Author: staff

Implementation of e-Verification Scheme-2021

MASTI

Income Tax Department has identified certain mismatches between third party information on interest and dividend income, and the Income Tax Return (ITR) filed by taxpayers

Taxpayers can provide response on-screen functionality on Compliance portal of the e-filing website https://eportal.incometax.gov.in to reconcile mismatch

Taxpayers are being informed of mismatch through SMS and emails as per details available with Income Tax Department

Posted On: 26 FEB 2024 7:36PM by PIB Delhi

The Income Tax Department has identified certain mismatches between the information received from third parties on interest and dividend income, and the Income Tax Return (ITR) filed by taxpayers. In many cases, taxpayers have not even filed their ITR.

In order to reconcile the mismatch, an on-screen functionality has been made available in the Compliance portal of the e-filing website  https://eportal.incometax.gov.in  for taxpayers to provide their response. At present, the information mismatches relating to Financial Years 2021-22 and 2022-23 have been displayed on the Compliance portal. The taxpayers are also being made aware of the mismatch through SMS and emails as per details available with the Department.

Those taxpayers who have already registered on the e-filing website, can navigate to Compliance portal directly after logging into their account. Details of mismatches identified will be available under the ‘e-Verification’ tab.

Taxpayers who are not registered on the e-filing website have to register themselves on the e-filing website to view the mismatch. For registration, the “Register” button on the e-filing website can be clicked and the relevant details can be provided therein. After successful registration, the e-filing account can be logged into and the Compliance portal can be navigated to view the mismatches.

The on-screen functionality is self-contained and will allow the taxpayers to reconcile the mismatch on the portal itself by furnishing their response.  No document is required to be furnished. This is a pro-active step taken by the Department to reach out to the taxpayers and provide them an opportunity to respond to the communication in a structured manner. It is clarified that the said communication is not a notice.

In case the taxpayer has disclosed the interest income in the ITR under the line item ‘Others’ in the Schedule OS, s/he need not respond to the mismatch pertaining to the interest income. The said mismatch shall be resolved on its own and will be reflected in the portal as ‘Completed’.

The taxpayers who are unable to explain the mismatch may consider the option of furnishing an Updated Income Tax Return if eligible, to make good any under reporting of income.

MCA operationalises Central Processing Centre (CPC) for Centralised Processing of Corporate Filings

MASTI

12 forms/applications will be processed at CPC from 16.02.2024; followed by other forms from 01.04.2024 onward

CPC will process applications in time-bound and faceless manner on the lines of Central Registration Centre (CRC) and Centralised Processing for Accelerated Corporate Exit (C-PACE)

Due to consistent efforts taken by MCA towards Ease of Doing Business, Incorporation of LLPs and companies is highest as compared to any of the previous financial years as on 14.02.2024

Posted On: 16 FEB 2024 2:15PM by PIB Delhi

On the lines of continuous endeavor to provide Ease of Doing Business in pursuance to Union Budget Announcement 2023-24, Central Processing Centre (CPC) has been established to process forms filed as part of various regulatory requirements under Companies Act and Limited Liability Partnership Act (LLP Act) in a centralised manner, requiring no physical interaction with the stakeholders.

From 16.02.2024, 12 forms/applications as listed below shall be processed at CPC, followed by other forms from 01.04.2024 onward. Later, forms/applications filed under LLP Act are also proposed to be centralised. Based on filing trends, it is expected that about 2.50 lakh forms will be processed through CPC annually, once it is fully operational.

 

Name of Form Description
MGT-14  Filing of Resolutions and Agreements
SH-7  Alteration in Capital
INC-24   Change in Name
INC-6  Conversion of One Person Company to Private or Public, or Private to OPC
INC-27   Conversion from Private into Public or Vice Versa
INC-20   Revocation/surrender of licence under Section 8 of the Act
DPT-3   Return of Deposits
MSC- 1  Application for obtaining the status of dormant company
MSC- 4   Application for seeking status of Active Company
SH-8   Letter of offer for Buy-Back
SH-9  Declaration of Solvency
SH-11   Return in respect of buy-back of securities

 

As of now, 4,910 forms have been received by CPC after commencing operations. The forms shall be processing a timebound and faceless manner. Processing of applications at CRC and C-PACE also does not require any physical interaction with the stakeholders.

The Central Registration Centre (CRC), Centralised Processing for Accelerated Corporate Exit (C-PACE), and CPC will ensure speedy processing of applications and forms filed for incorporation, closure and for meeting regulatory requirements so that the companies are incorporated, closed, can alter and raise capital, and are able to complete their various compliances under the corporate laws with ease.

After the establishment of CPC, jurisdictional Registrar of Companies (RoC), will have to focus more on their core functions of inquiries, inspection and investigation for ensuring robust corporate governance.

Further Steps towards Ease of Doing Business

Over the past many years, the Ministry of Corporate Affairs has taken several steps towards Ease of Doing Business.

An important part of the EoDB has been initiatives taken towards ease of entry in terms of quicker incorporation of companies. Central Registration Centre (CRC) was established for centralised, expeditious, transparent processing of applications filed for companies and LLPs for incorporation in Non-STP (Straight Through Processing) mode. This has yielded desired results. While during FY 2013-14, 1,02,063 Companies and LLPs were incorporated, during FY 2022-23, 1,95,586 Companies and LLPs got incorporated, registering an increase of about 92%.

 

 

Incorporation of LLPs and companies till 14.02.2024 this financial year has been not only more than the previous Financial Year 2022-23, but also the highest as compared to any of the previous financial years.

Following ease of entry, it was announced in the Union Budget Speech 2022-23 to establish Centralised Processing for Accelerated Corporate Exit (C-PACE) for expeditious voluntary closure of companies under the provisions of Section 248(2) of Companies Act, 2013 from more than 2 years to less than 6 months. Accordingly, C-PACE was established and operationalised on 01.05.2023. Under C-PACE, applications filed for voluntary closure of companies are getting processed in Non-STP within an average time of less than 4 months (about 100 days) compared to an average time of more than 18 months earlier. C-PACE has processed and closed 12,441 companies so far. Only 3,368 applications are pending with C-PACE, the lowest as compared to any previous year.

Law Commission of India submits its Report titled “Law on Matrimonial Issues Relating to Non-Resident Indians and Overseas Citizens of India”

MASTI

22nd Law Commission of India has submitted its Report No. 287 titled “Law on Matrimonial Issues Relating to Non-Resident Indians and Overseas Citizens of India” to the Government of India on 15.02.2024.

The Law Commission of India received a reference on The Registration of Marriage of Non-Resident Indians Bill, 2019 (NRI Bill, 2019) from the Ministry of External Affairs, received through the Department of Legal Affairs, Ministry of Law and Justice, for examination.

Having conducted an in-depth study of the law concerning the instant subject-matter, including the NRI Bill, 2019 , the Commission is of the considered opinion that the proposed central legislation should be comprehensive enough to cater to all facets involving marriages of NRIs as well as foreign citizens of Indian origin with that of Indian citizens. Such a legislation should be made applicable not only to the NRIs but also to those individuals who come within the definition of ‘Overseas Citizens of India’ (OCIs) as laid down under Section 7A of the Citizenship Act, 1955. It is further recommended that all marriages between the NRIs/OCIs and Indian citizens should be made compulsorily registered in India. The said comprehensive central legislation should also include provisions on divorce, maintenance of spouse, custody and maintenance of children, serving of summons, warrants, or judicial documents on the NRIs/OCIs, etc. Further, it is recommended that requisite amendments need to be introduced in the Passports Act, 1967 in order to mandate the declaration of marital status, the linking of a spouse’s passport with the other and mentioning of the Marriage Registration Number on the passports of both the spouses. Furthermore, the Government, in collaboration with the National Commission for Women and the State Commissions for Women in India and the NGOs and Indian associations abroad, should conduct awareness programs for women and their families who are about to enter into marital relationship with NRIs/OCIs.

Promotion of Hindi in Higher Courts

MASTI

Promotion of Hindi in Higher Courts

AI Assisted Legal Translation Advisory Committee assisting translation of e-SCR Judgments into vernacular languages by using AI Tool

31,184 judgments of Supreme Court translated into 16 languages

4,983 judgments of High Courts translated into vernacular language

Posted On: 02 FEB 2024 3:57PM by PIB Delhi

As far as Supreme Court and High Courts are concerned, Article 348(1)(a) of the Constitution of India states that all proceedings in these Courts shall be in English language. However, Article 348 (2) of the Constitution of India provides that the Governor of a State may, with the previous consent of the President, authorize the use of Hindi Language, or any other language used for any official purposes of the State, in proceedings in the High Court having its principal seat in that State. Further, Section 7 of the Official Language Act, 1963 states that the Governor of a State may, with the previous consent of the President, authorize the use of Hindi or the official language of the State, in addition to the English Language, for the purposes of any judgment, decree or order passed or made by the High Court for that State and where any judgment, decree or order is passed or made in any such language (other than the English Language), it shall be accompanied by a translation of the same in the English Language issued under the authority of the High Court.

The Cabinet Committee’s decision dated 21.05.1965 has stipulated that consent of the Hon’ble Chief Justice of India be obtained on any proposal relating to use of a language other than English in the High Court.

The use of Hindi in the proceedings of High Court of Rajasthan was authorized under Article 348(2) of the Constitution in 1950. After the Cabinet Committee’s decision dated 21.05.1965 as mentioned above, the use of Hindi was authorized in the High Courts of Uttar Pradesh (1969), Madhya Pradesh (1971) and Bihar (1972) in consultation with the Chief Justice of India.

As informed by the Supreme Court of India, Hon’ble Chief Justice of India has constituted the AI Assisted Legal Translation Advisory Committee, headed by Hon’ble Mr. Justice Abhay S. Oka, Judge, Supreme Court of India, for translation of e-SCR Judgments into vernacular languages by using AI Tool. As on 02.12.2023, by using AI translation tools, 31,184 judgments of Supreme Court, have been translated into 16 languages viz. Hindi (21,908), Punjabi (3,574), Kannada (1,898), Tamil (1,172), Gujarati (1,110), Marathi (765), Telugu (334), Malayalam (239), Odia (104), Bengali (39), Nepali (27), Urdu (06), Assamese (05), Garo (01), Khasi (01), Konkani (01). The details of the judgments of Supreme Court translated into 16 languages, as on 02.12.2023, is available on the e-SCR Portal of the Supreme Court website.

A similar Committee has been constituted in all the High Courts, headed by the Judges of the respective High Courts. As of now, the Supreme Court is collaborating with the High Courts in translation of e-SCR Judgments into 16 vernacular languages. As per the information received from the High Courts, 4,983 judgments have been translated into vernacular language and uploaded by the High Courts on their respective websites.

This information was given by the MINISTER OF STATE (INDEPENDENT CHARGE) FOR MINISTRY OF LAW AND JUSTICE; MINISTER OF STATE IN THE MINISTRY OF PARLIAMENTARY AFFAIRS; MINISTER OF STATE FOR THE MINISTRY OF CULTURE, SHRI ARJUN RAM MEGHWAL in a written reply in Lok Sabha today.

High Court Judges appointed as Chief Justices of High Courts

MASTI

Press Communique

Posted On: 02 FEB 2024 11:10PM by PIB Delhi

In exercise of the powers conferred by Clause (1) of Article 217 of the Constitution of India, the President is pleased to appoint the following Judges of High Courts as Chief Justices of High Courts with effect from the date they assume charges of their respective office in the concerned High Court: –

Sl. No. Name of the Judge (S/Shri Justice) Details
1 Manindra Mohan Shrivastava Acting Chief Justice, Rajasthan High Court (PHC: Chhattisgarh) Appointed as Chief Justice of the Rajasthan High Court.
2 Kumari Justice Ritu Bahri, Acting Chief Justice, Punjab & Haryana High Court Appointed as Chief Justice of the Uttarakhand High Court
3 Chakradhari Sharan Singh, Judge, Patna High Court Appointed as Chief Justice of the Orissa High Court
4 Vijay Bishnoi, Judge, Rajasthan High Court Appointed as Chief Justice of the Gauhati High Court.
5 Arun Bhansali, Judge, Rajasthan High Court Appointed as Chief Justice of Allahabad High Court
6 S. Vaidyanathan Judge, Madras High Court Appointed as Chief Justice of the Meghalaya High Court

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Sushma Shivkumar Daga & Anr. Vs. Madhurkumar Ramkrishnaji Bajaj (Supreme Court)

MASTI

Sushma Shivkumar Daga & Anr. Vs. Madhurkumar Ramkrishnaji Bajaj & Ors.

[Civil Appeal No. 1854 of 2023]

Sudhanshu Dhulia, J.

1. The appellants before this Court were the plaintiffs in a civil suit, filed in the year 2021, seeking declaration that the Conveyance Deed dated 17.12.2019 to be declared null and void, and that the registered Development Agreements dated 17.09.2007, 20.11.2007, 30.11.2007, 03.12.2007 and 27.02.2008 stand validly terminated.

The respondents/defendants moved an application under Section 8 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”) for referring the matter to arbitration by relying upon the arbitral clause in the two agreements dated 31.03.2007 and 25.07.2008. It was contended that the aforesaid agreements formed the basis of the Conveyance Deed and the Development Agreements which are subject matter of the suit.

The Trial Court allowed the application of the defendant and referred the matter for arbitration, vide its order dated 13.10.2021. This order was challenged in Writ Petition No.8836 of 2021 by the appellants / plaintiffs before the Bombay High Court, which was dismissed vide order dated 10.12.2021. Aggrieved by these two orders, the appellants / plaintiffs are now before this Court.

2. The only question to be decided by us here is whether the Trial Court and the High Court have rightly referred the matter to arbitration or the dispute is of such a nature that it is not liable to be referred to arbitration, as there was no arbitration clause in the Conveyance Deed dated 17.12.2019 or if there was, yet the matter in any case is such that it is not arbitrable. The brief facts of the case are as follows:

M/s Emerald Acres Private Limited (respondent no. 2) was incorporated by Late Mr. Shivkumar Daga and his wife, Mrs. Sushma Shivkumar Daga (appellant no.1) on 18.04.2006 to carry on the business of real-estate development. Subsequently, two Tripartite Agreements were signed between Shivkumar Daga (hereinafter referred to as ‘SD’), Madhurkumar Ramakrishnaji Bajaj & Ors. (hereinafter referred to as ‘MB’) and M/s. Emerald Acres Private Limited (hereinafter referred to as ‘EAPL’) to develop, trade, and deal with the property and also to acquire such further properties as may be mutually agreed between the parties. Both the Tripartite Agreements dated 31.03.2007 and 25.07.2008 contain the following arbitration clause:

“It is agreed between Parties that in the event of any disputes or differences between the Parties hereto in relation to this Agreement or in relation to any matter touching or arising from this Agreement, the parties shall refer such disputes and differences to the arbitration under the provisions of the Arbitration & Conciliation Act, 1996 or any statutory modification thereof.”

3. Shivkumar Daga died on 08.05.2011, bequeathing his assets through a will dated 10.02.2011 to his wife (appellant no. 1) and his son (appellant no. 2), in which a probate petition has already been filed and as per the records before us the case is still pending.

4. The appellants i.e., SD’s wife and his son then filed a suit seeking, inter alia, a declaration that the Deed of Conveyance dated 17.12.2019 be declared null and void, and that the Development Agreements entered into pursuant to the two Tripartite Agreements be declared validly terminated.

5. The Conveyance Deed dated 17.12.2019 sought to be declared void and the five Development Agreements dated 17.09.2007, 20.11.2007, 30.11.2007, 03.12.2007 and 27.02.2008 sought to be declared as validly terminated by the appellants, all find their source in the two Tripartite Agreements dated 31.03.2007 and 25.07.2008.

6. The first prerequisite for an application under Section 8, of an arbitration agreement being there in the 2007 and 2008 Tripartite agreements cannot be denied, as all the other Development Agreements find their source in the aforesaid two Tripartite Agreements. The Trial Court and the High Court have rightly held that the broad language of the “arbitration clause” in the two Tripartite Agreements dated 31.03.2007 and 25.07.2008 would cover the dispute raised by the appellants before the Civil Court, and hence the case has been rightly referred for arbitration.

7. The role of a ‘Court’ is now in any case, extremely limited in arbitration matters. The underlying principles of arbitration as contained in the Arbitration and Conciliation Act, 1996, was always to have as little interference as possible by a judicial authority. Section 5 of the Arbitration Act reads as under:

5. Extent of judicial intervention.-

Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. Major amendments were made in the Arbitration Act in the year 2015, inter alia, both in Section 8 and Section 11 of the Act, in order to further reduce any chances of judicial interference and now the amended Section 8 of the Arbitration Act reads as under:

8. Power to refer parties to arbitration where there is an arbitration agreement. –

(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that court.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.

The amendments in Section 8 and Section 11 of the Arbitration Act were based on the following recommendations made in the 246th Report of the Law Commission of India, 2014:

“33. It is in this context, the Commission has recommended amendments to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The scope of the judicial intervention is only restricted to situations where the court/judicial authority finds that the arbitration agreement does not exist or is null and void. Insofar as the nature of intervention is concerned, it is recommended that in the event the court/judicial authority is prima facie satisfied against the argument challenging the arbitration agreement, it shall appoint the arbitrator and/or refer the parties to arbitration, as the case may be.

The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the Arbitral Tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie.”

Note to the clause for amendment of Section 8 by the Arbitration and Conciliation (Amendment) Bill, 2015 reads as under:

Clause 4 of the Bill seeks to amend Section 8 of the principal Act to specify that the judicial authority shall refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. A proviso below sub-section (2) is inserted to provide that where the original arbitration agreement or certified copy thereof is not available with the party who apply under sub-section (1), and is retained by the other party, such party shall file a copy of the arbitration agreement along with application under sub-section (1) praying to the court to call upon the other party to produce the original arbitration agreement or its duly certified copy before the court. The basic purpose for bringing an amendment in Section 8 (as well as Section 11 of the Arbitration Act) was to minimise the scope of judicial authority in matters of arbitration, except on the ground where prima facie, no valid arbitration agreement exists.

8. In the present case, the 2007 as well as the 2008 Tripartite Agreement, forms the basis for all subsequent agreements, conveyance, etc. The arbitration clause is also very wide in its scope, as we have already seen. At the sake of repetition, the 2008 Tripartite Agreement states that “any dispute, in relation to these agreements or in relation to any matter touching or arising from this Agreement, shall be referred to arbitration.”

The contention of the appellants therefore that the dispute raised in the civil suit is non- arbitrable is also not correct. The dispute relates to a property which is the subject matter of the two tripartite agreements dated 31.03.2007 and 25.07.2008.

9. In the Tripartite Agreement dated 31.03.2007 the intention of the parties was clearly to acquire and develop properties, which was indeed done through the development agreements (sought to be declared as validly terminated by the appellants). Clause 11 of the Tripartite Agreement dated 31.03.2007 reads as under:

“SD and MB have in due course agreed to develop, further trade and deal with the Property and also to acquire such further properties as may be mutually agreed between the Parties and any such further acquisitions that may be made through a Special Purpose Vehicle viz. the Company wherein MB and SD shall have equity in the proportion of 90:10.”

10. It is true that in Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Others, (2011) 5 SCC 532 this Court had set apart cases where the dispute was totally nonarbitrable, such as matrimonial disputes, guardianship dispute, or even we may add disputes relating to consumers, which are governed by an entirely different Parliamentary legislation known as Consumer Protection Act, 2019:

“35. The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication.

Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public fora (courts and tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes.”

11. Thereafter, this Court in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, laid down a fourfold test for determining when the subject-matter of a dispute in an arbitration agreement is not arbitrable. These were:

“(1) When cause of action and subjectmatter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem.

(2) When cause of action and subjectmatter of the dispute affects third-party rights; have erga omnes effect; require centralised adjudication, and mutual adjudication would not be appropriate and enforceable.

(3) When cause of action and subject matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable.

(4) When the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s).”

Nevertheless, the case before the Civil Court does not fall in any of the categories, visualised in either Booz Allen (supra) or Vidya Drolia (supra) referred above.

12. In Vidya Drolia (supra), this Court has held that Court will only decline reference under Section 8 or under Section 11 of the Act in rare cases where the Court is certain that either the arbitration agreement is non-existent, or the dispute is itself “manifestly non-arbitrable”. This was reiterated by this Court in NTPC Ltd. v. SPML Infra Ltd. (2023) 9 SCC 385.

13. In BSNL v. Nortel Networks (2021) 5 SCC 738, this court had held that reference to the Arbitral Tribunal can be declined by the Court, only if the dispute is non-arbitrable. For example, consumer disputes which are entirely different nature of disputes, statutorily protected under a special legislation. (Smt. M. Hemalatha Devi & Ors. v. B. Udayasri 2023 INSC 870).

14. In any case, Section 16 of the Arbitration Act gives immense powers to the Arbitral Tribunal, including power to rule on its own jurisdiction. Section 16 of the Arbitration Act reads as under:

“16. Competence of arbitral tribunal to rule on its jurisdiction.-

(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,-

(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

(4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.

(5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or subsection (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34.”

15. All jurisdictional issues including the existence and the validity of an arbitration clause can be gone into by the Arbitral Tribunal. In other words, the Arbitral Tribunal is competent to decide on its own competence. This aspect has been dealt with in a recent judgment of this Court in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd. (2020) 2 SCC 455. This is what has been stated:

“7.11. The doctrine of “kompetenzkompetenz”, also referred to as “compétence-compétence”, or “compétence de la recognized”, implies that the Arbitral Tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement. This doctrine is intended to minimise judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties.

The doctrine of kompetenz-kompetenz is, however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract. The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement.

Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified [Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751. See also BSNL v. Telephone Cables Ltd., (2010) 5 SCC 213 : (2010) 2 SCC (Civ) 352. Refer to PSA Mumbai Investments Pte. Ltd. v. Jawaharlal Nehru Port Trust, (2018) 10 SCC 525 : (2019) 1 SCC (Civ) 1] . If an arbitration agreement is not valid or non-existent, the Arbitral Tribunal cannot assume jurisdiction to adjudicate upon the disputes.

Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement “is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made”.

7.12. The legislative intent underlying the 1996 Act is party autonomy and minimal judicial intervention in the arbitral process. Under this regime, once the arbitrator is appointed, or the tribunal is constituted, all issues and objections are to be decided by the Arbitral Tribunal.

7.13. In view of the provisions of Section 16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator. Sub-section (1) of Section 16 provides that the Arbitral Tribunal may rule on its own jurisdiction, “including any objections” with respect to the existence or validity of the arbitration agreement.

Section 16 is as an inclusive provision, which would comprehend all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is a jurisdictional issue, which would be required to be decided by the arbitrator under Section 16, and not the High Court at the prereference stage under Section 11 of the Act. Once the existence of the arbitration agreement is not disputed, all issues, including jurisdictional objections are to be decided by the arbitrator.”

16. The purpose behind giving these powers to the Arbitral Tribunal is to minimise judicial interference in arbitration matters. In Weatherford Oil Tool Middle East Ltd. v. Baker Hughes Singapore PTE 2022 SCC OnLine SC 1464, this court had observed that a bare perusal of Section 16 of the Arbitration Act would indicate that the arbitration clause in a contract would be an independent agreement in itself and the arbitrator is empowered to decide upon its existence and validity.

17. After the 2015 amendment, primarily the court only has to see whether a valid arbitration agreement exists. Additionally, the clear non-arbitrability of cases, such as where a party to the agreement is statutorily protected, such as a consumer “has also to be seen by the Court” (Booz Allen supra). Short of the narrow field stated above, the scope of judicial scrutiny at the stage of Section 11 (6) or Section 8 is extremely limited.

Objections will nevertheless be raised both on Section 8 and Section 11 applications. These objections can be genuine, such as where there is no arbitration clause or where the matter is itself non-arbitrable, but often these objections could be only to wriggle out of the statutory commitment of parties to a defined process of redressal mechanism.

18. In the present case there are broadly three objections of the appellants on the Section 8 application moved by the respondents which has already been allowed by the two courts below. The first objection regarding the absence of an arbitration clause in the Conveyance Deed dated 17.12.2019 and the development agreements has already been discussed in detail in the preceding paragraphs.

19. The second is that the suit filed by the appellants is for cancellation of a document relating to immovable property i.e. land and it therefore amounts to an action in rem and hence arbitration is not the remedy. This question however, is no more res integra. Elaborate analysis on this aspect has been done by this Court in the case of Deccan Paper Mills v. Regency Mahavir Properties, (2021) 4 SCC 786, therein this court after referring to all the relevant precedents and the case laws has held that whether it is a suit for cancellation of a deed or a declaration of rights rising from the deed, it would only be an action in personam and not in rem.

The decision of the Division Bench of Andhra Pradesh High Court in Aliens Developers (P) Ltd. v. Janardhan Reddy, 2015 SCC Online Hyd 370, was held to be wrong wherein it was held that a suit under Section 31 of Specific Relief Act amounts to an action in rem and this adjudicatory function can only be done by the Competent Civil Court and the powers cannot be exercised by an Arbitrator.

The basic foundation of the Court for holding that a Section 31 suit for cancellation of a document amounts to an action in rem was held to be wrong. The entire scope and ambit of the Specific Relief Act, 1963 was considered and in Deccan Paper Mills (supra), the anomalies in law for holding such to be an action in rem were discussed and it was held that a relief sought under the Specific Relief Act is nothing but an action in personam.

20. The third objection is regarding fraud. The plea of fraud raised by the appellants in their objection to the Section 8 application has never been substantiated. Except for making a bald allegation of fraud there is nothing else. This Court has consistently held that a plea of fraud must be serious in nature in order to oust the jurisdiction of an Arbitrator.

In Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710, this Court laid down two conditions which must be satisfied before the Court can refuse to refer the matter to the Arbitrator, a forum consciously decided by parties in an agreement. The first is whether the plea permeates the entire contract and above all, the arbitration agreement, rendering it void or secondly, whether the allegation of fraud touches upon the internal affairs of the parties inter se having no implication in the public domain.

The allegations must have some implication in public domain to oust the jurisdiction of an Arbitrator, if an allegation of fraud exists strictly between the parties concerned, the same will not be termed to be as a serious nature of fraud and hence would not be barred for arbitration.

21. In the present case, therefore there is absolutely no ambiguity that both the Tripartite Agreements dated 31.03.2007 and 25.07.2008 contain an arbitration clause, which forms the basis of all subsequent agreements including the agreements sought to be declared as validly terminated by the appellants and the conveyance deed sought to be declared as null and void.

Both the trial court as well as the High Court have given a correct finding on facts as well as on law. We find no scope for interference in the matter.

This appeal hence has no force, and is hereby dismissed. No order as to costs.

…………………J. [Aniruddha Bose]

…………………J. [Sudhanshu Dhulia]

New Delhi.

December 15, 2023.

Unstamped arbitration agreements are enforceable, Supreme Court Judgement

MASTI

The Supreme Court unanimously ruled in Curative Petition (C) No. 44 of 2023 in Review Petition (C) No. 704 of 2021 in Civil Appeal No.1599 of 2020 that unstamped arbitration agreements were legally enforceable. The seven-judge Constitution Bench said that deeming such agreements unenforceable merely due to a lack of stamping at the start of arbitral proceedings goes against the rationale of the law.

The decision reversed a ruling by a five-judge bench in April, which said that unstamped or improperly stamped agreements were not legally enforceable.

The court said on Wednesday that agreements without the right stamping were not automatically void or unenforceable – they just couldn’t be used as evidence. It also said this was a fixable problem. Stamping refers to paying stamp duty on the value of an agreement as required by law

This Court has been called upon to resolve an issue which arose in the context of three statutes – the Arbitration and Conciliation Act 1996, the Indian Stamp Act 1899, and the Indian Contract Act 1872. The Stamp Act imposes duty on “instruments”. An instrument which is unstamped or insufficiently stamped is inadmissible in evidence and cannot be acted upon in terms of its provisions. Arbitration agreements are often embedded in underlying instruments or substantive contracts. When an application is made for the appointment of an arbitrator, an objection is raised on the ground that the arbitration agreement is inadmissible because it is in an instrument which is unstamped or inadequately stamped. The primary issue that arises is whether such arbitration agreements would be non-existent, unenforceable, or invalid if the underlying contract is not stamped.

Experts welcome the ruling

Sairam Subramanian, partner at Saraf and Partners, said, “The Supreme Court has resolved a roadblock to the future of Indian arbitration. The issue had been [hampering] the evolution of the arbitration landscape in India.”

According to Charanya Lakshmikumaran, partner at Lakshmikumaran & Sridharan Attorneys, adjudication on stamp duty aspect at the referral stage led to unnecessary costs and delays as the court conducted a mini-trial on the sufficiency of stamp duty, derailing the arbitral process. The Supreme Court’s ruling aligns with the legislative goal of making India an arbitration hub and expediting the arbitral process, especially in the appointment of arbitrators, he added.

“The SC endorsement of the validity and enforceability of unstamped arbitration agreements brings relief around countless commercial agreements and contracts, including those exchanged through letters and emails,” said Nitin Potdar, M&A Partner at J Sagar Associates, Mumbai.

Case history

The issue dates back to 2011, when the Supreme Court held that unstamped arbitration agreements could not be enforced. In 2020 the matter was brought to the Supreme Court again by N N Global Mercantile Pvt. Ltd., which had a dispute with Indo Unique Flame Ltd over a bank guarantee. N N Global claimed the agreement was unstamped and thus unenforceable. In January 2021, a three-judge bench disagreed with previous rulings and referred the case to a five-judge Constitution Bench.

On 25 April 2023, the Constitution Bench ruled with a 3:2 majority that unstamped arbitration agreements were void and unenforceable. They said an arbitration agreement could not be separated from the main contract, and if stamp duty was not paid on the main contract, the arbitration clause was also invalid. The ruling raised concerns about potential delays in arbitrator appointments and clashed with India’s pro-arbitration stance.

On 26 September the Supreme Court, in response to a curative petition challenging the previous judgment, agreed to reconsider the matter due to its “larger ramifications and consequences”. The court formed a seven-judge constitutional bench comprising Chief Justice DY Chandrachud, Justice Sanjay Kishan Kaul, Justice Sanjiv Khanna, Justice B R Gavai, Justice Surya Kant, Justice JB Pardiwala, and Justice Manoj Misra.

The petitioners argued that an improperly stamped agreement should not make an arbitration agreement automatically invalid. They said an arbitration clause was separate from the main contract, and the overall contract’s invalidity shouldn’t affect it.

The respondents argued that the court shouldn’t handle legal questions in this case, and that allowing a curative petition would violate court rules. But the court decided to hear the case, citing the importance of the legal question involved.

WHETHER CARBON CREDIT IS CAPITAL OR REVENUE RECEIPT: SUPREME COURT verdict in JINDAL STEEL & POWER LIMITED

MASTI

RECOMPUTATION OF DEDUCTION UNDER SECTION 80 IA OF THE INCOME TAX ACT, 1961: The market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board’s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under Section 80-IA of the Act.

EXERCISE OF OPTION TO ADOPT WRITTEN DOWN VALUE METHOD: There is no requirement under the second proviso to sub-rule (1A) of Rule 5 of the Rules that any particular mode of computing the claim of depreciation has to be opted for before the due date of filing of the return. All that is required is that the assessee has to opt before filing of the return or at the time of filing the return that it seeks to avail the depreciation provided in Section 32 (1) under subrule (1) of Rule 5 read with Appendix-I instead of the depreciation specified in Appendix-1A in terms of sub-rule (1A) of Rule 5 which the assessee has done. If that be the position, we find no merit in the question proposed by the revenue. The same is therefore answered in favour of the assessee and against the revenue.

WHETHER CARBON CREDIT IS CAPITAL OR REVENUE RECEIPT: The Tribunal held that Carbon credit is generated under the Kyoto Protocol and because of international commitments. Carbon credit emanates out of such technology and plant and machinery which contribute to reduction of greenhouse gases. That apart, carbon credits are also meant to promote environmentally sound investments which are admittedly capital in nature. Therefore, Tribunal held that carbon credit is a capital receipt.

Against the aforesaid decision of the Tribunal, revenue preferred appeal before the High Court of Chhattisgarh under Section 260A of the Act. However, the only issue raised by the revenue before the High Court was relating to disallowance of deduction by the assessing officer under Section 80-IA (4) (iv) of the Act.

Question of carbon credit being capital receipt or not was not raised. In other words, revenue had accepted the decision of the Tribunal as regards carbon credit and did not challenge the said decision before the High Court. In fact, in the proceedings dated 11.09.2009 it was agreed by both the sides (including the revenue) that the only question which arose for consideration of this Court was as regards interpretation of Section 80-IA of the Act. Therefore, the issue relating to carbon credit was not raised or urged by the revenue.

If that be the position, revenue would be estopped from raising the said issue before this Court at the stage of final hearing. That apart, there is no decision of the High Court on this issue against which the revenue can be said to be aggrieved and which can be assailed. In the circumstances, we decline to answer this question raised by the revenue and leave the question open to be decided in an appropriate proceeding.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.13771 OF 2015
COMMISSIONER OF INCOME TAX APPELLANT(S)
VERSUS
M/S JINDAL STEEL & POWER LIMITED
THROUGH ITS MANAGING DIRECTOR RESPONDENT(S

Housing society can levy charges for cultural activities: Bombay High Court

MASTI

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

 

WRIT PETITION NO. 11870 OF 2019

 

 

Mrs. Jyoti Sharadchandra Lohokare                                .Petitioner

 

V/s.

The Managing Committee, Shreeji Ville CHS Ltd. & Ors.                                                                                                        .Respondents

 

Mr. Butala i/b. M/s. S.S. Butala & Associates, Advocate, for the Petitioner

Mr. Prashant P. Kulkarni, Advocate, for Respondent No.1 Mr. P.G. Sawant, AGP, for Respondent No.4 – State

CORAM        :          MADHAV J. JAMDAR, J. DATE         :          25.09.2023

 

ORAL JUDGMENT:

 

  1. Heard Mr. Butala, learned Counsel appearing for the Petitioner, Mr. Prashant Kulkarni, learned Counsel appearing for Respondent No.1-Housing Society and Mr. Sawant, learned AGP for Respondent 4-State.

 

  1. The Petitioner, by the present Writ Petition fled under Article 227 of the Constitution of India is inter alia challenging the legality and validity of the order dated 6th March 2019 passed by the learned Judge, Co-operative Court, Thane at Thane below Exhibit 5 in Dispute No. CCT 22/2019 as confrmed by the Judgment and Order dated 10th June 2019 passed by the learned Member, Maharashtra State Co-operative Appellate Court, Mumbai in A.O. No. 21 of 2019.

 

  1. By the said Dispute, the Petitioner has challenged a Resolution passed   in   Annual   General   Meeting   dated 11th November 2006 of the Respondent No. 1-Housing Society in respect of levying certain mandatory charges towards expenses for ‘cultural activities’.

 

  1. It is the contention of Mr. Butala, learned Counsel appearing for the Petitioner that Bye-Law No.148 of the Model Bye-Laws of The Co-operative Housing Society (hereinafter referred to as “said Bye-Laws”) provides for appropriation of profts and as per Bye-law 148(b)(iii) the proft is to be allocated to a ‘Common Welfare Fund’ for furtherance of the objects specifed in Bye-law No.5(d). He further submitted that Bye-law No. 65 provides for compulsory charges to be collected from the members and break-up of said charges of the society are provided in Bye-law No. 66. He submitted that the charges levyed towards expenses for cultural activities are not included under Bye-Law 65 i.e. compulsory charges and therefore said ‘cultural charges’ are illegally levied by Respondent No.1- Society. He therefore submitted that the impugned orders are liable to be quashed and set aside.

 

  1. On the other hand, Mr. Prashant Kulkarni, learned Counsel appearing for Respondent 1–Housing Society submitted that the Society has passed a Resolution in the Annual General Meeting dated 11th November 2006 in respect of charges for the purpose of cultural events. He states that the same is permissible as per law and therefore, no interference is warranted in the impugned orders.

 

  1. Thus, the question to be decided in this Writ Petition is whether a Co-operative Housing Society can levy and collect charges towards expenses for ‘cultural activities’ and whether such an act of a Co-operative Housing Society is permissible in

 

  1. For consideration of the above question, it is necessary to set out the various types of ‘Societies’ as contemplated under the provisions of the Maharashtra Co- operative Societies Act, 1960 (hereinafter referred to as “said Act“). Section 12 of the said Act provides that the Registrar shall classify all societies into one or other of the classes of societies as defned in Section 2 of the said Act. Section 2 of the said Act contemplates following types of Societies:-
  • Agricultural Marketing Society [(Section 2(1)]

 

Section  2(1):- “agricultural   marketing society” means a society –

 

(a)     the object of which is the marketing of agricultural produce and the supply of implements and other requisites for agricultural production, and

 

  • not less than three-fourths of the members of which are agriculturists, or societies formed by agriculturists;

 

  • Co-operative Bank [Section 2(6), 2(10)]

 

Section 2(6):- “Central Bank” means a co-operative bank, the objects of which include the creation of funds to be loaned to other societies; but does not include the primary urban co-operative bank;

 

Section 2(10):- “Co-operative bank” means a society which is doing the business of banking as defned in clause (b) of sub- sections (1) of section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function a Co-operative Agricultural and Rural Development Bank under Chapter XI;

 

Section 2(10) (aii-l):- “co-operative credit structure     entity”     means     the     primaragricultural credit co-operative society, the District Central Co-operative Bank or the State co-operative Bank;

 

  • Consumer Society [(Section 2(9)]

Section 2(9):- “Consumer society” means a society, the object of which is –

 

  • the procurementproduction or processing, and distribution of goods to or the performance of other services, for, its members as also other customers, and

 

(b)     the distribution among its members and customers, in the proportion, prescribed by rules or by bye-laws of the society, of the profts accruing from such procurement, production or processing and distribution;”

 

  • Crop Protection Society [(Section 2 (10-A)]

 

Section 2(10-A):- “Crop Protection Society” means a society, the object of which is protection of the crops, structures, machinery, agricultural implements  and other equipment such as those used for pumping water on the land.

 

  • Farming Society [Section 2(12)]

 

Section  2(12):  farming  society”  means  a society in which, with the  object  of increasing agricultural  production, employment and income and the better utilization of resources; lands are brought together and jointly cultivated by all the members, such lands (a) being owned by or leased to the members (or some of them) or

(b)      coming in possession of the society in any other manner whatsoever;

 

  • Housing Society [Section 2(16)]

 

Section 2(16):- “housing society” means a society, the object of which is to provide its members with open plots for housing, dwelling houses or fats; or if open plots, the dwelling houses or fats are already acquired, to provide its members common amenities and services;

 

 

 

  • Lift Irrigation Society [Section 2(16-A)]

 

Section 2(16-A):- “lift irrigation  society” means a society, the object of which is to provide water supply by motive power or otherwise to its members, for irrigation and otherwise;

 

  • Processing Society [Section 2(22)]

 

Section  2(22):-   “processing  society”  means a society, the object of which is the processing of goods;

 

  • Producers’ Society [Section 2(23)]

 

Section 2(23):- “producers’ society” means a society, the object of which is, the production and disposal of goods or the collective disposal of the labour of the members thereof;

 

  • Resource Society [Section 2(25)]

 

Section 2(25):- “resource society” means a society, the object of which is the obtaining for its members of credit, goods or services required by them.

 

  • General Society [Section 2(15)]

 

Section 2(15):- “general society” means a society not falling in any of the classes of societies defned by the other clauses of this section.”

 

(Emphasis added)

 

 

  1. For considering the question raised in the present Writ Petition, it is also necessary to set out defnition of Society as provided by Section 2(27) of the said Act, which reads as under :-

 

“2(27) “society” means a co-operative society registered, or deemed to be registered, under this Act which is an autonomous association of persons, united voluntarily to meet their common  needs and aspirations through a jointly owned and democratically  controlled  enterprise and adhering to the co-operative principles and values

 

(Emphasis added)

 

The Society, inter alia, means an autonomous association of persons formed to meet their common needs and aspirations through a democratically controlled enterprise, adhering to the co-operative principles and values. Thus, any Society is formed to meet common needs and aspirations of its Members.

 

  1. The Supreme Court, in the decision of Bengal Secretariat Land Mortgage Bank & Housing Society Ltd. v. Aloke Kumar [Civil Appeal 7261 of 2022] reported in 2022 SCC OnLine SC 1404 while examining the constitutional validity of the 97th amendment of the Constitution of India has discussed the nature of Co-operative Society. The relevant part of the said decision is set out herein below :-

“57. By now it is well established position that once a person becomes a member of the Co-operative Society, he loses his individuality with  the Society  and he has no independent rights  except  those  given to him by the statute and bye-laws. The member has to  speak through  the Society or rather the Society alone can act and speaks for him qua the rights and duties of the Society as a body (see : Daman Singh v. State of Punjab, reported in (1985) 2 SCC 670 : AIR 1985 SC 973). This view has been followed in the subsequent decision of this Court in the case of State of U.P v. Chheoki Employees Co-operative Society Ltd., reported in (1997) 3 SCC 681 : AIR 1997 SC 1413. In this decision, this Court further observed that the member of a Society has no independent right qua the Society and it is the Society that is entitled to represent as the corporate  aggregate. This Court also observed that the stream cannot rise higher than the source. Suffce it to observe that so long as the Resolutions passed by the General Body of the Appellant Society are in force and not overturned by a forum of competent jurisdiction, the said decisions would bind the Respondent No. 1. He cannot be permitted to take a stand alone position but is bound by the majority decision of the General Body. Notably, the Respondent No.1 has not challenged the Resolutions passed by the General Body of the Appellant Society to redevelop the property and more so, to appoint the Hi- Rise as the Developer to give him all the redevelopment rights.

  1. 58. …

 

  1. The object of the provision has to be borne in mind. The entire legislative scheme goes to show that the Co- operative Society is to function democratically and the internal democracy of a society, including resolutions passed in accordance with the Act, the Rules, and the bye-laws have to be respected and implemented. The Cooperative Movement is both a theory of life and a system of business. It is a form of voluntary association where individuals unite for mutual aid in the production and  distribution  of  wealth upon principles of equity, reason and common good. It stands for distributive justice and asserts the principle of equality and equity ensuring to all those engaged in the production of wealth a share proportionately commensurate with the degree of their contribution. It provides as a substitute for material assets, honesty and a sense of moral obligation and keeps in view the moral rather than the material sanction. The movement is thus a great Co-operative movement.

 

  1. The basic principles of co-operation are that the members join as human beings and not as capitalists. The Co-operative Society is a form of organization wherein persons associate together  as  human beings on the basis of equality for promotion of economic interest of its This movement is a method of doing the business or other activities with ethical base. “Each for all and all for each” is the motto of the co-operative movement. This movement not only develops latent business capacities of its members but produces leaders; encourages economic and social virtues, honesty and loyalty, becomes imperative, prospects of better life, obtainable by concerted effort  is opened up; the individual realises that there is something more to be sought than mere material gains for himself. So, in fact, it being a business cum moral movement, and the success of the Co-operative Society depends upon the reality with which one of the members work for the achievement of its objects and purpose. The Committee on Co-operation in India emphasized the moral aspect co-operation, to quote the words:— “The theory of co-operation is very briefy that an isolated and powerless individual can, by association, with others and by moral development support, obtain in his own degree the material advantages available to wealthy or powerful persons and thereby develop himself to the fullest extent of his natural abilities. By the Union of forces, material advancement is secured and by united action self reliance is fostered and it from the inter-action of these infuences that it is hoped to attain the effective realisation of the higher and more prosperous standard of life which has been characterised as better business, better arming and better living; we have found that there is a tendency not only among the outside public but also among supporters of the movement to be little its moral aspect and to regard this as superfuous idealism. Cooperation in actual practice must often fall short of the standard aimed at and details inconsistent with co-operative ideals have often to be accepted in the hope that they may lead to better things. We wish clearly to express that it is the true co-operation alone, that is, to a co-operation which recognises the moral accept of the question that Government must look for the amelioration of the masses and not to a psudo co-operative edifce, however imposing, which is built in ignorance of co- operative principles. The movement is essentially a moral one and it is individualistic rather than socialistic. It provides as a substitute for material assets honesty and a sense of moral obligation and keeps in view the moral rather than the material sanction. Pages 5 and 6 of Theory and Practice of Co-operation in India and Abroad by Kulkarni, Volume 1. Co-operation is a mode of doing business, is at present applied as the solution of many economic problems. Co-operation is harnessed to almost all forms of economic activity. Though co-operation was introduced in this country as a remedy for rural indebtedness, it has been applied successfully in a wide range of activities such as production, distribution, banking, supply, marketing, housing and insuranceSee Theory and Practice of Co-operation in India and Abroad by Kulkarni Volume 1 Page 2.”

 

(Emphasis added)

 

 

Thus, it is settled legal position that the Co-operative Society is to function democratically and the internal democracy of a society, including resolutions passed in accordance with the Act, the Rules, and the bye-laws have to be respected and implemented. The above observations of the Supreme Court are squarely applicable to the Societies registered under the provisions of the said Act.

 

  1. At this stage, only it is required to be noted that out of 100 members of the Respondent No. 1 – Society, only 1 member e. Petitioner has challenged Resolution  passed  by the Respondent No. 1 – Society by majority to create ‘cultural funds’

 

  1. A perusal of the objects of various Societies as contemplated under the said Act clearly shows that there is a distinction between ‘Housing Societies’ and ‘other Societies’. As far as Societies concerning agricultural operations viz. Agricultural Marketing Society, Crop Protection Society, Farming Society, Lift Irrigation Society are concerned, the object inter alia is enhancement of income of the agriculturists. The object of Consumer Society inter alia is distribution of goods to the members. The objects of Co- operative Bank/Credit Co-operative Society are banking and related activities. Thus, the basic objects of all these Societies are related to augmentation of income of its member or providing credit and banking activities. Thus, in a way all such other Societies are concerned with commercial aspects and fnancial gain/support with respect to their Members.

 

  1. However, it is required to be noted that the nature of a ‘Co-operative Housing Society’ is entirely different from that of other Societies as contemplated under the provisions of the said Sub-Section 16 of Section 2 defnes ‘housing society’ as a society, the object of which is to provide its Members with open plots for housing, dwelling houses or fats; or if open plots, the dwelling houses or fats are already acquired, to provide its Members common amenities and services. The housing societies are societies where, in these fats,  Society  Members  along  with their family members reside. Therefore, Model Bye-laws of Co-operative Housing Society inter alia provides in its objects in Bye-Law No.5 as follows :-

“(b) To manage, maintain and administer the property of the Society;

 

(c)              To raise funds for achieving the objects of the Society;

 

  • To undertake and provide for, on its own account or jointly with a co-operative or other institution for social, cultural or recreative activities;

 

(e)              To provide Co-operative Education and Training to develop Co-operative skills to …………………. its ………………………..

Members, Committee Members, Offcers and employees of Society.

 

(f)               To do all things, necessary or expedient for the attainment of the objects of the Society, specifed in these Bye- Laws.”

 

(Emphasis added)

 

It is undisputed that the said Model Bye-laws have been adopted by Respondent No.1-Housing Society. Thus, one of the objects of the housing society is to undertake social, ‘cultural’ or recreational activities. The Bye-Law No.5(f) provides that to do all things, necessary or expedient for the attainment of the objects of the Society, specifed in these Bye-Laws is an object of the Society.

 

 

The Bye-Law No. 5(c) provides that to raise funds for achieving the objects of the Society is also one of the objects of the Society. Thus, to raise funds to undertake Social, Cultural or recreational activities itself is one of the objects of the Housing Society.

 

  1. It is to be noted that such type of activities are required as Society Members along with their family members reside in such housing socieities. It is also important to note that the defnition of “society” under Section 2(27) of the said Act specifes the same as an autonomous association of persons, united voluntarily to meet their common needs and aspirations through a jointly owned and democratically controlled enterprise and adhering to the co-operative principles and values. It is well established that human being is a social Hence, it is important for the housing Societies to organise and conduct Social, Cultural or Rerecreational activities.

 

  1. It is necessary  to  consider  the  submissions  of  Butala, learned counsel appearing for the Petitioner in the above background. Mr. Butala has relied on Bye-law Nos.65 and 66. Apart from these two Bye-laws, Bye-law No.67 is also important. All these three Bye-laws are set out herein below for ready reference.

 

65.   Composition of the Charges of the Society The    contribution    to    be    collected     from            the Members of the Society, towards outgoings and establishment of its funds, referred to in these Bye-laws as the ‘charges’ may be in relation to the following:

 

(a) Property Taxes, (b) Water Charges, (c) Common Electricity Charges, (d) Contribution to Repairs and Maintenance Fund, (e) Expenses on repairs and maintenance of the lifts of the Society, including charges for running the lift. (f) Contribution to the sinking fund, (g) Service Charges, (h) Car Parking Charges, (i) Interest on the defaulted charges,

(j) Repayment of the instalment of the loan and interest, (k) Non-occupancy charges, (l) Insurance Charges, (m) Lease rent, (n) Non- agricultural tax, (o) Education and Training Fund (p) Election Fund (q) Any Other Charges.

 

  1. Break-up of Service Charges of the Society The Service charges of the Society referred to at 65 (g) above shall include the following:

 

(a)           Salaries of the offce staff, liftmen, watchmen, malis and any other employees of the Society.

 

  • Where the Society has independent Offce, the property taxes, electricity charges, water charges

 

(c)     Printing, Stationery and Postage,

 

  • Travelling allowance and conveyance charges to the staff and the Members of the Committee of the

 

 

 

(e)        Sitting fees paid to the Members of the Committee of the Society,

 

  • Subscription to the Education Fund of the Maharashtra Rajya Sahakari Sangh

 

(g)           Annual Subscription of the Housing Federation and any other co-operative institution to which the Society is affliated.

 

  • Entrance fees for affliation to the Housing Federation and any other co-operative

 

(i)         Audit Fees for Internal, Statutory and Reaudit, if any.

 

  • Expenses incurred at meetings of the General Body, the Committee and the Sub- Committee, if

 

(k)           Retainer fees, legal charges, statutory enquiry fees.

 

  • Common electricity

 

(m)       Any other charges approved by the General Body at its Meeting. However such charges should not contradict the provisions of the Act, Rules and Bye-laws of the Society.

 

  1. Sharing of  the  Society’s  charges  by  the Members

 

  • The Committee  shall  apportion  the  Share of each Member towards the charges of the Society on the following basis:

 

 

(i) Property taxes : As fxed by the Local Authority.
(ii) Water Charges : On the basis of total number and size of inlets provided in each fat.
(iii) Expenses on repairs and maintenance of the building/buildings of the Society : At the rate fxed at the general body from time  to  time,  subject  to  the  minimum  of

0.75       per      cent       per      annum,       of     the construction cost of each fat for meeting

expenses of normal recurring repairs.

(iv) Expenses on repairs and maintenance of the lift, including charges for running the lift : Equally by all the Members of the building in which lift is provided, irrespective of the fact whether they use the lift or not.
(v) Sinking Fund : As provided under the bye-law No. 13(c).
(vi) Service Charges : Equally divided by number of fats.
(vii) Parking Charges : At the rate fxed by the General Body of the Society at its meeting under the Bye-law No. 83/84.
(viii) Interest on the delayed payment of Charges : : At the rate fxed under the Bye-law No. 71 to be recovered from the defaulter Member.
(ix) Repayment installment and interest  

of

of the the loan : The amount of each instalment interest fxed by the fnancing agency. with
(x) Non-occupancy charges : At the rate fxed under the Byê-law No. 43(c).
(xi) Insurance Charges : The built up areas of each fat, provided that if there is increase in the insurance premium due to storing any specifc goods in any fat, used for commercial purposes, the extra burden of insurance premium shall be shared by those who are responsible for such increased premium in proportion of the built-up areas to their fats.
(xii) Lease Rent : The built-up area of each fat.
(xiii) Non-Agricultural tax : The built-up area of each fat.
(xiv) Education       &      Training Fund : Rs. 10 per Flat/unit per month.
(xv) Election Fund : Equally by the members and as prescribed by the election authority in the Rules made thereof and as decided by the General Body Meeting of the Society.
(xvi) Any other charges : As may be decided by the General Body Meeting of the Society

 

 

Committee to fx Society’s Charges in respect of every flat

 

(b)     The Committee shall fx in respect of every flat the Society Charges on the basis laid down as under the Bye-law No. 66 (a).”

 

(Emphasis added)

 

 

  1. It is clear that Bye-law 65 provides that the contribution can be collected from the Members for the day to day funtioning of the Society and establishment of its funds. The charges which can be collected from the members inter alia includes ‘any other charges’. Bye-law No.66(m) provides that ‘any other charges’ should be approved by the General Body at its meeting. It further provides that such charges should not contradict the provisions of the Act, Rules and Bye-laws of the Society. Bye-law No.67 is regarding sharing of the Society’s Charges by the Members and provides that as far as ‘any other charges’ are concerned, the same may be decided by the General Body of the Society.

 

  1. Thus, it is very clear that the Model Bye-laws provide for collection of charges from the members as provided in Bye-law 65. Bye-law No.65(q) provides that ‘any other charges’ can be collected from the members of the Society. Bye-law No.66(m) provides that such ‘any other charges’ should be approved by the General Body of the Society and such charges should not contradict the provisions of the Act, Rules and Bye-laws of the Society. Bye-law No.5(d) specifcally provides that the object of a Co-operative Housing Society inter alia is to undertake and provide for, on its own account or jointly with a co-operative or other institution for ‘social, cultural or re-creative activities’.

 

  1. As per Resolution dated 11th November 2006 passed by the General Body of the Respondent No.1Housing Society, a resolution has been passed inter alia to set up a cultural fund and an amount of Rs.70/- per fat per month towards the said cultural fund was approved to be collected from the Members for undertaking various cultural activites/events and annual gathering and further that this amount would be included in monthly Bye-law No.67(a)(xvi) provides that the Committee shall apportion the share of each Member with respect to any other charges as may be decided by the General Body of the housing Society.

 

 

  1. It is one of the contentions of Butalathat Bye-law No.148(b)(iii) provides for allocation to a Common Welfare Fund, such part of the proft as the General Body may determine to be utilised in furtherance of the objects specifed in the Bye-law No.5(d). Therefore, it is his submission that such an amount can be utilised only if the housing Society earns a proft. However, if the objects of the housing Society are seen, then it is not a proft making body, but the charges are levied for the purpose of collecting funds for the objects of the society and one of the objects of the society is to undertake social, ‘cultural’ or re-creative activities. Bye-law No.148 cannot be interpreted in such a manner that there is a restriction on the Society to set up a cultural fund and collect the contribution for such a fund and that such a fund to be created only from proft earned by Society. The only prohibition for levy and collection of charges is that it should be approved by the General Body and said charges should not contradict the provisions of the Act, Rules and Bye-laws of the society. As Bye-laws of the Respondent No.1-Housing Society specifcally provide for undertaking social, ‘cultural’ or recreational activities, and as the charges towards ‘cultural fund’ are approved by the General Body of the Respondent No.1- Housing Society, the challenge to the impugned order fails.

 

  1. It is unfortunate that out of 100 members of Respondent 1–Housing Society, only 1 member i.e. the Petitioner has challenged the legality and validity of the Resolution, by which the Respondent No. 1–Housing Society has decided to set up a ‘cultural fund’ for the purpose of undertaking various cultural activities/events and annual gathering.

 

  1. Therefore, no interference is warranted under the jurisdiction of this Court under Article 227 of the Constitution of Accordingly the Writ Petition is dismissed.

 

(MADHAV J. JAMDAR, J.)

Shri Justice Chandrakant Vasant Bhadang Appointed ITAT President

MASTI

Shri Justice Chandrakant Vasant BhadangShri Justice Chandrakant Vasant Bhadang, B.Sc., LL.B., was born on 05.11.1960. He was enrolled as Advocate on 5.12.1984. He was directly appointed as Additional District Judge on 3 October 2000 and worked in various capacities at different places as a Judicial Officer. He was appointed as an Additional Judge of the Bombay High Court on March 3, 2014 and as Permanent Judge on March 02, 2016.

According to the Bombay High Court website, the following is the brief biodata of JUSTICE CHANDRAKANT VASANT BHADANG: Born on 5 November 1960 at Khamgaon, District Buldhana. Graduated in Science from G.S. College of Commerce, Science and Arts, Khamgaon in 1981. Obtained LL.B. Degree from Nagpur University and was enrolled as an Advocate on 5 December 1984. Comes from a family of Lawyers. Practiced mainly on Civil and Criminal side, in the District Court and for some time at the Nagpur Bench of the Bombay High Court, before joining Maharashtra Judicial Service, as a directly recruited District Judge on 3 October 2000. Worked as Additional District and Sessions Judge at Nagpur, Member Industrial Tribunal at Bandra and Principal District and Sessions Judge, Nashik. Also worked in the Registry of the Bombay High Court, on various positions, as Registrar (Vigilance), Registrar (Judicial), Registrar (Personnel) and Registrar (Inspection). Was appointed as Registrar General on 13 May 2013. Elevated as a Judge, Bombay High Court on 3 March 2014.

The following Circular has been issued by doptcirculars.nic.in

“The Appointments Committee of the Cabinet has approved the proposal for appointment of Justice Chandrakant Vasant Bhadang, retired Judge, Bombay High Court to the post of President, Income Tax Appellate Tribunal.
2. Necessary communication in this regard has been sent to the Department of Legal Affairs.”