Supreme Court Judgements

This is a collection of the latest Supreme Court judgements. These judgements have been delivered by the apex court in 2017 and 2018 and are landmark because they decide important principles of law.

The list of important judgements of the Supreme Court will be updated in real time so that citizens can be aware of the law laid down on important issues.

supreme court judgements

Binding force under Article 141 of the Constitution

The Supreme Court of India is the highest judicial forum and final court of appeal under the Constitution of India.

It is the highest constitutional court and has the power of constitutional review. It has wide powers of original, appellate and advisory jurisdictions.

It decides appeals against judgements of the High Courts and other courts and tribunals.

Supreme Court Judgements are binding on all courts within India and on the union and state governments.

In Shenoy & Co. Vs. CTO (1985) 155 ITR 178 the Supreme Court held that the law laid down by it is binding on all, notwithstanding the fact that it is against the State or a private party; it is binding even on those who were not parties before the court.

It was also pointed out that as per Article 141 of the Constitution of India the law declared by the Supreme Court shall be binding on all courts within the territory of India.

It was clarified in Soma Wanti Vs. State of Punjab (1963) 33 Comp Cas 745 (SC) that the binding effect of Supreme Court Judgements on a question of law does not depend upon whether a particular argument was considered therein or not.

In CIT Vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209, the Supreme Court held that it is neither desirable nor permissible to pick out a word or a sentence from a judgment divorced from the context of the question under consideration and treat it to be complete ‘law’ declared by the Apex Court.

It was held that a judgment must be read as a whole and the observations have to be considered in the light of the questions which were before the Court, principle emerging there from must be applied accordingly.

It is also a well settled proposition of law as laid down in Chandi Ram Vs. ITO (1996) 133 Taxation 219 (Raj) that the exposition of law by the Apex Court is not an enactment of the law but is merely an exposition of the correct position of the law which was always in existence.

How to access latest Supreme Court judgements

The authoritative source to access the judgements of the apex Court of India is through its official websites which can be accessed at (1) and (2).

However, the drawback of the official websites is that one cannot access the judgement if one is not aware of the case number, the name of the petitioner or the respondent or the date of the judgement.

Latest Supreme Court Judgement On S. 498A Dowry Harassment

MASTI

In the latest judgement delivered on September 14 , 2018, the Supreme Court has modified the guidelines laid down by it in Rajesh Sharma and others v. State of U.P. and another AIR 2017 SC 3869 : 2017 (8) SCALE 313 on the arrest of the husband and his relatives on the subject of dowry harassment.

The judgement of the Supreme Court on section 498A of the IPC is delivered in Social Action Forum for Manav Adhikar vs. UOI WRIT PETITION (CIVIL) NO. 73 OF 2015.

The Supreme Court judgement in which extensive discussion is there about section 498A and dowry harassment has been delivered by a Bench comprising of CJI Dipak Misra, Justice A.M. Khanwilkar and Justice Dr. D.Y. Chandrachud.

The Court has directed that the guidelines laid down in Rajesh Sharma and others v. State of U.P. and another AIR 2017 SC 3869 : 2017 (8) SCALE 313 be modified.

Text of Social Action Forum for Manav Adhikar vs. UOI WRIT PETITION (CIVIL) NO. 73 OF 2015

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO. 73 OF 2015

Social Action Forum for Manav Adhikar …Petitioner(s)
and another

VERSUS

Union of India

Ministry of Law and Justice and others …Respondent(s)

WITH

CRIMINAL APPEAL NO. 1265 OF 2017

WRIT PETITION (CRIMINAL) NO. 156 of 2017

J U D G M E N T

Dipak Misra, CJI

Law, especially the criminal law, intends to control, if not altogether remove, the malady that gets into the spine of the society and gradually corrodes the marrows of the vertebrae of a large section of the society. A situation arises and the legislature, expressing its concern and responsibility, adds a new penal provision with the intention to achieve the requisite result.

When a sensitive legal provision is brought into the statute book, the victims of the crime feel adequately safe, and if the said provision pertains to matrimonial sphere, both the parties, namely, wife and husband or any one from the side of the husband is booked for the offence and both the sides play the victim card.

The accused persons, while asserting as victims, exposit grave concern and the situation of harassment is built with enormous anxiety and accentuated vigour. It is propounded in a court of law that the penal provision is abused to an unimaginable extent, for in a cruel, ruthless and totally revengeful manner, the young, old and relatives residing at distant places having no involvement with the incident, if any, are roped in.

Thus, the abuse of the penal provision has vertically risen. When the implementation of law is abused by the law enforcing agency, the legislature introduces a protective provision as regards arrest.

Needless to say, the courts have ample power to grant pre-arrest bail or popularly called anticipatory bail and even to quash the criminal proceeding totally to stabilize the lawful balance because no court of law remotely conceives of a war between the two sexes.

The courts remain constantly alive to the situation that though no war takes place, yet neither anger nor vendetta of the aggrieved section should take an advantage of the legal provision and harass the other side with influence or espousing the principle of sympathy.

The role of the law enforcing agency or the prosecuting agency is sometimes coloured with superlative empathy being totally oblivious of the sensation to make maladroit efforts to compete with the game of super sensitivity. Such a situation brings in a social disaster that has the potentiality to vertically divide the society. The sense of sensitivity and the study of social phenomenon are required to be understood with objectivity.

In such a situation, it is obligatory on the part of the legislature to bring in protective adjective law and the duty of the constitutional courts to perceive and scrutinize the protective measure so that the social menace is curbed.

We are, in the instant matters, focussing on Section 498-A of the Indian Penal Code, 1860 (for short, “the IPC‟).

2. Section 498-A was brought into the statute book in the year 1983. The objects and reasons for introducing Section 498-A IPC can be gathered from the Statement of Objects and Reasons of Criminal Law (Second Amendment) Act of 1983 and read as under :-

"The increasing number of Dowry Deaths is a matter of serious concern. The extent of evil has been commented upon by the Joint Committee of the Houses constituted to examine the working of Dowry Prohibition Act, 1961. Cases of cruelty by the husband and the relatives of the husband which culminate in suicide by, or murder of the hapless woman concerned, constitute only a small fraction of the cases involving such cruelty. It is, therefore proposed to amend the Indian Penal Code, Code of Criminal Procedure and the Indian Evidence Act suitably to deal effectively not only with cases of Dowry Death but also cruelty to married woman by their in laws.  

2. The following are the changes that are proposed to be made:-

(i) The Indian Penal Code is proposed to be amended to make cruelty to a woman by her husband or any relative of her husband punishable with an imprisonment for a term which may extend to three years and also with fine. Willful conduct of such a nature by the husband or any other relative of the husband as is likely to drive the woman to commit suicide or cause grave physical or mental injury to her, and harassment of woman by her husband or by any relative of her husband with a view to coercing her or any of her relatives to meet any unlawful demand for property would be punishable as cruelty, the offence will cognizable if information relating to the commission of the offence is given to the officer in charge of a Police Station by the victim of the offence or a relative of the victim of the offence or, in the absence of any such relative, by any public servant authorized in this behalf by the State Government.

It is also being provided that no court shall take cognizance of the offence except upon a Police Report or complaint made by the victim of the offence or by her father, mother, brother, sister or by her father’s or mother’s brother or sister or with the leave of the court by any other person related to her by blood, marriage or adoption (vide Clauses 2, 5 and 6 of the Bill.)

(ii) Provision is being made for inquest by Executive Magistrates and for postmortem in all cases where a woman has, within seven years of her marriage, committed suicide or died in circumstances raising a reasonable suspicion that some other person has committed an offence. Post-mortem is also being provided for in all cases where a married woman has died within seven years of her marriage and a relative of such woman has made a request in this behalf (vide Clauses 3 and 4 of the Bill)

(iii)The Indian evidence Act, 1872 is being amended to provide that where a woman has committed suicide within a period of seven years from date of her marriage and it is shown that her husband or any relative of her husband and subjected her to cruelty, the court may presume that such suicide had been abetted by her husband or by such relative of her husband (vide Clause 7 of the Bill) 3. The Bill seeks to achieve the above objectives."

3. Regarding the constitutionality of Section 498-A IPC, in Sushil Kumar Sharma v. Union of India and others (2005) 6 SCC 281 : AIR 2005 SC 3100, it was held by the Supreme Court:-

 

"Provision of S. 498A of Penal Code is not unconstitutional and ultra vires. Mere possibility of abuse of a provision of law does not per se invalidate a legislation. Hence plea that S. 498A has no legal or constitutional foundation is not tenable. The object of the provisions is prevention of the dowry menace. But many instances have come to light where the complaints are not bona fide and have been filed with oblique motive. In such cases acquittal of the accused does not in all cases wipe out the ignominy suffered during and prior to trial.

Sometimes adverse media coverage adds to the misery. The question, therefore, is what remedial measures can be taken to prevent abuse of the well-intentioned provision. Merely because the provision is constitutional and intra vires, does not give a licence to unscrupulous persons to wreck personal vendetta or unleash harassment.

It may, therefore, become necessary for the legislature to find out ways how the makers of frivolous complaints or allegations can be appropriately dealt with. Till then the Courts have to take care of the situation within the existing frame-work."

4. In B.S. Joshi and others v. State of Haryana and another (2003) 4 SCC 675 : AIR 2003 SC 1386, the Court observed:-
 
"There is no doubt that the object of introducing Chapter XX-A containing Section 498A in the Indian Penal Code was to prevent the torture to a woman by her husband or by relatives of her husband. Section 498A was added with a view to punishing a husband and his relatives who harass or torture the wife to coerce her or her relatives to satisfy unlawful demands of dowry.

The hyper-technical view would be counter productive and would act against interests of women and against the object for which this provision was added. There is eveiy likelihood that non-exercise of inherent power to quash the proceedings to meet the ends of justice would prevent women from settling earlier. That is not the object of Chapter XXA of Indian Penal Code."

5. In Brij Lal v. Prem Chand and another 3(1989) 2 SCR 612, this Court ruled thus:-

 

“It would not be out of place for us to refer here to the addition of Sections 113-A and 113-B to the Indian Evidence Act and Sections 498-A and 304-B to the Indian Penal Code by subsequent amendments. Section 113-A Evidence Act and 498-A Indian Penal Code have been introduced in the respective enactments by the Criminal Law (Second amendment) Act, 1983 (Act 46 of 1983) and Section 113-B of the Evidence Act and 304-B Indian Penal Code have been introduced by Act No. 43 of 1986.

The degradation of society due to the pernicious system of dowry and the unconscionable demands made by greedy and unscrupulous husbands and their parents and relatives resulting in an alarming number of suicidal and dowry deaths by women has shocked the Legislative conscience to such an extent that the Legislature has deemed it necessary to provide additional provisions of law, procedural as well as substantive, to combat the evil and has consequently introduced Sections 113-A and 113-B in the Indian

Evidence Act and Sections 498-A and 304-B in the Indian Penal Code. By reason of Section 113-A, the Courts can presume that the commission of suicide by a woman has been abetted by her husband or relation if two factors are present viz. (1) that the woman had committed suicide within a period of seven years from her marriage, and (2) that the husband or relation had subjected her to cruelty.

We are referring to these provisions only to show that the Legislature has realised the need to provide for additional provisions in the Indian Penal Code and the Indian Evidence Act to check the growing menace of dowry deaths…”

6. Presently, to the factual score. The instant Petitions have been preferred under Article 32 of the Constitution of India seeking directions to the respondents to create an enabling environment for married women subjected to cruelty to make informed choices and to create a uniform system of monitoring and systematically reviewing incidents of violence against women under Section 498-A IPC including their prevention, investigation, prosecution and rehabilitation of the victims and their children at the Central, State and District levels.

That apart, prayer has been made to issue a writ of mandamus to the respondents for a uniform policy of registration of FIR, arrest and bail in cases of Section 498-A IPC in consonance with the law of the land, i.e., to immediately register FIR on complaint of cruelty and harassment by married women as per the IPC.

7. It has been averred by the petitioners that hundreds of women are being subjected to horrific acts of violence often in the guise of domestic abuse or to extract more money from the girl’s natal family due to absence of any uniform system of monitoring and systematic review of incidents of violence against married women which has led to dilution of the legislative intent behind Section 498-A IPC.

And, in the wake of ever increasing crimes leading to unnatural deaths of women in marital homes, any dilution of Section 498-A IPC is not warranted.

8. It has been contended that Section 498-A IPC, since its introduction, has increasingly been vilified and associated with the perception that it is misused by women who frequently use it as a weapon against their in-laws. As per the petitioners, though there is general complaint that Section 498-A IPC is subject to gross misuse, yet there is no concrete data to indicate how frequently the provision has been misused.

Further, the Court, by whittling down the stringency of Section 498-A IPC, is proceeding on an erroneous premise that there is misuse of the said provision, whereas in fact misuse by itself cannot be a ground to repeal a penal provision or take away its teeth.

9. It is set forth in the petition that Section 498-A IPC has been specifically enacted to protect the vulnerable sections of the society who have been victims of cruelty and harassment. The social purpose behind Section 498-A IPC is being lost as the rigour of the said provision has been diluted and the offence has practically been made bailable by reason of various qualifications and restrictions prescribed by various decisions of this Court including Rajesh Sharma and others v. State of U.P. and another  AIR 2017 SC 3869 : 2017 (8) SCALE 313, a recent pronouncement.

10. It has also been submitted by the petitioners that the police is hesitant to arrest the accused on complaint of married women and the same inaction is justified by quoting various judgments, despite the fact that Section 498-A IPC discloses a non-bailable offence and sufficient checks and balances have been provided in the law itself under Section 41 CrPC. To prevent arbitrary and necessary arrest, the statute very clearly states that the police shall record reasons for effecting arrest as well as for not arresting.

 

11. The petitioners have also asseverated that there is lack of monitoring mechanism to track cases registered under Section 498-A IPC including systematic study of the reason of low convictions and due to this absence, penal laws have not been able to secure a safe married environment to women. This, as per the petitioners, has also resulted in rise in cases under Section 498-A IPC because the deterrent effect of the said provision is getting diluted. It is also the case of the petitioners that investigation by the police of offence under Section 498-A IPC is often unprofessional and callous and the investigating officers perceptibly get influenced by both the parties which results in perpetrators escaping conviction.

12. It is further contended that in many cases under Section 498-A, IPC the Court has not considered mental cruelty caused to the woman but has concentrated only on any sign of physical cruelty due to which the courts do not look into a case if the evidence does not show that the woman was physically harassed. This has led the courts to brand the woman on many occasions as hyper-sensitive or of low tolerance level.

13. It has been further averred that the alleged abuse of the penal provision is mostly by well-educated women who know that the offence is both cognizable and non-bailable and impromptu works on the complaint of the woman by placing the man behind the bars, but this cannot be a ground for denying the poor and illiterate women the protection that is offered by Section 498-A IPC against cruelty, rather there is a need to create awareness specifically in the rural areas about the laws for protection of women and consequent available remedies in case of breach.

14. It is also set forth in the petition that despite the Dowry Prohibition Act, 1961 being passed, the irony still survives perhaps with more oxygen, for the social evil of dowry is on the increase and is openly 11
practised with pride. It is put forth that women today are still tortured and often the court, despite being the ultimate saviour, does not come to the rescue of these women as a consequence of which an atmosphere of ambivalence prevails and such societal ambivalence creates a situation of war between two classes though in actuality the offence is relatable to individuals. A sorry state of affairs is pronouncedly asserted.

15. On the aforesaid bedrock, a prayer in Writ Petition (Civil) No. 73 of 2015 has been made to have a uniform policy of registration of FIR, arrest and bail in cases of Section 498-A IPC. It is worthy to note here that during the pendency of this Writ Petition, the judgment had been pronounced in Rajesh Sharma (supra). The Court in Rajesh Sharma (supra) issued the following guidelines:-

“19.i) (a) In every district one or more Family Welfare Committees be constituted by the District Legal Services Authorities preferably comprising of three members. The constitution and working of such committees may be reviewed from time to time and at least once in a year by the District and Sessions Judge of the district who is also the Chairman of the District Legal Services Authority.

(b) The Committees may be constituted out of para legal volunteers/social workers/retired persons/ wives of working officers/other citizens who may be found suitable and willing.

(c) The Committee members will not be called as witnesses.
 
(d) Every complaint under Section 498A received by the police or the Magistrate be referred to and looked into by such committee. Such committee may have interaction with the parties personally or by means of telephone or any other mode of communication including electronic communication.

(e) Report of such committee be given to the Authority by whom the complaint is referred to it latest within one month from the date of receipt of complaint.

(f) The committee may give its brief report about the factual aspects and its opinion in the matter.

(g) Till report of the committee is received, no arrest should normally be effected.

(h) The report may be then considered by the Investigating Officer or the Magistrate on its own merit.

(i) Members of the committee may be given such basic minimum training as may be considered necessary by the Legal Services Authority from time to time.

(j) The Members of the committee may be given such honorarium as may be considered viable.

(k) It will be open to the District and Sessions Judge to utilize the cost fund wherever considered necessary and proper.

ii) Complaints under Section 498A and other connected offences may be investigated only by a designated Investigating Officer of the area.

Such designations may be made within one month from today. Such designated officer may be required to undergo training for such duration (not less than one week) as may be considered appropriate.

The training may be completed within four months from today;

iii) In cases where a settlement is reached, it will be open to the District and Sessions Judge or any other senior Judicial Officer nominated by him in the district to dispose of the proceedings including closing of the criminal case if dispute primarily relates to matrimonial discord;  

iv) If a bail application is filed with at least one clear day‟s notice to the Public Prosecutor/complainant, the same may be decided as far as possible on the same day. Recovery of disputed dowry items may not by itself be a ground for denial of bail if maintenance or other rights of wife/minor children can otherwise be protected. Needless to say that in dealing with bail matters, individual roles, prima facie truth of the allegations, requirement of further arrest/ custody and interest of justice must be carefully weighed;

v) In respect of persons ordinarily residing out of India impounding of passports or issuance of Red Corner Notice should not be a routine;
vi) It will be open to the District Judge or a designated senior judicial officer nominated by the District Judge to club all connected cases between the parties arising out of matrimonial disputes so that a holistic view is taken by the Court to whom all such cases are entrusted; and

vii) Personal appearance of all family members and particularly outstation members may not be required and the trial court ought to grant exemption from personal appearance or permit appearance by video conferencing without adversely affecting progress of the trial.

viii) These directions will not apply to the offences involving tangible physical injuries or death.”

16. In the meanwhile, Writ Petition (Criminal) No. 156 of 2017 had been filed. A prayer had been made in the said Writ Petition to implement the suggestion that out of three members, at least two members should be appointed in the Family Welfare Committee. When this Writ Petition was listed on 13.10.2017, the following order came to be passed:-  

“Mr. Alok Singh, learned counsel for the petitioner though has a different set of prayers in the writ petition, it fundamentally requires this Court to implement directions rendered in Criminal Appeal No.1265 of 2017 [Rajesh Sharma vs. State of U.P. and Another].

Additionally, learned counsel would submit that certain lady members, certain organizations and welfare committees are to be involved.
At this stage, we are obligated to state that we are not in agreement with the decision rendered in Rajesh Sharma (supra) because we are disposed to think that it really curtails the rights of the women who are harassed under Section 498A of the Indian Penal Code. That apart, prima facie, we perceive that the guidelines may be in the legislative sphere.

Issue notice to the respondent Nos.1 to 3. No notice need be issued to the respondent No.4. Even if the petitioner does not take steps, the Registry shall see to it that the respondents are served. Ms. Indu Malhotra and Mr. V. Shekhar, learned senior counsel are appointed as Amicus Curiae to assist the Court in the matter.

List the matter on 29th November, 2017.”

17. Mr. V. Shekhar, learned senior counsel, was appointed as Amicus Curiae to assist the Court in the matter.

18. It was submitted by the learned Amicus Curiae that the decision in Rajesh Sharma (supra) requires reconsideration, for the said judgment confers powers on the Family Welfare Committee to be constituted by the District Legal Services Authority which is an extra-judicial committee of para legal volunteers/social workers/retired persons/wives of working officers/other citizens to look into the criminal complaints under Sections 498-A IPC in the first instance and further, there has been a direction that till such time a report of the committee is received, no arrest should be made. It is urged that the constitution of FWC to look into the criminal complaints under Section 498-A IPC is contrary to the procedure prescribed under the Code of Criminal Procedure.

19. It is further propounded that the directions in certain paragraphs of the judgment in Rajesh Sharma (supra) entrusting the power to dispose of the proceedings under Section 498-A IPC by the District and Sessions Judge or any other senior judicial officer nominated by him in the district in cases where there is settlement, are impermissible, for an offence under Section 498-A is not compoundable and hence, such a power could not have been conferred on any District and Sessions Judge or any senior judicial officer nominated by him.

Elaborating the said submission, it is canvassed that the High Court is empowered under Section 482 CrPC to quash the proceeding if there is a settlement between the parties. Learned Amicus Curiae further submitted that the recovery of disputed dowry items may not itself be a ground for denial of bail which is the discretion of the court to decide the application of grant of bail in the facts and circumstances of the case and thus, this tantamounts to a direction which is not warranted in law. Criticism has been advanced with regard to the direction in paragraph 19(v) which states that for persons who are ordinarily residing out of India, impounding of passports or issuance of Red Corner Notice should not be done in a routine manner.

It is urged that if an accused does not join the investigation relating to matrimonial/family offence, the competent court can issue appropriate directions to the concerned authorities to issue Red Corner Notice which will depend on the facts of the case.

20. Learned Amicus Curiae has further put forth that dispensation of personal appearance of outstation family members is unwarranted, for in a criminal proceeding, the competent court which deals with application of exemption should be allowed to exercise the judicial discretion and there should not have been a general direction by this Court. Certain suggestions have been given by the learned Amicus Curiae which we shall refer to at the relevant stage.

21. To appreciate the controversy, it is necessary to understand the scope of Section 498-A of IPC. It reads thus:-

498-A. Husband or relative of husband of a woman subjecting her to cruelty.—Whoever, being the husband or the relative of the husband of a woman, subjects such woman to cruelty shall be punished with imprisonment for a term which may extend to three years and shall also be liable to fine.

Explanation.—For the purpose of this section, “cruelty” means—

(a) any wilful conduct which is of such a nature as is likely to drive the woman to commit suicide or to cause grave injury or danger to life, limb or health (whether mental or physical) of the woman; or

(b) harassment of the woman where such harassment is with a view to coercing her or any person related to her to meet any unlawful demand for any property or valuable security or is on account of failure by her or any person related to her to meet such demand.”

22. The said offence is a cognizable and non-bailable offence. This Court in Arnesh Kumar v. State of Bihar and another (2014) 8 SCC 273 has observed that the said offence which is a cognizable and non-bailable offence has lent it a dubious place of pride amongst the provisions that are used as weapons rather than shield by disgruntled wives.

The simplest way to harass is to get the husband and his relatives arrested under this provision. The Court has taken note of the statistics under “Crime in India 2012 Statistics” published by the National Crime Records Bureau, Ministry of Home Affairs which shows arrest of 1,97,762 persons all over India during the year 2012 for the offence under Section 498-A. Showing concern, the Court held that arrest brings humiliation, curtails freedom and casts scars forever and the police had not learnt its lesson which is implicit and embodied in the Criminal Procedure Code. Commenting on the police, the Court said:-

“It has not come out of its colonial image despite six decades of Independence, it is largely considered as a tool of harassment, oppression and surely not considered a friend of public. The need for caution in exercising the drastic power of arrest has been emphasised time and again by the courts but has not yielded desired result. Power to arrest greatly contributes to its arrogance so also the failure of the Magistracy to check it. Not only this, the power of arrest is one of the lucrative sources of police corruption. The attitude to arrest first and then proceed with the rest is despicable. It has become a handy tool to the police officers who lack sensitivity or act with oblique motive.”

23. The Court, thereafter, has drawn a distinction between the power to arrest and justification for the exercise of it and analysed Section 41 CrPC. Section 41 stipulates when police may arrest without warrant. The said provision reads as follows:-

41. When police may arrest without warrant.—(1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person—

(a) who commits, in the presence of a police officer, a cognizable offence;

(b) against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether with or without fine, if the following conditions are satisfied, namely:–

(i) the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence;

(ii) the police officer is satisfied that such arrest is necessary–
(a) to prevent such person from committing any further offence; or
(b) for proper investigation of the offence; or 19
(c) to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or
(d) to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the police officer; or
(e) as unless such person is arrested, his presence in the Court whenever required cannot be ensured,
and the police officer shall record while making such arrest, his reasons in writing.

Provided that a police officer shall, in all cases where the arrest of a person is not required under the provisions of this sub-section, record the reasons in writing for not making the arrest.
(ba) against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence.
(c) who has been proclaimed as an offender either under this Code or by order of the State Government; or
(d) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or
(e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or
(f) who is reasonable suspected of being a deserter from any of the Armed Forces of the Union; or
(g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable 20
suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or
(h) who, being a released convict, commits a breach of any rule made under subsection (5) of section 356; or
(i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition.
(2) Subject to the provisions of section 42, no person concerned in a non-cognizable offence or against whom a complaint has been made or credible information has been received or reasonable suspicion exists of his having so concerned, shall be arrested except under a warrant or order of a Magistrate.”
24. Scrutinising the said provision, the Court held as under:-
“7.1. From a plain reading of the aforesaid provision, it is evident that a person accused of an offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years with or without fine, cannot be arrested by the police officer only on his satisfaction that such person had committed the offence punishable as aforesaid. A police officer before arrest, in such cases has to be further satisfied that such arrest is necessary to prevent such person from committing any further offence; or for proper investigation of the case; or to prevent the accused from causing the evidence of the offence to disappear; or tampering with such evidence in any manner; or to prevent such person from making any inducement, threat or promise to a witness so as to dissuade him from disclosing such facts to the court or the police officer; or unless such accused person is arrested, his 21
presence in the court whenever required cannot be ensured. These are the conclusions, which one may reach based on facts.
x x x x x
7.3. In pith and core, the police officer before arrest must put a question to himself, why arrest? Is it really required? What purpose it will serve? What object it will achieve? It is only after these questions are addressed and one or the other conditions as enumerated above is satisfied, the power of arrest needs to be exercised. In fine, before arrest first the police officers should have reason to believe on the basis of information and material that the accused has committed the offence. Apart from this, the police officer has to be satisfied further that the arrest is necessary for one or the more purposes envisaged by sub-clauses (a) to (e) of clause (1) of Section 41 CrPC.”
25. The learned Judges, thereafter, referred to Section 41-A CrPC which has been inserted by Section 6 of the Code of Criminal Procedure (Amendment) Act, 2008 (5 of 2009). The said provision is to the following effect:-
41-A. Notice of appearance before police officer.—(1) The police officer shall, in all cases where the arrest of a person is not required under the provisions of sub-section (1) of Section 41, issue a notice directing the person against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence, to appear before him or at such other place as may be specified in the notice.
(2) Where such a notice is issued to any person, it shall be the duty of that person to comply with the terms of the notice.
(3) Where such person complies and continues to comply with the notice, he shall not be arrested in respect of the 22
offence referred to in the notice unless, for reasons to be recorded, the police officer is of the opinion that he ought to be arrested.
(4) Where such person, at any time, fails to comply with the terms of the notice or is unwilling to identify himself, the police officer may, subject to such orders as may have been passed by a competent court in this behalf, arrest him for the offence mentioned in the notice.”
Explaining the said provision, it has been ruled:-
“9. …The aforesaid provision makes it clear that in all cases where the arrest of a person is not required under Section 41(1) CrPC, the police officer is required to issue notice directing the accused to appear before him at a specified place and time. Law obliges such an accused to appear before the police officer and it further mandates that if such an accused complies with the terms of notice he shall not be arrested, unless for reasons to be recorded, the police officer is of the opinion that the arrest is necessary. At this stage also, the condition precedent for arrest as envisaged under Section 41 CrPC has to be complied and shall be subject to the same scrutiny by the Magistrate as aforesaid.”
The Court further went on to say that:-
“10. We are of the opinion that if the provisions of Section 41 CrPC which authorises the police officer to arrest an accused without an order from a Magistrate and without a warrant are scrupulously enforced, the wrong committed by the police officers intentionally or unwittingly would be reversed and the number of cases which come to the Court for grant of anticipatory bail will substantially reduce. We would like to emphasise that the practice of mechanically reproducing in the case diary all or most of the reasons contained in Section 41 CrPC for effecting arrest be discouraged and discontinued.”
The directions issued in the said case are worthy to note:-
11. Our endeavour in this judgment is to ensure that police officers do not arrest the accused unnecessarily and Magistrate do not authorise detention casually and 23
mechanically. In order to ensure what we have observed above, we give the following directions:
11.1. All the State Governments to instruct its police officers not to automatically arrest when a case under Section 498-A IPC is registered but to satisfy themselves about the necessity for arrest under the parameters laid down above flowing from Section 41 CrPC;
11.2. All police officers be provided with a check list containing specified sub-clauses under Section 41(1)(b)(ii);
11.3. The police officer shall forward the check list duly filled and furnish the reasons and materials which necessitated the arrest, while forwarding/producing the accused before the Magistrate for further detention;
11.4. The Magistrate while authorising detention of the accused shall peruse the report furnished by the police officer in terms aforesaid and only after recording its satisfaction, the Magistrate will authorise detention;
11.5. The decision not to arrest an accused, be forwarded to the Magistrate within two weeks from the date of the institution of the case with a copy to the Magistrate which may be extended by the Superintendent of Police of the district for the reasons to be recorded in writing;
11.6. Notice of appearance in terms of Section 41-A CrPC be served on the accused within two weeks from the date of institution of the case, which may be extended by the Superintendent of Police of the district for the reasons to be recorded in writing;
11.7. Failure to comply with the directions aforesaid shall apart from rendering the police officers concerned liable for departmental action, they shall also be liable to be punished for contempt of court to be instituted before the High Court having territorial jurisdiction.
11.8. Authorising detention without recording reasons as aforesaid by the Judicial Magistrate concerned shall be liable for departmental action by the appropriate High Court.”
26. The aforesaid decision, as is perceptible, is in accord with the legislative provision. The directions issued by the Court are in the nature of statutory reminder of a constitutional court to the authorities for proper 24
implementation and not to behave like emperors considering the notion that they can do what they please. In this context, we may refer with profit to a passage from Joginder Kumar v. State of U.P and others6:- “20. … No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for a police officer in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person‟s complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter. The recommendations of the Police Commission merely reflect the constitutional concomitants of the fundamental right to personal liberty and freedom. A person is not liable to arrest merely on the suspicion of complicity in an offence. There must be some reasonable justification in the opinion of the officer effecting the arrest that such arrest is necessary and justified. Except in heinous offences, an arrest must be avoided if a police officer issues notice to person to attend the Station House and not to leave the Station without permission would do.” 27. Again, the Court in Joginder Kumar (supra), while voicing its concern regarding complaints of human rights pre and after arrest, observed thus:-
6 (1994) 4 SCC 260
“9. A realistic approach should be made in this direction. The law of arrest is one of balancing individual rights, liberties and privileges, on the one hand, and individual duties, obligations and responsibilities on the other; of weighing and balancing the rights, liberties and privileges of the single individual and those of individuals collectively; of simply deciding what is wanted and where to put the weight and the emphasis; of 25
deciding which comes first—the criminal or society, the law violator or the law abider….”
28. In D.K. Basu v. State of W.B.7, after referring to the authorities in Joginder Kumar (supra), Nilabati Behera v. State of Orissa and others8 and State of M.P. v. Shyamsunder Trivedi and others9, the Court laid down certain guidelines and we think it appropriate to reproduce the same:- “(1) The police personnel carrying out the arrest and handling the interrogation of the arrestee should bear accurate, visible and clear identification and name tags with their designations. The particulars of all such police personnel who handle interrogation of the arrestee must be recorded in a register. (2) That the police officer carrying out the arrest of the arrestee shall prepare a memo of arrest at the time of arrest and such memo shall be attested by at least one witness, who may either be a member of the family of the arrestee or a respectable person of the locality from where the arrest is made. It shall also be countersigned by the arrestee and shall contain the time and date of arrest. (3) A person who has been arrested or detained and is being held in custody in a police station or interrogation centre or other lock-up, shall be entitled to have one friend or relative or other person known to him or having interest in his welfare being informed, as soon as practicable, that he has been arrested and is being detained at the particular place, unless the attesting witness of the memo of arrest is himself such a friend or a relative of the arrestee.
7 (1997) 1 SCC 416 8 (1993) 2 SCC 746 9 (1995) 4 SCC 262
(4) The time, place of arrest and venue of custody of an arrestee must be notified by the police where the next friend or relative of the arrestee lives outside the district or town through the Legal Aid Organisation in the District and the 26
police station of the area concerned telegraphically within a period of 8 to 12 hours after the arrest. (5) The person arrested must be made aware of this right to have someone informed of his arrest or detention as soon as he is put under arrest or is detained. (6) An entry must be made in the diary at the place of detention regarding the arrest of the person which shall also disclose the name of the next friend of the person who has been informed of the arrest and the names and particulars of the police officials in whose custody the arrestee is. (7) The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor injuries, if any, present on his/her body, must be recorded at that time. The “Inspection Memo” must be signed both by the arrestee and the police officer effecting the arrest and its copy provided to the arrestee. (8) The arrestee should be subjected to medical examination by a trained doctor every 48 hours during his detention in custody by a doctor on the panel of approved doctors appointed by Director, Health Services of the State or Union Territory concerned. Director, Health Services should prepare such a panel for all tehsils and districts as well. (9) Copies of all the documents including the memo of arrest, referred to above, should be sent to the Illaqa Magistrate for his record. (10) The arrestee may be permitted to meet his lawyer during interrogation, though not throughout the interrogation. (11) A police control room should be provided at all district and State headquarters, where information regarding the arrest and the place of custody of the arrestee shall be communicated by the officer causing the arrest, within 12 hours of effecting the arrest and at the police control room it should be displayed on a conspicuous notice board.”
29. In Lalita Kumari v. Government of Uttar Pradesh and others10, the Constitution Bench, referring to various provisions of CrPC, adverted
10 (2014) 2 SCC 1 27
to the issue of conducting a preliminary enquiry. Eventually, the Court opined that the scope of preliminary enquiry is not to verify the veracity or otherwise of the information received but only to ascertain whether the information reveals any cognizable offence and, thereafter, proceeded to state thus:- 120.6. As to what type and in which cases preliminary inquiry is to be conducted will depend on the facts and circumstances of each case. The category of cases in which preliminary inquiry may be made are as under: (a) Matrimonial disputes/family disputes (b) Commercial offences (c) Medical negligence cases (d) Corruption cases (e) Cases where there is abnormal delay/laches in initiating criminal prosecution, for example, over 3 months‟ delay in reporting the matter without satisfactorily explaining the reasons for delay. The aforesaid are only illustrations and not exhaustive of all conditions which may warrant preliminary inquiry.” 30. From the aforesaid, it is quite vivid that the Constitution Bench had suggested that preliminary enquiry may be held in matrimonial/family disputes. 31. In Rajesh Sharma (supra), as is noticeable, the Court had referred to authorities in Arnesh Kumar (supra) and Lalita Kumari (supra) and observed that:-
“16. Function of this Court is not to legislate but only to interpret the law. No doubt in doing so laying down of norms 28
is sometimes unavoidable.11 Just and fair procedure being part of fundamental right to life,12 interpretation is required to be placed on a penal provision so that its working is not unjust, unfair or unreasonable. The court has incidental power to quash even a non-compoundable case of private nature, if continuing the proceedings is found to be oppressive.13 While stifling a legitimate prosecution is against public policy, if the proceedings in an offence of private nature are found to be oppressive, power of quashing is exercised. 17. We have considered the background of the issue and also taken into account the 243rd Report of the Law Commission dated 30th August, 2012, 140th Report of the Rajya Sabha Committee on Petitions (September, 2011) and earlier decisions of this Court. We are conscious of the object for which the provision was brought into the statute. At the same time, violation of human rights of innocent cannot be brushed aside. Certain safeguards against uncalled for arrest or insensitive investigation have been addressed by this Court. Still, the problem continues to a great extent. 18. To remedy the situation, we are of the view that involvement of civil society in the aid of administration of justice can be one of the steps, apart from the investigating officers and the concerned trial courts being sensitized. It is also necessary to facilitate closure of proceedings where a genuine settlement has been reached instead of parties being required to move High Court only for that purpose.” 32. After so stating, the directions have been issued which we have reproduced in paragraph 15 hereinabove.
11 Sahara India Real Estate Corporation Limited v. Securities and Exchange Board of India : (2012) 10 SCC 603, Para 52; SCBA v. Union of India : (1998) 4 SCC 409, Para 47; Union of India v. Raghubir Singh (d) by Lrs. : (1989) 2 SCC 754, Para 7; Dayaram v. Sudhir Batham : (2012) 1 SCC 333 12 State of Punjab v. Dalbir Singh : (2012) 3 SCC 346, Paras 46, 52 & 85 13 Gian Singh v. State of Punjab : (2012) 10 SCC 303, Para 61
33. On a perusal of the aforesaid paragraphs, we find that the Court has taken recourse to fair procedure and workability of a provision so 29
that there will be no unfairness and unreasonableness in implementation and for the said purpose, it has taken recourse to the path of interpretation. The core issue is whether the Court in Rajesh Sharma (supra) could, by the method of interpretation, have issued such directions. On a perusal of the directions, we find that the Court has directed constitution of the Family Welfare Committees by the District Legal Services Authorities and prescribed the duties of the Committees. The prescription of duties of the Committees and further action therefor, as we find, are beyond the Code and the same does not really flow from any provision of the Code. There can be no denial that there has to be just, fair and reasonable working of a provision. The legislature in its wisdom has made the offence under Section 498-A IPC cognizable and non-bailable. The fault lies with the investigating agency which sometimes jumps into action without application of mind. The directions issued in Arnesh Kumar (supra) are in consonance with the provisions contained in Section 41 CrPC and Section 41-A CrPC. Similarly, the guidelines stated in Joginder Kumar (supra) and D.K. Basu (supra) are within the framework of the Code and the power of superintendence of the authorities in the hierarchical system of the investigating agency. The purpose has been to see that the investigating agency does not abuse the power and arrest people at its whim and fancy. 30
34. In Rajesh Sharma (supra), there is introduction of a third agency which has nothing to do with the Code and that apart, the Committees have been empowered to suggest a report failing which no arrest can be made. The directions to settle a case after it is registered is not a correct expression of law. A criminal proceeding which is not compundable can be quashed by the High Court under Section 482 CrPC. When settlement takes place, then both the parties can file a petition under Section 482 CrPC and the High Court, considering the bonafide of the petition, may quash the same. The power rests with the High Court. In this regard, we may reproduce a passage from a three-Judge Bench in Gian Singh (supra). In the said case, it has been held that:-
“61. … Inherent power is of wide plenitude with no statutory limitation but it has to be exercised in accord with the guideline engrafted in such power viz.: (i) to secure the ends of justice, or (ii) to prevent abuse of the process of any court. In what cases power to quash the criminal proceeding or complaint or FIR may be exercised where the offender and the victim have settled their dispute would depend on the facts and circumstances of each case and no category can be prescribed. However, before exercise of such power, the High Court must have due regard to the nature and gravity of the crime. Heinous and serious offences of mental depravity or offences like murder, rape, dacoity, etc. cannot be fittingly quashed even though the victim or victim‟s family and the offender have settled the dispute. Such offences are not private in nature and have a serious impact on society. Similarly, any compromise between the victim and the offender in relation to the offences under special statutes like the Prevention of Corruption Act or the offences committed by public servants while working in that capacity, etc.; cannot provide for any basis for quashing criminal proceedings involving such offences. But the criminal cases having 31
overwhelmingly and predominatingly civil flavour stand on a different footing for the purposes of quashing, particularly the offences arising from commercial, financial, mercantile, civil, partnership or such like transactions or the offences arising out of matrimony relating to dowry, etc. or the family disputes where the wrong is basically private or personal in nature and the parties have resolved their entire dispute. In this category of cases, the High Court may quash the criminal proceedings if in its view, because of the compromise between the offender and the victim, the possibility of conviction is remote and bleak and continuation of the criminal case would put the accused to great oppression and prejudice and extreme injustice would be caused to him by not quashing the criminal case despite full and complete settlement and compromise with the victim.”
35. Though Rajesh Sharma (supra) takes note of Gian Singh (supra), yet it seems to have it applied in a different manner. The seminal issue is whether these directions could have been issued by the process of interpretation. This Court, in furtherance of a fundamental right, has issued directions in the absence of law in certain cases, namely, Lakshmi Kant Pandey v. Union of India14, Vishaka and others v. State of Rajasthan and others15 and Common Cause (A Registered Society) v. Union of India and another16 and some others. In the obtaining factual matrix, there are statutory provisions and judgments in the field and, therefore, the directions pertaining to constitution of a Committee and conferment of power on the said Committee is
14 (1984) 2 SCC 244
15 (1997) 6 SCC 241 16 (2018) 5 SCC 1 32
erroneous. However, the directions pertaining to Red Corner Notice, clubbing of cases and postulating that recovery of disputed dowry items may not by itself be a ground for denial of bail would stand on a different footing. They are protective in nature and do not sound a discordant note with the Code. When an application for bail is entertained, proper conditions have to be imposed but recovery of disputed dowry items may not by itself be a ground while rejecting an application for grant of bail under Section 498-A IPC. That cannot be considered at that stage. Therefore, we do not find anything erroneous in direction Nos. 19(iv) and (v). So far as direction No. 19(vi) and 19(vii) are concerned, an application has to be filed either under Section 205 CrPC or Section 317 CrPC depending upon the stage at which the exemption is sought.
36. We have earlier stated that some of the directions issued in Rajesh Sharma (supra) have the potential to enter into the legislative field. A three-Judge Bench in Suresh Seth v. Commissioner, Indore Municipal Corporation and others17 ruled thus:-
17 (2005) 13 SCC 287
“5. … In our opinion, this is a matter of policy for the elected representatives of people to decide and no direction in this regard can be issued by the Court. That apart this Court cannot issue any direction to the legislature to make any particular kind of enactment. Under our constitutional scheme Parliament and Legislative Assemblies exercise sovereign power to enact laws and no outside power or authority can issue a direction to enact a particular piece of legislation. In Supreme Court Employees’ Welfare Assn. v. 33
Union of India18 (SCC para 51) it has been held that no court can direct a legislature to enact a particular law. Similarly, when an executive authority exercises a legislative power by way of a subordinate legislation pursuant to the delegated authority of a legislature, such executive authority cannot be asked to enact a law which it has been empowered to do under the delegated legislative authority. …”
18 (1989) 4 SCC 187 19 (2015) 2 SCC 796 20 (2004) 9 SCC 362 21 (1970) 1 SCC 248 22 (1994) 2 SCC 691 23 (1997) 7 SCC 592 24 (2011) 7 SCC 639 25 (1998) 4 SCC 117
37. Another three-Judge Bench in Census Commissioner and others v. R. Krishnamurthy19, after referring to N.D. Jayal and another v. Union of India and others20, Rustom Cavasjee Cooper v. Union of India21, Premium Granites and another v. State of T.N. and others22, M.P. Oil Extraction and another v. State of M.P. and others23, State of Madhya Pradesh v. Narmada Bachao Andolan and another24 and State of Punjab and others v. Ram Lubhaya Bagga and others25, opined:- “33. From the aforesaid pronouncement of law, it is clear as noon day that it is not within the domain of the courts to embark upon an enquiry as to whether a particular public policy is wise and acceptable or whether a better policy could be evolved. The court can only interfere if the policy framed is absolutely capricious or not informed by reasons or totally arbitrary and founded ipse dixit offending the basic requirement of Article 14 of the Constitution. In certain matters, as often said, there can be opinions and opinions but the court is not expected to sit as an appellate authority on an opinion.” 34
38. In the aforesaid analysis, while declaring the directions pertaining to Family Welfare Committee and its constitution by the District Legal Services Authority and the power conferred on the Committee is impermissible. Therefore, we think it appropriate to direct that the investigating officers be careful and be guided by the principles stated in Joginder Kumar (supra), D.K. Basu (supra), Lalita Kumari (supra) and Arnesh Kumar (supra). It will also be appropriate to direct the Director General of Police of each State to ensure that investigating officers who are in charge of investigation of cases of offences under Section 498-A IPC should be imparted rigorous training with regard to the principles stated by this Court relating to arrest.
39. In view of the aforesaid premises, the direction contained in paragraph 19(i) as a whole is not in accord with the statutory framework and the direction issued in paragraph 19(ii) shall be read in conjunction with the direction given hereinabove.
40. Direction No. 19(iii) is modified to the extent that if a settlement is arrived at, the parties can approach the High Court under Section 482 of the Code of Criminal Procedure and the High Court, keeping in view the law laid down in Gian Singh (supra), shall dispose of the same.
41. As far as direction Nos. 19(iv), 19(v) and 19(vi) and 19(vii) are concerned, they shall be governed by what we have stated in paragraph 35. 35
42. With the aforesaid modifications in the directions issued in Rajesh Sharma (supra), the writ petitions and criminal appeal stand disposed of. There shall be no order as to costs.
…..………………………..,CJI
(Dipak Misra)
…..…………………………..,J
(A.M. Khanwilkar)
..………………………….….,J
(Dr. D.Y. Chandrachud)
New Delhi;
September 14 , 2018.

Supreme Court Order Staying Further Constructions In States/Union Territories Until Solid Waste Management Policy Is Framed

MASTI

The Supreme Court has in order dated 31st August 2018 stayed further constructions in the States/Union Territories until the Solid Waste Management Policy is framed.

The Supreme Court held that it is unfortunate that some States and Union Territories have not yet framed any Policy under the Solid Waste Management Rules, 2016.

It was pointed out by the Supreme Court that in case the States have the interest of the people in mind and cleanliness and sanitation, they should frame a Policy in terms of the Solid Waste Management Rules so that the States remain clean.

It was held by the Supreme Court that the attitude of the States/Union Territories in not yet framing a Policy even after two years is pathetic, to say the least.

ITEM NO.60 COURT NO.3 SECTION PIL-W
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
SMW (C) No(s).1/2015

IN RE: OUTRAGE AS PARENTS END LIFE AFTER CHILDS DENGUE

Date : 31-08-2018 This petition was called on for hearing today.

CORAM :
HON’BLE MR. JUSTICE MADAN B. LOKUR
HON’BLE MR. JUSTICE S. ABDUL NAZEER

UPON hearing the counsel the Court made the following

O R D E R

It is stated that the States of Bihar, Jammu and Kashmir, Tamil Nadu, Kerala and Arunachal Pradesh have deposited the costs.

Andhra Pradesh

The affidavit in terms of the order dated 10th July, 2018 has not been filed.

The Union of India is not aware whether the State Policy has been framed by the State of Andhra Pradesh since the affidavit has not been filed.

In any event, no one is present on behalf of the State of Andhra Pradesh to assist us. However, an appearance slip has been given on behalf of the advocate who is not present.

Costs of Rs.5,00,000/- (Rupees five lakhs only) is imposed on the State of Andhra Pradesh to be deposited with the Supreme Court Legal Services Committee within two weeks for utilization of juvenile justice issues.

U.T. of Chandigarh

The Union Territory of Chandigarh has not framed its State Policy.

Even there is no appearance on behalf of the Union Territory of Chandigarh. However, an appearance slip has been given on behalf of the advocate who is not present.

Costs of Rs.3,00,000/- (Rupees three lakhs only) is imposed on the Union Territory of Chandigarh to be deposited with the Supreme Court Legal Services Committee within two weeks for utilization of juvenile justice issues.

Kerala

As prayed for, two weeks’ time is granted to the State of Kerala for filing the affidavit.

Madhya Pradesh, Maharashtra, Odisha and Uttarakhand

Costs of Rs.3,00,000/- (Rupees three lakhs only) each is imposed on the States of Madhya Pradesh, Maharashtra and Uttarakhand for not framing the State Policy/not complying with the orders of this Court. The amount be deposited with the Supreme Court Legal Services Committee within two weeks for utilization of juvenile justice issues.

It is unfortunate that some States and Union Territories have not yet framed any Policy under the Solid Waste Management Rules, 2016.

In case the States have the interest of the people in mind and cleanliness and sanitation, they should frame a Policy in terms of the Solid Waste Management Rules so that the States remain clean.

The attitude of the States/Union Territories in not yet framing a Policy even after two years is pathetic, to say the least.

Further constructions in the States/Union Territories are stayed until the Policy is framed.

List the matter on 9th October, 2018.

INTERLOCUTORY APPLICATION NO 109465/2018 (Application for Modification of Court’s order dated 10.7.2018 filed by Mr. M. Shoeb Alam, Advocate on behalf of State of Jammu & Kashmir)

List the application on 9th October, 2018.

(SANJAY KUMAR-I) (KAILASH CHANDER)

AR-CUM-PS ASSISTANT REGISTRAR

Mr. Colin Gonsalves, Sr. Adv. (AC)
Ms. Nabila Hasan, Adv.
Ms. Sneha Mukharji, Adv.
Ms. Olivia Bang, Adv.

For Petitioner(s)

For Respondent(s)

UOI & Delhi Mr. A.N.S. Nadkarni, ASG
Moef Mr. S. Wasim A. Qadri, Adv.
Ms. Saudamini Sharma, Adv.
Ms. Suhasini Sen, Adv.
Mr. D.L. Chidanand, Adv.
Mr. Raj Bahadur, Adv.
Mr. Ritesh Kumar, Adv.
Mrs. Anil Katiyar, Adv.
Mr. G.S. Makker, Adv.
Mr. B.V. Balram Das, Adv.
Mr. Chirag M. Shroff, AOR
Ms. Neha Sangwan, Adv.
Ms. Sanjana Nangia, Adv.
EDMC Mr. Sanjiv Sen, Sr. Adv.
Mr. Praveen Swarup, Adv.

NHAI Mr. Mukesh Kumar, Adv.
for M/s. M.V. Kini & Associates
CPCB Mr. Avijit Roy, AOR

For States of
Arunachal Pradesh Mr. A. Tewari, Adv.

Ms. Eliza Bar, Adv.
Mr. Shree Pal Singh, Adv.
Assam Mr. Shuvodeep Roy, Adv.
Mr. Sayooj Mohandas, Adv.
Bihar Mr. M. Shoeb Alam, Adv.
Ms. Fauzia Shakil, Adv.
Mr. Ujjwal Singh, Adv.
Mr. Mojahid Karim Khan, Adv.
Chhattisgarh Mr. Atul Jha, Adv.
Mr. Sandeep Jha, Adv.
Mr. D.K. Sinha, Adv.
Goa Mr. A.N.S. Nadkarni, ASG
Ms. Mayuri Nayyar Chawla, Adv.
Mr. S.S. Rebello, Adv.
Mr. P.S. Sudheer, Adv.
Ms. Shruti Jose, Adv.
Gujarat Ms. Hemantika Wahi, Adv.
Ms. Mamta Singh, Adv.
Ms. Vishakha, Adv.
Ms. Pallavi Baghel, Adv.
Haryana Mr. Anil Grover, AAG
Mr. Shivam Kumar, Adv.
Mr. Sanjay Kumar Visen, Adv.
H.P. Mr. Vikas Mahajan, AAG
Mr. Vinod Sharma, Adv.
J&K Mr. M. Shoeb Alam, Adv.
Ms. Fauzia Shakil, Adv.
Mr. Ujjwal Singh, Adv.
Mr. Mojahid Karim Khan, Adv.
Jharkhand Mr. Tapesh Kumar Singh, Adv.
Mr. Mohd. Waquas, Adv.
Mr. Aditya Pratap Singh, Adv.
Karnataka Mr. V.N. Raghupathy, Adv.
Kerala Mr. K.N. Balgopal, Sr. Adv.
Mr. G. Prakash, Adv.
Mr. Jishnu M.L., Adv.
Ms. Priyanka Prakash, Adv.
Ms. Beena Prakash, Adv.
Madhya Pradesh Mr. Arjun Garg, Adv.
Mr. Devansh Shrivastava, Adv.
Maharashtra Ms. Deepa M. Kulkarni, Adv.
Mr. Nishant R. Katneshwarkar, Adv.
Manipur Mr. Leishangthem Roshmani, Adv.
Ms. Maibam Babina, Adv.
Meghalaya Mr. Ranjan Mukherjee, Adv.
Mr. Subhro Sanyal, Adv.

Nagaland Ms. K. Enatoli Sema, Adv.
Mr. Amit Kumar Singh, Adv.
Mr. Z.H. Isaac Haiding, Adv.
Odisha Mr. Som Raj Choudhury, Adv.
Mr. Prashant Kumar, Adv.
Punjab Mr. Naginder Benipal, Adv.
Mr. Abhigya, Adv.
Rajasthan Mr. S.S. Shamshery, AAG
Mr. Amit Sharma, Adv.
Mr. Sandeep Singh, Adv.
Mr. Ankit Raj, Adv.
Ms. Indira Bhakar, Adv.
Ms. Ruchi Kohli, AOR
Sikkim Ms. Aruna Mathur, Adv.
Mr. Avneesh Arputham, Adv.
Ms. Anuradha Arputham, Adv.
Ms. Geetanjali, Adv.
for M/s Arputham Aruna & Co.
Tamil Nadu Mr. Shekhar Naphade, Sr. Adv.
Mr. B. Vinodh Kanna, Adv.
Mr. A. Sriram, Adv.
Telangana Mr. P. Venkat Reddy, Adv.
Mr. Prashant Tyagi, Adv.
Tripura Mr. Shuvodeep Roy, Adv.
Mr. Rituraj Biswas, Adv.
Uttar Pradesh Ms. Aishwarya Bhati, AAG
Mr. Garvesh Kabra, Adv.
Mr. V.V.V. Pattabhiram, Adv.
Uttarakhand Mr. J.K. Sethi, Dy. AG
Mr. Ankur Prakash, Adv.
Mr. Ashutosh Kumar Sharma, Adv.
W.B Mr. Suhaan Mukerji, Adv.
Mr. Harsh Hiroo Gursahani, Adv.
Ms. Astha Sharma, Adv.
Mr. Abhishek Manchanda, Adv.
Ms. Kajal Dalal, Adv.
For M/s PLR Chambers & Co.
A&N Mr. K.V. Jagdishvaran, Adv.
Mrs. G. Indira, Adv.
Dadra & Nagar Mr. Deepak Jain, Adv.
Haveli Ms. Jaspreet, Adv.
Ms. Prabhleen Kaur, Adv.
Mr. Vaibhav Manu Srivastava, Adv.
Daman & Diu Mr. Deepak Jain, Adv.
Ms. Jaspreet, Adv.
Ms. Prabhleen Kaur, Adv.
Mr. Vaibhav Manu Srivastava, Adv.
Puducherry Mr. V.G. Pragasam, Adv.
Mr. S. Prabu Ramasubramanian, Adv.
Mr. S. Manuraj, Adv.

Latest Supreme Court Judgement On Employment Of Scheduled Caste candidates

MASTI

The latest judgement of the Supreme Court dated 30th August 2018 in BIR SINGH VERSUS DELHI JAL BOARD & ORS lays down the law on the important question whether a person belonging to a Scheduled Caste in relation to a particular State would be entitled or not, to the benefits or concessions allowed to Scheduled Caste candidate in the matter of employment, in any other State?

Lordship Justice Ranjan Gogoi and Ladyship Justice R. BANUMATHI agreed that a person notified as a Scheduled Caste in State ‘A’ cannot claim the same status in another State on the basis that he is declared as a Scheduled Caste in State ‘A’ and that it will be in consonance with the constitutional scheme to understand the enabling provision under Article 16(4) to be available to provide reservation only to the classes or categories of Scheduled Castes/Scheduled Tribes enumerated in the Presidential orders for a particular State/Union Territory within the geographical area of that State/Union Territory (Union Territory added by me) and not beyond.

Hon’ble R. BANUMATHI, J. has given a dissenting judgement on the question whether so far as the National Capital Territory of Delhi is concerned the pan-India Reservation Rule in force is in accord with the constitutional scheme relating to services under the Union and the States/Union Territories.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1085 OF 2013

BIR SINGH ….APPELLANT(S)
VERSUS

DELHI JAL BOARD & ORS. ….RESPONDENT(S)
WITH

CIVIL APPEAL NO(S) 99359937 OF 2014
CIVIL APPEAL NO(S).10081 OF 2014
CIVIL APPEAL NO(S). 8141 OF 2014
CIVIL APPEAL NO(S). 8802 OF 2012
CIVIL APPEAL NO(S).1086 OF 2013
CIVIL APPEAL NO.9048 OF 2018
[ARISING OUT OF S.L.P(C) NO.36324 OF 2017]

J U D G M E N T

RANJAN GOGOI, J

1. Leave granted in Special Leave Petition (Civil) No.36324 of 2017

2. In State of Uttaranchal vs. Sandeep Kumar Singh and others1 [Civil Appeal No.4494 of 2006) the following question arose for consideration of this Court: "Whether a person belonging to a Scheduled Caste in relation to a particular State would be entitled or not, to the benefits or concessions allowed to Scheduled Caste candidate in the matter of employment, in any other State?"

3. In the course of the deliberations that took place this Court noticed the Constitution Bench judgments of this Court in Marri Chandra Shekhar Rao vs. Dean, Seth G.S. Medical College and others2 and Action Committee on Issue of Caste Certificate to Scheduled Castes and Scheduled Tribes in the State of Maharashtra and another vs. Union of India and another3.

The view of a three Judge Bench of this Court in S. Pushpa and others vs. Sivachanmugavelu and others4 was also noticed and the same was perceived to be somewhat contrary to the view expressed by the Constitution Bench in the above two cases. This Court also took note of the fact that a two judge Bench of this Court in Subhash Chandra and another vs. Delhi Subordinate Services Selection Board and others5 held that the dicta in S. Pushpa (supra) is an obiter and does not lay down any binding ratio.

The Bench hearing the case i.e. State of Uttaranchal vs. Sandeep Kumar Singh and others (supra) took the view that "it was not open to a two judge Bench to say that the decision of a three judge Bench rendered following the Constitution Bench judgments to be per incuriam". In this regard, the canons of judicial discipline carved out by this Court in Central Board of Dawoodi Bohra Community and another vs. State of Maharashtra and another6 were recalled and eventually in paragraph 13 of the opinion rendered in State of Uttaranchal vs. Sandeep Kumar Singh and others (supra) the reference of the question noted below was made to a larger Bench:

"13. A very important question of law as to interpretation of Articles 16(4), 341 and 342 arises for consideration in this appeal. Whether the Presidential Order issued under Article 341(1) or Article 342(1) of the Constitution has any bearing on the State’s action in making provision for the reservation of appointments or posts in favour of any Backward Class of citizens which, in the opinion of the State, is not adequately represented in the services under the State? The extent and nature of interplay and interaction among Articles 16(4), 341(1) and 342(1) of the Constitution is required to be resolved."

4. The said Civil Appeal No.4494 of 2006 (State of Uttaranchal vs. Sandeep Kumar Singh and others) was disposed of by the larger Bench of this Court by order dated 6th August, 2014, in the light of the findings of the High Court recorded in paragraph 4 of the High Court order to the effect that the order impugned suffers from an apparent illegality as the appointing authority of the petitioner therein is the University and the University had acted at the dictate of the State Government, which has no power to ask for cancellation of an appointment made in accordance with the advertisement. In the aforesaid order dated 6th August, 2014 this Court took the view that the conclusions recorded in paragraph 4 of 4 the High Court order cannot be said to be legally flawed and accordingly closed the said Civil Appeal (No. 4494 of 2006) on the aforesaid basis. The question referred was not answered.

5. However, the question arising and referred to in the State of Uttaranchal vs. Sandeep Kumar Singh and others (supra) was felt to be surviving and subsisting in the present appeals also. Accordingly, by an order of the Court dated 7th August, 2014, the very same question as formulated in paragraph 13 of the judgment in State of Uttaranchal vs. Sandeep Kumar Singh and others (supra), as extracted above, has been referred for an answer by a five judge Bench of this Court. That is how we are in seisin of the matters.

6. The factual matrix need not detain us and a brief resume will suffice. The question as to whether a policy in furtherance of the enabling provision contained in Article 16(4) of the Constitution of 5 India could extend to giving of benefits beyond the Scheduled Castes and Scheduled Tribes of a State/Union Territory enumerated in the Presidential Orders framed/issued under Articles 341 and 342 of the Constitution of India had arisen in the bunch of writ petitions filed before the High Court of Delhi against the order/orders of the Central Administrative Tribunal.

The learned Tribunal following Marri Chandra Shekhar Rao (supra) and Action Committee (supra), in preference to the view expressed in S. Pushpa (supra) (three judge Bench) held that insofar as the Union Territory of Delhi is concerned, a migrant Scheduled Caste person would not be entitled to the benefits conferred on members of the Scheduled Castes enumerated in the list for the Union Territory of Delhi by the Presidential Order (i.e. the Scheduled Castes and Scheduled Tribes Lists (Modification) Order, 1956) in question.

The Delhi High Court sitting in a Full Bench (perhaps in view of the importance of the question) found the decision in S. Pushpa (supra) to be more directly relatable to the issue at hand i.e. being one of services in the Union Territory and, therefore, felt to be bound by the decision of the three judge Bench of this Court in S. Pushpa (supra). While doing so, the Delhi High court in paragraph 66 of the judgment emphasised on the necessity of an authoritative pronouncement on the issue(s) arising. Accordingly, certificate to appeal under Article 134A of the Constitution was granted by the High Court. Paragraph 66 of the judgment of the Full Bench of the Delhi High Court will require a specific notice and is, therefore, reproduced below:

"66. This court summarizes its conclusions, as follows:

(1) The decisions in Marri, Action Committee, Milind and Channaiah have all ruled that scheduled caste and tribe citizens moving from one State to another cannot claim reservation benefits, whether or not their caste is notified in the state where they migrate to, since the exercise of notifying scheduled castes or tribes is region (state) specific, i.e " in relation" to the state of their origin. These judgments also took note of the Presidential Notifications, which had enjoined such citizens to be "residents" in relation to the state which provided for such reservations.

(2) The considerations which apply to Scheduled Caste and Tribe citizens who migrate from state to state, apply equally in respect of those who migrate from a state to a union territory, in view of the text of Articles 341 (1) and 342 (1), i.e. only those castes and tribes who are notified in relation to the concerned Union Territory, are entitled to such benefits. This is reinforced by the Presidential Notification in relation to Union Territories, of 1951. Only Parliament can add to such notification, and include other castes, or tribes, in view of Articles 341 (2), Article 342(2) which is also reinforced by Article 16(3).

States cannot legislate on this aspect; nor can the executive Union or state, add to or alter the castes, or tribes in any notification in relation to a state or Union Territory, either through state legislation or through policies or circulars. Differentiation between residents of states, who migrate to states, and residents of states who migrate to Union Territories would result in invidious discrimination and overclassification thus denying equal access to reservation benefits, to those who are residents of Union Territories, and whose castes or tribes are included in the Presidential Order in respect of 8 such Union Territories. The Pushpa interpretation has led to peculiar consequences, whereby:

(i) The resident of a state, belonging to a scheduled caste, notified in that state, cannot claim reservation benefit, if he takes up residence in another state, whether or not his caste is included in the latter State’s list of scheduled castes;

(ii) However, the resident of a state who moves to a Union Territory would be entitled to carry his reservation benefit, and status as member of scheduled caste, even if his caste is not included as a scheduled caste, for that Union Territory;

(iii) The resident of a Union Territory would however, be denied the benefit of reservation, if he moves to a State, because he is not a resident scheduled caste of that State.

(iv) The resident of a Union Territory which later becomes a State, however, can insist that after such event, residents of other states, whose castes may or may not be notified, as scheduled castes, cannot be treated as such members in such newly formed states;

(v) Conversely, the scheduled caste resident of a state which is converted into a Union Territory, cannot protest against the treatment of scheduled caste residents of other states as members of scheduled caste of the Union Territory, even though their castes are not 9 included in the list of such castes, for the Union Territory.

(3) The ruling in Pushpa is clear that if the resident of a state, whose caste is notified as Scheduled caste or scheduled tribe, moves to a Union Territory, he carries with him the right to claim that benefit, in relation to the Union Territory, even though if he moves to another state, he is denied such benefit (as a result of the rulings in Marri and Action Committee). The ruling in Pushpa, being specific about this aspect visàvis Union Territories, is binding; it was rendered by a Bench of three judges.

(4) The later ruling in Subhash Chandra doubted the judgment in Pushpa, holding that it did not appreciate the earlier larger Bench judgments in the correct perspective. Yet, Subhash Chandra cannot be said to have overruled Pushpa, since it was rendered by a smaller Bench of two judges. This approach of Subhash Chandra has been doubted, and the question as to the correct view has been referred to a Constitution Bench in the State of Uttaranchal case.

(5) By virtue of the specific ruling applicable in the case of Union Territories, in Pushpa, whatever may be the doubts entertained as to the soundness of its reasoning, the High Courts have to apply its ratio, as it is by a formation of 10 three judges; the said decision did notice the earlier judgments in Marri and Action Committee. Article 141 and the discipline enjoined by the doctrine of precedent compels this Court to follow the Pushpa ruling.

(6) In matters pertaining to incidence of employment, such as seniority, promotion and accelerated seniority or promotional benefits, flowing out of Articles 16 (4A) and (4B) of the Constitution, there may be need for clarity, whichever rule is ultimately preferred i. e the Pushpa view or the Marri and Action Committee view. In such event, it may be necessary for the guidance of decision makers and High Courts, to spell out whether the correct view should be applied prospectively. Furthermore, it may be also necessary to clarify what would be meant by prospective application of the correct rule, and whether such employment benefits flowing after recruitment, would be altered if the Marri view is to be preferred."

7. Civil Appeal Nos.99359937 of 2014 from the decision of the Calcutta High court pertain to claims made by persons belonging to Uraons and Mundas members of the Scheduled Tribes 11 communities who have migrated to the Union Territory of Andaman & Nicobar Island. The High Court rejected the claim of reservation made by the aforesaid migrants Scheduled Tribes communities confining such benefits to the Scheduled Castes communities enumerated in the list appearing in the Presidential Order pertaining to the Union Territory of Andaman & Nicobar Island.

8. Before delving into the constitutional provisions which would be necessary to be dealt with for answering the reference a brief look at the preconstitutional position on the issue would throw considerable light and provide a sound insight to the multifaceted questions that the reference has given rise to.

9. The caste system in India, which is the bane of a just social order, has a long history which can be traced to the earliest times. Ancient Hindu religious scriptures refer to the practice. Division of Society based on birth and the calling/profession of a person has continued to dominate Hindu thinking and way of life and is perhaps one of the thorny problems inherited by the British Administration which had tried to resolve the same by giving legal recognition to what came to be termed as the "depressed classes". Such recognition was in the form of a protective regime which extended to representation in the Legislature and in the services under the State.

Exercises in finding out the numerical strength of the depressed class in the early 20th Century (By Southborough Committee) revealed a grim picture indicating such number to be as high as 20 per cent of the majority population (Hindu) in eight (08) Indian Provinces of Madras, Bombay, Bengal, United Provinces, Punjab, Bihar and Orissa, Central Provinces and Assam. The above figure did not include primitive or aboriginal tribes who later came to be known as the Scheduled Tribes and included in the list of Scheduled Tribes under the different Presidential Orders issued from time to time.

10. The Government of India Act, 1935 (hereinafter referred to as "1935 Act") (also referred to as "the Constitution Act") brought into force the expression "Scheduled Castes" for the first time in Indian Constitutional history. Entry 26 Part I of the First Schedule to the 1935 Act stipulates that "the Scheduled Castes mean such castes, races or tribes or parts of or groups within the castes, races or tribes, being castes, races, tribes, parts or groups, which appear to His Majesty in Council to correspond to the classes of persons formerly known as ‘the depressed classes’, as His Majesty in Council may specify".

11. Thereafter a Gazette Notification was published on 6th June, 1936 promulgating the Government of India (Scheduled Castes) Order, 1936 notifying the list of castes that are to be considered as "the Scheduled Castes" across the territory of India. A look at the Schedule which consisted of nine (09) parts i.e. Madras, Bombay, Bengal, United Provinces, Punjab, Bihar, Central Provinces, Assam, Orissa would indicate that identification of the different castes for inclusion as Scheduled Castes in the Schedule to the 1935 Act was based on an elaborate exercise conducted for each of the Provinces so much so that while some castes have been identified as Scheduled Castes throughout a Province, others have been so identified to limited areas within a province.

The post constitutional exercise by the Constitution (Scheduled Castes) Order, 1950 and the Constitution (Scheduled Tribes) Order, 1950, as originally enacted under Articles 341 and 342 of the Constitution, was basically an exercise in recasting the Schedule to the 1935 Act. The subsequent amendments to the aforesaid two Orders, from time to time, have been necessitated to bring the position in tune with the amendments to the First Schedule to the Constitution made at different points of time by creation of new States and alterations in the area and boundaries of existing States.

12. Article 366 of the Constitution which defines expressions appearing in the Constitution specifically defines ‘Scheduled Castes’ [clause (24)] to mean "such castes, races or tribes or parts of or groups within such castes, races or tribes as are deemed under Article 341 to be Scheduled Castes for the purposes of this Constitution". Similarly, clause (25) of Article 366 defines "Scheduled Tribes" to mean "such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be Scheduled Tribes for the purposes of this Constitution".

13. Part XVI of the Constitution of India deals with special provisions relating to certain classes. Article 330 provides for reservation of seats for Scheduled Castes and Scheduled Tribes in the House of the People (Lok Sabha) whereas Article 332 contains similar provisions so far as the Legislative Assemblies of the States are concerned. Article 335 of the Constitution provides that "the claims of the members of the Scheduled Castes and Scheduled Tribes shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts in connection with the affairs of the Union or of a State".

By the Constitution (Eighty Second) Amendment Act, 2000 a proviso to Article 335 was added to provide that the members of the Scheduled Castes and Scheduled Tribes may be granted relaxation in qualifying marks in any examination or standards of evaluation can be lowered in matters of promotion to any class or classes of services or posts in connection with the affairs of the Union or of a State. Article 338 of the Constitution provides for a National Commission for Scheduled Cates which is invested with the following duties:

"(a) to investigate and monitor all matters relating to the safeguards provided for the Scheduled Castes under this Constitution or under any other law for the time being in force or under any order of the Government and to evaluate the working of such safeguards;

(b) to inquire into specific complaints with respect to the deprivation of rights and safeguards of the Scheduled Castes;

(c) to participate and advise on the planning process of socioeconomic development of the Scheduled Castes and to evaluate the progress of their development under the Union and any State; the Scheduled Castes and to evaluate the progress of their development under the Union and any State;

(d) to present to the President, annually and at such other times as the Commission may deem fit, reports upon the working of those safeguards; deem fit, reports upon the working of those safeguards;

(e) to make in such reports recommendations as to the measures that should be taken by the Union or any State for the effective implementation of those safeguards and other measures for the protection, welfare and socioeconomic development of the Scheduled Castes; and

(f) to discharge such other functions in relation to the protection, welfare and development and advancement of the Scheduled Castes as the President may, subject to the provisions of any law made by Parliament, by the rule specify."

14. Similarly, Article 338A provides for a National Commission for Scheduled Tribes which is vested with similar duties as in the case of the Commission for the Scheduled Castes.

15. Article 341(1) of the Constitution empowers the President with respect to any State or Union Territory, and where it is a State, after consultation with the Governor thereof, by public notification, to specify the castes, races or tribes or parts of or groups within castes, races or tribes which shall for the purposes of the Constitution be deemed to be Scheduled Castes in relation to that State or Union Territory, as the case may be.

16. In case of Scheduled Tribes the President has been similarly empowered under Article 342(1) of the Constitution. Subclause (2) of Article 341 and Article 342 empowers the Parliament by law to include in or exclude from the list of Scheduled Castes/Scheduled Tribes specified in the Notification issued under clause (1) thereof any caste, race or tribe/tribal community or part of or group within any caste, race or tribe/tribal community. It is further provided that except as provided i.e. by Parliament by law(s) made, the notification issued under Article 341(1) or Article 342(1) shall not be varied by any subsequent notification. The constitutional mandate, therefore, appears to be that any caste, race or tribe/tribal community or part of or group within any caste, race or tribe/tribal community as has been specified in the Presidential Order under clause (1) of Article 341 or Article 342 can be altered only by Parliament by law(s) made.

17. Article 341 and Article 342 also makes it clear that the caste, race or tribe or part of or group within any caste, race or tribe as specified in the Presidential Order under Article 341(1) or a tribe or tribal community as may be specified in the Presidential Order under Article 342(1) shall be deemed to be Scheduled Castes/Scheduled Tribes for the purposes of the Constitution in relation to that State or Union Territory, as the case may be. The above position is further made clear by clause (2) of the two Presidential Orders which are in the following terms.

"Clause 2 of the Constitution (Scheduled Castes) Order, 1950

2. Subject to the provisions of this Order, the castes, races or tribes or parts of, or groups within, castes or tribes specified in Parts I to XXV of the Schedule to this Order shall, in relation to the States to which those Parts respectively relate, be deemed to be Scheduled Castes so far as regards member thereof resident in the localities specified in relation to them in those Parts of that Schedule.

Clause 2 of the Constitution (Scheduled Tribes) Order, 1950

2. The Tribes or tribal communities, or parts of, or groups within, tribes or tribal communities, specified in Parts I to XXII of the Schedule to this Order shall, in relation to the States to which those Parts respectively relate, be deemed to be Scheduled Tribes so far as regards members thereof residents in the localities specified in relation to them respectively in those Parts of that Schedule."

18. There are various parameters by which a caste/race is recognized as ‘Scheduled Caste/Scheduled Tribe’ in a State/Union Territory or a particular part thereof. There is no doubt that before the Presidential Orders were issued under Article 341(1) or under Article 342(1), elaborate enquiries were made and only after such enquiries that the Presidential Orders were issued. While doing so, the Presidential Orders not only provided that even specified parts or groups of castes, races or tribes/tribal community could be Scheduled Castes/Tribes in a particular State/Union Territory but also made it clear that certain castes or tribes or parts/groups thereof could be Scheduled Castes/Tribes only in specified/particular areas/districts of a State/Union Territory.

The reason for such an exercise by reference to specific areas of a State is that judged by standards of educational, social backwardness, etc. races or tribes may not stand on the same footing throughout the State. The consideration for specifying a particular caste or tribe or class for inclusion in the list of Scheduled Castes and Scheduled Tribes or Backward Classes in any given State depends on the nature and extent of the disadvantages and social hardships 22 suffered by the concerned members of the class in that State. These may be absent in another State to which the persons belonging to some other State may migrate.

19. The Presidential Orders which enumerate lists of castes/races, tribes recognized as ‘Scheduled Caste/Scheduled Tribe’ cannot be challenged or agitated in a court of law except, perhaps, on the limited ground as held in M. Nagaraj and others vs. Union of India and others7. A few illustrations may clarify the position. The question whether Dohar caste is a subcaste of Chamar caste which is recognized as a scheduled caste came up for consideration in Bhaiya Lal vs. Harikishan Singh8. This Court held that the court cannot enquire into whether Dohar caste is a subcaste of Chamar caste and whether the same must be deemed to have been included in the Presidential Order.

In Bhaiya Lal (supra), this Court held that before issuing notifications under Articles 341 and 342, an elaborate enquiry is made and as a result of the enquiry social justice is sought to be done to the castes, races or tribes as may appear to be necessary. It was further held that only Parliament is empowered to amend the Notification under Articles 341(2) and 342(2) of the Constitution, as is underlined by the expression "but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent notification" occurring in each of the said provisions. In Bhaiya Lal (supra), this Court held as under:"

10…The object of Article 341(1) plainly is to provide additional protection to the members of the Scheduled Castes having regard to the economic and educational backwardness from which they suffer. It is obvious that in specifying castes, races or tribes, the President has been expressly authorised to limit the notification to parts of or groups within the castes, races or tribes, and that must mean that after examining the educational and social backwardness of a caste, race or tribe, the President may well come to the conclusion that not the whole caste, race or tribe but parts of or groups within them should be specified. Similarly, the President can specify castes, races or tribes or parts thereof in relation not only to the entire State, but in relation to parts of the State where he is satisfied that the examination of the social and educational are backwardness of the race, caste or tribe justifies such specification.

In fact, it is well known that before a notification is issued under Article 341(1), an elaborate enquiry is made and it is as a result of this enquiry that social justice is sought to be done to the castes, races or tribes as may appear to be necessary, and in doing justice, it would obviously be expedient not only to specify parts or groups of castes, races or tribes, but to make the said specification by reference to different areas in the State. Educational and social backwardness in regard to these castes, races or tribes may not be uniform or of the same intensity in the whole of the State; it may vary in degree or in kind in different areas and that may justify the division of the State into convenient and suitable areas for the purpose of issuing the public notification in question…"

[Underlining added]

20. Whenever States’ reorganization had taken place in the past, Parliament had exercised its powers under Article 341(2) and Article 342(2) and provided for specific Castes/Tribes that were entitled to be recognised as Scheduled Castes and Scheduled Tribes in relation to the reorganized States/Union Territories. The Scheme of the Constitution (Scheduled Castes) and (Scheduled Tribes) Orders makes it clear that Parliament’s intention was to extend the benefits of reservation in relation to the States/Union Territories only to the castes, races or tribes as mentioned in the Presidential Orders.

21. The Orders of 1950 was amended by the Constitution (Scheduled Castes and Scheduled Tribes Order), by the Amendment Act, 1956 (Act 63/1956). Another amending Act was enacted by parliament in 1976. Earlier, orders had been made for the first time in relation to certain territories, such as the Constitution (Andaman and Nicobar Islands) Scheduled Tribes Order, 1959. Further, amendments had taken place as and when parliament reorganized states, through separate Reorganisation Acts, which led to large scale modification of the Presidential Orders.

Illustratively, when new States/Union Territories were formed such as, Nagaland, Pondicherry, or Sikkim, the Scheduled Castes or Scheduled Tribes Orders were made in relation to the new States/Union Territories, for instance, the Constitution (Nagaland) Scheduled Tribes Order, 1970after the reorganisation of Assam; the Constitution (Sikkim) Scheduled Castes Order, 1978; the Constitution (Sikkim) Scheduled Tribes Order, 1978) upon creation of the State of Sikkim; the recent ones being upon creation of the States of Uttarakhand, Chhattisgarh, and Jharkhand. Likewise, when previous Union Territories (such as Goa, Mizoram and Arunachal Pradesh) were constituted into States, consequential amendments were made to the Scheduled Castes and Tribes Orders. All such amendments/enactments were made by Parliament.

22. Though in a different context i.e. in relation to Backward Classes this Court in M.C.D. v. Veena and Ors.9, has specifically held that migrants are not entitled for reservation as Other Backward Classes (OBCs) in the States/Union Territories where they have migrated. The relevant portion of the judgment that may be noticed is as hereunder:"

6. Castes or groups are specified in relation to a given State or Union Territory, which obviously means that such caste would include caste belonging to an OBC group in relation to that State or Union Territory for which it is specified. The matters that are to be taken into consideration for specifying a particular caste in a particular group belonging to OBCs would depend on the nature and extent of disadvantages and social hardships suffered by that caste or group in that State. However, it may not be so in another State to which a person belonging thereto goes by migration. It may also be that a caste belonging to the same nomenclature is specified in two States but the considerations on the basis of which they had been specified may be totally different.

So the degree of disadvantages of various elements which constitute the data for specification may also be entirely different. Thus, merely because a given caste is specified in one State as belonging to OBCs does not necessarily mean that if there be another group belonging to the same nomenclature in another State, a person belonging to that group is entitled to 28 the rights, privileges and benefits admissible to the members of that caste. These aspects have to be borne in mind in interpreting the provisions of the Constitution with reference to application of reservation to OBCs."

23. A Constitution Bench of this Court in Marri Chandra Shekhar Rao (supra) had the occasion to consider the question as to whether a member of the Gouda community which is recognised as "Scheduled Tribe" in the Constitution (Scheduled Tribes) Order, 1950 for the State of Andhra Pradesh would be entitled to admission in a medical institution situated in the State of Maharashtra. This Court noticed the fact that the father of the petitioner in Marri Chandra Shekhar Rao (supra) was an employee in Fertilizer Corporation of India, a public sector undertaking and thereafter in Rashtriya Chemicals and Fertilizers Limited, a Government of India undertaking. He belonged to the Gouda community, a recognized Scheduled Tribe of Andhra Pradesh.

On his appointment he was stationed at Bombay. The petitioner came to Bombay at the age of nine years. He completed his studies in Bombay; he submitted an application for his admission in the medical institutions run by Bombay Municipal Corporation which was denied. This denial of admission was based on the Government of India circular dated 22nd February, 1985, according to which a person who migrates from one State to another is entitled to the benefit of being Scheduled Castes/Scheduled Tribes in the State of origin and not in the State to which he or she migrates. The appellant was held not entitled to be admitted to the Medical College on the basis that he belonged to a Scheduled Tribe in his original State i.e. Andhra Pradesh.

24. After referring to various provisions of the Constitution of India, the background in which the Presidential Orders were issued and several earlier judgments of this Court, it was held as under:

"9. It appears that Scheduled Castes and Scheduled Tribes in some States had to suffer the social disadvantages and did not have the facilities for development and growth. It is, therefore, necessary in order to make them equal in those areas where they have so suffered and are in the state of underdevelopment to have reservations or protection in their favour so that they can compete on equal terms with the more advantageous or developed sections of the community.

Extreme social and economic backwardness arising out of traditional practices of untouchability is normally considered as criterion for including a community in the list of Scheduled Castes and Scheduled Tribes. The social conditions of a caste, however, varies from State to State and it will not be proper to generalise any caste or any tribe as a Scheduled Tribe or Scheduled Caste for the whole country. This, however, is a different problem whether a member or the Scheduled Caste in one part of the country who migrates to another State or any other Union territory should continue to be treated as a Scheduled Caste or Scheduled Tribe in which he has migrated. That question has to be judged taking into consideration the interest and wellbeing of the Scheduled Castes and Scheduled Tribes in the country as a whole."

[underlining is ours]

25. In Marri Chandra Shekhar Rao (supra), rejecting the contention that a member of Scheduled Castes/Scheduled Tribes should get the benefit of the status ‘for the purpose of the Constitution throughout the territory of India’, it was observed that if such contention is to be accepted the expression "In relation of that State" would become nugatory.

26. Marri Chandra Shekhar Rao (supra) was followed by another Constitution Bench of this Court in Action Committee (supra). After referring to Articles 14, 15(1), 15(4), 16(4) and 19 and Part XVI of the Constitution of India and the decisions governing the field and also Articles 341 and 342, it was held as under:"

3. On a plain reading of clause (1) of Articles 341 and 342 it is manifest that the power of the President is limited to specifying the castes or tribes which shall, for the purposes of the 32 Constitution, be deemed to be Scheduled Castes or Scheduled Tribes in relation to a State or a Union Territory, as the case may be. Once a notification is issued under clause (1) of Articles 341 and 342 of the Constitution, Parliament can by law include in or exclude from the list of Scheduled Castes or Scheduled Tribes, specified in the notification, any caste or tribe but save for that limited purpose the notification issued under clause (1), shall not be varied by any subsequent notification.

What is important to notice is that the castes or tribes have to be specified in relation to a given State or Union Territory. That means a given caste or tribe can be a Scheduled Caste or a Scheduled Tribe in relation to the State or Union Territory for which it is specified. These are the relevant provisions with which we shall be concerned while dealing with the grievance made in this petition.

…. 16. We may add that considerations for specifying a particular caste or tribe or class for inclusion in the list of Scheduled Castes/Schedule Tribes or backward classes in a given State would depend on the nature and extent of disadvantages and social hardships suffered by that caste, tribe or class in that State which may be totally non est in another State to which persons belonging thereto may migrate. Coincidentally it may be that a caste or tribe bearing the same nomenclature is specified in two States but the 33 considerations on the basis of which they have been specified may be totally different. So also the degree of disadvantages of various elements which constitute the input for specification may also be totally different.

Therefore, merely because a given caste is specified in State A as a Scheduled Caste does not necessarily mean that if there be another caste bearing the same nomenclature in another State the person belonging to the former would be entitled to the rights, privileges and benefits admissible to a member of the Scheduled Caste of the latter State "for the purposes of this Constitution". This is an aspect which has to be kept in mind and which was very much in the minds of the Constitutionmakers as is evident from the choice of language of Articles 341 and 342 of the Constitution…."

[underlining is ours]

27. Marri Chandra Shekhar Rao (supra) and Action Committee (supra) were followed in Subhash Chandra and another (supra). After referring to various judgments on the point and also the various circulars, this Court in Subhash Chandra and another (supra) held as under:34

"69. Both the Central Government and the State Government indisputably may lay down a policy decision in regard to reservation having regard to Articles 15 and 16 of the Constitution of India but such a policy cannot violate other constitutional provisions. A policy cannot have primacy over the constitutional scheme. If for the purposes of Articles 341 and 342 of the Constitution of India, State and the Union Territory are on a par on the ground of administrative exigibility (sic) or in exercise of the administrative power, the constitutional interdict contained in clause (2) of Article 341 or clause (2) of Article 342 of the Constitution of India cannot be got rid of. …….

75. If a caste or tribe is notified in terms of the Scheduled Castes Order or the Scheduled Tribes Order, the same must be done in terms of clause (1) of Article 341 as also that of Article 342 of the Constitution of India, as the case may be. No deviation from the procedure laid down therein is permissible in law. If any amendment/alteration thereto is required to be made, recourse to the procedure laid down under clause (2) thereof must be resorted to."

28. In Marri Chandra Shekhar Rao (supra), the Constitution Bench observed that the expression "in relation to that State" must be read meaningfully and harmoniously. 35 It was observed that if a member of Scheduled Castes/Scheduled Tribes gets the benefit of that status throughout the territory of India, the expression "in relation to that State" would become nugatory. If the special privileges or the rights granted to scheduled castes or scheduled tribes in a particular State are to be made available in all the States and if such benefits are to be carried from State ‘A’ to State ‘B’ on migration, the mandate of Article 341/342 would get compromised. Such a consequence must be avoided for it is a fundamental rule of interpretation, be it of a statutory enactment or of the Constitution, that wherever and whenever there is a conflict between two provisions, the same should be so interpreted as to give effect to both. "…….Nothing is surplus in a Constitution and no part should be made nugatory…..". [Marri Chandra Shekhar Rao (supra)]

29. The issue has to be viewed from another perspective. If a member of a Scheduled Caste/ Scheduled Tribe of Andhra Pradesh who had migrated to Maharashtra is to be given the benefit of reservation it will amount to depriving a member of a Scheduled Caste/Scheduled Tribe of Maharashtra by reducing the reservation earmarked for them. It is in this context, in Marri Chandra Shekhar Rao (supra), that the Constitution Bench observed as under:"

14. ….But having regard to the purpose, it appears to us that harmonious construction enjoins that we should give to each expression – "in relation to that State" or "for the purposes of this Constitution" – its full meaning and give their full effect. This must be so construed that one must not negate the other. The construction that reservation made in respect of the Scheduled Caste or Tribe of that State is so determined to be entitled to all the privileges and rights under the Constitution in that State would be the most correct way of reading, consistent with the language, purpose and scheme of the Constitution.

Otherwise, one has to bear in mind that if reservations to those who are treated as Scheduled Caste or Tribe in Andhra Pradesh are also given to a boy or a girl who migrates and gets deducted (sic inducted) in the State of Maharashtra or other States where that caste or tribe is not treated as Scheduled Caste or Scheduled Tribe then either reservation will have the effect of depriving the percentage to the member of that caste or tribe in Maharashtra who would be entitled to protection or it would denude the other nonScheduled Castes or nonScheduled Tribes in Maharashtra to the proportion that they are entitled to. This cannot be logical or correct result designed by the Constitution."

30. Unhesitatingly, therefore, it can be said that a person belonging to a Scheduled Caste in one State cannot be deemed to be a Scheduled Caste person in relation to any other State to which he migrates for the purpose of employment or education. The expressions "in relation to that State or Union Territory" and "for the purpose of this Constitution" used in Articles 341 and 342 of the Constitution of India would mean that the benefits of reservation provided for by the Constitution would stand 38 confined to the geographical territories of a State/Union Territory in respect of which the lists of Scheduled Castes/Scheduled Tribes have been notified by the Presidential Orders issued from time to time. A person notified as a Scheduled Caste in State ‘A’ cannot claim the same status in another State on the basis that he is declared as a Scheduled Caste in State ‘A’.

31. In S. Pushpa (supra), the Pondicherry Government had appointed Selection Grade Teachers in 1995 under the Scheduled Castes quota from amongst the scheduled castes candidates registered in the employment exchange in Pondicherry but also extended the benefit of reservation to scheduled castes candidates of other States and Union Territories. The Chennai Bench of Central Administrative Tribunal ("CAT" for short) quashed the selection process holding that migrant Scheduled Castes/Scheduled Tribes 39 candidates could not be considered for appointment for posts within the union territory of Pondicherry. In S. Pushpa (supra) the issue was with regard to the extent of benefit that Scheduled Castes candidates of other States/Union Territories would be entitled to in Pondicherry. This Court held that in the matter of providing reservation, it was open to the Pondicherry Government to apply or adopt a policy to give the benefit of reservation to migrant Scheduled Castes and Scheduled Tribes. In paragraphs 17 and 21 in S. Pushpa (supra), it was held as under:

"17. We do not find anything inherently wrong or any infraction of any constitutional provision in such a policy. The principle enunciated in Marri Chandra Shekhar Rao cannot have application here as UT of Pondicherry is not a State. As shown above, a Union Territory is administered by the President through an Administrator appointed by him. In the context of Article 246, Union Territories are excluded from the ambit of the expression "State" occurring therein.

This was clearly explained by a Constitution Bench in T.M. Kanniyan v. ITO. In New Delhi Municipal Council v. State of Punjab the majority has approved the ratio of T.M. Kanniyan and has held that the Union Territories are not States for the purpose of Part XI of the Constitution (para 145). The Tribunal has, therefore, clearly erred in applying the ratio of Marri Chandra Shekhar Rao in setting aside the selection and appointment of migrant SC candidates.

(underlining is ours)

*** *** ***

21. ….Article 16(4) is not controlled by a Presidential Order issued under Article 341(1) or Article 342(1) of the Constitution in the sense that reservation in the matter of appointment on posts may be made in a State or Union Territory only for such Scheduled Castes and Scheduled Tribes which are mentioned in the Schedule appended to the Presidential Order for that particular State or Union Territory. This article does not say that only such Scheduled Castes and Scheduled Tribes which are mentioned in the Presidential Order issued for a particular State alone would be recognised as backward classes of citizens and none else.

If a State or Union Territory makes a provision whereunder the benefit of reservation is extended only to such Scheduled Castes or Scheduled Tribes which are recognised as such in relation to that State or Union Territory then such a provision would be perfectly valid. However, there would be no infraction of clause (4) of Article 16 if a Union Territory by virtue of its peculiar position being governed by the President as laid down in Article 239 extends the benefit of reservation even to such migrant Scheduled Castes or Scheduled Tribes who are not mentioned in the Schedule to the Presidential Order issued for such Union Territory. The UT of Pondicherry having adopted a policy of the Central Government whereunder all Scheduled Castes or Scheduled Tribes, irrespective of their State are eligible for posts which are reserved for SC/ST candidates, no legal infirmity can be ascribed to such a policy and the same cannot be held to be contrary to any provision of law."

32. The upshot of the aforesaid discussion would lead us to the conclusion that the Presidential Orders issued under Article 341 in regard to Scheduled Castes and under Article 342 in regard to Scheduled Tribes cannot be varied or altered by any authority including the Court. It is the Parliament alone which has been vested with the power to so act, that too, by laws made. Scheduled Castes and Scheduled Tribes thus specified in relation to a State or a Union Territory does not carry the same status in another State or Union Territory. Any expansion/deletion of the list of Scheduled Castes/Scheduled Tribes by any authority except Parliament would be against the constitutional mandate under Articles 341 and 342 of the Constitution of India.

33. Article 16(4) is an enabling provision. It enables the State to provide to backward classes including Scheduled Castes and Scheduled Tribes reservation in appointments to public services. Such reservation is to be provided on the basis of quantifiable data indicating the adequacy or inadequacy, as may be, of the representation of such classes in Government service. The data which is the basis of the satisfaction of the State being verifiable, is open to judicial scrutiny on the limited ground of relevance of the circumstances on which the satisfaction is moulded. The policy decision to provide 43 reservation, of course, is beyond the pale of judicial review.

34. It is an unquestionable principle of interpretation that interrelated statutory as well as constitutional provisions have to be harmoniously construed and understood so as to avoid making any provision nugatory and redundant. If the list of Scheduled Castes/Scheduled Tribes in the Presidential Orders under Article 341/342 is subject to alteration only by laws made by Parliament, operation of the lists of Scheduled Castes and Scheduled Tribes beyond the classes or categories enumerated under the Presidential Order for a particular State/Union Territory by exercise of the enabling power vested by Article 16(4) would have the obvious effect of circumventing the specific constitutional provisions in Articles 341/342.

In this regard, it must also be noted that the power under Article 16(4) is not only capable of being exercised by a legislative provision/enactment but also by an Executive Order issued under Article 166 of the Constitution. It will, therefore, be in consonance with the constitutional scheme to understand the enabling provision under Article 16(4) to be available to provide reservation only to the classes or categories of Scheduled Castes/Scheduled Tribes enumerated in the Presidential orders for a particular State/Union Territory within the geographical area of that State and not beyond.

If in the opinion of a State it is necessary to extend the benefit of reservation to a class/category of Scheduled Castes/Scheduled Tribes beyond those specified in the Lists for that particular State, constitutional discipline would require the State to make its views in the matter prevail with the central authority so as to enable an appropriate parliamentary exercise to be made by an amendment of the Lists of Scheduled Castes/Scheduled Tribes for that particular State. Unilateral action by States on the touchstone of Article 16(4) of the Constitution could be a possible trigger point of constitutional anarchy and therefore must be held to be impermissible under the Constitution.

35. The decision in S. Pushpa (supra) may now be taken up to understand the basis on which the conclusion recorded therein was recorded. In S. Pushpa (supra) a distinction was found by this Court in the constitutional status of a Union Territory and a State in relation to the Union/Central Government. The provisions of Article 239 and 239A of the Constitution; Section 3(8) of the General Clauses Act, 1897 defining ‘Central Government’ and the provisions of the Government of Union Territories Act, 1963 were considered to arrive at the following conclusion:

"14. The effect of these provisions is also that the Administrator (Lt Governor of Pondicherry) and his Council of Ministers act under the general control of and are under an obligation to comply with any particular direction issued by the President. Further, the Administrator (Lt Governor of Pondicherry) while acting under the scope of the authority given to him under Article 239 of the Constitution would be the Central Government."

36. It is on the aforesaid basis that the concerned Notification/Government Order dated 16th February, 1974 by which it was provided that Scheduled Castes/Scheduled Tribes candidates from outside the Union Territory of Pondicherry should also be considered for appointment to posts reserved for Scheduled Castes/Scheduled Tribes in the Union Territory Administration and the communication of the Government of India dated 6th October, 1995 to the same effect were upheld.

37. The First Schedule to the Constitution, as original enacted, provided for three (03) categories of States i.e. Part ‘A’, Part ‘B’ and Part ‘C’ States to comprise the territory of India.

The States Reorganization Act, 1956 and the consequential Constitution (Seventh Amendment) Act, 1956 drastically altered the provisions of the First Schedule to the 47 Constitution by establishment of new States; alteration in the area and boundaries of existing States and also by abolition of the three (03) categories of States; and by classification of certain areas as Union Territories. Pursuant thereto the Government of Union Territories Act, 1963 was enacted to provide for Legislative Assemblies and Councils of Ministers for certain Union Territories and for certain other incidental matters.

It will not be necessary to specifically deal with the provisions of the aforesaid Act in any great detail except to say that in course of time most of the Union Territories (except for Pondicherry), which had been provided with their own Legislatures and Councils of Ministers have graduated to become fullfledged States on the basis of enactment of several State Reorganisation Acts details of which have been mentioned (para 21). The Union Territory of Pondicherry, as on date, stands out as sole Union Territory which has a Legislature and Council of Ministers, apart from Delhi.

38. Delhi, which was one of the original Union Territories, came to be called as

"National Capital Territory of Delhi".

This change was introduced by the Constitution (SixtyNinth Amendment) Act, 1991 with effect from 1st February, 1992 by insertion of Article 239AA in Part VIII of the Constitution (i.e. Special provisions with respect to Delhi). Article 239AA( 3)(a) empower the Legislative Assembly of the National Capital Territory of Delhi to make laws with respect to any matters enumerated in the State List or in the Concurrent List (i.e. List II and List III of the Seventh Schedule to the Constitution of India) subject to certain exceptions.

It is here that the Union Territory of Delhi i.e. National Capital Territory of Delhi is enjoined a special status inasmuch as power to enact laws on any of the subjects in List II and List III is a constitutional conferment as opposed to the position in the erstwhile Union Territories and the present day Union Territory of Pondicherry where the power to frame/make laws has been conferred on the Union Territory Legislatures by a Parliamentary enactment i.e. Section 18 of the Government of Union Territories Act, 1963. The above narration has been considered necessary only to make the discussion complete. We make it clear that we are not entering into any discussion as to the special position/status of Delhi, if any, by virtue of the provisions contained in Article 239AA as the said issue does not arise for consideration in the present reference.

39. The above view coupled with the scope and ambit of the present reference may also not require us to go into the correctness of the view expressed by this Court in paragraph 14 of the decision in S. Pushpa (supra) (as already extracted). The resolution of the question formulated for an answer is capable of being reached by adopting an entirely different perspective which we intend to do hereinafter.

40. The federal nature of the Constitution finds broad manifestation in two principal areas i.e. division of legislative power and exercise thereof by the Union and the constituent States and secondly, which is more relevant and important to the subject in hand, is the constitutional provisions relating to services under the Union and the States as dealt with in Part XIV of the Constitution.

41. The subject finds an elaborate study by Dr. D.D. Basu in "Commentary on the Constitution of India"10. According to Dr. D.D. Basu, "In India though the Union and the States have their own public services, (vide Entry 70 of List I and Entry of List II) there is no clearcut bifurcation in the administration of the Union and the State laws as in the U.S.A. The State officials administer the State laws as well the Union laws applicable within that Sate whereas the members of the Union Services while working within a State, also carry out State laws, insofar as they may be applicable.

The second peculiarity of the Indian federal system of administration is that though the federal and State Governments have civil services of their own to manage their own households, there are certain services known as the AllIndia Services, which are common to both the federal and State Governments. The organisation of the Civil services in the Indian federal system may be demonstrated as thus:

All India Services

Central Civil Services

State Civil Services

Central Secretariat Services"

Subordinate Services

42. At the State Level, as Dr. D.D. Basu points out, "the State Civil Services administer the subject solely belonging to the State Governments, according to the federal distribution of subjects thus including the Judicial, Executive, Medical, Engineering, Police, Education branches. Their members are under the exclusive control of the respective State Governments and their duties are confined to the territories of the State by which they have been appointed, unless sent on deputation to the Union Government".11 These State Civil Services may be Administrative Services, Forest Services etc. [illustratively, in case of Himachal Pradesh, Himachal Pradesh Administrative Service (HPAS) is a type of service, so is, Himachal Pradesh Forest Service (HPFS). The recruitment to these services is conducted by way of Civil Services.

Examinations organised by the Statespecific Public Service Commission e.g. in case of Himachal Pradesh, it is Himachal Pradesh Public Service Commission. As stated earlier, persons inducted into the State Service of a particular State cannot be transferred to any other State. These officers are concerned with only the affairs of the state in which they are appointed. These services (like HPAS, HPFS) may, for convenience, be called as Superior Services/Higher Services with reference to a State. But in addition to these higher services, there are also services that may, again for convenience, be called as Subordinate Services/Lower Level Jobs. The posts in these services are like those of Clerks, School Teachers; Drivers, Attendants, Safai Workers, etc. For the purpose of recruitment of Subordinate Servants, states have in place Statespecific Selection Commissions.

43. At the Federal Level, civil administration is carried out by the members of –

(1) All India Services (specifically provided for in Article 312);

(2) Central Civil Services (although, not specifically provided for in the Constitution but are regulated by creation of statutory Rules framed under the proviso to Article 309). These are again Superior Services and the selection/recruitment is by the Union Public Service Commission.

ALL INDIA SERVICES

There are three All India Services (AIS) –

(a) Indian Administrative Service (IAS);

(b) Indian Forest Service (IFoS);

(c) Indian Police Service (IPS). As regards AIS, Dr. D.D. Basu12 says that, "the peculiarity of the AIS from the federal standpoint is that –

(a) Though they are recruited and their conditions of service are determined by the Union Government, they have to administer both Union and the State subjects, accordingly as their services are placed at the disposal of the Union or a State Government, in connection with the affairs of the Union or the State, as the case may be.

(b) While serving in a State, they are controlled by the State Government, except as regards the imposition of the penalty of dismissal, removal or compulsory retirement, which can be awarded only by the Union Government.

(c) In a sense, this system is an exception to the usual federal precedent inasmuch as it is intended to fill up the strategic posts both under the Union and State Governments by men of superior calibre, recruited on a uniform basis, through the UPSC. Thus, while a Deputy 56 Collector may be a member of the State Civil Service, the Additional Collector and the Collector may be members of the Indian Administrative Service. The category of AIS thus breaks through the federal division so far as the administrative services in India are concerned. In fact, the principal agents of a Sate administration are members of the AIS and it would be a mistake to suppose that the AIS exist for the administration of the Union subjects. Broadly, speaking, the administration of a State is run both by the members of the AIS and State Services, the latter supplying only the intermediate and subordinate tiers.

(d) Though the bulk of recruitment to the AIS is by competitive examination, a certain proportion is selected by promotion from amongst members of the State Civil Services.

(e) Though a member of AIS may be required to serve anywhere in India, on recruitment, he is usually assigned to a State or States jointly, or, in a technical language, is included in a State cadre or Joint cadre and continues to serve there until or unless he is called upon to serve the Union Government, in any of its Departments.

(f) While employed under a State, again, the members of the AIS do not have to work only in the Secretariat of the State but also in the Districts as already stated and members of these services are expected to acquire experience of the business in the district as well as Secretariat administration and there is a constant interchange of officers between the Secretariat and the Districts, just as there is such an 58 interchange between the States and the Union Secretariats on the other hand."

44. Therefore, the members of the All India Services are common to the Union and the States and they serve, by turn, both the Union and State Governments. The members of these services although recruited by the Centre their services are placed under various State cadres. "It is evident from Article 312(1) that the members of the AIS are common to the Union and the States. Curiously, however, there is a cadre for the Indian Administrative Service only in the States, according to the Indian Administrative Service (Cadre) Rules, 1954 and there is no separate cadre for members of this service in the Government of India. Each members of the Indian Administrative Service therefore, belongs to the cadre of one State or the other."

13

45. There are many State Cadres e.g. Bihar Cadre, Rajasthan Cadre and Joint Cadres like AGMUT (for Arunachal Pradesh + Goa + Mizoram + the 7 Union Territories). These officers remain in the allotted Cadres till they retire. They are not normally to be transferred from one State Cadre to another State Cadre though they have the accountability to serve both under the State and the Centre.

46. At this juncture, the Union of India’s Affidavit may also be referred to, which states with reference to AIS that, "the conditions of service of these services (AIS) are regulated by the DoPT by way of executive and statutory instructions, statutory rules formulated under Article 309 of the Constitution and Act of Parliament etc. The functional control of some of the services rests with other.

Ministries and Departments also.

The Ministry of Home Affairs exercises functional control on IPS and the Ministry of Environment & Forest & Climate Change exercises functional control on IFoS. Members of these services are allocated a cadre under a State or Union Territory and they serve the Union as well as the State, whichever is allotted to them. Thus their services are All India Services. Their recruitment is by the Union Public Service Commission and as they serve the Union as well as the States, their recruitment is on pan India basis. Every citizen of this country having the required qualification is eligible to be considered for the appointment.

It is pertinent to note that before selection in the AIS, there is no specification or indication of the cadre in Union, Union Territory or State, which they may serve. Upon selection alone, they would be allocated cadre depending upon the merit and the preferences they would have made at the time of applying. Upon selection they could be allocated to serve through any of the 25 states or 7 Union Territories of Delhi; Puducherry; Chandigarh; Daman & Diu; Dadra & Nagar Haveli; Andaman & Nicobar; Lakshadweep coupled with the states of Arunachal Pradesh, Goa and Mizoram"14.

47. CENTRAL CIVIL SERVICES

The Central Civil Services (CCS), as Dr. D.D. Basu points out, "are engaged in administering the Union subjects, such as the Posts and Telegraphs, Customs and Excise, Income Tax. In short, these constitute all the administrative services in the Central Departments which have not so far been included in the list of All India.

Services. They are under the exclusive control of the Union Government. Besides the Central Services, there are other Services intended for work solely in the Central Secretariat, or, in other words, those who are to manage the offices of the Central Departments. Both the Central Civil Services and Central Secretariat Services are subdivided into Class I, II, III, IV, (= Group A, B, C, D15) according to the rank and responsibilities of the officers… Members of the Central Services are also sent on transfer or deputation to States where offices relating to the Union subjects or Public Sector Undertakings relating thereto are located."

16 All that we would like to add is that though the members of these services are concerned only with the affairs of the Union/Centre they discharge such duties in the offices and establishments of the Union Government as may be located in the States and the Union Territories. The Central Civil Services (Classification, Control and Appeal) Rules, 1965 [CCS Rules, 1965] (enacted under the proviso to Article 309) are the governing statutory Rules with reference to these services. Rule 4 of CCS Rules, 1965 classifies the Central Civil Services into four types –

(i) Central Civil Services, Group A (45 services as per the Schedule to the Rules);

(ii) Central Civil Services, Group B (33 services as per the Schedule to the Rules);

(iii) Central Civil Services, Group C (5 services as per the Schedule to the Rules);

(iv) Central Civil Services, Group D (1 service as per the 64 Schedule to the Rules)17.

48. CCS Group A:

The Affidavit of the Union of India says that, "recruitment to Group A services is made by UPSC. The recruitment is again on all India basis. This is the reason the personnel belonging to these 45 services work in the posts of Union and the Union Territories (UT) across the length and breadth of the country. The Cadre Controlling Authority of Group A services are the respective ministries of the Government of India. For example, the first service being the Archaeological Service, the Cadre Controlling Authority is the Ministry of Culture, Central Government. Another example, the 12th service being the Indian Foreign Service and this is controlled by Ministry of External Affairs. No. 16 is the Indian Revenue Service and it is controlled by the Ministry of Finance. The members of these services being recruited pursuant to the Central Service Exams conducted by the UPSC are allocated to the respective services.

Whichever Ministry seeks recruitment to the service in this Group, sends requisition to UPSC as per procedure prescribed and UPSC accordingly advertises for the post in Group A. Every citizen of India is eligible to apply as per the qualifications and requirements in the notification. DOPT is the nodal Ministry for regulating the conditions of service of all Central Civil Services as per Allocation of Business Rules. As per the conditions of service, every employee is required to give an undertaking agreeing to the conditions of all India transfer liability at the time of 66 joining service. Central Civil Services employees belonging to Group A serve the Union of India and that is the reason why these services are across the length and breadth of the country, wherever there is an office of the Central Government.

Member of the Groups A service are governed by CCS Rules of 1965 as well as Central Civil Services (Conduct) Rules 1972; Central Civil Services (Pension) Rules 1972 and such other Rules made by the Central Ministries."

49. CCS Group B:

As mentioned earlier, there are 33 Group B Services. Amongst these, are the Union Territory Services listed at No. 28 and No. 29 and known as the ‘Delhi and Andaman and Nicobar Islands Civil Service’ abbreviated as ‘DANICS’ and ‘Delhi and Andaman and Nicobar Islands Police Service’ (Grade 67 II) abbreviated as ‘DANIPS’. While at this stage we may have also a look at Union Territory services in some detail.

UNION TERRITORY SERVICES

50. The Government of India (Ministry of Home Affairs) by way of a notification dated 6th August, 2003, and in the exercise of the proviso to Article 309, enacted ‘the National Capital Territory of Delhi, Andaman and Nicobar Islands, Lakshadweep, Daman and Diu and Dadra and Nagar Havel (Civil Service) Rules, 2003 [DANICS Rules, 2003]. As also, ‘the National Capital Territory of Delhi, Andaman and Nicobar Islands, Lakshadweep, Daman and Diu and Dadra and Nagar Havel (Police Service) Rules, 2003 [DANIPS Rules, 2003].

51. The DANICS/DANIPS Rules, 2003 define:

* ‘Administration’ to mean the Government of the National Capital Territory of Delhi in respect National Capital 68 Territory of Delhi and Union Territory Administration in respect of the Union Territories of – Andaman & Nicobar Islands; Lakshadweep; Daman & Diu; Dadra & Nagar Haveli [under Rule 2(a)]

* ‘Commission’ to mean the Union Public Service Commission [under Rule 2(h)].

* ‘Scheduled Castes and Scheduled Tribes’ to have the same meaning as are assigned to them by Articles 366(24) and 366(25) [under Rule 2(n)].

The DANICS/DANIPS Rules, 2003, further, state that posts in Junior Administrative GradeI, Junior Administrative GradeII, Selection Grade will be Central Civil Services (Group A), whereas Entry Grade shall be Central Civil Services (Group B) [Rule 3]. The vacancies in DANICS/DANIPS shall be filled in on the basis of the Civil Services Examination conducted by UPSC [Rule 7].

Every member of DANICS/DANIPS allocated to an Administration shall be posted against a duty post18 under the Administration by the Administrator [Rule 12]. More importantly, the Government of India shall, from time to time, allocate a member of DANICS/DANIPS to any Administration for posting [Rule 12]. Nothing in the Rules affects reservations, relaxation in agelimit and other concessions required to be provided for the Scheduled Castes, the Scheduled Tribes, Other Backward Classes and other special categories of persons in accordance with the orders issued by the Government of India from time to time in this regard [Rule 17: the Saving clause]. The Sanctioned Strength for DANICS and DANIPS is in the DANICS/DANIPS Rules, 2003 (approximately 398 DANICS; approximately 355 DANIPS).

52. As per the Union of India’s Affidavit, DANICS and DANIPS are ‘Union Territory Services’19.

The Affidavit says, "…at Serial 28 and 29 of the Schedule (to CCS Rules, 1965), we have the Union Territory Services known as DANICS and DANIPS". The Affidavit, further, says that, "DANICS/DANIPS Officers are posted in Delhi; Andaman & Nicobar Islands; Lakshadweep; Daman & Diu; Dadra & Nagar Haveli. The recruitment to all the Union Territories for these Group B posts are common. They are also centralised and the Appointing Authority is none other than the Ministry of Home Affairs (Joint Secretary). For the recruitment to these services, it is the very same examination meant for AIS and CCS Group A. Any citizen of India is eligible to apply, subject to the conditions prescribed.

As per the Service Rules, transfer undertakings throughout the Union Territories covered under DANICS/DANIPS is taken from these officers. This is the reason why the Union of India while inviting applications for recruitment considers all candidates, including reserved candidates on all India basis. Group B Cadre of DANICS/DANIPS is the Feeder Cadre for IAS and IPS respectively (i.e. AIS). They retire invariably in these Offices, some of them reaching high positions in the Central Government. Recruitment to AIS; CCS Group A; CCS Group B (Gazetted) is conducted through UPSC. In the Civil Services Examination, the applicants are common when the applications are made. Every aspirant seeks recruitment to the services and it is only as per the marks and ranking that allocations are made eventually to AIS; CCS Group A; CCS Group B. Therefore, when UPSC undertakes the recruitment, it is naturally a pan India recruitment and therefore, it is necessary to seek applications including from reserved candidates from all over India.

"20

53. But it is not the Members of the All India Services (AGMUT Cadre); Central Civil Services (Group ‘A’ and ‘B’) and the ‘DANICS’ and ‘DANIPS’ who alone are the public servants in the States and the Union Territories engaged in the discharge of duties in connection with the affairs of the Union. There are and bound to be public servants that work the subordinate services.

CCS Group C:

54. At the subordinate level these are the Group ‘C’ posts. In the Schedule to CCS Rules, 1965, there are 5 such services. The Union of India’s Affidavit says that, "These posts, in so far, as they relate to services under the Union of India are concerned are recruited by the Staff Selection Commission (which is the Recruiting Agency under the DoPT). The members of CCS Group C get promoted to CCS Group B. Recruitment to posts in this group arise out of requisition made by the concerned ministries all over India.

These requisitions, upon reaching, the Staff Selection Commission are processed and selection takes place and appointments are made. Even from these appointees, undertaking for all India transfer liability is taken. As these are posts under the Central Government and these employees are liable to transferred anywhere in the country and the recruitment being centralised for all such posts in the country, it has been consistent policy of the Union of India to have pan India eligibility."

55. With regard to CCS Group D posts, in the affidavit of the Union it is stated that "the posts under this category are primarily of what used to be Class IV employees now referred to as the Multi Tasking staff. In recent years, Central Pay Commission has recommended against any further recruitment to these posts in Group D. Further it has also been recommended that the existing posts will be merged with Group C. Hence, this is now a vanishing cadre21."

56. The broad picture that emanates from the above discussion and narration is that insofar as the services in connection with the affairs of the Union is concerned (Central Services), wherever the establishment may be located i.e. in the National Capital Territory of Delhi or in a State or within the geographical areas of Union Territory, recruitment to all positions is on an All India basis and reservation provided for is again a panIndia reservation. This by itself, from one perspective, may appear to be in departure from the rule set out in Part XVI of the Constitution of India (Articles 341 and 342). However, the close look undertaken hereinbefore indicates such a position is fully in accord with the constitutional structure of a federal polity.

NATIONAL CAPITAL TERRITORY of DELHI

57. In case of National Capital Territory of Delhi, especially, to make the picture even clearer, a reference may be made to ‘Delhi Administration Subordinate Service Rules, 1967’. Rule 3 of the aforesaid Rules is to the following effect:

"3. Constitution of service and its classification.

(1) On and from the date of commencement of these Rules, there shall be constituted one Central Civil Service, known as the Subordinate Service of the Delhi Administration.

(2) The Service shall have four Grades, namely-

Grade I

Grade II

Grade III

Grade IV

(3) The posts in Grade I shall be Central Civil posts, Class II Group ‘B’ (Gazetted) and those in Grades II, III and IV shall be Central Civil posts Group ‘C’ (NonGazetted).

(4) Members of the service shall, in the normal course be eligible for appointment to various Grades of the service to which they belong and not to the other service."

(underlining is ours)

Subordinate services in the National Capital Territory of Delhi are, therefore, clearly Central Civil Services. The Affidavit of the Union also points out this feature by stating that, "The posts in CCS Group C are in the subordinate services. The equivalent in the Union Territory of Delhi is the Delhi Administrative Subordinate Services (DASS) and the Recruiting Agency in the place of Staff Selection Commission is the Delhi Subordinate Service Selection Board (DSSSB). Members of the Delhi Administrative Subordinate Services are the Feeder Cadre for Central Civil Services Group B (DANICS). It is for these reasons that the policy (of pan India eligibility) consistently adopted."22

58. A combined reading of these provisions of the DASS Rules, 1967 and CCS Rules, 1965, therefore, more than adequately explains the nature of Subordinate Services in the NCT of Delhi. These clearly are General Central Services and perhaps, it is owing to this state of affairs that the Union of India in its Affidavit has stated that, "Members of the Delhi Administrative Subordinate Services are the Feeder Cadre for Central Civil Services Group B (DANICS). It is for these reasons that the policy (of pan India eligibility) is consistently adopted."

59. While examining the validity of reservation of seats in medical colleges for local candidates in Delhi, this Court in Dr. Jagdish Saran and Others Vs. Union of India23 had made certain observations with regard to the special status that the capital city enjoys, which today, has come to be known as the National Capital Territory of Delhi. The observations of this Court in paragraphs 10 and 56 may be usefully recapitulated and, therefore, is set out below:

"10. The capital city is not just a part of India. It is miniaturised India, a fact often forgotten by the administration in the field of culture and education, especially visavis regional, minorities. It is magapolitan and people from all parts flock to this outsized city. But we cannot exaggerate this factor, for the presence of the farther regions like the South and the Northeast, populationwise, is minimal and precarious. Shri Balakrishnan insisted that the University was sustained by Central Government finances, collected from the whole country, and the benefits must likewise belong to all qualified students from everywhere. These are valuable aspects to shape policy but the court must test constitutionality and no more. To that extent alone we will weigh these factors in moulding our verdict.

xxx xxx xxx

56. We may windup by articulating the core thought that vitalises our approach. Anyone who lives inside India can never be considered an ‘outsider’ in Delhi. The people in the States are caught in a happy network of mutuality, woven into a lovely garment of humanity, whose warp and woof is India. This is the underlying fundamental of the preambular resolve registered in our National Parchment. So we insist that blind and bigoted local patriotism in xenophobic exclusivism is destructive of our Freedom and only if compelling considerations of gross injustice, desperate backwardness and glaring inequality desiderate such a purposeful course can protective discrimination gain entrance into the portals of college campuses. The Administration has a constitutional responsibility not to be a mere thermometer where mercury rises with populist pressure but to be a thermostat that transforms the mores of groups to stay in the conscience of the nation viz. the Constitution."

60. The Affidavit of the Union does not touch upon the details of Subordinate Services in other Union Territories. Neither the authorities of the other Union Territories have laid before the Court any relevant material in this regard. We, therefore, refrain from addressing the issue in question as far as other Union Territories are concerned and have confined our discussions and the consequential views only to the National Capital Territory of Delhi.

61. Accordingly, we answer the question referred in terms of the views expressed in para 34 of this opinion. We further hold that so far as the National Capital Territory of Delhi is concerned the pan India Reservation Rule in force is in accord with the constitutional scheme relating to services under the Union and the States/Union Territories.

62. In view of the conclusions reached as above, it will not be necessary to remit Civil Appeal Nos. 1085 of 2013, 10081 of 2014, 8141 of 2014, 8802 of 2012, 1086 of 2013 and Civil Appeal arising out of Special Leave Petition (Civil) 81 No.36324 of 2017 (pertaining to Delhi) for further consideration by the appropriate Bench. Accordingly, we dispose of the said appeals (pertaining to Delhi) in terms of the present order. So far as Civil Appeal Nos.99359937 of 2014 pertaining to the U.T. of Andaman and Nicobar Island are concerned the issue may be decided by the appropriate Bench in the light of the views expressed herein on adequate and sufficient materials being placed before the Bench by the contesting parties.

………………………………………J. [RANJAN GOGOI]

………………………………………J. [N.V. RAMANA]

………………………………………J. [MOHAN M. SHANTANAGOUDAR]

………………………………………J. [S. ABDUL NAZEER]

PLACE: NEW DELHI

DATE: 30th AUGUST, 2018

Bir Singh Vs. Delhi Jal Board & Ors.

[Civil Appeal No. 1085 of 2013]

[Civil Appeal Nos. 9935-37 of 2014]

[Civil Appeal No. 8375 of 2014]

[Civil Appeal No. 10081 of 2014]

[Civil Appeal No. 8141 of 2014]

[Civil Appeal No. 8802 of 2012]

[Civil Appeal No. 1086 of 2013]

[Civil Appeal No. 9048 of 2018 Arising Out of Slp(C) No. 36324 of 2017]

J U D G M E N T

R. BANUMATHI, J.

Reference Order:-

1. I have gone through the judgment proposed by His Lordship Justice Ranjan Gogoi. I agree with the following conclusions arrived 83 at in paras (30) and (34) and the reasonings thereon. "A person notified as a Scheduled Caste in State ‘A’ cannot claim the same status in another State on the basis that he is declared as a Scheduled Caste in State ‘A’……".

"…….It will, therefore, be in consonance with the constitutional scheme to understand the enabling provision under Article 16(4) to be available to provide reservation only to the classes or categories of Scheduled Castes/Scheduled Tribes enumerated in the Presidential orders for a particular State/Union Territory within the geographical area of that State/Union Territory (Union Territory added by me) and not beyond."

With due respect, I do not agree with the conclusion arrived at in para (61) and the reasonings thereon. "……So far as the National Capital Territory of Delhi is concerned the pan-India Reservation Rule in force is in accord with the constitutional scheme relating to services under the Union and the States/Union Territories."

For agreeing with the conclusion arrived at in paras (30) and (34) and for differing from the conclusions in para (61) and the reasonings thereon, I have given my own reasonings.

2. The extent and nature of interplay and interaction under Articles 16(4), 341(1) and 342(1) of the Constitution of India was referred to the Constitution Bench in State of Uttaranchal v. Sandeep Kumar 84 Singh and Ors., (2010) 12 SCC 794, with the following reference:-

"13. A very important question of law as to interpretation of Articles 16(4), 341 and 342 arises for consideration in this appeal. Whether the Presidential Order issued under Article 341(1) or Article 342(1) of the Constitution has any bearing on the State’s action in making provision for the reservation of appointments or posts in favour of any Backward Class of citizens which, in the opinion of the State, is not adequately represented in the services under the State? The extent and nature of interplay and interaction among Articles 16(4), 341(1) and 342(1) of the Constitution is required to be resolved."

3. Territory of India:- Article 1(1) of the Constitution of India declares that India, that is Bharat, shall be a Union of States. As amended by the Constitution Seventh (Amendment) Act, 1956. Article 1 of the Constitution reads as under:-

1. Name and territory of the Union.-

(1) India, that is Bharat, shall be a Union of States.

(2) The States and the territories thereof shall be as specified in the First Schedule.

(3) The territory of India shall comprise-

(a) the territories of the States;

(b) the Union Territories specified in the First Schedule; and

(c) such other territories as may be acquired.

4. Under the Constitution of India, as initially enacted, the States were divided into Part A States, Part B States, Part C States and the territories in Part D. Substantial changes were made by the Constitution (Seventh Amendment) Act, 1956 which incorporated the recommendations of the States Reorganisation Commission and was to have effect in concert with the States Reorganisation Act, 1956. The four categories of States that existed were reduced to two categories. The first of these categories – Part A and Part B States comprised one class, called "States". The second category comprised the areas which had earlier been included in Part C and Part D States; these areas were called "Union Territories". Some additions and deletions were made to the existing lists. Now as per Schedule I, there are twenty-nine States and Seven Union Territories.

5. The expression "State" is not defined in the Constitution. It is defined in the General Clauses Act, 1897 which is made applicable to the interpretation of the Constitution by Article 367. As on the date of the commencement of the Constitution, clause (58) in Section 3 of the General Clauses Act, 1897 defined "State" in the following words:-

"3. (58) ‘State’, – shall mean a Part A State, a Part B State or a Part C State." The said definition was amended by the Adaptation of Laws Order 86 No. 1 of 1956 issued by the President in exercise of the power conferred upon him by Article 372-A of the Constitution introduced by the Constitution Seventh (Amendment) Act, 1956. The amended definition ‘State’ reads thus:-

"3. (58) ‘State’, –

(a) as respects any period before the commencement of the Constitution (Seventh Amendment) Act, 1956, shall mean a Part A State, a Part B State or a Part C State; and

(b) as respects any period after such commencement, shall mean a State specified in the First Schedule to the Constitution and shall include a Union Territory."

6. Clause (30) in Article 366 defines the "Union Territory" in the following words:-

"366. (30) ‘Union Territory’ means any Union Territory specified in the First Schedule and includes any other territory comprised with the territory of India but not specified in that Schedule."

7. Clause (24) of Article 366 defines "Scheduled Castes" and clause (25) of Article 366 defines "Scheduled Tribes". The latter means "such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be ‘Scheduled Tribes’ for the purposes of this Constitution". Article 341(1) of the Constitution empowers the President, in consultation with the Governor of the State concerned, to specify Scheduled Castes by public notification.

Equally, Article 342(1) of the Constitution empowers the President "with respect to any State or Union Territory, and where it is a State, after consultation with the Governor thereof, by public notification, specify the tribes or tribal communities or parts of or groups within tribes or tribal communities which shall for the purposes of this Constitution be deemed to be ‘Scheduled Tribes’ in relation to that State or Union Territory, as the case may be". Article 342(2) of the Constitution empowers "Parliament, by law, to include in or exclude from the list of ‘Scheduled Tribes’ specified in a notification issued under clause (1), any tribe or tribal community or part of or group within any tribe or tribal community, but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent notification."

Until the Presidential Notification is modified by appropriate amendment by Parliament in exercise of the power under Article 341(2) of the Constitution, the Presidential Notification issued under Article 341(1) is final and conclusive and any caste or group cannot 88 be added to it or subtracted by any action either by the State Government or by a Court on adducing of evidence. In other words, it is the constitutional mandate that the tribes or tribal communities or parts of or groups within such tribes or tribal communities specified by the President, after consultation with the Governor in the public notification, will be ‘Scheduled Tribes’ subject to the law made by Parliament alone, which may, by law, include in or exclude from the list of ‘Scheduled Tribes’ specified by the President. Thereafter, it cannot be varied except by law made by the Parliament.

8. The President of India alone is competent or authorized to issue an appropriate Notification in terms of Article 341(1) and Article 342(1). Cumulative reading of Articles 338, 341 and 342 indicate that:- a) Only the President could notify castes/tribes as Scheduled Castes/Tribes and also indicate conditions attaching to such declaration. A public Notification by the President specifying the particular castes or tribes as SC/ST shall be final for the purpose of Constitution and shall be exhaustive. 89 b) Once a notification is issued under clause (1) of Articles 341 and 342 of the Constitution, the Parliament can by law include in or exclude from the list of Scheduled Castes or Scheduled Tribes, specified in the notification, any caste or tribe but save for that limited purpose the notification issued under clause (1), shall not be varied by any subsequent notification24.

9. It is stated that before notification was issued under Article 341(1) and Article 342(1) notifying certain caste/race or group as Scheduled Caste/Scheduled Tribe, an elaborate enquiry was made and also after such enquiry, the Presidential Order was issued. While doing so, Presidential Order not only specified parts or groups of caste, races or tribes but also made the said specification by reference to different areas in the State. By perusal of the Presidential Order, it is clear that some caste/race is actually confined with reference to a particular area; for instance, confined to a particular taluk in a district. The reason for such specification by reference to different areas in the State being educational, social backwardness, races or tribes cannot be the same throughout the State. The consideration for specifying a particular caste or tribe or class for inclusion in the list of Scheduled Castes and Scheduled Tribes or Backward Classes in a given State would depend on the nature and extent of the disadvantages and social hardships suffered in that State. These may be absent in another State to which these persons belonging to other States may migrate.

10. Whenever States’ reorganization took place in the past, Parliament exercised its powers under Articles 341(2) and 342(2) and provided for specific Castes/Tribes that had to be Scheduled Castes and Scheduled Tribes in relation to the reorganized States/Union Territories. The Constitution Scheduled Caste Orders and the Constitution Scheduled Castes (Union Territories) Order, also clarify that Parliament’s intention was to extend benefits of reservation in relation to the States/Union Territories in terms of the castes, races or 91 tribes mentioned as per the Presidential Orders themselves.

11. Presidential Order which provided for castes/races, tribes recognized as ‘Scheduled Caste/Scheduled Tribe’ and their interpretation cannot be challenged or agitated in a court of law. The question whether Dohar caste is a sub-caste of Chamar caste which is recognized as a Scheduled Caste came up for consideration in Bhaiya Lal v. Harikishan Singh, AIR 1965 SC 1557, wherein this Court held that the court cannot enquire into whether Dohar caste is a sub-caste of Chamar caste and whether the same must be deemed to have been included in the Presidential Order.

In Bhaiya Lal’s case, this Court held "…that before a notification is issued under Article 341(1), an elaborate enquiry is made and it is as a result of this enquiry that social justice is sought to be done to the castes, races or tribes as may appear to be necessary, and in doing justice…" and while doing so, the notification not only to specify parts or groups of castes, races or tribes but to make specification by reference to different areas in the State. In Bhaiya Lal’s case, the Supreme 92 Court held that only the Parliament is empowered to amend the Notification under Articles 341(2) and 342(2) of the Constitution.

12. Presidential Notification (Scheduled Caste) Order 1950:-

The List of Scheduled Castes is contained in the Constitution (Scheduled Castes) Order 1950. The Presidential Notifications of 1950 and 1951 (as amended) in relation to Scheduled Castes and Scheduled Tribes of various States, very importantly provided that:-

"2. Subject to the provisions of this Order, the castes, races or tribes or parts of, or groups within, castes or tribes specified in [Parts I to XXV] of the Schedule to this Order shall, in relation to the States to which those Parts respectively relate, be deemed to be Scheduled Castes so far as regards members thereof resident in the localities specified in relation to them respectively in those Parts of that Schedule." The Presidential Notification of 1950 was amended by the Constitution (Scheduled Castes and Scheduled Tribes Order), Amendment Act, 1956, (Act No.63 of 1956).

Another amending Act was enacted by Parliament in 1976. Further, amendments had taken place as and when Parliament reorganized States like Bombay, Andhra Pradesh, Uttarakhand, Chhattisgarh and Jharkhand through separate Acts. All these were Parliamentary enactments. Presidential Notification pertaining to Union Territories, Scheduled Castes (Union Territories) Order, 1951 specifies Scheduled Castes resident in the Union Territories of Delhi, Chandigarh and Daman and Diu. When new Union Territories were formed such as Pondicherry, Sikkim, Goa, Daman and Diu, Arunachal Pradesh, Mizoram, the Scheduled Castes or Scheduled Tribes Orders were made in relation to those new Union Territories.

13. The Constitution (Scheduled Tribes) Order, 195025:- In exercise of the powers conferred by clause (1) of Article 342 of the Constitution of India the President has, after consultation with the Governors of the States concerned, made the Constitution (Scheduled Tribes) Order, 1950, specifying the tribes or communities which shall be deemed to be Scheduled Tribes in the States mentioned therein. This Order has been amended by the Scheduled Castes and Scheduled Tribes Orders (Amendment) Act, 1976 (Act No.108 of 1976), the Constitution (Scheduled Tribes) Order (Amendment) Act, 1991 (16 of 1991), the Constitution (Scheduled Tribes) Order (Second Amendment) Act, 1991 (39 of 1991), the Scheduled Castes and Scheduled Tribes Orders (Amendment) Act, 2002 (32 of 2002), the Scheduled Castes and Scheduled Tribes Orders (Amendment) Act, 2002 (10 of 2003), the Constitution (Scheduled Tribes) Order (Amendment) Act, 2003 (47 of 2003), the Constitution (Scheduled Tribes) Order (Amendment) Act 2006 (48 of 2006), the Constitution (Scheduled Tribes) Order (Amendment) Act, 2008 (14 of 2008) and the Constitution (Scheduled Tribes) Union Territories Order (Amendment) Act, 2008 (2 of 2009). As it stands amended, it specifies the Scheduled Tribes resident in the States of Andhra Pradesh, Assam, Bihar, Gujarat, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Orissa, Rajasthan, Tamil Nadu, Tripura, West Bengal.

14. Article 16(4) is only an enabling provision to provide reservation to backward classes. Clause (4) of Article 16 of the Constitution cannot be made applicable for the purpose of grant of benefit of reservation for Scheduled Castes or Scheduled Tribes in a State or Union Territory, who have migrated to another State or Union Territory and they are not members of the Scheduled Castes and Scheduled Tribes in the State to which they have migrated. The Presidential Orders made under Article 341 and Article 342 have an overriding status. The presence of Articles 338, 338A, 341, 342 of the Constitution clearly shows that it precludes any tinkering or deviation from the list of castes or tribes notified in the Presidential Order which are reserved for that State or that Union territory.

15. India is huge. There is Unity in Diversity. Diversity in terms of language, culture, demography, geographical area, development of regions, opportunities available to individuals for education and to make social and economical advancement etc. Some States are well- 96 developed; some other States are developing; few other States are under-developed. All the affirmative action of the States is to provide equality of opportunity to the socially and economically disadvantaged group. Under Article 15(4) of the Constitution, State is empowered to make special provisions for the advancement of any socially and educationally backward class of citizens or for the Scheduled Castes or Scheduled Tribes.

Article 16 of the Constitution of India lays down that there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State. Article 16(4) of the Constitution empowers the State to make provisions to provide reservation to the backward classes in employment or appointment to any posts and thereby to create equally opportunities for their socio-economic empowerment and their emancipation. Article 16(4) speaks of one type of reservation namely reservation of appointments/posts.

16. Article 16(4) of the Constitution is an enabling provision directed towards achieving equality of opportunity in services under 97 the State. Observing that Article 14 of the Constitution is the genus while Article 16 is the species, in E. P. Royappa v. State of Tamil Nadu and Anr., (1974) 4 SCC 3, it was held that:-

"85. ………Article 16 embodies the fundamental guarantee that there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State. Though enacted as a distinct and independent fundamental right because of its great importance as a principle ensuring equality of opportunity in public employment which is so vital to the building up of the new classless egalitarian society envisaged in the Constitution, Article 16 is only an instance of the application of the concept of equality enshrined in Article 14.

In other words, Article 14 is the genus while Article 16 is a species. Article 16 gives effect to the doctrine of equality in all matters relating to public employment. The basic principle which, therefore, informs both Articles 14 and 16 is equality and inhibition against discrimination. Now, what is the content and reach of this great equalising principle? It is a founding faith, to use the words of Bose. J., "a way of life", and it must not be subjected to a narrow pedantic or lexicographic approach. We cannot countenance any attempt to truncate its all-embracing scope and meaning, for to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be "cribbed, cabined and confined" within traditional and doctrinaire limits…….."

[Underlining added]

17. The Constitution Bench of nine Judges in Indra Sawhney and Ors. v. Union of India and Ors., (1992) Supp 3 SCC 217, observed that Article 16(4) of the Constitution is aimed at ‘protective equality’ and it was held as under:-

"563. Thus, Article 16(1) and (4) operate in the same field. Both are directed towards achieving equality of opportunity in services under the State. One is broader in sweep and expansive in reach. Other is limited in approach and narrow in applicability. Former applies to ‘all’ citizens whereas latter is available to ‘any’ in Article 16(4) read together indicate that they are part of same scheme. The one is substantive equality and other is protective equality. Article 16(1) is fundamental right of a citizen whereas Article 16(4) is an obligation of the State. The former is enforceable in a Court of law, whereas the latter is ‘not constitutional compulsion’ but an enabling provision.

Whether Article 16(4) is in substance, ‘an exception’, ‘a proviso’, or an ’emphatic way of putting the extent to which equality of opportunity could be carried’, or ‘presumed to exhaust all exceptions in favour of backward class’, or ‘expressly designed as benign discrimination devoted to lifting to backward classes’, but if Article 16(1) is the positive aspect of equality of opportunity’, Article 16(4) is a complete Code for reservation for backward class of citizens as it not only provides for exercise of power but also lays down the circumstances, in which the power can be exercised, and the purpose and extent or its exercise. One is mandatory and operates automatically whereas the other comes into play on identification of backward class of citizens and their inadequate representation."

[Underlining added]

18. Article 16(4) of the Constitution is not an exception; but a facet of Article 14 and Article 16(1) of the Constitution; it enables the State to effectuate equality of opportunity to any backward class. As held in Chattar Singh and Ors. v. State of Rajasthan and Ors. (1996) 11 SCC 742 in paras (17) and (18), that "….It gives power to the state to effectuate the opportunity of equality to any backward class of 99 citizens. ……..The object of reservation for the Scheduled Casts and Scheduled Tribes is to bring them into the mainstream of national life, while the objective in respect of the backward classes is to remove their social and educational handicaps. Therefore, they are always treated dissimilar and they do not form an integrated class with Dalits and Tribes for the purpose of Article 16(4) or 15 (4)…".

19. In State of Kerala and Anr. v. N.M. Thomas and Ors. (1976) 2 SCC 310 in para (178), it was held that "…differences and disparities exist among men and things and they cannot be treated alike by the application of the same laws but the law has to come in terms with life and must be able to recognize the genuine differences and disparities that exist in human nature. Legislature has also to enact legislation to meet specific ends by making a reasonable and rational classification..".

20. A Constitution Bench of this Court in Marri Chandra Shekhar Rao v. Dean, Seth G.S. Medical College and Ors., (1990) 3 SCC 130 had the occasion to consider the question as to whether a member of Gouda community which is recognised as "Scheduled Tribe" in the Constitution (Scheduled Tribes) Order, 1950 would be entitled to admission in a medical institution situated in the State of Maharashtra. Based on the Government of India circular dated 22.02.1985, the appellant was denied admission to the Medical College on the ground that Marri Chandra Shekhar Rao was not a ‘Scheduled Tribe’ in the migrated State i.e. State of Maharashtra.

21. After referring to various provisions of Constitution of India, background in which the Presidential Order was issued and earlier judgments, in Marri Chandra Shekhar Rao’s case, it was held as under:- "9. It appears that Scheduled Castes and Scheduled Tribes in some States had to suffer the social disadvantages and did not have the facilities for development and growth. It is, therefore, necessary in order to make them equal in those areas where they have so suffered and are in the state of underdevelopment to have reservations or protection in their favour so that they can compete on equal terms with the more advantageous or developed sections of the community.

Extreme social and economic backwardness arising out of traditional practices of untouchability is normally considered as criterion for including a community in the list of Scheduled Castes and Scheduled Tribes. The social conditions of a caste, however, varies from State to State and it will not be proper to generalise any caste or any tribe as a Scheduled Tribe or Scheduled Caste for the whole country. This, however, is a different problem whether a member or the Scheduled Caste in one part of the country who migrates to another State or any other Union territory should continue to be treated as a Scheduled Caste or Scheduled Tribe in which he has migrated. That question has to be judged taking into consideration the interest and well-being of the Scheduled Castes and Scheduled Tribes in the country as a whole."

22. Marri Chandra Shekhar Rao case was followed by another Constitution Bench of this Court in Action Committee on issue of caste certificate to Scheduled Castes and Scheduled Tribes in the State of Maharashtra and Anr. v. Union of India and Anr. (1994) 5 SCC 244. In Action Committee’s case, it was held as under:-

"3. On a plain reading of clause (1) of Articles 341 and 342 it is manifest that the power of the President is limited to specifying the castes or tribes which shall, for the purposes of the Constitution, be deemed to be Scheduled Castes or Scheduled Tribes in relation to a State or a Union Territory, as the case may be. Once a notification is issued under clause (1) of Articles 341 and 342 of the Constitution, Parliament can by law include in or exclude from the list of Scheduled Castes or Scheduled Tribes, specified in the notification, any caste or tribe but save for that limited purpose the notification issued under clause (1), shall not be varied by any 102 subsequent notification. What is important to notice is that the castes or tribes have to be specified in relation to a given State or Union Territory. That means a given caste or tribe can be a Scheduled Caste or a Scheduled Tribe in relation to the State or Union Territory for which it is specified.

These are the relevant provisions with which we shall be concerned while dealing with the grievance made in this petition. …. 16. We may add that considerations for specifying a particular caste or tribe or class for inclusion in the list of Scheduled Castes/Schedule Tribes or backward classes in a given State would depend on the nature and extent of disadvantages and social hardships suffered by that caste, tribe or class in that State which may be totally non est in another State to which persons belonging thereto may migrate. Coincidentally it may be that a caste or tribe bearing the same nomenclature is specified in two States but the considerations on the basis of which they have been specified may be totally different. So also the degree of disadvantages of various elements which constitute the input for specification may also be totally different.

Therefore, merely because a given caste is specified in State A as a Scheduled Caste does not necessarily mean that if there be another caste bearing the same nomenclature in another State the person belonging to the former would be entitled to the rights, privileges and benefits admissible to a member of the Scheduled Caste of the latter State "for the purposes of this Constitution". This is an aspect which has to be kept in mind and which was very much in the minds of the Constitution-makers as is evident from the choice of language of Articles 341 and 342 of the Constitution…."

Marri Chandra Shekhar Rao’s case and Action Committee’s case were followed in Subhash Chandra and Anr. v. Delhi Subordinate Services Selection Board and Ors., (2009) 15 SCC 458. In Subhash Chandra case, the Supreme Court reiterated that "If a caste 103 or tribe is notified in terms of the Scheduled Castes Order or the Scheduled Tribes Order, the same must be done in terms of clause (1) of Article 341 as also that of Article 342 of the Constitution of India, as the case may be. No deviation from the procedure laid down therein is permissible in law. If any amendment/alteration thereto is required to be made, recourse to the procedure laid down under clause (2) thereof must be resorted to."

23. In Marri Chandra Shekhar Rao’s case, it was held that a Scheduled Caste or Scheduled Tribe of any State which depends on the nature and extent of disadvantages and social hardships suffered by the caste, tribe or class in that State or area may be non-existent in another State. The inclusion of the castes, races or tribes is mainly based on the degree of disadvantages or hardships faced by the castes, races or tribes in that State or in some cases or in part area of the State. For instance, in the Presidential Order relating to the State of Tamil Nadu, the caste Kanikaran, Kanikkar (in Kanyakumari District and Shenkottah and Ambasaundram taluks of Tirunelveli district) are 104 notified as Scheduled Castes.

This shows that the President can specify castes, races or tribes or parts thereof in relation not only to the entire State but in relation to the parts of the State. The President has been authorised to limit the notification to parts of the State or groups within castes, races or tribes. In Marri Chandra Shekhar Rao case, the Constitution Bench therefore held that the expression "in relation to that State" must be read meaningfully; otherwise the expression "in relation to that State" would come nugatory.

24. The Presidential Order issued under Article 341 of the Constitution in regard to Scheduled Castes and Article 342 of the Constitution in regard to Scheduled Tribes cannot be varied by anyone or by the Court. Only the Parliament by law include or exclude from the list of Scheduled Castes or Scheduled Tribes specified in a notification issued under Article 341(1) and Article 342(1) of the Constitution respectively any caste, race or tribe or parts or group within any caste, race or tribe. The Scheduled Castes or Scheduled Tribes thus specified in relation to one State or Union 105 Territory does not carry their status in another State or Union Territory.

When the Scheduled Castes or Scheduled Tribes are specified for each State and in some cases, specific areas of the State or Union Territory, neither the State legislature nor the courts can include or exclude other Scheduled Castes or Scheduled Tribes so specified in some States or Union Territories which would be against the mandate of Articles 341 and 342 of the Constitution and the Presidential Orders issued thereon. If that is permitted, it would amount to addition or alteration of the Presidential Order which is violative of the Constitutional Scheme.

25. State of Maharashtra v. Milind and Ors. (2001) 1 SCC 4, dealt with a question as to whether the notified Scheduled Tribe being Halba or Halbi as contained in item 19 of the Presidential Order would include "Halba-Koshti". This Court held that addition of "Halba- Koshti" in the Presidential Order would amount to amendment thereto which is impermissible in law. In Milind’s case, it was held as under:-

"33……The jurisdiction of the High Court would be much more 106 restricted while dealing with the question whether a particular caste or tribe would come within the purview of the notified Presidential Order, considering the language of Articles 341 and 342 of the Constitution. These being the parameters and in the case in hand, the Committee conducting the inquiry as well as the Appellate Authority, having examined all relevant materials and having recorded a finding that Respondent 1 belonged to "Koshti" caste and has no identity with "Halba/Halbi" which is the Scheduled Tribe under Entry 19 of the Presidential Order, relating to the State of Maharashtra, the High Court exceeded its supervisory jurisdiction by making a roving and in-depth examination of the materials afresh and in coming to the conclusion that "Koshtis" could be treated as "Halbas". In this view the High Court could not upset the finding of fact in exercise of its writ jurisdiction. Hence, we have to essentially answer Question 2 also in the negative. Hence it is answered accordingly."

26. When the Parliament restricts the benefit of reservation by inclusion of a caste as a Scheduled Caste to a State or part of State i.e. certain specified districts in a State, the Court cannot express any opinion as to its correctness. Hence, as regards the inclusion of caste "Mochi" in the list of Scheduled Castes within a particular area as per Constitution (Scheduled Castes) Order (Second Amendment) Act, 2002, it was held that it was not for the Court to render any opinion in regard to the correctness of the same. [vide Shree Surat Valsad Jilla K.M.G. Parishad v. Union of India and Ors. (2007) 5 SCC 360].

27. The executive instructions/circulars issued by the Government of India also reiterate to well-settled position. The circular No. BC-16014/1/82-SC & BCD-I dated 06.08.1984 of the Ministry of Home Affairs addressed to all State Governments and UT Administration states that SC and ST on migration from the State of his origin to another State will not lose his status as SC/ST; but will be entitled to the concession/benefits admissible to the SC/ST from the State of his origin and not from the State where he has migrated.

The relevant portion of the said circular reads as under:-

No. BC-16014/1/82-SC & BCD-I

Government of India/Bharat Sarkar

Ministry of Home Affairs/GrihMantralaya

New Delhi, the 6th August, 1984

To,

The Chief Secretaries of All State Governments and U.T. Administrations.

Subject: – Verification of claim of candidates belonging to Scheduled Castes and Scheduled Tribes and migrants from other States/Union Territories-Form of certificate-Amendment to.

Sir, ……..

2. The instructions issued in this Ministry’s letter of even number dated the 18.11.1982 will continue. It is, however, clarified that the Scheduled Caste/Scheduled Tribe person on migration 108 from the State of his origin to another State will not lose his status as Scheduled Caste/Scheduled Tribes but he will be entitled to the concessions/benefits admissible to the Scheduled Castes/Scheduled Tribes from the State of his origin and not from the State where he has migrated……

(Underlining added)

Yours faithfully

Sd/-

Joint Secretary to Govt. of India

28. The same thing was reiterated in the circular dated 22.02.1985 issued by the Ministry of Home Affairs which has also clarified that a Scheduled Caste/Scheduled Tribe person who has migrated from the State of origin to some other State for the purpose of seeking education, employment, etc. will be deemed to be a Scheduled Caste/Tribe of the State of his origin and will be entitled to derive benefits from the State of origin and not from the State to which he has migrated.

29. My Conclusion for agreeing with the view taken in paras (30) and (32):-

It is now settled law that a person belonging to Scheduled Caste/Scheduled Tribe in State ‘A’ cannot claim the same status in another State ‘B’ on the ground that he is declared as a Scheduled Caste/Scheduled Tribe in State ‘A’. The expressions "in relation to that State or Union Territory" and "for the purpose of this Constitution" used in Articles 341 and 342 of the Constitution of India are to be meaningfully interpreted. A given caste or tribe can be a Scheduled Caste or a Scheduled Tribe in relation to that State or Union Territory for which it is specified. Thus, the person notified as a Scheduled Caste in State ‘A’ cannot claim the same status in another State on the basis that he was declared Scheduled Caste in State ‘A’. Article 16(4) has to yield to the Constitutional mandate of Articles 341 and 342.

Union Territories:

30. Part VIII of the Constitution of India deals with Union Territories. Article 239 provides that the Union Territory shall be administered by the President acting through an Administrator to be appointed by him. Article 239 reads as follows:-

"239. Administration of Union Territories

(1) Save as otherwise provided by Parliament by law, every Union Territory shall be administered by the President acting, to such extent as he thinks fit, through an administrator to be appointed by him with such designation as he may specify.

(2) Notwithstanding anything contained in Part VI, the President may appoint the Governor of a State as the administrator of an adjoining Union Territory, and where a Governor is so appointed, he shall exercise his functions as such administrator independently of his Council of Ministers."

31. Article 239A was inserted by the Constitution (Fourteenth Amendment) Act, 1962. Article 239A of the Constitution of India empowers the Parliament to create by law legislatures and Council of Ministers in the then Union Territories of Himachal Pradesh, Manipur, Goa, Daman & Diu and Pondicherry. Arunachal Pradesh and Mizoram were added later. With Himachal Pradesh, Manipur, Tripura, Goa and Mizoram all becoming full-fledged States, the only Union Territory left under Article 239A is Pondicherry. Now, Union Territory of Pondicherry (Puducherry) also has a legislature and Council of Ministers.

32. Article 341 empowers the President "with respect to any State or Union Territory, and where it is a State, after consultation with the 111 Governor thereof, by public notification, specify the castes, races or tribes or parts of or groups within castes, races or tribes which shall for the purposes of this Constitution, be deemed to be Scheduled Caste in relation to that State or Union Territory as the case may be." Equally Article 342(1) empowers the President "with respect to any State or Union Territory, and where it is a State, after consultation with the Governor thereof, by public notification, specify the tribes or tribal communities or parts of or groups within tribes or tribal communities which shall for the purposes of the Constitution be deemed to be Scheduled Tribes in relation to that State or Union Territory, as the case may be".

Articles 341(2) and 342(2) of the Constitution empower the Parliament alone by law to include or exclude from the list of Scheduled Castes/Scheduled Tribes specified by notification issued under Articles 341(1) and 342(1) of the Constitution of India. Until the Presidential Notification is modified by appropriate amendment by Parliament in exercise of the power under Articles 341(2) or 342(2) of the Constitution, the Presidential Notification issued under Articles 341(1) and 342(1) of the 112 Constitution is final and conclusive. No caste or group can be added to it or subtracted by any action either by the State Government or by a Court on adducing of evidence. Articles 341 and 342 of the Constitution do not make any distinction between a ‘State’ or ‘Union Territory’.

33. Constitution (Scheduled Castes) (Union Territories) Order, 1951:- In exercise of powers under Clause (1) of Articles 341 and 342 of the Constitution, the Presidential Notifications were issued specifying Scheduled Castes in relation to various Union Territories. List of Scheduled Castes are declared in relation to each Union Territory separately. Presidential Notification pertaining to Union Territories, Scheduled Castes (Union Territories) Order, 1951 specifies Scheduled Castes resident in the Union Territories of Delhi, Chandigarh and Daman and Diu.

The Presidential Order provided that:- "Subject to the provisions of this Order, the castes, races or tribes or parts of, or groups within, castes or tribes, specified in *[Parts I to 113 III] of the Schedule to this Order shall, in relation to the *[Union territories] to which those parts respectively relate, be deemed to be Scheduled Castes so far as regards members thereof resident in the localities specified in relation to them respectively in those Parts of that Schedule." As and when there is reorganisation of the Union Territories, in exercise of the powers conferred under Article 341(1) of the Constitution, the President has made various orders.

34. The Constitution (Scheduled Tribes) (Union Territories) Order, 195126:- In exercise of the powers conferred by clause (1) of Article 342 of the Constitution of India, as amended by the Constitution (First Amendment) Act, 1951, the President made the Constitution (Scheduled Tribes) (Part C States) Order, 1951, specifying the tribes or communities which shall be deemed to be ‘Scheduled Tribes’ in Part C State. This Order was adapted for the Union Territories by the Scheduled Castes and Scheduled Tribes Lists (Modification) Order, 1956.

35. When new territories were formed, such as Pondicherry (Puducherry), or Sikkim, the Scheduled Castes or Scheduled Tribes Orders were made in relation to the new territories. In exercise of the powers under Articles 341(1) and 342(1), the President has made the orders – The Constitution (Dadra and Nagar Haveli) Scheduled Castes Order, 1962; The Constitution (Dadra and Nagar Haveli) Scheduled Tribes Order, 1962; The Constitution (Pondicherry) Scheduled Castes Order, 1964; The Constitution (Goa, Daman and Diu) Scheduled Caste Order, 1968; The Constitution (Goa, Daman and Diu) Scheduled Tribes Order, 1968; In the case of Goa, the Goa, Daman and Diu Reorganisation Act, 1987 (Act No.18 of 1987), by Section 19 amended the Scheduled Castes and Scheduled Tribes Orders.

36. Union Territories do not become merged with the Central Government:- The Union Territories are centrally administered by the 115 President acting through an administrator. As held by this Court in New Delhi Municipal Council v. State of Punjab & Ors. (1997) 7 SCC 339, the President, who is the executive head of a Union Territory while administering the Union Territory, does not function as the head of the Central Government, but as the head of the Union Territory under powers specially vested in him under Article 239 of the Constitution thereby occupying a position analogous to that of a Governor in a State. Though the Union Territories are centrally administered under the provisions of Article 239, they do not become merged with the Central Government as has been held by this Court in Satya Dev Bushahri v. Padam Dev and Ors. AIR 1954 SC 587.

They are centrally administered; but they retain their independent identity [Chandigarh Administration and Anr. v. Surinder Kumar and Ors. (2004) 1 SCC 530]. The Union Territory does not entirely lose its existence as an entity though large control is exercised by the Union of India. [Government of NCT Delhi v. All India Central Civil Accounts, Jao’s Association and Ors. (2002) 1 SCC 344] 116

37. View taken in Pushpa and Chandigarh Administration – not correct view:- Reliance was placed upon Pushpa’s case to contend that Article 16(4) is not controlled by the Presidential Order issued under Article 341(1) or Article 342(1) to the Officers appointed to the post in the Union Territories need not be confined to only such Schedule Castes/Schedule Tribes of the particular Union Territory. In Pushpa’s case, the Supreme Court was confined with the question as to whether, selection and appointment already made to migrants’ Schedule Caste candidates of other States against the quota reserved for the Schedule Caste candidates in the Union Territory of Pondicherry was legal and valid.

In S. Pushpa and Ors. v. Shivachanmugavelu and Ors. (2005) 3 SCC 1, Pondicherry Government appointed Selection Grade Teachers in 1995 under the Scheduled Castes quota not only from the Scheduled Castes candidates of Pondicherry but also such candidates of Scheduled Castes from other States. In Pushpa’s case, this Court upheld the policy of the Pondicherry Government extending the benefit of reservation of SC/ST seats even to those candidates who came from other States. The Pondicherry Government proceeded on the basis that since Central Government jobs were open to all SC/ST candidates irrespective of origin of their States, the same may apply to jobs with a Union Territory as well. In Pushpa’s case, this Court held that in the matter of providing reservation, it was open to the Pondicherry Government to extend the benefit of reservation to migrant Scheduled Caste and Scheduled Tribe candidates and that the same will not be an infraction of clause (4) of Article 16 of the Constitution of India.

38. In Pushpa’s case, the principle that "when members of Scheduled Castes/Scheduled Tribes migrate to another State, they do not carry with them the special privileges and advantages", was held not applicable in case of Union Territories. In para (21) of Pushpa’s case, it was held as under:-

"21…..Article 16(4) is not controlled by a Presidential Order issued under Article 341(1) or Article 342(1) of the Constitution in the sense that reservation in the matter of appointment on posts may be made in a State or Union Territory only for such Scheduled Castes and Scheduled Tribes which are mentioned in the Schedule appended to the Presidential Order for that particular State or Union Territory. This article does not say that only such Scheduled Castes and Scheduled Tribes which are mentioned in the Presidential Order issued for a particular State alone would be recognised as backward classes of citizens and none else.

If a State or Union Territory makes a provision whereunder the benefit of reservation is extended only to such Scheduled Castes or Scheduled Tribes which are recognised as such in relation to that State or Union Territory then such a provision would be perfectly valid. However, there would be no infraction of clause (4) of Article 16 if a Union Territory by virtue of its peculiar position being governed by the President as laid down in Article 239 extends the benefit of reservation even to such migrant Scheduled Castes or Scheduled Tribes who are not mentioned in the Schedule to the Presidential Order issued for such Union Territory.

The UT of Pondicherry having adopted a policy of the Central Government whereunder all Scheduled Castes or Scheduled Tribes, irrespective of their State are eligible for posts which are reserved for SC/ST candidates, no legal infirmity can be ascribed to such a policy and the same cannot be held to be contrary to any provision of law." (Underlining added) In my considered view, the above observation in Pushpa’s case is not a correct view. The judgment in Pushpa’s case is contrary to the views taken in Marri Chandra Shekhar Rao’s case. The judgment in Pushpa’s case is contrary to the views taken in Marri Chandra Shekhar Rao’s case.

Facts of Pushpa’s case disclose that the Government of Pondicherry had throughout proceeded on the basis that being a Union Territory all orders regarding reservation for SC/ST in respect of post/services under the Central Government were applicable to post/services as under the Pondicherry administration. The decision in Pushpa’s case therefore cannot be taken to be an authoritative pronouncement. Clause (2) of Article 341 of the Constitution empowers Parliament alone by law to include or exclude from the lists of Scheduled Castes specified in a notification issued under clause (1) of Article 341. No executive action or order or modification or variance of the same is possible and any such variance would be against the constitutional scheme.

39. In Pushpa’s case, the posts advertised were of Selection Grade Teachers under the Pondicherry Services and not for Central Government jobs. It may be that Pondicherry is a Union Territory; but the posts/services exclusively coming under Pondicherry administration is meant only for the Scheduled Casts/Scheduled Tribes as notified under the Presidential Order for Pondicherry. In fact, Pondicherry (Union Territory) itself by referring to Subhash Chandra’s case has taken the decision that reservation benefits to posts/services arising under the Union Territory of Pondicherry will be 120 confined only to the Scheduled Castes/Scheduled Tribes notified by virtue of Presidential Order. The said Government Order of the Pondicherry Government was upheld by this Court in Puducherry Scheduled Caste People Welfare Association v. Chief Secretary to Government, Union Territory of Pondicherry and Ors. (2014) 9 SCC 236, wherein this Court held as under:-

"13. It is important to bear in mind that it is by virtue of the notification of President under Article 341(1) that the Scheduled Castes come into being. The members of the Scheduled Castes are drawn from castes, races or tribes, they attain a new status by virtue of Presidential Order. Clause (2) of Article 341 empowers Parliament alone by law to include or exclude from the list of Scheduled Castes specified in a notification issued under clause (1) by the President. By no executive power, amendment, modification, alteration or variance in the Presidential Order is permissible.

It is not open to the executive to do anything directly or indirectly which may lead to any change in the Presidential Order. Once Presidential Order has been issued under Article 341(1) or Article 342(1), any amendment in the Presidential Order can only be made by Parliament by law as provided in Article 341(2) or Article 342(2), as the case may be, and in no other manner. The interpretation of "resident" in the Presidential Order as "of origin" amounts to altering the Presidential Order."

40. The principle in Pushpa’s case was not accepted in Subhash Chandra’s case. It was held that although Union Territory is administered by the Union Government, socio-political aspect of the 121 Union Territory cannot be mixed up with administrative aspect. In Subhash Chandra’s case, it was held that if the principle applied in Pushpa’s case is to be given a logical extension, it will lead to an absurdity, that the Scheduled Castes Order in a State/Union Territory brought under the control of the President under Article 341 of the Constitution could be altered by virtue of a notification issued in pursuance of Article 16(4) of the Constitution, which is not in consonance with the Constitutional Scheme.

41. Let us refer to the facts of Chandigarh Administration and Another v. Surinder Kumar and Others (2004) 1 SCC 530. Ministry of Home Affairs, Government of India issued various circulars pertaining to the Scheduled Castes and Scheduled Tribes. The circular dated 22.02.1985 regarding "Issue of Scheduled Caste/Scheduled Tribe certificate to migrants from other States/Union Territories", issued by the Ministry of Home Affairs clarified that a Scheduled Caste/Tribe person who has migrated from the State of origin to some other State for the purpose of seeking education, employment, etc. will be deemed to be a Scheduled Caste/Tribe of the State of his origin and will be entitled to derive benefits from the State of origin and not from the State to which he has migrated.

Based on the aforesaid circular of the Government of India, the Home Secretary, Chandigarh Administration vide his letter dated 28.07.1986 sought clarification from the Government of India, Ministry of Home Affairs, as to whether, these instructions are applicable in the Union Territory of Chandigarh. Chandigarh Administration received the reply dated 26.08.1986 from Ministry of Welfare stating that there is no discrimination in the employment under the Central Government between the Schedule Caste/Schedule Tribes of one State or another and Union Territories and that the same may be followed by the Chandigarh Administration. The letter dated 26.08.1986 stated that Scheduled Castes/Scheduled Tribes of any other State/Union Territory would be entitled to the benefits and facilities provided in the services under the Union Territory of Chandigarh. Further the said circular leaves it to the Chandigarh Administration to seek further clarification. The above letter of Government of India is in clear violation of Constitutional scheme.

42. Pursuant to the said letter, Chandigarh Administration sought clarification from the Department of Personnel and Training. However, they have not received any response. The clarification was issued by the Home Secretary, Chandigarh Administration vide letter dated 07.09.1999. The said letter had given a clarification based on the Government of India circular dated 02.02.1985 stating that a Schedule Caste/Schedule Tribe of any other State or Union Territory would not be entitled to the benefits of reservation in the services in the Chandigarh Administration and that the benefit of reservation to persons belonging to reserved categories in other States in the Chandigarh Administration is to be discontinued with effect from 07.09.1999.

In Chandigarh Administration case, the Supreme Court took the view that the stand taken by Chandigarh Administration discontinuing the benefits of reservation with effect 124 from 07.09.1999 was untenable. With due respect, I am not in agreement with the view taken in Chandigarh Administration case . The letter dated 26.08.1986 sent by the Ministry of Welfare/Kalyan Mantralaya is contrary to the letter dated 22.02.1985 sent by the Ministry of Home Affairs and also against the Constitutional scheme.

43. It was held in Subhash Chandra that Chandigarh Administration and Pushpa proceeded on the basis that Marri Chandra Shekhar Rao and Action Committee would have no application in relation to Union Territories. Observing that both Articles 341 and 342 not only refer to the State but also to the Union Territory. In para (64) of Subhash Chandra’s case, it was held as under:-

"64. Although Union Territories are administered by the Central Government, yet it is difficult to conceive that the socio-political aspect can be mixed up with the administrative aspect. Article 341 leads to grant of constitutional rights upon a person whose affinity to a caste/tribe would attract the Constitution (Scheduled Castes) Order or the Constitution (Scheduled Tribes) Order. Once a person comes within the purview of presidential promulgation, he would be entitled to constitutional and other statutory or administrative benefits attached thereto. In our opinion, such socio-political rights created in our Constitution cannot be segregated keeping in view the administrative exigencies."

44. As per the scheme of the Constitution under Articles 341, 342 and 239 of the Constitution, only those Scheduled Castes/Scheduled Tribes as notified in the Presidential Notification for the respective Union Territory can legitimately claim the benefit of reservation in that Union Territory. Even though the Union Territories are centrally administered, though the administrator/Lieutenant Governor so far as the administrative aspects of the Union Territories, each Union Territory has its own identity. Each of the Union Territories would be bound by their respective Presidential Order of Scheduled Castes/Scheduled Tribes for giving benefit of reservation to Scheduled Castes/Scheduled Tribes in employment.

Only those persons, who come within the purview of the Presidential Notification, would be entitled to constitutional and other statutory benefits of reservation in the respective Union Territory. If the benefit of reservation is to be extended to Scheduled Castes/Scheduled Tribes from all over the country then it would amount to inclusion of caste, races or tribes to the Presidential Order pertaining to that Union Territory.

As discussed earlier, such inclusion or exclusion in the 126 Presidential Order can be done only by the Parliament in the manner as indicated in Articles 341(2) and 342(2) of the Constitution of India. By no executive order, amendment, alteration or variance in the Presidential Order is permissible. Whether there can be PAN India reservation of SCs and STs to services under various Union Territories of India

45. Under Central Civil Services (Classification, Control and Appeal) Rules, 1965 [CCS(CCA) Rules, 1965], there are four categories of services namely:-

(i) Central Civil Services, Group A;

(ii) Central Civil Services, Group B;

(iii) Central Civil Services, Group C; and

(iv) Central Civil Services, Group D

Central Civil Services – Group A:-

46. As per the Schedule to Central Civil Services (CCA) Rules, 1965, under Group ‘A’, there are forty five services inter alia like –

(i) Archaeological Service (Serial No.1);

(ii) Central Health Service (Serial No.5);

(iii) Indian Defence Accounts Service (Serial No.11);

(iv) Indian Foreign Service (Serial No.12);

(v) Indian Meteorological 127 Service (Serial No.13);

(vi) Indian Postal Service (Serial No.14);

(vii) Indian Posts and Telegraphs Traffic Service (Serial No.15);

(viii) Indian Revenue Service (Serial No.16);

(ix) Indian Salt Service (Serial No.17);

(x) Directorate General of Mines Safety (Serial No.19);

(xi) Indian Telecommunication Service (Serial No.22);

(xii) Central Legal Service (Grades I,II, III and IV) (Serial No.25);

(xiii) Delhi and Andaman and Nicobar Islands Civil Service, Grade I (DANICS) (Serial No.28);

(xiv) Delhi and Andaman and Nicobar Islands Police Service, Grade II (DANIPS) (Serial No.29);

(xv) Company Law Board Service (Serial No.38);

(xvi) Labour Officers of the Central Pool (Serial No.39); and (xvii) Armed Forces Headquarters Civil Services (Serial No.44).

47. By reading of the categories of services, the said services of Group ‘A’ are concerned only with the services of the Union of India and the appointment to Group ‘A’ services are made by the President. The Cadre Controlling Authority of Group ‘A’ services are the respective ministries of the Government of India. Recruitment to 128 Group ‘A’ services is made by the Union Public Service Commission (UPSC) and the recruitment is on all-India basis. So far as the recruitment to Group ‘A’ services is concerned, Union of India in its counter affidavit has stated as under:-

"a. ……… Recruitment to Group A services is made by the UPSC. This recruitment is again on all India basis…………

b. Whichever ministry seeks recruitment to the service in this Group sends requisition to UPSC as per procedure prescribed and UPSC accordingly advertises for the post in Group A. Every citizen of India is eligible to apply as per the qualifications and requirements in the notification.

c. DoPT is the nodal ministry for regulating the conditions of service of all Central Civil Services as per Allocation of Business Rules. As per the conditions of service, every employee is required to give an undertaking agreeing to the conditions of the all India transfer liability at the time of joining the service.

d. Central Civil Services employees belonging to Group A serve the Union of India and that is the reason why these services are across the length and breadth of the country, wherever there is an office of the Central Government.

e. Member of the Group A service are governed by Central Civil Services (Class, Control & Appeal) Rules, 1965 as well as Central Civil Services (Conduct) Rules, 1972 & Central Civil Services (Pension) Rules, 1972 and such other rules made by the central ministries.

"27 Central Civil Services – Group B:-

48. Under Rule 5, the Central Civil Services – Group ‘B’ are specified in the Schedule and there are thirty-two such services mentioned. Some of the thirty-two services of Group ‘B’ and their appointing authorities are as under:-

PART II – Central Civil Services, Group ‘B’

(Except for Civilians in Defence Services)

Description of service (2)

Appointing Authority (3)

Description of service (2)

Appointing Authority (3)

Section Officer Grade of the Central Secretariat Service excluding Section Officers with Group ‘A’ status. (Serial No.1)

President

Postal Superintendents’ Service, Group ‘B’ (Serial No.7)

Director-General Posts

Postmasters’ Service, Group ‘B’ (Serial No.8)

Director-General Posts

Customs Preventive Service, Group ‘B’- Chief Inspectors (Serial No.15)

Collector of Customs

Botanical Survey of India, Group ‘B’ (Serial No.18)

Chief Botanist, Botanical Survey of India

Income Tax Service, Group ‘B’ (Serial No.17)

Commissioner of Income Tax

Geological Survey of India, Group ‘B’ (Serial No.19)

Director-General , Geological Survey of India

Survey of India, Group ‘B’ (Serial No.20)

Surveyor General of India

Zoological Survey of India, Group ‘B’ (Serial No.21)

Zoological Survey of India

Central Electrical Engineering Service Group ‘B’ (Serial No.22)

Director General (Works), Central Public Works Department

Central Engineering Service, Group ‘B’: (Serial No.24)

 

Indian Salt Service, Group ‘B’ (Serial No.26)

Joint Secretary, Ministry of Production

 

(i) Posts in the Ministry of Irrigation and Power.

Joint Secretary,

(ii) Posts in the Central Water and Power Commission

Chairman, Central Water and Power Commission

(iii) Posts in the Chambal Control Board

Joint Secretary, Ministry of Irrigation and Power

(iv) Posts in the Farakka Barrage Control Board

Commissioner (Ganga Basin), Ministry of Irrigation and Power

(v) Posts in the Ganga Discharge Circle

Commissioner (Ganga Basin), Ministry of Irrigation and Power

Delhi and Andaman and Nicobar Islands Civil Service, Grade II. (DANICS) (Serial No.28)

Joint Secretary, Ministry of Home Affairs

Delhi and Andaman and Nicobar Islands Police Service, Grade II. (DANIPS) (Serial No.29)

Joint Secretary, Ministry of Home Affairs

General Central Service, Group ‘B’- (Serial No.32)

 

Administrator All Group ‘B’ posts of the Departmentalised Accounts Offices of the Government of India. (Serial No.33)

Chief Controller of Accounts or Joint Controller General of Accounts in a Ministry or Department where there is no Chief Controller of Accounts

(i) Post in any Ministry of Department of Government of India, other than the post in respect of which specific provision has been made by a general or special order of the President.

Secretary in the Ministry or Department

(i-a) Posts outside a Ministry or Department of Government of India, other than the posts in respect of which specific provision has been made by a general or special order of the president.

In respect of posts in an office under the control of a Head of Department directly under the Government.

-Head of the Department

In respect of other posts – Secretary in the Ministry or Department

(ii) Posts in Union Territories other than Delhi Administration, the Andaman and Nicobar Islands and the Laccadive, Minicoy and Amindive Islands

Administrator

 

(iii) Delhi Administration-All posts

Chief Secretary

 

(iv) The Andaman and Nicobar Islands-All Posts

Chief Commissioner

 

(v) The Lakshadweep Administration-All Posts

Administrator

Recruitment to Group ‘B’ services are conducted by the UPSC. The appointing authority to various Group ‘B’ services is the President of India/respective Ministries/respective Heads like Ministry of Home Affairs, Collector of Customs, Commissioner of Customs etc.

49. In Serial Nos. 28 and 29 of the Schedule, we have the Union Territories Service known as Delhi, Andaman and Nicobar Islands, Lakshadweep, Daman & Diu and Dadra & Nagar Haveli Civil Services (DANICS) and Delhi, Andaman and Nicobar Islands, Lakshdweep, Daman & Diu and Dadra & Nagar Haveli Police Services (DANIPS). In the counter affidavit filed by the Union of India, it is stated as under:-

"a. …….DANICS/DANIPS officers are posted in Delhi, Andaman & Nicobar Islands, Lakshdweep, Daman & Diu and Dadra & Nagar Haveli. The recruitment to all the Union Territories for these Group B posts are common. They are also centralised and the appointing authority is none other than Ministry of Home Affairs, Government of India. The recruitment to these services is the very same examination meant for the All India Services (IAS/IPS) on the one hand and the Central Civil Services Group A on the other. Any citizen of India is eligible to apply, subject to the conditions prescribed. As per service rules, transfer undertakings throughout the Union Territories covered under DANICS/DANIPS is taken from these officers.

b. This is the reason why the Union of India while inviting applications for recruitment considers all candidates, including reserved candidates on all India basis. Group B cadre of DANICS and DANIPS is the feeder cadre for IAS and IPS respectively. They retire invariably in these offices, some of them reaching high positions in the central government. c. As indicated above recruitment to the All India Services, CCS Group A as well as CCS Group B (Gazetted) is conducted through UPSC in the Civil Services Examination, the applicants are common when the applications are made, every aspirant seeks recruitment to the services and it is only as per the marks and ranking that allocations are made eventually to All India Services, Group A and Group B.

Therefore, when UPSC undertakes the recruitment, it is naturally a PAN India recruitment and therefore it is necessary to seek applications including from reserved candidates from all over India."28

Central Civil Services – Group C:-

50. There are five services under Central Civil Services – Group ‘C’ under CCS (CCA) Rules. Some of the posts noted in Group ‘C’ and their appointing authorities are as under:-

PART III – Central Civil Services, Group ‘C’

(Except for Civilians in Defence Services)

Description of service (2)

Appointing Authority (3)

Description of service (2)

Appointing Authority (3)

Central Secretariat Clerical Service, Upper Division and Lower Division Grade (Serial No.1)

Deputy Secretary or Director, Cadre Authority

General Central Service, Group ‘C’ (Serial No.4)

Deputy Secretary or Director in the Ministry/Department of Government

 

 

(i) Posts in the Ministry/Department of Government other than the posts in respect of which specific provision has been made by a general or special order of the President

 

 

 

(ii) Posts in non-Secretariat Office other than posts in respect of which specific provision has been made by a general or special order of the President

Head of Office

 

 

(iii) Posts in Union Territories

Head of Office of such other authority as may be specified by the Administrator.

 

 

(iv) All Group ‘C’ posts of the Departmentalized Accounts Office of the Government of India

Controller of Accounts or Deputy Controller General of Accounts in a Ministry or Department where there is no Controller of Accounts.

 

Insofar as Group ‘C’ services of Union of India are concerned, they are recruited by the Staff Selection Commission (SSC) which is the recruiting agency under DoPT. Members of these services get promoted to CCS – Group ‘B’. In the counter affidavit filed by the Union of India, it is stated as under:-

"a. ……Recruitment to posts in Group C arise out of requisition made by the concerned ministries all over India. These requisitions upon reaching the Staff Selection Commission are processed and selection takes place and appointments are made. Even from these appointees undertaking for all India transfer liability is taken. As these are posts under Central Government and these employees are liable to be transferred anywhere in the country and the recruitment being centralised for all such posts in the country, it had been consistent policy of the Union of India to have PAN India eligibility.

b. The posts in CCS Group C are in the subordinate services. The equivalent in the Union Territory of Delhi is the Delhi Administrative Subordinate Services (DASS) and the recruiting agency in the place of Staff Selection Commission is the Delhi Subordinate Service Selection Board (DSSSB). Members of Delhi Administrative Subordinate Services are the feeder cadre for Central Civil Services Group B (DANICS). It is for these reasons that the policy is consistently adopted."29

Central Civil Services – Group D:-

51. Class IV employees now referred to as Multi-Tasking Staff (MTS) come under this category. Some of the posts noted in Group ‘D’ and their appointing authorities are as under:-

PART IV – Central Civil Services, Group ‘D’

(Except for Civilians in Defence Services)

Description of service (2)

Appointing Authority (3)

General Central Service, Group ‘D’ (Serial No.1)

 

(i) Posts in Ministries or Departments of Government other than posts in respect of which specific provision has been made by a general or special order of the President.

Under Secretary

(ii) Posts in non-Secretariat Offices other than posts in respect of which specific provision has been made by a general or special order of the President.

Head of Office

(iii) Posts in Union Territories

Head of Office or such other authority as may be specified by the Administrator

(iv) All Group ‘D’ posts of the Departmentalized Accounts Offices of the Government of India

Deputy Controller of Accounts or Assistant Controller General of Accounts in a Ministry or Department where there is no Deputy Controller of Accounts.

52. As pointed out earlier, there is centralised recruitment conducted by UPSC for the Central Civil Services in Group ‘A’ and Group ‘B’. For this centralised recruitment, applications are invited from candidates across the country and Scheduled Castes/Scheduled Tribes of all the States/Union Territories are entitled to apply for the reserved posts. Recruitment to various posts in Group ‘A’ and Group ‘B’ (Gazetted) categories for services in States/Union Territories are presently filled only through UPSC by centralised recruitment. After recruitment, the Group ‘A’ and Group ‘B’ officers are posted across the country wherever there are offices of Central Government.

53. Services mentioned at Serial No.28 that is Delhi and Andaman and Nicobar Islands Civil Service, Grade-II (DANICS) are Group ‘B’ civil services. DANICS officers are posted at Delhi, Andaman and Nicobar Islands, Lakshadweep, Daman and Diu and Dadra and Nagar Haveli. DANICS – Group ‘B’ civil service officers are directly 136 recruited through the Central Civil Services examination conducted by UPSC. Since DANICS is a centralised recruitment conducted through UPSC naturally applications are invited from the candidates across the country including reserved candidates of Scheduled Castes/Scheduled Tribes.

54. Delhi, Andaman and Nicobar Islands Police Services (DANIPS) are recruited directly through centralised civil services examination conducted by UPSC. DANIPS are posted at Delhi and other Union Territories – Andaman and Nicobar Islands, Lakshadweep Islands, Daman and Diu and Dadar and Nagar Haveli.

The cadre strength is controlled by the Ministry of Home Affairs, Government of India. Two-thirds of DANIPS are filled by direct recruitment and remaining are promoted from non-gazetted police officers of Union Territory of Delhi and other Union Territories. Since, DANIPS officers are recruited through a centralised recruitment conducted through UPSC, applications are invited from candidates from across the country including reserved candidates of Scheduled Castes and Scheduled Tribes of all the States and Union Territories. Thus, up to Group ‘B’ (Gazetted) of Central Civil Services including the Group ‘B’ (Gazetted) services of Union Territories, there is Centralised Civil Services Examination conducted by UPSC with PAN INDIA reservation.

55. Serial No.32, Group ‘B’ of CCS (CCA) Rules refers to General Central Services. At the risk of repetition, we may usefully refer to Serial No.32 which reads as under:-

Serial No.

32 General Central Service, Group ‘B’-

 

 

(i) Post in any Ministry of Department of Government of India, other than the post in respect of which specific provision has been made by a general or special order of the President.

Secretary in the Ministry or Department

 

(i-a) Posts outside a Ministry or Department of Government of India, other than the posts in respect of which specific provision has been made by a general or special order of the president.

In respect of posts in an office under the control of a Head of Department directly under the Government.

-Head of the Department In respect of other posts

– Secretary in the Ministry or Department

 

(ii) Posts in Union Territories other than Delhi Administration, the Andaman and Nicobar Islands and the Laccadive, Minicoy and Amindive Islands

Administrator

 

(iii) Delhi Administration-All posts

Chief Secretary

 

(iv) The Andaman and Nicobar Islands-All Posts Secretary in the Ministry or Department In respect of posts in an office under the control of a Head of Department directly under the Government. -Head of the Department In respect of other posts – Secretary in the Ministry or Department Administrator Chief Secretary Chief Commissioner

Chief Commissioner

 

(v) The Lakshadweep Administration-All Posts Administrator

Administrator

As seen from the above, Serial No.32(i) and (i-a) relates to the posts under the Government of India for which the appointing authority is the Secretary in the Ministry or Department/Head of the Department respectively. Serial No.32 (ii) of Central Civil Services (CCA) Rules, 1965 relates to "Posts in Union Territories other than Delhi Administration, the Andaman and Nicobar Islands and the Laccadive, Minicoy and Amindive Islands".

The appointing authority is shown to be the ‘Administrator’. Serial No.32 (iii) to (v) relate to ‘All posts’ in Delhi administration, Andaman and Nicobar Islands and the Lakshadweep administration respectively. Serial No.32(ii) posts in the Union Territories (other than Delhi Administration, the Andaman & Nicobar Islands and the Laacadive, Minicoy and Amindive Islands) Group ‘B’ (Gazetted) posts for which recruitment is conducted by UPSC. Since there is centralised recruitment conducted by UPSC for Group ‘B’ (Gazetted), naturally applications are invited from the candidates across the country 139 including reserved candidates of Scheduled Castes/Schedules Tribes from all the States/Union Territories.

Up to the level of Group ‘B’ (Gazetted) of Central Civil Services, since there is centralised recruitment for which there is PAN INDIA reservation of Scheduled Castes and Scheduled Tribes, Scheduled Castes/Scheduled Tribes from any State/Union Territory are entitled to apply for the reserved posts for Group ‘B’ examinations conducted by UPSC.

56. When it comes to services under Union Territories, there are so many other services like teaching, clerical cadre, police services, Medical Officers, Health Services, Stenographers, Typists, services under the Revenue department, services under public-sector undertakings, services under the municipalities and the corporations in the Union Territories and various other services which are concerned with the administration of Union Territories. These services under the Union Territories would fall under Group ‘B’, Group ‘C’ and Group ‘D’ and their recruitment is within the exclusive domain of the respective Union Territories. Though the government servants under 140 the Union Territories are governed by Central Civil Services Rules, the services under the Union Territories are essentially different from All India Services. For recruitment to services under respective Union Territories, there are different modes of recruitment for the different Union Territories.

57. This Court posed the question whether there is other category of employees in UT administration and what is the practice followed for recruitment. In response to the question, Union of India, on instructions, filed the following response:-

SCOPE of SC/ST RESERVATION IN UTs

1. Puducherry :

Reserved posts confined to local reserved candidates.

2. Chandigarh :

Reserved posts filled up by candidates from all India.

3. Daman & Diu :

Reserved posts confined to local reserved candidates for Group C posts. For Group B it is opened to candidates from all India but local candidates get additional 20 marks.

4. Dadra & Nagar Haveli :

Reserved posts confined to local reserved candidates for Group C posts. For Group B it is opened to candidates from all India but local candidates get additional 20 marks.

5. Lakshadweep :

Reserved posts confined to local 141 reserved candidates.

6. A & N Islands :

For Group C posts locally reserved.

7. NCT of Delhi :

Reserved posts filled up by candidates from all India.

For the above response that there is PAN India reservation of the reserved candidates for recruitment by Union Territories of Chandigarh, Dadra and Nagar Haveli and NCT of Delhi, no authenticated documents were produced to substantiate the same. When there are Presidential Orders notifying the Scheduled Castes/Scheduled Tribes for Union Territories of Chandigarh, Dadra and Nagar Haveli, calling for application from the Scheduled Castes/Scheduled Tribes candidates from all over India for the reserved posts of services under various Union Territories, be it Group ‘B’ or Group ‘C’, is not in accordance with the constitutional scheme.

58. For Group ‘B’ and Group ‘C’ posts falling within the services of the Union Territories, recruitment is made by the Staff Selection Board of respective Union Territories. For instance, let me refer to the Staff Selection Board of UT Administration of Daman and Diu 142 whose home page reads as under:- "In exercise of the powers conferred by the provision of Article 239 of the Constitution of India, the Administrator of Daman & Diu is pleased to make following rules to regulate the method of recruitment to all Group ‘B’ and ‘C’ categories of posts under the Administration of Daman & Diu.

It aims to "ensure a uniform and transparent process and procedures for recruitment of all Group ‘B’ and ‘C’ categories of posts under the Administration of Daman and Diu through an autonomous body, without disturbing the existing recruitment processes and procedures and for ensuring that cumulative outcome of the recruitment is to provide just and fair opportunities to all the candidates and for matters connected therewith or incidental thereto30."

59. In response to the question posed by the court, Union of India filed response affidavit stating that in Union Territories Daman and Diu and Dadra and Nagar Haveli, for Group ‘B’, it is opened to candidates from all over India. Local candidates with domicile certificate get additional twenty per cent marks. Response filed by the Union of India that there is PAN India reservation for Group ‘B’ services of Daman and Diu and Dadra and Nagar Haveli, no authenticated documents/format of any application for Group ‘B’ posts conducted by Daman and Diu was produced before us. Even assuming that there is such PAN India reservation for recruitment of Group ‘B’ conducted by the Union Territory of Daman and Diu, when there are Scheduled Castes/Scheduled Tribes as notified in the Presidential Order (Reorganisation Act, 1987 in respect of SCs/STs), there cannot be PAN India reservation as it is not in accordance with the constitutional scheme.

60. Pointing out that services in the Union Territories are different from All India Services and that the mode of recruitment are also different, in para (29) of Subhash Chandra and another v. Delhi Subordinate Service Selection Board and others (2009) 15 SCC 458, it was held as under:-

"29. Concededly, in respect of education or service, there exists a distinction between State Services and State-run institutions including the Union Territory Services and Union Territory-run institutions on the one hand, and the Central Civil Services and the institutions run by the Central Government on the other.

Whereas in the case of the former, the reservation whether for admission or appointment in an institution and employment or appointment in the services or posts in a State or Union Territory must confine to the members of the Scheduled Castes and Scheduled Tribes as notified in the Presidential Orders but in respect of All India Services, Central Civil Services or admission to an institution run and founded by the Central Government, the members of the Scheduled Castes and Scheduled Tribes and other reserved category candidates irrespective of their State for which they have been notified are entitled to the benefits thereof.

It is not denied or disputed that services in the Union Territory is essentially different from All India Services. It is also beyond any controversy that machinery for recruitment is also different. Indisputably again, not only the conditions of recruitment but also conditions of service differ." I am in full agreement with the view taken by Justice Sinha in Subhash Chandra case.

61. Rule 3 of Delhi Administration Subordinate Services (DASS) Rules, 1967 deals with constitution of services and its classification in Delhi Administration. As per Rule 3(3) of DASS Rules, the post in Grade-I, Class-II Group ‘B’ (Gazetted) and those in Grades II, III and IV shall be Central Civil Services Posts. But as noted earlier, as per Serial No.32 – General Central Service, Group ‘B’, insofar as Delhi Administration – All Posts (Serial No. 32 (iii)), the Appointing Authority is the Chief Secretary. The subordinate services in the National Capital Territory of Delhi though "Central Civil Services", they are neither All India Services nor services under Union of India so as to attract Pan India Reservation.

62. Even in the counter affidavit filed by the Union of India, by referring to Group ‘C’ services, it is stated that CCS – Group ‘C’ are in the subordinate services and there are equivalent services in the Union Territory of Delhi. For recruitment of other employees in the Union Territory of Delhi, there is Delhi Administrative Subordinate Services (DASS) and the recruiting agency is Delhi Subordinate Staff Selection Board (DSSSB). Members of Delhi Administrative Subordinate Services are stated to be the feeder cadre for Central Civil Services – Group ‘B’ (DANICS).

31 Merely because members of Delhi Administrative Subordinate Services are the feeder category for DANICS, PAN India reservation cannot be extended to Delhi Subordinate Services or to services under various Union Territories. Likewise, merely because, DANICS and DANIPS (Serial Nos. 28 and 29 of Group ‘B’ Services) are the feeder category for IAS and IPS, it cannot be said that the Pan India Reservation is applicable to services under National Capital Territory of Delhi.

63. So far as Group ‘B’ and Group ‘C’ posts falling under the services of the Union Territories, recruitment is done by the respective Staff Selection Board of respective Union Territories. Serial No.4 (iii) – ‘Posts in Union Territories’ of Group ‘C’ in CCS (CCA) Rules is shown and the appointing authority is stated as Head of the Office of such other authority as may be specified by the Administrator. Merely because the posts in the Union Territories and the appointing authority are shown in Group ‘C’ in CCS (CCA) Rules, that does not mean that those Group ‘C’ and Group ‘D’ posts are available for the Scheduled Castes and Scheduled Tribes of all the States/Union Territories.

For recruitment of Group ‘B’ and Group ‘C’ posts of services under the respective Union Territories, since the examination is conducted by the respective Union Territories like Delhi Subordinate Staff Selection Board and other Union Territories Staff Selection Boards of respective Union Territories, reservation of posts of Scheduled Castes/Scheduled Tribes must be confined only to those Scheduled Castes/Scheduled Tribes as notified in the Presidential Order of the respective Union Territories. For recruitment 147 of Group ‘B’ and Group ‘C’ posts under various Union Territories including Union Territory of Delhi, there cannot be PAN INDIA reservation of Scheduled Castes/Scheduled Tribes, lest, it would defeat the very object of the Presidential Orders issued specifying the Scheduled Castes/Scheduled Tribes for respective Union Territories.

64. As pointed out earlier, services under the Union Territories though they are Central Government services, they are services under the respective Union Territories and not under the direct control of Union of India/different Ministries. Procedure for recruitment to the various posts for the services of Union Territories are different as followed by respective Union Territories. The persons appointed for the services of Union Territories might be governed by CCS (CCA) Rules; but they are employees of respective Union Territories.

The appointing authorities are the authorities under the administration of Union Territories and not under the Ministries of Union of India. Central Civil Services are the services directly under Union of India. Contrarily, various services under the Union Territories are the 148 services under the respective Union Territories. Such services under Union Territories cannot be said to be Central Civil Services that is services under Union of India to extend the benefit of PAN India reservation for recruitment to the services under respective Union Territories including Union Territory of Delhi.

65. In exercise of the powers conferred by clause (1) of Article 341, the President issued the Constitution (Scheduled Castes) Union Territories Order, 1951 in the Presidential Order specifying Scheduled Castes in relation to Delhi and the thirty-six castes/groups notified are as under:-

Part 1 – Delhi

Throughout the Union Territory

1. Adi Dharmi

19. Kachhandha

2. Agria

20. Kanjar or Giarah

3. Aheria

21. Khatik

4. Balal

22. Koli

5. Banjara

23. Lalbegi

6. Bawaria

24. Madri

7. Bazigar

25. Mallah

8. Bhangi

26. Mazhabi

9. Bhil

27. Meghwal

10. Chamar, l Chanwan Chmanr, Jatya or Jatav Chamar, Mochi Ramadasia, Ravidasi, Reghgrh or Raigharh

28. Naribut

11. Chohra (Sweeper)

29. Nat (Rana), Badi

12. Chuhra (Balmiki)

30. Pasi

13. Dhanak or Dhanuk

31. Perna

14. Dhobi

32. Sansi or Bhedkut

15. Dom

33. Sapera

16. Gharrami

34. Sikligar

17. Julaha (Weaver)

35. Singiwala or Kalbelila

18. Karbirpanthi

36. Sirkiband

In relation to Delhi, there are thirty-six castes notified as Scheduled Castes in the Presidential Order.

The members of the Scheduled Castes in Delhi are drawn from castes, races and by virtue of the Presidential Order pertaining to Delhi, they attain the status of the Scheduled Caste. In view of the Presidential Order issued for the Scheduled Castes to Delhi, only those Scheduled Castes can claim the benefit of reservation in the employment under the Union Territory of Delhi who are notified in the Presidential Order. Neither the Delhi Government nor the court can add any caste or group to the list of Scheduled Castes notified in the Presidential Order.

Once a Presidential Order has been issued under Article 341(1) of the 150 Constitution, any addition or deletion to the Presidential Order can only be made by the Parliament by law as provided under Article 341(2) and in no other manner. Merely because, Delhi Subordinate Services is a feeder category for DANICS, there cannot be Pan India Reservation of the SCs and STs for the services under Group ‘C’ and ‘D’ categories, for which recruitment are made by the Delhi Subordinate Staff Selection Board (DSSSB).

66. Likewise, the Presidential Order has notified the following Scheduled Castes for the Union Territory of Chandigarh, Daman and Diu, Puducherry and Dadra and Nagar Haveli:-

Part II – Chandigarh

1. Adi Dharmi

19. Khatik

2. Bangali

20. Kori or Koli

3. Barar, Burar or Berar

21. Marjia or Marecha

4. Batwal, Barwala

22. Mazhabi

5. Bauria or Bawaria

23. Megh

6. Bazigar

24. Nat

7. Balmiki, Chura or Bhangi

25. Od

8. Bhanjra

26. Pasi

9. Chamar, Jatia Chamar, Rehgar, Raigar, Ramdasi

27. Perna or Ravidasi

10 . Chanal

28. Pherera

11 . Dagi

29. Sanhai

12 . Darain

30. Sanhal

13 . Dhanak

31. Sansoi

14 . Dhogri, Dhangri or Siggi

32. Sansi, Bhedkut or Manesh

15 . Dumna, Mahasha or Doom

33. Sapela

16 . Gagra

34. Sarera

17 . Gandhila or Gnadil Gondola

35. Sikligar

18 . Kabirpanthi or Julaha

36. Sirkiband

The Schedule – Puducherry

Adi Andhra

9. Pallan Adi Dravida

10. Parayan, Sambavar Chakkiliyan

11. Samban Jambuvulu

12. Thoti Kuravan

13. Valluvan Madiga

14. Vetan Mala, Mala Masti

15. Vetriyan Paky

16. Puthirai Vannan

The Schedule – Dadra and Nagar Haveli Bhangi

3. Mahar Chamar

4. Mahayavanshi

67. Let me take the case of Andaman & Nicobar Islands.

The PART III – Daman and Diu Bhangi (Hadi)

4. Mahyavanshi (Vankar) Chambhar, Moch

5i. Mang Mahar Constitution (Andaman and Nicobar Islands) Scheduled Tribes Order, 1959 has notified the following tribes or tribal communities who have been included in the Schedule for the Andaman & Nicobar Islands:-

The Schedule The Andamanese (including Chariar or Chari, Kora, Tabo or Bo, Yere, Kede, Bea Balawa, Bojigiyab, Juwai and Kol

4. Sentinelese Jarawas

5. The Nicoberese Onges

6. The Shompens When Andaman & Nicobar Islands is recruiting persons to the services of Group ‘B’, ‘C’ and ‘D’ under its administration, it has to necessarily follow the policy of recruiting members from amongst the Scheduled Tribes who are notified as Scheduled Tribes in the Presidential Notification for Andaman and Nicobar Islands.

It will not be appropriate to extend the benefit of reservation to the SCs and STs from other States/Union Territories, lest it would deprive the notified Scheduled Tribes of the Andaman and Nicobar Islands.

68. It may be that the candidates recruited by the respective Union Territories for Group ‘B’ and Group ‘C’ may become the feeder categories for further promotion in Group ‘A’ and Group ‘B’ of All India Services respectively in the Central Civil Services. The fact that the candidates who are recruited by the respective Union Territories become the feeder categories for further promotion in the Central Civil Services is not a ground for extending the benefit of all India reservation to the Scheduled Castes/Scheduled Tribes for the reserved posts in the respective Union Territories. Be it noted that the candidates recruited by the various State Governments under Group ‘A’ of respective State services become the feeder category for IAS and IPS.

The persons recruited for Group ‘B’ and Group ‘C’ by the respective Union Territories stand on the same footing as that of the candidates so recruited by the various States where only the Scheduled Castes/Scheduled Tribes of the respective States can apply.

69. A letter dated 10.05.2013 by Special Secretary (Services) addressed to all the Secretaries/Heads of Departments of NCT of Delhi has been filed by the Union of India. The letter relates to the subject "Reservation policy to be followed with regard to SCs/STs in 154 civil posts under GNCTD". The said letter refers to the judgment in Pushpa’s case and states that the Ministry of Law and Justice has opined that the law declared by the Supreme Court in Pushpa’s case applies to the NCT of Delhi and that Pushpa’s case cannot be ignored. Relevant portion of the said letter reads as under:-

"GOVERNMENT of NATIONAL CAPITAL TERRITORY of DELHI

(SERVICES DEPARTMENT BRANCH-IV)

7TH LEVEL, B-WING, DELHI SECRETARIAT, I.P. ESTATE,

NEW DELHI – 110002

No. F. 19(6)/2012/S-IV/883

Dated: 10-05-2013

…… The Government of National Capital Territory of Delhi follows the guidelines and instructions issued by the Government of India from time to time in matters regarding reservation to Scheduled Castes and Scheduled Tribes in recruitment to various civil posts in Government of Delhi. Ministry of Home Affairs, Govt. of India, in the context of order dated 11.02.2005 of Hon’ble Supreme Court of India in case titled S. Pushpa & Ors. Vs. Sivachanmugavelu & Ors. stated vide their letter dated 01.06.2005 that the matter has been examined in consultation with the Ministry of Law & Justice (Department of Legal Affairs).

That the Ministry had opined that the law declared by the Supreme Court of India cited above, applies to the National Capital Territory of Delhi. This was accordingly conveyed to the departments vide this department’s letter No.F.16 (73)/97-S-III/710 dated 30.06.2005, stating that all the Scheduled Castes/Scheduled Tribe candidates irrespective of their nativity, are eligible for reservation to the civil posts under Govt. of NCT of Delhi, which are reserved for SC/ST candidates and appropriate action for recruitment may be taken accordingly.

Subsequently, in view of order dated 04.08.2009 of Hon’ble Supreme Court in the matter of Sarv Rural & Urban Welfare Society vs. Union of India & Ors. and of the Hon’ble High Court dated 12.09.2012 in WP(C) No.5390/2010 under consideration in the Ministry of Home Affairs, Govt. of India. Now, Ministry of Home Affairs, Govt. of India, vide its letter 155 No.14012/09/2012-Delhi-I dated 03.04.2013 has informed that the subject matter has been re-examined in consultation with Ministry of Law & Justice.

In this matter Learned Attorney General for India has given his opinion dated 18.02.2013 (copy enclosed), which is self-explanatory and has been approved by the Hon’ble Minister of Law & Justice, Govt. of India. The opinion, inter alia, states that having regard to the order in the State of Uttaranchal’s case, till this issue is resolved by a larger bench, the decision in S. Pushpa case cannot be ignored. Ministry of Home Affairs has conveyed that it has been decided to proceed according to this opinion. Copy of above mentioned letter of the Ministry of Home Affairs is circulated for information & necessary action accordingly.

Yours faithfully,

(Kailash Chandra)

Spl. Secretary (Services)

Dated: 10-05-2013 ….."

70. PAN India reservation probably is followed by NCT of Delhi in its recruitment based on the above letter dated 10.05.2013. Since I have taken the view that the decision in Pushpa’s case is not a correct decision extending PAN India reservation for the reserved posts recruited by NCT of Delhi or any other Union Territories is against the Presidential Orders issued under Articles 341 and 342 of the Constitution of India and against the constitutional scheme.

71. As discussed earlier in para (8), in case of Union Territories, though administrative control to certain extent is exercised by the 156 Union of India, Union Territories do not lose their identity as an entity. The existing practice of PAN INDIA reservation followed in Delhi and Chandigarh is against the constitutional scheme and also against the executive instructions dated 06.08.1984 and 22.02.1985 issued by the Ministry of Home Affairs.

72. As pointed our earlier, the Ministry of Home Affairs in its circular dated 06.08.1984 addressed to all the State Governments and Union Territories administration stated that SCs and STs on migration from the State of his origin to other State will not loose his status as SCs/STs; but will be entitled to the concession/benefits to the SCs/STs from the State of his origin and not from the State where he has migrated.

The same thing was reiterated in the letter dated 22.02.1985 of the Ministry of Home Affairs, Government of India. If PAN India reservation is to be extended to the Union Territories like Delhi, Chandigarh, Puducherry, Andaman & Nicobar Islands or Daman & Diu for Group ‘C’ and ‘D’ services for which recruitment are made by the respective Union Territories, the very object of the 157 Constitutional Scheme of upliftment of the SCs/STs of these Union Territories will be defeated. All India reservation to the services under the Union Territories including the Union Territory of Delhi will be against the mandate of Articles 341 and 342 of the Constitution and against the Constitutional Scheme.

73. Marri Chandra Shekhar Rao and Action Committee are applicable to the States and they are applicable with equal force to the Union Territories including Union Territory of Delhi. There cannot be any distinction between the States and the Union Territories. Likewise, there can be no distinction between Union Territory of Delhi and other Union Territories. When Presidential Orders of Scheduled Castes/Scheduled Tribes are notified for various Union Territories including Union Territory of Delhi extending PAN India reservation to the employment falling under the services of Union Territories including Union Territory of Delhi, will be against the Constitutional scheme and the law laid down in Marri Chandra Shekhar Rao and Action Committee.

74. Article 16(4) of the Constitution has to yield to the constitutional mandate of Articles 341 and 342 of the Constitution. The Presidential Order issued under Article 341 in regard to Scheduled Castes and Article 342 in regard to Scheduled Tribes cannot be varied by anyone or by the Court. Only the Parliament by law include or exclude from the list of Scheduled Castes or Scheduled Tribes specified in the notification issued under Article 341 (1) and Article 342(1) respectively any caste, race or tribe or parts or group within any caste, race or tribe. The Scheduled Castes or Scheduled Tribes thus specified in relation to one State or Union Territory does not carry the status in another State or Union Territory.

When the Scheduled Castes or Scheduled Tribes are specified for each State in relation to one State or Union Territory, neither the State legislature, the administration of the Union Territories and nor the courts can include or exclude other Scheduled Castes or Scheduled Tribes so notified in the Presidential Order. Providing all India reservation to the services of Union Territories 159 including Union Territory of Delhi, would be against the mandate of Articles 341 and 342 and the Presidential Orders issued thereon. If that is permitted, it would amount to addition or alteration of the Presidential Order which is impermissible and violative of the Constitutional Scheme.

75. It is the responsibility of each State/Union Territory to provide for such reservation/affirmative action by positive discretion to bring backward classes/Scheduled Castes and Scheduled Tribes in the respective States/areas to provide socio-economic empowerment. If the reservation to the Scheduled Castes and Scheduled Tribes are to be extended to all categories of Scheduled Castes and Scheduled Tribes all over India or to the migrants then there is every possibility of the Scheduled Castes and Scheduled Tribes of other developed States and Union Territories squandering reservations to the Scheduled Castes and Scheduled Tribes who are disadvantaged in the respective States/Union Territories including Union Territory of Delhi. If this is permitted, it would defeat the very object of providing reservation to the disadvantaged Scheduled Castes and Scheduled Tribes in a particular State or Union territory. The enabling provision of Article 16(4) of the Constitution has to yield to the constitutional scheme of Article 341 and Article 342 of the Constitution.

76. Conclusion:-

  • Insofar as the States, I agree with the majority view that a person who is recognised as a member of Scheduled Castes/Scheduled Tribes in his original State, will be entitled to all the benefits of reservation under the Constitution in that State only and not in other States/Union Territories and not entitled to the benefits of reservation in the migrated State/Union Territory.
  • Marri Chandra Shekhar Rao and Action Committee are applicable to the States and they are applicable with equal force to the Union Territories including Union Territory of Delhi. There cannot be 161 any distinction between the States and the Union Territories. Likewise, there can be no distinction between Union Territory of Delhi and other Union Territories. When Presidential Orders of Scheduled Castes/Scheduled Tribes are notified for various Union Territories including Union Territory of Delhi extending PAN India reservation to the employment falling under the services of Union Territories including Union Territory of Delhi, will be against the Constitutional scheme and the law laid down in Marri Chandra Shekhar Rao and Action Committee.
  • Since there is centralised recruitment upto Group ‘B’ (Gazetted) services conducted by UPSC for the Central Civil Services posts in the States/Union Territories of India, there has to be necessarily PAN India reservation for Scheduled Castes/Scheduled Tribes for those recruitment conducted by UPSC. Sofaras Group ‘B’ and Group ‘C’ posts falling under services of Union Territories including Union Territory of Delhi for which recruitment is conducted by the respective Union Territories, benefit of reservation in employment (Article 16(4)) is to be extended only to those Scheduled Castes/Scheduled Tribes specified in the Presidential Order of the respective Union Territories. Insofar as the posts recruited by the Staff Selection Board of the respective Union Territories including the Union Territory of Delhi, there cannot be PAN India reservation for Group ‘B’, Group ‘C’ and Group ‘D’ posts falling under the services of various Union Territories and such PAN India reservation would be against the constitutional scheme and Marri Chandra Shekhar Rao and Action Committee.

………………………….J. [R. BANUMATHI]

New Delhi;

August 30, 2018

1 (2010) 12 SCC 794

2 (1990) 3 SCC 130

3 (1994) 5 SCC 244

4 (2005) 3 SCC 1

5 (2009) 15 SCC 458

6 (2005) 2 SCC 673

7 (2006) 8 SCC 212

8 AIR 1965 SC 1557

9 (2001) 6 SCC 571

10 8th Edition, 2011, Volume 9, Page 9858

11 8th Edition, Volume 9, 2011, Page 9860

12 8th Edition, 2011, Volume 9, Page 9858.

13 D.D. Basu, 8th Edition, 2011, Volume 9, Page 10585

14 Para 5 of the Affidavit.

15 Rule 6A of the Central Civil Services (Classification, Control and Appeal) Rules, 1965 provides that, "All reference to Central Civil Services/Central Civil Posts, Class I, Class II, Class III and Class IV in all Rules, Orders, Schedules, Notifications, Regulations, Instructions in force, immediately before the commencement of these rules shall be construed as references to Central Civil Services/Central Civil Posts, Group ‘A’, Group ‘B’, Group ‘C’ and Group ‘D’ respectively, and any reference to "Class or Classes" therein in this context shall be construed as reference to "Group or Groups", as the case may be."

16 8th Edition. Volume 9, Page 9859.

17 Para 6 of the Affidavit

18 Duty Posts are mentioned in the Schedule to these Rules. To name a few, these are – Joint Director of Social Welfare/Delhi; Joint Director of Education/Delhi; Deputy Medial Superintendent of Lok Nayak Jai Prakash Narain Hospital/Delhi; Registrar of Cooperative Societies/Port Blair; Assistant Commissioner of Police/Delhi; Deputy Superintendent of Police/Andaman & Nicobar; Chief of Police/Dadra & Nagar Haveli etc.

19 Page 4, Para (ii)(a) of the Affidavit.

20 Page 4, 5 of the Affidavit.

21 Page 6, para iv.a. of the Affidavit

22 Page 6, Para (b) of the Affidavit.

23 (1980) 2 SCC 768

24 Ref. Action Committee on Issue of Caste Certificate to Scheduled Castes and Scheduled Tribes in the State of Maharashtra and Anr. v. Union of India (UOI) and Anr. (1994) 5 SCC 244.

25 Ref. Election Manual (1984), p.44 quoted in Commentary on the Constitution of India 8th Ed. by Durga Das Basu.

26 Ref. Ibid., p.53, quoted in Article 342 of commentary on the Constitution of India 8th Ed. by Durga Das Basu.

27 Para No. 6(i) of the Counter Affidavit filed by the Union of India at Pg. No.3-4

28 Para No. 6(ii) of the Counter Affidavit filed by the Union of India at Pg. No.4-5

29 Para No. 6(iii) of the Counter Affidavit filed by the Union of India at Pg. No.5-6

30 https://daman.nic.in/staff-selection-board-daman-diu.aspx#downloads (27.06.2018)

31 Para No. 6(iii) of the Counter Affidavit filed by the Union of India at Pg. No.6

Supreme Court Judgement on Validity Of Second Marriage During Pendency Of Appeal Against First Marriage

MASTI

The Supreme Court judgement in MR. ANURAG MITTAL vs. MRS. SHAILY MISHRA MITTAL has clarified that although the Hindu Marriage Act prescribes that it shall be lawful to marry again only after dismissal of an appeal filed by aggrieved party against the decree of divorce, the second marriage would not be void if solemnised during the pendency of appeal.

A bench of Justices S A Bobde and L Nageswara Rao interpreted section 15 of Hindu Marriage Act and held that incapacity for second marriage for a certain period of time (during the pendency of appeal against divorce) did not have the effect of treating the former marriage as subsisting and that a marriage contracted during that period will not be void because it was contracted under an incapacity.

Section 15 of the Hindu Marriage Act states that when a marriage has been dissolved by a decree of divorce and either there is no right of appeal against the decree or, if there is such a right of appeal, the time for appealing has expired without an appeal having been presented, or an appeal has been presented but has been dismissed, it shall be lawful for either party to the marriage to marry again. Section 5(1) of the Act says a marriage may be solemnized between any two Hindus, if neither party has a spouse living at the time of the marriage.

The Delhi high court had earlier held that any marriage solemnized by a party during the pendency of the appeal wherein the operation of the decree of divorce was stayed, would be in contravention of Section 5 (i) of the Act. It passed the order on an appeal filed by a man challenging HC verdict which had declared his second marriage void on a plea of his second wife.

This judgement of the Delhi High Court is no longer good law.

The facts of the case are ANURAG MITTAL got married the second time when his appeal against divorce from his first wife was pending in HC. During pendency of his plea, he had settled the dispute with his first wife and filed an application for accepting the divorce and sought withdrawal of his appeal. But a fortnight before the HC passed the formal order allowing him to withdraw his appeal, he got married for the second time.

His second marriage also did not turn out to be blissful and matrimonial discord between the couple led his second wife to challenge validity of the marriage saying that it was void as it was solemnised during the pendency of case in HC. A family court dismissed her plea but the HC gave verdict in her favour and declared the marriage void.

The apex court, after hearing both the sides came to the conclusion that violation of section 15 did not render marriage void and said “if a provision of law prescribes an incapacity to marry and yet the person marries while under that incapacity, the marriage would not be void in the absence of an express provision that declares nullity”.

“The Hindu Marriage Act is a social welfare legislation and a beneficent legislation and it has to be interpreted in a manner which advances the object of the legislation. The Act intends to bring about social reforms. It is well known that this court cannot interpret a socially beneficial legislation on the basis as if the words therein are cast in stone,” the bench said.

“The dissolution of the marriage is complete once the decree is made, subject of course to appeal. This court also decided that incapacity for second marriage for a certain period of time does not have the effect of treating the former marriage as subsisting and the expression ‘spouse’ would not include within its meaning the expression former spouse,” the bench said while referring to its 1978 verdict.

“Whenever a statute prohibits a certain thing being done thereby making it unlawful without providing for consequence of the breach, it is not legitimate to say that such a thing when done is void because that would tantamount to saying that every unlawful act is void…

Consequences of treating a marriage void are so serious and far reaching and are likely to affect innocent persons such as children born during the period anterior to the date of the decree annulling the marriage that it has always been considered not safe to treat a marriage void unless the law so enacts or the inference of the marriage being treated void is either inescapable or irresistible,” the bench said while quoting its earlier judgement.

Text of judgement of the Supreme Court in MR. ANURAG MITTAL Versus MRS. SHAILY MISHRA MITTAL Civil Appeal No.18312 of 2017 dated 24 August, 2018

Reportable

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No.18312 of 2017

MR. ANURAG MITTAL …… APPELLANT (S)
Versus
MRS. SHAILY MISHRA MITTAL …….. RESPONDENT (S)

JUDGMENT
L. NAGESWARA RAO, J.
1. By a judgment dated 31.08.2009, the Additional District Judge, North, Tis Hazari Court, Delhi allowed the petition filed by Ms. Rachna Aggarwal under Section 13 (1) (i) (a) of the Hindu Marriage Act, 1955 (hereinafter referred to as “the Act’) and dissolved the marriage between her and the Appellant. By the said judgment the petition filed under Section 9 of the Act by the Appellant for restitution of conjugal rights was dismissed.

The Appellant filed appeals against the said judgment and the operation of the judgment and decree dated 31.08.2009 was stayed by the High Court on 20.11.2009.
During the pendency of the Appeal, the Appellant and Ms. Rachna Aggarwal reached a settlement before the Mediation Centre, Tis Hazari Court, Delhi. According to the terms of the settlement dated 15.10.2011, the Appellant had to move an application for withdrawal of the Appeals within 30 days.

The Appellant filed an application to withdraw the appeals before the High Court in terms of the settlement dated 15.10.2011 which was taken up on 28.11.2011 by the Registrar of the High Court of Delhi. He recorded that there was a settlement reached between the parties before the Mediation Centre, Tis Hazari Court, Delhi and listed the matter before the Court on 20.12.2011. The High Court dismissed the appeals filed by the Appellant as withdrawn in terms of the settlement by an order dated 20.12.2011. In the meanwhile, the Appellant married the Respondent on 06.12.2011. Matrimonial discord between the Appellant and the Respondent led to the filing of a petition by the Respondent for declaring the marriage as void under Section 5 (i) read with Section 11 of the Act. The main ground in the petition was that the appeal filed by the Appellant against the decree of divorce dated 31st August, 2009 was pending on the date of their marriage i.e. 06.12.2011. The Family Court dismissed the petition filed by the Respondent. The Respondent challenged the judgment of the Family Court in the High Court. By a judgment dated 10.08.2016, the High Court set aside the judgment of the Family Court and allowed the appeal of the Respondent and declared the marriage between the Appellant and the Respondent held on 06.12.2011 as null and void. Aggrieved by the judgment of the High Court, the Appellant has approached this Court.

2. As a pure question of law arises for our consideration in this case, we make it clear that we are not dealing with the merits of the allegations made by both sides. The points that arises for consideration are:
a) Whether the dismissal of the appeal relates back to the date of filing of the application for withdrawal?
b) Whether the marriage dated 06.12.2011 between the Appellant and the Respondent during the pendency of the appeal against the decree of divorce is void?
3. The Family Court framed only one substantial issue as to whether the marriage between the parties was null and void on account of the contravention of Section 5 (i) of the Act. It was held by the Family Court that the judgment and decree of divorce dated 31.08.2009 is a judgment in rem which was neither reversed nor set aside by a superior court. As the judgment was confirmed by the High Court, the marriage between the parties stood dissolved w.e.f. 31.08.2009 itself. The Family Court also observed that there is no provision in the Act which declares a marriage in contravention of Section 15 to be void.

It was further held by the Family Court that the effect of stay of the judgment by a superior court is only that the decree of divorce remained in abeyance but it did not become non-existent. On the other hand, the High Court framed a question whether the Appellant could have contracted a second marriage after the decree of divorce was passed on 31.08.2009 notwithstanding the operation of the decree being stayed. The High Court was of the opinion that any marriage solemnized by a party during the pendency of the appeal wherein the operation of the decree of divorce was stayed, would be in contravention of Section 5 (i) of the Act.

4. Section 11 of the Act provides that any marriage solemnized after commencement of the Act shall be null and void if it contravenes any of the conditions specified in Clauses (i), (iv) and (v) of Section 5. Clause (i) of Section 5 places a bar on marriage by a person who has a spouse living at the time of the marriage. Section 15 of the Act which is relevant is as follows: “15. Divorced persons. When may marry again.- When a marriage has been dissolved by a decree of divorce and either there is no right of appeal against the decree or, if there is such a right of appeal, the time for appealing has expired without an appeal having been presented, or an appeal has been presented but has been dismissed, it shall be lawful for either party to the marriage to marry again.”

5. There is no dispute that the marriage between the Appellant and the Respondent was held on 06.12.2011 during the pendency of the appeals filed by the Appellant against the decree of divorce in favour of Ms. Rachna Aggarwal. It is also clear from the record that the appeals were dismissed as withdrawn on 20.12.2011 pursuant to an application for withdrawal that was placed before the Registrar on 28.11.2011. The Family Court has rightly held that the decree of divorce is a judgment in rem.1

6. It is pertinent to take note of the Proviso to Section 15 of the Act according to which it shall not be lawful for the respective parties to marry again unless at the time of such marriage at least one year has elapsed from the date of the decree in the Court of first instance. This Proviso was repealed w.e.f. 27.05.1976. In Lila Gupta v. Laxmi Narain (1978) 3 SCC 258, Rajender Kumar contracted second marriage with Lila Gupta before the expiry of one year from the date of decree of divorce.

This Court was concerned with a point relating to the marriage between Rajender Kumar and Lila Gupta being void having been contracted in violation of the Proviso to Section 15 of the Act. In the said context this Court observed as follows:

“8. Did the framers of law intend that a marriage contracted in violation of the provision contained in 1 Marsh v. Marsh 1945 AC 271 2 Hindu Marriage (Amendment ) Act, 1976, Act 68 of 1976 the proviso to Section 15 to be void? While enacting the legislation, the framers had in mind the question of treating certain marriages void and provided for the same. It would, therefore, be fair to infer as legislative exposition that a marriage in breach of other conditions the legislature did not intend to treat as void.

While prescribing conditions for valid marriage in Section 5 each of the six conditions was not considered so sacrosanct as to render marriage in breach of each of it void. This becomes manifest from a combined reading of Sections 5 and 11 of the Act. If the provision in the proviso is interpreted to mean personal incapacity for marriage for a certain period and, therefore, the marriage during that period was by a person who had not the requisite capacity to contract the marriage and hence void, the same consequence must follow where there is breach of condition (iii) of Section 5 which also provides for personal incapacity to contract marriage for a certain period.

When minimum age of the bride and the bridegroom for a valid marriage is prescribed in condition (iii) of Section 5 it would only mean personal incapacity for a period because every day the person grows and would acquire the necessary capacity on reaching the minimum age. Now, before attaining the minimum age if a marriage is contracted Section 11 does not render it void even though Section 18 makes it punishable. Therefore, even where a marriage in breach of a certain condition is made punishable yet the law does not treat it as void.

The marriage in breach of the proviso is neither punishable nor does Section 11 treat it void. Would it then be fair to attribute an intention to the legislature that by necessary implication in casting the proviso in the negative expression, the prohibition was absolute and the breach of it would render the marriage void? If void marriages were specifically provided for it is not proper to infer that in some cases express provision is made and in some other cases voidness had to be inferred by necessary implication.

It would be all the more hazardous in the case of marriage laws to treat a marriage in breach of a certain condition void even though the law does not expressly provide for it. Craies on Statute Law, 7th Edn., P. 263 and 264 may be referred to with advantage:

“The words in this section are negative words, and are clearly prohibitory of the marriage being had without the prescribed requisites, but whether the marriage itself is void … is a question of very great difficulty. It is to be recollected that there are no words in the Act rendering the marriage void, and I have sought in vain or any case in which a marriage has been declared null and void unless there were words in the statute expressly so declaring it (emphasis supplied). . . . From this examination of these Acts I draw two conclusions. First, that there never appears to have been a decision where words in a statute relating to marriage, though prohibitory and negative, have been held to infer a nullity unless such nullity was declared in the Act. Secondly, that, viewing the successive marriage Acts, it appears that prohibitory words, without a declaration of nullity, were not considered by the legislature to create a nullity [Ed. Quoting Catterall v. Sweetman, (1845) 9 Jur 951, 954] .”

9. In the Act under discussion there is a specific provision for treating certain marriages contracted in breach of certain conditions prescribed for valid marriage in the same Act as void and simultaneously no specific provision having been made for treating certain other marriages in breach of certain conditions as void. In this background even though the proviso is couched in prohibitory and negative language, in the absence of an express provision it is not possible to infer nullity in respect of a marriage contracted by a person under incapacity prescribed by the proviso.

10. Undoubtedly the proviso opens with a prohibition that:

“It shall not be lawful” etc. Is it an absolute prohibition violation of which would render the act a nullity? A person whose marriage is dissolved by a decree of divorce suffers an incapacity for a period of one year for contracting second marriage.

For such a person it shall not be lawful to contract a second marriage within a period of one year from the date of the decree of the Court of first instance. While granting a decree for divorce, the law interdicts and prohibits a marriage for a period of one year from the date of the decree of divorce. Does the inhibition for a period indicate that such marriage would be void? While there is a disability for a time suffered by a party from contracting marriage, every such disability does not render the marriage void.

A submission that the proviso is directory or at any rate not mandatory and decision bearing on the point need not detain us because the interdict of law is that it shall not be lawful for a certain party to do a certain thing which would mean that if that act is done it would be unlawful. But whenever a statute prohibits a certain thing being done thereby making it unlawful without providing for consequence of the breach, it is not legitimate to say that such a thing when done is void because that would tantamount to saying that every unlawful act is void. As pointed out earlier, it would be all the more inadvisable in the field of marriage laws.

Consequences of treating a marriage void are so serious and far reaching and are likely to affect innocent persons such as children born during the period anterior to the date of the decree annulling the marriage that it has always been considered not safe to treat a marriage void unless the law so enacts or the inference of the marriage being treated void is either inescapable or irresistible. Therefore, even though the proviso is couched in a language prohibiting a certain thing being done, that by itself is not sufficient to treat the marriage contracted in contravention of it as void.”

7. In the said judgment, this Court also had occasion to deal with the continuance of the marital tie even after the decree of divorce for the period of incapacity as provided in the Proviso to Section 15 of the Act. In the said context, this Court held as follows:

“13. To say that such provision continues the marriage tie even after the decree of divorce for the period of incapacity is to attribute a certain status to the parties whose marriage is already dissolved by divorce and for which there is no legal sanction. A decree of divorce breaks the marital tie and the parties forfeit the status of husband and wife in relation to each other. Each one becomes competent to contract another marriage as provided by Section 15.

Merely because each one of them is prohibited from contracting a second marriage for a certain period it could not be said that despite there being a decree of divorce for certain purposes the first marriage subsists or is presumed to subsist. Some incident of marriage does survive the decree of divorce; say, liability to pay permanent alimony but on that account it cannot be said that the marriage subsists beyond the date of decree of divorce. Section 13 which provides for divorce in terms says that a marriage solemnised may on a petition presented by the husband or the wife be dissolved by a decree of divorce on one or more of the grounds mentioned in that section.

The dissolution is complete once the decree is made, subject of course, to appeal. But a final decree of divorce in terms dissolves the marriage. No incident of such dissolved marriage can bridge and bind the parties whose marriage is dissolved by divorce at a time posterior to the date of decree. An incapacity for second marriage for a certain period does not have effect of treating the former marriage as subsisting. During the period of incapacity the parties cannot be said to be the spouses within the meaning of clause (i), sub-section (1) of Section 5. The word “spouse” has been understood to connote a husband or a wife which term itself postulates a subsisting marriage. The word “spouse” in sub-section (1) of Section 5 cannot be interpreted to mean a former spouse because even after the divorce when a second marriage is contracted if the former spouse is living that would not prohibit the parties from contracting the marriage within the meaning of clause (i) of sub-section (1) of Section 5. The expression “spouse” in clause ( i), sub- section (1) of Section 5 by its very context would not include within its meaning the expression “former spouse”.
(underlining ours)

8. After a comprehensive review of the scheme of the Act and the legislative intent, this Court in Lila Gupta (supra) held that a marriage in contravention of the proviso to Section 15 is not void. Referring to Sections 5 and 11 of the Act, this Court found that a marriage contracted in breach of only some of the conditions renders the marriage void. This Court was also conscious of the absence of any penalty prescribed for contravention of the proviso to Section 15 of the Act. This Court referred to the negative expression “it shall not be lawful” used in proviso to Section 15 which indicates that the prohibition was absolute.

In spite of the absolute prohibition, this Court was of the view that a marriage contracted in violation of the proviso to Section 15 was not void. There was a further declaration that the dissolution of a marriage is in rem and unless and until a Court of appeal reversed it, marriage for all purposes was not subsisting. The dissolution of the marriage is complete once the decree is made, subject of course to appeal. This Court also decided that incapacity for second marriage for a certain period of time does not have the effect of treating the former marriage as subsisting and the expression ‘spouse’ would not include within its meaning the expression ‘former spouse’.

9. The majority judgment was concerned only with the interpretation of proviso to Section 15 of the Act. Justice Pathak in his concurring judgment referred to Section 15, but refrained from expressing any opinion on its interpretation.

Effective date of the Dismissal of Appeal

10. In case of a dissolution of marriage, a second marriage shall be lawful only after dismissal of the appeal. Admittedly, the marriage between the Appellant and the Respondent was on 06.12.2011 i.e. before the order of withdrawal was passed by the Court on 20.12.2011. There is no dispute that the application for withdrawal of the appeal was filed on 28.11.2011 i.e. prior to the date of the marriage on 06.12.2011. We proceed to consider the point that whether the date of dismissal of the appeal relates back to the date of filing of the application for withdrawal of the appeal. Order XXI Rule 89 (2) of the Code of Civil Procedure, 1908 (hereinafter referred to as “the CPC”) provides that unless an application filed under Order XXI Rule 90 of the CPC is withdrawn, a person shall not be entitled to make or prosecute an application under Order XXI Rule 89 of the CPC. In Shiv Prasad v. Durga Prasad,4 the contention of the Appellant therein that an application filed under the aforesaid Rule 90 does not stand withdrawn until an order to the effect is recorded by the Court, was not accepted. It was held that every applicant has a right to unconditionally withdraw his application and his unilateral act in that behalf is sufficient. No order of the Court is necessary permitting the withdrawal of the application. This Court concluded that the act of withdrawal is complete as soon as the applicant intimates the Court that he intends to withdraw the application. The High Court of Bombay in Anil Dinmani Shankar Joshi v. Chief Officer, Panvel Municipal Council, Panvel5 followed the judgment of this Court in Shiv Prasad (supra) and held that the said judgment is applicable to suits also. The High Court recognized the unconditional right of the plaintiff to withdraw his suit and held that the withdrawal would be 4 (1975) 1 SCC 405 5 AIR 2003 Bom. 238, 239 complete as soon as the plaintiff files his purshis of withdrawal.

11. Order XXIII Rule 1 (1) of the CPC enables the plaintiff to abandon his suit or abandon a part of his claim against all or any of the defendants. Order XXIII Rule 1 (3) of the CPC requires the satisfaction of the Court for withdrawal of the suit by the plaintiff in case he is seeking liberty to institute a fresh suit. While observing that the word abandonment in Order XXIII Rule 1 (1) of the CPC is “absolute withdrawal” which is different from the withdrawal after taking permission of the court, this Court held as follows6: “12. The law as to withdrawal of suits as enacted in the present Rule may be generally stated in two parts:

(a) a plaintiff can abandon a suit or abandon a part of his claim as a matter of right without the permission of the court; in that case he will be precluded from suing again on the same cause of action. Neither can the plaintiff abandon a suit or a part of the suit reserving to himself a right to bring a fresh suit, nor can the defendant insist that the plaintiff must be compelled to proceed with the suit; and

(b) a plaintiff may, in the circumstances mentioned in sub-rule (3), be permitted by the court to withdraw from a suit with liberty to sue afresh on the same cause of action. Such liberty being granted 6 K.S. Bhoopathy v. Kokila (2000) 5 SCC 458 by the Court enables the plaintiff to avoid the bar in Order II Rule 2 and Section 11 CPC.”

12. Order XXIII Rule 1 (1) of the CPC gives an absolute right to the plaintiff to withdraw his suit or abandon any part of his claim. There is no doubt that Order XXIII Rule 1 of the CPC is applicable to appeals as well and the Appellant has the right to withdraw his appeal unconditionally and if he makes such an application to the Court, it has to grant it. 7 Therefore, the appeal is deemed to have been withdrawn on 28.11.2011 i.e. the date of the filing of the application for withdrawal. On 06.12.2011 which is the date of the marriage between the Appellant and the Respondent, Ms. Rachna Aggarwal cannot be considered as a living spouse. Hence, Section 5 (i) is not attracted and the marriage between the Appellant and the Respondent cannot be declared as void.

13. Sh. Sakha Ram Singh, learned Senior Counsel appearing for the Respondent placed reliance on a judgment of this Court in Lila Gupta (supra) to submit that the marriage between the Appellant and the 7 Bijayananda Patnaik v. Satrughna Sahu (1962) 2 SCR 538, 550 Respondent held on 06.12.2011 is void as it was in violation of Section 15 of the Act. He relied upon the concurring judgment of Justice Pathak in support of his submission that the findings pertaining to Proviso to Section 15 cannot be made applicable to Section 15. He submitted that there is a qualitative difference between the period of incapacity set out in the Proviso during which a second marriage cannot be contracted and the bar for another marriage during the pendency of an appeal. We have already noted that Justice Pathak refrained from expressing any view on the expression of Section 15 of the Act. However, the scope and purport of Section 15 of the Act arise for consideration in the present case.

Interpretation of Section 15 Interpretation has been explained by Cross in Statutory Interpretation8 as:

“The meaning that the Court ultimately attaches to the statutory words will frequently be that which it believes members of the legislature attached to them, or the meaning which they would have attached to the words had the situation before the Court been present to their minds. Interpretation is the process by which the Court determines the meaning of a statutory 8 Cross Statutory Interpretation, Ed. Dr. John Bell & Sir George Ingale, Second Edition (1987) provision for the purpose of applying it to the situation before it”.

14. The Hindu Marriage Act is a social welfare legislation and a beneficent legislation and it has to be interpreted in a manner which advances the object of the legislation. The Act intends to bring about social reforms.9 It is well known that this Court cannot interpret a socially beneficial legislation on the basis as if the words therein are cast in stone.10

15. The predominant nature of the purposive interpretation was recognized by this Court in Shailesh Dhairyawan v. Mohan Balkrishna Lulla11 which is as follows:

“ 33. We may also emphasise that the statutory interpretation of a provision is never static but is always dynamic. Though the literal rule of interpretation, till some time ago, was treated as the “golden rule”, it is now the doctrine of purposive interpretation which is predominant, particularly in those cases where literal interpretation may not serve the purpose or may lead to absurdity. If it brings about an end which is at variance with the purpose of statute, that cannot be countenanced.
Not only legal process thinkers such as Hart and Sacks rejected intentionalism as a grand strategy for statutory interpretation, and in its place they offered purposivism, this principle is now widely applied by 9 Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi (1996) 4 SCC 76, para 68 10 Revanasiddappa v. Mallikarjun, (2011) 11 SCC 1, para 40 11 (2016) 3 SCC 619 the courts not only in this country but in many other legal systems as well.”

16. In Salomon v. Salomon & Co Ltd.12, Lord Watson observed that :

“In a Court of Law or Equity, what the legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication.” In Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg AG13, Lord Reid held that:

“We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used. We are seeking not what Parliament meant but the true meaning of what they said.”

17. It is also relevant to take note of Dy. Custodian v. Official Receiver14 in which it was declared that “ if it appears that the obvious aim and object of the statutory provisions would be frustrated by accepting the literal construction suggested by the Respondent, then it may be open to the Court to inquire whether an alternative construction which would serve the purpose of achieving the aim and object of the Act, is reasonably possible” .
12 [1897] AC 22 at 38 13 [1975] AC 591, p. 613 14 (1965) 1 SCR 220 at 225 F – G

18. Section 15 of the Act provides that it shall be lawful for either party to marry again after dissolution of a marriage if there is no right of appeal against the decree. A second marriage by either party shall be lawful only after dismissal of an appeal against the decree of divorce, if filed. If there is no right of appeal, the decree of divorce remains final and that either party to the marriage is free to marry again. In case an appeal is presented, any marriage before dismissal of the appeal shall not be lawful. The object of the provision is to provide protection to the person who has filed an appeal against the decree of dissolution of marriage and to ensure that the said appeal is not frustrated. The purpose of Section 15 of the Act is to avert complications that would arise due to a second marriage during the pendency of the appeal, in case the decree of dissolution of marriage is reversed. The protection that is afforded by Section 15 is primarily to a person who is contesting the decree of divorce.

19. Aggrieved by the decree of divorce, the Appellant filed an appeal and obtained a stay of the decree. During the pendency of the appeal, there was a settlement between him and his former spouse. After entering into a settlement, he did not intend to contest the decree of divorce. His intention was made clear by filing of the application for withdrawal. It cannot be said that he has to wait till a formal order is passed in the appeal, or otherwise his marriage dated 06.12.2011 shall be unlawful. Following the principles of purposive construction, we are of the opinion that the restriction placed on a second marriage in Section 15 of the Act till the dismissal of an appeal would not apply to a case where parties have settled and decided not to pursue the appeal.

20. It is not the case of the Appellant that the marriage dated 06.12.2011 is lawful because of the interim order that was passed in the appeals filed by him against the decree of divorce. He rested his case on the petition filed for withdrawal of the appeal. The upshot of the above discussion would be that the denouement of the Family Court is correct and upheld, albeit for different reasons. The conclusion of the High Court that the marriage dated 06.12.2011 is void is erroneous. Hence, the judgment of the High Court is set aside.

21. Accordingly, the Appeal is allowed.
……….……..J.
[S.A. BOBDE]
………..………………..J.
[L. NAGESWARA RAO] NEW DELHI,

August 24th 2018 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No. 18312 Of 2017 MR. ANURAG MITTAL … APPELLANT(S) Versus MRS. SHAILY MISHRA MITTAL … RESPONDENT(S) JUDGMENT S.A.BOBDE, J.

1. I am in agreement with the view taken by Nageswara Rao
J. but it is necessary to state how the question before us has already been settled by the decision in Lila Gupta v. Laxmi Narain and Ors.1. Even when the words of the proviso were found to be prohibitory in clear negative terms – “it shall not be lawful” etc., this Court held that the incapacity to marry imposed by the proviso did not lead to an inference of nullity, vide para 9 of Lila Gupta (supra).

It is all the more difficult to infer nullity when there is no prohibition; where there are no negative words but on the other hand positive words like “it shall be lawful.” Assuming that a marriage contracted before it became lawful to do so was unlawful and the words create a disability, it is not possible to infer a nullity or voidness vide paras 9 (1978) 3 SCC 258 and 10 of Lila Gupta case. The Court must have regard to the consequences of such an interpretation on children who might have been conceived or born during the period of disability.

2. The observations in Lila Gupta’s case are wide. They are undoubtedly made in the context of the proviso to sec 15 of the Hindu Marriage (Amendment) Act, 1976 2, since deleted. The proviso opened with the prohibition that “it shall not be lawful.” This Court considered the question whether a marriage contracted in violation of the proviso would be a nullity or void and came to the conclusion that though the proviso is couched in prohibitory and negative language, in the absence of an express provision it was not possible to infer nullity in respect of a marriage contracted by a person under incapacity prescribed by the proviso.

What is held in essence is that if a provision of law prescribes an incapacity to marry and yet the person marries while under that incapacity, the marriage would not be void in the absence of an express provision that declares nullity. Quae incapacity imposed by statute, there is no difference between an incapacity imposed by negative language such as “it shall not be lawful” or an incapacity imposed by positive language like “it shall be lawful (in certain conditions, in the absence of which it is impliedly unlawful)”. It would thus appear that the law is already settled by this Court that a marriage contracted during a prescribed period will not be void because it was contracted under an incapacity. Obviously, this would
have no bearing on the other conditions of a valid marriage. The decision in Lila Gupta case thus covers the present case on law.

3. In any event, in the present case we are satisfied that the appellant’s marriage was not subsisting when he married again. He had filed an application for withdrawal of his appeal against the decree for dissolution and had done nothing to contradict his intention to accept the decree of dissolution.
…………………………J.
[ S.A. BOBDE ] NEW DELHI, AUGUST 24, 2018

Sikkim Lottery | Double Taxation Of Income | Read Latest Supreme Court Judgement

MASTI

The latest judgement of the Supreme Court in Mahaveer Kumar Jain Versus Commissioner of Income Tax, Jaipur deals with the taxation of the first prize of Rs. 20 lakhs in the 287th Bumper Draw of the Sikkim State Lottery held at Gangtok organized by the Director, State Lottery, Government of Sikkim, Gangtok.

The Supreme Court Bench comprising of Justices R.K. AGRAWAL and ABHAY MANOHAR SAPRE has delivered judgement on APRIL 19, 2018.

In the latest judgement, the Supreme Court has held that once the assessee has paid the income tax at source in the State of Sikkim as per the law applicable at the relevant time in Sikkim, the same income was not taxable under the Income-tax Act, 1961

Text of Supreme Court in the Sikkim Lottery case

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4166 OF 2006

Mahaveer Kumar Jain …. Appellant(s)

Versus

Commissioner of Income Tax, Jaipur ….
Respondent(s)

JUDGMENT

R.K. Agrawal, J.

1) The present appeal has been preferred against the final judgment and order dated 10.09.2004 passed by the High Court of Judicature for Rajasthan, Bench at Jaipur in D.B.I.T. Reference No. 40 of 1995 whereby the Division Bench of the High Court answered the questions referred to under Section 256(1) of the Income Tax Act, 1961 (in short ‘the I.T. Act’) in favour of the Revenue and against the appellant-assessee.

2) Before proceeding further, it is pertinent to set out the facts in a summarized way to appreciate properly the issue involved in this instant appeal:-

a) The appellant herein, a resident of Jaipur, Rajasthan, having income from business and property, won the first prize of Rs. 20 lakhs in the 287th Bumper Draw of the Sikkim State Lottery held on 20.02.1986 at Gangtok organized by the Director, State Lottery, Government of Sikkim, Gangtok. Out of Rs. 20 lakhs, the appellant herein received Rs. 16,20,912/- through two Demand Drafts for Rs. 8,10,000/- and Rs. 8,10,912/- each, after deduction of Rs. 2 lacs being agent’s/seller’s commission and Rs. 1,79,088/- being Income Tax under the Sikkim State Income Tax Rules, 1948.

b) The appellant herein filed Income Tax Return for the Assessment Year (AY) 1986-87 disclosing the income from lottery at Rs. 20 lakhs and deducting the agent/seller commission of Rs. 2 lakhs out of the same. He claimed deduction under Sec. 80 TT of the IT Act on Rs 20,00,000/- i.e the gross amount of the prize money won in the lottery in accordance with the provisions of the charging Section.

c) On scrutiny, the Assessing Officer (AO), vide order dated 08.01.1988, allowed the deduction under Section 80TT of the IT Act on Rs. 18 lakhs instead of Rs. 20 lakhs while holding that the Government of Sikkim, had deducted the tax at source from the lottery amount of Rs. 18 lakhs as Rs. 2 lakhs have been paid to the agent directly. In other words, under the relevant provisions of Section 80TT of the IT Act, the deduction can be claimed only on net income out of lottery and not on the gross income. The said order was further confirmed by the Commissioner of Income Tax, (Appeals), Rajasthan-II, Jaipur, vide order dated 31.10.1988

d) Being aggrieved, the present appellant preferred an appeal before the Income Tax Appellate Tribunal (in short ‘the Tribunal’), Jaipur Bench challenging the computation by the Assessing Officer (AO) of the deduction under Section 80TT of the IT Act. The appellant herein – the assessee raised an additional ground before the Tribunal claiming that the authorities below have grossly erred in law in treating the lottery income of Sikkim Government as income under the IT Act. Though the Tribunal allowed the appeal partly vide order dated 26.02.1993 but it dismissed the objections raised by the appellant herein as to legality of assessment order and held that the lottery amount is taxable under the provisions of IT Act.

e) However, at the instance of the appellant herein – the assessee, the Tribunal framed certain questions under IT Act and referred the same to the High Court for opinion, considering them the questions of law fit for reference which are as under:

“1. Whether on the facts and in the circumstance of the case, the Hon’ble Tribunal was justified in holding that income from Sikkim State Lottery is taxable under the Income Tax Act, 1961?

2. Whether in the facts and circumstances of the case the Tribunal was justified in holding that deduction u/s 80TT is applicable on the net winning amount received by the assessee and not on the gross amount of the winning prize?”

f) A Division Bench of the High Court, vide judgment and order dated 10.09.2004, answered the questions raised in affirmative.

g) Aggrieved by the judgment and order dated 10.09.2004, the appellant-assessee has preferred this appeal by way of special leave before this court.

3) Heard Mr. Sanjay Jhanwar, learned counsel for the appellant-the assessee and Mr. Yashank P. Adhiyaru, learned senior counsel for the respondent and perused the records. Point(s) for consideration

4) The issue that arises for consideration in the present case is whether income from lottery earned is taxable under the IT Act especially when such income was already taxed under the provisions of Sikkim State Income Tax Rules, 1948. If so, whether the deduction that is to be allowed on such income under Sec 80 TT of the IT Act is on ‘gross income’ or on the ‘net income’.

Rival contentions:

5) Learned counsel appearing for the appellant contended that the High Court has grossly erred in holding that the provisions of the IT Act are applicable to the present case as the provisions of the said Act are extended to the State of Sikkim only with effect from 01.04.1989 and, therefore, income accrued in the State of Sikkim prior to this date could not be charged to tax under the IT Act and was taxable under the Sikkim State Income Tax Rules, 1948. Learned counsel further contended that the order in question passed by the High Court is not lawful as the provisions of Article 371F of the Constitution of India, particularly, clauses (k) and (n) thereof, operate in relation to all the laws prevailing in the territories of Sikkim which prevents the application of the IT Act in the State of Sikkim up till 31.03.1989. Learned counsel further contended that the order passed by the High Court is not just and lawful as the levy of taxes on the same income both by the Union of India and the State of Sikkim is contrary to the principle of double taxation. Further, the High Court grossly erred in holding that the deduction under Section 80TT of the IT Act is applicable on the net winning amount received by the assessee after deducting the agent/seller commission and not on the gross amount of the winning prize.

6) On the other hand, learned senior counsel appearing for the Respondent submitted that the High Court has rightly held that the Tribunal was right in holding that income from winning of lotteries from Sikkim during the assessment year in question was liable to be included in the hands of the assessee as resident of India within the State of Rajasthan where IT Act was in force notwithstanding that the same had accrued or arisen to him at a place where the Act of 1961, was not in force even in respect of income accruing to him outside taxable territory. Learned senior counsel further submitted that on the question as to “whether the Tribunal was justified in holding that deduction under Section 80 TT of the IT Act was applicable on the net winning amount received by the assessee and not on the gross amount of the winning prize”, the High Court answered the same in the affirmative in favour of Revenue and against the appellant herein – the assessee observing that deduction under Section 80 TT of the IT Act is not referable to gross total income but is referable to net income.

Discussion:-

7) Before we go into the issues raised in this appeal, it would be necessary to have an idea of the position of Sikkim under the Indian Constitution. Prior to 26.04.1975, Sikkim was not considered to be a part of India. Any income accruing or arising there from would be treated as income accruing or arising in any foreign country. However, by the 36th amendment to the Indian Constitution in 1975, Sikkim became part of the Indian Union. This, amendment was effected by introducing Article 371F in the Constitution. In the backdrop of the brief history that led to the insertion of Article 371F in the Constitution of India with effect from April 26, 1975, we may now refer to Article 371F to the extent it is relevant:-

“371F. Special Provisions with respect to the State of Sikkim- Notwithstanding anything in this Constitution.— xxxxx

(k) all laws in force immediately before the appointed day in the territories comprised in the State of Sikkim or any part thereof shall continue to be in force therein until amended or repealed by a competent Legislature or other competent authority ;

(n) “The President may, by public notification, extend with such restrictions or modifications as he thinks fit to the State of Sikkim, any enactment which is in force in a State in India at the date of the notification.”

On a plain reading of this provision, it becomes clear that all laws which were in force prior to April 26, 1975, in the territories now falling within the State of Sikkim or any part thereof were intended to continue to be in force until altered or repealed. Therefore, the law in force prior to the merger, continued to be applicable. As a matter of fact, the IT Act was made applicable only by Notification made in 1989 and the first assessment year would be 1990-91 and by the application of this Act, the Sikkim State Income Tax Manual, 1948 stood repealed. However in the present case, we are concerned with the assessment year 1986-87, and, during this time, the IT Act had not been made applicable to the territories of Sikkim. The law corresponding to the IT Act, which immediately was in force in the relevant State was Sikkim State Income Tax Rules, 1948. Hence, there can be two situations, first is that the person was a resident of Sikkim during the time period of 1975-1990 and the income accrues and received by him there only. In such a case, no question of applicability of the IT Act arises. However, the problem arises where the income accrues to a person from the State of Sikkim who was not a resident of Sikkim but of some other part of India. The question that arises is whether the provisions of the IT Act are applicable to such income and whether the same can be subjected to tax under the said Act especially in light of the fact that the income has already been subjected to tax under the Sikkim State Income Tax Rules, 1948.

8) The case of the assessee is that irrespective of the place of residence, income accruing or arising in Sikkim, would not be taxable in India, as per clause (k) of Article 371F of the Constitution and is taxable only under the Sikkim State Income Tax Rules, 1948. The contention seems to be based on erroneous assumption and the simple answer to the said contention is that though the IT Act is not applicable to various other countries but still the income accruing and arising in foreign countries can be brought to tax provided the assessee is resident and ordinarily resident and further the income accrued or received in any territory which is considered to be a part of India is within the net of IT Act.

9) The appellant, being a resident of Rajasthan, received the income arising from winning of lotteries from Sikkim during the Assessment Year in question was liable to be included in the hands of the Assessee as resident of India within the State of Rajasthan where IT Act was in force notwithstanding that the same had accrued or arisen to him at a place where the IT Act was not in force even in respect of income accruing to him without taxable territory. In the above backdrop, it would be apposite to refer Section 5 of the IT Act which reads as under:-

“5-Scope of total Income:-(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which-

(a) is received or deemed to be received in India in such a year by or on behalf of such person; or

(b) accrues or arises or is deemed to accrue or arise to him in India during such year; or x x x x x” The very wordings of Section 5 of the IT Act show that it casts a very wide net and all incomes accruing anywhere in the world would be brought within its ambit. A combined reading of both the clauses makes it clear that any income accrued or received in India would be included in his total income for taxing purposes under the IT Act. However, in the present case, we find that the amount has been earned by the appellant-assessee in the State of Sikkim and the amount of lottery prize was sent by the Government of Sikkim to Jaipur on the request made by the appellant.

10) The result, therefore, is that, while Section 5 of the IT Act would not be applicable, the existing Sikkim State Income Tax Rules, 1948 would be applicable. Thus, on the income, it would appear that Income-tax would be payable, under Sikkim State Income Tax Rules, 1948 and not under the IT Act. Since Sikkim is a part of India for the accounting year, there would appear to be, on the same income, two types of income-taxes cannot be applied.

11) In the above backdrop, it would be appropriate to refer the decision of this Court in the case of Laxmipat Singhania vs. Commissioner of Income Tax, U.P. (1969) 72 ITR 291 at 294 wherein this Court has observed that “It is a fundamental rule of law of taxation that, unless otherwise expressly provided, income cannot be taxed twice”.

12) Further, in a decision of this Court in Jain Brothers and Others vs. Union of India and Others (1970) 77 ITR 107 (SC), it has been held as under:-

“6 It is not disputed that there can be double taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted, they cannot be so interpreted as to tax the subject twice over to the same tax….. If any double taxation is involved, the Legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over.”

13) The above referred cases make it clear that there is no prohibition as such on double taxation provided that the legislature contains a special provision in this regard. Now, the only question remains to be decided is whether in fact there is a specific provision for including the income earned from the Sikkim lottery ticket prior to 01.04.1990 and after 1975, in the income-tax return or not. We have gone through the relevant provisions but there seems to be no such provision in the IT Act wherein a specific provision has been made by the legislature for including such an income by an assessee from lottery ticket. In the absence of any such provision, the assessee in the present case cannot be subjected to double taxation. Furthermore, a taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the Statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted. So, it is clear enough that the income in the present case is taxable only under one law. By virtue of clause (k) to Article 371F of the Constitution which starts with a non-obstante clause, it would be clear that only the Sikkim Regulations on Income-tax would be applicable in the present case. Therefore, the income cannot be brought to tax any further by applying the rates of the IT Act.

14) In view of the aforementioned discussions, we are of the considered view that once the assessee has paid the income tax at source in the State of Sikkim as per the law applicable at the relevant time in Sikkim, the same income was not taxable under the IT Act, 1961. Having decided so, the other issue whether the income that is to be allowed deduction under section 80 TT of the IT Act is on ‘Net Income’ or ‘Gross Income’, becomes academic.

15) In view of the above, the appeal is allowed.

……………….………………………J.

(R.K. AGRAWAL) .…….…………………………………J.

(ABHAY MANOHAR SAPRE) NEW DELHI;

APRIL 19, 2018.

Supreme Court Judgement On Construction In Mumbai

MASTI

In the latest judgement in MAHARASHTRA CHAMBER OF HOUSING INDUSTRY VERSUS MUNICIPAL CORPORATION OF GREATER MUMBAI the Supreme Court has held that a total prohibition on construction in Mumbai has serious ramifications on housing sector.

The Supreme Court has also held in the judgement that such a ban on construction has a serious impact on the financial loans which have been obtained by the developers and builders.

Such a ban makes serious inroads into the rights of citizens under Article 19, 21 and 300A of the Constitution of India, the Supreme Court has held in the judgement.

The Bench comprising of HON’BLE MR. JUSTICE S.A. BOBDE and HON’BLE MR. JUSTICE L. NAGESWARA RAOThough held that it might be equally true that the activities and the neglect in disposing of the debris invades the rights of other citizens under Article 21 etc. That issue is left open for a proper determination.

Text of Supreme Court judgement in MAHARASHTRA CHAMBER OF HOUSING INDUSTRY VERSUS MUNICIPAL CORPORATION OF GREATER MUMBAI

ITEM NO.10 COURT NO.7 SECTION IX

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

SPECIAL LEAVE PETITION (CIVIL) No.D23708/2017

(Arising out of impugned final judgment and order dated 26-02-2016
in CA No. 221/2013 29-02-2016 in CA No. 221/2013 04-05-2017 in RP
No. 3720/2017 passed by the High Court Of Judicature At Bombay)

MAHARASHTRA CHAMBER OF HOUSING INDUSTRY Petitioner(s)
VERSUS

MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS. Respondent(s)

(FOR ADMISSION and I.R. and IA No.73411/2017-CONDONATION OF DELAY
IN FILING and IA No.73415/2017-EXEMPTION FROM FILING C/C OF THE
IMPUGNED JUDGMENT and IA No.73414/2017-PERMISSION TO FILE LENGTHY
LIST OF DATES )

Date : 15-03-2018 These petitions were called on for hearing today.

CORAM :
HON’BLE MR. JUSTICE S.A. BOBDE
HON’BLE MR. JUSTICE L. NAGESWARA RAO

For Petitioner(s) Mr. Mukul Rohatgi, Sr. Adv.
Mr. Shyam Divan, Sr. Adv.
Mr. Kunal Vajani, Adv.
Ms. Padhma Lakshmi Iyengar, Adv.
Mr. Nikhil Rohtgi, Adv.
Ms. Priyakshi Bhatnagar, Adv.
Mr. Shashank Khurana, Adv.
Mr. Pranaya Goyal, AOR

For Respondent(s) Mr. Ranjit Kumar, Sr. Adv.
Mr. Dhruv Mehta, Sr. Adv.
Mr. J.J. Xavier, Adv.
Mr. Ashish Wad, Adv.
Mrs. Jayashree Wad, Adv.
Ms. Sukriti Jaggi, Adv.
For M/S. J S Wad And Co, AOR

Mr. C.U. Singh, Sr. Adv.
Signature Not Verified
Mr. Rishabh Parikh, Adv.
Digitally signed by
SANJAY KUMAR
Date: 2018.03.16
Mr. E. C. Agrawala, AOR
Mr. Arnav Behari, Adv.
16:16:07 IST
Reason:
2

UPON hearing the counsel the Court made the following
O R D E R
These petitions have been preferred by the petitioner for seeking permission to carry on the construction which has been prohibited by the impugned judgment and order/s passed by the High Court.

We make it clear that this order is not intended to set aside or modify the aforesaid impugned judgment. We have considered the matter only in order to explore the possibility of safe method of permitting certain constructions in the city of Mumbai for a limited period to pave the way for further orders that may be passed.

Prima facie, we are satisfied that a total prohibition, though selective, has serious ramifications on housing sector which is of great significance in a city like Mumbai. It also has a serious impact on the financial loans which have been obtained by the developers and builders. Such a ban makes serious inroads into the rights of citizens under Article 19, 21 and 300A of the Constitution of India. Though it might be equally true that the activities and the neglect in disposing of the debris invades the rights of other citizens under Article 21 etc. That issue is left open for a proper determination.

We have heard the matter on several occasions and we are of the considered view that the following order should govern the construction activities in the city of Mumbai :

Primarily, the ban has been imposed by the Bombay High Court because of alarming impact of the inability of Respondent No.1 – Municipal Corporation of Greater Mumbai (for short, the ‘Municipal Corporation’) to deal with and safely dispose of the solid waste and construction debris that is generated by the activities of construction of buildings.

It was however argued before us that this construction debris can be safely disposed of at designated sites, whoever they belong to, provided the same are available for receiving and storing this debris. This, no doubt, assumes that construction activity will go on and that itself has deleterious effect on the population because of the waste particles which are dispersed in the air. We therefore direct that any construction that is permitted hereafter for the purpose of this order shall be only after adequate safeguards are employed by the builders for preventing dispersal of particles through the air. This shall be incorporated in the IOD, unless it is already so incorporated. According to the Municipal Corporation, ten sites have been located and inspected along with the representative/s of the Monitoring Committee. The land owners have given the consent or ‘No Objection Certificate’ (NOC) for bringing such debris onto specified locations which require to be filled with earth. In another words, these sites require land filling which will be done by this debris.

The Municipal Corporation shall permit a builder or developer to carry on construction on their sites by imposing the conditions in the IOD or any such permission, that the construction debris generated from this particular site, shall be transported and deposited in specific site inspected and approved by the Municipal Corporation.

The Municipal Corporation shall specify such a site meant for deposit of construction debris in the building permission or IOD. It shall also ensure compliance by regular inspection of both, the construction site and the landfill site. Any breach will entail the cancellation of the building permission or IOD and the work will be liable to be stopped immediately.

The landfill site shall be governed by the Construction and Demolition Waste Management Rules, 2016, which came into force with effect from 29.3.2016. In particular, the landfill sites shall be the “Sanitary landfill sites” as defined in the Solid Waste Management Rules, 2016. The Municipal Corporation shall ensure that the criteria “for development of facilities at the sanitary land-fills” shall be applied to the landfill sites as specified in paragraph (B) of Schedule I to the Solid Waste Management Rules, 2016. These Rules will apply to the extent they are relevant and necessary in relation to the landfill sites which are permitted to be used for disposal of construction debris under this order.

The Municipal Corporation shall not permit any construction whether in respect of pre-existing IOD or fresh IOD unless it has first located a landfill site and has obtained ‘No Objection Certification’ or consent of the land owner that such debris may be deposited on that particular site. The Municipal Corporation shall incorporate in the IOD the condition that the construction is being permitted only if such construction debris is deposited.

In so far as the ‘small generators’ of Construction and Demolition [“C&D”] Waste are concerned, the C&D Waste shall be disposed of in accordance with the ‘Debris On-Call Scheme’ initiated by Respondent No.1 Municipal Corporation, whereunder the agencies appointed by the Respondent No.1 Municipal Corporation shall through its authorised appointed agencies pick up and collect the C&D Waste which shall be transported to/unloaded at the designated disposal sites and used for creating infrastructure facility of dumping grounds, covering of Municipal Solid Waste and preparation of internal roads/loops within the dumping ground premises as well as in accordance with the provisions of Construction and Demolition Waste Management Rules, 2016.

In so far as the ‘large generators’ of C&D Waste are concerned, the C&D Waste shall be disposed of as per the Waste/Debris Management Plan submitted by the owner/developer at the time of applying for an IOD and as approved by the Solid Waste Management department of Respondent No.1 Municipal Corporation, wherein neither Deonar nor Mulund dumping sites shall be included as designated disposal sites as well as in accordance with the provisions of Construction and Demolition Waste Management Rules, 2016.

In the event for any reason whatsoever the consent given by the disposal site owner/authority is revoked and/or in the event the time limit during which the disposal site was available has expired, the relevant construction activity will be stopped after issuance of a Show Cause Notice and till such the Waste Management Plan/Debris Management Plan has been appropriately amended to provide a new disposal site for dumping of C&D Waste and is approved by Respondent No.1 Municipal Corporation. The applicant for development permissions shall give the Bank Guarantee to the tune of Rs.5 lacs to Rs.50 lacs depending upon the size project and mode of development, which bank guarantee shall remain in force solely for the purpose of ensuing compliance of the Waste Management Plan/Debris Management Plan approved by Respondent No.1 Municipal Corporation from time to time, till the grant/issuance of the Occupation Certificate. The Monitoring Committee shall be entitled to inspect the record of the Municipal Corporation for pertaining to the grant of IODs and shall also be entitled to visit and inspect the landfill sites. The Monitoring Committee shall be entitled to bring to the notice of the Municipal Corporation any breach in the permission or in the conditions of IOD of building permission. The Municipal Corporation shall pass a speaking order on such objections within a period of one month.

In view of the above, the Municipal Corporation shall submit a detailed report to this Court after the expiry of six months. This order shall remain in force for a period of six months from today. It is made clear that no construction debris will be carried for disposal to the Deonar and Mulund dumping sites. List the matter after six months along with the report of Respondent No.1 Municipal Corporation.

(SANJAY KUMAR-II) (INDU KUMARI POKHRIYAL)
COURT MASTER (SH) ASST.REGISTRAR

S. 14A Rule 8D: Read Latest Supreme Court Judgement In MAXOPP INVESTMENT

MASTI

The law on section 14A and Rule 8D have been explained in the latest Supreme Court judgement in MAXOPP INVESTMENT LTD VERSUS COMMISSIONER OF INCOME TAX.

The judgement of the Supreme Court is dated 12th February 2018.

The bench comprised of Justice A.K. SIKRI) and Justice ASHOK BHUSHAN.

The Supreme Court held that the issue that falls for consideration is as to whether the dominant purpose test, which is pressed into service by the assessees would apply while interpreting Section 14A of the Act or we have to go by the theory of apportionment.

The Court expressed the opinion that the dominant purpose for which the investment into shares is made by an assessee may not be relevant even though Maxopp Investment Limited may have made the investment in order to gain control of the investee company.

It was held by the Supreme Court in the latest judgement that this was not a relevant factor in determining the issue at hand because such dividend income is non-taxable.

In this scenario, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure, it was held.

It was further held by the Supreme Court that keeping this objective behind Section 14A of the Act in mind, the said provision has to be interpreted, particularly, the word ‘in relation to the income’ that does not form part of total income.

The principle of apportionment of expenses comes into play as that is the principle which is engrained in Section 14A of the Act, the Supreme Court held following Walfort Share and Stock Brokers P Ltd.

Full Text of Supreme Court judgement in MAXOPP INVESTMENT LTD VERSUS COMMISSIONER OF INCOME TAX

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 104-109 OF 2015

MAXOPP INVESTMENT LTD. …..APPELLANT(S)

VERSUS

COMMISSIONER OF INCOME TAX,
NEW DELHI …..RESPONDENT(S)

WITH

CIVIL APPEAL NO. 1423 OF 2015

CIVIL APPEAL NO. 3267 OF 2013

CIVIL APPEAL NO. 130 OF 2015

CIVIL APPEAL NOS. 110-112 OF 2015

CIVIL APPEAL NO. 1500 OF 2018
(ARISING OUT OF SLP (CIVIL) NO. 19614 OF 2013)

CIVIL APPEAL NO. 1508 OF 2018
(ARISING OUT OF SLP (CIVIL) NO. 31417 OF 2016)
Signature Not Verified

Digitally signed by
ASHWANI KUMAR
Date: 2018.03.13
17:10:40 IST
Reason: CIVIL APPEAL NO. 115 OF 2015

CIVIL APPEAL NO. 8596 OF 2014
2

CIVIL APPEAL NO. 1505 OF 2018
(ARISING OUT OF SLP (CIVIL) NO. 27054 OF 2016)

CIVIL APPEAL NOS. 10096 OF 2013

CIVIL APPEAL NO. 123 OF 2015

CIVIL APPEAL NO. 6590 OF 2015

CIVIL APPEAL NO. 1576 OF 2018
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 4024 OF 2018
@ DIARY NO. 39820 OF 2017)

CIVIL APPEAL NO. 1579 OF 2018
(ARISING OUT OF SLP (CIVIL) NO. 20475 OF 2017)

CIVIL APPEAL NO. 1578 OF 2018
(ARISING OUT OF SLP (CIVIL) NO. 23123 OF 2017)

CIVIL APPEAL NO. 18019 OF 2017

CIVIL APPEAL NO. 1580 OF 2018
(ARISING OUT OF SLP (CIVIL) 32405 OF 2017)

CIVIL APPEAL NO. 1575 OF 2018
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 4023 OF 2018
@ DIARY NO. 36413 OF 2017)

CIVIL APPEAL NO. 2802 OF 2018
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 6746 OF 2018
@ DIARY NO. 1146 OF 2018)

CIVIL APPEAL NO. 2791 OF 2018
3

(@ SPECIAL LEAVE PETITION (CIVIL) NO. 6685 OF 2018
@ DIARY NO. 39823 OF 2017)

CIVIL APPEAL NO. 2792 OF 2018
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 6686 OF 2018
@ DIARY NO. 41903 OF 2017)

CIVIL APPEAL NO. 1577 OF 2018
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 4027 OF 2018
@ DIARY NO. 41890 OF 2017)

CIVIL APPEAL NO. 2793 OF 2018
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 6687 OF 2018
@ DIARY NO. 41203 OF 2017)
AND
CIVIL APPEAL NO. 2794 OF 2018
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 6688 OF 2018
@ DIARY NO. 41922 OF 2017)

JUDGMENT
A.K. SIKRI, J.

Chapter IV of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) contains the provisions pertaining to ‘computation of total income’. Section 14 which is the first provision under this Chapter enumerates five heads of income within which all income are to be classified. Under the scheme of the Act, certain types of income are exempt from tax and, in this behalf, specific provisions are made stipulating that such incomes would not form part of the total income under the Act as fortiorari, they are not included under any of the heads of income and, therefore, no taxes levied on such exempted incomes. It is in this backdrop, Section 14A of the Act clarifies that if any expenditure is incurred in earning that income which does not form part of the total income, such expenditure shall also not be allowed as deduction. Though, Section 14A was inserted by the Finance Act, 2001, but it was given retrospective effect from April 1, 1962. Original Section was in the following terms:

“Section 14A – For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.”

2) By the Finance Act, 2006, the aforesaid provision was amended whereby it was renumbered as sub-section (1) and sub-sections (2) and (3) were added thereto. Before that, a proviso was also added by amendment vide Finance Act, 2002 which was to operate retrospectively from May 11, 2001. In these batch of appeals, we are not concerned with sub-sections (2), (3) or the proviso and it is only interpretation that has to be given to sub-section (1), which arises for consideration.

3) Though, it is clear from the plain language of the aforesaid provision that no deduction is to be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act, the effect whereof is that if certain income is earned which is not to be included while computing total income, any expenditure incurred to earn that income is also not allowed as a deduction. It is well known that tax is leviable on the net income. Net income is arrived at after deducting the expenditures incurred in earning that income.

Therefore, from the gross income, expenditure incurred to earn that income is allowed as a deduction and thereafter tax is levied on the net income. The purpose behind Section 14A of the Act, by not permitting deduction of the expenditure incurred in relation to income, which does not form part of total income, is to ensure that the assessee does not get double benefit. Once a particular income itself is not to be included in the total income and is exempted from tax, there is no reasonable basis for giving benefit of deduction of the expenditure incurred in earning such an income.

For example, income in the form of dividend earned on shares held in a company is not taxable. If a person takes interest bearing loan from the Bank and invests that loan in shares/stocks, dividend earned therefrom is not taxable. Normally, interest paid on the loan would be expenditure incurred for earning dividend income. Such an interest would not be allowed as deduction as it is an expenditure incurred in relation to dividend income which itself is spared from tax net. There is no quarrel upto this extent.

4) However, in these appeals, the question has arisen under varied circumstances where the shares/stocks were purchased of a company for the purpose of gaining control over the said company or as ‘stock-in-trade’. However, incidentally income was also generated in the form of dividends as well. On this basis, the assessees contend that the dominant intention for purchasing the share was not to earn dividends income but control of the business in the company in which shares were invested or for the purpose of trading in the shares as a business activity etc.

In this backdrop, the issue is as to whether the expenditure incurred can be treated as expenditure ‘in relation to income’ i.e. dividend income which does not form part of the total income. To put it differently, is the dominant or main object would be a relevant consideration in determining as to whether expenditure incurred is ‘in relation to’ the dividend income. In most of the appeals, including in Civil Appeal Nos. 104-109 of 2015, aforesaid is the scenario.

Though, in some other cases, there may be little difference in fact situation. However, all these cases pertain to dividend income, whether it was for the purpose of investment in order to retain controlling interest in a company or in group of companies or the dominant purpose was to have it as stock-in-trade.

5) Before we proceed further, we may briefly note the facts of Civil Appeal Nos. 104-109 of 2015, for better understanding of the issue involved.

The appellant company is engaged, inter alia, in the business of finance, investment and dealing in shares and securities. The appellant holds shares/securities in two portfolios, viz. (a) as investment on capital account; and, (b) as trading assets for the purpose of acquiring and retaining control over investee group companies, particularly Max India Ltd., a widely held quoted public limited company.

Any profit/loss arising on sale of shares/securities held as ‘investment’ is returned as income under the head ‘capital gains’, whereas profit/loss arising on sale of shares/securities held as ‘trading assets’ (i.e. held, inter alia, with the intention of acquiring, exercising and retaining control over investee group companies) has been regularly offered and assessed to tax as business income under the head ‘profits and gains of business or profession’.

Consistent with the aforesaid treatment regularly followed, the appellant filed return for the previous year relevant to the Assessment Year 2002-03, declaring income of Rs.78,90,430/-. No part of the interest expenditure of Rs.1,16,21,168/- debited to the profit and loss account, to the extent relatable to investment in shares of Max India Limited, yielding tax free dividend income, was considered disallowable under Section 14A of the Act on the ground that shares in the said company were acquired for the purposes of retaining controlling interest and not with the motive of earning dividend. According to the appellant, the dominant purpose/intention of investment in shares of Max India Ltd. was acquiring/retaining controlling interest therein and not earning dividend and, therefore, dividend of Rs.49,90,860/- earned on shares of Max India Ltd. during the relevant previous year was only incidental to the holding of such shares. The Assessing Officer (AO), while passing the assessment order dated August 27, 2004, under Section 143(3) worked out disallowance under Section 14A of the Act at Rs.67,74,175/- by apportioning the interest expenditure of Rs.1,16,21,168/- in the ratio of investment in shares of Max India Ltd. (on which dividend was received) to the total amount of unsecured loan. The AO, however, restricted disallowance under that Section to Rs.49,90,860/- being the amount of dividend received and claimed exempt.

6) In appeal, the Commissioner of Income Tax (Appeals) {CIT(A)} vide order dated January 12, 2005 upheld the order of the AO. The appellant herein carried the matter in further appeal to the Income Tax Appellate Tribunal, New Delhi (for short the ‘ITAT’). In view of the conflicting decisions of various Benches by the ITAT with respect to the interpretation of Section 14A of the Act, a Special Bench was constituted in the matter of ITO v. Daga Capital Management (Private) Ltd. 1 The appeal of the appellant was also tagged and heard by the aforesaid Special Bench.

7) The Special Bench of the ITAT in the case of Daga Capital Management (Private) Ltd., dismissing the appeal of the appellant, 1 312 ITR (AT) 1 inter alia, held that investment in shares representing controlling interest did not amount to carrying on of business and, therefore, interest expenditure incurred for acquiring shares in group companies was hit by the provisions of Section 14A of the Act. The Special Bench further held that holding of shares with the intention of acquiring/retaining controlling interest would normally be on capital account, i.e. as investment and not as ‘trading assets’. For that reason too, the Special Bench held that there existed dominant connection between interest paid on loan utilized for acquiring the aforesaid shares and earning of dividend income. Consequently, the provisions of Section 14A of the Act were held to be attracted on the facts of the case.

8) On the interpretation of the expression ‘in relation to’, the majority opinion of the Special Bench was that the requirement of there being direct and proximate connection between the expenditure incurred and exempt income earned could not be read into the provision. According to the majority view, ‘what is relevant is to work out the expenditure in relation to the exempt income and not to examine whether the expenditure incurred by the assessee has resulted into exempt income or taxable income’.

As per the minority view, however, the existence of dominant and immediate connection between the expenditure incurred and dividend income was a condition precedent for invoking the provisions of Section 14A of the Act. It was accordingly held, as per the minority, that mere receipt of dividend income, incidental to the holding of shares, in the case of a dealer in shares, would not be sufficient for invoking provisions of Section 14A of the Act.

9) Against the aforesaid order of the Special Bench, the appellant preferred appeal under Section 260A of the Act to the High Court. The High Court of Delhi has, vide impugned judgment dated November 18, 2011, held that the expression ‘in relation to’ appearing in Section 14A of the Act was synonymous with ‘in connection with’ or ‘pertaining to’, and, that the provisions of that Section apply regardless of the intention/motive behind making the investment. As a consequence, proportionate disallowance of the expenditure incurred by the assessee is maintained.

10) It would be pertinent to point out at this stage that Punjab and Haryana High Court in a recent judgment in the case of Principal Commissioner of Income Tax v. State Bank of Patiala2 has taken a view which runs contrary to the aforesaid view taken by the Delhi High Court. The Punjab and Haryana High Court followed, with approval, the judgment of the High Court of Karnataka in CCI Ltd. v. Joint Commissioner of Income Tax, Udupi Range 3 The Revenue has filed appeals challenging the correctness of the aforesaid decisions. Thus, in view of conflict of opinions of various High Courts, these batch of 2 (2017) 391 ITR 218 (P&H) 3 (2012) 206 Taxman 563 appeals are by those assessees who were lost before the High Court and by the Income Tax Department against the judgments of the High Court where the view taken is favourable to the assessee and against the Revenue.

11) Before adverting to the discussions on these judgments, let us go through the relevant statutory provisions, as that would enable us to appreciate the ratio of these cases more appropriately. Since the focus of discussion is Section 14A of the Act, we reproduce Section 14A in its entirety hereinbelow:

“Expenditure incurred in relation to income not includible in total income.
14A. (1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act :

Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001.”

12) Sub-section (2) of Section 14A deals with the proportionality as it empowers the AO to extricate that amount of expenditure which is incurred in relation to such income which does not form part of the total income under the Act. However, this is to be done ‘in accordance with such method as may be prescribed.’ This prescription is provided by the delegated legislation, in the form of Rule 8D of the Income Tax Rules, 1962 (for short ‘Rules’) which Rule was inserted w.e.f. March 24, 2008 vide Income Tax (Fifth Amendment) Rules, 2008 4. We, thus, reproduce Rule 8D hereunder:

“Method for determining amount of expenditure in relation to income not includible in total income.

8D.(1) Where the Assessing Officer, having regard to the accounts of the assessee of a previous year, is not satisfied with—

(a) the correctness of the claim of expenditure made by the assessee; or
(b) the claim made by the assessee that no expenditure has been incurred, in relation to income which does not form part of the total income under the Act for such previous year, he shall determine the amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2).
(2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:— 4 In Civil Appeal No. 2165 of 2012 (Commissioner of Income Tax, Mumbai v. M/s. Essar Teleholdings Ltd. through its Manager pronounced on January 31, 2018, this Court has held that Rule 8D is prospective in nature.

(i) the amount of expenditure directly relating to income which does not form part of total income;
(ii) in a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely:— Where A = amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year;

B = the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year;

C = the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year;

(iii) an amount equal to one-half per cent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year.

(3) For the purposes of this rule, the “total assets” shall mean, total assets as appearing in the balance sheet excluding the increase on account of revaluation of assets but including the decrease on account of revaluation of assets.”

13) With the aforesaid statutory scheme in mind, we traverse through the judgments of the Delhi High Court in Maxopp Investment Ltd. and that of Punjab and Haryana High Court in State Bank of Patiala.

JUDGMENT OF DELHI HIGH COURT IN MAXOPP INVESTMENT LTD.

14) Three questions fell for consideration before the High Court. For the purpose of these appeals, it is only question No. 1 which is relevant, and formulation thereof by the High Court was as under:

“1. Whether expenditure (including interest paid on funds borrowed) in respect of investment in shares of operating companies for acquiring and retaining a controlling interest therein is hit by section 14A of the Income tax Act, 1961 inasmuch as the dividend received on such shares does not form part of the total income?”

15) On facts, it was noted that the assessee company is in the business of finance, investment and was dealing in shares and securities. The assessee held shares and securities, partly as investments on the “capital account” and partly as “trading assets” for the purpose of acquiring and retaining control over its group companies, primarily Max India Ltd.

As per the assessee, any profit resulting on the sale of shares held as trading assets was duly offered to tax as business income of the assessee. During the previous year relevant to the assessment year 2002-03, the assessee incurred total interest expenditure of Rs. 1,61,21,168/-, which was claimed as business expenditure under section 36(1)(iii) of the Income Tax Act, 1961 (hereinafter referred to as “the said act”). According to the assessee, the expenditure claimed was not hit by section 14A of the Act, on the ground that although borrowed funds were partly utilised for investment in shares held as trading assets, such investment was made with the intention to acquire and retain a controlling interest in the aforesaid company and that the receipt of dividend thereon was merely incidental.
The High Court then took note of legislative history of Section 14A of the Act and Rule 8D of the Rules.

Thereafter, the Court went on to discuss the law which stood prior to insertion of Section 14A. Taking note of certain judgments, the High Court observed that prior to the insertion of Section 14A in the Act, the law was that when an assessee had a composite and indivisible business, which had elements of both taxable and non-taxable income, the entire expenditure in respect of the said business was deductible and, in such a case, the principle of apportionment of the expenditure relating to the non-taxable income did not apply. However, where the business was divisible, the principle of apportionment of the expenditure was applicable and the expenditure apportioned to the ‘exempt’ income or income not exigible to tax, was not allowable as a deduction.

The High Court, then, took cognizance of the legislative intent and objective behind the insertion of Section 14A by referring to the Memorandum Explaining the Provisions of the Finance Bill, 2001. It also reproduced passages from few judgments of this Court. Since, for the purpose of the present case, it is necessary to keep in mind the objectives behind this provision, we reproduce that part of the discussion hereunder:

“Objective behind insertion of section 14A

15. The object behind the insertion of section 14A in the said Act is apparent from the Memorandum explaining the provisions of the Finance Bill 2001 which is to the following effect:-

“Certain incomes are not includable while computing the total income as these are exempt under various provisions of the Act. There have been cases where deductions have been claimed in respect of such exempt income. This in effect means that the tax incentive given by way of exemptions to certain categories of income is being used to reduce also the tax payable on the non-exempt income by debiting the expenses incurred to earn the exempt income against taxable income. This is against the basic principles of taxation whereby only the net income, i.e., gross income minus the expenditure is taxed. On the same analogy, the exemption is also in respect of the net income. Expenses incurred can be allowed only to the extent they are relatable to the earning of taxable income.

It is proposed to insert a new section 14A so as to clarify the intention of the Legislature since the inception of the Income-tax Act, 1961, that no deduction shall be made in respect of any expenditure incurred by the assessee in relation to income which does not form part of the total income under the Income-tax Act.

The proposed amendment will take effect retrospectively from April 1, 1962 and will accordingly, apply in relation to the assessment year 1962-63 and subsequent assessment years.”

16. As observed by the Supreme Court in the case of CIT v. Walfort Share and Stock Brokers P Ltd: 326 ITR 1 (SC), the insertion of section 14 A with retrospective effect reflects the serious attempt on the part of Parliament not to allow deduction in respect of any expenditure incurred by the assessee in relation to income, which does not form part of the total income under the said act against the taxable income. The Supreme Court further observed as under:-

“.. In other words, section 14 A clarifies that expenses incurred can be allowed only to the extent that they are relatable to the earning of taxable income. In many cases the nature of expenses incurred by the assessee may be relatable partly to the exempt income and partly to the taxable income. In the absence of section 14A, the expenditure incurred in respect of exempt income was being claimed against taxable income. The mandate of section 14A is clear. It desires to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of an exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income…”

“..Expenses allowed can only be in respect of earning taxable income. This is the purport of section 14A. In section 14A, the first phrase is “for the purposes of computing the total income under this Chapter” which makes it clear that various heads of income as prescribed in the Chapter IV would fall within section 14A. The next phrase is, “in relation to income which does not form part of total income under the Act”. It means that if an income does not form part of total income, then the related expenditure is outside the ambit of the applicability of section 14A..

(Emphasis supplied)”

17. The Supreme Court also clearly held that in the case of an income like dividend income which does not form part of the total income, any expenditure/deduction relatable to such (exempt or non-taxable) income, even if it is of the nature specified in sections 15 to 59 of the said Act, cannot be allowed against any other income which is includable in the total income. The exact words used by the Supreme Court are as under:-

“Further, section 14 specifies five heads of income which are chargeable to tax. In order to be chargeable, an income has to be brought under one of the five heads. Sections 15 to 59 lay down the rules for computing income for the purpose of chargeability to tax under those heads. Sections 15 to 59 quantify the total income chargeable to tax.

The permissible deductions enumerated in sections 15 to 59 are now to be allowed only with reference to income which is brought under one of the above heads and is chargeable to tax. If an income like dividend income is not a part of the total income, the expenditure/deduction though of the nature specified in sections 15 to 59 but related to the income not forming part of the total income could not be allowed against other income includable in the total income for the purpose of chargeability to tax. The theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14 A.

(emphasis supplied)”

16) The High Court then undertook the exercise of analysing the provisions of Section 14A of the Act and, in the process, examined the contours and scope of the expressions ‘in relation to’ and ‘expenditure incurred’ occurring therein. The High Court pointed out that contention of the assessees, in this behalf, was that the word ‘incurred’ must be taken literally in the sense that the expenditure must have actually taken place. Moreover, the expenditure must also have taken place in relation to income which does not form part of total income. Further, the expression “in relation to” implies that there must be a direct and proximate connection with the subject matter.

In other words, only that actual expenditure which is made directly and for the object of earning exempt income (in the present appeals – dividend income) could be disallowed under section 14A of the Act. If the dominant and main objective of spending was not the earning of ‘exempt’ income then, the expenditure could not be disallowed under section 14A of the Act provided it was otherwise allowable under sections 15 to 59 of the said Act. The High Court, however, did not agree with the aforesaid propositions advanced by the learned counsel for the assessees which according to it was mired by several difficulties. Distinguishing the case law cited by the assessees where the expression ‘in relation to’ was interpreted by this Court, as not applicable in the present context, the High Court, instead, referred to the judgment in the case of Doypack Systems Pvt. Ltd. v. Union of India5 wherein this Court has held that expressions ‘pertaining to’, ‘in relation to’ and ‘arising out of’ used in the deeming provisions, are used in an expansive sense.

It also referred to the judgment of this Court in CIT v. Walfort Share and Stock Brokers P Ltd.6 wherein this Court has held that the basic principle of taxation is to tax the net income, i.e., gross income minus the expenditure and on the same analogy the exemption is also in respect of net income. In other words, where the gross income would not form part of total income, it’s associated or related expenditure would also not be permitted to be debited against other taxable income.

17) Likewise, explaining the meaning of ‘expenditure incurred’, the High Court agreed that this expression would mean incurring of actual expenditure and not to some imagined expenditure. At the same time, observed the High Court, the ‘actual’ expenditure that is in contemplation under section 14A(1) of the said Act is the ‘actual’ expenditure in relation to or in connection with or pertaining to exempt income. The corollary to this is that if no expenditure is incurred in relation to the exempt income, no disallowance can be made under section 14A of the said Act. On the basis of the aforesaid discussion, the High Court answered the question formulated by it in the affirmative.

5 (1988) 2 SCC 299
6 (2010) 326 ITR 1 (SC)

JUDGMENT OF PUNJAB AND HARYANA HIGH COURT IN STATE BANK OF PATIALA

18) This case arose in the context where exempt income in the form of dividend was earned by the Bank from securities held by it as its stock in trade. The assessee filed its return declaring an income of about Rs.670 crores which was selected for scrutiny. The return showed dividend income exempt under section 10(34) and (35) of about Rs.11.07 crores and net interest income exempt under section 10(15)(iv)

(h) of about Rs.1.12 crores. The total exempt income claimed in the return was, therefore, Rs.12,19,78,015/-. The assessee while claiming the exemption contended that the investment in shares, bonds, etc. constituted its stock-in-trade; that the investment had not been made only for earning tax free income; that the tax free income was only incidental to the assessee’s main business of sale and purchase of securities and, therefore, no expenditure had been incurred for earning such exempt income; the expenditure would have remained the same even if no dividend or interest income had been earned by the assessee from the said securities and that no expenditure on proportionate basis could be allocated against exempt income.

The assessee also contended that in any event it had acquired the securities from its own funds and, therefore, section 14A was not applicable. The AO restricted the disallowance to the amount which was claimed as exempt income by applying the formula contained in Rule 8D holding that Section 14A would be applicable. The CIT(A) issued notice of enhancement under Section 251 of the Act and held that in view of Section 14A of the Act, the assessee was not to be allowed any deduction in respect of income which is not chargeable to tax. Therefore, he disallowed the entire expenditure claimed instead of restricting the disallowance to the amount which was claimed as exempt income as done by the AO.

The ITAT set aside the order of the AO as well as CIT(A). It referred to a CBDT Circular No.18/2015 dated 02.11.2015 which states that income arising from investment of a banking concern is attributable to the business of banking which falls under the head “Profits and gains of business and profession”. The circular states that shares and stock held by the bank are ‘stock-in-trade’ and not ‘investment’. Referring to certain judgments (which we will also refer to) and the earlier orders of the Tribunal, it was held that if shares are held as stock-in-trade and not as investment even the disallowance under rule 8D would be nil as rule 8D(2)(i) would be confined to direct expenses for earning the tax exempt income. In the aforesaid factual backdrop, in appeal filed by the Revenue, the High Court noted that following substantial question of law arose for consideration:

“Whether in the facts and circumstances of the case, the Hon’ble ITAT is right in law in deleting the addition made on account of disallowance under section 14A of the Income Tax Act, 1961?”

19) In its analysis, the High Court accepted the contention of the counsel for the assessee that the assessee is engaged in the purchase and sale of shares as a trader with the object of earning profit and not with a view to earn interest or dividend. The assessee does not have an investment portfolio. The securities constitute the assessee’s stock-in-trade. The Department, in fact, rightly accepted, as a matter of fact, that the dividend and interest earned was from the securities that constituted the assessee’s stock-in-trade. The same is, in any event, established. The assessee carried on the business of sale and purchase of securities. It was supported by Circular No.18, dated November 02, 2015, issued by the CBDT, which reads as under:-

“Subject: Interest from Non-SLR securities of Banks – Reg.

It has been brought to the notice of the Board that in the case of Banks, field officers are taking a view that, “expenses relatable to investment in non-SLR securities need to be disallowed u/s 57(i) of the Act as interest on non-SLR securities is income from other sources.”

2. Clause (id) of sub-section (1) of Section 56 of the Act provides that income by way of interest on securities shall be chargeable to income-tax under the head “Income from Other Sources”, if, the income is not chargeable to income-tax under the head “Profits and Gains of Business and Profession”.

3. The matter has been examined in light of the judicial decisions on this issue. In the case of CIT Vs Nawanshahar Central Cooperative Bank Ltd. [2007] 160TAXMAN 48(SC), the Apex Court held that the investments made by a banking concern are part of the business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head “Profits and Gains of Business and Profession”.

3.2 Even though the abovementioned decision was in the context of co-operative societies/Banks claiming deduction under section 80P(2)(a)(i) of the Act, the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.

4. In the light of the Supreme Court’s decision in the matter, the issue is well settled. Accordingly, the Board has decided that no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to the notice of all concerned.

(emphasis supplied)”

20) The High Court pointed out that the Circular carves out a distinction between stock-in-trade and investment and provides that if the motive behind purchase and sale of shares is to earn profit then the same would be treated as trading profit and if the object is to derive income by way of dividend then the profit would be said to have accrued from the investment. If the assessee is found to have treated the shares and securities as stock-in-trade, the income arising therefrom would be business income. A loss would be a business loss. Thus, an assessee may have two portfolios, namely, investment portfolio and a trading portfolio. In the case of the former, the securities are to be treated as capital assets and in the latter as trading assets.

21) Further, as a banking institution, the assessee was also statutorily required to place a part of its funds in approved securities, as held in CIT v. Nawanshahar Central Co-operative Bank Ltd. 7. Since, the shares, bonds, debentures purchased by the assessees constituted its stock-in-trade, the provisions of Section 14A were not applicable. Here, the Court noted distinction between stock-in-trade and investment and made the following observations:

“17. Under section 14A, an expenditure can be disallowed only if it is incurred by the assessee in relation to income exempt from tax. The dividend or interest from the assessee’s stock-in-trade i.e. the securities was exempt from tax in view of sections 10(15)(iv)(h),(34) and (35). This was incidental to its business of banking. The business income on account of the assessee trading in the securities is assessable under the head “Profits and gains of business and profession”. The expenditure incurred in relation to stock-in-trade arising as a result of investment in shares and debentures is deductible under sections 28 to 37. There is a distinction between stock-in-trade and investment. The object of earning profit from trading in securities is different from the object of earning income, such as, dividend and interest arising therefrom. The object of trading in securities does not constitute the activity of investment where the object is to earn dividend or interest.”

22) The High Court then discussed in detail the judgment in Walfort Share and Stock Brokers P Ltd. which related to dividend stripping.

After explaining the objective behind Section 14A of the Act (which is already noted above), this Court in the facts of that case, had held that a payback does not constitute an ‘expenditure incurred’ in terms of Section 14A as it does not impact the profit and loss account. This expenditure, in fact, is a payout.

23) According to the High Court, what is to be disallowed is the

7 (2007) 289 ITR 6 (SC)

expenditure incurred to “earn” exempt income. The words ‘in relation to’ in Section 14A must be construed accordingly. Applying that principle to the facts at hand, the High Court concluded as under:

“Now, the dividend and interest are income. The question then is whether the assessee can be said to have incurred any expenditure at all or any part of the said expenditure in respect of the exempt income viz. dividend and interest that arose out of the securities that constituted the assessee’s stock-in-trade. The answer must be in the negative.

The purpose of the purchase of the said securities was not to earn income arising therefrom, namely, dividend and interest, but to earn profits from trading in i.e. purchasing and selling the same. It is axiomatic, therefore, that the entire expenditure including administrative costs was incurred for the purchase and sale of the stock-in-trade and, therefore, towards earning the business income from the trading activity of purchasing and selling the securities. Irrespective of whether the securities yielded any income arising therefrom, such as, dividend or interest, no expenditure was incurred in relation to the same.”

24) We may also note here that the High Court referred to the judgment of the Karnataka High Court in CCI Ltd. case and concurred therewith. This judgment in CCI Ltd. is, however, a very short judgment which records the submission of counsel for the parties very briefly and thereafter the entire discussion is contained in para 5 that reads as under:
“5. When no expenditure is incurred by the assessee in earning the dividend income, no notional expenditure could be deducted from the said income. It is not the case of the assessee retaining any shares so as to have the benefit of dividend. 63% of the shares, which were purchased, are sold and the income derived therefrom is offered to tax as business income.

The remaining 37% of the shares are retained. It has remained unsold with the assessee. It is those unsold shares have yielded dividend, for which, the assessee has not incurred any expenditure at all. Though the dividend income is exempted from payment of tax, if any expenditure is incurred in earning the said income, the said expenditure also cannot be deducted.

But in this case, when the assessee has not retained shares with the intention of earning dividend income and the dividend income is incidental to his business of sale of shares, which remained unsold by the assessee, it cannot be said that the expenditure incurred in acquiring the shares has to be apportioned to the extent of dividend income and that should be disallowed from deductions. In that view of the matter, the approach of the authorities is not in conformity with the statutory provisions contained under the Act.
Therefore, the impugned orders are not sustainable and require to be set aside.”

25) At this stage, it will also be useful to refer a judgment of Calcutta High Court in Commissioner of Income Tax v. G.K.K. Capital Markets (P.) Ltd.8 which has also agreed with the view taken by the Karnataka High Court. In that case, the assessee was engaged in the business of share trading. In the computation of income, the assessee claimed long-term capital gains as exempt income and declared expenditure disallowable against it under Section 14A of the Act.

The AO treated the long-term capital gains as business income. The Appellate Tribunal found that the assessee did not have any investment and all the shares were held as stock-in-trade as was evident from the orders of the lower authorities. On those facts it held that once the assessee had kept the shares as stock-in-trade, Rule 8D of the Rules would not apply. On the questions whether the Appellate Tribunal was justified in deleting the disallowance under Section 14A computed in accordance with Rule 8D 8 (2017) 392 ITR 196 (Cal) and in holding the investments as shares stock-in-trade, the High Court held that the AO had accepted the correctness of the disallowable expenditure offered by the assessee on its claim of the amount as long-term capital gains.

He had not allowed the claim itself treating the amount as business income to thereafter disallow the offered expenditure. According to the High Court, since the finding of fact was recorded by the AO regarding the exempt income claimed being treated as business income and the shares held by the assessee having been treated as stock-in-trade, there could not have been disallowance of expenditure under Section 14A of the Act and that provision had no application.

26) It would be pertinent to mention that earlier judgment of the same High Court in the case of Dhanuka and Sons v. CIT9 was cited by the Revenue. However, this judgment was distinguished on the ground that, in that case, there was no dispute that part of the income of the assessee from its business was from dividend whereas the assessee was unable to produce any material before the authorities below showing the source from which such shares were acquired. For better understanding, it would be necessary to note the discussion in the case of Dhanuka and Sons, which was reproduced by the High Court in G.K.K. Capital Markets (P.) Ltd. Para 6 to para 9 of Dhanuka and 9 (2011) 339 ITR 319 (Cal) Sons read as under:

“6. Mr. Sarkar, the learned advocate appearing on behalf of the revenue, has, on the other hand, supported the order passed by the Tribunal and has contended that the assessee itself having failed to produce material in support of its contention, the Assessing Officer rightly assessed the deductible income on proportionate basis. Mr. Sarkar submits that the same is in conformity with Rule 8D of the Income tax Rule and thus, we should not interfere with the order passed by the Tribunal.

7. After hearing the learned counsel appearing for the parties and after going through the materials on record and the decisions cited by Mr. Khaitan, we find that the Supreme Court in the cases of CIT v. Maharastra Sugar Mills Ltd. [1971] 82 ITR 452 and Rajasthan State Warehousing Corpn. v. CIT [2000] 242 ITR 450/109 Taxman 145 having held that where there is one indivisible business giving rise to taxable income as well as exempt income, the entire expenditure incurred in relation to that business would have to be allowed even if a part of the income earned from the business is exempt from tax, section 14A of the Act was enacted to overcome those judicial pronouncements. The object of section 14A of the Act is to disallow the direct and indirect expenditure incurred in relation to income which does not form part of the total income.

8. In the case before us, there is no dispute that part of the income of the assessee from its business is from dividend which is exempt from tax whereas the assessee was unable to produce any material before the authorities below showing the source from which such shares were acquired. Mr. Khaitan strenuously contended before us that for the last few years before the relevant previous year, no new share has been acquired and thus, the loan that was taken and for which the interest is payable by the assessee was not for acquisition of those old shares and, therefore, the authorities below erred in law in giving benefit of proportionate deduction.

9. In our opinion, the mere fact that those shares were old ones and not acquired recently is immaterial. It is for the assessee to show the source of acquisition of those shares by production of materials that those were acquired from the funds available in the hands of the assessee at the relevant point of time without taking benefit of any loan. If those shares were purchased from the amount taken in loan, even for instance, five or ten years ago, it is for the assessee to show by the production of documentary evidence that such loaned amount had already been paid back and for the relevant assessment year, no interest is payable by the assessee for acquiring those old shares.

In the absence of any such materials placed by the assessee, in our opinion, the authorities below rightly held that proportionate amount should be disallowed having regard to the total income and the income from the exempt source. In the absence of any material disclosing the source of acquisition of shares which is within the special knowledge of the assessee, the assessing authority took a most reasonable approach in assessment.”

27) We have already stated as to how the two divergent opinions have emerged from different High Courts and the respective reasons in support of these conflicting outcome. Obviously, assessees are banking upon the reasons which prevailed with the High Courts that have taken the view which are favourable to the assessees and the Revenue is relying upon the reasoning given by Delhi High Court as well as Calcutta High Court in Dhanuka and Sons case. Therefore, it may not be necessary to give a detailed narrative of the arguments which were advanced by various counsel appearing for the assessees as well as counsel for the Revenue. A brief resume of their submissions would serve the purpose.

28) Insofar as assessees are concerned, their arguments are recapitulated in brief hereinbelow:

(i) The holding of investment in group companies representing controlling interest, amounts to carrying on business, as held in the various cases.

(ii) Notwithstanding that dividend income is assessable under the head “income from other sources”, in view of the mandatory prescription in Section 56 of the Act, the nature of dividend income has to be ascertained on the facts of the case. Where dividend is earned on shares held as stock-in-trade/shares purchased for acquiring/retaining controlling interest, dividend income is in the nature of business income.

(iii) Interest paid on loans borrowed for acquiring shares representing controlling interest in the investee company is allowable business expenditure in terms of Section 36(1)(iii) of the Act, since acquiring controlling interest in companies and managing, administering, financing and rehabilitating such companies are for business and/or professional purposes and not for earned dividend.

(iv) Conversely, interest paid on funds borrowed for investment in shares representing controlling interest does not represent expenditure incurred for earning dividend income and is not allowable under Section 57(iii) of the Act (prior to introduction of Section 14A).

29) Basing their case on the aforesaid principles, it was argued that when the shares were acquired, as part of promoter holding, for the purpose of acquiring controlling interest in the company, the dominant object is to keep control over the management of the company and not to earn the dividend from investment in shares. Whether dividend is declared/earned or not is immaterial and, in either case, the assessee would not liquidate the shares in investee companies.

Therefore, no expenditure was made ‘in relation to’ the income i.e. the dividend income and, therefore, Section 14A would not be attracted. In this hue, it was submitted that Section 14A was to be accorded plain and grammatical interpretation meaning thereby mandating and requiring a direct and proximate nexus/link between the expenditure actually incurred and the earning of the exempt income.

It was also argued that even if contextual/purposive interpretation is to be given, that also called for direct and proximate connection between the expenditure incurred and earning of dividend. According to the learned counsel appearing for the assessees, the legislative intention behind inserting Section 14A in this statute was to exclude both, viz. the receipts which are exempt under the provisions of the Act as well as expenditure actually incurred ‘in relation thereto’ from entering into the computation of assessable income, so as to remove the double benefit to the assessee (i) in the form of exempt income, on which no tax is leviable; and (ii) providing deduction in respect of expenditure actually incurred which directly resulted in the earning of exempt income by the assessee.

30) Mr. K. Radhakrishnan, learned senior counsel appearing for the Revenue, on the other hand, made a fervent plea to accept the view taken by the Delhi High Court. He submitted that the objective behind insertion of Section 14A of the Act manifestly pointed out that expenditure incurred in respect of income earned, which is exempted from tax, has to be disallowed. He also pointed out that this message was eloquently brought out by this Court in Walfort Share and Stock Brokers P Ltd. case.

Otherwise, argued the learned senior counsel, the assessee will get double benefit, one, in the form of exemption from income tax insofar as dividend income is concerned and other by getting deduction on account of expenditure as well. He, thus, submitted that expression ‘in relation to’ had to be given expansive meaning in order to sub-serve the purpose of the said provision. He also emphasised that literal meaning of Section 14A of the Act pointed towards that and that was equally the purpose behind the insertion of Section 14A as well.

31) We have given our thoughtful consideration to the argument of counsel for the parties on both sides, in the light of various judgments which have been cited before us, some of which have already been taken note of above.

32) In the first instance, it needs to be recognised that as per section 14A(1) of the Act, deduction of that expenditure is not to be allowed which has been incurred by the assessee “in relation to income which does not form part of the total income under this Act”.

Axiomatically, it is that expenditure alone which has been incurred in relation to the income which is includible in total income that has to be disallowed. If an expenditure incurred has no causal connection with the exempted income, then such an expenditure would obviously be treated as not related to the income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income.

33) There is no quarrel in assigning this meaning to section 14A of the Act. In fact, all the High Courts, whether it is the Delhi High Court on the one hand or the Punjab and Haryana High Court on the other hand, have agreed in providing this interpretation to section 14A of the Act. The entire dispute is as to what interpretation is to be given to the words ‘in relation to’ in the given scenario, viz. where the dividend income on the shares is earned, though the dominant purpose for subscribing in those shares of the investee company was not to earn dividend. We have two scenarios in these sets of appeals.

In one group of cases the main purpose for investing in shares was to gain control over the investee company. Other cases are those where the shares of investee company were held by the assessees as stock-in-trade (i.e. as a business activity) and not as investment to earn dividends. In this context, it is to be examined as to whether the expenditure was incurred, in respective scenarios, in relation to the dividend income or not.

34) Having clarified the aforesaid position, the first and foremost issue that falls for consideration is as to whether the dominant purpose test, which is pressed into service by the assessees would apply while interpreting Section 14A of the Act or we have to go by the theory of apportionment. We are of the opinion that the dominant purpose for which the investment into shares is made by an assessee may not be relevant. No doubt, the assessee like Maxopp Investment Limited may have made the investment in order to gain control of the investee company.

However, that does not appear to be a relevant factor in determining the issue at hand. Fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Section14A of the Act in mind, the said provision has to be interpreted, particularly, the word ‘in relation to the income’ that does not form part of total income. Considered in this hue, the principle of apportionment of expenses comes into play as that is the principle which is engrained in Section 14A of the Act. This is so held in Walfort Share and Stock Brokers P Ltd., relevant passage whereof is already reproduced above, for the sake of continuity of discussion, we would like to quote the following few lines therefrom.

“The next phrase is, “in relation to income which does not form part of total income under the Act”. It means that if an income does not form part of total income, then the related expenditure is outside the ambit of the applicability of section 14A..

xxx xxx xxx The theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14 A.”

35) The Delhi High Court, therefore, correctly observed that prior to introduction of Section 14A of the Act, the law was that when an assessee had a composite and indivisible business which had elements of both taxable and non-taxable income, the entire expenditure in respect of said business was deductible and, in such a case, the principle of apportionment of the expenditure relating to the non-taxable income did not apply. The principle of apportionment was made available only where the business was divisible.

It is to find a cure to the aforesaid problem that the Legislature has not only inserted Section 14A by the Finance (Amendment) Act, 2001 but also made it retrospective, i.e., 1962 when the Income Tax Act itself came into force. The aforesaid intent was expressed loudly and clearly in the Memorandum explaining the provisions of the Finance Bill, 2001. We, thus, agree with the view taken by the Delhi High Court, and are not inclined to accept the opinion of Punjab & Haryana High Court which went by dominant purpose theory.

The aforesaid reasoning would be applicable in cases where shares are held as investment in the investee company, may be for the purpose of having controlling interest therein. On that reasoning, appeals of Maxopp Investment Limited as well as similar cases where shares were purchased by the assessees to have controlling interest in the investee companies have to fail and are, therefore, dismissed.

36) There is yet another aspect which still needs to be looked into. What happens when the shares are held as ‘stock-in-trade’ and not as ‘investment’, particularly, by the banks? On this specific aspect, CBDT has issued circular No. 18/2015 dated November 02, 2015.

37) This Circular has already been reproduced in Para 19 above. This Circular takes note of the judgment of this Court in Nawanshahar case wherein it is held that investments made by a banking concern are part of the business or banking. Therefore, the income arises from such investments is attributable to business of banking falling under the head ‘profits and gains of business and profession’.

On that basis, the Circular contains the decision of the Board that no appeal would be filed on this ground by the officers of the Department and if the appeals are already filed, they should be withdrawn. A reading of this circular would make it clear that the issue was as to whether income by way of interest on securities shall be chargeable to income tax under the head ‘income from other sources’ or it is to fall under the head ‘profits and gains of business and profession’.

The Board, going by the decision of this Court in Nawanshahar case, clarified that it has to be treated as income falling under the head ‘profits and gains of business and profession’. The Board also went to the extent of saying that this would not be limited only to co-operative societies/Banks claiming deduction under Section 80P(2)(a)(i) of the Act but would also be applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.

38) From this, Punjab and Haryana High Court pointed out that this circular carves out a distinction between ‘stock-in-trade’ and ‘investment’ and provides that if the motive behind purchase and sale of shares is to earn profit, then the same would be treated as trading profit and if the object is to derive income by way of dividend then the profit would be said to have accrued from investment. To this extent, the High Court may be correct. At the same time, we do not agree with the test of dominant intention applied by the Punjab and Haryana High Court, which we have already discarded. In that event, the question is as to on what basis those cases are to be decided where the shares of other companies are purchased by the assessees as ‘stock-in-trade’ and not as ‘investment’. We proceed to discuss this aspect hereinafter.

39) In those cases, where shares are held as stock-in-trade, the main purpose is to trade in those shares and earn profits therefrom. However, we are not concerned with those profits which would naturally be treated as ‘income’ under the head ‘profits and gains from business and profession’. What happens is that, in the process, when the shares are held as ‘stock-in-trade’, certain dividend is also earned, though incidentally, which is also an income.

However, by virtue of Section 10 (34) of the Act, this dividend income is not to be included in the total income and is exempt from tax. This triggers the applicability of Section 14A of the Act which is based on the theory of apportionment of expenditure between taxable and non-taxable income as held in Walfort Share and Stock Brokers P Ltd. case. Therefore, to that extent, depending upon the facts of each case, the expenditure incurred in acquiring those shares will have to be apportioned.

40) We note from the facts in the State Bank of Patiala cases that the AO, while passing the assessment order, had already restricted the disallowance to the amount which was claimed as exempt income by applying the formula contained in Rule 8D of the Rules and holding that section 14A of the Act would be applicable.

In spite of this exercise of apportionment of expenditure carried out by the AO, CIT(A) disallowed the entire deduction of expenditure. That view of the CIT(A) was clearly untenable and rightly set aside by the ITAT. Therefore, on facts, the Punjab and Haryana High Court has arrived at a correct conclusion by affirming the view of the ITAT, though we are not subscribing to the theory of dominant intention applied by the High Court. It is to be kept in mind that in those cases where shares are held as ‘stock-in-trade’, it becomes a business activity of the assessee to deal in those shares as a business proposition. Whether dividend is earned or not becomes immaterial.

In fact, it would be a quirk of fate that when the investee company declared dividend, those shares are held by the assessee, though the assessee has to ultimately trade those shares by selling them to earn profits. The situation here is, therefore, different from the case like Maxopp Investment Ltd. where the assessee would continue to hold those shares as it wants to retain control over the investee company. In that case, whenever dividend is declared by the investee company that would necessarily be earned by the assessee and the assessee alone.
Therefore, even at the time of investing into those shares, the assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by the assessee. In contrast, where the shares are held as stock-in-trade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes up in order to earn profits. In the result, the appeals filed by the Revenue challenging the judgment of the Punjab and Haryana High Court in State Bank of Patiala also fail, though law in this respect has been clarified hereinabove.

41) Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the said apportionment.

In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the AO.

42) Civil Appeal No. 1423 of 2015 is filed by M/s. Avon Cycles Limited, Ludhiana, wherein the AO had invoked section 14A of the Act read with Rule 8D of the Rules and apportioned the expenditure. The CIT(A) had set aside the disallowance, which view was upturned by the ITAT in the following words:

“…Admittedly the assessee had paid total interest of Rs.2.92 crores out of which interest paid on term loan raised for specific purpose totals to Rs.1.70 crores and balance interest paid by the assessee is Rs.1.21 crores. The funds utilized by the assessee being mixed funds and in view of the provisions of Rule 8D(2)(ii) of the Income Tax Rules the disallowance is confirmed at Rs.10,49,851/-, we find no merit in the ad hoc disallowance made by the CIT (Appeals) at Rs.5,00,000/-.

Consequently, ground of appeal raised by the Revenue is partly allowed and ground raised by the assessee in cross-objection is allowed…” Taking note of the aforesaid finding of fact, the High Court has dismissed the appeal of the assessee observing as under:

“In the present case, after examining the balance-sheet of the assessee, a finding of fact has been recorded that the funds utilized by the assessee being mixed funds, therefore, the interest paid by the assessee is also an interest on the investments made. Such being a finding of fact, we do not find that any substantial question of law arises for consideration of this Court.” After going through the records and applying the principle of apportionment, which is held to be applicable in such cases, we do not find any merit in Civil Appeal No. 1423 of 2015, which is accordingly dismissed.

43) Few appeals are filed by the Revenue against the assessees which pertained to the period prior to the introduction of Rule 8D of the Rules. Here, the case is decided in favour of the assessees also on the ground that Rule 8D of the Rules is prospective in nature and could not have been made applicable in respect of the Assessment Years prior to 2007 when this Rule was inserted. This view has already been upheld by this Court in Civil Appeal No. 2165 of 2012 (Commissioner of Income Tax, Mumbai v. M/s. Essar Teleholdings Ltd. through its Manager), pronounced on January 31, 2018, that the said Rule is prospective in nature. On this ground alone, these appeals of the Revenue fail as it is not necessary to go into the other issues.

44) To sum up:

(a) Appeals of the assessees, i.e. Civil Appeal Nos. 104-109, 110-112, 130, 1423 of 2015, are dismissed.

(b) Appeals of the Revenue, i.e. Civil Appeal Nos. 3267, 19614, 10096 of 2013, 8596 of 2014, 18019 of 2017, 115, 123, 6590 of 2015, Civil Appeals arising out of SLP (C) Nos. 27054, 31417 of 2016, 20475, 23123, 32405 of 2017, Diary Nos. 36413, 39820, 39823, 41890, 41903, 41922 of 2017 and 1146 of 2018 are dismissed.

(c) Appeal of the Revenue, i.e. Civil Appeal arising out of Diary No. 41203 of 2017, is allowed.

………………………………………J.

(A.K. SIKRI) ………………………………………J.

(ASHOK BHUSHAN) NEW DELHI;

FEBRUARY 12, 2018.

Latest Supreme Court Judgement On Mutuality Principle For Co-op Hsg Societies

MASTI

In the latest judgement dated 12th March 2018 in INCOME TAX OFFICER VERSUS VENKATESH PREMISES COOPERATIVE SOCIETY LTD the Supreme Court has considered whether certain receipts by co­operative societies, from its members i.e. non­occupancy charges, transfer charges, common amenity fund charges and certain other charges, are exempt from income tax based on the doctrine of mutuality.

The challenge by the department before the Supreme Court was based on the premise that such receipts are in the nature of business income, generating profits and surplus, having an element of commerciality and therefore exigible to tax.

The assessee in Civil Appeal No.1180 of 2015 assailed the finding that such receipts, to the extent they were beyond the limits specified in the Government notification dated 09.08.2001 issued under Section 79­A of the Maharashtra Co­operative Societies Act, 1960 (hereinafter referred to as ‘the Act’) was exigible to tax falling beyond the mutuality doctrine.

The Revenue submitted before the Supreme Court that the receipts were exigible to tax no sooner that mutuality came to an end and the receipts had an element of profit, also generating a surplus, rendering commerciality to the nature of the activity.

The Supreme Court noted in the judgement the submission of the department that the benefit of a common identity between the contributors and the participants could not alone be the final test.

The Tribunal had correctly held that the transferee not being a member at the time of payment, the doctrine of mutuality had no application to such receipts. The principle of mutuality could not be invoked to prevent taxability of high value receipts by a society selling properties and then inducting such purchasers as members.

Text of Supreme Court judgement in INCOME TAX OFFICER VERSUS VENKATESH PREMISES COOPERATIVE SOCIETY LTD

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2706 OF 2018
(arising out of SLP (C) No(s). 30194/2010)

INCOME TAX OFFICER, MUMBAI ….APPELLANT(S)
VERSUS
VENKATESH PREMISES COOPERATIVE
SOCIETY LTD. ….RESPONDENT(S)

with
CIVIL APPEAL NO. 3827 OF 2012
CIVIL APPEAL NO. 3271 OF 2012
CIVIL APPEAL NO.3272 OF 2012
CIVIL APPEAL NO.1180 OF 2015
CIVIL APPEAL NO.2997 OF 2017
CIVIL APPEAL NO.8741 OF 2017

CIVIL APPEAL NO(s).2708 OF 2018
(arising out of SLP(C) No. 32061/2010)
CIVIL APPEAL NO(s).2707 OF 2018
(arising out of SLP(C) No. 30195/2010)
CIVIL APPEAL NO(s).2713 OF 2018
(arising out of SLP(C) No. 32914/2010
CIVIL APPEAL NO(s).2710 OF 2018
(arising out of SLP(C) No. 32913/2010
CIVIL APPEAL NO(s).2709 OF 2018
Signature Not Verified
(arising out of SLP(C) No. 32063/2010)
Digitally signed by
BALA PARVATHI
CIVIL APPEAL NO(s).2711 OF 2018
(arising out of SLP(C) No. 32065/2010)
Date: 2018.03.13
15:46:41 IST
Reason:

CIVIL APPEAL NO(s).2712 OF 2018
(arising out of SLP(C) No. 34087/2010)

1
CIVIL APPEAL NO(s).2716 OF 2018
(arising out of SLP(C) No. 35120/2010
CIVIL APPEAL NO(s).2714 OF 2018
(arising out of SLP(C) No. 32918/2010)
CIVIL APPEAL NO(s).2715 OF 2018
(arising out of SLP(C) No. 34061/2010)
CIVIL APPEAL NO(s).2717 OF 2018
(arising out of SLP(C) No. 128/2011)
CIVIL APPEAL NO(s).2728 OF 2018
(arising out of SLP(C) No. 16967/2011)
CIVIL APPEAL NO(s).2718 OF 2018
(arising out of SLP(C) No. 133/2011)
CIVIL APPEAL NO(s).2720 OF 2018
(arising out of SLP(C) No. 367/2011)
CIVIL APPEAL NO(s).2721 OF 2018
(arising out of SLP(C) No. 370/2011)
CIVIL APPEAL NO(s).2719 OF 2018
(arising out of SLP(C) No. 378/2011)
CIVIL APPEAL NO(s).2722 OF 2018
(arising out of SLP(C) No. 2623/2011)
CIVIL APPEAL NO(s).2724 OF 2018
(arising out of SLP(C) No. 2745/2011
CIVIL APPEAL NO(s).2726 OF 2018
(arising out of SLP(C) No. 4096/2011)
CIVIL APPEAL NO(s).2723 OF 2018
(arising out of SLP(C) No. 2744/2011)
CIVIL APPEAL NO(s).2725 OF 2018
(arising out of SLP(C) No. 3283/2011)
CIVIL APPEAL NO(s).2727 OF 2018
(arising out of SLP(C) No. 5382/2011)
CIVIL APPEAL NO(s).2729 OF 2018
(arising out of SLP(C) No. 17102/2011)
CIVIL APPEAL NO(s).2730 OF 2018
(arising out of SLP(C) No. 17667/2011)
CIVIL APPEAL NO(s).2731 OF 2018
(arising out of SLP(C) No. 19992/2012)
CIVIL APPEAL NO(s).2732 OF 2018
(arising out of SLP(C) No. 19993/2012)

2
CIVIL APPEAL NO(s).2733 OF 2018
(arising out of SLP(C) No. 17428/2015)
CIVIL APPEAL NO(s).2734 OF 2018
(arising out of SLP(C) No. 29755/2013)
CIVIL APPEAL NO(s).2735 OF 2018
(arising out of SLP(C) No. 17430/2015)
CIVIL APPEAL NO(s).2736 OF 2018
(arising out of SLP(C) No. 17431/2015)
CIVIL APPEAL NO(s).2740 OF 2018
(arising out of SLP(C) No. 37702/2016)
CIVIL APPEAL NO(s).2739 OF 2018
(arising out of SLP(C) No. 36157/2016)
CIVIL APPEAL NO(s).2737 OF 2018
(arising out of SLP(C) No. 34865/2016)
CIVIL APPEAL NO(s).2738 OF 2018
(arising out of SLP(C) No. 34866/2016)
CIVIL APPEAL NO(s).2741 OF 2018
(arising out of SLP(C) No. 4122/2017)
CIVIL APPEAL NO(s).2742 OF 2018
(arising out of SLP(C) No. 4126/2017)
CIVIL APPEAL NO(s).2743 OF 2018
(arising out of SLP(C) No. 12234/2017)
CIVIL APPEAL NO(s).2766­2767 OF 2018
(arising out of SLP(C)Nos.6582­6583/2018 @ Diary No(s). 14603/2017)
CIVIL APPEAL NO(s).2747 OF 2018
(arising out of SLP(C) No. 19340/2017)
CIVIL APPEAL NO(s).2744 OF 2018
(arising out of SLP(C) No. 18935/2017)
CIVIL APPEAL NO(s).2768­2769 OF 2018
(arising out of SLP(C)Nos.6585­6586 @ Diary No(s). 14672/2017)
CIVIL APPEAL NO(s).2771­2772 OF 2018
(arising out of SLP(C)Nos.6587­6588/2018 @ Diary No(s). 14675/2017)
CIVIL APPEAL NO(s).2770 OF 2018
(arising out of SLP(C)No.6589/2018 @ Diary No(s). 14674/2017)
CIVIL APPEAL NO(s). 2746 OF 2018
(arising out of SLP(C) No. 18944/2017)
CIVIL APPEAL NO(s). 2745 OF 2018
(arising out of SLP(C) No. 18943/2017)

3
CIVIL APPEAL NO(s). 2765 OF 2018
(arising out of SLP(C)No.6550/2018 @ Diary No(s). 18867/2017)

JUDGMENT
NAVIN SINHA, J.

Delay condoned. Leave granted in all the Special Leave Petitions.

2. A common question of law arises for consideration in this batch of appeals, whether certain receipts by co­operative societies, from its members i.e. non­occupancy charges, transfer charges, common amenity fund charges and certain other charges, are exempt from income tax based on the doctrine of mutuality. The challenge is based on the premise that such receipts are in the nature of business income, generating profits and surplus, having an element of commerciality and therefore exigible to tax. The assessee in Civil Appeal No.1180 of 2015 assails the finding that such receipts, to the extent they were beyond the limits specified in the Government notification dated 09.08.2001 issued under Section 79­A of the Maharashtra Co­operative Societies Act, 1960 (hereinafter referred to as ‘the Act’) was exigible to tax falling beyond the mutuality doctrine.

3. The primary facts, for better appreciation shall be noticed from SLP (C) No.30194 of 2010. The assessing officer held that receipt of non­occupancy charges by the society from its members, to the extent that it was beyond 10% of the service charges/maintenance charges permissible under the notification dated 09.08.2001, stands excluded from the principle of mutuality and was taxable. The order was upheld by the Commissioner of Income Tax (Appeals). The Income Tax Appellate Tribunal held that the notification dated 09.08.2001 was applicable to co­operative housing societies only and did not apply to a premises society. It further held that the transfer fee paid by the transferee member was exigible to tax as the transferee did not have the status of a member at the time of such payment and, therefore, the principles of mutuality did not apply. The High Court set aside the finding that payment by the transferee member was taxable while upholding taxability of the receipt beyond that specified in the government notification.

4. Shri K.R. Radhakrishnan, learned senior counsel appearing on behalf of the Revenue in all the appeals, submitted that the receipts were exigible to tax no sooner that mutuality came to an end and the receipts had an element of profit, also generating a surplus, rendering commerciality to the nature of the activity. The benefit of a common identity between the contributors and the participants could not alone be the final test. The Tribunal had correctly held that the transferee not being a member at the time of payment, the doctrine of mutuality had no application to such receipts. The principle of mutuality could not be invoked to prevent taxability of high value receipts by a society selling properties and then inducting such purchasers as members. The validity of the notification dated 09.08.2001 having been upheld by the Bombay High Court in The New India Co­ operative Housing Society vs. The State of Maharashtra, 2013 (2) MHLJ 666, any receipt by the society beyond that permissible in the law under the notification, was not only illegal, but also amounted to rendering of services for profit attracting an element of commerciality and thus was taxable. It stands to reason that if the society levied maintenance charge upon a resident member at the rate of Rs.1.35 per sq.ft./p.m. and charged the much higher rate of Rs.7/­ per sq.ft./p.m. as non­occupancy charges from others, the society was acting commercially to earn profit. Reliance was placed on Commissioner of Income Tax, Madras vs. Kumbakonam Mutual Benefit Fund Ltd., AIR 1965 SC 96 = (1964) 8 SCR 204, Chelmsford Club vs. Commissioner of Income Tax, (2000) 3 SCC 214.

5. Sri Radhakrishnan, sought to invoke Article 43B of the Constitution of India mandating professional management of co­operative societies, to justify taxability of receipts beyond that permissible under the government notification. Reliance was further placed on Article 243ZI to submit that economic participation had to be restricted to members and had no application to a transferee who was not a member, rendering receipt from them sans mutuality taxable.

6. The submission on behalf of the respondents shall be considered cumulatively for convenience except to the extent necessary. Relying on Mittal Court Premises Co­operative Society Ltd. vs. Income Tax Officer, (2010) 320 ITR 414 (Bom), it was submitted that the notification dated 09.08.2001 was restricted in its application to housing co­operative societies only and had no application to a premises Society. Any receipt by the latter beyond the same was thus not exigible to tax on that ground.

7. The receipt by a housing co­operative society of an amount beyond that mentioned in the notification dated 09.08.2001, if it was contrary to the law, would be actionable at the instance of the person required to pay such charges as was the case in The New India Co­operative Housing Society (supra). Such receipts will not be exigible to tax so long as the doctrine of mutuality stood satisfied by commonality of identity between the contributors and the participants, and the contribution by the members was utilised for the common benefit of all the members.

8. The receipt of transfer fee before induction to membership under some of the bye­laws shall not be liable to tax as the money was returned in the event that the person was not admitted to membership. The appropriation by the society took place only after admission to membership. Once a person was admitted to membership, the members forming a class, and the identity of the individual member being irrelevant, the principle of mutuality was automatically attracted. The receipt essentially was from a member and the fact that for convenience, part of it may have been paid by the transferee, was irrelevant as ultimately the amount was utilised for the mutual benefit of the members including the fresh inductee member.

9. Likewise, non­occupancy charges were levied for the purpose of general maintenance of the premises of the Society and provision of other facilities and general amenities to the members. The fact that such members who were not in self occupation may have had to pay at a higher rate was irrelevant so long as the receipts were utilised for the benefit of the members as a class. It is not the case of the Revenue that such receipts had been utilised for any purpose other than the common benefit of the members. Even if any amount was left over as surplus at the end of the financial year after meeting maintenance and other common charges, that would constitute surplus fund of the society to be used for the common benefit of members and to meet heavy repairs and other contingencies and will not partake the character of profit or commerciality so as to be exigible to tax.

10. Relying on Commissioner of Income Tax­21 vs. Jai Hind Co­operative House Construction Society, (2012) 349 ITR 541 (Bom), it was contended that premium receipts by a housing society for allowing a member to construct using extra FSI was also not taxable on principles of mutuality as the receipts were utilised by the society for maintenance and infrastructure including to defray the extra burden on account of the additional FSI constructed.

11. Fresh construction by a society itself, utilising extra FSI available, with grant of occupancy rights only to a member who may have had to pay more as membership fees than an existing member, will likewise not detract from the principle of mutuality as the contribution was ultimately to be used for the maintenance, repairs and facilities to members in the society including the additional construction. There could be no bifurcation between the receipts and costs to deny exemption to the extent paid by the new members to qualify the same as non­mutual. Crucially, the admission to membership preceded the payment and allotment of premises was done by draw of lottery.

12. It was next submitted that every receipt could not ipso facto be classified as income, relying on Commissioner of Income Tax, Mumbai vs. D.P. Sandhu Bros. Chembur (P) Ltd., (2005) 273 ITR 1 (SC). Referring to CIT vs. Royal Western India Turf Club Ltd., AIR 1954 SC 85, it was submitted that so long as the three tests to determine mutuality and commonality of interests were met, there could not be exigiblity to tax under the general understanding of the doctrine of mutuality that a person could not make a profit from himself. Reliance was also placed on Commissioner of Income Tax, Bihar vs. M/s. Bankipur Club Ltd., (1997) 226 ITR 97 (SC ) = (1997) 5 SCC 394 and Bangalore Club vs. Commissioner of Income Tax and Another, (2013) 350 ITR 509 (SC)= (2013) 5 SCC 509.

13. We have considered the submissions on behalf of the parties.

14. The doctrine of mutuality, based on common law principles, is premised on the theory that a person cannot make a profit from himself. An amount received from oneself, therefore, cannot be regarded as income and taxable. Section 2(24) of the Income Tax Act defines taxable income. The income of a co­operative society from business is taxable under Section 2(24)(vii) and will stand excluded from the principle of mutuality. The essence of the principle of mutuality lies in the commonality of the contributors and the participants who are also the beneficiaries. The contributors to the common fund must be entitled to participate in the surplus and the participators in the surplus are contributors to the common fund. The law envisages a complete identity between the contributors and the participants in this sense. The principle postulates that what is returned is contributed by a member. Any surplus in the common fund shall therefore not constitute income but will only be an increase in the common fund meant to meet sudden eventualities. A common feature of mutual organizations in general can be stated to be that the participants usually do not have property rights to their share in the common fund, nor can they sell their share. Cessation from membership would result in the loss of right to participate without receiving a financial benefit from the cessation of the membership.

15. The doctrine of mutuality based on common law is predicated on the principles enunciated in Styles vs. New York Life Insurance Company, (1889) 2 T.C. 460, by Lord Watson in the House of Lords in the following words:

“When a number of individuals agree to contribute funds for a common purpose, such as the payment of annuities or of capital sums, to some or all of them, on the occurrence of events certain or uncertain, and stipulate that their contributions, so far as not required for that purpose, shall be repaid to them, I cannot conceive why they should b regarded as traders, or why contributions returned to them should be regarded as profits.”
16. In Bankipur Club Ltd. (supra), considering the surplus of receipts over expenditure generated from the facilities extended by a club to its members and its exemption from tax on principles of mutuality, it was observed :­ “20……..In all these cases, the appellate tribunal as also the High Court have found that the amounts received by the clubs were for supply of drinks, refreshments or other goods as also the letting out of building for rent or the amounts received by way of admission fees, periodical subscription etc. from the members of the clubs were only for/towards charges for the privileges, conveniences and amenities provided to the members, which they were entitled to as per the rules and regulations of the respective clubs. It has also been found that different clubs realised various sums on the above counts only to afford to their members the usual privileges, advantages, conveniences and accommodation. In other words, the services offered on the above counts were not done with any profit motive and were not tainted with commerciality. The facilities were offered only as a matter of convenience for the use of the members (and their friends, if any, availing of the facilities occasionally).

21. In the light of the above findings, it necessarily follows that the receipts for the various facilities extended by the clubs to their members, as stated hereinabove as part of the usual privileges, advantages and conveniences, attached to the membership of the club, cannot be said to be “a trading activity”. The surplus — excess of receipts over the expenditure as a result of mutual arrangement, cannot be said to be “income” for the purpose of the Act.”

17. In Bangalore Club (supra), after referring to Styles, the doctrine of mutuality was explained further as follows :­ “8………..The principle relates to the notion that a person cannot make a profit from himself. An amount received from oneself is not regarded as income and is therefore not subject to tax; only the income which comes within the definition of Section 2(24) of the Act is subject to tax [income from business involving the doctrine of mutuality is denied exemption only in special cases covered under clause (vii) of Section 2(24) of the Act]. The concept of mutuality has been extended to defined groups of people who contribute to a common fund, controlled by the group, for a common benefit. Any amount surplus to that needed to pursue the common purpose is said to be simply an increase of the common fund and as such neither considered income nor taxable…….. A common feature of mutual organisations in general and of licensed clubs in particular, is that participants usually do not have property rights to their share in the common fund, nor can they sell their share. And when they cease to be members, they lose their right to participate without receiving a financial benefit from the surrender of their membership……”

18. In The Commissioner of Income Tax vs. Common Effluent Treatment Plant, (Thane Belapur) Association, (2010) 328 ITR 362 (Bom), the assessee, an incorporated association under Section 25 of the Companies Act, 1956 comprising of industries operating in the Thane­Belapur region, was set up with a view to provide a centralised treatment facility for industrial effluents in view of the inability of each industrial unit to set up a separate effluent treatment facility. Chandrachud, J. (as he then was), speaking for the Division Bench, applying the principles of mutuality to the surplus so generated not being exigible to tax, held :­ “10. ….The income of the assessee is contributed by its members. The assessee has been formed specifically with the object of providing a common effluent facility to its members. The income is not generated out of dealings with any third party. The entire contribution originates in its members and is expended only in furtherance of the object of the Association for the benefit of the members. On these facts, both the Commissioner (Appeals) and the Tribunal were justified in coming to the conclusion that the surplus so generated falls within the purview of the doctrine of mutuality and was not exigible to tax….”

19. The proceedings in the present appeals relate to different assessment years based on information gathered by the Assessing Officer pursuant to notice under Section 133(6) of the Income Tax Act. Transfer charges are payable by the outgoing member. If for convenience, part of it is paid by the transferee, it would not partake the nature of profit or commerciality as the amount is appropriated only after the transferee is inducted as a member. In the event of non­ admission, the amount is returned. The moment the transferee is inducted as a member the principles of mutuality apply. Likewise, non­occupancy charges are levied by the society and is payable by a member who does not himself occupy the premises but lets it out to a third person. The charges are again utilised only for the common benefit of facilities and amenities to the members. Contribution to the common amenity fund taken from a member disposing property is similarly utilised for meeting sudden and regular heavy repairs to ensure continuous and proper hazard free maintenance of the properties of the society which ultimately enures to the enjoyment, benefit and safety of the members. These charges are levied on the basis of resolutions passed by the society and in consonance with its bye­laws. The receipts in the present cases have indisputably been used for mutual benefit towards maintenance of the premises, repairs, infrastructure and provision of common amenities.

20. Any difference in the contributions payable by old members and fresh inductees cannot fall foul of the law as sufficient classification exists. Membership forming a class, the identity of the individual member not being relevant, induction into membership automatically attracts the doctrine of mutuality. If a Society has surplus FSI available, it is entitled to utilise the same by making fresh construction in accordance with law. Naturally such additional construction would entail extra charges towards maintenance, infrastructure, common facilities and amenities. If the society first inducts new members who are required to contribute to the common fund for availing common facilities, and then grants only occupancy rights to them by draw of lots, the ownership remaining with the society, the receipts cannot be bifurcated into two segments of receipt and costs, so as to hold the former to be outside the purview of mutuality classifying it as income of the society with commerciality.

21. Section 79A of the Maharashtra Co­operative Societies Act reads as follows:

“79A. Government’s power to give directions in the public interest, etc.­ (1) If the State Government, on receipt of a report from the Registrar or otherwise, is satisfied that in the public interest or for the purposes of securing proper implementation of co­operative production and other development programmes approved or undertaken by Government, or to secure the proper management of the business of the Society generally, or for preventing the affairs of the Society being conducted in a manner detrimental to the interests of the members or of the depositors or the creditors thereof, it is necessary to issue directions to any class of societies generally or to any Society or societies in particular, the State Government may issue directions to them from time to time, and all societies or the societies concerned, as the case may be, shall be bound to comply with such directions.
(2) The State Government may modify or cancel any directions issued under subsection (1), and in modifying or cancelling such directions may impose such conditions as it may deem fit.

(3) Where the Registrar is satisfied that any person was responsible for complying with any directions or modified directions issued to a Society under sub­ sections (1) and (2) and he has failed without any good reason or justification, to comply with the directions, the Registrar may by order­­

(a) if the person is a member of the committee of the Society, remove the member from the Committee and appoint any other person as member of the committee for the remainder of the term of his office and declare him to be disqualified to be such member for a period of six years from the date of the order:

(b) if the person is an employee of the Society, direct the committee to remove such person from employment of the Society forthwith, and if any member or members of the committee, without any good reason or justification, fail to comply with this order, remove the members, appoint other persons as members and declare them disqualified as provided in clause (a) above: Provided that, before making any order under this sub­section, the Registrar shall give a reasonable opportunity of being heard to the person or persons concerned and consult the federal Society is affiliated. Any order made by the Registrar under this section shall be final.”

22. In The New India Co­operative Housing Society (supra), the challenge by the aggrieved was to the transfer fee levied by the society in excess of that specified in the notification, which is a completely different cause of action having no relevance to the present controversy. It is not the case of the Revenue that such receipts have not been utilised for the common benefit of those who have contributed to the funds.

23. The notification dated 09.08.2001 in the relevant extract reads as follows:­ ORDER In the exercise of the powers conferred upon the State Government under Section 79­A of the Maharashtra Co­operative Societies Act, 1960 following orders are hereby issued in the larger interests of the people in the State.

1) Xxxxxx

2) The rate of premium to be charged for the transfer Flat/Premises as well as the rights and share in the share capital/property of the Co­operative Housing Society by a member in favour of another, should be determined at the General Meeting of the Society.

24. We do not find any reason to take a view different from that taken by the High Court, that the notification dated 09.08.2001 is applicable only to co­operative housing societies and has no application to a premises society which consists of non­residential premises.

25. Kumbakonam (supra), is distinguishable on its own facts. The doctrine of mutuality was held to be inapplicable because the members who had not contributed to surplus as customers were nevertheless entitled to participate and receive part of the surplus. In Chelmsford Club (supra), it was held that there was no profit motive or sharing of profits as such amongst the members. The surplus, if any, from the business was not shared by the members but was used for providing better facilities to the members. There was a clear identity between the contributors and the participators to the fund and the recipients thereof.

26. In the result, all appeals preferred by the Revenue are dismissed. Civil Appeal No.1180 of 2015 preferred by the assessee society is allowed.

……………………………J.

(Rohinton Fali Nariman) ……………………………..J.

(Navin Sinha) New Delhi, March 12, 2018.

ITEM NO.1501 COURT NO.10 SECTION IX

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

C.A.No.2706/2018 @ SLP(C)No.30194/2010 (Arising out of impugned final judgment and order dated 11- 01-2010 in ITA No.680/2009 passed by the High Court Of Judicature At Bombay) INCOME TAX OFFICER,MUMBAI Petitioner(s) VERSUS VENKATESH PREMISES COOP.STY.LTD. Respondent(s) WITH C.A.No.3271/2012 (IX) C.A.No.3272/2012 (IX) C.A.No.3827/2012 (IX) C.A.No.1180/2015 (III) C.A.No.2997/2017 (III) C.A.No.8741/2017 (III) C.A.No.2708/2018 in SLP(C)No.32061/2010 (IX) C.A.No.2707/2018 in SLP(C)No.30195/2010 (IX) C.A.No.2713/2018 in SLP(C)No.32914/2010 (IX) C.A.No.2710/2018 in SLP(C)No.32913/2010 (IX) C.A.No.2709/2018 in SLP(C)No.32063/2010 (IX) C.A.No.2711/2018 in SLP(C)No.32065/2010 (IX) C.A.No.2712/2018 in SLP(C)No.34087/2010 (IX) C.A.No.2716/2018 in SLP(C)No.35120/2010 (IX) C.A.No.2714/2018 in SLP(C)No.32918/2010 (IX) C.A.No.2715/2018 in SLP(C)No.34061/2010 (IX) C.A.No.2717/2018 in SLP(C)No.128/2011 (IX) C.A.No.2728/2018 in SLP(C)No.16967/2011 (IX) C.A.No.2718/2018 in SLP(C)No.133/2011 (IX) C.A.No.2720/2018 in SLP(C)No.367/2011 (IX) C.A.No.2721/2018 in SLP(C)No.370/2011 (IX) C.A.No.2719/2018 in SLP(C)No.378/2011 (IX) C.A.No.2722/2018 in SLP(C)No.2623/2011 (IX) C.A.No.2724/2018 in SLP(C)No.2745/2011 (IX) C.A.No.2726/2018 in SLP(C)No.4096/2011 (IX) C.A.No.2723/2018 in SLP(C)No.2744/2011 (IX) C.A.No.2725/2018 in SLP(C)No.3283/2011 (IX) C.A.No.2727/2018 in SLP(C)No.5382/2011 (IX) C.A.No.2729/2018 in SLP(C)No.17102/2011 (IX) C.A.No.2730/2018 in SLP(C)No.17667/2011 (IX) C.A.No.2731/2018 in SLP(C)No.19992/2012 (IX) C.A.No.2732/2018 in SLP(C)No.19993/2012 (IX) C.A.No.2733/2018 in SLP(C)No.17428/2015 (IX) C.A.No.2734/2018 in SLP(C)No.29755/2013 (IX) C.A.No.2735/2018 in SLP(C)No.17430/2015 (IX) C.A.No.2736/2018 in SLP(C)No.17431/2015 (IX) C.A.No.2740/2018 in SLP(C)No.37702/2016 (IX) C.A.No.2739/2018 in SLP(C)No.36157/2016 (IX) C.A.No.2737/2018 in SLP(C)No.34865/2016 (IX) C.A.No.2738/2018 in SLP(C)No.34866/2016 (IX) C.A.No.2741/2018 in SLP(C)No.4122/2017 (IX) C.A.No.2742/2018 in SLP(C)No.4126/2017 (IX) C.A.No.2743/2018 in SLP(C)No.12234/2017 (IX) C.A.Nos.2766-2767/2018 @ SLP(C)Nos.6582-6583/2018 @ Diary No(s). 14603/2017 (IX) C.A.No.2747/2018 in SLP(C)No.19340/2017 (IX) C.A.No.2744/2018 in SLP(C)No.18935/2017 (IX) C.A.Nos.2768-2769/2018 @ SLP(C)Nos.6585-6586/2018 @ Diary No(s). 14672/2017 (IX) C.A.Nos.2771-2772/2018 @ SLP(C)Nos.6587-6588/2018 @ Diary No(s). 14675/2017 (IX) C.A.No.2770/2018 @ SLP(C)No.6589/2018 @ Diary No(s).14674/2017 (IX) C.A.No.2746/2018 in SLP(C)No.18944/2017 (IX) C.A.No.2745/2018 in SLP(C)No.18943/2017 (IX) C.A.No.2765/2018 @ SLP(C)No.6550/2018 @ Diary No(s).18867/2017 (IX) Date : 12-03-2018 These petitions were called on for pronouncement of judgment today.

For Petitioner(s) Mrs. Anil Katiyar,AOR Mr. B.V. Balaram Das,AOR Mr. Shiv Kumar Suri,Aor Mr. Shikhil Suri,Adv.

Mr. Saswat Pattnaik,Adv.

For Respondent(s) Mr. Salil Kapoor,Adv.

Mr. Sanat Kapoor,Adv.

Mr. Sumit Lalchandani,Adv.

Ms. Soumya Singh,Adv.

Ms. Ananya Kapoor,Adv.

Mr. Kislaya Parashar,Adv.

Mr. Rajeev Sharma,Adv.

Mr. Deepak Goel,Adv.

Mr. Firasat Ali Siddiqi,Adv.

Mr. A.D. Kumar,Adv.

Mr. Anil Kr. Chopra,Adv.

Mr. Siddhartha Chowdhury,AOR Ms. Nandini Gore,Adv.

Ms. Sonia Nigam,Adv.

Mr. Mandeep Kalra,Adv.

Ms. Manik Karanjawala,Adv.

For M/s. Karanjawala & Co.,AOR Mr. Pratap Venugopal,Adv.

Ms. Surekha Raman,Adv.

Ms. Niharika,Adv.

Ms. Kanika Kalaiyarasan,Adv.

For M/s. K.J. John & Co.,AOR Mr. S. C. Birla,AOR Mr. Kamal Mohan Gupta,AOR Mrs. Shally Bhasin,AOR Mr. Nikhil Nayyar,AOR Mr. Rashmikumar Manilal Vithlani,AOR Mr. V.N. Raghupathy,AOR Mrs. V.D. Khanna,AOR Mr. Senthil Jagadeesan,AOR Hon’ble Mr. Justice Navin Sinha pronounced the Reportable judgment of the Bench comprising Hon’ble Mr. Justice Rohinton Fali Nariman and His Lordship.

Delay condoned.

Leave granted in all the SLPs.

The appeals preferred by the Revenue are dismissed and Civil Appeal No.1180/2015 preferred by the assessee-society is allowed in terms of the signed Reportable judgment.

Pending application, if any, stands disposed of.

(Sarita Purohit) (Suman Jain)
Court Master Branch Officer

(Signed Reportable judgment is placed on the file)

Supreme Court judgement in Danamma vs. Amar On HUF Rights Of Daughters

MASTI

In DANAMMA @ SUMAN SURPUR VERSUS AMAR, the Supreme Court has decided the issue whether married daughters can be said to be the coparceners in the Hindu Undivided Family (HUF) as they were born prior to the enactment of Hindu Succession Act, 1956.

In the Supreme Court has held that a fundamental change has been brought forward in the Hindu Succession Act, 1956 by amending it in 2005.

The Court noted in the judgement dated 01.02.2018 that Section 6, as amended, stipulates that on and from the commencement of the amended Act, 2005, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son.

It is held in the judgement that the status conferred upon sons under the old section and the old Hindu Law was to treat them as coparceners since birth.

The Supreme Court has held in the judgement that the amended provision now statutorily recognizes the rights of coparceners of daughters as well since birth.

Section 6 of the Hindu Succession Act, 1956 uses the words in the same manner as the son. It should therefore be apparent that both the sons and the daughters of a coparcener have been conferred the right of becoming coparceners by birth.

It is the very factum of birth in a coparcenary that creates the coparcenary, therefore the sons and daughters of a coparcener become coparceners by virtue of birth.

The Supreme Court further held that devolution of coparcenary property is the later stage of and a consequence of death of a coparcener. The first stage of a coparcenary is obviously its creation as explained above, and as is well recognized.

It explained that one of the incidents of coparcenary is the right of a coparcener to seek a severance of status. Hence, the rights of coparceners emanate and flow from birth (now including daughters) as is evident from sub-s (1)(a) and (b).

Text of Supreme Court’s judgement in DANAMMA @ SUMAN SURPUR vs. Amar

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 188-189 OF 2018
[@SLP(C) Nos. 10638-10639 of 2013]

DANAMMA @ SUMAN SURPUR & ANR. …..APPELLANT(S)

VERSUS

AMAR & ORS. …..RESPONDENT(S)

JUDGMENT
A.K. SIKRI, J.

The appellants herein, two in number, are the daughters of one, Gurulingappa Savadi, propositus of a Hindu Joint Family. Apart from these two daughters, he had two sons, namely, Arunkumar and Vijay. Gurulingappa Savadi died in the year 2001 leaving behind the aforesaid two daughters, two sons and his widow, Sumitra. After his death, Amar, S/o Arunkumar filed the suit for partition and a separate possession of the suit property described at Schedule B to E in the plaint stating that the two sons and widow were in joint possession of the aforesaid properties as coparceners and properties mentioned in Schedule B was acquired out of the joint family nucleus in the name of Savadi. Case set up by him was that the appellants herein were not the coparceners in the said joint family as they were born prior to the enactment of Hindu Succession Act, 1956 (hereinafter referred to as the ‘Act’). It was also pleaded that they were married daughters and at the time of their marriage they had received gold and money and had, hence, relinquished their share.

2) The appellants herein contested the suit by claiming that they were also entitled to share in the joint family properties, being daughters of Gurulingappa Savadi and for the reason that he had died after coming into force the Act of 1950.

3) The trial court, while decreeing the suit held that the appellants were not entitled to any share as they were born prior to the enactment of the Act and, therefore, could not be considered as coparceners. The trial court also rejected the alternate contention that the appellants had acquired share in the said properties, in any case, after the amendment in the Act vide amendment Act of 2005. This view of the trial court has been upheld by the High Court in the impugned judgement dated January 25, 2012 thereby confirming the decree dated August 09, 2007 passed in the suit filed for partition.

4) In the aforesaid backdrop, the question of law which arises for consideration in this appeal is as to whether, the appellants, daughters of Gurulingappa Savadi, could be denied their share on the ground that they were born prior to the enactment of the Act and, therefore, cannot be treated as coparceners? Alternate question is as to whether, with the passing of Hindu Succession (Amendment) Act, 2005, the appellants would become coparcener “by birth” in their “own right in the same manner as the son” and are, therefore, entitled to equal share as that of a son?

5) Though, we have mentioned the gist of the lis involved in this case along with brief factual background in which it has arisen, some more facts which may be necessary for understanding the genesis of issue involved may also be recapitulated. We may start with the genealogy of the parties, it is as under:

“ Guralingappa=Sumitra
(Def.8)

————————————————————— Mahandanda Arunkumar @ Arun=Sarojini Vijay Danamma (Def. 7) (Def.1) (dead) (Def.2) (Def.5) (Def. 6)

———————————————-

Sheetal Amar Triveni
(Def. 3) (Plff) (Def. 4) ”

6) Respondent No. 1 herein (the plaintiff) filed the suit on July 01, 2002 claiming 1/15th share in the suit schedule properties. In the said suit, he mentioned the properties which needed partition.

7) The plaint schedule C compromised of the house properties belonging to the joint family. The plaint schedule D comprised of the shop properties belonging to the joint family. The plaint schedule E comprised of the machineries and movable belonging to the joint family. The plaintiff averred that the plaint schedule properties belonged to the joint family and that defendant no. 1, the father of the plaintiff was neglecting the plaintiff and his siblings and sought partition of the suit schedule properties. The plaintiff contended that all the suit schedule properties were the joint family properties. The plaintiff contended in para 5 of the plaint that the propositus, Guralingappa died 1 year prior to the filing of the suit. In para 7 of the plaint, the plaintiff contended that defendant no. 1 had 1/3rd share and defendant no. 5 and 8 had 1/3 rd share each in the suit schedule properties. The plaintiff also contended that defendants 6 and 7 did not have any share in the suit schedule properties.

8) Defendant no. 1 (father of the plaintiff) and son of Guralingappa Savadi did not file any written statement. Defendant nos. 2, 3 and 4 filed their separate written statements supporting the claim of the plaintiff. Defendant no. 5 (respondent no. 5 herein and son of Guralingappa Savadi), however, contested the suit. He, inter alia, contended that after the death of Guralingappa, an oral partition took place between defendant no. 1, defendant no. 5 and others and in the said partition, defendant no. 1 was allotted certain properties and defendant no. 5 was allotted certain other properties and defendant no. 8, Sumitra, wife of Guralingappa Savadi was allotted certain other properties. Defendant no. 5 further contended that defendant nos. 6 and 7 were not allotted any properties in the said alleged oral partition.

9) Defendant no. 5 further contended that one of the properties, namely, C.T.S. No. 774 and also certain other properties were not joint family properties.

10) The appellants claimed that they were also entitled to their share in the property. After framing the issues and recording the evidence, the trial court by its judgment and decree dated August 09, 2007 held that the suit schedule properties were joint family properties except CTS No. 774 (one of the house properties in plaint C schedule).

11) The trial court held that the plaintiff, defendant nos. 2 to 4 were entitled to 1/8th share in the joint family properties. The trial court further noted that defendant no. 8 (wife of Gurulingappa Savadi) died during the pendency of the suit intestate and her share devolved in favour of defendants no. 1 and 5 only and, therefore, defendant nos. 1 and 2 were entitled to ½ share in the said share. The trial court passed the following order:

“The suit of the plaintiff is decreed holding that the plaintiff is entitled for partition and separate possession of his 1/8th share in the suit ‘B’, ‘C’ and ‘D’ schedule properties (except CTS No. 774) and also in respect of the Machinery’s stated in the report of the commissioner. The commissioners report Ex. P16 which contains the list of machinery’s to form part of the decree.
The defendants 2 to 4 are each entitled to a/8th share and the 5th defendant is entitled for 4/8 share in the above said properties.”

12) The trial court, thus, denied any share to the appellants.

13) Aggrieved by the said judgment and decree of the trial court, the defendant nos. 6 and 7 filed an appeal bearing R.F.A. No. 322 of 2008 before the High Court seeking equal share as that of the sons of the propositus, namely, defendant nos. 1 and 5.

14) The High Court by its impugned judgment and order dated January 25, 2012 dismissed the appeal. Thereafter, on March 04, 2012 defendant nos. 6 and 7 filed a review petition bearing no. 1533 of 2012 before the High Court, which met the same fate.

15) We have heard the learned counsel for the parties. Whereas, the learned counsel for the appellants reiterated his submissions which were made before the High Court as well and noted above, learned counsel for the respondents refuted those submissions by relying upon the reason given by the High Court in the impugned judgment.

16) In the first instance, let us take note of the provisions of Section 6 of the Act, as it stood prior to its amendment by the Amendment Act, 2005. This provision reads as under:

“6. Devolution of interest in coparcenary property.—When a male Hindu dies after the commencement of this Act, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act:

Provided that, if the deceased had left him surviving a female relative specified in Class I of the Schedule or a male relative specified in that class who claims through such female relative, the interest of the deceased in the Mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship.

Explanation 1.—For the purposes of this section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.
Explanation 2.—Nothing contained in the proviso to this section shall be construed as enabling a person who had separated himself from the coparcenary before the death of the deceased or any of his heirs to claim on intestacy a share in the interest referred to therein.”

17) No doubt, Explanation 1 to the aforesaid Section states that the interest of the deceased Mitakshara coparcenary property shall be deemed to be the share in the property that would have been allotted to him if the partition of the property had taken place immediately before his death, irrespective whether he was entitled to claim partition or not. This Explanation came up for interpretation before this Court in Anar Devi & Ors. v. Parmeshwari Devi & Ors.1. The Court quoted, with approval, the following passage from the authoritative treatise of Mulla, Principles of Hindu Law, 17th Edn., Vol. II, p. 250 wherein the learned 1 (2006) 8 SCC 656 author made following remarks while interpreting Explanation 1 to Section 6:

“…Explanation 1 defines the expression ‘the interest of the deceased in Mitakshara coparcenary property’ and incorporates into the subject the concept of a notional partition. It is essential to note that this notional partition is for the purpose of enabling succession to and computation of an interest, which was otherwise liable to devolve by survivorship and for the ascertainment of the shares in that interest of the relatives mentioned in Class I of the Schedule. Subject to such carving out of the interest of the deceased coparcener the other incidents of the coparcenary are left undisturbed and the coparcenary can continue without disruption. A statutory fiction which treats an imaginary state of affairs as real requires that the consequences and incidents of the putative state of affairs must flow from or accompany it as if the putative state of affairs had in fact existed and effect must be given to the inevitable corollaries of that state of affairs.”

7. The learned author further stated that:

“[T]he operation of the notional partition and its inevitable corollaries and incidents is to be only for the purposes of this section, namely, devolution of interest of the deceased in coparcenary property and would not bring about total disruption of the coparcenary as if there had in fact been a regular partition and severance of status among all the surviving coparceners.”
8. According to the learned author, at pp. 253-54, the undivided interest “of the deceased coparcener for the purpose of giving effect to the rule laid down in the proviso, as already pointed out, is to be ascertained on the footing of a notional partition as of the date of his death. The determination of that share must depend on the number of persons who would have been entitled to a share in the coparcenary property if a partition had in fact taken place immediately before his death and such person would have to be ascertained according to the law of joint family and partition. The rules of Hindu law on the subject in force at the time of the death of the coparcener must, therefore, govern the question of ascertainment of the persons who would have been entitled to a share on the notional partition”.

18) Thereafter the Court spelled out the manner in which the statutory fiction is to be construed by referring to certain judgments and summed up the position as follows:

“11. Thus we hold that according to Section 6 of the Act when a coparcener dies leaving behind any female relative specified in Class I of the Schedule to the Act or male relative specified in that class claiming through such female relative, his undivided interest in the Mitakshara coparcenary property would not devolve upon the surviving coparcener, by survivorship but upon his heirs by intestate succession. Explanation 1 to Section 6 of the Act provides a mechanism under which undivided interest of a deceased coparcener can be ascertained and i.e. that the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.

It means for the purposes of finding out undivided interest of a deceased coparcener, a notional partition has to be assumed immediately before his death and the same shall devolve upon his heirs by succession which would obviously include the surviving coparcener who, apart from the devolution of the undivided interest of the deceased upon him by succession, would also be entitled to claim his undivided interest in the coparcenary property which he could have got in notional partition.”

19) This case clearly negates the view taken by the High Court in the impugned judgment.

20) That apart, we are of the view that amendment to the aforesaid Section vide Amendment Act, 2005 clinches the issue, beyond any pale of doubt, in favour of the appellants. This amendment now confers upon the daughter of the coparcener as well the status of coparcener in her own right in the same manner as the son and gives same rights and liabilities in the coparcener properties as she would have had if it had been son. The amended provision reads as under:

“6. Devolution of interest in coparcenary property.―(1) On and from the commencement of the Hindu Succession (Amendment) Act, 2005 (39 of 2005), in a Joint Hindu family governed by the Mitakshara law, the daughter of a coparcener shall,―

(a) by birth become a coparcener in her own right the same manner as the son;

(b) have the same rights in the coparcenery property as she would have had if she had been a son;

(c) be subject to the same liabilities in respect of the said coparcenery property as that of a son, and any reference to a Hindu Mitakshara coparcener shall be deemed to include a reference to a daughter of a coparcener:

Provided that nothing contained in this sub-section shall affect or invalidate any disposition or alienation including any partition or testamentary disposition of property which had taken place before the 20th day of December, 2004.

(2) Any property to which a female Hindu becomes entitled by virtue of sub-section (1) shall be held by her with the incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this Act or any other law for the time being in force, as property capable of being disposed of by her by testamentary disposition.

(3) Where a Hindu dies after the commencement of the Hindu Succession (Amendment) Act, 2005 (39 of 2005), his interest in the property of a Joint Hindu family governed by the Mitakshara law, shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship, and the coparcenery property shall be deemed to have been divided as if a partition had taken place and,―

(a) the daughter is allotted the same share as is allotted to a son;

(b) the share of the pre-deceased son or a pre-deceased daughter, as they would have got had they been alive at the time of partition, shall be allotted to the surviving child of such pre-deceased son or of such pre-deceased daughter; and

(c) the share of the pre-deceased child of a pre-deceased son or of a pre-deceased daughter, as such child would have got had he or she been alive at the time of the partition, shall be allotted to the child of such pre-deceased child of the pre-deceased son or a pre-deceased daughter, as the case may be.

Explanation.―For the purposes of this sub-section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.

(4) After the commencement of the Hindu Succession (Amendment) Act, 2005 (39 of 2005), no court shall recognise any right to proceed against a son, grandson or great-grandson for the recovery of any debt due from his father, grandfather or great-grandfather solely on the ground of the pious obligation under the Hindu law, of such son, grandson or great-grandson to discharge any such debt:

Provided that in the case of any debt contracted before the commencement of the Hindu Succession (Amendment) Act, 2005 (39 of 2005), nothing contained in this sub-section shall affect―

(a) the right of any creditor to proceed against the son, grandson or great-grandson, as the case may be; or

(b) any alienation made in respect of or in satisfaction of, any such debt, and any such right or alienation shall be enforceable under the rule of pious obligation in the same manner and to the same extent as it would have been enforceable as if the Hindu Succession (Amendment) Act, 2005 (39 of 2005) had not been enacted.

Explanation.―For the purposes of clause (a), the expression “son”, “grandson” or “great-grandson” shall be deemed to refer to the son, grandson or great-grandson, as the case may be, who was born or adopted prior to the commencement of the Hindu Succession (Amendment) Act, 2005 (39 of 2005).

(5) Nothing contained in this section shall apply to a partition, which has been effected before the 20th day of December, 2004.

Explanation.―For the purposes of this section “partition” means any partition made by execution of a deed of partition duly registered under the Registration Act, 1908 (16 of 1908) or partition effected by a decree of a court.]”

21) The effect of this amendment has been the subject matter of pronouncements by various High Courts, in particular, the issue as to whether the right would be conferred only upon the daughters who are born after September 9, 2005 when Act came into force or even to those daughters who were born earlier.

Bombay High Court in Vaishali Satish Gonarkar v. Satish Keshorao Gonarkar2 had taken the view that the provision cannot be made applicable to all daughters born even prior to the amendment, when the Legislature itself specified the posterior date from which the Act would come into force.

This view was contrary to the view taken by the same High Court in Sadashiv Sakharam Patil v. Chandrakant Gopal Desale3. Matter was referred to the Full Bench and the judgment of the Full Bench is reported as Badrinarayan Shankar Bhandari v. Omprakash Shankar Bhandari4.

The Full Bench held that clause (a) of sub-section (1) of Section 6 would be prospective in operation whereas clause (b) and (c) and other parts of sub-section (1) as well as sub-section (2) would be retroactive in operation. It held that amended Section 6 applied to daughters born 2 AIR 2012 Bom 110 3 2011 (5) Bom CR 726 4 AIR 2014 Bom 151 prior to June 17, 1956 (the date on which Hindu Succession Act came into force) or thereafter (between June 17, 1956 and September 8, 2005) provided they are alive on September 9, 2005 i.e. on the date when Amended Act, 2005 came into force. Orissa, Karnataka and Delhi High Court have also held to the same effect 5.

22) The controversy now stands settled with the authoritative pronouncement in the case of Prakash & Ors. v. Phulavati & Ors.6 which has approved the view taken by the aforesaid High Courts as well as Full Bench of the Bombay High Court. Following discussion from the said judgment is relevant:

“17. The text of the amendment itself clearly provides that the right conferred on a “daughter of a coparcener” is “on and from the commencement of the Hindu Succession (Amendment) Act, 2005”. Section 6(3) talks of death after the amendment for its applicability. In view of plain language of the statute, there is no scope for a different interpretation than the one suggested by the text of the amendment. An amendment of a substantive provision is always prospective unless either expressly or by necessary intendment it is retrospective. [Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24, paras 22 to 27]

In the present case, there is neither any express provision for giving retrospective effect to the amended provision nor necessary intendment to that effect. Requirement of partition being registered can have no application to statutory notional partition on opening of succession as per unamended provision, having regard to nature of such partition which is by operation of law.

The intent and effect of the amendment will be considered a little later. On this finding, the view of the High Court cannot be sustained.

18. The contention of the respondents that the amendment 5 AIR 2008 Ori 133: Pravat Chandra Pattnaik v. Sarat Chandra Pattnaik; ILR 2007 Kar 4790: Sugalabai v. Gundappa A. Maradi and 197 (2013) DLT 154: Rakhi Gupta v. Zahoor Ahmad 6 (2016) 2 SCC 36 should be read as retrospective being a piece of social legislation cannot be accepted.

Even a social legislation cannot be given retrospective effect unless so provided for or so intended by the legislature. In the present case, the legislature has expressly made the amendment applicable on and from its commencement and only if death of the coparcener in question is after the amendment.

Thus, no other interpretation is possible in view of the express language of the statute. The proviso keeping dispositions or alienations or partitions prior to 20-12-2004 unaffected can also not lead to the inference that the daughter could be a coparcener prior to the commencement of the Act.

The proviso only means that the transactions not covered thereby will not affect the extent of coparcenary property which may be available when the main provision is applicable. Similarly, Explanation has to be read harmoniously with the substantive provision of Section 6(5) by being limited to a transaction of partition effected after 20-12-2004. Notional partition, by its very nature, is not covered either under the proviso or under sub-section (5) or under the Explanation.

19. Interpretation of a provision depends on the text and the context. [RBI v. Peerless General Finance & Investment Co. Ltd., (1987) 1 SCC 424, p. 450, para 33] Normal rule is to read the words of a statute in ordinary sense.

In case of ambiguity, rational meaning has to be given. [Kehar Singh v. State (Delhi Admn.), (1988) 3 SCC 609 : 1988 SCC (Cri) 711] In case of apparent conflict, harmonious meaning to advance the object and intention of legislature has to be given. [District Mining Officerv. TISCO, (2001) 7 SCC 358]

20. There have been number of occasions when a proviso or an explanation came up for interpretation. Depending on the text, context and the purpose, different rules of interpretation have been applied. [S. Sundaram Pillai v. V.R. Pattabiraman, (1985) 1 SCC 591]

21. Normal rule is that a proviso excepts something out of the enactment which would otherwise be within the purview of the enactment but if the text, context or purpose so require a different rule may apply. Similarly, an explanation is to explain the meaning of words of the section but if the language or purpose so require, the explanation can be so interpreted. Rules of interpretation of statutes are useful servants but difficult masters. [Keshavji Ravji & Co. v. CIT, (1990) 2 SCC 231 : 1990 SCC (Tax) 268] Object of interpretation is to discover the intention of legislature.

22. In this background, we find that the proviso to Section 6(1) and sub-section (5) of Section 6 clearly intend to exclude the transactions referred to therein which may have taken place prior to 20-12-2004 on which date the Bill was introduced.

Explanation cannot permit reopening of partitions which were valid when effected. Object of giving finality to transactions prior to 20-12-2004 is not to make the main provision retrospective in any manner. The object is that by fake transactions available property at the introduction of the Bill is not taken away and remains available as and when right conferred by the statute becomes available and is to be enforced.

Main provision of the amendment in Sections 6(1) and (3) is not in any manner intended to be affected but strengthened in this way. Settled principles governing such transactions relied upon by the appellants are not intended to be done away with for period prior to 20-12-2004. In no case statutory notional partition even after 20-12-2004 could be covered by the Explanation or the proviso in question.

23. Accordingly, we hold that the rights under the amendment are applicable to living daughters of living coparceners as on 9-9-2005 irrespective of when such daughters are born. Disposition or alienation including partitions which may have taken place before 20-12-2004 as per law applicable prior to the said date will remain unaffected. Any transaction of partition effected thereafter will be governed by the Explanation.”

23) The law relating to a joint Hindu family governed by the Mitakshara law has undergone unprecedented changes. The said changes have been brought forward to address the growing need to merit equal treatment to the nearest female relatives, namely daughters of a coparcener.

The section stipulates that a daughter would be a coparcener from her birth, and would have the same rights and liabilities as that of a son. The daughter would hold property to which she is entitled as a coparcenary property, which would be construed as property being capable of being disposed of by her either by a will or any other testamentary disposition.

These changes have been sought to be made on the touchstone of equality, thus seeking to remove the perceived disability and prejudice to which a daughter was subjected.

The fundamental changes brought forward about in the Hindu Succession Act, 1956 by amending it in 2005, are perhaps a realization of the immortal words of Roscoe Pound as appearing in his celebrated treaties, The Ideal Element in Law, that “the law must be stable and yet it cannot stand still. Hence all thinking about law has struggled to reconcile the conflicting demands of the need of stability and the need of change.”

24) Section 6, as amended, stipulates that on and from the commencement of the amended Act, 2005, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son. It is apparent that the status conferred upon sons under the old section and the old Hindu Law was to treat them as coparceners since birth.

The amended provision now statutorily recognizes the rights of coparceners of daughters as well since birth. The section uses the words in the same manner as the son. It should therefore be apparent that both the sons and the daughters of a coparcener have been conferred the right of becoming coparceners by birth. It is the very factum of birth in a coparcenary that creates the coparcenary, therefore the sons and daughters of a coparcener become coparceners by virtue of birth.

Devolution of coparcenary property is the later stage of and a consequence of death of a coparcener. The first stage of a coparcenary is obviously its creation as explained above, and as is well recognized. One of the incidents of coparcenary is the right of a coparcener to seek a severance of status. Hence, the rights of coparceners emanate and flow from birth (now including daughters) as is evident from sub-s (1)(a) and (b).

25) Reference to the decision of this Court, in the case of State Bank of India v. Ghamandi Ram7 in essential to understand the incidents of coparceneryship as was always inherited in a Hindu Mitakshara coparcenary:

“According to the Mitakshara School of Hindu Law all the property of a Hindu joint family is held in collective ownership by all the coparceners in a quasi-corporate capacity. The textual authority of the Mitakshara lays down in express terms that the joint family property is held in trust for the joint family members then living and thereafter to be born (See Mitakshara, Ch. I. 1-27).

The incidents of coparcenership under the Mitakshara law are: first, the lineal male descendants of a person up to the third generation, acquire on birth ownership in the ancestral properties is common;

secondly, that such descendants can at any time work out their rights by asking for partition; thirdly, that till partition each member has got ownership extending over the entire property, conjointly with the rest; fourthly, that as a result of such co-ownership the possession and enjoyment of the properties is common; fifthly, that no alienation of the property is possible unless it be for necessity, without the concurrence of the coparceners, and sixthly, that the interest of a deceased member lapses on his death to the survivors.”

26) Hence, it is clear that the right to partition has not been abrogated.

7 AIR 1969 SC 1330.

The right is inherent and can be availed of by any coparcener, now even a daughter who is a coparcener.

27) In the present case, no doubt, suit for partition was filed in the year 2002. However, during the pendency of this suit, Section 6 of the Act was amended as the decree was passed by the trial court only in the year 2007.

Thus, the rights of the appellants got crystallised in the year 2005 and this event should have been kept in mind by the trial court as well as by the High Court.

This Court in Ganduri Koteshwaramma & Anr. v. Chakiri Yanadi & Anr.8 held that the rights of daughters in coparcenary property as per the amended S. 6 are not lost merely because a preliminary decree has been passed in a partition suit.

So far as partition suits are concerned, the partition becomes final only on the passing of a final decree. Where such situation arises, the preliminary decree would have to be amended taking into account the change in the law by the amendment of 2005.

28) On facts, there is no dispute that the property which was the subject matter of partition suit belongs to joint family and Gurulingappa Savadi was propositus of the said joint family property. In view of our aforesaid discussion, in the said partition suit, share will devolve upon the appellants as well.

Since, Savadi died leaving behind two sons, two daughters and a widow, both the appellants would be entitled to 1/5 th 8 (2011) 9 SCC 788 share each in the said property. Plaintiff (respondent No.1) is son of Arun Kumar (defendant No.1).

Since, Arun Kumar will have 1/5 th share, it would be divided into five shares on partition i.e. between defendant No.1 Arun Kumar, his wife defendant No.2, his two daughters defendant Nos.3 and 4 and son/plaintiff (respondent No.1). In this manner, the plaintiff/respondent No.1 would be entitled to 1/25 th share in the property.

29) The appeals are allowed in the aforesaid terms and decree of partition shall be drawn by the trial court accordingly.

No order as to costs.

………………………………………J.

(A.K. SIKRI) ………………………………………J.

(ASHOK BHUSHAN) NEW DELHI;

FEBRUARY 1, 2018.

Deadline for linking Aadhaar Extended By Supreme Court

MASTI

The Supreme Court passed an order on 13th March 2018 extended the deadline for linking Aadhaar cards to services, such as bank accounts and mobile phone connections, from March 31 till it decides on petitions challenging the Constitutional validity of The Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016.

This was ordered by a five-judge Constitution bench headed by Chief Justice of India Dipak Misra and including Justices A K Sikri, A M Khanwilkar, D Y Chandrachud and Ashok Bhushan.

The Supreme stated that that its interim order of December 15, 2017, fixing the March deadline, “shall stand extended till the matter is finally heard and the judgment is pronounced”.

It was made clear in the Supreme Court’s order that the direction shall also apply to the Tatkal passport scheme for which Aadhaar had been mandated.

In other words, the Passports (1st Amendment) Rules, 2018 will also be eligible for the aadhaar deadline extension.

However, the extension will not disturb the disbursement of subsidies under Section 7 of the Aadhaar Act.

Section 7 of the Aadhaar Act states: “…the Central Government or, as the case may be, the State Government may, for the purpose of establishing identity of an individual as a condition for receipt of a subsidy, benefit or service for which the expenditure is incurred from, or the receipt therefrom forms part of, the Consolidated Fund of India, require that such individual undergo authentication, or furnish proof of possession of Aadhaar number or in the case of an individual to whom no Aadhaar number has been assigned, such individual makes an application for enrolment:

Provided that if an Aadhaar number is not assigned to an individual, the individual shall be offered alternate and viable means of identification for delivery of the subsidy, benefit or service.”

The Government said the Centre was prepared for the extension when the deadline ends by March-end.

The Supreme Court’s order also made it clear that the guidelines contained in the December order, allowing those who did not have Aadhaar cards yet to furnish the number of their Aadhaar applications for opening bank accounts, will continue to operate.

The interim order of the Supreme Court had stated that the extension would cover “the schemes of the Ministries/Departments of the Union government to all state governments in similar terms”. This will also remain in force.

Aadhaar Linking Deadline Extended Indefinitely By Supreme Court