Supreme Court of India - Equivalent citations: 1987 AIR 748, 1986 SCR (3) 518 - Bench: Reddy, O. Chinnappa (J) - Citation:  1987 AIR  748- 1986 SCR (3)518- 1986 SCC (3)615     JT 1986 115- 1986 SCALE  (2)217 -  Citator Info : RF     1988 SC1208    (25) - Date of Judgment: 11 August, 1986

ACT:
Constitution of India, Art. 19(1)(a) and 25(1)-National Anthem-Singing of-Compulsion despite genuine conscientious religious objection -Whether contravenesy Fundamental Rights.

Prevention of Insult to National Honour Act, 1960, s.3- National Anthem-Singing of-Refusal on genuine conscientious religious faith-Whether offence committed.

Kerala Education Act, 1959 read with the Kerala Education Rules, 1959, s. 36, Chapter IX Rule 6-National Anthem . Singing of-Refusal by school pupils on genuine conscientious religious faith-Whether misconduct entitling censure suspension dismissal of pupil.

HEADNOTE:
The appellants-three children belong to a sect called Jehovah's Witnesses who worship only Jehovah-the Creator and none other. They refused to sing the National Anthem: 'Jana Gana Mana' because, according to them, it is against the tenets of their religious faith-not the words or the thoughts of the National Anthem-but the singing of it.

They desisted from actual singing only because of their aforesaid honest belief and conviction but they used to stand up in respectful silence daily, during the morning assembly when the National Anthem was sung.

A Commission was appointed to enquire and report, and it reported that the children were "law abiding" and that they showed no disrespect to the National Anthem. However, under the instructions of Deputy Inspector of Schools, the Head Mistress expelled the appellants from school from July 26, 1985.

A representation by the father of the children to the Education Authorities requesting that the children may be permitted to attend the 519

school pending orders from the Government having failed, the appellants filed a Writ Petition in the High Court seeking an order restraining the authorities from preventing them from attending the school. A single Judge and then a Division Bench rejected the prayer of the appellants. Allowing the appeal by Special Leave, to this Court,

HELD: 1.1. The Fundamental Rights of the appellants under Art. 19(1)(a) and 25(1) have been infringed and they are entitled to be protected. The expulsion of the three children from the school for the reason that because of their conscientiously held religious faith, they do not join the singing of the National Anthem in the morning assembly though they do stand respectfully when the National Anthem is sung, is a violation of the fundamental right to freedom of conscience and freely to profess, practice and propagate religion. Therefore, the judgment of the High Court is set aside and the respondent authorities are directed to re- admit the children into the school, to permit them to pursue their studies without hindrance and to facilitate the pursuit of their studies by giving them the necessary facilities. [538D-E; 539-C-D]

1.2 There is no provision of law which obliges anyone to sing the National Anthem nor is it disrespectful to the National Anthem if a person who stands up respectfully when the National Anthem is sung does not join the singing. Proper respect is shown to the National Anthem by standing up when the National Anthem is sung. It will not be right to say that disrespect is shown by not joining in the singing. Standing up respectfully when the National Anthem is sung but not singing oneself clearly does not either prevent the singing of the National Anthem or cause disturbance to an assembly engaged in such singing so as to constitute the offence mentioned in s. 3 of the Prevention of Insults to National Honour Act. [527B-G]

2.1 Article 19(1)(a) of the Constitution guarantees to all citizens freedom of speech and expression, but Article 19(2) provides that nothing in Article 19(1)(a) shall prevent a State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the said right. Art. 25(1) guarantees to all persons freedom of conscience and the right freely to profess, practise and propagate religion, subject to order, morality and health and to the other provisions of Part III of the Constitution. Art. 51-A(a) of the Constitution enjoins a dub on every citizen of India "to abide by the Constitution and respect its ideals and institutions, the National Flag and the National Anthem". [526G-H; 527C] 520

2.2 While on the one hand, Art. 25(1) itself expressly subjects the right guaranteed by it to public order, morality and health and to the other provisions of Part III, on the other hand, the State is also given the liberty to make a law to regulate or restrict any economic, financial, political or other secular activity which may be associated with religious practice and to provide for social welfare and reform, even if such regulation, restriction or provision affects the right guaranteed by Art. 25(1). Therefore, whenever the Fundamental Right to freedom of conscience and to profess, practise and propagate religion is invoked, the act complained of as offending the Fundamental Right must be examined to discover whether such act is to protect public order, morality and health, whether it is to give effect to the other provisions of Part III of the Constitution or whether it is authorised by a law made to regulate or restrict any economic, financial political or secular activity which may be associated with religious practise or to provide for social welfare and reform. [531G- H; 532A-B]

2.3 Any law which may be made under clauses 2 to 6 of Art. 19 to regulate the exercise of the right to the freedoms guaranteed by Art. 19(1)(a) to (e) and (g) must be 'a law' having statutory force and not a mere executive or departmental instructions. [529E-F]

The two circulars on which the Department, in the instant case, has placed reliance have no statutory basis and are mere departmental instructions. They cannot, therefore, form the foundation of any action aimed at denying to citizens Fundamental Right under Art. 19(1)(a). Further it is not possible to hold that the two circulars were issued 'in the interest of the sovereignty and integrity of India, the security of the State, friendly relation with foreign states, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence' and if not so issued, they cannot again be invoked to deny a citizen's Fundamental Right under Art. 19(1)(a). If the two circulars are to be so interpreted as to compel each and every pupil to join in the singing of the National Anthem despite his genuine, conscientious religious objection, then such compulsion would clearly contravene the rights guaranteed by Art. 19(1)(a) and Art. 25(1). [530C-E; 529C]

Kharak Singh v. State of U.P., AIR 1963 SC 1295 and Kameshwar Prasad v. The State of Bihar, [1962] Supp. SCR 369 relied upon.

3. The Kerala Education Act contains no provision of relevance and the appellants in the present case have never been found guilty of 521misconduct such as that described in Chapter IX, Rule 6 of the Kerala Education Rules. On the other hand, the report of the Commission, is to the effect that the children have always been well-behaved, law-abiding and respectful. [528 B-C]

4. The question is not whether a particular religious belief or practice appeals to our reason or sentiment but whether the belief is genuinely and conscientiously held as part of the profession or practice of religion. Personal views and reactions are irrelevant. If the belief is genuinely and conscientiously held it attracts the protection of Art. 25 but subject, of course, to the inhibitions contained therein. [533F-G]

In the instant case, what the petitioners truly and conscientiously believe is not in doubt. They do not hold their beliefs idly and their conduct is not the outcome of any perversity. The petitioners have not asserted those beliefs for the first time or out of any unpatriotic sentiment Jehovah's Witnesses, as they call themselves, appear to have always expressed and stood up for such beliefs all the world over. [523C-D] Adelaide Company of Jehovah's Witnesses v. The Commonwealth, 67 CLR 116; Minersville School District v. Gebitis, 84 Law Ed. US 1376; West Virginia State Board of Education v. Barnette, 87 Law Ed. 1628; Donald v. The Board of Education for the City Hamilton, 1945 Ontario Reports 518, Sheldon v. Fannin, 221 Federal Suppl. 766; The Commissioner Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, [1954] SCR 1005; Rati Lal Panachand Gandhi v. The State of Bombay & Ors., [1954] SCR 1055; SP Mittal etc. etc. v. Union of India

JUDGMENT:
Commissioner, Calcutta, AIR 1984 SC 51 referred to.


& CIVIL APPELLATE JURISDICTION: Civil Appeal No. 870 of From the Judgment and order dated 7.12.1985 of    the Kerala High Court in W.A . No. 483 of 1985.

F.S. Nariman, T.S. Krishnamurthy Iyer, K.J. John and M. Jha for the Appellants.

G.    Viswanatha Iyer and    Mrs.    Baby Krishnan    for Respondent Nos. I to 3.

P.S. Poti,    E.M.S.    Anam and James Vincent for    the Respondents.

The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The three child-appellants, Bijoe. Binu Mol and Bindu Emmanuel, are the faithful of Jehovah's Witnesses. They    attend school. Daily, during    the morning Assembly, when the National Anthem 'Jana Gana Mana' is sung, they stand respectfully but they do not sing. They do not sing because, according to them, it is against the tenets of their religious    faith-not the    words or the thoughts of the Anthem but the singing    of it.    This they and before    them their elder sisters who attended the    same school earlier have done all these several years. No one bothered, No one worried. No one thought it disrespectful or unpatriotic. The children were left in    peace and to their beliefs. That was until July, 1985, when some patriotic gentleman took notice. The gentleman thought it was unpatriotic of the children not to sing    the National Anthem. He happened to be a Member of the Legislative    Assembly. So,    he put    a question in    the Assembly. A Commission was appointed to enquire and report. We do not have    the report of the Commission. We are told that the Commission reported that the    children are 'law- abiding' and that they showed no disrespect to the National Anthem. Indeed    it is nobody's case. that the children are other than well-behaved or that they have ever behaved disrespectfully when the National Anthem was sung. They have always stood up in respectful silence. But these matters of conscience, which though better left alone, are sensitive and emotionally    evocative. So,    under the instructions of Deputy Inspector of Schools, the Head Mistress expelled the children from the school from July 26, 1985. The father of the children    made representations requesting that    his children may be permitted to    attend    the school pending orders from the Government. The Head Mistress expressed her helplessness in    the matter. Finally the children filed a Writ Petition in the High Court seeking an order restraining the authorities    from preventing them from attending School. First a    learned single    judge and then a Division Bench rejected the prayer of    the children.    They have now    come before    us by    special leave under    Art.    136 of    the Constitution.

We are afraid the    High court misdirected itself    and went off at a    tengent. They considered, in minute detail, each and every word and thought of the National Anthem and concluded that there was no word or thought in    the National    Anthem    which could offend anyone's religious susceptibilities. But that is not    the question at all. The objection of the petitioners is not to the language or the sentiments of the National Anthem: they do not    sing the National Anthem wherever, 'Jana Gana Mana' in India, 'God save the Queen' in Britain, the Star-spangled banna in the United States and so on. In their words in the Writ Petition they say, "The students who are Witnesses do not sing the Anthem though they stand up on such occasions to show    their respect    to the    National Anthem. They desist from actual singing only because of their honest belief and conviction that    their religion does not permit them to join any rituals except it    be in their prayers to Jehovah their God. "

That the petitioners truly and conscientiously believe what they say is not in doubt. They    do not    hold their beliefs idly and their    conduct is not the outcome of any perversity. The    petitioners have not asserted these beliefs for the    first time or out of any unpatriotic sentiment. Jehovah's Witnesses, as they call themselves, appear to have always expressed and stood up for such beliefs all the world over as    we shall presently show. Jehovah's Witnesses    and their peculiar    beliefs though little noticed in    this country, have been noticed, we find,    in the Encyclopaedia Britannica and    have    been the subject of judicial pronouncements elsewhere.

In 'The New Encyclopaedia Britannica' (Macropaedia) Vol. 10    page 538, after mentioning that Jehovah's Witnesses are "the adherents of    the apocalyptic    sect organized by Charles Taze Russell in the early 1870", it    is further mentioned, "..    They believe that the Watch Tower Bible and Tract Society, their    legal agency and publishing    arm, exemplifies the    will of God and proclaims the truths of the Bible against the evil    triumvirate of    organized religion, the business world, and the state .. The Witnesses    also stand apart from civil    society, refusing to vote, run for public office,    serve in any armed forces, salute the flag, stand for the National    Anthem, or recite the pledge of allegiance. Their religious stands have brought clashes with various governments, resulting in law suits, mob violence, imprisonment, torture,    and death. At one time more    than 6,000 Witnesses    were inmates of Nazi concentration camps, Communist and Fascist States usually    forbid    Watch Tower activities. In    the U.S. the society has taken 45 cases to the Supreme Court and    has won    significant victories    for freedom of religion and speech. The Witnesses have been less successful in claiming exemptions as ministers from military service and in    seeking to withhold blood transfusions from their children."

Some of the beliefs held by Jehovah's Witnesses    are mentioned in a little    detail in the statement of case in Adelaide Company of Jehovah's Witnesses v. The Commonwealth, 67 CLR    116 a case decided by the Australian High Court. It is stated, "Jehovah's Witnesses are an association of persons loosely organised    throughout Australia    and elsewhere who regard the literal interpretation of the Bible as Fundamental to proper religious beliefs."

"Jehovah's Witnesses believe    that    God, Jehovah, is the Supreme ruler of the universe. Satan or Lucifer was    originally part of God's organization and the perfect man was placed under him. He rebelled against God and set up his own organization in challenge to God and through that organization had ruled the world. He rules    and controls the    world through material agencies such as organized    political, religious, and financial bodies. Christ, they believe, came to earth to redeem all men who    would    devote them selves entirely to serving God's will and purpose and He will come to earth again (His second coming has already begun) and will over-throw all the powers of evil."

"These beliefs lead Jehovah's Witnesses to proclaim and    teach publicly    both orally and by means of printed books and    pamphlets that    the British Empire and also other organized political bodies are organs of Satan, unrighteously governed and identifiable with the Beast in the thirteenth chapter of the Book    of Revelation. Also    that Jehovah's Witnesses    are Christians entirely devoted to the Kingdom of God, which is    "The Theocracy" that they have no part in the political affairs of the world and must not interfere in the least manner    with war between nations. They must be entirely neutral and not interfere with    the drafting of men of nations they go to war. And also that wherever there is a conflict between the laws of Almighty God    and the Laws    of man    the Christian must always obey God's law in preference to man's law. All laws of men, however, in harmony with God's law the Christian obeys. God's law is expounded and taught by Jehovah's Witnes-

ses. Accordingly they refuse    to take an oath of allegiance to    the King or other constituted human authority."

The case of Adelaide Company of Jehovah's Witnesses v. The Commonwealth (supra) arose out of an action to restrain the Commonwealth of Australia    from enforcing    the National Security (Subversive Associations) Regulations to    the Jehovah's Witnesses.

Minersville School    District v. Gobitis, 84 Law. Ed. US 1375 and West Virginia State Board of Education v. Barnette, 87 Law    Ed. 1628 are two cases decided by the American Supreme Court in which Jehovah's witnesses claimed that they could not be compelled    to salute the flag of the United States while reciting pledge of allegiance. In the latter case, Jackson,    J. referred to the particular belief of the Witnesses which    was the subject matter of that case, as follows:

"The Witnesses are an unincorporated body teaching that the obligation imposed    by law    of God is superior to that of    laws enacted    by temporal government. Their religious    beliefs include a literal version of Exodus, Chapter XX, verses 4 and 5, which says "Thou shall not make upto the any graven image, or any likeness of anything that is in    heaven above,    or that is in the earth beneath, or that is in the water under the earth; thou shalt not bow down thyself to them, nor serve them." They consider that the flag is an "image"
within this command. For this reason they refuse to salute Donald v.    The Board of Education for the City Hamilton 1945 Ontario Reports 518 is a case decided by the Court of Appeals    of Ontario where the objection by Jehovah's Witnesses was to saluting the flag and singing National Anthem. The Court referred to the following belief of the Jehovah's Witnesses:

"The appellants, father and    sons, are affiliated with    "Jehovah's Witnesses"    and believe    that saluting the    flag and joining in the singing of the national    anthem    are both contrary to    and forbidden by    command of Scripture-the former because they    consider the flag an "image" within the literal meaning of Exodus, Chapter XX verses 4 and 5, and the latter because, while they respect the King and the State, the prayer voiced in this anthem is not compatible with the belief and    hope which they hold in the early coming    of the    new world, in the government of which present temporal states can have no part."
Sheldon v. Fannin, 221 Federal Supp. 766 a case decided by the    United States District Court of Arizona also arose out of    the refusal of Jehovah's Witnesses to stand when the National Anthem was sung. The Court observed:

"This refusal    to participate, even to the extent of standing, without singing, is said to have been dictated by their religious    beliefs as Jehovah's Witnesses, requiring    their literal acceptance of the Bible as they Word of Almighty God Jehovah. Both precedent and authority for their refusal to stand is claimed to    be found in the refusal of three    Hebrew children Shadrach,    Meshach    and Abednege, to    bow down at the sound    of musical instruments playing    patriotic- religious music throughout the land at the order of    King Nebuchadnezzar of ancient Babylon..    (Daniel 3: 1328)    For a similar reason, members of the Jehovah's Witnesses sect refuse to    recite    this Pledge of Allegiance to the Flag of the United States viewing this patriotic ceremony to be the worship of a    graven    image. (Exodus 20: 4-5). However, by some process of reasoning we need not tarry to explore, they are willing to stand during the Pledge of Allegiance, out of respect for the Flag as a symbol of the religious freedom    they enjoy (See Board of Education v. Barnette, 319 US 624 (1943)."
It is evident that Jehovah's Witnesses, wherever they are, do    hold religious    beliefs which may appear strange or even bizarre to us, but the sincerity of their beliefs is beyond question. Are they entitled to be protected by the Constitution?

Article 19(1)(a) of the Constitution guarantees to all citizens freedom of speech and expression, but Article 19(2) provides that nothing in Art. 19(1)(a) shall prevent a State from making any law,    in so    far as such    law imposes reasonable restrictions on the exercise of the right conferred by the said    sub-clause in the interests of the sovereignty and    integrity of India, the security of    the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or    incitement to    an offence.    Art. 25(1) guarantees to all persons freedom of conscience and the right freely to profess, practise and    propogate religion, subject to order, morality and health    and to the other provisions of Part III of the Constitution. Now, we have to examine whether    the ban imposed by the Kerala education authorities against silence when the National Anthem is sung on pain    of expulsion from the school is consistent with the rights    guaranteed by    Arts.    19(1)(a) and    25 of    the Constitution.

We may at once say that there is no provisions of law which obliges anyone to sing the National Anthem nor do we think that it is disrespectful to the National Anthem if a person who stands up respectfully when the National Anthem is sung    does not join the singing. It is true Art. 51-A(a) of the Constitution enjoins a duty on every citizen of India "to abide by the Constitution and respect its ideals and institutions, the National Flag and the National Anthem." Proper respect    is shown to the National Anthem by standing up when the National Anthem is sung. It will not be right to say that disrespect is shown by not joining in the singing.

Parliament has not been unmindful of 'National Honour'. The Prevention of Insults to National Honour Act was enacted in 1971. While s. 2 deals with insult to the Indian National Flag and the Constitution of India, s. 3 deals with    the National Anthem and enacts, "Whoever, intentionally prevents the    singing of the National    Anthem or causes disturbance to any assembly engaged in such singing shall be punished with imprisonment for a term which extend to three years or with find, or with both."

Standing up respectfully when    the National Anthem is sung but not    singing oneself clearly does not either prevent the singing of the National Anthem or cause disturbance to an assembly engaged in such singing so as to constitute the offence mentioned in s. 3 of    the Prevention of Insults to National Honour Act.

The Kerala    Education Act    contains no provision of relevance. Section 36, however, enables the Government to make rules for the purpose of    carrying into    effect    the provisions of the Act    and in particular to    provide    for standards of education and courses of    study.    The Kerala Education Rules    have been made pursuant to    the powers conferred by the Act. Chapter VIII of the Rules provides for the organisation of instruction and progress of pupils. Rule 8 of Chapter VIII provides for moral instruction    and expressly    says "Moral instruction should form a definite programme in every school but it    should in no way wound the social or religious susceptibilities of the peoples generally." The rule goes on to say    that 'the components of a high character' should be impressed upon    the pupils. One of the components is stated to be 'love of one's    country'. Chapter IX    deals    with discipline. Rule 6 of Chapter IX provides for the censure, suspension or    dismissal of    a pupil found    guility of deliberate in-subordination, mischief, fraud,    mal-practice in examinations, conduct likely to cause    unwholesome influence on other pupils etc. It is not suggested that the present    appellants have ever been    found guility of misconduct such    as that described in Chapter IX, Rule 6. On the other hand, the report of the Commission, we are told, is to the effect that the children have always been well- behaved, law-abiding and respectful.

The Kerala Education Authorities rely upon    two circulars of September 1961 and February 1970 issued by the Director of Public Instruction, Kerala. The first of these circulars is said to be a Code of Conduct for Teachers and pupils and stresses the importance of    moral and spiritual values. Several generalisations have been made and under the head patriotism it is mentioned, "Patriotism

1. Environment should be created in the school to develop the right kind of    patriotisms in    the children. Neither religion nor party nor anything of this kind should    stand against one's love of the country.

2. For national integration, the basis must be the school.

3. National Anthem. As a rule, the whole school should participate in the singing of the National Anthem."

In the second circular also instructions of a general nature are given and para 2 of the circular, with which we are concerned, is as follows:

"It is compulsory that all schools shall have the morning Assembly every day before actual instruction begins. The whole school with all the pupils and teachers shall be gathered for the Assembly. After the singing of the National Anthem the whole school shall, in one voice, take the National Pledge before marching back to the classes."
Apart from    the fact that the circulars have no legal sanction behind    them in the sense that they are not issued under the authority of any statute, we also notice that the circulars do not oblige each and every pupil to join in the singing even if he has any conscientious objection based on his religious faith, nor is any penalty attached to    not joining the singing. On the other hand, one of the circulars (the first one) very rightly emphasise the importance of religious tolerance. It is said there, "All religions should be equally respected."
If the two circulars are to be so interpreted as to compel each and every    pupil to join in the singing of the National Anthem despite his genuine, conscientious religious objection, then such compulsion would clearly contavene the rights guaranteed by Art. 19(1)(a) and Art. 25(1).
We have referred to Art. 19(1)(a) which guarantees to all citizens freedom of speech and expression and to Art. 19(2) which provides that nothing in    Art. 19(1)(a) shall prevent a State from making any law, in so far as such law impose reasonable restrictions on the exercise of the right conferred by    Art. 19(1)(a)    in the interests of    the sovereignty and    integrity of India, the security of    the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence. The law    is now well settled that any law which may be made under clauses (2) to (6) of    Art. 19 to regulate the exercise of the right to the freedoms guaranteed by Art. 19(1)(a) to (e) and (g) must be 'a law'    having statutory force and not a mere executive or departmental instruction. In Kharak Singh v. State of U.P., AIR 1963 SC 1295 the    question arose whether a police regulation which was a mere departmental instruction, having no statutory basis could be said to be a law for the purpose of Art.    19(2) to (6). The Constitution Bench answered the question in the negative and said, "Though learned Counsel for the respondent started by attempting    such a justification by invoking s. 12 of    the Indian Police Act    he gave this up and conceded that    the regulations contained in Ch. XX had no such    statutory basis but    were merely executive or    departmental instructions framed for the guidance    of the    police officers. They would not therefore    be "a    law" which the State is entitled to make under the relevant cls. (2) to (6) of Art. 19 in    order to regulate or    curtail fundamental rights guaranteed by the several sub-clauses of Art. 19(1), not would the same be "a procedure established by law" within Art. 21. The position therefore is    that if    the action of    the police which is the arm of the executive of the State is found to infringe any of the freedoms guaranteed to the petitioner the petitioner would be entitled to the relief of mandamus which he seeks, to restrain the State from taking action under the regulations. "

The two circulars on which the department has placed reliance in the present case have no statutory basis and are mere departmental instructions. They cannot, therefore, form the foundation    of any    action aimed at denying to citizen's Fundamental Right under Art. 19(1)(a). Further it is    not possible to hold that the two circulars were issued 'in the interest of the sovereignty and integrity of    India,    the security of the State, friendly relation with foreign States, public order, decency or morality, or in relation to contempt of court, defamation    or incitement to an offence' and if not so issued, they cannot again be invoked to deny a citizen's Fundamental    Right    under    Art. 19(1)(a).    In Kameshwar Prasad v. The State of Bihar, [1962] SUPP. SCR 369 a Constitution    Bench of the court had to consider    the validity of Rule 4A of the    Bihar Government Servants' Conduct Rules which prohibited    any form of demonstration even if    such demonstration was innocent and incapable of causing a breach of public tranquility. The court said, "No doubt, if the rule were so framed as to single out those types of demonstration which were likely to lead to a disturbance of public tranquility or which would fall under the other limiting criteria specified in    Art. 19(2) the validity of the rule could have been sustained. The vice of the rule, in our opinion, consists in this that it lays a ban on every type of demonstration-be the    same however innocent and however incapable of causing a breach of    public    tranquility and does    not confine itself to those forms of demonstrations which might lead to that result."

Examining the action of the Education    Authorities in    the light of Kharak Singh v. State of Uttar Pradesh (supra) and Kameshwar Pradesh v. State of Bihar (supra)    we have no option but to hold that the expulsion of the children from the school not joining the singing of the National Anthem though they respectfully    stood up in silence when the Anthem was sung was    violative of    Art. s19(1)(a).

Turning next to the Fundamental Right guaranteed by Art. 25, we may usefully set    out here that article to the extent relevant:

"25(1) Subject to public order, morality    and health and to the other provisions of this Part, all persons are equally entitled to    freedom of conscience and the    right    freely    to profess, practise and propagate religion.
(2) Nothing in this    article shall    affect    the operation of any existing law or prevent the State from making any law-
(a) regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice;

(b) providing for social    welfare and reform or    the throwing open of Hindu    religious institutions    of a public character to all classes and sections of Hindus."

(Explanations I and II not extracted as unnecessary) Article 25 is an article of faith in the Constitution, incorporated in    recognition of    the principle that the real test of a true democracy is the ability    of even an insignificant minority    to find its    identity under    the country's Constitution.    This has to be borne in mind in interpreting Art. 25.

We see that the right to    freedom of conscience    and freely    to profess, practise    and    propagate religion guaranteed by Art. 25    is subject to    (1) public order, morality and health; (2) other provisions of Part III of the Constitution; (3) any law (a) regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice; or    (b) providing for social welfare and reform or the throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus. Thus while on the one hand, Art. 25(1) itself expressly subjects the right guaranteed by it to public order, morality and health and    to the other provisions of Part III, on the other hand, the State is also given the liberty to make a law to regulate or restrict any economic, financial, political or other secular activity which may be associated with    religious practise and to provide    for social welfare    and reform, even if    such regulation, restriction or provision    affects the right guaranteed by Art. 25(1). Therefore, whenever the Fundamental Right to freedom of conscience and to profess, practise and propagate religion is invoked, the act complained of as offending the Fundamental Right must be examined to discover whether such act is to protect public order, morality    and health, whether it is to give effect to the other provisions of Part III of the Constitution or whether it is authorised by a law made to    regulate or restrict any economic, financial, political    or secular activity which    may be associated with religious practice or to provide for social welfare and reform. It is the duty and function of the Court    so to do. Here again as mentioned in connection with    Art. 19(2) to (6), it must be a law having the force of a    statute and not a mere executive or a departmental instruction. We    may refer here to    the observations of Latham, CJ. in Adelaide Company of Jehovah's Witnesses v. The Commonwealth    (supra), a decision of    the Australian High    Court quoted by Mukherje, J. in the Shrirur Mutt case. Latham, CJ. had said:

"The    Constitution protects    religion within a community organized under a Constitution, so that the continuance of such protection    necessarily assumes the    continuance of the community so organized. This view makes it possible    to reconcile religious    freedom with ordered government. It does not mean that the mere fact that the Commonwealth Parliament passes a law in the belief that it will promote the peace, order and good government of Australia precludes    any consideration by a court of the question whether or not such a law infringes religious freedom. The final determination of that question by Parliament would remove    all reality from the Constitutional guarantee. That guarantee is intended to limit the sphere of action of the    legislature.    The interpretation and application of the guarantee cannot, under our    Constitution,    be left to Parliament, If the - guarantee is to have any real significance it must be left to the courts of justice to determine    its meaning and to    give effect to it by declaring the invalidity of laws which infringes it and by declining    to enforce them.    The courts will therefore    have    the responsibility of determining whether a particular law can fairly be regarded, as a law to protect the existence of the community, or whether, on the other hand, it is a law "for prohibiting the free exercise of any religion." The word    "for" shows that the purpose of    the legislation    in question may properly    be taken into account in determining whether or not it is a law    of the prohibited character."
What Latham, CJ. has said about the responsibility of the court accords with what we have said about the function of the court when a claim to the Fundamental Right guaranteed by Art. 25 is put forward.

The meaning of the expression 'Religion' in the context of the    Fundamental Right to freedom of conscience and the right to profess, practice    and propagate religion, guaranteed by    Art. 25 of the Constitution, has    been explained in the well known cases of The Commissioner, Hindu Religious Endowments, Madras v. Sri    Lakshmindra Thirtha Swamiar of Sri    Shirur    Mutt,    [1954]    SCR 1005 Rati Lal Panachand Gandhi v. The State of Bombay & Ors., [1954] SCR 1055 and S. P.    Mittal Etc. Etc. v. Union of India & Ors, [1983] SCR 729. It is not necessary for our present purpose to refer to the exposition contained    in these judgments except to say that in the first of these cases Mukherjea, J. made a    reference to "Jehova's Witnesses" and appeared to quote with approval the views of Latham, CJ., of    the Australian High Court in Adelaide    Company v.    The Commonwealth (supra) and those of the American Supreme Court in West    Virginia State    Board    of Education v. Barnettee (supra). In Ratilal's case we also notice that Mukherjea, J. quoted as appropriate Davar, J.'s following observations In Jarnshedji v. Soonabai, 23 Bomaby ILR 122:

"If this is the belief of the Community and it is proved undoubtedly    to be    the belief of    the Zoroastrian community,-a secular Judge is bound to accept that belief-it is not for him to sit in judgement on    that belief, he has no right to interfere with the conscience of a doner who makes a gift in favour of what he believes to be the advancement of his religion and the welfare of his community or mankind."
We do endorse the view suggested by Davar J's observation that the question is not whether a particular religious belief or practice appeals to our reason or sentiment but whether the belief is genuinely and conscientiously held as part of the profession or practice of religion. Our personal views and reactions are irrelevant.    If the belief is genuinely and    conscientiously held    it attracts    the protection of Art. 25    but subject,    of course, to    the inhibitions contained therein.

In Minersville School Dist. v. Gobitis    (supra)    the question arose    whether the requirement of participation by pupils and public schools in the ceremony of saluting the national flag did not infringe the liberty guaranteed by the 14th amendment, in the case of a pupil who re-

fused to participate    upon    sincere    religious grounds. Frankfurter, J.    great exponent    of the    theory of judicial restrain that he was speaking for the majority of the United States    Supreme    Court    upheld    the requirement regarding participation in the ceremony    of flag salutation primarily on the ground, "The wisdom of training children in patriotic impulses by those compulsions which    necessarily prevade so much of the educational process is not for our independent judgment ..... For ourselves, we might be tempted    to say that    the deepest patriotism is best engendered by giving unfettered scope to the    most crochety    beliefs.. But    the courtroom is    not the arena for debating issues of educational policy. It is not our    province to choose among    competing considerations in    the subtle process of securing effective loyalty to the traditional ideals of    democracy, while respecting at the same    time    individual idiosyncracics among    a people so diversified in racial origins and religious    allegiances so to hold would in effect make us the school board for the country. That authority has not been giving to this Court. not should we assume it."

Frankfurter, J's view, it is seen, was founded entirely upon his conception    of judicial restraint. In that very    case Justice Stone dissented and said, "It (the Government) may    suppress religious practices dangerous    to morals, and presumably those also which are    inimical to public safety, health and good order. But it is a long step, and one which I am unable to take, to    the position that Government may, as a supposed,    educational measure and as a means of    disciplining young, compel affirmations which violate their religious conscience."

Stone, J. further observed:

"The    very essence of the    liberty    which    they guaranteed is    the freedom of the individual from compulsion as    to what he shall think and what he shall say, at least    where the compulsion is to bear false witness to his religion"
It was further added:

"History teaches us that there have been but few infringements of personal liberty by the State which have not been    justified, as they are here, in the name of righteousness and the public good, and few which have not been directed, as they are now, had politically helpless manners."
We do not think that it is necessary to consider the case of Gobitis at greater length as the decision was overruled very shortly after it was pronounced by the same' court in West Virginia State    Board of Education v. Barnette (supra). Justices Black    and Douglas who had agreed with Justice Frankfurter in the Gobitis's case retraced their steps and agreed with Justice Jackson who gave    the opinion of    the court in West Virginia State Board of Education v. Barnette (supra). Justice Jackson in the course of    his opinion observed, It is    also to be noted that the compulsory flag salute and pledge requires affirmation of a belief and an attitude of mind. It is not clear whether the regulation contemplates that pupils forego any contrary convictions    of their own    and become unwilling converts to the prescribed ceremony or whether it will be acceptable if they simulate assent by words without belief and    by a gesture barran of meaning. It is now a commonplace that censorship or suppression of expression of opinion is tolerated by our    Constitution only when    the expression presents a dear and present danger of action of a kind the State is empowered to prevent and punish.    It would seem that    involuntary affirmation could be commanded only on even more immediate and    urgent grounds    than silence.    But here the power of compulsion is invoked without any allegation that remaining passive during a flag salute ritual creates a clear    and present danger that would justify an effort even to muffle expression. To sustain the compulsory flag salute we are required to say that a Bill of Rights which guards the individual's right to speak his    own mind, left it open to public authorities to compel him to utter what is not in his mind."

Justice Jackson referred to Lincoln's famour dilemma 'must a government of necessity be too strong for the liberties of its people, or too weak to maintain its own existence' and added, "It may    be doubted whether Mr. Lincoln would have thought    that the strength of government to maintain itself would be impressively vindicated by our confirming power of the state to expel a handful of    children from school. Such    over simplification, so handy in political debate, often lacks the precision necessary to postulates of judicial reasoning. If validly applied to this problem, the    utterance cited    would resolve every issue of power in favour of those in authority and would require us to override every liberty thought to weaken or delay execution of their policies.

Government of limited    power need not be anemic government.    Assurance that    rights    are secure tends to diminish fear and    jealousy of strong government, and by making us feel safe to live    under it makes for its better support. Without promise of a limiting Bill of Rights it is doubtful if our Constitution could have mustered enough strength to enable its ratification. to enforce those    rights today is not to choose weak government over strong government. It is only to adhre as a means of strength to individual freedom of mind in preference to officially    disciplined uniformity for which history indicates a disappointing and disastrous end."

Dealing with the argument that any interference with    the authority of the school Board would in effect make the court the School Board for the country as suggested by Justice Frankfurter, Justice Jackson said, "There are village tyrants as well    as village Hampdens, but    none who acts under color of law is beyond reach    of the    Constitution ..    We cannot, because of modest estimates    of our competence in such specialities as public    education, withhold the judgment    that history authenticates as    the function of this court when liberty is infringed." Justice Jackson ended his opinion with the statement "If there is    any fixed star in    our Constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters    of opinion or    force    citizens to confess by word or act their faith therein. If there    are any circumstances which permit an exception, they do not now occur to us.

We think    the action of the local authorities in compelling the    flag salute    and pledge transcends constitutional limitations on their power and invades the sphere of intellect    and spirit which    it is    the purpose of the First Amendment to    our Constitution to reserve from all official control."

Sheldon v. Fannin (supra) was    a case where    the pupils refused even to stand when the National Anthem was sung. We do not    have to    consider that situation in the present case since it is the case of the    appellants and    it is    not disputed that they have always stood up and they will always stand up respectfully when the National Anthem is sung.

Donald v.    Hamilton Board Education (supra) was again a case of    objection by Jehovah's witnesses to flag salutation and singing the national anthem. Gillanders, J.A., said:

"There is no doubt that the teachers and the school board, in the case now being considered, in good faith prescribed the ceremony of the    flag salute only    with the thought of    inculcating respect for    the flag and the    Empire    or Commonwealth of Nations which events of recent years have given more abundant reason than ever before to love and respect. If I were permitted to be guided by my personal views, I would find it difficult to understand how any well-disposed person could    offer objection to joining in such a salute on religious or other grounds. To me, a command to join the flag salute or the singing of the national anthem would be a command not to join in any enforced religious exercise, but, viewed in proper perspective, to join    in an act of respect for a    contrary principle, that is, to pay respect to a nation and country which stands for religious freedom, and the principle that people may worship as they please, or not at all."
"But, in considering whether or not such exercises may or should, in this case, be considered, as having devotional or religious significance, it would be misleading to proceed on any    personal views    on what such exercises might include or exclude."

After referring    to Jackson, J's opinion in West Virginia State Board of Education v. Barnette (supra) and some other cases, it was further observed, "For the Court to take to itself the right to say that the exercises here in question had no religious or devotional significance might well be for the Court to deny that very religious freedom which the statute is intended to provide. "

"It is urged that the refusal of the infant appellants to join in the exercises in question is disturbing and constitutes conduct injurious to the moral tone of the school. It is not claimed that the appellants themselves engaged in    any alleged religious ceremonies or observations, but only that they refrained from joining in    the exercises in    question ..............    To do    just that could not, I think be    viewed    as conduct injurious to    the moral tone    of the school or class."

We    are satisfied, in the present case, that    the expulsion of the three    children from    the school for    the reason that because of their conscientiously held religious faith, they do not join the singing of the national anthem in the morning assembly though they do stand up respectfully when the anthem is sung, is a violation of their fundamental right to freedom of conscience and    freely    to profess, practice and propagate religion.

Shri Vishwa Nath Iyer and Shri Potti, who appeared for the respondents    suggested that the appellants, who belonged but to    a religious    denomination could not claim-the Fundamental Right guaranteed    by Art. 25(1) of    the Constitution. They purpored to    rely upon a sentence in the judgment of this court in Jagdishwaranand v. Police Commissioner, Calcutta, AIR 1984 SC 51. The question in that case was whether the Ananda Margis had a fundamental right within the meaning of    Art. 25 or Art 26 to perform Tandava dance in public streets and public places. The Court found that Anand Marga was a Hindu religious denomination and not a separate religion. The court examined the question whether the Tandava dance was a religious rite or practise essential to the tenets of the Ananda Marga and found that it was not. On that    finding the court concluded that the Ananda Marga had no    fundamental right to perform Tandava dance in public streets and public places. In course of the discussion, at one place, there is found the following sentence:

"Mr. Tarkunde, Counsel for the petitioner had claimed protection of    Art. 25 of the Constitution, but in view of our finding    that Ananda Marga was not a separate religion. application of Art. 25 is not attracted."
This sentence appears to have crept into the    judgment by some slip. lt is not a sequitur to the reasoning of the court on any of the issues. In fact,    in the subsequent paragraphs, the    court has expressly proceeded    to consider the claim of the Ananda Marga    to perform Tandava dance in public streets pursuant to the right claimed by them under Art. 25(1).

We, therefore, find that the Fundamental Rights of the appellants under Art. 19(1)(a) and 25(1) have been infringed and they are entitled to be protected. We allow the appeal, set aside the judgment    of the High Court and direct    the respondent authorities    to re-admit the children into    the school, to permit them    to pursue their studies without hindrance and to facilitate the pursuit of their studies by giving them the necessary facilities. We only wish to add: our tradition teaches tolerance; our    philosophy preaches tolerance; our    constitution practices tolerance; let us not dilute it.

The appellants are entitled to their costs.

M.L.A. Appeal allowed.

Supreme Court of India - Equivalent citations: AIR 1992 SC 453, 1992 73 CompCas 201 SC, JT 1991 (4) SC 430, (1992) 2 MLJ 11 SC, 1991 (2) SCALE 1135, (1992) 1 SCC 160, 1991 Supp 3 SCR 1 - Bench: P Sawant, B J Reddy - Date of Judgmenrt: on 28 November, 1991

ORDER

1. These two appeals, Civil Appeal No. 1946 of 1980 filed by defendant 1 and Civil Appeal No. 1947 of 1980 filed by defendants 4 to 6, are against the decision dated February 8, 1980 of the Madras High Court. The main question that falls for consideration in both the appeals is whether the shareholders can among themselves enter into an agreement which is contrary to or inconsistent with the Articles of Association of the company.

2. The third defendant is a private limited company which all along had a total shareholding of 50. Before the joint family of the plaintiffs and defendants came to hold all the 50 shares of the company, the family was a minority shareholder holding 13 shares, the rest 37 shares being held by outsiders. In course of time, the family acquired the rest 37 shares and became the sole shareholder of the company. The family consisted of Baluswamy Naidu and Guruviah Naidu who were brothers, and each of the brothers held 25 shares in the company. The plaintiffs and defendants 1 and 2 and one Selvaraj are the sons of Baluswamy Naidu and defendants 4 to 6 are the sons of Guruviah Naidu. Baluswamy Naidu died on February 5, 1963 and Guruviah Naidu died on January 10, 1970. The plaintiffs alleged that in 1951 there was an oral agreement between Baluswamy Naidu and Guruviah Naidu that each of the branches of the family would always continue to hold equal number of shares, viz., 25 and that if any member in either of the branches wished to sell his share/shares, he would give the first option of purchase to the members of that branch and only if the offer so made was not accepted, the shares would be sold to others. Although on behalf of defendants, it was disputed that there was any such agreement entered into between the two brothers, the finding recorded by all the courts below is against the defendants. It is not in dispute that the Articles of Association of the company were not amended to bring them in conformity with the said agreement.

Contrary to the said agreement, the first defendant, i.e., son of Baluswamy Naidu sold the shares to defendants 4 to 6 who are the sons of Guruviah Naidu. Hence the plaintiffs who are Baluswamy's sons filed the present suit for (i) a declaration that the said sale was void and not binding upon the plaintiffs and the second defendant (who is also the son of Baluswamy Naidu but was joined as a pro forma defendant) and for (ii) an order directing defendants 1 and 4 to 6 to transfer the said shares to the plaintiffs and the second defendant and for (iii) a permanent injunction restraining defendants 4 to 6 from applying for registering the said shares in their names and from acting adversely to the interests of the plaintiffs and the second defendant on the basis of the transfer of the said shares.

3. The Trial Court decreed the suit by holding that the sale of the said shares was invalid and not binding on the plaintiffs and the second defendant, and directed both the first defendant and defendants 4 to 6 to transfer the said shares to the plaintiffs, and granted permanent injunction as prayed for. The appeals filed by the first defendant and defendants 4 to 6 were dismissed. In the second appeals filed by them the High Court held that the courts below had proceeded on a wrong basis. According to the High Court the suit was in effect one to enforce the agreement providing for pre-emption and the court was entitled to mould the reliefs on the facts proved in the case and accordingly the High Court modified the decree by directing substitution of the plaintiffs as shareholders in place of defendants 4 to 6. In other words, the High Court in terms held that (i) the sale of the shares by the first defendant in favour of defendants 4 to 6 was invalid and hence the plaintiffs and the second defendant became entitled to purchase the said shares, (ii) the agreement was binding on the company, and (iii) the company was bound in law to register the said shares in the plaintiffs' names.

4. Shri Parasaran appearing for defendants 4 to 6 in C.A. No. 1946 of 1980 contended that the agreement in effect imposed an additional restriction on the right to transfer the shares. The restriction was not envisaged by any of the Articles of Association. Hence it was not binding on any shareholder or a vendee of the shares from the shareholders. It was also unenforceable at law and, therefore, not binding on the company. Hence the sale of the shares by the first defendant to defendants 4 to 6 was not invalid and the High Court was wrong in directing the transfer of shares in favour of the plaintiffs. Shri Bhatt appearing for the first defendant (appellant in C.A. No. 1946 of 1980) contended that assuming that the sale of shares by the first defendant to defendants 4 to 6 was invalid in view of the agreement, the High Court could only have declared that the sale was invalid and it could not have further directed the transfer of shares in favour of plaintiffs. The first defendant could not be forced to sell the shares to the plaintiffs. Shri Krishnamurthy, on the other hand, contended that (i) the shareholders were bound by the agreement of 1951; (ii) the agreement was entered into to maintain the ownership of the company in the family and to ensure that the two branches of the family had an equal share in the management and profits and losses of the company; (iii) there was nothing in the Articles of Association which prohibited such agreement and (iv) the two branches of the family being party to the agreement, it was enforceable against them, and the courts have done nothing more than to enforce the agreement.

5. The basis of the judgment and decree of the High Court and of the judgments and decrees of the courts below is the alleged invalidity of the sale of the shares. It is therefore, necessary to understand the true position of law in this behalf. Section 3(iii) of the Companies Act (hereinafter referred to as 'the Act') defines private company to mean a company which by its Articles, restricts the right to transfer its shares, if any, and limits the number of its shares to 50 (excepting employees and ex-employees who were and are members of the company) and prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company. Section 26 of the Act provides that in the case of a private company limited by shares, such as the third defendant-company, there shall be registered with the Memorandum, Articles of Association signed by the subscribers of the Memorandum prescribing regulations for the company. Section 28 provides that the Articles of Association of a company limited by shares may adopt all or any of the regulations contained in Table A in Schedule I of the Act. Section 31 provides for alteration of the Articles by a special resolution of the company. Section 36 states that when the Memorandum and Articles of Association are registered, they bind the company and the members thereof. Section 39 provides for supply of the copies of Memorandum and Articles of Association to a member. Section 40 makes it mandatory to incorporate any changes in the Articles of Association in every copy of the Articles of Association. Section 82 defines the nature of shares and states that the shares or other interests of any member in a company shall be movable property transferable in the manner provided by the Articles of Association of the company.

These provisions of the Act make it clear that the Articles of Association are the regulations of the company binding on the company and its shareholders and that the shares are a movable property and their transfer is regulated by the Articles of Association of the company.

6. Whether under the Companies Act or Transfer of Property Act, the shares are, therefore, transferable like any other movable property. The only restriction on the transfer of the shares of a company is as laid down in its Articles, if any. A restriction which is not specified in the Articles is, therefore, not binding either on the company or on the shareholders. The vendee of the shares cannot be denied the registration of the shares purchased by him on a ground other than that stated in the Articles.

7. We may refer to certain authorities which reinforce the above proposition.

In S.P. Jain v. Kalinga Tubes Ltd. , it was also a case of a battle between two groups of shareholders led by P & L as they were named in the decision. In July 1954 these two groups who held an equal number of shares of the value of Rs. 21 lakhs, out of a total share capital of Rs. 25 lakhs, in the company which was then a private company, entered into an agreement with the appellant who was a third party and certain terms were agreed to. Various resolutions were passed by the company to implement the agreement. However, neither the Articles of Association were changed to embody the terms of the agreement nor the resolutions passed referred to the agreement. In 1956-57, the company desired to raise a loan from the Industrial Finance Corporation and as per the requirement of the Corporation, in January 1957 the company was converted into a public company and appropriate amendments for the purpose were made in the Articles. However, even on this occasion, the agreement of July 1954 was not incorporated into the Articles. Disputes having arisen, the matter reached the Court. The appellant claimed the benefit of the agreement of July 1954. It was held by this Court that the said agreement was not binding even on the private company and much less so on the public company when it came into existence in 1957. It was an agreement between a non-member and two members of the company and although for some time the agreement was in the main carried out, some of its terms could not be put in the Articles of Association of the public company. As the company was not bound by the agreement it was not enforceable.

In Re Swaledale Cleaners Ltd. (1968) 1 All ER 1132 it was held that it is well-established that a share in a company is an item of property freely alienable in the absence of express restrictions under the Articles. This view is reiterated in Tett v. Phoenix Property and Investment Co. Ltd. and Ors. 1986 2 BCC 99, 140.

In Chapter 16 of Gore-Browne on Companies (43rd Ed.) while dealing with transfer of shares it is stated that subject to certain limited restrictions imposed by law, a shareholder has prima facie the right to transfer his shares when and to whom he pleases. This freedom to transfer may, however, be significantly curtailed by provisions in the Articles. In determining the extent of any restriction on transfer contained in the Articles, a strict construction is adopted. The restriction must be set out expressly or must arise by necessary implication and any ambiguous provision is construed in favour of the shareholder wishing to transfer.

In Palmer's Company law (24th Ed.) dealing with the 'transfer of shares' it is stated at page 608-9 that it is well-settled that unless the Articles otherwise provide the shareholder has a free right to transfer to whom he will. It is not necessary to seek in the Articles for a power to transfer, for the Act (the English Act of 1980) itself gives such a power. It is only necessary to look to the Articles to ascertain the restrictions, if any, upon it. Thus a member has a right to transfer his share/shares to another person unless this right is clearly taken away by the Articles.

In Halsbury's Laws of England (4th Ed.) para 359 dealing with 'attributes of shares' it is stated that "a share is a right to a specified amount of the share capital of a company carrying with it certain rights and liabilities while the company is a going concern and in its winding. The shares or other interest of any member in a company are personal estate transferable in the manner provided by its articles and are not of the nature of real estate".

Dealing with 'restrictions on transfer of shares' in Penington's Company Law (6th Ed.) at page 753 it is stated that shares are presumed to be freely transferable and restrictions on their transfer are construed strictly and so when a restriction is capable of two meanings, the less restrictive interpretation will be adopted by the court. It is also made clear that these restrictions have to be embodied in the Articles of Association.

8. Against the background of the aforesaid legal position, we may now examine the Articles of Association of the third defendant-company. It is not disputed before us that the only Article of the Articles of Association of the company which places restriction on the transfer of shares is Article 13. The Article reads as follows:

13. No new member shall be admitted except with the consent of the majority of the members on the death of any member of his heir or heirs or nominee, shall be admitted as member. If such heir, heirs or nominee is/are unwilling to become a member, such share capital shall be distributed at par among the members equally or transferred to any new member with the consent of the majority of the members.

The aforesaid Article in effect consists of three parts. The first part states that no new member shall be admitted except with the consent of the majority of the members. The second part states that on the death of any member, his heir or heirs or nominee/s shall be admitted as members. The third part states that if such heir or heirs or nominee/s is/are unwilling to become member/s, the share capital of the deceased member shall be distributed among the existing members equally or transferred to any new member with the consent of the majority of the members. It is, therefore, clear that even a new member can be admitted provided the majority of the members are agreeable to do so. It also appears from the word "nominee" that a living member has a right to nominate even a third party to succeed to him as a member on his death. Further the restriction on transfer by way of a right of pre-emption which is incorporated in the third part of the Article is only in respect of the shareholding of the deceased member and not of a living member. Whereas the heirs/nominees are as a matter of right entitled to become members if they are willing to do so, the restriction on the transfer of shares steps in only when they are unwilling to become members. The restriction states that in the latter event the shares of the deceased member shall be first distributed among the existing members equally and if they are to be transferred to any new member, it would be done so with the consent of the majority of the existing members. It may be noticed from this restriction, that firstly there is no limitation on the transfer of his shares by a living member either to the existing member or to a new member. The only condition is that when the transfer is made to a new member, it will have to be approved by the majority of the members. The transfer may be to any existing member whether he belongs to one or the other branch of the family and in such case there is no need of a consent of the majority of the members. The Article in fact envisages the distribution of the shareholding of the deceased member (and not of the living member) equally among the members of both branches of the family and not of any one of the branches only. Even the shares of the deceased member can be transferred to any new member when his heirs/nominees are not willing to become members. However, this can be done only with the consent of the majority of the members.

9. Hence, the private agreement which is relied upon by the plaintiffs whereunder there is a restriction on a living member to transfer his shareholding only to the branch of family to which he belongs in terms imposes two restrictions which are not stipulated in the Article. Firstly, it imposes a restriction on a living member to transfer the shares only to the existing members and secondly the transfer has to be only to a member belonging to the same branch of family. The agreement obviously, therefore, imposes additional restrictions on the member's right to transfer his shares which are contrary to the provisions of the Article 13. They are, therefore, not binding either on the shareholders or on the company. In view of this legal position, the finding recorded by the courts below that the sale by the first defendant of his shares to defendants 4 to 6 is invalid as it is in breach of the agreement, is erroneous in law. In view of our above finding, it is unnecessary to go into the question whether the High Court was justified in directing the transfer of shares by defendants 4 to 6 to the plaintiffs even if its finding that the sale was invalid was correct.

In the circumstances, the appeals are allowed, the decree of the High Court is set aside and the plaintiffs' suit is dismissed with costs.

Company Law Board - Kinetic Engineering Ltd. vs Sadhana Gadia And Ors. on 14 October, 1991 - Bench: S Upasani, C Mehta

ORDER

1. This matter arises out of four references filed by Kinetic Engineering Limited (hereinafter referred to as "the company") in pursuance of the provisions of Clause (c) of Sub-section (4) of Section 22A of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as "the SCR Act"), seeking confirmation by this Bench in regard to the opinion formed by the board of directors of the company in its meeting held on April 14, 1989, to refuse the registration of transfer of shares in favour of various transferees as detailed in annexure "A". Since a common question of law is involved, all the above four references are being disposed of by this common order.

2. Mr. Rakeshkumar Malani, Mrs. Shashi Malani, Mr. Damodar Prasad Malani and Mrs. Manju Malani are holders of 50 equity shares of the company and, out of the said 50 shares, eight equity shares are proposed to be transferred to the various transferees as mentioned in annexure "A". The board noted that the transferees in the above group are not holding any shares at present. The board, after having considered the matter in detail, came to the conclusion that acceptance of an application for transfer of less than 50 equity shares of the company, unless it is covered by one of the exceptions mentioned in Article 47A of the articles of association of the company, is not in the interest of the company as the cost of service to such shareholder would far exceed the amount of dividend payable on such shares and such costs are disproportionate to the face value and the present market value of the shares. The board also viewed that such transfers are also not in the interest of the investor as it would create odd lots for which the market quotations are less than the normal quotations and hence such transfers are also not in the bona fide interest of the investors and appears to be with ulterior motive. The board also noted that the Government and stock exchanges have prescribed a minimum lot of 50 equity shares for shares having a face value of Rs. 10 each ; in refusing such transfers, the balance of convenience is in favour of the company. The board also noted that the provisions of Section 36 of the Companies Act, 1956, according to which the articles constitute an agreement between the members and the company and the provisions of the same are binding on the transferees of shares also. The board of directors having considered all the above facts formed an opinion in good faith that the approval of the board would be contrary to the provisions of Article 47A of the articles of association ; and hence contrary to law and, accordingly, decided to refuse the transfer.

3. Respondent No. 1, in her written submissions, has submitted that the securities were lodged with the petitioner-company on January 27, 1989, which have been duly received by the company on February 1, 1989, and the company ought to have filed the reference under Section 22A(4)(c) on or before April 1, 1989 ; whereas the company has filed the reference only on May 15, 1989, which is after a period of about three and half months from the date of lodgment of the securities and the same is much beyond the period of two months prescribed in Section 22A(4) of thfr SCR Act and hence the petition should be rejected by this Bench as not maintainable and as time-barred. It is further submitted that the transfer of securities is not in contravention of any of the provisions of law though the company ought to have complied with the provisions of the listing agreement executed by it with the Stock Exchange, Bombay, and transfer effected within one month of the date of its lodgment. It is further submitted that the petitioner-company has amended its articles without the prior approval of the stock exchange and hence the altered Article 47A in contravention of the said agreement, is void ab initio. The definition of "member" under the Companies Act, 1956, does not require that each member should hold a certain minimum number of shares nor does the said Act prohibit any person from holding one or more shares which are less than market lot. It is further submitted that the transactions for spot delivery could be entered into without the assistance of the members of stock exchange and hence even if the rules, regulations and byelaws provide for any number as market lot, the same will not apply to any such transactions. The securities are goods, as defined in the Sale of Goods Act and are, therefore, movable properties. It is the fundamental right of every citizen of India to deal with movable property as he wishes. It is further submitted that the costs incurred in servicing the shareholders are insignificant when compared with the total revenue of the company. As to what is in the interest of the investors, the investor himself is the best judge and not the board of directors.

4. Respondent No. 4 in his written submissions has pointed out that a listed company cannot refuse transfer of shares even if it is below the specified limit prescribed under the articles of association in violation of the stock exchange listing requirements, according to the pronouncement of various stock exchanges in similar cases. It is further represented that as per the order passed by the Bombay High Court in A.C. Shah v. Stock Exchange (O. O. C. J. Appeal No. 914 of 1985 in W. P. No. 1723 of 1985), it was held that the resolution passed by the company lays down restrictions on trading units and not on transfer of shares.

5. Mr. A.R. Amin, advocate and partner of Kanga and Co., advocates, solicitors and notary, accompanied by Shri T.N. Subramanian and R. Vaidya, advocates along with Shri R. Loonker, secretary of the company, appeared on behalf of the petitioner-company and brought to the notice of the Bench the provisions of Article 47A of the articles of association of the company which reads as under :

"47A. The directors shall not accept an application for transfer of less than 50 equity shares of the company provided, however, that this condition shall not apply to--

(i) The transfer of equity shares made in pursuance of any statutory provisions or an order of the court of law ;

(ii) The transfer of the entire equity shares by a shareholder holding less than 50 equity shares by a single transfer to a single or joint names;

(iii) The transfer of equity shares of shareholders holding less than 50 shares to one or more transferees, whose holding in the company will not be less than 50 shares each after the said transfer."

6. During the course of hearing, Mr. Amin submitted that the constitutional validity of the provisions of Section 22A of the SCR Act has already been challenged by way of Writ Petition No. 484 of 1990 in the case of Bajaj Tempo Ltd. and as such it would be more appropriate that the court's verdict on the subject-matter may be awaited. It was pointed out to him that since there is no specific provision under the rules to keep aside the case or stay the proceedings till the outcome of the case pending before the court, the matter should be proceeded with accordingly. Mr. Amin clarified that the shares which were lodged on February 1, 1989, were duly returned to the transferees on February 24, 1989, pointing out the provisions of Article 47A of the articles of association and the same were relodged on March 11, 1989, and the same were duly considered in the Board meeting held on April 14, 1989, and reference was duly filed on May 15, 1989, before the Company Law Board.

7. Mr. Amin further argued that, in terms of Section 36 of the Companies Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles. He emphasized that in view of the specific provisions under the Companies Act, the provisions of the articles of association are binding on all its members and as such the company has rightly refused the transfer and registration of shares which put restriction for transfer of shares below, but for the circumstances indicated in the article itself. He further argued that, under Article 13(3)(a) of the Constitution of India, "law" includes any Ordinance, Order, bye law, rule, regulation, notification, custom or usage having in the territory of India the force of law. According to Mr. Amin, the articles of association which is an agreement between the company and its members is a contract and is binding on all the parties concerned which relates to regulation of the affairs of the company and, therefore, in terms of the aforesaid Article 13(3)(a) of the Constitution of India, the articles of association would assume the force of law and would be binding on all concerned parties. He further argued that, accordingly, the petitioner company's case is covered under Clause (b) of Sub-section (3) of Section 22A of the SCR Act namely "that the transfer of the security is in contravention of any law". He further submitted that the transfer of shares is for mala fide purpose and not for bona fide investment. He further argued that, having considered all the facts and circumstances of the case, the board of directors of the company, in the interest of the company and its members, have rightly formed an opinion in good faith that such transfer ought to be refused on the grounds mentioned in Clause (b) of Sub-section (3) of Section 22A of the SCR Act and submitted that the board's opinion formed in good faith and in accordance with law should be confirmed.

8. Mr. Kishore Nagda, company secretary, appearing for respondent No. 1, while reiterating the written submissions referred to earlier, argued that the provisions of Section 22A of the SCR Act which provides for free transferability and registration of transfers of listed securities of companies would override the provisions of articles of association of the company. Any provision which is contrary to such provisions is not binding on the company or its members and, accordingly, submitted that there is no force in the contentions puts forth by the company that all the shares to be traded on stock exchanges should be in marketable lots and the articles of association which put reasonable restrictions on the transfer of shares is not violative of the provisions of Section 22A of the SCR Act. He concluded his arguments stating that the shares ought to have been transferred in favour of transferees and the Company Law Board should issue directions to the petitioner-company to register the impugned shares.

9. The question for consideration is whether the articles of association can have the force of law within the meaning of Article 13(3)(a) of the Constitution of India and would give power to the board of directors of the company to refuse the transfer of shares irrespective of the specific provisions of Section 22A of the SCR Act regarding free transferability and registration of shares or securities. The provisions of the articles are binding on the company with reference to members and vice versa to the extent they have signed the contract. But the question arises whether any provision in the articles which is violative of the provisions of any statute can be enforced. Every incorporated company has its own memorandum and articles of association. The memorandum contains the fundamental conditions upon which alone the company is allowed to be incorporated. These are the conditions introduced for the benefit of the creditors, and the outside public, as well as of the shareholders. The articles are for the internal regulations of the company. Articles cannot alter or vary that which would be the result of the memorandum standing alone. The memorandum must prevail where its object is clear and the articles should not be so construed as to nullify a provision in the memorandum. Bye-laws of a company are framed in order to carry out the provisions contained in the articles of association themselves. Bye-laws are subordinate to the articles of association and the articles of association are subordinate to the memorandum. Memorandum and articles of association are statutory terms of a contract governing the relationship between the company and the shareholders. Articles of association are not only a contract between the company and its members but they also constitute a contract between the members to regulate their rights inter se. However, this does not mean that either the articles of association or the memorandum have the force of law and will be binding on every member of the society. Articles of association are essential for internal management of the company and the memorandum defines the powers of the company as well as those of the directors. In view of this, it is very clear that if any provision of the articles or the memorandum is contrary to any provisions of any law, it will be invalid ab initio. Moreover, in Co-operative. Central Bank Ltd. v. Additional Industrial Tribunal [1970] 40 Comp Cas 206 ; AIR 1970 SC 245, it has been held that bye-laws that can be framed by co-operative societies, under the Co-operative Societies Act are similar in nature to the articles of association of a company incorporated under the Companies Act and such articles of association have never been held to have force of law or statute. Thus, we do not accept the contention of learned advocate that the articles of association can be treated on par with the provisions of the law and the company was right in rejecting the registration of transfer of shares on the basis of provisions in the articles of association though they were contrary to the provisions applicable to listed companies under Section 22A of the Securities Contracts (Regulation) Act. Section 22A of the SCR Act provides for free transferability and registration of the shares or the listed securities of companies and the board of directors can refuse registration of transfer of shares only on any of the three grounds enumerated in Clauses (b), (c) and (d) of Sub-section (3) of Section 22A of SCR Act. The petitioner-company's case is that since transfer of less than 50 shares under circumstances other than those enumerated in Article 47A of the articles of association is prohibited, the board of directors have rightly refused the registration of transfer of shares. Since there is a specific provision which seeks free transferability and registration of transfers of listed securities, according to us any provisions which puts any restriction on the free transferability of shares would be a negation of the expressed provisions of law and would be self-defeating.

10. In view of the foregoing, we hereby direct pursuant to the provisions of Sub-section (7)(a) of Section 22A of the SCR Act, that the transfer of shares involved in these four references, which are the subject-matter of this order, shall be registered by Kinetic Engineering Limited within ten days from the date of receipt of this order.

11. No orders as to costs.

Equivalent citations: 1971 AIR 422, 1971 SCR (2) 483 - Bench: Shah, J.C. - Citation: 1971 AIR  422 - 1971 SCR  (2) 483 - 1971 SCC  (1) 50 - Date of Judgment:25/09/1970

Act:
Companies Act (7 of 1913)-Fully paid up share-Forfeiture of- Effect-Sale of forfeited share-If illegal-Right of member to proceeds of sale-Indian Contract Act (9 of 1872), s. 74- Scope of.

Headnote:
Under the scheme of the articles of association of the Calcutta Stock Exchange Association Ltd., the Committee is authorised under art. 21 to expel or suspend a member on the ground inter alia that he refused to abide by the decision of Committee in any matter which is under the articles or under the bye-laws referred to the Committee. Under art. 22, a member declared a "defaulter" because he fails to fulfil any engagement between himself and any other member within six months from the date on which he has been declared a defaulter ceases to be a member of the Exchange automatically. Upon his ceasing to be a member and upon a resolution being passed by the Committee expelling a member his share stands forfeited. The share so forfeited is deemed to be the property of the Exchange. Such forfeiture involves the extinction of all interest in and also all claims and demands against the Exchange in respect of the share and all other rights incidental to the share, but, not the liability of the erstwhile member to discharge his liabilities to the Exchange. But the Committee must sell, reallot or otherwise dispose of the share for the satisfaction of the debts, which may then be due and owing by the defaulter to the Exchange or to any of its members arising out of transactions or dealings in stocks and shares. The net proceeds of the sale shall be applied towards the satisfaction of the debts, liabilities or engagements of the shareholder and the residue, if any, paid to the member or his legal representatives.

The appellant failed to carry out a direction to pay a certain sum arising out of a share transaction and the Committee after notice, declared him a defaulter. Six months later, after notice to the appellant, the Committee resolved that the share standing in his name shall be forfeited to the Exchange and that the appellant be expelled from the membership of the Exchange. The Exchange thereafter disposed of the 'share for Rs. 55,000. The appellant challenged the action taken by the Exchange but the suit was dismissed.

In appeal to this Court, HELD : (1) It is not necessary that a resolution expelling a member and a resolution declaring him a defaulter should both be passed before his share is forfeited by the Exchange. The word and is used to indicate an alternative and does not make the two conditions cumulative, because, it would lead to the anomalous result that a member would have to be expelled by the Committee under art. 21 and would also automatically cease to be a member under art. 22. [490 A-C] Surajmall Mohta v. Ballabhdas Mohta, I.L.R 63 Cal. 531, approved.

484 In any event, in the present case, a resolution declaring the appellant a defaulter was passed and six months later the appellant was expelled from the membership of the Exchange and it was resolved that his share shall stand forfeited. [490 C-D]

(2)(a) Regulation 24 in Table A in the First Schedule to the Companies Act, 1913, provides for the exercise of the power to forfeit a share when there is default in paying calls, but no inference follows therefrom that the share of a member could be forfeited only for non-payment of a call made in respect of a share which was not fully paid up. Subject to the provisions of the Companies Act a company and its members are bound by the Provisions contained in its articles of association. The Articles regulate the internal management of the company and define the powers of its officers. In the absence of any provision contained in the Act which prohibits a company from forfeiting a share for failure on the part of a member to carry out an undertaking or engagement the articles of a company which provide that in certain events membership rights of a shareholder including his right to the share will be forfeited are binding. There' is no provision the Indian Companies Act 1913, which restricts the exercise of the right of the Exchange to forfeit shares for non-payment of a call only, and the articles of the Exchange expressly provide that in the event of a member failing to carry out the engagement and in ,the conditions specified therein his share shall stand forfeited. [492 A-E]

(b) Under art. 27, the terms of which are mandatory, the shares forfeited to the Exchange must be re-allotted or otherwise disposed of : it cannot be retained by the Exchange. A forfeited share is merely a shake available to the company for sale and remains vested in it for that pur- pose only. By forfeiting a share pursuant to the authority of the articles of association no reduction of capital is achieved. [491 F, H; 492 A]

Therefore, arts. 22, 24, 26, 27 and 29 relating to forfeiture of shares are valid. [492 D-E] Sri Gopal Jalan & Co. v. Calcutta Stock Exchange Association Ltd., [1964] 3 S.C.R. 698, followed.

Calcutta Stock Exchange Association Ltd. v. S. N. Nundy & Co. I.L.R. [1950] 1 Cal. 235, approved. (3) There is nothing in the procedure followed which rendered the forfeiture of the appellant's share illegal. The appellant had ample notice of the proceedings and the orders were not made against him contrary to rules of natural justice. [493 C]

(4)(a) Under its articles the Exchange has authority to sell the share and to appropriate the sale proceeds towards satisfaction of the debts, liabilities or engagements. But the balance of the amount remaining due after satisfying the liabilities of the appellant did not remain the property of the Exchange. The appellant was entitled to the amount. This is expressly provided for in art. 33. The expression used in art. 29 'the forfeiture shall involve extinction of all interest' is subject to the rights as by the articles saved and art. 33 saves the defaulting share-holder's right lo the balance remaining with the Exchange.[493 D-G]

(b) Even assuming that arts. 24 and 31 reserve to the Exchange two distinct powers-the power to forfeit and the power to exercise a lien, and that art. 33 only applies to a sale in enforcement of a lien and not to a sale after forfeiture, the balance on hand after satisfying the liability of the defaulter must still be returned to the defaulter, under s. 74 of the Contract Act. The power of the Exchange to forfeit the shares arises out of the articles and its source is in contract. On the principle underlying s. 74 of the Contract Act the Exchange had no right to hold, out of the sale proceeds of the share, any amount in excess of the amount due to it or to its members. [493 H; 494 A-B] Fateh Chand v. Balkishan Das, [1964] 1 S.C.R. 515, followed. (c) The legal theory of forfeiture is that a share forfeited is only taken over by the company with the object of disposing of it to satisfy its claims to enforce which the share was forfeited and all other obligations arising against him out of his membership.

If the company is per- mitted to retain the balance of the amount after satisfying the debts, liabilities and engagements of the share-holder, the transaction would not be different from one purchasing the share of the defaulting shareholder for a value equal to the amount of his obligation and that would be illegal. [495 E-H]

JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1626 of 1966. Appeal from the judgment and decree dated July 7, 8, 1964 of the Calcutta High Court in Appeal from Original Decree    No. 143 of 1960.

R. B. Datar, for the appellant.

B. Sen, N.    R. Khaitan and B. P. Maheshwari, for respondent.

The Judgment of the Court was delivered by- Shah, J.-Naresh Chandra Sanyal was the holder of a fully paid-up    share    of the Calcutta Stock Exchange    Association Ltd.hereinafter    called the Exchange'.    As a member of    the Exchange he was authorised to carry on business as a broker in shares, stocks and securities in the hall of    the Exchange. In    December 1941 Sanyal purchased    one hundred shares    of the Indian    Iron &    Steel    'Company Ltd.    from Johurmull Daga    & Company, but did not arrange to    take delivery of the shares on the due date.    Johurmull Daga    and Company    sold the shares pursuant to the authority given to them by the Sub-Committee of the Exchange. The    transaction resulted in a    loss of Rs. 438/10/-.    The Sub-Committee directed Sanyal to pay the amount due by him, but he failed to carry out that direction.

On January 7, 1942 the complaint of Johurmull Daga & Company was referred to the Full Committee of the Exchange. Sanyal failed    to pay the amount directed to be paid by him and he was by    resolution dated February 19, 1942    declared a defaulter. On    September 1, 1942, at a meeting at which Sanyal    was present, the Full Committee resolved that    the share standing in his name be forfeited to the Exchange with effect    from September 1, 1942 and that Sanyal    be expelled from the membership of the Exchange. 436Sup.Cl/71 48 6 Sanyal    then instituted an action in    the High Court of Calcutta on its original side claiming a declaration    that the articles of the Exchange providing for "forfeiture of a fully paid up share were ultra vires and illegal" and    that "particularly Arts. 21, 22. and 24 were invalid"; that    the share held by him had not been "properly forfeited" by    the Exchange and that forfeiture of the share was    "irregular, void and inoperative and was not binding upon him" He    also claimed    an order that he be restored to the membership of the Exchange and that the share register be rectified accordingly. In the alternative Sanyal claimed a decree for Rs. 55,0001- being the value of the share, or in any event to the surplus of the sale proceeds after "liquidating    the debts due by him to the Exchange." The suit was resisted by the Exchange.    The Trial Court dismissed the suit.    In appeal    under the Letters Patent the decree was confirmed. With special leave Sanyal has appealed to this Court in forma pauperis.

The relevant Articles of Association of the Exchange    are these Art. 21-"The Committee shall have power to expel or suspend any member or if being    firm any member or authorised assistant of the firm in any of the events following (6) If    the member or if being a firm    any member or authorised assistant of the    firm refuses to abide by the decision of    the Committee    in any matter    which    under these articles or under the Bye-laws for the    time being in    force    is made    the subject of a reference to the Committee.

Provided    always    that in every case arising under the provisions of sub,-section (5), (6), (7) and (8) of this Article no resolution    for the expulsion of a member or if being a    firm any member or authorised assistant of the firm shall be    valid unless passed by    a majority consisting of not less than two-thirds of the members    of the    Committee at    a meeting specially    convened for the purpose and at which meeting not less than two thirds of    the members    of the    committee at    a meeting specially    convened for the purpose and at which meeting not less than seven members of the Committee shah be present."

4 8 7 Art. 22-"Any member who has been    declared a defaulter    by reason of his failure to fulfil any engagement between himself and any other member or members and who fails to fulfil such engagements within six months from the    date upon which he has been so declared a defaulter shall at the expiration of such period of    six calendar    months automatically cease to be a member."

Art. 24-"Upon any member ceasing to be a member under the provisions of    article 22 hereof and upon any resolution being passed by the Committee expelling any member under    the provisions of Article 21 hereof or upon    any member being adjudicated insolvent the share held by    such member shall ipso facto be forfeited."

Art. 27-"Any share so    forfeited shall be deemed to be the property of the    Association, and the Committee shall sell, re-allot,    and otherwise    dispose of the same in such manner to the best advantage for the satisfaction of all debts which, may then, be due and owing either to the Association or any of its    mem- bers arising out of transactions or dealings in stocks and shares."

Art. 28-"Any member whose share has been so forfeited    shall notwithstanding be liable to pay and shall forthwith pay to the Association all moneys owing by the member to    the Association at the time of the forfeiture together with interest thereon, from the    time of forfeiture until payment at 12 percent per annum and the committee may enforce the    pay- ment thereof, without    any deduction    or allowance for the value of the share at    the time of forfeiture."

Art. 29-"The forfeiture    of a    share shall involve the extinction of all interest in and also of    all claims and demands    against    the Association in respect of the share, and    all other rights incidental to the share. except only such of those rights as by these Articles expressly saved."

Art. 31-"The Association shall have a first and paramount lien upon the share registered in the name of each member and upon    the proceeds    of sale thereof for    his debts, liabilities and engagements.

Art. 32-"For the purpose of enforcing such hen the Association    may sell the share subject thereto in such manner as, they think fit. Art. 33-"The nett proceeds of any such    sale shall be applied in or towards satisfaction of the debts, liabilities, or    engagements, residue (if any) paid to such    member,    his executors, administrators, committee, curator or other representatives."

The relevant bye-laws of the exchange are: "Settlement of    Disputes.-All    disputes, complaints and claims between by and against members shall, on the application of either party, be decided by the Committee or by a Standing or Special Sub-Committee appointed by the Committee for the purpose. In the event of the matter being decided by the Committee the decision shall be, final and binding    upon all members concerned but any member aggrieved with the decision of the Standing or Special Sub-Committee may, within seven days of    such decision being given, appeal to the Committee whose decision shall be final. In the event of any member or members refusing, neglecting or failing to observe, carry out or comply with any decision of the Committee,-or if no appeal is preferred, with the decision of    the Standing or Special Sub-Committee, such member or members so in default shall be dealt    with by the Committee under the rules,    regulations and/or by laws of the Association for the time being in force."

Bye-law 13-"Defaulters.--Any member who shall fail to pay any subscription or other moneys due by him to the Association on due date, or who shall fail-to fulfil any    engagement between himself and another member or members may be declared a 'defaulter' by the Committee and on such declaration his name shall be posted as a 'defaulter' on the notice board of the Association    and so    long as the    name remains so posted he shall not be at liberty to exercise any of the privileges of member- ship."

Under the scheme of the Articles of Association of the    Ex- change,    the Committee is authorised to expel or suspend a member    on the ground, inter alia, that he refuses to abide by the    decision of the Committee in any matter which is under the Articles or under the Bye-laws referred to    the Committee. A person declared a "defaulter" because he fails to fulfil any engagement between himself and    any other member or members within six months from the date on which he has been declared a defaulter, ceases to be    a member of the Exchange and his share    also stands forfeited. The share    so forfeited is deemed    to be    the property of the Exchange. But the Committee must sell,    re- allot or otherwise dispose of the share for satisfaction of the debts which may then be due and owing by the defaulter to the Exchange or to any of its members arising out of transactions or dealings in stocks and shares. Forfeiture of a share involves extinction of all interest in and    also of all claims and demands against the Exchange in respect of the share and all other rights incidental to the share,    but not the liability of the. erstwhile member to discharge    his liabilities to the Exchange. The Exchange has a first    lien upon the share of a member and upon the proceeds of    sale thereof for his debts and liabilities, and in enforcement of the lien, the Exchange may sell the share. The net proceeds of the share subject to the lien it sold will be applied in or towards satisfaction of the debts, liabilities    or engagements of the shareholder and the residue, if any, paid to such member, his executors,    administrators, committee, curator or other representatives.

In this appeal counsel for Sanyal contended, that under the Indian Companies Act, 1913, a fully paid up share cannot be forfeited    for failure to carry out any engagement by    the shareholder other than an engagement to pay a call made by the Company to    pay unpaid capital;

that the    procedure followed by the    Sub-

Committee    of the Exchange was irregular in that Sanyal had no notice of the    meeting of the Committee to declare him a defaulter; that the Committee had no authority under    the Articles of Association to direct sale of    the share; and that in any event Sanyal was entitled to    the balance remaining on hand with the Exchange after satisfying his debts, liabilities    and engagements under the Articles of Association. For failure to abide by the decision of the Committee in respect    of his liability to pay the amount of loss due to Johurmull Daga & Company Sanyal was declared a defaulter, and when he continued to remain a defaulter for six months he was by resolution of the Full Committee expelled from the membership of    the Exchange.    The Full Committee    also resolved to forfeit his share.. The Exchange thereafter disposed of the share for Rs. 55,000/-.    The argument raised by counsel for Sanyal that a member of the Exchange forfeits his share only if a resolution expelling him and a resolution declaring him a defaulter are passed is without substance. The conductive "and" between the first    two clauses    of Art. 24 is used to indicate an Alternative,    and does not make the two conditions cumulative. We agree    with the observations of Panckridge, J., in Surajmall Mohta v. Ballabhdas Mohta(1) that Art. 24 "is carelessly drawn, because, on its literal application, before his share could be forfeited, a member would both have to be expelled by the Committee under article 21 and automatically cease to be a member    under    article    22--Clearly this cannot be    the intention of the article and it is obvious that by a slip, 'and' has been substituted for "or"."

In any event the Full Committee passed on February 19,    1942 ,a resolution    declaring the appellant    a defaulter.    The appellant did not carry out his engagements for a period of six months there, after. By resolution dated September 1, 1942 at a meeting of the Full Committee the appellant    was expelled from    the membership of the Exchange    and it    was resolved that his share shall stand forfeited. There is no provision in the Indian Companies    Act, 1913, which restricts the exercise of the tight of the Exchange to forfeit    :share-,, for    non-payment of a call    only.    The Indian    Companies Act, 1913, made no provision    relating to forfeiture of    shares.    By s. 17(2) of the Act, a company could adopt the regulations contained in Table A in    the First Schedule    but the Company was not bound    to do    so. Regulations 24 to 30 of Table A dealt with the power and the procedure relating to forfeiture of shares. Regulation    24, it is true, provided for exercise of the power to forfeit a share when there was    default in paying calls, but no inference follows therefrom that the share of a member could be forfeited only for non-payment of a call made in respect of the share which was not fully paid up.

In The    Calcutta Stock Exchange Association Ltd. v. S. N. Nundy & Co.(2), Harries C.J. after examining the provisions of the    Companies Act 1913 reviewed the decisions of    the Courts    in England and of the High Court of Calcutta    and observed that    the Indian Companies Act as well as    the English Companies Act contemplate, recognize and sanction forfeiture generally and not for non-payment of calls only; that a    company may by its Articles lawfully    provide    for grounds of forfeiture other than nonpayment of call, subject to the    qualification that the Articles relating to    for- feiture    do not offend against the general law of the    land and in particular the Companies Act, and public policy;    and that the forfeiture contemplated does not entail or effect a reduction in capital or involve or amount to purchase by the Company of its (1) I. L R. 63 Cal. 531.

(2) I. L. R. [1950] 1 cal. 235.

own shares nor does it amount to trafficking    in its    own shares.    The Court in that case was concerned to determine the true effect of the Articles of the Exchange which    fall to be interpreted in this case.

This Court in Sri Gopal Jalan & Company v. Calcutta Stock Exchange Association    Ltd.(1) also considered whether forfeiture of    shares    resulted in reduction    of capital contrary to the provisions of the Companies Act where power of forfeiture was given by the Articles for failure to carry out an undertaking or satisfy an obligation of the member to forfeit the shares. The Court in that case was interpreting the Articles which fall to be interpreted in this appeal. The Court held that the Exchange was not liable to file    any return of the forfeited shares under S. 75(i) of the Indian Companies Act, 1956 when the same were re-issued. The Court observed that when a share is forfeited and re-issued, there is no allotment, in the sense of appropriation of shares out of the authorised and unappropriated capital, and approved the observations, of Harries, C.J. in S. N. Nundy's case(2) that "on such forfeiture all that happened was that    the right of the particular shareholder disappeared but    the share considered as a unit of issued capital )continued to exist and was kept in suspense until another shareholder was found for it". In the view of this Court, the shares so forfeited may not be "allotted' in the sense in which    that word is understood in the Companies Act. The    Court    also pointed    out that re-issue of forfeited shares is    not allotment of the shares but only a sale, for, if it were not so the    forfeiture even for non-payment of call would be invalid as involving an illegal reduction of capital. Article    27 of the Exchange it may be recalled is in terms mandatory. The share forfeited to the Exchange must be    re- allotted or otherwise disposed of : it cannot be retained by the Exchange.    The share after forfeiture in the hands of the Company is subject to an obligation to dispose it    of. On that account there is no reduction of capital by    mere forfeiture.

Mr. Datar appearing for the appellant however contended that in Sri Gopal Jalan & Company's case(1) the parties argued the case on the footing that Articles of Association of    the Exchange were not invalid, whereas in the present case    the validity of the Articles is challenged. But the Court in citing with approval the observations of Harries C.J. in S. N. Nundy's case(2) did in effect pronounce upon the validity of the Articles.

A forfeited share is, therefore, merely a share available to the Company for sale and remains vested in the Company    for that purpose only. By forfeiting a share pursuant to    the authority of the (1) [1964] 3,S. C. R. 698.

(2) I. L. R. [1950] 1 Cal. 235.

Articles of Association, no    reduction of    capital    is achieved. We are unable to agree with counsel    for Sanyal that forfeiture of shares is permissible only in cases expressly contemplated by Table A Model Articles i.e.    for non-payment of    calls in respect of a share which is    not fully paid up.

Subject    to the provisions of the Companies Act the Company and the members are bound by the provisions contained in the Articles of Association. The Articles regulate the internal management of the Company and define the powers of    its officers. They also    establish a contract    between    the Company    and the members and between the members inter    se. The contract governs the ordinary rights and    obligations incidental to membership in the Company. In the absence of any provisions contained in the Indian Companies Act which prohibit a Company from forfeiting a share for    failure on the part of the member to carry out an undertaking or an engagement the Articles of a Company which provide that in certain    events membership rights of the    shareholder including his    right to the share will be forfeited    are binding. The    Articles of Association of the Exchange expressly provide that in the event of the member failing to carry out the engagement and in the conditions specified therein    his share shall stand forfeited. Articles 22,    24, 26, 27 & 29 of the Exchange relating to forfeiture of shares in certain events are therefore valid.

There is in our judgment nothing in the procedure followed by the Sub-Committee and the Full Committee which rendered the forfeiture    of Sanyal's share illegal. It    is not in dispute    that Sanyal incurred liability in favour of one of the members of the Exchange to pay Rs. 438-10-0 in    the transaction relating to the sale of Indian Iron & Steel Company's shares and he failed to discharge that liability. He continued to remain in default for six months even after the resolution of the Full Committee, and on that account he ceased to be a member and his share was forfeited. The High Court has found that the copies of the letters    dated    9th, 10th, 16th, 17th and    20th December,    1941,    and of    8th January, 11th & 19th February, 1942, were sent to Sanyal and the usual notices relating to the complaints placed before the Sub-Committee or the Full Committee were    served    upon Sanyal, that such notices were posted on the notice board of the Exchange that the appellant had opportunities at    all stages    of the proceedings to come before the Exchange    and refute the charges made against him and that at no stage of the proceeding until September 1, 1942, did Sanyal appear before    the Sub-Committee or the Full Committee. The    High Court was of    the view that the order had not been    made against Sanyal contrary to the rules of natural justice. It is true that Johurmull Daga complained about the- default committed by Sanyal on December 9, 1941 and the meeting of the Sub-Committee was held on December 10, 1941. Granting that the letter of the    Sub- Committee enclosing a copy of the complaint dated December 9, 1941, sent by post to Sanyal may not have    reached    him because    he had left Calcutta, he had still ample notice of the proceeding of the SubCommittee because intimation    was given to him    by the notice posted on    the board of    the Exchange. Sanyal raised no contention at any stage before the Sub-Committee or before the Full Committee that he    had not received the notices of the meetings dated December    10, 1941, December    17, 1941, January 7,    1942 of the    Sub- Committee and of the meeting dated February 19, 1942 of    the Full Committee. Regularity of the proceedings of the    Com- mittees at the various meetings is not challenged before us. We are unable to agree with the contention raised by counsel for Sanyal that the rules of    natural justice were    not complied with when the Sub-Committee and the Full Committee passed the impugned resolutions against Sanyal. There is no substance in the plea that the Committee had no jurisdiction to order sale of the share forfeited. Article 27 declares that the forfeited share is the property of    the Exchange and that the Committee of the Exchange shall    sell reallot or otherwise dispose of the share, for    satisfaction of all debts due by the member to the Association or to    its members out of transactions in shares and stocks. Under its Articles the Exchange has, authority to sell the share    and to appropriate the sale proceeds towards satisfaction of the debts, liabilities or engagements"

But we are unable to agree with the view taken by the    High Court that the balance of the amount remaining due after satisfying the liabilities of Sanyal remained the property of the Exchange and that Sanyal had no right thereto. Under the stipulations contained in Arts. 21, 22, 24, the share of the defaulter    or expelled member stands forfeited    for failure    to fulfil his obligation. The share of' Sanyal by express    resolution was forfeited. After applying    the, amount realised on sale of the share towards satisfaction of the debts, liabilities and engagements of Sanyal to    the Exchange and its members, the balance remaining in the hands of the    Exchange had to be held for and on be-half of    the appellant. That is expressly provided in Art. 33.    The expression used in Art. 29 "The forfeiture shall involve the extinction of all interest" is subject to those rights as by the Articles are saved, and Art. 33 saves to the defaulting shareholder whose share is forfeited    the right to    the balance    remaining with, the Exchange. Even assuming    that Articles 24 &    31 reserve to    the Exchange two distinct powers-the power to forfeit and the power to    exercise a lien, and that Art. 33 only applies to sale in    enforcement of a lien, and not to a sale under Art. 27, we are of    the view that the balance on hand after satisfying the liability of the defaulter must still be returned to the defaulting shareholder.    The power to forfeit does not imply authority to appropriate the balance,    remaining in    hand after satisfying the liabilities and    obligations of the defaulter to the Exchange and its    members. Any    such implication would be contrary to the intendment of s. 74 of the Contract Act.

The power of the Exchange to forfeit the shares arises    out of the Articles and its source is in contract. Forfeiture of share is in the nature of    imposition of    a penalty. Section 74 of the Indian ,Contract Act provides :

"When a contract has been broken, if a sum is named in the contract as the amount to be paid in case    of such breach, or if the contract contains    any other stipulation    by way of penalty,    the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has    broken    the contract    reasonable    compensation    not exceeding, the amount so named or, as the case may be, the penalty stipulated for.
In Fateh Chand v. Balkishan Das(1) this Court    in dealing with a    case in which a claim for damages for breach    of contract to sell :a lien of    immovable property arose, pronounced that the expression "'the contract contains    any other stipulation by way of penalty" comprehensively applies to every covenant involving a penalty whether    it is    for payment    on breach of contract of money, or    delivery of property in future, or for forfeiture of right to money or other property already delivered. Duty not to enforce    the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by s. 74 of    the Indian Contract Act.    In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount    deposited pursuant to the terms of a contract which expressly provides for forfeiture the Court has jurisdiction to award such sum only as it considers reasonable, but    not exceeding the amount specified in the contract as liable to forfeiture. The same principles, in our judgment, would apply in the ,case in which there is a stipulation in    the contract by way of a penalty, and the damages awarded to the party complaining of the breach will not in any case exceed the loss suffered by the complainant party. It was observed at p. 526 in Fateh Chand's case(,) :

"The section (s. 74) is clearly an attempt to eliminate    the somewhat elaborate    refinements made under the English common law    in distinguishing between stipulations providing for payment of liquidated damages and (1) [1964] IS.    C.R. 515.
stipulatings in the nature of penalty. Under the common law    a genuine pre-estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages    and binding between the parties : a stipulation in a    contract in terrorem is a penalty and    the Court refuses to enforce it, awarding to    the aggrieved party only reasonable compensation. The Indian Legislature    has sought to    cut across the web of rules and presumptions under the English common law, by enacting a uniform principle    applicable to all    stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty." The Court also observed at p. 530 "Section    74 declares the law as to liability upon breach of contract where compensation is by agreement of the parties predetermined, or where there is    a stipulation    by way    of penalty.    But the application of the enactment is not restricted to cases where the aggrieved party claims relief as    a plaintiff.    The section does not confer a special benefit upon any party; it merely declares the law    that notwithstanding any term in the contract    pre-
determining damages or providing    for forfeiture of any property by way of penalty, the Court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated."
Granting that Art. 33 deals with those cases in which    lien alone is, enforced and not in cases where forfeiture is levied, and the obligation of the defaulting shareholder is determined by    Art. 29, in our judgment, on the principle underlying S.    74 of the Contract Act the Exchange had no right to hold out of the sale proceeds of the share    any amount in excess of the amount due to it or to its members. The Exchange may not purchase its own shares.    If it    does so, it amounts to reduction of capital.    The legal theory of forfeiture is that a share forfeited is only taken over by the Company with the object of disposing it of    to satisfy its claim to enforce which the share was forfeited and    all other obligations arising against him out of his membership. The Company is given this right to recover the loss suffered by it by reason of the breach of contract committed by    the shareholder. If the Company is permitted to retain    the balance    of the amount after satisfying the debts, liabili- ties and engagements of the shareholder, the    transaction would not be different from one purchasing the share of    the defaulting shareholder for a value equal to the amount of his obligations. That would be plainly illegal. We    are therefore unable to agree with the High Court that the Exchange was entitled to    retain    the balance    after satisfying the debts, liabilities    and engagements of the appellant to the other members or to    the Exchange.

The decree passed by the High Court is set aside and    the case remanded to the High Court for determining the extent of the liabilities of the appellant to the Exchange not only in respect of the transactions with Johurmull Daga but in respect    of all other outstanding liabilities of the appellant to other members of the Exchange    and to    the Exchange which    are enforceable under the Articles. The appellant is entitled    to receive from the Exchange    the balance    remaining due after deducting the aggregate amount or value of the obligations. He will be    entitled to interest on the balance at the rate of 6% per annum from the date of the institution of the suit.    Parties will    bear their own costs throughout.

This appeal was filed in forma pauperis. The 'appellant will pay the court fee payable on the memorandum of appeal if he had not been permitted to appeal in forma pauperis. V.P.S. Appeal allowed and case remanded.

Ashbury Railway Carriage and Iron Co Ltd v Riche (1875) LR 7 HL 653 is a UK company law case, which concerned the objects clause of a company.

Its importance has been diminished as a result of the Companies Act 2006 s 31, which allows for unlimited objects for which a company may be run. Furthermore, any limits a company does have in its objects clause has no effect whatsoever for people outside a company (s 39 CA 2006), except as a general issue of authority of the company's agents.

Facts:
Incorporated under the Companies Act 1862, the Ashbury Railway Carriage and Iron Company Ltd’s memorandum, clause 3, said its objects were "to make and sell, or lend on hire, railway-carriages…" and clause 4 said activities beyond needed a special resolution. But the company agreed to give Riche and his brother a loan to build a railway in Belgium. Later, the company refused the agreement. Riche sued, and the company pleaded the action was ultra vires.

Judgment:
Exchequer Court
The judges of the exchequer chamber being equally divided, the decision of the court below was affirmed.

Blackburn J said,
“thought it was at common law an incident to a corporation that its capacity should be limited by the instrument creating it, I should agree that the capacity of a company incorporated under the act of 1862 was limited to the object in the memorandum of association. But if I am right in the opinion which I have already expressed, that the general power of contracting is an incident to a corporation which it requires an indication of intention in the legislature to take away, I see no such indication here. If the question was whether the legislature had conferred on a corporation, created under this act, capacity to enter into contracts beyond the provisions of the deed, there could be only one answer. The legislature did not confer such capacity. But if the question be, as I apprehend it is, whether the legislature have indicated an intention to take away the power of contracting which at common law would be incident to a body corporate, and not merely to limit the authority of the managing body and the majority of the shareholders to bind the minority, but also to prohibit and make illegal contracts made by the body corporate, in such a manner that they would be binding on the body if incorporated at common law, I think the answer should be the other way.”

House of Lords
The House of Lords, agreeing with the three dissentient judges in the Exchequer Chamber, pronounced the effect of the Companies Act to be the opposite of that indicated by Mr Justice Blackburn. It held that if a company pursues objects beyond the scope of the memorandum of association, the company's actions are ultra vires and void. Lord Cairns LC said,

“It was the intention of the legislature, not implied, but actually expressed, that the corporations, should not enter, having regard to this memorandum of association, into a contract of this description. The contract in my judgment could not have been ratified by the unanimous assent of the whole corporation.

Supreme Court of India - Equivalent citations: 1966 AIR 330, 1964 SCR (7) 618 - Bench: Gupta, K.C. Das - Citation: 1966 AIR  330 -  1964 SCR  (7) 618 - Judgment date: 1 April, 1964

ACT:
Municipality-No     confidence  resolution against  President- Enactment  providing  three clear days    notice    for  holding special     general meeting --Provision  if  mandatory--Failure to give such notice-Effect--Validity-Mysore Town Municipalities    Act, 1951, ss. 23(9), 24(1) (a),  24(3)     and 27(3).

Headnote:
The appellant was the elected President of the Municipality. In a special general meeting of the councillors a resolution expressing no confidence in him as President was moved and passed. In the High Court as well as in this Court, the legality of the proceedings of the meeting and the validity of the resolution was challenged by the appellant on the grounds, (i) that the requisite three days notice under the Act was not served on all the members and so the meeting was not validly held, (ii) that the meeting was not properly held as the appellant was not allowed to preside and thus s. 24(1) (a) of the Act was contravened and (iii) that the requisition for moving the resolution ,did not comply with the proviso to s. 23(a) of the Act as fifteen days notice was not given of the intention to move the resolution. The last two contentions were rejected by the High Court. On the main contention it held that as the notices were sent to the councillors on the 10th October 1963, they must be held to have been given on that date even though they were actually served on the llth, 12th and 13th; but, apart from that it was of opinion that the provisions about three days, notice was only directory and not mandatory and so the omission to give notice would not affect the validity of the resolution.

Held: (i) The High Court was wrong holding that "send- ing" a notice amounts to "giving" the notice. There is no authority or principle for the proposition that as soon as the person in the legal duty to give the notice despatches the notice to the address of the person to whom it has to be given, the giving is complete. Therefore, it must be held that the notice given to some of the councillors was of less than three clear days.

(ii) The provision as regards any motion or proposition of which notice must be given in s. 27(3) of the Act is only directory and not mandatory. Therefore the fact that some of the councillors received less than three clear days notice of the meeting did not by itself made the proceedings of the meeting or the resolution passed there invalid. These would be invalid only if the proceedings were prejudicially affected by such irregularity. In the present case, nineteen of the, twenty councillors attended the meet- ing and of these 19, 15 voted in favour of the resolution of no confidence against the appellant. There is thus no reason for holding that the proceedings of the meeting were prejudicially affected by the "irregularity in the service of notice".

State of U.P. v. Manbodhan Lai Srivastava, [1958] S.C.R. 533, referred to.

(iii) On a consideration of the material on the record, it must be held that it was after the appellant left the meeting that the Vice President took the chair and thereafter the no confidence resolution was moved and passed. There could therefore be no question of any contravention of the requirement under s.24(1) (a) of the Act that the President shall preside. (iv) The proviso to s.23(9) of the Act was not contravened. All that is required is that before the resolution is actually moved, the President has got fifteen days notice. In the present case, the meeting was held on October 14 and the appellant received the notice on the 25th September. There was thus more than 15 days notice given to him.

JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 223 of 1964. Appeal    by special leave from the Judgment and    order dated December 6, 1963 of the Mysore High Court in Writ Petition No. 2273 of 1963.

S.K. Venkataranga Iyengar and R. Gopalakrishnan, for    the appellant.

N.S. Krishna Rao and Girish Chandra, for respondents No. 1, 2, 4-10, 12-15.

April 1, 1964.    The Judgment of the Court was delivered by DAS GUPTA, J.-Is the requirement of three clear days' notice for the holding of a special general meeting as embodied in s. 27(3) of the Mysore Town Municipalities Act 1951, a mandatory provision? That is the main question which arises for decision in this appeal.

The appellant was elected as the President of    Holenarsipur Municipality on September 11, 1962. At a special general meeting of the Municipal Council held on October 14, 1963, a resolution was passed in the following terms:- "This Council has no confidence in the Municipal President of Holenarsipur Municipality."

On November 2, 1963 Mr. Narasimhiah, the President of    the Council    applied to the High Court of Mysore under Art.    226 of the Constitution praying for the issue of an    appropriate writ quashing the proceedings of the meeting which culminat- ed in the resolution of no confidence against him. Prayer; were made also for some consequential reliefs. Holenarsipur Municipality has twenty Councillors. Thirteen out of the them sent a request to the President to convene a special    general meeting to discuss a resolution expressing no confidence in him as President. This request was handed over to the President on 25th September 1963. As however he did not take any steps for convening the meeting the    Vice President acted in the matter-calling a meeting to discuss the resoulation to express no confidence in the President. A notice under the Vice-President's signature stating that it was proposed to hold a special general body meeting of the Municipality on the 14th October 1963 at 10 A.M. in the office premises and asking the members to be present in time was served on the Councillors. One copy of the notice was also posted up at the Municipal Office as    required by 27(3) of the Mysore Town Municipalities Act, 1951 (herein- after referred to as "the Act"). The notice bore the    date 10th October 1963. On fifteen of the twenty Councillors the notice    was personally served on that very date, i.e.,    the 10th October.    On three of the Councillors, viz.,    the President Narasimhiah,    Mr. Dasappa and Mr. Sanniah,    the notice    was served on the 13th October. It was served on Councillor Mirza Mohammad Hussain on the 12th October and on the Councillor R. G. Vaidyanatha on the 11th October 1963. When the meeting was held on October 14, 1963, nineteen of the twenty Councillors were present.    The President,    Mr. Narasimhiah was among them. He claimed to preside over    the meeting. But,    ultimately, he appears to have left    the meeting. The meeting was then held under the presidentship of the Vice President Mr. Singri Gowda. The no-confidence motion against the President was moved and was passed,    fif- teen members having voted for it.

In challenging    the legality of the proceedings of    this meeting    of 14th October and the validity of the resolution of no confidence passed there, the petitioner    urged three principal grounds. The first is that the requisite three days' notice was not served on all the members and so    the meeting    was not validly held.    The second ground urged    was that the meeting cannot be said to be properly held as he was not allowed to preside and the Vice-President presided. and thus s.24(1)(a) of the Act was contravened. Thirdly, it was urged that the requisition for moving the resolution of no confidence did not comply with the proviso to s.23(9) of the Act as 15 days' notice was not given of the intention to move the resolution.

The High Court held that on the materials before it, it    was not possible to pronounce as to the circumstances under which the Vice-President presided at the meeting. So,    the High Court rejected the contention that there was    any contravention of s.24(1)(a) of the Act. The case made in the petition that 15 days' notice had not been given of    the intention to move the resolution does not appear to    have been pressed at the hearing; as there is no mention in    the judgment of any such argument.    On the    question regarding the failure. to serve three days' notice of the meeting on all the Councillors,    the High Court followed its    own decision in another Writ Petition No. 2280 of 1963    and rejected the petitioner's contention. The judgment in    Writ Petition No. 2280 of 1963 which was produced before us shows that the High Court took the view that as the notices were sent on the 10th October they must he held to have been given on that date even though they    were ,actually served on the 11th, 12th and 13th; but, apart from that the High Court was of opinion that the provision about' three days' notice was only directory and not mandatory    and so the omission to give notice would not affect the validity of the resolution.

All the three grounds raised in the petition    were urged before    us in    support    of the appeal. As    regards the petitioner's contention that the meeting was not held in accordance with law as he was not allowed to preside, we are of opinion, on a consideration of what material there is on the record, that it was after he left the meeting that    the Vice President    took the chair and    thereafter the    no confidence resolution    was moved and    passed.    There    can therefore be no question of    any contravention of    the requirement that the President shall preside. There is. our opinion, no substance also in the contention that the proviso to s.23(9) was contravened.    The proviso runs thus: -

"Provided    that no such resolution shall be moved unless notice of    the resolution is signed by not less than one-third of the whole number of the Councillors and at least fifteen days' notice has been given of the intention to move the resolution."
Admittedly, the notice was signed by more than one-third of the whole number of Councillors. It is said, however,    that fifteen days' notice of the intention to move the resolution was not given.    This argument which Mr. lyengar addressed to us, but which does not appear to have been urged before    the High Court-proceeds on the assumption that fifteen days' notice    of the intention to move the resolution has to be given not only to the President but    also to the other Councillors. We do not think that    that assumption is justified. In our opinion, what is required is that fifteen days' notice of the intention to move the resolution has to be given to the President. In other words, all that is required is that before the resolution is actually moved the President has    got fifteen days' notice. In    the present case, the meeting was held on October 14 and the President received the notice on the 25th September. There was    thus more than 15 days' notice given to him.

This brings us to the main contention that    three days' notice    of the special general meeting was not given and so the meeting is invalid.    We find it difficult to agree    with the High Court that "sending" the notice amounts to "giving" the notice.

"Giving" of anything as ordinarily understood in the English language is not complete unless it has reached the hands of the person to whom it has to be given.    In the eye of    law however giving is complete in many matters where it has been offered to a person but not accepted by him. Tendering of a notice    is in law therefore giving of a notice    even though the person to whom it is tendered refuses to accept it.. We can find however no authority or principle for the proposi- tion that as soon as the person with a legal duty to    give the. notice despatches the notice to the address of    the person    to whom it has to be given, the giving is complete. We are therefore of opinion that the High Court was wrong in thinking, that the notices were given to all the Councillors on the 10th October. In our opinion, the notice given    to, five of the Councillors was of less than three clear days. The question then is: Is the provision of three clear days' notice mandatory, ie., does the failure to give such notice make the proceedings of the meeting and the resolution    pas- sed there invalid? The use of the word "shall" is    not conclusive on    the question. As in all other    matters of statutory construction the decision of this question depends on the ascertainment of the legislature's intention. Was it the legislature's intention in making the provision that the failure    to comply with it shall have    the consequence of making what is done invalid in law? That is the question to be answered. To ascertain the intention the Court has to examine carefully the object of the statute, the consequence that may follow from insisting on a strict observance of the particular provision and above all the general scheme of the other provisions of which it forms a part. In the State of U.P. v. Manbodhan Lal Srivastava (1)    where the question arose whether    the provisions of Art. 320(3)(c) of    the Constitution are mandatory (which provides that the Union Public    Service    Commission or    the State Public Service Commission shall be consulted on certain    disciplinary matters), this    Court    laid stress on    the fact that    the proviso    to the Article contemplates that the President or the Governor as the case may be make regulations specifying the matters in which either in general or in any particular class or in any particular circumstances, it shall not be necessary for the Public Service Commission to be consulted. Speaking for the Court Sinha J. observed: -

"If the    provisions of Art. 320    were of a mandatory    character, the    Constitution would not have left it to the discretion of the Head of the Excutive    Government to    undo those provisions by making regulations to    the contrary."
(1) [1958] S.C.R. 533 This appears to have been the main reason for    the court's decision that the provisions of Article 320 (3)(c) are    not mandatory. Naturally, strong reliance has been placed on this decision on behalf of the respondents. It is pointed out that while providing that three clear days' notice of special    general meeting shall be given to the    Councillors, the legislature said in the same breath that "in cases of great    urgency, notice of such shorter period as    is reasonable should be given to the Councillors of a special general meeting." The decision of what should be considered to be a case of "great urgency" was left ,entirely to    the President or the Vice-President on whom the duty to    call such a meeting is given under s.27(2). It is urged by    the learned Counsel that if the intention of the legislature had been to make the service of three clear days'    notice    man- datory    it would not have left the discretion of giving notice for a shorter period for some of the special general meetings in this manner. We see considerable force in    this argument. The very fact that while three clear days' notice is not to be given of all special general meetings and    for some such meetings notice only of such shorter period as is reasonable has to be given justifies the conclusion that the "three    clear days". mentioned in the section was given by the legislature as only a measure of    what it considered reasonable.

It is    necessary also to remember that the main object of giving the notice is to make it possible for the Councillors to so arrange their other business as to be able to attend the meeting.    For an ordinary general meeting    the notice provided is of seven clear days. That is expected to    give enough    time for the purpose. But a lesser period-of three clear days'--is considered sufficient for "special general meetings" generally.    The obvious reason for    providing a shorter    period for such meetings is that    these    are considered more important meetings and Councillors    are expected to make it convenient to attend these meetings even at the cost of some inconvenience to themselves. Where    the special    general meeting is to dispose of some matter of great urgency it is considered that a period ,of even    less than three clear days' notice would be sufficient. A consideration of the object of these provisions and    the manner    in which the    object    is sought to    be achieved indicates that    while    the legislature did intend    that ordinarily the notice as mentioned should be given it could not have intended that the fact that the notice is of    less than the period mentioned in the section and thus    the Councillors had less time than is ordinarily considered reasonable to    arrange    his other business to    be free to attend the meeting, should have the serious result of making the proceedings of the meeting invalid.

It is important to notice in this connection one of the pro- visions in s.36 of the Act. It is in these words: -

"No resolution of a municipal council or    any committee    appointed under this Act shall be deemed invalid on account of any    irregularity in the service of notice upon any councillor or member provided the    proceedings of    the municipal    council or committee were    not prejudicially affected by such irregularity."
It is    reasonable to    think that the    service of notice mentioned in this provision refers to the giving of notice to the Councillors. Quite clearly, any irregularity in    the manner    of giving the notice would be covered by the words "irregularity in the    service    of the notice upon    any Councillor". It appears to us however reasonable to think that in making such a provision in s.36 the legislature    was not thinking only of irregularity of the mode of service but also of the omission to give notice of the full period as required.

It is    interesting to notice in this connection that    the English    law as regards meetings of borough councils    and county    councils contain a specific provision that want of service    of a    summons    to attend the    meeting (which is required to be served on every member of the council)    will not affect the validity of the meeting.    It may be presumed that the legislature    which    enacted    the Mysore    Town Municipalities Act,. 1951, was aware of these provisions in English    law. It has not gone to the length of saying    that the failure to serve the notice will not make    the meeting invalid. It has instead said that any irregularity in    the service of notice would not make a resolution of the Council invalid provided that the proceedings were not prejudicially affected by such irregularity.    The logic of making such a provision in respect    of irregularity in the    service of notice becomes strong if the fact that the notice given    was short of the required period is considered an irregularity, The existence of this provision in s.36 is a further reason for thinking that the provision as regards any motion or proposition of which notice must be given in s-27(3) is only directory and not mandatory.

We are therefore of opinion that the fact that some of    the Councillors received less than three clear days' notice of the, meeting did not by itself make the Proceedings of    the meeting or the resolution passed there invalid.    These would be invalid only if the proceedings    were prejudicially affected by such irregularity.    As already stated, nineteen of the twenty Councillors attended the meeting. Of these 19, 15 voted in favour of the resolution of no-confidence against the appellant.    There is thus absolutely no reason for thinking that the    proceedings of the meeting were prejudicially    affected by    the "irregularity in the service of notice."

We have therefore come to the conclusion that the failure to give three clear days' notice to some of the Councillors did not affect the validity of the meeting or the resolution of no confidence passed there against the appellant. In the result, we dismiss the appeal with costs.

Appeal dismissed.

7

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Supreme Court of India -  Bench: CJI R.C. Lahoti, D.M. Dharmadhikari, P.K. Balasubramanyan - CASE NO.: Appeal (civil)  7000 of 2004 - Judgment date: 6 April, 2005

Judgment:
R.C. Lahoti, CJI Facts in brief Elections of Uttar Pradesh Legislative Council were held pursuant to the Presidential notification dated 7.11.2003. The appellant was declared elected. Respondent No. 1 filed an election petition under Section 80 of the Representation of the People Act, 1951 (hereinafter 'the Act', for short) laying challenge to the election of the appellant.

The appellant was served with the summons, accompanied by a copy of the election petition, requiring his appearance before the Court on 6.4.2004. On the appointed day, the appellant appeared through his counsel and sought for one month's time for filing the written statement. The Court allowed time till 13.5.2004 for filing the written statement. On 13.5.2004, the appellant again filed an application seeking further time for filing the written statement on the ground that copies of several documents were required to be obtained. The Court adjourned the hearing to 3.7.2004 as, in between, from 13.5.2004 to 2.7.2004, the High Court was closed for summer vacation. On 22.6.2004, appellant's advocate's nephew expired. However, the written statement was drafted and kept ready for filing. The registered clerk of the advocate was deputed for filing the same in the Court on the appointed day. The clerk reached Allahabad, the seat of the High Court, from Gazipur where the appellant and his advocate resided. On 1.7.2004, that is, two days prior to the day of hearing, the affidavit of the appellant annexed with the written statement, was sworn in at Allahabad. However, (as is later on stated), on account of lack of understanding on the part of the registered clerk, the written statement could not be filed on 3.7.2004 but the same was filed on 8.7.2004 accompanied by an application for condonation of delay in filing the written statement briefly stating the reasons set out hereinbefore. On 23.8.2004, the High Court rejected the application filed by the appellant and refused to take the written statement on record for the reason that the same was filed beyond a period of 90 days from the date of service of summons, the period of limitation as provided by the Proviso to Rule 1 of Order VIII of the Code of Civil Procedure, 1908 (hereinafter 'the CPC', for short), as introduced by Act 22 of 2002 with effect from 1.7.2002. Feeling aggrieved by the said order, the winning candidate i.e. the defendant-respondent before the High Court, has filed this appeal by special leave.

We have heard Shri Vijay Hansaria, the learned senior counsel for the appellant, Shri Vijay Kumar, the learned counsel for the respondent (election petitioner), and also Mr. Rakesh Dwivedi, the learned senior counsel, who has on request appeared Amicus Curiae.

Questions for decisions The learned counsel for the appellant submitted that the provisions of the CPC do not ipso facto and in their entirety apply to the trial of election petition under Chapter II of the Act. Alternatively, he submitted that rules have been framed by the Allahabad High Court making special provisions relating to the trial of election petitions which would override the provisions of the CPC. In the next alternative, the learned senior counsel submitted that the provisions of Order VIII Rule 1 of the CPC being in the realm of procedural law, the time limit contained therein should be construed as directory and not mandatory assuming the provision is applicable to the trial of election petitions. The learned counsel for respondent No. 1 has disputed the correctness of the submissions so made and argued in support of the impugned order of the High Court.

Three questions arise for decision :-

(1) Whether Order VIII Rule 1 of the CPC is applicable to the trial of an election petition under Chapter II of the Act?

(2) Whether the rules framed by the High Court governing the trial of election petitions would override the provisions of CPC and permit a written statement being filed beyond the period prescribed by Order VIII Rule 1 of the CPC?

(3) Whether the time limit of 90 days as prescribed by the Proviso appended to Rule 1 of Order VIII of the CPC is mandatory or directory in nature?

Relevant Provisions The Representation of the People Act, 1951 (43 of 1951) has been enacted, as its Preamble indicates, to provide for the conduct of elections and other proceedings relating to such elections, as also for the decision of doubts and disputes arising out of or in connection with such elections. Part VI of the Act deals with 'Disputes Regarding Elections'. The provisions contained therein are elaborate and detailed. This Part is divided into five Chapters. Chapter I incorporates Section 79 which is an interpretation clause giving definitions of certain words and expressions which are relevant for the purpose of Parts VI and VII of the Act. Chapter II deals with presentation of election petitions to High Courts. The jurisdiction to try election petitions is conferred on the High Courts. Provisions are made as to by whom and in what manner an election petition shall be presented; who will be parties to the petition; what an election petition must contain and the reliefs which an election petitioner may claim. Chapter III makes provision for trial of election petitions; procedure before the High Court and several rules of evidence applicable to trial of an election petition. What directions __ principal and incidental __ can be made and issued by the High Court in its judgment disposing of an election petition and the grounds on which such directions can be founded are provided for. Chapter IV lays down the rules governing the discretion of the court in the matter of permitting withdrawal of election petitions and the procedure relating thereto. Provision is made as to when and subject to what procedure an election petition would abate or substitution would be permitted in case of death of a party to the election petition. Chapter V deals with costs and security for costs. Right of appeal and procedure relating thereto are contained in Chapter IVA.

Two points of significance deserve to be noted and highlighted. On all the subjects, suggested by the titles given to the different Chapters, provisions are already available in the CPC which is a pre-existing law. An election petition is a civil trial and if the Parliament had so wished, all the aspects of trial included in Part VI could have been left to be taken care of by the pre-existing law, that is, the CPC. However, the Parliament has chosen to enact separate and independent provisions applicable to the trial of election petitions and placed them in the body of the Act.

Section 87 of the Act provides as under :-

"87. Procedure before the High Court.-(1) Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the High Court, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 (5 of 1908) to the trial of suits:

Provided that the High Court shall have the discretion to refuse, for reasons to be recorded in writing, to examine any witness or witnesses if it is of the opinion that the evidence of such witness or witnesses is not material for the decision of the petition or that the party tendering such witness or witnesses is doing so on frivolous grounds or with a view to delay the proceedings.

(2) The provisions of the Indian Evidence Act, 1872 (1 of 1872), shall, subject to the provisions of this Act, be deemed to apply in all respects to the trial of an election petition."

(emphasis supplied) "86. Trial of election petitions.__ (1) to (5)    xxx    xxx    xxx (6)    The trial of an election petition shall, so far as is practicable consistently with the interests of justice in respect of the trial, be continued from day to day until its conclusion, unless the High Court finds the adjournment of the trial beyond the following day to be necessary for reasons to be recorded.

(7)    Every election petition shall be tried as expeditiously as possible and endeavour shall be made to conclude the trial within six months from the date on which the election petition is presented to the High Court for trial."

(emphasis supplied) Sub-section (6) of Section 86 of the Act requires trial of an election petition to be continued from day to day until its conclusion, so far as is practicable consistently with the interests of justice in respect of the trial, unless the High Court finds the adjournment of the trial beyond the following day to be necessary for reasons to be recorded. Sub-section (7) requires every election petition to be tried as expeditiously as possible with an endeavour to conclude the trial within six months from the date of presentation of the election petition. Thus, the procedure provided for the trial of civil suits by the CPC is not in its entirety applicable to the trial of election petitions. The applicability of the procedure is circumscribed by two riders; firstly, the CPC procedure is applicable "as nearly as may be"; and secondly, the CPC procedure would give way to any provisions of the Act and of any rules made thereunder.

Section 169 of the Act confers power on the Central Government to make rules for carrying out the purposes of the Act. The Central Government is empowered to make rules which may govern the procedure of trial of election petitions. Although, this subject is not specifically mentioned as one of the matters in sub-section (2) which specifies the topics on which the Central Government may frame rules, however, clause (i) of sub-section (2) is a residuary clause which empowers the Central Government to frame rules regarding "any other matter required to be prescribed by this Act." Sub-section (1) of Section 87 of the Act also gives an indication that the statute contemplates the framing of rules under the Act to govern the procedure of trials before the High Court, which, read with the Preamble to the Act, is the source of power for making the rules laying down the procedure for the trial of election petitions. There is no provision in the Act which empowers the High Court to frame the rules governing the procedure of trials before the High Court. However, the High Court is not entirely powerless in the matter of framing the rules of procedure. Article 225 of the Constitution of India confers powers on the High Court, inter alia, to make rules of court for the purpose of hearing, trying and deciding any matter lying within the jurisdiction of the High Court. The High Court can thus frame rules of procedure regarding the trial of election petitions under Article 225 of the Constitution. This source of power emanates from the Constitution and is, therefore, very potent. Section 129 of CPC is another source of power of High Court to make rules to regulate its own procedure in the exercise of its original civil jurisdiction. This will include election petitions also as they are tried in the original civil jurisdiction of the High Court.

The Allahabad High Court has framed several rules in exercise of the powers conferred by Article 225 of the Constitution. Chapter XV-A, consisting of 13 Rules and entitled "Special provisions relating to the trial of election petitions", was added in the body of the rules vide notification dated 7.3.1967. Following Rules are relevant for our purpose and hence are extracted and reproduced hereunder :-

"1. Scope.The provisions of this Chapter shall govern the trial of election petitions under the Representation of the People Act, 1951.

xxx    xxx    xxx

5. Issue of notice to respondent.The election petition shall be laid before the Bench so constituted without delay, and unless it is dismissed under sub- section (1) of Section 86 of the Act or for being otherwise defective, the Bench may direct issue of notice to the respondent to appear and answer the claim on a date to be specified therein. Such notice shall also direct that if he wishes to put up a defence he shall file his written statement together with a list of all documents, whether in his possession or power or not, upon which he intends to rely as evidence in support of his defence on or before the date fixed; and further, that in default of appearance being entered on or before the date fixed in the notice the election petition may be heard and determined in his absence. The notice shall be in Form No. 34-A.

xxx    xxx    xxx

12. Court's power to give directions in matters of practice and procedure.The Bench may, consistently with the provisions of Section 87 of the Act, give such directions in matters of practice and procedure (including the recording of evidence) as it shall consider just and expedient."

A perusal of the several provisions made by the High Court Rules goes to show that the Rules touch many a subject on which provisions are found in the Act itself. Suffice it to observe that in case of conflict, the provisions of the Act and the provisions of the High Court Rules shall, as far as may be, be harmoniously construed avoiding the conflict, if any, and if the conflict be irreconcilable the provisions contained in the Act being primary legislation shall prevail over the provisions contained in the High Court Rules framed in exercise of delegated power to legislate. No such conflict is noticeable, so far as the present case is concerned.

'Trial' of election petition, when it commences?

At this point the question arises : When does the trial of an election petition commence or what is the meaning to be assigned to the word 'trial' in the context of an election petition? In a civil suit, the trial begins when issues are framed and the case is set down for recording of evidence. All the proceedings before that stage are treated as proceedings preliminary to trial or for making the case ready for trial. As held by this Court in several decided cases, this general rule is not applicable to the trial of election petitions as in the case of election petitions, all the proceedings commencing with the presentation of the election petition and upto the date of decision therein are included within the meaning of the word 'trial'.

In Harish Chandra Bajpai v. Triloki Singh 1957 SCR 370, the narrow and wider sense in which the word 'trial' is used came up for consideration of the Court. In its narrow or limited sense, 'trial' means the final hearing of the petition consisting of examination of witnesses, filing documents and addressing arguments. In its wider sense, the word 'trial' indicates the entire proceeding from the time when the petition comes before the court until the pronouncement of decision. In the context of an election petition, it was held that the word 'trial' must necessarily include the matters preliminary to the hearing, such as settlement of issues, issuance of directions and the like. With the receipt of the petition in the High Court, various steps have to be taken before the stage can be set for hearing it. The respondent has to file his written statement and issues have to be settled. The stages of discovery and inspection, enforcing attendance of witnesses and compelling the production of documents do not form part of the hearing in a trial governed by the CPC but precede it. For the purpose of an election petition, the word 'trial' includes the entire proceedings commencing from the time of receipt of the petition until the pronouncement of the judgment. It was held that hearing of an application under Order VI Rule 17 of the CPC for amending the pleadings would be a stage in the trial of an election petition.

In Om Prabha Jain v. Gian Chand and another 1959 Supp. (2) SCR 516, also this Court refused to assign a restrictive meaning to the word 'trial' in regard to election petitions while interpreting Section 90(3) of the Act as it existed prior to the 1966 Amendment. It was held that an order dismissing an election petition at the very threshold under Section 90(3) for non-compliance with Section 117 would be deemed to be an order at a stage of trial. This view was reiterated by this Court recently in Dipak Chandra Ruhidas v. Chandan Kumar Sarkar (2003) 7 SCC 66, wherein it was held that to be an order passed during the trial of an election petition it is not necessary that at the time of passing of that order there must have been a full dressed trial after taking evidence of the parties; even an order dismissing an election petition summarily for non- compliance with the provisions of Section 81 or 82 or 117 is an order passed during the trial of an election petition.

Two decisions by High Courts deserve to be noticed. They are Duryodhan v. Sitaram & Ors. AIR 1970 Allahabad 1 (FB) and Hari Vishnu Kamath v. Election Tribunal, Jabalpur & Anr. AIR 1958 MP 168. Both the High Courts have taken the view that the word 'trial' undoubtedly has two meanings. It may mean the trial of a controversy that arises from an issue. It may equally mean the trial of an election petition covering the entire process of the litigation from its first seisin by the tribunal (or the Court) to its disposal and would include all the matters even prior to the hearing of the election petition. The matters relating to service of summons, calling for and finalizing the pleadings and settling the issues are all constituent stages of the trial. We find ourselves in agreement with the meaning so assigned to the word 'trial' in the context of election petition.

Receiving written statement being part of 'trial', time can be extended Once we are clear about the meaning of the word 'trial' in the context of election petition, certain consequences follow. Sub-section (6) of Section 86 of the Act would empower the High Court trying an election petition to adjourn the trial beyond the following day if necessary and for reasons to be recorded. The filing of a written statement being a stage in the trial of an election petition, this provision would empower the High Court to grant a reasonable time for filing of a written statement though for reasons to be recorded. The availability of this power finds support from Rules 5 and 12 of the High Court Rules. Under Rule 5, the High Court has power to fix a date for filing the written statement which power would include the power to fix such date not merely once but again and again depending on the discretion of the High Court. Power to extend time for filing the written statement being a matter of practice and procedure the High Court would be within its power to give such directions in that regard as it shall consider just and expedient within the meaning of Rule 12. This discretion vested in the Court by Rules made under Article 225 for purposes of any special act would not be controlled by the proviso to sub-rule (1) of Order VIII of the CPC.

This position of law does not admit of any doubt as was held in Mohan Raj v. Surendra Kumar Taparia & Ors. (1969) 1 SCR 630, that the CPC applies only subject to the provisions of the Act and the rules made thereunder. The question arose in the context of Sections 82 and 86 of the Act whereunder a candidate against whom the allegations of corrupt practices were made in the petition and so should have been necessarily joined as respondent under Section 82 but was not joined and Section 86 provides for mandatory dismissal of such a petition. It was held that the defect could not be cured by invoking Order 1 Rule 10 or Order 6 Rule 17 of the CPC to avoid the penalty of dismissal of the petition. In Iridium India Telecom Ltd. v. Motorola Inc. JT 2005 (1) SC 50, this Court affirmed the view taken by a Division Bench of the Bombay High Court that the amended provision of Order VIII, Rule 1 of the CPC would not apply to the suits on the Original Side of the High Court and such suits would continue to be governed by the High Court (Original Side) Rules; the High Court Rules were framed in exercise of the power conferred by Section 129 of the CPC and the Letters Patent and, therefore, were saved by Section 4(1) of the CPC.

Section 87 of the Act is a guarded provision as its language indicates. A few things are noteworthy for determining the nature and character of the provision contained in Section 87. Its title reads  "Procedure before the High Court". The applicability of the provision is  "subject to the provisions of this Act and of any rules made thereunder". The procedure prescribed by the Code for the trial of suits is not just adopted, and as if incorporated into the Act, so as to govern the trial of election petition. The procedure applicable under the Code to the trial of suits has been made applicable to the trial of every election petition "as nearly as may be". The language of sub-Section (1) of Section 87 has to be read in juxtaposition with the language of sub-Section (2), whereby the provisions of the Indian Evidence Act, 1872 have been made applicable in respect to the trial of an election petition by providing that they shall "be deemed to apply in all respects to the trial of an election petition".

In Tarlok Singh v. Municipal Corporation of Amritsar & Anr. (1986) 4 SCC 27, Section 384 of the Punjab Municipal Corporation Act, 1976 came up for the consideration of the Court. It provided for the procedure in the Code, in regard to suits, being followed, "as far as it can be made applicable", in the disposal of certain matters under the Act. The Court held that the relevant provisions of the Code were made applicable for the purposes of guidance of procedure and it is not expected that the procedure of a suit was to be followed technically and strictly in accordance with the provisions contained in the Code.

In Direct Recruit Class II Engineering Officers' Association v. State of Maharashtra & Ors. (1990) 2 SCC 715, the expression "as far as applicable" came up for the consideration of the Court. It was held that such expression had the effect of making the rules or provisions contained elsewhere applicable with realism and flexibility, true to life rather than with abstract absolutism.

We are, therefore, of the opinion that, in view of Rules 5 and 12 framed under Article 225 for purposes of the Special Act, the High Court is not powerless to extend the time for filing the written statement simply because the time limit for filing the written statement within the allowance permitted by the Proviso to Order VIII Rule 1 of the CPC has come to an end.

Alternatively, Order VIII Rule 1 of CPC, mandatory or directory?

This leads us to examine the alternative contention of the learned senior counsel for the appellant that, in any event, Order VIII Rule 1 of the CPC is not mandatory but directory in nature, a submission on which both the learned counsel for the parties have forcefully argued and the learned Amicus Curiae has also made detailed submissions.

The CPC which consolidated and amended the laws relating to the procedure of the Courts of Civil Judicature in the year 1908, has in the recent times undergone several amendments based on the recommendations of the Law Commission displaying the anxiety of Parliament to secure an early and expeditious disposal of civil suits and proceedings but without sacrificing the fairness of trial and the principles of natural justice in-built in any sustainable procedure. The Statement of Objects and Reasons for enacting Code of Civil Procedure (Amendment) Act, 1976 (104 of 1976) records the following basic considerations which persuaded the Parliament in enacting the amendments:-

(i)    that a litigant should get a fair trial in accordance with the accepted principles of natural justice;

(ii)    that every effort should be made to expedite the disposal of civil suits and proceedings, so that justice may not be delayed;

(iii)    that the procedure should not be complicated and should, to the utmost extent possible, ensure fair deal to the poorer sections of the community who do not have the means to engage a pleader to defend their cases.

By Code of Civil Procedure (Amendment) Act, 1999 (46 of 1999) the text of Order VIII, Rule 1 was sought to be substituted in a manner that the power of court to extend the time for filing the written statement was so circumscribed as would not permit the time being extended beyond 30 days from the date of service of summons on the defendant. As is well- known, there was stiff resistance from the members of the Bar against enforcing such and similar other provisions sought to be introduced by way of amendment and hence the Amendment Act could not be promptly notified for enforcement. The text of the provision in the present form has been introduced by Code of Civil Procedure (Amendment) Act, 2002 (22 of 2002) with effect from 1.7.2002. The purpose of such like amendments is stated in the Statement of Objects and Reasons as "to reduce delay in the disposal of civil cases".

The text of Order VIII, Rule 1, as it stands now, reads as under : -

"1. Written statement.__ The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence:

Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the same on such other day, as may be specified by the Court, for reasons to be recorded in writing, but which shall not be later than ninety days from the date of service of summons."

Three things are clear. Firstly, a careful reading of the language in which Order VIII, Rule 1 has been drafted, shows that it casts an obligation on the defendant to file the written statement within 30 days from the date of service of summons on him and within the extended time falling within 90 days. The provision does not deal with the power of the court and also does not specifically take away the power of the court to take the written statement on record though filed beyond the time as provided for. Secondly, the nature of the provision contained in Order VIII, Rule 1 is procedural. It is not a part of the substantive law. Thirdly, the object behind substituting Order VIII, Rule 1 in the present shape is to curb the mischief of unscrupulous defendants adopting dilatory tactics, delaying the disposal of cases much to the chagrin of the plaintiffs and petitioners approaching the court for quick relief and also to the serious inconvenience of the court faced with frequent prayers for adjournments. The object is to expedite the hearing and not to scuttle the same. The process of justice may be speeded up and hurried but the fairness which is a basic element of justice cannot be permitted to be buried.

All the rules of procedure are the handmaid of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the Statute, the provisions of the CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice. The observations made by Krishna Iyer, J. in Sushil Kumar Sen v. State of Bihar (1975) 1 SCC 774, are pertinent:-

"The mortality of justice at the hands of law troubles a Judge's conscience and points an angry interrogation at the law reformer.

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 justiciae where the tragic sequel otherwise would be wholly inequitable.  Justice is the goal of jurisprudence __ processual, as much as substantive."

In The State of Punjab and Anr. v. Shamlal Murari and Anr. (1976) 1 SCC 719, the Court approved in no unmistakable terms the approach of moderating into wholesome directions what is regarded as mandatory on the principle that "Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice." In Ghanshyam Dass and Ors. v. Dominion of India and Ors. (1984) 3 SCC 46, the Court reiterated the need for interpreting a part of the adjective law dealing with procedure alone in such a manner as to sub- serve and advance the cause of justice rather than to defeat it as all the laws of procedure are based on this principle.

It is also to be noted that though the power of the Court under the proviso appended to Rule 1 of Order VIII is circumscribed by the words __ "shall not be later than ninety days" but the consequences flowing from non-extension of time are not specifically provided though they may be read by necessary implication. Merely, because a provision of law is couched in a negative language implying mandatory character, the same is not without exceptions. The courts, when called upon to interpret the nature of the provision, may, keeping in view the entire context in which the provision came to be enacted, hold the same to be directory though worded in the negative form.

In Sangram Singh v. Election Tribunal, Kotah & Anr. (1955) 2 SCR 1, this Court highlighted 3 principles while interpreting any portion of the CPC. They are:

(i)    A code of procedure must be regarded as such. It is 'procedure', something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to 'both' sides) lest the very means designed for the furtherance of justice be used to frustrate it.

(ii)    There must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exceptions and where they are clearly defined they must be given effect to.

(iii)    No forms or procedure should ever be permitted to exclude the presentation of the litigant's defence unless there be an express provision to the contrary.

Our attention has also been invited to a few other provisions such as Rules 9 and 10 of Order VIII. In spite of the time limit appointed by Rule 1 having expired, the court is not powerless to permit a written statement being filed if the court may require such written statement. Under Rule 10, the court need not necessarily pronounce judgment against the defendant who failed to file written statement as required by Rule 1 or Rule

9. The court may still make such other order in relation to the suit as it thinks fit.

As stated earlier, Order VIII, Rule 1 is a provision contained in the CPC and hence belongs to the domain of procedural law. Another feature noticeable in the language of Order VIII Rule 1 is that although it appoints a time within which the written statement has to be presented and also restricts the power of the Court by employing language couched in a negative way that the extension of time appointed for filing the written statement was not to be later than 90 days from the date of service of summons yet it does not in itself provide for penal consequences to follow if the time schedule, as laid down, is not observed. From these two features certain consequences follow.

Justice G.P. Singh notes in his celebrated work "Principles of Statutory Interpretation" (Ninth Edition, 2004) while dealing with mandatory and directory provisions - "The Study of numerous cases on this topic does not lead to formulation of any universal rule except this that language alone most often is not decisive, and regard must be had to the context, subject-matter and object of the statutory provision in question, in determining whether the same is mandatory or directory. In an oft-quoted passage LORD CAMPBELL said: 'No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Courts of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be considered'." (p. 338) "For ascertaining the real intention of the Legislature", points out SUBBARAO, J. "the court may consider inter alia, the nature and design of the statute, and the consequences which would follow from construing it the one way or the other; the impact of other provisions whereby the necessity of complying with the provisions in question is avoided; the circumstances, namely, that the statute provides for a contingency of the non- compliance with the provisions; the fact that the non-compliance with the provisions is or is not visited by some penalty; the serious or the trivial consequences, that flow therefrom; and above all, whether the object of the legislation will be defeated or furthered". If object of the enactment will be defeated by holding the same directory, it will be construed as mandatory, whereas if by holding it mandatory serious general inconvenience will be created to innocent persons without very much furthering the object of enactment, the same will be construed as directory." (pp. 339-340) Two decisions, having a direct bearing on the issue arising for decision before us, have been brought to our notice, one each by the learned counsel for either party. The learned senior counsel for the appellant submitted that in Topline Shoes Ltd. v. Corporation Bank (2002) 6 SCC 33, pari materia provision contained in Section 13 of the Consumer Protection Act, 1986 came up for the consideration of the Court. The provision requires the opposite party to a complaint to give his version of the case within a period of 30 days or such extended period not exceeding 15 days as may be granted by the District Forum. The Court took into consideration the Statement of Objects and Reasons and the legislative intent behind providing a time frame to file reply and held : (i) that the provision as framed was not mandatory in nature as no penal consequences are prescribed if the extended time exceeds 15 days and; (ii) that the provision was directory in nature and could not be interpreted to mean that in no event whatsoever the reply of the respondent could be taken on record beyond the period of 45 days.

The Court further held that the provision is more by way of procedure to achieve the object of speedy disposal of such disputes. The strong terms in which the provision is couched are an expression of 'desirability' but do not create any kind of substantive right in favour of the complainant by reason of delay so as to debar the respondent from placing his version in defence in any circumstances whatsoever.

In our opinion, the view of the law so taken by this Court squarely applies to the issue before us and we find ourselves in agreement with the law stated by the two-Judge Bench of this Court in the case of Topline Shoes Ltd. (supra).

The learned counsel for the respondent, on the other hand, invited our attention to a three-Judge Bench decision of this Court in Dr. J.J. Merchant & Ors. v. Shrinath Chaturvedi (2002) 6 SCC 635, wherein we find a reference made to Order VIII, Rule 1 of the CPC vide paras 14 and 15 thereof and the Court having said that the mandate of the law is required to be strictly adhered to. A careful reading of the judgment shows that the provisions of Order VIII, Rule 1 of the CPC did not directly arise for consideration before the Court and to that extent the observations made by the Court are obiter. Also, the attention of the Court was not invited to the earlier decision of this Court in Topline Shoes Ltd. case (supra).

It was submitted by the senior learned counsel for the appellant that there may be cases and cases which cannot be foretold or thought of precisely when grave injustice may result if the time limit of days prescribed by Order VIII, Rule 1 was rigidly followed as an insurmountable barrier. The defendant may have fallen sick, unable to move; may be he is lying unconscious. Also, the person entrusted with the job of presenting a written statement, complete in all respects and on his way to the court, may meet with an accident. The illustrations can be multiplied. If the schedule of time as prescribed was to be followed as a rule of thumb, failure of justice may be occasioned though for the delay, the defendant and his counsel may not be to blame at all. However, the learned counsel for respondent No.1 submitted that if the court was to take a liberal view of the provision and introduce elasticity into the apparent rigidity of the language, the whole purpose behind enacting Order VIII, Rule 1 in the present form may be lost. It will be undoing the amendment and restoring the pre-amendment position, submitted the learned counsel.

We find some merit in the submissions made by the learned counsel for both the parties. In our opinion, the solution __ and the correct position of law __ lie somewhere midway and that is what we propose to do placing a reasonable construction on the language of Order VIII, Rule 1.

Considering the object and purpose behind enacting Rule 1 of Order VIII in the present form and the context in which the provision is placed, we are of the opinion that the provision has to be construed as directory and not mandatory. In exceptional situations, the court may extend the time for filing the written statement though the period of 30 days and 90 days, referred to in the provision, has expired. However, we may not be misunderstood as nullifying the entire force and impact  the entire life and vigour  of the provision. The delaying tactics adopted by the defendants in law courts are now proverbial as they do stand to gain by delay. This is more so in election disputes because by delaying the trial of election petition, the successful candidates may succeed in enjoying the substantial part, if not in its entirety, the term for which he was elected even though he may loose the battle at the end. Therefore, the judge trying the case must handle the prayer for adjournment with firmness. The defendant seeking extension of time beyond the limits laid down by the provision may not ordinarily be shown indulgence.

Ordinarily, the time schedule prescribed by Order VIII, Rule 1 has to be honoured. The defendant should be vigilant. No sooner the writ of summons is served on him he should take steps for drafting his defence and filing the written statement on the appointed date of hearing without waiting for the arrival of the date appointed in the summons for his appearance in the Court. The extension of time sought for by the defendant from the court whether within 30 days or 90 days, as the case may be, should not be granted just as a matter of routine and merely for asking more so, when the period of 90 days has expired. The extension can be only by way of an exception and for reasons assigned by the defendant and also recorded in writing by the Court to its satisfaction. It must be spelled out that a departure from the time schedule prescribed by Order VIII, Rule 1 of the Code was being allowed to be made because the circumstances were exceptional, occasioned by reasons beyond the control of the defendant and such extension was required in the interest of justice, and grave injustice would be occasioned if the time was not extended.

A prayer seeking time beyond 90 days for filing the written statement ought to be made in writing. In its judicial discretion exercised on well-settled parameters, the Court may indeed put the defendants on terms including imposition of compensatory costs and may also insist on affidavit, medical certificate or other documentary evidence (depending on the facts and circumstances of a given case) being annexed with the application seeking extension of time so as to convince the Court that the prayer was founded on grounds which do exist.

The extension of time shall be only by way of exception and for reasons to be recorded in writing, howsoever brief they may be, by the court. In no case, the defendant shall be permitted to seek extension of time when the court is satisfied that it is a case of laxity or gross negligence on the part of the defendant or his counsel. The court may impose costs for dual purpose: (i) to deter the defendant from seeking any extension of time just for asking and (ii) to compensate the plaintiff for the delay and inconvenience caused to him.

However, no straitjacket formula can be laid down except that the observance of time schedule contemplated by Order VIII Rule 1 shall be the rule and departure therefrom an exception, made for satisfactory reasons only. We hold that Order VIII Rule 1, though couched in mandatory form, is directory being a provision in the domain of processual law.

We sum up and briefly state our conclusions as under:-

(i)    The trial of an election petition commences from the date of the receipt of the election petition by the Court and continues till the date of its decision. The filing of pleadings is one stage in the trial of an election petition. The power vesting in the High Court to adjourn the trial from time to time (as far as practicable and without sacrificing the expediency and interests of justice) includes power to adjourn the hearing in an election petition affording opportunity to the defendant to file written statement. The availability of such power in the High Court is spelled out by the provisions of the Representation of the People Act, 1951 itself and Rules made for purposes of that Act and a resort to the provisions of the CPC is not called for.

(ii)    On the language of Section 87(1) of the Act, it is clear that the applicability of the procedure provided for the trial of suits to the trial of election petitions is not attracted with all its rigidity and technicality. The rules of procedure contained in the CPC apply to the trial of election petitions under the Act with flexibility and only as guidelines.

(iii)    In case of conflict between the provisions of the Representation of the People Act, 1951 and the Rules framed thereunder or the Rules framed by the High Court in exercise of the power conferred by Article 225 of the Constitution on the one hand, and the Rules of Procedure contained in the CPC on the other hand, the former shall prevail over the latter.

(iv)    The purpose of providing the time schedule for filing the written statement under Order VIII, Rule 1 of CPC is to expedite and not to scuttle the hearing. The provision spells out a disability on the defendant. It does not impose an embargo on the power of the Court to extend the time. Though, the language of the proviso to Rule 1 of Order VIII of the CPC is couched in negative form, it does not specify any penal consequences flowing from the non- compliance. The provision being in the domain of the Procedural Law, it has to be held directory and not mandatory. The power of the Court to extend time for filing the written statement beyond the time schedule provided by Order VIII, Rule 1 of the CPC is not completely taken away.

(v)    Though Order VIII, Rule 1 of the CPC is a part of Procedural Law and hence directory, keeping in view the need for expeditious trial of civil causes which persuaded the Parliament to enact the provision in its present form, it is held that ordinarily the time schedule contained in the provision is to be followed as a rule and departure therefrom would be by way of exception. A prayer for extension of time made by the defendant shall not be granted just as a matter of routine and merely for asking, more so when the period of 90 days has expired. Extension of time may be allowed by way of an exception, for reasons to be assigned by the defendant and also be placed on record in writing, howsoever briefly, by the Court on its being satisfied. Extension of time may be allowed if it was needed to be given for the circumstances which are exceptional, occasioned by reasons beyond the control of the defendant and grave injustice would be occasioned if the time was not extended.

Costs may be imposed and affidavit or documents in support of the grounds pleaded by the defendant for extension of time may be demanded, depending on the facts and circumstances of a given case.

In the case at hand, the High Court felt satisfied that the reason assigned by the defendant-appellant in support of the prayer for extension of time was good and valid. However, the prayer was denied because the High Court felt it had no power to do so. The written statement has already been filed in the High Court. We direct that the written statement shall now be taken on record but subject to payment of Rs.5000/- by way of costs payable by the appellant herein to respondent No.1 i.e. the election petitioner in the High Court, within a period of 4 weeks from today.

The appeal stands allowed in the above terms.

No order as to the costs in this appeal.

Before parting we would like to state that the issue raised in this appeal arises frequently before the courts and is of some significance affecting a large number of cases, and so, in spite of the parties being represented by learned counsel, we thought it fit to request Mr. Rakesh Dwivedi, Senior Advocate and former Additional Solicitor General of India to assist the Court as Amicus Curiae. He responded to the call of the Court and presented the case from very many angles bringing to the notice of the Court a volume of case law some of which we have referred to hereinabove. We place on record our appreciation of the valuable assistance rendered by Mr. Rakesh Dwivedi, Senior Advocate.

In The Supreme Court Of India - Civil Appellate Jurisdiction - Civil Appeal No. 8400 Of 2017 - Civil Appeal Nos.15091-15091 Of 2017 - (Arising Out Of Diary No. 22835 OF 2017) - Date of Judgment: 19  September, 2017

Judgment

A.K. Sikri, J

Permission to file the appeal is granted and delay condoned in Diary No. 22835 of 2017.

2) Though this case has a past history as well, in the instant appeal, we are concerned with the correctness of the order dated May 01, Signature Not Verified 2017 passed by the National Company Law Appellate Tribunal Digitally signed by BALA PARVATHI Date: 2017.09.20 15:24:00 IST Reason:

(hereinafter referred to as, the ‘NCLAT’) whereby it is held that the time of seven days prescribed in proviso to sub-section (5) of Section 9 of the Insolvency and Bankruptcy Code, 2016 (for short, the ‘Code’) is mandatory in nature and if the defects contained in the application filed by the ‘operational creditor’ for initiating corporate insolvency resolution against a corporate debtor are not removed within seven days of the receipt of notice given by the adjudicating authority for removal of such objections, then such an application filed under Section 9 of the Code is liable to be rejected. The precise question of law which was framed by the NCLAT for its decision is to the following effect:

“Whether the time limit prescribed in Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as Code 2016) for admitting or rejecting a petition or initiation of insolvency resolution process is mandatory?”
3) Chapter II of Part II of the Code deals with corporate insolvency resolution process. Under Section 7 of the Code, financial creditor (as per the definition contained in Section 5(7)) can initiate corporate insolvency resolution process. Section 8, on the other hand, deals with insolvency resolution by operational creditor. Operational creditor is defined in Section 5(2) of the Code to mean a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. This Section provides that if ‘default’ has occurred in payment of the said debt within the meaning of Section 2(12), such an operational creditor may send a demand notice to the corporate debtor demanding payment of the amount involved in the default, in the prescribed manner, giving ten days notice in this behalf. The corporate debtor is given ten days time to bring to the notice of the operational creditor about the existence of a dispute, if any, however, send requisite proof for repayment of unpaid operational debt. However, in case the payment is not received or notice of dispute is not received, operational creditor can file an application under Section 9 for initiation of corporate insolvency resolution process. Since we are concerned with this provision, the same is reproduced below in its entirety:
“9. Application for initiation of corporate insolvency resolution process by operational creditor. – (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed.
(3) The operational creditor shall, along with the application furnish — “(a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and
(d) such other information as may be specified.
(4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional.
(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order—
(i) admit the application and communicate such decision to the operational creditor and the corporate debtor if,— “(a) the application made under sub-section (2) is complete;
(b) there is no repayment of the unpaid operational debt;
(c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;
(d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.
(ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if— “(a) the application made under sub-section (2) is incomplete;
(b) there has been repayment of the unpaid operational debt;
(c) the creditor has not delivered the invoice or notice for payment to the corporate debtor;
(d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or
(e) any disciplinary proceeding is pending against any proposed resolution professional:
Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause
(ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of this section.”

4) A reading of the aforesaid provision would reflect that time limits for taking certain actions by either the operational creditor or adjudicating authority are mentioned therein. As per sub-section (1) of Section 9, application can be filed after the expiry of period of ten days from the delivery of notice or invoice demanding payment, which is in tune with the provisions contained in Section 8 that gives ten days time to the corporate debtor to take any of the steps mentioned in sub-section (2) of Section 8. As per sub-section (2) of Section 9, the operational creditor is supposed to file an application in the prescribed form and manner which needs to be accompanied by requisite/prescribed fee as well. Sub-section (3) puts an obligation on the part of the operational creditor to furnish the information stipulated therein. Once such an application is filed and received by the adjudicating authority, fourteen days time is granted to the adjudicating authority to ascertain from the records of an information utility or on the basis of other evidence furnished by the operational creditor, whether default on the part of corporate debtor exists or not. This exercise, as per sub-section (5), is to be accomplished by the adjudicating authority within fourteen days. Sub-section (5) provides two alternatives to the adjudicating authority while dealing with such an application. In case it is satisfied that conditions mentioned in clause (i) of Section 9(5) are satisfied, the adjudicating authority may pass an order admitting such an application. On the other hand, if the adjudicating authority finds existence of any eventuality stated in sub-section (2), it may order rejection of such an application.

5) One of the conditions, with which we are concerned, is that application under sub-section (2) has to be complete in all respects. In other words, the adjudicating authority has to satisfy that it is not defective. In case the adjudicating authority, after the scrutiny of the application, finds that there are certain defects therein and it is not complete as per the provisions of sub-section (2), in that eventuality, the proviso to sub-section (5) mandates that before rejecting the application, the adjudicating authority has to give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice.

6) Sub-section (5) of Section 9, thus, stipulates two time periods. Insofar as the adjudicating authority is concerned, it has to take a decision to either admit or reject the application with the period of fourteen days. Insofar as defects in the application are concerned, the adjudicating authority has to give a notice to the applicant to rectify the defects before rejecting the application on that ground and seven days period is given to the applicant to remove the defects.

7) The question before the NCLAT was as to whether time of fourteen days given to the adjudicating authority for ascertaining the existence of default and admitting or rejecting the application is mandatory or directory. Further question (with which this Court is concerned) was as to whether the period of seven days for rectifying the defects is mandatory or directory.

8) The NCLAT has held that period of fourteen days prescribed for the adjudicating authority to pass such an order is directory in nature, whereas period of seven days given to the applicant/ operational creditor for rectifying the defects is mandatory in nature. Conclusion in this behalf is stated in paragraphs 43 and 4 of the impugned order and these paragraphs read as under:

“43. Thus, in view of the aforementioned unambiguous position of law laid down by the Hon’ble Apex Court and discussion as made above, we hold that the mandate of sub-section (5) of section 7 or sub-section (5) of section 9 or sub-section (4) of section 10 is procedural in nature, a tool of aid in expeditious dispensation of justice and is directory.
44. However, the 7 days’ period for the rectification of defects as stipulated under proviso to the relevant provisions as noticed above is required to be complied with by the corporate debtor whose application, otherwise, being incomplete is fit to be rejected. In this background we hold that the proviso to sub-section (5) of section 7 or proviso to sub-section (5) of section 9 or proviso to sub-section (4) of section 10 to remove the defect within 7 days are mandatory, and on failure applications are fit to be rejected.” On the basis of the aforesaid findings, the NCLAT directed rejection of the application filed by the operational creditor in the following manner:

“51. Further, we find that the application was defective, and for the said reason the application was not admitted within the specified time. Even if it is presumed that 7 additional days time was to be granted to the operational creditor, the defects having pointed out on 16th February 2017 and having not taken care within time, we hold that the petition under section 9 filed by respondent/operational creditor being incomplete was fit to be rejected.
52. For the reasons aforesaid, we direct the Adjudicating Authority to reject and close the Petition preferred by Respondents. After we reserved the judgment if any order has been passed by the Adjudicating Authority, except order of dismissal, if any, are also declared illegal.”

9) Before we pronounce as to whether the aforesaid rendition by the NCLAT is justified or not, it would be apposite to take stock of certain essential facts.

10) Before the enactment of the Code, the relevant legislation dealing with such subject matters was the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’). Under this Act, an industrial undertaking, on becoming sick (i.e. where its net worth got eroded), could file a reference under Section 15(1) of SICA, before the Board for Industrial and Financial Reconstruction (for short, ‘BIFR’) constituted under SICA. BIFR, on admitting such a reference, was supposed to undertake the exercise whether such a sick company can be revived or not. For this purpose, BIFR would appoint an Operating Agency (OA) which was supposed to explore the possibility of revival plan in consultation with the other stakeholders, particularly the creditors. If such reconstruction/revival scheme prepared by the OA was found to be feasible by the BIFR, after ascertaining the views/objections of the concerned parties, BIFR would sanction such a scheme. If that was not possible, BIFR would recommend winding up of sick company by making reference in this behalf to the jurisdictional High Court. There was a provision of appeal before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). This scheme is stated in brief for the purposes of clarity of the matter though we are not concerned with any of the provisions of SICA. Another aspect which needs to be mentioned is that on admitting the reference, all other legal proceedings by creditors or other persons initiated against the said sick industrial company had to be put on hold by virtue of the protection granted under Section 22(1) of SICA.

11) Respondent No.1 herein, namely, Juggilal Kamlapat Jute Mills Company Limited, became a sick industrial company in the year 1994 and because of this reason it filed its reference under Section 15(1) of SICA. It was declared as a sick industrial company by the BIFR on December 16, 1994 as a result whereof it came under the protective umbrella of Section 22(1) of SICA.

According to the appellant (who is the operational creditor in this case), which is a jute trader, it had supplied raw jute to respondent No.1 (the corporate debtor) in the years 2001, 2002 and 2003 in respect of which the corporate debtor owned a sum of Rs.17,06,766.95 p. Further, according to the operational creditor, the corporate debtor had issued Certificate dated October 24, 2004 acknowledging the aforesaid debt. However, it was not in a position to recover this debt because of the pendency of proceedings which resulted in stay of proceedings in view of Section 22(1) of SICA. In the year 2007, one Kolkata based company, known as Rainey Park Suppliers Private Limited (hereinafter referred to as ‘Rainey Park’), invested in corporate debtor and took over its management from its erstwhile promoters, i.e. J.K. Singhania Group. The operational creditor had sent notices to Rainey Park to pay the aforesaid amount. However, it was not paid. Legal notices were also sent and applications were also filed before the BIFR in this behalf. It led to various events which are not required to be mentioned for the sake of brevity. Fact remains that the aforesaid debt was not honoured or liquidated by the corporate debtor or Rainey Park. While the matter was pending with BIFR, Sick Industrial Companies Repeal Act was passed on the enactment of the Code with effect from May 28, 2016. Resultantly, all proceedings before BIFR and AAIFR stood abated. With this embargo, Section 22(1) of SICA also vanished.

12) In these changed circumstances, the operational creditor served another demand notice dated January 06, 2017, in the statutory format prescribed under the Code, upon the corporate debtor calling up it to pay the outstanding dues. As it was not paid, the operational creditor filed application for initiation of corporate insolvency resolution process under Section 9 o the Act. The chronology of events which took place from the date of filing of the said application till the passing of the impugned order by the NCLAT are mentioned herein below:

10.02.2017 → The appellant filed the application under Section 9(2) of the Code, being CP No. 10/ALD/2017, before the adjudicating authority under the Code.

14.02.2017 → The registry of the adjudicating authority pointed out some procedural defects on the basis of the check list prepared for scrutiny of the petition/application/ appeal/reply as per Order No. 25/2/2016-

NCLT dated 28.07.2016 and listed the application for hearing before the adjudicating authority on 16.02.2017.

16.02.2017 → The adjudicating authority granted time to the appellant for removal of the said procedural defects on 28.02.2017 and also wanted to know about the stage of the proceedings before BIFR when the proceedings stood abated.

28.02.2017 → The appellant removed the procedural defects. As inquired by the adjudicating authority, the appellant’s counsel sought for some more time for filing formal memo by providing/furnishing the latest order passed by BIFR before the Code came into force.

03.03.2017 → The appellant filed its formal memo/additional documents/orders arising in/out of the pending BIFR’s proceedings which stood abated. On 03.03.2017, the respondent No. 1 debtor appeared before the Adjudicating Authority and sought liberty to raise its objections qua the maintainability of the application.

09.03.2017 → The Corporate debtor/respondent No.1 company filed its written objections before the Adjudicating Authority disputing the maintainability of the application filed on various grounds like time barred debt; the defective demand notice; civil suit filed against the appellant being Civil Suit No. 225 of 2017 before the District Court and embargo created by Section 252 of the IB Code, 2016 the proceedings cannot be initiated for a period of six months after abatement of SICA.

One JK Jute Mill Mazdoor Morcha, Kanpur i.e. respondent No. 2 herein moved an application seeking intervention in the mater and brought on record various orders including the judgment dated 13.11.2014 passed by this Court in the matter of Ghanshyam Sarda v. Shiv Shankar Trading Company & Ors., reported in (2015) 1 SCC 298 wherein this Court has found that the sale of assets without BIFR’s permission as questionable before the BIFR and also an order dated 18.11.2016 passed by this Court in the case of Ghanshyam Sarda v. Sashikant Jha (i.e. contempt petition (civil) No. 338 of 2014), wherein the Director(s) of the have been held guilty of contempt. It is also said that the corporate debtor i.e. respondent No. 1 also failed to clear the legitimate dues of the workmen of jute mill which are worth more than 100 crores in rupees.

09.03.2017 → In light of the foregoing scenario, the Adjudicating Authority for providing substantial justice inter alia directed the respondent No. 1/Corporate Debtor to maintain status quo in respect of its immovable property until further orders. 21.03.2017 → The interim order passed by the Adjudicating Authority, Allahabad Bench on 09.03.2017 was challenged by the respondent No. 1/Corporate Debtor under Section 61 of the IB Code, 2016 before the National Company Law Appellate Tribunal (NCLAT) being Company Appeal No. 9 of 2017. The NCLAT on 21.03.2017 issued notice in the said appeal inter alia observing that question of law is involved in this case and directing the Adjudicating Authority not to admit the application filed under the IB Code, 2016 by the appellant.

01.05.2017 → The NCLAT has allowed the AT No. 09/2017 on the ground that the application and Section 9 petition filed by appellant herein was incomplete, defected and was fit to be rejected.

Hence, the NCLAT was pleased to direct NCLT to reject and close the application filed by the appellant under Section 9 of the IB Code, 2016 passed in the impugned order inter alia rejecting the application filed by the appellant under Section 9 of the IB Code, 2016 read with IB (Application to Adjudicating Authority) Rules, 2016 being CP No. (IB)10/ALD/ 2017.

13) We may point out at the outset that the learned senior counsel appearing for the appellant had submitted that in the instant case the defects which were pointed out were not of the nature mentioned in the Code but were in terms of the Companies Act, 2013. For this purpose, he had referred to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as ‘Rules 2016’) and on that basis it was argued that Section 9(5) of the Code did not apply in the instant case inasmuch as there has to be difference between ‘defective’ application and ‘incomplete’ application. He also submitted that the respondent had been violating interim orders passed by BIFR in the proceedings pending before it under SICA. However, we make it clear at the outset that since we are dealing with the substantial issue as to whether seven days period provided for removing the defects is mandatory or not, it is not necessary to touch upon these mundane aspects. Instead, it would be better to concentrate on the substance of the matter.

14) As mentioned above, insofar as prescription of fourteen days within which the adjudicating authority has to pass an order under sub-section (5) of Section 9 for admitting or rejecting the application is concerned, the NCLAT has held that the same cannot be treated as mandatory. Though this view is not under challenge (and rightly so), discussion in the impugned order on this aspect has definite bearing on the other question, with which this Court is concerned. Therefore, we deem it apposite to discuss the rationale which is provided by the NCLAT itself in arriving at the aforesaid conclusion insofar as first aspect is concerned.

15) It is pointed out by the NCLAT that where an application is not disposed of or an order is not passed within a period specified in the Code, in such cases the adjudicating authority may record the reasons for not doing so within the period so specified and may request the President of the NCLAT for extension of time, who may, after taking into account the reasons so recorded, extend the period specified in the Code, but not exceeding ten days, as provided in Section 64(1) of the Code. The NCLAT has thereafter scanned through the scheme of the Code by pointing out various steps of the insolvency resolution process and the time limits prescribed therefor. It is of relevance to mention here that the corporate insolvency resolution process can be initiated by the financial creditor under Section 7 of the Code, by the operational creditor under Section 9 of the Code and by a corporate applicant under Section 10 of the Code. There is a slight difference in these provisions insofar as criteria for admission or rejection of the applications filed under respective provisions is concerned. However, it is pertinent to note that after the admission of the insolvency resolution process, the procedure to deal with these applications, whether filed by the financial creditor or operational creditor or corporate applicant, is the same. It would be relevant to glance through this procedure.

16) On admission of the application, the adjudicating authority is required to appoint an Interim Resolution Professional (for short, ‘IRP’) in terms of Section 16(1) of the Code. This exercise is to be done by the adjudicating authority within fourteen days from the commencement of the insolvency date. This commencement date is to reckon from the date of the admission of the application. Under sub-section (5) of Section 16, the term of IRP cannot exceed thirty days. Certain functions which are to be performed by the IRP are mentioned in subsequent provisions of the Code, including management of affairs of corporate debtor by IRP as well as duties of IRP so appointed. One of the important functions of the IRP is to invite all claims against the corporate debtor, collate all those claims and determine the financial position of the corporate debtor. After doing that, IRP is to constitute a committee of creditors which shall comprise of financial creditors of the corporate debtor. The first meeting of such a committee of creditors is to be held within seven days of the constitution of the said committee, as provided in Section 22 of the Code. In the said first meeting, the committee of creditors has to take a decision to either appoint IRP as Resolution Professional (RP) or to replace the IRP by another RP. Since term of IRP is thirty days, all the aforesaid steps are to be accomplished within this thirty days period. Thereafter, when RP is appointed, he is to conduct the entire corporate insolvency resolution process and manage the operations of the corporate debtor during the said period. It is not necessary to state the further steps which are to be taken by the RP in this behalf. What is important is that the entire corporate insolvency resolution process is to be completed within the period of 180 days from the date of admission of the applicant. This time limit is provided in Section 12 of the Act. This period of 180 days can be extended, but such extension is capped as extension cannot exceed 90 days. Even such an extension would be given by the adjudicating authority only after recording a satisfaction that the corporate insolvency resolution process cannot be completed within the original stipulated period of 180 days. If the resolution process does not get completed within the aforesaid time limit, serious consequences thereof are provided under Section 33 of the Code. As per that provision, in such a situation, the adjudicating authority is required to pass an order requiring the corporate debtor to be liquidated in the manner as laid down in the said Chapter.

17) The aforesaid statutory scheme laying down time limits sends a clear message, as rightly held by the NCLAT also, that time is the essence of the Code. Notwithstanding this salutary theme and spirit behind the Code, the NCLAT has concluded that as far as fourteen days time provided to the adjudicating authority for admitting or rejecting the application for initiation of insolvency resolution process is concerned, this period is not mandatory. For arriving at such a conclusion, the NCLAT has discussed the law laid down by this Court in some judgments. Therefore, we deem it proper to reproduce the discussion of the NCLAT itself in this behalf:

“32. In P.T. Rajan Vs. T.P.M. Sahir and Ors. (2003) 8 SCC 498, the Hon’ble Supreme Court observed that where Adjudicating Authority has to perform a statutory function like admitting or rejecting an application within a time period prescribed, the time period would have to held to be directory and not mandatory. In the said case, Hon’ble Apex Court observed:
“48. It is well-settled principle of law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefor, the same would be directory and not mandatory. (See Shiveshwar Prasad Sinha v. The District Magistrate of Monghur & Anr. AIR (1966) Patna 144, Nomita Chowdhury v. The State of West Bengal & Ors. (1999) CLJ 21 and Garbari Union Co-operative Agricultural Credit Society Limited & Anr. V. Swapan Kumar Jana & Ors. (1997) 1 CHN 189).
49. Furthermore, a provision in a statute which is procedural in nature although employs the word “shall” may not be held to be mandatory if thereby no prejudice is caused.”
33. That the Hon’ble Apex Court has on numerous occasions interpreted the word ‘shall’ to mean ‘may’.
An analogous position can be found in the context of the time prescribed for filing Written Statements by Defendants to a suit, wherein the Hon’ble Apex Court was faced with the question of a Court’s power to take on record Written Statements that were filed beyond the period of 90 days, as prescribed under Order VIII Rule 1 of the Code of Civil Procedure, 1908. In this regard, the Hon’ble Supreme Court in Kailash Versus Nanhku and Ors (2005) 4 SCC 480 held as under:

“27. Three things are clear. Firstly, a careful reading of the language in which Order 8 Rule 1 has been drafted, shows that it casts an obligation on the defendant to file the written statement within 30 days from the date of service of summons on him and within the extended time falling within 90 days. The provision does not deal with the power of the court and also does not specifically take away the power of the court to take the written statement on record though filed beyond the time as provided for. Secondly, the nature of the provision contained in Order 8 Rule 1 is procedural. It is not a part of the substantive law. Thirdly, the object behind substituting Order 8 Rule 1 in the present shape is to curb the mischief of unscrupulous defendants adopting dilatory tactics, delaying the disposal of cases much to the chagrin of the plaintiffs and petitioners approaching the court for quick relief and also to the serious inconvenience of the court faced with frequent prayers for adjournments. The object is to expedite the hearing and not to scuttle the same. The process of justice may be speeded up and hurried but the fairness which is a basic element of justice cannot be permitted to be buried.”
34. Further, Hon’ble Supreme Court in the matter of Smt. Rani Kusum vs Smt. Kanchan Devi (2005) 6 SCC 705, concurring with the ratio laid down in Kailash Versus Nanhku (supra) held that:
“10. All the rules of procedure are the handmaid of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the statute, the provisions of CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice.
11. The mortality of justice at the hands of law troubles a judge’s conscience and points an angry interrogation at the law reformer.
12. 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 the 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. (See Sushil Kumar Sen v. State of Bihar [(1975) 1 SCC 774] .)
13. No person has a vested right in 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.
(See Blyth v. Blyth [(1966) 1 All ER 524 :
1966 AC 643 : (1966) 2 WLR 634 (HL)] .) 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. (See Shreenath v. Rajesh [(1998) 4 SCC 543 : AIR 1998 SC 1827] .)
14. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice.” xx xx xx
41. Further, nature of the provisions contained in sub-section (5) of section 7 or sub-section (5) of section 9 and sub-section (4) of section 10 of the ‘Code’ like Order VIII Rule 1 being procedural in nature cannot be treated to be a mandate of law.
42. The object behind the time period prescribed under sub-section (5) of section 7, sub-section (5) of section 9 and sub-section (4) of section 10, like Order VIII, Rule 1 of CPC is to prevent the delay in hearing the disposal of the cases. The Adjudicating Authority cannot ignore the provisions. But in appropriate cases, for the reasons to be recorded in writing, it can admit or reject the petition after the period prescribed under section 7 or section 9 or section 10.
43. Thus, in view of the aforementioned unambiguous position of law laid down by the Hon’ble Apex Court and discussion as made above, we hold that the mandate of sub-section (5) of section 7 or sub-section (5) of section 9 or sub-section (4) of section 10 is procedural in nature, a tool of aid in expeditious dispensation of justice and is directory.”

18) The NCLAT has also held that fourteen days period is to be calculated ‘from the date of receipt of application’. The NCLAT has clarified that date of receipt of application cannot be treated to be the date of filing of the application. Since the Registry is required to find out whether the application is in proper form and accompanied with such fee as may be prescribed, it will take some time in examining the application and, therefore, fourteen days period granted to the adjudicating authority under the aforesaid provisions would be from the date when such an application is presented before the adjudicating authority, i.e. the date on which it is listed for admission/order.

19) After analysing the provision of fourteen days time within which the adjudicating authority is to pass the order, the NCLAT immediately jumped to another conclusion, viz. the period of seven days mentioned in proviso to sub-section (5) of Section 9 for removing the defect is mandatory, with the following discussion:

“44. However, the 7 days’ period for the rectification of defects as stipulated under proviso to the relevant provisions as noticed above is required to be complied with by the corporate debtor whose application, otherwise, being incomplete is fit to be rejected. In this background we hold that the proviso to sub-section (5) of section 7 or proviso to sub-section (5) of section 9 or proviso to sub-section (4) of section 10 to remove the defect within 7 days are mandatory, and on failure applications are fit to be rejected.” There is no further discussion on this aspect.
20) We are not able to decipher any valid reason given while coming to the conclusion that the period mentioned in proviso is mandatory. The order of the NCLAT, thereafter, proceeds to take note of the provisions of Section 12 of the Code and points out the time limit for completion of insolvency resolution process is 180 days, which period can be extended by another 90 days. However, that can hardly provide any justification to construe the provisions of proviso to sub-section (5) of Section 9 in the manner in which it is done. It is to be borne in mind that limit of 180 days mentioned in Section 12 also starts from the date of admission of the application. Period prior thereto which is consumed, after the filing of the application under Section 9 (or for that matter under Section 7 or Section 10), whether by the Registry of the adjudicating authority in scrutinising the application or by the applicant in removing the defects or by the adjudicating authority in admitting the application is not to be taken into account. In fact, till the objections are removed it is not to be treated as application validly filed inasmuch as only after the application is complete in every respect it is required to be entertained. In this scenario, making the period of seven days contained in the proviso as mandatory does not commend to us. No purpose is going to be served by treating this period as mandatory. In a given case there may be weighty, valid and justifiable reasons for not able to remove the defects within seven days. Notwithstanding the same, the effect would be to reject the application.

21) Let us examine the question from another lens. The moot question would be as to whether such a rejection would be treated as rejecting the application on merits thereby debarring the application from filing fresh application or it is to be treated as an administrative order since the rejection was because of the reason that defects were not removed and application was not examined on merits. In the former case it would be travesty of justice that even if the case of the applicant on merits is very strong, the applicant is shown the door without adjudication of his application on merits. If the latter alternative is accepted, then rejection of the application in the first instance is not going to serve any purpose as the applicant would be permitted to file fresh application, complete in all aspects, which would have to be entertained. Thus, in either case, no purpose is served by treating the aforesaid provision as mandatory.

22) Various provisions of the Code would indicate that there are three stages:

(i) First stage is the filing of the application. When the application is filed, the Registry of the adjudicating authority is supposed to scrutinise the same to find out as to whether it is complete in all respects or there are certain defects. If it is complete, the same shall be posted for preliminary hearing before the adjudicating authority. If there are defects, the applicant would be notified about those defects so that these are removed. For this purpose, seven days time is given. Once the defects are removed then the application would be posted before the adjudicating authority.

(ii) When the application is listed before the adjudicating authority, it has to take a decision to either admit or reject the application. For this purpose, fourteen days time is granted to the adjudicating authority. If the application is rejected, the matter is given a quietus at that level itself. However, if it is admitted, we enter the third stage.

(iii) After admission of the application, insolvency resolution process commences. Relevant provisions thereof have been mentioned above. This resolution process is to be completed within 180 days, which is extendable, in certain cases, up to 90 days. Insofar as the first stage is concerned, it has no bearing on the insolvency resolution process at all, inasmuch as, unless the application is complete in every respect, the adjudicating authority is not supposed to deal with the same. It is at the second stage that the adjudicating authority is to apply its mind and decide as to whether the application should be admitted or rejected. Here adjudication process starts. However, in spite thereof, when this period of fourteen days given by the statute to the adjudicating authority to take a decision to admit or reject the application is directory, there is no reason to make it mandatory in respect of the first stage, which is pre-adjudication stage.

23) Further, we are of the view that the judgments cited by the NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating authority has to pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to sub-section (5) of Section 7, Section 9 or sub-section (4) of Section 10 as well. After all, the applicant does not gain anything by not removing the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible.

24) Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and not mandatory in nature. However, we would like to enter a caveat.

25) We are also conscious of the fact that sometimes applicants or their counsel may show laxity by not removing the objections within the time given and make take it for granted that they would be given unlimited time for such a purpose. There may also be cases where such applications are frivolous in nature which would be filed for some oblique motives and the applicants may want those applications to remain pending and, therefore, would not remove the defects. In order to take care of such cases, a balanced approach is needed. Thus, while interpreting the provisions to be directory in nature, at the same time, it can be laid down that if the objections are not removed within seven days, the applicant while refilling the application after removing the objections, file an application in writing showing sufficient case as to why the applicant could not remove the objections within seven days. When such an application comes up for admission/order before the adjudicating authority, it would be for the adjudicating authority to decide as to whether sufficient cause is shown in not removing the defects beyond the period of seven days. Once the adjudicating authority is satisfied that such a case is shown, only then it would entertain the application on merits, otherwise it will have right to dismiss the application. The aforesaid process indicated by us can find support from the judgment of this Court in Kailash v. Nanhku & Ors., (2005) 4 SCC 480, wherein the Court held as under:

“46. (iv) The purpose of providing the time schedule for filing the written statement under Order 8 Rule 1 CPC is to expedite and not to scuttle the hearing. The provision spells out a disability on the defendant. It does not impose an embargo on the power of the court to extend the time. Though the language of the proviso to Rule 1 Order 8 CPC is couched in negative form, it does not specify any penal consequences flowing from the non-compliance. The provision being in the domain of the procedural law, it has to be held directory and not mandatory. The power of the court to extend time for filing the written statement beyond the time schedule provided by Order 8 Rule 1 CPC is not completely taken away.
(v) Though Order 8 Rule 1 CPC is a part of procedural law and hence directory, keeping in view the need for expeditious trial of civil causes which persuaded Parliament to enact the provision in its present form, it is held that ordinarily the time schedule contained in the provision is to be followed as a rule and departure therefrom would be by way of exception. A prayer for extension of time made by the defendant shall not be granted just as a matter of routine and merely for the asking, more so when the period of 90 days has expired. Extension of time may be allowed by way of an exception, for reasons to be assigned by the defendant and also be placed on record in writing, howsoever briefly, by the court on its being satisfied.
Extension of time may be allowed if it is needed to be given for circumstances which are exceptional, occasioned by reasons beyond the control of the defendant and grave injustice would be occasioned if the time was not extended. Costs may be imposed and affidavit or documents in support of the grounds pleaded by the defendant for extension of time may be demanded, depending on the facts and circumstances of a given case.”
26) In fine, these appeals are allowed and that part of the impugned judgment of NCLAT which holds proviso to sub-section (5) of Section 7 or proviso to sub-section (5) of Section 9 or proviso to sub-section (4) of Section 10 to remove the defects within seven days as mandatory and on failure applications to be rejected, is set aside.

No costs.

.............................................J.

(A.K. SIKRI) .............................................J.

(ASHOK BHUSHAN) NEW DELHI;

SEPTEMBER 19, 2017.

ITEM NO.1501                   COURT NO.6                   SECTION XVII

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

Civil Appeal     No(s).8400/2017

SURENDRA TRADING COMPANY                                    Appellant(s)

                                       VERSUS

JUGGILAL KAMLAPAT JUTE MILLS COMPANY LTD & ORS.             Respondent(s)

WITH
Diary No(s). 22835/2017 (XVII)

Date : 19-09-2017 These appeals were called on for pronouncement of judgment today.

For Appellant(s) Mr. Sunil Fernandes, AOR Mr. Gaurav Kejriwal, AOR Mr. Sujit Keshri, Adv.

For Respondent(s) Mr. Kailash Chand, AOR Mr. Satish Vig, AOR Ms. Kanika Singh, Adv.

Ms. R.K. Mohit Gupta, Adv.

Ms. Sangram Singh Hooda, Adv.

M/s. Coac, AOR Mr. Akshat Kumar, AOR Hon'ble Mr. Justice A.K. Sikri pronounced the judgment of the Bench comprising His Lordship and Hon'ble Mr.Justice A.K. Sikri.

The appeals are allowed in terms of the signed reportable judgment.

(B.PARVATHI) and (MALA KUMARI SHARMA)
COURT MASTER - COURT MASTER
(Signed reportable judgment is placed on the file)

Madras High Court - Equivalent citations: (1958) 1 MLJ 34 - Bench: R Ayyangar - Judgment date: 14 October, 1957

ORDER Rajagopala Ayyangar, J.

1. K.M. Adam, the petitioner, is a dealer in skins. He was assessed to income-tax for the years 1948-1949 to 1953-1954. The quantum of the tax levied in these assessments was disputed, by the petitioner, assessee, but that is not material for the present petition. What, however, is of relevance is that as a result of these assessments a sum of over Rs. 3,00,000 was found due from the petitioner as arrears of income-tax.

2. The petitioner had for the purpose of his business opened an overdraft account with the Indian Bank, Ltd., for which he had pledged with them, his stock of hides and skins. The limit set to the overdraft by the Bank was at Rs. 1,37,500. On the date relevant to the present petition the assessee had drawn on this account a sum of Rs. 1,31,301-2-1 and this sum was shown in the books of the Bank as debit to his account. While so, the Additional Income-tax Officer, Second Circle, Madras, who is the respondent in this petition, served a notice on 19th November, 1955, on the Indian Bank under Section 46(5-A) of the Indian Income-tax Act. In view of the points raised during argument it is necessary to set out the terms of this notice:

To The Indian Bank (Head Office), Madras I.

A sum of Rs. 345,689-14-0 is due from K. M. Adam on account of Income-tax and/or penalty. I am to request you under Section 46(5-A) of the Income-tax Act, 1922. to pay me forthwith any amount due from you, to, or held by you for, or on account of, the said Mr. K.M. Adam of 46, Harris Road, Pudupet, Madras-2, up to the amount of arrears shown above, and also request you to pay any money which may subsequently become due from you to him or which you may subsequently hold for or on account of him up to the amount of arrears still remaining unpaid, forthwith, on the money becoming due or being held by you as aforesaid, as such payment is required to meet the amount due by the tax-payer in respect of arrears of income-tax and penalty. I am to say that any payment made by you in compliance with this notice is in law deemed to have been made under the authority of the tax-payer and my receipt will constitute a good and sufficient discharge of your liability to the person to the extent of the amount referred to in the receipt.

I am to observe that if you discharge any liability to the tax-payer after receipt of this notice, you will be personally liable to me as Income-tax Officer, II Additional Circle, Madras, to the extent of the liability discharged or to the extent of the liability of the tax-payer for tax and penalties whichever is less.

Further if you fail to make payment in pursuance of this notice to me as Income-tax Officer further proceedings may be taken by and before the Collector on the footing that this notice has the same effect as an attachment by the Collector in exercise of his powers under the proviso to Sub-section (2) of Section 46.

The necessary chalan for depositing the money to the credit of Government in the Reserve Bank of India will be supplied immediately on hearing from you.

A copy of this notice is being sent to Mr. K.M. Adam (tax-payer).

(Sd.)....

3. On receipt of this notice, a copy of which was also sent to the assessee, the Bank replied to the Income-tax Officer, on 23rd November, 1955, stating that there was no amount with them which was payable to Mr. Adam. They also set out the fact that the assessee has pledged with them his stock of hides and skins and had also executed a mortgage of certain of his properties described in the letter. They then stated the amount due to them, as also the limit set for the overdraft. A copy of this reply was sent to the assessee, with a note addressed to him reading ' Please do not operate on your account until you get the above order of the Income-tax Officer vacated '. The Income-tax Officer replied to this on the next day (24th November, 1955) when he said " With reference to the above, I have to state that as and when you make future payments the above notice comes into play." The result of this last communication was that the Bank refused to pay the petitioner any further sums on his overdraft account and this has led to the filing of the present writ petition under Article 226 of the Constitution.

4. The prayer in paragraph 8 of the supporting affidavit to the writ petition was that the records relating to the notice under Section 46(5-A) issued by the respondent may be called for and quashed. Though in the petition there was also a prayer for the issue of a writ of prohibition restraining the Income-tax Officer from taking coercive steps for the recovery of the tax for the year 1950-1951 pending an appeal of the assessee before the Appellate Assistant Commissioner what was argued at the hearing of the petition was confined to the validity of the notice under Section 46(5-A) and the action taken in pursuance thereof, particularly by the communication, dated 24th November, 1955.

5. Section 46 is the provision dealing with the mode of the recovery of the tax. Sub-section (5-A) enacts:

The Income-tax Officer may at any time or from time to time by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to the Income-tax Officer) require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Income-tax Officer either forthwith upon the money becoming due or being held at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the tax-payer in respect of arrears of income-tax and penalty or the whole of the money when it is equal to or less than that amount.

The Income-tax Officer may at any time or from time to time amend or revoke any such notice or extend the time for making any payment in pursuance of the notice.

Any person making any payment in compliance with a notice under this Sub-section shall be deemed to have made the payment under the authority of the assessee and the receipt of the Income-tax Officer shall constitute good and sufficient discharge of the liability of such person to the assessee to the extent of the amount referred to in the receipt.

Any person discharging any liability to the assessee after receipt of the notice referred to in this Sub-section shall be personally liable to the Income-tax Officer to the extent of the liability discharged or to the extent of the liability of the assessee for tax and penalties, whichever is less.

If the person to whom a notice under this Sub-section is sent fails to make payment in pursuance thereof to the Income-tax Officer, further proceedings may be taken by and before the Collector on the footing that the Income-tax Officer's notice has the same effect as an attachment by the Collector in exercise of his powers under the proviso to Sub-section (2) of Section 46.

Where a person to whom a notice under this Sub-section is sent objects to it on the ground that the sum demanded or any part thereof is not due to the assessee, or that he does not hold any money for or on account of the assessee then nothing contained in the section shall be deemed to require such, person to pay any such sum or part thereof as the case may be to the Income-tax Officer.

6. It will be seen that this provision is analogous to an attachment of a debt or what is commonly termed a garnishee summons. The classes of persons to whom such notice could be served are two : (1) any person from whom money is due or may become due to the assessee and (2) any person who holds or may subsequently hold money for or on account of the assessee. The question which arises for consideration in the present case is, as to whether a bank which has afforded overdraft facilities to its customer, holds the amount, specified as that up to which the customer may draw is either ' a debtor ' of the customer or holds that money on behalf of or on account of the customer.

7. I shall now proceed to consider whether the Bank in the present case stands in either of the two situations mentioned above. That moneys standing to the credit of a judgment-debtor in the current account of his in a bank is attachable is beyond dispute. This has been so held on the basis that the bank would be a debtor and could therefore be garnished. Similarly if the money of a customer is on a deposit account it would also be a case where the bank will be in the position of a debtor or as one who held money on behalf of the customer. It is unnecessary for the present case to complicate it by a consideration of the question which has been the subject of some debate as to the essentiality of a notice of demand before a sum due from a bank to a customer could be treated as garnishable debt. The sounder and the more generally accepted view on this point is that expressed in Joachimson v. Swiss Bank Corporation L.R. (1921) 3 K.B. 110 that a garnishee order itself constitutes a sufficient notice to turn a bank into a debtor. That question apart, there must be a debt to be attached. Unless the Bank were a debtor there could be no attachment and an unutilised overdraft account does not render the bank a debtor in any sense and therefore, the bank is not a person from whom money is due to the customer. Nor does the Bank in such a case fall within the expression ' person from whom money may become due '. This refers to a case where there is a debitum in presenti solvendum in futuro, that is, where by reason of an antecedent contract between the garnishee and the judgment-debtor a ' debt' automatically emerges, where the maturing into a presently payable debt is not by reason of external compulsion but due to pre-existing facts which of their own motion bring a debt into existence at a predetermined point of time. The proposition that a garnishee order does not accelerate the 'time for payment and that it does not alter any of the terms of the contract between the garnishee and the judgment-debtor relative to the accrual of a debt arc too well established to need discussion.

8. Mr. Rama Rao Sahib, learned Counsel for the department, did not contend, that the margin between what the assessee had drawn and the limit of the overdraft was a debt either due at the date of the attachment or which could become due in the manner, I have stated above. He rather rested his case on attempting to bring the present instance into the second limb of Sub-section (5-A), namely, 'holds or may hold money for or on account of the assessee'. The argument under this head was somewhat on these lines. Immediately the customer drew a cheque on his overdraft account, which the Bank had by reason of the arrangement with the customer to honour, the money which it thus decides to pay to its customer, becomes at once the customer's money which between the time when the Bank makes up its mind to pay and the time of the actual payment it holds on the customer's account. I must confess that this approach is too metaphysical for me to comprehend. Just by way of illustration I will take the case of an ordinary lender to whom a judgment-debtor applies for a loan. The theory would, if applied to Such an instance, result in some such position immediately the lender makes up his mind to lend and agrees to do so, viz-, that the lender holds the sum for or on account of the would-be borrower and so to speak becomes the debtor of the borrower and that when the money is actually paid that debt is discharged. But it would be seen that if the payment of the loan were thus a repayment of the borrower's money held by the lender, a loan would not result in any debt in favour of the lender which the borrower has to repay. I do not think it is worthwhile pursuing this theory any further. In my judgment when a Bank lends money on overdraft and the customer is always in debit there is no stage at which the bank is a debtor to its customer, nor any point of time at which it holds any money of his on his account. Section 46(5-A) of the Act cannot be on any construction be intended as a credit freeze, with this feature superadded, that if there was any thawing, the resultant credit released became immediately payable to the department. Of course, if at any stage the account of the customer is in credit, Section 46(5-A) would come into play and the sum so standing to the credit of these cases might be directed to be paid over. The present is not such a case and this undoubted right of the department is not what is now sought to be asserted. What the impugned order of the Income-tax Officer directs is virtually that the Bank should pay over to the Department the difference between the limit of the overdraft allowed to the petitioner and the amount drawn by him up to the date of the notice under Section 46(5-A). This in my judgment is not within the scope of the provision and the order understood in the light of the letter, dated 24th November, 1955, is consequently beyond the jurisdiction of the respondent. The notice is accordingly set aside but this will not prevent the department from proceeding to recover the arrears of tax in a manner authorised by the law. The rule is to this extent made absolute. There will be no order as to costs.

Bench: P. B. Majmudar, Rajesh G. Ketkar - In The High Court Of Judicature At Bombay Civil Appellate Jurisdiction - Writ Petition No.4313  Of 2008 -  dated:  8 July, 2010

Judgment Reserved on: 6th May, 2010 Judgment Pronounced On :8th July, 2010 Judgment : (Per R.G.Ketkar, J.)

1. By this petition under Article 226 of the Constitution of India, the petitioners challenge the order dated 29th November 2007 passed by the 3rd Respondent, Cess Officer, Municipal Corporation of the City of Navi Mumbai (for short NMMC) , as also the prohibitory order dated 5th November 2007 passed by the 3rd Respondent. The facts and circumstances giving rise to the filing of the present writ petition, briefly state, are as under:-

The 1st Petitioner is a Company and Small Scale Unit engaged in the business of manufacturing of compounded asafoetida ( Hing) from its factory situate at MIDC, Navi Mumbai. The 1st Petitioner is also a member of Small Scale Entrepreneurs Association (for short the Association) who challenged the competence of the NMMC for levy and collection of cess from the Industries in Maharashtra Industrial Development Corporation (for short MIDC) area in Thane Belapur Industrial Belt by filing Writ Petition No.2787/2001. On 22nd December, 2005 the 2nd Respondent issued demand notice of Rs.49,733/- for the period 2005-2006 for payment of property taxes. The petitioner replied this notice on 5th January, 2006 questioning the competence of the NMMC to levy and recover the property taxes. Respondent No.2 issued notice dated 26th July, 2006 calling upon the 1st Petitioner to produce the books of accounts and demanding the payment of cess. This was replied by the 1st Petitioner on 27th July, 2006 contending that the question about the competence of the NMMC to levy and collect cess is pending in this Court and the petitioners would abide by the decision in that case. On 29th September, 2006 the 2nd Respondent issued final reminder to appear before the cess authorities alongwith the books of accounts to ascertain the cess liability. This was followed by notice dated 5th October, 2006 issued under Rule 25(3) (10) & (11) of the Bombay Provincial Municipal Corporation (Cess on entry of goods) Rules 1996 (for short the Rules). This was replied by the petitioners on 9 th October, 2006. Since there was no payment, the 2nd Respondent issued letter dated 29th November, 2006 and proposed for best judgment assessment. This was replied by the petitioners on 4th December, 2006 requesting the 2nd Respondent not to initiate any proceedings and/or pass any order as the matter is sub-judice before this Court. The notice of demand was issued under Rule 25 (14) of the Rules on 27 th December, 2006 pursuant to the order dated 27th December, 2006 passed under Rule 25(5) of the Rules.

Pursuant to this order, the 3rd Respondent passed an order under Rule 35 on 27th December, 2006 attaching the Bank Account No.CC-653 in the Dombivali Nagari Sahakari Bank Limited to protect the legitimate revenue of the Corporation which is impugned in this petition. The petitioners also challenged the prohibitory order dated 5th November, 2007 passed by the 3rd Respondent u/s.152 (J) (3) of the Bombay Provincial Municipal Corporations Act, 1949 (for short the Act) attaching the goods, list whereof was annexed to the said order.

2. Heard Mr.Jitendra Jain, learned counsel for the petitioners, Ms.S.S.Bhende, learned AGP for Respondent Nos.1 & 5, and Mr.A.A.Garge, learned counsel for Respondent Nos.2 & 6. Mr.Jain, for the petitioners submitted that the order dated 29th November, 2007 passed by the 3rd Respondent attaching the cash credit account is wholly unsustainable. He submitted that basically it is an overdraft facility and the amount is not payable by the Bank.

3. As far as the prohibitory order dated 5th November, 2007 passed by the 3rd Respondent u/s.152 (J) of the Act is concerned, he submitted that the said order passed by 3rd Respondent is without any authority and only the Commissioner of NMMC has power to pass the said order.

4. On the other hand, Mr.Garge, learned counsel for Respondent Nos.2 & 6 submitted that the order dated 29th November, 2007 passed by the 3rd Respondent under Rule 35 of the Rules is with a view to protecting the legitimate revenue of the Corporation. The petitioners are liable to pay Rs.

13,90,129/- as cess liability. As far as prohibitory order dated 5th November, 2007 passed by the 3rd Respondent is concerned, he submitted that the Cess Officer is one of the Cess Authorities u/s.152E of the Act. He further submitted that the petitioners have an equally efficious alternate remedy of filing an appeal u/s.406 of the Act. He therefore prayed for dismissal of the writ petition.

5. Mr.Jain invited our attention to the judgment of the learned Single Judge of the Madras High Court in the case of Adam V/s.Income Tax Officer, Vol.XXXIII, Income Tax Reports 26, as also the judgment of the learned Singe Judge of the Karnataka High Court in the case of Karnataka Bank Limited V/s.Commissioner of Commercial Taxes, 1999 Sales Tax Cases 19.

In the case of Income Tax Officer, the learned Single Judge of the Madras High Court considered the provisions of Section 46 (5A) of the Income Tax Act. The said provision reads as under:-

"The Income-tax Officer may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to the Income Tax Officer) require any person from whom money is due or may become due to the assessee, or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Income Tax Officer, either forthwith upon the money becoming due or being held at or within the time specified in the notice (not being before the money becomes due or is held)so much of the money as is sufficient to pay the amount due by the taxpayer in respect of arrears of income-tax and penalty or the whole of the money when it is equal to or less than that amount.
The Income-tax Officer may at any time or from time to time amend or revoke any such notice or extend the time for making any payment in pursuance of the notice.
Any person making any payment in compliance with a notice under this sub-section shall be deemed to have made the payment under the authority of the assessee and the receipt of the Income- tax Officer shall constitute a good and sufficient discharge of the liability of such person to the assessee to the extent of the amount referred to in the receipt.
Any person discharging any liability to the assessee after receipt of the notice referred to in this sub-section shall be personally liable to the Income-tax officer to the extent of the liability discharged or to the extent of the liability of the assessee for tax and penalties, whichever is less.
If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the Income-tax Officer, further proceedings may be taken by and before the Collector on the footing that the Income-tax Officer's notice has the same effect as an attachment by the Collector in exercise of his powers under the proviso to sub-section (2) of Section 46.
Where a person to whom a notice under this sub-section is sent objects to it on the ground that the sum demanded or any part thereof is not due to the assessee, or that he does not hold any money for or on account of the assessee then nothing contained in this section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, to the Income-tax Officer."
After extracting section 46(5A) of the Income Tax Act, the learned Single Judge observed that the classes of persons to whom such notice could be served are two; (i) any person from whom money is due or may become due to the assessee; (ii) any person who holds or may subsequently hold money for or on account of the assessee. In that case, the amount of Rs. 3,45,689-14-0 was due from K.M.Adam on account of income tax and/or penalty. On 19th November,1955 the Respondent served notice u/s.46(5A) of the Income Tax Act calling upon the Indian Bank to pay the dues of Mr.Adam. This was replied by the Bank on 23rd November, 1955 stating that there was no amount with them which was payable to Mr.Adam. The learned Single Judge held that un-utilised overdraft account does not render the banker the debtor in any sense and the banker is, therefore, not a person from whom money is due to the customer. Nor is the banker in such case, a person from whom money may become due. Where the banker lends money on an overdraft and the customer is always in debit there is no stage at which the banker is debtor to the customer, nor at any point of time at which he holds any money of the customer or the later's account. In view of this, Section 46 (5A) of the Income Tax Act cannot be resorted to as a credit-freeze. This judgment was followed by the learned single Judge of Karnataka High Court in the case of Karnataka Bank Limited (supra).

6. In the present petition, the 3rd Respondent has passed the order under Rule 35 of the Rules, which reads as under:-

"35. Special mode of recovery (1) Notwithstanding anything contained in any law for the time being in force or contract to the contrary, the Commissioner at any time or, from time to time, by notice in writing, a copy of which shall be forwarded to the dealer or person liable to pay cess at his last address known to the Commissioner, require -
(a) any person from whom any amount of money is due, or may become due, to a dealer or person from whom any amount has become due under these rules and has remained unpaid; or (b) any person who holds or may subsequently hold money for or on account of such dealer or person, to pay to the Commissioner, either forthwith upon the money becoming due or being held or at or within the time specified in the notice (but not before the money becomes due or is held as aforesaid), so much of the money as is sufficient to pay the amount due by such dealer or person in respect of the arrears of cess, penalty, interest, sum forfeited, fine or the whole of the money when it is equal to or less than that amount.
Explanation - For the purpose of this rule, the amount of money due to a dealer or person from, or money held for or on account of a dealer or person by any person, shall be calculated after deducting therefrom such claims, if any, lawfully subsisting, as may have fallen due for payment by such dealer or person to such person.
(2) The Commissioner may at any time or, from time to time, amend or revoke any such notice, or extend the time for making any payment in pursuance of the notice. (3) Any person making any payment in compliance with a notice under this rule shall be deemed to have made the payment under the authority of such dealer or person and the receipt of the Commissioner shall constitute a good and sufficient discharge of the liability of such first mentioned person, to the extent of the amount referred to in the receipt. (4) Any person, discharging any liability to such dealer or person after receipt of the notice referred to in this rule, shall be personally liable to the Commissioner to extent of the liability discharged, or to the extent of the liability of such dealer or person in respect of such arrears, whichever is less. (5) Where a person to whom a notice under this rule is sent proves to the satisfaction of the Commissioner that the sum demanded or any part thereof is not due to such dealer or person or that he does not hold any money for or on account of such dealer or person, then nothing contained in this rule shall be deemed to require such person to pay any such sum or part thereof to the Commissioner. (6) Any amount of money which a person is required to pay to the Commissioner, or for which he is personally liable to the Commissioner under this rule shall, if it remains unpaid, be recoverable as an arrears of property taxes.
7. Comparison of Rule 35 extracted herein-above with Section 46(5A) of the Income Tax Act, would indicate that similar language is employed in both the provisions. In view of this, Section 46 (5A) of the Income Tax Act cannot be resorted to as a credit-freeze.

8. We have disposed of the Writ Petition No.2787 of 2001 by holding that the MIDC area is within the municipal limits of the NMMC and consequently, having regard to the provisions of the Act, the NMMC has power and competence to levy and recover taxes, which obviously includes the cess as well. In the present case, undisputedly, the NMMC has attached the cash credit account which in other words is a overdraft facility. The un-utilised overdraft account does not render the banker the debtor in any sense and the banker is, therefore, not a person from whom money is due to the customer. Nor is the banker in such case, a person from whom money may become due. Where the banker lends money on an overdraft and the customer is always in debit there is no stage at which the banker is debtor to the customer, nor at any point of time at which he holds any money of the customer or the later's account. We respectfully agree with the view expressed by the learned Single Judge of Madras High Court in Adam's case (supra) followed by the learned Single Judge of Karnataka High Court in Karnataka Bank's case (supra). We have therefore no authority but to set aside the order dated November 29, 2007 passed by the 3rd Respondent under Rule 35 of the Rules. We however make it clear that this will not prevent the NMMC from proceeding to recover the amount of cess liability in any other manner authorised by law.

9. As far as the prohibitory order dated November 5, 2007 passed by the 3rd Respondent is concerned, the petitioners have challenged the same on the ground that the said order is without jurisdiction and contended that only the Commissioner of NMMC could have passed the said order. On the other hand, the learned counsel for Respondent Nos.2 & 6 submitted that he is one of the cess authorities u/s.152E of the BPMC Act, and there is no substance in the aforesaid submission raised by the learned counsel for the petitioners.

10. In our opinion, the petitioners have equally efficacious alternate remedy by filing the appeal u/s.406 of the BMPC Act. It would be open to the petitioners to raise all the contentions before the learned Judge in the appeal u/s.406 of the BPMC Act. We do not express any opinion on these contentions.

11. In case the petitioners prefer the appeal within eight weeks from today, the learned Judge shall decide the same in accordance with law by taking into consideration the fact that the petitioners were bonafide prosecuting their remedies in the form of this writ petition in this Court.

12. The order dated November 29, 2007 passed by the Cess Officer of the NMMC is quashed and set aside with liberty to the NMMC to recover the cess liability in any other manner authorised by law.

13. Rule is made partly absolute in the aforesaid terms, with no order as to costs.

R.G.Ketkar, J. And P.B.Majmudar, J.

Case Note: Family - Maintenance - Liability of - Sections 18 to 23 of Domestic Violence Act, 2005 and Sections 406 and 498A of Indian Penal Code, 1860 - Present appeal filed against order whereby High court held that application filed by Appellant under Act, 2005 for maintenance was not maintainable - Whether divorced woman could seek for reliefs against her ex-husband under Sections 18 to 23 of Act - Held, alleged domestic violence took place when FIR was lodged by Appellant under Section 498A and 406 of Code against Respondent and his relatives - In petition filed by Respondent, High Court refused to quash said FIR against him observing that prima facie case under Section 498A of Code was made out against him - Act of domestic violence once committed, subsequent decree of divorce would not absolve liability of Respondent from offence committed or to deny benefit to which aggrieved person was entitled under Act - Sessions Judge and High Court failed to notice fact that FIR was lodged much prior to alleged divorce between parties and erred in holding that petition under Section 12 was not maintainable - Impugned order was set aside - Petition allowed. [paras 30, 31, 32 and 33] JUDGMENT

S.J. Mukhopadhaya, J.
1. Leave granted.

2. This appeal has been preferred by the Appellant against the judgment dated 23rd January, 2013 passed by the High Court of Judicature at Bombay in Writ Petition No. 4250 of 2012. By the impugned judgment, the High Court dismissed the writ petition preferred by the Appellant and upheld the order dated 3rdNovember, 2012 passed by the Additional Sessions Judge, Sewree, Mumbai whereby the Sessions Judge held that the application filed by the Appellant under the Protection of Women from Domestic Violence Act, 2005 (hereinafter referred to as the "Domestic Violence Act, 2005") is not maintainable.

3. The case of the Appellant is that she got married to 1st Respondent according to Muslim rites and rituals on 13th May 2005. 1st Respondent was in the habit of harassing her. She was subjected to physical abuse and cruelty. For example, 1st Respondent acted with cruelty, harassed her and had banged her against a wall on her back and stomach on 5th January, 2006, due to which she suffered severe low back pain. The 1st Respondent refused her entry into the matrimonial house on 19th February, 2006 and asked her to stay with her parents. She delivered a baby boy at Breach Candy Hospital, Mumbai on 10th August, 2006 but the 1st Respondent never visited to see the new born baby. Later, the 1st Respondent filed a petition seeking custody of the minor child.

4. The Appellant lodged FIR No. 224 of 2007 on 6th September, 2007 before Agripada Police Station Under Section 498A, and 406 Indian Penal Code against the 1st Respondent, his mother and his sister. Against the same, a writ petition was filed by the 1st Respondent bearing Writ Petition No. 1961 of 2007 seeking quashing of the FIR. The High Court dismissed the said writ petition and the same was challenged by the 1st Respondent on which this Court issued notice. Subsequently, this Court by order dated July, 2008 remitted the matter to the High Court for hearing afresh Writ Petition No. 1961 of 2007. On 4th December, 2008, Writ Petition No. 1961 of 2007 was partly allowed by the High Court quashing the FIR against the 1stRespondent's mother and sister with the observation that the prima facie case Under Section 498A was made out against the 1st Respondent.

5. According to the Appellant, she obtained an ex parte 'Khula' from Mufti under the Muslim Personal Law on 9th May, 2008. The 1st Respondent challenged the 'Khula' pronounced by-Mufti before the Family Court, Bandra vide M.J. Petition No. B-175 of 2008. He also filed a petition for restitution of conjugal right.

6. On 29th September, 2009, the Appellant filed a petition Under Section 12 of the Domestic Violence Act, 2005 against the 1st Respondent before the ACMM's 46th Court, Mazgaon, Mumbai for relief Under Section18 to 23 of the Domestic Violence Act, 2005 alleging that he is not providing maintenance for herself as well as for the minor child. The 1st Respondent filed his reply to the said application which was followed by the rejoinder filed by the Appellant. The Protection Officer appointed by the Magistrate under Domestic Violence Act, 2005 filed his report, inter alia, stating that an act of domestic violence was committed by the 1st Respondent upon the Appellant. But the Magistrate was transferred, the Court fell vacant and no order was passed. Subsequently, the Appellant filed an application for interim maintenance and the Magistrate by order dated 4th February, 2012 allowed the application directing the 1st Respondent to pay interim maintenance of Rs. 25,000/-. Without paying the maintenance, the 1st Respondent preferred an appeal before the Sessions Court challenging the order of Magistrate dated 4th February, 2012. The Sessions Court, Sewree, Mumbai by order dated 3rd August, 2 012 condoned the delay in preferring the appeal and directed the 1st Respondent to deposit the entire amount of maintenance prior to the hearing of the appeal. As the 1st Respondent did not deposit the amount, the Appellant filed an application for issuance of distress warrant. Accordingly a notice was issued on 1st September, 2012. The counsel for the Respondent stated across the bar that the 1st Respondent had deposited the money before the Sessions Court and filed two applications on 3rd September, 2 012 for recalling the order dated 4th February, 2012 and for dismissal of the application on the ground that the domestic relationship did not exist between the Appellant and the 1st Respondent.

7. The Sessions Judge, Seweree, Mumbai by order dated 3rd November, 2012 observed and held as follows:
14. First I will take the legal point which has been taken by the learned advocate for the Appellant as to whether there was domestic relationship between the parties on the divorce took place between the parties on 09/05/2008. The learned advocate for the Respondent submitted that though the divorce is taken place as per custom, then also it is not confirm by Civil Court. Secondly, he argued that non-applicant himself filed a proceeding for restitution of conjugal rights after this date and also filed proceedings for setting aside that divorce obtained by custom and therefore, it cannot be said that divorce took place between the parties. But this argument cannot be accepted because we have to see pleadings of the applicant. She herself came with a case that marriage was dissolved by Mufti on 09/05/2008. She herself filed such documents along with application in which declaration is made about Nikah of the applicant with the non-applicant is declared null and void and therefore, applicant is no more wife of the Appellant, after period of Iddat she was wife of the Appellant, after period of Iddat she was free from any hindrance. She herself came with a case that she is no more wife of the non-applicant after 09/05/2008. It is further to be noted that she herself moved for this customary divorce and according to non-applicant same was obtained exparte. In this background applicant cannot blow hot and cold by saying that though she took such divorce then also same has not been confirmed by Civil Court as well as the non-applicant has filed the proceeding for restitution of conjugal rights and setting aside of that divorce and therefore, she may be treated as his wife.

15. So, now a legal question arise as to whether in view of divorce took place on 09/05/2008, the domestic relationship between the parties exist on the date of filing of this petition on 29/09/2009 ? and if there is no domestic relationship then whether the application is maintainable ? 20. So, it is the consistent view of Hon'ble Apex Court, Hon'ble Bombay High Court and other Hon'ble High Court that after divorce domestic relationship between the parties was not remain and therefore, application under the Act after date of divorce is not maintainable. In the present case also the facts are similar and therefore, the law laid down is applicable. In the present case also the facts are similar and therefore, the law laid down is applicable.

21...So, I conclude that in view of divorce took place between the parties on 09/05/2008 the domestic relationship between parties did not remained and therefore, this application filed on 29/06/2009 under the Act is not maintainable and therefore, question of granting of any interim relief does not arise because it can be said that applicant has no prima-facie case.

23........Even if I would have held that application is maintainable, then in such circumstances it would have remanded back the matter to Lower Court for hearing fresh and recording such reasons. But when I am coming to a conclusion that as prima facie the application is itself not maintainable so applicant has no prima facie case and therefore, I told that impugned order is liable to be set aside straight away. The Sessions Judge by the aforesaid judgment allowed the appeal and set aside the interim order dated 4thFebruary, 2012 passed by the Additional Chief Metropolitan Magistrate, 46th Court at Mazgaon, Mumbai. By the impugned judgment, the High Court affirmed the aforesaid order.


8. Before this Court the parties have taken similar pleas as taken before lower courts. According to the Appellant the cause of action i.e. domestic violence took place much before the divorce, therefore, FIR was filed and hence the Appellant is entitled for the relief under the Domestic Violence Act, 2005. The Protection Officer has already submitted report holding that the domestic violence was committed by the 1st Respondent upon the Appellant.

9. On the other hand, according to the counsel for the 1st Respondent after dissolution of the marriage no relief can be granted under the Domestic Violence Act, 2005. In his support reliance was placed on the decision of this Court in Inderjit Singh Grewal v. State of Punjab and Anr. /SC/0988/2011 : (2011) 12 SCC 588.

10. The questions arise for our consideration are:
(i) Whether divorce of the Appellant and the 1st Respondent has taken place on 9th May, 2008; and
(ii) Whether a divorced woman can seek for reliefs against her ex-husband Under Sections 18 to 23 of the Domestic Violence Act, 2005.

11. For determination of the issue, it is necessary to notice the relationship between the Appellant and the 1st Respondent. It is not in dispute that the Appellant got married to 1st Respondent according to the Muslim-rites and rituals on 13th May, 2005. Since then their relationship was 'domestic relationship' as defined Under Section 2(f) of the Domestic Violence Act, 2005. Both of them had lived together in a 'shared household' as defined Under Section 2(s) of the Domestic Violence Act when they are/were related by marriage.

12. The Appellant had taken plea that she obtained an ex parte 'Khula' from Mufti under the Muslim Personal Law. But the 1st Respondent has not accepted the same and has challenged the 'Khula' obtained by the Appellant, before the Family Court, Bandra vide M.J. Petition No. B-175 of 2008. The Respondent has also filed a petition for restitution of conjugal rights. 13. The concept of dissolution of marriage under Muslim Personal Law was noticed and discussed by Single Judge of the High Court of Delhi in Masroor Ahmed v. State (NCT of Delhi) and Anr./DE/9441/2007 : (2007) ILR 2 Delhi 1329. In the said case, the High Court noticed different modes of dissolution of marriage under the Muslim Personal Law (Shariat) and held:

15. The question which arises is, given the shariat and its various schools, how does a person proceed on an issue which is in dispute? The solution is that in matters which can be settled privately, a person need only consult a mufti (jurisconsult) of his or her school. The mufti gives his fatwa or advisory decision based on the Shariat of his school. However, if a matter is carried to the point of litigation and cannot be settled privately then the qazi (judge) is required to deliver a qaza (judgment) based upon the Shariat (A qazi (or qadi) is a judge appointed by the political authority or state. He or she may pass judgments in his or her jurisdiction in respect of many legal matters, including divorce, inheritance, property, contractual disputes, etc. Schacht, p. 188. A qaza or kada is a judgment, which must be given according to the madhab to which the qadi belongs. Schacht, p. 196. More information on qazis and qazas can be found at pp. 188-198.). The difference between a fatwa and a qaza must be kept in the forefront. A fatwa is merely advisory whereas a qaza is binding. Both, of course, have to be based on the shariat and not on private interpretation de hors the shariat (Abdur Rahim, p. 172' (in respect of qazis).
The Muslim Personal Law (Shariat) Application Act, 1937 and the various forms of dissolution of marriage recognised by it.

16. In India, the confusion with regard to application of customary law as part of muslim law was set at rest by the enactment of The Muslim Personal Law (Shariat) Application Act, 1937. Section 2 of the 1937 Act reads as under: 2. Application of Personal Law to Muslims.-- Notwithstanding any customs or usage to the contrary, in all questions (save questions relating to agricultural land) regarding intestate succession, special property of females, including personal property inherited or obtained under contract or gift or any other provision of Personal Law, marriage, dissolution of marriage, including talaq, ila, zihar, lian, khula and mubaraat, maintenance, dower, guardianship, gifts, trusts and trust properties, and wakfs (other than charities and charitable institutions and charitable and religious endowments) the rule of decision in cases where the parties are Muslims shall be the Muslim Personal Law (Shariat).
The key words are--notwithstanding any customs or usage to the contrary and--the rule of decision in cases where the parties are muslims shall be the muslim personal law (shariat). This provision requires the court before which any question relating to, inter-alia, dissolution of marriage is in issue and where the parties are muslims to apply the muslim personal law (shariat) irrespective of any contrary custom or usage. This is an injunction upon the court (See: C. Mohd. Yunus v. Syed Unnissa /SC/0359/1961 : (1962) 1 SCR 67). What is also of great significance is the expression- 'dissolution of marriage, including talaq, ila, zihar, lian, khula and mubaraat. This gives statutory recognition to the fact that under muslim personal law, a dissolution of marriage can be brought about by various means, only one of which is talaq. Although islam considers divorce to be odious and abominable, yet it is permissible on grounds of pragmatism, at the core of which is the concept of an irretrievably broken marriage. An elaborate lattice of modes of dissolution of marriage has been put in place, though with differing amplitude and width under the different schools, in an attempt to take care of all possibilities. Khula, for example, is the mode of dissolution when the wife does not want to continue with the marital tie. She proposes to her husband for dissolution of the marriage. This may or may not accompany her offer to give something in return. Generally, the wife offers to give up her claim to Mahr (dower). Khula is a divorce which proceeds from the wife which the husband cannot refuse subject only to reasonable negotiation with regard to what the wife has offered to give him in return. Mubaraat is where both the wife and husband decide to mutually put an end to their marital tie. Since this is divorce by mutual consent there is no necessity for the wife to give up or offer anything to the husband. It is important to note that both under khula and mubaraat there is no need for specifying any reason for the divorce. It takes place if the wife (in the case of khula) or the wife and husband together (in the case of mubaraat) decide to separate on a no fault/no blame basis. Resort to khula (and to a lesser degree, mubaraat) as a mode of dissolution of marriage is quite common in India.

14. From the discussion aforesaid, what we find is that 'Khula' is a mode of dissolution of marriage when the wife does not want to continue with the marital tie. To settle the matter privately, the wife need only to consult a Mufti (juris consult) of her school. The Mufti gives his fatwa or advisory decision based on the Shariat of his school. Further, if the wife does not want to continue with marital tie and takes mode of 'Khula' for dissolution of marriage, she is required to propose her husband for dissolution of marriage. This may or may not accompany her offer to give something in return. The wife may offer to give up her claim to Mahr (dower). The 'Khula' is a mode of divorce which proceeds from the wife, the husband cannot refuse subject only to reasonable negotiation with regard to what the wife has offered to give him in return. The Mufti gives his fatwa or advisory decision based on the Shariat of his school. However, if the matter is carried to the point of litigation and cannot be settled privately then the Qazi (Judge) is required to deliver a qaza (judgment) based upon the Shariat.

15. In the present case, the Appellant stated that she has obtained an ex parte 'Khula' on 9th May, 2008 from Mufti under the Muslim Personal Law. Neither it is pleaded nor it is made clear by the Appellant or the 1st Respondent as to whether for such 'Khula' the Appellant made a proposal to husband-Ist Respondent for dissolution of marriage accompanied by an offer to give something in return. It has not been made clear that whether the Appellant gave up her claim to Mahr (dower). The husband, 1st Respondent has not accepted 'Khula' given by Mufti (jurisconsult) which is in the form of fatwa or advisory decision based on the Shariat. He, however, has not moved before the Qazi (Judge) to deliver a qaza (judgment) based upon the Shariat. Instead, he has moved 145 before the Family Court, Bandra against the 'Khula' by filing petition-M.J. Petition No. B175 of 2008. He has also prayed for restitution of conjugal right. Therefore, with no certainty, it can be stated that the divorce was taken on 9th May, 2008.

16. In Shamim Ara v. State of U.P. and Anr. /SC/0850/2002 : (2002) 7 SCC 518, this Court considered valid 'Talaq' in Islamic Law. This Court while discussing the correct law of 'Talaq, as ordained by the Holy Quran observed that Talaq must be for a reasonable cause and be preceded by attempts at reconciliation between the husband and the wife by two arbiters-one from the wife's family and the other from the husband's; if the attempts fail Talaq may be effected. The Court further held that the Talaq to be effective has to be pronounced.

17. In the said case, the muslim woman claimed maintenance Under Section 125 of the Code of Criminal Procedure, 1973. The husband-Respondent No. 2 in his written statement filed in proceedings Under Section 125, Code of Criminal Procedure alleged his wife, the applicant Under Section 125 Code of Criminal Procedure to be sharp, shrewd and mischievous and stated that he divorced her on 11th July, 1987 being fed up with all such activities unbecoming of the wife. This Court noticed that the particulars of the alleged Talaq were not pleaded and even during the trial, the husband, examining himself, adduced no evidence in proof of Talaq said to have been given by him on 11th July, 1987. It was further observed that there were no reasons substantiated in justification of Talaq and no plea or proof that any effort at reconciliation preceded Talaq. Subsequently, it was held that there is no proof of Talaq for having been taken place on 11th July, 1987. What the High Court has upheld as Talaq is the plea taken in the written statement and its communication to the wife by delivering a copy of the written statement on 5thDecember, 1990. This Court held that a mere plea taken in the written statement of a divorce having been pronounced sometime in the past cannot by itself be treated as effectuating Talaq on the date of delivery of the copy of the written statement to the wife. The husband ought to have adduced evidence and proved the pronouncement of Talaq on 11th July, 1987 and if he failed in proving the plea raised in the written statement, the plea ought to have treated as failed.

18. In the present case, as noticed that there is no definite plea taken either by the Appellant or by the 1st Respondent that 'Khula' become effective in accordance with Muslim Personal Law (Shariat). Neither the Appellant nor the 1st Respondent placed any evidence in support of such divorce. No specific pleading was made that the Appellant proposed to her husband-1st Respondent for dissolution of marriage. On the other hand, it is clear that the 'Khula' was pronounced by the Mufti ex parte. For the said reason, the 1stRespondent challenged the same by filing M.J. Petition No. B-175 of 2008, before the Family Court, Bandra. In this background, we hold that the Sessions Judge, Sewree, Mumbai by order dated 3rd November, 2012 wrongly observed and held that the Appellant is no more wife of the 1st Respondent. The High Court has also failed to notice that no evidence was produced in support of the statement either made by the Appellant or by the 1st Respondent. It also failed to appreciate the fact that the 'Khula' was obtained from the Mufti and not from Qazi and the same was challenged by the 1st Respondent before the Family Court, Bandra, Mumbai and wrongly upheld the finding of the Sessions Judge. Therefore, with no certainty, it can be stated that the divorce has taken place on 9th May, 2008, in absence of pleading, evidence and finding.

19. Even if it is presumed that the Appellant has taken 'Khula' (divorce) on 9th May, 2008 and the 1stRespondent is no more the husband, the question arises that in such case whether the erstwhile-wife can claim one or other relief as prescribed Under Sections 18, 19, 20, 21, 22 and interim relief Under Section 23of the Domestic violence Act, 2005, if domestic violence had taken place when the wife lived together in shared household with her husband through a relationship in the nature of marriage. 20. For determination of such issue, it is desirable to notice the relevant provisions of the Domestic Violence Act, 2005, as discussed hereunder:
(20.1) Section 2(a) of the Domestic Violence Act, 2005 defines "aggrieved person" as follows:
2(a)"aggrieved person" means any woman who is, or has been, in a domestic relationship with the Respondent and who alleges to have been subjected to any act of domestic violence by the Respondent; Therefore, it is clear that apart from the woman who is in a domestic relationship, any woman who has been, in a domestic relationship with the Respondent, if alleges to have been subjected to act of domestic violence by the Respondent comes within the meaning of "aggrieved person".

(20.2) Definition of Domestic relationship reads as follows: 2(f)"domestic relationship" means 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; From the aforesaid provision we find that a person aggrieved (wife herein), who at any point of time has lived together with husband (1st Respondent) in a shared household, is also covered by the meaning of "domestic relationship"
(20.3) Section 2(s) defines "shared household"
2(s) "shared household" means a household where the person aggrieved lives or at any stage has lived in a domestic relationship either singly or along with the Respondent and includes such a household whether owned or tenanted either jointly by the aggrieved person and the Respondent, or owned or tenanted by either of them in respect of which either the aggrieved person or the Respondent or both jointly or singly have any right, title, interest or equity and includes such a household which may belong to the 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 etc," (s) "shared household" means a household where the person aggrieved lives or at any stage has lived in a domestic relationship either singly or along with the Respondent and includes such a household whether owned or tenanted either jointly by the aggrieved person and the Respondent, or owned or tenanted by either of them in respect of which either the aggrieved person or the Respondent or both jointly or singly have any right, title, interest or equity and includes such a household which may belong to the 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.
Therefore, if the 'person aggrieved' (wife herein) at any stage has lived in a domestic relationship with the Respondent (husband herein) in a house, the person aggrieved can claim a "shared household".
(20.4) Definition of "Domestic violence" as assigned in Section 3 reads:


3. Definition of domestic violence.--For the purposes of this Act, any act, omission or commission or conduct of the Respondent shall constitute domestic violence in case it-
(a) harms or injures or endangers the health, safety, life, limb or well-being, whether mental or physical, of the aggrieved person or tends to do so and includes causing physical abuse, sexual abuse, verbal and emotional abuse and economic abuse; or
(b) harasses, harms, injures or endangers the aggrieved person with a view to coerce her or any other person related to her to meet any unlawful demand for any dowry or other property or valuable security; or
c) has the effect of threatening the aggrieved person or any person related to her by any conduct mentioned in Clause (a) or Clause
(b); or (d) otherwise injures or causes harm, whether physical or mental, to the aggrieved person.

Explanation I.--For the purposes of this section,-
(i) "physical abuse" means any act or conduct which is of such a nature as to cause bodily pain, harm, or danger to life, limb, or health or impair the health or development of the aggrieved person and includes assault, criminal intimidation and criminal force;
(ii) "sexual abuse" includes any conduct of a sexual nature that abuses, humiliates, degrades or otherwise violates the dignity of woman;
(iii) "verbal and emotional abuse" includes-
(a) insults, ridicule, humiliation, name calling and insults or ridicule specially with regard to not having a child or a male child; and
(b) repeated threats to cause physical pain to any person in whom the aggrieved person is interested. (iv) "economic abuse" includes--"
(a) 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 and her children, if any, stridhan, property, jointly or separately owned by the aggrieved person, payment of rental related to the shared household and maintenance;
(b) disposal of household effects, any alienation of assets whether movable or immovable, valuables, shares, securities, bonds and the like or other property in which the aggrieved person has an interest or is entitled to use by virtue of the domestic relationship or which may be reasonably required by the aggrieved person or her children or her stridhan or any other property jointly or separately held by the aggrieved person; and
(c) prohibition or restriction to continued access to resources or facilities which the aggrieved person, is entitled to use or enjoy by virtue of the domestic relationship including access to the shared household.

Explanation II.--For the purpose of determining whether any act, omission, commission or conduct of the Respondent constitutes "domestic violence" under this section, the overall facts and circumstances of the case shall be taken into consideration.
Therefore, apart from 'physical abuse' and 'sexual abuse', 'verbal and emotional abuse' and 'economic abuse' also constitute 'domestic violence'.

21. Chapter IV of the Domestic Violence Act, 2005 deals with "Procedure for obtaining the orders of reliefs". Section 12 relates to the application to Magistrate, which reads as follows:
Section 12. Application to Magistrate.--(1) An aggrieved person or a Protection Officer or any other person on behalf of the aggrieved person may present an, application to the Magistrate seeking one or more reliefs under this Act:
Provided that before passing any order on such application, the Magistrate shall take into consideration any domestic incident report received by him from the Protection Officer or the service provider.
(2) The relief sought for Under Sub-section (1) may include a relief for issuance of an order for payment of compensation or damages without prejudice to the right of such person to institute a suit for compensation or damages for the injuries caused by the acts of domestic violence committed by the Respondent:
Provided that where a decree for any amount as compensation or damages has been passed by any court in favour of the aggrieved person, the amount, if any, paid or payable in pursuance of the order made by the Magistrate under this Act shall be set off against the amount payable under such decree and the decree shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, be executable for the balance amount, if any, left after such set off.
(3) Every application Under Sub-section (1) shall be in such form and contain such particulars as may be prescribed or as nearly as possible thereto.
(4) The Magistrate shall fix the first date of hearing, which shall not ordinarily be beyond three days from the date of receipt of the application by the court.
(5) The Magistrate shall endeavour to dispose of every application made Under Sub-section (1) within a period of sixty days from the date of its first hearing.

22. As per proviso to Sub-section (1) of Section 12, the Magistrate before passing any order Under Section 12 is required to take into consideration any domestic incident report received by him from the Protection Officer or the service provider.

23. The reliefs which can be granted by the Magistrate under the Domestic Violence Act, 2005 are as follows:

(i) Right to reside in a shared household-Section 17;
(ii) Protection orders-Section 18;,
(iii) Residence orders-Section 19;
(iv) Monetary relief-Section 20;
(v) Custody orders-Section 21;
(vi) Compensation orders-Section 22 and
(vii Interim and ex parte orders-Section 23.

24. In the instant case, the Appellant sought relief Under Sections 18 to 23 of the Domestic Violence Act, 2005. It includes Protection order Under Section 18, Monetary relief Under Section 20, Custody orders Under Section 21, Compensation Under Section 22 and interim relief Under Section 23. Relevant provisions read as follows: Section 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 the 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 the 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.

(4) The Magistrate shall send a copy of the order for monetary relief made Under Sub-section (1) to the parties to the application and to the in-charge of the police station within the local limits of whose jurisdiction the Respondent resides.
(5) The Respondent shall pay the monetary relief granted to the aggrieved person within the period specified in the order Under Sub-section (1).
(6) Upon the failure on the part of the Respondent to make payment in terms of the order Under Sub-section (1), the Magistrate may direct the employer or a debtor of the Respondent, to directly pay to the aggrieved person or to 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. The Monetary relief as stipulated Under Section 20 is different from maintenance, which can be in addition to an order of maintenance Under Section 125 of the Code of Criminal Procedure or any other law. Such monetary relief can be granted to meet the expenses incurred and losses suffered by the aggrieved person and child of the aggrieved person as a result of the domestic violence, which is not dependent on the question whether the aggrieved person, on the date of filing of the application Under Section 12 is in a domestic relationship with the Respondent.

25. "Section 22. Compensation orders.--In addition to other reliefs as may be granted under this Act, the Magistrate may on an application being made by the aggrieved person, 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 committed by that Respondent. Section 23. Power to grant interim and ex parte orders.--(1) In any proceeding before him under this Act, the Magistrate may pass such interim order as he deems just and proper. (2) If the Magistrate is satisfied that an application prima facie 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, he may grant an ex parte order on the basis of the affidavit in such form, as may be prescribed, of the aggrieved person Under Section 18, Section19, Section 20, Section 21 or, as the case may be, Section 22 against the Respondent.
Therefore, it is well within the jurisdiction of the Magistrate to grant the interim ex parte relief as he deems just and proper, if the Magistrate is satisfied that the application prima facie 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.

26. It is not necessary that relief available Under Sections 18, 19, 20, 21 and 22 can only be sought for in a proceeding under Domestic Violence Act, 2005. Any relief available under the aforesaid provisions may also be sought for in any legal proceeding even before a Civil Court and Family Court, apart from the Criminal Court, affecting the aggrieved person whether such proceeding was initiated before or after commencement of the Domestic Violence Act, This is apparent from Section 26 of the Domestic Violence Act, 2005 as quoted hereunder:
26. Relief in other suits and legal proceedings.--(1) 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 a criminal court, affecting the aggrieved person and the Respondent whether such proceeding was initiated before or after the commencement of this Act. (2) Any relief referred to in Sub-section (1) may be sought for in addition to and along with any other relief that the aggrieved person may seek in such suit or legal proceeding before a civil or criminal court. (3) In case any relief has been obtained by the aggrieved person in any proceedings other than a proceeding under this Act, she shall be bound to inform the Magistrate of the grant of such relief.

27. Appellant hap filed an F.I.R. against the 1st Respondent for the offence committed Under Section 498Aof Indian Penal Code The High Court refused to quash the F.I.R. qua 1st Respondent on the ground that prima facie case has been made out. Even before the Criminal Court where such case Under Section-498Ais pending, if allegation is found genuine, it is always open to the Appellant to ask for reliefs Under Sections 18 to 22 of the Domestic Violence Act and Interim relief Under Section 23 of the said Act.

28. In V.D. Bhanot v. Savita Bhanot /SC/0115/2012 : (2012) 3 SCC 183, this Court held that the conduct of the parties even prior to the coming into force of the Protection of Women from Domestic Violence Act, 2005 could be taken into consideration while passing an order Under Sections 18, 19 and 20thereof. The wife who had shared a household in the past, but was no longer residing with her husband can file a petition Under Section 12 if subjected to any act of domestic violence. In V.D. Bhanot (supra)this Court held as follows: 12. We agree with the view expressed by the High Court that in looking into a complaint Under Section 12 of the PWD Act, 2005, the conduct of the parties even prior to the coming into force of the PWD Act, could be taken into consideration while passing an order Under Sections 18, 19 and 20 thereof. In our view, the Delhi High Court has also rightly held that even if a wife, who had shared a household in the past, but was no longer doing so when the Act came into force, would still be entitled to the protection of the PWD Act, 2005.

29. In Inderjit Singh Grewal (supra) the Appellant-Inderjit Singh and the Respondent No. 2 of the said case got married on 23rd September, 1998. The parties to the marriage could not pull on well together and decided to get divorce and, therefore, filed a case for Divorce by mutual consent Under Section 13B of the Hindu Marriage Act, 1955. After recording the statement in the said case, the proceedings were adjourned for a period of more than six months to enable them to ponder over the issue. The parties again appeared before the Court on second motion and on the basis of their statement, the District Judge, Ludhiana vide judgment and order dated 20th March, 2008 allowed the petition and dissolved their marriage. After dissolution of marriage, the wife filed a complaint before the Senior Superintendent of Police, Ludhiana against Inderjit Singh under the provisions of the Domestic violence Act alleging that the decree of divorce obtained by them was a sham transaction. It was further alleged that even after getting divorce both of them had been living together as husband and wife. In the said case, the Superintendent of Police, City I conducted the full-fledged inquiry and reported that the parties had been living separately after the dissolution of the marriage. Hence, no case is made out against the Inderjit Singh. In this context, this Court held that Section 12-- Application to Magistrate" under the Domestic Violence Act challenging the said divorcewas not maintainable and in the interest of justice and to stop the abuse of process of Court, the petitions Under Section 482 Code of Criminal Procedure was allowed. The law laid down in the said case is not applicable for the purpose of determination of the present case.

23. When we come to Section 26 of the Act, the sweep of the Act is such that all the innovative reliefs available under Sections 18 to 22 may also be sought in any legal proceeding before a civil court, family court or criminal court affecting the aggrieved person and the respondent. The proceeding in the civil court, family court or criminal court may well include female members of a family, and reliefs sought in those legal proceedings would not be restricted by the definition of “respondent” in the 2005 Act. Thus, an invidious discrimination will result, depending upon whether the aggrieved person chooses to institute proceedings under the 2005 Act or chooses to add to the reliefs available in either a pending proceeding or a later proceeding in a civil court, family court or criminal court. It is clear that there is no intelligible differentia between a proceeding initiated under the 2005 Act and proceeding initiated in other fora under other Acts, in which the self-same reliefs grantable under this Act, which are restricted to an adult male person, are grantable by the other fora also against female members of a family. This anomaly again makes it clear that the definition of “respondent” in Section 2(q) is not based on any intelligible differentia having any rational relation to the object sought to be achieved by the 2005 Act. The restriction of such person to being an adult male alone is obviously not a differentia which would be in sync with the object sought to be achieved under the 2005 Act, but would in fact be contrary to it.

24. Also, the expression “adult” would have the same effect of stultifying orders that can be passed under the aforesaid sections. It is not difficult to conceive of a non-adult 16 or 17 year old member of a household who can aid or abet the commission of acts of domestic violence, or who can evict or help in evicting or excluding from a shared household an aggrieved person. Also, a residence order which may be passed under Section 19(1)(c) can get stultified if a 16 or 17 year old relative enters the portion of the shared household in which the aggrieved person resides after a restraint order is passed against the respondent and any of his adult relatives. Examples can be multiplied, all of which would only lead to the conclusion that even the expression “adult” in the main part is Section 2(q) is restrictive of the object sought to be achieved by the kinds of orders that can be passed under the Act and must also be, therefore, struck down, as this word contains the same discriminatory vice that is found with its companion expression “male”.

25. Shri Raval has cited a couple of judgments dealing with the provisions of the 2005 Act. For the sake of completeness, we may refer to two of them.

26. In Sandhya Manoj Wankhade v. Manoj Bhimrao Wankhade, (2011) 3 SCC 650, this Court, in a petition by a married woman against her husband and his relatives, construed the proviso to Section 2(q) of the 2005 Act. This Court held:

“No restrictive meaning has been given to the expression “relative”, nor has the said expression been specifically defined in the Domestic Violence Act, 2005, to make it specific to males only. In such circumstances, it is clear that the legislature never intended to exclude female relatives of the husband or male partner from the ambit of a complaint that can be made under the provisions of the Domestic Violence Act, 2005.” [Para 16]

27. In Indra Sarma v. V.K.V. Sarma, (2013) 15 SCC 755, the appellant entered into a live-in relationship with the respondent knowing that he was a married person. A question arose before this Court as to whether the appellant could be said to be in a relationship in the nature of marriage. Negativing this contention, this Court held:

“The appellant, admittedly, entered into a live-in relationship with the respondent knowing that he was a married person, with wife and two children, hence, the generic proposition laid down by the Privy Council in Andrahennedige Dinohamy v. Wijetunge Liyanapatabendige Balahamy [(1928) 27 LW 678 : AIR 1927 PC 185] , that where a man and a woman are proved to have lived together as husband and wife, the law presumes that they are living together in consequence of a valid marriage will not apply and, hence, the relationship between the appellant and the respondent was not a relationship in the nature of a marriage, and the status of the appellant was that of a concubine. A concubine cannot maintain a relationship in the nature of marriage because such a relationship will not have exclusivity and will not be monogamous in character. Reference may also be made to the judgments of this Court in Badri Prasadv. Director of Consolidation [(1978) 3 SCC 527] and  Tulsa v. Durghatiya [(2008) 4 SCC 520] .

We may note that, in the instant case, there is no necessity to rebut the presumption, since the appellant was aware that the respondent was a married person even before the commencement of their relationship, hence the status of the appellant is that of a concubine or a mistress, who cannot enter into relationship in the nature of a marriage. The long- standing relationship as a concubine, though not a relationship in the nature of a marriage, of course, may at times, deserves protection because that woman might not be financially independent, but we are afraid that the DV Act does not take care of such relationships which may perhaps call for an amendment of the definition of Section 2(f) of the DV Act, which is restrictive and exhaustive.

Parliament has to ponder over these issues, bring in proper legislation or make a proper amendment of the Act, so that women and the children, born out of such kinds of relationships be protected, though those types of relationship might not be a relationship in the nature of a marriage.” [Paras 57, 59 & 64]

28. It may be noted that in Badshah v. Urmila Badshah Godse & Anr., (2014) 1 SCC 188, this Court held that the expression “wife” in Section 125 of the Criminal Procedure Code, includes a woman who had been duped into marrying a man who was already married. In so holding, this Court held:

“Thus, while interpreting a statute the court may not only take into consideration the purpose for which the statute was enacted, but also the mischief it seeks to suppress. It is this mischief rule, first propounded in Heydon case [(1584) 3 Co Rep 7a : 76 ER 637] which became the historical source of purposive interpretation. The court would also invoke the legal maxim construction of ut res magis valeat quam pereatin such cases i.e. where alternative constructions are possible the court must give effect to that which will be responsible for the smooth working of the system for which the statute has been enacted rather than one which will put a road block in its way. If the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation should be avoided. We should avoid a construction which would reduce the legislation to futility and should accept the bolder construction based on the view that Parliament would legislate only for the purpose of bringing about an effective result. If this interpretation is not accepted, it would amount to giving a premium to the husband for defrauding the wife. Therefore, at least for the purpose of claiming maintenance under Section 125 Cr.P.C, such a woman is to be treated as the legally wedded wife.”[Para 20]

29. We will now deal with some of the cases cited before us by both the learned senior advocates on Article 14, reading down, and the severability principle in constitutional law.

30. Article 14 is in two parts. The expression “equality before law” is borrowed from the Irish Constitution, which in turn is borrowed from English law, and has been described in State of U.P. v. Deoman Upadhyaya, (1961) 1 SCR 14, as the negative aspect of equality. The “equal protection of the laws” in Article 14 has been borrowed from the 14th Amendment to the U.S. Constitution and has been described in the same judgment as the positive aspect of equality namely the protection of equal laws. Subba Rao, J. stated:

“This subject has been so frequently and recently before this court as not to require an extensive consideration. The doctrine of equality may be briefly stated as follows: All persons are equal before the law is fundamental of every civilised constitution. Equality before law is a negative concept; equal protection of laws is a positive one. The former declares that every one is equal before law, that no one can claim special privileges and that all classes are equally subjected to the ordinary law of the land; the latter postulates an equal protection of all alike in the same situation and under like circumstances. No discrimination can be made either in the privileges conferred or in the liabilities imposed. But these propositions conceived in the interests of the public, if logically stretched too far, may not achieve the high purpose behind them. In a society of unequal basic structure, it is well nigh impossible to make laws suitable in their application to all the persons alike. So, a reasonable classification is not only permitted but is necessary if society should progress. But such a classification cannot be arbitrary but must be based upon differences pertinent to the subject in respect of and the purpose for which it is made.” [at page 34]

31. In Lachhman Dass v. State of Punjab, (1963) 2 SCR 353, Subba Rao, J. warned that over emphasis on the doctrine of classification or an anxious and sustained attempt to discover some basis for classification may gradually and imperceptibly deprive Article 14 of its glorious content. That process would inevitably end in substituting the doctrine of classification for the doctrine of equality. This admonition seems to have come true in the present case, as the classification of “adult male person” clearly subverts the doctrine of equality, by restricting the reach of a social beneficial statute meant to protect women against all forms of domestic violence.

32. We have also been referred to D.S. Nakara v. Union of India, (1983) 1 SCC 305. This judgment concerned itself with pension payable to Government servants. An office Memorandum of the Government of India dated 25.5.1979 restricted such pension payable only to persons who had retied prior to a specific date. In holding the date discriminatory and arbitrary and striking it down, this Court went into the doctrine of classification, and cited from Re: Special Courts Bill, (1979) 2 SCR 476 and Maneka Gandhi v. Union of India, (1978) 2 SCR 621, and went on to hold that the burden to affirmatively satisfy the court that the twin tests of intelligible differentia having a rational relation to the object sought to be achieved by the Act would lie on the State, once it has been established that a particular piece of legislation is on its face unequal. The Court further went on to hold that the petitioners challenged only that part of the scheme by which benefits were admissible to those who retired from service after a certain date. The challenge, it was made clear by the Court, was not to the validity of the Scheme, which was wholly acceptable to the petitioners, but only to that part of it which restricted the number of persons from availing of its benefit. The Court went on to hold:

“If it appears to be undisputable, as it does to us that the pensioners for the purpose of pension benefits form a class, would its upward revision permit a homogeneous class to be divided by arbitrarily fixing an eligibility criteria unrelated to purpose of revision, and would such classification be founded on some rational principle? The classification has to be based, as is well settled, on some rational principle and the rational principle must have nexus to the objects sought to be achieved. We have set out the objects underlying the payment of pension. If the State considered it necessary to liberalise the pension scheme, we find no rational principle behind it for granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that date. If the liberalisation was considered necessary for augmenting social security in old age to government servants then those who, retired earlier cannot be worst off than those who retire later. Therefore, this division which classified pensioners into two classes is not based on any rational principle and if the rational principle is the one of dividing pensioners with a view to giving something more to persons otherwise equally placed, it would be discriminatory. To illustrate, take two persons, one retired just a day prior and another a day just succeeding the specified date. Both were in the same pay bracket, the average emolument was the same and both had put in equal number of years of service. How does a fortuitous circumstance of retiring a day earlier or a day later will permit totally unequal treatment in the matter of pension? One retiring a day earlier will have to be subject to ceiling of Rs 8100 p.a. and average emolument to be worked out on 36 months' salary while the other will have a ceiling of Rs 12,000 p.a. and average emolument will be computed on the basis of last 10 months' average. The artificial division stares into face and is unrelated to any principle and whatever principle, if there be any, has absolutely no nexus to the objects sought to be achieved by liberalising the pension scheme. In fact this arbitrary division has not only no nexus to the liberalised pension scheme but it is counter-productive and runs counter to the whole gamut of pension scheme. The equal treatment guaranteed in Article 14 is wholly violated inasmuch as the pension rules being statutory in character, since the specified date, the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension. A 48 hours' difference in matter of retirement would have a traumatic effect. Division is thus both arbitrary and unprincipled. Therefore, the classification does not stand the test of Article 14.” [para 42]

33. We were also referred to Rattan Arya and others v. State of Tamil Nadu and another, (1986) 3 SCC 385, and in particular, to the passage reading thus:-

“We may now turn to S.30(ii) which reads as follows:

"Nothing contained in this Act shall apply to any residential building or part thereof occupied by anyone tenant if the monthly rent paid by him in respect of that building or part exceeds four hundred rupees."

By one stroke, this provision denies the benefits conferred by the Act generally on all tenants to tenants of residential buildings fetching a rent in excess of four hundred rupees. As a result of this provision, while the tenant of a non-residential building is protected, whether the rent is Rs. 50, Rs. 500 or Rs. 5000 per month, a tenant of a residential building is protected if the rent is Rs. 50, but not if it is Rs. 500 or Rs. 5000 per month. Does it mean that the tenant of a residential building paying a rent of Rs. 500 is better able to protect himself than the tenant of a non- residential building paying a rent of Rs. 5000 per month? Does it mean that the tenant of a residential building who pays a rent of Rs. 500 per month is not in need of any statutory protection? Is there any basis for the distinction between the tenant of a residential building and the tenant of a non-residential building and that based on the rent paid by the respective tenants? Is there any justification at all for picking out the class of tenants of residential buildings paying a rent of more than four hundred rupees per month to deny them the |rights conferred generally on all tenants of buildings residential or non-residential by the Act? Neither from the Preamble of the Act nor from the provisions of the Act has it been possible for us even to discern any basis for the classification made by S.30(ii) of the Act.”(Para 3)

34. In Subramanian Swamy v. CBI, (2014) 8 SCC 682, a Constitution Bench of this Court struck down Section 6A of the Delhi Police Special Establishment Act on the ground that it made an invidious distinction between employees of the Central Government of the level of Joint Secretary and above as against other Government servants. This Court, after discussing various judgments dealing with the principle of discrimination (when a classification does not disclose an intelligible differentia in relation to the object sought to be achieved by the Act) from para 38 onwards, ultimately held that the aforesaid classification defeats the purpose of finding prima facie truth in the allegations of graft and corruption against public servants generally, which is the object for which the Prevention of Corruption Act, 1988 was enacted. In paras 59 and 60 this Court held as follows:

“It seems to us that classification which is made in Section 6-A on the basis of status in government service is not permissible under Article 14 as it defeats the purpose of finding prima facie truth into the allegations of graft, which amount to an offence under the PC Act, 1988. Can there be sound differentiation between corrupt public servants based on their status? Surely not, because irrespective of their status or position, corrupt public servants are corrupters of public power. The corrupt public servants, whether high or low, are birds of the same feather and must be confronted with the process of investigation and inquiry equally. Based on the position or status in service, no distinction can be made between public servants against whom there are allegations amounting to an offence under the PC Act, 1988.

Corruption is an enemy of the nation and tracking down corrupt public servants and punishing such persons is a necessary mandate of the PC Act, 1988. It is difficult to justify the classification which has been made in Section 6-A because the goal of law in the PC Act, 1988 is to meet corruption cases with a very strong hand and all public servants are warned through such a legislative measure that corrupt public servants have to face very serious consequences. In the words of Mathew, J. in Shri Ambica Mills Ltd. [State of Gujarat v. Shri Ambica Mills Ltd., (1974) 4 SCC 656 : 1974 SCC (L&S) 381 : (1974) 3 SCR 760] : (SCC p. 675, paras 53-54) “53. The equal protection of the laws is a pledge of the protection of equal laws. But laws may classify. …

54. A reasonable classification is one which includes all who are similarly situated and none who are not.” Mathew, J., while explaining the meaning of the words, “similarly situated” stated that we must look beyond the classification to the purpose of the law. The purpose of a law may be either the elimination of a public mischief or the achievement of some positive public good. The classification made in Section 6-A neither eliminates public mischief nor achieves some positive public good. On the other hand, it advances public mischief and protects the crimedoer. The provision thwarts an independent, unhampered, unbiased, efficient and fearless inquiry/investigation to track down the corrupt public servants.” [paras 59 and 60]

35. In a recent judgment, reported as Union of India v. N.S. Ratnam, (2015) 10 SCC 681, this Court while dealing with an exemption notification under the Central Excise Act stated the law thus:-

“We are conscious of the principle that the difference which will warrant a reasonable classification need not be great. However, it has to be shown that the difference is real and substantial and there must be some just and reasonable relation to the object of legislation or notification. Classification having regard to microscopic differences is not good. To borrow the phrase from the judgment in Roop Chand Adlakha v. DDA [1989 Supp (1) SCC 116 : 1989 SCC (L&S) 235 : (1989) 9 ATC 639] : “To overdo classification is to undo equality.” [para 18]

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

Having struck down these two words from the definition of “respondent” in Section 2(q), the next question that arises is whether the rest of the Act can be implemented without the aforesaid two words. This brings us to the doctrine of severability – a doctrine well-known in constitutional law and propounded for the first time in the celebrated R.M.D. Chamarbaugwalla v. Union of India, 1957 SCR 930. This judgment has been applied in many cases. It is not necessary to refer to the plethora of case law on the application of this judgment, except to refer to one or two judgments directly on point.

37. An early application of the aforesaid principle is contained in Corporation of Calcutta v. Calcutta Tramways Co. Ltd., [1964] 5 S.C.R. 25, in which a portion of Section 437(i)(b) of the Calcutta Municipal Act, 1951 was struck down as being a procedural provision which was an unreasonable restriction within the meaning of Article 19(6) of the Constitution. Chamarbaugwalla’s case was applied, and it was ultimately held that only the portion in parenthesis could be struck down with the rest of the Act continuing to apply.

38. Similarly, in Motor General Traders v. State of A.P., (1984) 1 SCC 222, Section 32(b) of the Andhra Pradesh Buildings (Lease, Rent & Eviction) Control Act, 1960 which exempted all buildings constructed on and after 26.8.1957, was struck down as being violative of Article 14 of the Constitution. This judgment, after applying Chamarbaugwalla’s case in para 27, and D.S. Nakara’s case in para 28, stated the law thus:-

“On a careful consideration of the above question in the light of the above principles we are of the view that the striking down of clause (b) of Section 32 of the Act does not in any way affect the rest of the provisions of the Act. The said clause is not so inextricably bound up with the rest of the Act as to make the rest of the Act unworkable after the said clause is struck down. We are also of the view that the Legislature would have still enacted the Act in the place of the Madras Buildings (Lease and Rent Control) Act, 1949 and the Hyderabad House (Rent, Eviction and Lease) Act, 1954 which were in force in the two areas comprised in the State of Andhra Pradesh and it could not have been its intention to deny the beneficial effect of those laws to the people residing in Andhra Pradesh on its formation. After the Second World War owing to acute shortage of urban housing accommodation, rent control laws which were brought into force in different parts of India as pieces of temporary legislation gradually became almost permanent statutes. Having regard to the history of the legislation under review, we are of the view that the Act has to be sustained even after striking down clause (b) of Section 32 of the Act. The effect of striking down the impugned provision would be that all buildings except those falling under clause (a) of Section 32 or exempted under Section 26 of the Act in the areas where the Act is in force will be governed by the Act irrespective of the date of their construction.” [para 29]

39. In Satyawati Sharma v. Union of India, (2008) 5 SCC 287, Section 14(1)(e) of the Delhi Rent Control Act was struck down in part, inasmuch as it made an invidious distinction between bonafide requirement of two kinds of landlords, the said ground being available for residential premises only and not non residential premises. An argument was made that if the Section was struck down only in part, nothing more would survive thereafter. This was negatived by this Court in the following words:

“In view of the above discussion, we hold that Section 14(1)(e) of the 1958 Act is violative of the doctrine of equality embodied in Article 14 of the Constitution of India insofar as it discriminates between the premises let for residential and non-residential purposes when the same are required bona fide by the landlord for occupation for himself or for any member of his family dependent on him and restricts the latter's right to seek eviction of the tenant from the premises let for residential purposes only. However, the aforesaid declaration should not be misunderstood as total striking down of Section 14(1)(e) of the 1958 Act because it is neither the pleaded case of the parties nor the learned counsel argued that Section 14(1)(e) is unconstitutional in its entirety and we feel that ends of justice will be met by striking down the discriminatory portion of Section 14(1)(e) so that the remaining part thereof may read as under: “14. (1)(e) that the premises let for residential purposes are required bona fide by the landlord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable accommodation;

***” While adopting this course, we have kept in view well-recognised rule that if the offending portion of a statute can be severed without doing violence to the remaining part thereof, then such a course is permissible—R.M.D. Chamarbaugwalla v. Union of India [AIR 1957 SC 628] and Lt. Col. Sawai Bhawani Singh v. State of Rajasthan[(1996) 3 SCC 105] . As a sequel to the above, the Explanation appearing below Section 14(1)(e) of the 1958 Act will have to be treated as redundant.” [paras 41 – 43]

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

41. Interestingly the Protection from Domestic Violence Bill, 2002 was first introduced in the Lok Sabha in 2002. This Bill contained the definition of “aggrieved person”, “relative”, and “respondent” as follows:

“2. Definitions.

In this Act, unless the context otherwise requires,-

“aggrieved person” means any woman who is or has been a relative of the respondent and who alleges to have been subjected to acts of domestic violence by the respondent;” xxxx

i) “relative” includes any person related by blood, marriage or adoption and living with the respondent;

j) “respondent’ means any person who is or has been a relative of the aggrieved person and against whom the aggrieved person has sought monetary relief or has made an application for protection order to the Magistrate or to the Protection Officer, as the case may be; and”

42. We were given to understand that the aforesaid Bill lapsed, after which the present Bill was introduced in the Lok Sabha on 22.8.2005, and was then passed by both Houses. It is interesting to note that the earlier 2002 Bill defined “respondent” as meaning “any person who is…..” without the addition of the words “adult male”, being in consonance with the object sought to be achieved by the Bill, which was pari materia with the object sought to be achieved by the present Act. We also find that, in another Act which seeks to protect women in another sphere, namely, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, “respondent” is defined in Section 2(m) thereof as meaning a person against whom the aggrieved woman has made a complaint under Section 9. Here again it will be noticed that the prefix “adult male” is conspicuous by its absence. The 2002 Bill and the 2013 Act are in tune with the object sought to be achieved by statutes which are meant to protect women in various spheres of life. We have adverted to the aforesaid legislation only to show that Parliament itself has thought it reasonable to widen the scope of the expression “respondent” in the Act of 2013 so as to be in tune with the object sought to be achieved by such legislations.

43. Having struck down a portion of Section 2(q) on the ground that it is violative of Article 14 of the Constitution of India, we do not think it is necessary to go into the case law cited by both sides on literal versus purposive construction, construction of penal statutes, and the correct construction of a proviso to a Section. None of this becomes necessary in view of our finding above.

44. However, it still remains to deal with the impugned judgment. We have set out the manner in which the impugned judgment has purported to read down Section 2(q) of the impugned Act. The doctrine of reading down in constitutional adjudication is well settled and has been reiterated from time to time in several judgments, the most recent of which is contained in Cellular Operators Association of India v. TRAI, (2016) 7 SCC 703. Dealing with the doctrine of reading down, this Court held:-

“But it was said that the aforesaid Regulation should be read down to mean that it would apply only when the fault is that of the service provider. We are afraid that such a course is not open to us in law, for it is well settled that the doctrine of reading down would apply only when general words used in a statute or regulation can be confined in a particular manner so as not to infringe a constitutional right. This was best exemplified in one of the earliest judgments dealing with the doctrine of reading down, namely, the judgment of the Federal Court in Hindu Women's Rights to Property Act, 1937, In re [Hindu Women's Rights to Property Act, 1937, In re, 1941 SCC OnLine FC 3 : AIR 1941 FC 72] . In that judgment, the word “property” in Section 3 of the Hindu Women's Rights to Property Act was read down so as not to include agricultural land, which would be outside the Central Legislature's powers under the Government of India Act, 1935. This is done because it is presumed that the legislature did not intend to transgress constitutional limitations. While so reading down the word “property”, the Federal Court held: (SCC OnLine FC) “… If the restriction of the general words to purposes within the power of the legislature would be to leave an Act with nothing or next to nothing in it, or an Act different in kind, and not merely in degree, from an Act in which the general words were given the wider meaning, then it is plain that the Act as a whole must be held invalid, because in such circumstances it is impossible to assert with any confidence that the legislature intended the general words which it has used to be construed only in the narrower sense: Owners of SS Kalibia v.Wilson [Owners of SS Kalibia v. Wilson, (1910) 11 CLR 689 (Aust)] , Vacuum Oil Co. Pty. Ltd. v. Queensland [Vacuum Oil Co. Pty. Ltd. v. Queensland, (1934) 51 CLR 677 (Aust)] , R. v. Commonwealth Court of Conciliation and Arbitration, ex p Whybrow & Co. [R. v. Commonwealth Court of Conciliation and Arbitration, ex p Whybrow & Co., (1910) 11 CLR 1 (Aust)] and British Imperial Oil Co. Ltd. v.Federal Commr. of Taxation [British Imperial Oil Co. Ltd. v. Federal Commr. of Taxation, (1925) 35 CLR 422 (Aust)] .” (emphasis supplied) This judgment was followed by a Constitution Bench of this Court in DTC v.Mazdoor Congress [DTC v. Mazdoor Congress, 1991 Supp (1) SCC 600 : 1991 SCC (L&S) 1213] . In that case, a question arose as to whether a particular regulation which conferred power on an authority to terminate the services of a permanent and confirmed employee by issuing a notice terminating his services, or by making payment in lieu of such notice without assigning any reasons and without any opportunity of hearing to the employee, could be said to be violative of the appellants' fundamental rights. Four of the learned Judges who heard the case, the Chief Justice alone dissenting on this aspect, decided that the regulation cannot be read down, and must, therefore, be held to be unconstitutional. In the lead judgment on this aspect by Sawant, J., this Court stated: (SCC pp. 728-29, para 255) “255. It is thus clear that the doctrine of reading down or of recasting the statute can be applied in limited situations. It is essentially used, firstly, for saving a statute from being struck down on account of its unconstitutionality. It is an extension of the principle that when two interpretations are possible—one rendering it constitutional and the other making it unconstitutional, the former should be preferred. The unconstitutionality may spring from either the incompetence of the legislature to enact the statute or from its violation of any of the provisions of the Constitution. The second situation which summons its aid is where the provisions of the statute are vague and ambiguous and it is possible to gather the intention of the legislature from the object of the statute, the context in which the provision occurs and the purpose for which it is made. However, when the provision is cast in a definite and unambiguous language and its intention is clear, it is not permissible either to mend or bend it even if such recasting is in accord with good reason and conscience. In such circumstances, it is not possible for the court to remake the statute. Its only duty is to strike it down and leave it to the legislature if it so desires, to amend it. What is further, if the remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided. One of the situations further where the doctrine can never be called into play is where the statute requires extensive additions and deletions. Not only it is no part of the court's duty to undertake such exercise, but it is beyond its jurisdiction to do so. (emphasis supplied)” [paras 50 and 51]

45. We may add that apart from not being able to mend or bend a provision, this Court has earlier held that “reading up” a statutory provision is equally not permissible. In B.R. Kapur v. State of T.N., (2001) 7 SCC 231, this Court held:

“Section 8(4) opens with the words “notwithstanding anything in sub-section (1), sub-section (2) or sub-section (3)”, and it applies only to sitting members of Legislatures. There is no challenge to it on the basis that it violates Article 14. If there were, it might be tenable to contend that legislators stand in a class apart from non-legislators, but we need to express no final opinion. In any case, if it were found to be violative of Article 14, it would be struck down in its entirety. There would be, and is no question of so reading it that its provisions apply to all, legislators and non-legislators, and that, therefore, in all cases the disqualification must await affirmation of the conviction and sentence by a final court. That would be “reading up” the provision, not “reading down”, and that is not known to the law.” [para 39]

46. We, therefore, set aside the impugned judgment of the Bombay High Court and declare that the words “adult male” in Section 2(q) of the 2005 Act will stand deleted since these words do not square with Article 14 of the Constitution of India. Consequently, the proviso to Section 2(q), being rendered otiose, also stands deleted. We may only add that the impugned judgment has ultimately held, in paragraph 27, that the two complaints of 2010, in which the three female respondents were discharged finally, were purported to be revived, despite there being no prayer in Writ Petition No.300/2013 for the same. When this was pointed out, Ms. Meenakshi Arora very fairly stated that she would not be pursuing those complaints, and would be content to have a declaration from this Court as to the constitutional validity of Section 2(q) of the 2005 Act. We, therefore, record the statement of the learned counsel, in which case it becomes clear that nothing survives in the aforesaid complaints of October, 2010. With this additional observation, this appeal stands disposed of.

J.(Kurian Joseph)
J. (R.F. Nariman)

New Delhi;                             
October 6, 2016.

Bench: Kurian Joseph, Rohinton Fali Nariman - Civil Appellate Jurisdiction - Civil Appeal No.  10084  Of 2016 - (Arising Out Of Slp (Civil) No. 9132 Of 2015) - Supreme Court Of India - Date Of Judgment: On 6 October, 2016

SC Strikes Down Words ‘Adult Male’ From The Definition of "Respondent" Under Section 2(Q) Of DV Act; Relief Possible Against Minors, Women. The classification of "adult male person" clearly subverts the doctrine of of equality, by restricting the reach of a social beneficial.

Judgment
R.F. Nariman, J.

1. Leave granted.

2. The present appeal arises out of a judgment dated 25.9.2014 of a Division Bench of the Bombay High Court. It raises an important question as to the constitutional validity of Section 2(q) of the Protection of Women from Domestic Violence Act, 2005, (hereinafter referred to as “the 2005 Act”).

3. On 3.4.2007, Kusum Narottam Harsora and her mother Pushpa Narottam Harsora filed a complaint under the 2005 Act against Pradeep, the brother/son, and his wife, and two sisters/daughters, alleging various acts of violence against them. The said complaint was withdrawn on 27.6.2007 with liberty to file a fresh complaint.

4. Nothing happened for over three years till the same duo of mother and daughter filed two separate complaints against the same respondents in October, 2010. An application was moved before the learned Metropolitan Magistrate for a discharge of respondent Nos. 2 to 4 stating that as the complaint was made under Section 2(a) read with Section 2(q) of the 2005 Act, it can only be made against an adult male person and the three respondents not being adult male persons were, therefore, required to be discharged. The Metropolitan Magistrate passed an order dated 5.1.2012 in which such discharge was refused. In a writ petition filed against the said order, on 15.2.2012, the Bombay High Court, on a literal construction of the 2005 Act, discharged the aforesaid three respondents from the complaint. We have been informed that this order has since attained finality.

5. The present proceedings arise because mother and daughter have now filed a writ petition, being writ petition No.300/2013, in which the constitutional validity of Section 2(q) has been challenged. Though the writ petition was amended, there was no prayer seeking any interference with the order dated 15.2.2012, which, as has already been stated hereinabove, has attained finality.

6. The Bombay High Court by the impugned judgment dated 25.9.2014 has held that Section 2(q) needs to be read down in the following manner:-

“In view of the above discussion and in view of the fact that the decision of the Delhi High Court in Kusum Lata Sharma's case has not been disturbed by the Supreme Court, we are inclined to read down the provisions of section 2(q) of the DV Act and to hold that the provisions of "respondent" in section 2(q) of the DV Act is not to be read in isolation but has to be read as a part of the scheme of the DV Act, and particularly along with the definitions of "aggrieved person", “domestic relationship" and "shared household" in clauses (a), (f) and (s) of section 2 of the DV Act. If so read, the complaint alleging acts of domestic violence is maintainable not only against an adult male person who is son or brother, who is or has been in a domestic relationship with the aggrieved complainant- mother or sister, but the complaint can also be filed against a relative of the son or brother including wife of the son / wife of the brother and sisters of the male respondent. In other words, in our view, the complaint against the daughter-in-law, daughters or sisters would be maintainable under the provisions of the DV Act, where they are co- respondent/s in a complaint against an adult male person, who is or has been in a domestic relationship with the complainant and such co- respondent/s. It must, of course, be held that a complaint under the DV Act would not be maintainable against daughter-in-law, sister-in- law or sister of the complainant, if no complaint is filed against an adult male person of the family.”

7. The present appeal has been filed against this judgment. Shri Harin P. Raval, learned senior advocate appearing on behalf of the appellants, assailed the judgment, and has argued before us that it is clear that the “respondent” as defined in Section 2(q) of the said Act can only mean an adult male person. He has further argued that the proviso to Section 2(q) extends “respondent” only in the case of an aggrieved wife or female living in a relationship in the nature of a marriage, in which case even a female relative of the husband or male partner may be arraigned as a respondent. He sought to assail the judgment on the ground that the Court has not read down the provision of Section 2(q), but has in fact read the proviso into the main enacting part of the said definition, something that was impermissible in law. He has argued before us that the 2005 Act is a penal statute and should be strictly construed in the event of any ambiguity. He further argued that in fact there was no ambiguity because the expression “adult male person” cannot be diluted in the manner done by the High Court in the impugned judgment. He cited a large number of judgments on the golden rule of literal construction, on how reading down cannot be equated to re-reading in constitutional law, and on how a proviso cannot be introduced into the main part of a provision so as to distort its language. He also cited before us judgments which stated that even though a statute may lead to some hardship, that would not necessarily render the provision unconstitutional nor, in the process of interpretation, can a Court mend or bend the provision in the face of the plain language used. He also cited judgments before us stating that given the plain language, it is clear that it is only for the legislature to make the changes suggested by the High Court.

8. Ms. Meenakshi Arora, learned senior counsel appearing on behalf of the respondents, countered each of these submissions. First and foremost, she argued that the 2005 Act is a piece of social beneficial legislation enacted to protect women from domestic violence of all kinds. This being the case, it is clear that any definition which seeks to restrict the reach of the Act would have to be either struck down as being violative of Article 14 of the Constitution or read down. According to her, given the object of the statute, which is discernible clearly from the statement of objects and reasons, the preamble, and various provisions of the 2005 Act which she took us through, it is clear that the expression “adult male person” is a classification not based on any intelligible differentia, and not having any rational relationship with the object sought to be achieved by the Act. In fact, in her submission, the said expression goes contrary to the object of the Act, which is to afford the largest possible protection to women from domestic violence by any person, male or female, who happens to share either a domestic relationship or shared household with the said woman. In the alternative, she argued that the High Court judgment was right, and that if the said expression is not struck down, it ought to be read down in the manner suggested to make it constitutional. She also added that the doctrine of severability would come to her rescue, and that if the said expression were deleted from Section 2(q), the Act as a whole would stand and the object sought to be achieved would only then be fulfilled. She referred to a large number of judgments on Article 14 and the doctrine of severability generally. She also argued that within the definition of “shared household” in Section 2(s) of the Act, the “respondent” may be a member of a joint family. She has adverted to the amendment made to the Hindu Succession Act in 2005, by which amendment females have also become coparceners in a joint Hindu family, and she argued that therefore the 2005 Act is not in tune with the march of statutory law in other areas. She also countered the submission of Shri Raval stating that the 2005 Act is in fact a piece of beneficial legislation which is not penal in nature but which affords various remedies which are innovative in nature and which cannot be availed of in the ordinary civil courts. She added that Section 31 alone was a penal provision for not complying with a protection order, and went on to state that the modern rule as to penal provisions is different from that sought to be contended by Shri Raval, and that such rule requires the court to give a fair interpretation to the provisions of these statutes, neither leaning in favour of the accuser or the accused. She also added that given the beneficial statute that we have to strike down/interpret, a purposive construction alone should be given, and as the offending expression “adult male person” is contrary to such purpose and would lead to absurdities and anomalies, it ought to be construed in tune with the Act as a whole, which therefore would include females, as well, as respondents. She also pointed out that, at present, the sweep of the Act was such that if a mother-in-law or sister-in-law were to be an aggrieved person, they could only be aggrieved against adult male members and not against any opposing female member of a joint family – for example, a daughter-in-law or a sister-in- law. This will unnecessary stultify what was sought to be achieved by the Act, and would make the Act a dead letter insofar as these persons are concerned. She also argued that the Act would become unworkable in that the reliefs that were to be given would only be reliefs against adult male members and not their abettors who may be females.

9. Ms. Pinky Anand, learned Additional Solicitor General for India, more or less adopted the arguments of the counsel who appeared for the Union of India in the Bombay High Court. It was her submission that in view of the judgment in Kusum Lata Sharma v. State (Crl. M.C. No.75 of 2011 dated 2.9.2011) of the Delhi High Court, laying down that the mother-in-law is also entitled to file a complaint against the daughter-in-law under the provisions of the 2005 Act, and the SLP against the said judgment having been dismissed by the Supreme Court, her stand was that it would be open to a mother-in-law to file a complaint against her son as well as her daughter- in-law and other female relatives of the son. In short, she submitted that the impugned judgment does not require interference at our end.

10. This appeal therefore raises a very important question in the area of protection of the female sex generally. The Court has first to ascertain what exactly is the object sought to be achieved by the 2005 Act. In doing so, this Court has to see the statement of objects and reasons, the preamble and the provisions of the 2005 Act as a whole. In so doing, this Court is only following the law already laid down in the following judgments.

11. In Shashikant Laxman Kale v. Union of India, (1990) 2 SCR 441, this Court was faced with the constitutional validity of an exemption section contained in the Indian Income Tax Act, 1961. After referring in detail to Re: Special Courts Bill, 1979 2 SCR 476 and the propositions laid down therein on Article 14 generally and a few other judgments, this Court held:-

“It is first necessary to discern the true purpose or object of the impugned enactment because it is only with reference to the true object of the enactment that the existence of a rational nexus of the differentia on which the classification is based, with the object sought to be achieved by the enactment, can be examined to test the validity of the classification. In Francis Bennion's Statutory Interpretation, (1984 edn.), the distinction between the legislative intention and the purpose or object of the legislation has been succinctly summarised at p. 237 as under: “The distinction between the purpose or object of an enactment and the legislative intention governing it is that the former relates to the mischief to which the enactment is directed and its remedy, while the latter relates to the legal meaning of the enactment.” There is thus a clear distinction between the two. While the purpose or object of the legislation is to provide a remedy for the malady, the legislative intention relates to the meaning or exposition of the remedy as enacted. While dealing with the validity of a classification, the rational nexus of the differentia on which the classification is based has to exist with the purpose or object of the legislation, so determined. The question next is of the manner in which the purpose or object of the enactment has to be determined and the material which can be used for this exercise. For determining the purpose or object of the legislation, it is permissible to look into the circumstances which prevailed at the time when the law was passed and which necessitated the passing of that law. For the limited purpose of appreciating the background and the antecedent factual matrix leading to the legislation, it is permissible to look into the Statement of Objects and Reasons of the Bill which actuated the step to provide a remedy for the then existing malady. In A. Thangal Kunju Musaliar v. M. Venkitachalam Potti [(1955) 2 SCR 1196 : AIR 1956 SC 246 : (1956) 29 ITR 349] , the Statement of Objects and Reasons was used for judging the reasonableness of a classification made in an enactment to see if it infringed or was contrary to the Constitution. In that decision for determining the question, even affidavit on behalf of the State of “the circumstances which prevailed at the time when the law there under consideration had been passed and which necessitated the passing of that law” was relied on. It was reiterated in State of West Bengal v. Union of India [(1964) 1 SCR 371 : AIR 1963 SC 1241] that the Statement of Objects and Reasons accompanying a Bill, when introduced in Parliament, can be used for ‘the limited purpose of understanding the background and the antecedent state of affairs leading up to the legislation’. Similarly, in Pannalal Binjraj v. Union of India [1957 SCR 233 : AIR 1957 SC 397 : (1957) 31 ITR 565] a challenge to the validity of classification was repelled placing reliance on an affidavit filed on behalf of the Central Board of Revenue disclosing the true object of enacting the impugned provision in the Income Tax Act.”

12. To similar effect, this Court held in Harbilas Rai Bansal v. State of Punjab, (1996) 1 SCC 1, as follows:

“The scope of Article 14 has been authoritatively laid down by this Court in innumerable decisions including Budhan Choudhry v. State of Bihar [(1955) 1 SCR 1045 : AIR 1955 SC 191] , Ram Krishna Dalmia v. Justice S.R. Tendolkar [1959 SCR 279 : AIR 1958 SC 538] , Western U.P. Electric Power and Supply Co. Ltd. v. State of U.P. [(1969) 1 SCC 817] and Mohd. Hanif Quareshi v. State of Bihar [1959 SCR 629 : AIR 1958 SC 731] . To be permissible under Article 14 of the Constitution a classification must satisfy two conditions namely (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different basis, but what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.

The statement of objects and reasons of the Act is as under: “Statement of Objects and Reasons of the East Punjab Urban Rent Restriction Act, 1949 (Act 3 of 1949).— Under Article 6 of the India (Provisional Constitution) Order, 1947, any law made by the Governor of the Punjab by virtue of Section 93 of the Government of India Act, 1935, which was in force immediately before 15-8-1947, is to remain in force for two years from the date on which the Proclamation ceased to have effect, viz., 14-8- 1947. A Governor's Act will, therefore, cease to have effect on 14-8-1949. It is desired that the Punjab Urban Rent Restriction Act, 1947 (Punjab Act No. VI of 1947), being a Governor's Act, be re-enacted as a permanent measure, as the need for restricting the increase of rents of certain premises situated within the limits of urban areas and the protection of tenants against mala fide attempts by their landlords to procure their eviction would be there even after 14-8-1949.

In order to achieve the above object, a new Act incorporating the provisions of the Punjab Urban Rent Restriction Act, 1947 with necessary modification is being enacted.” It is obvious from the objects and reasons quoted above that the primary purpose for legislating the Act was to protect the tenants against the mala fide attempts by their landlords to procure their eviction. Bona fide requirement of a landlord was, therefore, provided in the Act — as originally enacted — a ground to evict the tenant from the premises whether residential or non-residential.

The provisions of the Act, prior to the amendment, were uniformly applicable to the residential and non-residential buildings. The amendment, in the year 1956, created the impugned classification. The objects and reasons of the Act indicate that it was enacted with a view to restrict the increase of rents and to safeguard against the mala fide eviction of tenants. The Act, therefore, initially provided — conforming to its objects and reasons — bona fide requirement of the premises by the landlord, whether residential or non-residential, as a ground of eviction of the tenant. The classification created by the amendment has no nexus with the object sought to be achieved by the Act. To vacate a premises for the bona fide requirement of the landlord would not cause any hardship to the tenant. Statutory protection to a tenant cannot be extended to such an extent that the landlord is precluded from evicting the tenant for the rest of his life even when he bona fide requires the premises for his personal use and occupation. It is not the tenants but the landlords who are suffering great hardships because of the amendment. A landlord may genuinely like to let out a shop till the time he bona fide needs the same. Visualise a case of a shopkeeper (owner) dying young. There may not be a member in the family to continue the business and the widow may not need the shop for quite some time. She may like to let out the shop till the time her children grow up and need the premises for their personal use. It would be wholly arbitrary — in a situation like this — to deny her the right to evict the tenant. The amendment has created a situation where a tenant can continue in possession of a non-residential premises for life and even after the tenant's death his heirs may continue the tenancy. We have no doubt in our mind that the objects, reasons and the scheme of the Act could not have envisaged the type of situation created by the amendment which is patently harsh and grossly unjust for the landlord of a non- residential premises.” [paras 8, 9 &13]

13. In accordance with the law laid down in these judgments it is important first to discern the object of the 2005 Act from the statement of objects and reasons:-

STATEMENT OF OBJECTS AND REASONS

1. Domestic violence is undoubtedly a human rights issue and serious deterrent to development. The Vienna Accord of 1994 and the Beijing Declaration and the Platform for Action (1995) have acknowledged this. The United Nations Committee on Convention on Elimination of All Forms of Discrimination Against Women (CEDAW) in its General Recommendation No. XII (1989) has recommended that State parties should act to protect women against violence of any kind especially that occurring within the family.

2. The phenomenon of domestic violence is widely prevalent but has remained largely invisible in the public domain. Presently, where a woman is subjected to cruelty by her husband or his relatives, it is an offence under section 498A of the Indian Penal Code. The civil law does not however address this phenomenon in its entirety.

3. It is, therefore, proposed to enact a law keeping in view the rights guaranteed under articles 14, 15 and 21 of the Constitution to provide for a remedy under the civil law which is intended to protect the woman from being victims of domestic violence and to prevent the occurrence of domestic violence in the society.

4. The Bill, inter alia, seeks to provide for the following:-

(i) It covers those women who are or have been in a relationship with the abuser where both parties have lived together in a shared household and are related by consanguinity, marriage or through a relationship in the nature of marriage or adoption. In addition, relationships with family members living together as a joint family are also included. Even those women who are sisters, widows, mothers, single women, or living with the abuser are entitled to legal protection under the proposed legislation. However, whereas the Bill enables the wife or the female living in a relationship in the nature of marriage to file a complaint under the proposed enactment against any female relative of husband or the male partner, it does not enable any female relative of the husband or the male partner to file a complaint against the wife or the female partner.

(ii) It defines the expression “domestic violence” to include actual abuse or threat or abuse that is physical, sexual, verbal, emotional or economic. Harassment by way of unlawful dowry demands to the woman or her relatives would also be covered under this definition.

(iii) It provides for the rights of women to secure housing. It also provides household, whether or not she has any title or rights in such home or household. This right is secured by a residence order, which is passed by the Magistrate.

iv) It empowers the Magistrate to pass protection orders in favour of the aggrieved person to prevent the respondent from aiding or committing an act of domestic violence or any other specified act, entering a workplace or any other place frequented by the aggrieved person, attempting to communicate with her, isolating any assets used by both the parties and causing violence to the aggrieved person, her relatives or others who provide her assistance from the domestic violence.

(v) It provides for appointment of Protection Officers and registration of non-governmental organizations as service providers for providing assistance to the aggrieved person with respect to her medical examination, obtaining legal aid, safe shelter, etc.

5. The Bill seeks to achieve the above objects. The notes on clauses explain the various provisions contained in the Bill.”

14. A cursory reading of the statement of objects and reasons makes it clear that the phenomenon of domestic violence against women is widely prevalent and needs redressal. Whereas criminal law does offer some redressal, civil law does not address this phenomenon in its entirety. The idea therefore is to provide various innovative remedies in favour of women who suffer from domestic violence, against the perpetrators of such violence.

15. The preamble of the statute is again significant. It states:

Preamble “An Act to provide for more effective protection of the rights of women guaranteed under the constitution who are victims of violence of any kind occurring within the family and for matters connected therewith or incidental thereto.”

16. What is of great significance is that the 2005 Act is to provide for effective protection of the rights of women who are victims of violence of any kind occurring within the family. The preamble also makes it clear that the reach of the Act is that violence, whether physical, sexual, verbal, emotional or economic, are all to be redressed by the statute. That the perpetrators and abettors of such violence can, in given situations, be women themselves, is obvious. With this object in mind, let us now examine the provisions of the statute itself.

17. The relevant provisions of the statute are contained in the following Sections:

“2. Definitions.—In this Act, unless the context otherwise requires,—

(a) “aggrieved person” means any woman who is, or has been, in a domestic relationship with the respondent and who alleges to have been subjected to any act of domestic violence by the respondent;

(f) “domestic relationship” means 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;

(q) “respondent” means any adult male person who is, or has been, in a domestic relationship with the aggrieved person and against whom the aggrieved person has sought any relief under this Act: Provided that an aggrieved wife or female living in a relationship in the nature of a marriage may also file a complaint against a relative of the husband or the male partner.

(s) “shared household” means a household where the person aggrieved lives or at any stage has lived in a domestic relationship either singly or along with the respondent and includes such a household whether owned or tenanted either jointly by the aggrieved person and the respondent, or owned or tenanted by either of them in respect of which either the aggrieved person or the respondent or both jointly or singly have any right, title, interest or equity and includes such a household which may belong to the 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.

3. Definition of domestic violence.—For the purposes of this Act, any act, omission or commission or conduct of the respondent shall constitute domestic violence in case it—

(a) harms or injures or endangers the health, safety, life, limb or well- being, whether mental or physical, of the aggrieved person or tends to do so and includes causing physical abuse, sexual abuse, verbal and emotional abuse and economic abuse; or

(b) harasses, harms, injures or endangers the aggrieved person with a view to coerce her or any other person related to her to meet any unlawful demand for any dowry or other property or valuable security; or

(c) has the effect of threatening the aggrieved person or any person related to her by any conduct mentioned in clause (a) or clause (b); or

(d) otherwise injures or causes harm, whether physical or mental, to the aggrieved person. Explanation I.—For the purposes of this section,—

(i) “physical abuse” means any act or conduct which is of such a nature as to cause bodily pain, harm, or danger to life, limb, or health or impair the health or development of the aggrieved person and includes assault, criminal intimidation and criminal force;

(ii) “sexual abuse” includes any conduct of a sexual nature that abuses, humiliates, degrades or otherwise violates the dignity of woman;

(iii) “verbal and emotional abuse” includes—

(a) insults, ridicule, humiliation, name calling and insults or ridicule specially with regard to not having a child or a male child; and

(b) repeated threats to cause physical pain to any person in whom the aggrieved person is interested.

(iv) “economic abuse” includes—

(a) 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 and her children, if any, stridhan, property, jointly or separately owned by the aggrieved person, payment of rental related to the shared household and maintenance;

(b) disposal of household effects, any alienation of assets whether movable or immovable, valuables, shares, securities, bonds and the like or other property in which the aggrieved person has an interest or is entitled to use by virtue of the domestic relationship or which may be reasonably required by the aggrieved person or her children or her stridhan or any other property jointly or separately held by the aggrieved person; and

(c) prohibition or restriction to continued access to resources or facilities which the aggrieved person is entitled to use or enjoy by virtue of the domestic relationship including access to the shared household. Explanation II.—For the purpose of determining whether any act, omission, commission or conduct of the respondent constitutes “domestic violence” under this section, the overall facts and circumstances of the case shall be taken into consideration.

17. Right to reside in a shared household.— (1) 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, 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.

18. Protection orders.—The Magistrate may, after giving the aggrieved person and the respondent an opportunity of being heard and on being prima facie satisfied that domestic violence has taken place or is likely to take place, pass a protection order in favour of the aggrieved person and prohibit the respondent from—

(a) committing any act of domestic violence;

(b) aiding or abetting in the commission of acts of domestic violence;

(c) entering the place of employment of the aggrieved person or, if the person aggrieved is a child, its school or any other place frequented by the aggrieved person;

(d) attempting to communicate in any form, whatsoever, with the aggrieved person, including personal, oral or written or electronic or telephonic contact;

(e) alienating any assets, operating bank lockers or bank accounts used or held or enjoyed by both the parties, jointly by the aggrieved person and the respondent or singly by the respondent, including her stridhan or any other property held either jointly by the parties or separately by them without the leave of the Magistrate;

(f) causing violence to the dependants, other relatives or any person who give the aggrieved person assistance from domestic violence;

(g) committing any other act as specified in the protection order.

19. Residence orders.— (1) While disposing of an application under sub-section (1) of section 12, the Magistrate may, on being satisfied that domestic violence has taken place, pass a residence order—

(a) restraining the respondent from dispossessing or in any other manner disturbing the possession of the aggrieved person from the shared household, whether or not the respondent has a legal or equitable interest in the shared household;

(b) directing the respondent to remove himself from the shared household;

(c) restraining the respondent or any of his relatives from entering any portion of the shared household in which the aggrieved person resides;

(d) restraining the respondent from alienating or disposing of the shared household or encumbering the same;

(e) restraining the respondent from renouncing his rights in the shared household except with the leave of the Magistrate; or

(f) directing the respondent to secure same level of alternate accommodation for the aggrieved person as enjoyed by her in the shared household or to pay rent for the same, if the circumstances so require: Provided that no order under clause (b) shall be passed against any person who is a woman.

(2) The Magistrate may impose any additional conditions or pass any other direction which he may deem reasonably necessary to protect or to provide for the safety of the aggrieved person or any child of such aggrieved person.

(3) The Magistrate may require from the respondent to execute a bond, with or without sureties, for preventing the commission of domestic violence.

(4) An order under sub-section (3) shall be deemed to be an order under Chapter VIII of the Code of Criminal Procedure, 1973 (2 of 1974) and shall be dealt with accordingly.

(5) While passing an order under sub-section (1), sub-section (2) or sub- section (3), the court may also pass an order directing the officer-in- charge of the nearest police station to give protection to the aggrieved person or to assist her or the person making an application on her behalf in the implementation of the order.

(6) While making an order under sub-section (1), the Magistrate may impose on the respondent obligations relating to the discharge of rent and other payments, having regard to the financial needs and resources of the parties.

(7) The Magistrate may direct the officer-in-charge of the police station in whose jurisdiction the Magistrate has been approached to assist in the implementation of the protection order.

(8) The Magistrate may direct the respondent to return to the possession of the aggrieved person her stridhan or any other property or valuable security to which she is entitled to.

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 the 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 the 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.

(4) The Magistrate shall send a copy of the order for monetary relief made under sub-section (1) to the parties to the application and to the in- charge of the police station within the local limits of whose jurisdiction the respondent resides.

(5) The respondent shall pay the monetary relief granted to the aggrieved person within the period specified in the order under sub-section (1).

(6) Upon the failure on the part of the respondent to make payment in terms of the order under sub-section (1), the Magistrate may direct the employer or a debtor of the respondent, to directly pay to the aggrieved person or to 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.

26. Relief in other suits and legal proceedings.—
1.  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 a criminal court, affecting the aggrieved person and the respondent whether such proceeding was initiated before or after the commencement of this Act.

2.  Any relief referred to in sub-section (1) may be sought for in addition to and along with any other relief that the aggrieved person may seek in such suit or legal proceeding before a civil or criminal court.

3.  In case any relief has been obtained by the aggrieved person in any proceedings other than a proceeding under this Act, she shall be bound to inform the Magistrate of the grant of such relief.

31. Penalty for breach of protection order by respondent.— (1) A breach of protection order, or of an interim protection order, by the respondent shall be an offence under this Act and shall be punishable with imprisonment of either description for a term which may extend to one year, or with fine which may extend to twenty thousand rupees, or with both.

(2) The offence under sub-section (1) shall as far as practicable be tried by the Magistrate who had passed the order, the breach of which has been alleged to have been caused by the accused.

(3) While framing charges under sub-section (1), the Magistrates may also frame charges under section 498A of the Indian Penal Code (45 of 1860) or any other provision of that Code or the Dowry Prohibition Act, 1961 (28 of 1961), as the case may be, if the facts disclose the commission of an offence under those provisions.”

18. It will be noticed that the definition of “domestic relationship” contained in Section 2(f) is a very wide one. It is a relationship between persons who live or have lived together in a shared household and are related in any one of four ways - blood, marriage or a relationship in the nature of marriage, adoption, or family members of a joint family. A reading of these definitions makes it clear that domestic relationships involve persons belonging to both sexes and includes persons related by blood or marriage. This necessarily brings within such domestic relationships male as well as female in-laws, quite apart from male and female members of a family related by blood. Equally, a shared household includes a household which belongs to a joint family of which the respondent is a member. As has been rightly pointed out by Ms. Arora, even before the 2005 Act was brought into force on 26.10.2006, the Hindu Succession Act,1956 was amended, by which Section 6 was amended, with effect from 9.9.2005, to make females coparceners of a joint Hindu family and so have a right by birth in the property of such joint family. This being the case, when a member of a joint Hindu family will now include a female coparcener as well, the restricted definition contained in Section 2(q) has necessarily to be given a relook, given that the definition of ‘shared household’ in Section 2(s) of the Act would include a household which may belong to a joint family of which the respondent is a member. The aggrieved person can therefore make, after 2006, her sister, for example, a respondent, if the Hindu Succession Act amendment is to be looked at. But such is not the case under Section 2(q) of the 2005 Act, as the main part of Section 2(q) continues to read “adult male person”, while Section 2(s) would include such female coparcener as a respondent, being a member of a joint family. This is one glaring anomaly which we have to address in the course of our judgment.

19. When Section 3 of the Act defines domestic violence, it is clear that such violence is gender neutral. It is also clear that physical abuse, verbal abuse, emotional abuse and economic abuse can all be by women against other women. Even sexual abuse may, in a given fact circumstance, be by one woman on another. Section 3, therefore, in tune with the general object of the Act, seeks to outlaw domestic violence of any kind against a woman, and is gender neutral. When one goes to the remedies that the Act provides, things become even clearer. Section 17(2) makes it clear that the aggrieved person cannot be 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, it is clear that women who evict or exclude the aggrieved person are not within its coverage, and if that is so, the object of the Act can very easily be defeated by an adult male person not standing in the forefront, but putting forward female persons who can therefore evict or exclude the aggrieved person from the shared household. This again is an important indicator that the object of the Act will not be sub-served by reading “adult male person” as “respondent”.

20. This becomes even clearer from certain other provisions of the Act. Under Section 18(b), for example, when a protection order is given to the aggrieved person, the “respondent” is prohibited from aiding or abetting the commission of acts of domestic violence. This again would not take within its ken females who may be aiding or abetting the commission of domestic violence, such as daughters-in-law and sisters-in-law, and would again stultify the reach of such protection orders.

21. When we come to Section 19 and residence orders that can be passed by the Magistrate, Section 19(1)(c) makes it clear that the Magistrate may pass a residence order, on being satisfied that domestic violence has taken place, and may restrain the respondent or any of his relatives from entering any portion of the shared household in which the aggrieved person resides. This again is a pointer to the fact that a residence order will be toothless unless the relatives, which include female relatives of the respondent, are also bound by it. And we have seen from the definition of “respondent” that this can only be the case when a wife or a common law wife is an aggrieved person, and not if any other woman belonging to a family is an aggrieved person. Therefore, in the case of a wife or a common law wife complaining of domestic violence, the husband’s relatives including mother-in-law and sister-in-law can be arrayed as respondents and effective orders passed against them. But in the case of a mother-in-law or sister-in-law who is an aggrieved person, the respondent can only be an “adult male person” and since his relatives are not within the main part of the definition of respondent in Section 2(q), residence orders passed by the Magistrate under Section 19(1)(c) against female relatives of such person would be unenforceable as they cannot be made parties to petitions under the Act.

22. When we come to Section 20, it is clear that a Magistrate may direct the respondent to pay monetary relief to the aggrieved person, of various kinds, mentioned in the Section. If the respondent is only to be an “adult male person”, and the money payable has to be as a result of domestic violence, compensation due from a daughter-in-law to a mother-in-law for domestic violence inflicted would not be available, whereas in a converse case, the daughter-in-law, being a wife, would be covered by the proviso to Section 2(q) and would consequently be entitled to monetary relief against her husband and his female relatives, which includes the mother-in-law.

Supreme Court - Daily Orders
Re portable - In The Supreme Court Of India - Civil Original Jurisdiction - Writ Petition (Civil) No 494 Of 2012 - dated: On 15 December, 2017
     
with t c ( c) no 151 of 2013 t c ( c) no 152 of 2013 w p (c ) no 833 of 2013 w p (c ) no 829 of 2013 t p (c ) no 1797 of 2013 w p (c ) no 932 of 2013 t p (c ) no 1796 of 2013 cont p (c ) no 144 of 2014 signature not verified digitally signed by chetan kumar t p (c ) no 313 of 2014 date: 2017.12.15 11:59:23 ist reason:

t p (c ) no 312 of 2014 slp (crl ) no 2524 of 2014 w p (c ) no 37 of 2015 w p (c ) no 220 of 2015 cont p (c ) no 674 of 2015 t p (c ) no 921 of 2015 cont p (c ) no 470 of 2015 cont p (c ) no 444 of 2016 cont p (c ) no 608 of 2016 w p (c ) no 797 of 2016 cont p (c ) no 844 of 2017 w p (c ) no 342 of 2017 w p (c) no 372 of 2017 w p (c ) no 1058 of 2017 w p (c ) no 966 of 2017 w p (c ) no 1014 of 2017 w p (c ) no 1002 of 2017 and with w p (c ) no 1056 of 2017

orders dr d y Chandrachud, j 1 we have heard submissions on interim relief. the prayer for interim relief at this stage is essentially based on the earlier orders of this court dated 23 September 2013, 24 march 2014, 16 march 2015, 11 august 2015 and 15 October 2015. the interim directions dated 15 October 2015 were issued by a constitution bench. the primary submission of the petitioners is that in terms of the interim order of the constitution bench:
(i) aadhaar cards could permissibly be utilized only for six schemes (two of them provided for in the order dated 11 august 2015 and four in the order dated 15 october 2015);

(ii) the union government was directed to strictly follow the earlier orders of this court commencing from 23 September 2013; and

(iii) the aadhaar card scheme was to be purely voluntary and could not be made mandatory until the matter is finally decided by this court.

2 mr shyam divan, learned senior counsel urged that since the interim order dated 15 march 2015 governs the field it was the obligation of the union government to seek a variation of the interim directions after the enactment of the aadhaar (targeted delivery of financial and other subsidies, benefits and services) act, 2016 before making it mandatory to uplink or provide details of the unique identification number/aadhaar card for all purposes.

3 mr gopal subramanium, learned senior counsel while advancing the same submission urged that the issue involves the paramountcy of the court and of the judicial process. in the submission of the learned counsel, the exercise of the judicial power in the form of the interim order dated 15 october 2015 (and the earlier orders) was to insulate citizens against any form of compulsion, this being in aid of protecting their fundamental rights.

4 mr arvind datar, mr kts tulsi, mr anand grover, mr kv viswanathan, ms minakshi arora and mr sanjay hegde, among other learned counsel urged submissions on various facets in support of the prayer for interim relief.

5 on the other hand, mr k k venugopal, the learned attorney general for india urges that the interim directions were issued in the absence of a legislative framework. after parliament has enacted the aadhaar act, 2016 (which came into force on 12 july 2016) the interim orders would, in his submission, not pose any impediment to enforcing the provisions of the law, duly enacted. moreover, the reasonableness of each notification would have to be justified by the department concerned. the learned attorney general has been supported in his submissions by mr Aryama Sundaram, learned senior counsel appearing on behalf of uidai and mr rakesh dwivedi, learned senior counsel.

6 having due regard to the importance of the issues which have been raised in the case, which has led to the judgment of nine judges of this court on 24 august 20171, we are of the considered view that the resolution of the issues raised before the court should proceed at the earliest, after the court reassembles in January 2018. this will ensure clarity for citizens on the one hand and for the union and the state governments and the instrumentalities on the other hand.

7 learned senior counsel appearing on behalf of the petitioners as well as the learned attorney general for India and all the other counsel supporting his submissions have agreed to the suggestion of the court that the final hearing of the case commence on 17 january 2018. we direct accordingly. 8 the matter which needs consideration in the meantime is the interim arrangement which should govern the field. 9 the learned attorney general for India has stated that:
(2017) 10 scc 1
(i) the union government has extended the deadline for aadhaar linkage with all schemes of its ministries/departments until 31 march 2018;

(ii) as far as aadhaar linkage with bank accounts is concerned, for existing bank accounts, the last date for the completion of the process may be extended to 31 march 2018;

(iii) in so far as new bank accounts are concerned, while the last date for completing the process of aadhaar linking may be extended until 31 march 2018, persons desirous to open new accounts shall produce proof to the bank of an application having been submitted for obtaining an aadhaar card together with the application number which shall be supplied to the account opening bank; and

(iv) as regards aadhaar based e-kyc for mobile phone subscribers, as held by a bench of two learned judges of this court by its order dated 6 february 2017 in lokniti foundation v union of india and another2, the process of completing the e-kyc process is to be completed by 6 february 2018. the union government informs the court, that consistent with the extension of the deadline to 31 march 2018 in other cases, this court may consider passing appropriate orders. 10 in terms of (i) and (ii) above, we accept the statement of the learned attorney general for india and order accordingly.

(2017) 7 scc 155 11 in terms of (iii) above, subject to the submission of the details in regard to the filing of an application for an aadhaar card and the furnishing of the application number to the account opening bank, we likewise extend the last date for the completion of the process of aadhaar linking of new bank accounts to 31 march 2018.

12 in terms of (iv) above we extend the date for the completion of the e-kyc process in respect of mobile phone subscribers until 31 march 2018. 13 consistent with the above directions, we also direct that the extension of the last date for aadhar linkage to 31 march 2018 shall apply, besides the schemes of the ministries/departments of the union government to all state governments in similar terms. as a consequence of the extension of the deadline to 31 march 2018, it is ordered accordingly.

14 we also clarify that in so far as the provisions of section 139 aa of the income tax act, 1961 are concerned, the matter stands governed by the judgment of this court in binoy visman v union of india3. writ petition (c ) no 247 of 2017 15 the above arrangement shall continue to operate pending the disposal of the proceedings before the constitution bench. 16 the registry shall list the entire batch of connected cases for final hearing on 17 january 2018.

CJI Dipak Misra, J A. K. Sikri, J A.M. Khanwilkar, J Dr D Y Chandrachud, J[Ashok Bhushan
New Delhi
December 15, 2017

In The High Court of Judicature at Bombay -  Civil Appellate Jurisdiction - Writ Petition No. 114 of 2018 - With Civil Application No.518 Of 2018 - Bench: B. H. Dangre - date of judgment: 4 May, 2018

Mr.Anagha N. Nimbkar For The Petitioner/Applicant. Mrs.Tanbon F. Irani For The Respondent.

Coram : Smt.Bharati H. Dangre, J Reserved On : 21st March 2018 Prouncened On : 04th May 2018 Judgment :-

1. The Present Petition Is Filed By The Petitioner Challenging The Order Dated 22.06.2017 Passed By The Family Court At Bandra Below Exh-7 In Petition No.A-1097/2015, Thereby Allowing The Application And Directing The Petitioner To Pay An Amount of Rs.25,000/- Per Month To The Petitioner And Rs.20,000/- Per Month Each For Both The Children Towards Interim Maintenance From The Date of The Filing of The Application Including The House Rent. The Petitioner Is Aggrieved By The Said Order And Prays For Quashing And Setting Aside The Said Order On The Ground That The Page 1 of 19 Jud-Wp-114-2018 Family Court Has Exceeded Its Jurisdiction In Passing The Said Order. A Brief Chronology of Facts And Events Leading To The Filing of Present Petition Is Culled Out In The Subsequent Paragraphs.

2. The Petitioner And The Respondent Belong To Islamic Alvi Bohra Community And Were Married On 16.10.1997. Out of The Said Marriage Three Children Were Born And One Eldest Son Expired On 28.10.2014. The Other Two Children Are Aged 14 And 13 Years Respectively.

The Respondent-Wife Filed Petition For Divorce Under The Dissolution of Muslim Marriage Act, 1939 Seeking Dissolution of The Marriage, Before The Family Court At Bandra On 15.04.2015 And Invoked Provisions of Section 2(Viii)(A)(D) of The Dissolution of Muslim Marriage Act, 1939 And Also Prayed For Custody of The Children, Maintenance And Accommodation. The Said Prayer For Divorce Was Opposed By The Petitioner By Filing Written Statement.

On The Very Same Day When The Proceedings Were Instituted For Divorce, The Respondent-Wife Moved An Interim Application Seeking Maintenance And Accommodation And In The Said Application She Reiterated The Statements Made In The Petition And Claimed An Amount of Maintenance For Herself As Well As Two Minor Children, Taking Into Consideration The Earning Capacity of The Page 2 of 19 Jud-Wp-114-2018 Petitioner-Husband And Her Requirements. The Amount of Rs.2 Lakhs Was Claimed Towards Maintenance For Herself And An Amount of Rs.1,50,000/- Was Claimed Towards The Maintenance of The Children Along With The Cost of Litigation. The Petitioner Filed His Response To The Said Application On 23.04.2016 Opposing The Said Claim.

The Husband Raised An Objection By Filing Application Under Order 7 Rule 11(A) of The Civil Procedure Code Which Came To Be Rejected By The Family Court By Observing That The Petition For Dissolution of Marriage Cannot Be Dismissed In Such A Fashion. On 20th May 2016 The Wife Again Filed An Application For Monthly Maintenance For Herself And Her Minor Children Which Was Marked As Exh.-34.
3. It Is A Specific Case of The Petitioner That He Gave Talaq To The Respondent On 29.03.2017 And Since The Wife Herself Was Claiming Divorce, He Was Under An Impression That She Would Not Object To The Same. The Wife Objected To The Divorce Granted By The Petitioner And According To The Petitioner She Accepted The Amount of Mehar And She Returned The Said Amount Only On 08.05.2017. According To The Petitioner Since, The Wife Herself Had Approached And Filed The Proceedings Under The Dissolution of Muslim Marriage Act, She Had No Justification To Oppose The Said Talaknama Dated Page 3 of 19jud-Wp-114-2018 29.03.2017. The Family Court Vide Order Dated 06.05.2017 Passed A Restrain Order, Restraining The Petitioner For Performing The Second Marriage. The Petitioner Moved An Application For Deciding The Maintainability of The Petition And Also Praying For Framing Preliminary Issue of Jurisdiction Under Section 9A of The Civil Procedure Code. The Learned Family Court By Order Dated 17.07.2017 Ordered That The Issues Raised In The Application Would Be Added To Other Issues To Be Dealt By The Court.

On 09.06.2017 The Respondent Filed An Application Under Section 12, 18, 19, 20, 22 And 23 of The Domestic Violence Act, 2005 And Prayed For The Similar Relief Which She Had Prayed In The Earlier Application. On 22.06.2017 The Family Court Passed An Impugned Order Which Is Assailed In The Present Petition.

4. In Support of The Petition I Have Heard Ms.Angha Nimbkar Appearing For The Petitioner She Would Submit That The Petitioner And Respondents Are Governed By The Muslim Personal Laws And Different Enactments Govern Their Personal Relationship of Including The Muslim Personal Law (Shariat) Application Act 1937, The Dissolution of Muslim Marriage Act, 1939 And The Muslim Women (Protection of Rights On Divorce) Act, 1986. The Learned Counsel Would Invite Attention To The Provisions Contained In The Page 4 of 19 Jud-Wp-114-2018 Muslim Women (Protection of Rights On Divorce) Act, 1986 And Specifically To The Provision Contained In Section-3 of The Said Act Which Contemplate A Reasonable And Fair Provision of Maintenance To Be Made And Paid To A Wife During Iddat Period. She Would Also Invite Attention To Section-3 of The Said Act Which Reads Thus :-
"(3) Where An Application Has Been Made Under Sub- Section (2) By A Divorced Woman, The Magistrate May, If He Is Satisfied That-
(A) Her Husband Having Sufficient Means, Has Failed Or Neglected To Make Or Pay Her Within The Iddat Period A Reasonable And Fair Provision And Maintenance For Her And The Children; Or
(B) The Amount Equal To The Sum of Mahr Or Dower Has Not Been Paid Or That The Properties Referred To In Clause(D) of Sub-Section (1) Have Not Been Delivered To Her, Make An Order, Within One Month of The Date of The Filing of The Application, Directing Her Former Husband To Pay Such Reasonable And Fair Provision And Maintenance To The Divorced Woman As He May Determine As Fit And Proper Having Regard To The Needs of The Divorced Woman, The Standard of Life Enjoyed By Her During Her Marriage And The Means of Her Former Husband Or, As The Case May Be, For The Payment of Such Mahr Or Dower Or The Delivery of Such Properties Referred To In Clause (D) of Sub-Section (1) To The Divorced Woman: Provided That If The Magistrate Finds It Impracticable To Dispose of The Application Page 5 of 19 Jud-Wp-114-2018 Within The Said Period, He May, For Reasons To Be Recorded By Him, Dispose of The Application After The Said Period."

5. She Would Also Make Reference To Section-2 of The Dissolution of Muslim Marriage Act, 1939 And Would Submit That The Said Act Permits A Women To Obtain A Decree For Dissolution of Marriage On The Grounds Set Out In The Said Section. The Learned Counsel For The Petitioner Would Thus Submit That The Family Court Has Erred Is Not Considering The Fact That Divorce Sought Under The Act For All Practical Purposes Is By Way of "Khula" And That Is A Reason There Is No Provision For Any Other Reliefs For Maintenance, Custody of Children Etc., Provided In The Act. She Would Submit That "Khula" Is A Mode of Dissolution of Marriage By Agreement Between Husband And Wife And The Divorce By "Khula" Is Divorce By Consent At The Instance of The Wife In Which She Gives Or Aggrieves To Give A Consideration To The Husband For Release From Marriage. She Would Submit That The Husband After Following The Established Procedure Under The Muslim Law Are Has Pronounced "Talaq" On 29.03.2017 Thereby Dissolving The Marriage Solemnized Between The Parties And Amount of Mehar/Dower of Rs.60,000/- Was Send To The Respondent On 30.03.2017, Which Came To Be Returned By Her Only On Page 6 of 19 Jud-Wp-114-2018 06.05.2017. The Learned Counsel Would Submit That The Respondent Is A Divorced Wife And Her Rights Are Enumerated And Limited Under The Muslim Women (Protection of Rights On Divorce) Act, 1986. She Would Submit That The Petition Filed Before The Court Was Exclusively Under The Dissolution of Muslim Marriage Act, 1939 Where There Is No Provision For Any Ancillary Reliefs, As Are Available Under The Domestic Violence Act, 2005. She Would Also Submit That The Learned Family Court Did Not Consider That The Complaint Under Section-12 Was Filed As An After Thought, After After Filing of The Application For Maintenance. She Would Also Emphasis That The Respondent Has Not Mentioned The Provision of Law Under Which The Relief Was Claimed. She Would Also Assail The Order of The Family Court On The Ground That The Court Did Not Consider The Qualifications of The Wife And Her Potential To Earn A Livelihood For Herself.

Per Contra Learned Counsel Ms.Irani Would Support The Impugned Order. She Would Submit That In No Contingency It Is A Case of 'Khulla'. She Would Submit That The Provisions of Protection of Domestic Violence Act Do No Create Any Restriction On The Wife To Invoke The Provisions of The Said Enactment On The Ground That She Is Governed By Muslim Personal Law. Mr.Irani Would Submit That The Wife Had Instituted Proceedings Under The Dissolution of Muslim Page 7 of 19 Jud-Wp-114-2018Marriage Act 1939 Specifically Invoking Section-2(Viii)(A) And (D). She Would Submit That For The Married Muslim Women There Was No Provision Available To Obtain A Decree From The Court Seeking Dissolution of Marriage, In Case The Husband Neglect To Maintain Her And Make Her Life Miserable By Inflicting Cruelty On Her And In Absence of Such A Provision Being Available, Muslim Women Were Subjected To Utmost Misery. In Order To Provide A Remedy To Such Oppressed Women, The Dissolution of Muslim Marriage Act, 1939 Came To Be Enacted Enabling A Women Married Under Muslim Law To Obtain A Decree For Dissolution of Marriage On The Grounds Enumerated Under Section-2. According To The Learned Counsel The Wife Had Invoked The Provisions of The Said Enactment Seeking Divorce On Ground of Cruel Treatment Meted Out To Her.

Ms.Irani Would Submit That The In The Said Proceedings The Wife Moved An Application Seeking Reliefs Available Under Section-12 of The D.V. Act Including The Monetary Relief. She Would Submit That There Is No Legal Embargo In Her Approaching The Competent Court By Invoking The Said Provision. She Would Pray For Upholding of The Impugned Order And Would Submit That The Proclamation of Talaq By The Husband Cannot Nullify The Benefits Flowing To Her Unless The Factum of Talaq Is Proved By Sufficient Evidence.


6. On Consideration of The Arguments Advanced By The Parties In Support of Their Respective Claim, The First Point Which Arise For Consideration Is Whether The Family Court Was Justified In Entertaining The Application Filed By The Respondent-Wife In Light of The Fact That The Parties Belong To Islamic Alvi Bohra Community And Specifically In The Backdrop of Muslim Women (Protection of Rights Ondivorce) Act, 1986. The Issue Is Whether Proceedings Claiming Relief Under D.V. Act, Can Be Entertained Specifically When The Main Petition Filed By The Wife Is Under The Dissolution of The Muslim Marriage Act, 1939.
It Is Not In Dispute That The Wife Has Instituted Proceedings For Divorce Praying For Dissolution of Marriage Solemnized On 17.09.1997 Under The Provisions of Section 2(Viii)(A) And (D) of Dissolution of Muslim Marriage Act. The Said Provision Permits The Woman Married Under The Muslim Law To Obtain A Decree For Dissolution of Marriage On The Ground That The Husband Has Treated Her With Cruelty Or Made Her Life Miserable And That He Has Disposed of Her Property Or Prevent Her From Exercising Her Legal Rights Over It.

In The Said Proceedings The Wife Had Moved An Application At Exh.-7 By Way of An Interim Application On 15.04.2015. The Said Application Is Titled As "Application For Page 9 of 19 Jud-Wp-114-2018 Maintenance And Residential Accommodation", Without Specifying The Section. Perusal of The Application Would However Reveal That The Wife Has Alleged That She Has Filed Petition For Divorce And Custody of Her Children And She Sought To Place Reliance On The Said Petitions. In The Said Application The Wife Has Claimed An Interim Maintenance From The Husband For Meeting The Expenses of Her Children As Well As Her Own Expenses. The Said Application No Doubt Do Not Mention The Provision Which Is Sought To Be Invoked. The Learned Counsel For The Petitioner Had Advanced A Submission That The Parties Being Governed By The Muslim Women (Protection of Rights On Divorce) Act, 1986 Which Governs The Entitlement For Maintenance of Muslim Women Who Have Been Divorced By And Who Have Obtained Divorce From Husband. As Per The Petitioner- Husband, Pursuant To Filing of The Said Proceeding He Had Given Talaq To The Respondent-Wife To 29.03.2017. The Contention of The Husband Is That The Wife Was Otherwise Seeking Divorce And He Has Granted Divorce Which Would Partake A Form of "Khula". He Would Submit That The Wife Had Accepted The Amount of Mehar In Pursuant To The Talaq Being Pronounced On 30.03.2017. However, She Turned Back And Returned The Meher On 08.05.2017. It Is The Specific Case of The Petitioner-Husband That On 28.04.2017, The Husband Re- Married Since The Wife Had Accepted The Meher Thereby Leading To A Page 10 of 19 Jud-Wp-114-2018 Conclusion That The Talaq Pronounced By The Husband Was Acceptable To Her. However, It Is A Specific Case of The Wife That The Said Dissolution of Marriage Cannot Be Treated As Khula And In Fact Mrs.Irani Had Invited Attention To The Pleadings And Would Submit That She Has Not Accepted The Said Talaknama And Rather In Light of The Latest Pronouncement of The Judgment By The Apex Court In The Case of Shayara Bano V/S. Union of India & Ors. (2017-9-SCC-1), The Talaknama Is Not Valid. Mrs.Irani Would Submit That Under The Muslim Law, In Certain Circumstances The Power To Initiate Divorce Proceeding Is Given To The Wife And She Had Instituted The Proceedings For The Said Purpose. However, She Would Submit That Her Client Has Not Accepted The Talaknama Dated 29.03.2017 And In Any Contingency She Would Take Appropriate Steps To Deal With The Said Issue Separately.

7. In The Present Case The Pronouncement of The Talaq Is Disputed By The Wife And The Husband Will Have To Be Prove The Said Factum of Talaq. As Till The Time The Talaq Is Not Proved, The Respondent Continues To Be Legally Weeded Wife of The Petitioner And In That Contingency The Question Is Whether The Wife Who Is In Domestic Relationship With The Petitioner Is Entitled To Seek The Relief Under The Provisions of The Domestic Violence Act. Though The Page 11 of 19 Jud-Wp-114-2018 Learned Counsel For The Petitioner Had Vehemently Argued That The Parties Are Governed By Muslim Personal Laws And Therefore The Provisions of The Domestic Violence Act Cannot Be Invoked, Per Contra Mrs.Irani Would Submit That There Is No Intention of The Legislature To Restrict The Provisions of Protection From Womens of Domestic Violence Act, 2005 To A Particular Category of Women And To Specifically Exclude The Women Belonging To The Muslim Religion.

8. Perusal of The Provisions of The Protection of Women From Domestic Violence Act, 2005 Would Reveal That It Is An Enactment To Provide For More Effective Protection For Rights of Women Guaranteed Under The Indian Constitution Who Are The Victims of The Violence. The Enactment No Way Intends To Restrict Its Application To Any Particular Category of Women But It Intends To Protect The Women Aggrieved, Who Are Victims of Domestic Violence. The Definition And Connotation of "Domestic Violence" Under Section-3 of The Enactment Do Not Indicate Any Intention Either Express Or Implied To Exclude Muslim Women. Section-36 of The Said Enactment Provides That The Provisions of The Act Shall Be In Addition To And Not In Derogation of The Provisions of Any Other Law For The Time Any Force. Thus, The Scheme of The Enactment Do Not Restrict The Applicability of The Provisions of The Act To A Particular Page 12 of 19 Jud-Wp-114-2018 Category of Women, Nevertheless To A Woman Belonging To A Particular Religion. No Doubt The Muslim Women Are Also Governed By Several Other Enactments In The Form of Muslim Women (Protection of Rights On Divorce) Act, 1986, Dissolution of Muslim Marriage Act, 1939 Etc., However, The Rights Conferred Under The Said Enactments Can In No Way Curtail The Operation Or Protection Granted Under The Protection of Women From Domestic Violence Act. In These Circumstances The Contention Advanced By The Learned Counsel For The Petitioner That The Respondent-Wife Could Not Avail The Provisions of The Domestic Violence Act Is Not Sustainable. Further, The Submission of The Learned Counsel For The Petitioner That The Wife Had Moved An Application Namely Exh.-7 In A Proceeding Which She Had Instituted Under The Dissolution of Muslim Marriage Act, 1939 And Therefore They Are Not Tenable, Needs To Be Cursorily Dealt With. The Section-26 of The Act of 2005 Permits The Relief To Be Availed Under Sections-18, 19, 20, 21 And 22 To Be Sought In Any Legal Proceedings Before A Civil Court, Family Court Or Criminal Court Affecting The Aggrieved Person Whether, Such Proceedings Were Initiated Before Or After The Commencement of This Act. Sub- Section 2 of Section-26 Makes It Amply Clear That In Such Relief May Be Sought For In Addition To And Alongwith Any Other Relief That The Aggrieved Person May Seek In Such Suit Or Legal Proceeding Before Page 13 of 19 Jud-Wp-114-2018 Civil Or Criminal Court.
9. In The Present Case Wife Had Instituted The Proceedings By Taking Aid of Section-2(Viii) And Has Specifically Filed The Proceedings On The Ground of The Cruel Treatment Meted Out To Her And Her Children By Making Her Life Miserable By Subjecting Her To Cruelty And By Preventing Her To Exercise Her Legal Right Over The Property. On Perusal of The Proceedings Filed By The Wife It Revealed That She Had Taken Out Proceedings For Dissolution of The Marriage On The Ground of Cruelty, Which Is A Form of Domestic Violence. The Term Domestic Violence Is Assigned A Specific Meaning In The Act of 2005 Which Include An Act of Harming, Injuring, And Endangering The Health, Safety, Life Or Well Being, Whether Physical Or Mental of The Aggrieved Person Including The Physical, Sexual, Verbal And Emotional Abuse And Also Economical Abuse. Thus, The Ground On Which The Wife Has Sought Dissolution of Marriage Is Cruelty And The Proceedings Initiated Though Under The Provisions of Dissolution of Muslim Marriage Act, 1939 Stand On The Same Platform As Proceeding Instituted By Wife Under The Provisions of Domestic Violence Seeking Relief Under Section-12 of The Act, She Being An Aggrieved Women.

In Any Contingency By Taking Recourse To Section-26 of Page 14 of 19 Jud-Wp-114-2018 The Domestic Violence, It Is Permissible For The Respondent-Wife To File Proceedings Seeking The Relief Under Sections-18, 19, 20, 21 And 22 of The Domestic Violence Act, In Addition To And Along With The Relief That She Has Otherwise Sought In The Pending Proceedings. Thus, The Claim For Interim Maintenance Filed By The Wife Cannot Be Said To Be Completely Alien To The Provisions Under Which She Has Approached The Court By Way of Main Petition Seeking Dissolution of Marriage On The Ground of Cruelty. By Way of An Interim Relief She Has Sought Maintenance From The Husband And Since There Is No Bar For Her To Invoke The Provisions of The Protection of Domestic Violence Act, 2005, Such An Application Is Duly Entertained By The Judge Family Court, Such An Application Cannot Be Thrown Away Only On The Ground That It Is Not Mentioned As To Under What Provision of Law, The Said Application Has Been Preferred. The Court Has Entertained The Said Application Considering The Factum of Destitution Being Put Forth By The Wife And Has Treated Her As An Aggrieved Person And Has Entertained The Said Application For Interim Maintenance And Directed Payment of Amount of Rs.25,000/- To The Wife And Rs.20,000/- For The Children Along With Rent of The House At Rate of Rs.40,000/-. The Court Has Considered That The Wife Has Been Subjected To Vagrancy And Is Unable To Maintain Herself And Her Children Whereas The Husband Owed A Page 15 of 19 Jud-Wp-114-2018 Moral Responsibility To Maintain His Wife And The Children Specifically In Case of Subsisting Marriage And Therefore Has Passed The Impugned Order Dated 22.06.2017.

9. The Case of The Husband Is That He Has Pronounced Talaq On 29.03.2017 And In Light of This Development Such An Order Is Not Justified, Is Also Liable To Be Ignored Since The Factum of Talaq Has Not Been Proved By The Husband And Merely Because Talaknama Is Tendered In The Court, The Marriage Cannot Be Said To Have Been Dissolved. Even Assuming For The Sake of It The Marriage Stands Dissolved By Khula Taking It To Be Divorce By Consent At The Instance of The Wife, The Husband Cannot Be Completely Absolved of His Liablity To Maintain His Wife And Children, In The Specific Background, That He Has Remarried And He Is Maintaining Two Children of The Wife Whom He Had Re-Married. The Learned Counsel For The Petitioner Has Also Invited Attention of The Court On A Subsequent Application Filed By The Wife Under Sections-12, 18, 19, 20, 22 And 23 of The Protection of Women From Domestic Violence Act, 2005 On 09.06.2017 And She Would Submit That If This Application Is Filed Under The Provisions of The Domestic Violence Act, Under What Provision of Law Did The Family Court Entertained The Earlier Application And Passed An Order Below Exh-7. As This Court Has Page 16 of 19 Jud-Wp-114-2018 Already Observed That The Said Application Was Filed In Petition No.A- 1097/2015 Instituted By The Wife For Dissolution of Marriage Under The Dissolution of Muslim Marriage Act, 1939 And She Would Submit That This Act Contains No Provision For Any Interim Maintenance Or Provision For Custody of Children. However, Perusal of The Provisions of The Muslim Women (Protection of Rights On Divorce) Act, 1986 Would Reveal That Certain Rights Are Conferred Even On A Woman Who Has Been Divorced By Who Have Obtained Divorced From Her Husband And Make Such A Woman Entitled To A Reasonable And Fair Provision And Maintenance To Be Paid To Her Within The Period of Iddat. Not Only This Such A Woman Is Also Entitled To An Amount Equal To Some of Mehar Or Dower Agreed To Be Paid To Her At The Time of The Marriage According To The Muslim Law And Also Entitled For All The Properties Given To Her Before And At The Time of The Marriage And After The Marriage By Her Relative, Friends Or Her Husband.

10. The Purpose of Any Provision of Law Which Is Beneficial To A Woman Is To Provide Some Solace To A Woman During The Subsistence of The Marriage Or Even After She Is Divorced Out of The Said Marriage And Since The Domestic Violence Act Is An Enactment To Provide Effective Protection of Rights of Woman, Who Are Victims Page 17 of 19 Jud-Wp-114-2018 of Violence, The Respondent-Wife Cannot Be Denied The Umbrella of The Said Legislation. The Respondent-Wife Has Staked Her Claim By Filing Proceedings Under The Domestic Violence Act 2005 Claiming Monthly Maintenance For Herself And Her Children Vide Exh-34. On The Said Application, The Respondent-Husband Has Been Directed To Produce All Or Any of The Documents Which Are In Existence Or His Possession And Which Are Not Produced By Him So As To Reflect His Earnings. Though It Is A Specific Case of The Petitioner-Husband That He Has Divorced To His Wife, It Cannot Be Expressed As A Gospel Truth Specifically In Light of The Latest Pronouncement of The Hon'ble Apex Court In Case of Shayara Bano V/S. Union of India & Others As To What Would Be The Effect of Such Talaknama. In Any Contingency This Court Is Not Concerned With The Validity of The Said Talaknama At This Stage And In This Proceedings. This Court Will Have To Restrict Itself To The Impugned Order Dated 22.06.2017 Passed By The Family Court At Bandra Directing The Husband To Pay Monthly Amount For Maintenance of The Wife And The Children And Also To Pay For The Rent of The House Where The Wife Is Residing.

The Objection Raised By The Learned Counsel For The Petitioner Ms.Anagha Nimbkar To The Maintainability of The Application On Which The Impugned Order Came To Be Passed Is Not Sustainable For The Reasons Stated Above And Since This Court At Arrived At A Conclusion That The Parties Being Governed By The Muslim Personal Law Is Not An Impediment In The Wife Invoking The Page 18 of 19jud-Wp-114-2018 Jurisdiction of The Court Under The Provisions of The Domestic Violence Act And There Is No Embargo of The Said Court To Confer The Relief On The Women Who Is An "Aggrieved Person" Within The Scope And Meaning of The Act Merely Because She Belongs To Muslim Religion. The Contention of The Learned Counsel For The Petitioner Therefore Deserves To Be Rejected.

The Impugned Order Has Taken Into Consideration The Earning Capacity of The Husband And The Needs of The Wife. In The Application Filed By The Wife A Statement Was Made That The Husband Was Depositing An Amount of Rs.10,000/- To Rs.15,000/- Per Month In Her Account, Which Was Not Found To Be Sufficient To Maintain Herself. The Court Taken In To Consideration The Said Aspect of The Matter And Also The Statement That The Husband Is Regularly Paying Certain Amount To The Wife From Which She Is Withdrawing Some Regular Amount. The Court Has Also Noted That The Wife Has No Shelter And In Such Circumstances The Impugned Order Cannot Be Faulted With And Their Appears To Be No Illegality Or Perversity In The Said Order Which Would Warrant And Inference At The Instance of This Order. In The Result The Impugned Order Is Upheld.

The Present Petition Being Devoid of Any Merit And Substance, Is Liable To Be Dismissed.

Smt.Bharati H. Dangre, J.

Equivalent citations: 140 (2007) DLT 16, I (2007) DMC 815 - Delhi High Court - Bench: P Nandrajog

1. I do not intend to catalog the various decisions under Section 24 of the Hindu Marriage Act 1955. It would be sufficient for me to note the judicial principles required to be applied while deciding an application under Section 24 of the Hindu Marriage Act 1955.

2. Since the Section relates to entitlement of the appellant spouse to receive interim maintenance from the non-applicant spouse, it is obvious that the focus of enquiry has to be the means of the applicant spouse to maintain him/her self as also the financial means of the non-applicant spouse. The issue of conduct or misconduct of either spouse is irrelevant for the reason, in every proceedings for divorce, dissolution or judicial separation, there is bound to be some allegations or the other pertaining to matrimonial misconduct. Thus, if conduct or misconduct were to be considered, no spouse would get any interim maintenance under Section 24.

3. The Section contemplates a summary enquiry and not a trial at length.

4. Right to maintenance is an incident of the status from an estate of matrimony. Interim maintenance has an element of alimony, which expression in its strict sense means allowance due to wife from husband on separation. It has its basis in social conditions in United Kingdoms under which a married woman was economically dependent and almost in a position of tutelage to the husband and was intended to secure justice to her.

5. Section 24 of the Hindu Marriage Act goes a step further inasmuch as it permits maintenance to be claimed by the husband even against the wife.

6. While considering a claim for interim maintenance, the court has to keep in mind the status of the parties, reasonable wants of the applicant, the income and property of the applicant. Conversely, requirements of the non applicant, the income and property of the non applicant and additionally the other family members to be maintained by the non applicant have to be taken into all. Whilst it is important to insure that the maintenance awarded to the applicant is sufficient to enable the applicant to live in somewhat the same degree of comfort as in the matrimonial home, but it should not be so exorbitant that the non applicant is unable to pay.

7. Maintenance awarded cannot be punitive. It should aid the applicant to live in a similar life style she/he enjoyed in the matrimonial home. It should not expose the non applicant to unjust contempt or other coercive proceedings. On the other hand, maintenance should not be so low so as to make the order meaningless.

8. Unfortunately, in India, parties do not truthfully reveal their income. For self employed persons or persons employed in the unorganized sector, truthful income never surfaces. Tax avoidance is the norm. Tax compliance is the exception in this country. Therefore, in determining interim maintenance, there cannot be mathematical exactitude. The court has to take a general view. From the various judicial precedents, the under noted 11 factors can Page 1521 be culled out, which are to be taken into consideration while deciding an application under Section 24 of the Hindu Marriage Act. The same are:

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 life style 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 Under Section 125 Cr.PC is adjustable against the amount awarded Under Section 24 of the Act.

9. With the backdrop facts aforesaid validity of the impugned order dated 13.5.2004 has to be decided.

10. The non-applicant Smt. Saroj Hegde sought dissolution of her marriage on grounds of cruelty and desertion. She filed a an application under Section 24 of the Hindu Marriage Act praying that she should be awarded a reasonable interim maintenance from her husband. She stated that she was unemployed.

11. In support of her claim, she pleaded that her husband was the son of Shri Rama Krishna Hegde, Ex Chief Minister of the State of Karnataka. She stated that he was an industrialist operating a unit at Peeneya Industrial Estate, Stage-II, Bangalore wherefrom he was earning at least Rs. 10 lacs per month. She further stated that the husband was a co-owner in the following properties:

1. Property No. 229, Raj Mahal Vilas Extension, Bangalore valued Rs. 6 crores.

2. Fionika Building, Walkeshwar Road, 12th Floor, Bombay valued Rs. 4 crores.

3. Ancestral property at Sidapur, Mytri valued Rs. 1 crore.

4. Peeneya Industrial Estate, II Stage, Bangalore valued Rs. 50 lakhs.

5. Flat at Ferozshah Road, New Delhi valued Rs. 2 crores.

6. Coffee Gardens at Coorg, Karnataka valued Rs. 10 crores.

7. 40 acres of agricultural farm land near Jai Nagar valued Rs. 5 crores.

12. Averments in respect of the immovable properties owned by the husband are in para 7 of the application filed by the wife under Section 24 of the Hindu Marriage Act. The same read as under:

PROPERTIES VALUE

i) Property No. 229, Raj Mahal Vilas Extension, Bangalore-560006 Rs. 6 crores Page 1522

ii) Fionika Building, Walkeshwar Road, 12th floor, Bombay.Rs.4 crores

iii) Ancestral property at Sidhpur, Mytri (co-owner) Rs. 1 crore

iv) Peeneya Industrial Estate, II Stage, Bangalore Rs. 50 lacs

v) Flat at Ferozshah Road, New Delhi Rs. 2 crores

vi) Coffee Gardens at Coorg. Rs. 10 crores

vii) Agricultural farm land (40 acres) near Jai Nagar Rs. 5 crores

13. Response of the husband to the averments made in para 7 are as under:

7. The respondent respectfully submits that, the respondent is unemployed and he has no source of income and that he is totally dependent on his parents.

14. It may be noted at the outset that the husband has not denied the assertion that he is the owner of the properties disclosed in para 7 of the application filed by the wife under Section 24 of the Hindu Marriage Act.

15. By and under the impugned order, Rs. 25,000/- per month has been awarded to the wife besides litigation expenses in sum of Rs. 25,000/-.

16. Shri K.N.Bhatt, learned senior counsel for the petitioner urged that while awarding maintenance to the respondent, learned Judge had to consider only the revenue income of the husband. Consideration of capital assets may be relevant in a claim for permanent alimony, urged the counsel. It is wholly irrelevant for purposes of deciding a claim under Section 24, submitted the learned senior counsel.

17. I do not agree.

18. If the capital asset is an industrial property, a coffee plantation, an orchard or any other agricultural holding, there would be a presumption that the said capital asset is yielding some income. It is not presumed to be a dead asset.

19. As noted herein above, unfortunately, nobody pays proper taxes to the Government. Self employed persons seldom disclose their true income. Prudence and worldly wisdom gained by a judge before whom citizens of all stratas of society litigate it can always be used by a Judge to broadly ascertain as to what is going on in the society. By no means, said knowledge can be used where law requires a fact to be conclusively proved. But where the law requires a Judge to form an opinion based on a host of primary data, a Judge can formulate an opinion pertaining to the likely income from the capital assets of the husband.

20. The matter can be viewed differently.

21. It is not the case of the husband that he has abandoned his capital assets. It is not his case that he is not residing in Raj Mahal Vilas Extension, Bangalore.

22. How is he maintaining the said properties?

23. The husband has disclosed nothing about the salaries paid to the various employees, servants and others employed at the various capital assets owned/co-owned by the husband.

24. It is a well recognized principle of law that where a person withholds vital information, a presumption arises against him that had he disclosed the information, the same would have been adverse to him.

Page 1523

25. Keeping in view the capital assets owned/co-owned by the husband, his social status, his place of residence, it is difficult to believe that the husband does not have the requisite means to support his wife a monthly maintenance of Rs. 25,000/-.

26. As regards the wife, there is no proof of she having any income.

27. Order sheets of the present case show numerous attempts made to effect a reconciliation or separation on amicable terms. Unfortunately, the attempts have failed.

28. I find no merit in the petition.

29. Dismissed.

30. The husband is directed to pay costs of the present litigation before this Court to the wife quantified at Rs. 25,000/-.

31. No costs.

"In the light of the above it would be farcical to assume that despite the factum of a marriage and a common matrimonial    home the two spouses would stand in a kind of a formal relationship where each is entrusted with or has been    passed dominion    over the exclusive property of the other..-....The matrimonial home so long as it subsist presumes a jointness of custody and possession by the spouses    of their individual as also of    their    joint properties line.. The inevitable presumption during    the existence or the imminent break up of the matrimonial home there fore is one of joint possession    of the spouses which might perhaps be dislodged by the special    terms of a written contract. However, to be precise    this presumption of joint possession properties within the    matrimonial home can subsist only as long- as the matrimonial home subsists or on the immediate break up thereof."
At other places the High Court has observed thus:
"47. In view of    the above, it would    be equally untenable to hold that either the desertion or the expulsion of one of the spouses    from the matrimonial home would    result    in entrusting dominion over    the property belonging to the other so as to bring the case within the    ambit of this pre requisite under S.405, Indian Penal Code. The joint custody and possession once established    would    thereafter........ exclude either express entrustment or the passing of dominion over the property. It was rightly argued that if an irate husband or wife walks out from the matrimonial home in a huff, this cannot constitute an entrustment or    dominion over the    property to    the other. Consequently, unless a special written agreement to the contrary can be established, the strongest presumption arises that during the existence and immediately after the crumbling of the matrimonial home, there was in essence, a joint possession and custody of the property of the spouses therein, including dowry and traditional presents,    which    would preclude    the essentials of entrustment or dominion over the property which form the cornerstone of criminality under s.405, Indian Penal Code.
53. It cannot, therefore, be prim. facie presumed that these are    exclusively the    ownership of the wife or inevitably entrusted either to the husband or his close relations. As was noticed earlier, if an irate wife in a tantrums    abandons the matrimonial home, such    like property does not in the eye of law become entrusted to the parents-in-law    or other close relations of the husband No    such gullible presumption of entrustment or passing of    the dominion of property can be raised in such a situation    to come within the    mischief of criminality for breach    of trust. Entrustment or dominion over the property has to be unequivocally alleged and conclusively established by proof later."
The High Court had itself rightly spelt out the legal propositions that the pure and traditional presents given to a bride    in a Hindu wedding may be    divided    into three categories, viz.,

(a) property intended for exclusive use of the bride, e. g., her personal    jewellery, wearing apparel, etc.

(b) articles of dowry which may be for common use and enjoyment in the matrimonial home, and

(c) articles given as presents to the husband or the parent-in -law and other members of his family. With regard to category (a) above, the    High Court observed thus:

"Similarly as regards the    first    category of articles meant for the exclusive use of the bride she would retain her pristine    ownership therein irrespective or    her entry and presence in    the matrimonial home or that of her parents in-law."
The High Court thus accepts the well established rule of Hindu law of stridhan that    that articles mentioned in category (a) are meant    for the exclusive use of the bride and are    her personal property. Unfortunately, however, with regard to category (c) while discussing the question of the rights of the bride to her exclusive property upon her entry in her    matrimonial home, the High Court has wrongly applied what it    had previously held with regard to category (a). In one breath the Judges    say that the bride is entitled to retain her ownership irrespective of her entry and presence in the    matrimonial home and in the other they come to the conclusion that    the moment a    married woman    enters    her matrimonial home, all her    properties, including    her exclusive property, become a joint property by a fiction of being placed in the custody of her husband or his relations. While we agree with the first    part of the categories, as extracted above, we find it difficult    to accept the other propositions adumbrated    at a later stage of the judgment which have been fully discussed by us. We fail to understand how the    High Court while finding that joint enjoyment does not divest a Hindu wife of her exclusive ownership still chose to treat it a joint property of the two spouses by the mere factum of joint user. The two views expressed by the High Court stand contradicted    by its    own findings and are wholly understandable. Thus, a    detailed analysis of    the judgment of the Punjab & Haryana High Court in Vinod Kumar's case (supra) appears to us to    be a mass of confusion and lacks both clarity and coherence. We are, therefore, unable to uphold or support the view    of the High Court that upon entering the matrimonial home    the ownership    of stridhan property becomes joint with her husband or his relations- To this extent, therefore, we overrule this decision and hold that with regard to the stridhan property of a married woman, even if it is placed in the custody of her husband or in-laws they would be    deemed to be trustees    and bound to return the same if and when demanded by her.

The Supreme Court in a large number of cases has held that the fundamental core of the offence of criminal breach of trust. is that a property    must be    entrusted and    the dominion of the property should be given to the trustee. In the present case, all    these conditions, even according to the findings of the Court though not its conclusion, are clearly established. That the    view of    the High Court is absolutely wrong would be    clear from a    number    of authorities, some of which we would like to discuss here.

In Chelloor Manaklal Narayan Ittiravi Nambudiri v. State of Travancore(1) this    Court    made the following observations:

"As laid down in S. 385,    Cochin    Penal    Code (corresponding to    S. 405, Indian Penal Code) to constitute an offence of criminal breach of trust it is essential that the prosecution must prove first of all that the accused was entrusted with some property or with any dominion or power over    it-It follows almost axiomatically from    this definition that the ownership or beneficial interest in    the property in respect of which criminal breach of trust is alleged to have been committed, must be in some person other than    the accused and the latter must hold it on account of some person or in some way for his benefit."
In Jaswantrai Manilal Akhaney v., State    of Bombay(2) Sinha, J. (as he then was) observed thus:

"For an offence under section 409,    Indian Penal Code, the    first essential    ingredient to    be proved is that the property was entrusted- - But when section 405 which defines "criminal breach of trust    speaks of a person being (1) AIR 1953 SC 478.
(2) [1956] S.C.R. 483.

in any manner entrusted with property, it does    not contemplate the creation    of a trust with all    the technicalities of    trust. It contemplates the creation of a relationship whereby    the owner of property makes it over to another person to be retained by him until a certain contingency arises or to be disposed of by him on the happening of a certain events."

In Akharbhai Nazorali v. Md. Hussain Bhai(1) the Madhya Pradesh High Court made the following observations:

"It may be that the deduction and retention of the employees' contribution is a trust created by virtue of that very    fact, or by virtue of a provision in statute or statutory rule. But even apart from the latter, the mere fact    of telling the employees that it is their contribution to the provident fund scheme and    then making a    deduction or recovery    and retaining    it, constitutes the offence of criminal breach of trust. This is so obvious that nothing more need be said about it."
These observations    were fully endorsed and approved by this Court in Harihar    Prasad Dubey v. Tulsi Das Mundhra & Ors.(2 where the following observations were made:

"This, in our opinion, is a correct statement of the position and we also agree with the learned Judge of the Madhya Pradesh High Court that "this so obvious that nothing more need be said about it We, therefore, think that    the impugned    order quashing    the charge against the respondents is obviously wrong." In Basudeb    Patra v. Kanai Lal Haldar(3) the Calcutta High Court observed thus:
"Whereas the illustration to s. 405 show equally clearly that the property comes into.
(1) AIR 1961 M. P. 37:

(2) AIR 1981 SC 92.

(3) AIR 1949 Calcutta 207, the possession of the accused either by    an express entrustment or by some process placing the accused in a position of trust..-.-On the facts of the present case, which, as I have said, are not open to question at this stage, it is quite clear that the ornaments were handed over to the petitioner by the beneficial owner in the confidence    that    they would be returned to    the beneficial owner in due time after having been used for the purpose for which they were handed over. If this is not an entrustment, if is impossible to conceive what can be an entrustment."

(Emphasis ours) This ratio    was fully approved by    this Court in Velji Raghavji Patel    v. State of Maharashtra(1) where    the following observation were made:

"In order    to establish " entrustment of dominion" over property to an accused person the mere existence of that person's dominion over property is not enough. It must be further shown that his dominion was the result of entrustment. Therefore, as rightly pointed out by Harris, C.J. the prosecution must establish    that dominion over the assets    or a particular asset of the partnership was by a special agreement    between    the parties, entrusted to the accused person."
In    the case of    State    of Gujrat v. Jaswantlal Nathalal,(2) Hegde, J., speaking for the Court, observed thus:

"The expression 'entrustment' carries with it the implication that the person handing over any property or on whose behalf that property    is handed over to another, continues    to be its owner. Further the person handing over the property    must have confidence in the person taking the property so as to create a fiduciary relationship between them."
In Sushil    Kumar Gupta v. Joy Shanker Bhattacharjee(3) this Court observed thus:

(1) AIR 1965 SC 1433.

(2) [1968] 2 SCR 408.

(3) AIR 1971 SC 1543.

"The offence of criminal    breach of trust is committed when a person who    is entrusted in any    manner    with property or with dominion over it,    dishonestly misappropriates it    or converts it to his own use.. The appellant's manner    of dealing with the money entrusted to his custody clearly constitutes criminal breach of trust."
In the case of Superintendent & Remembrancer of Legal Affairs, West Bengal v. S.K. Roy (1) this Court held that for 'entrustment' two things are necessary, viz., (l) the entrustment may    arise in "any manner" whether or not it is fraudulent, and    (2) the accused must    have acquisition or dominion over the property.

In Bhai Sher Jang    Singh & Anr. v. Smt. Virinder Kaur (supra) the Punjab & Haryana High Court observed thus:

It might be that some of the articles which were presented to her are for the use of both the spouses but the ornaments and things of    the like nature are certainly meant for her and her alone. When she makes an allegation in the complaint that either her husband or her parents-in-law had    converted to their own use the ornaments forming the    part of her stridhan which she had entrusted to them, the Court has to give legal effect to    such allegation    and to assume that    such ornaments had been made the subject matter of criminal breach of    trust. It is settled law that    even in a criminal complaint the    complainant is under no obligation to plead the legal effect of the allegations made. All    that    is required is that the facts constituting a complaint should be    specifically mentioned so that the Court may be able to perform its duty of punishing the accused under the    appropriate provision of law if such allegations are made    out. Further more, in a case like this a complaint cannot be quashed without giving the aggrieve wife an opportunity of proving    that the ornaments had been given to her at the time of her marriage for her use only."
(Emphasis supplied) We fully endorse this decision and hold that it lays down the correct law on the subject.
(1) [1974] 4 S.C.C. 230.

There is a judgment of the Allahabad High Court which more or    less takes the same view as    the Punjab & Haryana High Court in Vinod Kumar's case (supra). In Criminal Misc. Case No. 676 of 1981 (connected with) Criminal Misc. Case No. 2753 of 1981, Kailash Nath Agarwal & Ors. v. Prem Pal Agarwal & Anr., (decided on 22.12.1983), the Allahabad High Court, out of the three categories laid down    by Punjab & Haryana High Court in Vinod Kumar's case, accepted only the third category, viz., articles which constitute    the individual property of the person for    whose    use it    was given, and held that the rest of the property falling under categories (a)    and (b)    would be property exclusively meant for the use of    the bride and once it was brought to the family home, the possession would be    joint unless by an express written    agreement there was an entrustment of the property of the bride    to other members of the family. The Allahabad High    Court thus also accepts the concept of the property being    a joint property in the matrimonial home. By and large this decision toes the line of the view taken by the Punjab and Haryana    High Court in Vinod Kumar's case. Furthermore, the High Court has gravely erred in holding that the property could only be claimed by filing a properly constituted civil suit or in accordance with the provisions of the    Dowry Prohibition Act or the Hindu Marriage Act as the case may be. This proposition, in our opinion, is wholly incorrect as conceded even by the Punjab , & Haryana High Court in Vinod Kumar's case.

There is an earlier decision of    the Punjab & Haryana High Court which clearly holds that where there is a clear allegation of entrustment by the wife against the husband, he could be prosecuted    by a criminal court on a complaint filed by the wife. In this connection, the Court in Avtar Singh & Anr. v. Kirpal Kaur Criminal Misc. No.2144-M of 1979 and Criminal Misc.No.2145 of 1979, decided on 16 8.79) made the following observations:

"In my opinion, where certain thing    is lying in trust with a    person, offence of dishonest misappropriation would be    committed on    a date    the demand for return of the entrusted articles is made and the same is declined...According to the complaint, the first demand for the return of the articles was made on January 27, 1976 and it was that date when the demand was declined. Hence, the offence of misappropriation of the dowry    articles lying    in trust was committed on January 27, 1976."
We    find    ourselves in entire agreement with    this decision and hold that this was correctly decided.

This Court has pointed out more than once that the High Court should very sparingly exercise its discretion under s. 482 Cr.    P.C. In L.V. Jadhav v. Shankarrao Abasaheb Pawar & Ors.(l) (to which two of us were a party), this Court made the following observations:

"The High Court, we cannot refrain from observing, might well    have refused to invoke its inherent powers at    the very threshold    in order to    quash    the proceedings, for these powers are meant to be exercised sparingly and with circumspection when there is reason to believe    that the process of law is being misused to harass a citizen."
In Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi & Ors.(2) this Court observed as follows :-

"Thus, it may be safely held that in the following cases an    order of the    magistrate issuing process against the accused can be quashed or set aside: (1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused;
(2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent    person can ever reach    a conclusion    that there is sufficient ground for proceeding against the accused;
(3) where the discretion    exercised by    the Magistrate in suing process is capricious and arbitrary having been either on no evidence or on materials which are wholly irrelevant or inadmissible; and (1) AIR [1983]SC 1219.

(2) [1976] Supp. SCR123 (4) where the complaint suffers from fundamental legal defects, such as, want of section, or absence of a complaint by legally competent    authority and    the like.

The cases    mentioned by us are purely illustrative and pro vide    sufficient    guidelines to indicate contingencies where the    High    Court    can quash proceedings." B The same principles would    apply mutatis mutandis to a criminal complaint.

We now come to the question as to whether or not a clear allegation of entrustment and misappropriation of properties was made by the appellant in her complaint and, if so, was the High Court justified in quashing the complaint at that stage. It    is well settled by a long course of this Court that for the    purpose of exercising its power under s. 482 Cr.P.C. to quash a FIR or a complaint the High Court would have to proceed entirely on the basis of the allegations made in the complaint or the documents accompanying the same per se. It has no jurisdiction to examine the correctness or otherwise of the allegations. In case no offence is committed on the allegation and    the ingredients of s.405 & 406, I.P.C. are not made out, the High Court would be justified in quashing the proceedings. In the present case, we shall show that    the allegations are both clear, specific and    unambiguous and, therefore, the complainant should have been given a chance to prove her    case. It is, of course, open to the accused at the trial to take whatever defence that were open to him but that stage had not yet come and therefore, the High Court    was totally ill-advised to speculate on the merits of    the case at    that stage and quash    the proceedings. We have narrated the facts    in detail in the earlier part of our judgment    but we might again, even at the risk of repetition, indicate the bare facts which prima facie make out a clear case under s.406, IPC against the accused. The important portions of the complaint may be spelt out thus:

(1) that all the accused attended the marriage of the appellant with the respondent and demanded dowry from the parents of the appellant in consideration of the marriage.

(2) that the parents of the appellant spent Rs,75,000 on the marriage and dowry articles worth Rs.60,000 (inclusive of    jewellery, wearing apparel, etc.) were given and entrusted to accused Nos.1 to 6 at the time of the Doli on 5.2.72, (3) that the articles entrusted    to the    accused were meant for the exclusive use of the appellant, (4) that the dowry articles were never    given by the accused to the appellant even for her use    and possession of    the same was illegally, dishonestly and mala fidely retained by the accused in order to obtain a    wrongful gain    to themselves    and wrongful loss to the appellant, (5) that on 11.12.1980 in the morning,    the accused brought the appellant to Ludhiana in three clothes and refused to give    the entrusted articles which were the stridhan of the appellant.

Taking all the allegations made above, by no stretch of imagination can it be said that the allegations do not prima facie amount to an offence of    criminal breach of trust against the respondent. Thus, there can be no room for doubt that all the facts stated in    the complaint constitute an offence under s. 406 IPC and the appellant cannot be denied the right to prove her case at the trial by per-empting it at the very behest by the order passed by the High Court.

We therefore, overrule the decisions of    the Punjab & Haryana High Court in Vinod Kumar's case. By way of post-script we might add that we are indeed amazed to find    that so deeply drowned and inherently engrossed are some of    the High Courts in the concept of matrimonial home qua the    stridhan property of a married women that    they simply refuse to believe that such properties are meant for the exclusive use of the wife    and could also be legally entrusted to the husband or his relatives. Thus, if    the husband or his relatives misappropriate the same and refuse to hand    it over to the wife and convert them to their own use and    even though these facts are clearly    alleged in a complaint for an offence under s. 405/406 I.P.C.,    some courts take the complaint is not maintainable. Thus, even when clear and specific allegations are made in    the complaint that such properties were entrusted to the husband,    they refuse to believe these hard facts and brush them aside on the ground that they are vague. The allegations of    the complainant in    this appeal and the    appeal    before    the Allahabad and the Punjab & Haryana High Court show that it is not    so but    is a pure figment of the High Court's imagination as    a result of which the High Court completely shut their eyes to the fact that the husband could also be guilty    under s. 405/406 I P.C. in    view of the clear allegations made in the complaint. In other words, the High Courts simply refuse to believe that there can be any such entrustment and    even if it is    so no offence is committed. Such an    approach amounts to a    serious distortion of    the criminal law,    resulting in perpetrating    grave    and substantial miscarriage    of justice to the wife at the hands of the    High Courts. We cannot countenance such a wrong and perverse approach.

For the reasons given above, we are satisfied that as the complaint prima facie disclosed an offence of criminal breach of trust as defined in s. 405/406 of the Indian Penal Code the High    Court was not justified in    quashing`the complaint. We,    therefore, allow this appeal, set aside the judgment of the High Court and restore the complaint filed by the    appellant and    direct    that the accused may be summoned, if not already summoned, and put on trial in accordance with law.

VARADARAJAN, J. This criminal appeal by special leave is directed against the judgment of a learned Single Judge of the    Punjab and Haryana High Court in Criminal Misc. Case No.4876 of 1981.

The appellant, Pratibha Rani is the estranged wife of the first respondent Suraj Kumar who is the brother of the second respondent Krishan Lal.    One Rattan Chand is    the father of respondents 1 and 2 and two others Chander Kumar and Vishwinder    Kumar. One Jugal Kumar is the brother-in-law of the first respondent.

The appellant filed a criminal complaint for an offence under s.406 I.P.C. against her husband and his father and brothers and brother-in-law mentioned above in the Court of the Additional Chief Judicial Magistrate, Ludhiana, alleging that she was married to the first respondent at Ludhiana on

4. 2. 1972 according to the Hindu rites and customs. The material averments in the complaint are these: The aforesaid persons, namely, father, brother and brother-in-law of the first respondent attended    the marriage and demanded dowry from the appellant's parents as consideration for the marriage. Accordingly, dowry articles mentioned in the list    appended to the complaint, worth Rs. 60,000, in the form of golden    articles, clothes and other valuables were    given and entrusted to    the respondents and four others mentioned in the complaint at Ludhiana time of 'doli' on 5.2.1972 in    the presence of Kapur Chand Jain and six others. The six respondents in the complaint started teasing, harassing and beating the appellant and they kept her without even food    to extract more money from    her parents. They turned out the appellant with her children in the beginning of 1977. After a great deal of persuasion and intervention by Panchayatdars, respondent 1 came to Ludhiana and took the    appellant to his house after giving an undertaking in    writing on 21. 6. 1977 not to misbehave with and maltreat the appellant her children. But after some time all the respondents in the complaint started maltreating the appellant and misbehaving with    her. The articles mentioned in the    list were never given    by the    respondents in    the complaint to the appellant for her use but were retained by them illegally    and with the dishonest intention of causing wrongful gain    to themselves    and wrongful loss to    the appellant. The    respondents in    the complaint    brought    the appellant to Ludhiana at 4.30 a.m. On 11.12.1980 and left her near Kailash Cinema Chowk. They refused to give    the articles mentioned in the list which are the stridhan of the appellant to her. When    the appellant's husband and    his brother, Vishwinder Kumar, respondents 1 and 5 in    the complaint, came    to Ludhiana on 10.2.1981 to    attend    the proceeding started by the appellant under s. 125 Cr. P.C., her parents persuaded them to return the articles entrusted to them    at the time of the marriage but they flatly refused to comply with that demand. The articles have not    been returned in spite of service of notice dated 17. 12. 1981 on the first respondent. Thus the respondents in the complaint have dishonestly converted the    articles belonging to    the appellant for their use in violation of the direction of the appellant's parents given at the time    of the    marriage to give the articles for the appellant's use.

The respondents in this appeal filed Criminal Misc. Case No.4876 of 1981 in the Punjab and Haryana High Court under    s.482 of the Code of Criminal procedure for quashing the criminal Proceedings and the    complaint taken on file by    the Additional Chief Judicial Magistrate, Ludhiana under s. 406 I.P.C. and his order summoning them.

Sukhdev Singh Kang, J. before whom the matter came up in the High Court relied strongly upon the observations made by a Full Bench of that High Court in Vinod Kumar Sethi & Ors. v.    State of PunJab and Ors.(l) and has observed in his judgment that the mere handing over of the articles of dowry of stridhana to the husband and other relations at the time of the marriage does not constitute entrustment in the sense of the    word used in ss. 405 and 406 I P.C. and that it does not amount to passing    of dominion over those    articles to them. The learned Judge has observed that there can be such an entrustment    only by a subsequent conscious act of volition ` and that in the absence of such    an act    any allegations of    breach of trust between the husband and wife cannot constitute an offence under s.406 I.P.C. The learned Judge has further observed that between the husband and wife there is always a jointness of control and possession of the properties of the spouse within the matrimonial home    and that it    goes against the very concept of entrustment of his or her property by one spouse to the other. In this view, he allowed the petition and quashed the proceeding arising out of the appellant's complaint, observing that the allegations in the appellant's complaint are similar to the one in Vinod Kumar's case (supra) and that this case is fully covered by the ratio in that decision.

The appellant has, therefore, come to this Court in appeal by special leave, impleading the petitioners before the High Court, who are only two out of the six respondents in the complaint, as respondents in this appeal.

In a petition under s.482 Cr.P.C. for    quashing a criminal complaint, the allegations made in the complaint have to    be taken to be correct in order to find out whether they constitute the various ingredient of    the offence alleged. In Nagawa Veernna Shivalingappa Konjalgi & Ors ) illustrations have been given    of cases in which it may be safely held that an order of    a Magistrate issuing process against an accused can be quashed or set aside. They are: (1) AIR 1982 Punjab 372.

(2) [1976] Suppl S.C.R. 123 (1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same,    taken    at their face value, make    out absolutely no case against the accused or the complaint does not disclose    the essential    ingredients of an offence which is alleged against the accused; (2) Where the allegations made in the complaint are palpably absurd and inherently improbable so that no prudent    person can ever reach    a conclusion    that there is sufficient ground for proceeding against the accused;

(3) Where the discretion    exercised by    the Magistrate    in issuing process    is capricious    and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) Where    the complaint suffers from fundamental legal defects such as want of sanction, or absence of a complaint by a legally competent    authority and    the like."

Article 126 in Mulla's Hindu Law, Fifteenth Edition, describing what constitutes Stridhana reads: -

"property given or bequeathed to a    Hindu female whether during maidenhood, coverture or widowhood by her parents and their relation or by her husband and his relations is stridhana according to    all schools except that the Dayabhaga does not recognise immovable property given or bequeathed by husband to his wife as stridhana."
Section 2    of the    Dowry prohibition Act, 1961 defines "dowry" as meaning:

"any property or valuable security given or agreed to be given either directly or indirectly-(a) by one party to a marriage to the other party to the marriage, or (b) by the parents of either party to the marriage, or by any other person to either party to the marriage or to any other person at or before of after    the marriage in connection with the marriage    of the said parties but does not include dower or mahr in the case of person    to whom    the Muslim personal law (Shariat) applies."
In the present complaint    of the wife    against    the husband and , his three brothers, father and brother-in-law, it is alleged that the marriage was performed at Ludhiana on 4.2.1972 according to Hindu rites and customs and that the father and three brothers and the brother-in law of    the husband attended the marriage    and demanded dowry from the wife's parents    as consideration for the marriage and that accordingly dowry articles worth Rs.60,000, mentioned in the list attached to the complaint, consisting of gold articles, clothes and other valuables were given and entrusted to the husband and the other five respondents in the complaint, at the time of the 'doli' at Ludhiana on 5.2. 1972 in    the presence of Kapur Chand Jain and six other persons. For the purpose of the petition under s.482 Cr.P.C. those articles must be    prima facie considered to be dowry or stridhana of the appellant-wife.

In Velji Raghavjl Patel v. State of Maharashtra,(1) it is observed:

"Upon the plain reading of s.405, I.P.C. it is obvious that before a person can be said to have committed    criminal breach of    trust it must be established that    he was    either    entrusted with or entrusted with dominion over property which he is said to have converted to his own use or disposed of in violation of any direction of law etc. Every partner has dominion over property by reason of the fact that he is a partner. This is a kind of dominion which every owner of property has over his property. But it is not dominion of the kind which satisfies the requirements of s. 405. In order to    establish "entrustment of dominion" over property to an accused person the mere existence of that person's dominion over    property is not enough. It must be further shown that his dominion was the result of    entrustment. Therefore, as rightly pointed out by Harris C.J., the prosecution    must establish that dominion over the assets or a particular asset of the partnership    was by    a special agreement between the parties, entrusted to the accused person.
If in the absence    of such a a special    agreement a partner receives money belonging to the partnership he cannot be said to have received it in a (1) [1965] 2 S C.R. 429 fiduciary capacity    or in other words cannot be held to have been    "entrusted" with dominion over    partnership properties."

In State of Gujarat v. Jaswantlal Nathalal(1) it is observed:

"Before there can be any entrustment there must be a trust meaning thereby an obligation annexed to the owner ship    of property and a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another and the owner. But that does not    mean that such an entrustment need conform to all the technicalities of the law of trust - see Jaswantrai Manilal Akhaney v. State of Bombay [1956] SCR    483, 498-500.    The expression 'entrustment' carries with it the implication that the person handing over any property or on whose behalf that property is handed over to anther, continues    to be    its owner. Further the person handing over the property must have confidence in the person    taking the property so as to create a fiduciary relationship between them."
In Sushil    Kumar Gupta v. Joy Shankar Bhattacharyya(2), it is observed:

"The    offence    of criminal breach of trust is committed when a person who is entrusted in any manner with property or with dominion over it,    dishonestly misappropriates it, or converts it to his own use, or dishonestly uses it or disposes it of, in violation of any direction of law prescribing the mode in which the trust is to be discharged, or of any lawful contract, express or implied, made by    him touching    such discharge, or wilfully suffers any other person so to do."
In Superintendent    Remembrancer of    Legal Affairs, West Bengal v. S.K. Roy(8), it is observed:

"There are, however, two distinct parts involved in the commission of the offence of criminal breach of trust. The first    consists of the creation of an obligation in rela (1) [1968] 2 SCR 408.
(2) [1970] 3 SCR, 770.

(3) [1974] 4 SCC,230.

tion to the property over which dominion or control is acquired    by the accused. The second is a misappropriation    or dealing with the property dishonestly and contrary to the terms of the obligation created.

The most important ingredient of an offence under s. 406, which is alleged    by the wife against her husband, his three brothers,    father and brother-in-law in her complaint in the present case is the entrustment of the dowry articles to the    respondent in the complaint and ,their dishonest conversion thereof to their own use.    There is no doubt an allegation in the complaint that these articles were given and entrusted    to the    respondents in the complaint at Ludhiana at the time of doll    on 5-2-1972. Apart from the husband the other respondents    in the complaint, as already stated, are his father, three brothers and brother-in-law. The articles were given for the use of the wife- If so, could there be entrustment of the articles to such a number of diverse persons? In the background of what usually happens in Hindu marriages namely, placing of the articles presented to the bride    in the    presence of the elders and others assembled for the occasion and removal thereof after the function is over    it has to be seen    whether    the allegation made    in the    complaint amounts to entrustment as required by law to make out an offence under s. 406 l.P.C. This question has been considered in detail by a Full Bench of the    Punjab and Haryana High Court in Vinod Kumar's case (supra) after an analysis of several    decision relating to the question. The learned Single Judge who has quashed the complaint in the present case on a petition of the husband and one    of his    brothers has heavily relied upon that Full Bench decision    of his Court. What runs through the judgment of the    learned Judges    in that    case is the concern of the Court for the peaceful    and harmonious relationship between the spouses in a matrimonial home and    a careful consideration of the question    whether    the ingredient of entrustment" exists in such    cases. Therefore, it is necessary to note what    has been observed in    some of    the paragraphs of the judgment to that case. The learned Chief justice speaking for the Bench has observed:

"21.. The present set of cases presents a    sad spectacle of a house divided against itself, not merely in the biblical but in the literal sense, where wives are ranged against their husbands in    acrimonious criminal prosecu-
tions. The    challenge on behalf of the husbands    and their relations is focussed basically against    the charge of    breach of trust under    Section 406 of    the Indian Penal Code, levelled against them. Now the core of the argument on behalf of the petitioners is that the very concept of any entrustment or passing dominion over her property by the wife to the husband does not arise at all so long as    the marriage subsists.    The contention is that the very nature of the conjugal relationship itself would negative any such stand. On this premise it is contended that the    basic    pre- requisite of the entrustment of property    or dominion over property being lacking and non-existent, no offence under Section 406, Indian renal Code,    can possibly be made out. Therefore, it was argued    that even accepting the first information reports as they do not and indeed cannot disclose a    cognizable offence under Section 406. The petitioners, therefore, seek the quashing of the proceedings - forthwith    rather    than being obliged to go through the    tortuous mill of a police investigation or the consequent criminal trial." "25.    Now apart from the principle, the    most ancient texts of Hindu Law have always been categoric that dowry, as commonly understood, was stridhana and thus in the exclusive ownership of the bride." "26. Now once it is so held that articles of dowry and traditional presents given at the wedding are owned by the bride individually    in her    own right, then one fails to see how    by the mere fact of her bringing the same into    her husband's or parents-in-law's household, would forth with divest her of the ownership thereof. Separate and individual right to property of the wife therein cannot vanish into thin air the    moment    the threshold of the matrimonial home is crossed. To say that at that point - of    time she would cease to own such property altogether and the title therein would pass to her husband or in any case she would lose half of her right therein and become merely a joint owner of the same,    with the family of her husband, does    not appear to    me as even remotely warranted either by the statute, principles or logic. No such marriage hazard against the wife can be implied in law.
Once she owns property exclusively, she would continue to hold and own    it as    such despite marriage    and coverture and the factum    of entering the matrimonial home.. "
"35. To    conclude on this aspect, I find nothing in the codification    of Hindu Law    which    in any    way abolishes the concept of    stridhana or the right of a Hindu wife    to exclusive individual ownership. Indeed the resultant effect of such enactments is to put the Hindu female wholly at par with the Hindu male, if not at    a higher pedestal    with regard to individual ownership of the property."

40. Now    having held as above    that Hindu wife can exclusively own and hold    property including her dowry and traditional presents given at the wedding,    the decks are    cleared for tackling the core question posed at the very outset. What indeed    is the    true legal relationship of the husband and wife qua the property individually owned by each within the four walls of the matrimonial home?    Does the wife stand entrusted with the property belonging to her husband individually and vice versa    the husband stands entrusted with    such property vesting in the exclusive ownership of    the wife? It is the answer to this    question which in essence would    determine the    attraction    and applicability of    Section 405,    I.P.C    betwixt    the spouses.."

"41. It bears 'repetition that the question herein has to be examined against the backdrop of    the matrimonial home. What truly is the concept and essence thereof had come up for exhaustive consideration earlier before a Full Bench in Kailash Vati v. Ayodhia Parkash, ILR (1977) 1 Punj. & Har. 642 in the context of Hindu Law itself. It is, therefore, apt to refer to the authoritative enunciation therein:- "To    my mind, the idea of the matrimonial home appears to lie at the very centre of the concept of marriage in all civilised societies. It is indeed around    it that generally the marriage tie revolves. The home epitomizes the finer nuances of the marital status.    The bundle of    indefinable rights and duties which bind the husband and the wife can perhaps be    best understood only in the context of their living together in the marital home The significance of the conjugal home in the marriage tie is indeed so patent that it would perhaps be wasteful    to elaborate the 8 same at any great    length. Indeed,    the marital status and the conjugal home have been almost used as interchangeable terms." and "To summarise, I have attempted to show by reference to Anglo-American Jurisprudence that the a concept of the marital home lies at the very centre of    the idea of marriage in all    civilised societies. Perhaps    from primeval times when human    beings lived sheltered in subterranean caves    to the    modern day when many    live perched in    flats in high rise apartments within    the megapolis,    the husband    and the wife    have always hankered for a place which may be their very own and which they    may call a home. The innumerable mutual obligations and rights which stem from    the living together of man and wife are undoubtedly beyond    any precise definition    and stand epitomized by the concept of the matrimonial home."

In the light of the above it would be    farcical to assume that despite the factum of a marriage and a common matrimonial home the two Spouses would stand in a kind of a formal relationship where each is entrusted with or has been passed dominion    over the exclusive property of the other. Rather it appears to me that the conjugal relationship and the existence of a matrimonial home automatically obviates any such hyper-technicalities of an entrustment or dominion over property.    It seems inapt to conceive the relationship as a day-to-day entrustment of the property of the husband to the    custody of the wife or vice versa of the property of the wife to the husband. The matrimonial home so long as it subsists presumes a jointness    of custody and possession by the spouses of their individual as also of their joint properties which can not be divided by any    metaphorical line. In a homely metaphor in    the context of the modern commercialised world it has been said    that the marriage relationship is not one of "I and You limited" but that of "We limited". Whilst the law    undoubtedly now clearly recognises    the individual ownership of property    by the    husband    and wife, the necessary assumption in law, therefore, would be that during the existence or even the imminent break up the matrimonial home the concept of jaintness of possession therein    seems to be a    paramount one.    The inevitable presumption during the existence or    the imminent break up of the matrimonial home therefore is one of joint possession of the spouses    which might perhaps be    dislodged by the special terms of a written contract. However,    to be precise this presumption of joint possession of properties within the matrimonial home can subsist only as long as the matrimonial home subsists or on the immediate break up thereof." "42-43. The aforesaid position seems to be well borne out by a homely example which was rightly advanced by Mr. Bhandare on behalf of the petitioners. It    was submitted that where a husband entrusts    a specific amount to    a wife    for paying the school fees of their children but in a shopping spree she converts the same into sarees for herself,    would    she thereby become liable to    breach of trust under    Section 406, Indian Penal Code? The answer would obviously appear to be in the negative. Similarly where a husband misuses or even appropriates any property exclusively belonging to his wife within the matrimonial home he hardly comes within the ambit    of criminality    under Section    406, Indian Penal Code. Usually if not invariably where the husband is the bread winner he brings home the month's wages and bands    them over to the wife to be spent on the family. Would it be possible to say that if she use the same for herself and even against the consent of her husband she would be committing a criminal breach of trust? Obviously the answer would appear to be in the negative."

"44. One may now turn precisely to the language of the Code itself. Sec. 405 is in the following terms:-

"405. Criminal Breach of trust: Whoever being in any manner entrusted with property, or with any dominion    over    property,    dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of    law prescribing the mode in, which such trust is to be discharged or    of any    legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully    suffers any other Person so to do, commits    criminal breach of trust."

It is well-setted that    from a    legal contract, or violation of direction of law,    the entrustment of property or dominion over property are the    per- requisites    for the applicability of the aforesaid provision. Once it is held as above, that property within the    matrimonial home is in the joint possession and custody (despite rights of the individual ownership therein) then these very per-requisites of entrustment or dominion over property    cannot be easily satisfied betwixt the spouses inter se. It is indeed well-settled that the very concept of the jointness of possession and custody would rule out the entrustment or dominion over property betwixt such joint custodians. In line with the    concept of joint ownership where    the possession of one joint owner is    deemed    to be    the possession of all, the analogy,is to be extended that existence of the property    within the matrimonial home rises a presumption that both the husband the wife are in possession thereof jointly and not that each one has entrusted his exclusive property    to the    custody of other. Subscribing    to the    latter view would be    both overly hypertechnical and subversive of the    very concept of    marriage, the    matrimonial home and    the inevitable mutual    trust which conjugality necessarily involves."

"45. It is obviously because of the afore said legal position and this inarticulate peremise underlying the same that    the learned counsel for the State and the complainants were    unable to cite even a single case of conviction for criminal breach of trust betwixt husband and wife. Even when pointedly asked, counsel    conceded that    despite    the diligent research    neither under the Indian Penal Code, nor under the analogous provisions of English law could they lay their hands for over a century and a half on any case where such a conviction had been upheld. This paucity, rather    the total absence of precedent, indirectly buttresses the view I have expressed above on principle and the statutory provisions. An analogy in their context may well be drawn from    the Law of Partnership. However, at the very outset I would notice that the position is not identical because partnership envisages    a joint or co-ownership of partnership property whereas in a conjugal relationship, as shown above, the    spouses may well be    the individual    and exclusive    owners    of their respective    properties. Nevertheless a marked similarity    therein is that in partnership, co-ownership    necessarily    connotes a jointness    of possession    of partnership properties whilst the    same position    inheres in the    matrimonial home where    the spouses are deemed to be    jointly in possession and custody. Now, barring some ancient notes of discordance, it seems to be now well accepted that a partner cannot be held guilty of    criminal breach of trust qua    partnership property except by    virtue of a special agreement    either written or    conclusively established. This    had always been so in English    law until it was specifically and altered by Statute 31 and 32 Victoria c. 116 and it is now governed by    the special provisions of the same and    subsequent legislation. In India, however, in the absence of any statutory change,    the legal position would continue to be the same. This came up for pointed consideration before a Full Bench of five Judges in Bhuban Mohan Das v. Surendra Mohan Das, AIR 1951    Cal, 69. The relief sought therein of quashing the proceedings under S. 406, Indian Penal Code, betwixt partners, was granted whilst holding that a charge under S. 406, Indian Penal Code cannot be framed against a person who, according to the complainant, is a    partner with    him and is accused of the offence in respect of property belonging to    them    as partners.    P.B. Mukharji,    J. in    his concurring judgment observed as under (Para 46) : "The question here is of much broader application and of a more fundamental nature. Its fundamen-

tal nature    is this that the very conception of partner ship precludes possibility of entrustment or dominion of the partnership property by one partner as against the other    and,    therefore, precludes any possible operation of the crime under Section 406 Penal Code, of criminal breach of trust    by one partner against    the other in respect of the partnership property." The aforesaid view has been expressly referred to and approved by their Lordships in Velji    Raghavji v. State of Maharashtra,(1) with the following added observations    (at pp. 1435-36) :-

"... Every partner has    dominion over    property by reason of the fact that he is a partner. This is a kind of dominion which every owner of property has over his property. out it is not dominion    of this kind which satisfies    the requirements of S.405. In order to establish `entrustment of dominion' over property to an accused person the mere existence of that person's dominion over property is not enough.    It must be further shown that his dominion    was the result of entrustment. Therefore, as rightly pointed out by Harris, C.J., the prosecution must establish    that dominion over the assets    or a particular asset of the partnership was, by a special agreement    between    the parties entrusted    to the    accused person.    If in    the absence of    such a    special agreement partner receives money belonging to the partnership he cannot be said to have received it in a fiduciary    capacity or in other words cannot be    held to    have been 'entrusted' with dominion over partnership properties. " If that is so in the partnership relation it appears to me that    it would be more so in the conjugal relationship with regard to the property within the matrimonial home." "46..... The nature, character and the incident of property within the matrimonial home, so    long as the marriage subsists,    seem to be such that except    by a special written agreement, no entrustment or dominion etc. Of the individual property of the spouses to each other can    b e presumed. Equally,    herein the specific and ascertainable (I) A.T.R. 1965 S.C. 1433 property of each spouse within the matrimonial home can , be so equivocal    and problematic as to oust    the requisite mens rea with consequent criminality    with regard thereto until the    title to such    property is clearly and specifically established. If the civil remedy seems to be adequate betwixt partners, during the subsistence of partnership there is no reason why it would not equally be    so betwixt spouses in an existing matrimonial home during the subsistence of the conjugal relationship. As already    referred to, apart from the civil remedy under the    general    law, added provisions exist in this    context under S.27 of    the Hindu Marriage Act buttressed    by the procedural provisions of 0.32-A of the Code of Civil Procedure." "47. In    view of the above, it would    be equally untenable to hold that either the desertion or the expulsion one of the spouses from the matrimonial home would result in entrusting dominion over the property belonging to the other so as to bring the case within the ambit    of this    pre-requisite under S.405, Indian Penal Code. The joint custody and possession    once established would    thereafter exclude either express entrustment or the passing of    dominion over    the property. It was    rightly    argued    that if an irate husband or    wife walks out from the matrimonial home in a    huff, this cannot constitute    an entrustment or dominion over the property to the other. Consequently, unless a special written agreement to the contrary can be established, the strongest presumption arises that during the existence and immediately    after    the crumbling    of the matrimonial home, there was in essence, a joint possession and custody of the property of the spouses therein, including dowry and traditional presents,    which would    preclude the    essentials entrustment of dominion over the property which form the corner-stone of criminality under S.405, Indian Penal Code."

"49. Equally the common use and enjoyment of certain articles of dowry and traditional presents, by the other members of a joint family    with the leave    and licence of    a Hindu wife, cannot    have the effect of extending the jointness of control and custody of the couple to undefined and unreasonable limits. Consequently, there is no reason to    assume that the mere use or enjoyment of dowry by other members of the household, would have the effect of    passing the possession and control thereof Jointly to the Hindu Undivided Family a such." "50. In the aforesaid context, pointed reference must be made to the opening word 'whoever' of S.405 of the Code to highlight that the criminal law does not take ken of any proximity of relationship for the offence of breach of    trust. "Whoever" would include    within    its ambit the parents-in-law, the brothers-in-law, sisters- in-law (and other close relations of the husband) of a Hindu wife    provided that    the basic ingredients of entrustment or passing of    dominion over    her separate individual property stands fully satisfied. Apart from the peculiarity of the conjugal relationship and the consequent    sharing of the matrimonial home,    the existence of the blood relationship of the parties does not seem to be relevant    for the applicability or otherwise of S.406 of the Code, Since the other members of the Hindu Joint family, to which the    husband may belong, would not be covered by    the presumption of jointness    of custody v    and possession of their individual properties by the spouses alone, they cannot by the mere fact of kinship be excluded from the scope of ss. 405 and 406 of the Code."

"56. To    conclude, it necessarily follows from the aforesaid discussion that    the very concept of    the matrimonial home cannotes a jointness of possession and custody by    the spouses even with regard to the movable properties exclusively owned by each of    them. It is, therefore, inapt to view    the same in view of    the conjugal relationship as involving any entrustment or passing of    dominion over    property day-to-day by    the husband to the wife or    vice versa. Consequently, barring a special written agreement to the contrary, no question of any entrustment or dominion over property would normally arise during coverture or its imminent break-up. There fore, the very essential pre-requisites and the core ingredients of the offence under S.406 of the Penal Code would be lacking in a charge of criminal breach of trust of property by one spouse against the other. Inevitably, therefore, the purported allegations of breach of trust betwixt husband and wife    so long as the conjugal relation ship lasts and the matrimonial home subsists, cannot constitute    an offence under Section 406 of the Indian Penal Code, subject to any special written agreement. Equally, as against the close relations of the husband, no facile presumption of entrustment and dominion over the dowry can be raised prims facie and this inevitably has to be by a subsequent conscious act of volition which must be specifically    alleged    and conclusively established by proof. Lastly, because of the definition in S. 2 of the Dowry Prohibition Act, the offences under the said Act cannot come within the ambit of S. 406 of the Indian Penal Code as these cannot stand together on the same set of facts." "57. Hence the answer (to the question) posed at the very outset is rendered in the affirmative.    The bond of matrimony, therefore, bar the spectre of the criminal breach of trust    qua the property of    the spouses at    the very threshold of the matrimonial home. It cannot    enter its hallowed precincts except through the back door of    a special written contract to    the contrary with regard to such property."

I    have extracted    above    several    passages from    the Judgment of the learned judges of the Full Bench in Vinod Kumar's case (supra) since I share their view and concern for peace and harmony in matrimonial homes and feel that the learned Single Judge who has quashed the wife's complaint in the present case was justified in relying heavily upon that judgment of the Full Bench. In these circumstances, 1 think that in    the absence of a separate agreement    and specific entrustment by    the wife to the husband and of his relations and vice versa of the property of the husband to the wife and or    her relation, it would    not be    possible to draw an inference of entrustment of custody or dominion over    the property of one spouse to the other and his or her relations so as to attract the stringent provisions of s.406 I.P.C. The offense of criminal breach of trust is cognizable and non-bailable and punishable with imprisonment for a term of three years or with fine or with both. In the absence of such a separate agreement for specific entrustment of the property of either spouse the appropriate remedy would appear to be by way of a civil suit where there    is scope for the parties to    the marriage coming    together at the instance of relations, elders and well-wishers and patching up their differences. Entertaining complaints of the irate wife or husband against the husband or wife without even an allegation of a specific and separate agreement constituting    entrustment of    the property of the wife or the husband would have disastrous effects and consequences on the peace    and harmony which ought to prevail in matrimonial homes. It is seen from para 45 of-the judgment in    Vinod Kumar's case (supra) that in spite of diligent research no instance of any case of successful prosecution    of the husband of wife at    the instance of the wife or the husband could be brought to the notice of the learned Judges. It may be stated that none was brought to the notice of this Court either in the course of the arguments in this    appeal. This would show that    the spouses had not lightly rushed in the past    to criminal courts with complaints of criminal breach of trust against the other spouses though in the day-to-day life there must have been numerous instances where the wife had used the property or cash of the husband for purposes different from the one    for which they were given by    the husband to be applied by the wife and vice-versa. I am anxious that no light-hearted change should be brought about in-the position and that the minimum requirement in such cases is a specific separate agreement whereby the    property of the wife to husband was entrusted to the husband or wife and or his or her close relations. In the absence of such    a specific separate agreement in the complaint, in the present case, I am of    the opinion that the    learned Single Judge    was perfectly justified in following the decision    of the Full Bench in Vinod Kumar s case (supra) and quashing the wife's complaint filed against the husband and his close relations. I would, therefore, dismiss the appeal.

In view of the majority    decision, this appeal is allowed, the judgment of the High Court is set aside and the complaint filed    by the    appellant is restored. The accused may now be summoned and put on trial in accordance with law.

S.R.     Appeal allowed

Equivalent Citations: 1985 AIR 628, 1985 SCR (3) 191 - Citation:  1985 AIR  628- 1985 SCR  (3) 191-  1985 SCC  (2) 370      1985 SCALE  (1)458 -  Citator  Info :  Rf 1986 Sc 833(50) -  Rf 1992 Sc 604 (103) - Bench: Fazalali, Syed Murtaza, Mukharji, Sabyasachi (J), Varadarajan, A. (J) - Supreme Court Of India - Date Of Judgment12/03/1985

ACT: Nature, character and concomitants of stridhan-Right of exclusive ownership over the stridhan during coverture- Whether the dowry/stridhan given to a wife and her exclusive property becomes a joint property/partnership property by a fiction of being placed in the custody of her husband and her relations, the moment a married woman enters her matrimonial home-Indian Partnership Act, 1932, section 4. Dowry Prohibition Act (28 of 1961) sections 2 Hindu Marriage Act, 1955 section 27 Hindu Succession Act Section 14 Indian Penal Code, sections 405, 406 and 482. Remedies open under law-Whether criminal remedy is barred when civil remedy is available simultaneously. Entrustment-Charge Or Criminal breach of trust by wife against her husband and his close relations maintainability- Essential ingredients of an offence section 405/406 Indian Penal Code. Inherent powers of the High Court to quash a First Information Report on a complaint under section 482' the Code of Criminal Procedure, 1973 (Act 11 of 1974), explained.


HEADNOTE:
     The appellant  Pratibha Rani, the estranged wife of the
first respondent  Suraj Kumar,    filed a     criminal  complaint
against her  husband, his  father, his    three brothers and a
brother-in-law in the court of the Additional Chief Judicial
Magistrate, Ludhiana,  alleging; (i) that she was married to
the first  respondent at  Ludhiana on 4 2. 1972 according to
Hindu rites  and customs;   (ii) that the aforesaid persons,
namely, father,     brothers and  brother-in-law of  the  first
respondent attended the marriage and demanded dowry from the
appellants' parents as consideration for the marriage; (iii)
that the  dowry articles  mentioned in    the  list  worth  Rs
60,000 in  the form  of gold  ornaments, clothes  and  other
valuables were    given and  entrusted to     the respondents and
four others  at Ludhiana at the time of 'doli' on 5. 2. 1972
in the    presence of  Kapur Chand  Jain and  six others; (iv)
that all  the six  respondents, from  the time    of  marriage
started teasing, harassing and beating her and they kept her
without even  food to  extract more  money from her parents;
(v) that  they turned out the appellant with her children in
the beginnings    of 1977     (vi) that  after a  great  deal  of
persuasion and intervention by Panchayatdars, respondent No.
I came to Ludhiana  and took  her to  his house,  after  giving  an
undertaking in    writing on 21. 6. 1977 not to misbehave with
and not     to maltreat  the appellant  and her children; (vii)
that after  some time  all the    respondents in the Complaint
not  only   started  again  maltreating     the  appellant     and
misbehaving with her, but also brought the appellant at 4.30
a.m. On     11.12.80 and  left her     near Kailash  Cinema Chowk,
(viii) that  the articles  (the stridhana)  mentioned in the
list appended  to the  complaint were  never  given  by     the
respondents to    the appellant  for her use but were retained
by them     illegally  and     with  the  dishonest  intention  of
causing wrongful gain to themselves and wrongful loss to the
appellant y  (ix) that    when the appellants' husband and his
brother,  Vishwinder  Kumar,  respondent  1  and  5  in     the
complaint, came     to  Ludhiana  on  10  2.81  to     attend     the
proceedings started  by     the  appellant     under    section     125
Criminal Penal Code her parents persuaded them to return the
articles entrusted  to them  at the time of the marriage but
they flatly refused to comply with that demand; (x) that the
articles have  not been     returned in  spite  of     service  of
notice dated 17.12.81 on the first respondent; (xi) that the
respondents  in      the  complaint   have     dishonestly,  thus,
converted the  articles belonging to the appellant for their
use in    violation of  the instructions    of  the     appellants'
parents given  at the  time of    the  marriage  to  give     the
articles  for  the  appellants'     use  and  that     (xii)    they
individually  and   jointly  committed    the  offences  under
sections 405 and 406 Indian Penal Code.<br><br>
     Thereupon    respondent   No.  1   filed  Criminal  Misc.
Application No.     4876 of 1981 in the Punjab and Haryana High
Court under  section 482  of the  Code of Criminal Procedure
for quashing  the criminal  proceedings     and  the  complaint
taken on  file by  the Additional Chief Judicial Magistrate,
Ludhiana under    section 406  IPC  and  his  order  summoning
them.A Learned    Single    Judge  of  the    High  Court  relying
strongly upon  the observations made by a Full Bench of that
High Court  in Vinod Kumar Sethi & Ors. v. State of Punjab &
Ors. reported  in AIR  1982 Punjab  372 allowed the petition
and quashed  the proceedings  arising out of the appellants'
complaint, observing that the allegations in the appellants'
complaint are similar to the one in that case and therefore,
fully covered  by the  ratio in     that  decision.  Hence     the
appeal by special leave.
     Allowing the appeal, the Court,
^
     HELD; (Per     E.lzal Ali,  J.) (on  behalf of  Sabyasachi
Mukharji, J. and himself)
     1.1 The  stridhan property     of a  married woman  cannot
acquire the  character of  a  joint  property  of  both     the
spouses as  soon as she enters her matrimonial home so as to
eliminate the  application of  section 406 IPC. The position
of stridhan  of a  Hindu  married  woman's  property  during
coverture is  absolutely clear    and unambiguous;  she is the
absolute owner    of such property and can deal with it in any
manner she  likes-She may  spend the  whole of it or give it
away at     her own  pleasure  by    gift  or  will    without     any
reference to  her husband. The entrustment to the husband of
the stridhan  property is just like something which the wife
keeps in  a bank  and can  withdraw any amount when ever she
likes  without    any  hitch  or    hindrance.  Ordinarily,     the
husband has  no right  or  interest  in     it  with  the    sole
exception that in times of extreme distress, as
193
in famine,  illness or    the like, the husband can utilize it
but he    is morally  bound to restore it or its value when he
is able     to do    so. This  right is  purely personal  to     the
husband and  the property  so received    by him    in  marriage
cannot be  proceeded against  even in  execution of a decree
for debt. [206F; 201D-E]
     Suraj Kumar  & Anr.  v. Pratibha  Rani, Criminal  Misc.
Petition No.  4876 of  1981  Punjab  &    Haryana     High  Court
reversed.
     Vinod Kumar  Sethi & Ors. v. State of Punjab & Anr. AIR
1982 Punjab  372; Surinder  Mohan v.  Smt Kiran     Saini, 1977
Chandigarh  Law      Reporter  212;  Kailash  Vati     v.  Ayodhya
Parkash, ILR (1977) 1 Punjab & Haryana 642 (FB) overruled.
     1.2 A  perusal of the allegations made in the complaint
undoubtedly makes  out a positive case of the accused having
dishonestly misappropriated  the articles handed over to the
n  in    a  fiduciary   capacity.  To  characterise  such  an
entrustment as    a joint     custody or  property given  to     the
husband and  the parents  is wholly unintelligible.A perusal
of the    list reveals  that  so    far  as     the  jewellery     and
clothes, blouses,  nighties and     gowns    are  concerned    they
could be  used only by the wife and were her stridhan. By no
stretch of  imagination could it be said that the [ornaments
and sarees  and other articles mentioned above could also be
used by     the husband.  If, therefore,  despite demands these
articles were  refused to  be returned    to the    wife by     the
husband and  his parents,  it  amounted     to  an     offence  of
criminal breach     of trust. All the ingredients of an offence
under section  405 IPC    were pleaded  and a prima facie case
for  summoning     the  accused    was  made   out.   In    such
circumstances, the  complaint  should  have  been  given  an
opportunity by    the High Court to prove her case rather than
quashing the  complaint. Such an exercise of jurisdiction by
the  High   Court  under  section  482    Cr.  P.     is  totally
unwarranted by law. [203A; 204B-D; 203B-C]
     2.1  Criminal   law  and    matrimonial  home   are     not
strangers. Crimes  committed in matrimonial home are as much
punishable as  anywhere else. The mere factum of the husband
and wife  living together does not entitle either of them to
commit a  breach of criminal law and if one does then he/she
will be     liable for  all the consequences of such breach. In
the case  of stridhan  properly also,  the  title  of  which
always remains    with the  wife though possession of the same
may sometimes  be with    the husband  or other members of his
family, if  the husband     or any     other member  of his family
commits such  an offence,  they will be liable to punishment
for the     offence of  criminal breach of trust under sections
405 and 406 IPC. Just as a newly married woman living in the
same house  and under  the same     roof cannot  be expected to
keep her  personal property  or belongings  like  jewellery,
clothing, etc.    under her  own lock  and key  thus showing a
spirit of  distrust to    the husband  at the  very behest,  a
husband cannot be permitted to cast his covetous eyes on the
absolute and personal property of his wife merely because it
is kept     in his     custody, thereby  reducing the custody to a
legal farce.  On  the  other  hand,  even  if  the  personal
property of  the wife  is jointly kept it would be deemed to
be expressly or impleedly kept in the custody of the husband
and i f he dishonestly misappropriates or refuses
194
to return  the same,  he is  certainly    guilty    of  criminal
breach of  trust, and there can be no escape from this legal
consequence. [207E-G; 208B-Cl
     2.2 It  is an  anathema to     suppose that  when a  civil
remedy is  available, a     criminal prosecution  is completely
barred. The  two remedies-are  under civil law and the other
under  criminal      law  are   not  mutually   exclusive     but
coextensive   and essentially  differ in  their content     and
consequences. Therefore,  it cannot  be said  that,  if     the
husband dishonestly misappropriates the stridhan property of
his wife  though kept  in his  custody, that  would not     par
prosecution under  section 406 IPC or render the ingredients
of section 405 IPC nugatory or abortive. To say that because
the stridhan  of a  married woman  is kept in the custody of
her husband no action against him can be taken as no offence
is   committed is to override and distort the real intent of
law. [208E-F]
     3.1 Neither  section 27  of the  Hindu Marriage Act nor
section 14  of the Hindu Succession Act, go to the extent of
providing that the claim of a woman on the basis of stridhan
is completely abolished, or that a remedy under the criminal
law for     breach of  trust is  taken away.  All that  the two
sections, provide  is that  if the husband refuses to return
the stridhan  property of  his    wife, it will be open to the
wife to     recover the  same by  a properly  constituted suit.
[204G-H; 205A]
     3.2  Section  27  of  the    Hindu  Marriage     Act  merely
provides for-  an alternate  remedy and     does not  touch  or
affect in  any way  the criminal liability of the husband in
case it     is proved  that he  has dishonestly misappropriated
the stridhan  of his  wife. It cannot also be spelt out from
any textbook  or the   sastric    law of the Hindus that these
two Acts take away the stridhan right of a woman-at the most
these Acts merely modify the concept of stridhan.
                            [205C-D]
     Bhai Sher Jang Singh & Anr. v. Smt. Virinder Kaur, 1979
Criminal Law Journal 493 approved.
     Surinder Mohan v. Smt. Kiran Saini, 1977 Chandigarh Law
Reporter 212 over ruled.
     4.1 It  is neither     appropriate nor  apposite to import
the concept  of partner     ship of  husband and  wife for     the
simple reason  that the     concept of  partnership is entirely
different from that of the husbands' keeping the stridhan in
his custody.  From the    definition  of    the  partnership  in
section 4 of the Indian Partnership Act, it is manifest that
in a  partnership the  wife must  by some clear and specific
act indicate  that the    stridhan which has been entrusted to
the husband is to be used for a partnership business and the
losses of  the firm,  if any,  would have  to be  shared  by
both.A pure and simple act of entrustment of the stridhan to
the  husband   does  not   attract  any      of  the  essential
ingredients of    a partnership  as defined in the Partnership
Act. When  the essential  conditions of a partnership do not
exist. the  mere factum of entrustment of stridhan would not
constitute any    co-ownership or     legal partnership, There is
also no
195
question of  the wife,    constituting herself  a partner with
her husband  merely by    allowing him  to keep the article or
money in  his custody.    Further, in  this  case,  there     is,
neither any  pleading nor  any    allegation  that  after     her
marriage, the  appellant transferred  all her  properties to
her husband  for  carrying  on    a  partnership    business  in
accordance with     the  provisions  of  the  Partnership    Act.
Therefore, a  criminal prosecution  under section 406 IPC is
maintainable.
                   [209E; 210B-C; G; 211C-D]
     Vinod Kumar  Sethi & Ors. v. State of Punjab & Anr. AIR
1982 Punjab  372; Surinder  Mohan etc.    V. Smt. Kiran Saini,
1977 Chandigarh     Law Reporter  212; Kailash  Vati v. Ayodhya
Parkash, ILR  (1973) 1 Punjab & Haryana, P 612; Kailash Nath
Agarwal &  Ors. v.  Prem Pal  Agarwal & Anr. Crl. Misc. case
No. 676     of 1981  connected with Crl. Misc. case No. 2753 of
1981 decided on 22.12.83 Allahabad High Court overruled.
     In the  instant case,  however, there  is    neither     any
allegation nor    anything in  the complaint to show that when
the wife  entered her  matrimonial home     she  had  entrusted
property to  her husband so as to make him part owner of the
same. Therefore, the question Or the husband having dominion
over the  property does     not at     all arise. In fact the wife
has nothing  to do  With the  partnership, if  any  and     the
husband is  a pure  and simple custodian of the property and
cannot use  the Same  for any  purposed without her consent.
[210E-F]
     The concept  of stridhan  property of  a married  woman
becoming joint    property of  both the spouses as soon as she
enters her matrimonial home and continues to be so until she
remains there or even if there is a break in the matrimonial
alliance,  is  in  direct  contravention  of  Hindu  law  of
Sadayika which    has been  administered    since  more  than  a
century by  High Court,     Privy Council    and also the Supreme
Court. [212C-D]
     4.2 The Full Bench decision in Vinod Kumar's case would
not  only   render  the      provisions  of   section  406     IPC
inapplicable and  nugatory  even  if  the  husband  has     the
audacity or  the  importunity  of  refusing  to     return     the
stridhan of his wife, but also be in direct contravention of
a  long      course  of  decisions     of  Supreme  Court  on     the
ingredients of section 405 IPC. [212A-B]
     By     a   pure  and     simple     figment   of  the   fertile
imaginations, the  Judges in  the Vinod Kamat's case seem to
have rewritten the law of criminal breach of trust contained
in sections  405 and 406 IPC so as to carve out an imaginary
exception to  the application of the Penal Code- more tragic
consequence of the view taken by the High Court is that even
if there is a break in the matrimonial alliance and the wife
wants her  husband to  return her  exclusive property and he
refuses lo  return even     then the  provisions of section 406
IPC would  not apply.  It is  an extreme travesty of justice
for a  court to     say that  whenever a  married    demands     her
stridhan property  from her  husband she should be driven to
the dilatory  process of a civil court and her husband would
be debarred  from being prosecuted by a criminal court. By a
strange and ingenious process of holding that such an act of
a husband does not attract the provisions of the
196
Penal Code, as the property being joint there is no question
of the    husband being  a trustee  or holding  the same    in a
fiduciary capacity.  Such a  view is  not only contradictory
but-what the  High  Court  has    said  before  regarding     the
applicability of  section 27  of the  Hindu Marriage Act and
the nature  of stridhan-is  also neither  in consonance with
logic and  reason nor  with the     express provisions  of     the
Penal Code  and seems  to be  inspired by  a spirit  of male
chauvinism so  as  to  exclude    the  husband  from  criminal
liability merely because his wife has refused to live in her
matrimonial home. The High Court, functioning in a civilised
and socialistic     society such  as ours    cannot play  such  a
havoc with judicial interpretation of an important branch of
law. The  High Court  cannot make  a complete  volte-face by
holding that  these very  properties after  marriage  become
joint property    of both     the spouses. The High Court has not
realised that  the theory  or philosophy of matrimonial home
propounded   by it  stands directly  contradicted by its own
observations.
                     [212D-H; 213A; H; 214A]
     4.3 The  fundamental core    of the    offence of  criminal
breach of trust is that a property must be entrusted and the
dominion of  the property should be given to the trustee. In
the present  case, all    these conditions,  even according to
the findings  of the  High Court  though not its conclusions
are clearly established.
                              [217C]
     Chelloor Manaklal    Narayan Ittiravi  Nambudiri v. State
of Travancore; AIR 1953 SC478; Jaswantrai Manilal Akhaney v.
State of  Bombay,  [1956]  SCR    483;  State  of     Gujarat  v.
Jaswantlal Nathalal  [1968] 2 SCR 408; Sushil Kumar Gupta v.
Joy Shankar  Bhattacharjee, AIR 1971 SC 1543; Superintendent
JUDGMENT:
[4] SCC 230 referred to.

Harihar Prasad Dubey v- Tulsi Das Mundhra & Ors. AIR 1949 Calcutta 207; Akharbhai Nasarali v. Md. Hussain Bhai AIR 1961 MP 37; Basudeb Patra v. Kana. Lal Haldar, AIR 1949 Calcutta 207, Bhai Sher Jang Singh and Anr. v. Smt. Virinder Kaur, 1979 Crl. L-J. 493; Avtar Singh and Anr v. Kirpal Kaur, Crl. Misc. No. 2144 of 1979 and Cr l Misc. No. 2145 of 1979 approved.

Vinod Kumar Sethi & Ors. v- State of Punjab and Anr. ATR 1982 Punjab 372; Surinder Mohan etc. v. Smt. Kiran Saini,    1977 Chandigarh Law Reporter    212; Kailash    Nath Agarwal & Ors- v. Prem Pal Agarwal & Anr. Crl. Misc. Case No. 676    of 1981 connected with Crl. Misc. case No. 2753 of 1981, Allahabad High Court: Kailash Vati v. Ayodhya Parkash, ILR (1977) 1 Punjab d: Haryana 642 overruled.

5. For the purpose of exercising its    power under section 482 Cr. PC to quash a First Information Report or a complaint the High Court would have to proceed entirely on the basis of the allegations made in the complaint or the documents accompanying    the same per se.    It has no jurisdiction to    examine the correctness or otherwise of the allegations. In case    no offence is committed on    the allegation and    the ingredients    of section 405 and 406 IPC are not    made out, the High Court would be justified in quashing the    proceedings. In the    -present case,    the allegations are both clear, specific and unambiguous and therefore, the    complaint should have been given a chance to prove her case.    It is, of course open to the accused at the trial to take whatever defences that were open to him or her but that stage had not yet come and    therefore, the    High Court was totally ill-advised to speculate on the merits of the case at that stage and quash the proceedings. Since all the facts stated in the complaint constituted an offence under section 406 IPC,    the appellant    cannot be denied the right to prove her case at the trial by pre-empting it the very behest by the order passed by the High Court. [223D-H; 224D-E-] Vinod Kumar Sethi & Ors. v. State of Punjab & Anr, AIR 1982 Punjab 372, over-led.

L.V. Jadhav v. Shakarrao Abasaheb Pawar & Ors. AIR 1983 SC 1219; Smt. Nagawa v. Veeranna Shivalingappa Konjalgi & ors. [1976] Supp. SCR 123 applied.

OBSERVATION (It is surprising to find that so deeply drowned and inherently engrossed are some    of the    High Courts in    the concept of matrimonial home qua the stridhan property- of a married woman that they simply refuse to believe that such properties are    meant for the exclusive use of the wife and could also be legally    entrusted to the husband or    his relations. Thus, if    the husband    or his relations misappropriate the same and refuse to    hand it over to the wife and convert them to their own use and even though these facts arc clearly alleged in a complaint for    an offence under section 405/406 IPC, some courts take the view that the complaint is not maintainable. Thus even when clear and specific allegations are made    in the    complaint that    such properties were    entrusted to the husband, they refuse to believe these hard facts and brush them aside on the ground that they are vague, and completely shut their eyes to the fact that the husband    could also be guilty under section 405/406 IPC in view of the clear allegations    made in the complaint. In other words, the High Courts simply refuse to believe that there can    be any such entrustment and even if it is so, no offence is committed. Such an approach amounts to a serious distortion of the criminal law, resulting in perpetrating grave and substantial miscarriage of justice to the wife at the hands of the High Courts. The Supreme Court cannot continuance such a wrong and    perverse approach.) [224G-H, 225A-C] Per A. Varadarajan, J. (dissenting) 1.1 In the absence of a separate agreement and specific entrustment by    the wife to the husband and or his relations and vice versa of the property of the husband to the wife and or    her relation, it would    not be    possible to draw an inference of entrustment of custody or dominion over    the property of one spouse to the other and    his or    her relations so as to attract the stringent provisions of section 406 IPC. The offence of criminal break of trust is cognizable and non-bailable and punishable with imprisonment for a term of three years or with fine or with both. In the absence    of such a    separate agreement for specific entrustment of the property of either spouse the appropriate remedy would appear to be by way of a civil suit where there is scope for the parties to the marriage coming together at the instance of relations, elders and    well-    wishers    and patching up their differences. [241G-H; 242A] 1.2 Entertaining    complaints of    the irate wife or husband    against the    husband    or wife without even an allegation of a specific and separate agreement constituting entrustment of the property of the wife of the husband would have disastrous    effects and consequences on the peace and harmony which ought to prevail in matrimonial homes. [242B] 1.3 The fact that no instance of any case of successful prosecution of    the husband or wife at the instance of the wife or    the husband could be    brought to the notice of the Supreme Court in the course of the arguments in this appeal would show that the spouses had not lightly rushed in the past to    criminal courts with complaints of criminal breach of trust against the other spouses though in the day-to-day life. There must have been numerous instance where the wife had used the    property or cash of the husband for purposes different from    the one    for which they were given by    the husband to be applied by the wife and vice-versa. Therefore, the minimum requirement in such cases is a specific separate agreement whereby the property    of the    wife or husband was entrusted to the husband or wife and or his or her close relations. In the absence of    such a specific separate agreement in the present case the complaint    was rightly quashed. [242D-F] & CRIMINAL APPELLATE    JURISDICTION: Criminal    Appeal    No. 684 of 1982 From the judgment and order dt. the 31st May, 1982 of the High Court of Punjab & Haryana at Chandigarh in Crl. Misc. No. 4876M/81.

V.C. Mahajan, and N.S. Das Bahl for the Appellant. Altat Ahamed for the Respondents.

Mrs. U. Kapoor for the Intervener.

T The following Judgments were delivered FAZAL ALI,    J. Sometimes the law    which is meant to impart justice    and fair play to the citizens or people of the count is so torn and twisted by a morbid interpretative process that instead of giving haven to the disappointed and dejected litigants it    negatives their well    established rights in law. The present case reveals the sad story of a helpless married woman who, having been turned out by her husband without    returning her    ornaments, money and clothes despite repeated demands, and    dishonestly misappropriating the same, seems to have got some relief by the court of the first instance    but to    her utter dismay and disappointment when she moved the High Court    she was forced like a dumb- driven cattle to seek    the dilatory remedy of a civil suit- such was the strange and harsh approach of the High Court, with due respect, which seems to have shed all the norms of justice and fair play.    Even so, the High Court is not much to be blamed because in the process of following precedents or decisions of doubtful validity of some courts, it tried to follow suit. It may be stated that even the old classic Hindu law jurists and    celebrated sages conceded certain substantial rights to the women, one of which was - what is    called Saudayika or stridhan,    with which we    are concerned here.

This now brings us to a brief discussion of the nature, character and concomitants of stridhan. In the instant case, we are    mainly concerned with that part of stridhan which is the absolute property of a married women during coverture. Sir Gooroodas    Banerjee in 'Hindu Law of Marriage    and Stridhana' while describing the nature of stridhan quoted Katyayana thus:

"Neither the husband, nor the son, nor the father, nor the brother, has power to use or to alien the legal property of a woman. And if any of them shall consume such property against her    own consent he shall be compelled to pay its value with    interest to her, and shall also    pay a    fine to the king... Whatever she has put amicably into the hands of her husband afflicted by disease, suffering    from disease,    or sorely pressed by creditors, he should repay that by his own freewill. "
(P.341) At another    place while referring to the nature    of a husband's rights over stridhan during coverture, the author referring to Manu says thus:

" ..    and by the    law as expounded by    the commentators of the different schools, the unqualified dominion of the    husband    is limited to only    some descriptions of the wife's property, while as regards the rest he is allowed only a qualified right of use under certain circumstances specifically defined."
(p.340) Similarly, while describing the    nature    of stridhan generally, which is known as saudayika, the    author    says thus:
"First, take    the case of property    obtained by gift. Gifts of affectionate kinderd, which are known by the name saudayika stridhana, constitute a woman's absolute property, which she has at    all times independent power    to alienate, and over which    her husband has only a qualified right, -namely, the right of use in times of distress."
The entire    classical text    on the subject has    been summarised by N.R. Raghavachariar in 'Hindu Law' (5th Edn) at page    533 (section 487) where the following statement is made:
"487. Powers During Coverture.
Saudayika, meaning    the gift of    affectionate kindred, includes both Yautaka or gifts received at the time of marriage as well as its negative Ayautaka. In respect of    such property, whether given    by gift or will, she is the absolute owner and can deal with it in any way she likes. She may spend, sell or give it away at her own pleasure by gift or will without reference to her husband and property acquired by it is equally subject to    such rights. Ordinarily, the husband has no manner of    right or interest in it. But    in times of extreme distress, as    in famine,    illness    or imprisonment, or for the    performance of indispensable duty the husband can take and utilise    it for    his personal purposes, though even then he is morally bound to restore it or its value when able to do so. But this right is purely personal    to him and cannot be availed of by a holder of a decree against the husband, and if the husband dies with out utilising the property for the liquidation of his debts, his creditors cannot claim to proceed    against    it in    the place of    her husband."
To the same effect is Maines' treatise on Hindu Law at page 728. The characteristics    of Saudayika have also been spelt out by Mulla's Hindu law at page 168 (section 113) which gives a complete    list of the stridhan property of a woman both before and during coverture, which may be extracted thus:
"113. Manu enumerates six kinds of stridhana:
1.    Gifts made before the nuptial fire, explained by Katyayana to    mean gifts made at the time of marriage before the fire which is the witness of the nuptial (adhyagni).
2.    Gifts made at the bridal procession, that is, says Katyayana, while the bride is being led from the residence of her parents to that of her husband (adhyavanhanika)
3.    Gifts    made in token of love, that is,    says Katyayana, those made through affection by    her father-in-law and mother-in-law (pritidatta), and those made at time the of her making obeisance at the feet of elders (padavan danika).
4.    Gifts made by father.
5.    Gifts made by mother.
6.    Gifts made by a brother."
It    is, therefore, manifest that the    position of stridhan of a Hindu    married woman's property during coverture is absolutely clear    and unambiguous; she is the absolute owner    of such property and can deal with it in any manner she likes - she may spend the whole of it or give it away at    her own pleasure by    gift or will    without    any reference to her husband. Ordinarily, the husband has no right or interest in it with    the sole exception that in times of extreme distress, as in famine illness or the like, the husband can utilise it but he is morally bound to restore it or its value when he is able to do so. It may be further noted that this right is purely personal to    the husband and the property so received    by him    in marriage cannot be proceeded against even in execution of a decree for debt.
Such being    the nature and character of stridhan of a woman, it is difficult to countenance the view of the Punjab & Haryana High Court in Vinod Kumar Sethi & Ors. v. State of Punjab & An.(l) that the stridhan property of a married woman becomes a joint    property as soon as she enters her matrimonial home. We shall deal with    this aspect of    the matter a little later.

We would first like to narrate the facts of the case to show how the complaint    filed by the appellant was wrongly quashed by the High Court. The general allegations made in the complaint may be summarised as follows:- (1) AIR 1982 Punjab 372-

The complainant was married to Suraj Kumar, Accused No. 1 (respondent)    on 4.2.72 at Ludhiana according to Hindu rites and customs in the presence of respectable persons. Accused No.2 was the father and accused Nos.3 to 5    were brothers and No.6 was    brother-in-law of accused No.; It is further alleged    that all the accused attended and actively participated in the marriage of the complainant and demanded dowry. The must important allegation made by the appellant was that her parents and relatives gave by way of dowry articles worth    Rs. 60,000/- inclusive of gold ornaments, clothes and other things which were entrusted to accused Nos.1 to 6 on    5.2.72 which were taken into possession by them. Soon after the    marriage, accused No. 1 started harassing, teasing and beating the complainant and ultimately turned her out alongwith her children sometime in the year 1977. It was avered in para 4 of the complaint that accused never returned the articles to her, the relevant portion of the allegations may be extracted thus:-

"The articles    above-mentioned were never given by the accused to    the complainant for her use    and possession of the same was illegally, dishonestly and malafidely retained by the accused in order to make a wrongful gain to them selves and wrongful loss to the complainant.
The accused refused to give the entrusted articles of dowry,    which were the stridhan of the complainant. On 10.2.1981 when the accused Nos. 1 to    5 came to Ludhiana to attend the proceeding u/s 125 Cr.P.C., filed by the complainant    in the    Court of Shri    S.S. Tiwana, they were persuaded by the parents of    the complainant to send the articles entrusted to them at the time of marriage but they gave flat refusal to its notice which was served upon the accused No.1 which was dated 17.12.80, but to no effect. The accused have thus dishonestly used    and    converted the articles aforementioned to    their own use,    who are still in possession of the same in violation of the direction given by the parents of complainant. The parents of the complainant directed the accused at the time of marriage to give the articles to    the complainant for her use, in the presence of the aforesaid persons, but the accused have not done the needful of the demand and have thus committed criminal breach of trust punishable u/s 406 IPC."
A perusal    of the    allegations made in the complaint undoubtedly makes out a positive case of the accused having dishonestly misappropriated the articles handed over to them in a fiduciary capacity. To characterise such an entrustment as a joint custody or property given to the husband and the parents is wholly unintelligible to us. All the ingredients of an offense under s.405 IPC were pleaded and a prima facie case for summoning the accused was    made out. In    such circumstances, the complainant should have been given an opportunity by    the High Court to prove her case rather than quashing the complaint. Such an exercise of    jurisdiction under s.482 Cr.P.C. is totally unwarranted by law. We might also mention that alongwith    the complaint,    a list of valuable articles had also been given, the relevant portion of which may be extracted thus;

I. " Jewellery"
1. Nine complete gold sets
2. One complete diamond set
3. Three gold rings
4. Two golden Bahi (Baju Band)
5. One golden chain
6. One shingar patti with golden tikka
7. One golden nath (Nose ring)
8. Twelve golden bangles II. Silver articles
1. Six glasses and one jug
2. Two surma danies
3. One tagari
4. Two payals III. Clothes Fifty one sarees, twenty one suits alongwith petti coats, blouses, nighties, shawls, sweaters, night suits, gowns and woollen    coat etc., six complete beds with sheets, etc."
A perusal    of the    list reveals that so    far as    the jewellery and clothes,    blouses, nighties and gowns    are concerned they    could be used only by the wife and were her stridhan. By no stretch of imagination could it be said that the ornaments and sarees and other articles mentioned above could also be used by the husband, If, therefore, despite demands these articles were refused to be returned to the wife by    the husband and his parents, it amounted to an offence of criminal breach of    trust.    In mentioning    the articles in the list, we have omitted furniture and utensils which though also belonged to the complainant yet there is some room for saying that these were meant for joint use of the husband and wife.

Thus, the    facts mentioned    in the    complaint taken at their face value reveal a clear allegation that the stridhan property of the appellant was entrusted to the husband who refused to return the same to her Some courts were of the opinion that in view of s. 27 of the    Hindu Marriage Act and s. 14 of the Hindu Succession act, the concept of stridhan    property of a woman    was completely abolished. For instance, the Punjab & Haryana High Court in a case reported in Surindra Mohan etc. v. Smt. Kiran Saini(1) held thus:

"That under the present law on claim can be made on the basis of stridhan, as it has now been completely abolished and cannot avail against statute which makes it the joint property of the parties."
We are of the opinion that this view of the High Court is not    legally sustainable because neither of the two Acts, referred to above, go    to the    extent of providing that the claim of a woman on the basis of stridhan is completely abolished. All    that the two    sections, mentioned above, provide is that if the husband re-

(1) 1977 Chandigarh Law Report 212 fuses to return the stridhan property of his wife, it will be open to the wife    to recover the same    by properly constituted suit. The sections    nowhere provide that    the concept of stridhan is abolished or that a remedy under the criminal law for breach of trust is taken away.

In a later decision in Bhai Sher Singh & Anr. v. Smt. Virinder Kaur(1), it was very rightly    pointed out by the same High Court that s. 27 of the Marriage    Act merely provides an alternate remedy to the wife to bring a properly constituted suit in respect of the stridhan property which the husband refused to return. Thus, it is clear that s. 27 merely provides    for an    alternate remedy and does not touch or affect in any way the Criminal liability of the husband in case it is proved that he has dishonestly misappropriated that stridhan of his wife. It cannot also be spelt out from any textbook or the sastric law of the Hindus that the two Acts mentioned    above take away the stridhan    right of a woman-at the most these Acts merely modify the concept of stridhan. It may be useful to    refer to certain pertinent observations in the aforesaid case.

"The aforementioned passage shows that a female has an absolute right to use her stridhan in any way she likes    and even if her husband can take    this property at the    time of distress, this right is personal to him, The allegations made in the instant complaint are not that the husband of the respondent has placed    her ornaments and jewellery etc. Out of her way. What    has been alleged therein is that    the petitioners who    are the parents-in-law of    the respondent have converted the ornaments and clothes, etc. presented to the respondent at the time of her marriage to their own use.
Section 27 of the Hindu Marriage Act empowers a Court while deciding a matrimonial dispute to also pass a decree in respect of property    which    may jointly belong to    both the husband and the wife. This section at best provides a civil remedy    to an aggrieved wife and does not in any way take away her right to file a criminal complaint if the property belonging    to her is criminally misappropriated by her husband.'' In these circumstances, the decision reported in 1977 Chandigrah Law Reporter 212 can no longer be considered good law. Even in Vinod Kumar's case (supra) the    Full Bench reiterated the    view that s. 27 in no way abolishes stridhan but expressly recognises the property exclusively owned by the wife. In this connection, the Court observed thus:

"The express    words of the    provision refer to property 'which may belong jointly to both the husband and the wife'. It    nowhere says that all    the wife's property be longs jointly to the couple or    that Stridhan is abolished and    she cannot be the exclusive owner thereof. Indeed, in    using the above terminology the statute expressly recognises that property which is exclusively owned    by the    wife is not within the ambit of Section    27 of the Hindu Marriage Act- - -Equally no other provision in the Hindu Marriage Act could be pointed out which erodes the concept of Stridhan or in anyway incapacitates the Hindu wife to hold property as an exclusive owner."

The sheet-anchor of the arguments of the counsel for the respondents-which is based on the decision of the Punjab & Haryana High Court in Vinod    Kumar's case-is that    the moment a woman after Marriage enters her matrimonial home, her stridhan property becomes    a joint properly of both the spouses and the question of application of s. 406 I.P.C is completely eliminated.    It is true that to a    great extent this part of    the argument of the    learned    counsel is supported by the aforesaid decision but, in our opinion, the decision, so far as this aspect of the matter is concerned, is wholly unsustainable. We would first extract the exact ratio held by the High Court in Vinod Kumar's case:

"To conclude,    it necessarily follows from    the aforesaid discussion that    the very concept of the matrimonial home connotes a jointness of possession and custody by the spouses even with regard to the moveable properties exclusively owned by each of    them. It is, therefore, inapt to view    the same in view of    the conjugal relationship as involving any entrustment or passing of dominion over property day-to-day by the husband to the wife or vice versa. Consequently, barring a special written agreement    to the contrary, no question of    any entrustment or dominion over property would normally arise during coverture    or its imminent break-up. Therefore, the very essential prerequisites and    the core ingredients of the offence under S.406 of    the Penal Code    would be lacking in a charge    of criminal breach of    trust of property by one spouse against the other."
These observations    on doubt support the contention of the learned counsel for the respondent but    we find it impossible to agree with the aforesaid observations for the reasons that we shall give hereafter. We fail to understand the logic of the reasoning adopted by the High Court in investing the pure and simple stridhan of the wife with the character of a joint property. We are surprised that the High Court should have taken    the view that a woman's absolute property though well recognised    by law is interpreted by    it as being shorn    its qualities    and attributes once a bride enters her matrimonial home.

We are clearly of    the opinion that the mere factum of the husband and wife living together does not entitle either of then    to commit a breach of criminal law and if one does then he/she will be liable for all the consequences of such breach. Criminal law and matrimonial home are not strangers. Crimes committed in matrimonial home are as much punishable as anywhere else. In the case of stridhan property also, the title of which always remains with the    wife though possession of the same may sometimes be with the husband or other members of his family, if the husband    or any other member of his family commits such an offence, they will be liable to punishment for the offence of criminal breach of trust under ss. 405 and 406, IPC.

Afterall how could any reasonable person expect a newly married women living in the same house and under the same roof to    keep her personal property    or belongings    like jewellery, clothing, etc., under her own lock and key, thus showing a spirit of distrust to the husband    at the    very behest. We are surprised how could the High Court permit the husband to cast his covetous eyes on the absolute and personal property of his wife merely because it is kept    in his    custody, thereby reducing the custody to a legal farce. On the other hand, it seems to that us even if the personal property of the wife is jointly kept, it would be expressly or impliedly kept in the custody of the husband and if    he dishonestly misappropriates or refuses to return the same, he is certainly guilty of    criminal breach of trust,    and there can be no escape from    this legal consequence. The observations of the High Court at other places regarding the inapplicability of s. 406 do not appeal to us and are in fact not in consonance with the spirit and trend of the criminal law. There are a large number of cases where criminal    law and    civil law can run side by side. the two remedies    are not mutually exclusive    but clearly coextensive and essentially differ in    their    content    and consequence. The object of the criminal law is to punish an offender who commits an offence against a person, property of the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases even his life. This does not, however, affect the civil remedies at all for suing the wrong deer in cases like arson, accidents, etc. It is an anathema to suppose that when    a civil remedy is available, a criminal prosecution is completely barred. The two types of actions are quite different in content, scope and import. It is not at all intelligible to us to take the stand that if the husband dishonestly    misappropriates the stridhan property of his wife, though kept in his custody, that would bar prosecution under s. 406 I.P.C. Or render the ingredients of s. 405 IPC nugatory or abortive. To say that because the stridhan of a married woman is kept in    the custody of her husband, no action against him can be taken as no offence is committed is    to override and distort the real intent of the law.

Coming back to the theory of matrimonial home and the stridhan becoming a joint property of the two spouses, the logical effect    of the observation made by the High Court is that once a woman enters her matrimonial home she completely loses her exclusive stridhan by the same being treated as a joint property    of the spouses. In other words, if this view is taken in its literal sense    the consequence would be to deprive the wife of the absolute character and nature of her stridhan and make the husband a co-owner of the same - such a concept is neither contemplated nor known to Hindu law of stridhan, nor does it appeal to pure common sense. It is impossible to uphold the view that once a married woman enters    her matrimonial home her stridhan property undergoes a vital change so    as to    protect    the husband    from    being prosecuted even    if he    dishonestly misappropriates the same. For    instance, properties    like jewellery, clothing, cash, etc. given by her    parents as gifts cannot be touched by the husband except in    very extreme    circumstances,    viz.,    where    the husband is in imprisonment or    is in serious distress. Even then    the religion and    the law enjoins that the husband    must compensate the wife and if he cannot do so, he must pay fine to the King which means that the husband would` be liable to penal action under the present law of the land. -

One of the arguments addressed by the counsel for the respondent which had appealed to thee full Bench of the Pun jab & Haryana High Court in Vinod Kumar's case (supra) as also to    our learned Brother Varadarajan, J., is that after entering the matrimonial home    the custody of the stridhan entrusted by the wife    to her    husband becomes    a sort of a partnership firm and in this view of the matter the question of criminal breach of trust does not arise. In our opinion, it is neither appropriate nor apposite to import the concept of partnership    in the    relationship of husband and wife for the simple reason that the    concept    of partnership is entirely different from that of the husband's keeping the stridhan in his custody. Section 4 of the Indian Partnership Act, 1932 (hereinafter referred to as the 'Partnership Act') defines 'partnership' thus:

"partnership" is the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all.
Persons who have entered into partnership with one another are called individually "partners"    and collectively "a firm" and    the name under which their business is carried on is called the "firm name". The essential ingredients of a partnership are: (1) that there should be an    actual or physical overt act    on the    part of    two persons to embark an a business adventure.
(2) that if any business is carried on by one or any of the partners the profits of the business shall be shared by    - them in the ratio contained in    the partnership agreement.
It is, therefore, manifest that in a partnership the wife must by some clear and specific act indicates that the stridhan which    has been entrusted to the husband is to be used for a partnership business and the losses of the firm, if any    would have to be shared by both. In other words, one of the    essential conditions of a partnership firm is that every partner must have dominion over the property by virtue of the    fact that he is a partner. This aspect of the matter was highlighted    in a decision of this Court    in Velji a Raghavji v. State of Maharashtra(1) where the following observations were made:

".. Every partner has dominion over    property by reason of the fact that he is a partner. This is a kind of dominion which every owner of property has over his property. But it is not dominion    of this kind which satisfies the requirements of s.    405. In order to establish 'entrustment of dominion' over property to an accused person the mere existence of that person's dominion over property is not enough.    It must be further shown that his dominion . was the result of entrustment."
In the instant case, however, there is    neither    any allegation nor    anything in the complaint to show that when the wife entered her matrimonial home she had entrusted the property to her husband so as to make him part owner of the same. Therefore, the    question of the husband's having dominion over the property does not at all arise. In fact, the wife has nothing to do with the partnership, if any, and the husband is a pure and simple custodian of the property and cannot use the same for any purpose without    her consent.A pure and simple act of entrustment of the stridhan to the    husband    does not attract any of the essential ingredients of a a partnership as defined in the Partnership Act.

In the instant case, there is also no question of the wife constituting herself a partner with her husband merely by allowing him to keep the    articles or money in    his custody. There    is neither any pleading nor any allegation that after her marriage, the appe-

(1)AIR 1965 SC 1433.

llant transferred all her properties to her    husband    for carrying on a partnership business in    accordance with the provisions of the Partnership Act. Thus, in our opinion, it cannot be said that a bare act of keeping stridhan property in the custody of the husband constitutes a partnership and, therefore, a criminal case    under s. 406    IPC is    not maintainable. It is not necessary for us to multiply cases on this point on which there    does not appear to be    any controversy. We    have already pointed out that the stridhan of a woman is    her absolute property and the husband has no interest in the same and the entrustment to him is just like something which he wife keeps in a Bank and can withdraw any amount whenever she likes without any hitch or hindrance and the husband cannot use the    stridhan for his personal purposes unless    he obtains the tacit    consent of his wife. When the essential conditions of a partnership do not exist the mere act or factum of entrustment of stridhan would not constitute any    co-ownership or legal partnership as defined under s.4 of the Partnership Act.

To sum up the position seems to be that a pure and simple entrustment of stridhan    without creating any rights in the    husband excepting putting the articles in    his possession does    not entitle him to use the same to    the detriment of his wife    without her consent. The husband has no justification for not returning the said articles as and when demanded by the wife nor can he burden her with loss-, of business by using the said    property which was never intended by her while entrusting possession of stridhan.) On the allegations in the complaint, the husband is no more and no less than a pure and simple custodian acting on b-half of his wife and if he diverts the entrusted property elsewhere or for different purposes he takes a clear risk of prosecution under s.406 of    the IPC. On a parity of reasoning, it is mainfest that the husband, being only a custodian of the stridhan of his wife, cannot be said to be in joint possession thereof    and thus acquire a joint interest in the property.

For these    reasons, the    custody    or entrustment of stridhan with the husband does not amount to a partnership in any    sense of the term and therefore, we are unable to agree with view taken in Vinod Kumar's case as also with the opinion expressed by our Brother on the points arising in the case.

Another serious consequence as a result of the ratio of the full Bench decision in Vinod Kumar's case would be to render the provisions of s. 406 IPC inapplicable and nugatory even if the husband has the audacity or the importunity of refusing to return the stridhan    of his    wife. Furthermore, we shall hereafter show    that the view of the Full Bench is in direct contravention of a long course of decisions of this Court on the ingredients    of s.    405 IPC. Before coming to    this chapter, we would like    to say    a few things more about the judgment of the High Court which on deeper probe and careful scrutiny seems to be self-contradictory.

We are clearly of    the opinion that the    concept of stridhan property of a married woman becoming a joint property of both the spouses as soon as she    enters    her matrimonial home and continues    to be    so until she remains there or even if there is a    break    in the    matrimonial alliance, is in direct contravention of Hindu Law of Sadayika which    has been administered    since more than a century by High Courts, Privy- Council as also this Court. By a pure and simple figment of the fertile imagination the Judges in Vinod Kumar's case seem to have rewritten the law of criminal breach of trust contained in ss. 405 and 406 IPC so as to carve out an imaginary exception to the application of the    Penal Code.A more tragic consequence of the    view taken by the High Court is that even if there is a break in the matrimonial alliance and the wife wants her husband to return her exclusive property and he refuses to return, even then the provisions of s. 406 IPC would not apply. It is an extreme travesty of justice for a court to say that whenever a married woman demands- her stridhan    property from    her husband she should be driven to the dilatory process of a civil court and her husband would be debarred from being prosecuted by a criminal court. By a strange and ingenious process of holding that such an act of a husband does not attract the provisions of the Penal Code, as the property being joint there is no question of the husband being a trustee or holding the same in a fiduciary capacity. Such a view, in our opinion, is not only contradictory but-what the High Court has said before regarding    the applicability of s.27 of the Hindu Marriage Act and the nature of stridhan as referred to above-is also neither in consonance with logic and reason nor with the express provisions of the Penal Code and seems to us to be inspired by    a spirit of    male chauvininism so    as to    exclude the husband from criminal lability merely because his wife has refused to live in    her matrimonial home. We are indeed surprised how could the High Court, functioning in    a civilised and socialistic society such as ours, play havoc with judicial interpretation of an important branch of law.

We shall now show how the final view taken by the High Court is clearly contradictory    to what it has observed before. In paragraphs 22A, 23 and 24 of the judgment, the High Court observes as follows:

"It must, therefore, be unreservedly stated that the law, as it stands today, visualises a complete and full ownership of her individual property by a Hindu wife and in this    context the factum of marriage is of little or    no relevance and she can own    and possess property in the same manner as a Hindu male. Once it is held that a Hindu wife can own property in her own right, then it is purely a question of fact whether the dowry or the traditional presents given to her, were    to be individually owned by her or had been gifted to    the husband alone or jointly to the couple.- ..    For instance    jewellery meant for the personal wearing of    the bride, wedding apparel made to    her measures specifically, cash amounts put into a fixed deposit ill a bank expressly in her E name; are obvious examples of dowry raising the    strongest, if    not conclusive presumption, of her separate owner ship in these articles. Once it is found as a fact that these articles of dowry were so given to her individually and in her own right, then I am unable to see how the mere factum of    marriage would alter any such property right and divest her    of ownership    either    totally or partially."
In these paragraphs the High Court unequivocally and categorically expresses    the view that a Hindu woman    has complete and full ownership of her individual property and the factum of marriage    is of no relevance to determine the nature of the property    It also holds that articles    like jewellery, wedding apparel and cash, etc., cannot alter any such property right. In view of this clear finding given by the High Court, how could it make a complete volte-face by holding that these very properties after marriage become joint property    of both    the spouses. The High Court has not realised that the theory or philosophy of matrimonial home propounded by it stands directly contradicted    by its    own observations referred to above.

In paragraph 49 of the judgment, the High Court clearly finds that the mere use by the relations of the husband would not have the effect of passing the possession of the property to the Hindu undivided family and in    this connection observes thus :-

Equally, the    common use and enjoyment of certain articles of dowry and traditional presents, by    the other members of a joint family    with the leave    and licence of    a Hindu wife, cannot    have the effect of extending the jointness Of control and custody of the couple to undefined    and unreasonable limits. Consequently, there is no    reason to assume that    the mere user or enjoyment of the dowry by other members of the house-hold, would have the effect of passing the possession and control thereof jointly to the Hindu Undivided Family as such."

Thus, these observations run counter and    are totally inconsistent and irreconcilable with the view taken by the High Court in paragraph 41 where it has observed thus:

[24] Sub-rule (7) of Rule 1278 says, as we have pointed out already, that the respondent has to be given all reasonable facilities for his defence, one of the facilities expressly referred to being that he should be allowed to call witnesses. In this connection, it has to be borne in mind that on 7th October 1943, the plaintiff expressed a wish that he wanted to examine five witnesses, namely, (1) Police Inspector Thornber, (2) V. G. Padgaonkar, (3) O. C. 5 Tank Recovery Company, Wanowri, (4) O. C. I, A. O. C. Station Workshops, Wanowri, and (5) D. A. P. M. Now, the last named three gentlemen belonged to the military. As far as the gentlemen mentioned at serial Nos. (3) and (4) were concerned, the plaintiff was told by the District Superintendent of Police that he would be given letters addressed to them and that he might go to them and make a request to them to show him the records for the purpose of taking out a certified copy of an extract from them about a report, it any, of injuries sustained by soldiers between 6 p. m. and 9 p. m. in the evening of 6th February 1943. As far as the gentleman mentioned at serial No. (5) was concerned, the plaintiff was told that a letter had been received from him already stating that there was no record in his office about any disturbance having taken place. Now, it is quite clear that a mere letter can never take the place of evidence. It is argued by Mr. Datar for the defendant that when the plaintiff expressed a wish to examine five men as witnesses in his defence he was asked the reason why he wanted to examine the persona mentioned at serial NOS. (3), (4) and (6), and the reason adduced by him was that they were required to produce a record of any report received by them regarding the injuries sustained by soldiers or the disturbance having taken place neat Wanowri Police Chowki. From this it is argued by Mr. Datar that if a letter was received from D. A. P. M. saying that no incident had been recorded in his office regarding any disturbance, and if certain copies of extracts from the records wore produced from the offices of the persons mentioned at serial Nos. (3) and (4) showing that no injuries were in fact sustained by soldiers on that day (6th February), that would be sufficient as far as the purpose of the plaintiff was concerned. Now, in our opinion, the District Superintendent of Police was not entitled to ask the plaintiff why he wanted to examine certain persona as his witnesses, nor was the plaintiff bound to disclose the reason for his so doing. But, as it happened, the plaintiff did give a reason in a rough and ready way and, instead of giving a list of half a dozen or more reasons ho merely said that he wanted to examine these witnesses, in order to prove whether any soldiers were injured or not, or whether any incident had taken place near the Military Lines Police Station. Surely, the plaintiff could not have been ready at the moment with a full analysis of the questions which ho might have wanted to ask these persons if they had appeared as his defence witnesses. It is quite probable that if these witnesses had actually been called to give evidence for the plaintiff, he might have asked them questions whether they had gone personally to the scene of the incident, whether they had made any enquiry from others, and if so, what enquiry, from whom and with what result, whether any record was made in their offices regarding the main incident, and if so, what that record was, and all other questions pertinent to the enquiry. The plaintiff was precluded from doing all this on account of the reason that the District Superintendent of Police, Poona, did not allow him to call these witnesses to give evidence.

[25] As far as Thornber was concerned, it is quite clear from the record before us that the plaintiff was really keen to examine him as his witness. He gave his name at the very outset on October 7. When he was reluctant to give evidence he dropped him and gave another name, namely Pukraj, But, when Pukraj could not be Lad in two hours' time which was allotted to him for the purpose by the District Superintendent of Police, the plaintiff renewed his request to examine Thornber and at that time something happened between the District Superintend of Police and the plaintiff, as the result of which the plaintiff agreed to give him up. It is to be remembered that in his statement which the plaintiff made before the Inspector General of Police on 8th November, he did make a categorical allegation that he was forced to give up Thornber. In oar opinion, the circumstances pointed out above do suggest that Thornber must not have been given up voluntarily by the plaintiff. If the District Superintendent; of Police advised a Sub-Inspector or explained to him that it was advisable in certain circumstances for him to give up Thornber as a defence witness, it would be difficult, we think, for the Sub Inspector, placed as the plaintiff then was, to insist upon his examination.

[26] In this connection it would not be cut of place to refer, once again, to certain observations from Local Government Board v. Arlidge, (1915 A. C. 120) to which we have already referred. It was pointed out by Viscount Haldane L C. that even in matters decided by a domestic tribunal the tribunal must give to each of the parties the opportunity of adequately presenting his case. It was also said that a domestic tribunal might obtain information in any way it thought best, always giving a fair opportunity to these who were parties in the controversy to correct or contradict any relevant statement prejudicial to their view. Now, there is no doubt that one of the ways in which the plaintiff could have, in this particular case, corrected or contradicted the statement prejudicial to his case was by leading evidence in his own defence, and, according to the observations just cited above from Local Government Board v. Arlidge, it was the duty of the District Superintendent of Police to allow the plaintiff to call the men whom he wanted to call as his defence witnesses. In Maclean V. The Workers' Union, (1929) 1 ch. 602 it was observed by Maugham J. that "the principles of natural justice" could only mean the principles of fair play, SO that a provision for an inquiry by a domestic tribunal necessarily imported the idea that the accused should be given his chance of defence and explanation. There is, therefore, no doubt on the authority of these cases that if a respondent is not allowed to call witnesses in his defence such as these whom he wanted to call, it would mean this, that a reasonable facility was not given to him for the purpose of leading his defence.

[27] Proceeding further with the examination of the question whether Sub-rule (7) of Rule 1278 was properly complied with or not by the enquiry officer in this case, it is to he remembered that the plaintiff was only given two hours' time to go a distance of five miles and back and produce his witness one Pukraj. The plaintiff has told us in his own evidence that he went to call Pukraj, but he was not found at his house, and therefore he had to return without him. Ho has added in his deposition that when Pukraj was not found and he had to return without him, he asked for more time to enable him to examine him. On this point, our attention was invited by Mr. Datar to certain other portions from the deposition of the plaintiff, and it is argued that these would show that he had not made any attempt to secure the presence of Pukraj For instance, at one place the witness said:

"On 7-10-1913, I cross-examined 10 witnesses. The enquiry was then adjourned for defence evidence till the 9th of October. On that day my witness Mr. Padgaonkar was examined. I did not make any attempt to secure the presence of my witness Pukhraj Marwadi.

I wanted to examine Mr. Thornber as my witness but the D. S. P. did not allow me to do so."

At another place, again, the plaintiff said;

"Pukhraj lives at Wanowrie. I did not try to see him before October 9."

Surely, from these statements in the evidence of the plaintiff, it could not be contended validly that after Thornber was given up by him and after Pukraj's name was cited by him as a defence witness, he did not go to Pukraj's house is order to get hold of him and produce him before the District Superintendent of Police. Reading his-evidence as a whole, it appeals quite clear that his original idea was to examine Thornber as his defence witness. Therefore at that point of time he bad not given the name of Pukraj. It was only after he had to give up examining Thornber in his defence after his conversation with the District Superintendent of Police that he decided for the first time to give the name of Pukraj as a defence witness. Obviously therefore, before that point of time there was no occasion for him to try and secure the presence of Pukraj. This is a totally different matter from saying that even after he had given the name of Pukraj as his defence witness be had not made any effort to go to the place of his residence and get him. As it matter of fact, he has clearly deposed that he did go to the house of Pukraj but found him absent. The question before us, therefore, is whether allowing only a two hours' time to the plaintiff to go a distance of five milts arid back and produce a witness in his defence could be said to be giving a reasonable facility to him for his defence. In our opinion, the question must be answered in the negative. The District superintendent of Police should have foreseen the possibility of Pukraj not being at home and should have therefore allowed the plaintiff more time than only two hours time to enable him to make a search for him. We do not know what conveyance exactly was available to the plaintiff to perform the journey of five mites. Presumably buses must have been running between the two places, but buses usually start at an interval of a few minutes, so that we are really not in a position to know whether even two hours' full time was effectively available to the plaintiff for getting hold of his witness.

[28] In the result we hold that in this respect also the plaintiff's defence was hampered and a reasonable facility which it was obligatory upon the enquiry officer to give to the respondent under Rule 1278, Sub-rule 7 of the Rules was not given to him.

[29] We proceed nest to yet another circumstance which would show that there was another breach of the provisions of Sub-rule (7) of Rule 1278 of the Rules under the Bombay District Police Act, 1680. We have seen that the plaintiff was suspended from service by the District Superintendent of Police, Poona, by his order dated 1-10-1943, which was received by him on 2-10 1943. By that same order the plaintiff's freedom of movement was restricted and it was directed that whilst under suspension he was not to leave Jejuri without the previous permission of the District Superintendent of Police. Now, in our opinion, the District Superintendent of Police had neither authority nor any justifiable reason for ordering this virtual internment of the plaintiff at Jejuri. The statements of witnesses who were to give evidence against the plaintiff in the departmental enquiry had already been recorded in the preliminary enquiry in September 1943 and these persons were not likely to tell a different story in the departmental enquiry in view of these statements. There was therefore, not much real danger of the plaintiff tampering with wit nesses, and even if it be assumed or imagined that there was such a danger, the District Superintendent of Police had no authority to pass orders which in effect amounted to a detention of the plaintiff at Jejuri.

[30] But what is material for the purpose of deciding these appeals is that the unwarranted.

restriction imposed on the plaintiff's freedom of movements by the order dated 1-10.1943, hampered the defence of the plaintiff substantially. One cannot pin down a person to a certain place and expect him at the same time to defend himself effectively. To charge a person with misconduct arising out of an incident which is alleged to have occurred at a certain place and to order that ho shall not visit that place amounts not only to not giving reasonable facilities for his defence, but intact to smothering his defence. We feel that if the plaintiff had been free to leave Jejuri and move about freely between 3-10-1913, the date on which he received his suspension order, and 6 10 1943, the date on which the departmental enquiry against him was commenced, he would have been able to go to the place of the alleged incident, might have made enquiries about the matter himself and might have been able to defend himself better. It is not improbable that an incident may have two versions, each supportable by a set of witnesses. In this case, certain witnesses were examined against the plaintiff in the departmental enquiry. It is possible that it the plaintiff had reasonably sufficient time at his disposal and freedom of movement between 3-10-1943, and 6-10 1943, he might have found people who might have given evidence in defence in respect of this very incident. The point is that but for the prohibition from moving out of Jejuri imposed upon him from 3-10-5943, we feel that he might have been able to collect better and more defence evidence in his favour. Once the departmental enquiry was started and the plaintiff was busy attending to it from day to day, he could not very well enquire and collect evidence in his own favour at the same time, as be might have been able to do if be had been free to move about between October 3 and 6-10-1943.

[31] Moreover, if be had been free to leave Jejuri between October 3 and G-10-1S43, we have no doubt he would in all probability have consulted a lawyer and other persona as well in the matter of his defence and would have been able to defend himself better. As it is, we feel extremely doubtful if he had really been able to take legal advice before his oral statement was recorded by the District Superintendent of Police on 6-10-1943, and before his written statement was also filed on the same date. He did approach a lawyer on October 7, and once or twice thereafter before October 10, but even so, it was hustling a lawyer too. Unless a legal adviser also has reasonable time at his disposal, he cannot effectively advise or draft. In short, in our opinion, the fact that the plaintiff was restrained from moving out of Jejuri between October 3 and 6-10-1943 --the litter being the date on which he appeared before the District Superintendent of Police, Poona, in the departmental enquiry against him--is by itself sufficient to show that all reasonable facilities were not afforded to him for defending himself. On this ground also, therefore, there was a breach of Sub-rule (7) of Rule 1278 of the Rules.

[32] We have already referred to the authority of Local Government Board v. Arlidge, (1915 A. C. 120) to point out that a domestic tribunal should always give a fair opportunity to the person charged to contradict a statement prejudicial to him. It is therefore that a right to cross examine witnesses has been given to a respondent under the rules (see Rule 1284, Sub-rule (7)). Now, in this case, the contention of the plaintiff is that three witnesses Bhagu Bhima Jagtap, Shaikh Ibrahim Shaikh Nabi and Pratapmal Tarachand Marwadi were not made available to him foe cross, examination. On the other hand, Mr. Datar for the defendant submits that these witnesses were cross-examined in fact by the plaintiff, Now, on this point, the plaintiff himself has stated in his evidence at exhibit 65 that these three persons were not examined at all in his presence, but their evidence recorded in his absence was brought on the record of the departmental enquiry. Clearly, therefore, he had no chance or opportunity of cross-examining them. It is difficult to see how else the plaintiff can prove this contention of his except by his own evidence and circumstances such as are found on the record.

[33] We find that the plaintiff did say to the District Superintendent of Police on 7-10-1943, that he did not wish to cross-examine B. L. Pawar, B. G. Pawar and A. B. Burungule as they bad not given any evidence, but had merely said that they corroborated a statement of Jagdale which was road out to them. He did not say that he did not wish to cross examine Bhagu, Shaikh Ibrahim and Partapmal. Besides, in his evidence he has said that on October 7 he had cross-examined ten witnesses. This would also show that the three men named above were not available to him for cross-examination and were not cross-examined by him. It is clear from the roznama (exh. 55) that in all sixteen statements of witnesses against the plaintiff were recorded in the departmental enquiry. Out of these sixteen men, ten were cross-examined by the plaintiff on October 7. That was the only date on which the Cross-examination of witnesses against the plaintiff was done, The two Parwars and Burungule were not cross-examined as the plaintiff did not wish to cross examine them. This would account for thirteen out of the sixteen witnesses so far as the point of cross-examination is concerned and would seem to support the contention of the plaintiff that he had no opportunity to cross-examine Bhagu, Shaikh Ibrahim and Partapmal.

[34] Moreover, it is evident from the District Superintendent of Police's note dated 9-10-1943, that he had resolved to finish the recording of evidence by the evening of October 9. In this contest it would be convenient to remember that October 9 was the date fixed for recording the defence evidence of the plaintiff. Eighth October was set apart for the plaintiff to go to the Military to obtain a certain copy of an extract of a report, if any, regarding injuries renewed by the soldiers on 6-2-1943. Obviously thus the idea of the District Superintendent of Police was to finish the cross-examination of the witnesses against the plaintiff on 7-10-1943. Now, on the one hand, there were as many as sixteen witnesses; on the other hand, their examination and cross-examination were to be finished in one day, October 7, as I have indicated above. It appears to us, in the setting of these circumstances, that as a step in aid of the District Superintendent of Police's objective, he did away with the cross-examination of three: men, and as for the other three out of the thirteen persons, he got them to say that they corroborated the statement of Jagdale which was read out to them. In these circumstances, we feel disposed to accept the plaintiff's evidence that he was given no opportunity of cross-examining Bhagu, Shaikh Ibrahim and Pratapmal. Clearly thus there was again a breach of B. 1278, Sub-section (7) and also Rule 1284, Sub-rule (7).

[35] Then, as regards the statements of two Parwars and Burungule, they would not amount to evidence at all, in our opinion. It might have done if Jagdale's previous statement had been read out to him and treated as his evidence. A domestic tribunal could treat that sort of material as evidence. But the bare statement of three other persons that they corroborated Jagdale's statement which was not read over to Jagdale at the time cannot amount to any evidence at all, and accordingly, in our opinion, the District Superintendent of Police's or the Inspector-General of Police's reliance upon these statements had prejudiced the object underlying the rules.

[36] Mr. Datar for the defendant has argued that since the plaintiff did not complain to the District Superintendent of Police, nor to the Inspector-General of Police, that military witnesses were not allowed to be examined by him in his defence, that a sufficient time was not given to him for getting Pukraj, that three witnesses were not made available to him for cross-examination, that a restriction on his movements imposed by the District Superintendent of Police's order dated 1-10-1943, had hampered his defence, etc., etc., we should take it that he did not think that his defence was prejudiced. We are not impressed by this submission. It was a domestic tribunal, and we have to remember the position in which the plaintiff stood in relation to that tribunal. The enquiry officers, i.e., the District Superintendent of Police and the Inspector-General of Police, were his superior officers, and he was just a subordinate police-officer under them. This, in our opinion, must have weighed with him when he did not complain to them about the manner in which the enquiry was conducted against him by the District Superintendent of Police who consti-

tuted a domestic tribunal. Moreover, the language of Rule 1278 Sub-rule (1), is mandatory. It says that the respondent must be given all reasonable facilities for his defence, e. g., must be allowed to call witnesses, must have access to or copies of extracts of documents used against him. etc., etc. A respondent is not to request an enquiry officer to give him reasonable facilities in his defence. The position under the rules is that the enquiry officer is required to give these facilities to them, and it is quite clear to us from the several circumstances pointed out above that in several respects the plaintiff was not allowed reasonable facilities for defending himself.

[37] Mr. Patel hag nest invited our attention to Sub-rules (9) and (10) of Rule 1284, Sub-rule (9) says that when all witnesses in support of the charge have been dealt with and all evidence relied upon in support of the charge has been carefully explained to the respondent, he should be called upon to enter on his defence and to produce his witnesses. Sub-rule (10) says that;

'Respondent's further statement should then be fully recorded in continuation of his previous one referred to above. As every reasonable facility to defend himself should be given to a respondent, he may, if he so desires and the officer conducting the enquiry sees no valid reason to refuse, be given copies of the statements and other documents in evidence against him or, under proper supervision, allowed to take his own copies, and allowed to submit his defence in writing, etc., etc."

Now, it is to be seen in this case that after the plaintiff had closed his defence and after he had submitted his final written statement on 10-10-1943, and whilst his final oral statement was being recorded by the District Superintendent of Police on October 11 four letters which were received from the military authorities is regard to the incidents of gambling in the Cantonment area were brought on the record, and these must presumably have bean taken into consideration by the Inspector-General of Police in arriving at his conclusion. This, in our opinion, was clearly contrary to the spirit of Sub-rule (9) of Rule 1284, which says that the respondent should be called upon to enter on his defence after all the papers relied on in support of the change have been carefully explained to him. As it was, the respondent had no opportunity to load any further defence evidence, in respect of the four letters which were brought on the record while his final oral statement was being recorded. In our opinion, therefore, there was a breach of Rule 1381, Sub-rule (9).

[38] Mr. Patel has then invited our attention to Sub-rule (10) and (11) of Rule 1378. Sub-rule (10) says that the summing up and the final order order should invariably be the work of the officer competent to inflict punishment, and Sub-rule (11) says that the respondent should ordinarily be present before the officer at the time of summing-up and passing of the final order, It is suggested in this case that the summing-up of evidence was not really the work of the District Superintendent of Police, but that Mr. Moray, the Assistant Superintendent of Police, had a considerable hand in it. There is no evidence in support of this allegation, and we have no hesitation in discarding it. In our opinion, there has been therefore no breach of Sub-rule (10) of Rule 1278. As far as Sub-rule (11) of Rule 1278 is concerned, we do not gather from it that the respondent should be present at the actual moment when the authority competent to dismiss him signs the summing-up and passes the final order, In our opinion, it is enough if sufficient opportunity is given to the officer concerned before the summing, up is made and the final order is passed, which was done in this case. We know from the record that the plaintiff's statement was recorded by the Inspector-General of Police on 8-11-1943. There after it was not necessary for the Inspector-General of Police to keep the plaintiff present at the time when he signed the summing-up and the final order. Sub-rule (11) of Rule 1278 also, in our opinion, was therefore not broken in this case.

[39] Mr. Datar has next invited our attention to Sub-section (3) of Section 89, Bombay District Police Act, 1890, the concluding portion of which lays down as follows :

"But the exercise of any power conferred by this Subsection shall be subject always to such rules and orders 39 may be made by the Provincial Government in that behalf."

Now, this Sub-section (3) deals with punitive powers of the Inspector General, Deputy Inspect or. General and Superintendent. An argument, therefore, is made that if the Inspector-General of Police wishes to exercise his punitive powers, he can only do so subject to such rules and orders as may be made by the Provincial Government in that behalf. It is then submitted before us that there are no such rules and orders in the matter of departmental enquiries and therefore, it is contended that even without an enquiry the plaintiff could have been dismissed from service by the Inspector-General of Police. This argument must fail, in our opinion. We have no doubt that the rules to which our attention has been invited by Mr. Patel on behalf of the plaintiff in this ease are the rules which are contemplated in the concluding portion of Sub-section (3) of Section 29, Bombay District Police Act, 1890. There is a rule, item No. 100 under Rule 38 at p. 74 of the Police Manual which says that "no police officer shall be depart-mentally punished otherwise than is provided by the rules." There is, therefore, no doubt, in our opinion, that the rules to which we have already made a reference in this judgment are the rules which are referred to in Sub-section (3) of Section 29. Accordingly we do not see any force in the submission of Mr. Datar that the plaintiff could have been dismissed from service by the Inspector-General of Police even without conducting any departmental enquiry against him.

[40] From what has been stated above, it is clear that this is a case of breach of vital rules, not merely rules relating to matters like leave, pay etc. The career of the plaintiff, indeed a question of his livelihood, was at stake, and therefore the important provisions of the rules enabling him to make a proper defence should have been strictly followed. The breach of rules, in our opinion, entirely vitiated the enquiry and also the order of the Inspector-General of Police based upon it. In our opinion, therefore, the plaintiff's dismissal was wrongful and the order of the Inspector-General of Police, Province of Bombay, dismissing him from service was void and inoperative.

[41] The question is what relief the plaintiff is entitled to. In the suit, as we have seen, lie asked for damages to the extent of its. 46,475 or, in the alternative, for reinstatement and arrears of salary. The learned trial Judge has passed a decree in his favour for Rs. 9,000 on the basis that he was entitled to damages equivalent to loss of salary and allowances for five years. In appeal the plaintiff has asked for Rs. 11,000 more. In view of the Privy Council decision in Sigh Commr. for India and Pakistan v. Lall, 50 Bom. L. R 649 he is not entitled either to damages or to arrears of pay. Their Lordships observed in that case that it was not necessary to cite authority to establish that no action in tort could lie against the Grown and therefore any right of action for damages must either be baaed on contract or conferred by statute. They went on to say that the respondent had sought to establish a statutory right to recover arrears of pay by action in the civil Court and had made reference accordingly to Sections 179(8), 247(4), 249 and 250, Government of India Act, 1935. But, said their Lordships, it was enough to state that they were unable to derive from these sections any statutory right to recover arrears of pay by action. As far as damages were concerned, their Lordships said that the order of remit by the Federal Court was not maintained by the respondent before that Board. It would clearly, therefore, follow from this decision of the Privy Council that the plain-tiff's claim to damages and arrears of salary must fail. The rules made under the Bombay District Police Act, 1890, do not provide for any right to claim damages or arrears of pay. Admittedly there was no contract in this ease on the basis of which the plaintiff could claim damages, and there is no statutory provision also in regard to the claim made in this respect. The same would apply also as far as his claim to arrears of pay is concerned. This position was realised obviously by Mr. Patel, and it was therefore that he did not seriously press before us his client's claim to damages and arrears of pay.

[42] It may be said in passing that Mr. Patel has invoked the aid of the Federal Courts's decision in Secretary of State v. I. M. Lall , in support of his claim for damages, but we cannot act upon that case since that judgment has ceased to be operative by virtue of the superior Court's (Privy Council's) appellate decision in the same case in The High Commr. for India and Pakistan v. Lall, 50 Bom, L. R. 649. In our opinion therefore, the only relief to which the plaintiff is entitled in this case and which we do grant him is a declaration that his dismissal from service is wrongful and the order passed by the Inspector-General of Police Province of Bombay, is void and inoperative. To this limited extent, his Appeal No. 62 of 1948 succeeds, and in all other respects it fails.

[43] The defendant's Appeal No. 31 of 1948 succeeds wholly in view of the Privy Council decision in The High Commr. for India and Pakistan v. Lall, 60 Bom. L. Rule 649, from which it must follow that the plaintiff is not entitled to any damages. It has to be borne in mind that Appeal No. 31 of 1948 is in respect of the learned trial Judge's order allowing Rs. 9,000 by way of damages to the plaintiff. As far as that order is concerned, obviously it cannot be sustained in view of the above mentioned Privy Council decision. Accordingly Appeal No. 81 of 1948 is wholly allowed.

[44] As to coats, we direct that in Appeal No. 52 of 1948 each party will boar its own coats. In Appeal No. 31 of 1948 the plaintiff will bear his own costs and also the costs of the Province of Bombay. As far as the suit costs are concerned, it is to be seen that originally the plaintiff had made an exaggerated and indeed a fantastic claim to damages, the major portion of which was disallowed by the learned trial Judge. Accordingly we order that as far as the suit costs are concerned, the plaintiff will bear his own and half the defendant's costs.

[45] The result is that the decree of the trial Court is set aside and the following decree substituted in its place : "It is declared, that the order of the Inspector-General of Police, Bombay, dated 12-11-1943, purporting to dismiss the plaintiff from the subordinate police service was void and inoperative."

[46] Decree varied.

Equivalent citations: AIR 1952 Bom 37, (1951) 53 BOMLR 754, ILR 1952 Bom 269 - Bombay High Court - Bench: Rajadhyaksha, Vyas - date of Judgment: 20 December, 1950

JUDGMENT Vyas, J.

[1] These are two appeals arising out of civil suit No. 1483 of 1945 of the Court of the Civil Judge, Senior Division, Poona, One of them (No. 31 of 1948) is filed by the Province of Bombay and the other (NO. 62 of 1948) is filed by Madhukar Ganpat Nerlekar, a Sub-Inspector of Police, who was dismissed from Government service by the order of the Inspector-General of Police, Bombay, dated 12 11-1913, after departmental enquiry which was held by the District Superintendent of Police, Poona. The plaintiff has filed Suit No. 1483 of 1945 for recovering Rs. 48,475 by way of damages for wrongful dismissal from service, future interest at 6 per cent, on that amount and costs. In the alternative, ho has asked for a declaration that the order of his dismissal was void and inoperative in law and that he is entitled to be reinstated in service and receive the arrears of salary as if ho had not been dismissed from service.

[2] The plaintiff's contentions are that the enquiry which was conducted by the District Superintendent of Police, Poona, under orders of the Inspector-General of Police. Bombay, was illegal, unfair and unjust, that rules of natural justice were violated in the conduct of the enquiry, that express and mandatory requirements of the rules and orders made under the Bombay District Police Act, 1890 (NO. iV [4] of 1890), were dis-regarded, and that even the provisions of Section 240, Government of India Act, 1935, which were a pre-requisite for the passing of an order of dismissal against a servant of the Crown, were broken by the defendant. It is contended by him that under Section 240 Sub-section (3), Government of India Act, 1935 a punishment of dismissal could not be passed against him without giving him a notice to show cause why such punishment should not be inflicted on him, Admittedly no opportunity was given 60 him to show cause against his proposed dismissal before an order of dismissal was passed against him. It is contended for him that he was not allowed to have a copy of the "Summary of evidence" forwarded by the District Superintendent of Police to the Inspector-General of Police with a recommendation that he should be dismissed from service. It is also submitted that the Inspector-General of Police had not informed the plaintiff that he had proposed to accept the recommendation of the District Superintendent of Police. It is contended that the order of dismissal passed in these circumstances is illegal.

[3] The contentions of the defendant (the Province of Bombay) are that the plaintiff was dismissed after proper departmental enquiry, that the rules and procedure for such enquiry were duly observed, that the plaintiff being an officer of subordinate rank in the Police Force, his case was governed by Section 243, and not Section 240, Government of India Act, 1935, that in accordance with Section 243, the conditions of service of the plaintiff were determined by the rules framed under the District Police Act, 1890, that there was no rule in the rules framed under Section 27, District Police Act, 1890, laying down that a notice to show cause against dismissal or reduction should be issued to a police officer of a subordinate rank before an order of dismissal or reduction is passed on him, and that, therefore, the plaintiff was not entitled, as of right to a notice to show cause against dismissal before an order of dismissal was passed against him. It is accordingly submitted for the defendant that the suit of the plaintiff deserves to fail, [4] The learned trial Judge, who has written a very careful and able judgment has hold that the plaintiff has failed to prove that the enquiry held before his dismissal was improper, illegal and in violation of the rules of natural justice. In his opinion, the rules prescribed by Government for the holding of a departmental enquiry against a police officer of a subordinate rank were substantially complied with. But he has farther come to the conclusion that the Crown had power to dismiss its servants subject to the provisions of Section 240, Government of India Act, 1936, and that as the order of dismissal was passed against the plaintiff in contravention of Section 240, Sub-section (3), Government of India Act, 1935, the said order was wrongful and the plaintiff had a cause of action arising out of it.

[5] The fasts which gave rise to the plaintiff's suit are as follows : The plaintiff was confirmed as a Sub-Inspector of Police in the Province of Bombay in July 1940. On 1st January 1943, ho was posted to the Military Lines Police-Station, Poona Cantonment. One of the executive officers of the Cantonment wrote a letter on 25th January 1943, to the Police Sub-Inspector, Poona Cantonment, stating that hand cart gambling was going on in the Cantonment area. At 7-25 p. m. on 3rd February 1933, a telephone message was sent from Wanowri police-station to the Military Lines police-station. The message was taken down in the telephone book maintained at the Military Lines police station by police constable, M.H. Moray. It was taken down both in Marathi and in English. The original message appears to have been communicated in and taken down in Marathi. The message, translated in English, was to the following effect :

"7-25 P.M. Duty Constable Phalke, phoned from Wanowri Chowki that 'maramari' is going on between Civil and Military people, near Wanowri Chowki. Send people urgently for help.". (See exhibit 48.) Mr. M.H. Moray, who took down the message, conveyed information regarding it immediately to the Sub-Inspector and Police Inspector. It is the case of the plaintiff that he sent out half a dozen constables to Wanowri immediately on receiving information of the incident from the message which was communicated by Phalke from Wanowri and that he went down to the spot personally also. He found that it was only & drunken brawl, that the quarrelling people had already dispersed, that none was injured and that no property was lost or damaged. It is contended that the Military police and Inspector Thornber, who had also arrived at Wanowri, were satisfied that nothing serious had happened. It is the case of the plaintiff that as nothing requiring notice or action had happened, no note wa3 made about the incident in the Station Diary or in the Personal Diary of the plaintiff. It is submitted further that, in the circumstances, no question of making any entry about an offence in any register relating to cognizable or non cognizable offences arose. Nothing happened thereafter till 31st August 1948. On 31st August 1943, a conference was held at Poona in the office, of the District Superintendent of Police between the Inspector-General of Police, the District Superintendent of Police and the Assistant Superintendent of Police (Mr. Moray). That conference was held in connection with the alleged complicity of certain police officers with the activities of the gamblers in the Forma Cantonment. An impression was current that the gamblers in the Poona Cantonment area were paying bush money to certain police officers so that no action might be taken against them. At the conference, it was thought that some junior police-officer might be persuaded to come out with true information regarding the alleged connection of the police with the gamblers. Accordingly Mr. P. W. Chitnis, Sub-Inspector, Poona Cantonment, was selected to give information and was tendered pardon. He was persuaded to give out full particulars of the alleged paid association of the police-officers with the gamblers. He made a statement at the above mentioned conference containing allegations against certain police-officers who were in the habit of receiving money from gamblers in order to hush up instances of gambling. In that statement Mr. Chitnis disclosed names of certain police-officers. That statement was not produced during the trial of the suit. It was asked for by the plaintiff but privilege was claimed in respect of it, and the Court considered the statement privileged. As we have just pointed out that statement of Mr. Chitnis made at the conference of the above mentioned police officers on 31st August 1943, is said to have contained names of certain police officers. On the statement being made, the District Superintendent of Police, Poona. asked the Assistant Superintendent of Police. Mr. Moray, to make a preliminary enquiry in the matter of the alleged complicity of certain police-officers with the activities of the gamblers. The enquiry was directed to be made against certain police officers. Accordingly a preliminary enquiry was conducted by Mr. Moray at his own residence. On 4th September 1913, the plaintiff received a letter from the District Superintendent of Police, Poona, at 2 O'clock in the afternoon, asking him to hand over the charge of the Military Lines police-station, Poona Cantonment, to one Mr. Mohan. By that letter the plaintiff was directed to leave Police before 2 O'clock the same evening and proceed to Jejuri, a place about thirty miles away from Poona. The order of transfer is exhibit 41 and reads :

"S. I. Nerlekar of Military Lines P. S.

You will hard over charge of your Polios Station at once to Sergt. Mohan and proceed today and take charge of Jejuri Police Station. You will leave Poona before 6 p. m.

Sd. J.G.. MAXWELL GUMBLETON Dist. Supdt. of Police, Poona."

The preliminary enquiry which the Assistant Superintendent of Police Mr. Moray, was directed to make into the conduct of certain police officers was duly conducted by him, and in due course he forwarded papers of the enquiry made by him against the plaintiff to the District Superintendent of Police, Poona, It would appear that on the basis of these papers the Inspector-General of Police ordered a departmental enquiry against the plaintiff and asked the District Superintendent of Police, Poona, to conduct that enquiry and forward a summary of evidence recorded by him do the Inspector General of Police. On 2nd October 1943, the plaintiff received a suspension order which was dated 1st October 1943. That order is exhibit 42 on the record and roads :

"Order.

The I G P. has suspended Section I.M.G. Nerlekar of Jejuri Police Station from the date of receipt of this order. While under suspension he should not leave his present place of posting except with the permission of the D. S. P. ...

Sd. J.G. MAXWELL-GUMBLETON Dist. Supdt. of Police, Poona."

It would thus be seen that by this order of suspension the plaintiff's freedom of movement restricted and he was asked not to leave his place of posting, namely Jejuri, without obtaining the previous permission of the District Superintendent of Police. Poona. On 3rd October 1943, the plaintiff received a charge-sheet with translations of some statements. That charge sheet is Ex. 43 and reads :

"Charges against Sub-Inspector Nerlekar.

Serious Misconduct in that -

(1) You on 6 2-43 at shout 7 p. m. visited the scene of riot at Wanowrie between gamblers and Military sepoys in which property was damaged and people received injuries including Police Constable Phalke who was on duty at Wanowrie Chowky, You did not register an offence under Sections 147, 332, Penal Code etc., nor did you send special reports to the D. S. P., the D. M. and the S D. P. O and thus contravened the orders in D.S. P's. circular No. a/12/410 of 10-3 42 and endorsement No. b/16/1795 of 15th September 1942 on Government of Bombay, H. D. (ol) No. 2496 of 1-7-1942. You acted thus because you were in the pay of gamblers.

(2) You allowed gambling to go freely in your charge in consideration of which you used to receive regular payments from the gamblers.

Sd. J.G. MAXWELL GUMBLETON 3 10 43."

It would be noticed that charge No. (1) was framed on the basis as though a certain incident had taken place at Wanowri on 6th February 1943. The telephone book maintained at the Military Lines police station, Poona Cantonment, had in the meantime been produced in Court in some other case, and it appears that it was understood from the papers in the preliminary enquiry that the incident had taken place on 6th February 1943. Accordingly the date mentioned in charge No. (1) was 6th February 1943. It would further be seen that two circulars were referred to in charge No. (1), one of which is at Ex. 46 and reads:

"All P.S. O's in the district are informed that immediate Intimation of any incident, however trivial, in which a soldier is involved whether as an aggressor against a member of the public or as one attached by a civilian or whether in an accident, or whether the matter be one of brawl amongst soldiers themselves be given by a special report to the D S P Poona, copies being sent direct to the District Magistrate, Poona, and the Sub-Divisional Police Officer concerned with a view that all three should receive information simultaneously."

[6] On 6-10-1943, the departmental enquiry against the plaintiff started before the District Superintendent of Police, Poona. On that date the plaintiff appeared before the District Superintendent of Police. Mr. Moray. Assistant Superintendent of Police, was present. The charge was explained to the plaintiff. The plaintiff made an oral statement which is at Ex 67, denying the charge. He also filed a written statement (Ex. 66) on the same date, saying that the facts disclosed in it did not constitute an offence under Sections 147 and 332, Penal Code, and that ho had not failed in his duties as ho had taken prompt and necessary notion in the matter. In that written statement the plaintiff also denied having received any money in consideration of hushing up the matter and said that he might be given an opportunity to cross examine all the witnesses whose evidence had been recorded against him. On 7 10-1943, the plaintiff said that he did not wish to cross examine B.L Pawar, B.G. Pawar and A.B. Burungule, as the statement of one Jagdale, a police constable, which was recorded in the preliminary enquiry, was merely read out in the departmental enquiry to these three constables (B.L. Pawar, B.G. Pawar and A.B Burungule) and they had merely said that that was a correct statement. On the same day (7 10-1943) the plain-tiff said that he wished to examine (1) Police Inspector Thornber, (2) Mr. V.G. Padgaonkar, (3) O C. 5th Tank Recovery Company, (4) O C. I. A. O. C Station Works at Wanowri and (5) D. A. P. M. He also expressed a wish to inspect the service-sheets of constables Phalke and Burungule He said that he wished to examine O C. 5th Tank Recovery Company and O C.I. A. O. C. Station Works in order to bring on record the report about injured soldiers, if any had been received on the night of 6 2 -1943. Regarding D. A. P. M. he stated on that day that he wanted him to produce report, if any, received by him regarding the alleged riot at Wanowri or injuries received by soldiers in that incident on the night of 6-2-1943. As far as Inspector Thornber was concerned, the plaintiff was told that the District Superintendent of Police Poona, would arrange to keep him present, for examination by the plaintiff, on the morning of 9-10-1943, and, as far as Padgaonkar was concerned, the plaintiff was asked to produce him that morning (9-10-1943) at ten o'clock. If Padgaonkar was likely to leave Poona before that time, the plaintiff was to produce him before the District Superintendent of Police earlier. As far as the proposed witnessed O. C. 5th Tank Recovery Company and O C. I. A. O. C. Station Works at Wanowri were concerned, the plaintiff was given letters addressed to them, asking them to lot him examine their records and give him a certified extract of a report, if any, regarding injuries received by soldiers between 6 P. M and 9 P. M. on 6-2-1943. As far as the plaintiff's desire to examine D. A. P. M. as his witness was concerned, he was shown a memorandum received from that gentle-man in which ho had and that his office had no record of any disturbance having taken place, presumably on 6 2-1943. Lastly, the plaintiff was told to produce his witnesses at ten O'clock in the morning of Sunday, 10-10-1943, All this happened on 7-10 1943. On 10-10.1943, the plaintiff filed his written statement (EX. 63) and on 11-10 1943, his final oral statement was recorded by the District Superintendent of Police. On 27-10-1943, the District Superintendent of Police prepared his summary of evidence (Ex. 58) against the plaintiff in which he said that it was proved that a riot had taken place at Wanowri between civilians and soldiers, that gambling was going on with the connivance of the police at Wanowri, that the riot had taken place because of the gambling, that the plaintiff had arrived at the scene of the riot either during the later stages of the riot or very soon thereafter, that he must have known what had happened, and that, notwithstanding that knowledge, he had made no entries about the incident in any official record and had made no report to anybody. It was also mentioned by the District Superintendent of Police in his summary of evidence that, in his opinion, there was only one punishment for Sub Inspectors who hushed up crime in order to "line their own pockets." That punishment, according to him, was dismissal On 8-11 1943, the Inspector-General of Police called the plaintiff and recorded his statement which is Ex. 69. Therein the plaintiff said that ho was forced to drop Mr. Thornber as a defence witness and requested that the "defence statement" of Mr. Thornber might be taken into consideration in his own proceeding, as the first charge against Mr. Thornber was precisely the same as the one which was framed against him in the proceedings pending against him. On 12.11-

1943, the Inspector. General of Police made his summing up (Ex. 72) and passed final orders (EX. 61) dismissing the plaintiff from service. Thereafter an appeal wag made by the plaintiff to the Government of Bombay against his order of dismissal, but it was rejected on 37-7-1944. A memorial to His Excellency the Governor was thereupon submitted by the plaintiff, which also was rejected. Then a notice under Section 80, Civil P. C. was given by the plaintiff to Government on 9 8 1945 (EX. 70). Finally, the present suit was filed against the Province of Bombay on 13 12 1945, in which the plaintiff claimed, as we have seen, Rs. 48,475 by way of damages for wrongful dismissal from service, together with future interest and costs. The learned trial Judge has allowed the claim to the extent of RS. 9,000 by way of damages for wrongful dismissal from service and has also allowed proportionate coats of the suit from the defendant. The defendant has been ordered to bear his own costs of the suit. In Appeal No. 52 of 1948 the claim has been valued at Rs. 11,000 for all purposes. It is to be noted at this stage that in the memorandum of appeal no relief is asked for a declaration that the plaintiff is wrongfully dismissed from service, although one of the grounds urged in the appeal memorandum does say that it ought to have been held that he was entitled to be reinstated in service. Mr. Patel for the plaintiff has made a request to us that he should be allowed to amend his memorandum of appeal and a prayer should be permitted to be inserted in it asking for a declaration that the plaintiff was wrongfully dismissed from service. That request is allowed on condition that the plaintiff pays additional court fee for this relief (Rs. 18-12 0).

[7] Before proceeding to deal with the various contentious which were pressed before us at considerable length, we shall refer to a comparatively smaller point, though an important one, which was raised by Mr. Patel for the plaintiff. It was contended by Mr. Patel that the legal evidence on the record was not adequate to justify an adverse finding against the plaintiff on the two charges made against him. It was argued that the evidence of Bhagu Bhima Jagtap, Shaikh Ibrahim Shaikh Nabi and Pratapmal Tarachand Marwadi was not really much good, since these witnesses were not made available for cross-examination by the plaintiff, that the so called evidence of B.L. Pawar, B.G. Pawar and A.B. Burungule, all police constables, was no evidence in fact since they merely said that they corroborated a statement of Jagdale which was made by him during the preliminary enquiry and read out to him in the departmental enquiry, that the evidence of Rustomji and Chitnis being accomplice evidence was unworthy of acceptance without independent corroboration, and that in these circumstances there was no adequate evidence to support the finding of the enquiry officer (District Superintendent of Police, Poona) against the plaintiff in respect of the alleged incident of 6.2-1913, and corruption. This raised a question at once whether this Court had power to act as Court of appeal and sit in judgment on the judgment of a domestic tribunal on merits. In this context Mr. Patel referred us to Thompson v. British Medical Association (N.S.W. Branch), 1924 A.C. 764 and pressed his point that if a domestic tribunal rightly convened and properly composed was burdened with the discharge of some judicial or quasi judicial duty affecting the rights, liberties or properties of a subject, and made a decision which it had jurisdiction to make, that decision, if legal evidence were given in the course of the proceeding adequate to sustain it, could not in the absence of some fundamental error be impeached or set aside, except upon the ground that the domestic tribunal was interested, or biased by corruption or otherwise, or influenced by malice in deciding as it did decide. However, there is a decision of our own Court in Ramji v. Naranji, 37 Bom. L R. 261, in which it was hold that if the requirements of natural justice had been complied with, a Court of law would not act as a Court of Appeal in reference to a decision of a domestic tribunal. In the body of his judgment Blackwell J. referred to the observations of Lord Atkinson in Thompson v. British Medical Association (N.S.W. Branch), 1924 A. C. 764 (p. 778) :

"That decision if legal evidence be given in the course of the proceeding adequate to sustain it, cannot in the absence at some fundamental error be impeached or set aside, save upon the ground that this body was interested, or biased by corruption or otherwise, or influenced by malice in deciding as it did decide,"

and characterized them as obiter. Then, again, in George Bell v. Royal Western India Turf Club, 47 Bom. L.R. 916, it was held that a domestic tribunal was not bound by the ordinary rules of evidence nor was it bound to follow the procedure of the Courts of law or anything like it. It was not even bound to hear the parties, but might reach its decision oven by correspondence. It was observed in that case that it was not even bound to act in a way that "the man in the street" would necessarily regard as just, But oven if we were to hold on the authority of Thompson v. British Medical Association (N.S.W. Branch), that adequate legal evidence is necessary to support a charge in an enquiry by a domestic tribunal, even then, in our opinion, there was adequate legal evidence in this case. Regarding charge No 1, there was the evidence of Phalke, Dagdu, Mahadu and Dnyanoba and other wit-nesses, which the enquiry officer thought sufficient to prove the charge. In respect of charge No. 2, there was the evidence of Rustomji and Chitnis. No doubt theirs was accomplice evidence, but each evidence was legally admissible What value should be attached to it was a different matter, and into that matter of appreciation of evidence we shall not enter, since we cannot sit as a Court of Appeal over a decision of a domestic tribunal. The point at this stage is only this, that in respect of both charges there was legal evidence which the enquiry officer thought fit to accept and which he considered was adequate for holding both the charges proved. In these circumstances, we do not see much substance in the submission advanced before us by Mr. Patel for the plaintiff on the authority of Thompson v. British Medical Association (N.S.W. Branch), that as there was no adequate legal evidence to support the offence against the plaintiff, the conclusion of the domestic tribunal against the plaintiff was unsustainable.

[8] We proceed next to the various other contentions which were pressed before us. Those were:

(1) Mr. Patel for the plaintiff urged that the order of dismissal was void and inoperative as it offended against the mandatory provisions of Sub-section {3} of Section 210, Government o£ India Act, 1935, which said that no person holding any civil post under the Crown in India "shall be dismissed or reduced in rack until ha has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him."

In the present case, it is alleged, and not disputed, that no such opportunity was given to the plaintiff Mr. Datar for the defendant submitted that as the plaintiff belonged to the subordinate rank of the police force, his dismissal was governed by Section 243 of the Government of India Act, 1935, and as the rules, framed under the District Police Act, 1890, under which the conditions of service of the police-officers of the subordinate ranks were determined, did not provide for any notice to show cause against the proposed action to be given to them before taking action against them, the order of the plaintiff's dismissal was valid.

(2) It was contended for the plaintiff that the rules framed under the District Police Act, 1890, in regard to the conducting of departmental enquiry against police officers of subordinate ranks were broken in several respects by the District Superintendent of Police, Poona, who hold the departmental enquiry against the plaintiff, and that therefore the order of the plaintiff's dismissal based on the said enquiry was null and void. On the other hand, Mr. Datar for the defendant argued that the rules under the Police Act for the holding of departmental enquiries were substantially observed and, therefore, the order of the plaintiff's dismissal was valid.

(3) It was urged for the plaintiff that rules of natural justice were violated in the conduct of the departmental enquiry against him, whereas it was maintained for the defendant that they were complied with, (4) Whether the plaintiff was entitled to any relief in the suit, and if so, what.

[9] Now, regarding the first point, namely, whether the making of an order of dismissal against the plaintiff was governed by Section 240, Sub-section (3), or Section 213 of the Government of India Act, 1935, the learned trial Judge's view is that it was governed by Section 210, Sub-section (3), and that, therefore, since no notice was given to the plaintiff why he should not be dismissed from service before an order of dismissal was passed against him, the enquiry was vitiated and became null and void. Mr. Patel for the plaintiff says that that is a correct view and submits that since the order of dismissal was passed without previous notice to the plaintiff to show cause against it, the order was illegal. Mr. Datar's submission, on the other hand, is that Section 243. Government of India Act, 1935, applies, which speaks of conditions of service of police-officers of subordinate ranks which are determined by the rules framed under the Police Act. His argument is that since the rules under the Police Act do not say that a prior notice to show cause against a dismissal order is necessary, the order of the plaintiff's dismissal in this ease is valid. The learned Judge relying on the two cases of Suraj Narain v. N. W. F. Province A. I. R. (29) 1942 F. c. 3 and Punjab Province v. Tara Chand A. I. R. (34) 19-17 P. C. 23 has held that there is a distinction between "tenure" and the expression "conditions of service' occurring in Section 243, that tenure is a fundamental factor of vital importance to an officer, whereas conditions of service refer merely to matters of details such as pay, leave, pension, posting, etc., that therefore orders regarding tenure are governed by the Constitution itself, whereas conditions of service are left to be dealt with by departmental heads according to the rules framed under the Police Act, and that therefore the order of dismissal of a police-officer of a subordinate rank, which is a question of tenure, is governed by Section 240 and not by Section 243, although Section 243 is a special section dealing with the conditions of service of police-officers of such ranks.

[10] Now, it is true that in Suraj Narain v. N. W. F. Province A. I. R. (29) 1912 F. c. 8, it was held that it might be that as a matter of etymology, the expression "conditions of service" could be given a very comprehensive moaning; but that, reading the four sections of the chapter (Sections 240 to 243 of chap, II) together, it seemed that the Act clearly intended to draw a distinction between the tenure on which an office was held on the one hand and the incidents relating to service in the office on the other, and that the duration of the office as well as the authority by which the Crown's pleasure to terminate it was to be signified were treated as fundamental matters standing on a different footing from the incidents of service. Their Lordships thought that the former were regarded as of such importance as to justify a declaration by the Act itself, while the latter were considered to be a proper subject for the rules. It was observed further that in Sections 241 and 212, the "conditions of service" left to be provided for by rules could not have been intended to comprise the matters dealt with in Sub-Sections (1) and (2) of Section 240, and it seemed reasonable to bold that the same restricted meaning should have been intended when the same expression was used in Section 243.

[11] But the above mentioned is no longer the position in law now in view of the decision of the Privy Council in that very case in N.W.F. Province v. Suraj Narain, 51 Bom. L.R. 425. Their Lordships reversing the judgment of the Federal Court held that the right of dismissal of a police-officer of a subordinate rank was a condition of service within the meaning of Section 243, Government of India Act, 1935. They observed that, in the absence of any special significance, they were unable to regard provisions which prescribed the circumstances under which the employer was to be entitled to terminate the service as otherwise than conditions of the service, whether these provisions were contractual or statutory, and were therefore of opinion that the natural meaning of the expression "conditions of service" would include provisions proscribing the circumstances under which the employer was to be entitled to terminate the service of his employee. Their Lordships said in terms that they did not accept the construction which the Federal Court had put on Section 243, namely that "conditions of service" did not include provisions as to dismissal. In other words, it was hold by the Privy Council that for the construction of Section 243 there was no distinction between tenure and conditions of service, that tenure was included in conditions of service, and that the question of retention in, or dismissal from service was one in respect of conditions of service and was therefore governed by Section 243. Now, Section 243 says that the conditions of service for police-officers of subordinate rank shall be determined by or under the Police Act. In the rules framed under the District Police Act, 1890, there is no provision that before dismissing a police officer he should be given a notice to show cause against his proposed dismissal. It is, there-fore, contended by Mr. Datar that the order of the plaintiff's dismissal is valid.

[12] Mr. Patel for the plaintiff says that the gist of the Privy Council decision referred to above is that where there is a rule, under the Police Act, regarding tenure of police-officers of subordinate ranks, it would be a valid rule under Section 243 notwithstanding Sub-sections (2) and (3) of Section 240, and in that case, Section 243 will apply and the rule will govern cases of dismissal or reduction. It is argued by Mr. Patel that the effect of the Privy Council decision is that tenure being a condition of service within the meaning of Section 240 and Section 243 having laid down that conditions of service shall be determined by or under the Police Act, i.e. by rules framed under that Act, a rule relating to tenure, made under the Act, would be a valid rule; and if there is such a rule, it will govern cases where tenure is terminated. But says Mr. Patel, where there is no rule made under the Police Act in relation to tenure, Section 243 will not govern cases of termination of tenure; but Sub-Sections (2) and (3) of Section 240 will apply.

[13] In our opinion, this is not a correct reading of the Privy Council decision in N.W.F. Province v. Suraj Narain, 51 Bom. L.R. 425. Their Lordships have clearly pointed out that Sub Sections (2) and (3) of Section 240 are the only provisions of chap. II to which the introductory words of Section 243 can be referable in relation to conditions of service, and since conditions of service for police-officers of subordinate ranks include tenure, it is clear, having regard to introductory words of Section 243 that cases of tenure of such police-officers will be governed not by 8. 240, Sub-sections (2) and (3), but by Section 243. Their Lordships have made it unreservedly clear that the right of dismissal was a condition of service within the meaning of Section 243. They have not said that if there is no rule made under the Police Act laying down that a show cause notice is necessary before termination of tenure, Section 240, Sub-sections (2) and (3) will apply, and not Section 243. As a matter of fact, we have got the rules made under Section 27 of the District Police Act, 1890, which do contain provisions regarding conducting of departmental enquiries and passing orders of punishment; including dismissal. Therefore, there is no doubt that there being rules, in the case, made under the Police Act in relation to conditions of service of police officers of subordinate ranks, Section 243 will apply and the rules framed under the Police Act will govern the cases of termination of tenure of such police-officers.

[14] Mr. Patel for the plaintiff next adopts an argument which was referred to in the judgment of the Federal Court in Suraj Narain v. N. W. F. Province A. I. R. (29) 1912 P. C. 3, and urges that the defendant's reading of Section 243 would exclude the declaration in Sub-section (1) of Section 240 as to the offices being held during His Majesty's pleasure. Their Lordships of the Federal Court had observed in the above case that it did not seem reasonable to them to assume that when passing the Act of 1935 the Parliament had intended to place a principle that all public servants hold office during His Majesty's pleasure on ft statutory basis as regards some offices, but allowed it to remain on a common law or implied contract basis as regards the rest. In their Lordships' opinion, it was more reasonable to hold that the statutory declaration as to the nature of the tenure contained in Sub-section (1) of Section 240 was intended to apply as much to the offices referred to in Section 243 as to the offices referred to in Sections 241 and 242 and for the same reason the protection afforded by Sub-section (2) should equally be held to have been intended for the benefit of both. Their Lordships saw no justification in the reason of the thing for drawing a distinction for the above mentioned purpose between one set of public offices and another. This argument which Mr. Patel for the plaintiff has adopted from the observations of their Lordships of the Federal Court in Suraj Narain v. N.W.P. Province is effectively answered by their Lordships of the Privy Council in N.W.F. Province v. Suraj Narain, 51 Bom. L.R. 435. They observed, in the body of the judgment, that it would be found, on a perusal of chap II of the Government of India Act, 1935, which included Sections 210 to 263, that Sub-sections (2) and (3) of Section 240 wore the only provisions of Chap. II to which the introductory words of Section 243 could be referable in relation to conditions of service, as every one of the other provisions of the chapter, with one exception, dealt with special classes of service, just as Section 243 dealt with a special class; and, said their Lordships the one exception was Sub-section (1) of Section 310, but that provided for termination by His Majesty, and there could be no question of delegation of that power by virtue of Section 243. In these circumstances, in our opinion, there is no force in this particular argument advanced by Mr. Patel for the plaintiff on the authority of the observations of their Lordships of the Federal Court in Suraj Narain v. N.W.F. Province.

[15] Mr. Patel has next referred us to the decisions of this Court in Broach Municipality v. Bhadriklal Ambalal, 53 Bom. L. R. 282, Lalbhai Chimanlal Shah v. Municipal Borough of Ahmedabad, F. A No. 182 of 1948, R.T. Rangachari v. Secretary of State, 39 Bom. L. R. 688 and R. Venkata Rao v. Secretary of State, 39 Bom. L.R. 699; and has argued that according to these decisions it was held that if there was a breach of a statute, then only there would be a cause of action, and that a breach of rules did not give rise to a cause of action. It is then contended by Mr. Patel that if we construe the Privy Council decision in N.W.F. Province v. Suraj Narain, 51 Bom. L.R. 425, as laying down that a cause of action would arise from a breach of a rule, the above said position in law would be disturbed. We have considered the decisions in Broach Municipality v. Bhadriklal and Lalbhai Chimanlal v. Municipal Borough of Ahmedabad: but are unable to find any observations therein from which it could be said that their Lordships had held in these cases that a breach of a rule would not give rise to a cause of action. It is true that in both these cases the proper procedure according to the rules was not followed. But it is to be remembered that in both these cases the person dismissed was a municipal employee, whereas in the case before us the plaintiff held an office under the Crown. This would show that the present case would stand on a different footing from the cases which were dealt with in the above said appeals. In Broach Municipality v. Bhadriklal Ambalal, Bhagwati J. said that if the rule which was broken was mandatory, the dismissed person would be entitled to a declaration that his dismissal was void and inoperative, and to a further declaration, that he should be deemed to be in service in spite of the resolution or order of dismissal. His Lordship went on to say that if the rule which was broken was directory, then the resolution of dismissal would be valid, but the dismissal itself would nevertheless be wrongful as the proper procedure under the rules was not observed and the dismissed person would be entitled to damages on account of wrongful dismissal, The actual observations of Bhagwati J. on this paint in that ease were as follows (p. 289):

'It the provisions of Rule 182 were mandatory, the result in terms of the decision of their Lordships of the Privy Council in the High Commr. for India & Pakistan v. L.M. Lall, 50 Bom. LR. 649, would be that the resolution would be null and void and the plaintiff would be held entitled to a declaration that his purported dismissal on 16-12-1942, was void and inoperative and that ha remained the Chief Officer of the Municipality at the dale of the institution of the suit. On the other hand, if the provisions of Rule 182 were directory and were merely an administrative rule passed by the Municipality under the provisions of Section 58 (f) of the Bombay Municipal Boroughs Act or the corresponding provisions contained in the Bombay District Municipal Act, 1902, the resolution would be bad in so far as it did not comply with the provisions of Rule 182 and would amount to a wrongful dismissal of the plaintiff from the employ of the Municipality and the plaintiff would be entitled to damages for such wrongful dismissal, the resolution bang nonetheless a valid resolution passed by the Municipality in compliance with the provisions of Section 33 (2) of the Act in flagrant violation of Rule 182."

In either ease Bhagwati J., held that a breach of the provisions of the rule (Rule 182) would give rise to a cause of action. In Lalbhai Chimanlal v. Municipal Borough of Ahmedabad, also, the proper procedure as required to be followed by the rules was not followed, but the case was disposed of on the basis of the relationship of master and servant, and it was held that there was negligence on the part of the person dismissed. That being so, his dismissal was held proper and his claim for damages was dismissed. This decision would again be no authority for saying that a breach of a rule would not give rise to a cause of action, since as we have just said, the matter was disposed of on the basis of the relationship of master and servant between the Municipality and the person dismissed, [16] It is to be noted that in R.T. Rangachari v. Secretary of State (89 Bom. L. R. 683) there was a statutory provision in Section 96B, Government of India Act, 1915, which, as amended by the Act of 1919, said that a person in the Civil Service of the Crown in India held office during His Majesty's pleasure and could not be dismissed by an authority subordinate to the one which appointed him. The actual words in the section are, "but no person in that service may he dismissed by any authority subordinate to that by which he was appointed. . . ." It was held in this casa that a breach of the abovementioned statutory provision gave rise to a cause of action. In that case, no question arose for considering whether a breach of a rule would give rise to a cause of action. Therefore, in this decision also we see no support for an argument that no cause of action could arise from a breach of a rule. The next case to which our attention was drawn was Section Venkata Rao v. Secretary of State, 39 Bom. L.R. 693. It was held in that case that the rules which were alleged to have been broken were directory and no contractual obligations were created by them. In the circumstances the decision in Shenton v. Smith, (1895) A. C. 229 was followed and it was held that no cause of action would arise from a breach of the rules. It is to be noted, however, that at the time when that case was decided there were no provisions analogous to the provisions of Section 243, Government of India Act, 19S5, which made all the difference to the law on the subject [17] In N.W.F. Province v. Suraj Narain (51 Bom. L. R. 425) it was held that if a delegation of power to terminate the tenure of an officer had been made under a rule in the absence of Section 213, Government of India Act, 1935, it would have been invalid in view of Sub-section (2) and (3) of Section 210 of the Act. But in view of Section 243 which excluded the operation of Sub-sections (2) and (3) of Section 240 of the Act, a rule regarding tenure made under the Police Act, 1890, would be valid and a breach of it would give rise to a cause of action. That was in fact, the spirit of the decision in that case (N. W. F. Province v. Suraj Narain). Mr. Datar for the defendant also concedes that a breach of a vital rule, e. g., a rule relating to dismissal or reduction from service framed under the Police Act and relating to conditions of service of police-officers referred to in Section 243, Government of India Act, 1935, would give rise to a cause of actior. We thus do not see any impediment in our holding, on the authority of the Privy Council decision, that the order of dismissal passed on the plaintiff in this case is governed by rules under Police Act, by which the conditions of service of the police-officer a are determined. Mr. Patel also concedes that if there had been a rule under the Police Act saying that a notice to show cause should be given to an officer before dismissing him, it would have been a valid rule under Section 243, 3overnment of India Act, 1935 and a breach thereof would have given rise to cause of action. It is, therefore, clear that, so far as the special provisions of Section 213 and the statutory force given by them to the rules made under the Police Act regarding conditions of service are concerned, a breach of these rules would give rise to a cause of action. The present suit will, therefore, be Maintainable.

(18) The second and the third points pressed before us are regarding alleged breaches of rules framed under the Police Act and of rules of natural justice and the two points may be dealt with together. There is no doubt, in our opinion, that the rules under the Police Act are based on the principles of natural justice. Therefore, it is not necessary, in our opinion, to deal with the question of natural justice apart from the question of compliance or non compliance with the rules under the Police Act. If there is no breach of any of the rules framed under the Police Act, it will be safe to assume that there has been compliance with the rules of natural justice. The expression "rules of natural justice" has been the subject of consideration in many eases, and it has been held that so long as a domestic tribunal acts honestly, in good faith, with a sense of responsibility and in consonance with its own rules, its decision cannot be questioned on ground of breach of rules of natural justice, for the reason that in that case the rules of natural justice will be deemed to have been observed.

[19] In Local Government Board v. Arlidge, 1915 A.c. 120, a point was taken for the respondent that the appeal had been decided neither by the Local Government Board nor by any one lawfully authorised to act for them, and that the procedure adopted by the Board was contrary to natural justice in that the respondent had not been afforded an opportunity of being heard orally before the Board. It was further assumed that a point was also taken that the report of the inspector on the second inquiry was not disclosed to the respondent. In his address before the House of Lords, Viscount Haldane L. C. said that when the duty of deciding an appeal was imposed, these whose duty it was to decide it must act judicially, and they must deal with the question referred to them without bias, and they must give to each of the parties the opportunity of adequately presenting the case made. His Lordship pointed out that the decision must be arrived at in the spirit and with the sense of responsibility of a tribunal whose duty it was to mote out justice, His Lordship agreed with the view expressed in an analogous case Board of Education v. Rice, (1911) A. C. 179 by Lord Loreburn, in which it was laid down that, in disposing of a question which was the subject of an appeal to it, the Board of Education was under a duty to act in good faith, and to listen fairly to both sides, inasmuch as that was a duty which lay on every one who decided anything. It was pointed out, however, that the Board was not bound to treat such a question as though it were a trial, that the Board had no power to administer an oath, and need not examine witnesses and that it could obtain information in any way it thought best, always giving a fair opportunity to these who were parties in the controversy to correct or contradict any relevant statement prejudicial to their view. His Lordship (Lord Shaw of Dunfermline) then went on to say that the words "natural justice" occurred in arguments and sometimes in judicial pronounce-meats, and pointed out that when a central administrative board dealt with an appeal from a local authority, it must do its best to act justly, and to, reach just ends by just means; that if a statute prescribed the means, it must employ them; and that if it was left without express guidance, it must still act honestly and by honest means.

[20] In Maclean v. The Workers' Union, (1929) 1 ch. 603, also, it was pointed out that eminent Judges had at times used the phrase "the principles of natural justice," which of course, was used only in a popular sense and was not to be taken to mean that there was any justice natural among men. Maugham J. went on to say in that case that a person who joined an association governed by rules under which he might be expelled, e.g., such rules as existed in Rules 45 and 46, had no legal right of redress if ho were expelled according to the rules, however unfair and unjust the rules or the action of the expelling tribunal might be, provided that it acted in good faith. His Lordship added that it was impossible to doubt that, if the rules postulated an inquiry, the accused must be given a reasonable opportunity of being heard. In his Lordship's opinion the phrase "the principles of natural justice" could only mean the principles of fair play, so that a provision for an inquiry necessarily imported the idea that the accused should be given his chance of defence and explanation. It was pointed out that the truth was that justice was a very elaborate conception, the growth of many centuries of civilisation, and the conception differed very widely in countries described as civilised. From a careful consideration of these authorities, it is clear that all that is meant by compliance with rules of natural justice by a domestic tribunal is that the tribunal must act honestly and with good faith, and must give a delinquent a chance of explanation and defence. If its rules postulate an enquiry, the delinquent must have a reasonable opportunity of being heard and of correcting and contradicting a relevant statement prejudicial to his view.

[21] During the course of his judgment in Maclean v. The Workers' Union, 1929-1 ch. 602, Maugham J. said that a domestic tribunal was bound to act strictly according to its rules and was under an obligation to act honestly and in good faith, and added that it was not suggested in the case before him that the rules as they then stood bad not been complied with, and on the evidence before him he was quite unable to hold that the committee had acted otherwise than honestly and in good faith. From these observations it is clear, in our opinion, that the Court's jurisdiction to examine the decisions of the domestic tribunals would be ousted if both the conditions were satisfied, namely, that the domestic tribunal had acted strictly according to its rules and that it had also acted honestly and in good faith. In the case before us there is no question, of course, that the Inspector. General of Police, Bombay, who passed the order of dismissal of the plaintiff, had acted dishonestly or in bad faith. Therefore, the only question that remains for us now to consider is, whether it is proved by the plaintiff that the tribunal in this case who conducted the enquiry and the tribunal Who passed the order of dismissal, namely, the District Superintendent of Police, Poona, and the Inspector General of Police, Bombay, had not acted strictly according to the rules framed under the Police Act.

[22] In this context Mr. Patel for the plaintiff has invited our attention to Sub-rules (6), (7), (10) and (11) of a-1278, B. 1281, and Sub-rules (8), (9) and (10) of Rule 1284, and has contended that all these rules were broken by the District Superintendent of Police, Poona , while conducting the departmental enquiry against the plaintiff. Now, Sub-rule (6) of Rule 1278 says that the charges must be complete, explicit and fully understood by the respondent before he is called upon to cross-examine the witnesses against him and to enter upon his defence generally. In this ease, it is submitted by Mr. Patel for the plaintiff that although the entry in the telephone book which was maintained at the Military Lines Police Station, Poona Cantonment, showed that a message was received from Duty Constable Phalke at 7.25 p m. on 3rd February 1943, the charge mentioned 6th February 1943, as the date of the incident and the statement of allegations also alleged that the incident had taken place on 6th February 1943. The whole of the enquiry was also conducted on the basis that the incident had taken place on 6th February 1943, and the finding of the Inspector-General of Police, Bombay, was also based on the assumption that the incident had transpired in the evening of 6th February 1943. Consistently with that finding, the plaintiff was punished for the conduct attributed to him in respect of an incident dated 6th February 1943. Now, on this point, the grievance of the plaintiff is referred to by himself in his own evidence in which he has said that on enquiry made by him he had learnt that constable Phalke had telephoned not on 6th February 1943, but on 3rd February 1943, and his message was received at 7-25 p.m. on 3rd February and was recorded in the telephone book the same evening i.e., 3rd February. It is the contention of the plaintiff that the mention of 6th February 1943, as the date of the incident in the charge and the conduct of the enquiry on the basis that the incident had occurred on 6th February 1943, had pat a totally different complexion on the proceedings and had disclosed the falsity of the entire police case against him. One of his grievances in this ease is that the charge and the statement of allegations being defective on account of this reason, he was prejudiced in his defence. His final submission on this point is that all the witnesses, except Dagdu and Sub-Inspector Chitnis, who mentioned that the incident had occurred on 6th February 1943, had given false evidence, and, that being so, the finding of the Inspector-General of Police was, in fact, based en evidence which was not trustworthy. Thus, the contentions of the plaintiff in regard to Sub-rule (6) of Rule 1278 ate that the said Sub-rule was broken in this case, that rules of natural justice were thereby adversely affected, that his defence also was prejudiced on that score, and that the entire proceedings had terminated in h s being found guilty of an incident which had not occurred, in fact, on 6th February 1943. Now in this connection the learned trial Judge's view is that this was merely a case of mistake in the mentioning of the date in the charge, and that the ends of justice were not prejudiced, nor was the defence of the plaintiff prejudiced, on that score. In our opinion, this is a correct view to take as far as the point about the charge is concerned. It is to be remembered that the incident had occurred in the first week of February 1943 and the preliminary enquiry was conducted in September 1943, something like six or seven months subsequently. When the departmental enquiry was being conducted, the telephone book which used to be maintained at the Military Lines Police Station had been produced in a Court in some other case and had not been returned to the Military Lines Police Station. Witnesses who gave evidence in the departmental enquiry obviously made a mistake as to the date on which the incident in respect of which they were deposing had occurred. But the important point to be borne in mind is that the plaintiff himself knew perfectly well what the incident was in respect of which an enquiry was being conducted against him, la his evidence at exh. 65 he said that there was no doubt in his mind at the time of the enquiry that the charge against him related to an incident which had occurred at Wanowri in the first week of February 1943. It is an undisputed position in this case that only one such incident had occurred at Wanowri in the first week of February 1943. In these circumstances, although a mistake had occurred in mentioning the date in the charge and although the enquiry was conducted and the finding was arrived at by the Inspect or. General of Police on the basis of the mistaken date, as far as the plaintiff himself was concerned, his defence was not prejudiced as he understood perfectly well what the incident was in respect of which he was being proceeded against departmentally. If two incidents had occurred in the first week of February 1913, if the charge had referred to one of them, if the witnesses bad given evidence in respect of the other incident and if the Court relying on the evidence of witnesses had found him guilty of the incident which was referred to in the charge, there would be no doubt that it would be a case in which the defence of the accused could be said to have been prejudiced. But the case hero is not of that description at all. In these circumstances, without adding any more comments, it would be safe to say that there was sufficient compliance with the requirements of Sub-rule (6) of Rule 1276 in this case.

[23] We turn next to Sub-rule (7) of Rule 1278 which says that the respondent must be given reasonable facilities for his defence, as for example, be allowed to call witnesses, have access to or copies of documents used in evidence against him or be made to understand them thoroughly, have reasonable time to produce his witnesses or to submit his written defence if he so desires. Mr. Patel urges strenuously in this case that the plaintiff was not allowed to call his witnesses, did not have access to or copies of documents which were used in evidence against him, and did not have reasonable time to produce his witnesses or submit his written defence. In other words, the contention of Mr. Patel is that almost all the vital requirements of Sub-rule (7) of Rule 1278 were broken by the enquiry officer in this case. We have given anxious thought to this part of Mr. Patel's arguments and have also carefully considered the submissions which Mr. Datar has made in that connection, and our opinion is that reasonable facilities were not given by the enquiry officer (District Superintendent of Police, Poona) to the plaintiff for his defence. It is clear from the record before us that on 6th October 1943, the charge against the plaintiff was read out to the plaintiff, his oral statement was also recorded on the same date, and his written statement also was filed by him on that date. On the next day, 7th October, witnesses against the plaintiff were examined and cross examined. He did not wish to cross examine constables B.L. Pawar, B.G. Pawar and A.B. Burungule, but went on with the cross examination of the rest of the witnesses except, it is alleged by the plaintiff, Bhagu Bhima Jagtap, Shaikh Ibrahim Shaikh Nabi and Pratapmal Tarachand Marwadi who, according to him, were not made available to him for cross-examination. The next day, 8th October, was spent by the plaintiff in approaching the Military for seeing their records and getting a certified extract of a report, if any, made regarding injuries to soldiers caused between 6 p. m. and 9 p. m. on 6th February 1943. It is to be remembered that the plaintiff wanted to examine three Military witnesses, namely, O. C. 5 Tank Recovery Company, O. C. I. A. O. C. Station Works and D. A. P. M. But the District Superintendent of Police, instead of calling these men for examination as witnesses for the plaintiff, gave to the plaintiff letters addressed to two of them in which he asked them to let the plaintiff see their records and give him a certified extract of a report, if any, of injuries sustained by the soldiers between 6 p.m. and 9 p. m. in the evening of 6th February 1943. As far as the third man, namely, D. A. P. M. was concerned, the District Superintendent of Police had simply told the plaintiff that a letter had been received by him from that person stating that there was no record in Ma office of any disturbance having taken place during the period in question. On 9th October, Thornber expressed his reluctance to give evidence as a defence witness for the plaintiff. Thereupon the plaintiff gave a fresh name of cue Pukraj and said that he wanted to examine him in his defence. The District Superintendent of Police gave him two hours' time within which to produce him. The place of residence of that witness was five miles away from Poona. The case of the plaintiff is that he went to that place but did not find Pukraj at home. He returned to Poona, and the record shows that ho thereafter gave up Pukraj as a witness. It appears that since the plaintiff found that Pukraj was not available, he renewed his request foe the examination of Thornber as his defence witness. The record before us shows that the District Superintendent of Police "explained the situation" to him, whereupon he agreed to drop him as a wit-ness. It is therefore clear, in out opinion, that after the plaintiff expressed his desire to examine Thornber in his defence, some conversation took place between him and the District Superintendent of Police, as the result of which he, a subordinate police-officer, agreed not to examine Thornber as his witness. On that day, 9th October, Pukraj was to be examined by the plaintiff as his witness, and on the next day, which was Sunday 10th October, at 8 o'clock in the morning the plaintiff was expected to submit his written statement before the District Superintendent of Police. That time, however, was extended by a few hours, and ultimately at eight o'clock in the evening on 10th October, the plaintiff filed Ms written statement. On 9th October his final oral statement had already been recorded by the District Superintendent of Police. From these facts it is evident that almost the entire bulk of the enquiry against the plaintiff was conducted and finished between 6th October and 10th October by District Superintendent of Police, Poona. In our opinion, the enquiry was rushed through and the plaintiff was not given reasonable facilities for Ms defence. It is to be remembered in this contest that the preliminary enquiry against the plaintiff had taken nearly a month in September 1943. Keeping that fact, in view, it appears to us that the departmental enquiry, which was begun from the stage of reading the charge to the plaintiff on 6th October, and was practically concluded on 10th October, was gone through with expedition which could not be said to be reasonable.

Bombay High Court - Equivalent citations: (1992) ILLJ 107 Bom - Bench: I Shah - Dated: on 5 March, 1990

Judgment

1. The State has come in appeal against the order of sentence passed the present Respondent, the Original Accused, in Summary Cases Nos. 4073/77, 4071/77 and 4072/77 for enhancement of the Sentence of fine of Rs. 5/- levied by the learned Chief Judicial Magistrate, Ahmednagar.

As in all these three appeals, the Appellant-Accused is the same and the contravention alleged is also the same, they are being disposed of by common judgment.

Briefly stated facts giving rise to these three appeals are that on February 9, 1977, Factory Inspector visited Bothara Engineering Works, a factory belonging to the present Respondent and found that Jaywant Pund, Sudhakar Shinde and Murlidhar Karale were working in the factory but their names were not entered as workers in the register as required by Section 62 of the Factories Act. The Factory Inspector, therefore, filed three separate complaints in respect of each of the workers in the Court. The learned Chief Judicial Magistrate on Strength of the evidence before him found that the Complainant proved that the present Respondent had contravened the provisions of Section 62 of the Factories Act and, therefore, have committed an offence punishable under Section 92 of the Factories Act and accordingly convicted the present respondent. The learned Chief Judicial Magistrate, however sentenced him only to pay a fine of Rs. 5/- in each case holding that it was a technical offence. Being aggrieved by the said order, the State has come in appeal seeking to enhance the sentence awarded to the present Respondent.

4. On behalf of the State, it is very strenuously contended that having found that having found the accused guilty of contravention of Section 62 it was an error to allow the Accused to go with a light punishment of Rs. 5/- as a fine in case. It was contended that the learned Chief Judicial Magistrate was in error when he thought or considered that it was a technical offence. Now it is true that the contravention though apparently appears to be only a technical one, really has far reaching consequences. One must keep in mind that in the legislations in respect of labour the view that is required to be taken must take into consideration the far reaching effects of the same. The provisions of maintenance of a register of workers is made with a view that one should be able to ascertain as to how many workers were being employed by the factory as on the number of laboures employed by the factory, number of legislations become applicable. Therefore, there is bound to be some temptation of not maintaining proper records of engagement of labourers or workers so that the other legislations, which impose onerous duties on the occupier of the Factory, do not become applicable. In view of this, the learned Additional Public Prosecutor appearing for the State is right in saying that the Lower Court was in error when considering that the offence was a mere technical one. Now it may be that in matter which originated in 1978, today in 1990 it may not be even desirable to enhance the sentence because of lapse of such a considerable period. But at the same it must be said that the sentence that was passed by the Trial Court was only a fleabite sentence and the Lower Court was in error in taking a lenient view in the matter.

5. However, as the State has come in appeal, the Respondent-Accused gets a chance of contending that his conviction itself is bad in law, and rightly so the Respondent-Accused has availed of this opportunity and has contended before me that on the material that was before the Lower Court the conviction itself cannot be sustained. It was contended that as per Section 62 the liability to maintain the register is imposed on the management and admittedly the present Respondent is not a Manager and is an occupier and, therefore, the contravention, if any, has been committed it is not liability of the present respondent. In support of his contention, reliance is placed on ruling reported in State Government, Madhay Pradesh v. Maganbhai Dasaibhai (1954-I-LLJ-480), where in it was held that an occupier will be liable for contravention of any the provisions of the Act or rules if the responsibility for observing the provisions has not been imposed on some other person. If specific duty is laid on a particular person. If specific duty is laid on a particular person, the responsibility for the breach will be his. The obligation to maintain the registers is imposed on a and not on an occupier. An occupier cannot, therefor, be held liable for the failure of the manager to comply with the requirements of Sections 62 and 83 and Rule 91. The occupier cannot be said to have a guilty mind when he is not charged with the duty of maintaining the registers. It is also clear that as per Section 7 occupier has to give a notice to the Chief Inspector of Factories before he begins to occupy or use any premises as a factory and the said notice is required to contain number of particulars including the name of the manager of the factory. Therefore, there is an obligation on the occupier to intimate the name of the manager of the factory. In the present case, the Complainant, it appears, had tired to rely on Exhibit 8 to show that the present Respondent is the Occupier of the factory. In his evidence also he was stated that he relied on Exhibit 8 only to show that the Accused was the Manager and the occupier. However he had to admit that Exhibit 8 did not disclose the name of the Manager as of the Accused. Unfortunately, Exhibit 8 is not in the records of the Lower Court, However it is definitely clear from evidence of the Complainant himself that the the name of the Accused is not shown as Manager in Exhibit 8. Under these circumstances, unless it could be shown that the present Respondent had also notified his name in the said notice to the Factory Inspector that he was the manager of the factory, he cannot be held responsible for the liability imposed upon the Manager as per Section 62 of the Factories Act. Hence the conviction of the Respondent under Section 68 read with Sec. 92 of the Factories Act itself is not sustainable. In the result, the appeals of the State in all the three matters will fail and on the other hand the Respondent will have to be acquitted. Hence the order.

The State appeals fail and the Accused, i.e. the present Respondent in all three cases, is acquitted of the offence for which he was convicted. Fine if recovered be refunded to the Accused.

43. The matter can also be looked at from a slightly different angle. Section 36, prior to the Amendment Act, is only a clog on the right of the decree holder, who cannot execute the award in his favour, unless the conditions of this section are met. This does not mean that there is a corresponding right in the judgment debtor to stay the execution of such an award. Learned counsel on behalf of the Appellants have, however, argued that a substantive change has been made in the award, which became an executable decree only after the Section 34 proceedings were over, but which is now made executable as if it was a decree with immediate effect, and that this change would, therefore, take away a vested right or accrued privilege in favour of the Respondents. It has been argued, relying upon a number of judgments, that since Section 36 is a part of the enforcement process of awards, there is a vested right or at least a privilege accrued in favour of the Appellants in the unamended 1996 Act applying insofar as arbitral proceedings and court proceedings in relation thereto have commenced, prior to the commencement of the Amendment Act. The very judgment strongly relied upon by senior counsel for the appellants, namely Garikapati Veeraya (supra), itself states in proposition (v) at page 515, that the vested right of appeal can be taken away only by a subsequent enactment, if it so provides specifically or by necessary intendment and not otherwise. We have already held that Section 26 does specifically provide that the court proceedings in relation to arbitral proceedings, being independent from arbitral proceedings, would not be viewed as a continuation of arbitral proceedings, but would be viewed separately. This being the case, it is unnecessary to refer to judgments such as Union of India v. A.L. Rallia Ram, (1964) 3 SCR 164 and NBCC Ltd. v. J.G. Engineering (P) Ltd., (2010) 2 SCC 385, which state that a Section 34 proceeding is a supervisory and not an appellate proceeding. Snehadeep Structures (P) Ltd. v. Maharashtra Small-Scale Industries Development Corpn. Ltd., (2010) 3 SCC 34 at 47-49, which was cited for the purpose of stating that a Section 34 proceeding could be regard as an “appeal” within the meaning of Section 7 of the Interest on Delayed Payments To Small Scale and Ancillary Industrial Undertakings Act, 1993, is obviously distinguishable on the ground that it pertains to the said expression appearing in a beneficial enactment, whose object would be defeated if the word “appeal” did not include a Section 34 application. This is made clear by the aforesaid judgment itself as follows:

“36. On a perusal of the plethora of decisions aforementioned, we are of the view that “appeal” is a term that carries a wide range of connotations with it and that appellate jurisdiction can be exercised in a variety of forms. It is not necessary that the exercise of appellate jurisdiction will always involve re-
agitation of entire matrix of facts and law. We have already seen in Abhayankar [(1969) 2 SCC 74] that even an order passed by virtue of limited power of revision under Section 115 of the Code is treated as an exercise of appellate jurisdiction, though under that provision, the Court cannot go into the questions of facts. Given the weight of authorities in favour of giving such a wide meaning to the term “appeal”, we are constrained to disagree with the contention of the learned counsel for the respondent Corporation that appeal shall mean only a challenge to a decree or order where the entire matrix of law and fact can be re-agitated with respect to the impugned order/decree. There is no quarrel that Section 34 envisages only limited grounds of challenge to an award; however, we see no reason why that alone should take out an application under Section 34 outside the ambit of an appeal especially when even a power of revision is treated as an exercise of appellate jurisdiction by this Court and the Privy Council.

xxx xxx xxx

40. It may be noted that Section 6(1) empowers the buyer to obtain the due payment by way of any proceedings. Thus the proceedings that the buyer can resort to, no doubt, includes arbitration as well. It is pertinent to note that as opposed to Section 6(2), Section 6(1) does not state that in case the parties choose to resort to arbitration, the proceedings in pursuance thereof will be governed by the Arbitration Act. Hence, the right context in which the meaning of the term “appeal” should be interpreted is the Interest Act itself. The meaning of this term under the Arbitration Act or the Code of Civil Procedure would have been relevant if the Interest Act had made a reference to them. For this very reason, we also do not find it relevant that the Arbitration Act deals with applications and appeals in two different chapters. We are concerned with the meaning of the term “appeal” in the Interest Act, and not in the Arbitration Act.”
44. Learned senior counsel appearing on behalf of the Respondents, has also argued that the expression “has been” in Section 36(2), as amended, would make it clear that the section itself refers to Section 34 applications which have been filed prior to the commencement of the Amendment Act and that, therefore, the said section would apply, on its plain language, even to Section 34 applications that have been filed prior to the commencement of the Amendment Act. For this purpose, the judgment in State of Bombay v. Vishnu Ramchandra (1961) 2 SCR 26, was strongly relied upon. In that judgment, it was observed, while dealing with Section 57 of the Bombay Police Act, 1951, that the expression “has been punished” is in the present perfect tense and can mean either “shall have been” or “shall be”. Looking to the scheme of the enactment as a whole, the Court felt that “shall have been” is more appropriate. This decision was referred to in paragraphs 60 and 61 of Workmen v. Firestone Tyre & Rubber Co. of India (P) Ltd., (1973) 1 SCC 813 at 838 and the ratio culled out was that such expression may relate to past or future events, which has to be gathered from the context, as well as the scheme of the particular legislation. In the context in which Section 11A of the Industrial Disputes Act, 1947 was enacted, this Court held that Section 11A has the effect of altering the law by abridging the rights of the employer. This being so, the expression “has been” would refer only to future events and would have no implication to disputes prior to December 15, 1971. However, in a significant paragraph, this Court held:

“63. It must be stated at this stage that procedural law has always been held to operate even retrospectively, as no party has a vested right in procedure.…”
45. Being a procedural provision, it is obvious that the context of Section 36 is that the expression “has been” would refer to Section 34 petitions filed before the commencement of the Amendment Act and would be one pointer to the fact that the said section would indeed apply, in its substituted form, even to such petitions. The judgment in L’Office Cherifien Des Phosphates and another v. Yamashita-Shinnihon Steamship Co. Ltd., (1994) 1 AC 486 is instructive. A new Section 13A was introduced with effect from 1 st January, 1992, by which Arbitrators were vested with the power of dismissing a claim if there is no inordinate or an inexcusable delay on the part of the claimant in pursuing the claim. This Section was enacted because the House of Lords in a certain decision had suggested that such delays in arbitration could not lead to a rejection of the claim by itself. What led to the enactment of the Section was put by Lord Mustill thus:

“My Lords, the effect of the decision of the House in the Bremer Vulkan case, coupled with the inability of the courts to furnish any alternative remedy which might provide a remedy for the abuse of stale claims, aroused a chorus of disapproval which was forceful, sustained and (so far as I am aware) virtually unanimous. There is no need to elaborate. The criticisms came from every quarter.
Several Commonwealth countries hastily introduced legislation conferring on the court, or on the arbitrator, a jurisdiction to dismiss stale claims in arbitration. The history of the matter, and the reasons why the question was not as easy as it might have appeared, were summarized in an article published in 1989 by Sir Thomas Bingham (Arbitration International, vol. 5, pp. 333 et seq.), and there is no need to rehearse them here. Taking account of various apparent difficulties the Departmental Advisory Committee on Arbitration hesitated for a time both as to the principle and as to whether the power to dismiss should be vested in the court or the arbitrator, but the pressure from all quarters became irresistible and in 1990 the Courts and Legal Services Act inserted, through the medium of Section 102, a new Section 13A in the Arbitration Act, 1950.” (at page 522) The question which arose in that case was whether delay that had taken place before the Section came into force could be taken into account by an arbitrator in order to reject the claim in that case. The House of Lords held that given the clamor for change and given the practical value and nature of the rights involved, it would be permissible to look at delay caused even before the Section came into force. In his concluding paragraph, Lord Mustill held:

“In this light, I turn to the language of Section 13A construed, in case of doubt, by reference to its legislative background. The crucial words are: “(a). . . there has been inordinate and inexcusable delay . . . “ Even if read in isolation these words would I believe be sufficient, in the context of Section 13A as a whole, to demonstrate that the delay encompasses all the delay which has caused the substantial risk of unfairness. If there were any doubt about this the loud and prolonged chorus of complaints about the disconformity between practices in arbitration and in the High Court, and the increasing impatience for something to be done about it, show quite clearly that Section 13A was intended to bite in full from the outset. If the position were otherwise it would follow that, although Parliament has accepted the advice of all those who had urged that this objectionable system should be brought to an end, and has grasped the nettle and provided a remedy, it has reconciled itself to the continuation of arbitral proceedings already irrevocably stamped with a risk of injustice. I find it impossible to accept that Parliament can have intended any such thing, and with due respect to those who have suggested otherwise I find the meaning of Section 13A sufficiently clear to persuade me that in the interests of reform Parliament was willing to tolerate the very qualified kind of hardship involved in giving the legislation a partially retrospective effect. Accordingly, I agree with Beldam L.J. that the arbitrator did have the powers to which he purported to exercise. I would therefore allow the appeal and restore the award of the arbitrator.”
46. In 2004, this Court’s Judgment in National Aluminium Company (supra) had recommended that Section 36 be substituted, as it defeats the very objective of the alternative dispute resolution system, and that the Section should be amended at the earliest to bring about the required change in law. It would be clear that looking at the practical aspect and the nature of rights presently involved, and the sheer unfairness of the unamended provision, which granted an automatic stay to execution of an award before the enforcement process of Section 34 was over (and which stay could last for a number of years) without having to look at the facts of each case, it is clear that Section 36 as amended should apply to Section 34 applications filed before the commencement of the Amendment Act also for the aforesaid reasons.

47. Both sides locked horns on whether a proceeding under Section 36 could be said to be a proceeding which is independent of a proceeding under Section 34. In view of what has been held by us above, it is unnecessary for us to go into this by-lane of forensic argument.
48. However, Shri Viswanathan strongly relied upon the observations made in paragraph 32 in Thyssen (supra) and the judgment in Hameed Joharan v. Abdul Salam, (2001) 7 SCC 573. It is no doubt true that paragraph 32 in Thyssen (supra) does, at first blush, support Shri Viswanathan’s stand. However, this was stated in the context of the machinery for enforcement under Section 17 of the 1940 Act which, as we have seen, differs from Section 36 of the 1996 Act, because of the expression “in relation to arbitral proceedings”, which took in the entire gamut, starting from the arbitral proceedings before the arbitral tribunal and ending up with enforcement of the award. It was also in the context of the structure of the 1940 Act being completely different from the structure of the 1996 Act, which repealed the 1940 Act. In the present case, it is clear that “enforcement” in Section 36 is to treat the award as if it were a decree and enforce it as such under the Code of Civil Procedure, which would only mean that such decree has to be executed in the manner indicated. Also, a stray sentence in a judgment in a particular context cannot be torn out of such context and applied in a situation where it has been argued that enforcement and execution are one and the same, at least for the purpose of the 1996 Act. In Regional Manager & Anr. v. Pawan Kumar Dubey (1976) 3 SCR 540, at 544 it was held:

“We think that the principles involved in applying Article 311(2) having been sufficiently explained in Shamsher Singh's case (supra) it should no longer be possible to urge that Sughar Singh's case (supra) could give rise to some misapprehension of the law. Indeed, we do not think that the principles of law declared and applied so often have really changed. But, the application of the same law to the differing circumstances and facts of various cases which have come up to this Court could create the impression sometimes that there is some conflict between different decisions of this Court. Even where there appears to some conflict, it would, we think, vanish when the ratio decidendi of each case is correctly understood. It is the rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts which may appear to be similar. One additional or different fact can make a world of difference between conclusions in two cases even when the same principles are applied in each case to similar facts.”
49. For the same reason, it is clear that the judgment in Hameed Joharan (supra), which stated that execution and enforcement were different concepts in law, was in the context of Article 136 of the Limitation Act, 1963, read with Section 35 of the Indian Stamp Act, 1899, which is wholly different. The argument in that case was that Article 136 of the Limitation Act prescribes a period of 12 years for the execution of a decree or order, after it becomes enforceable. What was argued was that it would become enforceable only when stamped and Section 35 of the Stamp Act was referred to for the said purpose. In this context, this Court held:

“And it is on this score it has been contended that the partition decree thus even though already passed cannot be acted upon, neither becomes enforceable unless drawn up and engrossed on stamp papers. The period of limitation, it has been contended in respect of the partition decree, cannot begin to run till it is engrossed on requisite stamp paper. There is thus, it has been contended, a legislative bar under Section 35 of the Indian Stamp Act for enforceability of partition decree. Mr Mani contended that enforcement includes the whole process of getting an award as well as execution since execution otherwise means due performance of all formalities, necessary to give validity to a document. We are, however, unable to record our concurrence therewith. Prescription of a twelve-year period certain cannot possibly be obliterated by an enactment wholly unconnected therewith.
Legislative mandate as sanctioned under Article 136 cannot be kept in abeyance unless the selfsame legislation makes a provision therefor. It may also be noticed that by the passing of a final decree, the rights stand crystallised and it is only thereafter its enforceability can be had, though not otherwise.” (at page 593) It is for this reason that it was stated that enforceability of a decree under the Limitation Act cannot be the subject matter of Section 35 of the Stamp Act. Therefore, Section 35 of the Stamp Act could not be held to “overrun” the Limitation Act and thus, give a complete go-by to the legislative intent of Article 136 of the Limitation Act. Here again, observations made in a completely different context have to be understood in that context and cannot be applied to a totally different situation.
50. As a matter of fact, it was noticed that furnishing of stamp paper was an act entirely within the domain and control of the Appellant in that case, and any delay in the matter of furnishing the same cannot possibly be said to stop limitation, as no one can take advantage of his own wrong (see paragraph 13). As a matter of fact, the Court held that unless a distinction was made between execution and enforcement, the result in that case would lead to an “utter absurdity”. The Court held, “absurdity cannot be the outcome of an interpretation of a Court order and wherever there is even a possibility of such absurdity, it would be a plain exercise of judicial power to repeal the same rather than encouraging it” (see paragraph 38).

51. Shri Viswanathan then referred us to this Court’s judgment in Akkayanaicker v. A.A.A. Kotchadainaidu and Anr. (2004) 12 SCC 469, which, according to him, has followed the judgment in Hameed Joharan (supra). This judgment again would have no application for the simple reason that the narrow point that was decided in that case was whether the time period for execution of a decree under Section 136 of the Limitation Act would start when the decree was originally made or whether a fresh period of limitation would begin after the decree was amended having been substantially scaled down by a Debt Relief Act. This Court held that as the original decree could not be enforced and only the amended decree could be enforced, 12 years has to be counted from the date of the amended decree. It is clear that this judgment also does not carry the matter further.

52. It was also argued that an award by itself had no legal efficacy, until it became enforceable, and that, therefore, until it could be enforced as a decree of the Court, it would continue to remain suspended. Here again, the judgment in Satish Kumar (supra) is extremely instructive. The question in that case was as to whether, under the 1940 Act, an award had any legal efficacy before a judgment followed thereupon and it was made into a decree. A Full Bench of the Punjab and Haryana High Court held that until it is made a rule of the Court, such an award is waste paper. This Court strongly disagreed and followed its unreported decision in Uttam Singh Dugal & Co. v. Union of India as follows:

“It seems to us that the main reason given by the two Full Benches for their conclusion is contrary to what was held by this Court in its unreported decision in Uttam Singh Dugal & Co. v. Union of India [ Civil Appeal No. 162 of 1962—judgment delivered on 11-10-1962] . The facts in this case, shortly stated, were that Uttam Singh Dugal & Co. filed an application under Section 33 of the Act in the Court of the Subordinate Judge, Hazaribag. The Union of India, Respondent 1, called upon Respondent 2, Col. S.K. Bose, to adjudicate upon the matter in dispute between Respondent 1 and the appellant Company. The case of Uttam Singh Dugal & Co.was that this purported reference to Respondent 2 for adjudication on the matters alleged to be in dispute between them and Respondent 1 was not competent because by an award passed by Respondent 2 on April 23, 1952 all the relevant disputes between them had been decided. The High Court held inter alia that the first award did not create any bar against the competence of the second reference. On appeal this Court after holding that the application under Section 33 was competent observed as follows:
“The true legal position in regard to the effect of an award is not in dispute. It is well settled that as a general rule, all claims which are the subject-matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award. After an award is pronounced, no action can be started on the original claim which had been the subject-matter of the reference. As has been observed by Mookerjee, J., in the case of Bhajahari Saha Banikya v.

Behary Lal Basak [33 Cal. 881 at p. 898] the award is, in fact, a final adjudication of a Court of the parties own choice, and until impeached upon sufficient grounds in an appropriate proceeding, an award, which is on the fact of it regular, is conclusive upon the merits of the controversy submitted, unless possibly the parties have intended that the award shall not be final and conclusive … in reality, an award possesses all the elements of vitality, even though it has not been formally enforced, and it may be relied upon in a litigation between the parties relating to the same subject-matter”. This conclusion, according to the learned Judge, is based upon the elementary principle that, as between the parties and their privies, an award is entitled to that respect which is due to the judgment of a court of last resort.

Therefore, if the award which has been pronounced between the parties has in fact, or can, in law, be deemed to have dealt with the present dispute, the second reference would be incompetent.

This position also has not been and cannot be seriously disputed.” This Court then held on the merits “that the dispute in regard to overpayments which are sought to be referred to the arbitration of Respondent 2 by the second reference are not new disputes; they are disputes in regard to claims which the Chief Engineer should have made before the arbitration under the first reference”. This Court accordingly allowed the appeal and set aside the order passed by the High Court.

This judgment is binding on us. In our opinion this judgment lays down that the position under the Act is in no way different from what it was before the Act came into force, and that an award has some legal force and is not a mere waste paper. If the award in question is not a mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of Section 17(1)(b) of the Registration Act.” (at pages 248-249)

53. Justice Hegde, in a separate concurring judgment, specifically stated that an award creates rights in property, but those rights cannot be enforced until the award is made a decree of the Court. The Learned Judge put it very well when he said, “It is one thing to say that a right is not created, it is an entirely different thing to say that the right created cannot be enforced without further steps”. The Amendment Act has only made an award executable conditionally after it is made, like a judgment of a Court, the only difference being that a decree would not have to be formally drawn following the making of such award.

54. Shri Viswanathan then argued, relying upon R. Rajagopal Reddy v. Padmini Chandrasekharan (1995) 2 SCC 630, Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2001) 6 SCC 356, Sedco Forex International Drill. Inc. v. CIT (2005) 12 SCC 717 and Bank of Baroda v. Anita Nandrajog (2009) 9 SCC 462, that a clarificatory amendment can only be retrospective, if it does not substantively change the law, but merely clarifies some doubt which has crept into the law. For this purpose, he referred us to the amendments made in Section 34 by the Amendment Act and stated that despite the fact that Explanations 1 and 2 to Section 34(2) stated that “for the avoidance of any doubt, it is clarified”, this is not language that is conclusive in nature, but it is open to the Court to go into whether there is, in fact, a substantive change that has been made from the earlier position or whether a doubt has merely been clarified. According to learned senior counsel, since fundamental changes have been made, doing away with at least two judgments of this Court, being Saw Pipes Ltd (supra) and Western Geco (supra), as has been held in paragraph 18 in HRD Corporation (Marcus Oil and Chemical Division) v. Gail (India) Limited (Formerly Gas Authority of India Ltd.) 2017 SCC Online 1024, it is clear that such amendments would only be prospective in nature. We do not express any opinion on the aforesaid contention since the amendments made to Section 34 are not directly before us. It is enough to state that Section 26 of the Amendment Act makes it clear that the Amendment Act, as a whole, is prospective in nature. Thereafter, whether certain provisions are clarificatory, declaratory or procedural and, therefore, retrospective, is a separate and independent enquiry, which we are not required to undertake in the facts of the present cases, except to the extent indicated above, namely, the effect of the substituted Section 36 of the Amendment Act.

55. Learned counsel for the Appellants have painted a lurid picture of anomalies that would arise in case the Amendment Act were generally to be made retrospective in application. Since we have already held that the Amendment Act is only prospective in application, no such anomalies can possibly arise. It may also be noted that the choosing of Section 21 as being the date on which the Amendment Act would apply to arbitral proceedings that have been commenced could equally be stated to give rise to various anomalies. One such anomaly could be that the arbitration agreement itself may have been entered into years earlier, and disputes between the parties could have arisen many years after the said arbitration agreement. The argument on behalf of the Appellants is that parties are entitled to proceed on the basis of the law as it exists on the date on which they entered into an agreement to refer disputes to arbitration. If this were to be the case, the starting point of the application of the Amendment Act being only when a notice to arbitrate has been received by the respondent, which as has been stated above, could be many years after the arbitration agreement has been entered into, would itself give rise to the anomaly that the amended law would apply even to arbitration proceedings years afterwards as and when a dispute arises and a notice to arbitrate has been issued under Section 21. In such a case, the parties, having entered into an arbitration agreement years earlier, could well turn around and say that they never bargained for the change in law that has taken place many years after, and which change will apply to them, since the notice, referred to in Section 21, has been issued after the Amendment Act has come into force. Cut off dates, by their very nature, are bound to lead to certain anomalies, but that does not mean that the process of interpretation must be so twisted as to negate both the plain language as well as the object of the amending statute. On this ground also, we do not see how an emotive argument can be converted into a legal one, so as to interpret Section 26 in a manner that would be contrary to both its plain language and object.

56. However, it is important to remember that the Amendment Act was enacted for the following reasons, as the Statement of Objects and Reasons for the Amendment Act states:

“2. The Act was enacted to provide for speedy disposal of cases relating to arbitration with least court intervention. With the passage of time, some difficulties in the applicability of the Act have been noticed. Interpretation of the provisions of the Act by courts in some cases have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of the Act. With a view to overcome the difficulties, the matter was referred to the Law Commission of India, which examined the issue in detail and submitted its 176th Report. On the basis of the said report, the Arbitration and Conciliation (Amendment) Bill, 2003 was introduced in the Rajya Sabha on 22nd December, 2003. The said Bill was referred to the Department-related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice for examination and Report. The said Committee, submitted its Report to the Parliament on 4th August, 2005, wherein the Committee recommended that since many provisions of the said Bill were contentious, the Bill may be withdrawn and a fresh legislation may be brought after considering its recommendations. Accordingly, the said Bill was withdrawn from the Rajya Sabha.
3. On a reference made again in pursuance of the above, the Law Commission examined and submitted its 246th Report on “Amendments to the Arbitration and Conciliation Act, 1996” in August, 2014 and recommended various amendments in the Act. The proposed amendments to the Act would facilitate and encourage Alternative Dispute Mechanism, especially arbitration, for settlement of disputes in a more user-friendly, cost effective and expeditious disposal of cases since India is committed to improve its legal framework to obviate in disposal of cases.

4. As India has been ranked at 178 out of 189 nations in the world in contract enforcement, it is high time that urgent steps are taken to facilitate quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered and reduce the pendency of cases in courts and hasten the process of dispute resolution through arbitration, so as to encourage investment and economic activity.

5. As Parliament was not in session and immediate steps were required to be taken to make necessary amendments to the Arbitration and Conciliation Act, 1996 to attract foreign investment by projecting India as an investor friendly country having a sound legal framework, the President was pleased to promulgate the Arbitration and Conciliation (Amendment) Ordinance, 2015.

6. It is proposed to introduce the Arbitration and Conciliation (Amendment) Bill, 2015, to replace the Arbitration and Conciliation (Amendment) Ordinance, 2015, which inter alia, provides for the following, namely:—

(i) to amend the definition of “Court” to provide that in the case of international commercial arbitrations, the Court should be the High Court;

(ii) to ensure that an Indian Court can exercise jurisdiction to grant interim measures, etc., even where the seat of the arbitration is outside India;

(iii) an application for appointment of an arbitrator shall be disposed of by the High Court or Supreme Court, as the case may be, as expeditiously as possible and an endeavour should be made to dispose of the matter within a period of sixty days;

(iv) to provide that while considering any application for appointment of arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues;

(v) to provide that the arbitral tribunal shall make its award within a period of twelve months from the date it enters upon the reference and that the parties may, however, extend such period up to six months, beyond which period any extension can only be granted by the Court, on sufficient cause;

(vi) to provide that a model fee Schedule on the basis of which High Courts may frame rules for the purpose of determination of fees of arbitral tribunal, where a High Court appoints arbitrator in terms of section 11 of the Act;

(vii) to provide that the parties to dispute may at any stage agree in writing that their dispute be resolved through fast track procedure and the award in such cases shall be made within a period of six months;

(viii) to provide for neutrality of arbitrators, when a person is approached in connection with possible appointment as an arbitrator;
(ix) to provide that application to challenge the award is to be disposed of by the Court within one year.

7. The amendments proposed in the Bill will ensure that arbitration process becomes more user-friendly, cost effective and lead to expeditious disposal of cases.” (Emphasis Supplied)

57. The Government will be well-advised in keeping the aforesaid Statement of Objects and Reasons in the forefront, if it proposes to enact Section 87 on the lines indicated in the Government’s press release dated 7 th March, 2018. The immediate effect of the proposed Section 87 would be to put all the important amendments made by the Amendment Act on a back-burner, such as the important amendments made to Sections 28 and 34 in particular, which, as has been stated by the Statement of Objects and Reasons, “…have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of the Act”, and will now not be applicable to Section 34 petitions filed after 23 rd October, 2015, but will be applicable to Section 34 petitions filed in cases where arbitration proceedings have themselves commenced only after 23rd October, 2015. This would mean that in all matters which are in the pipeline, despite the fact that Section 34 proceedings have been initiated only after 23rd October, 2015, yet, the old law would continue to apply resulting in delay of disposal of arbitration proceedings by increased interference of Courts, which ultimately defeats the object of the 1996 Act.4 It would be important to remember that the 246 th These amendments have the effect, as stated in HRD Corporation (Marcus Oil and Chemical Division) v. Gail (India) Limited (Formerly Gas Authority of India Ltd.) 2017 SCC Online 1024 (at paragraph 18) of limiting the grounds of challenge to awards as follows:

“…In fact, the same Law Commission Report has amended Sections 28 and 34 so as to narrow grounds of challenge available under the Act. The judgment in ONGC v. Saw Pipes Ltd, (2003) 5 SCC 705, has been expressly done away with. So has the judgment in ONGC v. Western Geco International Ltd., (2014) 9 SCC 263. Both Sections 34 and 48 have been brought back to the position of law contained in Renusagar Power Plant Co. Ltd.
v. General Electric Co., (1994) Supp (1) SCC 644, where “public policy” will now include only two of the three things set out therein, viz., “fundamental policy of Indian law” and “justice or morality”. The ground relating to “the interest of India” no longer obtains. “Fundamental policy of Indian law” is now to be understood as laid down in Renusagar (supra). “Justice or morality” has been tightened and is now to be understood as meaning only basic Law Commission Report has itself bifurcated proceedings into two parts, so that the Amendment Act can apply to Court proceedings commenced on or after 23 rd October, 2015. It is this basic scheme which is adhered to by Section 26 of the Amendment Act, which ought not to be displaced as the very object of the enactment of the Amendment Act would otherwise be defeated.

58. At the fag end of the arguments, Shri Viswanathan, in rejoinder, raised another point which arises only in Civil Appeals arising out of SLP(C) No. 8374-8375 of 2017 and 8376-8378 of 2017. According to him, the impugned judgment, when it dealt with the majority award in favour of respondent Enercon GmbH, went behind the award in ordering execution of a portion of the award in favour of Enercon, when the majority award, in paragraph 331(3) notions of justice and morality i.e. such notions as would shock the conscience of the Court as understood in Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49. Section 28(3) has also been amended to bring it in line with the judgment of this Court in Associate Builders (supra), making it clear that the construction of the terms of the contract is primarily for the arbitrator to decide unless it is found that such a construction is not a possible one.”
(b), specifically ordered the 2nd and 3rd defendants to pay to WWIL, which is a joint venture company, a sum of Rs.6,77,24,56,570/-. The majority award of the tribunal had specifically stated, in paragraph 298, as follows:

“Enercon’s claim is first pleaded as damages payable by the Mehra directors directly to Enercon. It also pleads an alternative claim for such further or other relief as the Tribunal considers appropriate (paragraph 18 of the application of 13 December 2015 and paragraph 323.4 of its closing written submission dated 13 May 2016, as also its Statement of Claim of 30 September 2014, at paragraph 102(M).) In the Tribunal’s view, given that WWIL is only part owned by Enercon (hence Enercon’s pecuniary disadvantage resulting from the Mehra directors’ wrongdoing is not the same as that of WWIL) and further that WWIL remains the person most immediately affected by such wrongdoing, the liability of the Mehra directors is best discharged by requiring them to deciding upon such relief in favour of WWIL (as distinct from direct relief in favour of Enercon), the Tribunal sees no material disadvantage to Enercon, and, as for the Mehra directors, no possible prejudice or other unfairness, whether as a matter of pleading, the form of relief or otherwise.” It is only thereafter that the Tribunal awarded the aforesaid amount in paragraph 331(3)(b) as follows:
“(b) Jointly and severally-
(i) to pay to WWIL the sum of INR 6,772,456,570, being the profit made by Vish Wind on the sale of allotment rights to WWIL in the years ending 31 March 2011 and 2012 together with interest thereon at the rate of 3% over European Central Bank rate from those dates until the date of this Award.
(ii) To pay to the Claimants their legal and other costs in the sum of €3,794,970.”
59. It is thus Shri Viswanathan’s contention that it is the decree holder alone who can execute such decree in its favour, and that in the present case it is WWIL who is the decree holder, insofar as paragraph 331(3)(b) is concerned and, that, therefore, Enercon’s Chamber Summons, to execute this portion of the award, is contrary to the Code of Civil Procedure as well as a number of judgments construing the Code.
60. On the other hand, the submission of the other side is that the Mehra brothers, who are the 2 nd and 3rd defendants in the arbitration proceedings, are in control and management of WWIL, and have wrongfully excluded Enercon from such control and management. WWIL, therefore, will never put this decree into execution. This being so, the interest of justice requires that we should not interfere with the High Court judgment as there is no person that would be in a position to enforce the award apart from Enercon.

61. We are of the opinion that even though the High Court may not be strictly correct in its appreciation of the law, yet it has attempted to do justice on the facts of the case as follows:

“These last words are important. If what Mr. Mehta says is correct and the decree was in favour of WWIL and not Enercon, that necessarily posits a rejection of Enercon’s claim for damages and, therefore, a material disadvantage to Enercon. But this is not what the Arbitral Tribunal did at all. It accepted Enercon's plea. It accepted its argument that the Mehras were guilty of wrongdoing. It accepted that the Mehras were liable to make good any advantage or benefit they have received. The Arbitral Tribunal merely changed the vehicle or direction by which that recompense, restitution or recovery was to be made. The nomenclature is immaterial. Given the nature of disputes, indeed, WWIL could never put this decree into execution. It never sought this relief. It could not have. This is not in fact, as paragraph 298, says a relief in favour of WWIL at all although WWIL may benefit from it. It is a relief and a decree in favour of and only of Enercon.” In this view of the matter, we do not think it appropriate, in the interest of justice, to interfere with the impugned judgment on this count.
62. In view of the above, the present batch of appeals is dismissed. A copy of the judgment is to be sent to the Ministry of Law and Justice and the Learned Attorney General for India in view of what is stated in paragraphs 56 and 57 supra.

J. (R.F. Nariman) ……
J. (Navin Sinha) New Delhi;

March 15, 2018.

“14. The learned counsel for the appellant submits that Parliament had Section 6 of the General Clauses Act in view, and therefore no express provision was made dealing with appeals and revisions, etc. In our view, Section 6 of the General Clauses Act would not apply because Section 297(2) evidences an intention to the contrary. In Union of India v. Madan Gopal Kabra [25 ITR 5] while interpreting Section 13 of the Finance Act, 1950, already extracted above, this Court observed at p. 68:
“Nor can Section 6 of the General Clauses Act, 1897, serve to keep alive the liability to pay tax on the income of the year 1949-50 assuming it to have accrued under the repealed State law, for a “different intention” clearly appears in Sections 2 and 13 of the Finance Act read together as indicated above.” It is true that whether a different intention appears or not must depend on the language and content of Section 297(2). It seems to us, however, that by providing for so many matters mentioned above, some in accord with what would have been the result under Section 6 of the General Clauses Act and some contrary to what would been the result under Section 6, Parliament has clearly evidenced an intention to the contrary.”
28. Shri Sundaram’s submission is also not in consonance with the law laid down in some of our judgments. The approach to statutes, which amend a statute by way of repeal, was put most felicitously by B.K.
Mukherjea, J. in State of Punjab v. Mohar Singh, 1955 1 SCR 893 at 899-900, thus:

“In our opinion the approach of the High Court to the question is not quite correct. Whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject we would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them. We cannot therefore subscribe to the broad proposition that Section 6 of the General Clauses Act is ruled out when there is repeal of an enactment followed by a fresh legislation. Section 6 would be applicable in such cases also unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new law and the mere absence of a saving clause is by itself not material. It is in the light of these principles that we now proceed to examine the facts of the present case.” (Emphasis Supplied) This statement of the law has subsequently been followed in Transport and Dock Workers Union & Ors. v. New Dholera Steamships Ltd., Bombay and Ors. (supra) at paragraph 6 and T.S. Baliah v. T.S. Rengachari, 1969 3 SCR 65 at 71-72.
29. Equally, the suggested interpretation of Shri Viswanathan would not only do violence to the plain language of Section 26, but would also ignore the words “in relation to” in the second part of Section 26, as well as ignore the fact that Section 21 of the 1996 Act, though mentioned in the first part, is conspicuous by its absence in the second part. According to Shri Viswanathan, the expression “arbitral proceedings commenced” is the same in both parts and, therefore, the commencement of arbitral proceedings under Section 21 is the only thing to be looked at in both parts. Thus, according to the learned senior counsel, if arbitral proceedings have commenced prior to coming into force of the Amendment Act, the said proceedings, together with all proceedings in Court in relation thereto, would attract only the provisions of the unamended 1996 Act. Similarly, when arbitral proceedings have commenced under Section 21 after the coming into force of the Amendment Act, those proceedings, including all courts proceedings in relation thereto, would be governed by the Amendment Act. This is not the scheme of Section 26 at all, as has been pointed out above. Further, this argument is more or less the conclusion reached by the report of the High Level Committee, headed by Justice B.N. Srikrishna, to amend the 1996 Act.3 It can be seen from the report of the High Level Shri Tushar Mehta, learned ASG, referred to a press release from the Government of India, dated March 7 th, 2018, after arguments have been concluded, in a written submission made to us. According to him, the press release refers to a new Section 87 in a proposed amendment to be made to the 1996 Act. The press release states that the Union Cabinet, chaired by the Prime Minister, has approved the Arbitration and Conciliation (Amendment) Bill, 2018 in which a new Section 87 is proposed to be inserted as follows:

Committee that an amendment would be required to Section 26 to incorporate its findings. Section 87 of the proposed Arbitration and Conciliation (Amendment) Bill, 2018 cannot be looked at, at this stage, for the interpretation of Section 26 of the Amendment Act for two “A new section 87 is proposed to be inserted to clarify that unless parties agree otherwise the Amendment Act 2015 shall not apply to (a) Arbitral proceedings which have commenced before the commencement of the Amendment Act of 2015 (b) Court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Amendment Act of 2015 and shall apply only to Arbitral proceedings commenced on or after the commencement of the Amendment Act of 2015 and to court proceedings arising out of or in relation to such Arbitral proceedings.” The Srikrishna Committee had recommended the following:

“The Committee feels that permitting the 2015 Amendment Act to apply to pending court proceedings related to arbitrations commenced prior to 23 October 2015 would result in uncertainty and prejudice to parties, as they may have to be heard again. It may also not be advisable to make the 2015 Amendment Act applicable to fresh court proceedings in relation to such arbitrations, as it may result in an inconsistent position. Therefore, it is felt that it may be desirable to limit the applicability of the 2015 Amendment Act to arbitrations commenced on or after 23 October 2015 and related court proceedings.

Recommendations reasons: (i) Section 87, as ultimately enacted, may not be in the form that is referred to in the press release; and (ii) a proposed Bill, introducing a new and different provision of law can hardly be the basis for interpretation of a provision of law as it now stands. Obviously, therefore,

1. Section 26 of the 2015 Amendment Act may be amended to provide that:

a. unless parties agree otherwise, the 2015 Amendment Act shall not apply to: (a) arbitral proceedings commenced, in accordance with section 21 of the ACA, before the commencement of the 2015 Amendment Act; and (b) court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the 2015 Amendment Act; and b. the 2015 Amendment Act shall apply only to arbitral proceedings commenced on or after the commencement of the 2015 Amendment Act and to court proceedings arising out of or in relation to such arbitral proceedings.

2. The amended Section 26 shall have retrospective effect from the date of commencement of the 2015 Amendment Act.” The High Level Committee recommended this after referring to divergent views taken by various High Courts. This included the interpretation given by the Calcutta High Court in Electrosteel Castings Limited v. Reacon Engineers (India) Pvt. Ltd. (A.P. No. 1710 of 2015 decided on 14.01.2016) and Tufan Chatterjee v. Rangan Dhar, (FMAT No. 47 of 2016 decided on 02.03.2016), the Madhya Pradesh High Court in Pragat Akshay Urja Limited Company v. State of M.P and Ors., (Arbitration Case Nos. 48, 53 and 54/2014, decided on 30.06.2016), the Madras High Court in New Tirupur Area Development v. Hindustan Construction Co. Limited, Shri Viswanathan’s approach leads to an amendment of Section 26, as recommended by the Srikrishna Committee, and not interpretation thereof. For all these reasons, his argument must, therefore, be rejected. Shri Datar’s argument is more or less the same as Shri (Application No. 7674 of 2015 in O.P. No. 931 of 2015) and the Bombay High Court in Rendezvous Sports World v. BCCI (Chamber Summons No. 1530 of 2015 in Execution Application (L) No. 2481 of 2015, Chamber Summons No. 1532 of 2015 in Execution Application (L) No. 2482 and Chamber Summons No. 66 of 2016 in Execution Application (L) No. 2748 of 2015 decided on 08.08.2016).

In addition to this, the following decisions by various High Courts also deal with the applicability of the Amendment Act: i. Calcutta High Court: Nitya Ranjan Jena v. Tata Capital Financial Services Ltd., GA No. 145/206 with AP No. 15/2016, West Bengal Power Development Corporation Ltd. v. Dongfang Electric Corporation, 2017 SCCOnline Cal 9388, Saraf Agencies v. Federal Agencies for State Property Management, AIR 2017 Cal. 65, Reliance Capital Ltd. v. Chandana Creations, 2016 SCC Cal. 9558 and Braithwaite Burn & Jessop Construction Company Ltd. v. Indo Wagon Engineering Ltd., AIR 2017 (NOC 923) 314.

ii.      Bombay High Court: M/s. Maharashtra Airport
        Development         Company         Ltd.     v.   M/s.    PBA
Infrastructure Ltd., 2017 SCCOnline Bom (7840), Enercon GmbH v. Yogesh Mehra, 2017 SCC Bom 1744 and Global Aviation Services Pvt. Ltd. v. Airport Authority of India, Commercial Arbitration Petition No. 434/2017, iii. Madras High Court: Jumbo Bags Ltd. v. New India Assurance Company Limited, 2016 (3) CTC 769. iv. Delhi High Court: ICI Soma JV v. Simplex Infrastructures Ltd., 2016 SCC Online Del 5315, Tantia- CCIL (JV) v. Union of India, ARB. P. 615/2016, Raffles Design International India Pvt. Ltd. v. Educomp Viswanathan’s, and suffers from the same infirmity as Shri Viswanathan’s interpretation. Shri A. Krishnan, in bringing in the concept of “seat”, is again doing complete violence to the language of Section 26, as “place of arbitration” is a Professional Education Ltd. and Ors., OMP (I) (COMM.) 23/2015, Orissa Concrete and Allied Industries Ltd. v. Union of India and Ors., Arb. P. No. 174 of 2016, Takamol Industries Pvt. Ltd. v. Kundan Rice Mills Ltd., EX. P. 422/2014 & EA No. 739/2016, Apex Encon Projects Pvt. Ltd. v. Union of India & Anr., 2017 SCC Online Del. 9779 and Ratna Infrastructure Projects Pvt. Ltd. v. Meja Urja Nigam Pvt. Ltd., 2017 SCC Online Del 7808.

v. Patna High Court: SPS v. Bihar Rajya Pul Nirman Nigam Ltd., Request Case No. 14 of 2016 and Kumar and Kumar Associates v. Union of India, 2017 1 PLJR 649. vi. Gujarat High Court: OCI Corp. v. Kandla Export Corporation & Ors., 2017 GLH (1) 383, Abhinav Knowledge Services Pvt. Ltd. v. Babasaheb Amdebdkar Open University, AIR 2017 (NOC 1012) 344 and Pallav Vimalbhai Shah v. Kalpesh Sumatibhai Shah, O/IAAP/15/2017.

vii. Kerala High Court: Shamsudeen v. Shreeram Transport Finance Ltd., ILR 2017 Vol. 1, Ker. 370 and Jacob Mathew v. PTC Builders, 2017 (5) KHC 583. viii. Tripura High Court: Subhash Podder v. State of Tripura, 2016 SCC Tri. 500.

ix. Chhatisgarh High Court: Orissa Concrete and Allied Industries Limited v. Union of India and Ors., Arbitration Application No. 34/2014. x. Rajasthan High Court: Dwarka Traders Pvt. Ltd. v.

Union of India, S.B., Arbitration Application No. 95/2013 and Mayur Associates, Engineers and Contractors v. Gurmeet Singh & Ors., S.B. Arbitration Application No. 74/2013.

xi. Himachal Pradesh High Court: RSWM v. The Himachal Pradesh State Supplies Co. Ltd., Arb Case No. 104/2016 well-known concept contained in Section 20 of the 1996 Act, which finds no mention whatsoever in Section 26 of the Amendment Act. For these reasons, his interpretation cannot also be accepted.

30. Shri Neeraj Kishan Kaul, learned senior counsel appearing on behalf of Respondents in SLP(C) Nos.19545-19546 of 2016, has argued that the first part of Section 26 does not apply to Court proceedings at all, thereby indicating that the Amendment Act must be given retrospective effect insofar as Court proceedings in relation to arbitral proceedings are concerned. For this purpose, he relied on Minister of Public Works of the Government of the State of Kuwait (supra).

31. In that case, the question that arose was as to the correct construction of Section 7(1) of the U.K. Arbitration Act, 1975. The said section was given retrospective effect and P.K. Construction Co. & Ors. v. Shimla Municipal Co. & Ors., Civil Writ Petition No. 2322/2016. xii. Punjab & Haryana High Court: Alpine Minmetals India Pvt. Ltd. v. Noble Resources Ltd., LPA No. 917/2017. in applying the New York Convention to arbitration agreements that were entered into before the convention was made applicable, for the reason that nobody had an accrued right/defence which was taken away. All defences available in a common law action on the award would be available and continued to be available. Hence, it was held that the award could always have been enforced by one form of procedure and that it subsequently became enforceable by an alternative form. This judgment can have no application to the present case, inasmuch as the Amendment Act, as applicable to Court proceedings that arose in relation to arbitral proceedings, cannot be said to apply to mere forms of procedure, but also includes substantive law applicable to such Court proceedings post the Amendment Act. Also, it is wholly fallacious to say that since the first part of Section 26 does not refer to Court proceedings in relation to arbitral proceedings, the Amendment Act is retrospective insofar as such proceedings are concerned. The second part of Section 26 would then have to be completely ignored, which, as has been seen hereinabove, applies to Court proceedings in relation to arbitral proceedings only prospectively, i.e. if such Court proceedings are commenced after the Amendment Act comes into force. For these reasons, such an interpretation of Section 26 is unacceptable.

32. Shri Chidambaram, appearing on behalf of some of the Respondents, has argued that the interpretation accepted by this Court supra is the correct interpretation. He has also argued that, alternatively, the expression “in relation to arbitral proceedings” in the second part of Section 26 would also include within it arbitral proceedings before the arbitral tribunal, as otherwise Section 26 would not apply the Amendment Act to such arbitral proceedings. We are afraid that this alternative interpretation does not appeal to us, for the simple reason that when the first part of Section 26 makes it clear that arbitral proceedings commenced before the Amendment Act would not be governed by the Amendment Act, it is clear that arbitral proceedings that have commenced after the Amendment Act comes into force would be so governed by it, as has been held by us above. The negative form of the language of the first part only becomes necessary to indicate that parties may otherwise agree to apply the Amendment Act to arbitral proceedings commenced even before the Amendment Act comes into force. The absence of any reference to Section 21 of the 1996 Act in the second part of Section 26 of the Amendment Act is also a good reason as to why arbitral proceedings before an arbitral tribunal are not contemplated in the second part.

33. Shri Sibal has argued that Section 26 is not a savings clause at all and cannot be construed as such. According to the learned senior counsel, Section 26 manifests a clear intention to destroy all rights, vested or otherwise, which have accrued under the unamended 1996 Act. We are unable to accept these submissions as it is clear that the intendment of Section 26 is to apply the Amendment Act prospectively to arbitral proceedings and to court proceedings in relation thereto. This approach again does not commend itself to us.

34. Dr. Singhvi has, however, argued that the approach indicated by us above could be termed as an “intermediate approach”, i.e. it is an approach which does not go to either of the extreme approaches of Shri Sundaram, Shri Viswanathan and Shri Datar or that of Shri Sibal. Further, according to the learned senior counsel, this approach has the merit of both clarity, as well as no anomalies arising as a result, as it is clear that the Amendment Act is to be applied only prospectively with effect from the date of its commencement, and only to arbitral proceedings and to court proceedings in relation thereto, which have commenced on or after the commencement of the Amendment Act. We think this is the correct approach as has already been indicated by us above.

35. The judgment in Thyssen (supra), was strongly relied upon by counsel on both sides. It is, therefore, important to deal with this judgment in a little detail. In Thyssen (supra), Section 85 of the 1996 Act came up for consideration. What is clear is that Section 85(2)(a) had the expression “in relation to arbitral proceedings” in both parts of sub-section (2)(a). When speaking of the repealed enactments, it stated that they will apply “in relation to” arbitral proceedings which commenced before the 1996 Act came into force, but that otherwise the 1996 Act shall apply “in relation to” arbitral proceedings, which commenced on or after the 1996 Act came into force.

36. The judgment in Thyssen (supra) construed Section 85 as follows:

“23. Section 85(2)(a) of the new Act is in two limbs: (1) provisions of the old Act shall apply in relation to arbitral proceedings which commenced before the new Act came into force unless otherwise agreed by the parties, and (2) the new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. The first limb can further be bifurcated into two: (a) provisions of the old Act shall apply in relation to arbitral proceedings commenced before the new Act came into force, and (b) the old Act will not apply in such cases where the parties agree that it will not apply in relation to arbitral proceedings which commenced before the new Act came into force. The expression “in relation to” is of the widest import as held by various decisions of this Court in Doypack Systems (P) Ltd. [(1988) 2 SCC 299], Mansukhlal Dhanraj Jain [(1995) 2 SCC 665], Dhanrajamal Gobindram [AIR 1961 SC 1285 : (1961) 3 SCR 1020] and Navin Chemicals Mfg. [(1993) 4 SCC 320] This expression “in relation to” has to be given full effect to, particularly when read in conjunction with the words “the provisions” of the old Act.
That would mean that the old Act will apply to the whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only the word “to” could have sufficed and when the legislature has used the expression “in relation to”, a proper meaning has to be given. This expression does not admit of restrictive meaning. The first limb of Section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of commencement of the new Act but also the provisions of the old Act for enforcement of the award under that Act.” (at page 369) [Emphasis Supplied] The judgment then goes on to refer to Section 48 of the Arbitration Act, 1940, which is set out therein as follows: “48. Saving for pending references.—The provisions of this Act shall not apply to any reference pending at the commencement of this Act, to which the law in force immediately before the commencement of this Act shall notwithstanding any repeal effected by this Act continue to apply.” (at page 349) Paragraph 33 goes on to state the difference between Section 85(2)(a) of the 1996 Act and the earlier Section 48 of the 1940 Act, as follows:

“33. Because of the view of Section 85(2)(a) of the new Act which we have taken, it is not necessary for us to consider difference in the repealing provisions as contained in Section 48 of the old Act and Section 85 of the new Act. We may, however, note that under Section 48 of the old Act the concept is of “reference” while under the new Act it is “commencement”. Section 2(e) of the old Act defines “reference”. Then under Section 48 the word used is “to” and under Section 85(2)
(a) the expression is “in relation to”. It, therefore, also appears that it is not quite relevant to consider the provision of Section 48 of the old Act to interpret Section 85(2)(a).” (at page 375) [Emphasis Supplied] Paragraph 25 specifically states that Section 6 of the General Clauses Act will not apply, inasmuch as a different intention does appear from the plain language of Section 85(2)(a). Ultimately, after stating seven conclusions in paragraph 22, this Court went on to state that enforcement of an award under the 1940 Act would be an accrued right for the reason that the challenge procedure under Section 30 of the 1940 Act was wider and completely different from the challenge procedure under Section 34 of the 1996 Act, and that to avoid confusion and hardship, it would be important to refer to the expression “in relation to” as meaning the entire gamut of arbitral proceedings, beginning with commencement and ending with enforcement of an award.
37. The judgment in Thyssen (supra) dealt with a differently worded provision, and emphasized the difference in language between the expression “to” and the expression “in relation to”. In reference to the Acts which were repealed under Section 85, proceedings which commenced before the 1996 Act were to be governed by the repealed Acts. These proceedings would be the entire gamut of proceedings, i.e. from the stage of commencement of arbitral proceedings until the challenge proceedings against the arbitral award had been exhausted. Similar was the position with respect to the applicability of the 1996 Act, which would again apply to the entire gamut of arbitral proceedings, beginning with commencement and ending with enforcement of the arbitral award. It is clear, therefore, that Section 85(2)(a) has two major differences in language with Section 26: one, that the expression “in relation to” does not appear in the first part of Section 26 and only the expression “to” appears; and, second, that “commencement” in the first part of Section 26 is as is understood by Section 21 of the 1996 Act. The second part of Section 85(2)(a) is couched in language similar to the second part of Section 26 with this difference, that Section 21 contained in the first part of Section 26 is conspicuous by its absence in the second part.

38. The judgment in Thyssen (supra) was followed in N.S. Nayak (supra). After setting out paragraph 32 of the judgment in Thyssen (supra) and paragraphs 22 and 23 of the aforesaid judgment, this Court concluded:

“13. As stated in paragraph 22, Conclusion 1 without any reservation provides that the provisions of the old Act shall apply in relation to the arbitral proceedings which have commenced before coming into force of the new Act. Conclusion 2, in our view, is required to be read in context with Conclusion 1, that is to say, the phrase “in relation to arbitral proceedings” cannot be given a narrow meaning to mean only pendency of the proceedings before the arbitrator. It would cover not only proceedings pending before the arbitrator but would also cover the proceedings before the court and any proceedings which are required to be taken under the old Act for the award becoming a decree under Section 17 thereof and also appeal arising thereunder. Hence, Conclusions 1 and 2 are to be read together which unambiguously reiterate that once the arbitral proceedings have started under the old Act, the old Act would apply for the award becoming a decree and also for appeal arising thereunder.
14. Conclusion 3 only reiterates what is provided in various sections of the Arbitration Act, which gives option to the parties to opt for the procedure as per their agreement during the arbitral proceedings before the arbitrator.
The phrase “unless otherwise agreed by the parties” used in various sections, namely, 17, 21, 23(3), 24(1), 25, 26, 29, 31, 85(2)(a) etc. indicates that it is open to the parties to agree otherwise. During the arbitral proceedings, right is given to the parties to decide their own procedure. So if there is an agreement between the parties with regard to the procedure to be followed by the arbitrator, the arbitrator is required to follow the said procedure. Reason being, the arbitrator is appointed on the basis of the contract between the parties and is required to act as per the contract. However, this would not mean that in appeal parties can contend that the appellate procedure should be as per their agreement. The appellate procedure would be governed as per the statutory provisions and parties have no right to change the same. It is also settled law that the right to file an appeal is accrued right that cannot be taken away unless there is specific provision to the contrary. There is no such provision in the new Act. In the present cases, the appeals were pending before the High Court under the provisions of the old Act and, therefore, appeals are required to be decided on the basis of the statutory provisions under the said Act. Hence, there is no substance in the submission made by the learned counsel for the appellant.” (at pages 63-64) The majority judgment in Milkfood Limited (supra), after referring to the judgments in Thyssen (supra) and N.S. Nayak (supra), concluded that, on the facts of that case, the 1940 Act will apply and not the 1996 Act. These judgments are distinguishable for the same reasons, as they only follow and apply Thyssen (supra).

39. From a reading of Section 26 as interpreted by us, it thus becomes clear that in all cases where the Section 34 petition is filed after the commencement of the Amendment Act, and an application for stay having been made under Section 36 therein, will be governed by Section 34 as amended and Section 36 as substituted. But, what is to happen to Section 34 petitions that have been filed before the commencement of the Amendment Act, which were governed by Section 36 of the old Act? Would Section 36, as substituted, apply to such petitions? To answer this question, we have necessarily to decide on what is meant by “enforcement” in Section 36. On the one hand, it has been argued that “enforcement” is nothing but “execution”, and on the other hand, it has been argued that “enforcement” and “execution” are different concepts, “enforcement” being substantive and “execution” being procedural in nature.

40. At this stage, it is necessary to set out the scheme of the 1996 Act. An arbitral proceeding commences under Section 21, unless otherwise agreed by parties, when a dispute arises between the parties for which a request for the dispute to be referred to arbitration is received by the respondent. The arbitral proceedings terminate under Section 32(1) by the delivery of a final arbitral award or by the circumstances mentioned in Section 32(2). The mandate of the arbitral tribunal terminates with the termination of arbitral proceedings, save and except for correction and interpretation of the award within the bounds of Section 33, or the making of an additional arbitral award as to claims presented in the proceedings, but omitted from the award. Once this is over, in cases where an arbitral award is delivered, such award shall be final and binding on the parties and persons claiming under them, under Section 35 of the 1996 Act. Under Section 36, both pre and post amendment, such award shall be “enforced” in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the Court. It is clear that the scheme of the 1996 Act is materially different from the scheme of the 1940 Act. Under Section 17 of the 1940 Act, once an award was delivered, the Court had to pronounce judgment in accordance with the award, following which a decree would be drawn up, which would then be executable under the Code of Civil Procedure. Under Section 36 of the 1996 Act, the Court does not have to deliver judgment in terms of the award, which is then followed by a decree, which is the formal expression of the adjudication between the parties. Under Section 36 of the 1996 Act, the award is deemed to be a decree and shall be enforced under the Code of Civil Procedure as such.

41. This brings us to the manner of enforcement of a decree under the Code of Civil Procedure. A decree is enforced under the Code of Civil Procedure only through the execution process – see Order XXI of the Code of Civil Procedure. Also, Section 36(3), as amended, refers to the provisions of the Code of Civil Procedure for grant of stay of a money decree. This, in turn, has reference to Order LXI, Rule 5 of the Code of Civil Procedure, which appears under the Chapter heading, “Stay of Proceedings and of Execution”. This being so, it is clear that Section 36 refers to the execution of an award as if it were a decree, attracting the provisions of Order XXI and Order LXI, Rule 5 of the Code of Civil Procedure and would, therefore, be a provision dealing with the execution of arbitral awards. This being the case, we need to refer to some judgments in order to determine whether execution proceedings and proceedings akin thereto give rise to vested rights, and whether they are substantive in nature.

42. In Lalji Raja and Sons v. Hansraj Nathuram, (1971) 1 SCC 721 at 728, this Court was concerned with a judgment debtor’s right to resist execution of a decree.
Section     20(1)(b)     of    the     Code        of    Civil

Procedure (Amendment) Act, 1951        was    extended     to

Madhya Bharat and other areas, as a result of which the judgment debtor’s right to resist execution of a decree was protected. In this context, this Court held that the Amendment Act of 1951 made decrees, which could have been executed only by courts in British India, executable in the whole of India. Stating that the change made was one relating to procedure only, this Court held:

“15. This provision undoubtedly protects the rights acquired and privileges accrued under the law repealed by the Amending Act.
Therefore the question for decision is whether the non-executability of the decree in the Morena Court under the law in force in Madhya Bharat before the extension of “the Code” can be said to be a right accrued under the repealed law. We do not think that even by straining the language of the provision it can be said that the non-executability of a decree within a particular territory can be considered as a privilege. Therefore the only question that we have to consider is whether it can be considered as a “right accrued” within the meaning of Section 20(1)(b) of the Code of Civil Procedure (Amendment) Act, 1950. In the first place, in order to get the benefit of that provision, the non-executability of the decree must be a right and secondly it must be a right that had accrued from the provisions of the repealed law. It is contended on behalf of the judgment-debtors that when the decree was passed, they had a right to resist the execution of the decree in Madhya Bharat in view of the provisions of the Indian Code of Civil Procedure (as adapted) which was in force in the Madhya Bharat at that time and the same is a vested right. It was further urged on their behalf that that right was preserved by Section 20(1)(b) of the Code of Civil Procedure (Amendment) Act, 1950. It is difficult to consider the non-executability of the decree in Madhya Bharat as a vested right of the judgment-debtors. The non-executability in question pertains to the jurisdiction of certain courts and not to the rights of the judgment- debtors. Further the relevant provisions of the Civil Procedure Code in force in Madhya Bharat did not confer the right claimed by the judgment-debtors. All that has happened in view of the extension of “the Code” to the whole of India in 1951 is that the decrees which could have been executed only by courts in British India are now made executable in the whole of India. The change made is one relating to procedure and jurisdiction. Even before “the Code” was extended to Madhya Bharat the decree in question could have been executed either against the person of the judgment-debtors if they had happened to come to British India or against any of their properties situated in British India. The execution of the decree within the State of Madhya Bharat was not permissible because the arm of “the Code” did not reach Madhya Bharat. It was the invalidity of the order transferring the decree to the Morena Court that stood in the way of the decree-holders in executing their decree in that court on the earlier occasion and not because of any vested rights of the judgment- debtors. Even if the judgment-debtors had not objected to the execution of the decree, the same could not have been executed by the court at Morena on the previous occasion as that court was not properly seized of the execution proceedings. By the extension of “the Code” to Madhya Bharat, want of jurisdiction on the part of the Morena Court was remedied and that court is now made competent to execute the decree.

16. That a provision to preserve the right accrued under a repealed Act “was not intended to preserve the abstract rights conferred by the repealed Act.... It only applies to specific rights given to an individual upon happening of one or the other of the events specified in statute” — See Lord Atkin’s observations in Hamilton Gell v. White. [(1922) 2 KB 422]. The mere right, existing at the date of repealing statute, to take advantage of provisions of the statute repealed is not a “right accrued” within the meaning of the usual saving clause — See Abbot v. Minister for Lands [(1895) AC 425] and G. Ogden Industries Pvt. Ltd. v. Lucas. [(1969) 1 All ER 121]” In Narhari Shivram Shet Narvekar v. Pannalal Umediram (1976) 3 SCC 203 at 207, this Court, following Lalji Raja (supra), held as follows:

“8. Learned counsel appearing for the appellant however submitted that since the Code of Civil Procedure was not applicable to Goa the decree became inexecutable and this being a vested right could not be taken away by the application of the Code of Civil Procedure to Goa during the pendency of the appeal before the Additional Judicial Commissioner. It seems to us that the right of the judgment debtor to pay up the decree passed against him cannot be said to be a vested right, nor can the question of executability of the decree be regarded as a substantive vested right of the judgment debtor. A fortiori the execution proceedings being purely a matter of procedure it is well settled that any change in law which is made during the pendency of the cause would be deemed to be retroactive in operation and the appellate court is bound to take notice of the change in law.” Since it is clear that execution of a decree pertains to the realm of procedure, and that there is no substantive vested right in a judgment debtor to resist execution, Section 36, as substituted, would apply even to pending Section 34 applications on the date of commencement of the Amendment Act.

In The Supreme Court Of India - Civil Appellate Jurisdiction - Civil Appeal Nos.2879-2880 Of 2018 (Arising Out Of Slp (C) Nos.19545-19546 Of 2016) Board Of Control For Cricket In India V/S Kochi Cricket Pvt. Ltd. And Etc

                                                   
WITH CIVIL APPEAL NO. 2881 OF 2018 (Arising out of SLP (C) No.20224 of 2016) WITH CIVIL APPEAL NO. 2882 OF 2018 (Arising out of SLP (C) No.5021 of 2017)

R.F. NARIMAN, J.

1. Leave granted.

2. The present batch of appeals raises an important question as to the construction of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as the “Amendment Act”), which reads as follows:

“Section 26. Act not to apply to pending arbitral proceedings.
Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.”
3. The questions raised in these appeals require the mentioning of only a few important dates. In four of these appeals, namely, Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. and Ors. (SLP(C) No. 19545- 19546 of 2016), Arup Deb & Ors. v. Global Asia Venture Company (SLP(C) No. 20224 of 2016), M/s Maharashtra Airports Development Company Ltd. v. M/s PBA Infrastructure Ltd. (SLP(C) No.5021 of 2017) and UB Cotton Pvt. Ltd. v. Jayshri Ginning and Spinning Pvt. Ltd. (SLP(C) No.33690 of 2017), Section 34 applications under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “1996 Act”) were all filed prior to the coming into force of the Amendment Act w.e.f. 23rd October, 2015. In the other four appeals, the Section 34 applications were filed after the Amendment Act came into force. The question with which we are confronted is as to whether Section 36, which was substituted by the Amendment Act, would apply in its amended form or in its original form to the appeals in question.

4. The relevant facts of the first appeal namely, Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. and Ors. (SLP(C) Nos. 19545-19546 of 2016), are as follows. A notice dated 18th January, 2012 was sent by Respondent No.1 invoking arbitration under a franchise agreement dated 12th March, 2011. A Sole Arbitrator was appointed, who delivered two arbitral awards dated 22 nd June, 2015 against the Appellant and in favour of the Respondents. On 16th September, 2015, the Appellants filed an application under Section 34 of the 1996 Act in the Bombay High Court challenging the aforesaid arbitral awards. On 26th November, 2015, the Respondents filed two execution applications in the High Court for payment of the amounts awarded under the two awards, pending enforcement of such awards. These were resisted by two Chamber Summons filed by the Appellants dated 3 rd December, 2015, praying for dismissal of the aforesaid execution applications stating that the old Section 36 would be applicable, and that, therefore, there would be an automatic stay of the awards until the Section 34 proceedings had been decided. The Chamber Summons were argued before a learned Single Judge, who, by the impugned judgment in Special Leave Petition (Civil) No.19545-19546 of 2016, dismissed the aforesaid Chamber Summons and found that the amended Section 36 would be applicable in the facts of this case. This is how the appeal from the aforesaid judgment has come before us.

5. As aforementioned, the skeletal dates necessary to decide the present appeals in the other cases would only be that so far as two of the other appeals are concerned, namely, Arup Deb & Ors. v. Global Asia Venture Company (SLP(C) No.20224 of 2016) and M/s Maharashtra Airports Development Company Ltd. v. M/s PBA Infrastructure Ltd. (SLP(C) No.5021 of 2017), the Section 34 applications were filed on 27 th April, 2015, and 25th May, 2015 respectively and the stay petitions or execution applications in those cases filed under Section 36 were dated 16th December, 2015 and 26 th October, 2016 respectively. In U.B. Cotton Pvt. Ltd. v. Jayshri Ginning and Spinning Pvt. Ltd. (SLP(C) No.33690 of 2017), the Section 34 application was filed on 22 nd February, 2013 and the execution application was filed in 2014, which was transferred, by an order dated 12 th January, 2017, to the Commercial Court, Rajkot as Execution Petition No. 1 of 2017. In the other cases, namely, Wind World (India) Ltd. v. Enercon GMBH through its Director (SLP(C) Nos.8372-8373 of 2017), Yogesh Mehra v. Enercon GMBH through its Director (SLP(C) Nos.8376-8378 of 2017), Ajay Mehra v. Enercon GMBH through its Director (SLP(C) Nos.8374-8375 of 2017), and Anuradha Bhatia v. M/s Ardee Infrastructure Pvt. Ltd. (SLP(C) Nos.9599-9600 of 2017), the Section 34 applications were filed after 23 rd October, 2015, viz., on 7th December, 2016 in the first two appeals, on 6th December, 2016 in the third appeal and on 4th January, 2016 in the last appeal.

6. Section 36, which is the bone of contention in the present appeals, is set out hereinbelow:

PRE-AMENDED PROVISION “Section 36. Enforcement.
Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court.” AMENDED PROVISION “Section 36. Enforcement.

(1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court.

(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.

(3) Upon filing of an application under sub- section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:

Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).”
7. Wide ranging arguments have been made on behalf of the parties before us. Shri C.A. Sundaram, learned Senior Advocate, leading the charge on behalf of the Appellants, has argued that Section 26 of the Amendment Act consists of two parts. According to him, the second part, which makes the Amendment Act applicable in relation to arbitral proceedings commenced on or after the date of commencement of this Act, is the principal part, whereas the first part of Section 26 is in the nature of a proviso or exception. It is his submission, therefore, that so far as the first part is concerned, Section 6 of the General Clauses Act, 1897 would be attracted, in which event the vested right to challenge arbitral awards would continue by virtue of the said Section under the old Act, which would, therefore, apply to the facts of all these cases. For this purpose, he relied upon certain passages in Thyssen Stahlunion v. Steel Authority of India (1999) 9 SCC 334, N.S. Nayak & Sons v. State of Goa (2003) 6 SCC 56, and Milkfood Ltd. v GMC Ice Cream Pvt. Ltd. (2004) 7 SCC 288. Given the fact that the vested right is preserved, the amendment is only prospective in nature, and for this purpose, he has cited a large number of judgments, starting with the celebrated judgment in Garikapati Veeraya v. N. Subbiah Choudhry (1957) SCR 488. He then referred to a chart of the effect of the amendments made in general by the Amendment Act, in which he divided the amended sections into three parts, namely, those that are only procedural, those that are only substantive and those that are procedural as well as substantive. In his submission, Section 36 is substantive in nature, in that, in place of an automatic stay of the award under the old regime, Order LXI, Rule 5 of the CPC will now be applicable. As a result of this, instead of an automatic stay, a deposit of the entire amount or substantial amount of the award would now have to be made in the interim period between the award and the decision in the Section 34 application. He referred to the 246th Law Commission Report as well as the debates leading to the Amendment Act to buttress his submissions. He also referred to the report of a High Level Committee headed by Justice B.N. Srikrishna, delivered on 30th July, 2017, in which, after referring to the divergent views taken by the High Courts, the Committee recommended that the Amendment Act will not apply to arbitral proceedings as well as Court proceedings which arise out of such arbitral proceedings, where the arbitral proceedings themselves have commenced in accordance with Section 21 before the commencement of the Amendment Act. Concomitantly, according to the High Level Committee, the Amendment Act will only apply to arbitral proceedings commenced on or after the commencement of the Amendment Act and to Court proceedings that arise out of or in relation to such arbitral proceedings.

8. Shri K.V. Viswanathan, learned Senior Advocate appearing on behalf of the BCCI in Civil Appeal arising out of SLP(C) No.19546 of 2016, has argued that the expression “arbitral proceedings” in both parts of Section 26 refers only to proceedings before an arbitrator and is the same in both parts. Consequently, it is clear that it is only arbitral proceedings that have commenced after 23 rd October, 2015 and Court proceedings in relation thereto, that will be governed by the Amendment Act. If the arbitral proceedings have commenced under the old Act, then those proceedings as well as all Court proceedings in relation thereto, would be governed only by the old Act. According to him, Section 6 of the General Clauses Act would be attracted, insofar as Court proceedings are concerned, when the first part of Section 26 is applied. According to him, the second part would not become superfluous on his reading of Section 26, as the option given to the parties would be given only on application of the first part and not the second. According to the learned senior counsel, the judgment in Thyssen (supra) is determinative of the present case, inasmuch as an entirely new challenge procedure under Section 34 is laid down by the amendments made in 2015, somewhat like the challenge procedure laid down in the original Section 34 of the 1996 Act, when contrasted with Section 30 of the Arbitration Act, 1940. According to the learned senior counsel, party autonomy must be respected, and this being the position, parties who have entered into agreements in the expectation that the old regime will apply cannot suddenly be foisted with a completely different regime under the Amendment Act. According to the learned senior counsel, Section 85 of the 1996 Act is similar to Section 26 of the Amendment Act and, therefore, the judgment in Thyssen (supra) must apply on all fours. The learned senior counsel also forcefully put to us a number of anomalies that would arise if the amendment to Section 36 were to be given retrospective operation. According to him, the right to be governed by the broad appellate/supervisory procedure found in sections 34 and 37 of the 1996 Act would be a vested right, resulting in the Amendment Act not being applicable. Insofar as Section 36 is concerned, the learned senior counsel made elaborate submissions on the difference between enforceability and execution, and stated that whereas the former dealt with substantive rights, the latter dealt with procedural rights. Equally, the expression “has been” contained in the amended Section 36(2) is purely contextual and equivalent to the expression “is”. For this, he has cited certain judgments which we will refer to in due course. According to the learned senior counsel, the decision in National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd. (2004) 1 SCC 540, which exhorted the legislature to amend Section 36, cannot take the matter any further, in that the said decision cannot be read to say that Section 36 should be substituted with retrospective effect.

9. Shri Tushar Mehta, learned Additional Solicitor General appearing in SLP (C) No.5021 of 2017, supported the arguments of his predecessor and added that, given a retrospective operation of Section 36, various anomalies would arise, which would lead to hardship and inconvenience and that, therefore, we should not impart retrospective operation to the aforesaid provision.

10. Shri Arvind Datar, learned senior advocate appearing in SLP (C) No.20224 of 2016, supported Shri Viswanathan in stating that the amendments made by the Amendment Act were very far reaching and changed the basis of challenge to arbitral awards. It would not be fair to retrospectively change the rules of the game insofar as such awards are concerned. According to the learned senior counsel, the expression “in relation to” that was used in Section 85 of the 1996 Act, as expounded in Thyssen (supra), was because Section 85 repealed three enactments together, and not because it sought to refer to Court proceedings. He reiterated that in the interest of clarity, the report of the High Level Committee, headed by Justice B.N. Srikrishna referred to by Shri Sundaram, was the correct position so that it clearly be delineated that the moment arbitral proceedings commenced before the Amendment Act, such “proceedings”, which would include all Court proceedings in relation thereto, would be governed by the old Act, and only arbitral proceedings commenced after the Amendment Act came into force, together with related Court proceedings, would all be governed by the Amendment Act.

11. Shri Anirudh Krishnan, learned Advocate appearing for the intervenor in SLP (C) No.20224 of 2016, referred to Section 85A contained in the 246 th Law Commission Report which, according to him, was given a go-by and was not followed in Section 26. He referred to the Law Minister’s speech stating that the amendment must be given prospective effect and further argued that the reason why the expression “in relation to” was used in the second part of Section 26 was because a distinction was made on whether the seat of the arbitral tribunal was in India or outside India. According to the learned counsel, since amendments have been made in Part II of the 1996 Act as well, if a seat based categorization is seen, the expression “in relation to” would not apply to Court proceedings simpliciter, but to arbitral tribunals which have their seat outside India. He further argued that Sections 34 and 36 are part of one scheme and are the “appeal package” insofar as arbitral proceedings are concerned and must, therefore, go along with the arbitral proceedings. This being the position, it is clear that the pre-amendment position would apply in case of arbitrations which commenced before the Amendment Act came into force.

12. Leading arguments for the other side, Shri Neeraj Kaul, learned senior counsel appearing in SLP(C) Nos.19545-19546 of 2016, emphasized that in the first part of Section 26, there is an absence of the mention of Court proceedings. According to the learned senior counsel, this was of great significance and would, therefore, show that the Amendment Act would retrospectively apply to Court proceedings, as distinguished from arbitral proceedings. On a correct construction of Section 26, according to the learned senior counsel, the second part of Section 26 takes within its sweep both arbitral proceedings as well as Court proceedings in relation thereto and would, therefore, apply to arbitral proceedings as well as Court proceedings in relation thereto, which have commenced after the Amendment Act came into force. For this purpose, he relied heavily on paragraph 23 in Thyssen (supra) and, submitted that, therefore, on a true construction of Section 26, Section 34 proceedings that have commenced before the Amendment Act came into force would be governed by the Amendment Act, and arbitral proceedings which commenced after the Amendment Act, together with Section 34 applications made in relation thereto, would then be governed under the second part of Section 26 of the Amendment Act. According to the learned senior counsel, no vested right exists inasmuch as Section 34 proceedings are not appellate proceedings. In any case, Section 26 evinces a contrary intention and would take away any such right assuming a vested right is involved. He countered the arguments of Shri Viswanathan, in particular, by stating that the original intent of the 1996 Act was to minimise Court intervention and to restrict the grounds of challenge of arbitral awards, and inasmuch as the decisions of this Court in ONGC v. Saw Pipes Ltd (2003) 5 SCC 705 and ONGC Ltd. v. Western Geco International Ltd. (2014) 9 SCC 263 had gone contrary to the original intention of the 1996 Act, all that the Amendment Act did was to bring the 1996 Act back, in accordance with its original intent, by nullifying the aforesaid judgments. He added that the ground of patent illegality that had been added by the Amendment Act also differs from the said ground as understood in the earlier case law, and has been added only qua domestic and not international commercial arbitrations. Learned senior counsel then argued that given the fact that court proceedings in this country take an inordinately long time, the whole object of the amendment to Section 36 would be stultified, if Section 36 is only to apply to court proceedings that result from arbitral proceedings, which have commenced on and after the commencement of the Amendment Act. That this could never be the case is clear from a judgment of the House of Lords, reported as Minister of Public Works of the Government of the State of Kuwait v. Sir Frederick Snow and Partners, (1984) 2 WLR 340, which is strongly relied upon. Learned senior counsel also stated that there is no distinction between execution and enforcement, and “enforcement” under Section 36, is nothing but execution of an award, as if it were a decree under the Code of Civil Procedure, 1908. He further argued that it is well settled that execution proceedings are procedural in nature and would be retrospective and, therefore, the substituted Section 36 would apply even in cases where the Section 34 application is made before the commencement of the Amendment Act. Another argument was that the expression “has been” contained in Section 36(2), as amended, would, in any case, refer to Section 34 proceedings that have already been filed, even pre- amendment, and for this purpose, he referred to certain judgments.

13. Shri P. Chidambaram, learned senior counsel appearing for the Respondents in SLP (C) Nos.8372-8373 of 2017, emphasised the word “but” that appears in Section 26, which not only segregates the first part of Section 36 from the second part, but also makes it clear that the two parts apply to two different situations. The first part, according to learned senior counsel, would apply to the arbitral proceedings themselves i.e. from the Section 21 stage up to the Section 32 stage of the 1996 Act, whereas the second part would include all proceedings that begin from the Section 21 stage and all court proceedings in relation thereto. According to Shri Chidambaram, Section 36, in its original form, is only a clog on the right of the decree holder. He argued that there is no corresponding vested right in the judgment debtor to indefinitely delay proceedings and for this purpose, he cited several judgments. According to the learned senior counsel, Section 36 proceedings are entirely independent of Section 34 proceedings and the moment Section 36 speaks of an award being enforceable under the Code of Civil Procedure as if it were a decree, enforceability only means execution and nothing else. He then referred to Satish Kumar v. Surinder Kumar, (1969) 2 SCR 244 to show that an award is not mere waste paper when it is delivered and before it becomes a decree, as it decides the rights of the parties and, therefore, being final and binding on parties, is a judgment delivered between parties, which may become executable on certain conditions being met, but which do not detract from the fact that the award itself has “vitality”.

14. Shri Kapil Sibal, learned senior counsel appearing on behalf of the Respondents in SLP (C) Nos.8374-8375 of 2017, has argued before us that the Statement of Objects and Reasons for the Amendment Act, in particular paragraph 4 thereof, would make it clear that the Amendment Act was necessitated because of India’s poor performance in contract enforcement among the nations in the world. For this reason, according to the learned senior counsel, it is clear that Section 26 needs to be interpreted in such a manner as would further the object of the Amendment Act and that this being so, it is clear that Section 26 must be read as being a provision which is not a savings provision at all, but a provision which destroys all rights, if any, that vested in the Appellants in the 1996 Act as unamended. For this purpose, he cited certain judgments which will be referred to in the course of our judgment.

15. Dr. A.M. Singhvi, learned senior counsel appearing on behalf of the Respondents in SLP (C) Nos.8376-8378 of 2017, has stated that the correct construction of Section 26 would be the intermediate between the extremes that have been canvassed before us by learned counsel appearing on behalf of the Appellants. According to him, it is important to emphasise that the first part applies only to arbitral proceedings before an arbitral tribunal and the second part would apply only to court proceedings in relation thereto. This becomes clear from two things; one, the expression “to” appearing in the first part as contrasted with the expression “in relation to” appearing in the second part; and, two, the presence of Section 21 of the 1996 Act in the first part and its absence in the second part of Section 26. According to him, this would be the correct interpretation of Section 26, which would result in no anomalies, as it is clear that the date of commencement of an arbitral proceeding would be fixed with reference to Section 21 and the date of commencement of a court proceeding would be fixed with reference to the date on which the court proceeding is filed, and it is only arbitral proceedings and court proceedings which are filed after the commencement of the Amendment Act that would be so covered.

16. Shri Nakul Dewan, learned Advocate appearing on behalf of the Respondent in SLP (C) No.20224 of 2016 has argued that the first part of Section 26 speaks of “the arbitral proceedings” commenced in accordance with the provisions of Section 21. The second part of Section 26 omits the word “the” as well as Section 21, making it clear that it is the arbitral proceedings before the Arbitrator alone that is referred to in the first part of Section 26, as opposed to Court proceedings referred to in the second part of Section 26, where the expression “in relation to arbitral proceedings” does not contain the word “the”. According to him, such interpretation is not contrary to the doctrine of party autonomy, which is never conferred on any party without limits, there being non-derogable provisions in the 1996 Act from which parties, even by agreement, cannot derogate. According to the learned counsel, each and every Court proceeding under the 1996 Act is a separate and distinct proceeding and it is the date of such proceeding alone which is relevant for the purpose of determining whether the Amendment Act applies. According to the learned counsel, there is no vested right to resist the execution of an award merely because an application for setting aside the award is pending under Section 34 of the 1996 Act. Even on the assumption that there is such a vested right, it is taken away, given the clear legislative intent of Section 26 of the Amendment Act. Lastly, he argued that on facts, clause 22.2(5) of the agreement between the parties automatically brought in all amendments to the 1996 Act and that, therefore, Section 36 in its amended form would necessarily apply to the facts in this case.

17. Having heard extensive and wide ranging arguments on the reach of Section 26 of the Amendment Act, it will be important to first bear in mind the principles of interpretation of such a provision. That an Amendment Act does include within it provisions that may be repealed either wholly or partially and that the provisions of Section 6 of the General Clauses Act would generally apply to such Amendment Acts is beyond any doubt – See Bhagat Ram Sharma v. Union of India, 1988 (Supp) SCC 30 at 40-41. That such a provision is akin to a repeal and savings clause would be clear when it is read with Section 27 of the Amendment Act and Section 85 of the 1996 Act, which are set out hereinbelow:

“Section 27. Repeal and savings.
(1) The Arbitration and Conciliation (Amendment) Ordinance, 2015, is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the principal Act, as amended by the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of the principal Act, as amended by this Act.
xxx xxx xxx Section 85. Repeal and savings.— (1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.
(2) Notwithstanding such repeal,—
(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;

(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act.”

18. At this point, it is instructive to refer to the 246 th Law Commission Report which led to the Amendment Act. This Report, which was handed over to the Government in August, 2014, had this to state on why it was proposing to replace Section 36 of the 1996 Act:

“AUTOMATIC STAY OF ENFORCEMENT OF THE AWARD UPON ADMISSION OF CHALLENGE
43. Section 36 of the Act makes it clear that an arbitral award becomes enforceable as a decree only after the time for filing a petition under section 34 has expired or after the section 34 petition has been dismissed. In other words, the pendency of a section 34 petition renders an arbitral award unenforceable. The Supreme Court, in National Aluminum Co. Ltd. v. Pressteel & Fabrications, (2004) 1 SCC 540 held that by virtue of section 36, it was impermissible to pass an Order directing the losing party to deposit any part of the award into Court. While this decision was in relation to the powers of the Supreme Court to pass such an order under section 42, the Bombay High Court in Afcons Infrastructure Limited v. The Board of Trustees, Port of Mumbai 2014 (1) Arb LR 512 (Bom) applied the same principle to the powers of a Court under section 9 of the Act as well. Admission of a section 34 petition, therefore, virtually paralyzes the process for the winning party/award creditor.
44. The Supreme Court, in National Aluminium, has criticized the present situation in the following words:

“However, we do notice that this automatic suspension of the execution of the award, the moment an application challenging the said award is filed under section 34 of the Act leaving no discretion in the court to put the parties on terms, in our opinion, defeats the very objective of the alternate dispute resolution system to which arbitration belongs. We do find that there is a recommendation made by the concerned Ministry to the Parliament to amend section 34 with a proposal to empower the civil court to pass suitable interim orders in such cases. In view of the urgency of such amendment, we sincerely hope that necessary steps would be taken by the authorities concerned at the earliest to bring about the required change in law.”

45. In order to rectify this mischief, certain amendments have been suggested by the Commission to section 36 of the Act, which provide that the award will not become unenforceable merely upon the making of an application under section 34.

So far as the transitory provision, so described by the Report, is concerned, the Report stated:

“76. The Commission has proposed to insert the new section 85-A to the Act, to clarify the scope of operation of each of the amendments with respect to pending arbitrations/proceedings. As a general rule, the amendments will operate prospectively, except in certain cases as set out in section 85-A or otherwise set out in the amendment itself.” The Report then went on to amend Section 36 as follows:
“Amendment of Section 36
19. In section 36, (i) add numbering as sub- section (1) before the words “Where the time” and after the words “Section 34 has expired,” delete the words “or such application having been made, it has been refused” and add the words “then subject to the provision of sub-
section (2) hereof,”
(ii) insert sub-section “(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render the award unenforceable, unless upon a separate application made for that purpose, the Court grants stay of the operation of the award in accordance with the provisions of sub-section (3) hereof;”
(iii) insert sub-section “(3) Upon filing of the separate application under subsection (2) for stay of the operation of the award, the court may, subject to such conditions as it may deem fit, grant stay of the operation of the award for reasons to be recorded in writing.”
(iv) insert proviso ”Provided that the Court shall while considering the grant of stay, in the case of an award for money shall have due regard to the provisions for grant of stay of money decrees under the Code of Civil Procedure, 1908.” [NOTE: This amendment is to ensure that the mere filing of an application under section 34 does not operate as an automatic stay on the enforcement of the award. The Supreme Court in National Aluminium Co. Ltd. v.
Pressteel & Fabrications (P) Ltd. and Anr, (2004) 1 SCC 540, recommends that such an amendment is the need of the hour.]”1 As a matter of fact, the amended Section 36 only brings back Article 36(2) of the UNCITRAL Model Law, which is based on Article 6 of the New York Convention, and which reads as under:

“36(2). If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.” The transitory provision Section 85A was then set out as follows:
“Insertion of Section 85A A new section Section 85A on transitory provisions has been incorporated. Transitory provisions.— (1) Unless otherwise provided in the Arbitration and Conciliation (Amending) Act, 2014, the provisions of the instant Act (as amended) shall be prospective in operation and shall apply only to fresh arbitrations and fresh applications, except in the following situations –
(a) the provisions of section 6-A shall apply to all pending proceedings and arbitrations. Explanation: It is clarified that where the issue of costs has already been decided by the court/tribunal, the same shall not be opened to that extent.
(b) the provisions of section 16 sub-section (7) shall apply to all pending proceedings and arbitrations, except where the issue has been decided by the court/tribunal.
(c) the provisions of second proviso to section 24 shall apply to all pending arbitrations. (2) For the purposes of the instant section,—
(a) “fresh arbitrations” mean arbitrations where there has been no request for appointment of arbitral tribunal; or application for appointment of arbitral tribunal; or appointment of the arbitral tribunal, prior to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.
(b) “fresh applications” mean applications to a court or arbitral tribunal made subsequent to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014. [NOTE: This amendment is to clarify the scope of operation of each of the proposed amendments with respect to pending arbitrations/proceedings.]”
19. The debates in Parliament in this context were referred to by counsel on both sides. Shri T. Satpathy (Dhenkanal) stated:

“You have brought in an amendment to Section 25 (a) saying that this Act will not be retrospective. When the Bill for judges’ pension and salary could be retrospective, why can you not amend it with retrospective effect so that ONGC-RIL case could be brought under this Act and let it be adjudicated as early as possible within 18 months and let the people of this country get some justice some time. Let us be fair to them.” To similar effect is the speech of Shri APJ Reddy, which reads as under:
“It is unclear whether the amended provisions shall apply to pending arbitration proceedings.
The Law Commission of India, in its 246th Report, which recommended amendments to the Arbitration & Conciliation Act, 1996, had proposed to insert a new Section 85-A to the Act, which would clarify the scope of operation to each amendment with respect to pending arbitration proceedings. However, this specific recommendation has not been incorporated into the Ordinance. One of the reasons for bringing about this ordinance is to instill a sense of confidence in foreign investors in our judicial process, with regard to certainty of implementation in practice and ease of doing business. Therefore, it is strongly urged to incorporate Section 85A as proposed by the 246th Report of the Law Commission of India, where it clearly states the scope of operation of the amended provisions.” The Law Minister in response to the aforesaid speeches stated:
“Nobody has objected to this Bill but some of our friends have observed certain things. They have said that the Bill is the need of the hour and that a good Bill has been brought. A few suggestions have been given by them. One of the suggestions was that it should have retrospective effect. If the parties agree, then there will be no problem. Otherwise, it will only have prospective effect.”
20. Finally, Section 26 in its present form was tabled as Section 25A at the fag end of the debates, and added to the Bill. A couple of things may be noticed on a comparison of Section 85A, as proposed by the Law Commission, and Section 26 as ultimately enacted. First and foremost, Section 85A states that the amendments shall be prospective in operation and then bifurcates proceedings into two parts – (i) fresh arbitrations, and (ii) fresh applications. Fresh arbitrations are defined as various proceedings before an arbitral tribunal that is constituted, whereas fresh applications mean applications to a Court or Tribunal, made subsequent to the date of enforcement of the Amendment Act. Three exceptions are provided by Section 85A, to which the Amendment Act will apply retrospectively. The first deals with provisions relating to costs, the second deals with the new provision contained in Section 16(7) (which has not been adopted by the Amendment Act) and the third deals with the second proviso to Section 24, which deals, inter alia, with oral hearings and arguments on a day-to-day basis and the non-grant of adjournments, unless sufficient cause is made out.
21. What can be seen from the above is that Section 26 has, while retaining the bifurcation of proceedings into arbitration and Court proceedings, departed somewhat from Section 85A as proposed by the Law Commission.

22. That a provision such as Section 26 has to be construed literally first, and then purposively and pragmatically, so as to keep the object of the provision also in mind, has been laid down in Thyssen (supra) in paragraph 26 as follows:

“26. Present-day courts tend to adopt a purposive approach while interpreting the statute which repeals the old law and for that purpose to take into account the objects and reasons which led to the enacting of the new Act. We have seen above that this approach was adopted by this Court in M.M.T.C. Ltd. case [(1996) 6 SCC 716]. Provisions of both the Acts, old and new, are very different and it has been so observed in Sundaram Finance Ltd. case [(1999) 2 SCC 479]. In that case, this Court also said that provisions of the new Act have to be interpreted and construed independently and that in fact reference to the old Act may actually lead to misconstruction of the provisions of the new Act. The Court said that it will be more relevant, while construing the provisions of the new Act, to refer to the UNCITRAL Model Law rather than the old Act.
In the case of Kuwait Minister of Public Works v. Sir Frederick Snow and Partners [(1984) 1 All ER 733 (HL)] the award was given before Kuwait became a party to the New York Convention recognised by an Order in Council in England. The House of Lords held that though a foreign award could be enforced in England under the (U.K.) Arbitration Act, 1975 as when the proceedings for enforcement of the award were initiated in England Kuwait had become a party to the Convention. It negatived the contention that on the date the award was given Kuwait was not a party to the New York Convention.” (at pages 370-371) Similarly, in Milkfood Limited (supra) at 315, this Court, while construing Section 85 of the 1996 Act, had this to say:

“70. Section 85 of the 1996 Act repeals the 1940 Act. Sub-section (2) of Section 85 provides for a non obstante clause. Clause (a) of the said sub-section provides for saving clause stating that the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before the said Act came into force. Thus, those arbitral proceedings which were commenced before coming into force of the 1996 Act are saved and the provisions of the 1996 Act would apply in relation to arbitral proceedings which commenced on or after the said Act came into force. Even for the said limited purpose, it is necessary to find out as to what is meant by commencement of arbitral proceedings for the purpose of the 1996 Act wherefor also necessity of reference to Section 21 would arise. The court is to interpret the repeal and savings clauses in such a manner so as to give a pragmatic and purposive meaning thereto. It is one thing to say that commencement of arbitration proceedings is dependent upon the facts of each case as that would be subject to the agreement between the parties. It is also another thing to say that the expression “commencement of arbitration proceedings” must be understood having regard to the context in which the same is used; but it would be a totally different thing to say that the arbitration proceedings commence only for the purpose of limitation upon issuance of a notice and for no other purpose. The statute does not say so. Even the case-laws do not suggest the same. On the contrary, the decisions of this Court operating in the field beginning from Shetty's Constructions [(1998) 5 SCC 599] are ad idem to the effect that Section 21 must be taken recourse to for the purpose of interpretation of Section 85(2)(a) of the Act. There is no reason, even if two views are possible, to make a departure from the decisions of this Court as referred to hereinbefore.”
23. All learned counsel have agreed, and this Court has found, on a reading of Section 26, that the provision is indeed in two parts. The first part refers to the Amendment Act not applying to certain proceedings, whereas the second part affirmatively applies the Amendment Act to certain proceedings. The question is what exactly is contained in both parts. The two parts are separated by the word ‘but’, which also shows that the two parts are separate and distinct. However, Shri Viswanathan has argued that the expression “but” means only that there is an emphatic repetition of the first part of Section 26 in the second part of the said Section. For this, he relied upon the Concise Oxford Dictionary on Current English, which states:

“introducing emphatic repetition; definitely (wanted to see nobody, but nobody)”.

Quite obviously, the context of the word “but” in Section 26 cannot bear the aforesaid meaning, but serves only to separate the two distinct parts of Section 26.

24. What will be noticed, so far as the first part is concerned, which states, “Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree…” is that: (1) “the arbitral proceedings” and their commencement is mentioned in the context of Section 21 of the principal Act; (2) the expression used is “to” and not “in relation to”; and (3) parties may otherwise agree. So far as the second part of Section 26 is concerned, namely, the part which reads, “…but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act” makes it clear that the expression “in relation to” is used; and the expression “the” arbitral proceedings and “in accordance with the provisions of Section 21 of the principal Act” is conspicuous by its absence.

25. That the expression “the arbitral proceedings” refers to proceedings before an arbitral tribunal is clear from the heading of Chapter V of the 1996 Act, which reads as follows:

“Conduct of Arbitral Proceedings” The entire chapter consists of Sections 18 to 27 dealing with the conduct of arbitral proceedings before an arbitral tribunal. What is also important to notice is that these proceedings alone are referred to, the expression “to” as contrasted with the expression “in relation to” making this clear. Also, the reference to Section 21 of the 1996 Act, which appears in Chapter V, and which speaks of the arbitral proceedings commencing on the date on which a request for a dispute to be referred to arbitration is received by the respondent, would also make it clear that it is these proceedings, and no others, that form the subject matter of the first part of Section 26. Also, since the conduct of arbitral proceedings is largely procedural in nature, parties may “otherwise agree” and apply the Amendment Act to arbitral proceedings that have commenced before the Amendment Act came into force. 2 Section 29A of the Amendment Act provides for time limits within which an arbitral award is to be made. In Hitendra Vishnu Thakur v. State of Maharashtra (1994) 4 SCC 602 at 633, this Court stated:

“(iii) Every litigant has a vested right in substantive law but no such right exists in procedural law.
(iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished.
In stark contrast to the first part of Section 26 is the second part, where the Amendment Act is made applicable “in relation to” arbitral proceedings which commenced on or after the date of commencement of the Amendment Act. What is conspicuous by its absence in the second part is any reference to Section 21 of the 1996 Act. Whereas the first part refers only to arbitral proceedings before an arbitral tribunal, the second part refers to Court proceedings “in relation to” arbitral proceedings, and it is the commencement of these Court proceedings that is referred to in the second part of Section 26, as the words “in relation to the arbitral

(v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication.” It is, inter alia, because timelines for the making of an arbitral award have been laid down for the first time in Section 29A of the Amendment Act that parties were given the option to adopt such timelines which, though procedural in nature, create new obligations in respect of a proceeding already begun under the unamended Act. This is, of course, only one example of why parties may otherwise agree and apply the new procedure laid down by the Amendment Act to arbitral proceedings that have commenced before it came into force.

proceedings” in the second part are not controlled by the application of Section 21 of the 1996 Act. Section 26, therefore, bifurcates proceedings, as has been stated above, with a great degree of clarity, into two sets of proceedings – arbitral proceedings themselves, and Court proceedings in relation thereto. The reason why the first part of Section 26 is couched in negative form is only to state that the Amendment Act will apply even to arbitral proceedings commenced before the amendment if parties otherwise agree. If the first part of Section 26 were couched in positive language (like the second part), it would have been necessary to add a proviso stating that the Amendment Act would apply even to arbitral proceedings commenced before the amendment if the parties agree. In either case, the intention of the legislature remains the same, the negative form conveying exactly what could have been stated positively, with the necessary proviso. Obviously, “arbitral proceedings” having been subsumed in the first part cannot re-appear in the second part, and the expression “in relation to arbitral proceedings” would, therefore, apply only to Court proceedings which relate to the arbitral proceedings. The scheme of Section 26 is thus clear: that the Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force.

26. We now consider some of the submissions of learned counsel for the parties as to what ought to be the true construction of Section 26. According to Shri Sundaram, the second part of Section 26 should be taken to be the principal part, with the first part being read as an exception to the principal part. This is so that Section 6 of the General Clauses Act then gets attracted to the first part, the idea being to save accrued rights. Section 6 applies unless a contrary intention appears in the enactment in question. The plain language of Section 26 would make it clear that a contrary intention does so appear, Section 26 being a special provision having to be applied on its own terms.

27. Thus, in Transport and Dock Workers' Union & others v. New Dholera Steamship Ltd., Bombay and others, (1967) 1 LLJ 434, a Five Judge Bench of this Court held:

“6. It was contended before us that as an appeal is a continuation of the original proceeding the repeal should not affect the enforcement of the provisions of the Ordinance in this case. Reliance is placed upon Section 6 of the General Clauses Act, 1897 wherein is indicated the effect of repeal of an enactment by another. It is contended that as the Payment of Bonus Ordinance has been repealed by Section 40(1), the consequences envisaged in Section 6 of the General Clauses Act must follow and the present matter must be disposed of in accordance with the Ordinance as if the Act had not been passed. It is submitted that there was a right and a corresponding obligation to pay bonus under Section 10 of the Ordinance and that right and obligation cannot be obliterated because of the repeal of the Ordinance. This argument is not acceptable because of the provisions of the second sub-
section of Section 40. That sub-section reads as follows:

“40. Repeal and saving.
(1)*** (2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under this Act as if this Act had commenced on the 29th May, 1965.” Section 6 of the General Clauses Act applies ordinarily but it does not apply if a different intention appears in the repealing Act. Here a different intention is made to appear expressly and the special saving incorporated in the repealing Act protects only anything done or any action taken under the Ordinance which is deemed to have been done or taken under this Act as if the Act had commenced on 29th May, 1965. Nothing had been done under the Ordinance and no action was taken which needs protection; nor was anything pending under the Ordinance which could be continued as if the Act had not been passed. There was thus nothing which was to be saved after the repeal of the Ordinance and this question which might have arisen under the Ordinance now ceases to exist.” In Kalawati Devi Harlalka v. CIT (1967) 3 SCR 833, a repeal and savings provision contained in Section 297 of the Income Tax Act, 1961 was held to evidence an intention to the contrary under Section 6 of the General Clauses Act as follows:

National Consumer Disputes Redressal Commission
New Delhi

Consumer Case No. 97 Of 2016

1. Ambrish Kumar Shukla & 21 Ors.
H. No. 412, 1st Floor, Sector 6,
Bahadurgarh
Jhajjar
Haryana 124 507 ...........Complainant(S)
Versus

1. Ferrous Infrastructure Pvt. Ltd.
Seth Farms, Khasra No. 41,42,44,45, Mehrauli, Gurgaon Road,
Ghitorni, New Delhi110030
...........Opp.Party(S)

Before:
Hon'ble Mr. Justice D.K. Jain,President
Hon'ble Mr. Justice V.K. Jain,Member
Hon'ble Dr. B.C. Gupta,Member

For The Complainant : Mr. Uttam Datt, Advocate
Mr. Tarun Sharma, Advocate
For The Opp.Party : Mr. K.V. Girish Chowdary, Advocate

Dated : 07 Oct 2016

Order
Justice V.K. Jain, Member


Vide order dated 24.05.2016, passed in CC No. 97 of 2016, the following issues relating to the interpretation of Section 12(1)(c) of the Consumer
Protection Act were referred, by a two members Bench of this Commission, to a larger Bench for its decision:
(i) Whether a complaint under Section 12(1)(c) of the Consumer Protection Act filed on behalf of or for the benefit of only some of the
numerous consumers having a common interest or a common grievance is maintainable or it must necessarily be filed on behalf of or for the
benefit of all the consumers having a common interest or a common grievance against same person (s);
(ii) Whether a complaint under Section 12(1)(c) of the Consumer Protection Act is maintainable, before this Commission, where the value
of the goods or services and compensation, if any, claimed in respect of none of the allottees / purchasers exceeds Rupees one crore.
(iii) Whether a complaint under Section 12(1)(c) of the Consumer Protection Act is maintainable before this Commission, where the value
of the goods or services and the compensation claimed in respect of an individual allottee exceeds Rupees one crore in the case of one or
more allottees but does not exceed Rupees one crore in respect of other allottees;
(iv) Whether a complaint under Section 12(1)(c) of the Consumer Protection Act is maintainable, in a case of allotment of several flats in a
project / building, where the allotments / bookings / purchases are made on different dates and or the agreed cost of the flat and / or the area
of the flat is not identical in all the bookings / allotments / purchases.
2. Vide order dated 11.08.2016, passed in First Appeal No. 166 of 2016, First Appeal No. 504 of 2016 and First Appeal No. 505 of 2016, the
following issues were referred, by a single Member Bench of this Commission to the larger Bench:
(i) In a situation, where the possession of a housing unit has already been delivered to the complainants and may be, sale deeds etc. also
executed, but some deficiencies are pointed out in the construction/ development of the property, whether the pecuniary jurisdiction is to be
determined, taking the value of such property as a whole, OR the extent of deficiency alleged is to be considered for the purpose of
determining such pecuniary jurisdiction.
(ii) Whether the interest claimed on such value by way of compensation or otherwise, is to be taken into account for determining the
pecuniary jurisdiction of a particular consumer forum.
(iii) Whether “the value of the goods or services and compensation, if any, claimed” is to be taken as per the original value of such goods,
or service at the time of purchase of such goods or hiring or availing of such service, OR such value is to be taken at the time of filing the
claim, in question.
(iv) In complaints proposed to be filed under section 12(1)(c) of the Act with the permission of Consumer Forum, whether the pecuniary
jurisdiction is to be determined taking the value of goods or service for individual consumer, OR the aggregate value of the properties of all
consumers getting together to file the consumer complaint is to be taken into consideration.
(v) For filing the consumer complaints u/s 12(1)(c), whether a group of cooperative societies could join hands to file a joint complaint?
(vi) Whether the term ‘consumer’ given in section 12(1)(c) includes the term ‘Person’ as defined in section 2(m) of the Act, meaning
thereby that groups of firms, societies, association, etc. could join hands to file the joint complaints, u/s 12(1)(c) of the Act.
(vii) Many a time, it is seen that more than one joint complaint are already pending in respect of one particular housing project. There is a
view that while applying section 12(1)(c) of the Act, only one of these complaints should be allowed to continue as a lead case, and all other
complaints should be dismissed and the parties in these dismissed complaints should be directed to become parties in the lead case. Whether
the above view is correct, OR in such cases, all complaints should be clubbed and heard together.
3. In First Appeal No. 644 of 2015, the complainant booked an apartment with respondent no. 1. The allotment was cancelled by the respondent
on account of nonpayment
of the balance sale consideration. Being aggrieved, the complainant approached the concerned District Forum by way of
a complaint, seeking restoration of the flat with possession and compensation. The respondent contested the complaint and took a preliminary
objection that the District Forum did not possess the requisite pecuniary jurisdiction to entertain the complaint. The District Forum vide its order
dated 22.01.2013, noticing that the price of the apartment was Rs.46,02,653/,
held that the said Forum had no pecuniary jurisdiction to entertain the
complaint. The appellant then approached the concerned State Commission by way of a fresh Consumer Complaint. The State Commission
however, took the view that if the grievance pertains to a deficiency in service, the complainant has to assess the deficiency in the service availed by
him and the value of the flat is not to be taken into consideration while deciding whether the said Commission had pecuniary jurisdiction to hear the
complaint or not. Noticing that the complainant had claimed Rs.10,00,000/as
compensation, the complaint was dismissed. Being aggrieved, the
complainant has approached this Commission by way of the aforesaid appeal.
Vide order dated 11.03.2016, passed in the aforesaid appeal, Bench No.1 of this Commission, noticing a divergence of opinion amongst various
Benches of this Commission, on the issue of pecuniary jurisdiction, referred the said issue raised in the aforesaid appeal, to a larger Bench. The
aforesaid issue however, is subsumed in issue no. 1 referred to the larger Bench in First Appeal No. 166 of 2016.
4. Section 12(1) of the Consumer Protection Act reads as under:
(1) A complaint in relation to any goods sold or delivered or agreed to be sold or delivered or any service provided or agreed to be provided
may be filed with a District Forum by(
a) the consumer to whom such goods are sold or delivered or agreed to be sold or delivered or such service provided or agreed to be
provided;
(b) any recognized consumer association whether the consumer to whom the goods sold or delivered or agreed to be sold or delivered or
service provided or agreed to be provided is a member of such association or not;
(c) one or more consumers, where there are numerous consumers having the same interest, with the permission of the District Forum, on
behalf of, or for the benefit of, all consumers so interested; or
(d) the Central or the State Government, as the case may be, either in its individual capacity or as a representative of interests of the
consumers in general.
5. Section 13(6) of the Consumer Protection Act reads as under:
(6) Where the complainant is a consumer referred to in subclause
(iv) of clause (b) of subsection
(1) of section 2, the provisions of rule 8
of Order I of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908) shall apply subject to the modification that every reference
therein to a suit or decree shall be construed as a reference to a complaint or the order of the District Forum thereon.
Section 2(1)(b) of the Consumer Protection Act reads as under:
(b) “complainant” means—
(i) a consumer; or
(ii) any voluntary consumer association registered under the Companies Act, 1956 (1 of 1956) or under any other law for the time being in force; or
(iii) the Central Government or any State Government; or
(iv) one or more consumers, where there are numerous consumers having the same interest;
(v) in case of death of a consumer, his legal heir or representative;] who or which makes a complaint;
6. Order I of Rule 8 of the Code of Civil Procedure which finds reference in Section 13(6) of the Consumer Protection Act, reads as under:
8. One person may sue or defend on behalf of all in same interest.(
1) Where there are numerous persons having the same interest in one suit,—
(a) one or more of such persons may, with the permission of the court, sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all
persons so interested;
(b) the court may direct that one or more of such persons may sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all persons
so interested.
(2) The court shall, in every case where a permission or direction is given under subrule
(1), at the plaintiff’s expense, give notice of the
institution of the suit to all persons so interested, either by personal service, or, where, by reason of the number of persons or any other cause, such
service is not reasonably practicable, by public advertisement, as the court in each case may direct.
(3) Any person on whose behalf, or for whose benefit, a suit is instituted, or defended, under subrule
(1), may apply to the court to be made a
party to such suit.
(4) No part of the claim in any such suit shall be abandoned under subrule
(1), and no such suit shall be withdrawn under subrule
(3) of rule 1 of
Order XXIII, and no agreement, compromise or satisfaction shall be recorded in any such suit under rule 3 of that Order, unless the court has given,
at the plaintiff’s expenses notice to all persons so interested in the manner specified in subrule
(2).
(5) Where any person suing or defending in any such suit does not proceed with due diligence in the suit or defence, the court may substitute in his
place any other person having the same interest in the suit.
(6) A decree passed in a suit under this rule shall be binding on all persons on whose behalf, or for whose benefit, the suit is instituted, or defended,
as the case may be.
7. Section 12(1) (c) of the Consumer Protection Act when read with Order I Rule 8 of the Code of the Civil Procedure will apply if (i) the
consumers are numerous (ii) They have the same interest (iii) the necessary permission of the Consumer Forum is obtained and (iv) notice in terms
of Subrule
(2) of Rule 8 of Order I is given. It however, is not necessary that the cause of action available to all the consumers should also be the
same. What is required is sameness of the interest and not the same cause of action.
8. The scope and object of the principle embodied in Rule 8 of Order I of Code of Civil Procedure was stated as under by a FourMembers
Bench
of this Commission in Anil Textorium Pvt. Ltd. Vs. Rajiv Niranjanbhai Mehta, III (1997) CPJ 31 (NC):
“6. …The principle admitted in all Courts / Tribunals/QuasiJudicial
Authorities upon questions affecting the suitor’s person and his
liberty and his property is that the rights of no man shall be decided unless he himself is present. Therefore, all persons having an interest in
the subjectmatter
are to be made parties in a suit or other proceedings but the provisions of Order I Rule 8 of the Code of Civil Procedure
has carved out an exception. It provides that where a number of persons are similarly interested in a suit one or more of them can with the
permission of the Court or on a direction given by the Court, sue or be sued on behalf of themselves and others. The provisions of this rule
have been included in the Code in public interest to avoid multiplicity of litigation and to facilitate the decision on questions; in which a large
number of persons are interested, without recourse to the ordinary procedure. These provisions are meant for the benefit and protection of
the persons who have the same interest as one who has filed the suit. The exception is adopted by the Courts to avoid inconvenience, because
if all persons interested are made parties, there would be considerable delay and justice would be hampered.
…….. It is the existence of a sufficient community of interest among the persons on whose behalf or against whom the suit is instituted
that should be the governing factor in deciding as to whether the procedure provided in the representative suit should be adopted or not”.
8. The complainants can be one or more consumers, where there are numerous consumers having the same interest. The interest
must be common to them all or they must have a common grievance which they seek to get redressed.
………… Where all the consumers jointly interested are made parties to the complaint, it is not a representative complaint in the strict
sense of the provisions of Order I Rule 8 and no permission is necessary”.
9. The obtaining of a quasijudicial
permission is an essential condition for binding those consumers other than those actually
parities to the complaint. The Consumer FORA have to exercise a judicial discretion in granting permission to a complainant to sue in a
representative capacity having regard to the nature of the complaint and the reliefs sought”.
9. In The Chairman, Tamil Nadu Housing Board, Madras Vs. T.N. Ganapathy, Civil Appeal No. 3002 of 1983 decided on 07.02.1990, a
number of persons, including the respondent before the Hon’ble Supreme Court, were allotted residential plots by Tamil Nadu Housing Board at a
tentative price. After more than ten years, fresh demands were made by the Board, threatening dispossession of the allottees in case of nonpayment
of the said demand. A suit was then filed by the respondent, who claimed to be representing all the allottees, on the ground that the cases of all of
them were identical. The suit was contested, interalia
on the ground that a suit in a representative capacity under Order 1 Rule 8 of the Code of
Civil Procedure was not maintainable. The Trial Court and First Appellate Court upheld the maintainability of the suit but dismissed the same on
merit. The High Court however, reversed the said decisions and decreed the suit. Being aggrieved, the Board approached the Hon’ble Supreme
Court by way of a Special Leave Petition. On the maintainability of the Suit, it was contended on behalf of the appellant that since the injury
complained was in respect of separate demand of money against each of the allottees, giving rise to different causes of action, the said provision was
not applicable. It was emphasized that those, who had been served with the additional demand were interested in defeating only the demand
individually referable to each of them. It was also contended that each one of the allottees was not interested in what happens to the others and
therefore, the allottees should file separate suits. The contention however, did not find favour with the Hon’ble Supreme Court, which interalia
observed and held as under:
“We do not find any merit in the argument. The provisions of Order 1 of Rule 8 have been included in the Code in the public interest so
as to avoid multiplicity of litigation. The condition necessary for application of the provisions is that the persons on whose behalf the suit is
being brought must have the same interest. In other words either the interest must be common or they must have a common grievance which
they seek to get redressed. In Kodia Goundar vs. Velandi Goundar, ILR 1955 Mad. 339, a Full Bench of the Madras High Court observed that
on the plain language of Order 1, Rule 8, the principal requirement to bring a suit within that Rule is the sameness of interest of the numerous
person on whose behalf or for whose benefit the suit is instituted. The Court, while considering whether leave under the Rule should be
granted or not, should examine whether there is sufficient community of interest to justify the adoption of the procedure provided under the
Rule. The object for which this provision is enacted is really to facilitate the decision of questions, in which a large number of persons are
interested, without recourse to the ordinary procedure. The provision must, therefore, receive an interpretation which will subserve the object
for its enactment. There is no words in the Rule to limit its scope to any particular category of suits or to exclude a suit in regard to a claim
for money or for injunction as the present one”.
“It is true that each of the allottees is interested individually in fighting out the demand separately made or going to be made on him
and, thus, separate causes of action arise in the case, but, that does not make Order 1, Rule 8 inapplicable. Earlier there was some doubt
about the Rule covering such a case which now stands clarified by the Explanation introduced by the CPC (Amendment) Act, 1976, which
reads as follows:
Explanation – For the purpose of determining whether the persons who sue or are sued, or defend, have the same interest in one suit,
it is not necessary to establish that such persons have the same cause of action as the persons on whose behalf, or for whose benefit,
they sue or are sued, or defend the suit, as the case may be.
The objects and reasons for the amendment were stated below:
OBJECTS AND REASONS: Clause 55; SubClause
(iv), Rule
8 of Order 1 deals with representative suits. Under this rule, where
there are numerous persons having the same interest in one suit, one or more of them may, with permission of the Court, sue or be
sued, on behalf of all of them. The rule has created a doubt as to whether the party representing others should have the same cause of
action as the persons represented by him. The rule is being substituted by a new rule and an explanation is being added to clarify that
such persons need not have the same cause of action.
There is, therefore, no doubt that the persons who may be represented in a suit under Order 1, Rule 8 need not have the same cause of
action. The trial court in the present case was right in permitting the respondent to sue on behalf of all the allottees of Ashok Nagar”.
10. Since by virtue of Section 13(6) of the Consumer Protection Act, the provisions of the Order 1 Rule 8 of CPC apply to the consumer
complaints filed by one or more consumers where there are numerous consumers having the same interest, the decision of the Hon’ble Supreme
Court in Tamil Nadu Housing Board (supra) would squarely apply, while answering the reference. The purpose of giving a statutory recognition to
such a complaint being to avoid the multiplicity of litigation, the effort should be to give an interpretation which would sub serve the said objective,
by reducing the increasing inflow of the consumer complaints to the Consumer Forums. The reduction in the number of consumer complaints will
be cost effective not only for the consumers but also for the service provider.
11. Reference dated 24.5.2016
Issue No. (i)
As held by the Hon’ble Supreme Court in Tamil Nadu Housing Board (supra), the interest of the persons on whose behalf the claim is brought must
be common or they must have a common grievance which they seek to get addressed. The defect or deficiency in the goods purchased, or the
services hired or availed of by them should be the same for all the consumers on whose behalf or for whose benefit the complaint is filed. Therefore,
the oneness of the interest is akin to a common grievance against the same person. If, for instance, a number of flats or plots in a project are sold by
a builder / developer to a number of persons, he fails to deliver possession of the said flats/plots within the time frame promised by him, and a
complaint is filed by one or more such persons, either seeking delivery of possession of flats / plots purchased by them and other purchasers in the
said project, or refund of the money paid by them and the other purchasers to the developer / builder is sought, the grievance of such persons being
common i.e. the failure of the builder / developer to deliver timely possession of the flats/plots sold to them, they would have same interest in the
subject matter of the complaint and sufficient community of interest to justify the adoption of the procedure prescribed in Order 1 Rule 8 of the
Code of Civil Procedure, provided that the complaint is filed on behalf of or for the benefit of all the persons having a common grievance against the
same developer / builder, and identical relief is sought for all such consumers.
The primary object behind permitting a class action such as a complaint under Section 12(1)(c) of the Consumer Protection Act being to facilitate the
decision of a consumer dispute in which a large number of consumers are interested, without recourse to each of them filing an individual complaint,
it is necessary that such a complaint is filed on behalf of or for the benefit of all the persons having such a community of interest. A complaint on
behalf of only some of them therefore will not be maintainable. If for instance, 100 flat buyers / plot buyers in a project have a common grievance
against the Builder / Developer and a complaint under Section 12(1)(c) of the Consumer Protection Act is filed on behalf of or for the benefit of say
10 of them, the primary purpose behind permitting a class action will not be achieved, since the remaining 90 aggrieved persons will be compelled
either to file individual complaints or to file complaints on behalf of or for the benefit of the different group of purchasers in the same project. This,
in our view, could not have been the Legislative intent. The term ‘persons so interested’ and ‘persons having the same interest’ used in Section 12(1)
(c) mean, the persons having a common grievance against the same service provider. The use of the words “all consumers so interested’ and “on
behalf of or for the benefit of all consumers so interested”, in Section 12(1)(c) leaves no doubt that such a complaint must necessarily be filed on
behalf of or for the benefit of all the persons having a common grievance, seeking a common relief and consequently having a community of interest
against the same service provider.
Sub rule (2) of Rule 8 of Order I of the Code of Civil Procedure mandates the Court to give notice of the institution of the suit /complaint to all
the persons “so interested”, meaning thereby to the persons having the same interest, i.e. a common grievance, on whose behalf or for whose benefit
the complaint is instituted. Notice can be either by way of personal service or where personal service is not reasonably practicable, by way of a
public advertisement. The aforesaid provision clearly envisages institution of a suit / complaint on behalf or for the benefit of not only those who
approach the Court/Forum but also on behalf of or for the benefit of the persons other than the plaintiffs / complainants, but having the same
grievance. Had the Legislative intent been to permit such a complaint only on behalf of the persons deciding to approach the Court/ Forum, there
could be no occasion for requiring the service of notice in the aforesaid manner, since there can be no question of serving any notice on those who
are already before the Court/Forum.
Sub Rule (5) of Rule 8 of Order I enables the Court to substitute the name of any person having same interest in the suit as plaintiff where it
finds that the person suing the suit is not proceeding with due diligence in the suit. The aforesaid power given to the Court also indicates that a suit
in terms of order 1 Rule 8 of the Code of Civil Procedure commonly termed as a class suit is intended on behalf or for the benefit of all the persons
having a common grievance against the same party and seeking the same relief not on behalf of or for the benefit of only some of them.
12. Issue No. (ii) and (iii)
Section 21 of the Consumer Protection Act, to the extent it is relevant provides that this Commission shall have jurisdiction to entertain
complaints where the value of the goods or services and compensation, if any, claimed exceeds Rs.1.00 crore. Therefore, what has to be seen, for the
purpose of determining the pecuniary jurisdiction, is the value of the goods or services and the amount of the compensation claimed in the
complaint. If the aggregate of (i) the value of the goods or services and (ii) the compensation claimed in the complaint exceeds Rs.1.00 crore, this
Commission would have pecuniary jurisdiction to entertain the complaint. Similarly, if the aggregate of the value of (i) the goods or services and (ii)
compensation, if any, claimed in the complaint exceeds Rs.20.00 lacs but does not exceed Rs.1.00 Crore, the State Commission would have the
pecuniary jurisdiction to entertain the complaint. Since a complaint under Section 12(1)(c) of the Consumer Protection Act can be filed only where
there are numerous consumers having the same interest and it has to be filed on behalf of or for the benefit of all the consumers so interested i.e. all
of the numerous consumers having the same interest, it is the aggregate of the value of the goods purchased or services hired or availed of, by all
those numerous consumers and the total compensation, if any, claimed for all those numerous consumers, which would determine the pecuniary
jurisdiction of this Commission. If the aggregate of the value of the goods purchased or the services hired or availed of by all the consumers having
the same interest and the total compensation, if any, claimed for all of them comes to more than Rs.1.00 crore, the pecuniary jurisdiction would rest
with this Commission alone. The value of the goods purchased or the services hired or availed of and the quantum of compensation, if any, claimed
in respect of the one individual consumer therefore, would be absolutely irrelevant for the purpose of determining the pecuniary jurisdiction in such a
complaint. In fact, this issue is no more res Integra in view of the decision of a FourMembers
Bench of this Commission in Public Health
Engineering Department Vs. Upbhokta Sanrakshan Samiti I (1992) CPJ 182 (NC). In the above referred case, a complaint was preferred,
seeking to recover compensation for alleged negligence on the part of the petitioner which had resulted in a large number of persons getting infected
by Jaundice. The names of 46 such persons were mentioned in the complaint but it was alleged that there were thousands of other sufferers who
were similarly placed and that complaint was filed on behalf of all of them. The complainant had sought compensation of Rs.20,000/for
every
student victim, Rs.10,000/for
every general victim and Rs.1,00,000/for
the legal representatives of those who had died due to Jaundice. The
District Forum held that it had no pecuniary jurisdiction to adjudicate upon the complaint. The State Commission took the view that the District
Forum has to go by the value as specified for each consumer. Rejecting the view taken by the State Commission, this Commission interalia
held as
under:
“5. In our opinion this proposition is clearly wrong since under the terms of Section 11 of the Act the pecuniary jurisdiction of the
District Forum would depend upon the quantum of compensation claimed in the petition. The view expressed by the State Commission is not
based on a correct understanding or interpretation of Section 11. On the plain words used in Section 11 of the Act, the aggregate quantum of
compensation claimed in the petition will determine the question of jurisdiction and when the complaint is filed in a representative capacity
on behalf of several persons, as in the present case, the total amount of compensation claimed by the representative body on behalf of all the
persons whom it represents will govern the valuation of the complaint petition for purposes of jurisdiction”.
6. The quantum of compensation claimed in the petition being far in excess of Rs.1.00 lac the District Forum was perfectly right in
holding that it had no jurisdiction to adjudicate upon the complaint. The reversal of the said order by the State Commission was contrary to
law”.
Therefore, irrespective of the value of the goods purchased or the service hired and availed of by an individual purchaser / allottee and the
compensation claimed in respect of an individual purchaser / allottee, this Commission would have the pecuniary jurisdiction to entertain the
complaint if the aggregate of the value of the goods purchased or the services hired or availed of by the numerous consumers on whose behalf or for
whose benefit the complaint is filed and the total compensation claimed for all of them exceeds Rs.1.00 crore.
Issue No. (iv)
13. As noted earlier, what is required for the applicability of Section 12(1)(c) of the Consumer Protection Act read with Order I Rule 8 of the Code
of Civil Procedure is the sameness of the interest i.e. a common grievance of numerous persons which is sought to get redressed through a
representative action. Therefore, so long as the grievance of the consumers is common and identical relief is claimed for all of them, the cost, size,
area of the flat / plot and the date of booking / allotment / purchase, would be wholly immaterial. For instance, if a builder / developer has sold 100
flats in a project out of which 25 are threebed
room flats, 25 are twobed
room flats and 50 are onebed
room flats and he has failed to deliver timely
possession of those flats, all the allottees irrespective of size of their respective flats / plots, the date of their respective purchase and the cost agreed
to be paid by them have a common grievance i.e. the failure of the builder/ developer to deliver possession of the flat / plot sold to them and a
complaint filed for the benefit of or on behalf of all such consumers and claiming same relief for all of them, would be maintainable under Section
12(1)(c) of the Consumer Protection Act. The relief claimed will be the same / identical if for instance, in a case of failure of the builder to deliver
timely possession, refund, or possession or in the alternative refund with or without compensation is claimed for all of them. Different reliefs for one
or more of the consumers on whose behalf or for whose benefit the complaint is filed cannot be claimed in such a complaint.
14. Reference order dated 11.8.2016
Issue No. (i)
It is evident from a bare perusal of Sections 21, 17 and 11 of the Consumer Protection Act that it’s the value of the goods or services and the
compensation, if any, claimed which determines the pecuniary jurisdiction of the Consumer Forum. The Act does not envisage determination of the
pecuniary jurisdiction based upon the cost of removing the deficiencies in the goods purchased or the services to be rendered to the consumer.
Therefore, the cost of removing the defects or deficiencies in the goods or the services would have no bearing on the determination of the pecuniary
jurisdiction. If the aggregate of the value of the goods purchased or the services hired or availed of by a consumer, when added to the compensation,
if any, claimed in the complaint by him, exceeds Rs. 1.00 crore, it is this Commission alone which would have the pecuniary jurisdiction to entertain
the complaint. For instance if a person purchases a machine for more than Rs.1.00 crore, a manufacturing defect is found in the machine and the cost
of removing the said defect is Rs.10.00 lacs, it is the aggregate of the sale consideration paid by the consumer for the machine and compensation, if
any, claimed in the complaint which would determine the pecuniary jurisdiction of the Consumer Forum. Similarly, if for instance, a house is sold
for more than Rs.1.00 crore, certain defects are found in the house, and the cost of removing those defects is Rs.5.00 lacs, the complaint would have
to be filed before this Commission, the value of the services itself being more than Rs.1.00 crore.
Issue No. (ii)
In Ghaziabad Development Authority Vs. Balbir Singh (2004) 5 SCC 65, the Hon’ble Supreme Court interalia
observed and held as under:
“However the power to and duty to award compensation does not mean that irrespective of facts of the case compensation can be
awarded in all matters at a uniform rate of 18% per annum. As seen above what is being awarded is compensation i.e. recompense for the
loss or injury.
… Along with recompensing the loss the Commission / Forum may also compensate for harassment / injury both mental and physical.
Similarly, compensation can be given if after allotment is made there has been cancellation of scheme without any justifiable cause.
That compensation cannot be uniform and can best of illustrated by considering case where possession is being directed to be delivered
and cases where only monies are directed to be returned. In cases where possession is being directed to be delivered the compensation for
harassment will necessarily have to be less because in a way that party is being compensated by increase in the value of the property he is
getting. But in cases where monies are being simply returned then the party is suffering a loss inasmuch as he had deposited the money in the
hope of getting a flat / plot. He is being deprived of that flat / plot. He has been deprived of the benefit of escalation of the price of that flat /
plot. Therefore, the compensation in such cases would necessarily have to be higher”.
The Hon’ble Supreme Court thus recognized that the interest to the flat buyers is paid by way of compensation. In fact, though the Consumer
Protection Act, authorises the Consumer Forum to award compensation, no specific powers to award interest has been conferred upon it. Therefore,
in view of the provisions contained in Sections 21, 17 and 11 of the Consumer Protection Act, the amount of the interest, which can be paid as
compensation, must necessarily be taken into account for determining the pecuniary jurisdiction.
Issue No. (iii)
Conflicting orders have been passed by the Benches of this Commission as to cut off date for determining the value of the goods or the services, as
the case may be, in terms of Section 21, 17 and 11 of the Consumer Protection Act. One view is that the value of the goods or services means the
consideration agreed to be paid by the consumer for the goods purchased or the services hired and availed of, whereas the other view is that the value
of the goods or services as the case may be, for the purpose of determining the pecuniary jurisdiction of the Consumer Forum should be the market
value of the goods or services on the date of institution of the consumer complaint. Though, the use of the word “value” in the above referred
Sections, tends to suggest that it is the market price of the goods or the services, as the case may be, which when added to the amount of
compensation, if any, claimed in the complaint, should determine the pecuniary jurisdiction of the Consumer Forum, on a deeper consideration we
are of the view that it is the price of the goods or the services as the case may be agreed to be paid by the consumer which would be relevant for the
purpose of determining the pecuniary jurisdiction. If the market price of the goods or the services as the case may be, on the date of institution of the
complaint is to determine the pecuniary jurisdiction, the market price being dynamic and ever fluctuating, this would create an unending uncertainty
with respect to the Consumer Forum before which the complaint is to be instituted. For instance, if there are 10 flat buyers in the same project,
identical consideration is agreed to be paid by them to the service provider, one of them decides to approach the Consumer Forum at a time when the
prevailing market value of the flat is more than Rs.1.00 crore, the complaint will have to be instituted before this Commission. If the prevailing
market value of the flat at the time when another flat buyer who agreed to pay the same consideration to the service provider decides to approach the
Consumer Forum is less than Rs.1.00 crore, he will have to approach the concerned State Commission. Therefore, there will be two separate Forums
dealing with the complaints of these two consumers who agreed to pay same price for the flat purchased by them. In one case, the order passed in
the consumer complaint would be challenged before the Hon’ble Supreme Court whereas in the other case, it would be challenged before this
Commission. Creating such an anomalous situation, in our view, could not have been the legislative intent.
Moreover, if the pecuniary jurisdiction of the Consumer Forum varies with the market price of the goods or services at the time the complaint is
instituted; there is a likelihood of the valuation given by the complainant, being seriously challenged by the opposite party. If this happens, the
Consumer Forum will first have to determine the market price of the goods or services as the case may be, at the time of institution of the complaint.
Such a determination is likely to be a time consuming process, besides being incapable of determination by way of a summary procedure, which the
Consumer Forums are adopting. Such an interpretation therefore, is likely to be counterproductive and result in an inordinate delay in the disposal of
the consumer complaint. On the other hand, no such difficulty is likely to arise if the sale consideration agreed to be paid by the consumer is taken as
the value of the goods or services. In that case, the amount of compensation as claimed in the complaint needs to be added to the agreed
consideration and the aggregate of the consideration and the compensation claimed in the complaint would determine the pecuniary jurisdiction of
the Consumer Forum.
Issue No. (iv)
In view of the answer to the issues No. (ii) and (iii) of the reference order dated 24.5.2016, it is the aggregate value of the goods purchased or
the services hired or availed of by all the consumers on whose behalf or for whose benefit the complaint is filed which, added to the total amount of
compensation, if any, claimed for all such consumers determines the pecuniary jurisdiction of the Consumer Forum. The value of the goods
purchased or the services hired or availed of by an individual consumer and the compensation claimed in respect of an individual consumer would
have no bearing on such determination.
Issue No. (v) and (vi)
It is evident from a bare perusal of Section 12(1)(c) of the Consumer Protection Act that a complaint under the aforesaid provision can be filed
only by one or more consumers. The term ‘consumer’ has been defined in Section 2(1)(d) of the Consumer Protection Act to mean any person who
buys any goods for a consideration or who hires or avails of any services for a consideration and includes the user other than the purchaser of the
goods and beneficiary other than the person hiring or availing of the services for consideration, with the permission of the person purchasing the
goods or hiring or availing of the services, as the case may be. Therefore, a Cooperative Society or a group of Cooperative Societies is not entitled to
file a complaint under Section 12(1)(c) of the Consumer Protection Act unless the cooperative society itself is a consumer as defined in Section 2(1)
(d) of the Consumer Protection Act. Similarly, no group of Firms, Society or Association can file such a complaint unless such group of Firms,
Society or Association itself is a consumer as defined in Section 2(1)(d) of the Consumer Protection Act. No person who does not qualify as a
consumer in terms of Section 2(1)(d) of the Consumer Protection Act, can be party to a complaint under Section 12(1)(c) of the Act nor can he be
amongst the persons on whose behalf or for whose benefit such a complaint is filed. In fact, a person who is not a consumer, as defined in Section
2(1)(d) of the Act, can invoke the jurisdiction of a Consumer Forum, by way of a consumer complaint.
Issue No. (vii)
As noted earlier, a complaint under Section 2(1)(c) of the Consumer Protection Act read with Order I Rule 8 of the Code of Civil Procedure
can be filed where there are numerous consumers having the same interest i.e. a common grievance against the same person and the complaint is
filed on behalf of or for the benefit of all such numerous consumers, and seeking same relief for all of them. Therefore, the Act does not envisage
more than one complaints on behalf of such consumers, in a representative character. The decision in one complaint filed in a representative capacity
will bind all the consumers on whose behalf or for whose benefit the complaint is filed, as provided in Order I Rule 8 (6) of the Code of Civil
Procedure. Therefore, once a complaint, in a representative capacity is filed under Section 12(1)(c) of the Consumer Protection Act, and the requisite
permission for filing such a complaint is given by the Consumer Forum, a second complaint, in a representative capacity under Section 12(1)(c) of
the Consumer Protection Act would not be maintainable by or on behalf of consumers having the same interest and seeking the same relief and if
filed, is liable to be dismissed with liberty to seek impleadment in the complaint already instituted in a representative capacity with the requisite
permission of the Consumer Forum. Since a complaint in a representative capacity can be filed only on behalf of all the consumers having the same
interest i.e. a common grievance and seeking the same relief against the same person, an individual complaint expressing such a grievance will not be
maintainable and the only recourse available to a consumer having the same grievance is to seek impleadment in the complaint filed in the
representative capacity. If such individual complaints are allowed even after the requisite permission in terms of Section 12(1)(c) is granted, that
would be in contradiction of Order I Rule 8 (6) of the Code of Civil Procedure which makes an order passed in a suit / complaint filed in a
representative capacity binding on all the persons on whose behalf or for whose benefit the suit / complaint is filed.
However, as far as the individual complaints instituted prior to grant of the requisite permission under Section 12(1)(c) of the Consumer
Protection Act is concerned, they having been validly instituted, such complainants cannot be compelled to withdraw their individual complaint and
become a party to the subsequently instituted complaint filed in a representative capacity. They having already taken recourse to the legal
proceedings, the complaint instituted in a representative capacity, will not be deemed to have been instituted on behalf of or for the benefit of such
complainants even if their grievance is identical to the grievance expressed in the complaint instituted in a representative character. They having
already approached the Consumer Forum for the redressal of their grievance, it would be difficult to say that the complaint filed in a representative
character was intended on their behalf or for their benefit as well. In fact, there may be a consumer having an identical grievance, who has already
approached the Consumer Forum by way of an individual complaint and whose complaint has already been adjudicated before the requisite
permission under Section 12(1)(c) of the Consumer Protection Act is accorded in a complaint filed in a representative capacity. Since, there cannot
be more than one adjudication in respect of the same grievance of the same person, it cannot be said that the complaint instituted in a representative
capacity was filed on his behalf or for his benefit as well. Therefore, the consumers, who are already before the Consumer Forum when the requisite
permission, in terms of Section 12(1)(c) of the Consumer Protection Act is accorded, will be out of the purview of the said complaint. Since it
cannot be said that the complaint in the representative capacity was filed on their behalf or for their benefit as well, the order passed in such a
complaint will not be binding on them. If however, such persons want to withdraw their pending complaints and join the complaint instituted in the
representative capacity, there is no bar on their adopting such a course of action. The decision, of course, would rest with them whether to continue
with the individual complaint already instituted by them or to withdraw the said complaint and become party to the complaint filed in a
representative capacity.
In one of the written submissions, it is contended that since a complaint in a representative capacity can be filed only on behalf of all the
consumer having the same interest, such a complaint will not be maintainable where one or more individual complaints, expressing such a grievance
are already pending. We however, are unable to accept the contention. No such restriction finds place in Section 12(1)(c) of the Consumer
Protection Act or in Order I Rule 8 of the Code of Civil Procedure. Accepting such a contention would defeat the very purpose of allowing such a
suit/complaint since every consumer would be compelled to file an individual complaint leading to multiplicity of proceedings. Such an
interpretation would not serve the cause either of the consumer or of the service provider.
15. For the reasons stated hereinabove, the references are answered as under:
Reference dated 24.5.2016
Issue No. (i)
A complaint under Section 12 (1)(c) of the Consumer Protection Act can be filed only on behalf of or for the benefit of all the consumers,
having a common interest or a common grievance and seeking the same / identical relief against the same person. Such a complaint however, shall
not be deemed to have been filed on behalf of or for the benefit of the consumers who have already filed individual complaints before the requisite
permission in terms of Section 12(1)(c) of the Consumer Protection Act is accorded.
Issue No. (ii), (iii) and (iv)
A complaint under Section 12 (1)(c) of the Consumer Protection Act is maintainable before this Commission where the aggregate of the value
of the goods purchased or the services hired or availed of by all the consumers on whose behalf or for whose benefit the complaint is instituted and
the total compensation, if any, claimed in respect of all such consumers exceeds Rs.1.00 crore. The value of the goods purchased or the services
hired and availed of by an individual consumer or the size, or date of booking / allotment / purchase of the flat would be wholly irrelevant in such a
complaint where the complaint relates to the sale / allotment of several flats / plots in the same project / building.
Reference dated 11.8.2016
Issue No. (i)
It is the value of the goods or services, as the case may be, and not the value or cost of removing the deficiency in the service which is to be
considered for the purpose of determining the pecuniary jurisdiction.
Issue No. (ii)
The interest has to be taken into account for the purpose of determining the pecuniary jurisdiction of a Consumer Forum.
Issue No. (iii)
The consideration paid or agreed to be paid by the consumer at the time of purchasing the goods or hiring or availing of the services, as the
case may be, is to be considered, along with the compensation, if any, claimed in the complaint, to determine the pecuniary jurisdiction of a
Consumer Forum.
Issue No. (iv)
In a complaint instituted under Section 12(1)(c) of the Consumer Protection Act, the pecuniary jurisdiction is to be determined on the basis of
aggregate of the value of the goods purchased or the services hired or availed by all the consumers on whose behalf or for whose benefit the
complaint is instituted and the total compensation claimed in respect of such consumers.
Issue No. (v) & (vi)
A complaint under Section 12(1)(c) of the Consumer Protection Act can be instituted only by one or more consumers, as defined in Section
2(1)(d) of the Consumer Protection Act. Therefore, a group of Cooperative societies, Firms, Association or other Society cannot file such a
complaint unless such society etc. itself is a consumer as defined in the aforesaid provision.
Issue No. (vii)
More than one complaints under Section 12(1)(c) of the Consumer Protection Act are not maintainable on behalf of or for the benefit of
consumers having the same interest i.e. a common grievance and seeking the same / identical against the same person. In case more than one such
complaints have been instituted, it is only the complaint instituted first under Section 12(1)(c) of the Consumer Protection Act, with the requisite
permission of the Consumer Forum, which can continue and the remaining complaints filed under Section 12(1)(c) of the Consumer Protection Act
are liable to be dismissed with liberty to join in the complaint instituted first with the requisite permission of the Consumer Forum.
The individual complaints instituted before grant of the requisite permission under Section 12(1)(c) of the Consumer Protection Act can
continue despite grant of the said permission but it would be open to such complainants to withdraw their individual complaints and join as parties to
the complaint instituted in a representative character. However, once the requisite permission under Section 12(1)(c) of the Consumer Protection Act
is granted, an individual complaint, expressing the same grievance will not be maintainable and the only remedy open to a consumer having the same
grievance is to join as a party to the complaint instituted in a representative character.
16. Before parting with the references, we would like to emphasise that considering the binding effect of a decision rendered in a complaint under
Section 12(1)(c) of the Consumer Protection Act, on all the consumers, on whose behalf or for whose benefit such a complaint is filed, even if they
chose not to join as a party to the complaint, it is necessary to exercise due care and caution while considering such a complaint even at the initial
stage and to grant the requisite permission, only where the complaint fulfils all the requisite conditions in terms of Section 12(1)(c) of the Consumer
Protection Act read with Order I Rule 8 of the Code of Civil Procedure; as interpreted in this reference. It would also be necessary for the Bench to
either give individual notices or an adequate public notice of the institution of the complaint to all the persons on whose behalf or for whose benefit
the complaint is instituted. Such a notice should disclose interalia
(i) the subject matter of the complaint including the particulars of the project if
the complaint relates to a housing project / scheme, (ii) the class of persons on whose behalf or for whose benefit the complaint is filed, (iii) the
common grievance sought to get redressed through the class action, (iv) the alleged deficiency in the services and (v) the reliefs claimed in the
complaint.
It will also be necessary to hear the opposite party, before taking a final view on the grant or otherwise of the permission required in terms of
Section 12(1)(c) of the Consumer Protection Act.
17. The Complaint and the Appeals, in which references were made, be listed before the appropriate Benches, for further proceedings, in the light
of the answer to the reference.

Jd.K. Jain
President
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Jv.K. Jain
Member
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Dr. B.C. Gupta
Member