SUPREME COURT

• Motor Vehicles Law

Uttar Pradesh State Road Transport Corporation Vs. Kulsum and Ors. (Decided on 25.07.2011) MANU/SC/0846/2011

Compensation - Section 146 of the Insurance Act - Liability of Insurance company to pay compensation to third parties - Appellant has challenged the the award passed by the Motor Accident Claims Tribunal holding the Appellant along with owner and driver liable to pay the compensation which was upheld by Allahabad High Court - Hence this appeal - Whether the Insurance Company would be liable to pay compensation or would it be the responsibility of the Corporation or the owner?

Held, liability to pay compensation is based on a statutory provision. Compulsory Insurance of the vehicle is meant for the benefit of the Third Parties. The liability of the owner to have compulsory insurance is only in regard to Third Party and not to the property. Once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 146 of the Act does not provide that any person who uses the vehicle independently, a separate Insurance Policy should be taken. The purpose of compulsory insurance in the Act has been enacted with an object to advance social justice. When a certificate of insurance is issued, in law, the insurance company is bound to reimburse the owner. There cannot be any doubt whatsoever that a contract of insurance must fulfill the statutory requirements of formation of a valid contract but in case of a third party risk, the question has to be considered from a different angle. Section 146 of the Act gives complete protection to Third Party in respect of death or bodily injury or damage to the property while using the vehicle in public place. For that purpose, insurance of the vehicle has been made compulsory to the vehicles or to the owners. This would further reflect that compulsory insurance is obviously for the benefit of Third Parties. Perusal thereof would show that there has not been any violation of the aforesaid terms and conditions of the policy. Respondent-Insurance Company has also failed to point out violation of any Act, Rules or conditions of the Insurance. Insurance Company has no legal justification to deny the payment of compensation to the claimants. Hence, the Appeal filed by Insurance Company fails, wherein it has been directed that the amount would first be paid by the Company, with right to it to recover the same from owner of the vehicle. This we hold so, as the liability of the Insurance Company is exclusive and absolute and the appeal of the Appellant Corporation is allowed.

• Constitutional Law

Bihar State Housing Board and Ors. Vs. Asha Lata Verma (Decided on 28.07.2011) MANU/SC/0862/2011

Jurisdiction of High Court - Determination/Re-fixation of price after delivery of possession - Appellant Board raised a demand of Rs. 3,64,419 towards outstanding dues when the Respondent sought to transfer her flat to her daughter- in- law - High Court in petition filed by the Respondent quashed the demand notice stating that Appellant cannot determine/re-fix the price after delivery of possession and also directed the State to enquire into the activities of the Board -Appeal filed before Division bench was also dismissed - Hence this Petition - Whether in a writ proceeding where the writ Petitioner challenged the demand notice issued by the Board, the writ Court could have gone beyond the relief sought by the Petitioner and ordered an inquiry by the Vigilance Department after registering FIR

Held, from the additional documents filed by the Board it is clear that based on the direction of the learned single Judge, Additional Director General Vigilance had sought opinion from the Advocate General. Advocate General had opined that the materials, which were collected s during preliminary inquiry and placed on record do not constitute any prima facie criminal offence against the officials of the Board so as to warrant institution of a regular case. Even after perusing the report of the Vigilance Department based on the opinion of the Advocate General, the learned single Judge passed further order on 3rd May, 2010 and again directed the Vigilance Department to submit further report. Merely on the basis of certain observations in the orders of the High Court in other matters which were either set aside or modified or not applicable to the case on hand, the learned single Judge was not justified in issuing directions for Vigilance inquiry. Normally, the function of the Court is to sort out the dispute raised and only in exceptional cases that too when adequate materials are there such inquiry can be ordered but not on the basis of the general information, assumption or presumption. Apart from this, after disposal of the writ petition as early as on 7th February, 2008, how the learned single Judge assumed jurisdiction and issued several directions in the matter. The direction relating to inquiry by the Vigilance Department and subsequent orders and directions by the learned single Judge cannot be sustained. Relief sought by the Respondent affirmed and the directions for investigation quashed

Narmada Bachao Andolan Vs. State of Madhya Pradesh (Decided on 26.07.2011) MANU/SC/0853/2011

Challenge to the Validity of Amendment - High Court held that challenge to the validity of the amendment was belated and could not be entertained and the alternative remedy before the GRA was efficacious and hence landless labourers were not entitled for allotment of agricultural land - Hence this appeal - Whether Amendment to Clause 5.1 of the R & R Policy was valid

Held, chronological development of amendment of R & R Policy reveals that Clause 3 of the R & R Policy provided for entitlement of oustees to get land in lieu of the land acquired. Clause 5 prescribed only the procedure for allotment of land under Clause 3 of the R & R Policy. The amendment of R & R Policy only facilitates those oustees who were not willing to take the land in lieu of the land acquired. Such an amendment was brought on demand of the oustees as an alternative. However, it does not take away the right of the oustees to claim land in lieu of the land acquired, for the simple reason that there was no amendment in year 1991 to Clause 3.2 of the R & R Policy and the amendment to the said Clause 3.2 incorporated on 27.4.2002 is not under challenge. The amendment under challenge simply facilitated an oustee to claim compensation instead of land. This may be for the reason that oustee may be willing to settle in another State or in urban area or wants to adopt any other vocation/profession or wants to start any other business. However, it does not take away the right of any oustee to claim the land in lieu of the land acquired. Therefore, in our opinion, amendment to Clause 5.1 remains inconsequential so far as the right of an oustee to claim land in lieu of the land acquired is concerned.. Hence, amendment to Clause 5.1 of the R & R Policy was inconsequential so far as entitlement of allotment of agricultural land in lieu of land acquired was concerned.

Procedure adopted for amendment - Whether the procedure adopted for the Amendment to Clause 5.1 of the R & R Policy was is not in consonance with the provisions of Section 21 of the General Clauses Act, 1897 and Article 166(2) and (3) of the Constitution valid

Held, provision (Section 21) is clearly a rule of interpretation which has been made applicable to the Constitution in the same manner as it applies to any Central Act or Regulation .For the interpretation of these provisions, Section 21 of the General Clauses Act is not applied, the result would be that the rules once made by the President or a Governor would become inflexible and the allocation of the business among the Ministers would forever remain as laid down in the first rules. Clearly, the power of amending these rules from time to time to suit changing situations must be held to exist and that power can only be found in these articles by applying Section 21 of the General Clauses Act. Appeal lacks merit and hence was dismissed

• Criminal Law

Glaxo Smith Kline Pharmaceuticals Ltd. and Anr. Vs. State of Madhya Pradesh (Decided on 28.07.2011) MANU/SC/0863/2011

Quashing of Complaint - Section 18, 25(3) and 35 of the Drugs and Cosmetics Act, 1940 - Chief Judicial Magistrate took cognizance under Section 35 of the Act as the samples of Betnesol found with the Appellants were not of Standard quality Appellants filed an application praying that sample of Betnesol tablets be sent for chemical analysis to the Director, Central Drugs Laboratory for being tested as per I.P.1996 which was rejected by both the Chief Judicial Magistrate and the High Court - Hence, this appeal - Whether the Courts below were justified in rejecting the application of the Appellants

Held, settled legal proposition that report of the analyst is conclusive. It means that no reasons are needed in support of conclusion given in the report, nor it is required that the report should contain the mode or particulars of the analysis. However, law permits the drug manufacturer to controvert the report expressing his intention to adduce evidence to controvert the report within the prescribed limitation of 28 days as provided under Section 25(3) of the Act 1940. In the instant case, the report dated 27th August, 1997 was received by the statutory authorities who sent the show cause notice to the Appellants on 29th September, 1997 and the Appellants replied to that notice on 3rd November, 1997. The case of the statutory authorities is that option/willingness to adduce evidence to controvert the analyst's report was not filed within the period of 28 days i.e. limitation prescribed for it. In the present case, the manufacturer did not notify the Inspector within the prescribed period that he intended to adduce evidence in contravention of the report. Also, akin to the case at hand, the manufacturer's right under section (3) of Section 25 expired few months before expiry of shelf life. Holding for the directors of the manufacturing company on different grounds, the court opined that the right to get drugs tested by Central Drugs Laboratory does not arise unless requirement of Sub-section (3) is complied with. The Appellants and other co-accused did not give any option to adduce evidence in contravention of the analyst's report within statutory limitation period. Appeal Dismissed

Munilal Mochi Vs. State of Bihar and Anr. (Decided on 21.07.20110) MANU/SC/0844/2011

Reduction in Sentence - Special Judge (Vigilance) convicted the Appellants for offences under Sections 120B, 420, 467, 468, 471(A) of the Indian Penal Code, 1860 (IPC) and Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act, 1947 and sentenced him rigorous imprisonment for a period of two and a half years and to pay fine of Rs. 15,000/- having default clause - High Court affirmed the Judgment of the Special Judge - Hence this Appeal - Whether the Appellant has made out a case for further reduction in the quantum of sentence?

Held, The only bar against the Appellant insofar as reduction of sentence is the minimum sentence prescribed in Section 5(3) of the Act. Inasmuch as, he was also convicted under Section 5(1)(c)(d) and Section 5(2) in the normal circumstance, the court has to impose minimum sentence of 1 year. However, proviso appended to Sub-Section 3 gives power to the court to impose a sentence of imprisonment of less than 1 year for any special reasons recorded in writing. It is not in dispute that the occurrence related to period 1982-83. Even on 01.10.2003, he retired from the post of Deputy Collector, Nalanda and stood convicted by the trial Court as aforesaid only in 2004, i.e., after a long period of 21 years. Considering the case of the prosecution, namely, several illegalities and irregularities in execution of NREP which is a Scheme formulated by the Government of India, the fact that the occurrence relates to the year 1982-83, the trial went for 21 years and ended in conviction in 2004, the Appellant retired from service even before conviction and his appeal was kept pending in the High Court for nearly 6 years, taking note of his present age, namely, 71 years and undergone 6 months imprisonment, we feel that ends of justice would be met by modifying the sentence to the period already undergone. Hence, the sentence is modified to the extent, i.e., the period of imprisonment, namely, 6 months undergone in prison as substantive sentence. Appeal is allowed in part

High Courts

• Constitutional Law

BOMBAY HIGH COURT (AURANGABAD BENCH)

Shri Sharda Bhavan Education Society duly registered society and public trust Vs. The State of Maharashtra, through the Secretary, Higher Education and Swami Ramanand Teerth, Marathwada University (Decided on 27.07.2011) MANU/MH/0935/2011

Appointment of Principal - Reservation for Backward Class - Petitioner issued two advertisements for filling up the posts from the reserved category but since no suitable candidate was available, the Petitioner moved the University again to approve its proposed advertisement to fill the post of the principal from open category which was refused by the Respondent - Hence this Petition - Whether merely because an institution runs several colleges of the same Faculty, is it obligatory for each such college to fill in the post of Principal by taking into account the reservation policy of the State

Held, University is governed by the Maharashtra Universities Act, 1994. No statutes have been framed under this Act, as yet. The Act itself does not specify any reservation for the post of Principal. In these circumstances, would a college be obliged to reserve the post of Principal for the backward classes? Until there is plurality of posts in a cadre, the question of reservation will not arise because any attempt of reservation by whatever means and even with device of rotation of roster in a single post cadre is bound to create 100 per cent reservation of such post whenever such reservation is to be implemented. There can be no doubt that when there is plurality of posts in a cadre, the reservation policy of the State must be implemented. But, it is difficult to accept that the single post cadre of Principal of a college should be clubbed together with the cadre of Principal in another college, merely because it is being run by the same institution. The Petitioner-institution is running three colleges in the same Faculty, affiliated to the same University. However, no statutes have been framed under the Maharashtra Universities Act, requiring such reservation for the post of Principal of the college. Each college must be treated as a separate entity and it cannot be clubbed with another college for the purposes of administration. Therefore, in our opinion, the contention of the Respondents is unacceptable. Circulars and government resolutions cannot supersede the provisions of a statute. The post of Principal of a college must be treated as an isolated post and cannot be clubbed together with the post of Principal in another college, merely because the colleges are run by the same trust or society. Hence Petition Allowed

• Direct Taxation Laws

DELHI HIGH COURT

Ashok Chaddha Vs.Income Tax Officer (Decided on 27.07.2011) MANU/DE/2814/2011

Notice - Section 143(2) of the Income Tax Act, 1961 - During the search of the residential premises of the Assessee and additional value of cash and jewelry and after hearing the Assessee, his income was computed at Rs.23,31,760/ - Appeal filed before the CIT(A) on ground that since the issuance of notice under section 143 (2) is a mandatory requirement, the assessment made was bad in law and void ab-initio and required to be cancelled - CIT (A)dismissed the appeal and upheld the Order of the Assessing Officer - Whether the issue of notice under Section 143(2) of the Income Tax Act is mandatory for finalization of assessment under Section 153A?

Held, the Assessee was issued a notice under section 153A of the Act, in response to which he had filed a return of income. Thereafter, two detailed questionnaires were issued to the Assessee before the completion of assessment. Section 153 A of the Act provides procedure for assessment in case where a search is initiated or documents are requisitioned. There is no specific provision in the Act requiring the assessment made under section 153A to be after issue of notice under section 143(2) of the Act. No specific notice was required under section 143(2) of the Act when the notice in the present case as required under Section 153 (A) (1) (a) of the Act was already given. In addition, the two questionnaires issued to the Assessee were sufficient so as to give notice to the Assessee, asking him to attend the office of the AO in person or through a representative duly authorized in writing or produce or cause to be produced at the given time any documents, accounts, and any other evidence on which he may rely in support of the return filed by him.

Search - Assessment - Whether the findings of the authorities below upholding addition of Rs.10 lac of cash seized t in the hands of the Assessee was perverse and required to be set aside?

Held, an application dated 23rd January, 2008 has been filed by Shri Sudhir Chadha whereby he has claimed ownership of the seized money. However, it is noted that the amount was seized on 20th April, 2003 as seen from the telegram sent by Thana Prabhari, GRP, Bhopal, whereas the claim of ownership was made on 23rd March, 2008, much after the date of seizure. No steps were taken by the Assessee or Shri Sudhir Chadha for almost 5 years. It was only when the assessment order came to be passed on 31st December 2007, that Shri Sudhir Chadha submitted a claim that the money belongs to him. Also, there is no plausible explanation given by the Assessee as to why his employee was found in possession of cash. No detail was filed about the land sought to be purchased by him. In these circumstances, the Tribunal was right in holding that the claim made by Shri Sudhir Chadha is an afterthought to accommodate the Assessee. Appeal dismissed.

• Law of Decentralization

BOMBAY HIGH COURT (NAGPUR BENCH)

Arun Kanhu Pawar Vs. Sakru Ganu Rathod, Additional Commissioner, Additional Collector and Secretary, Gram Panchayat Mhaismal (Decided on 21.07.2011) MANU/MH/0937/2011

Disqualification of Sarpanch and members of Gram Panchayat - Section 14 (1) (j3) of the Bombay Village Panchayats Act, 1958 - Additional District Commissioner allowed the appeal filed by the Complainant/Respondent on ground that the Petitioner had carried out encroachment on Government land - Whether the Additional District Commissioner was justified in disqualifying the Sarpanch and members of Gram Panchayat

Held, Additional Commissioner, seems to have been swayed by the fact that the land shown belonged to the State Government and, therefore, even if the basic amenities, etc. are given to the occupants of the said new Tanda Basti and even if the tax has been recovered by the Gram Panchayat, that would be of no avail. The Additional Commissioner by a cryptic order allowed the said Appeal without considering the matter in its proper perspective qua the allegation which was made in terms of the ground available in Section 14 (1) (j3) of the said Act. The Additional Commissioner has not even adverted to the case of the Respondent No.1 complainant that it was the father of the Petitioner, who had allegedly encroached upon the Government land and whether on the said basis the Petitioner could be disqualified under Section 14 (1) (j3) of the said Act on the said ground. The said order of the Additional Commissioner makes a totally unsatisfactory reading. It is expected of a quasi judicial authority to record finding of facts as well as law, when it is dealing with the matter within its jurisdiction more so when it is dealing with a matter as serious as the disqualification of the members of the Gram Panchayat and the Sarpanch. The same is totally found lacking in the impugned orders. Hence, impugned orders passed by the Additional Commissioner set aside and the matter relegated back to the Additional Commissioner for a de novo consideration.

• Criminal Laws

DELHI HIGH COURT

State Govt. of NCT. of Delhi Vs. Parveen Kumar and Ors. (Decided on 25.07.2011) MANU/DE/2795/2011

Acquittal - Challenge against thereto -Trial Court acquitted the Respondent for offences punishable under Section 364-A read with Section 34 Indian Penal Code, 1860 (IPC) on ground that prosecution could not establish the guilt of the Respondent beyond doubt - Whether the Trial Court erred in acquitting the Respondent

Held, In this case, the incident allegedly took place in December, 2000, whereas the Respondent-accused were arrested much later, in March, 2003 and made to stand trial. The Trial court reasoned that it was unsafe to rely on the finger print report because none of the policemen who allegedly lifted the samples which matched with those found at the spot, were examined by the prosecution. As regards refusal by the accused to participate in the TIP, it was held that there was evidence pointing to the fact that they had been shown to the witnesses, before the TIP was arranged. The court also took note of several other discrepancies and infirmities in the prosecution evidence. The jurisdiction of the High Court, while considering a petition for leave to appeal, by the prosecution, is well defined. The court does not examine the impugned judgment as an appellate court; it has to be alive to any exceptional features in the Trial court's judgment, which compel the exercise of its discretion to grant leave, and hear the appeal. Mere errors, in the Trial Court's order are insufficient; the legislature has advisedly not permitted appeals, a factor which has led the courts to say that a judgment of acquittal is an affirmation of the accused's innocence, which should not be lightly interfered with by the High Court, except for substantial and compelling reasons. Ratio laid down in Chandrappa & Others v. State of Karnataka to be followed. Therefore, after consideration of evidence led before Trial Court there were no substantial or compelling reasons exist warranting a second look into the case. Hence appeal dismissed.

TRIBUNALS

• Direct Taxation Laws

IN THE ITAT VISAKHAPATNAM

ITO Vs. Jugraj Pukhrajji (Decided on 25.07.2011) MANU/IV/0237/2011

Addition in Value of Stocks - Assessing officer conducted a survey operation in the premises of the Assessee and proceeded to value the physical inventory of stock and found a difference in the value of stock of Rs.28,33,537 - Assessing Officer found the reply filed by the Assessee as unsatisfactory and added the value of stocks arrived by him - CIT(A) in appeal directed the assessing officer to adopt the value as arrived at by the Assessee - Hence this appeal

Held, CIT(A) found fault with the workings made by the assessing officer with the observation that the assessing officer has adopted single sale price, that too maximum sale price. However, in the assessment order, the assessing officer has only stated that the sale price as available in the sale bill books no.3, 4, 14, 49, 18 is taken as the basis. There is no observation that the Assessing Officer is adopting maximum sale price. On the contrary, the assessing officer has made a specific observation that there is no basis for the value of stock arrived at by the Assessee, where as the CIT(A) has observed that the Assessee has adopted average sale price which is in total contradiction with the observation made by the assessing officer. Before us, no material was placed to support of the observations made by the CIT(A). Hence, the order of CIT(A) reversed and Order of Assessing Officer restored.