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Courts have power to mould relief to lender and borrower under the SARFAESI Act

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The Court held that the general approach that the claimant who succeeds in establishing the unlawfulness of administrative action is entitled to grant of remedial order does not undermine the discretion which the courts or judicial authorities have in assessing “what is fair and just to do in the particular case – to withhold the remedy altogether or to mould the remedy by grant of a declaration rather than a more coercive quashing, prohibiting or mandatory order or injunction which may have been sought.”

It was noted that relief may be granted in respect of one aspect and not others. The general approach, therefore, is that a complainant who succeeds in establishing unlawfulness of an action is entitled to a remedial order, but the court has discretion in the sense of determining what is fair and just to do in a particular case. This discretionary aspect of grant of relief even with reference to post litigation events has been highlighted in Beg Raj Singh v. State of U.P. and Others, (2003) 1 SCC 726 wherein it was held as under:

“7. Having heard the learned counsel for the petitioner, as also the learned counsel for the State and the private De Smith’s Judicial Review, Eigth Edition (2018), at page 1006, we are satisfied that the petition deserves to be allowed. The ordinary rule of litigation is that the rights of the parties stand crystallized on the date of commencement of litigation and the right to relief should be decided by reference to the date on which the petitioner entered the portals of the court. A petitioner, though entitled to relief in law, may yet be denied relief in equity because of subsequent or intervening events i.e. the events between the commencement of litigation and the date of decision. The relief to which the petitioner is held entitled may have been rendered redundant by lapse of time or may have been rendered incapable of being granted by change in law. There may be other circumstances which render it inequitable to grant the petitioner any relief over the respondents because of the balance tilting against the petitioner on weighing inequities pitted against equities on the date of judgment. Third-party interests may have been created or allowing relief to the claimant may result in unjust enrichment on account of events happening in-between. Else the relief may not be denied solely on account of time lost in prosecuting proceedings in judicial or quasi- judicial forum and for no fault of the petitioner. A plaintiff or petitioner having been found entitled to a right to relief, the court would as an ordinary rule try to place the successful party in the same position in which he would have been if the wrong complained against would not have been done to him…”

A similar view was taken earlier by the Supreme Court in Rameshwar and Others v. Jot Ram and Another 14 (1976) 1 SCC 194.

In the case of ARCE POLYMERS PRIVATE LIMITED VERSUS M/S. ALPHINE PHARMACEUTICALS PRIVATE LIMITED, the Court held that it was clear that the Bank actively considered the Borrower’s request for extension of the moratorium period. However, the Borrower did not submit the viability report and failed to bring in Rs. 45,00,000. Post this default also there were negotiations with assurances and promises by the Borrower. Displaying forbearance, the Bank granted indulgence as action under the SARFAESI Act was deferred for nearly one year. The Court held that the Borrower had indulged in a dilatory and tricky approach and had failed to submit details of the additional collateral security offered along with the legal opinion and the engineer’s valuation report. Even visit to the proposed collateral security property was not arranged. The Borrower again tried its luck and submitted a restructuring proposal but this did not fructify into an acceptable settlement. The Bank having lost faith could not rely on the Borrower. Only thereafter, the Bank proceeded with the auctions under the SARFAESI Act. The Borrower then kept silent.

The Court held that taking into consideration the entire facts of the case, which perspicuously reflect disingenuous conduct on part of the Borrower to gain indulgence, unfulfilled assurances and promises, their unwillingness to pay, and in light of the law laid down by the Court, the Borrower has waived and is estopped from challenging violation of Section 13(3A) of the SARFAESI Act.

The pdf of the judgement can be downloaded below.

The conduct of the Borrower can show waiver & he is estopped for arguing violation of Section 13(3A) of the SARFAESI Act: Supreme Court

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In ARCE POLYMERS PRIVATE LIMITED VERSUS M/S. ALPHINE PHARMACEUTICALS PRIVATE LIMITED CIVIL APPEAL NO. 7372 OF 2021, the Supreme Court was considering the question whether a borrow can be regarded as having waived his rights by inaction and whether he is estopped from arguing that there is a violation of section 13(3A) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“The SARFAESI Act).

Section 13(3) in The SARFAESI Act reads as follows:

(3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower. 1[(3A) If, on receipt of the notice under sub‑section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non‑acceptance of the representation or objection to the borrower: Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A.

The Supreme Court held that waiver is an intentional relinquishment of a known right. Waiver applies when a party knows the material facts and is cognizant of the legal rights in that matter, and yet for some consideration consciously abandons the existing legal right, advantage, benefit, claim or privilege. Waiver can be contractual or by express conduct in consideration of some compromise. However, a statutory right may also be waived by implied conduct, like, by wanting to take a chance of a favourable decision. The fact that the other side has acted on it, is sufficient consideration.

It held that while it is correct that waiver being an intentional relinquishment is not to be inferred by mere failure to take action, but the present case is of repeated positive acts post the notices under Sections 13(2) and (4) of the SARFAESI Act. Not only did the Borrower not question or object to the action of the Bank, but it by express and deliberate conduct had asked the Bank to compromise its position and alter the contractual terms. The Borrower wrote repeated request letters for restructuring of loans, which prayers were considered by the Bank by giving indulgence, time and opportunities. The Borrower, aware and conscious of its rights, chose to abandon the statutory claim and took its chance and even procured favourable decisions. Even if we are to assume that the Borrower did not waive the remedy, its conduct had put the Bank in a position where they have lost time, and suffered on account of delay and laches, which aspects are material. Action on the Subject Property was delayed by more than a year as at the behest of the Borrower, the Bank gave them a long rope to regularise the account.

To ignore the conduct of the Borrower would not be reasonable to the Bank once third party rights have been created. In this background, the principle of equitable estoppel as a rule of evidence bars the Borrower from complaining of violation, the Court held.

The question of waiver of mandatory requirement of a statute was considered by the Supreme Court in depth in Commissioner of Customs, Mumbai v. Virgo Steels, Bombay and Another, (2002) 4 SCC 316 by referring to a catena of judgments beginning from the judgment of the Privy Council in AL.AR. Vellayan Chettiar (Decd.) and Others v. Government of the Province of Madras, Through the Collector of Ramnad at Madura, and Another AIR 1947 PC 197 wherein it was held that though notice under Section 80 of the Code of Civil Procedure, 1908 is mandatory, the suit would not be bad if the non-issuance of notice is waived by the party for whose benefit the provision has been enacted. Similarly, in S. Raghbir Singh Gill v. S. Gurcharan Singh Tohra and Others, (1980) Supp SCC 53 the argument that the requirement of Section 94 of the Representation of Peoples Act, 1951 cannot be waived was rejected observing that a privilege conferred or a right created by a statute, if it is solely for the benefit of a party, the said party can waive it. However, where a provision enacted is founded on public policy, the courts would be slow to apply the doctrine of waiver. The doctrine applies in the first situation as the right to waive inheres in the concept of personal privilege and right. Reference in this regard can be also made to the ratio in Krishan Lal v. State of J&K (1994) 4 SCC 422 and Martin & Harris Ltd. v. VIth Additional Distt. Judge and Others. (1998) 1 SCC 732

In Bank of India and Others v. O.P. Swarnakar and Others, (2003) 2 SCC 721 and in Shri Lachoo Mal v. Shri Radhey Shyam, (1971) 1 SCC 619 the Supreme Court elucidated the general principle that everyone has a right to waive and to agree to renounce an advantage of law or rule made solely for the benefit and protection of the person in private capacity. If a party gives up the advantage that could be taken of a particular position in law, it cannot later be permitted to change and turn around so as to avail of that advantage. However, this rule will not apply when there is a prohibition against contracting out of the statute, which prohibition would have its consequences or in case the waiver would be contrary to public policy. Further, a person cannot waive a right of a third person.

This principle has been subsequently followed in Pravesh Kumar Sachdeva v. State of Uttar Pradesh and Others, (2018) 10 SCC 628 to hold that waiver is abandonment of a right which normally everybody is at liberty to waive. Waiver is nothing unless it amounts to release, albeit it can be adduced from acquiescence or may be implied. The essence of waiver is an estoppel and they are questions of conduct and, therefore, necessarily determined on the facts of each case. As a rule and judicial policy, the courts of law do not allow a litigant to take inconsistent position to gain advantage through the aid of judicial proceedings.

The judgement of the Supreme Court can be downloaded below.

Taxation of lotteries: Supreme Court clarifies the law whether State Legislatures have legislative competence to impose tax on lotteries conducted by other States in their State

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In STATE OF KARNATAKA & ANR VERSUS STATE OF MEGHALAYA & ANR CIVIL APPEAL NOS.10466-10476 OF 2011 the Supreme Court answered the important question whether the State Legislatures of Karnataka and Kerala had legislative competence to impose tax on the lotteries conducted by other States in their State (in the State of Karnataka and Kerala respectively). The High Courts of Kerala and Karnataka had held that the respective State Legislatures had no legislative competence to impose tax on the lotteries conducted by other States in their State. This view has been reversed by the Supreme Court.

The conclusions of the Apex Court can be summed up as follows: –

(i) That the subject ‘betting and gambling’ in Entry 34 of List II is a State subject.

(ii) From the earlier judgments of the Supreme Court, it is clear that ‘lotteries’ is a species of gambling activity and hence lotteries is within the ambit of ‘betting and gambling’ as appearing in Entry 34 List II.

(iii) The expression ‘betting and gambling’ is relatable to an activity which is in the nature of ‘betting and gambling’. Thus, all kinds and types of ‘betting and gambling’ fall within the subject of Entry 34 of List II. The expression ‘betting and gambling’ is thus a genus it includes several types or species of activities such as horse racing, wheeling and other local variations/forms of ‘betting and gambling’ activity. The subject ‘lotteries organised by the Government of India or the Government of a State’ in Entry 40 of List I is a Union subject. It is only lotteries organised by the Government of India or the Government of State in terms of Entry 40 of List I which are excluded from Entry 34 of List II. In other words, if lotteries are conducted by private parties or by instrumentalities or agencies authorized, by Government of India or the Government of State, it would come within the scope and ambit of Entry 34 of List II.

(iv) Thus, the State legislatures are denuded of their powers under Entry 34 of List II only to the extent of lotteries organised by the Government of India or the Government of a State, in terms of Entry 40 of List I. In other words, except what is excluded in terms of Entry 40 of List I, all other activities which are in the nature of ‘betting and gambling’ would come within the scope and ambit of Entry 34 of List II. Thus, ‘betting and gambling’ is a State subject except to the extent of it being denuded of its powers insofar as Entry 40 of List I is concerned.

(v) Entry 62 of List II is a specific taxation Entry on ‘luxuries, including taxes on entertainments, amusements, betting and gambling’. The power to tax is on all activities which are in the nature of ‘betting and gambling,’ including lotteries. Since, there is no dispute that lotteries, irrespective of whether it is conducted or it is organised by the Government of India or the Government of State or is authorized by the State 121 or is conducted by an agency or instrumentality of State Government or a Central Government or any private player, is ‘betting and gambling’, the State Legislatures have the power to tax lotteries under Entry 62 of List II. This is because the taxation contemplated under the said Entry is on ‘betting and gambling’ activities which also includes lotteries, irrespective of the entity conducting the same. Hence, the legislations impugned are valid as the Karnataka and Kerala State Legislatures possessed legislative competence to enact such Acts.

(vi) Thus, the scope and ambit of lotteries organised by Government of India or Government of State under Entry 40 of List I is only in the realm of regulation of such lotteries. The said Entry does not take within its contours the power to impose taxation on lotteries conducted by the Government of India or the Government of State.

(vii) The Court also held that lottery schemes by the Government of other States are organised/conducted in the State of Karnataka or Kerala and there are express provisions under the impugned Acts for registration of the agents or promoters of the Governments of respective States 122 for conducting the lottery schemes in the State of Karnataka and the State of Kerala. This itself indicates sufficient territorial nexus between the respondents– States who are organising the lottery and the States of Karnataka and Kerala.

(viii) In view of the aforesaid conclusions, the Supreme Court held that Division Benches of the High Courts of Kerala and Karnataka were not right in holding that the respective State Legislatures had no legislative competence to impose tax on the lotteries conducted by other States in their State (in the State of Karnataka and Kerala respectively).

Supreme Court Guidelines On Payment Of Maintenance In Matrimonial Matters

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Click here to download the Supreme Court judgement in RAJNESH VERSUS NEHA

In RAJNESH VERSUS NEHA, the Supreme Court has framed guidelines on payment of maintenance in matrimonial matters

The Apex Court on 4th November, 2020 in the case of Rajnesh Vs Neha & Another in a land mark decision regarding maintenance etc u/s 125 of CrPC issued guidelines regarding the following:-

General Guidelines and Directions

Issue of Overlapping Jurisdictions

Payment of interim maintenance

Criteria for determining quantum of maintenance

Date from which Maintenance to be awarded Enforcement of orders of maintenance

Final Directions

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 730 OF 2020
(Arising out of SLP (Crl.) No. 9503 of 2018)

RAJNESH …APPELLANT

Versus

NEHA & Anr. …RESPONDENTS

INDEX
PART A Order passed in Criminal Appeal No.730 of 2020
PART B General Guidelines and Directions
I. Issue of Overlapping Jurisdictions
II. Payment of interim maintenance
III. Criteria for determining quantum of maintenance
IV. Date from which Maintenance to be awarded
V. Enforcement of orders of maintenance
VI. Final Directions

Signature Not Verified

Digitally signed by
Jatinder Kaur
Date: 2020.11.04
13:33:16 IST
Reason:

1
INDU MALHOTRA, J.
PART A Leave granted.

(i) The present Criminal Appeal arises out of an application for Interim Maintenance filed in a petition u/S. 125 Cr.P.C. by the Respondent-wife and minor son. The Respondent No.1-wife left the matrimonial home in January 2013, shortly after the birth of the son-Respondent No.2. On 02.09.2013, the wife filed an application for interim maintenance u/S. 125 Cr.P.C. on behalf of herself and the minor son. The Family Court vide a detailed Order dated 24.08.2015 awarded interim maintenance of Rs.15,000 per month to the Respondent No.1- wife from 01.09.2013; and Rs.5,000 per month as interim maintenance for the Respondent No.2-son from 01.09.2013 to 31.08.2015; and @ Rs. 10,000 per month from 01.09.2015 onwards till further orders were passed in the main petition.

(ii) The Appellant-husband challenged the Order of the Family Court vide Criminal Writ Petition No.875/2015 filed before the Bombay High Court, Nagpur Bench. The High Court dismissed the Writ Petition vide Order dated 14.08.2018, and affirmed the Judgment passed by the Family Court.

(iii) The present appeal has been filed to impugn the Order dated 14.08.2018.

This Court issued notice to the wife and directed the Appellant-husband to file his Income Tax Returns and Assessment Orders for the period from 2005-2006 till date. He was also directed to place a photocopy of his passport on record. By a further Order dated 11.09.2019, the Appellant-husband was directed to make payment of the arrears of Rs.2,00,000 towards interim maintenance to the wife; and a further amount of Rs.3,00,000, which was due and payable to the wife towards arrears of maintenance, as per his own admission. By a subsequent Order dated 14.10.2019, it was recorded that only a part of the arrears had been paid. A final opportunity was granted to the Appellant-husband to make payment of the balance amount by 30.11.2019, failing which, the Court would proceed under the Contempt of Courts Act for wilful disobedience with the Orders passed by this Court.

In the backdrop of the facts of this case, we considered it fit to frame guidelines on certain aspects pertaining to the payment of maintenance in matrimonial matters. There are different statutes providing for making an application for grant of maintenance / interim maintenance, if any person having sufficient means neglects, or refuses to maintain his wife, children, parents. The different enactments provide an independent and distinct remedy framed with a specific object and purpose. Inspite of time frames being prescribed by various statutes for disposal of interim applications, we have noticed, in practice that in a vast majority of cases, the applications are not disposed of within the time frame prescribed. To address various issues which arise for consideration in applications for grant of maintenance / interim maintenance, it is necessary to frame guidelines to ensure that there is uniformity and consistency in deciding the same. To seek assistance on these issues, we have appointed Ms. Anitha Shenoy and Mr. Gopal Sankaranaryanan, Senior Advocates as Amici Curiae, who have graciously accepted to assist this Court.

(iv) By a further Order dated 17.12.2019, the Appellant was directed to pay an amount of Rs.1,45,000 to the Respondent no.1-wife within a period of 45 days.

On the issue of framing guidelines, the National Legal Services Authority was directed to elicit responses from the State Legal Services Authorities of various States.

(v) By a subsequent Order dated 05.08.2020, it was recorded that an Affidavit of Compliance had been filed on 04.08.2020 by the Appellant-husband, wherein it was stated that arrears of Rs.1,45,000 till 11.09.2019 had been paid by him in January, 2020. However, he had made no further payment to the wife thereafter. With respect to the amount of Rs.10,000 p.m. payable for the minor son, the Order had been complied with till July 2020. A statement was made by the Counsel for the Appellant that he was not disputing the payment of maintenance for his son, and would continue to pay the same. A direction was issued by this Court to pay the entire arrears of maintenance to the wife @ Rs.15,000 p.m. as fixed by the Family Court, and continue to pay the said amount during the pendency of proceedings.

(vi) By the Order dated 25.08.2020, it was noted that the Appellant had filed an Affidavit dated 23.08.2020 wherein he had admitted and acknowledged that an amount of Rs.5,00,000 was pending towards arrears of maintenance to the Respondent No.1-wife. The Appellant was directed to pay 50% of the arrears within a period of 4 weeks to the Respondent No.1, failing which, he was directed to remain present before the Court on the next date of hearing. The Counsel for the husband placed on record a chart of various proceedings pending between the parties. Taking note of the aforesaid facts, we considered it appropriate to refer the matter for mediation by Mr. Shridhar Purohit, Advocate, a well-known Mediator in Nagpur, to resolve all disputes pending between the parties, and arrive at an overall settlement.

(vii) On 08.10.2020, we were informed that the mediation had failed. The husband appeared before the Court, and made an oral statement that he did not have the financial means to comply with the Order of maintenance payable to the Respondent No.1-wife, and had to borrow loans from his father to pay the same. He however stated that he had paid the maintenance awarded to the son, and would continue to do so without demur. Both parties addressed arguments and filed their written submissions.

(viii) We have heard the Counsel for the parties, and perused the written submissions filed on their behalf.

The husband has inter alia submitted that he was presently unemployed, and was not in a position to pay maintenance to the Respondent No.1-wife. He stated that he did not own any immovable property, and had only one operational bank account. The husband declined to pay any further amount towards the maintenance of his wife. It was further submitted that the Family Court had erroneously relied upon the Income Tax Returns of 2006, while determining the maintenance payable in 2013. He further submitted that he was exploring new business projects, which would enable him to be in a better position to sustain his family.

The wife has inter alia submitted that the amount of Rs.10,000 awarded for the son was granted when he was 2 ½ years old in 2015. The said amount was now highly inadequate to meet the expenses of a growing child, who is 7 ½ years old, and is a school-going boy. It was further submitted that the admission fee for the current academic year 2020-2021 had not yet been paid. If the fee was not paid within time, the school would discontinue sending the link for online classes. She submitted that she was being over-burdened by the growing expenses, with no support from the husband.

With respect to the contention of the husband that he had no income, she submitted that the husband had made investments in real estate projects, and other businesses, which he was concealing from the Court, and diverting the income to his parents. It has also been alleged that the Appellant had retained illegal possession of her Streedhan, which he was refusing to return. Despite orders being passed by this Court, and in the proceedings under the D.V. Act, he was deliberately not complying with the same. In these circumstances, it was submitted that there was a major trust deficit, and there was no prospect for reconciliation.

(ix) With respect to the issue of enhancement of maintenance for the son, the Respondent is at liberty to move the Family Court for the said relief. We cannot grant this relief in the present appeal, as it has been filed by the husband.

(x) In the facts and circumstances of the case, we order and direct that :

(a) The Judgment and order dated 24.08.2015 passed by the Family Court, Nagpur, affirmed by the Bombay High Court, Nagpur Bench vide Order dated 14.08.2018 for payment of interim maintenance @ Rs.15,000 p.m. to the Respondent No.1-wife, and Rs.10,000 p.m. to the Respondent No.2-son, is hereby affirmed by this Court;
(b) The husband is directed to pay the entire arrears of maintenance @ Rs.15,000 p.m., within a period of 12 weeks’ from the date of this Judgment, and continue to comply with this Order during the pendency of the proceedings u/S. 125 Cr.P.C. before the Family Court;
(c) If the Appellant-husband fails to comply with the aforesaid directions of this Court, it would be open to the respondents to have the Order enforced u/S.128 Cr.P.C., and take recourse to all other remedies which are available in accordance with law;

(d) The proceedings for payment of interim maintenance u/S. 125 Cr.P.C.

have been pending between the parties for a period of over 7 years now. We deem it appropriate that the Family Court decides the substantive application u/S. 125 Cr.P.C. in Petition No. E-443/ 2013 finally, in light of the directions / guidelines issued in the present judgment, within a period of 6 months’ from the date of this judgment.

The Registry is directed to forward a complete copy of the pleadings, alongwith the written submissions filed by the parties, and the record of the proceedings in the present Criminal Appeal, to the Family Court, Nagpur. The present Criminal Appeal is disposed of accordingly.

PART B Given the backdrop of the facts of the present case, which reveal that the application for interim maintenance under Section 125 Cr.P.C. has remained pending before the Courts for seven years now, and the difficulties encountered in the enforcement of orders passed by the Courts, as the wife was constrained to move successive applications for enforcement from time to time, we deem it appropriate to frame guidelines on the issue of maintenance, which would cover overlapping jurisdiction under different enactments for payment of maintenance, payment of Interim Maintenance, the criteria for determining the quantum of maintenance, the date from which maintenance is to be awarded, and enforcement of orders of maintenance.

Guidelines / Directions on Maintenance Maintenance laws have been enacted as a measure of social justice to provide recourse to dependant wives and children for their financial support, so as to prevent them from falling into destitution and vagrancy.

Article 15(3) of the Constitution of India provides that : “Nothing in this article shall prevent the State from making any special provision for women and children.” Article 15 (3) reinforced by Article 39 of the Constitution of India, which envisages a positive role for the State in fostering change towards the empowerment of women, led to the enactment of various legislations from time to time.

Justice Krishna Iyer in his judgment in Captain Ramesh Chander Kaushal v Mrs. Veena Kaushal & Ors.1 held that the object of maintenance laws is :

“9. This provision is a measure of social justice and specially enacted to protect women and children and falls within the constitutional sweep of Article 15(3) reinforced by Article 39. We have no doubt that sections of statutes calling for construction by courts are not petrified print but vibrant words with social functions to fulfil. The brooding presence of the constitutional empathy for the weaker sections like women and children must inform interpretation if it has to have social relevance. So viewed, it is (1978) 4 SCC 70.
possible to be selective in picking out that interpretation out of two alternatives which advances the cause — the cause of the derelicts.” The legislations which have been framed on the issue of maintenance are the Special Marriage Act 1954 (“SMA”), Section 125 of the Cr.P.C. 1973; and the Protection of Women from Domestic Violence Act, 2005 (“D.V. Act”) which provide a statutory remedy to women, irrespective of the religious community to which they belong, apart from the personal laws applicable to various religious communities.

I Issue of Overlapping Jurisdiction Maintenance may be claimed under one or more of the afore-mentioned statutes, since each of these enactments provides an independent and distinct remedy framed with a specific object and purpose. For instance, a Hindu wife may claim maintenance under the Hindu Adoptions and Maintenance Act 1956 (“HAMA”), and also in a substantive proceeding for either dissolution of marriage, or restitution of conjugal rights, etc. under the Hindu Marriage Act, 1955 (“HMA”) by invoking Sections 24 and 25 of the said Act.

(i) In Nanak Chand v Chandra Kishore Aggarwal & Ors. 2 , the Supreme Court held that there was no inconsistency between the Cr.P.C. and HAMA. Section 4(b) of HAMA would not repeal or affect the provisions of Section 488 of the old Cr.P.C. It was held that :

“4. Both can stand together. The Maintenance Act is an act to amend and codify the law relating to adoptions and maintenance among Hindus. The law was substantially similar before and nobody ever suggested that Hindu Law, as in force immediately before the commencement of this Act, insofar as it dealt with the maintenance of children, was in any way inconsistent with Section 488, Cr.P.C. The scope of the two laws is different. Section 488 provides a summary remedy and is applicable to all persons belonging to all religions and has no relationship with the personal law of the parties. Recently the question came before the Allahabad High Court in Ram Singh v. State: AIR1963All355, before the Calcutta High Court in Mahabir Agarwalla v. Gita Roy [1962] 2 Cr. L.J.528 and before the Patna High Court in Nalini Ranjan v. Kiran Rani: AIR1965Pat442. The three High Courts have, in our view, correctly come to the conclusion that Section 4(b) of the Maintenance Act does not repeal or affect in any manner the provisions contained in Section 488, Cr.P.C.” (emphasis supplied) (1969) 3 SCC 802.
While it is true that a party is not precluded from approaching the Court under one or more enactments, since the nature and purpose of the relief under each Act is distinct and independent, it is equally true that the simultaneous operation of these Acts, would lead to multiplicity of proceedings and conflicting orders. This would have the inevitable effect of overlapping jurisdiction. This process requires to be streamlined, so that the respondent / husband is not obligated to comply with successive orders of maintenance passed under different enactments.

For instance, if in a previous proceeding under Section 125 Cr.P.C., an amount is awarded towards maintenance, in the subsequent proceeding filed for dissolution of marriage under the Hindu Marriage Act, where an application for maintenance pendente lite is filed under Section 24 of that Act, or for maintenance under Section 25, the payment awarded in the earlier proceeding must be taken note of, while deciding the amount awarded under HMA.

Statutory provisions under various enactments

(a) The Special Marriage Act, 1954 (“SMA”) Section 4 of the Special Marriage Act, 1954 provides that a marriage between any two persons who are citizens of India may be solemnised under this Act, notwithstanding anything contained in any other law for the time being in force. It is a secular legislation applicable to all persons who solemnize their marriage in India.

Section 36 of the Special Marriage Act provides that a wife is entitled to claim pendente lite maintenance, if she does not have sufficient independent income to support her and for legal expenses. The maintenance may be granted on a weekly or monthly basis during the pendency of the matrimonial proceedings. The Court would determine the quantum of maintenance depending on the income of the husband, and award such amount as may seem reasonable. Section 36 reads as:

“S.36. Alimony pendente lite.—Where in any proceeding under Chapter V or Chapter VI it appears to the district court that the wife has no independent income sufficient for her support and the necessary expenses of the proceeding, it may, on the application of the wife, order the husband to pay her the expenses of the proceeding, and weekly or monthly during the proceeding such sum as, having regard to the husband’s income, it may seem to the court to be reasonable.

Provided that the application for the payment of the expenses of the proceeding and such weekly or monthly sum during the proceeding under Chapter V or Chapter VI, shall, as far as possible, be disposed of within sixty days from the date of service of notice on the husband.” Section 37 provides for grant of permanent alimony at the time of passing of the decree, or subsequent thereto. Permanent alimony is the consolidated payment made by the husband to the wife towards her maintenance for life. Section 37 reads as:

“S. 37. Permanent alimony and maintenance.—(1) Any court exercising jurisdiction under Chapter V or Chapter VI may, at the time of passing any decree or at any time subsequent to the decree, on application made to it for the purpose, order that the husband shall secure to the wife for her maintenance and support if necessary, by a charge on the husband’s property such gross sum or such monthly or periodical payment of money for a term not exceeding her life, as, having regard to her own property, if any, her husband’s property and ability, the conduct of the parties and other circumstances of the case, as it may seem to the court to be just. (2) If the district court is satisfied that there is a change in the circumstances of either party at any time after it has made an order under sub-Section (1), it may, at the instance of either party, vary, modify or rescind any such order in such manner as it may seem to the court to be just.
(3) If the district court is satisfied that the wife in whose favour an order has been made under this Section has remarried or is not leading a chaste life, it may, at the instance of the husband, vary, modify or rescind any such order and in such manner as the court may deem just.”

(b) The Hindu Marriage Act, 1955 (“HMA”) The HMA is a complete code which provides for the rights, liabilities and obligations arising from a marriage between two Hindus. Sections 24 and 25 make provision for maintenance to a party who has no independent income sufficient for his or her support, and necessary expenses. This is a gender-neutral provision, where either the wife or the husband may claim maintenance. The pre- requisite is that the applicant does not have independent income which is sufficient for her or his support, during the pendency of the lis.

Section 24 of the HMA provides for maintenance pendente lite, where the Court may direct the respondent to pay the expenses of the proceeding, and pay such reasonable monthly amount, which is considered to be reasonable, having regard to the income of both the parties.

Section 24 reads as:

“24. Maintenance pendente lite and expenses of proceedings.— Where in any proceeding under this Act it appears to the court that either the wife or the husband, as the case may be, has no independent income sufficient for her or his support and the necessary expenses of the proceeding, it may, on the application of the wife or the husband, order the respondent to pay to the petitioner the expenses of the proceeding, and monthly during the proceeding such sum as, having regard to the petitioner’s own income and the income of the respondent, it may seem to the court to be reasonable.

Provided that the application for the payment of the expenses of the proceeding and such monthly sum during the proceeding, shall, as far as possible, be disposed of within sixty days from the date of service of notice on the wife or the husband, as the case may be.” (emphasis supplied) The proviso to Section 24 providing a time line of 60 days for disposal of the application was inserted vide Act 49 of 2001 w.e.f. 24.09.2001.

Section 25 provides for grant of permanent alimony, which reads as : “25. Permanent alimony and maintenance — (1) Any court exercising jurisdiction under this Act may, at the time of passing any decree or at any time subsequent thereto, on application made to it for the purpose by either the wife or the husband, as the case may be, order that the respondent shall pay to the applicant for her or his maintenance and support such gross sum or such monthly or periodical sum for a term not exceeding the life of the applicant as, having regard to the respondent’s own income and other property, if any, the income and other property of the applicant, the conduct of the parties and other circumstances of the case, it may seem to the court to be just, and any such payment may be secured, if necessary, by a charge on the immovable property of the respondent.

(2) If the court is satisfied that there is, a change in the circumstances of either party at any time after it has made an order under sub-section (1), it may at the instance of either party, vary, modify or rescind any such order in such manner as the court may deem just.

(3) If the court is satisfied that the party in whose favour an order has been made under this section has remarried or, if such party is the wife, that she has not remained chaste, or, if such party is the husband, that he has had sexual intercourse with any woman outside wedlock, it may at the instance of the other party vary, modify or rescind any such order in such manner as the court may deem just.” (emphasis supplied) Section 26 of the HMA provides that the Court may from time to time pass interim orders with respect to the custody, maintenance and education of the minor children.

(c) Hindu Adoptions & Maintenance Act, 1956 (“HAMA”) HAMA is a special legislation which was enacted to amend and codify the laws relating to adoption and maintenance amongst Hindus, during the subsistence of the marriage. Section 18 provides that a Hindu wife shall be entitled to be maintained by her husband during her lifetime. She is entitled to make a claim for a separate residence, without forfeiting her right to maintenance. Section 18 read in conjunction with Section 23 states the factors required to be considered for deciding the quantum of maintenance to be paid. Under sub-section (2) of Section 18, the husband has the obligation to maintain his wife, even though she may be living separately. The right of separate residence and maintenance would however not be available if the wife has been unchaste, or has converted to another religion.

Section 18 reads as follows :

“18. Maintenance of wife.— (1) Subject to the provisions of this section, a Hindu wife, whether married before or after the commencement of this Act, shall be entitled to be maintained by her husband during her lifetime.

(2) A Hindu wife shall be entitled to live separately from her husband without forfeiting her claim to maintenance—

(a) if he is guilty of desertion, that is to say, of abandoning her without reasonable cause and without her consent or against her wish or willfully neglecting her;

(b) if he has treated her with such cruelty as to cause a reasonable apprehension in her mind that it will be harmful or injurious to live with her husband;

(c) [****]

(d) if he has any other wife living;

(e) if he keeps a concubine in the same house in which his wife is living or habitually resides with a concubine elsewhere;

(f) if he has ceased to be a Hindu by conversion to another religion;

(g) if there is any other cause justifying living separately. (3) A Hindu wife shall not be entitled to separate residency and maintenance from her husband if she is unchaste or ceases to be a Hindu by conversion to another religion.” The distinction between maintenance under HMA and HAMA is that the right under Section 18 of HAMA is available during the subsistence of a marriage, without any matrimonial proceeding pending between the parties. Once there is a divorce, the wife has to seek relief under Section 25 of HMA. 3 Under HMA, either the wife, or the husband, may move for judicial separation, restitution of conjugal rights, dissolution of marriage, payment of interim maintenance under Section 24, and permanent alimony under Section 25 of the Act, whereas under Section 18 of HAMA, only a wife may seek maintenance.

The interplay between the claim for maintenance under HMA and HAMA came up for consideration by the Supreme Court in Chand Dhawan v Jawaharlal Dhawan.4 The Supreme Court, while considering the various laws relating to marriage amongst Hindus, discussed the scope of applications under the HMA and HAMA in the following words :

“23. …Section 18(1) of the Hindu Adoptions and Maintenance Act, 1956 entitles a Hindu wife to claim maintenance from her husband during her life-time. Sub-section (2) of Section 18 grants her the right to live separately, without forfeiting her claim to maintenance, if he is guilty of any of the misbehaviors enumerated therein or on account of his being in one of objectionable conditions as mentioned therein. So while sustaining her marriage and preserving her marital status, the wife is entitled to claim maintenance from her husband. On the other hand, under the Hindu Marriage Act, in contrast, her claim for maintenance pendente lite is durated on the pendency of a litigation of the kind envisaged under Sections 9 to 14 of the Hindu Marriage Act, and her claim to permanent maintenance or alimony is based on the supposition that either her marital status has been strained or affected by passing a decree for restitution of conjugal rights or judicial separation in favour or against her, or her marriage stands dissolved by a decree of nullity or divorce, with or without her Panditrao Chimaji Kalure v Gayabai (2002) 2 Mah LJ 53.
(1993) 3 SCC 406.
consent. Thus when her marital status is to be affected or disrupted the court does so by passing a decree for or against her. On or at the time of the happening of that event, the court being seized of the matter, invokes its ancillary or incidental power to grant permanent alimony. Not only that, the court retains the jurisdiction at subsequent stages to fulfill this incidental or ancillary obligation when moved by an application on that behalf by a party entitled to relief. The court further retains the power to change” or alter the order in view of the changed circumstances. Thus the whole exercise is within the gammit of a diseased or a broken marriage. And in order to avoid conflict of perceptions the legislature while codifying the Hindu Marriage Act preserved the right of permanent maintenance in favour of the husband or the wife, as the case may be, dependent on the court passing a decree of the kind as envisaged under Sections 9 to 14 of the Act. In other words without the marital status being affected or; disputed by the matrimonial court under the Hindu Marriage Act the claim of permanent alimony was not to be valid as ancillary or incidental to such affectation or disruption. The wife’s claim to maintenance necessarily has then to be agitated under the Hindu Adoptions and Maintenance Act, 1956 which is a legislative measure later in point of time than the Hindu Marriage Act, 1955, though part of the same socio-legal scheme revolutionizing the law applicable to Hindus….” (emphasis supplied) Section 19 of the HAMA provides that a widowed daughter-in-law may claim maintenance from her father-in-law if (i) she is unable to maintain herself out of her own earnings or other property; or, (ii) where she has no property of her own, is unable to obtain maintenance; (a) from the estate of her husband, or her father or mother, or (b) from her son or daughter, if any, or his or her estate.

Section 20 of HAMA provides for maintenance of children and aged parents. Section 20 casts a statutory obligation on a Hindu male to maintain an unmarried daughter, who is unable to maintain herself out of her own earnings, or other property. In Abhilasha v Parkash & Ors.,5 a three-judge bench of this Court held that Section 20(3) is a recognition of the principles of Hindu law, particularly the obligation of the father to maintain an unmarried daughter. The right is absolute under personal law, which has been given statutory recognition by this Act. The Court noted the distinction between the award of maintenance to children u/S. 125 Cr.P.C., which limits the claim of maintenance to a child, until he or she attains majority. However, if an unmarried daughter is by reason Decided on 15.10.2020 in Criminal Appeal No.615/2020.

of any physical or mental abnormality or injury, unable to maintain herself, under Section 125(1)(c), the father would be obligated to maintain her even after she has attained majority. The maintenance contemplated under HAMA is a wider concept. Section 3(b) contains an inclusive definition of maintenance including marriage expenses. The purpose and object of Section 125 Cr.P.C. is to provide immediate relief to the wife and children in a summary proceeding, whereas under Section 20 read with Section 3(b) of HAMA, a much larger right is contemplated, which requires determination by a civil court.

Section 22 provides for maintenance of dependants. Section 23 provides that while awarding maintenance, the Court shall have due regard to the criteria mentioned therein :

“23. Amount of maintenance. – (1) It shall be in the discretion of the court to determine whether any, and if so what, maintenance shall be awarded under the provisions of this Act, and in doing so, the court shall have due regard to the consideration set out in sub-section (2) or sub-section (3), as the case may be, so far as they are applicable.
(2) In determining the amount of maintenance, if any, to be awarded to a wife, children or aged or infirm parents under this Act, regard shall be had to—
(a) the position and status of the parties;
(b) the reasonable wants of the claimant;
(c) if the claimant is living separately, whether the claimant is justified in doing so;
(d) the value of the claimant’s property and any income derived from such property, or from the claimant’s own earning or from any other source;
(e) the number of persons entitled to maintenance under this Act.
(3) In determining the amount of maintenance, if any, to be awarded to a dependant under this Act, regard shall be had to—
(a) the net value of the estate of the deceased after providing for the payment of his debts;
(b) the provision, if any, made under a will of the deceased in respect, of the dependant;
(c) the degree of relationship between the two;
(d) the reasonable wants of the dependant;
(e) the past relations between the dependant and the deceased;
(f) the value of the property of the dependant and any income derived from such property, or from his or her earnings or from any other course;
(g) the number of dependants entitled to maintenance under this Act.”

(d) Section 125 of the Cr.P.C.

Chapter IX of Code of Criminal Procedure, 1973 provides for maintenance of wife, children and parents in a summary proceeding. Maintenance under Section 125 of the Cr.P.C. may be claimed by a person irrespective of the religious community to which they belong. The purpose and object of Section 125 Cr.P.C. is to provide immediate relief to an applicant. An application under Section 125 Cr.P.C. is predicated on two conditions : (i) the husband has sufficient means; and (ii) “neglects” to maintain his wife, who is unable to maintain herself. In such a case, the husband may be directed by the Magistrate to pay such monthly sum to the wife, as deemed fit. Maintenance is awarded on the basis of the financial capacity of the husband and other relevant factors.

The remedy provided by Section 125 is summary in nature, and the substantive disputes with respect to dissolution of marriage can be determined by a civil court / family court in an appropriate proceeding, such as the Hindu Marriage Act, 1956.

In Bhagwan Dutt v Kamla Devi 6 the Supreme Court held that under Section 125(1) Cr.P.C. only a wife who is “unable to maintain herself” is entitled to seek maintenance. The Court held :

“19. The object of these provisions being to prevent vagrancy and destitution, the Magistrate has to find out as to what is required by the wife to maintain a standard of living which is neither luxurious nor penurious, but is modestly consistent with the status of the family. The needs and requirements of the wife for such moderate living can be fairly determined, only if her separate income, also, is taken into account together with the earnings of the husband and his commitments.” (emphasis supplied) Prior to the amendment of Section 125 in 2001, there was a ceiling on the amount which could be awarded as maintenance, being Rs. 500 “in the whole”.
In view of the rising costs of living and inflation rates, the ceiling of Rs. 500 was (1975) 2 SCC 386.

done away by the 2001 Amendment Act. The Statement of Objects and Reasons of the Amendment Act states that the wife had to wait for several years before being granted maintenance. Consequently, the Amendment Act introduced an express provision for grant of “interim maintenance”. The Magistrate was vested with the power to order the respondent to make a monthly allowance towards interim maintenance during the pendency of the petition.

Under sub-section (2) of Section 125, the Court is conferred with the discretion to award payment of maintenance either from the date of the order, or from the date of the application.

Under the third proviso to the amended Section 125, the application for grant of interim maintenance must be disposed of as far as possible within sixty days’ from the date of service of notice on the respondent.

The amended Section 125 reads as under :

“125. Order for maintenance of wives, children and parents. (1) If any person having sufficient means neglects or refuses to maintain-

(a) his wife, unable to maintain herself, or

(b) his legitimate or illegitimate minor child, whether married or not, unable to maintain itself, or

(c) his legitimate or illegitimate child (not being a married daughter) who has attained majority, where such child is, by reason of any physical or mental abnormality or injury unable to maintain itself, or

(d) his father or mother, unable to maintain himself or herself, a Magistrate of the first class may, upon proof of such neglect or refusal, order such person to make a monthly allowance for the maintenance of his wife or such child, father or mother, at such monthly rate as such Magistrate thinks fit, and to pay the same to such person as the Magistrate may from time to time direct:

Provided that the Magistrate may order the father of a minor female child referred to in clause (b) to make such allowance, until she attains her majority, if the Magistrate is satisfied that the husband of such minor female child, if married, is not possessed of sufficient means : Provided further that the Magistrate may, during the pendency of the proceeding regarding monthly allowance for the maintenance under this sub-section, order such person to make a monthly allow for the interim maintenance of his wife or such child, father or mother, and the expenses of such proceeding which the Magistrate considers reasonable, and to pay the same to such person as the Magistrate may from time to time direct :

Provided also that an application for the monthly allowance for the interim maintenance and expenses of proceeding under the second proviso shall, as far as possible, be disposed of within sixty days from the date of the service of notice of the application to such person.

Explanation. – For the purposes of this Chapter,-

(a) “minor” means a person who, under the provisions of the Indian Majority Act, 1875 (9 of 1875); is deemed not to have attained his majority;

(b) “wife” includes a woman who has been divorced by, or has obtained a divorce from, her husband and has not remarried.

(2) Any such allowance for the maintenance or interim maintenance and expenses of proceeding shall be payable from the date of the order, or, if so ordered, from the date of the application for maintenance or interim maintenance and expenses of proceeding, as the case may be. (3) If any person so ordered fails without sufficient cause to comply with the order, any such Magistrate may, for every breach of the order, issue a warrant for levying the amount due in the manner provided for levying fines, and may sentence such person, for the whole, or any part of each month’s allowance for the maintenance or the interim maintenance and expenses of proceeding, as the case may be, remaining unpaid after the execution of the warrant, to imprisonment for a term which may extend to one month or until payment if sooner made:

Provided that no warrant shall be issued for the recovery of any amount due under this section unless application be made to the Court to levy such amount within a period of one year from the date on which it became due: Provided further that if such person offers to maintain his wife on condition of her living with him, and she refuses to live with him, such Magistrate may consider any grounds of refusal stated by her, and may make an order under this section notwithstanding such offer, if he is satisfied that there is just ground for so doing.

Explanation. – If a husband has contracted marriage with another woman or keeps a mistress, it shall be considered to be a just ground for his wife’ s refusal to live with him.

(4) No wife shall be entitled to receive an allowance for the maintenance or interim maintenance and expenses of proceeding, as the case may be, from her husband under this section if she is living in adultery, or if, without any sufficient reason, she refuses to live with her husband, or if they are living separately by mutual consent.

(5) On proof that any wife in whose favour an order has been made under this section is living in adultery, or that without sufficient reason she refuses to live with her husband, or that they are living separately by mutual consent, the Magistrate shall cancel the order.” (emphasis supplied) In Chaturbhuj v Sitabai7 this Court held that the object of maintenance proceedings is not to punish a person for his past neglect, but to prevent vagrancy and destitution of a deserted wife by providing her food, clothing and shelter by a speedy remedy. Section 125 of the Cr.P.C. is a measure of social justice especially enacted to protect women and children, and falls within the constitutional sweep of Article 15(3), reinforced by Article 39 of the Constitution.

Proceedings under Section 125 of the Cr.P.C. are summary in nature. In Bhuwan Mohan Singh v Meena & Ors.8 this Court held that Section 125 of the Cr.P.C. was conceived to ameliorate the agony, anguish, financial suffering of a woman who had left her matrimonial home, so that some suitable arrangements could be made to enable her to sustain herself and the children. Since it is the sacrosanct duty of the husband to provide financial support to the wife and minor children, the husband was required to earn money even by physical labour, if he is able-bodied, and could not avoid his obligation, except on any legally permissible ground mentioned in the statute.

The issue whether presumption of marriage arises when parties are in a live-in relationship for a long period of time, which would give rise to a claim u/S. 125 Cr.P.C. came up for consideration in Chanmuniya v Virendra Kumar Singh Kushwaha & Anr. 9 before the Supreme Court. It was held that where a man and a woman have cohabited for a long period of time, in the absence of legal necessities of a valid marriage, such a woman would be entitled to maintenance. A man should not be allowed to benefit from legal loopholes, by enjoying the advantages of a de facto marriage, without undertaking the duties and obligations of such marriage. A broad and expansive interpretation must be given to the term “wife,” to include even those cases where a man and woman have been living together as husband and wife for a reasonably long period of time. Strict proof of marriage should not be a pre-condition for grant of (2008) 2 SCC 316.

(2015) 6 SCC 353.

(2011) 1 SCC 141.

This judgment was referred to a larger bench.

maintenance u/S. 125 Cr.P.C. The Court relied on the Malimath Committee Report on Reforms of Criminal Justice System published in 2003, which recommended that evidence regarding a man and woman living together for a reasonably long period, should be sufficient to draw the presumption of marriage.

The law presumes in favour of marriage, and against concubinage, when a man and woman cohabit continuously for a number of years. Unlike matrimonial proceedings where strict proof of marriage is essential, in proceedings u/S. 125 Cr.P.C. such strict standard of proof is not necessary.10

(e) Protection of Women from Domestic Violence Act, 2005 (“D.V. Act”) The D.V. Act stands on a separate footing from the laws discussed hereinabove. The D.V. Act provides relief to an aggrieved woman who is subjected to “domestic violence.” The “aggrieved person” has been defined by Section 2(a) to mean any woman who is, or has been, in a domestic relationship with the respondent, and alleges to have been subjected to any act of domestic violence. Section 2(f) defines “domestic relationship” to include a relationship between two persons who live, or have at any point of time lived together in a shared household, when they are related by consanguinity, marriage, or through a relationship in the nature of marriage, adoption, or are family members living together as a joint family.

Section 2(q) of the Act defined “respondent” to mean an “adult male person” who is, or has been, in a domestic relationship with the aggrieved woman. In Hiral P. Harsora & Ors. v Kusum Narottamdas Harsora & Ors.11 this Court held that the “respondent” could also be a female in a domestic relationship with the aggrieved person. Section 3 of the D.V. Act gives a gender- neutral definition to “domestic violence”. Physical abuse, verbal abuse, emotional abuse and economic abuse can also be inflicted by women against other women. Even sexual abuse may, in a given fact circumstance, be by one woman on another. Section 17(2) provides that the aggrieved person cannot be Kamala & Ors. v. M.R. Mohan Kumar (2019) 11 SCC 491.

(2016) 10 SCC 165.

evicted or excluded from a “shared household”, or any part of it by the “respondent”, save in accordance with the procedure established by law. If “respondent” is to be read as only an adult male person, women who evict or exclude the aggrieved person would then not be covered by the ambit of the Act, and defeat the very object, by putting forward female persons who can evict or exclude the aggrieved woman from the shared household. The Court struck down the words “adult male” before the word “person” in Section 2(q) of the 2005 Act, and deleted the proviso to Section 2(q), as being contrary to the object of the Act.

The expression “relationship in the nature of marriage” as being akin to a common law or a de facto marriage, came up for consideration in D. Velusamy v D. Patchaiammal.12 It was opined that a common law marriage is one which requires that although a couple may not be formally married : (a) the couple hold themselves out to society as being akin to spouses; (b) the parties must be of legal age to marry; (c) the parties must be otherwise qualified to enter into a legal marriage, including being unmarried; and (d) the parties must have voluntarily cohabited, and held themselves out to the world as being akin to spouses for a significant period of time. However, not all live-in relationships would amount to a relationship in the nature of marriage to avail the benefit of D.V. Act. Merely spending week-ends together, or a one-night stand, would not make it a “domestic relationship”.

For a live-in relationship to fall within the expression “relationship in the nature of marriage”, this Court in Indra Sarma v. V.K.V. Sarma13 laid down the following guidelines : (a) duration of period of relationship; (b) shared household; (c) domestic arrangements; (d) pooling of resources and financial arrangements; (e) sexual relationship; (f) children; (g) socialisation in public and

(h) intention and conduct of the parties. The Court held that these guidelines were only indicative, and not exhaustive.

“Domestic violence” has been defined in Section 3 of the Act, which includes economic abuse as defined in Explanation 1 (iv) to Section 3, as :

(2010) 10 SCC 469.

(2013) 15 SCC 755.

“Economic abuse which means deprivation of all or any economic or financial resources, to which the aggrieved person is entitled under any law or custom, whether payable under an order of a Court or otherwise, or which the aggrieved person requires out of necessity, including but not limited to household necessities for the aggrieved person, or her children.” Section 17 by a non-obstante clause provides that notwithstanding anything contained in any other law for the time being in force, every woman in a domestic relationship shall have the right to reside in the “shared household”, irrespective of whether she has any right, title or beneficial interest in the same. Section 17 reads as :

“17. Right to reside in a shared household:
(1) Notwithstanding anything contained household: in any other law for the time being in force, every woman in a domestic relationship shall have the right to reside in the shared household, whether or not she has any right, title or beneficial interest in the same.
(2) The aggrieved person shall not be evicted or excluded from the shared household or any part of it by the respondent save in accordance with the procedure established by law.” Section 19 deals with residence orders, grant of injunctive reliefs, or for alternate accommodation / payment of rent by the respondent.

A three-judge bench of this Court in Satish Chander Ahuja v Sneha Ahuja14 has overruled the judgment in S.R.Batra v Taruna Batra,15 wherein a two judge bench held that the wife is entitled to claim a right of residence in a “shared household” u/S.17 (1), which would only mean the house belonging to, or taken on rent by the husband, or the house which belongs to the joint family of which the husband is a member. In Satish Chander Ahuja (supra), the Court has held that although the judgment in S.R. Batra (supra) noticed the definition of shared household under Section 2(s), it did not advert to different parts of the definition, which makes it clear that there was no requirement for the shared household to be owned singly or jointly by the husband, or taken on rent by the husband. If Decided on 15.10.2020 in C.A. No. 2483/2020 by a bench comprising of Hon’ble Justices Ashok Bhushan, R. Subhash Reddy and M.R.Shah.

(2007) 3 SCC 169.

the interpretation given in S.R. Batra is accepted, it would frustrate the object of the Act. The Court has taken the view that the definition of “shared household” in Section 2(s) is an exhaustive definition. The “shared household” is the household which is the dwelling place of the aggrieved person in present time. If the definition of “shared household” in Section 2(s) is read to mean all the houses where the aggrieved person has lived in a domestic relationship alongwith the relatives of the husband, there will be a number of shared households, which was never contemplated by the legislative scheme. The entire scheme of the legislation is to provide immediate relief to the aggrieved person with respect to the shared household where the aggrieved woman lives or has lived. The use of the expression “at any stage has lived”, is with the intent of not denying protection to an aggrieved woman merely on the ground that she was not living there on the date of the application, or on the date when the Magistrate passed the order u/S. 19. The words “lives, or at any stage has lived in a domestic relationship” has to be given its normal and purposeful meaning. Living of the woman in a household must refer to a living which has some permanency. Mere fleeting or casual living at different places would not make it a shared household. The intention of the parties and the nature of living, including the nature of the household, must be considered, to determine as to whether the parties intended to treat the premises as a “shared household” or not. Section 2(s) r.w. Sections 17 and 19 grant an entitlement in favour of an aggrieved woman to the right of residence in a “shared household”, irrespective of her having any legal interest in the same or not. From the definition of “aggrieved person” and “respondent”, it was clear that :

(i) it is not the requirement of law that the aggrieved person may either own the premises jointly or singly, or by tenanting it jointly or singly;
(ii) the household may belong to a joint family of which the respondent is a member, irrespective of whether the respondent or the aggrieved person has any right, title, or interest in the shared household;
(iii) the shared household may either be owned, or tenanted by the respondent singly or jointly.

The right to residence u/S. 19 is, however, not an indefeasible right, especially when a daughter-in-law is claiming a right against aged parents-in- law. While granting relief u/S. 12 of the D.V. Act, or in any civil proceeding, the court has to balance the rights between the aggrieved woman and the parents- in-law.

Section 20 provides for monetary relief to the aggrieved woman : “20. Monetary reliefs.-

(1) While disposing of an application under sub-section (1) of section 12, the Magistrate may direct the respondent to pay monetary relief to meet the expenses incurred and losses suffered by the aggrieved person and any child of the aggrieved person as a result of domestic violence and such relief may include, but is not limited to,-

(a) the loss of earnings;

(b) the medical expenses;

(c)the loss caused due to destruction, damage or removal of any property from the control of the aggrieved person; and

(d) the maintenance for the aggrieved person as well as her children, if any, including an order under or in addition to an order of maintenance under section 125 of the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force.

(2) The monetary relief granted under this section shall be adequate, fair and reasonable and consistent with the standard of living to which the aggrieved person is accustomed.

(3) The Magistrate shall have the power to order an appropriate lump sum payment or monthly payments of maintenance, as the nature and circumstances of the case may require.” (emphasis supplied) Section 20(1)(d) provides that maintenance granted under the D.V. Act to an aggrieved woman and children, would be given effect to, in addition to an order of maintenance awarded under Section 125 of the Cr.P.C., or any other law in force.

Under sub-section (6) of Section 20, the Magistrate may direct the employer or debtor of the respondent, to directly pay the aggrieved person, or deposit with the court a portion of the wages or salaries or debt due to or accrued to the credit of the respondent, which amount may be adjusted towards the monetary relief payable by the respondent.

Section 22 provides that the Magistrate may pass an order directing the respondent to pay compensation and damages for the injuries, including mental torture and emotional distress, caused by the acts of domestic violence perpetrated by the respondent.

Section 23 provides that the Magistrate may grant an ex parte order, including an order under Section 20 for monetary relief. The Magistrate must be satisfied that the application filed by the aggrieved woman discloses that the respondent is committing, or has committed an act of domestic violence, or that there is a likelihood that the respondent may commit an act of domestic violence. In such a case, the Magistrate is empowered to pass an ex parte order on the basis of the affidavit of the aggrieved woman.

Section 26 of the D.V. Act provides that any relief available under Sections 18, 19, 20, 21 and 22 may also be sought in any legal proceeding before a Civil Court, Family Court or Criminal Court. Sub-section (2) of Section 26 provides that the relief mentioned in sub-section (1) may be sought in addition to, and alongwith any other relief that the aggrieved person may seek in a suit or legal proceeding before a civil or criminal court. Section 26 (3) provides that in case any relief has been obtained by the aggrieved person in any proceeding other than proceedings under this Act, the aggrieved woman would be bound to inform the Magistrate of the grant of such relief.

Section 36 provides that the D.V. Act shall be in addition to, and not in derogation of the provisions of any other law for the time being in force.

Conflicting judgments on overlapping jurisdiction

(i) Some High Courts have taken the view that since each proceeding is distinct and independent of the other, maintenance granted in one proceeding cannot be adjusted or set-off in the other. For instance, in Ashok Singh Pal v Manjulata,16 the Madhya Pradesh High Court held that the remedies available to an aggrieved person under S. 24 of the HMA is independent of S. 125 of the Cr.P.C. In an AIR 2008 MP 139.

application filed by the husband for adjustment of the amounts awarded in the two proceedings, it was held that the question as to whether adjustment is to be granted, is a matter of judicial discretion to be exercised by the Court. There is nothing to suggest as a thumb rule which lays down as a mandatory requirement that adjustment or deduction of maintenance awarded u/S. 125 Cr.P.C. must be off-set from the amount awarded under S.24 of the HMA, or vice versa.

A similar view was taken by another single judge of the Madhya Pradesh High Court in Mohan Swaroop Chauhan v Mohini.17 Similarly, the Calcutta High Court in Sujit Adhikari v Tulika Adhikari18 held that adjustment is not a rule. It was held that the quantum of maintenance determined by the Court under HMA is required to be added to the quantum of maintenance u/S. 125 Cr.P.C.

A similar view has been taken in Chandra Mohan Das v Tapati Das19, wherein a challenge was made on the point that the Court ought to have adjusted the amount awarded in a proceeding under S.125 Cr.P.C., while determining the maintenance to be awarded under S.24 of the HMA, 1955. It was held that the quantum of maintenance determined under S.24 of HMA was to be paid in addition to the maintenance awarded in a proceeding under S.125 Cr.P.C.

(ii) On the other hand, the Bombay and Delhi High Courts, have held that in case of parallel proceedings, adjustment or set-off must take place.

The Bombay High Court in a well-reasoned judgment delivered in Vishal v Aparna & Anr.,20 has taken the correct view. The Court was considering the issue whether interim monthly maintenance awarded under Section 23 r.w. Section 20 (1)(d) of the D.V. Act could be adjusted against the maintenance awarded under Section 125 Cr.P.C. The Family Court held that the order passed under the D.V. Act and the Cr.P.C. were both independent proceedings, and adjustment was not permissible. The Bombay High Court set aside the judgment of the Family Court, and held that Section 20(1)(d) of the D.V. Act makes it clear (2016) 2 MP LJ 179.

(2017) SCC OnLine Cal 15484.

2015 SCC OnLine Cal 9554.

2018 SCC OnLine Bom 1207.

that the maintenance granted under this Act, would be in addition to an order of maintenance under Section 125 Cr.P.C., and any other law for the time being in force. Sub-section (3) of Section 26 of the D.V. Act enjoins upon the aggrieved person to inform the Magistrate, if she has obtained any relief available under Sections 18, 19, 20, 21 and 22, in any other legal proceeding filed by her, whether before a Civil Court, Family Court, or Criminal Court. The object being that while granting relief under the D.V. Act, the Magistrate shall take into account and consider if any similar relief has been obtained by the aggrieved person. Even though proceedings under the D.V. Act may be an independent proceeding, the Magistrate cannot ignore the maintenance awarded in any other legal proceedings, while determining whether over and above the maintenance already awarded, any further amount was required to be granted for reasons to be recorded in writing.

The Court observed :

“18. What I intend to emphasize is the fact that the adjustment is permissible and the adjustment can be allowed of the lower amount against the higher amount. Though the wife can simultaneously claim maintenance under the different enactments, it does not in any way mean that the husband can be made liable to pay the maintenance awarded in each of the said proceedings.” (emphasis supplied) It was held that while determining the quantum of maintenance awarded u/S.125 Cr.P.C., the Magistrate would take into consideration the interim maintenance awarded to the aggrieved woman under the D.V. Act.

The issue of overlapping jurisdictions under the HMA and D.V. Act or Cr.P.C. came up for consideration before a division bench of the Delhi High Court in RD v BD 21 wherein the Court held that maintenance granted to an aggrieved person under the D.V. Act, would be in addition to an order of maintenance u/S. 125 Cr.P.C., or under the HMA. The legislative mandate envisages grant of maintenance to the wife under various statutes. It was not the intention of the legislature that once an order is passed in either of the 2019 VII AD (Delhi) 466.

maintenance proceedings, the order would debar re-adjudication of the issue of maintenance in any other proceeding. In paragraphs 16 and 17 of the judgment, it was observed that :

“16. A conjoint reading of the aforesaid Sections 20, 26 and 36 of DV Act would clearly establish that the provisions of DV Act dealing with maintenance are supplementary to the provisions of other laws and therefore maintenance can be granted to the aggrieved person (s) under the DV Act which would also be in addition to any order of maintenance arising out of Section 125 of Cr.P.C.
17. On the converse, if any order is passed by the Family Court under Section 24 of HMA, the same would not debar the Court in the proceedings arising out of DV Act or proceedings under Section 125 of Cr.P.C. instituted by the wife/aggrieved person claiming maintenance. However, it cannot be laid down as a proposition of law that once an order of maintenance has been passed by any Court then the same cannot be re-adjudicated upon by any other Court. The legislative mandate envisages grant of maintenance to the wife under various statutes such as HMA, Hindu Adoption and Maintenance Act, 1956 (hereinafter referred to as ‘HAMA’), Section 125 of Cr.P.C. as well as Section 20 of DV Act. As such various statutes have been enacted to provide for the maintenance to the wife and it is nowhere the intention of the legislature that once any order is passed in either of the proceedings, the said order would debar re adjudication of the issue of maintenance in any other Court.” (emphasis supplied) The Court held that u/S. 20(1)(d) of the D.V. Act, maintenance awarded to the aggrieved woman under the D.V. is in addition to an order of maintenance provided u/S. 125 Cr.P.C. The grant of maintenance under the D.V. Act would not be a bar to seek maintenance u/S. 24 of HMA.

Similarly, in Tanushree & Ors. v A.S.Moorthy,22 the Delhi High Court was considering a case where the Magistrate’s Court had sine die adjourned the proceedings u/S. 125 Cr.P.C. on the ground that parallel proceedings for maintenance under the D.V. Act were pending. In an appeal filed by the wife before the High Court, it was held that a reading of Section 20(1)(d) of the D.V. Act indicates that while considering an application u/S. 12 of the D.V. Act, the 2018 SCC OnLine Del 7074.

Court would take into account an order of maintenance passed u/S. 125 Cr.P.C., or any other law for the time being in force. The mere fact that two proceedings were initiated by a party, would not imply that one would have to be adjourned sine die. There is a distinction in the scope and power exercised by the Magistrate under S.125, Cr.P.C. and the D.V. Act. With respect to the overlap in both statutes, the Court held :

“5. Reading of Section 20(1)(d) of the D.V. Act further shows that the two proceedings are independent of each other and have different scope, though there is an overlap. Insofar as the overlap is concerned, law has catered for that eventuality and laid down that at the time of consideration of an application for grant of maintenance under Section 12 of the D.V. Act, the maintenance fixed under Section 125 Cr.P.C. shall be taken into account.” (emphasis supplied) The issue whether maintenance u/S. 125 Cr.P.C. could be awarded by the Magistrate, after permanent alimony was granted to the wife in the divorce proceedings, came up for consideration before the Supreme Court in Rakesh Malhotra v Krishna Malhotra.23 The Court held that once an order for permanent alimony was passed, the same could be modified by the same court by exercising its power u/S. 25(2) of HMA. The Court held that :
“16. Since the Parliament has empowered the Court Under Section 25(2) of the Act and kept a remedy intact and made available to the concerned party seeking modification, the logical sequitur would be that the remedy so prescribed ought to be exercised rather than creating multiple channels of remedy seeking maintenance. One can understand the situation where considering the exigencies of the situation and urgency in the matter, a wife initially prefers an application Under Section 125 of the Code to secure maintenance in order to sustain herself. In such matters the wife would certainly be entitled to have a full-fledged adjudication in the form of any challenge raised before a Competent Court either under the Act Or similar such enactments. But the reverse cannot be the accepted norm.” The Court directed that the application u/S. 125 Cr.P.C. be treated as an application u/S. 25(2) of HMA and be disposed of accordingly.
2020 SCC OnLine SC 239.
(iii) In Nagendrappa Natikar v Neelamma24 this Court considered a case where the wife instituted a suit under Section 18 of HAMA, after signing a consent letter in proceedings u/S. 125 Cr.P.C., stating that she would not make any further claims for maintenance against the husband. It was held that the proceedings u/S. 125 Cr.P.C. were summary in nature, and were intended to provide a speedy remedy to the wife. Any order passed u/S. 125 Cr.P.C. by compromise or otherwise would not foreclose the remedy u/S. 18 of HAMA.
(iv) In Sudeep Chaudhary v Radha Chaudhary25 the Supreme Court directed adjustment in a case where the wife had filed an application under Section 125 of the Cr.P.C., and under HMA. In the S. 125 proceedings, she had obtained an order of maintenance. Subsequently, in proceedings under the HMA, the wife sought alimony. Since the husband failed to pay maintenance awarded, the wife initiated recovery proceedings. The Supreme Court held that the maintenance awarded under Section 125 Cr.P.C. must be adjusted against the amount awarded in the matrimonial proceedings under HMA, and was not to be given over and above the same.

Directions on overlapping jurisdictions It is well settled that a wife can make a claim for maintenance under different statutes. For instance, there is no bar to seek maintenance both under the D.V. Act and Section 125 of the Cr.P.C., or under H.M.A. It would, however, be inequitable to direct the husband to pay maintenance under each of the proceedings, independent of the relief granted in a previous proceeding. If maintenance is awarded to the wife in a previously instituted proceeding, she is under a legal obligation to disclose the same in a subsequent proceeding for maintenance, which may be filed under another enactment. While deciding the quantum of maintenance in the subsequent proceeding, the civil court/family court shall take into account the maintenance awarded in any previously instituted proceeding, and determine the maintenance payable to the claimant.

(2014) 14 SCC 452.

(1997) 11 SCC 286.

To overcome the issue of overlapping jurisdiction, and avoid conflicting orders being passed in different proceedings, we direct that in a subsequent maintenance proceeding, the applicant shall disclose the previous maintenance proceeding, and the orders passed therein, so that the Court would take into consideration the maintenance already awarded in the previous proceeding, and grant an adjustment or set-off of the said amount. If the order passed in the previous proceeding requires any modification or variation, the party would be required to move the concerned court in the previous proceeding.

II Payment of Interim Maintenance
(i) The proviso to Section 24 of the HMA (inserted vide Act 49 of 2001 w.e.f.
24.09.2001), and the third proviso to Section 125 Cr.P.C. (inserted vide Act 50 of 2001 w.e.f. 24.09.2001) provide that the proceedings for interim maintenance, shall as far as possible, be disposed of within 60 days’ from the date of service of notice on the contesting spouse. Despite the statutory provisions granting a time-bound period for disposal of proceedings for interim maintenance, we find that applications remain pending for several years in most of the cases. The delays are caused by various factors, such as tremendous docket pressure on the Family Courts, repetitive adjournments sought by parties, enormous time taken for completion of pleadings at the interim stage itself, etc. Pendency of applications for maintenance at the interim stage for several years defeats the very object of the legislation.

(ii) At present, the issue of interim maintenance is decided on the basis of pleadings, where some amount of guess-work or rough estimation takes place, so as to make a prima facie assessment of the amount to be awarded. It is often seen that both parties submit scanty material, do not disclose the correct details, and suppress vital information, which makes it difficult for the Family Courts to make an objective assessment for grant of interim maintenance. While there is a tendency on the part of the wife to exaggerate her needs, there is a corresponding tendency by the husband to conceal his actual income.

It has therefore become necessary to lay down a procedure to streamline the proceedings, since a dependant wife, who has no other source of income, has to take recourse to borrowings from her parents / relatives during the interregnum to sustain herself and the minor children, till she begins receiving interim maintenance.

(iii) In the first instance, the Family Court in compliance with the mandate of Section 9 of the Family Courts Act 1984, must make an endeavour for settlement of the disputes. For this, Section 6 provides that the State Government shall, in consultation with the High Court, make provision for counsellors to assist a Family Court in the discharge of its functions. Given the large and growing percentage of matrimonial litigation, it has become necessary that the provisions of Section 5 and 6 of the Family Courts Act are given effect to, by providing for the appointment of marriage counsellors in every Family Court, which would help in the process of settlement.

If the proceedings for settlement are unsuccessful, the Family Court would proceed with the matter on merits.

(iv) The party claiming maintenance either as a spouse, or as a partner in a civil union, live-in relationship, common law marriage, should be required to file a concise application for interim maintenance with limited pleadings, alongwith an Affidavit of Disclosure of Assets and Liabilities before the concerned court, as a mandatory requirement.

(v) On the basis of the pleadings filed by both parties and the Affidavits of Disclosure, the Court would be in a position to make an objective assessment of the approximate amount to be awarded towards maintenance at the interim stage.

(vi) The Delhi High Court in a series of judgments beginning with Puneet Kaur v Inderjit Singh Sawhney26 and followed in Kusum Sharma v Mahinder Kumar Sharma27 (“Kusum Sharma I”) directed that applications for maintenance under the HMA, HAMA, D.V. Act, and the Cr.P.C. be accompanied with an Affidavit of assets, income and expenditure as prescribed. In Kusum Sharma II,28 the Court framed a format of Affidavit of assets, income and expenditure to be filed by both parties at the threshold of a matrimonial litigation. This procedure was extended to maintenance proceedings under the Special Marriage Act and the Indian Divorce Act, 1869. In Kusum Sharma III, 29 the Delhi High Court modified the format of the Affidavit, and extended it to maintenance proceedings under the Guardians & Wards Act, 1890 and the Hindu Minority & Guardianship Act, 1956. In Kusum Sharma IV 30 the Court took notice that the filing of Affidavits alongwith pleadings gave an unfair advantage to the party who files ILR (2012) I Delhi 73.

(2014) 214 DLT 493.

(2015) 217 DLT 706.

MANU/DE/2406/2017.

2017 – (2018) 246 DLT 1.

the affidavit subsequently. In this judgment, it was clarified that the Affidavit must be filed simultaneously by both parties. In Kusum Sharma V31 the Court consolidated the format of the Affidavits in the previous judgments, and directed that the same be filed in maintenance proceedings.

(vii) Given the vastly divergent demographic profile of our country, which comprises of metropolitan cities, urban areas, rural areas, tribal areas, etc., it was considered appropriate to elicit responses from the various State Legal Services Authorities (“SLSAs”).

This Court vide its Order dated 17.12.2019 requested the National Legal Services Authority (“NALSA”) to submit a report of the suggestions received from the SLSAs for framing guidelines on the Affidavit of Disclosure of the Assets and Liabilities to be filed by the parties.

(viii) The NALSA submitted a comprehensive report dated 17.02.2020 containing suggestions from all the State Legal Service Authorities throughout the country. We find the various suggestions made by the SLSAs to be of great assistance in finalizing the Affidavit of Disclosure which can be used by the Family Courts for determining the quantum of maintenance to be paid.

(ix) Keeping in mind the varied landscape of the country, and the recommendations made by the SLSAs, it was submitted that a simplified Affidavit of Disclosure may be framed to expedite the process of determining the quantum of maintenance.

We feel that the Affidavit to be filed by parties residing in urban areas, would require to be entirely different from the one applicable to rural areas, or tribal areas.

For this purpose, a comprehensive Affidavit of Disclosure of Assets and Liabilities is being attached as Enclosure I and II to this judgment.

(x) We have been informed by the Meghalaya State Legal Services Authority that the State of Meghalaya has a predominantly tribal population, which follows a matrilineal system of society. The population is comprised of three tribes viz. the Khasis, Jaintia and Garo tribes. In Meghalaya, the youngest daughter is the Decided by the Delhi High Court vide Judgment dated 06.08.2020.

custodian of the property, and takes important decisions relating to family property in consultation with her maternal uncle. The majority of the population is employed in the unorganized sector, such as agriculture. Under Section 10(26) of the Income Tax Act 1961, the tribals residing in this State are exempted from payment of income tax.

The Meghalaya State Legal Services Authority has suggested that the declaration in Meghalaya be made in the format enclosed with this judgment as Enclosure III.

(xi) Keeping in mind the need for a uniform format of Affidavit of Disclosure of Assets and Liabilities to be filed in maintenance proceedings, this Court considers it necessary to frame guidelines in exercise of our powers under Article 136 read with Article 142 of the Constitution of India :

(a) The Affidavit of Disclosure of Assets and Liabilities annexed at Enclosures I, II and III of this judgment, as may be applicable, shall be filed by the parties in all maintenance proceedings, including pending proceedings before the concerned Family Court / District Court / Magistrate’s Court, as the case may be, throughout the country;

(b) The applicant making the claim for maintenance will be required to file a concise application accompanied with the Affidavit of Disclosure of Assets;

(c) The respondent must submit the reply alongwith the Affidavit of Disclosure within a maximum period of four weeks. The Courts may not grant more than two opportunities for submission of the Affidavit of Disclosure of Assets and Liabilities to the respondent. If the respondent delays in filing the reply with the Affidavit, and seeks more than two adjournments for this purpose, the Court may consider exercising the power to strike off the defence of the respondent, if the conduct is found to be wilful and contumacious in delaying the proceedings.32 On the failure to file the Affidavit within the prescribed time, the Family Court may proceed to decide the application for maintenance on basis of the Affidavit filed by the applicant and the pleadings on record;

Kaushalya v Mukesh Jain, Criminal Appeal Nos. 1129-1130 / 2019 decided vide Judgment 24.07.2019.

(d) The above format may be modified by the concerned Court, if the exigencies of a case require the same. It would be left to the judicial discretion of the concerned Court, to issue necessary directions in this regard.

(e) If apart from the information contained in the Affidavits of Disclosure, any further information is required, the concerned Court may pass appropriate orders in respect thereof.

(f) If there is any dispute with respect to the declaration made in the Affidavit of Disclosure, the aggrieved party may seek permission of the Court to serve interrogatories, and seek production of relevant documents from the opposite party under Order XI of the CPC;

On filing of the Affidavit, the Court may invoke the provisions of Order X of the C.P.C or Section 165 of the Evidence Act 1872, if it considers it necessary to do so;

The income of one party is often not within the knowledge of the other spouse. The Court may invoke Section 106 of the Evidence Act, 1872 if necessary, since the income, assets and liabilities of the spouse are within the personal knowledge of the party concerned.

(g) If during the course of proceedings, there is a change in the financial status of any party, or there is a change of any relevant circumstances, or if some new information comes to light, the party may submit an amended / supplementary affidavit, which would be considered by the court at the time of final determination.

(h) The pleadings made in the applications for maintenance and replies filed should be responsible pleadings; if false statements and misrepresentations are made, the Court may consider initiation of proceeding u/S. 340 Cr.P.C., and for contempt of Court.

(i) In case the parties belong to the Economically Weaker Sections (“EWS”), or are living Below the Poverty Line (“BPL”), or are casual labourers, the requirement of filing the Affidavit would be dispensed with.

(j) The concerned Family Court / District Court / Magistrate’s Court must make an endeavour to decide the I.A. for Interim Maintenance by a reasoned order, within a period of four to six months at the latest, after the Affidavits of Disclosure have been filed before the court.

(k) A professional Marriage Counsellor must be made available in every Family Court.

Permanent alimony

(i) Parties may lead oral and documentary evidence with respect to income, expenditure, standard of living, etc. before the concerned Court, for fixing the permanent alimony payable to the spouse.

(ii) In contemporary society, where several marriages do not last for a reasonable length of time, it may be inequitable to direct the contesting spouse to pay permanent alimony to the applicant for the rest of her life. The duration of the marriage would be a relevant factor to be taken into consideration for determining the permanent alimony to be paid.

(iii) Provision for grant of reasonable expenses for the marriage of children must be made at the time of determining permanent alimony, where the custody is with the wife. The expenses would be determined by taking into account the financial position of the husband and the customs of the family.

(iv) If there are any trust funds / investments created by any spouse / grandparents in favour of the children, this would also be taken into consideration while deciding the final child support.

III Criteria for determining quantum of maintenance

(i) The objective of granting interim / permanent alimony is to ensure that the dependant spouse is not reduced to destitution or vagrancy on account of the failure of the marriage, and not as a punishment to the other spouse. There is no straitjacket formula for fixing the quantum of maintenance to be awarded.

The factors which would weigh with the Court inter alia are the status of the parties; reasonable needs of the wife and dependant children; whether the applicant is educated and professionally qualified; whether the applicant has any independent source of income; whether the income is sufficient to enable her to maintain the same standard of living as she was accustomed to in her matrimonial home; whether the applicant was employed prior to her marriage; whether she was working during the subsistence of the marriage; whether the wife was required to sacrifice her employment opportunities for nurturing the family, child rearing, and looking after adult members of the family; reasonable costs of litigation for a non-working wife.33 In Manish Jain v Akanksha Jain 34 this Court held that the financial position of the parents of the applicant-wife, would not be material while determining the quantum of maintenance. An order of interim maintenance is conditional on the circumstance that the wife or husband who makes a claim has no independent income, sufficient for her or his support. It is no answer to a claim of maintenance that the wife is educated and could support herself. The court must take into consideration the status of the parties and the capacity of the spouse to pay for her or his support. Maintenance is dependent upon factual situations; the Court should mould the claim for maintenance based on various factors brought before it.

On the other hand, the financial capacity of the husband, his actual income, reasonable expenses for his own maintenance, and dependant family members whom he is obliged to maintain under the law, liabilities if any, would Refer to Jasbir Kaur Sehgal v District Judge, Dehradun & Ors. (1997) 7 SCC 7. Refer to Vinny Paramvir Parmar v Paramvir Parmar (2011) 13 SCC 112.

(2017) 15 SCC 801.

be required to be taken into consideration, to arrive at the appropriate quantum of maintenance to be paid. The Court must have due regard to the standard of living of the husband, as well as the spiralling inflation rates and high costs of living. The plea of the husband that he does not possess any source of income ipso facto does not absolve him of his moral duty to maintain his wife if he is able bodied and has educational qualifications.35

(ii) A careful and just balance must be drawn between all relevant factors.

The test for determination of maintenance in matrimonial disputes depends on the financial status of the respondent, and the standard of living that the applicant was accustomed to in her matrimonial home.36 The maintenance amount awarded must be reasonable and realistic, and avoid either of the two extremes i.e. maintenance awarded to the wife should neither be so extravagant which becomes oppressive and unbearable for the respondent, nor should it be so meagre that it drives the wife to penury. The sufficiency of the quantum has to be adjudged so that the wife is able to maintain herself with reasonable comfort.

(iii) Section 23 of HAMA provides statutory guidance with respect to the criteria for determining the quantum of maintenance. Sub-section (2) of Section 23 of HAMA provides the following factors which may be taken into consideration : (i) position and status of the parties, (ii) reasonable wants of the claimant, (iii) if the petitioner/claimant is living separately, the justification for the same, (iv) value of the claimant’s property and any income derived from such property, (v) income from claimant’s own earning or from any other source.

(iv) Section 20(2) of the D.V. Act provides that the monetary relief granted to the aggrieved woman and / or the children must be adequate, fair, reasonable, and consistent with the standard of living to which the aggrieved woman was accustomed to in her matrimonial home.

Reema Salkan v Sumer Singh Salkan (2019) 12 SCC 303.

Chaturbhuj v Sita Bai (2008) 2 SCC 316.

(v) The Delhi High Court in Bharat Hedge v Smt. Saroj Hegde37 laid down the following factors to be considered for determining maintenance :

“1. Status of the parties.
2. Reasonable wants of the claimant.
3.The independent income and property of the claimant.
4. The number of persons, the non-applicant has to maintain.
5. The amount should aid the applicant to live in a similar lifestyle as he/she enjoyed in the matrimonial home.
6. Non-applicant’s liabilities, if any.
7. Provisions for food, clothing, shelter, education, medical attendance and treatment etc. of the applicant.
8. Payment capacity of the non-applicant.
9. Some guess work is not ruled out while estimating the income of the non-applicant when all the sources or correct sources are not disclosed.
10. The non-applicant to defray the cost of litigation.
11. The amount awarded u/s 125 Cr.PC is adjustable against the amount awarded u/ 24 of the Act. 17.”

(vi) Apart from the aforesaid factors enumerated hereinabove, certain additional factors would also be relevant for determining the quantum of maintenance payable.

(a) Age and employment of parties In a marriage of long duration, where parties have endured the relationship for several years, it would be a relevant factor to be taken into consideration. On termination of the relationship, if the wife is educated and professionally qualified, but had to give up her employment opportunities to look after the needs of the family being the primary caregiver to the minor children, and the elder members of the family, this factor would be required to be given due importance. This is of particular relevance in contemporary society, given the highly competitive industry standards, the separated wife would be required to undergo fresh training to acquire marketable skills and re-train herself to secure a job in the paid workforce to rehabilitate herself. With advancement of age, it would be difficult for a dependant wife to get an easy entry into the work-force after a break of several years.

140 (2007) DLT 16.

(b) Right to residence Section 17 of the D.V. Act grants an aggrieved woman the right to live in the “shared household”. Section 2(s) defines “shared household” to include the household where the aggrieved woman lived at any stage of the domestic relationship; or the household owned and rented jointly or singly by both, or singly by either of the spouses; or a joint family house, of which the respondent is a member.

The right of a woman to reside in a “shared household” defined under Section 2(s) entitles the aggrieved woman for right of residence in the shared household, irrespective of her having any legal interest in the same. This Court in Satish Chander Ahuja v Sneha Ahuja 38 (supra) held that “shared household” referred to in Section 2(s) is the shared household of the aggrieved person where she was living at the time when the application was filed, or at any stage lived in a domestic relationship. The living of the aggrieved woman in the shared household must have a degree of permanence. A mere fleeting or casual living at different places would not constitute a “shared household”. It is important to consider the intention of the parties, nature of living, and nature of the household, to determine whether the premises is a “shared household”. Section 2(s) read with Sections 17 and 19 of the D.V. Act entitles a woman to the right of residence in a shared household, irrespective of her having any legal interest in the same. There is no requirement of law that the husband should be a member of the joint family, or that the household must belong to the joint family, in which he or the aggrieved woman has any right, title or interest. The shared household may not necessarily be owned or tenanted by the husband singly or jointly. Section 19 (1)(f) of the D.V. Act provides that the Magistrate may pass a residence order inter alia directing the respondent to secure the same level of alternate accommodation for the aggrieved woman as enjoyed by her in the shared household. While passing such an order, the Magistrate may direct the Civil Appeal No. 2483 / 2020 decided vide Judgment dated 15.10.2020.

respondent to pay the rent and other payments, having regard to the financial needs and resources of the parties.

(c) Where wife is earning some income The Courts have held that if the wife is earning, it cannot operate as a bar from being awarded maintenance by the husband. The Courts have provided guidance on this issue in the following judgments.

In Shailja & Anr. v Khobbanna,39 this Court held that merely because the wife is capable of earning, it would not be a sufficient ground to reduce the maintenance awarded by the Family Court. The Court has to determine whether the income of the wife is sufficient to enable her to maintain herself, in accordance with the lifestyle of her husband in the matrimonial home.40 Sustenance does not mean, and cannot be allowed to mean mere survival.41 In Sunita Kachwaha & Ors. v Anil Kachwaha 42 the wife had a postgraduate degree, and was employed as a teacher in Jabalpur. The husband raised a contention that since the wife had sufficient income, she would not require financial assistance from the husband. The Supreme Court repelled this contention, and held that merely because the wife was earning some income, it could not be a ground to reject her claim for maintenance. The Bombay High Court in Sanjay Damodar Kale v Kalyani Sanjay Kale43 while relying upon the judgment in Sunita Kachwaha (supra), held that neither the mere potential to earn, nor the actual earning of the wife, howsoever meagre, is sufficient to deny the claim of maintenance. An able-bodied husband must be presumed to be capable of earning sufficient money to maintain his wife and children, and cannot contend that he is not in a position to earn sufficiently to maintain his family, as held by the Delhi High Court in Chander Prakash Bodhraj v Shila Rani Chander (2018) 12 SCC 199.

See also Decision of the Karnataka High Court in P. Suresh v S. Deepa & Ors., 2016 Cri LJ 4794.

Chaturbhuj v Sita Bai, (2008) 2 SCC 316.

Vipul Lakhanpal v Smt. Pooja Sharma, 2015 SCC OnLine HP 1252.

(2014) 16 SCC 715.

2020 SCC OnLine Bom 694.

Prakash.44 The onus is on the husband to establish with necessary material that there are sufficient grounds to show that he is unable to maintain the family, and discharge his legal obligations for reasons beyond his control. If the husband does not disclose the exact amount of his income, an adverse inference may be drawn by the Court.

This Court in Shamima Farooqui v Shahid Khan45 cited the judgment in Chander Prakash (supra) with approval, and held that the obligation of the husband to provide maintenance stands on a higher pedestal than the wife.

(d) Maintenance of minor children The living expenses of the child would include expenses for food, clothing, residence, medical expenses, education of children. Extra coaching classes or any other vocational training courses to complement the basic education must be factored in, while awarding child support. Albeit, it should be a reasonable amount to be awarded for extra-curricular / coaching classes, and not an overly extravagant amount which may be claimed. Education expenses of the children must be normally borne by the father. If the wife is working and earning sufficiently, the expenses may be shared proportionately between the parties.

(e) Serious disability or ill health Serious disability or ill health of a spouse, child / children from the marriage / dependant relative who require constant care and recurrent expenditure, would also be a relevant consideration while quantifying maintenance.

AIR 1968 Delhi 174.

(2015) 5 SCC 705.

IV Date from which Maintenance to be awarded There is no provision in the HMA with respect to the date from which an Order of maintenance may be made effective. Similarly, Section 12 of the D.V. Act, does not provide the date from which the maintenance is to be awarded.

Section 125(2) Cr.P.C. is the only statutory provision which provides that the Magistrate may award maintenance either from the date of the order, or from the date of application. 46 In the absence of a uniform regime, there is a vast variance in the practice adopted by the Family Courts in the country, with respect to the date from which maintenance must be awarded. The divergent views taken by the Family Courts are : first, from the date on which the application for maintenance was filed; second, the date of the order granting maintenance; third, the date on which the summons was served upon the respondent.

(a) From date of application The view that maintenance ought to be granted from the date when the application was made, is based on the rationale that the primary object of maintenance laws is to protect a deserted wife and dependant children from destitution and vagrancy. If maintenance is not paid from the date of application, the party seeking maintenance would be deprived of sustenance, owing to the time taken for disposal of the application, which often runs into several years.

The Orissa High Court in Susmita Mohanty v Rabindra Nath Sahu47 held that the legislature intended to provide a summary, quick and comparatively inexpensive remedy to the neglected person. Where a litigation is prolonged, either on account of the conduct of the opposite party, or due to the heavy docket in Courts, or for unavoidable reasons, it would be unjust and contrary to the object of the provision, to provide maintenance from the date of the order.

In Kanhu Charan Jena v. Smt. Nirmala Jena48 , the Orissa High Court was considering an application u/S. 125 Cr.P.C., wherein it was held that even though K. Sivaram v K. Mangalamba & Ors.1989 (1) APLJ (HC) 604.

1996 (I) OLR 361.

2001 Cri LJ 879.

the decision to award maintenance either from the date of application, or from the date of order, was within the discretion of the Court, it would be appropriate to grant maintenance from the date of application. This was followed in Arun Kumar Nayak v Urmila Jena,49 wherein it was reiterated that dependents were entitled to receive maintenance from the date of application.

The Madhya Pradesh High Court in Krishna Jain v Dharam Raj Jain50 held that a wife may set up a claim for maintenance to be granted from the date of application, and the husband may deny it. In such cases, the Court may frame an issue, and decide the same based on evidence led by parties. The view that the “normal rule” was to grant maintenance from the date of order, and the exception was to grant maintenance from the date of application, would be to insert something more in Section 125(2) Cr.P.C., which the Legislature did not intend. Reasons must be recorded in both cases. i.e. when maintenance is awarded from the date of application, or when it is awarded from the date of order.

The law governing payment of maintenance u/S. 125 Cr.P.C. from the date of application, was extended to HAMA by the Allahabad High Court in Ganga Prasad Srivastava v Additional District Judge, Gonda & Ors.51 The Court held that the date of application should always be regarded as the starting point for payment of maintenance. The Court was considering a suit for maintenance u/S. 18 of HAMA, wherein the Civil Judge directed that maintenance be paid from the date of judgment. The High Court held that the normal inference should be that the order of maintenance would be effective from the date of application. A party seeking maintenance would otherwise be deprived of maintenance due to the delay in disposal of the application, which may arise due to paucity of time of the Court, or on account of the conduct of one of the parties. In this case, there was a delay of seven years in disposing of the suit, and the wife could not be (2010) 93 AIC 726 (Ori).

1993 (2) MPJR 63.

2019 (6) ADJ 850.

made to starve till such time. The wife was held to be entitled to maintenance from the date of application / suit.

The Delhi High Court in Lavlesh Shukla v Rukmani52 held that where the wife is unemployed and is incurring expenses towards maintaining herself and the minor child / children, she is entitled to receive maintenance from the date of application. Maintenance is awarded to a wife to overcome the financial crunch, which occurs on account of her separation from her husband. It is neither a matter of favour to the wife, nor any charity done by the husband.

(b) From the date of order The second view that maintenance ought to be awarded from the date of order is based on the premise that the general rule is to award maintenance from the date of order, and grant of maintenance from the date of application must be the exception. The foundation of this view is based on the interpretation of Section 125(2) Cr.P.C. which provides :

“(2) Any such allowance for the maintenance or interim maintenance and expenses for proceeding shall be payable from the date of the order, or, if so ordered, from the date of the application for maintenance or interim maintenance and expenses of proceeding, as the case may be.” (emphasis supplied) The words “or, if so ordered” in Section 125 has been interpreted to mean that where the court is awarding maintenance from the date of application, special reasons ought to be recorded.53 In Bina Devi v State of U.P., 54 the Allahabad High Court on an interpretation of S.125(2) of the Cr.P.C. held that when maintenance is directed to be paid from the date of application, the Court must record reasons. If the order is silent, it will be effective from the date of the order, for which reasons need not be recorded. The Court held that Section 125(2) Cr.P.C. is prima facie clear that maintenance shall be payable from the date of the order.
Crl.Rev.P. 851/2019 decided by the Delhi High Court vide Order dated 28.11.2019.

Bina Devi & Ors. v State of Uttar Pradesh & Ors. (2010) 69 ACC 19.

(2010) 69 ACC 19.

The Madhya Pradesh High Court in Amit Verma v Sangeeta Verma & Ors.55 directed that maintenance ought to be granted from the date of the order.

(c) From the date of service of summons The third view followed by some Courts is that maintenance ought to be granted from the date of service of summons upon the respondent.

The Kerala High Court in S. Radhakumari v K.M.K. Nair 56 was considering an application for interim maintenance preferred by the wife in divorce proceedings filed by the husband. The High Court held that maintenance must be awarded to the wife from the date on which summons were served in the main divorce petition. The Court relied upon the judgment of the Calcutta High Court in Samir Banerjee v Sujata Banerjee,57 and held that Section 24 of the HMA does not contain any provision that maintenance must be awarded from a specific date. The Court may, in exercise of its discretion, award maintenance from the date of service of summons.

The Orissa High Court in Gouri Das v Pradyumna Kumar Das58 was considering an application for interim maintenance filed u/S. 24 HMA by the wife, in a divorce petition instituted by the husband. The Court held that the ordinary rule is to award maintenance from the date of service of summons. It was held that in cases where the applicant in the maintenance petition is also the petitioner in the divorce petition, maintenance becomes payable from the date when summons is served upon the respondent in the main proceeding.

In Kalpana Das v Sarat Kumar Das,59 the Orissa High Court held that the wife was entitled to maintenance from the date when the husband entered appearance. The Court was considering an application for interim maintenance u/S. 24 HMA in a petition for restitution of conjugal rights filed by the wife. The Family Court awarded interim maintenance to the wife and minor child from the date of the order. In an appeal filed by the wife and minor child seeking CRR No. 3542/2019, decided by the Madhya Pradesh High Court vide Order dated 08.01.2020.

AIR 1983 Ker 139.

70 CWN 633.

1986 (II) OLR 44.

AIR 2009 Ori 133.

maintenance from the date of application, the High Court held that the Family Court had failed to assign any reasons in support of its order, and directed :

“9. …Learned Judge. Family Court has not assigned any reason as to why he passed the order of interim maintenance w.e.f. the date of order. When admittedly the parties are living separately and prima facie it appears that the Petitioners have no independent source of income, therefore, in our view order should have been passed for payment of interim maintenance from the date of appearance of the Opposite Party-husband…” (emphasis supplied) Discussion and Directions The judgments hereinabove reveal the divergent views of different High Courts on the date from which maintenance must be awarded.
Even though a judicial discretion is conferred upon the Court to grant maintenance either from the date of application or from the date of the order in S. 125(2) Cr.P.C., it would be appropriate to grant maintenance from the date of application in all cases, including Section 125 Cr.P.C. In the practical working of the provisions relating to maintenance, we find that there is significant delay in disposal of the applications for interim maintenance for years on end. It would therefore be in the interests of justice and fair play that maintenance is awarded from the date of the application.

In Shail Kumari Devi and Ors. v Krishnan Bhagwan Pathak60, this Court held that the entitlement of maintenance should not be left to the uncertain date of disposal of the case. The enormous delay in disposal of proceedings justifies the award of maintenance from the date of application. In Bhuwan Mohan Singh v Meena61, this Court held that repetitive adjournments sought by the husband in that case resulted in delay of 9 years in the adjudication of the case. The delay in adjudication was not only against human rights, but also against the basic embodiment of dignity of an individual. The delay in the conduct of the proceedings would require grant of maintenance to date back to the date of application.

2008 9 SCC 632.

2015 6 SCC 353.

The rationale of granting maintenance from the date of application finds its roots in the object of enacting maintenance legislations, so as to enable the wife to overcome the financial crunch which occurs on separation from the husband. Financial constraints of a dependant spouse hampers their capacity to be effectively represented before the Court. In order to prevent a dependant from being reduced to destitution, it is necessary that maintenance is awarded from the date on which the application for maintenance is filed before the concerned Court.

In Badshah v Urmila Badshah Godse 62 , the Supreme Court was considering the interpretation of Section 125 Cr.P.C. The Court held :

“13.3. …purposive interpretation needs to be given to the provisions of Section 125 CrPC. While dealing with the application of a destitute wife or hapless children or parents under this provision, the Court is dealing with the marginalised sections of the society. The purpose is to achieve “social justice” which is the constitutional vision, enshrined in the Preamble of the Constitution of India. The Preamble to the Constitution of India clearly signals that we have chosen the democratic path under the rule of law to achieve the goal of securing for all its citizens, justice, liberty, equality and fraternity. It specifically highlights achieving their social justice. Therefore, it becomes the bounden duty of the courts to advance the cause of the social justice. While giving interpretation to a particular provision, the court is supposed to bridge the gap between the law and society.” (emphasis supplied) It has therefore become necessary to issue directions to bring about uniformity and consistency in the Orders passed by all Courts, by directing that maintenance be awarded from the date on which the application was made before the concerned Court. The right to claim maintenance must date back to the date of filing the application, since the period during which the maintenance proceedings remained pending is not within the control of the applicant.
(2014) 1 SCC 188.
V Enforcement of orders of maintenance Enforcement of the order of maintenance is the most challenging issue, which is encountered by the applicants. If maintenance is not paid in a timely manner, it defeats the very object of the social welfare legislation. Execution petitions usually remain pending for months, if not years, which completely nullifies the object of the law. The Bombay High Court in Sushila Viresh Chhawda v Viresh Nagsi Chhawda63 held that :
“The direction of interim alimony and expenses of litigation under Section 24 is one of urgency and it must be decided as soon as it is raised and the law takes care that nobody is disabled from prosecuting or defending the matrimonial case by starvation or lack of funds.”
(i) An application for execution of an Order of Maintenance can be filed under the following provisions :
(a) Section 28 A of the Hindu Marriage Act, 1956 r.w. Section 18 of the Family Courts Act, 1984 and Order XXI Rule 94 of the CPC for executing an Order passed under Section 24 of the Hindu Marriage Act (before the Family Court);
(b) Section 20(6) of the DV Act (before the Judicial Magistrate); and
(c) Section 128 of Cr.P.C. before the Magistrate’s Court.
(ii) Section 18 of the Family Courts Act, 1984 provides that orders passed by the Family Court shall be executable in accordance with the CPC / Cr.P.C.

(iii) Section 125(3) of the Cr.P.C provides that if the party against whom the order of maintenance is passed fails to comply with the order of maintenance, the same shall be recovered in the manner as provided for fines, and the Magistrate may award sentence of imprisonment for a term which may extend to one month, or until payment, whichever is earlier. Striking off the Defence

(i) Some Family Courts have passed orders for striking off the defence of the respondent in case of non-payment of maintenance, so as to facilitate speedy disposal of the maintenance petition.

AIR 1996 Bom 94.

In Kaushalya v Mukesh Jain 64 , the Supreme Court allowed a Family Court to strike off the defence of the respondent, in case of non-payment of maintenance in accordance with the interim order passed.

(ii) The Punjab & Haryana High Court in Bani v. Parkash Singh 65 was considering a case where the husband failed to comply with the maintenance order, despite several notices, for a period of over two years. The Court taking note of the power to strike off the defence of the respondent, held that :

“Law is not that powerless as not to bring the husband to book. If the husband has failed to make the payment of maintenance and litigation expenses to wife, his defence be struck out.”
(iii) The Punjab & Haryana High Court in Mohinder Verma v Sapna, 66 discussed the issue of striking off the defence in the following words :

“8. Section 24 of the Act empowers the matrimonial court to award maintenance pendente lite and also litigation expenses to a needy and indigent spouse so that the proceedings can be conducted without any hardship on his or her part. The proceedings under this Section are summary in nature and confers a substantial right on the applicant during the pendency of the proceedings. Where this amount is not paid to the applicant, then the very object and purpose of this provision stands defeated. No doubt, remedy of execution of decree or order passed by the matrimonial court is available under Section 28A of the Act, but the same would not be a bar to striking off the defence of the spouse who violates the interim order of maintenance and litigation expenses passed by the said Court. In other words, the striking off the defence of the spouse not honouring the court’s interim order is the instant relief to the needy one instead of waiting endlessly till its execution under Section 28A of the Act. Where the spouse who is to pay maintenance fails to discharge the liability, the other spouse cannot be forced to adopt time consuming execution proceedings for realising the amount. Court cannot be a mute spectator watching flagrant disobedience of the interim orders passed by it showing its helplessness in its instant implementation. It would, thus, be appropriate even in the absence of any specific provision to that effect in the Act, to strike off the defence of the erring spouse in exercise of its inherent power under Section 151 of the Code of Civil Procedure read with Section 21 of the Act rather than to leave the aggrieved party to seek its enforcement through execution as execution is a long and arduous procedure. Needless to say, the remedy under Section 28A of the Act regarding execution of decree or interim order does not stand obliterated or extinguished by striking off the defence of the defaulting spouse. Thus, where the spouse who is directed to pay the maintenance and litigation Criminal Appeal Nos. 1129-1130 / 2019 decided vide Judgment dated 24.07.2019.
AIR 1996 P&H 175.
MANU/PH/3684/2014.
expenses, the legal consequences for its non-payment are that the defence of the said spouse is liable to be struck off.” (emphasis supplied)

(iv) The Delhi High Court in Satish Kumar v Meena67 held that the Family Court had inherent powers to strike off the defence of the respondent, to ensure that no abuse of process of the court takes place.

The Delhi High Court in Smt. Santosh Sehgal v Shri Murari Lal Sehgal,68 framed the following issue for consideration : “Whether the appeal against the decree of divorce filed by the appellant-wife can be allowed straightway without hearing the respondent-husband in the event of his failing to pay interim maintenance and litigation expenses granted to the wife during the pendency of the appeal.” The reference was answered as follows :

“5.The reference to the portion of the judgment in Bani’s case extracted here- in-above would show that the Punjab and Haryana High Court and Orissa Page 2216 High Court have taken an unanimous view that in case the husband commits default in payment of interim maintenance to his wife and children then he is not entitled to any matrimonial relief in proceedings by or against him. The view taken by Punjab and Haryana High Court in Bani’s case has been followed by a Single Judge of this Court in Satish Kumar v. Meena . We tend to agree with this view as it is in consonance with the first principle of law. We are of the view that when a husband is negligent and does not pay maintenance to his wife as awarded by the Court, then how such a person is entitled to the relief claimed by him in the matrimonial proceedings. We have no hesitation in holding that in case the husband fails to pay maintenance and litigation expenses to his wife granted by the Court during the pendency of the appeal, then the appeal filed by the wife against the decree of divorce granted by the trial court in favor of the husband has to be allowed. Hence the question referred to us for decision is answered in the affirmative.” The Court concluded that if there was non-payment of interim maintenance, the defence of the respondent is liable to be struck off, and the appeal filed by the appellant-wife can be allowed, without hearing the respondent.

2001 (60) DRJ 246.

AIR 2007 Delhi 210.

(v) The Punjab and Haryana High Court in Gurvinder Singh v Murti & Ors.69 was considering a case where the trial court stuck off the defence of the husband for non-payment of ad-interim maintenance. The High Court set aside the order of the trial court, and held that instead of following the correct procedure for recovery of interim maintenance as provided u/S. 125 (3) or Section 421 of the Cr.P.C., the trial court erred in striking off the defence of the husband. The error of the court did not assist in recovery of interim maintenance, but rather prolonged the litigation between the parties.

(vi) The issue whether defence can be struck off in proceedings under Section 125 Cr.P.C. came up before the Madhya Pradesh High Court in Venkateshwar Dwivedi v Ruchi Dwivedi.70 The Court held that neither Section 125(3) of the Cr.P.C, nor Section 10 of the Family Courts Act either expressly or by necessary implication empower the Magistrate or Family Court to strike off the defence. A statutory remedy for recovery of maintenance was available, and the power to strike off defence does not exist in a proceeding u/S. 125 Cr.P.C. Such power cannot be presumed to exist as an inherent or implied power. The Court placed reliance on the judgment of the Kerala High Court in Davis v Thomas,71 and held that the Magistrate does not possess the power to strike off the defence for failure to pay interim maintenance.

Discussion and Directions on Enforcement of Orders of Maintenance The order or decree of maintenance may be enforced like a decree of a civil court, through the provisions which are available for enforcing a money decree, including civil detention, attachment of property, etc. as provided by various provisions of the CPC, more particularly Sections 51, 55, 58, 60 read with Order XXI.

Gurvinder Singh v Murti & Ors. I (1990) DMC 559.

II (2018) DMC 103 MP.

Karnataka High Court affirmed this view in Ravindra Kumar v Renuka & Anr. 2009 SCC OnLine Kar

481. 2007(4) ILR (Kerala) 389.

See also Sakeer Hussain T.P. v Naseera & Ors., 2016 (4) ILR (Kerala) 917.

Striking off the defence of the respondent is an order which ought to be passed in the last resort, if the Courts find default to be wilful and contumacious, particularly to a dependant unemployed wife, and minor children.

Contempt proceedings for wilful disobedience may be initiated before the appropriate Court.

VI Final Directions In view of the foregoing discussion as contained in Part B – I to V of this judgment, we deem it appropriate to pass the following directions in exercise of our powers under Article 142 of the Constitution of India :

(a) Issue of overlapping jurisdiction To overcome the issue of overlapping jurisdiction, and avoid conflicting orders being passed in different proceedings, it has become necessary to issue directions in this regard, so that there is uniformity in the practice followed by the Family Courts/District Courts/Magistrate Courts throughout the country. We direct that:

(i) where successive claims for maintenance are made by a party under different statutes, the Court would consider an adjustment or set- off, of the amount awarded in the previous proceeding/s, while determining whether any further amount is to be awarded in the subsequent proceeding;

(ii) it is made mandatory for the applicant to disclose the previous proceeding and the orders passed therein, in the subsequent proceeding;

(iii) if the order passed in the previous proceeding/s requires any modification or variation, it would be required to be done in the same proceeding.

(b) Payment of Interim Maintenance The Affidavit of Disclosure of Assets and Liabilities annexed as Enclosures I, II and III of this judgment, as may be applicable, shall be filed by both parties in all maintenance proceedings, including pending proceedings before the concerned Family Court / District Court / Magistrates Court, as the case may be, throughout the country.

(c) Criteria for determining the quantum of maintenance For determining the quantum of maintenance payable to an applicant, the Court shall take into account the criteria enumerated in Part B – III of the judgment.

The aforesaid factors are however not exhaustive, and the concerned Court may exercise its discretion to consider any other factor/s which may be necessary or of relevance in the facts and circumstances of a case.

(d) Date from which maintenance is to be awarded We make it clear that maintenance in all cases will be awarded from the date of filing the application for maintenance, as held in Part B – IV above.

(e) Enforcement / Execution of orders of maintenance For enforcement / execution of orders of maintenance, it is directed that an order or decree of maintenance may be enforced under Section 28A of the Hindu Marriage Act, 1956; Section 20(6) of the D.V. Act; and Section 128 of Cr.P.C., as may be applicable. The order of maintenance may be enforced as a money decree of a civil court as per the provisions of the CPC, more particularly Sections 51, 55, 58, 60 r.w. Order XXI.

Before we part with this judgment, we note our appreciation of the valuable assistance provided by the Ld. Amici Curiae Ms. Anitha Shenoy and Mr. Gopal Sankaranarayanan, Senior Advocates in this case.

A copy of this judgment be communicated by the Secretary General of this Court, to the Registrars of all High Courts, who would in turn circulate it to all the District Courts in the States. It shall be displayed on the website of all District Courts / Family Courts / Courts of Judicial Magistrates for awareness and implementation.

.……………………….

(INDU MALHOTRA, J.)

New Delhi, ………………………….
November 4, 2020 (R. SUBHASH REDDY J.)

Enclosure I
Affidavit of Assets and Liabilities for Non-Agrarian Deponents I _________, d/o _______ or s/o , aged about ______years, resident of , do hereby solemnly affirm and declare as under:

A. Personal Information

1. Name:

2. Age/Sex:

3. Qualifications (Educational and Professional):

4. Whether the Applicant is staying in the matrimonial house / parental home / separate residence. Please provide the current residential address of matrimonial home or place of residence and details of ownership of residence, if owned by other family member.

5. Date of marriage:

6. Date of separation:

7. General monthly expenses of the Applicant (rent, household expenses, medical bills, transportation, etc.):

B. Details of Legal Proceedings and Maintenance being paid

1. Particulars of any ongoing or past legal proceedings with respect to maintenance or child support between the Applicant and Non-Applicant.

2. Whether any maintenance has been awarded in any proceeding arising under the D.V.Act, Cr.P.C., HMA, HAMA, etc.? If yes, provide details of the quantum of maintenance awarded in the proceedings.

3. If so, provide particulars thereof, alongwith a copy of the Order/s passed.

4. Whether the Order of maintenance passed in earlier proceedings has been complied with. If not, arrears of maintenance.

5. Whether any voluntary contribution towards maintenance has been made/ will be made in the future? If yes, provide details of the same.

C. Details of dependant family members

1. Details of Dependant family members, if any.

a. Relationship with dependants:

b. Age and sex of dependant/s:

2. Disclose if any independent source/s of income of the dependants, including interest income, assets, pension, tax liability on any such income and any other relevant details.

3. The approximate expenses incurred on account of the dependant.

D. Medical details if any, of the Deponent and/or dependant family members

1. Whether either party or child /children is suffering from any physical / mental disability, or any other serious ailment. If yes, produce medical records.

2. Whether any dependant family member has serious disability, requiring continuous medical expenditure. If yes, produce disability certificate and approximate medical expenditure incurred on such medical treatment.

3. Whether either party or child/children or any other dependent family member is suffering from life-threatening diseases, which would entail expensive and regular medical expenditure? If yes, provide details of the same along with summary of previous details of hospitalisation/medical expenses incurred.

E. Details of Children of the parties

1. Number of children from the existing marriage / marital relationship/ previous marriage

2. Name and age of children

3. Details of the parent who has the custody of the children.

4. Expenditure for maintenance of dependant children.

a. Towards food, clothing and medical expenses b. Towards expenses for education, and a summary of general expenses c. Towards expenses, if any, of any extra educational, vocational or professional / educational course, specialised training or special skills programme of dependent children.

d. Details of any loan, mortgage, charge incurred or instalment plan (being paid or payable), if any, on account of any educational expenses of children.

5. Whether any voluntary contribution by either of the parties is being made towards these educational expenses. If yes, provide details of the same. Also provide an estimate of any additional contribution that may be required.

6. Whether any financial support is being provided by a third party for the educational expenses of the children?

F. Details of Income of the Deponent

1. Name of employer:

2. Designation:

3. Monthly income:

4. If engaged in Government Service, furnish latest Salary Certificates or current Pay Slips or proof of deposit in bank account, if being remitted directly by employer.

5. If engaged in the private sector, furnish a certificate provided by the employer stating the designation and gross monthly income of such person, and Form 16 for the relevant period of current employment.

6. If any perquisites, benefits, house rent allowance, travel allowance, dearness allowance or any other service benefit is being provided by the employer during the course of current employment.

7. Whether assessed to income tax?

If yes, submit copies of the Income Tax Returns for the periods given below :
(i) One year prior to marriage
(ii) One year prior to separation
(iii) At the time when the Application for maintenance is filed
8. Income from other sources, such as rent, interest, shares, dividends, capital gains, FDRs, Post office deposits, mutual funds, stocks, debentures, agriculture, or business, if any, alongwith TDS in respect of any such income.

9. Furnish copies of Bank Statement of all accounts for the last 3 years.

G. Assets (movable and immovable) owned by the Deponent

1. Self-acquired property, if any:

2. Properties jointly owned by the parties after marriage:

3. Share in any ancestral property:

4. Other joint properties of the parties (accounts/ investments/ FDR/ mutual funds, stocks, debentures etc.), their value and status of possession:

5. Status of possession of immovable property and details of rent, if leased:

6. Details of loans taken or given by the Deponent

7. Brief description of jewellery and ornaments of parties acquired during /after marriage
8. Details of transfer deeds or transactions of alienation of properties previously owned by the applicant, executed during the subsistence of the marriage. Also provide brief reasons for such sale or transaction, if any.

H. Details of Liabilities of the Deponent

1. Loans, liabilities, mortgage, or charge outstanding against the Deponent, if any.

2. Details of any EMIs being paid.

3. Date and purpose of taking loan or incurring any such liability:

4. Actual amount borrowed, if any, and the amount paid upto date of filing the Affidavit:

5. Any other information which would be relevant to describe current liabilities of the Deponent.

I. Self-employed persons / Professionals / Business Persons / Entrepreneur

1. Brief description of nature of business/profession/vocation/self-employed/work activity.

2. Whether the business/profession/ self-employment is carried on as an individual, sole proprietorship concern, partnership concern, LLP, company or association of persons, HUF, joint family business or any other form? Give particulars of Applicant’s share in the partnership/business/ professional association/self- employment. In case of partnership, specify the share in the profit/losses of the partnership.

3. Net Income from the business/profession/ partnership/self-employment.

4. Business/partnership/self-employment liabilities, if any, in case of such activity.

5. In case of business of company, provide brief details of last audited balance sheet to indicate profit and loss of the company in which such party is in business in the company.

6. In case of a partnership firm, provide details of the filings of the last Income Tax Return of partnership.

7. In case of self-employed individual, provide the filings of the last Income Tax Return from any such professional/business/vocational activity.

J. Information provided by the Deponent with respect to the income, assets and liabilities of the other Spouse

1. Educational and professional qualifications of the other spouse:

2. Whether spouse is earning? If so, give particulars of the occupation and income of the spouse.

3. If not, whether he/she is staying in his/her own accommodation, or in a rented accommodation or in accommodation provided by employer/business/partnership?

4. Particulars of assets and liabilities of spouse as known to the deponent, alongwith any supporting documents.

K. Details of Applicant or the other Spouse, in case parties are Non-Resident Indians, Overseas Citizens of India, Foreign Nationals or Persons living abroad outside India.

1. Details of Citizenship, Nationality and current place of residence, if the Applicant or other spouse is residing abroad outside India, temporarily or permanently.

2. Details of current employment and latest income in foreign currency of such applicant/spouse, duly supported by relevant documentation of employment and income from such foreign employer or overseas institution by way of employment letter or testimonial from foreign employer or overseas institution or latest relevant bank statement.

3. Details of household and other expenditure of such applicant/spouse in foreign jurisdiction.

4. Details of tax liability of applicant/other spouse in foreign jurisdiction.

5. Details of income of applicant/other spouse from other sources in India/foreign jurisdiction.

6. Details of expenses incurred or contribution made on account of spousal maintenance, child support or any other educational expenses, medical treatment of spouse or children.

7. Any other relevant detail of expenses or liabilities, not covered under any of the above headings and any other liabilities to any other dependant family members in India or abroad.

Declaration

1. I declare that I have made a full and accurate disclosure of my income, expenditure, assets and liabilities from all sources. I further declare that I have no assets, income, expenditure and liabilities other than as stated in this affidavit.

2. I undertake to inform this Court immediately with respect to any material change in my employment, assets, income, expenses or any other information included in this affidavit.

3. I understand that any false statement in this affidavit, apart from being contempt of Court, may also constitute an offence under Section 199 read with Sections 191 and 193 of the Indian Penal Code punishable with imprisonment upto seven years and fine, and Section 209 of Indian Penal Code punishable with imprisonment upto two years and fine. I have read and understood Sections 191, 193, 199 and 209 of the Indian Penal Code, 1860.

DEPONENT Verification Verified at ___on this _____day of _____ that the contents of the above affidavit are true to my personal knowledge, no part of it is false and nothing material has been concealed therefrom, whereas the contents of the above affidavit relating to the assets, income and expenditure of my spouse are based on information believed to be true on the basis of record. I further verify that the copies of the documents filed along with the affidavit are the copies of the originals.

DEPONENT Enclosure II Details for Affidavit for Agrarian Deponents (Krishi)

1. Total extent of the rural land/s owned, or the specific share holding in the same land:

2. Jamabandis / Mutations to show ownership

3. Location of the land owned by the party.

4. Nature of land : whether wet land or dry land.

5. Whether such land is agricultural land or non-agricultural land:

6. Nature of agriculture / horticulture :

7. Nature of crops cultivated during the year :

8. If rural land is not cultivable, whether the same is being used for business, leasing or other activity :

9. Income generated during the past 3 years from the land.

10. Whether any land is taken on lease /battai (or any other term used for a lease in the local area of the concerned jurisdiction where rural /agricultural land is located.)

11. (a) Whether owner of any livestock, such as buffaloes, cows, goats, cattle, poultry, fishery, bee keeping, piggery etc., the number thereof and Income generated therefrom?

(b) Whether engaged in dairy farming, poultry, fish farming or any other livestock activity.

12. Loans, if any obtained against the land. Furnish details of such loans.

13. Any other sources of income :

14. Liabilities, if any

15. Any other relevant information :

Declaration

1. I declare that I have made a full and accurate disclosure of my income, expenditure, assets and liabilities from all sources. I further declare that I have no assets, income, expenditure and liabilities other than as stated in this affidavit.

2. I undertake to inform this Court immediately with respect to any material change in my employment, assets, income, expenses or any other information included in this affidavit.

3. I understand that any false statement in this affidavit, apart from being contempt of Court, may constitute an offence under Section 199 read with Sections 191 and 193 of the Indian Penal Code punishable with imprisonment upto seven years and fine, and Section 209 of Indian Penal Code punishable with imprisonment upto two years and fine. I have read and understood Sections 191, 193, 199, and 209 of the Indian Penal Code,1860.

DEPONENT Verification Verified at ___on this ___day of_____that the contents of the above affidavit are true to my personal knowledge, no part of it is false and nothing material has been concealed therefrom. I further verify that the copies of the documents filed along with the affidavit are the copies of the originals.

DEPONENT Enclosure III Affidavit for the State of Meghalaya

1. Whether the woman is the youngest daughter of the family.

2. Whether the woman is staying with her husband in her family property.

3. Whether she has any maternal uncle, who plays a very important role in their family matters, which includes settlement of matrimonial disputes. The woman should also disclose her clan and her lineage.

4. The woman should disclose if her children have adopted the surname of her mother, in as much as Khasi has been defined as “a person who adopts the surname of his or her mother”.

5. The woman should disclose if she gets any financial assistance from her clan or family member.

6. The woman should disclose if her parents are alive more specifically, her mother, and how many siblings she has.

7. In event of a woman not being the youngest daughter, she has to disclose who the youngest daughter is.

8. The woman should disclose if she has any movable or any immovable property, self-acquired or inherited from her clan.

9. The woman should disclose if she is married to tribal or non-tribal The above format may be modified or adapted by the concerned Court, as may be considered appropriate.

Declaration

1. I declare that I have made a full and accurate disclosure of my income, expenditure, assets and liabilities from all sources. I further declare that I have no assets, income, expenditure and liabilities other than as stated in this affidavit.

2. I undertake to inform this Court immediately with respect to any material change in my employment, assets, income, expenses or any other information included in this affidavit.

3. I understand that any false statement in this affidavit, apart from being contempt of Court, may also constitute an offence under Section 199 read with Sections 191 and 193 of the Indian Penal Code punishable with imprisonment upto seven years and fine, and Section 209 of Indian Penal Code punishable with imprisonment upto two years and fine. I have read and understood Sections 191, 193, 199, and 209 of the Indian Penal Code, 1860.

DEPONENT Verification Verified at ___on this _____day of _____ that the contents of the above affidavit are true to my personal knowledge, no part of it is false and nothing material has been concealed therefrom, whereas the contents of the above affidavit relating to the assets, income and expenditure of my spouse are based on information believed to be true on the basis of record. I further verify that the copies of the documents filed along with the affidavit are the copies of the originals.

DEPONENT

DOWNLOAD: Download Supreme Court order in RAJNESH VERSUS NEHA

E-assessment Scheme, 2019 | CBDT Notification

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In its bid to curb corruption by making tax filing and their review faceless, the government has come out with e-assessment scheme, 2019 making it mandatory for all communication between tax department and taxpayers to be done online.

Now, tax notices will be issued by a centralised e-assessment centre requiring taxpayers to reply only through digital mode. Through mobile app, real-time alerts would be sent to assessees updating about progress in the case.

The tax department has, however, reserved the right to allocate an assessment case to a tax officer where complexity is involved.

Moving to digital from the decades-old system of manual scrutiny, the tax department would use data analytics, artificial intelligence, machine learning and other latest tools to ascertain misreporting or evasion. The move is in line with the government’s promise to eliminate human interface in tax matters.

Finance Act 2018 had introduced three new sub Sections – 3A to 3C to Section 143 with a view to notify a new e-assessment scheme, where the assessment proceedings will be conducted in electronic mode, which will almost eliminate person-to-person contact to the extent it is technologically feasible.

Rakesh Nangia, Managing Partner, Nangia Advisors (Andersen Global) said that the idea of e-assessments, is in principle, an outstanding one but the administrative systems and procedures need to be developed to ensure that it does not result in uncalled-for injustice to the taxpayers.

“The use of artificial intelligence, machine learning, video conferencing, telecommunication application software, mobile app etc. in the e-assessment process are few measures which emerged economies have already adopted long back. However, the digital capabilities may pose significant implementation challenges in India,” Nangia said.

The Central Board of Direct Taxes (CBDT), the policy-making body of the Income Tax Department had been running e-assessment as a pilot project in few major cities before expanding it pan-India. The initiative was launched to reduce visits by taxpayers to income tax offices and their interface with the taxmen, thereby bringing anonymity in proceedings.

Laying down the assessment procedure, the scheme says that National e-Assessment Centre shall serve a notice on the assessee under sub-section (2) of section 143, specifying the issues for selection of his case for assessment. The assessee would be given 15 days time from the date of receipt of the notice to file their response.

“The National e-assessment Centre shall assign the case selected for the purposes of e-assessment under this scheme to a specific assessment unit in any one regional e-assessment centre through an automated allocation system,” the scheme said.

All communications between the National e-assessment Centre and the assessee will be exchanged exclusively by electronic mode. The internal communication within the department will also be online.

DOWNLOAD: Download CBDT Notification E-assessment Scheme, 2019

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 12th September, 2019
(INCOME-TAX)
S.O. 3264(E).–In exercise of the powers conferred by sub-section (3A) of section 143 of the Income-tax Act,
1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:__
1. Short title and commencement.–– (1) This Scheme may be called the E-assessment Scheme, 2019.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. Definitions .–– (1) In this Scheme, unless the context otherwise requires, ––
(i) “Act” means the Income-tax Act, 1961 (43 of 1961);
(ii) “addressee” shall have the same meaning as assigned to it in clause (b) of sub-section (1) of section 2 of
the Information Technology Act, 2000 (21 of 2000);
(iii) “assessment” means assessment of total income or loss of the assessee under sub-section (3) of section
143 of the Act;
(iv) “authorised representative” shall have the same meaning as assigned to it in sub-section (2) of section
288 of the Act;
(v) “automated allocation system” means an algorithm for randomised allocation of cases, by using suitable
technological tools, including artificial intelligence and machine learning, with a view to optimise the use
of resources;
10 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(vi) “automated examination tool” means an algorithm for standardised examination of draft orders, by using
suitable technological tools, including artificial intelligence and machine learning, with a view to reduce
the scope of discretion;
(vii) “Board” means Central Board of Direct Taxes constituted under the Central Board of Revenues Act,
1963 (54 of 1963);
(viii) “computer resource” shall have the same meaning as assigned to them in clause (k) of sub-section (1) of
section 2 of the Information Technology Act, 2000 (21 of 2000);
(ix) “computer system” shall have the same meaning as assigned to them in clause (l) of sub-section (1) of
section 2 of the Information Technology Act, 2000 (21 of 2000);
(x) “computer resource of assessee” shall include assessee’s registered account in designated portal of the
Income-tax Department, the Mobile App linked to the registered mobile number of the assessee, or the
email account of the assessee with his email service provider;
(xi) “digital signature” shall have the same meaning as assigned to it in clause (p) of sub-section (1) of
section 2 of the Information Technology Act, 2000 (21 of 2000);
(xii) “designated portal” means the web portal designated as such by the Principal Chief Commissioner or
Principal Director General, in charge of the National e-assessment Centre;
(xiii) “e-assessment” means the assessment proceedings conducted electronically in ‘e-Proceeding’ facility
through assessee’s registered account in designated portal;
(xiv) “electronic record” shall have the same meaning as assigned to it in clause (t) of sub-section (1) of section
2 of the Information Technology Act, 2000 (21 of 2000);
(xv) “electronic signature” shall have the same meaning as assigned to it in clause (ta) of sub-section (1) of
section 2 of the Information Technology Act, 2000 (21 of 2000);
(xvi) “email” or “electronic mail” and “electronic mail message” means a message or information created or
transmitted or received on a computer, computer system, computer resource or communication device
including attachments in text, image, audio, video and any other electronic record, which may be
transmitted with the message.;
(xvii) “hash function” and “hash result” shall have the same meaning as assigned to them in the Explanation to
sub-section (2) of section 3 of the Information Technology Act, 2000 (21 of 2000);
(xviii) “Mobile app” shall mean the application software of the Income-tax Department developed for mobile
devices which is downloaded and installed on the registered mobile number of the assessee;
(xix) “originator” shall have the same meaning as assigned to it in clause (za) of sub-section (1) of section 2 of
the Information Technology Act, 2000 (21 of 2000);
(xx) “real time alert” means any communication sent to the assessee, by way of Short Messaging Service on
his registered mobile number, or by way of update on his Mobile App, or by way of an email at his
registered email address, so as to alert him regarding delivery of an electronic communication;
(xxi) “registered account” of the assessee means the electronic filing account registered by the assessee in
designated portal;
(xxii) “registered e-mail address” means the e-mail address at which an electronic communication may be
delivered or transmitted to the addressee, including-
(a) the email address available in the electronic filing account of the addressee registered in
designated portal; or
(b) the e-mail address available in the last income-tax return furnished by the addressee; or
(c) the e-mail address available in the Permanent Account Number database relating to the
addressee; or
(d) in the case of addressee being an individual who possesses the Aadhaar number, the e-mail
address of addressee available in the database of Unique Identification Authority of India ;or
(e) in the case of addressee being a company, the e-mail address of the company as available on the
official website of Ministry of Corporate Affairs; or
(f) any e-mail address made available by the addressee to the income-tax authority or any person
authorised by such authority.
(xxiii) “registered mobile number” of the assessee means the mobile number of the assessee, or his authorised
representative, appearing in the user profile of the electronic filing account registered by the assessee in
designated portal;
(xxiv) “video telephony” means the technological solutions for the reception and transmission of audio-video
signals by users at different locations, for communication between people in real-time.
(2) Words and expressions used herein and not defined but defined in the Act shall have the meaning respectively
assigned to them in the Act.
3. Scope of the Scheme.–– The assessment under this Scheme shall be made in respect of such territorial area, or persons
or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board.
4. E-assessment Centres.– (1) For the purposes of this Scheme, the Board may set up-
(i) a National e-assessment Centre to facilitate the conduct of e-assessment proceedings in a centralised manner,
which shall be vested with the jurisdiction to make assessment in accordance with the provisions of this
Scheme;
(ii) Regional e-assessment Centres as it may deem necessary to facilitate the conduct of e-assessment
proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the
jurisdiction to make assessment in accordance with the provisions of this Scheme;
(iii) assessment units, as it may deem necessary to facilitate the conduct of e-assessment, to perform the function
of making assessment, which includes identification of points or issues material for the determination of any
liability (including refund) under the Act, seeking information or clarification on points or issues so identified,
analysis of the material furnished by the assessee or any other person, and such other functions as may be
required for the purposes of making assessment;
(iv) verification units, as it may deem necessary to facilitate the conduct of e-assessment, to perform the function
of verification, which includes enquiry, cross verification, examination of books of accounts, examination of
witnesses and recording of statements, and such other functions as may be required for the purposes of
verification.
(v) technical units, as it may deem necessary to facilitate the conduct of e-assessment, to perform the function of
providing technical assistance which includes any assistance or advice on legal, accounting, forensic,
information technology, valuation, transfer pricing, data analytics, management or any other technical matter
which may be required in a particular case or a class of cases, under this Scheme; and
(vi) review units, as it may deem necessary to facilitate the conduct of e-assessment, to perform the function of
review of the draft assessment order, which includes checking whether the relevant and material evidence has
been brought on record, whether the relevant points of fact and law have been duly incorporated in the draft
order, whether the issues on which addition or disallowance should be made have been discussed in the draft
order, whether the applicable judicial decisions have been considered and dealt with in the draft order,
checking for arithmetical correctness of modifications proposed, if any, and such other functions as may be
required for the purposes of review,
and specify their respective jurisdiction.
(2) All communication among the assessment unit, review unit, verification unit or technical unit or with the assesse or
any other person with respect to the information or documents or evidence or any other details, as may be necessary for
the purposes of making an assessment under this Scheme shall be through the National e-assessment Centre.
(3) The units referred to in sub-paragraphs (iii), (iv), (v) and (vi) of paragraph (1) shall have the following authorities,
namely:–
(a) Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, as the case may
be;
(b) Deputy Commissioner or Deputy Director or Assistant Commissioner or Assistant Director, or Income-tax
Officer, as the case may be;
(c) such other income-tax authority, ministerial staff, executive or consultant, as considered necessary by the
Board.
5. Procedure for assessment.––(1) The assessment under this Scheme shall be made as per the following procedure,
namely:__
(i) the National e-Assessment Centre shall serve a notice on the assessee under sub-section (2) of section 143,
specifying the issues for selection of his case for assessment;
(ii) the assessee may, within fifteen days from the date of receipt of notice referred to in sub-clause (i), file his
response to the National e-assessment Centre ;
(iii) the National e-assessment Centre shall assign the case selected for the purposes of e-assessment under this
Scheme to a specific assessment unit in any one Regional e-assessment Centre through an automated
allocation system;
(iv) where a case is assigned to the assessment unit, it may make a request to the National e-assessment Centre for
__
(a) obtaining such further information, documents or evidence from the assesse or any other person,
as it may specify;
(b) conducting of certain enquiry or verification by verification unit; and
(c) seeking technical assistance from the technical unit;
(v) where a request for obtaining further information, documents or evidence from the assessee or any other
person has been made by the assessment unit, the National e-assessment Centre shall issue appropriate
notice or requisition to the assessee or any other person for obtaining the information, documents or evidence
requisitioned by the assessment unit;
(vi) where a request for conducting of certain enquiry or verification by the verification unit has been made by the
assessment unit, the request shall be assigned by the National e-assessment Centre to a verification unit
through an automated allocation system;
(vii) where a request for seeking technical assistance from the technical unit has been made by the assessment unit,
the request shall be assigned by the National e-assessment Centre to a technical unit in any one Regional eassessment
Centres through an automated allocation system;
(viii) the assessment unit shall, after taking into account all the relevant material available on the record, make in
writing, a draft assessment order either accepting the returned income of the assessee or modifying the
returned income of the assesse, as the case may be, and send a copy of such order to the National eassessment
Centre;
(ix) the assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to
be initiated therein, if any;
(x) the National e-assessment Centre shall examine the draft assessment order in accordance with the risk
management strategy specified by the Board, including by way of an automated examination tool, whereupon
it may decide to –
(a) finalise the assessment as per the draft assessment order and serve a copy of such order and notice
for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying
the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;
or
(b) provide an opportunity to the assessee, in case a modification is proposed, by serving a notice
calling upon him to show cause as to why the assessment should not be completed as per the draft
assessment order; or
(c) assign the draft assessment order to a review unit in any one Regional e-assessment Centre, through
an automated allocation system, for conducting review of such order;
(xi) the review unit shall conduct review of the draft assessment order, referred to it by the National e-assessment
Centre whereupon it may decide to__
(a) concur with the draft assessment order and intimate the National e-assessment Centre about such
concurrence; or
(b) suggest such modification, as it may deem fit, to the draft assessment order and send its
suggestions to the National e-assessment Centre;
(xii) the National e-assessment Centre shall, upon receiving concurrence of the review unit, follow the procedure
laid down in sub-paragraph (a) or sub-paragraph (b) of paragraph (x), as the case may be;
¹Hkkx IIμ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 13
(xiii) the National e-assessment Centre shall, upon receiving suggestions for modifications from the review unit,
communicate the same to the Assessment unit;
(xiv) the assessment unit shall, after considering the modifications suggested by the Review unit, send the final
draft assessment order to the National e-assessment Centre;
(xv) The National e-assessment Centre shall, upon receiving final draft assessment order, follow the procedure laid
down in sub-paragraph (a) or sub-paragraph (b) of paragraph (x),as the case may be;
(xvi) The assessee may, in a case where show-cause notice under sub-paragraph (b) of paragraph (x) has been
served upon him, furnish his response to the National e-assessment Centre on or before the date and time
specified in the notice;
(xvii) The National e-assessment Centre shall,-
(a) in a case where no response to the show-cause notice is received, finalise the assessment as per the
draft assessment order,as per the procedure laid down in sub-paragraph (a) of paragraph (x); or
(b) in any other case, send the response received from the assessee to the assessment unit;
(xviii) The assessment unit shall, after taking into account the response furnished by the assessee, make a revised
draft assessment order and send it to the National e-assessment Centre;
(xix) The National e-assessment Centre shall, upon receiving the revised draft assessment order,-
(a) in case no modification prejudicial to the interest of the assessee is proposed with reference to the draft
assessment order, finalise the assessment as per the procedure laid down in sub-paragraph (a) of
paragraph (x); or
(b) in case a modification prejudicial to the interest of the assessee is proposed with reference to the draft
assessment order,provide an opportunity to the assessee, as per the procedure laid down in subparagraph
(b) of paragraph (x);
(c) the response furnished by the assessee shall be dealt with as per the procedure laid down in paragraphs
(xvi),(xvii), and (xviii);
(xx) The National e-assessment Centre shall, after completion of assessment, transfer all the electronic records of
the case to the Assessing Officer having jurisdiction over such case., for –
(a) imposition of penalty;
(b) collection and recovery of demand;
(c) rectification of mistake;
(d) giving effect to appellate orders;
(e) submission of remand report, or any other report to be furnished, or any representation to be made, or
any record to be produced before the Commissioner (Appeals), Appellate Tribunal or Courts, as the
case may be;
(f) proposal seeking sanction for launch of prosecution and filing of complaint before the Court;
(xxi) Notwithstanding anything contained in paragraph (xx), the National e-assessment Centre may at any stage
of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction
over such case.
6. Penalty proceedings for non-compliance.– (1) Any unit may, in the course of assessment proceedings, for noncompliance
of any notice, direction or order issued under this Scheme on the part of the assessee or any other person,
send recommendation for initiation of any penalty proceedings under Chapter XXI of the Act, against such assesse or any
other person, as the case may be, to the National e-assessment Centre, if it considers necessary or expedient to do so.
(2) The National e-assessment Centre shall, on receipt of such recommendation, serve a notice on the assessee or any
other person, as the case may be, calling upon him to show cause as to why penalty should not be imposed on him under
the relevant provisions of the Act.
14 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(3) The response to show – cause notice furnished by the assessee or any other person, if any, shall be sent by the
National e-assessment Centre to the concerned unit which has made the recommendation for penalty.
(4) The said unit shall, after taking into consideration the response furnished by the assesse or any other person, as the
case may be, –
(a) make a draft order of penalty and send a copy of such draft to National e-assessment Centre; or
(b) drop the penalty after recording reasons, under intimation to the National e-assessment Centre.
(5) The National e-assessment Centre shall levy the penalty as per the said draft order of penalty and serve a copy of the
same on the assessee or any other person, as the case may be.
7. Appellate Proceedings.– An appeal against an assessment made by the National e-assessment Centre under this
Scheme shall lie before the Commissioner (Appeals) having jurisdiction over the jurisdictional Assessing Officer and any
reference to the Commissioner (Appeals) in any communication from the National e-assessment Centre shall mean such
jurisdictional Commissioner (Appeals).
8. Exchange of communication exclusively by electronic mode.–– For the purposes of this Scheme,-
(a) all communications between the National e-assessment Centre and the assessee, or his authorised
representative, shall be exchanged exclusively by electronic mode; and
(b) all internal communications between the National e-assessment Centre, Regional e-assessment Centres
and various units shall be exchanged exclusively by electronic mode.
9. Authentication of electronic record.–– For the purposes of this Scheme, an electronic record shall be authenticated
by the originator by affixing his digital signature in accordance with the provisions of sub-section (2) of section 3 of the
Information Technology Act, 2000 (21 of 2000):
Provided that in case of the originator, being the assesse or any other person, such authentication may also be done by
electronic signature or electronic authentication technique in accordance with the provisions of sub-section (2) of section
3A of the said Act:
10. Delivery of electronic record.––(1) Every notice or order or any other electronic communication under this Scheme
shall be delivered to the addressee, being the assessee, by way of-
(a) placing an authenticated copy thereof in the assessee’s registered account; or
(b) sending an authenticated copy thereof to the registered email address of the assessee or his authorised
representative; or
(c) uploading an authenticated copy on the assessee’s Mobile App; and
followed by a real time alert.
(2) Every notice or order or any other electronic communication under this Scheme shall be delivered to the addressee,
being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed
by a real time alert.
(3) The Assessee shall file his response to any notice or order or any other electronic communication, under this Scheme,
through his registered account, and once an acknowledgement is sent by the National e-assessment Centre containing the
hash result generated upon successful submission of response, the response shall be deemed to be authenticated.
(4) The time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions
of section 13 of the Information Technology Act, 2000 (21 of 2000).
11. No personal appearance in the Centres or Units.––(1) A person shall not be required to appear either personally or
through authorised representative in connection with any proceedings under this Scheme before the income-tax authority
at the National e-assessment Centre or Regional e-assessment Centre or any unit set up under this Scheme.
(2) In a case where a modification is proposed in the draft assessment order, and an opportunity is provided to the
assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the
¹Hkkx IIμ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 15
such draft assessment order, the assessee or his authorised representative, as the case may be, shall be entitled to seek
personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit under
this Scheme, and such hearing shall be conducted exclusively through video conferencing, including use of any
telecommunication application software which supports video telephony, in accordance with the procedure laid down by
the Board.
(3) Any examination or recording of the statement of the assessee or any other person (other than statement recorded in
the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit under this
Scheme, exclusively through video conferencing, including use of any telecommunication application software which
supports video telephony in accordance with the procedure laid down by the Board.
(4) The Board shall establish suitable facilities for video conferencing including telecommunication application software
which supports video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised
representative, or any other person referred to in sub-paragraph (2) or sub-paragraph (3) is not denied the benefit of this
Scheme merely on the consideration that such assessee or his authorised representative, or any other person does not
have access to video conferencing at his end.
12. Power to specify format, mode, procedure and processes.––(1) The Principal Chief Commissioner or the Principal
Director General, in charge of the National e-assessment Centre shall lay down the standards, procedures and processes
for effective functioning of the National e-assessment Centre , Regional e-assessment Centres and the unit set-up under
this Scheme, in an automated and mechanised environment, including format, mode, procedure and processes in respect
of the following, namely:__
(i) service of the notice, order or any other communication;
(ii) receipt of any information or documents from the person in response to the notice, order or any other
communication;
(iii) issue of acknowledgment of the response furnished by the person;
(iv) provision of “e-proceeding” facility including login account facility, tracking status of assessment,
display of relevant details, and facility of download;
(v) accessing, verification and authentication of information and response including documents submitted
during the assessment proceedings;
(vi) receipt, storage and retrieval of information or documents in a centralised manner;
(vii) general administration and grievance redressal mechanism in the respective Centres and units.
[Notification No. 61/2019/F.No. 370149/154/2019-TPL]
ANKUR GOYAL, Under Secy.

CBDT Circulars On Prosecution Of Offenses And Compounding Of Offenses Under Direct Tax Laws

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Circular No. 24 12019
F.No.2 85/08/2014-IT(Inv. V)/ 349
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
*******
Room No. 515, 5th Floor, C-B1ock,
Dr. Shyama Prasad Mukherjee Civic Cent re,
Minto Road, New Delhi – ll 0002.
Dated: 09.09.2019

Subject: Procedure for identification and processing of cases for prosecution under Direct Tax Laws-reg.

The Central Board of Direct Taxes has been issuing guidelines from time to time for streamlining the procedure of identifying and examining the cases for initiating prosecution for offences under Direct Tax Laws. With a view to achieve the objective behind enactment of Chapter XXII of the Income-tax Act, 1961 (the Act), and to remove any doubts on the intent to address serious cases effectively, this circular is issued.

2. Prosecution is a criminal proceeding. Therefore, based upon evidence gathered, offence and crime as de fined in the relevant provision of the Act, the offence has to be proved beyond reasonable doubt. To ensure that only deserving cases get prosecuted the Central Board of Direct Taxes in exercise of powers under section 119 of the Act lays down the following criteria for launching prosecution in respect of the following categories of offences.

i. Offences u/s 276B: Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.

Cases where non-payment of tax deducted at source is Rs. 25 Lakhs or below, and the delay in deposit is less than 60 days from the due date, shall not be processed for prosecution in normal circumstances. In case of exceptional cases like, habitual defaulters, based on particular facts and circumstances of each case, prosecution may be initiated only with the previous administrative approval of the Collegium of two CCIT/DGIT rank officers as mentioned in Para 3.

ii. Offences u/s 276BB: Failure to pay the tax collected at source.

Same approach as in Para 2.i above.

iii . Offences u/s 276C(l): Wilful attempt to evade tax, etc.

Cases where the amount sought to be evaded or tax on under-reported income is Rs. 25 Lakhs or below, shall not be processed for prosecution except with the previous administrative approval of the Collegium oftwo CCIT/DG IT rank officers as mentioned in Para 3.

Further, prosecution under this section shall be launched only after the confirmation of the order imposing penalty by the Income Tax Appellate Tribunal.

iv. Offences u/s 276CC: Failure to furnish returns of income.

Cases where the amount of tax, which would have been evaded if the failure had not been discovered, is Rs. 25 Lakhs or below, shall not be processed for prosecution except with the previous administrative approval of the Collegium of two CCIT/DGIT rank officers as mentioned in Para 3.

3. For the purposes of this Circular, the constitution of the Collegium of two CCIT/DGIT rank officers would mean the following-

As per section 279(1) of the Act, the sanctioning authority for offences under Chapter XXII is the Principal Commissioner or Commissioner or Commissioner (Appeals) or the appropriate authority. For proper examination of facts and circumstances of a case, and to ensure that only deserving cases below the threshold limit as prescribed in Annexure get selected for filing of prosecution complaint. such sanctioning authority shall seek the prior administrative approval of a collegium of two CCIT/DGIT rank officers, including the CCIT/DGIT in whose j urisdiction the case lies. The Principal CCIT(CCA) concerned may issue directions for pairing of CCslT/DGIT for this purpose. In case of disagreement between the two CCITIDGIT rank officers of the collegium, the matter will be referred to the Principal CClT(CCA) whose decision will be final.

In the event that the Pr.CCIT(CCA) is one of the two officers of the collegium, in case of a disagreement the decision of the Pr.CCIT(CCA) will be final.

4. The list of prosecutable offences under the Act specifying the approving authority is annexed herewith.

5. This Circular shall come into effect immediatel y and shall apply to all the pending cases where com plaint is yet to be filed.

6. Hind version shall follow.
Encl: As above
(Mamta Bansal)
Director to the Government of India

Circular No. 25/2019
F.No.285/0812014-IT(Inv. V) /350
Government of India
Ministry of Finance
Department of Revenue
(Cent ral Board of Direct Taxes)
*******
Room No. 515, 5th Floor, C-Block,
Dr. Shyama Prasad Mukherjee Civic Centre,
Minto Road, New Delhi -110002.
Dated: 09.09.20 19

Subject: Relaxation of time-Compounding of Offences under Direct Tax Laws-One-time measure-Reg.

The Central Board of Direct Taxes (CBDT) has been issuing guidelines from time to time for compounding of offences under the Direct Tax Laws, prescribing the eligibility conditions. One of the conditions for filing of Compounding application is that, it should be filed within 12 months from filing of complaint in the court.

2. Cases have been brought to the notice of CBDT where the taxpayer s could not apply for Compounding of the Offence, as the compounding application was filed beyond 12 months. in view of para 8(vii) of the Guidelines for Compounding of Offences under Direct Tax Laws. 2014 dated 23. 12.2014 or in view of para 7(ii) of the Guidelines for Compounding of Offences under Direct Tax Laws, 2019 dated 14.06.2019.

3. With a view to mitigate unintended hardship to taxpayers in deserving cases, and to reduce the pendency of existing prosecution cases before the courts, the CBDT in exercise of powers u/s 119 of the Income-tax Act, 1961 (the Act) read with explanation below subsection (3) of section 279 of the Act issues this Circular.

4.1 As a one-time measure, the condition that compounding application shall be filed within 12 months, is hereby relaxed, under the following conditions:

i) Such application shall be filed before the Competen t Authority i.e. the Pr. CCIT/CCITIPr. DGIT/DGIT concerned, on or before 31.12.2019.

ii) Relaxation shall not be available in respect of an offence which is generally/normally not compoundable , in view of Para 8.1 of the Guide lines dated 14.06.20 19.

4.2 Applications tiled before the Competent Authority, on or before 31.12.2019 shall be deemed to be in time in terms of Para 7(ii) of the Guidelines dated 14.06.2019.

4.3 It is clarified that Para 9.2 of the Guidelines dated 14.06. 2019, shall not apply to all such applications made under this one-time measure. The other prescriptions of the Guidelines dated 14.06.20 19 including the compounding procedure, compounding charges etc. shall apply to such applications.

5. For the purposes of this Circular, application can be filed in all such cases where a) prosecution proceedings are pending before any court of law for more than 12 months . or b) any compounding application for an offence filed previously was withdrawn by the applicant solely for the reason that such application was filed beyond 12 months, or

c) any compounding application for an offence had been rejected previous ly solely for technical reasons.

6. Hind version shall follow.
(Mamta Bansal)
Director to the Government of India

DOWNLOAD: Download CBDT Circular No. 24 12019 and Circular No. 25/2019 dated 9th September 2019

Declaration for GST transitional credit beyond the due date: Gujarat High Court Judgement

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MASTI

In M/S SIDDHARTH ENTERPRISES THROUGH PARTNER MAHESH LILADHAR TIBDEWAL Versus THE NODAL OFFICER SPECIAL CIVIL APPLICATION NO. 5758 of 2019 the Gujarat High Court (HC) had to decide the issues of allowing filing of declaration for transitional credit beyond the due date and whether rule 117 of Central Goods and Services Tax Rules, 2017 providing the due date to claim transitional credit is procedural in nature, and thus merely directory and not a mandatory provision.

According to the petitioner, the intention of the Government was not to collect tax twice on the same goods and thus, credit of duty/tax paid earlier is admissible as transitional credit, even if declaration in Form GST TRAN-1 and TRAN-2 are not filed within the due date on account of technical difficulties.

The phrase “technical difficulties on the common portal” should be interpreted liberally.

Referring to various rulings, the Gujarat High Court heldthat:

• Section 140(3) of Central Goods and Services Tax Act, 2017 provides for a substantive right which cannot be curtailed or defeated on account of the procedural lapse.

• The entitlement of credit of the eligible duties is a vested right.

• Liability to pay GST on stock carried forward from previous regime without corresponding credit would lead to double taxation.

• Rule 117 is violative of Article 14, 19(1)(g) and 300A of the Constitution.

Thus, HC directed the respondents to allow petitioner to file declaration in Form GST TRAN-1 and TRAN-2 to enable them to claim transitional credit of eligible duties. HC held that rule 117 providing the due date for the purposes of claiming transitional credit is procedural in nature and thus, the same should not be construed as a mandatory provision.

DOWNLOAD: Download the judgement in In M/S SIDDHARTH ENTERPRISES THROUGH PARTNER MAHESH LILADHAR TIBDEWAL Versus THE NODAL OFFICER

Full text of the judgement of the Gujarat High Court that declaration for transitional credit beyond the due date is permissible

C/SCA/5758/2019 CAVJUDGMENT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 5758 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 5759 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 5760 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 5762 of 2019

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MR.JUSTICE A.C. RAO Sd/-

1 Whether Reporters of Local Papers may be allowed YES to see the judgment ?

2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy NO of the judgment ?

4 Whether this case involves a substantial question NO of law as to the interpretation of the Constitution of India or any order made thereunder ?

M/S SIDDHARTH ENTERPRISES THROUGH PARTNER MAHESH LILADHAR TIBDEWAL Versus THE NODAL OFFICER =================== Appearance:

MR. VINAY SHRAFF WITH MR. VISHAL J. DAVE WITH MR. NIPUM SINGHVI for MR SOAHAM JOSHI, AGP for the Respondent(s)No. 2 NOTICE SERVED BY DS for the Respondent(s)No.1,3 =================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR.JUSTICE A.C. RAO C/SCA/5758/2019 CAVJUDGMENT Date: 06/09/2019 (PER: HONOURABLE MR.JUSTICE J.B.PARDIWALA)

1. Since the issues raised in all the captioned writ- applications are the same, those were heard analogously and are being disposed of by this common judgment and order.

2. RULE returnable forthwith in all the captioned writ- applications. Mr.Soaham Joshi, the learned AGP waives service of notice of rule for and on behalf of the respondents nos.1 and 2 respectively.

3. For the sake of convenience, the Special Civil Application No.5758 of 2019 is treated as the lead matter. By this writ- application under Article 226 of the Constitution of India, the writ-applicant, a partnership firm, has prayed for the following reliefs :

“(a) Your Lordships may be pleased to issue writ of mandamus and/or any other appropriate writ(s) to allow filing of declaration in form GST Tran-1 and GST Tran-2, to enable it to claim transitional credit of eligible duties in respect of inputs held in stock on the appointed day in terms of Section 140(3) of the Central Goods and Services Tax Act, 2017;
(b) Your Lordships may be pleased to issue writ of declaration and/or any other appropriate writ(s) for declaration of the due date contemplated under Rule 117 of the CGST Rules to claim the transitional credit as being C/SCA/5758/2019 CAVJUDGMENT procedural in nature and thus merely directory and not a mandatory provision;
(c) Your Lordships may be pleased to grant ad-interim relief with respect to prayer under Para (a) and Para (b) above;
(d) Your Lordships may be pleased to award costs of and incidental to this application be paid by the respondents;
(e) Your Lordships may be pleased to issue order(s), direction(s), writ(s) or any other relief(s) as this Hon’ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice;”
4. The writ-applicant is a partnership firm having its registered office at Bharuch, State of Gujarat. The writ-applicant is in the business of import-export and distributor of branded housewares registered under the CGST Act vide registration bearing No.GSTIN24ABJFS7809M1ZL

5. It appears from the materials on record that the writ- application has been filed seeking appropriate writ, order or direction to the respondents for being permitted to file declaration in the form GST TRAN-1 and GST TRAN-2 respectively to enable the writ-applicants to claim transitional credit of the eligible duties in respect of the inputs held in the stock on the appointed day in terms of Section 140(3) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as, ‘the Act’) read with Rule 117 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as, ‘the Rules’).

C/SCA/5758/2019 CAVJUDGMENT

6. It is the case of the writ-applicants that the declaration in the form GST TRAN-1 could not be filed on account of the technical glitches in terms of poor net connectivity and other technical difficulties on the common portal. The writ-applicants, in the alternative, have prayed for a declaration that the due date contemplated under Rule 117 of the Rules to claim transitional credit is procedural in nature, and thus, merely directory and not a mandatory provision.

SUBMISSIONS ON BEHALF OF THE WRIT-APPLICANTS :

7. Mr.Shraff, the learned counsel appearing with Mr.Dave for the writ-applicants, vehemently submitted that when the Indirect Tax regime transitioned from the Central Excise regime to the Goods and Services Tax regime, the CGST Act, 2017, allowed the carry forward of the CENVAT credit on the duty paid stock on the appointed day, i.e. 1st July 2017.

8. It is submitted that the CGST was payable on such duty paid stock and, therefore, the credit was allowed because the intention of the Government was not to collect tax twice on the same goods. It is pointed out that in such cases, it was provided that the credit of the duty/tax paid earlier would be admissible as credit.

9. The learned counsel submitted that as his clients were not able to file the form GST TRAN-1 within the date specified, i.e. 27th December 2017, on account of the technical difficulties, they had to physically lodge their claim of transitional credit on C/SCA/5758/2019 CAVJUDGMENT stock in the form GST TRAN-1 and GST TRAN-2 respectively with their Jurisdictional Officer.

10. The learned counsel submitted that his clients also met the Jurisdictional Officer time to time and also addressed various letters to the Nodal Officer and the Jurisdictional Officer for being allowed to file on-line form GST TRAN-1 and GST TRAN-2 respectively in terms of the decision of the Goods and Services Council and the Circular No.39/13/2018-GST dated 3rd April 2018.

11. The learned counsel pointed out that his clients also requested that they be allowed to file the above referred forms in terms of the Notification No.48/2018-C.T. dated 10th September 2018 read with Order No.01/2019-GST dated 31st January 2019 which extended the period for submitting declaration in the form GST TRAN-1 till 31st March 2019 for all those tax payers who could not submit the said declaration by the due date on account of the technical difficulties on the common portal.

12. The learned counsel submitted that the Jurisdictional Officer of his client twice addressed a communication in writing to the Nodal Officer recommending the case of the writ- applicants for being allowed to file the form GST TRAN-1 and GST TRAN-2 respectively. However, the Jurisdictional Officer has not received any official communication till date from the Nodal Officer neither denying nor allowing to file the above referred forms. However, the office of the Nodal Officer informed that the writ-applicants cannot be permitted to file the form GST TRAN-1 because as per the GST System Logs, the tax payer has neither C/SCA/5758/2019 CAVJUDGMENT tried for saving/submitting or filing the form GST TRAN-1. Mr.Shraff, the learned counsel pointed out that the very same stance is reflected in the affidavit-in-reply filed on behalf of the respondent no.2.

13. The learned counsel submitted that without giving any opportunity of hearing to his clients, the office of the Nodal Officer reached to the conclusion that the writ-applicants had neither tried for saving/submitting or filing the form GST TRAN- 1 as per the GST System Logs.

14. The learned counsel submitted that this could be termed as violative of the principles of natural justice. The learned counsel also submitted that in the absence of the meaning of the phrase “technical difficulties on the common portal” in the CGST Act or Rules, the same should be given a liberal interpretation because it is a settled principle of law that an interpretation unduly restricting the scope of a beneficial provision should be avoided so that it may not take away with one hand what the policy gives with the other.

15. The learned counsel, in support of his submissions, has placed strong reliance on the decision of the Supreme Court in the case of Union of India v. Suksha International & Nutan Gems and another, 1989 (39) ELT 503 (SC) [para-9].

16. The learned counsel, in the last, submitted that the technology has been added to the system for the benefit and convenience of the tax payers but it should not be subservient to the purpose and hence the impediments, if any, should not make the writ-applicants servants of the technology.

C/SCA/5758/2019 CAVJUDGMENT

17. In such circumstances referred to above, the learned counsel prays that there being merit in all the writ-applications, those be allowed and the reliefs as prayed for be granted.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS :

18. Mr.Soaham Joshi, the learned AGP, has vehemently opposed all the writ-applications. Mr.Joshi submitted that none of the grievances redressed by the writ-applicants are tenable in law. At the same time, Mr.Joshi fairly submitted that the Jurisdictional Officer, Bharuch, did bring to the notice of the Nodal Officer about the various problems and difficulties faced by the tax payers. Mr.Joshi submitted that the role of the Nodal Officer is to collect all such complaint and grievances of the tax payers across the State and forward them to the GSTM and the GSTM, upon verification, would further forward the grievances to the IT Redressal Grievance Committee. Mr.Joshi submitted that in the case on hand the Nodal Officer had acted promptly and had also forwarded the grievances of the tax payers to the GSTM. Mr.Joshi placed strong reliance on the following averments made in the affidavit-in-reply filed on behalf of the respondents.

“8. It is respectfully submitted that the petitioner has annexed various articles from various websites such as business standard, financial express which are of the year 2017. In light of the same it is respectfully submitted that, these articles are secondary evidence in nature under the Indian Evidence Act. Therefore, reliance placed upon these articles can be taken into consideration only when there is C/SCA/5758/2019 CAVJUDGMENT no primary evidence available. It is respectfully submitted that, the petitioner has further annexed the minutes of the 26th GST Council meetings held on 10.03.2018, the same is annexed from page 50 to the memorandum of the application and upon perusal of the agenda as mentioned at page 50 of the 26th GST Council meeting agenda 7 reads as under:
“Agenda 7: Grievance Redressal Mechanism in GST Regime in light of recent judgments of Hon’ble High Court of Allahabad and Mumbai.”
In light of the same it is respectfully submitted that the agenda approved the setting up of the Grievance Redressal Committee and further the agenda also approved that instead of setting up new Grievance Redressal Committee the GIC shall act as the IT Grievance Redressal Committee.
9. It is respectfully submitted that, the nodal officer had forwarded the grievance of the petitioner to GSTN and the case of the petitioners were considered by the 33rd GST Council meeting dated 20.02.2019.

10. It is respectfully submitted that the petitioner has placed reliance upon two decisions of the Hon’ble High Court of Allahabad and Hon’ble High Court of Mumbai which is averred in paragraph 2.14 and paragraph 2.15 to the memorandum of application. In light of the same upon reading the cause title of the case the respondent was the Union of India and in the present case the petitioner has not joined the Union of India as party respondent.

C/SCA/5758/2019 CAVJUDGMENT

11. It is respectfully submitted that, upon perusal of the 33rd GST Council meeting the said report contains 195 pages and agenda item 4 reads as decisions/ recommendations of the 4th I.T. Grievance Redressal Committee for information of the council, which is at page no.104 of the report and agenda item on GST Tran-1 cases were discussed and decided on 12/02/2019. The Hon’ble Court may be please to consider the submission made at the time of argument as far as the said report is concerned.

12. It is also respectfully submitted that, the petitioner has not joined GSTN nor the I.T. Grievance Redressal Committee as party respondent and therefore, the petitioner suffices of lack of non-joinder/mis-joinder of parties.”

19. In such circumstances referred to above, Mr.Joshi prays that there being no merit in the writ-applications, those be rejected.

20. Having heard the learned counsel appearing for the parties and having gone through the materials on record, we would like to address ourselves on the following aspects :

(1) Section 140(3) of the CGST Act provides for a substantive right which cannot be curtailed or defeated on account of the procedural lapses.

(2) The entitlement of the credit of carry forward of the eligible duties is a vested right.

C/SCA/5758/2019 CAVJUDGMENT (3) The rights accrued under the existing law have been saved by the CGST Act.

(4) The right to carry forward the CENVAT credit is a constitutional right.

(5) It is arbitrary, irrational and unreasonable to discriminate in terms of the time limit to allow the availment of the input tax credit with respect to the purchase of the goods and services made in the pre-GST regime and post-GST regime and the same could be termed as violative of Article 14 of the Constitution of India.

(6) The doctrine of legitimate expectation also could be said to be violated.

(7) By not allowing the right to carry forward the CENVAT credit for not being able to file the form GST TRAN-1 within the due date would definitely have a serious impact on the working capital of the writ-applicants and such action could be termed as violative of Article 19(1)(g) of the Constitution of India.

(8) The liability to pay GST on sale of stock carried forward from the previous tax regime without corresponding input tax credit would lead to double taxation on the same subject matter.

(9) The action could be also termed as violative of Article 300A of the Constitution of India.

C/SCA/5758/2019 CAVJUDGMENT

ANALYSIS :

21. Section 140(3) of the CGST Act allows carry forward of the eligible duties in respect of the inputs held in stock subject to the fulfillment of conditions (i) to (v) as mentioned therein. Section 140(3) of the CGST Act is a complete Code in itself and the substantive right conferred by the Act cannot be curtailed by way of rules.

22. In the aforesaid context, we may refer to the following decisions :

(1) The Madras High Court, in the case of Tara Exports v. Union of India, reported in 2019 (20) G.S.T.L. 321 (Madras), has held as under :
“8. GST is a new progressive levy. One of the progressive ideal of GST is to avoid cascading taxes. GST Laws contemplate seamless flow of tax cred its on all eligible inputs. The input tax credits in TRAN-1 are the credits legitimately accrued in the GST transition. The due date contemplated under the laws to claim the transitional credit is procedural in nature. In view of the GST regime and the IT platform being new, it may not be justifiable to expect the users to back up digital evidences. Even under the old taxation laws, it is a settled legal position that substantive input credits cannot be denied or altered on account of procedural grounds.”
C/SCA/5758/2019 CAVJUDGMENT (2) The Supreme Court, in the case of Union of India v.
Suksha International & Nutan Gems & Anr., reported in 1989 (39) E.L.T. 503 (S.C.), has held that an interpretation unduly restricting the scope of a beneficial provision should be avoided so that it may not take away with one hand what the policy gives with the other. We may quote the relevant paragraph 9 of the judgment thus :
“9. We have considered the rival contentions on the point. Para 185(4) was intended to provide certain incentives to the Export Houses which, upon grant of Imprest-Licences, fulfill their countervailing obligations in the matter of export commitments. The provision is a beneficial one. Clauses (4) and (7), no doubt, on their plain wording present certain constructional difficulties and the view sought to be put across by Shri Subba Rao for the appellants, on the plain language of Clause (7), is not without possibilities. However, the basis of a harmonious construction which commended itself to the High Court in other similar cases appears to us to advance and promote the objects of the policy in paragraph 185(4) and is, at all events, not an unreasonable view to take of the matter. In so me of these cases this Court has declined to interfere with this interpretation by rejecting petitions for special leave. Acceptance of the interpretation suggested by Shri Subba Rao would, in our opinion, unduly restrict the scope of the beneficial provision and, in many instances which would C/SCA/5758/2019 CAVJUDGMENT otherwise fall within the beneficial scope of the policy in para 185(4), take away with one hand what the policy gives with the other. We think we should accept the submissions of Shri Harish Salve which is consistent with the view taken of the matter by the High Court in other cases and hold that the conditions in para 185(4) of the policy would not be attracted to the case of Export Houses which are granted Imprest Licences.
Accordingly we hold and answer contention (a) against the appellants.”
(3) The Supreme Court, in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, reported in 1991 (55) E.L.T. 437 (S.C.), has held that the mere fact that a condition is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It would be erroneous to attach equal importance to the non-observance of all the conditions irrespective of the purposes they were intended to serve.
We may quote the relevant paragraph 11 of the judgment thus :

“11. We have given our careful consideration to these submissions. We are afraid the stand of the Revenue suffers from certain basic fallacies, besides being wholly technical. In Kedarnath’s case, the question for C/SCA/5758/2019 CAVJUDGMENT consideration was whether the requirement of the declaration under the proviso to Section 5(2)(a)(ii) of the Bengal Finance (Sales-tax) Act, 1941, could be established by evidence aliunde. The court said that the intention of the Legislature was to grant exemption only upon the satisfaction of the substantive condition of the provision and the condition in the proviso was held to be of substance embodying considerations of policy. Shri Narasimha Murthy would say the position in the present case was no different. He says that the notification of 11th August, 1975 was statutory in character and the condition as to ‘prior-permission’ for adjustment stipulated therein must also be held to be statutory. Such a condition must, says counsel, be equated with the requirement of production of the declaration form in Kedarnath’s case and thus understood the same consequences should ensue for the non-compliance. Shri Narasimhamurthy says that there was no way out of this situation and no adjustment was permissible, whatever be the other remedies of the appellant. There is a fallacy in the emphasis of this argument. The consequence which Shri Narasimha Murthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be C/SCA/5758/2019 CAVJUDGMENT substantive , mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve.
In Kedarnath’s case itself this Court pointed but that the stringency of the provisions and the mandatory character imparted to them were matters of important policy. The Court observed:

“…The object of Section 5(2)(a)(ii) of the Act and the rules made thereunder is self-evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well nigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section.Therefore, presumably to achieve the two fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person C/SCA/5758/2019 CAVJUDGMENT claiming the exemption shall furnish a declaration form in the manner prescribed under the section. The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid.” (See : [1965] 3 SCR 626) Such is not the scope or intendment of the provisions concerned here. The main exemption is under the 1969 notification. The subsequent notification which contain condition of prior-permission clearly envisages a procedure to give effect to the exemption. A distinction between the provisions of statute which are of substantive character and were built-in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in their nature on the other must be kept clearly distinguished.
What we have here is a pure technicality. Clause 3 of the notification leaves no discretion to the Deputy Commissioner to refuse the permission if the conditions are satisfied. The words are that he “will grant”. There is no dispute that appellant had satisfied these conditions. Yet the permission was withheld-not for any valid and substantial reason but owing to certain extraneous things concerning some inter-depart-mental issues. Appellant had nothing to do with those issues. Appellant is now told “we are sorry. We should have given you the permission But now that the period is over, nothing can be done”. The C/SCA/5758/2019 CAVJUDGMENT answer to this is in the words of Lord Denning: “Now I know that a public authority can not be estopped from doing its public duty, but I do think it can be estopped from relying on a technicality and this is a technicality.” (See: Wells v. Minister of Housing and Local Government [1967] 1WLR 1000.

Francis Bennion in his “Statutory Interpretation”, 1984 edition, says at page 683:

“Unnecessary technicality: Modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation.””
(4) The Supreme Court, in the case of State of Mysore and Ors. v. Mallick Hashim & Co., reported in AlR 1972 SC 1449, has held that no conditions could be imposed which destroy the right to a refund which is otherwise absolute. The conditions authorised are conditions which regulate the refund and not conditions which result in the extinguishment of the right to a refund which the Legislature has created under the proviso. We may quote the relevant paragraph 20 of the judgment thus :

“As mentioned earlier the petitioner in the two Writ Petitions are dealers in hides and skins whereas the petitioner in the Sales Tax Revision Petition before the C/SCA/5758/2019 CAVJUDGMENT High Court is a dealer in copra and coconuts. It is not disputed that hides and skins as well as copra and coconuts are declared goods under Section 14 of the Central Sales Tax Act, 1956. It is also not disputed that at the time of purchase of those goods the dealers in question had paid the purchase tax. Further it is admitted that these goods were sold in the course of inter-State sale transactions. It is not denied that the petitioners had a right to apply for refund of the taxes paid by them but the objection raised by the State is those refund applications were not filed within the period mentioned in Rule 39-A (2) and (3) and further in two cases it is contended that the applications were not made in the prescribed form. The High Court has taken the view that Rule 39-A is ultra vires the rule-
making power. It has opined that the rules made under Section 5 (4) of the Mysore Sales Tax Act, 1957, are those which must relate to the manner and conditions under which refund has to be made and such a rule cannot in substance deprive the dealer of the right to get refund to which he is entitled to under S. 15 of the Central Sales Tax Act, 1956, as well as Section 5 (4) of the Mysore Sales Tax Act, 1957. We have not thought it necessary to go into that question as, in our opinion, sub-rules (2) and (3) of rule 39-A are wholly unreasonable rules and consequently these cannot be sustained. Sub-rule (3) of Rule 39-A provides that before a person is entitled to refund under Section 15 of the Central Sales Tax Act. 1956, as well as under Section 5 (4) of the Mysore Sales Tax C/SCA/5758/2019 CAVJUDGMENT Act, 1957, he must have made the refund application within the time before which he should have submitted his Sales-tax return. In many States the dealers have to submit quarterly returns. Under Rule 18 framed under the Mysore Sales Tax Act, 1957, we are informed that a dealer will have to submit his annual return within 30 days of the end of the financial year. That means even if a sale in the course of inter-State trade has been made on the 31st March of a year, the refund application will have to be made within 30 days from that date. The position will be worse still if the dealer is required to submit quarterly returns. The learned counsel for the State was not in a position to tell us whether in the Mysore State the dealers have to file quarterly returns. In our opinion the impugned Rule is merely an attempt to deny the dealers the refund to which they are entitled under the law or at any rate to make the enforcement of that right unduly difficult.”

(5) The Supreme Court, in the case of Commissioner of Central Excise, Madras v. Home Ashok Leyland Ltd., reported in 2007 (210) E.L.T. 178 (S.C.), has held that Rule 57A recognizes the right of the manufacturer to take credit for the specified duty paid on the inputs. whereas Rule 57E is a procedural provision. Rule 57E being procedural and classificatory would not affect the substantive rights of the manufacture of the specified final product to claim the Modvat credit for the duty paid on the inputs subsequent to the date of the receipt of those inputs. We may quote the relevant paragraphs 3 and 4 of the judgment thus :

C/SCA/5758/2019 CAVJUDGMENT “3. The above discussion indicates that the right to claim MODVAT credit existed only in Rule 57A. Even Rule 57E says so. There can be no doubt that right from its inception the right to claim MODVAT credit is under Rule 57A. Rule 57A recognizes the right of the manufacturer to claim credit. Rule 57E recognizes not only the right of the manufacturer to claim credit but also the extent to which credit could be claimed for the duty paid on inputs. Therefore, Rule 57A is a substantive provision. However, the procedure of adjustment finds place in Rule 57E. Rule 57E is procedural provision. It deals with adjustments in duty credit. The object behind enacting Rules 57A, 57E and 57G is to avoid duty on duty whereby the price of the final product is loaded. Therefore, Rule 57A recognizes the right of the manufacturer to take credit for the specified duty paid on the inputs, whereas Rule 57E deals with adjustment in the duty credit, such adjustment mean on account of reduction on the credit allowed. It could also be in the event of refund. Suffice it to state that Rule 57E deals only with adjustment in the duty credit. Rule 57G states that credit shall not be taken unless the manufacturer of the final product maintains his records regarding receipt of the inputs in his factory like having again bill of entry certain types of registers (RR-1) or any other document prescribed by Central Board of Excise and Customs.

C/SCA/5758/2019 CAVJUDGMENT

4. In our view, therefore, the courts below were right in holding that Rule 57E was procedural, clarificatory and therefore would not affect the substantive rights of the manufacturer of the specified final product to claim MODVAT credit for the duty paid on the inputs subsequent to the date of the receipt of those inputs. Consequently, the respondent-manufacturer in the present case was entitled to take credit between the period 16.8.1987 to 30.12.1987 in the sum of Rs.6,43,994.57.”

(6) The Madras High Court, in the case of Hospira Health Care India P. Ltd. v. Development Commissioner, MEPZ, SEZ & Heous, Chennai, reported in 2016 (340) ELT 668 (Madras), has held that a procedure should not run contrary to the substantive right in the policy. If the procedural norms are in conflict with the policy, then the policy will prevail and the procedural norms to the extent they are in conflict with the policy, are liable to be held bad in law. We may quote the relevant paragraphs 27, 28 and 33 of the judgment thus :

“27. It is a settled position that the procedure formulated under any Policy is only to operationalise the right and not to prevent the same. If a statute is workable even without framing of the rules, the same has to be given effect to When the petitioner had stated that in respect of the purchases made from EOUs was earlier allowed by the respondents, the same would establish that the respondents had followed the provisions of paragraph 6.11.
C/SCA/5758/2019 CAVJUDGMENT
28. When the Policy gives a substantive right, the Appendix cannot restrict the substantive right provided in the policy and the Appendix is meant for effectuating the rights contained in the policy and cannot be a tool for narrowing or frustrating the objective and operation of the substantive right granted to the petitioner.
33. In the present case, when the policy provides for reimbursement under paragraph 6.11, the said objective was prevented or diluted by the Appendix. As already stated, the Appendix is meant for effectuating the rights contained in the policy and not to frustrate the operation of the substantive right. The Appendix should be meant only for reaching the objective and definitely should not be meant for defeating a person from getting the fruits of the substantive right provided in the policy. A procedure should not run contrary to the substantive right in the policy. In the case on hand, it is only a procedural amendment and not a policy amendment. When the policy gives a right to the petitioner for claiming refund of taxes, it cannot be prevented by making an amendment in the procedure. The petitioner can be prevented only if the policy is amended prohibiting refund of tax for the purchases made from an 100% EOU. The procedure was to be prescribed by an authority in implementing the policy and must be in consonance with the policy. If the procedural norms C/SCA/5758/2019 CAVJUDGMENT are in conflict with the policy, then the policy will prevail and the procedural norms to the extent they are in conflict with the policy, are liable to be held to be bad in law.”

(7) This High Court, in the case of Baroda Rayon Corporation Ltd. v. Union of India, reported in 2014 (306) E.L.T. 551 (Gujarat), has held that the manner in which the credit taken is required to be utilised is laid down under sub-rule (2) and is subject to the conditions and restrictions, if any, specified in the notification issued under sub-rule (1) of Rule 57A of the Rules. Thus, if the time-limit within which the credit taken under sub-rule (1) of Rule 57A is to be restricted, the same would have to be provided under the notification issued under Rule 57A(1) of the Rules. Insofar as Rule 57G of the Rules is concerned, there is no power vested in the Central Government to restrict the time-limit within which the credit is required to be taken. To put it differently, the right to avail of credit is conferred under Rule 57A of the Rules. Rule 57G only provides the procedure to be observed by the manufacturer. Thus, while exercising the powers under Rule 57G of the Rules, the Central Government is not empowered to curtail any right conferred under Rule 57A of the Rules. In such circumstances, the impugned notification issued in exercise of the powers under Rule 57G of the Rules insofar as the same prescribes a time- limit for taking of credit, being in excess of the powers conferred under the said rule was held to be ultra vires the same and not sustainable to that extent. We may quote the relevant paragraphs 8 and 9 of the judgment thus :

C/SCA/5758/2019 CAVJUDGMENT “8. Rule 57G of the Rules as it stood at the relevant time, insofar as the same is relevant for the present purpose reads thus:-

“RULE 57G. Procedure to be observed by the manufacturer.- (1) Every manufacturer intending to take credit of the duty paid on inputs under rule 57A, shall file a declaration with the Assistant Collector of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the said Assistant Collector may require, and obtain a dated acknowledgement of the said declaration.
(2) A manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgement aforesaid, take credit of the duty paid on the inputs received by him:
Provided that no credit shall be taken unless the inputs are received in the factory under the cover of an invoice, issued under rule 52A, an AR-1, or triplicate copy of a Bill of Entry, a certificate issued by an Appraiser of Customs C/SCA/5758/2019 CAVJUDGMENT posted in Foreign Post Office or any other document as may be prescribed by the Central Government by notification in the Official Gazette in this behalf evidencing the payment of duty on such inputs.”

The subject notification has been issued in exercise of powers conferred by the first proviso to rule 57G of the Rules which provides for prescription of any other document evidencing the payment of duty on such inputs as may be prescribed by the Central Government by notification in the Official Gazette. Thus, from the language employed in the provision, it is apparent that the Central Government is empowered to prescribe any other document in addition to the documents prescribed under the said rule evidencing the payment of duty on such inputs. However, the said power is limited to prescribing any other document in addition to the documents prescribed and does not extend to prescribing a time limit within which credit has to be taken. In other words, once such documents are prescribed, there is no further power vested in the Central Government to prescribe a time limit for taking credit. Insofar as taking credit is concerned the same is governed by rule 57A of the Rules which lays down that the provisions of the said section shall apply to such finished excisable products as the Central Government may, by notification in the Official Gazette, specify in this behalf for the purpose of allowing credit of any C/SCA/5758/2019 CAVJUDGMENT duty of excise or additional duty under section 3 of the Customs Tariff Act, 1975, (referred to as specified duty) as may be specified in the notification paid on the goods used in the manufacture of the said final products (referred to as the inputs). Sub-rule (2) of rule 57A provides that the credit of specified duty allowed under sub-rule (1) shall be utilised towards payment of duty of excise leviable on final products, whether under the Act or any other Act, as may be specified in the notification issued under sub-rule (1) and subject to the provisions of the said section and the conditions and restrictions, if any, specified in the said notification. Thus, the manner in which credit taken is required to be utilised is laid down under sub-rule (2) and is subject to the conditions and restrictions, if any, specified in the notification issued under sub-rule (1) of rule 57A of the Rules. Thus, if the time limit within which credit taken under sub-rule (1) of rule 57A is to be restricted, the same would have to be provided under the notification issued under rule 57A (1) of the Rules. Insofar as rule 57G of the Rules is concerned, there is no power vested in the Central Government to restrict the time limit within which credit is required to be taken. To put it differently, the right to avail of credit is conferred under rule 57A of the Rules. Rule 57G only provides the procedure to be observed by the manufacturer. Thus, while exercising powers under rule 57G of the Rules, the Central Government is not empowered to curtail any right conferred under rule 57A of the Rules. In the circumstances, the impugned C/SCA/5758/2019 CAVJUDGMENT notification issued in exercise of powers under rule 57G of the Rules insofar as the same prescribes a time limit for taking of credit, being in excess of the powers conferred under the said rule is ultra vires the same and as such cannot be sustained to that extent.

9. Another aspect of the matter is that by curtailing the time limit within which the credit taken is to be availed, in effect and substance the said notification provides for lapsing of the credit that has already accrued in favour of the petitioner. In this regard it may be noted that the petition pertains to credit taken in the year 1994. At the relevant time there was no provision in the Act empowering the Central Government to frame rules providing for lapsing of credit of duty. Clause (xxviii) of sub-section (2) of section 37 of the Act, which empowers the Central Government to frame rules providing for lapsing of credit has been inserted with retrospective effect from 16th March, 1995. Hence, the said provision would not be applicable to the facts of the present case. In the circumstances, apart from the fact that rule 57G of the Act does not empower the Central Government to prescribe a time limit for taking credit, at the relevant time the Central Government was not empowered to frame a rule providing for lapsing of the credit taken. Hence, the present case would be squarely covered by the decisions of the Supreme Court in the case of Collector of Central Excise, Pune vs. Dai Ichi Karkaria Ltd , (supra) and in the case of Eicher Motors Ltd. vs. C/SCA/5758/2019 CAVJUDGMENT Union of India, (supra). In Collector of Central Excise, Pune vs. Dai Ichi Karkaria Ltd. (supra), the Supreme Court in the context of rules 57A to 57J of the Central Excise Rules, 1944 has held that a manufacturer obtains credit for central excise duty on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgment thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. The court held that the credit is indefeasible. In Eicher Motors Ltd. vs. Union of India, (supra) the Supreme Court held thus:

“We may look at the matter from another angle. If on the inputs, the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the Rule cannot be applied to the goods manufactured prior to 16-3-
C/SCA/5758/2019 CAVJUDGMENT 1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods.””
(8) The Madhya Pradesh High Court, in the case of Bharat Heavy Electricals Ltd. v. Commissioner of Central Excise, Bhopal, reported in 2016 (332) E.L.T. 411 (M.P.), has held that when power is exercised under Rule 57G, the Central Government is not empowered to curtail any right conferred by the substantive provision of Rule 57A and, therefore, the notification issued under Rule 57G prescribing the time limit for taking the credit as found by this Court in Baroda Rayon Corporation (supra) was declared to be ultra vires, as it was beyond the power and was in conflict with the impugned provision of Rule 57A. The ruling is based on the principle laid down by the Supreme Court in the cases of Eicher Motors Limited and Dai Ichi Karkaria Limited. We may quote the relevant paragraphs 10 and 11 of the judgment thus :

“10. Therefore, in the case of Baroda Rayon Corporation Limited Vs. Union of India, 2014 (306) ELT 551 (Guj), the Gujarat High Court has considered question identical in nature as is posed before us. In the case of Baroda Rayon Corporation Limited also, the benefit of MODVAT credit was denied to the assessee only because of an entry made in RG-23 A Part I & Part II, showing a date beyond six months. In the said case, the principle of law governing grant of MODVAT credit; the requirement of Rules 57A and C/SCA/5758/2019 CAVJUDGMENT 57G; the law laid down in the case of Eicher Motors Limited (supra) and Dai Ichi Karkaria Limited (supra) have all been considered and it has been held by the Gujarat High Court in the aforesaid case has held that merely because the entry of date made in Part II is beyond six months, the benefit of MODVAT credit cannot be denied when from all other material available, including the entry made in Part I, it is found that the benefit can be granted to the assessee.
11. We are in full agreement with the principle laid down by the Gujarat High Court wherein also under similar circumstances, identical action has been quashed and MODVAT credit extended. We agree with the Gujarat High Court when it says that the right to avail all credit conferred under Rule 57A and Rule 57G only provides the procedure to be observed by the manufacturer. Therefore, when power is exercised under Rule 57G, the Central Government is not empowered to curtail any right conferred by the substantive provision of Rule 57A and, therefore, the Notification issued under Rule 57G prescribing the time limit for taking the credit as found by the High Court of Gujarat is found to be ultra vires, as it is beyond the power and is in conflict to the impugn provision of Rule 57A, these are based on the principle laid down by the Hon’ble Supreme Court in the cases of Eicher Motors Limited (supra) and Dai Ichi Karkaria Limited (supra). ”

C/SCA/5758/2019 CAVJUDGMENT (9) The Allahabad High Court, in the case of Global Sugar Ltd. v. Commissioner of Central Excise, Kanpur, reported in 2016 (334) E.L.T. 604 (Allahabad), has held that Rule 57T of the Rules is only procedural in nature. The Modvat credit cannot be denied on a technical ground that the procedure for availing Modvat credit was not followed at the relevant moment of time. We may quote the relevant paragraphs-7 to 13 of the judgment thus :

“7. We find from a perusal of the order that the applicant had filed the application under sub rule (3) of Rule 57T along with an application for condonation of delay showing cause that they were not aware of the procedure for claiming declaration under the said Rule and have filed the same at the earliest opportune moment. It was contended that this is only a procedural/technical lapse and that the substantive right of Modvat credit could not be denied on account of such procedural/technical lapse. The claim of the applicant for Modvat credit was disallowed on the ground that mandatory permission as required under Rule 57-T was not granted by the competent authority though it is admitted that such application was filed by the applicant.
8. Having heard Sri Piyush Agarwal, the learned counsel for the applicant and Sri R.C.Shukla, the learned counsel for the respondents, we find that the procedure involved for availing Modvat credit under Rule 57-T of the Rules is more or less akin as provided C/SCA/5758/2019 CAVJUDGMENT under Section 57G of the Rules. This Court in Commissioner of Central Excise, Kanpur vs. M/s Balmer Lawrie & Co. Ltd., decided on 29.9.2016 (2016 UPTC 137) held that the provision of Rule 57-G of the Rules was not mandatory and that it was only a procedural provision and if there was a procedural lapse, it could not mean that Modvat credit could not be availed. The same principle is applicable in the instant case.

9. We find that Modvat credit is basically a duty collecting procedure which allows relief to a manufacture on the duty element borne by him in respect of the inputs used by him. The object behind Rule 57-T of the Rules in the instant case is utilization of credit allowed towards such inputs which was being exclusively used for erection of a shed and was not exclusively used for production of a final product. Sub-clause (6) of Rule 57-T indicates as to when a Modvat credit could be availed, namely, that if the capital goods are received in the factory premises of the manufacturer under cover of a document specified under Rule 57-G evidencing the payment of duty on such capital goods.

10. In the instant case, it is not disputed that the goods were received in the factory premises and was consumed for the purpose of erection of shades for boiler houses, etc. It is also not disputed that the goods so received showed evidence of payment of C/SCA/5758/2019 CAVJUDGMENT duty on such goods. When these two conditions are existing which are the mandatory requirement, in such case, Modvat credit should be allowed and could not be denied on the ground that there was a procedural lapse in not applying for a declaration within a stipulated period.

11. Sub-rule (3) of Rule 57-T of the Rules clearly indicates that if the declaration is not filed within the specified period, the same can be considered after the expiry of period on sufficient cause being shown. In the instant case, the applicant clearly stated that they were not aware of such procedure for claiming Modvat credit and the moment they came to know applied for Modvat credit. The fact, that the applicant applied for Modvat credit has not been disputed. Once this is not disputed, it is not open to the respondents to deny Modvat credit on the ground that permission was not granted by the competent authority. There is no evidence that the application of the applicant was rejected. In our opinion, even if there is a procedural lapse, it does not mean that Modvat credit could not be availed.

12. In Commissioner of Central Excise, Allahabad vs. Hindalco Industries Pvt. Ltd, 2013 (293)ELT 208, this Court after considering the provision of Rule 52-A and 57-G of the Rules held that Rule 57-G of the Rules only prescribes the procedure for availing Modvat credit and did not affect any substantial right. In our opinion, the said decision is clearly applicable.

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13. In the light of the aforesaid, we hold that Rule 57-T of the Rules is only procedural in nature. We are also of the opinion, that Modvat credit cannot be denied on a technical ground that the procedure for availing Modvat credit was not followed at the material moment of time.”

(10) The Supreme Court, in the case of Sambhaji and Others v. Gangabai and Others, reported in (2008) 17 SCC 117, has held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed. We may quote the relevant paragraphs 11 and 12 of the judgment thus :

“11. The processual law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a residuary power in Judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. Justice is the goal of jurisprudence, processual, as much as substantive. No person has a vested right in C/SCA/5758/2019 CAVJUDGMENT any course of procedure. He has only the right of prosecution or defence in the manner for the time being by or for the court in which the case is pending, and if, by an Act of Parliament the mode of procedure is altered, he has no other right than to proceed according to the altered mode. A procedural law should not ordinarily be construed as mandatory, the procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed.
12. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. A Procedural prescription is the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice.”
23. The entitlement of credit of eligible duties on the purchases made in the pre-GST regime as per the then existing Cenvat credit rules is a vested right and, therefore, it cannot be taken away by virtue of Rule 117 of the Central GST Rules, 2017, with retrospective effect for failure to file the form GST Tran-1 within the due date, i.e. 27.12.2017. The provision for facility of credit is as good as the tax paid till the tax is adjusted and, therefore, the right to the credit had become absolute under the Central Excise Act and, therefore, the credit is indefeasible and the same cannot be taken away.

24. This High Court, in the case of Filco Trade Centre Pvt. Ltd. v. Union of India, reported in 2018 (17) G.S.T.L. 3 (Gujarat), C/SCA/5758/2019 CAVJUDGMENT while striking down clause (iv) of sub-section (3) of Section 140 of the CGST Act, recognized that the benefit of credit of eligible duties on the purchases made by the first stage dealer as per the then existing Cenvat credit rules was a vested right and it cannot be taken away by virtue of clause (iv) of sub-section (3) of Section 140 with retrospective effect in relation to the goods which were purchased prior to one year from the appointed day. We may quote the relevant paragraphs 26 to 31 of the judgment thus :

“26. In case of Indusr Global Ltd v. Union of India, 2014 (310) ELT 833 (Guj) Division Bench of this Court was considering vires of Rule 8 (3A) of the Central Excise Rules, 2002 which provided that if an assessee defaults in payment of duty beyond thirty days from the date prescribed under sub-rule (1) then notwithstanding anything contained in the sub-rule(1), the assessee shall pay excise duty for each consignment at the time of removal without utilizing the CENVAT credit till the assessee pays the outstanding amount including interest. The Court while striking down such Rule unconstitutional observed as under:
“31. This extreme hardship is not the only element of unreasonableness of this provision. It essentially prevents an assessee from availing cenvat credit of the duty already paid and thereby suspends, if not withdraws, his right to take credit of the duty already paid to the Government. It is true that such a provision is made because of peculiar circumstances the assessee lands himself in. However, when such provision makes no distinction between a willful C/SCA/5758/2019 CAVJUDGMENT defaulter and the rest, we must view its reasonableness in the background of an ordinary assessee who would be hit and targeted by such a provision. As held by the Supreme Court in the case of Eicher Motors Ltd (supra) an assessee would be entitled to take credit of input already used by the manufacturer in the final product. In the said case, the Supreme Court was dealing with rule 57F which was introduced in the Central Excise Rules, 1944 under which credit lying unutilized in the Modvat credit account of an assessee on 16th March 1995 would lapse. Such provision was questioned. The Supreme Court held that since excess credit could not have been utilized for payment of the excise duty on any other product, the unutilised credit was getting accumulated. For the utilization of the credit, all vestitive facts or necessary incidents thereto had taken place prior to 16.3.1995. Thus the assessees became entitled to take the credit of the input instantaneously once the input is received in the factory of the manufacturer of the final product and the final product which had been cleared from the factory was sought to be lapsed. The Supreme Court struck down the rule further observing that if on the inputs the assessee had already paid the taxes on the basis that when the goods are utilized in the manufacture of further products as inputs thereto then the tax on those goods gets adjusted which are finished subsequently. Thus a right had accrued to the assessee on the date when they paid the tax on the C/SCA/5758/2019 CAVJUDGMENT raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. We may also recall that in the case of Dai Ichi Karkaria Ltd (supra) it was reiterated that a manufacture obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable produce immediately it makes the requisite declaration and obtains an acknowledgment thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product.”
27. These judgements would thus indicate that the right that the petitioner had to pass on the credit of excise duty paid on goods purchased at the time of sale of such goods was a vested right. It was as good as the duty paid by the assessee to the Government revenue which could be utilised by the purchasers of such goods from the petitioner against future liabilities of course subject to fulfilment of conditions.
When the new regime was therefore introduced through goods and service tax statutes, through migration these existing rights were being adjusted in terms of provisions contained in sections 139 and 140 of the CGST Act. The legislature also recognized such existing rights and largely protected the same by allowing migration thereof in the new regime. In the process, however, a condition was imposed to enable the assessees in the nature of first stage dealer such as the present petitioner-company viz. that the invoices or other prescribed documents on the basis of which credit was claimed were issued not earlier than twelve months C/SCA/5758/2019 CAVJUDGMENT immediately preceding the appointed day. In effective terms, this condition restricted the enjoyment of existing credit in respect of goods purchased not prior to one year of the appointed day. In relation to all goods purchased prior to such day, no credit would be available under the credit ledger to be maintained under the CGST Act. Such credit would be lost. Undoubtedly, therefore, this condition has retrospective operation and takes away an existing right. This by itself may not be sufficient to hold the provision as ultra vires or unconstitutional. However, in addition to these findings, we also find that no just reasonable or plausible reason is shown for making such retrospective provision taking away the vested rights. Had the statutory provision given a time limit from the appointed day for utilization of such credit, the issue would stand on an entirely different footing. Such a provision could be seen as a sunset clause permitting the dealers to manage their affairs for which reasonable time frame is provided. The present condition however without any basis limits the scope of a dealer to enjoy existing tax credits in relation to purchases made prior to one year from the appointed day. No such restriction existed in the prior regime. Merely the stated grounds in the affidavit in reply that the provision is introduced since physical identification of goods is necessary so as to ensure that the first stage dealers do not take any undue advantage of such benefit and also to accommodate the administrative convenience would not be sufficient. Firstly, as noted, there was no such restriction in the CENVAT Credit Rules or analogous provisions of similar rules in the past. Since decades therefore the credits would be available C/SCA/5758/2019 CAVJUDGMENT to a first stage dealer on all purchases towards the manufacturing duty. No time frame of the past dealings was envisaged under such rules. The same grounds of physical identification of goods preventing undue advantage being taken and the administrative convenience would exist even then. Secondly, no limitation of time is prescribed in the proviso to sub-section (3) of section 140 where a dealer is not in possession of any invoice or any other document evidencing payment of duty in respect of inputs in which case credit at the prescribed rate would be granted.

28. The judgment of the Supreme Court in case of Osram Surya (P.) Ltd. (supra) involved different facts. It was a case in which, first provisio which was introduced in Rule 57-G of the MODVAT Credit Rules was challenged. By virtue of this provision a manufacturer would not be allowed to take MODVAT credit after six months from the date of the documents specified therein. It was on this background the Supreme Court had, while upholding the validity of the provision held and observed that the same did not take away a vested right. The important distinction in the present case as compared to the facts of our case is that the Legislature, by introducing a condition for enjoyment of an existing right, provided prospective time limit of six months which did not exist earlier. In other words, from the date of introduction of the proviso, the benefit of utilization of CENVAT credit under certain circumstances would be restricted to a period of six months. This provision thus, did not act with retrospective effect.

C/SCA/5758/2019 CAVJUDGMENT

29. We are conscious that the Bombay High Court in case of JCB India Limited (supra) has taken a different view. We have given our detailed reasons for the view that we have adopted. Needless to record, we are unable to adopt the line chosen by the Bombay High Court in case of JCB India Ltd. (supra).

30. To sum up we are of the opinion that the benefit of credit of eligible duties on the purchases made by the first stage dealer as per the then existing CENVAT credit rules was a vested right. By virtue of clause (iv) of sub-section (3) of section 140A such right has been taken away with retrospective effect in relation to goods which were purchased prior to one year from the appointed day. This retrospectivity given to the provision has no rational or reasonable basis for imposition of the condition. The reasons cited in limiting the exercise of rights have no co-relation with the advent of GST regime. Same factors, parameters and considerations of “in order to co-relate the goods or administrative convenience” prevailed even under the Central Excise Act and the CENVAT Credit Rules when no such restriction was imposed on enjoyment of CENVAT credit in relation to goods purchased prior to one year.

31. In the conclusion we hold that though the impugned provision does not make hostile discrimination between similarly situated persons, the same does impose a burden with retrospective effect without any justification.”

C/SCA/5758/2019 CAVJUDGMENT

25. The Supreme Court, in the case of Eicher Motors Ltd. v. Union of India, reported in 1999 (106) E.L.T. 3 (S.C.), has recognized the provision for facility of credit as a vested right and has held that the facility of credit is as good as tax paid till the tax is adjusted on future goods. We may quote the relevant paragraphs 5 and 6 of the judgment thus :

“5. Rule 57F(4A) was introduced into the Rules pursuant to Budget for 1995-96 providing for lapsing of credit lying unutilised on 16-3-1995 with a manufacturer of tractors falling under heading No. 87.01 or motor vehicles falling under heading No. 87.02 and 87.04 or chassis of such tractors or such motor vehicles under heading No. 87.06.
However, credit taken on inputs which were lying in the factory on 16-3-1995 either as parts or contained in finished products lying in stock on 16-3-1995 was allowed. Prior to 1995-96 Budget, central excise/additional duty of customs paid on inputs was allowed as credit for payment of excise duty on the final products, in the manufacture of which such inputs were used. The condition required for the same was that the credit of duty paid on inputs could have been used for discharge of duty/liability only in respect of those final products in the manufacture of which such inputs were used. Thus it was claimed that there was a nexus between the inputs and the final products. In 1995-96 Budget MODVAT scheme was liberalised/simplified and the credit earned on any input was allowed to be utilised for payment of duty on any final product manufactured within the same factory irrespective of whether such inputs were used in its manufacture or not. The experience showed that credit C/SCA/5758/2019 CAVJUDGMENT accused on inputs is less than the duty liable to be paid on the final products and thus the credit of duty earned on inputs gets fully utilised and some amount has to be paid by the manufacturer by way of cash. Prior to 1995-96 Budget, the excise duty on inputs used in the manufacture of tractors, commercial vehicles varied from 15% to 25%, whereas the final products were attracted excise duty of 10% or 15% only. The value addition was also not of such a magnitude that the excise duty required to be paid on final products could have exceeded the total input credit allowed. Since the excess credit could not have been utilised for payment of the excise duty on any other product, the unutilised credit was getting accumulated. The stand of the assessees is that they have utilised the facility of paying excise duty on the inputs and carried the credit towards excise duty payable on the finished products. For the purpose of utilisation of the credit all vestitive facts or necessary incidents thereto have taken place prior to 16-3- 1995 or utilisation of the finished products prior to 16-3- 1995. Thus the assessee became entitled to take the credit of the input instantaneously once the input is received in the factory on the basis of the existing scheme. Now by application of Rule 57F(4A) credit attributable to inputs already used in the manufacture of the final products and the final products which have already been cleared from the factory alone is sought to be lapsed, that is, the amount that is sought to be lapsed relates to the inputs already used in the manufacture of the final products but the final products have already been cleared from the factory before 16-3- 1995. Thus the right to the credit has become absolute at C/SCA/5758/2019 CAVJUDGMENT any rate when the input is used in the manufacture of the final product. The basic postulate, that the scheme is merely being altered and, therefore, does not have any retrospective or retro-active effect, submitted on behalf of the State, does not appeal to us. As pointed out by us that when on the strength of the rules available certain acts have been done by the parties concerned, incidents following thereto must take place in accordance with the scheme under which the duty had been paid on the manufactured products and if such a situation is sought to be altered, necessarily it follows that right, which had accrued to a party such as availability of a scheme, is affected and, in particular, it loses sight of the fact that provision for facility of credit is as good as tax paid till tax is adjusted on future goods on the basis of the several commitments which would have been made by the assessees concerned. Therefore, the scheme sought to be introduced cannot be made applicable to the goods which had already come into existence in respect of which the earlier scheme was applied under which the assessees had availed of the credit facility for payment of taxes. It is on the earlier scheme necessarily the taxes have to be adjusted and payment made complete. Any manner or mode of application of the said rule would result in affecting the rights of the assessees.

6. We may look at the matter from another angle. If on the inputs the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus C/SCA/5758/2019 CAVJUDGMENT a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods.”

26. The Supreme Court, in the case of Collector of Central Excise, Pune v. Dal Ichi Karkaria Ltd., reported in 1999 (112) E.L.T. 353 (S.C.), has held that the credit taken is indefeasible. We may quote the relevant paragraphs 17 and 18 of the judgment thus :

“17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is C/SCA/5758/2019 CAVJUDGMENT available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available.
18. It is, therefore, that in the case of Eicher Motors Ltd. v. Union of India (1999) 106 ELT 3 : (1999 AIR SCW 563 : AIR 1999 SC 892) this Court said that a credit under the MODVAT scheme was “as good as tax paid”.”
27. The right to carry forward credit is a right or privilege, acquired and accrued under the repealed Central Excise Act, 1944 (1 of 1944) and it has been saved under Section 174(2)(c) of the CGST Act, 2017 and, therefore, it cannot be allowed to lapse under Rule 117 of the CGST, 2017, for failure to file declaration form GST Tran-1 within the due date, i.e. 27.12.2017.

28. The right to carry forward CENVAT credit for not being able to file the form GST Tran-1 within the due date offends the policy of the Government to remove the cascading effect of tax by allowing the input tax credit as mentioned in the Objects and Reasons of the Constitution 122nd Amendment Bill, 2014. The Objects and Reasons of the Constitution 122nd Amendment Bill, 2014 clearly set out that it is intended to remove the cascading effect of taxes and to bring out a nationwide taxation system.

C/SCA/5758/2019 CAVJUDGMENT

29. The cascading of taxes, in simple language, is ‘tax on tax’. The denial of carry forward of tax paid on stock on the appointed day may lead to cascading effect of tax because the GST will again have to be paid on the Central Excise duty already suffered on the stock. It is an established principle of law that it is necessary to look into the mischief against which the statute is directed, other statutes in pari materia and the state of the law at the time.

30. It was held by the Supreme Court in the case of Macquarie Bank Limited v. Shilpi Cable Technologies Ltd., reported in AIR 2018 SC 498, that :

“It is thus clear on a reading of English, U.S., Australian and our own Supreme Court judgments that the ‘Lakshman Rekha’ has in fact been extended to move away from the strictly literal Rule of interpretation back to the Rule of the old English case of Heydon, where the Court must have recourse to the purpose, object, text, and context of a particular provision before arriving at a judicial result. In fact, the wheel has turned full circle. It started out by the Rule as stated in 1584 in Heydon’s case, which was then waylaid by the literal interpretation Rule laid down by the Privy Council and the House of Lords in the mid 1800s, and has come back to restate the Rule somewhat in terms of what was most felicitously put over 400 years ago in Heydon’s case.”
31. It was held by the Supreme Court in the case of District Mining Officer and Ors. v. Tata Iron and Steel Co. and Ors., C/SCA/5758/2019 CAVJUDGMENT reported in AIR 2001 SC 3134 that, “the process of construction combines both literal and purposive approaches. In other words, the legislative intention, i.e. the true or legal meaning of an enactment, is derived by considering the meaning of the words used in the enactment in light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. We may quote the relevant paragraph 14 of the judgment thus :

“14. Dr.A.M.Singhvi, the learned senior counsel, appearing for the assessee-respondent in S.L.P. (Civil) No. 13106/96 and S.L.P. (Civil) No. 15442-15443/98 contended that the intention of the Parliament in enacting the Validation Act was only to save the State Governments from refunding the monies already collected under Statutes declared void ab initio by the Courts and it never intended to confer a right on the State to make any fresh levy or collection in respect of the cess and taxes, which could be collected up to 4-4-91, as contended by Mr. Dwivedi, appearing for the State of Bihar.
According to Dr. Singhvi, when this Court in Orissa Cement’s case, following the earlier judgment of the Court in India Cement, invalidated levies made under different Statutes enacted by the States of Orissa, Madhya Pradesh and Bihar and issued a mandamus, directing refund of the monies collected under such void Statutes, the State Governments would have been under a constitutional obligation to carry out the directions issued and were bound to refund the monies collected from the respective States from the date of the Judgment of the High Court, which would have ruinous consequences on the States economy. When the State C/SCA/5758/2019 CAVJUDGMENT Governments apprised these problems to the Central Government, the Parliament intervened and to save the State Governments from refunding the monies collected, enacted the Cess and Other Taxes on Minerals (Validation) Act, 1992 to validate imposition and collection of such levies under the State laws which were declared void by the Court. The Statement of Objects and Reasons of the Validation Act unequivocally proclaims that the Act was promulgated to validate collection of such levies by the State Governments up to 4th of April, 1991. The date 4-4-91was chosen because on the date, the Supreme Court delivered the judgment in Orissa Cement case. To bring about the uniformity among all the States, the cut off date was selected in the Validation Act as 4-4-91. Parliament also consciously did not desire or choose to prescribe different dates for different States in the schedule to Validation Act containing 11 enactments in respect of 7 States. The Parliament, thus devised the method of prospective overruling and the language used in sub-section (2) of Section 2 of the Validation Act makes the intention more explicit, and as such it must be held that it allowed the States to retain the amount of cess already collected but did not authorise to make any fresh collection which has not been collected up to 4-4-91. Dr. Singhvi further contends that the deliberate and conscious omissions by Parliament of a saving clause in the Validation Act, permitting levies or actions after 4-4-91 points to the only effect that Parliament did not intend any levy to be imposed or any collection to be made after 4-4-1991. Had it been the intention, then a specific and unambiguous saving clause could have been C/SCA/5758/2019 CAVJUDGMENT provided as was done in Jaora Sugar Mills’ case (1966) 1 SCR 523 and Prithvi Cotton Mills Ltd. case (1969) 2 SCC

283. A bare perusal of the Validation Act in Jaora Sugar Mills case and the Validation Act in the present case would unequivocally indicate that in the case in hand, the Parliament never intended to confer a right on the States to collect and impose any levy subsequent to 4-4-91 and on the other hand merely allowed the State to retain the collection already made. According to Dr.Singhvi in Kannadasan’s case, this Court drew wrong analogy from Gangopadhyaya’s case and held that the provisions therein were identical to the provisions in the Validation Act, which was under consideration. Dr. Singhvi further urged that this Court in Kannadasan’s case, has not appreciated the fact that Parliament deliberately and consciously omitted to incorporate a saving clause in the Validation Act. Dr. Singhvi urged that by the Validation Act life was infused into void State Statutes only up to 4-4-91 and consequently, the levies which may have accrued prior to 4-4-91 could not be permitted to be collected after 4-4-91. With reference to Article 265 of the Constitution, the learned counsel urged that the Constitution of India imposes a limitation on the taxing power of the State in so far as it provides that no tax can be levied or collected except by authority of law. Thus not only the levy, but also the collection must be only by authority of law. The expression “authority of law” would mean that there should be in existence, a lawful enactment, which authorises the levy or collection of a tax. After 4-4-91, there being no valid law in existence, which could authorise collection of the levy of cess and taxes on minerals, it is C/SCA/5758/2019 CAVJUDGMENT difficult to comprehend how the State could be permitted to make the levy and collection of the dues subsequent to 4.4.91. According to Dr. Singhvi, and interpretation of the provisions of the Validation Act, authorising realisation of levy after 4-4-91 for the past period would be contrary to equity, justice and fair-play.”

32. It was held by the Supreme Court, in the case of U.P. Bhoodan Yagna Samiti, U.P. v. Braj Kishore and Ors., reported in AIR 1988 SC 2239, that it is clear that when one has to look to the intention of the Legislature, one has to look to the circumstances under which the law was enacted, the Preamble of the law, the mischief which was intended to be remedied by the enactment of the statute. We may quote the relevant paragraph 16 of the judgment thus :

“16. And it is clear that when one has to look to the intention of the Legislature, one has to look to the circumstances under which the law was enacted. The Preamble of the law, the mischief which was intended to be remedied by the enactment of the statute and in this context, Lord Denning, in the same book at Page No. 10, observed as under :
“At one time the Judges used to limit themselves to the bare reading of the Statute itself – to go simply by the words, giving them their grammatical meaning and that was all. That view was prevalent in the 19th century and still has some supporters today. But it is wrong in principle. The Statute as it appears to those C/SCA/5758/2019 CAVJUDGMENT who have to obey it – and to those who have to advise them what to do about it; in short, to lawyers like yourselves. Now the eccentrics cut off from all that is happening around them. The Statute comes to them as men of affairs – who have their own feeling for the meaning of the words and know the reason why the Act was passed just as if it had been fully set out in a preamble. So it has been held very rightly that you can enquire into the mischief which gave rise to the Statute
– to see what was the evil which it was sought to remedy.”
It is now well settled that in order to interpret a law one must understand the background and the purpose for which the law was enacted. And in this context as indicated earlier if one has bothered to understand the common phrase used in the Bhoodan Movement as ‘Bhoomihin Kissan’ which has been translated into English to mean ‘landless persons’ there would have been no difficulty but apart from it even as contended by learned counsel that it was clearly indicated by S. 15 that the allotments could only be made in accordance with the scheme of Bhoodan Yagna.
In order to understand the scheme of Bhoodan and the movement of Shri Vinoba Bhave, it would be worthwhile to quote from ‘Vinoba And His Mission’ by Suresh Ram printed with an introduction by Shri Jaya Prakash Narain and foreword by Dr. S. Radhakrishnan. In this work, statement of annual Sarvodaya Conference at Sevapuri has been quoted as under :

C/SCA/5758/2019 CAVJUDGMENT “The fundamental principle of the Bhoodan Yagna movement is that all children of the soil have an equal right over the Mother Earth, in the same way as those born of a mother have over her. It is, therefore, essential that the entire land of the country should be equitably redistributed anew, providing roughly at least five acres of dry land or one acre of wet land to every family. The Sarvodaya Samaj, by appealing to the good sense of the people, should prepare their minds for this equitable distribution and acquire within the next two years at least 25 lakhs of acres of land from about five lakhs of our villages on the rough basis of five acres per village. This land will be distributed to those landless labourers who are versed in agriculture, want to take to it, and have no other means of subsistence.”

This would clearly indicate the purpose of the scheme of Bhoodan Yagna and it is clear that S.15 provided that all allotments in accordance with S.14 could only be done under the scheme of the Bhoodan Yagna.”

33. In our opinion, it is arbitrary, irrational and unreasonable to discriminate in terms of the time-limit to allow the availment of the input tax credit with respect to the purchase of goods and services made in the pre-GST regime and post-GST regime and, therefore, it is violative of Article 14 of the Constitution.

34. Section 16 of the CGST Act allows the entitlement to take input tax credit in respect of the post-GST purchase of goods or C/SCA/5758/2019 CAVJUDGMENT services within return to be filed under Section 39 for the month of September following the end of financial year to such purchase or furnishing of the relevant annual return, whichever is earlier. Whereas, Rule 117 allows time-limit only up to 27th December 2017 to claim transitional credit on pre-GST purchases. Therefore, it is arbitrary and unreasonable to discriminate in terms of the time-limit to allow the availment of the input tax credit with respect to the purchase of goods and services made in pre-GST regime and post-GST regime. This discrimination does not have any rationale and, therefore, it is violative of Article 14 of the Constitution.

35. The Supreme Court, in the case of Ajay Hasia and Ors. v. Khalid Mujib Sehravardi and Ors., reported in AIR 1981 SC 487, has held that Article 14 strikes at the arbitrariness because any action that is arbitrary, must necessarily involve negation of equality. It is sufficient to state that the content and reach of Article 14 must not be confused with the doctrine of classification. The doctrine of classification which is evolved by the courts is not para-phrase of Article 14 nor is it the objective and end of that Article. Wherever there is arbitrariness in the State action, whether it be of the legislature or of the executive or of an “authority” under Article 12, Article 14 immediately springs into action and strikes down such State action. In fact, the concept of reasonableness and non-arbitrariness pervades the entire constitutional scheme and is a golden thread which runs through the whole of the fabric of the Constitution. We may quote the relevant paragraphs 16 and 17 of the judgment thus :

“16. If the Society is an “authority” and therefore “State”
within the meaning of Article 12, it must follow that it is C/SCA/5758/2019 CAVJUDGMENT subject to the constitutional obligation under Article 14. The true scope and ambit of Article 14 has been the subject matter of numerous decisions and it is not necessary to make any detailed reference to them. It is sufficient to state that the content and reach of Article 14 must not be confused with the doctrine of classification. Unfortunately, in the early stages of the evolution of our constitutional law, Article 14 came to be identified with the doctrine of classification because the view taken was that that Article forbids discrimination and there would be no discrimination where the classification making the differentia fulfils two conditions, namely. (i) that the classification is founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group; and (ii) that that differentia has a rational relation to the object sought to be achieved by the impugned legislative or executive action. It was for the first time in E. P. Ayyappa v. State of Tamil Nadu, (1974) 2 SCR 348 : (AIR 1974 SC

555), that this Court laid bare a new dimension of Article 14 and pointed out that that Article has highly activist magnitude and it embodies a guarantee against arbitrariness. This Court speaking through one of us (Bhatgwati, J.) said :

“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 C/SCA/5758/2019 CAVJUDGMENT 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. From a positivistic point of view equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of Article 14, and if it affects any matter relating to public employment, it is also violative of Article 16. Articles 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.”
17. This vital and dynamic aspect which was till then lying latent and submerged in the few simple but pregnant words of Article 14 was explored and brought to light in Royappa’s case and it was reaffirmed and elaborated by this Court in Maneka Gandhi v. Union of India, (1978) 2 SCR 621 : (AIR 1978 SC 597), where this Court again speaking through one of us (Bhagwati, J.) observed :-

“Now the question immediately arises as to what is the requirement of Art. 14: what is the content and C/SCA/5758/2019 CAVJUDGMENT reach of the great equalising principle enunciated in this article, There can be no doubt that it is a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made 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 imprisoned within traditional and doctrinaire limits………. Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 like a brooding omnipresence.”

This was again reiterated by this Court in International Airport Authority’s case ( (1979) 3 SCR 1014) at p. 1042: (AIR 1979 SC 1628) (supra) of the Report. It must therefore now be taken to be well settled that what Article 14 strikes at is arbitrariness because an action that is arbitrary, must necessarily involve negation of equality. The doctrine of classification which is evolved by the Courts is not paraphrase of Article 14 nor is it the objective and end of that Article. It is merely a judicial formula for determining whether the legislative or executive action in question is arbitrary and therefore constituting C/SCA/5758/2019 CAVJUDGMENT denial of equality. If the classification is not reasonable and does not satisfy the two conditions referred to above, the impugned legislative or executive action would plainly be arbitrary and the guarantee of equality under Article 14 would be breached. Wherever therefore there is arbitrariness in State action whether it be of the legislature or of the executive or of an “authority” under Article 12, Art. 14 immediately springs into action and strikes down such State action. In fact, the concept of reasonableness and non-arbitrariness pervades the entire constitutional scheme and is a golden thread which runs through the whole of the fabric of the Constitution.”

36. It is legitimate for a going concern to expect that it will be allowed to carry forward and utilise the CENVAT credit after satisfying all the conditions as mentioned in the Central Excise Law and, therefore, disallowing such vested right is offensive against Article 14 of the Constitution as it goes against the essence of doctrine of legitimate expectation.

37. The Supreme Court, in the case of MRF Ltd. v. Assistant Commissioner (Assessment) Sales Tax, reported in 2006 (206) E.L.T. 6 (S.C.), has held that a person may have a ‘legitimate expectation’ of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past C/SCA/5758/2019 CAVJUDGMENT practice. The doctrine of legitimate expectation has an important place in developing law of judicial review. We may quote the relevant paragraph 38 of the judgment thus :

“38. The principle underlying legitimate expectation which is based on Article 14 and the rule of fairness has been re- stated by this Court in Bannari Amman Sugars Ltd. v. Commercial Tax Officer, 2005 (1) SCC 625. It was observed in paras 8 and 9:
“8. A person may have a ‘legitimate expectation’ of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past practice. The doctrine of legitimate expectation has an important place in the developing law of judicial review. It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest to enable one who cannot point to the existence of a substantive right to obtain the leave of the court to apply for judicial review. It is generally agreed that ‘legitimate expectation’ gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The C/SCA/5758/2019 CAVJUDGMENT doctrine does not give scope to claim relief straightway from the administrative authorities as no crystallized right as such is involved. The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise. In other words, where a person’s legitimate expectation is not fulfilled by taking a particular decision then the decision-maker should justify the denial of such expectation by showing some overriding public interest. (See : Union of India and Ors. v. Hindustan Development Corporation and Ors., AIR 1994 SC 988)
9. While the discretion to change the policy in exercise of the executive power, when not trammeled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of C/SCA/5758/2019 CAVJUDGMENT arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.””
38. By not allowing the right to carry forward the CENVAT credit for not being able to file the form GST Tran-1 within the due date may severely dent the writ-applicants working capital and may diminish their ability to continue with the business. Such action violates the mandate of Article 19(1)(g) of the Constitution of India.

39. This High Court, in the case of Indsur Global Ltd. v. Union of India, reported in 2014 (310) E.L.T. 833 (Gujarat), has held as under:

“34. By no stretch of imagination, the restriction imposed under sub-rule (3A) of Rule 8 to the extend it requires a defaulter irrespective of its extent, nature and reason for the default to pay the excise duty without availing Cenvat credit to his account can be stated to be a reasonable restriction. It leads to a situation so harsh and a position so unenviable that it would be virtually impossible for an assessee who is trapped in the whirlpool to get out of his financial difficulties. This is quite apart from being wholly reasonable, being irrational and arbitrary and therefore, violative of C/SCA/5758/2019 CAVJUDGMENT Article 14 of the Constitution. It prevents him from availing credit of duty already paid by him. It also is a serious affront to his right to carry on his trade or business guaranteed under Article 19(1)(g) of the Constitution. On both the counts, therefore, that portion of sub-rule (3A) of rule must fail.”
40. The liability to pay GST on sale of stock carried forward from the previous tax regime without corresponding input tax credit would lead to double taxation on the same subject matter and, therefore, it is arbitrary and irrational.

41. C.B.E. & C. Flyer No.20, dated 1.1.2018 had clarified as under :

“(c) Credit on duty paid stock : A registered taxable person. other than manufacturer or service provider, may have a duty paid goods in his stock on 1st July 2017. GST would be payable on all supplies of goods or services made after the appointed day. It is not the intention of the Government to collect tax twice on the same goods. Hence, in such cases, it has been provided that the credit of the duty/tax paid earlier would be admissible as credit.”
42. Article 300A provides that no person shall be deprived of property saved by authority of law. While right to the property is no longer a fundamental right but it is still a constitutional right. CENVAT credit earned under the erstwhile Central Excise Law is the property of the writ-applicants and it cannot be appropriated for merely failing to file a declaration in the absence of Law in C/SCA/5758/2019 CAVJUDGMENT this respect. It could have been appropriated by the government by providing for the same in the CGST Act but it cannot be taken away by virtue of merely framing Rules in this regard.

43. In the result, all the four writ-applications succeed and are hereby allowed. The respondents are directed to permit the writ- applicants to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act. It is further declared that the due date contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit is procedural in nature and thus should not be construed as a mandatory provision.

44. Rule made absolute to the aforesaid extent.

(J. B. PARDIWALA, J.) (A. C. RAO, J.) /MOINUDDIN

Liability Of Non-Executive Directors For Offenses Committed By The Company

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In Rajendra Shah s/o. Ambalal Shah vs. The State of Maharashtra CRIMINAL WRIT PETITION NO.1528 OF 2016, the Bombay High Court has laid down important law that persons who are not Executive Director but are alternate Directors cannot be prosecuted for offenses committed by the Company. The Court followed the judgement in Homi Phiroz Ranina & Ors. vs. State of Maharashtra & Ors where the complaint was filed for delay in remitting the tax deducted.

The applicant argued that he was non- executive Director of the company and was a practising advocates and, therefore, was prohibited under the law to act as full time directors. They could only act as non-executive directors not exercising administrative powers or peforming administrative duties.

The Bombay High Court held that unless the complaint discloses a prima facie case against the applicant/accused of their liability and obligation as principal officers in the day to day affairs of the company as Directors of the company, the applicants cannot be prsoecuted for the offences committed by the company and held that it will be a travesty of justice to prosecute all the Directors if the offence is committed without their knowledge.

DOWNLOAD: Download Rajendra Shah s/o. Ambalal Shah vs. The State of Maharashtra CRIMINAL WRIT PETITION NO.1528 OF 2016

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION

CRIMINAL WRIT PETITION NO.1528 OF 2016

Rajendra Shah s/o. Ambalal Shah … Petitioner
Vs.
The State of Maharashtra & anr. … Respondents

Mr.Amit Desai, Senior Advocate with Pranav Badheka and Abhay
Jadeja, P.Mane I/b Prashant Bhikaji Pawar for the Petitioner

Mr.Vinod Chate, APP, for the Respondent – State

Mr.Dhirendra Pratap Singh for Resp. No.2

CORAM: Mrs.MRIDULA BHATKAR, J.

JUDGEMENT RESERVED ON: JANUARY 15, 2019
JUDGEMENT DELIVERED ON: JANUARY 30, 2019

JUDGEMENT:
1. Admit. Respondents waive notice through their respective Counsel. By consent of the parties, the Petition is heard finally at the stage of admission.

2. The petitioner, the original accused No.6, challenges the order of issuance of process dated 24.5.2002 and the issuance of summons dated 3.11.2015 and prays that all proceedings and the orders are to be set aside in Criminal Case No.3847/SS/15 from the Court of Metropolitan Magistrate, 18 th Court, Girgaum, Mumbai. Respondent No.2, the Registrar of Companies, has filed this complaint under section 295 (4) of the Companies Act, 1956 for contravention of section 295 (4) of the Companies Act (for short, hereinafter referred to as ‘the Act’).

U/s 295(4) of the Act, a company needs to take prior sanction for giving loans to the other parties. However, there is a violation of the provisions under section 295 of the Act as the loans were disbursed by accused No.1 company to its sister concern. Accused Nos.7 and 8 are the companies to whom the loan is disbursed by the company, namely, M/s.Baron International Ltd. of which accused Nos.1 to 6 are the Directors. During inspection of the company’s books of accounts and the records taken on 3.11.1999 by the concerned officer from the Office of the Registrar of Companies, it was found that this disbursement of loans to accused Nos.7 and 8 was without prior sanction of the Registrar of Companies and therefore, criminal complaint is lodged on 24.5.2002.

3. The learned Senior Counsel appearing for the applicant/accused has submitted that the order of issuance of process against the applicant/accused is illegal and bad in law on the following grounds:

i) He submits that the applicant/accused is not an Executive Director but he was an alternate Director. He submits that in the averments made in the complaint, no substantial role is attributed to accused No.6, who is an advocate and solicitor by profession and is a senior partner in the firm M/s.Crawford Bayley & Company, advocates & Solicitors. He is not a signatory of the cheque which is subject matter of the prosecution. In the complaint also, it is specifically mentioned that the original accused No.2 has signed and issued the said cheque. The averments are mainly against the accused Nos.2 to 4 and not against accused No.6.

ii) In the balance sheet of 30.6.1999, the amount of Rs.112,240/- has been shown as the loan amount due from Jaykaba Trading and Investment Ltd., accused No.8 and Rs.26 lakhs has been shown as amount due from Shakun Mulchanani and Kabir Mulchandani of M/s.Sprite Electronics Private Ltd. of which accused Nos.2 and 3 are the directors. The petitioner is not connected with those companies.

4. They held the position of Directors in these two companies. Thus, both accused Nos.1 and 2 are the ones, who were active in disbursement and maintaining the books of accounts. He further submitted that as per the Advocates Act, the applicant/accused, being an advocate, is not supposed to sign any balance sheet or cannot be a witness in any proceedings. Moreover, a mere signature is not to be taken that he had approval and knowledge about such disbursement of loans and whether this disbursement is without sanction? He submitted that accused No.6 was an alternate Director and not Managing Director. He signed as an alternate director on the balance sheet and not as a Managing Director. On the balance sheet, the signatures of a Chairman and accused No.2 as a Managing Director are appearing. Therefore, the signature of applicant/accused appearing on the balance sheet is in fact insignificant and no vicarious liability can be saddled on accused No.6 in this company affair.

He also pointed out that company is not a party to the proceedings. The learned Counsel has submitted that in para 2, the complainant has mentioned that accused Nos.1 to 6, at the relevant time, were the officer in default of the company as per annexure A. The learned Counsel relied on the definition of officer, who is in default, under section 5 of the Act.

He argued that he does not fall in the category of A, B, C, D, E and F. In clause (G), he may fall, however, accused No.2 is working as a Managing Director and, therefore, clause (g) will not be attracted to the present applicant/accused.

5. He further argued that the inspection has taken place in 1999; the complaint was filed in 2002 i.e., after more than 2 years and, therefore, as per section 468 of the Criminal Procedure Code, cognisance of this offence can be taken only within one year where the punishment is of one year. In the present case, the punishment is prescribed for one year and so, the complaint filed is beyond limitation and the trial Court ought not to have taken cognisance of this complaint.

6. In support of his submissions, he relied on the judgments in Srikumar Menon and Ors. vs. Registrar of Companies. 1; Atul B. Munim vs. Registrar of Companies & Ors. 2 and in Homi Phiroz Ranina & Ors. vs. State of Maharashtra & Ors. 3

7. Mr.Singh, the learned Counsel appearing for Respondent No.2, while opposing this application has submitted that at the 1 MANU/WB/0525/2011 2 1999 SCC Online Bom 893 3 2003 (3) Mh.L.J. 34 wp.1528.2016 (R).doc stage of issuance of process, the learned Judge has to only consider the averments made in the complaint. In the present case, the petitioner is admittedly a Director of the said company. It is also admitted that the loans were disbursed to the respondents/ accused Nos.7 and 8 without taking prior sanction of the government, which are the sister companies of the company. He submitted that there is no delay in filing the complaint because time was taken for show-cause notice dated 3.1.2002 issued by the office to accused No.6 and it was received by the wife of the accused on 26.5.2005 and it was served. The show-cause notice was served immediately at the residence of respondent No.6. The learned Counsel submitted that there is no delay in filing the complaint because the sanction to launch prosecution by the respondents was obtained by the complainant on 12.10.2002 and immediately in 2002. Then, the complaint was filed in May, 2002.

8. In support of his submissions, he relied on the judgment of the Madras High Court in the case of R.M. Subramaniam & Ors. vs. Inspector of Labour, Tiruchirapalli 4; so also of the Delhi High Court in the case of Bhupinder Kaur Singh & Ors. vs. Registrar 4 MANU/TN/1049/1999 wp.1528.2016 (R).doc of Companies5.

9. Heard. Perused the complaint and other record before the Court. In the case of Srikumar Menon and Ors. vs. Registrar of Companies (supra), a show-cause notice was sent under section 295(1C) of the Act. An application was filed under section 633(2) of the Companies Act, where without permission of the Central Government, intercorporate deposits were created. For such violation, conviction prescribed was maximum imprisonment of 6 months for the offender. The complaint was filed, however, objection was raised on the ground that it was barred by limitation under section 468 of the Code of Criminal Procedure. The learned Single Judge of the Calcutta High Court held that under section 469(3) of the Code of Criminal Procedure, the period of limitation in relation to offence shall commence on the day, when such offence came to his knowledge of the aggrieved person. In that case, therefore, if the Central Government is aggrieved by the act of company then, the date of inspection was considered as the date of knowledge to the Central Government and from that date, the limitation was to be computed.

5 142 (2007) Delhi Law Times 277

10. In the case of Atul B. Munim vs. Registrar of Companies & Ors (supra), a learned Single Judge of this Court has considered section 5 of the Companies Act. It was held that if the petitioner was not a whole time or executive director of the company, then, he is to be treated as alternate to the whole time director or executive director of the company. He also stated that the process cannot be issued mecanically without applying mind to the facts of the case and the provisions of law.

11. In Homi Phiroz Ranina & Ors. vs. State of Maharashtra & Ors., the complaint was filed for delay in remitting the tax deducted. The applicant has taken stand that he was non- executive Director of the company and they are also practising advocates and, therefore, they are prohibited under the law to act as full time directors. They could only act as non-executive directors not exercising administrative powers or peforming administrative duties. It is held that unless the complaint discloses a prima facie case against the applicant/accused of their liability and obligation as principal officers in the day to day affairs of the company as Directors of the company, the applicants cannot be prsoecuted for the offences committed by the company and held that it will be a travesty of justice to prosecute all the Directors if the offence is committed without their knowledge. The set of the facts are quite similar to the facts in the present case.

The status of the applicant/accused in the case of Homi Phiroz Ranina & ors. vs. The State of Maharashtra & ors. (supra), is similar to the status of the petitioner in the case in hand. The applicant is also a practising advocate and solicitor. So, he could only act as non- executive Director unless specific material is brought on record, the liability of a principal or active Director cannot be fixed on him. Admittedly, he is not a signatory to the cheque, which is the subject matter of the complaint.

12. In R.M. Subramaniam & Ors. vs. Inspector of Labour, Tiruchirapalli (supra), a revision was preferred against conviction under the Industrial Disputes Act. A learned Single Judge of the Madras High Court in that case has held that where notice of prosecution for an offence has been given and where previous sanction of the government is required, the period of such notice and the time spent for obtaining sanction has to be excluded in admitting the period of limitation. In the said case, the learned Judge has taken a different view from the earlier view taken by the wp.1528.2016 (R).doc Bombay High Court in the case of H.H. Wagh vs. State of Maharashtra & anr.6. In the said case, the offence was committed under the Industrial Disputes Act but the learned Single Judge of this Court has taken a view that when there is no provision of taking sanction in the act of the government or the authority and though the sanction is taken, there is no such period of sanction which can be excluded from computing the period of limitation.

13. In Bhupinder Kaur Singh & Ors. vs. Registrar of Companies7. In this case, the learned Single Judge of Delhi High Court while dealing with the proceedings under the Companies Act, has dealt with the issue of period of limitation for prosecution. In the said case, the funds collected by way of public issue were not utilised in the leasing business as stated in and promised in the prospectus and, therefore, the act was made punishable under section 63 and 628 of the Companies Act. In the said case, the complaint was filed immediately after receiving permission from the Department of Company Affairs. The learned Judge has held that the question of limitation is a mixed question of law and fact. The learned Judge has held that the complaint cannot be thrown out on 6 1991 (1) Bom.C.R. 206 7 142 (2007) Delhi Law Times 277 wp.1528.2016 (R).doc the ground of limitation and it is to be decided at the stage of trial. In the said case, in November, 2015, the prospectus was sent in November, 1995 and the issue was opened on 29.1.1996 and closed on 8.2.1996 and the complaint was filed 6 years thereafter i.e., in the year 2002, though the period of limitation was 3 years.

14. In the present case, the inspection was carried on 3.11.1999 by the Income Tax department and the complaint was filed in May 2002. The view taken by the Madras High Court in the case of R.M. Subramaniam (supra) is different than the view taken by the Bombay High Court. However, it is also true as laid down in the case of Bhupinder Kaur Singh (supra), it is a matter of mixed question of law and facts. Therefore, this issue can be kept open in the complaint.

15. The other point in respect of the status of the petitioner as an active partner and was having knowledge of not taking prior approval for disbursement, is not made out in the averments. A specific role is attributed to accused Nos.1 and 2. Accused No.2 is a Managing Director and therefore, he has signed the cheque. The petitioner had not signed the books of accounts but he has signed the balance sheet. The submissions of the learned Senior wp.1528.2016 (R).doc Counsel that the said balance sheet was signed in a routine manner as the signature of the Managing Director and the chairman were appearing, carries substance. Thus on the basis of only signature, it cannot be said that there is enough material to show the knowledge of the petitioner of disbursement of the loan without prior approval. A significant circumstance also to be addressed to is that the accused Nos.1 and 2 are the Directors of those companies in whose favour the loans were disbursed. Thus, the accused Nos.1 and 2 had direct interest in the disbursement of loan. There is nothing to show that the petitioner has any interest or any connection with the other two companies. In view of these facts and the submissions of the learned Counsel for both the parties, I hold that no case is made out to issue process under section 295 (4) of the Companies Act, 1956 is made out to swaddle the vicarious liability on the petitioner.

16. Hence, the process issued by the learned Magistrate under section 295 (4) of the Companies Act, 1956 on 24.5.2002 and the summons dated 3.11.2015 are quashed and set aside. Rule is made absolute accordingly.

(MRIDULA BHATKAR, J.)

CBDT Circular On Bogus Long-Term Capital Gain (LTCG)/Short Term Capital Loss (STCL) On Penny Stocks

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MASTI

Circular No. 23 of 2019
F. No. 279/Misc./M-93/2018-ITJ(Pt.)
Government of India
Ministry of Finance
Department of Revenue
Central Board Direct Taxes
Judicial Section
New Delhi, 6th September 2019

Subject: -Exception to monetary limits for filing appeals specified in any Circular issued under Section 268A of the Income-tax Act, 1961-reg

Reference is invited to the Circulars issued from time to time by Central Board of Direct Taxes (the Board) under section 268A of the Income-tax Act,1961 (the Act), for laying down monetary limits and other conditions for filing of departmental appeals before Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/appeals before Supreme Court.

DOWNLOAD: Download CBDT Circular No. 23 of 2019 (Penny Stocks Monetary Tax Limit)

2. Several references have been received by the Board that in large number of cases where organised tax-evasion scam is noticed through bogus Long-Term Capital Gain (LTCG)/Short Term Capital Loss (STCL) on penny stocks and department is unable to pursue the cases in higher judicial fora on account of enhanced monetary limits. It has been reported that in large number of cases, ITATs and High Court have recognized the unique modus operandi involved in such scam and have passed judgements in favour of the revenue.

However, in cases where some appellate fora have not given due consideration to position of law or facts investigated by the department, there is no remedy available with the department for filing further appeal in view of the prescribed monetary limits.

3. In this context, Board has decided that notwithstanding anything contained in any circular issued u/s 268A specifying monetary limits for filing of departmental appeals before Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/appeals before Supreme Court. appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity.

4. Hindi version follows.
(Neetika Bansal)
Director (lTJ)
CBDT, New Delhi
Copy to:
I . Chairman, Members and all other officers in CBDT of the rank of Under Secretary and
above.
2. All Pr. Chief Commissioners oflncome tax and all Directors General oflncome Tax
3. ADG (PR, P&P), Mayur Bhawan, New Delhi for printing in the quarterly Tax Bulletin
and for circulation as per usual mailing list.
4. The Comptroller and Auditor General ofIndia.
5. ADG (Vigilance), Mayur Bhawan, New Delhi.
6. Joint Secretary & Legal Advisor, Ministry of Law & Justice, New Delhi.
7. All Directorates of Income-tax, New Delhi and ProDGIT(NADT), Nagpur.
8. ITCC (3 copies).
9. ADG (System)-4, for uploading on the Department’s website.
10. Data Base Cell for uploading on irsofficersonline.gov.in.
II. njrs_support@nsdl.co.in for uploading on NJRS.
12. Hindi Cell for translation.
13. Guard file.
(Neetika Bansa )
Director (lTJ)
CBDT, New Delhi