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Tuesday, April 30, 2013

sec.376 I.P.C. and Juvenile Justice (Care and Protection of Children) Act, 2000= whether the conviction recorded by the High Court was justified on merits and, if it was, whether we ought to refer the appellant to the Juvenile Justice Board at this stage. Our answer is in the affirmative qua the first part and negative qua the second. The High Court has, in our opinion, properly appreciated the evidence on record especially the deposition of the prosecutrix, her companion PW-2 and her aunt Piar Devi-PW-3 as also her parents. The High Court has also correctly appreciated the medical evidence available on record especially the deposition and the report of PW-8-Dr. Suresh Bansal, the relevant portion of whose report reads as under: “...On examination I found that the female child had not started menstruating. There was painful separation of thighs. No marks of violence were present. Clotted blood was present on labia majora and on thighs. Secondary sexual characters were developed. Breasts were developed according to age. Pubic and axillary hairs were present but were scanty. Hymen was freshly fractured. Posterior fourchette was torn. The chid admitted one little finger with pain. The vagina was congested..... Injury mentioned in MLC Ext. PW-8/C appeared on the prosecutrix was subject to sexual intercourse...” 19. The prosecutrix was between 9 to 12 years according to the deposition of PW-9-Dr. D.C. Negi and deposition of PW- 13 who proved her date of birth to be 13th April, 1982. The presence of human blood on the cap with which the appellant appears to have wiped the blood after the sexual assault is also an incriminating circumstance which the High Court has rightly taken into consideration while finding the appellant guilty. We, therefore, see no reason to interfere with the order of conviction as recorded by High Court on merits. 20. Coming then to the question of reference to the Juvenile Justice Board, we are of the view that such a reference is unnecessary at this distant point of time. The appellant is nearly 36 years old by now and a father of three children. He has already undergone nearly three years of imprisonment awarded to him by the High Court. In the circumstances, reference to the Juvenile Justice Board at this stage of his life would, in our opinion, serve no purpose. The only option available is to direct his release from custody. 21. In the result, we dismiss criminal appeal arising out of SLP (Crl.) No.5059 of 2012 directed against the order of the High Court dated 8th April, 2010 and uphold the conviction of the appellant for the offence under Section 376 IPC.


Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS. 628-629 OF 2013
(Arising out of S.L.P (Crl.) Nos.5059-60 of 2012)
Bharat Bhushan …Appellant
Versus
State of Himachal Pradesh …Respondent
J U D G M E N T
T.S. THAKUR, J.
1. Delay condoned.
2. Leave granted.
3. These appeals arise out of judgments and orders dated
8
th April, 2010 and 30th April, 2010 passed by the High Court
of Himachal Pradesh at Shimla whereby Criminal Appeal
No.406 of 1995 has been allowed, the order of acquittal
1Page 2
passed by the trial Court set aside, the appellant convicted
for an offence punishable under Section 376 of the Indian
Penal Code and sentenced to undergo rigorous imprisonment
for a period of five years besides a fine of Rs.50,000/-. In
default of payment of fine, the appellant has been directed to
undergo further imprisonment for a period of one year.
4. The appellant was charged with commission of an
offence of rape upon a girl hardly 11 years old while she was
working in the fields along with another girl aged around 10
years in Village Kanda, District Shimla, Himachal Pradesh. At
the trial, the prosecution examined not only the prosecutrix
who supported the charge but also other witnesses including
PW-2-her companion whose name is withheld to protect her
identity and who had escaped an attempted assault by the
co-accused, Dinesh Kumar. An alarm raised by PW-2
appears to have attracted the attention of PW-3-Piar Devi,
mother of PW-2, who had rushed to the spot to rescue the
girls, whereupon both the accused appears to have fled
away. PW-5-Misru-the father of the prosecutrix and PWs-7, 8
and 9 namely Dr. Ajay Negi, Dr. Suresh Bansal and Dr. D.C.
2Page 3
Negi were also examined at the trial all of whom have
supported the prosecution case in their respective
depositions. The trial Court, however, came to the conclusion
that the prosecution had failed to prove its case against the
appellant, the deposition of the witnesses mentioned above
notwithstanding and, accordingly, acquitted both the accused
persons of the charges framed against them.
5. Criminal Appeal No.406 of 1995 was then filed by the
State of Himachal Pradesh against the order of acquittal to
assail the view taken by the trial Court qua the appellant as
also his companion Dinesh Kumar. The High Court has by its
judgment and order dated 8th April, 2010 allowed the appeal
in part, reversed the view taken by the trial Court and
convicted the appellant for rape, punishable under Section
376 of the Indian Penal Code. As regards Dinesh Kumar, the
High Court was of the view that the order of acquittal passed
in his favour was justified. The High Court was of the view
that the prosecution story was reliable and inspired
confidence not only because of the inherent worth of the
deposition of the prosecutrix but also because of the fact that
3Page 4
her story was fully corroborated by PW-2, the other girl who
escaped from the clutches of Dinesh Kumar, the co-accused
and that of PW-3 Piar Devi who had rushed to the place of
occurrence to rescue the victim after hearing an alarm raised
by her daughter. More importantly, the High Court found
that the deposition of Dr. Suresh Bansal who had examined
the prosecutrix establish the commission of rape upon the
victim. The appellant was on such re-appraisal of evidence
convicted under Section 376 of the Indian Penal Code.
6. The High Court next examined the question of sentence
to be awarded to the appellant and by separate order dated
30th April, 2010 sentenced the appellant to rigorous
imprisonment for five years and a fine of Rs.50,000/- and a
default sentence of one year as already noticed above. What
is important is that while doing so the High Court noticed and
rejected the contention urged on behalf of the appellant that
he was only 16 years and 4 months old at the time offence
was committed, hence, entitled to the benefit of provisions of
Section 20 of the Juvenile Justice (Care and Protection of
Children) Act, 2000. Relying upon the decision of a
4Page 5
Constitution Bench of this Court in Pratap Singh v. State
of Jharkhand and Anr. (2005) 3 SCC 551, the High Court
held that the benefit of the Act was not legally available to
the petitioner.
7. The High Court also relied upon the decisions of this
Court in Jameel v. State of Maharashtra (2007) 11 SCC
420, where this Court held that since the appellant in that
case had completed 16 years of age as on the date of the
occurrence, the Juvenile Justice (Care and Protection of
Children) Act, 2000, Act had no application. Reliance was
also placed by the High Court upon the decision of this Court
in Ranjit Singh v. State of Haryana (2008) 9 SCC 453
where this Court had relying upon the Judgment in Jameel’s
case (supra) rejected the contention that the petitioner was
entitled to the benefit of Juvenile Justice (Care and
Protection of Children) Act, 2000, since he was below 18
years as on the date of the commission of the offence. In
conclusion, the High Court held that Section 20 of the 2000
Act was inapplicable since the accused was over 16 years of
age at the time of commission of the offence i.e. 22nd June,
5Page 6
1993 and over 18 years of age on 01-04-2001, the date
when the 2000 Act came into force. The present appeal filed
by the appellant assails the correctness of the above two
orders as already noticed earlier.
8. We have heard learned Counsel for the parties at some
length. The legal position regarding the entitlement of the
appellant who was more than 16 years but less than 18
years of age as on the date of commission of the offence on
22nd June, 1993, is in our view settled by the decision of this
Court in Hari Ram v. State of Rajasthan (2009) 13 SCC
211. This Court has in that case traced the history of the
legislation and reviewed the entire case law on the subject.
Relying upon the decision of the Constitution Bench of this
Court in Pratap Singh’s case (supra), this Court in Hari
Ram’s case (supra) reiterated that the question of juvenility
of a person in conflict with law has to be determined by
reference to the date of the incident and not the date on
which cognizance is taken by the Magistrate. Having said
that, this Court held that the effect of the pronouncement in
Pratap Singh’s case (supra) on the second question, viz.
6Page 7
whether the 2000 Act was applicable in a case where the
proceedings were initiated under the 1986 Act and were
pending when the 2000 Act came into force, stood
neutralised by the amendments to Juvenile Justice (Care and
Protection of Children) Act, 2000, by Act 33 of 2006. The
amendments made the provisions of the Act applicable even
to juveniles who had not completed the age of 18 years on
the date of the commission of offence said this Court.
Speaking for the Court Altamas Kabir, J. (as His Lordship
then was) observed:
“58. Of the two main questions decided in Pratap
Singh case, one point is now well established that
the juvenility of a person in conflict with law has to
be reckoned from the date of the incident and not
from the date on which cognizance was taken by the
Magistrate. The effect of the other part of the
decision was, however, neutralised by virtue of the
amendments to the Juvenile Justice Act, 2000, by
Act 33 of 2006, whereunder the provisions of the
Act were also made applicable to juveniles who had
not completed eighteen years of age on the date of
commission of the offence.
59. The law as now crystallised on a conjoint
reading of Sections 2(k), 2(l), 7-A, 20 and 49 read
with Rules 12 and 98, places beyond all doubt that
all persons who were below the age of 18 years on
the date of commission of the offence even prior to
1-4-2001, would be treated as juveniles, even if the
claim of juvenility was raised after they had attained
the age of 18 years on or before the date of
commencement of the Act and were undergoing
sentence upon being convicted.
xxxxxxxxx
7Page 8
xxxxxxxxx
68. Accordingly, a juvenile who had not completed
eighteen years on the date of commission of the
offence was also entitled to the benefits of the
Juvenile Justice Act, 2000, as if the provisions of
Section 2(k) had always been in existence even
during the operation of the 1986 Act.”
9. These decisions have been followed in several other
subsequent pronouncements of this Court including the
decisions of this Court in Raju and Anr. v. State of Haryana
(2010) 3 SCC 235, Dharambir v. State (NCT of Delhi) and
Anr. (2010) 5 SCC 344, Mohan Mali and Anr. v. State of
M.P. (2010) 6 SCC 669, Jitendra Singh @ Babboo Singh
and Anr. v. State of U.P. (2010) 13 SCC 523, Daya Nand
v. State of Haryana (2011) 2 SCC 224, Shah Nawaz v.
State of U.P. and Anr. (2011) 13 SCC 751 and Amit Singh
v. State of Maharashtra and Anr. (2011) 13 SCC 744.
10. The attention of the High Court was, it is obvious, not
drawn to the decision in Hari Ram’s case (supra), although
the same was pronounced on 5th May, 2009 i.e. almost a
year earlier to the pronouncement of the impugned
judgment in this case. Be that as it may, as on the date the
offence was committed the appellant was admittedly a
8Page 9
juvenile having regard to the provisions of Sections 2(k),
2(l), 7-A, 20 and 49 read with Rules 12 and 98 of the Rules
framed under the Juvenile Justice (Care and Protection of
Children) Act, 2000. He was, therefore, entitled to the
benefit of the said provision, which benefit, it is evident, has
been wrongly denied by the High Court only because the
High Court remained oblivious of the pronouncement of this
Court in Hari Ram’s case (supra).
11. The question then is whether the High Court could have
at all recorded a conviction against the appellant who as seen
above was a juvenile on the date of the commission of the
offence. The answer to that question, in our opinion, lies in
Section 20 of the 2000 Act which reads as under:
“20. Special provision in respect of pending
cases.- Notwithstanding anything contained in this
Act, all proceedings in respect of a juvenile pending
in any court in any area on the date on which this
Act comes into force in that area, shall be continued
in that court as if this Act had not been passed and
if the court finds that the juvenile has committed an
offence, it shall record such finding and instead of
passing any sentence in respect of the juvenile,
forward the juvenile to the Board which shall pass
orders in respect of that juvenile in accordance with
the provisions of this Act as if it had been satisfied
on inquiry under this Act that a juvenile has
committed the offence.
9Page 10
Provided that the Board may, for any adequate and
special reason to be mentioned in the order, review
the case and pass appropriate order in the interest
of such juvenile.
Explanation.- In all pending cases including trial,
revision, appeal or any other criminal proceedings in
respect of a juvenile in conflict with law, in any
court, the determination of juvenility of such a
juvenile shall be in terms of Clause (1) of Section 2,
even if the juvenile ceases to be so on or before the
date of commencement of this Act and the
provisions of this Act shall apply as if the said
provisions had been in force, for all purposes and at
all material times when the alleged offence was
committed.”
12. The above makes it manifest that proceedings pending
against a juvenile in any Court as on the date the 2000 Act
came into force had to continue as if the 2000 Act had not
been enacted. More importantly Section 20 (supra) obliges
the Court concerned to record a finding whether the juvenile
has committed any offence. If the Court finds the juvenile
guilty, it is required under the above provision to forward the
juvenile to the Board which would then pass an order in
accordance with the provisions of the Act as if it had been
satisfied on enquiry under the Act that the juvenile had
committed an offence.
13. Even in Pratap Singh’s case (supra), this Court had
interpreted Section 20 of the 2000 Act, and held that Section
10Page 11
20 was attracted to cases where the person, if male, had
ceased to be a juvenile under the 1986 Act being more than
16 years of age but had not yet crossed the age of 18 years.
This Court declared that it was only in such cases that
Section 20 was attracted and the Court required to record its
conclusion as to the guilt or innocence of the accused. This
Court observed:
“31. Section 20 of the Act as quoted above deals
with the special provision in respect of pending
cases and begins with non-obstante clause. The
sentence "Notwithstanding anything contained in
this Act all proceedings in respect of a juvenile
pending in any Court in any area on date of which
this Act came into force" has great significance. The
proceedings in respect of a juvenile pending in any
court referred to in Section 20 of the Act is relatable
to proceedings initiated before the 2000 Act came
into force and which are pending when the 2000 Act
came into force. The term "any court" would include
even ordinary criminal courts. If the person was a
"juvenile" under the 1986 Act the proceedings would
not be pending in criminal courts. They would be
pending in criminal courts only if the boy had
crossed 16 years or girl had crossed 18 years. This
shows that Section 20 refers to cases where a
person had ceased to be a juvenile under the 1986
Act but had not yet crossed the age of 18 years then
the pending case shall continue in that Court as if
the 2000 Act has not been passed and if the Court
finds that the juvenile has committed an offence, it
shall record such finding and instead of passing any
sentence in respect of the juvenile, shall forward the
juvenile to the Board which shall pass orders in
respect of that juvenile.”
(emphasis
supplied)
11Page 12
14. Reference may also be made to the decision of this
Court in Bijender Singh v. State of Haryana and Anr.
(2005) 3 SCC 685, where this Court reiterated the legal
position while interpreting the provisions of the Act and said:
“8. One of the basic distinctions between the 1986
Act and the 2000 Act relates to age of males and
females. Under the 1986 Act, a juvenile means a
male juvenile who has not attained the age of 16
years, and a female juvenile who has not attained
the age of 18 years. In the 2000 Act, the distinction
between male and female juveniles on the basis of
age has not been maintained. The age-limit is 18
years for both males and females.
9. A person above 16 years in terms of the 1986 Act
was not a juvenile. In that view of the matter the
question whether a person above 16 years becomes
“juvenile” within the purview of the 2000 Act must
be answered having regard to the object and purport
thereof.
10. In terms of the 1986 Act, a person who was not
juvenile could be tried in any court. Section 20 of
the 2000 Act takes care of such a situation stating
that despite the same the trial shall continue in that
court as if that Act has not been passed and in the
event, he is found to be guilty of commission of an
offence, a finding to that effect shall be recorded in
the judgment of conviction, if any, but instead of
passing any sentence in relation to the juvenile, he
would be forwarded to the Juvenile Justice Board (in
short the 'Board') which shall pass orders in
accordance with the provisions of the Act as if it has
been satisfied on inquiry that a juvenile has
committed the offence. A legal fiction has, thus,
been created in the said provision...
xx xx xx
12. Thus, by reason of legal fiction, a person,
although not a juvenile, has to be treated to be one
by the Board for the purpose of sentencing which
takes care of a situation that the person although
not a juvenile in terms of the 1986 Act but still
12Page 13
would be treated as such under the 2000 Act for the
said limited purpose.”
(emphasis supplied)
15. Section 20 of the 2000 Act fell for interpretation even in
Dharambir v. State (NCT of Delhi) (2010) 5 SCC 344,
where too this Court held that the explanation appended to
the same enables the Court to determine the juvenility of the
accused even after conviction and that the Court can while
maintaining the conviction set aside the sentence imposed
upon him and to forward the case to the Board for passing
an appropriate order under the Act. This Court observed:
“11. It is plain from the language of the Explanation
to Section 20 that in all pending cases, which would
include not only trials but even subsequent
proceedings by way of revision or appeal, etc., the
determination of juvenility of a juvenile has to be in
terms of Clause (l) of Section 2, even if the juvenile
ceases to be a juvenile on or before 1st April, 2001,
when the Act of 2000 came into force, and the
provisions of the Act would apply as if the said
provision had been in force for all purposes and for
all material times when the alleged offence was
committed. Clause (l) of Section 2 of the Act of
2000 provides that "juvenile in conflict with law"
means a "juvenile" who is alleged to have
committed an offence and has not completed
eighteenth year of age as on the date of commission
of such offence. Section 20 also enables the Court to
consider and determine the juvenility of a person
even after conviction by the regular Court and also
empowers the Court, while maintaining the
conviction, to set aside the sentence imposed and
forward the case to the Juvenile Justice Board
13Page 14
concerned for passing sentence in accordance with
the provisions of the Act of 2000.”
16. The above position was restated in Daya Nand v.
State of Haryana (2011) 2 SCC 224 and Kalu @ Amit v.
State of Haryana (2012) 8 SCC 34.
17. In the present case, the appellant was not a juvenile
under the 1986 Act as he had crossed the age of 16 years.
This case was, however, pending before the High Court in
appeal on the date the 2000 Act came into force and had,
therefore, to be dealt with under Section 20 of the Act which
required the High Court to record a finding about the guilt of
the accused but stop short of passing an order of sentence
against him. Inasmuch as the High Court convicted the
appellant, it did not commit any mistake for the power to do
so was clearly available to the High Court under the
provisions of Section 20. What was not permissible was
passing of a sentence for which purpose the High Court was
required to forward the juvenile to the Juvenile Board
constituted under the Act. The order of sentence is,
therefore, unsustainable and shall have to be set aside. 
14Page 15
18. The next question then is
whether the conviction
recorded by the High Court was justified on merits and, if it
was, whether we ought to refer the appellant to the Juvenile
Justice Board at this stage.
Our answer is in the affirmative
qua the first part and negative qua the second. 
The High
Court has, in our opinion, properly appreciated the evidence
on record especially the deposition of the prosecutrix, her
companion PW-2 and her aunt Piar Devi-PW-3 as also her
parents. The High Court has also correctly appreciated the
medical evidence available on record especially the
deposition and the report of PW-8-Dr. Suresh Bansal, the
relevant portion of whose report reads as under:
“...On examination I found that the female child had
not started menstruating. There was painful
separation of thighs. No marks of violence were
present. Clotted blood was present on labia majora
and on thighs. Secondary sexual characters were
developed. Breasts were developed according to
age. Pubic and axillary hairs were present but were
scanty. Hymen was freshly fractured. Posterior
fourchette was torn. The chid admitted one little
finger with pain. The vagina was congested.....
Injury mentioned in MLC Ext. PW-8/C appeared on
the prosecutrix was subject to sexual intercourse...”
19. The prosecutrix was between 9 to 12 years according to
the deposition of PW-9-Dr. D.C. Negi and deposition of PW-
15Page 16
13 who proved her date of birth to be 13th April, 1982. The
presence of human blood on the cap with which the appellant
appears to have wiped the blood after the sexual assault is
also an incriminating circumstance which the High Court has
rightly taken into consideration while finding the appellant
guilty. We, therefore, see no reason to interfere with the
order of conviction as recorded by High Court on merits.
20. Coming then to the question of reference to the
Juvenile Justice Board, we are of the view that such a
reference is unnecessary at this distant point of time. The
appellant is nearly 36 years old by now and a father of three
children. He has already undergone nearly three years of
imprisonment awarded to him by the High Court. In the
circumstances, reference to the Juvenile Justice Board at this
stage of his life would, in our opinion, serve no purpose. The
only option available is to direct his release from custody. 
21. In the result, we dismiss criminal appeal arising out of
SLP (Crl.) No.5059 of 2012 directed against the order of the
High Court dated 8th April, 2010 and uphold the conviction of
the appellant for the offence under Section 376 IPC. Criminal
16Page 17
appeal arising out of SLP (Crl.) No.5060 of 2012 is, however,
allowed and the order dated 30th April, 2010 passed by the
High Court is set aside with a direction that the appellant
shall be released from custody unless he is required in
connection with any other case.
….……………...…………J.
(T.S. THAKUR)
……….………...……...…J.
(DIPAK MISRA)
New Delhi
April 26, 2013
17

Section 14(3)(c) does not require that the building plans should have been duly sanctioned by the local authorities as a condition precedent to the entitlement of the landlord for eviction of the tenant. = availability of building plans duly sanctioned by the local authorities is not an ingredient of Section 14(3)(c) of the Act and, therefore, could not be a condition precedent to the entitlement of the landlord for eviction of the tenant, but depending on the facts and circumstances of each case, the Court may look into the availability of building plans duly sanctioned by the local authorities for the purpose of determining the bonafides of the landlord. once the High Court maintained the order of eviction passed by the Controller under Section 14(4) of the Act, the tenants were obliged to give vacant possession of the building to the landlord and could only ask for reasonable time to deliver vacant possession of the building to the landlord and hence the direction of the High Court that the order of eviction could only be executed on the revised plan of the building being approved was clearly contrary to the provisions of Section 14(4) of the Act and the proviso thereto. We accordingly allow the appeals, set aside the directions in Para 27 of the impugned judgment of the High Court, but grant time to the respondents to vacate the building within three months from today. We make it clear that it will be open for the respondents to apply for re-entry into the building in accordance with the proviso to clause (c) of Section 14(3) of the Act introduced by the Amendment Act, 2009. Considering, however, the peculiar facts and circumstances of the cases, there shall be no order as to costs.


Page 1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 4127 OF 2013
(Arising out of SLP (C) No. 30 of 2012)
Hari Dass Sharma … Appellant
Versus
Vikas Sood & Ors. … Respondents
WITH
CIVIL APPEAL No. 4128 OF 2013
(Arising out of SLP (C) No.776 of 2012)
Hari Dass Sharma … Appellant
Versus
Kesri Devi & Ors. … Respondents
AND
CIVIL APPEAL No. 4129 OF 2013
(Arising out of SLP (C) No.888 of 2012)
Hari Dass Sharma … Appellant
Versus
Shiv Prashad … Respondent
J U D G M E N T
A. K. PATNAIK, J.Page 2
Leave granted.
2. These are appeals against the common order dated
02.09.2011 of the High Court of Himachal Pradesh in Civil
Revision Nos.179, 180 and 181 of 2008.
3. The facts very briefly are that the appellant let out
shops in premises No.5 Cart Road, Shimla (for short
“the building”) to the respondents. 
The appellant
filed applications under Section 14 of the H.P. Urban
Rent Control Act, 1987 (for short “the Act”) before
the Rent Controller, Shimla, for eviction of the
respondents from the building on grounds inter alia
that he bona fide required the building for purposes
of addition and alteration of the building or
rebuilding.
The respondents filed their replies before
the Rent Controller denying that the appellant
required the building for additions and alterations or
rebuilding. The Rent Controller framed an issue as to
whether the building was required bona fide by the
appellant for rebuilding or reconstruction. 
The
appellant examined an official of the Municipal
Corporation, Shimla, in support of his case that a plan
2Page 3
for rebuilding/ reconstruction had been sanctioned
and also a Civil Engineer in support of his case that
the building was in dilapidated condition and required
to be reconstructed. The Rent Controller after
considering the oral and documentary evidence on
record held that though the sanction plan of the
building was not a requirement of the Act, it is a
circumstance to establish the bonafide of the
appellant to seek eviction for the purpose of
rebuilding or reconstruction and also held that the
building was old and the appellant was in the
occupation of second floor of the building and for
rebuilding or reconstruction, the respondents have to
vacate the building and accordingly allowed the
applications of the appellant for eviction of the
respondents from the building. The respondents filed
appeals before the Appellate Authority, Shimla
against the order of eviction but the Appellate
Authority dismissed the appeals.
4. The respondents then filed the Civil Revisions before
the High Court and by the impugned common order
3Page 4
maintained the orders of eviction but relying on the
decision of this Court in Harrington House School v.
S.M. Ispahani & Anr. [(2002) 5 SCC 229] directed that
only on the valid revised/renewed building plan being
sanctioned by the competent authority, the order of
eviction shall be available for execution.
The High
Court further directed in the impugned order that the
valid revised/renewed sanctioned or approved
building plan shall be produced before the executing
court whereupon the executing court shall allow a
reasonable time to the tenants for vacating the
property and delivering possession to the landlord
and till then the tenant shall remain liable to pay
charges for use and occupation of the premises at
the rate at which they were being paid earlier.
Aggrieved, the appellant has filed these appeals.
5. Mr. Nidesh Gupta, learned counsel appearing for the
appellant, submitted that Section 14(4) of the Act
provides that if the Controller is satisfied that the
claim of the landlord is bonafide, he shall make an
order directing the tenant to put the landlord in
4Page 5
possession of the building on such date as may be
specified by the Controller and the proviso to Section
14(4) of the Act says that the Controller may give the
tenant a reasonable time for putting the landlord in
possession of the building and may extend such time
not exceeding three months in the aggregate. He
submitted that Section 14(4) of the Act thus makes it
clear that the order of eviction once passed by the
Controller will have to be executed and that the
direction of the High Court in the impugned order
that the order of eviction will not be executed till
such time as the building plan is sanctioned for
rebuilding or reconstruction of the tenanted building
is contrary to the bare provision in Section 14(4) of
the Act.
He submitted that in Harrington House
School v. S.M. Ispahani & Anr. (supra), on which the
High Court has relied on in the impugned judgment,
this Court decided the dispute between the landlord
and the tenant under the provisions of the Tamil
Nadu Buildings (Lease and Rent Control) Act, 1960
and it had not considered the effect of the proviso to
5Page 6
Section 14(4) of the Act whereunder the Controller
had the power to grant in the aggregate three
months time to put the landlord in possession of the
tenanted premises. He cited the decision of this
Court in Shri Balaganesan Metals v. M.N.
Shanmugham Chetty & Ors. [1987) 2 SCC 707],
wherein this Court, while considering the proviso to
Section 10(3)(c) of the Tamil Nadu Buildings (Lease
and Rent Control) Act, 1960, similar to the proviso to
Section 14(4) of the Act, held that the proviso
empowers the Controller to grant adequate time to
the tenant upto a maximum of three months to
vacate the building and secure accommodation
elsewhere. He also relied on the decision of this
Court in J. Jermons v. Aliammal & Ors. [(1999) 7 SCC
382] in which it has been similarly held that a tenant
is entitled under Section 10(3)(c) of the Tamil Nadu
Buildings (Lease and Rent Control) Act, 1960 to be
granted reasonable time for putting the landlord in
possession of the building, which may be extended
6Page 7
from time to time upto the maximum period of three
months.
6. In reply, Mr. Dhruv Mehta, learned counsel appearing
for the respondents, submitted that the provisions of
the Tamil Nadu Buildings (Lease and Rent Control)
Act, 1960 as well as the provisions of the H.P. Urban
Rent Control Act, 1987 (“the Act”) are analogous and,
therefore, the decision of this Court in Harrington
House School v. S.M. Ispahani & Anr. (supra) will
apply to a case arising under the Act and the High
Court rightly relied on the decision in Harrington
House School v. S.M. Ispahani & Anr. (supra) in which
this Court directed that the order of eviction will not
be executed until the plan for the building was
sanctioned. He further submitted that in any case
under the proviso to Section 14(4) of the Act the
Controller has power to give to the tenant a
‘reasonable time’ for putting the landlord in
possession of the building and it is only on expiry of
such reasonable time that the Controller may extend
the time not exceeding three months in any case. He
7Page 8
submitted that the power of the Controller to grant
reasonable time to the tenant for putting the landlord
in possession of the building is different from the
power of the Controller to extend such time not
exceeding three months. He submitted that the
expression ‘reasonable time’ to be given to the
tenant for putting the landlord in possession of the
building will depend upon the facts of each case and
in the facts of the present case, the High Court has
granted time upto the time of sanction of the plan for
rebuilding or reconstruction of the building. In this
context, he submitted that the sanctioned plan for
reconstruction of the building has lapsed and as the
building regulations for areas within the city limits of
Shimla have undergone drastic changes, it is not
permissible for the appellant to reconstruct the
building as per the sanction originally granted. He
submitted that in Jagat Pal Dhawan v. Kahan Singh
(dead) by L.Rs. & Ors. [(2003) 1 SCC 191] this Court,
while interpreting clause (c) of sub-section (3) of
Section 14 of the Act, has observed that while
8Page 9
adjudicating an eviction petition on the ground that
the building is bona fide required by the landlord for
reconstruction, the Court may look into the condition
of building, availability of necessary funds and
whether building plans have been sanctioned by the
local authority in order to assess the bona fide of the
landlord, even if the Act does not require these
aspects to be considered. He submitted that,
therefore, unless the appellant produces the revised
sanctioned plan before the executing court, the order
of eviction cannot be executed as rightly directed by
the High Court and this is not a case for interference
with the impugned order of the High Court. He finally
submitted that by the Himachal Pradesh Urban Rent
Control (Amendment) Act, 2009 (for short ‘the
Amendment Act, 2009’) a new proviso has been
added in clause (c) of Section 14(3) stating that the
tenant evicted under clause (c) of Section 14(3) of
the Act shall have the right to re-enter on new terms
of tenancy, on the basis of mutual agreement
between the landlord and the tenant, to the premises
9Page 10
in the rebuilt building equivalent in area to the
original premises for which he was a tenant. He
submitted that since the eviction orders passed by
the Controller in this case are under Section 14(3)(c)
of the Act, the respondents are entitled to re-entry as
per this proviso inserted by the Amendment Act,
2009.
7. Before considering the submissions of the learned
counsel for the parties, we may have a look at clause
(c) of sub-section (3) and sub-section (4) of Section
14 of the Act. These provisions, as they stood before
the Amendment Act, 2009, when the Controller
passed the orders of eviction, are extracted
hereinbelow:
“14. Eviction of tenants – 
(1) ………………
(2) ………………
(3) A landlord may apply to the Controller
for an order directing the tenant to put
the landlord in possession: 
(a) ……………….
(b) ……………….
(c) in the case of any building or
rented land, if he requires it to carry
1Page 11
out any building work at the
instance of the Government or local
authority or any Improvement Trust
under some improvement or
development scheme or if it has
become unsafe or unfit for human
habitation or is required bona fide
by him for carrying out repairs which
cannot be carried out without the
building or rented land being
vacated or that the building or
rented land is required bona fide by
him for the purpose of building or rebuilding or making thereto any
substantial additions or alterations
and that such building or re-building
or addition or alteration cannot be
carried out without the building or
rented land being vacated.
(4) The Controller shall, if he is satisfied
that the claim of the landlord is bona fide,
make an order directing the tenant to put
the landlord in possession of the building
or rented land on such date as may be
specified by the Controller and if the
Controller is not so satisfied he shall
make an order rejecting the application: 
Provided that the Controller may
give the tenant a reasonable time for
putting the landlord in possession of the
building or rented land and may extend
such time not exceeding three months in
the aggregate.”
8. A reading of clause (c) of sub-section (3) of Section
14 of the Act would show that a landlord may apply to the
Controller for an order directing the tenant to put the
1Page 12
landlord in possession in case of any building if it is
required bona fide by him for the purpose of building or
rebuilding or making thereto any substantial additions or
alterations and that such building or rebuilding or addition
or alteration cannot be carried out without the building
being vacated.
In Jagat Pal Dhawan v. Kahan Singh (dead)
by L.Rs. & Ors. (supra), this Court had the occasion to
consider the provisions of Section 14(3)(c) of the Act and
R.C. Lahoti J. writing the judgment for the Court held that
Section 14(3)(c) does not require that the building plans
should have been duly sanctioned by the local authorities
as a condition precedent to the entitlement of the landlord
for eviction of the tenant. 
To quote from the judgment of
this Court in Jagat Pal Dhawan v. Kahan Singh (dead) by
L.Rs. & Ors. (supra):
“The provision also does not lay down
that the availability of requisite funds and
availability of building plans duly
sanctioned by the local authority must be
proved by the landlord as an ingredient of
the provision or as a condition precedent
to his entitlement to eviction of the
tenant. However still, suffice it to
observe, depending on the facts and
circumstances of a given case, the court
may look into such facts as relevant,
1Page 13
though not specifically mentioned as
ingredient of the ground for eviction, for
the purpose of determining the bona fides
of the landlord. If a building, as
proposed, cannot be constructed or if the
landlord does not have means for
carrying out the construction or
reconstruction obviously his requirement
would remain a mere wish and would not
be bona fide.”
It will be clear from the aforesaid passage that this Court
has held that availability of building plans duly sanctioned
by the local authorities is not an ingredient of Section
14(3)(c) of the Act and, therefore, could not be a condition
precedent to the entitlement of the landlord for eviction of
the tenant, but depending on the facts and circumstances
of each case, the Court may look into the availability of
building plans duly sanctioned by the local authorities for
the purpose of determining the bonafides of the landlord.
9. In the present case, the Controller has held in the
orders of eviction that the appellant had admittedly
obtained sanction from the Municipal Corporation, Shimla
and that the building was an old one and that the
appellant was occupying the second floor of the building
and that rebuilding or reconstruction cannot be carried out
1Page 14
without the building being vacated by the respondents.
The Controller has accordingly arrived at a satisfaction
that the appellant bonafide requires the building for the
purpose of building or rebuilding and has accordingly
issued the direction in terms of sub-section (4) read with
clause (c) of sub-section (3) of Section 14 of the Act to the
respondents to put the appellant in possession of the
building. This order of the Controller was challenged by
the respondents in appeal but the Appellate Authority has
dismissed the appeal. Thereafter, the respondents filed
the Civil Revisions before the High Court challenging the
orders of the Controller and the orders of the Appellate
Authority, and the High Court has in the impugned
common order maintained the orders passed by the
Controller and the Appellate Authority subject to the
modifications mentioned in para 27 of its order. Para 27
of the impugned order of the High Court is quoted
hereinbelow:
“Accordingly, in view of the observations
and discussions made hereinabove, there
is no merit in the petition and the same is
dismissed. However, in the interest of
justice, in view of the judgment rendered
1Page 15
by their Lordships of the Hon’ble
Supreme Court in Harrington House
School v. S.M. Ispahani & Another (2002)
5 SCC 229, though the orders passed by
both the authorities are upheld/sustained,
however, it is directed that only on the
valid revised/ renewed building plan
being sanctioned by the competent
authority, the order of eviction shall be
available for execution. The valid
revised/ renewed sanctioned or approved
building plan shall be produced before
the executing court whereupon the
executing court shall allow a reasonable
time to the tenants for vacating the
property and delivering possession to the
landlord. Till then the tenant shall remain
liable to pay charges for use and
occupation of the premises at the same
rate at which they are being paid earlier.
Subject to these modifications, the orders
passed by both the authorities below are
maintained. No costs.” 
10. We also find that the respondents challenged the
impugned order of the High Court separately in Special
Leave Petition (Civil) Nos. 14028 and 2971 of 2012, but
this Court dismissed the Special Leave Petitions of the
respondents. The result is that the findings of the
Controller regarding the claim of the appellants for
eviction of the respondents on the ground that the
appellant bonafide requires the building for rebuilding or
reconstruction as affirmed by the appellate authority and
1Page 16
the High Court have become final could not be reopened
on any ground whatsoever and the respondents cannot
now contend that the appellant cannot any longer
construct or reconstruct the building on account of drastic
changes in the building regulations within the city limits of
Shimla.
11. In fact, the only question that we have to decide in
this appeal filed by the appellant is 
whether the High
Court could have directed that only on the valid
revised/renewed building plant being sanctioned by the
competent authority, the order of eviction shall be
available for execution. 
The High Court has relied on the
decision of this Court in Harrington House School v. S.M.
Ispahani & Anr. (supra) and we find in that case that the
landlords were builders by profession and they needed the
suit premises for the immediate purpose of demolition so
as to construct a multi-storey complex and the tenants
were running a school in the tenanted building in which
about 200 students were studying and 15 members of the
teaching staff and 8 members of the non-teaching staff
were employed and the school was catering to the needs
1Page 17
of children of non-resident Indians. 
This Court found that
although the plans of the proposed construction were
ready and had been tendered in evidence, the plans had
not been submitted to the local authorities for approval
and on these facts, R.C. Lahoti, J, writing the judgment for
the Court, while refusing to interfere with the judgment of
the High Court and affirming the eviction order passed by
the Controller, directed that the landlords shall submit the
plans of reconstruction for approval of the local authorities
and only on the plans being sanctioned by the local
authorities, a decree for eviction shall be available for
execution and further that such sanctioned plan or
approved building plan shall be produced before the
executing court whereupon the executing court shall allow
a reasonable time to the tenant for vacating the property
and delivering the possession to the landlord and till then
the tenants shall remain liable to pay charges for use and
occupation of the said premises at the same rate at which
they are being paid. 
In the present case, on the other
hand, as we have noted, the Rent Controller while
determining the bonafides of the appellant-landlord has
1Page 18
recorded the finding that the landlord had admittedly
obtained the sanction from the Municipal Corporation,
Shimla, and has accordingly passed the order of eviction
and this order of eviction has not been disturbed either by
the Appellate Authority or by the High Court as the
Revision Authority. 
In our considered opinion, once the
High Court maintained the order of eviction passed by the
Controller under Section 14(4) of the Act, the tenants were
obliged to give vacant possession of the building to the
landlord and could only ask for reasonable time to deliver
vacant possession of the building to the landlord and
hence the direction of the High Court that the order of
eviction could only be executed on the revised plan of the
building being approved was clearly contrary to the
provisions of Section 14(4) of the Act and the proviso
thereto. 
12. We accordingly allow the appeals, set aside the
directions in Para 27 of the impugned judgment of the
High Court, but grant time to the respondents to vacate
the building within three months from today. We make it
clear that it will be open for the respondents to apply for
1Page 19
re-entry into the building in accordance with the proviso to
clause (c) of Section 14(3) of the Act introduced by the
Amendment Act, 2009. Considering, however, the
peculiar facts and circumstances of the cases, there shall
be no order as to costs. 
.……………………….J.
(A. K. Patnaik)
………………………..J.
(Gyan Sudha Misra)
New Delhi,
April 29, 2013.
1

Monday, April 29, 2013

Considering the totality of the evidence and circumstances of the case, we are of the view that the High Court has rightly reversed the judgment of the trial court after finding the appellant guilty under Section 302 read with Section 148 of IPC for the murder of Amrita Dome and awarded the sentence of life imprisonment. We, therefore, find no reason to interfere with the judgment of the High Court. The appeal lacks merit and the same is dismissed.


Page 1
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No.1268 OF 2007
GUIRAM MONDAL .. Appellant
Versus
STATE OF WEST BENGAL .. Respondent
J U D G M E N T
K. S. Radhakrishnan, J
1. The appellant, the 10th accused in Sessions Case No.20 of
1986, was charge-sheeted along with others for the offences
punishable under Section 147, 148, 149, 323 and 302 of the Indian
Penal Code and Section 25/27 of the Arms Act. The Trial Court,
after appreciation of the oral and documentary evidence vide its
judgment dated 22.4.1987 acquitted all the accused persons,
except Accused No.3 Tarun Mondal, who was convicted for the
Page 2
2
offences punishable under Section 148 and 302 of IPC for causing
the murder of Amrita Dome and sentenced him to suffer
imprisonment for life under Section 302 IPC.
2. The State of West Bengal, aggrieved by the order of acquittal,
preferred G.A. No.22 of 1987 before the High Court of Calcutta.
The High Court vide its judgment dated 28.11.2006 partly allowed
the appeal and convicted the appellant along with four others,
while maintaining the order of acquittal passed by the trial Court,
in respect of rest of the accused persons. Tarun Mondal, 3rd
accused, was further found guilty of the murder of Sultan Khan.
3. We are, in this case, concerned only with the appeal filed by
Guiram Mondal, 10th accused. The prosecution case, in short, is
that on 26.4.1984 at about 12 hours the accused persons formed
an unlawful assembly with deadly weapons and took along with
them Amrita Dome and Sultan Khan through a kuchha road in
village Pechaliya and, in the process, assaulted both Amrita Dome
and Sultan Khan. Some of the witnesses, who are relatives of the
deceased Amrita Dome, tried to save him but they were also
Page 3
3
assaulted by the accused persons and the informant Sadananda
Dome (PW1) was shot at by a pipe-gun and he sustained injuries.
While the accused persons were proceeding as such, Amrita Dome
managed to escape from their clutches and took shelter in the
house of Monohar Mondal @ Manu Mondal (PW2). The accused
persons, however, chased Amrita Dome and brought him out of
the house of Manu Mondal and killed him in the passage or
pathway lying between the house of Manu Mondal and his nephew
Sahadeb Mondal. Accused persons after murdering Amrita Dome
left the spot to chase Sultan Khan, who was left injured in front of
Durga temple which was close to the house of Monohar Mondal.
Sultan Khan was also murdered by them and they carried away his
death body to the grazing field and left it there.
4. Sadananda Dome (PW1) then passed this information, which
was recorded in writing by PW 15 on 26.4.1984 at 6.05 PM and the
same was treated as the FIR. The same was sent to the police
station and was received there at 7.25 PM and on the basis of that
FIR a case was registered against the accused persons and they
were charge-sheeted for the offences, already mentioned earlier.
Page 4
4
PW 15, the Investigating Officer visited the place of occurrence
and prepared the sketch map and conducted the inquest in the
presence of PW 10, the Pradhan of the Gram Panchayat and sent
both the dead bodies for post-mortem examination through
constable PW 13.
5. PW 12 Dr. S. Nath, conducted the post-mortem on both the
dead bodies and opined that the death was due to effect of head
injury and associated injuries which were anti mortem and
homicidal in nature. PW 15 on 13.5.1984 arrested various accused
persons including the appellant and were brought before the trial
court. On the side of the prosecution 16 witnesses were
examined. PW 1 Sadananda Dome, the first informant is the
brother of the deceased Amrita Dome. Monohar Mondal, in
whose house the deceased Amrita Dome took shelter, was
examined as PW2. Menoka Dome, wife of deceased Amrita
Dome, was also examined as PW 3 and Sankar Dome, the father of
the deceased Amrita Dome was also examined as PW 5. On the
side of the defence, Joydev Garian DW1 was examined.
Page 5
5
6. Dr. S. Nath was examined as PW12, who conducted the postmortem on the dead bodies on 27.4.1984 deposed that on the
dead body of Amrita Dome he found (1) one incised wound on
right lateral aspect of forehead 2.5” x 2” x .5” (2) one incised
wound in mid-region of forehead 3” x 2” x .5” (3) one incised
would 3” below the midpoint of chin 4” x 2” x 2.5” laryns and
tranches cut off. He also noticed fracture of 4th, 5th ^ 6th ribs on
the right side (2) fracture of 4th and 5th ribs on the right side (3)
right lung was found ruptured. Further, it was also noticed a
fracture of frontal bone. PW 12 has opined that the death was due
to the effects of head injury and associated injury was ante
mortem and homicidal in nature. PW12 conducted the postmortem over the dead body of Sultan Khan and found (1) one
incised would 3” x 2” x 1” on back portion of head (2) one incised
would on left lateral aspect of neck 2” x 1.5” x 1” and (3) one
incised would 4” x 3” x 5” x4” aspect of neck 2” x 1.5” x 1”. He
also found fracture of 4th, 5th, 6th and 7th rib of the right side and
fracture of 4th, 5th and 6th ribs of the left side. He found fracture of
occipital bone and both the lungs were ruptured. In his opinion,
Page 6
6
death was due to head injury and associated injury ante mortem
and homicidal in nature.
7. PW 1, the brother of the deceased Amrita Dome, who is also
an injured witness, had clearly and unequivocally supported the
prosecution case and stated that he had seen the accused persons
armed with deadly weapons like bhojali, axe, pipe gun and dragger
etc. catching hold of his brother Amrita Dome and one Sultan
Khan. Amrita Dome had managed to escape from the clutches of
the accused persons and took shelter in the house of Monohar
Mondal. PW1 also deposed that Sultan Khan in that process was
half dead and lying in front of Durga Temple. PW 1 deposed that
the accused persons took Amrita Dome out of the house of
Monohar Mondal and assaulted with lathi, dagger, bhojali etc. PW
1 stated that he tried to save his elder brother but was shot at by
a pipe-gun which caused injury on his shoulder. PW 1 also noticed
that Kristo Gorain cut the throat of Sultan Khan and thereafter
brought Sultan Khan to a grazing field and left the body there.
Page 7
7
8. We have also gone through the evidence of the eyewitnesses
 PWs 2, 3, 4, 8 and 11 and their versions corroborate
fully the version of PW 1, the first informant and eye-witness,
relating to the incident of assault and murder of Amrita Dome and
Sultan Khan. The specific part played by the various accused
persons, including the appellant, has been narrated by those
witnesses. PW 2 had deposed that on the date of the incident he
was in the cow-shed and as soon as he heard a hue and cry, he
came out and found that some persons, including the appellant,
forcibly taking away Amrita Dome from the house of Manu Mondal.
PW 2 had also requested the accused persons to not to assault
Amrita Dome but was pushed away by the accused persons. Later
he found Amrita Dome dead and the body was lying on the pathway between his house and the house of Sadananda Mondal.
9. PW 3, the wife of Amrita Dome, also fully supported the
prosecution case and also PW8, the mother of the deceased
Amrita Dome and P.W.11, the wife of the brother of the deceased.
The High Court has correctly appreciated the evidence rendered
by those witnesses. The High Court after examining the oral and
Page 8
8
documentary evidence came to the conclusion that the trial court
was completely in error by over-looking some crucial and
important evidence and placed much reliance on non-mention of
name of accused persons in the inquest report. The High Court, in
our view, correctly applied the legal principle that non-mention of
name of the few accused persons in the inquest report is of no
consequence.
10. The inquest report normally would not contain the manner in
which the incident took place or the names of eye-witnesses as
well as names of accused persons. The basic purpose of holding
an inquest is to report regarding the cause of death, namely
whether it is suicidal, homicidal, accidental etc. Reference may
be made to the Judgment of this Court in Pedda Narayana and
others v. State of Andhra Pradesh (1975) 4 SCC 153 and
Amar Singh v. Balwinder Singh and Others (2003) 2 SCC 518.
In Radha Mohan Singh @ Lal Saheb and Others v. State of
U.P. (2006) 2 SCC 450, this Court held that the scope of inquest is
limited and is confined to ascertainment of apparent cause of
death. Inquest is concerned with discovering whether in a given
Page 9
9
case the death was accident, suicidal or homicidal, and in what
manner or by what weapon or instrument the injuries on the body
appear to have been inflicted. The details of overt acts need not
be recorded in the inquest report. The High Court has rightly held
that the manner and approach of the trial court in disbelieving the
prosecution story by placing reliance on the inquest report was
erroneous and bad in law.
11. We also fully agree with the views expressed by the High
Court that the FIR was not anti dated, anti timed or was
subsequently created. The verbal submission of PW 1 was
reduced into writing by PW 15 and the same was treated as the
FIR (Ext.3). The formal FIR was marked ext.3/3. Those documents
would clearly indicate that the incident took place on 26.4.1984 at
about 12 hrs and the FIR was recorded at village Pechaliya at 6.05
PM and after it was sent to the Khairasole police station which was
registered as Khairasole P.S. Case No.10 dated 26.4.1984 at 7.25
P.M. There is nothing to show that the FIR was anti dated, anti
timed or fabricated. Merely because the FIR was placed before the
learned Magistrate on 30.4.1984, three days after registration of
Page 10
10
FIR, it cannot be said that the FIR was anti timed, anti dated and
fabricated. In fact, no question was put to the Investigating Officer
as to the cause of delay in sending FIR to the Magistrate.
12. This Court in State of Jammu and Kashmir v. S. Mohan
Singh and Another (2006) 9 SCC 272 held that the mere delay in
sending the First Information Report to a Magistrate cannot be a
ground to throw out prosecution case if the evidence adduced is
otherwise found credible and trustworthy. We are of the view that
the High Court has rightly held that there is no reason to hold that
the FIR was a fabricated document or anti dated or anti timed.
13. We are also not impressed by the argument of Ms. Rupali S
Ghose, learned counsel appearing for the appellant, that not much
reliance could be placed on the evidence of eye-witnesses as most
of them are relatives of Amrita Dome and not a single independent
witness was examined by the prosecution. In our view, merely
because a witness is a relative of the deceased is not a reason for
discarding his evidence. Many a time, strangers will not come
forward depose as witnesses, even if they have witnessed the
Page 11
11
crime. Further, possibility of influencing such witnesses is also not
uncommon. Evidence of relatives can be acted upon if the court
finds that the evidence of such a witness is reliable and
trustworthy. In this connection reference may be made to the
Judgments of this Court in Seeman @ Veeranam v. State by
Inspector of Police (2005) 11 SCC 142, Alamgir v. State (NCT,
Delhi) (2003) 1 SCC 21, Dalbir Kaur and Others v. State of
Punjab (1976) 4 SCC 158, State of U.P. v. Jodha Singh and
Others (1989) 3 SCC 465, Labh Singh and Others v. State of
Punjab (1976) 1 SCC 181, Visveswaran v. State represented
by SDM (2003) 6 SCC 73.
14. PW2, Monohar @ Manu Mondal, it may be noted, was not a
relative of Amrita Dome. A close scrutiny of the evidence
rendered by the eye-witnesses, some of which are relative of the
deceased, clearly establishes the involvement of the accused.
Further, in the cross examination of the eye witnesses, we have
not noticed any serious contradiction, omission, infirmity, defect or
lacuna which can make their evidence unbelievable and to make
them untrustworthy witnesses. Further, the evidence of eye-
Page 12
12
witnesses have been fully corroborated by the evidence of PW 12,
the autopsy surgeon relating to the nature of injuries and places of
injuries on the person of the deceased. We notice that, earlier, the
appeal was filed by Guiram Mondal along with Kisto Gorain and
Madhusudan Mondal. Appeal was initially dismissed on 17.9.2007
since they had not complied with the orders of this Court dated
19.4.2007 for surrendering. Later, the appellant herein was
arrested and his case was restored on 28.11.2008 by this Court.
15. Considering the totality of the evidence and circumstances of
the case, we are of the view that the High Court has rightly
reversed the judgment of the trial court after finding the appellant
guilty under Section 302 read with Section 148 of IPC for the
murder of Amrita Dome and awarded the sentence of life
imprisonment. We, therefore, find no reason to interfere with the
judgment of the High Court. The appeal lacks merit and the same
is dismissed. 
……………………………..J.
(K.S. Radhakrishnan)Page 13
13
……………………………..J.
(Dipak Misra)
New Delhi,
April 26, 2013

The Appellate Jurisdiction of this Court guaranteed under Section 15Z of the Securities and Exchange Board of India Act, 1992 (for short ‘SEBI Act’) has been invoked challenging a joint order dated 5.10.2012 passed in Appeal Nos. 28 and 29 of 2012 passed by Securities Appellate Tribunal, Mumbai (for short ‘Tribunal’) upholding the order passed by SEBI dated April 18, 2011 restraining the appellant for a period of two years from buying, selling or dealing in securities and the order passed by the adjudication officer dated July 28, 2011 imposing a monetary penalty of 50 lacs under Section 15HA of SEBI Act.


Page 1
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.4112-4113 of 2013
(D.No.201 of 2013)
N. Narayanan .. Appellant
Versus
Adjudicating Officer, SEBI .. Respondent
J U D G M E N T
K. S. Radhakrishnan, J
1. India’s capital market in the recent times has witnessed
tremendous growth, characterized particularly by increasing
participation of public. Investors’ confidence in the capital market
can be sustained largely by ensuring investors’ protection.
Disclosure and transparency are the two pillars on which market
integrity rests. Facts of the case disclose how the investors’
confidence has been eroded and how the market has been abused
for personal gains and attainments.Page 2
2
2. The Appellate Jurisdiction of this Court guaranteed under
Section 15Z of the Securities and Exchange Board of India Act,
1992 (for short ‘SEBI Act’) has been invoked challenging a joint
order dated 5.10.2012 passed in Appeal Nos. 28 and 29 of 2012
passed by Securities Appellate Tribunal, Mumbai (for short
‘Tribunal’) upholding the order passed by SEBI dated April 18,
2011 restraining the appellant for a period of two years from
buying, selling or dealing in securities and the order passed by the
adjudication officer dated July 28, 2011 imposing a monetary
penalty of 50 lacs under Section 15HA of SEBI Act.
3. The appellant was the promoter as well as a whole time
Director of M/s Pyramid Saimira Theatre Limited (PSTL), a
company registered under the Companies Act, 1956. The shares
of PSTL were listed on Bombay Stock Exchange Ltd. (BSE) and
National Stock Exchange (NSE) at the relevant time. The company
was involved in the business of Exhibition (Theatre), Film and
Television, Content Production, Distribution, Hospitality, Food &
Beverage, Animation and Gaming and Cine Advertising etc. The
company had nine Directors, including the appellant herein. ThePage 3
3
investigation department of SEBI noticed that the company had
committed serious irregularities in its books of accounts and
showed inflated profits and revenues in the financial statements
and lured the general public to invest in the shares of the
company based on such false financial statements thereby
violated the provisions of Securities and Exchange Board of India
(Prohibition of Fraudulent and Unfair Trade Practice Relating to
Securities Market) Regulations, 2003 (for short ‘Regulations
2003’). Consequently, a notice was issued to the appellant and to
the other Directors stating that they had violated Section 12A of
SEBI Act and Regulation 3(b), 3(c), 3(d), 4(1), 4(2)(a), 4(2)(e), 4(2)
(f), 4(2)(k), 4(2)(r) of Regulations 2003 and were directed to show
cause why appropriate directions as deemed fit and proper under
Sections 11, 11B and 11(4) of the SEBI Act read with Regulation 11
of Regulations 2003 be not issued against them.
4. The appellant replied to the show cause notice vide letter
dated February 3, 2010 stating that there were no irregularities
and the company’s Managing Director and the Principal Officer
would send a detailed reply in that regard. Later, a notice dated Page 4
4
April 8, 2010 under Rule 4(1) of the SEBI (Procedure for Holding
Inquiry and imposing penalties by Adjudicating Officer) Rules,
1995 was issued to the Directors to show cause why penalty be
not imposed under Section 15HA of the SEBI Act for the alleged
contravention of the provision of the Act.
5. The appellant submitted a detailed reply stating that it was
the Managing Director and Principal Officer of the company who
was in charge of day-to-day affairs of the company including the
operations, finance and accounts, secretarial and compliance,
legal services and technical services. Appellant, it was stated,
though was a whole time Director of the company was only
handling Human Resource Department of the company and was
fully engrossed in the recruitment of personnel, training and team
buildup. Further, it was also stated that he had only relied upon
the auditor’s statements in financial matters and hence was not
personally liable for the violation of the provisions of SEBI Act and
Regulations 2003. Personal hearing was accorded to the appellant
on 30.8.2010. Written Submissions dated 15.9.2010 filed by thePage 5
5
appellant was also considered by SEBI. The Board noticed
following specific violations:-
(a) manipulated accounts by fictitious entries;
(b) made false disclosures to the stock exchange;
(c) did not co-operate with the investigations, and
(d) did not maintain certain books of accounts.
6. On facts, the officer found that all the above-mentioned
violations had been established. Consequently, the Whole Time
Member (WTM) of SEBI, in exercise of powers conferred under
Section 19 of the SEBI, held that the Directors were found guilty
for the violation of Section 12A of SEBI Act, 1992 and Regulation
3(b), 3(c), 3(d), 4(1), 4(2)(a), 4(2)(e), 4(2)(f), 4(2)(k), 4(2)(r) of the
Regulations 2003. WTM of SEBI then, in exercise of the powers
conferred on him under Section 19 read with Sections 11, 11B and
11(4) of the SEBI Act and Regulation 11 of Regulations 2003,
passed an order restraining the appellant and other Directors for a
period of two years and three years respectively from buying,
selling or dealing in securities in any manner whatsoever orPage 6
6
accessing the securities market directly or indirectly and from
being Director of any listed company.
7. The Adjudicating Officer also held that the appellant and
others have violated the provisions of Section 12A of SEBI Act and
Regulation 3(b), 3(c), 3(d), 4(1), 4(2)(a), 4(2)(e), 4(2)(f), 4(2)(k),
4(2)(r) of Regulations 2003 and took the view that the appellant
and other Directors are liable for monetary penalty under Section
15HA of SEBI Act whereby a penalty of 50 lacs was imposed on the
appellant.
8. The above order, as already indicated, was affirmed in an
appeal by the Tribunal, the legality of which is the subject matter
of this appeal.
9. We may before examining various legal issues that arise for
consideration in this appeal wish to indicate that the investigation
had revealed that the financial results contained in the quarterly
report filed with the stock exchanges contained inflated figures of
the company’s revenue profits, security deposits and receivables.Page 7
7
Further, the manipulation in the financial results of the company
resulted in price rise of the scrip of the company and the
promoters pledged their shares to raise substantial funds from
financial institutions.
10. We would like to demonstrate on the facts of this case as well
as law on the point that “market abuse” has now become a
common practice in the India’ security market and, if not properly
curbed, the same would result in defeating the very object and
purpose of SEBI Act which is intended to protect the interests of
investors in securities and to promote the development of
securities market. Capital market, as already stated, has
witnessed tremendous growth in recent times, characterized
particularly by the increasing participation of the public. Investor’s
confidence in capital market can be sustained largely by ensuring
investors’ protection.
11. Before examining the law on the point, we would like to
demonstrate how the company and its Directors had inflated
figures of the company’s revenue profits, security deposits andPage 8
8
receivables which were relied upon by investors for making
investment decisions. Facts would also indicate that the Directors
had pledged their shares and artificially inflated prices of the scrip
based on inflated financial results which enabled them to raise
higher quantum of funds that would not have been possible
otherwise.
12. The quarterly unaudited financial results of the company for
the quarter ended 31st March 2007 to the quarter ended 31st March
2009 shows the following details:
Particulars For the quarter ended (in Rs. Lakh)
March
31,
2007
June 30,
2007
Sept. 30,
2007
Dec. 31,
2007
March
31, 2008
June 30,
2008
Sept. 30,
2008
Dec. 31,
2008
March
31, 2009
Net Sales 6756.8
9
12271.4
3
14418.7
9
23141.8
7
24556.1
2
2501.87 25225.7
2
13794.8
1
8069.04
Other
Income
23.24 13.68 231.75 152.90 144.05 12.94 - 2.08 -
Total
Income
6780.1
3
12285.1
1
14650.5
4
23294.7
7
24700.1
7
25027.8
1
25225.7
2
13796.8
9
8069.04
Total
Expenditur
e
6122.6
0
9936.44 12513.4
2
19718.5
4
22366.9
3
22886.7
2
23478.4
8
12997.5
8
6859.02
Net profit /
loss
583.47 1600.77 1511.31 2986.50 -311.22 1349.72 870.42 -7474.35 -8527.25
Equity 2827.6
4
2827.65 2827.65 2827.65 2827.65 2827.65 2827.65 2827.65 2827.65
Face value
of shares
(in Rs.)
10 10 10 10 10 10 10 10 10Page 9
9
13. The above facts and figures would indicate that the net sales
for the quarter ended June 30, 2007 doubled as compared to the
previous quarter. In the subsequent quarters, till the quarter
ended September 30, 2008, that upward trend had continued and
in the quarter ended December 31, 2008, there was a sudden fall
in the net sales figures (the net sales figures for the quarter ended
December 31, 2008 were down by around 45% as compared to the
previous quarter).
14. The company also showed a loss of Rs.74.74 crore in the said
quarter. For the quarter ended March 31, 2009, the company
again showed a loss of Rs. 85.37 crore. The net profit figures also
surged in sync with the total income upto the quarter ended June
30, 2008 except for the quarter ended March 31, 2008.
15. SEBI, it was pointed out, had verified books of accounts of the
company for the financial year 2007-2008 to ascertain whether
proper books of accounts and supporting documents were
maintained by the company in respect of the theatre income,
theatre receivables and theatre security deposits and whether thePage 10
10
financial disclosures made by the company to the stock exchanges
as per listing agreement reflected true and fair view of the state of
affairs of the company.
16. SEBI’s investigation revealed that for the financial year 2007-
08, total revenue of Rs. 749.30 crore included an income of Rs.
549.58 crore from theatres which is stated as follows:
(In Rs. Crore)
Region From PSTL
Theatres
From Non-PSTL
Theatre
Total Revenue
from Theatres
Tamil Nadu 303.46 41.51 344.97
Andhra
Pradesh
74.66 62.04 136.70
Karnataka 45.86 7.60 53.45
Kerala 12.95 12.95
Others 0.28 1.23 1.52
Total 437.21 112.18 549.58
17. On theatre income of Rs. 303.46 crore from Tamil Nadu
region included consolidated credit entries of Rs.244 crore with
corresponding consolidated debits ‘Theatre Collections Receivable
Account’. The account did not show any income from April 2008
onwards. The journal vouchers in respect of those entries did not
carry any such narration such as daily collection report number,Page 11
11
name of theatre etc. The receivables were adjusted against cost
of content, transferred to advance/security deposit account or
remained unrealized. As on March 31, 2008, the total receivables
of the company from Tamil Nadu region were Rs. 38.58 crore. Out
of that, Rs.2.19 crore was outstanding against 162 theatres and
the balance Rs. 36.39 crore outstanding in one account only which
did not contain the theatre wise break up. Further it was also
noticed that the entire amount of Rs.75 crore from own theatres in
Andhra Pradesh was accounted by single journal voucher which
did not have any other supporting documents in support of those
consolidated entries or journal vouchers, despite assurance to
provide the same. Those facts lead the SEBI to conclude that
those revenues disclosed inflated figures in its annual report for
2007-08 and thereby misled the investors.
18. The company disclosed no stock exchanges on January 30,
2009 that it had entered into agreement with 802 theatres as on
June 30, 2008. Out of 802 agreements, the company could show
only 257 original agreements to SEBI officials which lead SEBI to
conclude that the balance 545 agreements never existed. ThePage 12
12
fictitious revenues had converted to ‘theatre collection
receivables’ which in turn had been converted to ‘security
deposits’. It was noticed security deposits were not genuine but
were created to hide receivables in the balance sheet since
outstanding receivables for a period of six months had to be
compulsorily disclosed in its annual report. The SEBI therefore
concluded the company had made a false corporate
announcement to the effect that it had entered into agreement
with 802 theatres thereby misled the investing public.
19. The appellant’s main defence was that, though he was the
Whole Time Director as well as Promoter of the company, yet was
not involved in the day-to-day management of the company and
that he was looking after the Human Resource Department of the
company. Further, it was also stated that the financial statements,
accounts etc. were prepared and duly audited by the statutory
auditors, verified by the audit committees and reviewed by the
managing Director and that, in the company, the role of each
Director was confined to his field of operation and there was no
justification for holding a Director to be in over-all charge andPage 13
13
control of the affairs of the company. Further, it was also pointed
out that the auditors were well versed in accounts and finance,
therefore, there was no reason for the Directors who have no
expertise or knowledge of the intricacies of the accounts and
finance to suspect them or sit in judgment over their decisions. In
such circumstances, it was contended, that there is no justification
in debarring them from buying, selling or dealing in securities or
accessing securities market or to impose penalty since there is no
mens rea on the part of the appellant in intentionally stating any
untrue statement or preparing false records and that he has no
role as such in preparing the accounts and finance of the
company.
20. The facts and figures as such are not in dispute and the
defence taken is that the statements were duly audited by
statutory auditors and, consequently, it could not be held that the
appellant had violated the provision of SEBI Act or the provisions
of Regulations 2003.Page 14
14
21. Let us now examine the scope of the various provisions
stated to have been violated by the appellant and its
consequences. Section 12A falls in Chapter VA of the SEBI Act
which reads as follows:
“PROHIBITION OF MANIPULATIVE AND DECEPTIVE
DEVICES, INSIDER TRADING AND SUBSTANTIAL
ACQUISITON OF SECURITIES OR CONTROL
Prohibition of manipulative and deceptive devices,
insider trading and substantial acquisition of securities
or control.
12A. No person shall directly or indirectly –
(a) use or employ, in connection with the issue,
purchase or sale of any securities
listed or proposed to be listed on a recognised stock
exchange, any manipulative or
deceptive device or contrivance in contravention of the
provisions of this Act or the rules or the regulations
made thereunder;
(b) employ any device, scheme or artifice to defraud in
connection with issue or dealing in securities which are
listed or proposed to be listed on a recognised stock
exchange; Page 15
15
(c) engage in any act, practice, course of business
which operates or would operate as fraud or deceit
upon any person, in connection with the issue, dealing
in securities which are listed or proposed to be listed on
a recognised stock exchange, in contravention of the
provisions of this Act or the rules or the regulations
made thereunder;
(d) engage in insider trading;
(e) deal in securities while in possession of material or
non-public information or communicate such material
or non-public information to any other person, in a
manner which is in contravention of the provisions of
this Act or the rules or the regulations made
thereunder;
(f) acquire control of any company or securities more
than the percentage of equity share capital of a
company whose securities are listed or proposed to be
listed on a recognised stock exchange in contravention
of the regulations made under this Act.”
22. Section 12A has to be read along with various provisions of
Regulations 2003. Chapter II of Regulations 2003 deals with
prohibition of fraudulent and unfair trade practices relating to the
securities market and Chapter III deals with investigation. SEBIPage 16
16
has also noticed the violation of Regulations 3 and 4 of 2003
Regulations, which read as follows:
“PROHIBITION OF FRAUDULENT AND UNFAIR TRADE
PRACTICES RELATING TO THE SECURITEIS MARKET:
3. Prohibition of certain dealings in securities
No person shall directly or indirectly.
(a) buy, sell or otherwise deal in securities in a
fraudulent manner;
(b) use or employ, in connection with issue,
purchase or sale of any security listed or proposed
to be listed in a recognized stock exchange, any
manipulative or deceptive devise or contrivance
in contravention of the provisions of the Act or the
rules or the regulations made there under;
(c) employ any device, scheme or artifice to
defraud in connection with dealing in or issue of
securities which are listed or proposed to be listed
on a recognized stock exchange;
(d) engage in any act, practice, course of business
which operates or would operate as fraud or
deceit upon any person in connection with any
dealing in or issue of securities which are listed or
proposed to be listed on a recognized stock
exchange in contravention of the provisions of the
Act or the rules and the regulations made there
under:Page 17
17
4. Prohibition of manipulative, fraudulent and unfair
trade practices
(1) Without prejudice to the provisions of
regulation 3, no person shall indulge in a
fraudulent or an unfair trade practice in
securities.
(2) Dealing in securities shall be deemed to be a
fraudulent or an unfair trade practice if it involves
fraud and may include all or any of the following
namely:-
(a)indulging in an act which creates false or
misleading appearance of trading in the
securities market;
(b) …..
(d)…..
(e) any act or omission amounting to
manipulation of the price of a security;
(f) publishing or causing to publish or reporting
or causing to report by a person dealing in
securities any information which is not true
or which he does not believe to be true prior
to or in the course of dealing in securities.Page 18
18
(g) …….
(h) …….
(i) ……..
(j) ……...
(k) an advertisement that is misleading or
that contains information in a distorted
manner and which may influence the
decision of the investors;
(l) …….
(p) …….
(q) …….
(r) planting false or misleading news which
may induce sale or purchase of securities.”
23. The object and purpose of the above-mentioned statutory
provisions are to curb “market manipulation”. Palmer’s
Company Law, 25th Edition (2010), Volume 2 at page 11097
states: “Market manipulation is normally regarded as thePage 19
19
“unwarranted” interference in the operation of ordinary market
forces of supply and demand and thus undermines the “integrity”
and efficiency of the market.” See also Gower & Davies –
Principles of Modern Company Law, 9th Edition (2012) at page
1160.
24. Reference may also be made to the penalty provisions which
is contained in Chapter VI A of the SEBI Act of which we are mainly
concerned with Section 15HA which deals with penalty for
fraudulent and unfair trade practices and Section 15J which deals
with the factors to be taken into account by the adjudicating
officer while adjudging the quantum of penalty. Those provisions
are given below for easy reference:
“15HA. Penalty for fraudulent and unfair trade
practices.- If any person indulges in fraudulent and
unfair trade practices relating to securities, he shall be
liable to a penalty of twenty-five crore rupees or three
times the amount of profits made out of such practices,
whichever is higher.”
“15J. Factors to be taken into account by the
adjudicating officer.-While adjudging quantum of penaltyPage 20
20
under section 15 I, the adjudicating officer shall have
due regard to the following factors, namely:
(a) the amount of disproportionate gain or unfair
advantage, wherever quantifiable, made as a result of
the default;
(b) the amount of loss caused to an investor or group of
investors as a result of the default;
(c) the repetitive nature of the default.”
25. In Sahara India Real Estate Corporation Limited and
Others v. Securities and Exchange Board of India and
Another (2013) 1 SCC 1, this Court has noticed that though the
Indian Companies Act, 1956 was modeled on English Companies
Act, 1948, no efforts have been made to incorporate universally
accepted principles and concepts into our company law. Of late,
however, some efforts have been made by carrying out few
amendments to the Companies Act, 1956, so also in the SEBI Act,
1992 and Rules and Regulations framed therein to keep pace with
the English Companies Act and related legislations. When we
interpret the provisions of the SEBI Act and the Regulations
relating to a company registered under the Companies Act, thePage 21
21
provisions of the Companies Act have also to be borne in mind.
For instance, in SEBI Act, there is no provision for keeping proper
books of accounts by a registered company.
26. Section 209 of the Companies Act says that every company
shall keep at the registered office proper books of accounts.
Books of accounts should be so kept as to give true and fair view
of the state of the company’s affairs and explain transactions. Of
course, the auditors of the company must examine whether the
company has maintained proper cost accounting records as
required by the rules. Companies whose securities are traded on
a public market, it is trite law that the disclosure of information
about the company is crucial for the correct and accurate pricing
of the company’s securities and for the official operation of the
market. Section 210 of the Companies Act states that at every
annual general meeting of the company, the Board of Directors is
required to lay before it a balance-sheet as at the end of and a
profit and loss account for the financial year. Page 22
22
27. Clause 41 of Listing Agreement between the SEBI and the
concerned companies requires the companies to furnish to stock
exchange and to publish unaudited financial result on a quarterly
basis in the prescribed format. Section 55A of the Companies Act
deals with the powers of SEBI which says some of the provisions
referred to therein, so far as they relate to issue and transfer of
securities and non-payment of dividends in the case of listed
companies be administered by SEBI. Further, it is also indicated
that how the books of accounts have to be kept by the company,
so also with regard to audit of account etc. finds a place in the
Companies Act, so also the qualification and disqualification of the
Managing Directors.
28. We notice in this case that the Directors of the company had
clearly violated provisions of Section 12A of SEBI Act read with
Regulations 3 and 4 of 2003 Regulations. Companies whose
securities are traded on a public market, disclosure of information
about the company is crucial for the accurate pricing of the
companies’ securities and also for the efficient operation of the
market.Page 23
23
Corporate Governance and Directors
29. SEBI Act read with Regulations of the Companies Act would
indicate that the obligations of the Directors in listed companies
are particularly onerous especially when the Board of Directors
makes itself accountable for the performance of the company to
share holders and also for the production of its accounts and
financial statements especially when the company is a listed
company.
30. The Directors of the company or the person in charge directly
or indirectly use or employ, in connection with the issue, purchase
or sale of any securities listed in stock exchange, any manipulative
or deceptive device or contrivance in contravention of SEBI Act or
the Regulations made thereunder have necessarily to be dealt with
in accordance with the provisions of the Act and the Regulations
which is absolutely necessary for the investor’s protection and to
avoid market abuse. Page 24
24
31. The facts clearly indicated that the company had made false
corporate announcement stating that it had entered into
agreements with 802 theatres and that false corporate
announcement gave false figures relating to advance, security
deposit and income pertaining to the theatres which were not
inexistence. The deposits shown were turned out to be not
genuine but mere book entries to hide receivables in the balance
sheet.
32. Responsibility is cast on the Directors to prepare the annual
records and reports and those accounts should reflect ‘a true and
fair view’. The over-riding obligation of the Directors is to approve
the accounts only if they are satisfied that they give true and fair
view of the profits or loss for the relevant period and the correct
financial position of the company.
33. Company though a legal entity cannot act by itself, it can act
only through its Directors. They are expected to exercise their
power on behalf of the company with utmost care, skill and
diligence. This Court while describing what is the duty of aPage 25
25
Director of a company held in Official Liquidator v. P.A.
Tendolkar (1973) 1 SCC 602 that a Director may be shown to be
placed and to have been so closely and so long associated
personally with the management of the company that he will be
deemed to be not merely cognizant of but liable for fraud in the
conduct of business of the company even though no specific act of
dishonesty is provide against him personally. He cannot shut his
eyes to what must be obvious to everyone who examines the
affairs of the company even superficially.
34. The facts in this case clearly reveal that the Directors of the
company in question had failed in their duty to exercise due care
and diligence and allowed the company to fabricate the figures
and making false disclosures. Facts indicate that they have
overlooked the numerous red flags in the revenues, profits,
receivables, deposits etc. which should not have escaped the
attention of a prudent person. For instance, profit as on quarter
ending June 2007 was three times more than the preceding
quarter, it doubled in the quarter ending December 2007 over the
preceding quarter. Further, there was disproportionate increase inPage 26
26
the security deposits i.e. Rs. 36.05 crore in September 2007 to Rs.
270.38 crore in December 2007 as compared to increase in the
number of theatres during the same period. They have
participated in the board meetings and were privy to those
commissions and omissions.
Securities Market – Market abuse
35. Prevention of market abuse and preservation of market
integrity is the hallmark of Securities Law. Section 12A read with
Regulations 3 and 4 of the Regulations 2003 essentially intended
to preserve ‘market integrity’ and to prevent ‘Market abuse’. The
object of the SEBI Act is to protect the interest of investors in
securities and to promote the development and to regulate the
securities market, so as to promote orderly, healthy growth of
securities market and to promote investors protection. Securities
market is based on free and open access to information, the
integrity of the market is predicated on the quality and the manner
on which it is made available to market. ‘Market abuse’ impairs
economic growth and erodes investor’s confidence. Market abuse
refers to the use of manipulative and deceptive devices, giving out
incorrect or misleading information, so as to encourage investorsPage 27
27
to jump into conclusions, on wrong premises, which is known to be
wrong to the abusers. The statutory provisions mentioned earlier
deal with the situations where a person, who deals in securities,
takes advantage of the impact of an action, may be manipulative,
on the anticipated impact on the market resulting in the “creation
of artificiality’. The same can be achieved by inflating the
company’s revenue, profits, security deposits and receivables,
resulting in price rice of scrip of the company. Investors are then
lured to make their “investment decisions” on those manipulated
inflated results, using the above devices which will amount to
market abuse.
36. We have, on facts, clearly found that the Directors of the
company have “created artificiality” by projecting inflated figures
of the company’s revenue, profits, security deposits and
receivables and that the manipulation in the financial results of the
company resulted in price rise of the scrip of the company and the
promoters of the company then pledged their shares to raise
substantial funds from financial institutions. The conduct of the
appellant and others was, therefore, fraudulent and the practicesPage 28
28
they had adopted, relating to securities, were unfair, which
attracted the penalty provisions contained in Section 15 HA read
with 15J of the SEBI Act.
Disclosure and Transparency:
37. Gower and Davies on Principles of Modern Company Law, 9th
Edition (2012) at page 751, reiterated their views on the scope
and rationale of annual reporting required under the Companies
Acts, as follows:
“On the basis that “forewarned is forearmed” the
fundamental principle underlying the Companies Act
has been that of disclosure. If the public and the
members were enabled to find out all relevant
information about the company, this, thought the
founding fathers of our company law, would be a sure
shield. The shield may not have proved quite so
strong as they had expected and in more recent times,
it has been supported by offensive weapons.”Page 29
29
38. The Companies Act casts an obligation on the company
registered under the Companies Act to keep the Books of accounts
to achieve transparency. Previously, it was thought that the
production of the annual accounts and it preparation is that of the
Accounting Professional engaged by the company where two
groups who were vitally interested were the shareholders and the
creditors. But the scenario has drastically changed, especially
with regard to the company whose securities are traded in public
market. Disclosure of information about the company is,
therefore, crucial for the accurate pricing of the company’s
securities and for market integrity. Records maintained by the
company should show and explain the company’s transactions, it
should disclose with reasonable accuracy the financial position, at
any time, and to enable the Directors to ensure that the balancesheet and profit and loss accounts will comply with the statutory
expectations that accounts give a true and fair view. Companies
(Amendment) Act, 2000 has added clause (a)(iii) under which SEBI
has also been given the power of inspection of listed companies or
companies intending to get listed through such officers, as may be
authorized by it.Page 30
30
39. So far as the company in question is concerned, books of
accounts were maintained in the Tally accounting software and for
the financial year 2007-08 separate books of accounts were
maintained for each region/unit. Books of accounts were
reportedly maintained by the regions in their respective regional
office and at the end of the year for the preparation of annual
financial statement and for auditing purpose, those books of
accounts were brought to the companies registered office. The
auditors had informed that those books were audited at the
registered office of the company. As already indicated, after the
declaration of financial results on January 31, 2008, containing
inflated profits, revenues for the quarter ended on 31.12.2007, the
Managing Directors of the company, his wife and the appellant had
together pledged 72,75,455 shares of the company with various
banks and financial institutions and raised 97.30 crores as loans.
We have noticed that the Directors and the Chief Financial Officers
of the company had caused to publish forged and misleading
results of the company, various quarterly financial results and the
annual results for the year 2007-08, were reported to the stockexchanges containing inflated figures of the company’s revenue,Page 31
31
profits, security deposits and receivables and those financial
statements which were relied upon by investors in making
investment decisions, which did not reflect a true and fair view of
the state of affairs of the company.
40. The appellant has taken the stand, as already stated, that
even though he was a whole time Director he was not conversant
with the accounts and finance and was only dealing with the
human resource management of the company, hence, he had no
fraudulent intention to deceive the investors. We find it difficult to
accept the contention. The appellant, admittedly, was a whole
time Director of the company, as regards the preparation of the
annual accounts, the balance-sheet and financial statement and
laying of the same before the company at the Annual General
Meeting and filing the same before the Registrar of the Companies
as well as before SEBI, the Directors of the company have greater
responsibility, especially when the company is a registered
company. Directors of the companies, especially of the listed
companies, have access to inside knowledge, such as, financial
position of the company, dividend rates, annual accounts etc.
Directors are expected to exercise the powers for the purposes forPage 32
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which they are conferred. Sometimes they may misuse their
powers for their personal gain and makes false representations to
the public for unlawful gain.
41. We have indicated, so far as this case is concerned, the
subsequent conduct of pledging their shares at artificially inflated
prices, based on inflated financial results and raising loan on them
would indicate that they had deliberately and with full knowledge
committed the illegality and hence the principle of “acta exteriora
indicant interiora secreta” (meaning external actions reveals inner
secrets) applies with all force, a principle which this Court applied
in Sahara’s case.
42. Above being the factual and legal position, we are of the view
that the SEBI has rightly restrained the appellant for a period of
two years from the date of that order from buying, selling or
dealing with any securities, in any manner, or accessing the
securities market, directly or indirectly and from being Director of
any listed company and that the adjudicating officer has rightly
imposed a penalty of Rs.50 lakhs under Section 15HA of SEBI Act.Page 33
33
The appeals are, therefore, dismissed. However, there will be no
order as to costs.
A word of caution:
43. SEBI, the market regulator, has to deal sternly with
companies and their Directors indulging in manipulative and
deceptive devices, insider trading etc. or else they will be failing in
their duty to promote orderly and healthy growth of the Securities
market. Economic offence, people of this country should know, is
a serious crime which, if not properly dealt with, as it should be,
will affect not only country’s economic growth, but also slow the
inflow of foreign investment by genuine investors and also casts a
slur on India’s securities market. Message should go that our
country will not tolerate “market abuse” and that we are governed
by the “Rule of Law”. Fraud, deceit, artificiality, SEBI should
ensure, have no place in the securities market of this country and
‘market security’ is our motto. People with power and money
and in management of the companies, unfortunately often
command more respect in our society than the subscribers and
investors in their companies. Companies are thriving with
investors’ contributions but they are a divided lot. SEBI has,Page 34
34
therefore, a duty to protect investors, individual and collective,
against opportunistic behavior of Directors and Insiders of the
listed companies so as to safeguard market’s integrity.
44. Print and Electronic Media have also a solemn duty not to
mislead the public, who are present and prospective investors, in
their forecast on the securities market. Of course, genuine and
honest opinion on market position of a company has to be
welcomed. But a media projection on company’s position in the
security market with a view to derive a benefit from a position in
the securities would amount to market abuse, creating artificiality.
SEBI has the duty and obligation to protect ordinary genuine
investors and the SEBI is empowered to do so under the SEBI Act
so as to make security market a secure and safe place to carry on
the business in securities. 
……………………………..J.
(K.S. Radhakrishnan)
……………………………..J.
(Dipak Misra)
New Delhi,Page 35
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April 26, 2013.