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Legislative and Regulatory Update
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[No.138]
October 30,
2005 |
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Supreme
Court |
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Chennammal Vs
Munimalaiyan and Ors.
The respondent
executed a simple mortgage in favour of the appellant for a sum of Rs 3000
alongwith three items given as security. Being unable to discharge the simple
mortgage a deed was executed by respondent in favour of appellant on the
intervention of Panchayatdars. In the said deed one of the properties given as
security for the simple mortgage was sold to the appellant with a right to
repurchase the same within a period of three years on payment of Rs 3000. On
legal notice being issued to the appellant for redemption, the appellant
contended that it was a deed of sale and not a mortgage by conditional sale.
The trial court held
that it was a mortgage by conditional sale and not a sale deed. However, first
appellate court held that it was an outright sale and not a mortgage by
conditional sale. The second appeal was preferred to the High Court wherein the
judgment of trial court was restored and held that it was a mortgage by
conditional sale.
The sole question to
be considered before the Hon’ble Supreme court was whether it was mortgage by
conditional sale or sale deed as contended by appellant. It was observed that a
mortgage by conditional sale takes the form of an ostensible sale of the
property with the condition superadded that it shall become an absolute sale on
default of payment on a certain date or subject to the proviso that the sale
shall be treated as void and the property re-transferred on payment being made
as also laid down in Section 58(c) of the Transfer of Property Act, 1882. It was
further observed that the nomenclature alone is hardly conclusive and it is the
real intention which is required to be gathered. The intention is to be gathered
from the document itself and if the words are clear and express, effect must be
given to them and any extraneous enquiry into what was thought or intended is
ruled out. It was further laid down that that the definition of mortgage by
conditional sale postulates the creation by the transfer of a relation of
mortgagor and mortgagee, the price being charged on property reconveyed. Thus
viewed from any angle, we are of the opinion that the document in question is a
mortgage by conditional sale.
The facts in brief
giving rise to controversy in the present case are that the respondent was born
in India but his late father migrated to Pakistan in the year 1957 and became a
citizen of Pakistan. After the breaking of hostilities between India and
Pakistan in the year 1965, the property of his father located in India got
vested in the Custodian. After the coming into force of the Enemy Property Act
in the year 1968, the properties of late Raja, the father of Respondent.,
continued to be vested in the Custodian till he died on 14.10.1973 in London.
After the death of his father, respondent who is a citizen of India inherited
the property being the sole heir and successor of his father. The question then
that arose before the Hon’ble Supreme Court was can the respondent be termed
as enemy or enemy subject within the meaning of Section 2(b) of the Enemy
Property Act, 1968 or can the property of an Indian Citizen be termed as enemy
property within the meaning of section 2(c)?
The court replied to
this question with an emphatic no. It was held that definition of enemy provided
under section 2(b) excludes citizens of India as an enemy or enemy subject or
enemy firm. Under the circumstances the respondent who was born in India and his
Indian citizenship not being in question cannot by any stretch of imagination be
held to be enemy. Similarly under Section 2 (c ), the property belonging to an
Indian could not be termed as an enemy property.
To the contention
that property was vested in the Custodian permanently , the Court observed that
Section 18 of the Act deals with divesting of enemy property vested in the
Custodian and makes it evident that enemy property is not permanently vested in
the Custodian and divesting the custodian of such property is contemplated. A
conjoint reading of Sections 6, 8 and 18 of the Act, indicates that the enemy
subject due to the vesting of his property in the Custodian is not divested of
his right, title and interest in the property. The vesting in the Custodian is
limited to the extent of possession, management and control over the property
temporarily.
The question that
arose in the present civil appeals was regarding the nature of the function of
the Chief Justice or his designate under Section 11 of the Arbitration and
Conciliation Act, 1996. The three judges bench decision in Konkan Rly. Corpn.
Ltd. Vs. Mehul Construction Co. as approved by the Constitution Bench in Konkan
Railway Corpn. Ltd. & anr. Vs. Rani Construction Pvt. Ltd. has taken the
view that it is purely an administrative function, its purpose being the speedy
disposal of commercial disputes and that such an order could not be subject to
judicial review under Article 136 of the Constitution of India., that it is
neither judicial nor quasi-judicial and the Chief Justice or his nominee
performing the function under Section 11(6) of the Act, cannot decide any
contentious issue between the parties. The correctness of the said view was
questioned in these appeals.
It was observed by
the Hon’ble Supreme Court that when the Chief Justice decides that he has
jurisdiction to proceed with the matter, or that there is an arbitration
agreement, or that one of the parties to it has failed to act according to the
procedure agreed upon, it cannot be said that he is not adjudicating on the
rights of the party who is raising these objections. The duty to decide the
preliminary facts enabling the exercise of jurisdiction or power, gets all the
more emphasized, when sub-Section (7) designates the order under sub-sections
(4), (5) or (6) a 'decision' and makes the decision of the Chief Justice final
on the matters referred to in that sub-Section. Thus, going by the scheme of
Section 11, it is difficult to call the order of the Chief Justice merely an
administrative order and to say that the opposite side need not even be heard
before the Chief Justice exercises his power of appointing an arbitrator. Even
otherwise, when a statute confers a power or imposes a duty on the highest
judicial authority in the State or in the country, that authority, unless shown
otherwise, has to act judicially and has necessarily to consider whether his
power has been rightly invoked or the conditions for the performance of his duty
are shown to exist. Thus, it was held that :-
(i) the power
exercised by the Chief Justice of the High Court or the Chief Justice of India
under Section 11(6) of the Act is not an administrative power. It is a judicial
power.
(ii) The Chief
Justice or the designated judge will have the right to decide the preliminary
aspects as indicated in the earlier part of this judgment. These will be- his
own jurisdiction, to entertain the request, the existence of a valid arbitration
agreement, the existence or otherwise of a live claim, the existence of the
condition for the exercise of his power and on the qualifications of the
arbitrator or arbitrators.
(iii) Since an order
passed by the Chief Justice of the High Court or by the designated judge of that
court is a judicial order, an appeal will lie against that order only under
Article 136 of the Constitution of India to the Supreme Court.
(iv) There can be no
appeal against an order of the Chief Justice of India or a judge of the Supreme
Court designated by him while entertaining an application under Section 11(6) of
the Act.
(v) The decision in
Konkan Railway Corpn. Ltd. & anr. Vs. Rani Construction Pvt. Ltd. [(2000) 8
SCC 159] is overruled.
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High Courts |
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Delhi
The petition was
filed challenging the grant of licence to the respondents on the ground that the
respondent was physically handicapped .The petitioner had also applied for the
licence in the same category. It was alleged that the respondent was illegally
treated as physically handicapped where his medical certificate specifically
stated that his physical disability was less than 40%.
The Court held that
for grant of kiosks and shops people preference should be given to people who
have minimum of 40% of disability in existence at the time of application. The
Delhi Government while granting each licence should take this criterion into
consideration. The interpretation that an applicant with more than 40%
disability will not be able to run the shops will totally negate the spirit of
Article 14 of the Constitution.
The Respondent was
working as a Lecturer (Electrical Engineering) at Polytechnic Directorate of
Training and Technical Education. Being the senior most he was asked to act as
the Head of the Department (Electrical Engineering) as the said position was
vacant. The main contention that arose was whether the lecturer was entitled to
additional pay and allowances for acting as the head of the department?
It was held that the
respondent was working only as a Lecturer and being the senior most Lecturer he
was asked to act as the head of the Department (electrical Engineering) as the
said post had fallen vacant. Therefore, the claim of the respondent is untenable
and misplaced and would not be entitled to the pay benefits and allowances of
the head of the department.
Madras
Manager, Mandvi
Coperative Bank Ltd., Bombay v Viswa Bandhu, rep.by its partner, Ashok J. Mehta,
Coimbatore and Others
The instant appeal
has been filed challenging the decree of the Trial Court, which had ordered for
dismissal of the suit. In this case, Demand Draft was sent by post which was
lost and fell into the hands of a third party not entitled to it. The recipient
of the draft opened new account with the bank and encashed them. Persons
entitled to the draft filed suit. The Respondents contended that the Appellant
did not take any bonafide steps to conduct enquiry about the person who had
opened a new account and had casually allowed the person to encash the Demand
Draft.
Accepting the order
of the lower court, it was held that the appellant has not chosen to examine the
customer who introduced the third party and was therefore liable for negligence.
Thus, the decree made by the first appellate Court is perfectly valid. And the
second appeal cannot be entertained as it involves only questions of facts and
does not involve any question of Law.
Andhra Pradesh
The Civil Revision
Petition was directed against the order passed by the Senior Civil Judge
allowing application filed under Order 26 Rule 9 of the code of Civil Procedure,
appointing an Advocate Commissioner. The suit was filed for the specific
performance of an agreement of sale, where as the parties contended that there
was no agreement of sell. Both the plaintiff and the defendants were claiming
the possession of the property.
The court held that
the burden of proof lies on the person who claims the possession of the
property. Under normal circumstances either of the parties to the suit could not
be allowed to collect evidence through Advocate Commissioner to prove their
claim. However under special circumstances, taking into consideration the facts
and circumstances of the case,
the court could
appoint an Advocate Commissioner for the purpose.
The petition was
filed challenging the order of the respondents which disqualified the
candidature of the petitioner of the grounds that he was over age i.e. above
25years.No such stipulation was made at the time of filing of the application
forms and subsequent entrance examination. However stipulation was made that the
candidates should fulfill eligibility criterion prescribed by the University.
The court held that
on perusal of the brochure of the college it is found that it stipulated age bar
only in the case of admissions made in the ANU Campus College and ANU PG Centre.
Extension of the rule to private affiliated colleges was arbitrary. If the
Registrar of University approved a decision for the enforcement of the rule, to
the private affiliated colleges, the same could be applied only from the
successive academic year.
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| PIB
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Dated 27.10.2005:
The Union Cabinet has given its approval for introduction of a Bill in the
Parliament by making some consequential amendments, proposed to be made in the
Protection of Human Rights Act, 1993.
Dated 27.10.2005:
The Union Cabinet has given its approval to introduce a Bill in Parliament for
repealing the Agricultural Produce Cess Act, 1940 and the Produce Cess Act 1966
in order to remove the cess on exports.
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RBI |
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Circular No.
FMD.No.1 /01.01.01/2005-06 Dated 25.10.2005: Vide the above circular, it has
been decided to increase the fixed reverse repo rate under the Liquidity
Adjustment Facility (LAF) of the Reserve Bank by 25 basis points with effect
from October 26, 2005 to 5.25 per cent from 5.0 per cent. The repo rate will
continue to be linked to the reverse repo rate. The spread between the reverse
repo rate and the repo rate has been retained at 100 basis points, as at
present. Accordingly, the fixed repo rate under LAF will be 6.25 per cent,
effective October 26, 2005.There will be no change in other terms and conditions
of the current LAF Scheme.
UBD
Circular No. UBD
(PCB)/BPD/Cir.15 /09.72.000 /2005-06 Dated 20.10.2005: The Reserve Bank of India
has clarified vide the above circular that banks carrying accumulated losses in
their balance sheet are not eligible to make donations. All other terms and
conditions mentioned in the circular UBD (PCB). / BPD/Cir. 43 /09.72.00 /2004-05
dated April 11, 2005 will continue to apply.
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| Ministry of Finance |
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Service Tax
Notification No.
31/2005 Dated 20.10.2005: The Central Government, vide this notification, has
brought forward the, Service Tax (Sixth Amendment) Rules, 2005 amending the
Service Tax Rules, 1994. These rules shall come into force on the date of their
publication in the Official Gazette. The amendments relate to the substitution
of Forms ST-1, ST-2 and ST-3.
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| Ministry of
Home Affairs |
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Notification No.
GSR638 (E) Dated 20.10.2005: The Central Government, vide this notification, has
brought forward the, Determination of the Price of the Forfeited Property Rules,
2005.These rules shall come into force on the date of their publication in the
Official Gazette. The following factors shall be taken into account while fixing
price of the forfeited property
(i) the market value
of the forfeited property;
(ii) the value of
such other property which is comparable to the forfeited property;
(iii) the material
cost or conversion cost; and
(iv) such other
factors which he may consider necessary in the determination of the price
Before the final
determination of the price with respect to the forfeited property is made, the
Authorised Officer shall take into account, representation, if any, made by the
person or his legal nominee.
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| Ministry
of Health and Family Welfare |
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Health
Notification No.
GSR646 (E) Dated 20.10.2005: The Central Government, after consultation with the
Central Committee for Food Standards, makes the Prevention of Food Adulteration
(5th Amendment) Rules, 2005 further to amend the Prevention of Food Adulteration
Rules, 1955. These rules shall come into force after two years from the date of
publication in the Official Gazette. The amendments relate to Rule 50 of the
Prevention of Food Adulteration Rules, 1955.
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| Ministry
of Labour And Employment |
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Notification No.
SO1520 (E) Dated 20.10.2005: The Central Government, vide this notification, has
fixed the minimum rates of wages per day per employees as specified in the
Columns (2) to (4) of the Schedule annexed to the above notification, payable to
the categories of employees mentioned against them in Column (1) thereof, in the
employment in Agriculture. The revised minimum rates of wages shall consist of -
(a) basic rates of
wages as set out in columns (2) to (4) of Part-1 of the Schedule and payable to
the categories of employees employed in the employment in Agriculture as
specified in column (1) thereof.
(b) a special
allowance (referred to as variable dearness allowance) at the rates set out in
column (2) to (4) of the Part-II of the said Schedule for the respective
categories of workers. The variable dearness allowance shall be adjusted by the
Chief Labour Commissioner (Central) at the interval of every six months
commencing on the 1st October and 1st April on the basis of the average Consumer
Price Index Number for Industrial Workers (1982=100) for the each preceding
period of six months ending on the 30th June and the 31st December every year,
respectively.
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| International Legal
Cases and News |
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Cases
Criminal Law
In the above
criminal suit, the appeal court upheld the decision of the trial court and affirmed the
Defendants' drug convictions. The defendants had claimed that the district court
improperly allowed testimony from an undercover officer based on evidence that
should have been disclosed prior to trial.
Defendant's
conviction for receipt of child pornography was affirmed by the appeal court on
appeal, the same was held by the trial court over the
defendant’s claim that officers exceeded the scope of consent when they
searched his computer by means other than those explained to him in the course
of obtaining consent.
Arbitration
The US 10th
Circuit Court of Appeals in the above arbitration suit held that a non-appealability
clause in an arbitration agreement that forecloses judicial review of an
arbitration award beyond the district court is enforceable
Labor &
Employment Law
In the above
Employment dispute, the appellate Court held that an employer can pay increased
salaries or commission to employee instead of reimbursing the employee for
actual automobile expenses incurred as per the law laid down under Labor Code
section 2802.
In the above
employment suit the Appellate Court held that the trial court erred when it
dismissed plaintiffs' claim against their former employer, for violations of
Labor Code and Industrial Welfare Commission wage order provisions relating to
rest breaks, since defendant has not proven that it supplied the plaintiffs with
their rest periods.
News
The US Court of
Appeal has rejected a request to set aside an injunction barring enforcement of
the state’s new voter ID requirement in the upcoming municipal elections,
which requires voters to produce their driver’s licenses or other
government-issued photo ID when requesting a ballot. The law has been held to be
unconstitutional, as those without drivers’ licenses would have been charged a
fee to obtain a state identification card. The absence of an adequate system for
providing the identification cards put an undue burden on the elderly, the poor
and the disabled.
The Constitutional
Court in Korea has ruled the existing law strictly regulating the medical ads to
be unconstitutional and Medical doctors and hospitals will now be allowed to
advertise more freely in the country. The existing law prevented the hospitals
and private medical institutions from marketing the methods and capabilities of
their services through print or broadcasting and they were only allowed to
provide basic information such as the type of clinical services they are
offering, the type of facilities they have and the number of staff members they
employ. The court said that the existing law infringes on the freedom of medical
institutions to pursue profits and the rights of patients to choose better
services and Direct-to-consumer advertising could empower the patient to learn
more about medical options if they are based on accurate information and lead to
a healthy competition between medical institutes that could benefit the quality
of health-care services eventually.
Over 65
institutional investors that lost money in WorldCom Inc.’s collapse agreed on
a settlement of $651 million to be paid by investment banks and other
defendants. Among the last strands of the web of litigation stemming from the
$11 billion accounting fraud at the telecommunications company, WorldCom’s
former investment banks primarily Citigroup and JP MORGAN CHASE & CO that
underwrote WorldCom Inc will pay the bulk of the settlement. WorldCom plunged
into bankruptcy in 2002 after the accounting fraud at the company was revealed
and the lawsuit was aimed at compensating the investors for losses on purchases
of WorldCom stocks and bonds spanning from 1998 to 2001.
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