an order passed by a Civil Court is amenable to scrutiny of the High Court only in exercise of jurisdiction under Article 227 of the Constitution of India, which is different from Article 226 of the Constitution and as per the pronouncement in Radhey Shyam (supra), no writ can be issued against the order passed by the Civil Court and, therefore, no letters patent appeal would be maintainable.

54. In the impugned judgment, the Division Bench merely went by the decisions of the Delhi High Court and its own Court in Nusli Neville Wadia (supra) and Prakash Securities Pvt. Ltd. (supra). We do not find any other analysis made by the Division Bench to entertain the Letters Patent Appeal, as to in what manner the judgment of the learned Single Judge would come within the purview of exercise of powers under Article 226 of the Constitution of India. Absent that analysis, the Division Bench could not have assumed jurisdiction to entertain the Letters Patent Appeal merely by referring to the earlier decisions of the same High Court in Nusli Neville Wadia and Prakash Securities Pvt. Ltd.

55. In other words, the Division Bench of the Bombay High Court ought to have dismissed the Letters Patent Appeal filed by the respondents as not maintainable. In that event, it was not open to the Division Bench to undertake analysis on the merits of the case as has been done in the impugned judgment. That was impermissible and of no avail, being without jurisdiction. Indeed, that will leave the respondents with an adverse decision of the learned Single Judge dismissing their writ petition No.4337 of 2012 vide judgment dated 14.08.2012, whereby the eviction order passed by the Estate Officer dated 05.12.2011 and confirmed by the City Civil Court on 03.04.2012 has been upheld.

56. As we have held that the Division Bench, in the facts of the present case, could not have entertained the Letters Patent Appeal against the judgment of the learned Single Judge, it is not necessary for us to examine the merits of the eviction order passed against the respondents by the Estate Officer and confirmed by the City Civil Court and the Single Judge of the High Court. In any case, that cannot be done in the appeal filed by the owner of the public premises, namely, the appellant. We may, however, to subserve the ends of justice, give liberty to the respondents to challenge the decision of the learned Single Judge by way of appropriate remedy, if so advised. That shall be done within six weeks from today failing which the appellant will be free to proceed in the matter in furtherance of the eviction order passed by the Estate Officer and confirmed right until the High Court, in accordance with law.

57. We once again clarify that we are not expressing any opinion either way on the merits of the eviction order passed by the Estate Officer and the order of the City Civil Court and of the learned Single Judge of the High Court confirming the same. As the preliminary issue regarding the maintainability of the Letters Patent Appeal has been answered in favour of the appellant, this appeal must succeed.

58. Accordingly, the appeal is allowed in the aforementioned terms. As a consequence, the judgment and order passed by the Division Bench of the High Court of Judicature at Bombay dated 12.10.2012 in Letters Patent Appeal No.181/2012 in C.W.P. No.4337/2012 is set aside and the said Letters Patent Appeal stands dismissed as not maintainable. No order as to costs.

.………………………….CJI.

(Dipak Misra) …………………………..….J.

(Amitava Roy) …………………………..….J.

(A.M. Khanwilkar) New Delhi;

February 20, 2018.

Right to Information Act, 2005 Interpreted By Supreme Court

MASTI

The Supreme Court has held in the latest judgement that indiscriminate and impractical demands or directions under the Right to Information Act, 2005 (RTI Act) for disclosure of all and sundry information (unrelated to transparency and accountability in the functioning of public authorities and eradication of corruption) would be counterproductive as it will adversely affect the efficiency of the administration and result in the executive getting bogged down with the non-productive work of collecting and furnishing information.

The Supreme Court judgement holds that the Act should not be allowed to be misused or abused, to become a tool to obstruct the national development and integration, or to destroy the peace, tranquillity and harmony among its citizens. Nor should it be converted into a tool of oppression or intimidation of honest officials striving to do their duty. The nation does not want a scenario where 75% of the staff of public authorities spends 75% of their time in collecting and furnishing information to applicants instead of discharging their regular duties.

The Supreme Court judgement holds that the threat of penalties under the RTI Act and the pressure of the authorities under the RTI Act should not lead to employees of a public authorities prioritising “information furnishing”, at the cost of their normal and regular duties.” (emphasis added) (7)

it has been held by the Supreme Court in the judgement that it is clear that in interpreting the scheme of the Act, this Court has, while adopting purposive interpretation, read inherent limitation in Sections 3 and 6 based on the Third Recital in the Preamble to the Act. While balancing the right to information, public interest including efficient working of the Government, optimum use of fiscal resources and preservation of confidentiality of sensitive information has to be balanced and can be a guiding factor to deal with a given situation de hors Sections 8,9 and 11

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.(s).6159-6162 OF 2013

UNION PUBLIC SERVICE COMMISSION ETC. Appellant(s)

VERSUS

ANGESH KUMAR & ORS. ETC. Respondent(s)

WITH
C.A. No. 5924/2013

JOINT DIRECTORS AND CENTRAL PUBLIC
INFORMATION OFFICER AND ANR. Appellant(s)

VERSUS

T.R. RAJESH Respondent(s)
AND

SLP(C) No. 28817/2014
SLP(C) No. 28801/2014
SLP(C) No. 28811/2014
SLP(C) No. 28816/2014
SLP(C) No. 28805/2014
SLP(C)No……. of 2018 (@Diary No(s). 15951/2017)

O R D E R

Civil Appeal No(s).6159-6162 of 2013 :

(1) We have heard learned counsel for the parties and Signature Not Verified perused the record.

Digitally signed by MAHABIR SINGH Date: 2018.02.21 16:15:35 IST Reason:

(2) These appeals have been preferred against judgment and Order dated 13.7.2012 in LPA NO.229 of 2011 in W.P.(C)NO.3316 of 2011, 28.08.2012 in Review Petition NO.486 of 2012 in LPA NO.229/2011 and Review Petition NO.484 of 2012 in W.P.(C) NO.3316/2011 of the High Court of Delhi at New Delhi.

(3) The respondents-writ petitioners were unsuccessful candidates in the Civil Services (Preliminary) Examination, 2010. They approached the High Court for a direction to the Union Public Service Commission (UPSC) to disclose the details of marks (raw and scaled) awarded to them in the Civil Services (Prelims) Examination 2010. The information in the form of cut-off marks for every subject, scaling methodology, model answers and complete result of all candidates were also sought. Learned Single Judge directed that the information sought be provided within fifteen days. The said view of the Single Judge has been affirmed by the Division Bench of the High Court.

(4) The main contention in support of these appeals is that the High Court has not correctly appreciated the scheme of the Right to Information Act, 2005 (the Act) and the binding decisions of this Court.

(5) It is submitted that though Sections 3 and 6 of the Act confer right to information (apart from statutory obligation to provide specified information under Section 4), Sections 8, 9 and 11 provide for exemption from giving of information as stipulated therein. The exclusion by Sections 8, 9 and 11 is not exhaustive and parameters under third recital of the preamble of the Act can also be taken into account. Where information is likely to conflict with other public interest, including efficient operation of the Government, optimum use of fiscal resources and preservation of confidentiality of some sensitive information, exclusion of right or information can be applied in a given fact situation.

(6) In support of this submission, reliance has been placed on judgment of this Court in Central Board of Secondary Education and Anr. v. Aditya Bandopadhyay and Ors., (2011) 8 SCC 497 wherein this Court observed :

“61. Some High Courts have held that Section 8 of the RTI Act is in the nature of an exception to Section 3 which empowers the citizens with the right to information, which is a derivative from the freedom of speech; and that, therefore, Section 8 should be construed strictly, literally and narrowly. This may not be the correct approach. The Act seeks to bring about a balance between two conflicting interests, as harmony between them is essential for preserving democracy. One is to bring about transparency and accountability by providing access to information under the control of public authorities. The other is to ensure that the revelation of information, in actual practice, does not conflict with other public interests which include efficient operation of the Governments, optimum use of limited fiscal resources and preservation of confidentiality of sensitive information. The Preamble to the Act specifically states that the object of the Act is to harmonise these two conflicting interests. While Sections 3 and 4 seek to achieve the first objective, Sections 8, 9, 10 and 11 seek to achieve the second objective. Therefore, when Section 8 exempts certain information from being disclosed, it should not be considered to be a fetter on the right to information, but as an equally important provision protecting other public interests essential for the fulfilment and preservation of democratic ideals.

62. When trying to ensure that the right to information does not conflict with several other public interests (which includes efficient operations of the Governments, preservation of confidentiality of sensitive information, optimum use of limited fiscal resources, etc.), it is difficult to visualise and enumerate all types of information which require to be exempted from disclosure in public interest. The legislature has however made an attempt to do so. The enumeration of exemptions is more exhaustive than the enumeration of exemptions attempted in the earlier Act, that is, Section 8 of the Freedom to Information Act, 2002. The courts and Information Commissions enforcing the provisions of the RTI Act have to adopt a purposive construction, involving a reasonable and balanced approach which harmonises the two objects of the Act, while interpreting Section 8 and the other provisions of the Act.

66. The right to information is a cherished right. Information and right to information are intended to be formidable tools in the hands of responsible citizens to fight corruption and to bring in transparency and accountability. The provisions of the RTI Act should be enforced strictly and all efforts should be made to bring to light the necessary information under clause (b) of Section 4(1) of the Act which relates to securing transparency and accountability in the working of public authorities and in discouraging corruption. But in regard to other information [that is, information other than those enumerated in Sections 4(1)(b) and (c) of the Act], equal importance and emphasis are given to other public interests (like confidentiality of sensitive information, fidelity and fiduciary relationships, efficient operation of Governments, etc.).

67. Indiscriminate and impractical demands or directions under the RTI Act for disclosure of all and sundry information (unrelated to transparency and accountability in the functioning of public authorities and eradication of corruption) would be counterproductive as it will adversely affect the efficiency of the administration and result in the executive getting bogged down with the non-productive work of collecting and furnishing information. The Act should not be allowed to be misused or abused, to become a tool to obstruct the national development and integration, or to destroy the peace, tranquillity and harmony among its citizens. Nor should it be converted into a tool of oppression or intimidation of honest officials striving to do their duty. The nation does not want a scenario where 75% of the staff of public authorities spends 75% of their time in collecting and furnishing information to applicants instead of discharging their regular duties. The threat of penalties under the RTI Act and the pressure of the authorities under the RTI Act should not lead to employees of a public authorities prioritising “information furnishing”, at the cost of their normal and regular duties.” (emphasis added) (7) Thus, it is clear that in interpreting the scheme of the Act, this Court has, while adopting purposive interpretation, read inherent limitation in Sections 3 and 6 based on the Third Recital in the Preamble to the Act. While balancing the right to information, public interest including efficient working of the Government, optimum use of fiscal resources and preservation of confidentiality of sensitive information has to be balanced and can be a guiding factor to deal with a given situation de hors Sections 8,9 and 11. The High Court has not applied the said parameters.

(8) The problems in showing evaluated answer sheets in the UPSC Civil Services Examination are recorded in Prashant Ramesh Chakkarwar v. UPSC1 .

From the counter affidavit in the said case, following extract was referred to :

“(B) Problems in showing evaluated answer books to candidates.—(i) Final awards subsume earlier stages of evaluation. Disclosing answer books would reveal intermediate stages too, including the so-called ‘raw marks’ which would have negative implications for the integrity of the examination system, as detailed in Section (C) below.

(ii) The evaluation process involves several stages.

Awards assigned initially by an examiner can be struck out and revised due to (a) totalling mistakes, portions unevaluated, extra attempts (beyond prescribed number) being later corrected as a result of clerical scrutiny, (b) The examiner changing his own awards during the course of evaluation either because he/she marked it differently initially due to an inadvertent error or because he/she corrected himself/herself to be more in conformity with the accepted standards, after discussion with Head Examiner/colleague examiners, (c) Initial awards of the Additional Examiner being revised by the Head Examiner during the latter’s check of the former’s work, (d) the Additional Examiner’s work having been found erratic by the Head Examiner, been rechecked entirely by another examiner, with or without the Head 1 (2013) 12 SCC 489 Examiner again rechecking this work.

(iii) The corrections made in the answer book would likely arouse doubt and perhaps even suspicion in the candidate’s mind. Where such corrections lead to a lowering of earlier awards, this would not only breed representations/grievances, but would likely lead to litigation. In the only evaluated answer book that has so far been shown to a candidate (Shri Gaurav Gupta in WP No. 3683 of 2012 in Gaurav Gupta v. UPSC dated 6.7.2012(Del.)) on the orders of the High Court, Delhi and that too, with the marks assigned masked; the candidate has nevertheless filed a fresh WP alleging improper evaluation.

(iv) As relative merit and not absolute merit is the criterion here (unlike academic examinations), a feeling of the initial marks/revision made being considered harsh when looking at the particular answer script in isolation could arise without appreciating that similar standards have been applied to all others in the field. Non-appreciation of this would lead to erosion of faith and credibility in the system and challenges to the integrity of the system, including through litigation.

(v) With the disclosure of evaluated answer books, the danger of coaching institutes collecting copies of these from candidates (after perhaps encouraging/inducing them to apply for copies of their answer books under the RTI Act) is real, with all its attendant implications.

(vi) With disclosure of answer books to candidates, it is likely that at least some of the relevant examiners also get access to these. Their possible resentment at their initial awards (that they would probably recognise from the fictitious code numbers and/or their markings, especially for low-candidature subjects) having been superseded (either due to inter-examiner or inter-subject moderation) would lead to bad blood between Additional Examiners and the Head Examiner on the one hand, and between examiners and the Commission, on the other hand. The free and frank manner in which Head Examiners, for instance, review the work of their colleague Additional Examiners, would likely be impacted. Quality of assessment standards would suffer.

(vii) Some of the optional papers have very low candidature (sometimes only one), especially the literature papers. Even if all examiners’ initials are masked (which too is difficult logistically, as each answer book has several pages, and examiners often record their initials and comments on several pages with revisions/corrections, where done, adding to the size of the problem), the way marks are awarded could itself be a give away in revealing the examiner’s identity. If the masking falters at any stage, then the examiner’s identity is pitilessly exposed. The ‘catchment area’ of candidates and examiners in some of these low-candidature papers is known to be limited. Any such possibility of the examiner’s identity getting revealed in such a high-stakes examination would have serious implications, both for the integrity and fairness of the examination system and for the security and safety of the examiner. The matter is compounded by the fact that we have publicly stated in different contexts earlier that the paper-setter is also generally the Head Examiner.

(viii) UPSC is now able to get some of the best teachers and scholars in the country to be associated in its evaluation work. An important reason for this is no doubt the assurance of their anonymity, for which the Commission goes to great lengths. Once disclosure of answer books starts and the inevitable challenges (including litigation) from disappointed candidates starts, it is only a matter of time before these examiners who would be called upon to explain their assessment/award, decline to accept further assignments from the Commission. A resultant corollary would be that examiners who then accept this assignment would be sorely tempted to play safe in their marking, neither awarding outstanding marks nor very low marks, even where these are deserved. Mediocrity would reign supreme and not only the prestige, but the very integrity of the system would be compromised markedly.” (9) This Court thereafter approved the method of moderation adopted by the UPSC relying upon earlier judgment in Sanjay Singh v. U.P. Public Service Commission, (2007) 3 SCC 720 and U.P. Public Service Commission v. Subhash Chandra Dixit, (2003) 12 SCC

701. (10) Weighing the need for transparency and accountability on the one hand and requirement of optimum use of fiscal resources and confidentiality of sensitive information on the other, we are of the view that information sought with regard to marks in Civil Services Exam cannot be directed to be furnished mechanically. Situation of exams of other academic bodies may stand on different footing.

Furnishing raw marks will cause problems as pleaded by the UPSC as quoted above which will not be in public interest. However, if a case is made out where the Court finds that public interest requires furnishing of information, the Court is certainly entitled to so require in a given fact situation. If rules or practice so require, certainly such rule or practice can be enforced. In the present case, direction has been issued without considering these parameters.

(11) In view of the above, the impugned order(s) is set aside and the writ petitions filed by the writ petitioners are dismissed. This order will not debar the respondents from making out a case on above parameters and approach the appropriate forum, if so advised.

(12) The appeals are accordingly disposed of.

Civil Appeal No. 5924 of 2013:

(1) In view of judgment rendered today in Civil Appeal No(s).6159-6162 of 2013, the impugned order is set aside. The appeal stands disposed of in the same terms.

SLP(C) No. 28817/2014, SLP(C) No. 28801/2014, SLP(C) No. 28811/2014 SLP(C) No. 28816/2014, SLP(C) No. 28805/2014, SLP(C) NO……… of 2018 (arising out of Diary No(s). 15951/2017) :

(1) Delay condoned.

(2) In view of judgment rendered in Civil Appeal Nos.6159-6162 of 2013, these special leave petitions are disposed of in the same terms.

……………………..J.

(ADARSH KUMAR GOEL) ……………………..J.

(UDAY UMESH LALIT) New Delhi, February 20, 2018.

Supreme Court Explains SC/ST Prevention Of Atrocities Act In Latest Judgement

MASTI

The Supreme Court judgement considers a case where a complaint was filed before the jurisdictional police station under Sections 420, 467, 468, 471, 120B, 506 of Indian Penal Code, 1860 [hereinafter referred as ‘IPC’ for brevity] and under Section 3 of Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 on the allegations that one Smt. Vidhyabai and others sold the disputed land to respondent no. 1 and got the appellant’s property mutated by committing fraud and forgery. It was further alleged that the respondents had threatened the appellant with dire consequence and swore at them with filthy language intended to belittle his caste/tribe. The concerned police station did not take any action on the aforesaid complaint.

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 312 OF 2018
(arising out of SLP (Crl.) No. 6900 of 2014)

RAJENDRA RAJORIYA … APPELLANT (S)

VERSUS

JAGAT NARAIN THAPAK AND ANOTHER … RESPONDENT (S)

JUDGMENT

N. V. RAMANA, J.

1.Leave granted.

2. In this criminal appeal the judgment dated 08.07.2014, passed by the High Court of Madhya Pradesh, bench at Gwalior in Criminal Revision No. 104/2013 is impugned.

Signature Not Verified Digitally signed by

3. Appellant herein filed a complaint before the jurisdictional police station under Sections 420, 467, 468, 471,120B, 506 of Indian Penal Code, 1860 [hereinafter referred as ‘IPC’ for brevity] and under Section 3 of Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 on the allegations that one Smt. Vidhyabai and others sold the disputed land to respondent no. 1 and got the appellant’s property mutated by committing fraud and forgery. It was further alleged that the respondents had threatened the appellant with dire consequence and swore at them with filthy language intended to belittle his caste/tribe. It may be noted that the concerned police station did not take any action on the aforesaid complaint.

4. Aggrieved by the inaction of the police, the appellant approached the Jurisdictional Magistrate, Gwalior, with the same set of facts under Section 200 of Cr.P.C.

5. The Judicial Magistrate, 1st Class, Gwalior, by Order dated 21.04.2012, dismissed the aforesaid criminal complaint on the footing that there was no sufficient proof on record provided by the appellant/complainant to prove that he belongs to Scheduled Caste or Scheduled Tribe and the dispute between the parties had trappings of civil nature.

6. Aggrieved by the aforesaid dismissal of criminal complaint, appellant approached Addl. District and Sessions Judge [hereinafter referred as ‘Sessions Court’ for brevity] in Criminal Revision No. 242/2012. The Sessions Court, by the order dated 07.12.2012, held that the complainant belonged to Jatav community which is a Scheduled Caste. Further the Sessions Court observed that the facts narrated portray that the respondent no. 1 in conspiracy with others had transferred the land belonging to the appellant in an illegal manner. Thereafter, concluded that the lower court did not appreciate the facts as well as the law in a proper manner and remanded the case in the following manner: –

This revision is allowed and order dated 21.04.2012 passed by Court is set aside and case is remanded back with a direction that if necessary after a further enquiry keeping in view the findings given in this order, proper order be passed with regard to registration of complaint and to summon the respondents and for that directed the parties to remain present before the Court below on 20.12.2012.

(Emphasis supplied)

7. On remand of the case, Judicial Magistrate, vide order dated 23.01.2013, while taking cognizance of the aforesaid offences under Section 420, 467, 471, 120-B of IPC and 3(1)(4) of SC/ST Act, registered the complaint as Criminal Case No. 1576/2013 and on 23-02-2013, learned Magistrate noted as under- …the court is required to prima facie decide question of initiating proceeding arises or not. It is pertinent that in this case learned Revisional Court has prima facie already found sufficient ground for initiating proceeding against non-applicants.

(emphasis supplied)

8. In the meanwhile, aggrieved by the remand order dated 07.12.2012 passed by the Sessions Court and the order of the Magistrate, dated 23.01.2013, taking cognizance, the respondent filed revision before the High Court being Criminal Revision No. 104/2013. By the impugned judgment dated 08.07.2014, the High Court allowed the revision petition and quashed the complaint on the reason that the revisonal court could not have taken cognizance on 23.01.2013 as the same was in violation of Section 398 of Cr.P.C.

9. We have heard learned counsels appearing on behalf of both the parties.

10. The questions that fall for consideration are in regard to the legality of the remand order passed by the Sessions Court and the order of the learned Magistrate taking cognizance thereafter. As the High Court has dealt with the validity of both the orders, we would like to take up the same in seriatum starting with legality of the remand order.

11. The respondent contends that the learned Sessions Judge could not have observed on merits as it amounted to taking cognizance of the matter. Such contentions although seems attractive, but must be rejected for reason that the revisional court only had provided reasons for ordering further enquiry under Section 398 of Cr.P.C and the observations provided on merit cannot be said to have an effect of taking cognizance in this case.

12. At the outset, before we decide the legality of the remand order, we are required to determine the scope of criminal revision under Section 397 read with Section 398 of Cr.P.C. It would be appropriate to reproduce Sections 397 and 398 of Cr.P.C herein.

Section 397. Calling for records to exercise powers of revision.

(1) The High Court or any Sessions Judge may call for and examine the record of any proceeding before any inferior Criminal Court situate within its or his local jurisdiction for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order,- recorded or passed, and as to the regularity of any proceedings of such inferior Court, and may, when calling for such record, direct that the execution of any sentence or order be suspended, and if the accused is in confinement, that he be released on bail or on his own bond pending the examination of the record. Explanation- All Magistrates whether Executive or Judicial, and whether exercising original or appellate jurisdiction, shall be deemed to be inferior to the Sessions Judge for the purposes of this sub- section and of section 398.

Section 398. Power to order inquiry.

On examining any record under section 397 or otherwise, the High Court or the Sessions Judge may direct the Chief Judicial Magistrate by himself or by any of the Magistrates subordinate to him to make, and the Chief Judicial Magistrate may himself make or direct any subordinate Magistrate to make, further inquiry into any complaint which has been dismissed under section 203 of Sub-Section (4) of section 204 or into the case of any person accused of an offence who has been discharged:

Provided that no Court shall make any direction under this section for inquiry into the case of any person who has been discharged unless such person has had an opportunity of showing cause why such direction should not be made.

A perusal of the aforesaid provisions portray that the revisionary power is exercised either by the Sessions Court or by the High Court and a dismissal of the complaint by the Magistrate under Section 203 of Cr.P.C may be assailed in a criminal revision under Section 397 of Cr.P.C. The ambit of revisional jurisdiction is well settled. Section 397 of Cr.P.C empowers the Sessions Judge to call for and examine the record of any proceeding before any subordinate criminal court situate within its jurisdiction for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence or order recorded or passed, and as to the regularity of any proceedings of such subordinate Court.

13. The extent of the revisionary powers inter alia, is provided under Section 399 read with Section 401 of Cr.P.C. It is clear from the aforesaid provisions that Section 398 has to be read along with other Sections which are equally applicable to the revision petitions filed before the Sessions Court. Section 398 only deals with a distinct power to direct further inquiry, whereas Section 397 read with Section 399 and Section 401 confers power on the revisionary authority to examine correctness, legality or propriety of any findings, sentence or order. The powers of the revisionary court have to be cumulatively understood in consonance with Sections 398, 399 and 401 of Cr.P.C.

14. We may note that the High Court, in the impugned judgment, came to an erroneous conclusion that the Sessions Court had itself taken cognizance of the matter which may be reproduced as under-

“On bare perusal of this provision it is clear that the impugned order cannot be passed under Section 398 of the Code. The word ‘may direct’ has been used by the legislation in this provision. It gives wide discretion to the court to order further enquiry. Sessions Court has no power to take cognizance of the offence, assess the offence and reach its own conclusion whether there is ground for proceeding with complaint or not and further to direct a Magistrate with regard to registration of a complaint on finding a prima facie case”.

15. On a perusal of the Sessions Court judgment (quoted supra), we are of the opinion that the Sessions Court did not pass an order taking cognizance. The Sessions Court order should have been construed only as a remand order for further enquiry. The observations made by the Sessions Court were only justification for a remand and the same did not amount to taking cognizance. In view of the above, the High Court clearly misconstrued the Sessions Court order and proceeded on an erroneous footing. On the other hand, the revisional court was also in error to the extent of influencing the Magistrate Court to keep the findings of Sessions Court in mind, while considering the case on remand. The misconception created before the High Court was due to the fact that the remand order provided discretion for the trial court to conduct further enquiry and thereafter consider issuing process. The High Court in the case at hand without appreciating the dichotomy between taking cognizance and issuing summons, quashed the complaint itself on wrong interpretation of law. In the light of the above, the impugned order of the High court cannot be sustained in the eyes of law.

16. Now coming to the second aspect as to the legality of the order of the learned Magistrate taking cognizance of the matter. The standard required by the Magistrate while taking cognizance is well settled by this court in catena of judgments. In Subramanian Swamy vs. Manmohan Singh & Another, (2012) 3 SCC 64, this Court explained the meaning of the word ‘cognizance’ holding that “…In legal parlance cognizance is taking judicial notice by the court of law, possessing jurisdiction, on a cause or matter presented before it so as to decide whether there is any basis for initiating proceedings and determination of the cause or matter judicially”. We may note that the Magistrate while taking cognizance has to satisfy himself about the satisfactory grounds to proceed with the complaint and at this stage the consideration should not be whether there is sufficient ground for conviction. It may not be out of context to note that at the stage of taking cognizance, the Magistrate is also not required to record elaborate reasons but the order should reflect independent application of mind by the Magistrate to the material placed before him.

17. On a perusal of the order of the learned Magistrate taking cognizance, it is apparent that the learned Magistrate observes that the Sessions court has already made out a prima facie case. Such finding would be difficult to sustain as the revisional court only observed certain aspects in furtherance of remanding the matter. Such observations could not have been made by the Magistrate as he was expected to apply his independent mind while taking cognizance. In the case on hand, we recognize the limitation on the appellate forum to review subjective satisfaction of the Magistrate while taking cognizance, but such independent satisfaction unless reflected in the order would make it difficult to be sustained. There is no dispute that Justice should not only be done, but should manifestly and undoubtedly be seen to be done. It is wrought in our constitutional tradition that we imbibe both substantive fairness as well as procedural fairness under our criminal justice system, in the sense of according procedural fairness, in the making of decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention.

18. On a different note, we may note that the Magistrates across India have been guided on number of occasions by concrete precedents of this Court to exercise utmost caution while applying their judicious mind in this regard. Unfortunately, we may note that number of cases which are brought before us reflects otherwise.

19. Our attention was drawn to the fact that a civil court subsequently declared the sale deed executed by Smt. Vidhyabai and others in favour of Jagat Narain Thapak as null and void. Further we are apprised of observations made by the Sessions Court on the merits of the case. But we are not inclined to go into those issues.

20. In view of the above, the appeal is allowed and the impugned judgment is set aside. Accordingly, the complaint be considered by trial court afresh. Before parting with this case, we may clarify that the trial court is directed to proceed with the case uninfluenced by any observations made by this Court for the purpose of deciding the instant appeal.

………………………….J.

(N. V. Ramana) ….………………………J.

(S. Abdul Nazeer) New Delhi, February 23, 2018.